Law v. Rich et al.

• Decision Date: 31 March 1900
• Court: West Virginia Supreme Court
• Parties: Law v. Rich et al.

47 W.Va. 634

Law

v.Rich et al.

Supreme Court of Appeals of West Virginia.

Submitted February 5, 1900

Decided March 31, 1900.

1. Corporation Surrender Franchise Dissolution.

A resolution by the stockholders of a joint-stock company to discontinue its business under section 56, chapter 53, Code 1891, operates as a voluntary surrender of the corporate franchise, and a dissolution of the corporation, (p. 635.)

2. Equity Jurisdiction Statute.

Equity has no jurisdiction, except as authorized by statute, to dissolve a corporation, (p. 636).

3. Corporation Receiver Bill Jurisdiction.

When a dissolution of a joint-stock corporation has been made by resolution of its stockholders, under section 56, chapter 53, Code 1891, if a creditor asks a court of chancery to administer its assets through a receiver or otherwise, the bill must state, as a basis of jurisdiction, the failure of the corporation to provide ample funds to sufficiently secure the debts of the corporation, as required by that section, (p. 637).

4. Cessation of Business Not Dissolution.

A mere cessation, or suspension, or discontinuance by a corporation of its corporate business, unless by resolution of its stockholders to discontinue business, will not operate as a dissolution of a corporation, (p. 637.)

Appeal from Circuit Court, Ritchie County.

Bill by M. L. Law, against Fred Rich and the Oriole Oil and Gas Company. Decree for defendants, and plaintiff appeals.

A firmed.

Davis & Woods, for appellant. Smith D. Turner, for apellees.

Brannon, Judge:

M. L. Law, made a lease July 19, 1895, to Fred Rich, of land for oil and gas develoment, which lease was assigned by Rich to the Oriole Oil and Gas Company, a corporation. Law, claiming that under the terms of said lease some money was due him for rent, brought a suit in equity in the circuit court of Ritchie County against Rich and the said Oriole Company to enforce said debt against certain property owned by that company in Ritchie County. The defendants demurred to the bill and amended bill, assigning as cause of demurrer want of jurisdiction in equity to entertain the suit. The Oriole Oil and Gas Company also answered. The court held that the bill showed no equity, and dismissed the case. Law appeals.

There are several questions of importance in the construction of the lease which it would be proper to discuss if there were jurisdiction in equity, but, as we hold there is not, it is improper to discuss them in this suit, and they are left in-tact now for consideration in another suit properly involving them. This is a suit for money claimed as rent under said lease, purely a money demand, proper for a law court. The only ground upon which the bill predicates jurisdiction in equity is the allegation that "said Oriole Oil and Gas Company resolved to discontinuue its business as a corporation under the laws of this State on the 8th day of February, 1897, a long time after said debt had become payable." At the start I will say that a general equity jurisdiction CE.nnot be appealed to as warrant to dissolve a corporation. "Courts of equity have no general jurisdiction to decree the dissolution of a corporation by a forfeiture of its franchises, and therefore cannot exercise such a power, unless given by statute." 9 Am. & Enc. Law (2d Ed.) 601; 5 Am. & Eng. Dec. Eq 128. Therefore, neither because of any inherent jurisdiction in equity nor because of a. discontinuance of its business can equity take jurisdiction of this case. Nothing is pleaded as aground of jurisdiction except the fact that the corporation had resolved to discontinue its business. Our statute (Code 1891, chapter 53, section 57) provides that not less than one-third in interest of the stockholders of a corporation may, by a suit in equity, obtain a decree of dissolution of the corporation by showing sufficient cause therefor. This is an additional power given courts of equity, but this bill cannot be sustained by that section. What effect has the mere discontinuance of business by a corporation upon its corporate life? It does not operate alone as a dissolution. Nonuser total nonuser of the franchise does not do so. The State must, by a proper proceeding-, have an adjudication of the fact of nonuser or misuser of the corporate charter, and of its consequent forfeiture and dissolution, before the life of the corporation ends. Moore v. Schoppert, 23 W. Va. 282; Lumber Co. v. Ward, 30 W. Va. 43, (3 S. E. 227); 9 Am. & Eng. Enc. Law (2d Edj 563, 574. But it is clear law that the mere suspension or discontinuance of business by a corporation will not destroy its life. The discontinuance or suspension may be temporary, often advisable for the interests of the stockholders. The State may step in, if the public is injured, and take away the charter for such a discontinuance of its business as is misuser or nonuser. Our Code, chapter 53, section 7, tolerates a suspension of business for two years, and declares that a longer suspension shall operate a forfeiture of corporate rights and privileges; say^> they shall cease. But that forfeiture must be enforced by the State, not by an individual. All this shows that mere discontinuance of business does not alone dissolve a corporation. It does not authorize a creditor to avail himself of jurisdiction in equity to have the assets administered for the benefit of creditors, as in the case of a dissolved corporation. A...