Berman v. Griggs

• Citation: 145 Me. 258,75 A.2d 365
• Parties: BERMAN et al. v. GRIGGS et al.
• Decision Date: 04 August 1950
• Court: Maine Supreme Court

Page 365

75 A.2d 365

145 Me. 258

BERMAN et al. v. GRIGGS et al.

Supreme Judicial Court of Maine.

Aug. 4, 1950.

Berman, Berman, Wernick, Portland, for plaintiffs.

Albert Knudsen, Portland, for defendants.

Before MURCHIE, C. J., and THAXTER, FELLOWS, MERRILL, NULTY and WILLIAMSON, JJ.

NULTY, Justice.

This case comes before this court on appeal from the decree of the sitting justice dismissing the bill in equity filed by the plaintiffs as assignees of a Maine corporation known as Associated Builders & Construction Co. The defendants, Clifton T. Griggs and Paul M. Christianson, were in reality the sole active owners of the company, the other defendant, Jacob Agger, an Attorney, being joined as party defendant because of the facts which will subsequently appear.

The Company found itself, in July, 1948, somewhat embarrassed by financial troubles, and, on August 10, 1948, a letter, prepared under the direction of defendant Agger as Attorney for the Company, was signed by said Agger and mailed to the creditors of the Company asking them to be present or be represented at a meeting of creditors of the Company to be held at the office of the Company on August 13, 1948. The record discloses that a large proportion of the creditors either attended the meeting in person or were represented by attorneys and the business situation of the Company was discussed at considerable length. Various procedures were considered and a creditors' committee was suggested. It developed that the warehouse which was the office of the Company and which was a valuable piece of property had been deeded by the Company on June 22, 1948, to defendants Griggs and Christianson. The corporate records of the Company do not disclose any official acts of the Board of Directors or Stockholders with respect to this conveyance and at the creditors' meeting more or less discussion ensued with respect to the defendants Griggs and Christianson reconveying the property to the Company in order that it might be considered an asset of the Company and be reflected in the financial statements for the benefit of the creditors. A creditors' committee was tentatively named at said meeting held August 13, 1948, and the record discloses that after said meeting of August 13, 1948, defendant Agger addressed another letter to all creditors in which he reported to them the results of said creditors' meeting, and, in addition to giving said creditors considerable information with respect to the Company's financial affairs, enclosed in said letter a formal assent for all creditors to sign and asked that the creditors give their formal assent to allow a creditors' committee to operate the business. In said letter which was prepared and signed by said Agger the following statements were made:

'After a lengthy discussion as to what would be best for the creditors and the corporation the officers of the corporation, namely Paul Christianson and Clifton T. Griggs, were asked what they would do to assist the financial structure. Both Mr. Griggs and Mr. Christianson, who are the owners of the warehouse and which represents an actual outlay to them within the past few months of $10,000.00, agreed to convey the property to the corporation as additional assets. They further agreed to reduce their own salaries to a bare minimum.

'There is approximately $18,000 in completed contracts which were to have been refinanced through a local bank, but because of complications which had arisen in the past six or seven weeks the paper was not acceptable to the banks but those contracts can now be financed through the Shawmut Bank, and a representative of the Shawmut Bank, who was present at the meeting, stated that his Bank would accept this paper if all of the creditors agree to go along with a creditors committee, otherwise they would not be interested in discounting the contracts.

'The creditors present, representing approximately $50,000.00 of the total $61,000.00 of liabilities, agreed that if a creditors committee was appointed for the benefit of the creditors and the corporation, they would not press their claims and were willing to allow the corporation to continue in business. Several of the creditors present who had attachments and trustees agreed to dismiss and discharge their attachment or trustee.'

From the record it appears that as a result of the letter and the work of the Creditors' Committee practically all the creditors agreed to permit the Company to continue its operations under the guidance of the Creditors' Committee and that those creditors who had attachments agreed to discharge and did subsequently discharge said attachments which had been hampering the Company's business.

Another meeting of the Creditors' Committee was held on August 24, 1948, which was about the time that the Creditors' Committee really began to function, and at this meeting it developed that a deed of the property in question had been drawn and was subsequently executed by defendants Griggs and Christianson and their wives and delivered to defendant Agger, who was also a member of the Committee and Secretary thereof.

It appears to be unnecessary from the view we take of this matter to go further into the facts of the case other than to say that some time later it was discovered by certain members of the Creditors' Committee that the deed in question had not been delivered and recorded although all attachments against the Company's property had been released and the Creditors' Committee was functioning, having made arrangements for bank financing. The failure to deliver and record the deed necessitated some changes in the Company's financing due to the fact that the bank financing was withdrawn because of the failure to...