CHAPTER XXII.

DISSOLUTION,

AND HEREIN OF FORFEITURE AND APPEAL.

573. Introductory.

574. Sundry circumstances which do not per se work a dissolutionResignation of officers-Failure to elect successors, et cetera.

§ 575. The same subject, continued-Non-user-Death of membersAcquisition of all the stock by a single shareholder.

§ 578.

The same subject, continued-Loss of the whole corporate property.

§ 577. Dissolution by expiration of charter.

§ 578. Dissolution by surrender of charter.

§ 579.

Of the authority and duty of directors respecting surrender.

§ 580. Acceptance of surrender by the State.

§ 581. Dissolution by consolidation.

§ 582.

Dissolution by bill in equity brought by creditors, or shareholders, or directors.

§ 583. Grounds upon which creditors and shareholders may obtain a

§ 588.

The same subject, continued-Ultra vires acts-"Trust " associations.

§ 589. The same subject, continued-Acts of the shareholders imputed to

the corporation.

§ 590. Proceedings to forfeit to be brought in the name of the State. Of the writs of scire facias and quo warranto.

§ 591.

§ 592. Forfeiture not to be collaterally pleaded.

§ 593. Waiver-The State may waive its right to enforce a forfeitureSubsequent recognition of corporate existence.

§ 594. Of the jurisdiction of courts of law and equity-The legislature prohibited from judicial acts.

$595. Dissolution by repeal of charter.

596. The same subject, continued.

§ 597. Effect of dissolution upon debts, rights of contract, and pending

litigation.

§ 598.

The same subject, continued-Of the rights of creditors.

Of the distribution of assets upon dissolution.

§ 599.

§ 600. The same subject, continued-Of the rights of shareholders. Of a certain qualified existence after dissolution.

§ 601.

§ 573. Introductory.-The dissolution of a corporation, the termination of its existence and political death, may result from the expiration of the term of years named in the statute, charter, or articles of association from which it derives its being, or it may be accomplished by a resolution of a majority of its shareholders surrendering their charter to the State or entering into an agreement of consolidation with another corporation. Dissolution may be enforced by a bill in equity brought by the creditors, a minority of shareholders, or the directors, when the corporate enterprise is in a failing condition. It may result from a decree of forfeiture in an action instituted by the State against the corporation upon a violation of the compact between itself and the State; or it may result from an act of legislature repealing the corporate charter, when that right has been reserved by the State. There are other circumstances which litigants have plead as in effect working the dissolution of corporations; but while some of them have been admitted by the courts as constituting grounds upon which proceedings for dissolution, or even for forfeiture, might be instituted by individuals or by the State, it has been denied that they operate per se to dissolve the corporate existence.1 In the united American States, many questions pertaining

to the dissolution of corporations in the modes indicated above are regulated by statute.2

1 Vide infra, §§ 574-576.

2 N. Y. 2 Rev. Stat. 461, 484, §§ 39-41; N. Y. 1 Rev. Stat. 600 (7th ed. 1530); N. Y. Laws of 1849, ch. 226: N. Y. Code Civ. Proc. §§ 1785, 1786, 2419, et seq.; People v. Central City Bank, 53 Barb. 412; In re Pyrolusite Manganese Co. 29 Hun, 429; In re Dubois, 15 How. Pr. 7; S. C. sub nom. In re Westchester Iron Co. 6 Abb. Pr. 386, notes; Fisher v. World etc. Ins. Co. 51 Abb. Pr. N. S. 363; Mooney v. British etc. Ins. Co. 9 Abb. Pr. N. 8. 103; AlaCode, § 1775 et seq.; Mass. Gen. Stat. ch. 68, §§ 35-39; In re Franklin Telegraph Co. 119 Mass. 447; Pa. Brightley's Purdon's Digest, 197; Ohio, Act of May 1, 1852; Ill. Rev. Stat. 577, § 25; Iowa Code, § 1074.

2

3

574. Sundry circumstances which do not per se work a dissolution—Resignation of officers— Failure to elect successors-Et cetera.-The failure of trustees or directors of a corporation to hold meetings does not work a dissolution;1 nor is its existence terminated by the resignation of all its officers. Neither is a company dissolved by the failure of the stockholders to elect officers at the times prescribed by charter or statute; nor by the abandonment of their trust by those in office before the election of their successors.* In such a case the corporate rights and franchises are merely dormant until other officers are elected.5 Where, however, the stockholders refuse to elect successors, a receiver may be appointed, and a windingup decreed. A company is not dissolved by the failure of its shareholders to hold annual meetings during a period of ten years, nor by the stock. holders and directors considering and treating the corporation as defunct, nor by an actual vote of the shareholders to dissolve it, for the purpose of escaping liability.10

9

6

1 Philips v. Wickham, 1 Paige, 590; Slee v. Bloom, 5 Johns. Ch. 366; S. C. 19 Johns. 456; 10 Am. Dec. 273; People v. Runkle, 9 Johns. 147; St. Louis etc. Loan Assoc. v. Augustin, 2 Md. App. 123; Knowlton v. Ackley, 8 Cush. 93; State v. Vincennes University, 5 Ind. 80, 81; President &

Trustees etc. v. Thompson, 20 Пl. 197; People v. Wren, 5 III. 269. Cf. Smith v. Smith, 3 Desaus. 557; Ward v. Sea Ins. Co. 7 Paige, 294; People ▼. Twaddell, 18 Hun, 427.

2 Philips v. Wickham, 1 Paige, 590, 596; Boston etc. Manufactory v. Langdon, 24 Pick. 49; 35 Am. Dec. 292; Russell v. McLellan, 14 Pick. 63; Evarts v. Killingworth Manuf. Co. 20 Conn. 447; Hoboken etc. Assoc. v. Martin, 13 N. J. Eq. 427; Muscatine Turn Verein v. Funck, 18 Iowa, 469, 472.

3 Allen v. New Jersey Southern R. R. Co. 49 How. Pr. 14; People v. Twaddell, 18 Hun, 427; Reilley v. Oglebay, 25 W. Va. 36, 43; Nashville Bank v. Petway, 3 Humph. 522; Harris v. Mississippi Valley etc. R. R. Co. 51 Miss. 602; Boston Glass Manuf. Co. v. Langdon, 24 Pick. 49; 35 Am. Dec. 292; Russell v. McLellan, 14 Pick. 63; Evarts v. Killingworth Manuf. Co. 20 Conn. 447; Hoboken Building etc. Assoc. v. Martin, 13 N. J. Eq. 427; Commonwealth v. Cullen, 13 Penn. St. 133; 53 Am. Dec. 450; Rose v. Turnpike Co. 3 Watts, 46; Lehigh Bridge Co. v. Lehigh Coal Co. 4 Rawle, 8, 23; 26 Am. Dec. 111; Cahill v. Kalamazoo etc. Ins. Co. 2 Doug. (Mich.), 122, 140; 43 Am. Dec. 457; State v. Vincennes University, 5 Ind. 80.

4 People v. Twaddell, 18 Hun, 427; Reilly v. Oglebay, 25 W. Va. 36, 43. Cf. Smith v. Silver Valley Mining Co. 64 Md. 85; 54 Am. Rep. 760; S. C. 10 Am. & Eng. Corp. Cas.

5 Philips v. Wickham, 1 Paige, 590. Cf. Lea v. American etc. Canal Co. 3 Abb. Pr. N. S. 1.

6 Lawrence v. Greenwich etc. Ins. Co. 1 Paige, 587.

7 Brown v. Union Ins. Co. 3 La. An. 177, 182; Curry v. Woodward, 53 Ala. 375; Knowlton v. Ackley, 8 Cush. 93. See Bruce v. Platt, 80 N. Y. 379. 8 State v. Barron, 58 N. H. 370. See State v. Vincennes University, 5 Ind. 80.

9 Baptist Mecting House v. Webb, 66 Me. 398; Rollins v. Clay, 33 Me. 132.

10 Portland etc. Co. v. Portland, 12 Mon. B. 77. Cf. Polar Star Lodge v. Polar Star Lodge, 16 La. An. 53.

§ 575. The same subject, continued - Nonuser-Death of members - Acquisition of all the stock by a single shareholder.—Ordinarily there is no presumption of surrender from nonuser of its franchises by a private corporation.1 Neither a voluntary cessation of all corporate business, nor an injunction restraining the corporation from exercising its powers, will have the effect of extinguishing its corporate existence. The death of all the members of a corporation having capital stock does not work its dissolution.* If every individual member should die at the same moment, the stock would be distributed according

3

115

to the statute of distributions, or according to the wills of the individual members. "The legal representatives of the deceased members would have authority, by law, to manage the corporation, and no dissolution would in such case take place.' A corporation is not dissolved by the fact that one person has acquired all of its stock. The person holding all the stock may still carry on the business under the corporate name, and may enjoy all the rights vested in the corporation by its charter. If he continues to use the corporate name, the fact of his being the sole owner of the property does not abate actions in law or equity brought against the company."

1 Slee v. Bloom, 5 Johns. Ch. 366; S. C. 19 Johns. 456; 10 Am. Dec. 273; Russell v. McLellan, 14 Pick. 63; Brandon Iron Co. v. Gleason, 24 Vt. 228; Enfield Toll Bridge Co. v. Connecticut River Co. 7 Conn. 28, 47. Cf. Pennsylvania etc. Canal Co. v. Commissioners of Portage Co. 27 Ohio St. 22.

2 Nimmons v. Dappan, 2 Sweeny, 652; Mickles v. Rochester City Bank, 11 Paige, 118; 42 Am. Dec. 103; Troy etc. R. R. Co. v. Kerr, 17 Barb. 581; Attorney-General v. Bank of Niagara, Hopk. Ch. 354; Rorke v. Thomas, 56 N. Y. 559, 563; Hollingshead v. Woodward, 35 Hun, 410; Allen v. New Jersey Southern R. R. Co. 49 How. Pr. 14; Kansas City Hotel Co. v. Sauer, 65 Mo. 279, 288; Chouteau Ins. Co. v. Floyd, 74 Mo. 286, 290; State National Bank v. Robidoux, 57 Mo. 446; Moseby v. Burrow, 52 Texas, 396; State v. Barron, 58 N. H. 370; Harris v. Nesbit, 24 Ala. 398; Baptist Meeting House v. Webb, 66 Me. 398; Rollins v. Clay, 33 Me. 132. Cf. In re Jackson Marine Ins. Co. 4 Sand. Ch. 559; Conro v. Gray, 4 How. Pr. 166. See, also, N. Y. Rev. Stat. 463, 464, §§ 38, 56.

3 Kincaid v. Dwinelle, 59 N. Y. 548. See Sanborn v. Lefferts, 58 N. Y. 179.

4 Boston etc. Manuf. Co. v. Langdon, 24 Pick. 49, 52; 35 Am. Dec. 292; Russell v. McLellan, 14 Pick. 63, 69. Cf. Chesapeake etc. Canal Co. v. Baltimore etc. R. R. Co. 4 Gill & J. 1, 121.

5 Russell v. McLellan, 14 Pick. 63, 69.

6 Newton Manuf. Co. v. White, 42 Ga. 148; Swift v. Smith, 65 Md. 428; S. C. 57 Am. Rep. 336; England v. Dearborn, 141 Mass. 590; Hopkins v. Roseclare etc. Co. 72 Ill. 373; Button v. Hoffman, 61 Wis. 20; 50 Am. Rep. 131; Sharp v. Dawes, 46 Law J. Q. B. 104.

7 Newton Manuf. Co. v. White, 42 Ga. 159.

§ 576. The same subject, continued Loss of the whole corporate property.-The possession of property not being essential to corporate existence,