Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/78

 § 85.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. V. rived from his interest in the subsequent sale from the promot- ers to the corporation. § 84«. It has recently been held " a fraud for promoters to undertake to decide for the future stockholders in the corpo- ration to be organized that one third of the whole capital stock of that corporation is a fair remuneration for their services as promoters, to issue one third of the capital stock to themselves as such remuneration, and then to invite the public to subscribe to the stock of the corporation, without disclosing the fact to the subscribers and without getting their consent to the pay- ment of that remuneration." Also: " Payment to promoters of remuneration for their services is not made valid by a vote passed by the corporation, when the corporation is in the sole control of the promoters before the capital has been issued to the public." In such case the corporation, and not its receiver is the proper party to bring suit ; and it may follow the shares received by the promoters, or the proceeds thereof, or may recover damages. 1 § 85. It is probably true, as a general legal proposition, that - D. , ., when A. makes a contract for B., who is not as vet Right of. J promoters A.'s principal, while A. becomes responsible from to indem-. /, , « r> i i nityfrom the outset for the performance or the contract made poratkm by him, B., by assuming the contract as principal, subse- therebv assumes to indemnify A. from anv liability quently • ■/•/•/ formed. under the contract towards the other contracting party. This agreement to indemnify would be implied, and B. would become principal as from the time of making the con- tract. Where B., however, who subsequently as principal assumes the contract made by A. as agent, is a corporation which was not organized at the time of making the contract, apparent difficulties arise. It would seem illogical to imply — and the discussion at present is confined to cases where no ex- press assumption of liability is made — any agreement on the part of the corporation, which at the time of making the con- tract could have had no agent, to indemnify any one who at that time attempted to act on its behalf. Nevertheless, as under such circumstances the corporation would be entitled to the full 1 Hay ward v. Leeson, 176 Mass. I language of the court by Judge Lor- 310. The passages quoted are the | ing. 58