Consolidated Textile Corp. v. Exposition Cotton Mills

Hines, J. (After staging the foregoing facts.) The first headnote needs no elaboration. [751] Is the plaintiff estopped, under the facts in the record, from undertaking to have a receiver appointed for the property of this company with the view of having its affairs wound up and its assets distributed among its stockholders, on the ground that the corporation had been dissolved by the expiration of its charter? In January, 1922, resolutions proposing to renew the charter of this company were sent to the plaintiff, so that it might know that it was the purpose of the company to apply for a second renewal of its charter. To these resolutions the plaintiff made no objection. Its representative voted for the renewal. At directors’ meetings held in March, June, September, and December, 1922, and March, 1923, dividends were declared and accepted by plaintiff. At most, if not at all, of these meetings the plaintiff’s representative was present participating in them, and making no objection to declarations of the dividends. At a meeting of the stockholders of the company in September, 1922, the plaintiff’s stock was voted by proxy for all the present officers of the company. At that meeting a resolution was passed commending and ratifying the act of the corporation in procuring a second renewal of its charter, and plaintiff’s stock was voted in favor of this resolution. All the stock of the company was so voted, and the action of the board approved. Since April 5, 1922, the directors met every two weeks. Plaintiff’s representative on the board was present at nearly all of these meetings. Various corporate acts were done, including authorization of a new apartment house for operatives at a cost of $15,000, the purchase of a lot by the company for $1,800, extensions in the cloth-room at a cost of $6,000, extensive repairs on the cottages of the company, purchase of additional machinery at a cost of $32,000, purchase of new looms at a cost of $100,000, the making of a contract for wiring and equipping the mill village at a cost of $20,000, the purchasing of supplies by the factory at a cost of $3,359,146, and the borrowing of $1,000,000. All these corporate acts were done with the knowledge and without the objection of plaintiff. In April, 1922, after the company’s charter had been renewed and after it went into effect, plaintiff purchased 367 additional shares of the stock of this company; and in April, 1923, it bought 308 additional shares, all of which were transferred to it on the company’s books. Persons who have dealt with a corporation as such are estopped [752] from denying its corporate existence. Civil Code (1910), § 2226. One who deals with a corporation as a legal entity, capable of transacting business, and in consequence receives from it money or other thing of value, is estopped from denying the legality of its existence. Petty v. Brunswick &c. R. Co., 109 Ga. 666 (3) (35 S. E. 82). The plaintiff stockholder was aware of the intention of the company to apply for a renewal of its charter, and made no objection to this proceeding. He afterwards voted his stock in ratification and approval of the renewal thereof. He voted for the election of directors after the charter was renewed. With knowledge of all the facts, plaintiff afterwards acquired stock in this company. This stock was transferred by the new company to it on the company’s books. Plaintiff’s representative aided in the conduct of the corporate business under the new charter. Plaintiff had a special representative on the board of•'directors. If plaintiff had made direct application to the court for leave to file an information, in the nature of a quo warranto, against the company to require it to show by what authority it exercised its corporate powers, such application should have been rejected by the court. Cole v. Dyer, 29 Ga. 434. Clearly the plaintiff is estopped by its conduct in this matter, and has no standing in a court of equity when it seeks to have the affairs of this company wound up and its assets distributed among its stockholders. Judgment affirmed. All the Justices concur. Kussell, C. J., dissents from the second division of the opinion.