Court Opinion

ID: 8183827
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:06:01.256526+00
Date Added: 2024-06-11T16:40:20.480509
License: Public Domain

Lyon, J.
1. The averments of the complaint indicate that this action was brought under sec. 1713, N. S., which provides, in respect to stock corporations, as follows: “No such corporation shall transact business with any others than its members, until at least one half of its capital shall have been duly subscribed, and at least twenty per centum thereof actually paid in; and if any obligation shall be contracted in violation hereof, the corporation offending shall have no right of action thereon; but the stockholders then existing of such corporation shall be personally liable upon the same.” That the action was brought under such section is apparent from the facts that a violation thereof is pleaded, and that plaintiff amended his complaint on the trial by alleging that the defendants were stockholders in the corporation from its organization, thus bringing them within the provisions and rendering them liable to the penalties of the section. Moreover, the case was given to the jury on the theory that it is an action under sec. 1773; for they were instructed that, unless they found the facts which brought the case within that section, the plaintiff could not recover. The record shows no objection to this by plaintiff, and no claim on his part that the action had a broader scope.
The contract with plaintiff for his services was made by Nice before the North Star Iron-Works Company of Ash-land was incorporated, and although Nice may have con-*639traoted therefor in form for that corporation when organized, this could not bind it after it wras organized. The law is that a corporation is liable for its own acts only after it has a legal existence. Until that time no one, whether a promoter or not, can sustain to the corporation the relation of agent. Were this not so, we would have an agent without a principal, which is an absurdity. But if one assumes to act as agent for a prospective corporation, and in form enters into a contract in its behalf, it is competent for such corporation, when organized, to ratify such contract. If, with full knowledge of all the facts, but not otherwise, the corporation assumes the contract and agrees to pay the consideration, or accepts the benefit of the contract, it will be bound thereby. 4 Am. & Eng. Ency. of Law, 201, § 9, and cases cited in notes. Some of these cases are cited in the brief of counsel for defendants. They need not be here repeated.
As we understand the charge of the learned circuit judge, he gave the jury the law substantially as above stated. But the infirmity in the charge is that the uncontradicted evidence proves that, when Bice entered into the alleged contract with plaintiff, the Wisconsin corporation had no existence, and there is no testimony tending to prove that the corporation, after it was organized, promised to fulfil the contract, or that, with full knowledge of all the material facts, it received the benefit of the contract by appropriating or using the drawings,, etc. Indeed, there is no proof that the corporation ever knew that Bice had contracted in its name, or that it ever performed any corporate acts after it was organized. Hence, upon the theory on which the case was tried, there was nothing to submit to the jury, and the court should have directed a verdict for defendants.
2. It is maintained by counsel for plaintiff that there is testimony in the case showing that Bice acted as the au*640thorized agent of the defendants, <?r some of them, in mating the contract with plaintiff, or that they, or some of them, have ratified such contract, and thus made themselves personally liable thereon without regard to the corporation ; and hence that a verdict for plaintiff should have been directed, at least against some of the defendants. Certainly, the facts thus suggested were not conclusively proved, if it be assumed that there was testimony tending to prove them. There was conflicting testimony, which, in any event, would send those questions of fact to the jury. Such questions were not submitted, and the court was not requested to submit them, to the jury, and the jury have not passed upon them. Hence, if it be conceded that the plaintiff was entitled to have them thus submitted, that will not save the verdict and judgment, which, as we have seen, are based on a theory which is unsupported by evidence.
¥e are of the opinion, however, that, under the complaint in its present form, it is not competent for the plaintiff to prove that Rice acted as the authorized agent of the defendants, or either of them, in making the contract with plaintiff, or that any of the defendants ratified such a contract. As there must be another trial, the circuit court may, in its discretion, allow the plaintiff to amend his complaint in this respect, if he desires to do so, by adding thereto a count based upon the alleged liability of defendants, irrespective of the corporation, or in any other appropriate manner.
3. It was objected on the argument in this court that the action should have been brought in equity, instead of at law. This objection comes too late. Hot having made it until the case reached this court, the defendants must be content with the remedy a court of law may properly administer.
By the Court.— The judgment of the circuit court is. reversed, and the cause will be remanded for a new trial.