Kopio's, Inc. v. Bridgeman Creameries, Inc.

• Decision Date: 14 December 1956
• Docket Number: No. 36950,36950
• Parties: KOPIO'S, Inc., Respondent, v. BRIDGEMAN CREAMERIES, Inc., et al., Defendants, Bridgeman Creameries, Inc., Appellant. DWINNELL & COMPANY, Inc., Third-party-plaintiff, Respondent, v. Hugh YOUNG, Third-party-defendant, Respondent.
• Court: Minnesota Supreme Court

Page 921

79 N.W.2d 921

248 Minn. 348

KOPIO'S, Inc., Respondent, v. BRIDGEMAN CREAMERIES, Inc., et al., Defendants, Bridgeman Creameries, Inc., Appellant.

DWINNELL & COMPANY, Inc., Third-party-plaintiff, Respondent, v. Hugh YOUNG, Third-party-defendant, Respondent.

No. 36950.

Supreme Court of Minnesota.

Dec. 14, 1956.

Syllabus by the Court.

1. A corporation cannot be voluntarily dissolved so as to terminate its existence as a legal entity until there has been compliance with the statutory provisions regulating such dissolution. While a corporation, for some purposes, may effect a defacto dissolution prior to formal statutory termination, the corporation is, nevertheless, amenable to suit as long as it continues to exist as a legal entity. Moreover, assuming compliance with the statutory prerequisites for dissolution, M.S.A. § 300.59, which extends the corporate existence for three years after its termination for the purpose of prosecuting and defending actions, applies to corporations even though they are voluntarily dissolved. Held, the defendant corporation was in existence for the purpose of being sued at the time of the alleged service.

2. As a general rule, where a corporation is amenable to suit after dissolution, service of process may be made on the same persons or officers that could be served prior to dissolution. This rule, however, refers to the offices or functions designated and not to any particular individual holding such office at the time of dissolution. Held that service on a former managing agent, who terminated his employment with the defendant at the time of its liquidation and thereafter became the employee of another organization, did not constitute service on the defendant corporation.

Reversed.

Butchart & Fredin, Duluth, for appellant.

Hugh Young and Thomas Carr, Minneapolis, for Kopio's, Inc. and Hugh Young.

Clarence Holten and James S. Eriksson, Minneapolis, for third-party-plaintiff.

DELL, Chief Judge.

This is an action to recover personalproperty damages which occurred in the destruction of a hotel by fire allegedly caused or allowed to spread through the negligence of the defendants. The defendant Bridgeman Creameries, Inc., appeals from an order denying its motion to dismiss said action on the ground that it had not been properly served with process. Since Bridgeman Creameries, Inc., is the only defendant involved on this appeal, it shall hereafter be referred to simply as the defendant.

The material facts as established by the record or agreed upon by counsel are as follows: On March 16, 1949, fire destroyed a large downtown Minneapolis building in which were located the plaintiff's hotel and the defendant's ice-cream parlor. On December 21, 1951, the stockholders of the defendant corporation adopted a resolution calling for the discontinuance and liquidation of the corporation as of February 29, 1952, under the direction of a trustee in dissolution. On February 29, 1952, a certificate of this resolution was filed with the secretary of state, ¹ and the trustee distributed all the assets of the defendant corporation to its stockholders. Thereafter the defendant did not conduct any business whatsoever.

On November 20, 1953, the summons and complaint in this action were served on one Karl Schulze as service on the defendant. It is conceded that until this date the defendant had no knowledge of any claim on the part of the plaintiff. Schulze had been employed by the defendant as a 'branch plant manager,' but his employment was terminated February 29, 1952, and since then he has served as an employee of Land O'Lakes Creameries, Inc., in its Bridgeman Creameries Division.

On December 1, 1953, a certificate of completion of dissolution and winding up was filed with the secretary of state as required by M.S.A. § 301.56. ² An answer was subsequently filed by the defendant raising the issue of the sufficiency of the service of the process and, on January 5, 1956, the defendant moved for dismissal.

1. The first question involved is whether or not the defendant was in existence for the purpose of being sued at the time of the alleged service of the summons. A corporation, as a creature of statute, has such rights and responsibilities, such powers and limitations, as are accorded it by the legislature. Minnesota corporations, including the defendant herein, are specifically granted the power to sue and be sued. ³ However, in the absence of statutory extension, all such powers of a corporation abate at the end of the corporate existence, ⁴ including the power to sue and be sued. ⁵ The defendant contends that, because of the resolution of December 21, 1951, and the complete liquidation and discontinuance of business as of February 29, 1952, its corporate existence was terminated as of this latter date and thereafter it could not be sued.

The procedure for voluntary dissolution of a corporation in this state is specifically regulated by statute, ⁶ and it is well established that, until there is compliance with such statutory prerequisites, the corporation continues in existence as a legal entity. ⁷ M.S.A. § 301.56 provides that corporate existence 'shall terminate' upon the filing of the certificate of dissolution with the secretary of state. While perhaps not specifically set forth, it is apparent from this section, and we have previously held, ⁸ that only after the filing of such a certificate is there a formal termination of corporate existence.

It is also settled that a corporation can effect a 'dissolution' in a broader sense prior to formal statutory termination. ⁹ For example, in A B C Brewing Corp. v. Commissioner of Int. Rev., 9 Cir., 224 F.2d 483, the court held that for certain tax purposes a corporation, which had ceased business activities and was in the process of dissolution, could be treated as dissolved de facto even though a dissolution certificate had not been filed. However, for the purpose of determining amenability of the corporation to suit, it is immaterial whether or not the defendant had effected such a de facto dissolution. It is well established that, if the corporation continues to exist as a legal entity, it is subject to suit regardless of whether it has ceased to do business or has liquidated its assets. ¹⁰ Inasmuch as the certificate of dissolution herein was not filed until after the alleged service of process, the defendant corporation was in existence, at least for the purpose of being sued, at the time of the alleged service.

In any event, it seems clear to us that even if the dissolution certificate as required by § 301.56 had been filed, the provisions of § 300.59 would be applicable. Section 300.59 provides:

'* * * every corporation whose existence terminates by limitation, forfeiture, or otherwise shall continue for three years thereafter for the purpose of prosecuting and defending actions, closing its affairs, disposing of its property, and dividing its capital, but for no other purpose.'

Defendant, relying upon Jacobs v. E. Bement's Sons, 161 Mich. 415, 126 N.W. 1043, ¹¹ contends that this statute does not apply to voluntarily dissolved corporations because the words 'or otherwise' must be construed with reference to the preceding words. ¹² However, rules of construction are designed to aid in the ascertainment of legislative intent and cannot be used to defeat it. ¹³ The purpose of § 300.59 was discussed in Bowe v. Minnesota Milk Co., 44 Minn. 460, 463, 47 N.W. 151, 152, which case involved a voluntary dissolution:

'* * * At common law, dissolution implied that the corporation had wholly ceased to exist for any purpose, so that suits brought by or against it abated, and a judgment thereafter rendered against it was a nullity; that its title to its property ceased to exist, and all legal remedies to enforce debts due by or to it became extinguished. The equity rule, however, was that, while the corporation had ceased to exist, yet that its property was impressed with a trust in favor of creditors and stockholders as beneficiaries, whose interests equity would protect by appointing a trustee, if necessary, to execute the trust. To obviate the inconvenient consequences ensuing at common law, and even to a certain extent in equity, from the dissolution of corporations, our statute, (Gen.St.1878, chapter 34, § 416,) (now M.S.A. § 300.59) in common with those of most states, provides that, after the dissolution of a corporation, it shall continue to be a body corporate during a term of years, for the purpose of prosecuting or defending actions by or against it, and for the purpose of enabling it to settle and close up its concerns, etc., but not for the purpose of carrying on the business for which it was established. Under this statute undoubtedly plaintiff could bring and maintain an action against the defendant, notwithstanding its previous dissolution, * * *.'

It is obvious that, since the consequences sought to be avoided by § 300.59 did not depend upon the manner of dissolution, the section was intended to apply to voluntary as well as involuntary corporate dissolutions.

2. A more difficult question is whether the service of process on Schulze constituted service on the defendant corporation. Rule 4.03 of the Rules of Civil Procedure provides in part:

'Service of summons within the state shall be made as follows:

'(c) Upon a Corporation.

'Upon a domestic or foreign corporation, by delivering a copy to an officer or managing agent, or to any other agent authorized expressly or impliedly or designated by statute to receive service of summons, and if the agent is one authorized or designated under statute to receive service any statutory provision for the manner of such service shall be complied with.'

The defendant concedes that Schulze was a 'branch plant manager' for the defendant at the time of discontinuance of business on February 29, 1952. The showing made on the motion to dismiss discloses that, for several...