In Re Drive In Development Corp.

371 F.2d 215 (7th Cir. 1966)

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Nature of the Case

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Facts

Drive-In (D) is one of four subsidiary companies controlled by Tastee Freez Industries, Inc. Drive-In leased or purchased sites for Tastee Freez and Carrols, Inc., an independent franchisee of the full line of Tastee Freez operations, and then subleased or sold the sites to the operators. Tastee Freez was incorporated in 1960. Maranz owned or controlled a majority of the stock in all the subsidiaries. When Tastee Freez was created, Maranz became its president; he was also an officer or director of each subsidiary. In April 1962, Allied Business entered into a contract with P that set forth the terms by which conditional sales contracts would be assigned to P. Two days later, Tastee Freez, Harlee, Freez King, Carrols, and D executed an instrument whereby they jointly and severally guaranteed Allied Business' obligations under its contract with P. Maranz signed the guaranty on behalf of D as 'Chairman' and Gregory Dick, secretary attested to its execution as secretary. P requested a copy of the resolution by the board of directors of each of the guarantors authorizing the execution of the guaranty. Copies of these resolutions were furnished by all guarantors except Tastee Freez. D's copy was certified, with the corporate seal affixed, by Dick, the corporation's secretary. No such resolution was contained in D's corporate minute book. On September 1963, Tastee Freez and each of its subsidiaries, including D, filed voluntary petitions of bankruptcy under chapter XI. P filed a claim against D asserting the guaranty executed on April 11, 1962, as the basis. The referee disallowed P's claim in its entirety. The referee reasoned that D’s minute book did not show that the directors considered or adopted the resolution certified by Dick The court affirmed and P appealed.