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December 23, 1981

UNITED STATES of America, Plaintiff,
Marshall B. COYNE, Defendant

The opinion of the court was delivered by: GASCH

This case came on for trial to the Court on November 2, 1981. Based upon the testimony adduced at trial, the trial exhibits, the arguments of counsel, and the entire record, the Court issues the following findings of fact and conclusions of law:


 1. Defendant Marshall B. Coyne has owned at least fifty (50) percent of the stock of a corporation by the name of Roscoe-Ajax Construction Company, Inc. (Roscoe-Ajax) at all times relevant to this case. Agreed Statement of Facts, P 4. Moreover, subsequent to 1971, Coyne has repeatedly claimed to be the sole owner of Roscoe-Ajax. Plaintiff's Exhibits 5, 6; Defendant's Exhibit E, P 8.

 3. On June 17, 1974, the United States Court of Claims entered a judgment for $ 36,348.88 against Roscoe-Ajax and in favor of the United States of America. Roscoe-Ajax Construction Company, Inc. v. United States, Court of Claims No. 839-71 (Ct.Cl., June 17, 1974, filed as Misc. No. 77-0146). That judgment resulted from a dispute between Roscoe-Ajax and the United States over amounts due under a contract for the construction of missile launch shelters at McGuire Air Force Base in New Jersey. The Court held that $ 36,348.88 was owing because of overpayments following a contracting officer's decision issued October 25, 1965.

 4. The judgment against Roscoe-Ajax remains unpaid despite the demand of the United States for payment. Agreed Statement of Facts, P 3. The company, which ceased to perform construction work in 1964, currently has no property subject to execution which can satisfy the judgment which the United States has against it. Id. PP 5, 13. Moreover, the 1973, 1974, and 1975 federal income tax returns of Roscoe-Ajax demonstrate that for those years the corporation's liabilities greatly exceeded its assets. Plaintiff's Exhibits 3-6.

 5. On or about March 20, 1975, $ 49,227.56 was paid to Marshall B. Coyne from the Joint Venture Bank Account of Roscoe-Ajax and the Knickerbocker Construction Corporation (Joint Venture Account). On or about May 9, 1975, $ 15,281.23 was paid to the defendant from the same account. David Morgulas served as trustee of the Joint Venture Bank Account. Agreed Statement of Facts, PP 8, 9.

 6. The March 20, 1975 payment was made pursuant to an agreement of August 18, 1966. Id. P 8. The agreement stated that defendant had advanced $ 962,643.50 to the corporation and that the corporation did not have sufficient cash to repay the advances. Defendant's Exhibit C, at 2 & Schedule A. These advances and others had been made by defendant and Charles Rose, the co-owner of Roscoe-Ajax, directly to a joint venture in which Roscoe-Ajax was involved. Id. at 2. When the co-venturer, Knickerbocker Construction Corporation, learned of the direct advances to the venture, it objected and demanded that the advances be made directly by Roscoe-Ajax, in accordance with the terms of the Joint Venture Agreement. Id. at 2-3. Subsequently, Roscoe-Ajax assumed the obligation for the advances, and the advances were recorded as investments by that corporation. Id.

 7. Coyne executed a personal indemnity to the bonding company in connection with the joint venture and made himself liable to provide collateral for any claims against the joint venture. Id. at 3. Because of these facts, Roscoe-Ajax agreed to assign over to Coyne a one-half interest in any sums that might become due to the corporation as a result of its interest in three joint ventures, two of which were with the Knickerbocker Construction Corporation. Id. at 4-5. The potential proceeds from these ventures were four or five million dollars. Testimony of Joseph P. Certa, Trans. 39.

 8. To avoid having to sign an agreement with himself, Coyne resigned as president of Roscoe-Ajax. Testimony of Joseph P. Certa, Trans. 32. Joseph Certa signed as president of Roscoe-Ajax, an office he retained only until the next election. Id. 32-33.

 9. An uncertified balance sheet compiled by Roscoe-Ajax's accountant and obtained from defendant's former counsel, stated that on August 30, 1966, some 12 days after the assignment agreement, the corporation's liabilities exceeded its assets. The letter, dated May 11, 1970, to which the balance sheet was attached, indicated that, subsequent to the 1966 agreement, the assignment to Coyne had been reinstituted on the books of Roscoe-Ajax. Plaintiff's Exhibit 7.

 11. A letter, dated May 28, 1975, from David Morgulas, trustee of the Joint Venture Account, to the accountants for Roscoe-Ajax detailed disbursements made from the account. Plaintiff's Exhibit 2. Listed were the two payments to Coyne described in Finding of Fact No. 5, supra, two other checks to Coyne in payment for advances he had made to the Joint Venture, and a payment to Marshall B. Coyne Corp. to cover a third advance to the Joint Venture. Id. The letter concluded that approximately $ 7,500 remained in the account "to which Marshall would be entitled to receive 60% and Knickerbocker 40%. This is only ...

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