Legal Question in Business Law in California

Re: Transfer of a money judgment

Compressing a question into a single short sentence is sometimes a great saver of time, space and wear and tear on the responder. Here, I'm not 100% clear on the facts, so I'll make a few general comments.

A suspended corporation has no powers, and by statute the only thing it can do is file for a name change. This is sometimes necessary, since the name of a suspended corporation can be taken by another corporation. Also, the contracts of a suspended corporation are voidable (not strictly void) by the other party; however, if the suspended corporation gets reinstated (obtains a certificate of revivor), it can also reinstate its contracts made while suspended and then they are no longer voidable. The other party must, therefore, take staps to rescind the contracts, if it wants to, before the revivor. There is more to it than this, but that's a foundation.

Now, about assignment of judgments in general. If X has a judgment against Y, so that Y owes X some money, X can assign (sell) his right to collect from Y to Z. Typically, Z will be a speculator with a lot of experience in evaluating the collectibility of judgments and Z will pay a percentage, often around 50%, of the face value of the judgment.

Applying this to your question: The suspended corporation, if it were "X" in the example and held (owned) a judgment against some other party, ("Y"), could sell its right to collect on the judgment to a third party, "Z", but "X" should exercise some caution in selling, because "Z" can bring an action to rescind its purchase and the deal would come unglued, probably to Z's advantage because "Z" is the party with the option to void the contract by a rescission suit.

Perhaps, however, you are asking whether the suspended corporation can "lay off" on some third party a judgment that it OWES as a judgment debtor.

I would have to say that I can't think of anything, other than perhaps the outcome of a bankruptcy, where a judgment creditor can be forced to look to a third party, and not the original debtor, for satisfaction of a judgment.

I hope this provides the answer you're looking for; if not, please contact me directly with an amplification on the facts.

Re: Transfer of a money judgment

A suspended California corporation may assign a money judgment, as it can enter into contracts. The contracts are voidable at the option of the other party.