Flor Cirino & Carib Auto Repairs, Inc. v. Hess Oil Virgin Islands Corp.
| Decision Date | 14 May 1973 |
| Docket Number | Civil No. 555-1972,Civil No. 277-1971,Civil No. 515-1972,Civil No. 554-1972 |
| Citation | 9 V.I. 518 |
| Court | U.S. District Court — Virgin Islands |
| Parties | FLOR CIRINO & CARIB AUTO REPAIRS, INC., Plaintiffs v. HESS OIL VIRGIN ISLANDS CORP. and CARIB GAS CORPORATION OF ST. THOMAS, Defendants MARK VI, INC., Plaintiff v. HESS OIL VIRGIN ISLANDS CORP. and CARIB GAS OF ST. THOMAS, INC., Defendants SEA KING ENTERPRISES, INC., Plaintiff v. HESS OIL VIRGIN ISLANDS CORP. and CARIB GAS OF ST. THOMAS, INC., Defendants WE HAUL, INC., Plaintiff v. HESS OIL VIRGIN ISLANDS CORP. and CARIB GAS OF ST. THOMAS, INC., Defendants |
Motions to dismiss actions for damages. District Court, Christian, Chief Judge, held that statute providing that "no corporation may-commence or maintain any action in any court if it has not paid its annual franchise tax last due" did not apply to corporations whose actions sounded in tort.VERNE A. HODGE, ESQ., St. Thomas, V.I., for Flor Cirino & Carib Auto Repairs, Inc.
VERNE A. HODGE, ESQ., St. Thomas, V.I., for Sea King Enterprises, Inc.
MITCHELL & HUNTER (RONALD T. MITCHELL, ESQ., of counsel), St. Thomas, V.I., for We Haul, Inc.
MITCHELL & HUNTER (RONALD T. MITCHELL, ESQ., of counsel), St. Thomas, V.I., for Mark VI, Inc.
GRUNERT, STOUT, HYMES & MAYER (JOHN E. STOUT, ESQ., of counsel), St. Thomas, V.I., for Carib Gas of St. Thomas, Inc.
BIRCH, DEJONGH & FARRELLY (ALEXANDER A. FARRELLY of counsel), St. Thomas, V.I., for Hess Oil Virgin Islands Corp.
MEMORANDUM AND ORDER
Defendants, Hess Oil Virgin Islands Corporation and Carib Gas of St. Thomas, Inc., have filed joint Motions to Dismiss against the corporate plaintiffs in the four above-captioned cases, on the ground that each plaintiff has failed to file and pay its annual Franchise Tax as required by Title 13 V.I.C. § 531. Section 533(a) of that title provides that "No corporation may commence or maintain any action in any court if it has not paid its annual franchise tax last due . . . ."
Plaintiff, WE HAUL, INC., in the civil action docketed at No. 555/1972, commenced its suit on November 24, 1972.It was in default on that date, and had been since June 30, 1971. CARIB AUTO REPAIRS, INC., the corporate plaintiff in civil No. 515/1972, brought suit on November 10, 1972. Allegedly, that plaintiff had failed to pay the required franchise tax since June 30, 1970. However, no certificate by the Commissioner of Finance was filed in verification of this charge. MARK VI, INC., plaintiff in No. 554/1972, commenced its action on November 24, 1972, but had not paid its franchise tax since June of that year. Only SEA KING ENTERPRISES, INC., was not in default as of the date it filed suit on June 25, 1971. That plaintiff, however, failed to pay the tax which fell due on June 30, 1971, and was still in default on February 9, 1973, the date defendants filed their motions to dismiss. SEA KING achieved current status in so far as the statute is concerned, when, on February 16, 1973, it paid all sums due.
The motions raise several questions. Defendants maintain that because all plaintiffs had not paid their last due franchise taxes at the time the motions to dismiss were filed, all four actions must be dismissed. Plaintiffs, on the other hand, contend that:
1. subsequent compliance with the taxation requirement should be sufficient to defeat the motion; or, in the alternative,
2. the requirements of § 533 cannot be applied to an action sounding in tort, but must be limited to causes ex contractu and these, being tort claims, are not demurrable; or once again, in the alternative;
3. if the actions are to be dismissed the statute of limitations has not, in any event, expired and the complaints may be re-filed, either by the corporations after payment of delinquent taxes, or by the individual stockholders or corporate officers as trustees, or 4. if the two-year statute of limitation is found applicable, it is tolled by the filing of these actions, even though the corporate plaintiffs lack the capacity to proceed in the present civil actions.
[1] As a background to the questions presented, I believe it is appropriate to first consider the terms of our statute, its legislative history and judicial interpretation. The present § 533 is based on sections 5 and 9 of Title II, Chapter 31 of the 1921 Code of Laws for the Municipality of St. Thomas and St. John. In turn, those sections of the 1921 Code were lifted from the governing statutes of the then Territory of Alaska. Our interpretation of the section is therefore controlled by the views of the courts of that territory in regard to their statute, at the time the sections were adopted in this jurisdiction. Williams v. Dow-ling, 4 V.I. 465, 318 F.2d 642 (3 Cir. 1963). However, the earliest Alaskan decision to consider the question, Richardson Vista Corp. v. Anchorage, 14 Alaska 1 (D.C. Alaska 1952), as much as it might be helpful by way of guidance and exemplification, is not, I believe to be deemed controlling, as it follows our adoption of their statute.
[2] In Richardson the corporate plaintiffs complied with the statute after the action had been commenced. The court denied a motion to dismiss saying, "The general rule adhered to by the courts in construing similar statutes is that, upon compliance by the corporation—including compliance after the suit is filed—the action may be maintained and the suit will not be dismissed by reason of previous default." In support of that court's appraisal of the prevailing view, I find a clear majority of opinions in accord, on similarly worded statutes, Eastman & Co. v. Watson, 130 P. 1144 (Wash. 1913), and on statutes worded solely in terms of "maintaining or prosecuting, Inn Operations, Inc. v. River Hills Motor Inn Co., 152 N.W.2d 808 (Iowa 1967); Video Engineering Co. v. Foto-Video Elec-tronics, Inc., 154 S.E.2d 7 (Va. 1967). Some courts have reached a contrary result where the governing statute made compliance a prerequisite to corporate existence, R. V. McGinnis Theatres & Pay T.V., Inc. v. Video Independent Theatres, Inc., 386 F.2d 592 (10 Cir. 1967), but even under those terms, compliance after commencement of an action has been held sufficient in some cases, Dinerco Construction, Inc. v. Wilstein, 4 Cal. App.3d 6, 85 Cal. Rptr. 851; Michigan Hills Rural Development, Inc. v. El Mac Hills Resort, Inc., 191 N.W.2d 733 (Mich. 1971). In the face of this formidable collection of authority, and particularly in accord with the Alaskan view, I conclude that compliance after the commencement of an action is sufficient under § 533.1
This conclusion, however, is not dispositive because of the statute of limitations issue. In spite of the general rule outlined above, several courts have held that compliance will not operate to protect an action from a motion to dismiss when the statute of limitations has expired, Jorgensen v. Baker, 157 N.E.2d 733 (Ill. 1959), cert. den. 361 U.S. 962; Fed. Crude Oil Co. v. Yountler Oil Co., 73 S.W.2d 969 (Tex. 1934), cert. den. 295 U.S. 741.2
Although there is a dearth of pointed authority, at least, one circuit has had occasion to consider the question, andapplying Illinois law, distinguished Jorgensen to reach a contrary result. The court avoided the Jorgensen holding on the basis of two distinguishing facts:
A significant difference between the Jorgensen case and the case at bar is that the plaintiff corporation in Jorgensen had been dissolved for nonpayment of state franchise taxes while the suit was in progress and therefore had no corporate powers. The plaintiffs in the instant case were never dissolved and were continuously functioning as active corporations. Another difference is that in Jorgensen the period of limitations for the institution of an action was fixed by statute, whereas in the instant suit the limitation was fixed by contract . . . . Rush Street Rugby Shop, Ltd. v. Md. Casualty Co., 409 F.2d 540, 542 (7 Cir. 1969).
The Rush Street opinion does not explain why those two factors constitute significant distinguishing elements under the statute, either in terms of its policies or its legislative history, but the court's approach, I believe, is...
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