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06/18/87 the People of the State of v. John Boyce Et Al.

June 18, 1987

THE PEOPLE OF THE STATE OF ILLINOIS, PLAINTIFF-APPELLEE

v.

JOHN BOYCE ET AL., DEFENDANTS (ALLOY PLATING CORPORATION, DEFENDANT-APPELLANT)



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

509 N.E.2d 776, 156 Ill. App. 3d 1036, 109 Ill. Dec. 115 1987.IL.845

Appeal from the Circuit Court of Winnebago County; the Hon. David F. Smith, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE LINDBERG delivered the opinion of the court. HOPF and WOODWARD, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINDBERG

Defendant, Alloy Plating Corporation, appeals from a judgment of the circuit court of Winnebago County convicting it of calculated criminal disposal of hazardous waste and unauthorized use of hazardous waste. (Ill. Rev. Stat. 1983, ch. 111 1/2, pars. 1044(b)(1), (d)(1).) Defendant contends that it was not subject to the indictment under which it was tried and convicted because defendant had been involuntarily dissolved before the indictment was filed. Alternatively, defendant contends that an instruction given on corporate accountability was erroneous and that under proper instructions on this subject the evidence was insufficient to prove defendant's guilt beyond a reasonable doubt. As a final alternative, defendant contends that the fines totalling $600,000 were excessive. We reverse on the basis of the first issue raised by defendant and therefore will not address defendant's alternative arguments.

Although it is not included in the record, it appears that an indictment was returned on April 11, 1984, charging defendant and Kenneth Domin with criminal violations of the Environmental Protection Act. (Ill. Rev. Stat. 1983, ch. 111 1/2, pars. 1001, 1044.) Domin, apparently, pleaded guilty on May 20, 1985, and agreed to testify against defendant and two other employees of defendant, John Boyce and Luis Galvan. The Illinois Secretary of State, on August 1, 1985, involuntarily dissolved defendant for failing to file its annual report and to pay franchise taxes. On August 13, 1985, a new, 23-count indictment was returned. The 21 counts of it that applied to defendant charged defendant, Boyce and Galvan with criminal violations of the Environmental Protection Act. (Ill. Rev. Stat. 1983, ch. 111 1/2. pars. 1044(b)(1), (c)(1), (d)(1), and (e).) Defendant was tried and convicted under this August 13, 1985, indictment. It appears that the April 11, 1984, indictment was nol-prossed; however, the order doing this does not appear to be in the record on appeal in the case at bar.

We initially must rule on a motion by the State to strike references in defendant's brief to a complaint by the State against the owners of defendant in a separate action. The references appear in defendant's argument that the fines imposed were excessive and indicate that the State is attempting to recover the fines from defendant's owners personally. The complaint, which, of course, was not presented to the trial court in the case at bar, does not appear to be relevant to the question of whether the trial court abused its discretion in imposing the fines based upon the information before it at the time of sentencing. We, therefore, grant the State's motion to strike and decline the invitation in defendant's brief and response to motion to strike that we take judicial notice of the complaint. Because we do not reach the issue of the propriety of the fine, our ruling on this motion does not affect the outcome of this appeal.

The dispositive issue concerns the effect of dissolution of the corporate defendant on the criminal prosecution at bar. The dissolution of a corporation is analogous to the death of an individual. (People v. Mazzone (1978), 74 Ill. 2d 44, 48, 383 N.E.2d 947, 950; see Markus v. Chicago Title & Trust Co. (1940), 373 Ill. 557, 561, 27 N.E.2d 463, 465.) Thus, at common law, dissolution terminated a corporation's legal existence. (Blankenship v. Demmler Manufacturing Co. (1980), 89 Ill. App. 3d 569, 572, 411 N.E.2d 1153, 1155.) A dissolved corporation could neither sue nor be sued, and pending proceedings were abated. (Blankenship v. Demmler Manufacturing Co. (1980), 89 Ill. App. 3d 569, 572, 411 N.E.2d 1153, 1155.) In the absence of a statute providing otherwise, this is still the law. (See People v. Mazzone (1978), 74 Ill. 2d 44, 48, 383 N.E.2d 947, 950 ("[upon] the dissolution of the corporation, it is no longer able to maintain an action, absent statutory exception, and all matters pending at the time of the dissolution abate"); see also Melrose Distillers, Inc. v. United States (1959), 359 U.S. 271, 272, 3 L. Ed. 2d 800, 802, 79 S. Ct. 763, 765 ("in the federal domain prosecutions abate both on the death of an individual defendant [citations] and on the dissolution of a corporate defendant [citations], unless the action is saved by statute").) Thus, in the case at bar, prosecution of the dissolved defendant could not be maintained unless some statute permitted it.

The State argues that this prosecution could be maintained under two statutes. One provides for the survival of certain remedies after the dissolution of a corporation (Ill. Rev. Stat. 1985, ch. 32, par. 12.80), and the other provides for the survival of proceedings pending against a corporation on the date of dissolution (Ill. Rev. Stat. 1985, ch. 32, par. 12.30(c)(5)). Neither statute permits the prosecution at bar.

The survival of remedies provision states:

"The dissolution of a corporation . . . shall not take away nor impair any remedy available to or against such corporation . . . for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within five years after the date of such dissolution." (Ill. Rev. Stat. 1985, ch. 32, par. 12.80.)

In People v. Mazzone (1978), 74 Ill. 2d 44, 383 N.E.2d 947, the Illinois Supreme Court construed the predecessor to this statute, which was identical except that it required action or other proceeding to be commenced within two years after dissolution. (Compare Ill. Rev. Stat. 1985, ch. 32, par. 12.80, with Ill. Rev. Stat. 1977, ch. 32, par. 157.94.) In Mazzone, the corporate defendant was found guilty of obscenity and was fined $1,000. While its appeal was pending, the corporate defendant was involuntarily dissolved. (People v. Mazzone (1978), 74 Ill. 2d 44, 45, 383 N.E.2d 947, 948.) Interpreting the statutory language at issue, the court said the statute:

"provides no basis for survival of a criminal prosecution after the dissolution of a corporation, since it speaks in terms of the survival of remedies, claims, and liabilities, which are words of art in civil litigation, whose language and functions are distinct from criminal prosecutions. Thus the ...


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