Chorpenning v. Yellow Cab Co. of Camden

• Decision Date: 27 June 1933
• Citation: 167 A. 12
• Parties: CHORPENNING et al. v. YELLOW CAB CO. OF CAMDEN et al.
• Court: New Jersey Court of Chancery

167 A. 12

CHORPENNING et al.

v. YELLOW CAB CO. OF CAMDEN et al.

Court of Chancery of New Jersey.

June 27, 1933.

Suit by Ralph M. Chorpenning, individually and as next friend of Ida M. Chorpenning, an infant, against the Yellow Cab Company of Camden and others.

Decree for complainant in accordance with opinion advised.

Harvey P. Carr and Samuel T. French, both of Camden, for complainants.

Clifford A. Baldwin, of Camden, for defendants.

DAVIS, Vice Chancellor.

The complainants are judgment creditors, having obtained judgments against the defendant Public Service Cab Company on October 23, 1928; the amount of the judgment of Ida M. Chorpenning is $15,000 and $92.72 costs, the amount of the judgment of Ralph Al. Chorpenning is $495 and costs. The sum of $5,000 was paid on account of these judgments in partial satisfaction by the Jersey Mutual Insurance Company, the insurer of the Public Service Cab Company, in full discharge of the insurer's obligation under the policy of insurance issued to the cab company. The suit which resulted in these judgments was commenced December 23, 1927, and had its foundation upon an accident which took place on October 13, 1927, when the complainant Ida Al. Chorpenning was struck by a taxicab of the defendant Public Service Cab Company, resulting in her injury. She was an infant, and her father, Ralph M. Chorpenning, the other complainant, brought suit as her next friend, as well as individually. The complainants became creditors on October 13, 1927, the date of the commission of the tort. Babirecki v. Virgil, 97 N. J. Eq. 315, 127 A. 594, 39 A. L. R. 171.

Public Service Cab Company, a New Jersey corporation, operated a taxicab business in the city of Camden at the time of this accident; George Falkenstein was its general manager and president, and Philip Messina was its secretary. Some time in the year 1928 the Public Service Coordinated Transport, through its attorney and agent Patrick H. Harding, one of the defendants, acting through one Charles A. Aceto, entered into negotiations for taking over the business and property of the Public Service Cab Company; as a result of the negotiations between Aceto and the Public Service Cab Company, an agreement was executed dated April 4, 1928, between that company and Aceto by which the company, in consideration of $500, gave Aceto the exclusive option for the period of thirty days to purchase its good will, franchises, rights, privileges and equipment, for the purchase price of $29,000. As this agreement was originally drawn, it omitted "franchises, rights, privileges"; these words afterwards were inserted. The execution of this agreement on behalf of the Public Service Cab Company was authorized at a meeting of the board of directors held April 3, 1928, it appears by the minutes. On May 3, 1928, at another meeting of the directors of the cab company, there was recorded: "On word from Charles A. Aceto that he was ready to close deal to purchase Public Service Cab Company a suggestion was made by Joseph Trombetta and duly seconded by Harry Yaeger to have all stock at office of Charles A. Aceto, 325 Arch Street, Camden, New Jersey, this afternoon of May 3, 1928 at 4 P. M."

The settlement took place on the afternoon of Alay 3, 1928, at which time Mr. Aceto was present, together with Mr. Falkenstein, the president and manager of the cab company, and Mr. Harding, attorney and agent of the Public Service Coordinated Transport. Mr. Harding at that time made inquiry to ascertain the creditors of the cab company. A settlement was made in accordance with the agreement. The memorandum of settlement showed the withholding of a number of items representing claims of creditors of the Public Service Cab Company aggregating $17,009.97. Two other claims were shown on this settlement, each for $500, and the memorandum of settlement showed a balance of $10,990.03. At the time of the settlement there was delivered to Mr. Harding by Mr. Falkenstein numerous certificates of stock of the Public Service Cab Company. So far as it appears, all of the issued stock of the company which was endorsed in blank was turned over to Mr. Harding with the various bills of sale and contracts for the purchase of taxicabs made by Public Service Cab Company. Air. Harding delivered his check to the order of the Public Service Cab Company dated May 2, 1928, for $10,990.03, which was a balance shown upon the memoranda of settlement. Numerous other checks were drawn by Mr. Harding to various creditors of the company during the months of May and June of that year; and there were three other checks drawn by Harding to Public Service Cab Company, one dated May 5th for $500; one May 7th for $4,000; and another, June 29th for $659.67. On May 10, 1928, there are minutes of two meetings, one held for resignation of officers, showing resignations of all the old officers of the company and their acceptance. The other meeting is designated as a meeting of the Public Service Cab Company at the office of Mr. Harding, there being present a majority of the directors of the company for resignation of the officers; at that meeting Patrick H. Harding, Thomas Comerford, and Mildred Elkins were elected directors, and Patrick H. Harding president and Thomas Comerford secretary and treasurer of the company; and also that Patrick H. Harding be named as solicitor and authorized to prepare the necessary papers to dissolve the company.

On June 9, 1928, there is a minute of another meeting at which were present Patrick H. Harding, Thomas Comerford, and Mildred Elkins, the directors, and at which the solicitor reported he had made the necessary application to dissolve the company, and that the certificate of dissolution should be received by the company in a day or so. There is a minute on June 23, 1928, of another meeting of the directors of the Public Service Cab Company held at the office of Mr. Harding with Patrick H. Harding, Thomas Comerford, and Mildred Elkins present, at which Mr. Harding reported that the certificate of dissolution of the company dated June 23, 1928, had been received by the company, and that the necessary advertising had been ordered to complete the dissolution. These are the only recorded minutes of this company bearing upon this transaction and the affairs of the company after the stock was taken over by Mr. Harding.

Mr. Falkenstein, the general manager of the Public Service Cab Company, was fully acquainted with the suit for damages pending against this company at the time of these transactions, and at the hearing in this cause there were produced two letters written by him to the insurance company referring to these cases. However, he testified that he had completely forgotten about the Chorpenning case at the time this settlement was made and when inquiry was made of him as to the creditors of the company. However, the Chorpenning case was defended on behalf of the company by the attorney of the insurer, Jersey Mutual Insurance Company, and was of such a nature, judging by the amount of the verdict, that should have elicited the continued interest of the general manager of the company, particularly when its limit of indemnity was $5,000...