Basshor v. Dressel

Miller, J., delivered the opinion of the Court. This is another case where creditors of a corporation are seeking to enforce as against a stockholder, the personal liability imposed by section 52 of Article 26 of the Code. None of the questions determined in Norris vs. Johnson, and Norris vs. Wrenschall, arise here. The case was concluded in the Court below by an instruction to the jury that there w'as no legal evidence of the incorporation of the company of which the defendant is sought to be charged as a stockholder, and the plaintiffs are not, therefore, entitled to recover in this action, and whether this instruction be correct is the main question in this case.

The certificate of incorporation, dated the 11th of October, 1866, professes on its face to form a company for the purpose of mining chrome ores and manufacturing bi-chromates and other salts, under the name of “ The Baltimore Chrome Mining and Manufacturing Company,” and provides that the mining operations of the company shall be conducted in ⁵⁰⁹ Harford comity and other counties of the State, and its manufacturing operations and generally all the business of the company shall be conducted in the city of Baltimore, in which its office for the transaction of business will be situated. On the part of the appellee, it is contended that this is an attempt to create a company, both for mining and manufacturing purposes, for which no provision is made by the Code: that these several kinds of corporations are provided for by different sections, are in many essential features totally dissimilar, and parties have no power without legislative sanction to amalgamate the two in one certificate: that this is a radical defect in the organization of this company, just as fatal to its corporate existence as if the attempt had been to incorporate it for a purpose not permitted by law: that the right of recovery against a stockholder depends upon the fact that the plaintiff was a creditor of the corporation of which the defendant was at the time a stockholder, and hence the plaintiff must show the existence of the corporation of which he became a creditor : and that on this issue it is competent for the defendant to contest the legal existence of the corporation by reason of neglect or violation of any condition precedent to a valid corporate existence, or because there is no warrant in the law for the creation of such a corporation. On the other hand, the appellants insist, first, that there is no defect in the certificate, that it contains all the prescribed requisites necessary to constitute a manufacturing corporation, and whatever more there is in it may be rejected as surplusage, especially in view of the facts that the certificate was recorded in Baltimore city only, and no attempt made to organize a mining company by having it recorded in Harford county, or elsewhere, that the corporation did carry on a manufacturing business in the city of Baltimore, for at least a year and a-half, and its debt to the appellants for machinery to be used in that business was there contracted: secondly, that where there has been such user of corporate franchises by an association of individuals, their existence as a corporation can only be inquired into by the State, ⁵¹⁰ and cannot be questioned in a collateral proceeding like the present between a creditor and a stockholder: and thirdly, that the appellee, who was one of the originators of the company, a subscriber to its stock, a signer of the' certificate of incorporation, and who acted as one of its directors from its organization until it stopped business, and was present at the meeting of the board at which the settlement of the appellants’ claim was unanimously authorized, is estopped by these acts of active participation in the user of a corporation defacto, from denying ..it had ever existed, and to permit him now to repudiate the existence of the corporation which he was thus instrumental in creating, conducting and holding out to the world as a corporation and capable of contracting debts as such, and escape the liability of a stockholder therein, would be inconsistent with any