Benninger v. Gall

1 Cin. Sup. Ct. Rep. 331

• Court: Ohio Superior Court, Cincinnati
• Decided: April 15, 1871
• Status: Published

Opinion

Storer, J.

The only question made by the parties on the testimony, as embodied in the bill of exceptions, is this : Was the relation subsisting between the plaintiffs and defendants a copartnership or that of corporators ?

If the .members of the association were partners only, it is clear to us that the pleadings must be amended before we can claim jurisdiction to decide the questions necessarily involved in the controversy, as before any relief could be given, all the partners should be made parties, either as plaintiffs or defendants. It is not a case where a common right is involved, to protect which one or more of those intrusted in preserving it is permitted, in consequence of the multiplicity of parties, to sue for themselves as well as for those who may join in the action, but where we must determine the rights and liabilities of all by one judgment. As a discovery is sought and a reference asked of all the matters connected with the association, all who are liable to contribute should appear on the record. We can not, then, unless the proper allegations are made, be permitted to assume the power to settle a controversy when our judgment would bind only those named in the pleadings.

We can find no reported case where such a rule as that relied on by the plaintiffs has been held to exist; while the admitted principles upon which the liabilities of copartnerships, their interests and protection, must be determined, will be violated if such an anomalous course is pursued. This court has heretofore held what the true rule is, when a controversy in which a common interest is involved may be directed, though all who are interested need not be joined, in Ruffner v. Commissioners of Hamilton Co., 1 Disney, 47, and we need not now more fully restate the rule. And the Supreme Court admit fully the doctrine in Matheny v. Golden, 5 Ohio St. 361.

It is claimed by the defendants that the parties in this litigation never were copartners, but, on the contrary, were members of a corporate body, to establish which we find in the record a certificate of the recorder of Hamilton county that the requirements of the statute authorizing the members of voluntary associations to become corporate bodies were complied with; and the evidence of such compliance, so far as the legal existence of the corporate body is concerned, is established.

In the Ashtabula & N. L. R. Co. v. Smith, 15 Ohio St. 328, it was held that when the act to provide for the creation and regulation of incorporated companies is complied with, the corporators and their associates become a body corporate.

Subsequent to the deposit of the articles of association with the recorder, and the issuing of his certificate, the parties to this action, plaintiffs as well as defendants, met and completed their organization and complied with the duty imposed by their charter and the by-laws. They had adopted and afterward paid the installments required of the members for more than a year, giving their notes to the corporators as stipulated in the by-laws, thereby admitting the existence of the corporation, and conforming in other respects to the rules prescribed for its government.

We must hold, upon these facts, that there was a corporation, not only created by the acts of the association in causing the record to be made to which we have referred, but the subsequent conduct of the parties who'now ask our intervention in their behalf. They have practically admitted the allegations of the answer, and should, on principle, be estopped from denying them in this litigation. Trumbull County Mutual Ins. Co. v. Horner, 17 Ohio, 407; Vorhees v. Receivers, etc., 17 Ohio, 463.

The question then arises: Can there be any collateral inquiry into the power of the legislature to grant a corporate franchise, whether conferred by special enactment or by general law, as provided in the constitution?

In an action by a corporation against a defendant, who has already admitted its existence, he will not be allowed to question it. We must recognize the same rule as applying wherever it is sought voluntarily to deny the legal existence of the corporate body. We feel bound to hold, in every such case, that the legislative grant must be regarded as valid while the statute conferring it is unrepealed, or the franchise has not been declared forfeited on quo warranto. On this ground, a defendant will not be allowed to prove that the charter was obtained by fraud, especially if the attempt to do so is made- by a subscriber to the stock who accepted the charter, and assisted in putting it into operation. Angell & Ames on Corporations, 644, 645; Charles River Bridge v. Warren Bridge, 7 Pick. 344; Bear Camp River v. Woodman, 2 Maine, 404.

So if there has been an excess of corporate authority, the acts done being clearly ultra vires, we may resolve the question into a negation of the power, which would be but equivalent to doing similar acts without any corporate authority whatever. But such acts do not, per sese, avoid a charter until a forfeiture of the franchise has been first 'judicially declared; Angell & Ames, 644, and cases cited. In the case before us, the corporation was created under section 66 of the act of April 9, 1852, claiming in part the purpose of conferring benefits upon the members, not only by subserving their individual interests, by protecting them in their particular calling in a mode not inconsistent with public policy or against law, while in case of sickness or accident, aid from the common fund was to be given to the members; and we must suppose the object we have stated was regarded in good faith, and could not be intended to advance or effect any other design, and whether the officers of the corporation have fulfilled their' duties or not, is not here a matter of inquiry. Sufficient is it that the body still exists which claims corporate powers, and we can not, in the collateral way now attempted by the plaintiffs, avoid their corporate acts, or by our decision virtually repeal their charter.

On the whole case, we are all of the opinion that the plaintiff'can not, in this form of action, obtain the relief he seeks. The petition will be dismissed without prejudice.