Hackbarth v. Wilson Lumber Co.

• Decision Date: 12 February 1923
• Parties: A. HACKBARTH, an Individual Doing Business as LAPWAI LUMBER COMPANY, Respondent, v. WILSON LUMBER COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

212 P. 969

36 Idaho 628

A. HACKBARTH, an Individual Doing Business as LAPWAI LUMBER COMPANY, Respondent, v. WILSON LUMBER COMPANY, a Corporation, Appellant

Supreme Court of Idaho

February 12, 1923

PROMOTER'S CONTRACT-LIABILITY OF CORPORATION.

If a contract is made with the promoters of a corporation in contemplation of its organization and for its benefit, it consti- tutes a continuing offer, and if after the organization of the corporation, it accepts the benefits of the contract, it accepts this continuing offer and makes the contract its own.

APPEAL from the District Court of the Fourth Judicial District, for Gooding County. Hon. H. F. Ensign, Judge.

Action for purchase price of lumber. Judgment for plaintiff. Affirmed.

Judgment affirmed, with costs to respondent.

W. T Stafford, for Appellant.

Where the court instructs the jury upon what state of facts they must find a verdict for a party, the instruction should include all the facts in the controversy material to the rights of the plaintiff or the defense of the defendant. (Deasey v. Thurman, 1 Idaho 775; Johnson v. Frazer 2 Idaho 404, 18 P. 48.)

The mere fact that a corporation is organized to take over the business formerly conducted by a firm or an individual is not in itself sufficient to render it liable for a debt incurred by such firm or individual in conducting such business. (Anderson v. War Eagle Con. Min. Co., 8 Idaho 789, 72 P. 671; Moore v. Boise Land Co., 31 Idaho 390, 173 P. 117; Walker v. Selma Fruit Co., 177 Cal. 737, 171 P. 309; Cooper v. Utah etc. Co., 35 Utah 570, 102 P. 202; Huggins v. Milwaukee Brew. Co., 10 Wash. 579, 39 P. 152; Hart Pioneer Nursery Co. v. Coryell, 8 Kan. App. 496, 55 P. 514; Byrne-Hammer Co. v. Willis-Dunn Co., 23 S.D. 221, 121 N.W. 620; McLellan v. Detroit etc., 56 Mich. 579, 23 N.W. 321; Duslacher v. Fraser, 8 Wyo. 58, 55 P. 306; Austin v. Tecumseh Nat. Bank, 49 Neb. 412, 68 N.W. 628; Ziemer v. C. G. Bretting Mfg. Co., 147 Wis. 252, 133 N.W. 139; Culbertson v. Alabama Const. Co., 127 Ga. 599, 56 S.E. 765, 9 L. R. A., N. S., 411; Greenberg-Miller Co. v. Everett Shoe Co., 138 Ga. 729, 75 S.E. 1120; Bludwine Bottling Works v. Crown Cork Co., 14 Ga.App. 285, 80 S.E. 853; Schufeldt v. Smith, 139 Mo. 367, 40 S.W. 887; Hall v. Baker Furn. Co., 86 Neb. 389, 125 N.W. 628; Nat. Bank v. Hollingsworth, 135 N.C. 556, 47 S.E. 618; 14 C. J. 305, sec. 368.)

The great weight of authority holds that parties who undertake to organize a corporation cannot bind the corporation by their contracts and agreements made before the company is incorporated. (Moore v. Handley Hdwe. Co. v. Towers Hdwe. Co., 86 Ala. 206, 6 So. 41; Greenberg-Miller Co. v. Everett Shoe Co., 138 Ga. 729, 73 S.E. 1120.)

Bissell & Bird, for Respondent.

There is a conflict in the evidence and there is evidence in the record which, if uncontradicted, would support the judgment, and therefore the judgment of the trial court must stand. (Harvey v. Brett, ante, p. 126, 209 P. 209; Seymour v. Boise R. R. Co., 24 Idaho 7, 132 P. 427; Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365; San Francisco & N. P. R. R. Co. v. Bee, 48 Cal. 398; Kirkup v. Anaconda etc. Co., 59 Mont. 469, 197 P. 1005, 17 A. L. R. 441; Nannizzi v. Caprile, 43 Cal.App. 498, 185 P. 673; C. S., chap. 206.)

The instructions as a whole are not misleading and do not constitute reversible error. (Richardson v. Harsha, 22 Okla. 405, 98 P. 897; Seymour v. Boise R. R. Co., supra; Moriarity v. Meyer, 21 N.M. 521, 157 P. 652; C. S., sec. 7976; 14 C. J. 262, 263; Kirkup v. Anaconda etc. Co., supra; Nannizzi v. Caprile, supra; 6 Cal. Jur. 705; Cady v. Keller, 28 Idaho 368, 154 P. 629; Taylor v. Lytle, 29 Idaho 546, 160 P. 942.)

MCCARTHY, J. Budge, C. J., and Dunn, William A. Lee, and Wm. E. Lee, JJ., concur.

OPINION

MCCARTHY, J.

This is an action to recover the price of lumber. It is alleged in the complaint that respondent sold and delivered this lumber to the promoters of the respondent corporation, who were engaged in the lumber business at Gooding, Idaho, and were represented in the transaction by one A. Wilson; that they received and used part of said lumber in the construction of buildings and put the rest into the general stock; that thereafter the said A. Wilson and the other persons interested caused the corporation to be formed under the laws of Idaho as the Wilson Lumber Co.; that the purpose of the incorporation was to take over the property and continue the business, which was done. The appellant, in addition to denying the allegations of the complaint, defends the action on the ground that the original purpose of those interested in the business was to incorporate a company at Gooding as a branch yard of the Wilson Lumber Co. of Enterprise, Or.; that respondent sold the lumber in question to said Oregon corporation, and it was shipped to the branch yard at Gooding; that later those interested incorporated the concern as an independent Idaho corporation, brought the lumber from the Oregon corporation, and paid for it by delivering to the latter notes which the interested parties had given in payment for corporation stock. From a judgment for respondent this appeal is taken. The principal assignments of error are: (1) that the complaint does not state a cause of action, (2) that the court erred in giving instruction No. 5, (3) that the evidence is insufficient to support the judgment in the particulars mentioned in the brief.

By the overwhelming weight of authority it is held that a corporation makes itself liable on the contracts of its promoters by receiving their benefits. (Commercial Trust Co. v. Idaho Brick Co., 25 Idaho 755, 139 P. 1004; Henry Gold Mining Co. v. Henry, 25 Idaho 333, 137 P 523; Mantle v. Jack Waite Mining Co., 24 Idaho 613, 135 P. 854, 136 P. 1130; authorities cited in note to Kirkup v. Anaconda Amusement Co., 59 Mont. 469, 197 P. 1005, 17 A. L. R. 441.) Several different legal theories have been advanced, some of which have been subjected to criticism on logical grounds. The most logical theory of liability to fit the case is that the proposal of one seeking to contract with a corporation through its promoters should be regarded as a continuing offer, which is accepted by the corporation by receiving the benefits after it is organized, notwithstanding its acceptance in the first instance by the promoters. (Weatherford etc. Ry. Co. v. Granger, 86 Tex. 350, 40 Am. St. 837, 24 S.W. 795; ...