Kridelbaugh v. Aldrehn Theatres Co.

Three promoters proposed to incorporate Aldrehn Theatres Co. (Aldrehn) (defendant) and hired J. W. Kridelbaugh (plaintiff), telling him that his services would be required to investigate and to determine in which state to incorporate Aldrehn. Kridelbaugh determined it was convenient to incorporate Aldrehn in Iowa and proceeded to incorporate Aldrehn. After, the three promoters became the only directors of Aldrehn, they promised to pay Kridelbaugh $1,500 for the services already performed. Kridelbaugh attended the first meeting of the board of directors and was told to secure the Iowa permit to sell Aldrehn stock in Iowa so that he could be paid for his prior services. Aldrehn refused to pay Kridelbaugh for his services, despite Kridelbaugh’s past efforts in incorporating Aldrehn being recognized at the first meeting and the acknowledgment by one of the Aldrehn directors that payment would be made to Kridelbaugh once the permit was secured and Aldrehn stock was sold. Kridelbaugh sued Aldrehn for specific performance to recover $1,530.02 as his attorneys’ fees and expenses incurred for services performed for Aldrehn prior to its incorporation. Alrehn argued that Kridelbaugh’s services were not ratified and the promoters could not bind the entity. The trial court entered judgment for Kridelbaugh. Aldrehn appealed.