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05/21/59 Francis O. Day Co., Inc., v. Jacob Shapiro

May 21, 1959




Before EDGERTON, DANAHER and BURGER, Circuit Judges.


May 21, 1959. Decided


DANAHER, Circuit Judge.

Appellant, a Maryland corporation, entered into a contract on December 2, 1954, for construction work on a development project on lands located in Maryland, owned by certain of the corporate appellees. Shapiro Engineering Corporation as general contractor executed the contract through appellee, Jacob Shapiro, also known as J. B. Shapiro. When agreed payments were not forthcoming, appellant had judgment in the courts of Maryland. *fn1 Suit on the judgment was then commenced in the District Court, the complaint naming as defendants Shapiro Engineering Corporation, which defaulted, and the remaining appellees here, Jacob Shapiro, Shapiro Building Supply Corporation, Shapiro Development Corporation, Shapiro, Inc., Shapiro Mortgage Corporation, Shapiro Sales, Inc., and Connecticut Avenue Woods III, a corporation, all of which last-named parties moved to dismiss on the ground that "the complaint fails to state a claim or cause of action upon which relief can be granted." From the District Court's order dismissing the complaint with prejudice, this appeal was taken.

Before the adoption of the Federal Rules of Civil Procedure, 28 U.S.C.A. the Supreme Court had pointed out *fn2 that "cause of action" may "mean one thing for one purpose and something different for another." "At times and in certain contexts, it is identified with the infringement of a right or the violation of a duty ." *fn3 (Emphasis added.) "At other times and in other contexts, it is a concept of the law of remedies . . .. Another aspect reveals it as something separate from writs and remedies, the group of operative facts out of which a grievance has developed." *fn4 It was observed that the Court had become increasingly liberal in its construction of allegations and as illustrative, Mr. Justice Cardozo cited among other cases, Friederichsen v. Renard, 1918, 247 U.S. 207, 38 S. Ct. 450, 62 L. Ed. 1075, where "a cause of action by a defrauded buyer to set aside a contract was turned into a cause of action to recover damages for deceit." *fn5

With the adoption of the new Rules the Court's concept as here to be applied was formulated in Rule 8(a)(2). "In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless is appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief ." *fn6 (Emphasis added.) The Court went on to explain that the Federal Rules of Civil Procedure "do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is 'a short and plain statement of the claim'

Applying the standards so explicitly recognized by the Court, we are bound to reverse the order dismissing the complaint here. Fairly construed, the complaint showed that the appellant had performed work, labor and services to the value of many thousands of dollars which redounded to the advantage of some if not all of the appellees. Appellant's claim was found by the courts of Maryland to be fair and just. The appellant had not been paid. Thus, as appellant brought suit on its judgment we find alleged a claim for which relief may be had, as the facts and our law will make clear.

The complaint alleged that the "Defendant, Jacob Shapiro, usually known as J. B. Shapiro, is a resident of the District of Columbia . . . and is the principal stockholder and owner of the defendant corporations," Shapiro Building Supply Corporation, Shapiro Development Corporation, Shapiro Engineering Corporation, Shapiro Mortgage Corporation, and Shapiro Sales, Inc., all organized under the laws of Maryland, Shapiro, Inc., organized under the laws of Delaware, and Connecticut Avenue Woods III, organized under the laws of Maryland. All of the corporate

It is further alleged that Maurice C. Shapiro, the registered agent of the corporate defendants, in August 1943, had first conveyed about 80 acres of land in Mongtomery County, Maryland, to Oakwood Village, Inc. Thereafter, on September 1, 1953, Oakwood Village, Inc. conveyed from the entire tract: about 17 acres to Connecticut Avenue Woods III, Inc., another parcel of about 15 acres of the same land to Shapiro Building Supply Corporation and a third parcel of about 44 acres of the remaining land to Shapiro, Inc.

Appellant alleged further that on the second of December, 1954, the appellee J. B. Shapiro submitted a contract to the appellant "for the performance of labor and furnishing of materials on a project then being contemplated on the land," previously mentioned; that Shapiro wrote into the contract that the owners of the land were Connecticut Avenue Woods III, Inc., Shapiro Building Supply Corporation, and Shapiro, Inc.; that

The complaint continued that appellant performed its work on the project and by judicial determination had become entitled to substantial remuneration therefor. Shapiro Engineering Corporation was then found to have been without funds or property and that the contract "when made by the defendant J. B. Shapiro in the name of said corporation, was made for the purpose of evading liability," and that the contract "was in truth and fact the contract of J. B. Shapiro in the guise of a corporation."

Appellees ask us to sustain their judgment principally on the ground that "The obligations of a corporation cannot be foisted on others said to be related or with common control of officials unless there is both allegation and proof of fraud or concealment by the person or corporation sought to be charged, which fraud or concealment affected the creation or payment of the obligation of the principal corporate obligor." *fn9 We think the issue may not be so narrowly stated, as will be developed.

Appellees argue that there is no allegation asserting any "legal identity" between Shapiro Engineering Corporation and the appellees. The record is otherwise, particularly as to Shapiro as may be seen from the allegations (supra). They say there is no allegation of an illegal, improper or prejudicial transfer of assets from the judgment debtor to the appellees after the contract of December 2, 1954, had been entered into. The claim does not depend upon such circumstance. Appellees continue that the situation was, or should easily have been, known to appellant before it entered into the contract with Shapiro Engineering Corporation. Thus, since the complaint does not allege fraud or manipulation by anyone after the contract was made, appellant was not prejudiced, it is insisted. Appellees thus argue, in effect, that if appellant was sufficiently gullible as to trust Shapiro and his Shapiro Engineering Corporation, appellant deserves to take a loss of over $12,000. They urge that since ...

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