Roberts Manuf'g Co. v. Schlick

• Decision Date: 04 November 1895
• Citation: 64 N.W. 826,62 Minn. 332
• Parties: ROBERTS MANUF'G CO. v. SCHLICK.
• Court: Minnesota Supreme Court

62 Minn. 332

64 N.W. 826

ROBERTS MANUF'G CO.

v.SCHLICK.

Supreme Court of Minnesota.

Nov. 4, 1895.

(Syllabus by the Court.)

1. Where several persons associate themselves for the purpose of promoting and organizing a corporation for the pecuniary profit of its members, and, after contracts have been made for and in the name of the proposed corporation, they voluntarily abandon their purpose, their relation one to the other, as to third parties, if not that of partners, is that of agent and principal, and each will be liable upon all the contracts of the association he has directly or indirectly authorized or ratified.

2. Held, that certain articles of association and the records of the proceedings of the board of directors were properly received in evidence.

3. Evidence considered, and held, that it sustains the material findings of fact and conclusions of law of the trial court to the effect that the defendant is liable on the contract in this case, made in the name of and for a proposed corporation which was never organized.

Appeal from district court, Ramsey county; J. J. Egan, Judge.

Action by the Roberts Manufacturing Company against Frank Schlick, Jr. Judgment was ordered for plaintiff, and from an order denying a new trial defendant appeals. Affirmed.

Henry C. James, for appellant.

Robertson Howard, for respondent.

START, C. J.

Briefly stated, the facts in this case are that certain individuals, named in the second subdivision of the findings of the trial court, on February 28, 1893, associated themselves together for the purpose of forming a corporation, securing a bank charter, and engaging in a general banking business as the Metropolitan National Bank of St. Paul, Minn., under the provisions of the national bank act. They executed articles of association, elected directors and other necessary officers. The defendant was not one of the original associates or promoters, but on April 15, 1893, he was chosen a director to fill a vacancy caused by a resignation, accepted the position, and thereafter acted as a director of the association. The board of directors, through its authorized committee, entered into certain contracts for the association, and in its proposed corporate name, for the lease of a banking office, and for safe and necessary office furniture and fixtures. The contract for the latter was made with the plaintiff on April 19, 1893, by a committee appointed by the board of directors before the defendant became a member. After the performance of this contract by the plaintiff on its part, the promoters voluntarily abandoned their purpose of becoming a corporation and engaging in the banking business, and are not, and never were, a corporation. All of the promoters except the defendant and one other have paid their proportionate share of the amount due to the plaintiff on its contract, and have been released by it from further liability therefor. This action was brought to recover from the defendant the balance of his proportionate share of such amount. The trial court found substantially the foregoing facts, and other evidential facts, and ordered judgment for the plaintiff for the amount claimed; and from an order denying his motion for a new trial the defendant appealed.

1. The plaintiff claims that the defendant is liable as a partner, but we neither discuss nor decide this question, for we are of the opinion that the defendant, in any view of the case, is liable upon the general principles of contract and agency. Where individuals associate themselves for the purpose of promoting and organizing a corporation for the pecuniary gain of its members, and act as an association by electing directors and other officers, through whom contracts are made for and in the name of the proposed corporation, and they afterwards abandon their purpose to form a corporation, their relation, one to the other, as...