Summary
In Sinnott v Hanan, 214 NY 454 (1915), the Court of Appeals recognized and applied a New Jersey statute allowing dissolved corporations to prosecute and defend suits, settle their affairs and dispose of assets.
Summary of this case from Friedel v. Asbestos Corp. (In re Eighth Judicial Dist. Asbestos Litig.)Opinion
Argued March 19, 1915
Decided April 13, 1915
De Witt Bailey for appellant. Louis S. Headley and Edwards H. Childs for respondent.
The action is upon an undertaking executed by the defendant to discharge an attachment of property levied under a warrant of attachment issued in an action of the plaintiff here against the Expanding Tread Company, a corporation organized under the laws of New Jersey. By the undertaking the defendant did "undertake, pursuant to the statute in such case made and provided, in the sum of two thousand dollars, that the defendant (in that action) will, on demand, pay to the plaintiff (therein) the amount of any judgment which may be recovered in the action against the defendant, The Expanding Tread Company, not exceeding the above-mentioned sum, with interest." A judgment against the company was recovered June 8, 1910, for two thousand one hundred and fifty dollars and sixteen cents and had not been paid.
The principal defense to the present action is, that the company was dissolved, as authorized by a statute of the state of New Jersey, prior to the recovery of the judgment against it of June 8, 1910, and subsequent to the commencement of the action in which it was recovered; hence, the judgment was void.
A statute, chapter 159 of the Laws of New Jersey for the year 1884, as amended and supplemented, provided, as found by the trial court: "If any corporation heretofore or hereafter created shall for two consecutive years neglect or refuse to pay the state any tax which has been or shall be assessed against it under any law of this state and made payable into the state treasury, the charter of such corporation shall be void, and all powers conferred by law upon such corporation are hereby declared inoperative and void * * *." It further provided that the state comptroller should report to the governor the delinquent corporations and that "the governor shall forthwith issue his proclamation, declaring under this act of the legislature that the charters of these corporations are repealed." The Expanding Tread Company was reported by the state comptroller as a delinquent corporation, and in 1904 the governor of New Jersey duly issued his proclamation declaring under the statute that the charter of the company was repealed. The regularity and the validity of the proclamation was stipulated by the parties and found by the trial court, and if additional and other facts had not been proven and found the defense would be securely established, because the common law abates at the dissolution of a corporation all actions pending against it. ( McCulloch v. Norwood, 58 N.Y. 562; Sturges v. Vanderbilt, 73 N.Y. 384; Greeley v. Smith, 3 Story, 657.) The Corporation Act of New Jersey contained, however, a section (§ 53) as follows: "All corporations, whether they expire by their own limitation or be annulled by the legislature or otherwise dissolved, shall be continued bodies corporate for the purpose of prosecuting and defending suits by or against them and of enabling them to settle and close their affairs, to dispose of and convey their property, and to divide their capital, but not for the purpose of continuing the business for which they were established." Inasmuch as this section relates to and regulates the corporate existence and power, it has extraterritorial operation and effect, even as had the statute under which the corporation was created and which was a part of its charter and the law of its existence. ( Relfe v. Rundle, 103 U.S. 222; Michigan State Bank v. Gardner, 15 Gray, 362.) The existence and the powers of any foreign corporation coming into this state to do business are at all times subject to the law of its creation and of its domicile and, additionally, to our laws relating to it, and the terms laid down by our legislature as conditions of allowing it to transact business here. ( Bank of Augusta v. Earle, 13 Peters, 519, 588, 589; Demarest v. Flack, 128 N.Y. 205; Hoyt v. Thompson's Executor, 19 N.Y. 207.) The sections we have quoted are, therefore, entitled to recognition and enforcement by the courts of this state. They apparently and under authority ( American Surety Co. v. Great White Spirit Co., 58 N.J. Eq. 526) are parts of a legislative scheme respecting corporations, are in pari materia and to be construed together. Their effect was to continue the life of the corporation as to its capacity to prosecute and defend suits by or against it, to settle and close its affairs, to dispose of and convey its property and to divide its capital, and to destroy its capacity and existence in all other respects and for all other purposes. Under them the action did not abate, because as to it the corporate existence was not affected. The corporation remained the defendant, with its power and authority to defend existent and unlessened. The question of reviving the action is, therefore, not in the case. ( Pomeroy's Lessee v. State Bank of Indiana, 1 Wall. [U.S.] 23; Hould v. Squire Co., 81 N.J.L. 103; Metropolitan Rubber Co. v. Place, 147 Fed. Rep. 90; Thornton v. Marginal Freight Ry. Co., 123 Mass. 32; Singer Talcott Stone Co. v. Hutchinson, 176 Ill. 48.)
The Corporation Act of New Jersey contains a section (§ 59) which the respondent invokes, and which is: "Any action, now pending or to be hereafter begun, against any corporation which may become dissolved, before final judgment, shall not abate by reason thereof, but no judgment shall be entered therein except upon notice to the trustees or receivers of the corporation." A finding of the trial court was, "that there is no evidence that any notice was given to the trustees or receivers of said Expanding Tread Company prior to the entry of said alleged judgment." It is sufficient to say that the form of the action and the method of procedure are matters of practice which are fixed and governed by our own laws.
The failure of the corporation to pay, on demand, the amount of the judgment was found in and by the finding, based upon evidence, that the execution duly issued upon it to the sheriff of New York county, the principal place of business of the corporation as designated by its certificate filed with the secretary of state of New York, pursuant to the statute, was returned wholly unsatisfied.
Our conclusion is, the rule of the common law that the dissolution of a corporation abates actions pending against it was modified by the section 53, that the action of the plaintiff against the corporation did not abate and the judgment therein was valid and the undertaking enforceable.
The judgment of the Appellate Division should be reversed and that of the Trial Term affirmed, with costs to the plaintiff in the Appellate Division and this court.
WILLARD BARTLETT, Ch. J., CUDDEBACK, HOGAN, MILLER, CARDOZO and SEABURY, JJ., concur.
Judgment reversed, etc.