18

in promoting the public interests, and only posed to require." It must be, therefore, operate to encourage dishonesty and promote that any act in excess of these granted pow injustice. Resting upon one or more of ers is an act contrary to public policy, and, these arguments, many cases might be cited. upon that ground, illegal and void. Any These are, then, a class of cases which make other view by which such acts are to be supa distinction between acts merely in excess ported because executed would operate as an of authority and those which, in addition, enormous practical extension of the power of are affirmatively forbidden, or immoral, or corporations. The view this court has taken in contravention of some principle of public has therefore been that "all acts outside the policy. It It seems to us that the true founda- object of its creation, as defined in the law tion of the doctrine of ultra vires lies in the of organization, and therefore beyond the proposition that every act of a corporation in powers conferred upon it," are acts not voidexcess of its powers is an act in contravention able only, but wholly void. Buckeye Marble of public policy, and, for that reason, to be & Freestone Co. v. Harvey, 92 Tenn. held null and void. The ground upon which L. R. A. 252; Memphis Grain & P. Elevator Co. corporate privileges are conferred is that the v. Memphis & C. R. Co. 85 Tenn. 705; Mallory public interests may be thereby subserved. v. Hanaur Oil Works, 86 Tenn. 598. The If this is not so, then all such concessions are rule, and the foundation upon which it rests, mere acts of legislative favoritism, and con- as held by the English courts, are identical travene the foundation upon which govern- with our own. The English doctrine is summent is supposed to rest, that all are to be marized by Mr. Beach in these words: "Corprotected in the enjoyment of equal rights porations are created for fixed purposes, with and privileges. Charters must be supposed certain specified powers. It is deemed to be to be, therefore, granted upon the supposition public policy to keep them strictly within that some public interest is thereby advanced. bounds so defined. There is an implied "The legislature is, therefore, presumed, prohibition to go beyond such limits, and says Judge Selden in Bissell v. Michigan S. all persons dealing with a corporation are & N. I. R. Co., 22 N. Y. 285, "to have charged with notice of the limitations upon granted just so much power, and so many its authority. Therefore every contract of a peculiar privileges, as those interests are sup-corporation or its agents, which exceeds the

powers, the stockholder may in many cases be de- | party to the contract, other legal principles apply nied, on the ground of his express assent or his in- | in determining whether the contract shall be obtelligent though tacit consent to the corporate action. If there be a departure from statutory direction, which is to be considered merely a breach of trust to be restrained by a stockholder, it is pertinent to consider what has been his conduct in regard thereto. A corporation may do acts which affect the public to its harm, inasmuch as they are per se illegal or are malum prohibitum. Then no assent of stockholders can validate them. It may do acts not thus illegal though there is want of power to do them, which affect only the interest of the stockholders. They may be made good by the assent of the stockholders, so that strangers to the stockholders dealing in good faith with the corporation will be protected in reliance upon those acts. Folger, J., in Kent v. Quicksilver Min. Co. 78 N. Y. 159.

The rule laid down in this case was followed in Sheldon H. B. Co. v. Eickemeyer H. B. Mach. Co., 90 N. Y. 607, where it was held that the plaintiff was estopped from claiming that the action of its trustees in transferring its property to the defendant in payment of a valid claim, was ultra vires.

Misconception arises from failing to distinguish between those rights which parties acquire as between themselves, and the rule by which corporate authority must be measured and limited when the state interposes to assert its prerogative. It is urged by those who oppose the general rule, that corporators might by ratifying corporate acts by their acquiescence, indefinitely ex end and amplify their granted powers. To this it is sufficient to answer that the state may interpose its authority at any time and compel an abandonment of the act in excess of power, and, if need be, revoke the charter of the company for its usurpation.

When the state challenges the legality of the transaction the paramount and only question is whether it has bestowed upon the company the requisite authority to engage in it. When the question arises between the company and the other

served. It will be admitted that where there is an absence of authority on the part of a corporation to do an act, the requisite power cannot be imported into the transaction, either by the consent of stockholders or by the execution of the contract by the other party to the agreement. The contract must necessarily continue to be ultra vires. No such effect has been attributed in any of the cases to acquiescence or unilateral performance. The basis upon which the enforcement of the contract in such cases rests is that the company is estopped from setting up its own unauthorized act, and its own incapacity, to evade performance on its part, after receiving the fruits of the bargain. The power of the company is not amplified, the agreement is none the more legal, in the sense that there was authority to execute it; the court simply refuses to entertain the defense which common honesty forbids the company to make. A man may become bound by the act of an unauthorized agent, and be held liable to the contract made for him, not on the ground that the agent in fact had any authority but for some conduct on the part of the alleged principal which precludes him from raising the question of authority. Why are corporations compelled to pay money borrowed in excess of authority, and to pay the stipulated rent for premises unlawfully leased for the period of occupation? The law does not imply a contract to pay the bondholders the money thus received. It is illogical to say that the law will imply a contract by the company which it has no power to make for itself. A contract cannot be implied where an express contract cannot be made. The law recognizes the obligation, it precludes or estops the attempt to evade it. Whatever legal phrase may be applied to it the underlying principle is that the corporation cannot set up its own infirmity when it is unconscionable to do so.

The liability of the company does not rest upon the doctrine of ratification. In its ordinary legal acceptation ratification applies to such contracts as a party has authority to make. Repeated af

powers of the corporation, violates this im- | charter. If it is repealed, or if the amendplied prohibition, and contravenes such pub-ments proposed, being not merely auxiliary, lic policy, and is illegal and void. Conse- but fundamental, are rejected by a vote repquently, as to such contracts, there can be resenting more than half of the stock, the no ratification or estoppel." 2 Beach, Priv. corporation shall continue to exist for the Corp. $421. The Tennessee rule is in accord purpose of winding up its affairs, but not with the holding of many of the American to enter upon any new business. If the courts. Pittsburgh, C. & St. L. R. Co. v. amendments or modifications, being fundaKeokuk & H. Bridge Co. 131 U. S. 389, 33 mental, are accepted by the corporation, as L. ed. 163; Central Transp. Co. v. Pullman aforesaid, in a general meeting to be called Palace Car Co. 139 U. S. 60, 35 L. ed. 68; for that purpose, any minor, married woman, Davis v. Old Colony R. Co. 131 Mass. 258, or other person under disability, or any stock41 Am. Rep. 221; Chambers v. Falkner, 65 holder not agreeing to the acceptance of the Ala. 448; Marion Sav. Bank v. Dunkin, 54 modification, shall cease to be a shareholder, Ala. 471. The remedy, in case one of the and the corporation shall be liable to pay parties has received a benefit under such a said withdrawing stockholders the par value contract, which, ex æquo et bono, it ought not of their stock, if it is worth so much; if not, to retain, is a suit in disaffirmance and for then so much as may be its real value in the an accounting. Buckeye Marble & Freestone market on the day of the withdrawal of said Co. v. Harvey, supra. The plaintiff's suit stockholders as aforesaid: provided, that the is upon the contract, and in affirmance of it, claims of all creditors are to be paid in and, if there be nothing else in the case, preference to said withdrawing stockholdcould not be maintained. ers. Acts 1875, p. 237, § 5. It is to be observed that the state does not by this act undertake to arbitrarily impose a fundamental alteration, and require the corporation to continue in business under the amendment. It does, however, demand that the corporation shall accept the amendment, however radical it may be, or continue its existence

2. But is the defendant company for any reason estopped to show that this amendment had not been adopted? The provisions of the Act of 1875, concerning legislative amendnents of charters obtained under the general law, is in these words: "The right is reserved to repeal, annul, or modify this

firmations of a contract by one who has no authority to enter into it, cannot supply the requisite authority.

But acquiescence in it upon which the other party acts, may, and does, upon settled legal principles preclude the parties from starting the question of power as between themselves. See opinion of Van Syckel, J., in Camden & A. R. Co. v. May's Landing & Egg Harbor City R. Co. 48 N. J. L. 530.

There is a distinction between the exercise by a corporation of a power not conferred upon it, varying from the objects of its creation as declared in the law of its organization, of which all persons dealing with it are bound to take notice; and the abuse of a general power, or the failure to comply with prescribed formalities or regulations in a particular instance, when such abuse or failure is not known to the other contracting party. See opinion of Mr. Justice Campbell, Zabriskie v. Cleveland, C. & C. R. Co. 64 U. S. 23 How. 381, 16 L. ed. 488; of Mr. Justice Hoar, Monument Nat. Bank v. Globe Works, 101 Mass. 57, 3 Am. Rep. 322; of Lord Hatherley, Ashbury R. Carriage & Iron Co. v. Riche, L. R. 7 H. L. 663.

A corporation may be bound to refund to a person from whom it has received money or property for a purpose unauthorized by its charter, the value of that which it has actually received; for in such a case, to maintain the action against the corporation is not to affirm but to disaffirm, the illegal contract. White v. Franklin Bank, 22 Pick. 181; Morville v. American Tract Soc. 123 Mass. 129.

Davis v. Old Colony R. Co., 131 Mass. 258, 41 Am. Rep. 221, was an action brought upon an agreement by the defendant company guaranteeing the expenses of a musical festival, the holding of which, the company considered, would result in great pecuniary benefit to itself. The court held that such an agreement was altogether outside of the purposes for which the company was organized, and that the action could not be maintained. Gray, Ch. J., said: "A corporation has power to do such business only as it is authorized by its act of incorporation to do, and no other. It is not held out by the government, nor by the stockholders,

| as authorized to make contracts which are beyond the purposes and scope of its charter. It is not vested with all the capacities of a natural person, or of an ordinary partnership, but with such only as its charter confers. If it exceeds its chartered powers, not only may the government take away its charter, but those who have subscribed to its stock may avoid any contract made by the corporation in clear excess of its powers. If it makes a contract manifestly beyond the powers conferred by its charter and therefore unlawful, a court of chancery, on the application of a stockholder, will restrain the corporation from carrying out the contract; and a court of common law will sustain no action on the contract against the corporation.

"Every person who enters into a contract with a corporation is bound at his peril to take notice of the legal limits of its capacity." That is good reason for making a distinction between municipal and private corporations in this respect. The creditor of a municipal corporation may, far more properly than the creditor of a private corporation be required to take notice at his peril as to when the limit is reached. And a private corporation will be held, at least to the extent of the consideration received, for indebtedness assumed to be contracted in excess of the limit imposed by the articles of incorporation. Humphrey v. Patrons' Mercantile Asso. 50 Iowa, 607.

Whether the plea of ultra vires should be allowed as a defense to assumed obligations should not be determined without regard to the character and objects of the incorporation, the nature of the powers conferred or withheld, the particular character of the obligations assumed or contract entered into, the relations of the contracting parties, and the bona fides of him against whom the doctrine is asserted. Dickinson, S., in Auerbach v. Le Sueur Mill Co. 28 Minn. 291, 41 Am. Rep. 285.

In Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950, a railroad corporation, without authority of the legislature, leased its railroad to three persons for twenty years, for the consideration of one half of the gross sums collected from the operation of the road by the lessees during the

only for the purpose of winding up its busi- | face. It must be taken to have known that ness. In other words, the state says to every the state, by the Act of 1889, had proposed corporation to be organized under this law: an amendment. It must be taken to have "I reserve the right to repeal or annul this known that it must accept this added power, charter at any time. If the amendment I or it must cease to do business. It knew that shall propose is vital and fundamental, it every such corporation which should thereshall be submitted to the action of the stock- after be found engaged in the doing of new holders. If a majority assent to it, and business would be regarded by all who dealt adopt it, then the corporation may continue with it as having all the powers conferred in business. If there be any who are inca- by the Act of 1875 and the Amendment of pable of consenting, or any unwilling to ac- 1889. An act or contract within the scope cept, then all such shareholders shall cease of either of these general laws of the state to be shareholders, and the corporation shall was an act or contract within the apparent be liable for the market value of all such scope of the power of any such company. All shares. But, if the amendment be unaccept- who deal with a corporation are bound to take able to a majority, then you shall exist only notice of the limitations contained within for the purpose of winding up your business, the law of its creation. Morawetz, Priv. and shall have no power to enter upon any Corp. § 592; Beach, Priv. Corp. 383. But new contracts." Under this act, if the altera- where an act or contract is within the aption be fundamental, the corporation must parent scope of its charter, and the defect in do one of two things: accept the offered power depends upon some extrinsic fact peamendment, or wind up. The defendant culiarly within the knowledge of the officers says that it did neither. The law conclu- and agents of the corporation, and is unsively presumes that every officer, agent, and known to the person so dealing, then there stockholder of this company knew the gen- is no presumption of a participation in doing eral law of the state affecting its powers and the illegal act, and a different rule of reits business. The corporation, regarded as sponsibility applies from that enforced where an entity, must be taken to have known of the defect is apparent upon a comparison of the right reserved by the state to amend its the contract with the charter. To illustrate: charter. This right was written in its very “If a person deal with an agent of a corpo

rights, and that the making of such contract does not estop the party promising from invoking the defense of ultra vires. Sherwood v. Alvis, 83 Ala. 115.

A corporation is not estopped by reason of having received the benefits of a contract which is ultra vires from setting up its invalidity in defense of a suit brought to enforce it. Chewacla Lime Works v. Dismukes, 5 L. R. A. 100, 87 Ala. 344.

term, reserving the right at any time to terminate It has uniformly been held in Alabama that a conthe contract and retake possession, paying such tract made by or with a corporation which is outdamages for the unexpired term, as should be de-side the pale of its corporate authority confers no termined by arbitration. At the end of five years the corporation resumed possession, and the accounts for that period were adjusted and paid. It was held that no action could be maintained against the corporation to recover the value of the unexpired term. The court referred to Asbury R. Carriage & Iron Co. v. Riche, supra, as establishing "the broad doctrine that a contract not within the scope of the powers conferred, on the corporation cannot be made valid by the assent of every one of the shareholders, nor can it by any partial performance become the foundation of a right of action," and expressed the opinion that that decision represented the decided preponderance of authority both in this country and in England, and was based on sound principle.

Asbury R. Carriage & Iron Co. v. Riche, 7 H. L. 653, was distinguished by Mr. Justice Folger in Kent v. Quicksilver Min. Co., 78 N. Y. 187, on the ground that the contract with Riche was prohibited by act of parliament.

In Simmons v. Troy Iron Works, 92 Ala. 427, the defendant company was organized for the purpose of manufacturing and dealing in machinery. It made a contract with a plaintiff for certain quantities of ice, and then refused to perform its part, whereupon the plaintifï sued for breach. The contract was held ultra vires and recovery was refused.

from denying its power.

In Pennsylvania, D. & M. Steam Nav. Co. v. Dandridge, 8 Gill & J. 248, the plaintiff had engaged with the agent of the company that his goods should for a certain sum paid by him, be transported by water to Virginia. This action was In Pearce v. Madison & I. R. Co., 62 U. S. 21 How. brought to recover the value of the goods which 441, 16 L. ed. 184, two corporations created by the were lost by negligence of the company. The comlaws of Indiana to construct distinct though con- pany claimed that the contract was ultra vires and necting lines of railroad in that state, were consol- that it had not ratified the contract made by its idated by agreement, and conducted the business agent by accepting the freight money since it did of both lines under a common board of manage- not know the circumstances of the contract. The ment, which gave notes in the name of the consoli-court held that the company was not estopped dated company in payment for a steamboat to be employed on the Ohio river and to run in connection with the railroads. After the execution of the notes and the acquisition of the steamboat, this relation between the corporations was legally dissolved. It was held that an action brought by an indorsee against the two corporations could not be maintained. It was contended that because the steamboat had been delivered to the defendants and connected by them to their use, they were responsible. But it was replied that the plaintiff did not claim under an assignment of the owner's interest. There was no suggestion that the plaintiff took the notes sued on without notice of the ille gality in the original consideration.

Abbott v. Baltimore & R. Steam Packet Co., 1 Md. Ch. 542, followed Pennsylvania, D. & M. Steam Nav. Co. v. Dandridge, supra, but it does not appear whether, in this case the contract was executed or executory.

In Maryland Hospital v. Foreman, 29 Md. 524, the court after setting out the principles relating to illega! contracts, said the contract in this case was simply ultra vires, and therefore not binding upon the parties. "To such a contract the principle in part delicto does not apply; but if the party dealing with the corporation has paid money upon it he is entitled to recover it back."

In Boyce v. Towsontown Station M. E. Church

ration, within the scope of his apparent au- | is estopped from setting up any irregularithority, and without notice of the nonper- ties in their issue, and contrary to the recital formance of any formality prescribed by the on the bonds, as between it and an innocent charter or by-laws as a condition precedent purchaser. Nelson v. Haywood County, 87 to the agent's authority to act, he will be en- Tenn. 781; Coloma v. Eaves, 92 U. S. 484, 23 titled to assume that the formality has been L. ed. 579. complied with, and the corporation will be estopped from showing that the agent had no authority to bind it by reason of a failure to comply with the prescribed conditions." Morawetz, Priv. Corp. $$ 610, 686. Thus, as against bona fide holders, a corporation was held estopped to show that its bonds were invalid because issued, and mortgage executed, under resolutions of a board of directors held in a state other than that in which the corporation dwelt. The purchaser of such bonds was held to be under no obligation to examine the minutes of the directory to see where it sat when the mortgage was authorized. Galveston, H. & H. R. Co. v. Cowdrey, 78 U. S. 11 Wall. 459, 20 L. ed. | 199. So when the power is given to a county to issue bonds upon terms prescribed in the act, and the duty of determining when the conditions have been complied with is imposed upon certain officers, or a particular court, and the bonds are afterwards issued, and recite upon their face that these conditions have been complied with, the county

Trustees, 46 Md. 359, Judge Stewart declared the law of Maryland to be that a corporation could not, by any principle of estoppel, make contracts ultra vires to bind itself.

This was an action of assumpsit to which the defendants set up that, on account of a defective certificate of incorporation, they never were a body corporate. It was decided that, though they had held themselves out as a corporation, and treated with the defendants as such, they were not estopped from denying liability as a corporation. Where the plaintiff sued for damages received by him while being carried by the defendant company under a contract to transport him beyond their line, it having been found that the company had no power to enter into the contract, the question arose whether they were estopped to set this up as a defense, and it was held that they were not. Hood v. New York & N, H. R. Co. 22 Conn. 502.

In Converse v. Norwich & N. Y. Transp. Co., 33 Conn. 166, it was held that the company did not enter into a contract to carry beyond its line, and therefore the question under discussion here was not a material one in the case. The court, however, referring to Hood v. New York & N. H. R. Co., supra, said: "That case cannot be shaken on the ground that the principles there applied are technically wrong. ... But corporations have within a few years under general laws become so numerous, and are so connected with, and so control the business of the country, and even its religious and benevolent agencies that the courts have gradually come to think it necessary to relax the technical and theoretical strictness of the legal principles applicable to them, and subject them to the same liabilities for the acts of their agents as natural persons, so far as it can be done practically and consistently with their charters."

The case of Royal British Bank v. Turquand, 6 El. & Bl. 327, is in point. The directors, by the charter, called the "deed of settlement," were only authorized to borrow money upon obtaining a resolution at a general meeting of the company. The directors having borrowed, without such a resolution, from one who loaned in good faith, on suit, the bank was held liable. Jervis, Ch. J., said: "We may take it for granted that the dealings with these companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. But they are not bound to do more. And the party here, on reading the deed of settlement, would find, not a prohibition from borrowing, but a permission to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done." To the same effect is the case Re County Life fore it was not bound, the court held that the agreement not being prohibited by law, but at most only in excess of the corporate powers, and the defendant having received the benefit thereof the law would not allow it to set up its own wrong to escape responsibility. Union Hardware Co. v. Plume & A. Mfg. Co. 58 Conn. 219.

A corporation chartered to make and maintain a road to the top of Mount Washington and to charge tolls for the use thereof was held to have no power to purchase horses, stages, etc., for the purpose of transportation, and in an action for the price of certain omnibuses, etc., the corporation was allowed the defense. Downing v. Mount Washington Road Co. 40 N. H. 230.

But Ossipee Hosiery & Woolen Mfg. Co. v. Can-. ney, 54 N. H. 295, followed Bissell v. Michigan S. & N. I. R. Co., 22 N. Y. 289, and held that debts contracted by a corporation in excess of its power were binding. And this was followed in Connecticut River Sav. Bank v. Fiske, 60 N. H. 363.

Manchester & L. R. Co. v. Concord R. Co. (N. H.) 9 L. R. A. 689, was a bill in equity for a discovery, for an accounting by defendant of its dealings with plaintiff's railroad properties and for a return of certain of such properties to the plaintiff. The defendant's plea was that the contracts between the parties, under which the defendant went into and retained possession and management of the plaintiff's road, were wholly beyond the corporate power of either party to make or ratify. But it was held that in a transaction which is simply ultra vires neither party will be heard to allege its invalidity while retaining its fruits. Limitation of the contractual power of a corporation does not prevent it from making restitution of money or property obtained under an unauthorized contract.

The defendant entered into an agreement with In Bissell v. Michigan S. & N. I. R. Co., 22 N. Y. the plaintiff to sell on commission certain goods 262. the companies had united their business. They manufactured by the latter the defendant having were held liable for injuries to a person whom they violated certain terms of the agreement the plain-engaged to transport on a line beyond the limits tiff brought action to recover a balance due. The authorized by the charter of either. Comstock, defense was put on the ground that the agreement Ch. J., after an elaborate argument placed the deand the defendant's undertaking to sell the goods cision on the principles of contract and of duty rewere in excess of its corporate powers, and there-sulting therefrom. Selden, J., thought the con

Assur. Co., L. R. 5 Ch. 293. Giffard, L. J., | effect, Methodist Episcopal Union Church v. said: “A stranger must be taken to have Pickett, 19 N. Y. 482, and Buffalo & A. R. read the general act under which the com- Co. v. Cary, 26 N. Y. 75. So, in Alabama, pany is incorporated, and also to have read where the rule concerning the defense of the articles of association, but he is not to be ultra vires is identical with our own, it has taken to have read anything more, and, if been held that, "if one contract with a corhe knows nothing to the contrary, he has a poration in a matter within its corporate right to assume, as against the company, that power, the mere making of the contract estops all matters of internal management have been the promisor from disputing the corporation's duly complied with." regular and complete organization.' Lehman v. Warner, 61 Ala. 465. In the later case of Sherwood v. Alvis, 83 Ala. 118, Stone, Ch. J., said: "The distinction is between the entire absence of authority in the organic law itself, and a failure to comply with some prerequisite which the law has made a condition precedent to the exercise of corporate functions. In the one case there is a want of power, and in the other only an abuse of power conferred."

The well-known general rule applicable to one dealing with a company purporting to be a corporation seems to be applicable where the inquiry is as to whether an amendment has or has not been accepted, and the company, by acts of user, has represented itself as having the power conferred by the amendment. That rule is that, as against all persons who have entered into contracts with bodies assuming to act in a corporate capacity, it is sufficient for such bodies to show Let us apply this principle to the case in themselves to be corporations de facto. The hand. One dealing with this corporation is court, in Merriman v. Magiveny, 12 Heisk. bound to take notice of the statute and its 497, said, that in a proceeding between such amendments under which it was doing busi corporation and an individual who has dealt ness. He was not bound to go any further. with it, irregularities in its organization, When he found this company engaging in which might give the state the right to pro- new business after the amendment of its ceed by quo warranto or other like proceed- charter under the Act of 1889, he was bound ing, to have the charter declared void, can- to look to the limitations upon its power connot be taken advantage of." See, to same tained in this amendment, for, finding it tract ultra vires and void but that the defendants | corporation is estopped from questioning the were liable for negligence.

In conformity with the views expressed by Chief Justice Comstock in this case, the case of Parish v. Wheeler, 22 N. Y. 502, was decided in the succeeding term. Here a railway corporation which bad exceeded its powers in the purchase of a steamboat was not allowed to set up such fact against one who had advanced the price when it had received and used the property.

Buffett v. Troy & B. R. Co. 40 N. Y. 168, followed Bissell v. Michigan S. & N. I. R. Co. 22 N. Y. 258.

In Whitney Arms Co. v. Barlow, 63 N. Y. 62, 20 Am. Rep. 504, the plaintiff was a corporation authorized for the purpose of manufacturing every variety of fire-arms, and other implements of war, and all kinds of machinery adapted to the construction thereof. It entered into a contract with the American Seal Lock Company for the manufacture and delivery of 10,000 locks. The locks having been delivered it was held that the contract was fully executed and that the plea of ultra vires would not prevail as a defense to an action brought to recover the contract price.

The principles of Whitney Arms Co. v. Barlow were approved by Ruger, Ch. J., in Woodruff v. Erie R. Co. 93 N. Y. 609.

Cunningham v. Massena Springs & Ft. C. R. Co., 63 Hun, 439, was an action for a balance due plaintiff on a contract made with him by president of the defendant to build a bridge and a piece of track beyond the defendant's line. The plaintiff having performed in good faith he was allowed to

recover.

validity of a contract made by it, apply only when the contract has been executed for the benefit of the corporation.

And therefore, it has been held that an electrio light company is not estopped to assert that a contract made in its behalf to pay the funeral expenses of an employé was ultra vires, because it has been performed by the other party thereto. Kipp v. East River Electric Light Co 46 N. Y. S. R. 397.

In Day v. Spiral Springs Buggy Co., 57 Mich. 146, 58 Am. Dec. 563, the company had entered into a contract which was ultra vires to purchase for speculation from the plaintiff a quantity of material used in upholstering buggies. The plaintiff after delivering part of the material refused to carry out the contract and brought an action for the quantity delivered. The court held that the action would lie.

A railroad company was, In Dewey v. Toledo, A. A. & N. M. R. Co., 91 Mich. 351, 50 Am. & Eng. R. R. Cas. 607, compelled to pay a note which it had given for property which had been made over to it and which it was actually using in its business.

In Baltimore & P. S. B. Co. v. McCutcheon, 13 Pa. 13, a foreign corporation had taken a lease of real estate without authority in its charter, and in an action for the rent the court enforced the contract.

Wright v. Pipe Line Co., 101 Pa. 204, 47 Am. Rep. 701, was an action by a bona fide purchaser on a note given by the defendant company in part payment of stock of another corporation. By the act under which the company was organized it was

In Schurr v. New York & B. 8. Invest. Co., 45 N. provided that it should not be lawful for any corY. S. R. 645, the defendant corporation was organ-poration organized under it to use any of its funds ized for the purpose of "purchasing, taking, holding, possessing, selling, improving, and leasing real estate and buildings, manufacture, purchase, lease, sale, use of building stone, lumber and other building materials." By the contract which was the foundation of the action the defendant agreed to pay the plaintiff a certain sum for his services in organizing stock companies to carry on its business in a certain place. Judgment for the plaintiff. Those decisions which hold that a defendant

in the purchase of stock of any other corporation. The court below instructed the jury that, the consideration of the note being unlawful, the plaintiff could not recover. The supreme court followed Oil Creek & A. River R. Co. v. Pennsylvania Transp. Co., 83 Pa. 160, saying: "The law never sustains a defense of this nature out of regard for a defendant; it does so only where an imperative rule of public policy requires it. . . . It may be that as between the original parties the defendants