
    AMERICAN HOME LIFE INS. CO. v. JENKINS et al.
    (Court of Civil Appeals of Texas. Ft. Worth.
    May 20, 1911.)
    1. Corporations (§ 79) — Subscriptions Through Promoters — Construction —Entire and -Severable Contracts.
    A contract with the promoters of a corporation, whereby a subscriber to the stock of the proposed corporation agreed to pay the corporation when organized a certain amount for the stock and also to pay the promoters a certain amount for the expenses of promotion, is sev-erable.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 186-193; Dec. Dig. § 79.]
    2. Corporations (§ 448) — Liability—Contracts op Promoters.
    A wife, without her husband’s consent, at the solicitation of those promoting a corporation, subscribed for shares of stock, agreeing- to pay the corporation for such shares, and also to pay the promoters a certain sum for promotion expenses and the privilege of subscribing. The corporation, when organized, did not assume the contracts of the promoters and received no benefit from the money paid them, or from property transferred by the wife to such promoters to secure the performance of her contract with them. Held that the corporation was not liable to the husband for the money paid to the promoters, or for the property transferred to them, though the payment and transfer were secured by fraud, and the money and property was community property, and the husband had not consented to the contract.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 1709, 1789-1792; Dec. Dig. § 448.]
    Appeal from District Court, Haskell County; C. C. Higgins, Judge.
    Action by H. H. Jenkins and another against the American Home Life Insurance Company. From a judgment for plaintiffs, defendant appeals.
    Reversed and rendered.
    C. K. Bell, for appellant.
    Helton & Murchison, for appellees.
    
      
      Nor other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   DUNKLIN, J.

Mrs. Zuma Jenkins gave to Stewart, Walker & Co. her two subscriptions in writing each for 100 shares of stock in the American Home Life Insurance Company, the organization of which Stewart, Walker & Co. were then promoting, one of the subscriptions being dated April 1, 1909, and the other April 29, 1909. The subscription dated April 29, 1909, is as follows:

“The American Home Life Insurance Company.
“Subscription to Capital Stock.
“No. 875. 100 shares.
“Whereas, Stewart, Walker & Co. of Fort Worth, Texas, are promoting the organization of a life insurance company, to be incorporated in pursuance of the laws of the state of Texas, under the name of the American Home Life Insurance Company, with an authorized capital stock of five hundred thousand dollars and a paid-up capital of at least two hundred thousand dollars, and a net sur-1 plus of at least one hundred and twenty-five thousand dollars, paid up and free from promotion and organization expenses, all in accordance with a printed prospectus issued toy them and delivered to me.
“And whereas, by their acceptance of this subscription said Stewart, Walker & Co. agree to endeavor with all reasonable diligence to accomplish on or before December 31st, 1909, the organization of said corporation with capital stock and surplus full paid as aforesaid, they defraying all expenses of promotion and incorporation:
“Now, therefore, I do hereby subscribe for 100 shares of the par value of ten dollars each of the capital stock of said the American Home Life Insurance Company and I do hereby agree with the said company and with the said Stewart, Walker & Co. to pay therefor the sum of $2250.00 dollars as follows: The sum of $1750.00 dollars I agree to pay to said the American Home Life Insurance Company at any time after May 1st, 1909, immediately upon receipt of notice from said Stewart, Walker & Company that said company has been duly incorporated, and that its capital stock has been subscribed in good faith in amounts and at rates netting the company at least two hundred thousand dollars capital, and at least one hundred and twenty-five thousand dollars surplus in the aggregate when paid. The remaining 'sum of $500.00 dollars I agree to pay and do pay concurrently with this subscription to the said Stewart, Walker and Co. in consideration of their agreement here-inbefore recited, and in lieu of any further or other contribution on the expense of promoting and incorporating said company.
“Witness my hand this the 29th day of April, 1909.
“This application is to take place as part of application #869.
“Zuma Jenkins,
“Name of Subscriber.
“Haskell, Texas,
“Post Office Address.
“(36) 2250.
“1750.
“1800.”

The subscription dated April 1, 1909, Is a duplicate of the one already quoted, with the exception of date and the further difference that it contains a statement that it is to take the place of application No. 601 as a part of the same.

One L. P. Gamble and one Fred Hoecker each had previously subscribed for 500 shares of stock in the proposed company, their subscriptions being in writing and in the same terms as the subscription above set out. Mrs. Jenkins’ subscriptions were procured by one J. Thomas Gregory, who induced her to purchase from Gamble and Hoecker "each the privilege of being allowed to substitute her subscriptions for 100 shares, and thus reduce each of their subscriptions to 400 shares. Two hundred and fifty dollars was charged as a bonus by Gamble and also by Hoecker for the surrender of 100 shares of the stock already subscribed by him, and it was understood by Mrs. Jenkins at the time she gave her subscriptions that each 100 shares of stock for which she subscribed would cost her $2,500 or $250 in excess of the amount stated in each of her subscriptions. When she gave her first subscription to Gregory, she delivered to him three vendor’s lien notes in her favor in a sufficient amount to cover the $1,750 named in her subscription as payable to the corporation when organized, and at the same time she executed to Gregory her promissory note for $750, which she paid a few days later. At the time she gave her second subscription she executed to Gregory her note for $750, and gave as collateral security a vendor’s lien note in her favor for $600, and also agreed with Gregory to pay in vendor’s lien notes the $1,750 dollars named in her contract as payable to the proposed company. The note given by Mrs. Jenkins to Gregory for the sum of $750 at the time of her second subscription for stock, together with the vendor’s lien note attached thereto as collateral security, was sold by Gregory to the Waggoner Bank & Trust Company of Ft. Worth. Afterwards on May 3, 1909, the proposed company was organized.

After the company was organized, its general manager demanded of Mrs. Jenkins payment of the $3,500 claimed to be due on her two subscriptions for stock. Quite an extensive correspondence ensued between the parties resulting, finally, in Mrs. Jenkins’ refusal to take the stock and the return .to her by the insurance company of the three vendor’s lien notes which she had turned over to Gregory in payment of the $1,750 due the company under the first subscription. These three notes were the only notes ever received 'by the insurance company after its organization. Nor did the company after its incorporation receive from Stewart, Walker & Co., nor from Gregory, nor from any one else, any other consideration paid by Mrs. Jenkins to Gregory, and there was no proof to show that appellant’s articles of incorporation made it liable upon the contracts of Stewart, Walker & Co. for promoting expenses.

This suit was originally instituted by Mrs. Zuma Jenkins and her husband, H. H. Jenkins, but later an amended petition was filed in which H.- H. Jenkins alone prosecuted the suit as plaintiff. In the amended petition it was alleged that in the transactions with Mrs. Zuma Jenkins Gregory was the agent of the defendant; that the vendor’s lien notes transferred by Mrs. Jenkins to Gregory were community property of the plaintiff and his wife; that the transfers were made without her husband’s knowledge or consent; that Mrs. Zuma Jenkins was induced to enter into said contracts by false and fraudulent representations by Gregory that the stock had a market value of $30 per share. Plaintiff sought judgment for a rescission of the said contracts on the part of Mrs. Zuma Jenkins and for judgment against the defendant for the money paid 'by her to Gregory; for a restoration of all the vendor’s lien notes delivered by Mrs. Jenkins to Gregory, and, in the alternative, for the value of the same in the event defendant did not return them.

Judgment was rendered in favor of the plaintiff against the company canceling the contracts entered into by Mrs. Jenkins and mentioned above, also for $1,100, with interest thereon, and the judgment further decreed title in the defendant company to the $600 vendor’s lien note which Mrs. Jenkins delivered to Gregory as collateral security for the $750 note signed by Mrs. Jenkins and payable to Gregory which was given at the time Mrs. Jenkins subscribed for the second 100 shares of stock in the defendant company, and which note and collateral Gregory afterwards sold to the Waggoner Bank & Trust Company. From that judgment the defendant has prosecuted this appeal.

In the case of W., M. W. & N. W. Ry. Co. v. Granger, 86 Tex. 350, 24 S. W. 795, 40 Am. St. Rep. 837, our Supreme Court held that a corporation is not bound by the contracts of its promoters entered into before the corporation is brought into legal existence, unless, after it is chartered, it adopts the contracts as its own, in the absence of a provision in the articles of incorporation or in the statute under which the same is chartered that the corporation shall be liable on. such contracts. And this is true even though the corporation is the recipient of some of the benefits resulting from the contracts made by the promoters and antedating its charter. See, also, Bonham Cotton Press Co. v. McKellar, 86 Tex. 694, 26 S. W. 1056; G. & B. V. Ry. Co. v. Winder, 26 Tex. Civ. App. 263, 63 S. W. 1043.

This decision is of controlling effect in this case. As shown, the contracts of Mrs. Zuma Jenkins antedated the organization of the corporation, and she parted with the vendor’s lien notes and money before the corporation came into existence. Appellant received none of the money and the three vendor’s lien notes received by it were returned to Mrs. Jenkins. It demanded payment of the $3,500 which Mrs. Jenkins had agreed to pay to the corporation for the 200 shares of stock as shown in her subscription contracts, but, this demand being refused, appellant returned the three vendor’s lien notes which had come intp its possession and elected to declare Mrs. Jenkins’ contract of no further force or effect. Clearly, the subscription contract by Mrs. Jenkins was severable, one part being in favor of the corporation when organized and the other part being in favor of the promoters.

Appellant did not adopt her contract in favor of the promotors, nor did it receive any benefits thereunder, and is not liable to the plaintiff for any benefits received by the' promotors under the contracts in their favor,, even though it he true that such benefits so received belonged to the community estate of plaintiff and his wife and the transaction on the part of Mrs. Jenkins was without the knowledge or consent of her husband, and even though it should be held that Gregory practiced a fraud upon her in such transaction. The facts recited above were proven without controversy.

For the reasons noted, the judgment of the trial court is reversed, and judgment is here rendered in appellant’s favor.  