98 ‘CORPORATION CODE relations with the association eased. Now to allow hint to come in and say that the corporation aia net exist which all eupposed had legal existence, ‘hat, though the officers of the association and plaintiff contracted for = ~-corporate liability on the part ofthe former, it shall be held, nevertheless, that the members of such association are bound’ ae partners, in direct Violation ofthe well-settled law that auch an association, under the eireum- ‘stances, was a de facto corporate body; that, ax between the parties, the relations are the same in all respects as though the corporation had a de jure existence, and contrary to the settled doctrine, as Ibelieve, ofthis and ‘most other courts,—is what the judgment in this ease does, in my opinion think the judgment ofthe eireuit court, holding the defendants lieble ‘as partners, was wrong, and that jt should be reversed, and the cause eau Taare / . clubs Frm Desi tazitien davis ~ Me 4 = el United States Creat Cove of Appeal Bem Crest 1908 TEE peal 2 He pe (ow four aferdita, atar bav 4 form orporation, ordered goods fom the pain ; er ‘corporation. And after they had filed such articles in one of the two public offices required by last, they ordered additional goods. fn ‘he lower eort held or the defendants and ploniappent) SANBORN, CIRCUIT JUDGE ... The patent and indisputable facts in > this cas are thatthe danis aswcintod themselves together, and, C2777." Yure- Dec ine, 1902, until December 22, 1902, active Tapurchasing / terial, and labor ofthe plaintiff, and in constructing « cotton gin: the name “The Cowata Gin Company 4 ¢ ee a rpg Suey ty eaceenccegeaion ih // ba Dito ke of ¢ gike ‘with the clerk of the judicial district in which thetr place of business w: unhld located, as required by the statutes in order to constitute them a l Hkh] szporain aro slot ta ineis as Such AGE Fe, 1901, e. 379, 31 Stat. 794; Mansfield’s Dig. Lews Ark. secs. 960, 968, 979, Day, [102 oo Oc fia, and forthe rt time wok onthe colar app, —_, Cb ofFORMATION AND ORGANIZATION OF CORPORATION 99 th associates may escape individual liability or such debta by a com; Incorporation Taws oF which gives the color ofa legal corporation, and by the user of the franchise ‘of such a corporation in the honest belief that it is duly incorporated. When the fact appenre, ast docs in the case at bar, by indisputable evidence that ccinted and knowingly incurred liabilities under a given name, ia that they are governed by the general rule, and the| Ihurden in upon them to prove that th ‘fall under some exception wen v. Shepard, ‘224, Wecheelbarg v. Flour City Nat. Bank, 64-80, 94,12 C.C-A 56, 60,61, 26 LIRA. 470; Clark, Jones, 87 ‘la. 474, 68, 362. Counsel fr he defendant rue wih ish force and yersesvecass 7 that they evenpe ability because they became ncornration de facto although they coneede thal. they never hacamse corporation dejure, snd js support ofthis position they cite among other eases. (Citations omi jut i, authorities filed under a general enabling actor a ‘i iad been a user of the franchis od bon whieh had ‘bofore the indebtedness in question was created, while nothing of this ature hed boon done belare The debt Tor $4700 which we are. now ‘considering was incurred. The authorities which have been recited rest ‘upon the proposition tha fied eis del Choy bor serpraton sas sad etomat am nd “ve eet ar, simatic ono eb He preset He espn, Me ato of Moraes orporations, at section 748 upon which counsel seem to rely, that. “Iran asain seme toner into cniastn a GET shay dang i retainers Hittereasuszaion endl nese ot essen Shona del sn prte Whe een vm ee Beibsocagantnas. Ts rually ur weser te neleton wor cts rpiton ooo and hth he ora wih te Setcatin ni porate cpl wre maths by the ple ture or prohibited by law, or illegal” is too broad to be sound. Patios who actively engage in business Sot 3x under the name and pretense_of a corporation which they know neither ‘exists nor has any color of existence may not escape individual liability100 CORPORATION CODE Decaus are led by their pretense to contract with thé ni asa in such cases thay act as the agents of « ~PEincipal that they know does not exist, and they are Tiable under a Ter rate, Baca stole espe FIRST RERECCS SS “Garis (ATH Ea} 690, Quoon City FursitareCerper Cov. Crawtord, 127 “Mo. 356, 964, 30 8,.W. 163. The burden is not who dea! with them as a corporation, but on themselves who act under the name of a bilities they meur, VEN in the absence of fraud or bad faith, upon the ple that where one of two parties must suffer he must bear the lee hose breach of duty ented ee are eases in which stockholders whe taok no active part in the business of a pretended corporation which was acting without any cherter ot filed articles, who supposed that the corporation was duly organized, have been held exempt from individual liability for the debta it incurred: but if they had been actively conducting his business with knowl [isk ot ineorporation those decisions most have been ctherwiae-Seacord ‘Pendleton, Hun 876 ONYS tes Fulerv Nome wT NT Be 2, Puller v. Rowe, STN.Y. 25, 26. Ni or thet nable to ‘such exemption, wa Ter the panera law of Arkansas in frce nthe indian Teritory the Sling of articles of incorporation with the clerk of Court of Appeals was a sine qua non of zny color ofa legal corporation. Without that there waa not, ‘and there could not be, an apparent corporation. Agreements to form one, statements that there was one, signed articles of association to make one, acts 28 one, ereated no color of incorporation, because there could be no ‘incorporation oF color of it under the law until the articles were filed, ‘Johnson v. Corser, 34 Minn, 955, 25 N.W. 799; Finnegan v. Noerenberg, 52 Minn, 289, 243, 244, 83 N.W. 1150, 1151, 18 LRA. 778, 38 Am, St. Rep, 552; Taylor on Private Corporations, 145; Roberts Mfg. Co. v. Schlick, 62 Minn, 882, 64 N.W. 826. In Finnegan v. Noerenberg, supra, Chief Justice Gilfilan well sai: “To give to body of men assuming to act as a corporation, where there has been no attempt to comply with the provisions of any law ‘authorizing them to become much, tne sate of de facto corporation,