which "left open for future agreement a number of points, e. g., the memorandum and articles of association, the borrowing and other powers of the company, and the plaintiffs' percentage of profit, with other matters," the plaintiffs could not recover damages for the breach thereof. The case is not satisfactorily reported. If the percentage of the profits to be paid to the plaintiffs was left open for future determination, the decision that the contract was too indefinite for enforcement was correct. The fact that the memorandum and articles of association and the borrowing and other powers of the company had not been agreed upon, was, however, no reason for denying the plaintiffs' relief in an action for damages. An understanding that the company shall be organized upon a reasonable basis may be implied, and the absence of a definite understanding in regard to matters not constituting a necessary factor in the computation of the value of the shares is no reason for denying relief in damages.29

§ 43. Measure of damages.

The measure of damages in an action for the breach of a contract to organize a corporation to purchase the plaintiff's property and pay for it in shares, is the amount the plaintiff would have gained by the performance of the contract. If the plaintiff's property has been conveyed to the corporation, or to the defendants, the measure of damages is the value of what the plaintiff was to receive. If the plaintiff has not parted with his property, the measure of his damages is the difference between the value of the property which he agreed to convey and the value of what he was to receive under his contract.30

If the shares in which the plaintiff was to be paid are, at the time of the breach, bought and sold in the open market to such

29. See, however, Flaherty V. Cary, 62 N. Y. App. Div. 116, 70 Supp. 951, affirmed without opinion, 174 N. Y. 550, 67 N. E. 1082; Wat

son v. Bayliss, 71 Wash. 499, 128 Pac. 1061.

30. Kirschmann v. Lediard, 61 Barb. (N. Y.) 573.

an extent that their market value has been fixed, this market value forms the measure of the value of the shares. The difficulty with the action for damages is that the shares, have, in most cases, at the time of the breach, no market value, and a market value is, in many cases, never established.

The fact that no market value for the shares was ever established does not defeat the plaintiff's action, or restrict his recovery to nominal damages. In Stanton v. New York & Eastern Railroad Co.,31 the promoters of the defendant corporation had before its organization made a contract with one Hungerford that he should procure for the proposed company certain rights of way and be paid for his services in the shares of the company. The company upon its organization assumed the obligations of this contract, but, being unable to obtain the necessary authority to build a bridge across the Housatonic River, abandoned the enterprise and called in the stock that had been issued. The court below, on the theory that the stock which he was to receive for his services never had any market value, allowed Hungerford only nominal damages. The Supreme Court of Errors, however, held that the reason that this stock never had any market value was that the corporation had decided not to issue it, that it could not take advantage of its own wrong and that Hungerford was entitled to substantial damages.

Where no market value of the shares is established the plaintiff's recovery is measured by the intrinsic value of the shares. He cannot recover their par value.32 He must prove the value of the contemplated properties and assets of the projected corporation, the amount of the bonded and other indebtednesses to which the shares were to be subject, the amount and different classes of shares to be issued, and from these facts the jury must determine

31. 59 Conn. 272, 22 Atl. 300, 21 Am. St. Rep. 110.

32. Beaty v. Johnston, 66 Ark.

529, 52 S. W. 129; Kirschmann v. Lediard, 61 Barb. (N. Y.) 573; Pitt v. Kellogg, 33 N. Y. St. R. 894, 11 Supp. 526.

to the best of their ability the probable value of the shares had they been issued in accordance with the agreement.33 It would ordinarily be impossible, and the plaintiff is not called upon, to prove such value to any degree of certainty, but he must, in order to recover, adduce facts from which some fair estimate of the intrinsic value of the shares can be made.34 A recovery may, of course, be defeated by proof that the contemplated scheme was wholly impracticable, and that the shares could in no event have had any value.35

§ 44. Action to recover property conveyed, or value thereof.

Parties, complaining of the breach of agreements to organize a corporation to take over their properties and deliver a certain part of its share capital in payment, realizing the very obvious difficulty of proving what the shares would have been worth had the corporation been organized in accordance with the agreement, frequently seek some other remedy, or, at least, some other basis of recovery. Where the plaintiff's property has been conveyed to the promoters it is sometimes sought to recover the property conveyed, or to hold the promoters liable for the value thereof, instead of suing them for the rather uncertain value of the shares which they agreed to deliver to the plaintiff.

In Manistee Lumber Co. v. Union National Bank,36 the plaintiff had assigned its claim of $39,000 against an insolvent corporation

33. Crichfield v. Julia, 147 Fed. Rep. 65, 73-74, 77 C. C. A. 297, and cases cited; Beaty v. Johnston, 66 Ark. 529, 52 S. W. 129; Dyer v. Rich, 1 Metc. (Mass.) 180.

34. Curran v. Smith, 149 Fed. Rep. 945, 952-953, 81 C. C. A. 537; Eisenmayer v. Leonardt, 148 Cal. 596, 84 Pac. 43.

It was held in Eisleben v. Brooks, 170 Fed. Rep. 86, 102 C. C. A. 380, that it was error for the trial court

to submit to the jury the question of the value of the shares which should, under the contract, have been delivered to the plaintiff, where the value of such shares depended entirely upon the value of certain mineral rights, and there was no evidence whatever as to the value of such mineral rights.

35. Eisenmayer v. Leonardt, 148 Cal. 596, 84 Pac. 43.

36. 143 Ill. 490, 32 N. E. 449.

to one of the defendants, receiving $11,700 in cash, it being agreed that the defendants should purchase the property and assets of the insolvent corporation, transfer the same to a new corporation to be formed, and upon the tender to it by the plaintiff, on or before May 1st, 1889, of the sum of $11,700 in cash, transfer to the plaintiff stock of the new company to the extent, and in the ratio, that $11,700 should bear to the aggregate cost of the aforesaid property and assets. The defendants subsequently denied their liability to deliver the stock to the plaintiff. The court held that the consideration for the assignment theretofore made by the plaintiff thereupon failed, and that a right of action arose to recover the dividend upon the plaintiff's claim against the insolvent corporation which the defendants had collected from the receivers, less the sum of $11,700 already paid to the plaintiff. In Schneider v. Miller, 87 a firm of which the plaintiff was the surviving partner, being the holder of a lease of certain asphalt lands, agreed with the defendant that the latter should organize a corporation with a capital stock of at least $30,000 to which this lease should be transferred. The defendant agreed to contribute to the corporation, as capital, $10,000 within sixty days and $20,000 in six months. It was agreed that the plaintiff should have two-thirds of the stock of the corporation, and the defendant's firm one-third and certain specified royalties on the product sold. The corporation was organized and the lease assigned to it. The defendant failed to contribute the capital required by the agreement. The court held that the defendant's promise to advance the required capital should be considerd a condition subsequent, and that his failure to perform justified a rescission of the contract and entitled the plaintiff to a re-assignment of the lease.

In Atlanta & West Point R. R. Co. v. Hodnett,38 a deed of a right of way given upon the sole consideration of certain promises

37. 129 N. Y. App. Div. 197, 113 Supp. 399. See same v. same, 132 N.

Y. App. Div. 852, 117 Supp. 287.

38. 36 Ga. 669.

made by its promoters, was set aside upon the failure of the corporation to perform such promises.

In Slide & Spur Gold Mines v. Seymour, 39 the plaintiff was allowed to enforce a vendor's lien for the unpaid purchase price, against property which he had sold to Haldeman, the promoter of the defendant corporation, and which Haldeman had in turn sold to the corporation.

In Curran v. Smith,40 the plaintiffs and defendants entered into an agreement under which the defendants agreed to construct a pipe line and reservoir, and the plaintiffs agreed to pay them therefor $110,000 in cash and one-half of the capital stock of a corporation to be formed to take over the pipe line. The remainder of the stock was to be retained by the plaintiffs. Investigation having shown that the cost of the pipe line would largely exceed, and the water supply fall short of, the estimates, the defendants abandoned the project. The plaintiff's demand for damages was denied on the ground that the value of the shares of the proposed corporation was too uncertain. The plaintiffs were, however, allowed to recover from the defendants the amount of certain expenditures in furtherance of the contract, made by them at the request of the defendants.

41

In Marston v. Singapore Rattan Co.,11 the plaintiff conveyed his business to the defendant corporation under an agreement that the plaintiff should be continued as manager, and should receive $12,000 in the shares of the company. The individual defendants agreed to take stock in the corporation for the moneys owing to them from the plaintiff, and one of the defendants from time to time furnished money and merchandise to the corporation, accepting shares in payment. The plaintiff was, after some eight months, discharged from his position as manager. He brought suit

39. 153 U. S. 509, 38 L. Ed. 802, 14 Sup. Ct. 842.

40. 149 Fed. Rep. 945, 81 C. C. A. 537.

41. 163 Mass. 296, 39 N. E. 1113. See Rogers v. Garland, 19 Dist. Col. 24, 41.