Thompson & Green Machinery Co. v. Music City Lumber Co.

The president of Music City Sawmill Co., Inc. (defendant) purchased a wheel loader from the plaintiff, Thompson & Green Machinery Co., Inc. Unbeknownst to both the plaintiff and defendant Sawmill was not a corporation at the time of the transaction. Sawmill was not incorporated until one day after the sale of the wheel loader.

A de jure corporation may result if there is compliance with incorporation statutes. A de facto corporation may result if there has been an apparent and good faith attempt to incorporate under the statute and someone affiliated with the corporation is acting under corporate powers. In addition, if both parties to a transaction act as if there is a corporation, then the parties may be estopped from claiming the non-existence of such corporation. However, IN THIS CASE, the Court held that the statute eliminated the concepts of corporation de jure, de facto, or by estoppel.

Corporate Formation & Form | Formation | Consequences of Defective Formation