S. A. AKEL AND ELAINE AKEL, HIS WIFE, APPELLANTS,
v.
J. W. DOOLEY AND ASENATH P. DOOLEY, HIS WIFE, APPELLEES
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The Akels, as officers of a corporation, agreed to a lease executed before incorporation although the corporation existed before the lease term began. The Dooleys sued for rent as lessors, and the trial court granted summary judgment in their favor, holding them not estopped from denying the corporation's existence at the time of the lease contract.
The trial court's summary judgment in favor of the Dooleys is affirmed. The Dooleys are not estopped from denying the corporation's existence because: (1) it is against Florida public policy for individuals to do business as a corporation without complying with incorporation statutes; and (2) the Dooleys had no knowledge of the non-incorporation at the time they entered into the lease and took no action in reliance on the corporation's purported existence.
“The settled general rule is that contracts made for a corporation by its promoters prior to its creation are not enforceable by or against the corporation after its organization.”
Establishes the fundamental principle that pre-incorporation contracts with a corporation cannot bind the corporation after incorporation
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Join FLexlaw to unlock all legal intelligenceThe Dooleys, as lessors, entered into a lease with Akel Corporation, a Florida corporation. The lease was executed before Akel Corporation's incorpora…
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This is an appeal from a summary judgment rendered in favor of the appellees, plaintiffs below, as lessors, against the appellants, defendants below, as lessees, *492in a suit for rent under a lease between the appellees and the Akel Corporation, a Florida corporation, in which the appellants were officers.
The lease in question was executed before the incorporation of Akel Corporation, although the corporation came into existence prior to the start of the leasehold term.
In Nichols v. Bodenwein, 1932, 107 Fla. 25, 146 So. 86, the Supreme Court said:
“This court has said: ‘The settled general rule is that contracts made for a corporation by its promoters prior to its creation are not enforceable by or against the corporation after its organization.’ Sumner-May Hardware Co. v. Scally et al., 66 Fla. 93, 62 So. 900. We have also approved the following:
“1 “An agent will be held personally liable where he professes to enter into a contract for a principal who is at the time non-existent, or legally incompetent or irresponsible, even though in thus entering into the contract he acts in good faith, as an agent assuming to contract for a principal must make a contract binding upon same principal, or else he himself is liable. In accordance with this rule it has been held that an agent is personally liable where he professes to enter into a contract on behalf of an unincorporated association, club or committee, or on behalf of a corporation, before its incorporation.” ’ I. W. Phillips & Co. v. Hall, 99 Fla. 1206, 128 So. 635-637; Bryce v. Bull, decided at this Term [106 Fla. 336] 143 So. 409.”
On rehearing, the Court held that a purchaser dealing with promoters was not estopped to deny existence, since it is against the public policy of the state, as expressed in the statute, for individuals to do business as a corporation without complying with corporation laws, in addition to which there was no showing that purchaser had any knowledge of nonexistence of pretended corporation at the time she entered into the contract
The Court, in its opinion on rehearing, said:
“We are unable to agree with the earnest contention of counsel for appellees Marsh and Dashiell that, inasmuch as the contract was signed by the parties in a corporate name and the contract accepted by appellant, that she dealt with them as a de facto corporation, she is estopped to deny the corporate existence. First, it is against public policy of this state, as expressed in the statute, for individuals to do business as a corporation without complying with the corporation laws; the statute imposes a penalty of partnership liability upon the directors, and officers for so doing, and the contracts so entered into are not enforceable either by or against the corporation. Sumner-May Hardware Co. v. Scally et al., 66 Fla. 93, 62 So. 900. Second, there is no showing that appellant had any knowledge of the nonexistence of the pretended corporation at the time she entered into the contract and paid her money or did any act which appellees acted upon that worked an estoppel against her.”
See also Charles v. Young, 1917, 74 Fla. 298, 76 So. 869; Humphreys v. Drew, 1910, 59 Fla. 295, 52 So. 362; Heinberg Bros. v. Thompson, 1904, 47 Fla. 163, 37 So. 71.
The appellees, J. W. Dooley and his wife, Asenath P. Dooley, filed a motion for summary judgment and each made an affidavit in support of said motion. Each affidavit, in effect, stated that at the time the lease agreement was made to Akel Corporation that no one mentioned to either of them anything about whether or not Akel Corporation was, at that time, incorporated, and that each of them was not aware of the fact that Akel Corporation was not incorporated as of the date of the lease. The affidavits also stated that they, the Dooleys, were not informed that the Akel Corporation was not incorporated as of the date of the lease until their attorneys so informed them after the institution of this suit.
*493No counter-affidavits were made by the defendant-appellants.
Finding no error in the record, we affirm the trial judge.
Affirmed.
PIERCE, J., and LOVE, WILLIAM K., Associate Judge, concur.
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Fla. AIR Conditioners, Inc. v. Colonial Supply Co., 390 So. 2d 174 (Fla. 5th DCA 1980)…irections to permit appellant to amend its complaint in order to permit the just determination of this cause on its merits. REVERSED. ORFINGER and FRANK D. UP-CHURCH, Jr., JJ., concur. .Nichols v. Bodenwein, 146 So. 86 (Fla.1932); Akel v. Dooley, 185 So. 2d 491 (Fla. 2nd DCA 1966); International Design, Inc. v. Rubin’s Franchises, Inc., 247 So. 2d 778 (Fla. 3rd DCA 1971); Katz v. Kent Kenholtz, 147 So. 2d 342 (Fla. 3rd DCA 1962). Independent of the inapplicable § 607.397, Fla.Stat., there may be other stat…
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DSA Grp., Inc. v. Gonzalez, 555 So. 2d 1234 (Fla. 2d DCA 1989)…2d 323, 326 (Fla. 2d DCA 1976) (parol evidence admissible as to capacity in which party signed contract). See also Puckett v. Codisco, Inc., 440 So. 2d 596 (Fla. 2d DCA 1983). The facts of this case appear to contrast with those in Akel v. Dooley, 185 So. 2d 491 [*1235] (Fla. 2d DCA 1966), in which it was held that a party who signed a contract for a nonexistent entity was personally bound under the contract. In this case the entity named in the contract for which defendant purported to sign was nonexistent…
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Int'l Design, Inc. v. Rubin's Franchises, Inc., 247 So. 2d 778 (Fla. 3d DCA 1971)…a. In all of them it seems clear that the liability of the promoter is treated as primary, not as a guarantee, cf. Nichols v. Bodenwein, 107 Fla. 25, 146 So. 86, 659 (1932); Bean v. Harris, Fla.App.1968, 212 So. 2d 368; Akel v. Dooley, Fla.App.1966, 185 So. 2d 491; Katz v. Kenholtz, Fla.App.1962, 147 So. 2d 342. We hold that the contract in question is one which does not fall within the statute of frauds as a contract of guarantee. Plaintiff alleged that defendant Roosevelt was one of the promoters of a corp…
Previewing 3 of 5 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Phillips v. Hall, 99 Fla. 1206 (Fla. 1930)
- Effie Smith Nichols v. Bodenwein, 107 Fla. 25 (Fla. 1932)
- Bryce v. Bull, 106 Fla. 336 (Fla. 1932)
- Heinberg Bros. v. Thompson, 47 Fla. 163 (Fla. 1904)
- Charles v. Young, 74 Fla. 298 (Fla. 1917)
- Wise v. Spears, 76 So. 869 (Ala. 1917)
- Humphreys v. Drew, 59 Fla. 295 (Fla. 1910)
- Sumner-May Hardware Co. v. Scally, 66 Fla. 93 (Fla. 1913)