Case ID: ohio-st_25/html/0279-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State of Ohio, on relation of the Attorney-General, v. Wilson S. Taylor and others.
    1. The common-law system of pleading, and not that prescribed by the code of civil procedure, is to he followed in proceedings in quo warranto, and, therefore, new matter set up in a replication in quo warranto, in confession and avoidance of the plea, is taken as confessed, if not denied.
    2. Where a company of individuals associated themselves together for tho purpose of manufacturing paper and flour, and organized as a corporation in accordance with the forms prescribed by the statute, establishing their office and place of corporate business in Ohio: Held, that they thereby became a legal corporation of Ohio, notwithstanding it was the secret intention of its members, at the time of their organization, to carry on their manufacturing operations exclusively in another state, and notwithstanding the fact that they have ever since carried them on accordingly.
    
      ■&. A proceeding in quo warranto to dissolve a corporation, or declare a forfeiture of its charter, or to oust it from the exercise of franchises which it usurps, must be against the corporation itself, and not merely against its individual members.
    Information in the nature of quo warranto.
    
    The information charges the defendants with usurping the franchise of being a corporation of Ohio, by the name of The Speer Manufacturing Company,” and by that name ■of pleading and being impleaded, answering and being answered, contracting and being contracted with, and of .acquiring, holding, using* selling, conveying, and otherwise •disposing of property, real and personal, as well without as within the State of Ohio.
    By their plea the defendants aver that they lawfully and ¡rightfully, exercise and enjoy the liberties and franchises mentioned, except that of owning or dealing in real estate not necessary for the purposes of manufacturing paper and flour, which lastrnamed liberty and franchise they disclaim. They aver that they were duly organized as such corporation, in January, 1878, under and in conformity to the provisions of the act to provide for the creation and regulation of incorporated companies, .passed May 1, 1852, and the amendments thereto. They set forth their certificate, made and recorded in conformity to the statute, showing that they have associated themselves together for the purpose of manufacturing paper and flour, in the name aforesaid, and that their principal place of business and office was to be at Cincinnati, Ohio. Books of subscription were duly opened; the capital stock was all taken; directors and other officers duly appointed; by-laws were adopted, and their office and principal place of business «established and opened at No. 92 West Fourth street, Cincinnati, Ohio. They say that the corporation has engaged in no business except that of manufacturing paper and ■flour, and that it owns no real estate except a mill in which it manufactures paper and flour, at Brookville, in the State ■of Indiana.
    To this plea there is a replication admitting the truth of .all the averments of the plea, but averring in confession and avoidance thereof, “ that said defendants did so associate themselves for the purpose and with the intent of pur•chasing, under color of being a body corporate and politic, real estate within the State of Indiana, and of manufacturing thereon, and not elsewhere, paper and flour, and for the purpose and with the intent of carrying on the business of manufacturing paper and flour within the State of Indiana, and not within the State of Ohio,” and that the defendants never “intended to embark in the business of manufacturing within the State of.Ohio, nor have they ever done so.”
    No demurrer or rebutter to this replication was filed, .and the cause was submitted to the court upon the pleadings and a single deposition, which deposition proves sub.stantially the several matters set forth in the replication.
    
      John Little, attorney-general; McGuffey, Morrill $“ Strunk, .and Hoadly, Johnson &; Colston, for relator :
    I. The company was organized in Ohio for no other purpose whatever than the manufacture of paper and flour in the State of Indiana. This is a fraud on the laws both of Ohio and Indiana, neither of which states has the right to organize artificial beings for the sole purpose of life within the other. The right of a corporation, where legitimately ■organized in one state, to act in another state, depends not upon the powers granted it by the state of its creation, but upon the comity of the sister state. Bank of Augusta v. Earle, 13 Pet. 519; Paul v. Virginia, 8 Wall. 168; N. Y. Life Insurance Company v. Best et al., 23 Ohio St. 105; Hill v. Beach, 1 Beasley, 31; Land Grant Railway and, Trust 
      
      Company v. Commissioners of Coffey Co., 6 Kansas, 245; Myers et al. v. Manhattan Bank, 20 Ohio, 283; Miller et al. v. Ewer, 27 Maine, 509; Freeman v. Machaias Water Power and Mill Co., 38 Ib. 343; Hiller et al. v. Parish et al., 1 McArthur, 380.
    II. The act of May 1, 1871, 68 Ohio L. 97, can not avail the defendants. It amends the act of April 13,1865 (S. & S. 166), and enlarges the powers of manufacturing companies, but it does not, nor does it profess to amend the act of 1852.
    This company exists under the act of May 1, 1852, and amendments thereto. The act of May 1, 1871, must be sf;rictly construed.
    HI. The certificate as pleaded is fatally defective in this,that it does not state the place where their manufacturing establishment is located, nor does it appear to have been recorded in the county (in Indiana), where the same is actually located.
   Welch, J.

The deposition is of no legal significance in the case. It only proves what stands admitted by the pleadings. The proceeding in such a case is not governed by the code, and the pleadings are to be made up as at common law. The case is therefore submitted to us as upon demurrer to the replication, and presents the simple question whether the matters averred in the replication are a sufficient avoidance of the title or right which the defendants set forth in their plea. In other words, the question is, does the fact of such secret intention, and the subsequent carrying of that intention into execution, render the proceeding of incorporation a nullity, so that the corporation, never obtained a legal existence. We answer the question in the negative. The secret intention of the parties is not by the law made an element in their organization. If their organization was in accordance with the statutory requirements, the lawfulness of their intention must be presumed. The company having organized in all respects in conformity with the laws of Ohio, with its office and place of corporate business in the state, thereby became and was a legal corporation of Ohio, and remains such until dissolved by act of the legislature, by its own volition, or by a proceeding in quo warranto against the' corporation itself. This is no such proceeding, but a proceeding merely against its individual officers and members,, who are admittedly its lawful officers and members, if any such corporation exists. If the company has, by the abuse or nonuse of its franchises, rendered itself liable to a forfeiture of its charter, such forfeiture can properly be declared and enforced only in a proceeding to which the corporation is a party. If it is assuming to exercise franchises outside the scope of its charter, it can, by a like proceeding, be ousted from tbeir exercise. Whether the matters set up in replication are a sufficient ground for any such proceeding against the corporation, it would he improper that we should now decide.

Judgment for the defendants.

McIlvaine, C. J., White, Rex, and Gilmore, JJ., concurred.