that two or more workmen, who are not otherwise partners, unite, in a particular instance, to do a piece of work and to divide the thing made, or to sell the product and divide the proceeds, does not of itself constitute them partners.51 It is not done as a business with a view to profit. Thus if two men go fishing together and divide the catch; 52 if one man furnishes a farm and another furnishes the seed and labor to raise a crop which they divide between them; 53 if a wheelwright and a blacksmith unite to make and iron a wagon, and then sell it and divide the price, they are not thereby constituted partners either in the particular adventure or in such ventures generally. Many further illustrations will be given in a later section.54

§ 16. Joint ventures-Syndicates. Other cases of particular and peculiar contracts for associated enterprise occasionally present themselves, usually in connection with the purchase, for ultimate sale or division, of a particular piece of property.55 In several modern cases a tendency to distinguish them by the name of "joint ventures" has been manifested,56 though this

51 Two lawyers, not partners, who take a particular case together and agree to divide the fees, do not thereby become partners: Willis v. Crawford (1901), 38 Oreg. 522, 64 Pac. 866, 53 L. R. A. 904.

See cases of men jointly doing a job of lumbering: Dwinel v. Stone (1849), 30 Me. 384, Burd. Cas. 17; McAlpine v. Millen (1908), 104 Minn. 289, 116 N. W. 583; Dutcher ý. Buck (1893), 96 Mich. 160, 55 N. W. 676, 20 L. R. A. 776, Mechem's Cas. 749.

52 See Hurley v. Walton (1872), 63 Ill. 260; Baxter v. Rodman (1826), 20 Mass. (3 Pick.) 435; Cambra v. Santos (1919), Mass. -, 123 N. E. 503.

53 See Reynolds v. Pool (1881), 84 N. Car. 37, 37 Am. Rep. 607; Day v. Stevens (1883), 88 N. C.

83, 43 Am. Rep. 732; Putnam v. Wise (1841), 1 Hill (N. Y.) 234, 37 Am. Dec. 309; Donnell v. Harshe (1877), 67 Mo. 170, Gilm. Cas. 63; Blue v. Leathers (1853), 15 Ill. 31; Logan v. Oklahoma Mill Co. (1904), 14 Okla. 402, 79 Pac. 103; Cherry v. Strong (1895), 96 Ga. 183, 22 S. E. 707, Burd. Cas. 28; Kelly v. Rummerfield (1903), 117 Wis. 620, 94 N. W. 649, 98 Am. St. R. 951; Wagner v. Buttles (1913), 151 Wis. 668, 139 N. W. 425, Ann. Cas. 1914 B, 144; Cedarberg v. Guernsey (1899), 12 S. Dak. 77, 80 N. W. 159; Williams v. Rogers (1896), 110 Mich. 418, 68 N. W. 240.

54 See post, § 83.

55 See ante, § 14.

56 See Jones v. Gould (1913), 209 N. Y. 419, 103 N. E. 720; Ross v.

§ 16]

name is not particularly illuminating. They are also sometimes called "syndicates," but this name is not more distinguishing than the other. They frequently have some of the characteristics of partnership, but they are usually not partnerships, at least of the commercial or trading class,57 and the rights and liabilities of the parties, where there are no elements of estoppel, are to be worked out by a consideration of the terms of the contract and of the powers and authorities in fact conferred.58 The implied authority of the associates to bind each other by contracts is usually very limited.59 Persons so situated who have acquired property which they are to hold until they unite in disposing of it do not usually contemplate or require any acts of agency by one; there are ordinarily no incidental contracts v. Hastings (1868), 41 Vt. 380, 98 Am. Dec. 592, Gilm. Cas. 71; Gottschalk v. Smith (1895), 156 Ill. 377, 40 N. E. 937; Wade v. Hornaday (1914), 92 Kan. 293, 140 Pac. 870; Coward v. Clanton (1898), 122 Cal. 451, 55 Pac. 147.

Burrage (1919),
N. E. 267.

Mass.

124

The term "joint adventure' seems to be also used, as in Butler v. Union Trust Co. (1918), 178 Cal. 195, 172 Pac. 601; Jackson v. Hooper (1909), 76 N. J. Eq. 185, 74 Atl. 130 (reversed and put on different theory, 76 N. J. Eq. 592, 75 Atl. 568, 27 L. R. A. (N. S.) 658); Keyes v. Nims (1919), Cal., 184 Pac. 695; McCarney v. Iowa -, 175 Lightner (1920), N. W. 751; Thimsen v. Reigard (1920), Oreg., 186 Pac. 559.

57 Thus in Butler v. Union Trust "It is Co., supra, the court says: sometimes a close question whether a transaction constitutes a partnership or a joint adventure."'

58 That no partnership resulted, in the particular case, see Butler v. Union Trust Co., supra; Jackson v. Hooper, supra; Jones v. Gould, supra; Clark v. Sidway (1891), 142 U. S. 682, 35 L. ed. 1157, 12 S. V. Gleason Ct. Farrand 327; (1884), 56 Vt. 633, Burd. Cas. 27; Central Trust Co. v. Creel (1919), 184 Ky. 114, 211 S. W. 421; Bruce

V.

Calling the associates partners, 8 see Kayser v. Maugham (1885), Colo. 232, 6 Pac. 803; Jones v. 56 Davies (1899), 60 Kan. 309, Pac. 484, 72 Am. St. R. 354; Spencer v. Jones (1899), 92 Tex. 516, 50 S. W. 118, 71 Am. St. R. 870; Yeoman v. Lasley (1883), 40 Ohio St. Hulett Fairbanks 190; (1883), 40 Ohio St. 233; Mitchell v. Tonkin (1905), 109 N. Y. App. Div. 165, 95 N. Y. S. 669; Canada v. Barksdale (1881), 76 Va. 899; Torbert v. Jeffrey (1900), 161 Mo. 645, 61 S. W. 823; Phillips v. Reynolds (1908), 236 Ill. 119, 86 N. E. 194.

Calling the arrangement a "pool," see Green v. Higham (1900), 161 Mo. 333, 61 S. W. 798.

59 See Jones v. Gould, supra; Keyes v. Nims, supra.

to be made; the parties intend to act unitedly when they act at all; and consequently there is no ground for implying any general authority in one to act for all. Only the consent of all, or the rare case of overpowering necessity, would create an authority.

In most other respects their relation is governed by the ordinary rules of partnership,60 though there is unfortunately much apparent conflict in the cases.

§ 17. Members of defectively-organized corporations.— Whether persons are to be held liable as partners who have engaged in business in pursuance of an unsuccessful attempt to organize a corporation is a question which presents many difficulties and upon which the authorities are in conflict. It is contended, on the one hand, that where the association has done business and entered into contracts as a corporation, the individuals composing it cannot, in case it appears that no cor

60 Thus in Butler v. Union Trust Co., supra, the court said:

"A joint adventure is similar to a partnership, and, being of a similar nature, the right to an accounting of profits in accordance with the agreement therefor, and the obligations growing out of such agreement between the parties are governed by the same rules of law, Petrie v. Torrent, 88 Mich. 43, 49 N. W. 1076; Causten v. Barnette, 49 Wash. 659, 96 Pac. 225; Claflin v. Gross, 50 C. C. A. 300, 112 Fed. 386, whether the parties were technically partners or not, an accounting was necessary to determine their respective rights, Garr v. Redman, 6 Cal. 574." Same in substance: Marston v. Gould (1877), 69 N. Y. 220. (But in Clark v. Sidway, supra, it is held that one associate can sue another at law for reimbursement for advances, and is not obliged to resort to equity.)

That the same rules of good faith and loyalty apply here as in partnership: Jackson v. Hooper, supra; Thimsen v. Reigard, supra. See, also, Hulett v. Fairbanks, supra; Stem v. Warren (1919), 185 N. Y. App. Div. 823, 174 N. Y. Supp. 30. See also Central Trust Co. v. Creel (1919), 184 Ky. 114, 211 S. W. 421; Selwyn v. Waller (1914), 212 N. Y. 507, 106 N. E. 321.

In National Surety Co. v. Winslow (1919), Minn. 173 N. W. 181, it is said: "In the absence of express limitations in that respect each party to such adventure is subject to all losses and liabilities, and entitled to share equally in the profits of the undertaking. The relationship is substantially that of a copartnership."'

As to contribution to losses among themselves, see Stettauer v. Carney (1878), 20 Kan. 474.

See discussion in 33 Harvard L. Review, 852.

poration really existed, be personally liable, because they have never contracted as individuals or intended to be bound as such. To hold them liable as partners would be to hold them upon a contract which they never made or intended to make. On the other hand, it is contended that the parties must have intended to become liable in some way, and inasmuch as they have failed to bind themselves as a corporation, it must be assumed that they are liable as partners-that it is only through the fact that they are corporators and not partners that they escape personal liability; and hence if the corporate shield fails, the individual liability necessarily arises.

The matter, however, can not be so shortly disposed of, and a further investigation of the considerations involved is indispensable. § 18. As has already been seen, a corporation is, with us, the creature of statute, and without such a statute the corporation can not ordinarily exist. The statutes providing for the organization of corporations usually prescribe a variety of acts to be done by the proposed incorporators with a view to regularity, safety and publicity. If all of these requirements are properly complied with a valid and unimpeachable incorporation will ordinarily result,-what is often described as a corporation de jure.

Not all of the requirements of such a statute, however, will necessarily be rated as of the same value or importance. Some of the provisions may be merely directory rather than mandatory. Certain of them may look merely to order and regularity, rather than to the protection of the substantial interests of the parties or the public. The state, of course, may insist upon a compliance with all of them; but it does not follow that private individuals may do the same where no substantial interest of their own is affected by the non-compliance. Public interest may require that corporate bodies, existing in fact, in pursuance of a genuine attempt to comply with the state's requirements, shall be recognized by private individuals as corporations until the state sees fit to interfere, even though such attempt at compliance be not in all respects complete and perfect. Such a body may be called a corporation de facto. It may be compared to

the officer de facto, whose acts, so far as private individuals are concerned, are regarded as official, even though his title to the office may not be perfect, if he be, nevertheless, permitted to exercise the functions of the office with public acquiescence or approval.61

§ 19. The corporation de facto is a legal institution, like the officer de facto. It arises from the policy of the law, and, though elements of estoppel are usually to be found in the cases in which it is recognized, it seems to be established that it is not dependent for its existence upon the application of that doctrine.62 The essentials of a corporation de facto are ordinarily said to be three :

1. The existence of a valid statute under which such a corporation as the one in question might lawfully be created. In some states, an apparently valid statute, i. e., one not yet declared unconstitutional, answers this requirement.

2. An attempt at compliance with it, often characterized as "actual and bona fide," but which should be colorable or apparent and bona fide.

3. A user or exercise of the corporate powers and functions which the statute contemplates. 63

§ 20. Same subject-Causes of failure to incorporate.—The reasons why it is alleged that no valid incorporation has been effected may be numerous; but they commonly arrange themselves under one of three general heads: 1. The entire absence of an enabling statute. 2. The unconstitutionality of the statute relied upon. 3. The failure to comply with the requirements of a valid statute.

61 See Mechem on Public Officers, §§ 318, 319.

62 See Society Perun v. Cleveland (1885), 43 Ohio St. 481, 3 N. E. 357, 360.

63 Many statements of the conditions of a de facto corporation name but two. These are sometimes (1) a statute and (2) user. (e. g. American Loan & Trust Co. v. Min

nesota, etc., R. Co. (1895), 157 Ill. 641, 42 N. E. 153; Methodist Church v. Pickett (1859) 19 N. Y. 482), and sometimes (1) a statute and (2) an attempt at compliance. That three conditions exist, see In re Gibbs' Estate (1893), 157 Pa. 59, 27 Atl. 383, 22 L. R. A. 276, Gilm. Cas. 91.