Cantor v. Sunshine Greenery, Inc.

165 N.J. Super. 411, 398 A.2d 571 (Super. Ct. App. Div. 1979)

 

RULE:

The act of executing the certificate of incorporation, the bona fide effort to file it and the dealings with plaintiffs in the name of that corporation fully satisfy the requisite proof of the existence of a de facto corporation.

FACTS:

Plaintiffs brought suit against defendant to hold defendant personally liable for breach of a lease executed between plaintiffs and a corporate entity. The lower court entered judgment against defendant, holding defendant personally liable because there was no corporate entity at the time of execution of the lease. Defendant appealed, arguing that at the time of the lease agreement, the corporation was a de facto corporation. 

ISSUE:

Should the defendant be personally liable for the lease?

ANSWER:

No

CONCLUSION:

The appeals court agreed with defendant and reversed the lower court's judgment. The appeals court held that the act of executing the certificate of incorporation, the bona fide effort to file it, and the dealings with plaintiffs in the name of the corporation, satisfied the requisite proof of the existence of a de facto corporation. According to the court, no formal meetings or resolutions or issuance of stock was necessary under the New Jersey Business Corporation Act of 1969, which eliminated the necessity of a meeting of incorporators.

Click here to view the full text case and earn your Daily Research Points.