Cantor v. Sunshine Greenery, Inc.

FACTS:  When Cantor leased his building to Sunshine Greenery, Brunetti signed the document as president of Sunshine.  At the time, Sunshine was not a de jure corporation inasmuch as the certificate of incorporation that had been forwarded to the Sec. of State was not officially filed until 2 days after the lease was executed.  Counsel for Sunshine thereafter repudiated the lease agreement, and Brunetti put a stop payment on the check supposedly covering the 1st month’s rent and security deposit.  Cantor sued both Sunshine and Brunetti.  In appealing the personal judgment rendered against him, Brunetti argued that a de facto corp. was in existence when the lease was signed, that Cantor dealt w/the corp. as such, and that he was thus estopped to deny its corporate existence so as to hold Brunetti personally liable.

ISSUE:  If one contracts w/a de facto corp. as such, can he thereafter deny its corp. existence so as to hold those w/whom he dealt personally liable on the K?

HOLDING:  No. A party who deals w/a de facto corp. as if it is a corp. is estopped to deny its corp. existence so as to hold the individual’s w/whom he dealt personally liable on any Ks thus entered into.  In this case, a de facto corp. clearly existed b/c the 3 necessary elements were present:  (1) the existence of a law authorizing incorporation, (2) actual exercise of corp. powers, and (3) a bona fide (good faith) effort to satisfy all conditions precedent to incorporation under the existing law.  Since Cantor dealt w/Sunshine as if it were in fact a corporation, he is now estopped from denying its corp. existence so that he might hold Brunetti personally liable on the lease K.  Reversed.

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