This is a motion by the absentee, Anne Vicendese, to vacate three default judgments entered against J-Fad, Inc., to intervene in these actions and to remove and consolidate these matters into the Chancery Division action of Anne Vicendese v. J-Fad, Inc., et al. (Docket #C-4135-76).
On August 15 and 16, 1977 the three following actions were instituted in the Law Division, Union County, against J-Fad, Inc.: Frank Vicendese and Anthony Vicendese v. J-Fad, Inc., a New Jersey corporation (Docket L 50223-76), B & S Capital Co., a partnership of the State of New Jersey v. J-Fad, Inc., a New Jersey corporation (Docket L 50207-76), and Berkeley Hardware & Mill Supplies, Inc., a New Jersey corporation, v. J-Fad, Inc., a New Jersey corporation (Docket L 50206-76). The same attorney represented plaintiffs in all of the actions. Frank and Anthony Vicendese are shareholders, officers and directors of defendant J-Fad, Inc. James Vicendese, deceased, was a brother of Frank and Anthony Vicendese and the husband of the
absentee, Anne Vicendese. Anne Vicendese is a minority shareholder of J-Fad, Inc. J-Fad, Inc.'s primary asset was unimproved land with a value somewhat in excess of $100,000.
The three actions are summarized as follows. The Berkeley Hardware & Mill Supplies, Inc. matter is an action on a lease for $100 a month rent for storage of J-Fad, Inc.'s books and records. Anthony Vicendese signed the lease as landlord, and Frank Vicendese signed the lease for J-Fad, Inc. The B & S Capital Co. , action is for $15,000 due on three promissory notes. Frank and Anthony Vicendese, the controlling partners of plaintiff, signed the notes as representatives of defendant. The third case is by Frank and Anthony Vicendese for notes due, and for unpaid salary, which they, in their capacity as directors of J-Fad, Inc., retroactively awarded themselves for their services as officers for the past five years.
On July 20, 1977 plaintiff's attorney sent a letter to Anne Vicendese stating that proceedings against J-Fad, Inc. will be instituted and that she will not be notified. On September 14, 1977 copies of the Complaint were sent to the absentee's attorney. J-Fad, Inc., which was controlled by plaintiffs, did not answer the complaint. In October 1977 defaults were entered. On November 14, 1977 the absentee filed this notice of motion, which was heard on December 2, 1977. Execution on the judgments was staved pending the determination of this motion.
Anne Vicendese has brought a Chancery Division action against J-Fad, Inc. and Frank and Anthony Vicendese for misuse of their powers as directors of J-Fad, Inc., including the dissipation of the corporation assets, and for a declaration of her ownership interest in J-Fad, Inc.
Notwithstanding a stay of execution of the default judgments, J-Fad, Inc. sold the real property and paid part of the proceeds in voluntary satisfaction of the three default judgments. Plaintiffs contend that this action has rendered the motion to vacate and intervene moot. The court does
not accept this argument in light of the factual circumstances presented. As is obvious from the record, the three plaintiffs in the Law Division matters are all controlled or owned by Frank and Anthony Vicendese. Similarly, J-Fad, Inc. is controlled by them. Anne Vicendese, the absentee, is a minority shareholder of J-Fad, Inc. By allowing these default judgments, the corporation's assets and the value of the absentee's stock are now greatly reduced.
This court will treat the three different Law Division cases together because there is an underlying purpose of dissipating the funds of J-Fad, Inc., in order to eliminate the interest of Anne Vicendese. In the Berkeley action , on its face it is improvident to pay $100 a month to rent office space to house the meager books and records of unimproved real estate with a value of about $130,000. It is equally implausible that two controlling shareholders would receive $3,000 salaries, retroactive for five years, for their role as officers, as Frank and Anthony Vicendese claim in their action. The third matter, B & S Capital Co. , is equally incredulous. Proceeds from the promissory notes were used to pay the salary and rent debts owed to Frank and Anthony Vicendese (the subjects of the two other actions).
Pursuant to R. 4:50-1(c) and (f), the judgments should be vacated. However this motion to vacate cannot be granted until the propriety of the intervention is resolved, since the ...