Perry v. Shaw

• Decision Date: 30 October 1942
• Citation: 13 So.2d 811,152 Fla. 765
• Parties: PERRY et al. v. SHAW et al.
• Court: Florida Supreme Court

13 So.2d 811

152 Fla. 765

PERRY et al. v. SHAW et al.

Florida Supreme Court

October 30, 1942

On Rehearing June 8, 1943.

Further Rehearing Denied June 18, 1943.

Appeal from Circuit Court, Dade County; Ross Williams, Judge.

Hudson & Cason A. C. Franks, and H. H. Eyles, all of Miami, for appellants.

Worley &amp Gautier and Ward & Ward, all of Miami, for appellee.

ADAMS, Justice.

Reluctant as the writer is to appear critical of the opinion and judgment reached by a majority of the Court, I earnestly believe the Court is committing us to erroneous principles of law and binding the parties to an unjust judgment. The writer is of the opinion that the chancellor entered a proper decree and that same was abundantly sustained by the evidence.

In reality we are dealing with two parties, Henry Shaw and Charles Perry. The latter acting in a dual capacity, individually, and as trustee.

In 1933 (at the bottom of the depression) Perry was the owner of distressed property, namely, a golf course. He solicited money, credit and effort of Shaw. An agreement was reached by the two. A corporation was formed. Perry leased the golf course to the corporation. The lease was assignable by the lessee. Both parties were stockholders and officers. Perry was president and actively employed by the corporation. In 1937 the corporation was disolved by operation of law for failure to pay its charter tax. The parties started to procure a new charter and considered proceedings for reinstatement of the old one, but did neither. However, they continued to operate under the corporate name of the business just as before until April 3, 1940, when Perry filed suit as trustee against Shaw and others to conclude the business, pay the debts and divide the remaining assets among the stockholders. It was alleged that the leasehold interest was one of the corporate assets.

On April 30, 1940 Perry, by permission of court, intervened individually and took the position that when the charter was forfeited the lease was breached and he could and did now elect to declare it of no effect. This contention is now approved by a majority of the Court.

The law of anticipatory breach of contract was sanctioned at common law and has long been approved in Florida. See Gilliland v. Mercantile Inv. & Holding Co., 147 Fla. 613, 3 So.2d 148, and cases there cited. However, such law does not apply to this case since the lease is an assignable asset and will inure to the creditors and stockholders in equity.

In 32 Am.Jur., page 704, par. 827:

'Dissolution of Corporate Party to Lease.--The Commonlaw doctrine that upon the dissolution of a corporation, its real estate reverted to the grantor, its personal estate vested in the Crown, and all debts due to and from it were extinguished by operation of law is now virtually obsolete in this country, and our courts have generally held that a lease to a corporation is not terminated by the dissolution of the corporation. It would seem that the lessor would have a claim against the assets of the dissolved corporation for rentals to accrue after the dissolution.'

In Vol. 16, Fletcher Cyclopedia Corporations, page 864, par. 8124:

'A lease to a corporation may, by its terms, terminate where the corporation ceases to exist. But unless the lease so provides, the rights and obligations thereunder are not extinguished by the corporation's dissolution, since leases affect property rights and survive the death of the parties. The stockholders succeed to the rights and liabilities of the dissolved corporation in an unexpired leasehold estate, and the obligation to pay rent, in accordance with the terms of the lease, may be enforced against its receiver.'

Cited by the above authors are some of the best courts in the land, among those are Massachusetts, Vermont, Virginia, Washington, New York, Oregon and the Supreme Court of the United States. An exhaustive note with authorities cited is found in 17 A.L.R., at page 532.

Inasmuch as our corporation statute directs that the officers act as trustees after forfeiture, it is all the more reason why we should adhere to the above rule. When an individual dies, the lessor has recourse against the personal representative. Here, where the corporate life ends, the directors, as trustees, conclude the business on principle the same as the personal representative. The United States Supreme Court has said in the case of Late Corporation of the Church of Jesus Christ of Latter-Day Saints v. United States, 136 U.S. 1, 10 S.Ct. 792, 804, 34 L.Ed. 478: 'When a business corporation, instituted for the purposes of gain or private interest, is dissolved, the modern doctrine is that its property, after payment of its debts, equitably belong to its stockholders. * * *' In the case at bar both parties have submitted their claims to a court of equity and both affirm there was a valuable property right in the leasehold. The law seems settled generally by good authority that if the common law afford no remedy the stockholders and creditors may obtain relief in equity. Folger v. Columbian Insurance Co., 99 Mass. 267, 96 Am.Dec. 747, and other cases there cited.

There is yet another reason why this decree should not be disutrbed. Perry was the president of the corporation; he was devoting his entire time to its business. The golf course operated in the same status for approximately three years after actual knowledge of the forfeiture. He was the lessor. He came into court as trustee to wind up the corporate business and tendered an only issue as to the number of shares of stock owned by Shaw. In less than thirty days after filing this suit he as lessor intervened and assumed an inconsistent position from that assumed by him as trustee. The effect of his latter position is to confess his neglect to continue the corporate charter and seek to profit by his own neglect.

There is a great difference of opinion between the writer and the majority opinion. Naturally one view is erroneous. The writer is deeply conscious of his probability to err and will not prolong this in the nature of an argument, however duty requires that our position be made clearly known to our colleagues. If we go further we take responsibility for causing error. I sincerely believe that an injustice has been done and an antiquated principle of law has been established which is not suitable to our jurisprudence and modern institutions.

BUFORD and THOMAS, JJ., concur.

TERRELL, BROWN WHITFIELD, and CHAPMAN, JJ., dissenting.

CHAPMAN, Justice (dissenting).

From a final decree entered by the Circuit Court of Dade County, Florida, making findings of fact, appointing a Receiver, with directions, ordering the liquidation and sale of designated assets of the Flagler Country Club, Inc., and other conclusions as expressed therein, an appeal therefrom has been perfected to this Court. We have been favored with exhaustive briefs and able oral argument and many questions are posed for a decision by this Court.

The property here involved at one time was the homestead of Charles H. Perry, but later converted into a golf course, and when this suit was instituted was being operated under the name of Flagler Country Club, Inc., a Florida corporation. The latter corporation was authorized to transact business by the State of Florida as a corporation on February 28, 1933, as shown by a certificate of the Secretary of the State of Florida. The title to the land constituting the golf course on March 21, 1933, appeared in the names of Charles H. Perry and wife, Mary S. Perry, by the entireties.

The Perrys, on March 21, 1933, executed a lease of indenture to the Flagler Country Club, Inc., of the lands formerly embracing the Perry homestead and subsequently used as a golf course. The lease of indenture contained numerous provisions unnecessary to mention except the period of time named therein was 30 years. The Flagler Country Club, Inc., went into possession and operated the golf club under the lease of indenture until October, 1937, when by an appropriate instrument the term of 30 years was amended and extended to the year 1967.

The Flagler Country Club, Inc., on December 18, 1937, by proclamation of the Governor of Florida was dissolved under the provisions of Chapter 16880, Acts of 1935, Laws of Florida, for its failure to file reports and to pay the capital stock tax levied under Chapter 14677, Acts of 1931, Laws of Florida. Charles H. Perry, as Trustee of the Flagler Country Club, Inc., brought an equity suit against the officers and stockholders of the corporation and others. Pursuant to an order on April 30, 1940, C. H. Perry and Mary S. Perry, owners by the entireties and lessors of the land on which the Flagler Country Club, Inc., operated a golf club, filed a bill of intervention praying for an order or decree cancelling, annulling and voiding the lease of indenture dated March 21, 1933, with the amendment extending the period of time named until 1967.

It was alleged by the intervenors that under the terms of the lease and amendment, the sole and only consideration for the execution by the lessors was that the lessees, Flagler Country Club, Inc., would operate the golf course or other business on the land for which the intervenors and lessors would receive as rents a stated proportion of the earnings of the property and not otherwise. That the dissolution of said corporation constitutes a breach of the executory contract which as a matter of law entitles the lessors and intervenors to a decree cancelling and declaring void the lease and amendment.

Considerable space in the briefs and time during the oral argument of counsel at the bar of this Court were consumed by the question posed namely: Does such dissolution of the corporation, as...