Case Name: J. F. Broyles et al. vs. William H. McCoy
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1858-09
Citations: 5 Sneed 602
Docket Number: 
Parties: J. F. Broyles et al. vs. William H. McCoy.
Judges: 
Reporter: Tennessee Reports
Volume: 37
Pages: 602–604

Head Matter:
J. F. Broyles et al. vs. William H. McCoy.
1. CobpoeatiON. Liability of corporators for debts contracted before act of incorporation. Partnership. Contract. Where an association of individuals, ■which, has existed as a partnership, becomes incorporated, and the corporation then accepts an assignment of all the property of such association, to carry out the purposes of the same, the individual members composing said association are primarily, and j ointly and severally liable for all the debts incurred before the act of incorporation. In such case the responsibility of the corporation for contracts previously made with the association, does not become substituted so as to exempt the members from individual liability.
2. Same. Case in judgment. The defendant, with a number of others, organized themselves into a joint stock company, for the purpose of building and keeping up a toll-bridge, and while unincorporated, obtained the requisite amount of stock, and contracted with the plaintiff for the construction thereof; while said bridge was under construction, said company became incorporated, adopting the property and effects of the company as -that of the corporation, after which the plaintiff brought his action against them, as individuals, for his work and labor upon the bridge, and for materials furnished; and it is held, that an acceptance of the bridge by one of said company, would bind all, and that the plaintiffs’ right to a recovery is not affected by the fact, that when the contract was made the association had it in view to obtain a charter; or by the fact, that while the bridge was still unfinished, and after the incorporation, the parties entered into another agreement merely with a view to carry out the original contract.
EROM GREENE.
This action of assumpsit is from the Circuit Court of Greene county. , At the October Term, 1857, before Judge Patterson, verdict and judgment were for the plaintiff.- The defendants appealed in error.
Milligan .and Maxwell, for tbe plaintiffs in error.
Deadricic and Crawford, for tbe defendant in error;

Opinion:
Wright, J.,
delivered tbe opinion of tbe Court.
There is no error in this judgment. Tbe defendants below, with others, constituted a joint stock company to build a bridge. Tbe funds to build it were raised by subscription, and tbe company duly organized, the defendants and others being tbe members of tbe company. For some time after its organization, it . remained and acted without any charter of incorporation, but was subsequently incorporated. In its unincorporated state, this company made a written contract with McCoy to furnish tbe materials and construct tbe bridge.
The Circuit Judge held tbe defendants liable to McCoy individually, and disregarded tbe position assumed in their behalf, that tbe corporation was to be sued. In this be was right. It is well settled, that where an association, which has existed as a mere co-partnership, becomes incorporated, and tbe corporation then accepts an assignment of all tbe property of' such- association, for tbe purpose of. carrying out their object, they are primarily, and jointly and severally liable for all tbe debts incurred before tbe act of incorporation. In such a case, tbe responsibility of tbe corporation for contracts previously made with tbe association, does not become substituted so as to exempt tbe members from individual liability. Angelí and Ames on Corporations, § 592, 593, 594. And it does not change tbe case, that tbe members of the company bad it in view to procure a future act of incorporation, when it was first formed. Angelí and Ames on Corporations, § 592. Nor is the case changed by the fact that while the bridge remained in an unfinished and imperfect state, a new agreement was made with McCoy, that if he would perform certain extra wort, the company would receive the bridge and pay him according to the terms of the original contract, for this must necessarily refer to the original contract, and can only be regarded as a mode of executing it; and not as a new and independent stipulation.
It follows from these principles, that the Circuit' Judge did not err in instructing the jury that it was competent for Broyles, one of the defendants, to receive the bridge, and that his act would bind the other members of the company. 1 Greenl. Ev. § 174-112.
Upon the whole, we find no error in this record, and affirm the judgment.