Boatmen's Bank v. Gillespie

• Citation: 108 S.W. 74,209 Mo. 217
• Parties: BOATMEN'S BANK v. THOMAS E. GILLESPIE, JOHN F. GILLESPIE and F. L. DAYTON, Appellants
• Decision Date: 18 February 1908
• Court: Missouri Supreme Court

108 S.W. 74

209 Mo. 217

BOATMEN'S BANK v. THOMAS E. GILLESPIE, JOHN F. GILLESPIE and F. L. DAYTON, Appellants

Supreme Court of Missouri, Second Division

February 18, 1908

Appeal from Jackson Circuit Court. -- Hon. Shannon C. Douglass Judge.

Reversed.

C. O Tichenor, Lathrop, Morrow, Fox & Moore, James P. Gilmore and George J. Mersereau for appellants.

(1) Plaintiff's petition wholly fails to state a cause of action, and the issues of this appeal should, therefore, be determined in favor of appellants upon a consideration thereof alone, for the reasons: (a) The certificate of incorporation issued by the Secretary of State is a final determination of its right to be and do business as a corporation, and thereafter no one except the State, by a direct proceeding, can question its corporate existence. Secs. 955, 1312, 1313, R. S. 1899; Thompson on Corp., secs 2991, 7709; Bank v. Rockefeller, 195 Mo. 15; Webb v. Rockefeller, 195 Mo. 57; Kayser v. Bremen, 16 Mo. 88; Furniture & Carpet Co. v. Crawford, 127 Mo. 356; Ryland v. Hollinger, 117 F. 216; Wells Co. v. Gastonia Co., 198 U.S. 177; Rice v. Bank, 126 Mass. 300; Powder Co. v. Sinsheimer, 46 Md. 317; Palmer v. Lawrence, 3 Sandf. (N. Y.) 61; Cozzens v. Brick Co., 166 Ill. 213; Petty v. Hayden Bros., 115 Iowa 212; Casey v. Galli, 94 U.S. 673; Lattimer v. Baird, 76 F. 536; Moxie Nerve Food Co. v. Baumback, 32 F. 205; Demarest v. Flack, 128 N.Y. 201; Hastings v. Railroad, 9 Cush. 596; Gunderson v. Bank, 199 Ill. 420; Lancaster v. Imp. Co., 140 N.Y. 570; Manufacturing Co. v. Garst, 18 R. I. 484; Duggan v. Colorado M. & I. Co., 11 Col. 113; Swartqout v. Railroad, 24 Mich. 389; Church v. Froislie, 37 Minn. 447; Doty v. Patterson, 155 Ind. 60; Johnson v. Oerstrom, 70 Minn. 309; Stout v. Zylick, 48 N. J. L. 599. (b) Fraud practiced upon the Secretary of State (broadly expressed, the State) in procuring a certificate of incorporation, does not, in a collateral suit by private persons, nullify the certificate of the Secretary of State granting to the company the right or franchise to be a corporation, and does not, therefore, render the incorporation liable as partners or individuals. Thompson on Corporations, sec. 38; Morawetz on Corporations (2 Ed.), sec. 769; Bank v. Rockefeller, 195 Mo. 15; Venner v. Loan & Trust Co., 90 F. 348; Macon v. Shores, 97 U.S. 272; Vinegar Co. v. Foehrenbach. 148 N.Y. 63. (c) The failure of a corporation to comply with conditions or duties subsequent does not invalidate the corporation so as to render the incorporators liable as partners or as individuals to the creditors of the corporation. 10 Cyc. 227; Morawetz on Corp. (2 Ed.), secs. 29, 38; Thompson on Corporations, secs. 226, 6611; Granby Mining Co. v. Richards, 95 Mo. 106; Mining Co. v. Woodbury, 14 Cal. 424; Ryland v. Hollinger, 117 F. 216; Searcy v. Yarnell, 47 Ark. 269; Railroad v. Railroad, 110 F. 879. (2) Where an agent undertakes to bind a principal when he has no authority to do so, he thereby makes himself personally liable, whether he acted in good or bad faith in so doing, and the allegations of the petition to the effect that Hollinger was not a trustee for Case and Stannard, and had no authority to sign their names, if true, in no way affect the validity of the corporation in question. 1 Cook on Corporations (4 Ed.), sec. 68; Ollesheimer v. Mfg. Co., 44 Mo.App. 172; Hotel Co. v. Wright, 73 Mo.App. 243; State ex rel. v. Smith, 48 Vt. 266; Lingenfelder v. Leschem, 134 Mo. 55; Durry v. Mallinkrody, 81 Mo.App. 449; Gestring v. Fisher, 46 Mo.App. 603; Wright v. Baldwin, 51 Mo. 269; Tailoring Co. v. Keeley, 59 Mo. 491; Blakeley v. Bennecke, 59 Mo. 193; Heath v. Goslin, 80 Mo. 310. (3) The alleged failure of defendants to pay anything for stock in the company, and the alleged understanding that they should not, and the allegation that the capital stock of the company was never paid as represented to the Secretary of State, do not avoid the incorporation, nor make the subscribers for the stock liable individually for the company's debts. Bank v. Rockefeller, supra; and authorities under point 1(b). (4) The allegations that the company had no office in the State of Missouri, and never transacted business in the State of Missouri, if true (which we deny), give the plaintiff no right to thus collaterally attack the existence of the corporation, and hold defendants liable as partners. Authorities under point 1 (c); Ryland v. Hollinger, 117 F. 216; Morawetz on Corporations (2 Ed.), sec. 965; Merrick v. Van Santvoord, 34 N.Y. 208; Moxie Nerve Food Co. v. Baumback, 32 F. 205; Hanna v. Petroleum Co., 23 Ohio St. 622; Land Co. v. Tilton, 19 F. 73. (5) The allegations that the company never elected a board of directors, as stated in the articles of association, if true (which we deny), neither state nor tend to state any cause of action. Sec. 1312, R. S. 1899; Morawetz on Corporations (2 Ed.), sec. 973; 21 Am. and Eng. Ency. Law, 845; Hax v. Mill Co., 39 Mo.App. 453; In matter of Union Ins. Co., 22 Wend. 591; In matter of Excelsior Ins. Co., 38 Barb. 297; People v. Jones, 17 Wend. 181; Wright v. Commonwealth, 190 Pa. St. 560; Schmidt v. Mitchell, 101 Ky. 570; Davidson v. Gaslight Co., 99 N.Y. 558; Welch v. Bank, 122 N.Y. 177. (6) The allegations that defendants were the only corporators residents of Missouri, and the others were residents of Kansas; that the defendants joined with the residents of Kansas to form a Missouri corporation and then to do and engage in business in Kansas, even though the stockholders' liability under the Kansas laws was different from or any more onerous than that of Missouri, if true, do not affect the validity of the corporation, nor render defendants liable as partners or individuals for the company's debts. Morawetz on Corporations (2 Ed.), sec. 35; State ex rel. v. Cook, 181 Mo. 578; Rolling Stock Co. v. People, 147 Ill. 234; Bank v. Hall, 35 Ohio St. 158; Petroleum Co. v. Weare, 27 Ohio St. 343; Moxie Nerve Food Co. v. Baumback, 32 F. 205; Merrick v. Van Santvoord, 34 N.Y. 208; Demarest v. Flack, 128 N.Y. 205; Manufacturing Co. v. Garst, 18 R. I. 484; Vinegar Co. v. Foehrenbach, 148 N.Y. 63. (7) Upon the entire record, the statutory requirements as to the payment of capital stock were fully complied with, and no question can be made as to the corporation being de jure on account thereof. State ex rel. v. Wood, 13 Mo.App. 139; State ex rel. v. Wood, 84 Mo. 379. (8) Upon the entire record there was a substantial compliance with the laws of the State of Missouri requiring the company to keep an office in Missouri, and all other requirements of law, and it transacted its business almost entirely in this State, and was, therefore, at all times a de jure corporation. 10 Cyc., 224, 1285; State ex rel. v. Wood, 13 Mo.App. 379; Rolling Stock Co. v. People, 147 Ill. 234; Thompson v. People, 23 Wend. 537; People v. Stockton, 45 Cal. 537. (9) Upon the entire record, the A. J. Gillespie Commission Company was, at least, a de facto corporation, and the incorporators or stockholders cannot be held liable individually or as partners for its corporate debts. Cook on Corporations (4 Ed.), sec. 234; Thompson on Corporations, sec. 38; Taylor on Corporations, sec. 45; Tulare Irr. Dist. v. Sheppard, 185 U.S. 1; Finnegan v. Building Ass'n, 52 Minn. 239; Johnson v. Schulin, 70 Minn. 147; Railroad v. Coal & Min. Co., 161 Mo. 288; Finch v. Ullman, 105 Mo. 255; Crenshaw v. Ullman, 113 Mo. 633; Granby Mining Co. v. Richards, 95 Mo. 106; Church v. Tobbein, 82 Mo. 413; St. Louis v. Shields, 62 Mo. 247; State v. Fuller, 96 Mo. 165; Fredericktown v. Fox, 84 Mo. 59; Smith v. Clark County, 54 Mo. 58; Macon v. Shores, 97 U.S. 272; Snider's Sons Co. v. Troy, 91 Fla. 224; Stout v. Zulick, 48 N. J. Law 559; Martin v. Fietz, 102 Cal. 55; Doty v. Patterson, 155 Ind. 65; Larned v. Beard, 65 N.H. 184; Bank v. Hall, 35 Ohio St. 158; Bank v. Padget, 69 Ga. 159; Bushnell v. Ice Co., 138 Ill. 67; Bank v. Stone, 38 Mich. 179; Owensboro Wagon Co. v. Mfg. Co. (Ala.), 31 So. 81; Clausen v. Head, 110 Wis. 403; Shoun v. Armstrong (Tenn.), 59 S.W. 790; Powder Co. v. Sinsheimer, 46 Md. 317; Gow v. Lumber Co., 109 Mich. 45; Ferguson v. Mercantile Co. (Miss.), 27 So. 877. (10) One who contracts with an organization as a corporation is estopped from denying the corporate existence thereof at the time of making the contract, or charging any defect in its organization affecting its capacity to contract as a corporation. West Missouri Land Co. v. Railroad, 161 Mo. 595; Bradley v. Reppell, 133 Mo. 545; Reinhard v. Mining Co., 107 Mo. 617; Broadwell v. Merritt, 87 Mo. 95; Ragan v. McElroy, 98 Mo. 349; Gas Light Co. v. St. Louis, 11 Mo.App. 555; Hasenritter v. Kirchhoffer, 79 Mo. 239; Studebaker Bros. Mfg. Co. v. Montgomery, 74 Mo. 101; Ins. Co. v. Bowman, 60 Mo. 252; St. Louis v. Shields, 62 Mo. 247; Ins. Co. v. Needles, 52 Mo. 15; Stoutimore v. Clark, 70 Mo. 471; Railroad v. McPherson, 35 Mo. 13; Hotel Co. v. Hunt, 57 Mo. 126; Benevolent Society v. Murray, 145 Mo. 622. (11) Where the subscribers fail to pay for stock as recited in the articles of association, the statutes and equity afford a remedy whereby they may be compelled to pay for such stock, but the remedy afforded excludes the idea of partnership liability. Bank v. Rockefeller, 195 Mo. 15; Shields v. Watts, 94 Mo. 410; Van Cleve v. Berkey, 143 Mo. 109; Hequembourg v. Edwards, 155 Mo. 514; Berry v. Rood, 168 Mo. 316; Shields v. Hobart, 172 Mo. 491.

I. N. Watson for respondent.

(1) Defendants and their associates were neither a corporation de jure nor de facto, because they were not the same parties to whom the state issued the charter set up in defendants' answer. First. There was no agreement between the parties named in this paper to incorporate and this is the first requisite to a...