Stout v. Zulick

• Decision Date: 30 June 1886
• Court: New Jersey Supreme Court
• Parties: STOUT and others, Surviving Partners, etc., v. ZULICK and others.

7 A. 362

48 N.J.L. 599

STOUT and others, Surviving Partners, etc.,

v. ZULICK and others.

Court of Errors and Appeals of New Jersey.

June Term, 1886.

Error to Essex circuit.

G. Collins, for plaintiffs in error.

H. M. Barrett and R. L. Lawrence, for defendants in error.

RUNYON, Ch. The plaintiffs in error, who were plaintiffs below, seek to recover from the defendants the amount of a bill of goods sold by them to the New Jersey & Sonora Reduction Company. The goods were sold in New York to the company, September 16, 1884, upon the order of its purchasing agent, and were charged to the company upon the plaintiffs' books of account, and the plaintiffs accepted the note of the company at two months, signed by the treasurer, for the price, and the goods were shipped to the company at Sonora, in Mexico. The note has not been paid. The plaintiffs brought suit for the price of the goods against the defendants, who were the persons who signed, as stockholders, a certificate of incorporation dated August 4, 1883, the object of which was to incorporate the company under the provisions of the act "concerning corporations." The ground upon which the plaintiffs base their claim of liability on the part of the defendants is that the proceedings for incorporation were not in compliance with the provisions of the act applicable to the subject. The act provides for the incorporation of any company of three or more persons, associating themselves together for any lawful business or purpose. The steps to be taken are the making, recording, and filing of a certificate, which is to be proved or acknowledged and recorded as required in case of deeds of real estate. In this case the certificate of acknowledgment of one of the defendants, Willard Richards, does not state that the contents of the certificate of incorporation were made known to him by the officers taking the acknowledgment, (a notary public of Saratoga county, in the state of New York;) and the accompanying certificate of authentication of the notarial act by the clerk of the courts of that county does not state that the notary was authorized by the laws of New York to take the acknowledgments and proofs of deeds or conveyances for lands, tenements, or hereditaments in that state, which statement is required by the supplement to the act respecting conveyances, (Revision, 1280,) in case of deeds for land, the acknowledgment or proof of which is taken in another state or territory before an officer so authorized. By reason and solely on account of those alleged defects, the plaintiffs insist that the certificate of incorporation is a nullity, and that the defendants are consequently liable as partners for the price of the goods.

It will have been seen that the goods were not sold to the defendants, but to the company to which the credit was given, and to which they were charged upon the plaintiffs' books, and for the price of which the plaintiffs accepted a note of the company signed by the treasurer. The contract was not with the defendants, but with the company, and the defendants were guilty of no fraud. None is imputed, but, as before mentioned, the claim of liability is based entirely upon the proposition that the proceedings intended to effect the incorporation are, because of the alleged defects before referred to, a nullity. In the absence of a statutory provision making shareholders liable in case of failure to comply with the requirements of the charter, or with the requirements of the act under which the company is incorporated, persons who have contracted with a de facto corporation as a corporation, cannot deny its corporate existence in order to charge its shareholders individually as partners. Tayl. Corp. § 739. See, also, Fay v. Noble, 7 Cush. 188. Where it is shown that there is a charter or a law under which a corporation, with the powers assumed, might lawfully be incorporated, and there is a colorable...