Legal Question in Business Law in California

Re: Corporation

I can't give you a clear answer without knowing who owed the money and to whom it was owed.

If the corporation owed the money, nothing happens; it still owes the money. If the corporation owed the money to the deceased officer, it now owes the money to his estate or heir.

If the deceased officer owed the money to the corporation, the corporation can attempt to collect from the executor or administrator.

Death of an officer has no effect on the liability of the corporation to third parties or of third parties to the corporation.

Incidentally, although California law does require for-profit corporations to have three officers (president, secretary and financial officer or treasurer), one person can hold two or even all three offices.

Officers are usually appointed by the board of directors (check the corporation's bylaws for details) and the board can fill vacancies.

If this does not answer your question you may contact me directly.

Re: Corporation

One way to answer your question is by explaining the difference between how corporations work as compared to partnerships.

The laws affecting corporations are different from those affecting partnerships. In a partnership, each partner is personally liable for debts of the partnership and following the death of a partner, if it is so provided in the partnership agreement, his/her heirs would be liable for the debt.

The provisions for the payment of monies owed to each partner are also usually spelled out in the partnership agreement as well.

In a corporation however, the "owners" of the corporation are the shareholders, not the officers. Any monies owed to the corporation once an officer dies, is still owed to the corporation.

Monies owed within the corporation, as in the case of salary or reimbursement due an officer/employee would normally be spelled out in an employment agreement or other similar document. That document would control as to the status of the debt following the death of the officer.

And if the corporation owed money to the officer prior to his/her death, then that money would, in most cases, be owed to the heirs.

You did not give any details in your question, however it would seem that the heirs of the officer should thoroughly check through the deceased officer's papers and documents to see if there is any contract or other document providing for the specific event which occurred, and contact the remaining corporate officers to determine what the corporation's position is regarding the debt.

If I can be of assistance to you, please do not hesitate to call me at (818) 888 0533 or e-mail [email protected]