Opinion ID: 519626
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Heading: Alabama's Corporate Dissolution Statute

Text: 12 Alabama's current statutory framework governing corporate dissolutions parallels the provisions of the Model Business Corporation Act (Model Act). Ala.Code, Secs. 10-2A-180 to -203 (1987); Model Bus.Corp.Act, Sec. 82-105 (1979). 9 In particular, its corporate survival statute is identical to section 105 of the Model Act. Ala.Code, Sec. 10-2A-203 (1987). The purpose of Alabama's survival statute is to provide a two year period in which to wind-up corporate affairs following the dissolution of a corporation. 10 The statute, in pertinent part, provides that: 13 The dissolution of a corporation either (1) by the issuance of a certificate of dissolution by a probate judge; or (2) by a decree of court when the court has not liquidated the assets and business of the corporation as provided in this chapter, or (3) by expiration of its period of duration, shall not take away or impair any remedy available to or against such corporation, its directors, officers or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within two years after the date of dissolution.... The shareholders, directors and officers shall have power to take such corporate or other action as shall be appropriate to protect such remedy, right or claim. 14 Id. The statute acts as a limitation upon the capacity of the corporation to sue or to be sued rather than as a statute of limitation. See W. Fletcher, Vol. 16A, Cyclopedia of the Law of Private Corporations, Sec. 8144, at 459 (1988). Thus, the statute extinguishes the corporate rights, remedies and claims a dissolved corporation, and its shareholders, directors and officers fail to bring within the two year wind-up period. Id. at 459-60; MBC, Inc. v. Engel, 119 N.H. 8, 397 A.2d 636, 639 (1979). The statute, however, does not supplant the equitable rule that shareholders succeed to certain classes of a dissolved corporation's assets. Fletcher, supra Sec. 8144 at 411-12, 460. These shareholders may then maintain an action to recover such assets beyond the statutory wind-up period. Id. at 460; see, e.g., Jenot v. White Mountain Acceptance Corp., 124 N.H. 701, 474 A.2d 1382, 1386 (1984) (survival statute does not extinguish claims based on corporate asset acquired by equitable principles brought in individual capacity after dissolution). 15 Fulgham makes two arguments regarding the statute's application. First, Fulgham argues that Foresco was dissolved by judicial decree rendering the survival statute inapplicable. Fulgham implicitly argues that the circuit court conducted a dissolution proceeding outside the statute's parameters and, therefore, the common law rule that extinguishes all unasserted corporate obligations applies to extinguish Hutson's claims. See Nelson v. Hubbard, 96 Ala. 238, 244, 243-44, 11 So. 428, 429, 431 (1891) (dissolution is the death of corporation precluding further actions by or against it; judicial proceeding against dissolved corporation must follow course prescribed by statute). Second, and alternatively, Fulgham argues that any claim that Foresco, its shareholders, directors, or officers could have brought on behalf of the corporation should have been within the two years provided for in the survival statute. Fulgham's argument is that allowing Hutson to bring this action beyond the two-year period frustrates the survival statute's purpose which is to provide a two-year period to definitively wind-up corporate affairs. 16 Fulgham's first argument is erroneous. Although the survival statute's predecessor did not apply to judicial dissolutions, 11 the current statute does not have such an exclusion. The circuit court properly complied with the relevant statutory provisions placing this dissolution proceeding squarely within the current dissolution statutes. After complying with the appropriate dissolution provisions, the court directed that a certificate of dissolution be issued to the probate judge as required under Sec. 10-2A-203(2). Thus, the two-year survival statute is applicable. 17 Fulgham's second argument is that even if the dissolution is within the statutory framework, Hutson, the corporation, or its shareholders failed to bring the disputed claims within the two-year wind-up period. The statute makes clear that the corporation or its shareholders, directors or officers must commence existing corporate claims, whether in contract or tort, within the two year wind-up period to survive dissolution. It is undisputed that neither Foresco nor its shareholders or directors asserted within the two-year period the contract and tort claims Hutson, now in his individual capacity, asserts. These corporate claims, therefore, are extinguished unless they are the types of corporate assets that devolve to shareholders upon dissolution. 18