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parties to the purchase agree that the purchaser shall organize a corporation to take over the property and pay the purchase price, or some part thereof, in the shares of the company to be formed.67

The purchaser does, it seems, enter upon the relation of promoter to the corporation if he makes his purchase, not for himself, but on behalf of the contemplated corporation.68 He will, at any rate, be held to have acted for the company in the transaction, and be compelled to give to it, when formed, the full benefit of his purchase.69 Whether the purchase was in fact made by the promoter for himself individually, or for the corporation to be formed, is often a question of some nicety.70 A matter of considerable, though not of controlling, importance in the determination of this question, is the circumstance that the purchase price is afterwards actually paid, not with moneys of the promoter, but in the shares, or out of the funds, of the company,71 or with moneys contributed by a syndicate organized for the purpose, the members of which are repaid by a pro rata distribution of the shares of the subsequently organized corporation.72

Massachusetts. Old Dominion Copper, etc., Co. v. Bigelow, 188 Mass. 315, 321, 74 N E. 653, 655, 108 Am. St. Rep. 479.

Michigan.-Cuba Colony Co. v. Kirby, 149 Mich. 453, 455–456, 112 N. W. 1133, 1134.

New Jersey.--Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eq. 219, 230, 233, 27 Atl. 1094, 44 Am. & Eng. Corp. Cas. 686; Woodbury Heights Land Co. v. Loudenslager, 55 N. J. Eg. 78, 90, 35 Atl. 436, affirmed, 56 N. J. Eq. 411, 41 Atl. 1115, but modified, 58 N. J. Eq. 556, 43 Atl. 671.

United Kingdom and Colonies.Gover's Case, L. R. 1 Ch. Div. 182, affirming, L. R. 20 Eq. 114; New Sombrero Phosphate Co. v. Erlanger, L. R. 5 Ch. Div. 73, 91, 25 W. R. 536, affirmed sub nom. Erlanger v. New Sombrero Phosphate Co., L. R. 3 App. Cas. 1218, 1234-1235, 1242–1243, 1255, 6 Eng. Rul. Cas. 777, 39 L. T. N. S. 269, 27 W. R. 65; Ladywell Mining Co. v. Brookes, L. R. 35 Ch. Div. 400, 409, 412, 415, 17 Am. & Eng. Corp. Cas. 22, affirming, L. R. 34 Ch. Div. 398; In re Hess Manufacturing Co., 23 Can. S. C. 644, 660, et seq., afirming, 21 Ont. App. 66, revers

ing, 23 Ont. 182. See also Burland v. Earle, 1902, App. Cas. 83, 98-99.

See contra a dictum in Central Trust Co. v. East Tennessee Land Co., 116 Fed. Rep. 743, 748.

The language of the court in Re Leeds & Hanley Theatres of Varieties, 1902, 2 Ch. Div. 809 at p. 822 may seem to the contrary. If so, it is dicta, for it was wholly unnecessary for the decision of the case, to determine that the Finance Company became a “promoter " before the organization of the Leeds & Hanley Theatres of Varieties.

67. Yale Gas Stove Co. v. Wilcox, 64 Conn. 101, 115, 29 Atl. 303. 25 L. R. A. 90, 42 Am, St. Rep. 159, 47 Am. & Eng. Corp. Cas. 647; Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eg. 219, 234, 27 Atl. 1094, 44 Am. & Eng. Corp. Cas. 686; Woodbury Heights Land Co. v. Loudenslager, 55 N. J. Eq. 78, 91, 35 Atl. 436, affirmed 56 N. J. Eq. 411, 41 Atl. 1115, but modified, 58 N. J. Eq. 556, 43 Atl. 671. Gover's Case, L. R. 1 Ch. Div. 182, 197, affirming, L. R. 20 Eq. 114; Ladywell Mining Co. v. Brookes, L. R. 35 Ch. Div. 400, 412, 17 Am. & Eng. Corp. Cas. 22.

68. See Gover's Case, L. R. 1 Ch.

$ 17. The same subject.—Taking step in organization of the

corporation. The relation of promoter to the corporation arises when the parties actually enter upon its organization,73 that is, when they

Div. 182, 187; Bagnall v. Carlton, 686; Woodbury Heights Land Co. v. L. R. 6 Ch. Div. 371, 405-407. And Loudenslager, 55 N. J. Eq. 78, 91, see post, $ 162n. Cf. In re Leeds & 35 Atl. 436, affirmed, 56 N. J. Eg. Hanley Theatres of Varieties, 1902, 411, 41 Atl. 1115, but modified, 58 2 Ch. Div. 809, 821-822.

N. J. Eq. 556, 43 Atl. 671. Lady69. Minister of Rys. & Canals v. well Mining Co. v. Brookes, L. R. 35 Quebec South Ry. Co., 12 Exch. Ch. Div. 400, 409-411, 17 Am. & Rep. of Can. 11, 24. See cases cited Eng. Corp. Cas. 22; same v. same, in succeeding notes. And see Miss L. R. 34 Ch. Div. 398, 407. issippi Lumber Co. v. Joice, 176 Ill. 72. Parker v. Boyle, 178 Ind. 560, App. 110, 118.

99 N. E. 986; Bigelow v. Old Do70. It is said to be a question minion Copper, etc., Co., 74 N. J. of fact, in Omnium Electric Palaces Eq. 457, 503, 71 Atl. 153; Arnold Lim. v. Baines, 1914, 1 Ch. Div. 332, v. Searing, 78 N. J. Eq. 146, 159, 160, 347. 82 L. J. Ch. N. S. 519, 526, 109 78 Atl. 762, 767; Arnold v. Searing, L. T. N. S. 206.

73 N. J. Eq. 262, 67 Atl. 831; Alex71. Yale Gas Stove Co. v. Wil andra Oil & Dev. Co. v. Cook, 11 cox, 64 Conn. 101, 116–117, 29 Atl. Ont. W. R. 1054. 303, 25 L, R. A. 90, 42 Am. St. Rep. 73. Yeiser v. U. S. Board & 159, 47 Am. & Eng. Corp. Cas. 647; Paper Co., 107 Fed. Rep. 340, 348, Plaquemines Tropical Fruit Co. v. 46 C. C. A. 567, 52 L, R. A. 724; Buck, 52 N. J. Eg. 219, 233-235, 27 South Joplin Land Co. v. Case, 104 Atl. 1094, 44 Am. & Eng. Corp. Cas. Mo. 572, 580, 16 S. W. 390, 392,

take the first decisive step, or perform the first overt act, in the carrying out of the plan of organization.74 The chronological order of the steps in the organization of a corporation, varies in different cases, and, as the first step creates the relation, there is no one act from which the relation uniformly dates.75 The moment at which the relation has its inception depends upon the facts of each particular case,76 and the burden of proof rests upon the party affirming the existence of the fiduciary relation."

The filing of a certificate of incorporation is an active step in the organization of the company sufficient to mark the inception of the relation of promoter to the corporation, and so, no doubt, is the preparation of such certificate, and perhaps even the employment of attorneys to prepare it.

The solicitation of subscriptions to the shares of the proposed company is an act sufficient to create the relation,78 even though there be nothing more than a mere informal invitation to subscribe for shares, extended before any written subscription agreement

38 Am. & Eng. Corp. Cas. 333; Cas. 647; Ladywell Mining Co. v. Shawnee, etc., Savings Bank Co. V. Brookes, L. R. 35 Ch. Div. 400, Miller, 24 Ohio C. C. 198, 211; 415, 17 Am. & Eng. Corp. Cas. 22. Densmore Oil Co. v. Densmore, 64 77. Ladywell Mining Co. v. Pa. St. 43, 50; Twycross v. Grant, Brookes, L. R. 35 Ch. Div. 400, L. R. 2 C. P. D. 469, 527.

411, 17 Am. & Eng. Corp. Cas. 22. 74. Milwaukee Cold Storage Co. See same v. same, L. R. 34 Ch. Div. v. Dexter, 99 Wis. 214, 230, 74 N. 398, 409-410. W. 976. 40 L. R. A. 837, 842; Gluck 78. Burbank v. Dennis, 101 Cal. stein v. Barnes, 1900 App. Cas. 90, 97, 35 Pac, 444, 446; South 240, 256.

Joplin Land Co. v. Case, 104 Mo. 75. See In re Olympia, Ltd.572, 581, 16 S. W. 390, 393, 38 Am. 1898. 2 Ch. Div. 153, 181–182, (affir- & Eng. Corp. Cas. 333; Ladywell med sub nom. Gluckstein v. Barnes, Mining Co. v. Brookes, L. R. 35 Ch. 1900 App. Cas. 240); citing Emma Div. 400, 411, 415, 17 Am. & Eng. Silver Mining Co. v. Lewis, L. R. Corp. Cas. 22; Foss v. Harbottle, 4 C. P. D. 396.

2 Hare 461, 489; Highway Adver76. Yale Gas Stove Co. v. tising Co. v. Ellis, 7 Ont. L. R. Wilcox, 64 Conn. 101, 116–118, 29 504, 508, citing In re Hess ManAtl. 303, 25 L. R. A. 90, 42 Am. St. ufacturing Co., 21 Ont. App. 66, 67, Rep. 159, 47 Am. & Eng. Corp. afirmed, 23 Can. S. C. 644.

Mining Corp. Ces 390, 393, 38 20.

has been prepared.79 If, however, the invitation to take shares in the proposed corporation is declined, and the corporation then in contemplation is abandoned, the moving party may purchase the contemplated property for his own account. Though he afterward revives his plan of forming a corporation, and this time successfully solicits the parties who at first refused to join him, he will not be held to have been a promoter from the time he first solicited the subscription, but will be treated as having acquired the property at a time when he was not subject to any fiduciary obligations.80

If the promoter acquired property at a time when he had already entered upon that relation to the corporation, a mere change in the details of the organization of the contemplated company is not an abandonment of the scheme such as to enable the promoter to disavow the trust relation and maintain that the property was thereafter held by him for his individual account. It has been held that the organization of the corporation under the statutes of a state other than that mentioned in the prospectus, is not an abandonment of the originally planned company; that the company organized is still the company mentioned in the prospectus and that it is entitled to the benefit of any purchase made for its account.81

§ 18. The same subject.-An illustrative case.

In Gluckstein v. Barnes, 82 a syndicate had been formed to buy and resell a place of entertainment known as “ Olympia.” The secretary of the syndicate, before the purchase, entered into an agreement with one Gluckstein, reciting that the syndicate proposed to purchase “ Olympia” with a view to its resale to a company to be formed, or to some other purchaser, and stating that if the company was formed, Gluckstein and three other persons named, all of whom were members of the syndicate, had consented to become directors of the proposed company, and that these four persons should be trustees for the syndicate, with power to buy and resell“ Olympia," and to promote and register the intended company. The court said that “where speculators have formed, exclusively of themselves, the directorate of a company to be immediately floated for the purpose of buying the property which those same individuals are associated to acquire and resell” they have taken a decisive step in shaping and limiting the company, and that this is certainly an act of promotion.88 It was claimed that the gentlemen forming the syndicate might have changed their minds and sold “Olympia” to an individual, but the court held that while this was true in the sense that until the registration of the company, and a binding contract with it, the parties were free to change their minds; true in the sense in which every enterprise not actually consummated may be abandoned; still the fact remained that these men intended to sell to the proposed company, that they did carry out that intention, and that the proposed directors stood in a fiduciary relation to the company from the moment that they had been provisionally appointed. 84 § 19. Termination of the relation.

79. Burbank v. Dennis, 101 Cal. 90, 96, 97, 35 Pac. 444, 446.

80. Craig v. Phillips, L. R. 3 Ch. Div. 722, 723, 725.

81. Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eq. 219, 235, 27

Atl. 1094, 1099–1100, 44 Am. & Eng. Corp. Cas. 686. But see post, $ 73, note 14.

82. 1900 App. Cas. 240, 241, 256257, affirming, In re Olympia, 1898, 2 Ch. Div. 153.

The obligations of the promoter ordinarily continue until the capital stock has been issued and the corporation provided with a board of directors capable of protecting its interests.86 The time

83. On this point see also Hich- Hitchcock v. Hustace, 14 Hawaii ens v. Congreve, 4 Sim. 420, 427. 232, 241-242; Hutchinson v. Simp

84. As to this, see also Bagnall son, 92 N. Y. App. Div. 382, 421, 87 v. Carlton, L. R. 6 Ch. Div. 371, Supp. 369 (dissenting opinion); 406 407.

Pietsch V. Milbrath. 123 Wis. 647, 85. Yeiser v. U. S. Board & 656-857, 101 N. W. 388, 391, 102 N. Paper Co., 107 Fed. Rep. 340, 348, W. 342, 68 L. R. A. 945, 107 Am. 46 C. C. A. 567, 52 L. R. A. 724; St. Rep. 1017; Emma Silver Mining

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