Harrill v. Davis

Citations

• 168 F. 187
• 22 L.R.A.N.S. 1153
• 1909 U.S. App. LEXIS 4434

Syllabus

<p>1. PARTNERSHIP (§ 41*)-CORPORATIONS (§ 225*)-INDIVIDUAL LIABILITY IN Case op Failure to Incorporate — General Hule.</p> <p>The general rule is that parties who associate themselves together and conduct a business for profit under a name adopted or used by them for that purpose are liable as partners for the debts they incur under that name.</p> <p>This general rule governs if the name used be that of a supposed corporation which the associates have attempted but failed to organize according to law.</p> <p>But a compliance by such associates with the statutes authorizing them to become a corporation exempts them from other individual liability than that proscribed by such laws for debts incurred after they become a corporation authorized to do business as such.</p> <p>[Ed. Note. — For other cases, see Partnership, Cent. Dig. §§ 56, 58; Dee. Dig. § 41;* Corporations, Cent. Dig. §§ 74, 864, 865; Doc. Dig. §'225.*]</p> <p>2; Partnership (8 41*)— Corporations (§ 60*)- -Individual Liability — Exceptions to General Bulb.</p> <p>Two exceptions to the general rule that corporators failing to organize legally are individually liable are: (1) Where such associates procure a charter or file articles of incorporation under a general enabling ad, secure thereby the color of a corporation, believe they are such, and use the supposed franchise of their corporation, and third parties deal with them as a corporation, they become a de facto corporation, which exempts them from individual liability to such parties, although there are defects in their incorporation. (2) Projectors of a corporation to be organized who inform third parties that they are contracting for such a corporation and assure them that the obligations incurred will become the obligations of the future corporation may escape individual liability to such third parties for obligations thus incurred, for services necessary to effect the corporate organization and for machinery and oilier property necessary to the com