NEY-COPELAND ASSOCIATES, INC. v. TAG POLY BAGS

Citation Codes

Equivalent Citations

citation codes

Docket Number

59393.

Attorney(S)

Thomas R. Campbell, Jr., for appellant. Frank W. Armstrong, for appellee.

Judges

SHULMAN, Judge.

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Smart Summary

Factual and Procedural Background

Plaintiff sued defendant, a Texas corporation, for breach of contract, asserting jurisdiction under Georgia's Long Arm Statute, Code Ann. § 24-113.1, based on a business meeting in Georgia at which contract negotiations occurred. Defendant made a special appearance and moved to dismiss for lack of jurisdiction, arguing the defendant corporation did not exist at the time of the meeting (incorporation occurred after the meeting) and thus could not be subjected to jurisdiction on that basis. The trial court found jurisdiction; defendant appealed. The trial occurred in Hall Superior Court before Judge Kenyon.

Legal Issues Presented

Whether a corporation incorporated after a business meeting may be subject to jurisdiction in Georgia based on that meeting when the meeting was held by the predecessor business (a partnership) that later became the corporation.
Whether a newly formed corporation that is identical in name, objects, assets, and stockholders to a prior partnership is the successor in interest and thus subject to liabilities and acts of the prior partnership for purposes of minimum contacts under the Long Arm Statute.

Arguments of the Parties

Appellant's Arguments

Defendant argued (by special appearance) that it could not be subjected to jurisdiction based on a meeting that occurred before its incorporation because the corporation did not exist at the time and a purported agent cannot bind a non-existent corporation.

Appellee's Arguments

Plaintiff asserted jurisdiction under the Long Arm Statute, claiming the "minimum contacts" requirement was satisfied by a business meeting in Georgia at which negotiations with agents of the defendant occurred.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Johnson-Battle Lumber Co. v. Emanuel Lumber Co., 33 Ga. 517 (126 S.E. 861)	The rule that a new corporation which, by identity of name, objects, assets, and stockholders, is a continuance of the old business becomes liable for the debts and obligations of the old entity.	The court relied on this rule to treat Ney-Copeland Associates, Inc. as the successor in interest to the prior partnership, thereby attributing the partnership's acts (including the Georgia meeting) to the corporation for jurisdictional purposes.
R. A. C. Realty Co. v. W. O. U. F. Atlanta Realty Corp., 205 Ga. 164 (52 S.E.2d 617)	Example of the principle that a purported agent cannot bind a corporation that did not yet exist.	The court cited this case as a contrary authority but held it did not compel dismissal because, given the court's finding of identity between the prior partnership and the new corporation, the corporation could not be said to have been non-existent for purposes of attributing the partnership's acts.

Court's Reasoning and Analysis

The court accepted the trial court's determination that there was an identity of name (from Ney-Copeland Associates to Ney-Copeland Associates, Inc.), objects, assets, and stockholders (the former partners). Applying the principle from Johnson-Battle that a new corporation which is in effect a continuance of the prior business assumes liabilities of the prior entity, the court concluded the newly formed corporation was the successor in interest and assumed the partnership's debts and obligations. From that premise the court reasoned that actions of the prior partnership—including the business meeting in Georgia giving rise to the asserted minimum contacts under the Long Arm Statute—are attributable to the successor corporation. The court addressed authorities holding that agents cannot bind a non-existent corporation (e.g., R. A. C. Realty) but found them inapplicable because, given the identity between the prior partnership and the new corporation, the reorganized entity could not properly be characterized as non-existent at the time of the meeting. Accordingly, the court found the minimum contacts established by the partnership's meeting were properly imputed to the corporation, supporting jurisdiction.

Holding and Implications

Judgment affirmed.

Direct effect: The Court of Appeals upheld the trial court's finding that Georgia had jurisdiction over Ney-Copeland Associates, Inc., because the corporation was treated as the successor in interest to the prior partnership and the partnership's meeting in Georgia furnished the requisite minimum contacts. The opinion does not discuss broader precedent beyond application to the parties; no new broader legal rule was announced beyond applying the successor/continuity principle to these facts.

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NEY-COPELAND ASSOCIATES, INC. v. TAG POLY BAGS, INC.

SHULMAN, Judge.

Plaintiff brought suit against defendant, a Texas corporation, for breach of contract, predicating jurisdiction on the Long Arm Statute, Code Ann. § 24-113.1. Plaintiff asserted that the "minimum contacts" requirement of transacting business within Georgia was satisfied by virtue of a business meeting (at which contract negotiations were held) between plaintiff and agents of the defendant. By special appearance, defendant moved to dismiss plaintiff's complaint for lack of jurisdiction, arguing that, regardless of whether or not such meeting satisfied the minimum contacts test, since defendant corporation did not exist as a corporate entity at the time of the meeting (as the date of its incorporation succeeded the alleged meeting date), jurisdiction could not be acquired over the defendant on the basis of such meeting. From a judgment finding jurisdiction, defendant appeals. We affirm.

In Johnson-Battle Lumber Co. v. Emanuel Lumber Co., 33 Ga. 517 ( 126 S.E. 861), this court held that "[w]here, after one half of the capital stock of a corporation, which belongs to one person, who owns the entire capital stock, is acquired by new stockholders, and all the new stockholders apply for articles of incorporation and become incorporated for the same objects and purposes under a charter creating a new corporation having in effect the same name, which takes over the entire assets and business of the old corporation as well as its stockholders, who become stockholders of the new corporation, and operates the new corporation in the same place and in the same manner in which the old corporation was operated, and becomes liable for the debts of the old corporation, the new corporation, by reason of such identity of name, objects, assets, and stockholders, is but a continuance of the old corporation, and the new corporation is liable for the debts and obligations of the old corporation."

In the instant case, the trial court was authorized to determine by reason of an identity of name (from Ney-Copeland Associates to Ney-Copeland Associates, Inc.), objects, assets, and stockholders (being the former partners of Ney-Copeland Associates) that the former partnership of Ney-Copeland Associates (the partners of which allegedly held the business meeting with plaintiff) was, for all intents and purposes, identical to Ney-Copeland Associates, Inc. — that Ney-Copeland Associates, Inc., was in fact the successor in interest to Ney-Copeland Associates; and that upon its formation, Ney-Copeland Associates, Inc., assumed and was liable for all the debts and obligations of the prior partnership.

Concomitant with the new corporation's presumed assumption of and liability for the debts and obligations of the partnership is the newly formed corporation's responsibility for the actions of the prior business upon which such debts and liabilities (if in existence) could be predicated. This being so, the business meeting held between the prior partnership and the plaintiff, as an action of the prior partnership (giving rise to the claim of jurisdiction), would likewise be attributable to its successor in interest, the newly formed corporation.

Cases appellant cites for the proposition that a purported agent cannot bind a non-existent corporation; that is, one that is yet to be formed (see, e.g., R. A. C. Realty Co. v. W. O. U. F. Atlanta Realty Corp., 205 Ga. 164 ( 52 S.E.2d 617)), do not compel a contrary result. Based on the identical nature of the prior partnership and the newly formed corporation, which constitute a single continuous business entity, the newly formed corporation cannot be said to have been non-existent at the time of the business meeting.

In view of their identity, the structural reorganization of the business (from a partnership into a corporation) does not negate the prior existence of the business; that is, its existence prior to the date of incorporation. And it is the prior acts of the business (as a partnership) upon which jurisdiction is based.

Since we find that the actions of the agents of Ney-Copeland Associates, which the trial court determined constituted the necessary minimum contacts under the Long Arm Statute, are attributable to Ney-Copeland Associates, Inc., the court properly found jurisdiction over the defendant corporation.

Judgment affirmed. Quillian, P. J., and Carley, J., concur.