Oregon Central R. R. v. Scoggin

The Court (Upton J.) announced the decision as follows: The denial that plaintiff “is a corporation dibly organized” should be stricken out. Although such denial is sometimes treated as a plea in bar in particular cases, ordinarily it does not involve the merits of the action, and is within the rule established in Hopwood v. Patterson (2 Ogn. 49). In this case, however, it is subject to the further objection that it is not necessary that the plaintiff should be both [163] incorporated and organized, to enable it to receive subscriptions and to sue. Nor is it a sufficient denial to say tlie plainti ff is not duly organized. It does not raise an issue of fact. Tho denial that defendant agreed to take ten shares, referred to in the second part of the motion, is admitted to be predicated on the disability of the plaintiff to make the contract. The motion raises these two questions: Can a corporation make and collect assessments before its organization is fully perfected by the election of officers, and in other respects? And can one who has contracted with the company as a corporation, question the regularity of its organization for the purpose of avoiding the contract? The language of section 5 of the general law, if not controlled by other provisions, is broad enough to authorize assessments and collections before the election of officers. The corporators “may sue and be sued,” purchase property, appoint agents, “make by-laws” *** “ for the sale of any portion of its stocks for delinquent assessments due thereon.” By section 6 the corporators must have power to receive subscriptions before proceeding to organize by electing officers, and, as a necessary consequence, may do anything requisite and proper to be done in obtaining subscriptions. If the corporators are empowered to contract in relation to subscriptions, to make rules for sales of delinquent assessments, and to sue and be sued, it seems to be immaterial for the purposes of this case, whether the corporation is organized or not. That one who subscribes to the stock can avoid the subscription, because of neglect to organize, is certainly a position difficult to sustain, and it is questionable whether the neglect can be set up, except by a proceeding in the nature of quo warranto, under section 353 of the code. This part of the motion should bo allowed. The fourth point in the motion is directed to the alleged failure of consideration. This part of the motion should be denied. The fifth and sixth specifications of the motion are [164] directed to alleged misrepresentations. These parts of the motion should be sustained. The answer does not show that the defendant was misled by the misrepresentations; and the false representations are not confined to matters of fact, but include conclusions and matters of opinion. The parts of the motion numbered one, two, three, five and six should be granted, but the motion should be overruled as to its fourth subdivision, relating to failure of consideration. Tbe defendant ashed leave to amend his answer, and leave was granted as to parts five and six, above specified, but denied as to specifications one, two and three.