Court Opinion

ID: 5176604
Source: CourtListenerOpinion
Date Created: 2022-01-06 00:19:23.689014+00
Date Added: 2024-06-11T08:26:21.135103
License: Public Domain

Opinion by
Walker, J.
The effect of the dissolution of a private corporation by decree of a court of competent authority, having jurisdiction over the same, is to extinguish and annul thenceforth its corporate powersr and the sovereign power which had brought it into existence by giving it an artificial personality, thereby, through its judicial mandate, terrain*272ates that existence by the withdrawal of all its franchises. Sec. 2, Waits’ Act. and Def., 350; Aug. & Ames on Corp., Sec. 638-799. In the case of National Bank v. Colby, 21 Wallace, (U. S.) p. 615; where the district court of the United States, had by its decree forfeited all the rights, franchises, and privileges of the Bank, and adjudge its dissolution, in proceedings for that purpose, under an act of Congress, the question under consideration being, whether a suit ao-ainst the Bank’to enfoice the collection of the demand is abated © by such decree. Mr. Justice Field, said : “With the forfeiture of its fights, privileges, and franchises the corporation was necessarily dissolved, as the decree adjudged. Its existence as a legal entity was thereupon ended; it was then a defunct institution, and judgment could no more be rendered against it in a suit previously commenced than judgment could be rendered against a dead man dyingyjendeníe lite. This is the rule with respect, to all corporations whose chartered existence has come to an end, either by lapse of time or decree of forfeiture, unless by statute, pending suits be allowed to proceed to judgment notwithstanding such dissolution. The prolongation of the corporate life for this specific purpose as much requires special legislative enactment as does the original creation of the corporation.” The opinion proceeds to quote as follows : ‘“I cannot distinguish,’says Story, in Greeley v. Smith, (3 Story, 658; see also Farmers’ and Mechanic Bank v. Settle, 8 Watts & Sargent, 207; and Mumma v. The Potomac Company, 8 Peters, 28l) between the case of a corporation and the case of a private person dying pendente lite,. In the latte,r case the suit is abated at law, unless it is capable of being revived-by the enactment of some statute, as is the case as to suits pending in the courts of the United States, when, if the right of action survives, the personal representatives of the deceased party may appear and prosecute or defend the suit. No such provision exists as to corporations, nor indeed, could exist without reviving the corporation pro haa nice, and, Iheiefore, any suit pending against it at its death, abates by mere operation of law’.”
It is by virtue of our statutes, which provide against the abatement of suits between private persons that pending suits are not discontinued by the death of plaintiff or defendant, as would be the conveyance, otherwise, at common law; and in order to maintain the suit after such death, by the legal representative, it is necessary *273that the legal basis therefor shall have been made apparent from the record. See Siese v. Malsch, 51 Texas, 358-9. There is no legislative provision in our State, which authorizes a pending suit to be prosecuted for or against, a private corporation created by the laws of another State, after such corporation shall be dissolved and its corporate existence shall have ceased.
It is proper to keep in mind the discrimination necessary to be made between corporations which exist within and by virtue of the laws of this State, and those which are the creation of the laws of other States of the Union ; as to the latter, they can not claim rights to recognition here, further than those that may bo extended ex comitate; for, as was said in respect to the helplessness and dependence of a. corporation away from “its native heath,” by the. Supreme Court of the United States in Bank of Augusta v. Earl, 13 Peters, 586. “It must dwell in (lie place of its creation, and cannot migrate to another .sovereignty.” In the case of Paul v. Virginia, 8 Wallace, (U. S.) 181, the following language is held: “The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. The recognition of its existence even by other States, and the enforcement-of its contracts made theiein, depend purely upon the comity of those States — a comity which is never extended where the existence of the corportion or the exercise of its powers are prejudicial to their interest or repugnant to tlieir policy. * * The whole matter rests on their discretion.”
Our statutes .regulating the dissolution of corporations, refer alone to such corjDoralions as are or shall be “created by or under the laws of this State.” Revised Stat., Arts 606-608.
Under the legislation in our State, as it exists, it seems to follow from the application of the rules of law governing the subject of the right of a resident citizen of Texas to sue in this State, a corporation which owed its existence to the laws of another State, and has been legally dissolved with a forfeiture of its rights and franchises, that after such dissolution a suit could not be brought against such extinct corporation; or if pending, could no longer be maintained in the courts of this State.
It was admitted by the parties on the trial, that the decree of the St. Louis Circuit Court was authorized by the laws of the State of Missouri.
*274John F. Williams, Receiver of the defendant, (Life Association of America) appeared, and making himself a party defendant, set up the plea in abatement, which denies the plaintiff’s right to sue. The case of Relfe v. Rundle, 13 Otto, (U. S.) 222, was a suit in which Relfe, the predecessor in office of Williams, in the above cited case made himself a party defendant, under circumstances analogous, and in behalf of the same interests and parties which Williams represents in this suit. It was decided in that case that the dissolution of the corporation under the laws of Missouri had the effect, according to their provisions and the deeree which adjudicated concerning them, to invest the Superintendent with the title to and the rights of the corporation; and that he had the right to represent the former corporation in litigation where its rights are concerned, the same as the corporation might have done if it had continued to exist. It may be conceded consequently, that Williams has the right to appear here, and to represent any rights or interests, which under our laws he may, in virtue of his relation to the corporation under the laws of Missouri, be enabled to maintain.
The plaintiff, clearly, could no further proceed in his suit after the circuit court decree, unless by making the Receiver a party, and when the plea in abatement was interposed, it became necessary that the plaintiff should proceed to lay the basis for a continuation of his suit by a recognition of the altered status of his rights since he begun his suit, by making the Receiver a defendant. He not having done so, Williams’ plea in abatement of the suit ought to have been sustained; the suit could non be prosecuted against the corporation, nor proceed further, unless by bringing parties before the court who were necessary in order to justify the court in rendering a judgment to affect the rights of persons concerned in the due administration of the assets of the company. Under the suggestion of dissolution of the corporation, the plaintiff prima facie, had no longer a cause of action in this forum; the court could take no judicial cognizance of the laws of Missouri, nor as to what rights the plaintiff might be able to assert, by amending his petition, against tie Receiver, as the successor to the rights of property recently vested in the corporation. Consequently, the suit, in the form in which the plaintiff prosecuted it, must have abated for want of any case being made appropriate for its maintenance against the *275Receiver, Williams, who alone could be sued after the dissolution, if there remained any ground longer for action.
According to this view of the subject, it becomes unprofitable to follow further the various grounds of error relied on for a reversal, because the trial below has been had upon issues which cannot afford the basis of a judgment for the plaintiff; he cannot recover against “the Life Association of America” at all either in this proceeding or any other; and if he may be enabled to retain this case in court and prosecute it further, it must be under an amended petition alleging such facts as will show upon the face of the pleading that under the laws of- Missouri, and the decree of the circuit court, the Receiver is invested with such authority as the representative of the defunct corporation as that he may properly be sued upon facts such as the plaintiff relies on for damages for deceit or fraud, or for the rescission of the contract as the case may be.
It is not necessary if we could, and we could not if we would, safely attempt to anticipate, or to give directions to the future course of the plaintiff to enable him to assert his rights; it is enough to say, now, that there exists fundamental error in the proceedings which have been had, and that it will not materially interest the parties or advance the cause on another trial, for us to consider further the eighteen assignments of error which are presented for examination.'
We conclude that the judgment ought to be reversed and the cause remanded.