Reinhard v. Virginia Lead Mining Co.

Macfarlane, J.

This is a suit in equity to quiet the title to certain real estate of which plaintiffs claim they are the owners.

The material facts are undisputed. On the nineteenth day of December, 1872, Nathaniel Sands and Rowland R. Hazard, in the city of New York, executed and acknowledged in due form a certificate in writing for the purpose of incorporating under the laws of the state; of Missouri a mining company, and adopted as the eor< porate name, “ The Virginia Lead Mining Company.” This certificate of incorporation shows a full compliance-with the laws of this state up to and including its proper acknowledgment. Instead of having the certificate-recorded, by the recorder of deeds of the county as-required by section 2, article 7, chapter 37, Wagner Statutes, page 333, it was sent to the clerk of the county court for record, where it remained until May 19, 1874, when the incorporators learning" the mistake had it filed and recorded by the proper officer, andón Augusts, 1874,. also had a copy filed and recorded with the secretary ot state, on which day a certificate of incorporation wa& issued.

*622 It is agreed that the land in suit on the twenty-eighth day of December, 1872, belonged to defendant, Amos W. Maupin. On that day Nathan Sands, one of the parties so attempting to incorporate, and representing the supposed corporation, purchased the land from Maupin, paying therefor $2,500. The deed was made to ■“The Yirginia Lead Mining Company,” as grantee. This deed was recorded April 22, 1873. On the twenty-•eighth day of September, 1873, said supposed corpora-ration, by persons representing to be its proper officers, in due form of law, made a deed of conveyance of the land to Robert C. Sands, which was recorded June 24, 1874.

On the eleventh day of December, 1879, defendant, Robert C. Sands, made a deed purporting to convey said lands to defendant, the Missouri Lead Mining & Smelting Company, a corporation under the laws of Great Britian. This deed was recorded December 17, 1879. The last-named corporation conveyed the land to defendants, George Hopkins and Samuel Pope, as trustees, to secure certain bonds issued by the company. These parties are all made defendants.

On the twenty-eighth of November, 1879, a judgment was rendered in the circuit court of said county against the said Maupin. Under an execution upon this judgment the land was sold to Frederick W. Reinhard, to whom a deed was executed June 5, 1885. The said Reinhard, on June 15, 1885, conveyed the lands to plaintiffs. Plaintiffs complain that all the deeds to and from •defendants cast a cloud upon their title, and pray that their title be quieted and said deeds be declared inoperative and void.

The organizers of the first corporation were not informed that the articles of incorporation had not been filed and recorded until May, 1874. Upon making the •certificate of incorporation, the parties thereto proceeded to the organization of the board of directors and elected .officers, and thereafter assumed to act as a corporation, *623 under the name of Ci The Yirginia Lead Mining Company.” The business was conducted in accordance with the laws governing corporations in the state of Missouri-The error in sending the certificate to the county clerk, instead of the recorder, was made by the attorney of the promoters, and as soon as the mistake was discovered it was corrected. These facts were alleged in the-answer of defendant. Upon a trial, plaintiffs’ bill was. dismissed and judgment was ‘entered for defendants,, and plaintiffs appeal.

It is readily seen, from the foregoing statement,, that the controverted question in this case hinges on the proper effect to be given the deed from Amos 'W. Maupin to the Yirginia Lead Mining Company. This, deed was made and recorded, as also was the certificate of incorporation, long prior to the judgment against Maupin, under which plaintiffs claim title, and consequently there can be no question of the want of, notice of this deed when plaintiffs’ ancestor bought under execution. No offer is made by plaintiffs to refund the-purchase money. They rely for relief on the naked legal proposition that the deed from Maupin to the mining company is absolutely null and void, because the corporation at the time did not have the capacity to take the title. Defendants, on the other hand, insist that the-corporation existed, de facto, at the time of the execution of the deed, and it, therefore, passed the title ; and that though it may not have been even a de facto corporation, still Maupin and his grantees are, under the-, circumstances, estopped to question its validity.

Plaintiffs assert their supposed wrongs, and seekrelief in a court of equity. They virtually admit that-their grantor sold the land in good faith, presumably-for its full value, accepted the money, and made a deed,, believing at the time, and intending, to part with the-title and vest it in the corporation. The promoters of the corporation purchased the land, and paid out their *624 money, under the belief that the corporation was authorized, at that time, to hold the title. They acted, as was supposed, in full compliance with the laws of the state provided for the management of corporations. The demands of plaintiffs do not commend themselves to a court of equity, and, unless the court is fettered by legal .principles, they should not be heard to assert them.

The legal principles invoked by plaintiffs are, first, In order toa valid and effectual conveyance of land there must be a grantee in being at the time of the delivery ■of the deed ; and, second, a corporation has no existence until after a full performance of every requirement of ‘the law, under which it is authorized. Both these propositions have support in decisions of this court.

It has been held, in this state, as at common law, that a deed will not take effect, or have any validity, us a conveyance of the property, unless the grantee therein is in being at its delivery. A deed to W. H. Phelps & Co., which was a partnership, firm, composed of Phelps and two others, was held to pass no title to the firm, or the two persons not named. Arthur v. Weston, 22 Mo. 379 . So it was held in Douthitt v. Stinson, 63 Mo. 268 , that a deed to a pretended corporation, which had no real existence, was absolutely void. In Thomas v. Wyatt, 25 Mo. 24 , a patent issued to a fictitious person was held to’be a nullity. A deed to the directors of a corporation which was named therein, which then had no existence, but was subsequently ■organized, was held to pass no title to the corporation.

These decisions were all made in actions at law. Judge Leonard qualifies his decision, in the case first cited, by the remark: “We must not, however, be misunderstood; our present decision refers to the transfer of the legal estate only, and does not touch the ■equitable rights of the parties growing out of the transaction.”

It has also been held that a corporation is not fully authorized to transact the business for which it was *625 created, until the articles of association had been filed with the secretary of state, and a note executed by the directors, signing their names as such before filing the articles with the secretary, became the personal note of the directors, and did not bind the corporation. Hurt v. Salisbury, 55 Mo. 312 . This decision was approved in the subsequent cases of Martin v. Fewell, 79 Mo. 401 , and Richardson v. Pitts, 71 Mo. 129 . On the other hand in Granby Mining Co. v. Richards, 95 Mo. 110 , it was held that the failure to file a certificate of incorporation with the circuit clerk, as was required by the statute, was an “omission of which the state alone should complain.” The suggestion was made in that case, that the rule of Hurt v. Salisbury, supra, should not be extended. These suits were against persons assuming to act as officers of corporations, which had not fully organized for the transaction of business.

We do not regard these lines of decisions as bearing upon the question in this case, or as inconsistent with the doctrine' of estoppel invoked by defendants. The grantors of plaintiffs dealt with the officers of this ■corporation in the corporate name, received the money •of the supposed corporation, and undertook to convey the land to it in consideration thereof. The question here is, as has been suggested, whether plaintiffs occupy a situation in which they can deny the validity of the •corporation or its acts. This question, we think, well settled in this state, and there is no necessity of inquiring whether, or not, this was a de facto corporation, ■capable of taking the title of land by grant.

The facts in the case of Broadwell v. Merritt, 87 Mo. 99 , are very similar to those in the case under consideration. The articles of association were written, signed, acknowledged and recorded as required by the statute, but a copy was not filed with the secretary of ’ state, which was also required. The business of the attempted organization was, with others, that of buying and selling *626 real estate. The officers of the corporation bought a. tract of land from one Little, and the deed was made to the corporation. Some years after that, the organization of the corporation was perfected, by filing with the secretary of state a copy of the articles as required. Before this was done, however, and about six years after making the deed to the corporation, Little conveyed the land by quitclaim deed to Broad well, who-sued the grantee of the corporation in ejectment. It was held fchat the validity of the corporation could not be challenged by plaintiff, on the ground that there was no grantee therein competent to take the title.' The court in that case speaking through Judge Rat says : “ We do not think that Little, after receiving the large and valuable consideratiou paid him for the land, and making his said deed to the association, and taking the trust deed from it, and putting it in possession thereof, and allowing it to be improved and held under his title for years, could, or ought to, be heard to call in question the capacity or power of the association to-take title to the property, and hold or enjoy the same. Broadwell, who takes under Little, under his said subsequent deed, is in no better • position. He is in privity with, and bound and estopped-by what would bind and estop, said grantor.” A number of cases of thi^, and the United States supreme court are cited in support of the proposition.

This decision was followed and approved in Ragan v. McElroy, 98 Mo. 350 , in which also a deed to a corporation was objected to, on the ground that it had not been shown that the corporation was properly organized. It was held that the grantor, and his heirs were forever .estopped from denying the corporate existence of the grantee, as against those -who have acquired title and possession under that deed. In a similar case in the United States supreme court, Mr. Justice Davis says: “No proposition is more thoroughly settled than this, and it is unnecessary to- *627 refer to authorities to support it. Conceding the bank to be guilty of usurpation, it was still a body corporate, defacto, exercising at least one of the franchises, which the legislature attempted to confer upon it, and in such a case the party who makes a sale of real estate to it is not in a position to question its capacity to take the title, after it has paid the consideration for the purchase.” Smith v. Sheeley, 12 Wall. 350 ; National Bank v. Matthews, 98 U. S. 621 . These decisions commend themselves as being founded on the soundest principles of equity and right.

It is true, as insisted, that no question of estoppel nan arise under a deed which is absolutely void. This proposition was distinctly held in Douthitt v. Stinson, supra. In that case, however, there was no law authorizing the formation of the corporation to which attempt was made to convey the land. Estoppel applies to the regularity of the organization of the corporation, and can only apply when there is authority of law to organize. Jones v. Type Foundry Co., 14 Ind. 89. The statutes of this state gave ample authority for the organization of the Virginia Lead Mining Company, and plaintiffs are estopped to deny the regularity of its organization. Judgment affirmed.

All concur.