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Anzalone v. Durchslag

AUGUST 26, 1971.

J.J. ANZALONE, D/B/A S. ANZALONE & COMPANY ET AL., PLAINTIFFS-APPELLEES,

v.

IRVING DURCHSLAG, D/B/A GENERAL PAINTING CONTRACTORS COMPANY ET AL., DEFENDANT-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. MARK C. JONES, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Defendants appeal a judgment entered against them below in the amount of $3,187 for merchandise allegedly ordered from plaintiff. Defendants assert that they were improperly held personally liable for the debt of General Painting Contractors which was not a partnership as found in the trial court, but a corporation. They seek to establish this fact by arguing alternatively that either General Painting Contractors was a division of Chicago Camcorp, Inc. (a valid Illinois corporation) and, therefore, entitled to share in its corporate existence, or that plaintiff should be estopped from denying General Painting Contractors' corporate existence because plaintiff dealt with General Painting Contractors as if it were a valid Illinois corporation.

More specifically they argue: (1) A corporation (i.e., Chicago Camcorp, Inc.) may contract, acquire rights, or incur obligations in a fictitious or trade name (i.e., General Painting Contractors.) (2) If the plaintiff intended to deal with the corporation (Chicago Camcorp), there is no liability on the officers and shareholders of the corporation. (3) If plaintiff contracted or otherwise dealt with an alleged corporation (General Painting Contractors) in such a way as to recognize its legal existence as a corporate body, he is thereby estopped to deny its corporate existence.

We affirm.

Joseph Anzalone, plaintiff, is in the business of selling paint, wallpaper, hardware and decorating equipment. Anzalone had known defendant Durchslag for twenty-five years, and, therefore, when Durchslag presented himself to Anzalone in early 1963 and informed him that he was a part of Chicago Camcorp, Inc., Anzalone decided to extend credit to the corporation on his goods. Chicago Camcorp, Inc. was originally a party to the action but was later taken out by reason of plaintiff's Amended Complaint. Ill. Rev. Stat. 1967, ch. 110, par. 46.

In April of 1964 Durchslag again appeared in Anzalone's place of business. Anzalone testified that Durchslag told him that "* * * he was going into this painting business big and he was going to form a new company, General Painting Contractors, and he was hiring a new man * * *." Azalone expressed his reservations about the new employee, who had a very bad business reputation, to both Durchslag and Durchslag's associate (and co-defendant) Ryan. Nevertheless, as Anzalone put it, "As long as Mr. Durchslag was behind the whole situation and I had known him for so many years and his family and doing business with them, and always been paid, I went, just went along with them."

When asked the name of this "new company," Anzalone replied, "General Painting Contractors. They were changing the name from Chicago Camp Corps [sic] to General Painting Contractors, a division of that, or whatever * * *. I am positive that is what he termed it as in forming a new company."

From April of 1964 until September of the same year, painting supplies were purchased by and billed to General Painting Contractors Co., 209 North Des Plaines, except for a few billed to General Painting Contractors Co., Chicago Camcorp, Inc. Bills, when paid, were paid by checks, the stubs of which bore the notation "Chicago Camcorp, Inc."

September 15, 1964, Durchslag informed plaintiff that he was no longer with General Painting Contractors. When plaintiff inquired, "Who do I go to see for the money now?", Durchslag replied, "You will have to chase * * * Jack Richards. We sold the business to him, or Jack Ryan."

Irving Durchslag testified at trial that General Painting Contractors Co. was not a corporation, nor was it a partnership. Its members were those of Chicago Camcorp, and the name "General Painting" was created because it better informed the public of Chicago Camcorp's decorating service. General Painting Contractors Co. did not have a checking account, a tax return, employees, a social security number, or a bank account separate from those of Chicago Camcorp, Inc.

Having heard all of the testimony and having viewed all of the evidence, the trial court entered a judgment against Durchslag and Ryan.

Defendants first argue that Chicago Camcorp, Inc. could contract, acquire rights, or incur obligations in a fictitious or trade name. They offer as authority for this argument the case of Malleable Iron Range Co. v. Pusey (1910), 244 Ill. 184, 91 N.E. 51. This case, however, is inapposite to the point defendants stress, for it addresses itself to an instance where a corporation's name was improperly stated on a contract. The court held that such a misnomer would not invalidate the contract if it could be proven that the identity of the corporation in question was unmistakable and that the corporation was misnamed in the contract by inadvertence. Thus, parole evidence was admissible to establish the identity of the corporation.

In Illinois a corporation has no legal right to use any name other than that under which it was organized, and use by a corporation of a name different from its legal corporate name is against the public policy of the State. (Svenska Nat. Forbundeti Chicago v. Swedish Nat. Ass'n., (1917), 205 Ill. App. 428.) If Chicago Camcorp, Inc. found that its legal name presented a consumer identification problem, it could have changed its name pursuant to the Corporation Act. (Ill. Rev. Stat. 1967, ch. 32, par. 157.52-2.) This would have required action on the part of the directors, notice to the shareholders, a two-thirds vote of the shareholders plus a proper filing of an amendment of the articles of incorporation. (Ill. Rev. Stat. 1969, ch. 32, pars. 157.53, 157.56.) The mere invention of the name "General Painting Contractors Co." and its designation as a division of Chicago Camcorp, Inc. gave rise to no new legal entity, nor did it inform creditors that Chicago Camcorp and General Painting Contractors were one and the same corporation.

The defendants next argue that if plaintiff intended to deal with the corporation, there is no liability on the officers and shareholders of the corporation. Defendants urge that the case of Pilsen Brewing Co. v. Wallace (1919), 214 Ill. App. 540, is ...


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