ners. What representation of fact has he made to them? Does he represent to them that they are a corporation,75 or are they ordinarily the ones who make the representation to him? It may be said that his representation to them is merely that he is dealing with them on a corporate basis, and that he may be estopped to deny that fact. This is doubtless what is ordinarily meant. Even so, it is essential that he shall have known that they pretended to be a corporation and were purporting to deal with him on that basis only.76 Where the representation, moreover, is not one of fact but of law-like the validity of the statute estoppel will not ordinarily arise."

77

§ 25. The difficulty with the free application of the doctrine of estoppel is that, by means of it, the state may be filled with alleged corporate bodies which no statute has authorized, but which, so far as the persons dealing with them are concerned, the courts must deal with as though they had a valid existence. Of course, this estoppel would not operate against the state if it saw fit to question their right to do business; but state officials are notoriously slow to act in such cases unless somebody strenuously insists upon it.

If there is to be any estoppel as to the fact of corporate existence in these cases, it ought, as a matter of policy, to be confined to those in which there might be at least a corporation de facto, i. e., to those in which there is a valid statute or at least a statute not yet declared unconstitutional. If the estoppel be merely as to the basis of liability, a statute would not be indispensable if the dealings otherwise showed what was to be the nature and extent of the liability.

§ 26. Same subject-The doctrine of contractual limitation. -It is sometimes said that, instead of estoppel, there is an implied contract between the parties that their dealings are upon the basis of a liability limited to the associate funds and exclud

75 See Cottentin v. Meyer (1910),

80 N. J. L. 52, 76 Atl. 341.

76 See, for example, Eaton V. Walker, and Guckert v. Hacke, cited in §§ 22, 23 supra.

77 See Ewart on Estoppel, 72 et seq.

ing any personal liability. That contracts of this sort may be expressly made is not to be denied; and an implied contract may undoubtedly also exist.78 The difficulty here, in many cases, is to find the foundation of facts from which such contract may be implied. Neither an express nor an implied contract could be upheld, if to do so would violate the policy of the state.

§ 27. Same subject-The doctrine that no one but the State may raise the question.-Finally, it is frequently asserted that the question of the legal existence of a body purporting to be a corporation and doing business as such, is one which may be raised by the state alone, and will not be tried collaterally in suits between private parties. Where the body in question amounts to a de facto corporation, the authorities which declare this rule are very numerous.79 It is, in such cases, merely a reflex of the de facto doctrine. It will be found most frequently coupled with the question of estoppel, though, as has been seen, the de facto corporation does not depend upon estoppel. will be found applied in some cases in which there was a statute and user but no colorable or ostensible attempt to comply with the statute by filing or recording the required articles. Such a rule, however, could have little or no application to a case in which, for the lack of a statute, there could not be a de facto corporation, i. e., to a case of the naked assumption of corporate privileges.

It

§ 28. Same subject-Rights as partners in such cases.—Although the question usually presents itself as a matter of the

78 See Staver & Abbott Mfg. Co. v. Blake (1896), 111 Mich. 282, 69 N. W. 508, 38 L. R. A. 798; Mechem's Cas. 28, Burd. Cas. 649; Frost v. Thompson (1913), 219 Mass. 360, 106 N. E. 1009.

79 See Imperial Building Co. v. Board of Trade (1909), 238 Ill. 100, 87 N. E. 167; Marshall v. Keach (1907), 227 Ill. 35, 81 N. E. 29, 118 Am. St. R. 247, 10 Ann. Cas. 164; Sniders' Sons Co. v. Troy

(1890), 91 Ala. 224, 8 So. 658, 11 L. R. A. 515, 24 Am. St. R. 887; Vanneman v. Young (1890), 52 N. J. L. 403, 20 Atl. 53; Higbie v. Aetna B. & L. Ass'n (1910), 26 Okla. 327, 109 Pac. 236, Ann. Cas. 1912 B, 223; Brown v. Webb (1912), 60 Oreg. 526, 120 Pac. 387, Ann. Cas. 1914 A, 148; Calor Oil Co. v. Franzell (1908), 128 Ky. 715, 109 S. W. 328, 36 L. R. A. (N. S.) 456, 33 Ky. Law Rep. 98.

liability of the associates as partners, the correlative question of their rights as such in similar cases may also arise. In a case, often cited, in which the associates sued as a corporation for the recovery of certain property, and were met with the defence that their organization as a corporation was too defective to permit the action to be maintained, the court, while acceding to this view, nevertheless held that the action could be sustained as one by a partnership doing business under the same name. As a partnership with the same name it could have taken title to the property in question; the associates would have been liable as partners; and the court held that they were entitled to the advantages which would be accorded to a similar partnership.80

§ 29. Promoters of companies.-Promoters of corporations are not, as such, partners. Though engaged in endeavoring to secure the organization of a company to carry on business for pecuniary profit, their immediate object is not the transaction of business for mutual gain, and they do not fall within the definition or the purposes of partnership.81

Nevertheless, if they carry on a business as incident to the organization, or if they launch and conduct the business before the corporation is organized, or if they conduct the business without ever bringing even a de facto corporation into existence, they will usually be liable as partners.82

80 See Jones v. Aspen Hardware Co. (1895), 21 Colo. 263, 40 Pac. 457, 52 Am. St. R. 220, 29 L. R. A. 143. See also Smith v. Texas, etc. R. Co. (1908), 101 Tex. 405, 108 S. W. 819; New Haven Wire Co. Cases (1889), 57 Conn. 352, 394; 18 Atl. 266, 5 L. R. A. 300. Cf. African M. E. Church v. New Orleans (1860), 15 La. Ann. 441; Maugham v. Sharpe (1864), 17 C. B. (N. S.) 443; National Shutter Bar Co. v. Zimmerman (1909), 110 Md. 313, 73 Atl. 19; Byam v. Bickford (1885), 140 Mass. 31, 2 N. E. 687.

81 See Reynell v. Lewis (1846), 15 Mees. & Welsby, 517; Capper's Case (1851), 1 Sim. (N. S.) 178; Batard v. Hawes (1852), 2 Ellis & B. 287, Burd. Cas. 33; Ringolsky v. Mining Co. (1914), 262 Mo. 241, 171 S. W. 56; Long v. Citizens Bank (1892), 8 Utah 104, 29 Pac. 878; United States Wood Preserv. Co. v. Lawrence (1915), 89 Conn. 633, 95 Atl. 8.

82 See Loverin V. McLaughlin (1896), 161 Ill. 417, 44 N. E. 99; Nicholls v. Buell (1909), 157 Mich. 609, 122 N. W. 217; Ridenour v. Mayo (1883), 40 Ohio St. 9; Bar

§ 30. Contemplated partnerships.-A mere intention to form a partnership does not constitute one. Persons, therefore, who are merely contemplating a future partnership, or who have simply entered into an agreement to thereafter become partners, cannot be held liable as partners, nor have they the rights of partners as between themselves.83 Before this result can ensue the executory agreement must have been executed. As declared in one case,84 "A marked distinction exists in law between an agreement to enter into the copartnership relation at a future day and a copartnership actually consummated. It is an elementary principle that a partnership in fact cannot be predicated upon an agreement to enter into a copartnership at a future day unless it be shown that such agreement was actually consummated. In the language of the text-books, the partnership must be 'launched.' To constitute the relation, therefore, the agreement between the parties must be an executed agreement. So long as it remains executory the partnership is inchoate, not having been called into being by the concerted action necessary under the partnership agreement. It is undoubtedly true that a partnership in præsenti may be constituted by an agreement if it appears that such was the intention of the parties. But where it expressly appears that the arrangement is contingent, or is to take effect at a future day, it is well settled

nett v. Lambert (1846), 15 Mees. & Wels. 489; Wechselberg v. Nat. Bank (1894), 12 C. C. A. 56, 64 Fed. 90, 26 L. R. A. 470.

83 See Atkins v. Hunt (1843), 14 N. H. 205, Mechem's Cas. 79 (citing Bourne v. Freeth, 9 Barn. & Cr. 632; Dickinson v. Valpy, 10 id. 128; Fox v. Clifton, 6 Bing. 776; Howell v. Brodie, 6 Bing. N. C. 44); Dow v. State Bank (1903), 88 Minn. 355, 93 N. W. 121, Gilm. Cas. 87; Martin v. Baird (1896), 175 Pa. 540, 34 Atl. 809, Mechem's Cas. 744, Burd. Cas. 34; National Bank v. Cringan (1895), 91 Va. 347, 21 S. E. 820; Shield v. Adkins (1915),

117 Va. 616, 85 S. E. 492; Sabel V. Savannah Rail & Equip. Co. (1903), 135 Ala. 380, 33 So. 663, Gilm. Cas. 116.

If, in such a case, one of the proposed partners dies before the partnership is launched, it will not come into effect, and provisions in the articles as to the effect of the death of one partner will not apply to this case. Dow v. State Bank, supra.

84 Reed v. Meagher (1890), 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455. See, also, Buzard v. McAnulty (1890), 77 Tex. 438, 14 S. W. 138; Sabel v. Savannah Rail & Equip. Co., supra.

that the relation of partners does not exist, and that, if one or more of them refuse to perform the agreement, there is no remedy between the parties except a suit in equity for specific performance, or an action at law for the recovery of damages, should any be sustained."

So long as essential terms remain undetermined, there can rarely be a present partnership.85

§31. Same subject.-The mere time of executing the articles is not conclusive, for persons may become partners at once, if such is the intention, even though partnership articles are thereafter to be executed. The test is the intention. If it is the intention that the parties are not to become partners until the terms have been agreed upon and articles executed, the partnership will not come into existence until that time, unless the condition is waived; but if the terms have been agreed upon, the execution of the articles, or the performance of other conditions, may be postponed or waived, and such a waiver will often be presumed where the parties actually begin business as partners before the conditions have been performed.86

Such a waiver is much more likely to be inferred where the rights of creditors, who have reasonably relied upon appearances of an actual partnership, are concerned, than in controversies between the parties themselves.87 In the latter case, it may often be shown that what was done was provisional, tentative or conditional only and not final.88

§ 32. Classification of partnerships.-Partnerships are sometimes classified as ordinary partnerships, limited partnerships,

85 See Sabel v. Savannah Rail & Equip. Co., supra; Latta v. Kilbourn (1893), 150 U. S. 524, 37 L. Ed. 1169, 14 S. Ct. 201, Mechem's Cas. 260, Burd. Cas. 503, Gilm. Cas. 425.

86 Cook v. Carpenter (1861), 34 Vt. 121, 80 Am. Dec. 670; Hartman v. Woehr (1867), 18 N. J. Eq. 383; Atkins v. Hunt (1843), 14 N. H. 205, Mechem's Cas. 79; Kerrick v. Stevens (1884), 55 Mich. 167, Mech. Part.-3

33

20 N. W. 888, Mechem's Cas. 87; First Nat. Bank v. Cody (1893), 93 Ga. 127, 19 S. E. 831; Bopp v. Fox (1872), 63 Ill. 540.

87 See Cain Lumber Co. v. Standard Dry Kiln Co. (1895), 108 Ala. 346, 18 So. 882.

88 One of the most striking cases of this sort is Martin v. Baird (1896), 175 Pa. 540, 34 Atl. 809, Mechem's Cas. 744, Burd. Cas. 34.