1. At common law, and by the rule in the federal courts,
dissolution of a corporation abates a litigation in which it is a
necessary party. P.
273 U. S.
259.
2. A motion to substitute one corporation for another on the
ground that the latter has been dissolved and that its assets and
obligations have devolved upon the other should not be allowed,
though consented to by the opposite party to the suit, in the
absence of a full showing of the facts relating to the dissolution,
its purpose, and effect. P.
273 U. S. 261.
3. Liquidating trustees, if appointed under the state statute
governing the dissolution of the corporation, should appear on the
motion for substitution in this Court. P.
273 U. S. 261.
Motions denied.
Motions to substitute the Oklahoma Natural Gas Corporation for
the plaintiff in error, the Oklahoma Natural Gas Company.
Page 273 U. S. 258
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
These are motions for substitution of a new party appellant in
each cause. The motions are joined in by the counsel of record for
the appellant and by the appellees. They show that the Oklahoma
Natural Gas Company was a corporation of the State of Oklahoma
organized in the Indian Territory in October, 1906, to have
existence for 20 years, and that its charter would have expired by
legal limitation in October, 1926; that about September 15, 1926,
after the appeals in these cases were allowed, the Oklahoma Natural
Gas Company was reorganized, the resulting corporation being named
the Oklahoma Natural Gas Corporation, organized and existing under
the laws of the State of Delaware; that the reorganized corporation
took over all the contracts, franchises, property, and assets of
the Oklahoma Natural Gas Company and assumed all the debts,
liabilities, and obligations of that company, including the
liability and obligation to make the refund to the patrons of the
Oklahoma Natural Gas Company involved in this action if it should
finally be held that the Oklahoma Natural Gas Company itself had
been obligated to make such refunds; that the Oklahoma Natural Gas
Corporation assumed the performance of the public service
theretofore performed by the Oklahoma Natural Gas Company; that the
new corporation became and is the successor in law and in fact of
the Oklahoma Natural Gas Company; that the latter company was by
decree of the District Court of Tulsa County, Oklahoma, duly and
legally dissolved as a corporation, and that, even if the decree
had not been rendered, it would have been dissolved by expiration
of the time limit in its charter in October, 1926. It is said that
the reorganized corporation, both by its assumption
Page 273 U. S. 259
thereof and by law, is liable for the refunds or discounts
involved herein if the order requiring them is valid, and that the
State of Oklahoma looks to and will look to the reorganized
corporation for the payment of the same if the order is finally
affirmed. The counsel for the old company, the Attorney General of
Oklahoma and the counsel for the Corporation Commission of
Oklahoma, all sign the motion.
There is no specific provision in our rules for the substitution
as a party litigant of a successor to a dissolved corporation. It
is well settled that, at common law and in the federal
jurisdiction, a corporation which has been dissolved is as if it
did not exist, and the result of the dissolution cannot be
distinguished from the death of natural person in its effect.
Mumma v. Potomac
Co., 8 Pet. 281;
National
Bank v. Colby, 21 Wall. 609;
Pendleton v.
Russell, 144 U. S. 640;
Bank of United States v. McLaughlin, Fed.Cas. No. 928;
Greeley v. Smith, Fed.Cas. No. 5,748;
Walters v.
Western & Altlantic Railroad Co., 69 F. 679;
Marion
Phosphate Co. v. Perry, 74 F. 425;
Board of Councilmen of
the City of Frankfort v. Deposit Bank of Frankfort, 120 F.
165;
United States v. Spokane Mill Co., 206 F. 999.
See also Edison Co. v. Westinghouse, 34 F. 232, and
Edison Co. v. United States Lighting Co., 52 F. 300. It
follows therefore that, as the death of the natural person abates
all pending litigation to which such a person is a party,
dissolution of a corporation at common law abates all litigation in
which the corporation is appearing either as plaintiff or
defendant. To allow actions to continue would be to continue the
existence of the corporation
pro hac vice. But
corporations exist for specific purposes, and only by legislative
act, so that, if the life of the corporation is to continue even
only for litigating purposes, it is necessary that there should be
some statutory authority for the prolongation. The matter is
Page 273 U. S. 260
really not procedural or controlled by the rules of the court in
which the litigation pends. It concerns the fundamental law of the
corporation enacted by the state which brought the corporation into
being.
This corporation is said to have been created before Oklahoma
became a state by the law of Indian Territory, so we may presume
that the corporation law of the State of Oklahoma since enacted,
Oklahoma Statutes 1921, c. 34, Article V, ยง 5361, has full
application.
Shulthis v. McDougal, 225 U.
S. 561,
225 U. S.
571-572. It provides:
"Unless other persons are appointed by the court, the directors
or managers of the affairs of such corporation at the time of its
dissolution are trustees of the creditors and stockholders or
members of the corporation dissolved, and have full power to settle
the affairs of the corporation and to collect and pay debts and
divide among the stockholders the property which remains after the
payment of debts and necessary expenses, and for such purposes may
maintain or defend actions in their own names by the style of the
trustees of such corporation dissolved, naming it, and no action
whereto any such corporation is a party shall abate by reason of
such dissolution."
We have found no Oklahoma case that construes this provision
with reference to the question now before the Court. The language
of the section would seem to indicate that as there is to be no
abatement. The Oklahoma Natural Gas Company, for litigating
purposes, is still in being, and continues to be a party before
this Court.
The showing made for the motion is that the Oklahoma Natural Gas
Company was, by a decree of the District Court of Tulsa County,
Oklahoma, duly and legally dissolved as a corporation. There is
nothing to indicate why the company was dissolved. We may assume,
but we do not know, that it was in anticipation of its dissolution
of force of law, and that the proceeding was undertaken in order to
transfer its assets, its obligations, and its liabilities to
another corporation, which is averred to be a corporation
Page 273 U. S. 261
of another state, to-wit, of Delaware, although the seal which
is attached to the consent of the Oklahoma Natural Gas Corporation
by its president and secretary and accompanies the motion, shows
that it was incorporated not in Delaware, but in Maryland.
The motion is signed by counsel for the appellant, the Oklahoma
Natural Gas Company. He does not explain how he continues to
represent the appellant, if in fact it has ceased to be, as he
represents to this Court.
In the absence of a fuller showing as to just what the
proceeding was in the District Court of Tulsa County in respect to
the dissolution of the old company and in view of the provisions of
the Oklahoma statute, we think it unwise to grant the motion for
substitution, even though with the consent of the appellees. It may
be that, with the disclosure of all the facts and circumstances, we
may find that what was done with the consent of all the parties to
this suit is in fact a novation which we can make effective.
United States v. City
Bank, 19 How. 384;
Ex parte Railroad,
95 U. S. 221,
95 U. S.
222.
We are not advised as to whether, at the time of the dissolution
of the corporation by time, liquidating trustees of the old company
were appointed under the statute. If they were, then they should
appear in this proceeding. The motion to substitute is denied
without prejudice to a renewal of it on a fuller showing.