against both the corporation and the individual defendants, and recovered the value of the property which he had transferred to the corporation. The Supreme Court reversed the judgment of the trial court, holding that the plaintiff had for eight months had the benefit of the agreement, that the parties could not be restored to their original position, and that the plaintiff could not rescind the transaction and recover the value of the property conveyed, but could only recover the damages resulting from the breach of the agreement.

§ 45. Actions to enforce mechanics' liens.

An interesting question arises out of the scheme under which butter and cheese manufacturing companies are frequently organized, and the attempt of the promoting contractors to secure their payments by means of an action to enforce a mechanic's lien. The scheme is, that the company engaged in the business of erecting such factories, prepares a contract in the form of a subscription agreement under which it agrees to erect a factory at a stated cost. The subscribers each sign for a stated amount and agree to form a corporation to take over the factory and to issue its shares to themselves in proportion to the amount of their respective subscriptions. The agreement sometimes contains a clause to the effect that the subscribers are liable each for himself alone, and not for the others, and this would, without such clause, be the proper interpretation of the agreement.* 42 It has sometimes happened that the contracting promoters, finding themselves unable to collect all of the subscriptions, have attempted by enforcing a mechanic's lien against the property

42. Davis & Rankin, etc., Co. v. Barber, 51 Fed. Rep. 148; Davis & Rankin, etc., Co. v. Jones, 66 Fed. Rep. 124, 14 C. C. A. 30, 32 U. S. App. 32; Chicago Bldg. & M'f'g Co.

v. Graham, 78 Fed. Rep. 83, 23 C. C. A. 657, 41 U. S. App. 680; Davis & Rankin v. Creamery Assoc., 63 Mo. App. 477, 480 and cases cited. Cf. Davis v. Shafer, 50 Fed. Rep.

to secure the unpaid portion of the contract price. The enforcement of such lien would, in effect, compel those subscribers who had paid their subscriptions, to pay the subscriptions of the delinquent subscribers in order to avoid the loss of the entire property. The right to enforce a mechanic's lien should in such case be denied,43 but it has in at least one case been allowed.44

43. Burnap v. Sylvania Butter Co., 12 Ohio C. C. 639; Davis & Rankin v. Creamery Assoc., 63 Mo. App. 477.

44. Davis & Rankin, etc., Co. v. Colusa Dairy Assoc., 55 Ill. App. 591.

CHAPTER IV.

OF CONTRACTS MADE FOR THE CORPORATION BY ITS PROMOTERS.

Section 46. Power of promoter to make contract for corporation.

47. Power of promoter to make contract for corporation after granting of charter.

48. Power of promoter to make contract for corporation after complete organization.

49. Liability imposed upon corporation by act of incorporation, or articles of association.

50. Assumption of liability by the fully organized corporation. 51. Status of promoter's contract pending action of corporation. 52. Status of subscription agreements pending action of corporation.

53. Assumption of liability by agreement of corporation.

54. The act of assumption.

55. Necessity of consideration.

56. Liability of corporation resulting from acceptance of benefit of promoter's contract.

57. Enforcement at law or in equity.

58. Lord Cottenham's Rule.

59. Obligation of corporation to pay for services in procuring contracts accepted by it.

60. Materiality of circumstance that original contract made by less than majority of incorporators.

61. Acceptance must be with full knowledge.

62. Liability of corporation accepting benefit of contract not

contemplating performance by it.

63. The same subject.-Contracts of a continuing nature.

64. The same subject.-Amended contracts.

65. The same subject.-Express adoption.

66. The same subject.-Obligations cast upon assignee by terms

of contract.

67. The same subject. Where corporation is organized to escape existing obligations.

SECTION 68. Liability of the corporation as affected by nature of par

69. Varying written agreement of promoter.

70. Subscription agreements.

71. Notice to promoter as notice to the corporation.

72. Admissions of promoter.

73. Enforcement by corporation of contract made by promoter. 74. Right of corporation to conveyance of property purchased for it by promoter.

of instrument naming projected corporation as

76. Title to property which corporation is expressly organized

77. Liability of promoter on contract made for corporation.
78. Liability of promoter after obligations are assumed by cor-
poration.

79. Enforcement of contract by promoter.

80. Pleading the promoter's contract.

§ 46. Power of promoter to make contract for corporation. The law is well settled that contracts made for a projected corporation by its promoters, are not binding upon it,1 and this has been held to be so even though the promoters, after the organiza

tion of the company, constitute all its stockholders, officers and