Imágenes de páginas
PDF
EPUB

adopting the benefit of the services, impliedly agrees to pay therefor, at least not as to those services which directly relate to the creation of the company the benefits of which are received by the company at the very moment that it achieves existence. The corporation cannot, in such case, be said to have entered upon any implied agreement to compensate the promoter for his services, for the corporation is at the time that it receives the benefit of these services incapable of making a contract.15 Such services of the promoter as do not directly affect the legal organization of the corporation, that is, such as relate to the acquisition of property or contract rights, the benefit of which services may be accepted or rejected by the company after its complete organization, stand upon a different basis. It may well be said that the corporation, by accepting the benefits of these services, impliedly agrees to pay the reasonable value thereof or such compensation as may to the knowledge of the corporation have been

Low v. Conn. & Pass. Rivers R. R., 45 N. H. 370, 377; Le Grand v. Manhattan Mercantile Ass'n, 80 N. Y. 638; Tanner V. Sinaloa Land & Fruit Co., 43 Utah 14, 134 Pac. 586, and cases cited; Hall v. Vt. & Mass. R. Co., 28 Vt. 401, 406-407.

Cf. In re English & Colonial Produce Co., Ltd., 1906, 2 Ch. Div. 435, overruling In re Hereford, etc., Waggon & Engineering Co., L. R. 2 Ch. Div. 621.

As to the foundation of a claim for compensation upon the act, or articles of incorporation, see:

[blocks in formation]

Warehousing Co., L. R. 6 Ch. App. 671; Re Rotherham Alum & Chemical Co., L. R. 25 Ch. Div. 103, 50 L. T. N. S. 219; Melhado v. Porto Alegre Ry. Co., L. R. 9 C. P. 503; In re Hereford, etc., Waggon & Engineering Co., L. R. 2 Ch. Div. 621, 624, 35 L. T. N. S. 40. And see Tilson v. Warwick Gas Light Co., 4 B. & C. 962; In re Brampton & Longtown Ry. Co., L. R. 10 Ch. App. 177; Hitchins v. Kilkenny, etc., Ry. Co., 9 C. B. 536. And see ante, § 49, and post, § 87n.

15. See post, §§ 87-88. For a discussion of a similar question see ante, § 58. And see Cushion Heel Shoe Co. v. Hartt, 181 Ind. 167, 103 N. E. 1063, 50 L. R. A. N. S. 979, quoting 10 Cyc. 265.

agreed upon by the promoter.16 The fact that it is difficult to fasten upon the corporation any contract to pay for those services of the promoter which are accepted, if at all, at the moment of its legal creation, is no reason for denying the promoter reasonable compensation therefor. Contracts made before the organization of the corporation fixing the amount to be paid the promoter for services of this character are not, and do not after its organization become, binding upon the corporation. Justice, however, requires the payment to the promoter of reasonable compensation for his services, and this should be allowed regardless of the technical difficulty of fastening upon the company any implied promise to pay the same. Recent cases in America have, without extended discussion, stated in broad terms that the promoter is entitled to reasonable compensation for his services.17

Compensation for services will not be allowed a promoter who has stated to his associates, or allowed them to understand, that

16. See ante, § 56, et seq. But see § 59.

17. Dickerman v. Northern Trust Co., 176 U. S. 181, 205-206, 20 Sup. Ct. 311, 44 L. Ed. 423; Caffee v. Berkley, 141 Iowa 344, 347, 118 N. W. 267, 268; Mason v. Carrothers, 105 Me. 392, 410, 74 Atl. 1030, 10371038; Third Ward Bldg. Ass'n v. Lotze, 9 Ohio Dec. Rep. 248, 11 Weekly Law Bul. 285; Bigelow v. Old Dominion Copper, etc., Co., 74 N. J. Eq. 457, 501, 71 Atl. 153; Holcombe v. Trenton White City Co., 80 N. J. Eq. 122, 155, 82 Atl. 618, 632.

Cf. Cushion Heel Shoe Co. v. Hartt, 181 Ind. 167, 103 N. E. 1063, 50 L. R. A. N. S. 979; Tanner v. Sinaloa Land & Fruit Co., 43 Utah 14, 134 Pac. 586; also Hughes v.

Cadena DeCobre Min. Co., 13 Ariz. 52, 66, 108 Pac. 231, 236, where the court concluded that no services had been rendered.

66

The services must, to entitle the promoter to compensation, have been necessary and reasonable." Low v. Conn, & Pass. Rivers R. R., 45 N. H. 370, 377-378.

If the promoter is himself the owner of property which the corporation is organized to purchase, and his services in organizing the corporation are therefore largely in his own interest, his right to receive compensation from the corporation is somewhat doubtful. Tanner v. Sinaloa Land & Fruit Co., 43 Utah 14, 134 Pac. 586.

no allowance for promotion expenses is to be made,18 or who rendered his services without expectation of payment.19

The promoter's right to compensation for services will necessarily be determined in the light of the enterprise which he promotes. If the enterprise is a small one, consisting of but few stockholders, and resembling a partnership under corporate guise, it may readily be inferred that the promoter did not expect to be paid for his services, but looked to the success of the enterprise for his compensation.20 If, on the other hand, the enter

18. Federal.-Ritchie v. McMullen, 79 Fed. Rep. 522, 553–554, 25 C. C. A. 50, 47 U. S. App. 470. (Petition for writ of certiorari denied, 168 U. S. 710, 42 L. Ed. 1212, 18 Sup. Ct. 945), affirming, on this point, 64 Fed. Rep. 253, 258-259.

Georgia.-Powell v. Georgia F. & A. Ry. Co., 121 Ga. 803, 43 S. E. 759. Michigan.-Cuba Colony Co. V. Kirby, 149 Mich. 453, 112 N. W. 1133.

Mississippi.-West Point Tel. & Tel. Co. v. Rose, 76 Miss. 61, 23 So. 629.

Ohio.-Third Ward Bldg. Assn. v. Lotze, 9 Ohio Dec. Reprint, 248, 11 W. L. Bull. 285.

United Kingdom and Colonies.Savin v. Hoylake Ry. Co., L. R. 1 Exch, 9.

The representations of the promoter's partners are binding upon him and a bar to his recovering compensation. Tanner v. Sinaloa Land & Fruit Co., 43 Utah 14, 134 Pac. 586.

A by-law of a corporation providing that none of its "officers" shall receive any compensation for services has been held to have no bear

ing upon the question of the promoter's compensation. Fitzpatrick v. O'Neill, 43 Mont. 552, 118 Pac. 273, Am. & Eng. Ann. Cas., 1912 C. 296.

19. Lindsey v. Pasco Power & Water Co., 203 Fed. Rep. 251, 121 C. C. A. 449; Hinkley v. Sac Oil & Pipe Line Co., 132 Iowa 396, 400, 107 N. W. 629, 631, 119 Am. St. R. 564; Low v. Conn. & Pass. Rivers R. R., 45 N. H. 370, 377-378, 384; In re Eddystone Marine Ins. Co., 1893, 3 Ch. Div. 9, 14; Third Ward Bldg. Assn. v. Lotze, 9 Ohio Dec. Rep. 248, 11 Weekly Law Bul. 285.

20. See Baily v. Burgess, 48 N. J. Eq. 411, 22 Atl. 733, where the court held that the promoter was not entitled to compensation "for the reason that it was a mutual effort upon the part of the Rowlands and Burgess (the promoter claiming compensation) to organize a company. This was part of the work to that end. Mr. Rowlands was to furnish the money and Mr. Burgess was to secure the title and discharge the liens, and the company, of which they were members, was to have the benefit thereof."

[ocr errors]

prise is an extensive one, and the corporation is organized with a large capitalization and a great number of stockholders, and the promoter's interest represents only a small proportion of the total capital, the presumption is strong that the promoter expected not only to reap a profit from his investment in the shares, but to be paid for his promotion services as well.

For services rendered after he has become a director of the corporation, the promoter is not entitled to compensation unless pursuant to an express agreement to that effect,1 except, perhaps, if the services are of a character not within the ordinary duties of a director.2

22

§ 85. Compensation of fraudulent promoters.

Whether the promoter's right to compensation for services may be defeated by showing that he has committed a fraud upon the company, or unlawfully taken a secret profit upon the promotion, is a question upon which the authorities do not agree. In some cases promoters compelled to account for secret profits have been allowed to offset against such profits the fair value of their services upon the promotion.23 Other cases hold, with better reason, that a promoter who commits a fraud upon the company, fails in the discharge of his duties, and is not entitled to compensation.24

21. New York & New Haven R. R. Co. v. Ketchum, 27 Conn. 170; Hall v. Vt. & Mass. R. R. Co., 28 Vt. 401, 409; Merchants Fire Office, Ltd., v. Armstrong, 1901 Weekly Notes 163. See also Cook on Corporations, § 657; Thompson on Corporation (2nd Ed.), § 1715; Clark & Marshall, on Private Corporations, § 671.

22. See N. Y. & N. H. R. R. Co. v. Ketchum, 27 Conn. 170, 181; Rockford R. I. & St. L. R. R. Co. v. Sage, 65 Ill. 328, 332, 16 Am. Rep.

587; Cook on Corporations, § 657;
Thompson on Corporations (2nd
Ed.), § 1715; Clark & Marshall on
Private Corporations, § 671.

23. Mason v. Carrothers, 105 Me. 392, 410, 74 Atl. 1030, 1037-1038, see also Caffee v. Berkley, 141 Iowa, 344, 347, 118 N. W. 267, 268.

24. Davis v. Las Ovas Co., 227 U. S. 80, 33 Sup. Ct. 197, 57 L. Ed. 426, affirming, Las Ovas Co. V. Davis, 35 App. Cas. Dist. of Col. 372; Dunlap v. Twin City Power Co., 226 Fed. Rep. 161, C. C.

Different considerations might arise if the promoter's fraud were a technical one, and it appeared that he had acted in good faith throughout.25

A promoter who retains a secret profit is certainly not entitled to receive additional compensation for services, and securities issued to him in payment for services may be cancelled upon the discovery of the fact that he has himself fixed and taken his compensation.26

§ 86. Compensation for services in obtaining subscriptions. The obtaining of subscriptions to the capital stock of the corporation is often a necessary step in the promotion, and the promoter's services in procuring such subscriptions may according to the weight of authority be taken into consideration in fixing his compensation.27

A. -; Hitchcock v. Hustace, 14 Hawaii 232, 244; Bagnall v. Carlton, L. R. 6 Ch. Div. 371, 391; In re Hereford & South Wales Waggon & Engineering Co., L. R. 2 Ch. Div. 621, 35 L. T. N. S. 40; Re Sale Hotel and Botanical Gardens, Ltd., 77 L. T. N. S. 681, reversed on other grounds, 78 L T. N. S. 368.

The promoters were allowed to offset their expenses against their liability for unlawful profits in Hayward v. Leeson, 176 Mass. 310, 322-323, 57 N. E. 656, 49 L. R. A. 725; Lydney & Wigpool Iron Ore Co. v. Bird, L. R. 33 Ch. Div. 85, 95, 24 Am. & Eng. Corp. Cas. 23; In re Leeds & Hanley Theatres of Varieties, 1902, 2 Ch. Div. 809, 826-827; In re Darby, 1911, 1 K. B. 95, 101; 80 L. J. K. B. Div. 180, 183; Emma Silver Min. Co. v. Grant, L. R. 11 Ch. Div. 918.

25. Richlands Oil Co. v. Morriss, 108 Va. 288, 298, 61 S. E. 762, 765.

26. Crowe v. Malba Land Co., 76 N. Y. Misc. 676, 135 Supp. 454.

27. Federal.-See Commonwealth S. S. Co. v. American Ship Building Co., 197 Fed. Rep. 797, 814, aff'd, 215 Fed. Rep. 296, 304, 131 C. C. A. 596.

California.-See Western States Life Ins. Co. v. Lockwood, 166 Cal. 185, 194, 135 Pac. 496, 500.

Illinois.-Ross V. Sayler, 104 Ill. App. 19, citing Rockford R. I. & St. L. R. R. Co. v. Sage, 65 Ill. 328, 16 Am. Rep. 587.

Indiana.-Cincinnati Ind. & Chi. R. R. Co. v. Clarkson, 7 Ind. 595. Kentucky.-Farmers Bank of Vine Grove v. Smith, 105 Ky. 816, 49 S. W. 810, 88 Am. St. Rep. 341.

New Hampshire.-Low v. Conn. & Pass. Rivers R. R., 45 N. H. 370, 377-378.

« AnteriorContinuar »