Court Opinion

ID: 3865027
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:58:43.119623+00
Date Added: 2024-06-11T14:14:55.763678
License: Public Domain

The plaintiff in these suits prays for injunctions to restrain the defendants from selling his land under executions recovered by them against the American Steam and Gas Pipe Company. The defendants claim the right to sell under the executions, on the ground that the plaintiff is a member of said company, and, as such, liable in his person and property for its debts, under Rev. Sts. c. 128. The plaintiff contends that he is not a member, and, therefore, is not subject to any such liability, for the reason that the American Steam and Gas Pipe Company never had any legal existence as a corporation.
The charter, or act of incorporation, for the American Steam and Gas Pipe Company, was granted or passed in 1867, the capital named in the charter or act being seventy-five thousand dollars. At that time, there was in force in the state a public statute which provided that no act of incorporation granted after *Page 114 
the passage thereof, "for any other than for religious, literary charitable, or cemetery purposes, or for a military or fire company, shall take effect until the persons therein incorporated shall have paid to the general treasurer the sum of one hundred dollars, if the capital limited by such act of incorporation is the sum or any less sum than one hundred thousand dollars." The hundred dollars, required by this statute, was not paid for the American Steam and Gas Pipe Company, and consequently, their act of incorporation never went into effect, if it is to be construed as passed subject to the statute. We think it is to be so construed, there being no clause of the act excepting it out of the operation of the statute. See The Union Horse Shoe Works v.Lewis, 1 Abbott U.S. 518.
The defendants contend that, even if the act has never gone into effect, the existence of the company as a corporation cannot be questioned in a collateral proceeding. It is undoubtedly the rule that, if a charter has once been duly granted and accepted, the state alone can enforce a forfeiture of the charter for any violation thereof, or failure to comply with its considerations on the part of the corporation; and that, until the state sees fit to enforce the forfeiture, the corporation is to be recognized as legally existing in all collateral proceedings. But here, the act of incorporation being inoperative, there never was any corporation to incur a forfeiture, or any charter to be forfeited. We know of no rule which precludes inquiry into the question, whether a company which assumes to act as a corporation has ever been incorporated, in any case, in the absence of any matter of estoppel to prevent the inquiry.
But the plaintiff, in order to have the relief which he seeks, ought to satisfy us, not only that his company is not a corporation, but also that he is entitled to show the fact as against its creditors. We assume, as we think the bills warrant us in assuming, that the plaintiff is a stockholder in the American Steam and Gas Pipe Company, though he has done nothing as such, except hold his stock. The question then is, whether a stockholder, who does nothing but hold his stock, is estopped, when pursued by a creditor of the supposed corporation, from denying its existence. We think he is so estopped. By becoming and continuing a stockholder, he holds himself out as a corporator, and so *Page 115 
contributes to the belief that the company with which he is associated is a corporation. To permit a person who has so held himself out to say that he is not a corporator, when legally pursued as such, would be to permit him to take advantage of his own wrong. He is like a person who, having held himself out or suffered himself to be held out as a copartner, may be charged with the copartnership debts. Or he is like a person who, without authority, as executor or administrator, intermeddles with the property of a decedent, and so becomes chargeable as an executor in his own wrong. The plaintiff having assumed the character of a corporator, where he is sought to be charged as such, ought not to be heard to say that the character was falsely or unlawfully assumed. The fact that he was not active in the business of the company cannot avail him; for it is the assumption to hold the stock as if he were a corporator, which makes the mischief. It might easily happen that the stockholder, whose name contributed most to the credit of the supposed corporation, was least active in its business, and it would be plainly unjust to exempt him from liability to the creditors, merely because of his inactivity.
We are aware that in Utley v. Union Tool Company, 11 Gray, 139, the Supreme Court of Massachusetts exempted a stockholder from liability to a creditor of a supposed corporation, upon proof that the corporation had never legally come into being under the statute of that state. But it does not appear that in that case the question of estoppel was raised by the counsel or considered by the court. We should agree entirely with the Supreme Court of Massachusetts in their decision in any case in which the estoppel would be inapplicable.
The plaintiff also seeks relief upon the ground that the writs in the actions against the American Steam and Gas Pipe Company were not duly served. But it appears from the copies of the records in those actions, which are annexed to the bills, that the company appeared thereto, pleaded the general issue, and submitted to judgment. The defect in the service of the writs, if there was any, was caused by this action of the company. The plaintiff, however, contends that, though entire copies of the records were annexed to his bills, only parts of them were incorporated therein, and that the parts so incorporated do not show *Page 116 
the appearance, plea, and submission to judgment. But, even if this be so, we think it immaterial. The Court of Common Pleas, in which the judgments against the company were recovered, is a court of general jurisdiction, and, in regard to such a court, the rule is that jurisdiction is to be presumed until the contrary is proved; and certainly we should not hold the contrary to be proved, so long as any part of the record in which the fact of jurisdiction would be likely to be shown, was withheld.
We think the demurrers must be sustained.
Demurrers sustained. Bills dismissed with costs.
NOTE. — This case was first heard by BRAYTON, C.J., and DURFEE, J. After the decision, the plaintiff petitioned for a rehearing, upon which the parties were heard before BRAYTON, C.J., and DURFEE and POTTER, JJ., and the petition was dismissed. The foregoing opinion was delivered at the October Term of the court, 1870; but it is so closely connected with the next following opinion in the case of Slocum v. Warren  others,
delivered at the present term of the court, that it has seemed best to print it here.