Court Opinion

ID: 6906487
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:01:12.93138+00
Date Added: 2024-06-11T16:06:21.978807
License: Public Domain

OLSON, J.
1. There is but a single point to be decided in this case, viz.: Was the Moonshine Ditch Company sufficiently organized at 8 o’clock on November 30, 1901, to initiate a water right? As to ability to transact business, corporations may be divided into three classes. First, de jure corporations, or those where the organization is entirely and legally perfected. Second, de facto corporations where there has been a bona fide attempt to organize a corporation and a user of corporate powers, but the organization is defective. Third, corporations not sufficiently organized to come within the latter class.
2-4. It is apparent from the statement of facts that the Moonshine Ditch Company falls in the class of de facto corporations and within the rule laid down in Splonskofsky v. Minto, 62 Or. 560 (126 Pac. 15). We *388have clearly in this case a law under which the corporation could he organized, a bona fide attempt to organize a corporation, and an actual use of corporate powers. It was an act of using corporate powers to appoint Gr. W. Cole as secretary and agent of the corporation. The filing of a notice to initiate a water right, which was made in the name of the corporation, is a user of corporate powers. The act of Gr. W. Cole as secretary and agent in the making and filing of the notice in the name of the corporation, even if considered as the act of a promoter, was ratified by the corporation by following up said notice by the construction of an irrigation system and user of water therein, and their claim before the water board on the water rights so initiated. The act has been plainly ratified: Schreyer v. Turner Flouring Mills, 29 Or. 1 (43 Pac. 719). Having established the Moonshine Ditch Company as a corporation de facto it is a settled law in this state that the legality of its existence cannot be inquired into collaterally. A direct attack may be made by the state, and in certain circumstances a direct attack may be made by individuals, but no collateral attack as attempted in this case will lie: Marsters v. Umpqua Oil Co., 49 Or. 374 (90 Pac. 151, 12 L. R. A. (N. S.) 825); Leavengood v. McGee, 50 Or. 233 (91 Pac. 453); Brown v. Webb, 60 Or. 526 (120 Pac. 387).
The above cases definitely settle the law of the State of Oregon to the effect that a corporation de facto cannot be collaterally attacked as to the regularity of its organization by any party other than the State of Oregon. The lower court is affirmed. Aeeirmed.
Harris, J., absent.