Sec. 1004. Personal Liability Of Promoters
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This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Sec. 1004. Personal Liability Of Promoters
Promoters are liable personally upon their contracts,1 and this liability is said in some cases to be in the nature of partnership liability.2 The promoters are not relieved of liability on their contracts because the corporation adopts them, unless there was an agreement to that effect.3 Thus where one in
Rep. 341; 49 S. W. 810; Taussig v. R. R., 166 Mo. 28; 89 Am. St. Rep. 674; 65 S. W. 969. That it is not liable. Weatherford, etc., Co. v. Granger, 86 Tex. 350; 40 Am. St. Rep. 837; 24 S. W. 795; reversing, 23 S. W. 425.
21 Farmers', Bank v. Smith, 105 Ky. 816; 88 Am. St. Rep. 341; 49 S. W. 810.
22 Taussig v. R. R., 166 Mo. 28; 89 Am. St. Rep. 674; 65 S. W. 969.
23 Smith v. Water Works, 73 Conn. 626; 48 Atl. 754.
24 North Sidney, etc., Co. v. Hig-gins (P. C.) (1899). A. C. 263; Abbott v. Hapgood, 150 Mass. 248; 15 Am. St. Rep. 193; 5 L. R. A. 586; 22 N. E. 907; Pennsylvania, etc., Co. v. Hapgood, 141 Mass. 145; 7 N.
E. 22. "The corporation after its organization cannot become a party to the contract even by adoption or ratification of it," Abbott v. Hapgood, 150 Mass. 248, 252; 15 Am. St. Rep. 193; 5 L. R. A. 586; 22 N. E. 907; citing Kelner v. Baxter, L. R. 2 C. P. 174; Gunn v. Ins. Co.. 12 C. B. (N. S.) 694; Melhado v. Ry., L. R. 9 C. P. 503; In re Empress Engineering Co., 16 Ch. D. 125.
25 141 Mass. 145; 7 N. E. 22,
26 150 Mass. 248; 15 Am. St. Rep. 193; 5 L. R. A. 586; 22 N. E. 907.
1 Mosier v. Parry, 60 O. S. 388; 54 N. E. 364.
2 Hyland v. Hollinger, 117 Fed. 216: 54 C. C. A. 248.
3 Roberts, etc.. Mfg. Co. v. Schlick, 62 Minn. 332; 64 N. W. 826; Queen business orders goods, and the business is then incorporated; and the goods are actually delivered to and received by the corporation, the person originally ordering the goods may be held liable.4 If the agreement releases the promoters and purports to bind the corporation, the promoters are not liable, but the corporation which they organize is liable, as where a contract with partners provided that they were to incorporate and that the corporation should be liable on the contract.5 The promoters may be reimbursed by the corporation to the extent of their legitimate expenses on behalf of the corporation.6 Thus promoters of a college, who agree to pay interest on a subscription to obtain it for the college may recover the sums thus advanced.7
City, etc., Co. v. Crawford, 127 Mo. 356; 30 S. W. 163.
4 Henderson Woolen Mills v. Edwards, 84 Mo. App. 448.
5 Chicago, etc., Co. v. Talbotton, etc., Co., 106 Ga. 84; 31 S. E. 809.
6 Hay ward v. Leeson, 176 Mass. 310; 49 L. R. A. 725; 57 N. E. 656.
7 Morton v. College, 100 Ky. 281 35 L. R. A. 275; 38 S. W. 1.
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