Tryber v. The Girard Creamery and Cold-Storage Company
| Decision Date | 10 July 1903 |
| Docket Number | 13,248 |
| Parties | W. F. TRYBER v. THE GIRARD CREAMERY AND COLD-STORAGE COMPANY |
| Court | Kansas Supreme Court |
Decided July, 1903.
Error from Crawford district court; WALTER L. SIMONS, judge.
Judgment affirmed.
SYLLABUS BY THE COURT.
CORPORATIONS--Liability for Obligations of Promoters. A corporation which does not adopt or assume the contracts of its incorporators, made before organization, will not be liable thereon merely because it takes title to, and uses and enjoys, property produced under such contracts, if, in making the contracts the incorporators did not act for the corporation or on its behalf or credit, but upon their own individual responsibility, and without any contemplation of corporate liability.
W. F. Rightmire, for plaintiff in error.
B. S. Gaitskill, for defendant in error.
OPINION
A large number of persons entered into a contract with the Chicago Building and Manufacturing Company, of Chicago Ill., for the establishing of a butter factory and ammonia cold storage at or near the city of Girard. The company agreed to erect and equip the proposed factory for the sum of $ 5000. The individuals associating themselves in the enterprise subscribed sums ranging in amount from $ 25 to $ 100 for the payment of the contract price of the factory, stipulating that each one should be liable to the company for the amount subscribed by him and no more.
The contract provided that any part of the price of the factory not paid when due should be settled by a satisfactory interest-bearing promissory note. It also provided that subscriptions might be made in excess of the sum of $ 5000, and that the total subscription should belong to the company until the full contract price due it should be collected and paid in cash, after which the remainder of the subscriptions, or notes, should become the property of the persons signing the agreement, to be collected and used by them as working capital. The contract provided that the subscribing individuals should appoint a committee who should have full authority to represent all their interests, and the construction and equipment of the factory was made subject to the supervision and scrutiny of such committee. That committee, together with a special agent of the company, was to determine if the factory had been completed according to contract. When the factory was completed the subscribing individuals agreed to pay the contract price. A paragraph of the contract contained an agreement of the subscribing individuals to incorporate under the laws of this state, presumably for the purpose of operating the factory, although the corporate object was not defined. It was agreed that the capital stock of the proposed corporation should be not less than the whole amount of the subscriptions to the contract, to be divided into shares of $ 100 each, to be issued to each subscriber in proportion to his paid-up interest in the contract with the Chicago Building and Manufacturing Company. Fifty-seven individuals and firms signed this contract, subscribing in the aggregate $ 5200. The factory was built, accepted, and placed in operation. The proposed corporation was formed under the name of the Girard Creamery and Cold-storage Company, only subscribers to the original contract becoming stockholders. The title to the factory and its equipments, after completion, was transferred to the new corporation. The sum of $ 922.70 of the contract price was not paid. The contract of subscription was assigned to plaintiff, who brought suit against the Girard Creamery and Cold-storage Company for the amount due.
An amended and substituted petition set forth the foregoing facts, with, however, many conclusions as to the meaning and effect of the contract, and as to the relations of parties to each other and to the new creamery company. The petition further alleged that without consideration paid by it, and with full knowledge of all the terms of the contract and of the building and equipping of the factory under such contract, and of the fact that the portion of the purchase-price of the factory sued for was unpaid, the creamery company had accepted title to the property, taken possession of it, and received and continued to retain all the benefits of the original agreement. A general demurrer to this pleading was sustained, and, the plaintiff declining to amend further, judgment was rendered for the defendant.
The single question for determination is whether the Girard Creamery and Cold-storage Company is liable for the debts of its incorporators. The contract set out is utterly barren of any obligation on the part of the corporation to be formed to pay debts incurred by the individual incorporators in the construction and equipment of the factory. The manufacturing company dealt with the incorporators as individuals. Separate and not joint liabilities on their part were expressly stipulated. Special forms of security for the payment of subscriptions were agreed upon, and after the collection of the price of the factory out of the subscription list any unpaid portions and any notes taken for unpaid portions were to be returned to the subscribers for their use as working capital, and not to the corporation. Extreme care seems to have been taken not to involve the prospective corporation in any liability upon the subscription list whatever. If recourse upon it were to be had, language might easily have been framed to indicate the fact. The contract does not purport to be made in furtherance of any corporate power or purpose. Instead of that, the formation of a corporation by the subscribers to the fund for the payment of the price of the factory was merely incidental to the accomplishment of their individual desires to secure a creamery. They agreed to adopt a corporate form of management for the obvious facilitation of their affairs. In this the manufacturing company had no interest. When the factory was turned over the manufacturing company's identification with the enterprise ended. The subscribers did not profess or pretend to be acting in the name of any corporation to be formed, nor for the benefit of any such corporation. They made no representation that the corporation would become liable for their debts, gave no guaranty to that effect, and the...
To continue reading
Request your trial
-
Boatright v. Steinite Radio Corp., 266.
...from it of $100 per week. This agreement was not binding upon the United Corporation until it ratified the same. Tryber v. Girard C. & C. S. Co., 67 Kan. 489, 73 P. 83; 14 C. J. pp. 255-258. The contract of joint adventure did not provide that the United Corporation would elect the plaintif......
-
Appellees v. The Middle West Portland Cement Company
...of the syllabus in Tryber v. Creamery Co., 67 Kan. 489, 73 P. 83, coupled with a text that is quoted with approval in the opinion. (p. 493.) instruction is criticized as omitting a full statement of the matters necessary to make the corporation liable on a contract made by the promoters, wh......