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135. State taxes must be paid before dissolution.

Hereafter no corporation organized under any law of this state shall be dissolved by its stockholders until all taxes levied upon or assessed against such corporation by the state of New Jersey in accordance with the provisions of an act entitled "An act to provide for the imposition of state taxes upon certain corporations and for the collection thereof," approved April eighteenth, one thousand eight hundred and eighty-four, and all acts amendatory thereof or supplementary thereto, shall have been fully paid, and a certificate to that effect, signed by the comptroller of the treasury, shall have been annexed to and filed with the certificate of dissolution.

(Supplement of March 23, 1900; P. L. 1900, p. 316.)

This act is intended to prevent corporations from dissolving and distributing their assets without paying the taxes already due to the state.

Where a company has filed no report with the State Board of Assessors claiming an exemption to which it was entitled, it is liable to the state for its franchise tax even though it was judicially declared insolvent prior to the time of the assessment. King v. American Electric Vehicle Co., 70 N. J. Eq., 568.

136. Purchasers of property and franchises of certain corporations sold by order of court may become a new corporation.

See "An Act concerning the sale of the property and franchises of any corporation created by or under any law or laws of this state except steam-railroad, canal, turnpike or plank-road companies," approved April 16, 1897; P. L. 1897, p. 229.

137. Corporate existence is admitted in judicial proceedings.

In every suit or judicial proceeding in this state, to which a corporation is a party, the existence of such corporation shall be taken to be admitted, unless it

is put in issue by the pleadings; and in courts in which the practice is that the defendant need not file a plea, the existence of such corporation shall be taken to be admitted unless the party to the suit denying the existence of such corporation shall file with the court an affidavit stating that to the best of his or its knowledge and belief such corporation does not exist.

(Supplement of April 8, 1903; P. L. 1903, p. 490.)

This section is a legislative enactment of a rule which had originally been followed in practice. MacMillan v. Stewart, 69 N. J. Eq., 212; aff'd Id., 676.

New York cases.

A party who has entered into a contract with another, in which the latter assumes to be and contracts as a corporation, is estopped from denying the corporate existence. U. S. Vinegar Co. v. Schlegel, 143 N. Y., 537, discussed in 148 N. Y., 58, 65.

In an action for goods sold to a corporation, the latter, under a general denial, cannot show that it was not incorporated at the time of the sale; to authorize such proof the answer must affirmatively allege the fact that the defendant was not a corporation. Schmidt v. Nelke Art Lithographic Co., 17 Misc. Rep., 124.

The corporate character of a plaintiff is not put in issue by a mere allegation in an answer that "defendant has no knowledge or information sufficient to form a belief" as to the allegations of the complaint in respect thereto. To permit such proof the answer must affirmatively allege that the defendant was not a corporation. Snow, Church & Co. v. Hall, 19 Misc. Rep., 655.

138. Dissolution of educational institutions.

1. Whenever in the judgment of the board of trustees or managers of any corporation created by any law of this State for educational purposes, it shall be deemed advisable and for the benefit of said corporation that the same should be dissolved before the expiration of its charter, it shall be lawful for such board of trustees or managers to wind up and dissolve such corporation in the manner hereinafter prescribed, or in the name of said corporation, by petition, set

ting forth the facts and circumstances of the case, to apply to the Chancellor for a dissolution of said corporation and for the appointment of a receiver or trustee of its estate and effects; whereupon the Chancellor, being satisfied of the sufficiency of said application, shall order such reasonable notice thereof to be served or published as he may judge proper and the circumstances of the case may require, fixing a day, not less than thirty days distant, for the hearing upon the same, and if, upon inquiry into the matter, it shall be made to appear to the Chancellor that such action may be taken without prejudice to the public welfare, and that it is advisable and best for said corporation that it should be dissolved, its affairs settled and its estate and effects divided and distributed among the stockholders, associate owners, creditors and others who may be entitled to the same, it shall be lawful for the Chancellor to enter a decree to that effect, and to appoint a receiver or trustee with full power to demand, sue for, collect, receive and take into possession all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, papers, choses in action, bills, notes and property of every description belonging to said corporation at the time of said decree of appointment, and to sell, convey or assign all the said real and personal estate; and to pay into the Court of Chancery all the moneys and securities for money arising from such sales, or which may be collected by said receiver or trustee from time to time under the order of the said Court of Chancery, first deducting the costs of the proceedings in said court, and making to said receiver or trustee and to counsel such reasonable compensation as the Chancellor may deem fit and proper.

2. The said receiver or trustee shall be further clothed with all the powers conferred upon a receiver

or trustee appointed under the act authorizing the appointment of a receiver or trustee in case of insolvent corporations; and it shall be lawful for the said Court of Chancery whether said corporation be dissolved by order of said court or by act of the board of trustees as hereinafter provided, to make all necessary and proper orders and decrees to settle and wind up the affairs of said corporation, and to distribute its estate, property and effects, or the proceeds thereof, among those entitled to the same, and if, at the time of the final decree of distribution, the owners of any part of said property or effects remain unknown, such part, share or shares shall be retained in the Court of Chancery until the same shall be claimed by the rightful owner or owners thereof.

3. In the event that such board of trustees or managers shall determine to wind up and dissolve such corporation without the appointment of a receiver therefor, the said board, at a meeting duly called and held for the purpose, of which meeting every trustee or manager shall have received at least three days. notice, shall, by a two-thirds vote of the whole board of trustees or managers, adopt a resolution to that effect, and thereupon such trustees or managers, being not less than two-thirds of the whole number, shall signify their consent in writing that such dissolution shall take place, which consent, together with a list of the names and residences of all of the trustees or managers and officers, certified by the president and secretary, shall be filed in the office of the secretary of state, who, upon being satisfied by due proof that the requirements aforesaid have been complied with, shall issue a certificate that such consent has been filed, and the board of trustees or managers shall cause such certificate to be published four weeks successively, at least once a week in a newspaper pub

lished in the county where the property of such corporation is situate; and upon filing in the office of the secretary of state of an affidavit that said certificate has been so published, the corporation shall be dissolved and the board shall proceed to settle up and adjust its business and affairs in the same manner and with the same powers and duties as provided in the act to which this is a supplement in cases of other corporations which are dissolved under the provisions of said act.

4. After a sale of the property and assets of such dissolved corporation and the payment of its debts and all expenses connected with such winding up and settlement, the residue of moneys in hand, if any, shall be distributed and paid in the manner provided in the second section of this act.

(Supplement of April 2, 1908; P. L. 1908, p. 113.)

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