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ers whose conduct has been influenced by the act or omission, or, as was said in Middleton Bank v. Jerome, 18 Conn. 449, where a person by his acts or his words intentionally induces another to believe in the truth of a fact and thereby change his situation or commit his interests, the character of an estoppel will attach to what would otherwise be mere matter of evidence, and will become binding upon a party and decisive with a jury even in opposition to proof of a contrary nature. Equitable estoppels, therefore, only arise when the conduct of the party estopped is fraudulent in its purpose, or unjust in its result, which forms the material distinction between the common law doctrine of estoppel and that which has grown up under the influence of equity in modern times. This entire doctrine has been examined and settled in this court in repeated instances as may be seen by the cases in our books. Kinney v. Farnsworth, 17 Conn. 360; Middleton Bank v. Jerome, 18 Conn. 450; Noyes v. Ward, 19 Conn. 250; Whitaker v. Williams, 20 Conn. 98; Emmons v. Gibbings, 24 Conn. 538. Let this doctrine be applied to the respondent and his course of conduct, and we must see that it is not for him, with his money in his pocket, to call in question the character of the party who has loaned him the money and taken his mortgage. If further authority is wanted we refer to Worcester Medical Society v. Harding, II Cush. 285, which is exactly this case, and in which the court promptly overruled this objection. Stow v. Wyse, 7 Conn. 214; Narraganset. Bank v. Atlantic Silk Co., 3 Met. 282; Congregational Society in Troy v. Perry, 6 N. H. 164; Dutchess Cotton Manufacturing Co. v. Davis, 14 Jones, 238; Eaton v. Aspinwall, 6 Duer 176; McFarlon v. Triton Ins. Co., 4 Denio 392; Schenectady & Saratoga Plankroad Co. v. Thatcher, 1 Kern 108; Palmer v. Lawrence, 3 Sandf. 161; All Saints Church v. Lovett, 1 Hall Sup. Ct. 191.

It has been claimed that the respondent is estopped under the common law rule, by the statement in his deed that there is such a corporation as the plaintiff's from whom he has borrowed the money and to whom he has executed his mortgage deed. But passing this, we decide that this fact, with the others to which we have alluded are sufficient to constitute a good equitable estoppel, which is sufficient for the present case. It is stronger than the common case of landlord and tenant where rent has been paid, which is a good estoppel.

There is still another ground of objection to the claim of the respondents, to which allusion has previously been made, to wit, that this corporation, having enjoyed its franchises so long, can be called in question only by the government, and can be reached only by quo warranto, if the government feel that here has been an unwarrantable exercise of corporate power. There is perhaps force in this objection, but it is not necessary for us to consider it.

Our conclusion is that the petitioners are entitled to a good and perfect deed from the respondent and a decree for a foreclosure for the whole note; and this is our advice.

In this opinion the other judges concurred.
Decree advised for plaintiffs.

Note. See, 1829, Hamtramck v. Bank of Edwardsville, 2 Mo. 169; 1833, The Congregational Society v. Perry, 6 N. H. 164; 1839, Bank v. Allen, 11 Vt. 302; 1843, Proprietors of Quincy Canal v. Newcomb, 7 Metc. (Mass.) 276; 1853, Worcester Med. Inst. v. Harding, 11 Cush. (65 Mass.) 285; 1855, Henderson R. Co. v. Leavell, 55 Ky. (16 B. Mon.) 358; 1860, Jones v. Cincinnati Type Foundry Co., 14 Ind. 89; 1861, Wood v. Coosa & C. R. Co., 32 Ga. 273; 1862, Washington College v. Duke, 14 Iowa 14; 1868, Cochran v. Arnold, 58 Pa. St. 399, supra, p. 625; 1878, Cahall v. Citizens' Mut. B. Assn., 61 Ala. 232; 1880, Humphreys v. Mooney, 5 Colo. 282; 1881, St. Louis Gas L. Co. v. St. Louis, 11 Mo. App. 55; 1881, Central Ag. & Mech. Assn. v. Alabama G. L. Ins. Co., 70 Ala. 120; 1883, Imboden et al. v. The Etowah & B. B. M. Co., 70 Ga. 86, on 107; 1883, Whitford v. Laidler, 94 N. Y. 145; 1886, Town of Searcy v. Yarnell, 47 Ark. 269; 1886, Singer Mfg. Co. v. Bennett, 28 W. Va. 16; 1887, Fresno Canal & I. Co. v. Warner, 72 Cal. 379, 14 Pac. Rep. 37; 1889, McCord & N. M. Co. v. Glenn, 6 Utah 139, 21 Pac. Rep. 500; 1889, Cravens v. Eagle Cotton Mills Co., 120 Ind. 6, 21 N. E. Rep. 981; 1891, Bon Aqua Imp. Co. v. Standard F. I. Co., 34 W. Va. 764, 12 S. E. Rep. 771; 1892, Perine v. Grand Lodge A. O. U. W., 48 Minn. 82, 50 N. W. Rep. 1022; 1895, Johnston v. Gumbel, 19 South. 100; 1896, Livingston Loan & B. Assn. v. Drummond, 49 Neb. 200, 68 N. W. Rep. 375; 1896, Tuckasegee Min. Co. v. Goodhue, 118 N. C. 981; 1898, Carroll v. Pacific Nat'l Bank, 19 Wash. 639, 9 Am. & E. C. C. (N. S.) 202, holding that a dealer with an apparent corporation will be estopped from denying the corporate existence, if it would prejudice third parties; 1898, Jones v. Hale, 32 Ore. 465, 52 Pac. Rep. 311; 1898, Grande Ronde L. Co. v. Cotton, 12 Colo. App. 375, 55 Pac. Rep. 610. But compare Jones v. Aspen Hardware Co., supra, p. 637.

Sec. 175. Same.

(b) Who seek to hold members of the corporation liable as partners, or individually liable.

SNIDER'S SONS' CO. v. TROY.1

1890. IN THE SUPREME COURT OF ALABAMA. 91 Alabama Rep. 224-233.

This action was brought by the Louis Snider's Sons' Company, a corporation created under the laws of Ohio, against D. S. Troy, and was commenced on the 15th of February, 1890. The complaint contained a single count, which claimed $827.92 for goods consisting of paper and other printing materials, sold by plaintiffs in March, April, May and July, 1888, to or on the order of the Dispatch Publishing Company, then publishing a newspaper in the city of Montgomery. The complaint alleged that said publishing company was at the time a partnership, and defendant was one of the partners; that the company claimed to be a corporation under the laws of Alabama, but was never, in fact, incorporated; that it was insolvent when plaintiff's account matured, and has ceased to do business.

The defendant filed a special plea, alleging that on the 2d day of October, 1885, he and two other persons named, filed in the office of the judge of probate of Montgomery county a declaration in writing 1 Arguments omitted.

for the formation of a corporation under the name of the Dispatch Publishing Company, stating the substance of the declaration, "all of which will more fully appear by reference to the same, a copy of which, with the indorsements thereon, is hereto attached as an exhibit, and made a part of this plea; that this defendant and his associates, immediately after the filing of said declaration as aforesaid, proceeded to organize said Dispatch Publishing Company, by electing a board of directors consisting of three members, as by law provided, and, on the organization of said company as aforesaid, commenced doing business under the name and style of the Dispatch Publishing Company, by the publication of a newspaper in said city of Montgomery; that the debt now sued for was contracted by said company as such corporation, and not otherwise; that plaintiffs knew that said company was doing business as a corporation, and made said contract with it as a corporation, and not as a partnership or association of individuals, and dealt with it as a corporation, and sold said bill of goods to it as a corporation, and not in any other capacity whatsoever."

The court overruled a demurrer to this plea, and its judgment is assigned as error.

CLOPTON, J. A corporation de facto exists, when from irregularity or defect in the organization or constitution, or from some omission to comply with the conditions precedent, a corporation de jure is not created, but there has been a colorable compliance with the requirements of some law under which an association might be lawfully incorporated for the purposes and powers assumed, and a user of the rights claimed to be conferred by the law-when there is an organization with color of law and the exercise of corporate franchises. Meth. E. Un. Church v. Pickett, 48 N. J. L. 599.

The enabling law, under which a corporation for the purposes and objects of the Dispatch Publishing Company, and with the powers assumed, might have been lawfully created at that time, is contained in sections 1803-1812 of the Code of 1876, and the amendatory acts, which authorize and provide for the incorporation of two or more persons desirous of forming a private corporation for the purpose of carrying on any industrial or other lawful business not otherwise specially provided for by law. Acts 1882-3, p. 40. The plea avers that defendant and two other named persons filed, September 2, 1885, with the judge of probate of Montgomery county a written declaration, signed by themselves, setting forth substantially the matters required by the statute, except the residences of the persons; that they organized by the election of three directors, and commenced and continued to do business in a corporate capacity, and were so doing business when the debt sued for was contracted. If the averments of the plea be true, the truth of which is admitted by the demurrer, the Dispatch Publishing Company was an association having capital stock divided into shares, organized by the election of officers, transacting business and exercising franchises, functions and powers, after an at42-WIL. CASES.

tempted incorporation-as if it were a corporation de jure-a colorable compliance with the requirements of an existing and enabling law, and user of the rights claimed to be conferred thereby-the essential elements of a corporation de facto. Cen. Agr. & Mech. Assn. v. Alabama Gold Life Ins. Co., 70 Ala. 120.

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Appellant seeks by the action to hold defendant, who was a member, liable as a partner for paper and other supplies sold to the Dispatch Publishing Company. Whether the shareholders in a corporation de facto are individually liable for the corporate debts, in the absence of fraud or a statute, is a question as to which the authorities are in direct antagonism. In Cook on Stock and Stockholders, § 233, the doctrine asserted is: "A corporate creditor, seeking to enforce the payment of his debt, may ignore the existence of the corporation, and may proceed against the supposed stockholders as partners by proving that the prescribed method of becoming incorporated was not complied with by the company in question." The leading cases supporting this doctrine are Bigelow v. Gregory, 73 Ill. 197; Abbott v. Omaha Smelt. Co., 4 Neb. 416; Garrett v. Richardson, 35 Ark. 144; Ferris v. Thaw, 72 Mo. 446; Richardson v. Mayo, 40 Ohio St. 9; Coleman v. Coleman, 78 Ind. 344. We have omitted reference to a few cases sometimes cited, for the reason, either the question on liability as partners was not before the court, as in Blanchard v. Kaull, 44 Cal. 440, or the debt was contracted before any steps were taken, other than the mere filing of a certificate, toward organization, as in Porpoise Fish Co. v. Bergen, 13 Amer. & Eng. Cor. Cas. 1, or it was contracted after the expiration of the charter by its own limitation, without reorganization, as in Nat. Bank v. Landon, 45 N. Y. 410. In the case last cited the shareholders entered into a special agreement which by its terms created a partnership as to third persons. In 2 Morawetz on Corporations, § 748, the doctrine is stated as follows: "If an association assumes to enter into a contract in a corporate capacity, and the party dealing with the association contracts with it as if it were a corporation, the individual members can not be charged as parties to the contract, either severally or jointly, or as partners. The following cases maintain the doctrine that the members of a corporation de facto can not be held liable as partners for the corporate debts: Fay v. Noble, 7 Cush. 188; First Nat. Bank v. Avery, 117 Mass. 476; Stout v. Žulick, 48 N. J. L. 599; Plan. Bank v. Padgett, 69 Ga. 164; Mer. & Man. Bank v. Stone, 38 Mich. 779; Humphrey v. Mooney, 5 Cal. 282; Cen. City Sav. Bank v. Walker, 66 N. Y. 424; Gartside Coal Co. v. Maxwell, 22 Fed. Rep. 197; Whiting v. Wyman, 101 U. S. 392.

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The plea and demurrer do not raise the question of the liability of the supposed stockholders as partners, where there has been no intention or attempt to incorporate; where they are acting as a body corporate, without even color of legislative authority-sheer usurpation. The plea avers that the debt sued for was contracted by the Dispatch Publishing Company, which is alleged to have been a de facto corporation, and that plaintiff sold the goods to and contracted with the com

pany as a corporation, knowing that it was doing business as such. The question before us, and the only question we propose to decide, is, whether, there being no fraud alleged nor statute making the stockholders individually liable, a creditor who has dealt with a de facto corporation as a corporation, who has entered into contractual relations with it in its corporate name and capacity, can disregard the existence of the corporation, and, electing to treat it as a partnership, enforce the collection of his debt from the stockholders individually? The conflicting authorities afford aid in the solution of this question only so far as their opinions may be in accord with settled principles and sustained by reason. Though it is an undecided question in this state, principles have been well settled which materially bear upon the inquiry, and mark the way to a correct conclusion.

Corporations may exist either de jure or de facto. If of the latter class, they are under the protection of the same law and governed by the same legal principles as those of the former, so long as the state acquiesces in their existence and exercise of corporate functions. A private citizen, whose rights are not invaded, who has no cause of complaint, has no right to inquire collaterally into the legality of its existence. This can only be done in a direct proceeding on the part of the state, from whom is derived the right to exist as a corporation, and whose authority is usurped. This principle was clearly and emphatically declared in Lehman v. Warner, 61 Ala. 455, in the following language: "The corporation must of necessity be presumed to be rightfully in possession of the franchise, and rightfully to exercise the power which the legislative grant confers. Individual right is not invaded, if the negative is true in fact, and there is usurpation. It is the state-the sovereign-whose rights are invaded and whose rights are usurped. The individual could not create the corporation, could not grant, define, limit its powers, and no grant of these by the sovereign can lessen his rights. There can consequently be no cause of complaint by the citizen, and no right to inquire whether the corporate existence is rightful-de jure or merely colorable." Taylor on Corp., § 145; 4 Am. & Eng. Enc. of Law 198. The creditor can not proceed against the stockholders as partners without proving non-compliance with prescribed conditions precedent, thus inquiring collaterally, not into the fact, but the legality of its existence.

It is also an established rule of general application that a party who contracts with a corporation exercising corporate powers and performing corporate functions-existing as a de facto corporation-in its corporate name and capacity, will not be permitted, in a suit on the contract, to deny and disprove the rightfulness of its existence. 4 Am. & Eng. Ency. of Law 198. In Swartwout v. Michigan Air Line R. Co., 24 Mich. 390, Cooley, J., declares the rule as follows: "Where there is thus a corporation de facto, with no want of legislative power to its due and legal existence, when it is proceeding in the performance of corporate functions, and the public are dealing with it on the supposition that it is what it professes to be, and the questions are only whether there has been exact regularity and strict

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