Owensboro Wagon Co. v. Bliss

• Decision Date: 27 November 1901
• Citation: 31 So. 81,132 Ala. 253
• Parties: OWENSBORO WAGON CO. v. BLISS ET AL.
• Court: Alabama Supreme Court

31 So. 81

132 Ala. 253

OWENSBORO WAGON CO. v. BLISS ET AL.

Supreme Court of Alabama

November 27, 1901

Appeal from circuit court, Lauderdale county; E. B. Almon, Judge.

Action by the Owensboro Wagon Company against R. L. Bliss and others. From a judgment in favor of the defendants, the plaintiff appeals. Affirmed.

John T Ashcraft and Robt. E. Simpson, for appellant.

C. E Jordan and Emmet O'Neal, for appellees.

HARALSON J.

"A corporation de facto exists, when from irregularity or defect in the organization or constitution, or from some omission to comply with the conditions precedent, a corporation de jure is not created, but there has been a colorable compliance with the requirements of some law under which an association might be lawfully incorporated for the purposes and powers assumed, and a user of the rights claimed to be conferred by the law--when there is an organization with color of law, and the exercise of corporate franchises." Snider's Sons' Co. v. Troy, 91 Ala. 224, 8 So. 658, 11 L. R A. 515, 24 Am. St. Rep. 887; Central Agricultural &amp Mechanical Ass'n v. Alabama Gold Life Ins. Co., 70 Ala. 120.

"Corporations may exist either de jure, or de facto. If of the latter class, they are under the protection of the same law, and governed by the same legal principles as those of the former, so long as the state acquiesces in their existence and exercise of corporate functions. A private citizen, whose rights are not invaded, who has no cause of complaint, has no right to inquire collaterally into the legality of its existence. This can only be done, by a direct proceeding on the part of the state, from whom is derived the right to exist as a corporation, and whose authority is usurped." Id.; Lehman, Durr & Co. v. Warner, 61 Ala. 455.

It is also well settled, as a corollary to the foregoing principles, that when one contracts with a corporation, which is in the exercise of corporate functions, but which is a de facto corporation merely, he will not, in a suit by the corporation on a contract made by him with it in its corporate name, be allowed to deny and disprove the rightfulness of its existence. 4 Am. & Eng. Enc. Law, 198; Swartwout v. Railroad Co., 24 Mich. 390. In the case last cited, Cooley, J., declares, that "it is plainly a dictate, alike of justice and public policy, that in controversies between the de facto corporation and those who have entered into contract relations with it, as corporators or otherwise, that such questions should not be suffered to be raised." Snider's Sons' Co. v. Troy, supra; Cahall v. Association, 61 Ala. 232. In the Snider and Troy Case, it was further held, that the same principle applied, whether in suits against stockholders to enforce unpaid subscriptions,--in which case the stockholder will not be allowed to dispute the due incorporation of the company,--or by a creditor of the corporation, who by denying the existence of the corporation, seeks to recover his debt against the stockholders, by suing them as partners. It is a correct and well settled principle, that "persons who have contracted with the corporation as such, and have acquired liens against it, are estopped from denying its corporate existence, for the purpose of holding its shareholders liable as partners." Snider's Sons' Co.'s Case, supra; Tayl. Corp. § 148. "A corporation de facto has an independent status, recognized by the law, as distinct from that of its members. A partnership is not the necessary legal consequence of an abortive attempt at incorporation." Adopting the language in Fay v. Noble, 7 Cush. 188, this court said in Snider's Sons' Co.'s Case, "Surely, it cannot be, in the absence of all fraudulent intent, that such a legal result follows, as to fasten on parties involuntarily, for such a cause, the enlarged liability of copartners, a liability neither contemplated nor assented to by them."

The facts in this case, without conflict, show that the defendants and a number of other persons, pursuing closely the provisions of the statute for the purpose (Code, p. 425, art. 11), associated themselves together for the purpose of incorporating the Farmers' Implement Company. They filed their declaration in the office of the probate judge of Lauderdale county, in accordance with the provisions of section 1252 of the Code. This declaration was indorsed: "Farmers' Implement Co. Declaration." "I hereby certify that the within conveyance, was filed in the office for record, on the 5th day of February 1898, and duly recorded in Vol. _____ of _____ on page _____. _____, Judge of Probate." The word "conveyance," in this certificate, was a mere self-corrective clerical error, used for the word, "declaration"; and the fact that the name of the judge of probate is not signed thereto, amounts to nothing. In the absence of statute prescribing what constitutes the filing of a paper, it is said to be filed whenever it is delivered to and is received by the proper officer. A bill in chancery, for instance, is to be considered as filed, when it is put in the custody and power of the court, by depositing it with the register, or with his assistant in his office, with the intention of filing it, although the fact and date of filing are not then indorsed on it. Ex parte Stow, 51 Ala. 69; Truss v. Harvey, 120 Ala. 636, 24 So. 927; 8 Am. & Eng. Enc. Pl. & Prac. 928.

On the same day the declaration was filed, the judge of probate issued to two of the proposed incorporators, a commission to open books of subscription to the capital stock of the corporation, as per section 1253 of the Code. Afterwards, the commissioners, acting under this commission, opened books of subscription, and more than 50 per cent. of the capital stock was duly subscribed by parties deemed solvent, a list of whom was returned to the court, as a part of the report of the commissioners, and payments in money were made by each of the subscribers of at least 20 per cent. of the stock subscribed by them, respectively. The subscribers met and organized the corporation by the election of a board of directors, a president, a secretary and general manager, and a treasurer all of which was duly certified and returned in writing to the judge of probate, as provided by section 1255 of the Code. The only missing links for the perfection of a corporation de jure under the statute, as appears, were, that these papers, so returned and filed with the probate judge, were never recorded in his office, and no certificate...