Opinion
Appeal from Superior Court, Los Angeles County; John W. Shenk, Judge.
Action by H. R. Slayden, doing business under the name of the H. R. Slayden Company, against M. F. O’Dea and others. Judgment for plaintiff, and the named defendant appealed. Motion by O. O. Farmer in behalf of the Imperial Engineering & Construction Company to dismiss the appeal and remand the cause, with directions to lower court to vacate the judgment. Motion denied. COUNSEL
George W. Crouch, Crouch & Crouch, Bradner W. Lee, Bradner W. Lee, Jr., and Kenyon F. Lee, all of Los Angeles, for appellant.
A. C. Labrie, of Los Angeles, for defendant Farmer.
J. W. Morin, of Pasadena, and Willoughby Rodman, of Los Angeles, for respondent.
OPINION
PER CURIAM.
O. O. Farmer, a defendant in the action, and who likewise is a stockholder of the Imperial Engineering & Construction Company, also a defendant in the action, has moved this court to dismiss the appeal and to remand the cause, with directions to the lower court to vacate the judgment. The motion is made on behalf of the Imperial Engineering & Construction Company and is based upon affidavits and a certified copy of a proclamation by the governor showing that the Imperial Engineering & Construction Company is, and at the time of the commencement of the action was, a defunct corporation, by reason of nonpayment of the state corporation license tax.
The action was brought by Slayden to recover a judgment against the Imperial Engineering & Construction Company for certain sums alleged to be due for materials furnished by himself and assignors and used by the corporation in the construction of a highway under a contract with the county of Los Angeles, made pursuant to the provisions of the Road District Act of 1907 (St. 1907, p. 806). By his complaint plaintiff asks that the amounts so due be adjudged to be secured by two road bonds issued by the county pursuant to the act; that the bonds be sold to pay such sums as may be adjudged due him; and that he have judgment against the Imperial Engineering & Construction Company for any deficiency remaining after the sale. The complaint further alleges that the Imperial Engineering & Construction Company is a California corporation. Defendant O’Dea, answering, denies practically all of the material allegations of the complaint, pleads the statute of limitations, alleges that he owns the bonds, and prays that he be adjudged to be the owner thereof. The Imperial Engineering & Construction Company and O. O. Farmer, appearing by A. C. Labrie, Esq., as their attorney, filed a disclaimer, disclaiming all right to the bonds. The county, answering, admitted that the bonds were in the possession of the county treasurer, and prayed the court to determine the conflicting claims of plaintiff and the other defendants thereto. In its written findings of fact the court specifically finds that "the Imperial Engineering & Construction Company was and still is a corporation duly organized and existing under and by virtue of the laws of the state of California." By its judgment the court adjudged that plaintiff have and recover of and from the Imperial Engineering & Construction Company certain designated sums; that plaintiff has a lien on the bonds to secure the amounts so adjudged due him; that the bonds be sold; that the balance, if any, after their sale be paid to defendant O’Dea; and that in case of a deficiency plaintiff have judgment therefor against the Imperial Engineering & Construction Company. The only appeal from the judgment is that taken by defendant O’Dea, who has appealed under the new, or alternative, method, by filing his notice of appeal with the county clerk, as provided by section 941b of the Code of Civil Procedure.
The motion now made in this court by Farmer on behalf of the defunct corporation is: (1) A motion to dismiss the appeal; and (2) a motion to remand the case to the lower court with instructions to vacate the judgment. It appears from the affidavits of Farmer and Labrie that the authorized capital stock of the Imperial Engineering & Construction Company is, or rather during the corporate existence was, divided into 7,500 shares. Of this total of 7,500 shares that might lawfully be issued, 5,605 were issued to and owned by Farmer. It further appears from these affidavits that the corporation did not pay its license tax for the fiscal year 1913, and that, pursuant to the proclamation made by the Governor on September 16, 1913, the Imperial Engineering & Construction Company, on November 30, 1913--which was some time prior to the commencement of the action--forfeited its charter. Labrie, in his affidavit, says that at the time he filed the disclaimer as attorney for the company he was not aware, and had not been informed, that it had forfeited its charter. Farmer, who was president of the corporation at the time of its demise, does not say that he did not know that the corporation had forfeited its charter. It further appears that Farmer consulted with Labrie concerning the filing of the disclaimer. From the certificate of the secretary of state, filed with the motion to dismiss, it appears that the license tax remains unpaid and the corporate charter still remains forfeited to the state. In the discussion that follows it should be remembered that the Imperial Engineering & Construction Company was nonexistent at and prior to the time when this action was commenced. It is this fact that differentiates the case from such cases as Brandon v. Umpqua Lumber Co., 166 Cal. 322, 136 P. 62.
Except as and when it is otherwise provided by the statute, the effect of the forfeiture of the charter of a corporation, whether for nonpayment of its corporation license tax or for other cause, is to terminate its existence as a legal entity. It is dead. It is incapable of suing or being sued as a corporate body, or in its corporate name. It can no more be proceeded against as a corporation than could a natural person after his death. Being dead, it can confer no authority upon any one to appear for it. Any appearance for it or in its name is unauthorized and void. It is not like the case of an unauthorized appearance for a living man, or for an existing corporation, where, under certain circumstances, not necessary to enumerate, certain presumptions of authority to make the appearance will be indulged. The corporation being dead, there is no one who can give any authority to appear for it. Any attempted appearance confers no jurisdiction and is an absolute nullity. Jurisdiction no more can be obtained by a court over a defunct corporation that over the person of a dead man. The dead corporation cannot be served with process, cannot appear, cannot admit any fact, nor authorize any one to do so for it. Any attempted judgment against it is void--a mere nullity. Crossman v. Vivienda Water Co., 150 Cal. 575, 89 P. 335; Newhall v. Western Zinc Min. Co., 164 Cal. 380, 128 P. 1040. Upon the dissolution of the corporation for nonpayment of its license tax, the title to all the property owned by it at the time of its demise passes to the persons who were its stockholders at the time of its death, who hold the property subject to the right vested in the persons who were the directors in office at the time of the dissolution to possess the corporate assets under a power to administer the same in the settlement of the affairs of the defunct corporation for the benefit of the creditors and those who were stockholders during the corporate existence. Rossi v. Caire, 174 Cal. 74, 161 P. 1161. Not only is any attempted judgment against a defunct corporation void but such judgment, in a proper proceeding, can be impeached and its invalidity shown by any one interested, as, for example, one entitled as creditor or stockholder to participate in the assets of the corporation, or one who, as stockholder, may be liable for the debts of the corporation. Crossman v. Vivienda Water Co., supra. And those sufficiently interested to be allowed to assail the judgment cannot be held bound by any unauthorized appearance attempted to be made on behalf of the dead corporation, unless by their acts or omissions they have estopped themselves from denying the validity of the judgment. Crossman v. Vivienda Water Co., supra. Though the judgment be void, estoppel may bar the way to a successful assault upon it. For, notwithstanding the nullity of the judgment against the dead corporation, one who otherwise might be entitled to attack it on behalf of the defunct corporation may estop himself by his acts of omission or commission from questioning its validity. Llewellyn Iron Works v. Abbott Kinney Co., 172 Cal. 210, 155 P. 986.
Appellant, the defendant O’Dea, resisting the motion made by Farmer on behalf of the defunct corporation, contends that the admitted facts show that Farmer is estopped to question the validity of the judgment. We think this contention must be sustained.
To entitle Farmer to move on behalf of the defunct corporation, it must appear that he has some interest to be protected, and that he is not estopped by his conduct. As one who was a stockholder at the date of the dissolution, he has a property right in what were the assets of the corporation at the time of its demise; that is, upon the dissolution of the corporation, the title to the corporate assets vested in him and the other stockholders, whoever they may be. Rossi v. Caire, supra. Also, as a stockholder, he is interested in defeating any claim against the corporation for the payment of which, in whole or in part, he may be liable as a stockholder. As a stockholder, therefore, he has a sufficient interest to entitle him to assail the judgment against the corporation. But notwithstanding this interest, if, by his conduct, he has estopped himself from questioning the judgment, this court cannot grant that part of the motion whereby we are asked to remand the case with directions to the lower court to vacate the judgment. That Farmer is estopped appears from the affidavits of himself and Mr. Labrie.
From the affidavit of Labrie it appears, inferentially at least, that at the time of the forfeiture of the corporate charter Farmer was president on the now defunct corporation. As such, he must have known that it had forfeited its charter prior to the commencement of the action. At any rate, Farmer is careful not to deny such knowledge in any part of his affidavit. And yet, notwithstanding such knowledge on his part--knowledge which, under the circumstances, should be imputed to him--he advised with Labrie about the disclaimer, and, after so advising with Labrie, the latter, on behalf of Farmer and the defunct corporation, filed the disclaimer whereby both disclaimed any right, title, or interest in or to the bonds. We think it clear that Farmer knowingly concealed from plaintiff and the other parties to the action all knowledge that the corporation had suffered dissolution, and adopted a course of action calculated to lead plaintiff and appellant O’Dea, and all other parties, to believe that the corporation was an existing corporate entity, thereby inducing plaintiff to prosecute his action against the corporation to final judgment, and O’Dea and the other defendants to litigate their claims in the belief that the corporation still enjoyed corporate life and was properly a party to the action for the determination of all conflicting claims and interests. For these reasons we think Farmer is estopped from now moving in this court, on behalf of the corporation, for any modification of the judgment based upon the theory that the corporation was not an existing entity at the time when the action was commenced, and that that part of the motion whereby we are asked to remand the cause to the lower court with directions to vacate the judgment must be denied.
In view of Farmer’s estoppel to move in this matter, it is unnecessary to determine to what extent evidence dehors the record on appeal may be considered to refute the express finding of the court that at the time of the trial the corporation was in existence.
Conceding that notice of appeal is essential to appellate jurisdiction, and assuming that such cases as Judson v. Love, 35 Cal. 463, and Bell v. San Francisco Savings Union, 153 Cal. 64, 94 P. 225--wherein it is held that the death of a natural person in whose favor judgment was rendered terminates the authority of his attorney to represent him or to receive notice of appeal--are applicable to appeals under the new, or alternative, method, where the notice is filed with the clerk, still, where a corporation is a defendant in an action, and that corporation is an existing corporate entity at the time when the action is commenced against it, the statute provides that the action shall not abate by reason of the subsequent forfeiture of the corporate charter for nonpayment of the license tax, but that the action "may be prosecuted to final judgment * * * with the same force and effect and in like manner as though no forfeiture had occurred." Section 2 (10a), Acts 1907 (Stats. 1907, p. 745), and the subsequent amendatory acts. By reason of this provision of the statute, the action, if the corporation be in existence when it is commenced, may be continued and prosecuted to final judgment in the name of the corporation, under the control and magagement of the directors or managers in office at the time of the forfeiture. And while doubtless such directors or managers may be substituted as parties to the action, such substitution is not essential; for, without any substitution or parties or change of attorney, they may control and manage the action and defend in the name of the corporation, notwithstanding the forfeiture of the charter. Lowe v. Superior Court, 165 Cal. 714, 134 P. 190; Brandon v. Umpqua Lumber Co., supra.
For reasons already stated, the moving party here is estopped to assert the nonexistence of the corporation at the time when the action was commenced. As to him, the situation must be regarded as though there had been no forfeiture of the corporate charter prior to the commencement of the action; and if there were no such forfeiture prior to the commencement of the action, then, even though it be admitted that the corporation is now defunct, still the action may continue in the name of the corporation, without any change of attorney, and this appeal may be prosecuted "with the same force and effect and in like manner as though no forfeiture had occurred," the directors in office at the time of the forfeiture, whom the statute makes "trustees for the corporation and stockholders," being deemed to be in control and management of the action so far as the corporation’s interests are concerned, even to the extent of receiving notice of appeal, through the attorney of record for the defunct corporation, by looking to the files to ascertain whether or not an appeal has been taken. Because the mover of the motion is estopped to deny the corporate existence of the Imperial Engineering & Construction Company at the date of the commencement of the action, and because, if it were in existence when the action was commenced, it would be the duty of the directors in office, in the event of a subsequent forfeiture of the corporate charter for nonpayment of the license tax, to manage and control the action for and on behalf and in the name of the corporation, as much so as if they had been substituted for it as parties defendant, they must be deemed to have received due notice of the appeal; for, as is said in Southern Pacific Co. v. Superior Court, 167 Cal. 255, 139 P. 69, it is the design of section 941b of the Code of Civil Procedure, in the event that an appeal is taken under the alternative method as therein provided, "to compel the prevailing party to look to the files to ascertain whether or not an appeal has been taken."
Motion denied.