(b) Voting at meetings estops: 1864, Railroad Company v. Bowser, 48 Pa. St. 29; 1890, Association v. Walker, 83 Mich. 386; 1895, Greenbrier Indus. Ex. v. Squires, 40 W. Va. 307.

(c) Attending and participating in organization meeting, or acquiescing in corporate acts, and receiving benefits estop: 1824, Rockville & W. T. R. Co. v. Van Ness, 2 Cranch (C. C.) 449, Fed. Cas. 11,986; 1849, South Bay M. D. Co. v. Gray, 30 Maine 547; 1850, Bridge Co. v. Chapin, 6 Cush. (Mass.) 50, on 53; 1858, Haynes v. Brown, 36 N. H. 545; 1888, Schloss v. Trade Co., 87 Ala. 411, on 414, 13 Am. St. Rep. 51; 1894, Ogden Clay Co. v. Harvey, 9 Utah 497, 35 Pac. Rep. 510; 1895, Greenbrier Indus. Ex. v. Squires, 40 W. Va.

307.

(d) Accepting office from corporation. See note below, under Curtis, Exr., v. Tracy, infra, p. 650.

Sec. 172. Same.

2. Upon statutory liability.

MCCARTHY v. LAVASCHE.

1878. 89 Ill. 270, 31 Am. Rep. 83, supra, 253.

Note. To same effect, see, 1859, Eaton v. Aspinwall, 19 N. Y. 119; 1871, Slocum v. Providence Steam & Gas R. Co., 10 R. I. 112, 116; 1872, Peychaud v. Lane, 24 La. Ann. 404; 1873, Upton v. Hansbrough, 3 Biss. 417, Fed. Cas. 16,801; 1876, Casey v. Galli, 94 U. S. 673; 1883, Keyser v. Hitz, 2 Mackey (D. C.) 473; 1886, Bell's Appeal, 115 Pa. St. 88, 8 Atl. 177. As to what acts will raise an estoppel, see supra, note, § 171.

Sec. 173.

(3) The promoters and officers of the apparent corporation.

CURTIS, EXR., v. TRACY, ET AL.1

1897. IN THE SUPREME COURT OF ILLINOIS. 169 Ill. Rep. 233-238. Affirming same case, 62 Ill. App. 49.

MR. JUSTICE MAGRUDER delivered the opinion of the court: This is an action brought to the July term, 1895, of the superior court of Cook county, against appellees, seeking to hold them liable as partners upon four promissory notes, executed by the Central Illinois Coal Company, all dated April 16, 1884, amounting altogether to $20,000.

The contention of the plaintiff, arising upon exceptions to the admission of evidence and upon the refusal of propositions of law submitted to the court, is, that, as the notes sued upon were made in the name of the corporation on April 16, 1884, and the certificate of organization was not recorded until June 5, 1885, the defendants, as directors, assumed to exercise corporate powers without complying with the provisions of the incorporation act, and are, therefore, liable 1 Statement of facts much abridged.

to pay the notes as partners under sections 4 and 18 of that act. (I Starr & Cur. Stat. 610, 617).

We have recently considered the liability of officers and directors of a corporation, under said sections 4 and 18, to creditors who are third persons. (Loverin v. McLaughlin, 161 Ill. 417.) In the Loverin case a distinction was said to exist between cases where a stockholder is a party to the suit, and cases where the contest is between third persons and the officers or directors assuming to exercise corporate powers. In the case at bar, C. H. Curtis, plaintiff's testator, was a stockholder in the company at or near the time when he became the owner of the notes sued upon, and not only so, but he was elected as a director of the company and transacted business for the company as such director before the certificate of organization was recorded as required by section 4. While acting as a director of the company, he accepted 400 shares of the capital stock as security for the very debt here sought to be recovered. It is true that the notes were not made while he was director, but after he became director he recognized the debt as an obligation of the corporation by taking part in proceedings by the board of directors by which the debt was further secured. Being already a stockholder and director he accepted additional certificates of stock, issued to him as security for these notes. This was done on October 22, 1884, and the certificate of organization was not recorded until June 5, 1885. It was as much his duty to see to it that the certificate was recorded as it was the duty of the original board of directors, elected by the first meeting of the subscribers. (Bushnell v. Consolidated Ice Machine Co., 138 Ill. 67.) By acting with the other directors in the meeting of October 22, 1884, he assumed to exercise corporate functions before that provision of the act, which required the certificate to be recorded, had been complied with. He is estopped by his conduct from seeking to enforce the liability provided for in section 18 against the defendants. He can not enforce against others a penalty which he has himself incurred by his own conduct.

It is well settled that a stockholder can not defend against a liability which rests upon him for the benefit of corporate creditors, upon the ground that the corporation was not legally organized by reason of non-compliance with the terms of the statute providing for such an incorporation. (Hickling v. Wilson, 104 Ill. 54.) He is estopped by the act of subscribing for the stock from setting up such defense. Upon principle there can be no difference between such a case and a case where a stockholder, who is also a director, seeks to enforce a claim resting for its validity upon the fact that the corporation in which he is such stockholder and director was not organized in accordance with the statute. Where a man has acted as a director of a corporation and participated in the management of its affairs, and attended its business meetings and voted upon questions affecting its interests, before the certificate of its organization has been recorded as required by law, he should be estopped from enforcing against others a liability based exclusively upon their failure to record the same certificate which he failed to have recorded.

Under the facts as herein recited, we think that the judgments of the superior court of Cook county and of the appellate court were corThose judgments are accordingly affirmed.

rect.

Judgment affirmed.

Note. See, 1828, All Saints Church v. Lovett, 1 Hall (N. Y.) 191; 1843, Selma & T. R. R. v. Tipton, 5 Ala. 787, 39 Am. Dec. 344; 1853, Danbury & N. R. Co. v. Wilson, 22 Conn. 435; 1858, Hayes v. Brown, 36 N. H. 545; 1867, Mason v. Nichols, 22 Wis. 376; 1870, Ramsey v. Peoria M. & F. Ins. Co., 55 Ill. 311; 1871, Parrott v. Byers, 40 Cal. 614; 1876, Phoenix W. Co. v. Badger, 67 N. Y. 294; 1882, Close v. Glenwood Cemetery, 107 U. S. 466; 1885, Thompson v. Reno Sav. Bank, 19 Nev. 103, 3 Am. St. Rep. 797, and note; 1888, Marshall Foundry Co. v. Killian, 99 N. C. 501, 6 Am. St. Rep. 539; 1888, Weinman v. Wilkinsburg & E. L. Pass. Ry., 118 Pa. St. 192, 12 Atl. Rep. 288; 1889, Corey v. Morrill, 61 Vt. 598; 1890, Bates v. Wilson, 14 Colo. 140, 24 Pac. Rep. 99; 1894, State Bank Building Co. v. Pierce, 92 Iowa 668, 61 N. W. Rep. 426.

Sec. 174.

(4) Dealers with knowledge of claim of corporate capacity. (a) Who seek to evade liability to the apparent corporation.

WEST WINSTED SAVINGS BANK AND BUILDING ASSOCIATION v. FORD.1

1858. IN THE SUPREMe Court of ERRORS OF CONNECTICUT. 27 Conn. Rep. 282-291.

ELLSWORTH, J. It appears in March, 1852, the respondent, with twenty-five others, took measures to form a corporation in West Winsted, under the act of 1850 authorizing the establishment of savings and building associations. The corporators prepared and signed the articles of association, and caused a copy to be left with the clerk of the town, in all respects complete except that the names of the corporators were not appended. They commenced and ever since have continued to prosecute their business (somewhat extensively) under their corporate name, "The West Winsted Savings Bank and Building Association." In July, 1854, the respondent applied to and received from the company a loan of $1,000, from which a bonus of 28 per cent. was deducted, leaving the amount actually received $720. For this loan of $1,000 he executed his note to the company, and agreed to secure it by good and perfect deed of land described in the petitioners' bill. It is found that he did execute and deliver to them a deed as agreed, except that one of the witnesses to it was a member of the company, and therefore, not a good witness, as this court has recently decided. In consequence of this the deed is not good, and the debt is not secured. The company have now brought their bill to obtain a good and perfect deed. All the facts stated in the bill are

1Statement of facts, except as given in the opinion, and arguments omitted.

found to be true except what is said about the corporators having signed the copy of the articles left with the town clerk. Our advice is asked as to the company's right to demand and have such deed, together with a decree of foreclosure; and whether the bonus is legal, and may be enforced, or should be rejected, in ascertaining the sum which is now due on the note.

We think the company are entitled to the relief they ask for, including in the debt the bonus of twenty-eight per cent.

It is objected to any decree in favor of the petitioners, that they are not a body corporate as they have alleged, and can not bring suit, inasmuch as the corporators did not comply with the fifth section of the act, which says a copy of the articles shall first be left with the town clerk.

On the one hand it is claimed that the statute requires that a copy shall be left and nothing more, and that the court has no power or right to superadd any other prerequisite; on the other hand, it is claimed that the paper is not a copy without the names of the stockholders which are appended to the original. We have not thought it important to examine or decide this point, because we are all satisfied for several reasons that no such objection ought to prevail in this

case.

In the first place, the objection to the existence of a corporation plaintiff can not be raised upon the general issue. It is preliminary in its character, like all objections to the person or character in which a plaintiff sues, and should be pleaded in an earlier stage of the cause. The existence of a corporation and its capacity to sue are admitted by a plea to the merits. The authorities on this point are very numerous. Phoenix Bank of N. Y. v. Curtis, 14 Conn. 437; Champlin v. Tilley, 3 Day 303; Sutton v. Cole, 3 Pick. 232, 245; Penobscot Boom Corporation v. Lampson, 16 Maine 224; Bank of Manchester v. Allen, 11 Verm. 302; School District v. Blaisdell, 6 N. H. 197; Bank of Utica v. Smally, 2 Cow. 770.

In the second place, the respondent is estopped by matter in pais. We have seldom met with a case to which this kind of equitable estoppel is more properly applicable than the present. In 1852 the respondent, with others, united and formed this association, and proclaimed themselves a corporation under the act of 1850. They unitedly took what were supposed to be the necessary measures to perfect their organization according to law; and if it has not been exactly done, the omission was through their mutual mistake and misapprehension. They intended that it should be considered as done, and so we must now treat them, not only as possessing a corporate existence, but as having a corporate existence under the statute, and having, as to and among themselves certainly, the attributes of such a corporation. The respondent has influenced persons to become members of the company, some by subscribing and some by purchasing from those who have subscribed, and to deposit their moneys and form contracts with the company as duly incorporated and qualified to act as a corporation under the provisions of the statute. Besides,

the company has, during all this time, with the concurrence and cooperation of the respondent, been carrying on business as a corporation, admitting new members, choosing officers and agents, borrowing and loaning money, receiving money on deposit and the like, until the rights and duties of the corporators and the corporation have become exceedingly multiplied and important, and, which ought to be conclusive upon the respondent, he has borrowed this very money and given his note and deed for it to the company by its corporate name. It would be a reproach to the law if, after this, he can be allowed to call in question the existence of the corporation or its capacity to loan the money. Of what particular importance was the leaving a copy of the articles of association to the members of the company? How did the omission affect or injure them? Their relations between themselves or with the company did not grow out of that circumstance, and we can not allow it to have any effect on these parties, however it may be as to the right of the government to complain, if it see fit, and prosecute the company by a writ of quo warranto.

The doctrine of equitable estoppel is of so common application here and elsewhere at this day, and has been so often discussed, and shown to be founded in such obvious propriety and necessity, that we need not spend time in discussing it, and it will be sufficient if we merely state the general principles pertaining to it. At the common law estoppels are founded on deeds and records of court, but estopples in equity are estopples in pais. The doctrine of this kind of estoppels was at first administered as a branch of equity jurisprudence, but is now incorporated into the law. The rule with regard to common law estoppels is a precise and technical one, though supposed to be founded in principles of truth and justice, such as the statement of material facts in specialties or as found by verdicts or judgments upon trials in courts of record. The common law rule is obviously too narrow and inadequate for the attainment of equity in the multiplied transactions of modern times, and hence the equitable estoppel of the present day.

Estoppel in pais is founded in the obligation which every man is under to speak and act according to the truth of the case, and in the policy of the law to prevent the great mischiefs resulting from uncertainty, confusion and want of confidence in the intercourse of men, if they were permitted to deny that which they have deliberately and solemnly asserted and received as true. But the mere acts, statements, or admissions of a party when not performed or made under seal or of record, or in some of those acts to which peculiar authority is attached by law, were not at common law considered as estoppels, and had no other weight than that of evidence, more or less important, but which might be explained or rebutted. By the recent decisions of the courts in this country and in England, a much wider scope is given to the doctrine of estoppels in pais, and it is now held and established, that wherever an act is done or a settlement made by a party which can not be contravened or contradicted without fraud, or gross misconduct, which is akin to it, on his part, an injury to oth