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Van Dam Egg Co. v. Allendale Farms Inc.

Decided: March 14, 1985.

VAN DAM EGG CO., PLAINTIFF-APPELLANT,
v.
ALLENDALE FARMS, INC., A CORPORATION, AND JOHN PUGLISI, DEFENDANTS-RESPONDENTS



On appeal from the Superior Court, Law Division, Monmouth County.

Pressler, Brody and Cohen. The opinion of the court was delivered by Cohen, J.A.D.

Cohen

The Law Division dismissed the second and third counts of plaintiff's complaint for failure to state a cause of action upon which relief could be granted. R. 4:5-2. Plaintiff appealed, and we now reverse.

Plaintiff's first count was brought solely against defendant Allendale Farms, Inc. It alleged that in July and August 1981 plaintiff sold Allendale eggs for which Allendale failed to pay

the agreed price of $100,372. Allendale did not defend, and judgment was entered against it.

The second and third counts were against defendant John Puglisi. The second count alleged that Puglisi was the president and sole stockholder of Allendale; that he ordered eggs from plaintiff; that he arranged for the sale to be made on credit, "representing that Allendale would pay for the eggs . . .," and that, at the time he placed the order, "Puglisi knew that Allendale was hopelessly insolvent and could not pay its creditors." The second count went on to allege that Puglisi's representations that Allendale would pay for the eggs were knowingly false and were made with the intention that plaintiff rely on them; that plaintiff did rely and that shortly after the last delivery of eggs Allendale ceased operations. The third count repeated all of the allegations of the second, charged that Puglisi's conduct was malicious and demanded punitive damages.

Defendant Puglisi's motion to dismiss the second and third counts for failure to state a cause of action was made for the first time on the day of trial after the jury was selected. Even though the complaint's allegations of fraud were general and conclusory, defendant did not, during the two years between filing of the complaint and the day of trial, seek relief from plaintiff's failure to plead the particulars of the fraud. R. 4:5-8(a); R. 4:6-4. Defendant received a plainly unresponsive answer to an interrogatory seeking the facts underlying the allegations of fraud, but it did not seek relief on that score either. R. 4:23-1.

On the motion to dismiss under R. 4:5-2, the complaint must be read indulgently, Spring Motors Distributors, Inc. v. Ford Motor Co., 191 N.J. Super. 22, 29-30 (App.Div.1983), to charge that, in order to persuade plaintiff to sell eggs to Allendale, Puglisi made the specific affirmative representation to plaintiff that Allendale had the capacity to pay for them and intended to

do so, knowing that Allendale was hopelessly insolvent and would not be able to pay.

The Law Division granted the motion to dismiss on the strength of our decision in Allesandra v. Gross, 187 N.J. Super. 96 (App.Div.1982). In that case, plaintiffs were a group of clothing manufacturers who delivered merchandise to a corporate buyer on open account. After the corporation filed a Chapter XI bankruptcy petition, plaintiffs started an action against Gross, the president and principal stockholder. The first three counts of the complaint charged that, when Gross ordered the merchandise, he fraudulently failed to disclose to plaintiffs the true financial condition of the corporation in order to induce plaintiffs to sell it on credit.

The trial court granted Gross's motion to dismiss the first three counts against him. The gist of its opinion was quoted in ...


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