Liberian Exodus Joint-Stock S.S. Co. v. Rodgers

• Decision Date: 22 March 1884
• Parties: LIBERIAN EXODUS JOINT-STOCK STEAMSHIP CO. v. RODGERS.
• Court: South Carolina Supreme Court

21 S.C. 27

LIBERIAN EXODUS JOINT-STOCK STEAMSHIP CO. v. RODGERS.

Supreme Court of South Carolina.

March 22, 1884

1. Where a plaintiff corporation alleged its corporate existence, and defendant answered such allegation by a denial of knowledge or information sufficient to form a belief, the plaintiff's corporate existence or capacity to sue is not in issue.

2. Matters which are causes of demurrer under section 165 of the code of procedure (except as provided in section 169) can only be objected to by demurrer when they appear upon the face of the complaint, or when not so appearing, by special allegations thereof in the answer. They cannot be put in issue by a general denial.

3. Commercial Insurance and Banking Co. v Turner , 8 S.C. 110, recognized and followed; and this case distinguished from Chicora Company v Crews , 6 S.C. 243.

Before COTHRAN, J., Charleston, February, 1883.

The opinion states the case. The order of the Circuit judge refusing a motion to set aside the order of nonsuit was as follows:

There is no doubt that at common law, in a suit brought by a corporation, it was necessary for the plaintiff to prove themselves duly incorporated by competent authority, on the plea of the general issue. Ang. & Ames Corp. , § 634. In some of the states, and notably in New York, to relieve corporations from the expense and inconvenience of preparing in every case of an action by a corporation, where the general issue was pleaded, to prove its charter, the common law rule was modified and the defendant was required if he really desired to litigate that question, to plead in abatement or bar that the plaintiffs were not a corporation. No such legislation has been adopted in this state, and the common law rule was accordingly recognized and applied in Chicora Co. v. Crews , 6 S.C. 243, where the defendant was permitted to attack the corporate existence of the plaintiff in an action brought to recover the value of property which came into his possession as the plaintiff's agent. There is nothing in the cases cited by the movants (S. & A. R. R. Co. v Ezell , 14 S.C. 285; Chubb v. Upton , 95 U.S. 665; Eaton v. Aspinwall , 19 N. Y. , 119) in conflict with the rule laid down in Chicora Co. v. Crews . In all those cases the defendants sought to take advantage collaterally of mere irregularity in the organization of the suing corporation, and it was held that they could not do so.

But if my construction of the act of 1874 be correct, then this is not a case of defective organization under the charter or act of incorporation, nor of erroneous proceedings after the necessary steps were taken to the assumption of corporate powers; but there is an absolute want of proof that any corporation was ever called into being which had the right to sue or be sued in its corporate name. To cases of this sort, the rule contended for is wholly inapplicable.

For the same reason, I am of opinion that the movants cannot succeed upon the second ground upon which their motion is based; that is, that the existence of the corporation cannot now be assailed collaterally, but must be attacked in the manner prescribed by section 426 of the code, in a proceeding instituted by the attorney general. That section and the other sections immediately preceding and succeeding it, referring to the same subject, assume the existence of a corporation. The ground taken here by the defendant, and to which I agree, is that the plaintiff is not a corporation. This case falls under the decision of the Supreme Court in the case of the Chicora Co. v. Crews, supra , and as a decision of that court, unreversed and unreviewable by me, I am constrained to follow it, and to refuse the motion to set aside the nonsuit; and it is so ordered and adjudged.

Mr. S. J. Lee , for appellant.

Messrs. Lord & Inglesby , and S. Hyde , contra.

OPINION

MR. JUSTICE MCGOWAN.

This was an action to recover $7,325 on the following contract:

" CHARLESTON, December 1st, 1879.

" I will sell and convey all my right, title, and interest in the Azor, unto the Liberian Exodus Joint Stock Steamship Co., for the sum of twenty-six hundred and seventy-five dollars. This offer to be accepted and the above amount of twenty-six hundred and seventy-five dollars paid into my hands on or before November 11th, 1880, otherwise this offer to be null and void.

(Signed,)

" F. S. RODGERS."

Paragraph I. of the complaint alleged: " That the plaintiff is and was, at the date of the agreement hereinafter mentioned, a body corporate under the laws of the state of South Carolina; " to which the defendant answered as follows: " That he has no knowledge or information sufficient to form a belief as to the truth of the allegation contained in the first paragraph of the complaint."

The plaintiff proved that on November 8th, 1879, the bark Azor was bought by the defendant from the U. S. marshal for $2,950, $450 of which being furnished by the plaintiff, and the bill of sale was taken in the name of the defendant. On June 7, 1880, the defendant sold the Azor for $4,500. The plaintiff also offered in evidence a charter of incorporation from the clerk of the Court of Common Pleas of Charleston county under the act of 1874 (reë nacted as chapter XXXIX. of Gen. Stat. ), upon the subject of " corporations organized under general statutes," granting to certain persons, under the name and style of " The Liberian Exodus Joint Stock Steamship Company of Charleston, S. C.," the right to carry on and conduct the business of " transporting passengers and freight along the Atlantic sea-coast and high seas in general; " that the company in 1877 organized under this alleged charter of incorporation, and carried on business as such in Charleston up to the commencement of this suit. The plaintiff then rested.

When the plaintiff closed their testimony, the defendant moved for a nonsuit on the grounds: 1. That the act of 1874 was unconstitutional. 2. That there was no proof that the plaintiff had complied with the conditions prescribed in the said act precedent to their right to obtain a charter. And 3. That there was no authority in the act for the incorporation of a navigation company. The Circuit judge held that at common law it was necessary for the plaintiff to prove themselves duly incorporated by competent authority; that " in some of the states, notably in New York, to relieve corporations from the expense and inconvenience of preparing in every case of an action by a corporation, when the general issue was pleaded, to prove its charter, the common law rule was modified, and the defendant was required, if he really desired to litigate that question, to plead in abatement or bar that the plaintiffs were not a corporation. No such legislation has been adopted in this state, and the common law rule was accordingly recognized and applied in the case of The Chicora Company v. Crews , 6 S.C. 243." And, thus taking the view that the general denial in the answer put in issue the existence of the corporation of the plaintiffs, he held that there was no corporation, and granted the nonsuit on the third ground taken, that the clerk of the court, in granting the charter " to carry on the business of transporting passengers and freight along the Atlantic sea-coast and high seas," had acted beyond the scope of his authority under the act aforesaid, and the charter was void.

From this order the plaintiff appeals to this court, upon the following grounds: 1. Because his honor erred in granting a nonsuit, there being evidence to sustain every material allegation in the plaintiff's complaint, and the plaintiff was entitled to the verdict of a jury on the evidence. 2. Because the defendant having contracted with the plaintiff as a corporation, or as doing business under a corporate name, cannot in this action question its corporate existence, and his honor erred in not so deciding. 3. Because one who contracts with a corporation, or acting corporation, or copartnership, doing business under a corporate name, cannot defend himself against a claim on such contract, in a suit by the corporation, by denying its corporate existence; and it was error not to so rule. 4. Because a corporation, either de jure or de facto , can only be attacked and its charter taken away in a suit by the attorney general of the state, and his honor erred in not so ruling.

From the view which the court takes of this case, it will not be necessary or even proper to consider now the questions whether the...