Corporations – Promotion – Discharge of Promoter’s Liability as Bidder at a Bankruptcy Sale
On October 1, defendant made the high bid at a bankruptcy sale of hotel properties as “Mr. Ash, trustee.” Later that same day a certificate of incorporation was executed for a corporation with Ash as treasurer. On October 4 the proper corporate papers were filed with the secretary of state. On October 4 the receivers receipted for the earnest money deposit, the instrument acknowledging, as interpreted by the court, that the receivers would look to the corporation to complete the contract and would not look to Mr. Ash personally. On October 14, the referee confirmed the sale to “Mr. Ash, trustee.” On October 27 the corporation ratified the acts of Mr. Ash. On October 27 the receivers were notified that the transaction would not be completed, the property was shortly thereafter resold, and the receivers brought suit. Held, defendant was not personally liable for the loss realized by resale. Frazier v. Ash, (5th Cir. 1956) 234 F. (2d) 320.