Hartman v. Hollingsworth

LILLIE, J.

This is an appeal from part of a judgment in a mandamus proceeding which orders the various respondents below to allow petitioner Robert E. Hartman, as a director of a corporation at the time of its dissolution, to inspect the corporate books and records in their possession. A similar right was denied the remaining petitioner, Chester R. Hartman, it being found that he was not a director at the time in question.

In issue is the construction to be given section 3004. Corporations Code, which provides in pertinent part that1 ‘ Every director shall have the absolute right at any reasonable time to inspect all books, records, documents of every kind ... of the corporation, domestic or foreign, of which he

is

a director . . . .” (Italics added.) Petitioners concede, and their pRading so alleged, that the company has been dissolved and the corporate property since distributed to the shareholders ; notwithstanding such dissolution, it is nevertheless alleged that petitioners “have various legal obligations arising out of such directorship and have the absolute right to examine the books and records of the corporation so as to protect themselves as to any of the legal obligations which may exist.” By their declaration in opposition, respondents point to the failure of any allegation that petitioners “are presently directors” of the company: instead, petitioners “merely allege that they

were

directors” [italics added] of

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said company. Attached to respondents’ declaration is a certificate of winding up and dissolution, signed by a majority of the directors and duly filed with the Secretary of State, which recites that the corporation has been completely wound up and its assets distributed to the shareholders; too, that adequate provision for the payment of all tax liabilities, federal and state, has been made by the deposit of the required sum with a depositary therein designated. (Corp. Code, § 5200.)

A corporation may elect to wind up its affairs and voluntarily dissolve by the vote or written consent of shareholders representing 50 percent of the voting power (Corp. Code, § 4600) ; this, it seems, was the method of dissolution here invoked. Upon the commencement of such proceedings the board of directors nevertheless continues to act as a board and has full power to wind up and settle the corporation’s affairs. (Corp. Code, § 4800.) When this settlement has been accomplished, and upon the filing of the certificate of winding up and dissolution with the Secretary of State, the 11 corporate existence shall cease except for the purpose of further winding up if needed.” (Corp. Code, § 5201.) The statute last mentioned has been thus construed: 1 ‘ When a corporation has been wound up and dissolved and following the statutory scheme therefor, has surrendered its franchise, it ceases to exist. 1 According to the principles of the common law, a corporation which has been legally dissolved is dead. It no longer enjoys an existence for any purpose. The necessary effect of such death is not different from the death of a natural person.’ [Citations.]”