Title Co. v. Wilcox Bldg. Corp.

Background

An Illinois corporation owned a single building and the land at 4136 Wilcox Avenue. The state court dissolved the corporation on May 22, 1931. Mechanics’ liens and mortgage foreclosures followed, a sale certificate issued, and the periods for redemption expired. In May 1935 three persons acquired the stock and the sale certificate, and the corporation filed a petition for reorganization under §77B of the Bankruptcy Act in June 1935, asking a federal court to turn over the property and stop foreclosure suits. Lower federal courts appointed a trustee and ordered turnover, then the case reached the Supreme Court.

Reasoning

The central question was whether a corporation that the state has lawfully dissolved and that has passed the state’s two‑year winding‑up period still has legal capacity to start a federal reorganization under §77B. The Court said no: a private corporation exists only by state law, Illinois law allowed corporate actions for only two years after dissolution, and after that the corporation had no authority to initiate reorganization. The Court found no conflict that would let federal law revive a state‑dead corporation, and it concluded the attempted §77B petition was beyond the corporation’s powers.

Real world impact

The decision prevents dissolved corporations from using federal reorganization to undo or evade state dissolution orders. Shareholders cannot enlist federal bankruptcy courts to revive a corporate existence the state has lawfully ended. Creditors, purchasers, and state authorities keep the limits set by state law on corporate life.

Dissents or concurrances

Justice Cardozo dissented, arguing the corporation still retained some corporate powers, had been defending suits, and thus could invoke federal bankruptcy law including §77B; he would have allowed the proceeding to continue.