Opinion ID: 1166571
Heading Depth: 1
Heading Rank: 1

Heading: Corporate Existence.

Text: A co-owner of property cannot ordinarily be guilty of theft of that property. People v. McCain, Colo., 552 P.2d 20 (1976). Here, therefore, the People were required to establish the existence of a corporate entity. Otherwise the appellee simply would have been a co-owner of his company's funds, and the funds would not have been susceptible to theft by him. The trial court ruled that, because the corporation had been legally defunct since 1972, the appellee and Knox were doing business as co-owners, and there was no basis for criminal theft charges. We disagree. The People correctly assert that in criminal cases the prosecution is required to prove only the de facto corporate existence of an alleged corporate victim. Hunter v. People, 172 Colo. 480, 474 P.2d 207 (1970); People v. Lamb, 165 Colo. 332, 438 P.2d 699 (1968); Goodfellow v. People, 75 Colo. 243, 224 P. 1051 (1924). For an enterprise to constitute a de facto corporation, three elements must coincide: (1) a law under which a corporation may lawfully be formed; (2) a bona fide attempt to form the corporation according to that law; and (3) an exercise of, or attempt to exercise, corporate powers. People v. South Platte Water Conservancy District, 146 Colo. 318, 364 P.2d 215 (1961); Bonfils v. Hayes, 70 Colo. 336, 201 P. 677 (1921); Fisher v. Pioneer Construction Co., 62 Colo. 538, 163 P. 851 (1917); Jones v. Aspen Hardware Co., 21 Colo. 263, 40 P. 457 (1895). The record clearly indicates that these three requirements were met in this case. It is clear beyond dispute that Balto Industries, Inc. was validly incorporated under Colorado law. Several witnesses testified that business operations continued under the corporate name even after the corporation was declared defunct in 1972. All business records and books, bank accounts, and the sign on the company headquarters bore the name Balto Industries, Inc., clearly evincing an intent to carry on the business as a corporation. Ordinarily, evidence of this nature is sufficient to establish de facto corporate status in a criminal case. See, e. g., Hunter v. People, supra ; People v. Lamb, supra . The trial court distinguished this case, however, on the basis of the fact that at the time of the alleged thefts the company had been declared defunct. Thus the ultimate question is whether that defunct status prevented Balto Industries from operating even as a de facto corporation. We conclude that it did not. Generally a corporation which has been dissolved by judicial decree or statutory forfeiture cannot exist thereafter as a de facto corporation. Bonfils v. Hays, supra. See also 8 Fletcher Cyclopedia of Corporations § 3844 (Rev.Ed.1966), and cases cited therein. The statute under which Balto Industries was declared defunct, section 7-10-109, C.R.S.1973, penalizes a corporation for failing to pay franchise taxes or file annual reports by prohibiting its transacting business as a corporation while it is defunct. However, the statute also provides that upon filing the necessary reports and paying the delinquent taxes, plus a penalty, the corporation is revived and reinstated to full corporate status. Section 7-10-109(4), C.R.S.1973. Thus, the statute does not authorize involuntary dissolution of the corporation, but merely allows the secretary of state to suspend its operations while it is in default. Dominion Oil Co. v. Lamb, 119 Colo. 62, 201 P.2d 372 (1948); Bokel v. Zitnik, 93 Colo. 565, 27 P.2d 753 (1933); Ruth v. Devaney, 84 Colo. 476, 271 P. 623 (1928); Smith v. Highland Mary Mining, Milling & Power Co., 82 Colo. 288, 259 P. 1025 (1927). The corporation's shareholders retain the power to hold annual meetings and elect corporate officers and directors, and the corporation may still hold, mortgage, and convey real estate. Section 7-10-109(2) and (3), C.R.S.1973. A revived corporation is regarded as having had continuous existence throughout the period of suspension. Dominion Oil Co. v. Lamb, supra ; Smith v. Highland Mary Mining, Milling & Power Co., supra . In other words, despite its technically defunct status, Balto Industries, Inc. still retained very real powers and duties as a corporation, including the power to hold property in the corporate name. [3] Although its power to transact business had been suspended, the corporation had not totally ceased to exist as a legal entity. Since Balto Industries' defunct status did not preclude its continued existence as at least a de facto corporation, we hold that the People's evidence sufficiently established the existence of a corporate victim of the alleged thefts.