Corporations - De Facto Existence - Necessity of Good Faith Attempt to Incorporate Under and of Colorable Compliance with Incorporation Statute

Authors

Richard R. Dailey, University of Michigan Law SchoolFollow

Abstract

Defendant, a purported holding corporation, was organized in 1922 before the enactment of a state statute authorizing such corporations. The articles of incorporation stated that the purpose of the corporation was "to acquire, own and hold" shares of stock in a realty company. There was actual user of corporate power by the defendant under this attempted incorporation until the time of this suit in 1954. The legislature in 1941 amended the incorporation statute to authorize incorporation of a holding company, but no action was taken by the defendant pursuant to this amended statute. In an action for a declaratory judgment, the minority stockholders of the realty company challenged the corporate existence of the defendant. The district court sustained a demurrer to the petition. On appeal, held, the defendant became a de facto corporation at the time of amendment of the incorporation statute in 1941 and its corporate existence was not now subject to collateral attack. Reversed on other grounds. Baum v. Baum Holding Co., (Neb. 1954) 62 N.W. (2d) 864.

Recommended Citation

Richard R. Dailey, Corporations - De Facto Existence - Necessity of Good Faith Attempt to Incorporate Under and of Colorable Compliance with Incorporation Statute, 53 Mich. L. Rev. 283 (1954).
Available at: https://repository.law.umich.edu/mlr/vol53/iss2/11