PROMOTERS. Those who, in popular and penal actions, prosecute offenders in their own name and the king's.
Persons or corporations at whose instance private bills are introduced into and passed through parliament. Especially those who press forward bills for the taking of land for railways and other public purposes, who are then called promoters of the undertak ing.
Persons who assist in organizing joint stock companies or corporations. Mozl. & W.
It has been said to be a term usefully summing up in a single word a number of business operations familiar to the com mercial world, by which a company is gen erally brought into existence ; 28 W. R. 351. One who does act with reference to the formation of a company or in aid of its or ganization, is, as regards that act, a pro moter of the company. Lloyd, Corp. Liab. for Acts of Prom. 17. It applies to any per son who takes an active part in inducing the formation of a company, whether he aft erwards becomes connected with the com pany or not ; Ex-Mission L. & W. Co. v. Flash, 97 Cal. 610, 32 Pac. 600. See Bosher v. Land Co., 89 Va. 455, 16 S. E. 360, 37 Am. St. Rep. 879.
Promoters stand in a relation of trust and confidence to the intended company, and are bound to exercise uberrima fides; Lloyd Corp. Liab. 18; Densmore Oil Co. v. Dens more, 64 Pa. 43; L. R. 6 Ch. Div. 372; their acts are carefully scrutinized ; L. R. 3 App. Cas. 1218 ; they are precluded from a secret advantage over the other stockholders ; Densmore Oil Co. v. Densmore, 64 Pa. 43. The relation of promoters to the company has been considered as similar to that of a trustee to a beneficiary ; Brewster v. Hatch, 122 N. Y. 349, 25 N. E. 505, 19 Am. St. Rep. 498 ; 6 Ch. Div. 371; or of an agent to a principal; id.; or as analogous to that of partners ; Densmore Oil Co. v. Densmore, 64 Pa. 43 ; Smith tr, Warden, 86 Mo. 382; Witmer v. Schlatter, 2 Rawle (Pa.) 359; contra, Johnson v. , Corser, 34 Minn. 355, 25 N. W. 799; or to be rather that of agency ; Gillett v. R. Co., 55 Mo. 315, 17 Am. Rep. 653; promoters may, in fact, be partners. It has also been held that their relation to wards each other is that of principal and agent ; each is liable for such contracts as he authorizes ;' Roberts Mfg. Co. v. Schlick,
62 Minn. 332, 64 N. W. 826.
Promoters are personally liable on con tracts made by them for the intended com pany when the latter proves abortive; L. R. 2 C. P. 174; and also for subscriptions paid in to an abortive company, and that with out any deduction for expenses incurred; Beach, Priv. Corp. 159; 3 B. & C. 814.
A promoter is not liable ew contractu to a person who has been induced by his fraud to take shares in a company, but he may be liable eco delicto; 2 E. & B. 476. Promoters are liable in damages to subscribers whose subscriptions are obtained by fraud ; Pad dock v. Fletcher, 42 Vt. 389; Miller v. Bar ber, 66 N. Y. 558; a bill in equity lies to re cover back money which a person has been induced, through fraud, to invest in a bub ble; 2 P. Wms. 153. As against a person acting as promoter, the corporation is en titled to the full benefit of all acts done and contracts made by him while acting in that capacity ; and the promoter, as between him self and the corporation, is entitled to no secret profits ; he may not purchase proper ty for the corporation, and then sell the same to the corporation at an advance; Si mons v. Min. Co., 61 Pa. 202, 100 Am. Dec. 628; 5 Ch. Div. 73, 395 ; s. c. in the House of Lords, 3 App. Cas. 1218. Where one has already pur chased a certain property at a good bargain, it is no fraud to organize a company and sell the property to it at an advance; Thomp. Liab. of Off. 222. See 1 Ch. Div. 182; Dor ris v. French, 4 Hun (N. Y.) 292. But if at the time of making the sale he occupies to wards the corporation a position of trust, as promoter or otherwise, it would seem that he should not be allowed to sell at an exorbitant price ; 16 Am. L. Rev. 289; but see Densmore Oil Co. v. Densmore, 64 Pa. 43; and he should faithfully state to the company all material facts relating to the property which would influence it in de ciding as to the purchase; Thomp. Liab. of Off. 219; L. R. 5 Eq. 464. See 2 Lind. Part. 580.