Foster v. Hip Lung Ying Kee & Co.

Mr. Justice Carter delivered the opinion of the court: The evidence in the record shows that for some time prior to November 6, 1907, thirty-five persons, whose signatures appeared on the bill of sale mentioned hereinafter, were the joint owners of the stock of goods and merchandise of a Chinese grocery and dry goods store located at 323 South Clark street. It seems to be conceded that the facts show that under our law the ownership of said stock of goods by said thirty-five persons must be held to be a partnership. The evidence further shows that on November 16, 1907, the intervening petitioner received from the Secretary of State a certificate of incorporation, which was filed for record in the recorder’s office of Cook county November 21, 1907. Directors and officers were elected for this corporation, and on November 26, 1907, it purchased from the said thirty-five persons the stock of groceries, merchandise and fixtures at 323 South Clark street for $4900, the former owners executing a bill of sale to appellee conveying said stock of goods and fixtures. The main contention of appellant is, that the appellee company was fraudulently organized and incorporated for the purpose of fraudulently purchasing the stock of goods from said partnership, so as to defeat the creditors of said partnership and prevent them from collecting what was due to them. The contention that appellee was fraudulently-incorporated is based chiefly upon the fact that the statement o.f the commissioners authorized by the Secretary of State to incorporate appellee shows that the capital stock of $17,000 was paid in to them on November 16, 1907, while the testimony taken before the master tends to show that a part or all of this stock was not paid for until a later date, the argument being that section 4 of the act concerning corporations for pecuniary profit (Hurd’s Stat. 1908, p. 524,) provides that before the certificate of organization is issued by the Secretary of State the commissioners shall report, among other things, to the Secretary of State that not less than one-half of the capital stock subscribed has been “actually paid in'.” There is no positive evidence in the record that one-half of the capital stock subscribed was not actually paid in prior to the making of this report to the Secretary of State. The evidence is uncontradicted that all of the capital stock of $17,000 was paid in before the purchase of said stock of goods and merchandise on November 26, 1907. No attempt was made by the appellant to introduce evidence to show that this capital stock was not all paid in before November 26, as testified to by witnesses for the appellee, or that the $4900 was not actually paid over on November 26 to the members of the co-partnership for the stock of goods and merchandise. We do not think this record contains any evidence indicating that the corporation was fraudulently incorporated, as contended by appellant. Moreover, we are disposed to hold that the lega‘1 existence of this corporation can only be determined by a direct proceeding, the evidence showing it is a de facto corporation. (Morrison v. Forman, 177 Ill. 427; Cozzens v. Chicago Brick Co. 166 id. 213; Marshall v. Keach, 227 id. 35; Imperial Building Co. v. Board of Trade, 238 id. 100.) Therefore it is unnecessary for us to decide here whether said section 4 of said incorporation statute requires that one-half of the subscription to the capital stock should have been paid to the commissioners, or to any other person, before the report by the commissioners to the Secretary of State. The judgment of the Appellate Court is affirmed. Judgment affirmed.