Evening bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1895-1912, 1902-06-01

ed standard without reference to tn
degree Of commercial activity at tn,
time Of their operations.
important Issue In Case.
The plaintiffs proceed upon the the
I DRY that the defendants occupied pO
sitiOn Of trust and confidence towards
the company and the public that wai
invited to buy and did buy the shares
and that the defendants could not take
the money and stock without first dis
closing the facts 20 and obtaining the
consent of the stockholders. while the
defendants insist that the plaintiffs
were not subscribers but purchasers
Of the stock from Hustace: that the
promoters were the original subscrib
ers for the stock and were strangers
and had the right to deal with the
plaintiffs and all subsequent stockhold
ers and the company at arms length.
The determination of the relation oc.
cupied By the defendants towards the
company and the plaintiffs is the i'm.
portant issue in this case and its de
termination. as Is conceded by coun.
sci. will settle the other Issues in.
VOWED.
The rule settled by the English au.
thorities is that in order to make a
complete contract to take shares there
must be an application for shares. an
allotment Of shares to the applicant
and communication to him of the al.
lotment. Rogers Case. l.. r.. Ch
631; Pellets Case, l.. r. Q Oh. 527. II
this rule were applied 10 the facts ot
this case We would be bound to hole
that the offer Of the plaintiffs to buy
shares. and the allotment by Hustace
srd the notice sent prior to April Goth
GO instituted a completed contract ard
each party receiving such notice was
d subscriber from that dAte. at least II
the notice was unconditional: II the
rCiiCe was conditional the contract he.
came complete on payment Of the Il: ST
assessment or earlier II the time OF
payment was waived or extended. This
tnCOry "Ould explain why Hustace al
forwards subscribed for stock as trrs.
tee and make that act consistent and
show that he intended to subscribe
and did subscribe for the stock 80
trustee for the several persons to
whom he had allotted stock. The tact
that h" did not pay the first or any
other assessment on any part Of this
i3.9o0 shares held as trustee tends
strongly to support the theory that
such was his intention and purpose at
that tim" and negatives the claim now
made that he was absolute owner Of
the stock and signed as trustee
through inadvertcncc or on advice OF
counsel.
Promoter and Corporation.
What relation in general does a FRO.
mOtcr bear to the corporation he
brings into existence and to the share.
holders whom ne induces to invest or
who voluntarily invest In the stock Of
the company.
Cook on Stock and Stockholders,
section 65l. says. "A promoter Is con
sidercd in la was occupying tiduciary
! relationship towards the corporation.
Judge Thompson says. Although
the promoters of a corporation are not
its agents for the purpose OF binding il
by their acts and engagements. yet
they are its fduciarles; they occupy
such a relation OF trust and confidence
towards the body which they are call.
ing into eXistenCe-or more properly
speaking toward those whom they in
vite to join them in the intended en-.
terprisc by becoming members OF
such bOdy-as requires the same good
faith on their part which the law eX.
acts of the directors of corporations
and all other iduciarics. They are
" No'''N III u N'llN' with HlhuultS
them from taking to themselves 4 Sc,
cret profit made out of their trust ia
the detrimcnt CT the future corpora
ton or its members" Commentaries
on Corporations, Vol. :, Sec. S2S6.
promoters stand in n fiducIary re
lation to that company which is theiI
creature" New Sombrcro Phosphate
Co. vs.. Erlanger. Oh. Div. 70. ll2:
l.. II. 3 App. Cas-. 1918.
whether called prospectors. pro
motors, agents. trustees. or any othel
name. they unQuestionably solicit anC
accept trusts from the members of tn,
company and therefore became II,
fduciarIes, iG Am. Law. Rev. p. CO
The law OF this question as abov,
quoted is too well established in III,
Jurisprudence OF this country and Eng
land to be now successfully ContrO
vcrted. Among the many American
courts that have announced and fol
lowed this view are the United States
Circuit Court and the Supreme Courts
Of California, Missouri. Pennsylvania
New York and Massachusetts.
Chandler vs.. Bacon. 30 Fed. 53S; Bur
banks vs.. Dennis, lOl Cal. 90, 9S 81
mons W. Nulyan Oil Co. 81 Pa. 81
2O9: Brewster VS., Hatch, 100 ~ \