Opinion ID: 1679331
Heading Depth: 1
Heading Rank: 2

Heading: Whether the transfer of a corporate asset by a dissolved corporation to one of its directors is valid?

Text: Defendants contend that they have standing based on SDCL 43-25-34 [1] to challenge the quit claim deed from Kehn Ranch to Louis. The trial court held that they did not have standing to challenge the corporate conveyance of the Option. The trial court's order granting summary judgment found that no genuine issue of material fact existed involving the validity of the Option held by Louis. Since Hoeksema's proposed stipulated facts were assumed to be true by Louis and the trial court for purpose of summary judgment, we are faced with a question of law. [2] Conclusions of law are reviewed de novo. Stover v. Critchfield, 510 N.W.2d 681 (S.D.1994). The trial court reached the right result in validating the transfer, but for the wrong reason. Hoeksema and Johnson did have standing to challenge the transfer. We have stated that: [C]ourts are instituted to afford relief to persons whose rights have been invaded, or are threatened with invasion, by the defendant's acts or conduct, and to give relief at the instance of such persons[.]... One cannot rightfully invoke the jurisdiction of the court to enforce private rights or maintain a civil action for the enforcement of such rights unless he has in an individual or representative capacity some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy. In Re Kenison's Guardianship, 72 S.D. 180, 184, 31 N.W.2d 326, 328 (1948) (citing 39 Am.Jur. pp. 858-860). Hoeksema and Johnson have a land sale contract which is directly affected by the outcome of this litigation. Louis instituted this declaratory judgment action. Since Hoeksema and Johnson are defendants, their standing is to be determined from the defendants' perspective. A party who is necessary to a complete determination or settlement of the question involved may be made a defendant. Security Nat. Bank & Trust Co. v. Richardson, 686 P.2d 293, 295 (Okla.App.1984). Hoeksema and Johnson have an interest in the outcome and are necessary for a proper determination in this litigation. Therefore, the only question is whether Kehn Ranch, a dissolved corporation, was legally entitled to transfer the Option. Defendants assumed that because Kehn Ranch was no longer a registered corporation that the Option was no longer valid. SDCL 47-7-30.1 allows an administratively dissolved corporation to continue its corporate existence to wind up its affairs. SDCL 47-7-6.1 allows a corporation to wind up its affairs after a certificate of dissolution is issued by the Secretary of State. [3] SDCL 47-7-6.1 grants a dissolved corporation the power to transfer its assets. See 3 Fletcher, Cyc. Corp., § 8137 (Perm. ed.). Dissolution of the corporation does not transfer title to the corporation's property. SDCL 47-7-6.1. An option to purchase land is an asset within the scope of a winding up statute and it therefore survives the dissolution of the corporation, and may be exercised if such action is necessary to settle properly the affairs of the dissolved corporation. 3 Fletcher, Cyc. Corp., § 8134. Under SDCL 47-7-6.1, a dissolved corporation may dispose of its properties and distribute its remaining property. The remaining corporate officers may convey title to corporate property to wind up the affairs of the dissolved corporation. Krebs v. Morgantown Bridge and Improvement Co., 141 W.Va. 83, 87 S.E.2d 609, 615 (W.Va.1955) (holding that secretary of dissolved corporation as last surviving officer was empowered to transfer title to corporate property for purposes of winding up corporate affairs). Under SDCL 47-7-50, a dissolved corporation continues its existence to wind up affairs for a period of two years. [4] The Certificate of Dissolution was issued December 15, 1989; the conveyance of the quit claim deed to Louis occurred February 21, 1991, within the two years of SDCL 47-7-50. The quit claim deed to Louis constitutes a valid conveyance of corporate property under SDCL 47-7-6.1. Therefore, the trial court reached the right result but for the wrong reason. See Sommervold v. Grevlos, 518 N.W.2d 733, 740 (S.D.1994); Cowell v. Leapley, 458 N.W.2d 514, 519 (S.D.1990). We have considered Defendants' other arguments and determine them to be without merit. Affirmed. MILLER, C.J., and WUEST, AMUNDSON and KONENKAMP, JJ., concur.