tion with the secretary of state; that in a collateral proceeding the regularity of the corporate organization could not be questioned. And this is a rule of uniform application. If, then, the plaintiff, by contracting with a body exercising the franchises of a corporation, is estopped from denying the legality of its organization, the same reason must apply with increased force to prevent a stockholder in such an organization from questioning the legality of the corporation.

That the legality of an incorporation can not be attacked collaterally, see Rice v. Rock Island and Alton Railroad Co., 21 Ill. 93. Goodrich v. Reynolds et al., 31 Ill. 490, and numerous subsequent cases. In fact, the books abound in adjudged cases which hold that a person doing an act or making a statement which misleads another to his injury shall not be permitted to question the act or the truth of the statement. So, on the same principle, appellant should be estopped, as his acts contributed to the organization of this company, and he held himself out to the world as a stockholder therein, and liable to the extent of double the amount of his subscription. Had the company not been organized, appellee would not have lost his money, and appellant thus contributed to that loss.

In Ferguson v. Landran, supra, appellants denied the validity of a tax levied under a local law, but the court held they were estopped to deny the validity of the law, because they had approved it and availed of its benefits and aided in procuring its passage. The court held the law unconsitutional, but enforced the tax. The court says, "parties are estopped from denying the constitutionality of a local statute by participating in the procurement of its passage, and by ratifying, acquiescing in, or approving it after its passage, and by becoming recipients of benefits under it; and all such persons are held to be liable to the tax authorized by such enactment, although it is unconstitutional and invalid to all other persons.

Here, appellant approved of the act, and availed himself of its benefits by subscribing for stock and becoming entitled to exercise all the rights and privileges of a stockholder in the corporation. Justice, morality, public policy and precedent all demand that appellant should be estopped from denying the constitutionality of the law. If stockholders might show the law unconstitutional, and their organization void, and all their acts unauthorized, then all persons engaged in the organization of the corporation should be held liable for the consequences of their illegal and unauthorized acts, independent of the clause in their charter. So they should, in no event, escape liability for obtaining money without authority.

Suppose these stockholders had formed a partnership, with articles of partnership containing precisely the same provisions that are contained in their charter, and had put in capital stock to the same extent, and the same amounts they each subscribed in shares, would any one question the legality of the organization, or the legal liability of each of the members of the firm? We apprehend these propositions would be conceded. And if so, in principle, what distinction can be

taken between the supposed case and the one at bar? Had the shareholders written under the charter a statement that it was unconstitutional and void as a law, but that they adopted it as articles of partnership, and that each would be bound by its terms and conditions, and would pay in, for capital stock, the sums set opposite their several names, and they had signed it, and specified the sum to be paid in, could it be doubted that each member would have been liable, under the articles thus executed? And if so, when stripped of mere form, and substance is alone considered, this organization is in effect the same. We can perceive no well-grounded distinction. We are therefore of opinion that, independent of all constitutional questions, each shareholder became liable under the charter as articles of partnership, as it operated as an agreement by each subscriber to be liable to creditors to double the amount each subscribed.

It is urged that under the language of the third section of the charter, although a liability may be created to double the amount of the stock, still it is to the corporation and not to the creditors. The obvious purpose of the general assembly was to secure the creditors of the institution. And if so, why make a provision which the creditor could not, and the directors would not, in all probability enforce? On their refusal the creditor, if that construction is to be given, would be compelled to proceed by mandamus, had the law been valid, to compel suits to be brought by the corporation against shareholders, and then in all probability, after years of delay in litigation, to get the money into their hands, a further delay would be liable to ensue until a recovery could be had against the bank and the money realized at the end of a long, obstinate and expensive litigation. Such a course could not, we think, have been intended. Such a requirement would greatly impair if it did not render the security worthless. We must therefore conclude, that as the provision was intended to secure the creditor, it was intended that his remedy should be direct and effective, and that he might sue in his own name and at law.

If this association only amounted to a partnership, as we have seen it was, then the firm could not sue one of its members to compel the payment. Nor do we perceive how the firm could maintain a bill for the purpose. Hence we must conclude that it was intended that the liability should be direct to the creditor and not to the firm.

Actions

It is next urged that a remedy is in equity and not at law. at law were maintained in the cases of Culver v. Third National Bank, 64 Ill. 528, and Corwith v. Culver, 69 Ill. 502, under a statute creating a liability of the stockholders. It was then urged that the remedy was in equity, but we held that it was a legal liability and could be enforced by an action at law. That statute did not determine, in terms, in which forum the remedy should be sought. But it being a legal right, the remedy was held to be at law.

It is urged that the liability should be construed to be joint against all the stockholders. To do so would, we think, do violence to the language of the statute; the language is, "each stockholder shall be

liable to double the amount of stock held or owned by him, for three months after giving notice of transfers, as hereinafter mentioned." This language renders the stockholders severally and individually liable.

The judgment of the court below must be affirmed.

Judgment affirmed.

Note. See infra, Conditions precedent to existence by estoppel, p. 630. 17-WIL. CASES.

PART II.

THE BODY CORPORATE, ITS PARENTAGE, CONCEP. TION, BIRTH, ANATOMY, LIFE AND DEATH.

TITLE I.

PARENTAGE-THE STATE AND PROMOTERS.

SUBDIVISION I. THE STATE, ITS POWER TO CREATE.

CHAPTER 2.

NATURE OF THE POWER AND METHODS OF EXERCISE.

ARTICLE I. NATURE OF THE POWER.

Sec. 48. "The state creates the corporation upon the application of individuals, who are called incorporators. The incorporators then organize the corporation. The functions of the incorporators thereupon cease, and the stockholders proceed to contribute the capital and elect directors. The directors then start and continue to keep in operation the powers of the corporation.' I Cook on Stock and Stockholders, § 2, 3d ed., p. 4.

(a) The power to create is an incident of sovereignty, and the sovereign's consent is essential. A corporation is the creature of the sovereignty that creates it, and to that alone is it amenable for violation or usurpation of its purely corporate authority.

STATE OF CONNECTICUT, EX REL. WILCOX, v. CURTIS.1 1868. IN THE SUPREME COURT OF ERRORS OF CONNECTICUT.

Conn. 374-384, 95 Am. Dec. 263.

35

[Information in the nature of a quo warranto upon the relation of Wilcox, who claimed to have been duly elected a director of the First National Bank of Meriden, Conn., but who claimed to have been deprived of exercising the franchises thereof by Curtis, who, without warrant, exercised the same and wrongfully excluded the relator. The suit was brought in the superior court for the county of New Haven. 1 Statement of facts abridged. Arguments omitted.

Defendant demurred, and the case was reserved for the advice of the supreme court.]

BUTLER, J. The power to create a corporation is an attribute of sovereignty; and the government of the United States created the corporation in question, in the exercise of that independent and supreme sovereign power which the people delegated to it by the constitution. It is, therefore, the creature of that sovereignty, and amenable to, and controllable by it, and by none other.

An information in the nature of a quo warranto against a corporation lies only at the instance and in the name of the sovereign power which created it. (5 Wheaton 291.) The original writ so lay against any person who usurped any franchise or liberty against the king, or for misuser or non-user of franchises or privileges granted by him. The information in the nature of a quo warranto, authorized by the statute of the 9th Anne, at the relation of any person against any other person usurping, intruding into, or unlawfully holding any franchise or office in any corporation, is but an extension and simplification of the ancient writ, and is grantable only where that would lie. In England it lies in the name of the sovereign against those who usurp such franchises, because such usurpation is in derogation of the rights of the crown. In this country it lies in the name of the government, against those who usurp such franchises, because grantable or granted by the commonwealth.

"The state, or commonwealth," says Mr. Angell in his work on corporations, "stands in the place of the king, and has succeeded to all the prerogatives and franchises proper to a republican government. With us therefore to assume a power which can not be exercised without a grant from the sovereign authority, or to intrude into the office of a private corporation, contrary to the provisions of the statute which creates it, is, in a large sense, to invade the sovereign prerogative and to assume or violate a sovereign franchise." And the cases cited fully sustain his positions. Upon the same principles the information can lie only in the name of the United States and in the federal courts, against those who invade a franchise grantable or granted by the national government.

As then the corporation in question is the creature of federal sovereignty, and in respect to its internal organization, operation and continual existence is amenable to and controllable by that sovereignty alone; and as the writ in question is properly grantable by that sovereignty alone whose franchise has been invaded and violated, it would seem upon principle too clear for argument (if there be nothing more in the case) that the relator has erred in invoking the interference of another uninvaded and unviolated sovereignty, and the court below have erred in assuming jurisdiction and granting the writ.

Such is the obvious prima facie character of the case before us. But the plaintiff insists that there is no error and makes several claims, founded upon the complex character of sovereignty as it exists in this country, divided between the national and state govern

ments.