steps toward becoming incorporated are so vitally essential that without them there is not even a de facto corporation, and the only result of non-performance or noncompliance is personal liability, either partnership or joint, according to the relations among themselves, of the persons who have acted in the corporate name.

A total failure to file or record the certificate or articles,' or a failure until liabilities are incurred,2 renders those who have signed them jointly liable for debts contracted in the meantime. So does an omission of

to the individuals who, upon inquiry, should be found to stand behind it. It seems clear, without pursuing the subject further, that this cause for demurrer, cannot be sustained. Individual members of an unincorporated association are liable for contracts made in the name of the association, without regard to the question whether they so intended or so understood the law, and even if the other party contracted in form with the association, and was ignorant of the names of the individual members composing it. And it is also held in the case just cited that the individual members of such an assocation do not acquire any immunity from individual liability by force of the statutes which provide that any number of persons associated and known by some distinguishing name may sue and be sued, plead and be impleaded, by such name; and that the individual property of the members shall not be liable to attachment or levy of execution in a suit brought against the association. See also Huer v. Carmichael (Ia.), 47 N. W. 1034, holding that in such action the plaintiff is not estopped to allege defects in its organization by reason of having recognized the corporation in dealing with it and in bringing suit against it as such.

1 Field v. Cooks, 16 La. Ann. 153; Abbott v. Omaha Smelting Co., 4 Neb. 416; Coleman v. Coleman, 78 Ind. 344; Garnett v. Richardson, 35 Ark. 144; Martin v. Fewell, 79 Mo. 401, 410; Ferris v. Thaw, 72 Mo. 449.

2 Bigelow v. Gregory, 73 Ill. 197. See also Bergen v. Porpoise F. Co., 13 Am. & Eng. Corp. Cas. 1 (N. J.). Contra, Whitney v. Hyman, 101 U. S. 392. See 17 Atl. Rep. 840.

3 See also, First Nat. Bank v. Davies, 43 Iowa, 424; Merriman v. Magivennis, 12 Heisk. (Tenn.) 494; Planters', etc., Bank v. Padgett, 69 Ga. 159; Gartside Coal Co. v. Maxwell, 22 Fed. Rep. 197; Humphreys v. Mooney, 5 Col. 282; Merchants', etc., Bank v. Stone, 38 Mich. 779; Jessup v. Carnegie, 80 N. Y.

441.

In Blanchard v. Kaull, 44 Cal. 440, the complaint failed to allege in what capacity the defendants had incurred the obligation. It was contended that. such allegation was unnecessary since the law presumed a copartnership in such case. But the court said: "A copartnership is not necessarily the result of an abortive attempt to form a corporation." There was a total absence of either allegation or proof of an intention to become personally bound, and evidence of fraud on the part of defendant was entirely wanting. They are liable in case of failure to file the certificate or articles with either the state or local

publication of the articles when required by statute.1 Or failure to state intelligibly where the principal place of business is to be. And the nature of their liability is usually, though not necessarily, that of partners. In such cases it is immaterial that the party contracted with them in the corporate name, since at common law parties may carry on business under any name they choose.*

§ 833. Fraud usually the basis of liability. The authorities are somewhat conflicting on the question of

authorities. Bigelow v. Gregory, 73 Ill. 197; Indianopolis Min. Co. v. Herkimer, 46 Ind. 142, but after being filed with the county officer designated, not for neglect to file copy with the secretary of state, Raisbeck v. Oestereicher, 4 Abb. N. C. 444; Makelume Mill Min. Co. v. Woodbury, 14 Cal. 424; Cross v. Pinckneyville Mill Co., 17 Ill. 54; Tarbell v. Page, 24 Ill. 46.

A creditor who has either participated or contracted with full knowledge of irregularities and defects has no right of action against the members personally. Nelson v. Luling, 62 N. Y. 645. In Eisfiled v. Kenworth, 50 Iowa, 389, it was held that the Iowa statute made stockholders liable as partners, in case of irregular incorporation. Stockholders have been held liable as partners where the articles published did not contain all the requirements of the statute. Stivers v. Carmichael (Iowa), 49 N. W. 983. Clegg v. Hamilton Co., 61 Iowa, 121; and in another case where there was a total failure to publish the certificate. Henig v. Adams & W. Co., 81 Ky. 300. Compare Holmes v. Gilliland, 41 Barb. 568. It has been held that where the secretary of state permits the articles to be filed after the time allowed by law, such filing is a waiver by the state of the right to proceed against the corporation. First Nat. Bank v. Davies, 43 Iowa, 424. See also Jessup v. Carnegie, 80 N. Y. 441.

1 Unity Ins. Co. v. Cram, 43 N. H. 636; Kaiser v. Lawrence S. Bank, 56 Iowa, 104; Huer v. Carmichael (Ia.), 47 N. W. 1034. Compare Humphrey v. Mooney, 1 Col. 282. The pretended corporation is not a necessary party defendant with the members in such action. Smith v. Colorado Fire Ins. Co., 14 Fed. Rep. 399. In Huer v. Carmichael, supra, it was held that where the articles of incorporation do not fix the highest amount of indebtedness or liability to which the corporation may be subjected, as required by Code Iowa, § 1061, there is such a failure to substantially comply with the requirements of the statute as will render the individual property of the stockholders liable for the corporate debts, under Code, § 1068.

3 See also, Stafford Bauk v. Palmer, 47 Conn. 443. Richardson v. Pitts, 71 Mo. 128, cases in which there had been no attempt to incorporate.

* Chaffee v. Ludeling, 27 La. Ann. 607; Lauferty v. Wheeler, 11 Abb. N. C. 223; Nat. Bank, etc., v. Landon, 45 N. Y. 410, 414; Lindley on Partn., 182; Ridenour v. Mayo, 40 O. St. 9; Wentz v. Lowe, 3 Atl. Rep. 878.

what state of facts will entitle a party contracting with an illegal association exercising corporate functions, to hold its members individually or jointly liable. It is generally held that when there has been a partial compliance and an honest attempt and intention on the part of the persons associated to comply fully with the law, that they cannot in any form or in any view of the matter be held individually liable; but if the proceedings were set on foot as a sham and cloak for screening themselves from individual liability, and to accomplish fraudulent purposes for their own personal gain, they should be held severally and jointly liable, not always as partners, but for the same reasons as that persons are ordinarily responsible for all damages resulting from their joint participation in a fraudulent enterprise. Where, however, in such case, or in any case of an unauthorized assumption of corporate capacity by an association, the members of which are in legal effect partners, whether such be their relation or not, they should be held to the liability of partners. The enjoyment of the profits or revenues from the business among themselves, otherwise than as dividends, it would seem, should be sufficient to justify a court in giving a creditor a remedy against them where no other remedy is available. Third parties are not chargeable with knowledge of, nor should they be held bound to allege or prove their real relations among themselves.1

In the following cases the members of the illegal body were held personally and jointly liable either as partners or on other grounds: Hill v. Beach, 1 Beasley, 31; Bigelow v. Gregory, 73 Ill. 197; Hess v. Werts, 4 S. & R. (Pa.), 356; Field v. Cooks, 16 La. Ann. 153; Abbott v. Omaha Smelting, etc., Co., 4 Neb. 416; Garnett v. Richardson, 35 Ark. 144; Coleman v. Coleman, 78 Ind. 344; Martin v. Fewell, 79 Mo. 401, 410; Kaiser v. Lawrence Sav. Bank, 56 Iowa, 104. See Holbrook v. St. Paul Fire, etc., Ins. Co., 25 Minn. 229; Ash v. Guie, 97 Pa. St. 493. In the following cases a different conclusion was reached: Blanchard v. Kaull, 44 Cal. 440; Planters', etc., Bank v. Padgett, 69 Ga. 159, 164; Trowbridge v. Scudder, 11 Cush. (Mass.), 83; American Salt Co. v. Heiden

§ 834. Knowledge of real relation immaterial.—The individual liability in such case is not affected by the fact that the party dealing with them did not at the time of making the contract know their real relation and intention among themselves. If it be said such party could not have intended to contract with them otherwise than in a corporate capacity, it is a sufficient answer that, according to a well-known rule of law, a party who deals with the agent of an undisclosed principal may, on discovering the latter, hold him liable. The individual or joint liability in these cases arises from the fact of their actual rather than their apparent relations to the assumed corporation, and their personal interest in the business.1

§ 835. Members are liable where no potential legality.— Various other circumstances may give rise to the question whether or not officers and members of corporations are personally liable for debts contracted and obligations incurred in a corporate name and character. But it may be stated as a general principle, that unless to release them would allow a fraud to succeed or amount to a defeat of justice and a deprivation of all remedy, no such liability attaches.2

heimer (Tex), 15 S. W. 1038; Merchants', etc., Bank v. Stone, 38 Mich. 779; First Nat. B'k v. Almy, 117 Mass. 476. See Central City Sav. Bank v. Walker, 66 N. Y. 424; Harrod v. Hamer, 32 Wis. 162; Humphreys v. Mooney, 5 Col. 282; Second Nat. Bank v. Hall, 35 Ohio St. 158; Stafford Nat. Bank v. Palmer, 47 Conn. 443; McClinch v. Sturges, 72 Me. 288; Fuller v. Rowe, 57 N. Y. 23; Glen v. Brevard, 35 La. Ann. 875; Gartside Coal Co. v. Maxwell, 22 Fed. Rep. 197; Nat. Union Bank v. Landon, 45 N. Y. 410; Vredenburg v. Behan, 33 La. Ann. 627.

See Pettis v. Atkins, 60 Ill. 454; Frost v. Walker, 60 Me. 468; Ferris v. Thaw, 72 Mo. 449; Farnum v. Patch, 60 N. H. 294; Field v. Cooks, 16 La. Ann. 153; Ridenour v. Mayo, 40 O. St. 9. See New York Iron Mine v. Negaunee Bank, 39 Mich. 644.

2 Whatever their liability in damages for false representations concerning capital stock or resources they cannot be compelled to make good such representations in kind either as partners or otherwise. First Nat. Bank v. Almy, 117 Mass. 476; Wakeman v. Dalley, 51 N. Y. 27, 30; Evans v. Coventry, 25 L.

One dealing with persons claiming to be a corporation, but whose corporate existence was not a valid one, because not authorized by law, was held not to be estopped from denying such corporate existence in a suit against such persons individually to collect a debt arising out of such dealings, where he never knew of their claims to be a corporation and always thought he was dealing with a partnership.'

J. Ch. 489; Crease v. Batevck, 31 Mass. 525, 527. Compare Haslett v. Witherspoon, Strobh. Eq. (S. C.), 209. An oral promise to pay corporate debts is one to answer for the debt, default, etc., of another within the statute of frauds and must be in writing. Accordingly, where, upon dissolution of the corporation, the business is carried on thereafter by the agents, no liability thereby attaches to the stockholders, unless the use of the corporate name in such business is authorized by them; but the use of such corporate name will not shield the agents from the liability of partners with respect to debts contracted in such business. Chaffee v. Ludeling, 27 La. Ann. 607. See also, Central City Sav. Bank v. Walker, 66 N. Y. 424; Nat. Un. Bank v. London, 45 N. Y. 410. 1 Eaton v. Walker, 76 Mich. 579; 6 L. R. An. 102. In this case it was also held that the fact that persons took counsel and acted in good faith in organizing themselves into a corporation under what they were advised was a valid law, does not relieve them from individual liability for obligations incurred by the concern if the law prove invalid; because "obligors are bound not by the style which they give themselves, but by the consequences which they incur by reason of their acts." See also, Patterson v. Arnold, 45 Pa. 410; Fuller v. Rowe, 57 N. Y. 23; Wells v. Gates, 18 Barb. 554; Doubleday v. Muskitt, 7 Bing. 110, 115; Nat. Un. Bank v. Landon, 45 N. Y. 410; Moore v. Mandelbourne, 8 Mich. 433; Empire Mills v. Alston, etc., Co. (Tex.), 15 S. W. 200. Where two persons after procuring a charter took steps to organize a corporation without subscribing the minimum capital stock or paying in the 10 per cent. required by statute, proceeded to business, contracted debts and made a fraudulent assignment of the corporate assets, it was held that the creditors had a right to file a bill to set aside the assignment and make the corporators liable for the fraud, and that the bill was not multifarious and there was no misjoinder of parties defendant or of causes of action. Burns v. Beck, 83 Ga. 471; 10 S. E. Rep. 121. See also Vredenburg v. Behan, 33 La. Ann. 687, where a rifle club attempted incorporation under the statute allowing incorporation for "literary, scientific and charitable purposes." The same result occurs where the statute is unconstitutional or for other causes invalid. State of Mich. v. Howard, 1 Mich. 512; Williams v. Bank of Mich., 7 Wend. 540; Chenango Bridge Co. v. Paige, 83 N. Y. 178, 180. In McGrew v. Prod. Exch., 85 Tenn. 572; 4 S. W. 38, it was held the corporation was not a necessary party defendant, that being a case when the objects of the incorporators were illegal, which, however, did not appear upon the face of the articles. See also, Lawler v. Murphy, 58 Conn. 294; 20 A. 457; Short v. Bandry, 56 Cal. 446; Cornell v. Corbin, 64 Cal. 198, 200. In Raynor v. Mintzner, 67 Cal. 161, the corporation was interested and its existence was not attacked.