## Facts

- An architectural firm agreed to provide services for a proposed motor hotel and restaurant project in Edina, Minnesota, under a written contract dated April 20, 1961.
- The printed agreement identified the “Owner” as “Boss Hotels Company, Inc.” and set the architect’s fee at 6% of construction cost, payable in stages as design work progressed.
- Before signing, the defendant struck the corporate name on the signature line and substituted: “By: Edwin A. Boss, agent for a Minnesota corporation to be formed who will be the obligor,” with the architect’s awareness and assent to that manner of signing.
- The contemplated Minnesota corporation was never formed; instead, an Iowa corporation was later organized in connection with the project.
- The architect completed detailed plans and specifications and obtained a firm contractor bid based on an estimated construction cost of $850,000.
- Partial payments were made using checks bearing “Boss Hotel Co., Inc.”
- The project was later abandoned after substantial architectural work had been performed.
- The architect sued the defendant individually to recover an unpaid fee balance of $23,750; the defendant argued only the not-yet-formed corporation was intended to be liable.

## Issues

1. Whether a promoter who signs a contract “as agent for a corporation to be formed who will be the obligor” is personally bound as a present obligor when the corporation does not exist at contracting.
2. Whether the architect agreed to look solely to the future corporation (or another fund) for payment, thereby displacing the promoter’s personal liability.
3. Whether post-contract conduct (including partial payments by an entity using a corporate name) created a novation or release of the promoter.

## Decision

- The court held the defendant was a present obligor on the architectural contract despite the “agent for a corporation to be formed” signature language.
- The court entered judgment for the architect against the defendant personally for the unpaid balance of the fee (and related relief such as interest/costs as awarded).

## Legal Principles

- A promoter who contracts on behalf of a projected corporation is personally liable unless the other contracting party agreed to look to some other person or fund for payment.
- Contract language stating that a future corporation “will be the obligor,” without an express agreement releasing the promoter, does not negate the default rule of promoter liability when the corporation is nonexistent at the time of contracting.
- Payment through an entity using a corporate name, without clear assumption and a release of the promoter, does not establish a novation shifting sole liability from the promoter to a corporation.

## Conclusion

Because the corporation referenced in the signature clause did not exist at contracting and the evidence did not show the architect agreed to rely exclusively on the future corporation or that a novation later released the promoter, the promoter remained personally liable for the unpaid architectural fees.


Stanley J. How & Assocs., Inc. v. Boss, 222 F. Supp. 936 (S.D. Iowa 1963)