105 Mo. App. 664 | Mo. Ct. App. | 1904
The allegations of plaintiff’s petition are substantially as follows:
That defendants on the ninth day of June, 1899, filed certain articles of association of what was known as the Se dalia Electric and Heating Company, showing a capital stock of $100,000 divided into 1,000 shares of $100 each, purporting to be all subscribed for by defendants, and that the full amount of such capital stock had been paid, whereas no part thereof had then or has since, been paid; that afterwards on the eighteenth day
The c^urt upon request of the parties made a finding of facts, which is as follows: “That the 996 shares of stock subscribed by Stewart and the one subscribed by Zimmerman were not paid into the treasury of the corporation; that there were no false representations made by Mr. Van Riper to Mr. Hyatt as to the capital being fully paid up which were relied upon by Mr. Hyatt as an inducement to enter into the contract.”
The evidence showed that the payment credited upon plaintiff’s claim did not come out of the company’s treasury but was realized upon a sale of its property on a judgment in favor of a company supplying materials for the erection of the plant. The defendant Van Riper testified that what money he used in the company’s business was furnished by Stewart who lived in the State of New York and who was reputed to be wealthy. The defendants were all stockholders and directors of the company. The so-called directors never met after the incorporation.
The court found for the plaintiff on the theory that
In Loverin v. McLaughlin, 161 Ill. 417, it was held: “The directors and officers of a corporation are under the statute liable for its debts contracted by them in the name of the corporation before the certificate of its complete organization has been recorded in the county where its principal office is located. Most certainly, if defendants set up to do business under the style of a corporation which had no existence, they would be liable as partners, as the mere name under which they were doing business would not relieve them from liability as such.”
“A charter to conduct an exposition at St. Joseph, Missouri, was obtained from the State of Colorado with a capital stock of $1,000,000, when in fact there was only $43,000 stock subscribed. The whole business of said corporation was to be conducted at St. Joseph, Missouri. Held, the rule of comity does not protect such corporation which was a fraud upon the laws of both States, and only colorable and absolutely void, and the incorporators were partners, and liable as such for the debts of the alleged corporation.” Cleaton v. Emery, 49 Mo. App. 345. Judge Gill, who rendered the opinion of the court, in speaking of the law of comity, quoted and approved the following from Morawetz on Private Corporations: “This law of comity was not established for the purpose of giving any State an unlimited power to dispose of the franchise of acting in a corporate capacity in other States. To obtain a charter for the purpose of evading the laws of a foreign State, under cover of the rule of comity, would be a fraud upon the
Individuals composing an incorporated company may render themselves personally liable to its creditors-by their acts, defaults and representations, such for example as representing the company to be solvent when they have knowledge to the contrary; permitting their assets to be wasted; or using their corporate existence, as a cloak for the prosecution of an illegal business.. Beach on Private Corp., sec. 163. And where there has been no legal incorporation, the members are individually liable as partners for all the obligations of the organization. And when the conduct of the parties, operates as a fraud or deceit upon third parties, whatever their private intentions may be, the relation of partnership may be said to exist between them with respect to such third persons. Idem, sec. 163; Story on Partnership, sec. 49.
The authorities cited all go to the principle, that under certain circumstances the members of a corporation may be held liable to third persons as partners.. There can be no doubt but what such liability would exist where the members of a corporation falsely represent their corporation to be solvent when in fact it is-not. But as the finding of the court was that plaintiff was not induced to contract upon such representations the judgment can not be upheld on that ground.
The theory of the court, as has been stated, was that the defendants under the evidence were liable as partners, which involves a more serious question. Axxd the finding and judgment must be sustained, if at all* upon the ground of fraud. The defendants in procur
Said company so organized was a fraud as to all the world having dealings with it, of which the defendants must be held, as a matter of law, with full knowledge. And it is not sufficient to assert that liability can not attach to the directors whn were participes criminis until the charter of the company had been regularly annulled by a decree of court, for such may never happen, in which event plaintiff would be without remedy. Surely, it can not be that directors of said company, insolvent at its inception, are exempt from liability to third persons who contracted with it in good faith believing it to be what it purported as solvent, and as so held out by defendants to the world under the certificate and seal of the State, fraudulently procured by them. It would be legalized fraud.
And besides, the defendants and the other directors of the association did not adopt the usual methods of a corporate body in the transaction of business. Whenever any money was to be used it was furnished by Stewart as the monied partner of the concern. It did not go into the treasury of the company. Not a dollar ever went into or out of it. No meetings of the directors were ever held at any time. Everything that transpired was as in the usual course as between partners. Partners in fact the defendants were; and we so hold.
For the reasons given the judgment is affirmed.