B-127642, AUG. 2, 1956

B-127642, AUG. 2, 1956

TO THE GENERAL MATERIALS COMPANY:

REFERENCE IS MADE TO THE LETTERS WRITTEN IN YOUR BEHALF BY MALONEY, ROSS AND PHELPS, ATTORNEYS AT LAW, 280 BROADWAY, NEW YORK, NEW YORK, DATED MARCH 6 AND APRIL 20, 1956. IT REQUESTED THAT THE GOVERNMENT REFRAIN FROM PLACING THE GENERAL MATERIALS COMPANY, DIVISION OF CROSBY PRODUCTS CORPORATION, ON THE LIST OF CONTRACTORS INDEBTED TO THE UNITED STATES.

BY LETTER DATED FEBRUARY 16, 1956, THE DEPARTMENT OF THE ARMY WAS REQUESTED TO ADD THE GENERAL MATERIALS COMPANY, DIVISION OF CROSBY PRODUCTS CORPORATION, 4 WATER STREET, BROOKLYN, NEW YORK, TO SUCH LIST BECAUSE OF AN UNSATISFIED INDEBTEDNESS IN THE SUM OF $1,074.41, REPRESENTING EXCESS COSTS INCURRED BY REASON OF THE FAILURE AND REFUSAL OF THE GENERAL MATERIALS COMPANY TO PERFORM UNDER PURCHASE ORDER NO. 762- 42091, DATED JULY 14, 1953, ISSUED BY F. H. MCGRAW AND COMPANY, INCIDENT TO CONTRACT NO. AT-/15/-2, WITH THE UNITED STATES ATOMIC ENERGY COMMISSION. THE CLAIM WAS ASSIGNED BY F. H. MCGRAW AND COMPANY TO THE UNITED STATES ON APRIL 5, 1955.

BY THE TERMS OF THE CONTRACT GENERAL MATERIALS COMPANY WAS TO DELIVERY CERTAIN WELL COPPER TUBING AND SINCE IT FAILED TO MAKE DELIVERY OF THAT MATERIAL, IT BECAME NECESSARY FOR F. H. MCGRAW AND COMPANY--- THE GOVERNMENT'S PRIME CONTRACTOR--- TO PURCHASE THE TUBING FROM OTHER SOURCES. THE EXCESS COSTS SO INCURRED DUE TO THE FAILURE OF GENERAL MATERIALS COMPANY TO MAKE TIMELY DELIVERY ARE CHARGEABLE TO THAT COMPANY.

IT APPEARS FROM YOUR ATTORNEYS' LETTERS THAT GENERAL MATERIALS COMPANY CHANGED ITS NAME TO W. AND M. ASSOCIATES, INC., AND THAT THE LATTER CORPORATION HAS ASSUMED THE OBLIGATIONS AND ASSETS OF THE GENERAL MATERIALS COMPANY, DIVISION OF THE CROSBY PRODUCTS CORPORATION. HENCE, YOUR ATTORNEYS ASSERT THAT THE OBLIGATION OF THE GENERAL MATERIALS COMPANY FOR ITS DEFAULT OF THE CONTRACT SHOULD BE SATISFIED BY W. AND M. ASSOCIATES, INC., WHICH, IT IS STATED, IS IN THE PROCESS OF LIQUIDATION.

YOUR ATTORNEYS APPEAR TO BE OF THE OPINION THAT THE PRESENT GENERAL MATERIALS CORPORATION, DIVISION OF CROSBY PRODUCTS CORPORATION, IS A SEPARATE ORGANIZATION NOT RELATED TO THE EARLIER COMPANY OF THE SAME NAME. THAT OPINION APPEARS TO BE BASED ON THE PROPOSITION THAT THE PRESENT GENERAL MATERIALS COMPANY, DIVISION OF CROSBY PRODUCTS CORPORATION, WAS ORGANIZED SUBSEQUENT TO THE CHANGE OF NAME MENTIONED ABOVE. IT IS STATED THAT THE PRESENT COMPANY WAS NOT A PARTY TO THE TRANSACTION WITH F. H. MCGRAW AND COMPANY, AND THAT, THEREFORE, ITS NAME SHOULD NOT BE ADDED TO THE LIST FURNISHED GOVERNMENT DEPARTMENTS AND AGENCIES.

BASED UPON INFORMATION TO THE EFFECT THAT THERE IS A VERY CLOSE RELATIONSHIP BETWEEN W. AND M. ASSOCIATES, INC., AND CROSBY PRODUCTS CORPORATION, 1400 PLAZA AVENUE, AND SINCE W. AND M. ASSOCIATES, INC., IS JUST A NEW NAME FOR THE OLD CROSBY PRODUCTS CORPORATION WE ARE OF THE OPINION THAT THE PLACING OF THE CROSBY PRODUCTS CORPORATION ON THE LIST OF INDEBTED CONTRACTORS WAS PROPER IN THE CIRCUMSTANCES.

THE DECISIONS OF THE COURTS ARE TO THE EFFECT THAT WHERE, AS HERE, THE RECOGNITION OF A CORPORATION AS A DISTINCT LEGAL ENTITY WOULD DEFEAT PUBLIC CONVENIENCE OR JUSTIFY A WRONG, AMONG OTHER ABUSES, THE LAW WILL DISREGARD THE ORGANIZATION AS A SEPARATE ENTITY. SEE MCCASKELL COMPANY V. UNITED STATES, 216 U.S. 504. COURTS WILL LOOK BEYOND A CORPORATE ENTITY WHENEVER JUSTICE REQUIRES (HAMILTON RIDGE LUMBER SALES CORPORATION V. WILSON, 25 F.2D 592) AND WILL GO BEHIND SUCH ENTITY TO DETERMINE AN ATTEMPTED EVASION OF FEDERAL LIABILITY. PALMOLIVE CO. V. CONWAY, 32 F.2D 226.

ACCORDINGLY, ON THE BASIS OF THE RECORD BEFORE US, THE ACTION TAKEN APPEARS PROPER.