QUESTIONS
1. After part of the shares of a proposed corporation had been successfully subscribed, one of the promoters hired a carpenter to repair a building that was to be conveyed to the proposed corporation. The promoters subsequently secured subscriptions to the balance of the shares and completed the organization, but the corporation, finding the building to be unsuitable for its purposes, declined to use the building or pay the carpenter. The carpenter brought suit against the corporation and the promoter for the amount the promoter agreed would be paid to him. Who, if anyone, is liable?
2. C. A. Nimocks was a promoter engaged in organizing the Times Printing Company. On September 12, on behalf of the proposed corporation, he made a written contract with McArthur for her services as comptroller for a one-year period beginning October 1. The Times Printing Company was incorporated October 16, and on that date, McArthur commenced her duties as comptroller. Neither the board of directors nor any officer took formal action on her employment, but all the shareholders, directors, and officers knew of the contract made by Nimocks. On December 1, McArthur was discharged without cause.
a. Does she have a cause of action against the Times Printing Company? Explain.
b. Does she have a cause of action against Nimocks? Explain.
3. Todd and Elaine purchased for $300,000 a building that was used for manufacturing pianos. Then as promoters, they formed a new corporation and resold the building to the new corporation for $500,000 worth of stock. After discovering the actual purchase price paid by the promoters, the other shareholders desire to have $200,000 of the common stock canceled. Can they succeed in this action? Why or why not?
4. Wayne signed a subscription agreement to purchase one hundred shares of stock of the proposed ABC Company, at a price of $18 per share in a State that has adopted the Revised Act. Two weeks later, the company was incorporated. A certificate was duly tendered to Wayne, but he refused to accept it. He was notified of all share-holders’ meetings, but he never attended. A dividend check was sent to him, but he returned it. ABC Company brings a legal action against Wayne to recover $1,800. He defends upon the ground that his subscription agreement was an unaccepted offer and that he had done nothing to ratify it and was therefore not liable upon it. Is he correct? Explain.
5. Julian, Cornelia, and Sheila petitioned for a corporate charter for the purpose of conducting a retail shoe business. They met all of the statutory provisions, with the exception of having their charter recorded. This was simply an oversight on their part, and they felt that they had fully complied with the law. They operated the business for three years, after which time it became insolvent. The creditors desire to hold the members personally and individually liable. May they do so? Explain.
