192 Conn. 271 (1984) | Cited 15 times | Supreme Court of Connecticut | February 21, 1984

In May, 1975, the plaintiffs,property owners in Monroe, instituted an action againstthe town planning and zoning commission (commission),Claude Betterton, Jr., the zoning enforcementofficer of the town of Monroe, and Monroe LittleLeague, Inc. (MLL), claiming, inter alia: that MLL hadexpanded the use of premises utilized for Little Leaguebaseball playing activities authorized under a specialexception issued by the commission; that the activitiesof MLL violated Monroe zoning regulations and constituteda nuisance; and that the defendant Bettertonhad failed to enforce the zoning regulations againstMLL although requested by the plaintiffs to do so. Theplaintiffs sought, inter alia, relief by way of injunction.

On June 19, 1975, the Superior Court ordered injunctiverelief on behalf of the plaintiffs against the defendantMLL in accordance with a written stipulation ofthe plaintiffs and MLL. That injunction imposed certainrestrictions on the days, hours, location and conditionsof play. From June 19, 1975, through aboutMarch, 1982, MLL conducted Little League baseballactivities in Monroe in conformity to that injunction.

In April, 1982, the officers and some of the directorsof MLL, on the advice of counsel, organized a corporationknown as Little League Baseball of Monroe, Inc.(LLBM), to conduct Little League baseball in Monroeand some Little League games were scheduled and

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     played on Saturdays. In May, 1982, the plaintiffs in the1975 action filed a contempt motion which alleged thatMLL had violated the 1975 injunction by schedulingand playing baseball games on Saturday and Sunday,as well as playing games at a proscribed location.1Thereafter, the new corporation, LLBM, was cited inand added as a party defendant to the contemptmotion.2

After an evidentiary hearing on the plaintiffs' motion,both defendant corporations, MLL and LLBM, werefound in contempt of the 1975 injunction and the courtordered the defendants to pay court costs of the plaintiffsin the amount of $328 in addition to their reasonableattorney's fees.3 This appeal followed.

On appeal the defendants claim that the trial courterred (1) in finding that the 1975 injunction provideda valid basis for holding either defendant in contemptin 1982 when no judgment file expressing the 1975 trialcourt's decision had ever been prepared or signed bythat trial judge; (2) in applying the 1975 injunction toLLBM, a corporation organized in 1982, when it wasnot a part of the 1975 injunction proceedings and notbound by the terms of that injunction; (3) in holdingMLL in contempt for acts Occurring after it had ceasedconducting Little League activity and after the plaintiffshad withdrawn their claims against it; (4) in considering

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     the contempt civil rather than criminal; and(5) in imposing a sanction in a civil contempt that waspunitive rather then remedial or coercive.

First, we take up the claim of the lack of a judgmentfile. There can be no question but that the parties, whostipulated in 1975 that the injunction order enter, knewexactly what the judgment provided. Indeed, not onlydid MLL scrupulously obey that judgment for almostseven years, but it unsuccessfully moved the court in1981 to modify that injunction claiming circumstanceshad substantially changed since that time.4 The actionof the court on June 19, 1975, in ordering injunctiverelief in accordance with the written stipulation, wasa judgment. See 46 Am.Jur.2d, Judgments 54. Thedefendants cannot and do not claim there is not anappealable judgment. When there is an appealable judgment,we have considered the appeal even where therewas no judgment file. See Harris v. First NationalBank & Trust Co., 139 Conn. 749, 752, 97 A.2d 260(1953); Northeastern Gas Transmission Co. v. Brush,138 Conn. 370, 372, 84 A.2d 681 (1951).

The claim that it was error to apply the 1975 injunctionto LLBM, a corporation which was not organizeduntil 1982, and which was not a party to the 1975proceedings and, therefore, not bound by that injunction,likewise lacks merit. The trial court agreed withthe plaintiffs that LLBM and those active in its organizationand operation realized that any playing of LittleLeague baseball on Saturday under the name ofLLBM would violate the injunction order. It also foundthat the officers of LLBM were "practically identical"with those of MLL and that MLL had not ceased to

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     exist at the time of the hearing. The new corporation,i.e., LLBM, was still using the bank account of MLL.The membership of MLL never voted to transfer itsfunds to LLBM. Significantly, witnesses who were officersof both MLL and LLBM indicated that LLBM wasorganized so that Little League baseball could be playedon Saturdays.5 Officers of LLBM who testified all indicatedthat they were aware of a stipulation thatprevented the playing of Little League baseball onSaturdays. We agree with the trial court that "[i]t isdifficult to see how [the defendants] thought that bysimply changing the name to [LLBM], they could avoidthe consequences of the court order."

"When the statutory privilege of doing business inthe corporate form is employed as a cloak for theevasion of obligations, as a mask behind which to doinjustice, or invoked to subvert equity, the separate personalityof the corporation will be disregarded." Mullv. Colt Co., 31 F.R.D. 154, 166 (S.D.N.Y. 1962).6 Thisgeneral principle is grounded in equity. Hill v. Jones,118 Conn. 12, 17-18, 170 A. 154 (1934); see generallyAngelo Tomasso, Inc. v. Armor Construction & Paving,Inc., 187 Conn. 544, 447 A.2d 406 (1982). Fraudneed not be shown in order to disregard the corporateentity where one corporation is used as an adjunct toanother corporation. In re Otsego Waxed Paper Co.,14 F. Sup. 15 (W.D. Mich. 1935). One corporation may be

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     disregarded when the two corporations are identicalor indistinguishable in fact. 1 Fletcher, Cyclopedia Corporations(Perm. Ed.) 43, p. 473. "Where there is anear identity between corporations, their separate existencescan be disregarded in order to prevent injusticeto a third party." Royal Exchange Assurance ofAmerica, Inc. v. 55 President Adams, 510 F. Sup. 581,583 (W.D. Wash. 1981); see Houston Oil Field MaterialCo. v. Stuard, 406 F.2d 1052, 1054 n. 1(5th Cir.1969); Crum v. Krol, 99 Ill. App.3d 651, 660-61,425 N.E.2d 1081 (1981); 18 C.J.S., Corporations 7(e).There can be no question that at the very least MLLand LLBM are in "near identity" with each other andthat their corporateness, singly or jointly, served towork injustice on the plaintiffs and was designed to subvertthe injunction.7 Thus, MLL and LLBM wereclearly bound in 1982 by the 1975 order. AlthoughLLBM, unlike MLL, was not a party to the 1975 injunctionproceedings, LLBM, under the circumstances ofthis case, is liable on contempt.8

Additionally, the claims of LLBM that the 1975 orderdid not run to the successors or assigns of MLL mustbe rejected. Persons who are beyond the scope of aninjunction are, of course, not bound by it and are "freeto ignore it." See G. & C. Merriam Co. v. Webster DictionaryCo., 639 F.2d 29, 34 (1st Cir. 1980). At commonlaw an injunction decree bound not only the partiesdefendant "but also those identified with them ininterest, in `privity' with them, represented by them

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     or subject to their control." Regal Knitwear Co. v.National Labor Relations Board, 324 U.S. 9, 14, 65S.Ct. 478, 89 L.Ed. 661 (1945); Dalton v. Meister, 84 Wis.2d 303,312, 267 N.W.2d 326 (1978). "The law is clearthat a person may be bound by the terms of an injunction,even though not a party to the action, if he hasnotice or knowledge of the order and is within the classof persons whose conduct is entitled to be restrainedor who acts in concert with such persons." Clancy v.Clancy, 26 Conn. Sup. 46, 50, 212 A.2d 79 (1965). Ina proceeding seeking contempt for violation of aninjunction Judge Learned Hand said: "Thus, the onlyoccasion when a person not a party may be punished,is when he has helped to bring about, not merely whatthe decree has forbidden, because it may have gone toofar, but what it has power to forbid, an act of a party.This means that the respondent [LLBM in this case]must either abet the defendant [MLL], or must belegally identified with him." Alemite Mfg. Corporationv. Staff 42 F.2d 832, 833 (2d Cir. 1930); see G. & C.Merriam Co. v. Webster Dictionary Co., supra, 35;Clancy v. Clancy, supra; Matter of Rothko, 84 Misc.2d 830,868-69, 379 N.Y.S.2d 923 (1975). From this it followsthat the trial court properly found both MLL andLLBM to be in contempt of the 1975 injunction underthe circumstances. The argument that LLBM was notin existence in 1975 avails it nothing.

The defendants' argument that the trial court erredin holding MLL in contempt for acts Occurring afterit ceased to conduct organized Little League activityand after the plaintiffs withdrew their claims againstMLL requires little discussion. First, as the facts haveshown, MLL was conducting Little League baseball.Second, any reasonable examination of the record persuadesus that the plaintiffs simply did not withdrawtheir claim against MLL.

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There remain the anomalous claims that the trialcourt erred in considering the contempt civil ratherthan criminal and in its imposition of a punishment ina civil contempt proceeding which was punitive ratherthan remedial or coercive. The trial court determinedand the plaintiffs correctly argue, that this matter wasone of civil, not criminal, contempt and that the sanctionsimposed upon the defendants were remedial andnot punitive. We agree.

In Board of Education v. Shelton Education Assn.,173 Conn. 81, 85, 376 A.2d 1080 (1977), referring toMcTigue v. New London Education Assn., 164 Conn. 348,321 A.2d 462 (1973), we said, "a criminal contemptis conduct that is directed against the dignity andauthority of the court. In contrast, civil contempt is conductdirected against the rights of the Opposing party.A contempt is considered civil when the punishmentis wholly remedial, serves only the purposes of thecomplainant, and is not intended as a deterrent against thepublic . . . . In distinguishing between [criminal andcivil contempt], much weight has been placed on thecharacter and purpose of the punishment." Criminalcontempt sanctions "are punitive in their nature andare imposed for the purpose of vindicating the authorityof the court." United States v. United Mine Workersof America, 330 U.S. 258, 302, 67 S.Ct. 677, 91L.Ed. 884 (1947), citing Gompers v. Bucks Stove &Range Co., 221 U.S. 418, 31 S.Ct. 492, 55 L.Ed. 797(1911); see Board of Education v. Shelton EducationAssn., supra. In United States v. United Mine Workersof America, supra, 303-304, the United StatesSupreme Court said: "Judicial sanctions in civil contemptproceedings may, in a proper case, be employedfor either or both of two purposes: to coerce the defendantinto compliance with the court's order, and to compensatethe complainant for losses sustained. Gompersv. Bucks Stove & Range Co., [supra, 448, 449]. Where

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     compensation is intended, a fine is imposed, payableto the complainant. Such fine must of course be basedupon evidence of complainant's actual loss, and hisright, as a civil litigant, to the compensatory fine isdependent upon the outcome of the basic controversy. `"Civil contempt proceedings are not punitive - i.e.,they are not imposed for the purpose of vindicating thecourt's authority - but are `purely remedial.' Parkerv. United States, 153 F.2d 66, 70 (1st Cir. 1946)."(Emphasis in original.) G. & C. Merriam Co. v. WebsterDictionary Co., supra, 41. The United States Court ofAppeals for the First Circuit recently noted that "`[i]tis well settled . . . that the court may, in a proceedingfor civil contempt, impose the remedial punishmentof a fine payable to an aggrieved litigant as compensationfor the special damages he may have sustained byreason of the contumacious conduct of the offender.'Parker v. United States, 126 F.2d 370, 380 (1st Cir.1942)." (Emphasis in original.) G. & C. Merriam Co.v. Webster Dictionary Co., supra, 41; see AMF Inc. v.Jewett, 711 F.2d 1096, 1101 (1st Cir. 1983); Rendieman,"Compensatory Contempt: Plaintiff's Remedy Whena Defendant Violates an Injunction," U. Ill. L.F. 971,979 (1980). The Merriam court took care to state, citingParker v. United States, 153 F.2d 66, 71 (1st Cir. 1946),that "such a `compensatory fine' must necessarily belimited to the actual damages suffered by the injuredparty as a result of the violation of the injunction."G. & C. Merriam Co. v. Webster Dictionary Co., supra.The United States Supreme Court aptly has observedthat "[t]he absence of wilfulness does not relieve fromcivil contempt . . . . Since the purpose is remedial,it matters not with what intent the defendant did theprohibited act." McComb v. Jacksonville Paper Co.,336 U.S. 187, 191, 69 S.Ct. 497, 93 L.Ed. 599 (1949).

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The trial court's memorandum of decision indicatesthat it determined this was a civil contempt, and infashioning its remedial order it was correctly concernedabout compensating the plaintiffs for having been putto the expense of this proceeding because of the contumaciousactions of both defendants. The trial courtproperly awarded the plaintiffs their court costs plusreasonable attorney's fees and, in doing so, confinedits "compensation" to them to their actual losses."[O]nce the plaintiff[s] [have proved] that [they have]suffered harm because of a violation of the terms of[the] injunction, compensatory damages are appropriate."Vuitton et Fils S. A. v. Carousel Handbags,592 F.2d 126, 130 (2d Cir. 1979).

There is no error.

In this opinion the other judges concurred.

1. Paragraph 2 of the 1975 stipulation provided: "Playing time shallbe restricted to Monday through Friday, inclusive, and no play shall besanctioned or permitted by Defendant [Monroe Little League, Inc.] onSaturday or Sunday." Paragraph 4 of that stipulation provided that"[p]laying field number three (3) so called shall not be used by theDefendant for organized Little League activity."

2. The trial court issued an ex parte injunction enjoining anyfurther playing of baseball on Saturdays at the proscribed location and thatorder was obeyed.

3. The trial court, in awarding reasonable attorney's fees to theplaintiffs, ordered that such fees were "to be determined by the courtfollowing a hearing thereon."

4. In their motion for contempt, the plaintiffs also point out thatMLL "after losing [its] Motion to Modify [the 1975 injunction]" so conducteditself in the formation of LLBM with the result that "the sole and exclusivereason for the formation of the new corporation was the belief that theCourt ordered injunction could be thus circumvented."

5. The president of LLBM who was also the president of MLL saidthat the only difference in the operation is "we're like operating onSaturdays. . . . Play baseball on Saturdays." The treasurer of LLBM whohad earlier been the treasurer of MLL said that the only reason that LLBMwas formed was "[s]o we could play baseball more on - on Saturdays[at Beardsley Field]."

6. In employing the concept of "piercing the corporate veil" it hasbeen said that the mere fact that the entity involved is a nonprofitcorporation does not preclude the application of that equitable remedy whichlooks to the substance and not the form. Macaluso v. Jenkins,95 Ill. App.3d 461, 464-67, 420 N.E.2d 251 (1981); 1 Fletcher, CyclopediaCorporations (Perm. Ed.) 41.75, p. 459.

7. In this connection, we also note that MLL's 1981 motion to modifythe 1975 injunction was denied by the court on March 8, 1982. Shortlythereafter, as stated in the defendants' brief, the officers and some of thedirectors of MLL organized LLBM in April, 1982.

8. The United States

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