Q1: Jerry Yarmouth incorporated J&R Interiors, Inc., and was its president, secretary, and sole shareholder. J&R failed to file annual reports and pay annual fees, however, and was involuntarily dissolved by the state. More than a year later, Yarmouth bought a workbench in J&R’s name from Equipto Division of Aurora Equipment Co. When the price was not paid, Equipto filed a suit in a Washington state court against Yarmouth, claiming that he was personally liable for payment. Yarmouth argued that he was not personally liable because he had acted as an agent for J&R. Does a corporation continue to exist after it is dissolved? If so, can it continue to conduct business? In whose favor should the court rule in this case, and why?
Q2: Alitech Corp. is a small midwestern business that owns a valuable patent. Alitech has approximately 1,000 shareholders with 100,000 authorized and outstanding shares. Block Corp. would like to have the use of the patent, but Alitech refuses to give Block a license. Block has tried to aquire Alitech by purchasing Alitech’s assets, but Alitech’s board of directors has refused to approve the acquisition. Alitech’s shares are selling for $5 per share. Discuss how Block Corp. might proceed to gain the control and use of Alitech’s patent.
