96 Wis. 641 | Wis. | 1897
There are two questions raised on this appeal; (1) Was the mere recording of the articles of incorporation, with the certificate of the election of officers, without the intention or fact of the papers themselves remaining in the office, a sufficient compliance with the statute, so that the organization of the borporation became complete, as upon a
1. The statute (sec. 1460, R. S.) provides that, upon the filing of “ a certificate of organization, . . . with a copy of the constitution,” in the office of the register of deeds of the county, “ such society shall have all the powers of a corporation necessary to promote the objects thereof.” It cannot be doubted that the filing of the proper papers in the proper office is made, by the statute, a condition precedent to the vesting of corporate powers. The oourt may not be able to clearly define the respect wherein the mere recording and removal of the papers from the office fails to serve the full purpose which the legislature intended to accomplish by the filing of them. The legislature, no doubt, had good and sufficient reasons for its choice of means to promote its purpose. For the court it is not a question of equivalents. A literal filing of the papers is necessary because it is so written in the law. The term “filing” and the verb “to file,” as related to this subject, include the idea that the paper is to remain in its proper order on file in the office. A paper is said to be filed when it is delivered to the proper officer, and by him received, to be kept on file. Bouv. Law Diet. The statute is plain and easy of observance. Yaluable rights and exemption from personal liability are to be secured by its observance. It is no undue severity to require its strict observance. The defendants had not observed it, and had not secured corporate powers.
2. Had the defendants secured immunity from individual liability ? No doubt, as a general rule, where an attempt to organize a corporation fails by omission of some substantial step or proceeding required by the statute, its members or stockholders are liable as partners for its acts and contracts. Beach, Priv. Corp. §§ 16, 162; 1 Thomp. Corp. §§ 239, 416,
The defendants are not a corporation either de jure or de facto, but are liable for the plaintiff’s claim as partners. It •was not necessary to prove a copartnership by evidence. That was established by implication of law. Nor was it necessary to prove that the debt was unpaid. There was no presumption that it had been paid to be rebutted. The judgment of the circuit court is right, and must be affirmed.
By the Gourt.— The judgment of the circuit court is affirmed.
With the decision that the defendants failed to comply with all the conditions precedent.to the corporate existence of the agricultural association I concur, but- from the decision that because of such failure such association was not a corporation defacto I respectfully dissent; hence dis
My brethren cite Beach, Priv. Corp. § 162, and 1 Thomp. Corp. §§ 239, 508, to the effect that, unless all the conditions precedent to the creation of a corporation are performed, there can be no corporation in fact, and that the members of the pretended corporation will be personally liable. Then §§ 417 and 420 of Judge Thompson’s work are cited, to the effect that, if the corporation never comes into being in fact, so as to be regarded as a corporation defacto, the persons who have assumed to contract in its name are personally liable. These sections seem to be tied together, in the opinion of the court, as if the two ideas ai’e in harmony, when the contrary, to my mind, is manifestly true. Thompson treats this subject in such a way as to naturally confuse one who attempts to follow him as authority. After saying, in §§ 239, 508, in effect, that all the conditions precedent to the creation of a corporation must be complied with, in order that the members may escape personal liability, he says, in § 417, that the rule does not apply to corporations defacto, and in § 420 that where there is a corporation de facto,— in other words, where the circumstances are such that a corporation might exist, and where the party seeking to charge the members individually has dealt with them as a corporation,— he is estopped from setting up the fact that they are not a corporation de jure, in order to charge them personally. Erom this confusion it is not to be wondered at that if a person tries to follow Judge Thompson he will be led inevitably into the position of holding that, unless all the conditions precedent to the existence of a corporation are complied with, personal liability of the members of the corpoj'ation will exist, though the rule ddes not apply if the organisation be a corporation de facto. That comes from trying to
If we hold with Missouri, Arkansas, and some other states, that unless all the'steps necessary to the creation of the corporation have been taken there is no corporate existence, and that the members of the association are personally liable, we, in effect, say that it is not sufficient to enable such members to escape personal liability to show that their organization is a corporation defacto; that nothing short of a corporation de jure will do. But if we adopt the growing doctrine, supported, as I shall shpw, by the overwhelming weight of authority in this country, that if a person contracts with a defacto corporation, the members of the latter ahd such person believing, in good faith, in its legal existence, such members cannot be held personally liable, then we concede, necessarily, that it is not essential to freedom from such liability that all the statutory requisites to the' existence of a corporation be complied with, because, when that is done, the organization, obviously, is not a corporation de facto only; it is a corporation de jure. This is too plain to admit of serious discussion.
While the decision in this case, as I read the opinion of the court, in one view, goes upon the ground that the members of a defacto corporation are not responsible personally, inasmuch as it may be held that the decision really is to the effect that personal liability exists because all the conditions precedent to a corporation de jwre were not complied with, some reference to authorities on the subject of whether to escape such liability it is necessary that the corporation exist in fact may be proper.
■ The development of the law on this subject has been rapid in recent years in the direction of holding that the state only can challenge the legality of the exercise of corporate powers. , The ancient doctrine was that all contracts made by a corporation in excess of its powers were void. That has not.
In Cochran v. Arnold, 58 Pa. St. 399, the question was whether a person who had contracted with a pretended corporation, so defectively formed that in a suit by the commonwealth it would have been enjoined for want of legal existence, could, in an action against the members of such corporation to enforce personal liability, successfully question the corporate existence. The case is particularly in point here, because the corporation claimed to exist by compliance with a general law, and the point was made that the rule that a private person cannot question the existence of a corporation assuming to exist' under the special law does not apply fully to corporations organized under general laws. To that and the general subject Mr. Justice SteoNg said: “Though formed under a general law, it is, as against all the world but the
The same subject was treated by the supreme court of Georgia in Planters’ & M. Bank v. Padgett, 69 Ga. 159, where the rule was laid down, in effect, that having contracted with the company, through its officers or agents, both parties believing the corporation to exist de jure as well as de faeio, an action cannot be maintained against them personally on the contract. The members never agreed to enter into the contract severally or jointly; they never agreed to be bound as partners, or to hold themselves out as such. The contract was intended to bind the association in a cor-, porate capacity only.
In Gartside Coal Co. v. Maxwell, 22 Fed. Rep. 197, the-corporation ivas so defectively organized as to have no legal existence. An action was brought by one who had dealt with it, against the stockholders, to hold them personally liable. Judge Beeweb, in delivering the opinion of the court, said, substantially, if the corporation had been challenged by the state, its exercise of corporate powers would have been enjoined, but where persons act in good faith, and suppose they are members of a valid corporation and transact business as such, and the corporate existence is not challenged; by the state, they cannot be held liable as individuals; that if a person deals with a supposed corporation,— with what all persons suppose is a corporation,— he cannot afterwards, turn around and say, “Well, I dealt with this supposed corporation ; I thought it was a corporation; I trusted it as such ; but, by reason of failure to legally incorporate, there is no legal corporation; therefore, I will hold the stockholdr
The foregoing citation of authorities has been carried to great length, but warranted, in my judgment, from the importance of the question involved. After carefully examining such authorities and the reasoning on which the doctrine discussed is based, I am unable to understand how any other conclusion can be reached than that a decision cannot be made that plaintiff in this case can attack the existence of the agricultural association as a corporation, if it were such de facto, without holding in direct conflict with the decision in John V. Farwell Co. v. Wolf, ante, p. 10, which is supported by the highest authorities in this country, and which the court certainly would not wish to question. True, there are some authorities still holding to the ancient doctrine that any one can challenge the existence of a corporation or the legality of its acts, but the trend of modern authority is to fence in, within constantly narrowing limits, the cases
Illinois has adhered as rigidly as any state to the doctrine that a creditor may raise the question of want of legal incorporation,, yet, in the recent case of Winget v. Quincy B. & H. Asso. 128 Ill. 67, it was held that, if a person contracts with a corporation defacto and receives the benefit of such contract, he cannot be permitted to allege any defect in the organization of the corporation as affecting its capacity to make the contract, even if the law under which it was organized was unconstitutional; that objection to the corporate existence is available only on behalf of the sovereign power of the state. That is carding the doctrine- under discussion further than is necessary for the purposes of this case, and beyond the general rule that there cannot be a de facto corporation under an unconstitutional law, because it is absolutely necessary to the existence of a defacto corporation that there be a valid law under which it might exist de jure.
So we say the law is that he who deals with a de facto corporation cannot attack its legal existence, though in administering it courts do not agree as to all the reasons for the doctrine. By some it rests on the ground that courts can only enforce contracts actually made by parties — cannot make contracts for them; by others upon the ground of estoppel; by others upon the broad, universally established principle that only the state can question the existence of a corporate organization, or the legality of its exercise of powers; and by still others upon the ground that broad principles of justice and public policy require that persons who, in
It only remains to be considered whether the association in question was a defacto corporation. My brethren say no, and, as I understand it, because there was a failure to perform some condition precedent to its being a corporation de jure. I must assume that such is really not the doctrine of this court, for the essential element of a mere corporation defacto is failure to comply with some provision of law requisite to its legal existence. Where such conditions are all complied with, then the corporation becomes an organization de jure, as well as defacto, and the doctrine pertaining to the latter class of official bodies has no application whatever. If it were the law that a corporation must be such de jure in order to be such de facto, obviously, the doctrine pertaining to the latter, upon which much learning has been displayed by the courts and text writers, would stand as the result of much useless expenditure of mental energy. The
One of the earliest and best considered cases on this subject is Methodist E. U. Church v. Pickett, 19 N. Y. 482. The corporation claimed to exist under a general law. Such law required the making, acknowledging, and recording of a certificate of organization, showing certain facts. That was complied with, except that the certificate did not show the existence of all facts requisite to a legal corporation. After acting as a corporation for some time, in an action brought as such to which a private person was a party, its corporate existence was challenged. On the question thus presented,
Vanneman v. Young, 52 N. J. Law, 403, touches the instant case at every point. The condition precedent which defendants here failed to perform was that as to filing in the office of the register of deeds of their constitution and certificate
In Vanneman v. Young, supra, there was, as here, an absolute failure to comply with the law in respect to the official record. The certificate of incorporation was not filed in tho office of the secretary of state. That, under the New Jersey law, was essential to corporate existence. Plaintiff sold to the pretended corporation some merchandise, and, upon payment therefor not being made, suit was brought by him against the members of the corporation, to charge them personally as partners, upon the ground that the corporation
In Georgia S. & F. R. Co. v. Mercantile T. & D. Co. 94 Ga. 309, there was a general law under which the organization might have been incorporated. It organized under a special law that was held unconstitutional. There was an entire absence, it will be observed, of any official record of any act done under the general law. It was held that the special law was unconstitutional and void; hence that the organization had no de jure existence; nevertheless, that it was a corporation de facto; that the essentials of a de facto corporation were all present: (1) A law under which the organization might have been incorporated; (2) a bona fide attempt to become incorporated; and (3) an assumption and exercise of the powers of a corporation, unchallenged by the state.
The foregoing authorities are believed to fairly state the law in respect to what is necessary to constitute a corporation defacto. The very meaning of the term “ defacto ” in
From the foregoing, I am warranted in asserting that, by well-settled principles of law, the agricultural association with whom plaintiff contracted was a defacto corporation. Every element necessary to make it such appears clearly by the record. There was a law under which it might have -existed. The association prepared their constitution, and
I think the judgment of the circuit court, holding the defendants liable as partners, was wrong, and that it should be reversed, and the cause remanded for a new trial.