In re Columbia Hotel Co. of Kalamazoo, Mich.

• Citation: 29 F. Supp. 848
• Decision Date: 30 September 1939
• Docket Number: No. 8021.,8021.
• Parties: In re COLUMBIA HOTEL CO. OF KALAMAZOO, MICH.
• Court: U.S. District Court — Western District of Michigan

29 F. Supp. 848

In re COLUMBIA HOTEL CO. OF KALAMAZOO, MICH.

No. 8021.

District Court, W. D. Michigan, S. D.

September 30, 1939.

Kim Sigler, of Hastings, Mich., and Burritt Hamilton, of Battle Creek, Mich., for debtor.

Laurence W. Smith, of Grand Rapids, Mich., for trustee.

Stephen H. Wattles and Fox, Fox & Fox, all of Kalamazoo, Mich., for indenture trustee.

RAYMOND, District Judge.

This matter is before the court upon answers filed by certain bondholders wherein it is prayed that debtor's petition for reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., be dismissed, the substantial reason urged being that debtor's corporate existence terminated September 1, 1935, because of failure to pay statutory fees and to file annual reports as required by law, and that the charter of debtor therefore became void under the provisions of section 91, Act No. 327 of Public Acts of Michigan of 1931. The case of Chicago Title & Trust Co. v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120, 58 S.Ct. 125, 82 L.Ed. 147, is relied upon by bondholders to support their contention.

Careful consideration of the Michigan statute referred to and of the cases of Bruun v. Cook, 280 Mich. 484, 273 N.W. 774; Mathews v. Life Insurance Co., 284 Mich. 352, 279 N.W. 858; and Stott v. Stott Realty Co., 288 Mich. 35, 284 N.W. 635, is convincing that after failure for two years to file annual reports and pay privilege fees, the charter of the corporation became void without any judicial proceedings whatsoever, and that the corporation thereafter had existence only for the purpose of winding up its corporate business. The provisions of the statute are declared to be self-executing. No authority is found to justify a belief that the corporation had power thereafter to take steps to continue its corporate business by reorganization or otherwise. In the reorganization proceedings it would seek to compel a considerable percentage of its creditors to submit to a plan of reorganization under which it would continue in business with substantially the same assets and ownership as at present and under the same or a changed corporate name. No such residuum of corporate power exists. It is not believed that Congress, by the enactment of Chapter X, intended to confer upon a corporation (whose charter had by its own nonfeasance become absolutely void, and whose sole remaining powers were those incident to winding up its affairs) the right to seek modification...