*1
367
disregard. Ling,
malice or reckless
140
Colo,
1050;
at
P.2d at
Denver
MICCICHE, Petitioner,
Co.,
Public
Warehouse
Colo. at
v.
132;
Homes,
P. at
Fort Collins Motor
Inc.
David
Collins,
BILLINGS and the
Industrial
City
Colo.App.
Fort
Commission
the State of
(1972). Thus,
question
by summary judgment. DiLeo v. No. 84SC341. 119, 125-26, 318, 323; 200 Colo. 613 P.2d Supreme Colorado, Court 321; Lull, see 614 P.2d Vlasaty, also En Banc. App. 827; Buckley, Hawaii 57 N.Y.2d N.Y.S.2d Nov. N.E.2d 469. Dominguez, citing Hatfield
Barnes,
115 Colo.
asserts defendants’ that the affidavits stat
ing September that the 4 memorandum was product personal knowledge either other faculty reliance on members’
statements that were believed be true
and that signed each defendant memo good
randum in faith and had no doubt
to the truth of the documents insuffi
cient to take the issue from In jury. neither the nor affidavits
depositions provide any of the defendants
indication Dominguez of malice. asserts may actual malice if inferred investigation
defendant’s of the facts is
grossly inadequate. Kuhn v. Tribune-Re
publican Co., Publishing
(Colo.1981). Here, eighteen defendants
were faculty Dominguez’s members in de
partment ample and had opportunity ob Dominguez’s
serve nothing work. Where malice, qualified record indicates
privilege requires presumption good summary judgment
faith and proper.
Coopersmith, 171 Colo. P.2d
Thus, even if the issue of were to consent Dominguez’s favor,
be decided in the dis
trict granting judg court’s of summary
ment proper Dominguez because failed
to show actual malice.
Judgment affirmed. VOLLACK, JJ.,
KIRSHBAUM and do participate. *2 Maldonado, Gen.,
Porman, Mary Karen Sol. Denver, Gen., respondent Atty. Asst. Industrial Commission.
QUINN, Chief Justice. to review the deci granted certiorari Billings appeals sion of the court Micciche, (Colo.App.1984), 7-3-104, 3 concerning of section the effect Corporation of the Colorado corpo liability of a personal on the Code1 and liabili officer for debts rate during when the cor incurred ties suspended from trans poration had been result of acting in Colorado as a business re corporate report to file the its failure 7-10-102(1), quired by section appeals construed Supp.). The court impose joint and several 7-3-104 to section Micciche, a liability upon petitioner, and one of three sharehold president vice Welding and ers of Mountain States States), Sheetmetal, (Mountain a Colo Inc. injuries corporation, work-related rado Bill respondent, David by the sustained employment of his ings, in the course judg We reverse Mountain States. appeals and remand of the court of ment proceedings. for further the case I. employed by Moun-
David metal and sheet as a welder tain States 21, 1980, Billings August sus- On worker. knees when a fracture of both tained him in the sheet metal fell on stack of claim employment. He filed a course of his on October compensation for workmen’s 31, 1980. P.C., Westlund, H. Dennis & Gunther accident, secretary Billings’ Prior to Ehrlich, Ridge, for Gunther, Terry Wheat suspended Mountain in 1979 had of state petitioner. transacting as a Colo- from States Denver, petitioner May, A. James to file to its failure corporation due rado Billings. David required by section however, Gen., time, Woodard, B. 7-10-102. For a Atty. Charles Duane Gen., in the Richard H. States continued to transact business Howe, Deputy Atty. Chief in those sources. case is contained cable to this Code to the Colorado All citations Corpora- present of the version Colorado Re- of the 1973 be to volume 3 will the Colorado 3A of and, Code is found in volume appropriate, where vised Statutes appli- Revised Statutes law Supplement, since the seeking state without reinstatement of its as an officer of suspended corporation, status under personally corporation’s liable for the obli- (1979 Supp.).2 gation Billings. granted We thereafter petition Micciche’s for certiorari to consider 4, 1980, hearing On December officer whether the court of erred in hold- Department entered Labor *3 ing that section 7-3-104 authorized the im- compensation workmen’s in award favor of position personal of for liability corporate Billings for his medical expenses and dis- obligations corporate aon solely officer ability benefits and also assessed because an he was officer when the obli- penalties against Mountain States for its gation was incurred. We conclude that the timely deny failure liability admit or and court of in erred its construction of carry for its failure to compen- workmen’s 7-3-104, accordingly and we re- 10, February sation insurance. On verse judgment the and remand the case to reopen moved his claim and for proceedings further on the unresolved sought impose liability on Micciche personal issue of liability might whether and two other officer-shareholders of appropriately imposed on by Micciche States, alleging Mountain that Mountain “piercing corporate the veil.” States did exist corporation. not as a Bill- ings’ against claim the other two officers subsequently
was
settled.
II.
hearings,
hearing
After several
provisions
the
offi-
Pertinent
of the Colorado Cor
cer
poration
ruled that
the
status
applicable
of
Code and
pro
case law
Micciche,
Mountain States rendered
as
legal
vice vide the
context for our resolution of
president
corporation, personally
of the
the
lia-
issue
us.
the
before
Under
Colorado
Code,
ble for
compensation
Corporation
benefits to
which
originally
was
en
Billings. The Industrial Commission re-
acted
Corporation
as the Colorado
Act of
ruling
hearing officer,
1-149,
versed the
ch.
sec.
1958 Colo.Sess.
119-203,
concluding
suspension
failing
that a
corporate
to Laws
begins
existence
file
corporate report
extinguish
not
incorporation
did
when the certificate of
is is
7-2-104,
the corporate entity
and
offi-
sued.
Incorpo
C.R.S.
cers,
Micciche,
including
in
liable for
ration
of
legal
results
creation
a new
commission,
entity
The
identity separate
apart
debts.
how-
with an
and
ever,
hearing
remanded the case to the
from the shareholders. H. Henn & J. Alex
ander,
purpose
determining
(3d
officer for the
Corporations
of
Laws
144-46
of
1983).
entity
whether the
ed.
validly
corpora
should be dis-
Since a
formed
regarded
liability imposed on
independent legal identity,
Micciche
has an
equitable
“piercing
responsible
under the
of
legally
doctrine
itself is
activities,
veil.”
own
and adverse economic
consequences to the shareholders based on
Both
Billings appealed
Micciche and
obligations
generally
are
“limited to what
decision of the commission
the court of
corpora
has
shareholder
invested in
appeals.
court of appeals
The
held that
tion.” Id. at
(1973),
under section
Mountain
of
States’ transaction
business
Section
which is
Micciche,
while
originally
under
rendered
central to this
was
enacted
corporations
support
year,
In a memorandum brief submitted in
cessive
which were sus-
petition
three-year
Micciche’s
pended
preceding
review
Industri-
for the
Commission,
al
is made
statement
provisions
under the
7-10-109
[section]
January
on
States
dissolved
by operation of law
shall be dissolved
pursuant
to section
any
necessity
other
under the
action
(1979 Supp.). That
in
statute states
relevant
provisions
sections
section and
7-8-
part:
114 and 7-8-115.
Commencing
January
on
and con-
tinuing
January
on
1 of each suc-
thereafter
impose liability only
is to
Corporation Act of
section 2.04
part of the Colorado
as
corpo-
provides
persons
follows:
act as or on behalf of
who
“knowing”
ration
that no
ex-
persons
All
who assume
act as a
ists.
Id.3
authority to
corporation without
do so
severally liable
all
jointly and
shall be
Corporation
requires
Code
occurring
arising
and liabilities
debts
corporation to file biennial
thereof.
as a result
setting
secretary
of state
forth various
32, sec.
1958 Colo.Sess.Laws
matters,
including
Ch.
the character
statute is identical
section 139
202. This
is en-
which
Business
of the 1950 Model
corpo-
gaged, the names and addresses
impose
Act,
designed
person
which
officers,
a statement
rate directors and
per
in those
al
situations
nature
regarding the
and extent
autho-
*4
and improperly
hold themselves out
sons
corporate
7-10-
rized and issued
stock. §
corporation
having
made
act as a
101,
(1973
Supp.).
3
If
& 1979
a
C.R.S.
any good
corporate
faith effort to achieve
corporation
report,
file
the
fails to
the
sec-
state
A 1969 revision of
status under
law.
state,
retary
pursuant
section
to
7-10-
Act
section 139 as
the Model
renumbered
109(1),
(1979
give
Supp.), must
3 C.R.S.
Although
statutory
the
text
section
corporation
the
of its
written notice to
fail-
revision,
changed in the 1969
was not
file,
report is
ure to
and unless the
filed
that
were rewritten
indicate
comments
notice,
thirty days after such
within
underlying section 139 was to
the intention
corporation
suspended. Section
shall be
the issuance of a certificate of incor
make
7-10-109(2),
Supp.),
states:
poration
corporate
the sole determinant
corporation
Any domestic
sus-
existence, thereby eliminating the doctrine
pended
inoperative
be
and no
... shall
1
incorporation.
Model
of de facto
See
longer
business in
competent
transact
Corp.
Annot.
2.04 com
Business
Act
§
state;
this
but the shareholders of such
1985).
(3d ed.
Because
ment at 135-36
corporation may
spe-
or
hold their annual
however,
courts,
permit
limit
continued
meetings of
cial
shareholders
liability in situations where individuals
ed
directors,
corpora-
and such
election of
erroneously
reasonably
believed that
but
hold, encum-
may
hold or continue to
corporation,
authority
act as a
they had
ber, sell,
convey
estate and make
or
real
see, e.g.,
v. International Busi
Cranson
reports
required by
such
as are
laws
477,
Md.
Corp., 234
200
ness Machines
this state
of the United States and
and
(1964);
v. Sunshine
A.2d 33
Cantor
corporate officers. The
elect
411,
Inc.,
N.J.Super.
Greenery,
398
165
corporation
away
not take
of such
shall
(1979),
drafters
the Model
A.2d 571
any
against
corpora-
remedy given
such
146 in 1985 order to
Act amended section
tion,
shareholders,
its officers for
more
standard ex
reflect
flexible
any liability
prior
incurred
thereto.
pressed in case
Model Business
law.
may
suspended corporation
A
comment
130-
Corp. Act Annot.
2.04
at
§
fee
paying a
reinstated
reinstatement
provision,
The current
renumbered
dollars, filing
report
fifty
corporate
a
Liability for Prein-
2.04 and entitled
section
upon
filing for the
paying the fee due
such
Transactions,
per
corporation
reads: “All
year
is to be rein
in which
as or on behalf of a
purporting
sons
act
stated,
twenty-five
penalty of
paying a late
no
knowing
incorpo
corporation,
there
year’s
current
filed
Act,
dollars for a
jointly
sever
under
are
ration
paying
seventy
fee of
May
after
a
created
so
ally liable for all
while
liabilities
year
each
that a
re-
the 1985 version of
dollars for
acting.” The effect of
authority to act. §
faith
in their
7-3-
section 7-3-104 was
belief’
3. The current version of
(1986).
Although
(Ch.
the revision
sec.
3A C.R.S.
§
in 1985
amended
clarify
318)
require
apply to this
it does
does not
implicit meaning
Colo.Sess.Laws
that liabili-
original
good
version.
imposed only
ty
on those "without
can be
port was not filed.
legal entity.
ence as a
Zimbelman, 194
(1979 Supp.).
830;
The effect
section
Colo.
7-10-
572 P.2d
Dominion Oil Co.
corporation.
Lamb,
is not to
dissolve a
Rath
(1948);
119 Colo.
er, the
obvious effect
Highland Mary
statute is to Smith v.
Mining, Milling
corporation incompetent
a
Co.,
render
to trans & Power
82 Colo.
Prior to
under
law
status but was still
provided
legal
that officers and directors
entity.
of a
valid
Several factors
us
lead
*5
corporation that
to
to this
corporate
failed
file a
conclusion.
report
jointly
severally
and
liable for
legislative
Since
intent
guiding
is the
corporate
during
debts incurred
the delin principle
construction,
statutory
of
e.g.,
period.
102,
11,
quent
sec.
Ch.
1911 Colo.
Employees’
Dawson v. Public
Retirement
Sess.Laws, 257,
This
259.
statute was
702,
Association,
(Colo.1983),
“penal
termed
in
as to the liability
nature”
legislative
we look
initially
object
to
corporate
aof
officer and director but “re
sought
by
to be attained
section 7-3-104.
in
medial
character” as
creditors of the
object
quite
That
obvious from the stat-
corporation.
Adjustment
Credit Men’s
source, namely,
ute’s
section 139
of
214,
v. Vickery,
Co.
62 Colo.
This latter ultimately repealed section was corporate effort to achieve status com- when the Colorado Act was statutory plying requirements with the for 32, 148, in enacted 1958. Ch. sec. 1958 incorporation. Corp. 1 Model Business Colo.Sess.Laws Act comment Annot. 2.04 at 130-33. § law, corporation
Under case
reinstated The construction of section 7-3-104 which
adopt
after
we
is deemed
have had
herein is consistent with that
throughout
Furthermore,
period
purpose.
continuous existence
such construction
suspension,
support
result
finds
juris-
with the
that the cor-
case law from other
poration’s
authority
personal liability
loss
holding
to transact
dictions
that no
imposed
does
business
not affect
continued exist-
should be
officers for
7-10-111,
(1979 Supp.),
Section
3 C.R.S.
for
conviction and fine of not more than one thou-
example, imposes
penalty
twenty-five
a civil
sand dollars for
or refusal to answer
failure
upon
dollars
declared
each domestic
“not
truthfully interrogatories propounded by the
fails or
that
refuses to file
secretary
signs
who
of state or
statement
pay
report
prescribed
its
therefor
the fee
report
filed
or other document
with the secre-
by May
1.” Section
any
tary
known to be
of state which is
false in
(1979 Supp.), subjects each officer and director
respect.
material
a domestic
to a misdemeanor
reinstated,
poration
the result
obligations solely on the basis of
to be
with
comply
corporation’s
corporate powers
failure to
of a reinstated cor
statutory requirements relating to fran
regarded
having
continuous
poration are
taxes,
reports,
filing
fees.
chise
annual
throughout
period
suspen
existence
Beauty
E.g.,
Zimbelman,
United States
Standard
sion, e.g.,
194 Colo. at
(9th
Stores, Inc,
Finally, we believe it to con- Krendl, Piercing debts. Krendl & the Cor consequences contrary con- sider the Inquiry, 55 porate Focusing the the fact that the Colorado Veil: struction. Given When, however, the cor Den.L.J. 1 permits a cor- Code signs report, supported by a false but makes no the rector who 5. This conclusion is further penalty officer or director statutory penalty mention of a for an scheme. Section provides to file an annual Supp.), expressly a one of a which fails C.R.S. report. supra. penalty di- See note dollar for an officer or thousand porate improperly premium. structure is used so that nonpayment of insurance Moun- recognition corpora- continued of the the August tain States was uninsured on legal separate entity as a would be Billings when suffered serious and unfair, corporate entity the may be dis- permanent injuries working while regarded corporate principals held lia- Mountain States. Mountain States has not Id. at 2. corporation’s for the ble actions. reports, paid fees, filed or taken any. steps Thus, if it is shown that used shareholders to cause the good be in corporate entity as a the mere instrumen- standing. view, In my the record establish- tality for the transaction of own af- their es that who respon- individuals separate regard fairs without and inde- operation sible for the of Mountain States existence, pendent corporate pur- or were aware that the had been pose defeating evading important leg- or suspended, that its compensa- policy, islative in order perpetrate lapsed, tion insurance had and that another, wrong equity fraud or on will company was at insolvent time that permit disregard- form to be David Section hired. ed and will hold the personal- shareholders imposes liability for individ- ly responsible corporation’s improp- uals who assume to act as a Fink v. Montgomery See Ele- er actions. do authority so. Failure to Co., 342, 350, vator Colo. 421 P.2d required reports file results Polichio, (1966); Gutheil v. Colo. in the of authorization to do 426, 431, (1939); La Fond 86 P.2d Colorado, privilege that has Basham, (Colo.App. been never restored States. 1984); Krendl, supra Krendl & 28-43. at Since Mountain States was never reinstat- fully developed In absence of factual ed, continuing corporate it cannot claim fact, findings record adequate how- vitality relating suspen- back to initial ever, we cannot determine whether Rocky sion. See Mountain Sales & Ser- equitable should applied doctrine here. vice, Inc., RV, Inc. Havana hearing We leave it to the officer to resolve (Colo.App.1981). this issue on remand case. majority The has ordered this mat- judgment is reversed and the case hearing ter should be for a remanded remanded to of appeals the court with di- determine whether veil hearing rections to return case to the pierced should be and individual proceedings officer for further consistent view, imposed my In Joe Micciche. expressed. with the views herein analyzed court correctly the indi- issue, statutory liability vidual but did not ERICKSON, J., specially concurs. *7 majority’s interpre- have the benefit of the Justice, Phillips ERICKSON, of & specially concur- tation section 7-3-104. See Engineering v. ring: Stong Co. Howard B. Associates, Inc., James Welding Mountain Met- States and Sheet Hare, (Okla.App.1974); In re F.Supp. 205 al, (Mountain States) Inc. was Rommel, (D.Md.1962), Moore by the Secretary State as a Colorado Ark. S.W.2d August 22, 1979, on failure support imposition individual corporate reports. De- and file pay fees in this case. spite suspension, con- view, operations doing my hearing by tinued its and was busi- In ordered ness as majority by interpretation on both the is mandated our date David L. employed as a welder 7-3-104. trial court and the section The sheet primarily metal worker and on the date court of con- both injured. that he was The com- with whether the cerned the issue of fail- pensation policy comply requirements insurance ure to with the July on States cancelled & entity corporate business Supp.) caused the The issue on partnership.
to revert to properly is focused whether
remand pierced and individ-
corporate veil should be The on Micciche. liability imposed
ual liability provided by incorporation
limited absolute, liability may be and individual that: after a determination
imposed being used corporate fiction is
[T]he public corporation itself to defeat
convenience, third justify wrong either to dealing or
parties stockholders,
internally between reprehensible
perpetrate fraud or other
conduct. Fletcher, Corporations Cyclopedia ed.). (1983 rev. 41.30 focuses majority opinion properly and, remand to be determined on
the issues mind, proper balance to my provides issues in this case.
determine factual Krendl, Corpo Piercing the Krendl &
See Inquiry, 55 Den Focusing the
rate Veil:
ver L.J. 1 in ma-
Accordingly, specially I concur
jority opinion. VanMeveren, Atty., Lor- A. Dist.
Stuart Collins, Schall, Atty., Fort en A. Asst. Dist. plaintiff-appellant. defendant-appellee. appearance for No Colorado, The PEOPLE of State ERICKSON, Justice. Plaintiff-Appellant, prosecution asserts appeal In when, at a court erred the district BRISBIN, Defendant-Appellee. Jack charges hearing, it preliminary dismissed (section 18-5- impersonation of criminal No. 85SA133. (1986)), driving after 8B C.R.S. Colorado, Supreme Court (section prohibited judgment En Banc. (1984)), of a failure because *8 police that the prosecution to establish Nov. stop the defendant’s probable had cause to agree arrest the defendant. car or to dismissal of the prosecution that with the hearing stage was preliminary case at the reverse inappropriate and we therefore to reinstate with directions remand the defendant. charges against