in the nature of a quo warranto to deprive the defendant corporation of its corporate charter, and procure its dissolution on two grounds: 1. For want of a substantial compliance with the statutory requirements in its formation.

It is contended that the corporation is not rightfully such, because while five incorporators signed the articles of incorporation, only four acknowledged the same.

Section 292 of the civil code reads as follows: "The articles of incorporation must be subscribed by five or more persons, a majority of whom must be residents of this state, and acknowledged by each before some officer authorized to take and certify acknowledgments of conveyances of real property.

It was said in People v. Selfridge, 52 Cal. 331: "The right to be a corporation is in itself a franchise; and to acquire a franchise under a general law, the prescribed statutory conditions must be complied with." Still, a substantial rather than a literal compliance will suf fice. (People v. Stockton, etc., R. Co., 45 Cal. 313; 13 Am. Rep. 178.) Was there a substantial compliance in this case?

Because a substantial compliance will do, it does not follow that any positive statutory requirements can be omitted on the ground that it is unimportant. They are conditions precedent to acquiring a statutory right, and none can be dispensed with by the court.

What is a substantial rather than a literal compliance may be illustrated from the cases. In Ex parte Spring Valley Water-Works, 17 Cal. 132, the certificate stated the place of business, but did not describe it as the "principal piace of business," as required. The court said: "The statement that San Francisco was the place of business would seem to imply that it was not only the principal but the only place of business.

In People v. Stockton, etc., R. Co., 45 Cal. 306, 13 Am. Rep. 178, the affidavit required in such cases to be attached to the certificate stated that 10 per cent. of the amount subscribed had been actually paid in, omitting the words "in good faith," which the statute required. In the certificate it was stated that more than 10 per cent. had been actually in good faith paid in. It was held sufficient; and it would seem that if it was actually paid in cash, it must have been paid in good faith.

And it was further held that payment by checks drawn against sufficient funds in a bank, which was ready to accept and pay checks, was substantially payment in cash.

In People v. Cheeseman, 7 Colo. 376, the acknowledgment taken by the notary omitted to state that the persons whose acknowledg ments were taken were personally known to the notary. The certifi cate did state that the persons who signed appeared before him and acknowledged it. The statute did not prescribe what the acknowledgment should contain, and it was held a substantial compliance with the requirement, although the form prescribed for acknowledg ments to deeds was not followed. It was acknowledged.

In all these cases it will be seen that the thing required was done,

but not literally, as directed. But there was no omission of any requirement. No case has been cited where the entire omission of a thing prescribed has been excused, unless it be the case of Larabee v. Baldwin, 35 Cal. 155. That was not an action instituted by the state to disincorporate on the ground of non-compliance. As we have seen, unless the state complains, a de facto corporation must be considered, under our code, as possessing a corporate character, and the stockholders, when sued upon their individual liability, should not be allowed to make the point that they did not comply with the law.

In that case the certificate was signed by five directors, but two failed to acknowledge it. Other questions are discussed at great length in the opinion, but in regard to the point made on the certificate it was simply remarked: "It is not clear that any fatal defect exists in the certificate of incorporation. If so, it is cured by the act of April 1, 1864." Plainly, it was unnecessary to consider the question.

Section 292 of the Civil Code required the articles to be subscribed and acknowledged by each. As this is an express condition precedent to a valid incorporation, it is not of consequence to the court whether it be a wise or necessary requirement or not. Still, it is easy to see a reason for it. The certificate secures the state and all concerned against the possibility of any fictitious names being subscribed to the articles, and furnishes proof of the genuineness of the signatures.

If the acknowledgment can be dispensed with as to one, why not as to two, or three, or all?

Ordinarily, no doubt, the state would not be expected to institute a proceeding of this character for such a defect alone, and we must presume that the attorney-general would not have instituted this inquiry, if he were not convinced that there were reasons sufficient to justify it. Other reasons are alleged, but as the statute authorizes a proceeding to forfeit the charter where the statute has not been complied with, although the corporation is acting in good faith, and is a de facto corporation, the complaint must be held to state a cause of action, and the demurrer should be overruled.

The judgment should be reversed, and the cause remanded, with directions to overrule the demurrer.

Sec. 160. Same.

(h) Filing articles.

BERGERON, RESPONDENT, v. HOBBS AND OTHERS, APPELLANTS.'

1837. IN THE SUPREME COURT OF WISCONSIN. 96 Wis. Rep. 641-658, 65 Am. Stat. Rep. 85.

Appeal from a judgment of the circuit court for Bayfield county; John K. Parish, C. J. Affirmed.

1 Arguments omitted. The strong dissenting opinion of Marshall, J., holding there was a corporation de facto, though not de jure, and that the plaintiff should be estopped, is omitted.

The defendants, under the name of Bayfield Agricultural Association, employed several persons to perform labor in improving their grounds and in erecting fences and buildings. Time checks given by the defendants to such laborers, for such labor, were assigned to the plaintiff, who brings this action to recover their amount, alleging that the defendants were a co-partnership. The defendants alleged that they were members of a corporation, and denied that they were copartners, or liable as such. This was the issue which was tried. It appeared upon the trial that articles of organization of the defendants as the Bayfield County Agricultural Association, and a certificate showing the election of officers, had been recorded in the office of the register of deeds of Bayfield county, but were not on file there. They had been deposited with instruction to record and return them, which had been complied with. When the testimony on both sides was in, the court directed a verdict for the plaintiff for the amount of the time checks. From a judgment on that verdict the defendants appeal.

NEWMAN, J. There are two questions raised on this appeal: 1. Was the mere recording of the articles of incorporation, with the certificate of the election of officers, without the intention or fact of the papers themselves remaining in the office, a sufficient compliance with the statute, so that the organization of the corporation became complete, as upon a proper filing of the papers themselves? And 2. If the recording was not sufficient for that purpose, are the defendants liable to the plaintiff only as a de facto corporation, or are they liable as co-partners?

*

1. The statute (sec. 1460, R. S.) provides that, upon the filing of "a certificate of organization, with a copy of the constitution," in the office of the register of deeds of the county, "such society shall have all the powers of a corporation necessary to promote the objects thereof." It can not be doubted that the filing of the proper paper in the proper office is made, by the statute, a condition precedent to the vesting of corporate powers. The court may not be able to clearly define the respect wherein the mere recording and removal of the papers from the office fails to serve the full purpose which the legislature intended to accomplish by the filing of them. The legislature, no doubt, had good and sufficient reasons for its choice of means to promote its purpose. For the court it is not a question of equivalents. A literal filing of the papers is necessary because it is so written in the law. The term "filing" and the verb "to file," as related to in this subject, include the idea that the paper is to remain in its proper order on file in the office. A paper is said to be filed when it is delivered to the proper officer, and by him received, to be kept on file. Bouv. Law Dict. The statute is plain and easy of observance. Valuable rights and exemptions from personal liability are to be secured by its observance. It is no undue severity to require its strict observance. The defendants had not observed it, and had not secured corporate powers.

2. Had the defendants secured immunity from individual liability? No doubt, as a general rule, where an attempt to organize a corporation fails by omission of some substantial step or proceeding required by the statute, its members or stockholders are liable as partners for its acts and contracts. Beach Priv. Corp., §§ 16, 162; I Thompson Corp., §§ 239, 416, 417. But the defendants' contention is that they are not within this rule, because they are at least de facto a corporation, and their right to be a corporation can not be inquired into in a collateral action, but only in a direct action for that purpose, by the state. The infirmity of the defendant's contention is in the assumption that they are de facto a corporation. In order to secure this immunity from inquiry into its right to be a corporation in a collateral action, its action as a corporation must be under a color, at least, of right. It is immaterial that they have carried on business, under the supposed authority to act as a body corporate, in entire good faith. If they had not color of legal right, they have obtained no immunity from individual liability for the debts of the supposed corporation. Until the articles of incorporation are filed in the office of the register of deeds of the county, there is no color of legal right to act as a corporation. The filing of such paper is a condition precedent to the right to so act. So long as an act, required as a condition precedent, remains undone, no immunity from individual liability is secured. I Thompson Corp., §§ 226, 508.

The defendants are not a corporation either de jure or de facto, but are liable for the plaintiffs' claim as partners. It is not necessary to prove a co-partnership by evidence. That was established by implication of law. Nor was it necessary to prove that the debt was unpaid. There was no presumption that it had been paid to be rebutted. The judgment of the circuit court is right, and must be affirmed. By the court-The judgment of the circuit court is affirmed.

Note. To same effect, see, 1859, Mokelumne Hill C. & M. Co. v. Woodbury, 14 Cal. 425, supra, p. 296; 1874, Indianapolis M. Co. v. Herkimer, 46 Ind. 142; 1876, First National Bank v. Davies, 43 Iowa 424; 1876, Abbott v. Omaha Smelting Co., 4 Neb. 416; 1879, Doyle v. Mizner, 42 Mich. 332, infra, p.632; 1879, Garnett v. Richardson, 35 Ark. 144; 1889, Childs v. Hurd, 32 W. Va. 66; 1893, Guckert v. Hacke, 159 Pa. St. 303; 1894, Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151; 1896, New York National Ex. Bk. v. Crowell, 177 Pa. St. 313. But compare, 1896, Supreme Court of Independent Order of Foresters v. Sup. Ct. U. O. of F., 94 Wis. 234; also, 1890, Vanneman v. Young, 52 N. J. L. 403, and 1897, Johnson v. Okerstrom, 70 Minn. 303; 1900, Slocum v. Head, 105 Wis. 431, 50 L. R. A. 324; 1901, Clausen v. Head, 110 Wis. 405, 84 Am. St. Rep. 933, 85 N. W. 1028, contra.

As to filing amendments of charter see, 1899, Jackson v. Crown Point Mining Co., 21 Utah 2, 81 Am. St. Rep. 651, 59 Pac. 238; 1900, Hoeft v. Kock, 123 Mich. 171, 81 Am. St. Rep. 159, 81 N. W. 1070.

ARTICLE V. CONDITIONS OF DE FACTO EXISTENCE.

Sec. 161. (1) Conditions precedent.

FINNEGAN v. NOERENBERG.'

1893. IN THE SUPREME COURT OF MINNESOTA. 52 Minn. Rep. 239-245, 38 Am. St. Rep. 552.

GILFILLAN, C. J. Eight persons signed, acknowledged and caused to be filed and recorded in the office of the city clerk in Minneapolis, articles assuming and purporting to form, under laws of 1870, ch. 29, a corporation, for the purpose, as specified in them, of "buying, owning, improving, selling and leasing of lands, tenements and hereditaments, real, personal and mixed estates and property, including the construction and leasing of a building in the city of Minneapolis, Minn., as a hall to aid and carry out the general purposes of the organization known as the 'Knights of Labor.'" The association received subscriptions to its capital stock, elected directors and a board. of managers, adopted by-laws, bought a lot, erected a building on it, and, when completed, rented different parts of it to different parties. The plaintiff furnished plumbing for the building during its construction, amounting to $599.50, for which he brings this action against several subscribers to the stock, as co-partners, doing business under the firm name of the "K. of L. Building Association." The theory upon which the action is brought is that, the association having failed to become a corporation, it is in law a partnership, and the members liable as partners for the debts incurred by it.

It is claimed that the association was not an incorporation because -first, the act under which it attempted to become incorporated, to wit Laws 1870, ch. 29, is void, because its subject is not properly expressed in the title; second, the act does not authorize the forma tion of corporations for the purpose or to transact the business stated in the articles; third, the place where the business was to be carried on was not distinctly stated in the articles, and they had, perhaps, some other minor defects.

It is unnecessary to consider whether this was a de jure corporation, so that it could defend against a quo warranto, or an action in the nature of a quo warranto, in behalf of the state; for although an association may not be able to justify itself when called on by the state to show by what authority it assumes to be and act as a corporation, it may be so far a corporation that, for reasons of public policy, no one but the state will be permitted to call in question the lawfulness of its organization. Such is what is termed a corporation de facto, that is, a corporation from the fact of its act

1

1 Arguments omitted; also statement of facts, except as given in the opinion.