*

identical with the corporation, nor do they represent them, in any relation of agency, and their contracts could of course only bind the company, so far as they should be subsequently adopted by it, as their successors; much in the same mode and to the same extent, and under the same restrictions and limitations, as the contracts of one partnership bind a succeeding partnership in the same house.

2. But a contract by a joint-stock association, that each member shall pay all assessments made against him, cannot be enforced, by a corporation subsequently created, and to which, others have performed service for the association, upon their credit, they are liable. Wood v. The Duke of Argyll, 6 Man. & Gr. 928; Steigenberger v. Carr, 3 id. 191. But express proof is required of authority from the partners, or of a necessity to draw bills, in the conduct of the business, to justify the directors in drawing bills on the credit of the association. Dickinson v. Valpy, 10 B. & C. 128. From the foregoing cases, and Bell v. Francis, 9 C. & P. 66, and some others, it would seem, that the directors and managing committee are always liable for services rendered such associations, on their employment and credit, and that such other members of the association are liable also, as the terms of the association, or their own active agency in the employment of servants and agents, fairly justify such employees in looking to for compensation Post, § 4, n. 11.

In regard to admissions made by provisional committee-men, and others, who have taken part in instituting railway projects, some allowance is made in the English courts, for probable mistakes and misapprehensions, by those not well acquainted with the liabilities of such persons. Newton v. Belcher, 6 Railw. C. 38; s. c. 12 Q. B. 921. And where others have not acted upon such admissions, the party has been allowed to show that they were made under mistake, either of law, or fact, and if so, the party has been held not to have incurred any additional liability thereby. Newton v. Liddiard, 6 Railw. C. 42; s. c. 12 Q. B. 925.

The rule laid down by Bailey, J., in Heane v. Rogers, 9 B. & C. 577, upon this subject, is here expressly recognized by Lord Denman, Ch. J. "The general doctrine laid down in Heane v. Rogers, that the party is at liberty to prove that his admissions were mistaken, or untrue, and is not estopped, or concluded by them, unless another person has been induced by them to alter his condition, is applicable to mistakes, in respect of legal liability, as well as in respect of fact." And this estoppel, it was held in the principal case, only extends to parties and privies, to the particular transaction in which the admission was made, and that third parties, having no interest in it, either originally or by derivation, can claim no benefit from it. This is in accordance with the established principles of the law of evidence, at the present time. See the opinion of the court in Strong v. Ellsworth, 26 Vt. R. 366.

3

in pursuance of the original articles of association, the funds and all the effects of the former company have been transferred.2 Nor is the act of all the corporators even, the act of the corporation, unless done in the mode prescribed by the charter and general laws of the state. Nor can an incorporated company sustain an action at law, upon a bond executed to a preliminary association, by the name of the individuals and their successors, as the governors of the Society of Musicians, for the faithful accounting of A. B., their collector, to them and their successors, governors, &c., the company being subsequently incorporated.4

3. But the company, by consenting to a decree against them, upon a bill to enforce a contract with the promoters, by which they stipulated to withdraw opposition in parliament, upon condition that the company, when it came into operation, should take the land of the opposers of the bill at a specified price, and pay all the costs and expenses of the opposition until the time of the compromise, were held to have adopted the agreement, whether it would have been otherwise binding upon them or not.5

SECTION III.

Subscribers to the Preliminary Association inter sese.

1. Liability for acts of directors limited by 5. Not liable for expenses except by terms of terms of subscription.

agreement.

2. Association not binding until prelimina- 6. Deeds of association generally make prories are complied with.

vision.

3. Contracts, how far controlled by oral rep- 7. One who obtains shares, without executing resentations of directors. the deed, not bound to contribute. Subscribers not excused by directors from n. 11. No relation of general partnership paying calls. subsists between subscribers.

§ 4. 1. The project for a railway being set on foot by a pro

Wallingford Manufacturing Co. v. Fox, 12 Vt. R. 304; Goddard v. Pratt, 16 Pick. 412, where it is held, the original copartners are still liable, upon contracts made with third parties, ignorant of the dissolution by the effect of the incorporation, the company having carried on business in the name of the partnership. 3 Wheelock v. Moulton, 15 Vt. R. 519.

↑ Dance v. Girdler, 4 Bos. & P. 34. See Gittings v. Mayhew, 6 Md. R. 113. 5 Williams v. St. George's Harbor Co., 2 De G. & J. 547; s. c. 4 Jur. N. S. 1066.

*

visional committee of directors or managers, the subscribers may insist upon the terms of subscription. The subscribers are not bound by any special undertaking of the directors, or any portion of them, beyond or aside of the powers conferred by the terms of the deed or contract of association.1

2. And the association is not binding, until the provisions by which it is, by its own terms, to become complete, are complied with. If before that the scheme be abandoned, the provisional subscribers, or allottees, may recover back their deposits of the provisional committee, in an action for money had and received.2 So, too, if one is induced to accept of shares in the provisional company, by fraudulent representations, he may recover back the whole of his deposits.3

3. But if one actually become a subscriber, he is bound by the terms of subscription, without reference to prior oral representations, and must bear a portion of the expense incurred, if the subscription so provide. But if the directors, in such provisional company, in order to induce subscriptions, promise the subscriber, that in the event of no charter being obtained, he shall be repaid his entire deposit, this contract is binding upon them, and may be enforced by action, notwithstanding the subscriber's agreement authorized the directors to expend the oney in the mode they did.5

4. But the contract of the directors will not excuse the subscriber from paying calls, if the terms of the subscriber's agreement require it. The contract of the directors in such case, and the deed of association, are wholly independent of each other, and neither will control the other.7

1 Londesborough ex parte, 27 Eng. L. & Eq. 292; Ex parte Mowatt, 1 Drewry, 247.

2 Walstab v. Spottiswoode, 4 Railway C. 321.

3 Jarrett v. Kennedy, 6 C. B. 319.

4 Watts v. Salter, 10 C. B. 477. And if one subscribe the agreement and parliamentary contract, he will be liable, although he have not received the shares allotted to him or paid the deposits. Ex parte Bowen, 21 Eng. L. & Eq.

422.

5 Mowatt v. Londesborough, 25 Eng. L. & Eq. 25; s. c. in error, 28 Eng, L. & Eq. 119; Ward v. Same, 22 Eng. L. & Eq. 402.

• Ex parte Mowatt, 1 Drewry, 247.

" Dover & Deal Railway, ex parte Mowatt, 19 Eng. L. & Eq. 127.

5. But it has been held, that persons, by taking shares in a projected railway, do not bind themselves to pay any expense incurred, unless it is so provided in the preliminary contracts of association, or the expense is incurred with their sanction and upon their credit. And * even where such shareholder consents to act on the provisional committee, it will not render him liable, as a contributory, to the expense of the company.9

6. But in general, the form of the deeds of association is such, that if one takes shares without reservation, he is to be regarded as a contributory to the expense,10 and especially where he acts as one of the provisional committee, and also accepts shares alloted to him.10

7. But one who has obtained shares in a projected railway company, but without executing the deed of settlement, or any deed referring to it, was held not liable to contribute to the expense incurred, in attempting to put the company in operation,11 and especially if the acceptance of the shares is conditional, upon the full amount of the capital of the company being subscribed, which was never done.11

Maudslay ex parte, 1 Eng. L. & Eq. 61.

• Carmichael ex parte, 1 Eng. L. & Eq. 66; Clarke ex parte, id. 69.

10 Burton ex parte, 13 Eng. L. & Eq. 435; Markwell ex parte, 13 Eng. L. & Eq. 456; Upfill's case, 1 Eng. L. & Eq. 13; Watts v. Salter, 12 Eng. L. & Eq. 482. See also St. James's Club in re, 13 Eng. L. & Eq. 589, as to the effect of proof, of the subscriber being present when a resolution is passed.

11 The Galvanized Iron Co. v. Westoby, 14 Eng. L. & Eq. 386.

It was formerly considered, that all persons engaged in obtaining a bill in parliament for building a railway, were partners in the undertaking, and for that reason a subscriber, who acted as their surveyor, could not maintain an action for work and labor, done by him in that character, against all or any one of the subscribers. Holmes v. Higgins, 1 B. & C. 74. See also Goddard v. Hodges, 1 C. & M. 33.

But it is now regarded as well settled, in all the courts in Westminster Hall, that there subsists between the subscribers to such an enterprise no relation of general partnership whatever, and no power to bind each other for expenses incurred in carrying forward the enterprise. Each binds himself only by his own acts and declarations, unless he acts by virtue of some authority conferred by the deeds of association. Parke, Baron, in Bright v. Hutton, 3 H. L. Cases, 341, 368. And an agreement, aside of the deed of association, that one of the promoters shall indemnify another, is held valid. Connop v. Levy, 5 Railway C. 124; s. c. 11 Q. B. 769. But a general indemnity against costs will only ex

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*SECTION IV.

Contracts of the Promoters adopted by the Company.

1. Liability may be transferred with assent of n. 3. Powers of provisional company to concreditors. tract limited by statute.

§ 5. 1. The company when fully incorporated may assume the liabilities of the preliminary association, incurred in obtaining tend to costs in suits lawfully brought. Lewis v. Smith, 2 Shelford, Bennett's ed. 1030.

And in regard to liability, for expenses incurred in carrying forward railway projects, it often happens, that one who has been active may thereby make himself liable to tradesmen and others who have performed service in behalf of the enterprise, upon the expectation he would see them paid. In Lake v. Duke of Argyll, 6 Q. B. 477, 479, Denman, Ch. J., said: “But when persons meet to prepare the measures necessary for calling the society into existence, attendance on such meeting, and concurrence in such measures, may be strong evidence, that any individual there present, and taking part in the proceedings, held himself out as a paymaster to all who executed their orders; and though not liable as a member or shareholder, yet his declared intention to become the president, or a member, in whatever event, or to take a share under any conditions, may be material evidence to show that he authorized contracts with those whose services were required by what may be called the constituent body."

But a charge to the jury, that before surveyors, in such case, could recover of the provisional committee, they must be satisfied that defendants did, by themselves or their agent, employ the plaintiff to do the work, or that, being informed of their having done it, on their credit, by the employment of some one not authorized, they consented to be held liable, was affirmed in the Exchequer Chamber. Nevins v. Henderson, 5 Railway C. 684; Williams v. Pigott, 5 Railway C. 544. See also Spottiswoode's case, 39 Eng. L. & Eq. 520. Since the publication of the second edition, the English courts have made numerous decisions bearing upon the general subject discussed in this note. In Maddjck v. Marshall, 10 Jur. N. S. 1201, the defendant was employed by the parties in interest to act as provisional director in connection with others, under the assurance from the solicitor of such parties, that they were safe and would incur no personal responsibility; and the directors thereupon appointed the principal party in interest. secretary, and passed a resolution to advertise, which resolution was signed by the defendant as director. The plaintiff upon taking the order was shown the resolution certified by the defendant as authority for the order. The court held this testimony for the jury, tending to show a personal undertaking by defendant, and that they could not disturb a verdict against him. See also Swan v. The North British Australasian Co., 8 Jur. N. S. 940, as to what acts will create an estoppel in such cases.