A proper agreement of hiring entered into with prospective employees of the corporation may become binding upon the corporation after its organization.90 It has been held that as the officers of the corporation, in the absence of express agreement, are not entitled to compensation for the ordinary services appertaining to their office, an agreement between the incorporators that one of them shall be made vice-president and receive as such a specified salary, does not become binding upon the corporation because of the acceptance by the person named of the position of vice-president and the performance by him of the services incident to that office.91 While a corporation cannot enter into a contract before it has been completely organized, there is no objection to its taking over a going concern as of a date prior to the corporate organization.92 § 69. Varying written agreement of promoter. Where the actual agreement of the promoter differs from the written memorandum thereof, the corporation, assuming the per burgh, 2 Macq. 391, 416, et seq., 2 Jur. N. S. 695; Leominster Canal Navigation Co. v. Shrewsbury & Hereford Ry. Co., 3 K. & J. 654; Earl of Shrewsbury v. North Staffordshire Ry. Co., L. R. 1 Eq. 593. See, however, Bobzin V. Gould Balance Valve Co., 140 Iowa 744, 118 N. W. 40. In First Nat'l Bank v. Church Federation of America, 129 Iowa 268, 105 N. W. 578, the promoter was, however, held personally liable. As to agreements for the location of railroad lines, see Woodstock Iron Co. v. Richmond & D. Extension Co., 129 U. S. 643, 9 Sup. Ct. 402, 32 L. Ed. 819. As to agreements relating to the location of the corporate plant, see Bobzin v. Gould Balance Valve Co., 140 Iowa 744, 118 N. W. 40. 90. Girard v. Case Bros. Cutlery Co., 225 Pa. 327, 74 Atl. 201, and see Coe v. Leckrone Coke Co., 30 Pa. Co. Ct. 113; Boston Deep Sea Fishing, etc., Co. v. Ansell, L. R. 39 Ch. Div. 339. See ante, §§ 23-25. 91. Citizens' Natl. Bank V. Elliott, 55 Iowa 104, 7 N. W. 470, 39 Am. Rep. 167. 92. Myott v. Greer, 204 Mass. 389, 90 N. E. 895; Ziemer v. C. G. Bretting Mfg. Co., 147 Wis. 252, 133 N. W. 139, Am. & Eng. Ann. Cas. 1912, D. 1275, formance of the contract with full knowledge of the facts, may be held to a performance of the actual agreement rather than of that set forth in the memorandum.93 § 70. Subscription agreements. A subscription may be enforced by the corporation without regard to the performance or non-performance of the collateral promises of the promoters by which the subscription was induced.94 This is not so much because the promises of the promoters are not binding upon the corporation, as that the courts will not allow the terms of the subscription agreement to be varied to the prejudice of the rights of other subscribers." 93. Stewart v. Norman (Tenn.), 39 S. W. 758. 94. Indiana.-Shick V. Citizens Enterprise Co., 15 Ind. App. 329, 44 N. E. 48, 57 Am. St. R. 230; Fox v. Allensville, etc., Turnpike Co., 46 Ind. 31, 35-36. Michigan.-Rapid Hook & Eye Co. v. DeRuyter, 117 Mich. 547, 76 N. W. 76. Missouri.-Joy v. Manion, 28 Mo. App. 55. North Carolina.-Boushall v. Myatt, 167 N. C. 328, 83 S. E. 352. West Virginia.-Clarksburg, etc., Land Co. v. Davis, W. Va.-, 86 S. E. 929. United Kingdom and Colonies.— Felgate's Case, 2 DeG. J. & S. 456; Nickoll's Case, 24 Beav. 639; Gourlie v. Chandler, 41 Nova Scotia 341. And see post, § 219. Cf. Burrows v. Smith, 10 N. Y. 550; Yonkers Gazette Co. v. Jones, 30 N. Y. App. Div. 316, 51 Supp. 973. In Mantle v. Jack Waite Min. Co., 24 Idaho 613, 135 Pac. 854, 136 Pac. 95 1130, an agreement of the promoters that the shares subscribed for by the plaintiff should be non-assessable until 25 cents a share had been paid on the stock of the promoters, was held to have become binding on the corporation and enforceable against it. The promoter's promise that the subscribers need not pay their subscriptions, may save the latter from liability if the corporation is insolvent, and its sole creditor and the only person whose interests will be served by enforcing the subscriptions, is the promoter who agreed that the same should not be enforced. Carnahan v. Campbell, 158 Ind. 226, 63 N. E. 384. 95. California.-Quartz Glass & Mfg. Co. v. Joyce, Cal. App. 150 Pac. 648. Massachusetts.-Nickerson v. English, 142 Mass. 267, 8 N. E. 45. Minnesota.-Minneapolis Threshing Mach. Co. v. Davis, 40 Minn. 110, 41 N. W. 1026, 3 L. R. A. 796, 12 Am. St. Rep. 701; Wood Harvester Stipulations contained in the subscription agreement itself, or Co. v. Jefferson, 71 Minn. 367, 74 N. W. 149. Missouri. Ollesheimer v. Thompson Mfg. Co., 44 Mo. App. 172, 181. Nebraska.-York Park Bldg. Assoc. v. Barnes, 39 Neb. 834, 840, 58 N. W. 440. New Hampshire.-White Mts. R. R. v. Eastman, 34 N. H. 124, 138, et seq. New York.-Yonkers Gazette Co. v. Jones, 30 App. Div. 316, 51 Supp. 973. But see Syracuse P. & O. R. R. Co. v. Gere, 4 Hun 392, 6 T. & C. 636. Oklahoma.-Huster V. Newkirk Creamery & Ice Co., 42 Okla. 440, 141 Pac. 790, L. R. A. 1915, A. 390. Pennsylvania.-Harvey v. Weitzenkorn, 232 Pa. 447, 81 Atl. 447; Miller v. Hanover Jctn. & Sus. R. R. Co., 87 Pa. 95, 30 Am. Rep. 349; Graff v. Pittsburg & S. R. R. Co., 31 Pa. 489; Robinson v. Pittsburgh & C. R. R. Co., 32 Pa. 334, 72 Am. Dec. 792. And see post, § 219. It has been held that one who signs his name to a subscription list without indicating the amount of his subscription, and thereby induces others to subscribe, is bound for the number of shares set opposite his name by the promoter, and estopped from questioning the promoter's authority. Silvain v. Benson, 83 Wash. 271, 145 Pac. 175. It has been held that an understanding that a subscription shall not become binding until some further act is performed by the subscriber, is valid, and available as a defense to an action to enforce the subscription. Ada Dairy Assoc. v. Mears, 123 Mich. 470, 82 N. W. 258, and see White v. Kahn, 103 Ala. 308, 15 So. 595. The same has been held in regard to an understanding that the subscription agreement shall not be delivered to the corporation until certain conditions have been fulfilled. Gilman v. Gross, 97 Wis. 224, 72 N. W. 885. It has, however, been held that the subscriber is in such case bound, if the subscription agreement, unconditional on its face, is delivered to the corporation without the performance of the condition. Rehbein v. Rahr, 109 Wis. 136, 85 N. W. 315. Cf. Cass v. Pittsburg V. & C. Ry. Co., 80 Pa. 31. It has been held that a delivery in escrow cannot be made to a com、 missioner appointed to receive subscriptions, as he is the person to whom the absolute delivery would be made, and delivery in escrow must be made to a third party. Wight v. Shelby R. R. Co., 16 B. Mon. (Ky.) 4, 63 Am. Dec. 522, but compare Cass v. Pittsburg V. & C. Ry Co., 80 Pa. 31. A collateral agreement of the promoters, to purchase from a particular subscriber, on demand, at cost, the shares subscribed for by him is valid and enforceable. Morgan v. Struthers, 131 U. S. 246, 254, 255, 33 L. Ed. 132, 9 Sup. Ct. 726; McCampbell v. Obear, Cal. App. - 148 Pac. 942; Meyer v. made with every subscriber thereto, may constitute conditions precedent, without the performance of which the subscriptions cannot be enforced,96 or conditions subsequent which the corporation by accepting the subscriptions impliedly agrees to perform.97 The collateral agreements of the promoters may, if the rights of other subscribers are not prejudiced, be enforced against the corporation if its consent to be bound thereby is shown.98 There is in any event no reason why the promoters should not be held individually liable upon their promises.99 Blair, 109 N. Y. 600, 17 N. E. 228, 4 Am. St. Rep. 500; McClymonds v. Stewart, 2 Pa. Super. Ct. 310; Scranton Luna Park Ass'n v. Osthaus, 8 Lack. Jur. (Pa.) 345; Kincaid v. Overshiner, 171 Ill. App. 37. An agreement to "guarantee" the subscriber's money," is an agreement to indemnify him against loss, and not an agreement to repurchase his shares, and the subscriber must, to recover, prove his loss. Norris v. Reynolds, 131 N. Y. App. Div. 818, 116 Supp. 106. 66 96. Rockford R. I. & St. L. R. R. Co. v. Shunick, 65 Ill. 223; Bobzin v. Gould Balance Valve Co., 140 Iowa 744, 118 N. W. 40; Audenried v. East Coast Milling Co., 68 N. J. Eq. 450, 455, 59 Atl. 577, and see Lake Ontario Shore R. R. Co. v. Curtiss, 80 N. Y. 219. 97. Bobzin V. Gould Balance Valve Co., 140 Iowa 744, 118 N. W. 40. See American Home Life Ins. Co. v. Compere, Tex. Civ. App. - 159 S. W. 79, 80. To bind the company it must appear that the condition was to be binding upon it, and not the mere personal obligation of the promoters. Russell v. Broadus Cotton Mills (Ala.), 39 So. 712. In Morrow v. Nashville, etc., Co., 87 Tenn. 262, 10 S. W. 495, 3 L. R. A. 37, a condition subsequent, contrary to public policy and void, was held no bar to the enforcement of the subscription. In U. S. Vinegar Co. v. Schlegel, 143 N. Y. 537, 38 N. E. 729, affirming, 67 Hun (N. Y.) 356, 22 Supp. 407, it was held that subscriptions to the stock of a corporation could not be avoided on the ground that the company was organized for an illegal purpose, where there was nothing to show that an illegal purpose was intended, except certain statements contained in the printed prospectus issued by the promoters. United States Vinegar Co. v. Foehrenbach, 148 N. Y. 58, 42 N. E. 403, and Clarksburg, etc., Land Co. v. Davis, W. Va. - 86 S. E. 929. See also 1 A subscription agreement, like any other agreement, does not ordinarily become binding before delivery, and the mere signature of the subscriber is of no effect until the agreement leaves his hands; 1 but a promoter who after signing the subscription agreement procures other subscriptions to be made upon the faith of his signature is bound, though the agreement has not left his possession 2 at least in those jurisdictions in which a subscription agreement is held binding as a contract between the subscribers.3 § 71. Notice to promoter as notice to the corporation. As the promoters are not the agents of the corporation, and have no power to act for it, notice given to a promoter is not ordinarily notice to the corporation. If, however, the promoters later constitute the board of directors and the only stockholders of the corporation, their knowledge attaches to the corporation and the latter is subjected to any equities of which all the promoters had Co. v. Newport Lumber Co., 15 Cal. App. - 1. Greer v. Chartiers Ry. Co., 96 Pa. 391, 42 Am. St. Rep. 548; Gilman v. Gross, 97 Wis. 224, 72 N. W. 885, and see Rehbein v. Rahr, 109 Wis. 136, 85 N. W. 315. 2. Greer v. Chartiers Ry. Co., 96 Pa. 391, 42 Am. St. Rep. 548. App. 37, 113 Pac. 691; Peek v. Steinberg, 163 Cal. 127, 124 Pac. 834. Colorado.-Franklin Mining Co. v. O'Brien, 22 Colo. 129, 141, 43 Pac. 1016, 1020, 55 Am. St. Rep. 118. Illinois.-Burt v. Batavia Paper Mfg. Co., 86 Ill. 66. Printing South Dakota.-Huron & Bindery Co. v. Kittleson, 4 S. D. 520, 57 N. W. 233. Wyoming.-Grand Rapids Furniture Co. v. Grand Hotel & Opera House Co., 11 Wyo. 128, 70 Pac. 838, 72 Pac. 687. Cf. California, etc., Min. Co. v. Manley, 10 Idaho 786, 81 Pac. 50. Appeal dismissed for want of jurisdiction, 203 U. S. 579, 51 L. Ed. 326, 27 Sup. Ct. 779; Zeigler v. Valley Coal Co., 150 Mich. 82, 113 N. W. 775, 13 Am. & Eng. Ann. Cas. 90; Bang v. Brett, 62 Minn. 4, 63 N. W. 1067. |