Finnegan v. Knights of Labor Bldg. Ass'n

• Decision Date: 13 January 1893
• Citation: 53 N.W. 1150,52 Minn. 239
• Parties: FINNEGAN v KNIGHTS OF LABOR BLDG. ASS'N ET AL.
• Court: Minnesota Supreme Court

52 Minn. 239

53 N.W. 1150

FINNEGANvKNIGHTS OF LABOR BLDG. ASS'N ET AL.

Supreme Court of Minnesota.

Jan. 13, 1893.

(Syllabus by the Court.)

1. A de facto corporation exists where there is a law authorizing the creation of corporations, an attempt to organize a corporation pursuant to it, and user as a corporation under such attempted organization.

2. A substantial compliance with the law is not necessary to constitute the body a de facto corporation.

3. Chapter 29, Laws 1870, entitled “An act in relation to the formation of co-operative associations,” is not obnoxious to the objection that the title does not express its subject, as required by the constitution.

4. Under that act, a corporation may be formed for the purpose of buying, owning, improving, selling, and leasing of lands, tenements, and hereditaments, real, personal, and mixed estates and property, including the constructing and leasing of a building, etc.

5. The taking subscriptions to and issuing stock, electing managers and directors, adopting by-laws, buying a lot, and constructing and leasing a building upon it, is a sufficient user to constitute a corporation attempted to be organized under that law a de facto one.

Appeal from district court, Hennepin county; SMITH, Judge.

Action by Andrew J. Finnegan against the Knights of Labor Building Association, Frederick D. Noerenberg, and others. Judgment for defendants. Plaintiff appeals. Affirmed.

Savage & Purdy, for appellant.

Ankeny & Irwin, for respondents.

GILFILLAN, C. J.

Eight persons signed, acknowledged, and caused to be filed and recorded in the office of the city clerk in Minneapolis, articles assuming and purporting to form, under Laws 1870, c. 29, a corporation, for the purpose, as specified in them, of “buying, owning, improving, selling, and leasing of lands, tenements, and hereditaments, real, personal, and mixed estates and property, including the construction and leasing of a building in the city of Minneapolis, Minn., as a hall to aid and carry out the general purposes of the organization known as the ‘Knights of Labor.”’ The association received subscriptions to its capital stock, elected directors and a board of managers, adopted by-laws, bought a lot, erected a building on it, and, when completed, rented different parts of it to different parties. The plaintiff furnished plumbing for the building during its construction, amounting to $599.50, for which he brings this action against several subscribers to the stock, as copartners doing business under the firm name of the “K. of L. Building Association.” The theory upon which the action is brought is that, the association having failed to become a corporation, it is in law a partnership, and the members liable as partners for the debts incurred by it.

It is claimed that the association was not an incorporation because-First, the act under which it attempted to become incorporated, to wit, Laws 1870, c. 29, is void, because its subject is not properly expressed in the title; second, the act does not authorize the formation of corporations for the purpose or to transact the business stated in the articles; third, the place where the business was to be carried on was not distinctly stated in the articles, and they had, perhaps, some other minor defects.

It is unnecessary to consider whether this was a de jure corporation, so that it could defend against a quo warranto, or an action in the nature of quo warranto, in behalf of the state; for, although an association may not be able to justify itself when called on by the state to show by what authority it assumes to be, and act as, a corporation, it may be so far a corporation that, for reasons of public policy, no one but the state will be permitted to call in question the lawfulness of its organization. Such is what is termed a corporation de facto,-that is, a corporation from the fact of its acting as such, though not in law or of right a corporation. What is essential to constitute a body of men a de facto corporation is stated by SELDEN, J., in Methodist, etc., Church v. Pickett, 19 N. Y. 482, as “(1) the existence of a charter or some law under which a corporation with the powers assumed might lawfully be created; and (2) a user by the party to the suit of the rights claimed to be conferred by such charter or...