Industrial Bldg. & Loan Ass'n v. Williams

1928 OK 376, 268 P. 228, 131 Okla. 167, 1928 Okla. LEXIS 607
CourtSupreme Court of Oklahoma
DecidedJune 5, 1928
Docket18211
StatusPublished
Cited by7 cases

This text of 1928 OK 376 (Industrial Bldg. & Loan Ass'n v. Williams) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Industrial Bldg. & Loan Ass'n v. Williams, 1928 OK 376, 268 P. 228, 131 Okla. 167, 1928 Okla. LEXIS 607 (Okla. 1928).

Opinion

BENNETT. C.

This was a civil action begun in district court, Creek county, Okla., by Industrial Building & Loan Association, a corporation, against J. Clay Williams et al., defendants, to recover of defendants on a promissory note for $3,500 dated February 8. 1920. executed by Bristow Emergency Hospital, by J. Clay Williams, secretary, and W. G. Bisbee, president, payable to plaintiff, and secured by real estate mortgage in usual form between same parties covering lot 15 and west half of lot 16, block 11, original town site of Bristow, Okla. Defendants filed a demurrer to plaintiff’s petition which was sustained. Thereupon, plaintiff, without amending, elected to stand upon such petition, and judgment was accordingly rendered in favor of defendants, dismissing plaintiff’s cause and allowing plaintiff proper exception. This cause is brought here for review of action of trial court Plaintiff assigns error as follows: (1) That court erred in sustaining defendant’s demurrer to petition; (2) that judgment in favor of defendant is contrary to law and contrary to facts set forth in petition. These points are argued separately in brief of plaintiff in error, but they may be treated together, since they raise but a single point

Was the petition subject to demurrer? The petition in substance is as follows: That plaintiff is an Oklahoma corporation engaged in business of building and loan association; that defendants, on December 29, 1922, executed and filed in office of Secretary of State of Oklahoma articles of incorporation, whereby they associated themselves together for purpose of forming a corporation under the name of Bristow Emergency Hospital, Inc., and that thereupon the Secretary of State issued to defendants a certificate or grant of corporate power, but that defendants (hereafter failed to perform the proper requirements for organization and perfection of such corporation, and that said defendants, without having performed those necessary acts, proceeded to assume powers of and to act as a corporation. They allege, among other things, that no by-laws were adopted, no stock issued, and no board of directors elected and no report filed with Corporation Commission. That said defendants, in assuming to act as such corporation, borrowed from plaintiff $3,500 and executed promissory note and mortgage in payment of which default was made, and petition further alleges that “this action is against defendants individually to recover upon said note and to foreclose said mortgage,” copies of which note and mortgage are attached to plaintiff’s petition and made part thereof and identified as exhibit B and C, respectively. There is also attached to and made a part of the plaintiff’s petition and marked “Exhibit A,” a copy of minutes of a meeting of board of directors of said corporation held in Bristow February 4. 1924. at 11 o’clock a. m., authorized and directing said defendants W. G. Bisbee and J. Clay Wil *169 liams to execute and deliver to plaintiff the promissory note and real estate mortgage of said Bristow Emergency Hospital covering said real estate and premises above described, and securing said plaintiff for a loan of $3,600, represented :by note aforesaid; also, that on the-day of February, 1923, said J. Clay Williams, the then owner of the real estate hereinbefore described, executed and delivered a warranty deed conveying said real estate to said Bristow Emergency Hospital, and that said deed was recorded in office of county clerk of Creek county in deed book 268, page 374 That February 4, 1924, said J. Clay Williams, W. G. Bisbee and B. W. King made an oral application for a loan of $3,500 from plaintiff, tendered as security therefor a real estate mortgage upon above-described real estate, and represented in writing that said Bristow Emergency Hospital was an Oklahoma corporation duly organized, and furnished a copy of minutes of a meeting as shown in exhibit A. Plaintiff alleges that no such meeting was in fact had, but that the statement was false, and that plaintiff relied upon the statement and believed Bristow Emergency Hospital was a corporation organized under laws of Oklahoma, and had a board of directors who had taken action on the application for the loan. That plaintiff agreed to loan said corporation $3 500, but if it had known the statement with respect to minutes was not true, it would not have made the loan. That February 8, 1924, in consideration of such representations, plaintiff made the loan and accepted note and mortgage as hereinbefore referred to ; that there has been default in payment of said note and the mortgage is in default, and there is now due thereon something over $4,000. It is alleged that there is located upon said real estate a frame and stucco building designed as a hospital; that the said building is now vacant, and has been wholly abandoned by said defendants ; that the value of said property does not exceed $2,000. Exhibit A, referred to above, indicates that all the company directors were present pursuant to call and waiver of notice, and after discussion of plans to pay existing indebtedness of company, it was decided that a loan.of $3,500 should be procured, and the officers were authorized and instructed to make application for such loan and to execute note and mortgage of corporation on real estate aforesaid to secure same. This certificate of minutes was subscribed and sworn to before notary public by secretary of company.

There are other facts set out in petition, but we believe the foregoing represents the substantia] facts therein contained.

It will be seen plaintiff based its petition upon the theory that' Bristow Emergency Hospital, Inc., was not a corporation by reason of its failure to comply with statutes of Oklahoma with reference to completion of its organization, and that there was no debt and no mortgage of such corporation; that, therefore, those who represented it to be such and contracted in its name became personally bound for the contract. Consideration of this question may be divided into the following questions: (1) Does filing of articles of incorporation with Secretary of State, and receiving from him a charter and undertaking to do business thereunder without further steps relative to organization constitute such persons a corporation for any purpose? and (2) Are persons who act under such corporation certificate as a corporation and make a contract in its name personally liable thereon? These questions can and should be treated together. The answer must depend to some extent upon the kind of suit in which these questions are raised.

We may say first that this is not a suit brought by the sovereign to question the regularity of the organization of this corpoporation. Throughout this long petition there is no allegation of fraud or bad faith, unless the same is deducible from the statement made in the latter part of the third paragraph and a -part of the fourth paragraph wherein the plaintiff, speaking of the meeting wherein the directors authoxdzed the loan and execution of the promissory note of the corporation secured by its real estate mortgage, says: “Plaintiff alleges the facts to be, however, that no such meeting was held, that the persons represented by said statement to be present were not present and said statement was wholly false,” and that plaintiff relied thereon.

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Bluebook (online)
1928 OK 376, 268 P. 228, 131 Okla. 167, 1928 Okla. LEXIS 607, Counsel Stack Legal Research, https://law.counselstack.com/opinion/industrial-bldg-loan-assn-v-williams-okla-1928.