The general principles governing an agent's liability for contracts made on behalf of his principal are subject to an exception in the case of public agents. It is a rule of presumption that a contract made by a public agent, as such, does not make him personally liable though made under such circumstances or so executed that he would be liable if he were a private agent.29 This presumption is applicable to scaled instruments,30 and negotiable instruments.31 The distinction between public agents and private agents is based on policy, and in case of officers of municipalities capable of acquiring rights and incurring liabilities under contracts, the exception is held inapplicable, and the same rules are enforced as in the case of private agents.32 The rule distinguishing public agents from private agents is one of presumption only, and if it is clear that the intention was to make a contract on the personal credit of a public agent, he will be bound.33
77 Att. 869, 34 L. R. A. (N. S.) 440, 138 Am. St. Rep. 1104.
24 'Davidson v. Dallas, 8 Cal. 227, 247.
25See Manice v Manice, 43 N. Y. 303, 314, 387.
26 It would be possible to say that the note was in effect payable to the unincorporated association, that is, all its members jointly, but it seems clear that this is not the intention of the parties, the form of the instrument being probably dictated by a desire to avoid the difficulties connected with an instrument payable to a large changing body.
27Davis v. Garr, 6 N. Y. 124, 55 Am. Dec. 387.
28 Negotiable Instruments Law, Sec. 8 (6), provides that an instrument may be drawn payable to the order of the holder of an office for the time
29 Macbeath v. Haldimand, 1 T. R. 172; Palmer v. Hutchinson, 6 App. Cas. 619; Parks v. Ross, 11 How. 362, 13 L. Ed. 730; Dwindle v. Henriques, 1 Cal. 387; Ogden v. Raymond, 22 Conn. 379, 58 Am. Deo. 429; Sparta School Township v, Mendell, 138 Ind. 188, 37 N. E. 604; Simonds v. Heard, 23 Pick. 120, 34 Am. Dec. 41; Reed v.
Contracts are frequently made by promoters on behalf of corporations which it is expected will be organized. Often under the terms of these contracts if the corporation were already in existence, the contract would be that of the corporation and not of the promoter. But as it is impossible for the corporation to contract before it comes into existence, the contract is treated as that of the promoter even though the language of the contract is appropriate for a contract by the corporation.34 Not only it is impossible for the corporation to become liable before it comes into existence, but its mere incorporation will not of itself charge it with liability for contracts which prior thereto promoters purported to make in its behalf.35 The corporation, however, may enter into contracts based on agreements previously made; thus subscriptions to stock in a corporation thereafter to be formed, amount to offers to the corporation which subsequently may be accepted by it;36 though, until acceptance, the subscriber may withdraw.37 The principle governing other contracts intended to be made on behalf of the future corporation is the same. Though it cannot when formed ratify the action of the promoter since it is an essential of ratification that the principal should have been in existence and capable of contracting at the time the agent acted,38 the corporation either by formal action, or without such action if the contract is of a sort which requires no formality, may become bound as a party to the contract by adoption or novation.39
Conway, 26 Mo. 13; Hammarskold v. Bull, 11 Rich. L. 493.
30 Macbeath v. Haldimand, 1 T. R. 172; Hodgson v. Dexter, 1 Cranch, 345, 2 L. Ed. 130; Knight v. Clark, 48 N. J. L. 22, 2 Atl. 780, 67 Am. Rep. 534.
31 School Town of Monticello v. Kendall, 72 Ind. 01, 37 Am. Rep. 139; Hodges v. Runyan, 30 Mo. 491. See, however, Wing v. Glick, 68 Ia. 473, 9 N. W. 384, 41 Am. Rep. 118; Fowler v. Atkinson, 6 Minn. 578; Trustees of Schools of Cahokis v. Rautenberg, 88 111. 219, where it was held that unless the body of a negotiable instrument contained some indication that the obligation was intended as an official one, the rules applicable to private agents apply and that the addition of the office of the public agent to the signature would not free him from liability.
32Hall v. Cockrell, 28 Ala. 507; Brown v. Bradlee, 166 Man. 28, 30
N. E. 85, 15 L. R. A. 509, 32 Am. St. Rep. 430; Simonds v. Heard, 23 Pick. 120, 34 Am. Dec 41; Providence v. Miller, 11 R. I. 272, 23 Am. Rep. 453.
33 Auty v. Hutchinson, 6 C. B. 266; Brown v. Bradlee, 156 Mass. 28, 30 N. E. 85, 15 L. R. A. 509, 32 Am. St. Rep. 430; Brown v. Rundlett, 15 N. H. 360; Nichols v. Moody, 22 Barb. 611; Walker v. Swartwout, 12 Johns. 444, 7 Am. Deo. 334; Osborne v. Kerr, 12 Wend. 179; Hanmarskold v. Dull, 9 Rich. Law, 474.
34 Kelner v. Baxter, L. R. 2. C. P. 174; Weiss v. Arnold Print Works, 188 Fed. 688; Hersey v. Tully, 8 Col. App. 110, 44 Pac. 854; Cannody v. Powers, 60 Mich. 26, 26 N. W. 801; O'Rorke v. Geary, 207 Pa. 240, 56 Atl. 541. See also Tanner v. Sinaloa Land etc. Co., 43 Utah, 14, 134 Pac. 586, Ann. Cm. 1916 C. 100. Cf. Foitel v. Dreyfous, 117 La. 756, 42 So. 259.
35 Kelner v. Baxter, L. R. 2C. P. 174; United German Silver Co. v. Bronson, 92 Conn. 266, 102 Atl. 647. In Pen-nell v. Lothrop, 191 Mass. 357, 359, 77 N. E. 842, speaking of a contract prepared on behalf of the corporation before its incorporation, the court said: "Such a contract, as between the corporation and any other party, would have its inception when entered into by the corporation, and would require, to make it valid, the existence of all such elements as are necessary in other contracts." 36Athol Music Hall Co. v. Carey,
116 Mass. 471.
37 Bryant's Pond Steam-Mill Co. v. Felt, 87 Me. 234, 32 Atl. 888, 33
L. R. A. 593; Hudson Real Estate Co.
v. Tower, 156 Mass. 82, 30 N. E. 465,32
Am. St. Rep. 434, 161 Mass. 10, 36
N. E. 680, 42 Am. St. Rep. 37ft; and see supra, Sec. 118. 38 See supra, Sec. 278. But see Stanton v. New York Ac. R. Co., 59 Conn.
272, 22 Atl. 300, 21 Am. St. Rep. 110. 39 Whitney v. Wyman, 101 U. S. 392,
25 L. Ed. 1060; In re Ballou, 215 Fed.
810; Moore etc. Co. v. Towers etc. Co., 87 Ala. 206, 6 So. 41, 13 Am. St. Rep. 23; United German Silver Co. v. Bronson, 92 Conn. 266, 102 Atl. 647; Chicago Building & Mfg. Co. v. Talbot ton Creamery & Mfg. Co., 106 Ga. 84, 31 S. E. 809; Louis Cook Mfg. Co. v. Randall, 62 Ia. 244, 17 N. W. 507; Belfast v. Belfast Water Co., 115 Me. 234, 98 Atl. 738, L. R. A. 1917 B, 908; Mo-Arthur v. Times Printing Co., 48 Minn. 319, 51 N. W. 216,31 Am. St. Rep. 653; The Paxton Cattle Co. v. First Natl. Bank, 21 Neb. 621, 33 N. W. 271, 59 Am. Rep. 852; Oakes v. Cattaraugus Water Co., 143 N. Y. 430, 38 N. E. 461, 26 L. R. A. 544; Seymour v. Spring Forest Association, 144 N. Y. 333, 39 N. E. 365, 26 L. R. A. 859; Morgan v. Bon Bon Co., 222 N. Y. 22, 118 N. E. 205; Schreyer v. Turner, etc., Co., 29 Oreg. 1, 43 Pac. 719; Huron Printing Co. v. Kittleson, 4 S. Dak. 520, 57 S. W. 233; Pittsburg, etc., Mining Co. v. Quintrell, 91 Tenn. 693, 20 S. W. 248; Weatherford, etc., Ry. Co. v. Granger, 86 Tex. 350, 24 S. W. 795, 40 Am. St. Rep. 637; Buffington
The cases generally speak of the obligation of the corporation as created by adoption, but novation seems the more accurate term. If the assent of the corporation to the bargain is merely an adoption of it, the promoter apparently must still remain liable.40 But it seems more nearly to correspond with the intentions of the parties to suppose that when the corporation assents to the contract, it assents to take the place of the promoter - a change of parties to which the other side of the contract assented in advance. There would then be a novation which would discharge the promoter at the same time the corporation assumed the obligation.41