Canadian Ace Brewing Co. v. Anheuser-Busch, Inc.

• Decision Date: 10 April 1978
• Docket Number: No. 77 C 4198.,77 C 4198.
• Citation: 448 F. Supp. 769
• Parties: CANADIAN ACE BREWING CO., Plaintiff, v. ANHEUSER-BUSCH, INCORPORATED, Defendant.
• Court: U.S. District Court — Northern District of Illinois

448 F. Supp. 769

CANADIAN ACE BREWING CO., Plaintiff, v. ANHEUSER-BUSCH, INCORPORATED, Defendant.

No. 77 C 4198.

United States District Court, N. D. Illinois, E. D.

April 10, 1978.

Allen H. Schultz, Jay L. Schultz, Schultz & Schultz, Chicago, Ill., for plaintiff.

C. Frederick Leydig, Paul L. Ahern, Leydig, Voit, Osann, Mayer & Holt, Ltd., Chicago, Ill., Harold F. Baker, Terrence C. Sheehy, Peter E. Moll, Scott E. Flick, Howrey & Simon, Washington, D. C., for defendant.

MEMORANDUM OPINION

WILL, District Judge.

Canadian Ace Brewing Co. (Canadian Ace), a dissolved Illinois corporation which had been engaged in brewing and distributing malt beverages, brings this action against Anheuser-Busch, Inc. pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15, alleging that defendant has engaged in monopolization, price fixing and price discrimination in the malt beverage industry. Before us at this time are defendant's motions to dismiss or to strike. For the reasons herein stated, we grant the motion to dismiss.

I.

Canadian Ace alleges, without specification, that, some time prior to 1967, Anheuser Busch, Inc., the largest manufacturer and seller of malt beverages in the United States, began and has continued to monopolize the malt beverage trade, has entered into contracts, combinations and conspiracies to fix the prices of its malt beverages, and has discriminated in price between different wholesaler purchasers of its malt beverages. As a result of these alleged actions, Canadian Ace claims that it was forced out of business. It seeks damages in a trebled total of $45,000,000.

Defendant moves to dismiss on the ground that Canadian Ace lacks capacity to bring this suit inasmuch as Illinois corporate law forbids dissolved corporations to sue or be sued after two years following the date of dissolution. Canadian Ace concedes the existence of this rule, but states that it was unaware of defendant's actions due to the latter's fraudulent concealment, which concealment, it contends, tolled the two-year survival statute prior to discovery of defendant's alleged conduct. Anheuser-Busch counters with a motion to strike the allegations in the complaint dealing with the alleged fraudulent concealment.

II.

On November 28, 1972, Canadian Ace filed with the Secretary of State of Illinois a statement of intent to dissolve, and, on December 6, 1972, following the filing of articles of dissolution, the Secretary of State issued a certificate of dissolution. Section 94 of the Illinois Business Corporation Act, Ill.Rev.Stat. ch. 32, § 157.94 provides:

The dissolution of a corporation either (1) by the issuance of a certificate of dissolution by the Secretary of State, . . . shall not take away or impair any remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within two years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name.

In the absence of any exceptional factors, therefore, as Canadian Ace's complaint was not filed until November 11, 1977, the suit would be barred by section 94.¹ Canadian Ace argues, however, that, as a matter of public policy, we should exercise our equitable powers and toll the two-year survival period due to Anheuser-Busch's alleged affirmative acts of fraudulent concealment. Plaintiff further asserts that this is a case of first impression and, in such circumstances, we should act in such a way as to uphold the federal claim for relief.

We begin with a few general observations on the question of corporate standing after dissolution. At common law, the dissolution of a corporation terminated its legal existence. It could neither sue nor be sued and even pending proceedings abated. See 2 Mod. Business Corp. Act. Ann. § 105, ¶ 2 (2d ed. 1970). Ultimately, every jurisdiction adopted statutes allowing actions to be brought by or against dissolved corporations and preventing actions from abating on dissolution, whether voluntarily or involuntarily or because of charter expiration. Even when a statute continues the existence of a corporation for a certain period, however, it is generally held that the corporation becomes defunct upon the expiration of such period, and, in the absence of a provision to the contrary, no action can afterwards be brought by or against it and must be dismissed. 16A W. Fletcher, Cyclopedia of the Law of Private Corporations § 8144 (1962 Rev. Vol. by M. Wolf).

Plaintiff, in invoking the principle of "fraudulent concealment," attempts to apply to section 94 the tolling principle applied to statutes of limitations. Although Canadian Ace discusses the difference in "procedural" and "substantive" (i. e., jurisdictional) statutes of limitations, noting that fraudulent concealment was originally considered applicable only to the former but is increasingly being applied to the latter, the Illinois courts have made clear that section 94 is a

survival statute rather than a statute of limitations. And this is the characterization given it by courts of this State. The Appellate Court for the First District, discussing Section 79 of the General Corporation Act of 1919, the predecessor to the present section 94, stated: "There is no dispute that by the common law doctrine of the status of a corporation after its dissolution for any cause, the corporation has no legal existence, and the real estate held by the dissolved corporation reverts to the grantors or donors, and the personal property escheats to the king, and that no right of action can be maintained to enforce a claim against a defunct corporation. In the United States, however, this common law doctrine has been so modified that the property of a dissolved corporation is to be used for the benefit of the creditors and stockholders after dissolution, and generally, by a saving clause, stockholders or creditors may maintain an action for that purpose, and in order to maintain an action it must be filed within the time fixed for such purpose. In the instant case, by the saving clause, complainant was granted statutory right to maintain an action of the character before this court. * * *" People v. Parker, 30 Ill.2d 486, 197 N.E.2d 30, 31 (1964) (citations omitted)

It would appear that any application of the fraudulent concealment doctrine must be made by analogy to the statute of limitations situation and involve invocation of this Court's equitable powers. We conclude, however, that under the various judicial constructions of section 94, we have no authority to set aside its provisions.

Canadian Ace in its brief cites the case of Hodgson v. Lodge 851, Int'l Ass'n of Mach. & Aerospace Wkrs., 454 F.2d 545 (7th Cir. 1971), which states in a footnote, 454 F.2d at 548 n. 3: "Moreover, it is clear that all statutory periods can be tolled in the case of fraudulent concealment. Bailey v. Glover, 88 U.S. (21 Wall.) 342, 22 L.Ed. 636 1874, Exploration Co. v. United States, 247 U.S. 435 38 S.Ct. 571, 62 L.Ed. 1200 1918."

To avoid any misconception about this statement, it should be noted that the case dealt solely with statutes of limitations and the Seventh Circuit was concerned with the substantive-procedural statute of limitations distinction. We do not...