Peckham v. Ronrico Corporation

• Decision Date: 31 December 1948
• Docket Number: No. 4319.,4319.
• Citation: 171 F.2d 653
• Parties: PECKHAM v. RONRICO CORPORATION et al.
• Court: U.S. Court of Appeals — First Circuit

171 F.2d 653 (1948)

PECKHAM v. RONRICO CORPORATION et al.

No. 4319.

United States Court of Appeals First Circuit.

December 31, 1948.

Jay E. Darlington, of Hammond, Ind. (J. Henri Brown, Walter L. Newsom, Jr. and Enrique Cordova Diaz, all of San Juan, Puerto Rico, on the brief), for appellant.

Herbert S. McConnell, of San Juan, Puerto Rico (Jose G. Gonzalez, of San Juan, Puerto Rico, and S. Pierre Robineau, of Miami, Fla., with him on the brief), for appellees.

Before MAGRUDER, Chief Judge, WOODBURY, Circuit Judge, and WYZANSKI, District Judge.

WYZANSKI, District Judge.

This is an appeal from a summary judgment for defendants entered by the District Court of the United States for Puerto Rico upon the pleadings and affidavits without taking oral testimony, 7 F.R.D. 324. The issue presented is whether that action was warranted by Federal Rules of Civil Procedure, rule 56, 28 U.S.C.A., which (both before and since the recent amendments) provides in part as follows:

Rule 56(b) "A party against whom a claim * * * is asserted * * * may, * * * move with or without supporting affidavits for a summary judgment in his favor as to all or any part thereof."

(c) "* * * The adverse party prior to the day of hearing may serve opposing affidavits. The judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that * * * there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

(f) "Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just."

The complaint sets forth a cause of action in which plaintiff, holding assignments of judgments against the late Sol Meyer, seeks to satisfy them out of shares of Ronrico Corporation which are held by the Ferd S. Meyer Puerto Rican Trust and which are alleged to be assets reachable by the creditors of Sol Meyer. The following four paragraphs summarize the complaint.

Sol Meyer was president and one of the principal stockholders of an Indianapolis bank which closed insolvent on May 12, 1931. In the Indiana state courts Garvin, a citizen of Indiana and receiver of the bank, secured a judgment finally reduced in amount to $824,933.33 against Sol Meyer on account of misappropriations from the bank. The judgment remains unsatisfied. In the United States District Court for the Southern District of Florida the receiver sued Sol Meyer on that judgment. He recovered the same amount; but that judgment also remains unsatisfied. On March 24, 1944 Garvin assigned both judgments to plaintiff, a citizen of Indiana.

While the Indiana action was pending and while he was insolvent, Sol Meyer, with the intent of defrauding his creditors, "promoted the organization of defendant Florida Cane Products Corporation, a Florida corporation" and "furnished the major part of the capital of said corporation, in consideration of which it issued its capital stock * * * part in the name of his son, who is the defendant Ferd (Ferdinand) S. Meyer; part in the name of said son's wife, who is the defendant Rosalyn Meyer; part in the name of Ferd's son, who is the defendant James Meyer; part in the names of himself and his son as purported trustees; part in the name of one of his agents and employees, who is the defendant Hoke T. Maroon, individually and as purported trustee; part in the names of his attorneys, who are defendants Aaron M. Reder and S. Pierre Robineau; part in the names of his friends and associates, who are defendants David L. Hulsman, W. George Kennedy and Jacob B. Gosch; and part in the name of another of his agents and employees, named William C. Chadwick * * *. Said recipients * * * had notice of the fraudulent intent of said Sol Meyer * * * at the time they received said stock, and they also then * * * had notice that he was insolvent and that said action by Garvin was pending against him." Part of Chadwick's stock passed by inheritance to the defendant Amanda Miller; and the remainder of the stock in Chadwick's name was transferred to defendants Ferd S. Meyer, Aaron M. Reder and W. George Kennedy, who each took with notice.

Florida Cane Products Corporation was the equitable owner of one half of the stock of the defendant Ronrico Corporation, a Puerto Rico corporation. The defendant stockholders of Florida Cane Products Corporation caused it to transfer that stock to a trust created under the laws of Puerto Rico, the Ferd S. Meyer Puerto Rican Trust, "of which defendant Ferd S. Meyer is the trustee, and of which they are beneficial owners, owning the same pro rata interests in said trust assets as they owned as stockholders of Florida Cane Products Corporation."

Plaintiff prays that the Court assume "jurisdiction over said Ferd S. Meyer Puerto Rican Trust and the assets thereof above described that is, the shares in Ronrico * * * to subject the several separate interests held by each of said defendants in said trust and in the assets of said trust to the payment of plaintiff's said judgments."

Answers to the complaint were filed on June 29, 1946 by Ferd S. Meyer, Rosalyn Meyer, James M. Meyer, Hoke T. Maroon, Aaron M. Reder, S. Pierre Robineau, David L. Hulsman, W. George Kennedy, Jacob B. Gosch, George W. Miller, Executor of Amanda Miller, and Florida Cane Products Corporation. Only parts of the answer of Ferd S. Meyer need be summarized for each of the other defendants in addition to setting forth matters relating solely to himself — such as his own lack of notice — adopted the answer of Ferd S. Meyer and the answers of all the other defendants.

Ferd S. Meyer admitted that Garvin had secured judgments against Sol Meyer, that Garvin had assigned these judgments to plaintiff and that these judgments were unsatisfied. He denied that "Sol Meyer made any of the transfers * * * alleged by the plaintiff, with or without intent to * * * defraud the plaintiff or his assignor." He denied "that Sol Meyer promoted the organization of Florida Cane Products Corporation" and denied "that said Sol Meyer furnished the major part or any part of the capital of said corporation." Further, defendant Ferd S. Meyer alleged that the purchase of Florida Cane Products Corporation stock "and the connection of Sol Meyer therewith has heretofore been fully adjudicated."

Attached to the answer as exhibits were copies of the pleadings, testimony and the judgment in a suit brought May 17, 1940 in the Florida state court by Garvin, as receiver against Ferd S. Meyer, as trustee for Edward Meyer, Sol Meyer, Jr., and James M. Meyer and Ferd S. Meyer, individually. In Garvin's complaint it was alleged that Garvin was the holder of two judgments against Sol Meyer (these being the judgments which have since been assigned to plaintiff in the case at bar); that Sol Meyer had transferred certain Florida real estate to trustees; "that at various other times * * * said Sol Meyer conveyed to the defendant Ferd S. Meyer, as Trustee, and to the defendant Ferd S. Meyer, individually, personal property, the exact description and value of which is to the plaintiff unknown * * * and * * * that said conveyances * * * were fraudulently made with the intention to defraud" Garvin. Those allegations of fraudulent transactions were denied. At a hearing before a Special Master in Chancery, Garvin's counsel put questions to Ferd S. Meyer concerning the acquisition of stock in Florida Cane Products Corporation. Ferd S. Meyer's counsel objected that the questions were immaterial. The Master reserved, and perhaps never made, his ruling. R. 149 Thereupon, Ferd S. Meyer testified that his father Sol Meyer had no connection with the purchase of the stock of Florida Cane Products Corporation; that his father never owned any stock in Florida Cane Products Corporation and that his father never paid for anything the son has. R. 149-154 The Florida court on September 25, 1943 entered a final decree dismissing Garvin's complaint with prejudice and reciting that the "evidence wholly fails to show that Sol Meyer ever conveyed to the Defendants, or either of them, any property, real, personal or mixed, as alleged in said Bill of Complaint."

In the case at bar after the filing of pleadings, including the attachments just referred to, the defendants moved on January 7, 1948 for summary judgment. Accompanying the motion were affidavits of Ferd S. Meyer, Rosalyn A. Meyer, Hoke T. Maroon, J. B. Gosch, A. M. Reder, S. P. Robineau, David L. Hulsman, and George W. Kennedy. These affidavits showed that the Florida Cane Products Corporation was organized with an authorized capitalization of 3,500 shares of Class A stock and 2,100 shares of Class B stock; that the defendants subscribed for and paid for out of their own funds such Class A stock as was issued to them; that Ferd S. Meyer's Class A stock was paid for out of the proceeds of his insurance policy; that Sol Meyer personally furnished none of the consideration for any of the Class A stock; and that in consideration of receiving the rights in the Gosch process, U.S. Patent No. 1,963,165, developed by Gosch, the corporation issued its Class B shares to the nominee of J. B. Gosch and Ferd S. Meyer, namely H. T. Maroon, as Trustee to hold one-half for the son of J. B. Gosch and the other half for Ferd S. Meyer and his son. R. 211, but see R. 200 lines 12-14 In explaining this transaction in Class B stock, Ferd S. Meyer, Gosch and other defendants swore that in the spring of 1934 Gosch approached Ferd S. Meyer to interest him in the as yet unpatented Gosch process; that they entered into negotiations covering that process; that Meyer's counsel Robineau...