Smith v. Lewis

SHENK, J.

In July, 1925, Millie C. Lewis, defendant herein, commenced an action as a minority stockholder of the Borch Radio Corporation and on behalf of said corporation against O. F. Smith, F. 0. Howe, E. L. Kirk, George E. Sheldon and Max Lowenthal to compel said defendants as directors of said corporation to

pay to

the corporation the sum of $9,500 alleged to have been the value of certain property and assets wrongfully withdrawn from said corporation and delivered to another -stockholder contrary to the provisions of section 309 of the Civil Code. Said corporation was alleged to be a corporation organized and existing under and by virtue of the laws of the state of California and was made a party defendant in said action under an allegation that it was controlled by the defendant directors and it would be futile for the plaintiff therein to make a demand on said corporation to commence said or any action against said defendants and therefore the plaintiff initiated said action on behalf of said corporation. The defendants therein named, except the defendants Lowenthal and the corporation, answered to the merits but did not allege in their answer, nor otherwise contend or show in said action, that said corporation at the time of the commencement of said action was under the disability of suspension of its powers by reason of the failure to pay its corporation license tax for the year 1923 as required by the Corporation License Act of 1915 as amended in 1917 (Stats. 1917, p. 371). Upon the trial of that action oral and documentary evidence was introduced. The court found the facts and rendered judgment in favor of the plaintiff, Millie C. Lewis, and against the answering defendants and ordered, adjudged and decreed" that the Borch Radio Corporation have judgment against said defendants for the sum of $9,500, interest and costs. This judgment became final in January, 1927.

[297]

On March 25, 1927, the plaintiffs herein, defendants in the former action, commenced the present action against Millie C. Lewis and the sheriff of Alameda County to set aside the judgment in the former action, to quash the execution issued thereunder and to enjoin the enforcement thereof, on the ground that said judgment was void for the reason that at the time the former action was commenced the Borch Eadio Corporation was under suspension of its corporate rights, privileges and powers for failure to pay its license tax for the year 1923, and that notwithstanding such suspension said Millie C. Lewis, as agent for and on behalf of said corporation, commenced said action and prosecuted the same to judgment.