State of Missouri v. AB Collins & Co.

• Decision Date: 19 August 1940
• Docket Number: No. 538.,538.
• Citation: 34 F. Supp. 550
• Court: U.S. District Court — Western District of Missouri
• Parties: STATE OF MISSOURI ex rel. and to Use of DARR v. A. B. COLLINS & CO., Inc., et al.

34 F. Supp. 550

STATE OF MISSOURI ex rel. and to Use of DARR v. A. B. COLLINS & CO., Inc., et al.

No. 538.

District Court, W. D. Missouri, W. D.

August 19, 1940.

C. A. Randolph, of Kansas City, Mo., for plaintiff.

James T. Britt and Spencer, Terrell & Britt, all of Kansas City, Mo., for defendants.

OTIS, District Judge.

The principal question for decision arising on the motion to remand is this: Where the "corporate existence and rights" of a Missouri corporation have been "forfeited and canceled" and the corporation "dissolved" pursuant to Section 4619, R.S. Mo.1929, Mo.St.Ann. § 4619, p. 2049, for failure of the corporation to file its annual registration report and anti-trust affidavit as required by Sections 4613 and 4614, R.S. Mo.1929, Mo.St.Ann. §§ 4613, 4614, p. 2047, is that corporation non-existent so that, if joined as a defendant with a non-resident defendant, it may be disregarded in considering whether there is complete diversity of citizenship as between the plaintiff and the non-resident defendant? There are also presented two subordinate questions which will be stated hereinafter and considered briefly.

By way of introduction it should be said that I had overruled the motion to remand by an order filed on July 27, 1940. In that order it was indicated only that the motion was overruled on the theory that "before the institution of this suit A. B. Collins & Company, Inc., named as a defendant, had ceased to exist" and that, therefore, "there was diversity of citizenship between plaintiff and the only actual party defendant." Since that order was made, precisely the same question was presented in a companion case to my colleague, Honorable Albert L. Reeves. On August 2, 1940, he filed in the case pending before him, State ex rel. v. A. B. Collins & Company, Inc., and Hartford Accident and Indemnity Company, 34 F.Supp. 549, a memorandum opinion in which he reached a conclusion different from that which I had reached when I filed the order of July 27. When Judge Reeves' opinion was called to my attention, I granted a rehearing. My reason for that was the great respect I feel for any views expressed by my colleague. When he has had opportunity fully to consider any question, his views almost always are right.

I have now heard the parties a second time and shall present here my conclusions and the reasoning whereby those conclusions have been reached.

Recognizing, of course, that I may be in error, nevertheless, I am satisfied that the motion to remand was properly overruled.

The petition in the case was filed in the state court February 22, 1940. Plaintiff sought recovery against A. B. Collins & Company, Inc., and Standard Accident Insurance Company on a fidelity bond which had been executed by A. B. Collins & Company, Inc., as principal, and Standard Accident Insurance Company, as surety. In the petition for removal which was filed in the state court on March 11, 1940, it was alleged by the removing defendant, Standard Accident Insurance Company, that the plaintiff was a citizen of Missouri and that the removing defendant was a citizen of Michigan. It was further alleged that A. B. Collins & Company, Inc., at the time of the institution of the proceeding, was a non-existent corporation; that its charter had been forfeited on January 1, 1939. The judge of the state court ordered removal on March 15, 1940. In the motion to remand which was filed here on May 6, 1940, it was denied that A. B. Collins & Company, Inc., was a non-existent corporation when the suit was instituted. It was also set up in the motion to remand (1) that in any event plaintiff had not been guilty of fraudulent joinder and (2) that the secretary of state had no authority to act against A. B. Collins & Company, Inc., while its corporation reorganization proceeding in bankruptcy was pending.

Upon the hearing of the motion to remand the following facts were established (they are indicated here as formal findings of fact):

1. Before January 1, 1939, A. B. Collins & Company, Inc., had failed to file its annual registration report and anti-trust affidavit as required by the laws of Missouri (Sections 4613 and 4614, R.S.Mo.1929, Mo. St.Ann. §§ 4613, 4614, p. 2047).

2. On January 1, 1939, the secretary of state, pursuant to Section 4619, R.S.Mo. 1929, Mo.St.Ann. § 4619, p. 2049, canceled the certificate of A. B. Collins & Company, Inc., by an appropriate entry on the margin of the record of the issuance of the certificate and notified the corporation by mail that "its corporate existence and rights in this state had been forfeited and canceled and that the corporation was dissolved, subject to rescission as provided by law."

3. There has been no rescission nor any application for rescission by the secretary of state of the action taken by him on January 1, 1939. The possible grounds for rescission set out in Section 4621, R.S.Mo. 1929, Mo.St.Ann. § 4621, p. 2050, did not exist in the case of A. B. Collins & Company, Inc.

4. Corporate reorganization proceedings for A. B. Collins & Company, Inc., have been pending in this court under the bankruptcy act since June 1938.

1. In the absence of any decision of the Supreme Court of Missouri holding that a corporation, whose certificate has been canceled by the Secretary of State pursuant to Section 4619, is not a dissolved and non-existent corporation, I begin the consideration of the principal question by looking at the statutory law. The statutes, if they require interpretation, must be interpreted by this court, in the absence of any interpretation placed upon them by the highest court of the state. The first of the statutes involved is the section mentioned, 4619, which provides: "If any corporation shall fail to comply with the provisions of this article, on or before the thirty-first day of December, the corporate rights and privileges of such corporation shall be forfeited, and the secretary of state shall thereupon cancel the certificate, or license, of such corporation by appropriate entry on the margin of the record thereof, whereupon all the powers, privileges and franchises conferred upon such corporation by such certificate, or license, shall subject to rescission as in this article provided, cease and determine, and the secretary of state shall notify such corporation by mail, addressed to its postoffice address, as disclosed by the records of his office, that its corporate existence and rights in this state have been forfeited and canceled, and the corporation dissolved, subject to rescission as in this article provided."

It would be difficult to conceive of any language which could be more expressive of dissolution of corporate existence than the language used in this statute. Failure to comply with the provisions of law, so says the statute, ipso facto results in the forfeiting of "the corporate rights and privileges of such corporation." The Secretary of State does not forfeit those rights and privileges. They are ipso facto forfeited. When he has canceled the certificate of the corporation and made an appropriate entry thereof on the record, "all the powers, privileges and franchises conferred upon such corporation by such certificate" (the reference here is to that certificate mentioned in Section 4538, Mo.St. Ann. § 4538, p. 1988, as a sine qua non without which a corporation can do nothing and be nothing) "shall * * * cease and determine." The Secretary of State is required to notify the corporation "that its corporate existence and rights in this state have been forfeited and canceled, and the corporation dissolved."

That the legislature meant exactly what it so plainly said in Section 4619, to-wit, that the "corporate existence * * * has been forfeited" and that the corporation has been "dissolved", is made even more clear by the connected section, 4622, which provides that: "When the forfeiture of the certificate, or license, of any corporation has been declared, the officers and directors or the manager, or managers, of the affairs of said corporation, at the time such forfeiture is declared, by whatever name they may be known in law, shall be trustees of such...