
    Floyd v. Swiler.
    
      Corporations — Liability on promoter’s note — Members not individually liable after corporation organized, when — Corporate and not individual liability established by evidence —Verbal understanding within statute of frauds and unenforceable.
    
    1. Defendants contracting to form corporation which when ' formed would assume promoter’s note are not individually liable for note after corporation was formed, unless they had expressly assumed responsibility.
    2. In suit on note against individual members of corporation, evidence held to show that members contracting to form corporation intended that corporation and not individuals should be liable on note assumed in contract.
    3. Verbal understanding, if made, by defendants contracting to form corporation, to assume liability on note after formation of corporation, is within statute of frauds and unenforceable.
    (Decided December 6, 1926.)
    Error : Court of Appeals for Cuyahoga county.
    
      Mr. Berkeley Pearce, for plaintiff in error.
    
    
      Messrs. Snyder, Henry, Thomsen, Ford & Sea-grave, for defendant in error.
   Vickery, J.

This case comes into this court on a petition in error to the municipal court of the city of Cleveland. In the court below Floyd brought an action against Swiler and one Collins to recover upon a promissory note of $1,000 that Floyd had given to one I. A. Greenwood. The court beloiv found for Swiler, Collins not having been found within the jurisdiction and not being a party to the record, and it is to reverse said finding of the court that error is prosecuted here.

It seems that Floyd was a sort of promoter and wanted to form a corporation to deal in certain articles, and he and some others entered into a written contract with Swiler and Collins that a corporation would be formed, and that when such corporation was formed it would assume this note for ■$1,000 which Floyd had given to Greenwood. Apparently the note was not paid, and so Floyd brings an action against Swiler to recover on this note.

The record does not show whether Floyd had paid the amount of this note to Greenwood or not, and, according to his theory of the case, if it is tenable, it probably would not make any difference. The rights of Floyd to recover in this action arise upon the wording of a written contract, in which there was an assumption of this note and agreement to pay it. A great many authorities have been cited by learned counsel for plaintiff in error to the effect that promoters of a corporation are liable to those who contract with the promoters, upon the strength of there being a corporation, or that there would afterwards be a corporation, where those parties were damnified and there was no corporation formed, but no authority was pointed out to us where, as in the instant case, the corporation afterwards formed assumed a certain obligation and individual members composing that corporation were held responsible unless they themselves had expressly assumed responsibility.

It is rather interesting in this case to know that a first draft of this contract made Swiler and Collins personally assume this obligation of Floyd’s to Greenwood; but tbe record shows that Swiler and Collins refused to sign and make themselves personally liable, whereupon the writing upon which this suit was brought was made and signed by the various parties. This is important, as bearing upon the construction of the words in the contract from which it is argued that there is an assumption of this obligation by Swiler and Collins. Not that we think it is ambiguous, but apparently it was thought to be ambiguous by Floyd, and he seeks to overcome the fact of the refusal of Swiler and Collins to sign the original contract as prepared, by putting a construction upon the contract as finally signed, which we do not think it will warrant.

It must be remembered that after this corporation was formed, the corporation by its board of directors assumed this obligation and promised to pay it. This is only important as carrying out the evident intention of these parties by having this obligation assumed by the corporation, which negatives the claim that Swiler and Collins assumed it personally. We do not think that Swiler and Collins were promoters of this enterprise. If there was any promoter it was evidently Floyd himself, and he apparently is the only man who profited in any way in this transaction, as the record shows Swiler and Collins at least parted with a thousand dollars of actual money. Just what became of the thousand dollars in question, where it went, the record is silent. In any event there was no such assumption in writing of this obligation by Swiler or Collins as would make them legally responsible. If there was a verbal understanding, which from the record we do not think there could have been, it was within the statute of frauds and unenforceable.

For these reasons we think the judgment below was right and should be affirmed.

Judgment affirmed.

Levine, P. J., and Sullivan, J., concur.  