Ducasse v.

American Yellow Taxi

October 19, 1928
Blackmar, NY SC
Alycat I didnt make a full blown digest for this case anymore since Sir
said we wont take it up in class.

SUMMARY: American Taximeter Company (ATC), assignor of plaintiff
Francois Ducasse, entered into a contract to lease to American Yellow
Taxi Operators, Inc., (AYT) 250. It was further agreed that if AYT were
to put more than 250 taxicabs into operation, that it should lease
taximeters for those cabs from ATC. Shortly after the contract was
made, AYT was merged into Yellow Taxi Corporation (YTC), and YTC
increased the number of cabs in operation to 535. The result of the
merger was to give YTC the rights under the lease, and to impose upon
it the obligations created by the exercise of those rights. Thus, YTC
became liable for the rental of the 250 taximeters, and also for the
rental of the additional number of taximeters up to 535. Then, YTC was
merged into American Yellow Taxi Corporation, New York (AYTNY).
AYTNY discontinued the use of the taximeters, and all the taximeters
were returned before the end of the five year period. AYTNY repudiated
the contract, and so Ducasse and ATC could consider the contract
broken and sue for damages and recover rentals that have accrued. The
NY SC held YTC liable for the rentals until the time of the breach of the
contract (the return of the taximeters before the end of the five year
period + the repudiation), and for damages after the breach.

DOCTRINE: The right of creditors (Ducasse) of the merged company
(AYT) must be enforced by actions against that corporation which is
kept alive for that purpose only. Nowhere has it ever been held that the
possessor corporation (YTC) can take the benefits of an executory
bilateral contract and leave the liabilities to a defunct, propertyless and
lifeless corporation which has no existence except for the sole purpose
of being sued upon and defending against causes of action alleged to
exist against it at the time of the merger.