Great Falls Bonding Agency, Inc. v. Comm'r of Internal Revenue

• Decision Date: 09 December 1974
• Docket Number: Docket No. 2143-74.
• Citation: 63 T.C. 304
• Parties: GREAT FALLS BONDING AGENCY, INC., PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

63 T.C. 304

GREAT FALLS BONDING AGENCY, INC., PETITIONER

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 2143-74.

United States Tax Court

Filed December 9, 1974.

Herbert B. Olfson and Jerome J. Roberts, for the petitioner.

Alan M. Jacobson and D. Ronald Morello, for the respondent.

Rule 60(c), Tax Court Rules of Practice and Procedure.— Petitioner was legally dissolved on Dec. 22, 1969. The State law under which it was organized permitted a dissolved corporation to file suit if action was commenced within 2 years of its dissolution. A petition was filed in petitioner's name within 90 days of the mailing of a notice of deficiency, but more than 4 years after petitioner's dissolution. Respondent filed a motion to dismiss for lack of jurisdiction, arguing that petitioner lacked capacity to sue. Held, respondent's motion to dismiss will be granted.

DAWSON, Judge:

This motion to dismiss was assigned to and heard by Commissioner Randolph F. Caldwell, Jr. The Court agrees with and adopts his opinion which is set forth below.

OPINION OF THE COMMISSIONER

This case is presently before the Court on respondent's motion to dismiss for lack of jurisdiction filed on May 16, 1974, pursuant to Rules 53 and 60(c), Tax Court Rules of Practice and Procedure.

Petitioner was legally dissolved under the laws of the State of Illinois, the State of its incorporation, on December 22, 1969.

On December 28, 1973, respondent mailed a notice of deficiency to petitioner, care of Mitchell Caplan, 2261 South Bridge Lane, Northbrook, Ill. 60062. This notice determined deficiencies in petitioner's Federal income tax and additions thereto as follows:

+--------------------------------------+
                ¦      ¦            ¦Additions to tax  ¦
                +------+------------+------------------¦
                ¦Year  ¦Deficiency  ¦sec. 6651(a)      ¦
                +------+------------+------------------¦
                ¦      ¦            ¦                  ¦
                +------+------------+------------------¦
                ¦1967  ¦$6,049.24   ¦$1,512.31         ¦
                +------+------------+------------------¦
                ¦1969  ¦806.69      ¦201.67            ¦
                +--------------------------------------+
                

On March 27, 1974, a petition was filed with this Court in the name of petitioner. This petition was executed by Herbert B. Olfson and Jerome J. Roberts as counsel for the petitioner.

On May 16, 1974, respondent filed a motion to dismiss for lack of jurisdiction on the ground that petitioner lacked capacity to litigate in this Court. He argued that under chapter 32, section 157.94, of the Illinois Revised Statutes and Rule 60(c), Tax Court Rules of Practice and Procedure, petitioner had no capacity to institute a proceeding in this Court.

We agree with respondent. Our Rule 60(c) provides that the capacity of a corporation to litigate in this Court is determined by the law of the State in which it was organized. Because petitioner was organized in Illinois, we must look to Illinois law to determine if petitioner can maintain a suit in this Court.¹

Chapter 32 of the Illinois Revised Statutes, section 157.94, states:

The dissolution of a corporation either (1) by the issuance of a certificate of dissolution by the Secretary of State, or (2) by the decree of a court of equity when the court has not liquidated the assets and business of the corporation, or (3) by expiration of its period of duration, 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.²

It is clear under Illinois law that petitioner's existence as extended by statute terminated on December 22, 1971, i.e., 2 years after its dissolution. As of that date it ceased to exist and lacked capacity to institute any legal proceeding. Gordon v. Loew's, Inc. 147 F.Supp. 398, 403-407 (D.C. N.J. 1956), affd. 247 F.2d 451 (C.A. 3, 1957). See Charles A. Zahn Co. v. United States, 6 F.Supp. 245, 248 (Ct. Cl. 1933).³ See also S. Hirsch Distilling Co., 14 B.T.A. 1073, 1078-1079 (1929), whose language is pertinent here even though no corporate survival statute was involved there, and Wheeler's Peachtree Pharmacy, Inc, 35 T.C. 177, 181 (1960), and the cases cited therein.

Thus a petition filed in petitioner's name on March 27, 1974, more than 4 years after its dissolution, cannot be entertained. First Bond & Mortgage Co., 21 B.T.A. 1, 2-3 (1930). Cf. Associates Investment Co., 59 T.C. 441, 446 (1972). Compare Jerry Anderson, Inc., 29 T.C. 972, 973-974 (1958), involving the Illinois statute at issue here, where the petition was filed within 2 years of dissolution.

At first blush, it does seem anomalous that respondent would issue a statutory notice of deficiency to a taxpayer and then turn around and say that there is no taxpayer who can petition this Court for a redetermination of the determined deficiency— as he has done here. Yet, section 6212(b)(1) is explicit in its language which permits respondent, in the absence of a notice of fiduciary relationship, to send a notice of deficiency to a corporation which has terminated its existence— as has the petitioner.

Whether such a corporation has the capacity to then petition this Court is another question. Our Rule 60(c) says that the answer to that question is to be determined by the law under which it was organized....