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NORTON v. SUPREME FUEL SALES CO

June 9, 1947

NORTON
v.
SUPREME FUEL SALES CO. SAME v. SUPREME FUEL SALES CO., et al.



The opinion of the court was delivered by: MEANEY

Plaintiff, Henry K. Norton, as trustee of the New York, Susquehanna & Western Railroad Company, originally field suit against defendant, Supreme Fuel Sales Co., a corporation, to recover unpaid demurrage charges and interest accrued thereon.

Subsequently, a second suit was instituted by the plaintiff against the same defendant, and in addition joining therein the individual defendants, both individually and as surviving directors and trustees of Supreme Fuel Sales Co., a corporation, and as partners trading as Supreme Fuel Sales Company. The second action seeks recovery of demurrage and interest, based upon the same facts as the first.

 The matter is presently before the court on plaintiff's motion for consolidation of the two actions and for summary judgement, pursuant to Federal Rules of Civil Procedure, rule 56, 23 U.S.C.A.following sec. 723c, and is submitted on the pleadings, affidavits and documentary evidence.

 These actions seek recovery of demurrage charges assessed against the defendants under the applicable freight tariff (No. F. 209, I.C.C. No. 2855 and supplements thereto) for detention at destination of 406 cars of coal during the period from February to June, inclusive, in 1943.

 The defendant corporation, Supreme Fuel Sales Co., was incorporated under the laws of New Jersey on May 9, 1933. In 1936, the said corporation entered into an agreement with the plaintiff railroad for determining the average basis of settling for detention of cars as set forth in N.Y.S. & w. Tariff No. F. 209-N, I.C.C. No. 2855.

 On January 28, 1938, the Charter and powers of the defendant corporation were revoked by executive proclamation, and as contended by the defendant, it has not since that date conducted any business of any kind whatsoever.

 On May 1, 1938, a certificate of partnership of the Supreme Fuel Sales Company was filed, said partnership consisting of Adolph Jurgensen and Edna Jurgensen, who were officers and directors of the corporation and having its place of business at the same address as the former corporation. In bringing these actions the plaintiff has joined the said Adolph Jurgensen and Edna Jurgensen as parties defendant, both individually as surviving directors and trustees of the corporation, and as partners trading as Supreme Fuel Sales Company.

 The plaintiff contends that the liability for the demurrage, if any, is that of the corporation and must be assessed under the terms and conditions of the Average Agreement entered into between the corporation and the plaintiff railroad. This contention is based upon the allegation that, even though the corporate powers were revoked by executive proclamation, nevertheless, the corporation has continued in business without interruption under the name of Supreme Fuel Sales Co., and that if they are correct in this contention, then the defendants are bound by the terms and conditions of the agreement. The defendants deny vigorously that the corporate business has been continued, and insist that the plaintiffs knew, or should have known, that since 1938 they have been dealing with the partnership Supreme Fuel Sales Company, and that the detained cars in question on which demurrage charges were made, were delivered on the order of Supreme Fuel Sales Company, the partnership.

 From the affidavits and exhibits offered by the plaintiff in proof of its contentions, and the affidavits of the defendants, the court is of the opinion that notwithstanding the proclamation of the Governor, the business of the corporate defendant, in its relations with the plaintiff may have been conducted as usual in the corporate name, but cannot so find as a matter of fact. During that period the corporation was not dead ( Reade v. Broadway Theater Co., 99 N.J.EQ. 282, 132 A. 477), but until there is a reinstatement entitling the corporation to continue its business and franchise, the Charter of the corporation is inoperative and void, and the officers and directors have only the powers of conserving and disposing of assets, paying debts and closing out the business. Any further acts which may have been performed by the individual defendants in conducting the business on behalf of the supposedly legal corporation would result in their becoming personally liable as individuals, and this is so even if it were to appear that such liability was incurred in good faith. Studerus Oil Co. v. Bienfang, 122 N.J.L. 238, 4 A.2d 787.

 Whether, in their relations with this plaintiff, the individual defendants continued to hold themselves out as the corporation, taking the benefits incident to such a continued relationship, is a matter that can be determined only on a hearing. On the determination of this question would depend whether or not the average agreement continued in effect and whether the terms and conditions thereof remained in force and controlled in the matters here in issue.

 This finding is arrived at after examination of voluminous records and documents, perusal of which would indicate that factual questions are at issue, as are the legal principles involved. Therefore, the court is precluded from entering summary judgment.

 However, as to the defense of 'bunching' it might at this time be noted for such appropriate action as may be made, that the court feels that this is an invalid defense.

 The defense is grounded on the argument that the car detention from which the demurrage claims grew was caused by the bunching of such cars on delivery by the plaintiff railroad and, therefore, no demurrage charges are assessable. If, on the final hearing, there is a finding that the parties to this suit are bound by the terms of the average agreement, the defense of bunching is unavailing and may not be urged. Pennsylvania R. Co. v. Kittaning Iron & Steel Mfg. Co., 253 U.S. 319, 40 S. Ct. 532, 64 L. Ed. 928. Moreover, the terms of the average agreement as provided in rule 9(E) *fn1" specifically prohibit cancellation or refund of demurrage charges because of bunching under the reasons asserted in this case by the consignee.

 Conversely, if on final hearing, there is a determination that the terms and conditions of the average agreement are not controlling in the matters here in issue, the defense of bunching may be made, provided, however, that 'claim (was) presented in writing to (the) railroads agent within 30 days * * * after the date on which bill for demurrage (was) rendered,' as required by Rule 8, ...


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