and directors,57 or the members or stockholders 58 of an association which assumes to act as a corporation without incorporating or organizing in compliance with the law. § 4283. Members as partners inter se. In some of the states in which it is held that the members of an association who assume to act as a corporation without incorporation are liable as partners, the courts have gone further and have held them to be in the position of partners inter se, both for the purpose of determining and protecting their rights in the property of the association,59 and for the purpose of holding them liable to contribution where the managing members are held liable for more than their proportion of the indebtedness of the association,60 provided they are not estopped to deny the 57 See 2623 et seq., supra. 58 See 84158, supra. 59 Illinois. Flagg v. Stowe, 85 Ill. 164. Indiana. Coleman v. Coleman, 78 Ind. 344. Louisiana. Factors' & Traders' Ins. Co. v. New Harbor Protection Co., 37 La. Ann. 233; African M. E. Church v. New Orleans, 15 La. Ann. 441. Maine. Smith v. Schoodoc Pond Packing Co., 109 Me. 555, 84 Atl. 268. Michigan. Doyle v. Mizner, 42 See also Fre Mich. 332, 3 N. W. 968; Whipple v. 37 Mich. 476. In Smith v. Schoodoc Pond Packing Co., 109 Me. 555, 84 Atl. 268, it was held that since the members of a defectively organized corporation were Iliable to creditors as partners, and since it was their understanding that they wcre to share equally in the profits of the business conducted by the purported corporation, they were entitled to an equal division of the profits on the cessation of such business, and that a receiver would be appointed to make the distribution. In Stowe v. Flagg, 72 Ill. 397, it was held that property agreed to be put into a proposed corporation as capital stock had never become cor porate property, but belonged to the incorporators as an association of individuals, so that one of them was entitled to maintain a bill against the others for relief in respect to it. See Lincoln Park Chapter No. 177 Royal Arch Masons v. Swatek, 204 Ill. 228, 68 N. E. 429, where a bill for an accounting was dismissed on the ground that there was a de facto corporation and the complainant was estopped to deny its existence. Compare Bushnell v. Consolidated Ice Mach. Co., 138 Ill. 67, 27 N. E. 596, where, however, the complainant was held to be estopped to deny the existence of the corporation. 60 Flagg v. Stowe, 85 Ill. 164; Richardson v. Pitts, 71 Mo. 128. In Sanders & Walker v. Herndon, 32 Ky. L. Rep. 1362, 108 S. W. 908, 33 Ky. L. Rep. 669, 110 S. W. 862, it was held that where an attempted incorporation was invalid the incorporators were liable as partners and liable to contribute as such, See also Warring v. Arthur, 98 Ky. 34, 17 Ky. L. Rep. 605, 32 S. W. 221, where the petition in an action for contribution by a member of a defectively organized corporation was held to be insufficient without deciding whether such an action would lie. existence of the corporation.61 The better opinion, however, is that they are not partners inter se in the absence of a partnership agreement between them, for there is not the same reason for recognizing such a relation as between themselves, contrary to their agreement, as there is for holding them liable to the persons dealing with them.62 "A partnership inter se can only be created by a direct understanding and agreement between the parties."63 And "persons cannot be made to assume the relation of partners, as between themselves, when their purpose is that no partnership shall exist. § 4284. Rights of associates as individuals. A contract to sell property to a supposed corporation is not void because it turns out not to be a corporation, since its members will take as partners under such circumstances.65 A receiver may enforce a contract made by it.66 And its stockholders have an equitable interest in its assets.67 It has been held that where, because of a failure to comply with the law, there is not even a corporation de facto, and the members of c1 See 350, supra. 62 London Assur. Co. v. Drennen, 116 U. S. 461, 29 L. Ed. 688; Heald v. Owen, 79 Iowa 23, 44 N. W. 210; Ward v. Brigham, 127 Mass. 24; Bolton v. Prather, 35 Tex. Civ. App. 295, 80 S. W. 666. 63 Bolton v. Prather, 35 Tex. Civ. App. 295, 80 S. W. 666. Hence they cannot be deemed partners inter se where they did not intend to become such, but, on the contrary, it was the distinct understanding that no such relation would be created. Bolton v. Prather, 35 Tex. Civ. App. 295, 80 S. W. 666. In Lincoln Park Chapter No. 177 Royal Arch Masons v. Swatek, 204 Ill. 228, 68 N. E. 429, and Bushnell v. Consolidated Ice Mach. Co., 138 Ill. 67, 27 N. E. 596, it is said that there must be an express or implied agreement in order to create a partnership as between the parties. In both of these cases, however, there were de facto corporations, and the complainant was held to be estopped. 64 London Assur. Co. v. Drennen, 116 U. S. 461, 29 L. Ed. 688. 65 Smith v. Texas & N. O. R. Co. (Tex.), 108 S. W. 819. 66 Cunningham v. Cleveland, 98 Fed. 657. 67 Persons who subscribe and pay for stock in an illegal corporation have an equitable interest in land bought by it and conveyed to a trustee for its benefit, which will be protected by a court of equity as against creditors of the trustee. Walker v. Taylor, 252 Ill. 424, 96 N. E. 1055. Where a lease was assigned to, and a building was erected upon the leased land by, a supposed corporation which had no legal existence because it was organized for an unlawful purpose, it was held that its stockholders who subscribed and paid for its stock, acquired an equitable interest in the property. Johnson v. Northern Trust Co., 265 Ill. 263, 106 N. E. 814. See also Imperial Bldg. Co. v. Chicago Open Board of Trade, 238 Ill. 100, 87 N. E. 167; State v. New Orleans Debenture Redemption Co. of Louisiana, 107 La. 562, 32 Sơ. 102. the association are therefore liable as partners, they are entitled to the advantages accorded to a partnership, and hence can sue as a copartnership on a contract made with the association.68 And it has also been held that they may sue, as individuals having a common interest in the business, for a libel alleged to have injuriously affected it.69 The sole owner of a bank which is not even a corporation de facto may lawfully dispose of its assets to pay or secure any of his creditors.70 The rights of promoters of corporations," and of the members of a partnership on its incorporation,72 have been considered in previous chapters. 68 Jones v. Aspen Hardware Co., 21 Colo. 263, 29 L. R. A. 143, 52 Am. St. Rep. 220, 40 Pac. 457. 69 National Shutter Bar Co. v. G. F. S. Zimmerman & Co., 110 Md. 313, 73 All 19. 70 Longfellow v. Barnard, 58 Neb. 612, 76 Am. St. Rep. 117, 79 N. W. 255. 71 See Chap. 5, supra. CHAPTER 57 AMENDMENT OR REPEAL OF CHARTER I. GENERAL CONSIDERATIONS § 4285. Introductory statement. § 4286. Definitions. § 4287. Power of legislature to amend or repeal in general. § 4288. Powers of Congress. II. CONSTITUTIONAL LIMITATIONS ON AMENDMENT CR REPEAL 4289. On powers of Congress. § 4290. Charter of corporation as contract. § 4291. Contract rights of corporations under general laws. § 4292. Charter as contract of public or municipal corporation. § 4293. What constitutes an impairment of the obligations of contracts-In gen § 4294. § 4295. § 4296. eral. - Of the contract between the corporation and its stockholders. Of the contracts between the corporation and third persons. - Of the contracts of public service corporations. § 4297. Legislation changing or affecting remedies. § 4298. Waiver of objection as to impairment of contract obligation. III. RESERVATION OF POWER TO ALTER, AMEND OR REPEAL 4299. In general. § 4300. Constitutional and statutory provisions-In general. § 4301. - Requirement of two-thirds vote of legislature. § 4302. - Construction of statutes. § 4303. Reservation of power as part of contract. § 4304. Effect of reservation of power upon legislative power. § 4305. Corporations affected. § 4306. Effect of legislative grant of irrepealable charter. § 4307. Bringing existing corporations within reserved powers. § 4308. Extent of reserved power-In general. Conditional power. - Impairment of vested rights. Illustrations of vested rights. Injustice to corporators prohibited. - Extent of reserved power to repeal-In general. § 4309. § 4310. § 4311. 4312. § 4313. § 4314. § 4315. § 4316. § 4317. Conditional power of repeal. - Extent of reserved power to alter or amend-In general. - Impairing or defeating objects of grant; grant of additional powers. § 4318. § 4319. Changes as fundamental and material and as incidental or auxiliary. Arbitrary and unreasonable amendments. § 4320. Contracts in contravention of reserved power to amend or repeal. IV. PARTICULAR ALTERATIONS, AMENDMENTS AND REPEALS § 4321. Banks. § 4322. Building and loan associations. § 4323. Change of name. § 4324. Consolidation and reorganization. § 4325. Contracts of corporations. § 4326. Contracts of stockholders. § 4327. Corporate reports. § 4328. Dams. § 4329. Ferries. § 4330. Franchises for use of streets. § 4331. Hotels. § 4332. Insurance corporations. § 4333. Master's and servant's rights and liabilities. § 4334. Railroad companies. § 4335. Rates and charges of railroads and other quasi public corporations. § 4336. Schools and colleges. § 4337. Sleeping car companies. § 4338. Street railroads. § 4339. Taxation. $ 4340. Extension of corporate charters. V. MODE OF AMENDING CHARTERS 4341. By legislative enactments. 84342. By courts. $4343. By corporations or their members. $4344. Procedure, registration, fees, etc. VI. ACCEPTANCE OF AMENDMENT 4345. Necessity of acceptance. 4346. Authority to accept. 4347. Power of majority to bind minority. 4348. Form, evidence and presumption of acceptance. § 4349. Repeal. VII. EFFECT OF AMENDMENT OR REPEAL 4350. Amendment-Effect in general. § 4351. § 4352. Burdens imposed. $4353. Presumptions as to validity of amendment or repeal; intent to repeal. $ 4354. Estoppel and laches as to amendment and acceptance. $4355. Enjoining illegal amendments. |