Sullivan County R. R. v. Conn. River Lumber Co.

• Decision Date: 31 March 1904
• Court: Connecticut Supreme Court
• Parties: SULLIVAN COUNTY R. R. v. CONNECTICUT RIVER LUMBER CO. et al.

57 A. 287

76 Conn. 464

SULLIVAN COUNTY R. R.

v. CONNECTICUT RIVER LUMBER CO. et al.

Supreme Court of Errors of Connecticut.

March 31, 1904.

Appeal from Superior Court, Hartford County; Alberto T Roraback, Judge.

Application by the Sullivan County Railroad against the Connecticut River Lumber Company and others to open a judgment dissolving the Connecticut Manufacturing Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Just before argument Mr. Buck, the senior counsel for the plaintiff (appellee) called the attention of the court to language in the brief of the appellants (defendants) which in his opinion was contemptuous, offensive, and disrespectful to the trial judge, and suggested that the brief ought not to be received. Counsel for the appellants disclaimed any intentional disrespect to the trial judge, and insisted that the words objected to were an illustrative way of asserting that certain of his conclusions were absolutely without evidence. After a short consultation, the court announced that the language on pages 129, 130, and 131 of the appellants' brief was impertinent and disrespectful both to the lower court and to the Supreme Court, and ordered these pages to be stricken from the brief.

The following facts, among others, appeared upon the record, or were found by the superior court: The Connecticut River Manufacturing Company was incorporated under the laws of this state in 1891, and soon afterwards bought certain lumber mills of the Connecticut River Lumber Company, another Connecticut corporation, and went into the business of cutting logs on land of the latter company in New Hampshire and Vermont, driving them down the Connecticut river, and turning them into lumber at the mills. This driving and manufacturing business had previously been done by the lumber company, and the two organizations were practically one company, with the same managing officers, and nearly the same directors. In June, 1897, the manufacturing company, by its negligence in driving logs down the river, and allowing an extraordinary quantity of them to be accumulated against the piers of a bridge of the plaintiff, which crossed the river between New Hampshire and Vermont, caused substantial damage to the bridge. In December, 1897, negotiations which bad been in progress for two months, looking to the formation of a new company to take over the business both of the lumber company and the manufacturing company, were concluded, and a contract was made between the two latter by which the manufacturing company sold out all its property to the lumber company, and agreed to wind up its affairs and take measures to procure its dissolution, and the lumber company agreed "to assist in every reasonable way in the winding up and termination of the manufacturing company," and "to pay at maturity all the just debts and liabilities of the manufacturing company, and to indemnify it against and hold it harmless from all claims, demands, debts, dues, and damages of every name, nature, and description, and, further, to purchase from every holder of any shares of stock in the manufacturing company all his stock, at such price as may be agreed upon, not exceeding par; or, if no such price can be agreed upon, then to pay to the manufacturing company, for the benefit of all stockholders whose shares have not been so purchased, a just proportion of all the proceeds of the said property remaining after the payment of the said debts and liabilities, which the manufacturing company will divide pro rata among the holders of such outstanding shares." At tins time the lumber company owned five-eighths of the stock of the manufacturing company, and by December 2, 1809, it had acquired the rest of it, and had also received conveyances of all the property of the manufacturing company. On December 2, 1899, both companies brought an application to the superior court for Hartford county, alleging that the manufacturing company had, in November, 1899, voted to wind up its affairs and dissolve; that it bad for a long time past abandoned its business, and now had no assets; and that more than a third of its capital stock was owned by the lumber company; and asking the court "to appoint a receiver of said Connecticut River Manufacturing Company, and to limit a time for all creditors of said Connecticut River Manufacturing Company to present their claims to said receiver, and to decree that all claims not so presented shall be forever barred, and order said receiver to give notice of such limitation to all known creditors of said Connecticut River Manufacturing Company, and that this court will pass a decree dissolving said corporation, and make such other and further orders in the premises as shall to justice and equity appertain." The prior conveyances of the property of the manufacturing company had been made pursuant to a purpose on the part of each company to prevent it from coming into the hands of a receiver of the manufacturing company. This property was worth over half a million dollars, over and above all debts and liabilities of the manufacturing company. The agreement of December, 1897, and all prior negotiations, were made and conducted in good faith, and with no purpose on the part of either company to prejudice the rights of the plaintiff or of any creditor of the manufacturing company. Up to the date of this agreement, one Van Dyke was president of each company. Immediately prior to its execution, be resigned these offices, and successors were elected, who thereupon executed the contract, respectively, in behalf of each company, and immediately afterwards resigned, Van Dyke being then, on the same day, re-elected to both offices, and accepting and retaining the same until the dissolution of the manufacturing company. He has always continued, since his re-election, to be president of the lumber company. That is solvent, and amply able to pay all claims against the manufacturing company. At the date of the agreement of December, 1897, Van Dyke was fully informed that an injury had been done to the plaintiff's bridge by the drive of logs belonging to the manufacturing company, and that the damage to the plaintiff growing out of that injury was very great. There is no direct evidence that any other officer of the manufacturing company was at that time so informed, but, as a fair and just inference from all the facts in evidence, it was found that other officers of the company were so informed, and that it was contemplated by the officers of said company that a claim might be made against the manufacturing company, for such damage, by the plaintiff. In February, 1898, the plaintiff brought suit in New Hampshire, for such damage, against the lumber company and Van Dyke. It sued them by mistake, having been informed, and believing, that the lumber company owned the logs which struck the bridge, and was then driving them, and being ignorant of the existence of the manufacturing company until it had been dissolved. It first learned that it owned and was driving these logs from testimony given in the New Hampshire suit, by Van Dyke, on September 26, 1900. This action was brought in December, 1900. During the whole time of the pendency of the dissolution proceedings, the existence of the plaintiff's claim against the manufacturing company was known to Van Dyke, who was president of the lumber company and also of the manufacturing company, but he intentionally concealed the existence of said claim from the court in which the dissolution proceedings were pending, and from the receiver; and no notice of the time limit for the presentation of claims against said the Connecticut River Manufacturing Company was ever sent to the applicant by any one, and the applicant never knew of the existence of the proceedings for the dissolution of said corporation, nor that it was dissolved, until several months after the decree of dissolution was passed.

Charles E. Perkins, Orville D. Baker, and Irving W. Drew, for appellants. Jahn R. Buck, John H. Albin, and John H. Buck, for appellee.

BALDWIN, J. (after stating the facts). Any judgment which has been either fraudulently obtained, or so improvidently entered that it is against equity and good conscience to make claim under it, may be set aside at a subsequent term, upon the application of any person interested and aggrieved, and due notice to all parties to the record. The remedy is not confined to parties to the suit. It is open to any one whose legal or equitable rights were directly invaded by the judgment Tyler v. Aspinwall, 73 Conn. 493, 499, 47 Atl. 755, 54 L. R. A. 758. Gen. St. 1902, § 3351, empowers the superior court, under certain conditions, to wind up and dissolve any business corporation at the instance of shareholders owning not less than one-tenth of its capital stock. In 1899 the Connecticut River Lumber Company, then owning more than one-tenth of the capital stock of the Connecticut River Manufacturing Company, a corporation located in Hartford county, united with it in an application to the superior court in that county, under this statute. No others were made parties, and no order of notice was procured. Three days later, on an ex...