KANSAS CITY COURT OF APPEALS RULING
where a corporate charter expired by the passage of time as limited in such charter,
the corporation is both de jure and de facto dead;
Clay County document dated 5/2/2004
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Page 223
3. Levees and Flood Control <S=>5
Where county levee district was organized on January 11, 1910 by circuit court
under statute requiring that its articles of association state "the number of years the
same is to continue," and articles of association for the district recited that "this corporation
shall continue for a term of fifty years," such district ceased to exist as a public corporation
on January 11, 1960, and after such date action of those who continued functions of the
district was without statutory authority. Section 245.-015 RSMo 1969, V.A.M.S.
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Defendants next contend that even if the existence of the district has legally."terminated, it still
has de facto existence and that the individual defendants are de facto supervisors of the
district and that their actions are valid. We cannot agree with such contention. In Bradley v.
Reppell, 133 Mo. 545, 32_S.W._645, it was held that where a corporate charter expired by the
passage of time as limited in such charter, the corporation is both de jure and de facto dead;
that in such circumstances the corporation ceased to exist as a separate entity and that any
powers in relation thereto resided in its last officers and
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board of directors as trustees. Sec 1 McQuillin, Municipal Corporations, 3d Edition, Sections
3.48, 3.49 and 3.50. Such trustees could not continue to conduct the business of the
corporation but could only pay the debts of the corporation and liquidate the business. It has
been otherwise expressed that where the law ceases to authorize the existence of the
corporation, the corporation expires as a matter of law. This doctrine is said to apply'to'both
private and public corporations alike, Mer-amec Spring Park Co. v. Gibson, 268_Mo. 394, 188
S.W.179.
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the district ceased to have legal existence in 1920 by reason of the 20 year limitation
contained in its charter, and the life of the district could not be extended because there was no
district in existence whose life could be continued. The court held that the district ceased to
exist in 1920 and the landowners within the district were in the same situation as if there never
had been a drainage district and they could not organize a new district by attempting to comply
with the reorganization statutes then in existence. The reasoning of the court is all founded
upon the premise that the district ceased to exist on the expiration of the time limitation
contained in its charter. Whether this contention was conceded by the defendants or not, it
was necessary for the court to reach this result before it could proceed to the specific
conclusion enunciated.
[3] We, therefore, conclude in the case at bar that Levee District No. Two of Howard County,
Missouri, ceased to exist as a public corporation on January 11, 1960, by reason of the
limitation contained in its articles of association that it exist for a period of 50 years. It follows
that from and after such date, there was no levee district and the action of those who
continued the functions of such district was without any statutory authority. As a consequence,
the holding of meetings of property owners within the district, the election of officers, the
levying and collection of levee district taxes and the expenditure of monies derived therefrom
were without legal authority. We, therefore, affirm that part of the trial court's order by which
the defendants were "enjoined and restrained from operating Levee District Number Two of
Howard County, Missouri, as a public corporation and attempting to exercise any powers or
authority granted by the laws of the State of Missouri to supervisors of such levee district and
particularly the levying and receiving taxes on lands within the boundaries of the District for the
year 1969." We further affirm that part of the order of the trial court enjoining the county
collector from collecting taxes purportedly levied by the district.
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This does not mean that the affairs of the district shall be left suspended in midair for all time
to come. It is pointed out in 2 McQuillin, Municipal Corporations, Third Edition (1966 Revised
Volume), Section 8.15, page 577, that in the absence of any statutory provision (and none
exists in Missouri), a court of equity will administer the affairs of a defunct corporation for the
benefit of its creditors and stockholders. Here, the landowners stand in the same position as
the stockholders of a private corporation.
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"Sometimes by virtue of express constitutional provisions, statutes commonly provide for the
satisfaction of debts, the enforcement of contract obligations, and the winding up of the affairs
of the dissolved corporation. * * * (I)n the absence of statute, or in supplementation thereof,
according to the just rule of the modern adjudications, both federal and state, a court of equity
will now lay hold of the property of the extinct corporation, and administer it for the benefit of its
creditors and stockholders. All contracts made while the corporation was in existence survive
the dissolution and may be enforced in equity, so far as to subject, for their satisfaction, any
property possessed by the corporation at the time. In the view of equity, the property
constitutes a trust fund, pledged to the payment of the debts of creditors and stockholders.
This well-settled rule, relating to private corporations, applies with like force to municipal
corporations: 'If a municipal corporation,' declares the Supreme Court of the United States,
'upon the surrender, or extinction in other ways, of its charter, is possessed of any property, a
court of equity will equally take possession of it for the benefit of the creditors of the
corporation.'
The protection of these rules extends generally speaking not only to claims or debts resting on
contracts, but also to other lawful claims and obligations whatever their nature or character.
This doctrine received the approval of this court in Diekroeger v. Jones, 235 Mo.App. 1117,
151 S.W.2d691, supra.
This result is particularly appropriate in this case because it does not appear from the record
what the assets of the district may be or what its obligations may be. It was stipulated that there
are no district bonds outstanding and the evidence disposed that at the time of trial, the district
had more than $1,000.00 on deposit in a bank and owned some type of a mowing machine.
Nothing more appears in the record as to the assets and liabilities of the district. Since there
are no statutes providing for the disposition of the public works constructed by the district,
many and varied legal questions can be foreseen and the guidance of a court of equity would
be beneficial, if not indispensable, in the liquidation of the affairs of the district.
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"It is further ordered and adjudged on Count II of the petition that the defendant James L.
Agnew, Collector of Revenue of Howard County, Missouri, and all agents and employees
acting under the direction and authority of the defendant James L. Agnew, be and they are
hereby enjoined and restrained from collecting any taxes from plaintiffs and any property
owner of lands within the boundaries of Levee District Number Two of Howard County, Missouri
levied by the acting Board of Supervisors on behalf of Levee District Number Two of Howard
County, Missouri for the year 1969 and from collecting any 1968 taxes levied by said District
on lands of plaintiffs which are unpaid at this time." is affirmed