A. E. Borden Co. v. Wurm

• Decision Date: 16 August 1966
• Citation: 222 A.2d 150
• Parties: A. E. BORDEN CO., Inc. v. Warren N. P. WURM et al.
• Court: Maine Supreme Court

Page 150

222 A.2d 150

A. E. BORDEN CO., Inc. v. Warren N. P. WURM et al.

Supreme Judicial Court of Maine.

Aug. 16, 1966.

Burns, Bryant, Hinchey & Nadeau, by Stanley M. Burns, Dover, N. H. Earl J. Wahl, Gorham, for plaintiff.

Thomas E. Flynn, Jr., Portsmouth, N. H., Peter N. Kyros, Portland, for defendants.

Before WILLIAMSON, C. J., and WEBBER, TAPLEY, MARDEN, RUDMAN and DUFRESNE, JJ.

MARDEN, Justice.

On appeal from findings of a single Justice upon a complaint brought under the provisions of Chapter 107 § 4, XI R.S. 1954 (now 14 M.R.S.A. § 6051 subsection 11) to reach and apply to plaintiff's claim certain assets allegedly the subject of fraudulent transfer.

The complaint raised other issues which, with the one currently before us, became the subject of ten days of hearings, reflected by four volumes of recorded testimony and some fifty documentary exhibits. The decisions of the single Justice on issues other than that upon which this appeal is based have become final.

The background of the present controversy is as follows: Warren N. P. Wurm (Warren) and Marjorie F. Wurm (Marjorie), defendants, husband and wife from March 27, 1935, had, from modest beginnings, well established themselves in business by March 1953, and had acquired substantial business real estate holdings, the title to some or all of which was held jointly. In March of 1953 a close corporation was formed, Warren's Realty, Inc., (Realty) and the bulk, if not all, of the jointly owned income producing real estate, valued by Warren at over $300,000.00, was transferred to that company, Warren taking back a corporate note for $100,000.00, secured by real estate mortgage. Warren was made President and Marjorie was made Treasurer, which offices they held until March 17, 1959 when Marjorie became both President and Treasurer. Thereafter the parties conducted their businesses and channeled their finances, both business and personal, through that corporation. The difficulty of identifying a given act as personal or corporate was one of the many problems faced by the single Justice. The original stock issue was one share each to Warren, Marjorie and Charles Wurm, Warren's brother, and being certificates one, two and three. Certificate four was for ten shares and, according to the stock book, was issued to Warren and Marjorie. Certificate five was for 987 shares purportedly issued to Warren, or Warren and Marjorie, on April 5, 1953. The stock book entries are not clear whether Marjorie's name was entered as a joint owner on the date that the certificate was issued, or at a later time.

In the latter part of 1956 Warren became interested in the Rice-Varrick Hotel at Manchester, New Hampshire, also corporately owned, (Rice-Varrick Hotel, Inc.) and with two other persons, each to acquire a third interest, arranged to buy it. Decision was made to renovate the hotel plant and on October 3, 1957 and on November 5, 1957 Warren obligated himself personally to plaintiff on conditional sales contracts, in the amounts of $44,051.50 and $20,366.00 respectively, for hotel equipment, including air conditioning units, to be installed in the Rice-Varrick Hotel. Also in 1957 Warren cashed an insurance annuity contract for $60,000.00, and in early 1958, Marjorie raised $20,000.00 by mortgaging the family home, title to which stood in her name, which money went into the hotel venture. The record before us does not make it clear whether these funds passed through Realty books, but it is borne in mind that the record on appeal consists of designated portions of the trial record. It would appear that Warren's or Realty's contribution to the hotel enterprise reached such relation to the total amount invested, that Warren or Realty arranged in early 1958 to purchase the interests of the other two persons, this deal to be executed by the fall of that year and Warren or Realty to operate the hotel meantime. During the period of renovation, controversy arose between plaintiff and Warren relative the installation of the air conditioners and the installment payments required by Warren to plaintiff were defaulted. Whether this default was due to Warren's then financial condition or to Warren's contention that plaintiff had failed to supply certain elements needed for their installation was also one of the factual issues before the single Justice.

By the fall of 1958 when Warren or Realty was due to pay off Warren's or Realty's fellow investors, the holder in escrow of the Rice-Varrick stock pressed for payment, the hotel operation by Warren was in financial straits and Warren had to seek financing at premium rates. The details of this are not clear, but as we read the record, and the recitation is only to further illustrate the complicated factual issues before the single Justice, Warren's or Realty's preliminary need was for $15,000.00 to pick up the Rice-Varrick stock. This money was available provided the $100,000.00 mortgage which Warren held from Realty, and which had been assigned to a bank in 1955 to secure a loan, could be used for collateral. Arrangements were made to re-secure the bank loan, and in consideration of advances made and to be...