Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/571

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 539. and subscribes for shares, the organization of the corporation not being at the time completed, he is ^y enhe not afterwards estopped thereby from pleading to an action on his subscription, that the steps necessary to com- plete the organization of the corporation have not been taken. 1 " The ground upon which a party who has contracted with a corporation as such is estopped to deny its existence is, that by his contract he has recognized the existence of the corporation. The contract in question, instead of purporting to be made •with an existing corporation, utterly excludes the idea of pres- ent existence, but contemplates the future organization of the corporation to which he was to pay the amount of his subscrip- tion." 2 § 539. On not dissimilar principles a subscriber to the stock of a railroad corporation may, in a suit brought against him for assessments by a new corporation formed by the consolida- tion of the original corporation with another, question the con- solidation proceedings in which he has taken no part, although they be sufficient to constitute the consolidated company a corporation de facto? For in an action brought by a consoli- dated corporation to recover subscriptions to the stock of one of the original corporations based on -the right of succession under the statute, it is essential that a consolidation in accord- ance with the statute be proved ; and it is not enough that the consolidated company be shown to be a corporation de facto} 1 Rikhoff ». Brown's Sewing Mach- ine Co., 68 Ind. 388 ; Indianapolis Furnace, etc., Co. v. Herkimer, 46 Ind. 142 ; Schloss v. Montgomery Trade Co., 87 Ala. 411; Caps v. Pro- specting Co., 40 Neb. 470. But such subscriber may estop himself by tak- ing part in corporate proceedings. Minnesota Gas Light Company v. Denslow, 46 Minn. 171; see Knight v. Flatrock, etc., Turnpike Co., 45 Ind. 134 ; Jackson v. Crown Point Mining Co., 21 Utah, 1. 2 Indianapolis Furnace, etc., Co. v. Herkimer, 46 Ind. 142, 149. See Bushnell v. Consolidated Ice Co., 138 111. 67. It has been held that a shareholder is not estopped by his subscription to deny the lawful existence of a cor- poration prohibited by the state con- stitution. St. Louis Colonization Ass'n v. Hennessy, 11 Mo. App. 555. Contra, McCarthy v. Lavashe, 10 Chic. Leg. N. 342. 3 Tuttle v. Michigan Air Line R. R. Co., 35 Mich. 247. See Rodgers v. Wells, 44 Mich. 411. 4 Mansfield, etc., R. R. Co. v. Drinker, 30 Mich. 124; Same v. Brown, 26 Ohio St. 223; Same v. Stout, ib. 241. 551