Timberline Equip. Co. v. Davenport - 267 Or. 64, 514 P.2d 1109 (1973)

Rule:

Oregon has recognized the doctrine of corporation by estoppel. The so-called estoppel that arises to deny corporate capacity does not depend on the presence of the technical elements of equitable estoppel, misrepresentations and change of position in reliance thereon, but on the nature of the relations contemplated, that one who has recognized the organization as a corporation in business dealings should not be allowed to quibble or raise immaterial issues on matters which do not concern him in the slightest degree or affect his substantial rights.

Facts:

Plaintiff filed suit against defendant to collect monies due under an equipment rental agreement. Defendant alleged that the rentals were made to a de facto corporation and accordingly he could not be held personally liable and that plaintiff was estopped from denying the corporate character of the lessee organization. The trial court rejected defendant's argument and entered judgment in favor of plaintiff. Defendant appealed. 

Issue:

1. Could the de facto doctrine preclude defendant’s liability? 
2. Was the plaintiff estopped from denying the corporate character of the lessee organization?

Answer:

1) No. 2) No.

Conclusion:

The appellate court affirmed, holding that the de facto doctrine no longer existed in the state. The court also held that doctrine of estoppel was inapplicable because there was no evidence that plaintiff believed that it was contracting with a corporate entity. Further, the court held that plaintiff could recover against defendant in his individual capacity because evidence indicated that defendant was a person who was assumed to act for the organization in question and accordingly could be held personally liable.