Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/138

 § 150.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. it hold where the authority under which the would-be share- holders have attempted to form themselves into a corporation is no authority at all, so that their organization never had even the appearance of validity : as. if, for instance, a body of men in New Jersey should attempt to form themselves into a corpo- ration under the laws of New York. 1 Such a body would not constitute a de facto corporation. § 149. The foregoing rules, as resting on principles of estoppel, are subject to still further qualifications. 2 The principle of es- toppel cannot be carried so far as to bar the plea that the con- tract on which suit is brought is illegal : malum prohibitum or malum in se ; for, from motives of public policy the law will not lend itself to enforce such a contract. 3 Likewise the law will not aid an illegal enterprise b} r enforcing a contract at the suit of a corporation incorporated for an illegal purpose. 4 If, however, there is nothing illegal in the purposes for which a corporation has been formed, the illegal nature of the de facto legislature that incorporated or purported to incorporate it will not so infect it with illegality as to render it incapable of suing in its corporate name. 5 § 150. As a final and obvious limitation on these rules as resting on estoppel, it must appear that there is an estoppel affecting the party who would deny the corporate existence. As was said in Dojde v. JSTizner : 6 " There are certainly many iHill v. Beach, 12 N. J. Eq. 31. Compare Methodist Episcopal Church v. Pickett, 19 N. Y. 483, 485; Lewis v. Tilton, 64 Iowa, 220. A corporation organized under a void law cannot enforce a mortgage made to it. But, if not organized for an unlawful purpose, its receiver can demand an accounting for the debt in a court of equity. Burton v. Schildbach, 45 Mich. 504. 2 An estoppel cannot be relied on in the face of a statute. Thus where the civil code prescribes that an un- authorized corporation canuot ap- pear in court, a defendant may plead that the corporation cannot sue. World ngmen's Bank «. Converse, 29 118 La. Ann. 369; see Nat. B'k v. Phoenix Warehousing Co., 6 Hun, 71. 8 See §§297 et seq. 4 Detroit Schuetzen Bund v. De- troit Agitations Verein, 44 Mich. 313. A shareholder is not estopped by his subscription from denying the lawful existence of a corporation prohibited by the state constitution. St. Louis Colonization Ass'n v. Hen- nessy, 11 Mo. App. 555; see, also, Chicora Co. v. Crews, 6 S. C. 243, and, semble contra, Importing and Exporting Co. v. Locke, 50 Ala. 332. 5 United States v. Insurance Cos., 22 Wall. 99. « 42 Mich. 332, 336. See, also, Mansfield, etc., R. R. Co. v. Drinker,