Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/79

 H CHAP. V.] PROMOTION OF A CORPORATION. [§ 86. benefit of the contract made by its promoter, and, as towards the corporation, the promoter would be charged with the duties and liabilities of an agent, it seems no more than equitable that an agreement should be implied on the part of the corporation to indemnify the promoter, in so far as the corporation has vol- untarily accepted the benefit of the contract, against any lia- bility towards the other contracting party. 1 This would hold good, however, only in those cases where the original contract as made by the promoter would not have been ultra vires the corporation after its organization. 2 The corporation, moreover, could expressly agree to assume any liability incurred by the promoter contracting on its be- half ; but such an agreement, were it other than the law under the circumstances would imply, would be a new contract, and would have to be supported by a valid consideration and be within the powers of the corporation. § 86. In England by statute many companies are required to pav the expenses which are incurred in their for- r. , . t. , Liability of mation ; and when such a statute applies, a member corpora- of the company will be entitled to be paid for his cmnpen- trouble and time in forming it. 3 In the absence, sat ® P ro " ° « — ■ ' moters. however, of any statute, it is the law thro ughout_ the United States tha t the corporation subsequently formed is no t liable to compe nsate its promoters for their services in form ing it and p rocuring subscriptions to its stock ** for, aside from the technical difficulties in the way arising from the fact that the corporation was not incorporated at the time when the services were rendered, it is thought reasonable to regard such services as having been given in view of the benefit expected from the organization of the company. 4 If, however, after its incorpo- ration, the corporation recognizing the services of its promoters expressly promises to pay for them, an action will lie against 1 See Parsons v. Spooner, 5 Hare, 102. 2 Thus a corporation is not liable to repay money advanced for the pur- pose of influencing the legislature to incorporate it. Marcband v. Loan and Pledge Association, 26 La. Ann. 389. See, generally, also §§ 87-90. 3 Carden v. General Cemetery Co., 5 Bing. N. C. 253; see In re Bramp- ton v. Longtown R'y Co., L. R. 10 Ch. 177; Hitchens v. Kilkenny R'y Co., 9 C. B. 536. 4 Rockford Rock Island, etc., R. R. Co. v. Sage, 65 111. 328; Bell's Gap R. R. Co. v. Christy, 79 Pa. St. 54; New York and New Haven R. R. Co. v. Ketcbum, 27 Conn. 171; Hall v. 59