Hodges v. S. Berwick Water Co.

• Decision Date: 02 June 1942
• Parties: HODGES v. SOUTH BERWICK WATER CO. et al.
• Court: Maine Supreme Court

26 A.2d 645

HODGES

v. SOUTH BERWICK WATER CO. et al.

Supreme Judicial Court of Maine.

June 2, 1942.

Exceptions from Superior Court, Somerset County; Raymond Fellows, Presiding Justice.

Action of assumpsit by Gwendolyn Hodges against the South Berwick Water Company and another on an account, for money advanced by the plaintiff which was used to improve a water plant. To review an adverse judgment, the defendants bring exceptions.

Exceptions sustained.

Before STURGIS, C. J., and THAXTER, HUDSON, MANSER, WORSTER, and MURCHIE, JJ.

Harvey D. Eaton, of Waterville, for plaintiff.

Cyrus N. Blanchard, of Wilton, and Bradley, Linnell, Nulty & Brown, by William B. Nulty, all of Portland, for defendants.

THAXTER, Justice.

This action of assumpsit was brought in the Superior Court against two corporations, the South Berwick Water Company and the South Berwick Water Company, Inc. The plea was the general issue. The writ contains two counts, the first an account annexed, the second an omnibus account under which the plaintiff specifies that she will offer proof of the items in the account annexed, also of a promissory note of South Berwick Water Company, Inc., dated July 1, 1937, for $2,800 and payable in one year with interest at 6%, also of another note of the same corporation dated November 28, 1938, for $1,000 payable on February 1st with interest at 5%, also of a check dated November 24, 1937, for $250, and a check dated November 26, 1938, for $942.50. The specifications do not allege by whom the checks were drawn. The exhibits, however, indicate that the plaintiff refers to two checks drawn by her to the order of Alvin B. Strout who seems to have been the president, principal and controlling stock owner, and manager of both of the defendant corporations.

A hearing was had before a single justice in vacation with right of exceptions reserved who ordered judgment against both companies in the amount of $13,773.77. From this ruling the defendants have brought the case to this court on a bill of exceptions. These are based on the ground that such ruling is unsupported by evidence and that the principles of law relied upon by the court are erroneous.

The general contention of the plaintiff is as set forth in the bill of exceptions, that she advanced certain securities and money to the defendants as set forth in the account annexed, the securities having the value declared upon in that account.

The record shows that the South Berwick Water Company was organized under a special act of the legislature in 1893 to furnish water to the people of South Berwick. It was given, subject to the conditions set forth in its charter, the right to issue stock and bonds and to acquire property by eminent domain. Alvin B. Strout acquired the stock of this company on March 17, 1937, and became its president and general manager. Shortly thereafter he caused to be organized under the general law the South Berwick Water Company, Inc. This corporation came into being early in April, 1937. Its purpose was to furnish water to the people of South Berwick. As collateral and ancillary to such general purposes it was, as set forth in Par. 4 of its certificate, authorized to carry on all kinds of general business. April 5, 1937, the stockholders of the South Berwick Water Company voted, subject to the approval of the Public Utilities Commission, to sell all of its assets with the exception of its franchise to this new corporation, the consideration for said sale to be all of the capital stock of the new company "and such bonds and as many bonds as the Maine Public Utilities Commission will permit said South Berwick Water Company, Inc. to issue on the credit of the assets to be conveyed". On the same day the stockholders of South Berwick Water Company, Inc., voted to purchase such assets and to pay such consideration for the property to be transferred to it. By decree dated April 24, 1937, the Public Utilities Commission authorized such sale for the consideration of $5,000 of the capital stock of the South Berwick Water Company, Inc., and such bonds as might be authorized by the commission. In accordance with this decree the property was conveyed; the obligation to supply water was assumed by the new company; and thereafter the South Berwick Water Company did no further business.

Shortly after this transaction was completed the plaintiff comes into the picture. She was approached by Strout, a lifelong friend, who told her that he was interested in the South Berwick Water Company. At various times beginning June 30, 1937, and ending November 28, 1938, she turned over to him various securities and cash totalling according to her account annexed $14,773.77. It is admitted that there is a duplication of items amounting to $1,000. The judgment for $13,773.77 ordered by the sitting justice apparently takes this error into consideration. These securities and cash were turned over to Strout personally and his receipts for them specify that they were "to be used as I see fit". There was nothing set up on the books of either company showing any obligation to the plaintiff. Strout testified that the money which he had received from the plaintiff and also from the sale of her securities totalling somewhere between $11,500 and $12,000 was used in improving the plant and facilities of the South Berwick Water Company, Inc. It seems to have been credited to his account on the books of the company. He testified that he agreed to give to Mrs. Hodges bonds or preferred stock of this company for what she had turned over to him. She says that she was to receive first mortgage bonds; but she does not seem to know by which company the securities were to be issued. She does not claim to have dealt with the...