Imágenes de páginas
PDF
EPUB

works owned by the estate. Duignan & Lewis put themselves in communication with the Richardsons, who introduced them to one Carlton. Carlton applied to the defendant Grant, and the Richardsons, Carlton and Grant thereupon proceeded to organize a corporation to take over the properties, first entering into an agreement with the Bagnall trustees that the latter should pay them a commission of £85,000. While the life tenant refused to act as a director of the company on the ground that he wished to be relieved from business, two of the three trustees of the Bagnall estate consented to become directors, and received a debenture bond each, from the promoters. A prospectus of the company was submitted to the trustees of the Bagnall estate, one of whom made some alterations therein. Duignan & Lewis acted as solicitors upon the organization of the company. The vice-chancellor said that it was impossible to doubt that each of these persons was employed, and actively engaged, in the formation of the company, and that all of them must be held to have been its pro

moters.

§ 8. Bankers and solicitors, not promoters.

It has been said that neither the bankers nor the solicitors of a company in process of formation are, as such, its promoters, 82 but the solicitors, at least, are in their dealings with the company, subject to restrictions and limitations similar to those imposed upon promoters.33

32. In re Great Wheal Polgooth, Ltd., 53 L. J. Ch. N. S. 42, 49 L. T. N. S. 20, 32 W. R. 107; In re Kensington Station Act, L. R. 20 Eq.

197.

33. Tyrrell v. Bank of London, 10 H. L. Cas. 26, 11 Eng. Rep. 934. For remarks on the proper conduct of solicitors of embryo cor

porations, see Bagnall v. Carlton, L. R. 6 Ch. Div. 371, 401-402, 404, 409; Erlanger v. New Sombrero Phosphate Co., L. R. 3 App. Cas. 1218, 1246-1247, 6 Eng. Rul. Cas. 777, 39 L. T. N. S. 269, 26 Weekly Rep. 65; Phosphate Sewage Co. v. Hartmont, L. R. 5 Ch. Div. 394, 443-444, 452, 46 L. J. Ch. 661.

§ 9. Subscribers for shares, not promoters.

35

A mere subscriber to the shares of a proposed company is not one of its promoters,34 but there are cases holding that, just as a promoter, he will not, without the knowledge of his associates, be permitted to profit by his transactions with the company.3 There is in fact some authority for a rule that a promoter does not assume a trust relation, either to the company, or to those whose subscriptions he solicits, unless he is himself also a subscriber for its shares.36

§ 10. Promoter's partners as promoters.

Whether or not a firm of which the promoter is a member may be considered to be a promoter, generally depends upon whether the promotion of corporations is, or is not, within the scope of the partnership business, and whether the promoting partner acted for himself, or for the partnership, in the transaction.87 The promoter's partners cannot, in any event, compel

34. Benton v. Minneapolis Tailoring & Mfg. Co., 73 Minn. 498, 506, 76 N. W. 265, 268; Thames Navigation Co. v. Reid, 9 Ont. 754, 765, reversed on another ground, 13 Ont. App. 303.

35. Lomita Land & Water Co. v. Robinson, 154 Cal. 36, 49, 50, 97 Pac. 10, 15, 16, 18 L. R. A. N. S. 1106, 1128, 1130-1132; Koster v. Pain, 41 N. Y. App. Div. 443, 58 N. Y. Supp. 865; Cf. Thames Navigation Co. v. Reid, supra, also Willock v. Dilworth, 204 Pa. St. 492, 54 Atl. 278. See post, § 90.

36. Densmore Oil Co. v. Densmore, 64 Pa. St. 43, 53-54; and see Yeiser v. U. S. Board & Paper Box Co., 107 Fed. 340, 344, 46 C. C. A. 567, 52 L. R. A. 724.

37. Walker V. Anglo-American Mortgage & Trust Co., 72 Hun (N. Y.) 334, 340, 55 St. Rep. 54, 25 Supp. 432; Boice v. McCormick, 106 N. Y. App. Div. 539, 94 Supp. 892; Lydney & Wigpool Iron Ore Co. v. Bird, L. R. 33 Ch. Div. 85, 95, 24 Am. & Eng. Corp. Cas. 23; Phosphate Sewage Co. v. Hartmont, L. R. 5 Ch. Div. 394, 443, 46 L. J. Ch. 661.

The promoter's partners are not entitled to share his compensation if his services as promoter were independent of the partnership, even though the corporation was organized to, and did, take over the partnership property. Carter v. Tucker, 138 Ky. 34, 127 S. W. 498.

a division of unlawful profits received by the promoter 38 and whether or not the partnership can be called a promoter of the corporation, any profit or benefit which would be unlawful if received by the promoter, is equally unlawful if given to his firm. 39

§ 11. Corporations as promoters.

There is no reason why a corporation should not, if such act is within the scope of its corporate powers, promote another corporation, and thereby bring itself within the definition of the term promoter and the limitations which flow from that relation. 40 If the promotion of other companies is beyond the corporate powers, the organization of another company by the officers of an existing corporation does not constitute the existing corporation the promoter of the new company.11 A corporation cannot, however, by a plea of ultra vires, escape liability for unlawful promoter's profits actually received by it.42

38. Travis v. Travis, 140 N. Y. App. Div. 191, 124 N. Y. Supp. 1021.

39. Scottish Pac. Coast Mining Co., Ltd., v. Falkner, Bell & Co., Sess. Cas. 15 Rettie 290, citing Imperial Mercantile Credit Association v. Coleman, L. R. 6 H. L. 189.

40. A. J. Cranor Co. v. Miller, 147 Ala. 268, 41 So. 678; Hooper v. Central Trust Co., 81 Md. 559, 585, 32 Atl. 505, 29 L. R. A. 262, 270; Electric Welding Co. v. Prince, 195 Mass. 242, 81 N. E. 306; Crowe v. Malba Land Co., 76 N. Y. Misc. 676, 135 Supp. 454; In re Leeds & Hanley Theatres of Varieties, 1902, 2 Ch. Div. 809, 810, 827, 831; Lagunas Nitrate Co. v. Lagunas Syndicate, 1899, 2 Ch. D. 392, 409, 423, 441.

41.-Thames Navigation Co. v. Reid, 9 Ont. 754, 762, reversed on another ground, 13 Ont. App. 303.

The existence of such power must be based upon some provision of the corporate charter. Eakins v. American White Bronze Co., 75 Mich. 568, 42 N. W. 982; Richard Hanlin Millinery Co. v. Mississippi Valley Trust Co., 251 Mo. 553, 158 S. W. 359.

As to provisions from which such power may be inferred, see Richard Hanlon Millinery Co. v. Mississippi Valley Trust Co., 251 Mo. 553, 158 S. W. 359. See also Machen on The Modern Law of Corporations, $ 85.

42. Richard Hanlon Millinery Co. v. Mississippi Valley Trust Co., 251 Mo. 553, 158 S. W. 359.

§ 12. Use of the word promoter in America.

Commissioner Simpson, writing for the Supreme Court of Kansas, in the year 1887,13 said that the word promoter is used in a much more restricted sense in this country than in England. The commissioner pointed out that "This word promoter had its origin in the methods by which joint-stock companies were formed in England, where by law they were declared partnerships. Subsequently, when the era of railroad building began in that country, the business of promoting the organization of such companies assumed definite form. The ordinary proceeding was this: The promoter introduced the enterprise to the notice of persons of wealth in the locality through which the line of the road was proposed to be located, informing them of its nature and prospects, and furnishing an estimate of its probable cost. These persons were solicited to aid by their influence or subscriptions, or both. Enough persons were secured to constitute a provisional committee, and then this committee appointed from their number a managing committee, which issued a prospectus, announcing the nature and probable profits of the scheme, the proposed means to carry it out, the amount of capital required, the number and price of shares, and other details, to which were generally attached the names of the promoters, with references to the names of those persons constituting the provisional committees. If all this resulted in fair probabilities of success, application was then made to parliament for a bill of incorporation. If the scheme failed, the expenses incurred gave rise to litigation, and many questions as to the liability of these committees and of the promoters were determined. If the incorporation was secured by the action of parliament, then another class of questions arose as to what acts of the promoters could be ratified by, and what acts resulted to the benefit of, the incorporation, and many

43. St. Louis F. S. & W. R. Co. v. Pac. 544, 558.

Tiernan, 37 Kan. 606, 630-631, 15

others growing out of the condition of affairs." The commissioner adds, that this method "has no resemblance to our method of organizing corporations. It is true that the word has been found to have its uses in our jurisprudence, but in a much more restricted sense than that used in the English reports."

The substantial difference in the methods of organizing corporations in the two countries, is that the charter is in England not obtained until after the share capital is largely subscribed, and often not until after a considerable part of the subscription moneys have been paid,** while in this country the corporation is generally legally organized before any money is actually paid in, and often before the subscription list is prepared. The situation, if the scheme proves abortive, may in the one case be quite different from the other.45

The term promoter has, however, been borrowed and is now in general use in this country, and the obligations and temptations of the relation, and the rules of law applicable thereto, are, except in cases arising out of the abandonment of the contemplated corporation, substantially the same in both countries.

§ 13. Meaning and effect of the term.

The conclusion to be drawn from the preceding sections, is that a person may be said to be a promoter of a corporation if before its organization, he directly or indirectly solicits subscriptions to its stock, or assumes to act in its behalf in the purchase of property, or in the securing of its charter, or otherwise assists in its organization.

44. As to the methods of organization pursued in England, see also Miller v. Denman, 49 Wash. 217, 222, 95 Pac. 67, 69, 16 L. R. A. N. S. 348, 351; Thompson on Liability of Officers and Agents of

Corporations, p. 206; Brice on
Ultra Vires 2nd. Am. Ed. p. 567, note.

45. The questions which arise when the scheme of incorporation proves abortive are discussed in a subsequent chapter. See post, chap.

« AnteriorContinuar »