Hall v. Pilgrim Plywood Corp.

• Decision Date: 07 February 1967
• Docket Number: No. 1962,1962
• Citation: 227 A.2d 285,126 Vt. 224
• Court: Vermont Supreme Court
• Parties: Dean HALL v. PILGRIM PLYWOOD CORPORATION.

Page 285

227 A.2d 285

126 Vt. 224

Dean HALL v. PILGRIM PLYWOOD CORPORATION.

No. 1962.

Supreme Court of Vermont.

Feb. 7, 1967.

William T. Keefe, Burlington, for plaintiff.

Black, Wilson & Hoff, Burlington, for defendant.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

HOLDEN, Chief Justice.

This is an action to recover for personal injuries sustained by the plaintiff during his infancy in 1944. The defendant moved to dismiss the cause, challenging jurisdiction on the contention that the defendant is not a legal entity since the corporation was legally dissolved August 24, 1962. A certificate of dissolution, filed in the office of the secretary of state, as provided in 11 V.S.A. § 531, was presented in support of the motion.

The motion to dismiss was denied. The defendant has appealed with permission, before trial. The question to be determined is the plaintiff's right to maintain the action more than three years after the corporation has been dissolved.

Although the corporation was dissolved under section 531, supra, the defendant relies on the provisions of 11 V.S.A. § 491 to defeat the action. This section provides:

A corporation whose charter or articles of association expire by their own limitation, or are annulled by forfeiture or otherwise, shall continue a body corporate for three years to enable it gradually to close its affairs, to dispose of and convey its property, to divide its capital stock, and to prosecute or defend suits until such suits and the subject-matter thereof are fully disposed of, but not for the purpose of continuing the business for which it was established.

There are other kindred statutes, each of different origin prescribing varying procedures to accomplish dissolution of domestic corporations. 11 V.S.A. § 491, upon which the defendant relies, is of early origin and appears in the first general revision of the statutory laws after 1797. R.S. 79 § 17.

The three year period of grace extended to corporations, whose charters have expired or been forfeitured, under section 491, is in the nature of an administration upon a decedent's estate. Foster v. President and Directors of the Essex Bank, 16 Mass. 245, 273. The section which follows bears this out by its provision for the appointment of a receiver by a court of chancery to administer the corporate estate. 11 V.S.A. § 492 (R.S. 79 § 18); Dewey v. St. Albans Trust Co., 56 Vt. 476, 484.

At the time of this enactment a forfeiture of a corporate charter required a judicial determination of the issue in an action for that purpose or a formal surrender by the corporation and an acceptance by the government which granted the franchise. Otherwise, the date of dissolution was uncertain. See Brandon Iron Co. v. Gleason, 24 Vt. 228, 238. Obviously the lawmakers did not have in mind a dissolution under 11 V.S.A. § 531, upon which the defendant acted, for this method of dissolution was not available at that time.

The origin of this section and that of 11 V.S.A. § 532 was in the tax law, and for a different purpose. It came into being with the imposition of the license tax assessed against corporations in 1902. 1902, No. 20 §§ 57 and 58.

To alleviate the severe penalty provided in section 7 and compulsory dissolution by judicial action at the instance of the commissioner of taxes in section 56, it was provided-'Every corporation organized under the laws of Vermont may render itself exempt from the further payment of the annual license tax,' by filing the sworn statement and following the procedure established in the present statute, 11 V.S.A. § 531.

With the inauguration of the corporate income and franchise tax, the reference to exemption from the license tax was eliminated to provide:

§ 531. Procedure

A domestic corporation may dissolve its charter or articles of association by filing with the secretary of state a statement signed by the commissioner of taxes or his designated agent evidencing the fact that all obligations of such corporation under the Vermont income and corporate franchise tax laws have been satisfied in full and a sworn statement, setting forth that the obligations of such corporation to its creditors have been discharged by operation of law or otherwise, that all of the assets of such corporation remaining after the discharge of its obligations to creditors have been apportioned among its stockholders or members according to their respective rights, that claims or demands do not exist against such corporation, and that such corporation is not the owner of real or personal estate located within this state or elsewhere. Such statement shall be subscribed and sworn to by the president and secretary, or any two directors or trustees of such corporations elected at the last regular election of officers by such corporation, and shall definitely set forth the official position of each person subscribing the same.-Amended 1959, No. 112, § 1, eff. April 15, 1959.

(1959 amendment. Amended V.S.1947 § 5852, as amended, by adding requirement for statement signed by commissioner of taxes evidencing payment of taxes, and omitting requirement for filing sworn statement with commissioner of taxes.)

The effect of the filing of the statement by the corporate officers has remained unchanged from the original enactment in 1902.

§ 532. Further transaction of business prohibited

A corporation causing the statement signed by the commissioner of taxes or his designated agent and the sworn statement mentioned in section 531 of this title to...