SUMMARY

There was a contract entered into by the promoters of the defendant corporation (Eclipse Pocahontas Coal Co) on
behalf of the corporation with Wallace wherein Wallace would transfer a lease of a tract of coal in exchange for
1/5 interest in the corporation. Wallace filed for specific performance. The SC ruled that the corporation and the
promoting stockholders should be held jointly liable. Wallace was a subscriber to the capital stock of the
corporation after executing his part under the contract. One that has paid his subscription to the capital stock may
by bill in equity compel the issuance of the proper certificates therefore.

FACTS

 Wallace owned and controlled an option for a lease of a tract of about 600 acres of coal in McDowell County.

 Wallace entered into a contract with the promoters (Griffith, Perkins, O’Keefe and Weller) of the defendant
corporation. Wallace would transfer or assign the said lease to Griffith, for himself and his associates, and from
Griffith to the corporation, when formed. In exchange, Wallace would be given 1/5 interest in the corporation
fully paid up.

 Wallace alleged that he was entitled to receive at least 50 shares of the stock of defendant corporation, but he
received only 5 shares.

 Wallace filed a complaint for specific performance.

 The contract was proven at the trial court where defendants Griffith and associates (Perkins, O’Keefe and
Weller) were held liable to pay a total of $4,300 to Wallace.

 Wallace appealed claiming that the corporation should be held liable.

RATIO

W/N the corporation is liable upon a contract made for and on its behalf and fully executed on the part
of Wallace. - YES
In this case the corporation as well as the promoters is liable to Wallace. As a general rule promoters of a
corporation not yet organized, especially when their contracts are made for and on behalf of the corporation,
are regarded as the agents of the corporation, and such contracts become binding upon them as well as upon
the corporation after organization and acceptance thereof by it.

In the case at bar not only did the corporation have notice of Wallace’s right through its corporators and agents,
but all the stockholders of the corporation participating in the first meeting of stockholders had notice that
Wallace had at least some interest or claim, and Perkins and Griffith knew the extent of it.

Wallace was a subscriber to the capital stock of the corporation. His contract was to sell and convey or cause to
be conveyed to the corporation the leasehold and to accept in payment fully paid up stock to the value of the
property when fully equipped for mining and producing coal. When the equipment was completed, he became
entitled to the stock. One who has paid his subscription to the capital stock of a corporation may by bill in equity
compel the issuance of proper certificates therefore.

When shares of stock have some peculiar value to a purchaser and cannot be purchased on the market, or their
value isn’t ascertainable with any degree of certainty, the purchaser may require specific performance of the
contract.

FALLO

Reversed and remanded.