Metro Bulletins Corp. v. Soboleski

620 A.2d 1314, 30 Conn. App. 493, 1993 Conn. App. LEXIS 85

• Court: Connecticut Appellate Court
• Decided: March 2, 1993
• Docket: 11047
• Status: Published

Opinions

O’Connell, J.

The defendant appeals from a judgment, rendered after a court trial, awarding $9400 to the plaintiff. The defendant claims that the trial court (1) improperly denied his motion for a stay, (2) improperly construed the Connecticut Certificate of Trade Name statute, and (3) should have found that the defendant gave the plaintiff actual notice of the defendant’s agency status. We reverse the judgment of the trial court.

The following facts are necessary to resolve this appeal. On April 22,1989, the plaintiff entered into a written contract whereby it agreed to provide billboard advertising services to a business known as Prime Pontiac for a six month period. The name “Prime Pontiac” was written on the contract on the line reserved for the name of the contracting firm. Below that line, the defendant, Louis Soboleski, president of Prime Pontiac, signed his name on behalf of Prime Pontiac. Immediately following his signature, in the area reserved for the signer’s title, the defendant wrote, in an illegible script, what appears to be a word beginning with the letter P.

At the time of contracting, Bridgeside Pontiac, Inc. (Bridgeside), was a Connecticut corporation in good standing and was doing business as Prime Pontiac. In compliance with General Statutes § 35-1,¹ Bridgeside’s status had been disclosed in a certificate of trade name, executed and filed in the Middletown town clerk’s office by the defendant in his capacity as president of Bridgeside.

On January 23, 1991, the plaintiff commenced this action for the unpaid balance owed on the contract. The complaint named the defendant as “Louis Soboleski doing business as Prime Pontiac.” On January 31, 1991, Bridgeside filed a Chapter 11 bankruptcy petition listing the plaintiff as an unsecured creditor. Approximately one week later, the defendant filed a notice, in the present case, of Bridgeside’s bankruptcy filing. The defendant pleaded as a special defense, that Bridgeside doing business as Prime Pontiac was the proper defendant in the action and that Bridgeside had filed for bankruptcy.

On August 20,1991, the defendant filed a motion to stay the proceedings due to Bridgeside’s Chapter 11 bankruptcy. The motion requested the court to “acknowledge and enforce the automatic stay . . . .” The trial court denied the motion and referred the case to a fact finder who recommended judgment for the plaintiff for $9400. The trial court rendered judgment in accordance with the fact finder’s report and recommendations. The defendant appealed.

I

We first consider the threshold question of whether the automatic stay provision of the federal bankruptcy law, 11 U.S.C. § 362,² is available to the defendant. Unlike Bridgeside, which is a debtor in the bankruptcy proceeding, the defendant is a nondebtor. As a general rule, the filing of a Chapter 11 bankruptcy petition does not enjoin litigation against nondebtors. G. Ishii-Chang, “Litigation and Bankruptcy: The Dilemma of the Codefendant Stay,” 63 Am. Bankr. L. J. 257 (1989). A number of courts have issued blanket prohibitions on the application of the stay to any nondebtor regardless of its relationship to the debtor and the effect of the action sought to be stayed. See, e.g., Fortier v. Dona Anna Plaza Partners, 747 F.2d 1324, 1329-30 (10th Cir. 1984); Lynch v. Johns-Manville Sales Corporation, 710 F.2d 1194, 1196-97 (6th Cir. 1983); Austin v. Unarco Industries, Inc., 705 F.2d 1, 4-5 (1st Cir.), cert. denied, 463 U.S. 1247, 104 S. Ct. 34, 77 L. Ed. 2d 1454 (1983); Pitts v. Unarco Industries, Inc., 698 F.2d 313, 314 (7th Cir. 1983); In re Kelton Motors, Inc., 121 B.R. 166, 193 (Bankr. D. Vt. 1990).

There is, however, limited authority for extending the stay to a nondebtor in special circumstances. See A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir.), cert. denied, 479 U.S. 876, 107 S. Ct. 251, 93 L. Ed. 2d 177 (1986). Here, the defendant claims the benefit of the stay, asserting that he has an identity of interest with the debtor.³ He contends that a judgment against him is, in effect, a judgment against the bankrupt debtor. A sufficient identity of interest has been recognized as satisfying the special circumstances requirement. See id.

Before the merits of the defendant’s identity of interest argument can be reached, however, we must determine the procedure by which the nondebtor may obtain the stay. Despite a split of authority, the weight of the case law indicates that a nondebtor, seeking to extend the stay beyond the debtor, must move for the extension in the bankruptcy court. See, e.g., Ingersoll-Rand Financial Corporation v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir. 1987); Federal Land Bank of Spokane v. Stiles, 700 F. Sup. 1060, 1063 (D. Mont. 1988); B & B Associates v. Fonner, 700 F. Sup. 7 (S.D.N.Y. 1988); Rhode Island Hospital Trust National Bank v. Dube, 136 F.R.D. 37, 39 (D.R.I. 1990); In re Codfish Corporation, 97 B.R. 132 (Bankr. D. Puerto Rico 1988); In re All Seasons Resorts, Inc., 79 B.R. 901, 903 (Bankr. C. D. Cal. 1987); In re MacDonald/Associates, Inc., 54 B.R. 865, 867 (Bankr. D.R.I. 1985); In re Precision Colors, Inc., 36 B.R. 429, 431 (Bankr. S.D. Ohio 1984); W. W. Gay Mechanical Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348, 1350 (Fla. 1989); Collier v. Eagle-Picher Industries, Inc., 86 Md. App. 38, 48, 585 A.2d 256, cert. denied sub nom. Corhart Refractories Co. v. Collier, 323 Md. 33, 591 A.2d 249 (1991).

In the present case, the defendant did not file for an extension of the automatic stay in the bankruptcy court. Instead, he proceeded by motion in our state trial court. We believe that the cases requiring filing of the motion for an extension of the stay in the bankruptcy court represent the better reasoning. This is because “[i]t is fundamental under federal bankruptcy law that the automatic stay operates for the benefit of the debtor and trustee only, and gives other parties interested in property affected by the automatic stay no substantive or procedural rights.” (Internal quotation marks omitted.) Shorr v. Kind, 1 Cal. App. 4th 249, 258, 2 Cal. Rptr. 2d 192 (1991). Only the bankruptcy court has the entire picture before it. It would be difficult, if not impossible, for a state trial court, which has only the immediate case before it, to determine the best interests of the bankruptcy estate. Accordingly, because the defendant, as a nondebtor, did not apply for an extension of the automatic stay in the bankruptcy court, we affirm the trial court’s denial of the defendant’s motion to stay.⁴

II

We turn next to the defendant’s claim that General Statutes § 35-1 is a notice statute and, as a result, the plaintiff had constructive notice that Bridgeside was the proper defendant. The fact finder found “that at the time this contract was executed, Bridgeside Pontiac, Inc., did business as Prime Pontiac pursuant to a trade name certificate filed with the town clerk of Middletown, Connecticut.” He further found “that the certificate would reasonably apprise a creditor that a corporation was doing business as Prime Pontiac, and that the true corporate name could reasonably be inferred . . . .” Notwithstanding these findings, the fact finder gave no effect to the statute and made his recommendations according to the usual common law rules of agency.

There are two possible purposes that § 35-1 might serve. First, it could be intended to protect a trade name from use by competitors, similar to the protection afforded authors and composers by the federal copyright statutes, or, second, it could be intended to benefit the public in general and creditors in particular by disclosing the true name and address of the person behind a trade name.

The general rule is that “[t]he object or purpose of statutes which regulate the doing of business under a fictitious or assumed name is . . . to protect the public by giving notice or information as to the person with whom they deal, and to afford protection against fraud and deceit.” (Emphasis added.) 57 Am. Jur. 2d, Names § 66. Our Supreme Court has recognized this rule as the purpose behind Connecticut’s trade name statute by enunciating that “its object is to enable a person dealing with another trading under a name not his own, to know the man behind the name, that he may know or make inquiry as to his business character or financial responsibility . . . .” DiBiase v. Garnsey, 103 Conn. 21, 27, 130 A. 81 (1925). The mandated disclosure is “intended for the protection of creditors . . . .” Wofsey v. New York & Stamford R. Co., 106 Conn. 254, 258, 138 A. 136 (1927).

In this respect, § 35-1 differs from the statutes governing trademarks and service marks, which are designed to give their owners protection from infringement or unauthorized use. See General Statutes § 35-1 la et seq. If a trade or service mark owner elects not to register the mark, the only risk is exposure to use of the mark by a competitor. This contrasts sharply with the risks posed by the failure to file a certificate of trade name. Section 35-1 provides two substantial penalties for noncompliance. First, a failure to comply shall be deemed to constitute an unfair or deceptive practice under § 42-110b (a) of the Connecticut Unfair Trade Practices Act (CUTPA). As a result, a defendant faces the full range of civil penalties and liabilities applicable to a CUTPA violation. Second, the defendant may be criminally prosecuted and imprisoned for as long as one year and fined up to $500. From this we conclude that, even though as an incidental benefit § 35-1 may provide some protection to persons transacting business under a trade name, it is primarily intended to protect creditors by giving them constructive notice of the contents of the trade name certificate.

It is a fundamental principle that all legislative enactments are intended to serve some purpose. Union Trust Co. v. Heggelund, 219 Conn. 620, 626, 594 A.2d 464 (1991); Connecticut Light & Power Co. v. Costle, 179 Conn. 415, 422, 426 A.2d 1324 (1980). Section 35-1 contains several key provisions to achieve its purpose of notification. These include the mandate that each town clerk create and maintain a dual indexing system, thus enabling the public to find either the owner of a particular trade name or the trade name of a particular person or entity.

We are further persuaded that the statute was intended to provide constructive notice by its parallels with real property recording and indexing provisions. In requiring a filing and indexing system, § 35-1 is analagous to General Statutes § 7-25, which governs the recording and indexing of real property records. As is also true of real property records, a certified copy of a certificate of trade name is presumptive evidence in all courts in Connecticut of the facts stated in the certificate. See General Statutes § 7-23.

In light of the statute’s specific mandates and substantial penalties, we cannot agree with the plaintiff’s contention that § 35-1 is not a notice statute. The plaintiff’s theory would mean that a business being conducted under a trade name could not use that trade name without providing an affirmative disclosure of the entity behind the business in every transaction with the public. Disclosure, however, is precisely the intended function of the statute. As a result, the plaintiffs theory would render the statute meaningless. We will not presume that the legislature intended to enact meaningless or useless legislation. Turner v. Turner, 219 Conn. 703, 713, 595 A.2d 297 (1991); Union Trust Co. v. Heggelund, supra.

In the present case, because the certificate of trade name was filed before the parties entered into the contract, we hold that the plaintiff had constructive notice of the corporate principal’s identity at the time of contracting. As stated by the Pennsylvania Supreme Court, construing a similar statute, the plaintiff “cannot plead ignorance of facts of which it is deemed to have had [constructive] notice.” Ulick v. Vibration Specialty Co., 348 Pa. 241, 243, 35 A.2d 332 (1944). Accordingly, the judgment of the trial court must be reversed.

Because our resolution of the second issue is dispositive of the appeal, we do not reach the issue of whether the defendant provided the plaintiff with actual notice of the defendant’s agency status.

The judgment is reversed and the case is remanded with direction to render judgment for the defendant.

In this opinion Landau, J., concurred.

1 General Statutes § 35-1 provides in pertinent part: “fictitious trade names forbidden; certificates, unfair trade practices. No person, except as hereinafter provided, shall conduct or transact business in this state, under any assumed name, or under any designation, name or style, corporate or otherwise, other than the real name or names of the person or persons conducting or transacting such business, unless there has been filed, in the office of the town clerk in the town in which such business is or is to be conducted or transacted, a certificate stating the name under which such business is or is to be conducted or transacted and the full name and post-office address of each person conducting or transacting such business or, in the case of a corporation using such an assumed name, its full name and principal post-office address. Such certificate shall be executed by all of such persons or, in the case of a corporation, by an authorized officer thereof, and acknowledged before some authority qualified to administer oaths. Each town clerk shall keep an alphabetical index of the names of all persons filing such certificates and of all names or styles assumed as hereinbefore provided and, for the indexing and filing of each such certificate, shall receive the statutory filing fee for documents established in section 7-34a, to be paid by the person filing such certificate. A copy of any such certificate, certified by the town clerk in whose office the same has been filed, shall be presumptive evidence, in all courts in this state, of the facts therein contained. . . . Any person conducting or transacting business in violation of the provisions of this section shall be fined not more than five hundred dollars or imprisoned not more than one year. Failure to comply twith the provisions of this section shall be deemed to be an unfair or deceptive trade practice under subsection (a) of section 42-110b.”

2 11 U.S.C. § 362 provides in pertinent part: “(a) Except as provided in subsection (b) of this section, a petition . . . operates as a stay, applicable to all entities, of — (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title . . . .”

3 The defendant also claimed the benefit of the bankruptcy stay due to his common law right of indemnification as an officer of the debtor corporation. Claims that are merely mentioned but not otherwise analyzed in the brief, as is true of this claim, are considered abandoned. Garrity v. McCaskey, 223 Conn. 1, 2 n.3, 612 A.2d 742 (1992).

4 We note that because the stay must be sought by the nondebtor, it is a misnomer to refer to it as an automatic stay.