Bankers' Trust & Audit Co v. Farmers' & Merch.S' Bank, (No. 5498.)

• Decision Date: 16 December 1926
• Docket Number: (No. 5498.)
• Parties: BANKERS' TRUST & AUDIT CO. v. FARMERS' & MERCHANTS' BANK.
• Court: Georgia Supreme Court

163 Ga. 352

136 S.E. 143

BANKERS' TRUST & AUDIT CO.

v.FARMERS' & MERCHANTS' BANK.

(No. 5498.)

Supreme Court of Georgia.

Dec. 16, 1926.

(Syllabus by the Court.)

A contract entered into by a duly organized bank for the future payment of a salary to its fiscal agent is lacking in consideration, in so far as the recited consideration relates to "services already rendered and to be rendered in promoting and organizing said bank."

It cannot be said, from the facts disclosed, that a recited consideration in a contract based upon services already rendered and to be rendered in promoting and organizing a bank contravenes public policy.

The contract described in the third certified question is lacking in mutuality, because of the provision that the fiscal agent, one of the parties to the contract, may at any time terminate the contract, should it "become dissatisfied with the management and operation of the said bank."

(Additional Syllabus by Editorial Staff.)

Certified Questions from Court of Appeals.

Action by the Bankers' Trust & Audit Company against the Farmers' & Merchants' Bank. Judgment for defendant, and plaintiff brings error. On certified questions by the Court of Appeals. Questions answered.

Clement & Campbell, of Monticello, for plaintiff in error.

R. A. Harrision and H. F. Griffin, Jr., both of Jeffersonville, and Jones, Park & Johnston, of Macon, for defendant in error.

GILBERT, J. [1] The Court of Appeals certified the following question:

"(1) Is a contract entered into by a duly organized bank for the future payment of a salary to its fiscal agent lacking in consideration, in so far as the recited consideration relates to 'services already rendered and to be rendered in promoting and organizing said bank'?"

The general rule is that a past consideration will not support a subsequent promise. 1 Elliott on Contracts, § 213; Shealy v. Toole, 56 Ga. 210; Willingham Sash, etc., Co. v. Drew, 117 Ga. 850, 45 S. E. 237; Dutton v. Faulk, 159 Ga. 736 (2), 126 S. E. 718. And see Powell v. Georgia, etc., Ry. Co., 121 Ga. 803, 49 S. E. 759; Neal v. Stanley, 17 Ga. App. 502, 87 S. E. 718. To this general rule there are some exceptions, depending upon the facts in each instance. In Hudson v. Hudson, 90 Ga. 581, 16 S. E. 349, it was held that:

"Ordinarily, where one renders in behalf of another valuable services, which are accepted by the latter, the law raises in favor of the former an implied promise to pay for the same, although no formal or express contract to pay has been made."

That rule does not apply in this case, for two reasons: First, from the question propounded it does not appear that the services were rendered to the banking corporation. At the time the services were rendered there was no such banking corporation. Its entity had not been created; and not having been created, and not being in existence, it could incur no liability nor receive any benefits. If the services rendered were of benefit to any one, it must have been to those promoting the project of forming the banking corporation.

A corporation Is not liable for services performed or expenses incurred prior to its organization. Rockford, etc., R. Co. v. Sage, 65 Ill. 328, 16 Am. Rep. 587; N. Y., etc., R. Co. v. Ketchum, 27 Conn. 170. In the latter case it was said:

"It is soon enough for corporate bodies to enter into contracts incumbering their property, when they are duly organized according to their charters and have their chosen and impartial directors to conduct their business."

Compare Franklin Fire Ins. Co. v. Hart, 31 Md. 59; Safety, etc., Ins. Co. v. Smith, 65Ill. 309; Anderson v. Timberlake, 114 Ala. 377, 22 So. 431, 62 Am. St. Rep. 105; Van Hummell v. International, etc., Co., 23 W. L. R. (Manitoba) 248, Ann. Cas. 1913E, 1163; Shattuck v. Eastman, 94 Mass: (12 Allen) 369. And see the elaborate annotation to the case of Moore, etc., Hdw. Co. v. Towers Hdw. Co., 87 Ala. 206, 6 So. 41, in 13 Am. St. Rep. 28; 7 R.C. L. 74, § 54; 14 C. J. 282, § 332 et seq.

In some cases it has been held that, where services are performed by promoters in the organization of a corporation, such services being beneficial to the corporation, and such benefits having been accepted by the corporation with the knowledge and consent of all stockholders, there was an implied promise on the part of the corporation to pay for such benefits the reasonable value of such services. They would seem, however, to imply an obligation based upon a quantum meruit. The suit in the present case is based upon contract, and not upon quantum meruit. It follows, therefore, that the petitioners must recover on a contract with the corporation, based upon a valid consideration. Under the facts stated in the question, the case seems to fall under the general rule that a past consideration will not support a subsequent promise.

Secondly, the question concerns (1) services already rendered and (2) services to be rendered—-"in promoting and organizing said bank." In other words, both the services already...