Brockmann v. O'Neill

• Decision Date: 25 April 1978
• Docket Number: No. 37979,37979
• Citation: 565 S.W.2d 796
• Parties: Raymond BROCKMANN and Luella Brockmann, Plaintiffs-Appellants, v. George B. O'NEILL, Peter J. Barbos and Denver T. Smith, Trustees of Royal Electric Contractors, Inc., Formerly a Missouri Corporation and George B. O'Neill, Peter J. Barbos, Denver T. Smith, L. T. Hundelt and R. K. Olson and Consolidated Electrical Contractors, Inc., a Missouri Corporation, by L. W. Hundelt, Defendants-Respondents. . Louis District,Division One
• Court: Missouri Court of Appeals

Page 796

565 S.W.2d 796

Raymond BROCKMANN and Luella Brockmann, Plaintiffs-Appellants, v. George B. O'NEILL, Peter J. Barbos and Denver T. Smith Trustees of Royal Electric Contractors, Inc., Formerly a Missouri Corporation and George B. O'Neill, Peter J. Barbos Denver T. Smith, L. T. Hundelt and R. K. Olson and Consolidated Electrical Contractors, Inc., a Missouri Corporation, by L. W. Hundelt, Defendants-Respondents.

No. 37979.

Missouri Court of Appeals,St. Louis District,Division One.

April 25, 1978.

Alfred J. Rathert, Fenton, for plaintiffs-appellants.

Albert H. Feldt, Clayton, for defendants-respondents.

McMILLIAN, Judge.

Plaintiffs-appellants, Raymond and Luella Brockmann, appeal from a judgment entered by the trial court denying their recovery on a promissory note against Consolidated Electrical Contractors, Inc., (Consolidated). Appellant sued George B. O'Neill, Peter J. Barbos, and Denver T. Smith, trustees of the assets, the last board of directors of Royal Electric Contractors, Inc. (Royal) a former Missouri corporation (Count I); and sued George B. O'Neill, Peter J. Barbos, Denver T. Smith, L. T. Hundelt, R. K. Olson, and L. W. Hundelt, individually and as directors of Consolidated and defendant Consolidated, a Missouri corporation (Count II).

The trial court, sitting without a jury, entered a limited judgment in favor of appellants on Count I and against respondents O'Neill and Smith, as trustees of the assets of Royal, and entered judgment in favor of all other respondents on Count II.

On appeal appellants contend that the trial court erred in limiting its judgment to the respondents as trustees of the assets of Royal, and that judgment should also have been entered against Consolidated as a successor to the promissory note. More specifically, appellant argues that Consolidated, the transferee corporation, was liable for the debts of Royal, the transferor corporation, either because the transfer was without consideration, or because the transferee corporation was a mere continuation of the old corporation. Thus, there are two issues to be resolved. First, whether Consolidated can be considered a continuation of Royal, so as to subject Consolidated to liability on the promissory note. ¹ Secondly, whether sufficient consideration passed between Royal and Consolidated so as to validate the transfer of assets and shield Consolidated from liability on the note.

Resolution of the issues will entail a recitation of the pertinent evidence presented at trial. On January 30, 1961, Royal was incorporated under the laws of the State of Missouri. The incorporators were respondents George B. O'Neill, Denver T. Smith, and George A. O'Neill, the deceased father of respondent O'Neill. These three incorporators served as the board of directors and primary officers of the corporation. Royal was engaged in the business of general electrical contracting.

Appellant Raymond Brockmann was employed as an electrician for Royal in 1960. On April 25, 1963, appellants lent Royal $10,000 and received from the corporation its promissory note for that sum. Mr. Brockmann testified that demands were made several times a year; however, they have received no payments.

Royal continued in the electrical contracting business until November, 1963, when it ceased doing business. At this time Royal had liabilities of $140,000, and owed the government $13,000 in back taxes. Its assets consisted of five trucks, equipment, tools and other material. Royal was engaged in approximately six electrical contracting projects.

On January 8, 1964, respondents O'Neill, Smith and their attorney, Albert H. Feldt, signed articles of incorporation which incorporated Consolidated, and on January 20, 1964, the corporate charter was issued. Consolidated was to engage in the business of general electrical contracting. Consolidated took over performance on Royal's electrical contracting projects, employed Royal's employees and used Royal's trucks and equipment.

At the time Royal ceased doing business it had sold its trucks and other assets to Consolidated Mechanical, Inc., a corporation whose major stockholder, Lester W. Hundelt, is on the present board of directors of Consolidated. In exchange for Royal's assets, Mr. Hundelt had paid $13,000, the amount Royal owed in back taxes to the government. There was no inventory of assets taken at the time of or prior to the sale. However, even though Royal had sold its assets to Consolidated Mechanical, Consolidated Electrical continued to use them in the course of their business.

As stated previously, Consolidated had taken over all of the projects formerly run by Royal. Respondent Smith had testified that none of the contractors were notified of the changeover. There was no delay or days lost during the changeover. Smith further testified that Consolidated used the same work force, supervisors, trucks, tools and equipment as Royal. There was further testimony that the employees were not notified of the changeover until several days later; however, no work had been delayed or stopped. In fact, appellant testified that he did not know of the changeover until he received his first paycheck from Consolidated. In addition, the employees had received no correspondence from Royal nor Consolidated concerning their job status or union affiliation.

After the court tried case the trial judge made findings of fact and conclusions of law in which he held that sufficient...