Fleming v. GRAY MANUFACTURING COMPANY

• Decision Date: 16 January 1973
• Docket Number: Civ. No. 15064.
• Court: U.S. District Court — District of Connecticut
• Parties: William J. FLEMING et al. v. The GRAY MANUFACTURING COMPANY and Gray Circle, Inc.

352 F. Supp. 724

William J. FLEMING et al. v. The GRAY MANUFACTURING COMPANY and Gray Circle, Inc.

Civ. No. 15064.

United States District Court, D. Connecticut.

January 16, 1973.

Samuel V. Schoonmaker, III, Howard A. Knight, Cummings & Lockwood, Stamford, Conn., for plaintiffs.

J. Read Murphy, John C. Yavis, Jr., Murtha, Cullina, Richter & Pinney, Hartford, Conn., for defendants.

RULING ON PLAINTIFFS' APPLICATION FOR INJUNCTIVE RELIEF

ZAMPANO, District Judge.

In this breach of contract action, the plaintiffs, in order to secure satisfaction of any judgment which may be entered, seek an order to attach the capital stock owned by the defendants in several subsidiary and affiliated corporations.

I.

Plaintiffs, William J. Fleming and his three children, were former stockholders of Circle Steel Partition Co., Inc. ("Circle Steel"), a New York corporation. On May 25, 1970, the defendant, The Gray Manufacturing Company ("Gray") and the defendant Gray Circle, Inc. ("Gray Circle"), both Connecticut corporations, entered into an agreement to purchase all the capital stock of Circle Steel for an aggregate consideration of $1,937,500.00.

The agreement provided that the purchase price would be honored by certified checks of $1,000,000 at the closing, and the balance payable in four equal annual installments of $234,375, together with interest at the rate of four percent per annum.

The closing was held on June 4, 1970, at which time all the capital stock of Circle Steel was delivered to the defendants in exchange for the $1,000,000 immediate payment plus the appropriate promissory notes. The consideration for the stock was allocated among the shareholders of Circle Steel in such a way that the plaintiffs herein are the only stockholders to have an interest in the deferred payments.

When the first promissory note was not paid at maturity on June 4, 1971, this suit was instituted. By way of an application for a mandatory injunction, the plaintiffs seek to secure their debt by obtaining an order directing the defendants to deposit with this Court all the capital stock owned by them in nine other corporations.

The moving papers indicate that the defendants' ownership interests in the nine other corporations are as follows:

1. The defendant Gray wholly owns the capital stock of the defendant Gray Circle;

2. The defendant Gray Circle owns all the capital stock of Circle Steel Partition Co., Inc., a New York corporation;

3. Circle Steel Partition Co., Inc., in turn, owns four other corporations: Circle Steel Partition Co., Inc. of Connecticut, Circle Partition Company of Georgia, Inc., Circle Partition Co., Inc. of Delaware, and Circle Steel Products, Inc., a New York corporation;

4. In addition to possessing all the capital stock of the defendant Gray Circle, the defendant Gray owns: 100 percent of Virginia Metal Products, Inc., a Connecticut corporation; 100 percent of Gray Pollution Control Systems, Inc., incorporated in Michigan; 85 percent of the Delaware corporation, Gray Tech, Inc.; and 46.4 percent of Quaker City Industries, Inc., a corporation organized under the laws of New York.

II.

The parties agree that all the corporate securities in question are located outside the state of Connecticut. In support of their efforts to reach the securities, the plaintiffs contend that: 1) complete relief is authorized by Connecticut's laws governing attachment of securities, and 2) since this Court has in personam jurisdiction over the defendants, it has inherent equitable power to order them to do specific acts, either within or without the territorial limits of its jurisdiction. The defendants, on the other hand, take a narrower view of the relevant statutes, and argue that this Court's power to grant extraordinary relief in this case is necessarily circumscribed by limitations contained in those statutes. The Court is of the opinion that neither extreme position is correct, and that a just resolution of the issue may be found approximately in the middle of the spectrum of the two divergent positions.

In this case the Court conducted a full hearing, upon due notice to the parties who appeared and were represented by counsel. The plaintiffs' basic right to a prejudgment attachment of the defendants' property is therefore assured. Conn.Gen.Stats. § 52-279; Smith v. Gilbert, 71 Conn. 149, 154-155, 41 A. 284 (1898). However, § 52-289 limits the attachment of a corporate share of stock to one "actually seized by the officer making the attachment, or is surrendered to the...