Ravitch v. Stollman Poultry Farms, Inc.

• Decision Date: 07 June 1973
• Parties: Harry RAVITCH v. STOLLMAN POULTRY FARMS, INC., et al.
• Court: Connecticut Supreme Court

Page 711

328 A.2d 711

165 Conn. 135

Harry RAVITCH v. STOLLMAN POULTRY FARMS, INC., et al.

Supreme Court of Connecticut.

June 7, 1973.

Jerome M. Griner, Hartford, for appellant (plaintiff).

William R. Moller, Hartford, for appellees (defendants).

Before HOUSE, C.J., and SHAPIRO, LOISELLE, MacDONALD and BOGDANSKI, JJ.

SHAPIRO, Associate Justice.

The plaintiff, Harry Ravitch, commenced this action nearly ten years ago. In his complaint Ravitch alleged that on March 5, 1963, he and the defendant Hyman Stollman entered into a written contract pursuant to which Ravitch had quit-claimed his interest in substantial parcels of realty located in Durham, Middletown and East Hampton. The plaintiff, who claimed that he was previously the owner of these parcels, alleged that the defendant Stollman had acquired title to said properties either in his own name or in the name of the Stollman Poultry Farms, Inc., a corporation of which the defendant Stollman was principal owner and shareholder. The defendant Stollman's breach of the contract was alleged to be a failure to account to the plaintiff regarding the properties in accordance with the provisions of the agreement. The complaint was subsequently amended to include a second count alleging fraud and unjust enrichment, a claim for the imposition of a constructive trust, and an ad damnum claim raising the original claim of damages from $200,000 to $1,000,000. ¹

By stipulation of the parties, the case was referred to a state referee for trial in 1969, and on March 20, 1972, the referee, acting as the court, rendered judgment for the defendants. The plaintiff's primary issue on appeal challenges the interpretation of certain contract provisions relating to the time at which performance was due under the terms of the contract. The court found that the plaintiff failed to fulfill a condition precedent to the defendant Stollman's performance and that this failure of the plaintiff to perform excused the defendant Stollman from his obligations under the contract. The court also concluded that the defendant Stollman's conduct was not fraudulent. ²

The material terms of the contract are set out in the footnote. ³ Some background information will serve to explain the nature of the transaction. The plaintiff had for many years been engaged in the business of raising chickens and of egg production. During the period from 1958 to 1963, he purchased from the defendant the Stollman Poultry Farms, Inc., over $200,000 worth of "started" pullets. The defendant Stollman, a seasoned poultryman, was primarily engaged in raising hatched chicks to the age of ten or twelve weeks, at which time they reached their egg-laying cycle. At maturity, the "started" pullets would be sold to an egg producer such as the plaintiff.

From 1958 through 1961, the plaintiff was in arrears in payments due the defendant's corporation totaling nearly $150,000. The defendant Stollman was frequently seeking from the plaintiff personal security for the sums overdue as well as payment. After beginning a new but ill-fated egg production operation at Aspinnok Mill, a converted textile mill, the plaintiff purchased even more pullets from the defendant the Stollman Poultry Farms, Inc. The defendant Stollman delivered over 100,000 pullets between June and November, 1961, to the mill. The plaintiff, during these five months, thwarted the defendant Stollman's attempts to obtain security for these sales. Finally, on November 28, 1961, the plaintiff signed a voucher as president of Middlesex Farms, Inc., indicating a debt for purchases from the defendant Stollman for $287,000. Some payments were made on this bill, the last of these leaving the total indebtedness of the plaintiff to the defendant Stollman at $234,551.50 in September, 1962. At the end of 1962, the plaintiff had reneged on a promise to give notes and mortgage deeds to the defendant Stollman as security for his debts. At that time the plaintiff's personal financial situation and that of his corporation, Middlesex Poultry Farms, Inc., were desperate; together, their indebtedness, including the sum owed to the defendant Stollman, was $792,282.48. The plaintiff's assets consisted primarily of the parcels of real estate in Durham, Middletown and East Hampton. One parcel, located in East Hampton, contained from forty-seven to sixty acres; the other, located mostly in Durham but partly in Middletown, contained some 135 acres and had several buildings, including the plaintiff's residence. Both parcels of property were so heavily mortgaged that there was no equity in them at the time they were transferred to the defendant Stollman in March, 1963.

On January 14, 1963, the Delaware Milling Company, the plaintiff's second largest creditor, brought suit on its claim for feed and attached the two parcels for $100,000. The defendant the Stollman Poultry Farms, Inc., followed suit on Janaury 17, 1963, by attaching the same parcels for $250,000. The defendant Stollman's claim, like that of the Delaware Milling Company, was that the plaintiff had undertaken personal liability for produce sold to Middlesex Farms, Inc. Within a month, three foreclosure actions were commenced on the Durham-Middletown parcel which related to mortgages in an amount totaling $72,500, and one foreclosure action was brought against the East Hampton parcel, which related to a mortgage for $30,000, Middlesex Farms, Inc., had filed a voluntary petition in bankruptcy on January 30, 1963, and the question arose whether the plaintiff would follow the fate of his corporation. In view of the possibility that the plaintiff could escape involuntary bankruptcy by claiming the status of a farmer, ⁴ it was clear that voluntary bankruptcy by the plaintiff or a settlement with creditors were the only courses open. At this juncture, it was obvious that the only hope for the creditors to retrieve any of their losses was to look to the real estate. The defendant Stollman was the largest creditor and the Delaware Milling Company was next with a claim listed by the plaintiff at $80,000 but claimed by the Delaware Milling Company to be substantially more. In a list later furnished to the defendant Stollman, the plaintiff conceded personal obligations in an amount of $436,089.94.

It was in this setting that the parties and their attorneys negotiated the terms of the contract which is now in dispute. The remaining account contains the court's findings with such corrections to which the plaintiff is entitled. In March, 1963, the defendant Stollman's attorneys, Myron Bernstein and Thomas Cambria, met with Attorney Louis Evans, who was counsel for the plaintiff, in Evans' office. Attorney Bernstein had outlined a proposal which involved placing title to the plaintiff's real property in the defendant Stollman, arranging for a settlement with creditors, liquidating the property, satisfying the defendant Stollman's claim and dividing the remainder. At a later meeting on March 5, 1963, the parties and their counsel met again at Attorney Evans' office. Evans, as the plaintiff's attorney, drew up the contract while the parties waited; the quitclaim deeds referred to in the agreement were executed and delivered. Essentially, this agreement provided for a two-step operation. First, the defendant Stollman was to have thirty days in which to attempt a common-law settlement with the creditors. If this failed, the plaintiff was to file "forthwith" a petition for an arrangement under chapter 11 of the Bankruptcy Act. ⁵ Plainly, the chapter 11 petition would have to be filed before May 15, 1963, in order to defeat the Delaware Milling Company's attachment on the plaintiff's property filed four months earlier. The plaintiff does not dispute the fact that the defendant Stollman and his attorneys conferred with the attorney representing the plaintiff's second largest creditor, the Delaware Milling Company, in an attempt to work out a 15 percent settlement. The plaintiff, meanwhile, had left his home and was living in New York, where it was difficult to reach him. He made no effort to cooperate in the adjustment of any of the claims or to keep in touch with the progress of the execution of the contract. The attempted settlement with creditors was a failure and the plaintiff's attorney, Evans, was so advised. The plaintiff, nevertheless, adamantly refused to file the chapter 11 petition. At a meeting on May 13, 1963, the plaintiff made his position clear and the parties separated with the understanding that "everything was off" under the contract. Efforts to pursuade the plaintiff to take any action were fruitless. Until this action was brought in August, 1963, there were no more communications between the parties.

The plaintiff attacks the court's ultimate conclusion that his failure to file a petition for an arrangement in federal court excused the defendant Stollman from further performance. His claim is that the defendant Stollman had a preceding obligation (1) to have the foreclosure actions withdrawn and (2) to deposit $5,000 in escrow for the plaintiff's benefit. In addition to these claims, the only serious corrections which the plaintiff seeks in the finding and which he pursues in his brief pertain to the court's interpretation of the written contract. The plaintiff claims that several of the court's findings which declare the meaning of certain provisions of the contract are without evidence. As matters of judicial interpretation, these findings, which are more properly conclusions, find ample support in the unattacked findings of fact, narrated above, which relate the history, purpose and intentions behind the agreement. ⁶ Further assignments of error relate to a rule of construction, and to a ruling on evidence.

Paragraph 3(a) of the contract of March 5, 1963, provides that if the proposed settlement with creditors "has not been effected within said thirty (30) day period then said Harry Ravitch shall...