First, poration two things are essential: Good Faith in Organizing a Necessity to Create Corporation De Facto.-The principle that there must be good faith in organizing a corporation for it to become one de facto often has been expressed, but the declaration has been made in cases where there was no contention that the associates had acted in bad faith. In a Texas case it was said that whether the rule of necessity of good faith should be "applied in a case in which the corporators have knowingly and intentionally violated the law in procuring a charter under general law we need not decide, but we are clearly of the opinion that it is not a proper rule to be aprail-plied in a case in which it appears that stockholders, who are sought to be held liable as partners, bought their stock after the organization had been effected and under the belief that a legal corporation existed." And it was said by Story, J., that: "It would be extremely difficult to maintain, upon general principles of law, that a private fraud between the original subscribers could be permitted to be set up to the injury of subsequent purchasers of the stock, who became bona fide holders, without any participation or notice of the fraud." As to original subscribers it was said: "If the subscriptions were fraudulently made, with a view to evade the provisions of the charter, the law will hold the parties bound by their subscriptions and compellable to comply with all the terms and responsibilities imposed upon them, in the same manner, as if they were bona fide subscribers. It will not make the subscription itself a nullity, but it will deprive the subscribers of the power of availing themselves of the same." There seems here a negative pregnant against a fraudulent subscription operating in any way against a corporation being even a corporation de facto and far less against its being a corporation de jure. In the last cited case it was held that where there was a general law for the incorporation of railroad companies, a road company organized under a special charter held to be unconstitutional was nevertheless a corporation de facto as to its bondholders and other creditors." In Alabama it was broadly declared that: "A corporation de facto exists, when, from irregularity or defect in the organization or constitution or from some omission to comply with conditions precedent, a corporation de jure is not created, but there has been a colorable compliance with the requirements of some law under which an association might lawfully be incorporated for the purpose and with the powers assumed and a user of the rights claimed to be conferred by the law; that is, when there is an organization with color of law and the exercise of corporate franchises and functions." In the Jennings case supra it appeared, that the corporation claimed to have been organized under a law that had been superseded and by it there was a difference as to liability of stockholders, but its existence as a corporation de facto was upheld as against collateral attack. (3) Imperial Bldg. Co. V. Chicago Oper. Board of Trade, 238 Fl. 100, 87 N. E. 167. (4) Jennings v. Dark, 175 Ind. 332, 92 N. E. 778. (5) Jennings v. Dart, Supra; G. S. R. Co. v. Trust Co., 94 Ga. 306, 21 S. E. 701, 32 L. R. A. 208. (6) See also St. Louis v. Shields, 62 Mo. 247. (7) Sniders Sons Co. v. Troy, 91 Ala. 224, Tex. 344. So. 650. (9) Minor v. Mechanics Bank, 1 Pac. 46, 66. sons who, by no act in the way of estoppel, may have a claim for loss or injury caused by associates, who for usurpation make them liable to have their association called in question by the state? While estoppel seems universally to have been ruled to secure to a corporation a de facto existence immune from attack by private individuality, yet there seems doubt whether such immunity does not go beyond mere estoppel. Summary of Foregoing Positions.- plain. But what is to be said of third perThe hundreds of cases in which ineffectual attempts to assail corporate existence were made, seem to resolve themselves into the general conclusion expressed in a New Jersey case as follows: "The bona fides of their (associates') attempt to incorporate themselves in accordance with the statutory provisions is unquestioned, and the contract of the plaintiff was entered into upon the assumption that he was dealing with a corporation de jure. The failure of the associates to observe exactly the directions of the statute did not in the least impair the rights which the plaintiff intended to secure by this contract. Under the Under the circumstances the plaintiff cannot bring into question the legality of the incorporation."" The observation about bona fides was thrown in argumentatively, as there was only the charge that statutory require ment that certificate of association had not been filed at the time of the purchase from plaintiff. But the ruling in the Texas and Federal Supreme Court cases supra show, that, if bad faith existed in organizing, the limit of remedy would be as against the associates to make them do what originally they were obligated to do. If they did not pay on their subscriptions as they should have paid, those and only those not complying, could be sued as partners for the loss to the extent that their own compliance might affect a creditor-in other words, their unpaid subscriptions were assets for the benefit of creditors. Estoppel as Reason for Precluding Collateral Attack.-There runs through all the cases the principle, that recognition in dealing with a corporation de facto, that it had corporate existence, remits the whole question of attack thereon to the state, which may attack directly for usurpation of power. If it acquiesces no one else recognizing or assuming to exercise, user of corporate franchises has a right to com Thus, where in a criminal case it was attempted to assail the lawfulness of corporate existence, the defendant being prosecuted for embezzlement while acting as cashier of bank defectively organized, the court said: "We need not stop to inquire whether the accused, having accepted employment as cashier of the bank, presumably by appointment, and certainly by the acquiescence of the board, with knowledge that the bank was acting as a corporation and was organized as such, would be estopped to collaterally bring in question the legality of the organization. Certainly the bank was a corporation de facto." Nothing seems plainer to any mind than that one cannot by estoppel, in a contractual sense, erect a de facto corporation into one de jure, so as to make embezzlement by him therefrom a criminal. act when but for such estoppel it would not be such, and, therefore, if the court had to decide the question of estoppel, it would have held conviction unlawful. The court, therefore, went on to hold that certificate of incorporation issued by the secretary of state amounted to a declaration by the state, that, so far as the world was concerned, the bank, as a corporation, had a de jure existence. Collateral Attack in Condemnation Cases. There would not seem to exist any theory of estoppel against one whose property is sought to be taken by a corporation exercising the right of eminent (12) Cason v. State, Ga., 86 S. E. 644. domain. Therefore some cases hold that a stricter rule obtains in condemnation cases, than in estoppel cases. Thus in an Ohio case1 a railroad company desiring to condemn land, proved its incorporation by producing the certificate of the secretary of state, which the law declared should be sufficient evidence of that fact, but it offered no evidence of its full organization and, therefore, of user of its franchise. The court said: "The statute under which the proceeding was conducted proceeds on the theory that the high power of eminent domain shall be invoked only in case the necessity arises from the inability of the corporation to agree with the landowner upon the compensation to be paid for the land appropriated." This attempt to agree must of necessity be by a corporation exercising its franchise. It is not held here, however, that corporate existence could have been attacked had the corporation have made some use of the franchise, notwithstanding it may have been defectively organized. In a New York case a corporation sought to condemn land subsequent to the expiration of the time in which, by its istence of estoppel against defendants might be thought to have cut some figure. But a later New York case dissipates or appears to dissipate this theory.15 There was a condemnation case and it was urged, that the right to condemn had been lost by cesser of corporate existence by way of forfeiture. The court construing a later statute, said the statute was not self-executing and advantage only could be taken by the state in a direct proceeding. This case, however, is not necessarily conclusive, in a claim by one not estopped, in a case of defective organization. There are many cases which apply the same principle to condemnation as to other cases, that is to say, that a corporation being de facto, its existence cannot be collaterally attacked, and those are believed to represent the weight of authority. For authority pro and con on this subject see extensive note in 2 L. R. A. (N. S.) 144. Suing Associates as Partners.—I think the cases I have referred to, and there is abundance of others, show that estoppel avails to prevent associates and stockholders in a merely defectively organized corporation from being sued as co-partners. And defectiveness may even arise out of bad faith.16 But if the fraud is to create an incorporation for the conduct of illegal, such as gambling, transactions, the associates may be held to personal liability."7 And so where there is no law authorizing charter, its right to construct a railroad was to begin. The statute declared that for such failure "its corporate existence and powers shall cease," and so if it does not fully construct its railroad within a limited number of years. The court said: "The legal existence of a corporation authorized incorporation, notwithstanding the asso to construct a railroad is at the foundation of the right to take property for its use."1 This case, like that from Ohio, does not decide that, had the proceeding been in time. defective organization could have been set up, but it was said that: "The statute executed itself and the non-existence of the corporation could be alleged in opposition to this application by the respondents." Nevertheless, the non-ex (13) Powers v. Railway Co., 33 Ohio St. 429. (14) Matter of Brooklyn & R. Co., 72 N. Y. 245. ciates may have acted in good faith and under the advice of counsel.18 Where there was an attempt by an insurance company in one city to remove to another and change its scheme from a mutual to a stock (15) Re Brooklyn El. R. Co., 125 N. Y. 434, 26 N. E. 474. (16) Stokes v. Findley, 4 McCrary, 205; Second Natl. Bank v. Hall, 35 Ohio St. 158; Am. Salt Co. v. Heidenheimer, 80 Tex. 344. (17) McGrew v. City Produce Exch., 85 Tenn. 572, 4 Am. St. Rep. 771. (18) Eaton v. Walker, 76 Mich. 579, 6 L. R. A. 102. company, when the authorizing act did not cover such a change. this was a mere assumption of authority making those participating in the change liable as partners.19 If a statute is greatly diverted from its purpose, as for example incorporating a rifle club under a statute for creating corporations for literary, scientific and charitable purposes, its associates become liable as partners.20 It may be deemed well established, that one dealing with a corporation that has, a de facto existence, this operates to prevent attack upon its existence as a corporation de jure or to go behind that organization to reach its associates as partners. Limit of Right of Collateral Attack Where No Estoppel is Involved.—There is involved here a question of public policy. Judge Edward H. Warren, in 20 How. Law Review at page 469, thus states the matter: "Are there considerations of public policy so urgent as to make it proper for the courts to allow persons to assert the right to be a corporation even when on a sound construction of the legislative enactments they have no such right? Considerations tending to an affirmative answer are that the courts should save time by refusing to go into the details of incorporation: and that they should encourage the use of the corporate device by establishing a consolation doctrine to the effect that, if persons try to form a corporation and pretty nearly succeed, they shall have pretty nearly as many rights as though they had succeeded." This "consolation doctrine" is to be derived greatly from the incorporation laws of different states. If supervision is given to the administrative department to pass upon the sufficiency of attempts to form a corporation and its judgment is rendered in the affirmative, that ought to have its effect, especially, if thereby the corporation goes out to the world with such approval and sells its stock to innocent buyers. If there is failure to comply with some directory requirement, this makes no difference among associates nor as regards ultimate liability. If, say in subscription to capital stock, there is non-compliance, Mr. Justice Story has said that the law gives a remedy against individual non-compliants to make them do what they originally engaged to do, and particular non-compliance should not have an ulterior effect upon innocent parties. Generally it may be thought, where statutory direction that the great seal of the state should attest proper incorporation imports verity, that result should stand so far as its citizens are concerned. Certainly, if a state attacked directly corporate organization and failed in its attack, its judgment ought to be like any other judgment in rem-binding on every one. It has been urged that a state's calling into question usurpation of authority by a corporation amounts practically to very little. We imagine, however, that, if a corporation attempted to organize under no authorizing law, it rarely would succeed in obtaining a certificate of incorporation and, where it did succeed by direction of some officer having a mistaken view of the law, the state quite promptly would question the validity of the incorporation. There is apparently no reason for corporators to apply for incorporation where there is no authorizing law therefor, and the question, therefore, is greatly academic. Ninety-nine out of a hundred of the cases in the courts have been of corporations de facto which have disregarded some directory requirement of the statute, and where there is fraud, such as false affidavit about capital stock being paid in, Justice Story has pointed out the remedy for that. N. C. COLLIER. St. Louis, Mo. SALES-IMPLIED WARRANTY. GEARING V. BERKSON, et al. (Two Cases). Supreme Judicial Court of Massachusetts. Suffolk. March 2, 1916. 111 N. E. 785. A wife, who, acting as her husband's agent, purchased pork chops from a dealer under an implied warranty of fitness, and was made sick, with her husband, because they were in fact unwholesome, could not maintain an action of tort against the dealer on the theory that such an action may be maintained on a fals warranty, as there was no contractual relation between her and the dealer, and an implied warranty of fitness does not run with the goods. Actions by Katherine Gearing and Percy A. Gearing against John Berkson and others. Judgment ordered for plaintiffs, and defendants appeal. Order of judgment for the first-named plaintiff reversed, and judgment entered for defendants, and order of judgment for the second-named plaintiff affirmed. DE COURCY, J. The Sales Act, St. 1908, c. 237, § 15, provides: "Subject to the provisions of this act and of any other statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract to sell or a sale, except as follows: "(1) Where the buyer expressly or by impli cation, makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller's skill or judgment, *** there is an implied warranty that the goods shall be reasonably fit for such purpose." "(3) If the buyer has examined the goods, there is no implied warranty as regards defects which such examination ought to have revealed." [1] Even before the enactment of this statute, it was recognized as the law in this commonwealth, that where the buyer at a shop reiles on the skill and judgment of the dealer in selecting food, and it is made known to the dealer that his knowledge and skill are relied on to supply wholesome food, he is liable if it is not fit to be eaten; while, in case the buyer himself selects provisions, the dealer's implied warranty does not go beyond the implied assertion that he believes the food to be sound. Farrell v. Manhattan Market, 198 Mass. 271, 84 N. E. 481, 15 L. R. A. (N. S.) 884, 126 Am. St. Rep. 436, 15 Ann. Cas. 1076. [2] The application of this rule of law to the facts as found by the trial judge is decisive in the action of Percy A. Gearing. His wife, acting as his agent, left to the defendant the selection of the meat, and paid for it at the current price for sound, wholesome pork chops. See Hunt v. Rhodes Bros. Co., 207 Mass. 30, 92 N. E. 1001. The defendant Freshman undertook to make the selection so left to him. The meat was cooked, and was eaten by the plaintiff and his wife, and both were made sick "because of the unwholesome, unsound, poisonous or unfit quality or condition of said pork chops.” The order of the Appellate Division in this action must be affirmed. [3] in the action of the wife, Katherine Gearing, the Appellate Division ordered judgment for the plaintiff on the first count of her declaration, and from this the defendants appealed. The count is apparently framed in contract, for breach of an implied warranty or condition of fitness for food. The declaration purports to be "in tort," presumably on the theory that an action of tort may be maintained upon a false warranty. See Farrell v. Manhattan Market Co., 198 Mass. 271, 274, 84 N. E. 481, 15 L. R. A. (N. S.) 884, 126 Am. St. Rep. 436, 15 Ann. Cas. 1076, and cases cited. The difficulty with the case on this ground is that there was no contractural relation, and hence no warranty, between Mrs. Gearing and the defendants. The only sale was that made to her husband through her as his agent; and a cause of action in contract accrued to him thereon, as above set forth. The implied warranty, or to speak more accurately the implied condition of the contract, to supply an article fit for the purpose required, is in the nature of a contract of personal indemnity with the original purchaser.. It does not "run with the goods." Williston on Sales, 244. Lebourdais v. Vitrified Wheel Co., 194 Mass. 341, 80 N. E. 482; Roberts v. Anheuser Busch Brewing Ass'n, 211 Mass. 449, 451, 98 N. E. 95. [4-6] Assuming that the question of Mrs. Gearing's right to recover in tort for negligence is before us, the findings of fact are conclusive against her. The sale apparently was one of "adulterated food" under R. L. c. 75, §§ 16, 18, 24; and the violation of the statute by the defendants presumably was some evidence of negligence. Berdos v. Tremont & Suffolk Mills, 209 Mass. 496, 90 N. E. 876, Ann. Cas. 1912B, 797. But that is controlled by the findings of the judge, that no negligence in fact was shown on the part of the defendants. In |