*1 Jr., AL., JUDSON, PLAINTIFFS-APPEL ET H. THOMAS COMPANY, LANTS, TRUST BANK AND v. PEOPLES DEFENDANT, ETC., COMMERCIAL AND BANKERS EVANS, DEFENDANTS- AND JOHN C. CORPORATION RESPONDENTS. September 23, May Argued 1957. and June 1957 Decided *4 Mr. A. Weisman the cause for Joseph plaintiffs- argued Freedman, <& Mr. app'ellants attorneys; Weisman (Messrs. Weisman, A. Joseph counsel).
Mr. Donald B. the cause for defendants- argued Kipp Bilder, Freeman, Bilder \& respondents (Messrs. attorneys for Bankers Commercial Messrs. Corporation; Pitney, Ward, Bilder, Jc counsel; Hardin of Mr. J. Mr. Walter B. Donald and Mr. James C. on the Kipp Pitney, brief). The opinion of the court was delivered by C. J. Plaintiffs were induced they Weintraub, charged fraud to sell by Bros., their shares of stock in Tuttle Inc. Westfield, a New and Jersey corporation, sought recover the difference received and the price between actual value of the shares.
Plaintiffs accepted defendants, settlement from Bank and Trust Peoples of Westfield and the Company Smith, estate of Charles M. and consent judgments dismissal were entered toas them. The defend remaining Evans, John O. ants, a New Sturdy Company, Jersey corporation owned and (wholly Evans), Bankers Com mercial thereafter Corporation, prevailed on motion for summary reversed, This court Judson v. judgment. Peoples Bank and Trust J. Company Westfield, 17 N. 67 (1954), and trial was entered plenary judgment against these remaining defendants.
Plaintiffs that the appeal, asserting damages inadequate and that trial court erred its application Joint Law, Tortfeasors Contribution N. J. 2AS. :53A-1 et seq. Bankers Commercial cross-appeals, questioning finding fraud amount additionally Neither damages. Evans nor We Sturdy certified the matter appealed. on our motion prior consideration the Appellate Division.
I. The Tuttle sale company engaged lumber, materials, mason hardware coal and did millwork. business was started in 1897 and operated some years as a Tuttle, William E. partnership by his brother, Jr. Arthur D. Tuttle. The Tuttle was formed corporation some- time in the 1920’s. William died early in 1923 and Arthur *6 devolved upon Their stock holdings ultimately in 1933. nieces, who Judsons, parties and the their nephews plaintiff. involved, here held plaintiffs time of the events
At the 3,578 shares out- 3,370 shares common stock out of of as a book- Evans, who came with company standing. all common, 1934, virtually held shares of keeper Arthur D. Tuttle. Also he received from by of which gift preferred shares of cumulative were outstanding 883% 7% $100, of share- par by value held a number with a stock whom is a to this suit. holders, party none of died in 1933 the January company’s position When Arthur It impact depres- insecure. was experiencing originally Its real estate was encumbered by mortgage sion. Bank $340,000 held Peoples in the sum jointly Trust The Westfield Trust the Westfield Company. and the Eederal difficulties, Deposit and encountered Company took over its one-half Insurance interest. Corporation Smith, Arthur’s death the Bank asked Peoples Upon the Tuttle director, employed its be vice-president was, week per $100 and he receiving salary company, and thereafter based years compensation a number of clear of service rendered. perfectly the amount upon all corporate called the turn with respect that Smith because acceded to his requests, partly matters. Judsons in him and bank’s confidence because partly of great them creditor no general gave position mortgagee alternative. Judson, Thomas H. Jr. resigned Smith’s
Upon suggestion, and in 1943 the 1943, in favor of Evans in as president common, 1,833 shares of which represented assigned Judsons C., Bank and D. as additional control, Peoples to the E. I. his relations with the friendly continued security. Smith the basis of relative selected Judsons, ability but upon affairs. Evans role leading corporate Evans for as a the business and the Judsons drag regarded active them out of partici- succeeded eventually easing pation.
Thus, when the crucial events in late incepted Smith and Evans were in effective control. Evans took account his situation and he had no future personal concluded with the company. had corporate picture brightened somewhat, war work largely because of temporary consisting of the manufacture of he felt airplane but packages, beneficiaries of his could labors creditors or only the Judsons. He confided in Smith that he planned Smith him quit. and seek to urged stay acquire A company. plan emerged.
The first have step appears to been to remove Thomas Judson from the active scene. In November Evans demanded that he from the offices resign vice-president and director, ordered, Bank saying Peoples so *7 Evans, Judson complied. who was without means, financial friend, contacted a one who mustered a Eager, syndicate $100,000 $20,000 of Evans, which would be loaned to who would receive of the common stock. Funds thus 20% available, being Smith went to work the to obtain Judson stock, and Evans, with Smith’s tackled the holders guidance, the preferred.
In or January February Smith met with Thomas Judson and stated that the corporation was on the brink that the insolvency; real estate was worth but a fraction value; of the book that the receivables had no value beyond the for debts which were they that most pledged; lumber on hand was suitable for only airplane packaging, and since the war end, work was at an the inventory was worthless; that his bank had determined to close in unless additional were working capital into brought company; he, Smith, had interested a friend wealthy in New buy York to the stock for a son and to inject required capital; unless the working Judsons seized this oppor- would be tunity they out. He asked wiped Judson to transmit this information to his family. Ultimately Judsons sell at agreed wit, Smith figure suggested, $15 a share, and executed options on March Eager 1945.
Evans reviewed his again situation and concluded the deal was not Rager for under it he would hold promising, a interest Smith, He so informed minority who 20%. Evans then agreed. Commercial, went to Bankers which for had financed years receivables and Tuttle inventory He laid Company. his problem before a vice- Langhans, who president, that Bankers proposed Commercial lend the funds under required a plan by which it would purchase common and and resell preferred to the Tuttle Company via a shell, corporate Sturdy Company. Langhans out that pointed had to Rager options eliminated, be and Evans $5,000 blandly paid of the Tuttle Rager Com- funds him pany’s to have aside. Smith step obtained new options to himself running representation that renewals were for the benefit of the same and then prospect, assigned options Bankers Commercial to carry out the plan just described.
That the representations made to the Judsons were fraudulent cannot flagrantly With the disputed. conniv- Smith, ance of Evans transmitted a false picture imminent doom, and while the structure would representing fall unless fresh obtained, were capital he schemed in working fact to eliminate their with the funds of the holdings itself. The company Judsons with their parted shares at $15, option price $35,550. for a total of The holders $48,850 of preferred accepted for shares value having par $84,003.18. unpaid dividends of One thorn remained. A holder 25of shares of common was impervious *8 sundry pressures, since his shares would swell in value if all but his and Evans’ 123 shares were retired, the adamant shareholder came $1,500. out with had Rager $5,000; obtained sum; Smith received like a and Bankers Commercial a “fee” in the same amount in addition to interest on its advance. All of these were payments made out of funds. a corporate came penny who, .Hot from Evans when the closed, transactions held the corporate equity.
Bankers Commercial the challenges sufficiency of the fraud as proof of to Evans and Smith. It first disputes the existence of a confidential between relationship Smith and valued trusted Smith That Judson
and Thomas Judson. relationship a is Whether confidential his clear. opinions here no them is of existed between in its technical sense misrepresenta- fraud of affirmative moment. The consisted the the between relationship hence the nature of tions, and the issue of a bearing upon men is circumstance merely made. the representations reliance upon justifiable that to the contention Nor is there substance included They matters of opinion. were solely representations unless fresh that to close planned a statement bank in fact whereas the plan were capital injected, working And with capital. a depletion working contemplated the value as to Smith opinions expressed respect too will support and the prospects, they of the assets business arms- to be an fraud. did not purport Smith charge rather to be a purchase, pretended but party length their interests. Judsons, friend bent upon advancing not be may ordinarily expressions opinions Although rule where the opinion given relied is otherwise upon, of the succeeded in the confidence one who has securing special holds himself out as victim, having knowledge or 3 Restate matter, to be disinterested. or purports Prosser, 543; ment, Law Torts secs. 542, Torts (1938), 1955), 90, p. Plimpton 561 et v. seq.; sec. (2d ed. cf. &(E. 110 N. J. L. 427 A. 1933). Friedberg, further Bankers Commercial contends the misrepresentations could not because rely upon Judsons with to the affairs respect corporate had full information they 1944, of December statement year-end as of have whatever data was desired. As obtained readily could balance sheet not too corporate will presently appear, of valuation and yield problem because helpful And with to access to informa respect a distress liquidation. noted that at least months in tion, it during may were under Evans made way, 1945 when negotiations cash respect disbursements, footings false penciled balance; substantial understatement of the cash in a resulting inference is Evans inescapable pursued and the
27 course of a stockholders. anticipation possible inquiry by rate, At one who fraud any perpetrates not may urge his victim should have been or more astute. circumspect Kero, Inc., Peter W. v. 6 Terminal Construction N. J. Corp., Dairies, 361, 369 County Schoharie (1951); Cooperative Inc., Eisenstein, v. 22 N. J. 503 Div. 1952). Super. (App. The true is whether there in fact reliance. question was If found, here, reliance is it is false which representations an intended fraud accomplish judicial will suffice to support relief.
Lastly, it since Thomas and William urged only reliance, testified Judson to must confined recovery them. direct evidence is furnished Ordinarily, but reliance may Jur., be found fair inference. Am. Fraud and Deceit, 134; sec. p. Flanigan v. N. J. McFeely, cf. 414, 419 Here (1956). Smith Thomas transmit urged to the representations he did. Hone of the family, Judsons was to sell. The transaction was seeking prompted the bleak which intended Smith to reach them. story these circumstances, In the inference is warranted that hit misrepresentations mark.
This to the us more difficult whether brings question Bankers Commercial in the scheme. participated says that from where it stood it only knew that Evans had a bargain. Such alone would not sustain a good knowledge claim of this conspiratorial participation; court so indicated the first Judson v. Bank Trust appeal. Peoples J.,N. supra at Company Westfield, 84). (17 page There is no evidence that Bankers Commercial knew conversations specific between Smith and Judson. The record and we think permits, requires, findings Bankers Commercial knew that Evans president (1) and director and indeed the stockholder active in man only agement company; the beneficial (2) acquire sought interest in the funds; use its company by and (3) sought so do without plaintiffs. first knowledge is not With debatable. to the second finding respect finding, Conlon, a of Bankers vice-president Commercial, testified *10 Evans repre- that he understood that pretrial discovery
on $50,000 his had of own sented that Evans Langhans to documentary funds cost. But part to cover Conlon, a memorandum from Langhans proof, including that knew only showed that Bankers Commercial plainly used; indeed, Bankers Commercial funds would be corporate and to advance agreed itself that course suggested part inventory supply on chattel mortgage against for needed the stock as well as working cash for purchase the trans- otherwise would be capital depleted by which the third Bankers actions. And with respect finding, were intended options Rager Commercial knew in the name for Evans and that the renewal part options for benefit of Evans. of Smith were the individual solely find it that this defendant knew Evans We inescapable he was the was from fact secreting plaintiffs and assets to eliminate corporate purchaser using interests. their stock whether those
Hence the facts question charged with of a fraud knowledge upon plain Bankers Commercial tiffs, the nature of the and this consideration of requires owed to shareholders. decisions duty Existing Evans view in our take a narrow and much criticized (see State Fletcher, 1167, 776 et Corporations 3 sec. (1947), p. seq.) to the of disclosure an duty with officer director respect shares from a Crowell v. purchases who stockholder. Jackson, 1891); &(E. 53 N. J. L. 656 A. v. Connolly Shannon, (Ch. 105 N. J. 155 affirmed 107 Eq. 1929), Baldi, 1930); J. & A. Gardner v. 24 (E. N. 180 N. J. Eq. (Ch. that, Div. But there is doubt Super. 1952). 228 no assets, in their with the and its corporation at least dealings and directors for the benefit officers quasi-trustees Shannon, v. Hill Connolly supra; shareholders. Dredging 501, Jur., J. Risley, 18 N. 13 Am. Corp. v. (1955); 948. p. sec. Corporations, Here assets were used corporate personal of the and director president without the advantage knowledge shareholders and at their This complaining expense. funds; Bankers Commercial knew furnished the yet fact, really it authored A is liable plan. person if he another “knows that the other’s conduct consti- tutes a or breach substantial assistance duty gives * * to the other so to himself conduct encouragement Restatement, Torts sec. Eor its (1939), 876(b). partici Bankers pation, Commercial must Judson v. respond. J., and Trust Peoples Bank Co. Westfield, supra N. (17 at page 83). II. The trial court found common $29 stock was worth *11 per share. Plaintiff’s the low, assail as too figure Bankers Commercial it attacks as excessive.
The 27, value of as book common of 1945 was July about $150 share. The per involved a of proofs reconstruction the 27, balance sheet as July 1945, of the date of consum- mation of the transaction, assets, valuations of underlying and some testimony adduced defendants from a by man who buys and sells The in corporations. the spread testimony was dramatic. quite addition,
In there was evidence upon the of death Tuttle, Arthur D. his were shares for reported federal estate tax at share purposes per $18.34 as 8, of 1933 January at (later adjusted per $26.60 and that share), the upon Judson, death of Thomas H. Sr. his shares were reported a New York tax estate return $25 at per share as 8, of Eebruary may 1938. It be said that except for flurry above, of war referred activity the corporate experience generally continued to be The 1944 poor. year- end statement showed an accumulated deficit of operating $363,184.73, and even this was figure an challenged by accountant for who was defendants of the view that should have off a company written substantial amount bad debts for 1936 to period 1945. Hence the estate tax valuations were somewhat more than the meaningful time hiatus would ordinarily hand, On other sriggest. a 15 books recorded sale of shares of common for
30 were out- time 148 shares of common in May (at $25,000 in sale 15 shares for and a further of standing) as to the adduced testimony 1948. But was March no of sales, in the of all circumstances of those light cannot naked fact sales at other evidence the of figure The went into company be accorded too much weight. us in far as the record before goes, 1949. So bankruptcy of failure is undisclosed. corporate the cause of shares to the valuation Various considerations pertinent trial a thus before the court. See close were corporation Neeld, After J. 551 considering Bassett v. N. (1957). court, substance, in reached its result by all them the sheet and a share for $2 revising adding “going balance value.” to the attack both sides is addressed primarily items. Plaintiffs
trial court’s treatment of individual com- the value the real estate and defendant placed upon plain as to the In inventory. challenges finding considering it must be borne mind that these items these contentions elements the overall determination of the value but a which, concern, of the shares of company, although going of forced liquidation faced the yet possibility light history poor performance. long real for some minor was property additions) (except to the The cost partners. donated company original $181,338. to the June partnership *12 $300,000 at corporation was taken in a in figure of that cost. the Internal Revenue Subsequently excess disallowed that differential for the Department purpose taxation, a circumstance which is not excess profits helpful its value. in ascertaining
There is no in point detailing conflicting land The was a struc testimony. parcel sundry large some ancient and some overbuilt. tures, Undoubtedly, one from scratch would not imitate improvements starting From the a layout. or the concern standpoint going in the of the Tuttle several activities company, engaged have value what would real estate could above be realized accepted its sale. The trial in upon court the main the Horn, a in of Van realtor and testimony appraiser, reaching a land $55,000 valuation of valuation of building $152,000, $14,000, to which was added the virtually conceded value of two which had been dwellings sold. resulting $221,000 figure $415,000. as the book value of against estimate, In his Yan Horn included a factor reaching 25% for economic in addition to depreciation physical depreciation. brunt attack Yan Horn’s plaintiffs’ upon testimony rests the fact 1948, that in March at the request Evans, Yan Horn valued the land at and the $277,577. structure at Yan Horn that the 1948 explained was made appraisal basis, on an “owner-user” “almost an value,” insurance in which economic depreciation no played role, and added that both land value and construction costs rose between 1945 and 1948. There is a unquestionably difference in fact between the value of of unusual property features the needs of the beneficially user and the serving sum the would a sale property yield on to others other for true, uses. It is as plaintiffs since we are urge, here concern, concerned with the value of shares a going which the real estate would price yield on separate sale is not but in the of the uncertain future controlling; light value company July selling property eventuality not could be wholly It is a ignored. consideration which a purchaser of shares of stock would into take account in naturally what to deciding pay. may again be noted the trial court added a share $2 value.” We cannot the trial “going say court’s finding erroneous.
Bankers Commercial the court’s questions acceptance inventory found by accountant, figure plaintiffs’ Puder. main, In the Bankers Commercial is critical of the use of sheet which was found with yellow the books and records of the Tuttle in the company of a possession custodian in and which bankruptcy proceedings, to state purported estimated, the actual inventory, as of against July 30, $28,000. The difference was 1945.
32 was not shown the exhibit
Bankers Commercial contends exhibit was the records of the part company. to be a in handwriting identified Thomas Judson as by being shown to have been sufficiently to us of Evans. seems But course of business. made in the regular to have been rest solely did not the inventory figure more importantly, testified, that he out Puder so pointing this upon paper. and sales in conjunction referred well purchases satisfied We are of 1944 and year-end figures 1945. evidence. We warranted the trial court’s is finding by not be may placed upon single much stress too repeat an ultimately the shares represented item. The value of considerations, many interplay including earnings assets. true inquiry potential aggregated the trial court’s total finding, whether we should disturb are not thus the entire record we persuaded reviewing should, in a small except particular either side that we referred to hereinafter. should not have deducted
Plaintiffs the trial court say and the value shares par ($88,350) preferred the value dividends in ($80,398.50) reaching accumulated common, rather should have used figure but fact at company acquired preferred. which the contention the accumulated quickly We pass not “debts” because not so recorded on the dividends were whether We not concerned with good books. accounting recorded. The accumulations be thus unpaid requires to receive the dividends upon liquida preferred right agreed from the tion that the be deducted total arrearages requires at common’s interest it. account capital arriving 1058; p. 2 Valuation Bonbright, Property (1937), cf. Co., 134 N. J. Sugar Eq. (Ch. Wessel v. Guantanamo 1944), (E. 135 N. J. & A. 1944); affirmed Lonsdale Eq. v. International Mercantile Marine Co.. Corp. Securities 1927). 101 N. J. Eq. (Ch.
It is not clear what seek the plaintiffs theory Evans as a common stockholder when realized advantage shares were at the acquired by company the preferred *14 of common and reduced Plaintiffs the acquisition figure. say true, This is it no but part plan. of preferred single differential than it recover the more entitles to plaintiffs the loss entitle the shareholders to claim would preferred also, say, is true as plaintiffs sustained plaintiffs. their bankruptcy obviously that had rescinded sales they (the would have been dictated another the course), advantage theirs, their shares would but this would be so because only the reason the on corporate have appreciated by gain then, course, on the transactions, only questionable and did that with the not preferred the assumption dealings fraud, a matter in an them for result to off-setting liability And if it here view. express any which we need not upon interfered that Evans could be said some approach the preferred, with an to opportunity plaintiffs purchase that the share- the answer is that preferred nothing suggests part would have been to relinquish any holders willing if the with them the full value of their transactions holdings with morality. had been handled basis consonant upon any the The we detect is whether only possible question prices were should at which the shares preferred purchased the their actual value in worth accepted fixing calculating and as to this it to common, say enough which the were preferred purchased representations (at from the evidential $105) $36 prices destroy ranging short, those sales. In the loss was experienced by value of and not by plaintiffs. preferred Plaintiffs the sums of each complain Smith Bankers Commercial were Eager, received by the sum be the difference between not added to found to and the fair market value of the shares price received 27, 1945. The to Bankers Commercial payment as of July date, was made after mentioned apparently Hence, true the cash same is Smith. payment awarded; them was reflected paid damages were not at The plaintiffs’ expense. payment payments however, 27, 1945, was made before and thus July Eager, cash taken into account reduced the total valuing stock. interest plaintiffs’ proportionate Accordingly, sum added at a should be to arrive correct valuation as of the critical date.
III. Smith, trial court found the tortfeasors to be: (1) Bank, Evans, (2) Peoples Sturdy Company, (3) (4) Bankers Commercial. Fone of (5) parties question as to the Bank. Plaintiffs Peoples accepted finding having *15 $2,500 in settlement from the estate of Smith the Bank, court, the trial the Peoples of pursuant opinion this court on the first that a sum appeal, concluded equal full shares to two must be credited the total against damages. It found the to be an shell and Sturdy corporation empty Evans, the mere "alter of and hence deemed those ego” defendants to be a unit. Upon single supplementary it found Evans to be insolvent. It was hearing, thereupon concluded that three but defendants in the calcula- figure tion, wit, Smith, Bank, the and Bankers Com- Peoples mercial, and since two had relieved by settlement, been Bankers Commercial was liable for one-third of adjudged the total limited, so ran as well damages. judgment, Evans and the Plaintiffs against Sturdy Company. correctly that say upon the trial court’s if the approach, accepted, insofar as Evans judgment (and are concerned Sturdy) should have been for one-half of the total because damages, Evans Sturdy) should not event (and any profit by his reason of But we need not further alleged insolvency. this the explore aspect since for other reasons judgment we hereinafter conclude that the insolvency Evans should even with respect to Bankers disregarded Commercial.
Plaintiffs ask us to reconsider the first Judson opinion that the defendants urge receive a credit remaining only in the amount the settlement. As noted that opinion, our did not Legislature adopt Uniform Contribution Act, Tortfeasors rather Among but borrowed from it and left for gnawing problems judicial solution. Plaintiffs say that in defend- of the liability remaining concluding ants be reduced full rata shares of tort- pro feasors relieved settlement we read into our statute result “akin” to the uniform law which the provisions of refused to We cannot Legislature plain accept. agree. law, of sections and 5 which do import uniform statute, not in our settles appear is that where a tortfeasor less for than his full share the shall other tortfeasors receive a credit for the sum their paid settlement may pursue of contribution unless right against settling wrongdoer the settlement contain an a full papers agreement pro rata credit upon liability remaining wrongdoers. Hence, the reached conclusions on the first Judson appeal rested an approach different from that of distinctly the omitted sections uniform law.
We that neither of the thus grant far approaches discussed is It is the satisfactory. law policy settlements and encourage any scheme statutory replacing common law inequitable to contribution approach ought not to be so as to deter them. fettering plain both the mentioned have approaches precisely effect. plaintiff share, If a must credit a apt full he is not to risk a small settlement which otherwise be might prudent. On hand, other if a defendant remains settling amenable to *16 an action for contribution, the he peace would buy might a be but delusive interlude.
The unwelcome of the impact uniform law accounts for the failure to it and general adopt the persuaded National Conference of Commissioners to withdraw its recommenda- tion in 1955 and to a substitute propose measure. In doing the so Commissioners commented: discourage “The effect of Section 5 of the 1939 Act has been to joint cases, by making impossible settlements in tort it for one alone a tortfeasor to take release and close the file. Plaintiff’s
attorneys accept, any are said to refuse to release which contains provision reducing damages pro the the ‘to the extent of the rata tortfeasor,’ they way share ing the released because have no of know- they giving up. ‘pro what are The rata’ share cannot be deter- judgment against mined advance of the other tortfeasors. In many settling than oases their chief for one rather reason they hope party get with whom another is that more from the they provision will A a amount do not settle. for reduction in fixed settling protect from defendant not the tortfeasor contribution. No open contribution in an un- wants to settle when he remains judgment against amount, a certain to be determined on the basis of party. reports a another suit to which will not be a Some he go say independent that settle- so far as to the 1939 Act has made impossible. Many complaints plaintiff’s come from ments of the say they longer attorneys, who that can no settle cases with one reports states, reached been tortfeasor. Such have other and have part opposition responsible for a considerable to the 1939 The York Law Revision Commission has introduced a Act. New objection acts, number of bills for contribution and this has been defeating the chief factor them.” substitute uniform law that a provides
The settlement the tortfeasor from for shall discharge settling liability “in faith,” if the settlement made good contribution receive tortfeasor credit the amount non-settling This seems in settlement. to be actually paid approach we solution, but its must be origin legislative; superior it read into our own statute without exercising cannot possibly that In these circumstances we feel is not ours. power made on the first interpretation constrained to abide but consequences unhappy appeal, conceding us, alternative before only possible recognizing wit, the uniform law the thesis of would hardly be an improvement. divided first this court appeal question
On the to intentional wrongdoers. the statute applied whether held it did and ask that this view plaintiffs majority the substitute measure be noted that may reappraised. be the National Conference of Commissioners would proposed law. A from benefit such tortfeasors exclude court, remain however, view that majority a correct on the first constitutes appeal interpreta- conclusion Hence, revision, if there to be a ought of our statute. tion had to the must Legislature. recourse Smith and Peoples is whether next question *17 as for the. considered units separate were properly Bank that provides the credit. Our statute of calculating purpose and and shall be agent “A master servant or principal N. J. 2A :53A-1. Plain a tortfeasor.” S. single considered should that and the bank be accordingly tiffs Smith urge not, are then one, and add that if they deemed to be Commercial, Conlon, and for Bankers should actors Langhans not named as counted even though likewise separately defendants. the view that
The reflects quoted statutory provision servant or and are agent a master and principal ordinarily and hence be so considered should entity a economic single also, decision Perhaps, legislative prorating liability. in the usual from the that case derived circumstance and the master or is vicarious hence principal liability entitled from the servant indemnity offending they or agent. Bank Peoples postu with to the respect finding that it Conlon
lates Smith acted for as just Langhans to us that it seems acted for Bankers Commercial. But Conlon situation differs from of Langhans Smith’s He for his personally that Smith also own acted gain. deemed correctly the sum hence acquired that his conduct to be a tortfeasor separate notwithstanding his served also to employer. implicate sustain the These considerations also trial basic It was an empty court’s treatment of the Sturdy Company. no independent shell utilized as a Evans. It had conduit identified Evans interest. was therefore properly a present purposes. tortfeasor for single to be impact concerns the question given remaining In the first reference insolvency opinion of Evans. it and must be insolvency, was made to the possibility flavor that the trial detected the correctly said court this there was made However, comment. court’s expression mere without for full opportunity hypothesis view which concrete facts impact appreciation now permit.
38
Defendants stress that under doctrine equitable defendants contribution, is made apportionment among are Johnson v. Tennessee who to and solvent. subject process Oil, Co., and 75 N. J. 314 Eq. Gas Mineral Development rule differs in which that 1909). applies (Ch. setting rule in from one before us. The as equitable applied it Johnson did not concern the claimant. Eather dealt with relief defendants. The thesis was solely among that a defendant who more than his share should paid receive defendants hand and contribution from on able to each of the defendants then to be remitted to the pay, equal however, Here, burden of the others. the issue is pursuing whether there should transferred the injured be claimants a loss aof tortfeasor. consequent upon insolvency
We start with the that contribution proposition law, at matter was not available and for that was not available even case of fraudulent Kanzler equity wrongdoers. Smith, 142 N. v. 3 on Eq. 1948); J. Scott Trusts (Ch. Restatement, 2025; 258.3, sec. (1956), p. Trusts (1935), Prosser, 46, sec. 258 (2); (2d Torts ed. sec. 1955), p. 249. cf. The statute was intended to relieve the tortfeasors of an injustice themselves. It was not among designed a full the victim he prevent recovery by unless voluntarily invited by a reduction with a tortfeasor for less than settling a rata share. It would be and pro inequitable beyond thesis the statute visit a further upon plaintiff loss reason of of a tortfeasor where by insolvency nothing at the time of settlement the claimant knew of suggests and meant insolvency defend prejudice remaining ant. The risk of that rightly loss should remain with the may added, offender. the result we reach although it, does not does insolvency not hinge necessarily since the portend uncollectibility, liability of Evans is not A., C. bankruptcy, U. hence dischargeable S. § here is who should bear the burden question weary a claim in such circumstances. We think the pressing left should be with Bankers problem Commercial. Conclusion. should be modified judgment (1) providing Commercial,
Bankers Evans and Sturdy, jointly liable severally of the total damages, (2) by 50% plaintiffs5 interest in the adding proportionate pay ment to 27, 1945, to the as of as found Rager damages July the trial court. The matter is remanded with directions *19 to in modify judgment harmony this opinion. J. in I in concur the con (dissenting part).
Hehek, clusion of my made colleagues representations were fraudulent,55 Judsons “affirmative mis “flagrantly representations55 reliance, and that justifiably inducing Bankers Commercial in Corporation knowingly participated the combination to cheat and defraud. -
But, in the admeasurement of the
adherence is
damages,
not
to the rule that
given
frauddoer
is liable for all
damages
from the
naturally
proximately ensuing
wrong,
which in
may include the
equity
of all
disgorging
profits
attributable to the fraud.
v.
57 N. J. L. 679
Duffy,
Smith
&
Co.,
A. 1895); Driscoll
(E.
Burlington-Bristol
v.
Bridge
Sabatino,
8 N. J. 433 (1952);
v.
15
J. 70
N.
(1954);
Zeliff
Falk v. Hoffman,
199,
233 N. Y.
And, token, the same by only cost actual of the stock preferred in the participants should conspiracy be considered the value of the assessing common stock. persuaded I am also that an undervaluation of the cor- real estate porate unduly impaired value of the stock
in the under determination embodied in the review. judgment It suffices say witness, in this that defendants’ regard Horn, $190,000, Yan who fixed the value of the real estate at had in 1948 $350,000. the same at appraised property
And, for the reasons the concurring opinion given cause, rendered on the earlier 67, of the 17 N. J. hearing of contribution does (1954), statutorily-given right not this class of cases. comprehend Unlike Uniform Act, Tortfeasors Contribution then recommended by National Conference of Commissioners on Uniform State Laws, statute, L.U. A. section 3 J. of our N. S. :53A-3, 2A terms confines the express operation to cases where principle or is suffered “injury damage” person act, as a any result of the or “wrongful neglect joint tortfeasors,” default of for which a money judgment recovered. word “tort” has a more manifestly exten sive act”; than otherwise, the meaning “wrongful departure in terms would have Indeed, no whatever. significance submission, out on the pointed there is a prior distinction of substance between these that has expressions pervaded the law of contribution from the very this beginning; differentiation has since been given recognition *20 National Conference of Commissioners in their 1955 recom mendations, of which more hereafter. act,” statute, as used in our
“Wrongful is characterized its default,” associates or the whole “neglect meaning positive the and the breaches of in nature negative duty * * * the same acts of and commission omissions and intentional, failures not criminal, willfully fraudulent or tainted with moral The turpitude. immemorial rule denying contribution between those who do knowingly willfully grievous injury to or person property the pursuit conspiratorial is founded in sound design public morality. There is no reason conceivable of policy willful fraud- why doers and criminis partioeps should have the benefit of the essentially doctrine equitable of contribution.
These principles were due the given recognition by National Conference of Commissioners in their submission of a sub- stitute act in to “reconcile the serious which variations and, exist if eliminate the adopted would generally presently confusion” and the lack of existing complete uniformity, had circumstances which induced the Commissioners to with the draw Model Act of 1939 “for further and revision.” study Yew Jersey is there classified as one of six states “which to declare the contribution leave most right questions to the courts.” Handbook the National Conference of Laws et Commissioners on State (1955), p. seq. Uniform the
Section substitute 1(c) proposed provides: right any “There is no favor contribution in tortfeasor who intentionally [wilfully wantonly] has caused or or contributed to injury wrongful or death.” And the Commissioners’ comment on this thus: sub-section * * * “Intentional, and wanton. Act wilful policy silent on matter. The here followed is that of the original contribution, rule as to court will not aid an wrongdoer in a intentional cause of action which is founded on wrong. battery, example, his own In cases of concerted there appears any .part liability to reason be little to shift another. extending Two valid reasons exist for the exclusion-to wilful and causing contributing injury. wanton or acts place naturally belong In the first wilful and wanton acts seem wrongs imply in the same class intentional and to moral turpitude part policy wrongdoer. on of the section as adopts recognize drafted law of those do states which not classi- degrees. negligence convey fication of into is intended to negligence idea that there is difference between and wilful or wanton misconduct. place, excluding In the second wilful and wanton actors from right contribution, arguments urged we most of eliminate allocating liability for a rule the shares of on the basis of relative degrees of fault. many ‘gross negligence’ guest In states wanton statutes is construed to mean wilful and conduct. wanton This is the rule applied determining right which should of contribution under this act. ‘wilfully placed Brackets have been around the words or wan- *21 tonly’ may they so that be omitted in those states where definition they they something imply of the terms mean than less and where by including remedy them bar of the would be too broad.” 42
n was not before us fraud of class now Conspiratorial The Commis Act of 1939. within the of Model design the matter.” silent on themselves the draft “was sioners say fraudulent” less can it said this “flagrantly Much act, subject default” was a or conduct “wrongful neglect In his recent work on in the sense. statutory contribution contribu torts, Dean Prosser that the rule denying concludes retreat,” “in full tion in favor of tortfeasors” “negligent opinion will “in due course time the pressure abolition,” or its but “As to wilful wrongdoers, compel misconduct, of the most forms of those who guilty flagrant relax the desire tendency there is no indication of or any Prosser, section 1955), rule.” Law Torts ed. (2d original under 46. the stated considerations of policy from Apart concert, the defendants the rule where act lying for the entire all, act is the act of and each is liable of one makes loss, the denial of contribution in such circumstances Adm’r deterrence from Thweatt’s conspiratorial fraud. Rand., ; Jones, Va., Ellis, (Va. Peck v. 1825) v. Ch., Prosser, Y., 1816). (N. N. Y. also 2 Johns. See 25 Cal. L. Rev. 413 Liability," “Joint Torts and Several (1937).
I modify would judgment accordingly. For Justice Wein- affirmance modification—-Chief Heher, Oliphant, Wacheneeld, traub, and Justices Burling and Jacobs —6.
Opposed—Hone. Hei-ier, J., in part. dissenting