Opinion ID: 1211468
Heading Depth: 2
Heading Rank: 1

Heading: Failure to file certificates of cancellation.

Text: Plaintiffs contend that Voldens are liable to creditors for their failure to file a statement of cancellation, as was required by statute. Clearly such a filing was mandatory in 1982: A. When redeemable shares of a corporation are redeemed or purchased by the corporation, the redemption or purchase shall effect a cancellation of the shares, and a statement of cancellation shall be filed as provided in this section.... NMSA 1978, § 53-13-10(A) (Orig.Pamp.) (repealed 1983). Our inquiry does not end here, however. While the transaction from Voldens to Ward did in fact effect a cancellation of shares, it does not necessarily follow that Voldens are thereby liable, for two reasons. First, the statute requires that a statement shall be filed; it does not say by whom. Indeed, plaintiffs, and the authorities they cite, speak of the duty falling upon the corporation. Thus, even accepting the contention that the duty arose while Voldens still controlled Arrow, we cannot conclude that it was therefore a personal, rather than a corporate, duty. Secondly, plaintiff's statutory interpretation rests upon the somewhat outmoded theory (discussed in more detail in Part III, below) that the capital of a corporation is held in trust for the creditors. Under such a theory the purpose of filing a certificate is to give notice to creditors that the corporation's capital has been reduced. We agree with Voldens, though, that a more useful form of notice was given to the world by recording with the Bernalillo County Clerk the security agreements, financing statements and purchase money mortgage by which the debts from Wards and Arrow to Voldens were secured. Moreover, we do not agree with plaintiffs that they are among the principal intended beneficiaries of the statutory requirement. In fact our statute was repealed, 1983 N.M.Laws, ch. 304, while Wards were in control of Arrow. The statute itself is silent on the question of liability for its violation. Thus, it is distinguishable from its New Jersey counterpart which has been held to require reimbursement from stockholders to creditors. Kleinberg v. Schwartz, 87 N.J.Super. 216, 218, 208 A.2d 803, 805 (1965) (citing N.J. Rev.Stat. § 14:11-5). Plaintiffs argue by analogy that a remedy is provided in NMSA 1978, Section 53-11-46 (Repl.Pamp.1983), which imposes liability upon the directors of a corporation, under certain circumstances. That liability, however, is to the corporation, enforceable by its shareholders via derivative suit, not to creditors. Having considered the foregoing, the trial court correctly determined that no liability of Voldens to plaintiffs arose from failure to file the notice of cancellation.