Litts v. Refrigerated Transport Co., Inc., Civ. No. 71-399.

• Decision Date: 19 November 1973
• Docket Number: Civ. No. 71-399.
• Citation: 375 F. Supp. 675
• Parties: Harold LITTS, Plaintiff, v. REFRIGERATED TRANSPORT CO., INC., Defendant and Third-Party Plaintiff. GEORGIA BROILER CORPORATION, Defendant, v. GLIDDEN-DURKEE DIVISION SCM CORPORATION and Pillsbury Farms, Inc., Third-Party Defendants, v. GEORGIA BROILER CORPORATION, Third-Party Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

375 F. Supp. 675

Harold LITTS, Plaintiff, v. REFRIGERATED TRANSPORT CO., INC., Defendant and Third-Party Plaintiff.

GEORGIA BROILER CORPORATION, Defendant, v. GLIDDEN-DURKEE DIVISION SCM CORPORATION and Pillsbury Farms, Inc., Third-Party Defendants, v. GEORGIA BROILER CORPORATION, Third-Party Defendant.

Civ. No. 71-399.

United States District Court, M. D. Pennsylvania.

November 19, 1973.

Levy, Preate & Purcell, Scranton, Pa., for plaintiff.

John R. Lenahan, Michael J. Eagen, Jr., James J. Haggerty, Scranton, Pa., for defendant.

MEMORANDUM AND ORDER

NEALON, District Judge.

Plaintiff, Harold Litts, instituted this action, sounding in tort, on September 16, 1971, against defendants Refrigerated Transport Co., Inc., and Georgia Broiler Corporation. Service of process was attempted, but not effected, on Georgia Broiler. Subsequently, Refrigerated Transport, (seeking to obtain service of Georgia Broiler), filed a third-party complaint against Glidden-Durkee Division, SCM Corporation, and Pillsbury Farms, Inc.¹ Pursuant to a stipulation between the parties, the complaint against Pillsbury Farms was withdrawn, and on April 27, 1973, after obtaining leave of court, Refrigerated Transport filed a third-party complaint against Georgia Broiler. It is not disputed that Georgia Broiler was dissolved on May 13, 1970, more than two years prior to the filing of the third-party complaint against it.

It is a precept of the common law that all legal proceedings brought by and against a corporation abate upon its dissolution. Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 259-260, 47 S.Ct. 391, 71 L.Ed. 634 (1927). Today, however, the harshness of the common law on creditors and shareholders has been abrogated in every American jurisdiction by statutes which extend the corporate life for the purpose of prosecuting and defending suits. See, Note, Suits By and Against Dissolved Corporations, 48 Iowa L.Rev. 1006 (1963).

Georgia's response² to the common law is enacted in Ga.Code Ann. § 22-1325, which provides:

"Survival of remedy after dissolution. —The dissolution of a corporation in any manner, except by a decree of court when the court has supervised the liquidation of the assets and business of the corporation as provided in this Code Chapters 22-1 through 22-20, shall not take away or impair any remedy available to or against such corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is pending on the date of such dissolution or is commenced within two years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name. The shareholders, directors and officers shall have power to take such corporate or other action as shall be appropriate to protect such remedy, right or claim."

The question thus presented is whether a dissolved Georgia corporation may be impleaded as a third-party defendant after the two-year period of extension has expired.

Under Rule 3, Fed.R.Civ.Pro., "a civil action is commenced by filing a complaint with the court." Although the third-party complaint against Georgia Broiler was not filed until after the two-year extension period, the third-party plaintiff asserts that the filing of the original complaint by Litts against Georgia Broiler on September 16, 1971 tolled the statute. While the commencement of Litts' action against Georgia Broiler was timely, it cannot be said that since the statute was tolled as to Litts, it was tolled as to the whole world.³ Although the alleged liability of Georgia Broiler to Refrigerated arises out of the same set of facts as does the alleged liability of Refrigerated to Litts, the rights asserted by each party are essentially different. The claim of Litts is based on the alleged tortious action of Refrigerated, while the claim of Refrigerated is one seeking indemnity or contribution. Rule 14(a), Fed.R.Civ.P.; 3 Moore, Federal Practice §§ 14.03 1, 3 and 14.04 (1972). To hold in this instance that the Georgia statute was tolled by the commencement of Litts' action so as to open up a claim by Refrigerated against Georgia Broiler would do violence to the reason behind the statute:

"There should be a definite point in time at which the existence of a corporation and the transaction of its business are terminated. To allow, as the plaintiff contends, the continued prosecution of lawsuits perverts the definiteness and orderly process of dissolution so as to produce a continuous dribble of business activity contrary to the intent of the winding up provisions of the statute."⁴

The third-party plaintiff also contends that the expiration of a statute of limitations on the cause of action asserted by the original plaintiff against the original defendant has no effect on the right of that defendant as a third-party plaintiff to implead a third-party defendant. That theory apparently has its genesis in the fact that, generally, the cause of action instituted by a third-party plaintiff is governed by a different statute of limitation than that limiting the action asserted by the original plaintiff.

"On general principles a defendant cannot, of course, maintain his impleader if the statute of limitations has run on the claim which he has against the third party. It should be recognized, however, that the applicable statute is not that which governs the plaintiff's claim against the defendant. If defendant has a claim over against a third-party defendant —such as a claim for indemnity, contribution, etc.—the statute usually will not commence to run against the defendant (third-party plaintiff) and in favor of the third-party defendant until judgment has been entered against the defendant, or the defendant has paid the judgment. Thus a defendant may implead a third party to enforce against him a right of contribution, even though the statute may have run on any claim by plaintiff directly against the third party."

3 Moore, Fed. Practice ¶ 14.09 at 534-35 (1972). See also Corning Glass Works v. Puerto Rico Water Resources Authority, 396 F.2d 421 (1st Cir. 1968); Sabat v. Pennsylvania Railroad Co., 157 F.Supp. 325 (E.D.N.Y.1958).

Moreover, it must be emphasized that the corporate extension statute is not a statute of limitations. Bazan v. Kux Machine Co., 52 Wis.2d 325, 190 N. W.2d 521 (1971). For the purposes of this case, the importance of that statement seems to lie in this: A statute of limitations begins to run upon the accrual of a party's cause of action, while the corporate statute starts running upon the dissolution of the corporation.

Research has only discovered one Georgia case construing § 1325. In Southern Land, Timber and Pulp Corp. v. United States, 322 F.Supp. 788 (N.D. Ga.1970) it was held that a suit instituted by a corporation, more than three years after its dissolution, against the United States for a tax refund was barred by § 1325. In addition, although § 1325 is patterned after § 98 of the Model Business Corporation Act,⁵ no case construing that Act has been found directly in point. However, in Alpha Portland Cement Co. v. MacDonald Engineering Co., 233 F.Supp. 647 (E.D. Pa. 1964), a similar Pennsylvania statute was construed in light of nearly identical facts so as to bar service...