Case Name: Rider v. The Nelson and Albemarle Union Factory
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1836-02
Citations: 7 Leigh 154
Docket Number: 
Parties: Rider v. The Nelson and Albemarle Union Factory.
Judges: 
Reporter: Virginia Reports
Volume: 34
Pages: 595–596

Head Matter:
Rider v. The Nelson and Albemarle Union Factory.
February, 1836,
Richmond.
[36 Am. Dec. 495.]
Corporations — Expiration of Charter Pending Appeal —Effect. —Bill against a public company incorporated for a limited time, dismissed by the court of chancery, and plaintiff appeals from the decree; pending the appeal, the charter of the company expires by efflux of time: Hura», the appeal must abate.
This was a bill exhibited by Rider against The Nelson and Albemarle Union Factory in the court of chancery of Lynch-burg, which the chancellor dismissed, as not presenting a proper case for relief in equity; and Rider appealed from the decree to this court. The Union Factory was a public company incorporated by act of assembly for a limited time. At the time of the decree of the court of chancery, the ' charter had not expired ; but it expired pending- the appeal here, and Johnson, (rather as amicus curias than as counsel for the company) moved that the appeal should be entered as abated for that cause.
"Corporations — Expiration of Charter Pending Appeal — Effect.—In Board of Supervisors v. Livesay. 6 W. Va. 44, it is said, the defendants, the appellants m these cases, being no longer In existence, either as a court or corporation, their being haying been extinguished by the constitution of this state, and this tact being judicially known to this court, the appeals taken in these cases are directed to abate, in the absence of legislation on the subject. Citing as authority Rider v. Nelson and Albemarle Factory, 7 Leigh 154. As authority for this rule of the common law the principal case is cited in Bank v. Patton, 1 Rob. 524; May v. State Bk. of N. C , 2 Rob. 74, 82, 85, 90, 100, 101; Bradley v. Ewart, 18 W. Va. 605; Lumber Co. v. Ward, 30 W. Va. 51, 3 S. E. Rep. 231; Miller v. Coal Co., 31 W. Va. 838, 8 S. E. Rep. 601; Booth v. Dotson, 93 Va. 237, 24 S. E. Rep. 935.
In Barksdale v. Finney, 14 Gratt. 358, the principal case is cited as holding, that as a corporation, without express provision of law, could never hold property, and can only hold it for so long a time as the charter permits, that after the expiration of its charter it can hold no property; and therefore a judgment against it would be fruitless.
Same — Same—Same- Assignment of Claim — Effect.— But where the rights of corporation have passed by assignment to living persons before the legal extinction of the party on the record, and those rights be sustained by the judgment of the court, such judgment will not be abortive, but may be enforced by and for the assignees. Bank of Alexandria v. Patton, 1 Rob; 524. and note; May v. State Bk. of N. C., 2 Rob. 56.
Same — Same—Statutory Provisions. — In Greenbrier Lumber Co. v. Ward, 30 W. Va 43, 3 S. E. Rep. 227, it is held, at common law, when 3, corporation ceased to exist by expiration of its charter, or by its dissolution by a forfeiture of its charter, thus judicially ascertained and declared, or in any other manner, all suits for or ag-ainst it abated. But this is not now the law in this state; the common law on this subject having been repealed by section 59 of chapter 53 of the Code of 1899. In this state a suit by or against a private corporation cannot be abated or dismissed because the corporation has been dissolved by a forfeiture of its charter, so judicially ascertained or declared, or by its dissolution in any other manner. See also, Miller v. Coal Co. 31 W. Va. 838, 8 S. E. Rep. 600; Bradley v. Ewart. 18 W. Va. 605; Donnally v. Hearndon, 41 W. Va. 519, 23 S. E. Rep. 646; Swing v. Bentley, etc., Co., 45 W. Va. 283, 31 S. E. Rep. 925; Swing v. Parkersburg Veneer, etc., Co., 45 W. Va. 288, 31 S. E. Rep. 926. In Virginia see Booth v. Dotson, 93 Va. 233, 24 S. E. Rep. 935, construing § 3307, Code 1887; also, foot-note to Reid v. Strider, 7 Gratt. 76. See monographic notes on “Corporations (Private)’’ appended to Slaughter v. Com., 13 Gratt. 767, and “Appeal and Error” appended to Hill v. Salem and Pepper’s Ferry Turnpike Co., 1 Rob. 263.

Opinion:
*TUCKER, P.
Nothing can be more obvious than the impossibility of proceeding with a suit, however well brought, where there are no parties before the court, or where one of them is no more, and has not, and cannot have, any person to represent him. If this be the case where the charter of a corporation has expired or been dissolved, it must follow that the appeal and the suit itself, must abate. Now, it seems undeniable, that there is no person at this time capable of representing the Union Factory. Where a corporation is sued, the president and directors are brought before the court to represent it, for as it is a body only in contemplation of law, there is no other way in which it can be sued. But when its charter expires, it ceases to have a president and directors; Their powers wither with the termination of the existence of the body of which they are but members. Nor can a new president and new directors ever be elected, as the corporation itself is extinct. Thus, then, the company neither has, nor can have, any representative in court, to assert or protect its interests, if indeed it continued to have any. But this it cannot have according to law. For it is beyond question, that its power to hold property in the character of a corporation, is gone, at the instant of the termination of its existence. Whether its property reverts to the donors, or to the stockholders, or to the commonwealth as derelict, there seems to be no doubt, that it no longer remains in the corporation as such. Without express legislative enactment, this imaginary creature of the law never could have held property at all. It can, therefore, only hold it so far as it is given, and for .so long a time as it is permitted by the charter which gave it existence. But the charter authorizes it to hold property, and to sue and be sued, for twenty years and no longer. After that time, therefore, it can hold no property. And this furnishes an additional and conclusive reason for the abatement of suits for it or against it. *For, if no longer entitled to hold property, no judgment for money or other thing should be given in its favour, and if it has no property, every judgment against it must be fruitless and futile. Therefore, without going into the perplexing inquiries which suggest themselves naturally to the mind, as to the effect-of the dissolution of a corporation upon its effects and its contracts, we feel ourselves warranted in saying, that where the charter of a corporation expires during the pendency of a suit, the suit must abate, whether the company be plaintiff or defendant. Accordingly, in this case the suit must be abated and the abatement certified to the court of chancery.
It may be proper to add, that it appears, to us to be peculiarly desirable, in a country where numerous companies are annually incorporated for a limited number of years, that the legislature should provide ini detail, what shall be the effect of the expiration or other determination of their charters, instead of leaving that matter to the embarrassment and the obscurity of common law principles.' According to them, the debts of a corporation either to it or from it are extinguished by its dissolution ; nor are the members liable, in there individual characters, for any portion of the debts of the corporation; 1 Lev. 237. The lands of the corporation revert to the donors ; 1 Black. Comm. 484. The personalty, it is supposed, goes to the commonwealth. If these things be so (and there is no reasonable doubt about it) they are grossly unjust. It cannot be just, that the members of a joint stock company should forfeit their property to the commonwealth by the expiration of their charter. It cannot be just, that the land which they have purchased and paid for, should revert to the grantor who has already received value for it. It cannot be just, that those who are indebted to the corporation (a bank for instance) should be absolved from their engagements; and still less, that by a forfeiture of its *charter, those to whom it is indebted should lose their just demands. To avoid all those consequences, the first bank of the United States transferred its funds and property, before its dissolution, to trustees for the benefit of the stockholders. But, it is believed, that the necessity of some such succedaneuni is not very generally adverted to, and would therefore be wisely avoided by some general legislative provision on the subject. In the meantime, we must proceed upon common law principles, and in doing so, we must direct this appeal to be abated.