Court Opinion

ID: 6241963
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:46:56.946335+00
Date Added: 2024-06-11T08:58:13.311227
License: Public Domain

Opinion by
Mr. Chief Justice Sterrett,
It is essential to the creation of a corporation under an enabling statute that all material provisions should be substantially followed ; and, exemption from personal liability being one of the chief characteristics distinguishing corporations from partnerships and unincorporated joint stock companies, it follows that those who transact business upon the strength of an organization which is materially defective are individually liable, as partners, to those with whom they have dealt. What provisions are material must be gathered from the relation of each to the purpose and scope of the act; and when, therefore, successive steps are prescribed for the creation of corporations these must obviously be regarded as imperative. Enabling statutes, on the principle of expressio unius est exclusio alterius, impliedly prohibit any other mode of doing the act which they authorize; they must be strictly construed: Sutherland on Stat. Construction, § 454. Hence it has been uniformly held that requirements in respect of filing charters are imperative: Childs v. Smith, 55 Barb. 45; Smith v. Warden, 86 Mo. 382; Abbott v. Smelting Co., 4 Neb. 416; Beach on Corporations, sec. 162.
It is plain even from a cursory reading of the act of April 29, 1874, P. L. 77, that recording of the certificate “in the office for the recording of deeds, in and for the county where the chief operations are to be carried on,” was intended to be made one of the conditions precedent to corporate existence. That was the last of successive steps required to be taken, and the right to begin the transaction of corporate business was made to depend upon the taking of that step. . “ From thenceforth,” the act expressly declares, the subscribers and their associates and successors “ shall be a corporation for the purposes and upon the terms named in the said charter.” One of the purposes of the *307act being exemption from personal liability in tbe transaction of business, it is obviously material that the public should have notice, and notice by record was accordingly prescribed. Failure to record was failure to comply with one of the express conditions of incorporation, and consequently of exemption from liability.
It may be conceded that had plaintiff dealt with defendants, as a corporation he would have been estopped from claiming 1 against them in any other capacity, even though they failed to record their charter: Spahr v. Bank, 94 Pa. 429. But it is not pretended that he had any knowledge of the existence of the charter; and there was certainly nothing, either in the name under which they did business or in their conduct, which should have put him upon inquiry. In these circumstances he was j amply justified in dealing with them as partners. It was through [ their default — not his — that they were so treated; and it would ¡ be manifest injustice that he should lose his admittedly honest i claim.
In the absence of an express agreement the acceptance of a note from the defendants, as a- corporation, after plaintiff had performed his part of the contract, cannot operate by way of election or estoppel. The relation of the parties was fixed by their status when the original contract was made and cannot be changed by gratuitous inference. The members of the alleged corporation were the defendants, and were not injured by the acceptance of the note. The principle which treats the acceptance of a note as additional security to and not as satisfaction of a mechanic’s lien (Jones v. Shawhan, 4 W. & S. 257) is, with even more justice, applicable here.
It follows from what has been said that the instructions complained of are erroneous.
Judgment reversed and a venire facias de novo awarded.