Sturtevant v. Town of Winthrop

• Decision Date: 28 May 1999
• Citation: 1999 ME 84,732 A.2d 264
• Parties: Mark E. STURTEVANT, d/b/a M.E.S. Environmental Services v. TOWN OF WINTHROP.
• Court: Maine Supreme Court

732 A.2d 264

1999 ME 84

Mark E. STURTEVANT, d/b/a M.E.S. Environmental Services v. TOWN OF WINTHROP.

Supreme Judicial Court of Maine.

Argued April 5, 1999.

Decided May 28, 1999.

Paul F. Macri (orally), Julian L. Sweet, Berman & Simmons, P.A., Lewiston, for plaintiff.

Joseph J. Hahn (orally), Bernstein, Shur, Sawyer & Nelson, P.A., Portland, for defendant.

Before WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, and CALKINS, JJ.

CALKINS, J.

[¶ 1] Mark Sturtevant appeals from a judgment entered in favor of the Town of Winthrop after a jury trial in the Superior Court (Kennebec County, Marden, J.). On appeal, Sturtevant contends that the trial court erred in setting aside the jury verdict in his favor on the ground that he lacked standing to bring the breach of contract claim against the Town. We agree with the trial court that Sturtevant lacked standing, and we affirm the judgment.

[¶ 2] Mark Sturtevant first entered into a written contract to provide snowplowing services to the Town of Winthrop in 1986. Between 1972 and 1986 Sturtevant was in the business of earth moving and trucking as well as snow removal and septic system service. He did business as M.E. Sturtevant, Contractor, and he had a corporation, M.E. Sturtevant Contractors, Inc., which did business with the Town in the late 1980s hauling solid waste.¹

[¶ 3] In March 1991, Sturtevant formed a new corporation, M.E.S. Environmental Services, Inc. Sturtevant was the president and sole shareholder of M.E.S. Environmental Services, Inc. In May 1991, M.E.S. Environmental Services, Inc., and the Town entered into a five-year contract for snowplowing. Sturtevant signed the contract as president of the corporation. The contract required the corporation to meet certain standards for its snowplowing equipment and gave the Town the right to cancel the contract for unsatisfactory performance.

[¶ 4] In July 1992, Sturtevant dissolved M.E.S. Environmental Services, Inc., by filing a statement of intent to dissolve and articles of dissolution with the Secretary of State. There was no evidence that Sturtevant delivered a copy of either document to the Town. There is no evidence as to when or how he notified the Town of the corporate dissolution. After the dissolution, Sturtevant continued to snowplow, and the Town continued to pay him for snowplowing.² In October 1994, the Town canceled the snowplowing contract, citing equipment and performance failures.

[¶ 5] Shortly thereafter, Sturtevant filed a complaint against the Town claiming breach of contract and demanding lost profits for the remainder of the contract term. In its answer the Town raised the affirmative defense that Sturtevant lacked standing in that he was an improper party because the contract was between the corporation and the Town. The case was tried to a jury. The jury found that the Town breached the contract and assessed damages in favor of Sturtevant of $156,000.

[¶ 6] At the close of Sturtevant's case and at the close of the evidence, the Town moved for judgment as a matter of law on the ground that Sturtevant lacked standing. The Town renewed the motion after the jury verdict. By agreement and with the court's consent, the parties submitted the factual issues regarding standing to the court. After hearing argument and reviewing additional evidence submitted by Sturtevant in the form of an affidavit, the trial court entered judgment for the Town, holding that Sturtevant lacked standing to sue on the corporation's contract.

I. CORPORATE DISSOLUTION PROCESS

[¶ 7] The statutory scheme governing the voluntary dissolution of Maine corporations requires the corporation to file with the Secretary of State a statement of intent to dissolve. 13-A M.R.S.A. §§ 1102(2), 1105 (1981). At that point the corporation ceases to carry on its business except as needed to wind up the business. Id. §§ 1105, 1106(1). The corporation is required to immediately notify all known creditors of the intent to dissolve. Id. § 1106(2). The corporation is required to "fulfill or discharge its contracts" and take all other action necessary "to wind up and to liquidate its business and affairs, as expeditiously as practicable." Id. § 1106(3). Once the debts of the corporation have been paid and the assets have been distributed to the shareholders, the corporation is required to execute and file articles of dissolution. Id. § 1110. The corporation then has a two-year time period starting from the date of filing the articles of dissolution in which an action must be commenced for any remedy against or available to the corporation, its officers, directors or shareholders. Id. § 1122(1).³ This latter provision is referred to as the survival statute. In this case the statement of intent to dissolve and the articles of dissolution were both filed with the Secretary of State on July 17, 1992, making that date the date of dissolution.

II. ASSIGNMENT OF CORPORATE CONTRACT

[¶ 8] Sturtevant argues that the corporation assigned its assets including the snowplowing contract to him, and because of that assignment he has standing as an individual to claim breach of contract by the Town, even though the snowplowing contract was between the Town and M.E.S. Environmental Services, Inc. He submitted to the trial court an affidavit signed by him dated September 15, 1997, which states that all corporate assets and liabilities were distributed to him personally. He further states in the affidavit that as the sole shareholder, president, liquidating trustee and sole distributee of the assets, he authorizes and ratifies his actions in seeking damages for the Town's breach of contract.

[¶ 9] The trial court found that Sturtevant's evidence of assignment was insufficient and that "as a factual matter the purported assignment never occurred." We review the factual finding by the clearly erroneous standard: "[T]he trial judge's findings stand unless they clearly cannot be correct because there is no competent evidence to support them." Harmon v. Emerson, 425 A.2d 978, 982 (Me.1981). "[T]he function of an appellate court is not to review a cold transcript and draw its own factual inferences; rather, appellate review of factual findings is limited to investigation of the record before it to determine whether competent evidence exists to support the lower tribunal's factual conclusions." Lewisohn v. State, 433 A.2d 351, 354 (Me.1981).

[¶ 10] Sturtevant, as the plaintiff, had the burden of proof on the issue of assignment. See Britton v. Co-op Banking Group, 4 F.3d 742, 746 (9th Cir.1993); Alpine Assocs., Inc. v. KP & R, Inc., 802 P.2d 1119, 1121 (Colo.Ct.App.1991). He had to demonstrate to the trial court, to whom he and the Town entrusted the task of fact finding, by a preponderance of the evidence, that M.E.S. Environmental Services, Inc., assigned the snowplow contract to himself as an individual.

[¶ 11] For an assignment to be enforceable there must be an act or manifestation by the assignor indicating the intent to transfer the right to the assignee. See Doughty v. Sullivan, 661 A.2d 1112, 1124 (Me.1995); see also RESTATEMENT (SECOND) OF CONTRACTS § 324 (1981). In this case there was no evidence of a manifestation of the corporate intent to transfer the contract rights at the time the corporation was in existence, and the trial court was not compelled to find that an assignment had occurred.⁴ No corporate records were presented to show that an assignment had taken place while the corporation was in existence.

[¶ 12] The dissenting opinion concludes that the trial court was compelled to find the existence of an assignment because of the dissolution of the corporation and because of Sturtevant's conduct in continuing to plow for the Town after the dissolution. Simply because a corporation is dissolved and the shareholder represents, in the boilerplate language of the articles of dissolution form, that the corporate assets have been distributed to the shareholder does not necessarily mean that a contract to which the corporation was a party has been assigned to the shareholder. As the trial court noted, Maine's dissolution statutes treat contracts differently from assets. The corporation is required to "fulfill or discharge its contracts," while assets are distributed to the shareholders once provision has been made for all obligations. 13-A M.R.S.A. § 1106(3), (4). Because "contracts" are not necessarily the same as "assets," the form language in the articles of dissolution, that all assets have been distributed, does not mean that all contracts have been assigned. Furthermore, the trial court could have concluded that the representation by Sturtevant in the articles of dissolution was for the mere purpose of completing the form or that it was not credible.⁵ At no time did Sturtevant testify that, in his capacity as president and sole shareholder of the corporation, he had assigned the snow removal contract to himself, nor did he testify that, in his individual capacity, he had accepted an assignment of the snow removal contract from the corporation. The court could have found that the notion of assignment first occurred to Sturtevant after the litigation began and his status as a party became an issue, which was long after the corporation ceased to exist.

[¶ 13] The fact that Sturtevant continued to plow for the Town for two years after the corporation was dissolved did not compel a finding of an assignment. That fact says nothing about the intent of the corporation to assign the contract. The court could have believed that Sturtevant simply continued to plow for the Town after dissolution in the same manner that he had plowed for the Town before incorporation. Sturtevant, either through one of his corporations or individually, had been plowing for the Town for a number of years. The court could have considered that Sturtevant did not seem to be concerned whether he was acting in a corporate capacity or as an individual.⁶

[¶ 14]...