Grand Rapids Furniture Company v. Grand Hotel and Opera House Company
| Decision Date | 13 April 1903 |
| Parties | GRAND RAPIDS FURNITURE COMPANY v. GRAND HOTEL AND OPERA HOUSE COMPANY, ET AL |
| Court | Wyoming Supreme Court |
Original Opinion of December 9, 1902, Reported at: 11 Wyo. 128.
Application for rehearing denied.
John H Chiles and Wells, Thompson & Chiles, for plaintiff in error on petition for rehearing.
There is no duty imposed upon the plaintiff in error to show that Kendall, Gildersleeve and Revell were trustees of this corporation, for the reason that the law expressly says that only certain persons can be trustees or directors of such corporation, and it certainly ought not to be presumed by this court that the law has been violated in that respect. The only thing necessary for this plaintiff to show in the trial of this case is, that there was a duty upon it to prove that it had a lien at some time prior to the institution of this suit upon this property. When the plaintiff in error proved that, the burden of proof then shifted upon the defendant in error company to prove, (1) that the plaintiff in error had not recorded this contract, and (2) that it was a bona fide purchaser, and this includes its corporate capacity to take and hold property. (Jones v. Aspen Hardware Co., 21 Colo. 263, 268.) The agreed statement of facts shows that Kendall, Gildersleeve and Revell were the incorporators of the company, and each subscribing for one share of its stock. And that no other stock had been sold to any other person. The law expressly says that no other person than a stockholder can be a trustee for the corporation. (R S., Sec. 3035.)
And under such statutes it has frequently been held that to no other person than those having a personal, pecuniary interest in its success or failure can the management of corporations be committed. (Orr Water Ditch Co. v. Reno Water Co. (Nev.), 30 P. 695; Bank v. Caldwell (N. Y.), 30 N. E., 644; Wright v. Bank (N. J.), 28 A. 719.)
The defendant was not a corporation, even de facto. (1 Clark & Marshall's Corp., Secs. 82, 261; Green v. Dennis, 6 Conn., 293; Abbott v. Smelting & Ref. Co., 4 Neb., 416; Kilpatrick v. Church, 63 Ia. 372; De Witt v. Hastings, 40 N.Y.S.Ct. 463.)
Is there any act enumerated by the court that the defendants could not have done as individuals? That the company had money and paid it out for the Opera House Company, is no proof of corporate user, because any one or all of the individuals, acting separately or as a partnership, could have advanced the money and have done the same thing, which we think is unquestionably shown by the record, as the company had neither issued nor sold any of its stock.
The fact that Revell acted as general manager and superintendent is no proof of corporate user, the exact point being decided in one of the cases above cited, where the corporation had both a clerk and treasurer.
The fact that the corporation was and is in possession of the property is not proof of corporate user, because it is not alone a corporate act, as any or all of the defendant individuals may have also had possession of the property. (Wall v. Mines, 128 Cal. 136; Martin v. Deetz, 102 Cal. 55.)
The laws of this State provide that, after the filing of articles of incorporation, there shall be a corporate meeting, officers elected, records and minutes kept, a seal adopted, and other acts which are prerequisite to becoming a corporation. These, and these only, are corporate acts, or what is known as corporate user; and will this court say that the burden of proof is upon us to show that these things have not been done, when there is absolutely no evidence in the record to sustain the finding of a trial court or to base it upon that this is a corporation by reason of corporate user?
And now, concerning the capacity in which Kendall, Gildersleeve and Revell hold this property, if they are not a corporation, and unquestionably they are not, then the law says they hold this property as a partnership. This follows as a matter of law, not a matter of fact. (See Cook on Stockholders, Secs. 233, 234; Abbott v. The Omaha Smelting & Ref. Co., 4 Neb., 416; Empire Mills v. Allston Grocery Co. (Tex.), 15 S. W., 505; Chaffee v. Ludeling, 27 La. Ann., 607; 1 Clark & Marsh Pr. Corp., Sec. 78, p. 220.)
It is elementary law that, under a statute of this character, one claiming to be a bona fide purchaser the burden is upon him to establish that fact by a preponderance of the evidence.
To constitute a bona fide purchaser certain tests are necessary--
1. That it had no notice of outstanding title.
2. That the purchase was upon valuable consideration.
3. That the consideration was paid before it obtained notice. (R. S., Sec. 2837; Blanchard v. Taylor, 12 Mich. 339; 86 Am. Dec., 57; Jackson v. McChesney, 7 Cow., 360; 17 Am. Dec., 521; Leod v. The Bank, 42 Miss. 99; Tiedeman on Sales, Sec. 329.)
Another and fourth test proper in this case is that it must show its corporate capacity to take and hold property. "As a general rule, when a company relies upon its corporate capacity it assumes the burden of establishing it." (Jones v. Aspen Hardware Co., 21 Colo. 263, 268; 1 Clark & Mars. Corp., Secs. 62-64.)
The fact that this company had money and paid seventeen hundred dollars in cash, as part payment for the property, referred to by the court in its opinion, is no evidence that it parted with anything of value, for in truth and fact it was absolutely impossible for it to acquire this money under the law, because it had not issued any of its stock or sold any of it, nor had it been able to accept a gift; it had not changed its position nor parted with anything of value, and it is evident that the money came from one or two of the defendants in error, who bought with notice of this plaintiff's lien, because they were the only persons who had any interest in seeing this corporation formed.
Referring, now, to the statement that the record shows by stipulation that the defendant "was duly organized and incorporated." We beg to say, in this connection, that the record as a whole must be construed together, and not isolated portions taken out, upon which the facts of the case are predicated. The stipulation shows that the defendant company was "duly organized and incorporated." It also shows that "at all times herein mentioned there has never been an election of officers of defendant company." And "that, since said incorporation of the defendant company, . . . . no stock of said corporation has been sold to any person except Kendall, Gildersleeve and Revell, being one share each, as in their original subscriptions."
We submit that these affirmative statements, together with the negative proof in the record, are as much a part of the record proper as the statement to the effect that the corporation was "duly organized and existing," and must be construed together with this statement, and when taken together it will be found that they qualify the first statement, and the record should read in substance something like this: "That defendant company was duly organized and incorporated, except that it had never elected any officers, issued or sold any of its stock (except one share each to the incorporators), or exercised any other act of corporate user, since the filing of the articles of its incorporation."
ON PETITION FOR REHEARING.
The court in its former opinion in this case intimated that, if it appeared that Kendall and Gildersleeve were trustees of the defendant company, we should be disposed to hold that there was notice to the company; but we reached the conclusion that there was no proof whatever that such was the fact. Counsel for plaintiff in error now strenuously insists as the law provides that the trustees of a corporation shall be stockholders and the trustees for the first year shall be named in the articles of incorporation, that, therefore, as Kendall, Gildersleeve and Revell were the only stockholders, they must be presumed to have been the trustees named for the first year, and the court must act upon this as one of the established facts in the case in reaching its...
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