McKinney v. Anderson
| Decision Date | 09 July 1987 |
| Docket Number | No. 01-87-0134-CV,01-87-0134-CV |
| Citation | 734 S.W.2d 173 |
| Parties | David W. McKINNEY, Individually, Appellant, v. James N. ANDERSON d/b/a Texas Executive Leasing, Appellee. (1st Dist.) |
| Court | Texas Court of Appeals |
James D. Squier, Blakeney, Bourque & Squier, Houston, for appellant.
Scott P. Zoppoth, Webb, Zimmerman, Fischman, Flaum & Glesby, Houston, for appellee.
Before LEVY, WARREN and DUGGAN, JJ.
Appellant, David W. McKinney, appeals the trial court's order granting appellee's motion for summary judgment. In his sole point of error, appellant claims that the trial court erred in granting the motion because he was not liable to appellee in his individual capacity.
The record reveals that Universal Staffing, Inc. ("Universal"), a Texas corporation, entered into an equipment lease with appellee, James N. Anderson, doing business as Texas Executive Leasing, on February 4, 1982. The lessee designated on the contract was Universal, not the present appellant, and the lease payments were not guaranteed by appellant or by any other person or entity. Pursuant to the contract, Universal agreed to pay a total amount of $42,376.72 as rental payments to appellee, in semi-annual installments of $5,297.09. The first rental payment was due on the fourth day of August, 1982, and Universal paid it. When Universal failed to make any further rental payments, appellee declared Universal in default, exercised his option to repossess the equipment leased to Universal, and sold it for $10,000.00. Appellee credited to Universal's account as an offset the prior rental payment, the deposit and the money he received from selling the equipment, and on May 15, 1986, he sued both Universal and David W. McKinney, individually, to recover the $26,079.63 balance, plus interest and attorney's fees.
On October 31, 1986, appellee filed a motion for summary judgment, alleging that there were no issues of material fact and that as a matter of law, Universal was a mere conduit for appellant's personal business, because Universal allegedly did not pay its franchise taxes or file its annually required franchise tax reports at any time during its corporate existence. Appellant filed a response to the motion alleging that there were genuine issues of material fact, and that appellee did not show that Universal was not in good standing as a chartered corporation at the time the lease was executed. Appellant also argued that the Secretary of State of Texas issued a Certificate of Incorporation for "Universal Staffing, Inc.," on October 2, 1981, following the payment of the necessary fees, including advance payment of franchise taxes, that the corporation was in active operation as a wholly separate entity from David W. McKinney at the time the lease was executed, and that Universal had, at all relevant times, multiple shareholders and employed in excess of 15 persons, on and for whom taxes were paid and benefits provided.
Appellee relies on Tex.Tax Code Ann. sec. 171.255(a) and (b) (Vernon 1982). These sections read:
(a) If the corporate privileges of a corporation are forfeited for the failure to file a report or pay a tax or penalty, each director or officer of the corporation is liable for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived. The liability includes liability for any tax or penalty imposed by this chapter on the corporation that becomes due and payable after the date of the forfeiture.
(b) The liability of a director or officer is in the same manner and to the same extent as if the director or officer were a partner and the corporation were a partnership.
Appellant alleges that these sections of the Tax Code are inapplicable because the corporation was in good standing when the lease was executed in early 1982. The record reveals that Universal did not suspend operations until December 31, 1982, at which time Universal wrote a letter to the Secretary of State advising the Secretary that the last day of corporate business was December 31, 1982. Appellee also admits in its motion for summary judgment that Universal's corporate charter was not forfeited until February 20, 1984, for its failure to pay taxes.
Under section 171.255, individual liability is imposed only for debts contracted after the forfeiture of the right to do business, and has no application to obligations arising or renewed prior thereto. River Oaks Shopping Center v. Pagan, 712 S.W.2d 190, 192 (Tex.App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.). In determining whether a debt has been created or incurred, ...
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