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sec. 6); and every defect, formal or vital, will be cured if the legislature recognizes the pretended corporation as one validly existing. (Basshor v. Dressel, 34 Md. 510; Koch v. Railroad Co., 75 Md. 226; Munich Co. v. Surety Co., 113 Md. 225).1

Fourth. Sometimes a statutory requirement in terms merely suspends corporate activity. For example, a Maryland taxing statute provides that certain classes of corporations, whether created by special charter or formed under a general law, shall pay to the State upon incorporation a bonus of one-eighth of one per cent. upon the amount of the authorized capital stock; and it is declared that until such bonus has been paid to the State Treasurer, the corporation shall not "have or exercise any corporate powers." In Maryland Tube Works v. West End Improvement Co., 87 Md. 208, it was held that the provision forbidding the having or exercising of any corporate powers, "included generally suits by or against the corporation," and that, having failed to pay the tax, the appellant's right to sue was as effectively denied as if there had been a judgment forfeiting its charter prior to the suit."

1 The principle, in these and similar cases, is broadly stated; and the result seems to be that, by recognition, the legislature can give life to a corporation which, by the Constitution, it could not originally have created. See I Thompson Corporations, sec. 512.

2 There is in the law (Code 1911, art. 81, sec. 101) a provision that the State may sue the corporation in default, and if the judgment in such suit shall not be paid within two years, the charter shall be "decreed to be forfeited and annulled ipso facto." For most purposes, it is immaterial whether the result of failure to pay the bonus tax is non-existence or merely suspended animation. See Cleaveland v. Mullin, 96 Md. 598; State v. Consolidated Gas Co., 104 Md. 368; Shutter Bar Co. v. Zimmerman, 110 Md. 317. A subscription made before but ratified after payment of the tax, is binding. Murphy v. Wheatley, 102 Md. 501.

§ 28. Conditions subsequent. The charter or the general law may prescribe acts to be done after corporate birth. Non-performance gives to the state the right to take proceedings for forfeiture of the charter; but does not otherwise affect corporate existence. As in the case of precedent conditions, the difficulty is not so much in the rule as in its application; and sometimes the distinction between causes of prevention and causes of forfeiture is finely drawn. In Hammond v. Straus, 53 Md. 14, a charter provided that when a certain percentage of the share capital had been paid in, the payment certified to the State Treasurer and a certificate of organization transmitted, "and not before, the incorporators shall be entitled to all the benefits and privileges herein conveyed or intended to be conveyed." The court held that this language did not import a condition precedent.1 Conditions subsequent may, however, by the express terms of a statute, be made self-executing and of their own force terminate corporate existence in cases of non-performance.2

§ 29. No such corporation. If logic instead of experi

1 And see the learned opinion in Munich Co. v. Surety Co., 113 Md. 222,-distinguishing Franklin Insurance Co. v. Hart, 31 Md. 59. Also, Wells v. Gastonia Co., 198 U. S. 177.

2 Maryland Tube Works v. West End Improvement Co., 87 Md. 216, quoting with approval 5 Thompson Corporations, sec. 6587; Nicolai v. Maryland Agric. Asso., 96 Md. 324.

Code 1911, Art. 23, secs. 120-122, provides for organization and payment of the bonus tax within two years from the date of charter granted; otherwise, the dormant corporation "shall be conclusively presumed to have surrendered all corporate or charter rights." Art. 81, sec. 99, provides that certain defaults on the part of a corporation "shall be deemed to amount to and shall constitute a forfeiture of the charter." The former provision was, inter alia, discussed in Murphy v. Wheatley, 102 Md. 501, and held not to be self-executing.

ence were the life of the law, nul tiel corporation, as the old phrase went, would be a good defense to every claim by, against or under a pretended corporation. Because corporate personality is a state concession, a group can never become a body corporate simply by pretending to be such. A special charter is merely a proposal until its terms are accepted; a general incorporation law is a standing offer to those who comply with its provisions, and in no other way than by acceptance and compliance can a corporate person be brought to the birth. But suppose that titles are taken and conveyed; that contracts are made and liabilities incurred in the name of a supposed corporation,-what are the rights and liabilities of the parties? No concise answer can be given to this question because the law on the subject is a part of chaos. It is always the right of the state to inquire by what warrant a corporation presumes to exist; but whether and when the question may be raised by private litigants, decisions differ.

There are three principal views: (1) That corporate existence is always open to inquiry and may be denied by the pretended corporation or by any person interested in denying it. (2) That where you have (a) a special or a general law under which the pretended corporation might have been formed; (b) an attempt in good faith to organize thereunder; and (c) an actual user of the corporate franchise, then you have a corporation de facto, and until the state questions its existence, no one may. But in this view there can be no corporation de facto, where there could be

1 The weight of authority favors the de facto rule, except where it is sought to be applied to conditions not within its intent and purpose, such, for example, as cases of eminent domain and stock subscriptions. See, for a good discussion of the conflicting opinions on the subject generally, Harvard Law Review, xxv, 623.

none de jure (Tulare District v. Shepard, 185 U. S. 14). (3) That where parties have undertaken to deal as with a corporation, both it and they, in any proceeding growing out of such dealing, are estopped to deny its existence.

The distinction between the second and third views is sometimes confused. Where de facto corporations are recognized and the three requisites concur, you have an entity that is a corporation de jure against all persons but the state. On the other hand, the estoppel doctrine is applied only to the facts of each particular case and may be invoked even where there is no corporation de facto. For example, one who has given credit to what both parties supposed to be a corporation, would not be allowed to sue the stockholders as partners,-even if one or more of the requisites of a de facto corporation were absent.1

§ 30. The Maryland law. The first view, namely, that "the legal existence of a corporation is always open to inquiry" may be said to have been the rule in this State prior to the legislation of 1908,-presently discussed. The de facto doctrine has been explicitly rejected as opposed to public policy and the application of estoppel has been denied; 2 but there are, nevertheless, cases in which, sometimes

1 This confusion of ideas appears in Jones v. Aspen Hardware Co., 21 Col. 263, cited in 87 Md. 217 and 110 Md. 318. See comment in I Wilgus Corporations, 629 and 671. Where the de facto theory exists, there is no need for invoking an estoppel.

2 Boyce v. Church, 46 Md. 369, where the estoppel rule would have prevented an unjust result; Smith v. Silver Valley Mining Company, 64 Md. 94,—with which compare Cannon v. Brush Electric Company, 96 Md. 446; Bonaparte v. Railroad Company, 75 Md. 340; Maryland Tube Works v. Improvement Company, 87 Md. 215; Cleaveland v. Mullin, 96 Md. 605. Compare Isaac v. Emory, 64 Md. 333 and Jones v. Linden Building Asso., 79 Md. 73.

upon grounds involving estoppel and sometimes upon the ground of collateral attack, inquiry into corporate existence has been excluded.1

§ 31. Act of 1908 (Code 1911, Art. 23, sec. 6). This provides that: "No certificate of incorporation shall be declared void for formal defects merely; and where an effort has been made in good faith to form, under the laws of this State, a corporation formable thereunder, neither party to any transaction with it shall deny the legality of its incorporation or organization in any suit or proceeding growing out of such transaction; and 'transaction' shall include any wrong to person or property giving rise to a cause of action or equitable relief by or against such corporation." The purpose of this provision was to prevent attack on corporate existence for formal defects in any case; and for any defects in two cases: (a) Where the defendant, pleading its own or the plaintiff's non-existence, has dealt on a corporate basis in the transaction out of which the suit arises; and (b) where, in the absence of any such dealing, the defendant so setting up its own or the plaintiff's defective incorporation, is sued as a wrongdoer. Cases in which there has been no dealing on a corporate basis, and in which the pretended corporation is asserting rights dependent upon valid

1 Maltby v. Railroad Company, 16 Md. 422; Franz v. Building Association, 24 Md. 259; Laflin v. Sinsheimer, 46 Md. 315; Keene v. Van Ruth, 48 Md. 184; Pott v. Schmucker, 84 Md. 551. In Maryland Tube Works v. Improvement Company, 87 Md. 215, it is said of some of these cases that they dealt with "legally existing bodies capable of acting." For a true and a mistaken conception of collateral attack, compare Lord v. Essex Building Asso., 37 Md. 320, with Keene v. Van Ruth, supra.

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