Goodale Lumber Co. v. Shaw

Mr. Chief Justice Moore,

after stating the facts, delivered the opinion of the court.

1. It is contended by defendant’s counsel that, no proof having been offered tending to show that plaintiff’s articles of incorporation had been filed, or any of its capital stock taken, or directors elected, the court erred in refusing to grant the nonsuit. It is maintained by plaintiff’s counsel, however, that, as the bill of exceptions does not purport to contain all the testimony given at the trial, the action of the court in overruling the motion for nonsuit is not subject to review. “It has been repeatedly held,” says Mr. Chief Justice Bean in Adkins v. Monmouth, 41 Or. 266 ( 68 Pac. 737 ) “that the rulings of the circuit court on a motion for nonsuit for insufficiency of testimony will not be reviewed upon appeal, unless the bill of exceptions affirmatively shows that it contains all the evidence given up to the time the motion was made.” To the same effect, see Woods v. Courtney, 16 Or. 121 ( 17 Pac. 745 ); Roberts v. Parrish, 17 Or. 583 (22 Pac. 136 ); Coffin v. Hutchinson, 22 Or. 554 ( 30 Pac. 424 ). In these cases, while testimony was found in each transcript tending to prove a material fact, the bill of exceptions did not contain a statement that no other relevant testimony had been offered, and, as error will not be presumed, but must affirmatively appear in order to secure a reversal, it was properly held that, the bill of exceptions not containing all the testimony introduced at the trial up to the time the motion for a judgment of nonsuit was made, the ruling of the court thereon would not be reviewed *547 upon appeal. The law, however, does not require the performance of vain things; and where, as in the present instance, the testimony set out in the bill of exceptions clearly shows the mode adopted to prove a particular fact, and also contains a statement which necessarily negatives the possibility of other testimony having been introduced upon the issue involved, the reason for the rule announced in the cases adverted to ceases, and the rule, which is otherwise general, has ingrafted thereon and becomes subject to an exception, which is illustrated in cases like the one at bar, where the bill states the objection with so much, but no more, of the evidence than is necessary to explain it: Hill’s Ann. Laws, § 232. When the bill of exceptions affirmatively shows that it contains all the testimony possibly applicable to, and considered by the trial court in ruling upon, a motion for a judgment of nonsuit, the appeal necessarily brings up for review the action of the court in disposing of the motion.

2. Considering the case on its merits, a private corporation is created by three or more persons subscribing their names to and acknowledging written articles of incorporation in triplicate, one of which shall be filed in the office of the secretary of state, one with the county clerk of the county where the business is proposed to be located, and the other retained in the possession of the corporation: Hill’s Ann. Laws, §§ 3217, 3218. The articles of incorporation or a certified copy of the one filed with the secretary of state or the county clerk is evidence of the existence of such corporation: Hill’s Ann. Laws, § 3219. Upon making and filing articles of incorporation, the persons subscribing their names as incorporators are authorized to carry into effect the objects specified in the articles: Hill’s Ann. Laws, § 3221. The incorporators arc authorized to open books and receive subscriptions to the' capital stock of the corporation, and, when one-half of such stock has been subscribed, it shall be lawful in the organization of the corporation to elect a board of directors: Hill’s Ann. Laws, § 3222. The directors, when elected and qualified, shall elect one of their number president: Hill’s Ann. Laws, § 3225. As the making of articles of incorporation necessarily precedes their filing, it is the latter act that *548 gives vitality to and brings into life a private corporation, and such filing is a condition precedent to its existence: Hills Ann. Laws, § 3221; Coyote G. & S. Min. Co. v. Ruble, 8 Or. 284 . Morawetz, in his work on Private Corporations (2 ed. § 27), in discussing this subject, says: “A substantial compliance with all the terms of a general incorporation law is a prerequisite of the right of forming a corporation under it. Thus, where it is provided that a certificate or articles of association setting forth the purposes of the corporation about to he formed, the amount of its capital, and other details, shall be filed with some public officer, a performance of this requirement is essential; and until it has been performed the association will have no right whatever to assume corporate franchises.” This author, in speaking of the proof of the performance of conditions precedent (Section 41), further says: “In order to prove the legal existence of a corporation, it is necessary to show that every condition precedent, subject to which the franchise of forming the corporation is conferred, has been complied with. Thus, it is essential, in order to establish the incorporation of a company under a general law, to show that all formalities prescribed by the law have been followed.”

While the statute provides that the articles of incorporation; or a certified copy of the one filed with the secretary of state or county clerk, is evidence of the existence of such corporation (Hills Ann. Laws, § 3219), this clause must necessarily be construed in pari materia with another section, which provides that upon filing articles of incorporation the persons subscribing the same are incorporators, and authorized to carry into effect the objects specified in the articles: Hills Ann. Laws, § 3221. In the methodical order of offering the necessary evidence it would ■ seem proper to prove the execution and acknowledgment of the articles of incorporation in triplicate, and that one of such articles had been filed in the office of the secretary of state and another in the office of the clerk of the county where the business of the corporation is proposed to be conducted: Hills Ann. Laws, § 3218. If Section 3219 is to be construed literally, and the existence of a de jure corporation can be established by the intro *549 duction in evidence of the articles of incorporation, without other proof except that of a subscribing witness (Hill’s Ann. Laws, §’761), it is possible, in the absence of filing the articles, to prove the existence of a corporation that has no vitality, the absurdity of which demonstrates that evidence other than the articles of incorporation is necessary. If, instead of the articles of incorporation retained in plaintiff’s possession, a certified copy had been introduced in evidence, it would have disclosed that at least one of the original articles had been filed with the certifying officer, and such proof would have come nearer establishing the existence of the corporation than the mode adopted. The articles of incorporation, unsupplemented by other proof, were, in our judgment, inadequate to prove the existence of the plaintiff as a corporation, and hence the court erred in charging the jury that the document introduced in evidence was sufficient for that purpose. A corporation is created by making and filing articles of incorporation (Hill’s Ann. Laws, §3221), and is organized by electing a board of directors, which can only be done when one half of the capital stock has been subscribed: Hill’s Ann. Laws, § 3222; Fairview R. Co. v. Spillman, 23 Or. 587 ( 32 Pac. 688 ). Thus, as was said by Mr. Chief Justice Nelly, in Holladay v. Elliott, 8 Or. 84 : “Where the statute prescribes the manner in which a corporation shall be organized, its requirements must be substantially complied with; otherwise it will have no legal capacity to transact business as a corporation.” Mr. Justice Wolverton, in Nickum v. Burkhardt, 30 Or. 464 ( 47 Pac. 788 , 48 Pac. 474 , 60 Am. St. Rep. 822 ), discussing this subject, says: “The organization is completed only when the directors have been elected, and they have elected a president and secretary.” The complaint having alleged that plaintiff is a corporation organized and existing by virtue of the laws of the State of Oregon, and this averment being denied in the answer, the burden was imposed upon it to prove the fact thus in issue. The neglect to show that one half of the capital stock had been taken, or a board of directors elected, was a failure to prove that plaintiff had ever been organized as a de jure corporation; and as it could transact no business in that capacity until thus constituted (Hol *550 laday v. Elliott, 8 Or. 84 ), there was an omission to prove a material averment of the complaint.

The testimony introduced was insufficient to establish plaintiffs organization as a corporation, and the court erred in refusing to grant the judgment of nonsuit, in consequence of which, and of the giving of the instruction complained of, the judgment is reversed, and the cause remanded for such further proceedings as may be necessary, not inconsistent with this opinion.

Reversed.