Case ID: ohio-st_43/html/0481-01.html
Source: Caselaw Access Project
Author: {"author": "Owen, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Society Perun v. Cleveland. Society Perun v. Hay.
    
      Corporation de facto— Collateral inquiry — Effect upon prior acts of subsequent judgment in quo warranto — Effect of such judgment upon third parties — Whether retro-active — Evidence of de facto existence of corporation — Admissibility.
    1. Where an attempt is made, in good faith, to organize a private corporation by colorable proceedings, approved by the attorney-general and the secretary of state, the paper intended for the certificate of incorporation admitted to record in the office of the latter, duly certified by him as the certificate of incorporation of such body; where these steps are followed by uninterrupted' and unchallenged user for a number of years, and valuable rights and interests have been in good faith acquired, enjoyed and disposed of by such organization, acting as-a body corporate, it is a corporation de facto, and its corporate capacity can not be questioned in a private suit to which it is a party.
    2. Such an organization has capacity to acquire, hold, enjoy, incumber, and convey the legal title to real estate; and rights acquired or liabilities incurred by it and by parties dealing with it in good faith,-will not be divested or defeated by a subsequent judgment in quo warranto proceedings, excluding it from, the use of corporate franchises by reason of some defect or omission in the original steps taken to assume corporate powers.
    3. It is not competent for this court, in a quo warranto proceeding ousting an acting corporation of the franchise to be a body corporate, to consider or determine the rights or liabilities of third parties, who have acquired such rights or incurred such liabilities in their dealings with such acting corporation.
    4. In such a proceeding, when the court has adjudged that such body be excluded from the right to exercise the franchises of a corporation, it has exhausted its jurisdiction over the subject-matter of the controversy before it.
    5. A judgment of ouster against a pretended corporation by reason of defect in the form of the certificate of incorporation, is not retro-active in its effect upon rights acquired and liabilities incurred in the course of transactions in good faith with such acting corporation, prior to such ouster.
    6. On the trial of an action to which such an organization is a party, evidence of an attempted and colorable incorporation, followed by user in good faith for a number of years, is admissible (as against a party not estopped to deny its corporate existence), to prove it a corporation de facto, though offered after judgment of ouster.
    Error to the District Court of Cuyahoga county.
    On the 28th of January, 1874, the city of Cleveland conveyed to Perun (an incorporated school and library society), certain real estate situated in that city, and to secure the unpaid purchase-money therefor, Perun, on the same date, executed and delivered to the city its four promissory notes and a mortgage upon the premises conveyed.
    The .city neglected to file this mortgage for record until the 21st day of October, 1879. In February, 1874, certain persons attempted to organize a mutual benefit association under an act supplementary to an act to provide for the creation and regulation of incorporate companies passed May 1, 1852 (S. & C. Stat. 271), passed April 20, 1872 (69 Ohio L. 82), under the corporate name of Society Perun. Thereafter, in May, 1874, Perun delivered to Society Perun its deed purporting to convey to the latter the premises ■theretofore mortgaged to the city. From that time forward, and prior to the filing of the city’s mortgage for record, Society Perun, acting in its supposed corporate capacity, from time to time, executed and delivered deeds, mortgages, and executory contracts of sale, purporting to convey, incumber and sell parcels of these mortgaged premises to various parties, who were made defendants in the action below, and some of whom (including Amasa Stone, a mortgagee, and who had paid taxes upon the premises mortgaged to him), are cross-petitioners in error. Thereafter, in June 1880, in a proceeding in quo warranto, in this court, instituted by the Attorney-General, Society Perun was adjudged not to have become incorporated in. conformity to the laws of this state, but that its pretended incorporation was in violation thereof; and it,was accordingly ousted of all rights and franchises to be a corporation;
    These proceedings in quo warranto were had pending, and prior to the. final judgment in the action below, which was brought by the city to foreclose her mortgage, and also to foreclose her supposed vendor’s lien on the mortgaged premises, as against these subsequent grantees, mortgagees» and purchasers.
    The cause was appealed from the court of common pleas to the district court, wherein it was tried upon the issues, the court finding among other things, that, as to the city of Cleveland, Society Perun was not a corporation either in law or in fact, and that the conveyance to it by Perun was void as against the city; and that the mortgages and other liens and claims of all the defendants (except the lien of Amasa Stone for taxes, and the claims of certain defendants for improvements on the premises), were subsequent and inferior to the lien of the city, in whose favor the court adjudged the second lien, and subsequent only to the lien of Amasa Stone for taxes paid by him, but of equal rank and merit with the holders of liens for expenditures on account of improvements above mentioned.
    By the judgment in the quo Warranto proceeding it was by this court in form adjudged that the defendants (the pretended incorporators) ever since their pretended incorporation, had unlawfully and without authority exercised the fanchises of, and usurped the right to be,a body corporate; that the pretended organization of these defendants as a corporation was wholly void and of no effect, and vested in them no corporate rights, powers, privileges, or franchises of any description whatever.
    It was further in form adjudged that the defendants never had, nor had any of them, the authority or lawful right to be a body corporate or to exercise or hold any of the powers, rights and liberties, privileges, functions or franchises of a body corporate; but that they and each of them in the use and exercise of the same were and had ever been usurpers thereof. The sole ground upon which this judgment of ouster was rendered was that while the statute required that they should set forth in their certificate of incorporation (among other things) the manner of carrying on the business of the association, the attempted compliance with this requirement was in these words :
    “ Third. That the manner of carrying on the business of said association shall be such as may be from time to time prescribed by the by-laws of such association; provided that the same shall not be inconsistent with the laws of tho state of Ohio.”
    Upon the trial below the plaintiff gave in evidence, against the objection of defendants, the record of the quo warranto proceedings.
    The defendants offered in evidence the writing which was filed with the secretary of state as the certificate of incorporation of Society Perun.
    They also offered to prove that the pretended incorporators proceeded to comply strictly with the requirements of the statutes; that they elected trustees, prepared a certificate of incorporation stating explicitly the manner of carrying on the business; that this was forwarded to the secretary of state, who submitted it to the attorney-general for examination and approval; that the secretary of state returned this paper with another form of certificate which had been approved by the attorney-general and secretary of state, and which was the identical certificate actually filed with the secretary of state, and under the supposed authority, of which an organization was in good faith attempted, and that they proceeded in good faith to act and transact its business under the supposed authority of such incorporation.
    All this was excluded, and the defendants excepted. To reverse this judgment the present proceeding is prosecuted.
    The alleged errors chiefly relied upon are the exclusion of the evidence offered to prove an attempt, in good faith, to incorporate Society Perun ; the finding and holding of the court that Society Perun had never been in law or fact a corporation; that as against the city the deed from Perun was void; and adjudging the city’s lien to be prior to the rights and liens of Society Perun and its mortgagees, grantees, and purchasers.
    
      Willson $ Sykora, for plaintiff in error.
    The judgment of ouster in the quo warranto proceeding was rendered long after all the rights of the parties to these suits had become vested. It could not have a retroactive effect so as to defeat the vested rights of Society Perun and its grantees. Gaff v. Flesher, 33 Ohio St. 115 ; McCarthy v. Lavasche, 89 Ill. 270.
    The plaintiff in error is sued, served, and brought into court as a corporation, the averment being made in the original petition that Society Perun is a corporation. The city of Cleveland is therefore estopped to deny its existence as such. Buffalo & A. R. R. Co. v. Cary, 26 N. Y. 77; Mitchell v. Deeds, 49 Ill. 416.
    Notwithstanding the defect in the organization of Society Perun as a corporation, its acts and transactions, under color of its supposed powers, up to the time of the judgment of ouster, were valid. . It was a corporation de facto, and no advantage could be taken of the defect in its organization collaterally. Searsburgh Turnpike Co. v. Cutler, 6 Vt. 324; Bank of Manchester v. Allen, 11 Vt. 302; Grand Gulf Bank v. Archer, 8 S. & M. 151; Boone Corp., sec. 154; Bondell v. Fay, 32 Cal. 354; Dannebroge Gold 
      
      Quartz Mining Co. v. Aliment, 26 Cal. 286; Ex parte Strang, 21 Ohio St. 610; Jones v. Dana, 24 Barb. 395.; Douglas County v. Bolles, 94 U. S. 104.
    It is only when the forfeiture is enforced and the charter vacated by competent authority, that the corporation and its legal capacity ceases. Darst v. Gale, 83 Ill. 136.
    The acts of an officer de facto, when questioned collaterally, are as binding as those of an officer de jure. To constitute an officer de facto of a legally existing office it is not necessary that he should derive his appointment from one competent to invest him with a good title to the office. It is sufficient if he derive his appointment from one having colorable authority to appoint.
    
      B. It. Beavis, for the executors of Amasa Stone, cross-petitioners in error.
    Society Perun did not owe either money or any legal or equitable duty to the city of Cleveland, and the city had no such legal interest as would qualify any complainant other than the state itself to complain of either the want of or abuse of corporate powers by Society Perun. Rowland v. Meader Furniture Co., 38 Ohio St. 269; Gaff v. Flesher, 33 Ohio St. 115; Presbt. Soc. v. Smithers, 12 Ohio St. 251; Hullman v. Honcomp, 5 Ohio St. 237; First Parish in Sudbury v. Stearns, 21 Pick. 148; Trustees of Vernon v. Hills, 6 Cow. 23; Railroad Co. v. Ellerman, 105 U. S. 173; Searsburgh Turn. Co. v. Cutler, 6 Vt. 324; Bank of Manchester v. Allen, 11 Vt. 302; Buffalo & A. R. Co. v. Cary, 26 N. Y. 77; Tarbell v. Page, 24 Ill. 46; Betts v. Betts, 4 Abb. N. Cas. 317; Savings Inst. v. Board of Education, 75 Mo. 408; Thompson v. Cander, 60 Ill. 247; C. L. & C. R. Co. v. D. & V. R. Co., 75 Ill. 113; Darst v. Gale, 83 Ill. 136.
    The judgment of ouster could not have a retroactive effect and affect prior acquired rights. Gaff v. Flesher, supra; Rowland v. Meader Furniture Co., supra.
    
    The district court erred in refusing to receive in evidence for any purpose the certificate of incorporation of Society Perun. Rev. Stats., sec. 3238; Osborn v. People, 103 Ill. 224; Mitchell v. Deeds, 49 Ill. 416.
    The only proper inquiry is limited to whether the corporation was such de facto. Hullman v. Honcomp, supra; Presbt. Soc. v. Smithers, supra; Gaff v. Flesher, supra; Rowland v. Meader Furniture, Co., supra; Ex parte Strang, 21 Ohio St. 610; Morawetz Corp., secs. 136, 139.
    The title to real estate derived through a corporation which thereby abuses its powers becomes indefeasable in the hands of its vendee. Walsh v. Barton, 24 Ohio St. 43; Darst v. Gale, supra.
    
    Where a corporation is incompetent by its charter to take title to real estate, a conveyance to it is not void, but only voidable, and the sovereign alone can object. National Bank v. Matthews, 98 U. S. 628.
    In ejectment by a corporation it is not proper to decide whether it was a violation of the charter to receive the conveyance. Shewalter v. Pirner, 55 Mo. 218; Goundie v. Northampton Water Co., 7 Pa. St. 233. The same rule applies in partition. Kelly v. People's Trans. Co., 3 Ore. 189.
    
      A. T. Brinsmade, and W. E. Sherwood, for the city of Cleveland.
    When the corporate existence of an association pretending to exist as a corporation is denied, that fact must be established by affirmative proof. A certified copy of the articles of incorporation made out in conformity with the statutory requirements, and filed with the secretary of state, is made prima facie evidence only of the existence of such corporation.
    The non-corporate existence of Society Perun was alleged and proved by the introduction of the judgment of ouster. The question, then, is not one as to the right .of collateral inquiry, but one as to whether the defendants below should have been permitted to make prima facie proof by the introduction of the pretended certificate of a corporate existence which the supreme court had previously declared did not exist and never had existed, and which showed on its face a fatal defect. The district court properly held that the judgment of this court in quo warranto was conclusive, and that Society Perun was not a corporation de jure.
    
    The city of Cleveland had the right of collateral inquiry. Railroad Co. v. Sullivant, 5 Ohio St. 276 Callender v. Railroad Co., 11 Ohio St. 516; Atkinson v. Railroad Co., 15 Ohio St. 21 ; Raccoon River Navigation Co. v. Nagle, 29 Ohio St. 238; Railroad Co. v. Stout, 26 Ohio St. 241-258; Bank v. Aikin, 18 Johns. 137 ; Field v. Cooks, 16 La. Ann. 153; Mining Co. v. Woodbury, 14 Cal. 424; Harris v. McGregor, 29 Cal. 124; Bigelow v. Gregory, 73 Ill. 197; Carey v. Railroad Co., 5 Iowa, 357; Paterson v. Arnold, 45 Pa. St. 414; O. & V. R. R. Co. v. Plumas Co., 37 Cal. 357-360.
    The cases cited by counsel in opposition are ones in which the corporations had been created by special acts, and none have relation to those created by general laws. The distinction as to the right of such inquiry in the two classes of cases is obvious. Ang. & Ames Corp., sec. 83; Fire Dept. v. Kip, 10 Wend. 266; Bigelow v. Gregory, supra; Mining Co. v. Herkimer, 46 Ind. 142; Insurance Co. v. Cram, 43 N. H. 636; McIntire v. Ditching Assn., 40 Ind. 104; Reed v. Street R. Co., 50 Ind. 342; Richmond Factory Assn. v. Clarke, 61 Me. 351; Boyle v. Mizner, 42 Mich. 332.
    Inasmuch as the city of Cleveland had no direct contract relation with Society Perun, and had not otherwise recognized its legal corporate existence, the city was entitled to dispute such existence. As to the city the society was not a corporation de facto. M. C. & L. M. R. R. Co. v. Stout, 26 Ohio St. 241.
    No case can be found where it is held that there is a corporation de facto against persons who have in no way recognized its existence as a corporation. User will not raise a corporation de facto as against one who has not taken any part in the acts of user, and this for the reason that user is not necessary to the creation of a corporation under general laws, especially under the law authorizing such a corporation as Society Perun attempted to become.
    
      If a corporation does not become so by virtue of compliance with the statute, it can not, as to those who have not dealt with it as such, become so by user, however long such user may continue. The notion of a de facto corporation is based on the doctrine of estoppel; when estoppel can not be invoked there can be no defacto corporation. Bank of Toledo v. International Bank, 21 N. Y. 542.
    There being no corporation, there was no legally existing grantee. 3 Wash. Real Prop. 565, 566; Jones v. Cincinnati Type Foundry, 14 Ind. 89; Russell v. Topping, 5 McLean, 202; Harriman v. Southam, 16 Ind. 190 ; Jackson v. Cory, 8 Johns. 388; Hornbeck v. Westbrook, 9 Johns. 74; Aug. & Ames Corp., sec. 152; Straus v. Ins. Co., 5 Ohio St. 64; Carey v. Railroad Co., supra; nor grantor. 3 Wash. Real Prop. 566, 567; 1 Wood Conv. 161-170; Miller v. Chittenden, 2 Iowa, 368; Hulick v. Scovil, 9 Ill. 191; Sloane v. McConahy, 4 Ohio, 157, 169, 170; Turnpike Co. v. Coy, 13 Ohio St. 84.
    
      1. R. Webster and W. J. Boardman, for other defendants in error, filed no briefs.
   Owen, J.

The defendants below, conceding that Society Perun had never been a corporation de jure, maintain that the court below should have permitted them to prove that such society was a de facto corporation ; that it attempted, in good faith, to become a body corporate; proceeded to act and transact business in good faith under the supposed authority of incorporation, and that its acts ought not to have been declared to be wholly void as against the city of Cleveland.

The judgment of ouster was an adjudication between the state and the society upon the right of the latter to exercise corporate franchises. For the purposes of such adjudication it was competent for this court to consider and determine what had been its status from its first attempt to incorporate. But it had no power to pass upon or determine the rights of parties not before it.

It was not competent for this court to determine in that proceeding that Society Pei’un had never been a corpora.tion de facto, or that its acts and business transactions, under the color of its supposed charter powers, were void. The authority of the court in that behalf was derived from sec. 6774 (Rev. Stats.), which provides: “When a defendant is found guilty of usurping, intruding into, or unlawfully holding or exercising an office, franchise, or privilege, judgment shall be rendered that such defendant be ousted and altogether excluded therefrom, and that the relator recover his costs.”

When the court had excluded the society from its franchises to be a corporation, it exhausted its jurisdiction over the subject-matter. It had no power to speak concerning whatever rights may have been acquired by the society as a corporation de facto, or by third parties in their transactions with it as an acting corporation.

It is conceded by the city that parties who had recognized the existence of the society by their transactions with it as a supposed corporation are estopped to deny its corporate existence. But it is maintained that the city, having engaged in no transactions with it, is free to challenge its existence as a corporation de facto as well as de jure. The argument is that: “No case can be found where it is held that there is a corporation de facto against persons who have in no way recognized its existence as a corporation,” and that: “ The notion of'a defacto corporation is based on the doctrine of estoppel; when estoppel can not be invoked there can be no de facto corporation.”

The theory that a defacto corporation has no real existence, that it.is a mere phantom, to be invoked only by that rule of estoppel which forbids a party who has dealt with a pretended corporation to deny its corporate existence, has no foundation, either in reason or authority. A de facto corporation is a reality. It has an actual and substantial legal’existence. It is, as the term implies, a corporation. '

“ It is a self-evident proposition that a contract can not be made with a corporation unless the corporation be in existence at the time. A real contract with an imaginary corporation is as impossible, in the nature of things, as a real' contract with an imaginary person. It is essential, therefore, in order to establish the existence of a contract with, a corporation, to show that the corporation was in existence, at least defacto, at the time the contract was made.” Morawetz Private Corporations, sec. 137.

It is bound by all such acts as it might rightfully perform as a corporation de jure. Where it has attempted in good faith to assume corporate powers; where its proceedings in that behalf are colorable, and are approved by those officers of the state who are authorized to act in that regard;, where it has honestly proceeded for a number of years, without interference from the state, to transact business as a corporation; has been reputed and dealt with as a duly incorporated body, and valuable rights and interests have been acquired and transferred by it, no substantial reason is suggested why its corporate existence, in a suit involving such transactions, should be subject to attack by auy other-party than the state, and then only when it is called upon in a direct proceeding for that purpose,- to show by what authority it assumes to be a corporation.

Proof was offered upon the trial below to show, (1) that the persons seeking to incorporate first filed with the secretary of state a certificate which fully complied with the requirements of the statutes, and free from the defect which finally proved fatal to its existence, but which was disapproved by the attorney-general; (2) That the certificate of incorporation which was finally filed with the secretary of state recited that, “ said association has been formed and organized for the mutual protection and relief of its members, and for the payment of stipulated sums of money to the families or heirs of the deceased members of said association; that the officers of said association have been duly chosen; that for the purpose of becoming a body corporate under an act passed by the general assembly of the state of ‘Ohio, entitled, an act supplementary to an act, entitled an act to provide for the creation and regulation of incorporated companies in the state of Ohio, passed May 1,1852, passed April 20,1872;” (3) That this certificate was approved by the secretary of state, and also by the attorney-general, as provided by the statutes (69 Ohio L. 150); (4) That it proceeded in good faith to transact business peculiar to corporations provided for by the act under which it attempted to incorporate.

All this was excluded, and the decision of the court below practically rested on the proof offered by the city, that Society Perun had been ousted of its franchises, which was evidently construed as determining that such society had from the first no corporate existence, either dejare or defacto, and consequently no capacity to receive or.impart any interest in or title to real estate except as against such parties as were by reason of their recognition of or deal-rings with it, estopped to deny its incorporate existence.

.. Did the court err? This fairly preseuts the controlling and very important question : Was it competent to show, as against a party who was not estopped to deny its eorporate existence, that Society Perun was, at the time of the transactions involved in controversy, a corporation de facto f'

In Attorney-General ex rel. Pettee v. Stevens, Saxton (N. J. Eq.) 369, the relator sought to enjoin the Camden and Amboy R. R. and Transportation Co. and others acting under its authority from erecting a bridge over a navigable stream. The claim was that the act authorizing the corporation had been perverted and'disregarded, and that there was no legal incorporation. The relators were in no manner estopped to attack the corporate existence of the respondent. The court held:

Where a set of men claiming to be a legally incorporated company under an act of the legislature, have done every thing necessary to constitute them a corporation, colorably at least, if not legally, and are exercising all the powers and functions of a corporation ; they are a corporation, defacto, if not dejare; and this court will not interfere, iu an incidental way, to declare all their proceedings void, and treat them as a body having no rights or powers.”

The chancellor, speaking for the court, said:

Here, then, is a set of men claiming to be a legally incorporate*! company under the act of the legislature, exercising all the powers and. functions of a corporation.. They are a corporation de facto, if not de jure. Every thing necessary to constitute them a corporation has been done, colorably at least, if not legally; and I do not feel at liberty, in this incidental way, to declare all their proceedings void, and treat them as a body having no rights or powers. It has been seen that the court will not do this where a corporation properly organized has plainly forfeited its privileges; and there is but little difference'in principle between the two cases. In both the corporation is actually in existence, but whether legally and rightfully so is the question. And it appears to me that if the court can take cognizance of the matter in this case, it must in all others where it can be brought up, not only directly, but incidentally.”

This case is approved and followed in National Docks R. Co. v. Central R. R. Co., 32 N. J. Eq. 755, which held: “ When a corporation existe de facto, the court of chancery can not, at the instance of private parties, restrain its operations upon the ground that its organization is not de jure. In such case the proper remedy is by quo warranto, or information in the nature thereof, instituted by the attorney-general.” The rule of estoppel found uo place in this case.

In S. & L. G. R. Co. v. S. & C. R. R. Co., 45 Cal. 680, it was held that: “If a corporation defacto is in the actual possession of a public highway, under a grant of a franchise to improve and collect tolls on the same, a mere trespasser can not justify his entry thereon on the ground that it was only a corporation defacto, and was not de jure entitled to the franchise.”

In Williams v. Kokomo B. & L. Ass’n., 89 Ind. 339, one Leach gave to an acting corporation'his mortgage on real estafe. Subsequent to the execution and recording of it, he executed another mortgage on the same land to Williamson. In a proceeding to foreclose the junior mortgage, ’Williamson maintained that the pretended corporation had no legal existence, by reason of defects and omissions in the proceedings to incorporate, and that the senior mortgage was void. He was in no manner estopped, by dealings with, or recognition of, the first mortgagee to deny its corporate existence. The court held that: “Ajunior mortgagee can not defeat a senior mortgage by showing that the corporation to which the senior mortgage was executed was defectively organized, if it be a corporation defacto.” Elliot, J., said : “Where persons assume to incorporate under the laws of the state, and in part comply with their requirements, assume corporate functions and transact business as a corporation, private persons can not collaterally question the right of such an association to a corporate existence, although there has not been a full compliance with the provisions of the statute. Baker v. Neff, 73 Ind. 68. This rule is not limited to cases where one by contract admits corporate existence, but is a rule of general application.” It is not easy to distinguish the principle of i this case from that of the case at bar.

In Pape v. Capitol Bank, 20 Kan. 440, Pape and wife gave their notes to “James M. Spencer or bearer,” and their mortgage on real estate to secure them. Spencer transferred the notes to the Capital Bank of Topeka, an acting corporation, with this indorsement: “ Pay the bearer, without recourse on me; James M. Spencer.” The mortgage was also transferred to the bank, which proceeded by suit to collect the notes and foreclose the mortgage. Pape and wife interposed the defense that the bank was not, and never had been, a body corporate, by reason, among others, of a defective organization. 'The bank had assumed corporate functions after an attempt, in good faith, to incorporate, and for a number of years was in the actual and notorious exercise of corporate franchises. Pape had transacted banking business with the plaintiff prior to the purchase of the notes and mortgage, but such business was wholly unconnected with the notes and mortgage in suit. His wife, however, had not in any manner recognized the existence of the hank as a corporate body, and the doctrine of estoppel was not invoked to aid the court in sustaining a judgment of foreclosure against Pape and wife. Brewer, J., says: “ The corporation is one de facto; and only the state can inquire, and that, in a direct proceeding, whether it be one dejare. . . . There must? in such cases, be a law under which the incorporation can be had; there must, also, be an attempt, in good faith, on the part of the corporators, to incorporate under such law; and when, after this, there has been for a series of years an actual, open, and notorious exercise, unchallenged by the state, of the powers of a corporation, one who is sued on a note held by such corporation will not be permitted to question the validity of the incorporation as a defense to the action. No mere matters of technical omission in the incorporation, no acts of forfeiture from misuser after the incorporation, are subjects of inquiry in such an action. This is not upon the ground of equitable estoppel but upon grounds of public policy. If the state, which alone can grant the authority to incorporate, remains silent during thempen and notorious assertion and exercise of corporate powers, an individual will not, unless there be some powerful equity on his side, be permitted to raise the inquiry.”

In Thompson v. Candor, 60 Ill. 244, Willetts, in February, 1858, deeded to “ Mercer Collegiate Institute,” a body pretending to be a corporation, the tract of land in controversy. He died in March, 1858. In 1868 his heirs quit-claimed their interest in the land to Thompson, who filed a bill in chancery for the cancellation of the deed from Willetts to the “Institute,” alleging, as one of the grounds of relief, that the named grantee was not legally incorporated — had no capacity to take the title, and that the deed was void. The court held:

“ Where parties endeavor to organize a corporation for educational purposes, under the general law, adopt a name, elect trustees, and organize by electing a president and officers, and the trustees had acted for years in managing the property, had leased and mortgaged it, and expended a large sum of money in its improvement, these acts constitute it a corporate body defacto, and the regularity of its organization can not be questioned collaterally. Such irregularity can only be questioned by quo warranto or scire facias.”

Thornton, J., says: “ In 1856 an attempt was made to organize a corporation under the general incorporation law. A corporate name was selected, trustees were appointed, and an organization effected by the election of a president and proper officers. The trustees thus appointed acted for years in the general management of the property, leased and mortgaged it, and expended a large amount of money.. Here then was a corporate body de facto, which had been engaged in an undertaking involving important interests. The regularity of its organization can not be questioned collaterally. Any alleged noncompliance with the law can only be inquired into by the writ of quo warranto or scire facias.”

There is no suggestion throughout the entire case of the rule of estoppel as an element affecting its disposition.

In Paper Works v. Willett, 1 Robertson (N. Y. Sup.), 131, it is held that formal defects in proceedings to organize a corporation are not available to defeat an action brought by a corporation for trespass in wrongfully taking property out of its possession.

See also, as illustrating the principle under discussion: Smith v. Sheeley, 12 Wall. 361; Grand Gulf Bank v. Archer, 8 S. & M. 151, 173; Dunning v. R. R. Co. 2 Carter (Ind.), 437; Dannebroge Mining Co. v. Allment, 26 Cal. 286; Searsburgh Turnpike Co. v. Cutler, 6 Vt. 315; Mitchell v. Deeds, 49 Ill. 416; Eliz. Academy v. Lindsey, 6 Ired. 476 ; Darst v. Gale, 83 Ill. 136; Rondell v. Fay, 32 Cal. 354; De Witt v. Hastings, 40 N. Y. (Superior Court) 463; Rice v. R. R. Co., 21 Ill. 93; Douglas County v. Bolles, 94 U. S. 104; The Banks v. Poitiaux, 3 Randolph (Va.),136; Goundie v. Northampton Water Co., 7 Pa. St. 233; Baker v. Backus, 32 Ill. 79; Tarbell v. Page, 24 Ill. 46; Thornburgh v. R. R. Co., 14 Ind. 499; Tar River Nav. Co. v. Neal, 3 Hawks, 520; Bear Camp River Co. v. Woodman, 2 Me. 404.

In Jones v. Dana, 24 Barb. 395, it was held that if a company has in form a charter authorizing it to act as a body corporate, and is in fact in the exercise of corporate powers at the time of taking a note from an individual, it is, as to him and all third persons, a corporation de facto, and the validity of its corporate existence can only be tested by proceedings on behalf of the people.'

In the case at bar, the certificate which was last filed by the society embraced a full statement of the objects of incorporation and indicated what the nature of its business must necessarily be, and was strongly suggestive of the manner in which it must necessarily be transacted; and while it is not our purpose to call in question the action of this court in the quo warranto proceedings, we have no hesitation in saying that if we were now called upon to determine whether the corporate life of Society Perun should be taken, the question, upon the facts offered in proof at the trial below, would not be free from doubt and difficulty. It is very clear that the proceedings to incorporate were colorable; and so far as this fact is a test of the existence of a corporation de facto, it is most amply established. That there was proof of user is manifest from the evidence which was .received without objection.

That the judgment of ouster did not and could not have a retroactive effect upon the rights of the society, and of parties who had dealt with it during its de facto existence, is suggested by the opinion of Wright, J., in Gaff v. Flesher, 33 Ohio St. 115.

The evidence which was offered and excluded would, if credited, have shown Society Perun capable of holding and transferring the legal title to the lands in controversy. Walsh v. Barton, 24 Ohio St. 43; Darst v. Gale, 83 Ill. 136 ; Shewalter v. Pirner, 55 Mo. 218; Nat. Bank v. Matthews, 98 U. S. 628 ; Goundie v. Northampton Water Co., 7 Penn. St. 233; Barrow v. Nashville Turn. Co., 9 Humph. 304; Kelly v. People’s Trans. Co., 3 Ore. 189; Bogardus v. Trinity Church, 4 Sandf. Ch. 758.

The public and all persons dealing with this society were justified in assuming that the certificate filed with the secretary of state, and by him admitted to record in his office, had been approved by him, and also by the attorney-general, as required by statute (69 Ohio L. 150), and that it so far conformed to all legal requirements that, as provided m section 2 of the act of incorporation (69 Ohio L. 83), “ a copy, duly certified by the secretary of state, under the great seal of the state of Ohio, shall be evidence of the existence of such association.”

It would seem that such approval, record, and certificate, followed by uninterrupted and unchallenged user for nearly six years, of all of which proof was tendered, would constitute a corporation cle facto, if such a body is, under any circumstances, entitled to legal recognition.

The highest considerations of public policy and fair dealing protest against treating such an organization as a nullity, and all of its transactions void.

The principle of the above cases is to be distinguished from a case where a mere corporation de facto attempts to assert the power of eminent domain by the appropriation of private property to public use. It has been held that the exercise of this right (which is but a delegation of the sovereign power of the state), depends upon the sufficiency and legal validity of the certificate of incorporation and public record of its organization. R. R. Co. v. Sullivant, 5 Ohio St. 276 ; Atkinson v. R. R. Co., 15 Ohio St. 21.

The case of Raccoon River Nav. Co. v. Eagle, 29 Ohio St. 288, is relied upon by the defendant in error. It was an action to recover upon a stock subscription. A plea of nul tiel corporation was interposed. The plaintiff claimed to be organized under an act to authorize the incorporation of companies “ for the purpose of improving any stream of water . . . declared navigable by any law of the state of Ohio.” On the trial the plaintiff offered in evidence a certificate by which it appeared that the company was formed for the purpose of improving, etc., Big Raccoon river. Unfortunately there was no navigable stream in Ohio by that name. No other testimony was offered. There was no proof of user. There wás no defect in the form of the proceedings to incorporate, but an attempt to organize and incorporate for a.purpose impossible of accomplishment. There was neither a de jure nor de facto corporation. Judgment was properly rendered for defendant.

In excluding proof of what was actually done looking to the incorporation of Society Perun, and of the subsequent acts of user, which was offered in evidence, there was error, for which the judgment in the first entitled case (as well as that in the same plaintiff against Hay et al., which was tried with it and involve the same general questions) are reversed. Numerous other questions are presented by the voluminous records in these cases, but as they all depend upon the one central and controlling question discussed above, and as the disposition here made of the cases must lead to a re-trial in the light of the principles indicated in this opinion, they are not separately considered.

Judgment reversed.