Abbott v. Hapgood

150 Mass. 248 | Mass. | 1889

Knowlton, J.

According to the terms of. the report in this case, if the demurrer should have been sustained on grounds which could have been removed by amendment, the plaintiffs are to be permitted to amend. The defendants have made no point upon the use of the present tense instead of the past tense in the allegation in the writ as to the partnership of the plaintiffs, and if that is material it may be corrected by amendment. In each count of the declaration, after alleging that there was a valuable consideration for the defendants’ contract, the plaintiffs aver that the contract was reduced to writing, and set out as the contract a writing which shows no consideration nor- mutuality, but merely an undertaking on one side. To.state the contract truly, they should set out in each count their own" agreement, which constituted the consideration for the agreement made by the defendants.

The substantive grounds of defence rest upon the rulings and refusals to rule in regard to the effect of the evidence. ' There was an attempt to recover under the contracts now before us by a suit brought in the name of the Penn Match Company, Limited, against these defendants. In that case the plaintiff was alleged to be a corporation, and the hearing and decision were upon a demurrer which admitted that allegation to be true. If we assume that the limited partnership organized under the laws of Pennsylvania was so far an .entity separate from the persons who were members of it that it could sue and be sued in this Commonwealth as a corporation can, it is quite clear that it was not a party to the contracts declared on. Penn Match Co. v. Hapgood, 141 Mass. 145. If a contract is made in the name and for the benefit of a projected corporation, the corporation after its organization cannot become a party to the contract, even by adoption or ratification of it. Kelner v. Baxter, L. R. 2 C. P. 174. Gunn v. London & Lancashire Ins. Co. 12 C. B. (N. S.) 694. Melhado v. Porto Alegre, New Hamburgh, Brazilian Railway, L. R. 9 C. P. 503. In re Empress Engineering Co. 16 Ch. D. 125.

Upon the facts reported in the present case, the defendants as well as the plaintiffs must have understood that the limited partnership was only projected, and that the plaintiffs, acting jointly as individuals or as general partners, constituted the only party who could contract with the defendants in the manner proposed. It is evident that both parties intended to enter into binding contracts. As recited in the report, for the purpose of carrying out their agreement to form a limited partnership, “ and in the name of and for the benefit of the projected company, the plaintiffs applied to the defendants, who made the contracts in question, and the plaintiffs made known to the defendants that the projected company would proceed with its organization, and would cause a factory to be built for it, only in case they could make a contract with the defendants to furnish the machines.”

We are of opinion, in view of the facts known to both parties, that the plaintiffs must be deemed to have been jointly contracting in the only way in which they could lawfully contract, and that they assumed the name “ Penn Match Company, Limited,” as that in which they chose to do business in reference to the projected limited partnership until their organization should be completed, and they should turn over the business to the new company, which would be composed of themselves in a new relation. This seems to be warranted by the language of the report, and entirely consistent with their purpose made known to the defendants; and in this way only can effect be given to their acts.

The judgment in the former suit is no bar to this action, for that suit was brought by a different plaintiff.

On the subject of damages, the report does not sufficiently state the evidence to enable us fully to determine the rights of the parties. As we understand the rule laid down by the presiding justice, that “ the only damages which can be recovered are such as the plaintiffs themselves have suffered independently of their membership of the association,” we are of opinion that it is too narrow. In the view which we take of the agreement, the plaintiffs contracted for articles to be delivered to themselves. They informed the defendants that they had agreed to organize a limited partnership, of which they were to be the sole members, and that they made the contracts to enable them profitably to carry on business in their new organization. By reason of the defendants’ breach of contract, the plaintiffs were unable to turn over to the new company the property which they should have received for that'purpose, and they have been unable to establish that company and start it in its work under such favorable auspices, and with such an equipment for the transaction of a profitable business, as if the defendants had performed their contracts. The only damages for which the defendants are liable to any one must be recovered in this action, and, inasmuch as the machines could not be procured in the market, we are of opinion that the parties must be presumed to have contracted in reference to the declared purpose for which they were to be furnished, and that that purpose may be considered in assessing the damages. Somers v. Wright, 115 Mass. 292. Townsend v. Nickerson Wharf Co. 117 Mass. 501. Manning v. Fitch, 138 Mass. 273. Whitehead & Atherton Machine Co. v. Ryder, 139 Mass. 366. Cory v. Thames Ironworks Shipbuilding Co. L. R. 3 Q. B. 181. Portman v. Middleton, 4 C. B. (N. S.) 322. McHose v. Fulmer, 73 Penn. St. 365.

We do not intimate that the plaintiffs are to receive any damages as members of the limited partnership, but only that the damages which they suffered, if any, by reason of the defendants’ preventing them from successfully establishing and fitting out a business to be conducted by them as a limited partnership may be recovered. The mere fact that they arranged to conduct their business by a limited partnership under the statute of Pennsylvania, does not deprive them of the rights which they then had in the business, nor of the advantages which properly belonged to it. The value of the articles contracted for may be estimated in reference to their intended use in the business for which the defendants were to furnish them.

The plaintiffs are to have leave to amend their writ and. declaration as they shall be advised, arid the case is to stand for trial.

So ordered.