Tuckasegee Mining Co. v. Goodhue

Avery, J.: The charter of a private corporation confers tlie right to organize and 'enjoy the franchise within the limits of the state granting it. When organized in the proper state, it may enjoy such privileges in another, under the rules of comity, as the local law does not prohibit it. The court was not in error in holding, as an abstract proposition, that a corporation created by the laws of North Carolina cannot be lawfully organized in a foreign state. But, if the allegations contained in the complaint be true, as the plaintiff offered to show, the defendant’s ancestor, in dealing with the plaintiff as a lawful corporation, becaipe a nominal stockholder in pursuance of a pre-existing contract, whereby the alleged corporation was to be organized, and the land in controversy was to be conveyed to a corporation thereafter to be formed (the *984 title to which, meantime, should be vested in said ancestor for the benefit of certain individuals composing the association which it was proposed-to merge into the body corporate). The plaintiff proposed to prove that the said lands were paid for with the money of the alleged corpo-rators and stockholders, who at least attempted to form the plaintiff corporation. The question is whether one, who entered into a contract to hold lands in trns't for an association and transfer the title to a corporation which it was agreed should be formed by the members of the association, and who afterwards dealt with the alleged corporation as a lawful entity, was not estopped from denying his fiduciary relation to the body during his life, and, if so whether his heir-at-law, to whom the legal title descended at his death, is not estopped also as a privy in estate from denying the right of the plaintiff to hold the land, and from thereby evading the duty, he in conscience was bonnd to discharge, of turning over the trust estate to the rightful owner. After taking upon himself the duties of trustee for the association the defendant’s father participated in the organization of the corporation, was elected president of it, and had certificates of shares of stock issued, a larger number of shares having been issued to him than to any other person. After his death these shares were sold by his administrator for the benefit of his estate. If these and other facts which plaintiff' offered to prove had been shown, the defendant Goodhue would have been estopped from denying the lawful existence of the corporation for which he was trustee. One who contracts with a party or association as a corporation» is estopped from denying the corporate existence of the body at the time»of contracting, and especially is this the case where such person attempts, by denying its existence, to evade a legal obligation or *985 duty. Jones v. Cincinnati, 14 Ind., 90; Ryan v. Martin, 91 N. C., 464; 110 Ill., 22. "Whether it be called an estoppel or not, it is unquestionably a rule of evidence that often works very just and equitable results. The fact that one incurred an obligation or duty in dealing with a party as a corporation, is evidence of the corporate existence of the party contracting in such capacity, which cannot be denied for the purpose of avoiding the payment of the debt or the performance of the duty. 1 Spelling Pr. Corp, .Sec. 57. In cases of this sort, though the first meeting of stockholders may have been held outside of the State, that fact cannot be shown by the body assuming the powers of a corporation in order to avoid its liability, nor by its debtors for the purpose of evading their accountability under contracts made with it. Heath v. Sylvester, &c., 39 Wis., 146. If the law could constitute any other agent for the State than the Attorney General to institute proceedings against pretended corporations, the courts would not select as such agents those who are attempting to evade the performance of a duty which equity and good morals require them to discharge without hesitation or delay. We think that the court, below erred in holding that the proof was not sufficient to preclude the defendant from denying his father’s obligations and duties to the plaintiff Company as a corporation. There wras error. The judgment of non-suit is set aside and a new trial granted. New Trial.