Merges v. Altenbrand
| Decision Date | 09 April 1912 |
| Parties | MERGES v. ALTENBRAND et al. |
| Court | Montana Supreme Court |
Appeal from District Court, Gallatin County; W. R. C. Stewart Judge.
Action by Francis Merges against Henry Altenbrand, Jr., and others. From a judgment of dismissal, rendered on sustaining a general demurrer to the complaint, plaintiff appeals. Reversed and remanded.
Wight & Pew, of Helena, for appellant.
Hartman & Hartman, of Bozeman, for respondents.
This action was brought for the purpose of having it adjudged that the Manhattan Malting Company, a corporation organized under the laws of Montana, (hereafter referred to as "the corporation"), is legally dead, by reason of the expiration of the time limit fixed by its charter, and to have a receiver appointed to wind up its affairs.
The following narrative of facts, gathered from the complaint, is sufficient to present the questions involved: The corporation was organized on December 26, 1890, the recorded certificate designating the plaintiff, defendants Henry Altenbrand, John G. Gillig, and two others as trustees for the first three months. Its capital stock consists of 10,000 shares of a par value of $100 each. The object of the incorporation named in the certificate is the manufacture and sale of malt at Moreland (now Manhattan), in Gallatin county. At different times there had been issued, and on December 26, 1910, there were outstanding, 5,821 shares of stock. At the time of the organization plaintiff purchased at par 200 shares and is now the owner of them. The defendants are the owners of 4,620 shares, more than two-thirds of all shares now outstanding and on December 26, 1910, were the acting trustees. On that date a meeting of the stockholders was held pursuant to notice as provided by law for the purpose of determining the question whether the existence of the corporation should be extended 20 years from that date. The result was the adoption of a resolution in favor of the extension, more than two-thirds of the holders of all the outstanding stock voting in the affirmative, the plaintiff, however, voting in the negative. On December 28, 1910, the chairman and secretary of the meeting caused to be filed with the clerk and recorder of Gallatin county a properly authenticated certificate of the proceedings had, and a certified copy of this certificate to be filed with the Secretary of State on December 31st. No other meeting was held and no other record of the proceedings made. Subsequently, and prior to the commencement of this action, the plaintiff demanded that the defendants proceed to wind up the affairs of the corporation by the payment of its debts out of the proceeds of its property and the distribution of the remainder among the stockholders. The property of the corporation is of great value. The defendants are in possession of it and are proceeding to use it in the conduct of the business, assuming that the corporation is still in existence. It is alleged that the corporation never elected to continue its existence under the Codes of 1895 nor under the Revised Codes of 1907, nor any other laws than those in force at the date of its organization; that, when it was organized, the term of its existence was limited to 20 years, and there was no provision of law authorizing an extension of it; that the provisions now in force permitting such extension, having been enacted subsequent to the organization of the corporation, have no application to it, but that, if they have, they are void because they impair the obligation of the contract existing between the corporation and the stockholders and between the stockholders themselves, and deprive the plaintiff of his property without due process of law. The court sustained a general demurrer to the complaint and rendered judgment dismissing the action. Plaintiff has appealed.
In order to understand the contentions made by counsel, a brief reference to some of the provisions of our corporation law and their history is necessary. Under the law as it existed in 1890, the life of a corporation was limited to 20 years. Comp. Stat. 1887, Fifth Div. § 446. There was then no provision authorizing an extension of this limit. By an act adopted by the Legislature of 1893 (Session Laws 1893, p. 111), the provisions of the Compiled Statutes relating to corporations were amended in several particulars. The limitation fixed by section 446, supra, was extended from 20 to 40 years. Section 467 was amended so as to include a provision authorizing any corporation or company theretofore formed, either by special act or under the general laws then existing or any formed thereafter, to extend the term of its existence, subject to the provisions and liabilities of the chapter of which section 467 was a part; provided the extension should in no case make the term of existence longer than 40 years from the date of the original incorporation. Sections 468 and 469 were so amended as to provide a method by which the extension could be effected. Section 468 declared that it must be authorized by a vote of at least two-thirds of all the shares of stock at a meeting of stockholders to be called as therein directed. Section 469 provided for the organization and conduct of the meeting, and, if the vote was in favor of the extension, for the making and filing of a certificate of the result with the clerk and recorder of the proper county, and a certified copy thereof with the Secretary of State. These sections, as amended, were continued in force by section 5186 of the Political Code of 1895 (Rev. Codes, § 3566), to be construed as amendments to the provisions on the same subject as found in the Civil Code (Pol. Code 1895, § 5184 [Rev. Codes, § 3564]), wherein they appear as sections 411-414. Section 446, as further amended (Laws 1905, c. 102, p. 224; Laws 1907, c. 163), is found in the Revised Codes as section 3825. Amended sections 467, 468, and 469 now appear therein as sections 3826, 3827, and 3828, respectively. Sections 3825 and 3826 were again amended by the act of 1909 (Laws 1909, pp. 148, 149), but not in any particular affecting this controversy.
1. We notice first the contention that the foregoing provisions do not apply to the corporation because it never elected to continue its existence under the provisions of the Codes of 1895 or subsequent legislation, and therefore could not avail itself of the privilege granted by section 3826, supra, as amended. This contention cannot be sustained, for the reason that, when the Codes of 1895 were adopted, the sections of the Compiled Statutes, supra, as amended by the act of 1893, were in full force and effect. By the express terms of amended section 467 (Rev. Codes, § 3826; Session Laws 1909, p. 149), it included any company or corporation theretofore formed "either by special act or under general law and now existing." As already pointed out, the provisions of the act of 1893 were continued in force as amendments to the provisions of the Code of 1895 on the same subject, and supplanted them so far as they were inconsistent with them. Pol. Code 1895, §§ 5184, 5186; Rev. Codes, §§ 3564, 3566. Therefore, after the adoption of the Codes of 1895, and later of the Revised Codes of 1907, the provisions of the act of 1893, and all subsequent amendments to them, still applied to the corporation, though it did not elect to continue its existence under the Codes authorizing it to do so. Civ. Code 1895, § 401; Rev. Codes, §§ 3815, 3816. This being so, it could avail itself of the privilege granted by section 3826 as amended.
2. Four steps are requisite to enable a corporation to avail itself of the privilege granted by the statute. These are: (1) A meeting of the stockholders, called as provided in section 3827, and a favorable vote by the requisite majority; (2) the preparation and execution of the required certificate evidencing the proceedings had; (3) the filing of the certificate with the clerk and recorder of the proper county; and (4) the filing of a certified copy thereof with the Secretary of State.
Counsel for plaintiff contend that all of these steps must be taken during the life of the corporation, or else the effort to extend its life is not effective for any purpose. They rely upon the rule, which is not the subject of question, that if the law under which a corporation is organized, or the special act creating it, fixes a definite time during which its life shall continue, when the limit expires the corporation is ipso facto dissolved, and cannot thereafter exercise any power, except such as the law confers in order to enable it to wind up its affairs. Clark v. American Canal Co., 165 Ind. 213, 73 N.E. 1083, 112 Am. St. Rep. 217; People v. Anderson, 76 Cal. 190, 18 P. 308; La Grange R. Co. v. Rainey, 7 Cold. (Tenn.) 420; 10 Cyc. 1271; 1 Thompson on Corporations, § 243. Our statute declares that a corporation is dissolved by the expiration of the time limited by its charter. Rev. Codes, § 3905.
The general rule is that a corporation comes into existence at the time when the conditions precedent imposed by law have all been substantially complied with. 1 Thompson on Corporations, §§ 171, 243, 265. It is an artificial person and necessarily can have no legal being until it...
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