CHAP. VI.] AGREEMENTS TO TAKE STOCK. [§ 103. transfer be absolute. 1 The American law is different on this point. 2 § 102. Moreover, by assigning his interest in a contract to take shares in the stock of a future corporation, a person may incur liability to his assignee, at least if he purports to sell shares in the stock of a future corporation, 3 for, should such a corpora- tion never be organized, he might have to refund any money paid him by his vendee. Still, in the absence of fraud, the vendor would incur no liability to his vendee by selling him merely his right to shares in the stock of the corporation when formed ; for here there is no failure of consideration even though the corporation be never formed, because the vendor sold only his right to shares in the stock of a certain corporation should it thereafter be organized. 103. Persons agreeing to take shares in the stock of a cor- poration to be formed necessarily come in contact with the promoters of the scheme of incorporation ; they tions bef- *" usually subscribe on the faith of the acts and repre- scribers Ub " sentations of the latter, and nidge as to the ultimate and promo- ' Jo ters. >yJ*" success of the undertaking from the opinion they ^m^lA*****- have formed of its promoters. The promoters of the plan are in a better position to judge of the feasibility and desirableness of the scheme than are persons who merely agree to take shares in the concern when it shall have started. Because of these and similar considerations a fiduciary relationship arises be- tween the promoters and persons who agree to subscribe for shares in the stock of the future corporation ; 4 and the latter are in consequence entitled to fair and open treatment from the former. It follows that promoters are liable to persons who subscribe for shares in the stock of the future company for damages caused by any fraudulent misrepresentation or con- cealment on their part, where the subscribers have relied on their representations, 5 and to recover such damages the sub- 1 Jessop's Case, 2 De G. & J. 638; DePass's Case, 4 De G. & J. 544; Harrison's Case, L. R. 6 Ch. 286; Williams's Case, 1 Ch. D. 546. See §§586,749. 2 Nathan v. Whitlock, 9 Paige, 152; Marcy v. Clark, 17 Mass. 330. See §§ 586, 749. 3 Kempson v. Saunders, 4 Bing. 5. See Street a. Bailis, 2 P. Wms. 217. 4 Williams v. Page, 24 Beav. 654, 611. See Brewster v. Hatch, 122 N. Y. 349. 5 Hornblower v. Crandall, 7 Mo. App. 220; aff'd 78 Mo. 581. 77
