Payne v. Bracken, 11861.

• Decision Date: 04 January 1936
• Docket Number: No. 11861.,11861.
• Citation: 90 S.W.2d 607
• Parties: PAYNE v. BRACKEN et al.
• Court: Texas Court of Appeals

90 S.W.2d 607

PAYNE v. BRACKEN et al.

No. 11861.

Court of Civil Appeals of Texas. Dallas.

January 4, 1936.

Rehearing Denied February 1, 1936.

Appeal from District Court, Van Zandt County; Thos. R. Bond, Judge.

Suit by Bryan W. Payne against J. A. Bracken and others. Judgment for defendants, and plaintiff appeals.

Affirmed.

Jno. S. Morris, of Ft. Worth, for appellant.

Lasseter, Simpson & Spruiell, of Tyler, for appellees.

LOONEY, Justice.

Appellant, Bryan W. Payne, brought this suit against appellees to foreclose the lien of a judgment obtained in a district court of Dallas county against J. S. Kimbrough and J. T. Miller; the contention of appellant being that, at the time the judgment was abstracted in the office of the county clerk of Van Zandt county, Kimbrough owned the real estate upon which foreclosure is sought. Appellees answered by general denial and specially pleaded that, prior to the abstracting of the judgment, Kimbrough had parted with all his interests in the real estate. On trial without a jury, judgment was rendered that appellant take nothing, from which he appealed.

The material facts, as found by the court, are these: On and prior to October 22, 1929, J. S. Kimbrough owned an undivided 3/32 interest in and to all oil, gas, and other minerals on and under the surface of the 40 acres of land involved, and on said date he, Van McPhail, and J. D. Wiley associated themselves to charter a private corporation for a legally authorized purpose to be known as the "East Texas Oil Corporation." A charter in due form was prepared, executed, and immediately forwarded to the secretary of state for filing, and, as found by the court, the incorporators, believing the charter had been filed, and acting in good faith, transacted business as a corporation. On the next day (October 23, 1929), but prior to the filing of the charter by the secretary of state, J. S. Kimbrough conveyed the real estate involved to the said East Texas Oil Corporation; the conveyance was duly recorded October 30, 1929, the consideration for same being the issuance by the inchoate corporation to Kimbrough of shares of its stock. The charter was not actually filed by the secretary of state until November 6, 1929, but on the preceding day appellant's judgment was abstracted in the records of Van Zandt county. On October 29, 1930, the corporation, acting under its name as amended, that is, the "East Texas Petroleum Company," conveyed the land in question to appellee J. A. Bracken, who subsequently conveyed interests therein to the other appellees.

The trial court held that, although appellant's judgment as abstracted was sufficient in law to have fixed a lien on lands in Van Zandt county owned by Kimbrough, but that his prior deed to the East Texas Oil Corporation divested him of all interest in the land in controversy, hence denied foreclosure.

The contention of appellant is that the conveyance of the mineral lease by Kimbrough to the East Texas Oil Corporation, having been executed before the corporation came into existence, that is, before its charter was filed, no title passed thereby; but even if title did pass, that the same vested in the individuals proposing the charter of the corporation, therefore the judgment lien attached to Kimbrough's undivided interest, and for that reason the court erred in adjudging that appellant take nothing. On the other hand, appellees contend that, the facts found by the court show the East Texas Oil Corporation to have been a de facto corporation at the time of the transaction involved, and a legal entity in the sense that it could contract, purchase, own, sell, convey, incur liabilities, ex contractu and ex delicto, and sue and be sued to the extent and in the same manner as a de jure corporation, therefore the conveyance, by Kimbrough to the said de facto corporation, passed title to the land; and, furthermore, that the legality, whether or not, of its status as a corporation de facto, and of its right to act in respect to the matter involved, could not be called in question otherwise than in a direct proceeding by the state, or under its authority.

We agree to the soundness of the propositon urged by appellant, that a conveyance to be effective must be to a grantee then in existence and capable in law of receiving the conveyance and holding the property conveyed. That doctrine, however, does not answer the question under consideration, which is this: Was the East Texas Oil Corporation a de facto corporation at the time Kimbrough conveyed the mineral lease? if so, title passed as effectually as if its status had been de jure. This generally recognized doctrine is stated in 7 R.C.L. page 67, § 48, as follows: "A corporation de facto may legally do and perform every act and thing which the same entity could do or perform were it a de jure corporation. As to all the world except the paramount authority under which it acts, and from which it receives its charter, it occupies the same position as though in all respects valid; and even as against the state, except in direct proceedings to arrest its usurpation of power, its acts are to be treated as efficacious. It is under the protection of the same law, and governed by the same legal principles, as a corporation de jure, so long as the state acquiesces in its existence and exercise of corporate functions. Thus a transfer of property to or by a corporation de facto will be held valid and binding against all persons except the state. * * *"

The trial court found that, after executing the charter, the incorporators "immediately" forwarded same to the secretary of state to be filed, and that "the incorporators believing the charter had been filed by the Secretary of State, and acting in good faith, transacted business as a corporation." As defined in Rawle's 3d Rev.of Bouv.Law Dict., vol. 1, page 763, a de facto corporation is an organization of persons intending in good faith to form a corporation under a permissive statute, but failing to comply with...