§ 576. Effect on Rights of Creditors.-The debts and obligations of a corporation are neither matured17 nor vacated18 by its dissolution. And section 404 of the Civil Code, which authorizes the legislature to amend or repeal the provisions of part four of division one of that code, and to dissolve all corporations created thereunder, provides that "such amendment or repeal does not, nor does the dissolution of any such corporation, take away or impair any remedy given against any such corporation, its stockholders or officers, for any liability which has been previously incurred."

Creditors may prevent a voluntary dissolution until their claims are paid,19 or, if they do not object in the dissolution proceedings, 20 or where the dissolution is involuntary, may sue the directors as trustees for the amounts due them.

Creditors must ordinarily pursue their usual remedies at law against the statutory trustees for the collection of their claims,* and a court of equity will not interfere in such cases to control the action of the trustees by the appointment of a receivers or otherwise unless they have abused their power. But where trustees use their power and authority for the purpose of benefiting themselves at the expense of the creditors and stockholders, and the corporation is insolvent, a court of equity will interpose at the instance of a creditor.4

§ 577. Effect on Judgments.-A judgment against a dissolved corporation rendered in an action commenced against it after its dissolution, or, in the absence of a statutory provision to the

17. Sherman v. S. K. D. Oil Co., 185 Cal. 534, 197 Pac. 799; California Nat. Supply Co. v. Dinsmore, 52 Cal. App. 513, 199 Pac. 552.

18. Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335.

19. See supra, §§ 568, 569.

20. Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335; In re Balfour & Garrette, 14 Cal. App. 261, 111 Pac. 615.

1. Hanson v. Choynski, 180 Cal. 275, 180 Pac. 816.

2. Sherman v. S. K. D. Oil Co., 185 Cal. 534, 197 Pac 799; Hanson v. Choynski, 180 Cal. 275, 180 Pac. 816.

3. See infra, § 587.

4. Hanson v. Choynski, 180 Cal. 275, 180 Pac. 816.

5. California Nat. Supply Co. v. Flack, 183 Cal. 124, 190 Pac. 634; Hanson v. Choynski, 180 Cal. 275, 180 Pac. 815; Llewellyn Iron Works v.

6

9

contrary, in an action pending against it at the time of its dissolution, is void and will not support a creditor's bill against a stockholder of the corporation on an unpaid stock subscription, and is not a bar to an action against the directors as trustees, or against an officer of the corporation personally. And such a judgment may be set aside and an execution issued thereon recalled and perpetually stayed on motion of a stockholder made within a reasonable time;10 or it may be impeached by a stockholder who intervenes in the action in which it is rendered for the purpose of expunging it from the records, without showing that he was a stockholder when the liability upon which it is based was incurred, or that the corporation has any assets.11

§ 578. Estoppel to Deny Validity of Judgment.-There can be no estoppel to deny the validity of a judgment against a defunct corporation, and no admission of its validity, in so far as the corporation itself is concerned. And persons sufficiently interested to assail the judgment, unless estopped by their own acts or omissions, are not bound by any unauthorized appearance or admissions attempted to be made on its behalf, or an attempted entry of its default.12 So a stockholder is not estopped by reason of the fact that one of the directors acting as trustees filed an answer in the action admitting the

Abbott Kinney Co., 172 Cal. 210, 155 Pac. 986; Newhall v. Western Zinc Min. Co., 164 Cal. 380, 128 Pac. 1040; Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335; Burks v. Weast, 67 Cal. App. 745, 228 Pac. 541; Sharp v. Eagle Lake Lumber Co., 60 Cal. App. 386, 212 Pac. 933.

6. Hanson v. Choynski, 180 Cal. 275, 180 Pac. 815; Lowe v. Superior Court, 165 Cal. 708, 134 Pac. 190; Nezik v. Cole, 43 Cal. App. 130, 184 Pac. 523.

7. Llewellyn Iron Works v. Abbott Kinney Co., 172 Cal, 210, 155 Pac. 986.

8. California Nat. Supply Co. v. Flack, 183 Cal. 124, 190 Pac. 634; Burks v. Weast, 67 Cal. App. 745, 228 Pac. 541.

9. Burks v. Weast, 67 Cal. App. 745, 228 Pac. 541.

10. Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335; Sharp

v. Eagle Lake Lumber Co., 60 Cal. App. 386, 212 Pac. 933.

11. Newhall v. Western Zine Min. Co., 164 Cal. 380, 128 Pac. 1040.

12. Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335; Nezik v. Cole, 43 Cal. App. 130, 184 Pac. 523.

corporate existence of the defendant corporation.13 Officers and stockholders, however, may be individually estopped by their conduct to deny the validity of such a judgment, as where by their conduct and a failure to disclose the facts they induce a person to prosecute to judgment an action brought against the corporation as an existing entity.14 But the mere fact that an officer is personally estopped will not estop another corporation of which he is also an officer.15

d. Directors as Trustees

§ 579. In General.

Civ. Code, § 400. "Unless other persons are appointed by the court, the directors or managers of the affairs of a corporation at the time of its dissolution are trustees of the creditors and stockholders or members of the corporation dissolved, . . . Trustees of corporations heretofore dissolved or whose charters have heretofore been forfeited by law shall have and discharge in the same manner and under the same obligations, all the powers and duties herein prescribed."

This section applies regardless of the method of dissolution, and whether it is voluntary or involuntary, 16 and under it, upon dissolution of a corporation by forfeiture of its charter or otherwise, the directors then in office, by virtue of the statute and without the intervention of any court,17 ipso facto become trustees of the corporation, its creditors and stockholders, for the purpose of winding up its affairs.18 They become

13. Newhall v. Western Zinc Min. Co., 164 Cal. 380, 128 Pac. 1040. 14. Llewellyn Iron Works v. Abbott Kinney Co., 172 Cal. 210, 155 Pac. 986; Slayden v. O'Dea, 172 Cal. 500, 189 Pac. 1066.

15. Llewellyn Iron Works v. Abbott Kinney Co., 172 Cal. 210, 155 Pac. 986.

16. Henderson v. Palmer Union Oil Co., 29 Cal. App. 451, 156 Pac. 65; Crossman v. Vivienda Water Co., 150 Cal. 575, 89 Pac. 335; State Inv. etc. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549; Havemeyer v. Superior Court, 84 Cal. 327, 18 Am. St. Rep. 192, 10 L. R. A. 627, 24 Pac 121; Nezik v. Cole, 43 Cal. App. 130, 184 Pac. 523.

17. Havemeyer v. Superior Court, 84 Cal. 327, 18 Am. St. Rep. 192, 10 L. R. A. 627, 24 Pac. 121.

18. Binford v. Boyd, 178 Cal. 458, 174 Pac. 56; Clark v. San Francisco,

trustees of an express trust.19 But it has been said that they are not trustees of a "trust" in any true sense of the term, but are rather the donees of a power in trust.20

If there are no directors in office at the time of the dissolution, or if for any reason those in office ought not to be entrusted with the conduct of the corporation's affairs, the court may appoint others in their place, in which case the persons so appointed become trustees in place of the directors, with the same powers and responsibility that are conferred upon the directors by the code. And the court is expressly given power to fill vacancies.2

§ 580. Filling Vacancies.

Civ. Code, & 400.

Death, resignation or failure or inability to act shall constitute a vacancy in the position of trustee, which vacancy shall be filled by appointment by the superior court upon petition of any person or creditor interested in the property of such corporation. . . .

The same section in respect of corporations previously dissolved provides that "vacancies in the office of trustees of such corporations shall be filled as hereinbefore provided."

The directors themselves have no power to fill vacancies resulting from resignations, nor to select, appoint or authorize others to take their places or perform their duties as trustees.3

§ 581. Determination of Identity of Directors.

Civ. Code, § 402. "If, upon the dissolution of any corporation, whether heretofore or hereafter occurring, the identity of the directors or managers of the affairs of such corporation, at the time of such dissolution shall not be otherwise judicially established, any person interested in the property, comprising the assets of such corporation at the time of such dissolution, may file a verified petition in

53 Cal. 306; Porter v. Anglo & London etc. Bank, 36 Cal. App. 191, 171 Pac. 845; Turney v. Morrissey, 22 Cal. App. 271, 134 Pac. 335.

19. Van Landingham v. United Tuna Packers, 189 Cal. 353, 208 Pac. 973. 20. Crystal Pier Co. v. Schneider, 40 Cal. App. 379, 180 Pac. 948.

1. State Inv. & Ins. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549. 2. See infra, § 580.

3. Van Landingham v. United Tuna Packers, 189 Cal. 353, 208 Pac. 973.

the superior court of the state of California in and for the county wherein was located the principal place of business of such corporation, at the time of its dissolution, setting forth the facts of dissolution of such corporation, the petitioner's interest in the property which formerly comprised the assets of such corporation, the absence of any judicial determination of the identity of the directors or managers of the affairs of such corporation at the time of its dissolution, the names and places of residence, so far as known to petitioner, of the persons who were such directors or managers of the affairs of such corporation (or if any be dead, or unable to act, or their names or places of residence be unknown, then such facts shall be stated), also any other facts pertinent to the relief prayed for, and a request that a decree be entered in said court, establishing the identity of the persons who were such directors or managers of the affairs of such corporation at the time of its dissolution, and for an order appointing successors for any such directors or managers who may be dead or unable to act, or, if it be impossible to determine the identity of all or any of such directors or managers, then for an order appointing trustees of the creditors and stockholders or members of such corporation in the place of such unknown directors or managers.

Upon the filing of such petition the clerk of said court shall fix a time and place for hearing said petition, not less than fifteen nor more than thirty days from the filing of said petition, and shall give notice thereof by posting notices in three public places in said county at least ten days before the date fixed for said hearing, and, if the place of residence of any such directors or managers be stated in the petition, then by mailing copies of said notice. to each of the persons named in said petition as directors or managers of the affairs of such corporation at the time. of its dissolution, at their respective places of residence as stated in said petition.

At any time before the date fixed for such hearing, any person interested in any property formerly comprising the assets of such corporation, or any person named in said. petition as one of the directors or managers of the affairs of such corporation, may answer said petition and deny any of the matters contained therein and set forth such affirmative matters as may aid the court in making a proper decree in accordance with the purposes of the petition.