Zaist v. Olson

Decision Date07 March 1967
Citation154 Conn. 563,227 A.2d 552
CourtConnecticut Supreme Court
PartiesJohn ZAIST et al. v. Martin OLSON et al.

The appellants filed a motion for reargument which was denied.

Howard F. Zoarski, New Haven, for appellants (defendants).

Richard F. Corkey, New London, with whom was Robert B. Hempstead, New London, for appellees (plaintiffs).

Before KING, C.J., and ALCORN, HOUSE, COTTER and RYAN, JJ.

ALCORN, Associate Justice.

The plaintiffs brought this action against Martin Olson, The East Haven Homes, Inc., and Martin Olson, Inc. The allegations of the complaint, briefly stated, are that the plaintiffs rendered services, supplied materials and furnished equipment to The East Haven Homes, Inc., for work on properties owned or leased by Martin Olson and Martin Olson, Inc., or by corporations subsequently merged into the latter; that the services, material and equipment were furnished at the instance and request of Martin Olson, who was an officer and director and the person in general charge of the affairs of The East Haven Homes Inc.; that this corporation acted as the agent or instrumentality of Martin Olson and of Martin Olson, Inc., of which Martin Olson was also an officer and director and the person in general charge; that the services rendered and the material and equipment furnished inured to the benefit of Martin Olson and Martin Olson, Inc.; and that the plaintiffs were entitled to recover the amount due with interest.

The defendants' answer was a general denial, and, on stipulation of the parties, the court referred the case to a referee to hear the facts and to report. The referee filed his report, recommending a judgment in favor of the plaintiffs against Martin Olson and Martin Olson, Inc. The defendants made a massive attack on the report by a motion to correct, in response to which the referee made a limited number of corrections, whereupon the defendants filed with the court, and were heard on, exceptions to the report as corrected and a request for further corrections by the court. The court overruled the exceptions, refused to make the corrections sought, and rendered judgment on the referee's report. This appeal is from that judgment.

The judgment is that the plaintiffs recover of Martin Olson and Martin Olson, Inc., a total of $31,596.95, which includes interest to the date of judgment. It fails to dispose of the issues between the plaintiffs and The East Haven Homes, Inc. All three defendants have appealed, however. The record in the case is, therefore, incomplete because of the failure of the judgment file to record any action by the court concerning The East Haven Homes, Inc. Harris v. First National Bank & Trust Co., 139 Conn. 749, 751, 97 A.2d 260. There is, in fact, no judgment from which that defendant may appeal. While this defect has obviously escaped the attention of the parties, the case stands before us as an appeal by the defendants Martin Olson and Martin Olson, Inc.

The memorandum of decision makes clear that recovery was allowed to the plaintiffs against only Martin Olson and Martin Olson, Inc. It was apparently through an oversight that no disposition as to the other defendant was ordered. Pepin v. Ryan, 133 Conn. 12, 17, 47 A.2d 846. The judgment file was signed by the clerk; Practice Book § 270; and correctly followed the mandate of the memorandum of decision. Thus, it is properly subject to correction only if we first set it aside. Lerner Shops of Connecticut, Inc. v. Waterbury, 151 Conn. 79, 94, 193 A.2d 472. Regardless of the decision on the other issues involved, the judgment must be set aside and the case remanded so that the judgment may be corrected to dispose of the issues between the plaintiffs and The East Haven Homes, Inc. Machiz v. Homer Harmon, Inc., 146 Conn. 523, 526, 152 A.2d 629; see Wexler Construction Co. v. Housing Authority, 149 Conn. 602, 607, n., 183 A.2d 262.

We turn now to the appeal by the defendants Martin Olson and Martin Olson, Inc., which, in actuality, is the only appeal briefed and argued before us. These defendants once again attack, in wholesale fashion, the referee's finding of the facts upon which the judgment was rendered. A study of the evidence submitted in the appendices to the briefs satisfies us that no corrections in the referee's amended report are merited and that the court did not err in overruling the exceptions and objections to it or in refusing to make any corrections in it. Except for a ruling on evidence, which will be later discussed, the only issue, and the basic one, is the claim that the court erred in rendering judgment on the basis of the conclusions that the services, materials and equipment furnished by the plaintiffs inured to the benefit on Martin Olson and Martin Olson, Inc., and that those defendants acted through the agency or instrumentality of The East Haven Homes, Inc.

The essential facts, as found by the referee, may be summarized as follows: In 1943, Martin Olson, subsequently referred to as Olson, caused The East Haven Homes, Inc., which we shall call East Haven, to be incorporated. Two hundred shares of stock were issued, of which Olson received 198; the other two shares were issued, one each, to his lawyer and his bookkeeper. Olson was president, treasurer and a director. He continued as president until November, 1955, and as treasurer until November, 1962, and, throughout all the dealings hereinafter related, he controlled East Haven and was empowered to sign all checks for it.

During 1952 and 1953, Olson personally acquired land in Groton for the purpose of erecting a shopping center. In April, 1954, he requested the plaintiffs to submit, and the plaintiffs did submit, prices for clearing and grading this land. The terms were mutually agreeable, and the plaintiffs began the work, setting the account on their records under the heading 'Martin Olson'. Thereafter, and before any payment was made, Olson told the plaintiffs to send the bills to East Haven, and the plaintiffs did so, keeping their records variously in the names of Olson and East Haven.

In 1954, Olson caused Martin Olson, Inc., hereinafter called Olson, Inc., to be incorporated; in it he owned, personally or as trustee for three of his minor children, thirty-two of the forty shares of issued stock. Olson was president and treasurer and in full control of the corporation from its inception until October, 1959. He and two of his children were the directors, and a son was vice-president. Thereafter, Olson quitclaimed a substantial part of his Groton land to Olson, Inc., which also acquired additional adjoining land from private owners. The plaintiffs continued to work on the land, known to them only as the Groton shopping center, unaware of any change in title. Olson, or in his absence his son, directed the work. In 1955, Olson, Inc., reconveyed part of the land to Olson.

While the plaintiffs were at work on the Groton land, Olson and Olson, Inc., acquired land for a shopping center in New London. In 1955, Olson caused The New London Shopping Center, Inc., to be incorporated. Olson was president and treasurer of that corporation and held all the stock personally or as trustee for his three minor children. Thereafter, Olson, this time describing himself as either 'of' or 'acting for' East Haven, made three contracts with the plaintiffs for work to be done and materials to be furnished in developing the New London shopping center land.

Later, Olson, Inc., voted to sell a large part of its New London land to The New London Shopping Center, Inc., which then had little if any capital funds, for $177,000, and Olson, as president, signed the deed. Meantime, East Haven voted to contract with Olson, Inc., to erect a shopping center in Groton for not over $450,000 and to contract with The New London Shopping Center, Inc., to erect a shopping center in New London for not over $1,700,000 but no such contracts were ever executed. While this was going on, the plaintiffs were continually working on the properties both in Groton and New London; and East Haven, with fixed assets consisting of office furniture, a few small tools and cars and a truck of small value, had neither the funds nor the equipment to construct either of the shopping centers. Nevertheless, East Haven, acting by Olson or his son, the vice-president of Olson, Inc., engaged various contractors for both projects. Funds for the construction of both projects were provided by a bank loan of $1,700,000 secured by a mortgage given by The New London Shopping Center, Inc., the proceeds from which were paid over to East Haven. Neither corporation was able, with these funds, to complete the New London project, and Olson besought the lending bank for additional funds.

To meet the lending bank's demand, Olson caused Viking, Inc., to be formed, to which The New London Shopping Center, Inc., conveyed a part of its land, which Viking, Inc., on the same day mortgaged to the lending bank for a loan of $650,000. Olson controlled, and was president, treasurer and a majority stockholder of, Viking, Inc., and was authorized by it to borrow such sums as he deemed advisable. The proceeds of the $650,000 loan were paid over to East Haven and used to pay bills on the New London project, and Viking, Inc., acting by Olson as its president, reconveyed to The New London Shopping Center, Inc., the land which was mortgaged to secure, and was covered by, the $650,000 mortgage.

During the month after Viking, Inc., was formed, Olson, Inc., acquired a tract of land in Waterford on which the plaintiffs also worked under a contract with East Haven. Thereafter, The New London Shopping Center, Inc., was merged into Olson, Inc., the two corporations continuing under the name of Olson, Inc., which remained under the full control of Olson. A few months later Olson, Inc., quitclaimed a substantial portion of its Groton land to Olson after Olson had notified the plaintiffs that, owing to the...

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    ...its discretion in allowing the maps into evidence for the purpose of aiding the trier in understanding the evidence. Zaist v. Olson, 154 Conn. 563, 579, 227 A.2d 552; Dawson v. Davis, 125 Conn. 330, 332, 5 A.2d 703. Under the circumstances, "(t)he accuracy of the (maps) was a proper subject......
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    ...veil piercing claims, by which a court may disregard a corporate fiction to hold individual stockholders liable, in Zaist v. Olson , 154 Conn. 563, 227 A.2d 552 (1967). In Zaist , this court held that courts may pierce the corporate veil under one of two theories: either the instrumentality......
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