HomeMy WebLinkAbout98-3013 equityVVYATT INVESTORS, INC. AND
ARNOLD FORBES,
PLAINTIFFS
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J. RAYMOND MILLER,
FRANK C. MYERS, III AND
J.R. PROPERTIES, INC.,
DEFENDANTS
: IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
98-3013 EQUITY
BEFORE BAYLEY, J. AND HESS, J.
OPINION AND ORDER OF COURT
Bayley, J., July 23, 1999:-
Wyatt Investors, Inc., and Arnold Forbes instituted a multi-count complaint in
Equity against J. Raymond Miller, Frank C. Myers, III, and J.R. Properties, Inc., arising
out of alleged agreements involving the development of two tracts of land known as the
Dillsburg Project and the Route 34 Project. Defendants filed preliminary objections to
the complaint which have been briefed and argued.
Paragraph 2 of plaintiffs' complaint avers:
Plaintiff Wyatt Investors, Inc., ('Wyatt') is a name by which Plaintiff Arnold
Forbes sometimes did business and entered into contracts, believing, at
the time, that it was a corporate entity although Forbes learned later that it
had never formally registered as such.
Defendants filed a preliminary objection seeking to dismiss all claims of plaintiff
Wyatt Investors, Inc. They cite Pt ~.ule of Civil Procedure 2002(a) requiring that"[a]ll
actions shall be prosecuted by and in the name of the real party in interest."
Defendants argue that if Wyatt Investors, Inc., does not exist, it cannot be a real party in
98-3013. EQUITY
interest. Defendants' position is not supported by the law.
When dealing with a corporation in its capacity as such, a party cannot deny its
existence as a corporation in an action by the corporation. Wentz v. Lowe, 2 Sadler's
Cases 379 (Pa. 1886) Specifically, a party who has dealt with a corporation as such
may not deny liability on a contract by alleging that the corporation has no legal
existence and, thus, no right to sue. Pittsburgh Southern Ry. v. Reed, 4 Sadler's
Cases 356 (Pa. 1886). A corporation may be a de facto corporation which is one that
(1) is subject to a law under which it might be created; (2) has failed to satisfy the
requirements of such a law; and 3) has assumed the exercise of corporate powers
notwithstanding the failure to comply with the law. Riviera Country Club Liquor
License Case, 196 Pa. Super. 636 (1961). Only the Commonwealth can attack the
legal existence of a de facto corporation. Florex Gardens v. Public Service
Commission, 82 Pa. Super. 92 (1923). A de facto corporation has the same capacity
as a de jure corporation to enter into contracts. Accordingly, it is sufficient to show a de
facto corporate existence in order to sustain an action by or against a corporation
regarding a contract. In Spahr v. Farmers' Bank, 94 Pa. 429 (1880), the Supreme
Court of Pennsylvania held that "When there is a de facto corporation, and the state
does not interfere, its corporate existence and its ability to contract cannot be
questioned in a suit brought upon an evidence of a debt given to it." The court noted
that while a corporation's charter may be nullified by the State, it cannot be challenged
in a collateral suit.
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98-3013 EQUITY
Based on plaintiffs' pleadings with respect to Wyatt Investors, Inc., we will
dismiss defendants' preliminary objections pursuant to Pa. Rule of Civil Procedure
1028(a) alleging lack of capacity to sue. We will also dismiss defendants' other
numerous preliminary objections to the complaint without analysis.
ORDER OF COURT
AND NOW, this ~r~,/~ day of July, 1999, the preliminary objections of
defendants to plaintiffs' complaint, ARE DENIED.
Albert J. Hajjar, Esquire
For Plaintiffs
L. C. Heim, Esquire
For Defendants
By the Court,
E gar . Bayley, J.
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