First Commercial Bank, N.A. v. Michael W. Walker et al.

Annotate this Case
FIRST COMMERCIAL BANK, N.A. v. Michael W.
WALKER, Aearth Development, Inc., Aearth
Preparation, Inc., and Coal Processors, A
Joint Venture

96-1495                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered April 30, 1998


1.   Appeal & error -- standing and capacity issue preserved by directed-verdict
     motion. -- The issue of standing and capacity was preserved by
     a timely motion for a directed verdict that was renewed at the
     conclusion of the case.

2.   Appeal & error -- law of case -- effect on subsequent appeal. -- The
     doctrine of law of the case prevents an issue raised and
     decided in the first appeal from being raised in a subsequent
     appeal.

3.   Appeal & error -- law of case -- review of standing and capacity not
     barred by. -- Where the supreme court's decision in the first
     appeal was predicated solely on the issue whether the chancery
     court had subject-matter jurisdiction, the supreme court's
     review of standing and capacity was not barred by the law of
     the case.

4.   Judgment -- res judicata -- when applicable. -- For the doctrine of
     res judicata to apply, the claim must have been adjudicated on
     the merits; this requirement presupposes that the court in
     which the claim was litigated properly had jurisdiction over
     those proceedings.
5.   Judgment -- res judicata -- did not require circuit court to adopt
     chancellor's rulings on remand. -- The doctrine of res judicata did
     not bar the circuit court's or the supreme court's
     consideration of standing and capacity where the chancery
     court rendered a judgment for appellant on the merits, but the
     supreme court reversed that decision for lack of subject-
     matter jurisdiction; therefore, the circuit court was not
     required by the doctrine of res judicata to adopt on remand
     any of the chancellor's rulings.

6.   Contracts -- interference with contractual relationship -- only appellee
     business entities could assert claim. -- To prevail on a claim for
     interference with a contractual relation, a plaintiff must
     present evidence and prove that a third party failed to
     continue a contractual relationship with the claimant as a
     result of the defendant's improper conduct; here, appellees
     did not allege that appellant's actions caused a third party
     to fail to continue a contractual relationship with the
     individual appellee, but rather asserted that appellant's
     conduct caused a third party to discontinue a contractual
     relationship with appellee business entities.

7.   Fraud -- only appellee business entities could assert claim. -- Only
     appellee business entities could assert a fraud tort claim
     where there was no allegation that appellant had made or
     breached any promise to provide financing to the individual
     appellee as an individual, but instead the claim was that
     there was a breach of a promise to enter into long-term
     financing with appellee business entities.

8.   Conversion -- only appellee business entities could assert claim. -- Where
     appellees claimed that appellant converted a sum of money
     belonging to appellee business entities that had been
     deposited in an escrow account, but where there was no
     allegation that the individual appellee asserted any right or
     interest in these funds for his own individual benefit,
     appellee business entities were the only parties who could
     assert, as owners, that appellant's actions constituted a
     conversion of the escrow account.

9.   Corporations -- corporation and stockholders separate entities. -- A
     corporation and its stockholders are separate and distinct
     entities, even though a stockholder may own the majority of
     the stock.

10.  Corporations -- attributes of corporation. -- A corporation has the
     power to sue and be sued in its corporate name; it is a legal
     entity which, being distinct from its members, owns the
     corporate property and owes the corporate debts, is the
     creditor to sue or the debtor to be sued, has perpetual
     existence, and can act only through its duly constituted
     organs, primarily its board of directors.

11.  Corporations -- officers -- no individual right of action for corporate
     injuries. -- Generally, the officers and members of a
     corporation may not sue or be sued in their own name; a
     corporate officer has no individual right of action against a
     third party for alleged wrongs inflicted on the corporation,
     even if the officer is the sole shareholder.

12.  Corporations -- officers -- no showing that individual appellee made
     contribution toward payment of guaranteed notes. -- There was no
     showing that the individual appellee had made any contribution
     toward payment of the notes that he guaranteed, even though it
     appeared that he had been discharged from bankruptcy; the
     wrongs that appellees sought to redress were corporate
     injuries, not injuries to the stockholder-officer as an
     individual.

13.  Guaranty -- promises of debtor and guarantor are independent. -- The
     undertaking of the principal debtor, here appellee business
     entities, is independent of the promise of the guarantor, here
     the individual appellee; a guarantor is one who makes a
     contract, which is distinct from the principal obligation, to
     be collaterally liable to the creditor if the principal debtor
     fails to perform; a guaranty relationship does not merge with
     that of a principal borrower so as to allow the guarantor to
     pursue the borrower's causes of action.

14.  Guaranty -- majority shareholder did not have standing to pursue causes of
     action belonging to corporate borrowers -- acted only as guarantor. -- The
     individual appellee's status as a majority shareholder did not
     vest him with standing to pursue causes of action that
     belonged to the corporate borrowers; likewise, in borrowing
     the funds, the individual appellee acted as a representative
     of appellee business entities and as a guarantor of the debt;
     although he was shown as a "maker" on some of the loan
     documents, he did not have standing to maintain this action
     because appellee business entities were the principal
     borrowers and sole recipients of the borrowed funds; the
     individual appellee acted only as a guarantor, even on those
     notes that he signed individually and as a representative of
     appellee business entities.

15.  Appeal & error -- individual appellee did not have standing as either
     stockholder-officer or guarantor of corporate debts. -- The supreme
     court concluded that the individual appellee did not have
     standing to bring the action either as an individual
     stockholder and officer of appellee business entities or as a
     guarantor of the debts of appellee business entities.
16.  Corporations -- corporation not in existence cannot initiate lawsuit. --
     A corporation not in existence cannot initiate a lawsuit; a
     suit must be initiated by a person, natural or artificial. 

17.  Corporations -- appellee business entities lost capacity to file suit
     following dissolution of joint venture and revocations of corporate
     charters. -- Appellee business entities lost the capacity to
     file suit following the dissolution of appellee joint venture
     and the revocations of the corporate charters of appellee
     business entities; the matter was reversed and dismissed.


     Appeal from Pulaski Circuit Court, Second Division; Chris
Piazza, Judge; reversed and dismissed.
     Barber, McCaskill, Jones & Hale, P.A., by: Glenn W. Jones,
John S. Cherry, and Joseph F. Kolb; and Williams & Anderson, by:
Philip S. Anderson, Leon Holmes, and Katharine R. Cloud, for
appellant/cross-appellees.
     The Burk Law Firm, A Professional Corporation, by: Michael G.
Burk; Walker & Black, by: Kendell R. Black; and James E. Burk, for
appellees/cross-appellants.

     Ray Thornton, Justice. 
     Plaintiffs, Michael W. Walker, Aearth Development, Inc.
(Aearth), Aearth Preparation, Inc., and Coal Processors, brought
the underlying lender-liability action, asserting that wrongful
actions of defendant, First Commercial Bank and its predecessors
(the Bank), caused the failure of plaintiffs' coal mining,
processing, and sales business in the Arkansas River Valley.  This
is the second appeal involving the disposition of these issues. 
The first appeal followed the chancery courtþs judgment in favor of
the Bank on all allegations after a twelve-day trial.  On appeal,
the jurisdiction of the chancery court was challenged, and we
determined that the lower court erred in transferring the case from
circuit court to the chancery court because the chancery court
lacked subject-matter jurisdiction.  See Walker v. First Commercial
Bank, 317 Ark. 617, 880 S.W.2d 316 (1994) (Walker I).  We reversed
and remanded with instructions to transfer the case to circuit
court, without binding the circuit court on any issue decided by
the chancellor.
     Individual plaintiff Michael Walker was a principal
stockholder in Aearth, which formed a wholly owned subsidiary,
Aearth Preparation, Inc.  Aearth entered into a joint venture with
other parties to form Coal Processors.  We refer jointly to Aearth
Development, Inc., Aearth Preparation, Inc., and Coal Processors as
"the Aearth business entities."  Aearth held a 75% interest in Coal
Processors, and the remaining 25% was acquired by George Locke, who
is not a party to this proceeding.  In addition to being a
stockholder and officer of Aearth, Mr. Walker was a guarantor of
notes executed by the Aearth business entities to obtain funds from
the Bank and other sources of credit.
     At trial in the circuit court, the Bank challenged the
standing and capacity of plaintiffs as a threshold matter, and also
urged the court to declare that all of plaintiffs' claims were
barred on principles of judicial estoppel because those claims were
not asserted during prior bankruptcy proceedings.  Over the Bank's
objections, issues of fraud, conversion, and tortious interference
with contractual relations were presented to the jury, which
returned a $22.5 million verdict.  The court reduced this verdict
by a set-off that the court determined to be greater than $7.3
million, which, together with a remittitur of $7 million from the
award of punitive damages, resulted in a verdict of $8.2 million.
     From this order, the Bank appeals and plaintiffs cross-appeal,
together asserting seventeen claims of error.  We have determined
that the Aearth business entities did not have the capacity to
bring the action for "lender liability" and that Mr. Walker did not
have standing to pursue, either as a stockholder or guarantor, the
same causes of action asserted by the Aearth business entities. 
Accordingly, we reverse and dismiss.

                       Factual Background
     Mr. Walker formed Aearth Development, Inc., in 1978.  Aearth entered into a joint
venture with Russell Mining Company of Kansas.  At the time of this joint venture, Mr. Walker
owned 40% of Aearth, and the balance of the stock was held by three other persons.  Some coal
was produced and sold, primarily to charcoal markets.  In early 1980, Russell Mining withdrew
from the joint venture.  At that time, Aearth owned a small bulldozer, a front-end loader, and a
scraper, and depended on contractors to provide their own equipment.  Aearth had not yet made
a profit from its operations.  An overseas purchaser expressed an interest in Arkansas coal, but
the coal had a high sulfur content with sulfur in the form of pyretic sulfur or "fools gold," which
often prevented the raw product from meeting the requisite specifications.
     Aearth sought development capital to enhance the quality of its product in order to
compete in the market place.  In December 1980, Mr. Walker engaged the investment firm of
Collins, Locke, and Lasater to assist in obtaining a target of $10,000,000 in development
financing.  One of the principals of the firm, George Locke, became personally interested in the
enterprise.  On December 16, 1980, Mr. Locke persuaded the Bank to grant Aearth, which had
virtually no working capital, a line of credit of $500,000, secured by the personal guarantees of
Mr. Locke and Mr. Walker.  By April 27, 1981, the full amount of the note had been advanced,
and no repayments had been made on that note.  Aearth's inventory and accounts receivable had
been pledged as collateral to the Bank, and this security agreement was never terminated.
     On May 20, 1981, Aearth, Mr. Locke, and Mr. Walker acquired a second line of credit
from the Bank in the amount of $800,000.  No repayments were made on this loan.
     In June 1981, Aearth entered into a joint venture with Arkala Coal Company.  This joint
venture, Coal Processors, named Mr. Locke as managing agent.  With Mr. Locke's assistance,
the joint venture obtained two lines of credit from the Bank, aggregating an additional sum of
$1,475,000 to be used in constructing a coal-washing facility.  The notes for these lines of credit
were signed by Aearth, Mr. Locke, and Mr. Walker, as well as by the principals of Arkala. 
These notes were fully advanced and were replaced by a single note, executed on November 30,
1981, by Coal Processors, Mr. Locke, and Mr. Walker, among others.
     Notwithstanding promises made in several loan agreements with the Bank to refrain from
entering into other loan agreements and encumbering assets and collateral already pledged to the
Bank, Aearth, together with Mr. Locke and Mr. Walker, entered into two separate agreements
with other creditors using some of the same assets as security.  Aearth executed a note on
December 23, 1981, in the amount of $716,000 to Bono, DiGiglia, and Levingston of Louisiana;
however, only about $500,000 of this note was actually advanced.  On January 9, 1982, Aearth
also executed a security agreement pledging its assets to Taylor Machinery of Memphis as
security for $662,667.36 that Taylor Machinery advanced to Aearth.
     Additionally, on December 10, 1981, the Bank advanced to Coal Processors an additional
$150,000.  The note for this advance was due on March 10, 1982.  Aearth executed another note
to the Bank on April 9, 1982, for a $300,000 loan, which was due on May 10, 1982.  By April,
the Aearth business entities were in default on all loans except this note that was due on May 10,
1982, and the entities owed the Bank $2,925,000, plus interest.
     On April 15, 1982, Aearth borrowed $272,000 from Dan Lasater, who personally
borrowed this amount from the Bank, for the purpose of paying two past due installments on
Coal Processors' $1,475,000 note to the Bank.  Mr. Lasater's demand note to the Bank was due
on or before May 14, and the Bank agreed to subordinate its right to any funds received from
Aearth to Mr. Lasater.  Aearth committed to Mr. Lasater that this debt would be paid from the
first proceeds of a specified sale of coal, and Aearth instructed the broker for the purchaser of
the coal that $272,000 of the proceeds were payable to Mr. Lasater.
     While the Aearth business entities had also pledged proceeds from the sale of this coal
to Taylor Machinery and other creditors, the specific instructions given by Aearth to the broker
did not provide for any distribution of these funds to Taylor Machinery.  When the $245,823.96
proceeds from the first sale were deposited in an escrow account at the Bank, the Bank applied
these proceeds to Mr. Lasater's loan.
     Taylor Machinery had become concerned about the repayment of its $662,667.36 advance,
and on or about April 6, Taylor Machinery had drawn down a $300,000 line of credit from the
Bank, reducing its exposure to about $360,000.  Aearth had orally represented that some of the
proceeds from the first sale of coal would be applied to Taylor Machinery's claims, and when
these funds were not forthcoming, Taylor Machinery orally told Aearth to park the equipment
pending some resolution of the financial problems.  After several weeks, Taylor Machinery
arranged to have its equipment picked up and returned to Memphis.
     The Aearth business entities discontinued operations and filed Chapter 11 bankruptcy
proceedings in November 1982.  In December 1983, the bankruptcy court converted the Chapter
11 proceedings to a Chapter 7 liquidation.  In May 1984, Mr. Walker filed a personal Chapter
7 bankruptcy petition.

              Standing and Capacity of the Parties
     We first consider whether, under principles of Arkansas law, plaintiffs had standing or
capacity to bring an action for lender liability against the Bank.  Plaintiffs argue that these issues
are not preserved for our review.  We disagree.  The issue of standing and capacity was preserved
by a timely motion for a directed verdict that was renewed at the conclusion of the case.
     Plaintiffs argue further that the issues were resolved in Walker I, and that by determining
that the chancery court did not have subject-matter jurisdiction, we decided these issues sub
silentio and that plaintiffs have standing and capacity as a result of the law of the case and res
judicata.  This argument also lacks merit.
     The doctrine of law of the case does prevent an issue raised and decided in the first appeal
from being raised in a subsequent appeal.  Bennett v. State, 308 Ark. 393, 825 S.W.2d 560
(1992).  However, our decision in Walker I was predicated solely on the issue whether the
chancery court had subject-matter jurisdiction.  We stated expressly that we "need not address any
other issues in view of the ruling on this dispositive issue."  Walker v. First Commercial Bank,
317 Ark. at 619, 880 S.W.2d   at 317.  Our determination that the chancery court was without
jurisdiction afforded the trial court a clean slate on which to consider the entire case, including
motions to dismiss for lack of standing, motions for summary judgment, and all other matters,
as though the chancery court had not acted at all.  Therefore, our review of standing and capacity
is not barred by the law of the case.
     The doctrine of res judicata likewise does not bar the circuit court's or our consideration
of standing and capacity.  For res judicata to apply, the claim must have been adjudicated on the
merits; this requirement presupposes that the court in which the claim was litigated properly had
jurisdiction over those proceedings.  Crockett & Brown, P.A. v. Wilson, 314 Ark. 578, 864 S.W.2d 244 (1993).  Here, the chancery court rendered a judgment for the Bank on the merits,
but we reversed that decision for lack of subject-matter jurisdiction.  Therefore, the circuit court
was not required by the doctrine of res judicata to adopt on remand any of the Chancellor's
holdings.
     The gravamen of plaintiffs' complaint is that the Bank's wrongful actions damaged the
Aearth business entities, breached an alleged agreement to provide long-term financing to the
Aearth business entities, impaired their ability to obtain other financing, interfered with their
contracts with others, and wrongfully applied funds belonging to the business entities to a debt
owed by the business entities.  For the reasons stated below, we have determined that Mr.
Walker, as an individual, lacked standing to bring this action against the Bank for compensatory
and punitive damages that the Aearth business entities allegedly suffered.

A.  Standing of Michael W. Walker as individual stockholder and guarantor or comaker of
business debts of the corporate plaintiffs
     Looking at the three underlying tort claims, each of plaintiffs' claims was based on
allegations of the Bank's wrongful conduct against the Aearth business entities.  Plaintiffs claimed
that the Bank tortiously interfered with its contractual relations regarding the performance of
contracts to sell coal and the performance of various other contractual commitments.  All of these
allegations were based on the Bank's actions with respect to the Aearth business entities'
performance of their contracts with third parties.  To prevail on a claim for interference with a
contractual relation, a plaintiff must present evidence and prove that a third party failed to
continue a contractual relationship with the claimant as a result of the defendant's improper
conduct.  Navorro-Monzo v. Hughes, 297 Ark. 444, 763 S.W.2d 635 (1989).  Plaintiffs did not
allege that the Bank's actions caused a third party to fail to continue a contractual relationship
with Mr. Walker, but rather asserted that the Bank's conduct caused a third party to discontinue
a contractual relationship with the Aearth business entities.
     In plaintiffs' fraud claim, they alleged that the Bank fraudulently induced them to enter
into the November 31, 1981, loan agreement by promising to provide long-term financing for all
the debts of the Aearth business entities.  Similarly, only the Aearth business entities could assert
this tort claim.  There was no allegation that the Bank had made or breached any promise to
provide financing to Mr. Walker as an individual; rather, the claim was that there was a breach
of a promise to enter into long-term financing with the Aearth business entities.  The Aearth
business entities' loans were guaranteed by Mr. Walker, Mr. Locke, and others; however, the
Aearth business entities were the primary obligors of the loans and the holders of legal title to
the assets pledged for the repayment of the loans.
     The third claim that went to the jury was that the Bank allegedly converted $245,000
belonging to the Aearth business entities that had been deposited in an Aearth escrow account. 
Plaintiffs asserted that the premature crediting of these proceeds from the specified sale of coal
to reduce Mr. Lasaterþs debt to the Bank caused Taylor Machinery to withdraw its equipment,
resulting in Aearthþs downfall.  There is no allegation that Mr. Walker asserted any right or
interest in these funds for his own individual benefit; therefore, the Aearth business entities were
again the only parties who could assert, as owners, that the Bank's actions constituted a
conversion of the escrow account.
     There is a near universal rule that a corporation and its stockholders are separate and
distinct entities, even though a stockholder may own the majority of the stock.  Banks v. Jones,
239 Ark. 396, 390 S.W.2d 108 (1965).  A corporation has the power to sue and be sued in its
corporate name.  Ark. Code Ann.  4-26-204(a)(2) (Repl. 1991).  The court of appeals has stated
that a corporation is "a legal entity which, being distinct from its members, owns the corporate
property and owes the corporate debts, is the creditor to sue or the debtor to be sued, has
perpetual existence, and can act only through its duly constituted organs, primarily its board of
directors."  Arkansas Iron & Metal Co. v. First Nat'l Bank of Rogers, 16 Ark. App. 245, 251,
701 S.W.2d 380, 383 (1985).
     Generally, the officers and members of a corporation may not sue or be sued in their own
name.  See 19 C.J.S. Corporations  711, at 364 (1990).  A corporate officer has no individual
right of action against a third party for alleged wrongs inflicted on the corporation, even if the
officer is the sole shareholder.  Id.  629, at 277.
     A recent federal case provides some guidance on a similar question.  See Taggart &
Taggart Seed v. First Tenn. Bank Nat'l Ass'n, 684 F. Supp. 230 (E.D. Ark. 1988).  In Taggart,
the defendant bank had provided plaintiffs with an $18 million line of credit and repayment of
the funds advanced were guaranteed by the corporations' principal shareholders Tommy Taggart,
Charles Taggart, and their spouses, as well as other guarantors.  The loan was further secured by
the pledge of the corporation's equipment, facilities, and inventory.  The bank considered that
an act of default had occurred and terminated the agreement.  The note was repaid in full, and
plaintiffs secured another line of credit.  The corporation and the individual stockholders and
guarantors filed a lender-liability action, with allegations including bad faith, misrepresentation,
deceit, constructive fraud, interference with contractual relations, and economic loss.  Id.
     The court granted the bank's motion to dismiss all parties except the corporation.  Id.  The
district court stated that the claims of the individual guarantors that they suffered damages
because of the bank's breach of its promise to lend further money to the corporation was "an
attempt to piggyback their claims on top of Taggart Seed's."  Id. at 234.  The court noted that
the injuries that the individuals alleged were "incidental to and derivative of the injury alleged
to the corporate entity. . . .  To allow [the individuals] to prosecute this action in their own names
would . . . violate the near universal rule that an action to redress injuries to a corporation must
be brought in the corporate name."  Id.
     In concluding that the claims of the individual plaintiffs were properly dismissed, the
district court stated:
          [T]he status of some of the plaintiffs as guarantors of the April, 1984, loan
     agreement does not give them standing to bring this action.  . . . [T]he guarantors do not
     contend that they contributed toward the repayment of the note.  The corporate entity,
     Taggart & Taggart Seed, Inc., is the real party in interest, not the guarantors who no
     longer have even a contingent liability on the note and who do not allege that they were
     ever called on for its repayment.
Id. at 235.
     As in Taggart, there is no showing in the case before us that Mr. Walker has made any
contribution toward payment of the notes that he guaranteed, even though it appears that Mr.
Walker has been discharged from bankruptcy.  Also, as stated above, the wrongs that plaintiffs
sought to redress were corporate injuries, not injuries to Mr. Walker as an individual.
     We recognize that Mr. Walker also asserted that because he was a guarantor of the various
loans, he should have standing as a "party" to the loan agreements.  However, the undertaking
of the principal debtor, here the Aearth business entities, is independent of the promise of the
guarantor, Mr. Walker.  First American Nat'l Bank v. Coffey-Clifton, Inc., 276 Ark. 250, 633 S.W.2d 704 (1982).  A guarantor is one who makes a contract, which is distinct from the
principal obligation, to be collaterally liable to the creditor if the principal debtor fails to perform. 
Id. (citing 10 Samuel Williston and Walter H.E. Jaeger, A Treatise on the Law of Contracts 
1211, at 685-86 (3d ed. 1967)); see also First Nat'l Bank of Helena v. Solomon, 170 Ark. 555,
280 S.W. 659 (1926).  There is no holding in any of these cases that a guaranty relationship
merges with that of a principal borrower so as to allow the guarantor to pursue the borrower's
causes of action.
     In Schmidt v. McIlroy Bank & Trust, 306 Ark. 28, 811 S.W.2d 281 (1991), the appellants
made a similar argument that they, as guarantors, should have standing to pursue lender-liability
claims on behalf of the corporate entity.  In concluding that the individual appellants had no
standing to sue for injuries to the corporation, we observed:
     [Appellants'] argument is that when the corporation's charter was revoked for failure to
     pay franchise fees, the officers and shareholders were considered to be operating the
     business as a partnership and were individually liable for the obligations of the de facto
     corporation, and since they were subjected to individual liability as partners, they ought
     to be allowed, in fairness, to bring suit in the same capacity.  The argument, while novel,
     is without merit. . . .  The effect of revocation was that the corporation lost its capacity
     to sue, and this particular type of corporate cause ceased to exist.  To allow the individual
     appellants to bring this cause of action would effectively reverse prior law which prohibits
     suits by a corporation whose charter has been revoked . . ..
Id. at 33, 811 S.W.2d   at 283-84 (citations omitted).
     Mr. Walker's status as a majority shareholder does not vest him with standing to pursue
causes of action that belong to the corporate borrowers.  Likewise, in borrowing the funds, Mr.
Walker acted as a representative of the Aearth business entities and as a guarantor of the debt. 
Although he was shown as a "maker" on some of the loan documents, he does not have standing
to maintain this action because the Aearth business entities were the principal borrowers and sole
recipients of the borrowed funds.  Mr. Walker acted only as a guarantor, even on those notes that
he signed individually and as a representative of Aearth business entities.We conclude that
Mr. Walker did not have standing to bring this action either as an individual stockholder and
officer of the Aearth business entities or as a guarantor of the debts of the Aearth business
entities.

B.  Capacity of the Aearth Business Entities
     On November 27, 1984, before the original complaint was filed in this matter, the
corporate charters of Aearth Development, Inc., and Aearth Preparation, Inc., were revoked for
nonpayment of franchise taxes.  The other business plaintiff, Coal Processors, was a joint venture
with Aearth Development, Inc., and George Locke as the joint venturers at the time the Aearth
business entities filed voluntary bankruptcy petitions on November 4, 1982.  Under the terms of
the agreement creating the joint venture, the joint venture dissolved and was terminated upon the
bankruptcy, insolvency, or involuntary dissolution of either joint venturer.  As provided in 11
U.S.C.  301 (1994), the commencement of a voluntary bankruptcy constitutes an adjudication
of bankruptcy, and additionally the revocation of the corporate charter resulted in the dissolution
of the corporate entities.
     In considering whether a corporation that had ceased to exist could initiate a lawsuit, we
have stated:
     [T]he trial judge ruled, quite properly, that a corporation not in existence could not initiate
     a lawsuit.  This is the law.  In Sulphur Springs Recreational Park, Inc. v. City of Camden,
     247 Ark. 713, 447 S.W.2d 844 (1969), we affirmed a trial court's dismissal of a
     complaint, because the plaintiff's corporate charter was not in existence when the suit was
     filed. . . .  A suit must be initiated by a person, natural or artificial.  Fausett & Co. v.
     Bogard, 285 Ark. 124, 685 S.W.2d 153 (1985).
Committee for Utility Trimming Inc. v. Hamilton, 290 Ark. 283, 284-85, 718 S.W.2d 933, 934
(1986).  We determined that the corporation's complaint was properly dismissed because our law
provides that a corporation cannot file a complaint in court after it ceases to exist legally.  Id.
     From these cases, we conclude that all of the Aearth business entities lost the capacity to
file suit following the dissolution of the joint venture, Coal Processors, and the revocations of the
corporate charters of Aearth Development, Inc., and Aearth Preparation, Inc., on November 27,
1984.

                   Other Issues and Conclusion
     The Bank advanced a separate argument that the doctrine of judicial estoppel bars
plaintiffs' claims in this case.  Plaintiffs declared to the bankruptcy court that they had no lender-
liability claim against the Bank, or that such a claim had a zero value.  This representation was
made under penalty of perjury, and if plaintiffs in this case had standing and capacity to bring
their cause of action against the Bank, we would carefully consider whether the circumstances
of this case call for us to apply the doctrine of judicial estoppel.
     However, having determined that Mr. Walker did not have standing to bring this action
and that the Aearth business entities had lost their capacity to bring suit, we need not determine
whether the principles of judicial estoppel would bar these claims or address the remaining issues
presented to us for decision.
     We reverse and dismiss.
     Glaze, Brown, and Imber, J.J., not participating.
     Special Justices J.W. Greene, Jr., and Mark Klappenbach join in this opinion.
     Special Justice Hani W. Hashem concurs.

     Hani W. Hashem, Special Justice, concurring.  I agree with the majority decision
reversing and dismissing this case.  However, I write briefly to distinguish this case from
Calandro v. Parkerson, 327 Ark. 131, 936 S.W.2d 755 (1997).  I am concerned that, without
delineation, our decision here may leave some misconception of inconsistency of decisions of this
Court.  In Calandro, a defunct corporation and its shareholders sued their attorney alleging
malpractice, breach of contract, and deceit.  The trial court granted summary judgment to the
attorney on all three causes of action, finding that the revocation of the corporationþs charter
caused it to lose its ability to bring suit.  The trial court further found that the individual
shareholders lacked standing and were not proper parties.  On appeal, this Court found the
summary judgment proper as it related to the corporate causes of action for breach of contract
and attorney malpractice.  However, the claim of the individual shareholders for deceit was
reversed and remanded to the trial court.  I see the distinction as being the procedural stages of
the appeals involved between Calandro and this case.
     In Calandro, the individual shareholders asserted that the attorney had knowingly made
false representations, upon which they had relied to their detriment.  This Court simply ruled that
there was a sufficient question of fact regarding the allegations of false representation in reversing
the trial courtþs decision on the deceit claim.  Calandro, 327 Ark. at 138, 936 S.W.2d   at 759. 
After careful consideration and stringent scouring of the behemoth record in this appeal, I can
find no credible, factual basis to believe that Michael W. Walker bore the brunt of any
misrepresentation which caused him harm separate and apart from the Aearth corporate entities. 
"You've got to guard against speaking more clearly than you think."  Washington Post, June 24,
1973, quoting Howard H. Baker, Jr., U.S. Senator.