I. W. Williams Co. v. Ah Quin

Three of the defendants in the above-entitled action have appealed from a judgment entered against them. There was a motion for a new trial and formal notice of

This action was brought against the defendants to recover from them severally an amount of money alleged to be due on account of merchandise sold. In the complaint it is set forth that in January, 1915, the individual defendants “pretended to organize a corporation”; that articles of incorporation were filed with the Secretary of State and with the county clerk, but that nothing further was done toward completion of said corporation, and that no stock was issued to the incorporators or anyone else; that no officers or directors were ever elected; that no meetings were held by the defendants who pretended to organize the corporation; that the pretended corporation “never had any capital whatever” and no existence in fact. The complaint proceeds to narrate that the defendants claimed to have organized a corporation and operated under such pretension, and that they represented to plaintiff that they were such corporation; that the plaintiff sold goods to the pretended corporation amounting in value to several hundred dollars. Further allegations followed to the effect that the corporation was pretended to be organized fraudulently by the defendants for the purpose of avoiding personal liability. The court made findings negativing the allegation that any fraudulent intent existed on the part of the incorporators of the corporation. The court found further that before the commencement of this action plaintiff had brought an action against the corporation, secured judgment and had execution issued thereon, which was returned unsatisfied “for want of corporate assets.” The holding of the court was, however, that the corporation had not been legally formed and that by reason of that fact alone the individual incorporators incurred the personal liability which plaintiff sought to enforce against them. As to the manner- of the organization of the corporation, the particular finding was as follows: “That the defendants George Ah Quin, Tom Ah Quin, Chan Hong, Reuben Summers, and Robert Wurgraft, on or about the fifteenth day of January, 1915, undertook

[1] We think, from the facts as determined by the court in the finding quoted, it must be concluded that the corporation was regularly and legally formed. The mere fact that certificates of stock were not issued does not detract from this conclusion, for the incorporators became stockholders and were entitled to have issued to them the certificates for the number of shares which they had subscribed for. It may be added that a copy of the articles of incorporation was received in evidence, and these articles showed that each of the five incorporators subscribed for one share of stock each of the par value of ten dollars. The directors selected for the first year were named, and it seems that all things were done that are required to be done under section 290 of the Civil Code, which prescribes what shall be shown by the articles of incorporation. [2] Persons dealing with the corporation were bound to take notice of the contents of the articles which were regularly filed. (Perkins v. Fish, 121 Cal. 317 , at p. 325, [ 53 Pac. 901 ].) As has been shown, the court found that the organization of the corporation was not conceived in fraud. The facts concerning the organization of the alleged corporation were fully disclosed to the plaintiff by the records and documents on file. [3] The mere fact that after obtaining judgment against the corporation, as it was found by the court, the plaintiff failed to discover assets sufficient to satisfy its claim, is not sufficient reason why a personal and several

The judgment appealed from is reversed.

Conrey, P. J., and Shaw, J., concurred.