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Amman Food & Liquor v. Heritage Insurance

OPINION FILED OCTOBER 23, 1978.

AMMAN FOOD & LIQUOR, INC., PLAINTIFF-APPELLANT,

v.

HERITAGE INSURANCE CO., DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL P. COMAN, Judge, presiding.

MR. JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

Amman Food and Liquor, Inc., appeals from an order of the Cook County Circuit Court dismissing its action against Heritage Insurance Company of America for Amman's "failure to pay franchise taxes within the time permitted."

Due to the nature of the issues raised, it is useful to consider the pertinent facts in this case in chronological sequence:

On January 4, 1975, Heritage issued to Amman for the sum of $1,970 a policy insuring Amman's premises to the extent of $80,000 against loss or damage by fire.

On February 23, 1975, while that insurance policy was in effect, Amman's premises were destroyed by fire.

On August 15, 1975, the Secretary of State sent Amman a notification of its delinquency in franchise tax payments.

On December 1, 1975, Amman was dissolved by the Secretary of State for delinquency in payment of franchise taxes.

On January 16, 1976, in view of Heritage's refusal to honor Amman's claim, Amman filed an action in the circuit court to compel payment of its claim.

On February 18, 1976, Heritage filed an answer to Amman's complaint going to its merits.

On February 23, 1976, the one-year time limit of the insurance policy for commencing actions for recovery under it expired.

On May 27, 1976, on payment of the franchise taxes owed, Amman was issued a certificate of reinstatement by the Secretary of State.

On June 9, 1976, Heritage filed a motion to dismiss Amman's action based on Illinois Civil Practice Act, section 48(1)(b) (Ill. Rev. Stat. 1975, ch. 110, par. 48(1)(b)) because Amman "was not an entity capable of suing at the time suit was filed or at any time, and even if capable of suing it was barred by section 142 (of the Illinois Business Corporation Act, Ill. Rev. Stat. 1975, ch. 32, par. 157.142) from suing, citing a decision of the Illinois Appellate Court.

On June 22, 1976, Amman responded to this motion, stating that it had been reinstated by the Secretary of State, that any defect on its part had been cured, and that section 142 is not an absolute bar to maintaining an action.

On August 23, 1976, the circuit court entered the order from which Amman appeals.

The issue presented in this appeal is whether the circuit court erred in granting a defendant's motion to dismiss an action because the plaintiff was a corporation which had been dissolved for nonpayment of franchise taxes after the occurrence upon which the action was based, but before the filing of the action, and the plaintiff corporation had been reinstated before the motion to dismiss was filed, but after the applicable period of limitation had expired.

Decisions applying Illinois law to similar facts have reached contrary results based on different interpretations of section 142 of the Business Corporation Act. For example, in Jorgensen v. Baker (1959), 21 Ill. App.2d 196, 157 N.E.2d 773, cert. denied, 361 U.S. 962, 4 L.Ed.2d 543, 80 S.Ct. 590, it was stated that a motion to dismiss an action under such circumstances was properly granted because section 142 bars a dissolved corporation from initiating or maintaining any civil action, so that a filing of an action by such a corporation would not toll the applicable statute of limitation. On the other hand, Rush Street Rugby Shop, Ltd. v. Maryland Casualty Co. (7th Cir. 1969), 409 F.2d 540, declared that such a filing would operate to toll a period of limitation because section 142's bar did not prevent a corporation from "commencing," as distinguished from "maintaining," an action.

Because under their stated rationales, these decisions' factual foundations are not meaningfully distinguishable, they stand as conflicting authority. Neither of these decisions articulates a consideration of the effect of all applicable laws to such a motion to dismiss, so that it is not possible to determine directly which rationale is valid, or whether an unarticulated rationale might serve to reconcile ...


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