Summary
In Norbo Trading Corp. v. Resolute Ins. Co., 115 Ga. App. 490 (154 S.E.2d 704), this court held that "the allegations of the wrongful and illegal acts of each and all of the defendants... as well as the allegations of conspiracy between the defendants" stated a cause of action.
Summary of this case from Norbo Trading Corporation v. WohlmuthOpinion
42455.
ARGUED JANUARY 3, 1967.
DECIDED MARCH 10, 1967. REHEARING DENIED MARCH 29, 1967.
Action for damages. Chatham Superior Court. Before Judge Harrison.
John R. Calhoun, for appellant.
Joseph B. Bergen, Converse Bright, Edenfield, Heyman Sizemore, Newell Edenfield, Joseph Lefkoff, for appellees.
The petition set forth a cause of action against the defendants named in the action with the exception of one item noted in the opinion.
ARGUED JANUARY 3, 1967 — DECIDED MARCH 10, 1967 — REHEARING DENIED MARCH 29, 1967 — CERT. APPLIED FOR.
Norbo Trading Corporation instituted an action in tort against Resolute Insurance Company, Joseph B. Bergen, Charles Leik, and Southeastern Ship Salvage Corporation in which the plaintiff alleged as follows: ". . . 6. That the said company, by and through its officers, agents and employees, is engaged in the business of purchasing obsolete `Liberty' ships from the United States Maritime Commission, under certain terms and conditions as set forth by said Commission, dismantling said ships, and selling the scrap material therefrom. 7. That in the latter part of 1964, the U.S. Maritime Commission issued bids for three ships, to wit: The S. S. Richard S. Ewell; The S. S. John G. Carlisle; and the S. S. Francis L. Lee. That pursuant to said bid, the Norbo Trading Corporation entered a bid on said ships in the amount of $55,100 per ship. 8. That simultaneously therewith, the said Norbo Trading Corporation entered into negotiation with the Nissha American Corporation to purchase certain scrap material from said ships in the amount of $383,875. That also, said Norbo Trading Corporation negotiated with the Afgan American Trading Company, Inc., a lending institution, to borrow the sum of $320,000 to finance the operation of purchasing said ships and the dismantling thereof. 9. That in order for Norbo Trading Corporation to purchase said ships and borrow money for its operation and to sell said scrap materials, it was necessary that the said Norbo Trading Corporation have performance bonds posted to the said Maritime Commission to ensure that said ships were scrapped in accordance with the rules and regulations of the U.S. Government; and the lending institution required a financial performance bond before the lending of said funds to finance said operation; and the purchasers of said scrap material required a performance bond to ensure delivering of said scrap material. 10. That Norbo Trading Corporation contacted Mr. Jack Walderman and Mr. Jerome Wohlmuth, agents of Resolute Insurance Company, to secure the posting of said bonds, and they contacted the defendant Charles Leik, national bonding manager for the defendant Resolute Insurance Company, and they agreed to post same on behalf of Resolute Insurance Company if Norbo Trading Corporation was successful in purchasing said ships and in consummating the above mentioned contracts. 11. That in January, 1965, Norbo Trading Corporation was notified by the U.S. Maritime Commission that it was the successful bidder on the aforesaid three ships, and Norbo Trading Corporation entered into contracts consummating the negotiations as heretofore authorized, to wit: Borrowing from Afgan American Trading Company, Inc. the sum of $320,000; selling to Nissha American Corporation scrap materials in the amount of $383,875; and purchasing from the U.S. Maritime Commission the three ships for the amount of $165,300. 12. That Norbo Trading Corporation purchased from Mr. Jack Walderman and Mr. Jerome Wohlmuth, agents of Resolute Insurance Company, with the approval of the defendant Leik, Performance Bond GP No. 2037 in the amount of $320,000 to the Afgan American Trading Company; Bonds No. GP 5462, No. GP 5463, and GP 3624 in the amount of $50,000 each to the U.S. Maritime Commission; and a bond number unknown to the Nissha American Corporation for the amount of $38,000. That Norbo Trading Corporation paid to the said Jack Walderman, Jerome Wohlmuth, and defendant Charles Leik the premium for said bonds totalling the sum of $22,500. 13. That upon execution of the aforesaid performance bonds, the said Jack Walderman, Jerome Wohlmuth and defendant Charles Leik required that the said Norbo Trading Corporation execute to the said Jerome Wohlmuth an instrument appointing him attorney in fact under certain terms and conditions. A copy of said instrument being made a part hereof and marked as Exhibit `A.' [Exhibit A is as follows: `Power of Attorney. The undersigned, Norbo Trading Corporation, a corporation duly organized and existing under and by virtue of the laws of the State of New York, does hereby appoint as its attorney in fact, Jerome Wohlmuth in accordance with resolutions adopted at a meeting of the Board of Directors duly held on January 25, 1965, to carry out the purchase of Liberty Ships, the leasing of the appropriate required shipyards, the performance of contracts to scrap the ships, and the performance of the contracts for the sales of the scrap in accordance with contracts already entered into by Norbo Trading Corporation with the appropriate parties of the second part and to do such other things or acts as may be required in furtherance of the foregoing. This power will be a power coupled with interest in the event that (1) chattel mortgages placed on the vessels purchased and resultant scrap are not delivered to Mr. Wohlmuth within five (5) days of their purchase, or (2) a confession of judgment against Emil Tucker and Miriam Tucker is not obtained, or (3) the contracts for the sale of the scrap are not performed or are in the judgment of Jerome Wohlmuth unlikely to be performed in accordance with their terms, otherwise this power of attorney shall be null and void and of no further effect.'] 14. That said Norbo Trading Corporation came to Savannah, Georgia, and formed a Georgia corporation, to wit: American Salvage Corporation, to carry out the actual scrapping of said ships. That the said Norbo Trading Corporation and the said American Salvage Corporation leased premises from the Savannah District Authority on the Savannah River, and spent the sum of $110,000 on the premises improving same so that the `Liberty' ships could be brought in and dismantled. 15. That immediately after operation of said business in Savannah began, the said Jerome Wohlmuth, acting as agent of the said Resolute Insurance Company and the defendant Charles Leik, started interfering with the operation of said business for which he had no knowledge or experience, had to countersign all checks with the officers of Norbo Trading Corporation, and, in general, interfered with the operation of said company. That the said Resolute Insurance Company and the defendant Charles Leik retained the defendant Joseph Bergen, local attorney, to look after their interest which they were responsible for under the performance bonds and to assist the said Jerome Wohlmuth. That the said Joseph Bergen required the said Norbo Trading Corporation to open an account with the Savannah Bank Trust Company wherein he signed the checks as trustee for monies received from the sale of scrap material from the said ships. That at the time he was acting as agent of the said Resolute Insurance Company and the defendant Charles Leik. 16. That after the said operation commenced, Plaintiff bid on another ship with the U.S. Maritime Commission, to wit: The U.S. John Milledge. Plaintiff was awarded the bid on this ship, borrowed $80,000 from Case-Press, Inc., and entered into a contract with the Robert Closter Company of Pennsylvania to purchase the scrap from said ship. That the Resolute Insurance Company posted a $50,000 performance bond with the U.S. Maritime Commission for this ship and a financial performance bond in the amount of $80,000 with Case-Press, Inc., and $180,000 with Robert Closter Company. That the power of attorney executed by Norbo Trading Corporation to Jerome Wohlmuth, as agent of defendant Resolute Insurance Corporation, as heretofore alleged, did not cover the above transaction. That petitioner at the time of purchase from the U.S. Maritime Commission made arrangements with said Commission for them to keep the ships in the reserve fleet in Wilmington, North Carolina, until Norbo requested same. That on the 22nd day of June, 1965, without any authority or right whatsoever, the said Jerome Wohlmuth and defendant Joseph Bergen, acting for the defendant Resolute Insurance Company and defendant Charles Leik, called Mr. Doty of the U.S. Maritime Commission and informed them that they represented your petitioner and that they were taking this ship out of the reserve fleet, which they did and had the same towed to Savannah, Georgia. 17. That the said Jerome Wohlmuth, acting as agent, employee and servant of Resolute Insurance Company, without Norbo's consent, diverted $13,000 of Norbo Trading Corporation's money to his own use from the $80,000 borrowed from Case-Press, Inc. to dismantle the U.S. John Milledge, which hindered the said Norbo Trading Corporation from the performance of its operation. That the said Norbo Trading Corporation tried to have the said Jerome Wohlmuth to return said monies, but he failed and refused to do so. 18. That in addition thereto, the said Jerome Wohlmuth and the said Joseph Bergen, who were handling the money of the said Norbo Trading Corporation, during the early part of May 1965, after receiving instructions from the president of Norbo Trading Corporation to do so, failed and refused to transfer monies from the Norbo account to the American Salvage Company account to pay the payroll for the men working on the scrapping of said ships and to pay the rent to the Savannah District Authority, causing said operation to cease. That the said Jerome Wohlmuth and Joseph Bergen wilfully failed to transfer said funds to cease operation of said business so that the said Jerome Wohlmuth could exercise his power of attorney that is attached hereto. 19. That the said Jerome Wohlmuth and Joseph Bergen, after the ceasing of said operation, notified all creditors and the Afgan Trading Company, the U.S. Maritime Commission, Case-Press, Inc., Nissha American Corporation, and the Robert Closter Company that they were exercising said power of attorney and taking over said operation and that they, the creditors, would be paid as they were going to perform the contracts of Norbo. 20. That shortly thereafter and on the 14th day of May, 1965, Jerome Wohlmuth and Joseph Bergen induced Norbo Trading Corporation to execute the consent to exercise power of attorney and temporary order entered in a case now pending in the Superior Court of Chatham County, Georgia, styled Jerome Wohlmuth v. Norbo Trading Corporation, upon the representation that they would merely take over the contracts of Norbo Trading Corporation on the first three ships and complete the same in accordance with the provisions of said contract, which was the only power they had under the power of attorney and the bonds so posted by Resolute Insurance Company, and turn over to petitioner the profits under said contracts. 21. That at the time of the aforesaid acts, petitioner Norbo Trading Corporation was not in default under any of the contracts it had executed and was in the process of fulfilling said contracts. 22. That the said Jerome Wohlmuth and Joseph Bergen, after the execution of said power of attorney by Norbo Trading Corporation, instead of fulfilling the contracts as they represented to petitioner that they would do and for which they were required to do under said power of attorney and the financial bonds posted by the said Resolute Insurance Company, and the order of the Superior Court of Chatham County, Georgia, took all of petitioner's property, leasehold improvements, and the three ships, and, in addition, and without any authority whatsoever, took the fourth ship which had been paid for by petitioner. That the said Jerome Wohlmuth and Joseph Bergen formed a new corporation, to wit: defendant Southeastern Ship Salvage Corporation, with the defendant Bergen as president; transferred all of plaintiff's property to said defendant corporation, including the lease with the Savannah District Authority, and the improvements thereon which cost your petitioner the sum of $110,000 to improve. That the said defendant corporation entered into an agreement with the said Jerome Wohlmuth acting as attorney in fact for petitioner and as agent of the defendant Resolute Insurance Company to complete the said contracts of the plaintiff. That the said defendant corporation after taking all the property and assets of petitioner, did not try to perform said contracts and had no intention of performing same but the said Bergen executed said contracts on behalf of defendant corporation and while acting as agent of defendant Resolute Insurance Company to take your petitioner's property for the use of the said defendant Bergen and the other defendants, and said defendants did wilfully place your petitioner's contract in default so that they could take over said property for their own benefit. 23. That the said Joseph Bergen, as trustee for Resolute Insurance Company, was designated signature agent on Norbo Trading Corporation account at the Savannah Bank Trust Company, which account had the sum of $6,000 in it. That petitioner Norbo Trading Corporation had placed in said account the additional sum of $10,000 to cover payroll and rent, and had directed the said Joseph Bergen to transfer this money to the American Salvage Company account so that the payroll and rent could be paid. That the said Joseph Bergen wilfully and maliciously refused to transfer this money so that the operation of the said Norbo Trading Corporation would close down so that he and Jerome Wohlmuth could take over said corporation. That the said Joseph Bergen has transferred the said $16,000 to some other account, and petitioner does not know of its whereabouts or for what purposes it was so used. 24. The bonds heretofore alleged as being posted by the defendant Resolute Insurance Company were never authorized by said company to be posted, but the defendant Charles Leik and Jerome Wohlmuth received the payments on said bonds while acting as agent of the defendant Resolute Insurance Company and the said Resolute Insurance Company is liable on said bonds and it has directed the defendant Charles Leik to get them off said bonds, and the defendant Charles Leik, with the consent and approval of the defendant Resolute Insurance Company, has directed the defendant Bergen to commit the acts heretofore alleged and during said acts they were acting for themselves and for their benefit and as agent of the defendant Charles Leik who is responsible to defendant Resolute Insurance Company and for their benefit and under their direction and control. 25. That said indebtedness to Case-Press, Inc., becomes due and payable on the 17th day of September, 1965, and said indebtedness to Afgan American Trading Company became due and payable on August 1, 1965. In spite of the fact that Resolute Insurance Company, through its agents, servants and employees was in possession of all assets of Norbo Trading Corporation, as aforesaid, and under a duty to perform plaintiff's contracts, the defendant Resolute Insurance Company joined and procured the Afgan and Case-Press companies to foreclose against all the assets of plaintiff, and defendant Resolute Insurance Company caused the sheriff of the superior court to levy upon your petitioner's property and assets and to sell same, which defendant Resolute purchased at said sale the assets of petitioner for the sum of $11,000 when the true value of same is $250,000. That said defendants wilfully and maliciously procured and joined in said foreclosure and levy by the sheriff of the superior court so they could take the assets of your petitioner under guise of the law so that they could be converted to their own use as defendant Resolute was under a duty to protect your petitioner due to the acts heretofore alleged. 26. That at the time of the aforesaid acts, the defendant Bergen and defendant Leik were acting for themselves individually and for their own benefit, and the defendant Bergen was acting as officer and agent of the defendant Southeastern Ship Salvage Corporation, and was acting in its behalf and in the course of its employment and acting for its benefit and under its direction and control, and the defendants Joseph Bergen and Charles Leik were acting as officers, agents and employees of the defendant Resolute Insurance Company and were acting in its behalf and in the course of their employment and acting for its benefit and under its direction and control. 27. That by the aforesaid acts, defendants have trespassed upon your petitioner's property and business, and petitioner has been damaged in the amount of $110,000, the value of the leasehold improvements, the sum of $220,000 for the profits your petitioner would have realized from the scrapping of the four ships, and the sum of $400,000 as the value of your petitioner's property, which your petitioner will hereinafter pray. 28. That in addition to the above damages, the said acts by the defendants were wilfully and maliciously done with the intent to take over and destroy your petitioner's business and to put your petitioner out of business and to cause your petitioner to be liable in the amount of $656,000 on the contracts he had so entered into, and petitioner will hereinafter pray for the sum of $1,000,000 as punitive damages against defendants for the commission of the aforesaid acts and to deter them from committing said acts in the future. 29. Petitioner further shows that the aforesaid acts of the defendants were a conspiracy between them to take your petitioner's property and assets and to put him out of business, and all of the aforesaid acts were done in conjunction with said conspiracy and for that purpose and intent."
Plaintiff prayed for process, perfection of service, and for a judgment of $1,720,000.
1. It seems too plain, without elaborate discussion, that the petition sets forth an action in tort, wherein punitive damages are also sought, based on the acts of the several defendants which are alleged to have been wilfully committed for the purpose of violating the plaintiff's rights and doing injury to it as alleged. The defendants owed the plaintiff the duty not to injure it in the ways alleged in the petition, with one exception and that is the act of Jerome Wohlmuth, alleged in Paragraph 17 of the petition, in converting $13,000 of plaintiff's money to his own use. In so doing he could not have been acting for the plaintiff or any of the defendants. The petition does not show on its face that the handling of the fourth ship purchased by plaintiff was included in the power of attorney shown in the petition. Whether or not the defendant insurance company did authorize the issuance of the bonds, the insurance company had no right to commit the unlawful acts alleged in the petition against the plaintiff. As to the dual agency of some of the defendants, the petition does not show on its face that the fact of the dual agencies was not known to and assented to by the principals involved so the allegations must be construed in the light of whether the agents were acting in good faith as to both principals. Under the allegations they were not, but were acting in bad faith insofar as their fidelity to the plaintiff was concerned. As to the consent decree, authorizing the exercise of the power of attorney by Wohlmuth, the plaintiff was bound only by its proper and faithful exercise and not by unauthorized and unlawful exercise as alleged in the petition. We cannot agree with appellees' interpretation of some parts of the petition which interpretations, in our opinion, are shown to be incorrect by plain and unambiguous allegations of the petition. We think that the allegations of the wrongful and illegal acts of each and all of the defendants are sufficiently alleged to withstand the general demurrer as well as the allegations of conspiracy between the defendants. Young v. Wilson, 183 Ga. 59 (2g) ( 187 S.E. 44); National Bank of Savannah v. Evans, 149 Ga. 67 ( 99 S.E. 123). Cases cited by appellees are distinguishable on their facts. The court erred in sustaining the demurrer to the petition.
Judgment reversed. Hall, J., concurs. Eberhardt, J., concurs in the judgment.