litigation between private parties and a corporation, this question cannot be raised. See Thompson, §§ 518-533; Coxe v. State, 144 N. Y. 396; Compare Guckert v. Hacke, ante p. 145.-ED.

(g) Corporations by Estoppel.

Where third parties deal with a corporation as such they are estopped from denying the existence of the corporation. Commercial Bank v. Pfeiffer, 108 N. Y. 242; Chubb v. Upton, 95 U. S. 665; Bank v. McDonald, 130 Mass. 264. The rule works both ways, and a corporation cannot, in an action against it, set up the fact of non-incorporation. Ewing v. Robeson, 15 Ind. 26; Rush v. Steamboat Co., 84 N. C. 702; De Witt v. Hastings, 40 N. Y. Super. Ct. 463. So, too, a shareholder is prevented from denying the existence of his corporation on the ground of estoppel. Slocum v. Pipe Co., 10 R. I. 112, 116.

These statements, unquestionably law, have caused a judicious and able writer on the subject to coin the expression corporations by estoppel." See Thompson on Corporations (vol. 1), $$ 518-533. It will be noted that the expression is of value only as between the corporation, its shareholders, and third parties, or the public. It can have no meaning as between the state and the corporation, the state having the right at all times to step in and question the legality of the corporation.— ED.

SNYDER V. STUDEBAKER.

19 Indiana Reports 462 (1862).

APPEAL from the Wells Circuit Court.

WORDEN, J. This was an action by Snyder against Studebaker to recover possession of a certain tract of land. Judgment for the defendant.

The same question is presented by the pleadings and the evidence. It appears that, in March, 1853, the plaintiff, who was then the owner of the land, conveyed the same to the Fort Wayne and Southern Railroad Company, by deed, duly executed and delivered.

This conveyance was made on account of a stock subscription. Afterward, in November, 1855, the railroad company, for a valuable consideration, conveyed the premises to the defendant.

The Fort Wayne and Southern Railroad Company was chartered by act of the legislature, passed in 1849; and it appears that the corporators named in the act in question met in the town of Bluffton, in said county of Wells, on the 19th day of November, 1851, and then and there accepted the act of incorporation, and organized the company pursuant to the provisions of said act.

If the corporation was not created before the 1st of November, 1851, when the new constitution took effect, it could have no exist

ence at all, as that instrument prohibits the creation of corporations other than banking, by special act. The State v. Dawson, 16 Ind. 40; Harriman v. Southam, 16 Ind. 190.

The plaintiff claims that, inasmuch as there was no acceptance of the charter, or organization under it, until after the adoption of the constitution of 1851, there was no such corporation as The Fort Wayne and Southern Railroad Company at the time he executed the conveyance, and, hence, that no title passed from him. But is he in a condition to dispute the existence of the corporation at the time he made his conveyance to it?

It has been held, in numerous cases in this state, that a party who has contracted with a corporation, as such, is, as a general proposition, estopped by his contract to dispute the existence of the corporation at the time of the contract. The following cases may be cited, though there are, perhaps, others reported and some not reported as yet: Judah v. The American Live Stock Insurance Company, 4 Ind. 333; The Brookville and Greensburg Turnpike Company v. McCarty, 8 Ind. 392; Ensey v. The Cleveland and St. Louis Railroad Company, 10 Ind. 178; Fort Wayne and Bluffton Turnpike Company v. Deam, 10 Ind. 563; Jones v. The Cincinnati Type Foundry Company, 14 Ind. 89; Hubbard v. Chappell, 14 Ind. 601; The Evansville, etc., Railroad Company v. The City of Evansville, 15 Ind. 395; Meikel v. The German Savings Fund Society, 16 Ind. 181; Heaston v. The Cincinnati and Fort Wayne Railroad Company, 16 Ind. 275.

The doctrine is by no means confined to the state, but prevails elsewhere. The Dutchess Cotton Manufactory v. Davis, 14 Johns. 238; All Saints' Church v. Lovett, 1 Hall 191; Palmer v. Lawrence, 3 Sand. Sup. C. R. 161; Eaton v. Aspinwall, 6 Duer 176; Jones v. Bank of Tennessee, 8 B. Mon. 122; Worcester Medical Institution v. Harding, 11 Cush. 285; The Congregational Society v. Perry, 6 N. H. 164; People's Savings Bank, etc. v. Collins, 27 Conn. 142; West Winsted Savings Bank v. Ford, 27 Conn. 282; Angell and Ames on Corp., § 94.

The estoppel arises upon matter of fact only, and not upon matter of law. Hence, if there be no law which authorized the supposed corporation, or if the statute authorizing it be unconstitutional and void, the contract does not estop the party making it to dispute the existence of the corporation. But if, on the other hand, there be a law which authorized the corporation, then, whether the corporators have complied with it, so as to become duly incorporated, is a question of fact, and the party making the contract is estopped to dispute the organization or the legal existence

of the corporation. This proposition is substantially stated in the cases of Jones v. The Cincinnati Type Foundry Company, Meikel v. The German Savings Fund Society, and Heaston v. The Cincinnati and Fort Wayne Railroad Company, supra.

Let us apply the doctrine to the case before us. The corporators named in the act to establish the Fort Wayne and Southern Railroad Company had a right, at any time before the offer of the franchises was withdrawn, that is, before the constitution of 1851 was adopted, to accept the charter, and organize under it. If they did so accept the charter, and organize, the corporation was legitimately created, and the new constitution did not destroy it.

Whether they did so accept the charter, and organize, was a question of fact, and the plaintiff, by his conveyance, is estopped to deny such acceptance and organization.

That the corporators accepted the charter, and organized under it, within the time when it was competent to do so, was as fully admitted by the contract as was any other step necessary to an organization.

The conclusion necessarily follows that the plaintiff is estopped to dispute the existence of the corporation at the time of his conveyance to it.

This point was ruled the other way in the case of Harriman v. Southam, 16 Ind. 190; but, upon more mature reflection, we are satisfied that the decision upon this point was wrong, and should be overruled.

We may remark, also, that the doctrine of estoppel was erroneously applied in the case of The Evansville, etc., Railroad Co. v. The City of Evansville, 15 Ind. 395. There the point made was that the law under which the corporation was organized was unconstitutional and void. A party, we have seen, does not, by his contract, estop himself to deny that there is any law, or any valid law, by which the corporation was authorized.

Some further observation, in respect to the case before us, will not be out of place. The doctrine of estoppel, as applied to the case, does not rest upon a mere technical rule of law. It has its foundation in the clearest equity, and the principles of natural justice. The doctrine of estoppel in pais is of comparatively recent growth, but is firmly and clearly established. "The recent decisions of the courts, both in this country and in England, appear to have given a much broader sweep to the doctrine of estoppel in pais than that which formerly existed, and to have established that, in all cases where an act is done, or a statement made, by a party, the truth or efficacy of which it would be a fraud on his part to

controvert or impair, there the character of an estoppel will be given to what would otherwise be mere matter of evidence, and it will, therefore, become binding upon a jury, even in the presence of proof of a contrary nature." 2 Smith Lead. Cas., p. 531, I Am. ed. See, also, upon this subject, Kinney v. Farnsworth, 17 Conn. 355; Middleton Bank v. Jerome, 18 Conn. 443; Laney v. Laney, 4 Ind. 149. In Doe ex dem. Richardson v. Baldwin, I Zabriskie, 397, it was said that "The doctrine of estoppel rests upon the principle, that when one has done an act, or made a statement, which it would be a fraud, on his part, to controvert or impair, and such act or statement has so influenced any one that it has been acted upon, the party making it will be cut off from the power of retraction. It must appear, 1. That he has done some act, or made some admission inconsistent with his claim; 2. That the other party has acted upon such conduct or admission; 3. That such party will be injured by allowing the conduct or admission to be withdrawn." Here the plaintiff, by his conveyance to the corporation, admitted that it had an existence, and could receive the title. Upon this act and admission of the plaintiff the defendant has acted in purchasing the land of the company. If the plaintiff had not conveyed to the corporation, the defendant would not have purchased from it. The law will not now permit the plaintiff to withdraw the admission made by him in conveying to the corporation and deprive the defendant of the land which he purchased on the faith of such admission. In our opinion. the judgment below is right, and must be affirmed.

Per curiam.-The judgment is affirmed, with costs.

Without de facto existence, at least, there can be no estoppel. Cochran v. Arnold, 58 Pa. St. 399; Maryland etc. Co. v. West End etc. Co., 87 Md. 207; Jones v. Aspen Hardware Co., 21 Colo. 263.

Estoppel does not apply in dealing with a pretended corporation without knowledge of its claims as such. Guckert v. Hacke, supra, p.

The following acts will create estoppel: Payments on subscriptions, Boggs v. Olcott, 40 Ill. 303; Voting at meetings, Railroad Co. v. Bowser, 48 Pa. St. 29; acquiescing in corporate acts or receiving benefits, Aullman v. Waddle, 40 Kan. 145. Thompson on Liability of Stockholders, § 407.

For exhaustive notes and an excellent selection of cases on this subject, see Wilgus' Cases on Corporations, pages 630–672.- Ed.

CHAPTER III.

The Corporation and the State.

I. Control Over Domestic Corporations and the Interpretation of Charters.

Dartmouth College Case, reported in 4 Wheaton, 518.

"In 1769 the King of England granted a charter constituting twelve persons therein named a corporation under the name of 'The Trustees of Dartmouth College,' with power to fill vacancies in their body. The purposes of the corporation were to establish a college for the education and instruction of the youth of the province in the arts and sciences and for the dissemination of civilization and Christianity among the Indians. The charter further authorized the corporation to receive, hold and administer property to enable it to accomplish these purposes.

"After the corporation had existed for nearly 50 years, received donations and endowments, the legislature of N. H. enacted several laws altering the management and purposes in several particulars. By these acts the name was changed to 'The Trustees of Dartmouth University,' the board was increased by nine trustees to be appointed by the governor, and provision was made for twenty-five overseers to be appointed by the governor and council. The entire management was placed in the hands of the board subject to the control of the overseers, and authority was conferred to establish a new college and an institute and to use the property and funds for that purpose.

"The trustees refused to be bound and claimed the original charter was a contract. So held. In delivering the opinion neither Marshall, C. J., nor Story, J., pointed out the exact terms of the contract, and it is apparent that a contract was assumed by them." "

As to the essential questions involved in the case, the Court was palpably wrong (see Am. Law. Rev. 26 at 172), but it is nevertheless true that this decision has been conclusively binding upon all the States from that time to this.

The doctrine thus settled is that, whenever the sovereign power for the time being and within the legitimate sphere of action grants to a body of men the franchise, privilege or license in the nature of property and the grantees accept the grant, such franchise, privilege or license is within the constitutional protection in such sense that it cannot thereafter be repealed or revoked by any form of State action against the consent of the corporation.

It was impliedly held a contract on the ground that the agreement between the donors and the beneficiaries, of which the trustees or corporation is the legal guardian, might be in some way impaired. The contract thus implied is the trust created by the various gifts.

But it is difficult to see how the mere grant of a franchise contained in a charter of incorporation can constitute a contract. The franchise is

1

See 2 Morawitz on Corp. 2nd ed. Secs. 1045-1113.