Hurd v. Meyer

• Decision Date: 06 June 1932
• Docket Number: No. 105.,105.
• Citation: 259 Mich. 190,242 N.W. 882
• Parties: HURD v. MEYER et al.
• Court: Michigan Supreme Court

259 Mich. 190

242 N.W. 882

HURD

v.MEYER et al.

No. 105.

Supreme Court of Michigan.

June 6, 1932.

Appeal from Circuit Court, Oakland County, in Chancery; Frank L. Covert, Judge.

Suit by Earl A. Hurd, receiver for the Hurd Lumber & Woodwork Company, against Theodore F. W. Meyer and others. Decree for plaintiff, and defendants appeal.

Affirmed.

Argued before the Entire Bench.Yerkes, Goddard & McClintock, of Detroit (Leslie C. Putnam, of Detroit, of counsel), for appellants Meyer.

Race, Haass & Allen, of Detroit (Floyd A. Supp, of Detroit, of counsel), for appellant Equitable Trust Co.

Wayne Van Osdol, of Detroit, for appellee.

NORTH, J.

A petition for the dissolution of the Hurd Lumber & Woodwork Company, a Michigan corporation, was filed in the circuit court of Wayne county. On November 30, 1928 a decree dissolving the corporation was entered and a receiver was appointed. Notice of dissolution was filed with the secretary of state on December 8 following. The order appointing the receiver granted to him ‘full power to operate the business of said company and to preserve its assets under the direction and orders of this court.’ On or about May 21, 1929, the receiver entered into a contract with the Hamer Homes Corporation to furnish certain materials to be used in constructing a dwelling house for the defendants Theodore F. W. Meyer and Mary B. Meyer, his wife. The last materials were furnished September 27, 1929. Neither the contractor nor the owners paid for the materials so furnished, and plaintiff, claiming to have taken the necessary steps, alleges it has a mechanic's lien upon the property, which lien it seeks by this proceeding to foreclose. The bill of complaint was filed March 24, 1930. From a decree for plaintiff, defendants have appealed.

Title to the property is held jointly in the names of Mr. and Mrs. Meyer; and defendant Equitable Trust Company has a mortgage lien. The receiver, in closing up the affairs of the Hurd Lumber & Woodwork Company, continued to carry on its business until December 30, 1931; and it is conceded that during this period he did not make an annual report to the secretary of state or pay an annual franchise fee. It is strenuously urged by appellants, because of the receiver's failure to comply with the statute requiring annual reports and the payment of an annual franchise fee, that plaintiff's corporate powers were suspended, that it could not acquire rights under a mechanic's lien, and that it cannot maintain this bill for foreclosure of such alleged lien. As now amended, Comp. Laws 1929, §§ 10127 and 10128.

As above noted, the corporation was decreed ‘dissolved’ November 30, 1928, and the notice of such dissolution was promptly filed with the secretary of state. The power granted to the receiver ‘to operate the business' was evidently only such as the court considered reasonably necessary to the advantageous winding up of the corporate business. The right to so continue the business for one year incident to the dissolution of the corporation is granted by statute. Comp. Laws 1929, § 15315. Notwithstanding such continuation of its former business, the corporate existence was terminated by the decree of November 30, 1928, and the subsequent filing of notice thereof with the secretary of state. It would be anomalous to say that, notwithstanding such termination of the corporate existence, the receiver must continue to pay for the corporation the annual franchise fee. The court ordered the business continued only to enable the receiver to take the necessary steps to realize on the corporation's assets, pay its creditors, and to distribute the surplus, if any, to the stockholders. The annual franchise fee is a charge by the state made against a going corporation for the right and privilege it has of doing business in this state, and is not chargeable incident to closing up the affairs of a dissolved corporation. Jones v. Winthrop Savings Bank, 66 Me. 242;Johnson v. Johnson Bros., 108 Me. 272, 80 A. 741, Ann. Cas. 1913A, 1303;Commonwealth v. Lancaster Savings Bank, 123 Mass. 493;Greenfield Savings Bank v. Commonwealth, 211 Mass. 207, 97 N. E. 927;Mather's Sons Co.'s Case, 52 N. J. Eq. 607, 30 A. 321;State v. Bradford Savings Bank & Trust Co., 71 Vt. 234, 44 A. 349;Keeney v. Dominion Coal Co. (D. C., Ohio) 225 F. 625;State of Ohio v. Harris (C. C. A.) 229 F. 892. The above cases and many others were cited by Mr. Justice Fead in Re Detroit Properties Corporation, 254 Mich. 523, 236 N. W. 850, 851, wherein we held that the receiver in charge of a corporation continuing its business, the purpose being ‘to protect and preserve its franchise and privileges,’ should file an annual report and pay the annual franchise fee. The obvious distinction between that case and the instant case is that the receiver in the former was carrying on the corporate business for the express purpose of preserving and perpetuating its franchise; while here the corporation has been dissolved and its franchise terminated. After dissolution the receiver of the corporation obviously cannot continue to conduct its corporate business because there is no such corporation in contem plation of law; and all the subsequent acts incident to closing up its affairs are much akin to the administration of the estate of a deceased person and are carried on under the direction and control of the court. After the appointment of a receiver of a dissolved corporation, he acts as a trustee and is vested with title to all the corporate property....