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Business Organizations Keyed to Ragazzo
Robertson v. Levy
Citation:197 A.2d 443
Plaintiff and Defendant entered into an agreement where the Defendant would form a corporation which would purchase the Plaintiff’s business. Defendant submitted the documents for the articles of incorporation on December 22 but didn’t receive a certificate of incorporation then. Plaintiff then entered into an assignment of the lease naming the Plaintiff as President of the corporation. The incorporating entity, rejected the articles of incorporation on January 2 but Defendant started operating the business that same day. On January 8, Plaintiff tendered a sale of all his assets to the corporation, and Defendant promised to pay him in installments. The Certificate of Incorporation for the company was issued on January 17, and the Defendant made one payment on the note and ran out of money. Plaintiff sued Defendant for the balance due on the note. Defendant argued that he wasn’t personally liable for the corporations debts because Plaintiff knew he was dealing with a corporation in the process of incorporating. The trial court found for the Defendant. Plaintiff appealed claiming that the Defendant was personally liable because he acted as a corporation without authority.
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