upon a condition precedent and are actually exercising corporate powers, it will be presumed as against all except the sovereign, that the condition has been performed.' But while a de facto corporation is estopped to deny its existence as to those who deal with it, this does not preclude proof of the subsequent cessation of its corporate functions. An association of persons cannot exist as a corporation de facto, unless they are capable of becoming a corporation de jure. And upon this principle a distinction is drawn between the cases of a de facto corporation irregularly formed under a valid law, and one whose want of corporate existence arises from the fact that the statute under which it claims to be incorporated is void. In the latter case there is held to be no colorable authority, and not even a de facto corporate existence. Thus a corporation organized under a void law cannot enforce a mort

Froislie, (1887) 37 Minn. 447; St. Paul Land Co. v. Dayton, (Minn. 1888) 40 N. W. Rep. 66; McDonnell v. Alabama Gold Life Ins. Co., (1889) 85 Ala. 401; Thompson v. New York R. Co., 3 Sandf. 625; Methodist Episcopal Church v. Pickett, 19 N. Y. 482; Elizabeth City Academy v. Lindsay, 6 Ired. 476; Grand Gulf Bank v. Archer, 8 Sm. & M. 151; Duke v. Cahawba Nav. Co., 10 Ala. 82; Bank of Circleville v. Remick, 15 Ohio, 222; Jones v. Tennessee Bank, 8 B. Mon. 122; Brouwer v. Appleby, 1 Sandf. 158; McFarlane v. Triton Ins. Co., 4 Denio, 392; People v. Manhattan Co., 9 Wend. 351; Bank of Toledo v. International Bank, 21 N. Y. 542; Holmes v. Gilliland, 41 Barb. 568; Fay v. Nobie, 7 Cush. 188; Ward v. Brigham, 127 Mass. 24; Salem National Bank v. Almy, 117 Mass. 476. Cf. Bigelow v. Gregory, 73 Ill. 197. But see Unity Ins. Co. v. Crane, 43 N. H. 636, and Cook County v. Chicago Industrial School for Girls, (1888) 125 Ill. 540, where it was held that in an action against the county

to compel payment for the support of dependent girls, the fact that plaintiff is a de facto corporation will not estop defendant from showing that it has no actual existence.

1 Cf. McGowan บ. American Pressed Tan Bark Co., (1887) 121 U. S. 575.

2 Spahr v. Farmers' Bank, (1882) 94 Pa. St. 429; Freeland v. Pennsylvania Central Ins. Co., (1882) 94 Pa. St. 504; Tar River Navigation Co. v. Neal, 3 Hawks, 520; Tar River Navigation Co. v. Elizabeth City Acad. emy, 6 Ired. 476; Rathbone v. Tioga Navigation Co., 2 Watts & S. 74.

Dobson v. Simonton, 86 N. C. 492. 4 Evenson v. Ellingson, (1887) 67 Wis. 634, deciding that as the laws of Wisconsin authorizing churches to organize as corporations make no provision for the organization of two churches into one corporation, a body of persons assuming to act as the board of trustees of a corporation de facto, composed of two churches in that State, act without authority.

gage made to it. But if not organized for an unlawful purpose, a receiver for it can demand in equity an accounting for the debt purporting to be secured thereby.?

§ 14. The same principle applicable to companies formed under general laws. The principle that the legality of corporate existence cannot be questioned collaterally, but can be impeached only by the State in direct proceedings for that purpose, applies as well to companies organized under general laws as to those created by special charter. When, under a general law for the formation of corporations, the articles of association have been lodged for record and the certificate of incorporation issued, a presumption arises that all the requirements of the enabling act have been complied with, and the certificate will be received as evidence of incorporation in the courts of the State, both as against all persons dealing

1 Burton v. Schildebach, (1882) 45 held inadmissible, the court deciding Mich. 504. that the mortgagee was entitled to

2 Burton v. Schildebach, (1882) 45 assume that the corporation de facto Mich. 504.

3 Stout v. Zulick, (1887) 48 N. J. 599. Cf. Granby Mining & Smelting Co. v. Richards, (1888) 95 Mo.

106.

4 Wood v. Wiley Construction Co., (1888) 56 Conn. 87, where it was held that in an action against a jointstock corporation on contracts entered into by it, in the absence of evidence as to the publication of its articles of organization before commencing business, as required by Conn. Gen. Stat. p. 311, § 5, it will be assumed that there is no legal bar to its transaction of business as a corporation. In Duggan v. Colorado Mortgage & Investment Co., (1888) 11 Colo. 113, the plaintiff, in an action of replevin against a sheriff, claimed the property under a mortgage from a de facto corporation. Defendant offered evidence to show the non-existence de jure of the corporation by reason of a defective certificate of incorporation, which was

rightfully possessed corporate powers, the certificate being colorable. See also Tarpey v. Desert Salt Co., (Utah, 1888) 17 Pacif. Rep. 631 (not yet reported). Where incorporators sign and acknowledge their charter

as

"citizens of G. County, State of Kansas,” and describe themselves in the body of the charter as all of "Salt Springs, G. County, Kansas," it will be presumed that they were citizens of Kansas, and all else appearing regular, that the corporation was duly incorporated. Sword v. Wickersham, (1883) 29 Kan. 746.

5 Fresno Canal & Irrigation Co. v. Warner, (1887) 72 Cal. 379. But when it appeared that a company was formed by the consolidation of a Michigan and an Ohio company, and that the Ohio company was organized under a voluntary agreement which would not satisfy the requirements of the law of Michigan, and it was not shown that that agreement was sufficient to author

with the corporation,' and as against the corporators themselves.2

3

§ 15. Acceptance by the incorporators requisite to render the legislative grant effective. The charter of a private corporation being a contract between the State and the incorporators, its acceptance by the latter is requisite to give it full force and effect. If it be granted to persons who have not ize its incorporation in Ohio, the 2 In Aultman v. Waddle, (1888) Michigan courts refused to assume 40 Kan. 195, it was held that perthat it was legally incorporated. sons who organize themselves as a Brown v. Dibble, (Mich.) 32 N. W. corporation, transact business, and Rep. 656. hold themselves out to the world as such, cannot, when proceeded against by creditors, set up as a defense that the preliminary steps of the organization were irregular, thereby to evade their liability as stockholders. So in McDonnell v. Alabama Gold Life Ins. Co., (1889) 85 Ala. 401, it was held that stockholders and organizers of a life insurance company are estopped, as against policy-holders who are suing to enforce the individual liability of the stockholders for the debts of the company, from setting up the illegality or irregularity of the corporate organization.

1 Fresno Canal & Irrigation Co. v. Warner, (1887) 72 Cal. 379, where it was held that when one has contracted with an alleged corporation, and is sued for failure to perform his contract, he cannot be heard to say that the corporation had no existence, and for that reason no contract was made. Stout v. Zulick, (1887) 48 N. J. 599, holding that in the absence of a statutory provision making shareholders liable in case of failure to comply with the requirements of the charter, or with the requirements of the act under which the company is incorporated, persons who have contracted with a de facto corporation cannot deny its corporate existence, in order to charge its shareholders individually as partners. Under the Missouri Act of Feb. 20, 1865, proving that, where a special company is created and organized, a certificate in writing shall be filed with the circuit clerk in the county where the business is carried on, and a duplicate filed with the Secretary of State, the failure to file such certificate with the circuit clerk is not fatal to the existence of the corporation, but is a mere omission which cannot be taken advantage of collaterally. Granby Mining & Smelting Co. v. Richards, (1888) 95 Mo. 106.

3 Dartmouth College v. Woodward, 4 Wheat. 518; Lincoln & Kennebec Bank v. Richardson, 1 Greenl. 79; Fire Department v. Kip, 10 Wend. 266; Haslett v. Wotherspoon, 1 Strob. Eq. 209; Falconer v. Higgins, 2 McLean, C. C. 196; Rex v. Amery, 1 T. R. 675; Rex v. Askew, 4 Burr. 2199; Thompson v. New York R. R. Co. 3 Sandf. Ch. 285; Green v. Seymour, 3 Sandf. Ch. 285; Edman v. Bowman, 58 Ill. 444; Curry v. Scott, 54 Pa. Stat. 270; Gardner v. Hamilton Ins. Co., 33 N. Y. 421; Hamilton Ins. Co. v. Hobart, 2 Gray, 543; Rex v. Chan. Cambridge, 3 Burr. 1661; King v. Pasmore, 3 T. R. 240; Bailey v. Mayor of New York, 3 Hill, 531; Short v. Unangst, 2 Watts & S. 45;

applied for it, the grant is said to be in fieri, until there has been an acceptance indicated.' It may, for a time, remain optional with the persons intended to be incorporated, whether they will take the benefit of the act of incorporation; yet if they execute the powers, and claim the privileges granted, the duties imposed on them by the act will then attach, from which they cannot discharge themselves. It is not essential that the acceptance of a charter be expressly made; it will be inferred from an exercise of the franchises conferred. Neither

Ellis v. Marshall, 2 Mass. 279; New Orleans R. R. Co. v. Harris, 27 Miss. 517; State v. Dawson, 16 Ind. 40.

1 Dartmouth College v. Woodward, 4 Wheat. 688; Angell & Ames on Corporations (11th ed.), § 83.

2 Angell & Ames on Corporations (11th ed.), § 83; Riddle v. Proprietors of Locks and Canals, 7 Mass. 187.

Penobscot Boom Co. v. Lamson, 16 Me. 224; Middlesex Husbandmen v. Davis, 3 Met. 133; Way v. Billings, 2 Mich. 397; Trott v. Warren, 2 Fairf. 227; All Saints Church v. Lovett, 1 Hall, 191; Dutchess Cotton Manuf. Co. v. Davis, 14 Johns. 238; Vernon Society v. Hills, 6 Cowen, 23; Eaton v. Aspinwall, 19 N. Y. 119; Sampson v. Bowdoinham, 36 Me. 78; Eastern Plank Road v. Vaughan, 20 Barb. 155; Wilmington R. R. Co. v. Saunders, 3 Jones (N. C.), 126; Crump v. U. S. Mining Co., 7 Gratt. 362; Commonwealth v. Claghorn, 13 Penn. St. 133; Cahill v. Kalamazoo Ins. Co., 2 Doug. (Mich.) 124; Narragansett Bank v. Athletic Silk Co., 3 Met.

282; Farmers' Bank v. Jenks, 7 Met. 592; Dedham Bank v. Chickering, 3 Pick. 335; Worcester Med. Inst. v. Harding, 11 Cush. 285; West Winsted Savings Bank v. Ford, 27 Conn. 282; People's Sav. Bank v. Collins, 27 Conn. 142; People v. Beigler, Hill & Denio, 133; Abbott v. Aspinwall, 26 Barb. 202; Buncombe Turnpike v.

McCarson, 1 Dev. & B. 306; Dooley v. Cheshire Glass Co., 15 Gray, 494; Merrick v. Reynolds Engine Co., 101 Mass. 381; Whitney v. Wyman, 101 U. S. 392; Salem National Bank v. Almy, 117 Mass. 476; Chamberlin v. Huguenot Manuf. Co., 118 Mass. 532; Augur A. & C. Co. v. Whittier, 117 Mass. 541; Hawes v. Anglo-Saxon Petroleum Co., 101 Mass. 385; Black River R. R. Co. v. Barnard, 31 Barb. 258; Angell & Ames on Corporations (11th ed.), § 83. The acceptance of a charter may be presumed by the fact that it has been applied for. Atlanta v. Gate City Gaslight Co., (1885) 71 Ga. 106. Acceptance of a charter may be shown by expenditures and other transactions in furtherance of the purpose thereof, without proof of any formal organization by meeting, election, etc. McKay v. Beard, (1884) 20 S. C. 156.

4

Angell & Ames on Corporations (11th ed.), § 83; United States Bank v. Dandridge, 12 Wheat. 71; Russell v. M'Lellan, 14 Pick. 63; Coffins v. Collins, 17 Me. 440. "The books of a corporation are the regular evidence of its doings, and the acceptance of the charter should be proved by them. But if the books have not been kept, or have been lost or destroyed, or are not accessible to the party upon whom the affirmative lies, then the acceptance may be proved by implication from the acts

is it indispensable to show a written instrument, or even a vote of acceptance; there may be instances in which an acceptance can be inferred,1 and it is said that a grant beneficial to the incorporators will be presumed to be accepted without any indication thereof by the grantees. But if accepted at all, the charter must be taken as it stands in its entirety and unconditionally. A charter takes effect immediately upon its acceptance by the incorporators.

§ 16. Of defective incorporation.- If a corporation be illegally formed, its members or stockholders are liable as partners for its acts or contracts; and directors, officers and agents acting and contracting in its name render themselves personally liable." There may, indeed, be certain irregularities or omissions with respect to a merely directory provision of an enabling act, which, while they would be sufficient to sustain an action by the State to declare a forfeiture, are yet insufficient to sustain an action brought by creditors to enforce the individual liability of members or stockholders as partners.

of the members of the alleged corporation." Angell & Ames on Corporations (11th ed.), § 83; Hudson v. Carman, 41 Me. 84.

1 Charles River Bridge v. Warren Bridge, 7 Pick. 344; Eastern R. R. Co. v. Boston R. R. Co., 111 Mass. 125; Bangor R. R. Co. v. Smith, 47 Me. 34; Owen v. Purdy, 12 Ohio St. 73.

2 Willcock on Mun. Corp. 30; Green v. Seymour, 3 Sandf. Ch. 285; Rex v. Pasmore, 3 T. R. 240; Rex v. Amery, 1 T. R. 589; Rex v. Cambridge, 3 Burr. 1656. "It is equally well established that it cannot be accepted for a limited time, and if it has not once been received, though but for an hour, or even a moment, it is conclusive and obligatory." Rex v. Barzey, 4 M. & S. 255; Angell & Ames on Corporations (11th ed.), § 87.

4 Kaiser v. Lawrence Savings Bank, (1882) 56 Iowa, 104, s. c. 41 Am. Rep. 85; Coleman v. Coleman, 78 Ind. 344.

5 Burt v. Salisbury, 55 Mo. 810, which was an action brought upon a promissory note, purporting to be executed by the directors of the North

Missouri Central District Stock, Agricultural and Mechanical Association. The action was brought against the directors upon the ground that the association was not incorporated at the time the note was given, and that the directors were therefore individually liable. It appeared that the association at the time the note was given was fully incorporated in every respect, except that it had failed to file its articles of incorporation with the Secretary of State, as the statute required; and it was held that the directors were indi

Frost v. Frostburg Coal Co., 24 vidually liable. How. 278.