Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

UNITED STATES v. CIGARETTE MERCHANDISERS ASSN.

November 23, 1955

UNITED STATES of America
v.
CIGARETTE MERCHANDISERS ASSOCIATION, Inc., et al., Defendants



The opinion of the court was delivered by: WEINFELD

The indictment herein, returned in April, 1954, charged the defendant, the Rowe Corporation, and thirteen others with violations of 1 and 2 of the Sherman Act. *fn1"

The Rowe Corporation, hereinafter called Rowe, moves to dismiss the indictment as against it upon the ground that its corporate existence ceased on September 30, 1955 as a result of its merger and consolidation with another corporation in consequence of which this prosecution has abated.

Upon arraignment all defendants pleaded not guilty. Thereafter the defendants other than Rowe pleaded nolo contendere *fn2" and are now awaiting sentence. Rowe requests that in the event of the denial of this motion it too be permitted to plead nolo contendere.

 Rowe was a New York corporation. On September 23, 1955, its stockholders voted to merge and consolidate with the Automatic Canteen Company of America, a Delaware Corporation. The latter corporation is not named a defendant in the indictment. The consolidation was effected on September 30, 1955, when the two corporations filed the requisite certificates with the Secretaries of State of New York and Delaware. *fn3"

 Under the consolidation the Automatic Canteen Company of America became the surviving constituent and Rowe's existence ended. Accordingly Rowe contends that it may no longer be prosecuted under the pending indictment. It relies of course upon the common law doctrine that the dissolution or merger of a corporation is analogous to the death of an individual with the result that all pending actions or proceedings by or against it are abated except insofar as the State of creation may artificially continue its life for a stated period to permit the winding up of its affairs. *fn4" The defendant presses that under New York law governing consolidation, a merged corporation is not continued for purposes of criminal prosecution or the payment of a fine or penalty which may be imposed in a criminal prosecution.

 The Government concedes *fn5" that the issue must be resolved by reference to New York law but argues that under the applicable statute, the corporation still remains subject to prosecution under the pending indictment.

 Preliminarily it may be observed that practically all states have statutes which in authorizing the dissolution of corporations, whether voluntarily or otherwise provide that for a specified period thereafter 'suits', 'actions' or 'proceedings' may be brought by or against the corporation and that pending actions shall not abate. The purpose of course in keeping the corporation 'alive' is to ameliorate the unjust and harsh results to creditors and stockholders alike if the strict common law doctrine of corporate death and abatement were applied.

 New York's consolidation statute provides for the survival of all 'actions or proceedings'. The parties are in accord that the applicable provision is 90 of the New York Stock Corporation Law, which provides:

 'The rights of creditors of any constituent corporation shall not in any manner be impaired, nor shall any liability or obligation due or to become due, or any claim or demand for any cause existing against any such corporation or against any stockholder thereof be released or impaired by any such consolidation; * * * and no action or proceeding then pending before any court or tribunal in which any constituent corporation is a party * * * shall abate or be discontinued by reason of such consolidation, but may be prosecuted to final judgment, as though no consolidation had been entered into; * * *.'

 The defendant argues that the 'action or proceeding' referred to in the saving clause of 90 refers only to civil suits and that 'liability or obligation' contemplates only corporate debts or civil liabilities and does not embrace a fine or a penalty which has been or may be imposed for a public wrong. I believe these contentions are without substance both as a matter of construction of the statute and the public policy which underlies it.

 On the construction issue, the answer is provided in a most persuasive manner by New York State's General Construction Law *fn6" which defines 'action':

 Section 11-a provides: "Action' when applied to judicial proceedings, signifies an ordinary prosecution in a court of justice, by a party against another party, for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense. Actions are of two kinds: civil and criminal.'

 Sections 16-a and 18-a, respectively, define 'civil action' and 'criminal action'. *fn7"

 Another section of the General Construction Law makes its provisions 'applicable to every statute' except where it appears that a different meaning or application is intended. *fn8" So applied to 90 of the Stock Corporation Law, 'action' as contained therein must be deemed to include both 'civil' and 'criminal' actions as defined in 11-a of the General Construction Law. Nothing in 90 of the Stock Corporation Law suggests that the words 'action or proceeding', clearly of broad generic meaning, were used in a constricted sense so as to encompass only civil actions and to exclude criminal actions or proceedings. The words in their ordinary and commonly accepted sense embrace every form and kind of litigation, civil and criminal. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.