Carmody v. Powers

Campbell, C. J.

Carmody sued defendants in the circuit court for the county of Charlevoix, to recover for the value o'f a steam-engine, and machinery for sawing and similar purposes, and he recovered judgment for the amount claimed. The suit was defended on two chief grounds:

First, that the property was subject to claims beyond what he represented, and that he did not fulfill a part of the agreement to work for the company; and, Second, that the contract was not individual, but was made on behalf of a corporation known as the Northern Manufacturing Company.

Several assignments of error are alleged, which are practically disposed of by the findings of the jury on questions which were submitted at defendants’ request, and in fact as well as presumably against them as proponents, based on testimony open to the jury to consider.

Plaintiff’s claim, is, that in July, 1883, he owned the property in question, subject to a lien in favor of his vendors, Messrs. Chandler & Taylor, of Indianapolis, for two notes, of $725 each, and interest, one of which he had arranged with a firm named Wilcox & Co. to pay, and of which full1 payment was delayed by non-payment of a check, and the other still due. He sold the engine and machinery, as he claimed, and as the jury found, to defendants, dealing with' Harry Powers in their behalf, for $2,700, which was to be paid by their assumption and payment of the last-named note, and the delivery to him, thereafter, of $2,000 of paid-up stock in a company which defendants contemplated organizing, on a basis which would make the stock worth its face. There was a conflict of testimony whether or not he . agreed to serve the proposed company at fifty dollars a *29 month, but as no time of service was specified this is not material, and if plaintiff was in default, it cannot be claimed that such a default, made after the delivery of the property, could avoid the contract itself or furnish more than a counter-claim for damages. The charge asked, that it would avoid the contract, cannot be supported on any ground. And the same defect exists concerning the charge asked, that if the machinery was subject to any larger lien than was represented, plaintiff had no title which he could convey, and could not recover. lie did not claim to transfer an absolute title, but merely one subject to a lien specified. He claims he fully explained how matters stood. But it cannot be insisted that no value passed, and it is not shown any damage followed or that defendants had to pay more than was stipulated.

The only serious controversy was, whether plaintiff dealt with defendants as individuals or as a corporation. It was not necessary that they should be partners, if they dealt jointly, and as the jury have found that they were not partners, and that they did contract personally with plaintiff, the only question is whether any charge was given or' refused by the court, which misled the jury.

Plaintiff swore positively that he did not deal with defendants as a corporation or supposing them to be such. The contract as he states it, was with these individuals who contemplated forming a corporation in future. The defendants, who claim the transaction was on behalf of the company, did not take the first step necessary to form a corporation, which is the acknowledgment of the articles, until some time after the sale. The jury expressly negatived, not only the existence of the corporation and its doing business at the time, but also plaintiff’s dealing with it at all. They found expressly that he dealt with defendants individually, and neither as a partnership nor as a corporation; and we do not see very clearly how, under this finding of fact, it becomes important to know what the law would have been had he dealt otherwise.

But we do not think that there is any room in such a case *30 as this for the doctrine of estoppel as applied to corporations defacto. We had occasion to consider this somewhat in Doyle v. Mizner, 42 Mich. 332 . An agreement with individuals, that when they become incorporated they will give plaintiff a certain amount of paid-up stock, cannot on any rule of law be considered as a dealing with the corporation itself, or as one which would bind the future corporation when organized. It is- possible there may be cases where an existing organization becomes incorporated bodily, but we have no statute which allows manufacturing companies to become incorporated except by the action of separate individuals, acting in their individual capacity and acknowledging their articles. Any bargain made here which looks to a future incorporation must necessarily be a personal one.

We do not deem it necessary, as already suggested, to consider the assignments separately. They are all disposed of by the special findings.

The judgment must be affirmed.

The other Justiees concurred.