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SMITH v. ATLAS CONTR. CO.

November 13, 1964

Ethel SMITH, Plaintiff,
v.
ATLAS CONTRACTING COMPANY, a corporation, and Walter Galenski and T. J. Scheve, t/a Atlas Contracting Company, a corporation, and Ralph O. Weed and Jay A. Hough, Defendants



The opinion of the court was delivered by: KEECH

This is an action by the plaintiff (now in her own right) wherein she seeks a permanent injunction against the foreclosure of deed of trust, and cancellation of note and deed of trust, all relating to premises 1128 Abbey Place, N.E., Washington, D.C. A temporary restraining order and preliminary injunction were requested and obtained, conditioned on the filing of a $ 1,000 bond for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.

This matter grows out of a contract dated October 17, 1961, between Atlas Contracting Company, Inc. (by W. Galenski, representative) and Ethel Smith, owner of said premises. The contract, for the sum of $ 6,500, provides for certain work on the premises, to be performed by Atlas, and payment by Atlas of existing first trust note (dated August 9, 1948) on the premises and certain utility bills.

 On October 18, 1961, plaintiff executed a promissory note payable to Atlas Contracting Company for the aforesaid sum, such note to bear interest at 6%, payable in installments of $ 60 per month commencing in November, 1961, and continuing with such payments each month thereafter until paid. The plaintiff executed a deed of trust in favor of Atlas Contracting Company to secure said note. The said note bears endorsement: 'With recourse pay to the order of Theodore J. Scheve Atlas Contracting Co. by Walter W. Galenski'.

 The aforesaid note of the plaintiff dated August 9, 1948, which defendant Atlas Contracting Company agreed to pay off was in the face amount of $ 12,000 payable at the rate of $ 90 per month, and showed a balance of $ 3,458.26 due as of September 5, 1961. This note was paid off in full on May 17, 1962, at which time there was a balance of $ 3,071.24.

 The record further shows that plaintiff made certain payments *fn1" on the note of August 9, 1948, after entering into the contract with Atlas on October 17, 1961. Defendant Galenski concedes that plaintiff is entitled to be reimbursed therefor. The record further shows that on November 10, 1961, the defendant Scheve purchased said note of $ 6,500, for cash in the amount of $ 5,300 (Defendants' Exhibit No. 6). Receipt for payment was dated November 10, 1961, and signed 'Atlas Contracting Co. by W. Galenski'.

 At the outset it should be noted that the contract of October 17, 1961, was made on a form contract of Atlas Contracting Company, Inc., and was signed by W. Galenski as representative. The note and deed of trust executed by plaintiff were both in favor of Atlas Contracting Company. All three of these documents -- contract, note and deed of trust (as well as note of August 9, 1948, the balance of which was paid by defendant Galenski as of May 17, 1962) -- were signed by Ethel Smith only.

 The record shows that the certificate of incorporation of Atlas Contracting Company, Inc., was revoked on September 9, 1957.

 Plaintiff contends that in view of the revocation of the certificate of incorporation the contract of October 17, 1961, is void, and further that, the note and deed of trust being based on the alleged void contract, they too are void, and that the purchaser (Scheve) of the note may not recover thereon nor may a valid foreclosure be had.

 Defendant Galenski acknowledges the fact that the certificate of incorporation of Atlas Contracting Company, Inc., had been cancelled prior to the Company's entering into the contract here involved, and that after such cancellation the name 'Atlas Contracting Co., Inc.' was used in the contract as well as in certain pleadings. Defendant Galenski attempted to explain such use by his inadvertent failure to strike 'Inc.' from old stationery of the corporation, and counsel for the defendant Galenski acknowledged that where, in pleadings, Atlas Contracting Company was referred to as a corporation or use was made of 'Inc.', it was inadvertently done through lack of knowledge, on his part, of the revocation of the articles of incorporation of Atlas Contracting Company, Inc.

 Defendant Galenski, for Atlas Contracting Company, contends that the mere fact that the contract was made by Atlas Contracting Company, Inc., did not render the contract void but only in law rendered him personally liable thereunder.

 The court finds that the use of the corporate name after revocation of the certificate of incorporation did not render the contract void but made defendant Galenski personally responsible thereunder.

 There was introduced in this case the fact that, about a year after plaintiff entered into the contract and executed the note and deed of trust, she was adjudicated to be incompetent. Later, she was declared to be competent. There is no testimony before the court that, at the time important for the determination of this action, plaintiff was of unsound mind. During the critical period she was active with reference to the premises, holding conferences with her attorney and her real estate broker looking to refinancing. Absent any evidence of incompetency, the law presumes a person to be mentally competent. There being no evidence of incompetency as to the critical period in this case, plaintiff is presumed competent during such period.

 The court therefore finds that at the critical times here involved plaintiff was competent to enter into the contract and to ...


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