Guckert v. Hacke

• Decision Date: 30 December 1893
• Docket Number: 276
• Parties: Guckert v. Hacke et al., Appellants
• Court: Pennsylvania Supreme Court

28 A. 249

159 Pa. 303

Guckert v. Hacke et al., Appellants

No. 276

Supreme Court of Pennsylvania

December 30, 1893

Argued November 8, 1893

Appeal, No. 276, Oct. T., 1893, by plaintiff, Frank J Guckert, from judgment of C.P. No. 3, Allegheny Co., Aug. T 1891, No. 268, on verdict for defendants, Paul H. Hacke et al.

Assumpsit against incorporators for debt of corporation.

At the trial before PORTER, J., it appeared that plaintiff entered into a contract to make some alterations and repairs in a building occupied by the Hughes & Gawthrop Co. In October 1890, a certificate of incorporation in proper form was presented by the Hughes & Gawthrop Co. to the governor, asking for a charter. The certificate was approved and letters patent were duly issued. All of the details required by the act of April 29, 1874, P.L. 77, were complied with, excepting only the recording of the certificate in the recorder's office of Allegheny county. The certificate was not recorded until June, 1891. In the meantime, plaintiff, without knowledge of the incorporation, made the contract with Gawthrop, upon which he sued. Subsequently he accepted a note for the debt, signed with the corporate name.

Defendants' points were as follows:

"1. The provisions of section 3 of the act of April 29, 1874, which provides that 'original certificates with all indorsements thereon shall then be recorded in the office of the recorder of deeds in and for the county where the chief operations are to be carried on,' are merely directory, and a failure to so record does not render the charter void or render the subscribers thereto individually liable for debts contracted by the corporation. Answer: The failure to record as stated will not of itself render the stockholders individually liable." [1]

"2. That from the moment the letters patent were issued by the governor of the commonwealth of Pennsylvania to the Hughes & Gawthrop Co., the subscribers to the articles of association became a corporation for every practical purpose, and any one dealing with them as a corporation is estopped from impeaching the charter in a collateral proceeding, by showing that a condition precedent to the existence of the corporation has not been complied with." Affirmed. [2]

"3. If the jury find from the evidence that letters patent were issued to the defendants by the governor of this commonwealth, to act as a corporation under the name of the Hughes & Gawthrop Co., and that they were actually engaged in carrying on business under such letters patent or charter, and that the contract sued on was made by E. B. Gawthrop, general manager of the Hughes & Gawthrop Co., and that the plaintiff received the promissory note of Hughes & Gawthrop Co., as a corporation, in payment of the amount due on said contract, he cannot now recover from Paul H. Hacke and J. B. George, two of the defendants, as individuals." Affirmed. [3]

Verdict and judgment against defendant, E. B. Gawthrop, and in favor of Paul H. Hacke et al., the other defendants. Plaintiff appealed.

Errors assigned were (1-3) instructions, quoting them.

Judgment reversed and a venire facias de novo awarded.

James Fitzsimmons, John S. Robb with him, for appellant. -- If the words, "and from thenceforth the subscribers, etc., shall be a corporation for the purposes and upon the terms named in the said charter," mean anything, they mean that such is one of the requisites that go to make up a good and valid charter, protecting the subscribers or stockholders from being liable as common partners, should they carry on business with an unsuspecting public in the county where its chief operations are to be carried on.

While we know of no authority bearing upon this precise question in Pennsylvania, yet we think that the general drift of the authorities in this and other states is in accord with the position we take in this case: Childs v. Hurd, 32 W.Va. 99; Kaiser v. Saving Bank, 56 Iowa 104; Larned v. Beal, 65 N.H. 184; Swartwout v. Michigan Air Line R.R., 24 Mich. 389; Fay v. Noble, 7 Cush. 188; Raisbeck v. Oesterricher, 4 Abbott, N. Cas. 444; Meriden Tool Co. v. Morgan, 1 Abbott, N. Cas. 125; Tarbell v. Page, 24 Ill. 46; West Harrisburg Building & Loan Assn. v. Morganthal, 2 Pearson, 343; Taylor, Corp. § 145; Spahr v. Farmers' Bank, 94 Pa. 429.

Defendants may be liable as members of a partnership, although not, in point of fact, members of the firm, by holding themselves out as such.

Robert S. Frazer, for appellees. -- When a body of men are acting as a corporation under color of apparent organization, in pursuance of some charter or enabling act, if their organization is irregular, they constitute a corporation de facto: Taylor, Corp. § 145; Swartwout v. Michigan Air Line R.R., 24 Mich. 389.

In our own state this court has said that where a charter has been granted to certain parties to act as a corporation, and they are actually in the possession and enjoyment of the corporate rights granted, such possession and enjoyment are valid against any one who deals with them in their corporate character, and he cannot be permitted in a collateral proceeding to prove that a condition precedent to its full corporate existence has not been complied with: Spahr v. Farmers Bank, 94 Pa. 429; Johnson v. B. & L. Assn., 104 Pa. 394; Cochran v. Arnold, 58 Pa. 406; Paterson v. Arnold, 45 Pa. 410.

Under the rule laid down in Grubb v. Mahoning Navigation Co., 14 Pa. 304, the moment the letters patent are issued the subscribers become a corporation for every practical purpose: First National Bank v. Almy, 117 Mass. 476; Water Supply Co. v. Braintree, 146 Mass. 482; Tarbell v. Page, 24 Ill. 47; Ramsey v. Ins. Co., 55 Ill. 311; Pierce v. Hacke, 49 Leg. Int. 288.

Before STERRETT, C.J., GREEN, WILLIAMS, McCOLLUM, MITCHELL, DEA...