Wachovia Bank & Trust Co. v. Plumtree School for Boys, Inc.

Seawell, J. Hereinafter it will be convenient to refer to the appellant as the Board of Education, and the appellee as the Boys School. The appeal of the defendant Board suggests some legal hurdles in the way of recovery by its codefendant, the Boys School, which, if insurmountable, might bring about a lapse in the legacy with no resultant benefit to itself. The appellant contends that in three ways at least, either of them efficient, the Boys School has lost its corporate entity or capacity to plead in this action or take under the will: Through the act of the Secretary of State in suspending its corporate rights and powers in failing to report and pay franchise tax; through the transfer of its property; and through its merger with Lees McRae College. It is true, of course, that a corporation which has been effectually dissolved cannot sue or defend as such,—it is simply civil-iter mortuus. A corporation which has been declared inoperative for failure to file its annual reports or suspension by the Secretary of State for failure to pay its franchise tax has not necessarily suffered extinction, 19 C. J. S., p. 1564, sec. 1774; State v. Superior Court of Snohomish County, 237 P. 722, 135 Wash. 315. And in Pinchback v. Mining Co., 137 N. C. 171, 49 S. E. 106, we find that the corporation, even when it is in the hands of the receiver and its property sold, is not dead. “It seems that the defendant corporation had gone into the hands of a receiver and its property sold. This, of course, does not affect the existence of the corporation.” In State v. Superior Court of Snohomish County, supra, where the statute in aid of tax collection is comparable with ours, the court does not regard the corporation as having lost all entity or capacity, but merely as dormant and, as suggested in the text above, still having the capacity at least to defend its rights when sued in the court. The statute provides no other method by which the assets and properties of the corporation can be protected and we do not believe it was the intention of the law to *744 leave the corporation defenseless against assault and sequestration from any and all quarters. Moreover, if this attack upon the corporate capacity of the defendant Boys School was timely, which we doubt, the School, having put in evidence its charter, thereby established, prima facie, its corporate existence. Defendant Board introduced the certificate of the Secretary of State containing the cancellation or restriction of the charter powers and afterward the defendant Boys School introduced a certificate to the effect that the cancellation was done through error and purported to correct the error. We do not know upon what principle this could be excluded. This later certificate of the Secretary of State was not based on the procedure of revival of the corporation or restoration of its powers after lawful suspension as laid down in the statute (P. L. 1937, Chapter 127), but was, as suggested, in the form of the correction of an erroneous action in declaring and recording the suspension. How the error came about is collateral to our present inquiry and not important; but it is worthy of note that Section 213 of the cited statute, among other excepted organizations, exempted “educational corporations not operated for profit” from the duty of filing returns or paying franchise tax, by excluding application of sections so requiring. As the record now stands, the trial court was justified in rejecting the view contended for by counsel for the Board. The appealing Board contends that the evidence discloses that the Boys School had conveyed all of its assets and thereby rendered itself unable to carry on the purposes for which it was organized (G.S. 55-129), and that the judge should have so found. The appellant Board made no request for a finding of fact to fix the status of the corporation on this point, and under the evidence it would be difficult to reach the conclusion that the defendant appellee, an educational institution and not a business enterprise, had so disposed of its assets and properties as to render it unable to conduct the business for which it was organized. The evidence does disclose that after the so-called merger the Boys School still received income from securities which went to Lees McRae College for instruction similar to that which the students of that school originally received at Plumtree. As for the merger with Lees McRae College, the evidence seems fairly susceptible to the view that the Boys School had been kept distinct as a corporate entity, although operated within the College, and that its trustees had been regularly elected by the Presbytery. For these reasons we are of the opinion that the capacity of the Boys School to take under the will was not subject to this particular attack, if, indeed, the actual preservation of the corporate capacity of the group or organization should be considered a necessary qualification. *745 There is a marked distinction between amalgamation with another society, or organization, engaged in similar activities, although the latter may he the controlling associate, and a corporate merger or consolidation. In the former instance the associated organization does not ipso facto cease, or necessarily lose its civil rights; it is often easy for the organization to demonstrably maintain its identity and continuity of existence. In a corporate merger, which is accomplished only by appropriate legal procedure, the individuality and life of the association is liable, and likely, to be lost, unless saved by the terms of the merger. There is no evidence here of a corporate merger. There is evidence that the Boys School was joined with Lees McRae College and managed or carried on by that institution, providing instruction in all respects similar to that theretofore required by its charter, and maintaining its organization without break in the significant election of trustees or directors by the Presbytery. In that situation authority for favorable consideration of the legal capacity of the appellee to take under the will may be found in numerous authorities from which we cite, as in accord with the principle we are persuaded to apply; Old Colony Trust, Co. v. Third Universalist Society, 285 Mass. 146, 188 N. E. 711, 91 A. L. R. 837; Jordan’s Estate, 310 Pa. 401, 165 A. 652; Boston Safe Deposit & Trust Co. v. Stratton, 259 Mass. 465, 156 N. E. 885. Ordinarily in this jurisdiction the appellate court is bound by the findings of fact made by the trial court where there is evidence to support them notwithstanding the fact that it may be contradictory. Exterminating Co. v. Wilson, 227 N. C. 96, 40 S. E. (2) 696; Bell v. Lumber Co., 227 N. C. 173, 41 S. E. (2) 281; S. v. Hart, 226 N. C. 200, 37 S. E. (2) 487. That is true in the construction of wills where it is necessary to resort to extrinsic facts or circumstances to clarifv the intent or identify the object of the bounty. The rule is correctly stated in 57 Am. Jur., Wills, sec. 1028 : “While the findings of the trial court in a will construction case are open to revie'w in an appellate court, they are, when based on extrinsic facts in addition to the will itself, to be given the same “weight as they are in any other case.” Moreover, the stipulation provided that the trial judge should hear the controversy without a jury and the weight of the evidence and the inferences to be drawn from it must be considered in that light. The defendant Board of Education has excepted to all the findings of fact and conclusions of law made by the trial court. We do not find it necessary to go into a detailed discussion of these exceptions or to institute a point by point comparison of the findings with the supporting evidence. It is sufficient to say that a diligent examination fails to discover any instance in which an essential finding of fact is not substantially supported by evidence, although at points the evidence may be variant or contradictory. *746 As we have already stated, there are two primary questions involved in the controversy: First, whether the legacy lapsed by the inability of the intended donee to take at the death of the testator; and second, the identity of the intended legatee. Upon these findings we are of the opinion that the trial court correctly held that the legacy did not lapse and that it was the intention of the donor to bestow it upon the Plumtree School for Boys, Inc., one of the contending defendants in this case. The judgment of the trial court is, therefore, Affirmed.