[CITE: Cherokee Drilling Corporation v. DNR, 1 CADDNAR 38 (1982)]
[VOLUME 1, PAGE 38]
Cause #: 81-025G
Caption: Cherokee Drilling
Corporation v. DNR
Administrative Law Judge: Clayton
Attorneys: Dodd; Miller, DAG
Date: March 31, 1982
ORDER
...[T]he
following permits issued pursuant to IC 13-4-7-20, by the DNR in the name of
Cherokee Drilling Corporation, as permittee,...[are]
revoked and ...all such wells...[are] ordered plugged. [A listing of the wells
is here omitted.]
FINDINGS OF FACT
1.
The Indiana Department of Natural Resources (hereinafter the
"Department") is an agency of the State of Indiana duly empowered to
conduct administrative hearings pursuant to IC 4-22-1-1 et seq.
2.
The Department has jurisdiction over both the subject matter of and the parties
to this action.
3.
IC 13-4-7-20 requires that any "person, owner, operator, land-owner,
leaseholder, contractor, driller, foreman and/or employee" who drills or
deepens an oil well or any well connected or associated with oil or gas filled
operation must obtain from the [natural resources] commission or its duly
authorized agent, a permit authorizing the drilling or deepening of such well.
4.
Cherokee Drilling Corporation was incorporated under the laws of the State of
Indiana on March 13, 1963, for, among other purposes: to drill wells for the
production of oil, liquid hydro-carbons, all gases and their respective
constituent products.
5.
Petitioner has outstanding and actively thirty-three (33) permits issued to it
by the Department pursuant to IC 13-4-7-20.
6.
All of the aforementioned thirty-three (33) permits were issued in the name of
Cherokee Drilling Corporation, as permittee.
7.
Pursuant to IC 13-4-7-19, the Department holds bonds executed by the United
States Fidelity and Guaranty Company which secure Petitioner's performance
under said thirty-three (33) permits.
8.
Theodore B. Uland has served in various capacities
within Cherokee Drilling Corporation, including the offices of President,
Treasurer, and General Manager.
9.
At the date of the hearing of this cause, Theodore B. Uland
regarded himself as the then General Manager and Chief Operating Officer of
Cherokee Drilling Corporation.
10.
On July 15, 1975, the Secretary of State of the State of Indiana, pursuant to I
23-3-5-1 et seq., revoked the rights and
privileges of Cherokee Drilling Corporation and declared its Articles of
Incorporation forfeited because of Petitioner's failure to file annual reports.
11.
IC 23-3-5-3 states in relevant part: Every corporation whose articles of
incorporation have been forfeited and its rights to transact business have been
revoked...shall continue its corporate capacity for three (3) years for the
purpose of winding up its affairs, liquidating and dissolving its affairs and
distributing its assets to its shareholders after paying all of its liabilities
and for no other purpose.
12.
During the three (3) years following July 15, 1975, and continuously up to the
date of the hearing of this cause, Petitioner continued to engage in the
business of drilling and producing oil and gas.
13.
IC 23-3-5-3 further requires that during the three (3) year period following
the forfeiture of its articles of incorporation, the corporation shall use the
words "in liquidation" after its corporate name.
14.
It was not until sometime during the fall of 1980 that the Department learned
or suspected that Petitioner's Articles of Incorporation had been forfeited.
15.
After the Department first learned or suspected that Petitioner's Articles of
Incorporation had been forfeited, the Department continued to communicate with
and/or direct correspondence to Petitioner in the name of Cherokee Drilling
Corporation.
16.
Pursuant to IC 23-3-5-1, the Secretary of the State of Indiana forfeited
Petitioner's Articles of Incorporation on July 15, 1975, and
[VOLUME 1, PAGE 39]
thereby revoked all Petitioner's
rights and privileges to carry on and transact the business of drilling and
producing oil and gas.
17.
From July 15, 1975, and continuously to the date of the hearing of this cause,
Petitioner continued to engage in the business of drilling and producing oil
and gas, all in violation of the Indiana General Corporations Act [IC 23-1-1
through IC 23-1-12]
18.
Cherokee Drilling corporation has not existed as a legal entity lawfully entitled to
engage in the business of producing oil and gas since July 15, 1975.
19.
In its communications and transactions with the Department, Petitioner failed
to signify its true corporate status by using the words "in
liquidation" after its corporate name, all in violation of IC 23-3-5-3.
20.
Neither petitioner's continued use of the name "Cherokee Drilling
Corporation" after July 15, 1975, nor any such continued use or reference
to said corporate name by the Department after that date, conferred upon the Petitioner
the status of a "de facto" corporation.[FOOTNOTE i]
FOOTNOTE
i. There cannot be a de facto corporation unless a de
jure corporation is possible. Indiana
Bond Company v. Ogle, 54 N.E. 407, 22 Ind. App. 593, 72 Am. St. Rep. 326.
De facto corporate existence requires a valid law under which the corporation
might have been formed, a bona fide attempt to incorporate under that law, and
an actual exercise of corporate powers. Sunman
- Dearborn Community School Corp. v. Kral-Zepf Freitag and Associates, 338 NE2d 707, 167 Ind. App. 339
(1975) ...[A] Corporation is dissolved ipso facto...on repeal of its
charter...since there is no longer any law under which it can legally
exist...[and] it cannot acquire the status of a corporation de
facto…after such repeal. 18 CJS Corporations, section 106.