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DEFENSE SUPPLIES CORP. ET AL. v. LAWRENCE WAREHOUSE CO. ET AL.

decided: April 18, 1949.

DEFENSE SUPPLIES CORP. ET AL
v.
LAWRENCE WAREHOUSE CO. ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.

Vinson, Black, Reed, Frankfurter, Douglas, Murphy, Jackson, Rutledge, Burton

Author: Murphy

[ 336 U.S. Page 632]

 MR. JUSTICE MURPHY delivered the opinion of the Court.

We are asked to assess the effect of the Defense Supplies Corporation's dissolution on an action to which it was a party at the time of dissolution. Petitioners are the Defense Supplies Corporation and the Reconstruction

[ 336 U.S. Page 633]

     Finance Corporation. Both are arms of the United States Government.*fn1

Defense Supplies Corporation brought action against respondents in the District Court for the Northern District of California, in February, 1944, alleging respondents' negligent destruction of automobile tires owned by Defense Supplies and stored by respondents. Respondents denied their negligence. The District Judge tried the cause without a jury in February, 1945. He ordered the case submitted on July 16, 1945, and in January, 1946, found negligence and ordered judgment for Defense Supplies Corporation in the amount of $41,975.15 and costs, 67 F.Supp. 16; engrossed findings and final judgment were entered in April, 1946. Respondents filed notice of appeal on June 14, 1946; the appeal was argued in the Court of Appeals for the Ninth Circuit in October, 1947, and in December the court affirmed the judgment below. 164 F.2d 773. In January, 1948, rehearing was denied.

[ 336 U.S. Page 634]

     Then respondents discovered that Defense Supplies Corporation "did not exist." Congress had dissolved the theretofore successful litigant as of July 1, 1945, by the Joint Resolution of June 30, 1945, 59 Stat. 310, and transferred all its assets to the Reconstruction Finance Corporation -- after trial, but before judgment, in the District Court. The Court of Appeals, one judge dissenting, granted respondents' second petition for reconsideration; denied a motion to substitute the Reconstruction Finance Corporation as out of time; and vacated the judgment entered in favor of the Defense Supplies Corporation, ordering the action dismissed. 168 F.2d 199. We brought the case here on certiorari, 335 U.S. 857, because of alleged conflict with Gaynor v. Metals Reserve Page 634} Co., 166 F.2d 1011, in the Court of Appeals for the Eighth Circuit.

Our decision rests upon interpretation of the statute dissolving Defense Supplies Corporation. For although our conception of a corporation centers upon legislative grant rather than spontaneous existence, see Petrogradsky M. K. Bank v. National City Bank, 253 N. Y. 23, 30-31, 170 N. E. 479, 481-482, the courts have generally treated a corporation's demise much as they have that of a natural litigant. Mumma v. Potomac Co., 8 Pet. 281, 287; National Bank v. Colby, 21 Wall. 609; Pendleton v. Russell, 144 U.S. 640; Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257. The parallel has not been the subject of universal admiration, see Marcus, Suability of Dissolved Corporations, 58 Harv. L. Rev. 675; and is by no means exact, Shayne v. Evening Post Publishing Co., 168 N. Y. 70, 78, 61 N. E. 115, 117; Bruun v. Katz Drug Co., 351 Mo. 731, 173 S. W. 2d 906. But at least one facet of the analogy has seemed too clear to permit change without an "independent lift of power"*fn2 from the Congress. Whether phrased in terms of adherence to precedent, congressional acceptance of that precedent,*fn3 or the "impossibility" of proceeding "without a defendant,"*fn4 most courts have held that the dissolution of a corporation works an abatement of pending actions.*fn5

But a time-honored feature of the corporate device is that a corporate entity may be utterly dead for most

[ 336 U.S. Page 635]

     purposes, yet have enough life remaining to litigate its actions. All that is necessary is a statute so providing. Oklahoma Gas Co. v. Oklahoma, supra; Pease v. Rathbun-Jones Engineering Co., 243 U.S. 273, 277. Unless the statutory terms are observed, however, the consequences of total dissolution attach, and, if we ...


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