Duggan v. Colorado Mortg. & Inv. Co.

• Decision Date: 17 February 1888
• Parties: DUGGAN v. COLORADO MORTGAGE & INVESTMENT CO.
• Court: Colorado Supreme Court

17 P. 105

11 Colo. 113

DUGGAN v. COLORADO MORTGAGE & INVESTMENT CO.

Supreme Court of Colorado

February 17, 1888

Error to superior court of Denver.

On the 2d day of October, 1882, the defendant in error, a corporation, was the owner of the chattels here in controversy, consisting of printing-presses, engines, type machinery, and printing supplies. Upon that day it sold and delivered the same to the World Printing & Publishing Company for the price of $1,840, and at the same time received from said company therefor, $140, and 17 notes for $100 each, and a chattel mortgage of the said chattels as security for the payment of said notes. The notes and the chattel mortgage were executed under the corporate seal and in the name of the said the World Printing & Publishing Company, by Arthur Shepherd, as president, and W. C. Williams, as secretary thereof, and the said chattels were then delivered to said company at the place it was carrying on the business of publishing a newspaper in Denver, called 'The Evening World,' and about the 2d day of March following, certain writs of attachment were issued by a justice of the peace against the property of said Arthur Shepherd and W. C Williams, under which the said plaintiff in error, as constable, seized the said chattels. The said notes matured one each succeeding month, after execution. One of them had been paid. The balance remained unpaid, and were held by defendant in error. By the terms of the chattel mortgage, defendant in error, on such default, was entitled to have possession of the chattels; whereupon it made demand upon plaintiff in error for the chattels, and then replevied the same, and upon the trial of this action had judgment in its favor therefor. The case comes here on error to reverse this judgment. The plaintiff in error offered in evidence at the trial the original certificate of incorporation of the said the World Printing & Publishing Company, which had been filed in the office of the secretary of state, on the 6th day of April, 1882, and recorded there. This certificate was regular in form, the statute requiring at least three incorporators. The requisite number of names, Arthur Shepherd, W. C. Williams and David Lescallett, were affixed thereto as incorporators, but there was no acknowledgment of said certificate attached thereto. This evidence was rejected by the court on motion of defendant in error. Plaintiff in error also offered to prove by said David Lescallett that he never signed nor authorized his name to the said certificate, which evidence was likewise rejected.

Sullivan & May, for plaintiff in error.

Hugh Butler and A. B. McKinley, for defendant in error.

PER CURIAM.

A corporation de facto presupposes a charter, or a law authorizing the creation of such a corporation, that there has been an attempt in good faith to comply with its provisions, and that there has been user or the exercise of corporate powers under it. Against such a corporation, as a general rule, a collateral attack by third persons will not avail. The reason is, that if rights and franchises have been usurped, they are the rights and franchises of the sovereign and he alone can interpose. Until such interposition, the public may treat those possessing and exercising corporate powers under color of law, as doing so rightfully. The rule is in the interest of the public, and is essential to the safety of business transactions with corporations.

Ang. &amp A. Corp. §§ 635, 636; Abb. Tr. Ev. 18, 26; Navigation Co. v. Neal, 3 Hawks, 520; Hudson v. Cemetery Corp., 113 Ill. 618; Tarbell v. Page, 24 Ill. 46; Turnpike Co. v. Cutler, 6 Vt. 315; Stout v. Zulick, 48 N. J. Law, 600, 7 A. 362. In the case of Railroad Co. v. Cary, 26 N.Y. 77, it is said: 'Under this and similar general acts for the formation of corporations, if the papers filed, by which the corporation is sought to be created, are colorable, but so defective that, in a proceeding on the part of the state against it, it would for that reason be dissolved, yet by acts of user under such an organization it becomes a corporation de facto, no advantage can be taken of such defect in its con...