Hudson v. Green Hill Seminary Corp.

113 Ill. 618, 1885 Ill. LEXIS 734

Opinion

Mr. Chief Justice Scholfield

delivered the opinion of the Court:

First—The plea of mil tiel corporation did not impose the burden upon appellee of proving that it was, in all respects, a perfectly legal corporation. It was entitled to recover on the issue presented by that plea, on making proof that it had a de facto existence, and the execution of the instrument upon which the suit is brought was sufficient prima facie evidence of the existence of appellee as a corporation, and no further proof thereof was necessary until such proof was rebutted by appellant. Brown et al. v. Scottish-American Mortgage Co. 110 Ill. 235; Wood v. Kingston Coal Co. 48 id. 356; Mitchell et al. v. Deeds, 49 id. 417. See, also, Cincinnati, Lafayette and Chicago Railroad Co. v. Danville and Vincennes Railroad Co. 75 Ill. 113; Illinois Grand Trunk Railroad Co. v. Cook, Admr. 29 id. 237; Tarbell v. Page et al. 24 id. 46; Louisville, New Albany and Chicago Ry. Co. v. Shires, 108 id. 617; Osborn v. The People ex rel. 103 id. 224.

In Baker et al. v. Neff, 73 Ind. 68, objection was urged that a corporation could not exist, under the general law of that State, until a duplicate of the articles of incorporation was filed in the office of the Secretary of State; but the objection was overruled, the court, among other things, observing: “If appellants were correct in their theory that there was no corporation until the duplicate of the articles of association was filed in the office of the Secretary of. State,— a point we need not, and do not, decide,—they are not in a situation to successfully urge it, because they are conclusively estopped by the deed made to the association, wherein it is recognized and acknowledged to be a corporation.” And there was like ruling, by the same court, in Williamson v. Kokomo Building and Loan Association, 89 Ind. 389. In that ease, as here, a copy, instead of a duplicate, was filed with the Secretary of State, and the court said: “Where persons assume to incorporate under the laws of the State, and in part comply with their requirements, assume corporate functions and transact business as a corporation, private persons can not collaterally question the right of such an association to a corporate existence, although there has not been a full compliance with the provisions of the statute. (Baker et al. v. Neff, 73 Ind. 68.) This rule is not limited to cases where one, by contract, admits corporate existence, but is a rule of general application. ” And, after some further discussion, the court proceeds: “The rule stated by us does not go to the extent of precluding strangers from showing that there was no law authorizing a corporation, nor from showing that there was no attempt at corporate organization, nor any assumption of corporate powers. (Oroville Railroad Co. v. Plumas Co. 37 Cal. 354.) Where, however, the acts done by persons assuming to act as a corporation are such as to constitute them a de facto corporation, a collateral attack by a private person will, as a general rule, be unavailing. Without attempting to define what a de facto corporation is, we adjudge that an association may be regarded as a de facto corporation where there is a law authorizing the creation of a corporation of its class and powers, and where there is an attempt, in good faith, to comply with the law, and the only error is in filing a certified copy of the articles of association, instead of a duplicate, with one of two designated depositaries, and where there is also an exercise of corporate functions. ” And so it follows this was a good de facto corporation in the State of Indiana, where it had its origin, notwithstanding the objection of appellant in regard to the non-filing of the duplicate articles of association.

Abbott, in his work on Trial Evidence, page 19, sec. 3, says: “The cases in which it is necessary to give strict proof of incorporation,—that is, to prove not only the being, but the right to be,—are: First, actions by the State to ascertain or to put an end to corporate existence; second, proceedings by a private corporation in the exercise of a franchise in derogation of common right,—for instance, to divest title to private property; third, proceedings of a penal character by a private corporation; fourth, actions on contracts, like subscriptions for stock, if the very consideration is the organization of a corporation having a right to existence,—in such cases the inquiry may extend to the due compliance with all the requirements of the law, but often, in these cases, it is narrowed or precluded by estoppel or admission; fifth, where the question is whether there is corporate power to take by will, sufficient regularity of origin to show an attempt in good faith to comply with the law may be required. ”

There can be no reasonable pretence that the present case falls within either of these exceptions; but Nelson v. Blakely, 54 Ind. 30, Stowe v. Flagg et al. 72 Ill. 401, and Bigelow v. Gregory, 73 id. 197, cited by counsel for appellant, and Gent v. Manufacturers and Merchants’ Ins. Co. 107 Ill. 652, and Allman v. Havana, Rantoul and Eastern Railroad Co. 88 id. 521, fall within the principle of the fourth exception. Nelson v. Blakely, and Allman v. Havana, Rantoul and Eastern Railroad Co., were suits to recover for subscriptions to the capital stock of corporations. The contract in such cases is to pay for stock of a corporation, and the existence of the corporation, and its capacity to lawfully issue stock, are therefore necessarily conditions precedent to the right to sue upon the subscription. If stock can not lawfully be issued, the subscriber can not get what he contracted for. There is an entire failure of consideration,—as much so as where one contracts to buy a thing which the seller is afterwards unable to deliver because it has no existence. But appellant made no contract of subscription for stock, here. He is entitled to no stock. His promise to pay was a mere offer until acted upon; but when money was expended or materials furnished, or labor bestowed, upon the faith of it, it became irrevocable, and binding as a promise to pay, (Pratt, Admx. v. Trustees, 93 Ill. 475,) and this, although at the time the writing was executed the corporation was only in contemplation. (Johnston v. Ewing Female University, 35 Ill. 518,; Snell v. Trustees M. E. Church of Clinton, 58 id. 290.) The real consideration upon which the plaintiff is entitled to recover, in such cases, is, that it has expended money, furnished materials, or bestowed labor, upon the faith of the promise in writing, and not any special benefit derived or expected to be derived by the promisor from the corporation. (McClure v. Wilson, 43 Ill. 356, and eases there cited.) In Stowe v. Flagg, the question was whether, in a contest between parties who had taken some, but insufficient, steps to organize a corporation, certain property belonged to these parties as individuals, or to the corporation they had ineffectually attempted to organize; and in Bigelow v. Gregory, the defendants, who were sought to be made liable as individuals, interposed the defence that the liability was corporate,—and in that case it was said: “And there would seem to be a distinction between the case where, in a suit between a corporation and a stockholder or other individual, the plea of nul tiel corporation is set up to defeat a liability which the one may have contracted with the other, and the case of a suit against individuals who claim exemption from individual liability on the ground of their having become a corporation formed under the provisions of a general statute. In the latter case a stricter measure of statutory requirements will be required than in the former. ”

Second—Appellee was organized, or attempted to be organized, under an act of the legislature of the State of Indiana, entitled “An act for the incorporation of high schools, academies, colleges, universities, theological institutions and missionary boards,” approved February 28, 1855. The ninth section reads as follows: “As an informality exists in regard to the amendment to the high school law passed in 1853, rendering corporations formed under it of doubtful legality, it is therefore deemed that an emergency exists, and therefore this law shall be in force from and after its passage, and publication in the ‘Indiana State Sentinel,’ and ‘Journal.’ ” On the trial, the act was read from a book purporting to be printed under the authority of the State of Indiana, entitled as follows: “Laws of the State of Indiana, passed at the thirty-eighth session of the General Assembly, begun on the fourth day of January, A. D. 1855—By authority—Indianapolis—Austin H. Brown, State printer.” But appellant objected to the reading of the same because it had not been previously proved that the act had been published in the Indianapolis “Sentinel” and “Journal,” as provided in the ninth section.

By article 4, section 28, of the constitution of the State of Indiana, it is provided that “no act shall take effect until the same shall have been published, and circulated in the several counties of this State, by authority, except in case of emergency,—which emergency shall be declared in the preamble, or in the body of the law. ” The publication required by the ninth section was only for the purpose of giving effect to the statute, as an emergent one, before the publication and circulation of the laws of that session as a body; and whether it was thus published or not, manifestly could not prevent its taking effect upon the publication and circulation of the body of laws passed at that session. (Mark v. State, 15 Ind. 98.) Inasmuch, therefore, as this corporation was not attempted to be organized until July 23, 1868,—more than fifteen years after the enactment of the statute,—the question whether it took effect immediately, on account of publication in those journals, or only after the publication and circulation of the body of laws passed at that session, does not, in the remotest degree, affect the parties to this suit. Section 10, chapter 51, of the Revised Statutes of 1874, entitled “Evidence and Depositions, ” expressly provides that “the printed statute books of the United States, and of this State, and of the several States, * * * purporting to be printed under the authority of said United States, any State or territory, shall be evidence in all courts and places in this State, of the acts therein contained.” The objection is utterly destitute of merit.

Third—Objection is urged that the court erred in admitting in evidence an act of the Indiana legislature assuming to validate and legalize the appellee- as a corporation, approved February 19, 1881. We deem this question immaterial. The evidence was sufficient of the organization of at least a defacto corporation, under the act of 1855. The question whether it was also one dejare, we have shown, under point first, is immaterial. But we are also of opinion that the objections urged against the admission of the act in evidence are, in any view, not well taken. Those objections are, first, that it does not appear upon the face of the act that it was signed by the Governor; and second, that inasmuch as the act is special, it is in contravention of a provision of the constitution of the State of Indiana, which provides that “corporations, other than banking, shall not be created by special act, but may be formed under general laws.” The act is authenticated by the Secretary of State of the State of Indiana, by having the seal of State affixed thereto, in conformity with section 905 of the United States Revised Statutes, (2d ed.) 1878, title 13, chapter 17, and this is held to be a sufficient authentication, without the attestation of any officer, or any other proof. 1 Greenleaf on Evidence, sec. 489; United States v. Amedy, 11 Wheat. 392; Henthorn v. Doe ex dem. 1 Blackf. 157; United States v. Johns, 4 Dall. 412.

Conceding that, under the constitutional provision referred to, it is incompetent for the legislature to render the corporation absolutely legal and valid in all respects, about which we express no opinion, still the authority to inquire, by quo warranto, whether, there being a corporation de facto, it is, in all respects, a legal and valid corporation, belongs to the State of Indiana alone. If that State does not choose to institute such a proceeding, and oust it of its assumed franchise, no one else can do so. This act may be regarded, therefore, as evidence that that State has treated the appellee as a corporation cle facto, for that much is recited in the preamble to the act, and that it has acquiesced in its acting as such. Although, in other words, this act might be no defence to a proceeding by the State of Indiana by quo warranto, or in that nature, against appellee, it is evidence of the recognition by that State that appellee assumes to exist and act as a corporation within that State, and so is competent evidence under the issue. Central Agricultural Association v. Alabama Company, 70 Ala. 120.

Fourth—There was evidence tending to prove, even apart from this legislative recognition and the signature to the contract, that appellee, in good faith, attempted to organize under the general law of 1855, and afterw'ards proceeded to act as a corporation. The weight and effect of this evidence are not within our province' to discuss.

Fifth—It is very earnestly contended by counsel for appellant that the court erred in refusing to allow the decision of the Supreme Court of Indiana, in Nelson v. Blakely, 54 Ind. 30, to be read in evidence to the jury. But it has been seen, under point first, that the decision in that case is not pertinent to any question in this case. It could have only tended to confuse the minds of the jury, and lead them from the real questions to be decided. It was very properly excluded.

Sixth—The court below, in giving and refusing instructions, conformed substantially to the views we have here expressed, and there was no error in that regard. There was no evidence tending to prove fraudulent misrepresentations on the part of appellee’s agent, or a failure of consideration in any other way, and we have been unable to discover any error in excluding or admitting evidence in any respect.

All the questions discussed upon this record have now been twice carefully considered by the court, and we remain of the opinion, heretofore expressed, that there is no error in the record for which the judgment below should be reversed. The judgment is therefore affirmed.

Judgment affirmed.