Mo. 128, relied upon by the counsel for the plaintiffs, furnishes a distinct answer to this inquiry. The first case was a suit upon a note executed by certain individuals as directors assuming to represent a corporation which had no legal existence, and this court held that the parties who signed the note were liable thereon. In the case last named certain members of an inchoate corporation, whose incorporation was incomplete by reason of a failure to file the articles of association with the secretary of state, advanced money for the benefit of the joint enterprise under obligations incurred by them upon the supposition that the association was duly incorporated, and they were adjudged to be entitled to contribution from their associate members. beyond the amount of stock severally subscribed for by such associThe effect of this decision is to create the relation and liability of partners as between the members of an unincorporated association, so far as the debts of the association contracted in good faith and paid by any of its members are concerned, and to establish a different rule from that laid down in Ward v. Brigham, 127 Mass. 24. The decision of this court is supported by the cases of Hill v. Beach, 12 N. J. Eq. 31 Hodgson v. Baldwin, 65 Ill. 532; Flagg v. Stowe, 85 IN. 164. Vide, also, Ferris v. Thaw, 72 Mo. 446.

ates.

In Pettis v. Atkins, 60 Ill. 454; Bigelow v. Gregory, 73 Ill. 197; Abbott v. Smelting Co., 4 Neb. 416; Frost v. Walker, 60 Maine 468; Wells v. Cates, 18 Barb. 554; National Union Bank v. Landon, 45 N. Y. 410, and Tappan v. Bailey, 4 Met. 529, it is held that members of an unincorporated association, notwithstanding their subscription and payment for a specified number of shares of the capital stock of the association, are liable as co-partners for the debts of the association. These decisions we regard as applicable to the case at bar. By reference to the testimony it will be seen that in 1875, more than a year before the articles of association were signed by the defendants, the store was established and shares of stock were subscribed for and Woods was appointed to make the purchases and superintend the sales. All this was done, it is true, with the understanding that the promoters of the enterprise were to become a corporation, and the purpose of the promoters undoubtedly was to limit their liability to the amounts severally subscribed by them.

If by reason of an unexecuted intention to become a corporation the defendants could carry on the business of merchandising from 1875 until May, 1877, without incurring in the meantime the liability of partners, we do not see why they could not have continued so to act as a corporation for a much longer period, buying and selling through an agent, and enjoying all the privileges of a corporation without being liable to be sued as such. No mere intention on the part of the members of an unincorporated association to be a corporation will suffice to restrict their individual liability to that imposed by the statute upon corporate shareholders. Not being a corporation, their liability can not be a corporate liability, but must be that of a joint-stock company, unless the provisions of the statute in relation to limited partnerships shall have been complied with, of which

there is not even the slightest intimation in this case. There is no question but that the goods were purchased by Woods of the plaintiffs for the defendants, and went into the store of the defendants, and were sold by Woods for their benefit, and a ruling which would turn the plaintiffs out of court, and compel them to collect the whole amount of their claims from Woods, or the directors in charge, who could in turn go against the defendants for contribution under the decision of this court in Richardson v. Pitts, supra, would be not only manifestly unjust, but utterly indefensible. Under the logic of the case last cited, the defendants are liable as partners directly to the plaintiffs for the debts of the association incurred before they became incorporated.

For the depts incurred after they became a corporation, their liability will depend upon the fact of actual notice of their incorporation to the plaintiffs at the time such debts were incurred. When partners have dealt as such with a seller, and after becoming incorporated, continued to deal as before, having their bills made in the same way, without giving any notice of their altered condition, they will continue to be liable as partners, unless the seller have knowledge thereof derived from some other source. Whether the plaintiffs had such notice or knowledge is a question of fact for the jury. For the reasons given, the judgment will be reversed, and the cause remanded. All the judges concur.

Note. See, 1857, Abbott v. Aspinwall, 26 Barb. (N. Y.) 202; 1858, Hill v. Beach, 12 N. J. Eq. 31; 1866, Medill v. Collier, 16 Ohio St. 599; 1874, Stowe v. Flagg, 72 Ill. 397; 1874, Whipple v. Parker, 29 Mich. 369; 1877, Flagg v. Stowe, 85 Ill. 164; 1878, Jessup v. Carnegie, 12 Jones & S. (N._Y.) 260; 1880, Ferris v. Thaw, 72 Mo. 446; 1881, Coleman v. Coleman, 78 Ind. 344; 1881, Kaiser v. Lawrence Sav. Bank, 56 Iowa 104, 41 Am. Rep. 85; 1883, Clegg v. Hamilton & W. Co. G. Co., 61 Iowa 121; 1884, Robinson v. Harris, 5 Ky. L. R. 928; 1884, Bamberger v. White, 6 Ky. L. R. 292; 1885, Smith v. Warden, 86 Mo. 382; 1891, Empire Mills v. Alston Grocery Co., 4 Texas App. 346, 12 L. R. A. 366; 1895, Taylor v. Branham, 35 Fla. 297, 17 So. Rep. 552; 1895. Jones v. Aspen Hardware Co., 21 Colo. 263, 52 Am. St. Rep. 220, supra, p. 637; 1896, Lehman v. Knapp, 48 La. Ann. 1148, 20 So. Rep. 674; 1896, New York Nat'l Ex. Bank v. Crowell, 177 Pa. St. 313, 35 Atl. Rep. 613; 1897, Liebold v. Green, 69 Ill. App. 527; 1898, Weir Furnace Co. v. Bodwell, 73 Mo. App. 389; 1899, Hequembourg v. Edwards, 155 Mo. 514, 50 S. W. Rep. 908; 1899, Christian & C. G. Co. v. Fruitdale L. Co., 121 Ala. 340, 25 So. Rep. 566. But see, supra, p. 625. Beach, § 162; Clark, § 45; Elliott, § 83; Morawetz, § 748; Taylor, §§ 148, 739; I Thompson, §§ 218, 506; III Thompson, §§ 2940, 2968-2993.

Sec. 180. (2) Does not result in a partnership liability; but if any liability, either a corporate one, or one resting only upon those who have participated in the acts, or authorized them to be done, or ratified them.

FAY AND ANOTHER V. NOBLE AND OTHERS.

1851. IN THE SUPREME JUDICIAL COURT OF MASSACHUSETTS. 7 Cushing's (Mass.) Rep. 188-194.

This was a replevin for seventy-two tons of pig iron. The defendants pleaded the general issue, and specified in defense a title in themselves under a mortgage from the West Boston Iron Company.

At the trial in the court of common pleas, before Wells, C. J., the following facts were in evidence: "Prior to May, 1848, Leonard Fuller and one Kendall owned and carried on at Boston a machine shop and an establishment for making iron castings. On the 22d of March, 1848, they, with others, were incorporated as a manufacturing corporation, under the name of the West Boston Iron Company, for the purpose of carrying on the same business (St. 1848, ch. 70, 8 Special Laws 879); and in May, 1848, attempted to and supposed they did organize as such corporation; and Fuller and Kendall then transferred the real and personal estate employed by them in said business to the corporation, receiving payment therefor in shares of stock in the corporation. The shares so received by Fuller amounted to more than three-fourths of the whole number of shares into which the capital stock purported to have been divided. From the time of this supposed organization until November, 1848, Fuller acted as the general agent of the company, and, on the 25th of September, 1848, purporting to act in that capacity, borrowed money of the plaintiffs, gave the note of the company therefor, and conveyed the pig iron in question to the plaintiffs as collateral security for its payment.

The plaintiffs put into the case the records of said supposed organization and of the proceedings under the same, and contended that, from an inspection of these records, it appeared the company had not been legally organized as a corporation; and so the court rules against the objection of the defendants. Two witnesses, called by the plaintiffs, testified, in answer to questions by the defendants, that the proceedings therein recorded were truly set forth. To this evidence the plaintiffs objected, but the judge admitted it as evidence of the actual agreement of the associates among themselves whether they were to be regarded as corporators, as partners or otherwise, as to the manner in which the business should be transacted and of the extent of the authority given to Fulier as their agent.

In November, 1848, a reorganization of the company as a corporation took place, and on the 14th of that month the corporation so reorganized conveyed all their property to the defendants by the mort

gage relied on by the defendants, who took possession under this mortgage of the iron in controversy.

The plaintiffs requested the judge to instruct the jury, among other things, that, as there had been no legal organization of the corporation at the time of the conveyance to the plaintiffs, the parties then holding shares therein and conducting the business for their common benefit were in law to be deemed partners, and could not, by any agreement among themselves limit the power of the members as such so as to affect the plaintiffs, unless knowledge of such limitation was brought home to the plaintiffs, the burden of proving which was on the defendants; that Fuller, as one of the partners and the managing partner and principal owner, had full powers to give the notes of the company to raise money and pledge their property for the payment thereof; and that although Fuller dealt with the plaintiffs as agent, they were not estopped to show and avail themselves of the fact that he was actually a partner and principal owner.

The presiding judge submitted the case to the jury, with instructions upon this point, of which the following is the material part:

"The proceedings, prior to November, 1848, did not prove a legal organization of the corporation, and consequently no corporate acts were done prior to November, 1848, when the new organization was effected. But, although not acting as a corporation, the individual associates were acting as an association connected together for the purpose of carrying on business; this association was not necessarily a partnership, with the usual powers and liabilities of a partnership, but it was a question of fact what were the terms of this agreement of association; and it being testified and proved that the writings offered as records of the corporation contained a true statement of the acts of the associates, these writings were admissible evidence to prove the actual agreement of the associates as between themselves; and it was for the jury, from this and other evidence, to determine what this agreement of association was. If it was a partnership without any limitation as to the powers of the individual members, each partner had a right to bind the partnership by a contract made for partnership purposes; and among other powers, had a right to borrow money in the name of the partnership, and pledge the partnership property as security for repayment. It was, however, competent for partners to limit the powers of individual members of the company by an agree ment that the conduct of the business should be confided wholly to the management of agents chosen for that purpose; and where this was done, a partner not selected as agent could not bind the company by an agreement with an individual who knew the fact that the power of transacting the business of the concern had been delegated to these agents."

The jury returned a verdict for the defendants, and the plaintiffs excepted.

BIGELOW, J. Upon the evidence introduced at the trial of this case in the court below, the presiding judge ruled that prior to November, 1848, there was no legal organization of the corporation called the

West Boston Iron Company, and therefore no corporate acts were done prior to that time. The whole case was tried and submitted to the jury on this assumption. As this point was so ruled at the request of the plaintiffs, and as the verdict was in favor of the defendants, no exception was taken thereto, and we are not called upon to determine its correctness.

The plaintiffs contended and asked the court to rule that inasmuch as there had been no legal organization of said corporation prior to November, 1848, the parties holding shares in said unorganized corporation were in law to be deemed co-partners and subject to all liabilities as such. The court did not give this precise instruction to the jury, but directed them in substance that said parties, by virtue of their being subscribers for and holders of stock in said company, were either general co-partners, with the usual powers and liabilities as such, or co-partners acting under certain restrictions and limitations. as to the rights and duties of individual members and through an agent with limited authority, and it was left to the jury to determine upon the nature and character of this co-partnership, and also the authority of Fuller as agent or co-partner to act in its behalf.

It seems to us, upon careful consideration of the case, that these instructions were not warranted by the facts proved, and although they do not form the precise ground of the exceptions taken by the plaintiffs, yet we think them so erroneous as to render it necessary to order the case to a new trial.

We are not aware of any authority, certainly none was cited at the argument, to warrant the instruction that in consequence of an omission to comply with the requisitions of law in the organization of a corporation, by which its proceedings were rendered void, persons who had subscribed for and taken stock in the company thereby became co-partners. The doctrine seems to us to be quite novel and somewhat startling. Surely it can not be, in the absence of all fraudulent intent (and none was proved or alleged in this case), that such a legal result follows as to fasten on parties involuntarily, for such a cause, the enlarged liability of co-partners; a liability neither contemplated nor assented to by them. The very statement of the proposition carries with it a sufficient refutation. No such result can follow unless a principle of law be established, founded on no authority, and required by no public exigency. Corporations are known and recognized legal entities, with rights and powers clearly defined and well understood, and wholly 'distinct and different from those of individuals and co-partnerships.. Persons who subscribe for and take stock in them are subject to certain fixed and limited liabilities, which they voluntarily assume, and these liabilities are not to be extended and enlarged so as to affect innocent parties beyond the letter of the law. A copartnership can not take upon itself the functions of a corporation, nor can a corporation or its members be made subject to the liabilities of a copartnership, in the absence of all statutory provisions imposing such liabilities. The personal liability of the members of a jointstock company or co-partnership is inconsistent with the character and