Eaton v. Walker

• Court: Michigan Supreme Court
• Writing for the Court: LONG, J.
• Citation: Eaton v. Walker, 76 Mich. 579, 43 N.W. 638 (Mich. 1889)
• Decision Date: 18 October 1889
• Parties: EATON v. WALKER ET AL.

43 N.W. 638

76 Mich. 579

EATON v. WALKER ET AL.

Supreme Court of Michigan

October 18, 1889

Appeal from circuit court, Wayne county; HENRY N. BREVOORT, Judge.

LONG J.

Plaintiff in the year 1883, was a dealer in grain and produce, residing at Mason, in this state. Defendants were the sole parties interested in a business of buying and selling grain and provisions for immediate and future delivery for themselves and other persons on commission at Detroit, and were members of the Board of Trade of Detroit. This action is brought upon an account stated by defendants to plaintiff in the sum of $3,562.68. The account was erroneously made out in the name of the firm of Walker, Summer & Co., with whom plaintiff had formerly done business, and of whom Mr. Walker was at that time a member. No question was made on the trial as to the amount due the plaintiff from Walker, Hopkins & Co., but the defense rested on the single ground that Walker, Hopkins & Co. were a corporation, and not liable as individuals. The cause was tried before the court without a jury, and the court made the following finding of facts and conclusions of law:

"(1) On the 3d day of May, 1882, the defendants organized a corporation under the name of Walker, Hopkins & Co. by executing articles of association, and having the same duly filed in the offices of the clerk for the county of Wayne and the secretary of state for the state of Michigan. The object of such corporation, as described in such articles of association, was 'to carry on mercantile business in buying and selling grain for immediate or future delivery.' (2) This corporation assumed to organize under act No. 187 of the Session Laws of 1875, as amended by act No. 274 of the Session Laws of 1881. The capital stock of the corporation was filed at $50,000; each of the defendants subscribing for an equal portion of the same. (3) The defendants Livingston and Hopkins paid for their stock. The defendant Livingston, on the 6th of May, 1882 paid $10,000 on account of his stock; on the 29th day of May, $1,000; 1st day of June, $1,000; on the 12th day of July, $325; on June 9, 1883, $1,000; and on July 25,1883 $1,675. The defendant Hopkins paid for his stock in cash at or about the time of the organization of the corporation. (4) Prior to the organization of the corporation, a copartnership, of which the defendant Charles H. Walker was one of the copartners, conducted a business in buying and selling grain, and doing a general commission business, under the name of Walker, Summer & Co. Neither the defendant Hopkins nor the defendant Livingston was connected with this copartnership. Prior to the organization of the corporation of Walker, Hopkins & Co., the defendant Walker purchased all the assets of the firm of Walker, Summer & Co., and transferred such assets to Walker, Hopkins & Co.; and agreement being executed between the defendant Walker and Walker, Hopkins & Co. providing, in effect, that the stock of the defendant Walker should be paid for out of collections to be made out of the assets thus transferred to Walker, Hopkins & Co.; but it does not appear that collections to any considerable amount were ever made upon the assets thus transferred to Walker, Hopkins & Co., or that the stock of the defendant Walker was ever paid for. (5) Soon after the organization of the corporation of Walker, Hopkins & Co., as above stated, it commenced to do business as a corporation in buying and selling grain and provisions for immediate or future delivery; the defendant Mark Hopkins, Jr., having been elected president of the corporation, the defendant Walker secretary and treasurer, and defendant Livingston vice-president. The three defendants herein were elected a board of directors, and records of the meetings of such corporation were duly kept, a corporate seal had and used, and regular stock certificates issued, and the fact of its incorporation duly announced through the public press and by circular. Such business was continued by said Walker, Hopkins & Co., as such corporation, till the 27th day of July, 1888, when it made an assignment for the benefit of its creditors to Charles M. Swift as assignee, who qualified as such assignee, and executed the trust under such assignment so made by such corporation. (6) The business of said corporation during the time it so conducted said business was managed by the defendants Hopkins and Walker as president and secretary and treasurer of said corporation. The defendant Livingston took no part in the transaction of the ordinary business of the corporation. (7) The plaintiff, who had been a customer of the firm of Walker, Summer & Co., upon the organization of the corporation of Walker, Hopkins & Co. continued to do business with it as he had done business with Walker, Summer & Co. prior to the organization of Walker, Hopkins & Co. (8) At the date of the execution of the assignment aforesaid, Walker, Hopkins & Co. was indebted to the plaintiff in the sum of $3,562.68. (9) At the time Walker, Hopkins & Co. commenced business as aforesaid, and during the time it continued to do business, the plaintiff had full notice that Walker, Hopkins & Co. was a corporation and not a copartnership, and he continued to do business with said Walker, Hopkins & Co. as such corporation. (10) That the plaintiff transacted his business with Walker, Hopkins & Co. as a corporation, and the indebtedness sued for herein was contracted while said plaintiff was dealing with said Walker, Hopkins & Co. as such corporation. (11) The defendant Livingston became a party to the organization of said corporation of Walker, Hopkins & Co., and a subscriber to its stock, in entire good faith, and all his dealings had with said corporation were had in good faith, and he never after the organization of said corporation received, directly or indirectly, any benefit therefrom by way of return of stock subscribed and paid for, or dividends thereon, and never at any time while said corporation continued to do business had any suspicion that the organization of said corporation was in any wise defective.

"CONCLUSIONS OF LAW.

"Whether act No. 274 of the Session Laws of 1881, under which the corporation of Walker, Hopkins & Co. assumed to organize, was a valid law or not, by reason of the alleged defect or imperfection in its title, the plaintiff is not entitled to recover in this cause. The defendant Livingston having acted in good faith with reference to the organization of said corporation and the transaction of its business, and the plaintiff having dealt with it as a corporation, he is now estopped to a question the validity of its incorporation. The defendants are entitled to judgment."

The court subsequently filed the following conclusions: "From these facts found, I am clearly of opinion that Walker, Hopkins & Co., with whom the plaintiff dealt, and by whom the account was rendered, was a corporation de facto, if not de jure, and that the plaintiff knew that Walker, Hopkins & Co. was a corporation. He never dealt with them as partners, and under the weight of authority I think the plaintiff is estopped to deny that Walker, Hopkins & Co. was a corporation, or to claim that the defendants, who were stockholders therein, are liable as partners."

Judgment was entered upon these findings in favor of defendants. Plaintiff brings the case to this court.

The defendants claim to be incorporated under act No. 187 of the Public Acts of Michigan of 1875. The title of this act is "An act for the incorporation of manufacturing companies." The first section authorizes a number of persons, not less than three, to associate according to the provisions of the act, "for the purpose of engaging in and carrying on any kind of manufacturing business, and who shall comply with all the provisions of this act, shall, with their successors and assigns, constitute a body politic and corporate under the name assumed by them in their articles of association." Act No. 187, Pub. Acts 1875. This section was amended by act No. 274, Pub. Acts 1881, so as to read, "for the purpose of engaging in and carrying on any kind of manufacturing or mercantile business, or any union of the two;" the act in other respects being unchanged. The title of the amending act is "An act to amend section one of an act entitled 'An act for the incorporation of manufacturing companies,' approved May 1, 1875, being act No. one hundred and eighty-seven of the Laws of Eighteen Hundred and Seventy-Five, so as to include mercantile business." The title of the act of 1875 remains unchanged, and only provides for the incorporation of manufacturing companies. The act of 1881 provides for the incorporation of companies to carry on a mercantile business,-a business entirely foreign to the act of 1875, which it purports to amend,-and therefore introducing matters not embraced in the purposes indicated in the title to the act amended. Section 20, art. 4, of the constitution provides that "no law shall embrace more than one object, which shall be embraced in its title." This attempt to incorporate a new business into the act of 1875 by the amendment of 1881 falls plainly within the...