O'Neill v. Vreeland, A-56

• Decision Date: 08 January 1951
• Docket Number: No. A-56,A-56
• Citation: 6 N.J. 158,77 A.2d 899
• Parties: O'NEILL v. VREELAND et al.
• Court: New Jersey Supreme Court

Page 158

6 N.J. 158

77 A.2d 899

O'NEILL v. VREELAND et al.

No. A-56.

Supreme Court of New Jersey.

Argued Dec. 4, 1950.

Decided Jan. 8, 1951.

Hymen D. Goldberg, Paterson, argued the cause for the appellant (Peter Cohn, Paterson, attorney).

Ralph W. Chandless, Hackensack, argued the cause for the respondent Vreeland (Chandless, Weller, Kramer & Frank, Hackensack, attorneys).

The opinion of the court was delivered by

VANDERBILT, C.J.

This is an appeal from a judgment of the Law Division of the Superior Court granting the defendant Vreeland's motion for a dismissal made after the plaintiff's opening to the jury. The appeal, taken to the Appellate Division of the Superior Court, has been certified here on our own motion.

The plaintiff's opening to the jury, which incorporated the pleadings by reference, included among other allegations the following: For many years the plaintiff had been engaged in the business of setting up, repairing and servicing intercommunication systems for various municipalities, police departments, fire departments, and other agencies. On April 6, 1946, he agreed to sell this business to William Britt and Dominick Bruno for the sum of $7,000, which represented its reasonable value. This sum was to be paid $2,000 in cash and the balance in monthly installments of $100 each. To conserve the good will of the business Britt and Bruno organized the J. Stanley O'Neill Fire and Police Radio Communications Co., and purchased the business in the name of that corporation. The defendant Arthur Vreeland, who had worked for the plaintiff for many years, then threatened to go into business in competition with the newly formed corporation and to take away its customers, with whom he was acquainted by reason of his former employment. In the face of this threat, Britt and Bruno agreed to sell to Vreeland all the capital stock of the new corporation for $2,500, and on April 22, 1946, an agreement to that effect was executed and assignment made of the stock certificates.

After acquiring all of the stock of the corporation, Vreeland treated it as an instrumentality for his own personal benefit and as his Alter ego for all purposes. He transacted corporate business in his individual name. He utilized the corporate bank account for personal and household expenses and otherwise for his own personal advantage. The corporation never held any meetings either of directors or stockholders. Indeed, it never had any stockholders, directors or officers aside from the defendant Vreeland. No corporate books were kept or reports and statements made as required by Title 14 of the Revised Statutes, N.J.S.A. dealing with general business corporations. No corporate tax returns were filed and no corporate taxes of any kind were paid. The defendant, Vreeland, however, made payments of $100 per month to the plaintiff on account of the balance of $5,000 due on the purchase price of the business until March, 1948, when he arbitrarily discontinued further payments. The balance then due to the plaintiff amounted to $2,800.

The plaintiff instituted this suit in the former Court of Chancery against the corporation and Vreeland, praying, among other things, that Vreeland be compelled to specifically perform the contract of April 6, 1946; that he be required to account to the plaintiff for all the assets of the corporation converted by him; that a receiver be appointed; that he be enjoined from further carrying on the business; that a lien be impressed upon the assets of the corporation converted by him; that these assets be sold to satisfy the plaintiff's claim; and that a decree be entered compelling him to pay to the plaintiff the sum of $2,800 together with interest and costs. The corporation failed to answer the complaint and a default judgment was ultimately taken against it. Vreeland, however, moved to dismiss the complaint on the ground that it failed to state a cause of action against him. This motion was not disposed of prior to September 15, 1948, when by the advent of the new court system the case was transferred to the Chancery Division of the Superior Court.

On October 21, 1948, the trial judge on his own motion entered an order transferring the cause to the Law Division of the Superior Court on the ground that the action was one cognizable in law but not in equity. The cause was accordingly transferred to the Law Division, was pretried there on January 3, 1950, and set down for trial. At the commencement of the trial, after examining the pleadings and the pretrial order and other records in the case, the trial judge stated that he was of the opinion that the action was one in equity and should be tried in the Chancery Division and he instructed the plaintiff to move before the Chancery Division to set aside the transfer of the case to the Law Division. In accordance with the court's instructions, the plaintiff made the motion, which was opposed by the defendant, but it was denied on the ground that the case, having been once transferred from the Chancery Division to the Law Division, could not under the provisions of Rule 3:40--3 be retransferred. The case was accordingly again set down for trial in the Law Division and again came on for trial on June 19, 1950.

After the jury had been selected and the plaintiff had completed his opening, the defendant moved for a dismissal on the ground that the action, if cognizable at law, was an action to collect for the debt, default or miscarriage of another and in the absence of a writing was barred by the Statute of Frauds. There followed extended argument on the motion and colloquy between counsel and the court, during which counsel for the plaintiff expressed a willingness to proceed to trial either with or without a jury and counsel for the defendant Vreeland conceded that the plaintiff might have a cause of action in equity, but refused to proceed to trial without a jury and pressed his motion for dismissal. Following this extended argument and colloquy the trial court, although recognizing that the plaintiff had an action in equity, granted the defendant's motion for dismissal solely on the ground that the plaintiff had failed to state a cause of action cognizable at law. From this judgment the plaintiff took this appeal.

In determining the propriety of the judgment appealed from it is necessary to consider the nature of the Superior Court and the relationship between its Law and Chancery Divisions. By the Constitution of 1947 the judicial power in this state is vested in the Supreme Court, the Superior Court, the County Courts and such inferior courts of limited jurisdiction as the Legislature has seen fit to establish, Art. VI, Sec. 1. Of these, the Superior Court has original general jurisdiction throughout the state in all causes, Art. VI, Sec. III, par. 2, and each of its judges exercises all the powers of the court subject only to the rules of the Supreme Court, Art. VI, Sec. III, par. 1. The Superior Court is divided into an Appellate Division, a Law Division and a Chancery Division, but the composition of each division and the causes it may hear are to be determined by the rules of the Supreme Court, Art. VI, Sec. III, par. 3. Subject to such rules, the Law Division and the Chancery Division each exercise the powers and functions of the other division when the ends of justice so require, and each division is required to grant both legal and equitable relief in any cause so as to completely determine all matters in controversy, Art, VI, Sec. III, par. 4. In State ex rel. Wm. Eckelmann, Inc., v. Jones, 4 N.J. 374, 382--383, 72 A.2d 872, 876, (Sup.Ct.1950) we stated: 'One of the great virtues of our new Constitution is that it minimizes opportunities for jurisdictional disputes. The Superior Court is but a single court * * *. We conceive it to be quite impossible for a litigant to go on to trial in one Division of the Superior Court and then assert, after judgment, a right to be heard, except on appeal, in another. To hold otherwise would be to revive one of the worst defects of the old order and to do violence to both the letter and the spirit of the new Constitution.' We reiterate here, the Superior Court is but a single court. The jurisdiction of the Law and Chancery Divisions is the same, although their jurisdiction is not identical with that of the Appellate Division, see Bergen County Sewer Authority v. Borough of Little Ferry, 5 N.J. 548, 76 A.2d 680 (Sup.Ct.1950). Since by the Constitution appeals may be taken to the Appellate Division from the Law and Chancery Divisions, from the County Courts and from other causes as provided by law, Art. VI, Sec. V, par. 2, it necessarily follows that the Appellate Division does not have general trial jurisdiction and the Law and Chancery Divisions do not have appellate jurisdiction.

The jurisdiction of the Law and Chancery Divisions being the same and the Constitution providing that the causes each may hear shall be as provided by rules of the Supreme Court, it is necessary to refer to the Rules in order to determine in which division a particular action should be brought. Rule 3:40--2 provides as follows: 'All actions which were on September 14, 1948 maintainable in the Court of Chancery or before the Chancellor, or in the Prerogative Court or before the Ordinary, shall be brought in the Chancery Division, and all other actions in the Superior Court shall be brought in the Law Division; but this rule shall not apply to...