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may be given to the conveyance at law, – that the title may be held to vest in the associates as natural persons (and this would obviate inquiry into the question of actual consideration).23 The
Sheeley, 12 Wall. (U. S.) 358). See also Provost v. Morgan's Co., 42 La. Ann. 809; German Ass'n v. Scholler, 10 Minn. 331 ; Valk v. Crandall, i Sandf. Ch. (N. Y.) 179, 182 ; Childs v. Hurd, 32 W. Va. 66, 100.
But, by the more recent decisions, it is held that (at least if the requirements of the de facto doctrine are satisfied) the grantor and those in privity with him are estopped to assert title against the associates (see note 33). Cahall v. Citizens' Ass'n, 61 Ala. 232; Bates v. Wilson, 14 Colo. 140; Thompson v. Candor, 60 Ill. 244; The Joliet v. Frances, 85 Ill. App. 243; Baker v. Neff, 73 Ind. 68; Williamson v. Kokomo Ass'n, 89 Ind. 389 (junior mortgagee cannot defeat prior mortgage to de facto corporation); Sword v. Wickersham, 29 Kan. 746; Reinhard v. Virginia Co., 107 Mo. 616 (and cases cited); Frost v. Frostburg Co., 24 How. (U. S.) 278. See also Keene v. Van Reuth, 48 Md. 184; Packard v. Old Colony Co., 168 Mass. 92, 96 ; Smith v. Sheeley, 12 Wall. (U. S.) 358. But cf. Jones v. Aspen Hardware Co., 21 Colo. 263.
In Otoe Ass'n v. Doman, 95 N. W. Rep. 327 (Neb.), a de facto corporation maintained a proceeding against its grantor for reformation of the deed.
On a grant by a municipal corporation of a franchise to a de facto corporation, see Kalamazoo v. Kalamazoo Co., 124 Mich. 74.
In Whipple v. Parker, 29 Mich. 369, Christiancy, J., said (p. 381): "Courts of equity at least, if not also courts of law, would find no difficulty in recognizing their property rights as individuals, or in securing to them as a partnership, or as joint owners, or as individuals, in some form the full enjoyment of their rights.” Note also Burton 7. Schildbach, 45 Mich. 504.
On the right to maintain ejectment in the name of the grantor, note that the grantee of a disseisee might maintain ejectment in the name of his grantor. See McMahan 0. Bowe, 114 Mass. 140, 145.
23 In Maugham v. Sharpe, 17 C. B. (n. s.) 443, chattels were mortgaged to "The City Investment and Advance Company.” The mortgagor believed he was conveying to a corporation (per Erle, C. J., at p. 462); but there was no such corporation authorized by the state. The court held that the title passed to the individuals doing business onder that name. Williams, J., said (p. 463) : “I apprehend, the meaning of the grant is plain : the deed purports and intends to convey the goods to those persons who use the style and firm of The City Investment and Advance Company. They may or may not be a corporation; but when it is ascertained that those who carry on business under that name are the defendants, the deed operates to convey the property to them.” Jones v. Aspen Co., 21 Colo. 263, 271 ; New Haven Wire Co. Cases, 57 Conn. 352, 394 ; accord. See also Farnsworth v. Drake, 11 Ind. 101; Fay v. Noble, 7 Cush. (Mass.) 188, 194; American Silk Works v. Salomon, 6 T. & C. (N. Y.) 352. On a charitable bequest to a de facto corporation, note Quinn v. Shields, 62 Ia. 129 (in connection with Miller v. Chittenden, 2 Ia. 315, and Grant v. Saunders, 121 Ia. 80); Lutheran Church v. Mook, 4 Redf. Sur. (N. Y.) 513.
The English courts would follow Maugham v. Sharpe, if the subject of the conveyance was realty. Wray v. Wray,  2 Ch. 349. In Byam v. Bickford, 140 Mass. 31, Devens, J., said (p. 32): “ But the South Chelmsford Hall Association was a body well known, all the members of which could be ascertained ; and, as it could not take as a corporation, the deed may properly be construed as a grant of the estate to those who were properly described by this title. ... The persons associated in the society were thus tenants in common of the land conveyed.” See also Hart v. Seymour, 147
associates are therefore asserting a property right which they are entitled to assert in some form. Looking at the substance, and not the form, the case will rarely, if ever, arise where X is prejudiced if the associates are allowed to assert the right as an artificial person.2: Similarly, if X makes a note payable to A, and A negotiates it to a de facto corporation, and suit is brought in the name of the corporation against A.25
But it would seem to be clear that there should be no sweeping doctrine to the effect that a de facto corporation may (unless checked by the state) exercise the same powers and privileges as
III. 598, 610; Clifton Heights Co. v. Randell, 82 Ia. 89; Friedman v. Goodwin, 9 Fed. Cas. 818.
And conversely a conveyance of realty to the “ Asheville Division No. 15" will pass title to such corporation, although the grantor supposed he was conveying to a voluntary association. Asheville Division v. Aston, 92 N. C. 578.
On a deed to A and “associates," see Ennis v. Brown, 1 N. Y. App. Div. 22.
On whether a title in natural persons will, upon their incorporation, pass to the corporation without formal transfer, see McCandless v. Inland Acid Co., 112 Ga. 291 ; Land Co. v. Randell, 82 Ia. 89; Catholic Church v. Tobbein, 82 Mo. 418; American Silk Works v. Salomon, 6 T. & C. (N. Y.) 352.
24 A de facto corporation may maintain ejectment against a person who has not dealt with the associates as a corporation. East Norway Church v. Froislie, 37 Minn. 447, 451 (" It would be unjust and intolerable if ... every interloper and intruder were allowed thus to take advantage of every informality or irregularity of organization"); Chiniquy v. Bishop of Chicago, 41 Ill. 148. But cf. Proprietors of Southold v. Horton, 6 Hill (N. Y.) 501 ; Augusta Co. v. Vertrees, 4 Lea (Tenn.) 75.
It may maintain an action for a tort to real or personal property. Buffalo Co. v. Cary, 26 N. Y. 75, 77–78; Remington Co. v. O'Dougherty, 65 N. Y. 570 (conversion); Persse Works v. Willett, 1 Rob. (N. Y.) 131 (trespass upon personalty); American Silk Works v. Salomon, 6 T. & C. (N. Y.) 352 (conversion); Elizabeth Academy v. Lindsey, 6 Ired. (N. C.) 476 (conversion); Searsburgh Co. v. Cutler, 6 Vt. 315, 323 (“For the purpose of protecting the property ... from tortfeasors, it is enough to shew a corporation de facto "); Baltimore Co. v. Baptist Church, 137 U. S. 568, 572 (nuisance. Per Gray, J., a de facto corporation may “maintain an action against any one, other than the state, who has contracted with the corporation, or who has done it a wrong"); American Co. v. New York, 68 Fed. Rep. 227 (infringement of patent).
It may maintain a bill for an injunction to restrain irreparable injury to property. Cincinnati Co. v. Danville Co., 75 Ill. 113; Williams v. Citizens' Co., 130 Ind. 71. See also Denver v. Mullen, 7 Colo. 345.
But cf. Slocum v. Providence Co., 10 R. I. 112, 114.
25 Cozzens v. Chicago Co., 166 Ill. 213; Wilcox v. Toledo Co., 43 Mich. 584, 590 ; Haas v. Bank of Commerce, 41 Neb. 754. See also Mix v. Bank of Bloomington, 91 Ill. 20; Chicago Co. v. Stafford County, 36 Kan. 121, 128. Cf. Marion Bank v. Dunkin, 54 Ala. 471; Hungerford Bank v. Van Nostrand, 106 Mass. 559.
An association de facto may recover for use and occupation of land. Philippine Sugar Co. v. U. S., 39 Ct. Cl. 225.
A grants land to a de facto corporation. It may maintain proceedings to have the land discharged from the incumbrance of a judgment against A. Keyes v. Smith, 67 N. J. L. 190.
a de jure corporation. The doctrine should never be applied, in favor of the associates themselves, to the prejudice of a person who has not dealt with them as a corporation.
Suppose A agrees to take and pay for stock in the X corporation when formed. Only a de facto corporation is formed. If a de jure corporation had been formed, it could have compelled A to pay for the stock.26 But the de facto corporation has no such right.27
Suppose the legislature has authorized the formation of railroad corporations and has authorized such corporations to condemn land. Only a de facto railroad corporation is formed. It cannot take land against the will of the owner.28
To return to the case put in the opening paragraph. If persons
26 Athol Co. v. Carey, 116 Mass. 471.
27 Schloss v. Montgomery Co., 87 Ala. 411; Indianapolis Co. v. Herkimer, 46 Ind. 142; Nelson v. Blakey, 47 Ind. 38; Reed v. Richmond Co., 50 Ind. 342, 83 Ind. 9; Rikhoff v. Brown's Co., 68 Ind. 388; Coppage v. Hutton, 124 Ind. 401 ; Allman v. Havana Co., 88 Ill. 521 ; Richmond Ass'n v. Clarke, 61 Me. 351; Taggart v. Western Co., 24 Md. 563; Katama Land Co.v. Holley, 129 Mass. 540; Columbia Co. v. Dixon, 46 Minn. 463, 465; Capps v. Hastings Co., 40 Neb. 470; Dorris v. Sweeney, 60 N. Y. 463; Greenbrier Exposition v. Rodes, 37 W. Va. 738. See also McIntire v. McLain Ass'n, 40 Ind. 104; Stowe v. Flagg, 72 Ill. 397 ; Mansfield Co. v. Drinker, 30 Mich. 124; Crocker v. Crane, 21 Wend. (N. Y.) 211 ; Wilmington Co. v. Wright, 5 Jones (N. C.) 304. But of. Willard v. Church of Rockville Centre, 66 Ill. 55.
But otherwise if the subscriber took part in the attempt to incorporate, or thereafter assented to treat with the corporation as though it had been lawfully formed (see note 33). Selma v. Tipton, 5 Ala. 787, 807; Danbury Co. v. Wilson, 22 Conn. 435; Hause v. Mannheimer, 67 Minn. 194; Cayuga Co. v. Kyle, 64 N. Y. 185; United Growers Co. v. Eisner, 22 N. Y. App. Div. 1; Tar River Co. v. Neal, 3 Hawks (N.C.) 520; Rockville Turnpike Road v. Van Ness, 2 Cranch C. C. (U. S.) 449.
See also Childs v. Smith, 46 N. Y. 34. 28 Piper v. Rhodes, 30 Ind. 309 (assessment by de facto turnpike company); McIntire v. McLain Ass'n, 40 Ind. 104 (assessment by de facto drainage company); Newton Co. v. Nofsinger, 43 Ind. 566 (same); Knight v. Flatrock Co., 45 Ind. 134 (assessment of tax in aid of de facto turnpike company); Williamson v. Kokomo Ass'n, 89 Ind. 389, 392 (condemnation. In Boyd v. Traction Co., 161 Ind. 587, 589, the court did not find it necessary to decide the point); Hopkins v. Kansas City Co., 79 Mo. 98 (condemnation); St. Joseph Co. v. Shambaugh, 106 Mo. 557, 566 (condemnation); Hampton v. Clinton Co., 65 N. J. L. 158, 160 (“ There is no doubt that non-compliance with conditions precedent to incorporation will defeat a condemnation "); N. Y. Cable Co. v. N. Y., 104 N. Y. 1, 43 (condemnation); Matter of Union Co., 112 N. Y. 61 (same); Matter of New York Co., 35 Hun (N. Y.) 220 (same. On appeal, 99 N. Y. 12); Matter of Broadway Co., 73 Hun (N. Y.) 7, 13 (same); Kinston Co. v. Stroud, 132 N. C. 413 (same. Cf. Wellington Co. v. Cashie Co., 114 N. C. 690. As to latter case, see note 12); Atlantic Co. v. Sullivant, 5 Oh. St. 276 (same); Atkinson v. Marietta Co., 15 Oh. St. 21 (same); Powers v. Hazelton Co., 33 Oh. St. 429 (same); Tulare District v. Shepard, 185 U. S. I, 17 (same). See also Niemeyer v. Little Rock Ry., 43 Ark. UI; Fales v. Whiting, 7 Pick. (Mass.) 225; Trenton Co. v. United Co., 60
employ agents, they are responsible for the torts of those agents while they are acting within the scope of their employment. Persons injured by such torts have a well-established common law right to call upon the principal to respond. Now the legislature has authorized those persons who do specified acts to exercise the privilege of acting as an artificial person, - of holding property and appointing agents as such artificial person. If the specified acts are done, the artificial person becomes the principal, and redress may be had only out of the property of this principal. But persons who have not done the specified acts should not be given this immunity, which is dependent upon incorporation.
The subscriber to stock of a corporation to be formed has a right, under that portion of the common law which deals with contracts, to have stock of a corporation authorized by the state. The courts ought not to ignore or impair that right. The person injured by the tort of the servant has a right, under that portion of the common law which deals with torts and agents, to have the master respond. The courts ought not to ignore or impair th right.
It may be urged that the exercise of the power of eminent domain is much more important than the exercise of the power to appoint an agent as an artificial person. The exercise of such a power is indeed a high act of sovereignty, and this consideration must incline courts to construe grants of the power with great strictness.29 The grant of a power to appoint an agent as an artificial person might not be construed with the same strictness. But neither power can be exercised except upon the terms laid down
N. J. Eq. 500; Farnham v. Benedict, 107 N. Y. 159; New Orleans Co. v. Louisiana Co., 11 Fed. Rep. 277.
There is considerable authority opposed to the text. Central of Georgia Co. v. Union Springs Co., 144 Ala. 639; McAuley v. Columbus Co., 83 Ill. 348; Peoria Co. v. Peoria Co., 105 Ill. 110; Chicago Co. v. Chicago Co., 112 Ill. 589; Morrison v. Forman, 177 Ill. 427; Eddeeman v. Union Co., 217 III. 409, 414; Detroit Co. v. Campbell, 140 Mich. 384, 394 (relying on 44 Mich. 387, and 81 Mich. 378, which only decided that the question could not be litigated in certiorari proceedings); Postal Co. v. Oregon Co., 23 Utah 474, 482. See also Osborn v. People, 103 I1). 224; Ward v. Minnesota Co., 119 111. 287; Reisner v. Strong, 24 Kan. 410, 417; Portland Co. v. Bobb, 88 Ky. 226; Farnham v. Delaware Co., 61 Pa. St. 265. But note the explanation of the Illinois doctrine made in Henry v. Centralia Co., 121 Ill. 264, 267.
On the litigation of this question in certiorari proceedings, see Schroeder v. Detroit Co., 44 Mich. 387 ; Traverse Co. v. Seymour, 8. Mich. 378; State v. Egg Harbor City, 55 N. J. L. 245.
29 Matter of Poughkeepsie Bridge Co., 108 N. Y. 483.
by the legislature. When the terms are ascertained by a proper construction of the legislative grants, it is no more proper for the courts to vary those terms in one case than in the other.
Compare the consequences of the exercise of these two powers to the person against whom they are asserted. In the one case his land is taken from him against his will, but the fair value is paid him. In the second case his body is injured, without his fault, and he is referred to an empty treasury for compensation.30
30 Authorities bearing on the case put in the opening paragraph of the text are as follows. In Vredenburg v. Behan, 33 La. Ann. 627, the plaintiff sued on account of damage done by an animal kept by the “Crescent City Rifle Club." The defendants contended that this club was a corporation, and that the corporation alone was liable for the tort. The court held that the statutes of Louisiana did not authorize the formation of such a corporation, and that the defendants — members of the club — were personally liable." It is a principle of law that cannot be successfully controverted, that where persons sought to be made liable for their acts, imprudence, or negligence, seek to escape such liability by pleading some privilege or immunity in derogation of common right, they must clearly establish the existence of the same, and bring themselves strictly within the provisions of the law on which they rest such claim ” (p. 635). (It may be suggested that Article 446 of the Civil Code prevents all recognition of the de facto doctrine, and that therefore the reasoning of this case has no bearing upon the proper scope of such a doctrine ; but it has not been so construed. For applications of the de facto doctrine see Blanc v. Germania Bank, 114 La. 739, and cases cited.)
In Smith v. Warden, 86 Mo. 382, the plaintiff sued on account of a tort committed by an agent of the defendants. The defendants contended that the tortfeasor was agent of a limited partnership, and that this partnership alone was liable, as master, for the tort. But the court held that one of the acts which was a prerequisite to the formation of such a limited partnership had not been performed, and that the defendants — who were assuming to do business as such limited partnership – were personally liable.
Lamming v. Galusha, 81 Hun (N. Y.) 247 (aff. 151 N. Y. 648), is against the text. But it may be noted : (1) the plaintiff's predecessor in title had given a written consent for the construction of the railroad, which consent was intended to operate “ as something more than a mere license.” The railroad had been constructed at the time the plaintiff bought, and the associates were openly asserting their right to act as a corporation. The plaintiff did nothing for eight years. He then asked for an injunction and damages. (2) The opinion is of a single justice sitting at special term. He seems to have been of the opinion (p. 252) that, if there was not substantial compliance with all the provisions of the statute, there would not be a corporation de jure (see notes 17 and 18). He relies on California cases decided after the statute respecting de facto corporations had been passed (see note 20), and his attention seems not to have been called to the statute.
In Guckert v. Hacke, 159 Pa. St. 303, A contracted with the associates. The associates intended to contract as a corporation, and the requirements of the de facto doctrine were satisfied. But a condition precedent to the formation of a corporation had not been performed, and A did not know that the associates were assuming to contract as a corporation. Held, that A, since he was not estopped (see note 33),