First National Bank of Deadwood, South Dakota v. Rockefeller

• Decision Date: 29 March 1906
• Parties: FIRST NATIONAL BANK OF DEADWOOD, SOUTH DAKOTA, Appellant, v. ROCKEFELLER et al
• Court: Missouri Supreme Court

93 S.W. 761

195 Mo. 15

FIRST NATIONAL BANK OF DEADWOOD, SOUTH DAKOTA, Appellant, v. ROCKEFELLER et al

Supreme Court of Missouri, Division Two

March 29, 1906

Appeal from Jackson Circuit Court. -- Hon. W. B. Teasdale, Judge.

Affirmed.

Botsford Deatherage & Young and Johnson & Lucas for appellant.

(1) The framers of the Missouri Constitution of 1875, by its prohibition of "fictitious" stock, and the Missouri Revising Session of 1879, charged with the enforcement of that Constitution, by the introduction into our corporation laws of the terms "bona-fide" subscription of stock, and "actually" paid, intended to put an end to "wild-cat" corporations in this State. Const. of 1875, art. 12, sec. 8; R. S. 1879, secs. 727-926; Van Cleve v. Berkey, 143 Mo. 109. (2) The bona-fide subscription and payment of the stock, as set forth in the articles of incorporation, are conditions precedent to the creation of a corporation, without the performance of which conditions precedent, the corporation is not created. 6 Am. and Eng. Ency. Law (2 Ed.), 504-506; Van Horn v Dowance, 2 Del. 317; Brannon v. Messick, 10 Cal. 108; Shockley v. Parvis, 4 Houst. (Del.) 569; Nevins v. Gomley, 95 Ill. 213; Martin v Ballew, 13 Bush. 132; Thomas v. Eckert, 88 Ill 593; Page v. Frazier, 14 Bush. 208; 1 Thompson on Corporations, secs. 53, 220, 221, 224, 225, 226, 227; 3 Thompson on Corporations, secs. 2975, 2978; 7 Thompson on Corporations, secs. 8210, 8211, 8213. The decision of the United States Supreme Court, May, 1905, in Wells Company v. Gastonia Company, 198 U.S. 186, is precisely in point. (3) The rule against collateral inquiry as to the existence of corporations grew up when corporations were created without conditions precedent by the direct fiat of the State by legislative charters, and that rule was applied during that period when the continued existence of a corporation, lawfully created, was questioned because of the non-performance of conditions subsequent, such as non-user and the like. That rule does not apply to our present system of general corporation laws under which corporations are created by the incorporators on the performance by them of the required conditions precedent. In cases where the corporation, by reason of the non-performance of conditions precedent, is not created, there is no corporation in existence which can be sued by quo warranto or other form of action, and in such case the only party or parties against whom the contention of no corporation can be made are the incorporators who, in this case, are the defendants in this action. State ex rel. v. Gravel Road Co., 37 Mo.App. 503; State ex rel. v. Fleming, 147 Mo. 8. (4) Section 1282, Revised Statutes 1899, which provides that no certificate of incorporation of a bank shall be valid unless the stock is first bona fide subscribed and one-half paid, is simply in affirmance of the common law under which the same rule exists as to corporations generally. Globe Pub. Co. v. Bank, 41 Neb. 189; Sovenir v. McLaughlin, 161 Ill. 432; Wechelberg v. Bank, 64 F. 90, 12 C. C. A. 56; 10 Ency. Law and Proc., 227. (5) Parties who deal with agents as such are not precluded or estopped from afterwards suing those agents on the ground that in point of fact they had no principals. So, parties who deal with persons as composing a corporation are not precluded or estopped from afterwards suing such persons if in point of fact there was no corporation. Doyle v. Mizner, 42 Mich. 336; Sovenir v. McLaughlin, 161 Ill. 435; Cunderson v. Bank, 199 Ill. 434; Glenn v. Bergmann, 20 Mo.App. 343; Empire Mills v. Grocery Co., 15 S.W. 505. There is nothing in this record showing that plaintiff dealt with the Siegel-Sanders Company definitely as a corporation. (6) The articles of association of the incorporation and certificate of the Secretary of State are only prima facie evidence of the creation of a corporation. R. S. 1889, sec. 1314; State ex rel. v. Cook, 174 Mo. 100; State ex rel. v. Talbert, 123 Mo. 69; Sovenir v. McLaughlin, 161 Ill. 432; Gundison v. Bank, 199 Ill. 433. (7) Section 1313, Revised Statutes 1899, requires all the incorporators to acknowledge the articles of incorporation, and the admitted failure of two of these defendants to perform this condition precedent prevented in itself the Siegel-Sanders Commission Company from becoming a corporation. (8) The following is a list of our authorities which are cited here as supporting generally the propositions of this brief: Thompson on Corp., secs. 225-226-308; Mor. on Private Corp., secs. 27-28-41-737; Childs v. Smith, 55 Barb. 45; Ins. Co. v. Crane, 42 N.H. 636; Utley v. Union Tool Co., 11 Gray 139; McIntire v. Ditching Assn., 40 Ind. 104; Furnace & Co. v. Herkimer, 46 Ind. 142; State ex rel. v. Beck, 81 Ind. 500; Childs v. Hurd, 32 W.Va. 98; Bates v. Wilson, 14 Colo. 156; Jones v. Hdw. Co., 21 Colo. 267; Kaiser v. Bank, 56 Ia. 104; Humphrey v. Mooney, 1 Colo. 493; Mining Co. v. Woodbury, 14 Cal. 424; Harris v. McGregor, 29 Cal. 125; Bigelow v. Gregory, 73 Ill. 197; Field & Co. v. Crooks, 16 La. Ann. 153; Coleman v. Coleman, 78 Ind. 344; Abbott v. Smelting Co., 4 Neb. 416; Trust Co. v. Floyd, 47 Ohio St. 525; Bergeron v. Hobbs, 96 Wis. 641; Walton v. Oliver, 49 Kan. 107; Whetstone v. Mfg. Co., 1 Kan.App. 320; Slocum v. Head, 105 Wis. 431; Montgomery v. Forbes, 148 Mass. 249; Gen. Laws of N. H. (1878), chap. 152; Hurt v. Salisbury, 55 Mo. 310; Richardson v. Pitts, 71 Mo. 128; Martin v. Fewell, 79 Mo. 401; Granby Mining Co. v. Richards, 95 Mo. 106; Cleaton v. Emery, 49 Mo.App. 345; R. S. 1899, sec. 1312; Davidson v. Hobson, 59 Mo.App. 130; Durant v. Abendroth, 69 N.Y. 148; Smith v. Warden, 86 Mo. 399; Furniture Co. v. Crawford, 127 Mo. 364; Furniture Co. v. Bodwell, 73 Mo.App. 392; Glenn v. Bergmann, 20 Mo.App. 343; Hill v. Beach, 1 Beazly (N.J.) 35; Duke v. Taylor, 37 Fla. 64; Coleman v. Coleman, 78 Ind. 344; Trust Co. v. Floyd, 47 Ohio St. 525; 1 Beach on Priv. Corp. (1 Ed.), 26; 1 Thomp. on Corp., sec. 266.

C. O. Tichenor for respondents.

(1) Defendants are sued as partners. It stands admitted that they did not intend to become, or act as partners by signing the articles of agreement; on the contrary, they intended to become a corporation; there was, in so far as defendants are concerned, no community of interest in the property of the corporation, in fact, defendants never have been in a position to assert any partnership. Hughes v. Ewing, 162 Mo. 295. Under such circumstances there ought to be no intendments in favor of plaintiffs in their claim. (2) The Siegel-Sanders Live Stock Commission Company was a corporation. There were no irregularities in its incorporation. Everything was regular and perfect from the very beginning, step by step, down to and including the certificate of incorporation. It was clothed with all the forms of a corporation under the laws of this State; it was in the exercise and use of the franchise conferred upon the incorporators. To say that they are to be regarded as a voluntary, unincorporated association, is not only contrary to reason, but also to the great weight of authority. The debt was not created by defendants individually, but by a corporation acting under a perfect charter, and in the exercise of its charter powers. Stout v. Zulich, 48 N.J.L. 599; Vanneman v. Young, 52 N.J.L. 403; American S. Co. v. Heidenheimer, 80 Tex. 344; Snider's Sons v. Troy, 91 Ala. 224; Gow v Lumber Co., 109 Mich. 45; Larned v. Beal, 65 N.H. 184; Johnson v. Okerstrom, 70 Minn. 309; Cochran v. Arnold, 58 Pa. 399; Gibbs' Estate, 157 Pa. 73; Slocum v. Head, 105 Wis. 431; Coal Co. v. Maxwell, 22 F. 197; Trowbridge v. Scudder, 11 Cush. 83; Ward v. Brigham, 127 Mass. 24; Humphreys v. Moony, 5 Colo. 282; Bank v. Palmer, 47 Conn. 443; P. & M. B. K. v. Padgett, 69 Va. 159; Blanchard v. Kaul, 44 Cal. 440; Powder Co. v. Sinsheimer, 46 Md. 321; Portland & G. T. Co. v. Bobb, 88 Ky. 226; Bank v. Padgett, 69 Ga. 164; G. C. Co. v. Maxwell, 22 F. 196; Shields v. Clifton H. L. Co., 94 Tenn. 123. (3) "It is entirely settled that the corporate existence of such corporation, de facto, cannot be inquired into collaterally. It is, as to all who contract with it, to be assumed to be a corporation de jure. The legality of its corporate existence may be inquired into by the State, but by no one else. And this is as true where the corporation is formed under a general law as it is where the corporate existence is claimed under a special charter." Stout v. Zulich, 48 N.J.L. 599. "The reason is that if rights and franchises have been usurped, they are the rights and franchises of a sovereign, and he can alone interfere. 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." Duggan v. Colorado N. I. Co., 11 Colo. 113; Finch v. Ullman, 105 Mo. 263; Catholic Church v. Tobbein, 82 Mo. 424; Bradley v. Reppell, 133 Mo. 553; Bibb v. Hall, 100 Ala. 96; Rheinhard v. Virginia M. Co., 107 Mo. 616; N. O. D. Co. v. La., 180 U.S. 328; President, etc., v. McCanaby, 16 S. R. 140; People v. M. W. Co., 97 Cal. 280. A general rule, not limited to cases where one contracts with corporation. Doty v. Paterson, 155 Ind. 64; 1 Clark and Marshall, Private Corps., 242-3-4. And where proceedings forming corporations are all regular in every way on their face from beginning to end, and an attack is made on the grant, it is a collateral attack. Lovitt v. Russell, 138 Mo. 483; Reed Bros. v. Nicholson, 158 Mo. 631; Brauford v. Woolf, 103 Mo. 391; Randolph, Com. Paper, sec. 13; Case M. Co. v. Soxman, 138 U.S. 437. (4) The fallacy of plaintiff's position can be shown in a few words. In order to be a...