Legal Question in Business Law in California

Re: Corporation doing business as another Corporation

The answer to your first corporation is "No". Under california law, a dba is not a separate legal entity. X corp. dba Y is still X corp., and Y has no separate legal status. In your question, Y is actually a different entity, a different corporation, and thus cannot be a "dba" of X corp.

2. The answer to your second question is No, nor should it. The subsidiary is a separate legal entity from the parent corporation, and thus should sign its own contracts. Also, if the parent company is signing, the parent's assets would be at risk for performance of the contract.

3. Your third question is moot, under the facts you have presented, since the subsidiary corporation cannot be a "dba" of the parent. However, if the parent wants to do business in California under a fictitious name (a dba), it must complete a dba form, record it with the county recorder, and publish it in a paper of general circulation for 4 consecutive weeks.

Re: Corporation doing business as another Corporation

I've had the advantage of reading Mr. Gittler's answer, and I agree with it to some extent, but I may have a little different interpretation of the facts you've given, so here's a second opinion - and I'll try to be clear about what I assume you're saying, so you won't be misled if I've misinterpreted the facts.

First question: I think there is nothing to prevent this from happening, i.e. it is legally possible, even if it isn't legally proper. Let's assume there are two corporations, ABC, Inc. and XYZ, Inc.

Let's assume that ABC, Inc. adopts the name XYZ, Inc. with XYZ, Inc's full knowledge and permission, then properly files and publishes XYZ, Inc. as its fictitious business name. With respect to ABC, Inc., "XYZ, Inc." is indeed a fictitious name, because it isn't the user's "real" name (its "real" name is, of course, ABC, Inc.).

Further, Business & Professions Code section 17910.5(a) provides that "No person shall adopt any fictitious business name which includes "Corporation," "Corp.," "Incorporated," or "Inc." unless that person is a corporation organized pursuant to the laws of this state or some other jurisdiction." This seems arguably at least to authorize the useage about which you're asking.

One could argue that one corporation holding itself out to be another corporation is misrepresentation and could be fraud; on the other hand, this is what d/b/a's are all about and the "mistaken identity" problem is supposedly taken care of by the filing laws.

The use by ABC, Inc. of XYZ, Inc.'s name may create a conflict of legal presumptions as to the right to use the name, since as a corporation licensed to do business in California, XYZ, Inc. is presumed to have the right to use its name in every county, and that would create a conflict with ABC, Inc.'s use in the county where it filed the d/b/a. However, the presumptions are rebuttable and if the entities have agreed on ABC, Inc.'s right to use the name, the conflict is not an insurmountable problem.

Having insurance has nothing to do with it, except that both corporations better have plenty of public liability coverage!

Having argued above that the proposed d/b/a is probably legally possible, I would continue by saying that it is probably a dumb idea. Whatever the possible reason for wanting to do this, there is no doubt a better arrangement that accomplishes the same objective. For example, one corporation could become the agent of the other. Under the d/b/a concept, one of the perils is that one corporation will become the undisclosed agent of the other, with unwanted liability consequences. If this arrangement is really about agency, why beat around the bush?

I'll complete my answer in a follow-up since I'm close to the LawGuru character limit for one answer.