49 Mo. App. 345 | Mo. Ct. App. | 1892
In the year 1889, the defendants, who compose some of the principal business men of St. Joseph, Missouri, conceived the idea of holding at said city a mammoth fair and 'exposition. To this end books were opened, but they were only able to secure subscriptions to the enterprise aggregating $43,000. .In order, doubtless, to impress the country with the magnitude of the proposed undertaking, it was determined to organize a corporation with a stated capital of $1,000,000. But under the corporation laws of Missouri this could not be done with such a meager subscription of only $43,000, since by the provisions of our laws for the incorporation of such business enterprises, the whole of the stock must have been in good faith subscribed, and fifty per cent, thereof paid up before such million-dollar corporation could be organized. R. S. 1889, sec. 2768. To avoid this obstacle, and evade the restrictions of the laws of their own state, the defendants (all citizens of St. Joseph, Missouri) then sought to organize as a corporation under the laws of the state of Colorado, where it seems the capital stock may be named at any sum, however large,
The enterprise proved a serious disaster, at least, financially; the assets of the pretended corporation proved inadequate for the payment of its debts, and this is an action by one of its creditors, whereby it is sought to hold the defendant incorporators liable as partners. The good faith of the corporation is attacked, on the ground that this organizing under the laws of Colorado was a legal fraud on the laws of that state as well as of Missouri; that there was then no incorporation, but that these defendants should be held liable as partners for its unpaid debts. No question is made as to the correctness of plaintiff’s account; the only matter in dispute is whether or not the defendants are individually liable therefor.
The cause was tried by the court below without the aid of a jury; a finding and judgment was had in favor of defendants, and plaintiff has appealed.
I. It is of course well understood that the incorporating in one nation or state, either by special act or general law, has no extra-territorial force. In other words, the statute laws of one state have no force or effect as such in other states. Such recognition as is given corporate entities in states other than the parent
Clearly then the statutes of Colorado meant to provide for the creation of such .corporations, a part, at least, of whose business was to be transacted in that state, and manifestly, too, it was the intention that the principal office of the corporation should be kept in the state of Colorado; yet we have here in the articles of association signed by these defendants a provision that the principal office of the corporation shall be at St. Joseph, Missouri. It is true that the articles formerly stipulated for the establishment of branch offices at various cities throughout the country, and among them at Denver, Colorado. Still this does not cover up nor conceal the sole design of the incorporation which was the conduct of a fair and exposition at St. Joseph, and nowhere else. It is disclosed, too, that no branch offices were indeed ever established, unless it was from the appointment of an agent, so called, at Denver during the last days of the exposition at St. Joseph,, and when the enterprise .was already a pronounced failure.
"We have here then the state of Colorado granting a corporate franchise to our own citizens to do business alone in this state. Not only that, but the sole purpose was to avoid the restrictions so wisely engrafted onto our corporation laws. To hedge about and protect its
So, in the state of Texas, where corporations for mercantile purposes were not permitted, but a firm at Dallas, in that state, secured incorporation in Iowa, the courts of Texas declined to recognize the concern as a corporation, and held the pretended incorporators as partners. Empire Mills, v. Grocery Co., 15 S. W. Rep. 505.
We have carefully read and considered the cases relied upon by defendants; and, while some have gone far in the direction of admitting the validity of foreign corporations, regardless of where the business thereof shall be prosecuted, we have yet to find a decision that goes to the extent we are asked to go in the case at bar. In all of these we find some semblance, at least, of business done or performed in the home state of the corporation, such as the yearly elections of directors and officers at the office of the company, kept in the legal domicile of the corporation, as were the cases of Merrick v. Van Santvoord, 34 N. Y. 208, and Hanna v. Company, 23 Ohio St. 622. Or cases where the corporation was organized in one state and extended its operations into other states, as in Atchison, T. & S. F. Ry. Co. v. Fletcher, 35 Kan. 236. Or, as in the case of Moxie Nerve Food Co. v. Baumbach, 32 Fed. Rep. 205, where, .though the main business of the corporation was transacted in jurisdictions other than the parent state, and the incorporators lived in such other states, yet its general office was maintained, and the
So, too,, the case cited in the text-books and in defendant’s brief, decided by the superior court of ■Cincinnati, entitled Second Nat. Bank v. Lovell, 2 Cin. Rep. 397, has gone almost to the verge of absurdity in sustaining the charters of foreign corporations. But there the incorporation was saved, because the articles ■of association provided a home office at Covington, Kentucky, and under its charter the corporation was entitled to do business in Kentucky, the parent state, and it did keep its principal office there, where, too, its elections were held.
We conclude, then, this to be an effort to have the state of Colorado create a Missouri corporation. To concede its validity and recognize its existence, is to admit authority in another state to direct the granting of such franchises in the borders of this commonwealth; in short to yield to Colorado the partial exercise of ■our state’s sovereignty. If this is to be allowed, then any business house at St. Joseph, Kansas City, or elsewhere in this state, desiring to incorporate and thereby limit the liability of the owners and promoters, may get up their articles of association and may choose to go to Denver and secure incorporation, rather than to Jefferson City, even though the entire business of the proposed corporation (including the maintenance of its principal office, the election of directors, etc.) shall be ■done at St. Joseph or Kansas City; and this is to be permitted because, forsooth, the laws of Colorado are more “liberal” than those of Missouri. Such an •evasion of our laws by our own people, it seems, can receive no countenance from the courts, even under the laws of comity.
II. ■ It is however claimed that plaintiff cannot in this collateral action question the legality of the
The books quite luniformly agree, that “a corporate creditor seeking to enforce the payment of his debt may ignore the existence of the corporation, and may proceed against the supposed stockholders as partners by proving that the prescribed method of becoming incorporated was not complied with by the company in question. He is not estopped from so doing, since he is not repudiating a contract, but is enforcing it. The fact that he contracted with them under a corporate name is immaterial, since at common law parties may carry on business under any name they choose.” Cook on Stock & Stockholders, 233, and cases cited. Applying these rules to the case
The judgment of the circuit court will, therefore, be reversed and the cause remanded to be .proceeded with in accordance with the principles here announced.