Court Opinion

ID: 9721898
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:11:58.849702+00
Date Added: 2024-06-11T18:24:29.133453
License: Public Domain

SCOTT, J.
I dissent. Corporations are creatures established under the authority of statute and exist only in accordance with the terms prescribed by statute. Four years ago, in North American Asbestos Corp. v. Superior Court (1982) 128 Cal.App.3d 138 [179 Cal.Rptr. 889] (North American I) this court stated that Corporations Code section 2010 applied only to domestic corporations. Then, as now, Corporations Code section 102 provided, with certain exceptions not applicable here, that the provisions of the Corporations Code apply only to domestic corporations and that application to other corporations is permitted only “to the extent expressly included in a particular provision of this division.” Then, as now, Corporations Code section 2010 made no mention of foreign corporations, which were the subject of the entire next chapter of the code. Then, as now, there was no constitutional prohibition against legislative favoritism toward foreign corporations.
In North American I, we noted: “It is clear that the California survival law does not apply to suits against dissolved foreign corporations. California Corporations Code section 2010 provides that ‘[a] corporation which is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it . . . .’ It also provides that ‘[n]o action or proceeding to which a corporation is a party abates by the dissolution of the corporation or by reason of proceedings for winding up and dissolution thereof. ’ Thus, there is no time limitation for suing a dissolved corporation for injuries arising out of its predissolution activities.
“If section 2010 applies to foreign corporations as well as to domestic corporations, then application of California law would permit these lawsuits to continue. However, section 2010 does not apply to a foreign corporation.
“In a law review note entitled Foreign Corporations: Continuance of Existence After Dissolution (1947) 35 Cal.L.Rev. 306, the author observed that Civil Code section 399, the predecessor to Corporations Code section 2010, was applicable only to domestic corporations and suggested an amendment to include foreign corporations. No such amendment has taken place.
“From a reading of Corporations Code generally, we conclude that it does not apply to foreign corporations which have dissolved. Corporations *912Code section 102 provides that with certain exceptions not applicable here the provisions of the Corporations Code apply only to domestic corporations and that application to other corporations is permitted only ‘to the extent expressly included in a particular provision of this division.’ Section 2010 is in chapter 20 of division 1, which is entitled ‘General Provisions Relating to Dissolution.’ Nowhere is there any mention that the provisions of that chapter or of section 2010 apply to foreign corporations. Foreign corporations are the subject of the entire next chapter, chapter 21.” (North American I, supra, 128 Cal.App.3d at pp. 143-144, fn. omitted.)
As we observed in North American I at page 144, Corporations Code section 102 provides that for the most part the Corporations Code provisions apply only to domestic corporations. Nothing in section 2010 suggests its application to foreign corporations, which are the subject of chapter 21, not chapter 20 of the Corporations Code. Indeed, section 2010 applies only to a “corporation” which is defined by Corporations Code section 162 to refer only to a corporation organized under California law. If these indications from the Legislature are not enough, its addition of Corporations Code section 2115 in 1975 made quite clear the Legislature’s intention that section 2010 apply only to domestic corporations.
Corporations Code section 2115 (added by Stats. 1975, ch. 682, § 7, pp. 1616-1617, eff. Jan. 1, 1976; amended by Stats. 1976, ch. 641, § 32.5, pp. 1571-1572, eff. Jan. 1, 1977) provides that if a foreign corporation has more than 50 percent of its property, payroll, and sales (averaging the three percentages) in California and more than one-half of its stock held by persons with California addresses it will be subject to certain enumerated sections of the California Corporations Code. Corporations Code section 2010 is not one of the enumerated sections. The Legislative Committee comment, printed with section 2115 (24 West’s Ann. Corp. Code, p. 703; Deering’s Ann. Corp. Code (1977 ed.) foil. § 2115, p. 340) states: “Prior law expressly applies only to corporations which are incorporated in this state subject to a very few exceptions (e.g., provisions relating to indemnification and inspection of records). In general, if a corporation is incorporated in another state it is not required to comply with the General Corporation Law of this state even though all of its shareholders reside in this state and it carries on all of its business within this state. This section requires a foreign corporation with specified minimum contacts in this state to comply with certain provisions of the new law, for the protection of California creditors and shareholders.”
The Legislature, having turned its attention to what provisions of California corporation law should apply to foreign corporations doing significant *913business in California, elected not to apply Corporations Code section 2010. We cannot by judicial fiat fill the void left by the Legislature nor provide greater regulation of a corporation not shown to meet the 50 percent requirement than the Legislature has announced for such a “quasi-foreign” corporation.
The only significant change since the decision in North American I is the majority’s discovery of reports showing that the Constitution Revision Commission and the electorate may not have realized the full impact of the decision to repeal article XII, section 15 of the California Constitution. But no amount of electoral error in repealing article XII, section 15, can supply a missing word to Corporations Code section 2010. Whether the electorate realized it or not, repeal of article XII, section 15, removed the only bar to treating foreign corporations more favorably than domestic corporations with regard to corporate survival as the Legislature most clearly has done.
After our decision in North American I either the electorate or the Legislature could easily have amended section 2010 to apply to foreign corporations. Neither did so. Now the majority of this court, purporting to act “in accordance with the intentions of both the Legislature and the electorate,” supplies the missing amendment. I would leave the amending process to the Legislature and, where appropriate, to the electorate.