$75. Rule as to Collateral Attack.

Civ. Code, $358. "The due incorporation of any company claiming in good faith to be a corporation under this part, and doing business as such, or its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such de facto corporation may be a party; but such inquiry may be had at the suit of the state on information of the attorney-general."

Both under this provision, and independently of it, the legal existence of a de facto corporation cannot be inquired into collaterally in a private suit, but may be questioned only by the state in a direct proceeding for that purpose instituted by the attorney general.8 As to all the world except the state such a corporation occupies the same position as though in all respects validly organized; and its acts are to be treated as efficacious even against the state, except in direct proceedings to arrest the usurpation of power.10 But the state may institute proceedings to forfeit the charter of a corporation de facto which is acting

7. Reclamation Dist. No. 765 v. McPhee, 13 Cal. App. 382, 109 Pac. 1106; People v. Leonard, 106 Cal. 302, 39 Pac. 617; Oroville & V. R. Co. v. Plumas County, 37 Cal. 354.

8. Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807; McCann v. Children's Home Soc., 176 Cal. 359, 168 Pac. 355; Vallejo etc. R. Co. v. Reed Orchard Co., 169 Cal. 545, 147 Pac. 238; McKee v. Title Ins. etc. Co., 159 Cal. 206, 113 Pac. 140; Keech v. Joplin, 157 Cal. 1, 106 Pac. 222; Robinson v. Blood, 151 Cal. 504, 91 Pac. 258; San Diego Gas Co. v. Frame, 137 Cal. 441, 70 Pac. 295; People v. Leonard, 106 Cal. 302, 39 Pac. 617; Lundy v. Delmas, 104 Cal. 655, 26 L. R. A. 651, 38 Pac. 445; Quint v. Hoffman, 103 Cal. 506, 37 Pac. 514, 777; Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368; Gray v. Cardiff Irr. Dist., 51 Cal. App. Dec. 304, 197 Pac. 389; First Nat. Bank v. Pennig, 28 Cal. App. 267, 151 Pac. 1153; Jaques v. Board of Supervisors, 24 Cal. App. 381, 141 Pac. 404; Midwest Air Filters v. Finn, 74 Cal. Dec. 116, 258 Pac. 382.

9. People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172, 32 Pac. 236; First Baptist Church v. Branham, 90 Cal. 22, 27 Pac. 60; People v. La Rue, 67 Cal. 526, 8 Pac. 84; Reclamation Dist. No. 765 v. McPhee, 13 Cal. App. 382, 109 Pac. 1106.

10. People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172, 32 Pac. 236; First Baptist Church v. Branham, 90 Cal. 22, 27 Pac. 60; People v. La Rue, 67 Cal. 526, 8 Pac. 84; Reclamation Dist. No. 765 v. McPhee, 13 Cal. App. 382, 109 Pac. 1106.

in good faith, if in forming it the statutes governing the matter have not been complied with.11

The code provision above quoted applies only to such corporations as are not forbidden by positive law to do business as de facto corporations, and hence does not apply to the attempted acts of a corporation whose charter has been forfeited for failure to pay its license tax, and whose acts thereafter are expressly made unlawful by the terms of the statute declaring such forfeiture.12 And the right of a pretended corporation to exist may be attacked collaterally where it has not even a de facto existence.13 Moreover, the code does not preclude a private person from denying the existence de jure or de facto of an alleged corporation.14 And an averment of the existence of a de facto corporation is as issuable as an averment of the existence of a corporation de jure.15

§ 76. Requisites to Existence of Corporation de Facto.-To constitute a corporation de facto there must be a charter or general law under which such a corporation as it purports to be might lawfully be organized, an attempt to organize thereunder, and actual user of the corporate franchise.16

There must have been a colorable attempt in good faith to comply with the statute.17 But it is not necessary that any particular time should elapse in order to show a de facto cor

11. See infra, § 557.

12. Van Landingham v. United Tuna Packers, 189 Cal. 353, 208 Pac. 973.

13. McPhee v. Reclamation Dist. No. 765, 161 Cal. 566, 119 Pac. 1077; Reclamation Dist. No. 765 v. McPhee, 13 Cal. App. 382, 109 Pac. 1106.

14. People v. Reclamation Dist. No. 556, 130 Cal. 607, 63 Pac. 27; Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368; Oroville & V. R. Co. v. Plumas County, 37 Cal. 360.

15. Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368; People v. Reclamation Dist. No. 556, 130 Cal. 607, 63 Pac. 27.

16. Midwest Air Filters v. Finn, 74 Cal. Dec. 116, 258 Pac. 382; Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807; Jaques v. Board of Supervisors, 24 Cal. App. 381, 141 Pac. 404.

17. Midwest Air Filters v. Finn, 74 Cal. Dec. 116, 258 Pac. 382; Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807; Brown v. City Council of Long Beach, 53 Cal. App. Dec. 1200, 258 Pac. 693.

porate existence.18 Nor is there any fixed rule for determining just how much business must be done by a corporation assuming de facto powers, or what facts showing good faith are necessary to constitute a de facto corporation. 19

If there is a valid statute under which such a corporation might lawfully be formed,20 it is sufficient if the company claims in good faith to be a corporation under the laws of the state, and is doing business as such corporation.1 But where there has been no attempt to organize, and no corporate act has been done and no corporate power exercised, there is not a corporation de facto. Nor can an individual become a corporation de facto by assuming the name of a toll-road company, where there are no directors or officers, and no acts in corporate forms.3

§ 77. Lawful Authority for Existence of Corporation-Fraud. As we have seen, one of the essential requisites to constitute a corporation de facto is a charter or general law under which such a corporation as it purports to be might lawfully be organized. A de facto corporation cannot result from an attempt to form a corporation under an unconstitutional statute, where there is no other law under which such a corporation could be formed at all.5 Nor can a corporation whose charter

18. Reclamation Dist. No. 765 v. McPhee, 13 Cal. App. 382, 109 Pac. 1106.

19. People v. Reclamation Dist. No. 556, 130 Cal. 607, 63 Pac. 27. 20. See infra, § 77.

1. Bakersfield Town Hall Assn. v. Chester, 55 Cal. 98.

2. Wall v. Mines, 130 Cal. 27, 62 Pac. 386 (as where there were no meetings of the stockholders or trustees, no election of officers, no bylaws adopted, no certificates of shares or memberships issued, no seal adopted or used, and no records or minutes kept, and no corporate acts of any kind performed); Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368; People v. Volcano Canyon Toll-Road Co., 100 Cal. 87, 34 Pac. 522; McCallion v. Hibernia Sav. etc. Soc., 70 Cal. 163, 12 Pac. 114.

3. People v. Volcano Canyon Toll-Road Co., 100 Cal. 87, 34 Pac. 522. 4. See supra, § 76.

5. People v. Reclamation Dist. No. 551, 117 Cal. 114, 48 Pac. 1016; Brandenstein v. Hoke, 101 Cal. 131, 35 Pac. 562. See Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807, holding the rule inapplicable. And see San Francisco v. Spring Valley Water Works, 48 Cal. 493.

has been forfeited for failure to pay its license tax continue to function as a corporation de facto so as to give validity to its acts and contracts entered into during the period of its forfeited charter and suspended powers. But there may be a corporation de facto whose existence cannot be collaterally attacked even though its charter was obtained through fraud.7 And the good faith of the corporators in forming a corporation cannot be inquired into in a collateral proceeding so as to in any manner affect the validity of its corporate existence.8

9

§ 78. Particular Defects.-There may be a de facto corporation whose existence will be secure against collateral attack, though its articles are not signed, verified or acknowledged in the manner required by the code, or are filed with the wrong officer, 10 or do not state all of the facts required by the statute,11 or provide for preferred and common stock with different par values, 12 or though its name so closely resembles that of a pre-existing corporation that the secretary of state should have refused to permit the articles to be filed,13 or though its certificate of incorporation has not been filed,14 or though a final organization was not effected within the time specified in the code,15 or though the organization meeting of its stockholders was held out of the state,16 or though a final organization was

6. Van Landingham v. United Tuna Packers, 189 Cal. 33, 208 Pac. 973. 7. Dean v. Davis, 51 Cal. 406.

8. Madera R. Co. v. Raymond Granite Co., 3 Cal. App. 668, 87 Pac. 27. 9. McCann v. Children's Home Soc., 176 Cal. 359, 168 Pac. 355 (charitable corporation); Wall v. Mines, 130 Cal. 27, 62 Pac. 386; Oroville & V. R. Co. v. Plumas County, 37 Cal. 354; Larrabee v. Baldwin, 35 Cal. 155; Dannebroge Gold Quartz Min. Co. v. Allment, 26 Cal. 286.

10. San Diego Gas Co. v. Frame, 137 Cal. 441, 70 Pac. 295; Bakersfield Town Hall Assn. v. Chester, 55 Cal. 98.

11. People v. Leonard, 106 Cal. 302, 39 Pac. 617.

12. Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807.

13. Vallejo & N. R. Co. v. Reed Orchard Co., 169 Cal. 545, 147 Pac. 238.

14. Charles Ehrlich & Co. v. J. Ellis Slater Co., 183 Cal. 709, 192 Pac. 526 (failure to file certificate as required by statute of state where foreign corporation was organized).

15. Stockton & Linden Gravel Road Co. v. Stockton & Copperopolis R. Co., 45 Cal. 680.

16. McKee v. Title Ins. & Trust Co., 159 Cal. 206, 113 Pac. 140.

not effected,17 or though its term of existence as specified in the articles of incorporation has expired.18 So a corporation may have de facto existence notwithstanding noncompliance with the statute requiring, as a condition precedent to the transaction of business, the filing of a copy of the articles of incorporation in the county where the principal business of the corporation is to be transacted.18a

§ 79. Powers of De Facto Corporations.-A corporation de facto may legally do and perform every act and thing which the same entity could do or perform were it a corporation de jure.19 The validity of its acts cannot be destroyed by a subsequent adjudication, in a suit by the state, that it had no legal right to a corporate existence.2 But its ultra vires acts may be challenged in a collateral proceeding, the same as those of a corporation de jure.1

20

The secretary of state may be compelled by mandamus to receive the license tax of a de facto corporation, and to issue a license to it. And two de facto corporations may consolidate and reorganize so as to form a new corporation in all respects valid, and proceedings in the nature of quo warranto against. the new corporation cannot be extended to an inquiry and determination as to the legality of the formation of the original corporations. A de facto corporation may also sue and be

17. Stockton & Linden Gravel Road Co. v. Stockton & Copperopolis R. Co., 45 Cal. 680.

18. First Nat. Bank v. Pennig, 28 Cal. App. 267, 151 Pac. 1153. 18a. Midwest Air Filters v. Finn, 74 Cal. Dec. 116, 258 Pac. 382.

19. People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172, 32 Pac. 236; First Baptist Church v. Branham, 90 Cal. 22, 27 Pac. 60; People v. La Rue, 67 Cal. 526, 8 Pac. 84; People's Ditch Co. v. Seventysix Land & W. Co., 5 Cal. Unrep. 292, 44 Pac. 176; Miller v. Perris Irr. Dist., 99 Fed. 143.

It is not precluded from asserting property rights acquired by it prior to the filing of a copy of its articles as provided in Civ. Code, § 296. Midwest Air Filters v. Finn, 74 Cal. Dec. 116, 258 Pac. 382.

20. McPhee v. Reclamation Dist. No. 765, 161 Cal. 566, 119 Pac. 1077. 1. Boca & L. R. Co. v. Sierra Valleys R. Co., 2 Cal. App. 546, 84 Pac. 298.

2. Westlake Park Inv. Co. v. Jordan, 198 Cal. 609, 246 Pac. 807.

3. People v. La Rue, 67 Cal. 526, 8 Pac. 84 (swamp-land, levee and reclamation districts).