Clark v. American Cannel Coal Co.

Monks, J.

This suit was brought by appellee to enjoin appellant from mining and removing fire-clay from certain real estate in Perry county, and to quiet appellee’s title to said fire-clay. Appellee sold and conveyed said real estate by deed to a remote grantor of appellant on September 20, 1866, and claims to own said fire-clay by virtue of the reservation contained in said deed. A trial of said cause resulted in a final decree quieting appellee’s title to said fire-clay and enjoining appellant' from removing the same.

1. The first question to be determined is: was appellee, when it commenced this suit, an existing corporation having the power to sue ? If this question be answered in the negative this case must be reversed. It appears from the record that appellee—a corporation—:was created by special act (Local Laws 1838, p. 216), to continue for a period of fifty years from December 23, 1837. The powers granted were to mine for coal, “purchase, receive, hold and enjoy lands, coal, iron and other mines, * * * and the same to sell, convey and demise.” In 1885 the legislafrure passed an act (Acts 1885, p. 121, §§5124-5128 Burns 1901), which, purported to extend the corporate existence of every private corporation, created or organized by special act for the purposes of mining stone, coal, iron ore, etc., thirty years after the passage of said act, whose board of directors, within sixty days after the passage of said act of 1885, shall avail itself of the provisions of said act by adopting resolutions to that effect, and filing the same with a statement giving the title and date of the act creating said corporation and of each act amendatory or supplemental to said creative act. The board of directors of appellee complied with the requirements of said act of 1885 on May 30, 1885, and appellee claims that thereby its corporate existence was extended thirty years from that time. Since 1837 until the commencement of this action appellee has exercised corporate powers under said special act of 1837 and the act of 1885. Appellant’s position is that, as the special act of December 23, 1837, creating appellee a corporation, fixed the life of said corporation at fifty years, it ceased to exist when that period was ended, in 1887; that said act of 1885 was unconstitutional, and the attempt to continue the corporate existence of appellee by complying with its provisions was without effect; that appellee, having ceased to exist as a corporation, can not maintain this action. The act of April 2, 1885, supra, which appellee claims continued its corporate existence for thirty years from the date of its passage, is clearly unconstitutional under the rule declared in In re Bank of Commerce (1899), 153 Ind. 460, 47 L. R. A. 489.

2. 3. 4. 5. Appellee insists, however, that appellant can not raise any question in regard to the constitutionality of said act of 1885 in this case, because (1) it is at least a de facto corporation, and therefore impervious to collateral attack; (2) that appellant is estopped from denying its corporate existence. It is true, as claimed by appellee, that the corporate existence of a de facto corporation can only be questioned in a direct proceeding brought for that purpose. Doty v. Patterson (1900),, 155 Ind. 60, 64, and authorities cited. It is -essential to the existence of a de facto corporation, however, that there be (1) a valid law under which a corporation with the powers assumed might be incorporated; (2) a bonafide attempt to organize a corporation under such law; (3) and an actual exercise of corporate powers. Doty v. Patterson, supra; 10 Cyc. Law and Proc., 252-256; 1 Clark & Marshall, Priv. Corp., §§82a, 82b. It follows, therefore, that there can not be a corporation de facto when there can not be one de jure. If there is no law under which a corporation de jure might exist, its nonexistence may be set up even in a collateral proceeding. 10 Cyc. Law and Proc., 255, 256; 1 Clark & Marshall, Priv. Corp., §82c; Heaston v. Cincinnati, etc., R. Co. (1861), 16 Ind. 275, 279, 79 Am. Dec. 430; Harriman v. Southam (1861), 16 Ind. 190; Snyder v. Studebaker (1862), 19 Ind. 462, 81 Am. Dec. 415; Eaton v. Walker (1889), 76 Mich. 579, 43 N. W. 638, 6 L. R. A. 102; Georgia, etc., R. Co. v. Mercantile Trust, etc., Co. (1894), 94 Ga. 306, 21 S. E. 701, 32 L. R. A. 208, 47 Am. St. 153. “To be a corporation de facto it must be possible to be a corporation de jure, and acts done in the former case must be legally authorized to be done in the latter, or they are not protected or sanctioned by the law. Such acts must have an apparent right.” Evenson v. Ellingson (1887), 67 Wis. 634, 646, 31 N. W. 342. It necessarily follows that there can not be a corporation de facto under an unconstitutional statute, for such a statute is void, and a void law is no law. 1 Clark & Marshall, Priv. Corp., p. 246; Black, Const. Law, p. 64; Snyder v. Studebaker, supra; Harriman v. Southam, supra; Heaston v. Cincinnati, etc., R. Co., supra; Eaton v. Walker, supra; Norton v. Shelby County (1886), 118 U. S. 425, 6 Sup. Ct. 1121, 30 L. Ed. 178.

6. If the law under which a corporation is organized, or the special act creating the corporation, fixes a definite time when its corporate life must end, it is evident that when that date is reached, said corporation is ipso facto dissolved without any direct action on the part of the state or its members. And no corporate powers can thereafter be exercised by it except such as are given it by statute for the purpose of winding up its affairs, which in this State is limited to three years after the dissolution. §3429 Burns 1901, §3006 E. S. 1881 and Horner 1901; 10 Cyc. Law and Proe., 1271; 2 Clark & Marshall, Priv. Corp., §305; 2 Morawetz, Priv. Corp. (2d ed.), §1031; 2 Beach, Priv. Corp., §780; People, ex rel., v. Anderson, etc., R. Co. (1888), 76 Cal. 190; Scanlan v. Cranshaw (1878), 5 Mo. App. 337; LaGrange, etc., R. Co. v. Rainey (1870), 47 Tenn. 420, 432; Grand Rapids Bridge Co. v. Prange (1877), 35 Mich. 400, 24 Am. Rep. 585; Bradley v. Reppell (1896), 133 Mo. 545, 32 S. W: 645, 34 S. W. 841, 54 Am. St. 685; May v. State Bank (1843), 2 Rob. (Va.) 56, 40 Am. Dec. 726; Rider v. Nelson, etc., Factory (1836), 7 Leigh (Va.) 156, 30 Am. Dec. 495.

7. Appellee in 1866 at the time its deed for the land in controversy was executed to appellant’s remote grantor, was a corporation de jure by virtue of the special law of December 23, 1837 (Local Laws 1838, p. 216). Even if appellant, who claims the real estate in controversy and the right to mine said fire-clay and remove the same under appellee’s deed of September 20, 1866, is estopped to deny its corporate existence, such estoppel only operates to prevent a denial of its corporate existence at the time the deed was executed in 1866, and in no way prevents appellant from alleging facts showing that the period fixed for its existence as a corporation expired in 1887, and that there was no such corporation in existence when this action was commenced. This is true because after a corporation is dissolved by a judicial decree or by the expiration of the period fixed for its existence in the law under which it is organized, it is not even a de facto corporation, and its existence as a corporation may he questioned collaterally. 1 Clark & Marshall, Priv. Corp., p. 247; 2 Clark & Marshall, Priv. Corp., §305; Guaga Iron Co. v. Dawson (1836), 4 Blackf. 202; Morgan v. Lawrenceburgh Ins. Co. (1852), 3 Ind. 285; Brookville, etc., Turnpike Co. v. McCarty (1856), 8 Ind. 392, 65 Am. Dec. 768; Bradley v. Reppell, supra; Krutz v. Paola Town Co. (1878), 20 Kan. 397; Marysville Investment Co. v. Munson (1890), 44 Kan. 491, 24 Pac. 977; Supreme Lodge Knights of Pythias v. Weller (1896), 93 Va. 605, 25 S. E. 891; Dobson v. Simonton (1882), 86 N. C. 492; Asheville Division, etc., v. Aston (1885), 92 N. C. 578; Sturges v. Vanderbilt (1878), 73 N. Y. 384; White v. Campbell (1844), 5 Humph. (Tenn.) 37.

8. As the corporate existence of appellee fixed by the special act of 1837 ended in 1887, and the three years given by §3429 Burns 1901, §3006 R. S. 1881 and Horner 1901, for the purpose of winding up its affairs ended in 1890, and the act of 1885 (Acts 1885, p. 121), under which appellee claims its corporate existence was extended thirty years, is unconstitutional, it follows that appellee had no power to sue when this action was commenced.

Judgment reversed, with instructions to sustain appellant’s motion for a new trial of the issues joined on the answers in abatement, and for further proceedings in accordance with this opinion.