is valid as to the plaintiff, and he had no right to raise the question of its invalidity."

It seems to us that the trial judge was correct in holding that the plaintiff was dealing with a corporation de facto, and it cannot be said that the plaintiff supposed that it was dealing with the copartners, for it clearly appears that it did not know whether it was dealing with co-partners or with a corporation. In Swartwout v. Railroad Co., supra, this court held that, in the case of the associates in the corporation de facto and those who have had dealings with it, there is a mutual estoppel resting upon broad grounds of right, justice, and equity, which prevents the former from denying, and the latter from disputing, the incorporation. Johns v. People, 25 Mich. 502.

Although the proposition finds some support in the authorities cited by counsel from other states, we cannot agree with counsel for appellant when he states that, until the recording of the articles of association with the county clerk, the Fred J. Pound Company could have no corporate existence. By the act itself it is provided that the president shall cause the articles of association to be recorded. The statute therefore contemplates the complete organization of the association and the election of officers before the recording of the articles, and we think that the better doctrine is that the State only can interfere in a case such as the one with which we are dealing.

There is no claim of fraud or false representation here. And it seems to us that it is undisputed that there was a bona fide attempt to organize a corporation under the statute. Where an attempt has been made to organize a corporation under a valid act, and the question is one of regularity merely, parties recognizing its legal corporate existence by dealing with it have no right to object to any irregularity in such organization.

As this court said in Eaton v. Walker, 76 Mich. 585 (43 N. W. 640 [6 L. R. A. 102]): "Two things are necessary to be shown in order to establish a corporation de facto, viz.: (1) The existence of a charter or some law under which a corporation, with the powers assumed, might lawfully be created. (2) A user by the party to the suit of the rights claimed to be conferred by such a charter or law. U. S. Bank v. Stearns, 15 Wend. (N. Y.) 314. If the law exists, and the record exhibits a bona fide attempt to organize under it, very slight evidence of user beyond this is all that can be required. M. E. Church v. Pickett, 19 N. Y. 487.'

Both of these requisites appear in the instant case.

We think the trial judge was justified in directing a verdict for the defendants, and the judgment of the circuit court is affirmed. OSTRANDER, C. J., and STEERE, MOORE, and BROOKE, JJ., concurred.2

Snider's Sons Co. v. Troy (1890), 91 Ala. 224, 8 So. 658; Owensboro Wagon Co. v. Bliss (1901), 132 Ala. 253, 31 So. 81; Tarbell v. Page (1860), 24 Ill. 46; Hoyt v. McCallum (1902), 102 Ill. App. 287; Finnegan v. Noerenberg (1893), 52 Minn. 239, 53 N. W. 1150; Johnson v. Okerstrom (1897), 70

STEVENS v. EPISCOPAL CHURCH HISTORY CO.

1910. 140 App. Div. (N. Y.) 570, 125 N. Y. S. 573.3

LAUGHLIN, J. * * The learned counsel for the respondents contends that the execution of the certificate of incorporation constituted the defendant a corporation de facto. * * *

Section 5 of the former General Corporation Law (Gen. Laws, chap. 35; Laws of 1892, chap. 687), as amended by chapter 285 of the Laws of 1902, which is now section 5 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28), required that the certificate of incorporation should be filed in the office of the Secretary of State, and should be by him duly recorded and indexed, and that a certified copy thereof or a duplicate original should be filed and similarly recorded and indexed in the office of the clerk of the county in which the office of the corporation was to be located, and further provided as follows: "All taxes required by law to be paid before or upon incorporation and the fees for filing and recording such certificate must be paid before filing. No corporation shall exercise any corporate powers or privileges until such taxes and fees have been paid." The execution of the certificate without any action directing or authorizing the filing thereof and without the filing thereof did not even constitute an attempt to comply with the requirements of the statute and created no liability and imposed no obligation on the parties who signed it to perfect the incorporation. At most it merely constituted an agreement among themselves, and in transacting business in the name of the corporation they doubtless became liable as copartners; but in no view of the case can it be maintained that the mere execution of the certificate created a corporation de facto. Of course, where there has been an attempt in good faith to comply with the requirements of the law with respect to filing a certificate of incorporation and a certificate has been filed in one or more of the places required by law and there has been user

Minn. 303, 73 N. W. 147 (repudiating Bergeron v. Hobbs, 96 Wis. 641, 71 N. W. 1056); Rutherford v. Hill (1892), 22 Ore. 218, 29 Pac. 546 (see note in 17 L. R. A. 549); American Salt Co. v. Heidensheimer (1891), 80 Tex. 344, 15 S. W. 1038, Accord.

In the following cases the shareholders of a de facto corporation were held not exempt from individual liability. Garnett v. Richardson (1879), 35 Ark. 144; Kaiser v. Lawrence Savings Bank (1881), 56 Iowa 104, 8 N. W. 772; Bigelow v. Gregory (1874), 73 Ill. 197 (partnership liability); Loverin v. McLaughlin (1896), 161 Ill. 417, 44 N. E. 99 (statutory provision); Williams v. Hewitt (1895), 47 La. Ann. 1076, 17 So. 496; Abbott v. Omaha &c. Refining Co. (1876), 4 Neb. 416; Wechselburg v. Flour City Nat. Bank (1894), 64 Fed. 90, 12 C. C. A. 56.

As to whether there must be a dealing on a corporate basis, see Christian &c. Grocery Co. v. Fruitdale Lumber Co. (1898), 121 Ala. 340, 25 So. 566; Doty v. Patterson (1900), 155 Ind. 60, 56 N. E. 668; Guckert v. Hacke (1893), 159 Pa. St. 303, 28 Atl. 249; Slocum v. Head (1900), 105 Wis. 431, 81 N. W. 673; Clausen v. Head (1901), 110 Wis. 405, 85 N. W. 1028.-Eds. 'Only a portion of the opinion is given.-Eds.

of the corporate name, the corporation will be deemed a corporation de facto, and no one other than the people of the State can question the validity of its existence; but some of the statutory steps must be taken in an attempt to comply with the requirements of the law, and the mere execution of a paper which is not filed and does not become a public record is insufficient and this may be inquired into collaterally by any person whose interests are affected thereby. (McLennan v. Hopkins, 2 Kan. App. 260; Jones v. Aspen Hardware Co., 21 Colo. 263; Van Buren v. Reformed Church of Gansevoort, 62 Barb. 495; Lamming v. Galusha, 81 Hun 247; affd., 151 N. Y. 648; Card v. Moore, 68 App. Div. 327; affd., 173 N. Y. 598; Eaton v. Aspinwall, 19 Id. 119; Childs v. Smith, 55 Barb. 45; revd. on another point, 46 N. Y. 34.)*

MONTGOMERY v. FORBES.

1889. 148 Mass. 249, 19 N. E. 342.

CONTRACT, to recover the price of goods sold and delivered. At the trial in the Superior Court, before Dewey, J., the only question was whether the goods were sold to a corporation called the Forbes Woolen Mills, or to the defendant as doing business under that name. The plaintiffs introduced evidence tending to show that subsequently to May, 1885, they received an order for the goods by a letter, written upon paper with the printed heading, "Incorporated 1885. Forbes Woolen Mills. George E. Forbes, Treasurer," and signed, "Forbes Woolen Mills by Geo. E. Forbes, Treasurer"; that they thereupon shipped the goods to the Forbes Woolen Mills and received in payment therefor three promissory notes, together equal

'McLennan v. Hopkins (1895), 2 Kan. App. 260, 41 Pac. 1061 (failure to prepare and file certificate); Utley v. Union Tool Co. (1858), 11 Gray (Mass.) 139 (no articles entered into); Van Buren. v. Reformed Church (1872), 62 Barb. (N. Y.) 495 (mere assumption and user); Perrine v. Levin (1910), 68 Misc. (N. Y.) 327, 123 N. Y. S. 1007 (certificate not filed with Secretary of State), Accord.

Failure to have signatures of subscribers to capital stock in the certificate as required, Gelders v. State (1909), 164 Ala. 592, 51 So. 232, to have the certificate signed at the end, Lyell Ave. Lumber Co. v. Lighthouse (1910), 137 App. Div. (N. Y.) 422, 121 N. Y. S. 802, to pay the statutory incorporation fees, Christian &c. Grocery Co. v. Fruitdale Lumber Co. (1898), 121 Ala. 340, 25 So. 566; Slocum v. Providence &c. Pipe Co. (1870), 10 R. I. 112; Slocum v. Warren (1871), 10 R. I. 116; Hughesdale Mfg. Co. v. Vanner (1879), 12 R. I. 491, held, not to prevent de facto corporate existence. But see Jones v. Aspen Hardware Co. (1895), 21 Colo. 263, 40 Pac. 457, holding payment of fees "a condition precedent to the exercise of any corporate power.'

According to prevalent American doctrine, stockholders of a defectively incorporated company which is not a de facto corporation, are personally liable. See article by F. M. Burdick, "Are Defectively Incorporated Associations Partnerships?" in 6 Columbia Law Rev. 1-14.-Eds.

to the price of the goods, signed "Forbes Woolen Mills by Geo. E. Forbes, Treasurer"; that when they sold the goods and took the notes, they understood from their correspondence with the defendant, as well as from information gained from a commercial agency, that the Forbes Woolen Mills were a corporation, and made all charges on their books against them as a corporation, and took the notes from the defendant as the notes of a corporation; and that after they sold the goods and received the notes they became satisfied there was no such corporation as the Forbes Woolen Mills; and contended that they were entitled to recover the price of the goods from the defendant personally.

The defendant contended that the Forbes Woolen Mills was a corporation, and testified that he purchased the goods as treasurer of the Forbes Woolen Mills, but admitted that they had not been paid for except by the notes, which themselves had not been paid; that in May, 1885, for the purpose of limiting his personal responsibility, and because the tax laws of New Hampshire were more favorable to corporations than the Massachusetts laws, he went to Nashua, New Hampshire, to form a corporation for the manufacture of woolen goods; that he employed an attorney at law of Nashua to incorporate the company in a legal and proper manner, under the laws of that State, and subsequently paid him for his services and disbursements in the premises; that he went to Nashua again, and with the attorney and three other persons, selected and secured by the attorney, signed and executed an agreement of association, which was dated May 6, 1885, and was duly recorded in the office of the Secretary of State of New Hampshire on May 12, 1885, and in the office of the clerk of the city of Nashua on May 13, 1885, and recited that the subscribers associated themselves for the purpose of forming a corporation, to be called the Forbes Woolen Mills, the amount of the capital stock to be twenty thousand dollars, divided into four hundred shares of fifty dollars each; and that the object of the corporation was to manufacture and sell woolen and other goods, and the places of business were Nashua in New Hampshire, and East Brookfield in Massachusetts.

The defendant further testified that, subsequently to the execution of the agreement of association, one or more meetings were held by the signers, at which he was elected president and treasurer of the corporation, and such other officers and directors were elected as were necessary under the laws of New Hampshire; that the attorney had been recommended to him as a reputable and reliable man and attorney, and he left everything in his hands, and supposed he did everything necessary and proper to establish the corporation in a legal manner; that records of the meetings were kept by the attorney, and that there was a stock-book and certificates of stock were issued; that all the stock was issued to the defendant, and that no other person was interested in it; that fifty per cent of the capital stock of the corporation was actually paid in by him in cash and

supplies; that after the organization of the corporation he hired, as treasurer of the corporation, a mill in East Brookfield belonging to his mother, Roxanna Forbes, and himself, and began the manufacture of woolen goods; that he purchased the necessary supplies, including those named in the plaintiff's account, and placed them under the direction of a superintendent, employed to supervise the manufacture of the goods; that there was no manufacturing done in Nashua, nor any other business except the holding of corporate meetings, and possibly the sale now and then of a bill of goods in the ordinary course of business; and that the principal place of business of the corporation was in East Brookfield; that he, as president and treasurer of the corporation, continued to manufacture woolen goods for about four months, and sent the goods to commission houses in New York to be sold; and that at the end of said four months he was unable to continue the business and gave it up, and no further business was done by him or by the corporation.

The following sections of chapter 152 of the General Laws of New Hampshire of 1878, were introduced in evidence:

"Sect. I. Any five or more persons of lawful age may, by written articles of agreement, associate together, for agricultural, educational, or charitable purposes, or for carrying on any lawful business, except banking and the construction and maintenance of a railroad; and when such articles have been executed and recorded in the office of the clerk of the town in which the principal business is to be carried on, and in that of the Secretary of State, they shall be a corporation, and such corporation, its officers and stockholders, shall have all the rights and powers, and be subject to all the duties and liabilities of similar corporations, their officers and stockholders, except so far as the same are limited or enlarged by this chapter.

"Sect. 2. The object for which the corporation is established, the place in which its business is to be carried on, and the amount of capital stock to be paid in, shall be distinctly set forth in its articles of agreement."

• Upon this evidence, the defendant asked the judge to rule that the plaintiffs were not entitled to recover, that the account in question had been paid by the notes of the Forbes Woolen Mills as a corporation, and that there was no evidence to authorize the jury to find for the plaintiffs.

The judge declined so to rule, and submitted the following questions to the jury: "Ist. Did the Forbes Woolen Mills and the members of said alleged corporation, including said Forbes, at the time of its attempted organization, intend to carry on its business as a manufacturing corporation (other than holding meetings of its members and officers) in whole or in part in the city of Nashua, New Hampshire? 2d. Was there an attempt in good faith on the part of the defendant, Forbes, to organize the corporation of the Forbes Woolen Mills? 3d. Did said Forbes, at and prior to the time the goods in controversy were ordered, namely, at all times after May