Mueller v. Seaboard Commercial Corp.

• Decision Date: 12 June 1950
• Docket Number: No. A--101,A--101
• Citation: 5 N.J. 28,73 A.2d 905
• Parties: MUELLER v. SEABOARD COMMERCIAL CORPORATION.
• Court: New Jersey Supreme Court

Page 28

5 N.J. 28

73 A.2d 905

MUELLER v. SEABOARD COMMERCIAL CORPORATION.

No. A--101.

Supreme Court of New Jersey.

Argued March 6, and May 15, 1950.

Decided June 12, 1950.

Edward R. McGlynn, Newark, argued the cause for the appellants (McGlynn, Weintraub & Stein, Newark, attorneys).

Robert W. Brady, Newark, argued the cause for the respondent (Brady & Daly, Newark, attorneys).

The opinion of the court was delivered by

BURLING, J.

This is an appeal to the Appellate Division of the Superior Court from an order of the Essex County Court, Law Division, denying the defendant's motion (1) to vacate an order made on November 7, 1949, authorizing the issuance of a writ of attachment for $25,000, and (2) to quash the writ issued pursuant thereto. We have certified the appeal on our own motion.

It is observed, In limine, that the order complained of it not a final judgment and since there has been nothing brought to our attention indicating that it is such an interlocutory judgment from which an appeal will lie, see Rules 4:2--1 and 4:2--2, the appeal is inappropriate. Under our former practice the only manner in which a review of a refusal to quash a writ of attachment could be had was by a writ of Certiorari. Jaudel v. Schoelzke, 95 N.J.L. 171, 112 A. 328 (E. & A.1920). Prerogative writs have been superseded, 1947 Constitution, Art. VI, Sec. V, Par. 4, N.J.S.A. Rule 3:81--1, but the relief heretofore available thereby is now available by an action in the Law Division of the Superior Court. Rule 3:81--2. The proper remedy of the defendant in the instant case, accordingly, is prescribed by the latter rule. However, since the case has been certified by us of our own motion, Rule 1:5--1(a), we shall dispose of it on the merits.

The plaintiff filed five affidavits in support of the order for a writ of attachment. No affidavits were filed by the defendant. The defendant in its motion to set the order aside and again on this appeal asserts that the affidavits are insufficient under the provisions of R.S. 2:42--88, N.J.S.A. in that they fail to establish that the plaintiff has a cause of action.

The statute provides in part as follows:

'A writ of attachment may issue out of the Superior or County Courts upon the application of any resident or nonresident plaintiff against the property, real and personal, of any person, corporation or organization against whom or which a summons might issue, upon proof, by affidavit entitled in the cause then proposed or then pending to the satisfaction of the court in which an action is about to be commenced, or to a judge thereof establishing: * * *

'b. That plaintiff has a cause of action, the nature and particulars of which he shall specify, and that defendant absconds from his creditors or is a nonresident of this State, and that summons cannot be served on him; but an attachment shall not issue hereunder against the rolling stock of a common carrier of another State or against the goods of a nonresident in transit in the custody of a common carrier of this or another State; or * * *.'

Where a motion to dissolve or quash an attachment is based upon the original papers on which the attachment was granted, the averments contained in such papers are to be deemed true, and all legitimate deductions and inferences from what appears in such papers must be made and construed in favor of plaintiff, and if such papers show a Prima facie case for the attachment this is sufficient. From the plaintiff's collective affidavits it appears: The defendant is a Delaware corporation with its principal place of business at 1819 Broadway in New York City. It is not authorized to and does not do business in New Jersey and has no officers or agents resident in this State upon whom a summons may be served. It was engaged in the business of corporate financing until September, 1948, when it was publicly announced that as a result of its own financial troubles it would find it necessary to liquidate the accounts of its customers. An expert liquidator, Frederick W. Raeder, was thereupon placed in complete charge of the defendant's business activities. One of the defendant's accounts receivable at this time was a debt of Technical Devices Corporation, a New Jersey corporation engaged in manufacturing with its principal place of business in Roseland, New Jersey. The defendant is the owner of all the outstanding stock of Technical. In 1949 the defendant decided to liquidate Technical and appointed Leslie E. Roberts, the president of Technical, as its agent for that purpose. All moneys received by Technical were to be paid over to the defendant. Roberts reported to Raeder and followed his instructions on all corporate matters.

The plaintiff is the owner of certain goods and chattels worth $25,000. These chattels were lawfully in the possession of Technical and being used by it under an option to purchase. In April, 1949, Roberts informed the plaintiff that Technical did not intend to exercise its option and that it had no further use for these chattels. The plaintiff thereupon sought to recover possession of these chattels, but without success. In a visit to Technical's place of business in the latter part of April, the plaintiff was informed by Eli Saltz, the person in charge of Technical's plant in Roberts' absence, that Roberts, acting on orders of Raeder, had instructed him not to turn this property over to anyone. Having been refused possession of his property, the plaintiff thereupon filed a complaint against Technical and Roberts for damages resulting from the conversion of these chattels. In his answer to this complaint, Roberts denied that he actively controls and manages the business of Technical. Both Technical and Roberts acted under the directions of Raeder in refusing to deliver up the chattels in question to him and in so doing they were acting as agents for the defendant and the defendant has actively participated in the conversion.

The foregoing facts which were set forth in the plaintiff's affidavits clearly establish Prima facie the proposition that Technical and Roberts in refusing to deliver up the property were acting as agents for and under instructions from the defendant. There is sufficient in these facts from which it can reasonably be inferred that Technical and Roberts were agents of the defendant and acting under its direction and authority in the converting of the plaintiff's property. If this be so there can be no doubt that the defendant is liable as a principal for the torts of its agents, Technical and Roberts, committed within the scope of their agency. As was stated by the Court of Errors and Appeals in Reliable Wood-working Co. v. Lindeman, 105 N.J.L. 121, 122, 143 A. 333 (E. & A.1928) , 'The rule of law is that every person is liable in trover who personally or by agent commits an act of conversion, or who participates by instigating, aiding, or assisting another.' See also the Restatement, Agency (1933) §§ 212 and 244 and the Restatement, Torts (1939) § 876. A corporation is liable for Torts committed by its agents within the course of employment and the fact that the agent is also a corporation is immaterial. Fletcher, Cyclopedia Corporations (Perm.Ed.) Vol. 10, par. 4877, p. 338; 19 C.J.S. Corporations, § 126o. Therefore, responsibility for the action of Technical, through its agents, also fastens upon the defendant.

The defendant's argument proceeds on the hypothesis that conversion requires a refusal to deliver on demand; that there is no proof that the defendant exercised any dominion over the property in question; that the alleged instructions by Raeder to Roberts and Technical to refuse delivery of the property to the plaintiff do not constitute a conversion because mere words, without accompanying acts, will not amount to a conversion; and that mere stock ownership by one corporation in another does not make the former liable for the latter's torts. But if the statements in the affidavits filed by the plaintiff are true the defendant is more than a mere stockholder in Technical; it is using its complete ownership of Technical for the purpose of directly controlling the latter's every activity; and Raeder acting for the defendant did exercise dominion over the plaintiff's property by refusing to permit delivery thereof when delivery could have been permitted by him.

We are well aware of the numerous cases which have decided that mere stock ownership by one corporation in another corporation is insufficient to render the former liable for the torts of the latter, Ross v. Pennsylvania R.R. Co., 106 N.J.L. 536, 148 A. 741 (E. & A.1930); Fletcher, Cyclopedia Corporations (Perm.Ed.) Vol. 10, par. 4878, but where the affairs of the latter corporation are so organized and conducted as to make it a mere instrumentality of the former the corporate entity will be disregarded where, as was recently said by this court in Irving Investment Corp. v. Gordon, 3 N.J. 217 (1949), at page 223, 69 A.2d 725, at page 728, '* * * the corporate form is used as a shield behind which injustice is sought to be done by those who have the control of it * * *'. See also Fletcher, supra, Vol. 1, par. 43. The reasonable inference to be drawn from the affidavits is that the defendant through Raeder completely dominated the action of Roberts and Technical and that Raeder's instructions to refuse delivery of the property to the plaintiff were accompanied by actual refusals of delivery.

The allegations of fact contained in the plaintiff's affidavits are considered sufficient to establish Prima facie a cause of action.

The briefs and oral arguments presented by the parties on March 6, 1950 were limited to the question of whether the affidavits set forth a cause of action against the defendant based upon a conversion. After the oral argument the court of its own initiative, in view of Rules 3:72--1 and 3:43--3, pondered the evidential competency of some of the statements contained...