195 Mo. 15 | Mo. | 1906
— This action was brought June 18, 1901, in the circuit court at Kansas City, Missouri. And all of the defendants were duly served with process. Afterwards on January 12,1903, by leave of the circuit court, plaintiff filed in said cause an amended petition in words and figures as follows, omitting caption:
“And now on this day again comes the said plaintiff and by leave of court first had and obtained, files this amended petition herein.
“Plaintiff for its cause of action says that during all the times hereinafter mentioned plaintiff was and still is a corporation duly created and existing under the laws of Congress of the TJinited States-, as a national bank, for the purpose of doing business as such national bank at the city of Deadwood, in the State of South Dakota.
“Plaintiff further states that on the 27th day of November, 1899, said defendants and one William Askew, for" the purpose of forming a concern and company under the name of Siegel-Sanders Live Stock Commission Company, which thereafter should engage and did engage in the live stock commission business at the Stock Yards Exchange Building in Kansas City, Missouri, executed and signed certain articles of association, but that said articles of association were not acknowledged by the defendants, Frank Rockefeller and E. E. Matchette, and that said articles of association of said defendants and said Askew, without being acknowledged by defendants Rockefeller and Matchette, were filed and recorded in the office of the register of deeds at Kansas City, Jackson county, Missouri, on the 28th day of November, 1899, and that a certified copy of said articles of association was, on December 1, 1899, filed and recorded in the office of the Secretary of State of Missouri, and a certificate of incorporation was on said last day executed by said Secretary of State by which said certificate said Siegel-Sanders Live Stock Commission Company purported to be a corporation.
*26 “Plaintiff further states that defendants in said articles of association stated and represented as follows, to-wit:
“ ‘ The capital stock of this corporation is two hundred and fifty thousand dollars divided into 2,500 shares of the par value of one hundred dollars each, the same has been bona-fide subscribed and all thereof actually paid up in lawful money of the United States and is in the custody of the persons hereinafter named as the first board of directors. . . .
“ ‘Fourth. The names and places of residence of the several stockholders and the number of shares subscribed by each are as follows:
Names. Places of Residence. No. of shares.
Frank Rockefeller, Cleveland, Ohio..........1,000
Wm. Askew, Kansas City, Missouri.......... 250
E. E. Matchette, Kansas City, Missouri.......'. 250
Frank Siegel, Kansas City, Missouri.....4.... 500
R. D. Swain, Kansas City, Missouri______ .... 500
“ ‘Fifth. The business of this corporation shall be managed by a board of directors composed of five directors and the following shareholders shall constitute the board of directors of this corporation for the first year and until their successors can be elécted as provided by the by-laws of this corporation: Frank Rockefeller, Cleveland, Ohio; Wm. Askew, Kansas City, Missouri, Frank Siegel, Kansas City, Missouri; E. E. Matchette, Kansas City, Missouri; R. D. Swain, Kansas City, Missouri.’
‘ ‘ Plaintiff further states that notwithstanding said statements so made by defendants and said Askew in said articles of association, the capital stock of said company was never in fact paid up. ■
“That said Frank Rockefeller did not in fact and had not at the time of the filing of said articles of association in the offices of the recorder of deeds and of said Secretary of State, paid into the treasury or to the*27 ■directors of said company the snm of one hundred thousand dollars, or any part thereof. That the said William Askew did not pay, and had not at the time of the filing of said articles of association, as aforesaid, paid into the treasury or to the directors of said company the sum of $25,000, or any other sum. That the said E. E. Matchette did not pay and had not at the time of the filing of said articles of association, paid into the treasury or to the directors of said company the sum of $25,000, or any other sum. That the said Frank Siegel had not at the time of the filing of said articles of association paid into the treasury or to the directors of said company the sum of $50,000, or any other sum. That the said R. D. Swain did not pay, and had not at the time of the filing of said articles of association, paid into the treasury or to the directors of said company, the sum of $50,000, or any other sum.
“Plaintiff further states that it was not true, as alleged in said articles of association, that all the stock mentioned ‘therein, aforesaid, had been bona-fide subscribed and actually paid up in lawful money of the United States, or any other property or valued thing, and that it was and is not true, as alleged in said articles of association, that the said capital stock thereof, to-wit, $250,000, or any other sum, was in the custody^ of the persons therein named as the first board of directors.
“Plaintiff further states that at the time of the signing and executing and filing, as aforesaid, their said articles of association, it was agreed by and between defendants and said Askew that the capital stock of said company should not. in fact be paid up, and that pursuant to said agreement the capital stock of said company was not in fact paid up and no portion of said capital stock was paid at the time of the filing of said articles of association, as aforesaid, or at the time of the issuance by the Secretary of State of the State of Missouri of said certificate thereon, and the statements*28 and allegations in said articles of association that the said capital stock of said$250,000 hadin fact been bonafide subscribed and had in fact been paid up in lawful money of the United States, was wholly false and untrue, and was known to be false and untrue by all of the said defendants and said Askew at the time of the executing and subscribing and filing, as aforesaid, of said articles of association.
“Plaintiff further states that it was agreed among all said defendants and said Askew that the capital stock of said company was not in fact to be paid up either in money, property or labor, but that the said capital stock should be issued as fully paid up without in fact being paid up.
“Plaintiff further states that by reason of the premises the certificate of incorporation obtained by defendants and said Askew from said Secretary of State was obtained by fraud and deceit; that said Secretary of State was not informed by defendants and said Askew, or by any of them at the time of their obtaining said certificate of incorporation from said Secretary of State, of the said non-payment of said capital stock, and of the said agreement between defendants and said Askew that the same should not be paid as aforesaid, and that the Secretary of State was not informed that said articles of association were not acknowledged before the filing thereof by defendants, Frank Rockefeller and E. E. Matchette, and that said cei'tificate of incorporation was so issued by the said Secretary of State in ignorance of the facts stated, as aforesaid, that said capital stock had not been paid, and was not-to be paid, and that said articles- of association had not'been acknowledged by said defendants, Frank Rockefeller and E. E. Matchette, and that, therefore, the obtaining of said certificate of incorporation by defendants and said Askew from said Secretary of State was fraudulent, null and void, both as to said Secretary of State and the State of Missouri, and that the obtaining of*29 said certificate of incorporation was likewise fraudulent, null and void as to all persons who should thereafter deal and did deal with said company, and that by reason of the premises said company never became a corporation created in conformity to the laws of the State of Missouri.
“But, that said company by reason of the premises became, was and is a partnership; that said company did business at the Live Stock Exchange in said Kansas City from December 1, 1899, until May, 1901, and that during all said last period from December 1, 1899, to May, 1901, said Siegel-Sanders Live Stock Commission Company did business as a partnership', and that defendants and said Askew composed and were members of said partnership, who carried on and conducted the live stock commission business of said company as such partnership so created and existing.
“Plaintiff further states that on November 1, 1899, one W. B. Crimes, Jr., being indebted to the SiegelSanders Live Stock Commission Company, a corporation, which had been created under the laws of the State of Kansas, in the sum of $22,537.56, executed and delivered on said date to said named company his four certain promissory notes each for the sum of $5,634.39, and all of which were payable six months after said November 1,1899; that said notes were payable by said Crimes to the order of said last company, and were given for a loan made by said company to said Crimes for said sum of $22,537.56.
£ £ Plaintiff further states that on said November 1, 1899, said Crimes, for the purpose of securing to said •company the payment of said four promissory notes, made, executed and delivered to said last company a certain chattel mortgage, dated November 1, 18991, and hy which chattel mortgage said Crimes conveyed to ■said company 799 head of dehorned western steers, "three years old, branded W on left side, bought of M. J. Walden; that said chattel mortgage conveying said 799*30 head of steers to secure the payment of said promissory notes was in the usual form of a chattel mortgage, and that said mortgage was, on November 3,1899, duly filed for record with the register of deeds of Clark county, Kansas, in which last county said 799 head of steers were located and situated at the time of making said mortgage, and in which last county said Crimes resided at the time of the execution of said mortgage, and that said mortgage was so recorded with the register of deeds of said Clark county in conformity with the laws of the State of Kansas, which required the recording of said chattel mortgage in the county in which the mortgagor resided.
“Plaintiff further states that said mortgage was given to said last company, and to its successors and assigns, and that by the giving of said mortgage said last company, its successors and assigns, obtained a first lien upon 799 head of steers which were owned by said Crimes and the right to the possession thereof.
“Plaintiff files copies of said notes and mortgages herewith.
“Plaintiff further states that after the giving of said notes by said Crimes to said last company and the execution and delivery by said Crimes to said company of said last chattel mortgage, said company, in the month of November, 1899, in the regular course of business, endorsed, sold and delivered said notes and chattel mortgages to this plaintiff, which paid said last company the full face value of said notes and mortgage thereof, less the usual discount, and that thereafter said plaintiff continued to be the owner and holder of said notes and mortgages so given by said Crimes and.that said notes have never been paid, but remain wholly due and unpaid.
“Plaintiff further states that in the month of March, 1900, and while said chattel mortgage was in full force as a valid security held by plaintiff for the payment of said notes, plaintiff was entitled to the immedi*31 ate possession of said 799 steers, but said first partnership commission company named herein and composed of said defendants and Askew, and which, as aforesaid, did business from December 1, 1899, to May, 1901, unlawfully and wrongfully took possession of said 799 head of steers and sold the same in the live stock markets at Kansas City, St. Louis and Chicago and received the proceeds thereof, and thereby converted said 799 steers and said proceeds to their, the defendants,’ own use.
“Plaintiff further states that the amount realized by said partnership association so composed of said defendants and said Askew from the sale of the 799 steers so conveyed by said mortgage held by plaintiff was the sum of $31,960; that defendants composing said partnership association first named should have paid said sum of $31,960, the proceeds of said cattle -so conveyed by said mortgage held by plaintiff so sold by said partnership association, to this plaintiff, but that said defendants and said Askew have not paid said sum of $31,960 to this plaintiff, or any part thereof.
“Wherefore, plaintiff prays judgment against said defendants for said sum of $31,960, and for lawful interest and costs.”
“ SECOND COUNT.
“Plaintiff for a still further cause of action against defendants, states as follows:
“Plaintiff for its cause of action says that during all the times hereinafter mentioned plaintiff was and still is a corporation duly created and existing under the laws of Congress of the United States as a national bank for the purpose of doing business as such national bank at the city of Deadwood, in the State of South Dakota.
“Plaintiff further states that on the 27th day of November, 1899, said defendants and one William Askew, for the purpose of forming a concern and company under the name of Siegel-Sanders Live Stock*32 Commission Company, which thereafter should engage and did engage in the live stock commission business at the Stock Yards Exchange Building in Kansas City, Missouri, executed and signed certain articles of association, but that said articles of association were not acknowledged by the defendants, Frank Rockefeller and E. E. Matchette, and that said articles of association of said defendants and said Askew, without being acknowledged by defendants-, Rockefeller and Matchette, were filed and recorded in the office of the register of deeds at Kansas City, Jackson county, Missouri, on the 28th day of November, 1899, and that a certified copy of said articles of association was,, on December 1, 1899, filed and recorded in the office of the. Secretary of State of the State of Missouri, and a certificate of incorporation was, on said last day, executed by said Secretary of Státe by which said certificate said SiegelSanders Live Stock Commission Company purported to be a corporation.
“Plaintiff further states that defendants in said articles of association stated and represented as follows, to-wit:
“ ‘The capital stock of this corporation is two hundred and fifty thousand dollars, divided into 2,500 shares of the par value of one hundred dollars each, the same has been bona-fide subscribed and all thereof actually paid up in lawful money of the United States and is in the custody of the persons hereinafter named as the first board of directors. . . .
“ ‘Fourth. The names and places of residence of the several stockholders and the- number of shares subscribed by each are as follows:
Names. Places of Residence. No. of Shares
Frank Rockefeller, Cleveland, Ohio..........1,000
William Askew, Kansas City, Missouri........ 250
E. E. Matchette, Kansas City, Missouri........ 250
Frank Siegel, Kansas City, Missouri.......... 500
R. D. Swain, Kansas City, Missouri............ 500
*33 “ ‘Fifth. The business óf this corporation shall be managed by a board of directors composed of five directors and the following shareholders shall constitute the board of directors of this corporation for the first year and until their successors can be elected as provided by the by-laws of this corporation: Frank Rockefeller, Cleveland, Ohio; ¥m. Askew, Kansas City, Missouri; Frank Siegel, Kansas City, Missouri;'E. E. Matchette, Kansas City, Missouri; R. D. Swain, Kansas City, Missouri.’
“Plaintiff further states that notwithstanding said •statements so made by defendants and said Askew in said articles of association, the capital stock of said ■company was never in fact paid up. That said Frank Rockefeller did not in fact pay and had not at the time •of the filing of said articles of association in the offices •of said recorder of deeds and of said Secretary of State, paid into the treasury or to the directors of said company the sum of $100,000, or any part thereof. That said William Askew did not pay, and had not at the time of the filing of said articles of association, as afore.said, paid into the treasury or to the directors of said company the sum of $25,000, or any other sum. That the said E. E. Matchette did not pay and had not at the time of the filing of said articles of association, paid into the treasury or to the directors of said company the sum of $25,000, or any other sum. That the said .Frank Siegel had not at the time of the filing of said articles of association paid into the treasury or to the •directors of said company the sum of $50,000, or any other sum. That the said R. D. Swain did not pay, nor .had at the time of the filing of said articles of association, paid into the treasury or to the directors of said •company the sum of $50,000, or any other sum.
“Plaintiff further states that it was not true, as .alleged ifii feaid articles of association, that all the stock mentioned therein, as aforesaid, had been bona-fide sub*34 scribed and actually paid up in lawful money of tiie United States, or any other property or valuable thing, and that it was and is not true, as alleged in said articles of association, that the said capital stock thereof, to-witr $250,000, or any other sum, was in the custody of the persons therein named as the first board of directors.
“•Plaintiff further states that at the time of the signing and executing and filing, as aforesaid, their said articles of association, it was agreed by and between defendants and said Askew that the capital stock of said company should not in fact be paid up, and that pursuant to said agreement the capital stock of said company was not in fact paid up and no portion of said capital stock was paid at the time of the filing of said articles of association, as aforesaid, or at the time of the issuance by the Secretary of State of Missouri of said certificate thereon and the statements and allegations in said articles of association that the said capital stock of said $250,000 had in fact been bona-fide subscribed and had in fact been paid up in lawful money of the United States, was wholly false and untrue, and was known to be false and untrue by all of the said defendants and said Askew at the time of the executing and subscribing and filing, as aforesaid, of said articles of association.
‘ ‘ Plaintiff further states that it was agreed among all said defendants and said Askew that the capital stock of said company was not in fact to be paid up either in money, property or labor, but that the said capital stock should be issued as fully paid up without in fact being paid up.
“Plaintiff further states that by reason of the premises the certificate of incorporation obtained by defendants and said Askew from said Secretary of State was obtained by fraud and deceit; that said Secretary of State was not informed by defendants and said Askew, or by any of them at the time of their obtain*35 ing said certificate of incorporation from said Secretary of State, of the said non-payment of said capital stock, and of the said agreement between defendants- and said Askew that the same should not be paid as aforesaid, and that said Secretary of State was not informed that said articles of association were not acknowledged before the filing thereof by defendants, Prank Rockefeller and E. E. Matchette, and that said certificate of incorporation was so issued by the said Secretary of State in ignorance of the facts stated as aforesaid, that said capital stock had not been paid, and that said articles of association had not been acknowledged by said defendants, Prank Rockefeller and E. E. Matchette, and that, therefore, the obtaining of said certificate of incorporation by defendants and said Askew from said Secretary of State was fraudulent, null and void, both as to said Secretary of State and the State of Missouri, and that the obtaining of said certificate of incorporation was likewise fraudulent, null and void as to all persons who should thereafter deal and did deal with said company, and that by reason of the premises said company never became a corporation created in conformity to the laws of the State of Missouri.
“ But, that said company by reason of the premises became, was and is a partnership; that said company did business at 'the Live Stock Exchange Building in said Kansas City from December 1, 1899, until May, 1901, and that during all said last period from December 1, 1899, to May, 1901, said Siegel-Sanders Live Stock Commission Company did business as a partnership, and that defendants and said Askew composed and were members of said partnership, who carried on and conducted the live stock commission business of said company as such partnership so created and existing.
“Plaintiff further states that on October 31, 1900, said partnership association, known as Siegel-Sanders*36 Live Stock Commission Company and so composed of defendants as partners therein, was the owner and holder of a certain note executed by W. B. Grimes, Jr., bearing date, Kansas City, Kansas, October 31, 1900, and by which, on May 7, 1901, said Grimes promised to pay to the order of Siegel-Sanders Live Stock Commission Company, the partnership aforesaid, at their office, $23,386.78 with interest from maturity at the rate of eight per cent per annum until paid, for value received, a copy of which last note is filed herewith.
“Plaintiff further states that on October 31, 1900, said Siegel-Sanders Live Stock Commission Company, the partnership association aforesaid, composed of said defendants, indorsed and assigned for value paid by this plaintiff at the time, said note to this plaintiff and by said assignment indorsed on the back of said note waived demand, notice and protest of same and guaranteed payment thereof at maturity, said assignment and guaranty beng signed by said Siegel-Sanders Live Stock Commission Company, the partnership association aforesaid, on the back of said note; that thereupon plaintiff became and ever since has been the owner and holder of said last note; that said note and the whole amount of the principal and interest thereon remain wholly due and unpaid.
“The premises considered, plaintiff prays judgment ori said last note against defendants for the said sum of $23,386.76 with interest at the rate of eight per cent from and after May 7, 1901.”
And afterwards, on March 11, 1903, said defendants filed in said cause a demurrer to said amended petition in words and figures as follows, viz.:
“In the circuit court of Jackson County, State of Missouri, at Kansas City, January term, 1903.
“First National Bank of Deadwood, South Dakota, a corporation, plaintiff, vs. Frank Rockefeller, E. E. Matehette, Frank Siegel and R. D. Swain, defendants.
“1. Now come the defendants, Frank Rockefel*37 ler, E. E. Matchette and R. D. Swain, and demur to the first count in the petition of plaintiff in the above-entitled cause for the reason that said first count does not state facts sufficient to constitute a cause of action.
“2. Said defendants demur to the second count of the petition of plaintiff in the above-entitled cause for the reason that said second count does not state facts sufficient to constitute a cause of action.
“Wherefore said defendants pray judgment.”
And afterwards, on June 20, 1903, the court sustained said demurrer and plaintiff declining to plead further, final judgment was rendered for the defendants, and thereupon on June 24, 1903, plaintiff filed an affidavit for an appeal and an appeal was granted by the circuit court to this court.
I. At the expense of brevity, we have set forth the petition in full, but stripped of its technical habiliments and reduced to its last analysis, it may be said that the two basic propositions upon which the petition must stand, if at all, are the charges, first, that the SiegelSanders Live Stock Commission Company never became a corporation under the laws of this State, because the defendants Prank Rockefeller and E. E. Matchette did not acknowledge the articles of association set forth, in the petition and which were filed in the office of the recorder of deeds of Kansas City, Missouri, and a certified copy thereof filed and recorded in the office of the Secretary of State, although such articles purported on their face to have been acknowledged by the said Rockefeller and Matchette, and secondly, because of the failure of the incorporators of said commission company to pay into' the treasury, or to the directors of said company, the amount of the stock subscribed for by them in said company in lawful money of the United States at the time of filing said articles, or at the time of the issuance by the Secretary of State of Missouri of hi.s certificate of incorporation and for
Addressing ourselves to the first proposition, to-wit, that the failure of the defendants Rockefeller and Matchette to acknowledge the articles before they were filed in the office of the recorder of deeds of Jackson county and with the Secretary of State, and the failure of the incorporators to pay the amount of their capital stock into the treasury, or to the board of directors, rendered the attempt at incorporation ineffectual and void, the question presented is, did this failure to take this initiatory step have the effect to' render the certificate of the Secretary of State incorporating the said commission company void and of no effect? For the proper determination of this question reference must be had to the statute of this State providing for the incorporation and creation of private corporations.
Section 955 of chapter 12, Revised Statutes 1899, provides: “Whenever any corporation shall be organized under the laws of this State, it shall be the duty of the officers of said corporation to file with the Secretary of State a copy of the articles of association or incorporation, and the corporate existence of such corporation shall date from the time of filing said copy of such articles ; and a certificate by the Secretary of State, under the seal of the State, that said corporation has become duly organized, shall be taken by all courts of this State as evidence of the corporate existence of such corporation; a certified copy of said certificate of the Secretary of State shall be filed and recorded in the office of the recorder of deeds of the county in which the corporation is organized.”
Section 1314 provides: “The Secretary of State shall give a certificate that said corporation has been duly organized, and the amount of its capital, and such certificate shall be taken by all courts of this State as evidence of the corporate existence of such corporation. The persons so acknowledging such articles of association, and their associates and successors, shall, for the period not to exceed fifty years next succeeding the issuing of such certificate by the Secretary of State, be a body corporate; and by such name they and their successors shall be entitled to have, possess and enjoy all the rights and privileges conferred by law upon corporations, subject' to the provisions of this article.”
The last two sections appear in article 91, entitled,' “Manufacturing and Business Companies.”
By reference to the petition it will be observed that it is conceded by the plaintiff that the papers presented by the corporators of the Siegel-Sanders Live Stock Commission Company to the Secretary of State were in form in every respect and in strict compliance with the requirements of the statute, and that upon them a certificate of incorporation was granted and issued by the Secretary of State on December 1,1899, as provided by section 1314, but the contention of the plaintiff is, and it so alleges, that said company never became a corporation, but became, was and is a partnership, because as a matter of fact said articles of association were not acknowledged by the defendants Rockefeller and Matchette, before they were filed and recorded in the office of the register of deeds, at Kansas City, Jackson county, Missouri, and a certified copy thereof filed and recorded
In Hurt v. Salisbury, 55 Mo. 310, it was held that where articles of association were duly acknowledged and recorded in the office of the recorder of the county where the corporation was located, but were not then filed with the Secretary of State, the officers of the corporation had no power to issue the note of the company,, and the note issued and signed by them as directors would bind them personally and not the corporation, and that the date of the corporate existence of the corporation was of the time of the filing of the articles in the office of the Secretary of State, and that until the officers took the final and necessary step of depositing- and filing in the office of the Secretary of State a copy of the articles of association, the corporation had no power to transact business as a corporation under section 2 -of chapter 62 of the General Statutes of 1865-(1 Wagner’s Statutes, 289). It is obvious that the decision in that case does not support the contention of' the plaintiff in tins case, because it is plain that in that case, the condition precedent, to-wit, the filing of the articles in the office of the Secretary of State, was the final act entitling them to incorporate and fixed the date when their corporate existence began. Here the final act, to-wit, the issuing of the certificate of incorporation by the Secretary of State, is conceded to have been done on the first day of December, 1899, and before the transaction of which plaintiff complains had occurred.
In Granby Mining Company v. Richards, 95 Mo.
A consideration of the sections of our statutes providing for the creation of business corporations, will show that the law has provided the steps which individuals seeking to become incorporated shall take, to-wit, the signing and acknowledging articles of association, enumerating the purposes of the corporation and requiring the filing of these articles in the office of the recorder of deeds of the county in which the corpor
In Kayser v. Trustees of Bremen, 16 Mo. 88, Judge Scott, speaking for this court, said: “The facts conceded, we conceive, gave jurisdiction to the county court over the subject-matter, and having declared the town incorporated, the validity of its existence can only be contested by proceeding in a quo warranto. It cannot be shown, in defense to a suit of a corporation, that the charter was obtained by fraud; neither can it be shown that the charter has been forfeited by misuser or nonuser. Advantage can only be taken of such, forfeiture by process on behalf of the State, instituted directly against the corporation, for the purpose of avoiding its charter, and individuals cannot avail themselves of it in collateral suits, until it be judicially declared. ’ ’
That it is plainly competent for the Legislature to provide for a public officer who shall issue this certificate of incorporation in behalf of the State, is no longer an open question. With us the source of a corporate franchise is the State through its legislative branch of government. In the Dartmouth College case (4 Wheat.
In Railroad Gazette v. Wherry, 58 Mo. App. l. c. 426, Judge Rombauer, speaking for the Court of Appeals, said: “Hence, even if the necessity of antecedent record and its failure were shown by the bill of exceptions, it is, to say the least, doubtful whether such facts, under the decision of the Supreme Court in Granby Mining Company v. Richards, 95 Mo. 106, would render the defendants individually responsible as partners for a bill contracted in the corporate name after the issue of the final certificate of incorporation.”
Language could hardly be more emphatic in a statute than that contained in section 1314 wherein it is said: “The persons so acknowledging such articles of association, and their -associates and successors, shall, for the period not to exceed fifty years next succeeding the issuing of such certificate by the Secretary of State, be a body corporate. ’ ’ From the date then of the issuing of the certificate the incorporators became a body corporate.
In Ryland v. Hollinger, 117 Fed. 216, the Circuit Court of Appeals of the United States for the Eighth circuit, construed section 2492, Revised Statutes 1889, now section 955, Eevised Statutes 1899, to mean that the existence of a corporation formed under that section Imgan when the Secretary of State issued the certificate of incorporation. Section 1314 provides when the grant of the State of corporate powers shall take effect, and that is upon the issuing of the certificate by the Secretary of State. In this manner the State has
But it is earnestly and ably urged by the learned counsel for the plaintiff that the acknowledgment of the articles of association by the incorporators is a condition precedent which must be performed before there can be a corporate existence under the statute. Unquestionably, both in legislative charters and in charters under general laws for the incorporation of companies, the statute itself often provides that the corporation shall not come- into existence or have the capacity to do business until certain conditions precedent have been complied with, and in such cases unless the acts or things required to be done are done there cannot be a corporation. This is well illustrated in the case of Railroad v. Shambaugh, 106 Mo. 566, in which this court said: “Where the act of incorporation does not in and of itself confer corporate capacity, but provides for the doing of certain things, upon the doing of which the company shall become a body corporate, the performance of these things constitutes conditions precedent, and until performed the company has no corporate existence. [Granby Mining Co. v. Richards, 95 Mo. 110; Hammett v. Railroad, 20 Ark. 204; Lyons v. Railroad, 32 Md. 18.] If, however, the charter confers corporate capacity without any conditions precedent, acceptance of the charter is all that need be shown. In such cases the act of incorporation
We are cited by the learned counsel for the plaintiff to the recent decision of the Supreme Court of the United States in Wells Company v. Gastonia Company, 198 U. S. 177. In that case the plaintiff corporation was organized under the general corporation laws of the State of Mississippi. In that State individuals may become incorporated for certain purposes under general laws. The first step towards incorporation is to apply to the Governor for a charter, stating the purposes for which the incorporation is to be created. That officer then takes the advice of the Attorney-General as to the constitutionality and legality of the provisions of the proposed charter; if the Governor approves the charter and causes the great seal of the State to be affixed thereto by the Secretary of State, the incorporation becomes complete. Charters are required to be recorded in the office of the Secretary of State and in the ■office of the clerk of the chancery court of the county in which a corporation does business. [Code of Mississippi 1892, chapter 25.] The second article of association of the Wells Company provided: “The capital stock of said corporation shall be $50,000, divided into shares of $500 each, and as soon as $10,000 of said stock is subscribed and paid for, said corporation shall have power to commence business.” It was the contention •of the defendant in that case that the subscription of :$10,000 of the capital stock and the payment thereof, was a condition precedent to the company’s becoming a ■corporation; that is, it could not become a corporation
In Hastings v. Railroad, 9 Cush. 596, the statute provided that neither section of the railroad “should be commenced until a certificate should have been filed in the office of‘the Secretary of the Commonwealth, subscribed and sworn to by the president of said company and the majority of the directors thereof, stating that all the stock appropriated and set apart for the construe
In Rice v. National Bank of the Commonwealth,
Thompson on Corporations, vol. 6, sec. 7709, says: “A certificate of incorporation, filed according to the provisions of a general corporation law, constitutes conclusive proof as to the regularity of the incorporation. If there is any fraud in the recitals of the certificate, the corporation may be ousted at the suit of the State; or possibly creditors who have been deceived by the fraud may have an action against the guilty parties. But the de facto existence acquired by the corporation, under such a certificate, is sufficient to enable it to act as a corporation, and acquire rights and incur liabilities as such, which will be enforced in the judicial courts.”
In Palmer v. Lawrence, 3 Sandf. (N. Y.) l. c. 168, Judge Liter among’ other things said: “This certificate made and filed by the associates was in exact conformity to the terms of the statute. It contained all the particu
In Laflin & Rand Powder Company v. Sinsheimer, 46 Md. 315, it was sought to hold as partners the incorporators of a West Virginia corporation, because the capital had not been paid. The court in holding that there was no liability as partners said: “We have carefully compared the certificates of its incorporation, authenticated by the Secretary of State and the seal of West Virginia, with the requirements of the laws of that State, and we find that it is in all respects in matter of form in accordance with their provisions. [Code of West Virginia, chap. 54, secs. 6, 7, 8, 9, and 10, and chap. 53, sec. 62.] . . . Can the validity of its incorporation be attacked in this suit, by proving aliunde the certificate of its incorporation, that certain prerequisites of the law had not been in good faith complied with ? We have found no case which has
From the foregoing authorities, it appears that the failure of Rockefeller and Matchette to acknowledge the articles of association, and the failure of the incorporators to pay for their capital stock into the treasury of the company, or to the directors of the company at the time of filing the articles, or at the time of the issuance by the Secretary of State of his certificate of incorporation, did not have the effect to nullify the certificate of the Secretary of State granting the SiegelSanders Live Stock Commission Company, the right or franchise to be corporation. By the express language of the statute (sec. 1314), when the certificate was issued the said company became a de facto corporate body under the laws of this State and the failure of two of the incorporators to acknowledge the articles of association and the failure of the corporation to pay into the treasury, or to the first board of directors, the amount of the stock subscribed for by them in lawful money, cannot be assailed by the plaintiff in this case in this collateral way, but said company was and has been a corporation de facto since the issuing* of the certificate by the Secretary of State and must remain so until it is dissolved by judicial proceeding on behalf of the State.
The principles upon which this conclusion is based and upon which the cases cited, as well as numerous others, rest, are nowhere better stated than by Mr. Justice Cooley in Swartwout v. Railroad, 24 Mich. 389.
II. But for the purpose of holding the incorporators liable as copartners it is further alleged that the certificate of incorporation obtained by the defendants from the Secretary of State was obtained by fraud and deceit; that the Secretary of State was not informed by defendants and Askew, or by any of them, at the time of obtaining said certificate of incorporation from the Secretary of State, of the non-payment of their capital stock, and of the agreement that the same should not be paid, and that the Secretary of State was not informed that the articles of association were not acknowledged before the filing thereof by the defendants Frank Rockefeller and E. E. Matehette, and that, therefore, the obtaining of the certificate of incorporation by defendants was fraudulent, null and void as to all persons who should thereafter deal with and did deal with said company, but that said company by reason of said fraudulent acts was and is a partnership. It thus appears that the plaintiff is seeking in this collateral proceeding to hold defendants as copartners for the alleged frauds in obtaining their certificate of incorporation. But the authorities already cited all agree that for fraud practiced in obtaining a certificate of incorporation, the State alone, by a direct proceeding, can annul and forfeit the charter of the company. [Palmer v. Lawrence, 3 Sandf. (N. Y.) 161; Cockran v. Arnold, 58 Pa. St. 399; Kayser v. Trustees of Bremen, 16 Mo. 88; Wells Co. v. Gastonia Co., 198 U. S. 177; Laflin & Rand Powder Co. v. Sinsheimer, 46 Md. 315;
We have read and considered the briefs in the light of the very able oral argument of the counsel, and our conclusion is without further elaboration and citation of authorities that the judgment of the circuit court in-sustaining the demurrer was correct and it is therefore affirmed.