Engstrum v. Union Gas Engine Co.

110 S.E. 787, 183 N.C. 79, 1922 N.C. LEXIS 207

• Court: Supreme Court of North Carolina
• Decided: March 1, 1922
• Status: Published

Opinion

Clark, C. J.

The defendants admit that both the defendants, the Newport Shipbuilding Corporation and the Union Gas Engine Company, are nonresidents having been incorporated in California, and that the Gas Engine Company is without property in the State; and further, that the Newport Shipbuilding Company is indebted to the Gas Engine Company in the sum of $60,000 or more.

It is true that the defendant engine company alleges that the action by the plaintiff is collusive and in the interest of the shipbuilding corporation. It admits that its codefendant is indebted to it in the sum of $60,000 or more, of which it is demanding payment, but avers that that corporation has several hundred thousand dollars worth of tangible personal property in the city of New Bern; that it is abundantly solvent and able to pay any judgment recovered against it by the plaintiff, and avers that the plaintiffs, stockholders, are the chief stockholders and practically sole owners of its codefendant, the Newport Shipbuilding Corporation, and are its directors and general officers, and that the pretense that they are different and have different and separate control is fictitious and fraudulent; that this suit is brought by collusion for the fraudulent purpose of preventing the codefendant from paying the amount due under the contract, and also to give -the said codefendant colorable standing as a basis to deal with the Government in this and other contracts, and the plaintiffs are insolvent.

The allegations of fact in the complaint, and in denial, are matters which must be determined upon the evidence in the trial of the issues arising thereon. It is admitted that the defendant gas engine company is a nonresident corporation, with no property in this State. If the allegations of the plaintiff are found to be true, it would be without remedy, unless by injunction or attachment the plaintiff is able to .restrain the collection by the engine company of the sum it claims against its codefendant, the shipbuilding corporation.

In Ellett v. Newman, 92 N. C., 519, Merrimon, J., held that, “Where there is reason to apprehend that the subject of the controversy will be destroyed or removed, or otherwise disposed of by the defendants pending the action, so that the plaintiff may lose the fruit of his recovery, tbe court will take control of it by tbe appointment of a receiver or tbe granting of an injunction, or by botb, if necessary, until tbe action shall be tried on its merits.” It is true that in tbis case there is no direct controversy as to tbe subject-matter, but upon tbe granting of tbe injunction by tbe judge we must take it tbat.be found, and there are affidavits to support bis finding, that botb defendants being nonresident corporations, and tbe gas engine company being without other assets in tbis State, if tbe $60,000 due to it by its codefendant, tbe shipbuilding company, was paid to it and removed from tbe State it could not then be attached or applied to tbe indebtedness due by it to tbe plaintiff, and therefore, in order to preserve such liability to any judgment that tbe plaintiff may recover of it, tbe gas engine company was required to give bond that such indebtedness may be forthcoming for application to any judgment which tbe plaintiff might recover, and in default of such bond is enjoined from collecting and removing such until its indebtedness to tbe plaintiff is determined by judgment.

Tbe contract and dealings between tbe Union Gas Engine Company and its codefendant, being about concluded and all tbe payments thereunder having been made except tbe small balance, $60,000, which is little more than sufficient to pay tbe claim of tbe plaintiff, if tbe gas engine company were allowed to complete its contract and remove its manager and officers from tbis State, which tbe plaintiff alleges it is about to do, tbe plaintiff would have no method of securing service of process upon it, as botb tbe defendants are California corporations.

Tbe plaintiff could not acquire jurisdiction within tbe State of North Carolina except by tbe service of process issued and served before tbe managers bad opportunity to leave tbe State, and it is alleged that when tbe service of summons was made upon tbe gas engine company, tbe officer upon whom it was served was preparing to leave, and bad already removed all of its property, and but for tbis proceeding tbe plaintiff would have bad no redress, since it could not have attached tbe indebtedness due to tbe defendant gas engine company by its codefendant after such payment and removal.

Tbe order of tbe court allowing tbe gas engine company to execute bond to secure any judgment obtained against tbe shipbuilding corporation enables tbe gas engine company, without any inconvenience, to proceed with its business and to collect what was due to it, and the $10,000 bond required to be filed by tbe plaintiff protects tbe gas engine company' from damages if there is any in restraining collection in excess of tbe sum which may be found to be due by it to tbe plaintiff.

Under these circumstances tbe injunction was properly continued to tbe bearing when all these matters of fact can be fully determined.

Affirmed.