Hoffman Wall Paper Co., Inc. v. City of Hartford

• Citation: 114 Conn. 531,159 A. 346
• Court: Supreme Court of Connecticut
• Decision Date: 15 March 1932
• Parties: HOFFMAN WALL PAPER CO., Inc., v. CITY OF HARTFORD.

159 A. 346

114 Conn. 531

HOFFMAN WALL PAPER CO., Inc., v. CITY OF HARTFORD.

Supreme Court of Errors of Connecticut.

March 15, 1932

Appeal from Court of Common Pleas, Hartford County; Thomas J Molloy, Judge.

The Hoffman Wall Paper Company, Inc., appealed from an assessment of benefits and damages by the board of street commissioners of the City of Hartford, and the judge of the court of common pleas referred the appeal to a committee, sustained the demurrer to a remonstrance to the report of the committee and rendered judgment for plaintiff in accordance with the committee's report, and defendant appeals.

Error and cause remanded.

Roger Wolcott Davis, of Hartford, for appellant.

Alexander W. Creedon, of Hartford, for appellee.

Argued before MALTBIE, C.J., and HAINES, BANKS, AVERY, and BROWN, JJ.

MALTBIE, C.J.

Abraham Hoffman owned a piece of land with buildings thereon on North Main street in the city of Hartford. In 1927 The Hoffman Wall Paper Company, Incorporated, hereinafter called the appellant, leased the property, and thereafter conducted a store on the premises. The city took steps to widen North Main street, and established a new street line which cut through the main building upon the property, taking a portion of it about thirty feet in depth. Damages were appraised to Hoffman for this taking and also to the appellant as lessee. Before the work of widening the street was completed, the city decided to establish a new street across the property of Hoffman, bringing all of it within the street lines. Damages were thereupon appraised to Hoffman, but none to the appellant. Under the provisions of the charter of the city, the appellant appealed to the judge of the court of common pleas for Hartford county, and the appeal was referred to a committee for a hearing. In his report, the committee found that the appellant had suffered damages by the establishment of the new street, and recommended a substantial award to it. The city remonstrated against the acceptance of the report largely upon the ground that the committee had failed to include certain facts it claimed were proven before him. The judge recommitted the report and the committee made a supplemental finding. The city again remonstrated. A demurrer was filed to this remonstrance, and the judge sustained it. He thereafter gave judgment finding that the appellant was entitled to receive the damages recommended in the report, and from that judgment the city has appealed.

No question is made as to the amount of the award to the appellant, if it was entitled to receive any damages. Whether it was or not cannot finally be determined upon the present record for reasons we shall later state. Certain claims of the city are, however, fairly presented, and their determination will serve to narrow the issues. We shall therefore discuss them now. Previous to 1926 Hoffman had individually conducted the store. When the appellant was organized and took over the store, approximately 95 per cent of its stock was issued to, and apparently is now owned by, Hoffman. The remaining shares are owned by employees of the store. The corporation was organized on account of the illness of Hoffman. The committee expressly refuses to find that it was formed for the purpose of imposing upon the city or of setting up a legal fiction purely for the purpose of obtaining damages; and the city makes no attempt to have such findings added to the report. It does seek to have added the facts that the shares owned by the employees were issued upon an agreement that before sale to any one else, or upon leaving the employment of the appellant, the holder would tender the stock to the corporation at its book value, and that Hoffman owned or controlled all the shares of the stock of the appellant. For the purpose of this discussion, we regard these facts as in the case. The city contends that, under these circumstances, the award of damages to Hoffman for the taking of the property should be held to constitute full damages because he and the corporation were legally identical. Undoubtedly there are instances in which a court will look through a corporation to the individuals who compose it. Starr Burying Ground Association v. North Lane Cemetery Association, 77 Conn. 83, 92, 58 A. 467. Professor Wormser likens these cases to those instances where courts disregard legal fictions because they are urged to an intent and purpose not within the reason for their existence. Wormser, The Disregard of the Corporate Fiction and Allied Corporate Problems, p. 9; see, also, 1 Fletcher, Cyclopedia of Corporations, p. 140. The cases where this will be done are those in which the corporation is a mere sham or device to accomplish some ulterior purposes or is a mere instrumentality or agent of another corporation or individual owning all or most of its stock. Chicago, M. & St. P. R. Co. v. Minneapolis Civic & Commerce Association, 247 U.S. 490, 501, 38 S.Ct. 553, 62 L.Ed. 1229; In re Muncie Pulp Co. (C. C. A.) 139 F. 546, 548; The Willem Van Driel, Sr. (C. C. A.) 252 F. 35, 37; Proctor & Gamble Co. v. Newton (D. C.) 289 F. 1013, 1016; In re Rieger, Kapner & Altmark (D. C.) 157 F. 609, 613; Brundred v. Rice, 49 Ohio St. 640, 32 N.E. 169, 34 Am.St.Rep. 589; Donovan v. Purtell, 216 Ill. 629, 639, 75 N.E. 334, 1 L.R.A. (N. S.) 176; H. E. Briggs & Co. v. Harper Clay Products Co., 150 Wash. 235, 239, 272 P. 962; Higgins v. California Petroleum & Asphalt Co., 147 Cal. 363, 81 P. 1070; or where the purpose is to evade some statute or accomplish some fraud or illegal purpose; Winestine v. Rose Cloak & Suit Co., 93 Conn. 633, 107 A. 500; United States v. Delaware L. & W. R. Co., 238 U.S. 516, 529, 35 S.Ct. 873, 59 L.Ed. 1438; United States v. Milwaukee Refrigerator Transit Co. (C. C.) 142 F. 247, 256; First National Bank of Chicago v. Trebein Co., 59 Ohio St. 316, 52 N.E. 834; or in some other like situation, 1 Fletcher, Cyclopedia of Corporations, p. 143. Unless something of this nature is established, to refuse to recognize the corporate entity as such is, in the words of Chief Judge Cardozo, to " thwart the public policy of the state instead of defending or upholding it." Berkey v. Third Avenue R. Co., 244 N.Y. 84, 95, 155 N.E. 58, 61, 50 A.L.R. 599. The mere fact that the corporation is organized to take over the property and business of an individual, to whom is issued, and who continues to hold and...