Opinion ID: 2173675
Heading Depth: 1
Heading Rank: 1

Heading: Capacity of the Dissolved Corporation

Text: The New Hampshire corporation continuance statute provides that corporations continue as a body corporate for the term of 3 years, for the purpose of prosecuting and defending suits by or against it... provided that for the purpose of any suit or action by or against any such corporation, pending at the end of said term of 3 years, such corporation shall continue as a body corporate until 90 days after final judgment or decree in such suit or action. RSA 294:98 (Supp. 1977). [1] MBC argues that because this court has taken a liberal attitude when interpreting limitation periods, we should liberally construe the corporation continuance statute. See, e.g., Raymond v. Eli Lilly & Company, 117 N.H. 164, 371 A.2d 170 (1977) (limitation period does not begin to run until plaintiff discovers cause of action). MBC incorrectly equates the corporation continuance statute with the statute of limitations. The corporation continuance statute expands rather than limits the rights and remedies of dissolved corporations. The dissolution of a corporation at common law terminated its legal existence for all purposes, prohibiting it from suing or being sued and abating all pending proceedings to which it was a party. Gary Furniture & Appliance Co. v. Skinner, 288 Ala. 617, 264 So. 2d 174 (1972); Nelson v. Miller, 212 So. 2d 66 (Fla. App. 1968); 2 AMERICAN BAR FOUNDATION, MODEL BUS. CORP. ACT ANN. § 105 ¶ 2, Comment (2d ed. 1971). [2, 3] Without statutory authority for prolongation, the life of the corporation would not continue even for purposes of litigation. Strict construction of the corporation continuance statute is required because matters concerning corporation continuance upon dissolution affect the fundamental law of the corporation enacted by the State which brought the corporation into being. Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 260 (1927) (Taft, C.J.); see Alexander v. Casco Music Systems, Inc., 323 N.E.2d 912 (Mass. App. (1975)); Boston Towboat Co. v. Medford Nat'l Bank, 228 Mass. 484, 117 N.E. 928 (1917); 16A W. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 8144 (rev. ed. 1962). The words suit and action are synonymous, Page v. Brewster, 58 N.H. 126 (1877), but do not mean the same as cause of action, which is the underlying right that is preserved by bringing a suit or action. Id. [4] MBC has argued, and the superior court has held, that because the suit or action, RSA 294:98, filed in State court after the statutory three-year corporation continuance period had elapsed, is identical to the one brought in federal court within the three-year period, it is the same suit or action brought initially. We reject this reasoning and hold that the State court suit is a separate and distinct action from the federal suit or action. Therefore, the suit is barred by RSA 294:98 because the corporation existed only with respect to the federal suit which was pending at the end of said term of 3 years. [5] Our reasoning reflects the sound judgments reached by other courts that have interpreted corporation continuance statutes. See Litts v. Refrigerated Transport Co., Inc., 375 F. Supp. 675 (M.D. Pa. 1973); Smith-Johnson Steamship Corp. v. United States, 231 F. Supp. 184 (D. Del. 1964). We deem that the policy of New Hampshire's corporation continuance statute is to insure that there is a definite point in time at which the existence of a corporation and the transaction of its business are terminated. Bishop v. Schield Bantam Co., 293 F. Supp. 94, 96 (N.D. Iowa 1968). The policy behind the statute is favored over the ends of particularized justice. Litts, supra at 678. To allow lawsuits involving a dissolved corporation to commence in contravention of a clearly expressed legislative policy would thwart the orderly process of corporate dissolution conceived by that policy. It would produce a continuous dribble of business activity contrary to the intent of the winding up provisions of the statute. Bishop v. Schield Bantam Co., supra at 96. [6] The superior court upheld MBC's second argument based on Adams v. Sullivan, 110 N.H. 101, 261 A.2d 273 (1970), that the limitation of actions saving statute, RSA 508:10, permits it to maintain its present action. We disagree. This savings statute provides that a plaintiff who brings a suit based on a cause of action before the statutory limitation period expires, and has his lawsuit dismissed on grounds other than an adverse determination upon the merits of the claim after the statutory period has elapsed, may bring a new suit on the same cause of action within one year after the dismissal, even though the statute of limitations for the underlying cause of action has run. RSA 508:10. Since we have held that MBC lost all legal capacity at the moment its federal action was dismissed, RSA 294:98, and that the State suit is a separate and distinct suit or action, it follows that it may not benefit from the extension period provided by the savings statute. MBC is defunct; therefore, it has no standing in the courts. Christensen v. Boss, 179 Neb. 429, 138 N.W.2d 716 (1965).