North American Asbestos Corp. v. Superior Court

• Decision Date: 22 January 1982
• Parties: NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; Harry P. HOOPES et al., Real Parties in Interest. NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; Lester JOHNSON, Real Party in Interest. NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; John GORMAN, Real Party in Interest. NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; Harold C. FOSTER et al., Real Parties in Interest. Civ. 51482, 52559, 53506, 53830.
• Court: California Court of Appeals Court of Appeals

Page 889

179 Cal.Rptr. 889

128 Cal.App.3d 138

NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent;

Harry P. HOOPES et al., Real Parties in Interest.

NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent;

Lester JOHNSON, Real Party in Interest.

NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent;

John GORMAN, Real Party in Interest.

NORTH AMERICAN ASBESTOS CORPORATION, Petitioner, v. The SUPERIOR COURT OF ALAMEDA COUNTY, Respondent;

Harold C. FOSTER et al., Real Parties in Interest.

Civ. 51482, 52559, 53506, 53830.

Court of Appeal, First District, Division 3, California.

Jan. 22, 1982.

Preston N. Ericksen, David A. Gifford, Ericksen, Arbuthnot, McCarthy & Kearney, Inc., Oakland, for petitioner.

Steven Kazan, Steven Kazan, A Law Corporation, Oakland, for real parties in interest Harry P. Hoopes et al., John Gorman and Harold Foster, et al.

George W. Kilbourne, Law Offices of George W. Kilbourne, Pleasant Hill, for real parties in interest Harry P. Hoopes, et al.

Edward M. Digardi, Edward M. Digardi, Inc., Oakland, for Lester Johnson.

Bryce C. Anderson, Martinez, for John Gorman and Harold Foster et al.

John P. MacMeeken, D. Wayne Jeffries, Monte S. Travis, Chickering & Gregory, San Francisco, for amicus curiae.

SCOTT, Justice.

Petitioner North American Asbestos Corporation challenges the denial of its motions to quash service of process. Petitioner's four petitions, considered herein collectively, raise the question of whether a dissolved Illinois corporation may be sued in California for asbestos-related injuries when the dissolution took place more than two years before the suits were filed.

Petitioner is the defendant in 13 different lawsuits, some with multiple plaintiffs, all involving asbestos-related injuries. Petitioner was incorporated under the laws of the State of Illinois on October 14, 1953, and on May 19, 1978, filed articles of dissolution and was issued a certificate of dissolution by the Secretary of State of Illinois.

Illinois has a statute which provides that the dissolution of a corporation shall not impair any remedy for a liability incurred prior to dissolution "if action or other proceeding thereon is commenced within two years after the date of such dissolution." (Ill.Rev.Stats.1977, ch. 32, § 157.94.) Eleven of the thirteen lawsuits were filed more than two years after dissolution. A twelfth brought by Carl Tognolini, Johnnie Overstreet and Ned Fernandez (action No. 532968-5, covered by petition 1 Civ. 51482) was filed several days before the two-year period ended, but service took place after the deadline. The remaining lawsuit by John Gorman (action No. 524147-9, covered by petition 1 Civ. 53506) was filed before the period expired, but when initially filed did not name petitioner as a defendant. The first amended complaint, which substituted petitioner for a Doe defendant, was filed after the two-year period had ended.

Service of process in the various lawsuits was by mailing summons and complaint to Max E. Meyer, trustee of the liquidating trust of North American Asbestos Corporation. Petitioner did not return the Acknowledgment of Receipt forms accompanying service. Instead, petitioner moved to quash, contending both that service upon the dissolved corporation was void and that the corporation did not have the minimum contacts with California to justify suit here. The motions to quash were denied. These petitions followed. We conclude that the motions to quash were properly denied in that the court had jurisdiction over petitioner and that the appropriate procedure to challenge petitioner's capacity to be sued was by way of a demurrer, motion for summary judgment, or other procedures.

Petitioner's attack upon the jurisdiction of the court in its motion to quash is resolved by Code of Civil Procedure sections 410.60 and 416.20. The latter section specifically authorizes service of summons upon "a corporation that has forfeited its charter or right to do business, or has dissolved...." Service may be accomplished by delivery "(t)o a person who is a trustee of the corporation and of its stockholders or members." Section 410.60 provides that "(i)n an action against a corporation which has forfeited its charter or right to do business, or has dissolved, the court in which the action is pending has jurisdiction over all the trustees of such corporation and of its stockholders or members from the time summons is served on one of the trustees ...." Petitioner's reliance upon Sharp v. Eagle Lake Lumber Co. (1923) 60 Cal.App. 386, 212 P. 933 is misplaced. The Sharp court discussed the principle that a defunct corporation is legally dead and no more capable of being sued than is a natural person after passing from this life. The court then observed that "the purported service of process in this case was an absolute nullity." (60 Cal.App. at p. 390, 212 P. 933.) Although the Sharp decision has not since been relied upon for that point, Witkin treats it as authority for the proposition that "(i)f the court has no jurisdiction of the defendant he may, at the time to plead, move to quash service. (C.C.P. 418.10 ....)" (5 Witkin, Cal.Procedure (2d ed. 1971) Attack on Judgment in Trial Court, § 167, p. 3739.)

However, in Sharp the purported service was upon the vice-president of the company, as vice-president. But since there was no company in existence, there was no vice-president or other agent of the company. Thus, the service of process was a nullity. Here, however, the service was not upon the company or upon an officer of the company, but upon the trustee. Service was in accordance with the requirements of Code of Civil Procedure section 416.20. Under Code of Civil Procedure section 410.60 it vested the court with jurisdiction over the trustee and the stockholders. The issues raised by petitioner address not the jurisdiction of the court, but the capacity of petitioner to respond to suit. ¹

A motion to quash does not lie when a dissolved corporation has been properly served in accordance with Code of Civil Procedure section 416.20; the trial court's denial of petitioner's various motions to quash was appropriate. (Cf. 1 Witkin, Cal.Procedure (2d ed. 1971) Jurisdiction, § 183, p. 712.)

In the event of further proceedings in this cause to determine petitioner's capacity to be sued the trial court will be required to determine whether the law of California or the law of Illinois applies. The two-year survival law applies under Illinois law to suits against a dissolved Illinois corporation. Illinois Revised Statutes, chapter 32, section 157.94, provides that "The dissolution of a corporation (by various means) shall not take away or impair any remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within two years after the date of such dissolution."

Petitioner contends that under Illinois law there is a clear bar to any lawsuit brought over two years after its dissolution. However, Illinois decisions hold that the two-year limitation on corporate survival is not absolute. Thus, in The People v. Parker (1964) 30 Ill.2d 486, 197 N.E.2d 30 there is a suggestion that suit would not...