Rialto Company v. Miner

• Decision Date: 07 April 1914
• Citation: Rialto Company v. Miner, 166 S.W. 629, 183 Mo.App. 119 (Mo. App. 1914)
• Parties: RIALTO COMPANY, Respondent, v. F. J. MINER, Appellant
• Court: Missouri Court of Appeals

166 S.W. 629

183 Mo.App. 119

RIALTO COMPANY, Respondent, v. F. J. MINER, Appellant

Court of Appeals of Missouri, St. Louis

April 7, 1914

March 2, 1914, Argued and Submitted

Appeal from St. Louis City Circuit Court.--Hon. W. B. Homer, Judge.

AFFIRMED.

Judgment affirmed.

A. M Frumberg, M. G. Reynolds and A. R. Russell for appellant.

(1) The acquisition and holding of real estate is not a lawful purpose under the statutes and public policy of the State of Illinois. Rev. Stat. of Illinois, Chapter 32, secs. 1, 5 and 26; Carroll v. East St. Louis, 67 Ill. 568; United States Trust Co. v. Lee, 73 Ill. 142; People v. Pullman Car Co., 175 Ill. 125; First M. E. Church v. Dixon, 178 Ill. 260; Bixler v Summerfield, 195 Ill. 147; Board of Trade v Building Co., 136 Ill.App. 606; Building Co. v. Bank, 181 Ill. 42; Building Co. v. Board of Trade, 228 Ill. 100; People v. Shedd, 241 Ill. 155; Walker v. Taylor, 252 Ill. 428. (2) The purpose for which plaintiff was organied was the acquisition and holding of real estate, and such being an unlawful purpose, the plaintiff could acquire no corporate existence. Board of Trade v. Building Co., supra; Building Co. v. Board of Trade, supra; People v. Shedd, supra. (3) The lack of corporate existence arising from attempted incorporation for an object unauthorized or prohibited by law may be raised collaterally. Gillette v. Railroad, 228 Ill. 276; American Trust Co. v. Railroad, 157 Ill. 653; Board of Trade v. Building Co., supra; Building Co. v. Board of Trade, supra. (4) The evidence of defendant, if true, showed that plaintiff had converted the property mentioned in the counterclaim; whether it was true was a question for the jury and not for the court. McKenna v. Walker, 85 Mo.App. 570; Knapp v. Knapp, 118 Mo.App. 692; Horton v. Terminal Hotel Co., 114 Mo.App. 261; Keyes v. Bank, 52 Mo.App. 330; Ireland v. Horseman, 65 Mo. 511; Allgear v. Walsh, 34 Mo.App. 139; Fulkerson v. Ingles, 17 Mo.App. 232; Smith v. Stephens, 9 Mo. 873; O'Donohoe v. Corby, 22 Mo. 393; Williams v. Wall, 60 Mo. 318.

Jones, Hocker, Hawes & Angert, James C. Jones, Jr., and Geo. F. Haid for respondent.

(1) When a corporation has gone into operation, and rights have been acquired, every presumption should be made in favor of its legal existence. Duke v. Cahawba Nav. Co., 10 Ala. 82. When an instrument is susceptible of two interpretations, one of which renders it invalid and the other will render it valid, the court will adopt the latter. Hunter W. Finch & Co. v. Furnace Co., 146 Ill.App. 257; Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Ill. 85; Ormes v. Dauchy et al., 82 N.Y. 443; Curtis v. Gokey, 68 N.Y. 300; Tillitt v. Mann, 104 F. 421; Crittenden v. French, 21 Ill. 598; Cochran v. County of Vermillion, 113 Ill.App. 140; National Hollow Brake Beam Co. v. Interchangeable B. B. Co., 106 F. 693; Jewell Filter Co. v. Jackson, 140 F. 340. The articles of association of a corporation are its charter and is a contract between the State and the incorporators. 7 Am. & Eng. Encyc. Law, page 669; Bergman v. St. Paul Mut. Bldg. Assn., 29 Minn. 275; Morawetz on Private Corporations, Secs. 149, 367. (2) Plaintiff being a de facto corporation, its corporate capacity cannot be attacked collaterally, and if it has abused its powers as a corporation, that can only be inquired into at the instance of the State. Gillette v. Aurora Railways Co., 228 Ill. 261; Rector v. Hartford Deposit Co., 190 Ill. 380; Dauchy Iron Works v. Gunder, 150 Ill.App. 604; Thompson v. Candor, 60 Ill. 244; Finch v. Ullman, 105 Mo. 263; Springer v. Loan & Trust Co., 202 Ill. 17; Hayden v. Hayden, 241 Ill. 183. (3) Defendant by entering into a contract with the corporation and by preferring a counterclaim in this case is estopped from denying that plaintiff is a corporation. City of St. Louis v. Shields, 62 Mo. 247; Broadwell v. Merritt, 87 Mo. 95; Cresswell v. Oberly, 17 Ill.App. 281; Ward v. Railroad, 119 Ill. 287; McKnight v. Mineral Point, 1 Pinney (Wis.) 99; Improvement Co. v. Holway, 85 Wis. 344. (4) The proof in this case is insufficient to make out a case of liability against plaintiff on defendant's counterclaim, and the court below was correct in so instructing the jury. The evidence absolutely failed to make out a case of conversion by plaintiff of the defendant's property. Wamsley v. Atlas Steamship Co., 168 N.Y. 533; National Bank v. Wheeler, 48 N.Y. 492; Duncan v. Fisher, 18 Mo. 403; Hawkins v. Hoffman, 6 Hill (N. Y.) 588; Packard v. Getman, 4 Wend. 615 (N. Y); Maguire v. Densmore, 70 N.Y. 417; Bolling v. Kirby, 95 Ala. 215; Davis & Son v. Hurt, 114 Ala. 146; Sturgis v. Reith, 57 Ill. 451; Rose v. Chandler, 15 Ill.App. 532; Stock Yards Co. v. Hawkins, 8 Kan.App. 155; 38 Cyc. 2008; 28 Am. & Eng. Ency. of Law, p. 682.

REYNOLDS, P. J. Nortoni and Allen, JJ., concur.

OPINION

REYNOLDS, P. J.

This is an action by plaintiff, alleged to be a corporation duly organized and existing under the laws of the State of Illinois, to recover five months' rent claimed to be due under and by virtue of a lease executed by plaintiff as lessor, to the defendant, lessee, the lease covering certain rooms in a building owned by plaintiff in the city of Chicago, the lease dated March 9, 1908, annual rental $ 2610, $ 217.50 payable monthly in advance on the first day of each month. Alleging that the defendant lessee had paid the rent under the lease until November 1, 1909, but had made default in payments for the remaining five months of the term, judgment is demanded for the amount.

The answer, for a first defense, denies that plaintiff is a corporation duly organized and existing under the laws of the State of Illinois, and denies that it is a corporation at all, alleging that the statutes of Illinois prohibit a corporation from acquiring and holding real estate, and that it is contrary to the laws and public policy of that State to permit a corporation to be organized for the purpose of leasing specified real estate for a long term of years upon which to erect buildings for tenants, and that a corporation attempted to be organized for such purposes has no valid, legal existence; that the promoters of the plaintiff corporation, seeking to evade the law and the public policy of the State of Illinois, organized the plaintiff company for the avowed purpose of securing or erecting a building to contain suitable and proper vaults and safes for the storage and protection of property and to do all things incident to the management of the building; that the avowed object of the plaintiff company was not to conduct a safety deposit vault business and that the company or alleged corporation did not at any time, and never has at any time, attempted in good faith to exercise any corporate functions properly belonging to deposit or safety vault companies, or any other functions not prohibited by the laws of the State of Illinois; that plaintiff is neither a corporation de jure nor defacto and has not the power to sue in this or any other court, and that by reason of the facts above stated the lease set up was and is null and void and directly contravenes and is in violation of the statutes of the State of Illinois and against the public policy of that State. "Defendant for his further answer herein says that he leased the premises herein referred to for the purpose of operating and conducting a brokerage and commission business," in Chicago; that about the beginning of the lease he moved into the offices or rooms in the building, furnished them with certain articles, enumerating them, of which article defendant avers he was lawfully possessed as of his own property and which were of the value of $ 1500; that on or about May 25, 1908, defendant quit his brokerage and commission business in the offices, closed the offices, turned the keys over to plaintiff and left the furniture and fixtures in the premises; that when defendant surrendered the keys of the offices to plaintiff it was agreed between plaintiff and defendant that the furniture and fixtures were to remain in the premises and be in the care and custody of plaintiff during the remainder of the term of the lease and that plaintiff would not permit or cause the property to be removed or molested during the term of the lease without the written consent of defendant, but, disregarding its duties plaintiff suffered and permitted the furniture and fixtures to be removed from the offices and from its care and custody during the term of the lease without the knowledge or written consent of defendant and wholly without his authority, and that the property thereby passed from the control of and was lost to defendant, to his damage in the sum of $ 1500, for which sum he demands judgment against plaintiff. This answer was duly verified by defendant, and a general denial, by way of reply, filed by plaintiff.

The cause came on for trial before the court and a jury and under the direction of the court the jury returned a verdict for plaintiff for the amount of the rental and interest and against defendant on his counterclaim, and judgment was entered accordingly. Interposing a motion for new trial and excepting to that being overruled, defendant has duly perfected his appeal to this court.

The errors assigned are to the action of the court in peremptorily instructing the jury to return a verdict for plaintiff on its cause of action and to return a verdict against defendant on his counterclaim.

At the trial of the cause, plaintiff introduced and read in evidence several sections from chapter 32 (Hurd's Ed. 1909), Revised Statutes Illinois, relating to corporations for pecuniary profit.

Section 1 of that chapter provides that corporations may be formed in the manner provided by the act "for any lawful purpose except banking,...