Walden Home Builders, Inc. v. Schmit

• Decision Date: 25 June 1945
• Docket Number: Gen. No. 43318.
• Citation: 62 N.E.2d 11,326 Ill.App. 386
• Parties: WALDEN HOME BUILDERS, Inc., v. SCHMIT et al.
• Court: United States Appellate Court of Illinois

326 Ill.App. 386

62 N.E.2d 11

WALDEN HOME BUILDERS, Inc.,

v.SCHMIT et al.

Gen. No. 43318.

Appellate Court of Illinois, First District, First Division.

June 25, 1945.

Appeal from Municipal Court of Chicago; George B. Weiss, Judge.

Action by Walden Home Builders, Inc., against Frank Schmit and Frank J. Kane, doing business as Great Northern Plumbing & Heating Supply Company, and another, for breach of contract. From an order dismissing its action for want of capacity to sue because of its dissolution by a decree of the superior court, plaintiff appeals.

Reversed and remanded.Samuel G. Rautbord, of Chicago (Irwin S. Baskes, of Chicago, of counsel), for appellant.

J. Thomas Moore, of Chicago (Harold J. Finder, of Chicago, of counsel), for appellees.

NIEMEYER, Justice.

Plaintiff appeals from an order dismissing its action for want of capacity to sue because of its dissolution by a decree of the Superior court of Cook county entered in a proceeding brought by the Attorney General.

The action was commenced May 22, 1942, by the filing of a praecipe and statement of claim and issuance of summons. Service was not had upon the defendants involved in the appeal until June 27, 1942. The complaint alleged that at the time of the transaction sued upon the plaintiff was an Illinois corporation, and thereafter on May 24, 1940, was dissolved by decree of court; that on or about April 7, 1937, plaintiff paid to defendants $2,640, in consideration whereof defendants in writing agreed to furnish to plaintiff certain boilers, pipe fitting, radiation and valves complete for heating six buildings; that none of the materials so contracted for was delivered to plaintiff and that defendants retained and converted to their own use the money paid them by plaintiff. Defendants, after filing an answer, withdrew it by leave of court and filed a motion to dismiss the action upon the ground that to give the court jurisdiction ‘it became necessary for plaintiff to file suit and cause service of process to be had upon the defendants within two years from its corporate dissolution on May 24, 1940, in compliance with the statutory provision of the State of Illinois then in force and effect,’ Ill.Rev.Stat.1939, chap. 32, par. 157.94, providing that the dissolution of a corporation ‘shall not take away or impair any remedy given against such corporation, its directors, or shareholders, for any liability incurred prior to such dissolution if suit thereon is brought and service of process had within two years after the date of such dissolution.’ By stipulation the motion to dismiss was heard before three judges of the trial court, who concurred in the entry of the order sustaining the motion and dismissing the action as to the defendants.

No transcript of proceedings was filed. The record contains what purports to be a letter from the Secretary of State of Illinois, and franchise tax receipts for the years 1939 through 1944; also a certified copy of a decree of the Superior court of Cook county entered June 30, 1944, vacating the prior decree of dissolution of plaintiff. Defendants have moved to strike these papers from the record. Plaintiff's counsel attempt to show by affidavit that they were considered by the court in determination of the motion to dismiss, and should be considered as an answer to defendants' motion. There is nothing in the record from which any inference can be drawn that these papers were filed as an answer or part of an answer, and, if considered by the trial court as evidence, such evidence should have been preserved by transcript of proceedings certified by the trial court. The motion to strike is allowed. The record properly before us is entirely devoid of anything showing why the plaintiff corporation was dissolved, and there is therefore no basis for defendants' contention, not raised in their motion to dismiss, that plaintiff could not sue because of failure to pay its franchise tax.

Plaintiff contends that the court erred in sustaining defendants' motion because in 1941 section 94 of the corporation act was amended, Laws 1941, Vol. 1, p. 421, Ill.Rev.Stat. c. 32, § 157.94, to preserve to a corporation rights of action in its name if commenced within two years from its dissolution, and that this amendment applied to corporations dissolved prior to its enactment. Defendants ‘contend that the amendment is not retroactive, and point out that the legislature did not intend to make it retroactive because to have done so would have made the amendment unconstitutional.’ At the time of plaintiff's dissolution there was no statute preserving any remedies on behalf of a dissolved corporation. Section 94, relied upon by defendants in their motion to dismiss, had no relation to actions by or in behalf of a dissolved corporation. It purported only to preserve remedies against the corporation, its directors and stockholders. Taking the complaint as true, as we must on the motion to dismiss, plaintiff had a meritorious cause of action, and defendants were indebted to it prior to its dissolution. This liability of the defendants did not terminate with the dissolution of the corporation, for in the absence of statutory provision creditors and stockholders of a dissolved corporation may bring suit in equity to recover corporate assets. Wheeler v. Pullman Iron & Steel Co., 143 Ill. 197, 204, 32 N.E. 420,17 L.R.A. 818;Shayne v. Evening Post Pub. Co., 168 N.Y. 70, 61 N.E. 115, 55 L.R.A. 777, 85 Am.St.Rep. 654; 13 Am.Jur., Corporations, § 1352, p. 1197. The amendment of 1941, therefore, did not create a new liability or cause of action against the defendants. It did not...