Parsons Mfg. Co. v. Hamilton Ice Mfg. Co.

• Decision Date: 14 June 1909
• Citation: 73 A. 254,78 N.J.L. 309
• Parties: PARSONS MFG. CO. v. HAMILTON ICE MFG. CO.
• Court: New Jersey Supreme Court

73 A. 254

78 N.J.L. 309

PARSONS MFG. CO.

v. HAMILTON ICE MFG. CO.

Supreme Court of New Jersey.

June 14, 1909.

Action by the Parsons Manufacturing Company against the Hamilton Ice Manufacturing Company. Verdict for plaintiff. Rule to show cause denied.

Argued February term, 1909, before REED, TRENCHARD, and MINTURN, JJ.

Wilson, Carr & Stackhouse, for plaintiff.

French & Richards, for defendant.

MINTURN, J. The Hamilton Ice Company, of Camden, N. J., and the plaintiff entered into a contract for the conditional sale to the ice company of an automatic blower known as the "Parsons System." The device was intended to regulate the draft upon the equipment of the ice company, and its cost was $1,300, payable in installments. The contract was signed, on behalf of the ice company, by N. B. Armstrong, manager, and the note in suit for a balance of $1,030 was given on January 15, 1906, and was signed "Hamilton Ice Manufacturing Company, N. Bruce Armstrong, Treas." The Hamilton Ice Manufacturing Company, the defendant, was duly incorporated under the laws of the state on February 7, 1906, and the incorporated company leased and took over the plant of the former company from one Robert G. McDougall, by an instrument in writing dated the 1st day of March, 1906. The officers of the corporation were Armstrong, McDougall, and one Rose, who controlled all of the stock. The plaintiff seeks in this suit to hold the defendant corporation liable for the note thus given, upon the ground that the payment thereof was assumed by defendant as one of the liabilities of the old company when defendant took over the property and assets of the former company. With this basis of liability in view the plaintiff gave testimony going to show that the ice plant, with the automatic device, just as it stood, was taken over by defendant, that the officers of the new corporation were the same men who had been directing and operating the old plant, and that in such respect no substantial change took place, except in defendant's status as a legal entity, between the old and the new concerns until the summer of 1908, when the defendant sold the machinery of the plant, and presumably possessed itself of the proceeds. Plaintiff contends that both McDougall and Armstrong, as the managers of the old concern, knew of this outstanding obligation, and when they organized defendant corporation, and took the assets of the old company, it was within their contemplation that the new company should assume the indebtedness of the other, and with this in mind they caused the note in suit to be made, not by the old concern, but, omitting the prefix "The," caused the note to be signed by the defendant corporation before it was organized. Upon subsequent occasions, and while managing defendant company, they met the representative of plaintiff, and pleaded for an extension of time to pay the note, promised to deliver the note of the new company in substitution for the note in suit, and actually paid $30 interest upon the old obligation, but never delivered the new note.

It appears in the case that the organization meeting was the only meeting ever held of defendant company, and that Armstrong and McDougall controlling the stock managed and dictated the affairs of defendant ab libitum, and without the formalities of corporation routine. Except for the responsibility that the law...