Southern Coal Co. v. Yazoo Ice & Coal Co.

• Decision Date: 13 January 1919
• Docket Number: 20457
• Citation: 118 Miss. 860,80 So. 334
• Parties: SOUTHERN COAL COMPANY v. YAZOO ICE & COAL CO
• Court: Mississippi Supreme Court

80 So. 334

118 Miss. 860

SOUTHERN COAL COMPANY v. YAZOO ICE & COAL CO

No. 20457

Supreme Court of Mississippi

January 13, 1919

Division A

APPEAL from the circuit court of Yazoo county, HON. W. H. PORTER Judge.

Suit by the Southern Coal Company against the Yazoo Ice & Coal Company. From a judgment against plaintiff on demurrer, it appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Green &amp Green, for appellants.

Appellees liable as co-partners under the Constitution of Mississippi. By section 930 of the Code, it is expressly provided "Every corporation organized under this chapter shall, within thirty days after such organization, make report thereof to the secretary of state, who is required to furnish blank forms for that purpose, as provided for in the next section. The secretary of state shall enter each report and index the same in a record to be kept in his office for that purpose. Should such report not be made in the time required, the charter granted shall be null and void, and all persons doing business thereunder shall be deemed and held to be partners in the business and liable as such."

By section 931, the secretary of state is required with each charter of incorporation granted under this chapter, to furnish a blank form of report of organization to be filled out and signed by the president and certified by the secretary and transmitted to the secretary of state for record in his office. The form of his report is so important as that it has been set forth at length in the Code.

Now, in Bank of Miss. v. Wrenn, 3 S. & M. 791, it was held that after the expiration of the charter of a bank it ceased to exist for any purpose whatever. Approved in Nevett v. Bank, 6. S. & M. 527.

In Bank of Miss. v. Duncan, 56 Miss. 172, this court, speaking through Justice CAMPBELL, said: "If, at the time of the passage of this act, there was anything due to appellant to which creditors or stockholders could maintain a claim in any of the courts in this state, it was within the power of the legislature to revive the bank for the purpose of collecting its assets, with a view to their distribution among such creditors and stockholders. But if the bank had ceased to exist by the limitation of time in its charter, as amended, and if by its extinction, the rights of creditors and stockholders expire, it was not within the power of the legislature to revive rights before extinguished, and authorize their enforcement. Davis v. Minor, 1 How. 183; Hooker v. Hooker, 10 S. & M. 599; Stewart v. Davidson, 10 S. &. M. 351; Cooley's Const. Lim., 355.

"It was firmly settled by the decisions of the high courts of errors and appeals of this state that banks in this state were subject to the operation of the common-law incident to the dissolution of a corporation, i. e., the extinction of all its rights and liabilities, except insofar as changed by statute. Commercial Bank v. Chambers et al., 8 S. & M. 9; Coulter et al. v. Robertson, 24 Miss. 278. And it was expressly declared that the rights of stockholders were not preserved by the Act of July 26, 1843, but were left to their fate as at common law, which was to perish. Coulter et al. v. Robertson, 24 Miss. 279."

By section 913 of the Code of Mississippi, it is provided: "A corporation, after its charter has expired or been annulled, may nevertheless be continued as a body-corporate for the term of three years thereafter, for the purpose of suing and being sued, and of enabling it to close up its concerns, to sell and convey property, and to divide the assets, but not for the purpose of enabling it to carry on other corporate business. This provision, however, shall not extend to cases in which it may be necessary to appoint trustees on judgment of dissolution."

Until 1890, there had been comparatively few corporations in Mississippi, and they had been of rather insignificant importance. By section 178 of the Constitution, it is provided--" Corporations shall be formed under general laws, only." By section 88, it is further provided: "The legislature shall pass general laws under which corporations may be created, organized, and their acts of incorporation altered." See Perry v. Bank, 77 So. 812.

Thus, the necessity of general laws and of a general application of the law is made manifest in these two sections, and the process of formation is uniform for all corporations in Mississippi, and when they fail to comply therewith, their status is accurately set forth in Doolittle v. Ragland, 100 Miss. 498, page 506. See also Hessig-Ellis Drug Co. v. Wilkins, 76 So. 570. In Yazoo City v. Lightcap, 82 Miss. 178, the uniformity requisite was thus prescribed, and the question whether those persons who had failed to become corporations could have these acts suspended for their benefit. By the Constitution, section 1890, it is expressly provided: "All existing charters or grants of corporate franchise under which organizations in good faith have not taken place at the adoption of this Constitution shall be subject to the provisions of this article; and all such charters under which organizations shall not take place in good faith and business be commenced within one year from the adoption of this Constitution, shall thereafter have no validity; and every charter or grant of corporate franchise hereafter made shall have no validity, unless an organization shall take place thereunder and business be commenced within two years from the date of such charter or grant."

It thus appears that unless an organization shall take place thereunder and a business be commenced within two years from the date of the charter, every charter or grant of corporate franchise "shall have no validity."

In the instant case, there was a grant of a corporate franchise to the parties named, and under section 930 it was requisite that before there could be a complete corporate organization that this report should have been filed. When it was not filed, then, in and of itself, as a time limit, upon the expiration of the thirty days, the charter became "null and void." R. R. Co. v. R. R. Co., 45 Cal. 373; U. S. v. Grundy, 3 Cranch, 337; Transit Co. v. City of Brooklyn, 79 N.Y. 529; Conn. v. Water Co., 110 Pa. 397; Adams v. R. R. Co., 77 Miss. 255; Wisconsin v. State, 97 Miss. 571.

Under section 87 of the Constitution, there was no right to suspend the effect of a general law. By section 87 of the constitution, it is expressly provided: "No special or local law shall be enacted for the benefit of individuals or corporations, in cases which are or can be provided for by general law, or where the relief sought can be given by any court of this state; nor shall the operation of any general law be suspended by the legislature for the benefit of any individual or private corporation or association, and in all cases where a general law can be made applicable, and would be advantageous, no special law shall be enacted." R. R. Co. v. R. R. Co., 83 Miss. 762.

Now, this was either a new corporation in which case compliance had to be with sections 897 and 898, or it was a renewal of a corporation, and compliance had to be with section 898.

Now, by section 912, on the dissolution of any corporation "either by judgment or otherwise, all of its real and personal estate shall vest in the stockholders." Now there was a dissolution of this corporation by its failure to comply with the express mandate of section 935 under which its charter became null and void, and its incorporators liable as partners, and yet there was a suspension of the effect of section 912 by the recreation out of the disintegrated elements of a prior existing corporation of that which was said to be by the legislature a new corporation.

Note further section 913 under which a corporation "after its charter has expired or been annulled," the case here, because it became null and void, may, nevertheless, be continued as a body corporate for the term of three years thereafter "but only for the purpose of" suing and being sued and of enabling it to close up its concerns, to sell and convey property and to divide the assets, but not for the purpose of enabling it to carry on other corporate business." Perkins v. Sanders, 56 Miss. 733.

Now, under the common law, except as modified by statute, where a corporation ceased to be, the realty reverts to the grantors or the heirs, the personalty goes to the state and debts are absolutely extinguished. Statutory modification is requisite to change the rule.

When the charter ceases, we submit that it is impossible for the legislature to re-create out of the integral elements of that corporation that which has under the constitution, ceased to be, especially at a time when under the Constitution, it is said it cannot be done, and further, especially when a general law alone is to be made the creator of corporate existence.

In short, the legislature has lost its power to act under a rule of public policy adopted by the constitutional convention, and unless these rules are frittered away, it necessarily follows that the act in question is void, and that these parties, having done business and received the acts of appellants, are liable therefor.

Barnett & Perrin, E. L. Brown and E. L. Mounger, for appellee.

The appellant is in no position to complain of the alleged unconstitutionality of chapter 140 of the Acts of 1912. The Yazoo Ice & Coal Company filed its report of organization on the 8th day of April, 1912, as provided in said act and it operated as a corporation thereafter and the appellant dealt with it as a corporation and appellant's debt was contracted with it as a corporation more than five years afterwards. The appellant did not deal with the individual sued, nor did it know that the...