Christiansen v. Mechanical Contractors Bid Depository, 9833.

• Decision Date: 11 December 1968
• Docket Number: No. 9833.,9833.
• Citation: Christiansen v. Mechanical Contractors Bid Depository, 404 F.2d 324 (10th Cir. 1968)
• Parties: Harold CHRISTIANSEN, d/b/a Palmer-Christiansen Company, Appellant, v. MECHANICAL CONTRACTORS BID DEPOSITORY, a Utah Corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

404 F.2d 324 (1968)

Harold CHRISTIANSEN, d/b/a Palmer-Christiansen Company, Appellant, v. MECHANICAL CONTRACTORS BID DEPOSITORY, a Utah Corporation, Appellee.

No. 9833.

United States Court of Appeals Tenth Circuit.

December 11, 1968.

Frank J. Allen, Salt Lake City, Utah (Allan E. Mecham and George M. Mecham, Salt Lake City, Utah, with him on the brief) for appellant.

David B. Dee, Salt Lake City, Utah (Wallace R. Bennett, Salt Lake City, Utah, with him on the brief) for appellee.

Before LEWIS, SETH and HICKEY, Circuit Judges.

HICKEY, Circuit Judge.

Plaintiff-appellant, Harold Christiansen, obtained a temporary restraining order enjoining defendant-appellee, Utah Sub-Contractors Bid Service, hereinafter called Bid Service, from withdrawing its deposited bank funds. The court also issued an order to show cause why Bid Service should not be permanently enjoined. Christiansen sought the permanent injunction to satisfy a judgment he obtained against co-defendant and co-appellee, Mechanical Contractors Bid Depository, hereinafter called Bid Depository.¹ The court held a hearing, denied a permanent injunction, and dissolved the temporary restraining order.

The issue is, was Bid Service the successor to and alter ego of Bid Depository and therefore liable for the judgment debt of Bid Depository?

Christiansen obtained a $60,000 judgment from Bid Depository. This court affirmed that judgment.² Christiansen levied on the judgment and took all the tangible assets of Bid Depository. These assets were, however, insufficient to satisfy the judgment. Within three months the executive manager of Bid Depository joined with two electrical contractors and formed Bid Service. Bid Service, which is a non-profit corporation, did not issue stock; the members contributed its initial capital. Bid Service offered a service similar in most respects to the service performed by Bid Depository. The appellant contends that Bid Service is the successor to and alter ego of Bid Depository and therefore liable for the judgment debt of Bid Depository.

Jurisdiction is based on Rule 69 (a) of the Federal Rules of Civil Procedure. Where applicable, Utah corporate law is controlling.³

The appellant correctly cites Utah law for the principle that a creditor of a corporation may follow property transferred by that corporation to another corporation, and may satisfy his debt out of that property when the second corporation is merely a successor to and continuation of the old corporation.⁴ The trial court found the following facts in conjunction with the cited Utah law:

"No property of the defendant corporation was transferred to or came into the possession of the Utah Sub-Contractors Bid Service. The Utah Sub-Contractors Bid Service received from or succeeded to no funds of the defendant corporation. * * * Many, if not a majority, of the users of the present Utah Sub-Contractors Bid Service were not members of the defendant corporation and were not involved in any way with the defendant. * * * did not secrete, transfer, conceal or remove any of its assets and as far as the evidence discloses all of its assets were made available for the purposes of satisfying the new judgment herein in part. * * * the

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