In re Dissolution of Mosquito Hawks, Inc.

109 So. 2d 815, 1959 La. App. LEXIS 807
CourtLouisiana Court of Appeal
DecidedMarch 16, 1959
DocketNo. 21152
StatusPublished
Cited by1 cases

This text of 109 So. 2d 815 (In re Dissolution of Mosquito Hawks, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Dissolution of Mosquito Hawks, Inc., 109 So. 2d 815, 1959 La. App. LEXIS 807 (La. Ct. App. 1959).

Opinions

McBRIDE, Judge.

This appeal involves an opposition on the part of Lucas F. Bruno, Jr., a practicing attorney at law, to the provisional account filed by the judicial liquidator of the above-captioned corporation, in which opponent set up a claim on his own behalf for $1,150. He seeks to have the provisional account amended so as to include him thereon as an ordinary creditor of the corporation to the above amount.

Bruno had been employed as attorney to draw up the articles of incorporation of Mosquito Hawks, Inc. After the corporation came into being, he was employed as attorney to represent the corporation under written contract. The conditions of the contract between the parties were that Bruno would receive as a retainer the sum' of $50 per month for a period of three years; the attorney was also to receive during said three-year period certain stipulated percentages of the gross profits of the corporation and on all sales of machinery made by it. The concluding paragraph of the instrument reads thus:

“That this contract shall take effect immediately, and is to continue until January 1, 1959 and shall automatically renew thereafter on a one year basis until terminated in writing by one of the parties hereto. This contract can[817]*817not be terminated without cause at anytime prior to its termination date except by mutual consent.”

The contract was entered into on “April , 1956,” and these liquidation proceedings were commenced on January 30, 1957. Bruno was paid on the contract as his retainer an aggregate sum of $650; however, after the liquidation proceedings he received nothing from the liquidator, who refuses to acknowledge the attorney’s claim for the $1,150 for the unexpired term of the contract which forms the basis of the opposition. Opponent does not pretend that there is any money due him arising out of gross profits or for the sale of machinery.

The matter was duly tried in the lower court, and the judge was of the opinion that the contract was but a mandate which was revokable at the will of the mandator, the corporation, and that opponent was entitled to nothing thereunder. However, opponent was recognized as an ordinary creditor in the sum of $250 on a quantum meruit basis in representation of services rendered in organizing the corporation, but otherwise the opposition was discharged. Bruno has appealed.

Appellant takes the position that his contract with the corporation amounted to a hiring of labor, and that under LSA-C.C. art. 2749 he could not be sent away without any serious ground of complaint and that the corporation was bound to pay him the whole of the retainer fees he would have earned during the three-year period except for the liquidation proceedings. On the other hand, the liquidator advances the contention that the contract was tantamount only to a mandate, which the corporation had the right to dissolve upon the institution of the liquidation proceedings, and that opponent has been paid all he was entitled to receive up until that time.

The attorney for the liquidator argues strenuously that opponent’s contract of employment was for an indefinite amount and was also for an undetermined or indefinite period of time. He points to the stipulations of the contract which provide that the attorney should be paid a percentage of the gross profits and also a percentage on the sale of machinery during the three-year period. He also points up that the contract was to be “automatically” renewed on a one-year basis until such time as sueh arrangement was terminated in writing by one of the parties thereto.

These provisions alluded to by counsel do not have the effect of making the contract one for an indefinite period or for an indefinite amount. It is true that the amount due opponent on the profits and sales of machinery could not be computed in futuro, but opponent is not claiming there is due him anything therefor. What he is claiming is the minimum fixed retainer fee under the contract, that is, $50 per month for the remainder of the time the contract had to run, and the stipulation for the percentage payments does not absolve the liquidator from the obligation the corporation assumed to pay opponent such minimum fee. The provisions for the automatic renewal of the contract on a year-to-year basis certainly do not affect the primary term, which was for a definite period or until January 1, 1959. The contract specifically states the parties could not terminate it without just cause at any time prior to such date except by mutual consent. It is proper to hold that opponent can treat the contract as having been effective for the primary period thereof.

Although the point is not raised before us, it is necessary to consider whether the liquidation proceedings worked a termination of the contract between the attorney and the corporation. We have given thought, to the matter and have made a research of the jurisprudence for any precedent that might be controlling, and have found that the Supreme Court has held squarely that the liquidation of a corporation cannot jeopardize the rights of creditors under a personal contract which, despite the liquidation, survive the dissolution of the corpora[818]*818tion. In Schleider v. Dielman, 44 La.Ann. 462, 10 So. 934, 937, the Court said:

“In respect to the immediate effects of the liquidation of the corporation on the plaintiff’s contract rights, there can be but little difficulty, as it cannot be doubted that the liquidation of a corporation has the immediate effect of terminating all of its purely personal obligations, and of relegating the beneficiaries thereunder to an action in damages in keeping with its covenants. A corporation is quite as much bound as a natural person to the performance of its contracts. The law, in authorizing the creation of corporations, provides at the same time, for their forced as well as for their voluntary dissolution. The law authorizes the stockholders of a business corporation such as the Louisiana Brewing Company was to dissolve at will, upon a vote of three fourths of its stockholders. Rev.Stats., § 687 [LSA-R.S. 12:53, 12:54], The privilege is incorporated in the company’s charter, and no act of the board of directors could deprive the stockholders of such right, and the contract the corporation had made with the plaintiff could have no such effect. It has been repeatedly decided that ‘the laws of a state in this regard, enter directly into the contract, and as corporations have the power to dissolve themselves, or consent to a forfeiture of corporate franchise, all persons must be regarded as having contracted upon the hypothesis of the existence and possible exercise of this power.’ State v. New Orleans Gas Light [& Banking] Company, 2 Rob. 529; Hunter v. [Sun Mut.] Insurance Company, 26 La.Ann. 13; Palfrey v. Paulding, 7 La.Ann. 363; Trisconi v. Winship, 43 La.Ann. [45] 49, 9 So. 29; Mumma v. Potomac Company, 8 Pet. 281 [8 L.Ed. 945]; [Mobile & Ohio] Railroad Company v. State, 29 Ala. [573] 586; Taft v. [Town of] Pittsford, 28 Vt. 286; Given’s Ultra Vires, Secs. 138, 435. But it is equally true that such dissolution does not destroy the obligation of the company’s contracts; the equitable rights of creditors surviving the act of dissolution, and attaching to the assets and property of the corporation in the hands of its liquidators. Morawitz on Corporations, § 1035; Curran v. [State of] Arkansas, 15 How. 304, [14 L.Ed. 705].”

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Bluebook (online)
109 So. 2d 815, 1959 La. App. LEXIS 807, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-dissolution-of-mosquito-hawks-inc-lactapp-1959.