Twin Creek & C. Turnpike-Road Co. v. Lancaster

• Decision Date: 17 November 1881
• Citation: 79 Ky. 552,3 Ky.L.Rptr. 368
• Parties: Twin Creek and Colemansville Turnpike Road Company v. Lancaster. Twin Creek and Colemansville Turnpike Road Company v. Renneckar.
• Court: Kentucky Court of Appeals

79 Ky. 552

3 Ky.L.Rptr. 368

Twin Creek and Colemansville Turnpike Road Company v. Lancaster.

Twin Creek and Colemansville Turnpike Road Company v. Renneckar.

Court of Appeals of Kentucky.

November 17, 1881

1. Where several persons jointly undertake to subscribe to the capital stock of a company to be organized for the prosecution of a common enterprise, which has for its object the advancement of the private interests of the several subscribers, the promise by each is a good consideration for the promise of the others, and it is too late, after the act of incorporation takes place, to withdraw from the association, whether the work has or not been undertaken.

2. As the subscribers agreed in this case that their subscriptions should be subject to a call of ten per cent. as soon as the company should be organized, the undertaking was not a mere agreement to subscribe, but was in fact a subscription subject to no other condition than the organization of the company, and as soon as that was completed and the call made it was the duty of the subscribers to pay.

APPEALS FROM HARRISON CIRCUIT COURT.

W. T LAFFERTY AND T. T. FORMAN FOR APPELLANT.

1. Where several promise to contribute to a common object desired by all, the promise by each may be a good consideration for the promise of the others. (Parsons on Contracts, vol. 1, p. 452, 6th ed.; Watkins, Tr., v Eames, 9 Cushing (Mass.), 539.)

2. The fact that the company was not organized at the time the subscription was made does not invalidate it. (Lackey v Richmond and Lancaster Turnpike Road Co., 17 B. M., 48; Thompson v. Page, 1 Met. (Mass.), 570.)

3. Advances having been made and liabilities incurred on the faith of appellee's subscription, appellant is entitled to recover. (1 Parsons on Contracts, p. 453, 6th ed.; Homer v. Dana, 12 Mass. 190; Thompson v. Page, 1 Met. (Mass.), 570; Mt. Sterling Coal Road Company v. Little, 14 Bush, 429.)

A. H. WARD FOR APPELLANT.

The doctrine laid down in the case of Goff v. Winchester College does not apply here, as the contract sued on in that case was in many respects different from the one sued on in this case. (Gill's adm'r v. Kentucky Gold and Silver Mining Co., 7 Bush, 638; Fry's ex'r v. Big Sandy Railroad Company, 2 Met., 314; 25 Ills., 393; 21 Penn., 220.)

W. H. RATLIFFE FOR APPELLEES.

As there was no incorporated company at the time the subscription sued on was made, it is not an enforceable contract. (Green's Brice's Ultra Vires, p. 475 and note; Angell & Ames on Corporations, p. 271; Goff v. Winchester College, 6 Bush, 443; Phillips' Limerick Academy v. Davis, 11 Mass. Reports, p. 112; Essex Turnpike Co. v. Collins, 8 Mass. 297; New Bedford and Bridgewater Turnpike Co., 8 Mass. 141; Mt. Sterling Coal Road Company v. Little, 14 Bush, 429.)

OPINION

PRYOR JUDGE:

These appeals are prosecuted from a judgment of the Harrison circuit court, in which a demurrer was sustained to the petition of the appellant, and the actions dismissed.

J. A. Lafferty, John W. Martin, and others, including the two appellees, J. H. Renneckar and Reuben Lancaster, were desirous of constructing a turnpike road in the county of Harrison, between certain designated points, and with a view of creating an incorporated company under chapter 56 of the General Statutes, so as to begin the enterprise, entered into the following agreement, or made what is alleged to have been a subscription, as follows:

" We, the undersigned, for the purpose of constructing a turnpike road from _______ to _______," designating the beginning and terminus of the road, " promise and agree to subscribe the amounts set opposite our respective names to the capital stock of a company to be organized for that purpose, and to pay the same in such installments as may be called for by the proper officers of such company, and we further agree that our said subscriptions may be subject to a call of ten per cent. as soon as such a company or corporation is completed or organized. Given under our hands," & c. Signed by J. A. Lafferty and eleven others, the names of the two appellees being among the number.

The parties, or some of them, to this subscription organized a company, with the corporate name of the Twin Creek and Colemansville Turnpike Road Company, for the purpose of constructing the turnpike road mentioned in the subscription.

The appellees were named as corporators, together with the others whose names appear on the subscription; but whether they authorized their signatures to the articles of association filed for record in the office of the county court clerk does not appear.

After the statute had been complied with and the company organized, a call was made on the appellees for a part of their subscription, and refusing to pay, this action was instituted in the name of the corporation, and on the agreement to subscribe to recover the amount of the call made.

An answer was filed to the petition, to which there was a demurrer, and that pleading reaching back, the demurrer was sustained to the petition. An amendment was then filed, and a demurrer sustained to the petition as amended, and a judgment rendered for the defendants.

The organization of the company is alleged in the original petition; the promise to pay by reason of the subscription made prior to the act of incorporation; the demand made of the appellees under a call properly made and their refusal to pay, & c. In the amendment it is alleged that the articles of incorporation were entered into in pursuance of the subscription made prior to the incorporation of the company and that the corporators and others signing the subscription did so relying upon the defendants' promise to pay their subscriptions; that...