Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/71

 CHAP. V.] PROMOTION OF A CORPORATION. [§ 78. templated company, receiving for the use of their names two hundred paid-up shares and a promise of indemnity. The prospectus, with their names attached, was published in the Times. It was held that a jury was warranted in inferring that a person who contracted for his passage with the secretary did so on the faith of these representations in the prospectus ; and that such a person could recover damages from the defend- ants, the representations proving untrue. 1 § 78. One other statement in regard to the liability of pro- moters may be ventured. When a promoter makes a contract merely as agent for the other promoters, contracting who have not as a matter of fact authorized him to ^™™e con- make the contract in question, but who have acted tra. ct binds . . . or is in such a way as to justify others in believing that adopted by such authority had been given, so that the party moters P or~ contracting with the promoter is enabled to hold ration* 1 ' " the other promoters on the contract, he cannot hold the promoter personally who contracted merely as agent ; not on the contract, for the contract purported to bind the other promoters only, and not on the breach of any implied warranty of authority, for the other promoters were in fact bound by the contract. 2 This, in practice, would prevent the party with whom the promoter contracted as agent from choosing whom to sue. It would not be competent for him to proceed against the agent on the ground that the agent had actually no author- ity to make the contract ; for that is something with which such contracting party has nothing to do, provided he can hold the principals. His interest is in no way affected, as he gave credit to the principals, not to the agent ; and as long as the very persons to whom he gave credit are bound to him, what more can he claim? All else is merely a matter to be settled between the agent and his principals. Moreover, when promoters adopt acts of one of their number, in regard to which no liability would otherwise have attached to them, they as- 1 Collingwooclu. Berkeley, 15 C. B. N. S. 145; see also Maddick v. Mar- shall, 17 C. B. N. S. 829; Lake v. Argyll, 6 Q. B. 477; Wood v. Argyll, 6 M. & G. 928. For the present law of England in this matter see Di- rectors' Liability Act 1890, 53 and 54 Vic. ch. 64. 2 See Proposition IV., §75. 51