thereof, it must be shown that the acceptance was made with full knowledge of the facts. Unless the corporation had full knowledge, an agreement to abide by the terms of the promoter's contract cannot be implied.74 It has been held that the acceptance by the corporation must be made with knowledge, not only of the nature and terms of the promoter's contract, but of the fact that without such acceptance it would not be bound thereby. An agreement to be bound by the terms of the promoter's contract cannot, it is said, be implied from the act of the corporation resulting from a mistaken belief that it is already bound.75

74. California.-Peek V. Steinberg, 163 Cal. 127, 124 Pac. 834; Rideout v. Nat'l Homestead Ass'n, 14 Cal. App. 349, 112 Pac. 192.

Colorado.-Possell V. Smith, 39 Colo. 127, 88 Pac. 1064.

Iowa.-Teeple v. Hawkeye Gold Dredging Co., 137 Iowa 206, 114 N. W. 906.

Missouri.-Pitts v. Steele Mercantile Co., 75 Mo. App. 221, 231.

Pennsylvania.-Tift V. Quaker City National Bank, 141 Pa. 550, 21 Atl. 660, 38 Am. & Eng. Corp. Cas. 339, citing Pittsburgh & Steubenville R. R. Co. v. Gazzam, 32 Pa. 340 and Bennecke v. Insurance Co., 105 U. S. 355, 26 L. Ed. 990. Texas.-Weathersby v. Texas & Ohio Lumber Co., Tex. Civ. App.

146 S. W. 243. Wisconsin.-Buffington v. Bardon, 80 Wis. 635, 50 N. W. 776, citing 4 Am. & Eng. Ency. of Law (1st Ed.), page 201, § 9.

And see note to Cushion Heel Shoe Co. v. Hartt, 50 L. R. A. N. S. 987.

The burden of proof as to the company's knowledge is on the party

asserting its liability. See Abel v. National Reserve Bank, 149 N. Y. App. Div. 710, 134 Supp. 379.

It was said in Low v. Connecticut & Passumpsic Rivers R. R., 46 N. H. 284, 297, where the plaintiff claimed for services rendered in the organization of the corporation, that it was not necessary that the precise character and extent of the claim should have been made known to the stockholders, but that they were put on inquiry, if they had notice that services had been rendered of such a nature as to raise the presumption that they were to be paid for. See also Low v. Connecticut & Passumpsic Rivers R. R., 45 N. H. 370, 379.

Whether the knowledge of an officer, acquired as a promoter, is the knowledge of the corporation assuming his contract, see post, § 71.

75. Tift v. Quaker City National Bank, 141 Pa. 550, 21 Atl. 660, 38 Am. & Eng. Corp. Cas. 339, citing Pittsburgh & Steubenville R. R. Co. v. Gazzam, 32 Pa. 340, 348 and Bennecke v. Insurance Co., 105 U. S. 355, 26 L. Ed. 990. See also In

§ 62. Liability of corporation accepting benefit of contract not contemplating performance by it.

The acceptance by the corporation of the benefits of a contract made by its promoters, does not create a contract between the corporation and the opposite party, unless the promoters' agreement provided for performance by the corporation. If the promoters enter into a contract by which they bind themselves personally to the performance of specified conditions, they can, after its organization, assign their rights under the contract to the corporation, just as to any other person, and the corporation will be compelled to perform only such conditions as are expressly imposed upon it by its agreement with the promoters. It can, just as can any other person, accept an assignment without assuming the obligations of its assignors. The corporation becomes obligated to the opposite party only if the promoters' agreement contemplated performance by it. If in such case, with knowledge of all the facts, it accepts the benefits of the promoters' agreement, it impliedly agrees to undertake such performance as the promoters stipulated for it. The mere acceptance from the promoters of a conveyance of their properties, or a transfer of their contract rights, does not, however, commit it to the performance of any obligations other than such as it may agree with the promoters to perform.76

re Northumberland Ave. Hotel Co., L. R. 33 Ch. Div. 16; Coit v. Dowling, 4 N. W. Terr. 464, and see Bagot Pneumatic Tyre Co. v. Clipper Pneumatic Tyre Co., 1901, 1 Ch. Div. 196, aff'd, 1902, 1 Ch. Div. 146.

76. Alabama.-Moore & Handley Hardware Co. v. Towers Hardware Co., 87 Ala. 206, 6 So. 41, 13 Am. St. Rep. 23.

Arkansas-Perry v. Little Rock & Fort Smith Ry. Co., 44 Ark. 383, 395; Little Rock & Fort Smith R. R.

Co. v. Perry, 37 Ark. 164, 191, et seq, 9 Am. & Eng. R. R. Cas. 610.

Colorado.-Ruby Chief Mining & Milling Co. v. Gurley, 17 Colo. 199, 29 Pac. 668.

Georgia.-Mitchell v. J. A. Gifford & Co., 133 Ga. 823, 67 S. E. 197.

Indiana.-Davis & Rankin Bldg. & Mfg. Co. v. Hillsboro Creamery Co., 10 Ind. App. 42, 37 N. E. 549.

Kansas.-Tryber v. Girard Creamery Co., 67 Kan. 489, 73 Pac. 83.

Massachusetts.-Koppel v. Mass.

It has even been doubted that a corporation, by accepting the benefits thereof, obligates itself to the performance of the conditions of a contract made by its promoters on behalf of another and different corporation contemplated at the time of the original contract.77

§ 63. The same subject.—Contracts of a continuing nature. A different situation arises in regard to contracts of a continuing nature. The corporation may in regard to such contracts render itself liable by accepting the benefits of a contract made by the promoters in their own behalf. If a person who has rendered services or furnished merchandise or materials to the promoters as individuals, renders similar services, or delivers similar merchandise or materials to the corporation organized to take over their business, the corporation accepting the same must necessarily pay therefor, but the question whether the other party must proceed upon quantum meruit or quantum valebat, or may claim the compensation or consideration agreed to be paid by the promoters, depends upon whether an agreement to pay compensation on the last named basis can under all the circumstances fairly be implied.78 The situation is precisely the same where the services or merchandise instead of being rendered or furnished to, are rendered or furnished by, the promoters and the corporation after its organization continues the performance or delivery therof.79

The corporation does not ordinarily, by continuing the contract, become subject to the liability of the promoters for services rendered to them before the corporate organization.80

§ 64. The same subject—Amended contracts.

If a contract of the promoters, originally drawn so as to provide for performance by the promoters as individuals, is, before

78. See North American Loan & Trust Co. v. Colonial & U. S. Mortgage Co., 83 Fed. Rep. 796, 28 C. C. A. 88, 55 U. S. App. 157; Heaton v. Clarke & Co., 122 Iowa 716, 98 N. W. 597; Horowitz v. Broads Mfg. Co., 54 N. Y. Misc. 569, 104 Supp. 988; Standard Printing Co. v. Demo

crat Publishing Co., 87 Wis. 127, 58 N. W. 238.

79. See North American Loan & Trust Co. v. Colonial & U. S. Mortgage Co., 83 Fed. Rep. 796, 28 C. C. A. 88, 55 U. S. App. 157; Bane v. Dow, 80 Wash, 631, 142 Pac. 23.

80. See Stone v. Fox Machine Co., 145 Mich. 689, 109 N. W. 659.

it is carried out, modified so as to provide for performance by the corporation, the corporation if accepts the benefits, will be

held to a performance of the obligations of the contract.81

company.

Something very near to the converse of this proposition arose in Bagot Pneumatic Tyre Co. v. Clipper Pneumatic Tyre Co.82 The plaintiff in that case had agreed to grant to one Phelps, or to a company then being formed by him, an exclusive license to use certain patents. This license was afterwards granted to Phelps individually. Phelps assigned all his rights under the license agreement to one Piercy acting as trustee for the intended The company upon its organization adopted the agreement made between Phelps and Piercy. The license was never actually assigned to the company by Phelps but the company made some use of it. In an action by the plaintiff, the original licensor, against the company, it was held that there was no privity of contract between the parties and therefore no right of action. The explanation of the case seems to be that while the original agreement provided for a grant either to Phelps or the company then being formed, the license was actually issued to Phelps individually, and that Phelps' assignee, though it was the company mentioned in the original agreement, took the assignment of his rights without assuming his obligations. The result might have been different had the license been granted directly to the company, or to Phelps in trust for the intended company.88 The English law upon the question of the corporate liability resulting from the acceptance of the benefits of the promoters' contracts is, however, in such an uncertain state that it is impossible to determine the precise effect of a decision, arising upon such an unusual state of facts.

81. Pratt v. Oshkosh Match Co., 89 Wis. 406, 62 N. W. 84.

82. 1902, 1 Ch. Div. 146, affirming, 1901, 1 Ch. Div. 196. It was in this case suggested that the licensor might perhaps have sued the com

pany in the name of the original licensee, the assignor of the company.

83. See Van Schaick V. Third Ave. R. R. Co., 38 N. Y. 346.