Opinion ID: 1923134
Heading Depth: 1
Heading Rank: 1

Heading: jurisdiction

Text: From the very beginning of these proceedings, the defendant has challenged the jurisdiction of the trial court. During the process of the determination of the several motions, many peripheral issues were considered. However, the pivotal issue as to the status of the defendant corporation as it related to the date of plaintiff's injury, i.e., December 8, 1966, was never resolved in the manner prescribed by statute and the case law of this state. We deem this to be essential in determining the issue of jurisdiction. The procedure to be followed in the trial court is set forth in sec. 262.16, Stats.: 262.16 Raising objection to personal jurisdiction, general appearance.... (2) HOW AND WHEN OBJECTION SHALL BE MADE. An objection to the court's jurisdiction over the person is not waived because it is joined with other defenses or motions which, without such objection to jurisdiction, would constitute a general appearance. Such objection shall be raised as follows: . . . . (c) By answer in all other cases. . . . . (3) JURISDICTION ISSUES TRIED TO COURT. All issues of fact and law raised by an objection specified in sub. (2) shall be tried to the court without a jury in advance of any issue going to the merits of the case. . . . In Pavalon v. Thomas Holmes Corp. (1964), 25 Wis. 2d 540, 547, 131 N. W. 2d 331, this court considered the foregoing statutory provisions, and stated: In order to carry out the underlying intent of this provision so as to permit one in appellant's position to attack the personal jurisdiction of the court and also demur to the sufficiency of the complaint, we hold that the jurisdiction issue may be raised by motion served with the demurrer. Such motion should be supported by an accompanying affidavit setting forth all material facts relied upon by movant to show the court's lack of personal jurisdiction. Where such a procedure is followed it is then the duty of the trial court under sub. (3) of sec. 262.16, Stats., to try the jurisdictional issue first before passing on the demurrer which raises an issue on the merits. We deem it advisable to point out that at such trial of the jurisdictional issue the allegations of a verified complaint are not to be considered as evidence tending to establish jurisdiction except for the limited purpose of determining the type of action. [1] The issue of jurisdiction cannot be determined from the present record and a jurisdictional trial is necessary. The initial issue to be determined at a jurisdictional trial must concern the date of the alleged dissolution of the defendant corporation as it relates to the time of the accident. It is the rule that when a corporation becomes defunct by dissolution in the state of its creation, it is defunct in every other state unless such other state has also granted it a charter. Title Co. v. Wilcox Building Corp. (1937), 302 U. S. 120, 58 Sup. Ct. 125, 82 L. Ed. 147; 17 Fletcher, Cyc. Corp. (perm. ed.), p. 935, sec. 8580, and cases cited therein; Restatement, Conflict of Laws, p. 228, sec. 158. This court is in accord with that conclusion in Turner v. Goetz (1924), 184 Wis. 508, 511, 512, 199 N. W. 155: . . . [C]orporations may come into existence only upon such terms as the legislature of the state of their creation may prescribe. Having been brought into existence under the law of a sovereign state, they become artificial persons. They may move from place to place within the state, may transact business in other states and other countries; subject, however, to such limitations as may be imposed by the states or countries in which they seek to do business, as they have not the right of natural persons. Wherever they may go, their existence, however, is referable to the laws of the state of their creation. (Emphasis supplied.) In Oklahoma Gas Co. v. Oklahoma (1927), 273 U. S. 257, 259, 260, 47 Sup. Ct. 391, 71 L. Ed. 634, the Supreme Court of the United States stated the effect of corporate dissolution on pending litigation: . . . It is well settled that at common law and in the Federal jurisdiction a corporation which has been dissolved is as if it did not exist, and the result of the dissolution can not be distinguished from the death of a natural person in its effect. [Citations omitted.] It follows therefore that, as the death of the natural person abates all pending litigation to which such a person is a party, dissolution of a corporation at common law abates all litigation in which the corporation is appearing either as plaintiff or defendant. To allow actions to continue would be to continue the existence of the corporation pro hac vice. But corporations exist for specific purposes, and only by legislative act, so that if the life of the corporation is to continue even only for litigating purposes it is necessary that there should be some statutory authority for the prolongation. The matter is really not procedural or controlled by the rules of the court in which the litigation pends. It concerns the fundamental law of the corporation enacted by the State which brought the corporation into being. See also: Defense Corp. v. Lawrence Co. (1949), 336 U. S. 631, 69 Sup. Ct. 762, 93 L. Ed. 931; Title Co. v. Wilcox Building Corp., supra ; Melrose Distillers v. United States (1959), 359 U. S. 271, 79 Sup. Ct. 763, 3 L. Ed. 2d 800; Sedgwick v. Beasley (D. C. Cir. 1949), 173 Fed. 2d 918; United States v. Line Material Co. (6th Cir. 1953), 202 Fed. 2d 929. Therefore, it is only by statutory authority of the state of incorporation that the life of a corporation may be prolonged for litigation purposes. An examination of Illinois statutes, ch. 32, sec. 157.94 and sec. 180.787, reflect that both statutes are in substantial conformance with sec. 105 of the Model Business Corporation Act [2] as it relates to prolonging the life of a corporation for two years after the date of its dissolution. It appears that this section of the Model Act has been infrequently construed. In Bishop v. Schield Bantam Co. (D. C. Iowa 1968), 293 Fed. Supp. 94, it was determined that a tort action commenced more than three and one-half years after dissolution was barred by what is now sec. 105 of the Model Act as adopted by the Iowa statutes: Cases construing the Model Act, although sparse, are relevant to the issues presented by this motion. See Bar Committee Source, Iowa Code Ann. § 496.102. In distinguishing the Ohio statute from § 98 of the Model Act it was stated: `The court has reviewed the statutes of several states treating on this matter of the continued existence of a dissolved corporation for purposes of litigation, and finds that there is a wide range of phraseology therein. Many of the said statutes, however, bear a strong resemblance to section 98 of the Model Business Corporation Act. Section 98, in its pertinent part, provides that dissolution of a corporation shall not take away or impair any remedy available against such corporation for any right or claim existing, or any liability incurred, prior to dissolution. It is, therefore, quite clear that under the Model Business Corporation Act, and those state statutes patterned after it, a corporation may be sued for pre-dissolution torts only.' Chadwick v. Air Reduction Company, D. C., 239 F. Supp. 247, 251 (1965). Bishop v. Schield Bantam Co., supra, 95. In Chadwick v. Air Reduction Co. (D. C. Ohio 1965), 239 Fed. Supp. 247, it was held that an Ohio statute containing the two-year limitation did not bar a post-dissolution tort action because the Ohio legislature had expressly added the following language to that of the Model Act, or which would have accrued. In Chadwick, it was determined the addition of the foregoing language would have no meaning unless it was construed to mean post-dissolution claims. However, neither the Wisconsin nor Illinois legislature has seen fit to so modify the language of the Model Act. The issues considered by the trial court relating to transacting business or doing business in Wisconsin and service of process on foreign corporations under various situations, all must be related directly to the corporate status of the defendant foreign corporation. If, in fact, the defendant corporation was dissolved, the applicable Illinois statute on dissolution must be considered in relation to the date of the injury sustained by the plaintiff. If the defendant corporation was dissolved under the Illinois statute and the statutory time for prosecution of actions barred by the statutory two-year period, then it matters not whether defendant corporation was at some prior time during its corporate existence, doing business in Wisconsin without a license. On the other hand, if defendant was a viable foreign corporation, subject to suit at the time of the injury, then the Wisconsin statutes on service of process on foreign corporations doing or transacting business in Wisconsin become significant. It appears from the trial judge's decision and statements of counsel that the two-year dissolution provision of sec. 180.787, Stats., may have been considered a statute of limitation. In Bishop v. Schield Bantam Co., supra , the Iowa court so considers a similar statute. However, we are of the opinion that the two-year dissolution provision is not a two-year statute of limitation within Wisconsin case law precedent. We consider the opinion of the court in United States v. Palakow (D. C. Wis. 1969), 298 Fed. Supp. 1378, to be a correct statement of Wisconsin precedent. In United States v. Palakow, supra, page 1381, the court held: In Wisconsin, the state supreme court has consistently held that a `statute of limitations' extinguishes both the right and the remedy. Maryland Casualty Co. v. Belesnay, 245 Wis. 390, 14 N. W. 2d 177 (1944); First National Bank of Madison v. Kolbeck, 247 Wis. 462, 19 N. W. 2d 908, 161 A. L. R. 882 (1945). However, § 180.787 by its terms provides that the dissolution of a corporation shall not take away or impair any remedy available to or against the corporation if action is commenced within two years. The statute is silent with respect to abolition of the right. The conclusion that § 180.787 is not a statute of limitation, as that term is defined in Wisconsin, is bolstered by the fact that the Wisconsin statutes of limitation are contained in Chapter 893, Wis. Stats. (1967). In Maryland Casualty Co. v. Belesnay, 245 Wis. 390, 393, 14 N. W. 2d 177, 178 (1944), the court said: `In Wisconsin the running of the statute of limitations absolutely extinguishes the cause of action for in Wisconsin limitations are not treated as statutes of repose. The limitation of actions is a right as well as a remedy, extinguishing the right on one side and creating a right on the other, which is as of high dignity as regards judicial remedies as any other right and it is a right which enjoys constitutional protection.' (Emphasis added.) Illinois has also construed its limitation on actions by or against dissolved corporations, which is comparable to sec. 180.787, Stats., in terms of the capacity to sue or be sued, rather than in terms of a statute of limitation. O'Neill v. Continental Illinois Co. (1950), 341 Ill. App. 119, 93 N. E. 2d 160. Appellant contends that the two-year limitation on actions by or against a corporation after its dissolution, embodied in sec. 180.787, Stats., has been tolled by sec. 893.30. We do not agree. Globig v. Greene & Gust Co. (D. C. Wis. 1961), 193 Fed. Supp. 544, made sec. 893.30 applicable to noncomplying foreign corporations notwithstanding the fact that service could be under sec. 180.847(4). [3] However, we believe such a holding is predicated upon there actually being a foreign corporation in existence at the crucial time. Also, sec. 180.787, Stats., refers to corporation, which, by definition under sec. 180.02, specificially excludes a foreign corporation. Furthermore, as previously stated, sec. 180.787 is not a statute of limitations such as is found in sec. 893.30. Appellant also cites sec. 226.12, Stats., for the proposition that defendant is amenable to suit in Wisconsin: 226.12 Liability of inactive foreign corporation. An action for the recovery of money may be commenced and prosecuted against a foreign corporation although such corporation may have ceased to act as a corporation in the same manner as though it had not so ceased to act; and the judgment may be enforced against property in this state which such corporation has any interest in or would have an interest in had the same not ceased to act as aforesaid, whether held or controlled by it or by a trustee, assignee, agent or other person for the use and benefit in whole or in part of such corporation or the creditors thereof or both. It is true that a state may provide for a means of adjudication against a foreign corporation with reference to its property or status within the state. Fond du Lac Cheese & Butter Co. v. Henningsen Produce Co. (1909), 141 Wis. 70, 123 N. W. 640. This is true even when the foreign corporation has been legally dissolved in the state of its creation. Clark v. Williard (1934), 292 U. S. 112, 54 Sup. Ct. 615, 78 L. Ed. 1160; and McGoon v. Scales (1870), 76 U. S. (9 Wall.) 23, 19 L. Ed. 545. However, in view of the fact that a corporation's existence and its capacity to be sued is governed by the state of its creation, or where it is certified to do business, sec. 226.12 can have no application where, as here, there is no evidence that the foreign corporation has assets within the state of Wisconsin and it is not certified to do business here. Appellant further contends that the defendant has waived its right to rely on the defense of dissolution by failing to plead it. It is clear that in Wisconsin, an objection to the jurisdiction of the court is not waived because it is joined with other defenses. Pavalon v. Thomas Holmes Corp., supra ; sec. 262.16, Stats. 1969. The defendant has consistently maintained its jurisdictional objection by alleging that it was not doing business in the state of Wisconsin. Furthermore, the defense of dissolution may be encompassed within an allegation of not doing business. In Chaplin v. Selznick (1944), 293 N. Y. 529, 58 N. E. 2d 719, a majority of the court held that where a California corporation, doing business in New York, had been formally dissolved in California and all of its assets had been distributed prior to service of process in New York, it had ceased doing business in New York for purposes of service of process.