169 A.D.2d 865 | N.Y. App. Div. | 1991
Appeal from an order of the Supreme Court (Best, J.), entered September 29, 1989 in Schenectady County, which denied plaintiff’s motion for summary judgment.
Defendant, the president and sole shareholder of Le Vison
After limited discovery, plaintiff learned that Le Vison had been dissolved by proclamation of the Secretary of State on December 19, 1978 for nonpayment of franchise taxes (see, Tax Law § 203-a). Plaintiff thereupon brought this motion for summary judgment on the theory that since Le Vison was dissolved at the time he executed the stock purchase agreement, the bargain lacked consideration. Defendant did not dispute the dissolution, but attests that Le Vison was completely inactive from 1975 until 1979, that he was simply unaware that it had any outstanding tax obligation during this period, and that in 1979 when Le Vison resumed normal operations it purportedly met its tax obligations. Defendant submitted copies of Le Vison’s tax returns and related documents for the years of 1979 through 1982 in support of this latter contention that the corporation colorably complied with relevant tax statutes. In denying plaintiff summary judgment, Supreme Court observed that there was a question of fact as to whether a de facto corporation existed at the time of the agreement between the parties. We affirm the order, but for a different reason.
Generally, when a corporate term expires, the corporation continues its affairs and exercises powers as before, and no one but the State may question its corporate existence (13 NY Jur 2d, Business Relationships, § 78, at 345; see, Garzo v Maid of Mist Steamboat Co., 303 NY 516). When, however, the corporation has been dissolved for neglecting to pay requisite franchise taxes, absent subsequent reinstatement—achievable by payment of unpaid franchise taxes, penalties and interest charges (Tax Law § 203-a [7])—de facto corporateness is usually not recognized (Henn and Alexander, Laws of Corporations § 144, at 341 [3d ed]; see, Lorisa Capital Corp. v Gallo, 119 AD2d 99, 110).
In New York, a corporation, during its delinquency and
Plaintiff maintains that because Le Vison lacked corporate existence, the stock purchase agreement was devoid of consideration. On this record, we are unpersuaded, for the contract addendum further provided that plaintiff would have management authority and eventually become chief administrative officer of Le Vison. Whether this guaranteed future employment, coupled with the uncontroverted allegation in defendant’s affidavit and verified answer to the effect that shortly after executing the addendum and becoming the chief administrative officer plaintiff transferred Le Vison’s accounts and applied its receivables to a company formed by plaintiff, constitutes sufficient consideration for the agreement presents a material triable question of fact.
Order affirmed, without costs. Mahoney, P. J., Weiss, Mikoll, Yesawich, Jr., and Levine, JJ., concur.