Clark v. American Cannel Coal Co.

• Decision Date: 19 April 1905
• Docket Number: No. 20,576.,20,576.
• Citation: 73 N.E. 1083,165 Ind. 213
• Parties: CLARK v. AMERICAN CANNEL COAL CO.
• Court: Indiana Supreme Court

165 Ind. 213

73 N.E. 1083

CLARK

v.AMERICAN CANNEL COAL CO.

No. 20,576.

Supreme Court of Indiana.

April 19, 1905.

Appeal from Circuit Court, Perry County; C. C. Cook, Special Judge.

Action by the American Cannel Coal Company against Emma L. Clark. From a judgment for defendant, plaintiff appealed to the Appellate Court, and the cause was transferred by that court (73 N. E. 727) to the Supreme Court. Reversed.

C. A. Weathers and Hatfield & Hemenway, for appellant. De Witt Q. Chappell and Oscar C. Minor, for appellee.

MONKS, J.

This action was brought by appellee to enjoin appellant from mining and removing fire clay from certain real estate in Perry county, and to quiet appellee's title to said fire clay. Appellee sold and conveyed said real estate by deed to a remote grantor of appellant on September 20, 1866, and claims to own said fire clay by virture of the reservation contained in said deed. A trial of said cause resulted in a final judgment quieting appellee's title to said fire clay and enjoining appellant from removing the same.

The first question to be determined is, was appellee, when it commenced this action, an existing corporation having the power to sue? If this question is answered in the negative, this case must be reversed. It appears from the record that appellee, a corporation, was created by special act (Loc. Laws 1838, p. 216) to continue for a period of 50 years from December 23, 1837. The powers granted were to “mine for coal, purchase, receive, hold and enjoy lands, coal, iron and other mines, and the same to sell, convey and demise.” In 1885 the Legislature passed an act (Acts 1885, Sp. Sess. p. 121, c. 30) which purported to extend the corporate existence of every private corporation created or organized by special act for the purposes of mining stone, coal, iron ore, etc., 30 years after the passage of said act, whose board of directors within 60 days after the passage of said act of 1885 “shall avail itself of the provisions of said act by adopting resolutions to that effect and filing the same with a statement giving the title and date of the act creating said corporation and of each act amendatory or supplemental” to said creative act. The board of directors of appellee complied with the requirements of said act of 1885 on May 30, 1885, and appellee claims that thereby its corporate existence was extended 30 years from that time. Since 1837 until the commencement of this action appellee has exercised corporate powers under said special act of 1837 and the act of 1885. Appellant's position is that, as the special act of December 23, 1837, creating appellee a corporation fixed the life of said corporation at 50 years, it ceased to exist when that period was ended, in 1887; that the act of 1885 (Acts 1885, pp. 121-123, c. 30) was unconstitutional, and the attempt to continue the corporate existence of appellee by complying with its provisions was without effect; that appellee, having ceased to exist as a corporation, cannot maintain this action.

The act of April 2, of 1885 (Acts 1885, p. 121, c. 30), which appellee claims continued its corporate existence for 30 years from the date of its passage, is clearly unconstitutional under the rule declared in Re Bank of Commerce, 153 Ind. 460, 53 N. E. 950, 55 N. E. 224, 47 L. R. A. 489. Appellee insists, however, that appellant cannot raise any question in regard to the constitutionality of said act of 1885 in this case, because (1) it is at least a de facto corporation, and therefore impervious to collateral attack; (2) that appellant is estopped from denying its corporate existence. It is true, as claimed by appellee, that the corporate existence of a de facto corporation can only be questioned in a direct proceeding brought for that purpose. Doty v. Patterson, 155 Ind. 60, 64, 56 N. E. 668, and authorities cited. It is essential to the existence of a de facto corporation, however, that there be (1) a valid law under which a corporation with the powersassumed might be incorporated; (2) a bona fide attempt to organize a corporation under such law; (3) and an actual exercise of corporate powers. Doty v. Patterson, 155 Ind. 60, 64, 65, 56 N. E. 668; 10 Cyc. Law and Proc. 252-256; 1 Clark and Marshall on Corporations, §§ 82, 82a, 82b. It follows, therefore, that there cannot be a corporation de facto when there cannot be one de jure. If there is no law under which a corporation de jure might exist, its nonexistence may be set up even in a collateral proceeding. 10 Cyc. Law and Proc. 255, 256; 1 Clark and Marshall on Corporations, § 82c; Heaston v. Cincinnati, etc., R. Co., 16 Ind. 275, 279, 79 Am. Dec. 430;Harriman v. Southam, 16 Ind. 190;Snyder v. Studebaker, 19 Ind. 462, 81 Am. Dec. 415;Eaton v. Walker, 76 Mich. 579, 43 N. W. 638, 7 L. R. A. 102; Georgia, etc., R. Co. v. Mercantile Trust, etc., Co., 94 Ga. 306, 21 S. E. 701, 32 L. R. A. 208, 47 Am. St. Rep. 153. “To be a corporation de facto it must be possible to be a corporation de jure, and acts done in the former case must be legally authorized to be done in the latter, or they are not protected or sanctioned by the law. Such acts must have an apparent right.” Evenson v. Ellingson, 67 Wis. 634, 646, 31 N. W. 342. It necessarily follows that there cannot be a corporation de facto under an unconstitutional statute, for such a statute is void, and a void law is no law. Clark and Marshall on Corporations, § 82c (2), p. 246; Black on Constitutional Law, p. 64; Snyder v. Studebaker, supra; Harriman v. Southam, supra; Heaston v. Cincinnati, etc., R. Co., 16 Ind. 279; Eaton v. Walker, supra; Norton v. Shelby, 118 U. S. 425, 6 Sup. Ct. 1121, 30 L. Ed. 178. If the law under which a corporation is organized, or the special act creating the corporation, fixes a definite time when its corporate life must end, it is evident that when that date is reached said corporation is ipso facto dissolved without any direct action on the part of the state or its members. And no corporate powers can thereafter be exercised by it except such as are given it by statute for the purpose of winding up its affairs, which in this state is limited to three years after the dissolution. Section 3429, Burns' Ann. St. 1901 (section 3006, Rev. St. 1881; section 3006, Horner's Ann. St. 1901); 10 Cyc. Law and Proc. 1271; 2 Clark and Marshall on Corporations, § 305; 2 Morawetz on Corp. § 1031; 2 Beach on Private Corp. § 780; People v. Anderson, 76 Cal. 190, 18 Pac. 308;Scanlon v. Cranshaw, 5 Mo. App. 337;La Grange, etc., R. Co. v. Rainey, 7...