Kaiser v. Lawrence Sav. Bank

• Decision Date: 23 April 1881
• Citation: 56 Iowa 104,8 N.W. 772
• Parties: KAISER v. LAWRENCE SAVINGS BANK AND ANOTHER.
• Court: Iowa Supreme Court

56 Iowa 104

8 N.W. 772

KAISER

v.LAWRENCE SAVINGS BANK AND ANOTHER.

Supreme Court of Iowa.

Filed April, 23, 1881.

Appeal from Muscatine district court.

Service in this case was made only upon the defendant Hoag. The plaintiff, in April, 1877, became a creditor of the Lawrence Savings Bank by reason of a deposit of money made by him in the bank, which bank was located and doing business in the city of Lawrence, Kansas. As such creditor he seeks to recover of the defendant Hoag upon the ground that the Lawrence Savings Bank was a partnership or unincorporated company, and that Hoag was a member of it. Hoag does not deny his membership, but denies that the Lawrence Savings Bank was an unincorporated company or partnership, and avers that the same was duly incorporated under the laws of Kansas, by reason whereof he was exempt from personal liability for the debts of the bank. There was a trial without a jury, and judgment for the plaintiff. The defendant Hoag appeals.Hanna, Fitzgerald & Hughes, for appellant.

Hoffman, Pickler & Brown and L. M. Fisher, for appellee.

ADAMS, C. J.

The evidence tends to show that certain individuals attempted in good faith to become incorported under the laws of Kansas for the purpose of doing business as a savings bank, and subscribed for shares in the supposed corporation. For several years they did business as a savings bank under the supposition that they were duly incorporated. Prior to the time that the plaintiff became a creditor of the bank, the defendant Hoag purchased an interest in the bank and remained the owner of such interest from that time forward. The question presented is whether the shareholders so far complied with the incorporation laws of Kansas as to become incorporated and secure an exemption from individual liability, and if they did not strictly become incorporated, whether the fact that they did business as a corporation not only with the general public, but with the plaintiff, was sufficient to secure to them exemption from individual liability. If the Lawrence Savings Bank became incorporated it did so under a general incorporation law, and not by reason of the grant of a special charter. The general incorporation law of Kansas constitutes chapter 23 of the statutes of Kansas. Section 8 provides that “the charter of an intended corporation must be subscribed by five or more persons, three of whom, at least, must be citizens of this state, and must be acknowledged by them before an officer duly authorized to take acknowledgment of deeds.” Section 9 provides that “such charter shall thereupon be filed in the office of the secretary of state.”

A certificate of the secretary of state of the state of Kansas was introduced in evidence, showing what papers and what only had been filed in his office pertaining to the incorporation of the Lawrence Savings Bank. The certificate shows that there were filed in his office what are denominated articles of association. The statute requires that a charter shall be filed. We are inclined to think, however, that the fact that the paper filed is denominated articles of association instead of a charter is not sufficient to invalidate it. We proceed, then, to inquire whether the paper complied with the statute in other respects, and we conclude that it does not. The statute requires that it shall be subscribed and acknowledged by five or more persons. The paper purporting to be articles of association is so informally drawn and executed that we cannot say that it is subscribed by any one. The paper consists of eight articles. The first six articles purport to be subscribed by 23 persons, but the seventh and eighth articles are not subscribed, and the seventh article is, under the statute, material. But if the articles had all been subscribed they would be fatally defective for want of acknowledgment by the subscribers, or a sufficient number thereof to comply with the statute.

The defendant, however, insists that neither a charter nor articles of incorporation are necessary to the incorporation of a savings bank. In sections 127, 128, 129, 130, of the general incorporation law are provisions in relation to savings banks. Section 130 provides that “before any such corporation [a savings bank] shall commence business, a majority of the shares thereof shall be subscribed for, and the entrance fee thereon shall be paid in, and the president and secretary thereof, under their hands and seals, shall make a certificate which shall specify-- First, the corporate name of such association; second, the name of the city or town in which such incorporation is to be located; third, the amount of capital stock and the number of shares into which the same shall be divided; fourth, the names and places of residence of the stockholders, and the number of shares held by each; fifth, the time when such incorporation was organized, which certificate shall be acknowledged before a notary public and recorded in the registry of deeds for the county in which such corporation is to be located.”

The defendant insists that the making and recording of such certificate constitutes the act of incorporation. But it seems to us otherwise. The making and recording of the certificate is, by the terms of the provision, a condition precedent to the commencement of business. We see very little if anything to indicate that it is to be deemed the act of incorporation. The certificate is to be made by the president and secretary. Before it can be made, then, there must be a president and secretary; but there cannot be a president and secretary until such officers have been duly chosen by a body of persons who have become associated under an agreement to become incorporated under a law authorizing them to become incorporated. Now this agreement, which must not only precede the making of the certificate, but the choice of the president and secretary who are to make the certificate, it appears to us, would more naturally be deemed the act of incorporation, and we see nothing in the incorporation laws of Kansas inconsistent with this view.

Again, the certificate must state the time when the corporation was organized. This, to our mind, implies quite clearly that before the certificate is made organization must have taken place. Now, if organization must precede the making of the certificate, such organization must be effected by compliance with section 8 and other sections pertaining to general incorporations, and, as we have seen, section 8 was not complied with. There are two other considerations, either of which, it appears to us, is still more fatal to the defendant's...