Peacock Hill Ass'n v. Peacock Lagoon Construction Co.

Peacock Hill Association, a nonprofit corporation managing the common areas and affairs of a condominium project moves to dismiss *371 the appeal from an adverse judgment by Peacock Lagoon Construction Co. (hereinafter referred to as “Construction”), the developer of the project.

The motion to dismiss is made on the ground that Construction’s corporate powers had been suspended pursuant to section 23301 of the Revenue and Taxation Code. 1

Construction has filed a declaration in opposition to the motion to dismiss accompanied by a receipt from the Franchise Tax Board indicating that it had recently filed its delinquent return, paid the penalty assessment, and applied for a certificate of revivor pursuant to section 23305 of the Revenue and Taxation Code. Subsequently, Construction filed a certificate of revivor issued by the Franchise Tax Board showing that Construction had been reinstated and revived to good standing.

In a number of situations the revival of corporate powers by the payment of delinquent taxes has been held to validate otherwise invalid prior action. (Traub Co. v. Coffee Break Service, Inc., 66 Cal.2d 368, 370 [ 57 Cal.Rptr. 846 , 425 P.2d 790 ];…

I dissent. The majority concede that “[Tjhe purpose of section

23301 of the Revenue and Taxation Code is to put pressure on the delinquent corporation to pay its taxes . . . .” (Ante, p. 371.) Yet that purpose is frustrated by permitting a delinquent corporation, merely through tardy payment of taxes, to validate all of the actions taken during its period of suspension. Under that concept the stick becomes a carrot; all incentive to avoid punitive disabilities dissolves. Upon exposure of its delinquency the corporation suffers little more than fleeting embarrassment, and, indeed, it is then rewarded by authentication of all its previous illegal acts.

In the present case, for example, Construction’s powers had been suspended prior to trial and remained in that status until after judgment and the filing of the notice of appeal. It was not until plaintiff brought the suspension to the attention of the appellate court by its motion to dismiss the appeal that Construction at long last paid its delinquent taxes. Presumably, if plaintiff had not moved to dismiss Construction’s appeal, the latter simply could have continued in its suspended status until the appeal had been decided and…

Peacock Hill Association, a nonprofit corporation managing the common areas and affairs of a condominium project moves to dismiss the appeal from an adverse judgment by Peacock Lagoon Construction Co. (hereinafter referred to as "Construction"), the developer of the project.

The motion to dismiss is made on the ground that Construction's corporate powers had been suspended pursuant to section 23301 of the Revenue and Taxation Code. [1]

Construction has filed a declaration in opposition to the motion to dismiss accompanied by a receipt from the Franchise Tax Board indicating that it had recently filed its delinquent return, paid the penalty assessment, and applied for a certificate of revivor pursuant to section 23305 of the Revenue and Taxation Code. Subsequently, Construction filed a certificate of revivor issued by the Franchise Tax Board showing that Construction had been reinstated and revived to good standing.

In a number of situations the revival of corporate powers by the payment of delinquent taxes has been held to validate otherwise invalid prior action. ( Traub Co. v. Coffee Break Service, Inc. 66 Cal.2d 368, 370 [ 57 Cal. Rptr. 846 , 425 P.2d 790…