Forbes v. Whittemore

Battle, J. The Southwestern Arkansas College was a corporation engaged in maintaining a school in Miller county, in this state, and was the owner of property, consisting of land, a brick building, subscriptions, and furniture. On the second day of August, 1890, W. A. Forbes and others, styling themselves “trustees,” entered into a contract with it in the words and figures following, to-wit: “Whereas, the board of directors of the Southwestern Arkansas College' have this day transferred to W. A. Forbes, W. H. Tilson, John Hallum, H. W. Stevens, John C. Watts, H. H. Echols, B. R. Attaway, John Winham, J. B. Eumbley, E. F. Friedell, Chas. S. Todd, R. J. Harriston, Noah P. Sanderson, E. D. Merideth, and John B. Nix, and their successors in office, the right, franchise, and privilege heretofore appertaining and belonging to the Southwestern Arkansas College, located on College Hill, Miller county, Arkansas, which transfer includes all the real and personal property belonging to the Southwestern Arkansas College, also the unpaid subscription belonging to said college, for and in consideration for which the said above-named trustees and their successors in office obligate and bind themselves as trustees, and their successors in office, to pay all liabilities of said Southwestern Arkansas College as they now exist, to honor the subscription of stock for tuition, and in all respects to assume the place, duties, and responsibilities of the above said directors of said college; and, furthermore, at all time during the scholastic year to maintain a first-class school, which school shall in its course be in all respects equal to the curriculum of ordinary colleges through the sophomore year, and up to the junior year, in classical, literary and scientific course, and at all times to maintain in good condition and repair the buildings now on the ground, and from time to time, as necessity may require, to add thereto such buildings as may be necessary to carry on the school herein provided for. “And it is further agreed and understood that if the said board of trustees fail to comply with these conditions after reasonable notice given to said board of trustees, the property herein conveyed is to revert to the said board of directors of Southwestern Arkansas College, or their successors or assigns; and we, for ourselves and our successors in office, as trustees, agree to surrender the possession of said property, real and personal. “Witness our hands and seals, this 2d day of August, 1890. “W. A. Forbes, President Board of Trustees. “F. F. Friedell, As Secretary Board of Trustees.” Under this agreement, Forbes and his associates in the enterprise took possession of the property, and entered, upon the performance of their contract; and, at a meeting held by them, authorized and directed W. A. Forbes, as their president, and E. F. Friedell, as their secretary, to execute to Osgood Whittemore two notes for $138 each, due, respectively, six and twelve months after date, in payment of a debt assumed by them in the contract with the “Southwestern Arkansas College.” In the exercise of this authority Forbes and Friedell executed the two notes, a copy of one of which, which serves to show in what manner both were written and executed, is as follows: “$138.00. Texarkana, Ark., July 1st, 1891. Six months after date, the Southwestern Arkansas College promises to pay to the order of Osgood Whittemore the sum of one hundred and thirty-eight dollars at the Gate City National Bank, Texarkana, Arkansas, for value received, without defalcation or discount, with interest at the rate of ten per cent, per annum from date until paid. This note is given in settlement of B. Fronhaff’s account for labor and material furnished in the building of the Southwestern Arkansas College, in Miller county, Ark. Southwestern Arkansas College, By W. A. Forbes, Prest, of Trustees, Southwestern Arkansas College, By E. F. Friedell, as Secy.” Forbes and those named with him in their contract with • the Southwestern Arkansas College, without organizing themselves into a corporation, undertook to perform their undertaking for about two years, and failed, when they abandoned the same, and surrendered the property, real and personal, which they had received from their predecessors, subscriptions excepted, leaving the two notes unpaid. Thereafter, on the 14th of November, 1892, Osgood Whittemore brought-an action on the notes against Forbes and his co-contractors, as late partners, doing business under the firm name and style of “the Southwestern. Arkansas College.” The defendants, answering, denied that they executed the notes in the capacity of partners, and that they were individually liable for the payment thereof, and alleged that the notes were contracts of a. corporation. In the trial of the issues in the case, all the foregoing facts were proved. The plaintiff recovered judgment, and the defendants appealed. The only important question in the case is, were the appellants individually liable for the payment of the notes sued on ? They were not the agents of the college, nor members of it. In their contract with it, each party preserved its individuality, neither being merged into the other. Appellants agreed that, if they failed to comply with their contract, the property conveyed should “revert” to the “Southwestern Arkansas College,” its assigns, or successors, - thereby recognizing each other as distinct parties, and that they would remain so. Their assumption of the name of the corporation from which they purchased did not constitute them such a corporation, or give them the right to act in a corporate capacity. They never undertook to organize themselves into a corporation, and were not a corporation de facto. Having undertaken in writing, for a valuable consideration, to pay the debt of another, they are as much liable as partners as they would have been had there been no pretense of incorporation, — like the members of any other merely voluntary association in respect of personal liability, — and are personally and individually liable. Garnett v. Richardson, 35 Ark. 144; Pettis v. Atkins, 60 Ill. 454; Bigelow v. Gregory, 73 Ill. 197; Hurl v. Salisbury, 55 Mo. 310; Fuller v. Rowe, 57 N. Y. 23; 1 Thompson on Corporations, secs. 218, 417, 503, 5002; 3 id. sec. 2992; 1 Cook on Stock, Stockholders and Corporation Law, (3 Bd.), sec. 234; 2 Morawetz on Corporations (2 Bd.), sec. 749. Judgment affirmed.