Court Opinion

ID: 7809371
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:10:57.79764+00
Date Added: 2024-06-11T16:30:25.538774
License: Public Domain

McCULLOCH, C. J., (dissenting). The Arkansas Public Service Company was undoubtedly a de facto corporation, according to the great weight of modern authority. So was the concern dealt with in the case of Garnett v. Richardson, 35 Ark. 144. The facts in the two cases are identical so far as concerns the ineffectual attempt to organize a corporation. The principle which formed the basis of the decision in Garnett v. Richardson is that participation in the operation of a business under corporate name without 'Completion of the organization so as to constitute a corporation de jure, makes such participants copartners in the business and renders them liable for the debts of the concern. The facts in Garnett v. Richardson were that the defendants were original organizers of the incomplete corporation, but it was their participation in the business which rendered them liable for the debts of the concern. This was made plain in the case of Breitzke v. Tucker, 129 Ark. 401, where we said that “to hold persons attempting to incorporate liable as partners, there must not only be an abortive attempt to incorporate, but there must also have been an attempt, after the failure to incorporate, to conduct the business for which the corporation was intended.” In the present case the party sought to be held liable for the debts was not an original incorporator, but he purchased stock in the corporation and actually participated in tSh.e operation of the business as an interested party — not as a mere employee. He was just as much a participant in the operation of the business as if he had been an original stockholder, and the fact that the stock had not actually been transferred to him is not important. He was the real owner of the stock, 'and participated in the operation of the business as one interested in the results of the operations. This brings him clearly within the doctrine of Garnett v. Richardson, which has not been overruled and which the majority does not now seem disposed to expressly overrule. We did not overrule it in Bank of Midland v. Harris, 114 Ark. 344, but, on the contrary, we recognized its binding force as a precedent by distinguishing it from the case under consideration. I think it would be better to overrule Garnett v. Richardson in express words rather than to attempt to distinguish it from the present case. There is a conflict in the testimony in this case, and the issues ought to have been submitted to the jury.