Hubbard v. Chappel

14 Ind. 601

• Court: Indiana Supreme Court
• Decided: May 15, 1860
• Status: Published

Opinion

Perkins, J.

Suit to foreclose a mortgage given by Hubbard and wife to the Lake Erie, Wabash, and St. Louis Railroad Company; and by said company assigned to one Boody, and by him assigned to the plaintiff.

Answer in seven paragraphs—

1. The general denial.

2. That the land was conveyed for a consideration, by the railroad company, to Elias Hubbard, and by him, his wife joining, mortgaged to the railroad company to secure the payment of the consideration, and averring that the railroad company had no title.

It may be here observed that a demurrer was overruled to this paragraph; that issue was then taken upon it, which was tried and found for the plaintiff.

Perhaps the paragraph was bad so far as judgment for the foreclosure of the mortgage was concerned. Hubbard conveyed to pie railroad company the title he received, and it is difficult to perceive, if neither had title, how a simple judgment of foreclosure could injure him. It might be important for him to resist a personal judgment for the amount left unpaid by the sale of the land.

It has been said that a mortgagor, under the circumstances set out in the paragraph in question, is estopped to deny the title of the mortgagee.

A part of the five remaining paragraphs deny that the grantee in the mortgage was a corporation at the time of the execution of the mortgage. Those paragraphs are bad, because the mortgagor is estopped to set up such fact. This has been often ruled, as a general proposition, in this state; too often to be now denied as law, unless shown to be clearly erroneous. It may, perhaps, not be applicable to suits on subscriptions of stock in corporations formed under the general law; but as to this we here decide nothing.'

These three propositions have been judicially settled in Indiana—

1. A default admits the character in which the plaintiff sues (13 Ind. R. 143); at all events, where that character is averred in the complaint. A default admits the material allegations in the complaint.

2. The general denial admits that character, though the rule is otherwise in New York. The Guaga Iron Company v. Dawson, 4 Blackf. 202.—Harris v. The Muskingum, &c., Co., id. 267.—Ind. Dig., p. 469.

3. Nul tiel corporation puts in issue, so far, at least, as to require proof of user, the existence of the corporation; but where the suit is upon a contract, at all events, other than of subscription for stock, made with the corporation, in which the existence of the corporation is recognized, the party being estopped to deny the existence of the corporation, cannot put the plaintiff upon the proof of it; because his own admission, thus made, is conclusive. See 4 Kent (6th ed.), side p. 261, note c.

Conditions precedent must be performed in cases of suits for stock. 8 Ind. R. 397.

Now, wherein is this a departure from the general rule of law? It seems to be uniformly conceded that if a party contract with a corporation after it has forfeited its corporate existence, he is estopped to set up the forfeiture. And it is said the corporation, when sued, is estopped to deny its corporate Capacity assumed in a contract. But how can it pay debts, if it cannot collect dues? So, it is almost uniformly said, that irregularities in organization cannot be set up in bar of a suit by the corporation. See Eaton v. Aspinwall, 19 N. Y. R. 119; The Methodist, &c. v. Pickett, id. 482.

Why, then, is not the general proposition a sound and reasonable one, that where persons are assuming to act as a corporate body, under a law authorizing such corporation ; where, in short, user is existing, under a pretended organization, and a party contracts with such body as a corporation, he should be estopped to deny their corporate existence? What, in fact, is here involved but, in a wide sense, irregularity of organization? And why is it not the duty of the contracting party to inquire in the one case as well as the other? And may not the corporation have been led to act upon its means, in one case as well as the other?

If the name in which the contract may have been made simply, prima facie, imply a corporation, while, in fact, the company is not assuming to be a corporation, but only a partnership, this fact may be shown. See Jones v. The Cincinnati Type Foundry Company, infra. Such is the law in some of the other states. See Case v. Benedict, 9 Cush. 540; Worcester, &c. v. Harding, 11 id. 285; Jones v. The Bank of Tennessee, 8 B. Mon. 122; Jones v. The Cincinnati Type Foundry Company, at this term

(1).

The remaining paragraphs admit that the mortgagee was a corporation at the date of the mortgage, but aver that under the laws of Ohio and Indiana she had consolidated with an Ohio company, under a new name. The terms of the consolidation are not given; neither the dates nor provisions of the alleged statutes of this state or Ohio are stated; no facts, indeed, are set forth, upon which any legal question can be raised. These paragraphs are bad for uncertainty. See Wright v. Bundy, 11 Ind. R. 398.

C. B. Smith, W. J. Smith, and J. M. Washburn, for the appellants. J. D. Conner and W. Z. Stuart, for the appellee.

Per Our aim.

The judgment is affirmed with 5 per cent. damages and costs.

Ante, 89.