subscription for shares in a company, simply for the purpose of deceiving others, with a secret agreement between himself and the managers that he shall not be liable as a subscriber, will, nevertheless, be held liable both in law and in equity."

1 Williams v. Page, 24 Beav. 654, 6C3; Clement v. Bowes, 1 Drew. 684, 688.

2 Thompson on Liability of Officers and Agents, 214; Graff v. Pittsburg etc. R. R. Co. 31 Pa. St. 489: White Mountains R. R. Co. v. Eastman, 34 N. H. 134; Litchfield Bank v. Church, 29 Conn. 137, 150.

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§ 17. How far the corporation is liable for the acts of its promoters. Although the company cannot accept the benefits of a contract entered into on its behalf by its promoters without assuming also the burdens thereof,1 yet as a general rule it is not bound by the contracts of its promoters nor responsible for their acts, except so far as it may have subsequently ratified them, either directly or indirectly, as by the voluntary acceptanc, of the benefits arising therefrom, or by accepting a charter so requiring For the promoters of a corporation have no authority to enter into preliminary contracts binding the corporation, when it shall come into existence. Such contracts bind only the individuals who make them. If, however, adopted by the corporation, and within the corporate powers, and not otherwise subject to objection, they may become the contracts of the corporation and enforceable against it. promoters who, before the act of incorporation, enter into a contract which it would be ultra vires for the incorporated company to make, do not thereby bind the latter." In England it is provided by the Railways Construction Facilities Act of 1864,' that contracts relative to the purchase or taking of lands

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for the railway, entered into by the promoters before the incorporation, shall be as binding on the company as if they had been entered into by the company. According to the view of some of the cases, there can be no ratification of the contracts of its promoters by a corporation, considering any such apparent ratification as a new contract, or basing the liability of the corporation upon the grounds of equitable estoppel.❞

1 Gooday v. Colchester & S. V. R'y Co. 15 Law R. Eq. 596; Edwards v. Grand Junction R'y Co. 1 Mylne & C. 650; Preston v. Liverpool M. & N. J. R'y Co. 7 Law R. Eq. 124.

2 Payne v. New South Wales Coal Co. 10 Ex. 283; Wood v. Wheelen, 93 II. 153; Hutchinson v. Surry Gas Association, 11 Com. B. 689; 1 Lindley on Partnerships, 395. Cf. Burrows v. Smith, 10 N. Y. 550.

3 Little Rock & Fort Smith R. R. Co. v. Perry, 37 Ark. 164; 9 Rail. C. 610; S. C. 44 Ark. 383; 25 Rail C. 44, 50; Boomer v. American Spiral Hinge Mfg. Co. 81 N. Y. 468; Despatch Line v. Bellamy Mfg. Co. 12 N. H. 205; Grape Sugar etc. Mfg. Co. v. Small, 40 Md. 395; Fister v. La Rue, 15 Barb. 323. Cf. Edwards v. The Grand Junction R. Co. 1 Mylne & C. 650. 4 Tilson v. Warwick Gaslight Co. 4 Barn. & C. 962; Shaw's Claim, Law R. 10 Ch. 177. Cf. Caledonian etc. R'y Co. v. Helensburgh, 2 Macq. 395, t 405, 407.

5 Munson v. Syracuse, Geneva & Corning R. R. Co. 103 N. Y. 58; Doubleday v. Muskett, 7 Bing. 110; Moneypenny v. Hartland, 1 Car. & P. 352; Kerridge v. Hesse, 9 Car. & P. 200. As to whether a contract entered into with promoters of one company will be binding on an amalgamated company or on a rival company that has assumed the first company's liabilities, see Stanley v. Chester etc. R'y Co. 3 Mylne & C. 773; Greenhalgh V. Manchester etc. R'y Co. 9 Sim. 416; Preston v. Liverpool, etc. R'y Co. 1 Sim. N. S. 586; Lindsey v. Great N. R'y Co. 10 Hare, 661; Hacker v. Mid Kent R'y Co. 12 Law T. N. S. 699.

6 Caledonian etc. R'y Co. v. Magistrates of St. Helensburgh, 2 Macq. 391: Shrewsbury v. N. Straffordshire R'y Co. 1 Eq. Cas. Abr. 539. But see Petre v. Eastern Counties R'y Co. 1 Nic. H. & C. 462. This case, however,

so far as it seems to hold to the contrary, is probably overruled.

7 27 & 28 Vict. ch. 121, § 30.

8 Melhado v. Porto Allegre R'y Co. Law R. 9 Com. P. 503; Kilner v. Baxter, Law R. 2 Com. P. 174; In re Empress Engineering Co. 16 Ch. 125; Inre Northumberland Avenue Hotel, 33 Ch. 16.

9 See cases cited supra, and Touche v. Metropolitan R'y Warehousing Co. 6 Ch. 671; Lindsey v. Great N. R'y Co. 10 Hare 664; Edwards v. Grand Junction R'y Co. 1 Mylne & C. 650; Stanley v. Chester etc. R'y Co. 3 Mylne & C. 773; Bedford etc. R'y Co. v. Stanley, 2 Johns, & H. 746.

§ 18. When the corporation may enforce the contracts of its promoters.-As long as the con

tract remains executory between the promoters and the contracting party, it cannot be enforced against the corporation, in the absence of a ratification on its part; neither can the corporation enforce it against the other contracting party without fulfilling all the engagements entered into on its behalf by the promoters.1 When, however, the

corporation has ratified the contract and performed the obligations undertaken by the promoters, it may compel the other contracting party to comply with the terms of the agreement.2

1 Taylor on Corporations, § 90; Burrows v. Smith, 10 N. Y. 550. 2 Bedford & C. R'y Co. v. Stanley, 32 Law J. Ex. 60.

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§ 19. Of contracts to quiet opposition to charter. In England contracts between the promoters of a company and persons opposing in parliament the granting of a charter, whereby, in consideration of the opposition being withdrawn, the promoters undertake that the projected corporation shall purchase certain property at a price greatly in excess of its fair valuation, or perform certain other acts for the benefit of its opponents, have been sustained, not only in equity,1 but also at law, in a long line of cases, which rest upon the authority of a decision of Lord Eldon's, in which he expressed an opinion to the effect that withdrawing opposition to a bill in parliament might be a good consideration for a contract. It has been decided that such agreements, although ultra vires, are not illegal, even when the land-owner, whose opposition has been bought off, is a member of parliament, unless it may be shown that the payment was made for the purpose of influencing his vote.3

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Where the contract of the promoters is an absolute agreement on their part that the company will purchase certain lands if the vendor supports the bill and it becomes a law, the latter, having performed his part of the agreement, may hold the promoters liable in damages, if the company fails to take and pay for the land.“ But of course, under contracts by the terms of which the company is to take the property only in case it is needed in the construction, specific performance can be enforced only in that event.

1 Edwards v. Grand Junction R'y Co. 1 Mylne & C. 650.

2 Howden v. Simpson, 1 Rail. C. 326; 1 Keeu, 533; 3 Myl..e & C. 95; 10 Ad. & E. 793; 3 Rail. C. 294; 9 Clark & F. 61.

3 Doe v. London & C. R'y Co. 1 Rail. C. 257; Stanley v. Chester & B. R'y Co. 1 Rail. C. 58; 9 Sim. 264; Hawkes v. Eastern Counties R'y Co. 1 DeGex M. & G. 737; 3 DeGex & S. 314; 15 Law R. Eq. 353; 4 Eng. L. & Eq. 91; Cromford & H. P. R'y Co. v. Stockport D. & W. B. R'y Co. 21 Beav. 74; Petre v. Eastern Counties R'y Co. 1 Rail. C. 462.

4 Vauxhall Bridge Co. v. Spencer, 2 Madd. 356.

5 Preston v. Liverpool etc. R'y Co. 5 H. L. Cas. 605; Edwards v. Grand Junction R'y Co. 1 Mylne & C. 650; Stanley v. Chester etc. R'y Co. 3 Mylne & C. 773; Simpson v. Howden, 9 Clark & F 61; Shrewsbury v. N. Staffordshire R'y Co. 35 Law J. Ch. 156; Petre v. Eastern Counties R'y Co. 1 Nic. H. & C. 462; Eastern Counties R'y Co v. Hawkes, 5 H. L. Cas. 331.

6 Bland v. Crowley, 6 Ex. 522; Capper v. Lindsey, 3 H. L. Cas. 293.

7 Gage v. Newmarket R'y Co. 18 Q. B. 457; Preston v. Liverpool etc. R'y Co. 5 H. L. Cas. 605; Scottish N. E. R'y Co. v. Stewart, 3 Macq. 382.

§ 20. Whether contracts to quiet opposition are in the nature of a bribe.—Although the courts have rather inclined to impart to such contracts the color of indemnification for injury to property or to the franchises of rival companies, than to regard them as bribes for the procurement of favor, yet, there are cases in which, although by reason of the abandonment of the enterprise, no injury was ever sustained, the contracts to quiet opposition have been enforced. In a later case, however, the lead

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ing cases cited above," "and other similar cases which have followed them," although distinguishable from the case at bar, were pronounced "unsupported in principle." And where the price has been so grossly in excess of the true value of the property that the court could not fail to perceive that it partook of the nature of a bribe, the contract has been declared ultra vires and specific performance denied. It has been held in England that a company already existing may validly contract that upon the passage of an act enabling it to build a new line, it will purchase certain property for the purposes of construction, whether the property be actually needed or no, and upon the passage of the act the contract may be specifically enforced. Such a contract, it is held, may be enforced after the compulsory powers of the company have terminated, as it is already in equity the owner of the land." In America there has been but little litigation involving the validity of contracts to quiet opposition. In New Hampshire the rule has been laid down that a contract, by which indemnity is guaranteed to a property holder, who merely for the protection of his private interest is opposing the bill in the legislature, is valid and may be enforced, unless it be shown that the legislature was misled and thereby induced to pass the act, when otherwise it would not have done so.8

1 Gage v. Newmarket R'y Co. 18 Q. B. 457; Porcher v. Gardner, 8 Com. B. 461.

2 Brand v. Crowley, 6 Ex. 522; Shrewsbury & B. R'y Co. v. London & N. W. Ry Co. 3 Macn. & G. 70; Hawkes v. Eastern Counties R'y Co. 3 De Gex & S. 314.

3 Edwards v. Grand Junction R'y Co. and Petre v. Eastern Counties R'y Co.

4 Caledonian & D. J. R'y Co. v. Helensburgh Harbor Trustees, 2 Macq. 391; 39 Law R. Eq. 28.