On appeal from Superior Court, Law Division, Hudson County.
Antell, Dreier and Skillman. The opinion of the court was delivered by Antell, P.J.A.D.
Plaintiffs appeal from a judgment dismissing their complaint on a fire insurance policy following a colloquy between court and counsel after a jury had been empaneled. Plaintiffs, Carl and James Lancellotti, operated a truck repair business at 57-61 Mallory Avenue in Jersey City through a corporation known as J & L Diesel Repair, Inc. (hereinafter "J & L"). The corporation's charter was revoked by the New Jersey Secretary of State in 1983 for non-payment of franchise taxes, and on March 7, 1984, the insurance policy that is the subject of this suit was amended to change the name of the insured from the corporation to the name of plaintiff Carl Lancellotti, the owner of the building in which the business was conducted. At the same time, the policy limits were increased to $220,000 for the building, $160,000 for contents and $120,000 for loss of earnings.
On April 17, 1984, the building and its contents were largely destroyed by fire. Defendant insurer declined payment, asserting the defense of arson. Defendant also argued that plaintiffs lacked standing because they had no insurable interest in the contents and earnings of the business.
The record herein consists of extensive Discussions about plaintiffs' anticipated proofs among and between court and counsel. The court reminded plaintiffs of two orders, dated June 9, 1989, and January 22, 1990, calling for production of all expert reports and barring any expert testimony if the reports were not presented. Plaintiffs' attorney stated that Carl Lancellotti had submitted to defendant a list of the contents and their valuations shortly after the fire, and that his testimony would address that information.
After the jury was sworn, defense counsel moved to limit proofs in order to restrict plaintiffs' opening statement. Although the transcript is not altogether clear, it appears that the court dismissed the complaint for the following reasons: (1) the plaintiffs lacked standing because the corporation, not the
individual plaintiffs, owned the business carried on within the building, including its contents and earnings, at the time of the loss, (2) because plaintiffs had not furnished their experts' reports they would be unable to prove the cost of damage to the building or its contents, and (3) because they had no expert witness to testify as to the length of time reasonably necessary to rebuild, repair or replace the building they could not prove their loss of business earnings.
The Secretary of State revoked the corporate charter of J & L sometime in 1983, and the insurance policy was amended March 7, 1984. Both these events took place prior to the fire. The effect of the revocation was to dissolve the corporation. N.J.S.A. 14A:12-8(b). A dissolution prohibits the corporation from carrying on its business except for the purpose of winding up its affairs by (a) collecting its assets; (b) conveying for cash such of its assets as are not to be distributed in kind to its shareholders; (c) paying, satisfying and discharging its debts and other liabilities; and (d) doing all other acts required to liquidate its business and affairs. N.J.S.A. 14A:12-9(1).
A dissolved corporation exists solely to prosecute and defend suits, and not for the purpose of continuing the business for which it was established. Leventhal v. Atlantic Rainbow Painting Co., Ltd., 68 N.J. Super. 406, 412, 172 A.2d 710 (App.Div.1961). See also Landa v. Adams, 162 N.J. Super. 318, 321, 392 A.2d 1215 (App.Div.1978). Furthermore, "persons who carry on the business of a corporation . . . after the charter has expired, or after dissolution, become personally liable as general partners." Leventhal, supra, 68 N.J. Super. at 413, 172 A.2d 710. See generally, Thomas G. Fischer, Annotation, Liability of Shareholders, Directors, and Officers Where Corporate Business is Continued After its Dissolution, 72 A.L.R. 4th 419 (1989). The corollary of that proposition, in our view, is that
such persons are also entitled to claim the earnings and assets ...