Klamath Lumber Co. v. Bamber

142 P. 359 | Or. | 1915

Opinion on the Merits

Affirmed January 19, 1915.

On the Merits.

(145 Pac. 650.)

In Banc. Statement by Mr. Justice Burnett.

The plaintiff brought an action in the usual form against the defendants to recover the amount of three promissory notes executed and delivered by them to the plaintiff. On August 18, 1913, the defendants filed a plea in abatement in which, after alleging their own' residence in Klamath County for three years, and that the plaintiff has been doing business in that county since June 15, 1910, they state:

“That the plaintiff has not filed ‘the annual reports as required by law for the year ending June 30, 1912, and 1913, nor has it paid the annual license fees for the year ending June 30, 1913, and 1914, as required by an act providing for the licensing of domestic corporations and foreign corporations, joint-stock companies and associations, to provide for the recording and filing of certain information concerning corporations, joint-stock companies, and associations, etc., approved February 16, 1903,’ in violation of and in derogation of the express requireménts and commands of said statute, and is a delinquent corporation, and has no rights or standing in any court of justice in this state under and by virtue of said statute to maintain any suit or action in any court of said state, and is in default of the payment as aforesaid of its license fees, and is in default of making its annual reports as required by law.”

On the same day the defendants filed an answer to the merits in which they allege three separate defenses, one a denial of every allegation of the complaint, except signing the notes, another lack of consideration, and, third, a counterclaim. The plaintiff filed a reply on September 3d, denying the new matter in'the answer, and on the following day replied to the plea in abatement, traversing it in some particulars, and made the following averment:

“Admits the allegation of paragraph 3 as to filing its reports and paying its animal license fees, but in avoidance says this is not necessary, as the corporation has dissolved and only brings this action to wind up its business, as is allowed by statute.”

Submitted on brief under the proviso of Supreme Court Rule 18: 56 Or. 622 (117 Pac. xi). Aeeirmed.

For appellant there was a brief over the name of Mr. W. M. Duncan.

For respondent there was a brief over the name of Mr. W. H. A. Renner.

Mr. Justice Burnett

delivered the opinion of the court.

2. The plaintiff would excuse itself from payment of the annual license fees mentioned in the plea by reliance upon Section 6699, L. O. L., reading thus :

“All corporations that expire by limitation specified in their articles of incorporation, or are dissolved by virtue of th¿ 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.”

Section 6701, L. O. L., to which allusion is there made, was amended by the act of February 26, 1913 (Laws 1913, c. 238). As thus amended, the latter section provides for dissolution of a corporation by the action of a stockholders’ meeting called for such purpose. Certain requirements are there prescribed, relating to the form of resolution to be adopted and the fee to be paid, and the following provision is then made in the act:

“The filing by the secretary of a corporation of proof of the passage of a resolution of dissolution, as hereinbefore provided, shall not be sufficient to absolve such corporation from the payment of any annual license fee required by law, unless the directors of such corporation shall, by a majority vote, have also adopted a resolution to dissolve such corporation, and proof thereof shall have been furnished to the Secretary of State by the written statement of the secretary of such corporation, setting forth a true copy of such resolution and showing the vote by which the same was adopted, and that such corporation is proceeding to dissolve, which statement shall be signed and sworn to by such secretary. ’ ’

The confession and avoidance in the reply to the plea does not disclose that the steps required by Section 6701 were taken, and consequently amount to nothing more than a conclusion of law. The facts concerning the requirements of the statute should have been alleged, if the plaintiff was proceeding to dissolve, and would thereby escape the payment of fees.

3. Referring again to Section 6699, L. O. L., we observe that the plaintiff does not appear to claim that its corporate existence expired by limitation. Neither is it disclosed that it was annulled by forfeiture or other cause by the judgment of any other court. It was contended that, by the language of that section, the term “forfeiture” was not necessarily controlled or qualified by the words “by the judgment of a court.” In our opinion, however, the converse is true, and the words “forfeiture or other cause” are to be included in the same category, and either or both must be the result of a judgment of a court. The conclusion on this point is that the plaintiff can claim nothing under the provision of that section.

4. Another contention of the plaintiff is based on Sections 6716-6719, inclusive. It is said in Section 6716:

“If any corporation organized or formed under, by, or pursuant to the laws of this state, whether now existing or hereafter created * * shall, for two consecutive years, neglect or refuse to furnish to the Secretary of State any statement required to be furnished under any law of this state, or to pay to the State Treasurer any license fee required to be paid under any law of this state, it shall be dissolved in the manner hereafter provided, and all powers conferred by law upon such corporation are hereby, declared inoperative and void, unless the Governor shall, for good cause shown to him, give further time for the filing of any such statement and the payment of any such license fee. # * ”

This is part of the act of 1905 found in Chapter 172 of the laws of that year. Other sections of the same statute require that the Secretary of State shall report to the Governor a list of all delinquent corporations on or before the first Monday in January of each year, and that the Governor shall forthwith issue his proclamation declaring such corporations dissolved and their articles of incorporation revoked and repealed. Publication of the proclamation and other details are required and a penalty provided for any one who shall exercise the corporate powers involved after the issuance of the proclamation. The construction of this act urged by the plaintiff is that the failure to pay the fees required ipso facto works a dissolution of the corporation, with the result that, for a period of five years thereafter named in Section 6699, it may prosecute or defend actions or suits in the settlement of its business, etc. The statute of 1905 is penal in its nature, and provides for a forfeiture of corporate powers, and must therefore be strictly construed. Eeading all the terms of the act together, it is plain that the filing of the list by the Secretary of State and the proclamation by the Governor are integral parts of the process of dissolution which we cannot disregard. From this point of view, therefore, we are still compelled to say that the plaintiff has not shown such a state of affairs as warrants us in saying that it was dissolved to the extent of exempting it from the payment of fees.

5. In our judgment the situation is controlled by Section 6708, L. O. L., which declares:

“No domestic corporation, and no foreign corporation, joint-stock company, or association, which shall have failed to pay the last annual license fee, .or anj other tax or fee which shall have become due and paya ■ ble against it, as provided in this act or any law of this state, shall be permitted to maintain any suit, action, or proceeding in any court of justice within this state, while such delinquency shall continue. * * ”

In the analogous case of Hirschfeld v. McCullagh, 64 Or. 502 (127 Pac. 541), we held that under such circumstances the courts would be closed against the offending corporation while its delinquency continued.

6. It is further urged that the defendants waived the plea in abatement by answering to the merits. Since Hopwood v. Patterson, 2 Or. 49, it has been the rule in this state that a plea in abatement cannot be joined with a plea in bar and must be disposed of before an answer to the merits can be considered: Le Grande v. Portland Public Market, 58 Or. 126 (113 Pac. 25); Rafferty v. Davis, 54 Or. 77 (102 Pac. 305); Harrison v. Birrell, 58 Or. 410 (115 Pac. 141).

7. These precedents would control the case against the contention of the defendants, if they had in fact joined the plea in abatement and their defense to the merits in the same pleading. The record, however, does not disclose such a condition. Although filed on the same day, the plea in abatement was in a separate statement of the defendants ’ reasons for defeating the present action while the defenses on the merits were embodied in an entirely separate document. Under such circumstances, the only requisite is that the plea in abatement shall be first considered and. determined, and that was the procedure in this instance. In the present case this conclusion is strengthened by reference to Section 6709, to this effect that:

“A plea that any domestic corporation or foreign corporation, joint-stock company, or association has not paid any tax or fee required by any law of this state, and which is then due and payable, may be interposed at any time before trial upon the merits in any action, suit, or proceeding, and, if issues be joined upon such plea, the same shall be first tried. ’ ’

This section plainly contemplates that the mere filing of an answer to the merits will not of itself deprive the defendant of the plea in abatement, based upon the delinquency of the corporation, but that, whenever such failure of duty appears at any time before the trial of the action, the defendant may interpose the plea.

It follows that the judgment must be affirmed.

Affirmed.

---

Lead Opinion

Opinion by

Mr. Chief Justice McBride.

1. The effect of the order abating the action and awarding costs and disbursements to defendants was to dismiss and terminate the case. Plaintiff could not after such a judgment proceed in the same action by paying up its delinquent fees and making its reports. As used in reference to actions at law, the word “abate” means that the action is utterly dead and cannot be revived except by commencing anew: Bouvier’s Law Diet., tit. “Abatement”; "Words & Phrases, same title.

Plaintiff’s action was terminated by the judgment, and it is eo instante liable to a levy of execution for costs.

The motion is overruled.

Motion to Dismiss Denied.