Opinion
No. 9745.
April 1, 1966. Rehearing Denied April 25, 1966.
APPEAL FROM DISTRICT COURT, ELEVENTH JUDICIAL DISTRICT, MINIDOKA COUNTY, THERON W. WARD, J.
Dunlap, Rettig Rosenberry, Caldwell, for appellant.
Duffin Duff, Rupert, for respondents.
The Trial Court when confronted by a motion for Summary Judgment must determine if there are factual issues which should be resolved by the trier of facts. I.R.C.P. 56(c); Merrill v. Duffy Reed Const. Co., 82 Idaho 410, 353 P.2d 657; Allen v. Moyle, 84 Idaho 18, 367 P.2d 579 (1961); Sutton v. Brown, 85 Idaho 104, 375 P.2d 990 (1962); Deshazer v. Tompkins, Supreme Court, State of Idaho, 89 Idaho 347, 404 P.2d 604.
All doubts and all favorable inferences which may be reasonably drawn from the evidence will be resolved against the party moving for Summary Judgment. Deshazer v. Tompkins, supra; Boesigner v. DeModena, 88 Idaho 337, 399 P.2d 635.
"1. Triplicate originals of the Articles of Incorporation shall be delivered to the Secretary of State. If the Secretary of State finds that the Articles of Incorporation conform to law, he shall put an endorsement of his approval upon each set, and when all taxes, fees and charges have been paid, as required by law, he shall file one of such sets of the Articles in his office, and shall record the same, and shall issue and record a Certificate of Incorporation.
2. Upon the issuance of the Certificate of Incorporation, the corporate existence shall begin." * * * Section 30-108 of the Idaho Code of 1947.
"An association is not even a corporation de facto where it has not filed its Articles of Incorporation, as required by law, or attempted to do so." Marshall-Wells Co. v. Kramlich, 46 Idaho 355, 267 P. 611. See Allen Steel Supply Co. v. Bradley, 89 Idaho 29, 402 P.2d 394, 403 P.2d 859.
"Conditions precedent to beginning business — Penalty for violation. — 1. A corporation formed under this act shall not incur any debts or begin the transaction of any business, except such as is incidental to its organization, or to the obtaining of subscriptions to or the payment for its shares until a triplicate original of the articles of incorporation has been filed for record in the office of the County Recorder as provided in Section 30-108.
A summary judgment may be granted when the material facts are undisputed and any facts that are in dispute could not affect the conclusions to be drawn from the admitted facts. McComb v. Southern Weighing Inspection Bureau, 170 F.2d 526 (4th Cir. 1948); Weston v. Noble, 19 F.R.D. 416 (D.C.Alaska 1956); Anderton v. Waddell, 86 Idaho 220, 384 P.2d 675 (1963).
Tracing through the judicial history of Idaho Code Title 30, shows a legislative intent and desired public policy to encourage corporations to do business in Idaho and to refrain from penalizing those corporations which do business in the state prior to compliance with the laws but subsequently do comply with those laws. Spokane Merchants Association v. Olmstead, 80 Idaho 166, 327 P.2d 385 (1958).
It is generally held that for an organization to be considered as a de facto corporation, the following essentials must be found to exist:
1. A valid law under which a corporation with the power assumed might be incorporated;
2. A bona fide attempt to organize a corporation under such law;
3. An actual exercise of corporate powers. Allen Steel Supply Co. v. Bradley, 89 Idaho 29, 402 P.2d 394 at 397; 12 ICR 253 at 255 (1965).
Respondents, J.A. Bauer and his son, Bruce Bauer, residents of Idaho, contacted plaintiff-appellant, C.L. Fike, at his residence in Wyoming to arrange a lease of a Piper Super Cub airplane owned by appellant to C B Aerial Services, Inc. The incorporators of Aerial Services were Bruce Bauer, Carma Bauer and Lloyd J. Webb. J.A. Bauer was not an incorporator nor was he a director, officer or stockholder in said corporation. Respondents brought with them to Wyoming a proposed lease prepared for the corporation by its attorney, Lloyd J. Webb. Appellant agreed to the rental of his plane on the terms proposed and signed the lease as did Bruce Bauer for the corporation. Bruce Bauer then flew the plane to Idaho and J.A. Bauer remained in Wyoming for the purpose of making changes and corrections in the lease agreement. Such corrections and changes as were made were initialed by him. Upon what authority J.A. Bauer acted is unclear, but appellant alleges J.A. Bauer was the principal spokesman during negotiations and represented that he was an incorporator, director and officer of C B Aerial Services, Inc.
The term of the lease ran from the date of its execution on June 30, 1961 until the following September 1st. The corporation agreed to return the airplane to the lessor in as good condition as that in which it was received and to maintain adequate insurance coverage, insuring loss by collision or other risk. The plane was however thereafter destroyed while in the possession of the corporation. The value of the aircraft at the time of the collision was approximated at $5,750. The insurance carrier paid $3,556.50 on that amount; and appellant sued for the difference or $2,193.50 on the ground there was not adequate insurance coverage as required by the terms of the lease agreement.
The articles of incorporation of C B Aerial Services, Inc. were signed March 30, 1961 but were not filed with the Secretary of State of Idaho until July 3, 1961, three days subsequent to the date the lease was signed. The signing incorporators were Carma Bauer, Bruce Bauer and Lloyd J. Webb. The articles were not filed with the county recorder until May 14, 1965, subsequent to institution of this action.
Appellant sued J.A. Bauer, Bruce Bauer and John Doe, who is unknown, contending that since the corporation did not in fact exist on the date of the leasehold agreement, the defendants were jointly and severally liable for the loss sustained. J.A. Bauer, separating himself from the other named defendants, moved for summary judgment on the ground the complaint failed to state a cause of action upon which relief could be granted against him. Affidavits in support of, and in opposition to, the motion were duly filed. The court concluded that the facts necessary to determine the motion were whether or not appellant knew he was dealing with a corporation and whether or not his actions had been such as to estop him from denying the corporate entity. The court granted the motion and entered a summary judgment for defendant J.A. Bauer. Appeal was taken from this judgment.
There is no doubt but what appellant dealt with the C B Aerial Services, Inc. as a corporation when the lease was executed on June 30, 1961, for the lease was signed by one of the incorporators for and on behalf of the corporation. At that time however the corporation was not even a de facto corporation for it had not qualified by filing the articles of incorporation with the Secretary of State, as required under the provisions of I.C. § 30-108. Until this is accomplished there is no de facto corporation under the rule adhered to by this court. Allen Steel Supply Co. v. Bradley, 89 Idaho 29, 402 P.2d 394, 403 P.2d 859; Marshall-Wells Co. v. Kramlich, 46 Idaho 355, 267 P. 611.
Obviously at the time of the lease's execution the corporation had not complied with the provision of I.C. § 30-108 requiring filing of one set of the articles of incorporation for record in the office of the county recorder of the county in which the registered office of the corporation is situated. So appellant brought this action against the defendants under the provisions of I.C. § 30-110, which provides as follows:
"1. A corporation formed under this act shall not incur any debts or begin the transaction of any business, except such as is incidental to its organization, or to the obtaining of subscriptions to or the payment for its shares until a triplicate original of the articles of incorporation has been filed for record in the office of the county recorder as provided in section 30-108.
"2. If a corporation has transacted any business in violation of this section, the officers who participated therein and the directors, except those who dissented therefrom and caused their dissent to be filed at the time in the registered office of the corporation, or who, being absent, so filed their dissent upon learning of the action, shall be severally liable for the debts or liabilities of the corporation arising therefrom."
Under this statute J.A. Bauer would be liable to appellant for any breach of the lease agreement if he had been an officer of the corporation or a director thereof at the time the lease was executed. In the affidavits in support of respondent's motion for summary judgment it is alleged and established that respondent J.A. Bauer was not an incorporator, an officer, a stockholder, or a director, nor did he hold any other position of control in the corporation at the time the lease agreement was executed. IRCP 56(e) provides in part as follows:
"When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon mere allegations or denials of his pleading, but must answer in detail as specific as that of the moving papers, setting forth the material facts as he believes and intends to prove them to be. If he does not so answer under oath, summary judgment shall be entered against him."
This court has recognized and enforced this provision. Minidoka County for Use and Benefit of Detweiler Bros., Inc. v. Krieger, 88 Idaho 395, 399 P.2d 962.
In the affidavit submitted by appellant in opposition to the motion for summary judgment he did not allege that J.A. Bauer was an incorporator or a director or an officer of the corporation, but instead merely alleged that "Bruce Bauer and J.A. Bauer represented that they were incorporators, directors and officers of the corporation known as C B Aerial Services, Inc., an Idaho corporation." (Emphasis supplied.) The penal provisions of I.C. § 30-110 do not extend to a person who merely represents himself to be an officer or a director of the corporation which had not in fact been regularly qualified.
Thus the allegations in appellant's complaint and those contained in his responsive affidavit are insufficient to raise any material issue of fact concerning the liability of J.A. Bauer, and the trial court committed no error in granting respondent's motion for a summary judgment.
The trial court disposed of the motion on the ground that appellant's acts in dealing with the corporation were sufficient to constitute an estoppel against his contending that the corporation had not become fully qualified. Where final judgment or order of the lower tribunal is correct, but entered upon a different or erroneous theory, the judgment or order will be affirmed by the appellate court upon the correct theory. Gagnon v. St. Maries Light Etc. Co., Ltd., 26 Idaho 87, 141 P. 88; Evans v. Continental Life and Accident Company, 88 Idaho 254, 398 P.2d 646; Jackson v. Blue Flame Gas Co., 90 Idaho 393, 412 P.2d 418.
Judgment affirmed. Costs to respondent.
McFADDEN, C.J., and McQUADE, TAYLOR and SMITH, JJ., concur.