West Winsted Savings Bank & Building Ass'n v. Ford

Ellsworth, J. It appears that in March, 1852, the respondent, with twenty-five others, took measures to form a corporation in West Winsted, under the act of 1850 authorizing the establishment of Savings and Building Associations. The corporators <prepared and signed the articles of association, and caused a copy to be left with the clerk of the town, in all respects complete except that the names of the corporators were not appended. They commenced and ever since have continued’ to prosecute their business, (somewhat — 288 — extensively,) under their corporate name, “ The West Winsted Savings Bank and Building Association.” In July, 1854, the respondent applied to and received from the company a loan of $1,000, from which a bonus of twenty-eight per cent, was deducted, leaving the amount actually received $720. For this loan of $1,000 he executed his note to the company, and agreed to secure it by a good and perfect deed of the land described in the petitioners’ bill. It is found that he did execute and deliver to them a deed as agreed, except that one of the witnesses to it was a member of the company, and therefore not a good witness, as this court has recently decided. In consequence of this the deed is not good, and the debt is not secured. The company have now brought their bill to obtain a good and perfect deed. All the facts stated in the bill are found to be true except what is said about the corporators having signed the copy of the articles left with the town clerk. Our advice is asked as to the company’s right to demand and have such a deed, together with a decree of foreclosure; and whether the bonus is legal and may be enforced, or should be rejected, in ascertaining the sum which is now due on the note. We think the company are entitled to the relief they ask for, including in the debt the bonus of twenty-eight per cent. It is objected to any decree in favor of the petitioners, that they are not a body corporate as they have alleged, and can not bring suit, in as much as the corporators did not comply with the fifth section of the act, which says a copy of the articles shall first be left with the town clerk. On the one hand it is claimed that the statute requires that a copy shall be left and nothing more, and that the court has no power or right to superadd any other pre-requisite; on the other it is claimed that th&paper is nota copy without the names of the stockholders which are appended to the original. We have not thought it important to examine or decide this point, because we are ail satisfied for several reasons that no such objection ought to prevail in this case. In the first place, an objection to the existence of a corporation plaintiff can not be raised upon the general issue. It — 289 — is preliminary in its character, like all objections to the person or character in which a plaintiff sues, and should be pleaded in an earlier stage of the cause. The existence of a corporation and its capacity to sue are admitted by a plea to the merits. The authorities on this point are very numerous. Phœnix Bank of N. Y. v. Curtis, 14 Conn., 437. Champlin v. Tilley, 3 Day, 303. Sutton v. Cole, 3 Pick., 232, 245. Penobscot Boom Corporation v. Lampson, 16 Maine, 224. Bank of Manchester v. Allen, 11 Verm., 302. School District v. Blaisdell, 6 N. Hamp., 197. Bank of Utica v. Smalley, 2 Cow., 770. In the second place, the respondent is estopped by matter in pais. We have seldom met with a case to which this kind of equitable estoppel is more properly applicable than the present. In 1852, the respondent with others united and formed this association and proclaimed themselves a corporation under the act of 1850. They unitedly took what were supposed to be the necessary measures to perfect their organization according to law; and if it has not been exactly done, the omission was through their mutual mistake and misapprehension. They intended that it should be considered as done, and so we must now treat them, not only as possessing a corporate existence, but as having a corporate existence under the statute, and having, as to and among themselves certainly, the attributes of such a corporation. The respondent has influenced persons to become members of the company, some by subscribing and some by purchasing from those who had subscribed, and to deposit their moneys and form contracts with the company as duly incorporated and qualified to act as a corporation under the provisions of the statute. Besides, the company has, during all this time, with the concurrence and co-operation of the respondent, been carrying on business as a corporation, admitting new members, choosing officers and agents, borrowing and loaning money, receiving money on deposit and the like, until the rights and duties of the corporators and the corporation have become exceedingly multiplied and important; and, which ought to be conclusive upon the re — 290 — spondent, he has borrowed this very money and given his note and deed for it to the company by its corporate name. It would be a reproach to the law, if, after this, he can be allowed to call in question the existence of the corporation . or its capacity to loan the money. . Of what particular importance was the leaving a copy of the articles of association to the members of the company ? How did the omission affect or injure them ? Their relations between themselves or with the company did not grow out of that circumstance, and we can not allow it to have any effect on these parties; however it may be as to the right of the government to complain, if it see fit, and prosecute the company by a writ of quo warranto. The doctrine of equitable estoppel is of so’ common application here and elsewhere at this day, and has been so often discussed, and shown to be founded in such obvious propriety and necessity, that we need not spend time in discussing it, and it will be sufficient if we merely state the general principles pertaining to it. At the common law éstoppels are founded on deeds and records of court, but estoppels in equity are estoppels in pais. The doctrine of this kind of estoppels was at first administered as a branch of equity jurisprudence, but is now incorporated into the law. The rule with regard to common law estoppels is a precise and technical one, though supposed to be founded in principles of truth and justice, such as the statement of material facts in specialties or as found by verdicts or judgments upon trials in courts of record. The common law rule is obviously too narrow, and inadequate for the attainment of equity in the multiplied transactions of modern times, and hence the equitable estoppel of the present day. ■ Estoppels in pais are founded in the obligation which every man is uhder to speak and act according to the truth of the case, and in the policy of the law to prevent the great mischiefs resulting from uncertainty, confusion and want of confidence in the intercourse of men, if they were permitted to deny .that which they have deliberately and solemnly asserted and received as true. But the mere acts, statements^ — 291 — or admissions of a party when not performed or made under seal or of record, or in some of those acts to which peculiar authority is attached by law, were not at common law considered as estoppels, and had no other weight than that of evidence, more or less important, but which might be explained or rebutted. By the recent decisions of the courts in this country and in England, a much wider scope is given to the doctrine of estoppels m pais, and it is now held and established, that wherever an act is done or a settlement made by a party which can not be contravened or contradicted without fraud, or gross misconduct which is akin to it, on his part, and injury to others whose conduct has been influenced by the act or omission, or, as was said in Middletown Bank v. Jerome, 18 Conn., 449, where a person by his acts or his words intentionally induces another to believe in the truth of a fact and thereby change his situation or commit his interests, the character of an estoppel will attach to what would otherwise be mere matter of evidence, and will become binding upon a party and decisive with a jury even in opposition to proof of a contrary nature. Equitable estoppels therefore only arise when the conduct of the party estopped is fraudulent in its purpose or unjust in its result, which forms the material distinction between the common law doctrine of estoppel and that which has grown up under the influence of equity in modern times. This entire doctrine has been examined and settled in this court in repeated instances as may be seen by the cases in our books. Kinney v. Farnsworth, 17 Conn., 360. Middletown Bank v. Jerome, 18 id., 450. Noyes v. Ward, 19 id., 250. Whitaker v. Williams, 20 id., 98. Emmons v. Giddings, 24 id., 538. Let this doctrine be applied to the respondent and his course of conduct, and we must see that it is not for him, with this money in his pocket, to call in question the character of the party who has loaned him the money and taken his mortgage. If further authority is wanted we refer to Worcester Medical Society v. Harding, 11 Cush., 285, which is exactly this case, and in which the court promptly overruled this objection. Stow v. Wyse, 7 Conn., 214. Narraganset Bank — 292 — v. Atlantic Silk Co., 3 Met., 282. Congregational Society in Troy v. Perry, 6 N. Hamp., 164. Dutchess Cotton Manufacturing Co. v. Davis, 14 Johns., 238. Eaton v. Aspinwall, 6 Duer, 176. McFarlon v. Triton Ins. Co., 4 Denio., 392. Schenectady & Saratoga Plank Road Co. v. Thatcher, 1 Kern., 108. Palmer v. Lawrence, 3 Sandf., 161. All Saints Church v. Lovett, 1 Hall Sup. Ct., 191. It has been claimed that the respondent is estopped under the common law rule, by the statement in his deed that there is such a corporation as the plaintiffs from whom he has borrowed the money and to whom he has executed his mortgage deed. But passing this, we decide that this fact with the others to which we have alluded are sufficient to constitute a good equitable estoppel, which is sufficient for the present case. It is stronger than the common case of landlord and tenant where rent has been paid, which is a good estoppel. There is still another ground of objection to the claim of the respondents, to which allusion has previously been made, to wit, that this corporation, having enjoyed its franchises so long, can be called in question only by the government, and can be reached only by a quo warranto, if the government feel that here has been an unwarrantable exercise of corporate power. There is perhaps force in this objection, but it is not necessary for us to consider it. Our conclusion is that the petitioners are entitled to a good and perfect deed from the respondent, and a decree for a foreclosure.for the whole note ; and this is our advice. In this opinion the other judges concurred. Decree advised for plaintiffs.