Hanson v. McLeod

• Decision Date: 30 May 1927
• Docket Number: 32
• Citation: 294 S.W. 998,174 Ark. 270
• Parties: HANSON v. MCLEOD
• Court: Arkansas Supreme Court

294 S.W. 998

174 Ark. 270

HANSON v. MCLEOD

No. 32

Supreme Court of Arkansas

May 30, 1927

Appeal from Lafayette Chancery Court; J. Y. Stevens, Chancellor affirmed.

Decree affirmed.

King & Whatley, for appellant.

McKay & Smith, for appellee.

OPINION

SMITH J.

This cause was heard in the court below upon an agreed statement of facts, which contained the following recitals: Appellee McLeod filed suit on November 28, 1924, against the Hanson Lumber Company, a domestic corporation, and R. H. Hanson, the president thereof, fox $ 138.38, unpaid wages, and $ 300 as penalty for failure to pay the wages, and $ 11,000 damages for breach of the contract under which plaintiff had been employed. At the trial of the cause plaintiff recovered judgment for $ 438.38, the amount of wages earned and not paid and two months' salary at $ 150 per month. No part of this judgment has ever been paid.

No statement of the condition of the corporation was ever filed with the clerk of the county court of the county in which the corporation was domiciled for either of the years 1924 or 1925, the time during which said wages were earned, as required by § 1715, C. & M. Digest.

During the pendency of the litigation above mentioned there was filed with the Secretary of State of the State of Arkansas a resolution of dissolution of said corporation, in which it was recited that the stockholders of the corporation had taken over all its assets and had assumed all its liabilities. After the recovery of the judgment in the circuit court, plaintiff filed a complaint in the chancery court, alleging the facts above stated, and that the stockholders of the corporation had taken over the assets of the corporation, pursuant to the resolution of dissolution and that these assets exceeded in value the debts of the corporation. There were only three stockholders of the corporation, they being the president, R. H. Hanson, and two other members of his family. Upon this record the chancery court rendered a decree in plaintiff's favor for the amount of the judgment of the circuit court, together with costs, against the corporation and the three stockholders thereof, and this appeal is from that decree.

Appellants contend, for the reversal of the decree of the chancery court, that, since the corporation was dissolved during the pendency of the action in the circuit court, that court had no jurisdiction to proceed to render judgment, and that the cause should have been transferred to the chancery court and the assets of the corporation there administered. It is especially insisted that the circuit court had no jurisdiction, after the dissolution of the corporation, to render judgment for the penalty for $ 300.

The cases of State ex rel. the Attorney General v. Arkansas Cotton Oil Co., 116 Ark. 74, 171 S.W. 1192, Ann. Cas. 1917A, 1178; St. L. I. M. & S. R. Co. v. Walsh, 86 Ark. 147, 110 S.W. 222; and Des Arc Oil Mill, Inc., v. McLeod, 141 Ark. 332, 216 S.W. 1040, are decisive of the questions presented on this appeal.

In the first of those cases it was decided that a strictly penal action did not survive against a corporation which, during the pendency of the action for the penalty surrendered its charter, since the statutes make no provision for the payment of penalties assessed against a dissolved corporation. This case pointed out the distinction between penal and remedial actions, it being there stated that, where an action is founded entirely upon a statute, and the only object of the suit is to recover a penalty or forfeiture provided by the statute, it is a penal action, and does not survive the dissolution of the corporation, but that, where the damages sued for are given wholly to the injured party...