Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/100

 § 108.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VI. understanding will they render themselves personally liable to persons defrauded and injured thereby. 1 § 106. One thing further as to the relationship between the promoters, and persons agreeing to take shares and tioiTof* 1Ca " making deposits. Such persons enter into such an deposits. agreement and pay their preliminary deposits, ex- pecting that a corporation, with the nature and general pur- poses of which they have been made acquainted by the pro- spectus and representations of the promoters, will be organized ; and they have contracted and paid their money with this spe- cial scheme in view. Clearly, if the promoters apply the funds so deposited in any other way than that which the subscribers were justified in contemplating, the subscribers' moneys have been misapplied, and each of them has a plain claim to recover back such funds from any promoter responsible for their mis- application. Such a misapplication would be a conversion of the funds of the subscribers, for which wrong an appropriate action would lie. It would seem, moreover, that any depositor should have a remedy, not only to obtain damages from the promoters for any misapplication of deposits, but, in cases where justice could not otherwise be done, that a depositor might com- pel the promoters to apply such funds to the furtherance of the scheme for which they were subscribed, at least so far as it would be practicable for a court of equity to enforce such ap- plication. -__^-^ — . 107. V7e~come now to the relations between a person who , *2/* v Subscrip- has agreed to take shares in the stock of the future '<*0l' tions gen- -t~ eraiiy'en- corporation, and that corporation itself when organ- l*mt*r» foroeable ■ • by the cor- lZeu. w°henor- § 108. First, i n regard to enforcing the agreement ganized. to subscribe for shares. This was an agreement be- tween the parties thereto to do a certain thing, to wit, to sub- scribe for shares in the stock of a certain corporation when or- ganized ; that is, it was an agreement to invest a certain amount of capital in a certain manner, to be used for a certain purpose. If we regard the corporation when formed as a distinct person, a legal difficulty will at once arise. This "person" was not a contrary to public policy, if not ac- tually tainted with fraud. Morgan v. Struthers, I3l U. S. 246. 80 i See Hall's Case, L. R. 5 Ch. 707; Getty v. Devlin, 70 N. Y. 504.