Service Lumber Co. v. Sumpter Valley Ry. Co.

149 P. 531, 81 Or. 32, 1915 Ore. LEXIS 372

• Court: Oregon Supreme Court
• Decided: June 15, 1915
• Status: Published

Opinions

Me. Justice Benson

delivered the opinion of the court.

1. In the appellant’s abstract of record we find some 17 assignments of error, but we shall consider one question only, and that is as to whether or not at the time of the trial the plaintiff’s right of action.' had abated. We conclude that it had, and it remains only to give our reasons for such conclusion. The plaintiff corporation on May 6, 1907, took such steps as are prescribed by statute for a voluntary dissolution. This was done, doubtless, in order to avoid the burdens of annual reports and the payment of annual license fees. Section 6699, L. 0. L., is as follows:

“All corporations that expire by limitation specified in their articles of incorporation, or are dissolved by virtue of the provisions of Section 6701, or are annulled by forfeiture or other cause by the judgment of a court, continue to exist as bodies corporate for a period of five years thereafter, if necessary for the purpose of prosecuting or defending actions, suits or proceedings by or against them, settling their business, disposing of their property, and dividing their capital stock, but not for the purpose of continuing their corporate business.”

As to the effect of this statute in a case like the one at bar it is said in the case of Dundee Mortgage & Trust Investment Co. v. Hughes (C. C.), 77 Fed. 856:

“In some of the states where the corporate existence is so extended by statute, express authority is given to prosecute to a final judgment all actions begun by the corporation within the limited period: Franklin Bank v. Cooper, 36 Me. 179; Greenbrier Lumber Co. v. Ward, 30 W. Va. 43 (3 S. E. 227). Under such a law was decided the case of Bewick v. Alpena Harbor Imp. Co., 39 Mich. 700, which is cited by counsel for the plaintiff. In that case the court held that the corporation might prosecute to a close any action commenced within the three-year period of limitation fixed by the statute, but in so holding gave effect to another provision of the law upon the same subject, which provided that no such suit, once commenced, should become abated at any time until brought to a close. There is no such or similar provision in the Oregon law. The statute of this state gives a bare extension of life for a fixed period after the dissolution of the corporation. Without the statute, as we have seen, by the common law, all corporations were defunct from the moment of their dissolution. The statute extends their existence for a further period for a stated purpose. At the expiration of that period it is the logic of the common-law rule that the corporation is as absolutely defunct as it would have been in the first instance had not its life been prolonged by the intervention of the statute. The Supreme Court of Massachusetts has held that a judgment recovered against a corporation after the expiration of a similar period of limitation is absolutely void: Thornton v. Marginal Freight Ry. Co., 123 Mass. 32.”

The doctrine here expressed appears to be in accord with the great weight of authority: 10 Cyc. 1314; 5 Thompson on Corporations, §§ 6550, 6555; MacRae v. Kansas City Piano Co., 69 Kan. 457 (77 Pac. 94); Buck Stove etc. Co. v. Vickers, 80 Kan. 29 (101 Pac. 668); May v. North Carolina St. Bank, 2 Rob. (Va.) 60 (40 Am. Dec. 726); 1C.J.134; 7 R. C. L., §§ 750, 751. This doctrine, it is true, may work hardship in the individual case, but it must not be forgotten that in the case at bar the dissolution of the corporation was voluntary, and no doubt the stockholders weighed the resulting advantages as against the consequent disabilities, so they cannot now complain.

2. It is contended with great earnestness and ability by counsel for plaintiff that the same question was before this court in the former appeal herein (67 Or. 63 (135 Pac. 539), and that the fact that the cause was remanded for a new trial after the lapse of the five-year period is conclusive upon the question. However, .we cannot agree with counsel in this. The judgment first appealed from was rendered within the five-year period, and the only assignment of error relating thereto that was then presented was in the following, words:

“The court erred in refusing to give the instruction requested by the defendant to the effect that as the plaintiff had been disincorporated prior to the commencement of the action, there was no evidence justifying the plaintiff in maintaining the action and that plaintiff could not recover.”

On petition for rehearing the opinion and judgment on former appeal (67 Or. 63 (135 Pac. 539), set aside, substitution of parties allowed, and cause is ordered to stand for rehearing on original appeal.

Rehearing Allowed. Mr. Samuel White, Mr. Charles W. Fulton and Mr. Robert Service, for the petition. Mr. John L. Rand and Messrs. Snow & McCamant, contra.

In Banc.

This assignment simply calls attention'to the fact that the action was commenced after the dissolution, and that was the only matter germane to the present discussion which was then submitted or considered. At the time the first judgment was rendered the lapse of the five-year period was not an issue, and could not be, for no such lapse had then occurred. It follows that the action must be dismissed.

Action Dismissed.

Mb. Justice Bean dissents.