Clark Estate Co. v. Gentry
| Decision Date | 14 May 1951 |
| Docket Number | No. 1,No. 42284,42284,1 |
| Citation | 240 S.W.2d 124,362 Mo. 80 |
| Parties | CLARK ESTATE CO. v. GENTRY et al |
| Court | Missouri Supreme Court |
C. W. Prince, Wm. Dennis Bush, and John J. Cosgrove, all of Kansas City, for appellant.
Cooper, Neel, Sutherland & Rogers and Wallace Sutherland, all of Kansas City, for respondent Alonzo H. Gentry.
Hugh M. Hiller, Philip J. Close, Kansas City, for respondent Commerce Trust Co.
Robert L. Jackson, Kansas City, for defendants Esther Reyburn and First Nat. Bank of Kansas City.
LOZIER, Commissioner.
Plaintiff-appellant corporation, the Clark Estate Company, has appealed from an order dismissing, with prejudice and for reasons hereinafter set out, its fourth amended petition. Defendants-respondents are Alonzo H. Gentry, the Commerce Trust Company and Esther Reyburn and the First National Bank of Kansas City, Executors of the Estate of Roscoe Reyburn, deceased.
The issues are: the right of a corporation, the charter of which has been forfeited, to file and maintain a suit in its own name and as a corporation; limitations of actions; and the effect of rescission of the forfeiture.
The dismissed petition alleged conspiracy, misrepresentations and fraud by Gentry, an architect, Reyburn, president of a building corporation, and the trust company in the construction and financing of buildings constructed on the company's property, and claimed damages in the sum of one million dollars. It was alleged that defendants' fraud caused the filing of mechanics' and materialmen's liens proceedings, resulting in a judicial sale on December 18, 1930. Other than the sale, all of the transactions appear to have occurred prior to January 1, 1927.
On January 1, 1927, the company's charter as a domestic corporation was forfeited by the secretary of state for failure to file the annual registration report, financial statement and anti-trust affidavit and for failure to pay the annual registration fee. The forfeiture was effected under the provisions of Sec. 9813, Mo.R.S.1919, now, substantially, a part of Sec. 4997.118, Mo.R.S.A. and Sec. 351.525, Mo.R.S.1949. This section directs forfeiture of 'the corporate rights and privileges' and provides that 'whereupon all the powers, privileges and franchises conferred * * * shall subject to rescission as in this chapter provided, cease and determine,' and that the secretary of state shall notify the corporation that 'its corporate existence and rights in this state have been forfeited and canceled, and the corporation dissolved subject to rescission as in this chapter provided.'
The pertinent provisions relating to the liquidation of the affairs of a Missouri corporation, the charter of which has been forfeited, including rights of suit, are: 'When the forfeiture of the certificate, or license, of any corporation has been declared, the officers and directors or the manager, or managers, of the affairs of said corporation, at the time such forfeiture is declared, by whatever name they may be known in law, shall be trustees of such corporation with full power to settle its affairs and distribute its assets among its stockholders, after paying the debts due and owing by such corporation, and as such trustees to sue and recover debts and property due such corporation, and they shall be jointly and severally responsible to the creditors and stockholders of such corporations to the extent of its property and assets that may properly come into their hands.' (Italics ours.) Sec. 9816, Mo.R.S.1919, now, substantially, a part of Sec. 4997.118, Mo.R.S.A. and Sec. 351.525, Mo.R.S.1949. See also Sec. 9755, Mo.R.S.1919.
On March 6, 1930, there was filed in the circuit court of Jackson County a petition in the caption of which the 'Clark Estate Company, a Corporation,' was plaintiff. The first paragraph of that petition alleged: 'Comes now the plaintiff and for its cause of action states that it is a corporation, organized and existing according to law. * * *' In the captions of the first amended petition, filed February 12, 1934, of the second amended petition, filed April 10, 1934, and of the dismissed petition, filed August 28, 1950 (after the rescission), the company was plaintiff. The first and second amended petitions alleged only that 'plaintiff states that it is a corporation.' The dismissed petition alleged that 'plaintiff is a corporation, duly existing according to law.'
In its answer to the second amended petition, filed July 3, 1934, the trust company, after denying generally, alleged that when the original petition was filed the cause was barred by the 5 year statute. It is also alleged that 'at the time of the commencement of this action, there was not nor is there now, any such corporation as Clark Estate Company, named as plaintiff herein.' Defendants' separate amended answers to the same petition, filed in June, 1935, also consisted of general denials and pleas of limitations. These answers also alleged that plaintiff's charter had been forfeited and cancelled on January 1, 1927, 'and said corporation dissolved, and has not been in existence since said last named date, and since last named date, has had no capacity to sue, and that it did not have capacity to institute this suit, * * * and that at the time of the commencement of this action against defendant there was not, nor is there now, any such corporation as the Clark Estate Company named as plaintiff herein.'
On January 17, 1946, the secretary of state issued his 'Certificate of Rescission of Forfeiture' certifying that the forfeiture entered January 1, 1927, 'was this day rescinded, and said corporation restored to good standing on the records of this department.' This rescission was under Sec. 4997.120, Mo.R.S.A. now Sec. 351.540, Mo.R.S.1949.
Exercise by any person of the corporate powers of a dissolved corporation was and is a misdemeanor. Sec. 9822, Mo.R.S.1919, Sec. 4628, Mo.R.S.1929, Sec. 4997.125, Mo.R.S.A. now Sec. 351.530, Mo.R.S.1949.
Sec. 9823, Mo.R.S.1919, Sec. 4629, Mo.R.S.1929, Sec. 4997.126, Mo.R.S.A. now Sec. 351.535, Mo.R.S.1949, provided: 'No corporation shall maintain an action in any court of this state for the collection of bills or accounts payable or for the enforcement of a contract, made while such corporation is in suspension, or after the forfeiture of its certificate, or license, under the provisions of this article, unless it shall have first been reinstated or the forfeiture entered against it rescinded as in this article provided.'
The trial judge assigned these reasons for dismissing the fourth amended petition: that at the time of the filing of the original petition in the name of the corporation as plaintiff, the corporation had no existence de facto or de jure because of the forfeiture of its charter; that at that time the corporation had no power or capacity to institute any action; that the plaintiff corporation was not entitled to exercise any corporate powers or perform any corporate functions between the times of the forfeiture and the rescission of the forfeiture; and that the alleged cause of action accrued to plaintiff corporation more than 5 years prior to the rescission. All of these grounds were urged in the defendants' motions to dismiss.
The company contends that the judgment below was erroneous because based upon a collateral attack upon the validity of the rescission. However, the issue here is not the ualidity of the rescission but its effect. See Bradley v. Reppell, 133 Mo. 545, 32 S.W. 645, 34 S.W. 841, 54 Am.St.Rep. 685, and Leibson v. Henry, 356 Mo. 953, 204 S.W.2d 310. And contrast Boatmen's Bank v. Gillespie, 209 Mo. 217, 108 S.W. 74, and Laird v. Pan-American Lumber Co., Mo.App., 237 S.W. 1047, both cited by the company.
In view of the clear language of Sec. 9816, Mo.R.S.1919, quoted above, we rule that the corporation was not entitled to file the suit. Over 3 years prior to the filing, the corporation had been dissolved, its rights to exercise corporate powers had been forfeited, and its capacity to function as a corporation had been revoked. On the day of the forfeiture, the company's very being as a legal entity was destroyed and from that date the then officers and directors of the dissolved corporation became statutory trustees of its affairs for the purposes stated in the statute. Turner v. Browne, 351 Mo. 541, 173 S.W.2d 868; Bruun v. Katz Drug Co., 351 Mo. 731, 173 S.W.2d 906; and Leibson v. Henry, supra.
Among the statutory rights forfeited was that of suing as a corporation. See Sec. 4997.4, Mo.R.S.A. now Sec. 351.385, Mo.R.S.1949. The corporation could no longer sue in its own name. Having no legal entity it could not be a party plaintiff or defendant at law or in equity. The right to assert its claims against these defendants was vested by law exclusively in the trustees. Only they--as such trustees, in their own names in behalf of the corporation, in their representative capacity--were entitled to institute the action filed on March 6, 1930. They were 'necessary parties.' See Bruun v. Katz Drug Co., 351 Mo. 731, 173 S.W.2d 906; State ex rel. McDowell v. Libby, 238 Mo.App. 36, 175 S.W.2d 171; Watkins v. Mayer, Mo.App., 103 S.W.2d 566; State of Missouri ex rel. and to use of Darr v. A.B. Collins & Co., D.C., 34 F.Supp. 550; Arnold v. Streck, 7 Cir., 108 F.2d 387; and Annotations 47 A.L.R. 1288 and 97 A.L.R. 477.
The company argues that it was entitled to bring this suit because of the difference in the wording of the sections prohibiting suits by a domestic corporation the charter of which has been forfeited, and prohibiting suits by a foreign corporation the license of which to operate in Missouri has been cancelled. Sec. 9823, Mo.R.S.1919, quoted above, and Sec. 9793, Mo.R.S.1919, now Sec. 4997.109, Mo.R.S.A. and Sec. 351.635, Mo.R.S.1949. It is the company's position that a dissolved Missouri corporation may sue in...
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