Marsh v. Mathias
| Citation | 56 P. 1074,19 Utah 350 |
| Court | Supreme Court of Utah |
| Decision Date | 28 April 1899 |
| Parties | CLARENCE MARSH AND P. J. OLSEN, APPELLANTS, v. H. G. MATHIAS, J. M. WHITMORE, E. S. HORSLEY, A. W. HORSLEY, J. H. PACE, A. BILLINGER, PRICE TRADING COMPANY, AND PRICE WATER COMPANY, RESPONDENTS |
Appeal from the Seventh District Court, Carbon County, Hon. Jacob Johnson, Judge.
Action by plaintiffs as stockholders of the defendant, Price Water Company to have it adjudged and determined that said company is not a corporation, and that the stockholders thereof are the owners of a certain ditch and property as tenants in common according to their ownership of stock therein; the ditch and property having been operated and used by the company.
From a judgment of non-suit plaintiffs appeal.
Affirmed.
Messrs Moyle, Zane & Costigan, for appellants.
Here the various requirements, which were omitted, are absolutely necessary before a corporation can be formed. If there had been a substantial compliance with the law, or any real compliance, the case would have been different. But the parties never filed their articles and never obtained a certificate. They did not acknowledge their article sbefore the probate judge, nor did they all comply with the provisions as to ten per cent of the stock being paid in. The law is peremptory upon this point. Nothing whatever was paid in. Article 4 of the so-called constitution absolutely disproves that anything was paid.
The ten-per-cent provision was one necessary to be complied with and the failure to do so made the whole articles of agreement nugatory. Hibernia T. Corp. v. Henderson, 8 S. and R., 219; Goshen T. Co. v. Hurtin, 9 Johns., 217; Highland T. Co. v. McKean, 11 Johns., 98; Dutchess Cot. Mfg. Co. v. Davis, 14 Johns., 238; People v. Chambers, 42 Cal. 201; State Ins. Co. v Redmond, 1 McCrary, 308.
As to the claim made that plaintiffs Marsh or Olsen have acquiesced in these matters and can not object, we invoke the ordinary rule as to estoppels, which is that a party to be estopped must have knowledge of the facts. The plaintiff Marsh never had any knowledge of the facts until the latter part of 1897, and suit was soon brought. Eaton v. Walker, 76 Mich. 579; 1 Thompson on Corp., Sec. 526, p. 385.
Messrs. Williams, Van Cott & Sutherland, and Messrs. Rawlins, Thurman, Hurd & Wedgwood, for respondents.
The Price Water Company is a corporation de facto, and plaintiffs being stockholders and having participated in its acts are estopped from attacking it.
The foregoing proposition is supported by a vast number of authorities which will be found collected in an exhaustive note. 33 Am. St. Rep. 181; Clay Co. v. Harvey, 9 Utah 509; Kilpatrick-Koch Dry Goods Co. v. Box, 13 Utah 499, on p. 501; Sanger v. Upton, 91 U.S. 56, on p. 64; 1 Thomp. on Corp., Secs. 495, 501, 503, 505, 507; Cooley on Const. Lim., 254 (4th ed., p. 312); Humphreys, etc., v. Mooney, 5 Colo. 282.
But even if the Price Water Company was neither a corporation de jure nor de facto, the plaintiffs by their acts and conduct, as stockholders and members of the corporation, have estopped themselves from denying the corporate existence. 1 Thomp. on Corps., Secs. 518, 521, 522, 523; Kilpatrick-Koch Dry Goods Co. v. Box, 13 Utah 501; Cook on Stock and Stockholders, Sec. 637; 2 Mor. Priv. Corps., Sec. 756.
The plaintiffs are stockholders of the defendant Price Water Company, and brought this action to have it adjudged and determined that such company is not a corporation, and that the stockholders thereof are the owners of a certain ditch and property, as tenants in common, according to their ownership of stock therein, the ditch and property having been operated and used by the company. Among other things, there is also a prayer for equitable relief because of various alleged acts of fraud and illegality on the part of the directors and majority stockholders. At the trial, upon the plaintiffs' resting their case, the court, on motion of counsel for the defendants, granted a non-suit, and entered judgment accordingly. This action of the court is assigned as error. The first question presented is whether the Price Water Company is a corporation. The appellants insist that it is neither a corporation de jure nor de facto, and that they are not estopped from attacking its corporate existence. As affecting this question, it was alleged in the complaint that, on February 8, 1884, certain parties, upon entering into negotiations looking toward the formation of a corporation, drew up a certain paper, consisting of various articles, which was called a constitution, and which fixed the name of the association as the Price Water Company. Then, after stating that the paper, or constitution, contained various articles required by the statute relating to corporations, it is alleged as follows: "That said constitution did not provide for any subscription to stock, and contained no subscription of stock by any one, nor did the same declare the business or pursuit of the association, nor did the same contain any oath or affirmation as required by law that any stock to any amount had been paid in, nor was the same acknowledged; that no certificate as required by law was ever issued, nor was any copy of the articles filed with the secretary of the then Territory of Utah as required by law, nor did the said association ever become a corporation, nor was any certificate of incorporation ever issued to said association.
"That, notwithstanding the premises the said association did enter on business as an irrigation company for the building of a canal, and for the purpose of distributing water to its various stockholders, and these plaintiffs and all other of its so-called stockholders took part in the said association and gave to it their money and water rights and labor solely for the purpose of having water distributed to them as stockholders, and with the purpose of paying for the distribution of water by the assessments levied to pay the expenses therefor."
In support of the allegations respecting the defects in the organization of the company, the plaintiffs, at the trial, introduced in evidence the paper referred to, or article of incorporation. To these articles of agreement, as they were designated when admitted in evidence, were signed the names of six persons, and the name of the corporation and the time of its duration were stated. The object and business of the corporation were declared to be to convey water for irrigation and other purposes, in a canal or canals which are therein described. The maximum amount of capital stock was designated, and the par value of each share fixed. The agreement contains a clause that the private property of the stockholders shall not be liable for the debts of the corporation, and designates the several officers, provides for their election and qualification, and declares where the general place of business shall be. It provides for filling vacancies, for the removal of officers, and for the making and amending of by-laws. Following the signatures of the incorporators is a list showing the amount of stock subscribed for by each, and an affidavit that each party has paid or is able to and will pay the amount of his stock, and that it is bona fide their intention to commence and carry on the business mentioned in the agreement. This is signed by four of the incorporators, and then is attached thereto the jurat of Job H. Whitney, clerk of Emery County in which he mentions the four persons who signed the affidavit, and states that they "made oath to the foregoing." In witness whereof he declares that he set his hand and seal of the county court thereto on Feb. 14, 1884. It further appears from the paper admitted in evidence, as the articles of agreement, that it was recorded on Feb. 28, 1884, but the statement as to recording is signed by "Job H. Whitney, recorder," who, as may be seen,...
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