Court Opinion

ID: 7939536
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:13:18.922477+00
Date Added: 2024-06-11T16:33:40.208925
License: Public Domain

Grant, C. J.
{after stating the facts). 1. The learned counsel for the plaintiffs state their claims under the two counts of the declaration, as follows:
*53“ The first count is based upon the theory that the Davis Mining Company was not a legally organized corporation, and was designed to permit recovery by plaintiffs in case it should be found there was no such legally authorized incorporation, but only an association of individuals (themselves) under a corporate name. The second count is based upon the theory that the Davis Mining Company was a corporation, at least de facto, all the capital stock of which was owned' by the four plaintiffs. Under each count the bargain claimed to have been made and carried •out by actual delivery (the second count including the capital stock) was the same. ”
There is nothing in the record to sustain the theory that the Davis Mining Company was not a legally organized corporation, or that plaintiffs were doing business as tenants, partners, or in any other capacity than that of corpora-tors. They had only the powers and rights of stockholders. The company was duly incorporated, and had a president, secretary and treasurer, and board of directors. It carried on its entire business and kept its books and records as a corporation. It was not only a de facto, but a de jure, corporation. The act of the legislature above referred to recognizes such a corporation as valid, and only declares its contracts void when made in this State before it has complied with the provisions of the law; The court below was therefore right in holding that there could be no recovery under the first count.
2. Under the second count, it becomes necessary to. determine what the contract was and with whom it was made. The offer stated in the letter of December 19th, and the telegram accepting it, constitute the contract. Its terms are clear and unmistakable. All prior conversations and negotiations, whether written or verbal, cannot be invoked to change the letter of the contract. The defendant offered to buy “the Davis Mine, and all the property, machinery, etc., belonging thereto.” It was not an offer to buy the stock of the individual stockholders. This is further made clear by the proposed terms of payment, to wit, to pay all the debts of the mining company *54and $3,000 to the stockholders. It meant a purchase of the franchise of the corporation, with all its rights and property. The letter was written to the president of the company. There is nothing in the record to indicate that the parties understood that the one was selling and the other was buying the stock of the plaintiffs. Their conduct at the time and subsequently clearly shows that they understood that they were acting in a corporate capacity, and not as individual stockholders. They retained their certificates of stock. They had previously attempted to sell defendant 13,000 shares of it, but he refused to purchase. They made no tender of the certificates until the close of the trial.
The original declaration was filed March 26, 1896, and was upon the common counts alone. Nothing .further appears to have been done in the case until July 6, 1896, when plaintiffs filed an amended declaration containing a special count setting forth that they were the owners of the property, and describing it, and that they had sold it to the defendant for $26,000. To this amended declaration the defendant pleaded the general issue. Subsequently, by the permission of the court, he filed an amended plea, giving the special matters in defense as stated in his letter of January 31, 1896. Plaintiffs, by leave of the court, on March 20, 1897, filed a second amended declaration, in which for the first time they alleged a sale of the stock.
There was no corporate action taken by the stockholders or by the directors authorizing the transaction. The assignment of the lease was made by the president and secretary in behalf of the corporation, and on the face of it was a corporate act. Stockholders do not own the corporate property, and cannot mortgage, sell, or convey it. The title is in the artificial being called the corporation, not in the stockholders. Such property is not under the control of its stockholders, whether they act separately or collectively. The laws under which these corporations are organized provide the agencies and methods by which *55their property can be sold and transferred. Randall v. Dudley, 111 Mich. 437; Humphreys v. McKissock, 140 U. S. 304; Fitzgerald v. Railway Co., 45 Fed. 812; England v. Dearborn, 141 Mass. 590; Button v. Hoffman, 61 Wis. 20 (50 Am. Rep. 131); Baldwin v. Canfield, 26 Minn. 43; Gashwiler v. Willis, 33 Cal. 11 (91 Am. Dec. 607). In Smith v. Hurd, 12 Metc. (Mass.) 371 (46 Am. Dec. 690), Chief Justice Shaw said:
“The individual members of a corporation, whether they should all join, or each act severally, have no right or power to intermeddle with the property or concerns of the bank, or call any officer, agent, or servant to account, or discharge them from any liability.. Should all the stockholders join in a power of attorney to any one, he could not take possession of any real or personal estate, any security or chose in action; could not collect a debt, or discharge a claim, or release damage arising from any default; simply because they are not the legal owners of the property, and damage done to such property is not an injury to them. Their rights and their powers are limited and well defined.”
In Button v. Hoffman the court say:
“These general principles sufficiently establish the doctrine that the owner of all the capital stock of a corporation does not, therefore, own its property, or any of it, and does not himself become the corporation, as a natural person, to own its property and do its business in his own name. While the corporation exists he is a mere stockholder of it, and nothing else.”
The artificial being known as the Davis Mining Company was still in existence after the alleged sale and transfer to defendant. The transfer of the stock-book to him, either individually or as secretary of the company, did-not operate to cancel the stock standing in the names of these plaintiffs. They might have sold the stock to an innocent purchaser, who would take a good title. Such certificates, in the absence of some provision of law to the contrary, stand upon the same basis as commercial paper, and innocent purchasers and pledgees take title by assignment and delivery. McLean v. Charles Wright *56Medicine Co., 96 Mich. 479, and authorities there cited.
We are forced to the conclusion from this record that this was a corporate contract, and void under the law above cited. While the corporation might be estopped to plead such a contract in its defense, it cannot maintain an action upon it without annulling the law. Seamans v. Temple Co., 105 Mich. 400 (28 L. R. A. 430, 55 Am. St Rep. 457); People’s Mut. Ben. Society v. Lester, 105 Mich. 716; People v. Hawkins, 106 Mich. 482.
3. If, however, all the stockholders of the corporation could by unanimous action contract, instead of the corporation, acting through its properly authorized officers, it would not aid the plaintiffs. What such a corporation could not do in its corporate capacity all its stockholders acting together could not do for it. If the act or contract of the corporation is void under the law, so, also, is the joint act or contract of all the stockholders, designed to accomplish the same purpose, and thus evade the law.
The judgment is affirmed.
The other Justices concurred.