Penn Match Co. v. Hapgood

7 N.E. 22, 141 Mass. 145, 1886 Mass. LEXIS 150

• Court: Massachusetts Supreme Judicial Court
• Decided: February 25, 1886
• Status: Published

Opinion

W. Albeit, J.

The plaintiff was not in existence when the writings were made, and cannot maintain the action, unless it became a party to the contracts after its incorporation. There is no ground for the contention of the plaintiff that the declaration shows the existence of the corporation, though unorganized, sufficient to be a party to a contract, as in Vermont Central Railroad v. Clayes, 21 Vt. 30. All that is alleged is the verbal, conditional agreement of certain individuals to form a corporation under general laws.

The power of a corporation to make contracts can be exercised in accepting and adopting proposed contracts made in its name and behalf before its incorporation. Such a contract must derive its vitality from the meeting of minds when both parties are in existence; until then, it can be nothing more than an offer by one party.

The writings, as between the plaintiff and the defendants, show no more than proposals by the defendants, revocable at any time before acceptance by the plaintiff after its incorporation. The fact that one is under seal is immaterial in this respect. The only consideration shown for the defendants’ promises is the acceptance of them by the plaintiff, and the promise to accept and pay for the goods implied in that; and the acceptance must be by some act or assent of both parties which will fix the rights of both, and is as essential to a promise under seal as by paroi. The defendants could not be bound until such acceptance by the plaintiff as would give them a right of action against it for a refusal to accept and pay for the goods. There is no allegation of acceptance by the plaintiff after its incorporation. The demand is not stated as an act of acceptance perfecting the contract, but, in connection with the refusal, to show a breach of an existing contract.

The plaintiff contends that it was a consideration of the contract moving from it, that it should perfect its organization, and procure a building and prepare to carry on business; or that the proposals of the defendants were made in view of these acts, and of the expectation that the plaintiff should accept -them when it should be competent to, and should do the other acts, relying on the contracts; and that the plaintiff has done the acts accordingly. A corporation may become bound to fulfil a contract made in its name and behalf in anticipation of its existence, by afterwards accepting the benefits of the contract, as it may acquire a right to enforce such a contract against the other party by his acceptance of performance by the corporation; Low v. Connecticut & Passumpsic Rivers Railroad, 45 N. H. 370, relied on by the plaintiff, is an instance of the former, and the common liability of subscribers of stock of the latter.

In the case at bar, the formation of the corporation and procuring a building were no part of the contract, or of the consideration of it. There was no agreement to do the acts, and the doing of them was not made by the parties a condition upon which the contract was to arise. The promises or proposals of the defendants, though a motive for doing the acts by the plaintiff, are not alleged to have been inducements offered by the defendants, nor are the acts alleged to have been done at their request. The defendants are not so connected with the acts to-be done by the plaintiff that they would have a right to regard the doing of them as the acceptance of the proposals, so that, without other act of acceptance by the plaintiff, they could have maintained an action against it upon refusal to accept and pay for the goods. See Dayton, &c. Turnpike v. Coy, 13 Ohio St. 84.

The declaration alleges contracts made before the plaintiff had a legal existence, and does not show any contract to which the plaintiff was a party.

Judgment for the defendants.