Williams v. Citizens' Enterprise Co.

• Decision Date: 29 May 1900
• Docket Number: 3,308
• Citation: 57 N.E. 581,25 Ind.App. 351
• Parties: WILLIAMS v. CITIZENS' ENTERPRISE COMPANY
• Court: Indiana Appellate Court

57 N.E. 581

25 Ind.App. 351

WILLIAMS v. CITIZENS' ENTERPRISE COMPANY

No. 3,308

Court of Appeals of Indiana

May 29, 1900

Rehearing denied October 10, 1900.

From the Henry Circuit Court.

Reversed.

J. F Duckwall and M. E. Forkner, for appellant.

F Winter, for appellee.

OPINION

ROBINSON, C. J.

Transferred from the Supreme Court. Williams v. Citizens Enterprise Co., 153 Ind. 496, 55 N.E. 425.

Appellee sued to recover the amount of appellant's subscription to the capital stock of a proposed corporation. Demurrer to the complaint overruled. Demurrers were sustained to the eighteen paragraphs of affirmative answer. Trial upon the issues formed by the complaint and general denial, and verdict and judgment in appellee's favor. Motion for a new trial overruled, which ruling and the rulings on the demurrers are assigned as errors.

The complaint sets out the subscription contract and avers that after its execution certain named persons executed a certificate stating the corporate name of the corporation, the objects and purposes of which were to "promote and aid the growth of the city of Muncie and vicinity in Delaware county, Indiana; to locate, establish, carry on, maintain, and assist all kinds of mining and manufacturing companies and to furnish power, motive power, machinery, and buildings therefor; to buy, sell, and manufacture all kinds of merchandise; to sink, operate, buy and sell gas wells and to preserve and sell the product of oil and gas wells; to take stock in other corporations, loan, and donate their money, etc., and also stating therein" the amount of capital stock, the duration of the corporation, by whom the business of the corporation was to be conducted and names of directors for the first year.

It is argued at length that the complaint is insufficient. In discussing the complaint, and also the answers, appellant's counsel claim that the contract sued on is not enforceable, for the reason that the articles of association are void because of multifariousness and uncertainty in the statement of the object for which the corporation was formed. No question of estoppel is involved because it is not shown that appellant took any part in the attempted organization. The question presented is whether there has been such a compliance with statutory requirements as to constitute a de jure corporation. Appellant, having subscribed to the capital stock of a proposed corporation, can be compelled to pay his subscription only upon a showing that a de jure organization of the proposed corporation has been perfected. It is not enough to show facts constituting a mere de facto corporation. Williams v. Citizens Enterprise Co., 153 Ind. 496, 55 N.E. 425; Indianapolis, etc., Co., v. Herkimer, 46 Ind. 142; Rikhoff v. Machine Co., 68 Ind. 388; Capps v. Hastings, etc., Co., 40 Neb. 470, 58 N.W. 956, 24 L. R. A. 259.

Corporations in this State may be created and may exist by virtue of general statutory authority, and by that only. If a corporation claims the right to exist for a certain purpose it must show that it was organized under a statute authorizing the creation of a corporation for that particular purpose. In this case an attempt was made to organize a corporation under the statute providing for the incorporation of manufacturing, mining, and other companies.

The section of the statute here involved, § 5051 Burns 1894, § 3851 Horner 1897, is as follows: "Whenever three or more persons may desire to form a company to carry on any kind of manufacturing, mining, mechanical or chemical business, * * * or to supply any city or village with water; or to form union stock-yards and transit companies, and operating, maintaining and transacting the business incident to such companies; or to form grain-elevator companies, and constructing, maintaining and operating elevators, and transacting the business incident thereto; or to form companies for the purpose of buying and selling dry goods, carpets, boots and shoes, millinery goods, fancy goods or jewelry, in connection with the manufacture of such goods and articles, into any articles for which they are suitable, and for the sale of such articles, when they are so manufactured--they shall make, sign and acknowledge, before some officer capable to take acknowledgment of deeds, a certificate in writing, which shall state the corporate name adopted by the company, the object of its formation, the amount of capital stock, the term of its existence (not, however, to exceed fifty years), the number of directors and their names who shall manage the affairs of such company for the first year, and the name of the town and county in which its operations are to be carried on, and file the same in the office of the recorder of such county, which shall be placed upon the record, and a duplicate thereof in the office of the Secretary of State."

It is seen that many of the objects named in the articles of incorporation in question are not named in the above act, nor in the act for the incorporation of voluntary associations, nor are they named in any other legislative act. The objects named in the articles, and which are designated as corporate objects in the act above set out, are these: To furnish motive power to carry on manufacturing or mining business; to manufacture all kinds of merchandise, and to sink and operate oil or gas wells; considering the last named as the designation of a particular kind of mining business.

It is conceded that several objects and purposes are stated in the articles for which a corporation may be organized under the manufacturing and mining act. It is argued that this is permissible and that the point was so decided by this court in Shick v. Citizens Enterprise Co., 15 Ind.App. 329; 57 Am. St. 230, 44 N.E. 48. But that case does not so hold. In that opinion is this statement: "The mere fact that the articles of association mention some purposes not within the purview of the statute does not vitiate the organization. * * * Some of the purposes of the organization, alleged in the second paragraph of the complaint as being in the articles of association, are within the provisions of section 5051, supra, of the manufacturers' and mining act." The complaint in that case was in two paragraphs, the theory of the first paragraph being that the subscription was made to an existing corporation, and in the second paragraph the subscription was made to a proposed corporation. The question now under consideration was not there considered, as the court, after holding the first paragraph of the complaint...