Court Opinion

ID: 9576289
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:22:50.024939+00
Date Added: 2024-06-11T13:04:47.821955
License: Public Domain

GIERKE, Justice.
This is an appeal by the defendant, Lang-don Farmers Union Oil Company, from the district court judgment granting summary judgment in favor of the plaintiff, Mary Schill. We affirm.
This case involves the patronage credits of a now defunct corporation. Patronage credits are the dividends or credits earned by a patron member of a cooperative for patronizing the cooperative.1
S & S Farms was a farm cooperative incorporated on July 11, 1969. S & S Farms encountered economic difficulties and for several years did not pay Mary Schill agreed cash rents for her land. In December 1984, S & S Farms confessed judgment to Mary Schill for $219,567.00.
Langdon Farmers Union Oil Company (hereafter referred to as Langdon Oil) is a cooperative association with whom S & S Farms was a patron member from July 11, 1969, until April 6, 1987, on which date S & S Farms filed for dissolution and assigned all of its assets to its creditors. All of S & 5 Farms’ machinery was assigned to the First Bank of Langdon pursuant to a security agreement. All remaining assets of S 6 S Farms were assigned to Mary Schill on May 1, 1985, as partial payment for the unsecured judgment against S & S Farms in the amount of $219,567.00.
On December 15,1984, Dennis Schill, secretary of S & S Farms, sent a letter to Langdon Oil requesting that all of S & S Farms’ patronage credits valued at $21,-735.00 be assigned to Mary Schill. S & S Farms’ request was rejected by the board of directors of Langdon Oil on February 15, 1985.
Langdon Oil has a policy of retirement or redemption of patronage credits upon the death of a natural patron. On April 10, 1987, Mary Schill sent a letter to Langdon Oil informing them that the farm cooperative of S & S Farms was legally dissolved and requesting retirement or redemption of 5 & S Farms’ patronage credits. Langdon Oil refused to distribute S & S Farms’ patronage credits to Mary Schill.
On June 22, 1987, Mary Schill commenced this lawsuit seeking distribution of the patronage credits of S & S Farms. In the complaint, Mary Schill alleges that she “was one of the shareholders of S & S Farms”, was “the sole creditor of S & S Farms”, and was “entitled to all of the assets of S & S Farms.” Langdon Oil, in its answer to the complaint, denied Mary Schill’s allegations and asserted that “the Complaint failed to state a cause of action upon which relief can be granted.”
During discovery, Mary Schill disclosed an assignment from S & S Farms, dated May 1, 1985. On January 26, 1988, the board of directors of Langdon Oil, in consultation with its attorney, transferred on its books all of S & S Farms’ patronage credits to Mary Schill making the assignment retroactive to May 1, 1985, that being the date of S & S Farms’ assignment to Mary Schill. Mary Schill neither joined in nor accepted this transfer but instead maintained that she was entitled to distribution.
On February 2, 1988, Mary Schill filed a motion for summary judgment on the ground that no genuine issue of material fact exists and that she is entitled to judgment as a matter of law. Langdon Oil filed opposing papers, including a brief supported by an affidavit and several attached exhibits, resisting the summary judgment motion on the grounds that all interest in all assets of S & S Farms was assigned to Mary Schill on May 1,1985, so that, when S 6 S Farms voluntarily dissolved, there were absolutely no patronage credits to retire because it had no assets. A hearing on the motion for summary judgment was held April 4, 1988. On April 13, 1988, the district court granted summary judgment in favor of Mary Schill. Langdon Oil filed this appeal on-May 31, 1988.
*410On appeal, Langdon Oil contends that there was an issue of material fact as to whether the transfer of patronage credits from S & S Farms to Mary Schill was in compliance with its bylaws. Accordingly, Langdon Oil contends that summary judgment was inappropriate and therefore the trial court erred in granting Mary Schill’s motion for summary judgment.
Rule 56 of the North Dakota Rules of Civil Procedure provides that summary judgment shall be granted if “there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.”
This Court stated the criteria necessary to determine the propriety of granting summary judgment in Stensrud v. Mayville State College, 368 N.W.2d 519, 521 (N.D.1985), as follows:
“Summary judgment is appropriate to promptly and expeditiously dispose of controversies without trial when, after viewing the evidence in the light most favorable to the party against whom summary judgment is sought and giving her the benefit of all favorable inferences, only a question of law is involved or there is no genuine dispute over either the material facts or inferences to be found from undisputed facts. [Citations omitted]. Even when a factual dispute exists summary judgment is proper if the law is such that the resolution of the factual dispute will not change the result.”
In the instant case, the trial court, in its order for summary judgment, made what it labeled findings of fact that “the transaction of January 26, 1988 was without the proper compliance” with Langdon Oil’s bylaws on transfers of stock. Therefore the trial court determined “that the document was invalid and without effect”, so that “the capital credits actually belong[ed] to S & S Farms.” The trial court further determined that the voluntary dissolution of S & S Farms on April 6, 1987, “was the death of that cooperative” and concluded that Langdon Oil must distribute the patronage credits of S & S Farms pursuant to its “policy of paying out capital credits upon the death of the patron”.
This Court has stated that labels placed on findings of fact or conclusions of law by the trial court are not conclusive but, rather, whether it is a finding of fact or a conclusion of law is to be determined by the reviewing court. Martinson Bros. v. Hjellum, 359 N.W.2d 865 (N.D.1985); Oakes Farming Ass’n v. Martinson, 318 N.W.2d 897 (N.D.1982).
The determinations of the trial court that the transaction of January 26, 1988, transferring S & S Farms' capital credits to Mary Schill was not in compliance with Langdon Oil’s bylaws and that the dissolution of S & S Farms was the death of the cooperative which would qualify for retirement of capital credits were conclusions of law and not findings of fact. Accordingly, we do not believe that there was a genuine dispute as to any material facts and that any determinations made by the trial court concerned only questions of law.
Unlike findings of fact, questions of law are fully reviewable on appeal. Wilson v. Wilson, 364 N.W.2d 113 (N.D.1985); Norden Laboratories, Inc. v. Rotenberger, 358 N.W.2d 518 (N.D.1984); Nygaard v. Robinson, 341 N.W.2d 349 (N.D.1983). Accordingly, we must review whether or not the trial court erred in its conclusions of law.
Initially, we must determine whether or not the transaction of January 26, 1988, transferring the capital credits of S & S Farms to Mary Schill was without proper compliance of Langdon Oil’s bylaws.
Langdon Oil’s articles of incorporation provide in part as follows:
“ARTICLE III. CAPITAL STOCK
“Section 7. Transfers of stock shall only be made with the approval of the Board of Directors and shall only be made upon the books of the association by the stockholder in person or pursuant to a power-of-attorney duly executed and acknowledged and filed with the Secretary of the association, and upon surrender of the certificate for such shares and *411no transfer shall be made unless and until any and all indebtedness owing to the association by the stockholder has been paid in full. The association shall have a first lien on the capital stock of the association for any debt due it by the holder thereof....”
Thus, a transfer of stock by Langdon Oil “shall only be made upon the books of the association by the stockholder in person or pursuant to a power-of-attorney duly executed and acknowledged and filed with the Secretary of the association. ...”
As previously stated, S & S Farms sent a letter to Langdon Oil on December 15, 1984, requesting that all of its patronage stock be assigned to Mary Schill. However, Langdon Oil rejected S & S Farms’ request on February 15, 1985. Thereafter, on January 26, 1988, Langdon Oil unilaterally transferred the patronage stocks of S & S Farms to Mary Schill.
Because the transfer of patronage credits was made upon the books without the stockholder in person or without a duly executed power-of-attorney, we agree with the trial court’s conclusion that Langdon Oil’s bylaws were not followed with regard to the transfer of stock.
Next, we must determine whether or not S & S Farms, a formerly dissolved corporate patron, should be treated for purposes of distribution of its patronage credits no differently than an individual patron who has died.
As previously stated, Langdon Oil maintains a policy of retiring or paying out patronage credits upon the death of an individual patron. While, in the instant case, Langdon Oil does not contest Mary Schill’s ownership of the patronage credits of S & S Farms, Langdon Oil is not willing to treat the dissolution of S & S Farms, a corporate patron, the same as the death of an individual patron which would qualify for retirement of patronage credits.
The general rule discussing the effect of dissolution of a corporation is stated in Section 8113 of 16A Fletcher, Cyclopedia Corporations (Perm, ed.) as follows:
“According to the principles of the common law, a corporation which has been legally dissolved is dead. It no longer enjoys an existence for any purpose. The necessary effect of such death is not different from the death of a natural person. This is true whether the corporation is dissolved voluntarily or involuntarily, and the effect of the dissolution is the same whether it results ipso facto from some act or omission of the corporation or through judicial decree. * * * Since the dissolved corporation ceases to exist, it is without any corporate powers either de jure or de facto, and has none of the attributes of a legal corporation. In other words, in the absence of statutory provisions to the contrary, the effect of dissolution is to put an end to the corporation’s existence for all purposes whatsoever.” [Footnotes omitted].
Thus, at common law, dissolution of a corporation terminates its existence and renders it civilly dead. 16A Fletcher, Cyclopedia Corporations (Perm, ed.) § 8113; see also In re Great Plains Royalty Corporation, 471 F.2d 1261, 1264-1265 (8th Cir.1973) (corporation formally dissolved becomes civilly dead); 19 Am.Jur.2d, Corporations § 2882 (effect of dissolution of a corporation).
Under the North Dakota Business Corporation Act,2 upon the issuance of the certificate of dissolution by the secretary of state, the existence of the corporation ceases except for the purpose of suits or for the purpose of further winding up its affairs. See N.D.C.C. §§ 10-19.1-111 (claims in dissolution), 10-19.1-113 (articles of dissolution and certificate of dissolution), and 10-19.1-124 (after dissolution claims barred— exceptions).
For the purpose of retiring patronage credits, we believe that, at least in the instant case where there is an absence of a bylaw provision to the contrary, a eorpora*412tion which has legally dissolved is entitled to the same treatment as that given to an individual patron who dies. Accordingly, we believe the trial court correctly determined that the formal dissolution of S & S Farms was the death of that corporation which qualifies for the retirement of its patronage credits.
For the reasons stated in this opinion, we affirm the trial court’s judgment that Mary Schill was entitled to the distribution of S & S Farms’ patronage credits.
ERICKSTAD, C.J., and YANDE WALLE, J., concur.

. Patronage credits are also known as capital credits, stock credits, patronage stock or patronage dividends.

. The provisions of the North Dakota Business Corporation Act are found at Chapter 10-19.1 of the North Dakota Century Code.