## Facts

- Martin G. Robertson agreed to sell an existing business and assign a lease to an entity Eugene M. Levy promised to incorporate as Penn Ave. Record Shack, Inc.
- Levy filed articles of incorporation on December 27, 1961, but no certificate of incorporation issued at that time.
- On December 31, 1961, Robertson executed a lease assignment to Penn Ave. Record Shack, Inc., signed by Levy as “President.”
- The articles were rejected on January 2, 1962; Levy nonetheless began operating the business under the corporate name that day.
- On January 8, 1962, Robertson executed a bill of sale transferring business assets to Penn Ave. Record Shack, Inc. and received an installment note signed “Penn Ave. Record Shack, Inc., by Eugene M. Levy, President.”
- A certificate of incorporation issued on January 17, 1962; only one installment payment was made on the note (assumed to have occurred after incorporation).
- The business ceased operations in June 1962 without assets; Robertson sought the unpaid note balance and additional lease-related expenses from Levy personally.

## Issues

1. Whether a person who signs and incurs obligations in the name of a corporation before a certificate of incorporation issues is personally liable under the District of Columbia Business Corporation Act.
2. Whether the creditor is estopped from denying corporate existence because the creditor dealt with the enterprise as a corporation and accepted an installment payment after incorporation.

## Decision

- The appellate court reversed the judgment for Levy.
- Levy was personally liable for obligations undertaken before the certificate of incorporation issued because he assumed to act as a corporation without authority.
- Robertson was not estopped from denying corporate existence as to those pre-incorporation obligations, despite later incorporation and acceptance of a payment.

## Legal Principles

- Under the District of Columbia Business Corporation Act, corporate existence begins only upon issuance of the certificate of incorporation; prior acts in the corporate name are unauthorized.
- Persons who assume to act as a corporation without authority before the certificate issues are jointly and severally liable for resulting debts and liabilities.
- Later issuance of a certificate of incorporation does not retroactively eliminate personal liability that attached when unauthorized pre-incorporation obligations were incurred.
- Acceptance of a post-incorporation payment on an obligation originally executed before incorporation does not bar the creditor from enforcing the actor’s statutory personal liability.
- Statutory rules fixing the moment corporate existence begins displace reliance on common-law doctrines such as de facto corporation and corporation by estoppel for pre-certificate acts.

## Conclusion

Because the corporation did not legally exist until the certificate of incorporation issued, Levy’s execution of the lease assignment and note in the corporate name before that date subjected him to personal liability under the governing statute, and Robertson’s later acceptance of a payment after incorporation did not prevent Robertson from enforcing that liability.


Robertson v. Levy, 197 A.2d 443 (D.C. 1964)