used in the contract of one C. H. Adams, he paying three per cent. annually as rent on all money so paid, said moneys to be paid when needed for the purpose above named, providing the town will abate taxes on said buildings and stock for the term of ten years." Plea, general issue and the following brief statement:

paper

And for a brief statement of special matter of defense, to be used under the general issue pleaded, the defendant further says: That said defendant never subscribed for nor promised to pay for any shares in the said Bryant's Pond Steam Mill Company; that the signature of said defendant was procured and affixed to said declared on, if at all, on Sunday, and whatever contract was made, if any, was made on Sunday, and therefore void; that subsequent to the time his said name was affixed to said paper and prior to the commencement of this suit, and prior to the organization of this company, this defendant revoked said subscription and notified the plaintiff and the solicitors for said stock that he should not accept the same, and requested his name stricken from the list of subscribers; that no person is named in said subscription paper as payee, and no contract was ever entered into with any person or persons; that no sum is named in said paper declared upon as a limit to the amount to be raised and is indefinite and uncertain; that a sufficient sum was not raised or subscribed for erecting buildings with steam power for the manufacturing of the various kinds of wood, as alleged, and plaintiff was obliged to, and did, mortgage the property to complete the amount; that at the time the plaintiff company pretended to organize, this defendant was not recognized as a subscriber, did not participate in the organization, and is not named therein as one of the subscribers to the stock of the same; that there were conditions attached to said subscription paper which are essential to be performed, and which have never been performed on the part of this plaintiff or any other parties interested in the said subscription, or on the part of the town of Woodstock; that said paper, purporting to be a subscription of shares of stock, is without consideration and void.

W VALTON, J. The only question we find it necessary to consider is whether a subscriber to the capital stock of an unorganized corporation has the right to withdraw from the enterprise, provided he exercises the right before the corporation is organized and his subscription is accepted. We think he has. Such a subscription is not a completed contract. It takes two parties to make a contract. A nonexisting corporation can no more make a contract for the sale of its stock than an unbegotten child can make a contract for the purchase of it.

The right of subscribers to the capital stock of a proposed corporation to withdraw their subscriptions at any time before the organization of the corporation is completed has been affirmed in several recent and well-considered opinions. The right rests upon the impregnable ground of the legal impossibility of completing a contract between two parties, only one of which is in existence. There can be no meeting of the minds of the parties. There can be no acceptance of

the subscriber's proposition to become a stockholder. There can be no mutuality of rights or obligations. There can be no consideration for the subscriber's promise. As said in one of our own decisions, it is a mere nudum pactum—a promise without a promisee-a contractor without a contractee. In fact, every element of a binding contract is wanting. If the subscriber's promise to take and pay for shares remains unrevoked till the organization of the proposed corporation is effected, and his promise has been accepted, then we have all the elements of a valid contract. Competent parties. Mutuality of duties and obligations. A valid consideration, the promise of one party being a sufficient consideration for the promise of the other. A promisee as well as a promisor. A contractee as well as a contractor. In fact, all the elements of a valid contract are present, and the subscription has become binding upon both of the parties. But, till the corporation has come into existence, all these elements are necessarily wanting, and the subscriber's promise amounts to no more than an offer, which, like all mere offers, may be withdrawn at any time before acceptance. When accepted it becomes binding. Till accepted it remains revocable. This conclusion is sustained by reason and authority.

In Starrett v. Rockland Co., 65 Maine 374, the plaintiff sought to recover a portion of the dividends of a successful insurance company. He had subscribed for five shares of the stock before the organization was effected; but the evidence of acceptance of his subscription by the corporation after its organization was not satisfactory, and the court held that without such acceptance there was no completed or binding contract; that the minds of the parties never met; that the plaintiff's subscription, being made before the corporation came into existence, amounted to no more than a proposal to take so many shares a mere nudum pactum—imposing no obligations and securing no rights.

And in Carr v. Bartlet, 72 Maine 120, the right of subscribers to withdraw from such undertakings while they remain inchoate and incomplete, is recognized and affirmed.

In Muncy Traction Engine Co. v. Green, 143 Pa. St. 269, 13 Atl. Rep. 747, decided in 1888, the defendant had been active in procuring subscribers to the capital stock of a proposed corporation, and had himself subscribed for twenty shares, but he wrote to the chairman of the meeting for the organization of the corporation, that, for reasons satisfactory to himself, he withdrew his subscription. The court ruled that the defendant had a right to withdraw his subscription at any time before the organization of the corporation was completed; and the jury having found as a matter of fact that the withdrawal was before the organization of the corporation was completed, a verdict for the defendant was affirmed, and judgment rendered thereon.

In Hudson Real Estate Co. v. Tower, 156 Mass. 82 (1892), the action was founded on a subscription to the capital stock of an unorganized corporation, and the defense was based on an alleged with

drawal of the subscription. The right to withdraw was controverted. The court held that at the time when the defendant signed the subscription paper declared on, it was not a contract, for want of a contracting party on the other side; that while such a subscription may become a contract after the corporation has been organized, still, until the organization is effected, and the subscription is accepted, it is a mere proposition or offer, which may be withdrawn like any other unaccepted proposition or offer.

It is urged by the counsel for the plaintiff corporation that such subscriptions create binding and enforcible contracts between the subscribers themselves, and are, therefore, irrevocable, except with the consent of all the subscribers; and some of the authorities cited by him seem to sustain that view. But we find, on examination, that such views, when expressed, are in most cases mere dicta, and that the cases are very few in which such a doctrine had been acted upon. Reason and the weight of authority are opposed to such a view. Of course, subscription papers may be so worded as to create binding contracts between the subscribers themselves. But we are not now speaking of such subscriptions; or of voluntary and gratuitous subscriptions to public or charitable objects, which, when accepted and acted upon, become binding. We are now speaking only of subscriptions to the capital stock of proposed business corporations. With regard to such subscriptions we regard it as settled law that they do not become binding upon the subscribers till the corporations have been organized and the subscriptions accepted; and that, till then, the subscribers have a right to revoke their subscriptions. And, in view of the fact that such subscriptions are often obtained by over-persuasion, and upon sudden and hasty impulses, we are not prepared to say that the rule of law which allows such a revocation is not founded in wisdom. We think it is.

In the present case an old man, upwards of eighty years of age, and now dead, was induced to subscribe for twenty shares of stock in a proposed, but not then organized, manufacturing corporation; but after a little reflection, he determined to revoke his subscription and withdraw from the enterprise. He notified the agent of the promoters, through whom his subscription had been obtained, of his determination to withdraw, and requested him to take his name off the subscription paper. And he again sent word by his son to have his name taken off. And notice of his withdrawal, and of his request to have his name taken off of the subscription paper, was given to the other subscribers at one of their meetings, and before the corporation was organized. We think his withdrawal was legal and complete, and that no action to recover the amount of his subscription is maintainable.

Other grounds are urged in defense of the action, but it is unnecessary to consider them.

Judgment for defendant.

Note. See note at end of next case.

Sec. 107. Same. Notice of withdrawal.

HUDSON REAL ESTATE COMPANY v. HERMAN C. TOWER. 1894. IN THE SUPREME JUDICIAL COURT of MassachusetTS. 161 Mass. Reports 10-16, 42 Am. St. Rep. 379.

Contract, to recover the amount of a subscription by the defendants, as copartners, for ten shares of stock in the plaintiff corporation. After the former decision, reported 156 Mass. 82, the case was tried in the superior court before Bond, J.

The jury returned the verdict for the defendants, and the plaintiff alleged exceptions. The facts sufficiently appear in the opinion.

ALLEN, J. It was heretofore decided in this case that until the organization of the corporation the defendant's subscription was a mere proposition or offer which might be withdrawn, like any other unaccepted offer. 156 Mass. 82. The principal question which the plaintiff now seeks to present is whether, upon the evidence and under the ruling of the court, the jury were warranted in finding a legal withdrawal or revocation of the subscription.

The only withdrawal or revocation relied on occurred in an interview between one of the defendants and Henry Tower, on August 31, 1889. In view of the verdict the only question left is whether a notification of withdrawal given orally to Henry Tower was sufficient.

It will be necessary to state the situation of the parties. The contract declared on is given below.

"We, the undersigned, hereby subscribe for and agree to purchase the number of shares set against our respective names, of the capital stock in the corporation to be organized under the laws of such state, as a committee hereafter to be appointed from the subscribers shall determine, said shares of capital stock to be of the par value of $50, and the capital stock of said corporation to be not less than $25,000, said corporation to be organized for the purpose of purchasing land, and erecting a shoe shop thereon, with the necessary appliances connected therewith, in the town of Hudson, to be rented, when com pleted, to H. H. Mawhinney & Co., for a term of ten years at a rental of seven per cent. per annum on the cost of the plant when completed. Said corporation to be organized as soon as may be, and in advance thereof an agreement in writing between a committee of the subscribers, in behalf of all, with said H. H. Mawhinney & Co. to be executed, binding the latter to take said plant for the period and at the terms stated, and on the organization of said corporation to be re-executed to bind both parties. And the subscribers hereto hereby bind themselves severally to pay for said stock to the treasurer of said corporation in the way and manner that the corporation when organized shall determine. And we severally agree that one seal shall be the seal of each.

"Hudson, August 7, 1889."

The corporation was organized under the laws of Maine. The meeting for the organization was held at Portland, Maine, August 29, 1889, at which time the articles of agreement, having been signed, were presented, by-laws were adopted, and officers chosen. The necessary papers were then prepared as required by law, and were approved by the attorney-general of Maine, on September 5, were recorded on September 6, and were received and filed in the office of the secretary of state on September 7, 1889. It was agreed at the argument that, under the laws of Maine, the legal existence of the corporation as a corporation, began on September 7.

On the 31st of August, Henry Tower's position was as follows: It must be assumed, though the bill of exceptions does not in express terms so state, that he was one of the subscribers. One of the plaintiff's requests for instructions assumes that there was a contract of the firm above referred to "with Henry Tower and others in behalf of the associates for the purchase of land and building a shoe shop thereon, dated August 19, 1889." This contract, being thus referred to by the plaintiff as an undisputed fact, must be taken to show that Henry Tower was acting as the person first named on the committee contemplated by the subscription paper, to obtain an agreement in writing binding said firm to take a lease of the premises. On August 29, at a meeting which apparently was the first formal step in the organization of the corporation, he was chosen president. By the statutes of Maine, which it was agreed we should refer to, the choice of officers is a necessary preliminary to the creation of the corporation. Revised Statutes of Maine of 1883, ch. 48, §§ 17-19.

It is also obvious that on August 31 he was, in the opinion of the jury, acting as an officer in behalf of the associates, and not merely on account of his personal interest as one of the subscribers. Such is the fair result of the instructions taken as a whole. The judge, in the course of his charge, called the jury's attention to this distinction by saying: "If Henry Tower was one of the officers of the associates for the purpose of managing their business, it would not be necessary that any other notice should be given than what was given to him; but if he went there simply as being interested, not acting as an officer, it may be that he was not an officer, so that he would be a party authorized to receive any notice of withdrawal, and if he was not, then it would be necessary for that fact to be communicated to the meeting." It being pointed out to the judge, at the close of the charge, that the plaintiff's records showed that at the meeting on the 29th of August, Henry Tower was chosen president, he further instructed the jury that if he had been so chosen president, and if the defendants notified him distinctly that if a certain event should happen with reference to the change of the policy of the corporation as to mortgaging its property they would no longer be in the association and would not pay a cent on their subscription, that would be a sufficient notification of their withdrawal if the event did happen. The undisputed testimony, so far as it is recited or disclosed in the bill of exceptions, goes to show that Henry Tower, in that interview, was