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spective subscribers, the machine which the corporation was to manufacture, and had requested acquaintances to subscribe for shares. These facts, it was held, made him a promoter.

§ 5. Sharing promoter's profits.

One who, in consideration of a share of the profits, assists the promoter in the organization of a corporation, thereby becomes himself a promoter, 28 and it has been held that a person by agreeing, in consideration of a share of the promoter's profits, to become a director of the proposed corporation, makes himself liable as a promoter from the time that such agreement is

made.24

§ 6. Carrying on promotion by agents.

It is not necessary, in order to constitute one a promoter, that he should personally perform any act of promotion. He becomes a promoter if the promotion is carried on by his authorized agents, 25 or if, though he does not appear in the transaction, the ostensible promoters are in fact his puppets acting under his control.26

§ 7. Acting as vendor, vendor's agent, etc.

The mere fact of selling, or agreeing to sell property to the corporation to be formed, or to its promoters, does not constitute the vendor a promoter.27 If, however, the owner, in order to pro

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23. Emma Silver Mining Co. v. Lewis, L. R. 4 C. P. D. 396, 408. See Stratford Fuel Ice C. & C. Co. v. Mooney, 21 Ont. L. R. 426, 441.

24. Nant-Y-Glo and Blaina Ironworks Company v. Grave, L. R. 12 Ch. Div. 738, 744. A similar case is Richlands Oil Company v. Morriss, 108 Va. 288, 293–294, 61 S. E. 762, 763–764.

25. South Joplin Land Co. v. Case, 104 Mo. 572, 580-581, 16 S.

W. 390, 392–393, 38 Am. & Eng.
Corp. Cas. 333.

26. Phosphate Sewage Co., Hartmont, L. R. 5 Ch. D. 394, 452, 46 L. J. Ch. 661.

27. Federal.-Wiser Lawler, 189 U. S. 260, 265, 47 L. Ed. 802, 23 S. C. 624.

California.--Blood V. La Serena Land & Water Co., 134 Cal. 361, 66 Pac, 317.

Missouri.-South Missouri Pine

cure the sale of his property, assists in the organization of the company, he thereby subjects himself to the restrictions which the law imposes upon promoters.28

Acting as agent for the vendor on the sale of property to a contemplated company, does not constitute the agent a promoter of the corporation,29 but if the agent himself organizes the corporation, he becomes a promoter, and the fact that he was first the agent of the vendor, does not exonerate him from liability to account to the corporation for any secret commissions received from his principal.30

In Bagnall v. Carlton,31 Richard Bagnall, life tenant under the will of James Bagnall, deceased, promised Duignan & Lewis, solicitors for the trustees of the wagnall estate, a commission of £1500 if they would find a purchaser for certain collieries and iron

Lumber Co. v. Crommer, 202 Mo. 504, 101 S. W. 22; South Joplin Land Co, v. Case, 104 Mo. 572, 578, 580, 16 S. W. 390, 392, 38 Am. & Eng. Corp. Cases 333, quoted in Exter v. Sawyer, 146 Mo. 302, 322, 47 S. W. 951, 956.

New York.-Finck v. Canadaway Fertilizer Co., 152 N. Y. App. Div. 391, 136 Supp. 914, modified and affirmed, 208 N. Y. 607, 102 N. E. 1102.

Pennsylvania.—Densmore Oil Co. v. Densmore, 64 Pa. 43, 52.

Wisconsin.-Forest Land Co. v. Bjorkquist, 110 Wis. 547, 86 N. W. 183.

United Kingdom and Colonies.Gover's Case, L. R. 20 Eq. 114, 122, affirmed, L. R. 1 Ch. Div. 182.

28. See South Joplin Land Co. v. Case, 104 Mo. 572, 579, 581, 16 S. W. 390, 392, 393, 38 Am. & Eng. Corp. Cas. 333; Finck v. Canadaway Fertilizer Co., 152 N. Y. App. Div. 391,

136 Supp. 914, modified and affirmed, 208 N. Y. 607, 102 N. E. 1102,

29. Blood v. La Serena Land & Water Co, 134 Cal. 361, 66 Pac. 317; South Missouri Pine Lumber Company v. Crommer, 202 Mo. 504, 101 S. W. 22; Thames Navigation Co. v. Reid, 9 Ont. 754, 765, (reversed on another ground, 13 Ont. App. 303). See Second National Bank v. Greenville Screw Point Steel Fence Post Co., 23 Ohio C. C. 274, 280; also Selover v. Isle Harbor Land Co., 91 Minn. 451, 98 N. W. 344, 100 Minn. 253, 111 N. W. 155.

30. Lydney & Wigpool Iron Ore Co. v. Bird, L. R. 33 Ch. Div. 85, 94-95, 24 Am. & Eng. Corp. Cas, 23, reversing, L. R. 31 Ch. Div. 328, 12 Am. & Eng. Corp. Cas. 6.

31. L. R. 6 Ch. Div. 371, 382. A somewhat similar case

is Glasier v. Rolls, L. R. 42 Ch. Div. 436.

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 promoters.

§ 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. 88

32. In re Great Wheal Polgooth, porations, see Bagnall v. Carlton, L. Ltd., 53 L. J. Ch. N. S. 42, 49 L. T. R. 6 Ch. Div. 371, 401-402, 404, N. S. 20, 32 W. R. 107; In re Ken- 409; Erlanger v. New Sombrero sington Station Act, L. R. 20 Eq. Phosphate Co., L. R. 3 App. Cas. 197.

1218, 1246–1247, 6 Eng. Rul. Cas. 33. Tyrrell V. Bank of London, 777, 39 L. T. N. S. 269, 26 Weekly 10 H. L. Cas. 26, 11 Eng. Rep. 934. Rep. 65; Phosphate Sewage Co. v.

For remarks on the proper con- Hartmont, L. R. 5 Ch. Div. 394, duct of solicitors of embryo cor- 443 444, 452, 46 L. J. Ch. 861.

§ 9. Subscribers for shares, not promoters.

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.85 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

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34. Benton v. Minneapolis Talloring & 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 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.41 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.

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