HARILL vs DAVIS 4 Defendants, after having agreed to form a corporation ordered goods from the plaintiff even before

they filed their AOI. And after they filed such AOI in one of the two public offices required by law, they ordered additional goods. This is an action to recover the purchase price of said goods form the defendants as partners. Lower court held for defendants, plaintiff appeals. FACTS From June 1902 December 22, 1902, 4 def associated themselves and engaged in the following activities: o purchased lumber, material and labor from Harill o construct cotton gin under The Coweta Gin Company o buying, selling and ginning cotton for profit under The Coweta Cotton and Milling Company o incurred more than $4,700 of the indebtedness of $5,145.48 Dec 22, 1902, made first real attempt to incorporate and first time took color of a corporation They filed AOI with clerk of Court of Appeals but never filed any duplicate with the clerk of judicial district in which their place of business was located as required by the statutes. Defendants argue that they became a corporation de facto but cited authorities where AOI had been filed under a general enabling act or charter issued and had been using a franchise.

ISSUE: 1) WON there is a corporation de facto NO 2) WON defendants are individually liable YES RATIO: Parties who actively engage in business for profit under the name and pretense of a corporation which they know neither exists nor has any color of existence may not escape individual liability because strangers are led by their pretense to contract with their pretended entity as a corporation. Neither the hope, the belief, nor the statement by parties that they were incorporated, nor the signing of AOI which were not filed, where filing is requisite to create the corporation, nor the user of the pretended franchise of such a nonexistent corporation, will constitute such a corpo de facto as will exempt those who actively and knowingly use its name to incur obligations from their individual liability to pay them. COLOR of LEGAL ORGANIZATION as a corporation under such charter or law and user of the supposed corporate franchise in good faith are indispensable to such exemption General Law of Arkansas: Filing of AOI with CA was a sine qua non of any color of legal corporation. On the argument that Harill is stopped, not applicable since it means stopped from denying its existence on the ground that it was not legally incorporated . Elements of estoppels in pais not present (ignorance of the truth and absence of equal means of knowledge of it by the party who calims the estoppel and action y the latter induced by the misrepresentation of a party against whom the estoppel is invoked. Defendants represented themselves as a corporation and had better knowledge than Harill. Court held that corporators or stockeholders remain individually liable under statute unless and until their AOI are filed in both offices.