Mortgage-Bond Co. v. Trust Co. of Georgia

The petition for scire facias to revive a dormant judgment was properly brought in the name of the plaintiff in the judgment, a foreign corporation, for the use of another as the beneficial and equitable owner of the judgment.

(a) The dissolution of the plaintiff's charter after the filing of the petition and while it was pending did not cause the proceeding to abate.

(b) The demurrers to the petition on the grounds that it showed no cause of action, and showed that the plaintiff had no legal existence were improperly sustained.

DECIDED APRIL 25, 1947. REHEARING DENIED MAY 29, 1947. On May 22, 1945, Mortgage-Bond Company of New York filed a petition for scire facias to revive a judgment obtained by it on January 7, 1936 in Fulton Superior Court against W. H. Wynne. States Realty Company Inc., and Wynndam Court Apartment Company Inc. It was alleged that said judgment was more than seven years old and was dormant, and that no part of the debt for which said judgment was rendered had been paid except the sum of $1000 realized from the sale of certain property levied on and sold in February, 1936, under the fi. fa. issued on said judgment, which amount had been credited thereon. It was alleged that W. H. Wynne had died testate after the rendition of the judgment and the issuance of the fi. fa., and under his will which had been probated the Trust Company of Georgia was named as executor and trustee and had qualified as such more than 12 months before the filing of the petition. The petition prayed that scire facias issue and be served upon the Trust Company of Georgia, as executor and trustee of the said W. H. Wynne, and that it be required to show cause why it should not be made a party defendant in the case, and that service likewise be made upon the other defendants, and that all of the defendants be required to show cause why said judgment should not be revived.

In amendments to the petition for scire facias it was alleged that the Mortgage-Bond Company, the original plaintiff, sold, conveyed, transferred, assigned and delivered on October 21, 1935, to the Mortbon Corporation of New York all of its assets and property (except its corporate franchise and name), with all "privileges and appurtenances whatsoever thereunto belonging," subject to certain conditions not material to this case; and that under said assignment the notes evidencing the indebtedness on which said original judgment was issued became the property of the Mortbon Corporation and after the date of said assignment the latter corporation had exclusive custody and control over said notes, and upon the rendition of said judgment said corporation assumed exclusive custody and control over said judgment and the execution issued thereon. It was also alleged in the amendments that notwithstanding said transfer and assignment, which was made after the filing of the original petition in the suit on the notes and before the judgment was obtained therein, the Mortbon Corporation allowed and permitted the case to proceed in the name of the assignor, and allowed and permitted the judgment to be taken in the name of said assignor, but that said corporation was the owner and holder for a valuable consideration of the notes on which the judgment was obtained and the indebtedness represented by them, after October 21, 1935 (the date of the assignment), and was the beneficial and equitable owner and holder of the judgment and the execution issued thereon at all times after the judgment was rendered and the execution was issued.

It appears from the petition that it was in fact filed by the Mortbon Corporation, although it was filed in the name of the Mortgage-Bond Company; and that on June 30, 1945, after the filing of the petition, the name of the Mortbon Corporation was changed to Telfair Stockton Company Inc., and the petition prayed that the action proceed in the name of the plaintiff for the use of Telfair Stockton Company Inc. It also appears that on June 4, 1945, while the petition for scire facias to revive said dormant judgment was pending, the charter of the plaintiff, the Mortgage-Bond Company, was dissolved under a voluntary proceeding in the Supreme Court of the State of New York. It was then alleged that "notwithstanding the dissolution of said charter, the present owner and holder of the beneficial and equitable interest in said dormant judgment, to wit: Telfair Stockton Company Inc., is under the laws of the State of Georgia and equitable principles, entitled to have said case proceed in the name of the Mortgage-Bond Company of New York, and is, under said laws and equitable principles, entitled to have said dormant judgment revived and to have the same enforced."

Each of the defendants filed demurrers to the petition as amended as follows: (1) Said petition does not as a whole, nor do any of its parts, show a cause of action against this defendant for the revival of the judgment sought to be revived in said petition. (2) Said petition as amended shows on its face that the party plaintiff has no legal existence. These demurrers were sustained and error is assigned on that judgment. The plaintiff says the question to be decided by this court is whether the name of the Mortgage-Bond Company of New York, a foreign corporation whose charter was dissolved after the filing of the petition for scire facias, can be used as the plaintiff in such petition brought for the use of Telfair Stockton Company Inc., the beneficial and equitable owner of the judgment. The defendants say the controlling question is whether the life of a foreign corporation, which has been dissolved by the state which created it, is continued as a legal entity so as to be the party plaintiff in a scire facias proceeding by section 36 of the act approved January 28, 1938, now found in the Code (Ann. Supp.), § 22-1874, as follows: "All corporations, whether they expire by their own limitations or are otherwise dissolved, shall nevertheless be continued for the term of three years and until final disposition of all suits begun within that time from such expiration or dissolution bodies corporate for the purpose of prosecuting and defending suits by or against them and enabling them gradually to settle and close their business, to dispose of and convey their property and to divide their assets, but not for the purpose of continuing the business for which the said corporation shall have been established." We think that the questions suggested by the parties are substantially the same.

There are statutes other than the one referred to in the preceding paragraph which must be considered in passing on the controlling question in this case. Before the passage of the corporation act of 1938, codified in the Code (Ann. Supp.), Chap. 22-18, the dissolution of a corporation either as a result of the expiration of its charter, or for any other cause, did not bring about its total extinction or operate to extinguish any demand or cause of action against it in favor of any person, nor did such dissolution work the abatement of any suit pending against such corporation at the time of such dissolution. Code, § 22-1210. Under the corporation act of 1938, which superseded this section of the Code (22-1210), there is a more comprehensive provision which includes in our opinion foreign corporations as well as others, which is as follows: "If any corporation created under any law of this or any other State becomes dissolved by the expiration of its charter or otherwise before final judgment obtained in any action pending in any court of this State against such corporation, the said action shall not abate by reason thereof, but, the dissolution of such corporation being suggested of record and the names of the trustees or receivers of such corporation being entered upon the record and notice thereof served upon said trustees or receivers, or, if such service be impracticable, upon the counsel of record in such case, the said action shall proceed to final judgment against the said trustees or receivers by the name of the corporation." Code (Ann. Supp.), § 22-1879. It may be argued that these statutes relate only to actions against corporations whose charters expire pending such actions. However, the act of 1938 provided for the prosecution of actions by all corporations after their dissolution as well as for defensive matters. The provision referred to is incorporated in the Code (Ann. Supp.), § 22-1874, as quoted above. While this latter section does not speak of foreign corporations as such and in express terms, it employs the words "all corporations" which would seem to include foreign as well as domestic corporations.

Under these statutes cited it has been held that a suit by distress warrant levied on corporate property was not abated by the dissolution of the corporation, and that the corporate existence so far continued that the action could be prosecuted and defended in the name of the corporation. Evans v. Ft.Valley Motor Co., 52 Ga. App. 237 (183 S.E. 96). "A corporation does not necessarily become extinct by the expiration of its charter," and it is no defense to a suit for rent against a tenant in arrears that the charter of the landlord corporation had expired before the institution of the suit and the accrual of the alleged indebtedness. West v. Flynn Realty Corporation,53 Ga. App. 594 (186 S.E. 753). In an action in which a foreign corporation was the defendant, it was held that its dissolution would not operate to extinguish the demand or cause of action against it in this State. Mfg. Lumbermen'sUnderwriters v. South Georgia Ry., 57 Ga. App. 699, 702 (196 S.E. 244). An execution was properly issued in the name of the plaintiff corporation after its dissolution where the judgment was obtained by the corporation before the dissolution. Byers v. Black Motor Co., 65 Ga. App. 773 (16 S.E.2d 478). Somewhat analogous is the ruling that "When a plaintiff dies after judgment has been entered in his favor and before the issuance of execution thereon, the execution should follow the judgment and may be issued in his name." Mims v. McKenzie,22 Ga. App. 571 (96 S.E. 441).

It was held in Venable v. Southern Granite Company,135 Ga. 508 (69 S.E. 822, 32 L.R.A. (N.S.) 446), in conformity with the general rule in other jurisdictions, that "if a corporation becomes extinct pending a suit to which it is a party, the suit thereby abates as to such corporation, and any judgment thereafter rendered against it is a nullity unless someprovision is made for the further prosecution of the suit by thelaws of the State in which the suit is pending." (Italics ours.) The Venable case was decided in 1910, before the act of 1918 (Code, § 22-1210) which provided for the continuation to conclusion of suits pending against a corporation notwithstanding its dissolution. And, it was held in Nalley Land Investment Co. v. Merchants c.Bank, 187 Ga. 142 (199 S.E. 815), that the act of 1918 "does expressly provide, not only that such dissolution shall not work the abatement of any suit pending against the corporation at the time of the dissolution (Code, § 22-1210), but that ``suits for the enforcement of any demand or cause of action due by such corporation may to a like extent be instituted and enforced against it in any court having jurisdiction thereof at the time of its dissolution.'"

After a careful consideration of the statute law of this State relating to the survival of corporations, and the decisions of our courts construing and applying these statutes, we have come to the conclusion that the petition for scire facias as brought in this case, in the name of the Mortgage-Bond Company of New York, a foreign corporation, for the use of Telfair Stockton Company Inc., the beneficial and equitable owner of the dormant judgment sought to be revived, was properly brought and did not abate by reason of the dissolution of the Mortgage-Bond Company after the filing of the petition and during the pendency of the proceeding. By this ruling we are simply saying that we think the laws of this State dealing with the continued existence after dissolution of corporations for certain purposes is applicable alike to domestic and to such foreign corporations as see fit to come into the State to transact their business herein. The general rule has long been settled that "the right of a foreign corporation to engage in business within a State other than that of its creation depends solely on the will of such other State," and it follows that such other State "has the power, if she allows any such companies to enter her confines, to determine the conditions on which the entry shall be made. And, as a necessary consequence of her possession of these powers, she has the right to enforce any conditions imposed by her laws as preliminary to the transaction of business within her confines by a foreign corporation." See Cooper Company of Gainesville v. State,187 Ga. 497, 500 (3) (1 S.E.2d 436).

The conclusion we have reached is supported by other statutes and decisions of our courts. "Scire facias to revive a judgment is not an original action, but the continuation of the suit in which the judgment was obtained." Code, § 110-1005. "The scire facias, when the judgment has been transferred, shall issue in the name of the original plaintiff for the use of the transferee." § 110-1009. Although a judgment of revival in a scire facias proceeding in the name of a plaintiff as transferee is not void if the court rendering it had jurisdiction, as was held inChapman v. Taliaferro, 1 Ga. App. 235 (58 S.E. 128), the proper way to bring a scire facias to revive a dormant judgment which has been transferred is in the name of the original plaintiff for the use of the transferee. In the Chapman case (page 237), this court said: "There is no question that the requirement of sections 5384, 5979 ( § 110-1009) is plain, and that it is intended, where a judgment has been assigned and has become dormant, that the scire facias to revive it shall proceed in the name, not of the transferee, as in this case, but in the name of the original plaintiff, for the use of the transferee." In the recent case of Franklin v. Mobley, 73 Ga. App. 245 (36 S.E.2d 173), this court held that: "While a legal assignment must be in writing, an equitable assignment can be made by an oral agreement; and, while there was no written transfer or assignment of the execution in this case, the equitable owners thereof were entitled to have the execution proceed in the name of the party in whose favor it was issued, for their use. The execution was not proceeding illegally for the want of a party plaintiff." The case just cited was not a scire facias to revive a dormant judgment, and may not be exactly in point, but we think the ruling there is analogous to our ruling here.

The defendants cite a number of cases to sustain their contentions that no suit of any kind can be prosecuted unless it is in the name of a plaintiff having a legal entity, and that upon the dissolution of a corporation it ceases to be a legal entity capable of suing or being sued. Unquestionably these are general rules of law, but they are not without exceptions. One exception is found in the case of corporations, either domestic or foreign, which may sue or be sued for a period of three years, and "until final disposition of all suits begun within that time," after the expiration of their charters or their dissolution as corporate bodies, and after they have ceased to be legal entities for general purposes. Code (Ann. Supp.) § 22-1874. The plaintiff here is in a better position than that described in this statute in that its proceeding to revive the dormant judgment was brought before the dissolution of the plaintiff corporation, and when the proceeding was filed the plaintiff was a legal entity. The general rules upon which the defendants rely are not applicable to this case for another reason. This is a proceeding by scire facias to revive a dormant judgment, and as already pointed out, "a scire facias to revive a judgment is not an original suit, but is a continuation of another suit, and is to be brought in the court where the judgment was rendered. All the parties to the original judgment must be parties to the proceeding to renew or revive it."Funderburk v. Smith, 74 Ga. 515.

The defendants rely upon other general rules of corporation law to the effect that a corporation is an artificial person, with such powers only as are conferred upon it by the charter granted by the State creating it, and that one State cannot dissolve or extend the life of a corporation created by another State. Citations from the courts of this State, from other jurisdictions and from text writers, are included in the briefs of the defendants supporting these general principles. Most of the Georgia cases cited by the defendants recognizing and applying these principles were decided before the act of 1918 (Code, § 22-1210), and the corporation act of 1938 (Code, Ann. Supp., Chap. 22-18), under which the existence of all corporations doing business in this State is extended or continued for the limited time and for the specified purposes therein stated. No Georgia cases have been cited which hold that these acts are invalid, or that they did not accomplish the evident aims for which they were enacted, or that they do not apply with equal force to all corporations operating in this State whether domestic or foreign. The legislative acts referred to, which are now a part of the codified laws of the State, seem to have established a sound public policy of treating all corporations, whether they be our own offspring or the children of sister States, exactly alike. We can see no injustice, unfairness or discrimination in such a policy.

We think the court erred in sustaining the demurrers as complained of by the plaintiffs.

Judgment reversed. Sutton, C. J., and Felton, J., concur.