Swofford Bros. Dry Goods Co. v. Owen

• Decision Date: 11 June 1913
• Docket Number: Case Number: 2816
• Citation: 133 P. 193,37 Okla. 616,1913 OK 413
• Parties: SWOFFORD BROS. DRY GOODS CO. v. OWEN et al.
• Court: Oklahoma Supreme Court

1913 OK 413

133 P. 193

37 Okla. 616

SWOFFORD BROS. DRY GOODS CO. v. OWEN et al.

Case Number: 2816

Supreme Court of Oklahoma

Decided: June 11, 1913

Syllabus

¶0 1. CORPORATIONS--Organization--"De Facto Corporation." Under Act Cong. Feb. 18, 1901, c. 379, 31 St. at L. 794, putting in force in the Indian Territory certain provisions of the laws of Arkansas, relating to corporations (section 960, and succeeding sections down to and including section 1035, Mansf. Dig.), where the president and directors of a corporation in course of organization filed a true copy of their articles of incorporation, at full length, and also a certificate setting forth the purpose for which such corporation is formed, the amount of its capital stock, the amount actually paid in, and the names of its stockholders, and the number of shares by each respectively owned, with the clerk of the United States Court of Appeals for the Indian Territory, but fail to file a duplicate thereof with the clerk of the judicial district in which such organization is to transact business, where the attempt to organize is for a lawful purpose and within the statute, made in good faith, and there has been an actual user of the corporate franchise for a term of years, without objection on the part of the sovereignty, a de facto corporation is thereby created.

2. SAME--Legality of Incorporation--Right to Attack. The legal existence of such a corporation cannot be inquired into by those with whom as a corporation it has contracted, though the legality of its corporate existence may be inquired into by the state in an action brought by it in the manner prescribed by statute.

3. PARTNERSHIP--Legality of Incorporation--Stockholders. A creditor who has dealt with a corporation de facto in its corporate name and capacity, and given credit to it and not to its stockholders, cannot, in the absence of fraud, charge them as partners with the debts of the corporation.

4. BANKRUPTCY--Effect of Filing Claim--Partnership--Estoppel. By filing proof of its claim against a bankrupt corporation, and receiving and accepting dividends on account thereof, a creditor is estopped from asserting its claim, in an action subsequently brought on the same indebtedness, against certain of the stock-holders, with whom it claims it contracted as a partnership.

5. SAME--Allowance of Claim--Adjudication of Liability of Corporation. The presentation and allowance of the account as a debt of the corporation was an adjudication by a court of competent jurisdiction, done at the instance and procurement of the creditor, fixing the corporation's liability.

6. SAME--Effect of Filing Claim--Estoppel. Even though the creditor, before filing its claim, was entitled to proceed against certain of the stockholders as partners, it having elected to file its claim against the bankrupt, corporation, and participated in the corporate dividends declared, with knowledge of the facts, cannot subsequently be heard to say that the indebtedness was not in fact a debt of the corporation, but of the partners instead.

7. CORPORATIONS--Liability of Directors--Accrual. Under section 1297, Comp. Laws 1909, no right of action accrues to the creditor of a corporation against the directors for creating debts beyond the subscribed capital stock until after a dissolution of the corporation shall have been duly adjudged.

J. F. Bledsoe and Thos. Norman, for plaintiff in error.

D. A. Richardson and W. F. Tyree, for defendants in error.

SHARP, C.

¶1 On the 22d day of April, 1903, articles of agreement and incorporation were filed by the Owen-Willis-Wheeler Mercantile Company in the office of the clerk of the United States Court of Appeals for the Indian Territory, at McAlester. The corporation so organized thereafter engaged in the general mercantile business in the Indian Territory, and afterwards in Oklahoma, until July 2, 1908, when it was adjudged a bankrupt by the United States District Court for the Eastern District of Oklahoma. The corporation was organized pursuant to an Act of Congress of February 18, 1901, putting in force in the Indian Territory certain provisions of the laws of Arkansas relating to corporations. Among the statutes so put in force was section 960, and the succeeding sections down to and including section 1035, as published in 1884, in the volume known as Mansfield's Digest. Section 968 of the adopted statutes provides that, before any corporation formed and established by virtue of the provisions of said act shall commence business, the president and directors thereof shall file a true copy of their articles of association at full length, and also a certificate setting forth the purpose for which such corporation is formed, the amount of its capital stock, the amount actually paid in, and the names of its stockholders, and the numbers of shares by each respectively owned, with the Secretary of State, and a duplicate thereof with the clerk of the county in which said corporation is to transact business. Under section 2 of the act of Congress, it was provided that wherever the words "Secretary of State" occur there should be substituted therefor the words "clerk of the United States Court of Appeals for the Indian Territory," and wherever the words "clerk of the county" occur there should be substituted therefor "clerk of the judicial district." So that, to comply fully with the law thus put in force, it was necessary to file a true copy of the articles of association with the clerk of the United States Court of Appeals for the Indian Territory, and a duplicate thereof with the clerk of the judicial district in which such corporation was to transact business. The former, as we have seen, was done; it does not appear from the record that the latter was. Save in this respect, the organization of the corporation appears in every way to have been regular, and that the corporation so formed continued the exercise of its corporate powers until adjudicated a bankrupt. June 11, 1909, plaintiff sued the defendants, R. A. Owen, A. G. Noble, J. Hamp Willis, and John McDuffee, former stockholders of said corporation, to recover an alleged balance due it amounting to $ 996.24. The petition charged that the defendants on or about the 18th day of December, 1907, and subsequently thereto, were engaged in the mercantile business at Woodville and Kingston, Okla., under the firm name and style of the Owen-Willis-Wheeler Mercantile Company, and that said concern was indebted to plaintiff on account for goods, wares, and merchandise purchased between December 18, 1907, and March 25, 1908, on which there was a balance due, after allowing all proper credits, of $ 883.05. A second count in the petition sought to recover the additional sum of $ 116.19 and attorney's fee, being the balance due on a promissory note, dated March 31, 1908. The answer of the defendants Willis, Owen, and McDuffee contained (1) a general denial; and further charged (2) that the indebtedness sued on was that of the corporation; (3) estoppel by a course of dealing; (4) estoppel arising out of the fact that plaintiff had asserted its claim against the bankrupt corporation, had participated in said bankruptcy proceedings, and received therefrom and accepted dividends on account of its said indebtedness. After a paragraph containing a general denial, plaintiff in its amended reply, filed February 17, 1911, charged as follows:

"Further replying to said answers, plaintiff denies that the Owen-Willis-Wheeler Mercantile Company is a corporation, and denies that it is still in existence, but admits that it was adjudged a bankrupt as alleged in said answer."

¶2 Plaintiff's testimony consisted of the deposition of its former adjuster, who testified that the plaintiff had been selling goods to the Owen-Willis-Wheeler Mercantile Company of Kingston and Woodville for several years, and up to and including the transactions of 1908 the plaintiff company dealt with said Owen-Willis-Wheeler Mercantile Company as a corporation. The witness further testified that the bill of goods included in the first paragraph of the petition was sold, not to the corporation, but to a copartnership composed of Owen, Willis and McDuffee, upon the representation of these parties and one Murphy that the corporation had been dissolved, and a copartnership organized in its stead. At the close of the trial, the court peremptorily instructed the jury to return a verdict for the defendants. This is urged as error for the following reasons: (1) That it does not appear that the Owen-Willis-Wheeler Mercantile Company was duly incorporated, and, if not, the defendants, being stockholders, were liable as partners; (2) that the defendants, having represented that the goods were purchased for the copartnership, were therefore individually liable, regardless of the fact that the corporation was or was not regularly incorporated. A payment of $ 242.47 was collected and remitted by their attorneys, in addition to which $ 92.97 was paid it by the trustee, J. P. Haven. These payments, so made and credited, consisted of dividends realized out of the bankrupt corporation. The plaintiff had full knowledge of the bankruptcy proceedings, and at one time made an offer to purchase the bankrupt stock. Assuming, without deciding, that it was incumbent upon the defendants to prove, under the issues joined, a duplicate of the articles of incorporation was filed with the clerk of the judicial district in which the corporation was to transact its business, what, then, would be the legal effect of a failure to comply with this provision of the statute? The adopted statute authorized the organization of a corporation for the purpose of engaging in or carrying on any kind of manufacturing, mechanical, mining, or other lawful business. There was a bona fide attempt to organize a corporation for the purpose of engaging in the general mercantile business, a class of business within the statute. As we have seen, articles...