Commonwealth Fuel Co. v. McNeil

• Decision Date: 09 October 1925
• Citation: 103 Conn. 390,130 A. 794
• Court: Connecticut Supreme Court
• Parties: COMMONWEALTH FUEL CO. v. MCNEIL.

130 A. 794

103 Conn. 390

COMMONWEALTH FUEL CO. v. MCNEIL.

Supreme Court of Errors of Connecticut.

October 9, 1925

Motion for Reargument Denied Nov. 10, 1925.

Appeal from Superior Court, Fairfield County; Isaac Wolfe, Judge.

Action by the Commonwealth Fuel Company against Kenneth W. McNeil. Judgment for plaintiff, and defendant appeals. No error.

On November 22, 1920, the plaintiff, a Pennsylvania corporation entered into a contract with the Archibald McNeil & Sons Company, Incorporated, a Connecticut corporation, which we shall hereafter call the Connecticut company, for the sale to it of 50,000 tons of coal at $6 a ton " f. o. b. at the mines," to be delivered, 10,000 tons in November, 1920 and the same amount in each of the four succeeding months. Both corporations were engaged in the business of dealing in coal at wholesale. All of the stock of the Connecticut company, except a few shares, was owned by the defendant. The plaintiff was not a coal producer, but it at once made a contract itself to purchase the same amount of the Mayer Brick Company, a mine-operating company. In November and December, the plaintiff delivered to the Connecticut company 12,902 tons, which were accepted, and for which payment was made.

The Connecticut company, in addition to its domestic business, had in 1919, 1920, and until May, 1921, a large foreign business, and had in the spring and summer of 1920, chartered a number of vessels to transport coal to foreign ports, but, by reason of a strike, it was unable to secure the coal to ship in them. This resulted in an accumulation of demurrage claims amounting to $1,616,783.53, the bringing of suits against the company for the recovery of $383,000 damages, and the attachment of its cargoes of coal at Baltimore on November 16, 1920. The defendant, on November 20, 1920, caused to be organized the Archibald McNeil & Sons, Incorporated, of New York, a New York corporation, which we shall hereafter call the New York company, and other corporations similarly organized under the laws of other states, in order to avoid attachments by holders of demurrage claims against the Connecticut company, and to preserve its assets and enable him to carry on its business. The capital of the New York Company was provided from funds of the Connecticut company, and prior to December 31, 1920, the defendant caused to be transferred from the Connecticut company to the New York company assets amounting in value to more than $1,000,000, and thereafter a considerable part of the business theretofore transacted by the Connecticut company to be transacted through the latter company, and the assets and liabilities of these companies to be intermingled as the defendant directed. From this time the New York company had no actual corporate existence separate from or independent of the Connecticut company.

After the deliveries of coal made by the plaintiff in November and December, 1920, the Connecticut company on and after January 1, 1921, refused to take any of the 37,098 tons of coal remaining to be delivered under the contract, despite repeated requests by the plaintiff that it do so. The plaintiff was then and thereafter able and willing to make deliveries as called for by its contract. The defendant, between February 9 and April 29, 1921, represented to the plaintiff that the Connecticut company was in serious distress financially, that a number of creditors of it were about to apply for a receiver, and that, because of these facts, it could not take and pay for further deliveries under the plaintiff's contract, or pay substantial damages for its breach. Defendant then suggested that plaintiff accept a cash settlement of the Connecticut company's liability under its contract, which plaintiff refused. Defendant thereupon represented to plaintiff that he was connected with a corporation known as the United States Coal & Coke Corporation, hereafter called the Coke company, which was in sound financial condition, had first-class credit, owed no money, and carried substantial bank balances, and that, if plaintiff would assign its claim against the Connecticut company to a nominee to be named by him, he would cause the Coke company to enter into a new contract for the purchase of 60,000 tons of coal, at a reduced price, and that, by reason of its financial condition as he had represented it, that company would be able to perform such a contract. The plaintiff thereupon secured the offer of another contract with the Mayer Company for 60,000 tons of coal in place of the existing one, and, upon the defendant renewing in the form of a letter his representations that the credit condition of the Coke company was first-class, that it owed no money and carried substantial bank balances, the plaintiff did, on April 29, 1921, enter into a new contract with it for the sale to it of 60,000 tons of coal, to be delivered at the rate of approximately 6,000 tons a month thereafter, at a price of $3.50 a ton for coal shipped from June 1st to November 1, 1921, and $4.16 2/3 for coal shipped from November 1, 1921, to April 1, 1922, in place of the $6 a ton price under its contract with the Connecticut company; and the plaintiff thereupon assigned its claim under that contract to the Karm Terminal Company of Connecticut, a corporation designated by the defendant and owned and controlled by him.

The plaintiff, under its contract of April 29, 1921, shipped, at the direction of the Coke company, 12,614.5 tons of coal to the New York company for the June and July quotas under the contract, and received trade acceptances in payment, but the Coke company refused to take the August installment, stopped payment on the trade acceptances, and did not pay for the coal shipped in June and July, although it had funds on deposit in banks sufficient to pay the same at least until later. The New York company did, in September, 1921, direct the plaintiff to resume shipments, but the plaintiff demanded, as it had a right to do under its contract, security for the payments which would become due and upon defendant failing to furnish it, refused further deliveries. Thereafter plaintiff renewed its request for security, but defendant refused to furnish it, and plaintiff made no further deliveries of coal under this contract. The plaintiff was at all times able to deliver coal in accordance with this contract and willing to do so, provided the Coke company furnished such security. The representations made by the defendant to the plaintiff with respect to the financial condition of the Connecticut company between February 9 and April 29, 1921, were false, made by him with knowledge of their falsity, and with the intention of creating a false impression in the plaintiff as to the actual financial condition of that company, and with the fraudulent intent of deceiving the plaintiff and inducing it to surrender its contract of November 22, 1920, and its right to damages thereunder, either through a small monetary settlement, or through the substitution of a new contract of more favorable terms for the defendant. The representations made by the defendant with respect to the Coke company were false, known to him to be false, and made recklessly, and with the intent of deceiving the plaintiff and of inducing the plaintiff to assign to the Karm Terminal Company the contract of November 22, 1920, and to substitute therefor the contract of April 29, 1921. All of these representations as to the Connecticut company and as to the Coke company were made as to matters of which the plaintiff had no knowledge or means of knowledge, and which plaintiff believed, and in reliance upon which it was induced to surrender the contract of November 22, 1920, with the Connecticut company, and enter into the contract of April 29, 1921, with the Coke company.

Homer S. Cummings, of Stamford, and Jonathan Grout, of Bridgeport, for appellant.

David S. Day and Philo C. Calhoun, both of Bridgeport, for appellee.

Argued before WHEELER, C.J., and BEACH, CURTIS, KEELER, and MALTBIE, JJ.

WHEELER, C.J. (after stating the facts as above).

This action is brought to recover damages because of the representations made to the plaintiff by the defendant with reference to the Connecticut company and the Coke company, upon the ground that they were false and fraudulent.

Much of the contention of the defendant in this court consists in an attempt to secure corrections of the finding of the trial court. Unless this attempt prevails to such an extent as to make the conclusions of the court erroneous, it is obvious, from a reading of the finding, that the plaintiff is entitled to a judgment and the questions remaining concern the measure of the damages. We have carefully examined the defendant's claims in the light of the testimony and exhibits, particularly the books of account, and we can discover few findings which were made without evidence to support them, and few facts not found, the evidence as to which required that they should be found. Indeed, it is not within the province of this court to make most of the additional findings which the defendant desires. Dexter Yarn Co. v. American Fabrics Co., 102 Conn. 529, 129 A. 527.

Too much space would be required to discuss the defendant's claims in detail. But, if these corrections which we find upon the record before us should have been made were made, they would be ineffective to change the trial court's conclusion that these representations as to the Connecticut company as alleged were proven, and were in fact false and fraudulent.

As to the representations concerning the Coke company, the defendant admits their making, as well he must, in view of his having inserted them in a letter as well as made them orally. As to the financial condition of...