The plaintiff brought this action to recover |3,000, with interest, alleged to be due upon a contract. It appears from the record that the plaintiff, Ole H. Petersen, Peter A. H. Franklin, Haris H. Petersen, G. E. Palen .and Sarah J. Vance were the promotors and incorporators of the defendant company. The articles of incorporation, which were signed by the promoters, were dated October 39, 1888, but were neither sworn to nor filed as required by law before December 3, 1888. The plaintiff, Ole H. Petersen and Sarah J. Vance, on the same day, December 3, 1888, conveyed by deed to the corporation certain mining claims, which were described in the articles of incorpora
On the same day, December 3, 1888, on which the articles of incorporation and the deed were executed, and these arrangements made, the contract which has given rise to this controversy, was entered into, by the terms of which, and in consideration of the conveying of the mining claims to the corporation, the plaintiff was to be paid out of the first sale of the 50,000 shares of working capital 35 per cent, of the proceeds until he had received $3,000. There appears to be no question that the working capital was sold for sufficient to pay the plaintiff’s claim in accordance with the terms of the contract.
Peter A. H. Franklin was named in the articles of incorporation as president of the company, and the contract was executed by the company through him. Palen was not a resident of Utah, and there is some evidence tending to show that Franklin was acting as his agent, but whether he had authority to so act is not very clear. There is also evidence - tending to show that Franklin informed Palen about the contract, but the exact date on which this was done does not appear. After the organization was completed, the corporation retained the property, conveyed by the deed, but failed to pay the plaintiff’s claim under the contract. At the trial judgment
The most important question presented is whether “promoters,” or persons who contemplate organizing a corporation can make contracts which will bind it after it becomes a legal entity.
It is contended by counsel for the appellant that a contract made for a corporation, before it has an actual existence, is not enforcable by or against it. This contention is too broad. It indicates that a corporation cannot, even in the exercise of its powers to make contracts, accept and adopt a contract made for it, by the promoters, before its existence as an entity. The legitimate sequence of this would be that a corporation, upon full and complete organization under the statute, might accept and adopt such a contract, receive and retain the benefits thereof, and at the same time be absolved from its burdens. We have no sympathy with a doctrine that would lead to such results — that might be employed as an instrument of fraud and injustice to the unwary.
It may be assumed as true that promoters and incorpor-ators have no standing in any relation of agency, since that which has no existence can have no agent, and in the absence of any act authorizing them so to do, can enter into no contract, nor transact any business which shall bind the proposed corporation after it becomes a distinct entity, but notwithstanding this be true, still such promoters and incorporators may, acting in their individual capacities, make contracts in furtherance of the incorporation and for its benefit, and, after the incorporation comes into being as an artificial person under the forms of law, it may, at least under the weight of American authority, accept and adopt such contracts, and thereupon they be
Where a contract is made by and with promoters, which is intended to inure to the benefit of a corporation about to be organized, such contract will be regarded as in the nature of an open offer which the corporation, upon complete organization, may accept and adopt or not as it chooses, but if it does accept and adopt and retain the benefits of it, it cannot reject any liability under it, but in such case will be bound to perform the contract, upon the principle that one who accepts and adopts a contract which another undertook to perform in his name and on his behalf, must take the burden with the benefit.
In Morawetz on Priv. Corp. Sec. 548, it is said: “A corporation may, however, make itself responsible for such acts and contracts by subsequently adopting .them. The liability of the corporation under these circumstances does not rest upon a supposed agency of the promoters, and a ratification of their acts, but upon the immediate
So, in Taylor on Priv. Corp., Sec. 87, the author says: “It may be said, generally, that a corporation when organized, in the absence of ratification on its part, is not responsible for the acts nor bound by the contracts of its promoters, unless made so by its charter, which it has accepted and thereby agreed to. But this is not identical with the proposition that the corporation may ignore the engagements entered into by its promoters when it has had the benefit of them. It cannot be said that the promoters were the agents of the corporation; but, nevertheless, the corporation may adopt such acts of its promoters intended for its benefit, and may ratify such of their contracts made on its behalf as would have been within the powers of the corporation after its organization; and this it may do notwithstanding that it was not organized when those contracts were made. And if it ratifies their contracts, then, in the absence of express agreement with the other contracting party, the corporation must be held to have assumed the liabilities which would have attached to it had its promoters been its agents at the time when they contracted on its behalf.”
In Alger on the Law of Promoters and the Promotion of Corporations, Sec. 206, it was said: “The acceptance or adoption may be implied from the acts of the corporation, — ‘acts from which you can infer, and from which you
See also Secs. 202-205, 208, Id. Cook on Stock and Stockholders, Sec. 707; Thomp. Corp., Sec. 5289; Redfield on Railways, p. 16; Grape Sugar & Vinegar Mfg. Co. v. Small, 40 Md. 395; Seymour v. S. F. C. Assn. 144 N. Y. 333; Swisshelm v. Swissvale Laundry Co. 95 Pa. St. 367; Whitney v. Wyman, 101 U. S. 392; Pittsburg, etc. Mining Co. v. Quintrell, 91 Tenn. 693; Huron P. & B. Co. v. Kittleson, 4 So. Dak. 520; Little Rock & Ft. S. R. R. Co. v. Perry, 37 Ark. 164; Paxton Cattle Co. v. First Nat. Bank, 21 Neb. 621; McDonough v. Bank, 34 Tex. 310; Bruner, receiver, etc., v. Brown, 139 Ind. 600; Furniture & Carpet Co. v. Crawford, 127 Mo. 356; Frankfort & St. Co. v. Churchill, 6 T. B. Mon. 428; Rogers v. N. Y. & L. L. Co. 134 N. Y. 197; Schrever v. Turner F. M. Co., 43 Pac. 719; Bell’s Gap Ry. Co. v. Christy, 79 Pa. St. 54; Pratt v. The Oshkosh Match Co., 89 Wis. 406; McArthur v. Times Printing Co., 48 Minn. 319; Wood v. Whelen, 93 Ill. 153.
Having thus considered the principles of law applicable to promoters and incorporators of corporations, and involved in the case at bar, it remains to be seen whether, the corporation, by acts and acquiescence, or in any other manner, has accepted and adopted the contract in question, cum onere, and is therefore liable to the respondent.
Thus in consideration of “having added to said incorporation certain valuable mining claims,” the respondent was to be paid ont of the sale of the working capital 35 per cent, of the proceeds, until he had received $3,000 in addition to the stock already standing in his name. This agreement was made on December 3, 1888, the same day on which the incorporation was completed, and on which the property referred to was conveyed to it by deed. The agreement was executed for the company by Peter A. H. Franklin, who, on the same day, became its president. Which of the three instruments, the articles of incorporation, the deed, or the contract, was executed first does not appear, but it is shown that they were all completed onc the same day. Thereupon the corporation, as appears, took possession of the property conveyed to it by the deed, and referred to in the contract, as a consideration for the $3,000 to be paid to the respondent, and has retained it, with the benefits accruing therefrom, during all these
To permit the corporation to retain possession of the property and its proceeds, without paying the agreed price therefor, would be subversive of every principle of justice.
In Seymour v. S. F. C. Ass’n., 144 N. Y. 333, where similar questions were considered, it was said: ‘ ‘ That no formal resolution of purchase was produced from the minutes of the corporation, does not prove that there was none, and if, in fact, there was none, because the agreement to that effect preceded by a day or two the actual filing of the corporate certificate, at least the corporation ratified the proposed contract, for it accepted the deeds, took possession of the property, has sold it in burial lots, has kept it and its proceeds for more than thirty years, and put utterly out of its power by its own acts any possible restoration. It must, therefore, pay or its possession becomes a robbery.”
The appellant complains of the charge of the court to
We have on many occasions said that such exceptions are too general and cannot be considered by us, unless the entire charge is erroneous, which is not the case here.
Nor did the court err in refusing to give the requests of the appellant to the jury. They were not proper under the circumstances disclosed by the record.
The appellant invoked the doctrine of ultra vires, but that doctrine can not be applied to such a case as this.
We find no reversible error in the record.
Judgment affirmed with costs.