Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/183

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 190. Limita- tions. who contract with de facto officers as officers of the corporation will not, when sued by the corporation on the contract, be allowed to defend on the ground that such officers were not legall} 7 " the representatives of the corporation. 1 § 190. Both branches of the foregoing proposition rest on principles of estoppel; and with the limits of the estoppel the scope of their application is determined. Consequently, to an action for calls, a shareholder may plead that the directors making the calls were not legally elected ; 2 and a forfeiture of shares declared by illegally chosen directors may be set aside. 3 It is also held that the principle on which the validity of the acts of de facto officers is sustained against the corporation does not apply where all the persons affected have notice that the officers assuming to act were not legally chosen. 4 as to outsiders acting in good faith. Thorington v. Gould, 59 Ala. 461; St. Louis Domicile Ass'n v. Augustin, 2 Mo. App. 123; Milliken v. Steiner, 56 Ga. 251. So persons dealing with an insurance agent may assume the con- tinuance of his authority until in some way informed of its revocation. Insurance Co. v. McCain, 96 U. S. 84. See, also, cases cited in the preceding and following notes. 1 Delaware, etc., Canal Co. v. Penn- sylvania Coal Co., 21 Pa. St. 131; Cooper v. Curtis, 30 Me. 488; Inibo- den y. Etowah, etc., M'g Co., 70 Ga. 86. See Simpson v. Garland, 76 Me. 203; Abbott v. Chase, 75 Me. 83. 2 People's Mutual Ins. Co. v. West- cott, 14 Gray, 440; Howbeach Coal Co. u. Teague, 5 H. &. N. 151. Qu?ere, supposing the only shareholders dis- puting the call had taken part with- out objection in the election of the directors, and voted for them. It has been held, where directors were elected at a meeting of share- holders not called by the persons named in the certificate of incorpo- ration, that a subscriber when sued on his subscription cannot plead that the directors were not legal offi- cers. The statute in this respect being but directory, the validity of the directors 1 acts could not thus be questioned collaterally. Chamber- lain v. Painesville, etc., R. R. Co., 15 Ohio St. 225. See § 540. 3 Garden Gully Mining Co. v. Mc- Lister, L. R. 1 App. Cas. 39. 4 State v. Curtis, 9 Nev. 325; Orr Water Ditch Co. v. Reno Water Co., 17 Nev. 166. It has also been held that, though the acts of a president de facto would be valid "for ordinary purposes," yet when a suit by which he was eventually ousted was pending to try his title to the office, he could not make a valid assignment of securi- ties belonging to the corporation, with a view to making preferences between creditors. Walker y. Flem- ming, 70 N. C. 483. But would such an assignment have been in the power of a president de jure ? See §§ 236 et seq. De facto officers cannot avail themselves of their acts in their own favor. Shel- lenberger v. Patterson, 168 Pa. St. 30. 163