LA BEL,LE mOM WOBKS V. HILL.
8trued according to their legal import, in the interests of commercial security, yet, as between the original parties and those affected by notice, the realrelation of the parties as principal and agent upon notes given to or executed by "A. B., Agent," should be open to proof. WALTER B. HILL. Macon, (Jeorgia.
BELLE IRON WORKS V. HILL
. (Oircuit OQurt,
October 16, 1884.)
ATTACHMENT-CONVEYANCE TO HINDER AND DELAY CREDITORS-REv. 398, CONSTRUED.
Attachment. This is a suit upon a draft for $2,265. The alleged grounds for attaching defendants' property are as follows: (1) That defendants have fraudulently conveyed or assigned their property or effects so as to hinder or delay their creditors; (2) that defendants have fraudulently concealed, removed, or disposed of their property or effects so as to hinder or delay their creditors; (3) that defendants were about fraudulently to conceal, remove, or dispose of their property or effects so as to hinder or delay their creditors. 'rhe defendants filed a plea in abatement denying the existence of either of the alleged grounds for the attachment. The case was tried before a jury. Plaintiff offered in evidence (1) a deed of trust dated September 18, 1883, conveying to one Craig all the real estate belonging to defendants, together with all the machinery, etc., thereon, in trust, to secure the payment of the debts of said firm, but providing that none
by Benj. F. Rex, Esq., of the St. Louis bar.
of the property so conveyed should be sold within two years from the date of said debt; (2) a written agreement, dated September 14, 1883, between defendants, certain of their creditors, and said Craig, but to which plaintiff was not a party. This contract provided that said Craig should conduct the business of defendants in their firm name, and should have authority to contract debts, and pay certain lien debts then outstanding; that two of the defendants should be employed by Craig, at $100 a u;lOnth each, for at least four months, and for such further time and at such salary as might 'be agreed on between said defendants and said Craig; that out of the proceeds of the sales of the defendants' personal property and the profits of said business the claims of all creditors who signed the agreement should be paid, at such times and in such amounts as three creditors therein named might thereafter determine; and that. if the debts duo said creditors, with interest thereon at 6 per cent. per annum, were paid within two years, then defendants were to be repaid, or have a rebate of 1 per cent. Qne of the defendants testified that said deed of trust was made with the hope that the personal property of the firm would suffice for the payment of their debts, and that, by making said deed of trust, their rea} estate would be saved to them. The Missouri statutes provide (Rev. St. 398) that the plaintiff in any civil action may have an attachment, etc., "where the defendant has fraudulently conveyed or assigned his property or effects so as to hinder or delay his creditors." Gilbert Elliott and Oeo. R. Lockwood, for plaintiff. Dyer, Lee et Ellis, Jas. J. Lindley, and Henry W. Bond, for defendants. MILLER, Justice, charged the jury, (orally,) in substance, that the agreement of September 14th did not hinder and delay creditors, and afforded no ground for ''attachment, because it conveyed nothing, but made Craig the agent of A. & Co. to carryon their business, and that the deed of trust of September 18th did not binder and delay creditors, within the meaning of the Missouri statute, unless it was made with a fraudulent intent, and that its execution was no ground for an attachment unless there'was fraud in fact on the defendants' part in executing it, and that fraud in law was not sufficient. In summing up, he said: "In short, gentlemen, if you believe that deed of trust to be an honest instrument,-if you believe it was made for an honest pUl'pose,-you will find for the defendants; but if you believe it to have been made for a dishonest purpose, you will find fQr the plaintiff."
GARTSIDE COAL 00.
GARTSIDE UOAL CO. V. MAXWELL
(Oircuit Oourt, E. D. Missouri.
November 8, 1884.)
LuBIMTY OF STOCKHOLDERS WHEllE COMPANY IS NOT VALIDLY INCORPORATED.
Where persons, supposing iu good faith that they are incorporated and are stockholders in a valid corporation, do business as a corporation for 8 series of years, without the corporate existence being challenged by the state, parties whQ deal with the company as a corporation cannot bold the stoc}(holders person. ally liable in case they afterwards discover that the company was not validly incorporated in consequence of some defect or irregularity in the proceedings of the supposed incorporaturs.
For opinion upon motion to s.uppreas depositions, see 20
187. Hiram J. Grover, for plaintiff. Henry Hitchcock, Lucien Eaton, and Walker eX Walker, for defend-
BREWER, J., (m·ally.) In this case the facts are these: There was a corporation, or what pretended to be a corporation, which purchased coal from the plaintiff, and the transactions extended through a series of years. The defendants, or the defendants' so-called corporation, failed to pay,-became insolvent; and this uction is to charge those who were the stockholders in this supposed corporation as though they were partners; and the basis of the claim is that there was no corporation; that whatever it assumed or pretended to be, although it called itself a corporation, and attempted to transact business as a corporation, yet in fact it was no corporation, and had no legal existence; and that these parties who were acting as though they were holders in this corporation were really not stockholders, and must therefore individually be held as partners to have made the purchases. It is very clear to my mind that this attempted incorporation was invalid, and that if it had ever been challenged by the officer of the state, in proper proceedings. its exercise of corporate powers would have been enjoined; but, while I think that is unquestionably so, it does not seem to me to follow that those who were supposing themselves stockholders in this corporation can be held personally liable. I think the true rule is this: that where persons knowingly and fraud· ulently assume a corporate existence, or pretend to have a corporate existence, they can be held liable as individuals; but where they are acting in good faith, and suppose that they are legally incorporated, -that they are stockholderl:"l in a valid corporation,-and where the corporation assumes to transact business for a series of years, and the assumed corporate existence is not challenged by the state, then they cannot be held liable, as individuals, as members of the corporation. Of course, the converse is perfectly true, that a person who deals
by Benj. 1.<'. Rex, Esq., of the St. Louis bar.