Opinion
May Term, 1900.
Hoadly, Lauterbach Johnson and Herbert R. Limburger, for the appellant.
John C. Davies, Attorney-General, and David B. Hill, for the respondent.
The demurrer to the complaint is interposed upon three grounds: That no cause of action is alleged; that plaintiff has no legal capacity to maintain this action, and that there is a misjoinder of parties plaintiff.
I think it plain that there is a cause of action alleged. Whether this alleged cause of action can be maintained, in the name of the People on the relation of a party in interest, is the only serious question presented.
The complaint states that defendant was organized as a domestic corporation in 1887. "That the defendant, instead of exercising its corporate powers, as required by law, has never engaged in its lawful and ordinary business. * * * Such omission or suspension of said business having been not only for a year, but ever since the said defendant was incorporated as aforesaid, it having failed to exercise its corporate powers necessary to enable it to transact the said business * * * and thereby the said defendant has forfeited its corporate rights, privileges and franchises." This is not an ambiguous declaration, nor is it susceptible of more than a single meaning. It is a declaration, in a single count, that from the date of organization this corporation has been dormant or dead; that its creators failed to put into it that breath of life which the statute says must be put in and must be evidenced by movement in the line of the purpose for which it was organized. This inaction from the beginning is conclusive evidence that it is dead, and that it should be buried out of sight. In such a case, an action will lie to judicially declare the death and administer the assets, if any there be. But by whom may the action be brought?
Section 1785 of the Code of Civil Procedure provides that such an action may be maintained to procure a judgment dissolving a corporation "Where it has suspended its ordinary and lawful business for at least one year." I do not think this complaint can be said to have been framed under that provision. Its wording precludes that conclusion. It is not alleged that the defendant ever had a life to suspend; on the contrary, it alleges that it had none. Besides, an action under this provision of the Code must, I think, be maintained either in the name of the People of the State or in the name of the party in interest, and not in the name of the People on the relation of a party. Section 1786 makes it plain that the action may be maintained by either the one or the other. Section 1808 is the only authority in the Code for uniting the People of the State and a party in interest, and that must be "In a case where the action can be brought only by the attorney-general in behalf of the people." In such a case, if the Attorney-General declines to bring it, he can be made to move by a party in interest, by giving bonds, etc., and becoming responsible for costs. Then the action takes the form prescribed by section 1986 — the form of action entitled in this complaint. There are many cases in which an action against a corporation can be maintained only by the Attorney General in the name of the People of the State. There are many cases where it can be maintained only by the party in interest; and there are some where such action can be maintained by either. Of the latter class are all the actions authorized by section 1785. I see no good reason for giving a forced meaning to the language used in section 1808. Its literal reading provides fully for every case. Actions authorized for causes stated in section 1798 of the Code are to be brought by the Attorney-General in the name of the People, and only by him; hence such actions may properly be brought in the name of the People of the State on the relation of a party, as is the action here being considered. Such an action is authorized when the corporation has "Forfeited its privileges or franchises, by a failure to exercise its powers," and that, I think, is the cause of action stated in this complaint. The form of the judgment in such a case, as provided by section 1801, is that the corporation be dissolved, a receiver appointed, an account taken and the property distributed in the same way as in voluntary dissolutions.
Section 31 of the General Corporation Law (Laws of 1892, chap. 687) provides as to a corporation of this character that if it "shall not organize and commence the transaction of its business, or undertake the discharge of its corporate duties within two years from the date of its incorporation, its corporate powers shall cease." This is the character of the failure alleged in the complaint, which gives rise to the cause of action. More than two years of failure is alleged — ever since 1887. More than two years since 1895, when, by amendment of the defendant's charter, the Legislature recognized the then existence of the corporation defendant.
If I am correct in my conclusion, that this action is in fact brought and properly brought, as here entitled, under section 1798 of the Code, leave of the court to bring it is essential, and, I think, should be alleged. While I do not find that the court has in any case directly so declared, neither do I find that it has declared to the contrary, and the general principles governing in practice seem to require that all facts necessary to show a cause of action, and also the right to the remedy sought, should be alleged. But, in a way, the complaint does allege this leave of the court. I think a general denial would raise the issue as to whether the leave had been granted. This is not a fact which pertains to the cause of action itself, concerning which the allegations should be, not only concise, but plain and direct; any form of statement from which the meaning may be drawn that leave to present the cause of action has been granted ought to be sufficient, and that, from the language used in the complaint, is clearly understood here.
I think, for the reasons stated, that the interlocutory judgment overruling the demurrer should be affirmed, with costs, and the usual leave should be given to answer over on payment of the costs of this court and at Special Term.
All concurred.
Interlocutory judgment affirmed, with costs, with leave to answer over upon payment of costs of this appeal and of the demurrer within twenty days after service of a copy of this order.