Frank Rizzo, Inc. v. Alatsas

• Decision Date: 25 June 1958
• Docket Number: No. A--136,A--136
• Parties: FRANK RIZZO, Inc., a New Jersey corporation, Plaintiff-Appellee, v. James G. ALATSAS and Martin Siegel, Jointly and Severally, Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 400

27 N.J. 400

142 A.2d 861

FRANK RIZZO, Inc., a New Jersey corporation, Plaintiff-Appellee, v. James G. ALATSAS and Martin Siegel, Jointly and Severally,

Defendants-Appellants.

No. A--136.

Supreme Court of New Jersey.

Argued May 20, 1958.

Decided June 25, 1958.

Hymen B. Mintz, Newark, argued the cause for defendants-appellants (Sol Herships, Newark, attorney).

Howard G. Kulp, Jr., Camden, argued the cause for plaintiff-appellee (Brown, Connery, Kulp & Wille, Camden, attorneys).

The opinion of the court was delivered by

FRANCIS, J.

Plaintiff obtained a judgment in the amount of $3,432.75, plus costs of $80.15, against Meridian Development Corporation, a New Jersey corporation, arising out of a corporate obligation. This suit was then brought on the judgment against James G. Alatsas and Martin Siegel, president and secretary of Meridian, in their individual capacities. On motion, summary judgment was granted against them. Their subsequent appeal was certified by us before consideration by the Appellate Division.

A mere outline of the case demonstrates its unusual nature. Ordinarily, we do not think in terms of the possibility of individual liability of corporate officers for obligations incurred by the entity in the usual course of business. Such personal liability is inconsistent with the existence of a body corporate at common law and can emanate only from some positive legislative fiat. Salt Lake City National Bank v. Hendrickson, 40 N.J.L. 52, 55 (Sup.Ct.1878). The alleged cause of action arises out of N.J.S.A. 14:8--16, under circumstances to be detailed. The statute provides:

'Upon payment of each installment of capital stock, and of every increase thereof, the president or a vice-president and the secretary or treasurer shall make a certificate stating the amount of the capital so paid and whether paid in cash or by the purchase of property. This certificate shall be signed and sworn to by the president or such vice-president and the secretary or treasurer and shall be filed in the office of the Secretary of State, within 10 days after such payment.

'If any of such officers neglect or refuse so to do for 30 days after written request so to do by a creditor or stockholder of the corporation, they shall be jointly and severally liable for all its debts contracted before the filing of such certificate.' (Emphasis added.)

No certificate had been filed in the present case prior to the entry of judgment against the corporation. Thereafter, plaintiff's attorneys sent by certified mail to Alatsas and Siegel the following notice dated August 8, 1957:

'Demand is hereby made on behalf of Frank Rizzo, Inc., that you file, within 30 days from the receipt of this letter a certificate in the office of the Secretary of State, stating the total amount of capital paid into the Meridian Development Corporation and whether it was paid in cash or by the purchase of property.

'Very truly yours,

'Brown, Connery, Kulp & Wille

'Attorneys for Frank Rizzo, Inc.

'By: Howard G. Kulp, Jr.,

'A Member of the Firm.'

The notices were addressed to Alatsas at the office of the corporation in Newark, and to Siegel at his home in West Orange, New Jersey.

In passing, we observe that the statute does not prescribe the method of service. It merely speaks of the duty to file the certificate 'after written request so to do.' But where one condition precedent to liability is the making of such a written request, obviously the proof must establish either personal receipt of the notice or adequate and timely knowledge thereof. Plaintiff claims service on Alatsas on August 9, and on Siegel on August 15, 1957. The required certificate, although signed by both of them on August 20, was not filed in the office of the Secretary of State until September 26, 1957--well beyond the allotted 30-day period. The tardiness formed the basis for the motion for summary judgment.

In explanation of the late filing, defendants submitted an affidavit of one Borsella, office manager of Meridian, who deposed that he had obtained the necessary certificate form from the Secretary of State on behalf of the defendants. He completed it except that 'we were not certain of the amount of capital stock, so that the figure relating thereto, was inserted in pencil.' Alatsas and Siegel executed it in that tentative form on August 20 and instruct him to obtain verification from the corporate accountant and then to file the certificate with the Secretary of State. Borsella encountered difficulty in obtaining the expeditious attention of the accountant to the matter, and in the early part of September (the answer to the complaint says 'on or about September 5') he telephoned plaintiff's attorney, inquiring as to what information was actually wanted. His affidavit says that he was told to do 'just what the letter said.' Thereupon, he tried to reach the accountant and, being unsuccessful, left a request for him to make an early appearance at defendants' office. Borsella again called plaintiff's attorney on the same day, advised him of the difficulty, assured him that the certificate would be filed and 'indicated to him, that we might need another week or so,' to which the attorney replied 'all right.'

The affidavit of counsel denies that he received a telephone call on behalf of defendants 'on or about September 5, 1957' and that he ever acquiesced in an extension of time. At the oral argument in this court, it was conceded that two telephone calls were received on September 12 and that they concerned the filing of the certificate in question.

The Borsella affidavit continues to the effect that when the accountant confirmed the pencilled figure, the document was completed and on September 20, 1957 was forwarded to the Secretary of State with a check for $1 which the accountant had said was the required fee. This turned out to be error because the fee was $2. As a result, the certificate was returned and when sent back with the proper fee, it was filed on September 26, 1957.

On these facts the trial court entered summary judgment for the plaintiff. He took the view that the failure to file within time constituted 'neglect' within the contemplation of the act. He held also that the attorney had no authority to waive plaintiff's right to strict compliance with the 'written request.'

Review of the propriety of a summary judgment must be engaged in with an eye to a fundamental concept. Such judgment is proper only where the record shows palpably that there is no issue as to any material fact in the case. R.R. 4:58--3. The papers supporting the motion are to be closely scrutinized; those opposed to it indulgently treated. Doubts must be resolved in favor the conventional trial. The matter cannot be decided on the affidavits of the parties where inferences for and against the existence of a cause of action or a defense arise therefrom, no matter how strongly they point in one direction or the other. Affidavits are of value only when they demonstrate the absence of a factual dispute as to all elements of the cause of action or the defense. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 76, 110 A.2d 24 (1954); West Side Trust Co. v. Gascoigne, 39 N.J.Super. 467, 470, 471, 121 A.2d 441 (A...