Battelle v. Nw. Cement & Concrete Pavement Co.

• Decision Date: 13 June 1887
• Citation: 37 Minn. 89,33 N.W. 327
• Court: Minnesota Supreme Court
• Parties: BATTELLE v NORTHWESTERN CEMENT & CONCRETE PAVEMENT CO.

37 Minn. 89

33 N.W. 327

BATTELLEvNORTHWESTERN CEMENT & CONCRETE PAVEMENT CO.

Supreme Court of Minnesota.

June 13, 1887.

(Syllabus by the Court.)

While a corporation is not bound by engagements made on its behalf by its promoters, before it is organized, it may, after it is organized, make such engagements its contracts by adopting them; and this it may do precisely as it might make similar original contracts, formal action of its board of directors being necessary only where it would be necessary to a similar original contract.¹

A contract between a director and the corporation is not voidable merely because made with a director, when all interested in the corporation, officers, directors, and stockholders, not only know of but consent to it, and the property acquired by it is kept and used by the corporation.

Appeal from district court, Hennepin county.

Action on an alleged verbal contract to pay certain promissory notes given by plaintiff. Plaintiff on January 16, 1884, purchased of one Canney certain personal property, then used by said Canney in the business of laying concrete pavements, and also at the same time purchased of him the good-will of said business, and also purchased of him certain real property. To secure the payment of the unpaid portion of the purchase price of said property, plaintiff executed and delivered to said Canney two promissory notes, one for $800, secured by mortgage upon the real property, and one for $4,000, secured by chattel mortgage upon said personal property. The former amount was indorsed as a payment on the latter note, leaving plaintiff's indebtedness to Canney, $3,200. Plaintiff alleged that thereafter, on March 27, 1884, he, together with A. S. Sampson and D. G. Peck, formed the corporation defendant, they being the only stockholders; that, on or about the time of forming said corporation, he sold and delivered to defendant the said real and personal property, in consideration of which defendant was to assume and pay the indebtedness thereon, consisting of plaintiff's notes, and plaintiff received a third of the stock of defendant, which he thereafter sold to said Peck; that thereafter, defendant having failed to pay said note for $4,000, said Canney, in January, 1886, foreclosed said chattel mortgage, and sold the property covered thereby; that there still remain due upon said note, after applying thereon the proceeds of the sale of said property, a balance, for which plaintiff is liable. To recover damages for defendant's alleged breach of contract to pay said note plaintiff brought this suit. On the trial, before LOCHREN, J., and a jury, the evidence tended to show that the agreement alleged was made with Sampson and Peck before the incorporation of defendant; that thereafter, in pursuance of said agreement, and after defendant's incorporation, the property was conveyed to defendant, and accepted by Sampson, Peck, and plaintiff, as directors, and used by, and the benefits of said property accepted by, defendant. There was a verdict for plaintiff. Defendan...