Court Opinion

ID: 3409034
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:26:36.1395+00
Date Added: 2024-06-11T13:49:59.778034
License: Public Domain

Counsel for respondents have presented a petition for rehearing accompanied by a brief urging that the opinion heretofore filed has failed to follow the precedents established by this court and by the supreme court of California. *Page 87 
They first state that the doctrine of Alaska Salmon Co. v.Standard Box Co., 158 Cal. 567, 112 P. 454, cited in the original opinion herein to the point that the Governor's proclamation is a necessary condition precedent to the forfeiture of a corporation's charter for nonpayment of license fee, has been repudiated by later California decisions, such as that of California Nat. Supply Co. v. Flack, 183 Cal. 124,190 P. 634. In Alaska Salmon Co. v. Standard Box Co., supra, as in Kaiser Fruit  Land Co. v. Curry, 155 Cal. 638,103 P. 341, 347, to the same effect, the court was considering a statute identical, so far as relating to this question, with our C. S., secs. 4781, 4786; while in the case of CaliforniaNat. Supply Co. v. Flack, supra, the court was considering a later statute which did not require a proclamation by the Governor. The later California cases, therefore, in no sense repudiate the doctrine of Alaska Salmon Co. v. Standard BoxCo., as applying to statutes such as ours.
The principal contention of the petition for rehearing is in substance that any act done in the corporate name, after its charter has been forfeited, is not only entirely void, but that, being made criminal by C. S., sec. 4789, an estoppel to deny its validity cannot be set up. C. S., sec. 4789, provides that it shall be unlawful for any corporation delinquent under the license law to transact any business within the state after the time when the charter is forfeited, and makes it a misdemeanor for any person after such time to exercise any of the powers of the corporation or transact any business for or on behalf of the corporation. C. S., sec. 4790, constitutes the managers in office or directors of a corporation whose charter may be so forfeited trustees with full power to settle the affairs of the corporation. C. S., sec. 4787, provides for the reinstatement, upon payment of the delinquent fees and penalties, of "any corporation which failed to pay the license tax and penalty," and provides that such reinstatement relieves the corporation from the forfeiture and relieves all persons exercising the powers of such corporation from the provisions of C. S., sec. 4789. *Page 88 
It seems obvious that the intent of our statute is that after delinquency no acts shall be performed, even by the trustees, which are in the nature of continuing the business of the corporation, but it is clearly the intention of the statutes that the statutory trustees may do all acts properly embraced within the winding up or settling of the corporate affairs. Such an act, of course, is disposing of and conveying the corporate property. We think it may be presumed that an act of this nature is done for the purpose of winding up the corporate affairs. Where a corporation, after the expiration of its charter, is permitted by statute to sue to collect its assets, it has been held that a suit begun in the corporate name is presumed to be for the lawful purpose of winding up its business. (Stark Electric R. Co. v. McGinty Contracting Co., 238 Fed. 657, 151 C.C.A. 507.) If, in such a conveyance, the trustees, through ignorance or mistake, use the corporate name, it does not seem that our statutes would contemplate that they should be subjected to the penalties of C. S., sec. 4789. Their act, if done for carrying on the general purposes of a corporation, and transacting its business, except for the purpose of winding it up, would be unlawful under sec. 4789, but it seems to us that an act which is properly within the scope of winding up the corporate affairs, even though exercised in the corporate name, is merely defectively exercised and not void, if it be shown that the act so done was in fact done by the trustees. Thus, in the matter of a deed in the corporate name, the execution of the deed would be defective, but we think undoubtedly the deed should be given effect, if it were shown that the trustees authorized it, and unless it were shown that it was an act not for winding up the corporate affairs, but for carrying on its general business.
None of the California cases cited by respondents present the situation found in this case, or pass upon the particular questions here raised, nor do we think they necessarily sustain respondents' contention when applied to the facts of this case. Among the cases so cited are Rossi v. Caire, *Page 89 174 Cal. 74, 161 P. 1161; California Nat. Supply Co. v. Flack,183 Cal. 124, 190 P. 634; Ransome-Crummey Co. v. SuperiorCourt, 188 Cal. 393, 295 P. 446; Van Landingham v. UnitedTuna Packers, 189 Cal. 353, 208 P. 973; Sharp v. Eagle LakeLumber Co., 60 Cal. App. 386, 212 P. 933; Newhall v. WesternZinc Min. Co., 164 Cal. 380, 128 P. 1040; Finch v. Finch,68 Cal. App. 72, 228 P. 553. Those decisions do hold that the particular acts under consideration, done by or against a corporation in its corporate name, after its charter had been forfeited, were void, and use general language which might be considered as supporting respondents' contention. It is repeatedly said in those decisions that a corporation whose charter had been "forfeited" for nonpayment of license fee has no more existence than a natural person when life ceases, and that no act can be done even in its behalf. This view rests, we think, upon the construction given by the California supreme court to their former statutes for reinstatement of such delinquent corporations, which statutes were identical, so far as is here concerned, with the language of our C. S., sec. 4787. It was there held that the language, "any corporation which failed to pay the license tax" (Cal. Stats. 1906, p. 22), as describing the corporations which might thereafter pay such amount and be reinstated, applied only to corporations whose charters had thus become forfeited prior to the enactment of that statute, and did not operate in futuro. It was necessary, therefore, for the California legislature to enact subsequent enabling laws, and they did at each session after the original act of 1905 was passed, and up to the repeal of the statute in 1913, enact a new statute practically identical with their 1906 statute above referred to, which had the effect of authorizing reinstatement of corporations whose charters had thus lapsed since the last legislative session. The California supreme court thus treated a corporation which became delinquent as utterly dead, the same as though its charter had expired by lapse of the time for which it was granted. The history of this legislation *Page 90 
is detailed in Rossi v. Caire, 186 Cal. 544, 199 P. 1042.
This construction of the statute providing for reinstatement has never obtained in Idaho; and under the practical construction to the contrary which has been given by the public and the bar and all branches of the state government since the law was passed in 1912, it would seem that the California construction should not now be given to the statute, but that the reinstatement provisions of C. S., sec. 4787, operate to permit corporations thereafter becoming delinquent to be reinstated. Indeed, this is the only possible construction of our statute, since C. S., sec. 4787, was a part of the very act which inaugurated the license fee provision, and at the time of its enactment there were, of course, no delinquent corporations, so that to consider the reinstatement statute as not applicable to corporations thereafter becoming delinquent would leave C. S., sec. 4787, entirely nugatory. Under our view of the statute, a corporation does not, by becoming delinquent, die as does a natural person or a corporation whose term of existence has terminated, but is rather in a state of suspended animation, from which condition it can be relieved merely by the payment of the delinquent fees and penalties. "Certainly, if a corporation had been dissolved, it could not be resurrected and reinstated as an entity, in such a free and easy manner." (Hazard v. Park (C.C.A.), 294 Fed. 40, 42.)
The language of Chief Justice Ailshie, in his special concurring opinion in the case of Rowe v. Stevens, 25 Idaho 237, at 254, 137 P. 159, to the effect that a domestic corporation is dead when its right to further do business has been forfeited, should not be considered as applying to the so-called forfeiture for nonpayment of license fee. In fact, the statute itself recognizes that the corporation in such case is not dead, but is merely deprived of its power to carry on business, when it provides, in C. S., sec. 4790, that the managers in office or directors, after such forfeiture, are trustees not *Page 91 
only for the stockholders of the corporation, but of the corporation itself.
Under the amendment to the California statutes in 1917, p. 359, containing provisions differing from our C. S., sec. 4787, the California court now holds that a corporation which has become delinquent is in a state of suspended animation; but still holds that acts performed in the corporate name during the period between the delinquency and the reinstatement are utterly void, without distinguishing between acts which are in the nature of carrying on the corporate business and such as it would seem the legislature intended to penalize, and acts which might lawfully be done by the statutory trustees. We think in a proper case this distinction should be made.
Applying these considerations to this case, the conveyance of the corporate property was a proper act to be performed by the trustees; and if they did the act, even though the deed was executed in the corporate name, it should not be considered void, but merely defective in its execution. Since the trustees allowed it to stand, and the corporation, upon its reinstatement and its succession to the rights of the trustees, has recognized the deed and operated under it, as have the respondents, we think the language of the original opinion that the deed here was not altogether void is a correct statement of the law; nor unless it is shown that the conveyance was not for a lawful purpose, but was in fact a carrying on of the corporate business as distinguished from winding up its affairs, did the act of making the deed subject anyone to the penalties of C. S., sec. 4789, and the objection that there is no estoppel against urging the invalidity of a criminal act would not apply.
The case of McKinlay v. Javan Mines Co., 42 Idaho 770,248 P. 473, relied on by respondents, is clearly distinguishable, because there the act in question was in its nature illegal, and the contract was for an illegal purpose; and in the case ofHolter v. Hauser, 33 Idaho 406, 195 P. 628, also relied on by respondents, a different sort of act was being considered, *Page 92 
and the corporation involved was one whose charter had expired by expiration of time.
We recommend that a rehearing be denied.
Varian, C., concurs.
The foregoing is approved as the opinion of the court, and a rehearing is denied.
Wm. E. Lee, C.J., and Givens, Taylor and T. Bailey Lee, JJ., concur.
Second petition for rehearing denied.