Before SWAN, Chief Judge, and CHASE and CLARK, Circuit Judges.
In November 1948, The DeAngelis Packing Company, a partnership composed solely of Anthony DeAngelis and his wife Virginia, owned a new meat packing plant at North Bergen, New Jersey. That company, to be hereinafter called the partnership, then leased the plant for a term of ten years to The DeAngelis Packing Company, Inc., a New Jersey corporation which had been recently organized to engage in the business of processing and packing meat, including the refining and processing of tallow of which 1,000,000 pounds per week could be rendered. Anthony DeAngelis, the controlling stockholder, was the president and duly authorized agent of the corporation during the time in which the events took place with which this appeal is concerned. The corporation for a while did an extensive business, its sales of its products for approximately one year immediately preceding December 1, 1950 being in excess of $28,000,000. Adolf Gobel, Inc., is a New York corporation which during the period here involved was also engaged in the meat packing business and will be referred to as Gobel.
In September 1950, the corporation executed three contracts with a representative of the plaintiff, The Italian Technical Delegation, to be now called the plaintiff, under which the corporation sold to the plaintiff 3900 tons of nonedible tallow for delivery in October, November and December of that year. In November 1950, the corporation in the same way sold to the plaintiff an additional 1500 tons of tallow for delivery during December 1950 and January and February 1951. None of the tallow was delivered except 300 tons in October 1950; and the plaintiff, as a consequence of the failure of the corporation further to perform its contracts, was obliged to purchase tallow on the market to the extent to which the corporation defaulted, and the market prices which it had to pay exceeded the contract prices by more than $800,000. It purchased a large quantity of this tallow from Gobel.
In April 1950, DeAngelis purchased enough Gobel stock to give him control of that corporation. He financed the purchase by borrowing $325,000 from the Public National Bank & Trust Company of New York; and the stock he bought, together with other collateral of his, was deposited with the bank to secure the loan and his other obligations to the bank. At this time the bank also received the continuing guarantee of the partnership for all of DeAngelis' obligations to it both past and future.
In October 1950, the partnership cancelled the lease of the meat packing plant to the corporation and sold the plant, subject to outstanding mortgages, to Gobel. It received $225,000 in cash, four promissory notes totalling $90,000 and 260,000 shares of Gobel stock. On October 25, 1950, the partnership paid the bank $200,000 in reduction of the loan the bank had made to DeAngelis and pledged 185,000 shares of its Gobel stock as security for its guarantee of his obligations to the bank. On November 24, 1950, the partnership pledged its remaining 75,000 shares of Gobel stock to certain trustees as collateral security for DeAngelis' and his wife's joint and several guarantee of the obligations of the DeAngelis corporation.
After DeAngelis acquired stock control of Gobel, it also borrowed from the same bank. Its obligation was guaranteed by DeAngelis; and the partnership did not, before his guarantee was given, cancel its continuing guarantee of his bank obligations.
A certificate for the dissolution of the corporation was executed on November 17, 1950 and duly filed in accordance with New Jersey law on December 29, 1950. It did no business thereafter.
Invoking the diversity jurisdiction of the court, the plaintiff filed a complaint in three counts against DeAngelis and his wife, individually and as co-partners, and Gobel to recover the damages it had sustained because of the breach by the corporation. The latter, having been dissolved pursuant to New Jersey law, was not made a party.
A warrant of attachment was granted under § 903, subd. 3, of the New York Civil Practice Act against the property of DeAngelis held by the bank and against the property of the partnership held by the bank and the trustees. The attachment against the property of the partnership was granted on a showing by the plaintiff that the partnership had assigned, disposed of, or secreted its property with intent to defraud its creditors, and also on the ground that it had fraudulently incurred obligations and made fraudulent transfers of its property within the meaning of §§ 273, 275, 277 and 278 of the New York Debtor and Creditor Law. The District Court later, on motion, vacated the attachment against the partnership's property, and it is from this order that the plaintiff now appeals. Such an order is appealable. Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 70 S. Ct. 861, 94 L. Ed. 1206.
The only count of the complaint in which the partnership is named as a defendant is the second. It sets forth a claim that the partnership, Virginia DeAngelis, Anthony DeAngelis (named as a conspirator but not sued in this count) and Gobel, acting in concert, did wilfully and without justification induce the corporation to break its contracts with the plaintiff. It is also alleged that the partnership conspired with the above mentioned persons and the corporation to induce the plaintiff to enter into the contracts by means of fraudulent misrepresentations.
The court permitted the plaintiff in opposing the motion to vacate to supplement its allegations in the complaint with affidavits; and the facts, as above summarized, are taken from the record as thus made out by the plaintiff. The notice of motion stated six grounds, of which the third was: "The papers upon which said warrant of attachment was granted fail to show sufficient evidence of the participation by defendants Anthony DeAngelis and Virginia DeAngelis, co-partners doing business as DeAngelis Packing Company, in any wrongdoing in the second cause of action in the complaint." The motion was granted on that ground, which made it unnecessary to deal with the other questions presented. We agree.
Before a warrant of attachment may be granted under § 903 of the New York Civil Practice Act there must be more support for it than a complaint sufficient to state a cause of action against a defendant whose property the plaintiff seeks to attach. In addition to that there must be enough shown to establish prima facie the facts on which the plaintiff relies as the basis for his alleged cause of action. Ecco High Frequency Corporation v. Amtorg Trading Corp., Sup., 81 N.Y.S.2d 610, affirmed 274 App.Div. 982, 85 N.Y.S.2d 304.
Yet neither the allegations in the second count of the complaint nor the supplemental affidavits, either alone or together, show prima facie that the partnership, itself or in concert with others, fraudulently induced the plaintiff to enter into the contracts with the corporation or that it intentionally and unjustifiably induced the corporation to break its contracts with the plaintiff. The only acts of the partnership that are shown are (1) the cancellation of the lease of its Bergen plant to the corporation and (2) the sale of that plant to Gobel. There is no evidence to show prima facie that Virginia DeAngelis knew of the contracts which the plaintiff had with the corporation. And even if it can be said that the partnership is chargeable with knowledge of their existence, there is nothing to show that the cancellation of the lease prevented the corporation from fulfilling the contracts. They were for the sale, not the rendering, of a quantity of tallow, and, for all that appears, the corporation was free to acquire the tallow needed for the sale by its purchase on the open market.
The District Court denied a motion to vacate an attachment on the property of Anthony DeAngelis on the ground that there had been a prima facie showing that DeAngelis induced the plaintiff to enter into the contracts by means of fraudulent misrepresentations. It is now urged that he was also acting on behalf of the partnership when he made the misrepresentations, and that the partnership was therefore in a conspiracy with him fraudulently to induce the plaintiff to make the contracts with the corporation. We are asked to infer that DeAngelis was acting on behalf of the partnership because the partnership was benefitted by his acts. It is argued that this benefit was realized because, since the corporation was being dissolved, the contracts would not be performed by it but were to be adopted by Gobel if they proved favorable and otherwise ignored. This advantage to Gobel was to inure to the benefit of the partnership, since it was prospectively a substantial owner of Gobel stock. However, the existence of contracts between the plaintiff and the corporation would certainly give Gobel no rights under those contracts on dissolution of the corporation The plaintiff did ultimately buy a large quantity of tallow from Gobel, but there is nothing to show that the plaintiff was not free to buy tallow elsewhere or that Gobel could not have sold its tallow to someone else as advantageously. Since the acts of DeAngelis did not benefit Gobel, they did not benefit the partnership; and there is, therefore, no basis for inferring that DeAngelis was acting on behalf of the partnership in procuring the contracts for the corporation.
It follows that the order vacating the attachment of the property of the partnership was not erroneous since, even though the plaintiff may eventually mend its hold, such basis for it as is shown by this record clearly indicated that, as against the partnership, the plaintiff must ultimately fail. Wulfsohn v. Russian Socialist Federated Soviet Republic, 234 N.Y. 372, 138 N.E. 24; Bernstein v. Van Heyghen Freres Societe Anonyme, 2 Cir., 163 F.2d 246.
CLARK, Circuit Judge (dissenting).
A major difficulty in the case has seemed to be, not a dearth of allegations, but a superfluity which has unfortunately served to dilute or conceal the strength of plaintiff's case. Cutting through all this mass, as well as some piddling quibbling by defendants over the contents of the record, I think the problem can be both clarified and simplified by disregarding peripheral claims in support of the attachment to concentrate upon a single dominant contention based upon facts here undisputed.That is, that Anthony DeAngelis, the dominating force in the partnership, The DeAngelis Packing Company, had the partnership cancel the lease on its important new packing plant to The DeAngelis Packing Company, Inc., a corporation he controlled, thus making it difficult or impossible for the corporation to carry out the contracts he had made for it to sell tallow to the plaintiff. These are the essential facts; they seem to me amply to justify the attachment under N.Y.C.P.A.§ 903, subd. 3.
The objecting arguments, as I understand them, boil down to three: that the partnership was not responsible for Anthony's acts, that the corporation could have performed its contracts by purchasing the tallow for resale, and that no wrongful or fraudulent intent was shown.
Perhaps it may be convenient to consider the last point first, because I rather think it colors the entire picture by suggesting that an aroma of possible good business judgment for the DeAngelis interests excuses the adverse consequences to the plaintiff. While the opinion does not explain the background, it appears that the DeAngelis corporation, notwithstanding its twenty-eight-million-dollar packing business in the year prior to December 1, 1950, was having financial difficulties. The partnership had recently built, on land owned by it, this modern and efficient meat processing plant, including facilities to refine and produce at least one million pounds of tallow and lard per week. So it had organized the packing corporation in 1948 and had leased the plant to it for ten years. Obviously this plant was a vitally important property of the partnership; so far as appears, this was its only fixed asset. Consequently something needed to be done to keep it productive. The means adopted was the acquisition of Adolf Gobel, Inc., and the various transfers to it recounted in the opinion.
From the DeAngelis standpoint this may have been wise business judgment and shrewd executive planning. Obviously it saved the partnership from the chances of having a white elephant on its hands in the shape of its vast new packing plant. But the point is that what may be wise business foresight to one may be intentional injury to another. What happened here, however the legal consequences may be viewed, was clearly intentional in the eyes of the law. Anthony DeAngelis knew the entire situation. When he put the DeAngelis corporation out of the new plant, he may have wanted only to benefit the partnership through the new Gobel business, but he knew of its potential effect upon the plaintiff's contracts. Quite possibly he may have hoped that Gobel could take and perform the contracts or that he could eventually pay the loss; but actually there was a loss to the plaintiff of more than $800,000, as the opinion points out, which must be held within DeAngelis' contemplation. Thus his act for the partnership was a direct and actionable interference with these contracts. Lamb v. S. Cheney & Son, 227 N.Y. 418, 422, 125 N.E. 817; Campbell v. Gates, 236 N.Y. 457, 460, 141 N.E. 914; The Poznan, D.C.S.D.N.Y., 276 F. 418, 433. No malice is necessary; it is sufficient to establish liability that DeAngelis acted intentionally and without legal or social justification. Hornstein v. Podwitz, 254 N.Y. 443, 448, 173 N.E. 674, 84 A.L.R. 1; Campbell v. Gates, supra; 6 Corbin on Contracts 855 (1951). Whether additional labels, such as fraud, conspiracy, or what not, are to be added seems to me merely garnishment of the essential facts which are enough to justify holding partnership property until the wrong is judicially established. Bernstein v. Van Heyghen Freres Societe Anonyme, 2 Cir., 163 F.2d 246, 248, certiorari denied 332 U.S. 772, 68 S. Ct. 88, 92 L. Ed. 357.
Against this background the other objections seem to me to fall rather quickly. That this big packing concern disposing of its own tallow is suddenly prevented from having any to meet its obligations to plaintiff seems to me an intentional interference with contract relations not to be wiped out by the suggestion that market forays might produce the tallow. Surely it is unrealistic to expect that this concern, stopped by its enfeebled financial condition from fulfilling its contracts in the normal and easy manner, ...