Kehn v. Hoeksema
| Decision Date | 18 October 1994 |
| Docket Number | No. 18704,18704 |
| Citation | 524 N.W.2d 879 |
| Parties | Louis KEHN, Plaintiff and Appellee, v. Etta HOEKSEMA, Peter Hoeksema, Jim D. Johnson and Lori Johnson, Defendants and Appellants. . Considered on Briefs on |
| Court | South Dakota Supreme Court |
Wally Eklund, of Johnson, Eklund, Nicholson, Dougherty and Abourezk, Gregory, for plaintiff and appellee.
John D. Jacobsen of Willoughby, Benson and Jacobsen, Burke, for appellants, Hoeksema.
J.M. Grossenburg, Winner, for appellants, Johnson.
Plaintiff brought declaratory judgment to determine parties' rights under an Option to purchase real estate. Defendants appeal from summary judgment in favor of Plaintiff. We affirm.
On November 2, 1978, Kehn Ranch Inc. entered into an agreement with Etta and Peter Hoeksema (Hoeksema) for an Option to Lease or Purchase certain real estate owned by Hoeksema. This Option was recorded in the Gregory County Register of Deeds on December 5, 1980. The Option granted Kehn Ranch, its heirs, successors, and assigns the right to match any bona fide offer from third parties should any third party offer to purchase or lease the Hoeksema real estate. The Option was binding "upon the heirs, successors and assigns of the parties" until January 1, 2008.
On October 29, 1990, Hoeksema entered into a contract for sale of the property to Jim and Lori Johnson (Johnson). Neither Kehn Ranch nor its successors or assigns were notified of this contract. The Secretary of State had issued a Certificate of Administrative Dissolution for Kehn Ranch on December 15, 1989. Hoeksema and Johnson assumed that because the corporation was dissolved, the Option was no longer valid. Louis Kehn (Louis) wrote a letter to Hoeksema's attorney on January 18, 1991, advising that he had recently learned of the contract with Johnson and that he was the assignee of the Kehn Ranch Option. On February 21, 1991, Kehn Ranch conveyed a quit claim deed to Louis, a corporate director, with the Option.
Louis brought a declaratory judgment action on June 21, 1991, against Hoeksema and Johnson. Both sides motioned for summary judgment. On December 30, 1991, the trial court denied both sides' motions for summary judgment and entered an order compelling discovery of Kehn Ranch corporate officers' identities, periods served and minutes of the February 21st meeting when the Option was given. An intermediate appeal was denied by this Court on January 22, 1993. On November 29, 1993, Louis filed a motion to strike Defendants' Answer and to grant judgment in his favor claiming Defendants' had no standing to challenge the conveyance to him. On February 16, 1994, the trial court granted Louis' motion, finding that Hoeksema and Johnson had no standing to challenge the conveyance from Kehn Ranch to Louis. We affirm because the right result was reached.
Whether the transfer of a corporate asset by a dissolved
corporation to one of its directors is valid?
Defendants contend that they have standing based on SDCL 43-25-34 1 to challenge the quit claim deed from Kehn Ranch to Louis. The trial court held that they did not have standing to challenge the corporate conveyance of the Option. The trial court's order granting summary judgment found that no genuine issue of material fact existed involving the validity of the Option held by Louis. Since Hoeksema's proposed stipulated facts were assumed to be true by Louis and the trial court for purpose of summary judgment, we are faced with a question of law. 2 Conclusions of law are reviewed de novo. Stover v. Critchfield, 510 N.W.2d 681 (S.D.1994). The trial court reached the right result in validating the transfer, but for the wrong reason.
Hoeksema and Johnson did have standing to challenge the transfer. We have stated that:
[C]ourts are instituted to afford relief to persons whose rights have been invaded, or are threatened with invasion, by the defendant's acts or conduct, and to give relief at the instance of such persons[.] ... One cannot rightfully invoke the jurisdiction of the court to enforce private rights or maintain a civil action for the enforcement of such rights unless he has in an individual or representative capacity some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy.
In Re Kenison's Guardianship, 72 S.D. 180, 184, 31 N.W.2d 326, 328 (1948) (citing 39 Am.Jur. pp. 858-860). Hoeksema and Johnson have a land sale contract which is directly affected by the outcome of this litigation. Louis instituted this declaratory judgment action. Since Hoeksema and Johnson are defendants, their standing is to be determined from the defendants' perspective. A party who is necessary to a complete determination or settlement of the question involved may be made a defendant. Security Nat. Bank & Trust Co. v. Richardson, 686 P.2d 293, 295 (Okla.App.1984). Hoeksema and Johnson have an interest in the outcome and are necessary for a proper determination in this litigation. Therefore, the only question is whether Kehn Ranch, a dissolved corporation, was legally entitled to transfer the Option.
Defendants assumed that because Kehn Ranch was no longer a registered corporation that the Option was no longer valid. SDCL 47-7-30.1 allows an administratively dissolved corporation to continue its corporate existence to wind up its affairs. SDCL 47-7-6.1 allows a corporation to wind up its affairs after a certificate of dissolution is issued by the Secretary of State. 3 SDCL 47-7-6.1 grants a dissolved corporation the power to transfer its assets. See 3 Fletcher, Cyc. Corp., Sec. 8137 (Perm. ed.). Dissolution of the corporation does not transfer title to the corporation's property. SDCL 47-7-6.1. "An option to purchase land is an asset within the scope of a winding up statute and it therefore survives the dissolution of the corporation, and may be exercised if such action is necessary to settle properly the affairs of the dissolved corporation." 3 Fletcher, Cyc. Corp., Sec. 8134. Under SDCL 47-7-6.1, a dissolved corporation may...
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