Case Name: ALFRED DE WITT, et. al., Plaintiffs and Respondents, v. S. CLINTON HASTINGS, Defendant and Appellant
Court: New York Superior Court General Term
Jurisdiction: New York
Decision Date: 1876-03-20
Citations: 8 Jones & S. 463
Docket Number: 
Parties: ALFRED DE WITT, et. al., Plaintiffs and Respondents, v. S. CLINTON HASTINGS, Defendant and Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 40
Pages: 463–482

Head Matter:
ALFRED DE WITT, et. al., Plaintiffs and Respondents, v. S. CLINTON HASTINGS, Defendant and Appellant.
I. CORPORATION DE FACTO.
1. What not sueeicient to establish.
(a) The mere acting as a corporation, no matter for how long, is not of itself sufficient.
2. What is necessary in addition to so acting.
(a) Either a charter or law which of itself creates, upon its acceptance, a corporation.
(S) Or, if the law provides that a corporation may be formed upon a subsequent compliance with prescribed regulations and forms, that some of those regulations and forms have been observed, although others have been omitted.
1. How much must be done, or how much may be omitted, has not been decided.
1. Sufficient compliance, what is; certificate
(a) Where a statute provides that upon filing in a county clerk’s office a certificate of a specified character, and a duplicate thereof in the office of the secretary of state, the persons who shall have signed and acknowledged the certificate, and their successors, shall be a body politic and corporate in fact and in law, the filing in the office of the secretcury of state a certificate of the specified character, without any certificate whatever being'filed in any county clerk’s office, is a sufficient compliance for the purpose of, with proof of user under it, establishing a corporation de facto.
3. User. .
1. Character of acts necessa/ry.
(a) Must be in their nature corporate acts, not speaking as much for non-incorporation as for corporation. Acts of individuals which would not be corporate acts if there were a charter will not be acts of user.
1. What are not acts of user.
(a) Those done before the doing of anything in the legal formation of the company, those not falling within the object'for which the company was to be formed, and those done by persons not acting within the scope of any authority conferred by the parties associated together in the formation of the company.
2. Against whom user will not raise a corporation defacto.
(«) Not as against one who has not taken any part in the acts of user, when the contest is between third parties.
S. Certificate of stock, the issuing thereof, effect of.
(a) Not necessarily an act of user as against the party to whom it is issued.
(1) It is not such act of user when it is an isolated act, unaccompanied by any other use of corporate powers, and cotemporaneous therewith there were acts from which a jury might find a disclaimer by the party to whom it was issued and who is sought to be made liable thereby.
4. Articles of association naming a pa/rty as t/rustee, effect of signing try such pa/rty.
(1) Only holds him to the obligations of an officer to carry on the corporate business, provided the articles are used to form a corporation de facto.
II. ESTOPPEL.
1. Certificate of stock.
(a) Its issue to and receipt by a subscriber to the stock does not estop him from denying the incorporation.
(1) Such Issue and receipt are to be looked upon simpl/y as hearing on the enguiry, whether in fact corporate franchises were used.
Supra, under head “certificate 'of stock, the issuing thereof, effect of.”
2. Articles of association, effect of.
Supra, head “ articles of association.”
III. MAXIMS.
1. Locus penitentim, maxim applied,
Before Curtis and Sedgwick, JJ.
Decided March 20, 1876.
Appeal from judgment.
The complaint charged that the Pacific Beater Press Company was a corporation under the laws of New Y ork, organized under the general act for the formation of corporations for manufacturing, &c„, purposes.
That at San Francisco, at the special instance and request of said corporation, the plaintiff laid out and expended for said corporation, in paying freight, cartage, wharfage, and dockage, upon a number of Beater presses, patterns, castings, &c., four thousand four hundred and six dollars and ninety-three cents, &c.
That the corporation was further indebted, for work, labor, and services done and rendered by plaintiff at the request of said corporation, in storing and taking care of certain Beater presses, &c., two thousand four hundred and eight dollars and thirty-eight cents.
That at the times aforesaid the defendant was one of the trustees of said company, and that the said company did not at any time publish or file any report of the amount of its capital stock and its existing debts, ■&c.
The answer was a general denial, with special averments that there was no such corporation, &c„, &c.
On the trial the following facts were testified to: Several gentlemen met in New York on Dec. 27,1864. Among them was the defendant and one Davis. The object, was stated to be the temporary organization of a stock company. The defendant moved its name should be The Pacific Beater Press Company. The meeting adjourned, to meet again on January 8, 1865, to more permanently organize the said company.
On January 3,1865, there was a meeting of the same gentlemen and others. There were nominations for president and for secretary and treasurer, for one year. There was not an election of officers.
It was resolved that Davis be nominated and appointed general superintendent of the affairs of the company on the Pacific side. It was resolved that the president and treasurer be authorized and empowered by the board, in the absence of a regular meeting of the same, to do anything which the board might lawfully do in and about the affairs of the company. It was further resolved that a stock assessment be made of ten per cent, on the entire capital stock of the company, for the purpose of forming a working capital of said company, for necessary expenses and for the immediate purchase of presses, patterns, and material, to be sent forthwith to California. It did not by subsequent testimony appear that this assessment was afterwards made or paid.
On the next day, January 4, 1865, six of the gentlemen acknowledged the execution of two certificates, such as in form are required by the acts for .the formation of corporations, &c. Each certified that the subscribers had associated themselves together, under the statutes, &c., “ for the purpose of manufacturing, using, and selling to others to be used, the hay-press known as the Harris Beater Press, or other presses accomplishing a similar purpose.” The corporate name was given. The amount, viz.: one hundred and five thous- and dollars, &c., of capital stock, was specified. The objects of said company ‘ ‘ are to manufacture presses for pressing hay, straw, cotton, and other substances, for which presses are intended to be used in California, also to sell any such articles as may be pressed by said presses, which may be manufactured by them,” &c. ; and also to sell to others rights of manufacturing presses, especially the press invented by John K. Harris, &c.
The certificates farther stated, it is understood, that of the capital stock aforesaid one hundred and fifty-shares of one hundred dollars each are to be issued, fully paid, for the conveyance to said company of the patent right to said Harris Beater Press in and for the state of California. Five directors or trustees, among them the defendant, were named for the first year. The gentleman named at the preliminary meeting as president was not named a.s trustee. It did not appear subsequently that any conveyance was made to the company of the patent-right, or that any stock was issued for a conveyance of it.
About this time a circular was printed, headed Pacific Beater Press Company, San Francisco. Organized January 3, 1865. It stated names of officers, among them as president the gentleman nominated at the preliminary meeting, as secretary and treasurer the gentlemen nominated for these offices jointly on the same occasion, and as vice president the defendant. The circular stated the value and advantages of the Beater Press. The so-called secretary and treasurer composed and had printed this circular. There was evidence that this circular was looked at, at one of the preliminary meetings of the associates. The witnesses on this subject produced by the plaintiff had no recollection of a definite kind. There was no evidence that it was issued by the company or by any meeting of the associates. It was sent to California. There was no certain proof that the defendant had ever seen this circular. There was no evidence of the dates of these matters, but a jury might have found that they took place before February 25, 1865.
It appeared that the defendant received certificates of stock in the company, and gave a receipt for them on the stock-book, but when was not proved.
About this time it was learned by defendant and others that a portion of the patent-right which the com pany was to use, had been conveyed, so that .the company could get no title to that portion. The defendant offered to prove that upon learning of this he denounced the whole proceeding as a fraud, and upon the eve of his departure tor California, on or about March 1,1865, addressed a note to the so-called president, requesting him to inform Mr. Bobbins, hereafter mentioned, that the defendant had resigned all connection with the “enterprise.” Upon objection of plaintiff’s counsel, this offer was rejected. It is uncertain from the printed case whether the court allowed to be read from a deposition of a witness who had knowledge of the transacsactions, the following, viz. : “All contracts were then agreed to be cancelled, and were cancelled so far as I recollect, and. all stock and scrip issued were, when received, considered valueless,” or whether it was not allowed to be read, upon plaintiffs’ objection. The defendant testified that he immediately delivered one-half of the certificates received by him to C. P. Huntingdon, and deposited the other half for J. Collyer Bobbins, “they being the parties to whom I sold all my interest.” The defendant offered to show, by reading a deposition, that two stockholders, upon learning the facts, having taken stock, returned it to the parties from whom they bought, and received their money back. There was evidence which would have sustained a jury in finding that the act in relation to abandoning the association took place before February 22, 1865.
There was testimony that on February 22,1865, the secretary of the company issued and delivered certificates of stock to Viele & Son,upon information received by the secretary that presses had been bought from that firm for the company. The secretary had no knowledge of the contract of purchase, and there was no evidence in the case as to it.
On February 25, 1865, one of the certificates above described was filed in the office of the secretary of state. No certificate was'filed in the office of the county clerk. By whom or by whose direction this filing wás done was not shown.
As appeared by two bills of lading in evidence, some hay presses and other packages were received on board of a ship for California, on January 12,1865, and other merchandise of the same kind on board another ship on March 18, 1865.
The evidence showed that no meeting of trustees was held from January 3, 1865, until March, 1867. After the last date two meetings were called by the gentleman named as secretary, but no quorum appeared ; the defendant was not present and no business was done or attempted. No other business of any kind was done for the association in New York ; no capital was paid in, no by-laws were made. The only place of business of the so-called company was in the office of the secretary and treasurer. There was no certain evidence- that the company had a sign upon the office. The only books of the company were the books containing the minutes of meetings referred to, and a book for the certificates of the shares of stock.
The only other business alleged to have been done for the company was in California. On the first Monday of January, 1865, Davis, who had been named as agent for California, went to San Francisco, where he lived. He either took to, or received in, California the circular referred to. He did nothing for the company down to August, 1865. In that month he received from the gentleman named as secretary a notice of the shipment of the merchandise specified in the bills of lading. No proof was given of the contents of that notice. The bills of lading referred to were of goods shipped by Simeon Leland (be being the gentleman named as president), to be delivered to J. C. Davis or his assigns, he or they paying freight. The consignee of the ships wrote to Mr. Davis personally that there were to his consignment certain merchandise, describing it, 1“ shipped by Simeon Leland, Hew York.” “ It was only last night, after considerable inquiry, that we ascertained your address, and now write to you hoping thereby to save you the heavy expense which will be incurred by storing your large consignment,” &c. ■ Mr. Davis answered in writing, “ I shall write to Mr. S. W. Mitchell to do the best, he can in storing any consignment of presses per ship Bengal. You will please store them as ordered by him.” There was no evidence of any statement between the parties that these shipments were on account of the company. According to the evidence of the consignees, the plaintiffs, there was a conversation soon after the letters were sent, in which Davis showed the circular and said that he expected to be in funds soon, either by sale of the presses or by funds which he expected to receive from the company east, and asked them to advance the freight and charges, that the stockholders were wealthy and would respond. Mr. Davis, as a witness for the plaintiffs, testified that the consignees requested him to call and pay freight upon the shipments, and his reply was he had no money belonging to the company, and could not pay the freight and charges upon the presses. Thereupon the merchandise was stored by plaintiffs, and the freight paid by them. The claim in this action was for the amount of' the freight and the cost of the storage.
There was a defense in the answer of the statute of limitations. The court upon the trial, refused to submit to the jury any other question than that which arose upon the issues as to the statute of limitations. The jury found for the plaintiffs, and judgment was e.nered - for plaintiffs. The defendant appeals from the judgment.
Gilbert & Smedley, attorneys, and D. C. Calvin and F. G. Smedley, of counsel for appellants, on the points considered by the court, urged, among other things :
I. The reception of the "copy certificate under defendant’s exception was error, especially as it appeared that the certificate had never been filed, according; to the statute, in the office of the clerk of the city and county of New York (Laws of 1857, chap. 262 and its amendments; Laws of 1848, chap. 40, § 9). Under that act there was no authority to file a pretended duplicate until the certificate had been filed in the office of the county clerk (Childs v. Smith, 55 Barb. 45). This case was reversed in 46 N. Y. 34, upon a different point; but Judge Folgeb, at page 41, speaking of certain acts of the proposed corporation, says s 16 They did not show a full compliance with the statute nor establish that a corporation was duly formed.” See also N. Y. Car Oil Co. v. Richmond, 10 Abb. 185.
II. It is insisted that the filing of the certificate, as required by the statute, is an indispensable prerequisite, and no amount of user will supply the defect. Such prerequisites are a substitute for a charter by legislative act. No amount of user will supply the place of a charter in the one case, or the making and filing the certificate in the other (Uttley v. The Union Tool Company, 11 Gray, 139). To establish a corporation de facto, it must be shown, 1st, a charter or some law by which the corporation might be created ; 2d, user by the party to the suit of the corporate powers claimed (M. E. Union Church v. Pickett, 19 N. Y., 482, p. 485). It is entirely clear that the action can not be maintained without proof of the incorpora tion, and of the company’s liability to the plaintiffs; and proof that the defendant and his associates assumed to purchase the presses in question, and ship them to California, and that their agent procured their storage, while it may make them liableo as partners or otherwise, can not create a corporation or make the defendant liable as trustee thereof. But it is submitted that the proof shows no such user as would help to create the corporation, if the defect wei'e not organic. All user, to be effective, must follow the alleged defective organization, which must- date from the filing of the certificate, February 25, 1865. And there was never a meeting held when a quorum was present or business was done after that time. And the only proof tending to show user is the pretended purchase by Leland, with the pretended stock of the company, in his own name, of the presses in question, and his shipment of them in his own name to an individual in no way legally representing the company.
III. The pretended purchases of presses by Leland were without authority ; there was no evidence of his authority conferred by the trustees, nor of their subsequent ratification thereof. By virtue of his office as president he had no such authority, and it could only be conferred by a vote or resolution at a meeting of the trustees. The acts of a corporate officer, acting without a special authority, are binding upon the corporation only so far as they are within the scope and ordinary course of the duties of his office (Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige, 127; Boome v. City of Utica, 2 Barb. 104; Ashuelet. Manf. Co. v. Marsh, 1 Cush. 507; Ridgway v. Farmers’ Bank, 12 Serg & R. 256 ; Marine Bank v. Clements, 3 Bosw. 600 ; Dabney v. Stevens, 2 Sweeney, 415, at page 426). It is insisted that Davis’ superintendence was limited to the sale of rights to use the presses in question, and the receipt of the price (Adriance v. Roome, 52 Barb. 399 ; Ang. & Ames on Corp., § 277; Dabney v. Stevens, 2 Sweeney, at page 429).
IV. Davis had no authority to charge the company with a claim of ownership, or admit his agency. That must be shown by the acts of the company through its trustees (1 Hun, 157; 1 Paige, 601; 23 N. Y. 439 ; 19 Barb. 310 ; Abb. Dig. Corp. 282, pl. 52, 53 ; Directors, 1 Disney, 285).
V. There is no evidence in this case to estop the defendant from. denying the existence of the corporation in question. There is no evidence that the plaintiffs have acted upon the representations of the defendant, for he has made none. The only thing he did was to attend two preliminary meetings and sign a certificate of incorporation which never became operative; and it is submitted with entire confidence that the doctrine of estoppel has no application to such a case, and can not be made the pretext of imposing a liability in contravention of common law. Estoppel must be mutual, and only attaches where a party asserts a fact, the denial of which would injure the adverse party, who has acted upon the faith of it (Welland Canal Co. v. Hathaway, 8 Wend. 480; Lawrence Brown, 1 Seld. 394; Irvin v. Conklin, 36 Barb. 64). The case of Buffalo & Alleghany R. R. Co. v. Cary (26 N. Y. 75) does not militate against this principle.
Goodrich & Wheeler, attorneys, and W. W. Goodrich, of counsel for respondent, submitted a brief on the facts, and among other things urged as matter of law :
I. The defendant is estopped to plead that the Company was not duly incorporated by reason of the failure to file the certificate in the New York county clerk’s office (Eaton v. Aspinwall, 19 N. Y. 119; affirming 6 Duer, 176; Schenectady Pl. R. Co. v. Thatcher, 11 N. Y. 102; Mc Farlan v. Triton Ins. Co., 4 Denio, 392; Mead v. Keeler, 24 Barb. 20; Abbott v. Aspinwall, 26 Barb. 202).

Opinion:
By the Court.—Sedgwick, J.
The court took from the jury all questions in relation to the corporate character of the Pacific Beater Press Co., and decided them adversely to the defendant. The defendant claimed that the evidence showed that the company was not a corporation defacto or de jure. It was not the latter, beyond doubt, and the most favorable view for the plaintiff would be, that there was such a user of corporate functions and rights un der color of a due organization, as a corporation, as to make what is called a de facto corporation. The cases hold that acting as a corporation, for any length of time, not being sufficient to make a corporation, it is necessary to show a charter or law which of itself creates, upon its acceptance, a corporation, or if the law provides that a corporation may be formed upon a subsequent compliance with prescribed regulations and forms, that some of those regulations and forms must have been observed, although others have been omitted. How much must be done to make/a colorable charter, or how much may be omitted, it has not been found necessary in the cases to decide. In the cases to which our attention has been called, the defect was of minor importance. Most of the steps had been taken, and it has generally been called an irregularity. What particular step in the process, designed by law to be complete wholly, is essential, and what may be deemed not essential, has not been decided. Judge Selden said, in Methodist Epis. Un. Ch. v. Pickitt (19 N. Y. 486): " The rightfulness of its existence not being in issue, of course evidence of any irregularity or of defects in its organization, short of such as would show a want of good faith on the part of those concerned in the proceedings, would be wholly irrelevant. If the lawr exists, and the record exhibits a bona fide attempt to organize under it, very slight evidence of user be-, yond this is all that can be required." In Eaton v. Aspinwall (19 N. Y. 119) the defect was not in the record, but was a want of a payment of a percentage of. capital which the law required, before the incorpo ration should be complete, and the court below gave importance to that. If the facts had been reversed, and the only evidence of an attempt to incorporate had been an organization of individuals, as if they were a corporation, and a payment of the percentage of capital as the capital of a corporation, I doubt if it would be deemed sufficient, even with acts of user, to make a corporation defacto.
The court further said, in the Methodist Episcopal Church v. Pickitt, that the degree of proof of user required depended, "to some extent, upon the nature of the incorporation and the law under which it is organized. Where no provision is made for any permanent evidence of the fact of organization, more proof of user would be required than where, as in this Case, the essential steps by which the organization is accomplished are required to be made matters of record."
I have come to the conclusion that the filing in the office of the secretary of state, of the certificate- of association, was sufficient, with due proof of user, to show the corporate character of the company fór the purposes of this action. I hesitated much, because though no more is needed than mere color of an incorporation, the filing of such a certificate seems so insignificant in its character, under the statute, as hardly to be a single step towards the formation of a company. On its face and by itself, it is not anything called for by the statute. It was not, and it did not, profess to be a duplicate of a certificate filed in the county clerk's office. Yet, unless it is treated as if it were a duplicate, the proof is, that there was nothing done towards an incorporation, and there would not be any color even of existence under an incorporation. It is, however, such a certificate as would be filed if it were a duplicate, and if there was an attempt to make an incorporation; and its contents are so expressive of such a purpose on the part of the associates, that I deem it sufficient, if there had been proof of user under it. Evidently the acts to show user must in their nature be corporate acts, or such as would be corporate acts if the attempted incorporation had been perfected, and they must be unequivocally such. The corporation de facto must be proved. The testimony to prove it must be certain, not speaking as much for non-incorporation as for corporation. In substance, user consists in an enjoyment and exercise (although not rightful) of such corporate franchises and powers as would be given by the law to an association if the attempted organization had been perfected. The contrast to that is, that acts of individuals which would not be corporate acts, if there were a charter, will not be acts of user. The acts must at least appear to be the acts of the association not rightfully incorporated, and the acts must be such as would be within the objects of the incorporation, as stated in that part of the proceedings under the statute, that have been, in fact, taken. The law does not intend, in its due protection of third parties, to encourage the existence' of associations assuming to be the grantees of the sovereign power of the state without authority of law. Third parties deal with associations which may be partnerships or may be corporations, and must depend upon the facts to show which they are, while they are not held to a close or critical examination of the efficiency of the steps taken to accomplish a legal incorporation.
And it should further be said that when the contest is between third parties, as in the present instance, and the incorporation has not been completed according to law, user will not make a corporation defacto against a person who does not take any part in their acts of user, and especially not against one who has done all in his power to prevent business being done under the illegal charter.
Excepting the issuing of certificates of stock to sev eral persons, and, among them, to the defendant, the acts relied upon to show user (at least, as the jury might have found, in those instances where the testimony was. not certain) were acts before the first and only thing was done in the legal formation of a company, viz., filing the certificate in Albany, or were acts not shown by the plaintiff to be within the objects stated by that certificate, or were acts done by persons not shown to be acting within the scope of any authority conferred by the association.
The acts, at the meetings that took place before the certificate was filed, were not done in the exercise of any pretended franchise. On their face they referred to an incorporation afterwards to be formed. They were not ratified by any action in relation to them after the certificate was filed. After that no meetings were held, and no attempt to continue any organization. These acts could have hhd in themselves no tendency to lead third parties to believe that a corporation had been formed. The supposed purchase of the presses which were sent to California was not, indeed, proven upon the trial. Whether the purchase was made by the president as an individual, or representing the company, did not in any manner appear. Granting that he had power given by the association to make purchases for the furtherance of its objects, there was no proof that he bought the presses in the exercise of that power. He had full power to purchase for himself, and not for the company. There is no proof that the articles purchased were such as could be used for any of the objects stated in the certificate. Purchasing presses was not stated to be one of the objects. Certificates of the " company's stock were issued as if in payment of a purchase for the company. That is the single fact to show that the purchase was by the company, but no authority had been given, before or after the filing of the certificate, to use the stock for such a purpose. These presses were not shipped to California in the name of the company. Therefore I think the proof did not show that the presses were the property of the company or bought for the company, and the alleged purchase does not show any use of corporate.powers.
The gist of the cause of action is that the company requested the plaintiffs to pay freight on and to store the presses referred to. If there were such a request it was made by the mouth of Davis, in San Francisco. At the best for plaintiffs, he was then agent for the association. He had been present at a preliminary meeting in Hew York, and had there heard that he was appointed their agent for California, and at the time the presses arrived in California he had in his possession the circular, the particulars of which have been, given, and we will assume that in some way he had the powers of a general agent. It should, however, be said that there was no proof that the association at any time sent the circular to him, or directed it to be sent, or intimated to him that he was to enter upon the exercise of any powers as agent, and he never did any business of the company. There was only a resolution to appoint him agent, not thereafter acted upon. The facts were, then, that the presses did not belong to the company (or at least the jury might have so found), were not bought for the company, were not shown to be suitable to the business of the company, or to further any of its objects. Therefore any dealings in respect of them by Davis were not within the scope of any authority given to him by the association. In what way the plaintiffs or Davis' were led to believe that the presses were the property of the company is not proven. They both thought so, but not by reason of any communication from the asso- - elation, or from any one who by the testimony even assumed to act for it. There was evidence that Davis had been advised of the shipment by the gentleman named at a preliminary meeting to be the secretary and treasnzer. There was no testimony that this advice .stated that the shipment was for the company. The bills of lading stated the shipment was by Leland individually. The notice of the consignees of the ship to Davis stated the same. The answer of Davis, in writing, to that notice did not refer to the company. If, then, Davis did not act in reference to any business of the company, what he did was not an act of user by the company. The plaintiff took the usual risk in dealing with an assumed agent in respect of his act, being one of user on the part of his alleged principals, or as creating a liability on their part.
We now consider whether the issuing of certificates of stock was an act of user under the facts of this case. The time when they were issued does not appear. Neither side attempted to show the time.
In Black River & Utica R. R. Co. v. Clarke (25 N. Y. 208), the judge giving the opinion said, that a subscription to take stock in a company was, in an action upon it against the subscriber, conclusive evidence of the corporate character of the company. The court said, "he is estopped by his own acts and admissions " from denying that corporate character. The court relied upon what was said by Thompson, Ch. J., in regard to contracts in general entered into with corpora tions, in Dutchess Cotton Factory v. Davis (14 Johns. 245), notwithstanding that this was questioned in Welland Canal Company v. Hathaway (8 Wend. 480). This decision was, in fact, also questioned in Williams v. Bank of Michigan (7 Wend. 541), by the chancellor. The court below, in Black River, &c. v. Clarke had made no ruling which called for a decision as to the conclusive character of the admission. The plaintiff below had given in evidence only the subscription paper, and the question was whether it contained enough evidence of the existence of the corporation to prevent a nonsuit. The subscription' paper stated that the company had been formed, under the law of the state entitled, &c., and that the articles of association, with the necessary affidavits, had been filed. If this was a. competent admission by the defendant of the existence of the corporation, the motion for non-snit was properly denied.
At the next term of the court of appeals, it decided Buffalo & Alleghany R. R. Co. v. Carey, 20 N. Y. 75. The action was upon a subscription by defendant's intestate to the stock of the plaintiff. The form of the subscription paper is not given. It was probably unlike that set out in Black River, &c. R. R. Co. v. Clarke. Ho opinion of the majority in the court of appeals was given, and the opinion of the court below is published "in the report. In view of the deductions to be made from the dissenting opinion of Judge Allen, it is difficult to see on what grounds the court, of appeals went in affirming the defendant's obligation. Perhaps the acts of user subsequent to the subscription were considered sufficient. But I can not see that the court of appeals decided that subscriptions estopped the subscribers from denying the incorporation.
In Eaton v. Aspinwall (19 N. Y. 121), while the judge delivering the opinion treated the fact as important that the defendant was a stockholder, he did so only in connection with the main ground, that there was sufficient proof of user. The defendant not only holding the stock, but receiving dividends upon it, furnished two considerations, 1st, it showed he participated in the acts of user ; 2d, it illustrated the equitable ground of the rule, that user, under- an. imperfect organization,''might, in favor of third parties, make a corporation defacto. I can not. see that the court meant to declare as a rule, that a holding of stock formed an estoppel. If there were such a rule, it was not necessary to show any other acts of user, or any attempt at an incorporation.
The issuing of stock should be looked upon, as bearing upon the enquiry, whether in fact it shows sufficiently that corporate franchises were used. If it were issued and received in connection with other corporate proceedings, purposely taken, to exercise corporate powers under an attempted organization, the evidence given by the issuing of the stock would be strong. In the present case, the issuing of the stock, and the receipt by the defendant of a part of it, were isolated acts not accompanied by any other use of corporate powers. All that was done in respect thereto was cotemporaneous with their acts, which the jury might have found formed a disclaimer on the part of the defendant, and even of the most of the associates, of any intention to take part in the further prosecution of corporate business. And at this point we see that, on general principles, there is a Ioqus penitential at which it is not too late to stop, in order not to enter upon a violation of the law. Even if the purchase of presses had been made in behalf of the association, nothing else being done but the issuing of the stock, the manner in which that stock was dealt with, the jury might have found, was significant to show that no corporate privileges were meant to be used.
The defendant testified, that the business of the company not having begun, and, indeed, nothing having been done but the issuing of the stock to him, he expressed the determination to have no further' connection with the affair, and handed the stock to some person with whom he had had some undisclosed bargaining. The whole evidence, however, was such that the jury might have found that this act was nothing but an endeavor to do what was just, in respect of the interests of such third person, but not as recogniz ing the existence of the corporation.
The defendant having signed the articles of association which named him as trustee, only held him to the obligations of an officer to carfy on the corporate business, provided such use was made of the paper as was designated by its character, viz., that it was to be used to form a corporation de jure.
On the whole case I think there were facts from which the jury .would at least have had a right to find that there had been an intention to form a corporation, that before that was carried out, the defendant and others refused to proceed further, that thereupon certain individuals took up the affair and attempted without authority to act for the association, that, in fact, had no existence after the refusal, and that the defendant had done nothing which estopped him from denying the existence of the incorporation. On this ground, as well as on the other grounds, that the facts do not indisputably show for whose account the presses were purchased, nor that a purchase of such presses was within the objects declared in' the articles of association that was filed, or that Davis was the agent of the supposed association in the matter in dispute, I think there should be a new trial, with costs to appellant to abide event.
Curtis, J., concurred.