Cornell University Law Library 
 
 The Moak Collection 
 
 s 
 
 PURCHASED FOR 
 
 The School of Law of CorneU University 
 
 And Presented February 14, 1893 
 
 IN nenoRY of 
 
 JUDGE DOUGLASS BOARDMAN 
 
 FIRST DEAN OF THE SOHOlaL 
 
 By his Wife and Daughter 
 A. M. BOARDMAN and ELLEN D. WILLIAMS 
 
Cornell University Library 
 KF 1386.U5B84 1880 
 
 A treatise on the doctrine of ultra vire 
 
 3 1924 019 347 487 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924019347487 
 
A TREATISE 
 
 ON THE DOCTRINE Off 
 
 ULTRA VIRES: 
 
 BEING 
 
 AN INVESTIGATION OF THE PRINCIPLES WHICH LIMIT TllB, 
 CAPACITIES, POWERS, AND LIABILITIES OF 
 
 CORPORATIONS, 
 
 AND MOEB ESPECIALLT OF 
 
 JOINT STOCK COMPANIES. 
 
 BY 
 
 SEWAED gEIOE, M.A., LL.D., London, 
 
 OF THE INNER TEMPLE, ESQ., BAEKI8TEK-AT-LAW. 
 
 SECOND AMERICAN EDITION. 
 WITH NOTES AND REFERENCES TO AMERICAN CASES. 
 
 * BY 
 
 ASHBEL GREEN, 
 
 OF THE NEW YORK BAR. 
 
 NEW YORK: 
 
 BAKER, YOOEHIS & CO., PUBLISHERS, 
 
 66 NASSAU STREET. 
 1880. 
 
Entered, according to Act of Congress, in the year eighteen hundred attd seventy-five, by 
 
 ASH BEL GREEN, 
 
 In the Office of the Librarian of Congress at Washington. 
 
 Copyright by Ashbbl Green, 1880, 
 
INTRODUCTION TO SECOND AMERICAN EDITION. 
 
 A SECOND edition of the treatise of Mr. Brice was published 
 in London in 1877, in which reference was made to many 
 of the cases relating to the doctrine of ultra vires, cited in 
 my notes to the first edition. At this time the American im- 
 print was exhausted. My impulse was to decline the labor of 
 preparing a second American edition ; but the demand was so 
 persistent that I critically examined the second edition to deter- 
 mine whether it would not satisfy the requirements of the pro- 
 fession in the United States. I found much embarrassment 
 arising from the change of structure of the work by Mr. Brice. 
 Much matter had been introduced not of sufficient value to the 
 American lawyer to afford compensation, as to him, for the in- 
 creased bulk. Moreover, the unfamiliarity of Mr. Brice with the 
 details of American practice and with the jurisdiction of our 
 Federal and State Courts had led him into some quite natural 
 errors, which needed correction. I became convinced that I 
 should do the best service by retaining the first American edition 
 as a framework, adding such new matter relative to English judg. 
 ments in the text of the second London edition as seemed to me 
 useful, and supplementing my original notes by references to ad- 
 ditional American decisions. I found it also convenient, in order 
 to economize space, to omit some statements of the facts of cases 
 contained in the London edition. 
 
 I am much indebted to Thomas Thacher, Esq., under whose 
 supervision the work has passed through the press, for valuable 
 work in collating and annotating tlie recent American law 
 upon the subjects discussed. 
 
 AsHBEL Gbeen. 
 
 New Tokk, March, 1880. 
 
INTRODUCTION TO FIRST AMERICAN EDITION. 
 
 The attention of the American lawyer is, perhaps, as frequent- 
 ly called to the law of corporations as to any subject within the 
 range of his professional study. The great number of corporations 
 in America, the vast interests within their control, and the numer- 
 ous questions daily arising out of their transactions, make this 
 branch of jurisprudence an object of peculiar interest t^ practi- 
 tioners in this country. Every attempt towards generalization, 
 which may lead to the establishment of rules and the deduction of 
 common and controlling principles, from authorities which are so 
 often conflicting, should be welcomed with favor, w;hatever may 
 be the judgment as to the success attending the effort. 
 
 The. treatise of Mr. Brice, to .which I have added notps and 
 references to American Reports, while, professedly, only an at- 
 tempt to collect and group the more important English judgments 
 on the doctrine of ultra vij-es, is the beginning of a needed work, 
 which must be accomplished before this most important part of 
 the law of corporations is reduced from a chaos of discordant decis- 
 ions to a branch of legal science with accurate and well established 
 formulas. Whatever is crude, incongruous, or indefinite in the 
 book, is due rather to the inherent difiiculties of the subject which 
 Mr. Brice is considering, than to any want of ability in the author 
 or to any defect in the method which he has pursued. 
 
 That which is most open to criticism in Mr. Brice's work, is 
 the repetition which occurs in dealing with the different phases of 
 the doctrine of ultra vires, and the extent to which he has gone in 
 considering the general law of corporations. If he has erred in 
 these particulars, it is a fault not so much to be deprecated as the 
 contrary would have been. I can fully appreciate the diflSculties 
 which Mr. Brice has encountered, not only in the selection of 
 the cases, and in deducing from the judgments of the English 
 Judges the rules he has enunciated, but also in determining what 
 
VI INTRODUOTION TO FIRST AMERICAN EDITION. 
 
 limits he should set to himself, as to matters relating to companies 
 to be considered. 
 
 The chief embarrassment that I have experienced in perform- 
 ing my task, has arisen from the excess of material that I have col- 
 lected, and which I have endeavored to compress and curtail as far 
 as practicable. 
 
 As it is, the notes have exceeded the dimensions originally 
 proposed ; and the fear that, otherwise, the book would prove too 
 bulky for a single volume, has induced me to omit a large amount 
 of matter prepared mainly for the appendix. 
 
 In the appendix I have treated of some subjects which, though 
 not strictly within the doctrine of ultra vires, ure collateral to 
 those found in the text. (as) 
 
 I have not cited the cases, so numerous in our reports, as to the 
 powers of municipal corporations, except in a very few instances, 
 but have referred to the valuable and widely known treatise of 
 Judge Dillon, on the Law of Municipal Corporations, as illustrating 
 that branch of the subject. 
 
 The notes have been prepared during such leisure as could be 
 spared from the duties attendant upon active practice. They are 
 far from being satisfactory to myself, but, I trust, may assist those 
 who investigate the topics discussed. 
 
 I am obliged to many of my legal brethren in this State and 
 elsewhere for valuable briefs and suggestions. 
 
 The index, which is entirely new, has been prepared, and the 
 
 proof sheets read by my friend, Thomas Thacher, Esq., to whom 
 
 I am also indebted for much valuable assistance in the preparation 
 
 of the notes. 
 
 AsHBEL Geeen. 
 New Yoke, November, 1875. 
 
 (a) The matter included in the appendix to the first American edition has been 
 inserted in this edition at appropriate places in the notes. 
 
PREFACE TO FIRST ENGLISH EDITION. 
 
 This treatise is, as the title page describes it, " An Investiga- 
 tion of the Principles which limit the Capacities, Powers, and Liar 
 bilities of Corporations, and more especially of Joint Stock Com- 
 panies." The doctrine of ultra vires is of modern growth. Its 
 appearance is a distinct fact, and as a guiding, or rather mislead- 
 ing principle in the legal system of this country, dates from about 
 the year 1846, being first prominently mentioned in the cases, in 
 equity, of Colman v. Eastern Counties Eailway Company, in 
 1846 -^ and, at law, of East Anglian Eailway Company v. Eastern 
 Counties Eailway Company,' in 1851.(a) 
 
 ' 10 Beav. 1 ; 16 L. J. (Ch.) 73. « 11 C. B. tli ; 21 L. J. (C. P.) 23. 
 
 (a) The powers of private corporations.and the effect of going beyond them, received 
 earlier coDBideration from American courts than from those of England. The reason 
 for this is to be found in the fact that, until a comparatively recent period, joint-stock 
 associations, consisting of individuals united Under and governed by deeds of 
 settlement or other articles of agreement, occupied, in England, the place corres- 
 ponding to private corporations in this country. Lord Langdale, M. B., in Colman v. 
 Eastern Counties Ry. Co. 10 Beav. 1, 13, says : "I think it right to observe that 
 companies of this kind, possessing most extensive powers, have so recently been in- 
 troduced into this country that neither the legislature nor courts of justice have been 
 able to understand all the different lights in which their transactions ought to be 
 Tiewed." This difference between the number of cases in the American and the 
 English courts was commented t^on by Tilghman, C. J., in Commonwealth ». Arri- 
 son, 16 S. (b B. 127. Accordingly, those curious to trace historically the doctrine 
 treated of by our author, will find that the American courts, both Federal and State, 
 years before the earliest English case cited in this treatise, discussed the powers of 
 trading corporations, and laid down rules in regard thereto. See Head v. Providence 
 Ins. Co. 2 Cr. 127 (1804); Bulkley v. Derby Fishing Co. 2 Conn. 252 (1817); People 
 V. TJtica Ins. Co. 15 Johns. 358 (1818); N. Y. Firemen Ins. Co. v. Sturges, 2 Cow. 
 664 (1824); Same v. Same, 5 Conn. 574 (1825); Bank of U. S. i;. Dandridge, 12 
 Wheat. 64 (1827); Binney's Case, 2 Bland, 99, 142 (1829); Beach v. Fulton Bk. 3 Wend. 
 J573 (1829) ; Bank of Augusta v. Earle, 13 Pet. 519, 587 (1839) ; Barry v. Merchants' Ex. 
 Co. 1 Sand. Ch. 280 (1844); Perrine v. Ches. <fc Del. Can. Co. 9 How. 172 (1850); 
 Moss V. Averell, 10 N. Y. 449 (1853); Steam Navigation Co. v. Weed, 17 Barb. 378 
 
Vlll PREFACE TO FIRST ENGLISH EDITION. 
 
 At the period now mentioned, the great railway companies were 
 being projected and developed. For the making of these lines 
 there were required larger funds than any partnership, however 
 numerous, could possess, and compulsory powers of a description 
 utterly beyond the royal prerogative to confer by charter on any 
 individual or association. Consequently, application was made to 
 the supreme legislature, by whose sanction corporations were called 
 into being, authorized to raise the necessary capital by methods 
 analogous to those used by joint-stock companies already in exist- 
 ence, and enabled to acquire — by coercive means, where amicable 
 overtures were rejected — the lands, houses, easements and other 
 proprietory rights needful for the profitable prosecution of the 
 undertaking. Scarcely had these bodies been created when ques- 
 tions were raised as to the exact nature of the powers and other 
 incidents so conferred upon them. Parliament had simply consti- 
 tuted them corporations. But corporations, according to the old 
 common law notion, were civil persons differing from ordinary 
 physical persons, mainly, if not entirely, in that they were intangi- 
 ble, and that, having thus a theoretical existence only, and being 
 incapable of mental expression, they could not suffer excommuni- 
 cation, be attainted, or perform certain acts requiring on the part 
 of the performer actual intention. Was this doctrine strictly cor- 
 rect ? And if so, were the new corporations endowed with all the 
 capacities of the old ones, and possessed of a character exactly 
 similar ? 
 
 These questions, or rather the latter, the courts, as soon as the 
 railway mania had to some extent ' subsided, were called upon to 
 determine. The former they have left open to the present moment, 
 inclining to answer it, though not positively answering it, in the 
 negative. The latter was decided, in the first instance, in a dis- 
 
 (1853); Pearce v. Madison <fe Ind. R. R. Co. 21 How. iil (1858) ; Bissell v. M. S. <fe 
 N. I. R. R. Co. 22 N. Y. 268 (1860). 
 
 The phrase ultra vires la to be found in Lord Karnes' Principles of Equity, orio'i- 
 nally published in 1766 (Sd ed. p. 309); thus: "A deed or covenant being void at 
 common law, as ultra vires, can a court of equity afford any relief? A principle in 
 logics, that will without power cannot produce any effect, is applicable to matters of 
 law, and is thus expressed, that a deed ultra vires is null and void, &o., <fec." And it 
 appears to the knowledge of the editor, first in English reports, as used by Baron 
 Bramwell, when at the bar, in 11 C. B. 115. It does not appear in Angell & Ames 
 on Corporations until the 5th edition, published in 1855. 
 
PREFACE TO FIRST ENGLISH EDITION. IX 
 
 pute between a few shareholders in a railway company, who ob- 
 jected to the grant of a subsidy to a steam packet company in com- 
 munication with their own line, and the general body, who sup- 
 ported such a disbursement of the corporate funds, the then master 
 of the rolls holding in favor of the dissentients that this was a mat- 
 ter in respect to which the majority could not bind the minority, 
 and which, if legal, could be so only when all concurred.'^ From 
 disputes in which the only persons concerned were the corpora- 
 tions themselves and their own members, and in which the decis- 
 ions might have been based upon the principles of ordinary part- 
 nership, the courts went farther, to matters which involved the 
 rights of outsiders. First, Turner, V.-C.,(a) restrained a railway 
 company from engaging in a trade in coal,' and in doing so he dis- 
 tinctly stated and expressly founded his jurisdiction upon the doc- 
 trine of ultra vires. Then the doctrine was extended to transac- 
 tions of every description where doubts could exist, or by fine 
 drawn reasoning be raised, as to the business peculiar to corpora- 
 tions, or the special powers, express or implied, belonging to them. 
 As one result, not unseldom has it been called into requisition to 
 relieve a company from a contract of which it may have had the 
 benefit, but which it finds convenient to repudiate.* 
 
 It is thus the creature purely of judicial decision. It was origi- 
 nated by the courts propria rnotu upon grounds of public policy 
 and commercial necessity, and to meet and provide for circum- 
 stances which called for the intervention of some strong hand, but 
 for which the State had not directly provided. Being so originat- 
 ed, and as most will probably admit, wisely originated, and in the 
 best interests of trade and commerce, it has, however, become a 
 species of Frankenstein. The tribunals have created ; but they 
 have confessed themselves powerless to control the operations of 
 the principle which they have called into existence, or even to 
 systematize its effects. In consequence, the doctrine of ultra vires 
 
 ' Colman v. Eastern Counties Railway ' Balfour v. Ernest, 6 C. B. (N.S.) 601; 
 
 Company, 10 Beav. 1 ; 16 L. J. (Cb.) 1Z. 28 L. J. (C. P.) 170 ; Ernest v. NichoUs, 6 
 
 ' Great Northern Railway Company v. H. Lds. 401 ; Athenaeum Life Assurance 
 
 iEastern Counties Railway Company, 9 Company v. Pooley, 3 De G. & J. 294 ; 28 
 
 Hare, 306; 21 L. J. (Ch.) 8SY. L. J. (Ch.) 119. 
 
 (a) In the second English edition "Kindersley, V.-C." is substituted for 
 "Turner V.-C," and Atty.-Gen. v. Great Northern Ry. Co. 1 Dr. & Sm. 164 is 
 cited. * 
 
X PREFACE TO FIRST ENGLISH EDITION. 
 
 is constantly cropping up in unexpected quarters, and manifesting 
 its efEects in an unforeseen and unwelcome manner. One of ita 
 first onslaughts was upon the time-honored maxim of the common 
 law, that a man cannot stultify himself * — that the lunatic, the fool, 
 the drunkard and the knave, who have made a contract, shall not 
 subsequently repudiate the same by alleging that neither they nor 
 their agents had at the time suflBcient brains or authorization to 
 make it. This maxim the doctrine of ultra vires soon demolished, 
 and corporations may set up their incapacity whenever it is incon- 
 venient for them to carry out their engagements.^ It next ran 
 full tilt against the less rigid but more equitable principles laid 
 down by the Courts of Lincoln's Inn. " Who seeks equity must 
 do equity," and " who comes for aid to chancery must come with 
 clean hands," are two of the most elementary principles of the 
 chancellor's jurisdiction. But the new doctrine refused to allow 
 them to be applied to corporations, and, after much wrangling, it 
 came off victorious, and corporations can now be relieved from 
 ultra vires contracts, and yet keep the benefits thereof.^ Another 
 rule was found to hamper the development of the doctrine, and to 
 impose some cheek upon the license assumed by corporations in 
 their dealings. " Quifacitper aliumfacitper «e" is the basis of 
 the law of principal and agent, and it has hitherto been deemed a 
 very useful and common sense rule, as sound and rational when 
 applied to the complex transactions of trade and commerce as to 
 the ordinary intercourse of every-day life. But the doctrine of 
 iiltra vires objected to its restraint, and made a desperate stand to 
 be relieved from it. Here, however, the common law maintained 
 its supremacy,* though, mirabile dictu, equity yielded,' so that 
 there is now to be seen the strange anomaly that corporations may 
 be liable at law under circumstances where chancery imposes no 
 liability, and that what the former says is palpable fraud, the lat- 
 ter will often pass over, or at least admit its inability to punish. 
 Besides these anomalies, there is the uncertainty that shrouds 
 the application of the doctrine. It is often impossible to predi- 
 cate beforehand what transactions will be held within the powers 
 of a given corporation. It is ultra vires of the Great Eastern 
 
 ' Beverley's Case, 4 Rep. 123, b. » With the exceptions and qualifica- 
 
 = Balfour v. Ernest, 6 C. B. (N.S.) 681 ; tions set forth in Part V, post. 
 28 L. J. (C. P.) 170; London Dock Com- < Barwick v. English Joint Stock 
 
 pany v. Sinnott, 8 E. <& B. 347. Bank, L. R. 2 Ex. 259. 
 
 ' Mixer's Case, 4 Be G. <t J. 576, 586. 
 
PREFACE TO FIRST ENGLISH EDITION. XI 
 
 Kailway Company to run steam packets from Harwich,^ but not of 
 the South Wales Railway Company to run them from Milford 
 Haven.* It is ultra vires of a steamship company to sell the 
 whole of its vessels except two,* but perfectly legal thus to dispose 
 at one swoop of every one of them.* It is ultra vires of railway 
 companies to enter into partnership,' but not ultra vires to make 
 arrangements for dividing the whole of the joint profits among 
 themselves in fixed proportions.' It is ultra vires of the town of 
 Southampton'' or Sheffield ^ to incur expense in order to obtain a 
 proper supply of water for their respective inhabitants, but not so 
 for Ashton-under-Lyne* or Wigan*" to do exactly the same thing. 
 As a necessary result the decisions and dicta upon this subject are 
 very conflicting, and some absolutely irreconcilable, while the 
 principle itself is become, if not an excrescence upon, at least a 
 very disturbing element in the legal system. 
 
 But it soon showed itself almost as inimical and dangerous as a 
 friend as unquestionably it was as an enemy. From being a protector 
 to shareholders, by preventing their companies from embarking in 
 hazardous enterprises, it has developed into their terror, by put- 
 ting on the list of contributories persons whose shares were surren- 
 dered or forfeited years before, but which surrender or forfeiture 
 was ultra vires.^ Acquiescence and lapse of time will lay the 
 ghost of most misdeeds, but they are unavailing when this doctrine 
 is concerned, and ultra vires compromises, iona fide made, have 
 been opened after the lapse of well nigh a quarter of a century, in 
 order to fix with liability the parties thereto.-'^ 
 
 This work is an attempt, though perhaps nothing more, to col- 
 lect and group the more important of these various decisions. 
 Where possible, the general conclusions deducible from a series of 
 authorities have been formulated in specific terms. The subject 
 
 ' Colman v. Eastern Counties Railway ' Attorney-General v. Andrews, 2 Mac. 
 
 Company, 10 Bear. 1. <fc G. 225. 
 
 "^ South Wales Railway Company v. ' Reg. v. Mayor, <feo., of Sheffield, L. 
 
 Redmond, 10 C. B. (N. S.) 676. R. 6 Q. B. 652. 
 
 * Gregory v. Patchett, 33 Beav. 597. ' Bateman v. Mayor, <fec. of Ashton- 
 
 * Wilson V. Miers, 10 C. B. (K S.) 348. nnder-Lyne, 3 H. & if. 323. 
 
 ' Charlton ti. Newcastle and Carlisle " Attorney Gen. v. Mayor, &a. of Wi- 
 Railway Company, 6 Jur. (N. S.) 1091 gan, 5 De G., M'. <fe G. 52. 
 
 ' Hare v. London and Northwestern " Ten years afterwards, in Stanhope's 
 Railway Company, 2 J. <fc H. 80. Case. 3 D. G. A S. M. 198. 
 
 " Spackman v. Evans, L. R. 3 H. Lds. 
 lYl. 
 
xu PREFACE TO FIRST ENGLISH EDITION. 
 
 has been arranged under four main heads— viz., a brief introduc- 
 tion ; then the effect of the doctrine upon what may be called 
 the substantive law of corporations ; next, its influence upon their 
 special powers which any particular corporation may possess ; and, 
 lastly, the procedure relating to ultra vires proceedings and per- 
 sons affected thereby. It has been endeavored either to state the 
 substance of, or at least to refer to, all the chief cases. * * * 
 
 S.B. 
 
 The Temple, July, 1874. 
 
TABLE OF CONTENTS. 
 
 PART L 
 
 INTRODUCTORY. 
 
 PAGE. 
 
 Section 1. — -The legal status of ookpobations 1 
 
 " 2. — The ordinary incidents of corporations 9 
 
 " 3.— Varieties of corporations 17 
 
 " 4. — How corporations are created 21 
 
 PART II. 
 
 THE DOCTRINE OF ULTRA VIRES AS AFFECTING THE 
 BUSINESS AND OTHER TRANSACTIONS ENGAGED IN 
 BY CORPORATIONS, AND THEIR RIGHTS AND LIABIL- 
 ITIES IN RESPECT THEREOF. 
 
 CHAPTER I. 
 THE EXACT IMPORT OF THE DOCTRINE OF ULTRA VIRES. 
 
 Section 1. — Judicial explanations of ultra virus 28 
 
 " 2. — Various meanings that have been given to the 
 
 term ultra vires 33 
 
 " 3. — The burden of proof in questions of ultra vires. 37 
 
 " 4. — Leading principles of ultra vires 41 
 
 CHAPTEE II. 
 
 THE AFFAIRS OF CORPORATIONS AND THE CON- 
 DUCT OF THE SAME 44 
 
 CHAPTER III. 
 
 THE BUSINESS WHICH COMMERCIAL CORPORATIONS MAY 
 
 TRANSACT. 
 
 Section 1. — ^The business of commercial corporations 65 
 
 " 2. — The extension and development of the business 
 
 of corporations 77 
 
 " 3. — Ownership and use of property 97 
 
 '■ 4. — Transfer OF concern 116 
 
xiv TABLE OF CONTENTS. 
 
 CHAPTEE IV. 
 SHARES AND STOCK. 
 
 FAOE 
 
 Section 1 . — Ordinary sharks —Membership 126 
 
 " 2. — Ordinary sharks — Paymknt .*. 142 
 
 3.— Calls 150 
 
 " 4. — Amount and division of capital 153 
 
 " 5. — Prkpbrknce sharks 164 
 
 " 6.— Scrip 1T4 
 
 " 7. ^Transfer op shares 177 
 
 8. — Corporate powkrs in rklation to sharks and 
 
 stock aftkr issue , 179 
 
 CHAPTEE V. 
 PROFITS 195 
 
 CHAPTEE VI. 
 FINANCIAL MATTERS. 
 
 Section 1 . — Debts 207 
 
 " 2 — Borrowing 213 
 
 « 3. — Securities 223 
 
 " 4. — Suretyship 252 
 
 " 5. — PowKR AS to nkgotiable ikstrumknts 253 
 
 " 6. — Nature op negotiable bonds 257 
 
 " 7. — Improper issoe op negotiable instruments..*.... 272 
 
 CHAPTEE VII. 
 LEGAL PROCEEDINGS 276 
 
 CHAPTEE VIII. 
 
 APPLICATIONS TO PARLIAMENT. 
 
 Section 1. — Power to make applications to parliament 289 
 
 " 2. — Agreements collateral to applications to par- 
 liament 31g 
 
 CHAPTEE IX. 
 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 Section 1. — Frauds 332 
 
 " 2. — Other torts 350 
 
TABLE OF CONTENTS. XV 
 
 OHAPTEE X. 
 
 PAGE. 
 
 CRIMES 366 
 
 PART III. 
 
 THE DOCTRINE OF ULTRA VIRES CONSIDERED WITH 
 REFERENCE TO THE POWERS AND PRIVILEGES OF 
 CORPORATIONS, AND THE MANNER AND PURPOSES 
 IN AND FOR WHICH SUCH MAY BE EMPLOYED. 
 
 CHAPTER I. 
 
 THE SPECIAL POWERS AND PRIVILEGES OF CORPORA- 
 TIONS. 
 
 Section 1. — ^The user of special poweks and privileges 371 
 
 " 2. — ^The transfer by one corporation to another of 
 
 ITS special powers and privileges 398 
 
 CHAPTER II. 
 TRAFFIC ARRANGEMENTS 409 
 
 CHAPTER III. 
 
 THE EXERCISE OF THE POWERS OF A CORPORATION 
 BY THE CORPORATION ITSELF. 
 
 Section 1. — Meetings of the members of a corporation 438 
 
 " 2. ^ThK NECESSITT FOB SEALING 446 
 
 CHAPTER IV. 
 
 THE POWERS OF DIRECTORS AND OTHER SIMILAR 
 
 OFFICIALS. 
 
 Section 1 . — ^The exact position filled bt directors and other 
 
 similar persons ' 467 
 
 " 2. — Powers possessed bt directors and other simi- 
 lar PERSONS 487 
 
xvi TABLE OF CONTENTS. 
 
 CHAPTER V. 
 ACTS INTRA VIRES, BUT INFORMAL. 
 
 PAGE. 
 
 Section 1. — Formalities to the observance of which certain 
 
 PARTIES are unable TO SEE 5"*' 
 
 " 2. — Directory formalities ^^^ 
 
 " 3. — Imperative formalities 5"" 
 
 « 4. — Observance of formalities ct pres 534 
 
 " 5. — Limitation of authority in extent 535. 
 
 « 6. — Formalities specially relating to the managing 
 
 BODY 
 
 537 
 
 CHAPTER VI. 
 
 RATIFICATION AND ACQUIESCENCE. 
 
 Section 1. — Ratification by a corporation itself 546 
 
 " 2. — Acquiescence by a corporation itself 555 
 
 " 3. — Ratification and acquiescence by officials 563 
 
 CHAPTER YII. 
 
 THE LIABILITY OF CORPORATIONS FOR THE ENGAGE- 
 MENTS ENTERED INTO UPON THEIR BEHALF BY 
 THEIR PROMOTERS. 
 
 Section 1. — When the engagements are ultra vires 571 
 
 " 2. — When the engagements are not ultra vires — 
 
 — Liability of statutory corporations 572 
 
 " 3. — When the engagements are not ultra vires — 
 
 Liability of registered corporations 587 
 
 4. — Rights of corporations 593 
 
 " 5. — Agreements by existing corporations as to ex- 
 tension 599 
 
 CHAPTER YIII. 
 AMALGAMATION. 
 
 Section 1 . — Novation qqi 
 
 " 2. — Power to amalgamate ■ 604 
 
 " 3. — Statutory amalgamation 623 
 
 " 4. — Quasi or simulated amalgamation by mere trans- 
 fer OF assets ; . . . ; ggg 
 
TABLE OF CONTENTS. xvii 
 
 PART IV. 
 
 THE DOCTRINE OF ULTRA VIRES CONSIDERED WITH 
 RESPECT TO THE ACTIONS WHICH MAY BE INSTI- 
 TUTED IN RELATION TO CONTRACTS, TORTS, AND 
 OTHER PROCEEDINGS AND MATTERS WHICH ARE 
 ULTRA VIRES. 
 
 CHAPTEE I. 
 
 ACTIONS IN RESPECT OF PROCEEDINGS WHICH ARE 
 ULTRA VIRES IN THE STRICT SENSE. 
 
 PAGE. 
 
 Section 1. — When an action mat be instituted 643 
 
 " 2. — Parties 645 
 
 " 3. — Frame op suit — Relief sought 657 
 
 CHAPTEE II. 
 
 ACTIONS IN RESPECT OF PROCEEDINGS BY A MAJORITY. 
 
 Section 1. — ^The interperbnob op the courts in the internal 
 
 AFP AIRS op corporations 660 
 
 " 2. — ^When redress mat be obtained bt one or more 
 members complaining of the proceedings of 
 
 the majoritt 674 
 
 " 3. — Parties 685 
 
 " 4. — Frame op action 692 
 
 CHAPTEE III. 
 
 ACTIONS BY THIRD PARTIES IN RESPECT OF ULTRA 
 
 VIRES PROCEEDINGS 693 
 
 CHAPTEE IV. 
 
 ACTIONS IN RESPECT OF PROCEEDINGS WHICH ARE 
 
 ULTRA VIRES IN THE IMPROPER SENSE 696 
 
 CHAPTEE Y. 
 
 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 Section 1. — When the attornet-general must be a partt.. 698 
 
 « 2. " " " MAT SUB 706 
 
 « 3. — Frame of action 713 
 
 B 
 
xvin TABLE OF CONTENTS. 
 
 PART V. 
 
 THE DOCTRINE OF ULTRA VIRES CONSIDERED WITH 
 RESPECT TO ULTRA VIRES TRANSACTIONS WHOLLY 
 OR PARTIALLY EXECUTED; AND TO THE RIGHTS 
 AND LIABILITIES WHICH ARISE BY REASON THEREOF. 
 
 CHAPTER I. 
 
 LIABILITY OF CORPORATIONS IN RESPECT OF ENGAGE- 
 MENTS ULTRA VIRES IN THE PRIMARY SENSE. 
 
 FAQE. 
 
 Section 1. — Direct liability for ultra vires enoagembnts . . . . 715 
 " 2. — Liability to account 717 
 
 CHAPTER II. 
 
 LIABILITY OF OFFICIALS. 
 
 Section I. — Coktractdal engagements 750 
 
 " 2.— Torts 765 
 
 CHAPTER III. 
 
 LIABILITY OF THIRD PARTIES IN RESPECT OF TRANS- 
 ACTIONS WHICH ARE ULTRA VIRES IN THE PRI- 
 MARY SENSE 769 
 
 CHAPTER lY. 
 
 TRANSACTIONS WHICH ARE ULTRA VIRES IN THE 
 SECONDARY SENSE. 
 
 Section 1 . — Nature of such transactions 774 
 
 " 2. — What ark such transactions 778 
 
 " 3. — Primary and ordinary capacities of corporations. 782 
 
 " 4. — Corporators and creditors 783 
 
 CHAPTER Y. 
 DISSOLUTION OF CORPORATIONS -JSC 
 
 INDEX, 
 
 805 
 
TABLE OF CASES. 
 
 Abbey v. Chase, 757. 
 
 Abbott V. Am. Hard Rubber Co., 480. 
 v. Aapinwall, 521, 
 V. Hermon, 456. 
 «. Johnson, 661. 
 V. Merriam, 646, 671. 
 
 Aberdeen Ry. Co. v. Blaikie, 479. 
 
 Ackerson v. Erie Ry. Co., 360. 
 
 Acklin V. Paschal, 100. 
 
 Adams v. Lawrence Co., 632. 
 V. Rivers, 100. 
 
 Adams' Case, 128, 164, 190, 497, 631. 
 
 Adamson's Cuse, 149, 205, 212, 483. 
 
 Adderly v. Storm, 93, 141. 
 
 Addison's Case, 93, 137, 140, 190, 191, 687. 
 
 Adler v. Milwaukee, <fec. Co., 793. 
 
 Adley v. Whitstable Co., 648, 679. 
 
 Adriance v. Roome, 471. 
 
 Mtna Insurance Co. v, Harvey, 6. 
 
 African Society v. Varick, 3. 
 
 Agace, ex parte, 716. 
 
 Agar V. Athenaeum Life Ins. Co., 473, 476, 
 520. 
 
 Aggs w. Nicholson, 264, 257, 621. 
 
 Agra «, Masterman's Bank, re, 257, 258, 
 627. 
 
 Agra Bank, ex parte, 603. 
 
 Agricultural Branch R. R. Co. v. Win- 
 chester, 78.. 
 
 Agriculturist Cattle Ins. Co. re, 49, 498, 
 
 626, 799. 
 Aicardi v. State, 62. 
 
 Aikln V. Western R. R. Co., 371. 
 AMn V. Blanchard, 39. 
 Alabama, &c. Ins, Co. v. Central, &c. As- 
 sociation, 39, 213. 
 Alabama, &c. Ins. Co. ». Smith, 223, 264. 
 Alabama R. R. Co. v. Kidd, 474. 
 Alabaster's Case, 129, 131, 146, 610. 
 Albany Street, Matter of, 100. 
 Albert v. Savings Bank, 331, 740. 
 Albert Average Assoc, 803. 
 Albert Life Assurance Co. re, 60S, 624, 
 
 627, 630. 
 
 Albion Steel Co. v. Martin, 596, 699. 
 
 Aldebert v. Leaf, 649. 
 
 Aldrich ». Cheshire R. R. Co., 74. 
 
 V. Drury, 382. 
 
 V. Press Co., 368. 
 
 Alexander v. Brown, 738. 
 
 V. Centrtl R. B. Co., 644. 
 V. Sizer, 753. 
 Alexander's Case, 140. 
 Alford V. Miller, 480, 496. ^ 
 Alison's Case, 609. 
 AUard v. Bourne, 621, 543. 
 Allegheny City v. McClurkan, 39, 272, 739. 
 Allegheny County v. Cleveland, <fcc. R. R. 
 
 Co., 5, 641. 
 Allen V. citizen's Steam Nav. Co., 474. 
 
 V. Curtis, 645, 646, 648, 663, 692. 
 
 V. First National Bank, 749. 
 
 V. Freedmen's Trust Co., 514, 632. 
 
 «. Jay, 374, 433. 
 
 V. London <fc S. W. Ry. Co., 345, 
 361. 
 
 V. Montgomery B. R. Co., 227. 
 
 V. N. J. Southern R. R. Co., 796. 
 
 V. Sea, Fire and Life Ins. Soc, 621. 
 
 V. Talbot, 685. 
 
 1). Town of Cameron, 520. 
 
 V. Wanamaker, 339. 
 
 V. Woonsocket Co., 425. 
 Allen's Case, 622. 
 
 Alliance Bank v. Kearsley, 210, 217. 
 AUman v. B. R. Co., 489, 670. 
 AUoway's Creek v. String, 3. 
 All Saints' Church v. Lovett, 622. 
 Almy V. State of California, 6. 
 Ambergate Ry. Co. v. Cunlthard, 151. 
 
 *. Mitchell, 162, 496. 
 American Academy v. Harvard College,51. 
 American Express Co. v. Gilbert, 504. 
 American Ins. Co. v. Cutler, 6. 
 
 V. Oakley, 463. 
 American Print Works v. Lawrence, 898. 
 American Ry.-Frog Co. i). Haven, 408, 
 
 676, 679. 
 American Silk Worksa. Salomon, 146,146. 
 American Un. Express Co. v. Stiloaeph, 5. 
 Amerman v. Wiles, 620. 
 Ameshury v. Insurance Co., 15. 
 Amherst Academy v. Cowls, 47. 
 Ammant v. N. A. <fec. B. B. Co., 245, S70. 
 Anchor Ins. Co. re, 604, 622, 629, 760. 
 Ancient City Club v. Miller, 276. 
 Anderson v. Duke, &c. Mining Co., 622. 
 V. Kerns Draining Co., 874. 
 
XX 
 
 TABLE OF CASES. 
 
 Anderson v. Longden, 493. 
 
 V. New. & Rich. E. R. Co., 176. 
 
 Ando-ver T. Co. v. Gould, 481. 
 V. Hny, 451. 
 
 Andrews v. Marris, 161. 
 
 Androscoggin R. R. Co. v. Androscoggin 
 R. R. Co., 410, 416. 
 
 Androscoggin R. R. Co. v, Stevens, 4, 
 
 Angas's Case, 142. 
 
 Angle V. Miss. <fe Mo. R. R. Co., 90. 
 
 Anglo-Australian L. <fe F. Ass. Co. v. Brit- 
 ish, &c. Co., 117, 608, 628, 719. 
 
 Anglo-Californian Bank v. Mahoney Min- 
 ing Co., 623, 565. 
 
 Anglo-Danubian Steam Nav. <fec. Co. re, 
 144, 168, 221, 231, 613. 
 
 Anglo-Greek Steam Co., 614, 799. 
 
 Annesley, ex parte, 20. 
 
 Anthony v. Adams, 284. 
 
 App V, Lutheran Congregation, 52. 
 
 Applegate v. Ernest, 245. 
 
 Appletreewick, Ac.Mining Co. re, 149,587. 
 
 Apsey, ex parte, 716. 
 
 Arents v. Commissioners, 270. 
 
 Argenti v. City of San Francisco, 748. 
 
 Arlington v. Pierce, 647. 
 
 Arms V. Conant, 443. 
 
 Armstrong v. Church Society, 662, 700. 
 V. Stokes, 650. 
 
 Amington v. Barnett, 878. 
 
 Arnold v. Mayor, <fec. of Gravesend, 59. 
 V. Mayor, <fec. of Poole, 449, 463, 
 
 454. 
 V. Ruggles, 178. 
 
 Arnot V. Erie liy. Co., 410. 
 
 Arthur v. Commercial Bank, 125, 237. 
 II. Griswold, 338, 766. 
 
 Ashbury, ex parte, 212. 
 
 Ashtabula, &o. R. R. Co. v. Smith, 129. 
 
 Ashton V. Atlantic Bank, 644. 
 V. Corrigan, 232. 
 V. Lord Langdale, 247. 
 
 Ashton's Charity, re, 51. 
 
 Ashuelot Boot, &c. Co. ». Hoitt, 127. 
 
 Ashworth v. Bristol & North Somerset Ry. 
 Co., 144. 
 
 Asiatic Banking Co. re, 92, 176, 267, 258. 
 
 AskeVs Case, 595. 
 
 Aspinwall v. Ohio <fe Miss. R. R. Co., 444, 
 642. 
 V. Torrance, 757, 768. 
 
 Astley V. Manchester, &c. Ry. Co., 99, 107, 
 296. 
 
 Aston, ex parte, 176. 
 
 Atchafalaya Bank v. Dawson, 787, 788. 
 
 Athenseum Life Ass. Co. v. Pooley, 86, 
 244, 476, 494, 566, 721. 
 
 Athenffium Life Ass. Co. re, 340, 616, 620, 
 686. 
 
 Athol<fe Enfield R. R. Co. v. Prescott, 158. 
 
 Athbl Music Hall Co. v. Carey, 127. 
 
 Atkins V. Fire Disintegrating Co., 6. 
 
 Atkinson v. Atkinson, 180. 
 
 V. Marietta, <fec. B. R. Co., 237. 
 Atlantic Cotton Mills v. Abbott, 164. 
 Atlantic Delaine Co. v. Mason, 442. 
 Atlantic Ins. Co. v. Sanders, 440. 
 Atlantic & G. W. R. R. Co. v. Dunn, 859. 
 Atlantic & Pac. R. R. Co. v. St. Louis, 22, 
 
 87. 
 Atlantic, &c. Tel. Co. v. Commonwealtli, 
 
 204. 
 Atlantic R. R. Co. v. Johnston, 150, 628. 
 Atlantic State Bank v. Savery, 749. 
 Atlas Bank v. Nahant Bank, 370, 690. 
 Atlas Nat. Bank v. Savery, 749. 
 Attleborough Nat. Bank v. Rogers, 783. 
 Att.-Gen. v. Andrews, 19, 809, 311. 
 
 V. Bank of Niagara, 709, 789. 
 
 V. Baxter, 60. 
 
 V. Birmingham Bank Co., 70. 
 
 V. Birmingham Ry. Co., 406. 
 
 V. Boston & Maine R.R.Co.,641. 
 . V. Boston Wharf Co., 709. 
 
 ». Browne's Hospital, 50. 
 
 V. Cambridge, 709. 
 
 V. Cambridge Consumers' Gas 
 Co., 76. 
 
 v. Chicago, 4c. R. R. Co., 96. 
 
 ». Christ's Hospital, 714. 
 
 It. Church, 60. 
 
 V. Clapham, 62. 
 
 1/. Clergy Society, 81, 791. 
 
 V. Cockermouth Local Bd., 397, 
 703. 
 
 V. Cohoes Co., 709. 
 
 V. Conservators of the River 
 Thames, 712. 
 
 V. Corp. of Carmarthen, 120. 
 
 V. Corp. of Leicester, 8. 
 
 V. Daniel, 60. 
 
 *. Daugars, 60, 658, 714. 
 
 i>. Del. & B. B. R. R. Co., 714. 
 
 V. Detroit, 707. 
 
 V. Earl of Lonsdale, 702. 
 
 V. East India Co., 705. 
 
 1/. Eastlake, 810, 311. 714. 
 
 t.. Ely, ifee. Ry Co., 296,392, 895. 
 
 V. Evart Booming Co., 376. 
 
 «. Federal Street Meetinghouse, 
 64. 
 
 V. Foundling Hospital, 48. 
 
 V. Garrison, 709. 
 
 V. Gould, 61, 669. 
 
 II. Great Northern Ey. Co., 78, 
 709, 710, 718. 
 
 V. Great Western Ey. Co., 711. 
 
 V. Guardians of the Poor of 
 Southampton, 810. 
 
 V.Hartley, 61. 
 
 t>. Hudson R. R. R. Co., 710. 
 
 T/. Insurance Co., 223, 272. 
 
 V. Jackson, 81. 
 
 V. Jolly, 50. 
 
TABLE OF CASES. 
 
 XXI 
 
 Att.-Gen. tr. Kerr, 8. 
 
 V. Life & Fire Ins. Co., 264. 
 V. Manchester & L. Ry. Co., 
 
 295, 300. 
 V. Mansfield, 61. 
 V. Margaret, 51. 
 V. Mayor, &c. of Beverley, 714. 
 V. Mayor,<&c. of Cambridg;e,221, 
 V. Mayor, <fcc. of NorwioTi, 279, 
 
 810, 814. 
 ii. Mayor, <tc. of Plymouth, 14, 
 
 120. 
 V. Mayor, &o. of Poole, 69. 
 «. Mayor, <fec. of Shrewsbury, 
 
 787. 
 V. Mayor, <fec. of Wigan,309,312. 
 V. Mayor, <te. of Yarmouth, 69. 
 V. Mayor of Kingston, 397, 703. 
 V. Merrimack Mfg. Co., 702. 
 • V. Middleton, 15, 48, 51. 
 V. Mid-Kent, <fcc. Ry. Co., 889, 
 
 891, 711. 
 «. Munro, 60. 
 V. New England Co., 12. 
 V. N. J. R. R. Co., 710. 
 „. N. Y. & L. B. R. R. Co., 384. 
 *. Old South Society, 61. 
 *. Oxford, &c. Ry. Co., 711. 
 ». Paterson & H. R. B. Co., 76, 
 
 702. 
 V. Pearson, 60, 62. 
 V. Portreene of Avon, 14. 
 V. Proprietors of Bradford 
 
 Canal, 397. 
 V. Proprietors of Meeting- 
 
 House, 702. 
 «. R.R.Co.,642,708,711. 
 v.Ruper, 20. 
 V. Salem, 707, 709. 
 «. Sidney Sussex College, 50. 
 ». St. Cross Hospital, 49, 60. 
 r. Tewkesbury, Ac; Ry.Co., 391. 
 ». Toronto Street Ry. Co., 391, 
 
 666, 700, 711. 
 V. Tudor Ice Co., 709, 713, 789. 
 V. Utica Ins. Co., 709, 713, 787, 
 
 789. 
 V. Vivian, 702, 706. 
 V. West Hartlepool Improve- 
 ment Com'rs, 811, 812. 
 V. Whiteley, 51. 
 V. Wilson. 6y, 666, 702. 
 Atwood «. Small, 332. 
 Atwool V. Merryweather, 277, 279, 676, 
 
 676, 677. 
 Aubrey's Estate, re, 674. 
 Auburn Academy v. Strong, 16, 61. 
 Auburn Plank-Road Co. ».Donglas,62,371. 
 Audenreid v. Phil. <fec. R. R. Co., 486. 
 Augusta Bank v. Hamblet, 489. 
 Aurora, &c. R. R. Co. v. Lawrenceburgh, 
 621. 
 
 Aurora Agric. Soo'y v. Paddock, 224,547. 
 Aurora City v. West, 269, 270. 
 Aurora T. Co. v. Holthou.se, 797. 
 Austin V. Guardians of Bethnal Green,462. 
 
 V. Lnmbeth Vestry, 60. 
 Austin's Case, 188, '514. 
 Australian Royal Mail, Ac. Co. v. Mar- 
 
 zetti, 464. 
 Australian Steam Clipper Co. v. Mounsey, 
 
 499. 
 Australian Steam Nav. Co.'a Case, 226. 
 Ayers v. South Austral. Banking Co.,776. 
 Ayray's Case, 3. 
 
 Babbitt a. Savoy, 280, 284. 
 Babcock v. Beman, 764. 
 
 V. N. J. Stock Yard Co., 63. 
 Bach V. Pacific Mail S. S. Co., 664. 
 Bachman, re, 177, 181, 182. 
 Bacon v. Robertson, 793, 803. 
 Badger v. Am. Popular L. Ins. Co., 622. 
 V. Bank of Cumberland, 461, 494. 
 V. South Yorkshire Ry. Co., 104, 
 113. 
 Baglan Hall Colliery Co., re, 143. 
 Bagoalstown, Ac. Ry. C"., re, 2S8. 
 Bagshaw v. Eastern Union Ry. Co., 30, 
 
 70, 329, 404, 649, 666, 668, 687. 
 Bagshaw, etparie, 604, 608, 6U, 616, 618, 
 
 631. 
 Bailey v. Birkenhead, Ac. Ry. Co., 666, 
 667, 686. 
 V. Foster, 20. 
 V. Hollister, 78. 
 </. Power St. Church, 663. 
 V. R. R. Co., 164, 679. 
 Bailiffs of Ipswich v. Johnston, 6. 
 Bain v. Whitehaven Ry. Co., 136, 619, 622. 
 Baird v. Bank of Washington, 14, 623, 
 Baker v. Backus, 788, 789. 
 «. Fales, 62, 54. 
 
 V. Hannibal A St. Jo R. R. Co., 74. 
 tf. Windham, 281, 284. 
 Baker's Case, 721. 
 Baldwin v. Bank of Newbury, 494. 
 Balfour tr. Ernest, 84, 117, 273. 
 
 V. Sea, Fire, Ac. Ass. Co., 84. 
 Ballon V. Talbot, 757. 
 Baltimore v. Gill, 707. 
 
 V. Reynolds, 450, 740. 
 Baltimore A Havre de Grace T. Co. v. 
 
 TTnion R. R. Co., 376. 
 Baltimore A Ohio E. R.Co. v. Blocher, 359. 
 v.Gallahue,642. 
 ».Glenn,4,6,642. 
 «. Supervisors, 
 
 22, 642. 
 «.Wheeling,869. 
 V. Wightman's 
 Adm'r, 6, 7. 
 Baltimore A Philadelphia Steamboat Ce. 
 \ V. Brown, 90. 
 
XXll 
 
 TABLE OF CASES. 
 
 Baltimore <t SuBqnehanna E. E. Co. v. 
 
 Oompton, 71, 390. 
 Baltimore & Susquehanna R. E. Co. v. 
 
 Musselman, 638. 
 Baltimore <fc Y. T. Co. v. Boone, S60. 
 Baltzen v. Kioolay. 757. 
 Bancroft v. Lynfield, 284. 
 Banet v. Alton & Sangamon R. E. Co., 79. 
 Bangor, &c. R. E. Co, v. Smith, 97. 
 Bangor, <fec. Slab Co., re. 172. 
 Bangor Boom Corp. v. Whitney, 731. 
 Bangs V. Dnckinfield, 519. 
 Bank v. Carrolton R. E. Co., 688. 
 ». Commonwealth, 62. 
 V. Hammond, 740. 
 v, Lanier, 15, 179. 
 V. St. John, 487, 496, 523. 
 V. Stewart, 503. 
 Bantart v. Tennant, 656. 
 Bant Com'rs v. Bank of Brest, 125, 490. 
 Eankhead v. Brown, 373. 
 Bank of America v. McNeil, 501. 
 Bank of Auburn v. Putnam, 459. 
 Bank of Augusta?;. Earle,4, 29,62,508,729. 
 Bank of Australasia v. Breillat, 219, 724. 
 Bank of Bellows' Falls v. E. <fe B. R. R. 
 
 Co., 369. 
 Bank of British Columbia v. Page, 6. 
 Bank of Chillicothe v. Chillicothe, 213, 
 223, 743. 
 V. Dodge, 764. 
 V. Swayne, 742. 
 Bank of Columbia ji.Patterson,446,451,463. 
 Bank of Columbus v. Bruce, 94, 159, 182, 
 
 192. 
 Bank of Commerce's Appeal, 180. 
 Bank of Genesee v. Patchin Bank, 253, 754. 
 Bank of Grafton v. Woodward, 603. 
 Bank of Hartford v. Hart, 503. 
 Bank of Hindustan v, Alison, 609. 
 Bank of Hindustan, re, 604, 609, 626. 
 Bank of Kentucky v. Schuylkill Bank, 
 
 471, 522. 
 Bank of London v. Tyrrell, 479. 
 Bank of Lyons v. Ocean Bank, 503. 
 Bank of Metropolis ». Guttschlick, 446,459. 
 Bank of Michigan v. Niles, 14. 
 Bank of Middlebury v. Rutland, <fec. R. R. 
 
 Co., 485, 489, 538. 
 Bank of Middletown v. Edgerton, 371, 489. 
 Bank of New S. Wales v. Undaunted, &c. 
 
 Co., 216. 
 Bnnk of N. Y. v. Bank of Ohio, 754. 
 Bank of N. America v. C. D. & Y. R. R. 
 
 Co., 4. 
 Bank of Northern Liberties!). Cresson,608. 
 Bank of Penn. v. Reed, 494, 546. 
 Bank of Pittsburgh v. Whitehead, 602. 
 Bank of Rome v. Village of Rome, 269. 
 Bank of Soul h Australia v. Abrahams, 234. 
 Bank of Switzerland v. Bank of Turkey, 
 
 69, 649, 792. 
 
 Bank of Toledo v. International Bank; 520. 
 Bank of U. S. s.Dandridge, 508, 522, 523. 
 V. Davis, 333, 446, 448, 450, 
 453,459,466,468,500, 
 502. 603. 
 V. Deveaux, 4. 
 i>. Dunn, 494. 
 V. Owens, 743. 
 Bank of Waltham v. Waltham, 178. 
 Bank of Washtenau v. Montgomery, 13. 
 Bannon v. Bait. & Ohio E. R. Co., 360. 
 Baptist Association v. Hart, 50. 
 Baptist Church v. Mulford, 452. 
 V. Rouse, 64. 
 V. Witherell, 54. 
 Barber v. Andover, 376. 
 
 V. Nottingham, <fec. Canal Co., 60. 
 Barber Surgeons of London v. Pelsou, 456,. 
 
 457. 
 Barclay v. Howell's Lessee, 100. 
 
 V. Quicksilver Mining Co., 60S. 
 V. Tallman, 791. 
 Barclay, ea: joaj-^e, 176. 
 Bard v. Poole, 445. 
 Bardstown, <fec. R. E. Co. «. Metcalfe, 62, 
 
 224, 237. 
 Bard well!). Sheffield Waterworks Co., 161, 
 
 198. 
 Bargate v. Shortridge, 39, 136, 511, 521, 
 
 525, 633. 
 Barge's Case, 151. 
 Barker v. Allen, 252, 753. 
 
 V. Cairo & Fulton E. E. Co., 319. 
 V. Mechanics' Ins. Co., 223,264,255. 
 V. Mun. Council of Clunes, 461. 
 Barnard v. Vermont & Mass. R E. Co., 
 
 164, 199, 664. 
 Barned's Bank, re, 92. 
 Barnes v. Ontario Bank, 213. 223, 264, 521. 
 
 ii. Trenton Gas-light Co., 602. 
 Barnett v. Chicago E. R. Co., 7. 
 Barnett's Case, 130, 497. 
 Barney v. Oyster Bay Co., 4S6. 
 Bamstead v. Empire Mining Co., 2, 678. 
 Barr v. Bartram Mfg. Co., 480. 
 
 V. Oskaloosa, 384. 
 Barrett «. Schuyler County, 270. 
 Barrett's Case, 256. 
 Barron v. Baltimore, 378. 
 Barrows v. Med. Soc. 46. 
 Barry v, Croskey, 342. 
 
 V. Merchants' Exchange Co., 66, 67, 
 72, 169, 213, 223, 224, 254. 
 Barter v. Wheeler, 398. 
 Bartholomew v. Bentley, 521. 
 Bartlett v. Briokett, 276. 
 v. Drew, 206. 
 iJ. King, 11. 
 iJ. Tucker, 767. ' 
 Bartlette v. Norwich, &o. R.R. Co.,410,416. 
 Barton v. Hutchinson, 575. 
 
 V. Plank-road Co , 94, 482, 484. 
 
TABLE OF CASES. 
 
 xxm" 
 
 Barton's Case, 186. 
 
 Barwick v. English Joint-Stock Bank, 337, 
 
 342, 845, 346. 
 Bash's Ca=e, 149, ISO. 
 Bass V. Chicago, <6c. R. R. Co., 360. 
 Bassett v. Marshall, 522. 
 
 V. Salisbury Mfg. Co., 404. 
 V. St. Albans, &o. Co., 142. 
 Basshor v. Dressel, 22. 
 Bateman v. Mayor, &c. of Ashton-under- 
 Lyne, 40, 301, 302, 317,452. 
 V. Mid-Wales Ry. Co., 211, 255, 
 256, 257, 272. 
 Bates V. Andr. <fe Ken. R. R. Co., 164, 168. 
 V. Bank of Alabama, 65, 462, 614. 
 *. Boston, <fec., R. R. Co., 466. 
 «. N. Y. Ins. Co., 204. 
 Bath V Miller, 236, 246. 
 Bavington v. P. & S. R. R. Co., 129, 155. 
 Bawkright Vi Insurance Co., 7. 
 Baxter v. Chicago Board of Trade, 46. 
 Bay V. Cook, 756. 
 
 Bayard i^.Farmers' <fe Mechanics' Bank,180. 
 BaylesB!). Orne, 487,. 646, 663, 675,676,789, 
 Bayley v. Manchester, <fec. Ry.Co.,354,361. 
 V. Wilkina, 505. 
 
 V. Wolverhampton Waterworks 
 Co., 60. 
 Beach v. Fulton Bank, 29, 333. 
 
 V. Smith, 146. 
 Beale v. Railway Coi, 369. 
 Beall tr. Fox, 14, 50. 
 Beardoier v. London, <fec. Ry. Co., 892. 
 Beardshaw, ex parte, 156. 
 Beardsley v. Ontario Bank, 243. 
 Beaston v. Farmers' Bank, 124. 
 Beattie v. Lord Ebury, 663, 758, 763. 
 Bealty v. Knowler, 28. 
 V. Kurtz, 686. 
 1). Marine Ins. Co., 621. 
 Beauchamp v. Great-Western Ry. Co., 107, 
 
 110, 381,760. 
 Beaufort, Duke of a. Patrick, 556. 
 Beavan v. McDonnell, 717. 
 Beaver County v. Armstrong, 270, 271. 
 Beck's Case, 129, 131. 
 Beckwith v. Windsor Mf;;. Co., 446. 
 Bedford & Gamhridge Ry. Co. v. Stanley, 
 
 585, 599, 600. 
 Bedfcrd, Duke of v. Dawaon, 74, 392. 
 Bedford R. R. Co. v. Bowser, 79, 128, 129, 
 
 . 134, 181, 182, 187, 193, 490,496. 
 Beddoes, ex parte, 574. 
 Beeching v. Lloyd, 690. 
 Beekman v. S. & S. B. R. Co., 372, 436. 
 Beene v. Catawba & M. R. R. Co., 153. 
 Beer v. London & Paris Hotel Co., 494,496. 
 Beer Co. v. Massachusetts, 96, 98, 
 Beers v. Bridgeport Spring Co., 204. 
 V. Phcenix Glass Co., 213, 474. 
 Beet's Case, 136. 
 Bellinger v. N. T. Central R. R. Co., 75. 
 
 Belfast, <feo. R. B. Co. v. Cottrell, 156. 
 
 V. Inhab. of Brooks, 433. 
 V. Moore, 127. 
 
 Belknap v. Boston & Maine B. R. Co., 361. 
 
 Bellows V. Todd, 5, 445. 
 
 Bell's Gap B. B. Co. v. Christy, 570. 
 
 Belmont v. Erie Railway Co., 485, 643, 663. 
 
 Belo V. Com'rs of Forsythe Co.. 272, 632. 
 
 Beman v. Rufford, 87,' 399, 410, 428. 
 
 Benedict v. Denton, 466. 
 
 Benjamin v. Elmira B. B. Co., 235, 244. 
 
 Bennett v. Judson, 339. 
 
 V. Md. Fire Ins. Co., 556. 
 
 Bennett's Case, 181, 184. 
 
 Bennington v. Park, 732. 
 
 Benoist v. Inhab. of Carondelet, 466. 
 
 Bensley v. Mountain Lake Co., 392. 
 
 Bentinck i). Norfolk Estuary Co., 110, 380. 
 
 Berkeley's Will, Earl of, re, 574. 
 
 Berkhampstead School, re, 49, 51. 
 
 Berks & Dauphin Turnpike Co. v. Myers, 
 466, 521. 
 
 Bernard, ex parte, 340. 
 
 Berry v. Yates, 91. 
 
 Bery v. Marietta, <fec. E. R. Co., 134. 
 
 Besel V. N. Y. C. & H. R. R. H. Co., 851. 
 
 Bestor v. Wathen, 480. 
 
 Bethany v. Sperry, 440. 
 
 Bethlem Hospital, 574. 
 
 Betts V. De Vitre. 363, 656, 759. 
 V. Gibbins, 505. 
 
 Bevan v. Lewis, 716. 
 
 Beverley «. Lincoln Gas-light Co., 450. 
 
 Biclrford ». First Nat. Bank, 337. 
 
 Biddulph V. St. George's Testry, 397. 
 
 Biederman v. Stone, 513. 
 
 Bigelow V. Hartford Bridge Co., 698, 709. 
 
 Bigelow, Matter of, 180. 
 
 Bignold V. Waterhouse, 600. 
 
 Bignold, ex parte, 219, 521, 643, 725. 
 
 Bill V. Sierra Nevada Lake, &c. Co., 298 
 
 Bingham ». Bingham, 760. 
 
 Binney v. Ince Hall Coal Co., 139. 
 
 Binuey'a Case, 14, 109, 760. 
 
 Birch's Case, 135. 
 
 Bird V. Bird's Patent, &c. Co., 118, 648. 
 
 Birmingham, <fcc. Ry.Co. v. Locke,132,530. 
 V. White, 244. 
 
 Birmingham Banking Co., ex parte, 212, 
 217, 219, 223, 228, 230, 260. 
 
 Birmingham Canal Co. o, Dudley, 115. 
 
 Bish V. Johnson, 636. 
 
 Bishop V. Brainerd, 632, 638, 639. 
 
 Bishop's Case, 178. 
 
 Bissell V. Jeffersonville, 532. 
 
 V. M. S. & N. L R. R. Co., 33, 36, 
 36, 40, 90, 272, 331, 424, 607, 
 516, 735. 
 
 Black V. Delaware, &c. C. Co., 8, 13, 78, 99, 
 124, 224, 237, 398, 407, 420, 
 469, 478, 485, 490, 632, 633, 
 634, 636, 663, 687, 792. 
 
XXIV 
 
 TABLE OF CASES. 
 
 Black V. Huegina, 646. 
 
 V. Phila. & Reading E. R. Co., 698. 
 
 V. United Companies, 62. 
 Black & Co.'s Case, 149. 
 Black & White Smitha' Soc. v. Vandyke, 
 
 46. 
 Blackburn's Case, 848. 
 Blaekman v. Central R. R. Ac. Co., 67Y. 
 Blaekmore v. Tales, 238, 678. 
 Black R. &c. R. R. Co. -a. Barnard, 22, 
 
 224, 520. 
 Blackstone Mfg. Co. v. Blackstone, 4. 
 Blake v. Buffalo Creek R. R. Co., 482, 697. 
 
 V. Great Western Ry. Co., 90. 
 
 D. Hinkle, 796. 
 
 V. HoUey, 89. 
 
 V. Livingston Co., 270. 
 
 V. P. & 0. R. R. Co., 798. 
 
 V. Rich, 100, 382. 
 Blake's Case, 302, 602. 
 Blakely Ordnance Co., re, 231, 257, 261. 
 Blanohard v. West. Union Tel. Co., 698. 
 Bland v. Crowley, 324, 326. 
 Blatchford v. Rosa, 478, 644, 588, 636. 
 Bliss V. Anderson, 643. 
 
 V. Matteson, 478, 480, 688, 611. 
 Blissett V. Daniel, 671. 
 
 V. Hart, 371. 
 Blodgett V. Morrill, 152, 336. 
 Blood, ex parte, 622. 
 Bloodgood ». Mohawk <fe H. R. R. Co.,352, 
 
 713. 
 Bloomer v. Union Coal & Iron Co., 600. 
 Bloomfield Gas Co. ». Richardson, 874. 
 Blossburg, &c. R. R. Co. v. Tioga R. R. 
 
 Co., 425. 
 Bloxamv. Metropolitan Ry. Co., 198, 662. 
 Bloxam's Case, 128. 
 Bluck V. Malalue, 673. 
 BluehiU Academy v. Witham, 571. 
 Blnndell's Case, 602. 
 Blunt V. Walker, 146. 
 Bly V. Second Nat. Bank, 740. 
 Bodie V. Chenango Ins. Co., 519. 
 Bonaparte v. C. & A. R. R. Co., 373, 880, 
 
 390, 699. 
 Bonhonus, ex parle, 216. 
 Bonelli's Telegraph Co. re, 640. 
 Bonesteel v. Mayor, 466. 
 Boody V. Rutland R. R. Co., 129. 
 Booe V. Railroad, 99. 
 Booker, ex parte, 2, 678. 
 
 *. Young, 542. 
 Booth V. B. & A. R. R. Co., 361. 
 
 V. Bunce, 608. 
 
 V. Farmers' & Meoh. Bank, 331. 
 Bordentown, <feo. T. Co. v. C. & A. R. R 
 
 Co., 76. 
 Borough of Hackney Newspaper Co., 611. 
 Bosanmiet v. Shortridge, 526. 
 Bostock V. N. Staffordshire Ry. Co., 99, 
 104, 108. 
 
 Boston <fc A. R. R. Co. in re, 877, 378. 
 Boston <fe L. R. R. Co. v. B. & M. R. R. 
 Co., 62, 411. 
 V. Commonwealth, 
 
 199.' 
 *. Salem & L. R.R. 
 Co., 375. 
 Boston & Me. R. R. Co. v. Lowel! & L. R. 
 
 R. Co., 377. 
 Boston &c. R. R. Co. v. Wellington, 127, 
 
 153. 
 Boston & W. R. R. Co. v. Old Colony R. 
 
 R. Co., 877. 
 Boston C. & M. R. E. Co. v. Gilmore, 241. 
 V. State, 366, 
 369. 
 Boston Glass Co. v. Langdon, 791, 794, 
 
 796. 
 Boston Mill Dam v. Newman, 876. 
 Boston Water Power Co. ii. Boston, Ac. R. 
 
 R. Co., 376. 
 Boulton, ex parte, 141. 
 Bow V. Allenstown, 22. 
 Bowden v. McLeod, 64. 
 ». Santos, 181. 
 Bowen v. Brecon Ry. Co., 238. 
 
 V. First Nat. Bank of Medina, 4. 
 V. Irish Pres. Cong., 466. 
 Bower v. Bank of the State, 8. 
 V. Com'rsof Sligo, 312. 
 Bowes V. City of Toronto, 820. 
 Bowler v. Lane, 360. 
 Bowling Green R. R. v. Warren County 
 
 Court, 29. 
 Bowne v. Douglass, 754. 
 Boyce v. St. Louis, 12, ]3. 
 
 V. Trustees, 621, 740. 
 Boynton v. Hatch, 142. 
 Bradford v. Water Lot Co., 3. 
 Bradley v. Ballard, 213, 223, 273, 745. 
 «. Case, 20. 
 V. Farwell, 479. 
 V. N. Y. <fc N. H. R. R. Co., 62, 
 
 873. 
 V. Richardson, 276. 
 V. S. C. Phosphate Co., 62. 
 Bradstreet v. Bank of Royalton, 538. 
 Bradt v. Benedict, 791. 
 Brady v. The Mayor, 66, 272, 453. 
 Braginton's Case, 128. 
 Brainard v. Clapp, 893. 
 Brainerd v. N. Y. & Har. E. R. Co., 269. 
 
 V. Peck, 236. 
 Bramah ». Roberts, 265. 
 Brampton, &c. Ry. Co. re, 673. 
 Branch w. City ot Charleston, 638. 
 Brand v. Hammersmitli Ry. Co.. 383. 
 Brandon Iron Co. v. Gleason, 791, 796. 
 Braund v. Earl of Devon, 62. 
 Brennan v. Tracy,' 368. 
 Brent v. State, 22. 
 Brewer v. Boston Theatre, 247, 646. 
 
TABLE OF CASES. 
 
 XXV 
 
 Brewers' Fire Ina. Co. v. Burger, 129. 
 Brewster v. Canada Co., 451. 
 V. Hartley, 94, 670. 
 Breynton v. L. <fe N. \V. Ey. Co., 390. 
 Brickner v. N. Y. Ceut. R. K. Co., 351. 
 Bridge Co. d. Clarksville, 376. 
 
 V. Mayer, 4, 445, 641. 
 Bridge Proprietors w. Hoboken L. <fc I. 
 
 Co., 62. 
 Bridgeport Bank v. N. T. & N. H. R. E.Co., 
 
 179. 
 Bridgeport City Bank v. Empire, Ac. Co., 
 
 263. 
 Bridger's Case, 130, 146. 
 Bridport Old Brewery Co. re, 440, 441. 
 Briggs V. C. & A. R. R. Co., 62. 
 
 V. Whipple, 284. 
 Bright V. Button, 667. 
 
 V. North, 309, 812. 
 Brightwell v. Mallory, 178. 
 Brinkerhoff ». Brown, 791. 
 Bristol V. North Somerset Ry. Co. re, 172, 
 
 234. 
 British & Am. T. Co. v. Albion Bank, 503. 
 
 V. Colson, 128. 
 British <fe Foreign Cork Co. re, 91. 
 British Empire, &c. Co. v. Browne, 465. 
 British Provident Ass. Co. v. Norton, 614, 
 
 721. 
 British Provident Ass. Co. re, 234, 511, 
 
 513. 
 British Sngar Refining Co. re, 136, 151, 
 
 439, 440, 545. 
 Broadbent v. Varley, 176. 
 Broadway Bank v. McElrath, 179. 
 Brockenbrough ii. James River Co., 153. 
 Brock, Town of r. Toronto,<fcc.By.Co.,521. 
 Brockway v. Allen, 754. 
 Brogdin v. Bank of Upper Canada, 666. 
 Brokaw v. N. J. R. <fe T. Co., 335, 351, 352. 
 Bromley v. Smith, 648. 
 Bronson v. La Crosse R. R. Co., 676. 
 Brooklyn Cent. R. R. Co. v. Brooklyn City 
 
 R. R. Co., 377. 
 .Brooklyn L. Ins. Co. v. Bledsoe, 742. 
 Brooklyn Park Com'rs v. Armstrong, 100, 
 
 395. 
 Brooklyn, W. & N. Ry. Co. re, 786, 788. 
 Brooks V. Peck, 687. 
 Brotherhood's Case, 188, 569, 781. 
 Broughton v. Hntt, 760. 
 
 V. Manchester W-works Co., 
 256, 453. 
 Brouwer v. Appleby, 154. 
 Brown ». Adams, 180, 769. 
 V. Andrew, 642. 
 V. Beatty, 373. 
 *. Brown, 318, 319. 
 V. Byers, 215, 216. 
 V. Co. of Somerset, 493. 
 ti. Hannibal, Ac. R. R. Co., 352. 
 V. Kidger, 215, 216. 
 
 Brown V. LecMe, 337. 
 
 V. Lehigh Coal & Nav. Co., 203. 
 V. State of Maryland, 5. 
 V. Town of Bellville, 466. 
 V. Van Dyke, 277, 679. 
 ii. Winnisimmet Co., 66, 665, 733. 
 Brown, exparie, 511, 514, 614, 618, 721. 
 Browning v. Cam. <fe Wood. R.R. Co., 380. 
 V. Great Central Mining Co., 
 462, 666. 
 Brownlee v. Ohio, <fec. B. R. Co., 336. 
 Brownlow v, Metropol. Board, 331. 
 Bruce v. Dei. & Hud. C. Co., 87. 
 
 V. Lord, 754. 
 Brucken v. W. <fe M. College, 49. 
 Bruff W.Mali, 338. 
 Bruffett V. Great Western R. R. Co., 638, 
 
 788, 791. 
 Brundage v. Brundage, 203, 204. 
 Bruning v. N. O. C. & B. R. R. Co., 393. 
 Brunswick v. Dunning, 17. 
 Brunton's Claim, 86, 259, 476. 
 Bruton Turnpike Trustees v. Wincanton 
 
 H. Bd., 60. 
 Bryan v. Reynolds, 318. 
 Bryant v. Goodman, 439. 
 Bryon v. Metropolitan, &a. Omnibus Co., 
 
 213, 217, 219, 499. 
 Bryson v. Warwick, <fcc. Canal Co., 770. 
 Buoher v. Dillsburg, <fec. R. R. Co., 127. 
 Buck Mountain Coal Co. ii. Lehigh Coal 
 
 Co., 403, 407, 702, 710. 
 Buckley v. Briggs, 256, 453. 
 
 V. Derby Fishery Co., 521, 626, 
 627, 734. 
 Bucksport, <fco. E. R. Co. v. Brewer, 130. 
 ». Buck, 130, 164. 
 Budd's Case, 178. 
 Budden's Case, 622. 
 Buell V. Buckingham, 473, 642. 
 Buenos Ayres, &e. Ry. Co., re, 160. 
 Buffalo & Allegheny R. R. Co. i/. Cary, 
 
 520, 521. 
 Buffalo & N. Y. City R. R. Co. v. Dudley, 
 
 '78 99 175 
 Buffalo' (t N. Y.R. R. Co. ti.Brainard, 372, 
 373. 
 V. Pottle, 78. 
 V. Lampson, 235,478. 
 Buffalo, Matter of, 377. 
 Buffet V. Troy & Boston R. R., 28, 90, 737. 
 Bugg, ex parte, 139. 
 Bulkeley v. Schutz, 298. 
 Bnlkley o. Derby Fishing Co., 621, 526, 
 
 627, 734. 
 Bull V. Chapman, 674, 692. 
 BuUard v. Bank, 15. 
 Bulmer's Case, 140. 
 Bult V. Morell, 255. 
 Buncombe T. Co. v. McOarson, 462. 
 Bundy v. Birdsall, 276. 
 Bunn's Case, 130, 146. 
 
TABLE OF CASES. 
 
 Bunting's Adm'ra v. Camden. <feo. E. R, 
 
 Co., 270. 
 Bnrbridge v. Morris, B53. 
 Burden v. Stern, 374. 
 Burges & Stock's Case, 85, 720, 721. 
 Burgess v. Pue, 622, 523. 
 Burke V. Sni=th, 137, 151, 181, 489,496. 
 Burlington, &c. E. R. Co. v. Palmer, 127. 
 V. Stewart, 746. 
 Bnrmester v. Norris, 216, 255. 
 Eurnes «. Pennell, 136, 348, 503, 604. 
 Burr V. McDonald, 224, 446, 623. 
 
 V. Smith, 60. 
 Burrell v. Associate Reformed Church, 63, 
 
 54. 
 Burrill v. Nahant Bank, 489, 492, 644, 646. 
 Burroughs v. Housatonio E. K. Co., 76. 
 V. North Carolina E.E. Co., 203, 
 
 204. 
 V. Eichmond, 271. 
 Bnrrowes v. Loch, 343. 
 Burrows v. Smith, 152. 
 Burslem Paper Mills Co., 722. 
 Burt V. British Nation Life Ass., 689. 
 V Farrar, 175. 
 V. Battle, 170, 224. 
 Burtis V. Buflfalo & S. L. E., 90. 
 Burton's Appeal, 14. 
 Busey v. Hooper, 126, 651. 
 Euah V. Martin, 61. 
 liush's Case, 143, 516, 626. 
 Bushnell v. Chautauqua Co. Nat. Bk., 738, 
 
 749. 
 Butchers' Association Case, 15. 
 Bntler v. City of Milwaukee, 280, 284. 
 V. Compston, 140. 
 V. Kent, 698. 
 V. Riihm, 237, 238. 
 V. "Watkins, 338. 
 Butternuts & O Turnpike Co. v. North,129. 
 Buttei'worth v. Stagg, 654. 
 Butts V. Wood, 277, 478, 671, 675. 
 
 Ciibot & W. S. Bridge Co. v. Chapin, 164. 
 
 Cadiz W works v. Barnett, 798. 
 
 Cahill 11. Kalamazoo Mut. Ins. Co., 623, 
 
 642, 795. 
 Caldwell v. Commercial Warehouse Co., 63. 
 V. Mohawk Valley Nat. Bank,749. 
 V. N. J. Steamboat Co., 360. 
 Caledonian Ry. Co. v. Helensburgh, 820, 
 
 572, 575," 585, 586, 699. 
 Caledonian Ey. Co. v. Ogilvy, 386. 
 
 V. Sprot, 114. 
 Calhoun v. Paducah, <fec. E, E. Co., 249. 
 California " City Slip Cases," 748. 
 CalMns v. Bloomfield, (fee. Gaa Co., 404. 
 
 V. Cheney, 54. 
 Callaway v. Clark, 86. 
 Camanehe; The, 276. 
 
 Camblos v. Phila. <fe Eeading E. R. Co., 
 66, 72, 485, 653. 
 
 Cambrian Ry. Co.'s Scheme, re, 172, 234. 
 Cambrian Steam Packet Co., re, 799. 
 Camden & A.R.R.Co. !/. R.(fe D.B.E.E., 62. 
 
 V. Eemer, 29. 
 Camden Rolling Mill Co. v. Swede Iron 
 
 Co., 7. 
 Cammeyer v. German Churches, 638. 
 Campagnie de Bellegarde, re, 221. 
 Campbell v. Miss. Union Bank, 791. 
 
 V. R. R. Co., 644. 
 Campbell's Case, 182, 186, 188, 221, 609. 
 Canal Co. v. Bonham, 224. 
 
 D. R. R. Co., 461, 641, 787, 789, 
 791, 795. 
 Candee v. Penn. E. E. Co., 90. 
 Cannon v. Trask, 682. 
 Canon v. McNab, 742. 
 Capp V. Topham, 505. 
 Card V. Carr, 543. 
 
 Carden v. General Cemetery Co., 573. 
 Cardiff Preserved Coal, <fec. Co., 7-e, 529. 
 Carey v. Cin. & Ohio. E. E. Co., 336, 639, 
 
 792. 
 Carting's Case, 147. 
 
 Carlisle v. Saginaw Valley, &c. E. R. Co., 
 127. 
 V. S, E. Ry. Co., 203, 686, 688. 
 Carnforth Hsematite Iron Co., ex parte, 803. 
 Carpenter v. Black Hawk Mining Co., 237. 
 V. Easton, &c. R. R. Co., 384. 
 V. Farnsworth, 758. 
 V. N. Y. & N. H. R. R. Co., 202, 
 
 203, 686. 
 V. Rommell, 270. 
 Carr v. Lefevre, 270. 
 V. St. Louis, 16. 
 Carrington v. Wycombe Ry. Co., 107. 
 Carroll v. City of East St. Louis, 5, 6, 1 3. 
 Carron Iron Co. i>. Maclaren, 4. 
 
 V. Stainton, 4. , 
 Carrugi v. Atlantic Fire Ins. Co., 521. 
 Cartan v. Father Matthews Society, IB. 
 Carter v. Balfour, 50. 
 
 V. Howe Machine Co., 357. 
 Cartmell's Case, 491, 513. 
 Cartridge v. Griffiths, 21, 
 Cass *. Ottawa Agric. Ins. Co., 157, 644. 
 
 V. Pittsburgh, &c. R. R. Co., 128, 129. 
 Catehpole v. Ambergate Ry. Co., 136 187, 
 
 530. 
 Catlin V. Eagle Bank, 796. 
 Ciitskill Bank v. Gray, 423, 424. 
 Cayuga Lake R. R. Co. v. Kyle, 127. 
 Ciizeaux V. Mali, 838. 
 Cefn Cilicen Mining Co., in re, 209. 
 Central Bank v. Empire Stove, <fcc. Co.,2B3. 
 Central Bridge Co. v. Lowell, 376. 
 Central Crosstown R. R. Co. v. Twenty- 
 third St. R. E. Co., 788. 
 Central Gold N. Co. v. Piatt, 1.3. 
 Central E. R. Co. ■n. Claghorn, 479. 
 V. Collins, 92. 
 
TABLE OF CASES. 
 
 XXVI I 
 
 Central R. R. Co. t/. Georgia, 632, 638. 
 
 V. Papot, 204. 
 Central E. R. Co., in re, 377. 
 Central Rv. Co. of Venezuela v. Eisch, 
 
 131, 347, 350. 
 Central Turnpike Co. v. Valentine, 154. 
 Challis's Case, 131, 139, 151, 610, 614. 
 Chamberlain v. Chamberlain, 12. 
 
 V. Painesville R. R. Co., 129, 
 438, 441, 523. 
 Chambers v. City of St. Louis, 747. 
 
 V. Manchester, <fec. Ry.Co., 38,726. 
 Chambersburg Ins. Co. v. Smith, 177. 
 Champion v. Memphis & C. R. R. Co., 79. 
 
 V. White, 339. 
 Chandler v. Brown, 182. 
 Chapin v. Sullivan R. R., 382. 
 
 «. Vt. & Mass. R. R. Co., 269. 
 Chaplin v. Hill, 456. 
 Chapman v. Atlantic R. R., 76. 
 
 V. Shepherd, 6Q5. 
 Chapman & Barker's CaBe,93,139,145,505. 
 Chapman's Case, 803. 
 Charitable Association v. Baldwin, 522, 
 
 623. 
 Charles River Bridge ». Warren Bridge, 
 
 62, 417, 787. 
 Charleston v. Branch, 638, 
 
 V. Moorehead, 465. 
 Charleston Ins. Co. v. Sebring, 646. 
 Charleston, &c. Turnpike Co. v. Willey, 39. 
 Charleston, Ac. R. R. Co. v. Blake, 603. 
 Charlton v. Hay, 595. 
 
 V. Newcastle, (fee. Ry. Co., 426, 
 662. 
 Charter Oak Life Ins Co. v. Sawyer, 6. 
 Chartered Bank of India v. Henderson,265. 
 Chase ii. Lord, S. 
 
 V. Vanderbilt, 7, 165, 198, 484. 
 Chase's Case, 17. 
 Chater v. San Francisco Sugar Refining 
 
 Co., 670. 
 Chattahoochee Nat. Bank v. Schley, 749. 
 Chautauqua Co. Bank v. Risley, 38. 
 Cheever v. Gilbert Elevated Ry. Co., 89. 
 Chelmsfork Co. v. Demarest, 603. 
 Cherry ^.Colonial Bank of Australasia,757. 
 Ghertsey Market, re, 61. 
 Chesapeake, cfeo. Canal Co. v. Knapp, 448. 
 Chesapeake, <feo R. R. Co. v. Virginia, 638. 
 Chester Glass Co. v. Dewey, 456, 693, 732. 
 Chestnut Hill, Ac. Co. v. Rutter, 352, 452. 
 Chetlain v. Republic L. Ins. Co., 134. 
 Chicago V. Lnnglass, 361. 
 Chicago, Ac, R. R. Co. v. Ackley, 96. 
 
 w. Att.-6en., 432. 
 *. Coleman, 604. 
 V. Davis, 362. 
 ».FtHoward,246. 
 V. Iowa, 96. 
 V. <lames, 464. 
 V. Keisel, 3, 
 
 Chicago, Ac. E. E. Co. ^. Lake, 373, 377. 
 V. Marseilles, 95. 
 V. McLallen, 351. 
 V. Moffitt, 637,639. 
 V. Parks, 436. 
 tf. People, 406,436. 
 V. Snett, 351. 
 V. Taylor, 351. 
 V. Whipple, 352. 
 V. Williams, 352. 
 «/. Wilson, 87, 381, 
 393. 
 Chicago Building Society v. Crowell, 566, 
 
 745. 
 Chicago City R. R. Co. v. AUerton, 158, 
 
 169, 169, 469. 495. 
 Childs V. Bank of Missouri, 356. 
 Chinnock's Case, 140. 
 Chippendale, ex parte, 218, 724. 
 Choquette v. Barada, 466. 
 Chorley, et parte, 85, 476. 
 Chouteau Spring Co. v. Harris, 177. 
 Christ Ch. v. Barksdale, 486. 
 
 V. Johnson, 448. 
 Christ Ch. Hospital v. County of PMla , 96. 
 Christian University v. Jordan, 564. 
 Chubb V. Upton 620, 521. 
 Church V. Imperial Co., 450. 
 V. Sterling, 646, 556. 
 Cincinnati, A_o. (Jo. v. Rosenthal, 746. 
 Cincinnati, Ac. R. R. Co. v. Cole, 97. 
 Cincinnati, Ac. Ry. Co. v. Pontius, 90. 
 Cincinnati R. R. Co. v. CJarkson, 145, 146. 
 Citizens, Ac. Ins. Co. v. Lott, 2(iO. 
 
 V. Sortwell, 440. 
 Citizens' Loan Assoc, v. Lyon, 486. 
 City V. Lamson, 269, 271. 
 City and County Bank, re, 798. 
 City Bank of Culumbus v. Bruce, 94, 159, 
 
 182,192. 
 City Bank, exparte, 269, 267. 
 Citv Council of Montgomery v. M. A. W. 
 
 ' PI. Rd. Co., 741. 
 City Hotel Co. v. Dickinson, 153. 
 City Insurance Co. v. Carru»i, 7, 740. 
 
 V. Commercial Bank, 798. 
 City of Glasgow L^ion Ry. Co. v. Hun- 
 ter, 75. 
 Clapp V. Cedar County, 270. 
 Claremont Bridge v. Royce, 13. 
 Clark ij. Blackman, 698. 
 
 V. Continental Improvement Co., 
 
 127. 
 V, Corp. of Washington, 459. 
 ». Dickson, 349. 
 V. Farmers' Woolen Mfg. Co., 254, 
 
 256, 270, 4fi6, 523. 
 V, Fariington, 146. 
 V. Iowa City, 269, 271. 
 V. Middleton, 6. 
 V. Monongaliela Nav. Co., 78. 
 »i. Saybrook, 698. 
 
xrviii 
 
 TABLE OF CASES. 
 
 Clark V. School Board of London, H. 
 
 V. Titcomb, 213. 
 Clark's Exeoutora v. Van Riemdyk, 656. 
 Clark, ex parte, 146. 
 Clarke v. Benton Mfg. Co , 452. 
 
 V. City of Janesville, 270, 272. 
 V. Cuokfield Union, 65, 450. 
 *. Hart, 186. 
 V. Imperial Gas Co., 522. 
 V. Manchester, <fec. Ry. Co., 891. 
 Clarkeou v. Clarkson, 199. 
 
 V. Hudson R. R. R. Co., 394. 
 Clay V. Enfford, 494! 
 Clearwater v. Meredith, 18, 99, 631, 632, 
 
 633. 
 Cleghorn i/. If. Y. C. <fe H. R. R. R. Co., 
 
 860. 
 Cleland's Case, 14T, 149. 
 Clemens v. Clemens, 12. 
 Cleye v. Financial Corp., 440, 614. 
 Cleveland v. Chamberlain, 654. 
 Cleveland <fe P. R. R. Co. v. Speer, 878, 
 
 880, 641. 
 Clinch V. Financial Corporation, 120, 442, 
 
 608,609,614,618,626. 
 Clinton, City of v. C. E. & Mo. R. R. R. Co., 
 
 879. 
 Clippinger v. Hepbaugh, 318. 
 Clothier v. Webster, 61. 
 Clowes V. Brettell, 519, 673. 
 Cluff V. auff, 247. 
 Coal Co. V. Blatchford, 644. 
 Coal Eciinomizing Co., re, 596. 
 Coate's Case, 147, 149, 173, 688. 
 Coburn v. Boston Papier Mache Mfg. Co., 
 
 796. 
 Cocheco Bank v. Haskell, 494, 603. 
 Cochin V. Midland Ry. Co., 66. 
 Cockburn's Case, 182, 498. 
 Cocker's Case, 612, 619. 
 Cockerell «. Van Diemen's Land, 619, 530. 
 Coe V. Col. & Piqua R. R. Co., 224, 236, 
 237, 238, 246, 644. 
 
 V. Hart, 239, 243, 245. 
 
 V. Johnson, 224, 228. 
 
 V. McBrown, 228, 236. 
 
 «. N.J.Md. Ry. Co., 726. 
 
 V. Wise, 61. 
 Coey V. Belfast, <fec. Ry. Co., 173, 204. 
 Cohen v. Wilkinson, 70, 89. 
 Coil V. Pittsburgh Fem. Coll. 162. 
 Colborne & Strawbridge, ex parte, 259, 
 
 267. 
 Colchester v. Seabar, 795. 
 Coloough V. Nashville, &e. R. R. Co., 74. 
 Coleman v. N. Y. & N. H. R. R. Co., 362. 
 ■ii. San Rafael, <&c. RoadCo., 12. 
 V. Second Ave. R. E., 478, 688, 
 597. 
 Coles V. Allison, 584. 
 Collen V. Wright, 761, 766. 
 Collie's Claim, 541. 
 
 Collins V. Taylor, 690. 
 Collinson v. Lister, 600. 
 Collum, ex parte, 176. 
 Colman v. Eastern Ry. Co., 29, 87, 89. 
 Coloma, Town of v. Eaves, !)32. 
 Colonial & General Gas Co., re, 234, 269. 
 Colonial Bank of Australia v. Willan, 618. 
 Colt V. WooUaston, 690. 
 Colton V. Ross, 690. 
 Columbus V. Woolen Co., 897. 
 Columbus, Ac. E. R. Co. v. Arnold, 361. 
 *.Ind.<fco.R.R.Co., 
 410, 416, 424. 
 V. Powell, 687, 638. 
 V. Skidmore, 639. 
 Columbus, City of v. Columbus & Shelby 
 
 R. R. Co., 403. 
 Columbus Ins. Co. v. Walsh, 6. 
 Commercial Bank v. Cunningham, 502. 
 
 V. Farmers' Loan <fe T. 
 
 Co., 246. 
 V. French, 8. 
 V. Great Western Ey. 
 
 of Canada, 228. 
 V. Newport Mfg. Co., 
 
 213, 223. 
 1). Nolan, 466. 
 Commercial Banking Co. of India, re, 622, 
 
 801. 
 Commercial Ins. Co. v. Union Ins. Co., 621. 
 Commissioners v. Andrews, 702. 
 1). Gherky, 20. 
 V. Holyoke Co., 98. 
 V. Rogers, 50. 
 of Central Park, Matter of, 
 
 376. 
 of Craven v. Atlantic, &C, 
 
 E. R. Co., 228. 
 of Douglas Co. «i. BoUes, 
 
 520. * 
 
 of Public Schools v. Com'ra 
 
 of County, 394. 
 of Tippecanoe Co. v. L. M. 
 
 <t B. E. E. Co., 432. 
 of Tippecanoe Co. v. Rey- 
 nolds, 479. 
 Commonwealth v. Alger, 378. 
 
 V. Atlantic A G. W. R. R. 
 
 Co., 638. 
 V. Boston & W. R. R. Co., 
 
 369. 
 V. Central Bridge Co., 367. 
 V. Commercial Bank, 787. 
 V. CuUen, 470, 795. 
 V. Bel. A Hudson Canal 
 
 Co., 426,436. 
 V. Erie <fe N. E. B. R., 29, 
 
 62, 876. 
 V. Essex Co., 98, 788. 
 V. Fayette R. E. Co., 97. 
 V. Fisher, 100. 
 ». FitohburgE.E.,71, 789. 
 
TABLE OF CASES. 
 
 XXIX 
 
 Commonwealth v. Franklin Ben. See, 46. 
 V. German Soc, 46. 
 1). Gill, 15. 
 V. Green, 64. 
 V. Guardians of Poor, 46. 
 V. Hamilton Mfg. Co., 96.. 
 V. Intoxicating Liquors, 
 
 96. 
 V. Meeser, 407. 
 V. Milton, 5. 
 V. ITashna, &c, S. B. Co., 
 
 369. 
 V. New Bedford Bridge, 
 
 368. 
 V, Penn. Ben. Inst., 46. 
 V. Philanthropic Soc, 4B. 
 V. Pike Ben. Soc, 46. 
 V. Pittsburgh, 270. 
 W.Pittsburgh, <fec. E. R. 
 Co., 98, 641, 787, 788. 
 V. Railway Co., 710. 
 V. Rosseter, 405. 
 V. St. Patrick Soc, 45. 
 V. Smith, 124, 224, 237. 
 V. Society, 46. 
 V. Swift Run Gap T. Co., 
 
 368. 
 V. Troy, &e. R.R. Co., 224. 
 t;. Trustees of St. Mary's 
 
 Ch., 468, 470. 
 V. Union Ins. Co., 787. 
 V. Yermont & Mass. R. R. 
 
 Co., 369. 
 V. Westchester R. R , 23. 
 Comstock, re, 731. 
 
 Concord v. Portsmouth Savings Bank, 631. 
 Concord Bank v. Gregg, 338. 
 Concord It. R. Co. v. Greely, 373, 
 Cone V. Del, L. iSiTW. R. E. Co., 361. 
 Conhockton S. R. Co. v. B., N. Y. & E. R. 
 
 R. Co., 76. 
 Conklin v. Bank, 16. 
 
 V. Commissioners, 707. 
 Coin. <fe Pass. River R. R. Co. v. Bailey, 
 
 162, 336. 
 Conn. Mat. L. Ins. Co. v. Cleveland, &c. 
 
 R. R. Co., 264, 269, 270, 272, 618. 
 Conn. R. R. R. Co. v. Baxter, 162. 
 Connie v. Junction, Ac. li. R. Co., 460. 
 Conro V. Port Henry Iron Co., 3, 126, 264, 
 
 468, 478, 656, 754. 
 Conservators of Eiver Tone v. Ash, 19, 22. 
 Const V. Harris, 660, 671. 
 Contoocook Valley R. E. Co. v. Barker, 
 154. / 
 
 Contra Costa E. R. Co. v. Moss, 378, 
 Contract Corporation, ex parte, 92, 136, 
 
 464,604.513,771. 
 Converse v. N. & N. Y. Trans. Co., 90, 734. 
 Conybeare«. New Brunswick Ey. Co., 603. 
 Cooch V. Goodman, 8. 
 Cook V. Berlin Woolen M. Co., 480. 
 
 Cook V. College of Physicians, 46. 
 
 V. Hager, 4. 
 
 V. Hannibal & St. Jo. R. R. Co., 351 . 
 
 V. Kent, 795. 
 
 ii. Mayor, etc of Bath, 701. 
 
 «. Nathan, 764. 
 
 ». Sumner Spring Co., 766. 
 
 V. Tullis, 547. 
 Cooke V. State Bank, 494. 
 Cooke, ex parte, 769. 
 Cookney's Case, 128. 
 Coolidge V. Brookline, 313. 
 Coombs V. New Bedford Cordage Co., 351. 
 Coon V. Plymouth P. E. Co., 787. 
 Cooper V. Curtis, 522. 
 
 V. Frederic, 16,94,182. 
 Cope V. Thames Haven, &c. Co., 462. 
 Copeland v. Citizens' Gaslight Co., 126. 
 Copley V. Grover <fe Baker Co., 356. 
 Copp V. Lamb, 444. 
 
 Copper Mining Co. v. Fox, 453, 454, 460. 
 Corbyn v. French, 50. 
 Cork <fe Youghal Ry. Co. o.Paterson, 133. 
 Cork & Youghal Ry. Co. re, 219, 727. 
 Cornell v. Hay, 696. 
 Corn Excb. Bank v. Cumberland Coal Co., 
 
 493, 638, 644. 
 Comiog V. Southard, 656. 
 Corry v. Londonderry, <feo. Ry. Co., 173, 
 
 195, 688. 
 Corwin v. Urbana Ins. Co., 789. 
 Coste's Case. 20. 
 Costello's Case, 178. 
 Coster V. Mayor, 384. 
 
 V. N. J. R. R. Co., S93. 
 Cother v. Midland Ry. Co., 106, 110, 880, 
 
 392 
 Cotton «.U. S., 11, 17. 
 CottrUI V. Myrick, 373. 
 Couch V. Watson Coal Co., 351. 
 Coulter V. Trustees of Western Sem., 3. 
 Council Bluff v. Kansas, &c. E. R. Co., 6. 
 County Attorney v. May, 709, 
 County Ins. Co., re, 474, 522. 
 County Life Ass. Co., re, 624, 
 County of Henry v. Nicolay, 637. 
 County of Macon v. Shores, 731. 
 County of Scotland v. Thomas, 632, 637. 
 County of Wentworth v. Hamilton, 451. 
 Coiivin V. Wallace, 466. 
 Coventry ». London, B. &c. Ry. Co., 107. 
 Covey V. Pittbsurgh & F. W. Ey. Co., 243, 
 
 246. 
 Covington, City of v. Bridge Co., 99, 642. 
 Covinuton, Ac. Bridge Co. v. Mayer, 4, 
 
 446, 641. 
 Covington, &o. P. E. Co. v. Moore, 623. 
 Covinuton. &c. R. R. Co. v. Winslow, 478. 
 Cowell V. Colorado Springs Co., 22. 
 Cowley V. Grand Rapids, &c. R. R. Co., 
 
 543. 
 Cox's Case, 140. 
 
XXX 
 
 TABLE OF CASES. 
 
 Coxon ». Great Western Ey. Co., 90. 
 Cragg V. Taylor. 139. 
 Craig V. City of Vicksburg, 270. 
 V. Gregg, 485, 692. 
 «. PhiUipa, 595,596. 
 V. Ward, 339. 
 Cralcer v. Chicago, <fec. E. E. Co., 360. 
 CraiD V. Bangor House, 522, 540, 642. 
 Ciumer v. Bird, 688. 
 Crampton v. Varna Ey, Co., 463, 464. 
 Crandall v. Nevada, S16. 
 Crawfordsville E. E. Co. v. Wright, 352. 
 Crawlej's Case, 128. 
 
 Crease v. Babcock, 93, 94, 98, 686, 788, 793. 
 Credit Foncier of England, ex parle, 95, 
 
 504. 
 Crenver Mining Co., in re, 205. 
 Crewer, <fec. Mining Co. v. Willyams, 252. 
 Crickmer's Case, 587. 
 Croeker v. Crane, 146, 154, 492, 620. 
 
 V. New London, <feo. 11.11. Co., 352. 
 V. Old South Sue, 45. 
 V. Whitney, 729, 737, 749. 
 Croft 1). Allison, 346. 
 Crofut V. Brooklyn Ferry Co., 4. 
 Cromford, <fee. Ey. Co. v. Lacey, 614. 
 Crompton v. Lea, 76, 657. 
 Cromwell v. Sac County, 270. 
 Crook V. Corp. of Seaford, 464, 660. 
 Groom's Case, 131. 
 Cropper, ex parte, 723. 
 Croaljy v. Hanover, 372. 
 
 V. New London, Ac. E.E. Co., 270. 
 Croskey «. Bank of Wales, 690. 
 Cross V. Sackett, S38, 349. 
 Cross' Case, 185. 
 
 Crossman ». Bristol, <fec. Ry. Co., 379, 700. 
 Crouch V. Credit Foncier of England, 262, 
 
 264. 
 Crowley v. Panama E. R. Co., 4. 
 Croxton'a Case, 286. 
 Crump V. U. S. Mining Co., 338, 603. 
 Cruse V, Paine, 93, 140. 
 Culbertson v. Wabash N. Co., 2. 
 Cumber v. Wane, 603. 
 Cumberland Coal Co. ». Parish, 478. 
 
 V. Sherman, 478, 
 600, 560. 
 Cumberland, Ac. E. E. Co. v. Portland, 
 
 356, 367. 
 Cumberland, <fcc. E. E. Co.'s Appeal, 435. 
 Cumberland Valley E. E. Co. v. M'Clana- 
 
 han, 74, 380. 
 Cumming v. Preacott, 141. 
 Cunliff !). Man. <fe Bolt. C. Co., 290, 294. 
 Cunningham tr. Edgefield E. E. Co;, 162. 
 V. Local, <tc. Wolverhamp- 
 ton, 450. 
 V. Pell, 646,663,671,675,686, 
 V. Vermont & Mass. E. E. 
 Co., 198. 
 Cnrien v. Santini, 791. 
 
 Curling v. Flight, 135. 
 
 Curran ». State, 151, 159,173,206,788,793. 
 
 Currie v. White, 201. 
 
 Currier v. C<incord E. E. Co., 418. 
 
 V. Lebanon State Co., 142,192,193. 
 ». M. <fe C. E. E. Co., 380, 390. 
 Curry v. Scott, 159. 
 
 V. Woodward, 203, 204. 
 Curtis V. Leavitt, 28, 168, 213, 223, 224, 
 499, 735. 
 
 V. Murray, 276. 
 Curtis' Case, 137. 
 Curtiss V. Whipple, 374. 
 Cushman v. Smith, 74, 393. 
 CuBtar V. Titusville Gas, &c. Co., 152, 336. 
 Custer V. Tompkins Co. Bank, 602. 
 
 Dabney v. Stevens, 471, 472. 
 
 Daily Post Co. v. MoArthur, 358, 360. 
 
 Daland v. Williams, 199. 
 
 Dale V. Grant, 692. 
 
 Dallas V. Eailroad Co., 7. 
 
 Dalton V. Midland Ey. Co., 142, 1S8, 203. 
 
 Damon v. Granby, 466. 
 
 Dana v. Bank of St. Paul, 39, 521. 
 
 V. Bank of U. S., 125, 467, 490, 
 Danbury, <fec. E. E. Co. v. Wilson, 78, 153, 
 
 174, 593. 
 Danforth v. E, E. Co., 463. 
 
 V. Schoharie & Duane T.Co.,459. 
 Daniel v. Mayor, 281. 
 Daniell v. Eoyiil British Bank, 619, 622. 
 Daniell, ex parte, 147, 184, 
 Daniels v. Ch. & N. W. E. E. Co., 74. 
 
 t». Hart, 237. 
 D'Arcy v. Tamar, Ac. Ey. Co., 639, 540, 
 
 641, 642. 
 Darling v. Boston, <fec. R. E. Co., 410,416, 
 
 424. 
 Darst V. Gale, 666, 745. 
 Dart V. Houston, 276. 
 Dartmouth College v. Woodward, 1, 29, 
 
 47, 51, 9fi, 708, 786, 787, 797. 
 Dashiell v. Att.-Gen., 60. 
 Dater v. Troy Turnpike Co., 362. 
 Daugars v. Eivaz, 50, 654, 691, 708. 
 Davenport v. Dows, 646, 653. 
 Davidson v. Grange, 681. 
 Davidson, ex parte, 96. 
 Davies' Case, 128. 
 
 Daviess County v. Huidekoper, 632. 
 Davis V. Bradford, 466. 
 
 V. C. <fe N. W. R. Co., 384. 
 
 V. City of Kendallville, 632. 
 
 V. Dumont, 162. 
 
 V. La Crosse, <fec. E. E. Co., 74. 
 
 II. Mayor, 698, 706, 707. 
 
 V. Meeting-House, 16, 164, 168. 
 
 1). Morier, 760. 
 . V. Tub., C. & D. E. E. Co., S7S. 
 Davis and Wilson's Case, 57. 
 Davison v. Gill, 113. 
 
TABLE OF CASES. 
 
 XXXI 
 
 DaTison v. Seymour, 318, 588, 478. 
 Dawes h. North Eiver Ins. Co., 621. 
 Day V. Brooklyn R. R. Co., 352. 
 V. India Rubber Co., 6. 
 V. Stetson, 787. 
 Dayton & C. R. R. Co. v. Hatch, 468, 469. 
 Dean v. Bennett, 442. 
 V. Davis, 23. 
 V. La Motte Lead Co., 3. 
 V. Roesler, 753. 
 V. Sullivan E. E. Co., 100. 
 Dean and Chapter of Rochester v. Pierce, 
 
 457. 
 DeansTille Cemetery Association, Matter 
 
 of, S73, 375. 
 De Camp v. Alward, 791. 
 
 V. Dobbins, 3, 536, 7S9. 
 Decatur v. Fisher, 361. 
 Dedham Bank v. Chickering, 493. 
 Dedham Savings Inst. v. Slack, 564. 
 De Faraigne v. Fox, 100. 
 Deffell V. White, 230, 521. 
 De Grave v. Mayor, <fec. of Moumouth,460. 
 De Groff«. Am. L.Th.Co., 38,521,735,751. 
 De Haven, v. Kensitgton Nat. Bank, 749: 
 Delacy «. Neuse Eiver Co., 45, 46. 
 Delafield v. Illinois, 272. 
 De Lancey v. Insurance Co., 63. 
 Del. & All. R. E. Co. v. Irick, 79, 593. 
 Del, L. <fe W. E. E. Co. v. Central R. R. 
 Co., 421. 
 0. Erie Ry. Co., 414. 
 DeL A Ear. Canal Co. v. Cam. & Atl. R. R. 
 Co., 408. 
 V. R. <fe D. B. R. E. 
 Co., 376, 698. 
 Del. Canal Co. v. Com., 352. 
 
 V. Penn. Coal Co., 623. 
 V. Sansom, 153, 
 Del. E. R. Co. V. Tharpe, 79, 98, 99, 788. 
 Del. E. R Tax Cases, 62, 641. 
 Den V. Bolton, 54. 
 D. Pilling, 54. 
 V. Vreeland, 465. 
 Dennett ». Drehens, 466. 
 Dennistown v. N.Y. <fc N. H. R.R. Co., 641. 
 Dent's and Forbes' Case, 143. 
 Dent's Case, 148. 
 
 Denton v. East Anglian Ry. Co., 467. 
 V. Great Northern Ry. Co., 335. 
 ». Livingston, 178. ■ 
 
 V. McNeil, 348. 
 Denton Colliery Co., 150. 
 . De Pass' Case, 176, 178. 
 
 De Peyster v. Insurance Co., 198. 
 Deposit, &e. Ass.Co. v. Ayscough, 349,603. 
 Derby v. Derby, 50. 
 De Kosaz's Case, 128. 
 Derrick v. Lamar Ins. Co., 836. 
 Deslandes v. Gregory, 761. 
 Despatch Line of Packets v. Bellamy Mfg. 
 Co., 489,452,468,489,622,638,689,549. 
 
 Despard v. Walbridge, 339. 
 Detroit v. Jackson, 452. 
 Revoe ». Ithaca & Owego R. R. Co., 870. 
 Devon & Somerset Ry. Co., re, 172, 234. 
 De Voss V. Richmond, 270, 272, 509. 
 De Winton v. Mayor, <tc. of Brecon, 222. 
 De Witt )). Walton, 754. 
 Dews V. Riley, 767. 
 Dey II. Jersey City, 538. 
 Diamond v. Lawrence County, 270. 
 Dickenson v. Valpy, 156,216,216,265,716. 
 Dickson v. Montgomery, 60. 
 V. United States, 1 2. 
 Dietrich v. Madison Relief Ass., 746. 
 Diggle II. London,(Sic. Ey.Co.,449,464,455. 
 Dill V. Wareham, 732. 
 Dillingham a. Snow, 22. 
 Dimpfel v. 0. & M. R. R. Co., 633, 781. 
 Dingley v. City of Boston, 100, 398. 
 Dingman v. People, 96. 
 District Attorney v. Lynn <fe Boston R. R. 
 Co., 709. 
 
 Dixon V. Evans, 129, 186, 187. 
 
 Dixon's Case, 526. 
 
 Dobson V. Pearce, 339. 
 
 Dobson's Case, 140. 
 
 Dodd V. Salisbury & Yeovil Ry. Co., 387. 
 
 Dodge V. Woolsey, 277, 646, 646, 648, 673, 
 674. 
 
 Dodgson's Case, 340. 
 
 Doe ii.^rchbishop of York, 113. 
 w.M&eorgia R. R. Co., 74. 
 V, Taniere, 467. 
 
 Doman's Case, 612. 
 
 Domestic Sewing JVfach. Co. v. Hatfield, 6. 
 
 Donelly v. Vandenberg, 71. 
 
 Doolin V. Ward, 419. 
 
 Doolittle ^.Supervisors of Broome Co.,698. 
 
 Doremus v. Dutch Church, 54, 789. 
 
 Dorr V. Munsell, 339. 
 
 Dorris v. French, 593. 
 V. Sweeney, 134. 
 
 Dossett V. Hardii g, 522. 
 
 Doubleday v. Hoskii;s. 58. 
 
 II. Muskett, 663, 554. 
 
 Dongan's Case, 129, liil, 614, 617. 
 
 Dougherty, v. Bunting, 698. 
 
 Doughty V. S. <Si E. E. R. Co., 380. 
 
 Douglas V. Cline, 245. 
 
 Douglas County v. BoUe?, 532. 
 
 Dousman v. Wisconsin, &c. Smelting Co.,i 
 680. 
 
 Dover v. Portsmouth Bridge, 698. 
 
 Dover & Deal Ry. Co., re, 156. 
 
 Downcs V. Ship, 560. 
 
 Downie v. Hoover, 143. 
 
 V. White, 129, 165. 
 
 Downing v. Marshal, 12, 13, 14. 
 
 I/. Mt. Washington, <fec. Co., 29, 
 
 39,72,86,459,731. 
 V. Potts, 186. 
 
 Dowse's Case, 619, 694. 
 
XXXJl 
 
 TABLE OF CASES. 
 
 Doyle V. Continental Ins. Co., 5, 6. 
 V. Muntz, 649, 6B0. 
 V. Peerless Petroleum Co., 621, 789. 
 Doj-le, ex parte, 140. 
 D. R. Martin, 487. 
 Draper v. Mass. Steam Heating Co., 763, 
 
 757. 
 Drew's Case, 608. 
 Driscoll V. West M%. Co., 16. 
 Droitwioh Salt Co. v. Ourzon,160,161,627. 
 Droitwich Salt Co., re, ISO. 
 Drummond's Case, 143. 
 Drury ». Cross, 478. 
 Dublin Case, 64. 
 Dubois V. Hermance, 339. 
 Dubuque v. 111. C. E. R. Co., 246. 
 Ducarry v. Gill, 542. 
 Ducat V. City of Chicago, 8, 6. 
 Dudley v. Kentucky High School,663,664. 
 Dudley Canal Co. », Grazebrook, 116. 
 Dugdale v. Lovering, 505. 
 Duke V. Andrews, 1 33. 
 
 V. Cahawba Ifavigation Co., 177. 
 Duke's Case, 137, 183. 
 Dulwich College Case, 116. 
 Duncan v. Findlater, 383. 
 
 V. Jaudon, 179, 180. 
 0. Niles, 757. 
 Dundas, Town of o. Desjardins Canal 
 Co., 233. 
 «. Hamilton, <fec. Road 
 Co., 896. 
 Dung V. Parker, 767. 
 
 Dunham v. Cincinnati, etc. E. R. Co., 236, 
 236. 
 *. Earl, 236. 
 V. Isett, 286, 237. 
 Dunn V. Birmingham Canal NaT., 75, 116. 
 V. Charleston, 100. 
 V. St. Andrew's Church, 462. 
 Dunning ». New Albany R. E., 22. 
 Dunston v. Imperial Gas Co., 16. 
 Dupre V. Boston Water-Power Co., 67. 
 Durant v. Iowa Co., 269. 
 Duranty's Case, 131, 340, 349. 
 Durfee v. Old Colony E.R. Co., 91, 99, 663. 
 Durham's Case, 536. 
 Durham, &c. Ry. Co. v. Walker, 99. 
 Durham Co. <fec. Society, re, 57, 722. 
 Dusenbury v. Ellis, 766. 
 Dutch Church v. Brown, 593. 
 
 V. Mott, 50. 
 Dutch West Ind. Co. v. Van Jelloses, 3. 
 Dutchess, &c. E. R. Co. v. Mabbett, 127. 
 Dutchess Cotton Mfg.Co. tJ.Davis,l 53,520. 
 Dutton V. Marsh, 274, 753. 
 Dyte V. St.Pancreas Bd. of 6uardians,452. 
 
 Eagle V. Cohn, 631. 
 Eagle Co., ex-parte, 516, 520. 
 Eaglesfield v. Marquis of Londonderry, 
 759, 761. 
 
 Eakright v. Logansport R.R. Co., 150,523. 
 Eales V. Cumberland Black Lead Mining 
 
 Co., 465, 487. 
 Eames v. Wheeler, 177. 
 Earp's Appeal, 199. 
 
 East <fe West Junction Ry.Co.,«, 172, 234. 
 East <fe West, &c. Ry.Co. v. Dawes,66, 106. 
 East Anglian Ry. Co. v. Eastern Co.'s Ry. 
 
 Co., 30, 37,815.316,417. 
 East Boston Freight R. R. Co. v. Eastern 
 
 R. R. Co., 237. 
 East Boston Freight E. E. Co. v. Hub- 
 bard, 71. 
 East Gloucester Ey. Co. v. Bartholomew, 
 
 180,134, 164, 619. 
 East Hartford v. Hartford Bridge Co., 378. 
 East London W'works Co. v. Bailey, 255, 
 
 449, 464, 466. 
 East N. Y. <fec. R. R. Co. v. Lighthall, 146. 
 East of England Banking Co., re, 798. 
 East Pant du Lead Mining Co. v. Merry- 
 weather, 672. 
 East River Bank v. Hoyt, 603. 
 East River Nat. Bank v. Gove, 609. 
 East Rome Town Co. v. Nagle, 671. 
 East Tenn. &c. R. R. Co. v. Evans, 639. 
 
 ■II. Gammon, 162, 
 336, 663. 
 Eastern Counties Ry. Co. v. Hawks, 81, 38, 
 
 89, 120, 323, 324, 326, 600. 
 Eastern P. R. Co. v. Vaughan, 176, 185. 
 Eastern R. R. Co. v. Boston & Me. R. R. 
 
 Co., 377. 
 Eastern Union Ry. Co. v. Cockrane, 624. 
 V. Eastern, Coun- 
 ties Ry. Co., 418, 414. 
 Eastman v. Meredith, 397. 
 Eastwood V. Bain, 757. 
 Easum's Case, 1 39, 505. 
 Eaton V. Aspinwall, 520. 
 
 V. B. C. & M. R. R. Co., 383. 
 V. European & N. A. R. R.Co., 894. 
 Eaton, <fec. R. R. Co. v. Hunt, 688, 640. 
 Ebaugh V. German Ref. Church, 528. 
 Ebbw Vale Co. ex parte, 454, 504, 771. 
 Ecclesiastical Com'rs v. Merral, 467. 
 Echols, ex parte, 289. 
 Eclipse Towboat Co. «. Pontchartrain R. 
 
 R. Co., 436. 
 Edelmann v. St. Louis Transfer Co., 360. 
 Edgerly v. Emerson, 439, 638, 642. 
 Edinburgh, <fec. Ey. Co. v. Campbbll, 110, 
 380. 
 «.PhiUp,70,406. 
 Edmunds v. Bushell, 605, 766. 
 Edwards ». Bringiler, 146. 
 «. Fairbanks, 742. 
 v. Grand Junction Ry. Co., 579, 
 
 682, 683. 
 V. Kilkenny, dtc. Ry. Co.,647,678. 
 V. London & N. W. By. Co., 361. 
 V. Martin, S03. 
 
TABLE OF CASES. 
 
 XXXIU 
 
 Edwards v. Shrewsbury, <fec. Ry. Co., 666, 
 686. 
 V. Stonington Cemetery Ass.,378. 
 Ehle V. Chittenango Bant, 199. 
 Ehrgott V. Bridge Manufactory, 272. 
 Eidnian v. Bowman, 159. 
 Elborough v. Ayres, 285. 
 Elder v. First Nat. Bank of Ottawa, 749. 
 Elclridare v. Smith, 238, 249, 380. 
 Electric Tel. Co. of Ireland, re, 725. 
 Elevated Railroad Cases, 76, 385. 
 Eley V. Positive, &o. Life Asa. Co., 590. 
 Elizabeth City Academy v. Lindsey, 523. 
 Elizabeth, City of v. Force, 27o. 
 Elizabethtown, <!ic. R. R. Co. v. Elizabeth- 
 town, 245. 
 ElMngton's Case, 130, 146. 
 Elliott V. North Eastern Ry.Co., 114. 
 Ellis V. Boston, Hart. & Erie R. R. Co.,479. 
 
 V. Colman, 761. 
 
 t. N. C. Institution, B23. 
 Ellis's Case, 116. 
 Ellison V. Mobile B. R. Co., 152. 
 Elwell V. Dodge, 509, 754. 
 Elwood V. Bullock, 15. 
 Ely V. Sprague, 146, 201, 202. 
 Elysville Mtg. Co. ti. O'Kisco Co., 462. 
 Embury v. Conner, 100. 
 Emly V. Lye, 716. 
 Emly, ex parte, 716. 
 Emmlttw. R. R. Co., 154. 
 Emp-re Ass. Corp. re, 604, 608, 610, 611, 
 
 614, 617, 618. 
 Empire City Bank, Matter of, 93, 94, 141. 
 Empire Transfer Co. i'. Blanchard, 553. 
 Empson's Case, 132, 512. 
 Enfield Bridge Co. v. H. & S. H. R. R. Co., 
 
 376. 
 Enfield Toll Bridge Co. v. Conn. B. Co.,791 
 Episcopal Society v. Episcopal Church, 3. 
 Eppes V. Miss. &c. R. B. Co., 79, 146, 519. 
 Era Insurance Cg. re, 118, 604, 629. 
 Erie & N. E. R. R. Co. v. Ca.'^ey, 98, 788. 
 Erie <fe Waterford Plank-road Co. v. Brown, 
 
 129. 
 Erie Ry. Co. v. D. L. <fe W. R. R. Co., 371, 
 391, 396,404. 
 V. Union Loc. <feo. Co., 435. 
 Ernest v. Crnysdill, 770. 
 
 V. NichoUs, 117, 473, 494, 508, 629, 
 720. 
 Essex Brewery Co. re, 499. 
 Essex Bridge Co. v. Tattle, 153. 
 Essex T. Co. v. Collins, 451, 459. 
 Estabrook, ex parte, 253. 
 Estell V. Knightstown Turnpike Co., 154. 
 Eureka Co, v. Bailey Co., 466. 
 European Bank, re, 604. 
 European Central Ry. Co. re, 487, 613. 
 European, <fec. Corp. ex parte, 214. 
 European Life Ass. Soo. re, 619, 623, 798, 
 
 799. 
 
 European B. R. Co. v. Poor, 478, 480, 482. 
 Eustace t). Dublin Trunk, <fec.Ry.Co., I7B. 
 Evan V. Corp. of Avon, 14, 58, 648, 705. 
 Evans v. Bagshaw, 689. 
 
 ^. Coventry, 95, 206, 649, 660. 
 V. Lee, 460. 
 V. O.igood, 440. 
 V. Phila. Club, 46. 
 V. Smallcombe, 559. 
 Evans' Case, 137. 
 
 Evansville, <fec. R. R. Co. «i. Androscoggin 
 Mills, 90. 
 w, Bauin, 852. 
 ».Evansville.l68, 
 
 168, 173, 197. 
 V, Wright, 146. 
 Evansville Nat. Bank v. Metropolitan Nat. 
 
 Bank, 15. 
 Evarts n. Killingworth Co., 795. 
 Evelin's Case, 20. 
 Everett v. Grapes, 15. 
 V. TJ. S., 452. 
 Everhart v. West Chester, <feo.B.E.Co.,79, 
 
 151. 
 Eversfield v. Mid-Sussex, Ry. Co., 110, 880, 
 
 387. 
 Evertsen v. Nat. Bank of Newport, 270. 
 Ewing V. Gordon, 461. 
 Excelsior Ins. Co. in re, 470. 
 Exeter & Cred. Ry. Co. v. Buller, 634, 
 
 667, 672. 
 Exeter Bank v. Rogers, 493. 
 Exmouth Docks Co. re, 'lil, 802. 
 Express Co. v. Ware, 6. 
 Ejser V. Western U. Tel. Co., 860. 
 
 Factage Parisien, re, 791. 
 
 Pagan's Case, 622. 
 
 Fairlie v. Fenton, 750. 
 
 Fallon i. R. R Co., 463. 
 
 Family Endowment Soc, re, 621,622,180. 
 
 Faneuil Hall Bank ... Bank of Brighton, 
 
 494. 
 Paris, ex parte, 439, 545. 
 Farmers' Bank v. Dearing, 5. 
 
 V. Geitinger, 642. 
 V. Troy Bank, 504. 
 Farmers, <fec. Bank v. Baldwin, 746. 
 
 V. Empire, <fec. Co., 258. 
 V. Harrison, 747. 
 Farmers' & Citizens' Bank v. Payne, 601. 
 Farmers' & Mech. Bank v. Butchers' & D. 
 
 Bank", 337,471,494. 
 Farmers' & Merchants' Ins. Co. v. Harrah,5. 
 Farmers' L. & T. Co. v. Clowes, 38. 
 
 V. Commercial Bank, 
 
 236, 249. 
 *. Hendrickson, 224, 
 
 242, 245. 
 ... Perry, 38, 272. 
 V. St. So. & D. 0. R. 
 B. Co., 239. 
 
XXXIT 
 
 TABLE OF CASES. 
 
 Farmers' Trans. Co. ir. MeCulloiigli, 465. 
 Farnham v. Del. <fe Hurl Canal Co., 739. 
 Farnnm v. Blackstone Canal Co., 5, 638. 
 Farrar v. Perlev, 441. 
 
 V. Vaughan, 12. 
 Farrell Foiindrv Co. v. Dart, 501. 
 Faulkner v S. Pac. R R. Co., 437. 
 Fawcett v. Lmrie, 203, 656, 678, 685. 
 Fay V. Nol)le, 223, 254, 472. 
 Fazakerly v. Wiltsliire, 23. 
 Fearing v. Irwin, 76, 384. 
 Fearjiside and Dean's Case, 140. 
 Featherstone v. Cooke, 669. 
 Featherstonhaugh v. Lee Moor, &c. Co., 68, 
 
 121, 122, 212. 
 Feeter v. lleath, 756. 
 Felling and Kimington's Case, 162, 163, 
 
 661, 769, 773. 
 Felling's Case, 488. 
 Feital v. Middlesex R. R. Co., 90. 
 Fell V. Burchett, 276. 
 Fellows V. Mini r, 12. 
 Feltnn's Executors' Case, 205. 
 Fenton v. Wilson Machine Co., 366. 
 Ferguson v. Wilson, 656, 759. 
 Ferrastone's Case, 687. 
 Fere !>. Buffalo, <fec. K. R. Co., 76. 
 Ftrrao's Case, 149. 
 Ferraria v. Vasconelles, 54. 
 Fei-tilizing Co. v. Hyde Park, 29, 96. 
 Ffooka V. London & H. W. Ry. Co., 40 4, 653. 
 Field V. Cooks, 520. 
 
 V. Field, 54, 542, 543. 
 Fielden v. Lancashire & Y. Ry. Co., 167. 
 Filder v. London, B. &o Ry. Co., 652. 
 Financial Corp., re, 160, 161, 163, 260,488. 
 Fink V. Coe, 860. 
 
 Finlay v. Bristol & Exeter Ry. Co., 456. 
 Finley Shoe Co. v. Kurtz, 495. 
 Finucane's Case, 128. 
 Fire Department v. Noble, 6. 
 Firemen's Ins. Co. o. Mayor of Baltimore, 
 
 405. 
 First Baptist Church v. Brooklyn Ins. Co., 
 
 503. 
 First Nat. Bank v. First Nat. Exch. Bant, 
 749. 
 
 ■d. Gifford, 179. 
 
 ■II. Graham, 749. 
 
 V. Haire, 749. 
 
 V. Hurford, 127, 134. 
 
 V. Reed, 480. 
 First Nat. Bank of Davenport *. Gifford, 
 601. 
 
 of Hightstown v. Chris- 
 topher, 501, 502. 
 
 of Lyons v. Ocean Nat. 
 Bank, 749. 
 
 of Rochester o. Harris, 
 749. 
 
 of Rochester v. Pierson, 
 746, 749. 
 
 First Nat. Bank of St. Johnshury v. Con- 
 cord, 532, 732. 
 First Parish v. Cole, 3, 13, 14, 653. 
 Firth V. Midland Ry. Co., 321. 
 Fisher v. Brown, 180. 
 
 ■u. Essex Bank, 177. 
 
 V. Evanaville, <fec. E. R. Co., 632, 
 
 634. 
 V. Murdook, 501. 
 V. Murray, 661. 
 
 V. N. Y. G. & H. R. R. R. Co., 638. 
 V. Taylor, 215, 216, 716. 
 Fishmongers' Co. v. Robertson, 456, 460. 
 Fisk V. Chicago, <fee. R. E. Co., 7, 143. 
 V. Potter, 235. 
 
 V. Union P. R. R. Co., 793, 797. 
 Fitchburg R. R. Co. v. Gage, 436. 
 Fitzgerald v. Champneys, 798. 
 Flauagan v. Great Western Railway Co., 
 
 65, 86. 
 Flecknerj). Bank of United States, 448,453, 
 
 458, 459, 468, 494,509, 546. 
 Fleming n. >elf, 58. 
 Fleming's Case, 622. 
 Fletcher v. Great Western Ry. Co., 115. 
 Fletcher's Case, 186, 190. 
 Flight V. BoUand, 462. 
 Flike V. B. & A. R. R. Co., 351. 
 Flint V. Chilton Co., 459, 465. 
 
 V. Fentonnlle P. R. Co., 788. 
 V. Pierce, 15. 
 Flint & P. M. R. R. Co. v. Dewey, 478,482. 
 Flint, Ac. P. R. Co. ii. WoodhuU. 98. 
 Flower v. London B & S. C. Ry. Co., 110, 
 
 380, 388, 389, 392. 
 Fogg V. GriflSn, 336. 
 
 *. Pew, 5i13. 
 Forbes v. Marshall, 219. 
 Forbes and Judd's Case, 149, 661. 
 Ford V. Ch. & N. W. R. R. Co., H. 
 
 V. Fitchburg R. R. Co., 351, 355. 
 Foreman v. Bigelow, 143. 
 Forrest v. Manchester Ey.Co.,66,211,652. 
 Forster i). Shaw, 465. 
 Fort Edward P. R. Co. v. Payne, 129. 
 Fosdiok V. Stiirges, 143. 
 Foss V. Harbottle, 231, 278, 634, 664, 668. 
 Foster v. Dawber, 603. 
 
 V. Mackreth, 216, 216. 
 Fothergill's Case, 147, 148, 149, 150, 651. 
 Foulke V. San Diego, &c. R. R. Co., 748. 
 Fountaine v. Carmarthen Ry. Co., 221, 
 
 508, 520, 622, 637. 
 Four Mile, (fee. R. R. Co. v. Bailey, 134. 
 Fowler v. Scully, 749. 
 Fowler, hi re, 872, 37.3. 
 Fox 1). Allensville Co., 154. 
 V. Clifton, 133, 156. 
 V. Seal, 286. 
 
 V. W. Pae. R. R. Co., 390. 
 Fox, rajoacfe,119,440,614,615,618,627,799. 
 Francis v. Schoellkopf, 698, 701. 
 
Table of cases. 
 
 XXX \r 
 
 Frankford TuTOpite Co. v. PhU. <St T. R. 
 
 K. Co., 76. 
 Frankfort v. Wlnterport, 318. 
 Frankfort Bank v. Jolinaon, 331. 
 Fmnklin e. Lewiston Savings Bank, 91. 
 Franklin Bank v. Cooper, 5 3, 793. 
 Franklin B. Asa. v. Marsh, 56. 
 Franklin Bridge Co. v. Wood, 23. 
 Frantlin Fire Ins. Co. v. Hart, 670. 
 Fraser v, Wha'ley, 673. 
 Fraser's Case, 149. 
 Frazier v. I'enn. R. R. Co., 351. _ 
 Free Granmar School of Chipping Sod- 
 bury, re, 61. 
 Freehold Mut. L. Ass. ». Brown, 97. 
 Freeman v. Freeman, 463. 
 
 V. Machias, &a. Co., 444. 
 V. Winchester, 153. 
 Free School v. Fhnt, 1 5. 
 Fremont v. Stone, 478, 611. 
 French v. Braintree Mfg. Co., 373. 
 V. Gifford, 674. 
 V. Quincy, 67. 
 Frend v. Dennett, 460, 631. 
 Frewin v. Lewis, SnO. 
 Fridley v. Bowen, 749. 
 Fripp V. Chard Ry. Co , 238. 
 Fritb V. Dubuque, &c. R. R. Co., 384. 
 Frost V. Belmont, 313, 319, 670. 
 Frothingham v. Barney, 636. 
 Frowd's Case, 348. 
 Fry V. Lexington, <fec. R. R. Co., 79. 
 Frye v. Tucker, 256. 
 FuUer v. Dame, 318, 478, 480, 481. 
 V. Hooper, 754. 
 V. Inhab. of Groton, 284. 
 V. Naugatuck R. K. Co., 734. 
 V. Plainfield Acad. School, 29, 45. 
 Fulton Bank v. N.Y. & S. Canal Co., 504. 
 Furness Ry. Co. v. Smiih, 414. 
 Furnivall v. Coombes, 20, 554. 
 Fyfe's Case, 513. 
 
 Gage V. Newmarket Ry. Ca, 326. 
 
 Gnines v. Coates, 29. 
 
 Galena, <fec. R. R. Co. v. Rae, 436. 
 
 Gallego V. Att.-Gen., 50. 
 
 Gallery v. Nat. Exchange Bank, 480. 
 
 Galloway v. Mayor, <fec. of London, 381, 
 
 397, 600, 657. 
 Galvanized Iron Co. v. Westoby, 133,166. 
 Galveston R. K. Co. v. Cowdrey, 236, 236, 
 
 241, 443, 644. 
 Gamsin v. Coombs, 452. 
 Ganse v. Clarksville, 213. 
 Garden Gully Mining Co. v. McLister,160, 
 
 186, 187, 631. 
 Gardiner v. Pollard, 645, 653. 
 Gardner v. Hamilton Ins Co., 635. 
 
 Ji. London, <fec. By. Co., 234,237, 
 238, 260, 428. 
 
 Gardflei* ». Ogden, 688. 
 
 Garrard v. Hardey, 176. 
 
 Garrett v. May, 231. 238. 
 
 Gas Co. V. San Francisco, 748. 
 
 Gashwiler v. Willis, 468. 
 
 Gas-light Improv't Co. v. TerrelT, 212,483. 
 
 Gass V. N Y. <fec. R. R. Co., 410, 416. 424. 
 
 V. Wilhite, 50. 
 Gaston v. Am. Exchange Bank, 601. 
 Giiswny v. Atlanta, ifec. R. R. Co., 359. 
 Gayle v. Cahawba & M. R. R. Co., 153. 
 Gelpcke v. Blake, 151, 
 
 V. Dubuquo, 269, 270, 272. 
 General Co. <fec. Land Credit, in re, S&,^ 
 
 176, 488, 801. 
 General Estate Co., re, 265, 256, 259,, 267., 
 General Exchange Bank v. Horner, 286. 
 General Provident Ass. Co., re, 219, 246,,, 
 
 611,722. 
 General South Ass. Co., re, 219, 23.1, 246^, 
 
 250, 512. 
 Genoa, Town of v. Woodruff, figs'. 
 Georgetown v. Alexandria Canal Co., 11(5, 
 Georgia Co. v. Castlebeiry, 571. 
 Gerhard v. Bates, 332. 
 German Min'g i o.'s Case,218, 724, 727,729. 
 German Ref. Church ». Commonwealth,54. 
 German Sav. Bank v. Wulfekuhler, 485. 
 Ger nan Security Bank v. Jefferson, 180. 
 Germautown Farmers' Jns. Co. v. Dhein 
 
 535, 746. 
 Getty V. Devlin, 482, 697. 
 Geyer v. Western Ins. Co., 180. 
 Gibberf s Case, 178. 
 Gibbons v. Ogden, 5. 
 Gibhs V. Queen Insurance Co., 7, 
 Gibbs and West's Case, 216, 226, 235, 499. 
 Gibson v. Armstrong, 54. 
 
 V. Mason, 373. 
 Gibson, ex parte, 340, 622. 
 Giesev». R. R. Co., 100, 381. 
 Gifford V. N. J. R. R. Co., 2, 663, 673, 678. 
 
 V. Thompson, 204. 
 Gilbert v. Manchester, <fec. Co., 177. 
 Gilberl's Case, 151, 487. 
 Gilchiist V. Little Rock, 632. 
 GUes ". Hutt, 530. 
 
 J). TaffValeRy. Co., 361. 
 Gill V. Kentucky Mining Co., 5. 
 Gillett i).Missouri Valley R.R.Co.,356,359. 
 
 V. Moody, 94, 793. 
 Gillis V. Bailey, 286, 492. 
 Gilman v. City of Sheboygan, 378. . 
 zi. Eastern R. R. Co., 351. 
 V. Hamilton, 51. 
 V. Philadelphia, 376. 
 Gilman, &c. R. K. Co. v. Kelly, 480, 481. 
 Gilmer v. Lime Point, 13, 374, 380. 
 Gilmore v. Pope, 446. 
 Gilpin V. Howell, 178. 
 Girard v. Ptiiladelphia, 3. 
 Glaize v. South Carolina R. R., 4. 
 
XXX VI 
 
 TABLE OF CASES. 
 
 Glass V. Tipton Turnpike Co., S. 
 Glass Co. V. Alexander, IBS. 
 Gleadow v. Hull Glnss Co., 91. 
 Gleaves v. Brick Ch. T. Co., 175. 
 Glover v. N^ rtliwestern Ry. Co., 538. 
 Glyn V. Baker, 269. 
 Godbold V. Mobile Bank, 486. 
 Godd V. Houghton, 'ZBO. 
 Goddard v. G. T. R. B. Co., S5T, 359, 433. 
 Goff ». Great Northern By. Co., 352, 361. 
 
 V, Winchester College, 130. 
 Going V. Emory, 50. 
 Gold Mining Co. v. Nat. Bank, 520, 532, 
 
 536, 556, "731, 1i1, 749. 
 Goldshede v. Cottrell, «03. 
 Goldsmid v. Tunbridge Wells Impr. 
 
 Com'rs, 397. 
 Gold^mid's Case, 302. 
 Gooday v. Colchester, &c. Ry. Co., 576. 
 Goodell V. Union Association, 3. 
 Goodin v. Canal Co., 478, 504. 
 
 V. Eyans, 146. 
 Goodrich v. Chicago, 894. 
 
 V. Reynolds, 146. 
 Goodspeedu. East Haddam Bank,331,357. 
 Goodwin *. Hardy, 203, 204. 
 .;. Robarts, 263, 2B7. 
 V. Union Screw Co., 451, 459. 
 V. U.S. Annuity (SEL.Ins.Co.,522. 
 Gorham v. Gilson, 676. 
 Gordon v. Baltimore, 276. 
 
 V. Preston, 224, 479, 489, 546. 
 V. Sea, Fire <fe Life Ass. Co., 221, 
 227. 274, 516, 536. 
 Gorgier v. Melville, 264, 269. 
 Gorriasen's Case, 128, 129, 130. 
 Goshen Turnpike Co. v. Huitin, 153. 
 Goshorn v. Supervisors, 642. 
 Gould V. Langclon, 638. 
 Goulding V. Clark, 440. 
 Gouldsworth v. Knights, 20. 
 Gove V. Epping, 284. 
 Governor v. Alien, 17, 20. 
 
 V. Gridlcy, 20. 
 Gowen v. Penobscot R. R. Co., 394. 
 Gower'a Case, 186, 187, 631, 595, 596. 
 Grady's Case, 513. 
 
 Graff t). Pittsb'gh,<!ic.R.R.Co., 129,143 161. 
 Graham v. Birkenhead, <fec. Ky. Co., 404. 
 V. Hendricks, 742. 
 V. Pacific R. E. Co., 352, 360. 
 V. Van Diemen's Land Co., 70, 
 440, 530. 
 Grain's Case, 536. 
 Gram v. Society, 54. 
 Grand Chute v. "Winegar, 532. 
 Granger v. Bassett, 203. 
 Granger Cases, 96, 713. 
 Grand Lodge v. Waddell, 741. 
 Grant v. Henry Clay Coal Co., 740. 
 
 V. Van Schootihoven, 688. 
 Gratz V. Redd, 153, 206, 487. 
 
 Gray v. Chaplin, 428. 
 V. Hook, 3 1 8. 
 V. Lewis, 278, 504, 668, 669,675,676, 
 
 678. 
 V. Monongahela Nav. Co., 78. 
 V. N. Y. & Va. S. S. Co., 478, 653. 
 V. Portland Bank, 159, 169,446,678. 
 Gray's Case, 139, 145, 147. 505. 
 Great Falls Mfg. Co. v. Fern aid, 37^. 
 Great Northern Copper Mining Co.,»*e,791 
 Great Northern Ry. Co. v. Eastern Coun- 
 ties Ry. Co., 398, 428. 
 Great North.Ry.Co. 'v. Kennedy, 186. 
 
 V. Lancashire, (feo.Ry. 
 
 Co., 413. 
 V. Manchester, 412. 
 V. S. Yorkshire & B. 
 D. Co., 417. 
 Great West.Ry.Co. v. Bennett, 116. 
 V. Burns, 437. 
 V. May, 387. 
 V. Metropol'n Ry. Co., 
 
 92, 657. 
 V. Miller, 360. 
 V. Oxford, <&c. Ky.Co., 
 
 649. 
 V. Preston, 89. 
 ». Reg., 70. 
 11. Rushout, 303, 308, 
 
 644, 649. 
 V. Wheeler, 502. 
 Great Western Tel. Co., re, 272. 
 Greaves v. Gouge, 645, 663, 677. 
 Green v. Af. Meth. Ep. Soc, 45. 
 V. Cady, 522. 
 
 V. London Gen'l Omnibus Co., 330. 
 V. Ophir Mining Co., 604. 
 V. Rutherforth, 49. 
 1). Seymour, 22. 
 V. Walkill Bank, 796. * 
 Green, ex parte 799. 
 Grcenhalgh v. Manchester, <feo. Ry. Co., 
 
 326, 682. 
 Greenslade v. Dower, 215, 216. 
 Greenville & C. R. R. Co. «. Coleman, 79. 
 Greenwich v. Easton, cStc. R. R. Co., 388. 
 Greenwood's Case, 5S6. 
 Gregg V. Med. Soc, 46. 
 Gregory v. I'atchett, 68, 87, 121, 284, 494, 
 
 655,664,691. 
 Grew V. Breed, 93, 370, 793. 
 Griffin v. Graham. 50. 
 
 V. Sanborntown, 418.. 
 Griffith V. State, 60. 
 
 V. Watson, 178. 
 Griffith's Case, 622. 
 Grimes v. Harrison, 57. 
 Grinham v. Card, 68. 
 Griaewood, ea^fflrte, 176,849. 
 Grissell's Case, 661. 
 Griswold v. Haven, 337. 
 
 V. Peoria Univ., 175. 
 
TABLE OF GASES. 
 
 XXXVll 
 
 Grogan v. San Franoiaeo, 748. 
 Grymes v. Hone, 179. 
 Gue V. Tiiie-water Canal Co., 240. 
 Guelph, Town of v. Canada Co., 702. 
 Guernsey v. Burlington, 374, 375. 532. 
 Gueat V. Worcester Ry. Co., 143, 145. 
 Gunn V. London, &o. Fire Ins. Co., 574, 
 
 592. 
 Gunn's Case, 128,132. 
 Gustard'a Case, 162. 
 Gynn v. Southeastern Ry. Co., 357. 
 
 Habersham v. Sar. iSsc. Canal Co., 408. 
 Habershon's Case, 151,212. 
 Hackensaob Improvement Co. u. N. J. M. 
 
 U.R.*Co.,396. 
 Haekettstown v. Swackhamer, 213. 
 Haddon v. Ayres, 252,753. 
 Hadley v, Freedman's Savings, <feo. Co., 6. 
 Hadsell ». Inhab. of Hancock, 279, 284. 
 Hagan v. Providence, ifec. R. R. Co., 359, 
 Hagar v. Union Nat. Bank, 204. 
 
 V. Whitehouse, 64. 
 Hagerstown Turnpike Co. v, Creeger, 3, 
 
 22. 
 Hague V. City of Philadelphia, 456. 
 Hahnemannian Ins. Co. o. Beebe, 358. 
 Haigh V. N. Bierly Union, 452. 
 Haight V. N. Y. Elevated R. R. Co., 788. 
 Hain ti. N. W. G. Co., 154. 
 Haines v. Taylor, 657. 
 Hakim's Case, 178. 
 Haldeman v. Penn. R. R. Co., 100. 
 Hale V. Bridge Co!, 478, 484. 
 
 V. Everett, 63, 54. 
 
 V. Lawrence, 398. 
 Halford v. Cameron's, <fec. Ry. Co., 254, 
 
 267. 
 Halket v. Merchant Traders' Loan Ass., 
 
 536. 
 Hall V. Carey, 523. 
 
 V, Mayor, (fee. of Bristol, 386. 
 
 V. Mayor, (fee. of Swansea, 456, 721. 
 
 „. Sullivan R. R. Co., 124, 224, 237. 
 
 ■0. Taylor, 19, 286. 
 
 V. Union Pac. R. R. Co., 407, 702. 
 
 V. Vt. <fe Mass. R. R. Co., 569. 
 Hall's Case, 96, 140, 184, 187, 194,497,781. 
 Hallett V. Dowdale, .'536, 763. 
 
 V. Hallett, 686. 
 Hallows V. Fernie, 688, 690. 
 Ham V. Toledo Ry. Co., 405. 
 Hambro' ii. Hull, Ac. Fire Ins. Co., 473, 
 
 530. 
 Earner's Devisees, 140. 
 Hamilton v. Annapolis <& E..R. R. R. Co., 
 - 381. 
 V. Grand Rapids, <fec. R. R. Co., 
 
 643. 
 V. Lycoming Ins. Co., 65. 
 V. Newcastle R. R. Co., 213,223, 
 256. 
 
 Hamilton v. Smith, 667. 
 V. State, 407. 
 
 V. Third Av. R. R. Co., 352,360. 
 Hamilton, &c. Hydraulic Co. v. C. H. & D. 
 
 R. R. Co., 743. 
 Hamilton &, D'. I'l. R. Co. v. Rice, 78, 154, 
 
 175. 
 Hamilton Ins. Co. v. Hobart, 635. 
 Hammersmith Ry. Co. v. Brand, 75, 386. 
 Hancock v. Hodgson, 536. 
 Hand Gold Mining Co. v. Parkers, 376. 
 Hanna v. Cincinnati, <fec. R. R. Co., 635. 
 Hannibal Bridge Go. v Schaubacker, 380. 
 Hannibal R. R. v. Mufier, 381. 
 Harby v. E. & W. India, &q. Ry. Co., 321. 
 Harcall v. Life Association, 223. 
 Hard v. yt. & Can. R. R. Co., 351. 
 Hardenburgh o. Farmers' & Mech. Bank, 
 
 523. 
 Harding v. Goodlett, 375. 
 
 v. Stamford Water Co., 384. 
 Harden v. Newton, 646. 
 Hardy v. Merriweather, 152, 223,254,256. 
 V. Metropolitan Land, <!tc. Co., 656, 
 769, 772. 
 Hare v. London, (fee. Ry. Co., 411,421,648, 
 
 656. 
 Hare's Case, 131,616. 
 Harlem Canal Co. v. Seixas, 153, 154, 619. 
 
 V. Spear, 164. 
 Harman v. Tappenden, 364. 
 Harman's Case. 612, 623. 
 Harmon v. Dreher, 54. 
 Harper v. Ind. & St. Louis R. R. Co., 351. 
 Harris v. Bible Society, 12, 
 V. McGregor, 520. 
 V. Muskingum Mfg. Co, 791. 
 V. North Devon Ry. Co., 186, 484. 
 1). Roof's Executors', 318. 
 Harris's Ca-se, 128, 129,490, 491. 
 Harrisburg Bank v. Tyler, 503. 
 Harrison v. Heathorn, 176. 
 V. Hoyle, 54. 
 V. Ry. Co., 168,171. 
 V. Stickney, 60. 
 Harrison's Case, 1 29. 
 Harshman v. Bates Co., 637, 
 Hart V. Alexander, 603. 
 V. Clarke, 679. 
 
 V. Eastern Union Ry. Co., 237. 
 Hartford Fire Ins. Co. v. Doyle, 6. 
 Hartford & N. H. R.R. Co. v. Croswell,78, 
 134,151,661. 
 V. Kennedy, 163. 
 v.N.Y.(feN.H.R.R.Co., 
 71,415,418.427. 
 Hartley's Case, 130,149', 150.189,499,596. 
 Haitridge v. Rockwell, 94, 192, 692. 
 Hartfidge and Allender, ex parte, 295. 
 Harts V. Brown, 481. 
 Hartshorn v. Day, 339. 
 Hartwell v. Armstrong, 374. 
 
xxxvm 
 
 TABLE OF CASES. 
 
 Harvey v. Thomas, SVS. 
 
 V. West Side El. R. R. Co., 603. 
 Haslet tw. Wotherspoon, 571. 
 Eastings v. Drew, 793. 
 Hatch V. Boynton, 146. 
 
 V. Chic. <fec. R. R. Co., 691. 
 V. Pui-cell, 456. 
 Hatcher v. Toledo, <fec. R. R., Co., 126. 
 Hattersley v. Earl of Shelburne, 42, 80, 
 
 306, 600, 657, 673. 
 Haizfield v. Gulden, 318, 319. 
 Haven v. Adiims, 466. 
 
 V. Grand Junction R. E. Co., 269, 
 
 271, 
 -.-. N. H. Asylum, 461. 
 Havens v. Foster, 764. 
 Hawken v. Bourne, 216, 718, 724. 
 HawMns v. Governor, 289 
 / V. Miss. & Tenn. R. R. Co., 79. 
 
 «. JNew Orleans Printing Cii.,358. 
 Hawtayne v. Bourne, 216, 216, 716, 718, 
 
 724. 
 Hawthorne's Case, 50", 503. 
 Hay V. Cohoes Co., 352, 373, 375, 770. 
 
 V. McCoy, 276. 
 Hayden v. Middlesex T. Co., 452. 
 Hayes v. Gallon Gas, &c. Co., 743. 
 
 V. State Bank, 272. 
 Hayman v. Giivcrning Body of Rugby 
 
 School, 50. 686. 
 Haynes v. Covington, 742. 
 
 V. Palmer, 151. 
 Hays V. H. G. &S. R. R. Co., 331.353,360. 
 V. Ottawa. <Sic. R.R. Co., 125. 
 V. Pittsburgh R. R. Co., 160, 151, 
 519. 
 Hayward v. Pilgrim Socletv, 479, 646. 
 Jlayward, <fec. PI. R. Co v. Bryan, 145. 
 Hazard v. Durant, 500, 646, 676. 
 
 V. Irwin, 339. 
 Hazen v. Boston R. R. Co., 362, 390. 
 
 V. Essex Co., 375. 
 Hazlehnrst v. Savannah R. R. Co., 92,165, 
 
 168, 523. 740. 
 Hazleton v. Union Bank, 504. 
 Head v. Providence Ins. Co., 521. 
 Head's Case 513. 
 Heard v. City of Brooklyn, 100. 
 Heart v. btate Bank, 178. 
 Heaston v. Cin. & Ft. W. R. R. Co., 175, 
 
 619,521. 
 Heath v. Barmore, 100. 
 V. Ellis, 686. 
 
 V. Erie R'way Co., 277, 478, 646, 
 663, 655,656,668,671, 686, 
 687, 691. 
 Heathcote v. North Staffordshire Ry. Co., 
 
 288, 294. 
 Henton, ex parte, 600. 
 Eebb's Case, 128. 
 
 Hedges v. Metropolitan Ry. Co., 393. 
 V. Paquett, 486, 674. 
 
 Heffner v. Connie, 407. 
 liegeman v. Johnson, 751. 
 HelliT V. Crawfciid, 604. 
 Hemming v. Maddick, 140, 630. 
 Hendee v. Pinkerton, 224, 237, 500. 
 Henderson v. Australian, <fec. Nav. Co., 
 463, 454. 
 V. Laoon, 348, 769. 
 V. R.R. Co., 1.^2,336,358. 
 V. Ro^al British Bank, 519, 
 781. 
 Henderson, exparte, 511, 614. 
 Hendrickson v. Deoow, 54. 
 Henniber v. Contoooook Valley R. R. Co., 
 
 74. 
 Henning v. U. S. Ins. Co., 621. " 
 Henry v. Dubuque, &c. R. R. Co., 100,882. 
 ■11. Great Northern &f. Co., 172, 
 
 173, 678, 685, 688. 
 V. Vermillion R. R. Co., 146. 
 Hensonti. R. H.Co., 369. 
 Hentz V. Long Island R. R. Co., 404. 
 Hepburn v. Lordan, 657. 
 Hercules Assurance Soc, re, 223,513,800. 
 Hereford, <Stc. Engineering Co., re, 673, 
 
 688, 5S9, 690, 699. 
 Heritage's Case, 137,513. 
 Herkimer Mfg. Co v. Small, 163. 
 Herod v. Rodman, 756. 
 Heron v. Vance, 793. 
 Hersey v. Veazie, 646, 653. 
 Herso v. San Francisco, 748. 
 Hespeler's Case, 147. 
 Hewitt V. New Orleans, <fcc. E. R. Co., 366, 
 358. 
 V. N. Y. & 0. M. R. R. Co., 96. 
 11. Pioneer Press Co., 360. 
 Heymann ». European Central Ry. Co., 
 
 360, 560. 
 Hey ward v. Mayor, 100. 
 Heyworth v. Knight, 505. 
 Higbee & Riggs v. Camden & A. R. E. Co., 
 
 698, 
 Higgins V. Hopkins, 536. 
 
 V. Livingstone, 761. 
 V. Senior, 550, 750. 
 niggs V. Northern Assam Tea Co., Lim- 
 ited, 261. 
 Iliggs's Case, 604, 608, 626, 627. 
 Hiahgate Archway Co. i,. Jeakea, 68, 107. 
 Highgate Schrol, re, 61. 
 Hightower v. Thornton, 163, 793. 
 Hildrcth v. Lowell, 375. 
 Hill V. La Crosse & M. E. R. Co., 246. 
 
 V. Manchester, Ac. W'works Co., 315, 
 
 521. 
 V. Newichawnnick Co. 204. 
 V. N. 0., 0. & G. W. E. R. Co., 360. 
 V. Western Vt. R. R. Co., 381. 
 Hill's & J(me»'Case, 67. 
 llill'.s Case, 513,723. 
 Hill Manuf. Co. v. B., L. & L. R. R. Co., 90. 
 
TABLE OF CASES. 
 
 XX3QX 
 
 Hilles V. Parrlsh, 161!, 446, 481. 
 
 Hilliard v. Goold, 646, 556. 
 
 Hilton V. Giraud, 247. 
 
 Hinchman v. Pateraon Horse R.E. Co., 698. 
 
 Hinckley v. Gilderslaae, 428, 698, '70u,T05, 
 712. 
 
 Hinsdale v. Lamed, 692. 
 
 Hippisley's Case, 609. 
 
 Hitchcock V. Galveston, 192, 730, 74S. 
 
 Hitchens v. Congreve, 690. 
 
 Hitchins v. Kilkenny Ry. Co., 573. 
 
 Hoagland v. Han. & St. J. P.. R. Co., 72. 
 
 Hoard's Case, 93, 139, 140, 725. 
 
 Hoboken Building Ass'n v Martin, 795. 
 
 Hodges V. New England Screw Co., 92, 
 478, 487, 608, 645, 675. 
 
 Hodgkinson ». Nat. Live St. Ins. Co. 162. 
 
 Hodgson tr. Earl Powis, 421. 
 
 Hodsdon v. Copeland, 692, 789, 791. 
 
 Hoffman Steam Coal Co. v. Cumberland, 
 &o. Co., 478, 501. 
 
 Hpfiiagle V. N. Y. C. & H. R. R. R. Co., 351. 
 
 Hogg V. Zanesville Mfg. Co., 504. 
 
 Holbert v. St. L. <fec. R. R. Co., 14. 
 
 Holbrook v. Bassett, 213. 
 
 V. N. J. Zinc Co., 179. 
 
 Holden's Case, 513. 
 
 Holdsworth v. Mayor, tfec. of Dartmouth, 
 58, 222, 280. 
 
 Holliday v. St. Leonards, 61. 
 
 Hollingsworth v. Detroit, 270. 
 
 Holmes v. Blogg, 717. 
 
 ■I). Eastern Counties Ry. Co., 86. 
 
 V. Gillilaiid, 520. 
 
 V. Holmes, 3. 
 
 V. Old Colony R.R. Corp., 410,424. 
 
 Holmes, ex.parte, 94, 160, 161, 162, 515. 
 
 Holroyd v. Marshall, 231. 
 
 Hilly oke Bank v. Burnham, 93, 141. 
 
 Holvoke Go. v. Lyman, 98. 
 
 Holt's Case, 603. 
 
 Home Counties, <feo. Ass. Co., re, 518. 
 
 Home Insurance Co. i). Davis, 5. 
 
 Home of the Friendless v. Rouse, 97. 
 
 Homersham v. Wolverhamptun Water- 
 works Co., 451, 630. 
 
 Hood V. N. Y. & N. H. R. R., 28, 90, 419, 
 733. 
 
 Hooker v. Eagle Bank, 456. 
 ii. Turnpike Co., 100. 
 V. Vandewater, 419. 
 
 Hoole V. Gt. Western tiy. Co., 174,1 99, 648. 
 
 Hope Mut. Fire Ins. Co. v, Beckman, 470. 
 
 Hopkins v. A. & St. L. R. R. Co.. 859, 
 V. Gallatin T. Co., 446, 466. 
 
 Hoppin V. Buffum, 670. 
 
 Horn V. Ivy, 45i). 
 
 Hornby v. Close, 55, 66. 
 
 Horrigan v. Nat. Bank, 337. 
 
 Hnrsey's Claim, 12, 68, 211. 
 
 Hort'sCase. 612, 619, 694. 
 
 Eartnall v. Byde Commissioners, 19. 
 
 Horton v. Baptist Church, 663. 
 H(jBi'a V. Jaciibs, 54. 
 llotehin v. Kent, 565. 
 Hotel Co. V. Wade, 482, 645, 731. 
 Howard v. Savannah, 15. 
 HoB-ard's Case. 490, 543. 
 Howbeach Coal Co. v. Teague,]50,154,188. 
 Howden v. Simpson, 581. 
 Howe V. Deuel, 485, 496. 
 V. Freeman, 236, 242. 
 V. Keeler, 446, 466. 
 V. Starkweather, 178, 
 Howe Machine Co. o. Louder, 368. 
 
 V. Snow, 504. 
 Howell V. Chicago R. R. Co., 7, 1 99,202,664. 
 Howlaod V. McNab, 167. 
 IIo wley V. Knight, 1 7. 
 Bowser v. Hermann B. Association, 66. 
 Houldsworth v. Evans, 188, 557. 
 House V. Cooper, 646. 
 Houston 1. Jefferson College, 638, 791. 
 llovey V. Rubber Co., 358. 
 Hoyle V. Plattsburgh, <fec. R. R. Co., 242, 
 
 478, 479. 
 Hoyt V. Quicksilver Mining Co., 166, 652. 
 V. iSheldon, 796. 
 
 SI. Thompson, 466, 489, 493, 544, 646. 
 Hubbard v. Ciiappel, 638. 
 
 V. N. Y. & H. R. R. Co., 270. 
 Hubbell V. Warren, 689, 690. 
 Hubbersty v. Manchester Ry. Co., 177. 
 Hud. & Del. Canal Co. n. N. Y. <fc Erie R. 
 
 R. Co., 699. 
 Hueston v. Baton & H. R. R. Co., 74. 
 Hughes V. Antietam Mfg. Co., 142, 164, 
 182,336. 
 V. Chester & Holyhead R. R. Co.* 
 
 371. 
 V. Layton, 57. 
 
 V. Verm. Copper Mining Co.. 204. 
 Huguenot Nat. Bank v. Studwell, 796. 
 Huidekoppr v. Buchanan Co., 532. 
 Hulli). Kiehraond, 361. 
 Hull Flax, (fee. Co. V. Wellesley, 163. 
 Hull & Lr.ndon Life Ass. Co., 340. 
 Humber Ironworks Co., re, 236. 
 Humboldt Townsliip v. Long, 532. 
 Humes ti. Knoxville, 352. 
 Hunt V. Bullock, 245. 
 
 . V. Test, 318. 
 Hunt's Case, 205. 
 
 Hunter v. Hudson River Iron Co., 335. 
 Hunterdon Co. Bank v. Nassau Bank, 179. 
 Huntingdon, &c R.K.Co.j;.Decker,601,50S. 
 Huntington v. Savings Bank, 29, 55. 
 Hurd V. Green, 738. 
 Hutchins i>. Byrnes, 465. 
 
 V, State Bank, 178. 
 Hutchinson v. Surrey Gas Consumers' Co., 
 674, 592. 
 11. Western, &a., R.E. Co., 364. 
 Hutton V. Bullock, 761. 
 
x\ 
 
 TABLE OF CASES. 
 
 Hutton V. Scarborough Cliff Hotel Co., 170. 
 Hyam's Case, 176, 178. 
 Hyatt V. Allen, 203. 
 
 111. Central K. R. Co. .;. Hammer, 3B0. 
 ■u. Reedy, 362. 
 V. Copeland, 90. 
 
 HI. Grand Trunk R. R. Co. v. Cook, 634. 
 
 III. In.«ane Hospital ti. Higgina, 276. 
 
 111. R. R. Co. V. Chic., &<-.. R. R. Co., 376. 
 
 m. R. E. R. Co. V. Beers, 79. 
 
 V. Ziramer, 79, 470. 
 
 Imlay v. Union Branch R. R. Co., 109. 
 
 Imperial Anglo-German Bank, re, 801, 803. 
 
 Imperial Bank of China v. Bank of Hin- 
 dustan, 610, 616. 
 
 Imperial L. Co. of Marseilles, re, 259, 267, 
 626,627. 
 
 Imperial Merc. Credit Ass. v. Coleman,479. 
 
 Imperial Merc. Credit Assoc, re, 119, 613, 
 627. 
 
 Imperial Steam, <fec. Co., re, 156. 
 
 Ind's Case, 519. 
 
 Independent Ins. Co.. re, 795. 
 
 Inderwick v. Snell, 664, 665, 667. 
 
 India, &c. Life Ass. Co., re, 619, 622. 
 
 Indiana Cent. R. R. Co. v. Oakes, 74. 
 V. State, 379. 
 
 Ind. & Cin. R. R. Co. ». State, 408. 
 
 Ind., Cin. & L. R. R. Co. ■o. Jones, 638. 
 
 Indianapolis, &c. R. R. Co. v. Rinard, 436. 
 V. Solomon, 411. 
 
 Indianapolis R. R. Co. n. Anthony, 353. 
 
 Ingate v. Austrian Lloyd's Co., 276. 
 
 Inglia V. Great Northern Ry. Co., 544. 
 
 Inerahsm v. Chic, D. <fe M. R. R. Co., 379. 
 
 Jhnabitants v. Wood, 20. 
 
 Inhah. of Greenwich v. Easton & Amboy 
 R. R. Co., 377. 
 
 Inhab. of Mendham v. Losey, 452. 
 
 luhab. of Princeton v. Adams, 64. 
 
 Inhab. of Saddle River v. Colfax, 462. 
 
 Inhab. of Springfield v. Conn. R. R. Co., 
 376, 377. 
 
 Innes v. Lansing, 690. 
 
 Insurance Company v. Francis, 4. 
 V. McCain, 656. 
 V. Morse, 6, 6. 
 V. The C. D., Jr., 6. 
 V. Woodruff. 603. 
 
 International Contr. Co., re, 519. 
 
 International Life Ass. Co., in re, 217, 235, 
 650. 
 
 Iowa & M. R. R. Co. v. Perkins, 154. 
 
 Irish Peat Co. v. Phillips, 186, 164, 619. 
 
 Iron R. R. Co. v. Lawrence Furnace Co., 97. 
 
 Irrigation Co. of France, 440, 616, 618, 627. 
 
 Irvine v. Turnpike Co., 78. 
 
 Irving V. Bancroft, 70. 
 
 Irving Bank v, Wetherald, 337. 
 
 Irwin V. Dixion, 698. 
 
 Isham V. Ben, Iron Co., 1 78. 
 
 Isham V. Buckingham, 137, 177 
 Ives V. Hazard, 461. 
 
 Jackson v. Brown, 224. 
 
 V. Cocker, 174. 
 
 V. Hampden, 438. 
 
 V. Hartwell, 20. 
 
 V. Hatliaway, 100. 
 
 V. Ludeling, 478, 671. 
 
 V. Phillips, 709. 
 
 V. Plank-road Co., 203, 204, 678. 
 
 r. Pratt, 466. 
 
 11. Roberts, 519. 
 
 V. Rutland A B. R. R. Co., 100. 
 
 V. Second Ave. R. R. Co., 352. 
 
 V. Turquand, 129, 140, 348. 
 
 V. Y. & C. R. R. Co., 270. 
 Jackson Ins. Co. v. Cross, 508, 514. 
 Jackson Marine Ins. Co., re, 789. 
 Jacques v. Marqiiand, 716. 
 James v. Eve, 610. 
 
 V. May, 140, 286. 
 Jameson v. People, 22. 
 Janey v. Latane, 60. 
 Jansen v. Ostrander, 17, 20. 
 Jarden v. Phil. Wil. & B. R. R. Co., 699. 
 Jay Briitge Co. v. Woodman, 15. 
 Jaycox, re, 731. 
 
 Jefferis J). P. W. & B. R. R. Co., 76. 
 Jefferson & P. R. R. Co. v. Hazeur, 388. 
 Jeftersonville v. Patterson, 270. 
 Jeffersonville R. R. Co. v. Rogers, 352,366, 
 
 369, 360, 436. 
 Jefferys v. Gurr, 20, 22. 
 Jefts V. York, 757, 764. 
 Jenkins v. Andover, 374. 
 
 V. Harvey, 22. 
 Jenks V. Coleman, 437. 
 Jennings v. V. S. Ins. Co., 635. 
 Jennings, re, 156. t, 
 
 Jessopp's Case, 185. 
 Jessup V. Bridge, 236. 
 V. Loucks, 404. 
 Job V. Lamb, 574, 692. 
 John V. Farmer's Bank, 787, 791. 
 Johns V. Johns, 178. 
 Johns Island Church Case, 64. 
 Johnson n. Albany, <fec. R. R. Co., 185. 
 
 V. Candage, 691. 
 
 V. County, 270. 
 
 V. Crawfordsville R. R. Co., 160, 
 152, 336. 
 
 V. Hntborn, 456. 
 
 V. Jones, 509, 623, 670. 
 
 V. Mayne, 51. 
 
 V, Shrewsbury, &c. Ry. Co., 898. 
 
 V. St. Louis Despatch Co., 368. 
 
 V. Swan, 60. 
 
 V. Underhill, 179. 
 
 10. Utioa Water- Works, 393. 
 
 V. Wabash PI. R. Co., 176. 
 Johnston v. Button, 661. 
 
TABLE OF CASES. 
 
 xH 
 
 Johnston v. Ewing Fem. Univ., 178 
 Joint -Stoct Co. V. Brown, 93. 
 Joint-Stock Coal Co., 791, 799. 
 Joint-Stock Discount Co. re, 613. 
 Jones ?i. Bone, 109. 
 
 V. Boston Milla Corporation, 370. 
 
 V. Garcia Del Rio, 688, 690. 
 
 V. Milton T. Co., 439, 440. 
 
 V. Noy, 717. 
 
 V. Planters' Bank, 504. ' 
 
 V. Terre Haute, &c. E. E. Co., 203, 
 204, 484, 496. 
 
 V. Williams, 60. 
 Jones, ex parte, 164, 187, 622, 723. 
 Joslyn D. Pacific Mail S. S. Co. 664. 
 Joy V. Jackson & M. P. E. Co., 79, 470. 
 Judson V. City of Plattsturg, 532. 
 i;. Rossie Galena Co., 370. 
 Junction, <fec. E. E. Co. v. Reeve, 128, 146, 
 
 638. 
 Junction R. E. Co. ». Cleneay, 270. 
 Junkins v. Union School District, 644. 
 
 Kalamazoo Mfg. Co. «. McAlister, 504. 
 fcnawha Coal Co. v. Kanawha, Ac. Coal 
 
 Co., 22. 
 Kansas City Hotel Co. v. Harris, 521. 
 V. Hunt, 127. 
 V. Sauer, 796 
 Kansas Ins Co. v. Craft, '88. 
 Kansas Pac. Ey. Co. v. Kersler, 360. 
 V. Mower, 96. 
 V. Nichols, 437. 
 Kansas Valley Nat. Bank.r. Eowell, 749. 
 Karnes v. Eoehester, Ac. E. E. Co., 195, 
 
 196, 201, 203. 
 Kay V. Johnson, 752. 
 Kean v. Johnston, 78, 125, 633, 636, 652, 
 
 661, 673, 792. 
 Keane v. Reynolds, 767. 
 Kearns v Leaf, 619, 623, 649, 694, 794. 
 Keeler v. Salisbury, 603. 
 Keightley, ex parte, 190. 
 Keith II. Burrows, 531. 
 Kelk's Case, 161, 186, 188. 
 Keller «. Johnson, 152. 
 Kelley v. Mayor of Brooklyn, 264, 521. 
 Kellinger v. Forty-second St. Ac. E. R. 
 
 Co., 76, 384, 698. 
 Kelly V. People's Trans. Co., 747. 
 Kelner v. Baxter 554, 761, 756. 
 KelsaU «. Tyler, 65. 
 Kelsey v. National Bank, 646. 
 
 V. Northern Light Oil Co., 336, 
 339. 
 Kemp V. South Eastern Ey. Co., 389. 
 Kendall «. Eider, 661. 
 Kennebec A P. R. E. Co. v. Jarvis, 1 64. 
 
 ; t). Kendall,15,163. 
 
 V. Palmer, 593. 
 V. Portland A K. 
 R. E. Co. 237. 
 
 Kennebec A P. R. E.Co. «.Waters,152,336. 
 Kennedy «. Bait. Ins. Co., 452. 
 V. Otoe Nat. Bank, 504. 
 V. Panama, Ac. Mail Co. 332,338. 
 Kennedy's Case, 622. 
 Kennet A Avon Nav. Co. v. Witherington, 
 
 60, 794. 
 Kennicott v. Supervisors, 269. 
 Kenosha, City of v. Lamson, 270. 
 Kenosha, Ac. R. E. Co. v. Marsh,79,99,151. 
 Kensington Station Act, re, 573. 
 Kent V. Jackson, 664, 688, 691. 
 
 *. Midland Ry. Co., 410, 411. 
 V. Quicksilver Mining Co., 185, 552, 
 558. 
 Kent Benefit Building Society, re, 56. 
 Kent Coast Ry. Co. v. London C. A D. Ry. 
 
 Co., 402. 
 Kentucky Seminary v. 'Wallace, 3. 
 Keppell V. Petersburg E. R. Co., 203. 
 kernaghan v. Williams, 285. ■ 
 Kernot v. Potter. 667. 
 Kerr, in re, 376, 391. 
 Kerrison v. Cole, 222. 
 
 V. Stewart, 645. 
 Kessler v. N. Y. Central Ry. Co., 90. 
 Ketcham v. Madison, Ind. A R. R. R. Co. 
 
 638. 
 Ketchum v. Buffalo, 223, 254. 
 V. Dimcan, 271. 
 i. Durkee, 716. 
 Key, ex parte, 722. 
 Key City, 638. 
 Keyser v. Stansifer, 54. 
 Kinoaid v. Dwinelle, 796. 
 Kinealy v. St. Louis, Ac. R. E. Co., 71. 
 King V. Accumulative Ass. Co., 536. 
 V. Bay lay, 17. 
 V. Bisliop of Chester, 48. 
 V. Doollttle, 765. 
 V. Eagle Mills, 339. 
 V. Elliot, 146. 
 V. Marshall, 234, 236, 248. 
 V. Merchants' Exchange Co., 224. 
 ■0. Morris A E. II. E. Co., 76. 
 V. Patterson A H. E. E. Co., 203. 
 11. Wilson, 270. 
 King's Case, 139, 163, 188. 
 Kingsbridge Flour Mill Co. v. Plymouth 
 
 Ac. Banking Co., 477. 
 King of the Two Sicilies v. Wilcox, 867. 
 Kingsbury s.'Ledyard, 523. 
 Kinkead v. McKee, 54. 
 Kingsley v. New Eu<>land Ins. Co., 509. 
 Kirk V. Bell, 150, 252, 642. 
 
 V. Hodgson, 661. 
 Kisch V. Central Ry. Co. of ■Venezuela,347, 
 
 690. 
 Kishaooquillas T. R. Co. v. McConaby, 787. 
 Kitchen v. Cape Girardeau,Ao.E.R.Co.,65. 
 Klein V. Redd, 1 53. 
 Kline v. Cent. Pac. R. E. Co. 352. 
 
xlii 
 
 TABLE OF CASES.. 
 
 Knapp V. R. R. Co., 644. 
 «. Williams, 247. 
 Kneeland v. Gilman, 745. 
 Knickerbocker Life Ins. Co. a. Eeclesine, 
 
 358. 
 Kniglit V. Carrollton R. R. Co., 381. 
 
 V. Mayor, Ac. of Wells, 3. 
 Knight's Case, 188, 497, 620, 781. 
 Kniskem v. Lutheran Church, 54. 
 Knorr «. Germantown If. R. Co., 74. 
 Knowlton v. Congress, (fee. Spring Co., 144. 
 • 159, 487, 738, 790. 
 Knox Co. V. Aspinwall, 270, 272, 509, 532. 
 Koehler w.Black R.Falls Iron Co., 466, 478. 
 Kohl V. U. S.. 372. 
 Kramer «. C. & P. R. R. Co., 372. 
 Kucheman v. C. C. <fe D. Ry. Co., 384. 
 Kyle V. Laurens R. R. Co., 90. 
 
 Lackland J). Northern Mo.R.R.Co.,380,S81. 
 Lafayette Ins. Co, >i, French, 5, 7. 
 Lafayette Savings Bank v. St. Louis, <fec, 
 
 Co., 263. 
 La Granse P. R. Co. v. Mays, 152. 
 La Grange R. R. Co. v. Rainey, 22,786,791. 
 Laing v. Reed, 67. 
 Laird v Birkenhead R. R. Co., 463. 
 Lake v. Virginia & T. R. R. Co., 77. 
 Lake Ontario R. R. Co. v. Mason, 175,519, 
 
 693. 
 Lake Shore, (Jcc. R. R. Co. v. Perkins, 437. 
 Lake Superior Nav. Co. v. Morrison, 156, 
 
 649. 
 Lake View v. Rose Hill Cemetery Co., 96. 
 Lamb v. Bowser, 6. 
 
 V. North London Ry. Co., 390. 
 L'Amoreux v. GonUI, 46]. 
 Lamprell v. Belleiicay Union, 451, 452. 
 Lancashire & Y. Ky. Co. v. E. Lancashire 
 
 Ry. Co., 413. 
 Lancasti-r <fe C. Ry. Co. v. N. W. Ry, Co., 
 
 288, 295, 296,421. 
 Lancaster Co. Nat. Bank v. Smith, 749. 
 Lance's App., 379, 380, 381. 
 Land v. Cofftnan, 747. 
 Land Credit Co. of Ireland, re, 141, 255, 
 
 515, 620. 
 Land Grant Co. v. Coffey Co., 5, 7. 
 Land Shipping Colliery Co., re, 612. 
 Lane v. Biaineid, 438. 
 
 «r. Sohomp, 532. 
 Lang V. I'urves, 700. 
 V. Smith, 269. 
 Langer's Case, 138. 
 
 Langley si. Boston & M. R. R. Co., 398. 
 Langley Mills, <tc. Co. re, 792. 
 Lanfstiin v. S. C. R. R. Co., 270, 271. 
 Laning v. N. Y. Cent. R. R. Co., 351. 
 Lankester's Case, 178. 
 Larsing v. Smith, 698. 
 Lathrop v. Commenial Bank of Scioto, 
 11,13,452. 
 
 Lathrop v. Union Pac, R. R. Co., 7. 
 Latimer v. Union Pac. R. R. Co., 7. 
 Latymer's Charity, re, 51. 
 Lauman v. Lebanon Valley R. E. Co., 125, 
 
 403, 632, 633, 634, 663, 673, 792. 
 Law V. Indisputable Co., 650, 794. 
 Lawless v. Anglo-Egyptian Cotton & Oil 
 
 Co., 367. 
 Lawrence v. Gebhard, 499. 
 Lawrence's Case, 348, 668. 
 Lawson v. Kolbenson, 54. 
 Lawyer v. Cipperly, 54. 
 Laythoarp v. Bryant, 461. 
 Lazear v. Nat. Union Bank, 749. 
 Lea V. Am. Ac. Canal Co., 787, 793, 795. 
 Leach v. Hale, 749. 
 
 Leary v. Hannibal & St. Jo. R. R. Co., 74. 
 Leasum v. Hillegas, 466. 
 Leavenworth, <fec. R. R. Co. v. Rice, 360. 
 Leavensworth v. County Court, 631. 
 Leavitt v. Blatehford, 224. 
 
 V. Conn. Peat Co., 521. 
 V. Palmer, 736. 
 Le Blanc, Matter of, 204. 
 Le Conteur v. London & S. W. Ry. Co., 90. 
 Le Couteulx v. City of Buffalo. 29. 
 Lee V. M. E. Church of Ft. Edward, 758. 
 Lee V. Village of Sandy Hill, 335, 362. 
 Leech v. Harris, 46, 46. 
 Leeds Banking Co., re, 543. 
 Lefler v. Field, 339. 
 Legg V. Mathieson, 238. 
 Legrand v. Hampden Sidney Coll. ,276,462. 
 Lehigh Bridge Co. v. Lehigh Coal Co., 787, 
 
 795. 
 Leifchild's Case, 91, 139 
 Leland v. Hayden, 199, 201. 
 Leominster Canal Nav. v, Shrewsbury, 
 
 &c. Ry. Co., 70, 463, 530, 672, 684. 
 Leonardsville Bank v. Willard, 4T6, 520. 
 Le Roy v. Globe Ins. Co., 2n3. 
 Lester v. Foxcroft, 463. 
 
 0. Webb, 474. 
 Levering v. Mayor, 466. 
 Levisee v. Shreveport R. R. Co., 480. 
 Leviston v. Junction R. R. Co., 74. 
 Levita's Case, 128. 
 Levy Court v. Coroner, 20. 
 Lewey'a Island R.R. Co. v. Bolton,185,61 9. 
 Lewis V. City of Clarendon, 637, 747. 
 V. Mayor, &c. of Rochester, 280. 
 V. St. Albans, &c. Works, 487. 
 V. Watson, 54. 
 Lewis's Case, 151. 
 
 Lexington, City of v. Butler, 269, 272. 
 Lexington, <fec. Ins. Co. v. Paige, 206. 
 Lexington & 0. R.R, Co. v. Applegale, 379. 
 Lexington R. R. Co. v. Bridges, 487. 
 Lexinaiton & W. C. R. R. Co. v. Chandler, 
 
 158, 154, 157, 519. 
 Lichbarrow v. Mason, 337, 
 Lichfield v. Vernon, 378. 
 
TABLE OF CASES. 
 
 xliii 
 
 Life Ins. Co. v. Meeh. Ins. Co., 213, 831. 
 Lightner v. Boston <fe A. B. R. Co., 638. 
 Lime Rock Bank v. Hewett, 503. 
 Limpua v. London General Omnibus Co., 
 
 352. 
 Linder v. Carpenter, 480. 
 Lindas v. Melrose, 274, 753. 
 Lindsey, Earl of v. Copper, 584. 
 
 i(. Great Northern By. 
 
 Co.,316,326,463,584. 
 Litchfield Bank v. Peck, 336. 
 Litchfield Iron Co. v. Bennett, 523. 
 Littledale, ex parte, 141. 
 Littlehampton, &c. Steamship Co., re, 175. 
 Liitle Miami, &c. R B. Co. v. Dayton, 378. 
 Little Miami B. R. Co. v. Stevens, 35 1 , 352. 
 Littleton Mfg. Co. v. Parker, 154. 
 Littlewort v. Davis, 20, 514, 532, 742. 
 Liverpool Borough Bank v. Turner, 531. 
 Liverpool, Ac. Building Soc, re, 57. 
 Liverpool Ins. Co. v. Massachusetts, 4. 
 Livesey v. Omaha Hotel Co., 154. 
 Livingston v. Lynch, 78, 661. 
 Llanelly Ry. & Dock Co. i;. London & 
 
 N. W. Ry. Co., 413. 
 Llanharry Hematite Iron Co., re., 544. 
 Lloyd V. Brewster, 690. 
 
 V. Freshfield, 215, 716. 
 V. London C. & D. Ry. Co., 99, 107. 
 Loan Association v. Topeka 374. 
 Local Bd. (fee. Chatham Extra v. Roch- 
 ester, <fcc. Com'rs, 60. 
 Lockhart v. Van Alstyne, 165,169,173,203. 
 Lockwood V. Mechanics' Nat. Bank, 15, 
 
 177, 542, 543. 
 Lodge V. Phil. <fec. B. R. Co., 390. 
 Logan V. Courtown, 89, 404. 
 Logan, ex parte, 803. 
 London and Colonial Co., re, 68. 
 London and C. Ass^ Soc. v. Redgrave, 156. 
 London & Co. Ins. Co., 164, 721. 
 London <fe Eastern Banking Co., re, 155. 
 London and Exchange Bank, 131. 
 London, &c. Industrial Assoc, re, 798. 
 London & Northern Ins. Co., re, 610. 
 London and Paris Banking Corp., re, 798. 
 Londiin <fe Provincial Starch Co., 205. 
 London, Ac. By. Co. v. Ackroyd, 115. 
 
 1). Blaotmore,68,107. 
 
 V. Bd. of Works, 394. 
 
 V. Bradley, 383. 
 
 J). Fairclough, 132. 
 
 V. Freeman, 132. 
 
 V. Goodwin, 624. 
 
 V. S. E. B.B. Co., 399. 
 
 K. S. W. By. Co., 81, 
 399, 414 
 
 V. Winter, 463. 
 London, &c. By. Co., re, 514. 
 London, Bombay, &c. Bank, re, 608, 
 London, <fec. By. Arrangement, re, 296. 
 London Dock Co. v. Smith, 455. 
 
 London Financial Ass. v. Stevens, 1 72, 234 
 j).Wrexham,(tc.By. 
 Co., 172. 234. 
 London Gaslight Co. v. Nicholls, 450. 
 London, Hamburgh, &c. Bank, re, 95. 
 London India Rubber Co., re, 172, 174. 
 London Marine Ins. Assoc, 803. 
 London Mercantile Discount Co. re, 672, 
 
 675, 676. 
 London Suburban Bank, 791. 
 Long Island R. E. Co., in re, 185 441, 
 
 699. 
 Longworth's Executors, ex parte, 155. 
 Lord V. Brooks, 199. 
 
 V. Copper Miners, 68, 121, 212, 663, 
 
 682. 
 V. Veazie, 654. 
 Lord Carington v. Wycombe By. Co.,38]. 
 Lord Manners v. Johnson, 109. 
 Lord Petre v. Eastern Counties By., 320, 
 
 326. 
 LoriuT V. Salisbury Mills, 179. 
 Los's Case. 608, 625, 627. 
 Lothrop V. Stedman, 97, 788. 
 Londenschlager v. Benton, 249. 
 Louisville, &o. B. R. Co. v. Com., 369. 
 
 V. Covington,403. 
 «. State, 246,369. 
 Lovett V. German Reformed Church, 523. 
 Low V. Cal. Pac. R. B. Co., 253. 
 
 II. Conn. <fe Pass.R.B.Cc, 299,503,569. 
 
 V. Galena R. B., 381. 
 Lowe V. London & N. W. By. Co., 456, 520. 
 Lowe's Case, 613. 
 Lowell V. City of Boston, 374. 
 Lowell Savings Bank v. Winchester, 471. 
 Lowell, &K. R. B. Co. v. Boston <fc L. E. 
 
 B. Co., 377. 
 Lowndes v. Garnett, <fec. Gold Mining Co., 
 
 219, 726. 
 LoWry v. Commercial & Farmers' B'k, 180. 
 Luards Case, 142. 
 Lucas V. Case, 54. 
 
 V. Johnson, 276. 
 
 V. Pitney, 213, 223, 254, 255, 266. 
 Ludlow V. Hurd, 236, 245. 
 Luling V. Atlantic Mut. Ins. Co., 201, 202, 
 
 204. 
 Lum V. B bertson, 803. 
 Lumbard v. Aldrich, 13. 
 V. Stearns, 374. 
 Luse V. Isthmus Transit E. B. Co., 495. 
 Lutheran Church v. Gristgau, 54. 
 Lutheran Congregation v. St. Michaels, 62. 
 Lyde v. E. Bengal By. Co., 87, 303, 308. 
 Lyndeborough Glass C. v. Mass. Glass 
 
 Co., 91, 565. 
 Lyman v. B. & W. B. B. Co., 76. 
 
 V. Bridge Co , 352. 
 Lyon V. Mitchell 319. 
 Lvster's Case, 188, 543. 
 Lyth V. Ault, 603. 
 
xliv 
 
 TABLE OF CASES. 
 
 Ljtton V. Great Northern Ey. Co., 321. 
 
 Mabey v. Adams, 3^8. 
 Macbride >;. Lindsay, 690. 
 Maccoun v. ltd. &c. R. K. Co., 336. 
 MacDongall v. Gardiner, 682. 
 
 ■V. Jersey Imperial Hotel Co., 
 69, 156, MS. 
 Maojrregor v. Dover and Deal By. Co., 
 
 315, 76-2. 
 Mackay v. Commercial Bant, 337, 342, 
 
 344, 346. 
 Mackley's Case, 498, 499. 
 Macon V. Macon & W. R. R. Co., 65. 
 Macon K. R. Co. v. Parker, 246. 
 Macon, &c. R.K. Co. w.Vason, 1 50, 153,523. 
 Maddox v. Graham, 270, 272. 
 Madison Ave. Bap.Ch. v. Oliver St.Ch.,73«. 
 Madison. Ac. P. R. Co. v. Wateitown, &c. 
 
 P. R. Co., 65, 86, 253, 745. 
 Madison, &c. R. R. Co. o. Norwich Sav- 
 ing Soc, 263. 
 Madrid Bank v. Pelly, 587. 
 Magdalena Steam Nav. Co., re, 219, 725. 
 Magee a. Badger, 146. 
 
 V. Mokelumne Hill Canal Co., 213, 
 223. 
 Mahani). Wood, 127. 
 Mahlon v. Demarest, 690. 
 Mahony v. Atlantic, &c. R. R; Co., 398. 
 V. Bank of the State, 23. 
 V. Kekule, 761. 
 Mair ii. Himalaya Tea Co., 520. 
 Mallorie's Case, 140. 
 Malone «. Hathaway, 351. 
 Manchester, &c. Life Ass. Assoc, re, 622. 
 Manchester, &c. Loan Assoc, re, 620. 
 Manchester, Ac. Ry. Co. v. Reg., 391. 
 Manchester Finance Co.'s Case, 130. 
 'Manchester School, re, 61. 
 Mandersi n v. Commercial Bank, 673. 
 Mandeville v. Riggs, 691. 
 Manhattan Gas Co. v. Barker, 698. 
 Manisty's Case, 187. 
 Manley v. Long, 450. 
 Mann ». Bntler, 686. 
 
 V. Cooke, 129, 148, 163, 155, 182. 
 
 V. Currie, 129, 153, 165, 182. 
 
 V. Pentz, 161, 466. 
 
 V. VtM, 182. 
 Manners v. Johnson, 109. 
 Manning v. London, Worcester, Ac. Ry. 
 
 Co., 673. 
 Mansfield, Ac, E.R. Co. v. Dunker,632,638. 
 Marbury tr. Madison, 289. 
 March v. Eastern R. R. Co., 416, 643, 671, 
 
 673, 686. 
 Mai-chand v. Loan, Ac. Ass., 570. 
 Marcy v. Town of Oswego, 532. 
 Marine Bank v. Biays, 203. 
 
 V. Ogden, 423, 424. 
 Marine Investment Co., 626. 
 
 Marine Mansion Co. re, 2.S0, 248. 
 
 Mariner's Bank v. Sewall, 79S'. 
 
 Marino's Case, 513. 
 
 Marion County v. Clark, 632. 
 
 Marion Savinajs Bank v. Dunkin, 741. 
 
 Market St. Bank v. Slumpe,496. 
 
 Marlborough Mfg. Co. v. Smith, 304, 470, 
 
 489. 
 Marlborough School, re, 51. 
 Marlow v. Pitfield. 717, 724. 
 Marquis of Salisbury v. Great Northern 
 
 Ry. Co., 104, 113. 
 Marr v. Bank of West Tenn , 793. 
 Marseilles Extension Ry. Co. re, 96, 604. 
 Marsh v. Burroughs, 127, 142. 
 II. Eastern R. R. Co., 2U4. 
 V. Falker, 339. 
 V. Fulton Co., 531. 
 Marshall v. Baltimore A 0. R. R. Co., 6, 
 299, 319, 681, 639. 
 V. Corp. of Queensborough, 467. 
 V. Glamorgan Iron Co., 191, 192. 
 V. Gray, 339. 
 Martin v. Brai ch Bank, 14. 
 
 V. Mavor of Brooklyn, 284. 
 V Mobile, Ac. B. R. Co., 5. 
 V. Nutkin, 20. 
 
 V. Pensacola, Ac. R.R. Co., 79,162. 
 V. Sedgwick, 141. 
 V. Zellerbach, 550. 
 Martin's Case, 608. 
 Marvine v. Hymers, 495. 
 Maryland v. Norlhern R. R. Co., 4. 
 Marylebone Banking Co. re, 95. 
 Mason v. Kennebec A P. R. R. Co., 74. 
 
 I,. York A C. R. R. Co., 644, 686. 
 Master, Ac. «. Green, 169. 
 Master's Case, 178. 
 Mathew v. Blackmore, 536. 
 Matteson ». N. Y. Cent. E. R. Co., 603. 
 Matthewman's Case, 142. 
 Matthews v. Great Northern Ry. Co., 167 
 173. 
 V. Skinker, 29, 747, 749. 
 II. Theological Seininary, 6. 
 Maughan v. Leamington Gaa Co., 678. 
 Mauney v. Mots, 276. 
 Maunsell v. Midland G. W. Ry. Co., 92, 
 
 298, 316, 422, 657. 
 Mauran v. Smith, 289. 
 Maxwell v. Dulwich College, 463. 
 Maxwell's Case, 687. 
 May II. Great Western Ry. Co., 107. 
 
 II. Memphis B. A R. R. Co., 184. 
 Maynard's Case, 147, 149. 
 Mayor ti. Bait. A Ohio R. R. Co., 92. 
 V. Cummins, 280. 
 «. Ray,41, 272, 780. 
 Mayor, Ac. v. Bailey, 874. 
 Mayor, Ac. of Baltimore ii. Pittsburgh, 
 
 Ac. R. R. Co., 98, 788. 
 Mayor, Ac. of Berwick ii. Oswald, 602. 
 
TABLE OF CASES. 
 
 xlv 
 
 Mayor, <fec. of Cardiff o. Cardiff Water- 
 works Co., 388. 
 Mayor, <Stc. of Oarmarthen v. Lewis, 457. 
 Mayor, <Sec. of Colchester v. Brooke, 787, 
 796. 
 V. LowteD, 14, 
 47, 58. 
 Mayor, &c. of Exeter v. Earl of Devon, 
 
 279, 700. 
 Mayor of Griffin v. Inman, 480. 
 Mayor of Kidderminster v. Hardwiok, 
 
 449, 460, 462. 
 Mayor, <tc. of Liverpool v. Choriey Water- 
 works Co., 703, 711. 
 Mayor, (fee. of London v. Goree, 457. 
 V. Hunt, 457. 
 V. Vanacre, 786. 
 Mayor, <Sfo. of Ludlow v. Charlton, 448, 
 
 .453, 454, 456. 
 Mayor, &c. of Lyme v. Henley, 786. 
 Mayor, &a. of iiorwich o. Norfolk Ky. 
 
 Co., 315. 
 Mayor, Ac of Stafford v. Till, 450, 457. 
 Mayor of Worcester v. B. R. Co., 98, 398. 
 MoAleer «. McMnrray, 646, 648. 
 V. Woodcock, 482, 597. 
 McAllister v. Plant, 224, 237. 
 McAulay v. Western Vt. R. R. Co., 404. 
 McAuley v. C. C. & I. C. Ry., 22, 632. 
 McCall V. Byram Mf^. Co., 444, 622. 
 McCarty v. S. & N. B. R. R. Co., 129. 
 McClelian v. Scott, 335. 
 McOluer v. Manchester <fe L. R. R. Co., 
 
 90, 398. 
 McClure v. Bennett,, 754. 
 McCord V. Ochiltree, 50. 
 McUortle v. Bates, 484. 
 McCoy V. Washington Co., 269. 
 McCracken v. San Francisco, 547, 748. 
 Mcl'ray v. Junction R. R. Co., 78, 79, 634. 
 McCrea v. Port Royal R. R. Co., 394. 
 McCullough V. Mayor, 406. 
 
 V. Moss, 459, 471. 
 V. SomerviUe, 661. 
 McCurdy v. Meyers, 792. 
 
 V. Rogers, 757, 764. 
 McCutcheon v. bteamboiit Co., 4&6. 
 ' ' McDaniels v. Flower For. Mfg. Co., 438. 
 McDonald v. Dpp. Canada Mining Co.,426. 
 McDonell v. Grand Canal Co., 652. 
 McDonnell v. Midland 6.W. Ry. Co., 431. 
 McDougall V. Jersey Imperial Hotel Co., 
 
 197. 
 McDuffee v. R. R., 435. 
 McElhenny's Appeal, 482, 688, 693, 697. 
 McEuen v. W. London Wharves, 130, 176. 
 McFarlan v. Triton Ins. Co., 'SB. 
 McGai'gell v. Hazleton Coal Co., 623. 
 McGary v. People, 3. 
 MoGenness v. Adriatic Mills, 603. 
 McGinnis v. Watson, 64. 
 McGoon V. Scales, 79S, 803. 
 
 McGregor v. Erie Ry. Co , 641. 
 Mclntire v. Western N. C. R. R. Co., 74. 
 Molntire Poor School v. Zanesville Canal 
 
 Co., 22, 787, 791, 795. 
 Molndoe v. St. Louis, 747. 
 McKenzie v. McLeod, 354. 
 McKeon v. Citizens' R. R. Co., 360. 
 McKim V. Odom, 276, 369. 
 McLaren v. Pennington, 662, 791. 
 McLaughlin v. D. & M. R. R, Co., 165, 
 
 169, 198, 649. 
 McLellan v. Cumberland Bank, 357. 
 McMahan v. Morrison, 631, 634. 
 McMillan v. M. S. <fe N. I. R. R. Co., 461. 
 McMurray v. Northern Ry. Co., 669. 
 McNeil V. Tenth Nat. Bank, 179. 
 McPherson v. Foster, 37, 746. 
 McRae v. Russell, 146. 
 McVicker v. Ross, 636. 
 Meach v. Smith, 766. 
 Mead v. Bunn, 764. 
 
 V. Keeler, 213, 223, 254. 
 V. N.Y. &c. R.R.C0., 22,632,638,641. 
 Meade v. Insurance Co., 126. 
 Meadow Dam Co. v. Gray, 78. 
 Meads v. Merchants' Bank of Albany,3S7. 
 Means v. Swormestedt, 753. 
 Mears v. London & S. W. Ry. Co., 352. 
 Meason's Estate, 178. 
 Mechanics' Association v. Conover, 66. 
 Mech. &c. Ass. ji.White Lead Co , 253,254. 
 Mech. Bank v. Bank of Columbia,45 1,453, 
 521. 
 V. Merchants' Bank, 177, 180. 
 V. N.Y. &c. R.R. Co., 169,177, 
 , 178, 470, 471. 
 Mechanics, <fec. Bank v. Smith, 609. 
 Medbury v. N. Y. <fc E. R. R. Co., 621. 
 Medical Invalid, <fec. Society, re. 622. 
 Medway C". v. Earl of Romnoy, 101. 
 Medway Cotton Co. v. Adams, 3. 
 Meeker v. Chic. Cast-Steel Co., 521. 
 Melhado v. Hamilton, 170. 
 
 1. Porto AlegreRy.Co.,556,590. 
 Melvin v. Hoitt, 127. 
 
 V. Lamnr Ins. Co., 142, 151, 182. 
 V. Lisenby, 621. 
 Memphis v. Dean, 278, 643, 645. 
 
 «. Memphis Gayoso Gas Co.,742. 
 Memphis, &c. Co. v. Whitfield, 369. 
 
 V. Williamson, 645. 
 Memphis, &c. R. R. v. Sullivan, 134, 154. 
 Memphis Freight Co. v. Memphis, 376. 
 Mendelssohn v. Anaheim Lighter Co., 360. 
 Menier v. Hooper's Telegraph Works, 648, 
 
 678, 683, 690. 
 Mercantile Discount Co., re, 676, 676. 
 Mercer v. MoWilliams, 74. 
 Mercer Co. v. Haokett, 268, 272. 
 Merchants' Bank v. Bankof Columbia,46]. 
 V. Murine Bank, 494. 
 V. MoColl, 754. 
 
xlvi 
 
 TABLE OF CASES. 
 
 Merchants' Bank w. State Bant, 331, 337, 
 
 494. 
 Merchants' Bank of Canada v. Livingston, 
 
 179. 
 Merchants' Co., re, 613. 
 Merchants' & Tradesmen's Assurance Soc, 
 
 803. 
 Merchants' Nat. Bank v. McNaughton, 4. 
 
 V. Mears, 749. 
 Meredith, ex parte, 274, 636. 
 Merrick v. Burlington, <fec. P. R. Co., 463, 
 621. 
 ■u. Peru Coal Co., 479. 
 V. Van Santvoord, 4, 7, 445. 
 Merrill v. Plainfield, 284. 
 Merrills v. Tariff Mfg. Co., 366. 
 Merriman v. Magiveney, 621. 
 Merritt v. Farris, 440. 
 
 V. Lambert, 272. 
 Mersey Docks & Harhor Trustees v. Gibbs, 
 
 19,61,332. 
 Messenger v. Penn. R. R. Co., 436. 
 Metcalf V. Hetherington, 397. 
 Methodist Chapel Co. v. Herrick, 451. 
 Methodist Episcopal Ch. v. Pickett, 521. 
 Metropolitan Bank v. Godfrey, 13. 
 Metropolitan Bd. of Works v. McCarthy, 
 
 76. 
 Metropolitan, <Sto. Bank, ex parte, 257. 
 Metropolitan City Ey. Co. v. Chicago Ry. 
 
 Co., 377. 
 Metropolitan Saloon Omnibus Co. v. Haw- 
 kins, 358. 
 Meux's Executors' Case, 603. 
 Mexican, <fec. Co., re, 176. 
 Meyer v. Amiilon, 764. , 
 
 1,. City of Muscatine, 269, 272. 
 V. Johnston, 237, 238. 
 Miami Coal Co. v. Wigton, 381. 
 Michel's Tiusts, re, 60. 
 Michigan Bank v. Gardner, 64. 
 
 V. N.Y.&N.H. R.R.Co., 
 167. 
 Michigan Central R.R. Co. v. Anderson,76. 
 V. Gougar, 604. 
 Michigan, <fec. R. R. Co. o. Burrows, 437. 
 
 ■V. McUonough,437. 
 Middlesex Husbandmen v. Davis, 39, 438, 
 
 622. 
 Middlesex R. R. Co. v. Boston, &c. R. R. 
 
 Co., 124. 
 Middlesex Turnpike Co. i). Locke, 78. 
 V. Swan, 78. 
 Middletown v, McCorraack, 3. 
 Midland Ry.Co. v. Amberfjate, <Sto.Ry.Co., 
 413,414. 
 V. Gordon, 174, 573. 
 V. Gi eat Western Ry. Co., 
 
 80,413,428,429. 
 V. London ifeN.VV. Ry.Co., 
 422. 
 Miles V. Bough, 544. 
 
 Milford Turnpike Co. v. Brush, 3. 
 Milhau V. Sharp, 698. 
 Mill V. Hawker, 255, 364, 766. 
 Mill-dam Foundry v. Hovey, 465,468. 
 Milledge ».. Boston Iron Co., 3; 
 Miller v. Chance, 224. 
 
 V. Craig, 375, 398. 
 
 V. Cummings, 679. 
 
 V. Ewer, 444. 
 
 )i. Gable, 54. 
 
 V. Grand Junction R. R. Co., 270. 
 
 V. Illinois Central R. R. Co., 201, 
 
 604. 
 </. Lancaster, 637, 639. 
 „. Porter, 1 1, 60. 
 ■u. Pace, 270. 
 ■o. E. & W. R. E. Co., 242, 269, 271, 
 
 489. 
 V. Second Building Ass'n, 151. 
 ■I). State, 97, 98. 
 V. Town of Berlin, 532. 
 V. Wildcat, &c. Co., 162. 
 Miller's Case, 622, 
 Milliken «. Steiner, 523. 
 Milliman t). N, T. &c. R. R. Co., 437. 
 Mills V. Jefferson, 270. 
 V. Mills, 319. 
 
 II. N. Ry. of Buenos Ayres, 196, 205, 
 644,649,651,694. 
 Milnor v. N. Y. & N. H. R. E. Co., 6, 90. 
 Milwaukee, <fec. R. E, Co. v. Arms, 360. 
 V. Field, 129. 
 V. Finney,S55,359. 
 Miners' Bank v. U. S., 98, 788. 
 Miners' Ditch Co. o. Zellerbach, 14, 40, 
 
 44, 717, 748. 
 Minnesota Co. v. St. Paul Co., 241. 
 Minor v. Mechanics' Bank, 129, 154, 155, 
 
 494,622. 
 Minot V. Curtis, 3, 276. " 
 
 V. Paine, 199, 203. 
 V. Phila. R. R. Co., 376. 
 Mississippi, &c. R. R. Co. v. Cross, 162, 
 
 336. 
 V. Gaster, 519. 
 V. Ward, 699. 
 Mitchell V. Copper Mining Co., 185, 519. 
 V. Deeds, 22, 638. 
 ■u. Wiuslow, 243. 
 V. Rome R. R. Co., 89, 504. 
 Mixer's Case, 340. 
 Mobile, &c. R. R. Co. v. Franks, 29. 
 
 V. State, 791, 792. 
 V. Talman, 227. 
 Mohawk & H. R. R. Co. v. Niles, 424. 
 Mohawk <& H. R. R. Co., re, 5%Z, 634. 
 Mohawk Bridge Co. v. Utica & S. R.R. Co., 
 
 62, 699. 
 Monroe v. Douglass, 764. 
 Montgomery, <fec. R. R. Co. v. Boving, 639. 
 Monument Nat. Bank v. Globe Works, 
 263, 717, 73S. 
 
TABLE OF CASES. 
 
 xlvii 
 
 Monys v. Lake, 222. 
 Moody V. Brighton & 8. C. Ey. Co., 503. 
 ». Corbett, 107,110. 
 V. Wright, 236. 
 
 V. Bank of Commerce, 16, 177. 
 V. Fitchhurg R. II. Co., 352. 
 V. Grand River Nav. Co., 388. 
 V. Hammond, 438. 
 V. Veazie, 686. 
 V. Whitcomb, 791. 
 MoOre and De la Torre's Case, 130. 
 Moore's Heirs v. Moore's Devisees, 11. 
 Moorhead v. Little Miami R. R. Co., 393, 
 
 699. 
 Moran v. Commissioners, 269, 272. 
 Morgan v. R. R. Co., 203, 645, 686. 
 
 V. Skiddy, 766. 
 Morrill v. Noyea, 235, 240. 
 Morris v. Cheney, 127. 
 V. Keil, 460. 
 V. St. Paul Ry. Co., 3. 
 Morris & E. R. R. Co. v. Blair, 391. 
 
 V. Central R. R. Co., 
 377,391,393. 
 V. Newark, 377. 
 V. Sussex R.R., 39, 
 306, 739. 
 Morris Canal Co. v. Fisher, 268. 
 V. Lewis, 270. 
 V. Townsend, 13. 
 Morris Run Coal Co. v. Barclay Coal Co., 
 
 426. 
 Morse v. Brainerd, 90. 
 
 V. Switz, 338. 
 Morton's Case, 130. 
 
 Morton Gravel Road Co. v. Wysong, 15. 
 Moseley Green, &c. Coal Co., re, 255. 
 Moses V. OscoU Banlc, 146. 
 Moss V. Averell, 68, 72, 86, 254, 255, 272, 
 656. 
 V. Harpeth Academy, 213. 
 II. Livingston, 754. 
 V. Oakley, 223, 254. 
 V. Rossie Lead Mining Co., 254, 456, 
 
 556, 734. 
 V. Steam Gondola Co., 133. 
 V. Syers', 170. 
 Moss's Appeal, 199. 
 Mott V. Hicks, 223, 254, 754. 
 
 V. U. S. Trust Co., 456, 614, 532. 
 Moultrie County v. Savings Bank, 532. 
 Mount Holly T. Co. v. Ferree, 177, 179. 
 Mower v. Leicester. 367. 
 Mowrey v. Indianapolis. <fco. R. E. Co., 99, 
 Mozley v. Alston, 278, 664, 666, 667, 668, 
 635, 663. 
 682, 697. 
 Muhleman v. Nat. Ins. Co., 503. 
 Mulholland v. Belfast Corporation, 69. 
 Mnller v. Dows, 641. 
 Mullock V. Jenkins, 67, 68. 
 Mumford v. Am. L. Ins. Co., 446. 
 
 Mumford v. Hawkins, 449. 
 
 Mumma v. Potomac Co., 787, 791, 793, 
 
 803. 
 Munn V. Commission Co., 223, 254. 
 
 V. Illinois, 96. 
 Munns v. Isle of Wight Ry. Co., 172, 234. 
 Munt V. Shrewsbury & Chester Ry. Co., 
 
 308. 
 Munt's Caie, 184, 496. 
 Murch V. Concord R. R. Co., 411. 
 Murdook v. Phillips' Academy, 49. 
 Murdock's Appeal, 49. 
 Mm ford v. Farmers' Bank, 263. 
 Murphey v. Hank of the Stale, 23. 
 Murphy v. Louisville, 742. 
 Murray v. Bush, 136, 521, 526, 662. 
 V. East India Co., 254. 
 V. Lardner, 269. 
 V. Stevens, 180, 681. 
 V. Vanderbilt,479. 
 Muscatine Turn Veie'n v. Fnnck, 793. 
 Musser v. Johnson, 460. 
 Mussey v. Eagle Bank, 494. 
 Mussina v. GoMthwaite, 478,486,645,671. 
 Mutual Ins. Co. v. Chase, 492. 
 
 II. McKelway, 738. 
 Mutual Life & Fire Afs. v. Mclntyre, 56. 
 Mutual Savings Bank v. Meriden Agency 
 
 Co., 91. 
 Myatt, V. St. Helen's, <fec. Ry. Co., 237. 
 Myers v. Dorr, 6. 
 
 ■0. Manhattan Bank, 4. 
 V. York & C. R. R. Co., 268, 270. ' 
 Mygatt V. City of Green Bay, 532. 
 
 Najac V. Boston & L. R. R. Co., 90. 
 Narragansett Bk. v. Atlantic Silk Co., 452, 
 
 520. 
 Nashua Lock Co. „. Worcester, <fec. R. R. 
 
 Co., 90. 
 Nashville Bank v. Cowardin, 381. 
 
 V. Petway, 795. 
 Nassau Phosphate Co.,re, 158. 
 Natal Investment Co., re, 260, 265, 266, 
 
 268, 800. 
 Nafchez v. Mallery, 742. 
 Nathan v. Whitlook, 181, 793. 
 National Bank v. Colby, 796. 
 
 ■d. Matthews, 729,731,747, 
 
 749. 
 V. Norton, 601. 
 National Bank, in re, 205, 211. 
 National Condensed Milk Co. v. Branden- 
 
 burgh, 7. 
 National Exch. Bank v. H. P. & F. R. R. 
 
 Co., 269, 270,271. 
 National Exchange Co. ».Drew,39,334,503. 
 National Financial Co., re, 94, 140, 286. 
 National Funds Ass. Co., re, 623. 
 National Manure Co. v. Donald, 31, 78, 101. 
 National Park Bank.t). Gunst, 4. 
 V. Nichols, 6. 
 
xlviii 
 
 TABLE OF CASES. 
 
 National Patent Stoam Fuel Co., re, 170, 
 334, 721. 
 
 National Pemberton Bank v. Porter, 36, 
 733, 749. 
 
 National Permanent Benefit Building So- 
 ciety, 87, 220, 717, 799. 
 
 National Pi-OTident Lil'e Aas. Co., 621, 622. 
 
 National Provincial M. Ins. Co., re, 96, 681. 
 
 National Security Bank v. Cushman, 501. 
 
 National Trust Co. v. Murphy, 14. 
 
 Native Iron Ore Co., re, 246, 611. 
 
 Natusch v. Irving, 79, 671. 
 
 Naugatuck R. R. Co. v. Waterbury Button 
 Co., 411. 
 
 Navigation Co. v. Com'ra of Newbern, 146. 
 
 Ntiylor V. South Devon Ry. Co., 187. 
 
 Nazro v. Merchants' Mut. Ins. Co., 678. 
 
 Neale v. Neale, 463. 
 ^. Turton, 255. 
 
 Neate v. Denman, 665. 
 
 Neil V. Board of Trustees, 23. 
 
 Nelson v. Gushing, 51. 
 
 V. Eaton, 213, 224. 
 
 V. Iowa Eastern R. R. Co., 246. 
 
 ■V. Luling, 766. 
 
 ■V. Milfofd, 280, 284, 
 
 ■«. Vt. & Canada R. R. Co., 398. 
 
 Nelson's Case, 131. 
 
 New Albany v. Burke, 151, 182. 
 
 New Albany <fe S.R.R.Co. ».Field3,129,155. 
 
 New Albany PI. R. Co. v. Smith, 270. 
 
 New Albany R. R. Co. v. MeCormick, 619. 
 ' ' 11. Pickens, 153. 
 
 New Athens v. Thomas, 448. 
 
 New Boston v. Dunbarton, 22. 
 
 New Brunswick, <fec, Ry. Co. v. Conybeare, 
 
 334, 341. 
 V. Muggeridge, 133, 346. 
 
 New Central Coal Co. v. George's Creek, 
 (fee. Co., 373. 
 
 New Clydach Sheet &, Bar Iron Co., )'e,248. 
 
 New England Car Spring Co. u. Bait. &, 
 0. R. R. Co., 246, 500. 
 
 New England Express Co. v. M. C. R. E. 
 Co., 433, 434. 
 
 New England, <fec. Ins. Co. v, Robiuson,'65. 
 
 New England Ins, Co. i>. De Wolf, 521. 
 V. Schlettler, 504. 
 
 New Hampshire Central R. R. Co. tr. John- 
 son, 154. 
 
 New Haven v. N, H. Water Co., 97. 
 
 New Haven, <fec. R. B. Co. v. Chapman, 78. 
 
 New Haven, <fec. Co. v. Ilayden, 306, 495. 
 
 New Hope & Del. Br. Co. v. Phenix Bank, 
 604, 564. 
 
 New Jersey 'n. Yard, 97. 
 
 New Jersey FranHinite Co. v. Ames, 644. 
 
 New Jersey Midland Ry. Co. v. Strait, 638. 
 
 New Jersey S. R. 14. Co. v. Com'rs, 377, 788. 
 
 New Jersey Steam Nav. Co. v. Merchants' 
 Bank, 434. 
 
 New London v. Brainard, 707. 
 
 New Orleans, <fcc. R. R. Co, v. Bailey, 359. 
 </. Burke, 360, 
 u. Harris, 79, 126. 
 V. New Orleans. 381. 
 New Sombrero Phosphate Co. v. Erlan- 
 
 ger, 597. 
 New York, <feo. Canal Co. v. Fulton Bank, 
 
 423, 42 1. 
 New York, &c. R. E. Co. v. Hunt, 155. 
 
 V. Ketchum, 569, 570. 
 V. New York, 453. 
 V. Pixley, 461. 
 V. Schuyler, 159, 177, 
 179,331,337. 
 New York Bridge Co., in re, 22, 788. 
 New York Central R. R. Co., Matter o^ 
 
 373 
 N. Y., <fe'c. R. E. Co., in re, 62, 380, 392. 
 N. Y., (fee. R. R. Co. V. Boston, &o, R. R. 
 
 Co., 376, 377. 
 N. Y,, <fcc. E. R. Co. V. Forty-second St. 
 
 R. R. Co .377. 
 N. Y. C. R. B. Co. V. Metro. Gas-light Co., 
 377, 380. 
 V. People, 407. 
 N. Y. Dry Dock Co. v. Hicks, 13. 
 N. Y. Elevated R. R. Co., in re, 22, 788. 
 N. Y. Exchange Co. v. DeWolf, 91, 152, 
 
 336. 
 N. Y. Fireman's Ins. Co. v. Ely, 29, 784. 
 
 v: Sturges, 29, 38. 
 N.Y.Floating Derrick Co.»'.N.J.Oil Co.,445. 
 N. Y. Marbled Iron Works v. Smith, 791. 
 N. Y. Trust & Loan Co. v. Helmer, 738. 
 Neuse River Nav. Co. v. Com'rs, 144. 
 Newark PI. R. Co. v. Elmer, 76, 702. 
 Newberry v. Garland, 838. 
 Newburg Petroleum Co. v. Weare, 6, 743. 
 Newburgh Turnpike Co. v. Miller, 871. 
 NewburyportT.Co. (/.Eastern R.R.Co.,376. 
 Newby v. Oregon R. R, Co., 8, 645, 668. 
 
 V. Van Oppen, Ac. Mfg. Co., 4. 
 Newcastle, <fec. E. It. Co. v. P. <fc I. R. R. 
 
 Co., 376, 378, 392. 
 Newcastle, <fec. T. Co. v. Bell, 623. 
 Newcastle Marine Ins. Co., re, 611, 614. 
 Newell i>. Great Western E. R. Co., 7. 
 Newhall v. Galena, Ac. Union R. E. Co., 
 
 663, 664. 
 Newman v. St. Louis, <fec. R. E. Co., 360. 
 Newport Marsh Trustees, ex parte, 22. 
 Newport Mechanics' Man. Co. ».Starbird,3. 
 Newry, Ac. Ey. Co. v. Moss, 141. 
 Newry <fe E. Ry. Co. v. Edmunds, 176. 
 Newton, <fec. Co. «. White, 795. 
 New Zealand Banking Corp., 163,488, 647. 
 Nicholas v. Oliver, 763. 
 Nichols V. Frothingham, 758. 
 
 V. Som. & Ken, R. R. Co., 390. 
 Nicholson v. Bradford Union, 451. 
 Nicolay v. St. Clair Co,, 632. 
 Nicoll V. N. Y. A Erie R. R. Co., 100. 
 
TABLE OF CASE3. 
 
 xlix 
 
 Nicoll's Case, 186, 330, 334, 358, 509. 
 Nimmons v. Tappan, 796. 
 Nixon V. Brownlonr, 133, 673. 
 No. 3, Midland, &c. Society, re, 56. 
 Nolfin V. Arabella Gold Mininp; Co., 188. 
 Noll V. Dubuque, B. & M. R. E. Co., 398. 
 Norman v. Mituhell, 133. 
 Norris v. Mayor, 791. 
 Northampton Bank v. Pepoon, 493. 
 North American T. & B. Co. 'a Cases, 736. 
 North British Ins. Co. v. llallett, 50.^. 
 Nortli Carolina R. R. Co. v. Leach, 1 62, 336. 
 North-Eastern Ry. Co. v. Crossland, 115. 
 V. McMichael, 520. 
 North Hallenbeagle Mining Co., 520. 
 Norlh Hempstead v. Hempstead, 23. 
 North Kent ExtensiDn Ry. Co., re, 801. 
 North Mlssouii R. R. Co. «. Alters, 7. 
 V. Gott, 394. 
 V. Lackland, 392. 
 North of England Juint-Stock Banking 
 
 Co., re, 340. 
 North I'enn. R. R. Co. v. Adams, 270, 271. 
 North River Bank v. Aymar, 337, 471, 50'2. 
 North StiiflFord Steel, Ac. Co. v. Ward, 157. 
 North Staffordsliire Ry. Co. v. Peek, 462. 
 Northern Cent. R. R. Co. v. Bastian, 452. 
 Northern R. R. Co. v. C. & C. R. R. Co., 
 372, 377. 
 V. Millei-, 99, 153. 
 Northern Transp. Co. v. Chicago, 13. 
 Northey v. Johnson, 176. 
 Northrup v. Miss. Ina. Co., 604. 
 Northumberland Biink «. Eyer, 3. 
 Northwestern Insurance Co. n. Overholt, 
 
 6, 6, 13, 532. 
 Northwestern R. R. Co. i/. Chicago, Ac, 
 
 R. R. Co., 642. 
 North Western Ry. Co. v. M'Michael. 151. 
 Nortliweit'n Union Packet Co. ».Shaw,745. 
 Northwicko, ex parte, 574. 
 Norton v. Hodges, 276. 
 Norwegian Titanic Iron Co., 69. 
 Norwich & LowestaftNav. !).Theobald,155. 
 Norwich Yarn Co., re, 219, 521, 725, 728. 
 Noyes v. l.oring. 757. 
 
 V. Rutland & B. R. R. Co., 90, 732. 
 Nugent V. Cincinnati, <fec. R. R. Co., 336. 
 
 V. Supervisors, 134, 632, 634, 635,637. 
 Nuneaton Local Bd. v. General Sewage 
 
 Co., 700. 
 
 Oakes v. Turquand. 131, 158, 341, 349, 
 
 6S1, 781. 
 Oakland R. E. Co. tf. Oakland & B. E. R. 
 
 Co., 71. 
 Oberlander v. Speiss, 764. 
 O'Brien v. Chic. Ac. R. R. Co., 143. 
 Occidental Ins. Co. v. Gauzhorn, 621. 
 Occum Co. V. Sprague Co., 653. 
 Odell »;. Odell, 11. 
 Ogden V. Murray, 478, 484. 
 
 D 
 
 Ogden V. Raymond, 757, 764. 
 Ogdensburgh.Ao. R.E. Co. v. Frost, 153. 
 V. Piatt, 90. 
 V. V. A C. R. R. 
 Co., 65, 411. 
 V. Wooley, 146. 
 Ogilvie V. Currie, 131. 
 V. Knox, 691. 
 I). Knox Ins. Co., 142, 336. 
 O'Hare v. Second Nat. Bank of Titusville, 
 
 585, 749. 
 Ohio V. Cleveland, Ac. R. R. Co., 198, 203. 
 Ohio A Miss. E. R. Co. v. Dunbar, 398. 
 
 V. Ind. A Cin.R.R. 
 
 Co., 411. 
 V. McPherson,445, 
 
 523. 
 V. Wheeler, 4, B, 
 6, 639. 
 Ohio, L A I. R. R. Co. v. Cramer, 145. 
 Ohio Ins. Co. «. Nunnemacher, 159. 
 Ohio Life Ins. Co. v. Merchants' Ins. & 
 
 T. Co., 742. 
 Ohrby v. Ryde Commissioners, 61. 
 Oil Creek Ac. R. R. Co. t>. Penn. Trans. 
 
 Co., 740. 
 Olcott V. Supervisors, 373. 
 
 T,. Tioga R. R. Co., 223, 264, 255, 
 424, 479, 493, 544, 663, 754. 
 Old Colony i{. R. Co. v. Evans, 462. 
 Oldtown, Ac. R. R. Co. v. Veazie, 134, 154. 
 Oliver v. M'.'raphis, Ac. R. R. Co., 97. 
 V. Mutual Ins. Co., 764. 
 v: North Pao. Transp. Co., 363. 
 Oliver, Lee A Co.'s Bank, in re, 97. 
 Olmstead v. Camp, 374, 375. 
 O'Neal V. School Com'rs, 20. 
 Oneida Bank v. Ontario Bank, 736. 
 Onion's Case, 133. 
 
 Ontario Salt Co.i>. Merchants' Salt Co.,425. 
 Opdyke v. Pacific R. R. Co., 253. 
 Oregon Cascade Co. v. Buily, 378, 381. 
 Oregon, Ac. R. R. Co. o. Scoggin, 127, 
 
 175, 336. 
 Oriental Commercial Bank, ex parte, 94, 
 
 140,286,610, 
 Orme v. Merchants' Nat. Bank, 749. 
 Ormerod's Case, 176. 
 Ormsbee v. Davis, 661. 
 Ormeby v. Vermont Copper Mining Co., 
 
 446, 566, 788. 
 Ornamental Pyrographic Co. v. Brown, 
 
 154, 166. 
 Oroville A V.R.R.Co. v. PlumasCo., 22,224. 
 Orr V. Bank of U. S., 362. 
 
 V. Glasgow, Ac. Ry. Co., 652. 
 V. Laooy, 743. 
 Osborn w. Bank of IT. S., 451. 
 
 V. Brooklyn R. R. Co., 698. 
 Osgood V. King, 142, .143, 182. 
 V. Laytin, 206. 
 V. Manhattan Co., 603. 
 
TABLE OF CASES. 
 
 Osgood V. Nelson, 491, 544. 
 
 V. Ogden, 662. 
 Ossipee Mfg. Co. v. Canney, 520, 535, 731. 
 Ottawa V. People, 407. 
 Ottawa, &c. R. R. Co. v. Blaclc, 134. 
 Otter V. Brevoort Petroleum Co., 144. 
 Ould V. Washington Hospital, 60. 
 Overend, Gurney & Co., ez parte, 255,485, 
 
 513, 520, 621, 661. 
 Overmeyer v. William?, 68. 
 Overseers, m re, 20. 
 Overseers of Poor v. Sears, 17. 
 Owen V. Whitaker, 670. 
 Owen, re, 55. 
 Owings V. Hull, 764. 
 
 V. Speed, 451. 
 Owsley V. Mont. & W.Pt.R.R.Co., 357,361. 
 Oxford Iron Co. v. Spradley, 39, 213, 223, 
 
 254. 
 
 Pacific Bank v. De Roe, 3. 
 Pacific R. E. Co. v. Cass Co., 246. 
 V. Hughes, 79. 
 V. Renshaw, 79. 
 I. Beely, 68, 480. 
 V. Thomas, 495, 556. 
 Packer v. Sunbury & Erie R. R. Co., 62. 
 Page V. Heineberg, 11, 13. 
 Pahlin's Case. 161, 186, 530. 
 Pahquioque B'k v. Bethel B'k, 796. 
 Paice V. Walker, 750, 751, 752. 
 Paine v. Guardians of Strand Union, 451, 
 456. 
 V. Lake Eiie <fe L. R. R. Co., 480, 637. 
 Painter's Case, 187, 190, 498. 
 Pallisteri;.Mavor,<fec.ofGraveBend,59.222. 
 Palmer v. Forbes, 245. 
 
 ■u. Grand Junction Ry., 436. 
 
 o. Lawrence, 153, 456. 
 
 V. Nassau B'k, 480. 
 Panama, <fec. Royal Mail Co., re, 249. 
 Pannell v. Hurley, 769. 
 Pape V. Capital B'k of Topeka, 621. 
 Pare v. Clegg, 66, 56, 722. 
 Paret v. City of Bayonne, 448. 
 Parish v. Wheeler, 224, 249, 456, 735. 
 Parker v. Lewis, 769. 
 
 V. Long Island E. R. Co., 360. 
 
 V. McKenna, 482, 770. 
 
 V. Mason, 199. 
 
 V. May, 702. 
 
 V. Northern, <fec. R. R. Co., 127. 
 
 V. R. R. Co., 98. 
 
 V. liens. & Sar. R. R. Co., 411. 
 
 V. River Dunn Navigation Co.,298. 
 Parrott v. Eyre, 751. 
 Parsons v. Goshen, 284. 
 
 T). Spooner, 699. 
 Partridge v. Albert Life Ass. Co., 345. 
 
 V. Badgers, 213, 223, 254. 
 Paschall v. Whitsett, 787, 793. 
 Passenger Cases, 6. 
 
 Patent File Co., in re, 212, 217, 219, 224, 
 
 230, 637. 
 Patent Paper Mfg. Co., re. 93, 140, 191. 
 Patten v. N. Y. Elevated R. R. Co., 788. 
 V. Northern Cent. R. R. Co., 397. 
 Patterson v. Miss. Boom Co., 375. 
 Patti^on V. Syracuse Nat. Bank, 749. 
 Paul V. Virginia, 6, 6. 
 Pauling V. London, <fcc. Ry. Co., 456. 
 Pawle's Case, 349. 
 Pawlet, Town oiv. Clark, 21. 
 Payne v. Mayor,<S!;c. of Breckon,33,59,222, , 
 !). New South Wales, &c. Co., 556, 
 674, 592. 
 Payson v. Stoever, 159, 566. 
 Peabody v. Flint, 478, 645, 671, 686. 
 Pearce v. Mad. & Ind. R. R. Co., 72, 86, 
 
 272, 423, 503, 682, 730. 
 Pearson, ex parte, 803. 
 Peavy v. Calais R. R. Co., 393. 
 Peck V. N. Y. C. & H. R. R. Ca, 427. 
 Peckham v. Barber, 463. 
 
 V. North Parish of Haverhill,424. 
 Pedell V. Gwynne, 274. 
 Peebles i). Patapsoo Guano Co., 331, 335. 
 Peek V. Gurney, 206, 342, 349, 360. 
 Peel's Case, 131, 158. 
 Pegge V. Lampeter Union, 451. 
 Peik V. Chicago, &c. Ry. Co., 96, 641 . 
 Pellatt's Case, 131, 143, 146, 498. 
 Pemigewasset Bank v. Rogers, 503. 
 Pendergast v. Bank of Stockton, 15. 
 Pendleton Co. v. Amy, 269, 632. 
 Peninsular Co. v. Fleming, 162. 
 Peninsular R. R. Co. v. Thorp, 632, 638, 
 Pennell v. Deffell, 769.. 
 Penney, ex parte, 178. 
 Penniman v. Briggs, 791. 
 Pennock v. Coe, 62, 224, 235, 240, 241. 
 Pennsylvania I). Wheeling, <feo., Bridge Co., 
 
 5, 376, 710. 
 Penn. <fec. Can. Co. v. Webb, 79. 
 Penn. etc. Nav. Co. v. Dandridge, 29, 656. 
 
 740. ^ 
 
 Pennsylvania Coal Co. i>. Del. & H. Canal 
 
 Co., 426. 
 Pennsylvania College Cases, 638. 
 Penn. R. R. Co. d. Canal Com'rs, 23, 62. 
 V. Nat. Ry. Co., 371. 
 V. N.Y. (fee. R. R. Co., 379, 
 
 891. 
 V. Vandiver, 362. 
 Penn. R. R. Co.'s Appeal, 503. 
 Penny v. South-Eastern RailwayCo., 73,75. 
 Penobscot Boom Corp. -o. Lamson, 64, 
 
 787, 791, 794, 797. 
 Penobscot R. R. Co. v. Dnmmer, 164, 156, 
 174 593 
 V. Dunn,'l29,489,623. 
 V. White,129,154,165. 
 Penrose v. Martyr, 274. 
 Pensacola Telegraph Co. v. W. U.Tel. Co.,6. 
 
TABLE OF CASES. 
 
 People V. Alb. & Sus. E. R. Co., 534, 670. 
 V. Alb. & Vt. R. R. Co., 71, 394, 
 
 403, 40.1, 407, 709,791 
 I). Albany Hospital, 670. 
 V. Assessors, 2. 
 V. Bank of Hudson, 787, 791. 
 V. Batchelor, 438, 440, 441, 442. 
 V. Ben. Soc, 46. 
 o. Bd. of Trade, 46. 
 V. Booth, 707. 
 
 V. Boston & A. R. R. Co., 96, 432. 
 V. Bristol T. R. Co., 789. 
 V. Canal Board, 289, 297. 
 V. Chicago, &G. R. R. Co., 405, 436. 
 V. Chicago Bd. of Trade, 45. 
 V. College of California, 791. 
 V. Com'rs, 96, 197. 
 V. Cook, 634. 
 V. Corp. of Albany, 367. 
 II. Crockett, 15. 
 ■u. Cummings, 679. 
 V. Dispen. & Hosp. Soc, 787. 
 V. Dutchess & C. R. R. Co., 407. 
 V. Fairbury, 534. 
 V. Farnham, 22. 
 V. Fire Underwriters, 45. 
 . V. Geneva College, 3. 
 
 V. Goshen Turnpike Road, 367. 
 
 V. Green, 405. 
 
 V. Halsey, 407. 
 
 </. Hills, 670. 
 
 V. Ingersoll, 707. 
 
 V. Kerr, 378,384,713. 
 
 V. Kingston T. Co., 788. 
 
 V. Kip, 15. 
 
 V. Lake Shore, &c. R. R. Co., 408. 
 
 V. Lowber, 707. 
 
 •</. Manhattan Co., 406. 787, 788. 
 
 ■0. Mayor of Brooklyn, 378. 
 
 V. Mayor, &c. of New York, 397. 
 
 V, McLean, 3, 4. 
 
 V. Meoh. Aid Soc, 46. 
 
 V. Miner, 707. 
 
 V. Mutual Gas Light Co., 489. 
 
 t'. Nearing, 374. 
 
 «,. N.Y. Com.Ass.,,45. 
 
 ■I). Northern R. R. Co., 789. 
 
 V. Peck, 439, 534. 
 
 V. Potter, 3. 
 
 V. R. R. Co., 707. 
 
 V. Runkle, 523, 534. 
 
 V. Sailors' Snug Harbor, 46, 49. 
 
 V. Salem, 373, 374. 
 
 V. Schermerhorn, 23. 
 
 II. Smith, 372. 
 
 V. Soc. for Prop. Gosp., 787. 
 
 V. St. Francisous Ben. Soc, 46, 46. 
 
 v. St. Stephen's Ch., 46. 
 
 V. State Ins. Co,, 406. 
 
 V. Steele, 54. 
 
 V. Sterling Uk. Co., 540. 
 
 V. Stockton (feVUalia R. R.Co., 146. 
 
 People ?'. Sturtevant, 656, 691. 
 
 V. Superyisors, 195,405,766. 
 V. Thompson, 787,788. 
 V. Troy & Boston R. R. Co., 407. 
 v. Twaddell, 795. 
 V. Tweed, 707. 
 V. Union Ins. Co., 787. 
 V. Utica Ins. Co., 29, 223, 254. 
 V. University Regents, 407. 
 V. Vanderbilt, 709. 
 V. Washington Bank, 789. 
 V. White, 100. 
 
 V. Williamsburg T. Co., 788. 
 People's Bank v. Gridley, 179. 
 People's Ferry Co. v. Balch, 129, 164, 174. 
 People's Ins. Co. v. Westcott, 438,439,442, 
 
 623. 
 Peoria, <fec. E. R. Co. v. Coal Valley Co., 
 638. 
 V. Elting, 153. 
 V, Peoria & S. R. R, 
 
 Co., 378. 
 V. Preston, 99 164. 
 V. Schertz, 384. 
 Percy v. Millaudon, 484, 486, 493, 496. 
 Perin v. Carey, 11, 50. 
 Perkins v. M. K. <fe T. R. R. Co., 360. 
 
 V. N. Y. Central R. R. Co., 335. 
 V. Portland, &c. R. R. Co., 90,731. 
 V. Washington Ins. Co., 452. 
 V Watkins, 742. 
 Perrett's Case, 129, 131, 560, 612, 614. 
 Perrin v. Granger, 185. 
 Perrine v. Ches. <& D. C. Co., 62. 
 Perry v. New Orleans, <fec R. R. Co., 384. 
 V. Simpson Mfg. Cc, 500, 501, 647. 
 Peru Iron Co., exparle, 88. 
 Peruvian Ey. Co. v. Thames, <fec. Ins. Co., 
 
 219,256,256,466,500. 
 Peter v. Kendal, 786. 
 Petersburg v. Metzker, 29. 
 Petersburg. &c. Gas Co., re, 69. 
 Peterson v. Mayor, <fec. of New York, 466, 
 
 459, 546, 550. 
 Peto V. Brighton, &c. Ry. Co., 232. 
 
 V. Hammond, 67. 
 Petre v. Eastern Counties Ry. Co , 679. 
 Pettibone v. La Crosse & M. R. R. Co., 74. 
 Pettigrew v. Chellis, 339. 
 Pettingill v. McGregor, 756. 
 Petty V. Tooker, 53, 54. 
 Phelps V. Farmers, <fec. Bank, 203. 
 
 ii. Maxwell's Cr. Mining Co., 501. 
 V. Townsend, 456. 
 Phil., &c. R. R. Co. V. Cowell, 203. 
 
 V. Derby, 352,363,355. 
 V. Hickman, 129, 146. 
 ■V. Howard, 638. 
 V. Ijarkin, 369. 
 V. Lewis, 210,270,272. 
 V. Maryland, 638. 
 «.Qui3ley,331,389,360. 
 
Hi 
 
 TABLE OF CASES. 
 
 Phil., <fec. E. E. Co. V. AVilliama, 880. 
 V. Wilt, 352,365. 
 V. Woelpper, 236. 
 V. Ycisfir, 76. 
 Phila. & Trenton E. E. Co., in re, 379. 
 Philadelphia Loan Co. v. Towner, 733. 
 Philadelphia Savings Bank Case, ] 5. 
 Philip V. Edinhurgh, iStc. Ey. Co., 394. 
 Phillips V. CoflFee, 465. 
 
 V. Covington Bridge Co., 129,146, 
 
 164, 155. 
 V. Wickham, 15, 79.5. 
 V. Winslow, 227, 246. 
 Phillips' Academy v. Kinsr, 51. 
 Phillipsburgh Bank v. K. R. Co., 641. 
 Phillipson v. Egremont, 9. 
 Philpott V. St, George's Hospital, 50. 
 Phoenix Bessemer Steel Co., re, 803. 
 Phoenix Insurance Co. v. ConiTnonwealth,5. 
 Phoenix Life Ass. Co., re, 85, 7jO. 
 Phoenix Warehousino Co. v. Badger, 127. 
 Phosphate of Lime Co v. Green, 188, 439, 
 
 551,562.563,781. 
 Phospliate of Lime Co.. re, 514. 
 Pickering v. Ilfracnmbe Hy. Co., 235. 
 
 V. Stephenson, 285. 
 Pickering's Claim, 762. 
 Pickett, ex parte, 289. 
 Piementa] v. Saa Francisco, 748. 
 Pierce v. Emery. 124, 224, 236, 237, 242. 
 1). Jersey Water-works Co., 158. 
 «. Milwaukee, Ac, E. R. Co., 236, 
 
 237. 
 V. Partridge, 2. 
 Pike V. Middleton, 284. 
 Pike, ex parte, 620. 
 Pilbrow V. Pilbrow's Atmospheric Ey. Co., 
 
 276, 691. 
 Pilgrim v. Southampton & D. Ey. Co., 383. 
 Pim )'. Muniiipal Council of Ontario, 451. 
 Pingrey v. Washburn, 299, 572. 
 Pinnel's Case, 603. 
 Piscatnnqua Bridge v. N. H. Bridge, 372, 
 
 875. 
 Piscatauqua Ferry Co. v. Jones, 162, 336. 
 Pitcher v. Hennessy, 764. 
 Piltsburgh, Ac. E. E. Co. v. Alleghany Co., 
 173, 199. 
 V. Biggftr, 129. 
 V. Hays, 437. 
 V. Kain, 398. 
 ;,-. Morton, 437. 
 V. Sln.=aer, 359. 
 v. Stewart, 129, 
 
 145. 
 
 V. Vandyne, 437. 
 
 V. Woocli'ow,129. 
 
 V. Woolley, 601. 
 
 Piltsburgh L. <fc C. Works v. State Xat. 
 
 Bank of Keokuk, 749. 
 Planet f'e-iefit Society, 801. 
 Planters' Bank v. Leavens, 178. 
 
 Planters' Bank v. Sharp, 496, 546. 
 Piatt V. Archer, 795. 
 
 V. Birmingham Axle Co., 601. 
 Platteville v. Galena, &o. E. E. Co., 71. 
 Plitt V. C.x, 100. 
 Plumstead Bd. of Works v. British Land 
 
 Co., 104. 
 Plymouth v. Jackson, 51. 
 Plymouth E. E. Co. v. Colwell, 246. 
 Polar Star Lodge v. Polar Star Lodge, 
 
 480. 791, 792. 
 Polk «. Plummer, 20. 
 Police Jury v. Britton, 264, 272, 532. 
 Pollard V. Maddox, 237. 
 PoUeys V. Ocean Ins. Co., 503. 
 Polly V. Sar. & Wash. E. E. Co., 73. 
 Pomeroy v. Bank, 793. 
 
 V. New York, &c. E. E. Co., 6. 
 V. Wells, 20. 
 Pond V. Vermont Valley E. E. Co., 646. 
 Pondville Co. v. Clark, 796. 
 Pontchartrain E. H. Co. v. Paulding, 487. 
 Pooley Hall Colliery Co., re, 221, 227, 537. 
 Port V. Eussell, 478. 
 Port Clinton E. E. Co. ». Cleveland & T. 
 
 E. E. Co., 407. 
 Port of London, &c, Co., exparte, 719. 
 Port Eoyal E. E. Co. v. Hammond, 7. 
 Porter v. Androscoggin, <4c. E. E. Co., 465, 
 466. 
 V. Nek or vis, 276. 
 Portland Dry Dock,<&c.Co. v. Portland,791. 
 Portland & K. E. E. Co. v. Kennebec <fe 
 
 P. R. E. Co., 224, 237. 
 Potter V. Bank of Ithaca, 3. 
 V. Thornton, 11, 14. 
 Potteries, &(.\ & North Wales Ey. Co., re, 
 
 172, 234 
 Pouglikeepsie, &o. Plankroiid Co ii. Giif- 
 
 fin, 78, 175. . 
 
 Powell V. Newburg, 452. 
 
 V. N. Mo. R. E. Co., 632, 638. 
 Powers V. Skinner, 318, 319. 
 Powis V. BuUer, 135. 
 
 V. Harding, 519. 
 Pr.itt V. Eaton, 'J38. 
 
 V. Pratt, 86, 200, 202. 
 V. Swanton, 466. 
 V. Taunton Copper Co., 180. 
 Pratt's Case, 623. 
 
 Preachers' Aid Society v. Eich, 50. 
 Prentice v. London. 58. 
 Presbyterian Church v. City of N. T., 167. 
 Presbyteiian Congregation v. Johnston, 
 
 52, 51. 
 President, etc. v. Trenton Bridge Co., 789. 
 Pres., iStc. of Hd. Hospital v. Foreman, 740. 
 Preston v. Grand Coll. Dock Co., 151, 186, 
 .679. 
 V. Liverpool, <fee. Ey. C'-., 31R, .';20, 
 ' 821, 325, 326, 576, 580, 585. 
 Preston & Henry, exparte, 132. 
 
TABLE OF CASES. 
 
 Hii 
 
 Price V. Grand Rapids, &c. E. R. Co., 543. 
 
 Price & Brown's Case, 93, 14U. 
 
 Priestly v. Fernie, 751. 
 
 Prince v. Prince, 465. 
 
 Prince of Wales Life Ass. Co. v. Harding, 
 
 616, 521. 
 Princess of Eeuss v. Bos, 158, 627, 801. 
 Pritchard's Case, 147, 149. 
 Professional, &c. Benefit Building Soc, re, 
 
 57,801. 
 Proprietors v. Towne, 7S. 
 Proprietors of Baptist Meeting House v. 
 
 Webb, 795. 
 Proprietors of Bridges v. Hoboken Land 
 
 Co., 77. 
 Proprietors of Locts & Canals v. Nashua, 
 
 <fec. R. R. Co., 106. 379, 380. 
 Prop, of Newburyport Bridge a. Story, 154. 
 Prospect Park, <fcc. R. R. Co., re. 632. 
 Protzman v. Indianap., 4c. R. R. Co., 381. 
 Proud V. Bates, 114. 
 Prouty V. M. S. & N. I. R. E. Co., 165, 168, 
 
 638. 
 Providence Bank v. Billings. 62. 
 Prudden v. Morris & E. E. K. Co., 420. 
 Pruitta. R. R. Co., 436. 
 Pudsey Coal Gas Co. i;. Corp. of Bradford, 
 
 695, 704. 
 Pngh & Sharman's Case, 140, 142. 
 Pulford V. Fire Department, 1 5. 
 Pullan V. Cincinnati, <fec. R. E. Co., 125, 
 
 228, 237, 241. 
 Pullman v. Upton, 141. 
 Pullman Southern Car Co. v. Gaines, 5. 
 Pumpelly v. Green Bay Co., 378, 383. 
 
 V. Phelps, 763. 
 Purdey's Case, 130. 
 Purnell v. Wolverhampton New W'works 
 
 Co., 624. 
 Putnam v. New Albany, 142, 182. 
 V. Sweet, 686. 
 
 Queen v. Eastern Archipelago Co., 790. 
 Queen's Benefit Building Society, 801. 
 Quimby v. Vermont Central R. E. Co., 100. 
 Quincy Coal Co, ". Hood, 501. 
 Quincy R. R. Bridge «. Adams Co., 4, 641. 
 Quiner v. Marblahead Ins. Co., 177. 
 
 Racine, &c. R.R.Co. v. Farmers' L.<feT. Co., 
 
 638, 640. 
 Racine Co. Bank v. Ayres, 130. 
 Eadoliffe v. Mayor, 74. 
 Eahm v. Bridge Manufactory, 253. 
 Eail Road v. Seeley, 29. 
 Rail Road Com'rs. v. U. P.cfe O. C. E.R.Co., 
 
 4n6,432. 
 Rail Road Co. ,,. Georgia, 632, 638. 
 
 V. Harris, 4, 6, 639. 
 
 V. Hecht, 97. 
 
 V. Howard, 253, 730. 
 
 V: James, 241. 
 
 Eail Road Co. v. Kenney, 376. 
 V. Kip, 372, 373. 
 V. Letson, 4, 6. 
 I'. Maine, 97, 632, 638. 
 V. Orr, 644. 
 V. Richmond, 96. 
 V. RoJrigues, 336. 
 V. Transportation Co., 90. 
 V. Vance, 4, 641. 
 V. Winans, 398. 
 Railway Co. v. AUerton, 158, 159, 169, 469, 
 496, 
 V. McCarthy, 39, 90, 730. 
 V. Moore, 437. 
 V. Whitim, 6, 639. 
 Railway r. Railway, 376. 
 Ramosotti v. Browning, 505. 
 Ramsden v. Boston & A. E. R. Co , SB2. 
 
 V. Dyson, 656. 
 Ramsey v. Erie Ey. Co., 485, 654. 
 
 V. Gould, 486. 
 Ranee's Case, 151, 195, 203, 205. 
 Rand v. Hubbell, 199. 
 Randall v. Elwell, 243. 
 
 V. Van Vecliten, 452. 
 Randle v. Deane, 450. 
 Randolph v. Larned, 126. 
 Rangeley v. Midland Ry. Co., 110. 
 Ranger v. GreatVVestern Ry.Co., 330, 343. 
 Ransom v. Stonington Bank, 485. 
 Raphael v. Thames Valley Ry. Co., 321, 
 
 391, 396. 
 Raritan & D. B. R. R. Co. v. Del. & Rar. 
 
 Canal Co., 371. 
 Rashdall v. Ford, 761, 762. 
 Rawlings v. Bell, 606. 
 Read v. Frankfort Bank, 793. 
 
 V. Memphis Gas Co., 492. 
 Reading Dispensary, re, 61. 
 Reading R. R. Co. v. Pennsylvania, 6, 376. 
 Eeddall v. Bryan, 374 
 Redmond v. Diikerson, 478, 688. 
 V. Enfield Mfg. Co., 7. 
 V. Hoge, 7. 
 
 II. South Wales Ey. Co., 40. 
 Reed v. Bradley, 466. 
 
 V. Richmond btreet E. R. Co., 127. 
 V. The Evergreens, 687. 
 V. Tobaccp Warehouse Co., 299. 
 Eeese v. Bank of Montgomery, 169. 
 Eeese River Mining Co. «. Smith, 348. 
 Reese River Silver Mining Co., in re, 350, 
 Refd. Prot. Dutch Ch. d. Brown, 176. 
 Regent Canal Iron Works Co., re, 231, 
 lleg. «. Aberdare Canal Co., 113. 
 
 V. Aire & Calden Navigation, 116. 
 
 V. Arnaiid, 787. 
 
 V. Ambergate, &c. Ey. Co., 70, 406. 
 
 u. Beeston, 20. 
 
 t). Birmingham & G. Ry. Co., 366. 
 
 V. Bradford Nav. Co., 386, 3S6. 
 
 V. Bridgewater, 282. 
 
liv 
 
 TABLE OF CASES. 
 
 Eeg. V. Bristol & E. Ey Co., 405, 713. 
 
 •1'. Bristol Dock Co., 405. 
 
 V. Com'rs of Paving, 712. 
 
 !;, Dean & Chapter of Rochester, 48. 
 
 ■V. Dunn 282. 
 
 41. Durham, 22. 
 
 V. EasternConnties Ry. Co., 404, 405, 
 713. 
 
 V. Fisher, 321. \ 
 
 V. Great North of England Ey. Co., 
 366, 367. 
 
 J.. Great Western Ry. Co., 70, 405. 
 
 ■u. Grimshaw, 441. 
 
 ... Lichfield, 312. 
 
 ■u. Local Government Board, 803. 
 
 ■V. London & N. W. Ry. Co., 70. 
 
 V. Longton Gas Co., 366. 
 
 V. Mayor, &c., of Dublin, 312. 
 
 II. Mayor, Ac, of Leeds, 281. 
 
 ■0. .Mayor, <fec., of Liverpool,14, 282, 
 312, 316. 
 
 V. Mayor, &c., of Manchester, 366. 
 
 V. Mayor, <fcc., of Monmouth, 280. 
 
 V. Mayor, Ac, of Sheffield, 283,313. 
 
 V. Mayor, Ac, of Tamworth, 282. 
 
 V. Mayor, cfec, of Wigan, 451. 
 
 V. Paramore, 282. 
 
 V. Poor Law Board, 803. 
 
 V. Poor Law Com'rs, 20. 
 
 V. Presideut, ifec.,of Kxeter, 48, 280. 
 
 V. E. & H. T. Co., 406. 
 
 ii. Richmond, 796. 
 
 «/. ycott, 55, 56. 
 
 V. South Wales Ry. Co., 120. 
 
 V. Stainer, 55. 
 
 1/. Stephens, 353, 366. 
 
 V. Thom.pson, 282. 
 
 V. Town Council of Lichfield, 279, 
 280. 
 
 V. Town Council of Stamford, 280, 
 282. 
 
 J.. United Kingdom Electric Tel. 
 Co., 366. 
 
 V. Vaughan, 385. 
 
 V. Watson, 58. 
 
 V. Wilts, Ac, Canal Co., 244. 
 
 V. Woods and Forests, 60. 
 
 V. York, (fee, Ry. Co., 70. 
 
 V. York & N. M. Ey. Co., 394. 
 
 V. York, N. & B. Ky. Co., 405. 
 Eeidi/. Eaton Co., 206. 
 
 V. N. W. E. R. Co., 370. 
 Eeidpath's Case, 128. 
 Reiser v. William Tell Association, 56. 
 Rendall v. Crystal Palace Co., 648, 790, 
 
 792. 
 Eens. & Sar. E. R. Co. t>. Davis, 62, 68, 88, 
 
 372, 373, 380, 381, 387, 388, 390. 
 Bens. &, Wash. P.E.Co. v. Barton, 1 76, 571. 
 
 V. Wetse], 154. 
 Eeuter v. Electric Tel. Co., 454, 565 
 Revere v. Boston Copper Co., 791, 792. 
 
 Rew V. Pettit, 20. 
 Rex ('. Amery, 786. 
 
 ■V. Attwood, 439, 544. 
 V. Austrey, 20. 
 
 V. Bailiffs, Ac, of Bewdley, 787. 
 V. Bird, 439, 544. 
 V. Bishop of Chester, 713. 
 V. Bishop of Ely, 708. 
 V. Bower, 796. 
 V. Brecknock C. Co., 405. 
 ■0. Chetwynd, 438, 439. 
 V. Corp. of Bedford Level, 523. 
 ■V. Cutback, 169. 
 V. Durham, 439. 
 V. Dursloy, 60. 
 V. Hill, 440. 
 V. Langhorn, 438. 
 V. Leeds, &c., Ry. Co., 115. 
 V. Mayor, &c., of London, 10, 786. 
 V. Morris, 794. 
 V. Parkyns, 544. 
 V. Pasmore, 787, 795. 
 V. Pease, 75, 385, 386, 387. 
 V. Player, 544. 
 V. Ponsonby, 786. 
 
 V. Prop, of Birmingham Canal, 70, 71. 
 V. PuMord, 545. 
 
 V. Severn <fe Wye Ry. Co., 70,405, 713. 
 ■d. St. Catharine's Hall, 47. 
 V. St. John College, 408. 
 Ward, 787. 
 Westwood, 439, 544. 
 Wharton, 14. 
 V. Windham, 369. 
 Rexford v. Kniglit, 100. 
 Eeynolds v. S^ark Co., 65, 68, 126. 
 Ehoner v. First National Bank, 5. 
 Ehos Hall Iron Co., re, 260. 
 Ehymney Ey. Co. ?).Taff Vale Ey.Co., 399. 
 Eice V. R. I. & A. E. R. Co., 79'. 
 Rice's Appeal, 480. 
 Rich V. State Bank, 646. 
 Richard v. Warren Co., 456. 
 Richards v. Chesapeake & 0. R.R. Co.,644. 
 1). Home Ass. Assoc, 128. 
 ■0. Kountze, 749. 
 V. Merrimack, ifecR.E. Co., 224. 
 ■<'. N. H. Ins Co., 478. 
 V. Scarborough Market Col, 392. 
 Eichardson v. Sibley, 124, 224, 237. 
 V. St. John Ins. Co,, 452. 
 V. Vt. &Mas3. E. E. Cc, 164, 
 
 168, 198, 641. 
 V. Williamson, 762. 
 Eiche V. Ashbury Ry. Carriage, Ac, Co., 
 
 36, S9, 40, 81, 2'i2, 488. 
 Richmond v. N. London Ry. Co., 393. 
 Richmond's Case, 187, 190, 497, 498. 
 Richmond and Painter's Cases, 151, 340. 
 Richmond Hill Hotel Co., re, 498. 
 Richmond R. E. Co. c. Louisa E. E. Co., 
 62. 375. 
 
TABLE OF CASES. 
 
 Iv 
 
 Richmond, Ac, R. R,'Co., v. Snead, 264. 
 Richmond Water Works, Ac, Co. v. Vestry 
 
 of Richmond, 429. 
 Rictet V. Metropolitan R. Co., 38S. 
 Ricketts v. Bennett, 216. 
 Riddle v. County of Bedford, B23. 
 Eidgefield, Ac, R. R. Co. o. Brush, 129, 
 
 14.3. 
 Ridgeway v. Farmers' Bank, 213, 468, 
 
 494, BOO. 
 Ridley v. Plymouth, <fec.. Grinding and 
 
 Baking Co., 84, 252, 4T7. 
 Rigby V. Great Western Ry. Co., 86. 
 Rihn V. R. R. Co., 644. 
 Riley «. Rochester, 13. 
 Risby V. Ab. Soc, 456. 
 Risley v. I., B. & W. R. R. Co., 4'71, 4'?8. 
 Rivanna Nav. Co. v. Dawsons, 94. 
 Rives V. Montgomery S. P. R. Co., 336. 
 
 V. P. R. Co., 152. 
 Rivington's Case, 612. 
 Roberts ii. Button, 756. 
 
 ir. Ohio <feM. R. R. Co., 150. 
 Roberts' Case, 129. 
 Robertson v. Bullions, 54. 
 
 V. Rockford, 638. 
 Robie V. Sedgwick, 22. 
 Robins V. Embry, 224. 
 Robins, at, parte, 713. 
 Robinson v. Bealle, 494. 
 
 V. Chartered Bank, 681. 
 V. Gardiner, 98. 
 V. Lewis, 20. 
 
 v.V <fe C. R. R. Co., 129, 155. 
 V. Smith, 485, 645, 67), 675, 
 686. 
 Robinson's Case, 1 28. 
 •Eobaon v. Dodds, 662. 
 Rochdale Canal Co. v. King, 101, 113,394. 
 
 V. UadclifFe, 113. 
 Rochester v. Barnes, 645. 
 Rochester Ins. Co. v. Martin, 746. 
 •Rochester White Lead Co.ti.RocheBter,397. 
 Rock Creek, Township of v. Strong, 622, 
 
 632. 
 Rockford, R. I. &c. R. R. Co. v. Sage, 570. 
 Rock River Bank v. Sherwood, 745. 
 RockviUe, <fec. T. Co.w. Van Kess, 523. 
 Rockwell V. Elkhorn Bank, 213, 223, 254, 
 
 521. 
 Rogers v. Danby Univer. Soc, 2. 
 V. Ingham, 760. 
 
 V. Lafayette Agric. Works, 664. 
 V. Oxford, (fee. Ry. Co., 431, 652. 
 Rogers' Case, 129, 523. 
 Rogers Locomotive W'ks v. Erie Ry. Co., 
 
 406, 435. 
 Rolfe v. Flower, 622. 
 Rollins V. Clay, 125, 489, 791, 795. 
 Rome, (fee. R. R. Co. v. Ontario, <fec. R. R. 
 
 Co. r«, 638. 
 Eomney Marsh ti.Corp. of Trinity House,61. 
 
 Roosevelt v. Brown, 93. 
 
 V. Draper, 707. 
 Root V. Goddard, 272. 
 
 41. Great Western R. R. Co., 90,416. 
 V. Wallace, 272. 
 Rorke v. Thomas, 608. 
 Rosa V. Butterfield, 221. 
 Rose V. City of Bridgeport, 270, 271. 
 V. Truax, 318. 
 V. Turnpike Co., 795. 
 Rosenbach v. Bank, 15. 
 Roshi's Appeal, 53. 
 Ross V. Adams, 13. 
 J). Crockett, 638. 
 V. Estates Investment Co., 346, 348, 
 
 690. 
 V. Lafayette, <Sec. R. R. Co., 150. 
 V. N. Y. (fee. R. K. Co., 361. 
 ■V. Union Pac. Ry. Co., 463. 
 Rothwell V. Humphreys, 216. 
 Rounds V. Delaware, Ac. H. R. Co., 355. 
 
 V. Smith, 337. 
 Rowe V. Granite Bridge Co., 709. 
 Royal Paukof India's Case, 92,93,140,508. 
 Royal British Bank v. Turquand, 216, 219, 
 
 476, 515. 520, 636. 
 Royal British Bank, re, 330, 340, 360, 509, 
 
 525.. 
 Royce v. Allen, 756. 
 Ruck V. Williams, 331. 
 Rugby School, re, 51. 
 Runyan v. Coster, 4, 5, 11. 
 Russian Vyksounsky Iron Works Co. re, 
 
 348. 
 Russelji. Branham, 765. 
 
 «/. Clarke, 688. 
 Russell V. East Anglian Ry. Co., 238. 
 V. Mayor, 398. 
 V. McLellan, 522, 795. 
 V. Wakefield W'works Co., 644,658. 
 Rutland, Ae.R.R.Co.ii. Proctor, 72,86,732. 
 0. Thrall, 159,164, 
 168, 298, 519. 
 Ryan i>. Dunlap, 494. 
 
 V. L., A. c& N. W. R. R. Co., 480, 502. 
 Ryder v. Alton &, S. R. R. Co., 204. 
 V. Redd, 163. 
 
 Sacketts Harbor Bank v. Codd. 735. 
 Sadd V. Maldon, <fec. Ry. Co., 393. 
 Sadler v. Lans;ham, 373. 
 
 V. Lee, "216, 717. 
 Safety Life Deposit Ins. Co. v. Smith, 570. 
 Safford v. Wyckoff. 38, 223, 254, 521. 
 Sage V. Dillard, 99. 
 
 « L. S. 4 M. S. R. R. Co., 641. 
 Sage, Matter of, 4, 408. 
 Sagory v. Dubois, 142, 161, 153. 
 Sahlgreen & Carrall's Case, 128. 
 Sala V. City of New Orleans, 786. 
 Salem Banlc v. Gloucester Bank, 468, 471, 
 472, 473, 508, 546. 
 
iTi 
 
 TABLE OF CASES. 
 
 Salem Mill Dam Co. «. Ropes, 154,156,159, 
 
 671, 593. 
 Salisbury v. Met. By. Co., 197. 
 Salisbury Mills a. Townsend, 190. 
 Salomons v. Lain^, .30,92,648,668,669,678. 
 Sampson v. Bowdoinham Steam Drill Co., 
 
 440, 442, 522, 523. 
 Samuel v. HoUlday, 2, 277, 472, 545, 646, 
 
 648,671, 673,688. 
 Samuels v. Evening Mail Ass. 368, 360. 
 
 V. Express Co., 645, 646. 
 San Antonio v. Lane, 270, 271. 
 
 V. Mebaffy, 730. 
 Sanborn v. Fireman's Ins. Co., 621. 
 Sanders*. Guardians of St. Keot's Union, 
 
 450. 
 Sanderson v. Wliite, 47, 49, 51. 
 
 It. .(Etna Iron & Nail Co., 653. 
 Sanderson's Patents Ass. re, 800. 
 Sandford v. R. R. Co., 434, 66.S, 699. 
 San Diego v.S. D. & L.A.R.R.Co.,480,488. 
 Sands v. Sanders, 519. 
 Ban Francisco, &c.R.B.Co.«. Bell, 476. 
 
 ii.Caldwell,373, 
 Sanger v. Commissioners, 407. 
 
 V. Upton, 142, 520. 
 Sankey Brook Coal Co., re, 234, 235, 499, 
 
 500. 
 Santa Cruz R. R. Co., v. Schwartz, 130. 
 Sargent v. Boston, <fec. R. R. Co., 43.5. 
 V. Essex Marine Ry. Co., 177. 
 V. Franklin Ins. Co., 177,204,681. 
 V. 'Webster, 438, 479, 489, 490, 
 642,543. 
 Sargent, ex parte, 136. 
 Satterlee v. San Francisco, 748. 
 Saugatuck Bridge Co. v. Westport, 796. 
 Saunders' Case, 139, 145. 
 Savage Mfg. Co. v. Worthington, 253. 
 . Savannah, Ac. R. R. Co. v. Shiels, 879. 
 Savell's Case, 162. 
 Savin v. Hoylake Ry. Co., 573. 
 Savings Bank v. Davis, 440, 442. 452, 453. 
 
 V. 'Wulfekuhler, 95. 
 Sawyer v. Hoag, 142. 
 
 V. Methodist Ep. Soc, 2. 
 *. Rut. & Burl. R. K. Co., 411. 
 Saxon Life Ass. Soc , re, 629, 760. 
 Sayre v. Louisville U. B. Association, 15. 
 Scammon v. Kimball, 662. 
 Scarborough Charity Petitions, re, 60. 
 Scarth v. Chadwick, 649, 689. 
 Schaeffer v. Missouri, Ac. Ins. Co., 126,142. 
 Schenck v. Andrews, 142. 
 Schenectady, &c. P. R. Co. v. Thatcher, 
 
 78, 99, 154, 519. 
 Schnorr's Appeal, 52. 
 Schoff V, Bloomfield, 441. 
 Schoharie R. R. Case, 670. 
 Scholey v. Ccnt.Ry.Co. of Venezuela,349. 
 Schollenberger, ex parte, 4', 6. 
 Schroder's Case, 143. 
 
 Schumm v. Seymonr, 538. 
 Schnitz V. Schoolcraft R. B. Co., 154. 
 Scott V. Central R. R. &c. Co., 199, 204, 
 V. Clinton & S. R. li. Co., 236, 241, 
 
 246. 
 V. Colburn, 210, 222, 226. 
 V. Depeyster, 478, 486. 
 V. Eagle Ins. Co.. 195, 198, 202. 
 V. Grand Trunk R. R. Co., 398. 
 V. Lord Eliury, 274, B53, 573. 
 V. Nat. Bank of Chester Valley, 749. 
 V. Royal Wax Candle Co., 4. 
 Scottish N. E. Ry. Co. r. Stewart, 38, 70, 
 S17, 321, 322. 325. 4"6, 674, 676, 685. 
 Screven Hose Co. v. I'hilpot, 740. 
 Sea and Kiver Marine ln.s.Co., re, 798, 800. 
 Sea, Fire, <tc. As.urance Co.. re, 116, 719. 
 Sears v. Hotchkijs, 485, 671. 686. 
 Seaton v. Grant, 662. 
 Seaver v. Cobui-n, 753. 
 Seoombe «. R. R. Co., 372. 373. 
 Security I'ire Ins. Co. v. Kentucky, 635. 
 Seddon v. Concell, 69ii. 
 Sedgwick v. Daiiii-U, 216. 
 V. Stanton, 319. 
 Selden v. Del. it H. C. Co, 76, 87. 
 Selma \{. R. Co. v. Anderson, 154. 
 
 V. Tipton, 153, 175. 
 Selma, R. &. D. R. R. Co. v. Harbin, 638, 
 
 639. 
 Seneca Bank v. Lamb, 15, 509. 
 Sentance v. Hawley, 606. 
 Serrell v. Derbyshire, <fec. Ry. Co., 256, 
 
 274, 521. 
 Sewall V. Erainerd, 271. 
 Sewance Milling- Co. v. McMahim, 604. 
 Sewll's Case, 16 3, 488, 547, eBl. 
 Seymour v. Can. & N. Kails 1!. R. Co., 286, 
 245, 249. 
 V. Greenwood, 346, 352. 
 V. Stu'ges, 163. 
 Shactleford v. Miss. Cent. R. R. Co., 639. 
 Shackkford,Ford & Co. v. Dangerfie,d,151. 
 Shaekleford's Case 129. 
 Shamokin Valley R.R.Co.f .Liv('rmore,224, 
 236, 249. 
 V. Malone, 793. 
 Shannon v. Frost, 64. 
 Sliarp V. Mayor, 333. 
 Shaipe J'. Hellas, 7o3. 
 bharplcy v. Louth, &c Ry. Co., 560. 
 Shaver v. Bear River Co.j 564. 
 lihaw V. Bill, 235. 
 
 V. Norfolk R. R. Co., 224, 237, 638, 
 
 644. 
 V. Piipe, 35. 
 V. Poynter, 36. 
 V. Spencer, 179, 180. 
 SI'aVs Claim. 578. 
 Shaw, ex pmie, 160. 
 
 Shawmut Bank v. P. &. M. R. R. Co.. 29. 
 72, 86. 
 
TABLE OF CASES. 
 
 Ivii 
 
 Shea V. Mabey, 486. 
 
 Shears v. Jacob, 230. 
 
 Sheffield v. Ladue, 767. 
 
 Sheffield, &c. Ry. Co. ». Woodcock, 136, 
 161, 544. 
 
 Sheffield Case, 313, 340. 
 
 Sheffield School Township v. Andress,448. 
 
 Shelby B. E. Co. v. Louisville R. R, Co., 
 489. 
 
 Shelbyville, (fee. T. Co. v. Barnes, 634, 
 
 Sheldon v. Hudson R. R. Co., 76. 
 
 Shepard's Case, 178. 
 
 Shepley v. A. & St. L. R. R. Co., 224,237. 
 
 Sheppard v. Oxenfnrd, 176. 
 
 Sheriff ». Butler, 140. 
 
 Sherman v. Carr, 284. 
 
 *. Fitch, 465, 566. 
 
 V. McKeon, 404. 
 
 .,. N. Y. Central R. R. Co., 763. 
 
 V. Smith, 98. 
 
 Sherwood v. American Bible Society, 14. 
 
 Shewalter v. Pirner, 747. 
 
 Shields v. Barrow, 688, 690. 
 V. Ohio, 97, 98, 631. 
 
 Shields Marine Ins. Assoc., re, 803. 
 
 Shilletto V. Thompson, 15. 
 
 Shinlfle v. First Nat. Bank, 749. 
 
 Ship V. Crosskill, 690. 
 
 Shipper v. Penn. R. R. Co., 435. 
 
 Sheriff's Case, 803. 
 
 Shoe & Leather Bank o. Thompson, 358. 
 
 Shoemaker v. Nat. Mech. Bank, 635, 749. 
 
 Shore v. Wilson, 60. 
 
 Shorter v. Smith, 376. 
 
 Shortz V. Unangst, 538. 
 
 Shrewsbury, Earl of v. N. Staffordshire 
 Ry. Co., 34, 318, 319,320,321,572,675, 
 685. 
 
 Shrewsbury.&o.lly.Co. v. Chester, <fec. Ry. 
 Co., 414. 
 V. London & N. W. 
 Ry. Co., 30,38, 
 4(j0. 
 
 Shrewsbury <Sc B. Ry. Co. v. Stour Val- 
 ley Ry. Co., 413. 
 
 Shrop.sbire U ion, (fee. v. Reg. 475. 
 
 Shropshire Union Railway Co. v. Ander- 
 son, 162. 
 
 Sibley v. Carteret Club, 45. 
 
 Sibree v. Tripp, 603. 
 
 Sichell's Case, 93, 141. 
 
 Sidebottom v. Com'rs of Glossop Reser- 
 Toir, 69. 
 
 Sidney's Case, 137. 
 
 Silcox V, Harper, 5 1. 
 
 Silk Mfg. Co. V. Campbell. 689. 
 
 Silkstone Fall Coll. Co., re, 440. 
 
 Sill V. Corning, 289. 
 
 Silver Hook Road v. Greene, 151, 492. 
 
 Silver Lake Bank v. North, 13, 734. 
 
 Simons v. "Vulcan Oil Co., 482, 588, 5!I3. 
 697. 
 
 Simpson v. Denison, 70, 308, 417, 427. 
 </. Lord Howden, 320. 326, 581. 
 I). Moore, 199. 
 V. S. Staffordshire Water Works, 
 
 389. 
 V. Westminster Palace Hotel Co., 
 12, 67,69, 121,211. 644. 
 Simpson's Case, 146. 
 Singer Mfg. Co. v. Holdfodt, 359, 501. 
 Singer's Case, 96, 1 94. 
 Sixth Ave. R. R. Co. v. Gilbert E. R. R. 
 Coi, 385, 698. 
 V. Kerr, 376. 
 Skiddy v. Atlantic, <fec. R. R. Co., 644. 
 Skinners' Co. v. Irish Soc, 702. 
 Slaughter v. Commonwealth, 6. 
 Slawson v. Loring, 753, 754. 
 Slaymaker v. Gettvsburgh Bank, 178. 
 Slee V. Bloom, 1 6, 151, 182, 789, 791, 795. 
 Sleeper v. Franklin Lyceum, 46. 
 Slim V. Croueher. 343, 756. 
 Sloan V. Pacific R. R. Co., 96. 
 Small V. Herkimer Mfg. Co., 153. 
 Smallcorabe v. Evans, 4 39. 
 Smart v. West Ham Union, 452. 
 Sraead v. Indianapolis R. R. Co., 253. 
 Smith V. Ala. L. Ins. & T. Co., 741. 
 
 V. Alvord, 445. 
 
 r. Bank of the Stite, 523. 
 
 «;. Bank of Victoria, 614. 
 
 I). City of Boston, 698. 
 
 V. Clarke County, 270. 
 
 V. County of Clark, 53 1 . 
 
 V. Crescent City Co., 179. 
 
 V. Erb, 523. 
 
 V. Eureka Flour Mills, 25i. 
 
 V. Exchange Bank of Pittsburgh, 
 749. 
 
 v. Fagan, 671. 
 
 ■u. First Nat. Bank, 749. 
 
 V. Goldsworthy, 139, 162, 543. 
 
 V. Gower, 238. 
 
 V. Hollett, 127. 
 
 V. HullGlassCo.,473, 475, 505,565. 
 
 V. Hurd, 645,646,692. 
 
 ■u. Junction Ry. Co., 654. 
 
 V. Lansing, 479. 
 
 V. Law, 213, 441. 
 
 V. Lloyd, 68. 
 
 V. I^ockwood, 698, 709. 
 
 V. London Gas Light Co.. 450. 
 
 1/. Neale, 462. 
 
 II. Nelson, 64. 
 
 ». N. C. R. R. Co., 603. 
 
 v.N.Y. cfeH. R. R. Co., 411. 
 
 V. Old Colony U. R. Co., 76. 
 
 V. Plank Roiid Co., 3, 162, 519. 
 
 V. Poor. 485, 768. 
 
 V. Prattville Co., 202, 4Sfi. 
 
 V. Reese River MiaingC:>..!31, 162, 
 690. 
 
 V. Sac Co., 269. 
 
Iviii 
 
 TABLE OF CASES. 
 
 Smith V. Smith, 45, 508, 521. 
 
 v. St. Louis <fec. Ins. Co., 125. 
 ■r. Swormstedt, 685. 
 V. Trowsdale, 602. 
 V. "Water Comnaissioners, 500, 501. 
 V. "Weguelin, 298. 
 Smith's Case, 350. 
 Smith, Knight & Co., re, 622, 681. 
 Smout V. llbery, 766. 
 Snell's Case, 182, 185,497. 
 Snow V. Housatonio R. R. Co., 351. 
 Soc. V. Commonwealth, 45, 46, 620. 
 SoG. for Estah. Usef. Mfrs. v. Butler, 712. 
 V. Mor. Canal 
 <!< Bkg.Co.,789. 
 Soc. for Savings «. New London, 269, 556. 
 Solomon's Lodge v. Montmollen, 460. 
 Soltan V. Deheld, 701. 
 Solvency Mutual Guarantee Soc, re, 600, 
 
 503. 
 Somerset & K. R. R. Co. v. Cashing, 157, 
 
 159. 
 Somerset R. R. Co. v. Clarke, 167. 
 Somerville's Case, 614. 
 Soper V. BuS^. & Roch. K. R. Co., 503. 
 South Baptist Soc. v. Clapp, 465, 479. 
 South Bay Co. v. Gray, 159. 
 South Carolina R.R. Co. v. Blake, 388, 393. 
 South Carolina R.R.Co., exparte, 388, 393. 
 South Eastern Ry.Co. v. Hebblewhite, 152. 
 South Eastern Ry.Co.'s Claim, re, 93, 130, 
 
 141, 146. 
 South Georgia, ifec.R.R.Co. v. Ayres, 134. 
 South of Ireland Colliery Co. v. Waddle, 
 
 452, 464, 457. 
 South Royalton Bank v. Suffolk Bank,357. 
 South Wales Atlantic Steamship Co., 803. 
 South Wales Ry. Co. o. Redmond, 38, 89. 
 South Yorkshire Ry. & River Dun Co. ?i. 
 
 G. N. Ry. Co., 31, 32, 388, 411, 426. 
 Southall V. British, 4c. Co., 120, 626, 627, 
 
 800. 
 Southampton Dock Co. v. Richards, 150. 
 V. Southampton 
 Pier & Harbor Bd., 428. 
 Southampton & L Bridge Co. v. South- 
 ampton Local Board, 331. 
 Southern Exp. Co. v. W. N. Car. Co., 39. 
 Southern Life Ins. Co. v. Lanier, 741. 
 Southern P. R. Co. v. Hixon, 45. 
 Southfields Water Wks.Co.ti.Cookson, 113. 
 Southgate v. Atlantic & Pac. R.R.Co., 495. 
 Southwell V. Bowditch, 750. 
 Southwestern R.R.Co. v. Georgia,632,638. 
 Spackman v. Evans, 187, 188, 513, 626, 
 549,558,559,560,562,781. 
 V. Lattimore, 316, 649. 
 Spackman's Case, 799. 
 Spargo's Case, 143, 149. 
 Sparhawkii, Union Pass. Ry. Co., 652, 686, 
 
 710. 
 Sparling v. Parker, 247. 
 
 Sparrow r.EvansvilIe,<!so.R.R.Co., 79, 636. 
 V. Oxford, (fee. Ry. Co., 393. 
 
 Spear v. Crawford, 68, 100, 163. 
 V. Ladd, 493. 
 
 Speddiug v. Nevell, 751 . 
 
 Speer v. Blairsville, 373. 
 
 Spelman v. Fisher Iron Co., 503, 509. 
 
 Spence's Case, 140. 
 
 Spence's Patent, &c. Cement Co., re, 799. 
 
 Spencer v. London & B. Ry. Co., 701. 
 
 Sperring's Appeal, 486, 675. 
 
 Spokes V. Banbury Bd. of Health,396,397. 
 
 Spooner v. Holmes, 270. 
 
 V. McConnell, 710. 
 V. Parsons, 677, 687. 
 
 Sprague v. Hartford, <Sce. R.R. Co., 4,641. 
 V. 111. R. R. Co., 78, 79, 663. 
 
 Sprigg V. Western Telegraph Co., 99. 
 
 St. Andrew's Bay Land Co. v. Mitchell,452. 
 
 St. Clair Co. Turnpike Co. v. People, 62. 
 
 St. George Steam Packet Co., re, 723. 
 
 St. James Church v. Church of the Re- 
 deemer, 480. 
 
 St. James's Club, 803. 
 
 St. -lohn V. Erie R. R. Co., 164, 196. 
 
 St. John's College v. Todington, 48. 
 
 St. Joseph V. Rogers, 269. 
 
 St. Louis V. Alexander, 479. 
 V. Weber, 29. 
 
 St. Louis, A. & C. R. R. Co. v. Dalby, 352. 
 
 St. Louis Bank v. Parmlee, 494. 
 
 St. Louis Domicile Assoc, v. Augustin,644. 
 
 St. Louis, &c. Ins.Co. v. Goodfellow, 177. 
 
 St. Louis, cfco. R. R. Co. v. Loftin, 96. 
 
 St. Louis Public Schools v. Risley, 466. 
 
 St. Louia R.R. Co. v. N'west'nR.R Co.,22. 
 
 St. Luke's Church v. Matthews, 16. 
 
 St. Mary's Church v. Cagger, 453. 
 
 St. Mary's Church, re, 54, 663. 
 
 St. Paul, (fee. R.R. Co. v. Parcher, 238, 249. 
 ■0. Robbins, 127. 
 
 St. Thomas Dock Co., re, 798. 
 
 Staats V. Hudson R. R. R, Co., 394. 
 
 Stace & Worth's Case, 130, 131, 146, 610, 
 615. 
 
 Stacey v. Vt. Cent. R. R. Co., 381. 
 
 Stafford v. Wyqkoff, 627. 
 
 Staffordshire, Ac. Canal Nav. v. Birming- 
 ham Canal Nav., 102, 120. 
 
 Stainsby i). Frazer's Metallic Life Boat 
 Co., 575. 
 
 Stallingers of Sunderland's Case, 8. 
 
 Stamford Bank v. Benedict, 452. 
 
 Stamps V. Birmingham, (fee. Ry.Co., 890. 
 
 Stanhope's Case, 186, 187, 191, 496, 498, 
 557, 569. 
 
 Stanley v. Chester, (fee. Ry. Co., 320, 326, 
 580, 582. 
 V. C. C. (fe 0. R. R. Co., 411, 424. 
 V. Colt, 51. 
 
 Stanley, exparte, 234, 499, 500. 
 
 Stanton v. Allen, 419. 
 
TABLE OF CASES. 
 
 lix 
 
 Stanton v. WUson, 175. 
 Stark V. Highgate Archway Co., 254,256. 
 Stark Bank v. U. S. Pottery Co., 253, 482. 
 Starkweather v. Amer. Bible Soc, 12. 
 Starr v. Bennett, 764. 
 
 V. Cam. <fe Atl. R. R. Co., 377. 
 State V. Adams, 49, 470, 708. 
 
 V. Amer. Express Co., 5. 
 
 V. Atkins, 17. 
 
 V. Bailey, 146, 631, 634, 793. 
 
 V. Baltimore & 0. R. R. Co., 201, 
 203, 204, 376. 
 
 V. Bank of La., 201, 468, 663, 664. 
 
 jj. Bank of Md., 791. 
 
 V. Barksdale, 367. 
 
 V. B. C. & M. R. R. Co., 13, 371. 
 
 V. Bd. of Ed. of Perryaburg, 532. 
 
 V. Bradfjrd, 787. 
 
 V. Bull, 791. 
 
 V. Carrigan, 5. 
 
 V. Chamber of Commerce, 46. 
 
 •17. Cincinnati, 788. 
 
 V. Columbus Gas Co., 96. 
 
 V. Commercial Bank, 471, 472, 494, 
 496, 509, 787, 789. 
 
 V. Commissioners, 97. 
 
 V. Conklin, 15. 
 
 V. Consolidated Coal Co., 632, 738. 
 
 V. County Judge, 407. 
 
 V. Crowell, 54. 
 
 <i. Curran, 98, 788. 
 
 V. Curtis, 15. 
 
 V. Delafield, 269. 
 
 V. Del. <feW. R. R. Co., 641. 
 
 V. Delesdenier, 17. 
 ■ V. Pagan, 786. 
 
 V. Ferris, 126. 
 
 V. Flavell, 789. 
 
 V. Fosdick, 5. 
 
 V. Franklin Bank, 178. 
 
 V. Georgia Med. Soc, 46. 
 
 V. Gilmore, 369. 
 
 V. Gorham, 406. 
 
 v. Grand Iruak R. R. Co., 369. 
 
 V. Great Works M. & M. Co., 367. 
 
 V. Greene Co., 632, 637. 
 
 V. Guerrero, 681. 
 
 V. Halllday, 408. 
 
 «. Hartford & N. H. R. R. Co., 71, 
 403,406,419, 427. 
 
 V. Jersey City, 380, 395, 644. 
 
 V. Krebs, 63. 
 
 V. Lusitanian Soc., 46. 
 
 V. Maine Central R. R. Co., 369. 
 
 V. Mansfield, 13, 380. 
 
 V. Mayor, 29. 
 
 J). Mciver, 180, 181. 
 
 V. Med. Soc, 46. 
 
 V. Merchants' Exchange, 16. 
 
 V. Mer. Ins. Co., 788, 789. 
 
 V. Metz, 641. 
 
 ■o. Mexican Gulf R. R. Co.', 236. 
 
 State ». Milwaukee, <tc Ry. Co., 4. 
 
 V. Montclair R. R. Co., 377. 
 
 <(. Morgan, 224, 237. 
 
 II. Morris, 97. 
 
 V. Morris & Essex R. R. Co., 351, 
 367,369. 
 
 V. Morristown Fire Ass., 159. 
 
 ii. Murfreesboro', 367. 
 
 V. Newark, 13. 
 
 V. N. E. R. R. Co., 406, 408. 
 
 V. New Haven & N. Co., 405, 710, 
 713. 
 
 V. Northern Central R. R. Co., 236, 
 245, 642. 
 
 V. 0. & M. R. R. Cc, 366, 368. 
 
 V. Paterson, &c. T. Co., 788. 
 
 V. Paup, 765. 
 
 V. Pawtuxet Turnpike Co., 403, 787. 
 
 V. Person, 97. 
 
 V. PettinelU, 439. 
 
 II. Rahway, 407. 
 
 V. Rives, 246. 
 
 V. Rombauer, 180. 
 
 V. S. C. & P. R. R. Co., 71. 
 
 V. S.Minn. R. R. Co., 406. 
 
 V. Smith, 95, 181, 192. 
 
 V. The Governor, 289. 
 
 V. Turnpike Co., 407. 
 
 II. Van Home, 272. 
 
 r. Vt. Central K. R. Co., 369. 
 
 V. VincennPs Univ., 791, 795. 
 
 ■a. Warren Foundry, (fee Co., 179. 
 
 V. White's Creek T. Co., 787, 788. 
 
 V. Wilmington Bridge Co., 408. 
 
 V. Woram, 17. 734. 
 
 V. Wright, 540, 670. 
 
 V. Zanesville Turnpike Co., 405. 
 State Bank v. Fox, 94. 
 
 V. State, 787. 
 State Bank at Elizabeth v. Chetwood, 523, 
 
 524. 
 State Bank of Ohio v. Knoop, 96. 
 State Board of Agriculture v. Citizens' 
 
 Street Ry. Co., 731,743. 
 State Fire Ins. Co., re, 274, 536, 650, 794. 
 State Freight Tax Cases, 5. 
 State Nat. Bk. v. Robidoux, 796. 
 State Treasurer v. Somerville, <fec. R. R. 
 
 Co., 244. 
 Steamboat Co. v. McCutcheon, 13. 
 Steam Navigation Co. v. Weed, 456, 734. 
 Stearns v. Bedford, 54. 
 Stebbins v. Jennings, 23, 52, 54. 
 
 V. Merritt, 438, 439, 466, 466. 
 Steed V. Mc Awley, 5 1. 
 Steele v. Hanner, 253. 
 
 V. North Metropolitan Railway Co., 
 294. 
 Stein V. La Dow, 661. 
 Steiner's Appeal, 223,224, 237. 
 Steines v. Frnnklin Co., 631. 
 Steininetz v. Versailles, (fee T. Co., 1 50. 
 
]x 
 
 TABLE OF CASES. 
 
 Stetson V. City Bant, 793. 
 
 V. Kempton, 284. 
 Stevens v. Buffalo, &e. R. R. Co., 235,243. 
 V. Eden Meeting House, 440. 
 V. Erie R. K. Co., 3 SO. 
 ". Hill, 493. 
 
 . . Mid Hants Ey. Co., 172, 234. 
 V. N. Y. <tO. M. R.R. Co., 271,366. 
 V. Pateraon & Newark R. E. Co., 
 
 879. 
 V. Rutland & B. Ry. Co., 78, 151, 
 
 292. 
 V. South Devon Ry. Co., 203,295, 
 
 3i'5,308, 686. 
 V. AVatson, 235. 
 V. Willard, 125. 
 Stevens' Hospital v. Dyas, 463. 
 Stevenson v. Bay City" 480, 502. 
 Stewart 4). Anglo-Calif. Gold Mining Co., 
 135. 
 V. Erie, &c. Transportation Co., 
 
 411,415. 
 V. Jones, 237. 
 V. Lehigh Valley R. R. Co., 14, 
 
 480,481. 
 <,. Nat. Union Bank, 535,731,749. 
 Stewart, ex parte, 139, 348, 557. 
 Siiles V. Cardiff Steam Nav. Co., 357. 
 Stinson v. Tliornton 1 79. 
 Stockbridre v. West Stockbridge, 22. 
 Stockins' Case, 530. 
 Stockport District Waterworks v. Mayor, 
 
 (fee. of Manchester, 704. 
 Stockton <fe Darlington Ry. Co. v. Brown, 
 
 388, 392. 
 Stockton, &c. Ry. Co. v. Leeds, 293, 294, 
 
 297. 
 Stoddard v. Shetucket Foundry Co., 146, 
 
 203, 204, 206. 
 Stokes V. Saltonstall, 355. 
 Stone V. Godfrey, 760. 
 
 V. Hackett, 177, 1 79. 
 V. Wisconsin, 96. 
 Stonehnm Branch R. R. Co. v. Gould, 154, 
 
 186. 
 Stoney v. Am. L. Ins. Co., 212, US. 
 Stoops V. Greensburgh P. Roail Co., 154. 
 Story V. Jersey City and Hergen Point 
 Plankroad Co., 290. 
 V. N. Y. Elevated R. R. Co., 385. 
 Stowe V. Flagg, 23. 
 V. Wyse, 440. 
 Stoystown, die. T. Co. v. Craven, 638. 
 Straffon'a Executors, 621. 
 Strand Music Hall, in re, 214, 232, 499. 
 Strang v. Holmes, 603. 
 Strnnton Iron, &c. Co., re, 150, 681. 
 Strasburg R. R. Co. v. Echternacht, 176, 
 
 306. 
 Strathmore Estate, re, 674. 
 Stralton v. Allen, 479. 
 
 «. Metropolitan Bd.of Works, 397, 
 
 Straus V. Goldsmid, 50. 
 
 Strauss v. Eagle Ins. Co., 146, 254. 
 
 Strickland v. Prichard, 791. 
 
 Strider v. Western College, 566. 
 
 Stringer's Case, 206. 
 
 Stiohecker v. Ala. R. R. Co., 381. 
 
 Stuart V. London & N. W. Ry. Co., 325, 
 
 326, 328. 
 Stubbs V. Lister, 679. 
 ijtupart V. Arrow.smith, 664. 
 Sturge V. Eastern Union Ry. Co., 167, 
 
 067. 
 Sturges V. Bank of Circleville, 494, 604. 
 V. Knapp, 644, 732. 
 a. Stetson, 143. 
 Sturtevant v. City of A Iton, 466. 
 Suburban Hotel Co., 791, 799. 
 Sugar Refilling Co. v. Jersey City, 379. 
 Sullivan v. Triunfo, inc. Mining Co., 481. 
 Sumner v. Marcy, 92, 223. 
 Sundeilnnd Maiine Ins. Co. v, Kearney, 
 
 536. 
 Supervisors v. Sehenck, 272. 
 V. Tweed. 707. 
 V. U. S., 403. 
 Susquehanna & BathT. Co. v. People, 367. 
 Susquehanna Bi'idge Co. v. Gen. Ins. Co., 
 
 224, 465, 466. 
 Susquehanna Canal Co. u. Bonham", 237, 
 
 245. 
 Sussex R. R. Co. v. Morris & E. R. R. Co., 
 
 415, 419. 
 Sutton V. Spectacle Makers' Co., 449. 
 Sutton's Hospital Case, 2, 3, 14. 
 Swan V. Williams, 373. 
 Swansea Dock C'l. v. Levicn, 150, 514. 
 Swartwout v. Mich., &c. R. R. Co., 127, 
 
 143, 621. 
 Swatara R. R. Co. v. Brune, 146. 
 Sweeny v. Smith, 186, 187, 498, "530, 679, 
 
 68"6, 690. 
 Swift V. Jewsbury, 346, 759. 
 
 V. Winlerbolham, 337, 346, 495. 
 Syers v. Brighton Brewe»y Co., 69. 
 Sykes' Case, 151, 212, 487. 
 Syracuse, &o. K.R. Co. *. Gere, 143. 
 
 Taber v, Cincinnati B. R. Co., 224. 
 
 Taft V. Hart., Prov. <fe F. R. R. Co., 164, 
 
 172. 
 Taggart v. Northern Central R.R.Cc, 638. 
 
 V. WestMd. R.R. Co., 176. 
 Taite's Case, 560. 
 Talbot ». Hudson, 373, 376. 
 Talbot's Case, 623. 
 Talma;lge v. N. A. Coal Co,, 39. 
 Talmage v. Pell, 89, 91, 735. 
 Tnppnn v. Deblois, 50. 
 Tar River Nav. Co. v. Neal, 153. 
 Tasker v. Wallace, 146. 
 Tiitem V. 'Wright, 6. 
 Tattan v. Great Western Ry. Co , S52. 
 
TABLE OF CASES. 
 
 Ixi 
 
 Taunton v. Royal Ins. Co., IS. 
 Tavistock Iron Works Co., re, 64-3. 
 Taylor v. Ashton, 332. 
 
 V. Atlantic, &o. R.R, Co., 638, 64!. 
 ti. Chichester, Ac. Ry. Co., 34, 89, 
 
 321,324,328, 329, 515. 
 j>. Crowland Gas and Coke Co., 
 
 574, 59.'. 
 V. Dulwich Hospital, 116. 
 «. Karle, 125, 427, 636. 
 V. Griswold, 15, 440. 
 I/. Hughes, 511. 
 K. Miami Exporting Co., 94, 192, 
 
 193,671. 
 V. R. R. Co., 359. 
 V. Robinson, 547. 
 ,;. Shelton, 757. 
 Taylor, exparte, 717. 
 Taymouth v. Koeliler, 546, 550. 
 Teasdale's Case, 161, 162, 163, 183, 188, 
 
 651. 
 Telford v. Met. B. of Works, 300, 317. 
 Temple v. Flower, 700. 
 Tenney v. East Warren Lumber Co., 465. 
 Terre Haute Gas Co. ». Teel, 362. 
 Terrell v. Hutton, 673. 
 Terrett v. Taylor, 21, 787. 
 Thames Haven Dock <fe Ry. Co. v. Rose, 
 
 543. 
 Thames Tunnel Co. v. Sheldon, 133. 
 Thatcher v. West River Nat. Bank, 3. 
 Thayer v. Boston, 331. 
 
 V. Middlesex Ins. Co., 452. 
 Thew V. Porcelain Wfg. (;o., 503. 
 Thigpen v. Miss. Cent. R. R Co., 836. 
 Third Avenue Savings Bank v. Dimock, 
 
 739. 
 Third Nat. Bank v. Boyd, 749. 
 Thom V. Bigland, 332. 
 Thomas r. Daken, 23. 
 
 V. Dickinson, 456. 
 V. Hobler, 662, 688, 690. 
 Thomas's Case, 182, 498, 630. 
 Thompfon v. Abbott, 637, 639. 
 V. Candor, 521. 
 «. Davenport, 762. 
 V. Erie R.R. Co., 164, 173, 664. 
 V. Lambert, 213, 223, 224, 746. 
 V. Perolval, 603. 
 V. Planet Benefit Building 
 
 Soc, 58. 
 I . Soc. of Tammany, 46, 
 V. Spiers, 500, 604. 
 V. Thompson, 247. 
 V. Tioga R. R. Co., 754. 
 V. University of London, 48, 
 
 708. 
 V. Universal Salvage Co., 255. 
 V. Waters, 5, 7, 13. 
 V. Wesleyan ITuwspaperAssoc., 
 
 475. 
 ». Youns, 493. 
 
 Thomson v. Lee Co., 269, 270. 
 Thiimson's Case, 130. 
 Thornburgh v. Newcastle R. R. Co., 1B2. 
 Thorne v. TaS Vale, &e. Co., 706. 
 Thornton v. Howe, 50. 
 
 ■I). Marginal Freight Ry. Co., 
 793. 
 Thorpe v. But. & B. R. R. Co., 878. 
 Thrashtr v. 1 ike R. R. Co., 175. 
 TibbalsD. Libley, 97. 
 Ticonic Water Power Co. v. Lang, ISO. 
 Tide-Water Co. v. Coster, 872. 
 Tilleard, re, 573. 
 Tilson V. Warwick Gas Co., 573. 
 Times Fire Ins. Co., re, 651. 
 Times I ife Ass., &c. Co., re. 622. 
 Tlnkham v. Borst, 793. 
 Tinkler v. Wandsworth Dist. Bd. of 
 
 Works, 60. 
 Titus ». Cairo B. R. Co., 495. 
 
 V. Cataw'isa R. R. Co., 578. 
 
 V. Great Western Turnpike Road, 
 180. 
 
 V. Evle, 764. 
 
 -K. Mabell, 246. 
 
 V. Sinheimer, 245. 
 Tobacco, Ac. Co. v. Woodroffe, 439. 
 Todd V. Austin, 374, 875. 
 
 V. Birdsall, 20. 
 Toledo & Wab. R. R. Co. v. Daniels, 393. 
 Toledo, W. & W. R. B. Co. v. Fisher, 504. 
 Toll Bridge Co. «. Betsworth, 508. 
 
 V. Osborn, 72. 
 Tome V. Parkersburg R. H. Co., 86. 
 Tomlin v. Budd, 68. 
 Tomlinson v. Branch, 638. 
 
 V. Jessup, 97, 98. 
 Tonica B. B. Co. v. McNeeley, 176, 693. 
 Topping V. Bickford, 66, 462. 
 Torrey v. 0. & A. R. R. Co., 396. 
 
 II. Dustin Monument Asa., 474. 
 Tothill's Case, 644. 
 Tott V. Hujrhes, 58. 
 Totten ». Tison, 166, 168. 
 Totterdell v. Fareham Brick Co., 452, 643, 
 
 566. 
 Touch e i;. Metropolitan Ry. Warehousing 
 
 Co., 688, 590. 
 Town ti. Bank of River Raisin, 126, 791. 
 Towne v. London, &c. Ship Co., 276. 
 Townsend v. Brown, 62. 
 
 V. N.Y. C. & H. R. B.R. Co.,360. 
 Townsend, in re, 13, 128, 372. 
 Tracy v. Guthrie Co. Agric. Soc, 546. 
 
 I^ Talmage, 734. 
 Trafford, exparte, 674. 
 Treadwell v. Salisbury M%. Co., 71, 12B, 
 
 406, 663, 792, 797. 
 Tredwen v. Bourne, 216. 
 Trent & Humber Co., re, 799. 
 Trenton Ins. Co. v. Perrine, 868. 
 ; Trenton Water-power Co., in re, 408. 
 
Ixii 
 
 TABLE OF CASES. 
 
 Trenton Water-power Co. «.Chambers,463. 
 
 V. Eaff, 384. 
 Trevillian v. Mayor, &c. of Exeter, 694. 
 Tring, .fee. Ry. Co., re, 503. 
 Trinity House v. Clark, 457. 
 Tripp v. Swanzey Paper Co., 500. 
 Trist V. Child, 319, 581. 
 Trott V. Warren, 522. 
 Troup's Case, 219, "725. 
 Troy V. Cheshire R. R. Co., S11. 
 Trny Ins. Co. ■;;. Carpenter, 504. 
 Troy, &c. R. E, Co. v. Kerr, 78, 153, 237, 
 663. 
 V. Tibbits, 129, 153, 
 175, 593. 
 Troy R. R. Co. v. Newton, 154, 157. 
 Troy T. Co. v. McChcsney, 153. 
 Trunsick v. Smith, 245. 
 Trustees v. Parks, 3. 
 
 V. Peasleo, 29. 
 V. Shulze, 224. 
 Trustees of Birkenhead Docks v. Birken- 
 head Dock Co., 394. 
 Trustees of British Museum v. White, 50. 
 Trustees' of Lexington v. McConnell, 276. 
 Tuclcahoe C. Co. v. Tuokahoe R.R. Co., 372. 
 Tucker v. Ferguson, 96. 
 V. Raleigh, 223. 
 V. Rex, 439. 
 Tucker's Case, 128, 614, 618, 631. 
 Tucker Mfg. Co. o. Fairbanks, 753. 
 Tuckerman v. Brown, 142, 143. 
 Tuffnell V. Constable, 20. 
 Tnmacacori Mining Co., 69, 791, 798. 
 Tundy v. Farrar, 451. 
 Tunis Rys. Co., re, 119, 626. 
 Turner v. N. B. & M. R. R. Co., 353, 359. 
 Turnpike Co. v. Dayidson, 22. 
 
 V. Illinois, 29, 62. 
 
 V. Myers, 3. 
 
 V. State, 698, 787. 
 
 V. Thorp, 603. 
 
 V. Valentine, 155. 
 Turquand v. Marshall, 72, 205, 439, 486. 
 Tuttle V. Mich. Air Line R.R. Co., 632, 638. 
 Twin Lick Oil Co. v. Marbury, 480, 481, 
 
 550, 731. 
 Tyler v. Beacher, 373, 376. 
 Tyng V. Commercial Warehouse Co., 63. 
 Tyrrell v. WooUey, 55. 
 Tyson v. Virginia R. R. Co., 663, 
 Tyson's Reef Co., re, 515. 
 
 Ulster Ry. Co. v. Banbridge, <&c. Ey. Co., 
 
 726, 727, 729. 
 Uncas Nat. Bnnk v. Eith, 227. 
 Underbill v. Gileson, 756. 
 Underwood v. Newport Lyceum, 39, 852, 
 742. 
 n. N.Y. & N. H. R. R. Co., 202. 
 Union Bank v. Jacobs, 213, 223, 264. 
 ir. Ridgely, 452, 493, 528. 
 
 Union Bank v. State, 1 78. 
 
 Union Bank of Tenn. v. Ellicott, 125, 490. 
 
 Union Branch R. R. Co. v. E. Tenn. R. R. 
 
 Co., 642. 
 Union Bridge Co. v. Troy, 387. 
 Union Hotel Co. v. Hersee, 134. 
 Union Ins. Co., Matter of, 534. 
 Union Locks Co. v. Towne, 151. 
 Union Mining Co. v. Rocky Mt. Nat. Bank, 
 213, 460, 468, 495, 501, 504, 614, 532, 
 556, 747. 
 Union Mutual Fire Ins. Co. v. Keyser, 508. 
 Union Pacific R. R. Co. v. Durant, 480. 
 Union Water Co. v. Murphy Co., 39. 
 United Ports' Co., re, 497, 612,614,618,631. 
 United Service Co., re. 497. 
 United Society v. Underwood, 478, 485. 
 United States v. Bait. R. R. Co., 369. 
 
 V, Bank of Columbus, 494. 
 
 V. Bradley, 11. 
 
 ■0. Bridge Co., 376, 377. 
 
 ■ii. Fox, 11. 
 
 I). Hart, 15. 
 
 V. Hodson, 11. 
 
 V. Kirkpatrick, 508, 522. 
 
 V. Linn, 11. 
 
 V. Maurice, 11,17. 
 
 V. New Orleans R. R. Co., 
 
 235, 236,'241. 
 V. Tingey. 1 1. 
 V. Union Pac. R. R. Co., 71, 
 
 702. 
 V. Van Zandt, 508, 522. 
 V. Vaughan, 681. 
 United States Ins. Co. v. Shriver, 501, 502. 
 United States Life Ins. Co. v. Adams, 6. 
 United States Mortgage Co. v. Gross, 13. 
 United States Rolling Stock Co. v. Atl. & 
 
 G. W. R. E. Co., 480. 
 United States Rolling Stock Co.pre, 641. 
 United States Trust Co. v. Brady, 23. 
 
 V. Lee, 13. 
 Unity Ins. Co. v. Cram, 520. 
 Universal Banking Corp., e. p. Challi8,139. 
 University of London v. Yarrow, 50. 
 University of Maryland v. Williams, 49, 
 
 787, 791. 
 Updike V. Doyle, 690. 
 Upton a. Burnham, 126. 
 V. Englehart, 152. 
 V. Hansbrough, 336, 620, 621. 
 V. Nat. Bank of S. Reading, 749. 
 V. Tribilcock, 142, 143. 
 Upton County R. R. Co. v. Sharman, 402. 
 Utica II. Churchill, 197. 
 Utica Insurance Co. Cases, 738. 
 
 Vale of Neath, <fcc. Co., re, 533. 
 
 Valpy & Chaplin, ex parte, 227, 246, 611. 
 
 Van Cott a. Van Brunt, 142, 143, 480. 
 
 Van Doren v. Robinson, 644. 
 
 Van Hookji. Somerville Mfg. Co., 479. 
 
TABLE OF CASES. 
 
 Ixiii 
 
 Van Keuren v. Johnston, 20. 
 Van Kirk v. Clark, 20. 
 Van Kuren v. Trenton Locomotive Co.423. 
 Van Leuyen v. First H'at. Bank, 749. 
 Van Wickle v. E. R. Co., 880. 
 Vance v. E Lancashire Ry. Co., 304, 306, 
 309, 600. 
 V. Erie Ry. Co., 356. 
 Vandall v. S. S. F. Dock Co., 29. 
 Vane v. Cockermouth, Ac, Ry. Co., lOY. 
 Vansant v. Roberts, 3. 
 Vaughan v. Earl of Bedford, 3. 
 Vauxhall Bridge Co. u. Earl of Spencer, 
 
 678. 
 Vaster v. Ohio & Miss. R. R. Co., 1 52, 336. 
 Veley v. Burder, 713. 
 Venable v. Cofifman, 51. 
 Venice, Town of ti. Murdock, 532, 
 Vermont & Canada R. R. Co. v. Vt. Cent. 
 
 R. R. Co., 732. 
 Vermont Central R. R. Co. v. Clayes, 146, 
 
 593. 
 Vernon Society v. Hill, 522. 
 Verplank v. Mercantile Ina. Co., 94, 675, 
 
 709, 789. 
 Vestry of Bermondaey v. Brown, 700. 
 Vestry of St. Luke's Ch. v. Mathews, 523. 
 Vioksburg, &q., R. R. Co. v. McKean, 336. 
 Vicksburg & I. R. R. Co. «. Patton, 360. 
 Vioksburg R. R. Co. v. Ragsdale, 604. 
 Victoria Permanent Benefit, <fec., Soc, 57, 
 
 723. 
 Vinas v. Merchants' Ins. Co., 331, 366, 368. 
 Vinoennes Univ. v. Indiana, 795. 
 Vincent v. Chicago, <fec., R. R. Co., 436. 
 
 V. Nantucket, 284. 
 Virginia v. Maryland, 27i'. 
 Virginia <fe Truckee 11. R. Co. v. Lovejoy, 
 
 393. 
 Virginia Steam Nav. Co. v. U. S., 3. 
 Vischer v. Hudson R. R. R. Co., 394. 
 Vivian v. Mersey Dock, (fee, Bd., 60. 
 Von Schmidt v. Huntington, 792. 
 Vreeland v. N. J. Stove Co., 162. 
 
 Wadsworth v. Henniker, 284. 
 
 Waite V. Windham Min. Co., 493, 623, 644. 
 
 Wakeman v. Dalley, 338, 764. 
 
 Waldo V. Chicago, <fec. R. R. Co., 89, 336. 
 
 Walker v. Bank of N. Y., 767. 
 
 V. Bartlett, 176. 
 
 V. Devereaux, 154, 520, 649. 
 
 V. Fleming, 150, 523. 
 
 ■0. Jones, 230. 
 
 V. Milne, 247. 
 
 V. Mobile R. R. Co., 162, 678. 
 
 V. Ogden, 185. 
 
 i;. Wainwright, 64. 
 Walker, ex parte, 3, 513. 
 Wall's Appeal, 656. 
 Wall's Case, 128. 
 Wallace v. Long Island R. R. Co., 677. 
 
 Wallace v. Loomis, 23. 
 V. Mayor, 361. 
 Wallis's Case, 128. 
 Walsh's Case, 147. 
 Walter's Case, 533. 
 Walton's Case, 625, 533. 
 Walworth v. Holt, 584. 
 Walwortli Co. Bank v. Farmers' Trust Co., 
 
 546. 
 Wandsworth, &c., Coke Co. i;, Wright, 681. 
 Ward V. Brigham, 571. 
 V. Bowling, 150. 
 V. Griswoldville Mfg. Co. 153. 
 V. Sea Ins. Co., 789, 791. 
 V. Sillingbourne, <fec., Ry. Co., 684. 
 
 688, 691, 801. 
 V. Society of Attorneys, 121, 294, 
 648, 792. 
 Ward's Case, 128. 
 
 Warden v. Union Pac. R. R. Co., 480. 
 Warden, <fec., of Dover Harbor v. South 
 
 Eastern Ry. Co., 106. 
 Wardrobe v. Cal. Stage Co., 360. 
 Ware v. Bazemore, 645. 
 
 V. Grand Junction W. W. Co., 290, 
 
 291, 292, 293. 
 V. Regent's Canal Co., 711. 
 Waring «. Catawba Co., 2. 
 Warner v. Mower, 440, 441, 442, 465. 
 Warren v. Mobile, <fec., R. R. Co., 638. 
 
 V. Ocean Ins. Co., 451. 
 Warwick R. R. Co. v. Cady, 167. 
 Washington Bank v. Lewis, 501. 
 Wash. <fe Bait. T. H. v. Md., 788. 
 Washington, <Scc. Road v. State, 787. 
 Washington Society v. Bacher, 46. 
 Waterbury v. Express Co., 46, 653. 
 
 V. R. R. Co., 391. 
 Waterford, <fec. Ry. Co. v. Dalbiac, 156. 
 V. Pidcock, 135. 
 Waterford & Whitehall T.Co.w.People, 367. 
 Waterhouse v. Jamieson, 131,143,149,348. 
 Water Lot Co. v. Bank of Brunsivick, 3. 
 Waterlow v. Sharp, 209, 238, 266. 
 Waterman v. Troy, <fec. R. R. Co. 198. 
 Watertown, Trustees of v. Cowen, 702. 
 Water Valley Mfg. Co. v. Seaman, 152. 
 Waterworks Co. v. Bnrkhart, 373. 
 Watkins v. Eames, 174. 
 
 V. Wilcox, 51, 54. 
 Watson V. Avery, 54. 
 
 V. Bennett, 352. 
 V. Bales, 630, 679. 
 V. Farris, 64. 
 V. Jones, 52, B3. 
 Watts V. Carroll Parish, 407. 
 
 B. McLean Imp, Co,, 72. 
 Watts'a Appeal, 86, 224. 
 Wayne <fe 0. Col. Inst. v. Blackmar, 693. 
 Weale v. W. Middlesex W-worka, 688. 
 Weardale Dist. Highway Bd. v. Bain- 
 bridge, 60. 
 
Ixiv 
 
 TABLE OF CASES. 
 
 Weare v. Gove, 765. 
 Wearer v. Bardeo, 178, 179. 
 Webb V. Com'rs of Heme Bay, 520, 829. 
 V. Direct London, <fec. Ey. Co., 324, 
 
 325, 32S, 328. 
 V. Earle, 173. 
 V. Manchester, <tc. Ry. Co., 110, 
 
 380. 
 V. Portland, &c. R. R. Co., «1. 
 V. Ridgely, 97, 670. 
 Webster v. Turner, 791. 
 
 V. Upton, 142, 179. 
 Webster's Case, 188. 
 Wcckler v. First Nat. Bk., 29, 749. 
 Weed V. Chase, 339. 
 
 V. Panama R. B. Co., 355. 
 Weeks v. Milwaukee, 3B7. 
 
 V. Propert, 763, 
 Weet V. Brockport, 397. 
 Weetjen v. Vibbard, 644. 
 Weight V. Liverpool, <fec. Ins. Co., 7. 
 Weikersheim's Case, 135, 141. 
 Weir V. St. Paul, <fec. R. R. Co., 373. 
 Weisraer v. Village of Douglas, 738. 
 Weld V. May, 54. 
 Welland Ry. Co. o. Blake, 152. 
 Welles V. Cowles, 178. 
 V. March, 661. 
 Wells V. American Express Co., 501. 
 V. Burbank, 23. 
 I). Mayor, <fec. of Hull, 461. 
 V. Railway Rubber Co., 842, 543. 
 Welsby and Anderson's Case, 191, 781. 
 Wernick's Case, 622. 
 Wesson v. Washburn Iron Co., 698. 
 West V. Madison Co. Agr. Board, 224. 
 
 V. Randall, 686, 688. 
 Westchester, (fee. R. R. Co. v. Jackson, 
 
 165, 168. 
 West Hartlepool Iron Works Co., re, 792, 
 
 798. 
 West London Ry. Co. v. Bernard, 544. 
 
 V. London <fe N. W. 
 Ry. Co., 399. 
 West River Bridge v. Dix, 97, 375. 
 West Virginia Transf. Co. v. Volcanic 
 
 Oil, <fec. Co., 375. 
 Western v. MacDermott, 109. 
 Western Bank v. Gilstrap, 449, 493, 495. 
 Western Bank of Scotland v. Addie, 341, 
 S42. 
 V. Bairds, 485. 
 V. Tallman, 
 146. 
 Western C. M. Co. v. Lawes C. M. Co., 358. 
 Western Life Ass. Soc, ex parte, 608, 630. 
 Western of Canada Oil Co., re, 119, 147. 
 Western R. R. Co. v. Nolan, 644, 645. 
 Western Screw Co. v. Cowsley, 570. 
 Western Sta^e Co. v. Walker, 661. 
 Western Transportation Co. v. Scheu, 4. 
 Western Union K. R. Co. v. Smith, 639. 
 
 Western Union Tel. Co. *. A. & P. TeL Co., 
 433. 
 V. Chicago, <fec. R. 
 
 R. Co., 433. 
 V. Eyser, 331. 
 V. Mayor, 5. 
 V. Rich, 65, 
 Western Wis. Ry. Co. v. Supervisors, 96. 
 Westfield Bank v. Cornen, 601. 
 Westman v. Aktiebolaget, <fec., 4. 
 Weston V. Foster, 100. 
 
 V. Hunt, 17. 
 Weston's Case, 178, 681. 
 Weatropp v. Solomon, 808. 
 Wetmore v. Story, 698. 
 Wey <fc Arun Junction Canal Co., 801. 
 Weymouth ». Washington, <fec. R.li. Co.,4. 
 Wheatcroft's Case, 12'8, 129,132, 190,812. 
 Wheeler v. Essex Public Road Bd., 739. 
 V. San Francisco, <fec. R. R. Co., 
 
 72, 86, 90. 
 V. Smith, 50. 
 Wheeler, in re, 201, 469, 534. 
 Wheeling, City of v. Mayor of Baltimore, 
 
 639. 
 Wheelock v. Kost, 141. 
 
 V. Moulton, 178. 
 Wheless v. National Bank, S57. 
 Whiatou V. Dean <fe Chapter of Rochester, 
 
 48, 648, 685, 708. 
 Whitaker v. H. P. & F. R. R. Co., 271. 
 White V. Erownell, 45. 
 
 V. Carmarthen, <&c. Ry. Co., 231, 
 
 686, 689, 696. 
 V. Franklin Bank, 732. 
 V. Howard, 12. 
 V. Madison, 757. 
 V. Skinner, 756. 
 
 1/. Syracuse <fe Utica R.E.Co.,92,99. 
 i>. Vermont R. R. Co., 269. 
 White's Bank v. Toledo Ins. Co., 29. 
 White Hall, <fec. R. E. Co. v. Myers, 143. 
 Whitehead v. Buffalo, &c. Ry. Co., 455. 
 Whitehousew. Birmingham Canal Co.,383. 
 Whiteman v. Wil. cfc Sus. R. R. Co., 362. 
 White Mts. R. R. Co «-. Eastman, 129, 153, 
 
 165, 157. 
 White River T. Co. r. Vt. Cent. E. R. Co., 
 
 375. 
 White Water Valley Canal Co. v. Vallette, 
 
 22, 210, 224, 228. 
 Whitfield V. S. E. Ry. Co., 330, 357. 
 Whitman Mining Co. v. Baker, 13, 29, 747 
 Whitney v. Atlantic, &b. R. R. Co., 398. 
 V. First Nat. Bank, 732, 749. 
 - V. Mayor , 686. 
 V. Peay, 747. 
 Whitney Arms Co. v. Barlow, 36, 89, 729, 
 
 730, 737, 745. 
 Whittenton Mills v. Upton, 423. 
 Whitwell V. Warner, 468, 479, 488, 671. 
 Wickersham v. Chicago Zinc. Co., 502, 
 
TABLE OF CASES. 
 
 IxT 
 
 ■Wictham v. New Brunswick, Ac. Ry. Co., 
 
 237. 
 Wiggin V. Free Will Baptist Ch., 440, 441. 
 Wight V. Shelby E. R. Co., 152, 836, 521. 
 Wifliy V. W. Cornwall Ry. Co., 90. 
 Wild*. Bank of Passamaquoddy, 471, 496, 
 
 509. 
 Wildey V. Collier, 319. 
 Wiley V. First Nat. Bank, 749. 
 WUkie V. Corp. of Clinton, 657. 
 
 V. Rochester, <Sec. Ry. Co., 645. 
 Wilkinson v. Malin, 50. 
 WUlamette Freighting Co. v. Stannus,154. 
 Willcocks, ec parte, 634, 542. 
 Williams v. Creswell, 6. 
 V. Evans, 566. 
 V. Gregg, 486. 
 i;. Mechanics' Bank, 179. 
 V. O'Meara, 286, 286. 
 V. Pearson, 50. 
 V. Salmond, 688. 
 V. Savage M^. Co., 96, 159, 192. 
 V. School District, 374. 
 V. St. George's Harhor Co., 647, 
 
 678. 
 V. Swansea Harbor Trustees,S36. 
 Williams, ex parte, 689, 604, 651. 
 Williamson v. New Albany, <Stc. R. E. Co., 
 235. 
 V. N. J. Southern R. R. Co., 
 236, 286, 244, 644. 
 Williamson, ex parte, 67,220,717,722,799. 
 Willink V. Morris Canal Co., 236, 236. 
 Willis *. Henderson, 686. ' 
 Williston V. M. S. & N. I. R. R. Co.,164,168, 
 
 202, 686. 
 Wills V. Murray, 438, 440, 619, 642, 545. 
 Willson V. Blackbird Creek Co., 876. 
 Wilmer v. Atlanta R. R. Co., 641. 
 Wilmington R. R. Co. v. Reid, 96. 
 Wilmot V. Corp. of Coventry, 457. 
 Wilmusdoerffer v. Lake Mahopac Co.,788. 
 Wilson V. Furness Ry. Co., 71, 701. 
 V. Goodman, 761. 
 ir. Miers, 68, 121,212,494,766,768. 
 V. Owen, 743. 
 V. Prop, of Central Bridge, 93,791, 
 
 792. 
 ti. School District, 456. 
 V. West Hartlepool Harbor, <fcp. 
 
 Co., 463, 564. 
 V. Wills Valley R. R. Co., 79. 
 Wilson's Case, 128, 149, 205, 722. 
 Wilthank's Appeal, 199, 201. 
 Wilts & Berks Canal Nav. Co. v. Swindon 
 
 W' Works Co., 101, 103. 
 Wiltshire Iron Co., 803. 
 Winch V. Eirkenhead,<fec. Ry.Co., 398, 428, 
 
 656, 657, 691. 
 Winchester v. Bait. & Susq. R. R. Co., 502. 
 Winchester, <fec. T. Co. v. Vimont, 237,246. 
 Winebrenner v. Colder, 64. 
 
 E 
 
 Winfield v. City of Hudson, 270. 
 
 Winona, <fcc. R. R. Co. v. Blake, 96. 
 
 Winsor, ex parte, 662. 
 
 Winter v. Muscogee R. R. Co., 29, 78. 
 
 Wise, ex parte, 799. 
 
 Wiswall V. Greenville, &c. Co., 72, 86. 
 
 Wiswell V. Congregational Church, 54. 
 
 Withers v. Buckley, 878. 
 
 Withnell v. Gartham, 20. 
 
 Witman v. Lex, 50. 
 
 Witmer v. Schlatter, 671. 
 
 Witte V. Derby Fishery Co., 627. 
 
 Wolf V. Goddard, 462. 
 
 V. Homoastle, 505. 
 Wollaston's Case, 188, 191, 496, 618, 781. 
 Wolverhampton, <fec. Ry. Co. v. London & 
 
 N. W. Ry.Co., 413. 
 Wolverhampton W'Works Co. v. Hawkes- 
 
 f»rd, 132, 135, 164. 
 Wood •(/. Allegheny Co., 532. 
 
 V. Bedford li. R. Co, 124, 237. 
 
 V. Davis, 688. 
 
 V. Draper, 671. 
 
 V. Dummer, 161, 159, 478, 798. 
 
 V. McCain, 318, 547. 
 
 V. Tate, 467. 
 
 V. Wood, 671. 
 Wood, ex parte, 129, 721. 
 Wood Hydraulic, <fec. Co. v. King, 445. 
 Wood Mowing Machine Co.ii. Caldwell,5,6. 
 Woodes V. Dennett, 756. 
 Woodhaus!). Anglo-Australian Ass. Assoc, 
 
 257. 
 Woodhull V. Beaver Co., 632. 
 Woodman «. York, <feo. R. R. Co., 466. 
 Woods V. People's Nat. Bank, 749. 
 Woolf V. City Steamboat Co., 276. 
 Worcester v. Western R. R. Co., 406. 
 Worcester, re, 603. 
 Worcester Corn Exchange Co., re, 215, 
 
 500, 622, 716, 728. 
 Worcester T. Co. v. Willard. 446. 
 Worcester & N. R. R.Co. «.Hinds,164,157. 
 Worral v. Judson, 93. 
 Worth, ex parte, 170, 334, 661. 
 Wright V. Brighton Brewery Co., 69. 
 It. Bundy, 444. 
 V. Carter, 62. 
 V. Deley, 68. 
 V. Lankton, 462. 
 V. Oroville Mfg. Co., 489, 674. 
 V. R. R. Co., 198, 361. 
 Wright's Case, 190, 348. 
 Wyatt V. Met. Bd. of Works, 574. 
 Wylda V. Northern R. R. Co., 898, 411. 
 Wyman v. Hallowell & A. Bank, 472. 
 
 n. Pen. & Ken. R. R. Co., 398. 
 Wynne's Case, 131, 612. 
 Wynn Hall Coal Co. re, 246, 511. 
 
 Tarborough v. Bank of England, 330. 
 Yates V. Van De Bogert, 89. 
 
Ixvi 
 
 TABLE OF CASES. 
 
 Yeaton v. Bank of the Old Dominion, 98. 
 
 Telland's Case, 513, 519. 
 
 Yellow Jacket Mining Co. o. Stevenson, 
 
 538, 565. 
 Yerkes v. Nat. Bank, 494. 
 Yetts V. Norfolk Rv. Co., 152, 666, 686. 
 Yool V. Great W. Ey. Co., 203. 
 York County v. Small, 523. 
 York & Conn. Ry. inre, 228. 
 York & Cumberland R. R. Co. v. Pratt, 154. 
 V. liitchie,150. 
 York & M. Line R. R. Co. v. Winaus, 124, 
 
 237. 
 York & N. Mid. Ry. Co. v. Hudson, 4Y9. 
 
 V. Reg., 405. 
 Young V. Paul, 461. 
 
 Ystalyfera Iron Co. v. Neath & Brecon Ry. 
 
 Co., 393. 
 Zabriskie v. C. C. & C. R. R. Co., 92, 253, 
 272, 442, 508, 509, 515, 525, 
 550, 643, 730. 
 V. Haekensack & N. Y. R.R.Co., 
 
 78, 99, 636, 663, 792. 
 V. I. C. & B. R. R. Co., 693. 
 Zack V. Penn. R. R. Co., 380. 
 Zantzinger v. Guater, 731. 
 Zimmer v. State, 637, 639. 
 Zinc Co. V. Franklinite Co., 608. 
 Zinn V. Mendel, 486. 
 Zirkel v. Joliet Opera House, 142, 182. 
 Zoltraan v. San Francisco, 456, 748. 
 Zulueta's Claim, 95, 771, 772. 
 
TREATISE ON THE DOCTRINE 
 
 ULTRA VIRES. 
 
TREATISE ON THE DOCTRINE 
 
 ULTRA VIRES. 
 
 PART I. 
 
 INTRODUCTORY. 
 
 Section I. — The Legal Status of Coepoeations. 
 
 A coepoeatton is a person which exists in contemplation of 
 law only, an.d not physically. " It is a collection of many indi- 
 viduals united into one body, under a special denomination, hav- 
 ing perpetual succession under an artificial form, and vested by 
 the policy of the law with the capacity of acting in several re- 
 spects as an individual, particularly of taking and granting prop- 
 erty, of contracting obligations, and of suing and being sued, of 
 enjoying privileges and immunities in common, and of exercising 
 a variety of political rights, more or less extensive according to 
 the design of its institution, or the powers conferred upon it, 
 either at the time of its creation or any subsequent period of its 
 existence." This is the definition given by Kyd (1 Kyd, Law of 
 Corp. 13), and it is a fairly accurate description of the general 
 nature of a corporation, but sufficient stress is not laid upon that 
 which is its real characteristic in the eye of the law, viz., its ex- 
 istence separate and distinct from the individual or individuals 
 composing it. (a) 
 
 (a) See C. J. Marshall's definition of a corporation, in Dartmouth College v. Wood- 
 ward, i Wheat. 636. 
 
 " A corporation aggregate is a collection of individuals united in one body, under 
 
 1 
 
2 INTRODUCTORY. 
 
 Considered as a tangible fact, it is a fiction, a shade, a nonen- 
 tity, but a reality for njany legal purposes. A corporation aggre- 
 gate is only in abstracto — it is invisible, immortal, and rests only 
 in intendment and consideration of law. This is the description 
 given by Coke in the Case of Sutton's Hospital (10 Rep. 32 h), 
 and though exception has sometimes been taken to it, and more 
 especially to the statement that a corporation is immortal, prob- 
 ably no better definition at once brief and accurate can be given. 
 The essential part of the notion involved in the term corporation 
 is its abstraction, the intangibility of its existence, its being com- 
 3)osed of a physical being, or beings, through which it mani- 
 iests its capacities and powers, but from which it is totally distinct. 
 This is the one important fact. The members of a corporation 
 aggregate, and the one individual who is constituted a corporation 
 sole, may, from their connection with such, have rights and priv- 
 ileges, and be under obligations and duties over and above those 
 affecting them in their private capacity, but they get them by re- 
 :flection, as it were, from the corporation. They individually are 
 not the corporation {a) — cannot exercise the corporate powers, en- 
 force the corporate rights, or be responsible for the corporate 
 acts, (b) 
 
 such a grant of privileges as secures a succession of members, without changing the 
 identity of the body, and constitutes the members for the time being one artificial 
 person or legal being, capable of transacting some kind of business like u natural 
 person." Bronson, J., in People v. Assessors, 1 Hill, 620. 
 
 " A corporation is a legal institution derised to confer upon the individuals of 
 -which it is composed, powers, privileges and immunities which they would not 
 otherwise possess, the most important of which are continuous legal identity and 
 perpetual or indefinite succession under the corporate name, notvrithstanding succes- 
 sive changes by death or otherwise in the corporators or members of the corpora- 
 tion. It conveys, perhaps, as intelligible an idea as can be given by a brief defini- 
 tion, to say that a corporation is a legal person with a special name, and composed of 
 auch members and endowed with such powers, and such only, as the law prescribes." 
 1 Dillon on Municipal Corp. 91. 
 
 (a) As an inference from the statement that the corporators are not the corpora-, 
 tion, the rule is established that the corporation may sue the corporators, and the 
 corporators sue the corporation. Culbertson v. Wabash N. Co. i McLean, 547; 
 Samuel v. Halliday, 1 Woolw. 418 ; Sawyer v. Methodist Ep. Soc. 18 Vt. 406 ; Rogers 
 *. Danby Univer. Society, 19 Vt. 187; Waring v. Catawba Co. 2 Bay, 110; Giflford v. 
 N. J. R. R. Co. 2 Stock. 171; Pierce v. Partridge, 3 Mete. 44; Barnstead v. Empire 
 Mining Co. 6 Cal. 299; ex parte Booker, 18 Ark. 338. 
 
 (5) The course of legislation in the United States indicates a general intent not to 
 grant special charters. The more modern constitutions of the several States direct 
 
INTRODUCTORY. d 
 
 It is usually laid down that a corporation must have a name, (a) 
 a common seal, and a perpetual identity. " Other attributes and 
 faculties may or may not belong to it, but these are essential. It 
 must undoubtedly possess some designation by which to identify 
 it, and it may possess several names,^ which may be given to it, 
 or acquired by reputation or prescription ;* but there is no neces- 
 sity, even at common law, that it should be described by metes 
 and bounds, or by any particular locality.' (J) 
 
 1 Vaughan v. E. of Bedford, Cro. Eliz. 22 ; Dutch W. Ind. Co. v. Van Jelloses, 
 
 851 ; see 3 Lev. 248. Stra. 611. 
 
 " See Eoight v. Mayor, &c. of Wells, 1 ° Case of Sutton's Hospital, 10 Eep. 
 
 Ld. Raym. 80; Ayray's Case, 11 Rep. 20, 29o. 
 
 the passage of general laws providing for the formation of corporations. Unless the 
 requirements of these general laws are complied with, members become responsible 
 for the corporate liabilities. See Angell & Ames on Corporations, chapter zvii, and 
 notes ; Chase v. Lord, 16 Hun, 369. 
 
 (ffl) A corporation may be known by several names. Minot v. Curtis, 7 Mass. 441 ; 
 Melledge v. Boston Iron Co. 5 Cush. 168; Conro v. Port Henry Iron Co. 12 Barb. 27. 
 A'corporate name may be acquired by usage. Smith v. Flank Road Co. 30 Ala. N. 
 S. 650. Where the corporate name consists of several descriptive words, the trans- 
 position or omission of some of them, or an interpolation, is not a material variance, 
 so long as there is no doubt as to the body intended to be designated. Trustees v. 
 Parks, 10 Maine, 441 ; Newport Mechanics' Man. Co. v. Starbird, 10 N. H. 123 ; 
 Medway Cotton Co. v. Adams, 10 Mass. 360 ; First Parish v. Cole, 3 Pick. 232; Com- 
 mercial Bk. V. French, 21 Pick. 490; Kentucky Seminary v. Wallace, 15 B. Mon. 45 ; 
 Turnpike Co. v. Myers, 6 8. & R. 12 ; Northumberland Bk. v. Eyer, 60 Penn. St. 
 436; Miiford Turnpike Co. v. Brush, 10 Ohio, 111; Middletown v. McCormack, 2 
 Pennington, 500 ; AUoway's Creek v. String, 6 Halstead, 326 ; Vansant v. Roberts, 
 3 Md. 119; Coulter v. Trustees of Western Seminary, 29 Md. 69; Virginia Steam 
 Nav. Co. u. U. S., Taney, 418 ; Goodell v. Union Association, <fcc. 29 N. J. Eq. 32 ; 
 DeCamp «. Dobbins. Id. 36 ; Hagerstown Turnpike Co. v. Creeger, S H. <fe J. 122 ; 
 Bower v. Bk. of the State, 5 Ark. 234; Thatcher v. West River Nat. Bank, 19 Mich. 
 196 ; People v. Potter, 35 Cal, 110 ; African Soc. v. Variok, 13 Johns. 38 ; McGary 
 V. People, 45 N. Y. 153. Where a name is given by statute, the corporation can 
 act by no other name. Glass v. Tipton Turnpike Co. 32 Ind. 376. An injunction 
 may be granted to a corporation to restrain persons from adopting and using 
 the same corporate name with that previously adopted, regularly and in good faith, 
 by the complainant. Newby v. ©regon R. R. Co., Deady, 609; see Holmes v. 
 Holmes, 37 Conn. 278. So, also, it is held that an error in the name in an execution 
 is a material variance and fatal. Bradford v. Water Lot Co. of Columbus, 58 Ga. 
 280. As to change of name, see Hx parte Walker, 1 Tenn. Ch. 97; Morris i;. St. 
 Paul Rw. Co. 19 Minn. 528 ; Chicago, Dubuque <fe Minn. R. R. Co. v. Keisel, 43 Iowa, 
 39 ; Water Lot Co. v. Bank of Brunswick, 53 Ga. 30; Pacific Bank v. DeRoe, 37 Cal. 
 538 ; Episcopal Society v. Episcopal Church, 1 Pick. 372 ; Girard v. Philadelphia, 
 1 Wall. 1 ; Dean v. La Motte Lead Co. 59 Mo. 623. 
 
 (6) As to location or domicile of corporations. Potter v. Bank of Ithaca, 5 Hill, 
 490 ; s. 0. 7 Hill, 630 ; People v. Geneva Coll. 5 Wend. 211 ; People v. McLean, 17 Hun, 
 
4: INTRODUCTORY. 
 
 A corporation being entirely fictitious and purely the creation 
 of law, it might fairly be argued that it can exist only where the 
 power which called it into being exists to give continued vitality 
 to the artificial creation. Doubts have from time to time been 
 expressed as to whether the English courts at all, and if at all, 
 how far, can recognize foreign corporations and their incidents. 
 Some of these doubts may remain, but in so far as relates to 
 legal proceedings, it is since the Judicature Acts quite settled that 
 foreign corporations, even though not incorporated according to 
 English law,^ may sue and be sued in English courts to judg- 
 ment, whether resident in England or not.' {a) 
 
 ' 'Serrhy v. Van Oppen, (fee. Mfg. Co. 1 Ex. D. 237. As to the domicile of a 
 
 L. R. 7 Q. B. 293. corporation, see Carron Iron Co. v. Mac- 
 
 '' Scott V. Royal "Wax Candle Co. 1 Q. laren, 5 H. L. G. 416 ; Same v. Stainton, 
 
 B. D. 404 ; Westman v. Aktiebolaget, <fec. 24 Beav. 346. 
 
 204; Bank of the U. S. v. Deveaux, 5 Cranch, 84; Runyan v. Coster, 14 Peters, 122 ; R. 
 R. Co. ». Letson, 2 How. 497; Ohio <fe Miss. R. R. Co. v. Wheeler, 1 Black, 286 ; Ins. 
 Co. V. Francis, 11 Wall. 216 : R. R. Co. v. Harris, 12 Wall. 83; Androscoggin R. R. 
 Co. 0. Stevens, 28 Me. 434; Blackstone Mfg Co. u. Blackstone, IS Gray, 488 ; Crofut 
 V. Brooklyn Ferry Co. 36 Barb. 201 ; "Western Tr. Co. v. Scheu, 19 N. Y. 408 ; Mer- 
 rick V. Van Santvoord, 34 N. Y. 208; People v. McLean, 17 Hun, 204; Maryland v. 
 Northern R. R. Co. 18 Md. 193; Baltimore, <fec. R. R. Co. v. Glenn, 28 Md. 287; 
 Crowley v. Panama R. R. 30 Barb. 99 ; Glaize v. So. Car. R. R. 1 Strobh. 70; Bank 
 of N". America v. C. D. & V. R. R. Co. 82 111. 493 ; State v. Milwaukee, L. S. & "W. 
 Ry. Co. 46 "Wis. 679. A foreign corporation does not become a domestic corporation 
 by complying with the laws of a State in pursuance of which a foreign corporation 
 may do business there without liability attaching to the officers. Cook v. Hager, 3 
 Col. 386. But a corporation having stipulated for service on an agent, in another 
 State, may be " found there," so as to give the United States Courts jurisdiction. Ex 
 parte SchoUenberger, 6 Otto, 369. As to companies incorporated under the laws of 
 more than one State, see Railroad Company v. Vance, 6 Otto, 450 ; Bridge Co. v. 
 Mayer, 31 Ohio St. 317 ; Matter of Sage, 70 N. Y. 220 ; Sprague v. Hartford, <fec. 
 R. R. Go. 6 R. I. 233 ; State v. Northern, <fec. Ry. Co. 18 Md. 193 ; Ohio & Miss. R. 
 R. Go. V. Wheeler, 1 Black, 286 ; Quincy R. R. Bridge Go. v. Adams County (S. C. 
 111.), 6 Reporter, 553. A national bank is a foreign corporation. Nat. Park Bank !'. 
 Gunst, 1 Abb. N. C. 292 ; Merchants' Nat. Bank v. McNaughton, Id. 293, n. ; Bowen 
 V. First Nat. Bank of Medina, 34 How. Pr. 409. 
 
 (a) Corporations created by foreign governments are recognized by, and may sue 
 and be sued in the courts of the Federal and State governments. "Weymouth v. 
 "Washington <fe Alexandria R. R. Co. 1 Mc Arthur, 19; Liverpool Ins, Co. v. Massa- 
 chusetts, 10 "Wall. 566. 
 
 The question of the position of corporations created by one State of the Union 
 in any other State, has given rise to much discussion. The rules established may be 
 thus stated : 1. Corporations have no status in States as citizens of the State creating 
 them. Bank of Augusta v. Earle, 13 Peters, 519, 586 ; Myers u. Manhattan Bank, 
 
INTRODUCTORY. 
 
 The common seal is an unquestionable incident of every cor- 
 poration, and evidence that there was a time when a borough had 
 
 20 Ohio, 283. They are not citizens within the constitutional provision that the 
 citizens of each State shall be entitled to all the privileges and immunities of citizens 
 in the several States, in such sense as to prevent a State from imposing conditions 
 for permitting them to do business within its limits. They are creatures of local 
 law, and have not even an absolute right of recognition in other States, but depend 
 for that and for the enforcement of their contracts upon the assent of such States ; 
 which may be given on such terms as the States may respectively prescribe. Paul 
 -w. Virginia, 8 Wall. 168 ; Insurance Co. v. Morse, 20 Wall. 446 ; Farnum v. Black- 
 stone Canal Co. 1 Sumn. 46 ; Runyan v. Coster, 14 Pet. 122 ; Ohio & Miss. B. R. Co. 
 ■11. Wheeler, 1 Black, 297 ; Ducat v. City of Chicago, 10 Wall. 410; 48 111. 173 ; Car- 
 roll V. City of East St. Louis, 67 HI. 568 ; Matthews i). Theological Sem. 2 Brews. 
 541 ; Fhceniz Ins. Co. v. Commonwealth, 5 Bush, 68 ; Gill v. Kentucky Mining Co. 7 
 Bush, 635 ; Martin v. Mobile, Ac. R. B. Co. 7 Bush, 116; Land Grant Co. v. Cofifey, 
 6 Kans. 245; Warren Co. v. jEtna Ins. Co. 2 Paine, 601 ; State v. Lathrop, 10 La. Ann. 
 398 ; State v. Posdick, 21 La. Ann. 434; Lafayette Ins. Co.;;. French, 18 How. 404 ; 
 Milnor v. N. T. & N. H. R. R. Co. 53 TS. Y. 363; Fire Department v. Noble, 3 E. D. 
 Smith, 449 ; Tatem ti. Wright, 3 Zab. 444 ; County of Allegheny v. Cleveland & 
 Pittsburg R. B. Co. 51 Penn. St. 228; Slaughter v. Commonwealth, 13 Grat. 767; 
 Commonwealth v. Milton, 12 B. Mon. 212; Doyle v. Continental Ins. Co. 4 Otto, 535; 
 Wood Mowing Machine Co. v. Caldwell, 64 Ind. 270 ; State of Indiana v. American 
 Express Co. 7 Biss. 230; Lamb v. Bowser, 7 Biss. 315, 372; Northwestern Ins. Co. 
 
 D. Overholt, 4 Dill. 287 ; Bellows ». Todd, 39 Iowa, 209 ; Thompson ii. Waters, 26 
 Mich. 214; Home Ins. Co. «/. Davis, 29 Mich. 238; Farmers' & Merchants' Ins. Co. 
 V. Harrah, 47 Ind. 236 ; Western Union Tel. Co. d. Mayer, 28 Ohio St. 521. The 
 right to impose conditions will not, however, authorize the exclusion or regulation 
 of foreign corporations engaged in interstate commerce. Pensacola Tel. Co. v. West- 
 ern Union Tel. Co. 6 Otto, 13. In the case of City of Council Bluffs v. Kansas, Ac. 
 
 E. R. Co. 46 Iowa, 338, the court, discussing the validity of a statute regulating the 
 transfer of freight at the State line, says : " Any regulation of the transportation of 
 interstate commerce, whether it be upon the high seas, the lakes, the rivers, or upon 
 railroads or other artificial channels of communication, affecting 6ommerce, operates 
 as a regulation of commerce itself. It has been so held by the Supreme Court of the 
 United States. Reading Railroad Co. v. Pennsylvania (State Freight Tax Cases), 16 
 Wall. 232 ; Passenger Oases, 7 How. 283 ; The State of Pennsylvania v. Wheeling & 
 Belmont Bridge Co. 18 How. 421 ; Gibbons v. Ogden, 9 Wheat. 1 ; Brown v. State 
 of Maryland, 12 Wheat. 419 ; Almy v. State of California, 24 How. 169. Taxation 
 upon freights carried by railroad companies, laws requiring the payment by masters 
 of vessels of a fixed sum for each passenger brought from a foreign port, those 
 granting exclusive right to navigate rivers with boats propelled by steam, those im- 
 posing a stamp duty upon bills of lading, and those authorizing the building of 
 bridges over navigable rivers, and the like, are held to be regulations of commerce.'' 
 The law was declared void. See, also. State v. American Express Co. 7 Biss. 227 ; 
 State J/. Carrigan, 39 N. J. Law, 35 ; and, contra, American Union Express Co. v. 
 City of St. Joseph, 66 Mo. 675; Pullman Southern Car Co. v. Gaines, 3 Tenn. Ch. 
 687. As to State control over national banks, see Farmer's Bank v. Dearing, 1 Otto, 
 34 ; Ehoner v. First Nat. Bank, 14 Hun, 126. As to the effect upon contracts of a 
 
INTRODUCTORY. 
 
 not a common seal has consequently been held evidence that It 
 was not then a corporation.' It has been said that it may, by 
 
 1 Bailiffs of Ipswich v. Jolinston, 2 Barnard, 191. 
 
 failure to comply with statutory regulations of the business of foreign corporations, 
 see "Wood Mowing Mach. Co. v. Caldwell, 54 Ind. 2170 ; Domestic Sewing Mach. Co. 
 V. Hatfield, 58 Ind. 18Y; U. S. Life Ins. Co. v. Adams, 1 Bias. 30; Northwestern, &o. 
 Ids. Co. v. Overholt, 4 Dill. 287 ; Amer. Ins. Co. v. Cutler, 36 Mich. 261 ; ^tna Ins. 
 Co. «. Harvey, 11 Wis. 394; Charter Oak Life Ins. Co. v. Sawyer, 44 Wis. 38"?; 
 Columbus Ins. Co. v. Walsh, 18 Mo. 229 ; Clark v. Middleton, 19 Mo. 53 ; Bank of 
 British Columbia v. Page, 6 Oreg. 431. 
 
 But 2. A corporation which has a legal existence in any one State, can sue in 
 the Federal courts of any other State. National Park Bank v. Nichols, 4 Biss. 315. 
 There is an incontrovertible presumption that the members of the corporation are 
 citizens of the State creating it. Louisville R. R. Co. v. Letson, 2 How. 497 ; Marshall 
 V. Baltimore <fe Ohio R. E. Co. 16 How. 314 ; Ohio & Miss. E. E. Co. ii.Wheeler, 1 Black, 
 286 ; Ins. Co. v. The C. D. Jr. 1 Woods, 72 ; Atkins v. Fire Disintegrating Co. 7 
 Blatoh. 555. And although it was at one time doubted whether a corporation could 
 be sued in the Federal courts of any State other than that which created it, unless 
 upon voluntary appearance — ^Day v. India Rubber Co. 1 Blatch. 628 ; Pomeroy v. 
 New York <fe N. H. E. E. Co. 4 Blatchf. 120; Myers v. Dorr, 13 Blatch. 22— it is now 
 determined that suit can be brought in any Federal court, where service can be ob- 
 tained according to the statutory rules of the State where such court is established. 
 Railroad Co. v. Harris, 12 Wall. 65; Eailway Co. „. Whiton, 13 Wall, 270; ex parte 
 SchoUenberger 6 Otto, 369. A State statute requiring corporations desiring to trans- 
 act business in the State to subscribe an agreement waiving any right to apply for a 
 removal of suits against them to the National courts, is unconstitutional and void, 
 and an agreement made in obedience to the exaction cannot be enforced. Insurance 
 Co. V. Morse, 20 Wall. 445 ; see Express Co. v. Ware, Id. 543. But notwithstanding 
 such law is void, yet, as each State has the right to deny to foreign corporations the 
 privilege of carrying on business within the State, the United States courts cannot 
 enjoin the State Secretary of State from revoking the license of a foreign corpora- 
 tion, upon the allegation that hia reason for so doing is, that the corporation has not 
 entered into such an agreement. The motives which induce a State to refuse liberty ' 
 to do business to foreign corporations are not open to inquiry. Doyle v. Continental 
 Ins. Co. 94 U. S. (4 Otto), 636; contra, Hartford Fire Ins. Co. v. Doyle, 6 Biss. 461. 
 See, in this connection. Bait. & Ohio R. R. Co. v. Wightman's Adm'r, 29 Gratt, 431. 
 
 3. The right of a corporation created in one State, to transact corporate business 
 and make contracts, in another State, is a right based upon the comity between the 
 States; but when contrary to the general policy of the State, or forbidden by local 
 law, or prejudicial to the interests of the State, the comity ceases to be obligatory. 
 Ducat V. Chicago, 48 111. 172; Paul «. Virginia, 8 Wall. 168; Baltimore, <fec.R.E.Co. 
 V. Glenn, 28 Md. 287; Williams v. Creswell, 51 Miss. 817; Newburg Petroleum Co. 
 V. Weare, 27 Ohio St. 843; Hadley v. Freedman's Savings, <fec. Co. 2 Tenn. Ch. 122; 
 Carroll v. City of East St. Louis, 67 111. 568. The comity involved in this question is 
 the comity of the States and not of the courts ; and the judiciary must be guided in 
 deciding the question by the principle and policy adopted by the Legislature ; not 
 only by the express provisions made by the Legislature and the natural implication 
 
INTRODUCTORY. 7 
 
 common consent, change its seal at any time, and consequently it 
 may validly affix to an instrument any seal whatever, provided it 
 purport to be the corporate seal.' But considering the embarrass- 
 ments and doubts that would arise from constant change in the 
 corporate seal, and also the fact that the Legislature has by statute 
 
 ' Sheph. Touch. 51. 
 
 from them, but also by their silence; for, if they have made no provieion at all upon 
 the particular subject, or branch of the subject, or question involved, it may reason, 
 ably be inferred that they intended to adopt the generally received principles of 
 comity, and to that extent, to recognize the rights dependent upon the foreign laws. 
 Thompson v. Waters, 26 Mich. 214. 
 
 In Merrick v. Van Santvoord, 34 IT. Y. 21Y, Porter, J. said: "The rules of com- 
 ity are subject to local modification by the law making power; but, until so modified, 
 they have the controlling force of legal obligation. The franchises and immunities 
 which they secure, it is the duty of the courts to respect, until the sovereign sees fit 
 to deny them. The rights of a foreign suitor or defendant, so far as they are un- 
 abridged by legislation, are as imperative and absolute as those of the citizen. These 
 rules have their place in every system of jurisprudence. As there are certain con- 
 servative powers not derived from grant but inherent in every government, because 
 essential to its existence, so there are certain obligations, springing from the necessi- 
 ties of National intercourse, and recognized by all civilized communities in the law of 
 general comity. They have been uniformly acknowledged and enforced by the 
 courts of this State." But no rule of comity allows one State to send corporations 
 into other States, to do business there, which they are forbidden to do in the State 
 of their origin. Land Grant B. R. <fec. Co. v. Coffey County, 6 Kans. 245. 
 
 4. The right to sue a corporation in courts of another State, depends generally 
 upon express legislation varying in different States, See Lathrop v. Union Pacific 
 K. R. Co. 1 McArthur, 234; Dallas v. Railroad Co. 2 MoArthur, 146; Howell v. Chi- 
 cago B. R. Co. 61 Barb. 378 ; Fisk v. Chicago R. R. Co. 53 Barb. 513 ; Redmond v. 
 Hoge, 3 Hun, 171 ; Barnett v. Chicago R. R. Co. 4 Hun, 114; Latimer v. Union Pa- 
 cific R. B. Co. 43 Mo. 105; Newell v. Gt. Western R. R. Co. 19 Mich. 336; Camden 
 Rolling MiU Co. v. Swede Iron Co. 32 N. J. L. 15 ; Nat. Condensed Milk Co. v. Branden- 
 burgh, 40 N. 3. L. Ill ; Bait. & Ohio R. R. Co. v. Wightman's Adm'r, 29 Gratt. 431 ; 
 North Mo. R. R. Co. v. Akers, 4 Kans. 453 ; City Ins. Co. o. Garrugi, 41 Ga. 660 ; 
 Bawkright v. Insurance Co. 56 Ga. 194; Weight v. Liverpool L. <fe G. Ins. Co. 30 La. 
 Ann. 1186. 
 
 As to the effect of judgments rendered against foreign corporations, where the 
 corporation does not appear, see the elaborate discussion and review of authorities 
 in Gibbe v. Queen Ins. Co. 63 N. Y. 114; also Lafayette Ins. Co. o. French, 18 How. 
 406 ; Barnett v, C. & L. H. R. B. Co. 4 Hun, 114. In this connection, see, as to re- 
 lief not to be granted against a foreign corporation. Chase v. Vanderbilt, 62 N. Y. 
 307 ; Fisk v. C, B. I. & P. R. R. Co. 4 Abb. N. S. 378 ; Redmond v. Enfield Mfg. Cq. 
 18 Abb. N. S. 332 ; Port Royal R. R. Co. v. Hammond, 58 Ga. 523. 
 
 As to the holding of real estate by foreign corporations, see post, pp. 12-14, n. 
 
 As to the corporate acts done out of the corporate domicile, see post, under " The 
 exercise of powers by corporations." 
 
8 INTRODUCTORY. 
 
 expressly authorized limited liability companies to alter from time 
 to time their common seal,' and that in some charters a similar 
 power has been given, it may fairly be questioned whether such a 
 power exists at common law. 
 
 The possession and user of a seal purporting to be a common 
 seal by a body does not necessarily show that they are a corpora- 
 tion,^ for many bodies not only have a common seal, but also take 
 in perpetual succession, and yet are not corporations. Thus the 
 Commissioners in Lunacy have a common seal (8 & 9 Yict. c. 100, 
 s. Y), so have the Inns of Court (Skinner, 684), but neither is a 
 corporation.' And of course, the assumption by a number of per- 
 sons of a common seal, and the affixing of the same to a contract, 
 cannot confer on such persons any of the qualities of a corpora- 
 tion, or enable them to sue collectively upon such contract.* 
 
 Corporations enjoy to some extent the attribute of immortal- 
 ity. It is often said that they never die. But this expression is 
 scarcely correct. Some corporations have been, by special acts of 
 parliament, created for limited and definite periods only — the 
 East India Company and the Bank of England were, at their 
 origin, instances of this kind ; so was the South Sea Conipany. {a) 
 
 Moreover, the existence of a corporation may be suddenly de- 
 termined in various ways, e. g., by the withdrawal or cancellation 
 of its charter, by winding up under statutory provisions, or the 
 like. The better expression is, therefore, that of continuous 
 identity. This simply denotes that, notwithstanding the l,apse of 
 time or alterations in the constitution of a corporation, or the re- 
 newal, many times repeated, of all its members, or its reconstruc- 
 tion on a new basis, and with even different objects,^ (5) the cor- 
 poration itself remains the same — it does not import that it must 
 or will continue forever. 
 
 1 7 A 8 Vict. u. 110, a. 26. * Cooch v. Goodman, 2 Q. B. 580. 
 
 ' Stallingera of Sunderland's Case, ' See Att.-Gen. v. Kerr, 2 Eeay. 420 ; 
 
 cited 2 Q. B. 593. Att.-Gen. v. Corporation of Leicester, 9 
 
 ' See many instances referred to in Beav. 646. 
 Merew <fc Steph. " Hist, of Boroughs," 
 
 (o) There are but few corporations in the United States now in existence whose 
 tharters are perpetual; and since the doctrine of eminent domain has been applied 
 to the condemnation of franchises as well as to other species of property, it may be 
 doubted whether any charter can be said to be unlimited in its duration. 
 
 (6) This reconstruction on a new basis, or with different objects, can only be effected 
 by the consent of all the members, or by compensation being awarded to those dis- 
 senting. Black V. D. <fe R. C. Co. 1 C. E. Green, 130 ; s. o. on appeal, 9 C. E. Green, 456. 
 
INTSODUCTORT. ' 9 
 
 Section II. — The Oedinaet Incidents of Ooeporations. 
 
 The incidents of a corporation, as enumerated by Blackstone, 
 9th ed. bk. i, p. 475, are : 1. To have perpetual succession. 2. To 
 perform all legal acts — to sue and be sued, to grant and receive, 
 &c. — in its corporate name, and to do all other acts as natural per- 
 sons may. 3. To purchase lands and hold them for the benefit of 
 themselves and their successors. 4. To have a common seal. 
 5. To make by-laws or private statutes for the better government 
 of the corporation, which are binding upon themselves, unless 
 contrary to the laws of the land, and then they are void. 
 
 H^ow, in reference to the above, it may be observed, in the first 
 place, as Blackstone himself points out, that the last two powers, 
 though they may be practiced by, yet are very unnecessary to, a 
 corporation sole : and secondly, that it is but a list, and that 
 neither complete nor systematically arranged, of the incidents 
 which exist at common law. 
 
 As to 1 — Perpetual Succession. It would seem that this is 
 by the common law an absolute essential of a corporation, and 
 that the crown cannot of its prerogative create corporations 
 having a limited duration. The 1 Vict. c. Y3,^ however, has, by 
 section 29, empowered the sovereign in any cha/rter of incorpora- 
 tion to be hereafter granted, to limit the duration thereof for any 
 term or number of years, or for any period whatever. Refer- 
 ence has also been made ^ to statutory corporations of a similar 
 description. 
 
 As to 2. The corporation, as a distinct and separate entity, 
 being alone recognized in all legal matter affecting itself, it fol- 
 lows that the corporate property and funds alone are liable for 
 the corporate transactions, and that no responsibility for the same 
 can be attached to any member of the corporation merely as 
 such. The corporation exists; it enforces its own rights and 
 privileges — through agents, indeed, since it is invisible — and is 
 liable on account of any proceeding authorized or ratified by it ; 
 no private individual can enforce these rights, or be brought 
 
 ' Usually called the Letters Patent ly upon the terms of their patent. See 
 
 Act. Companies formed under this stat- PhilUpson v. Egreraont, 6 Q. B. 587. 
 ute are not necessarily corporations, see ^ Ante, p. 8. 
 
 Act. Their incidents, <fec., depend entire- 
 
10 INTRODUCTORY. 
 
 under any obligation for the results arising from their enforce- 
 ment, {a) 
 
 But the joint-stock and other similar acts have not only al- 
 lowed corporations to be created, the members of which are re- 
 sponsible for the contracts,, &c., of the corporation up to the 
 amount of the shares held by them in it ; but also given the mem- 
 bers power to transfer their interest to other parties, without 
 asking permission of the general body. This is a most important 
 modification of the doctrines of the old common law, which in no 
 case recognized the individual apart from the corporation, or 
 deemed him to possess any interest in its funds or franchises, 
 which he could at his absolute pleasure convey to another. 
 
 Blackstone adds, that corporations may " do all other acts as 
 natural persons may." This statement is manifestly wrong if 
 taken in its full sense. A corporation could not levy a fine, wage 
 law, be outlawed, or perform fealty or homage, nor can it com- 
 mit treason or felony, or be bound by statute or recognizance, or 
 be summoned into the ecclesiastical courts, or be executor, or ad- 
 ministrator. But it is probable that their capacity was limited, 
 in the opinion of even the older judges, to a much greater degree 
 than these few disabilities. A corporation always forfeited its 
 charter for abuse of its franchises — " if the trust be broken, and 
 the end of its institution be perverted," j>er Holt, in Kex v. 
 Mayor, &c. of London.^ It is here, and in many other cases, dis- 
 tinctly recognized that a corporation has a definite scope and 
 limit, outside which it may not presume to act without., risking 
 its very existence. This is but the germ of the doctrine of ultra 
 vires, which has been so greatly developed by recent decisions. 
 
 As to 3. Blackstone has not noticed the acquisition of pure 
 personalty. This species of property every corporation not ex- 
 pressly restricted therefrom may acquire, hold, and deal with as 
 fully and freely as an ordinary individual. As to lands, it should 
 
 ' 1 Show. 274, 280. 
 
 (o) This must be taken with the qualification that in certain contingencies share- 
 holders may enforce the corporate rights in equity, on failure of directors to do so. 
 And also that in the United States, stockholders, on failure to comply with stat- 
 utory requirements, similar in some respects to the joint-stock and other acts of 
 Great Britain alluded to in the text, become responsible for corporate liabilities. 
 See Angell & Ames on Corporations, chap, xvii, and notes. 
 
INTRODUCTORY. 11 
 
 be pointed out, that " it is not correct to say that every corpora- 
 tion aggregate, as such, has power to acquire lands as an incident 
 to its incorporation ; the proper mode of stating the law seems 
 to be that, subject to the discretion of the crown or parliament 
 as to the grant of a license in mortmain, a corporation has a 
 capacity to take and hold in perpetuity." Grant, " Corpora- 
 tions," 98. (a) 
 
 (a) " We have not in this country re-enacted the statutes of mortmaiD, or generally 
 assumed them to be in force ; and the only legal check to the acquisition of lands by 
 corporations consists in those special restrictions contained in the acts by which they 
 are incorporated, and which usually confine the capacity to purchase real estate to 
 specified and necessary objects; and in the force to be given to the exception of cor- 
 porations out of the statute of wiUs which declares that all persons, other than 
 bodies politic and corporate, may be devisees of real estate. The^tatutes of mort- 
 main are in force in the State of Pennsylvania. By the statute in Pennsylvania 
 of 6th of April, 1833, all purchases of land by any corporation, or by any person in 
 trust for one, without the license of the commonwealth, are made subject to for- 
 feiture, and the same penalty extends to all lands held by corporations existing in 
 other States, either directly or through the medium of trustees or feoffees. Pur#)n's 
 IJig. 860. The provincial statute of Massachusetts of 28 Geo. II, was commonly 
 called a statute of mortmain. It was virtually repealed by the statute of 1786, 
 which was a substitute for it ; and it has been held that a bequest in trust for pious 
 and charitable uses was not void. Bartlet v. King, 12 Mass. 637. The Revised Stat- 
 utes of Massachusetts of 1836 continue the same provision, and deacons and church- 
 wardens of Protestant churches are made bodies politic competent to taie dona- 
 lions for their churches and for the poor thereof. Revised Statutes, part 1, tit 8, c. 
 20, sec. 39. The British mortmain acts were never recognized as the law of Virginia 
 or Kentucky. Moore's Heirs i/. Moore's Devisees, 4 Dana, 356; Lathrop v. Com- 
 mercial Bank of Scioto, 8 Dana, 114. In Louisiana, substitutions and ^fidei commissa 
 are abolished. Civil Code, art. 1 507. The object was to prevent property from be- 
 ing placed out of commerce, but it does not apply to naked trusts to be executed 
 immediately." 2 Kent's Com. (12 ed.) 356; see Runyon v. Lessee of Coster, 14 Pe- 
 ters, 122; Miller v. Porter, 63 Penn. St. 292 ; Potter „. Thornton, 7 R. I. 262 ; Perin 
 V. Carey, 24 How. 465; Page v. Heineberg, 40 Vt. 81; Odell v. Odell, 10 Allen, 1. 
 
 Corporations for religious or charitable purposes cannot acquire or hold real 
 estate in any territory of the United States of greater value than fifty thousand dol- 
 lars, under penalty of forfeiture and escheat to the United States. 12 Stats, at 
 Large, c. 126, sec. 3, p. 601 ; U. S. Rev. Stat. sec. 1890, p. 333. 
 
 The United States is a body politic and corporate, and, as other corporations, 
 capable of contracting, U. S. v. Maurice, 2 Brook. 96, 109 ; and of taking a bond, U. S. 
 V. Tingey, 5 Peters, 115, 128 ; or other security for debts due to it, U. S. v. Bradley, 
 
 10 Peters, 369 ; U. S. v. Linn, 15 Peters, 311; Nelson v. Lagon, 12 How. 108 ; U. S. v. 
 Hodson, 10 Wall. 395 ; and of holding property, real and personal, Cotton v. U. S. 
 
 1 1 How. 229. But where the law of a State allows real estate to be devised only to 
 natural persons and to corporations established by the Legislature of such State, a 
 devise of such real estate to the United States is void. U. 8. v. Fox, 52 N. Y. 530 ; 
 
12 INTRODUCTORY. 
 
 From very early times, as is well known, the Legislature, 
 favoring the unfettered alienation of land, and seeing that this 
 was greatly impeded by the transfer to corporations, who took^ in 
 perpetuity and never died, passed numerous statutes interposing 
 obstacles to such transfer. Of these the most important were, 7 
 Ed. I, St. 2, c. 1 (De viris religiosis), and 13 Ed. I, st. 1, c. 32 
 (Westminster the second), which declared that no corporation, 
 ecclesiastical or lay, should buy or sell, or in any way take land by 
 gift, lease, or otherwise, under pain of forfeiture of the same, 
 with power to the next lord of the fee within one year to enter, 
 and if he do not, then the next lord has half a year to enter, and 
 in default of all the mesne lords, then the king can seize : and 15 
 Kich. II, c. 5, which extended the provision of these statutes to 
 aU alienations to the use of corporations. The effect of these en- 
 actments is, that a corporation may, without license from the 
 crown,^ acquire lands,* {a) but the mesne lords or the crown may, 
 
 ' The grant of such a license is mere- censes are now granted in pursuance of 1 
 
 ly* waiver of the crown's right to enter; & 8 Will. IIT, c. 3Y. 
 it does not abrogate the statutes of mort- * See Att.-Gen. v. New England C«., 
 
 main with respect to the mesne lords ; cited 2 Keen, 285 ; Farrar v. Vaughan, 2 
 
 but as the titles of these latter have now Ves. Sr. 188 ; contra, Att.-Gen. v. Wilson, 
 
 become impossible to trace, it in reality 2 Keen, 685 ; Horsey's Claim, L. E. 6 Eq. 
 
 abolishes the penalties of mortmain. Li- 661 ; Simpson a. Westminster Palace 
 
 Hotel Co. 8 H. L. C. 712. 
 
 s. 0. 4 Otto, 315. Where there is no such restriction the devise is good. Dickson 
 ■V. V. S. 125 Mass. 311. 
 
 The city of St. Louis cannot take real estate in New York, because by its charter 
 it is riot authorized to take or hold such real estate upon any trust, use or purpose, 
 and because by a law of New York no devise to a corporation could be valid unless 
 such corporation was expressly authorized by its charter or by statute to take by 
 devise. Boyce v. City Saint Louis, 29 Barb. 650 ; o. p. Starkweather v. Am. Bible 
 Soc. 72 111. 50. 
 
 The capacity of a foreign corporation to take lands in Connecticut by devise, is 
 unaffected by any provisions of the law of the State of incorporation, restricting de- 
 vises to corporations. If the charter gives general corporate powers, the c&pacity to 
 take must be determined by the laws of Connecticut governing devises. Thus the 
 American Tract Society may take by devise in Connecticut, notwithstanding the 
 statute of wills of New York, where it was incorporated, might prevent a similar de- 
 vise there, from vesting. White v. Howard, 38 Conn. 342. 
 
 If a corporation cannot hold land in its own name, it is said that it cannot hold it 
 in the name of another ; nor take a beneficial interest in it. Coleman v. San Rafael, 
 <fec. Koad Co. 49 Cal. 517. See Clemens v. Clemens, 37 N. Y. 75 ; Chamberlain v. 
 Chamberlain, 43 N. Y. 424; Harris v. Bible Soc. 2 Abb. Ct. of Ap. Dec. 316; 
 Downing v. Marshall, 23 N. Y. 366 ; White „. Howard, 46 N. Y. 144 ; Fellows v. 
 Miner, 119 Mass. 541. 
 
 (a) The power to acquire lands is unlimited unless restricted by express law. Page 
 
INTRODUCTORY. 13 
 
 within the prescribed period, seize them. The alienation is good 
 as against the grantor under any circumstances, and good as re- 
 
 V. Heineberg, 40 Vt. 81 ; Central Gold M. Co. v. Piatt, 3 Daly, 263. Corporations 
 cannot hold real estate beyond the authority conferred by their charter. Steamboat 
 Co. V. McCutcheon, 13 Penn. St. 15; Riley v. Rochester City, 9 N. Y. 64; see Down- 
 ing V. Marshall, 23 N. Y. 366; State v. Mansfield, 3 Zab. 512; State v. Newark, 1 
 Dutch. 315 ; Parish v. Cole, 3 Pick. 232. In Pennsylvania, a foreign corporation 
 may lawfully take a lease of an office in which to transact its business. Steamboat 
 Co. V. McCutcheon, 13 Penn. St. 15. In Vermont, foreign corporations may take and 
 hold lands. State v. B. C. <k M. 26 Vt. 433 ; Claremont Bridge v. Royce, 42 Vt. 730. 
 In New Hampshire. Lumbard v. Aldrich, 8 N. H. 31. In New York. Silver Lake 
 Bk. V. North, 4 Johns. Ch. 370 ; Boyce v. St. Louis, 29 Barb. 650. In New Jersey. 
 See Revision 1877, p. 195, § 99; Black v. D. & R. C. Co. 7 C. E. Green, 422. In 
 Kentucky. See Lathrop v. Commercial Bank, 8 Dana, 116. In Illinois. See North- 
 ern Transp. Co. v. Chicago, 7 Biss. 52. But in Carroll v. East St. Louis, 67 111. 568, 
 it was held that a foreign corporation, created for the express purpose of purchasing 
 and selling real estate, could not exercise such power in Illinois upon the ground that 
 such exercise was against the general policy of the State in regard to domestic cor- 
 porations, and tended to create perpetuities. A foreign corporation cannot purchase 
 and hold real estate in Illinois beyond what is necessary for the transaction of its 
 business or the collection of its debts, either for its own benefit or in trust for others. 
 United States Trust Co. v. Lee, 73 lU. 142. It is, however, held in United States 
 Mortgage Co. n. Gross (7 Cent. L; J. 226), that the rule, that foreign corporations 
 could not purchase and hold real estate in Illinois, did not apply to corporations 
 created for the purpose of loaning money upon real estate, and that the act (Laws 
 1875, p. 65) permitting such loan and purchase by the corporation, under foreclos- 
 ure of the land mortgaged, was retroactive and was not unconstitutional. In 
 Thompson v. Waters, 25 Mich. 214, it is said, a railroad corporation chartered in 
 another State, with power to acquire lands in that State, will be allowed to acquire 
 land in Michigan. Strictly, the legal existence of a corporation is confined to the 
 State which created it and endowed it with its powers, capacities and rights ; and it 
 can exercise those powers, capacities and rights in another State only by the permis- 
 sion, express or implied, of the legislative power there. But the mere right of such 
 corporation to purchase and sell property, not being in its nature strictly a franchise, 
 will be recognized and protected in the courts of another State, subject to the 
 qualification that the enjoyment and exercise of such right shall not be contrary 
 to the laws or settled policy of the latter State, or prejudicial to its interests or 
 those of its citizens. An express enabling act of the Legislature is not neces- 
 sary. In Nevada. Whitman Mining Co. v. Baker, 3 Nev. 386. In California. 
 Gilmer v. Lime Point, 18 Cal. 251. See N. Y. Dry Dock Co. v. Hicks, 5 McLean, 
 111 ; Bank of Washtenaw v. Montgomery, 2 Scam. 428 ; Metropolitan Bk. v. Godfrey, 
 23 111. 679 ; Life Ins. Co. v. Overholt, 4 Dillon, 287. The Legislature may authorize 
 a foreign corporation to take lands for a public improvement. Morris Canal Co. v. 
 Townsend, 24 Barb. 668 ; in re Townsend, 39 N. Y. 171 ; Ross v. Adams, 4 Dutch. 
 160; 8. 0. 1 Vroom, 505. The supplement to the charter of the Canal Company, 
 which authorized the company " to lease to any person or persons, or corporation," 
 — HeM, to empower the company to make a lease to a foreign corporation which had 
 
14 INTRODUCTORY. 
 
 gards the title of the corporation, if those who have power to enter 
 do not choose to do so.^ {a) 
 
 Trading corporations may of course alienate their lands in any 
 way, and for any estate that may be most conducive to their own 
 interests ; bnt it is very doubtful if other descriptions of corpora- 
 tions have this power. Coke was of opinion they might,'' but 
 modern authorities incline the other way.' (c) The lands given to 
 ecclesiastical, charitable, municipal, and similar corporations, have, 
 however, generally been given to enable them fitly to discharge 
 the duties imposed on them. They consequently hold them under 
 a trust ; and the Court of Chancery will in all such cases interfere 
 to prevent any disposition of the lands which would interfere with 
 the proper performance of this trust.* 
 
 As to 4— the need of a common seal. This requisite has been 
 considerably qualified by modern legislation and judicial decision, 
 as will be seen hereafter. 
 
 As to 5 — by-laws. Corporations aggregate, being as it were 
 semi-political, though, inferior communities, reqiiire the establish- 
 ment of fixed and known rules, in accordance with which their 
 internal government shall be carried on. The law has deemed it 
 
 ' As to the property which may be ' See Rex v. Wharton, 2 T. R. 204 ; 
 
 held by corporations and the restrictions Mayor, <fec. of Colchester v. Lowton, 1 V. 
 
 upon the same, see Grant on Corporations, <fc B. 226 ; Evan v. Corporation of Avon, 
 
 pp. 98-153; Stephen's Commentaries, bk. 29 Beav. 144; see Att.-General </. Por- 
 
 ii, pt. i, chap, xiv ; and 9 Geo. II, c. 36 ; (6) treene of Avon, 33 L. J. Ch. 172. 
 24 Vict. c. 9 ; 25 & 26 Vict. c. 80 ; 31 & * See Att.-6en. v. Mayor, Ac. of Ply- 
 
 32 Vict. c. 44 ; 33 <fc 34 Vict. c. 34. mouth, 9 Beav. 67 ; Reg. v. Mayor, &c. 
 
 ' Case of Sutton's Hospital, 10 Rep. of Liverpool, 9 A. & E. 436. 
 30J. 
 
 theretofore been recognized by the Legislature, and which had a pre-existing capacity 
 to accept the lease. Stewart v. Lehigh Valley R. R. Co. 88 N. 3. L. 506 ; but see 
 Holbert v. St. L., K. C. <fe N. R. Co. 45 Iowa, 23. As to taking mortgage, see Nat. 
 Trust Co. V. Murphy, 30 N. J. Eq. 408. 
 
 (o) See Baird v. Bk. of Washington, 11 S. & R. 411 ; Martin v. Branch Bk. 16 Ala. 
 N. S. 587; Bk. of Michigan?;. Niles, 1 Dougl. 401. 
 
 (6) Not in force in Georgia. Beall v. Fox, 4 Ga. 404. Nor in Rhode Island. 
 Potter V. Thornton, 7 R. I. 252. Nor in New York. Downing «. Marshall, 23 
 N. Y. 392. 
 
 (c) Independent of positive law, all corporations have the absolute jus disponmdi 
 of lands and chattels, neither limited as to objects nor circumscribed as to quantity. 
 2 Kent's Com. 12 ed. p. 365 ; First Parish in Sutton ii. Cole, 3 Pick. 239 ; Barry v. 
 The Merchants' Exchange Company, 1 Sandf. Ch. 280 ; Binney's Case, 2 Bland Ch. 
 142 ; Burton's Appeal, 67 Penn. St. 213 ; Sherwood v. The American Bible Society, 
 1 Keyes, 561 ; Miners' Ditch Co. v. Zellerbach, 37 Cal. 643. 
 
INTRODUCTOEY. 15 
 
 the more advisable course to leave these rules for the most part to 
 the discretion of the corporations and those composing them, who 
 may be reasonably supposed to know what is most conducive to 
 their own interests and welfare. Consequently corporations have 
 inherent in them the power to make all such by-laws as are requi- 
 site for the due management of their affairs, and for determining 
 the conditions of membership. These by-laws must not be op- 
 posed to, or inconsistent with, the statute or common law of the 
 realm, nor contradictory to the charter of incorporation.^ {a) 
 
 Not unseldom, especially in the case of statutory corporations, 
 
 ' See Dunston v. Imperial Gas Com- ton, 3 Vea. 330; Everett v. Grapes, 3 L. 
 pany, 3 B. & Ad. 125; Elwood v. Bui- T. N. S. 669; Shilletto v. Thompson, 1 
 lock, 6 Q. B. 383 ; Att.-Gen. v. Myddle- Q. B. D. 12. 
 
 (a) By-laws must not be repngnant to the constitution or laws of the United States, 
 or of the State creating the corporation, or of the State wherein it seeks to exercise 
 its powers, nor repugnant to its charter, or in excess of the powers as to making by- 
 laws granted to it. U. S. v. Hart, 1 Pet. C. C. 390 ; Bank v. Lanier, 11 Wall. 369 ; 
 Kennebec R. Go. v. Kendall, 31 Me. 470 ; Jay Bridge Co. ■«. Woodman, 31 Me. 5lS ; 
 People V. Kip, 4 Cow. 382; Auburn Academy v. Strong, Hopk. Ch. 278; Phillips -v. 
 Wickham, 1 Paige, 590; Seneca Bank v. Lamb, 26 Barb. 595 ; Case of Phila. Savings 
 Bank, 1 Whart. 461; Butchers' Ass'n, 35 Penn. St. 151 ; Taylor ». Griswold, 2 Green, 
 223 ; St. Luke's Oh. i;. Matthews, 4 Des. Ch. 578 ; Sayre v. Louisville U. B. Ass'n, 1 
 Duval, 143 ; Davis v. Meeting-house, 8 Mete. 321 ; Carr v. St. Louis, 9 Mo. 191 ; State 
 V. Conklin, 34 Wis. 21 ; Pulford v. Fire Department, 31 Mich. 458; State v. Curtis, 9 
 Nev. 326. Corporations cannot by by-laws impose any personal or individual liability 
 on third persons beyond such as is specified in their charter or in general laws of the 
 State creating it. Free School v. Flint, 13 Mete. 539 ; Flint v. Pierce, 99 Mass. 68. 
 The power to make by-laws resides in the members of a corporation at large, where 
 there is no law or usage to the contrary. Morton Gravel Road Co. v. Wysong, 51 Ind. 
 4. A corporation having power to regulate the transfer of its stock, cannot create a 
 lien by a by-law on such stock. Bullard v. Bank, 18 Wall. 594 ; Bank v. Lanier, 11 
 Wall. 369 ; Evansville Nat. Bk. v. Metropolitan Nat. Bk. 2 Biss. 527 ; Driscoll v. 
 West Manufacturing Co. 36 N. Y. Superior Ct. 488 ; s. o. 59 N. Y. 96 ; Roaenbach d. 
 Bank, 63 Barb. 495 ; Coaklin v. Bank, 53 Barb. 512; s. 0. 45N.Y. 655; contra, 
 Lockwood V, Mec. Nat. Bk. 9 R. I. 308 ; Pendergaat v. Bank of Stockton, 2 Sawyer, 
 108. By-laws must be reasonable, and not oppressive or vexatious. Cartan v. Father 
 Matthew Soc. 3 Daly, 20 ; Commonwealth v. Gill, 3 Whart. 228 ; St. Luke's Ch. v. 
 Matthews, 4 Des. Cb. 578 ; Moore v. Bank of Commerce, 52 Mo. 377 ; State v. Mer- 
 chants' Exchange, 2 Mo. Appeals, 96. By-laws must not be retrospective. People 
 V. Crockett, 9 Cal. 112 ; Howard v. Savannah, T. Charlton, 173 ; Pulford v. Fire De- 
 partment, 31 Mich. 468. A by-law void as against strangers or non-aaaenting mem- 
 bers may be good as a contract by assenting members. Slee v. Bloom, 19 Johns. 456 ; 
 Davis V. Proprietors of Meeting-houae, 8 Meto. 321 ; Amesbury v. Ins. Co. 6 Gray, 
 696 ; Cooper v. Frederic, 9 Ala. (N. S.) 738. On the subject of by-laws, see Field on 
 Corps, oh. xi; Angel & Ames on Corp. § 336. 
 
16 INTRODUCTORY. 
 
 they require, for complete validity, the ratification or approval of 
 some official board or personage.^ (a) 
 
 The above may be considered as a statement of the leading 
 facts relative to the capacities of corporations, bat it is nothing 
 more than a brief, imperfect enumeration. The most scientific 
 method of treating their capacities and incidents, and the rights 
 and liabilities resulting therefrom would probably be to take them 
 in the following order : 
 
 i. Common law incidents of every corporation — understanding 
 by the term incident, all legal facts whatever coming with- 
 in-^ the category of right, powej*, privilege, capacity, im- 
 munity, duty, obligation, liability. 
 
 ii. Incidents which cannot belong to a corporation, nnless it be 
 by the instruments creating and constituting it, expressly 
 invested with the same, or with the possibility, on the 
 happening of certain events, of acquiring them or being 
 subject thereto. 
 
 iii. Incidents which do or may belong to a corporation, im- 
 pliedly and without any special words, being rendered 
 necessary from a consideration of the nature and require- 
 ments of its business or undertaking. 
 
 Such a treatment of the subject, if thoroughly and successfully 
 carried out, would be exhaustive ; but the difficulties in the way, 
 arising from the multiplicity and diversity of topics, are too great. 
 Therefore, it is proposed, having in the present chapter indicated 
 in a general manner the various incidents of corporations, in the 
 subsequent chapters to deal with these incidents seriatim in a less 
 pretentious way, in connection with the particular facts — business, 
 financial proceedings, and the like — to which they severally 
 relate. 
 
 ' See, for example, S 4 4 Vict. c. 91, sa. 7-10; 8 & 9 Vict. c. 20, ss. 108-111. 
 
 (a) la the United States some clasBes of co;pporations, created under general laws, 
 must have their charters approyed by courts or* other officials; for example, in Penn- 
 sylvania, building associations, literary, charitable and religious coi-poralions, are re- 
 quired to exhibit their articles to the Court of Common Pleas. Pupdon's Dig. 130, 
 pp. 129, 196. Charters of insurance companies in New York require the approval 
 of the Attorney-General. 4 R. S. (Edmonds' ed.) p. 207. 
 
INTRODUCTORY. 17 
 
 Section III. — Vaeietieb of Corporations. 
 
 The first and primary division of corporations, and that which 
 is the most characteristic of EngKsh law, is into sole and aggre- 
 gate. The former are single persons who, for certain purposes, 
 are considered to have a personality altogether distinct from that 
 of ordinary citizens. There are not many examples of these. The 
 sovereign is one, (a) so constituted t(5 prevent an abeyance of the 
 crown between the death of one holder and the accession of an- 
 other. All bishops of the Church of England, all parsons and 
 vicars, and some deans and prebendaries are corporations sole.'' 
 So is the queen regnant ; so, at least for certain purposes, is the 
 chamberlain of the city of London,^ and it would seem the chan- 
 cellor of the University of Oxford is another instance.' So the 
 Regius professors of law and Hebrew, and the Lady Margaret's 
 Reader of Divinity in the University of Oxford are respectively 
 corporations sole, having each a prebend attached to his office.* (5) 
 
 The best arrangement of corporations aggregate for the pur- 
 poses of this work is according to their object. There are various 
 ways of arranging them upon this basis, but the one which seems 
 most clearly to exhibit mutual relationship is the common division 
 into ecclesiastical and lay. 
 
 Ecclesiastical corporations aggregate include all those whose 
 members are 'spiritual persons only, and which exist in connection 
 with, and subordination to, the Church of England. They may 
 be thus subdivided according as the members were and are capa- 
 ble, e. g., dean and chapter, master and fellows of a college ; or as 
 
 ' As to the lauds formerly vested in " See Howley v. Knight, 18 L. J. Q. B. 
 
 deans and prebendaries in their corporate 3, 7. 
 
 capacity, see The Eoolesiagtical Duties ' Chase's Case, 8 Hen. VI, fol. 18, pi. 7. 
 
 and Eevenues Act, 3 <fe 4 Vict. c. 113. ■* See 13 & 14 Car. II, c. 4, s. 29, and 
 
 King V. Baylay, 1 B. <fc Ad. 761, 770. 
 
 (o) The United States is a corporation. Marshall, C. J., in U. S. v. Maurice, 2 
 Brock. 96. The States of the Federal -Union are corporations. State of Indiana v. 
 Woram, 6 Hill, 33 ; State o. Delesdenier, 1 Tex. 76 ; Cotton v. U. S. 11 How. 229. 
 The State is not a corporation ■within the meaning of the U. S. internal revenue 
 acta. State of Georgia v. Atkins, 35 Ga. 315. 
 
 (6) Sole corporations are not common in the United States. Minister of Parish: 
 Weston V. Hunt, 2 Mass. 501 ; Brunswick v. Dunning, 7 Mass. 447. Public officers : 
 Overseers of Poor v. Sears, 22 Pick. 125 ; Jansen v. Ostrander, 1 Cow. 670 ; Governor 
 V. Allen, 8 Humph. 176. 
 
 3 
 
18 INTRODUCTORY. 
 
 the head alone was capable, the remaining members being dead in 
 law, e. g., abbot and monks. 
 
 Of lay corporations, the better arrangement is into — 
 
 I. Eleemosynary, such as hospitals for the maintenance or re- 
 lief of sick persons, almshouses, colleges for the promotion of 
 learning, and the like. 
 
 And II. Civil, i. e., established for distinctively temporal and 
 -worldly purposes. These may conveniently be divided into com- 
 mercial and non-commercial corporations.^ 
 
 Commercial corporations may again be collected into the fol- 
 lowing classes : — {a.) Those at common law, i. e., whose existence 
 cannot be traced to the exercise of the royal prerogative. (S.) 
 Those created by special charter, and having their peculiar capa- 
 cities and incidents determined by such charter, (c.) Those created 
 by special statute, whether or not also incorporating therewith, 
 wholly or partially, and to that extent falling under, the provisions 
 of other general acts ; e. g., most companies for railways, gas-works, 
 <fec. {d.) Those created in accordance with the regulations of the 
 general acts which have been passed in recent times for the pur- 
 pose of facilitating the incorporation of individuals for particular 
 purposes. These acts, the chief of which now in force are the 
 Companies Acts, 1862 & 186Y, contain merely general rules, it 
 being left to the persons proposing to incorporate themselves to 
 determine most of the powers and duties of the future corpora- 
 tion. 
 
 These corporations differ widely in many respects from all 
 others, except, perhaps, groups (c) and {d) of the next division. 
 They all have a capital divided into sfock or shares, the latter of 
 equal values, or arranged into classes of equal values, and mem- 
 bership is constituted by the possession of some of such stock or 
 shares. In consequence they are, and in this work will be fre- 
 quently styled ""joint-stock" or "public companies." 
 
 Non-commerciaP corporations cannot be subdivided in accord- 
 
 ' " Trading " and " mercantile " are ordinary shopkeeping — when employed 
 
 expressiona also applied to corporations here, it will generally be in this narrow 
 
 for ordinary business purposes. Mercan- signification. 
 
 tile has nearly the same meaning as com- '' " Noncommercial," for want of a bet- 
 
 mercial, but is perhaps somewhat nar- ter term, is not unseldom used to denote 
 
 rower — e. g., it would scarcely be applied all, not merely civil, corporations for 
 
 to a railway company or a gasworks, other than commercial purposes, i e. to 
 
 Trading is certainly, as a rule, much more include both ecclesiastical and eleemosy- 
 
 restricted, being used only in connection nary bodies. The context will show 
 
 witih companies for purposes analogous to whether the expression has the narrow or 
 
INTRODUCTORY. 19 
 
 ance witli any leading principle, or upon any scientific plan ; but, 
 perhaps, tlie most useful grouping of them will be into — {a.) Mu- 
 nicipal corporations, whicb are of two classes, (1) " reformed," (2) 
 " unreformed," according as" they are or are not within the pro- 
 visions of 6 & 6 "Will. lY, c. 16. (b.) Quasi-mnmcipal bodies, 
 including under this head the various local government boards, 
 the sanitary authorities, and the other authorities for local admin- 
 istrative purposes, (c.) The many bodies which have been called 
 into being and incorporated for the carrying out or the supervision 
 of works and other matters of general or national importance, such 
 as the commissioners for river, sewage, navigation, and the like 
 purposes ; dock or turnpike trustees ; and so on. {d.) Those whose 
 aims are of a somewhat charitable nature, i. e., friendly, provident, 
 benefit and similar societies which may conveniently be grouped 
 under one head as " Co-operative Associations." (e.) Anomalous 
 associations, existing for worldly as opposed to religious or chari- 
 table purposes, but not designed for the acquisition of gain, such 
 as the council of law reporting, the corporation of foreign bond- 
 holders. 
 
 Between these various and dissimilar societies there is no dif- 
 ference in legal consideration. Whatever be the aims of any 
 group of men, in every case, if the group be endowed with the 
 legal marks of a corporation, it is such, having the privileges, but 
 also subject to the incapacities of a corporation. 
 
 But, besides these, various other bodies exist, having some, 
 but wanting others of the characteristics of true corporations — 
 aggregate. These are commonly designated quasi-corporations. 
 Such, for instance, are most of the commissioners instituted for 
 public purposes, and which have been referred to above. These 
 are either made corporations to all intents, or so far erected into 
 corporations that the powers given to them, the duties imposed on 
 them, and tlie rights of action acquired by them, descend to their 
 successors.^ 
 
 Of these ^'wasz-corporations aggregate, church-wardens are an- 
 
 wide meaning. The bodies coming under draws, 2 Mao. & Gor. 225 ; 2 BT. <fe T. 431 ; 
 
 (o) and (6), and perhaps also (c) may for Hall v. Taylor, E. B. & E. 107 ; Hartnall 
 
 many purposes be conveniently grouped v. Ryde Commissioners, 4 B. <fe S. 361 ; 
 
 together as " subordinate administrative Mersey Docks & Harbor Board v. Gibbs, 
 
 bodies." L. E. 1 H. Ld. 293 ; see, also, 10 & 11 
 
 ' See Conservators of River Tone v. Vict. c. 16, The Commissioners Clauses 
 
 Ash, 10 B. & C. 349; Att.-Gen.' ^j. An- Act. 
 
20 INTRODUCTORY. 
 
 other example.^ They have no common seal,' and therefore can- 
 not bind themselves and their successors, covenants entered into 
 by or with church-wardens being merely personal, and going to 
 and against their executors.^ Like pffrtnerships, they must all join 
 in suing, and notice to or acquiescence by one is notice to' or ac- 
 quiescence by all/ They may hold chattels, but not lands,' and 
 they are the proper persons to sue for injury done to the goods of 
 the parish.^ The church-wardens and overseers have been together 
 constituted a quasi-corporate body for certain purposes, by 9 Geo. 
 I, c. Y, and 59 Geo. Ill, c. 12.' The guardians of the poor are 
 another instance of quasi-corporationB.^ 
 
 There are also g'Masi-corporations sole.(a) The Lord Chancellor 
 is an example ; so are the Chief Justices of the King's and Com- 
 mon Bench, e. g. a person who has received a grant of an ofiSce 
 from either, may plead the prescriptive right of the grantor. So 
 a sheriff may prescribe to take a fee for a thing which is not 
 within his office, e. g. to take %Qd. of every prisoner acquitted, 
 that not being given for doing his office.' 
 
 Many of the statutes regulating friendly societies and other 
 analogous associations provide that the property shall be vested in 
 the treasurer or secretary for the time being, or in a trustee, and 
 
 ' Withnell v. Gartham, 6 T. R. 396. Doe dem. Bailey v. Foster, 3 C. B. 216, 
 
 ' Rex V. Austrey, 6 M. <fe Selw. 319 ; 226. 
 
 ex parte Annesley, 2 Y. <fe Coll. (Eq. Ex.) « Evelin's Case. W. Jones, 439. Com- 
 
 360. pare Marriott v. Tarpley, 6 Sim. 279. 
 
 3 Furnivall v. Coomtes, 6 Scott N. R. ' See R. v. Beestor, 3 T. R. 692; Goulds- 
 
 637; Rew v. Pettit, 1 A. & E. 196. Com- worth v. Knights, 11 M. <fe W, 342. 
 
 pare Tuffnell v. Constable, 7 A, <fc E. 798 ; « 5 <t 6 Will. IV, c. 69, and 6 <fc 6 Vict. 
 
 Robinson v. Lewis, per Brian, C. J. 20 Ed. c. 67. Compare judgment in Jefferys w. 
 
 IV, fol. 2, pi. 7 ; and see Martin v. Nutkin, Gurr, 2 B. <fe Ad. 833 ; and in Reg. v. Poor 
 
 2 P. Wms. 266. Law Commissioners, 9 Q. B. 291. 
 
 « Withnell v. Gartham, 6 T. R. 866. « 2 Inst. 210 ; Coste's Case, 21 Hen. 
 
 ' Att.-Gen. v. Rnper, 2 P. Wms. 125; VII, 16. 
 
 (a) Inttancea of quasi sole corporations : — Superyisor in New York : Jansen v. 
 Ostrander, 1 Cow. 670 ; Jackson v. Hartwell, 8 Johns. 424. Governor of State : Gov- 
 ernor V. Allen, 8 Humph. 176 ; Polk v. Plummer, 2 Humph. 600. "Levy Court" of 
 Washington, charged with administration of the ministerial and financial duties of 
 county. Levy Court v. Coroner, 2 Wall. 507. School Districts: Inhabitants v. 
 Wood, 13 Mass. 193 ; O'Neal v. School Corns. 27 Md. 227; Littlewort ». Davis, 60 
 Miss. 403. Overseers of Poor : Todd v. Birdsall, 1 Cow. 260 ; In re Overseers, 18 
 Johns. 418; Governor v. Gridley, Walker (Miss.), 328 ; Bradley v. Case, 3 Scam. 608. 
 County Superintendents of Poor: Pomeroy v. Wella, 8 Paige, 406; Van Keuren 
 V. Johnston, 8 Den. 183. County Commissioners: Van Kirk «. Clark, 16 Serg. <fe R. 
 286 ; Corns, v. Gherky, Wright (Ohio), 493. 
 
INTRODUCTORY. 21 
 
 that actions shall be brought . by and against him ; such person is 
 thereby created a g't^asi-corporation sole.^ 
 
 Section IY. — How Created. 
 
 Corporations are usually considered to owe their existence to 
 the royal prerogative,' which has been manifested impliedly in the 
 case of such as exist — {a.) by Common Law, (5.) by Prescription, 
 (o.) by Implication ; and expressly in the case of those that have 
 been created — (rf.) by Charter, (e.) by Act of Parliament. 
 
 But corporations of this last class cannot fairly be considered 
 to have been created by the crown. Their existence and their 
 rights and capacities, often much greater than the crown could 
 grant, must be referred to and based upon the statutes of incor- 
 poration. 
 
 a. Corporations hy Common Law. 
 
 This class comprises all those to which corporate capacities 
 have been annexed in virtue of their political character, by the 
 universal assent of the community from the most remote period 
 to which their existence can be traced. Of this description are 
 the king, all bishops, parsons, vicars, deans, archdeacons, prebend- 
 aries ; the canons of some cathedrals, some church-wardens ; all 
 deans and chapters; and such were all chauntry priests, each 
 abbot and convent, or prior and convent, {a) 
 
 i. Corporations hy Prescription. 
 
 These are such as have existed from time immemorial, and of 
 which it is impossible to show the commencement by any partic- 
 ular charter or act of parliament, the law presuming that such 
 charter or act of parliament once existed, but that it has been 
 
 ^ E. g. 18 <fe 19 Vict. c. 63. Compare poration, see 6 Ed. I; 2 Inst. 278; statute 
 
 Cartridge v. GriflBths, 1 B. & Aid. 67. of Gloucester ; 5 cfe 6 Will IV, c. 76, s. 1 ; 
 
 'Subjects having _/«ro regalia could, 1st Report of Corporation Commissioners, 
 
 in ancient times, grant charters of incor- App. pp. 1511-1525. 
 
 (o) 2 Kent Com. 277; Augell & Ames on Corporations, § 36 ; Town of Pawlet v. 
 Clark, 9 Cranch, 292 ; Terrett v. Taylor, 9 Cranch, 43. 
 
22 INTEODUCTORT. 
 
 lost by such accidents as lengtli of time may produce.^ This 
 origin must, of course, be clearly proved, and in pleading it the 
 corporation must aver that it has existed from time immemorial.* 
 It was formerly contended that corporations could not exist by 
 prescription merely, but the contrary is now well established.' {a) 
 
 c. Corporations hy Implication. 
 
 These are bodies to whom rights have been given, or upon 
 whom duties have been imposed, which rights and duties cannot 
 be enforced without considering the bodies having them as cor- 
 porations. Thus where the king granted to the men of Islington 
 to be discharged from toll, they were impliedly incorporated for 
 this purpose.^ So in Conservators of the River Tone v. Ash,' an 
 act of 10 & 11 Will. Ill had constituted thirty persons therein 
 named, and their successors, conservators of the river, &c., and 
 had enabled them to take estates in fee simple to themselves and 
 their successors ; but it had not totidem verbis incorporated them. 
 On trespass brought by the plaintiffs, the third plea was, that 
 " the said persons so suing as conservators of the Kiver Tone 
 
 ' 1 Kyd, 41. * 21 Edward IV, 69. 
 
 "Reg. «;. Durham, 10 Mod. 146. ^^ 10 B. <fe C. 349. See also Jefiferys «. 
 
 ' See 10 Rep. 27 ; Merew & Steph. Gurr, 2 B. & Ad. 841 ; and ex parte New- 
 
 "Hist. of Boroughs," 2172; JenMns v. port Marsh Trustees, 16 Sim. 346. 
 Harvey, 2 C. M. & R. 339. 
 
 (a) Charter may be presumed from long exercise of corporate powers. New Boston 
 V. Dunbarton, 15 N. H. 201 ; Bow v. Allenstown, 34 N. H. 351 ; Dillingham v. Snow, 
 5 Mass. 647; Stockbridge i/. West Stockbridge, 12 Mass. 400; Dunning v. New 
 Albany R. R, 2 Ind. 437; Hagerstown Turnpike Co. v. Creeger, 5 H. <fe ,1. 122; 
 Eobie V. Sedgwick, 35 Barb. 827. 
 
 A recognition by the Legislature of the corporate existence is conclusive evidence 
 of the fact against every one but the State. Mclntye Poor School v. Canal Co. 9 
 Ohio, 203 ; Green v. Seymour, 3 Sand. Ch. 285 ; In re N. Y. Elevated R. R. Co. 70 
 N. Y. 338 ; Bow v. Allenstown, 34 N. H. 372; Jameson v. People, 16 111. 257 ; People 
 V. Farnham, 35 111. 562 ; Mitchell v. Deeds, 49 III. 416 ; McAuley v. C. C. & I. C. Ey. 
 Co. 83 111. 348 ; Cowell v. Col. Springs Co. 3 Col. 82 ; Mead v. N. Y., <fec. R. R. Co. 46 
 Conn. 199 ; Basshor v. Dressel, 34 Md. 503 ; Kanawha Coal Co. v. Kanawha & Ohio 
 Coal Co. 7 Blatch. 391 ; St. Louis R. R. Co. v. Northwestern R. R. Co. 2 Mo. App. 69 ; 
 Atlantic & P. R. R. Co. •«. City of St. Louis, 66 Mo. 228; Turnpike Co. v. Davidson 
 Co. 3 Tenn. Ch. 896; /« re New York Bridge Co. 67 Barb. 295; Baltimore <fe Ohio 
 R. R. Co. V. Supervisors, 8 "W. Vo. 319 ; La Grange R. R. Co. v. Rainey, 7 Cold. 
 420 ; 0. 4 V. R. R. Co. v. Plumas Co. 37 Cal. 854 ; White Water V. C. Co. «. Vallette, 
 21 How. 414 ; see Brent v. State, 43 Ala. 297 ; Black River & Utica R. R. Co. n. 
 Barnard, 31 Barb. 268. 
 
INTRODUCTORY. 23 
 
 were not a body politic or corporate, as by tbe declaration was 
 supposed." But it was held that the above words by implication 
 had incorporated them. (<z) 
 
 d. Corporations hy Charter. 
 
 ' These are such as have been constituted by letters patent of 
 the crown, passed under the great seal. The great majority of 
 the corporations that arose in the middle ages were thus created.. 
 The granting of charters being a branch of the royal prerogative, 
 it is usually stated that none but the sovereign can create a cor- 
 poration ; but several instances are on record where subjects hav- 
 ing jura regalia, and even those not so privileged, have granted 
 charters of incorporation,^ and it is unquestioned that the crown- 
 may confer on a citizen, or another corporation, such a power.^ 
 
 e. Corporations hy Act of Parliament. (}) 
 
 The invariable mode in which corporations are now called into 
 being, is by the direct intervention of the supreme legislature. 
 Either a special act of parliament is passed incorporating the per- 
 sons applying for the same and giving them only such powers 
 and capacities as are contained in such act or in other statutes in- 
 
 ' See Grant, "Corporations," pp. 11, c. 24, empowering the charity commis- 
 
 12. sioners by certificate to incorporate the 
 
 ' See 39 Eliz. c. 5 ; Fazaterly t). Wilt- trustees of any public charity, 
 shire, 1 Stra. 462. See also 85 & 36 Vict. 
 
 (a) A conveyance of land by sovereign authority to a body of men creates a quaai- 
 corporation. North Hempstead xi. Hempstead, 2 Wend. 109 ; People v. Schermer- 
 horn, 19 Barb. 540. If powers are granted to a body of men, which cannot be exer- 
 cised except when acting in a corporate capacity, a corporation is created by impli- 
 cation. Wells V. Burbank, 17 N. H. 398 ; Stebbins v. Jennings, 10 Pick. 188; Ma- 
 hony V. Bank of the State, 4 Ark. 620 ; Murphey v. Bank of the State, 1 Ark. 67 ; 
 Thomas v. DaHn, 22 Wend. 94; People v. Sohermerhorn, 19 Barb. 558; Common- 
 wealth V. Westchester E. R. 3 Grrant Cas. 200 ; Dean v, Davis, 51 Cal. 406. See, 
 however, Neil v. Board of Trustees, &a. 31 Ohio St. 15. 
 
 (6) In the United States corporations can only be created by legislative act, either 
 by special charter or by the compliance with general laws framed for their organiza- 
 tion. United States Trust Co. v. Brady, 20 Barb. 119; Penn. R. E. Co. v. Canal 
 Commissioners, 21 Pa. St. 9; Franklin Bridge Co. v. Wood, 14 Ga. 80; Stowe v. 
 riagg, 72 111. 397. A constitutional provision that corporations shall not be created 
 by special act, does not prevent a special act changing the name of an existing rail- 
 road company, and empowering it to purchase additional property. Wallace v. 
 Loomis, 7 Otto, 146. 
 
21 INTRODUCTORY. 
 
 corporated therewith, or individuals in a manner incorporate 
 themselves by taking advantage of the general statutes which 
 have been enacted for that purpose. The more important of 
 these latter which are now in force, are the following : 
 
 I. 25 & 26 Yict. c. 89, " The Companies' Act, 1862," and 30 
 & 31 Vict. c. 131, " The Companies' Act, 1867," which relate to 
 and regulate all ordinary joint-stock companies not governed by 
 special acts or charters. 
 
 I . 33 & 34 Yict. c. 61, " The Life Assurance Societies' Act, 
 1870 " (amended by 34 & 35 Vict. c. 58, and 35 & 36 Vict. c. 41), 
 containing regulations as to life assurance companies formed after 
 the passing of the act, and as to other matters connected there- 
 with. 
 
 III. The statutes relating to Friendly Societies and similar 
 bodies, of which the chief are, 25 & 26 Vict. c. 87, " The In- 
 dustrial and Provident Societies' Act, 1862 " (amended by 30 & 
 31 Vict. c. 117, and 34 & 35 Vict. c. 80) ; 37 & 38 Vict. c. 42, 
 " The Building Societies' Act, 1874; " 38 & 39 Vict. c. 60, "The 
 Friendly Societies' Act, 1875," and 39 & 40 Vict. c. 32, « The 
 Friendly Societies' Amendment Act, 1876." 
 
 IV. 32 & 33 Vict. c. 19, an " Act amending the law relating 
 to mining partnerships within the Stannaries." 
 
 The first two of the above statutes, the Companies' Acts of 
 1862 and 1867 — and the other statutes enumerated are for anal- 
 ogous purposes — enable persons by a very simple and speedy pro- 
 cess to unite themselves into, and thereby create, a corporertion for 
 almost any and every purpose of life, commercial or otherwise. 
 The constitution of such corporation, its objects and purposes, its 
 rights and powers, and those of its various members, will be de- 
 termined by the instruments drawn up — often a memorandum and 
 articles of association — at the time of registration. The acts 
 themselves contain but little upon these heads. The chief specific 
 provisions found in them relate to the formalities and other cir- 
 cumstances connected with the foundation and the dissolution, 
 voluntary or forced, of the corporation, and with the assembling 
 periodically of the members. The enactments that concern the 
 working and control of the corporation, and the rights and liabili- 
 ties of the shareholders, and other matters belonging to the in- 
 ternal management of the association, are but mere generalia, it 
 being left to the individuals from time to time composing the as- 
 
INTRODUCTORY. 25 
 
 sociation, to fix and prescribe these in a more particular manner, 
 and in accordance with the exigencies and requirements of the 
 undertaking in which they propose to engage. 
 
 These statutes give to the bodies coming within their purview, 
 no arbitrary or compulsory power of dealing with the rights, pe- 
 cuniary or proprietary, of^others than their own members. A 
 corporation is as powerless as an individual, and it is as illegal in 
 the one case as the other to infringe or encroach upon existing 
 rights. Wherever, for any reason whatever, public or private, it 
 is necessary to do so, special authorization must be obtained from 
 the supreme legislature. For this purpose special acts of parlia- 
 ment are passed, conferring on the corporations obtaining them 
 powers to enter upon and occupy property other than and exceed- 
 ing what they would enjoy at common law, or by virtue of the 
 Companies' Acts, and immunities, more or less extensive, from 
 liabilities that would otherwise arise from the user of such powers, 
 very generally also providing compensation more or less adequate, 
 and modes of obtaining the same for the parties thereby damnified. 
 Of these acts a great number are passed every session, a few only 
 creating new corporations, by far the larger portion investing ex- 
 isting corporations with additional powers, or additional facilities, 
 for using the powers which they already possess. In consequence 
 of the multiplicity of such statutes and of the continued repetition 
 therein of clauses which had been, and which would be rery many, 
 re-enacted in statutes, pa/ri materia a series of acts was passed in 
 the eighth and ninth years of this reign, embodying in distinct 
 acts the most frequent and important of such clauses, according to 
 the undertakings to which they related, and providing that such 
 should be incorporated in subsequent statutes of the description in 
 question, saving so far as they should be expressly varied or ex- 
 cepted by such statutes. Of these " Consolidation Acts/' the 
 chief are : 
 
 (1) 8 & 9 Vict. c. 16, The Companies Clauses Consolidation 
 Act, 1845 (amended slightly by 30 & 31 Yict. cc. 126 and 127 ; 
 and further, more materially by 32 & 33 Yict. c. 48, The Com- 
 panies Clauses Consolidation Act, 1869). 
 
 8 & 9 Yict. c. 17, a similar act for Scotland. 
 
 (2) 8 & 9 Yict. c. 18, The Lands Clauses Consolidation Act, 
 1846 (amended by 32 & 33 Yict. c. 18, The Lands Clauses Con- 
 solidation Act, 1869). 
 
26 INTRODUCTORY. 
 
 8 & 9 Yict. c. 19, a similar act for Scotland (amended by 
 23 & 24 Yict. c. 106, The Lands Clauses Amendment Act, I860). 
 
 (3) 8 & 9 Yict. c. 20, The Eailways Clauses Act, 1845 (amended, 
 or rather added to, by 26 & 27 Yict. c. 92, The Railways Clauses 
 Act, 1863, which has consolidated certain other provisions usually 
 inserted in the more recent Railway Acts). 
 
 8 & 9 Yict. c. 33, is a similar act for Scotland. 
 
 (4) 10 & 11 Yict. c. 14, The Markets and Fairs Clauses Act, 
 1845. 
 
 (5) 10 & 11 Yict. c. 15, The Gas-works Clauses Act, 1845 
 (amended as below, see 7). 
 
 (6) 10 & 11 Yict. c. 16, The Commissioners Clauses Act, 1845. 
 This act relates to the execution of undertakings of a public nature 
 by " commissioners," and embodies many of the clauses usually in- 
 serted in such acts, but it applies only where the act creating the 
 commissioners expressly incorporates it. 
 
 (7) 10 & 11 Yict. c. 17, The Water-works Clauses Act, 1845 
 (extended and amended by the Water-works Clauses Act, 1863 ; 
 by 33 & 34 Yict. c. 70, The Gas and "Water-works Facilities Act, 
 1870 ; and by 36 & 37 Yict. c. 89, The Gas and Water-works Fa- 
 cilities Act, 1870, Amendment Act, 1873). 
 
 (8) 10 & 11 Yict. c. 27, The Harbour, Docks, and Piers 
 Clauses Act, 1847 (amended by 25 & 26 Yict. c. 69, and affected 
 by 24 & 25 Yict. c. 45, The General Pier and Harbour Act, 1861 ; 
 and 29 & 30 Yict. c. 56, The General Pier and Harbour Orders 
 Confirmation. Act, 1866). » 
 
 (9) 10 & 11 Yict. C.34, The Towns Improvement Clauses Act, 
 1847 (amended by 24 & 25 Yict. c. 61). Also amended, modified, 
 curtailed, or otherwise affected in its operation by the various 
 acts relating to local government boards and to boards of public 
 health. 
 
 (10) 10 & 11 Yict. c. 65, The Cemeteries Clauses Act, 1847. 
 
 (11) 26 & 27 Yict. c. 112, The Telegraph Act, 1863, qualified 
 and affected in various ways by the subsequent acts, 29 & 30 
 Yict. c. 3 ; 31 & 32 Yict. c. 110 ; 32 & 33 Yict. c. 73 ; 33 & 34 
 Yict. c. 88. See, also, 35 & 36 Yict. c. 83, and 36 & 37 Yict. 
 c. 83. 
 
 (12) 33 & 34 Yict. c. 78, The Tramways Act, 1870, slightly 
 affected by 35 & 36 Yict. c. 43. 
 
 It may here be observed, that the expression " constating in- 
 
INTRODUCTORY. 2Y 
 
 struments " will very generally be employed in this work,' to sig- 
 nify the document or collection of documents which fix the 
 constitution of any corporation. These documents are rery 
 various — charters, letters patent, statutes of the founder, acts of 
 parliament, by-laws, deeds of settlement, articles of association — 
 and not unfrequently they will be very numerous and lengthy, 
 the original muniments having been added to or modified by 
 many subsequent proceedings, resolutions, and the like. There- 
 fore it will be far more convenient to have one single term always 
 denoting the same general fact, but varying in its exact import 
 with the circumstances. "When " private constating instruments " 
 are spoken of, it will be in order to distinguish the special docu- 
 ments — charters, deeds of settlement, articles of association, &c. — 
 of particular corporations from the general statutes, such as the 
 Companies Clauses Acts, which apply to all corporations coming 
 within them.^ 
 
 1 Field on Corp. § 84 ; 1 Red. on Rail, g 11. 
 
PART II. 
 
 THE DOCTRINE OF ULTRA VIRES AS AFFECTING THE BUSINESS 
 AND OTHER TRANSACTIONS ENGAGED IN BY CORPORA- 
 TIONS AND THEIR RIGHTS AND LIABILITIES IN RESPECT 
 THEREOF. 
 
 CHAPTEE I. 
 
 THE EXACT IMPORT OF THE DOCTRINE OF ULTRA VIRES. 
 
 Section I. — Judicial Explanations of Ultea Vibes. 
 
 In old times, as has been seen, corporations were considered to 
 have most of the powers — the due exercise of such powers being 
 secured by the imposition of certain formalities — and to be sub- 
 ject to the greater part of the obligations of ordinary citizens. 
 But of late, from the introduction and development of the doc- 
 trine of ultra vires, these powers and obligations have been, 
 especially as regards some kinds of corporations, considerably 
 curtailed. It has been laid down that some, if not aU, corpora- 
 tions, exist for the attainment of certain objects only, and that, 
 if their powers are not expressly, they are impliedly restricted to 
 such only as are necessary for the due attainment of those objects, 
 and that, consequently, they can perform no acts, enter into no 
 transactions, and incur no liability but such as spring out of or are 
 otherwise incidental (a) to the purposes for which they have been 
 created. This doctrine may have been present in a vague form 
 to the minds of the older judges, but it is only within the last 
 
 (a) " Aa incidental power is one that is directly and immediately appropriate to 
 the execution of the specific power granted, and not one that has a slight or remote 
 relation to it." Hood v. TS. Y. & N. H. R. R. 22 Conn. 1 ; Curtis v. Leavitt, 15 N. Y. 
 IS"?; Buflfet v. Troy & Boston R. R. 40 N. Y. 176 ; 1 N. Y. R. S. 599, § ITS. A 
 principal power or grant conferred by a statute or charter is not to be construed 
 to carry as an incident anything not implied in the principal, nor usually appurte- 
 nant to it, and not possessed of a similar character. Beatty v. Knowler, 4 Peters, 
 162. 
 
THE DOCTRINE OF ULTRA VIRES. 29 
 
 half century that it has been laid down in clear and unqualified 
 language, {a) Its exact purport may be gathered from the judg- 
 ments in the following cases : 
 
 In Colman v. Eastern Counties Kailway Company/ the defend- 
 ants, for the purpose of encouraging the traffic on their railway, 
 proposed to guarantee certain profits, and secure the capital of an 
 intended steamboat company, who were to run steamboats from 
 Harwich in connection with their railway. But Lord Langdale, 
 the master of the rolls, held that such a transaction was not within 
 the scope of their authority, and he accordingly restrained them 
 from carrying it into effect. " I am clearly of opinion that the 
 powers which are given by an act of parliament like that now in 
 question extend no further than is expressly stated in the act, or 
 
 1 10 Beav. 1. 
 
 (a) The American rule is stated without much variation in idea, though with some 
 change of expression, as follows : " A corporation being a mere creature of the law, 
 possesses only those properties which the charter confers upon it, either expressly or 
 as incidental to its yery existence." Dartmouth Coll. v. Woodward, 4 Wheat. 618. 
 " Incorporated companies have no powers but such as are granted or necessarily in- 
 cident." Beach v. The Fulton Bank, 3 Wend. 583. The modern doctrine is, to con- 
 sider corporations as having such powers as are specifically granted by the act of 
 incorporation, or are necessary for the purpose of caiTying into eflfect the powers 
 expressly granted ; and as not having any other. Bank of Augusta v. Earle, 13 
 Peters, 581 ; 4 Wheat. 636 ; Turnpike Co. v. Illinois, 6 Otto, 63 ; Huntington v. Sav- 
 ings Bank, Id. 388 ; Fertilizing Co. v. Hyde Park, 1 Otto, 666 ; Trustees v. Peaslee, 
 15 N. H. 330 ; Downing ^. Mt. Washington Road Co. 40 N. H. 231 ; Fuller v. Plain- 
 field Acad. School, 6 Conn. 532 ; People v. Utica Ins. Co. 15 Johns. 357 ; N. Y. Fire- 
 man's Ins. Co. ii. Sturges, 2 Cow. 675 ; IT. Y. Fireman's Ins. Co. a. Ely, 2 Cow. 699; 
 C. <fe A. R. R. Co. V. Remer, 4 Barb. 130 ; Le Couteubt v. City of Buflfalo, 33 N. Y. 
 333 ; Com. v. Erie & N. E. R. R. 3 Casey, 352 ; Penn. <fec. Nav. Co. v. Dandridge, 8 
 Gill & 3. 248 ; Weckler v. First Nat. Bk. 42 Md. 581 ; R. R. v. Seeley, 45 Mo. 220 ; 
 St. Louis V. Weber, 44 Mo. 547; Matthews v. Skinker, 62 Mo. 329 ; Vandall v. S. S. 
 F. Dock Co. 40 Cal, 83 ; Shawmut Bank v. P. & M. R. R. Co. 31 Vt. 491 ; Mobile <fe 
 Ohio R. R. Co. V. Franks, 41 Miss. 494 ; State v. Mayor, 5 Port. (Ala.) 279 ; Peters- 
 burg V. Metzker, 21 111. 205 ; Winter v. Muscogee R. R. Co. 11 Ga. 438; Whitman 
 Mining Co. v. Baker, 3 Nev. 386 ; White's Bank v. Toledo Ins. Co. 12 Ohio St. 601 ; 
 Bowling Green R. R. u. Warren County Court, 10 Bush, 712. 
 
 Extraordinary authority can only be conferred upon a corporation by express 
 words; it will not be implied. The implied powers of a corporation are only those 
 which are incidental to its very existence, or so necessary to the enjoyment of some 
 special grant, that without the implied power, such right would fail. Hence, to 
 create a monopoly in a corporation, there must be an express provision in the act or 
 charter wMfereby the Legislature restrains itself from granting charters for rival or 
 competing works. Gaines v. Coates, 51 Miss. 336. 
 
30 THE DOCTRINE OF ULTRA VIRES. 
 
 is necessarily and properly required for carrying into effect the 
 undertaking and works which the act has expressly sanctioned." 
 " I must say, in the absence of legal decision, that the acquiescence 
 of the shareholders in such transactions affords no ground what- 
 ever for the presumption of legality." And in Salomons v. Laing,^ 
 his lordship said : " A railway company incorporated by act of 
 parliament is bound to apply all the moneys and property of the 
 company for the purposes directed and provided for by the act, 
 and for no other purposes whatever." 
 
 J In East Anglian Railways Company v. Eastern Counties Rail- 
 way Company,' one of the earliest cases at law, per Sir J. Jervis, 
 L. C. J. : " It is clear that the defendants have a limited authority 
 only, and are a corporation only for the purpose of making and 
 maintaining the railway sanctioned by the act ; and that their funds 
 can only be applied for the purposes directed and provided for by 
 the statute." 
 
 In Bagshaw v. Eastern Union Railway Company,' Wigram, 
 Y.-C, said : " The Legislature may have thought it right to provide 
 that the capital raised for a specific purpose should not be applied 
 for any other purpose. Under such a state of things, the applica- 
 tion of capital so appropriated to any other than the specified pur- 
 pose must be imlawful. No majority of the shareholders, however 
 large, could sanction the misapplication of such portion of the cap- 
 ital. Indeed, in strictness, even unanimity would not make such 
 an act lawful." 
 
 Turner, L. J., expressed himself to the same effect in Shrews- 
 bury, &c. Railway Company v. London and Northwestern, &c. 
 Railway Company : * " The great undertakings of these [i. e., rail- 
 way and similar) companies could not be carried out by private 
 enterprise, and parliament has therefore, with a view to the public 
 good, authorized the constitution of large bodies, acting by di- 
 rectors, for the purpose of carrying them out. But these bodies 
 bave no existence independent of the acts which create them, and 
 they are created by parliament with special and limited powers, 
 and for limited purposes. "Whether parliament has wisely limited 
 their powers for the purposes of their incorporation, it is not for 
 us to consider. The fact of their being endued with such powers, 
 and incorporated for such purposes, only shows that parliament 
 
 ' 12 Beav. 339. » 1 Hare, 114. * 
 
 2 11 C. B. 116. « 22 L. J. Ch. 682. 
 
THE DOCTRINE OF ULTRA VIRES. 31 
 
 did not think fit to intrust them with more extended powers, or 
 to incorporate them for other purposes." 
 
 In South Yorkshire Railway and Riyer Dun Company v. 
 Great Northern Railway Company,^ an agreement, under the 
 seals of the two companies, that defendants might for a term of 
 twenty-one years have free use of the plaintiffs' railway, works, 
 engines, &c., on payment of certain tolls and under certain con- 
 ditions, was held, by a majority of the Court of Exchequer, not 
 to be ultra vires, the payments to be made being considered tolls, 
 within the meaning of section 87 of the Railway Clauses Consoli- 
 dation Act, 1845. In reference to the question of ultra vires, 
 Parke, B., observed : " Corporations which are creations of law 
 are, when the seal is properly affixed, bound just as individuals 
 are by their own contracts, and as much as all the members of a 
 partnership would be by a contract in which all concurred. But 
 where a corporation is created by an act of parliament for partic- 
 ular purposes, and with special powers, then, indeed, another 
 question arises. Their deed, though under the corporate seal, and 
 that regularly affixed, does not bind them, if it appears by the 
 express provisions of the statute creating the corporation, or by 
 reasonable inference from its enactments, that the deed was ultra 
 vires — that is, that the Legislature means that such a deed should 
 not be made." 
 
 In the National Manure Co. v. Donald,' Pollock, L. C. B., laid 
 down that " there can be no doubt that a parliament corporation 
 is a corporation merely for the purposes for which it is established 
 by act of parliament ; and it has no existence for any other pur- 
 pose. Whatever is done beyond that purpose is ultra vires and 
 void." 
 
 Similarly Lord Cranworth, in the House of Lords, in Eastern 
 Counties Railway v. Hawkes : ^ "It must, therefore, be now con- 
 sidered as a well-settled doctrine that a company incorporated by 
 act of parliament for a special purpose cannot devote any part of 
 its funds to objects unauthorized by the terms of its incorporation, 
 however desirable such an application may appear to be." 
 
 It is unnecessary to add anything to the above. A corpora- 
 tion is commonly styled a "legal person," but the appellation 
 " person " is applicable to it only by analogy ; and the analogy 
 
 ' 9 Ex. 66, 84; 22 L. J. Ex. 804. 3 6 H. Lds. 348. 
 
 ^ 28 L. J. Ex. 185, 188. 
 
32 THE DOCTRINE OF ULTRA VIRES. 
 
 fails when it is thus clearly stated that this legal person is wanting 
 in much that belongs to a natural person — that its course of exist- 
 ence is marked out from its birth ; that it has been called into 
 being for certain special purposes ; that it has aU the powers and 
 capacities, and only those which are expressly given it, or are ab- 
 solutely requisite for the due carrying out of those purposes, and 
 that all the obligations it affects to assume which do not arise from 
 or out of the pursuit of such purposes are null and void. 
 
 It will be seen that, in the extract from the judgment in 
 South Yorkshire Railway and Kiver Dun Company v. Great 
 Northern Eailway Company, Parke, B., draws a distinction, and 
 the same distinction has been made in many other cases as dieta 
 only, never as the basis of decision, between ordinary corporations 
 " which are bound just as individuals by their own contracts," and 
 those created for particular purposes. But it may fairly be 
 doubted whether any corporations are now, or ever have been, 
 created save for particular purposes ; and this for two reasons : 
 First. — Corporations are pure abstractions. They do not actually 
 exist, but only in contemplation and by fictions of law. They are 
 legal persons, in the juridical meaning of the term persons or per- 
 sonw, but they are in no wise citizens. Indeed, the chief legal 
 necessity for such a fiction is, that there may be a definite entity 
 to sue and be sued in the courts. This being so, is it not the 
 better and more rational view of these personm, these entities, to 
 say that their implied capacities and incidents extend only so far 
 as the need for their existence ends, than to assume that "because 
 analogous to physical beings in some respects, they are, therefore, 
 in law, beings in all respects, and with all legal capacities and in- 
 cidents ? Secondly. — The raison d ^itre of corporations is to en- 
 able associations to accomplish certain ends, which single individ- 
 uals, unaided by the law, could not accomplish ; and what are 
 these ends but "particular purposes?" Take, as a strong in- 
 stance, a university or a London guild. Either can undoubtedly 
 manage, invest, transform, and expend the corporate property in 
 almost any way it pleases, but, if they proposed to exhaust the 
 same on the private pleasures of existing members, or to abandon 
 the promotion, the one of education, the other of their " art and 
 mystery," it is very probable, if not absolutely certain, that the 
 Court of Chancery would restrain the same, as being ultra vires. 
 It must, however, be admitted that there is a distinction between 
 
THE DOCTRINE OF ULTRA VIRES. 33 
 
 " ordinary " and " special " corporations, in that some corporations 
 exist for the furtherance of private aims only, and can deal with 
 their assets and privileges in any way which may seem most agree- 
 able to the majority of the members, without hindrance from the 
 courts on behalf either of the public, so long as they keep within 
 their powers, or of an individual member so long as he is not 
 being treated fraudulently or unfairly. But the franchises and 
 the powers of all corporations, and therefore of these, are re- 
 stricted. If they attempt to exceed or to misuse them, they com- 
 mit acts ultra vires, which, at all periods of our history, have 
 exposed them to the risk of confiscation of their charter and 
 privileges. The crown, to whose prerogative they owe their exist- 
 ence, can require them to pbserve the conditions upon which their 
 privileges have been granted. To this extent, therefore, they are 
 " special " corporations. It is equally certain that they are " spe- 
 cial " in the sense that, as all their capacities are contained in and 
 spring from the instrument of incorporation, these capacities must 
 be limited, vaguely, perhaps, but still limited,^ and, consequently, 
 that any member is entitled to prevent an abuse of these capaci- 
 ties, or a turning of them to wrong objects. It may be well, how- 
 ever, for the sake of convenience and distinction, to apply the 
 term "ordinary" to such corporations, and to style all others 
 " special," whether this special character arises from a trust im- 
 posed upon the corporate body or from a limitation express or 
 implied of its rights and faculties to the accomplishment of certain 
 defined and unmistakable purposes. 
 
 Section II.— Yakioits Meanings that have been given to the 
 TERM Ultra Viees. (a) 
 
 The expression, " ultra vires" has been used in at least two 
 senses, as was pointed out by Kindersley," Y.-C, in the Earl of 
 
 ' See the judgment of Bramwell, B., in Payne v. Mayor, Ac. of Breokon, 3 H. 
 
 & N. 572 ; 27 L. J. Ex. 496. 
 
 (a) Mr. Justice SeldeD, in Biaaell v. M. S. & N. I. R. R. Cos. 22 N. Y. 268 (decided 
 Sept. 1860), thus cla'isifies the English cases on ultra vires : "There are three classes 
 of cases in England in which the question of ultra vires arises, viz., 1st, cases in 
 which one or more of the shareholders seeks to restrain the officers of the corpora- 
 tion from engaging in transactions unauthorized by the charter; 2d, actions brought 
 by third persons against corporations, to enforce their contracts, in which the de- 
 
 3 
 
34 THE DOCTRINE OF ULTRA VIRES. 
 
 Shrewsbury v. North Staffordshire Eailway Co.^ "When you 
 speak of ultra vires of the company, you mean one or other of two 
 things, either that you cannot bind all the shareholders to submit to 
 it [i. e., that you cannot bind dissentient shareholders], or that it is 
 ultra vires in this respect, that the Legislature, for instance, having 
 authorized you to make a railway, you cannot go and make a 
 harbor. But, in the present case, the latter question does not 
 arise. The question is, whether it is ultra vires as being beyond 
 the power of the directors to bind all the shareholders." 
 
 This passage was quoted with approval by Blackburn, J., in 
 Taylor v. Chichester & Midhurst Railway Co.,^ and explained at 
 some length : " The Legislature, in passing special acts by which 
 railway and other trading companies are incorporated, have in 
 view two distinct purposes. They incorporate a body of share- 
 holders, who seek, as a trading speculation, to carry out a particu- 
 lar scheme for their own benefit, and they, at the same time, 
 being satisfied that the scheme will be for the benefit of the 
 public, confer on the body thus incorporated certain privileges, 
 and impose on them certain restrictions for the benefit of the 
 public. As the shareholders are, in substance, partners in a trad- 
 ing concern, the management of which is committed to the body 
 corporate, a trust is by implication created in favor of the share- 
 holders that the corporation will manage the corporate affairs, and 
 apply the corporate funds for the purpose of carrying out the 
 original speculation." 
 
 This twofold use of the term has been unfortunate, as it has 
 contributed to obscure the reasoning upon a subject in itself suffi- 
 ciently perplexing. Especially to it is due not a little of the con- 
 fusion that exists as to the cases in which a corporation can ratify, 
 and as to the extent to which it can be made liable for acts 
 done and agreements entered into by itself or its agents in an in- 
 
 ' 36 L. J. Oh. 156, 172. The report ly the distinction as drawn by the Vice- 
 in L. R. 1 Eq. 618, does not show so clear- Chancellor. 
 
 * L. R. 2 Ex. 356, 378. 
 
 fense relied upon is, that in making the contract the corporation exceeded its corpo- 
 rate powers; and 3d, similar actions in which the defense is that the directors had 
 exceeded, not the powers conferred upon the entire corporation by law, but those 
 conferred by the shareholders upon the directors or managing officers by deed. 
 
 " These three classes of cases differ materially in their nature and principles, and 
 if we woidd avoid confusion, must be kept entirely distinct in investigating the sub- 
 ject." 
 
THE DOCTRINE OF ULTRA VIRES. 35 
 
 formal manner, when such acts and agreements are in other 
 respects within its powers. The former is the true and primary 
 meaning ; viz., that a corporation has certain powers only, and that 
 it can be bound only when acting, whether directly or by agents, 
 within the limits of these powers ; and this is the signification 
 which will in this work be given to the term when it is employed 
 without any qualification. 
 
 The latter meaning is a totally difiEerent affair. In fact it has 
 nothing to do with the powers of corporations as such, but simply 
 with the powers of the coUeciive hody of indi/oiduals composing 
 them. This body, be it remembered, is not the corporation, 
 which exists apart and distinct from its members, and whose 
 capacities were determined at its origin. Now, it is manifest, 
 that any body of men, whether associated casually or by some 
 stronger union, can bind themselves by positively participating in 
 and agreeing to any legal transaction. Is it allowable to go a step 
 further and say, that when this association takes the form of a 
 corporation, the members can, by the concurrence of one and all 
 in a given act, which though not absolutely vltra vires of the cor- 
 poration, is, nevertheless, not binding on it, render such act bind- 
 ing, not merely on themselves, but on the corporation ? This is a 
 highly important question, but it will be better discussed in con- 
 nection with ratification, hereafter. 
 
 There is yet a third meaning not unseldom given to ultra 
 vires, viz., what is beyond the powers of the executive part of a 
 corporation. This is needless confusion, and might always be 
 avoided by adding, as is sometimes, done, " of the directors," or 
 " agents," as the case might be. {a) 
 
 Sometimes the term ultra vires is used even in a fourth sense, 
 as denoting what is outside the powers, not of a particular corpo- 
 ration, but of every corporation. Bylaws in restraint of trade 
 are ultra vires in this sense.^ Facts will thus be ultra vires which 
 
 ' Though it seems that such could be v. Pope, 2 B. <fe Ad. 465 ; Shaw v. Poyn- 
 legalized by special custom. See Shaw ter, 2 A. <& E. 312. 
 
 (a) "The phrase ullra vires is applied in the English cases, both to acts which 
 simply exceed the powers conferred by the deed of settlement upon the officers, as 
 the agents of the shareholders, and acts which transcend the powers conferred by 
 law upon the entire corporation. This indiscriminate use of the phrase is calculated 
 to mislead, unless the distinction referred to is observed." Selden, J., in Bissell v. 
 M. S. & N. I. R. R. Cos. 22 N. Y, 268. 
 
36 THE DOCTRINE OF ULTRA VIRES. 
 
 are contrary to the common law or to the provisions express or 
 implied of some statute — e. g., the issuing prior to the companies' 
 act of 1867 of shares to bearer.* (a) 
 
 Cairns, L. C, in Eiche v. Ashbnry Ky. Carriage, &c. Co., L. 
 E. 7 H. L. 653, 672, says : " I have used the expression exira 
 vires and ultra vires. I prefer either expression very much to 
 one which occasionally has been used in the judgments in the 
 present case, and has also been used in other cases, the expression 
 ' illegality.' In a case such as that which your lordships have 
 now to deal with, it is not a question whether the contract sued 
 upon involves that which is malum prohibitum or Tnahim m se, 
 or is a contract contrary to public policy, and illegal in itseK. I 
 assume the contract in itself to be perfectly legal, to have nothing 
 in it obnoxious to the doctrine involved in the expressions which 
 I have used. The question is not as to the legality of the con- 
 tract ; the question is as to the competency and power of the 
 company to make the contract." (5) 
 
 ' See in re General Company for Promotion of Land Credit, L. R. 5 Ch. 863. 
 
 (a) This is in no sense vXtra vires but simple illegality, and embraces cases in 
 which the defense is available alike to corporations and individuals, 
 
 " There is nothing of mystery or of sanctity in the use of the words of a dead 
 language — ultra vires — and although it is a concise and convenient form by which 
 to indicate the unauthorized action of artificial persons with limited powers, still it 
 is as applicable to individual as to corporate action. An illegal act of an individual 
 is as really ultra vires as the unauthorized act of a corporation." Lord, J., in Na- 
 tional Pemberton Bank v. Porter, 125 Mass. 333. ^ 
 
 " The words ultra vires and illegality represent totally different and distinct ideas. 
 It is true that a contract may have both these defects, but it may also have one with- 
 out the other. For example, a bank has no authority to engage, and usually does 
 not engage, in benevolent enterprises. A subscription, made by authority of the 
 board of directors, and under the corporate seal, for the building of a church or 
 college, or an almshouse, would be clearly ultra vires, but it would not be illegal. 
 If every corporator should expressly assent to such an application of the funds, it 
 would still be idlra vires, but no wrong would be committed and no public interest 
 violated. So a manufacturing corporation may purchase ground for a school-house 
 or a place of worship for the intellectual, religious and moral improvement of its 
 operatives. It may buy tracts and books of instruction for distribution among them. 
 Such dealings are outside of the charter ; but, so far from being illegal or wrong, 
 they are in themselves benevolent and praiseworthy. So a church corporation may 
 deal in exchange. This, although ultra vires, is not illegal, because dealing in ex- 
 change is, in itself, a lawful business, and there is no State policy in restraint of that 
 business." Bissell v. M. S. & N. I. R. R. Cos. 22 N. Y. 268. 
 
 (6) In Whitney Arms Co. v. Barlow, 63 N. Y. 68, Allen, J., says : " When acts of 
 corporations are spoken of as ultra vires, it is not intended that they are unlawful, or 
 
THE DOCTRINE OF ULTRA VIRES. 37 
 
 Section III. — The Bueden of Proof in Questions of TJltea 
 
 YiEES. 
 
 Corporations have all such authorities and capacities as belong 
 to them by the general common law, or are given them by their 
 constating instruments. And acts which on the face of their 
 constating instruments are authorized will be presumed to be 
 valid, unless those objecting to them can establish their invalidity. 
 Omnia acta rite esse presumuntur. 
 
 But there is the other important question : has a corporation 
 only those powers which are so expressly given to it by its con- 
 stating instruments, or has it all such as will conduce to the attain- 
 ment of its ends, save such as are, by direct provision in its con- 
 stating instruments or by necessary inference from the same, 
 denied it ? 
 
 In Oolman v. Eastern Counties Eailway Company, the master 
 of the rolls said : ^ "It has been very properly admitted that rail- 
 way companies have no right to enter into new traces or busi- 
 nesses not pointed out hy the acts." In East Anglian Railways 
 Company v. Eastern Counties Eailway Company,' the Court of 
 Common Pleas stated : " It is clear that the defendants have a 
 limited authority only, and are a corporation only for the purpose 
 of making and maintaining the railway sanctioned by the act, and 
 that their funds can only ie applied for the pwrposes directed and 
 provided for hy the statute." 
 
 The burden of authority would, however, seem, from a consid- 
 eration of subsequent cases, to incline the other way, i. e., to the 
 
 » 10 Beav. 1 ; 16 L. J. Ch. 73. ^ 11 C. B. 776. 
 
 even such as the corporation cannot perform, but merely those which are not within 
 the powers conferred upon the corporation by the act of its creation, and are in vio- 
 lation of the trust reposed in the managing board by the shareholders, that the 
 affairs shall be managed and the funds applied solely for carrying out the objects for 
 which the corporation was created." 
 
 " A corporate act is said to be tdira vires when it is not within the scope of the 
 powers of the corporation to perform it under any circumstances, or for any purpose ; 
 or, with reference to the rights of certain parties, when the corporation is not 
 authorized to perform it without their consent ; or, with reference to some specific 
 purpose, when it is not. authorized to perform it for that purpose, although fully 
 within the scope of the general powers of the corporation, with the consent of the 
 parties interested, or for some other purpose." McPherson v. Foster, 43 Iowa, 
 48, 65. 
 
38 THE DOCTRINE OF ULTRA VIRES. 
 
 I 
 following opinion, promulgated by Parke, B., and quoted cmte, p. 
 31. Thus, in Chambers v. Manchester & Milford Kailway Com- 
 pany,^ Compton, J., held that a " corporation is bound by the seal 
 being affixed to the deed, where the directors have power given 
 them so to affix it, but that it is not bound where the Legislature 
 has said that the thing shall not he done.''' In Eastern Counties 
 Railway Company v. Hawkes,^ Lord St. Leonards said: "The 
 decisions do not authorize directors to bind their companies by 
 contracts foreign to the purposes for which they were established ; 
 but they do hold companies bound by contracts duly entered into 
 by their directors, for purposes which they have treated as within 
 the objects of their acts, and which cannot be clearly shown not 
 to fall within them." In Shrewsbury & Birmingham Railway 
 Company v. "North Western Railway Company,^ Lord Cranworth, 
 in delivering the judgment of the House of Lords, considered this 
 to be the more correct way of enunciating the doctrine. " Prima 
 facie a corporation may contract under seal. You must show 
 that the pgrticular contract is one which the corporation has no 
 power to enter into. It must be shown on the face of it to be a 
 breach of duty — something foreign to the object for which the 
 company was established." 
 
 So, in Scottish North Eastern Railway Company v. Stewart,^ 
 Lord "Wensleydale expressed himself very similarly, saying: 
 " There can be no doubt that a corporation is fully capable of bind- 
 ing itself by any contract under its common seal in England, and 
 without it in Scotland, except when the statutes by which it is 
 created or regulated expressly or by necessary implication prohibit 
 such contract between the parties. Prima facie all its contracts 
 are valid, and it lies on those who impeach any contract to make 
 out that it is avoided." {a) 
 
 1 5 B. <fe S. 588; 33 L. J. Q. B. 268, « 5 H. L. Ca. 381. 
 
 275; see Sonth Wales Railway Company ^ 6 H. L. Ca, 113, 124. 
 
 V. Redmond, 10 Q. B. N. S. 675. « 3 Macq. 382, 414-6. 
 
 (a) The dealings of a corporation, which on their face or accordiugto their appar- 
 ent import are within its charter, are not to be regarded as illegal or unauthorized 
 without some evidence tending to show that they are of such a character. In the 
 absence of proof there is no legal presumption that the law has been violated. Chau- 
 tauque County Bank v. Risley, 19 N. Y. 869; K. Y. Firemen's Ins. Co. v. Stnrges, 2 
 Cow. 664; Safford v. Wyckoff, 4 Hill, 442; ex parte Peru Iron Co. 1 Cow. 540; 
 Farmers' L. & T. Co. v. Perry, 3 Sandf. Ch. 339 ; Same a. Clowes, 3 Comst. 470 ; Mc- 
 Farlan v. Triton Ins. Co. 4 Denio, 392; De Groff v. Am. L. Th. Co. 21 N. Y. 124; 
 
THE DOCTRINE OF ULTRA VIRES. 39 
 
 Finally, in the latest case where this question was very thoroughly 
 examined, viz., that of Taylor v. Chichester & Midhurst Railway 
 Company,^ Blackburn, J., approved of the same, adding : " I think, 
 therefore, we are entitled to consider the question to be, not 
 w^hether the present defendants had, by virtue of the acts of incor- 
 poration, authority to make the contract, but whether they are 
 iy those statutes forbidden to make it." (a) 
 
 • L. R. 2 Ex. 356, 384. 
 
 Yates V. Van De Bogert, 56 N. Y. 626; Akin v. Blanehard, 32 Barb. 527; Allegheny , 
 City V. McClurkan, 14 Penn. St. 81 ; Downing v. Mt. Washington Co. 40 if. H. 230 ; 
 Mitchell V. Rome R. R. Co. 17 Ga. 674; Underwood ». Newport. Lyceum, 5 B. Mon. 
 129; BlaVe v. HoUey, 14 Ind. 383; Charleston & Jefforsonville Turnpike Co. v. Wil- 
 ley, 16 Ind. 34 ; Talmadge v. The N. A. Coal Co. 3 Head, 337 ; Dana v. The Bank of 
 St. Paul, 4 Minn. 385 ; Morris & Essex R. B. v. Sussex R. R. 5 0. E. Green, 542 ; Ox- 
 ford Iron Co, V. Spradley, 46 Ala. 98; Middlesex Husband. <& Man. Ase. ii. Davis, 3 
 Mete. 133. Corporations are presumed to contract within their powers. The doc- 
 trine of ultra vires, when invoked for or against a corporation, should not be allowed 
 to prevail where it would defeat the ends of justice, or work a legal wrong. Railway 
 Co. V. McCarthy, 6 Otto, 267; Union Water Co. v. Murphy Co. 22 Cal. 620; Whit- 
 ney Arms Co. v. Barlow, 63 N. Y. 62 ; Southern Express Co. v. W. N. Car Co. (98 
 U. S.), 7 Reporter, 673 ; Ala. Gold L..In8. Co. v. Centr. Agr.,'<feo. Ass. 64 Ala. 73. 
 
 (a) Blackburn, J., delivered a dissenting opinion. The judgment in the Exchequer 
 Chamber was reversed in the House of Lords (39 Law J. Ex. 217; s. o. L. R. 4 Ho. 
 L. Cases, 628), that tribunal holding, that the contract was not ultra vires of the 
 directors, in the sense of being prohibited by the Legislature, and was therefore a 
 legal contract binding on the company. The case in the Court of Exchequer, where 
 the contract was held binding, will be found in 4 H. <fe C. 409. Lord St. Leonards, 
 in Eastern Counties Railway ii. Hawkes, 5 Ho. of L. Cases, 381 (1855), holds this 
 language: "I trust that this decision, and the decisions of this house during the 
 present session in the cases of National Exchange Co. v. Drew (2 Macq. 103), and in 
 Bargate v. Shortridge (6 Ho. of L. Cases, 297), will place the powers and liabilities 
 of directors and their companies in making contracts, and in dealing with third par- 
 ties upon a safe and rational footing. They do not authorize directors to bind their 
 companies by contracts foreign to the purposes, for which they were established ; but 
 they do hold companies bound by contracts duly entered into by their directors, for 
 purposes which they have treated as within the objects of their acts, and which can- 
 not be clearly shown not to fall within them; and they further hold companies to be 
 bound bt/ a continued course of dealing by their directors with third persons, in relation 
 to their shares, although that mode of dealing is contrary to the regulations of their 
 deed of management. I hope that we shall have no other cases before ua, where tlie 
 defense of a company rests upon the want of power to make a contract, which the 
 directors deliberately entered into, and under which they took a benefit, or upon the 
 irregularities of their own proceedings." See the instructive case of Riche v. Ash- 
 bury Railway Carriage & Iron Company, L. R. 9 Exch. 224 (1874), and particularly 
 the observations of Chamell, B. (p. 227), and of Blackburn, J. (pp. 254, 262 et seq.), 
 L. R. 7 H. L. 653. 
 
40 THE DOCTRINE OF ULTRA TIRES. 
 
 As this view has also been taken, not only by the different 
 members of the House of Lords in the three cases, and by the 
 Court of Queen's Bench in the two cases above quoted, and by 
 the Court of Exchequer in Bateman v. Mayor, &c. of Ashton- 
 under-Lyne,^ but also by the Court of Common Pleas itself, in 
 Eedmond v. South Wales Kailway Company,' we may conclude 
 that it is now established that this is the true mode of expressing 
 the doctrine. The result, then, of the English authorities is, that 
 corporations— certainly those for commercial purposes, and proba- 
 bly all corporations to which the doctrine applies — have by impli- 
 cation all capacities and powers which, being reasonably incidental 
 to their enterprise or operations, are not forbidden them either 
 expressly by their constating instruments or by necessary infer- 
 ence therefrom, (a) 
 
 ' 3 H. <fe N. 323 ; 2Y L. J. Ex. 458. of Lords decided that the contract in 
 
 ' 10 C. B. N. S. 675. See, also, Riche question was ultra vires because it was 
 
 K. Ashbury Railway Carriage, &c. Com- clearly outside the defendants' memoran- 
 
 pany, L. R. 7 H. L. 653, -where the House dum of association. 
 
 (a) Though the American decisions are conflicting in regard to trading corpora- 
 tions, the current of judicial decision seems to be tending towards the modern En- 
 glish doctrine, as stated in the text, and such corporations are held liable as to bona 
 fiie third parties, where the contracts involved are not expressly or by necessary 
 implication prohibited by their charters. Some jurists place their opinion on the 
 ground of an estoppel, in this, that the corporation having received the benefit of 
 the transaction, should not be allowed to plead want of power, and thus- escape lia- 
 bility ; and others on the ground, that acts ullra vires TD&y be illegal as to sharehold- 
 ers, as in excess of conferred powers, and yet not unlawful, as being mala w s« or 
 mala prohibita, and that in regard to such illegality, both parties not beii% in pari 
 delicto, the corporation is liable. See discussion in Bissell v. M. S. <fe N. I. R. R. Cos. 
 22 N. Y. 262, 281, and Miners' Ditch Co. v. Zellerbach, Si Cal. 543. In the latter ' 
 case the Court said : " The term ultra vires, whether with strict propriety or not, is 
 used in different senses. An act is said to be ultra vires when it is not within the 
 scope of the powers of the corporation to perform under any circumstances or for any 
 purpose. An act is also, sometimes, said to be ultra vires with reference to the 
 rights of certain parties, when the corporation is not authorized to ])erform it with- 
 out their consent; or with reference to some specific purpose, when it is not author- 
 ized to perform it for that purpose, although fully within the scope of the general 
 powers of the corporation with the consent of the parties interested or for some other 
 purpose. When an act is ultra vires in the first sense mentioned, it is generally, if 
 not always, void in toto, and the corporation may avail itself of the plea. But when 
 it is ultra vires in the second sense, the right of the corporation to avail itself of the 
 plea will depend upon tlie circumstances of the case." When the act in question is 
 one which the corporation is not authorized to perform under any circumstances, the 
 defense is available to the corporation against all persons, because they are bound to 
 know from the law of its exi8t»nce that it has no power to perform the act; but when 
 
THE DOCTRINE OF ULTRA VIRES. 41 
 
 Section IY. — Leading Principles of Ultea Yieeb. 
 
 The propositions following indicate the chief cardinal princi- 
 ples involved in making up the doctrine of ultra vires. They 
 are necessarily enunciated in wide and general language, but prob- 
 ably such a statement as therein contained will be found useful, 
 both as a summary and an outline of the law and as introductory 
 to a special consideration of the doctrine. 
 
 I. A corporation has all the capacities for engaging in transac- 
 tions which are expressly given it by the constating instruments. 
 This, of course, is but what the common law lays down, and it is 
 no part of the theory of ultra vires that a corporation has not 
 capacities which its founders have expressly said it shall have. 
 There is the qualification, however, that such capacities cannot be 
 such as are forbidden expressly or impliedly by statute. 
 
 II. A corporation has all the capacities for engaging in trans- 
 actions which are impliedly given it by reasonable implication 
 from the language of the constating instruments. It is here that 
 ditficulties arise. The existence of such implied capacities is fully 
 admitted, but the difficulty consists in determining what they 
 are. 
 
 III. A corporation has all the capacities or powers for manage- 
 ment which are given it by its constating instruments, either 
 expressly or by reasonable inference therefrom. Questions of 
 management are of frequent occurrence and of great practical 
 importance. It wiU be found that the principles here coming into 
 play frequently constitute a modification and infringement of the 
 strict doctrines of ultra vires. 
 
 IY. Capacities or powers for management may be given by 
 
 the act is authorized for some purposes but not for others, the defense may or may 
 not be available, depending upon the question, whether the party dealing with the 
 corporation is aware of the intention to perform the act for an unauthorized purpose, 
 or under circumstances not justifying its performance. And^the test, as between 
 strangers having no knowledge of an unlawful purpose and the corporation, is, to 
 compare the terms of the contract with the provisions of the law from which the cor- 
 poration derives its powers, and if the court can see that the act to be performed is 
 necessarily beyond the powers of the corporation for any purpose, the contract can- 
 not be enforced ; otherwise it can. 
 
 In regard to municipal corporations, the rule is stricter, against the validity of 
 ultra vires contracts. See Dillon on Municipal Corporations, sees. 381,749; The 
 Mayor v. Ray, 19 Wall. 468. 
 
42 THE DOCTRINE OF ULTRA VIRES. 
 
 wide general language. This is an extension of the last proposi- 
 tion. It is given here as a principle separate and distinct from 
 the principles relating to capacity to engage in enterprises or 
 transactions, because it is submitted that the exact extent of this 
 latter capacity will depend entirely upon the language used (sub- 
 ject to the effect of proposition II), where as authority to do what 
 comes under the head of management may arise by implication. 
 
 V. Corporations have no capacities or powers other than those 
 indicated in the four previous propositions, and they cannot legally 
 or validly engage in other transactions. 
 
 VI. Courts in dealing with corporations wiU look to those 
 capacities and powers only which they actually possess, at the 
 time.'^ 
 
 YII. Corporations cannot be rendered directly liable upon 
 ultra vires transactions, but must account for benefits received 
 therefrom. As long as the transaction remains executory, it is 
 established that it cannot be enforced. But if it be executed, 
 though in England it cannot be enforced or sued on, yet in the 
 United States there seems some doubt whether the corporation 
 will be allowed to set up the defense of ultra vires. In both 
 countries, however, unquestionably the corporation must account 
 for benefits derived. 
 
 YIII. Special proceedings, in themselves ultra vires, will 
 sometimes be upheld as having been rendered necessary by unex- 
 pected circumstances. This is the result of the capacity to man- 
 age in accordance with the common rules and ideas obse»ved by 
 ordinary business people, and to the advantage and emolument of 
 the corporation. These rules and this object will sometimes, under 
 special circumstances, allow the doing of that which would other- 
 wise be altogether improper. 
 
 IX.. Formalities are generally not imperative but merely direc- 
 tory, and therefore the absence of them can be set up against those 
 persons only who were cognizant of the defect. Formalities are 
 useful as a protection, but they may not be turned into instruments 
 of dishonesty, either against or on behalf of a corporation. The 
 cautions here requisite are — (1) to separate mere formalities from 
 powers and capacities, and (2) to remember that formalities may 
 be essential and imperative ; and if so, they must be duly ob- 
 served. 
 
 ' Hattersley v. Earl of Shelburne, 31 L. J. Ch. 873. 
 
THE DOCTRINE OF ULTRA VIRES. 43 
 
 X. Francliises and special privileges or powers in the nature 
 of franchises cannot be delegated. This is established beyond dis- 
 pute. Every capacity of a corporation which can be styled 
 " special " or a " privilege," is given to it for itself, for its own 
 purposes, and to be used by itself directly. Any transfer, direct 
 or indirect, to others is altogether void. 
 
 XI. Special powers of whatever description can be used only 
 honafide for the purposes for which created. 
 
 XII. The capacities and powers of the governing body, and a 
 fortiori those of the subordinate agents of a corporation, cannot be 
 
 greater, and will generally be much more restricted than those of 
 the corporation. 
 
 XIII. Any party to an ulU'a vires transaction may set up the 
 defense thereof, and any one corporator may call upon the courts 
 to restrain the corporation from engaging therein. 
 
CHAPTEE II. 
 
 THE AFFAIRS OF CORPORATIONS AND CONDUCT OF THE SAME. 
 
 In the last chapter, reference was made to the distinction be- 
 tween special and ordinary corporations. The better and more 
 practical division would probably be into commercial corporations 
 and those for any purpose whatever other than trade pure and sim- 
 ple.(a) Commercial corporations are, one and all, "special" cor- 
 porations, and to them in particular the doctrine of ultra vires ap- 
 plies. Of other varieties of corporations some, at least, will be 
 special, and will be subject to the principle of ultra vires ; some 
 may be considered as " ordinary " corporations, taking that term 
 with the explanation already given, and wiU, in so far as they are 
 ordinary, be unaffected by — save under peculiar circumstances — 
 this principle. In this chapter it is intended to examine our sub- 
 ject in so far as it concerns the general conduct of the affairs of 
 corporations not for commercial purposes. 
 
 Membership in Corporations. 
 
 In connection with the control of the corporate affairs, the first 
 point to be noticed is membership, and the rights and privileges 
 which it confers. For the determination of these matters the com- 
 mon law lays down few rules, and recourse must, in consequence, 
 be had to the constating instruments. Here will be found the 
 conditions which, qualified and supplemented it may be by cus- 
 tom, constitute membership. These conditions vary indefinitely 
 with the nature of the corporation. As to municipal bodies, they 
 have been amended and reduced to uniformity by the provisions 
 of 5 & 6 "Will. lY, c. 76. With respect to charitable bodies, some- 
 times residence, or the occupation or ownership of property -v^ithin 
 
 (a) There are three classes of corporations : public municipal corporations, the ob- 
 ject of which is to promote the public interest ; corporations technically private, but 
 of a quasi public character, having in view some public enterprise, in which the pub- 
 lic interests are involved, such as railroad, tarnplke and canal companies; and cor- 
 porations strictly private. Miners' Ditch Company v. Zellerbach, 3T Cal. 543. 
 
THE AFFAIRS OF CORPORATIONS. 45 
 
 a certain district, or the being rated to the poor, is a sufficient 
 qualification, and the person possessing the same is thereby enti- 
 tled to become, or perhaps ipso facto becomes, a corporator. Some- 
 times it is poverty, place of birth, the bearing a particular name, 
 or the being related to the founder. Yery generally, an election 
 or some formal kind of admission is necessary. This latter essen- 
 tial is never found in the case of joint-stock companies, not, at 
 least, when the incoming member obtains from one retiring shares 
 or stock, in respect of which no pecuniary liability exists. The 
 possession of such shares or stock confers membership without the 
 knowledge, and even against the wishes, and to the detriment of 
 all the other members. 
 
 Membership, as it confers privileges, so, on the other hand, 
 very generally entails the performance of certain duties with re- 
 spect to the corporation. When this is so, the corporation has 
 power to expel members who do not observe those duties, at least 
 when the bceachxtends directly or indirectly to the forfeiture of 
 the corporate rights and franchises, and the destruction of the cor- 
 poration.(a) Corporations may also disfranchise their members 
 who have been proved guilty of the more heinous crimes, ^{b) It 
 ' On Disfranchisement, see Grant on "Corporations," pp. 262 — 267. 
 
 ( a) It is a tacit condition annexed to the franchise of a member, that he will not 
 oppose or injure the interests of the corporate body, and consequently if he breaks 
 this condition he may be disfranchised. Com. v. St. Patrick Soc. 2 Binn. 441 ; Peo- 
 ple V. Fire Underwriters, 7 Hun, 248. 
 
 (6) These rules apply to benevolent societies, stock and other exchanges, literary, 
 social, and like institutions whose purposes are not primarily or exclusively those of 
 gain ; while the right to censure a member for improper conduct is incident to every 
 corporation. Smith v. Smith, 3 Desaus. 667 ; Com. v. Philanthropic Soc. 5 Binn. 486 ; 
 Society v. Commonwealth, 62 Penn. St. 125 ; see People v. Chicago Board of Trade, 
 45 III. 112. Still, before expulsion, a member is entitled to notice of the intention 
 and the reasons for expulsion, and to an opportunity to be heard in opposition to the 
 charges. Black <fe White Smiths' Soc. e. Vandyke, 2 Whart. 309 ; Green v. Af. Meth. 
 Ep. Soc. 1 S. <fe R. 254; Com. v. Penn. Ben. Inst. 2 S. <fe. R. 141; Com. v. Guardians 
 of Poor, 6 S. <fe R. 469 ; Com. v. Pike Ben. Soc. 8 Watts & S. 247 ; Washington So- 
 ciety «;^aoher, 20 Penn. St. 426 ; Fuller v. Plainfield Acad. 6 Conn. 532 ; Barrows v. 
 Med. ^. 12 Cush. 402 ; People v. St. Franciseus Ben. Soc. 24 How. Pr. 216 ; People 
 11. N. Y. Com. Ass. 18 Abb. Pr. 271 ; People v. Sailors' Snug Harbor, 64 Barb. 532 ; s. 
 0. 6 Abb. N. S. 119 ; Delacy v. Neuse River Co. 1 Hawks, 274 ; Southern Plank Road 
 Co. V. Hixon, 8 Ind. 166; Leech v. Harris, 2 Brewster, 571; White v. Brownell, 2 
 Daly, 329; Sibley v. Carteret Club, 40 N. J. L. 295. 
 
 Mandamus lies to restore to membership a corporator illegally removed. Bar- 
 rows V. Mass. Med. Soc. 12 Cush. 402; Crocker o. Old South Soc. 106 Mass. 489; 
 
46 THE AFFAIRS OF CORPORATIONS. 
 
 must, however, be questioned whether this power of disfranchise- 
 ment can belong impliedly to any joint-stock companies. Persons 
 become members of such, corporations — apart, that is, from express 
 provision to the contrary — merely by the acquisition of shares or 
 stock. The possession of such shares or stock seldom, if ever, im- 
 poses upon the possessor the least duty towards the company, and 
 by the transfer thereof his membership ceases. It would, conse- 
 quently, seem that such corporations have no implied power to 
 eject their members, however troublesome they may be, or how- 
 ever hostile their acts to the welfare and prosperity of the whole 
 body.(a) But such a power might unquestionably be given by ex- 
 press provision ' in the constating instruments, as is iudeed, in real- 
 ity, done whenever the company or its directors are authorized to 
 forfeit shares for non-payment of calls. 
 
 The affairs of Corporations considered generally. 
 
 A corporation is an imperium in im/perio. Its by-laws, stat- 
 utes, and customs are its legal code, establishing in a general man- 
 ner the mode in which its affairs are to be conducted, and the 
 rights and powers of the various corporators. The members in 
 
 ' As to the effect of an express pro- Tision of this kind see Hope v. Interna- 
 tional Financial Soc. W. N. ISte, p. 267. 
 
 Sleeper v. Franklin Lyceum, 7 E. I. 623 ; People v. St. Franciscus Ben. Soc. 24 How. 
 Pr. 216; People v. Med. Soc. 24 Barb. 570; s. o. 32 N. Y. 187; People v. St. Stephen's 
 Ch. 6 Lans. 172; 8. 0. 63 N. T. 103; People v. Ben. Soc. 3 Hun, 361 ; Delacy v. Neuae 
 River Co. 1 Hawks, 274 ; State v. Georgia Med. Soc 38 Ga. 608 ; State v. Luaitanian 
 Soc. 15 La. Ann. 73 ; People v. Meeh. Aid Soc. 22 Mich. 86 ; State v. Chamber of 
 Commerce, 20 Wis. 68 ; Society v. Commonwealth, 62 Peun. St. 125 ; Com. v. Society, 
 2 Binn. 441; Same v. Franklin Ben. Soc. 10 Penn. St. 357; Same v. German Soc. 15 
 Penn. St. 251 ; Evans v. Phila. Club, 50 Penn. St. 107 ; Cook v. College of Physicians, 
 9 Bush, 541 ; but in People v. Board of Trade, 80 111. 134, it is said that the courts 
 will not interfere to control the manner of enforcing the by-laws of purely voluntary 
 associations, organized, not for the prosecution of a business, but only for inculcating 
 certain principles among the members, such as a board of trade. An expelled mem- 
 ber of such an association cannot be restored by mandamus. As to interference by 
 certiorari or injunction, see Gregg v. Med. Soc. Ill Mass. 185; State «. Med^oc. 38 
 N. J. L. 377 ; Thompson v. Soc. of Tammany, 17 Hun, 306 ; Baxter v. ChicaJI^Bd. of 
 Trade, 83 111. 146. 
 
 (a) Evans o. Philadelphia Club, 50 Penn. St. 107 ; Society v. Commonwealth, 52 
 Penn. St. 125 ; Leech v. Harris, 2 Brewster, 571. Members not acting bona fide for 
 the interests of the corporation, are not permitted to invoke the action of the courts, , 
 as to corporate transactions. Waterbury ,;. Express Co. 3 Abb. N. S. 163; State v. 
 Lusitanian Soc. 16 La. Ann. 73. 
 
THE AFFAIES OF CORPORATIONS. 47 
 
 general meeting assembled constitute a forum, supreme in all that 
 relates to internal arrangement, provided they keep within the cor- 
 porate powers, and act in subordination ta the immutable statutes, 
 if any, which form its constitution.^ They can determine the bus- 
 iness which shall be done and the transactions which shall be car- 
 ried on or concurred in in the corporate name. They can maintain 
 or abandon the corporate rights, enforce the corporate privileges, 
 or allow them to pass into desuetude, improve or waste the cor- 
 porate property ; change the nature of that property, and divert it 
 from one purpose to another — in a word keep the corporation alive 
 and active, or permit it to fall into decay ; but always provided 
 that, in so doing they are infringing no public rights, are within 
 their powers and committing no breach of trust or violation of 
 other duties. 
 
 It is seldom, however, that this can be the case. There may 
 be " ordinary " corporations endowed with privileges without cor- 
 responding responsibilities, and therefore absolutely exempt, save 
 when misusing their franchises, from the jurisdiction of every 
 legal tribunal, whether the intervention of the courts be sought on 
 public or on private grounds ; and therefore it would seem a for- 
 tiori irresponsible for, because incapable of committing, ulWa 
 vires acts. 
 
 Excluding these corporations, if any are to be found, as well as 
 commercial corporations, there remain the large numbers to which 
 this principle does with more or less stringency apply. In the 
 management of their affairs, the courts do intervene whenever 
 they are exceeding or misusing their powers, or are refusing to do 
 acts the doing of which is imposed on them as a duty. In briefly 
 considering these matters, the simpler way will be to proceed by 
 taking the different classes of corporations as already enumerated. 
 
 First. — Ecclesiastical Corporations. 
 
 These have incident to them a visitor ; either the founder and 
 his heirs and assigns, or these failing, the king and his successors.' {a) 
 
 ' See Mayor, <feo. of Colchester v. Low- ■' Rex v. St. Catherine's Hall, Cam- 
 
 ten, 1 V. & B. 226. bridge;, 4 T. R. 2.S3. 
 
 (a) In the United States, the Legislature is the visitor of all corporations founded 
 by it for public purposes. Amherst Academy v. Cowls, 6 Pick. 427 ; see, also, San- 
 derson V. White, 18 Pick. 328 ; Dartmouth College v. Woodward, 4 Wheat. 518. 
 
48 THE AFFAIRS OF CORPORATIONS. 
 
 The supervision of the visitor is supreme .as to all matters of inter- 
 nal arrangement,^ and in so far as he acts in accordance with the 
 rules and ordinances established and in force, he excludes the jur- 
 isdiction of the courts. He may be restrained if acting beyond 
 his powers or compelled to act if he refuses, but application must 
 be to the Queen's Bench for a prohibition or a mcmdamus,^ and 
 not to chancery; but beyond this, in the absence of a trust, the 
 courts ordinarily will not interpose.^ It may be difficult to deter- 
 mine who is the visitor,* and sometimes the appointment is to be 
 gathered only from an examination of the statutes generally,^ 
 But, though the jurisdiction of the visitor is, under ordinary cir- 
 cumstances, exclusive, and his decision not examinable, either at 
 law or in equity, yet it is different if a trust exists. In such a case 
 the Court of Chancery exercises its authority whenever this is nec- 
 essary for the due carrying out of the trust.* 
 
 The doctrine of ultra vires comes into play in very many ways 
 in connection with ecclesiastical corporations, but it is not possible 
 to do more than refer to some of the points to be noticed. These 
 matters can be fittingly discussed only in works which especially 
 treat of ecclesiastical law. First to be considered is the right of 
 appointment to ecclesiastical benefices, prebendaries, and sees — in 
 other words, of naming the person who shall be for the time being 
 an ecclesiastical corporation sole, in whom this is vested, the cere- 
 monies to be observed by the appointor and the acceptor, and the 
 conditions to be satisfied by either party ; and also the correspond- 
 ing legal facts in connection with the continuation of and the fill- 
 ing up of vacancies in ecclesiastical corporations aggregate.' 
 
 Secondly, the personal rights and privileges of these persons. 
 In many cases they have ample powers of prohibiting other minis- 
 ters from conducting public worship in the churches or districts 
 to which they have been appointed. 
 
 Thirdly, their rights, powers, and liabilities in respect of the 
 
 ' King n. Bishop of Cheater, 1 W. Bl. which waa practically the same decision 
 
 22 ; and see Thompson v. University of at law. 
 London, 33 L. J. Ch. 625. » See St. John's College, Cambridge, 
 
 ^ Whiston V. Dean <fe Chapter of Roch- v. Todington, 1 Burr. 158 ; Att.-Gen. v. 
 
 ester, 1 Hare, 532. Middleton, 2 Ves. Sen. 327. 
 
 ' Att.-Gen. v. Foundling Hospital, 2 * See Whiston v. Dean & Chapter of 
 
 Ves. 42. Rochester, ubi supra ; and the c«ses cited 
 
 * Compare the case cited in note (^) in in the notes following in reference to char- 
 Chancery with Reg. V. Dean <fe Chapter of itable trusts. 
 
 Rochester, 17 Q. 13. 1 ; 20 L. J. Q. B. 467, ' See Reg. v. President & Chapter of 
 
 Exeter, 12 A. <fe E. 512. 
 
THE AFFAIRS OF CORPORATIONS. 49 
 
 user and alienation of the corporate property, and more especially 
 of church property. 
 
 Fourthly, the questions relating to the jurisdiction of the vari- 
 ous inferior ecclesiastical courts. 
 
 Secondly. — Charitable Corporations. 
 
 These have been arranged into three groups — religious bodies'^ 
 educational institutions, and charitable corporations, in the stricter 
 and commoner use of this expression. This division is useful be- 
 cause of the special principles, which, under various circumstances, 
 and for particular reasons, are applied to these separate classes by 
 the courts, and for examining such principles. But probably 
 every instance of either class is a " charity" in the broad sense of 
 the term, as recognized in the courts, and is therefore amenable to 
 the general jurisdiction and general principles established for the 
 general control of charities. 
 
 First. As to the jurisdiction. Many eleemosynary corpora- 
 tions,^ have, like ecclesiastical bodies, a visitor ; and what has been 
 there said as to the visitor applies equally with regard to these 
 corporations as to those of the last class. Within the limits of the 
 authority bestowed upon him, in the absence of a trust, or where 
 the trust, if any, does not extend or regulate, his jurisdiction is 
 supreme and exclusive, {a) 
 
 But it is otherwise when the existence of a trust can be estab- 
 lished. "Where there is a clear and distinct trust, this court 
 administers and enforces it as much where there is a visitor as 
 where there is none. This is clear, both on principle and author- 
 ity. The visitor has a common law office, and common law duties 
 to perform, and does not superintend the performance of the trust 
 which belongs to the various officers, which he may take care to see 
 are properly kept up and appointed." ^ 
 
 ' Is there any visitor of religious bo- Cross Hospital, 17 Beav. 48B, 466 ; Green 
 
 dies not belongina; to or under the con- o. Rutherforth, 1 Ves. 462 ; Re Berkhamp- 
 
 trol of the State Church ? stead School, 2 V. <fe B. 134. 
 
 2"Per Romilly, M. R., Att.-6en. v. St. 
 
 (a) As to powers of visitors in eleemosynary corporations, see State v. Adams, 44 
 Mo. 5V0 ; Murdock's Appeal, 7 Pick. 303 ; Murdock ti. Phillips Acad. 12 Pick. 244 ; 
 Sanderson v. White, 18 Pick. 328; Bracken v. W. & M. College, 1 Call, 161 ; 3 Call, 
 B73 ; People v. Sailors' Snug Harbor, 54 Barb. 632 ; University of Md. v. Williams, 
 9 GiU <fe J. 365. 
 
 4 
 
50 THE AFFAIRS OF CORPORATIONS. 
 
 Where this trust is established, whatever be its object, what- 
 ever be the nature of the charity — places of worship, whether of 
 the established religion or not,^ almshouses or hospitals,^ colleges,' 
 grammar schools,* the promulgation of religious or secular doc- 
 trines,'' works of public utility ; * or any of the very many purposes 
 which have been decided to fall within the spirit if not the letter 
 of 43 Eliz. c. 4,' and the like — the Court of Chancery assumes 
 jurisdiction, and causes the trust to be duly observed and carried 
 out. (a) 
 
 It is not easy to conceive a charity that does not, to a greater 
 or less degree, partake of the nature of a trust, and therefore to 
 that extent come within the supervision of chancery.' It would 
 seem, upon general principles, that the objects of the charity ought 
 in every case to be looked upon as oestuis que trustent. The gift 
 has been made or bequeathed, and the charity created for their 
 benefit, and the persons who for the time being are the legal 
 owners of the property belonging to the charity are owners there- 
 
 ' Att.-Gen. *. Dangara, 33 Beav. 621 ; ♦ Wilkinson v. Malin, 2 C. A J. 636. 
 
 Att.-Gen. v. Munro, 2 D. G. <fc Sm. 122; » Att.-Gen. v. Baxter, 1 Vern. 248; 
 
 Corbyn tr. French, 4 YeB. 418 ; Att.-Gen. Thornton v. Howe, 31 Beav. 14 ; Re 
 
 «j. Pearson, 8 Mer. 400 ; Daugars «. Rivaz, Michel's Tniats, 28 Beav. 39; Straus v. 
 
 28 Beav. 233 ; Att.-Gen. v. Pearson, T Goldsmid, 8 Sim. 614. 
 
 Sim. 290. See Re Scarborough Charity « Johnson v. Swann, 3 Madd. 457 ; 
 
 Petitions, 1 Jur. 36 ; Shore v. Wilson, 9 Trustees of the British Museum v. White, 
 
 CI. <fe F. 356. 2 S. <fc S. 694. 
 
 ' Att.-Gen. v. St. Cross Hospital, 17 ' See University of London v. Yarrow, 
 
 Beav. 436. See Philpott v. St. George's 23 Beav. 159; 26 L. J. Ch. 430; Jones v. 
 
 Hospital, 27 Beav. 107 ; Att.-Gen. v. Williams, Amb. 661. 
 
 Browne's Hospital, 17 Sim. 137; 19 L. J. * See Hayman v. Governing Body of 
 
 Ch. 73. Rugby School, L. R. 18 Eq. 28. 
 
 ^ Att.-Gen. v. Sidney Sussex College, 
 Cambridge, L, R. 4 Ch. 722. 
 
 (ffl) Courts of equity in this country, by virtue of original common law powers, 
 assume jurisdiction over bequests to charitable uses without claiming prerogative 
 powers, or whether the statute of 43 Elizabeth is considered in force or not. Bap- 
 tist Ass. II. Hart, 4 Wheat. 1 ; Perin v. Carey, 24 How. U. S. 466 ; Tappan v. Debloia, 45 
 Me. 122; Preachers' Aid Soc. v. Rich, 45 Me. 552; Burr v. Smith, 7 Vt. 276; Going 
 V. Emory, 16 Pick. 107; Derby v. Derby, 4 R. I. 414; Dutch Ch. v. Mott, 7 Paige, 
 77; Witman v. Lex, 17 S. cfe R. 88; Miller v. Porter, 53 Peun. St. 292; Griffeth *. 
 State, 2 Del. Ch. 421; Griffin v. Graham, 1 Hawks, 96; Atty.-Gen. v. Jolly, 1 Rich. 
 Eq. (S. C.) 99 ; Beall v. Fox, 4 Ga. 404 ; Carter v. Balfour, 19 Ala. 814; Williams v. 
 Pearson, 88 Ala. 299 ; Dickson v. Montgomery, 1 Swan, 348 ; McCord v. Ochiltree, 
 8 Blackf. 15; Commissioners v. Rogers, 56 Ind. 297; Gass v. Wilhite, 2 Dana, 170. 
 But see, as to law in Maryland and Virginia, Dashiell v. Atty.-Gen. 6 H. & J. 392; 
 6 H. & J. 1 ; Wheeler v. Smith, 9 How. U. S. 66 ; Gallego v. Atty.-Gen. 8 Leigh, 450 ; 
 Janey v. Latane, 4 Id. 327 ; Ould v. Washington Hospital, 5 Otto, 308. 
 
THE AFFAIRS OF COEPORATIONS. 51 
 
 of, sub modo, that is, in order to apply it to the purposes directed 
 by the original donor — in other words, they hold it upon a trust, (a) 
 
 Questions of ultra vires will depend on the construction placed 
 upon the instruments under which the charity was primarily 
 founded, or by which its constitution has been subsequently modi- 
 fied. (J) Any going beyond or abandonment of the original scope 
 or object of the charity will be ultra vires, unless expressly per- 
 mitted by the Legislature,^ (c) or compelled by necessity,' or ex- 
 cused by lapse of time and custom.' {d ) 
 
 Thus, schools founded for giving instruction in classics may 
 not be converted into establishments for teaching merely element- 
 ary English.^ Nor, on the other hand, can one intended for dif- 
 fusion of elementary knowledge be restricted to the teaching of 
 higher subjects only.' 
 
 So, schools endowed for the benefit of a particular town or 
 district will not be thrown open to the whole kingdom,' unless 
 Tinder special circumstances, such as a very large increase in the 
 income.' 
 
 But a departure from the strict directions or words and lan- 
 guage employed by the founder will be permitted, if thereby his 
 manifest intention can be the better fulfilled.^ {e) And in recent 
 
 ' See Att.-Gen. v. Margaret, 1 Vern. 3 ; iJe Free Grammar School of Chipping 
 
 66 ; lie Highgate School, 1 Jur. IH ; Re Sodbury, 8 L. J. Ch. l.S ; ifeEugby School, 
 
 Reading Dispensary, 10 Sim. 118. 1 Beav. 467. 
 
 '^ See Re Ashton's Charity, 27 Beav. ' Att.-Gen. v. Jackson, 2 Keen, 641. 
 
 116. See Re Manchester School, L. R. 2 Ch. 
 
 ' Att.-Gen. v. Hartley, 2 J. & W. 363 ; 497. 
 Att.-Gen. v. Myddleton, 2 Ves. S. 330. « Berkhampstead School Case, L. R. 1 
 
 See Re Chertsey Market, 6 Price, 261 ; Eq. 102. 
 Att-Gen. v. Gould, 28 Beav. 485. ' Re Latymer'a Charity, L. R. 7 Eq. 
 
 * Att.-Gen. o. Mansfield, 2 Ruag. 601. 353. 
 See Re Marlborough School, 13 h. .1. Ch. « Att.-Gen. v. Whiteley, 11 Ves. 241. 
 
 (a) Auburn Academy v. Strong, Hopkins Ch. 278 ; Sanderson v. White, 18 Pick. 
 328 ; Nelson v. Cushing, 2 Cush. 519 ; Johnson v. Mayne, 4 Iowa, 180. 
 
 (6) The regulations of the founder of a charity are the laws of the corporation, 
 which cannot be altered, modified, or amended. Phillips Ac. o. King, 12 Mass. 646 ; 
 Dartmouth College »,j-Woodward, 4 Wheat. 518 ; Gilman v. Hamilton, 16 111. 226. 
 
 (c) The Legislature cannot divert the property of a charitable corporation. Ply- 
 mouth V. Jackson, 16 Penn. St. 44; Venable v. Coffman, 2 West Va. 810. See Atty.- 
 General v. Clergy Soc. 10 Rich. Eq. (S. C.) 604 ; Stanley v. Colt, 6 Wall. 119 ; Watkins 
 ». Wilcox, 6 N. Y. Sup. Ct. 639. 
 
 {d) Atty.-Gen. v. Old South Society, IS Allen, 474. 
 
 (e) American Academy v. Harvard College, 12 Gray, 682; Silcox v. Harper, 32 
 Oa. 639. 
 
52 THE AFFAIRS OF CORPORATIONS. 
 
 times there has heen by statute, vested in the Court of Chancery, 
 an extensive authority of dealing with, and reconstituting, endowed 
 and grammar schools, and approving of modifications in their con- 
 stitution and regulations.'' 
 
 In considering charitable corporations, it must not be forgotten 
 that the charity commissioners possess very extensive powers of 
 supervision and control, and that their consent and authorization 
 have to be obtained, in respect of the doing of anything which 
 affects the essential constitution of the charity, and especially by 
 16 & 17 Vict. c. 13Y, s. 17, prior to bringing any suit, petition or 
 other legal proceeding relating to the charity or its funds.' Now, 
 also, by 35 & 36 Yict. c. 24, the charitable trustees incorporation 
 act, 1872, they are empowered to grant a certificate of registration 
 to, and thereby to incorporate, the trustees of any charity for 
 religious, educational, literary, scientific, or public purposes. 
 
 There is one point in connection with religious bodies, incor- 
 porated or not, which requires particular attention, viz., as to the 
 principles to be followed in determining the rights of the parties 
 concerned, when disputes arise as to matters of doctrine, form of 
 government, &c. In eases of this kind, the English courts hold 
 it to be their duty to decide in favor of those, whether a minority 
 or majority of the congregation, who are adhering to the doctrine 
 professed by the congregation, and the form of worship in prac- 
 tice, as also in favor of the government of the church in operation, 
 with which it was connected at the time the trust was declared. 
 
 If, however, the congregation be not described in the original 
 donation or terms of subscription, as in connection with, or under 
 the ecclesiastical jurisdiction of any particular body of worshipers, 
 it may change its relation, and by consequence it may modify or 
 revise its form of government, provided there be in such change 
 no radical departure from the original faith or doctrine.' (a) 
 
 ' See 3 <fe 4 Vict. c. 11; 23 & 24 Vict. ^ j^^ Lo^d Eldon, C, in Att.-Gen. v. 
 
 c. 11 ; 31 & 32 Vict. cc. 32 and 118 ; 32 Pearson, 8 Meriv. 400. See the full and 
 
 <fc 33 Vict. cc. 66 and 58. valuable judgment in Att.-Gen. v. Clap- 
 
 ' See Braund v. Earl of Devon, L. R. 3 ham, 10 Hare, 540, relating to the oon- 
 
 Ch. 800. ^ Btitution, Ac, of the Wesleyan Methodists. 
 
 (a) See Presbyterian Congregation o. Johnston, 1 Watts & Serg. 9; Lutheran 
 Congregation of Pine Hill v. St. Michael's, &o. of Pine Hill, 48 Penn. St. 20 ; App v. 
 Lutheran Congregation, 6 Penn. St. 201 ; Baker v. Fales, 16 Mass. 487 ; Stebhins v. 
 Jennings, 10 Pick. 171 ; Watson v. Jones, 13 Wall. 679 ; Schnorr's Appeal, 67 Penn. 
 
THE AFFAIRS OF COEPORATIONS. 53 
 
 Thirdly. — Friendly Societies and other similar Associations. 
 
 Analogous, as regards many of their objects to eleemosynary 
 corporations, are friendly, building and similar societies. But 
 
 ■St. 138 ; Roshi's Appeal, 69 Penn. St. 462 ; Petty v. Tooker, 21 N. Y. 26V ; Burrell v. 
 Asaociate Reformed Church, 44 Barb. 282; Hale v. Everett, 53 N. H. 9. 
 
 Mr. Justice MUler, in "Wataon v. Jones, 13 Wall. 679, 722, thus classifies the ques- 
 IdoDS arising in civil courts concerning property held by ecclesiastical bodies : " The 
 questions which have come before the civil courts concerning the rights to property 
 held by ecclesiastical bodies may, so far as we have been able to examine them, be 
 profitably classified under three general heads, which, of course, do not include cases 
 governed by considerations applicable to a church established and supported by law 
 as the religion of the State. 
 
 "1. The first of these is when the property which is the subject of controversy 
 has been, by the deed or will of the donor, or other instrument by which the prop- 
 ■crty is held, by the express terms of the instrument, devoted to the teaching, support 
 or spread of some specific form of religious doctrine or belief. 
 
 " 2. The second is when the property is held by a religious congregation which, 
 "by the nature of its organization, is strictly independent of other ecclesiastical asso- 
 ciations, and, so far as church government is concerned, owes no fealty or obligation 
 to any higher authority, 
 
 " 3. The third is where the religious congregation or ecclesiastical body holding 
 iihe property is but a sabordinate member of some general church organization in 
 which there are superior ecclesiastical tribunals with a general and ultimate power 
 of control, more or less complete, in some supreme judicatory over the whole mem- 
 bership of that general organization. 
 
 " In regard to the fibst of these classes, it seems hardly to admit of a rational 
 •doubt that an individual, or an association of individuals, may dedicate property by 
 way of trust to the purpose of sustaining, supporting and propagating definite re- 
 ligious doctrines or principles, provided that in doing so they violate no law of 
 morality, and give to the instrument by which their purpose is evidenced the formal- 
 ities which the laws require. And it would eeem also to he the obvious duty of the court, 
 in a case properly made, to see that the property so dedicated is not diverted from the 
 ■trust which is thits attached to its use. So long as there are persons qualified within 
 the meaning -of the original dedication, and who are also willing to teach the doc- 
 trines or principles prescribed in the act of dedication, and so long as there is any 
 one so interested in the execution of the trust as to have a standing in court, it must 
 be that they can prevent the diversion of the property or fund to other and different 
 uses. This is the general doctrine of courts of equity as to charities, and it seems 
 ■equally applicable to ecclesiastical matters. * * • 
 
 "The SECOND class of cases which we have described has reference to the case of 
 a church of a strictly congregational or independant organization, governed solely 
 within itself, either by a majority of its members or by such other local organism as 
 it may have instituted for the purpose of ecclesiastical government ; and to property 
 lield by such a church, either by way of purchase or donation, with no other specific 
 trust attached to it in the hands of the church than that it is for the use of that con- 
 negation as a religious society. In s%ich cases, where there is a schism which leads to 
 
54: THE. AFFAIRS OF CORPORATIONS. 
 
 these societies are of statutory, not private origin, their constitu- 
 tion being determined by various acts of parliament whicii have 
 
 a separation into distinct and conflicting bodies, the rights of such bodies to the use of the 
 property must be determined by the ordinary principles which govern voluntary associa- 
 tions. If the principle of government in such cases is that the majority rules, then 
 the numerical majority of memhers must control the right to the use of the property.. 
 If there be within the congregation oflBcers in whom are vested the powers of such 
 control, then those who adhere to the acknowledged organism by which the body is 
 governed are entitled to the use of the property. * » * 
 
 " But the THIRD of these classes of cases is the one which is oftenest found in the 
 courts, and which, with reference to the number and difficulty of the questions in- , 
 volved, and to ether considerations, is every way the most important. It is the case 
 of property acquired in any of the usual modes for the general use of a religious 
 congregation which is itself part of a large and general organization of some relig- 
 ious denomination, with which it is more or less intimately connected by religious 
 views and ecclesiastical government. In this class of cases, we think the rule of 
 action which should govern the civil courts, founded in a broad and sound view of 
 the relations of church and State, under our system of laws, and supported by a 
 preponderating weight of judicial authority, is, that, whenever the questions of disci- 
 pline, or of faith, or ecclesiastical rule, custom,, or law have been decided by the highest of 
 these church judicatories to which the matter has been carried, the legal tribunals must 
 accept such decisions as final, and as binding on them, in their application to the case be- 
 fore them." See, also, The Dublin Case, 88 N. H. 459; Hale v. Everett, 53 N. H. 9 ; 
 Smith V. Ifelson, 18 Vt. 611 ; Baker v. Fales, 16 Mass. 147; Stebbins v. Jennings, 10 
 Pick. \1\ ; Steams v. Bedford, 21 Pick. 114 ; Weld v. May, 9 Cush. 181 ; Inhabitants 
 of Princeton v. Adams, 10] Cush. 129 ; Atty.-Gj^n. u. Federal Street Meeting-House, 
 3 Gray, 1 ; Hosea v. Jacobs, 98 Mass. 65 ; Baptist Church v. Rouse, 21 Conn. 160; 
 Field V. Field, 9 Wend. 396; Miller v. Gable, 2 Den. 492; s. o. 10 Paige, 627; Bap- 
 tist Church V. Witherell, 3 Paige, 296 ; Lawyer v. Cipperly, Y Paige, 281 ; Watkins 
 V. Wilcox, 6 N. Y. Supreme Court (T. & C), 539 ; People v. Steele, 2 Bar^. S9Y ; 
 Robertson v. Bullions, 9 Barb. 64; s. c. 11 N. Y. 243 ; Walker v. Wainwright, 16 
 Barb. 486 ; Bowden v. McLeod, 1 Ed. Ch. 588 ; Kniskern v. Lutheran Church, 1 
 Sandf. Ch. 439; Wheaton v. Gates, 18 TS. Y. 395; Petty «. Tooker, 21 N. Y. 267;. 
 s. c. 29 Barb. 256 ; Burrell v. Associate Ref. Synod, 44 Barb. 282 ; Gram v. Society, 
 36 N. Y. 161 ; State v. Crowell, 4 Halst. 411 ; Den v. Bolton, 1 Halst. 206; Hen- 
 drickson v. Decow, Saxt. 577 ; Doremus v. Dutch Church, 2 Green Ch. 332 ; Den v. 
 Pilling, 4 Znb. 653 ; McGuinis v. Watson, 41 Penn. St. 9 ; Winebrenner v. Colder, 43 
 Penn. St. 244; Re St. Mary's Church, 7 S. & R. 517; Commonwealth v. Green, 4 
 Whart. 603 ; Presbyterian Church v. Johnson, I W. & S. 37 ; German Ref Church 
 V. Commonwealth, 3 Barr, 282 ; Keyser v. Stansifer, 6 Ohio, 363 ; Wiswell v. Con- 
 gregational Church, 14 Ohio St. 31 ; Harrison v. Hoyle, 24 Ohio St. 254 ; Shannon 
 u. Frost, 3 B. Mon. 253 ; Gibson v. Armstrong, 7 B. Mon. 481 ; Watson v. Avery, 2 
 Bush, 332; s. o. 3 Bush, 645 ; Lewis v. Watson, 4 Bush, 228 ; Lucas v. Case, 9 Bush, 
 297 ; Kinkead v. McKee, lb. 535 ; Harmon vi Dreher, 1 Speer Eq. 87 ; Johns Island 
 Church Case, 2 Rich. Eq. 192 ; Ferraria v. Vasooncelles, 23 lU. 466; s. o, 31 111. 25 ; 
 Calkins v. Cheney, 4 Ch. Legal News, 389 ; Lawson v. Kolbenson, 61 111. 405 ; Wat- 
 son V. Farris, 45 Mo. 183 ; Lutheran Church v. Gristgau, 34 Wis. 329 ; see Hagar ».. 
 Whitehouse, Hoffman's Ecc. Law, ch. 23 ; Tyler's Ecc. Law, 85 ; Buck's Ecc. Law, 
 244 ; Steed v. McAuley, 82 Leg. Intel. 370. 
 
THE AFFAIRS OF CORPORATIONS. 55 
 
 been passed in that behalf, supplemented in matters of detail and 
 minor importance by rules drawn up by the members themselves, 
 and in so far as necessary officially certified and approved. Of 
 these various bodies the most important class consist of 
 
 a. Friendly Societies. 
 
 The statutes relating to these are the following : 
 18 & 19 Yict. c. 63 ; 21 & 22 Vict. c. 101 ; 23 & 24 Vict. c. 58 ; 
 38 & 39 Vict. c. 60, which has repealed all prior acts and consti- 
 tutes a code for these bodies.^ 
 
 5. Loan Societies. 
 
 3 & 4 Vict. c. 110, regulates these bodies, and has finally been 
 made perpetual by 26 & 2Y Vict. c. 56. (a) 
 
 ' See Tyrrell v. WooUey, 2 Scott N. 589 ; 30 L. J. Oh. 742 ; Hornby o. Close, 
 
 R. 171 ; Kelsall v. Tyler, 11 Exch. 513 ; L. R. 2 Q. B. 153 ; Reg. v. Stainer, L. R. 
 
 25 L. J. Ex. 153 ; Re Owen, 31 Beav. 285 ; ICC. 2.30 ; Ke?. v. Scott, 13 L. J. M. C. 
 
 31 L. J. Ch. 825 ; Pare v. Clegg, 29 Beav. ifS ; 8 Jur. 473"; 34 & 35 Vict. c. 31. 
 
 (a) In Huntington v. Savings Bank, 6 Otto, 394, Strong, J., thus states the char- 
 acter of a sayings bank : " It is not u commercial partnership, nor is it an artificial 
 being, the members of which have property interests iu it, nor is it strictly eleemosy- 
 nary. Its purpose is rather to furnish a safe depositary for the money of those 
 members of the community disposed to intrust their property to its keeping. It is 
 somewhat of the nature of such corporations as church-wardens for the conservation 
 of the goods of a parish, the college of surgeons for the promotion of medical science, 
 or the society of antiquaries for the advancement of the study of antiquities. Its 
 purpose is a public advantage, without any interest in its members. The title of the 
 act incorporating it indicates its purpose, namely, an act to incorporate a national 
 savings bank; and the only powers given to it were those we have mentioned — 
 powers necessary to carry out the only avowed purpose, which was to enable it to 
 receive deposits for the use and benefit of depositors, dividing the income or interest 
 of all deposits among its depositors or their legal representatives. It is, like many 
 other savings institutions incorporated in England and in this country during the 
 last sixty years, intended solely for provident investment, in which the management 
 and supervision are entirely out of the hands of the parties whose money is at stake, 
 and which are qumi benevolent and most useful, because they hold out no encourage- 
 ment to speculative dealing or commercial trading. This was the original idea of 
 savings banks. Scratchley's Treatise on Savings Banks, passim ; Grant's Law of 
 Bankers, 571, where, in defining savings banks, it is said the bank derives no benefit 
 whatever from any deposit, or the produce thereof. Such are savings banks in 
 England, under the statutes of 9 Geo. IV, c. 92, sect. 2, and 26 & 27 Vict. c. 87. 
 Very many such exist in this country. Among the earliest are some in Massachu- 
 setts, organized under a general law passed in 1834, which contained a provision 
 like the one in the act of Congress, that the income or profit of all deposits shall be 
 divided among the depositors, with ju^t deduction of leasonable expenses. They 
 
66 THE AFFAIRS OF COEPORATIONS. 
 
 c. Industrial and Provident Societies. 
 The statute in force relating to these societies is 39 & 40 Vict. 
 c. 45.1 
 
 d. Benefit Buildmg Societies. 
 
 6 & 7 "Will. IV, c. 32, is the act under which these associations 
 were originally founded. It has been modified in unimportant 
 matters by 12 & 13 Vict. c. 106, s. 1 ; 13 & 14 Vict. c. 115 ; 23 
 & 24 Vict. c. 13 ; 26 & 2Y Vict. c. 65, s. 44, and 31 & 32 Vict, 
 c. 124, s. 11. The existing statute is 3Y & 38 Vict. c. 42, which 
 repeals previous legislation. 
 
 "With regard to these different societies, few remarks need be 
 made. Their purposes and objects are determined mainly and 
 primarily by the special acts relating to them, which can be quali- 
 fied in minor details only, by their certified rules. Thus, 18 & 19 
 Vict. c. 63, s. 9, defines the objects of friendly societies. Those 
 associations only which confine themselves to the objects so de- 
 fined will come within the designation ; and therefore a society 
 "whose main purpose is within this section, but which adds thereto 
 the propagation and maintenance of trades iinionism, is not a 
 friendly society." 
 
 So with benefit building societies. Their object is " that any 
 individual member may borrow money from the society to enable 
 Mm to buy or build a house, mortgaging it to the society as secur- 
 ity for the money borrowed, and ultimately making it absolutely 
 his own, by paying off the mortgage out of his subscription." '(as) 
 
 1 See re No. 3 Midland, Ac. Soc. 33 30 L. J. Ch. 742. See Trides' Union Act, 
 L. J. Ch. 739 ; 4 D. G. J. <fe S. 468. 34 <fe 35 Vict. c. 31. 
 
 2 Horoby v. Close, L. R. 2 Q. B. 153. » Per Kinderaley, V.-C. in re Kent Bene- 
 Compare Reg. v. Scott, 13 L. J. M. C. 473 ; fit Building Society, 1 Dr. <fe Sm. 417 ; 30 
 8 Jnr. 473 ; Pare v. Qegg, 29 Beav. 889 ; L. J. Ch. 785 ; 7 Jar. N. S. 1046. 
 
 exist also in New York, Pennsylvania, Maine, Connecticut, and other States. In- 
 deed, until recently, the primary idea of a savings bank has been, that it is an insti- 
 tution in the hands of disinterested persona, the profits of which, after deducting the 
 necessary expenses of conducting the business, inure wholly to the benefit of the de- 
 positors, in dividends, or in a reserved surplus for their greater security. Such, 
 very plainly, is the defendant corporation in this case." 
 
 (ffi) In Pennsylvania, the courts hold the contracts made with building societies 
 usurious, though the act under which they are formed declared otherwise. Reiser v. 
 William Tell Ass. 39 Peun. St. 137; Houser v. Hermann B. Ass. 41 Penn. St. 478. 
 
 In Massachusetts and New Jersey, the contracts are upheld. Mutual L. & F. Ass. 
 ■d. Mclntyre, 3 Allen, 571 ; Franklin B. Ass, v. Marsh, 29 N. J. L. 226 ; Mechanics' Ass. 
 V. Conover, 14 N. J. Eq. 219. 
 
THE AFFAIRS OF CORPORATIONS. 57 
 
 Consequently, it is ultra vires of such a society to act or hold 
 themselves out as a freehold land society.' But if the rules so 
 allow, they may invest a portion of their surplus funds in the pur- 
 chase of real estate, provided this be done ionajide, and in the fur- 
 therance of their main objects.' Moreover, some societies combine 
 the acquisition and dealing in land with the purposes of a building 
 society pure and simple ; and provided the former object be aux- 
 iliary and subordinate to the latter, it would appear that the com- 
 bination is allowable.' 
 
 The present statute (37 & 38 Vict. c. 42, s. 15) contains a series 
 of provisions enabling building societies to borrow. Previously 
 they had not, by statute or by implication, any such power, but their 
 rules might specially authorize it. Therefore, without a provision 
 in that behalf, a borrowing by them or their directors was ultra 
 vires* Even rules authorizing borrowing must restrict the sums 
 so to be obtained to limited and definite amounts : unlimited 
 powers to borrow were ultra vires, as contrary to the spirit of the 
 acts.' The borrowing must, moreover, be not only for the pur- 
 poses of the society, but also for the purposes pointed out in the 
 authorizing rules, those purposes being in other respects lawful,^ 
 and the powers given by such rules must, in all respects, be strictly 
 followed : thus, authority to borrow from members does not justify 
 borrowing from other persons.' 
 
 In respect of disputes relating to the internal affairs of these 
 societies, provision has been made by statute, which will generally 
 obviate any necessity for the interference of the superior courts.* 
 
 By the joint effect of 6 & 7 "Will. lY, c. 32, s. 4, and 13 & 14 
 Yict. c. 115, s. 1, very similar provisions are made for benefit 
 building societies. 
 
 ' Grimes v. Harrison, 26 Beav. 435 ; Hill's and Jones' Case, L. R. 9 Eq. 605 ; 
 
 28 L. J. Ch. 823. Se Professional, Commercial and Indus- 
 
 " Mullock V. Jenkins, 14 Beav. 628 ; trial Benefit Building Soc. L. R. 6 Ch. 
 
 21 L. J. Ch. 65 ; Grimes v. Harrison, ubi 856; lie Liverpool, <fec. Building Soc. 15 
 
 supra. Compare Peto v. Hammond, 30 8. J. 177. 
 
 Beav. 496 ; 81 L. J. Ch. 354 ; Hughes v. " Jte Durham County, <fcc. Society, 
 
 Layton, 4 B. <fe S. 820; 33 L.J. M. C. 89. Davis and Wilson's Case, L. R. 12 Eq. 
 
 ' See re Durham County Permanent 516. 
 Investment Land and Building Society, ' Re Victoria Permanent Benefit, <fec. 
 
 Davis and Wilson's Case, L. R. 12 Eq. Society, ubi supra. 
 516. « See 18 <fe 19 Vict. c. 63, s. 46 ; 21 & 22 
 
 ■• Be National Permanent Benefit Vict. c. 101, s. 6 ; 37 & 38 Vict. c. 42, bs. 
 
 Building Soc. Mc parte Williamson, L. R. 34, 35, 36 ; 38 <fe 39 Vict. c. 60, s. 22 ; 39 
 
 6 Ch. S09. & 40 Vict. c. 46, d. 14 ; 30 <fe 31 Vict. c. 
 
 » Laing o. Reed, L. R. 5 Ch. 4; Re 117, s. 3. 
 Victoria Permanent Benefit, &c. Soc. 
 
58 THE AFFAIRS OF CORPORATIONS. 
 
 It would seem that the jurisdiction of the courts is ousted as 
 regards disputes of the kind contemplated, whenever rules have 
 been drawn u.p, as is usually done, providing for an extra-judicial 
 settlement of such disputes, as by a reference to arbitration. There 
 are two judgments of Lord Eomilly to the contrary .^ But all the 
 other decisions, both at law ^ and in equity,' are uniform to the 
 effect that not only is the adjudication in the manner provided by 
 the statute binding and conclusive without appeal, but also the 
 jurisdiction of the tribunal so constituted is absolutely exclusive of, 
 not merely concurrent with, that of any other tribunal. 
 
 But if questions of fraud or breaches of trust arise, the ordi- 
 nary jurisdiction of the ordinary courts remains.* 
 
 Fourthly. — Municipal Corporations. 
 
 Prior to 5 & 6 "Will. IV, c. 76, municipal corporations {a) were 
 " ordinary " corporations — using that term in the sense and with 
 the explanation already given it — and as such had wide, if not un- 
 restricted, powers of dealing^with their property and funds.' (5) 
 That statute, however, as to municipal bodies coming within it,° 
 completely altered their nature, constituting them trustees of their 
 corporate property for public purposes, and impressing a trust 
 upon this property. Any diversion of the municipal property to 
 purposes other than those prescribed by the act will, consequently, 
 be illegal, on the double ground of its being a breach of trust and 
 also ultra vires. In Att.-Gen. v. Aspinwal],' an injunction was 
 granted against the endowment of places of worship at the 
 borough expense ; though, in Att.-Gen. v. Mayor, &c. of War- 
 
 ' Smith V. Lloyd, 26 Beav. 507 ; * Mullock v. Jenkins, 14 Beav. 628 ; 21 
 
 Doubleday v. Hoskins, L. R. 16 Eq. 344, «. L. J. Oh. 65. 
 
 '' See Grinham v. Card, 1 Ex. 833 ; 21 * Reg. v. Watson, 2 T. R. 199 ; Mayor, 
 
 L. J. Ex. 321 ; Wright v. Deley, 4 H. & C. <fec. of Colchester v. Lowten, 1 V. A B. 226, 
 
 209. 244 ; Holdsworth v. Mayor, <fec. of Dart- 
 
 s See Fleming v. Self, Kay, 518, 3 D. mouth, 11 Ad. & E. 490; Eyan v. Corpo- 
 
 G. M. & G. 997; Tott v. Hughes, 16 L. T. ration of Avon, 29 Beav. 144 ; Com. Dig. 
 
 0. S. 260; Thompson «. Planet Benefit Franchise, F. 11, 18. 
 Building Society, L. R. 1 5 Eq. 333 ; Pren- « See, also, 1 Vict. o. 78, s. 49, ena- 
 
 tioe V. London, L. R. 10 C. P. 699 ; 44 L. J. bling the crown, by charter, to extend 5 &, 
 
 C. P. 353. 6 Will. IV, c. 76, to other towns. 
 
 ■I 2 My. <fe Cr. 618. 
 
 (o) As to remedies to correct and redress illegal acts by municipal corporations, 
 see Dillon on Munic. Corp. ch. 22. 
 (6) Dillon, § 445. 
 
THE AFFAIRS OF CORPORATIONS. 5^ 
 
 wick,' the defendants were allowed to defray, from time to time, 
 the expense of repairing a certain pew in the parish church. In 
 Att.-Gen. v. Mayor, &c. of Poole,^ a similar order was issued with 
 respect to a proposal to award, out of the corporate funds, com- 
 pensation for the emoluments of oflSces abolished, {a) So the levy- 
 ing of rates,^ or the granting of leases,* by the corporation, will be 
 restrained, if it appears that these things are about to be done 
 from improper motives. (J) As wiU be seen hereafter, applications 
 to Parliament at the corporate expense,^ except so far as provided 
 by the recent statute, 35 & 36 Vict. c. 91, or the engaging in liti- 
 gation,^ save strictly and solely in the protection of the corporate 
 privileges or property, are ultra vires, and will be prevented. 
 
 And not only this — not only will positive and direct violations 
 of the purposes indicated be restrained, but due care mast be 
 shown in the management of the corporate property. Therefore, 
 the immingling the municipal funds in any transaction which, 
 from circumstances beyond the corporate control, may cause the 
 loss of those funds, such as in the purchase of a sublease, the orig- 
 inal demise of which contained covenants forfeiting the whole 
 lease on breach of the same, will be, if not absolutely ultra vires 
 or illegal, so far improper that specific performance of such an 
 agreement will not be enforced.' 
 
 Not only is the application of the municipal funds now con- 
 fined to the limited and definite objects specified in the act 5 & 6 
 Will. IV, c. 76, but by section 94 an absolute bar is placed upon 
 the alienation of the mimicipal real estate — save for terms not ex- 
 ceeding thirty-one years, and upon conditions laid down by the 
 statute — unless it be with the consent of the commissioners of the 
 treasury or any three of them, which consent has to be strictly 
 followed.* It was, however, held in Payne v. Mayor, &e. of Bre- 
 con,' that the covenants in a mortgage, charging the municipal 
 
 ' 10 Jnr. 962; 15 L. J. Q. B. 306. « See 35 <fe 36 Vict. c. 91. 
 
 2 4 My. & Or. 11 ; Att.-Gen. ■</. Wilson, ' MulhoUand v. Belfast Corporation, 9- 
 
 Cr. & Ph. 1. Ir. Ch. 292. 
 
 ' Att.-Gen. v. Mayor, (fee. of Lichfield, ' See Arnold v. Mayor, <fec. of Graves- 
 
 11 Beav. 121. end, 2 K. & J. 574 ; 25 L. J. Ch. 776. 
 
 * Att.-6en. «. Mayor, .fee. of Yarmouth, « 3 H. <& N. 572; 27 L. J. Ex. 495 ;. 
 
 21 Beav. 625. Pallister v. Mayor, (fee. of Gravesend, 9- 
 
 5 See 35 <fe 36 Vict. c. 91. C. B. 774. 
 
 (a) Dillon, §§ 13, 100. 
 (6) See Dillon, § 735. 
 
60 THE AFFAIRS OF CORPORATIONS. 
 
 estates, and which had been made without the consent of the com- 
 missioners first obtained, were valid and enforceable against the 
 corporation, and that although the money had not been borrowed 
 for any of the purposes set forth in section 92. 
 
 Fifthly. — Other PubUo Bodies. 
 
 It is the same with the many corporate and ^'^asi-corporate 
 bodies and associations, constituted for the carrying out of public 
 works or the supervision of matters of public necessity. If they 
 keep within their authority, the courts will not interfere, even 
 though they may not be proceeding in such a way as to meet with 
 thorough approval.'^ 
 
 But if, they exceed or abuse their powers, or are acting with 
 anala fides, or are devoting the funds at their disposal to wrong 
 purposes, the Court of Chancery will put a stop to the same. 
 This occurs most frequently in respect of the application of rates 
 or tolls raised by such bodies. These, as will be seen, cannot be 
 applied to the support of application to parliament for farther 
 powers, nor in the payment of legal expenses not incurred strictly 
 in the discharge of the actual and unavoidable duties of their 
 office. So, where different classes of rates are levied, and there is 
 a deficiency in one class, money cannot be taken from any other 
 class to supply this deficiency.' 
 
 And generally, as with all other corporations, their powers, 
 duties and liabilities will be determined directly or impliedly by 
 the statutes and other instruments appointing them. The juris- 
 diction,' the rights,* and the responsibilities ' thereby vested in or 
 imposed upon them, will belong to them, but no others. For the 
 due and careful carrying out of their authorities they must pro- 
 
 ' Tinkler v. Wandsworth District v. Rochester Pavement, <fec. Commission- 
 Board of Works, 2 D. G. & J. 261 ; ers. L. R. 1 Q. B. 24. 
 Austin V. Lambeth Vestry, 27 L. J. Ch. ' Barber v. Nottingham, <fec. Canal 
 388. See Weardale District Highway Company, 15 C. B. N. S. 726 ; 38 L. J. 
 Board v. Bainbridge, L. R. 1 Q. B. 396; C. P. 193. Compare .Kennet and Avon 
 Bruton Turnpike Trustees v. Wineanton Navigation Company v. Witherington, 18 
 Highway Board, L. R. 6 Q. B. 437. Q. B. 531 ; 21 L. J. Q. B. 419. 
 
 * Att.-6en. v. Daniel, 4 Jur. 790 ; Rex * See Vivian v. Mersey Dock and Har 
 
 V. Dursley, 5 Ad. & E. 10. Compare bor Board, L. R. 5 C. P. 19. 
 
 Att.-Gen. v. Church, 2 H. <fe M. 697 ; ' See Bayley v. Wolverhampton Wa- 
 
 Harrison v. Stickney, 2 H. Lds. 108. See terworks Company, 30 L. J. Ex. 57, and 
 
 .also, the cases cited in the last note, and cases in foUtfwing notes ; and compare 
 
 Local Board of Health of Chatham Extra Reg. v. Woods and Forests, 19 L. J. Q. 
 
 B. 497. 
 
THE AFFAIRS OF CORPORATIONS. 61 
 
 vide ; and in default of this, if anything be done, directed, or con- 
 curred in negligently by them, or through negligence omitted to 
 be so done or directed, they will be answerable in damages for 
 the injury resulting,^ even though they have no funds to pay such 
 damages,^ and even though they are purely a public body and 
 deriving personally no profit or advantage whatever from their 
 position.* 
 
 A few general remarks are all that can be added here by way 
 of conclusion to the statements contained in this chapter. First, 
 the doctrine of ultra vires applies to " special " corporations only. 
 Secondly, the rights and privileges, the powers and duties of such 
 corporations are given to them, or imposed upon them, solely and 
 entirely, by their constating instruments, either expressly or by 
 implication therefrom. Thirdly, apart from the fact as will be 
 seen hereafter that the courts refuse to adjudicate in matters 
 of purely internal administration, the Legislature has by stat- 
 ute provided for the determination, by an extra-judicial tribunal, 
 of disputes arising in connection with the affairs of certain, 
 corporations. Fourthly, if there are any " ordinary " corpora- 
 tions possessed, like physical individuals, of full power over 
 their rights and property, and in respect of their dealings there- 
 with exempt from the control of the courts, yet, whenever a trust 
 has been created, the Court of Chancery will compel the due ob- 
 servance and carrying out of such trust. Fifthly, if there are any 
 such " ordinary " corporations, at least, municipal corporations 
 are not so since 5 & 6 WiU. lY, c. 76 ; nor are any of the boards 
 of commissioners and other such authorities which are constituted 
 for public purposes ; nor, apparently, are any charitable corpora- 
 tions — if they do not exist for particular and special purposes, it 
 would appear that they all import a trust. 
 
 ' Mersey Dock and Harbor Trustees Leonards, Shoreditch, 11 C. B. N. S.192 ; 
 
 V. Gibbs, L. R. 1 H. Lds. 93 ; 35 L. J. 8 Jur. N. S. 19. 
 
 Ex. 226; Romney Marsh v. Corporation ^ Bnsh v. Martin, 2 H. <fe C. 311; 33 
 
 of the Trinity. House, L. R. 5 Ex. 204;. L. J. Ex. lY; and see the cases cited in 
 
 Ohrby v. Ryde Commissioners, 6 B. & S. the last note. 
 
 743 ; 33 L. J. Q. B. 296 ; Coe v. Wise, 6 ' See the cases cited in the last two 
 
 B. <fe 8. 440; 33 L. J. Q. B. 281 ; Clothier notes, especially Mersey Dock and Har- 
 V. Webster, 12 C. B. N. S. 790; 31 L. J. bor Trustees v. Gibbs. 
 
 C. P. 216. Compare Holliday v. St. 
 
CHAPTEE III. 
 
 THE BUSINESS WHICH COMMERCIAL CORPORATIONS MAT TRANSACT. 
 
 It follows from the general statement already given of tlie 
 purport and effect of the doctrine of ultra vires, that commercial 
 corporations can legally become concerned in certain transactions 
 only. The purposes — commercial or otherwise — ^for the carrying 
 on of which corporations are brought into being, are defined by 
 their constating instruments, and special circumstances and equi- 
 ties apart, they cannot bind the corporate property by engaging in 
 matters alien to these purposes. To determine such purposes, the 
 language of these instruments must be carefully considered, for in 
 construing documents, it is the exact wording, and not 'the possi- 
 ble intentions of their framers, that the courts have to follow, (a) 
 
 (a) It is a rule of construction tliat all grants from the State, and grants of fran- 
 chises and exemptions in charters, must be construed strictly and most strongly in 
 favor of the public and against the grantee. The object is to protect the public 
 against improvident grants and grants made by implication without clear intention. 
 They will not be sustained by doubtful words. Ambiguity vitiates them. But this 
 rule is qualified by another ; that such grant and the statute making it must receive 
 a reasonable construction, and not be so construed as to defeat the intention of the 
 Legislature, and that the ambiguity must be such as is not removed by the settled 
 rules of construction. Black v. United Cos. 7 C. E. Green, 130 ; s. o. 9 C. E. Green, 
 455 ; Providence Bank v. Billings, 4 Peters, 514 ; Charles River Bridge a. Warren 
 Bridge, 11 Peters, 420; Bank of Augusta v. Earle, 13 Peters, 519; Perrine v. Ches. 
 A Del. C. Co. 9 How. 172; Richmond R. R. Co. v. Louisa R. R. Co. 13 How. Tl ; 
 Pennook v. Coe, 23 How. Ill ; Rice v. R. R. Co. 1 Black, 358; Delaware Tax Cases, 
 18 Wall. 206; Aicardi ». The State, 19 Wall. 636 ; Turnpike Co. v. Illinois, 6 Otto, 
 «3 ; Bradley v. South. Car. Phosphate Co. 1 Hughes, 72; Bradley v. N. Y. <t N. H.R. 
 R. Co. 21 Conn. 294 ; Boston & L. R. R. Co. v. B. & M. R. R. Co. 5 Gush. 376; Mo- 
 hawk Bridge Co. v. Utica & S. R. R. Co. 6 Paige, 554 ; Auburn Plank-road Company 
 V. Douglas, 9 N. Y. 444; Ren. & Sar. R. R. o. Davis, 43 N. Y. 137 ; In re N. Y. & 
 H. R. R. 46 N. y. 646 ; Briggs v. C. <fc, A. R. R. Co. 2 Zab. 623; Townsend v. Brown, 
 4 Zab. 80 ; Wright «. Carter, 3 Dutcher, 76 ; C. & A. R. R. v. R. & D. B. R. R. 1 C. 
 E. Green, 821 ; Bridge Prop. v. Hoboken L. <fr L Co. 2 Beasley, 81 ; s. o. 1 Wall. 116 ; 
 Bardstown & L. R. R. Co. «j. Metcalfe, 4 Mete. (Ky.) 199 ; Packer v. Sunbury & Erie 
 R. R. 19 Penn. St. 218 ; Bank v. Commonwealth, 19 Penn. St. 144; Penn. R. R. v. 
 Canal Com'rs, 21 Penn. St. 9 ; Com. v. Erie & N. E. R. R. Co. 27 Penn. St. 339 ; St. 
 
BUSINESS OF CORPORATIONS. 63 
 
 Herein lies the vast distinction between statute and judiciary in- 
 terpretation. In estimating the effect of the judgment in any 
 particular case, it is not the mere expressions employed that give 
 it weight, but the raUo decidendi — the rule to be deduced from 
 the decision taking into account surrounding facts. From a stat- 
 ute, however, no particular facts have to be eliminated. It consti- 
 tutes a code, and enunciates principles for the determination of 
 every point that comes within its scope. Its authors must be 
 credited with the possession of all necessary foresight and discrim- 
 ination, and with an average knowledge of the due value to be 
 given to the legal language they employ. If their labors point to 
 the creation of a corporation, all the capacities and attributes of 
 the same when in being, will, as already seen, depend upon the 
 vpsiasima verba of which they have made use, and the meaning 
 attached to them by the courts, and not upon the powers they 
 had intended to give it, or their interpretation of their own lan- 
 guage, (a) From this difference between originators' intention 
 
 Clair County Turnpike Co. v. The People, 82 111. IVi. In construing a special act of 
 incorporation, the presumption is that the Legislature did not intend to grant to the 
 corporation such an exception from the operation of the general law applicable to 
 similar corporations, as would create an unreasonable monopoly or immunity at va- 
 riance with constitutional principles. De Lancey v. Insurance Co. 62 N. H. 581. 
 Mere general words in a charter do not authorize the corporation to do acts which 
 are prohibited by the general public law of the State. Such provisions must be 
 .construed in subordination to the general law. Thus a charter provision authorizing 
 the corporation to dispose of property " in any manner they deem best," does not 
 operate to enable them to resort to a lottery to dispose of it, if lotteries are prohib- 
 ited by the general law. State v. Krebs, 64 N. C. 604. A special charter which 
 grants to an incorporated company the power to contract, without limit, for commis- 
 sions upon loans made by it, in addition to the lawful interest, does not authorize 
 the corporation to take usury under the name of commissions. Johnson v. Griffin 
 Banking, Ac. Co. 65 Ga. 691. A charter by which a corporation is authorized to loan 
 moneys and to receive and take the management and custody of securities " upon 
 such terms and for such commissions, in addition to interest, as shall be stipulated 
 and agreed upon by and between the said company and the parties receiving the loan 
 or advance," does not empower the company to make loans which are in fact usurious. 
 Caldwell v. Commercial Warehouse Co. 1 Hun, 718 ; Tyng v. Commercial Warehouse 
 Co. 58 N. Y. 308. A charter authorizing the corporation thereby created to carry 
 on a stock yard, — Held, not to empower the company to carry on such business in a 
 way that would be injurious to others, or would materially aflfect their health, 
 their comfort, or their property. Babcock v. New Jersey Stock Yard Co. 21 N. J. 
 Eq. 296. 
 
 (o) The existence, franchises, powers, capacities, duties, and liabilities of every 
 corporation, are created, fixed, limited and qualified both in action and time, by the 
 
64 BUSINESS OF COEPORATIONS. 
 
 and subsequent legal construction, have undoubtedly arisen many 
 of the cases relating to ultra vii'es, while the wonderful diversity 
 of construction, attached by various judicial luminaries to the 
 same wording, has contributed not a little to render still more ob- 
 scure a subject in itself sufficiently perplexing. 
 
 It must then be carefully borne in mind, that questions of 
 ultra vires relating to the express powers of corporations wiU 
 have to be decided upon a consideration of the exact language used 
 in the constating instruments, while such as concern their implied 
 powers wiU be determined by the ratio decidendi to be gath- 
 ered from an examination of numerous conflicting decisions and 
 dicta. 
 
 Moreover, it would seem, as has already been pointed out, that 
 the doctrine of ultra vires will be applied more strictly to com- 
 mercial than to non-commercial corporations, though perhaps 
 there is no real ground for drawing such a distinction ; but in 
 every case there is a limit to the acts, the doing of which will ren- 
 der the funds of the corporation liable for the consequences re- 
 sulting therefrom. What are these acts ? What is the business 
 which may be undertaken by a corporation will be determined in 
 each particular instance by a reference to, and an examination of, 
 the powers actually given to a corporation, read in connection 
 with the business or other purposes for which it has been insti- 
 tuted. That it may carry on such primary business is a truism — 
 the difficulty is in determining what other secondary matters, in- 
 cidental to such primary business and necessary for the commo- 
 dious and profitable carrying on and development of the same, are 
 within the scope of its constitution. 
 
 law of the State granting the charter. Penohscot Boom Corp. v. Lamaon, 16 Me. 
 224 ; Mich. Bank v. Gardner, 15 Gray, 362. 
 
BUSINESS OF CORPORATION'S. 65 
 
 Section I. — The Business of Commercial Corpoeations. 
 
 Subject to these remarks, the following general rules relating 
 to the business of commercial corporations will probably be found 
 accurate : 
 
 I. A corporation may transact all such matters as, heing ancil- 
 lary to its jprimary business or main enterprise, are trans- 
 acted hy ordinary individuals under similar circum- 
 stances, (a) 
 
 This rule is but an enunciation in words of the fact that cor- 
 porations must have, and have impliedly, the authority given 
 them to make arrangements for the due and proper conduct of 
 their undertakings. Thus, railway companies may put up refresh- 
 ment rooms,* stations,^ coal depots,' &c., guardians of the poor 
 may enter into contracts for the erection of water-closets at the 
 workhouses under their supervision,* and the like. So all corpo- 
 rations, trading or non-trading, may engage and discharge, with- 
 out the formality of a deed, their ordinary servants and work- 
 men. (5) 
 
 ' Flanagan v. Great Western Railway '' East. & West. <fec. Rw. Co. v. Dawes, ' 
 
 Company,!. R. 7 Eq. 116. 11 Hun, 363. 
 
 ^ Cochin V. Midland Rw. Co. 2 Ph. ■* Clarke v. Cuckfield Union, 21 L. J. 
 
 469. Q. B. 349 ; 1 Bail. C. C. 81. 
 
 (a) A corporation, by the terms of its creation, has the same capacity to buy and 
 sell that an individual has who is competent to make contracts. Reynolds v. Stark 
 Co. 5 Ohio, 206. Every corporation, as such, has the capacity to take and grant 
 property, and to contract obligations, in the same manner as an individual. Barry 
 V. Merchants' Exchange Co. 1 Sand. Ch. 280 ; Brady v. The Mayor, 1 Barb. 584 ; O. 
 & L. C. R. R. Co. d. V. & C. R. R. Co. 6 N. T. Sup. Ct. 489 ; New England Fire & 
 M. Ins. Co. V. Robinson, 25 Ind. 536 ; Madison, <Sec. Plank-road Co. v. Watertown, 
 &c. Plank-road Co. 5 Wis. 173. See Hamilton v. Lycoming Ins. Co. 5 Penn. St. 339-; 
 Macon v. Macon & W. R. R. Co. 1 Ga. 221 ; Camblos v. Phil. <fe Reading R. B. Co. 4 
 Brews. 563. Corporations are bound by the same implications and inferences as 
 natural persons. Bates v. Bank of Alabama, 2 Ala. N. S. 451. In Western Union 
 Tel. Co. V. Rich, 19 Kan. 517, it is said that a railroad company may put up a tele- 
 graph along its line as incidental to its primary business. 
 
 (6) Topping «. Bickford, 4 Allen, 120 ; Kitchen v. Cape Girardeau, (fee. R. R. Co. 
 59 Mo. 514. See American cases collected in notes to Angell & Ames on Corp. sec- 
 tion 283 ; see post, under the head of The necessity for sealing. 
 5 
 
66 BUSINESS OF CORPORATIONS. 
 
 II. A. corporation may employ the corporate property, when it 
 would, otherwise he lying idle and profitless, for such pur- 
 poses as are not alien to its primary business. 
 
 "Were it not for this principle, a corporation would be unable 
 to utilize its waste lands, or to invest its unemployed capital, or 
 even to place it at deposit account. But the principle extends to 
 circumstances different from and more important than these. A 
 corporation takes or acquires, either from necessity or by miscal- 
 culating the extent of its future business, or by the result of sub- 
 sequent occurrences it finds itself in possession of, more extensive 
 premises or a larger stock than it can itself profitably employ — 
 what is it to do with the excess? 
 
 Forrest v. Manchester Railway Company^ is a case in point. 
 The defendants had authority to keep steam vessels for the pur- 
 poses of a ferry, and it was decided that they could use these ves- 
 sels, when otherwise unemployed for excursion trips. The Master 
 of the Rolls held that as it was not for the benefit of the company 
 that its property or capital should remain idle; and since the 
 steamboats had been purchased really for the purposes of the ferry, 
 and not of the excursions, the company were justified in utilizing 
 them in the way they had done, (a) 
 
 1 30 BeaT. 40. 
 
 (a) Brown v. Winnisimmet Co. 11 Allen, 326, was a case where a ferry company 
 let one of its steamboats, not in actual use, for an indefinite time : held not ultra 
 vires. Bigelow, C. J., says (page 333): " W^e cannot doubt that under their charter 
 they are authorized to hold any amount or kind of personal property, within the 
 limit of value fixed by the act, which they may deem necessary or expedient for the 
 proper conduct and management of the business of the ferry ; that it is no excess of 
 their corporate powers to own steamboats which are not required for immediate or 
 constant use in the daily prosecution of their ordinary business, but which may be 
 convenient or useful in case of sudden emergency or accident, or when those which 
 are employed in the regular service of the ferry might be withdrawn for repairs ; 
 that it is not necessary that such extra or additional steamboats should be kept unemployed 
 when not required for the business of the ferry, but that it is competent for the defendants 
 to use them or to let them to others to be used in carrying on any legitimate business for 
 which they are suitable, such as the towage of vessels and the transportation of pas- 
 sengers or merchandise, so long as such use is only temporary and incidental to the 
 main purpose for which they are owned by the defendants." 
 
BUSINESS OF CORPORATIONS. 67 
 
 III. A corporation may temporarily let off or transfer to third 
 parties or even alienate such part of its estates or assets as 
 it is unahle,from special circumstances, to mahe an im- 
 mediate advantageous use of. {a) 
 
 Not only may a corporation itself utilize its surplus stock, 
 when lying idle, in ways and modes not perhaps exactly and liter- 
 ally within the purview of its charter ; it may do more — it may as- 
 sign or lease for a time this surplus to third parties. The limits 
 of the principle, and the extent to which it reaches, are vague and 
 not to be marked with any degree of precision ; but the principle 
 itself, as a principle, is established beyond dispute. It is the ratio 
 of the decision in Simpson v. "Westminster Palace Hotel Com- 
 pany.^ The defendant company was established for the purpose 
 of building a hotel, " the carrying on the usual business of a hotel 
 and tavern therein, and the doing all such things as are incidental 
 or otherwise conducive to the attainment of the above objects." 
 The company built an enormous hotel, containing 317 rooms. Be- 
 fore it was opened, the directors, with the assent of a majority of 
 the shareholders, agreed to let a portion of it, containing 169 
 rooms unfurnished, to the India Board, for oflBces, at the rent of 
 iE6,000 a year, for the term of three years, with an option to the 
 board to extend it to five years. The directors also agreed to 
 make alterations for that purpose, which it was estimated would 
 «ost about £2,000, and cause a further expense in restoring the rooms 
 to a state fit for hotel purposes It was established that this agree- 
 ment was not entered into with a view to the permament employ- 
 ment of part of the premises for purposes not authorized by the 
 constitution of the company, but was adopted as an interim meas- 
 ure, because the directors believed that the whole of so large a 
 building could not safely and advantageously be opened as a hotel 
 at first, and because they had not capital to open the whole at once. 
 It was held by Knight-Bruce, L. J., affirming the decision of Page 
 Wood, V.-C, that the agreement was not ulln'a vires, and that the 
 court ought not to interfere to restrain its being carried into ef- 
 fect. (5) ■ 
 
 ' 2 D. 6. F. <fe J. 141 ; 29 L. J. Ch. 561 ; aflSrmed, 8 H. Lds. C. 712. 
 
 (a) French v. Quincy, 3 Allen, 9 ; Barry v. Mer. Ex. Co. 1 Sand. Ch. 280; Dupre 
 V. Boston Water Power Co. 114 Maas. 37. 
 
 (6) Qucere. Was not the decision of the court partly based upon the contract to 
 supply Tictuals to the clerks of the India Office ? 
 
68 BUSINESS OF CORPORATIONS. 
 
 In Featherstonliaugh v. Lee Moor, &c. Co.^ a lease of th& 
 whole premises, and indeed the whole business was, under very 
 special circumstances, justifiable. 
 
 Similarly there may be an absolute alienation, a conversion 
 into money of the whole, and a fortiori of surplus. This is usu- 
 ally done in view of dissolution. But the proceeding, whenever 
 determined on, is equally good so far that it is not ultra vires in 
 the true sense,^ nor even in the second sense,' provided it be done 
 with iona fides} 
 
 And in the very similar ease of Horsey's Claim, re London and 
 Colonial Company,' where the company had taken on lease a house 
 too large for their own needs, and had let off the portion which 
 they did not require. Page "Wood, V.-C, said the point was : " Did 
 they (*. e., the company) take this house for a speculation, in order 
 to let it again, or for their own purposes ? That is the real ques- 
 tion, and it can be answered only in one way. I do not, therefore, 
 think the taking of this house was ull/ra viresP He consequently 
 admitted the landlord to claim as a creditor in the winding up of 
 the company, {a) 
 
 Statutory provision is often made for the sale by corporations 
 of the superfluous lands acquired by them under their compulsory 
 powers, and being in excess of what is needed for their under- 
 taking,* (5) and in such cases the right of pre-emption is generally 
 reserved to the original owner.' 
 
 » L. E. 1 Eq. 318. ' See London and South-Western RaiU 
 
 2 Wilson V. Miers, 10 C. B. N. S. 348. way Company v. Blackmore, L. R. 4 H. 
 
 ^ Lord !). Copper Miners of England, 2 Lds. 610; Highgate Archway Company 
 
 Ph. 740. ■ jj. Jeakes, L. K. 12 Eq. 9; and the many 
 
 '' Gregory v. Patohett, 38 Beav. 59Y. similar decisions. Tomlin v. Budd, L. E. 
 
 » L. E. 5 Eq. 561 ; 37 L. J. Ch. 393. 18 Eq. 368. 
 6 See 8 & 9 Vict. c. 18, s. 128. 
 
 (a) The power of acquisition involves the power to make the property acquired a 
 benefit. Reynolds v. Stark Co. 5 Ohio, 206 ; Overmyer v. Williams, 16 Ohio, 26, 
 This, however, does not authorize the acquisition of property for the purpose of spec- 
 ulation. Moss V. Averell, 10 N. Y. 449 ; Rensselaer <fe Saratoga E. E. v. Davis, 48 
 N. y. 13'7: Pacific E. E. v. Seely, 46 Mo. 212. 
 
 A canal company may purchase more land than the precise quantity needed for 
 the thread of the canal, and divide the excess among the stockholders or dispose of 
 it in any other lawful manner. Spear w. Crawford, 14 Wend. 20. 
 
 (6) In most of the United States there are enactments limiting the amount of land 
 and duration of tenure by corporations. 
 
BUSINESS OF CORPORATIONS. 69 
 
 TV. As corporations may alienate their surplus property, so 
 they may let off the same for a time to he used for other 
 than the strict corporate purposes. 
 
 Simpson v. "Westminster Palace Hotel Co.^ is a distinct decis- 
 ion in this behalf. There the property leased was an hotel built 
 by an hotel company : it was leased to the India Office for clerks' 
 rooms, and this was perfectly valid. Eef erence may also be made 
 to the innumerable instances where banks, insurance companies, 
 and the like, had large buildings, and let off the upper floors and 
 other portions thereof without demur from anyone. 
 
 V. A corporation may carry on a part only of its business, (a) 
 
 It sometimes happens after a corporation has been created, that 
 •certain branches of its undertaking turn out as profitless as the 
 others are remunerative. Under such circumstances, if the differ- 
 ent branches can be separated, the corporation may give up the 
 former, and devote all its attention to the latter. It is no aban- 
 donment of the objects of a company, if, when established to ac- 
 complish three or four, it abandons one, and carries on the others, 
 provided such abandonment does not alter the fundamental prin- 
 ciple of the company. 
 
 The ]!^orwegian Titanic Iron Co.' was formed for the purchase 
 of certain collieries in England, and iron mines in Ji^'orway, in 
 order to bring over the iron ore from Norway and smelt it in En- 
 gland. After a time it was deemed advisable to sell the collieries 
 and to retain the mines. One of the shareholders thereupon pre- 
 sented a petition to wind up the .company, on the ground that it 
 had failed to realize its objects ; but the Master of the EoUs con- 
 sidered that the company were justified in abandoning the collier- 
 ies, and therefore dismissed the petition with costs. 
 
 If, however, the objects of the corporation constitute in reality 
 one indivisible project, and its constitution is such that a share- 
 holder can say that his contract with it was that the whole project 
 
 ' 8 H. L. C. in. 11 Eq. 534; Re Petersburg, &c. Gas do. 
 
 * 35 Bear. 223. Compstre Syers v. W. N. 18Y4, p. 196; Macdougall ?). Jersey 
 Brighton Brewery Co. 11 L. T. N. S. 560: Imperial Hotel Co. 2 H. <fe M. 528; Side- 
 Wright V. Same, 13 W. R. 220; Bank of bottom «. Com'rs. of Glossop Reservoir, 
 Switzerland v. Bank of Turkey, 5 L. T. 1 Exch. 611. 
 U. S. 549; Tumacacori Mining Co. L. R. 
 
 (a) Assumed by Willard, J., in Moss v. Averell, 10 N. Y. 449. 
 
to BUSINESS OF CORPORATIONS. 
 
 should be completed as far as means allow, tlien he is entitled to 
 ask the court to prevent the abandonment of one of such objects. 
 Thus in Cohen v. "Wilkinson,^ a railway company incorporated to 
 construct a railway from Epsom to Plymouth, was restrained, at 
 the suit of a shareholder, from making it from Epsom to Leather- 
 head only. 
 
 In Bagshaw v. Eastern Union Ky. Co.^ the defendants having 
 power to make certain branch lines, and having raised capital 
 therefor, were restrained upon the application of a subscriber to 
 such capital, from abandoning the branch lines, and expending the 
 capital so raised upon their main line. 
 
 Upon the point now under consideration, viz., the abandon- 
 ment of an integral portion of the whole enterprise, it is now 
 settled — 
 
 1. That such a proceeding is not ultra vires in the strict sense, 
 and consequently, with the exception mentioned in the third clause 
 below, none but members can complain thereof : 
 
 2. That corporations not possessing compulsory powers nor 
 subject to any special duty imposed on them by the Legislature, 
 may exercise their corporate rights and franchises or not, exactly 
 as they please : 
 
 3. That if they have such powers, or are subject to such duties,, 
 they can be compelled to carry out the power or perform the same 
 only on the intervention of the attorney-general, acting on be- 
 half of third parties interested,' or of the public,* and provided, 
 first, that the language of the constating instruments is imperative^ 
 and not merely permissive,^ and secondly, that the corporation has 
 no valid excuse for their omission.' 
 
 ' 12 Beav. 125 ; 1 M'N. & G. 481 ; Gra- stitutes a wrong to the public. Att.-Gen. 
 
 ham V. Birkenhead, <fec. Ry. Co. 2 M'N. & v. Birmingham, &c. Ry. Co. 3 M'N. & G. 
 
 G. 146 ; Irving v. Bancroft, cited 2 M'N. 453. 
 
 & G. 149; Simpson v. Denison, 10 Hare, Is not the proper proceeding to enforce- 
 
 61. Compare Rex v. Proprietors of Bir- a pure statutory duty on behalf of the 
 
 mingham Canal, 2 W. Bl. 708 ; Rex v. public in every case by mandamus and 
 
 Severn & Wye Ry. Co. 2 B. <fe Aid. 646. not by information ? Leominster Canal 
 
 2 2 M'N. <fe G. 389. See Att.-Gen. v. Nav. v. Shrewsbury, &c. Ry. Co. 3 K. 
 Birmingham Bk. Co. 3 M. <fe G. 453. & J. 654 ; 26 L. J. Ch. 764. 
 
 3 Kex V. Severn & Wye Ry. Co. 2 B. = Reg. v. York, &c. Ry. Co. 1 E. <fe B. 
 & Aid. 646; Great Western Ry. Co. v. 858; Reg. v. Great Western Ry. Co. Ibid.. 
 Reg. 1 E. <fe B. 874. 874; Edinburgh, <feo. Ry. Co. v. Philip, 2 
 
 * It seems that the attorney-general Macqueen, 524 ; Scottish North Eastern 
 
 cannot file an information against a priv- Ey. Co. v. Stewart, S Macqueen, 382. 
 
 ileged corporation to compel it to com- * Reg. v. Ambergate, <fec. Ry. Co. 1 E. 
 
 plete its enterprise merely on the ground & B. 372; 22 S. J. Q. B. 191 ; Reg. v. Lon- 
 
 that there is a statutory duty to complete don & North Western Ry. Co. 16 Q. B. 
 
 it, and that an abandonment thereof con- 864. 
 
BUSINESS OF CORPORATIONS. 71 
 
 4. An agreement between riral corporations not to exercise 
 their compulsory powers, e. g., not to build a line of railway, is 
 void, (a) 
 
 YI. A corporation may, in the furthera/nee of its aims, enter 
 into contracts and perform and concur im, acts alien to its 
 own undertaking and dehors its express powers, provided 
 such contracts and acts are not directVy forbidden, are es- 
 sential to its existence, OAid covld not have been foreseen 
 and provided for at its inception. 
 
 The principle is circumscribed within narrow limits, and it 
 holds only when applied with great care, and to unexpected and 
 material circumstances. (5) 
 
 In Wilson v. Furness Railway Company,^ the defendants were 
 
 ' L. R. 9 Eq. 28. 
 
 (a) "The act imports only an authority to the proprietors, not a command. They 
 may desert or suspend the whole work, and, a fortiori, any part of it." Lord Mans- 
 field in Rex v. Proprietors of Birmingham Canal, 2 W. Black. T08 ; see Treadwell v, 
 Salisbury Manuf. Co. Y Gray, 393. As to the abandonment of an unprofitable branch 
 of railway, see Com. v, Fitchburg R. R. 12 Gray, 180. 
 
 An agreement not to build a portion of a liae, at instance of a rival liae, is void. 
 Hartford & New Haven R. R. Co. v. New York & New Haven R. R. Co. 3 Robert. 
 411 ; State.!;. Hartford <fe New Haven R. R. Co. 29 Conn. 538 ; Baltimore & Susque- 
 hanna R. R. Co. V. Compton, 2 Gill, 20. 
 
 The franchise of a railroad corporation can only be legally exercised by its oper- 
 ating its entire road. People v. Albany & Vermont R. R. Co. 24 N. Y. 261 ; s. c. 
 37 Barb. 21'?. Can a franchise be dissevered except by legislative authority? 
 Donelly v. Vandenberg, 3 Johns. 27 ; Oakland R. R. Co. v. Oakland & Brooklyn R. 
 R. Co. 45 Cal. 365 ; East Boston Freight R, R. Co. o. Hubbard, 10 Alien, 459. 
 
 A railroad company may be restrained irom wasting its means in constructing 
 branches, when it is doubtful whether it will be able to build the main line and such 
 branches. Town of Platteville v. Galena, (fee. R. R. Co. 43 Wis. 493. A railroad 
 company accepting a grant from the State was held thereby to have entered into a 
 contract with the State to build and maintain its line, which the State could enforce 
 by mandamus, or other appropriate proceeding. State v. S. C. <fe P. R. R. Co. 1 Neb. 
 357. See, in this connection, also, U. S. v. Union Pac. R. R. Co. 4 Dill. 479 ; Kinealy 
 V. St. Louis, (fee. R. R. Co. (S. C. Mo. 1879), 9 Cent. L. J. 86. 
 
 (6) Whether this rule is founded on or supported by authority, depends on the 
 consideration of the question, whether the contract must be expressly forbidden, or if 
 not forbidden, whether it can be repudiated if executed. It is submitted, however, 
 that whether the contracts " could have been foreseen and provided for at the incep- 
 tion of corporation," is not an element in determining their illegality. The point to 
 be adjudged by the court, is not whether the corporation might not have obtained 
 the power, but whether the power really exists. 
 
72 BUSINESS OF CORPORATIONS. 
 
 decreed specifically to perform an engagement entered into by 
 them to construct a wharf and carriage road, upon certain terms, 
 for the benefit of third parties. The act incorporating the defend- 
 ant company subjected them to the necessity of obtaining approval 
 of the admiralty to certain works to be done by them. In consid- 
 eration of certain landowners obtaining from the admiralty a waiver 
 of this obligation, they agreed to make the wharf and road men- 
 tioned, but omitted to do so ; and upon a bill being filed, demurred 
 on the ground of ultra vires, the said agreement being in no way 
 expressly authorized by their act ; but the demurrer was overruled. 
 
 YII. A corporation may, in carrying on its business, enter 
 into all the usual arrangements with, its customers and 
 oilier parties, that private persons enter into in the ordi- 
 na/ry course of managing a property or conducting a trade 
 or other undertaking, (a) 
 
 The business of a corporation can be conducted only in the 
 manner in which other individuals are accustomed to look after 
 and conduct their own, and what is customary with the latter will 
 generally be legal and allowable with the former. Thus a bank- 
 ing company may allow a customer to overdraw his account, and 
 the court will neither restrain this at the suit of a shareholder, nor 
 subsequently on losses thereby Recurring hold the directors, who 
 are guiltless_ of fraud, liable for the same, even though the de- 
 faulting customer be himself a director.^ 
 
 ' Tarquand v. Marshall, L. R. 4 Oh. BYe ; 38 L. J. Ch. 639. 
 
 (a) Moss V. Averell, 10 N. T. 449 ; Barry v. Merchants' Ex. Co. 1 Sandf. Ch. 280. 
 See Camblos v. Phil. <fe Reading R. R. Co. 4 Brewster, 563 ; Watts v. McLean Imp. 
 Co. Leg. 6az. Oct. 23, 1873. A railroad company cannot purchase steamboats to 
 run in connection with its roads, although it is empowered to do all that is necessary 
 to put in operation a railroad between the points named in its charter. Pearoe v. 
 Madison & Ind. R. R. Co. 21 How. 441; Hoagland v. Hannibal <fe St. Joseph R. E. 
 Co. 39 Mo. 461. Contra, Shawmut Bk. v. Plattsburg <fc Montreal R. R. Co. 81 Vt. 
 491 ; Wheeler v. San Francisco & Al. R. R. Co. 31 Cal. 46 ; and see Rutland & Bur- 
 lington B. B. Co. V. Proctor, 29 Vt. 95. A charter giving authority to make and 
 keep in repair a road, to take tolls of passengers and for carriages, to build and own 
 toll-houses, and to take land for the road, does not authorize the company to estab- 
 lish stage and transportation lines, or to buy carriages and horses for such a purpose. 
 Downing v. Mount Washington, &c. Co. 40 N. H. 230 ; Wiswall ?;. Greenville, <fec. Co. 
 3 Jones Eq. 183. A charter to a corporation to erect a toll-bridge does not give the 
 corporation power, as an incident to such franchise, to build and rent wharves. 
 Toll-Bridge Co. v. Osborn, 35 Conn. 1. 
 
BUSINESS OF CORPORATIONS. " 73 
 
 A company in transacting its legitimate business, may deal 
 liberally witb its customers and waive the benefit of stipulations 
 introduced for its own benefit, when the enforcement of the 
 same would in the end be detrimental to itself and to the profit- 
 able carrying on of its business. Thus, where the directors of an 
 insurance company had offered to pay losses caused by a gun- 
 powder explosion, although their policies contained an express 
 exception of such losses, and they at the same time did not admit 
 any legal liability to do so, on a bill by a shareholder to restrain 
 the payments, it appearing on the evidence that it was usual and 
 advantageous for companies to make such payments, although not 
 strictly bound to do so, Page "Wood, Y.-C, held, that this was a 
 mode of carrying on the business with which the court could not 
 interfere ; and the bill was dismissed with costs. " This is not a 
 case of applying funds to purposes wholly foreign to the objects 
 of the company, but it is an expenditure designed to secure to the 
 company the largest possible amount of profits in its own proper 
 business." ^ 
 
 YIII. ■Gorj)orations endued with special powers will ha/ve, in 
 addition, an implied authority to do such acts as may he 
 necessary for the full amd complete utilization of such 
 special powers. 
 
 Corporations, as will be seen hereafter, are, as regards most 
 varieties of torts on a very similar footing to that of ordinary 
 citizens, acts which are wrongful in the case of the latter being 
 equally so if done by the former. But many corporations have 
 given to them compulsory powers for entering upon land and the 
 like. Proceedings carried on by them in pursuance of such 
 powers are legal, and persons aggrieved thereby will be ousted of 
 their common law remedy, and, if the statutes conferring the 
 powers have not indicated a method of redress, will be without 
 remedy at all.' {a) 
 
 ' Taunton v. R^yal Insurance Com- way Company, 7 E. <fe B. 660 ; 26 L. J. 
 pany, 2 H. <fc M. 135. Q. B. 225. 
 
 '' See Penny v. South-Eastern Rail- 
 
 (ffl) Private property cannot be taken for public uae without just oompenaation. 
 Constlt. U. S. Art. ], sec. 18. A railroad company may enter on land for the pur- 
 pose of making surreys, without compensation. Polly v. Sar. & Wash. R. R. Co. 9 
 
74 ■ BUSINESS OF CORPORATIONS. 
 
 Not unseldom express powers in this respect are given to cor- 
 porations, and it requires extreme care to determine what is the 
 precise eifect of such statutory authorities, acts of parliament of 
 this description frequently incorporating other acts, and by the 
 result of such incorporation investing the corporations concerned 
 with rights and incidents never contemplated by the Legislature. 
 A case illustrating this precaution is that of Duke of Bedford v. 
 Lawson.^ By the Eailway Clearing House Extension Act (37 
 Vict. c. xvi), which incorporated the Land Clauses Act, 1845, 
 the railway clearing committee were empowered to take certain 
 lands and .to erect thereon any buildings and works for the pur- 
 pose of the clearing system. The plaintiffs, the owners of a 
 neighboring house, filed a bill to restrain the erection of a build- 
 ing on land acquired under the act, on the ground that it inter- 
 fered with their ancient lights. Jessel, M. E., decided that the 
 clearing committee could not be restrained by injunction, and 
 that the plaintiffs' remedy was under sec. 68 of the Land Clauses 
 Act, 1845. 
 
 Over and above the powers so expressly bestowed, corpora- 
 tions have, under some circumstances, impliedly the privilege to 
 carry on other works, and to engage in other matters detrimental 
 to their neighbors, without exposing tjiemselves to legal proceed- 
 ings for the same, {a) The principle unquestionably exists, but 
 
 1 L. R. 20 Eq. 353 ; Clark v. School Board of London, L. R. 9 Ch. 120. 
 
 Barb. 449, and cases cited. Cushman v. Smith, 34 Me. 247 ; Mercer v. MeWilliams, 
 Wright's (Ohio) Reps. 132. 
 
 In some States the company is liable for damage occasioned by temporary occu- 
 pation, and, in general, is bound to make compensation for temporary use, if the land 
 is not ultimately taken. Redfield on Railways, § 66. 
 
 The statutory remedy for taking private property is not cumulative, but exclu- 
 sive. Mason v. Kennebec & Portland R. R. Co. 81 Me. 215 ; Aldrich v. Cheshire R. 
 R. Co. 21 N. H. 359 ; Henniker v. Contoocook Valley R. R. Co, 29 N. H. 146 ; Knorr 
 ■ii. Germantown R. R. Co. 5 Wharton, 256 ; Cumberland Valley R. R. Co. v. Mc- 
 Clanahan, 59 Penn. St. 23 ; Hueston v. Eaton & Hamilton R, R. Co. 4 Ohio St. 685 ; 
 Mclntire v. Western North Carolina R. R. Co. 61 N. C. 278 ; Leviston v. Junction R. 
 R. Co. 7 Ind. 597 ; Indiana Central R. R. Co. v. Oakes, 20 Ind. 9 ; Colcough v. Nash- 
 ville & Northwestern R. R. Co. 2 Head, 171 ; Pettibone v. La Crosse & Milwaukee 
 R. R. Co. 14 Wis. 443 ; Davis v. Same, 12 Wis. 16; Ford v. Ch. & N. W. R. R. Co. 
 14 Wis. 609 ; Baker v. Hannibal & St. Jo. R. R. Co. 36 Mo. 643 ; Leary v. Same, 38 
 Mo. 485 ; contro, Doe v. Georgia R. R. Co. 1 Ga. 524 ; Daniels v. Ch. & N. W. R. R. 
 Co. 35 Iowa, 129. Seepost, under head of Special Powers. 
 
 (a) Where one has the sanction of the State for what he does, unless he commits 
 a fault in the manner of doing it he is completely justified. Radcliffe v. Mayor, 4 
 
BUSINESS OF CORPORATIONS. 75 
 
 how far it extends and what the wrongs are which it legalizes 
 cannot be predicted with any degree of certainty. 
 
 In Eex V. Pease,^ where the owner of a railway was indicted 
 for a nuisance, he was acquitted on the ground that his proceed- 
 ings were authorized by his act of parliament.^ 
 
 The recent decision in Hammersmith and City Railway Com- 
 pany V. Brand,' well illustrates both the principle itself and the 
 difficulties incidental to its application. Property of the original 
 plaintifE (Brand), lying near to, but none of which was actually 
 taken by the railway company, was seriously affected by the traffic 
 on the railway after it was opened, and a jury summoned to assess 
 this damage awarded " for vibration from the use of the railway 
 after construction, £212." A special case was then prepared, 
 which stated, inter alia, that " it did not appear {i. e., at the 
 award) that any struchural injury was caused to the house or out- 
 buildings by the construction of the railway ; but it did appear, 
 and it was admitted for the purposes of this case, that, by reason 
 of the working of the railway after it had been opened for traffic, 
 the house and buildings were and would be subjected to vibration, 
 noise, and smoke from passing trains, and were and always would 
 be affected and depreciated and lessened in value thereby ; " and 
 the question asked was, "whether the plaintiff was entitled to 
 have compensation for the injury so caused ? " The Court of 
 Queen's Bench decided in the negative against the plaintiff's 
 claim ; this was reversed by a majority of the Exchequer Cham- 
 ber ; but finally a majority of the House of Lords concurred in 
 and maintained the original decision. They held that neither the 
 land clauses consolidation act nor the railways clauses consolida- 
 tion act contains any provisions under which a person, whose land 
 has not been taken for the purposes of a railway, can recover 
 statutory compensation from the railway company in respect of 
 damage or annoyance arising from vibration occasioned (without 
 
 M B. & Ad. 30. 3 L. R. 4 h. Lds. 171 ; City of Glasgomr 
 
 ' See also Penny v. South-Eastern Union Ry. Co. v. Hunter, L. R. 2 So. & 
 
 Ey. Co. 1 E. & B. 660; 26 L. J. (Q. B.), D. 78 ; Dunn v. Birmingham Canal Nav. 
 
 225 ; Metropolitan Board of Works v. L. R. 7 Q. B. 244 ; Crompton v. Lea, L. 
 
 McCarthy, L. R. 1 H. L. 243. R. 19 Eq. 121. 
 
 N. Y. 195; Bellinger v. N. Y. Central R. R. Co. 23 K Y. 42 ; Selden v. Del. <fc Hud. 
 C. Co. 29 N. Y. 634; Conhockton S. R. Co. v. B. K Y. & E. R. R. Co. 3 Hun, 628 ; 
 Newark Plank-road Co. v. Elmer, 1 Stockt. 754 ; Atty.-Gen. «/. Paterson & Hudson 
 R. R. E. Co. 1 Stockt. 526. 
 
76 BUSINESS OF CORPORATIONS. 
 
 negligence) by the passing of trains after the railway is brought 
 into use, even though the value of the property has been actually 
 -depreciated thereby ; and further, that the common law right of 
 action is, under such circumstances, taken away. Lord Chelms- 
 ford observed : " We do not expect to find words in an act of 
 parliament expressly authorizing an individual or a company to 
 commit a nuisance, or to do damage to a neighbor. The 86th 
 section (*. e., of 8 & 9 Yict. c. 20) gives power to the company to 
 use and employ locomotive engines, and if such locomotives can- 
 not possibly be used without occasioning vibration and conse- 
 quent injury to neighboring houses, upon this principle of law 
 that ' cuioumque aliquis quid concedit, concedere videtur et id 
 sine quo res ipsa esse non potuit,^ it must be taken that power is 
 given to cause that vibration without liability to an action. The 
 right given to use the locomotive would otherwise be nugatory, as 
 each time a train passed upon the line and shook the houses in 
 the neighborhood actions must be brought by their owners, 
 -which would soon put a stop to the use of the railway." {a) 
 
 Another case, coming under this principle, is that of the Att.- 
 ■Gen. V. Cambridge Consumers' Gas Company.' A local act of 
 parliament, passed in 1T88, vested the property of all the streets 
 of Cambridge in commissioners, and empowered the commission- 
 ers, from time to time, to cause the pavements to be taken up and 
 the streets to be paved, relaid or altered, and to cause the streets 
 to be lighted, and to contract with any persons for lighting the 
 
 1 L. R. 6 Eq. 282. * 
 
 (a) A turnpike company cannot complain of the use of enginea on a railroad, on 
 the ground of injury or disturbance of its franchise. Bordentown & S. A. Turn- 
 pike Co. D. C. & A. R. R. Ca. 2 Harr. 314 (1839). Where the law confers the right 
 to use an element of danger, it protects the person using it, except for his abuse of 
 his privilege. Therefore, a loss of property from sparks of a locomotive, apart from 
 negligence or misuse, is damnum absque injuria. Frankford Turnpike Co. v. Phil. <fe 
 T. R. B. Co. 54 Penn. St. 345 ; Phil. <fc Reading R. R. -u. Yeiser, 8 Penn. St. 366 ; 
 Sheldon v. Hudson B. R. R. Co. 14 N. Y. 218 ; Fero v. Buffalo, &o. R. R. Co. 22 N. 
 Y. 209 ; Burroughs v. Housatonic R. R. Co. 15 Conn. 124; Lyman v. B. <fe W. R. R. 
 4 Ciish. 288; Chapman v. Atlantic R. R. 37 Me. 92; Jefferis v. P. W. & B. R. R. Co. 
 3 Houston, 447 ; Mich. Centr. R. R. Co. v, Anderson, 20 Mich. 244 ; King v. Morris 
 & Essex R. R. Co. 3 C. E. Green, 397; Smith v. Old Colony R. R. Co. 10 R. I. 22. 
 See Shearman & Redfield on Negligence, ch. xx, and Redfield on Railways, § 125. 
 See also Kellinger v. Forty-second St. &c. R. R. Co. 50 N. Y. 206 ; Fearing v. Irwin, 
 55 N. Y. 486, and the Elevated Railroad Cases, grouped together in 3 Abb. N. 0. 
 301-509. 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 7Y 
 
 streets, and gave to the persons to be appointed by them for these 
 purposes, full power to do the same. The commissioners au- 
 thorized a gas company to take up the streets. Upon motion for 
 an injunction to restrain the company, it was held, that although 
 for the purpose of lighting the streets in the only methods origin- 
 ally known, it was not necessary to break up the streets, the act 
 enabled the commissioners to adopt every improved method of 
 lighting, and consequently to break up, and authorize other per- 
 sons to break up, the streets for the purpose of lighting them 
 with gas. {a) 
 
 Section II. — The Extension and Development of the 
 Business of Cokpoeations. 
 
 Commercial corporations can enter into no business, and cor- 
 porations generally can engage in no transactions, so as to render 
 the corporate assets liable for the results thereof, other than those 
 coming within the scope of their constitution. This is, indeed,, 
 but a restatement of the doctrine of ultra vires, but it is or has 
 been not unseldom forgotten or misunderstood, and attempts have 
 from time to time been made to break through it, or counteract its 
 operations. Such attempts, whether made openly or covertly, 
 will always, on the application of parties affected thereby, be re- 
 strained by the court ; and even if not restrained — if by the in- 
 dolence or fraud of the parties concerned in them they are per- 
 sisted in— yet they will not, save under special circumstances, en- 
 tail upon the corporation itself any responsibility for the conse- 
 quences. 
 
 I. A corporation proposing to engage in any transaction not 
 within its express or implied powers, may he restrained 
 from so doing or from continuing the same, (b) 
 
 (a) Where the Legislature, in 1790, had given an exclusive privilege to build 
 bridges over certain streams, an act passed in 1860, granting franchise of building 
 viaducts for a railway over the same streams, does not interfere with the former 
 grant. The language of the act of 1790 is to be construed according to the state of 
 knowledge and science at the time of its passage. Proprietors of Bridges v. Ho- 
 boken Land Co. 2 Beasley, 503 ; 8. o. 1 Wall. (U. S. Sup. Ct.) 116. See Lake v. Vir- 
 ginia <fc Truckee R. R. Co. 1 Nev. 294. 
 
 (6) No majority, however large, has a right to divert one cent of the joint capital 
 to any purpose not consistent with and growing out of the original fundamental in- 
 
Y8 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 This is well shown by the decision in Att.-Gen. v. Great 
 Northern Railway Company,^ where, upon an information at the 
 
 ' 6 Jur. N. S. 1006 ; compare National Manure Company v. Donald, 4 H. <t N. 
 
 8 ; 28 L. J. Ex. 185. 
 
 tention. Nothing is more clearly settled, than that any fundamental alteration of a 
 charter, or material deviation from or extension of a road in the case of road com- 
 panies, interferes with the rights of the corporators, and that no majority, however 
 large, can compel individual stockholders to submit. Kean v. Johnson, 1 Stockt. 
 401 ; Black v. Delaware & Raritau C. Co. t C. E. Green, 130 ; a. c. on appeal, 9 0. 
 E. Green, 455. 
 
 The business of a corporation cannot be changed, or abandoned, or sold out with- 
 out the consent of all the corporators ; one corporator, however small his interest, 
 can prevent it. Zabriskie v. Hackensack & New York R. R. Co. 3 C. E. Green, l^S. 
 When a person takes stock in a corporation, he enters into a, contract with the com- 
 pany, that his interests shall be subject to the direction and control of the proper 
 authorities of the corporation, to accomplish the object for which the company was 
 organized. He does not agree, that the improvement to which he subscribed should 
 be changed in its purposes and character, at the wiU and pleasure of a majority of 
 "the stockholders, so that new responsibilities, and it may be new hazards, are added 
 to the original undertaking. But it is not every unimportant change which would 
 work a dissolution of the contract. It must be such a change that a new and differ- 
 ent business is superadded to the original undertaking. Clearwater v. Meredith, 1 
 Wall. 25 ; Hartford & New Haven R. R. Co. v. CrosweU, 5 Hill, 383. The relation 
 between a corporation and a stockholder is one of contract, and any legislative en- 
 actment which, without his assent, authorizes a material change in the powers or 
 purposes of the corporation, not in aid of the original object, if acted upon by the 
 corporation, is not binding upon him. McCray v. Junction R. R. Co. 9 Ind. 858 ; 
 Winter v. Muscogee R. R. Co. 11 6a. 438. This contract cannot be changed without 
 consent of both contracting parties. If any substantial change be made, the share- 
 holder may say, rum hcec in fcedera veni. Middlesex Turnpike Co. v. Locke, 8 Mass. 
 268. The change must be a substantial one. Sprague v. Illinois R. R. R. Co. 19 111. 
 II'I. But there will, of course, be considerable diversity of opinion, as to what con- 
 stitutes a substantial or material change. Thus, in Proprietors v. Towne, 1 N. H. 44, 
 the increase of the amount of land which the company was authorized to take, from 
 six to one hundred acres, was held substantial, while in Gray v. Monongahela Nav. 
 Co. 2 W. & S. 156 ; Clark v. Same, 10 Watts, 364, and Irvine v. Turnpike Co. 2 Penn, 
 {P. <fc W.) 466, an alteration of the charter granting additional privileges, though these 
 may extend the liabilities of the company, was not considered an invasion of the con- 
 tract. See, also. Meadow Dam Co. v. Gray, 30 Me. 547 ; Stevens v. Rutland <fe B. Ew. 
 Co. 29 Vt. 545; Middlesex Turnpike Co v. Swan, 10 Mass. 384; Agricultural Branch 
 R. R. Co. V. Winchester, 18 Allen, 29 ; Danbury & Norwalk Co. o. Wilson, 22 Conn. 
 435 ; New Haven & Derby R. R. Co. v. Chapman, 38 Conn. 56 ; Livingston v. Lynch, 
 4 Johns. Ch. 51S ; Hamilton <fe Deansville Plank-road Co. v. Rice, 1 Barb. 157; Troy 
 A Rutland R. R. Co. «. Kerr, 17 Barb. 581 ; Poughkeepsie & Salt Point Plank-road Co. 
 s). Griffin, 21 Barb. 454 ; Buffalo, Corning <fe N. Y. R. R. Co. v. Pottle, 23 Barb. 21 ; 
 Schenectady & Saratoga Plank-road Co. v. Thatcher, 11 N. Y. 102 ; BuflFalo & N. Y. 
 City R. E. Co. v. Dudley, 14 N. Y. 836; Bailey v. Hollister, 26 N. Y. 112 ; Delaware 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 79 
 
 suit of the attorney-general, as representing the public, Kinders- 
 ley, V.-C, restrained the defendants from carrying on, without 
 special authorization in their act, a trade in coal. He observed : 
 " Is such an act an illegal act ? Now here again it appears to me 
 that the case is hardly arguable on this point. * * * Although 
 the act of parliament, which constitutes and incorporates the com- 
 pany, contains no prohibition in express terms against engaging 
 in any other business except that of making and maintaining and 
 nsing the railway, there is implied in every such act of parliament 
 a prohibition or (looking at it as a contract) a contract against 
 ever engaging in any other business than that of a railway com- 
 pany." 
 
 Another and much earlier case equally well known is that of 
 Natusch V. Irving.* The plaintifE was one of the original sub- 
 scribers to a company formed for granting fire and life assurances ; 
 shortly after its incorporation the act of 6 Geo. I, c. 18, was re- 
 pealed, which had prohibited companies from engaging in marine 
 insurance, and the company then proposed to grant marine insur- 
 ance, and issued advertisements to that effect. To this the plaintiff 
 objected, and he was told he might have his subscription back, and 
 a policy which he had effected in the company canceled and the 
 premium, returned. These offers he refused, and, after some fur- 
 ther negotiations, filed his bill against the company to restrain the 
 issue of policies of marine insurance. Lord Eldon granted the in- 
 
 ' Gow. on " Partn.'' App. 398 ; alao re- ported in 2 Cooper Ch. Cases, Part 2 p 
 
 368. 
 
 & Atlantic R. R. Co. v. Irict, 3 Zab. 321 ; Everhart v. West Chester & Phila. R. R. 
 Co. 28 Penn. St. 339 ; Bedford R. R. Co. v. Bowser, 48 Peon. St. 29 ; Delaware R. R. 
 Co. V. Tharp, 1 Houst. 149 ; Greenville & Colnmbia R. R. Co. v. Coleman, 6 Rich. 
 Law, 118 ; Wilson v. Wills Valley R. R. Co. 33 Ga. 466 ; Martin „. Pensacola <fe Ga. 
 R. R. Co. 8 Fla. 370; Eppes v. Mississippi, &c. R. R. Co. 35 Ala. N. S. 33 ; New Or- 
 leans J. <fc 6. N. R. R. Co. V. Harris, 27 Miss. 517; Hawkins v. Miss. & Tenn. R. R. 
 Co. 35 Miss. 688 ; Champion v. Memphis <fc Charleston R. R. Co. lb. 692 ; Fry v. 
 Lexington, &o. R. R. Co. 2 Mete. (Ky.) 314; Sparrow v. Evansville, <fec. R. R. Co. 7 
 Ind. 369; Banet v. Alton & Sangamon R. R. Co. 13 111. 604 ; Sprague v. HI. R. R. R. 
 Co. 19 lU. 174; 111. R. R. R. Co. v. Zimmer, 20 111. 664; Rice c/. Rock Island & Al- 
 ton R. R. Co. 21 111. 93 ; 111. R. R. R. Co. n. Beers, 27 HI. 186 ; Joy v. Jackson & 
 Michigan Flank-road Co. 11 Mich, 156 ; Penn. <fe Ohio Can. Co. v. Webb, 9 Ohio, 136 ; 
 McCray v. Junction R. R. Co. 9 Ind. 358 ; Kenosha, &c. R. R. Co. v. Marsh, 17 Wis. 
 13; Pacific R. R. Co. v. Renshaw, 18 Mo. 210; Same v. Hughes, 22 Mo. 291. See, 
 also, note at the end of this section. 
 
80 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 junction, being fully of opinion that the plaintiff was entitled 
 thereto. 
 
 II. Whole agreements and particular stipulations in them, 
 which iy themselves are perfectly good, hut which are in- 
 tended to attain an ultra vires object, are not valid. 
 
 In Hattersley v. Earl of Shelburne,^ Kiadersley, Y.-G., said: 
 " I think that, according to tlie principle of Beman v. EufEord, 
 followed as it has been in other cases, this court will not allow any 
 of the acts which are agreed to be done by that illegal agreement, 
 merely because independently of that agreement some of those 
 acts might be done. I think that principle is established, and it 
 is a principle which commends itseK to one's sense of right and 
 justice ; that, although a company may do a certain act indepen- 
 dently, that company is not to agree to do that act as a part of a 
 series and collection of acts to be done for the purpose of working 
 out an illegal agreement. But here it is said, very truly, that is 
 not this agreement ; this agreement is not that they will, without 
 the assistance of parliament, do certain acts ; but it is an agree- 
 ment in effect to apply to parliament for those powers which are 
 necessary to enable them to carry out an agreement. And if that 
 were all, there would be nothing illegal in it. But it appears to 
 me that where, as in this case, there are a number of things agreed 
 to be done, which are all for the purpose of accomplishing a cer- 
 tain end and object which is ultra vires, in such a case the parties 
 have no right by virtue of that agreement, until they have got the 
 authority of parliament, to do even those acts which, indepen- 
 dently of this agreement, they did not require the authority of 
 parliament to do. Therefore I think the plaintiffs are entitled, so 
 far as relates to that consideration, to such an injunction as will re- 
 strain the doing of acts which, though lawful in themselves, are 
 unlawful, because they have not got the authority of Parliament to 
 accomplish the whole of that end to which these particular agree- 
 ments are merely ancillary." 
 
 Some doubt, however, has certainly been thrown upon this 
 proposition by the opinions of the Lords Justices in the very re- 
 cent case of Midland Ky. Co. v. Great Western Ey. Co.^ There 
 Mellish, L. J., observed : " I wish to make a few remarks on what 
 
 ' 31 L. J. Ch. 875. « L. E. 8 Ch. 841, 856. 
 
EXTENSION AND DETELOPMENT OF BUSINESS. 81 
 
 BO doubt is a very important question, namely : Assuming that 
 the clauses in themselves are legal, nevertheless, may it be shown 
 that there was some illegal intention, and that it was made 
 with some illegal object, and that on that account the court 
 would not enforce it ? First, Is there any authority upon that ? 
 No doubt there are some cases in which the judges have used this 
 sort of expression. "Without saying, in plain terms, it is contrary 
 to the act itself, they have said it is contrary to the policy of the 
 law, and 'it is a virtual illegality,' and expressions of that kind. 
 But when the cases are looked at, I think it is quite clear that in 
 .all the cases there was either an actual lease or an actual exclusive 
 working agreement. The only case which raised any doubt in my 
 mind as to that was the case of London, Brighton & South Coast 
 Ky. Co. V. London & South Western Ky. Co.,^ respecting the sta- 
 tion at Portsmouth. The third agreement in that case did, at first 
 flight, look somewhat similar to the agreement in this case ; but, on 
 the whole, I am of opinion that the judges did not really mean 
 there to decide that, though the agreement was on the face of it 
 Jcgal, yet the court might go into the illegal intent, and on that 
 ground hold it to be void. "What they really meant was, that 
 there being a lump sum of £18,000 to be paid in lieu of all the 
 tolls, that showed quite plainly that it was intended that the whole 
 working of the traffic of the railway should be given up." 
 
 III. Contracts of this kind are not only objeationable before- 
 hand, hut even if acted upon, they may he repudiated 
 hy, amd cannot he enforced against the corporation. 
 
 This proposition has been admitted in numberless cases. If a 
 contract be ult/i'a vires, no matter what has been done under it, 
 or how greatly the corporation has benefited thereby, no matter 
 how grievous be the hardship caused by the rule, in no case can 
 such contract be enforced against it. Probably it may have to ac- 
 count for any benefit received, but that is all ; the arrangement, 
 qua contract, cannot be enforced. 
 
 The most recent English authority is that of Eiche v. Ash- 
 bury Ry. Carriage, &c. Co.' It deserves very particular attention, 
 as having invoked the fullest consideration of the meaning and 
 import of ultra vires in reference to corporations within the Com- 
 
 ' 4 D. G. <t J. 362. ' L. R. 7 H. L. 653. 
 
 6 
 
82 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 panics Acts, 1862 and 1867. It will, therefore, be set forth at 
 length. 
 
 The defendants were incorporated as a limited company under 
 the Companies Act, 1862, the objects of the company, as stated in 
 the memorandum of association, being, " To make, sell, or lend on 
 hire railway carriages and wagons, and all kinds of railway plant,, 
 fittings, machinery, and rolling stock ; to carry on the business of 
 mechanical engineers and general contractors ; to purchase, lease,, 
 work, and sell mines, minerals, land, and buildings ; to purchase 
 and sell as merchants timber, coal, metal, and other materials; and 
 to buy and sell any such materials on commission as agents." And 
 by art. 4 of their articles of association, " An extension of the com- 
 pany's business beyond or for other than the objects or purposes^ 
 expressed or implied in the memorandum of association, shall take 
 place only in pursuance of a special resolution." 
 
 The defendants' directors, in January, 1865, entered into con- 
 tracts on behalf of the company, by which the company became 
 purchasers of a concession granted by the Belgian government 
 for the construction of a railway in Belgium, and contracted with 
 the plaintiff that, through the medium of a societe anonyme which 
 the company were to form in Belgium, he should be employed to 
 construct the line, and that they would pay certain sums of money 
 into the treasury of the societe anonyme for the purpose of pay- 
 ments being made to him thereout for the construction of the 
 railway. The contracts were afterwards modified in certain par- 
 ticulars by agreements entered into in October, 1865, 'by the 
 directors on behalf of the company. In this month the plaintiff 
 commenced the construction of the line, and the societe anonyme 
 was formed, and for some time payments were made by the com- 
 pany into the treasury of the societe in pursuance of their contract 
 with the plaintiff. 
 
 In October, 1865, the directors being advised that these con- 
 tracts were ultra vires, projected a company to take them over. 
 
 At a general meeting of the company, held in November, 
 1865, a balance-sheet was presented, showing advances on account 
 of the Belgian contract ; objections were raised to this item, but 
 an assurance having been given by the chairman that it would not 
 appear again, but would be taken over by the proposed company, 
 a resolution approving and adopting the accounts was passed. 
 
 On the 20th December, 1866, an extraordinary general meet- 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 83 
 
 ing of the company was held, and a committee was appointed to 
 inquire into the company's affairs. The committee reported to 
 an extraordinary meeting, held on the 1st of May, 1867, that the 
 Belgian contracts were ultra vires, that thej' did not bind the- 
 company, and that the directors were liable to replace the moneys 
 expended, but recommended an amicable settlement. A committee 
 was appointed in pursuance of this recommendation, and at an 
 annual meeting held on the lith of May, 1867 (the circular con- 
 vening which mentioned as part of the business of the meeting 
 the consideration and adoption of any report to be made by the 
 committee, and when the advances on the Belgian contracts again 
 appeared in the balance-sheet), a resolution was passed adopting a 
 recommendation of the committee, to the effect that certain per- 
 sons (directors of the company) should " purchase " from the com- 
 pany the Belgian contracts, the company undertaking to take any 
 legal proceedings necessary to enforce the contracts at the expense 
 and on the indemnity of the purchasers, and reserving their right 
 to maintain that the contracts were ultra vii'es and not binding on 
 the company ; and subject to this resolution the balance-sheet was 
 approved. At another annual meeting, held on the 24th of De- 
 cember, 1867, a formal contract, carrying out the resolution of the 
 lith of May (and which was referred to in the circular convening 
 the meeting), was sanctioned, and the seal of the company afBxed, 
 and the entry of advances in the balance-sheet was altered to 
 "advances to be refunded in accordance with a resolution passed 
 at a meeting of shareholders on the 14th of May, 1867." 
 
 In May, 1868, the company repudiated the contracts as being 
 ultra vires. 
 
 In an action brought by the plaintiff to recover damages 
 against the company for not continuing to make payments in pur- 
 suance of the contracts of January and October, 1865, it was held 
 in the Court of Exchequer,^ first, that the contracts were ultra 
 vires ; and, secondly, by Martin and Channell, BB., Bramwell, B., 
 dissenting, that they had been ratified by the shareholders. 
 
 From this judgment error was brought ; and it was held hj the 
 Exchequer Chamber,^ that the contracts were ultra vires ; but on 
 the other point the judges were equally divided. Blackburn, 
 Brett, and Grove, JJ., holding, first, that the contracts, though 
 
 ' L. E. 9 Ex. 224. ' L. R. 9 Ex. 249. 
 
84 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 beyond the scope of the memorandum of association, were capable 
 of ratification by the individual shareholders ; and, secondly, that 
 they had been so ratified : whereas Keating, Archibald, and Quain, 
 JJ., were of opinion, first, that the contracts being beyond the 
 ■scope of the memorandum of association, were incapable of ratifi- 
 cation ; and, secondly, that there was no evidence that they had 
 been in fact ratified by-all the shareholders. 
 
 From this decision an appeal was taken to the House of Lords,^ 
 where it was unanimously decided, first, that the objects of a com- 
 pany incorporated under the Companies' Act, 1862, as stated in 
 the memorandum of association required by the 8th section of 
 that act, cannot be departed from, except so far as the 12th section 
 permits the change ; secondly, that consequently a contract made 
 by the directors of such a company upon a matter not included in 
 the memorandum of association, is ultra vires, both of the direct- 
 ors and of the company ; thirdly, that the contract in question in 
 the suit was ult/ra vires ; and, fourthly, that such a contract can- 
 not be rendered binding on the company, though afterwards ex- 
 pressly assented to at a general meeting of shareholders — being in 
 its inception Toid, as beyond the powers of the company fixed by 
 the provisions of the statute, it cannot be ratified even by the as- 
 sent of the whole body of shareholders, {a) 
 
 lY. Securities given, or other contracts made in consideration 
 of ultra vires cont/rqcts, are void. 
 
 "Not only may corporations be restrained beforehand from en- 
 tering into engagements of this nature, not only are such engage- 
 ments when entered into not obligatory upon or enforceable 
 against a corporation ; but even securities given and contracts 
 made in consideration of them are invalid. Balfour v. Ernest ' is 
 the leading authority upon this point. The directors of a joint- 
 stock insurance company, registered under 7 & 8 Yict. c. 1 10, who 
 were authorized by the deed of settlement to draw bills on account 
 of the company only when they were so drawn for the purposes 
 
 ' L. R. n H. L. 653. Ex. 711 ; 17 L. J. (Ex.) 252; Balfour v. 
 
 » 5 C. B. (N. S.) 601 ; 28 L. J. (C. P.) Sea Fire, &c. Ass. Co. 3 0. B. (N. S.) 300 ; 
 
 IW. Compare Ridley D. Plymouth and 27 L. J. (C. P.) IT. 
 Stonehouse Grinding and Baking Co. 2 
 
 (ffl) That this doctrine would not be generally assented to in this country, will ap- 
 pear from the notes upon the subject of " Liahility for ultra vires acts," post. 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 85' 
 
 of the company, drew a bill on behalf of the company in payment 
 of a claim due to the plaintiff on a policy effected by him with 
 another company, the business of which was attempted to be as- 
 signed to the first-mentioned company by a deed of amalgamation 
 of the two companies. The amalgamation failed, and the deed of 
 amalgamation was Illegal and void, but the bill was given to and 
 received by the plaintiff upon the supposition that such deed was 
 valid. The issuing of the said bill was no part of the ordinary 
 business of the first-mentioned company. It was held, that the 
 plaintiff could not recover against such company on the bill, as the 
 directors had no authority to draw it, and the plaintiff (being- 
 taken to have had knowledge of the contents of the deed of 
 settlement) must be considered to have had notice of the want of 
 such authority. 
 
 This was a case at common law, but the decision is the same 
 in chancery, at least until the corporation is held — if it ever can 
 be held — bound by acquiescence. Thus, in Re Phoenix Life Ass. 
 Co., Burges and Stock's Case,^ the company had been established 
 for granting assurances upon lives, andj at an extraordinary gen- 
 eral meeting, it was resolved to extend the business to marine in- 
 surance. A supplemental deed, professing to confirm this exten- 
 sion of business, was executed by several of the shareholders ; and 
 in the annual return to the joint-stock companies' registry office, 
 the extension was notified. The reports of the directors several 
 times alluded to the extension, and on one occasion such a report 
 accompanied the dividend warrant. The business, as extended, 
 was carried on for a year and a half, when the company was or- 
 dered to be wound up. Page "Wood, V.-C, decided that these 
 circumstances were not sufficient to bind the general body of 
 shareholders by acquiescence to the extension which could be ef- 
 fected only by a new deed, executed by all. He said : " I need 
 not refer to the cases that show that you cannot bind a single dis- 
 sentient shareholder to any purpose which is not the original pur- 
 pose of the company ; and that if there was a single dissentient 
 shareholder, it would be quite sufficient for the official manager 
 
 ' 2 J. A H. 441; 31 L. J. (ChJ 749. 157 and Brunton'a Claim, L. E. 19 Eq. 
 
 Compare Athenaeum Life Asa. Co. ■o. 302 ; and has been expressly dissented 
 
 Pooley, 3 De G. <fe J. 294 ; 28 L. J. (Oh.) from in Tome v. Parkersbnrg R. R. Co. 
 
 119, which, however, was a case of fraud 17 Amer. 54il, where, under the same 
 
 and which, on that point, has been qnss- circumstances, the defendants were held 
 
 tioned in ^a:jDoW« Chorley, L. R. 11 Eq. liable. 
 
86 EXTENSION AND DEVELOPMENT OE BUSINESS. 
 
 appearing for all the shareholders to say that no such claim could 
 be supported against the company." 
 
 V. Corporations may transact, in addition to thei/r main un- 
 dertaking, all such subordinate and connected matters as 
 a/re, if not essential, at least very convenient to the due 
 prosecution of the former. 
 
 Though corporations may not undertake new business foreign 
 to their primary work, yet, under many circumstances, they are in 
 a manner necessitated to engage in business which is not within 
 the mere letter of their constitution. Thus, railway companies 
 will be permitted to erect refreshment rooms,^ or book-stalls,' and 
 to adopt other similar measures for both providing for the com- 
 fort of their customers and adding to their own receipts, (a) 
 
 VI. Corporations may so far develop and extend their opera- 
 tions, as to engage in matters not primarily contemplated 
 hy thevr founders, (J) provided these matters come fairly 
 within their scope, and provided, also, that in so develop- 
 
 ' See Rigby «. Great Western Railway ^ Holmes v. Eastern Counties Railway 
 
 Company, 4 R. C. 175, 491 ; Flanagan v. Company, 3 K. <fe J. B'TB. 
 Great Western Railway Company, L. B. 7 
 Eq. 116. 
 
 (a) A corporation created for the purpose of mining and transporting coal, with 
 power to purchase goods, chattels and effects needfiil for that purpose, has power to 
 purchase and use a steamboat to transport and deliver coal. Callaway Co. i. Clark, 
 32 Mo. 305 ; see Moss v. Averell, 10 N. Y. 449 ; Pearce v. Mad. <fe Ind. R. R. Co. 21 
 How. 442; Wheeler v. San Francisco <fc Al. R. R. Co. 31 Cal. 4ft; Rutland & Bur. R. 
 R. Co. V. Proctor, 29 Vt. 93; Shawmut Bk. v. Plattsburg & Montreal R. R. Co. 31 
 Vt. 491; Downing v. Mt. Washington, <fec. Co. 40 N. H. 230; Wiswall v. Greenville 
 & Raleigh Plank-road Co. 3 Jones Eq. 183; Watts' Appeal, 78 Pa. St. 370. 
 
 " The rule is, that if the means employed are reasonably adapted to the ends for 
 which the corporation was created, they come within its implied or incidental powers, 
 though they may not be specifically designated by the act of incorporation.'' Madi- 
 son, (fee Plank-road Co. v. Watertown, Ac. Plank-road Co. 5 Wis. 173. 
 
 Where the terms of the charter embrace proposed business, courts will not inter- 
 fere. Pratt V. Pratt, 33 Conn. 446. 
 
 (6) It is suggested that the only way in which the question can be determined, 
 whether the operations of a corporation are primarily contemplated by its founders, 
 is by reference to the constating instruments, and in this view the rule is but an am- 
 plification of rule I, on page 77. The same observation may be made as to rule VII, 
 page 91. 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 87 
 
 vng and extending their undertaking, they employ direct 
 cmd not indirect means, (a) 
 
 Corporations may extend their sphere of business ; (5) but there 
 are limits beyond which they cannot go. These limits are vague 
 and obscure, and the above statement is only an attempt to indi- 
 ■«ate them roughly. The Master of the Rolls, in Gregory v. Patch- 
 •ett,* in reference to this subject, thus observed : " The difficulty in 
 this case is, to define the limits of deviation which will justify the 
 interference of this court. It is very easy to point out many cases 
 in which the right to interfere is unquestionable, as if the directors 
 of a railway company should embark the funds of the company in 
 carrying on a brewery or a steamboat company, or speculate in the 
 3)urchase or sale of stock ; or where, as in Beman v. Eufford," the 
 directors proposed to transfer the whole business to another com- 
 pany." In a subsequent case his lordship referred at greater 
 length to the same question.' " As an illustration of the manner 
 by which a railway company might legitimately embark in pro- 
 jects apparently inconsistent with its means and objects, it was 
 suggested that coals might be necessary for the purpose of the 
 
 ' 33 Beav. S98, 606. ' Lyde v. Eastern Bengal Railway 
 
 ' 1 Sim. N. S. 550. Company, 36 Beav. 10, 16. 
 
 (a) This rule is stated in the second edition by Mr. Brice thus : " Corporations 
 may so far develop and extend their operations, as to engage in matters not primarily 
 contemplated by their founders, provided these matters are incidental to their proper 
 business, are conducive to and bona fde limited to its prosperous development, and 
 are involved in the due prosecution of the business." 
 
 Mr. Brice observes, as to the suggestion in the last note : " But this is scarcely 
 •correct. The founders intend the continued existence of the corporation which they 
 •call into being, and they provide it with all necessary capacities so far as their rea- 
 -soning and foresight go. In time, however, circumstances change, the mode of con- 
 ducting the enterprise alters, additional capacities are requisite if the existence is to 
 ■continue prosperous. The rule attempts to formulate what is allowable in the new 
 situation." 
 
 (6) A company authorized to build a canal of suitable dimensions, to be deter- 
 mined by the corporation, has the power to alter its canal by widening and deepen- 
 ing whenever, in the judgment of the company, the dimensions previously adopted 
 should, by reason of the increase of business, become unsuitable. Selden v. Del. cfe 
 Hud. C. Co. 29 N. Y. 634; s. o. 24 Barb. 362; Bruce v. Same, 19 Barb. 371. A rail- 
 road company having power to build branches may build an extension. Atl. & Pac. 
 R. R. Co. V. City of St. Louis, 66 Mo. 228. 
 
 Power granted to a railroad company to acquire lands is not exhausted by an 
 apparent completion of its road, if an increase of business demands more work. Chi- 
 ■cago, Bur. & Quin. R. R. v. Wilson, IV 111. 123. 
 
88 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 railway, and that thereupon the company might work a coal mine 
 for that purpose, if, by so doing, it could obtain coals cheaper than 
 by the purchase of them, and that by so doing, it would be fair 
 and proper and not really inconsistent with the objects of the com- 
 pany ; and that if it did work a colliery for this purpose, it would 
 be foolish to prevent the company from obtaining a profit by the 
 sale of such coals as were raised and not required for the company. 
 The answer to this argument appears to me to depend upon the- 
 facts of each particular case. If, in truth, the real object of the 
 colliery was to supply the railway with cheaper coals, it would be 
 proper to allow the accidental additional profit of selling coals to- 
 others ; but if the principal object of the colliery was to undertake 
 the business of raising and selling coals, then it would be a per- 
 version of the funds of the company, and a scheme which ought 
 not to be permitted, however profitable it might appear to be.. 
 The prohibition or permission to carry on this trade would de- 
 pend on the conclusions which the court drew from the evidence.. 
 The same observations apply here ; if the use of the boat is really 
 to assist the trafiic on the existing railway, it is lawful and proper ;:. 
 but if the object be to extend the traffic to places beyond the rail- 
 way, which the railway is never intended to reach, then it is iUegal 
 and beyond the powers of the company." 
 
 These expressions of Lord KomiUy are so lucid and explicit as 
 to need nothing additional by way of explanation. Whataver be 
 a company's legitimate business, the company may foster it by all 
 the usual means ; but it may not go beyond this ; it may not, 
 under the pretense of fostering, entangle itself in proceeding*, 
 with which it has no legitimate concern. 
 
 In the next place, the courts have, however, determined that 
 such means shall be direct, not indirect ; i. e., that a company shall' 
 not enter into engagements, as the rendering assistance to other 
 undertakings, from which it anticipates a benefit to itself, not im- 
 mediately, but mediately, by reaction, as it were, from the success- 
 of the operations thus encou^^aged (a) — all such proceedings inev- 
 
 (ffl) The acquisition of lands to prevent interference by competing lines or- 
 methods of transportation, or in aid of collateral enterprises remotely connected witb 
 the running or operating of a railroad, although they may increase its revenues and 
 business, are not within the power of a railway corporation. Rensselaer & Sar. R. E. 
 Co. V. Davis, 43 N. Y. 137. An insurance company may not purchase a claim against 
 a policy holder to use it as a set-oflf. Kansas Ine. Co. v. Craft, 18 Kan. 283. A cor-r 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 89> 
 
 itably tending to breaches of duty on part of the directors, tO' 
 abandonment of its peculiar objects on part of the corporation. 
 Such is the rule of law, but great difSculties arise in its application. 
 In Colman v. Eastern Railway Company,^ the defendants were^ 
 at suit of a shareholder, restrained from guaranteeing the divi- 
 dends of a steam packet company, to be started in connection with 
 their line, from Harwich, and from which they expected great 
 profit would result to the railway. 
 
 The limitation involved in this decision applies, however, only 
 where the transaction to be assisted or engaged in is in reality 
 and fact something beyond the corporation's primary undertaking. 
 Consequently, where a company, whose railway terminated at 
 Milf ord Haven, entered into a contract with the defendant for 
 steam vessels to run between that place and Ireland, it was held 
 that the contract was not ultra vires, and that the defendant, hav- 
 ing provided an unseaworthy vessel, was liable in damages. Erie,. 
 C. J., thus distinguished this from the last case : " So far from a 
 contract by this company to facilitate the forwarding of passen- 
 gers and goods to Ireland being illegal, I rather gather that the- 
 Legislature contemplated and intended that a railway terminating- 
 at Milford Haven should forward traffic to and from Ireland, and 
 therefore this contract would be entirely within the scope and 
 object of the company's incorporation and extension." ^ (a) 
 
 Where one railway company was unable to complete its line,, 
 and another neighboring company did so for it, under an agree- 
 ment to work the line, &c., and subsequently, disputes arising, the 
 latter company sued the former for the work so done, it was held 
 that the agreement was ultra vires, and that therefore it could not 
 recover.' (J) 
 
 ' 10 Beav. 1 ; 16 L. J. Ch. 13 ; Cohen ^ South Wales Railway Company v. 
 
 V. Wilkinson, 12 Beav. 134 ; 1 Mac. & G. Eedmond, 10 C. B. N. S. 675. 
 
 486; 18 L. J. Ch. 378, 411. Compare 'Great Western Ry. Co. v. Preston, 
 
 Logan V. Conrtown, 13 Beav. 22. &c. Ey. Co. 17 Upp. Can. Q. B. (1859) 477. 
 
 poration cannot engage in a distinct branch of business not authorized by its charter, 
 for the purpose of raising funds to accomplish the object for -which it was created. 
 Waldo V. Chicago, St. Paul & F. R. R. Co. 14 Wis. 625. A New York banking cor- 
 poration cannot buy State or other stocks for sale again, or as a means of raising 
 money. Talmage v. Pell, 7 N. Y. 328. 
 
 (o) The two decisions in the text are not easily reconcilable. Equal diflSculty will 
 be found in attempting to reconcile the American cases cited in the note to p. 86. 
 
 (6) In Cheever v. Gilbert Elevated Ry. Co. 43 N. Y. Super. Ct. 478, it is held 
 
©0 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 It is not ultra vi/res of a railway company to contract to carry 
 beyond their own line. In Wilby v. "West Cornwall Kailway 
 €ompany,i this point was raised for the defendants, though not 
 pressed ; but Watson, B., said that such a contract was not ultra 
 iolres, whether the extra distance were by sea or land ; and the 
 legality of such contracts has since been expressly decided.* (a) 
 
 ' 2 H. & N. 703. Company, 5 H. <fe N. 274 ; 29 L. J. Ex. 
 
 "^ See Blake v. Great Western Kailway 165 ; Le Conteur v. London & South 
 
 Company, 7 H. <fe N. 987 ; 31 L. J. Ex. Western Railway Company, L. R. 1 Q. B. 
 
 346 ; Coxon v. Great Western Railway 54. 
 
 that a corporation may loan money to aid in a work auxiliary to its main business, 
 -and is not liable for misappropriation. 
 
 (a) Whatever doubts may have been expressed as to the power of railroad com- 
 panies to eontraet to carry beyond their own lines, the law is now well settled that such 
 contracts are not ultra vires. In Ogdensburgh <fe Lake Champlain Railroad Co. v. 
 Piatt, 22 Wall. 123, Hunt, J., says: "The defendants were an incorporation organ- 
 ized under the general railroad law of the State of New York. They possessed the 
 powers given to corporations generally, and were subject to the corresponding liabil- 
 ities, assuming the case to stand upon the general principles applicable to the ques- 
 tion, the doctrine that a railroad company may subject itself to the obligations of a 
 carrier beyond its own line, has been distinctly held in the State of New York, 
 where this contract was made ; in the State of Massachusetts, where its performance 
 was to be completed, and in the State of Vermont, .where the alleged injury occurred. 
 « * * We do not see that there is room to doubt the power of the company to 
 make the contract in question." In support of this position, the following cases are 
 cited: Bissell v. Michigan R. R. 22 N. Y. 258; Buffit v. Troy <fe Boston R. R. 40 N. 
 Y. 168 ; Root V. 6r. W. R. R. 45 N. Y. 524; Burtis v. Buffi <fc S. L. R. 24 N. Y. 269 ; 
 Hill Manuf. Co. v. B. L. & L. R. R. Co. 104 Mass. 122 ; Feital v. Middlesex R. K 109 
 Mass. 398; Noyes v. Rutland & B. R. R. Co. 27 Vt. 110 ; Morse ... Brainer'S, 41 Vt. 
 550 ; Railroad Co. «. Transportation Co. 16 Wall. 324 ; EvansTille & Crawfordsville 
 R. R. Co. V. Androscoggin Mills, 22 Wall. 694. Reference being also made to the 
 -contrary decisions in Converse «i. N. & N. Y. Trans. Co. 33 Conn, 166; Hood v, N. 
 Y. <!t N. H. R. R. 22 Conn. 502 (as to which, see Bald. Conn. Digest, 99). See, also. 
 Railway Co. v. McCarthy, 6 Otto, 258 ; Perkins v. Portland & Saco R. R. Co. 47 Me. 
 673; Nashua Lock Co. v. Worcester <fe Nashua R. R. Co. 48 N. H. 339 ; McCluer v. 
 Manchester <St L. R. R. Co. 13 Gray, 124; Najac v. Boston & L. R. R. Co. 7 Allen, 
 329; Milnor v. N. Y. & N. H. R. R. Co. 53 N. Y. 363 ; Baltimore <fe Phila. Steam- 
 boat Co. V. Brown, 54 Penn. St. 77; Kessler v. N. Y. Central R. R. Co. 7 Lans. 63; 
 Illinois Central R. R. Co. v. Copeland, 24 111. 332 ; Cincinnati, Ham. <fe Day. R. R. 
 ■Co. V. Pontius, 19 Ohio St. 221 ; Candee v. Pennsylvania R. R. Co. 21 Wis. 689 ; 
 Wheeler v. San Francisco & Alameda R. R. Co. 31 Cal. 46; Kyle v. Laurens R. R. 
 ■Co. 10 Rich. 382 ; Angle v. Miss. & Mo. R. R. Co. 9 Iowa, 488. 
 
EXTENSION AND DEVELOPMENT OF BUSINESS.* 91 
 
 YII. A corporation may extend its undertaking so as to in- 
 clude within its operations business not perhaps contem- 
 plated hy its originators, hut iecome essential to its exist- 
 ence, and growing out of its primary and special busi- 
 ness, {a) 
 
 This rule seems to be established, but it certainly conflicts with 
 many other of the principles of ultra vires, and must be applied 
 with great care, and under particular circumstances only. The 
 memorandum of association of the British and Foreign Cork Com- 
 pany stated that the objects for which the company was estab- 
 lished were " the purchasing and selling of cork, and also the cut- 
 ting of cork by the improved machinery for which letters patent 
 were granted to K. B. C." It was determined not to be ultra 
 vires for the company to purchase the patent.'' 
 
 This decision was acquiesced in, but it will probably be consid- 
 ered to have somewhat restricted the doctrine. There is certainly 
 a broad distinction between dealing in cork and cutting cork and 
 purchasing the patent of a cork-cutting machine. 
 
 VIII. A corporation may deal in the shares of other corpora- 
 tions, without express power so to do, provided the nature 
 of its business be such as to render such transactions con- 
 ducive to its prosperity. (5) . 
 
 ' Be British & Foreign Cork Company, p4re Gleadow v. Hull Glasa Company, 19 
 Leifchild's Case, L. E. 1 Eq. 231. Com-' L. J. Ch. 44. 
 
 (a) A company newly incorporated for the purpose of manufacturing and selling 
 glass, contracted to purchase glassware for the purpose of keeping up their stock, 
 and supplying customers, until the works they had bought from a company preceding 
 them were put in repair. It was held that this contract was not ultra vires. It was 
 Important that the company should retain the old customers, and to do this it was 
 necessary to keep up their stock, and enable them to fill orders from their customers, 
 until they could supply themselves from their own manufactory. Such purchases are 
 auxiliary and incidental to the main purpose of their incorporation, and are fairly 
 within the scope of the powers conferred upon them by law. Lyndeborough Glass 
 Co. 0. Mass. Glass Co. Ill Mass. 315. See Durfee v. Old Colony R. R. Co. 5 Allen, 
 230. 
 
 (6) In the United States a corporation cannot become a stockholder in another 
 corporation, unless by power specifically granted by its charter, or necessarily im- 
 plied in it. Franklin Co. v. Lewiston Savings Bank, 68 Me. 43 ; Mutual Savings 
 Bank v. Meriden Agency Co. 24 Conn. 189 ; Berry u. Yates, 24 Barb. 199 (but see 
 N. Y. Exchange Co. v. De Wolf, 5 Barb. 693) ; Talmage v. Pell, V N. Y. 348. Especially 
 
92 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 Till recently it was doubted whether one company could be a 
 shareholder in another ; indeed, the weight of authority was in the 
 negative.^ In Great Western Railway Company v. Metropolitan 
 Eailway Company,^ the facts were : The Great Western Railway 
 had been authorized, by act of parliament, to hold 17,500 shares in 
 the Metropolitan Railway, and had placed these in the hands of 
 nominees ; and it was provided that, on an extension of the Met- 
 ropolitan Railway, additional shares should be offered to the orig- 
 inal shareholders. An extension was made and new shares issued. 
 The Great Western Railway Company claimed its proportion of 
 these. Page Wood, V.-C, decided that the Great Western Rail- 
 way was not authorized to take, &c., nor claim these ; but, on ap- 
 peal, it was held that they might take, though perhaps not hold, 
 such shares ; and, therefore, a demurrer to their bill was overruled, 
 reserving the benefit for the hearing. 
 
 In subsequent cases the possibility of corporations possessing 
 such a power impliedly and without express provision has been 
 fully admitted. It was so admitted by Lord Cairns, L. J., in lie 
 Barned's Bank, ex parte The Contract Corporation,' and also most 
 unreservedly by Selwyn, L. J ., in Se Asiatic Banking Corpora- 
 tion, Royal Bank of India's Case.* " As to the capacity of a trad- 
 ing corporation to accept shares in another ti'ading corporation, it 
 is sufficient for me to say that I entirely agree with the judgment 
 of Lord Cairns, in the case of Barned's Bankiiig Company, viz., 
 that there is not, either by the common or statute law, anything 
 to prohibit one trading corporation from taking or aceepting 
 shares in another trading corporation. There may, of course, be 
 circumstances which prohibit or render it improper for a company 
 so to do, having regard to its own constitution, as defined by its 
 memorandiim and articles." 
 
 ' See Salomons v. Laing, 12 Beav. 339 ; " L. R. 3 Ch. 105. 
 
 Maunaell v. Midland Great Western Ey. ^ L. R. 4 Ch. 252, 26Y. Compare Re 
 
 Co. of Ireland, 1 H. <t M. 130. Asiatic Banking Company, L. R. 7 Eq. 91. 
 
 ■^ 32 L. J. Ch. 382 ; 9 Jur. N. S. 562. 
 
 if it be for the purpose of controUiag or affecting the management of the other cor- 
 poration. Sumner v. Maxay, 3 Woodb. & Minot, 105 ; Central R. R. Co. v. Collins, 
 40 Ga. 682 ; Hazlehurst v. Savannah R. R. Co. 43 Ga. 13. See, also, Hodges v. Screw 
 Co. 1 R. I. 812 ; and the following cases under express legislatiye sanction : Zabristie 
 V. G. G. & C. R. R. Co. 23 How. 381 ; White v. Syracuse & Utioa R. R. Co. 14 Barb. 
 659; Mayor v. Bait. & Ohio R. R. Co. 21 Md. 60. 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 93 
 
 The last sentence contains a qualification — important, indeed, 
 but arising from the general doctrines. Accordingly, in Joint- 
 Stock Company v. Brown,^ a case six months later, before James, 
 Y.-C, where the directors of a company established for inter alia, 
 " the making advances and procuring loans on, and the investing 
 in, securities," had taken 3,000 £10 shares in another company 
 (banking), it was held that the directors had no power to take 
 these shares, and that the payment of the deposit (£30,000) was a 
 breach of trust on their part, for which they were to be personally 
 liable. This was the raUo decidendi,' but the Yice-Chancellor, 
 following Page Wood, V.-O., before whom the case had also been, 
 considered that the transaction was not an " investment in securi- 
 ties," and, consequently, was ultra vires of the company as consti- 
 tuted by its articles. 
 
 When a company purchases shares, they are very generally 
 transferred into the name of a trustee for itself. In such case the 
 trustee is, under the companies acts, the person immediately liable 
 in respect of the shares so standing in his name, (a) The trustee 
 of a private individual is under the same liability, as well appears 
 by Chapman and Barker's Case.^ Here a shareholder in a com- 
 pany borrowed money of it, and transferred some shares to a nom- 
 inee of the company as a security for the loan ; and he was placed 
 on the list of contributories without prejudice to any right which 
 he might have to be indemnified by the company. (5) Mortgagees 
 will also similarly be responsible for the payments due on account 
 of the mortgaged shares.' But the trustee is entitled to be re- 
 couped by his cestui que trust for any payments which he may 
 have to make on account of the same ; * and in the event of a wind- 
 
 ' L. R. 8 Eq. 381. pany, but the company haying no power 
 
 " L. R. 3 Eq. 361. to buy its own shares, Addison was, eight 
 
 ' Price &■ Brown's Case, 3 Dr. & Sm. years later, placed on the list. With this 
 
 146 ; Royal Bank of India's Case, L. R. 4 case the decision in Re South Eastern Rail- 
 
 Ch. 252. Compare Ee Patent Paper Man- way Company's Claim, L. R. 14 Eq is 
 
 nfacturing Company, Addison's Case, L. scarcely reconcilable. See, as to the non- 
 
 R. 5 Ch. 294, where shares had been is- liability of equitable mortgagees of shares, 
 
 sued to Addison as a security for a loan Sichell's Case, L. R. 3 Ch. 119. 
 to the company, and on repayment they * Hoare's Case, 2 J. <fe H. 229 ; Cruse 
 
 were transferred to a trustee for the com- v. Paine, L. R. 4 Ch. 441. 
 
 (a) Matter of Empire Bank, 18 X. Y. 226; Wilson v. Prop. Central Bridge, 9 R. I. 
 890. 
 
 (i) Crease v. Bnbcock, 10 Mete. 626 ; Grew v. Breed, Ibid. 669 ; Holyoke Bank 
 V. Burnham, 11 Cush. 183; Matter of Empire Bank, 18 N. Y. 226; Roosevelt v. 
 BrowD, 11 N. Y. 148 ; "Wonal v. Judson, 6 Barb. 210 ; Adderly v. Storm, 6 Hill, 624. 
 
94 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 ing up, he can prove for all his liabilities, present and future, 
 arising from the said shares, without regard to his indebtedness to 
 the company on other grounds.^ 
 
 IX. Corporations cannot, whatever the nature of their husinessy 
 without an express and very clear power in that behalf, 
 deal im, their own shares, (a) 
 
 ' Jie National Financial Company, ex parte Oriental Commercial Bank, L. R. 3 
 
 Ch. 791. 
 
 («) American authorities hold, that there is at common law nothing to prevent a 
 corporation from taMng its own stock in payment or satisfaction of debt, or from 
 holding and selling its stock thus acquired ; Barton v. P. J. & TJ. F. Plank-road Co. 
 17 Barb. 397 ; Cooper v. Frederick, 9 Ala. 738; and some even hold that at common 
 law a corporation may purchase its own stock ; Verplanck v. Merc. Ins. Co. 1 Edw. 
 Ch. 84 ; Hartridge v. Rockwell, R. M. Charlton, 260 ; provided, in all cases, that the 
 transaction is bona fide, and not in fraud of creditors; Gillett v. Moody, 3 Corns. 479. 
 An Ohio bank may receive its own stock in payment of a debt, and may hold it as it 
 does its other corporate property. Taylor d. Miami Exporting Co. 6 Ohio, 17<r ; 
 State Bank v. Fox, 3 Blatch. 431; Bank of Columbus v. Bruce, 17 N. Y. 507. In 
 Virginia, a bequest to a corporation of its own stock was held valid. Eivanna Nav. 
 Co. V. Dawsons, 3 Gratt. 19. The New York revised statutes put it out of the power 
 of a moneyed corporation to apply any portion of its funds, except surplus profits, to 
 the purchase of shares of its own stock; or to receive any such shares in payment or 
 satisfaction of any debt, save that, if any shares of its own stock shall be hypothe- 
 cated or pledged to any such corporation, and the debt secured thereby shall not be 
 ])aid when due, the directors shall, within sixty days thereafter, cause such shares to 
 be sold ; and if they be not sold within that period, and the debt remain unsatisfied, 
 the shares shall be charged at the amount actually paid thereon, as a reduction of the 
 capital stock, and no dividends shall thereafter be made until the deficit so created 
 be made good, 1 R. S. (Edmonds' ed.) 548, 549 ; In re Empire City Bank, 18 N. Y. 
 226. See Crease v. Baboock, 10 Met. 525. Stock taken by a corporation as security 
 for, or payment of a debt, is not to be voted upon. " It is not to be tolerated, that a 
 company should procure stock in any shape which its officers may wield to the pur- 
 poses of an election ; thus securing themselves against the possibility of removal." 
 Ex parte Holmes, 5 Cow. 426; Brewster v. Hartley, 37 Cal. 15. 
 
 "Cases have been cited to show, that, if the shares of an incorporated company 
 are transferred to the corporation, they merge, and are extinguished. In the case of 
 Ex parte Holmes, 6 Cow. 426, which involved the right of voting on certain shares 
 of stock which stood in the names of trustees for the corporation, it was said by the 
 court, that the corporation may, from necessity, take their own stock in pledge or 
 payment, and that they may keep it outstanding to prevent merger, and convert it 
 to their security — implying, of course, that a transfer to the corporation itself would 
 operate as a merger ; and, I presume, imless there is some provision in the charter to 
 the contrary, that a transfer of its own stock directly to a corporation would have 
 that effect. But it does not follow that they may not subsequently be revived. It is 
 believed, that but few banks in this State are not authorized to take their stock in 
 
EXTENSION AND DEVELOPMENT OF BUSINESS. 9& 
 
 There is a great difEerence between dealing in the shares of 
 other companies and in its own. The former is ordinary business^ 
 attended only with the usual risks of ordinary transactions, but 
 the latter tends inevitably to breaches of their duty on the part of 
 the directors, and to fraud and rigging the market on the part of 
 the corporation itself. Consequently, a corporation, to possess 
 such a power, must have it conferred by the plainest and most 
 explicit language in its constating instruments. 
 
 This limitation was settled by the decision in Zulueta's Claim, 
 Be London, Hamburgh and Continental Exchange Bank.^ The 
 memorandum of association fills half a page in enumerating the 
 various objects of the company, viz., " the making of purchases, 
 investments, sales, or any other dealings m a/ny of the above- 
 named articles or securities ;" but in the list are not ccmtained its 
 own shares. Gifi'ard,'L. J., accordingly decided that the purchase 
 of these was not within the ordinary scope of the company, nor 
 could be brought within it by any reasonable construction. " I am 
 clearly of opinion that this transaction is ultra vires; and if it is 
 ult/ra vires, it is not a mere voidable transaction, but it is wholly 
 and totally void; it is a transaction which no general meeting 
 could confirm, because it was altogether beyond the power of the 
 company in every sense." 
 
 Whether a company having power to deal in its own shares, 
 may, without express authority to that efEect, hold them in the 
 names of trustees, so that neither the transferrer nor transferee 
 shall be liable on them, is uncertain. In one case the trustee was 
 held liable, several years after he had parted with the shares, 
 apparently on the ground that he had, by accepting the shares, 
 held himself out as a shareholder.' In a later case, a dissatisfied 
 shareholder transferred his shares, in accordance with an agree- 
 ment to that efEect, to a nominee of the company, and the Master 
 of the Kolls considered the transaction valid, chiefiy on account 
 
 ' L. R. 5 Ch. 444, and cases cited; Re 161. See Evans v. Coventry, 25 L. J. Ch, 
 Marseilles Extension Ey. Co. ex, parte 489 ; and Hall's Case, L. E. 5 Ch. 707. 
 Credit Foncier of England, L. E. 7 Ch. ' Re Marylebone Banking: Company, 
 
 ea; 'parte Davidson, 8 D. (}. ife Sm. 21. 
 
 payment or pledge, and it has always been supposed that it could be reissued." Wil- 
 liams v. Savage Man. Co. 3 Md. Ch. 418. See State v. Smith, 48 Vt. 266 ; C. S; <fe S. 
 W. E. E. Co. V. Marseilles, 84 111. 643 ; Savings Bank v. Wulfekuhler, 19 Kan. 60: 
 
"98 EXTENSION AND DEVELOPMENT OF BUSINESS. 
 
 of the wide powers of contracting and action given to the direct- 
 ors.^ (a) 
 
 ' Re National Proviacial Marine Insur- ance Company, Singer's Case, W. N. 1869, 
 
 p. 206. 
 
 (a) The discuasion in this eectiou would not be complete, for American readers, 
 ■without reference to the power of the State to alter, extend and regulate the business 
 •of corporations. 
 
 I. It is established throughout the United States, that the charter of a corpora- 
 tion is a contract, and as such is protected by the constitutional provision that no 
 State shall pass any law impairing the obligation of contracts. Dartmouth College 
 V. Woodward, 4 Wheat. 518. For other authorities, seeOooley on Const. Lim. 2^9. 
 The apparent scope of this principle, howeyer, is much restricted by certain other 
 rules, as follows : 
 
 A corporation, " engaged in a public employment affecting the public interest," is 
 subject to the power of the State to regulate the use of its property for the good of 
 -the public, in all matters not expressly provided for by the charter. So the State 
 may regulate the rates of charges upon railroads. This is held not to impair the 
 •obligation of the contract, because, in the absence of express stipulation to the con- 
 trary, the charter is assumed to be taken subject to this power of regulation. See 
 Chicago, &c. R. B. Co. o. Iowa, 4 Otto, 155 ; Munn v. Illinois, Id. 118; Peik v. Chi- 
 cago, (fee. Ry. Co. Id. 164; Chicago, M. <St St. P. R. B. Co. v. Ackley, Id. 179; Wi- 
 nona, Ac. R. R. Co. V. Blake, Id. 180; Stone v. Wisconsin, Id. 181; (knovm as "The 
 Granger Cases") and the authorities cited in the briefs and opinions. See, also. 
 People V. B. & A. R. R. Co. TO N. T. 569 ; State v. Columbus Gas Co. (Ohio), 8 Cent. 
 L. J. 404. But see Att'y-Gen. v. Chicago, &e. R. R. Co. 36 Wis. 425 ; Sloan v. Pa- 
 •cific R. R. Co. 61 Mo. 24. 
 
 The constitutional limitation above mentioned does not remove corporations from 
 the operation of general regulations made in the exercise of the police power. Cooley 
 on Const. Lim. 674-576 ; Beer Co. <,. Massachusetts, 7 Otto, 25, and cases cited in 
 briefs and opinion ; Fertilizing Co. v. Hyde Park, 7 Otto, 659 ; R. R. Co. v. Rich- 
 mond, 6 Otto, 521. "Police regulations must have reference to the comfort, safety 
 and welfare of society, and, when applied to corporations, they must not be in con- 
 flict with any of the provisions of their charters. Under the pretense of police regu- 
 lations, a corporation cannot be divested of any of the essential rights and privileges 
 conferred by its charter." Lake View v. Rose Hill Cemetery Co. 70 111. 191. See 
 further, on this subject. Com. v. Intoxicating Liquors, 115 Mass. 153 ; Com. v. Hamil- 
 ton Mfg. Co. 120 Mass. 383 ; People v. B. <fe A. R. B. Co. 70 N. Y. 569 ; Dingman v. 
 People, 51 111. 277; Kansas Pac. By. Co. u. Mower, 16 Kan. 673. 
 
 Where a privilege is granted to a corporation without any beneficial equivalent • 
 to the State, its revocation is not forbidden by the constitutional provision foresaid. 
 Thus, exemption from taxation given by statute after the organization of the corpora- 
 tion, and so not being part of the original charter, is not inviolable. Tucker v. Fer- 
 guson, 22 Wall. 527 ; West. Wisconsin Ry. Co. „. Supervisors, 8 Otto, 596 ; Christ 
 Ch. Hospital v. County of Phila. 24 How. 300 ; Hewitt v. N. Y. & 0. M. R. R. Co. 12 
 Elatoh. 452 ; St. Louis, &a. R. R. Co. v. Loftin, 30 Ark. 693 ; People v. Commissioners, 
 47 N. Y. 601. It is otherwise when such exemption is a part of the charter. Wilming- 
 ton R. R. Co. V. Beid, 13 Wall. 264; State Bank of Ohio v. Knoop, 16 How. 369; 
 
OWNERSHIP AND USE OF PROPERTY. 9Y 
 
 Section III. — Ownership and Use op Peopeett. 
 
 I. The ownership of lands obtained hy private contract for 
 corporate purposes, depends purely upon the contract en- 
 tered into or the conveyance made. 
 
 There can be little if any doubt that as between a corporation 
 and persons from whom it acquires lands, whether or not ex- 
 
 Home of tl^e Friendless v. Rouse, 8 Wail. 430 ; State v. Commiaaionera, St N. J. Law, 
 240; Oliver v. Memphis, <fcc. R. R. Co. 30 Ark. 128. But id State v. Morris, 77 N. 
 C. 512, it was held that the right to dispose of property by lottery, given by charter, 
 was a mere license or privilege, and was revocable. The reasoning in the opinion, 
 however, rests upon the notion of the police power. 
 
 The doctrine that a charter cannot be impaired by subsequent legislation, is ad- 
 ministered to protect rights, not to prevent changes in remedies. Railroad Co. v, 
 Hecht, 5 Otto, 168. 
 
 The constitutional provision referred to does not prevent the condemnation of the 
 property or franchises of corporations under the exercise of the power of eminent do- 
 main. West River Bridge v. Dix, 6 Uow. 507 ; ^nd sse post, note on " Eminent Do- 
 main." 
 
 II. At present, in this country, the power to amend, alter and repeal charters, is, 
 as a rule, reserved by the States in constitutions, general laws or special acta of in- 
 corporation. 
 
 It is setiled, that the reservation applies equally in whichever of theae waya it is 
 made. Tomlinaon v. Jesaup, 15 Wall. 454; Miller v. The State, Id. 478 ; Bangir, <fec. 
 R. R. Co. V. Smith, 47 Me. 34; State v. Person, 32 N. J. Law, 134; in « Oliver Lee 
 & Co.'a Bank, 21 N. Y. 9 ; Com. v. Fayette R. E. Co. 55 Penn. St. 462 ; Cooley on 
 Const. Lim. 279. Alao, that it appliea to all subsequent grants to corporationa existing 
 before the reservation. State v. Commissioners, 37 N. J, Law, 228. Also, where 
 pre-exiating corporationa take advantage of general laws. Iron Railroad Co. v. Law- 
 rence Furnace Co. 29 Ohio St. 208 ; I incinnati, &c. R. R. Co. v. Cole, Id. 126 ; Tib- . 
 bals V. Libley, 87 111. 142. Also, where corporations having charters which are 
 unalterable, consnlidate after such reservation. Shields 0. Ohio, 5 Otto, 319 ; Rail- 
 road Co. ii. Maine, 6 Otto, 499. But, an enactment of one Le.ialature, that all char- 
 tera thereafter granted may be amended or repealed, does not preclude a subsequent 
 Legislature from making an inviolable contract with a corporation by means of a 
 supplement to its charter. New ,Iersey v. Yard, 5 Otto, 104. This reaerved power 
 of amendment, when once exercised, ia not exhauated. The effect of the reaervation 
 is to prevent the grant from becoming a contract with the State. State v. Commis- 
 eioners, 87 N. J. Law, 228, 233. Legislation, to repeal or alter a charter, must be 
 expreaa, or such aa to raise a neoeaaary implication. Freehold Mut. L. Aaa. v. Brown, 
 29 N. J. Eq. 121 ; State v. Commisaionera, supra ; New Haven v. N. H. Water Co. 44 
 Conn. 106 ; Webb v. Kiilgely, 38 Md. 364. 
 
 The reaerved power of repeal ia, as a rule, unlimited. In Lothrop v. Stedman, 
 13 Blatch. 134, Shipman, J., uses this language : " When a charter itself or a gen- 
 eral statute, provides that the charter is subject to repeal by the Legislature, at ita 
 pleasure, without reatrictions or conditions limiting the power of repeal, the Legiala- 
 7 
 
98 OWNERSHIP AND USE OF PROPERTY. 
 
 pressed to be for the purposes of its undertaking, whether the 
 conveyance be in fee or for a limited interest, all the rights of the 
 
 ture has the right to exercise its power summarily and at will, and its action, beings 
 a legislative and not a judicial act, cannot be reviewed by the courts, unless it should 
 exercise its powers so wantonly and carelessly as palpably to violate the principles- 
 of natural justice, and in such case a repeal, like other legislative acts which do thus- 
 palpably violate the principles of natural justice, may be reviewed by courts." But 
 if the power to repeal is made conditional upon the conduct of the corporations, a 
 judicial determination must precede legislative action. Mayor, <fec. of Baltimore v. 
 Pittsburgh, &c. R. R. 1 Abb. U. S. 9 ; Com. v. Pittsburgh, <fec. R. R. 58 Penn. St. 46 ; 
 Erie & N. E. R. R. Co. v. Casey, 26 Penn. St. 287; Flint, <fec. P. R. Co. v. Woodhull, 
 25 Mich. 99; Crease v. Babcock, 23 Pick. 334; Com. o. Essex Co. 13 Gray, 239; 
 State V. Curran, 7 Eng. (Ark.) 321 ; Delaware R. R. Co. v. Tharpe, 5 Harr. 454. But 
 see Miner's Bank v. TJ. S. 1 Green (Iowa), 553. 
 
 But the power to alter and amend, differs materially from the power to repeal, in 
 that its exercise contemplates the continuance of the company under changed condi- 
 tions. The limits and effect of its exercise cannot be considered as wholly settled. 
 A distinction is to be taken between mandatory and permissive alterations. Manda- 
 tory alterations are such as require the corporation, as a condition of continuance, to 
 alter its method of doing business, or submit to certain burdens for the benefit of the 
 public; c.j., amendments requiring the building of bridges, lowering tolls or fares, 
 imposing taxes, and the like. Tomlinson v. Jessup, 16 Wall. 454 ; Sherman v. Smith, 
 1 Black, 587 ; Beer Co. v. Massachusetts, 1 Otto, 25 ; Mayor of Worcester v. E. R. 
 109 Mass. 103 ; Parker v. R. R. 109 Mass. 606 : Com'rs v. Holyoke Co. 104 Mass. 446. 
 
 Such alterations are operative without any action of the corporation. The reser- 
 vation of power to amend, gives to the charter the nature of a license. The manda- 
 tory amendment imposes a condition upon which the continuance of the license de- 
 pends. The corporation may, perhaps, surrender the license because of the conditions, 
 but it must comply therewith if it continues its corporate existence. This appears 
 to be the meaning of the decision in Yeaton v. Bank of the Old Dominion, 21 Gratt- 
 ,593, where it is held that the charter cannot be modified without the consent of the 
 corporation, but that if the corporation refuses to accept a statutory modification, it 
 must cease to transact business. The consent here referred to ia that of the corpora- 
 tion, not of all the stockholders. (But as to amendments concerning the winding up 
 of a corporation, see Robinson v. Gardiner, 18 Gratt. 609.) With regard, however, to 
 such mandatory amendments, the Supreme Court in Shields v. Ohio, 6 Otto, 319, has 
 said : " The power of alteration and amendment is not without limit. The alterations 
 must be reasonable ; they must be in good faith, and they must be consistent with 
 the scope and object of the act of incorporation." See, also, Holyoke Co. v. Lyman, 
 16 Wall. 500; Miller v. State, 15 Wall. 478. 
 
 Permissive alterations are such as allow but do not require the corporation to alter 
 or modify its business. It is with regard to such amendments that the chief difficulty 
 appears. Such alterations require acceptance, and the question arises, whether they 
 may be accepted by a majority of the stockholders against the will of a minority. 
 The stockholder, at the time of his subscription, contemplates the possible exercise 
 of the reserved power by the State, for the purposes for which the reservation was 
 made. This enters into and makes part of his contract. But the courts differ in 
 their opinions as to what these purposes are, and consequently with regard to his 
 
OWNERSHIP AND USE OF PROPERTY. 99 
 
 corporation and of the grantor will depend upon and be measured 
 by the conveyance executed or the contract made. Whatever 
 portion of his own interest which the grantor has not reserved 
 to himself has gone to the corporation. Whatever has gone to 
 them they may deal with in any way they like as far as the grantor 
 is concerned, so long as they do not interfere with the rights, if 
 any, which he has reserved to himself.^ If he has not reserved 
 any interest in such land, and moreover has not stipulated as to the 
 user, &c., thereof, then he will not be heard to complain whatever 
 the corporation may do.^ {a) 
 
 ' Durham, &c. Ry. Co. u. Walker, 2 ° Astley v. Manchester, <fco. Ry. Co. 
 
 Q. B. 940 ; Lloyd v. London, Chatham <fc 2 D. G. 4 J. 463 ; and see Boatock v. 
 
 Dover Ry. Co. 34 L. J. (Ch.) 401. Com- North Staffordshire Ry. Co. 4 E. & B. 
 
 pare cases in next note. 798. 
 
 rights under the contract. If the purpose is only to prevent the charter from being 
 a contract irrevocably binding the State, and to allow the State to protect its inter- 
 ests and those of the public, and it is not to allow the State to empower the majority 
 to make changes, against the will of the minority, which are not required for public 
 reasons, then clearly such permissive amendments are not affected by the reservation, 
 and must be accepted unanimously. The leading authority in support of the position 
 suggested, is Zabriskie v. Hackensack <fe N. Y. R. R. Co. 18 N. J. Eq. 178, in which 
 will be found a thorough and able examination of the principles and authorities 
 bearing upon the question. The contrary view is taken in New York, where it is 
 held that the reservation will authorize corporations, by consent of the Legislature, 
 against the will of dissenting stockholders, to extend materially their enterprises, 
 build branch roads, increase their capital, loan money to other enterprises, to borrow, 
 and to make other changes, some of them pertaining to the private business of the 
 corporation, and not affecting the interests of the public. Northern R. R. v. Miller, 
 10 Barb. 260; White v. Syracuse <fc Utica R. R. Co. 14 Barb. 560; Plank-road Co. 
 V. Thatcher, 11 N. Y. 102 ; Buffalo & N. Y. City R. R. Co. v. Dudley, 14 N. Y. 336. 
 The same principle is held in Massachusetts, Durfee v. R. R. 5 Allen, 230. And also 
 in Delaware, R. R. v. Tharpe, 1 Houst. 149; Peoria & Rock Island R. R. Co. o. Pres- 
 ton, 35 Iowa, 115 ; Sprigg v. Western Telegraph Co. 46 Md. 67 ; City of Covington 
 V. Bridge Co. 10 Bush, 69. But it is established that amendments which are funda^ 
 mental in their nature, must be accepted by all the stockholders. Buff. <fc N. Y. City 
 R. R. Co. v. Dudley, 14 N. Y. 336 ; Mowrey «. Ind„ &c. R. R. Co. 4 Biss. 78 ; 
 Clearwater v. Meredith, 1 Wall. 25 ; Sage v. Dillard, 15 B. Mon. 353 ; White v. Syra- 
 cuse R. R. Co. 14 Barb. 560 ; Sprigg v. Western Telegraph Co. 46 Md. 67 ; Booe v. 
 R. R. 10 Ind. 93 ; Kenosha, Ac. R. R. ,;. Marsh, 17 Wis. 13 ; Peoria <fe Rock Island 
 R. R. Co. V. Preston, 35 Iowa, 115. 
 
 It follows, however, from the doctrine that the right of eminent domain extends 
 to every species of property, that where a public benefit is to be accomplished, a 
 change in the management or an extension of the enterprise may be enforced by the 
 Legislature, provided compensation is made in due form for the extinguishment of 
 the rights of dissenting stockholders. Black v. Del. & Rar. Can. Co. 24 N. J. Eq. 
 455 ; and see post, note on " Eminent Domain." 
 
 (o) Where a corporation purchases more land than is needed, it may divide or 
 
ICO OWNERSHIP AND USE OF TROPERTY. 
 
 II. If lands he tnhen compulsorily, the rights as to ownership 
 of the corporation and of the other parties will depend 
 icpon the conveyance and the acts of parliament giving the 
 compulsory powers read together ; hut if the acts are silent, 
 then the last proposition holds good. 
 
 It must be premised that by "purposes of the undertaking" 
 
 dispose of the surplus. Spear v. Crawford, 14 Wend. 20 ; see NiooU ti. New York <fe 
 Erie Railroad Company, 12 Barb. 460 ; s. o. 12 N. Y. 121. 
 
 But where property is taken in invilum, unless the statute contemplated the tak- 
 ing of a fee simple, the right acquired is a mere easement or servitude. Barclay v. 
 Howell's Lessee, 6 Pet. 498 ; Jickson v. Rut. & Bur. R. R. Co. 25 Vt. 151 ; Jackson 
 V. Hathaway, 15 Johns. 447 ; Adams v. Rivers, 11 Barb. 390. And where the use is 
 abandoned, the title reverts to the former owner. Hooker v. Turnpike Co. 12 Wend. 
 3T1 ; People v. White, 11 Barb. 26; Heard ■„. City of Brooklyn, 60 N. Y. 242; Dean 
 V. SuUivan R. R. Co. 22 N. H. 321 ; Blake v. Rich, 34 N. H. 282 ; Quimby v. Ver. 
 mont Central R. R. Co. 23 Vt. 387 ; Weston v. Foster, 1 Mete. 297 ; Henry v. Du- 
 buque <fe Pacific R. R. Co. 2 Iowa, 288; Giesey v. R. R. Co. 4 Ohio St. 308. And no 
 more property can be compulsorily appropriated than the Legislature has declared 
 to be necessary for the accomplishment of the public purpose contemplated. Mat- 
 ter of Albany Street, 11 Wend. 148; Embury v. Conner, 8 Sandf. 98; s. o. S N. Y. 
 611; Dunn v. Charleston, Hnrper (Law), 189. 
 
 Modern legislation has modified the odious rule of the common law, that, upon 
 the dissolution of a corporation, its remaining real estate unsold reverts to the grantor 
 and his heirs (see Angell & Ames on Corporations, g§ 179, 195), and the courts, in 
 similar spirit, hold that where a corporation is authorized to acquire a fee simple to 
 lands belonging to private persons, for public use, and such acquisition is had and 
 compensation accepted, no reversionary estate remains, but the property may be 
 used for any purpose, or may be disposed of by the corporation. Hey ward v. Mayor, 
 7 N. Y. 314; Rexford v. Knight, 11 N. Y. 308; Brooklyn Park Com. v. Armstronc;, 3 
 Lans. 429 ; s. c. 45 N. Y. 234 ; Heath v. Barmore, 50 N. Y. 302 ; Dingley v. City of 
 Boston, 100 Mass. 544 ; De Varaigne v. Fox, 2 Blatchf. 95 ; Com. v. Fisher, 1 Pa. (P. 
 & W.) 462; Plitt V. Cox, 43 Penn. St. 486 ; Haldeman v. Penn. R. R. Co. 50 Penn. 
 St. 425. But as to reverter of land received by devise, see Acklin v. Paschal, 48 
 Tex. 147. This subject has frequently been considered in the United States, in con- 
 nection with the construction of railways upon public highways. Judge Dillon, in 
 his treatise on Mun. Corp. §§ 656, 557, remarks : " If the fee in the streets or high- 
 ways is in the public, or in the municipality in trust for public use, and is not in the 
 abutter, the doctrine seems to be settled that the Legislature may authorize them to 
 be med by a railroad company in the construction of its road, without compensation 
 to adjoining owners or to the municipality, and without the consent, ^nd even against 
 the wishes, of either. But where the public have only an eaaemeni in the street or 
 highway, it has been generally, but not always, held that against the propretor of 
 the soil the use of the street or highway, for the purpose of a steam railroad, is an 
 additional burden which, under the constitution of the different States, cannot be im- 
 posed by the Legislature, without compensation to such proprietor for the new servi- 
 tude." See Cooley on Cons, Lim. p. 549; Redfield on Railways, § 76, 
 
OWNERSHIP AND USE OF PROPERTY. 101 
 
 is meant here the user of the land as land, e. g., the erection of a 
 station, a dock, or house thereon, not the sale and letting of the 
 land, which, in the case of many corporations, would be fairly 
 within their " general purposes." 
 
 Very generally when a statute, public or private, authorizes a 
 corporation to appropriate lands, &c., by compulsion, it is specially 
 enacted that such lands are to " be taken for the purposes of the 
 enterprise" only, and sometimes the object is limited even more 
 strictly. 
 
 What wiU be the precise effect of such a restriction (1) as 
 regards the corporation itseK ; (2) as regards the grantor to the 
 corporation ? 
 
 How the corporation is • affected, or rather what is the extent 
 of the rights acquired by the corporation, is shown by the 
 National Manure Co. v. Donald.^ Here a company had been 
 incorporated and empowered by act of parliament for the pur- 
 poses of forming a canal, and had, under the powers of that act, 
 constructed a canal. They acquired by grant, and for more than 
 twenty years used the water of certain natural streams, to feed the 
 canal. Then under another act of parliament the company was 
 reconstituted and empowered to construct a railway, and was 
 enabled to dispose of aU land not required for it, including the 
 site of the canal, and all rights and easements enjoyed by the 
 ganal company were vested in the railway company for the pur- 
 poses of the railway. The railway company afterwards leased the 
 water rights they had formerly enjoyed to the plaintiffs, who used 
 them for the purpose of their mills, and whose -exercise thereof 
 was obstructed by the defendants on the ground that it interfered 
 with their rights as mill owners on the streams in question. The 
 plaintiffs having brought an action against the defendants for the 
 obstruction, it was held that the plaintiffs' title could not be sus- 
 tained, for the company had only been enabled to acquire the 
 water rights in their capacity as a canal company, and as such 
 they had ceased to exist. 
 
 It was here decided that the canal company had acquired only 
 rights analogous to an easement, and had not become riparian 
 owners — " The section which gave the company the right in ques- 
 
 1 4 H. & N. 8 ; 28 L. J. (Ex.) 185 ; C. B. N. S. 875 ; Wilts and Berks Canal 
 
 Rochdale Canal Co. v. King, 2 Sim. N. S. Navigation Co. v. Swindon Waterworks 
 
 78; same case at law, 18 L. J. (Q. B.) Co. L. R. 7 H. L. 697. 
 293 ; Medway Co. v. Earl of Romney, 9 
 
102 OWNERSHIP AND USE OF PROPERTY. 
 
 tion for their absolute use, did not giVe tlietn the unconditional 
 and unreserved ownership." 
 
 A decision of the House of Lords to the same effect is Stafford- 
 shire, &c. Canal Nav. v. Birmingham Canal Nav.^ The plaintiff 
 company, under an agreement supposed to have been made in 
 virtue of acts of parliament, had obtained and used for very many 
 years a supply of water from the defendants' canal. The defend- 
 ants proposed to erect machinery which should pump back some 
 of the water coming from a certain level, and so would affect the 
 supply thus obtained for the plaintiffs' canal, but would not pre- 
 vent the existence and free use of a communication made with 
 that canal in accordance with one of the acts. The plaintiffs filed 
 a bill to prevent the construction of this machinery, alleging that 
 it was contrary to the intention of the Legislature as shown in the 
 various acts, and to the agreement ; and also contrary to the right 
 which must now be taken as vested in them by user and prescrip- 
 tion. But the House of Lords held,, that the powers granted by 
 the acts were granted for specific purposes, wbicb were those of 
 making and maintaining a free communication between different 
 places by navigable canals ; and that the ordinary doctrines as to 
 the permissive use of water did not apply in such a case, and that 
 no grant could be made by the defendant company of the use of 
 any water which might injuriously affect those purposes ; that 
 consequently no right by prescription could, in this case, have any 
 foundation in grant — and that, therefore, affirming the judgment 
 of the Lords Justices, the bill must be dismissed. ' 
 
 The judgment of Chelmsford, L. C, as to the principles in- 
 volved in this and similar cases, is particularly clear. He said, 
 " The 2d section of that act (2 & 3 Will. IV, c. 71) applies to a 
 claim to the use of water which may be lawfully made at the 
 common law, by custom, prescription, or grant. Custom and pre- 
 scription are here out of the question, and if the respondents 
 could not have granted the use of the water to the appellants, the 
 act is wholly inapplicable ; but the respondents have not the 
 water in their canal with an absolute power of dealing with it at 
 their pleasure. When the canal was made, under the provisions 
 of the act of 8 Geo. Ill, the public had a right to use it upon 
 payment of tolls, and the respondents were bound to keep and 
 
 ' L. R. 1 H. L. 264. 
 
OWNERSHIP AND USE OF PROPERTY. 103 
 
 maintain the canal in an efficient state for the passage of the 
 traffic along it. They could not bind themselves that, for all 
 time to come, a certain quantity of water should be discharged 
 from their canal into that of the appellants, because it was impos- 
 sible for them to know whether all the water beyond what was 
 necessary to keep open the communication between the two 
 canals would not be wanted for the purpose of their own canal. 
 By a grant of the continual use of the quantity of water flowing 
 irom their canal into the canal of the appellants, the respondents 
 would have fettered themselves in the exercise of the powers, 
 vested in them by the act for extending, preserving, and improv- 
 ing their canal, for which the application of all the water beyond 
 what was necessary for keeping up the communication between 
 the two canals might have been essential. To impose such a 
 servitude upon the water in their canal as that contended for by 
 the appellants would have been ultra vires of the respondents, 
 and, consequently, length of user could never confer an inde- 
 feasible claim upon the appellants under the Prescription Act, as 
 no grant of the use of the water could have been lawfully made 
 by the respondents." 
 
 "With this case may be compared that of the Wilts and Berks 
 Canal Nav. Co. v. Swindon "Waterworks Co.,* which is scarcely 
 reconcilable with it, where the exact contrary was decided. The 
 plaintiff company was established by certain acts of parliament. 
 The acts gave the canal proprietors rights as to taking water from 
 streams within the distance of 2,000 yards, for the purpose of 
 making and maintaining the canal. They purchased a mill on a 
 stream, from which stream they had the right to take water. In 
 this way they became riparian owners. As such they were enti- 
 tled to the flow of water from brooks and streams running into 
 that stream, subject only to the rights which other riparian owners 
 at the upper part of the stream might lawfully exercise. The di- 
 rectors of the defendant company purchased a mill on the upper 
 part of the same stream, and so became riparian owners, as the 
 owner of that mill had been. They not only used the water for 
 the purposes and in the manner allowed by law to every riparian 
 owner, but collected it into a permanent reservoir for the supply 
 of an adjacent town, and claimed, as their legal right, such a user 
 
 ' L. R. 7 H. L. 697. 
 
104 OWNERSHIP AND USE OF PROPERTY. 
 
 of it. The House of Lords held that any company which pur- 
 chases the land of a riparian owner stands in the same situation as 
 he did with respect to the water rights connected with that land ; 
 and that the plaintiff company had by the above purchase become 
 riparian owners, and that the flow of water in the canal being 
 affected by the defendants' proceedings, they were entitled to 
 come into equity, and obtain an injunction to restrain this use of 
 the water. 
 
 As to the grantor the English authorities appear conflicting, 
 but they may probably be reconciled by deducing from them the 
 principles involved in the last two propositions, viz., that his posi- 
 tion depends upon the question whether or not there is, either in 
 the deed of conveyance or in the statutes relating to the transac- 
 tion, any reservation, any stipulation, any clause for his benefit, 
 enabling him to object to any proceedings by the corporation with 
 regard to the land inconsistent with the purposes for which it was 
 acquired. Perhaps it may be said, it is a matter of fact, taking 
 the conveyance and statutes together, whether or not the grantor 
 has parted with his entire interest, absolutely, unconditionally — 
 though it would seem that if the conveyance be of doubtful con- 
 struction, the grantor will not be deemed to have parted with any 
 greater interest than is required for the corporate purposes for 
 efl'ectuating which the conveyance is made.^ 
 
 If there be any such reservation or clause in the grantor's 
 favor, then he can call upon the courts to enforce it. On this 
 point Bostock v. North Staffordshire Ry. Co.^ is a leading' English 
 case, and the judgments delivered in it, though not as explicit as 
 they might be, merit very careful attention. By various acts of 
 parliament, a company — represented at the time of the suit by 
 the defendants — had been incorporated for making an inland navi- 
 gation, and had compulsorily acquired from the ancestor of the 
 plaintiff certain lands in fee simple as stated in the acts, though 
 not expressed in the conveyances, " to and for the use of the navi- 
 gation, but to be for no other use or purpose whatsoever." The 
 acts reserved to the grantor of the lands purchased, his heirs, &c.^ 
 the minerals, the right of fishing, and the right to use pleasure 
 
 ' Marquis of Salisbury v. Great North- = 4 E. & B. 798 ; 2i L. J. (Q. B.) 225. 
 
 ern Ry. Co. 5 C. B. N. S. 174 ; 28 L. J. Compare Badger v. South Yorkshire Ry. 
 
 C. P. 40; Plurastead Board of Worka v. Co. 1 E. & E. 847: 28 L. J. (Q B ) 118. 
 British LanH Co. L. R. 10 Q. B. 16. 
 
OWNERSHIP AND USE OF PROPERTY. 105 
 
 boats over the whole canal and reservoir which was made in con- 
 nection with it on the land so acquired. The defendants let out 
 pleasure boats for hire on the canal and reservoir ; and the plaintifE 
 instituted a suit to stop this. A special case was stated by the 
 Court of Chancery for the opinion of the Queen's Bench, the 
 questions in which were, first, whether the defendants could law- 
 fully let out boats for hire on the reservoir ? and, secondly, whether 
 they could lawfully use the reservoir for any other purpose than 
 for supplying the canal with water ? 
 
 It was held by Lord Campbell, C. J., that, under the statutes,, 
 there was not a prohibition against the defendants using the reser- 
 voir for any other purpose than that of feeding the canal, but that 
 all uses of it, whereby the grantor of the land, his heirs, &c,, were- 
 prejudiced, were unlawful. " Looking merely to the deed, the fee 
 simple passed with all the incidents of a fee simple estate ; but 
 looking to the act of parliament, which empowered the company 
 to purchase and to hold the land ' for the use of the navigation, 
 but for no other use or purpose whatsoever,' I think that the com- 
 pany could not lawfully apply it to any other use or purpose so as 
 to prejudice the grantor, his heirs or assigns, seized of the lands to 
 which a quasi servitude was attached." 
 
 Coleridge and Wightman, JJ., decided that the defendants 
 could not lawfully let out boats for hire upon the reservoir, or use 
 it for any other purposes of profit but those contemplated by the 
 statutes, since the land was vested in them for the. use of the nav- 
 igation only [{. e., any other use would be ultra vires in the strict 
 sense] ; and also because such use of the reservoir would derogate 
 from the rights of adjacent landholders ; and, lastly, because it 
 involved a disposition of the corporate funds to a purpose foreign 
 to the object of the incorporation [*. e., would be ultra vires- 
 in the secondary sense ; but this point was immaterial, since the 
 plaintifE was not a shareholder]. 
 
 Erie, J., said that " the company took the fee with all usual 
 incidents, and also the superadded duty both of using it for the 
 purpose of navigation, and of not using it for any other purpose 
 inconsistent with or tending to defeat that purpose ; and that so 
 long as the company perform this superadded duty, they may ex- 
 ercise all rights of ownership consistent with such performance, 
 and so may use pleasure boats thereon which do not impede the 
 performance of that duty." 
 
106 OWNERSHIP AND USE OF PROPERTY. 
 
 It will be seen that a majority of the court decided that the 
 letting boats for hire was qua the plaintiff — she being the repre- 
 sentative of the grantor — unlawful ; ^ but that upon the question 
 of ultra vires the judges were equally divided. 
 
 But the courts will put a reasonable and business-like con- 
 struction upon the term " purposes ; " and therefore they will not 
 interfere to restrain a corporation from dealing with its lands un- 
 less it is clearly shown to be inconsistent with the purposes or 
 conditions for or upon which they were acquired. 
 
 Therefore, where land had been sold to a railway company, 
 one of the sections of whose act provided that the whole of the 
 land so sold should be " appropriated to and used solely for the . 
 purposes of the said railway and the buildings connected there- 
 with," and the company erected on this land a building, which 
 was used as a custom-house, which was used partly for the exam^- 
 ination of the luggage of persons coming from the continent, of 
 whom a portion only went on by the railway, and partly as an 
 hotel. Turner, V.-C, considered this to be no infringement of the 
 above provision.' The building was used principally and primarily 
 for a " purpose connected with the railway," and the Vice-Chan- 
 cellor thought that the employment of it for other purposes not 
 radically different from or inconsistent with this one, constituted 
 BO breach of the statute. 
 
 In Cother v. Midland Ey. Co.' it was held by the Lord Chan- 
 cellor, overruling Wigram, Y.-C, that under the words " railway 
 and works " the defendants were authorized to take compulsorily 
 lands for the erection of a station, {a) 
 
 ' Accordingly, Stuart, V.-C, granted Compare East <fc West India Docka, &c. 
 
 a perpetual injunction to restrain such Ry. Co. v. Dawes, 11 Hare, 363, where 
 
 letting. 25 L. J. (Oh.) 325. the grantor of the lands objected to the 
 
 ^ Warden, <Stc. of Dover Harbor v. user of them as a coal depot. 
 South Eastern Ry. Co. 9 Hare, 489. ^ 2 ph. 469. 
 
 (a) In respect to lands taken by railroad corporations, although the discretion of 
 "the directors is unlimited as to the mode and extent of the use or occupation, for 
 the purposes for which the corporation was created, yet it is definitely limited by 
 those purposes. Any uses of the land confessedly for other purposes, or not apparently 
 for purposes permitted by its charter, are not protected by its authority. For such 
 uses the owner may have his redress by any appropriate action. It was, therefore, 
 held in Proprietors of Locks and Canals v. Nashua and Lowell R. R. Co. 104 Mass. 1, 
 that the surrender by a railroad corporation into the exclusive use and occupation of 
 private traders or manufacturers, for their trade or manufactures, as tenants for rent, 
 ■of land taken by right of eminent domain for the location of a railroad, and build- 
 
OWNERSHIP AND USE OF PROPERTY. 107 
 
 There is the other alternative where the conveyance is in terms 
 absolute and unqualified, and the acts of parliament are silent, but 
 the corporation acquiring is indued with the capacity of holding 
 lands for certain purposes only, and the conveyance was admit- 
 tedly caused, perhaps even so recited, by putting into force the 
 compulsory powers. 
 
 What is the position of the grantor then, if the corporation 
 proceeds to turn the lands to other and unauthorized purposes ? 
 And does it make any difference whether the lands have been ac- 
 quired by an ordinary amicable contract,^ or have been taken in 
 invitum by virtue of the compulsory powers ? 
 
 The answer of the English authorities seems to be that in 
 whichever way the acquisition has been made, if the conveyance 
 be out and out, if the grantor has really parted with all his interest 
 without reservation, then no rights remain to him — no rights 
 which will enable him, in his individual private capacity, to call 
 upon the courts to stop such unauthorized user. 
 
 The leading case is Astley v. Manchester, &c. Ey. Co.' The 
 defendants, a railway company, compulsorily purchased portions 
 
 ' See ante, p. 9Y. ern Ry. Co. L. R. 3 Ch. 745 ; Vane v. Cock- 
 
 2 2 D. 6. <fe J. 453. Compare Moody ermouth, &c. Ry. Co. 12 L. T. N. S. 821 ; 
 
 V. Corbett, L. R. 1 Q. B. 510 ; 35 L. J. (Q. Lloyd v. Loudoa, Chatham <fe Dover Ry. 
 
 B.) 161 ; Earl Beauchamp v. Great West- Co. 34 L. J. Ch. 401. 
 
 ings erected thereon by the corporation as freight-houses or engine-houses, is a mis- 
 appropriation of tiie land, which entitles the owner of the fee to maintain a writ of 
 entry to establish his right therein and recover damages or mesne profits for the un- 
 authorized use of it, although the corporation derives advantages in its freighting 
 business from the carriage of merchandise for the tenants, and the receipt and deliv- 
 ery of it at these buildings instead of at the regular station-houses, and the build- 
 ings remain adapted to the purposes for which they were erected, and the corporation 
 does not intend permanently to abandon the use of the premises for the railroad. 
 
 On the subject of reverter, attention may profitably be directed to land clauses 
 consolidation act, 1845, S & 9 Vict. c. 18. Section 127 provides that " lands acquired 
 bj' the promoters of the undertaking, and not required for the purposes thereof, 
 must be sold within a prescribed period, or shall, at the expiration of such period, 
 vest in, and become the property of, the adjacent owners.'' See Moody ii. Corbett, 5 
 B. & S. 859 ; Y B. <fe S. 544 ; L. R. 1 Q. B. 510 ; May v. Great Western Railway 
 Co. L. R. 1 Q. B. 364; h. R. 8 Q. B. 26; L. R. 1 H. L. 284, 293, 300; Coventry v. 
 London, Brighton, &c. Ry. Co. L. R. 6 Eq. 104 ; Carrington v. Wycombe Ry. Co. L. 
 R. 3 Ch. S11 ; Astley v. Manchester, <fec. Ry. Co. 2 D. G. <fc J. 453 ; Beauchamp v. 
 Great Western Ry. Co. L. R. 3 Ch. 745 ; Highgate Archway Co. v. Jeakes, L. R. 12 
 Eq. 9 ; London & S. W. Ry. Co. v. Blackmore, L. R. 4 H. L. 610 ; Goddefroi <St Shortt, 
 Railway Companies, p. 92. 
 
108 OWNERSHIP AND USE OF PROPERTY. 
 
 of the plaintiff's land for the purpose of a branch railway, but 
 suffered their powers to expire without making it. Before the 
 period of ten years, within which, by the lands clauses consoli- 
 dation act, they were bound to dispose of superfluous lands, had 
 expired, they promoted a bill for enabling them to make another 
 branch railway, and proceeded to carry on works on the above 
 portions of the plaintiff's land for the purpose of the proposed 
 branch line. Chelmsford, L. C, held (1) that the plaintiff's right 
 of repurchase under the 128th section of the lands clauses act, 
 had not arisen, for that the words " dispose of " in that section 
 refer to a transfer of the land to some other person, not to its ap- 
 plication to a new purpose : (2) that the abandonment by the com- 
 pany of the particular branch railway for which the lands were 
 purchased, did not, independently of legislative enactments, give 
 the plaintiff any right to a reconveyance : and (3) that the plaintiff 
 had no equity to restrain the company from any user of the land 
 not shown to be productive of irreparable injury to it. 
 
 The lands had been taken compulsorily — so much was admitted 
 — but they were originally taken hona fide, were conveyed in fee 
 and without qualification to the company, and the act of parlia- 
 ment contained no clauses in favor of the vendor. As to the 
 equitable doctrine urged for the plaintiff, the Lord Chancellor 
 said : " Then, it was said that these clauses have nothing to do 
 with the present question, that the plaintiff is entitled to a recon- 
 veyance wholly irrespective of these clauses ; he asserts that when 
 the company have acquired land under the compulsory powers of 
 their act, and have abandoned the undertaking, an equity imme- 
 diately springs up in the landowner to entitle him to require that 
 his land should be reconveyed to him by the company. 1 was 
 surprised at the assertion of an equity of this extraordinary char- 
 acter, and asked for some authority in support of it, but none was 
 produced. Such an equity, if it exist, must be reciprocal, and if 
 a landowner has a right to claim a reconveyance of his land, the 
 company ought to have a corresponding right, when they abandon 
 the undertaking, to call on the landowner to take back his land, 
 and to return them the purchase money. 
 
 This decision seems at first sight to be inconsistent with that 
 in Bostock's case.^ There, as here, the land was taken compul- 
 
 ' Ante, pp. 104, 106. 
 
OWNERSHIP AND USE OF PROPERTY. 109 
 
 sorily ; there, as here, the land was taken as being " necessary for 
 the purposes " of the undertaking ; there, as here, the conveyance 
 of the land on the face of it was unconditional, and contained no 
 limitation as to the user by the corporation. Yet in Bostock's 
 case a descendant of the grantor was held entitled to restrain the 
 corporation from temporarily using the land for purposes which 
 in no degree interfered with its user by them for the strictly legit- 
 imate objects ; while in Astley's case the original grantor had to 
 pay the costs of a suit to stop the corporation from abandoning 
 in toto the objects for which it had obtained the land and perma- 
 nently devoting it to other unauthorized • ends. But there is this 
 difference, that in the former case the act of parliament giving 
 the compulsory powers did contain, whereas in the latter it did not 
 contain, reservations and rights in favor of the grantor. 
 
 Lands may be obtained not only for the general requirements 
 of the corporate enterprise, but also for particular of those re- 
 quirements. In such cases the doctrine of ultra vires imposes an 
 additional qualification upon the ownership. It is a simple prin- 
 ciple of equity that, though the owner of a fee simple cannot at 
 law be restricted in his ownership of his estate, yet his rights may 
 in equity be greatly curtailed by apt clauses inserted in the instni- 
 ment of conveyance, which clauses will be binding on himself and 
 all those taking from or through him with notices. Thus, cove- 
 nants not to build,^ not to carry on particular trades,' however 
 inoperative at law,' are perfectly good and enforcable in chan- 
 cery. 
 
 So it is by the effect of the principle of xHtra vires, and the 
 limitation may be thus formulated : 
 
 III. If corporations acquire lands, easements, or other proprie- 
 ta/ry rights, to he devoted to certain specified pwrposes, 
 their ownership thereof will he pro tanto restricted, so 
 that they cannot employ them in or towards the further' 
 ance of other purposes, {a) 
 
 ' Western v. MacDermott, L. R. 2 Ch. ' Jones v. Bone, L. R. 9 Eq. 674. 
 
 12 ; Lord Manners v. Johnson, 1 Ch. D. " Qj/. — Are they so since the Judica- 
 
 673. • lure acts? 
 
 (a) Imlay v. Union Branch R. R. Co. 26 Conn. 265. In Binney's Case, 2 Bland, 
 142, Sept., 1829, the chancellor says : " This is the first instance, in this court, in 
 which a member has charged the body politic itself with making expenditures not 
 
110 OWNERSHIP AND USE OF PROPERTT. 
 
 This proposition follows a fortiori from the reasoning by which 
 the last has been established. It applies equally to all franchises 
 and other similar privileges, and it will be examined at length in 
 the chapter on " Special Powers and Privileges." 
 
 A good iUnstrative case is Bentinck v. Norfolk Estuary Co.' 
 Here the defendants had power to make and maintain certain 
 cuts and works, with authority to take and use such of certain 
 lands " as might be necessary or proper for them to enter for the 
 pui-pose of executing these works." Within the limits of their 
 line of deviation they proceeded to take lands for the purpose not 
 of forming their works, but of digging materials for the same. 
 It was held by Page Wood, V.-C, that they had no authority to 
 do so, which judgment on appeal was affirmed, and an injunc- 
 tion granted by the Yice-Chancellor against them was made per- 
 petual. 
 
 Moody V. Corbett ^ is a recent and very important case upon 
 the subjects of the acquisition of lands for special purposes, and 
 of surplus lands, and as to the evidence that the company is defi- 
 nitely proposing to use the lands for other purposes.* There 
 land had been purchased by the London and Brighton Eailway 
 Company for the particular purpose of building a bridge. After 
 the bridge was built, land was left for which the company had 
 no use, and it was let out in the ordinary way and for purely 
 agricultural purposes. Upon these facts the courts held that 
 the railway company had abandoned the special purposes for 
 which they had obtained the land, and that by virtue of stat- 
 
 1 8 D. G. M. & G. 714 ; 26 L. J. (Oh.) corporated the company's clauses and 
 
 40+ ; Webb i). Manchester, <fec. Ry. Co. 4 the lands clauses act, which does con- 
 
 My. <feC. 116; Cotber ». Midland Ry. Co. tain provisions for the entering upon 
 
 2 jPh. 469 ; 17 L. J. (Ch.) 235 ; Flower «. lands merely for the purpose of obtaining 
 
 London, Brighton <fe South Coast Ry. Co. materials. 
 
 34L. J. (Ch.)o40; Edinburgh <fe Glasgow = 5 B. <fe S. 859 ; 34 L. J. (Q. B.) 166 ; 
 
 Ry. Co. V. Campbell, 9 L. T. N. S. (H. L. ) on appeal, 7 B. <fe S. 544 ; L. R. 1 Q. B. 
 
 157. See Eversfield «;. Mid-Sussex Ry. 510. Compare Rangeley ti. Midland Ry. 
 
 Co. 3 D. G. A J. 286 ; 28 L. J. (Ch.) 107. Co. L. R. 3 Ch. 306. 
 It should be noticed that the act constitut- ^ As to this, see also Beauchamp v. 
 
 ing the defendants in Beutincf s case in- Great Western Ry. Co. L. R. 3 Ch. 745. 
 
 for corporate purposes, and, on that ground, prayed to have it prevented from doing 
 so by injunction. » * * If property be given to a hodii politic for certain speci- 
 fied and limited purposes, any application of it to an obviously different object is a viola- 
 tion of the law ; and, consequently, expenditures not for corporate purposes, in what- 
 ever way they may have been authorized by the body politic, may be enjoined and 
 prohibited." 
 
OWNERSHIP AND USE OF PROPERTY. Ill 
 
 ntory provisions it had reverted to the plaintiff as adjoining- 
 owner. 
 
 The gist of the present proposition (and the same remark ap- 
 plies to the preceding one) turns upon the purposes being " speci- 
 fied." "When will they be " specified " ? 
 
 They will be so in two ways. The first is when the purposes 
 in question are actually set forth in the instrument of acquisition, 
 so that it plainly appears therefrom that the parties at the time of 
 conveyance contemplated that the lands would be devoted to these 
 purposes only, and that the conveyance is made in consideration 
 thereof. 
 
 In all such eases it seems now quite settled that whatever the 
 purposes in question, general or special, whether the reasoning 
 be based upon the general principles of equity relating to convey- 
 ances and to notice, or reservations and clauses in favor of the 
 grantor, or upon the special principles of ultra vi/res, any user by 
 the corporation for purposes other than those specified is unlawful,, 
 and may be restrained by the parties interested in the lands in 
 question. 
 
 Secondly, the purposes now in consideration may be "speci- 
 fied" by implication. That is to say, a corporation may be created 
 for the attainment of definite ends — it may belong to the class 
 herein styled special — and in the course of its transactions and in 
 pursuance of its powers, it may acquire lands without being in 
 terms, either in its own constating instruments or by other docu- 
 ments, restricted in its mode of dealing therewith. What will be 
 the powers of such a corporation over such lands ? 
 
 This question, as far as relates to general purposes, has been 
 dealt with, the conclusion seeming to be that, in Great Britain at 
 least, there will be no presumption for or against either the corpo- 
 ration or the grantor — that their rights of ownership depend solely 
 upon the construction of the instruments of title. 
 
 But it is submitted that it is not so when it can be shown that 
 the acquisition was for a distinct special purpose, and that in such 
 case the above proposition holds. 
 
 "Where lands are acquired compulsorily, this seems to be be- 
 yond doubt. As Campbell, L. 0. J., said in Bostock's isase,' " That 
 such \i. e., that the lands in question should not be used to the 
 
 ' Uhi supra; 24 L. J. (Q. B.) 238. 
 
112 OWNERSHIP AND VSE OF PROPERTY. 
 
 prejudice of tlie grantor] was the intention of the Legislature in 
 conferring on the company the compulsory power of purchasing 
 the laud, I cannot doubt ; for nothing so unjust could have been 
 contemplated as that when the land had been purchased profess- 
 edly to enable the company to make a lake, they might have 
 erected upon it a soap manufactory or alkali works, utterly de- 
 stroying the amenity of the residence of the grantor, although not 
 amounting to an indictable or actionable nuisance." 
 
 It is true that when compulsory powers are given, the statute 
 conferring them generally limits them to the acquisition of lands 
 " for the purposes of the undertaking." But the limitation may 
 not be inserted ; and where it is left out, Lord Campbell's reason- 
 ing applies with equal force. 
 
 Lands obtained in the ordinary way of contract must, upon 
 principle, be considered to be subjected to the same qualification. 
 It is true that the original grantor in such case has no particular 
 interest in the lands — whatever he has parted with he has parted 
 with of his own free will — and, consequently, so far as he has not 
 reserved to himself rights over the lands conveyed, he stands in 
 the position of one of the public. This, however, does not aflFect 
 the question of ultra vires itself. This principle declares that cor- 
 porations have only such powers as are expressly given to them, 
 or are necessarily implied in the nature of their undertaking. It 
 limits their powers to these. And this limitation is not a special 
 one — a limitation applying to contracts only. It is a general lim- 
 itation, and it applies not merely to some contracts — to' contracts 
 for the acquisition of property or the performance of services ; 
 but to all contracts, and not merely to contracts, but all the pro- 
 ceedings of corporations. 
 
 ly. Eestriciions on lands acquired hy corporations can he en- 
 forced only hy the persons and for the purposes for which 
 imposed. 
 
 This proposition is the converse of the two immediately pre- 
 ceding ones. As corporations acquiring lands for particular pur- 
 poses may not devote them to other pui-poses, so e converso, reser- 
 vations in favor of particular persons or purposes cannot be en- 
 forced against the corporations by other persons or for other pur- 
 poses than those so specified. 
 
OWNERSHIP AND USE OF PROPERTY. 113 
 
 In Rochdale Canal Co. v. King,^ tlie defendants, the owners of 
 a cotton miU on the banks of a canal belonging to the plaintiffs, 
 were authorized by the act of parliament under which the canal 
 was made and the plaintiffs incorporated, to draw water from the 
 canal for condensing steam, and not for any other purpose : nev- 
 ertheless they used the water for other purposes. In consequence 
 of which the plaintiffs brought an action and obtained a verdict 
 against them, but only for nominal damages. The defendants, 
 however, continued to use the water as before. Whereupon the 
 bill was filed for an injunction to restrain them from so doing. 
 The answer stated a case of acquiescence on the part of the plaint- 
 iffs. It was held that the plaintiffs had sufficiently established 
 their title at law, and that, but for their acquiescence, they would 
 have been entitled to the injunction, notwithstanding they had 
 recovered only nominal damages in the action.* 
 
 Y. The j>resumption is that corporations acquire over lands 
 taken compulsorily for certain purposes only a species of 
 easement. 
 
 This is little more than a corollary from the last proposition. 
 If the right of ownership is restricted to the user for which the 
 acquisition was obtained, it is but a step farther to say that, unless 
 the contrary appears, nothing more than an easement is acquired. 
 This was the decision in Badger v. South Yorkshire, &c. Co.' 
 Here a local statute gave to the navigation company of a river, 
 among other powers, a power to appoint and set out towing-paths 
 alongside the river, bxit the language left it in equal doubt whether 
 the soil of the towing-paths was to vest in the company or only 
 
 ' 2 Sim. N. S. 78 ; same case at law, itants, with the consent of the company, 
 
 14 Q. B. 122, 135; Rochdale Canal Co. xi. might obtain water by the pipes to com- 
 
 Radcliffe, 18 Q. B. 287. Compare Reg. v. muaicate with the company's pipes at cer- 
 
 Aberdare Canal Co. 1 4 Q. H. 854. tain charges according to the bore uC the 
 
 ' A local act authorized a company to pipes. It was held that the owners or oc- 
 enter upon lands within a manor, and to cupiers of lands within the manor were 
 dig and search for any spring of water, not prevented by the act from sinking 
 and to convey the water from such springs wells in such lands, though the effect 
 into a town for the use of the inhabitants might be to draw off the water from the 
 of the town and the shipping in the company's springs. Southfields Water- 
 harbor. It provided that the company works Go. ®. Cootson, 15 L. J. Exch. 316. 
 should not take the water from any spring, * 1 E. <fc E. 347 ; 28 L. J. (Q. B.) 118. 
 streams, or ponds, so as to deprive the See Doe v. Archbishop of York, 14 Q. B. 
 occupiers of the lands of water for their 81 ; Davison v. GUI, 1 East, 69 ; Marquis 
 own necessary uses, and for the cattle de- of Salisbury v. Great Northern Ry. Co. 
 pasturing therein. The company had 6 C. B. (N. S.) 174 ; 28 L. J. (C. P.) 40. 
 power to lay down pipes, and the inhab- 
 
 8 
 
114: OWNERSHIP AND USE OF PROPERTY. 
 
 the easement of the right of way for towing ; though it was neces- 
 sary for other purposes of the company that the company should 
 have the fee of certain parts of the land adjoining. It was held, 
 that the company did not acquire the fee in the towing-paths, but 
 only such a use of the soil or easement as was necessary for the 
 purposes of the navigation. 
 
 Another point should also be noticed. It is the principle 
 that acquisition frequently draws with it all the rights neces- 
 sary for the full enjoyment of the subject thereof. It may be 
 thus expressed : 
 
 YI. When a person conveys land to ie used for specified pur- 
 jposes, retaining other adjacent land, he may not so deal 
 with this adjacent lam.d as to prevent the grantee from 
 using the land conveyed for such specified purposes. 
 
 The commonest instances are when conveyances are made to 
 railway and other similar companies, who propose to erect thereon 
 bridges, docks, &c., requiring unusual subjacent or adjacent sup- 
 port, and the minerals are reserved to the grantor. The result of 
 the numerous decisions is this : — 
 
 First. Both the conveyance and the act of parliament in virtue 
 of which the land was taken may be silent as to the exact powers 
 of the grantor with respect to the minerals. If so, the rights of 
 the grantor are restricted pro tanto by the needs of the grantee, 
 and he "warrants such a measure of support subjacent and adjar 
 cent as is necessary for the land in its condition at the time of the 
 grant, or in the state for the purpose of putting it into which the 
 grant was made." ^ 
 
 Secondly. There may be a clause stating that the minerals 
 shall not be worked ' either within a specified distance or indefi- 
 nitely, so as to cause damages to the erections upon the surface. 
 Under these circumstances, either (I) nothing whatever is said as 
 to the right or duty of tiie company to purchase the minerals, in 
 which case the owner cannot work them to the damage of the 
 company ; * and he is not entitled to any compensation there- 
 
 ' Fer Cranworth, L. C, Caledonian page as to the language used in varioua 
 
 Ey. Co. 11. Sprot, 2 Macq. 449 ; Elliott v. clauses, and the effect thereof. 
 North Eastern Ey. Co. 10 H. L. C. 33S ; ^ Elliott v. North Eastern Ry. Co. uhi 
 
 32 L. J. (Ch.) 402 ; Proud v. Bates, 34 L. mpra, per Lord Kingsdown : " When the 
 
 J. (Ch.) 407. ! absolute right to the minerals is reserved 
 
 5 8 & 9 Vict. c. 20, s. 78, and see the to the owner, he was to work at his own 
 
 cases in the notes on this and the next peril. When his right was qualified by 
 
• 
 OWNERSHIP AND USE OF PROPERTY. 115 
 
 for * even though the act or conveyance expressly reserves the min- 
 erals to the grantor,^ unless afld so far as provision to that effect 
 may have been made in the instruments of conveyance.* 
 
 Or (II) such an option of purchasing the minerals may be 
 given to the company, and if so, either they must purchase, or on 
 their refusal the owner can work his minerals in a careful man- 
 ner without being liable for damage caused thereby,^ though if 
 they purchase even only partially, e. g., the interest of a lessee 
 for 15 years, the rights of the owner to work are gone, and 
 he cannot subsequently, on the falling in or forfeiture of the 
 lease, work the minerals, though apparently he is entitled to com- 
 pensation. 
 
 In all cases it makes no difference whether or not the reserva- 
 tion of the minerals be with the clause that, " the working thereof 
 be in a reasonable and careful manner, &c." — ^the grantee's right 
 to support is a common-law right, capable of being limited only by 
 express words to that effect; nor whether the conveyance has 
 been the result of a private contract, or compelled by act of par- 
 liament. 
 
 It seems, also, that statutory provisions of the kind now in 
 statement, will constitute a special code determining the relative 
 rights of the company and the mine-owner vendor, and abro- 
 gating the common law so far as is inconsistent therewith. There- 
 fore, under such circumstances, the company can only claim the 
 statutory rights and privileges so enacted in their favor, and not 
 those of an ordinary purchaser to adjacent and subjacent support ; 
 and if they, the company, on notice given, do not purchase the 
 minerals, the owner may work them in a proper manner, even 
 though, from incidental circumstances, they could never have been 
 worked without damaging the surface. 
 
 the option given to the company to pur- Ry. Co. B H. <St N. 689 ; Birmingham 
 
 chase, then, if the company preferred the Canal Co. v. Earl of Dudley, T H. <fe N. 
 
 risk of damage to the expense of pur- 969 ; London <fe North Western Ry. Co. 
 
 chase, they were to be subjected to the v. Ackroyd, 31 L. J. (Ch.) B88 ; Great 
 
 risk -which the^ refused to buy oflf." Western Ry. Co. v. Bennett, L. R. 2 H. 
 
 ' Reg. V. Aire & Calder Navigation, L. 27. Compare Dunn v. Birmingham 
 
 30 L. J. (Q. B.) 337. Canal Co. L. R. 1 Q. B. 244. 
 
 ' North Eastern Ry. Co. .i. Crossland, * Rex v. Leeds, <fec. Ry. Co. 3 A. <fc E. 
 
 2 J. <fc H. 566. 688 ; Reg. v. Aire & Calder Navigation, 
 
 ' Dudley Canal Co. -o. Grazebrook, 1 vM supra. 
 B. <t A. 69 ; Fletcher v. Great Western 
 
116 TRANSFER OF CONCERN". 
 
 VII. Corporations owning lands ha'oe power to alienate their 
 lands for any interest which they may deem Jit, unless 
 resl/rained therefrom expressl/y or iy implication, pro- 
 vided, however, such alienation he in the ordinary mode 
 of conducting the corporate lusiness or operaUom. 
 
 Subject to the qualifications already considered, the property, 
 lands or not, of corporations, is theirs absolutely, alienable, like 
 the property of ordinary citizens, at the will of the coi-porations 
 themselves. But there may be restrictions as to alienation, as 
 "well as to ownership or user, and if this is so, the owner, corporate 
 ■or not, can alienate only subject to such restrictions. 
 
 This occurred in the Dulwich CoUege Case, Taylor v. Dnlwich 
 Hospital.^ The constitution of the college required that leases 
 .-granted should be at a rack-rent. It was consequently held that 
 the contract for a lease not at a rack-rent was ultra vires, and not 
 binding on the corporate body. 
 
 But the alienation must be in the ordinary course, and for the 
 purposes of the corporate operations. Any other alienation would 
 be restrainable at the instance of any corporator. It would also 
 be ultra vires, or at least voidable, as against third parties ac- 
 quiring such land with knowledge of the true nature of the 
 transaction. 
 
 Section IV. — Teanbfee of Conoeen. 
 
 I. A corporation man/ with, hut may not without, express au- 
 thority in this hehalf contained in hath its own constating 
 instruments and those^ of the transferring corporation, 
 either purchase or hy other means acquire the whole concern 
 of another corporation, {a) 
 
 It might fairly have been thought that such an arrangement 
 would be valid, if only upon the ground that it is the simplest and 
 
 ' 1 P. Wms. 65B. [^purchasing] Co. bought the property 
 
 ' " That the [selling] Co. may not with a bad title." Turner, L. J. 1 De G. 
 
 have had power to sell, does not seem to J. <fc Sm. S7 ; and compare Re Sea, Fire, 
 
 me to affect the case. Assuming that &c. Assurance Co., Port of London As- 
 
 they had no such power, the only c»nse- surance Co.'s Case, 5 De G. M. A G. 466. 
 quence, as I apprehend, would be that the 
 
 (a) See note at end of this chapter. 
 
TRANSFER OF CONCERM-. 117 
 
 shortest means of enabling the purchaser to acquire a business or 
 to amplify its own. But from the dicta in Ernest v. NichoUs/ 
 the reverse would seena to be the case. Here the sale by the 
 directors of a joint-stock company, registered under Y & 8 Yict. 
 c. 110, of the whole of its trade, business, good- will, stock, &c., 
 was, from special circumstances, deemed to be invalid. But in 
 reference " to a special contract to do the very unusual thing of 
 purchasing by one company the trade of another," Lord Wensley- 
 dale said : " Such a contract clearly does not bind, unless it is au- 
 thorized by the deed, and it is made strictly in accordance to its 
 provisions." Similarly, per Cranworth, L. C, " the transaction in 
 question was a purchase by the one company of the good-will and 
 the whole concern of the other. That would, ordinarily speaking, 
 be a transaction in which no company would be justified in enga- 
 ging, because it cannot be said to be within the ordinary scope of 
 one company to purchase the good-will of another." 
 
 This transaction, the purchase of a good-will or whole concern, 
 must not be confused with an "amalgamation" or " consolidation," 
 which, though on the face of it, somewhat similar, is totally differ- 
 ent in fact and in law.** The above dicta referred only to the for- 
 mer transaction, and denied its legality, unless expressly, author- 
 ized by the constating instruments — and even then Lord Cranworth 
 was in doubt. 
 
 If one company cannot purchase the business, good-will, &c., 
 of another, it would seem evident that practically this latter can- 
 not sell, apart from any consideration whether theoretically it" has 
 or has not the ability to do so. But this is not quite certain ; for 
 as to the converse, *. e., where the selling company has no power 
 to sell, though the purchasing company can purchase, it has been 
 determined that the defect of capacity in the former company 
 does not affect the validity of the transaction, as against the latter 
 company.' 
 
 More recently, this subject was greatly discussed on various 
 occasions in the winding up of the " Saxon " and other allied com- 
 panies; and the Vice- Chancellor and the Coui-t of Appeal in one 
 instance, arrived at different conclusions as to the effect of certain 
 
 ' 6 H. L. C. 401. Compare Balfour v. where the defendants were bound by ac- 
 
 Erneet, 5 C. B. (N. S.) 601 ; 28 L. J. C. P. quiescence. 
 170 ; and Anglo- Australian Life & Fire ^ See Amalgamation, post. 
 
 Assnrance Co. v. British Provident Insur- ' Ante, p. 116, note 2. 
 
 ance Co. 3 Giff. 621 ; 8 Jur. (N. S.) 628, 
 
118 TRANSFER OF CONCERN. 
 
 transactions, and the construction of a company's deed of settle- 
 ment. This was in the case of the Era Life & Fire Assurance 
 Co.^ The Lords Justices decided that the purchase by the Era 
 company of the business of the Saxon, another life assurance com- 
 pany, which had been confirmed by special general meetings of 
 both companies, was not ultra vires of such companies. The 
 deed of settlement of the purchasing company was of the usual 
 nature, giving the directors authority to vary, &c., contracts, and 
 where its provisions were silent to act in their absolute discretion 
 for the company's benefit, and empowering a general meeting to 
 authorize any act requiring the sanction of such meeting ; but no 
 provision was made for a purchase of the above-named description. 
 V.-C. Wood, consequently, held such purchase void.' "The mat- 
 ter reduces itself to the question, whether there was any power in 
 the directors of either company to effect this amalgamation, and in 
 particular whether it was competent for the Era [the purchasing] 
 company to undertake all the existing policies of another com- 
 pany. It appears to me quite clear that this could not be done 
 without some special power in the deed of settlement to authorize 
 such a transaction. I find nothing of the kind beyond the gen- 
 eral power given to the directors by the 38th clause of the Era 
 deed." But, upon the same facts, the Lords Justices came to the 
 opposite conclusion, to which the Vice-Chancellor bowed, when 
 the case came before him for a rehearing, although he did not 
 change his own opinion.' 
 
 In a very recent case it has been decided that a company hav- 
 ing power to " absolutely sell and dispose of, or demise, any lands, 
 buildings, contracts, works, or processes," &c., could not, against 
 the wish of a single dissentient shareholder, sell the whole of their 
 business and, assets. The facts were as follows : * — The directors 
 entered into an agreement with A. to sell him the business and 
 assets of the company upon the terms that the directors should 
 forthwith call an extraordinary meeting, and endeavor to get the 
 sanction of the shareholders to the. carrying out of the, sale, and 
 that on such sanction being obtained he should pay the directors 
 £250 in cash, and if he should succeed in establishing a new com- 
 pany for the same purpose, should, within three months from the 
 
 ' 1 De G. J. <fe Sm. 29. < Bird v. Bird's Patent Deodorizing, 
 
 i! 2 J. (t H. 404. 4c. Co. L. R. 9 Ch. 358. 
 
 " 1 H. & M. 672, 678 
 
TRANSFER OF CONCERN. 
 
 119 
 
 allotment of shares, pay a further sum of £1,250 in cash, and 
 iB2,000 in fully paid-up shares of the new company. The company, 
 at an extraordinary general meeting, passed a resolution for affix- 
 ing the seal of the company to the agreement, which was done, 
 and A. paid the £250. It was decided by both Bacon, Y.-C, and 
 the Lords Justices, that the agreement was ultra vires. 
 
 There is a special provision on this point in section 161 ' of 
 the companies' act, 1862, that where a company " is proposed to 
 be or is in the course of being wound up altogether voluntarily," * 
 its business may, as an entirety, be transferred to another com- 
 pany,* for the consideration and subject to the provisoes in favor 
 of dissentient members * or debenture holders' therein mentioned- 
 
 It was attempted to support the transaction set forth above in 
 Bird's case under this section, but the Lords Justices decided that 
 that section only authorizes a sale to an existing company, not to 
 a person about to form a company. 
 
 ' " where any company is proposed 
 to be, or 18 in the course of being wound 
 ■up altogether voluntarily, and the whole 
 or a portion of its business or property 
 is proposed to be transferred or sold to 
 another company, the liquidators of the 
 first mentioned company may, with the 
 sanction of a special resolution of the 
 company by whom they were appointed, 
 conferring either a general authority on 
 the liquidators, or an authority in respect 
 •of any particular arrangement, receive in 
 compensation, or part compensation, for 
 such transfer or sales, shares, policies, or 
 other like interests in such other com- 
 pany for the purpose of distribution 
 Bmongst the members of the company 
 being wound up, or may enter into any 
 other arrangement whereby the members 
 of the company being wound up may, in 
 lieu of receiving cash, shares, policies, or 
 other like interests, or, in addition there- 
 to, participate in the profits of or receive 
 any other benefit from the purchasing 
 company, and any sale made, or arrange- 
 ment entered into by the liquidators in 
 pursuance of this section, shall be bind- 
 ing on the members of the company being 
 wound up, subject to this proviso, that if 
 any member of the company being wound 
 up, who has not voted in favor of the 
 special resolution passed by the company 
 of which he is a member, at either of the 
 meetings held for passing the same, ex- 
 presses his dissent from any such special 
 resolution in writing, addressed to the 
 
 liquidators, or one of thBm, and left at 
 the registered office of the company not 
 later than seven days after the date of the 
 meeting at which such special resolution 
 was passed, such dissentient member may 
 require the liquidators to do one of the 
 following things, as the liquidators may 
 prefer: that is to say, either to abstain 
 from carrying such resolution into effect, 
 or to purchase the interest held by such 
 dissentient member at a price to be de- 
 termined in manner hereinafter men- 
 tioned, such purchase money to be paid 
 before the company is dissolved, and to 
 be raised by the liquidators in such man- 
 ner as may be determined by special 
 resolution. No special resolution shall be 
 deemed invalid for the purposes of this 
 section by reason that it is passed antece- 
 dently to, or concurrently with, any res- 
 olution for winding up the company, or 
 for appointing liquidators, but If an order 
 be made within a year for windiug up the 
 company by or subject to the supervision 
 of the court, such resolution shall not be 
 of any validity unless it is sanctioned by 
 the court." 
 
 ^ Or under supervision, Se Imp. Merc. 
 Credit Assoc. L. R. 12 Eq. 604. 
 
 ' Which must be an existing company, 
 p. 118, note 4, 
 
 * See ex parte Fox, L. R. 6 Ch. 116. 
 
 » Tunis Rys. Co. W. N. 1874, p. 165; 
 lie Western of Canada Oil Co. W. N. 
 1874, p. 148. 
 
120 TRAIirSFER OF CONCEKN. 
 
 A transaction whicli would otherwise be uli/ra vires may be ac- 
 complished under this section;^ and an unregistered company 
 without power to transfer its business to another company, may da 
 so by registering itself and then winding up voluntarily.' 
 
 II. A carporaUon of a puilic naPure may not so deal with it» 
 property as to incapacitate itself from performing its piMic 
 duties. 
 
 This proposition seems correct without qualification. In other 
 words, it is ultra vires in the true sense for a corporation having 
 public duties to enter into any transactions with respect to the 
 corporate property which may prevent the proper discharge ©f 
 those duties.' As, however, at the present day measures are sel- 
 dom taken to compel an unwilling corporation to fulfill its public 
 obligations, the proposition may appear an empty truism. But it 
 is not so. The attorney-general may interfere on behalf of the 
 public, and restrain the carrying out of transactions like those 
 now contemplated ; * and even if this does not happen, it is open 
 to the parties themselves — as it is in every ultra vires proceeding 
 — to object that the transaction is illegal, and not binding upon 
 either side.° 
 
 This principle holds not merely with regard to such " public "' 
 corporations as municipal and similar bodies, but also with regard 
 to corporations which are " public " in a less degree or in some 
 aspects only. In Reg. v. South Wales Ey. Co.,° this was so de- 
 cided. The defendant company having power to take and pur- 
 chase lands, and to construct a railway according to the plans and 
 books of reference deposited under their act, gave notice to the 
 Llanelly Railway & Dock Company, that they required to pur- 
 chase a small piece of land, on part of which the Llanelly rail- 
 way was actually constructed, such piece of land being set out, in 
 the said plans and books of reference, as part of the proposed line 
 of the South Wales Railway ; but they afterwards refused to issue- 
 their warrant to the sheriflE to assess the amount of purchase 
 
 'Clinch V. Financial Corp. L. R. 4 Coop. 30; Att.-Gen. ». Mayor, <fec. of Ply- 
 
 Ch. ll*?. mouth, 9 Beav. 67. 
 
 ' Southall V. British, &c. Co. L. R. 6 ' See Eastern Counties Ry. Co. *.. 
 
 Oh. 614. Hawkea, 5 H. L. C. 831 ; Staffordshire, 
 
 8 Staffordshire, <fec. Canal Nav. v. Bir- &c. Canal Nav. v. Birmingham Canal 
 
 mingham Canal Nav. L. R. 1 H. L. 254. Nav. L. R. 1 H. L. 254. 
 
 * See Att.-Gen, v. Corp. of Carmarthen, ' 14 Q. B. 902. 
 
TRANSFER OF CONCER]Sr. 121 
 
 money, on the ground that the Llanelly Kailway & Dock Com- 
 pany had no power under their act to sell any portion of land on 
 which their railway was constructed. It was held, on an applica- 
 tion for a mandamus to the South "Wales Eailway Company t» 
 issue their warrant, that, as there was no express clause in any 
 special or general act of parliatoent which authorized either the 
 Llanelly Railway & Dock Company to sell any part of their actual 
 line of railway, or the South Wales Eailway Company to purchase 
 it, the authority was not to be implied, from the general power 
 given to the South Wales Eailway Company to make their line, 
 and to purchase lands, according to their deposited plans and 
 books of reference. 
 
 Does this rule apply to strictly "private" as distinguished 
 from "public" corporations?^ In other words, are agreements 
 entered into by those corporations, which have been created purely 
 for the benefit of the members thereof, with regard to their prop- 
 erty, legal and binding, whereby — it being assumed that the 
 property in question is essential to the continued existence of the 
 corporation or the accomplishment of its aims — ^the corporation is 
 incapacitated from further prosecuting its aims ? 
 
 The answer seems to be that such agreements are not ultra 
 vii'cs, in the true sense, though they are so in the improper sense 
 — ^that is, thg,t they are reciprocally binding upon and enforceable 
 against both the corporation and the other contracting party, if 
 none of the corporators object, or if made by persons having full 
 authority to act on behalf of the corporation ; ' but that it is com- 
 petent for any corporator to refuse his assent to any such engage- 
 ments, and thereby to render them inoperative.' 
 
 III. Commercial, and aippa/rently, all private corporations, 
 may voluntarily alienate the whole of their tangible assets. 
 
 This is the point considered in the last paragraph, formulated 
 and put into wider language. First. A commercial corporation 
 may convert its various species of personal property into money. 
 This was expressly so decided in Wilson v. Miers.* The action 
 
 ' Wilson V. Miers, 10 C. B. N. S. 348 ; * 10 C. B. N. S. 348. Here the trans- 
 
 Featherstonbangh v. Lee Moor, &e. Co. L. action was decided to be not ultra vires 
 
 R. 1 Eq. 318. in the primary sense. In Lord v. Copper 
 
 ' Id. Miners in England, 2 Ph. 740, a similar 
 
 ' Gregory v. Patohett, 33 Beav. 697; transaction for the purpose of liquidating 
 
 Ward V. Society of Attorneys, 1 Coll. the company's affairs was upheld against 
 
 370. See Simpson v. Westminster Palace i the wishes of a member. See Gregory ». 
 
 Hotel Co. 8 H. L. C. 712. Patchett, 33 Beav. 597. 
 
122 TRANSFER OF CONCERN. 
 
 was against the directors of a joint-stock company for an alleged 
 breacli of warranty arising thus : The defendants employed the 
 plaintiffs to find a purchaser for the whole of the company's ves- 
 sels. They (the plaintiffs) accordingly negotiated a sale with one 
 C. ; the negotiation, however, went off upon an objection raised 
 by C.'s solicitors, that the directors had no power to sell the whole 
 of the vessels ; and, thereupon, the plaintiffs brought their action 
 for their commission, £3,000, against the directors, averring an 
 implied warranty on the part of the latter that they had power to 
 sell, although, in fact, they had not. A verdict was entered for 
 the plaintiffs for the full amount claimed, but the Court of Com- 
 mon Pleas set it aside. Erie, C. J., said : " I am of opinion that 
 the plaintiffs fail because as to the contract between the company 
 and C, I think it was a contract binding on the company, being 
 made under the general authority given to the directors to sell 
 their ships. The authority extended to sell some ships, and if 
 some, there is no rule of law limiting it to less than twelve [the 
 whole], or to a part only. The directors have the duty to protect 
 the general interests of the shareholders according to their judg- 
 ment. If the ships could only be navigated at a loss, they may 
 let, cease to navigate, or lay them up, or, if it would be more 
 profitable, sell." The decision being that the directors had au- 
 thority to sell, it follows a fortiori that their principals, the cor- ■ 
 poration itself, would have had at least an equal power. 
 
 Secondly. It may alienate temporarily the whole of its tangible 
 assets,' even in those cases where the assets are necessary to the 
 continued active existence of the corporation, and M'here, conse- 
 quently, by the alienation, such existence is for the time put into 
 abeyance. 
 
 This proposition is correct only under very peculiar circum- 
 stances ; but that there are cases where it is correct, is established 
 by Featherstonhaugh v. Lee Moor Porcelain Clay Co.' Here a 
 company was incorporated in the first place for " the working, 
 preparation, and sale of porcelain clay," with power, if it should 
 be deemed expedient after the original business had become de- 
 veloped, to combine " mining operations " with the original busi- 
 ness. By the company's deed it was provided that it should be 
 
 ' See, below, the qualiflcationa under ' L. R. 1 Eq. 318. 
 
 which this proposition holds good, p. 
 124. 
 
TEAITSFER OF CONCERN. 123 
 
 competent for any extraordinary general meeting, by a majority 
 of two-thirds in number of the shareholders, to empower and re- 
 quire the directors to bind the company, and every shareholder 
 thereof, to any act, deed, matter, or thing whatsoever which the 
 company, by virtue of its corporate capacity or otherwise, or aU 
 the shareholders together, would be enabled to make, do, or exe- 
 cute if the consent of every shareholder were given thereto ; also, 
 that the directors should have power to make contracts, and in 
 case it should be doubtful whether it was in the competence of 
 the directors to conclude any contract, the same might be submit- 
 ted to an extraordinary general meeting, and if sanctioned, should 
 be binding upon every shareholder, whether under incapacity or 
 not, in like manner as if every shareholder were sui juris and 
 had consented. The company obtained leases of land for ninety- 
 nine years, commenced business in 1852, and paid one dividend 
 and no other, the undertaking not turning out successful. 
 
 It was held that after a period of nine years of unsuccessful 
 working, a majority of two-thirds of the shareholders in general 
 meeting was empowered, under the above clauses, to authorize the 
 directors to make a valid mining lease for twenty-one years of the 
 whole of the works and buildings of the company. 
 
 Page Wood, Y.-C, said : " The test, at least for the purposes 
 of this case, may well be : Have the company, by this act which 
 they intended to carry into effect by force of the clause, either on 
 the one hand abandoned their purposes (these were the two cases 
 put by Lord Campbell), or, on the other hand, exceeded their pur- 
 poses ? Have they done either one or the other ? It appears to 
 me they have not abandoned the purposes of the company ; they 
 have granted a lease for twenty-one years, and so far, they have 
 agreed to take a rent for their property instead of working it 
 themselves and taking the profit. At the end of twenty-one years 
 they are to have the whole of the property back, and as it appeared 
 to them (that is the true way to put it, for they are the sole judges 
 on that part of the case), they would have it back in a more profit- 
 able condition at the end of the twenty-one years. They have not 
 exceeded their powers, because nobody can contend that parting 
 with their property for a certain time is exceeding their powers 
 beyond this, that during all that time they are not carrying on the 
 business." 
 
 But the last two decisions do not go far enough to establish 
 
124 TRANSFER OF CONCERN. 
 
 the proposition in its entirety. The question is, can a corpora- 
 tion always alienate absolutely, that is, convert into money, the 
 whole of its assets, real as well as personal ? This has been so 
 decided with regard to personal chattels. Therefore the answer, 
 it is submitted, must be the same as to realty and chattels real. 
 Perhaps, however, such a proceeding, though not ultra vires in 
 the strict sense, would be so, special circumstances apart, in the 
 secondary sense, i. e., would be a transaction to which any mem- 
 ber could refuse his assent. 
 
 IV. Thirdly. £ut t?te two propositions immediately preceding 
 are correct only if a/nd so far as the transactions 
 
 (1) Are expressly authorized or allowed impliedly by the na- 
 ture of the business ; (2) are called for by the urgent necessities of 
 the case ; (3) do not constitute a peculiar hardship to or otherwise 
 specially infringe upon the rights of individual corporators, (a) 
 
 (a) Upon the subject discussed in this section the American authorities are not in 
 harmony. Sharswood, J., in Wood v. Bedford R. R. Co. 8 Phila. 94, says, that a 
 " corporation, unless specially restricted by its charter or some statute, has general 
 power to dispose of its property, the whole or part, but that it has no right to sell or 
 assign its franchise either in whole or in part, unless authorized by law." The latter 
 part of this statement seems to be very generally supported by the authorities. 
 Franchises are parts of the sovereign power delegated to a subject, and privileges to 
 which other citizens are not entitled. In such grants the State regards the character 
 of the grantee, and the guards and restrictions placed upon the artificial body when 
 the grant is to a corporation, the members of which are continually changing. So, 
 in Richardson v. Sibley, 11 Allen, 67, it is said, that "a corporation created for the 
 very purpose of constructing, owning and managing a railroad, for the accommoda- 
 tion and benefit of the public, cannot, without distinct legislative authority, mate 
 any alienation, absolute or conditional, either of the general franchise to be a corpo- 
 ration, or of the subordinate franchise to manage and carry on its corporate busi- 
 ness, without which its franchise to be a corporation can have little more than a 
 nominal existence.'' To the same effect are Middlesex R. R. Co. «. Boston, Ac. R. E. 
 Co. 115 Mass. 347 ; Commonwealth v. Smith, 10 Allen, 465 ; Pierce v. Emery, 32 N. 
 H. 804 ; York & Md. Line R. R. v. Wiuans, 11 How. 39 ; Hall v. SuUivan R. R. Co. 
 21 Law Reporter, 140 ; s. o. 2 Redf. Ry. Cas. 621. 
 
 But all authorities do not assent to the first part of Judge Sharswood's statement 
 of the law. Thus, Story, J., in a dissenting opinion, concurred io by Justices Bald- 
 win and McLean, in Beastou v. Farmers' Bank, 12 Peters, 102, says : " Independent 
 of some special and positive law, or provision in its charter to such an effect, I do ex- 
 ceedingly doubt if any corporation, at least without the express assent of all the cor- 
 porators, can rightfully dispose of all its property by such a general assignment, bo 
 as to render itself incapable in future of performing any of its corporate functions." 
 So, also, in Black v. Del. <fe Rar. Can. Co. 22 N. J. Eq. 399, the Chancellor says : " It 
 
TRANSFER OF CONCERN. 125 
 
 may be considered as settled, that a corporation cannot lease or alien any franchise, 
 or amy property necessary to perform its obligations and duties (o the State without 
 legislative authority," and he cites a long list of cases to support this statement. 
 
 In Treadwell v. Salisbury Mfg. Co. 1 Gray, 404, » distinction is made in this re- 
 spect between guost-public and private corporations. It is said : " Corporations 
 established for objects ywosi-public, such as railway, canal and turnpike corporations, 
 to which the right of eminent domain and other large privileges are granted in order 
 to enable them to accommodate the public, may fall within the exception ; as also 
 charitable and religious bodies, in the administration of whose a£fairs the community 
 or some portion of it has an interest to see that their corporate duties are properly 
 discharged. Such corporations may, perhaps, be restrained from alienating their 
 property, and compelled to appropriate it to specific uses, by mandamus or other 
 proper process. But it is not so with corporations of a private character, established 
 solely for trading and manufacturing purposes. Neither the public or the Legisla- 
 ture have any direct interest in their business or its management. These are com- 
 mitted solely to the stockholders, who have a pecuniary stake in the proper conduct 
 of their affairs." 
 
 It is important to distinguish between the restrictions upon the power of transfer 
 growing out of the relation between the corporation and the State, and those grow- 
 ing out of the rights of stockholders. These restrictions seem to be more or less 
 confused in the authorities. What has been said in this note applies to the former. 
 The question whether a transfer is valid as against stockholders depends mainly upon, 
 the principles which have been heretofore consideredin connection with the subject 
 of alteration and extension of business (see ante, p. 96, note). See, especially, Kean 
 V. Johnston, 9 N. J. Eq. 401 ; Lauman v. Lebanon "Valley R. R. Co. 30 Penn. St. 42. 
 In Treadwell v. Salisbury, supra, the opinion is expressed that a corporation, as a 
 method of winding up its affairs, may sell all its property for stock in another corpo- 
 ration, to be distributed among its own stockholders who are willing to take them. 
 
 When the rights of creditors are considered, a further point is to be borne ia 
 mind. A corporation may transfer its property, under some restrictions, but the 
 proceeds of such property must not be divided among stockholders, if such division 
 will reduce the capital stock below the amount required. As against creditors, only 
 profits can be divided. See post, chapter on " Profits." Upon the question of alien- 
 ability of property, see, further, PuUan v. Cincinnati R. R. Co. 4 Biss. 35 ; Rollins 
 V. Clay, 33 Me. 132; Stevens v. Willard, 43 Vt. 692 ; Conro v. Port Henry Iron Co. 
 12 Barb. 27 ; Copeland «. Citizens' Gas-light Co. 61 Barb. 60 ; Meade «. Insurance 
 Co. 61 How. Pr. 1 ; Taylor t/. Earle, 16 N. T. Sup. Ct. 1 ; Randolph v. Lamed, 21 
 N. J. Eq. 657 ; Dana v. Bank of U. S. 6 W. <fc S. 223 : Union Bank of Tenn. v. Elli 
 cott, 6 G. (fe J. 363 ; Arthur v. Com. & R. R. Bank, 17 Miss. 394; New Orleans, <fcc. 
 R. R. Co. V. Harris, 27 Miss. 617; Smith v. St. Louis, <fec. Ins. Co. 2 Tenn. Ch. 727 
 Reynolds v. Com'rs of Stark Co. 6 Ohio, 204; Hays v. Ottawa, <fec. R. R. Co. 61 111. 422 
 Hatcher v. Toledo, <fec. R. R. Co. 62 IlL 477 ; Bank Com'rs v. Bank of Brest, Harr. 
 Ch. 106; Town v. Bank of River Raisin, 2 Doug. (Mich.) 541. Also, consult the 
 Companies' Act, 26 & 26 Vict. Ch. 89, 1862, s. 161, and cases cited in notes to Buck- 
 ley's Law and Practice under Companies' Acts, 2d ed. p. 320. And see post, note on 
 Mortgaging in chapter on " Borrowing," and n ote on Consolidation. Quaere : How far 
 should the old theory of inalienability of franchises be changed in view of the policy 
 of general laws for incorporations and for public works, making the granting of 
 franchises no longer a special privilege, but open to all who comply with the terms 
 required by such general laws ? 
 
CHAPTEE IV. 
 
 SHARES AND STOCK. 
 
 Section I. — Oedinaet Shares — Membership. 
 
 Membership in all the corporations possessing a capital, is 
 constituted by the legal ownership of a portion of the capital, 
 whether as shares or as stock, (a) Membership may be con- 
 veniently viewed as of two kinds : — First, full or perfect, when 
 everything has been done both to vest in the member the legal 
 title to the capital in question, and also to give him the complete 
 rights in respect thereof ; or, secondly, imperfect or inchoate mem- 
 bership, when the intending member has entered into such an 
 arrangement that he can be compelled by the company or the 
 person with whom he has contracted, or by the creditors of the 
 company, to become a nfember, but he has not yet actually fulfilled 
 all these requisites. The distinction carries with it many im- 
 portant results. Inchoate members are, for most purposes of gov- 
 ernment or interference in the affairs of the company, not mem- 
 bers. Nevertheless upon proceedings being taken by creditors of 
 the company, e. g., in a winding up to enforce their rights against 
 the individual shareholders, in the ease of companies whose mem 
 bers are under such personal liability for the corporate debts, 
 inchoate and full members will generally be under the same 
 liability. It is in these latter cases that the chief questions have 
 arisen. 
 
 (1.) Inchoate Mernhershijp. 
 
 The simpler plan will probably be to consider, first, what will 
 render a person contributory in a company governed by the Com- 
 
 (a) Each pereon in whose name stock stands on the books of a corporation is, as 
 to the corporation, a stockholder. State v. Ferris, 42 Conn. 660. The mere sub- 
 scribing for shares in an incorporated company does not constitute the subscriber a 
 stockholder, but entitles him to become one. Busey v. Hooper, 36 Md. 16. Slight 
 evidence of mutual recognition of the relation may establish the iialfux and liability 
 of a stockholder. Upton v. Burnham, 3 Biss. 431. See, also, Schseffer v. Missouri, 
 Ac. Ins. Co. 46 Mo. 248. 
 
ORDmARY SHARES— MEMBERSHIP. 127 
 
 panies' Acts 1862, and 1867, and then to take the case of other 
 joint-stock companies. The former of these statutes provides 
 that every person is a member " who has agreed to become a 
 member." 
 
 I. A binding contract to take shares is entered into iy an offer 
 in that hehalf being made, such offer accepted modo forma ^ 
 and the acceptance commumicated to the applicant or his 
 agent, (a) 
 
 It will be expedient to point out what will constitute a con- 
 
 (o) A corporation may receive aubscriptiona to atock, and may lay aaaeaamenta or 
 sue thereon, before being folly organized. Boston, <tc. R. R. Co. v. Wellington, 113 
 MasB. 79 ; Oregon, <fec. B. R. Co. v. Scoggin, 3 Oreg. 161. Snbacriptions cannot be 
 taken, or if taken create no obligation, until by-lawa directing the manner of aub- 
 Bcribing have been adopted, if the charter declares that the persona subscribing the 
 original articles, and thoae who subscribe to the stock in the manner to be provided 
 by the by-laws, shall be a body corporate. Carliale v. Saginaw Valley, &c. R. R. 
 Co. 27 Mich. 316. The engagement of a subscriber to the stock of a proposed cor- 
 poration is subject to the general principles of the law of contracts, in ao far that it 
 needs a consideration, which is generally the counter engagement to give him the 
 stipulated shares of the proportional value agreed for, in an enterprise faithfully 
 carried out so aa to be substantially the same as that described in the subscription 
 paper and any accompanying or referred to documents. The obligation to give 
 these shares ia concurrent with and gives support to the subscriber's obligation to 
 pay. Melvin v. Hoitt, 52 N. H. 61 ; Aahuelot Boot, <fec. Co. v. Hoitt, 66 N. H. 648 ; 
 Athol Music Hall Co. v. Carey, 116 Maee. 471 ; Parker v. Northern, <fec. R. R. Co. 33 
 Mich. 23 ; St. Paul, &c. R. R. Co. v. Robbins, 23 Minn. 439 ; First Nat. Bank v. Hur- 
 ford, 29 Iowa, 679 ; Mahan v. Wood, 44 Cal. 462. A subscription duly made and 
 accepted confers mutual rights of contract. Marsh v. Burroughs, 1 Woods, 463. 
 The rights of a corporation arising upon aubscriptions to its stock, are not incapable 
 of assignment, but may be enforced by one standing in .Ihe light of an assignee ; 
 such aa a company undertaking the enterprise and succeeding to the property and 
 franchise of a previous one. Morris v. Cheney, 61 III 461 ; Smith v. Hollett, 34 
 Ind. 619; Swartwoutw. Michigan, (fee. R. R. Co. 24 Mich. 404. The subscription must 
 embody the terms necessary to constitute a complete contract on both sides. A sub- 
 scription paper, in which the names of directors are left blank, or which contains no 
 promise to pay for the shares, cannot be enforced. Belfast, (fee. Ry. Co. v, Moore, 60 
 Me. 661 ; Dutchess, (fee. R. R. Co. v. Mabbett, 68 N. Y. 397 ; Bucher v. Dillsburg, 
 (fee. R. R. Co. 76 Penn. St. 806; Reed v. Richmond Street R. R. Co. 60 Ind. 342 j 
 Kansas City Hotel Co. ii. Hunt, 67 Mo. 126. Formal irregularities or defects, as 
 when a subscription to a proposed railroad does not correctly describe the terminii 
 of the road as built, do not avoid the subscription. Boston, (fee. R. R. Co. v. 
 Wellington, 113 Masa. 79 ; Cayuga Lake R. R. Co. v. Kyle, 64 N. Y. 185 ; 5 Thomp. 
 (fe C. 669. See, also. Phoenix Warehousing Co. v. Badger, 67 N. Y. 294 ; B. C. (fe 
 M. R. R. Co. V. Palmer, 42 Iowa, 222 ; Clark v. Continental Improvement Co. 67 Ind. 
 136. 
 
12S SHARES AND STOCK. 
 
 tract to take shares. First, a firm contract is made, enforceable 
 against either party, immediately that a proposal is offered for a 
 definite number of shares and such proposal, not being mean- 
 while withdrawn,^ is definitely accepted by or on behalf of the 
 company? (a) 
 
 The acceptance must always be communicated to the applicant, 
 unless he waives this requirement,' but, (1) this may be done 
 either directly * or indirectly ; ' (2) it may be dispensed with, of 
 course expressly, or impliedly by the form,* or other attendant 
 circumstances of the application ; ' and (3) it may be communicated 
 to any person constituted expressly' or impliedly,' by the appli- 
 cant his agent. 
 
 It should be remembered that what it is necessary to bring 
 home to the applicant's knowledge is — not a letter of allotment, 
 though of course this is best if it can be proved — but the fact of 
 allotment, the fact that his offer has been duly accepted.'" And 
 where the applicant directs expressly or impliedly " the acceptance 
 to be returned to him by post, the contract wiU be complete im- 
 mediately upon posting the letter,^ unless such letter has actually 
 not reached the allottee, and he gives some substantial reason 
 explanatory of its non-arrival." 
 
 Secondly. If the proposal be made subject to a condition 
 
 ' Hebb's Case, L. R. 4 Eq. 9 ; Wilson's « G. H. Levita's Case, L. R. B Oh. 489 ; 
 
 Case, 20 L. t (N. S.) 962. De Rosaz's Case, 21 L. T. (N. S.) 10. 
 
 » Tucker's Case, 20 W. R. 88 ; Blox- ' Cookney's Case, S De G. <fe J. 110. 
 
 tan's Case, 33 Beav. 629 ; 33 L. J. (Ch.) See Braginton's Case, 12 L. T. (N. S.) 
 
 674 ; Adam's Case, L. R. 13 Eq. 479. 269 ; Wallis's Case, L. R. 4 Oh. 326, n. ; 
 
 ' See following notes. Robinson's Case, L. R. 4 Ch. 330. 
 
 * Gunn's Case, L. R. 3 Ch. 40 ; British >» See Bloxam'a Case, 4 De G. J. <fe S. 
 
 and Amer. Telegraph Co. v. Colson, L. R. 447 ; Gunn's Case, L. R. 3 Ch. 40 ; 
 
 6 Ex. 108 ; Robinson's Case, L. R. 4 Ch. Crawley's Case, L. R. 4 Ch. 322 ; Rioh- 
 
 330. ards v. Home Ass. Assoc. L. R. 6 C. P. 
 
 ' Crawley's Case, L. R. 4 Ch. 330 ; 691. 
 Ward's Case, L. R. 10 Eq. 669; Wheat- " Wall's Case, L. R. 16 Eq. 18. 
 croft's Case, 29 L. T. (N. S.) 324 ; Davies' " Harris's Case, L. R. 7 Ch. 687 ; 
 Case, 41 L. J. (Ch.) 659 ; Gorrisseu's Townsend's Case, L. R. 13 Eq. 148. Con- 
 Case, L R. 8 Ch. 507. ira, British and Amer. Telegraph Co. v. 
 
 « Tucker's Case, 20 W. R. 88. Colson, L. K. 6 Ex. 108. 
 
 'Cookney's Case, 3 De G. & J. 170; '^ p-inu^ane's Case, 17 W. R. 818; 
 
 Davies' Case, 41 L. J. (Ch.) 659; Goriis- Reidpath's Case, L. R. 11 Eq. 86. See 
 
 sen's Case, L. R. 8 Ch. 507 ; and cases in contra, Wall's Case, L. R. IB Eq. 18 ; and 
 
 notes 11 4 12. Compare Sahlgreen and Townsend's Case, k6j taora. 
 CarraU's Case, L. R. 3 Ch. 323. 
 
 (ffl) Where a subscription is on conditions, especially, acceptance is necessary. 
 Junction, <fec. E. R. Co. v. Reeve, 16 Ind. 236 ; Bedford R. R. Co. v. Bowser, 4ff 
 Penn. St. 29 ; Cass v. Pittsburg, <fcc. R. E. Co. 80 Penn. St. 31. 
 
ORDINARY SHARES— MEMBERSHIP. 129 
 
 precedent which is not performed/ or subject to other stipulations 
 which have not been carried out,' or if the acceptance contain new 
 terms or do not in all respects agree with the proposal,' there will 
 be no contract — ^unless indeed the condition, variation, &c., be 
 waived, usually by laches and lapse of time.* (a) 
 
 ' Alabaster's Case, L. R. 'J Eq. 273 ; Ch. 633. See, also, the fourth section of 
 
 Exparte Wood, \,. R. 16 Eq. 236 ; Dou- these remarlis, post, p. 130. 
 gan's Case, L. R. 8 Ch. 640. Compare ' Jackson v. Turquand, L. R. 4 H. L. 
 
 Dixon V. Evans, L. R. 8 H. L. 606 ; Per- 306; Roberts' Case, 1 Drew. 204; Beck's 
 
 rett's Case, L. R. 16 Eq. 260. Case, L. R. 9 Ch. 392; Harris's Case, L. 
 
 5 Wood's Case, 8 De G. <fe J. 86 ; B. 7 Ch. 687. 
 Shackleford's Case, L. R. 1 Ch. 667 ; * Wheatcroft's Case, 29 L. T. (N. S.) 
 
 Rogers' Case, Harrison's Case, L. R. 3 324. See Gorrissen's Case, L. R. 8 Ch. 
 
 507. 
 
 (a) Conditions must be open and made bona fide to be valid. Subscriptions made 
 for the fraudulent purpose of evading the provisions of the charter, to which, by 
 private agreement with the directors, conditions are added, will be enforced as if 
 unconditional. Minor v. Mechanics' Bank, 1 Peters, 46. Likewise, private agree- 
 ments not expressed in the subscription papers, giving peculiar privileges to the 
 subscriber, are fraudulent upon the other subscribers, and are therefore null. White 
 Mts. R. R. Co. 1). Eastman, 34 N. H. 124; Mann ». Cooke, 20 Conn. 178 ; Mann v. 
 Currie, 2 Barb. 294; Graff ». Pittsburgh, &c. R. R. Co. 31 Penn. St. 489; Robinson v. 
 P. <fe C. R. R. Co. 32 Penn. St. 334; Bavington v. P. A S. R. R. Co. 34 Penn. St. 368 ; 
 New Albany A S. R. R. Co. v. Fields, 10 Ind. 187; Downie v. White, 12 Wis. 176; 
 1 Red£eld on Railways, § 48. Under statutes in Pennsylvania, requiring that a 
 certain amount be subscribed to commissioners appointed, before a charter is granted, 
 a condition attached to a subscription made before organization is void, and the sub- 
 scription is treated as absolute. Bavington v. Pittsburgh R. R. Co. 34 Penn. St. 358 ; 
 Pittsburgh & S. R. R. Co. v. Biggar, Id. 466 ; Same v. Woodrow, 3 Phila. 271 ; Pitts- 
 bnrgh <b C. R. R. Co. v. Stewart, 41 Penn. St. 64; Bedford R. B. Co. ». Bowser, 48 
 Penn. St. 29. See, also, the following cases, which make a distinction in favor of sub- 
 scriptions after organization: Erie & Waterford Plank-road Co. v. Brown, 26 Penn. 
 St. 166 ; Phila. & W. Chester R. R. Co. v. Hickman, 28 Penn. St. 318 ; McCarty v. S. <t 
 N. B. R. R. Co. 6 Reporter, 665. Under statutes in New York, concerning railroad 
 and turnpike companies, preliminary subscriptions must be absolute; conditional 
 iubscriptiom are void. Troy <fe Boston B. E. Co. v. Tibbits, 18 Barb. 297; Butter- 
 nuts <fe 0. Turnpike Co. v. North, 1 Hill, 618; Fort Edward Plank-road Co. v. Payne, 
 1 6 N. Y. 683. In general, however, conditional subscriptions may be received when 
 not forbidden by the charter, and on performance of the conditions they become ab- 
 solute. Chamberlain v. Painesville R. R. Co. 16 Ohio St. 226 ; Ashtabula, <bc. R. R. 
 Co. V. Smith, 16 Ohio St. 328; Penobscot R. R. Co. v. White, 41 Me. 512. Subscripl 
 tions may thus be qualified as to time, manner or means of payment, or made to de- 
 pend upon the location of a road in a certain place, or within a certain time, or upon 
 the subscription of a certain amount to the capital stock. Penobscot R. R. Co. u. 
 Dunn, 39 Me. 687 ; Boody v. Rutland R. R. Co. 24 Vt. 660 ; Peoples' Ferry Co. v. 
 Balch, 9 Gray, 314 ; Ridgefield, (fee. R. R. Co. v. Brush, 43 Conn. 86 ; Brewers' Fire Ins. 
 Co. V. Burger, 17 N. Y. Supm. Ct. 66 ; Cass v. Pittsburgh, Ac. By. Co. 80 Penn. St. 81 ; 
 Phillips V- Covington Bridge Co. 2 Mete. (Ey.) 219; Milwaukee A N. 111. R. R. Co. 
 9 
 
130 SHA.RES AND STOCK. 
 
 But a mortgagee of shares is, as regards the company, an abso- 
 lute and not merely a conditional holder thereof. Even if the 
 shares have been issued to him as a security for a loan to the com- 
 pany, accompanied witb a proviso that upon repayment the com- 
 pany shall take back the shares, nevertheless the unfortunate 
 mortgagee will be full owner of such shares, and, npon winding 
 up, will be placed upon the list of contributories.^ 
 
 Many of the cases under this bead have arisen out of agree- 
 ments to supply materials to or to do work for the company, tak- 
 ing payment therefor in shares.** In all the instances of this de- 
 scription, the question is whether or not the application was con- 
 ditional.^ 
 
 It should also be noticed that agreements to " place shares " 
 are usually not agreements to take them,* though, of course, upon 
 breach, the party may be liable in damages to the company or its 
 liquidator. 
 
 But where promoters represented that a certain amount of 
 capital had been subscribed for, they were fixed as contributories 
 in respect of shares up to that amount. ° 
 
 Thirdly. A condition or clause in the constating instruments, 
 that a share shall not be issued to, or even shall not vest m^ an 
 applicant till he shall have paid a certain portion of the amount, 
 does not render an application conditional, but it merely restricts 
 the allottee's rights of property and of transfer.' 
 
 Fourthly, If the proposal has been definitely agreed to, and it 
 then turns out that some of its conditions are ultra tiwes^ or are 
 otherwise impossible of execution,' it may be broken off and re- 
 
 ' Addison's Case, L. R. 5 Oh. 294. « McEuen v. West London Wharves, 
 
 See Manchester Finance Co.'s Case, 22 <fcc. Co. L. R. 6 Cb. 665. 
 W. R. 41 ; Southeastern Ry. Co.'s Claim, ' Id ; Purdey's Case, 16 W. R. 660; 
 
 L. R. 14 Eq. 10. See post, p. 140. East Gloucestershire Ry. Co. -u. Barthol- 
 
 ' Stace and Worth's Case, L. R. 4 Ch. omew, L. R. 3 Ex. 15. See Morton's 
 
 682; Brldger's Case, L. R. 5 Ch. 306; Case, L. R. 16 Eq. 104. 
 Thomson's Case, 34 L. J. (Ch.) 525. » Bunn's Case, 2 De G. F, & J. 276; 
 
 '' Per Cairns, L. J., in Elkington's Harnett's Case, L. R. 18 Eq. 607 ; 30 L. 
 
 Case, L. R. 2 Ch. 511, 522. T. (N. S.) 862. 
 
 * Gorrissen's Case, L. R. 8 Ch. 607. « Hartley's Case, L. R. 10 Ch. 187. 
 
 ' Moore and De la Torre's Case, L. R. See Barnett's Case, ubi supra. 
 18 Eq. 661. 
 
 tf. Field, 12 Wis. 340; Racine Co. Bank v. Ayers, 12 Wis. 612. See, also, Ticonio 
 Water Power Co. v. Lang, 68 Me. 480 ; Bucksport & Bangor R. R. Co. v. Buck, 68 
 Me. 81 ; Bucksport & Bangor R. R. Co. v. Brewer, 67 Me. 295 ; Santa Cruz R. E. 
 Co. V. Schwartz, 6 Reporter, 139 ; Goff v. Winchester College, 6 Bush, 443 
 
ORDINARY SHARES— MEMBERSHIP. 131 
 
 pudiated, certainly by consent of both parties, and probably at the 
 will of the applicant only.^ 
 
 Many of the cases have arisen in connection with invalid 
 amalgamations. The result is, that if the shareholder, to whom 
 shares in the new or proposed company have been allotted, 
 has not acted personally, but only through his own company or 
 directors ;' or if, having applied personally, he has clearly based 
 his application, and made it conditional, upon the validity and 
 completion of the contemplated amalgamation ; ' or if, having ap- 
 plied personally and not having so made it conditional, he has 
 nevertheless made it conditional upon other terms which have not 
 been fulfilled,* he will not be a shareholder in such other com- 
 pany. 
 
 But he will be so, if he has made such personal unqualified ap- 
 plication ^ or acceptance,' even though he referred to the amalga- 
 mation,' the result being to render him a member of both com- 
 panies. 
 
 Fifthly. If an application has been brought about by fraud, 
 the applicant may withdraw the same or repudiate the shares, if 
 allotted .'(a). But he must be prompt,' he cannot do so after a 
 winding up has commenced,*" and it is only the original shareholder, 
 not any transferee from him, who can thus repudiate." 
 
 Sixthly. The section enacts," in addition to the agreement, 
 " cmd whose name shall be on the register." But this requisite, 
 as abundantly appears from the preceding remarks, is purely di- 
 rectory. Persons are members by the mere agreement, though 
 their names are not registered. Moreover, by section 35, the regis- 
 ter may be rectified by inserting thereon the proper names, and 
 striking out others, and, by section 37, it is simply made prvma 
 facie evidence. 
 
 ' Pellatt's Case, L. R. 2 Ch. 627. « Central Ry. Co. of Venezuela x,. 
 
 ^ Alabaster's Case, L. R. 7 Eq. 273 ; Kisch, L. R. 2 H. L. 99 ; Smith v. Reese 
 
 Dougan's Case, L. R. 8 Ch. 640. See River Mining Co. L. R. 4 H. L, 64. 
 
 Staoe and Worth's Case, L. R. 4 Ch. 682. ' Peel's Case, L. R. 2 Ch. 674 ; Per- 
 
 ' London and Exchange Bank, 16 L. rett's Case, L. R. 15 Eq. 250; Ogllvie v. 
 
 T. fN. S.) 340. Currie, 37 L. J. (Ch.) 541. 
 
 * Wynne's Case, L. R. 8 Ch. 1002 ; '» Gates v. Turquand, L. R. 2 H. L. 
 
 Beck's Case, L. R. 9 Ch. 392 ; Nelson's 325. But see Waterhouse v. Jamieson, L. 
 
 Case, W. N. 1874, 197. R. 2 H. L. Sc. 29. 
 
 > Hare's Case, L. R. 4 Ch. 603. " Duranty'sGase,26Beav.268; Croom's 
 
 « Challis's Case, L. R. 6 Ch. 266. Case, L. R. 16 Eq. 417. 
 
 ' Cases in last two notes. '^ Ante, p. 127. 
 
 (a) See^os^, pp. 160-163. 
 
132 SHARES AND STOCK. 
 
 "With regard to the exactly similar provision contained in sec- 
 tion 8 of the Companies Clauses Consolidation Act, 1845, and the 
 requisites of the register as set forth in section 9, it has been de- 
 cided that the' requirements with respect to the names and addi- 
 tions of the shareholders ; ^ the number of shares and amount of 
 subscriptions paid on them ; ^ the authentication of all the entries 
 by seal ; ' and the time of sealing the register,* are all directory 
 merely. 
 
 It should also be mentioned generally with- regard to notice of 
 allotment, as with other formalities, that whether or not the non- 
 observance of this will vitiate an allotment to ordinary persons, it 
 will usually not have this effect with regard to directors,' audi- 
 tors,* or other officials of the company, since it is their duty to take 
 care that all formalities are fulfilled. 
 
 The Companies Clauses Act, 1846, defines, in section 2, the 
 word shareholder to mean shareholder, proprietor or member of 
 the company ; and, in section 8, it enacts that every person who 
 shall have subscribed the prescribed sum or upwards to the capital 
 of the company, or shall otherwise have become entitled to a share 
 in the company, and whose name shall have been entered on the 
 register of shareholders hereinafter mentioned, shall be deemed a 
 shareholder of the company.' 
 
 This provision, it will be noticed, is less extensive than that in 
 the Companies Act, 1862 — ^it is, " who shall have subscribed, &c.," 
 not merely ^' shall have agreed." It is, however, submitted that 
 the two enactments, as far as concerns inchoate membership, are 
 substantially the same, each amounting to this, that those persons 
 are inchoate members against or for whom a decree of specific 
 performance would be made in respect of an unexecuted contract 
 to become members.' 
 
 With regard to joint-stock companies which do not incorporate 
 the Companies Clauses Act, and which are not within the Companies 
 Acts, reference must be made to the constating instruments. These 
 
 ' London & Brighton Ry. Co. v. Fair- v. Hawksford, 11 C. B. (N. S.) 456 ; 31 L. 
 
 clough, 2 M. & G. 674. J. (C. P.) 184 ; 10 W. R. 153. 
 
 " Birmingham, Bristol <fc Thames Ry. ' Gunn's Case, L. R. 3 Ch. 40. 
 
 Co. V. Locke, 1 Q. B. 266. « Wheatcroft's Case, 29 L. T. (N. S.) 
 
 ' London Grand Junction Ry. Co. v. 324; see Empson's Case, L. R. 9 Eq. 597. 
 
 Freeman, 2 M. * 6. 606. ■" 8 <t 9 Vict. c. 16, s. 8. 
 
 * 'Wolverhampton New WVorks Co. ' See JEx parte Preston and Henry, 16 
 
 L. T. (N. S.) 496. 
 
ORDINARY SHARES— MEMBERSHIP. 133 
 
 ■will contain the necessary regulations determining what makes in- 
 choate membership, and what formalities, &c., have to be gone 
 through to perfect that state. In the absence of contrary specific 
 provisions, it seems clear that in every case the test of inchoate 
 membership will be that last set forth, viz., whether or not a de- 
 cree for specific performance could be obtained by or against a 
 company upon an arrangement which it is contended is an agree- 
 ment to become or be accepted a member. 
 
 Subject to the slight doubt as to what, in any particular case, 
 will constitute the requisite preliminaries now in statement, the 
 analysis already given of the essentials of a contract to take shares 
 in a company under the Companies Act, will probably be found to 
 be correct with reference to all joint-stock companies whatever. 
 
 1. There must be a proposal accepted and the acceptance com- 
 municated to the shareholder. Without these two facts there 
 would be no contract, and the taking of shares is but a contract, not 
 differing in this respect from other contracts. This, apart from 
 questions which may arise as to formalities, &c., will be sufficient, 
 but it is necessary.^ 
 
 2. Any facts in the nature of conditions must be duly per- 
 formed to render the application binding,' unless waived by the 
 party, whether the company or the applicant in whose behalf they 
 are imposed, either expressly or impliedly, or by the conduct of 
 the party subsequent to the application. And, of course, the ac- 
 ceptance must be simple and direct, and not contain new terms, 
 &c.,' and a fortiori a person who applies for shares in an under- 
 taking, cannot merely by force of such application be fixed as a 
 shareholder in another different undertaking.* (a) 
 
 ' See Thames Tunnel Co. o. Sheldon, v. Clifton, 6 Bing. 776 ; Duke v. Andrews, 
 
 6 B. (& C. 341 ; and the cases ante, p. 128. 2 Ex. 290. 
 
 ' New Brunswick, <fec. Ry. Co. v. Mug- * Galvanized Iron Co. v. Westoby, 8 
 
 geridge, 4 H. & N. 160 ; Moss «. Steam Ex.17. See contrary decisions : Nixon d. 
 
 Gondola Co. 17 C. B. 180. Brownlow, 8 H. <fe N. 686 ; Cork <fe Youg- 
 
 s Onion's Case, 1 Sim. (N. S.) 394 ; Fox hal Ry. Co. v. Paterson, 18 C. B. 44 ; Nor- 
 man V. Mitchell, 5 De G." M. h G. 648. 
 
 (a) Changes in the contract of subscription, after it has been signed, material al- 
 terations in the charter, or departure from the substantial important features of the 
 corporate organization as proposed to, aiid accepted by, the subscriber, or from its 
 purposes and plans, such as the majority of the directors would have in virtue of the 
 incorporation, and aside from limits drawn from the subscription, the power to ob- 
 tain or make, but which materially change the subscriber's engagement from its 
 terms and intention, will operate, if made without his assent, to discharge him from 
 
134 SHARES AND STOCK. 
 
 3. But stipulations, though in the nature of and analogous to 
 conditions, may not really be so, but only preliminaries to the 
 rights of property, &c.' 
 
 (2.) Completion of Membership. 
 
 The observations of the last few pages have been made with 
 especial reference to what will constitute inchoate membership — 
 to what will constitute such a state of facts as will enable either 
 party to insist upon the logical and legal completion of that st&te 
 of facts by converting it into full membership. 
 
 ' East Gloucestershire By. Co. v. Bar- tholomew, L. R. 3 Ex. 16 ; p. 130, notes 
 
 6 AT. 
 
 liability on his subscription. Nugent «. Supervisors, 19 Wall. 241; s. p. South 
 Georgia, &c. B. R. Co. v. Ayres, 66 Ga. 230; Hartford & N. H. R. B. Co. v. Crosswell, 
 6 Hill, 383 ; Dorris v. Sweeney, 60 N. Y. 463 ; Bery v. Marietta, Ac. By. Co. 26 Ohio 
 St. 673. So a change in the amount of capital stock will work a discharge. Hughes 
 ■V. Antietam Mfj^ Co. 34 Md. 316. So a change in the route of a road. Middlesex 
 Turnpike Co. v. Swan, 10 Mass. 384; but, contra, Del. B. B. Co. ti. Tharp, 1. Houst. 
 149. The same has been held of a change in the position of a bridge. Fremont 
 Ferry, &e. Co. v. Fuhrman, 8 Neb. 99 ; and see 1 Eedf. on Bailways, 193, ff. Changes 
 in the corporate affairs, authorized or contemplated by the charter and by-laws, 
 do not discharge a subscriber. Mowrey v. Indianapolis, Ac. B. B. Co. 4 Biss. 78; 
 s. p. Nugent d. Supervisors, 19 Wall. 241; Bishop v. Brainerd, 28 Conn. 289; 
 Hays V. Ottawa, Ac. E. B. Co. 61 111. 422 ; Ottawa, Ac. E. B. Co. v. Black, 79 HI. 262. 
 Changes which the directors or the majority have no power to make or carry 
 into effect, because they are ultra vires or fraudulent, do not release a subscriber ; his 
 proper remedy is a resort to the courts to restrain or vacate the unlawful act or pro- 
 ceeding. Hays II. Ottawa, Ac. B. B. Co. 61 111. 422 ; s. p. Ottawa, Ac. B. B. Co. v. 
 Black, 79 111. 262. Changes in matters of detail, not affecting the substantial nature 
 and material features of the engagement as intended and entered into by the subscri- 
 ber, will not release him. Nugent v. Supervisors, 19 Wall. 241 ; s. p. New Haven, Ac, 
 B. E. Co. V. Chapman, 38 Conn. 56. Abandonment of business is no defense to a 
 subscriber, if the corporation is indebted to more than the amount of the subscription. 
 Phoenix Warehouse Co. v. Badger, 67 N. T. 294. 
 
 As to the effect of failure to commence business or construct work, in the manner 
 or at the time contemplated, see First Nat, Bank v. Harford, 29 Iowa, 679, and Union 
 Hotel Co. V. Hersee, 16 Hun, 371. Mismanagement merely will not discharge a sub- 
 scriber. Chetlain v. Eepublic L. Ins. Co. 86 111. 220. As to waiver and estoppel in 
 this connection, see Oldtown A Lincoln B. E. Co. v. Veazie, 39 Me. 682; Bedford R. 
 E. Co. V. Bowser, 48 Penn. St. 29 ; May v. Memphis Br. E. E. Co. 48 Ga. 109 ; Mem- 
 phis Br. E. E. Co. V. Sullivan, 67 Ga. 240 ; Four Mile, Ac. E. B. Co. „. Bailey, 18 Ohio 
 St. 208. Seejcosi, p. 151. 
 
ORDINARY SHARES— MEMBERSHIP. 135 
 
 What are the necessary incidents of such completion will vary 
 indefinitely. The Legislature in the two most important of the 
 general joint-stock acts — the Companies Clauses Act, 1845/ and 
 the Companies Act, 1862,' — directs that a register shall be kept, 
 and a similar provision is found in those special acts incorporating 
 companies not within these two statutes. But the register is 
 seldom, if ever, conclusive evidence. It only raises a strong pre- 
 sumption ; and it is competent to show, on the one hand, that a 
 person is not a full member whose name is on the register,' and, 
 on the other, that persons not registered are full members.* 
 
 Other formalities there may be in the nature of conditions pre- 
 cedent, strictly so called, so that till the performance of them a 
 person is not a full member. These formalities, as far as the 
 present subject is concerned, relate to and afEect two distinct, 
 though allied matters, viz. : 
 
 1. What will amount to a substantial performance of them, so 
 as to entitle a person to the full rights of membership ? 
 
 2. What will be the effect of their non-observance ? 
 
 Now, first, it must be remarked that if there are any formali- 
 ties which are mere evidence, and in no sense conditions, then 
 manifestly, as far as que^ions of ownership are concerned, they 
 may be left out of consideration. Such, for instance, is the regis- 
 ter, which has just been referred to, the share certificate, &c., 
 which is usually given to shareholders,^ most of the internal regu- 
 lations appointed by companies themselves as to the transfer of 
 shares, &c.' 
 
 The non-observance must be examined with respect to the 
 exactly opposite conclusions : the rendering a person a shareholder 
 or not a shareholder. 
 
 In the first place, if a person claims to be a shareholder, or is 
 claimed as such, and does not legally repudiate the claim, then 
 after a time, undetermined and varying with the circumstances, he 
 
 < 8 <t 9 Vict. c. 16, SB. 8, 10-12, 28, 36. British Sugar Co. -S K. <t J. 408 ; Catch- 
 
 « 25 <fe 26 Vict. c. 89, 8. 26. pole v. Ambergate, <fcc. By. Co. 1 E. & B. 
 
 8 Waterford, <fec. Ry. Co. v. Pidcock, 8 111. 
 
 Ex. 279; Bain v. Whitehaven Ry. Co. 3 » gge Curling; v. Flight, 2 Ph. 613; 
 
 H. L. C. 1 ; Powis v. BuUer, 4 C. B. (N. S.) SWart v. Anglo-Calif. Gold Mining Co. 
 
 469. See, also, the cases cited in the 18 Q. B. 736. 
 
 notes to pp. 129-131. « See Langer's Case, 37 L. .1. (Ch.) 
 
 ■•Wolverhampton W'worka Co. ». 292 ; ^ porfe Sargent, L. R. 17 Eq. 273 ; 
 
 Hawtsford, 6 C. B. (N. S.) 336; 6 Jur. (IT. Weikersheim's Case, L. R. 8 Ch. 831 ; M 
 
 S.) 1104; Birch's Case, 2 De G. <t J. 10; parte Contract Corp. L. R. 3 Ch. 105. 
 
136 SHAKES AND STOCK. 
 
 will become a full member, his position not to be repudiated by 
 either himself or the company.* 
 
 Similarly the opposite result may occur. If a person enters 
 into an arrangement to become a member, and no further steps 
 are taken, the essential formalities, &c., not fulfilled, but the 
 whole matter left in abeyance, then, after a time, the affair will be 
 deemed off, and neither the company^ nor its creditors' can claim 
 such person as a shareholder, nor a fortiori can he himself claim 
 such position. 
 
 With regard to this second case there can be no doubt that 
 such an agreement can in this way be dissolved, but it seems also 
 quite clear that not only stronger and more conclusive evidence of 
 laches and acquiescence will be required than in the former case, 
 but in addition the laches and acquiescence must not be tainted 
 with fraud or collusion ; in other words, that while the slight evi- 
 dence of acquiescence, &c., will suffice to render valid an informal 
 agreement to take shares, yet to rescind such an agreement there 
 must be 
 
 {a) Clear evidence of such acquiescence, &c., as will justify the 
 presumption that the parties waived the contract ; and, 
 
 (5) An absence of fraud or collusion ; and it may be added 
 that these facts, which will be viewed somewhat strictly in favor 
 of the company, will be examined even more stringently when it 
 is a liquidator or creditor of the company who is attempting to fix 
 such individual with liability as a member.* 
 
 , , , .,, (3.) Effect of Cont/ract to iecome a Member. 
 
 In addition to the cases which have now been considered there 
 are numerous dthers which at first sight seem to resemble them 
 and to be governed by the same principles and yet are plainly ir- 
 reconcilable — cases of apparent informalities in connection with 
 the acceptance or transfer of membership and of apparent waiver 
 of such informalities, but where, nevertheless, the parties have been 
 fixed as members. 
 
 ' Sheffield, <fcc. Ry. Co. v. Woodcock, ' See the very instructive case of Bar- 
 
 7 M. &W. 674; Burnes v. Pennell, 2 H. gate v. Shortridge, 6 H. L. 0. 297. 
 L. C. 497. * Bargate v. Shortridge, 6 H. L. C. 
 
 « See Irish Peat Co. v. Phillie, 1 B. <fe 297 ; Beet's Case, 2 DeGt. J. A S. 660 ; 84 
 Sm. 698. L. J. (Ch.) 628 ; Murray v. Bush, L. E. 6 
 
 H. L. 87. 
 
ORDINAkr SHARES— MEMBERSHIP. 137 
 
 But upon a careful examination of these cases, it will be found 
 that the question involved is one not of form but of substance, 
 one not of the import of formalities but of the exercise of p6wers: 
 The three propositions following will probably cover all such 
 cases. 
 
 II. If a person has in any way whatever ieoome a full mem- 
 ier, or de facto vncv/rred an actual and not prospectwe 
 liahility as such^ his posiUon can he determined onJ/y, 
 either hy the due destruction of his liability hy the exercise 
 of a power in that iehalf where such jpower exists^ or ly 
 the substitution (fsome other responsible person in his own 
 stead? (a) 
 
 There is a recent case which must be noticed and which has 
 introduced a qualification of this proposition. This was Duke's 
 Case.* By the memorandum of association the capital of a com- 
 pany was divided into so many A. or ordinary shares, and so many 
 B. or preference shares, carrying a right to a preferential div- 
 idend. Duke subscribed the memorandum of association for 
 fifty B. shares. He afterwards became a director of the company, 
 and thinking it unfair to take his qualification entirely in prefer- 
 ence shares, applied for twenty-five A. shares and twenty-five B. 
 shares, and those shares were allotted to him. Jessel, M. R., held 
 that Duke was a contributory for twenty-five A. and twenty-five 
 B. shares only. He said : " The memorandum is also a contract inde- 
 pendently of the act of parliament ; but then as regards those terms 
 of the contract, which the act does not require to be stated, it is 
 irrevocable. It is irrevocable as regards the number of shares, by 
 which, I think, is meant the proportion of capital to be taken by 
 the subscriber ; but all that the act requires of Mr. Duke to do is to 
 
 appear on the register as the holder of fifty shares. He does so ap- 
 
 / 
 
 ' E. g., by sigming the memorandum ^ j^ g^ |,y transfer of hia shares arid 
 
 of association uader 26 <fc 26 Vict. c. 89, the entry of transferee's name on the 
 
 s. 23, Evans' Case, L. R. 2 Ch. 427 ; Sid- company's books. See Curtis'a Case, L. R. 
 
 ney's Case, L. R. 13 Eq. 228. 6 Eq. 456 ; Heritage's Case, L. R. 9 Eq. 
 
 ' ^. 5^., by forfeiture, &c., see sect, viii 6; and pir Giffard, L. J., in Addison's 
 
 of this chapter. Case, L. R. 5 Ch. 294, 297. 
 
 * 1 Ch. D. 620. 
 
 ., (o) When selling out, or transferring his shares, by a subscriber, will relieve him 
 from further action upon his subscription, — see Burke v. Smith, 16 Wall. 390; Isham 
 k Buckingham, 49 N. T. 216. 
 
138 SHARES AND STOCK. 
 
 pear ; he holds twenty-five A. shares and twenty-five B, shares. 
 Of course the shares for which the subscriber of the memorandum 
 appears on the register must not be of a totally different kind from 
 those for which he subscribed ; but here there is no difference as 
 regards creditors ; the only difference is as regards the other share- 
 holders of the company ; in fact, Mr. Duke has given up the right 
 to a preferential dividend on twenty-five out of the fifty shares for 
 which he subscribed the memorandum." 
 
 III. If a full member has heen relieved of his sha/res, or if cm 
 inchoate member has been discharged from, his agreement, 
 by persons — the company ck its directors— purporting to 
 act in virtue of a power in that behalf, and there is no such 
 power, so that the defect is one of power not of formality, 
 the transaction is simply void and the liability remains. 
 
 IV. If an informality has been waived by persons assuming 
 to represent the compa/ny, and these persons have no such 
 power whether general or ad hoc to bind the company, then 
 
 the company will not be bound thereby, and per conse- 
 quentiam the waiver will be a nullity and the liability {or 
 non-Uability) will remain. 
 
 Here the question involved does not concern the company at 
 all directly but only through its agents, and it is a mixed one of a 
 power and its mode of exercise. It is assumed that the agent has 
 a power somewhat applicable to the transaction in statement re- 
 quiring in its exercise certain essential formalities, but has not ex- 
 ercised it with those due formalities and with bona fides, and has 
 subsequently attempted to ratify, waive, acquiesce in, or condone 
 the defect. It is quite clear that the company will not be bound 
 till it is itself affected with knowledge and acquiescence. 
 
 (4.) Anomalous Membership. 
 
 Various special forms of membership remain to be noticed — 
 cases where the persons had originally no intention to become 
 members, but where, on account of the possession of shares or 
 stocks, they have in contemplation of law become so. 
 
 1. Trustees. — "When a company purchases shares, they are very 
 generally transferred into the name of a trustee for itself. In 
 
OKDINART SHARES— MEMBERSHIP. 139 
 
 such case tlie trustee is, under the Companies Acts, the person 
 immediately liable in respect of the shares so standing in his 
 name. The Companies Act, 1862, enacts in section 30 : " No 
 notice of any trust, expressed, implied, or constructive, shall be 
 entered on the register, or be receivable by the registrar, in the 
 case of companies under this Act, and registered in England or 
 Ireland." This section though not as wide as the corresponding 
 one of 19 & 20 Vict. c. 47,* which was that no notice of a trust 
 should be receivable, has been construed as meaning that the 
 only person, trustee or not, who can be recognized by a com- 
 pany is the one actually on the register, whether proceedings be 
 had in equity ' or at law.' Such trustee is therefore directly and 
 personally liable.* 
 
 This much is quite clear. Possibly the section will not be 
 extended beyond fixing the de facto member with liability, so 
 that, in other respects, the rights of a cestui que trust must be 
 recognized, e. g., if he directs the company not to pay dividends 
 to the trustee.' 
 
 It is, of course, precisely the same if the word " nominee " be 
 employed, as it often is. Such person is in aU respects a trustee.^ 
 
 This applies equally to the trustee of a private individual who 
 is under the same liability, as well appears by Chapman and Bark- 
 er's Case.' Here a shareholder in a company borrowed money of 
 it, and transferred some shares to a nominee of the company as a 
 security for the loan ; and he was placed on the list of contribu- 
 tories without prejudice to any right which he might have to be 
 indemnified by the company. 
 
 In all cases the liability of the trustee is unqualified — is not 
 limited to the amount of the trust estate.' 
 
 ' See sect. 19; Ex parte Stewart, 34 ' Cragg v. Taylor, L. R. 1 Ex. 148 ; 
 
 L. J. Bk. 6 ; 13 W. R. 356. In the Com- ibid. 2 Ex. 131. 
 
 panies Clauses Consolidation Act, 1848, * Unless peculiar countervailing equi- 
 
 sect. 20, the words are : " The company ties arise, as in Saunder's Case, 2 De G. 
 
 shall not be bound to see to the execution J. <fe S. 101 ; or the trustee has specially 
 
 of any trust, whether express, implied, or provided against personal liability, as ia 
 
 constructive, to which any of the said Gray's Case, 1 Ch. D. 664. 
 shares may be subject," and the receipts ' See Binney v. Ince Hall Coal Co. 35 
 
 of the trustees are to be sufficient dis- L. J. (Ch.) 363. 
 charges, &c. * See Ex parte Isaac Bugff, 2 Dr. ife 
 
 ' Chapman and Barker's Case, L. R. 3 Sm. 452 ; King's Case, L. R. 6 Ch. 196. 
 Eq.Sei ; Universal Banking Corp. e. p. ' L. R. 3 Eq. 361 ; and see note above. 
 
 Challis, 16 W. R. 451 ; IV L. T. (N. S.) ' Hoare's Case, 2 J. & H. 229; Leif- 
 
 637; Easum's Case (Alb. Arb.), 15 Sol. child's Case, L. R. 1 Eq. 231. 
 J. 750. 
 
140 SHARES AND STOCK. 
 
 But under some circumstances, and indirectly, the cestui que 
 trust is sometimes brought into immediate contact with • the 
 company, e.ff., by being rendered liable for the shares which 
 his trustee has been unable to pay for.* This also occurs where 
 the trust is merely a device to escape liability and yet obtain the 
 benefit.' 
 
 But a trustee is entitled to be recouped by his cestui que 
 trust for any payments which he may have to make on account 
 of the same,' and in the event of a winding up, he can prove 
 for all his liabilities present and future, arising from the said 
 shares, without regard to his indebtedness to the company on 
 other grounds.'' 
 
 A trustee for a married woman is entitled to indemnity out of 
 her separate estate,* unless there is restraint against anticipation.' 
 
 2. Executors form another class. As to their testator's shares, 
 there is no necessity for them to render themselves personally 
 liable thereon. The Acts ' presume that they will not become 
 so liable, and it is only acts amoimting to personal dealing,' not 
 proceedings rendered necessary, e. g., the acceptance of dividends 
 in the administration of the estate,' by their position, which will 
 fix personal liability. 
 
 But in every case the acceptance of new shares is a personal, 
 not a representative acceptance, even though applied for, allotted, 
 and accepted in the latter character.'" 
 
 3. Mortgagees will also similarly be responsible for the pay- 
 ments due on account of the mortgaged shares." Thus in He Pat- 
 ent Paper Mfg. Co., Addison's Case," shares had been issued to 
 Addison as a security for a loan to the company, and on repay- 
 
 ' Hemming v. Maddiok, L. B. 1 Ch. ' 8 & 9 Vict. c. 16, s. 21; Companies 
 
 396; National Financial Co., ex parte Ori- Act, 1862, sg. 16, 96, 105. 
 
 ental Bank, L. R. 8 Ch. 791. Compare » See Hall's Case, 1 Mac. & G. 307; 
 
 James v. May, L. R. 6 H. L. 328. Alexander's Case, 15 Sol. J. 788, and 
 
 ' Cox's Case, 4 De G. J. dc S. 63 ; cases in next note. 
 
 Chinnock's Case, John. 714, and similar ' £x parte Doyle, 2 H. cSc J. 221 ; 
 
 cases of fictitious transfers; Pugh and Hamer's Devisees, 2 De G. M. & 6. 366, 
 
 Sharman's Case, L. R. IS Eq. 666. 371 ; Bulmer's Case, 83 Beav. 436. 
 
 * Hoare's Case, 2 J. AH. 229 ; Cruse '» Spence's Case, 17 Beav. 203 ; Fearn- 
 V. Paine, L. R. 4 Ch. 441 ; see Hemmings side and Dean's Case, Dobson's Case, L. 
 I). Maddick, L. R. 7 Ch. 396. R. 1 Ch. 231. See Jackson v. Turquand, 
 
 • ■* Re National Financial Co., ex parte L. R. 4 H. L. 305 ; Mallorie's Case, L. R. 
 
 Oriental Commercial Bank, L. R. 3 Ch. 2 Ch. 181. 
 
 791. " Price and Brown's Case, 3 De G. 4 
 
 ' Butler V. Cumpston, L. R. 7 Eq. 16. Sm. 146 ; Royal Bank of India's Case, L. 
 
 • Sheriff!). Butler, 14 W. R. 629 ; 12 R. 4 Ch. 252. 
 
 Jnr. (N. S.) 329. " L. R. 6 Ch. 294. 
 
ORDINARY SHARES— MEMBERSHIP. 141 
 
 ment they were transferred to a trustee for the company, but the 
 company having no power to buy its own shares, Addison was 
 eight years later placed on the list.^ (a) 
 
 In Weikersheim's Case,^ the facts were : One of two partners 
 in a foreign firm of bankers, lent to L., in this country, a sum of 
 money, L. executing, by way of security, a transfer to the firm 
 of shares in a company, which was executed by the above-named 
 partner in the name of his firm, and the transfer was approved 
 of by the directors. L. at that time held transfers of a corres- 
 ponding number of shares, but the transfers were not registered. 
 Sometime afterwards the transfer deeds were left at the office 
 of the company, and the transfers were registered, the registra- 
 tion to the bankers being dated before the registration of the 
 transfers to L., and being in the name of the bankers as a firm. 
 The loan was afterward repaid, and the shares retransferred to 
 L. by the same partner, he executing the deed in the name of the 
 firm, and the transfer was duly registered. Within a year from 
 this time an order for winding up the company was made. It 
 was held, notwithstanding objections on account of informalities, 
 &c., that the firm of bankers were, in respect of these shares, lia- 
 ble as past members of the company. 
 
 It would seem that equitable mortgagees are not and cannot 
 be treated as shareholders.' 
 
 So e contrario, the mortgage by a director of his shares does 
 not take away his qualification.* 
 
 Moreover the rights of mortgagees are not altogether to be 
 ignored — a company must observe notices duly given to it,' of 
 mortgages or other liens," and successive incumbrances will rank 
 according to the time of giving such notice.' 
 
 ' With this case the decision in Jie * See Sx parte Boulton, 1 De G. <fe J. 
 
 South Eastern Ry. Co.'s Claim, L. R. 14 163. 
 Eq. 10, is scarcely reconcilable. ' Martin v. Sedgwick, 9 Beav. 333 ; 
 
 ' Be Land Credit Co. of Ireland, L. R. Newry, <fec. Ey. Co. v. Moss, 14 Bear. 
 
 8 Ch. 831. 64 ; Gumming v. Prescott, 2 T. &C. (Ex.) 
 
 5 Siohell's Case, L. R. 3 Ch. 119. 488. 
 
 * Cumming v. Prescott, 2 T. it C. (Ex.) ' Ibid. 
 
 488 ; Mc parte Littledale, 6 De G. M. A 
 G. 714, 728. 
 
 (o) A transferee of stock held as collateral is responsible, as if he were a full owner 
 of the same. Pullman v, Upton, 6 Otto, 328 ; Holyoke Bank v. Burnham, 11 Gush. 
 183 ; in re Empire City Bank, 18 N. Y. 223 ; Adderly v. Storm, 6 Hill, 624; Whee- 
 lock V. Koet, 77 III. 296. 
 
142 SHAKES AND STOCK. 
 
 4, Married women may be shareholders in respect of their 
 separate estate if the constating instruments do not forbid this ; * 
 and the husband will not be liable if the company have clearly 
 contracted directly and solely with the wife.** 
 
 Section II. — OEDmAEX Shakes — Payment. 
 
 The capital of a joint-stock company being an essential ele- 
 ment in its constitution, it is plainly inconsistent with this prin- 
 ciple, and with the general policy of the joint-stock com- 
 panies acts, that shares should be issued except for an equivalent 
 consideration. Capital which appears to be subscribed and 
 allotted, and is so styled, but for which a company has not 
 received any consideration, has evidently never had any tangible 
 existence. All proceedings tending to this end are discoun- 
 tenanced, and it may be stated broadly that : 
 
 I. Shares cannot validly be given away or otherwise allotted., 
 save for an equivalent in money or money's worth, (a) 
 
 > Matthe-wman's Case, L. B. 3 Eq. 781 ; Luard's Caae, 1 Be G. F. <fe J. 533. See 
 
 see Pugh and Sharman's Case, L. K 13 Dalton v. Midland Ry. Co. 13 C. B. 474 ; 
 
 Eq. 666. 22 L. J. (C. P.) 177. 
 
 '^ Angas's Case, 1 De G. A Sm. 660 ; 
 
 (a) This principle may be considered as established in this conntry, especially 
 since the ease of Upton v. TribUoock, 1 Otto, 46, where it is said : " The capital paid 
 in, and promised to be paid in, is a fund which the trustees cannot squander or give 
 away. They are bound to call in what is unpaid, and carefully to husband it when 
 received." In Van Cott «. Van Brunt, 2 Abb. N. C. 283, Gilbert, J., says : " The 
 capital stock of a corporation is a trust fund for the payment of its debts, and the 
 directors will not be permitted to waste it, either directly by releasing subscribers 
 from the obligations created by their subscriptions, or by receiving payment of 
 stock, issued without a subscription, in the form of property or services, at more than 
 a sum which a faithful trustee in the honest exercise of his judgment might deem 
 the just value thereof." See, also, Sanger v. Upton, 1 Otto, 45 ; Webster v. Same, 
 Id. 66; Sawyer v. Hoag, 17 Wall. 610; Ogilvie v. Knox Ins. Co. 22 How. 380; Put- 
 nam V. New Albany, 4 Bias. 366 ; Marsh v. Burroughs, 1 Wood, 463 ; Currier v. 
 Lebanon Slate Co. 66 N. H. 262 ; Bassett v. St. Albans, etc. Co. 47 Vt. 313 ; Tucker- 
 man V. Brown, 38 N. Y. 297 ; Boynton v. Hatch, 47 N. Y. 225 ; Schenck v. Andrews, 
 57 N. Y. 133 ; Sagory v. Dubois, 3 Sandf. Ch. 499 ; Hughes v. Antietam Mfg. Co. 84 
 Md. 316 ; Zirkel «. Joliet Opera House, 79 111. 334 ; Melvin v. Lamar Ins. Co. 80 111. 
 446 ; Osgood v. King, 42 Iowa, 478 ; Schae£fer v. Missouri, <fec. Ins. Co. 46 Mo. 248. 
 Any private agreement between subscriber and agent soliciting his subscription, that 
 he shall not be called on for payment, that in a certain event he shall be released, or 
 
ORDINARY SHA.RES— PAYMENT. _ 14S 
 
 The intention of the Legislature is, that the capital should 
 actually be subscribed in such a way as to give the company the 
 value thereof. Paid-up shares, however, are not unfrequently 
 issued by companies, bnt it necessarily follows that such an issue is 
 ull/ra vires, at least, to this extent, that the original parties taking 
 such shares will, on a winding up, be contributories in respect 
 thereof, unless they shall have given for them an equivalent in 
 money's worth,^ though it must be considered doubtful whether 
 lonajide transferees would also be liable.^ To relieve from the 
 payment in money, the consideration must be something given to 
 the company after it is formed ; what is given to it before its 
 formation will not do.* 
 
 Does this rule prevent the issue of shares at a discount or 
 under their nominal value ? (pi) Upon principle it would seem 
 
 ' Dmmmond'a Case, L. R. 4 Ch. 772 ; So. App. 29 ; Guest v. Worcester Rv. Co. 
 
 Pell's Case, L. R. 6 Ch. 11; Schroder's L. R. 4 C. P. 9; Spargo's Case, 1. R. 
 
 Case, L. R. 11 Eq. 131; Dent's and 8 Ch. 407 ; Bush's Case, L. R. 9 Ch. 554. 
 
 Forbes's Case, L. R. 8 Ch. 768. ' Re Baglau Hall Colliery Co. L. R. 5 
 
 ' See Waterhouse v. Jameson, L. R. 2 Ch. 346. 
 
 otherwise limiting his liability, is void against creditors of the company or their 
 representative; or even against the company if unauthorized by it. See Upton ij. 
 Tribllcock, 91 IT. S. (1 Otto), 45 ; Swartwout v. Michigan, <fec. R. R. Co. 24 Mich. 404 ; 
 Syracuse, &c. R. R. Co. v. Gere, 6 N. Y. Sup. Ct. 636 ; 4 Hun, 392 ; Graff v. Pitts- 
 burgh, <fec. R. R. Co. 31 Penn. St. 489. An agreement between the subscribers for 
 stock in a corporation, made in anticipation of its organization, and separate from, 
 but imposing conditions upon the subscription, itself absolute in its terms, such as 
 an agreement that the subscriber may pay In work, not in cash, cannot change the 
 character or obligations of the subscription. Ridgefield, <frc. R. R. Co. v. Brush, 4S 
 Conn. 86 ; White Hall, Ac. R. R. Co. v. Myers, 16 Abb. Pr. (N. S.) 34; Tuckerman v. 
 Brown, 33 N. Y. 297. It is held, in Osgood v. King, 42 Iowa, 478, that the oflBcers of 
 a corporation are chargeable with fraud, if they receive in payment for stock prop- 
 erty at a valuation known to be in excess of its real value, and in consideration 
 thereof issue paid-up certificates of stock. It is held, in Van Cott v. Van Brunt, 2 
 Abb. N. C. 283, that a holder of stock issued to him for work and materials will be 
 credited only with their actual value, and will be charged with the full value of the 
 stock. But in Foreman v. Bigelow (U. S. C. C. Mass.), 7 Reporter, 137, it is held 
 that where paid-up shares are issued for land at a fraudulent valuation, innocent pur- 
 chasers in open market are not liable. That a corporation may assign a contract of 
 subscription, as any other contract, for a valuable consideration, see Downie v. 
 Hoover, 12 Wis. 174, and cases in same volume affirming it, 
 
 (a) The sale of stock in a corporation by the directors at a less rate than the 
 price fixed in the charter is a fraud upon the law and the stockholders. Sturges v. 
 Stetson, 1 Biss. 246 ; Fosdick v. Sturges, 1 Bias. 255 ; Mann v. Cook, 20 Conn. 188 ; 
 Fisk V. Chic. R.'l. & Pac. R. R. Co. 53 Barb. 513; O'Brien v. Same, 53 Barb. 568 ; 
 
144 SHARES AND STOCK. 
 
 uot. Shares are issued merely to get money — so are debentures, 
 and these may be sold at a discount ^ — and the Companies Clauses 
 Act, 1863, allows such a proceeding with respect to shares and 
 stock.'' But the provisions contained in the 35th section of Com- 
 panies Act, 1867, impliedly prevents such a proceeding. 
 
 But though the general principles as above stated is now quite 
 established, yet difficulties may arise in the practical application 
 of it. In the first place : 
 
 II. A person who contracts to take shares of a/ny kind or under 
 any condition, can only he compelled to do exactly what he 
 has contracted to do. 
 
 This qualification, if such it be, is clear. A contract to take 
 shares is like any other contract — one which binds both parties to 
 what they have agreed, nothing more nor less. Consequently, 
 the first question is, has the person agreed to take paid-up' 
 shares and nothing else, or has he agreed in any event to take 
 shares, and to call and deal with them as paid up if and so far as 
 the law allows ? 
 
 The answer is all important in determining the liability. If it 
 be the affirmative to the former part of the question, then the 
 party is entitled to paid-up shares, and cannot be fixed with other 
 liability. This is well shown by the two cases following : In 
 Ashworth v. Bristol & North Somerset Ky. Co.,* by a written 
 agreement, the directors of a company agreed to transfer to the 
 plaintiff 6Y5 fully paid-up shares in the company as a seeurity for 
 moneys advanced by him on their promissory notes. They subse- 
 quently registered the plaintiff as the holder of 675 partly paid-up 
 shares. The plaintiff, being threatened with proceedings by judg- 
 ment-creditors of the company, applied to the court to rectify the 
 register and restrain the judgment-creditors from proceeding 
 against him at law ; and Wood, Y.-C, held that the company had 
 no authority to place the plaintiff on the register in any other 
 
 ' He Anglo-Danubian, &o. Co. L. R. shaves are considered. See cmte, p. 128, 
 
 20 Eq. 389. for the general subject of conditions. 
 » 30 & 31 Vict. c. 127, ss. 27-29. " 16 L. T. (N. S.), 661. 
 
 ' Here only contracts for paid-up 
 
 Neuse River Nav. Co. v. Coa'rs, 7 Jones Law, 276. See, however. Otter v. Bre- 
 voort Petroleum Co. 50 Barb. 247 ; Knowltou v. Congress, <fec. Spring Co. B7 N, Y. 
 618. 
 
ORDINARY SHARES— PAYMENT. 145 
 
 capacity than as the holder of fully paid-up shares, and granted an 
 injunction to restrain the company from allowing his name to 
 remain there otherwise than as the holder of fully paid-up shares. 
 , In Guest v. Worcester, &c. By. Co.,' a railway company de- 
 posited with a bank 1,500 shares, as security for an advance of 
 £5,000, the certificate on the face of it purporting that the shares 
 were " registered as fully paid-up in the books of the company," 
 In the register of shareholders the names of the chairman and 
 manager of the bank were inserted simply as holders of the 
 shares ; but in the call book was a memorandum : " Deposited at 
 bank as security for overdraft." Upon a rule for a sci.fa. against 
 the persons in whose names the shares were registered, it was 
 held that they were not liable. BoviH, L. 0. J., said : " Upon 
 the affidavits it is clear that the bank never undertook any lia- 
 bility to the company in respect of these shares. They never 
 contemplated paying calls, but accepted the certificate as a 
 security for their advance, on the faith of the statement written 
 thereon, that the shares were registered in the books of the com- 
 pany as fully paid-up shares." 
 
 This principle applies in other cases than those of paid-up 
 shares. Many persons accept shares from or on behalf of a com- 
 pany, not intending, but in the result held, to be liable for them. 
 But by proper stipulations they can provide against this. Thus 
 trustees,'* nominees,' and mortgagees* of a corporation may accept 
 its shares under such explicit and carefully worded conditions, as 
 not to incur liability in respect thereof, though under ordinary 
 circumstances such persons are in the position of ordinary share- 
 holders. 
 
 III. Shares must be paid for, hut not necessarily in money, 
 and the mnowit of the consideration will not be examined 
 by the courts, (a) 
 
 ■ L. R. 4 C. P. 9. 3 Gra/B Case, 1 Ch. D. 664. 
 
 2 Saunders' Case, 2 De G. J. & S. 101. " Re South Eastern Ry. Co.'s Claim, 
 
 See Chapman and Barker's Case, L. R. 3 L. R. 14 Eq. 10. 
 Eq. 361. 
 
 (a) Subscriptions may be paid in materials or in labor, or serviees, or by taking 
 contracts. Beach v. Smith, 30 N. Y. 116 ; Am. Silk Works v. Salomon, 4 Hun, 136 ; 
 Pittsburgh, &c. R. R. Co. o. Stewart, 41 Penn. St. 54 ; H. & P. Plank road Co. u. 
 Bryan, 6 Jones Law, 82 ; Cincinnati R. R. Co. v. Clarkson, *! Ind. 695 ; Ohio, I. & 
 
 10 
 
146 SHARES AND STOCK. 
 
 On the other hand, if a party has agreed to take the shares at 
 all events, although he naay have implied or intended that they 
 should be paid up, or that he should be allowed to pay for them 
 in other ways than by cash, he will be fixed with them, and be 
 liable, at least, on a winding up, to pay for them in cash. Thus 
 an agreement that a shareholder shall not be liable for calls, but 
 may participate in profits, is ultra vires} 
 
 This oftenest happens when persons dealing with a company, 
 tradesmen and the like, agree to take payment for their articles,* 
 or for their work, e. g., as agents,* in shares. ]!^ot unseldom the 
 person so contracting has been absolutely fixed with a definite 
 number of shares. As Lord Cairns, L. J., said in Elkington's 
 Case : * " The real point for determination in this case might be 
 said to be this : Did Messrs. Eikington intend and agree to be- 
 come members and shareholders in prmsenti, with a collateral 
 agreement as to what should be the effect of their becoming 
 shareholders ? or, on the other hand, did Messrs. Eikington agree 
 
 1 Bnnn's Case, 2 De G. F. <fe J. 275, tar's Case, L. R. 1 Eq. 273 ; Staoe and 
 295-9; Ex parte Clark, L. R. 7 Eq. 650. Worth's Case, L. E. 4 Ch. 682. 
 
 2 Pellatt's Case, L. R. 2 Ch. 527 ; Elk- « Simpson's Case, L. R. 4 Ch. 184 ; 
 ington's Case, L. R. 2 Ch. 511; Alabas- Bridger's Case, L. R. 5 Ch. 305. 
 
 * Ubi supra. 
 
 I. R. R. Co. V. Cramer, 23 Ind. 490 ; Phillips v. Covington Bridge Co. 2 Mete. (Ky.) 
 219 ; Eppes v. M. G. & T. R. R. Co. 35 Ala. 33 ; Edwards v. Bringier, &c. Co. 27 La. 
 Ann. 118. Special authority is perhaps necessary to authorize subscriptions payable 
 in land. State v. Bailey, 16 Ind. 46; Junction R. R. Co. ». Reeve, 15 Ind. 236; 
 Goodin v. Evans, 18 Ohio St. 150 ; but see Hatch v. Boynton, 47 N. T. 225 ; Am. 
 Silk Works u. Salomon, 4 Hun, 135; Cincinnati R. R. Co. o. Clarkson, 7 Ind. 595; 
 Evansville, <!ec. R. R. Co. v. Wright, 38 Ind. 64. Payment may be in the stock of 
 another corporation. East N. Y. <fe Jamaica R. R. Co. v. Lighthall, 6 Eobt. 407 ; 
 Swatara R. R. Co. u. Brune, 6 Gill (Md.), 41. Subscriptions may be made payable, 
 and in general payment received, in promissory notes, or notes and mortgages. 
 Vt. Central R. R. Co. v. Olayes, 21 Vt. 30; Stoddard v. Shetucket Foundry Co. 34 
 Conn. 542; Ely v. Sprague, Clarke, 351 ; Magee v. Badger, 30 Barb. 247; Ogdens- 
 burgh, (fee. R. R. Co. v. Wooley, 3 Abb. App. Dec. 398 ; McRae v. Russell, 12 Ired. 
 Law (N. C), 224; Strauss v. Eagle Ins. Co. 5 Ohio St. 69; Goodrich v. Reynolds, 31 
 111. 490 ; Clark v. Farrington, 11 Wis. 306 ; Bluat v. Walker, Id. 334 ; Western Bank 
 of Scotland v. Tallman, 17 Wis. 530. Payment in checks is good only if the checks 
 are good. Crocker v. Crane, 21 Wend. 211 ; People v. Stoclrton & Visalla R. R. Co. 
 45 Cal. 306. It is held, however, in Navigation Co. v. Com'rs of Newbern, 7 Jones 
 Law, 275, that a corporation of limited powers can take nothing in payment of stock 
 subscribed except money, unless by express provision of its charter. See Taster v. 
 Wallace, 6 Daly, 364; Phila. & W. Chester R. R. Co. v. Hickman, 28 Penn. St. 318; 
 Henry v. Vermillion R. R. Co. 17 Ohio, 187; Moses v. Oscoee Bank, 1 B. J. Lea. 
 (Tenn.) 398; King v. Elliot, 5 S. &M. 428; Redf. on Railways, § 68. 
 
ORDINARY SHARES— PAYMENT. 147 
 
 that if and when a certain preliminary condition should be per- 
 formed, and not otherwise, they would become members and 
 shareholders ? To these questions a sufficient and conclusive an- 
 swer to my mind would be given by the facts which, up to this 
 time, I have referred to. It appears to me that it would be im- 
 possible to do otherwise than answer the first of these questions 
 in the affirmative, namely, that Messrs. Elkington, whatever may 
 have been the collateral agreement as to the effect of their becom- 
 ing shareholders, did agree to become members and shareholders 
 in jyroesenti" 
 
 The 25th section of the Companies Act, 1867, imposes an 
 additional requisite, viz., that every share shall be deemed issued, 
 " and held subject to the payment of the whole amount thereof 
 in cash, unless the same shall have been otherwise determined by 
 a contract duly made in writing, and filed with the registrar of 
 joint-stock companies at or before the issue of such shares." This 
 enactment has hitherto been construed stringently, and persons 
 have been in several instances made contributories who have given 
 a full equivalent for their shares, but which equivalent has not 
 been in the form of a payment in cash.' In considering this sec- 
 tion there is a preliminary point to be borne in mind. The sec- 
 tion may not apply at all. A person can be compelled to carry 
 out such contract, to take shares or otherwise, as he has bound 
 himself to do. 
 
 This principle remains unaffected by the statute, as is M'eU 
 shown in the recent case He Western of Canada Oil, &e. Co.' 
 The facts were as follows : W. entered into an agreement with a 
 person as trustee of an intended company for the sale to the com- 
 pany of a property for a certain sum in cash and a certain number 
 of fully paid-up shares. The agreement was not to be binding 
 unless adopted by the company when formed. The company was 
 formed, and the agreement was set out in the articles. W. ap- 
 plied to the appellants to become directors, which they agreed to 
 do upon his promising to transfer to them fully paid-up shares to 
 qualify them. They acted as directors, and adopted the agree- 
 ment for sale. The number of shares requisite for the qualifica- 
 
 ■ Cleland's Case, L. R. 14 Eq. 387; '^ Carling, Hespeler and Walah'a Cases, 
 
 Pritchard's Case, L. R. 8 Ch. 956; but 1 Ch. D. 115; Gray's Case, 1 Ch. D. 664. 
 
 see Fothergill's Case, L. E. 8 Ch. 270; Compare ex parte Daniell, 1 De G. & J. 
 
 Maynard's Case, L. R. 9 Ch. 60; Coates's 372. 
 Case, L. R. 17 Eq. 169. 
 
148 SHAKES AND STOCK. 
 
 tion of a director was five, but after the completion of the pur- 
 chase thirty paid-up shares were, by the direction of W., allotted 
 to each of the appellants, and they were entered on the register as 
 holders each of thirty fuUy paid-up shares, and received certifi- 
 cates to that effect. An order was afterwards made for winding 
 up the company, and the Master of the EoUs settled them on the 
 list of contributories for thirty unpaid shares each. 
 
 The Court of Appeals, however, reversed this, holding that the 
 appellants, as to the shares allotted to them, stood in the same 
 position as if those shares had been allotted to "W"., and trans- 
 ferred to them by him ; that they personally made no contract 
 with tlie company ; and that "W.'s only contract, which alone as a 
 contract could be enforced against either them or him, was for 
 paid-up shares. " Beyond all question, they never made them- 
 selves liable to take any shares at all — they never contracted to 
 take shares or to pay for shares — the only contract between them 
 and the company was the contract that arises from the fact, that 
 certificates of the shares as paid-up shares were sent to them, and 
 they accepted those certificates. If, therefore, the case depends 
 on a contract between them and the company, the contract must 
 either be approbated or reprobated. If the contract was a con- 
 tract that they would take paid-up shares, we cannot convert that 
 into a contract to take unpaid shares." 
 
 Subject to the above, in investigating the effect of this section, 
 the two questions are : 
 
 1. What is a payment in cash ? * 
 
 3. What is a contract duly made in writing and filed ? 
 
 As to the former, " if the circumstances relied on would in an 
 action for the money due upon shares be evidence only in support 
 of a plea of accord and satisfaction, this section would prevent 
 their being a good defense ; but that if they would support a plea 
 of payment, then the 25th section did not prevent their being a 
 good defense."* 
 
 Consequently there will be payment : 1. By actual payment in 
 cash. 2. By setting off against the shares in question, they being 
 properly identified,^ and crediting them with any debt actually 
 due eo tempore from the company to the shareholder, whether 
 
 ' Per Mellisli, L. J. L. R. 8 Ch. 414. « Fothergill's Case, L. R. 8 Cli. 270 ; 
 
 ^Denfs Case, L. R. 8 Ch. 768. 
 
ORDINARY SHARES— PAYMENT, 149 
 
 («) in respect of property, good-will, &c., at its inception ; ^ or 
 (J) in respect of any debt due and payable at the time of the 
 issue, which it is agreed shall be set off against the identical 
 shares in question ; * and 3. By similarly setting off a debt simi- 
 lai-ly due to a third party.' 
 
 But it seems that no other arrangement, whatever its form or 
 intent, not coming within one of these three rules, will be allowed 
 to be payment in cash.* Therefore an agreement, between a con- 
 tractor and a company, that the former shall supply engines to the 
 company, and shaU take a specified number of shares therein 
 against the payments, for which he may set off the engines as 
 supplied, must be registered, or in a winding up he will be liable 
 for the shares, and not be able to set off against them the amount 
 due to him from the company as damages or otherwise.' 
 
 Secondly. The contract duly made in writing, 1, usually is and 
 ought to be, as the language implies, an ordinary written agree- 
 ment between the company or its lawful agents and the individual 
 shareholder, contained either in one document, or in several doc- 
 uments connected on the face of them, and the whole registered.^ 
 Therefore, 2, an agreement in the articles to this effect will not 
 ordinarily suffice ; ' though under special circumstances where a 
 cost book company was turned into a registered company, and the 
 property was by the articles transferred to the new company for 
 paid-up shares therein, and all the partners signed the articles, this 
 was deemed sufficient.* 
 
 A few other points may be noticed, viz. : 
 
 1. Shares issued as paid up under an improper or delusive 
 contract which has actually been registered are, it seems, consid- 
 ered to be paid up in the hands of hona fide transferees,* the lia- 
 bility apparently remaining in the transferrors.'" 
 
 ' Spargo'B Case, L. R. 8 Ch. 407; May- ■• Fraser's Case, uU mpra; Cleland's 
 
 nard's Case, L. R. 9 Ch. 60. See, also, Case, vhi supra. 
 
 Ferrao's Case, L. R. 9 Ch. 355. ' Black and Co.'s Case, L. R. 8. Ch 254. 
 
 « Adamson's Case, L. R. 18 Eq. 670 ; « Fothergill's Case, L. R. 8 Ch. 270. 
 
 Sx parte Wilson, 22 W. R. 766 ; W. N. ' Pritchard'a Case, L. R. 8 Ch. 956. 
 
 1874, 139. Compare Coates's Case, L. R. ^ Be Appletreewick Mining Co., L. R. 
 
 17 Eq. 169. 18 Eq. 95, and cases cited and comment- 
 
 » Ferrao's Case, L. R. 9 Ch. 355 ; Hart- ed on. 
 
 ley's Case, L. R. 10 Ch. 167. Compare » Bash's Case, L. R. 9 Ch. 554. 
 
 contrary decisions in Cleland's Case, L. '" See Waterhouse v. Jamieson, L. R. 
 
 R. 14 Eq. 387; Forbes and Judd's Case, L. 2 Sc. App. 29; Spargo's Case, L. R. 8 
 
 R. 5 Oh. 272; Fraser's Case, 42 L. J. (Ch.) Ch. 407, 410, per Mellish, L. J. 
 358 ; 21 W. R. 642 ; 28 L. T. (N, S.) 158. 
 
150 SHARES AND STOCK. 
 
 2. The issue of shares means the issue of certificates for the 
 same.^ 
 
 3. If by mistake the shares have been issued before filing the 
 contract, and the allottees are ignorant of the omission,' the Court 
 of Chancery will rectify the register, and direct a cancelling of the 
 certificates and re-issue thereof after registration,' and the com- 
 pany may do the same propria motu^ 
 
 4. The shares must be properly identified/ though there is no 
 necessity that they should be actually numbered or otherwise 
 specifically described.* 
 
 Section III. — Calls, {a) 
 
 Companies having their capital divided into shares have, as 
 incident thereto, the power to make calls. It is purely a question 
 of internal arrangement in whom this power is vested. It will 
 generally be in the directors ; and where it is so, a call made by 
 those who are actually directors, [b) and not yet removed, will be 
 good.' (c) But if made by persons not having the power,^ or not 
 acting at a board meeting when this is required,' the call will be 
 
 ' Bash's Case, L. R. 9 Ch. 654. « Fothergill's Case, L. R. 8 Ch. 2'70; 
 
 2 Droitwich Salt Co. 22 W. R. 767 ; Dent's Case, Ibid. 768. 
 W. N. 1874, 183. ' Re Buenos Ajres, <Stc. Ry. Co. W. 
 
 s Denton Colliery Co. ex parte Shaw, N. 1875, p. 59. 
 L. R. 18 Eq. 16. ' Swansea Dock Co. v. Levien, 20 L. 
 
 ■• Hartley's Case, L. R. 10 Cb. 157, J. (Ex.) 447. Compare Southampton 
 
 Qucere, if the company can be compelled Dock Co. v. Richanls, 1 Man. & Gr. 448. 
 
 to do this ; see last two cases, and com- See Garden Gully Mining Co. v. McLis- 
 
 pare sect. 26 of this Act, and Re Stranton ter, L. R. 1 App. 39. 
 Iron, (fee. Co. L. R. 16 Eq. 559 ; Ward v. « Howbeach Coal Co. v. League, 6 H, 
 
 Dowling, 19 L. T. (N. S.) 277. <fe N. 151. 
 
 » Kirk V. Bell, 16 Q. B. 290. 
 
 (a) On the general subject of calls or assessments upon shares and the defenses 
 thereto, see Ang. & Ames on Corps, c. xv ; 1 Eedf. on Railways, §§ 47-60 ; Field 
 on Corp. §§ 97-102. 
 
 (6) The fact that the directors have been illegally elected cannot be set up as a 
 defense to a suit for the payment of stock. Eakright v. Logansport E. R. Co. 13 
 Ind. 404. See Atlantic R. R. Co. v. Johnston, 70 N. C. 348 ; Walker v. Fleming, lb. 
 483 ; Johnson v. Crawfordsville R. R. Co. 11 Ind. 280 ; Steinmetz ij. Versailles, Ac. 
 T. Co. 57 Ind. 457. 
 
 (fl) Tort <fc Cumberland R. R. Co. v. Ritchie, 40 Me. 425 ; Hays v. Pittsburgh R. 
 R. Co. 38 Penn. St. 81 ; Ross v. Lafayette & Ind. R. R. Co. 6 Ind. 297 ; Roberts v. 
 Ohio & Mobile R. R. Co. 32 Miss. 373. See Macon, ckc. R. R. Co. v. Vason, 57 
 Ga. 814. 
 
CALLS. 151 
 
 simply nugatory ; though other trifling irregularities will of 
 course not vitiate.'' (a) Calls may be made, at least in the case 
 of Qompanies within the Companies Clauses Consolidation Act, 
 1845,* and apparently in the case of other companies also,' pay- 
 able by installments. 
 
 Calls must in all respects, both as to times and amounts, be 
 made, whether by the company in general meeting, or the direc- 
 tors, in such a way as to press equally upon all ; * and for the fur- 
 therance of the corporate purposes,(5) *. e., for the hona fide pur- 
 pose of obtaining capital, and not to enable any particular mem- 
 bers ' to escape or lessen their liability, (c) 
 
 Barge's Case ° shows how strictly the exercise of a power to 
 make calls will be construed. There certain shareholders had ad- 
 vanced £3 per share to the company, with the option that they 
 could treat the advance as payment on account of calls. The com- 
 pany being wound up, it was nevertheless held that they must 
 pay up their calls, and could only prove for their advance as a 
 loan. 
 
 ■ British Sugar Refining Co. 3 K £ J. private members; and Gilbert's Case, L. 
 
 408 ; Sbackleford, Ford <fe Co. v. Danger- R. 6 Cb. 569, as to directors ; Haberbon's 
 
 field, L. E. 3 C. P. 407 ; Sbeffield Ey. Co. Case, L. E. 5 Eq. 286, wbere » director 
 
 *. Woodcock, T M. <fc W. 674. attempted to set-oflF against a call a de- 
 
 ' Ambergate Ey. Co. o. Coultbard, 6 benture of tbe company not yet due ; 
 
 Ex. 459; North Western Ey. Co. v. Syke's Case, L. E. 13 Eq. 255; and 
 
 M'Micbael, 6 Ex. 273. Eance's Case, L. E. 6 Ch. 104, 115 ; and 
 
 » See Lewis's Case, 28 L. T. (N. S.) 396. Adamson's Case, L. E. 18 Eq. 670, where 
 
 * Preston v. Grand Coll. Dock Com- tbe arrangement was perfectly good and 
 
 pany, 11 Sim. 327. upheld. 
 
 ' See Richmond and Painter's cases, 4 ' L. E. 5 Eq. 420. 
 
 K. & J. 306, as to calls made favoring 
 
 (a) Directors authorized to make calls cannot delegate authority to the treas- 
 urer. Silver Hook Eoad v. Greene (7 Reporter, 187), 12 E. 1. 
 
 (J) Any fundamental change in the purposes of the company will relieve the sub - 
 scriber from calls. Union Locks Co. v. Towne, 1 N. H. 44 ; Stevens v. Eutland, <fec. 
 E. E. Co. 29 Vt. 646 ; Hartford, &c. E. E. Co. v. Croswell, 6 Hill, 383; Kenosha, Ac. 
 E. R. Co. V. Marsh, 17 Wis. 13 ; see Hays v. R. R. Co. 61 HI. 422. See p. 133 n. 
 
 (c) Mann v. Pentz, 2 Sandf. Ch. 268 ; Sagory v. Dubois, 8 Sandf. Ch. 466 ; Ever- 
 hart V. West Chester R. R. Co. 28 Pettn. St. 339; Graff v. Pittsburgh E. R. Co. 31 
 Penn. St. 489 ; Hays v. Pittsburgh R. E. Co. 38 Penn. St. 81. But unless rights of 
 creditors intervene, tbe company may release subscribers on proper consideration. 
 Miller v. Second BuUding Assn. 50 Penn. St. 32 ; Gelpcke v. Blake, 19 Iowa, 263 ; 
 Haynesj). Palmer, 13 La. Ann. 240; compare Burke v. Smith, 16 Wall. 390; N. Al- 
 bany w. Burke, 11 Wall. 106; Cnrran ii. State, 16, How. 304; Wood v. Dummer, 3 
 Mason, •808 ; Slee v. Bloom, 19 Johns. 456 ; Melvin v. Lamar Ins. Co. 80 111. 446. 
 
152 SHARES AND STOCK. 
 
 Of course, calls can be made only for purposes not ulira vires 
 of the corporation. If it is intended to devote the proceeds to 
 other purposes, the call imposes no liability either at law or in 
 chancery upon a shareholder.^ {a) 
 
 The Court of Chancery will interfere to restrain the making 
 of calls for an illegal object ; ^ or the enforcing them against a 
 shareholder, inveigled into taking shares by the fraud of the com- 
 pany or its officers ; '(J) but it will not interfere if the application 
 of the proceeds be in reality a matter of internal economy, and 
 within the scope of the company, or of a majority of its members 
 to determine.^ (c) 
 
 ' South Eastern Railway Company v. Insurance Company, 26 Beav. 4'?3 ; 4 D. 
 
 Hebblewhite, 12 A. <fe E. 497; Shrop- G. <fc J. 422. 
 
 shire Union Railway Company v. Ander- * Smith v. Reese River Co. L. R. 4 H. 
 
 son, 3 Ex. 401 ; Welland Railway Com- L. 64. 
 pany v. Blake, 6 H. cfe N. 410. * See Yetts v. Norfolk Ry. Co. 3 D. G. 
 
 ^ HodgMnson v. National Live Stock & Sm. 293. 
 
 (a) These purposes must be such as were originally authorized or naturally auxil- 
 iary thereof. See ante, notes pp. 11, 133, 134. 
 
 (J) Subscriptions obtained by fraud cannot be enforced against the subscriber, 
 and while any parol representations or agreements made at the time of subscribing 
 for stock, inconsistent with the written terms of the subscription, are inoperative and 
 void and inadmissible to vary it, still this rule does not exclude such parol evidence 
 showing fraud sufficient to vitiate any contract. But fraud makes the contract void- 
 able only, and will not avail unless the subscriber has exercised due diligence in 
 taking advantage of it. See Upton v. Engleharfc, 3 Dill. 496 ; Kennebec R. R. Co. v. 
 Waters, 34 Me. 369 ; Pisoataqua Ferry Co. o. Jones, 39 N. Hamp. 491 ; Blodgett v. 
 Morrill, 20 Vt. 509 ; Conn. & Pass. River R. R. Co. v. BaUey, 24 Vt. 46B ; ,Conn. R. 
 R. R. Co. ■;. Baxter, 32 Vt. 805 ; Burrows v. Smith, 10 N. T. 550 ; N. T. Exch. Co. 
 V. De Wolf, 31 N. y. 273 ; s. c. 5 Bosw. 593 ; Vreeland v. N. J. Stone Co. 29 N. J. 
 Eq. 188, and note; Coil v. Pittsburgh Female College, 40 Penn. St. 439 ; Custar v. 
 Titusville Gaa, <fec. Co. 63 Penn. St. 381 ; N. C. R. R. Co. v. Leach, 4 Jones Law, 
 340; Martin v. Pensacola R. R. Co. 8 Fla. 370; Rives v. P. R. Co. 30 Ala. 92; Smith 
 ■0. P. R. Co. 30 Ala. 650 ; Walker v. Mobile R. R. Co. 34 Miss. 245 ; Ellison v. Mobile 
 R. R. Co. 36 Miss. 5*72; Water Valley Mfg. Co. v. Seaman, 63 Miss. 655 ; Henderson 
 V. R. R. Co. 17 Tex. 560 ; Miss. R. R. Co. v. Cross, 20 Ark. 443 ; Cunningham ». 
 Edgefield R. R. Co. 2 Head, 23 ; E. Tenn. R. R. Co. v. Gammon, 5 Sneed, 867 
 Wight V. Shelby R. R. Co. 16 B. Mon. 4 ; La Grange P. R. Co. v. Mays, 20 Mo. 64 
 Johnson v. Crawfordsville R. R. Co. 11 Ind. 280; Keller v. Johnson, 11 Ind. 337 
 Vawter v. Ohio & Miss. R. R. Co. 14 Ind. 174; Hardy v. Merriweather, 14 Ind. 203 
 Thornburgh v. Newcastle R. R. Co. 14 Ind. 499; Miller v. Wildcat, <fec. Co. 57 Ind. 
 241 ; Davis v. Dumont, 37 Iowa, il. 
 
 (c) The power of forfeiture and sale of shares, upon failure of the subscribers to 
 pay calls, is not an exclusive, but a cumulative remedy, unless the charter or some 
 general statute applicable to the subject otherwise enacts. The obligation of actual 
 
AMOUNT AND DIVISION OF CAPITAL. 153 
 
 Section IY. — Amount and Division of Capital. 
 
 (1.) Capital in connection with commencement of tusiness. 
 
 I. Corporations hawing the power to raise a definite capital may 
 begin their business before that capital or any portion thereof 
 is obtained, {a) 
 
 An extrajudicial opinion has been expressed, to the effect that 
 before a company is complete so as to be able to commence oper- 
 
 payment is created in all cases by a subscription to capital stock, except the terms of 
 the subscription are such as plainly to exclude it. Glass Co. v. Alexander, 2 N. 
 Hamp. 380 ; White Mts. E. E. Co. i/. Eastman, 34 N. Hamp. 147 ; Essex Bridge Co. 
 X). Tuttle, 2 Vt. 393 ; City Hotel Co. v. Dickinson, 6 Gray, 586 ; Lexington <fe W. 
 Cambridge E. E. Co. v. Chandler, 13 Mete. 311; Boston, <fec. E. E. Co. v. Welling- 
 ton, 113 Mass. 79; Hart. & N. H. E. E. Co. v. Kennedy, 12 Conn. 499; Ward v. 
 Griswoldville Mfg. Co. 16 Conn. 593 ; Mann v. Cooke, 20 Conn. 178; Goshen Turn- 
 pike Co. V. Hurtln, 9 Johns. 217 ; Dutchess Cotton M%. Co. v. Davis, 14 Johns. 238 ; 
 Harlem Canal Co. o. Seixas, 2 Hall, 604 ; Sagory v. Dubois, 3 Sandf Ch. 466 ; Pal- 
 mer V. Lawrence, 3 Sandf Sup. Ct. 161 ; Spear v. Crawford, 14 Wend. 20; Troy T. 
 Co. V. McChesney, 21 Wend. 296 ; Mann v. Currie, 2 Barb. 294 ; Northern E. K. Co. 
 V. Miller, 10 Barb. 260; Troy <fe E. E. R. Co. v. Kerr, 17 Barb. 581 ; Troy cfc Boston 
 R. R. Co. V. Tibbits, 18 Barb. 297; Ogdensburg, <fec. E. E. Co. v. Frost, 21 Barb. 
 641; Delaware Canal Co. v. Sansom, 1 Einn. 70; Tar Eiver Nay. Co. v. Neal, 3 
 Hawks, 520 ; Hightower v. Thornton, 8 6a. 486 ; Macon E. B. Co. v. Vason, 57 Ga. 
 314 ; Beene v. Cahawba & M. E. E. Co. 3 Ala. 660; Selma E. R. Co. o. Tipton, 5 
 Ala. 787 ; Gayle v. Cahawba E. E. Co. 8 Ala. 686 ; Freeman v. Winchester, 10 Sm. 
 &M. 577; Gratz«. Eedd, 4 B. Mon. 178; Klein v. Same, 13 111. 514; Eyder v. 
 Same, 13 111. 516; Peoria E. R. Co. *. Elting, 17 111. 429; see, however. Ken. 
 & Port. E. E. Co. V. Kendall, 31 Me' 470; Seymour v. Sturges, 26 N. T. 134. 
 
 But the corporation must elect which remedy to pursue — at least it cannot forfeit 
 the stock and then sue ; so where an action had been commenced to recover certain 
 installments, and then a further call was made and the stock forfeited for non-pay- 
 ment of the last call, a plea of the defendant of such forfeiture, in bar of further main- 
 tenance of the action, was sustained. Small v. Herkimer Mfg. Co. 2 N. Y. 330 ; 
 overruling Herkimer Mfg. Co. ». Small, 21 Wend. 273; 2 Hill, 127; Athol & En- 
 field E. E. Co. V. Inhab. of Prescott, 110 Mass. 213; New Albany R. R. Co. a. Pick- 
 ens, 6 Ind. 247. 
 
 In Brockenbrough v. James River Co. 1 P. <fe H. 94, and Danbnry & N. E. R. Co. 
 V. Wilson, 22 Conn. 435, power to sue after sale was given by statute. 
 
 [a) The American rule seems to be the reverse of that stated in the text ; where 
 the number of shares and the amount of capital is fixed, the whole stock must be 
 subscribed before the corporation can begin business, wnlesa the constating instruments 
 expressly remove this restriction. This rule does not prevent the corporation from 
 doing preliminary business dr from making assessments for preliminary purposes, 
 but the subscription of the whole amount is a condition precedent to laying an assess- 
 
154 SHARES AND STOCK. 
 
 ations, at least a large portion of its capital must be subscribed. 
 In Howbeach Coal Company v. Teague/ the actual point decided 
 
 ' 5 H. (fe N. 150; 29 L. J. (Ex.) 137. Ornamental Pyrographic CompaDy v. 
 Compare the opinion of Bramwell, B., in Brown, 2 H. <fe. C. 63 ; 32 L. J. (Ex.) 193. 
 
 ment for general purposes, or entering upon the general business for which the cor- 
 poration was created. Oldtown & Lincoln K. R. Co. v. Veazie, 39 Me. 571 ; Penob- 
 scot R. R. Co. V. Dummer, 40 Me. 1'72; Same v. White, il Me. 612; Littleton Mfg. 
 Co. V. Parker, 14 N. H. 543 ; Contoooook Valley R. R. Co. v. Barker, 32 N. H. 363 ; 
 N. H. Central R. B. Co. v. Johnson, 30 N. H. 890 ; Salem Mill Dam Co. v. Ropes, 6 
 Pick. 23 ; Prop, of Newburyport Bridge v. Story, 6 Pick. 46 ; Salem Mill Dam Co. 
 1). Ropes, 9 Pick. 187; Central Turnpike Co. v. Valentine, 10 Pick. 142; Stoneham 
 Branch R. R. Co. v. Gould, 2 Gray, 277 ; Troy B. R. Co. v. Newton, 8 Gray, 696 ; 
 Cabot <fe. W. Springfield Bridge Co. v. Chapin, 6 Cush. 50 ; "Worcester and Nashua 
 B. B. Co. V. Hinds, 8 Cush. 110; Atlantic Cotton Mills v. Abbott, 9 Cush. 423 ; Lex- 
 ington <fe West Cambridge R. R. Co. <;. Chandler, 13 Mete. 311 : Harlem Canal Co. ■». 
 Seixas, 2 Hall, 504; Same v. Spear, 2 Hall, 610; Rensselaer & Washington Plank- 
 road Co. 1). Wetsel, 21 Barb. 66; Hamilton & Deansville Plank-road Co. v. Rice, 7 
 Barb. 157; Hughes v. Antietam Mfg, Co. 34 Md. 316; Memphis, Ac. R. R. v. SuUi- 
 Tan, 57 Ga. 240; Hain v. N. W. G. Co. 41 Ind. 196; Fox v. AllensyiUe Co. 46 Ind. 
 SI ; Schurtz v. Schoolcraft R. B. Co. 9 Mich. 269; Peoria & Bock Island R. R. Co. v. 
 Preston, 35 Iowa, 115 ; Livesey v. Omaha Hotel Co. 5 Neb. 50; Willamette Freight- 
 ing Co. V. Stiannus, 4 Oreg. 261. Parker, J., in Sch. & Sar. Plank-road Co. v. 
 Thatcher, 11 N. T. 102, holds that " a subscription of the whole amount of stock has 
 never been held a condition precedent to a legal corporate existence, except when it 
 •was made so by the act of incorporation." This must be taken to apply to cases 
 where the corporation comes into existence for organization on certain subscriptions 
 being made less than the whole amount, or where a corporation is created in prcesenti, 
 by naming commissioners to open books for subscriptions. Minor v. Mech. Bank, 1 
 Peters, 46. But it is believed that no case can be found in this country where a cor- 
 poration has been held authorized to cwnmence the business, to carry on which it is 
 created, before the capital stock is subscribed, unless by legislative enactment to that 
 effect. See Brouwer v. Appleby, 1 Sandf, 158 ; Walker v. Devereaux, 4 Paige, 229 ; 
 Crocker v. Crane, 21 Wend. 211 ; Stoops v. Greensburgh Plank-road Co. 10 Ind. 47; 
 Selma R. B. Co. v. Anderson, 51 Miss. 829. An express agreement between a sub- 
 scriber and the corporation may remove this restriction, as far as liability for assess- 
 ments is concerned, and allow calls at any time. Kennebec <fe Portland R. R. Co. v. 
 Jarvis, 34 Me. 360; York cfe Cumberland R. R. Co. v. Pratt, 40 Me. 447; Bucksport 
 R. R. Co. V. Buck, 65 Me. 536; Peoples' Ferry Co. v. Balch, 8 Gray, 314; Hamilton 
 <fe Deansville Plank-road Co. v. Rice, 7 Barb. 167 ; Phillips v. Covington Bridge Co. 
 2 Mete. (Ky.) 219; Emmitt v. R. R. Co. 31 Ohio St. 23 ; Estell v. Knightstown Turn- 
 pike Co. 41 Ind. 174; Iowa & Minn. R. R. Co. v. Perkins, 28 Iowa, 281. The cor- 
 porators cannot, by any act alleged to operate by way of waiver or estoppel, relieve 
 the corporation from its obligation to have the capital required by its charter. Old- 
 town & Lincoln R. B. Co. v. Veazie, 39 Me. 571. All the subscriptions upon which 
 the right to assess depends must be actual and not merely colorable. Thus, a sub- 
 scription by one man for another, without authority, is not a real subscription, and 
 must not be counted. Salem MUl Dam Co. o. Ropes, 9 Pick. 187. A contractor's 
 
ABtOUNT AND DIVISION OF CAPITAL. 155 
 
 was that the call sued upon was illegal, the directors making it 
 not having been properly appointed ; but in reference to a second 
 point raised, viz., whether calls could have been made before the 
 whole capital was subscribed, Martin, B., observed : " If a com- 
 pany is to be formed, of which there are to be 240 shares, it can- 
 not be competent for the directors, after only sixty or seventy, 
 not one-third the number of shares, haye been taken, to insist on 
 the persons who hold this limited number of shares to pay calls." 
 But it is submitted that this is not good law. No statute has fixed 
 a minimum of capital to be subscribed for as a condition precedent 
 to the existence of the company ; ' and the cases both in Equity 
 and at Common Law have rather established the contrary. In 
 Macdougall v. Jersey Imperial Hotel Co.^ an injunction was re- 
 fused which was applied for to restrain the defendants from com- 
 mencing business before the whole of the nominal capital was sub- 
 scribed. And the decision in Ornamental Pyrographic Company 
 V. Brown,' where Martin, B., abandoned his former opinion, is also 
 
 ' In the act (now repealed) 1 & 8 Vict, parte, Longworth's Executors, 29 L. J. 
 
 113, there was a clause, sect. 6, to this (Oh.) 66. 
 
 effect, in reference to which see Re Lon- ^ 2 H. dfc M. 628 ; ante, p. 69. 
 
 don & Eastern Banking Corporation, ex ' Uhi supra. Compare Norwich <Ss 
 
 agreement with a railroad company, to accept stock in payment for making the road, 
 cannot be counted towards the amount which must be subscribed to commence or- 
 ganization. So held, when the contractor had become insolvent. New York, (fee. R. 
 E. Co. V. Hunt, 39 Conn. '75. The unpaid subscriptions of insolvent persons, infants, 
 or married womem, are to be excluded. Phillips v. Covington Bridge Co. 2 Mete. 
 (Ky.) 219. Subsequent insolvency, or mere inability to pay at the time of subscrib- 
 ing, win not, however, shut out the subscriptions. Penobscot E. E. Co. ii. Dummer, 
 40 Me. 172; Same v. "White, 41 Me. 612; Salem Mill Dam Co. v. Eopes, 9 Pick. Wl. 
 If any subscriptions are upon condition precedent, they cannot come in, unless 
 it be proved that the conditions have either been complied with or waived. Central 
 Turnpike Co. </. Valentine, 10 Pick. 142; Belfast, <fco. E. E. Co. v. Cottrell, 66 Me. 186. 
 If the subscriptions were fraudulently made (by collusion between the directors and 
 the subscriber) to evade the provisions of the charter, the law will hold the parties 
 bound by their subscriptions and compel them to comply with all the terms and re- 
 sponsibilities imposed upon them in the same manner as if they were bona fide sub- 
 scribers. Minor v. Mechanics' Bank of Alexandria, 1 Peters, 46. Likewise, private 
 arrangements not expressed in the subscription papers, giving peculiar privileges to 
 the subscriber, are fraudulent upon the other subscribers, and therefore null. White 
 Mts. E. E. Co. «. Eastman, 34 N. H. 124 ; Mann v. Cooke, 20 Conn. 178 ; Mann v. Currie, 
 2 Barb. 294 ; Eobinson v. P. & C. E. E. Co. 32 Penn. St. 334 ; Bavington v. P. & S. 
 E. E. Co. 34 Penn. St. 358 ; New Albany & S. E. E. Co. v. Fields, 10 Ind. 187; Dow- 
 nie V. White, 12 Wis. 176. 
 
156 SHARES AND STOCK. 
 
 the same, it being here held that a company, whose memorandum 
 of association had been duly signed, might, under section 2, table 
 
 B, of 19 & 20 Yict. c. 47, make calls on the shareholders, although 
 all the capital had not been taken up. Pollock, C. B., said : " If 
 you take shares in a company, not guarding against the liability 
 to be called on to pay the calls, you are liable to pay them, unless 
 expressly exempted. The question then arises, does the act of 
 parliament create any exemption ? I can find none. On the con- 
 trary, under table B, the governing body is entitled to make calls 
 the moment the company is established ; and the reason of that is, 
 the subscribers for shares become liable to pay any call upon the 
 shares subscribed for among themselves." 
 
 In lie Imperial Steam & Household Coal Company,^ Malins, 
 Y.-C, considered it fraud for a company to commence its business 
 with only one-fifteenth of its nominal capital subscribed. 
 
 There is a well known series of cases where persons success- 
 fully resisted the attempt to fix them with liability as being mem- 
 bers of proposed partnerships or inchoate companies.^ But these 
 and similar cases were decided in accordance with principles of 
 law relating to partnership, and not that relating to corporations. 
 A partnership has no existence apart from those composing it, and 
 the rights and liabilities of each member are determined by the 
 contract which, upon his entry into the partnership, he makes with 
 those already in it, and if any attempt be made to commence or 
 to carry on business in any manner whatever different from that 
 by such contract stipulated for, the member thereby affected is 
 entitled to withdraw. The rights and liabilities of members of 
 corporations as such are, on the other hand, determined by a refer- 
 ence solely to the documents constituting the company, and do 
 not depend upon contracts entered into between the different 
 members thereof. And, secondly, even in the case of corporations, 
 intending shareholders may protect themselves by taking proper 
 
 Lowestoft Nav. v. Theobald, M. <fc M. 151, Morrison, 22 Upp, Can. C. P. 217, in an 
 
 and Galvanized Iron Co. v. Westoby, 21 action against a shareholder in a Joint- 
 
 L. J. (Ex.) 302, where subscribers were Stock Company for calls, the defense was 
 
 held not liable, with Waterford Ey. Co. set up that the stock had not all been 
 
 II. Dalbiac, 20 L. J. (Ex.) 227 ; London subscribed, and it was expressly decided 
 
 and Continental Ass. Soc. v. Redgrave, 4 to be no defense. • 
 
 C. B. (N. S.) 624, and iBe Jennings, 1 Ir. i 37 L. J. Ch. 617. 
 
 (Ch.) 664, in each of which it was decided ' See Dickenson v. Valpy, 10 B. k C. 
 
 that the raising of the prescribed capital 128 ; Fox v. Clifton, 6 Bing. 776 ; 9 Bing. 
 
 was not precedent to the power to make 115 ; ii« Dover & Deal Railway Company, 
 
 calls. So in Lake Superior Nav. Co. «. ex parte Beardshaw, 1 Drew, 226. 
 
AMOUNT AND DIVISION OF CAPITAL. 157 
 
 precautions ; by obtaining, for instance, such, provisions to be 
 placed in the constating instruments of the company as forbid it 
 commencing business or making calls before a given part, or, if 
 thought fit, the whole of the capital has been subscribed. 
 
 II. Corporations may provide, hy their constating inst/ruments, 
 that their business shall not he commenced till the whole or 
 a defined portion of their capital is svhscribed. (a) 
 
 If such a provision exists, it may be set up by either members 
 or outsiders. In North Stafford Steel, &c. Co. v. Ward,^ where 
 there was a clause in the plaintiff company's articles of association 
 that, in case the whole capital should not be subscribed, the regis- 
 tered members, if the directors should by resolution so declare, 
 should be associated for the objects thereof, it was held that the 
 capital not having been all subscribed, a subscriber thereto, in the 
 absence of such resolution, could not be sued for calls. 
 
 In Cass V. Ottawa Agric. Ins. Co.,^ where the constating in- 
 struments provided that the company should not commence busi- 
 ness till $50,000 of its capital had been paid up, and the company 
 obtained the requisite certificate of this subscription, but it turned 
 out that this sum had been borrowed; upon suit by a single 
 shareholder, the company was restrained from commencing busi- 
 ness. 
 
 In the cases last cited members successfully applied to the 
 
 ' L. R. 3 Ex. 172. it was unsuccessfully attempted to evade 
 
 '' 22 Grant. Cb. (Upp. Canada, 1875), a similar statutory provision by consider- 
 
 612. Compare Howland v. McNab, -8 ing a steamer supplied to a company as 
 
 Grant. Ch. (Upp. Canada, 1857), 47, where equivalent to the subscription required. 
 
 (a) If the number of shares and ainount of stock are not fixed, the presumption is 
 that they are to be fixed by the corporators, and this must be done, and the amount 
 so fixed subscribed, before assessments can be made. Somerset <fc Kennebec R. R. 
 Co. V. Gushing, 45 Me. 624. But in Warwick R. R. Co. v. Cady, 11 R. I. 131, the 
 contrary is held. Where the charter provides that the number of shares shall not 
 exceed a certain limit, and shall be determined from time to time by the directors, 
 the directors cannot levy assessments before making such determination. Worcester 
 & N. R. R. Co. 0. Hinds, 8 Cush. 110 ; Troy R. R. Co. v. Newton, 8 Gray, 596 ; Lex- 
 ington & W. C. R. R. Co. i). Chandler, 13 Mete. 311. Where the charter assigns two 
 limits between which the capital must cpme, after the lower limit is reached by sub- 
 scription, it is not necessary for the corporation to determine the ultimate amount 
 before making assessments. White Mts. R. R. Co. n. Eastman, 34 N. Hamp. 124. 
 Contra, Somerset R. R. Co. n. Clarke, 61 Me. 379. 
 
158 SHARES AND STOCK. 
 
 courts to enforce this provision. A later decision, Pierce v. Jersey 
 Water-works Company,^ shows that the company may take advan- 
 tage of such a provision. Here a clause in the articles of associa- 
 tion provided that " when and so soon as 3,000 shares in the com- 
 pany shall have been subscribed for and allotted, the members of 
 the company for the time being shall be and shall continue asso- 
 ciated for the objects of the company, and the regulations for the 
 management thereof shall be in force and binding on such mem- 
 bers ; " and the memorandum of association stated the objects of 
 the company to be, inter alia, " the doing of all such acts as the 
 directors are authorized to do by the accompanying articles of as- 
 sociation of the company." Before 3,000 shares were subscribed 
 for, the directors appointed the plaintiff engineer to the company. 
 In an action against the company for the plaintiff's salary, it was 
 held that until 3,000 shares were subscribed for, the directors had 
 no power to make any contract for carrying on the business of the 
 company ; and that, therefore, the plaintiff could not maintain the 
 action. 
 
 In this case Martin, B., considered that, until 3,000 shares 
 were subscribed, there existed no such incorporated company as 
 the plaintiff could contract with. But this opinion can scarcely be 
 correct. A company de facto, registered or otherwise incorporated, 
 actually is a corporation, a legal existence, and the certificate of 
 registration is conclusive as to this, whatever formalities may be 
 asserted to have been omitted, even though some of the original 
 members be infants.' 
 
 (2.) Variation of Capital. 
 
 III. Corporations ha/oe not, apart from statutes, the power to 
 vary their capital when the amount thereof has been fixed 
 in their constating instruments, semble. (a) 
 
 1 L. R. 5 Ex. 209. 5 H. L. 176 ; Peel's Case, L. R. 2 Ch. 6Y4 ; 
 
 ^ Oakes v. Turquand, L, R. 2 H. L. jRe Nassau Phosphate Co. 2 Ch. D. 610 ; 
 325, 364; Princess of Reuss v. Bos, L. R. 24 W. R. 692. 
 
 (a) Where the charter fixes the amount of the capital stock, the numher of shares 
 and amount of capital cannot be changed, except as expressly authorized by the 
 charter or articles of association or by a law passed subsequent to the charter and 
 accepted regularly by the stockholders. Chicago City R. R. Co. v. Allerton. 18 
 
AMOUNT AND DIVISION OF CAPITAL. 159 
 
 Whetlier public companies and similar corporations have, im- 
 pliedly, the power to vary the amount of their capital as originally 
 fixed, has not yet been positively decided, but the weight of au- 
 thority is in the negative. 
 
 In Smith v. Goldsworthy,* the facts were as follows : The 
 deed of settlement of a company incorporated by special act, de- 
 clared (clause 29) that it should be lawful for " a special general 
 meeting to amend, alter or annul, either wholly or in part, any or 
 all of the existing provisions of the deed, and to make any new 
 or other regulations in lieu thereof ; and such new regulations," 
 &c., after certain confirmation, should " be binding and conclu- 
 
 ' 4 Q. B. 430 ; 12 L. J. Q. B. 192. 
 
 Wall. 233. A subscriber to stock issued in illegal increase of capital may recover 
 any partial payment made. Knowlton v. Congress, <fec. Spring Co. 14 Blatchf. 364. 
 
 " A corporation with a fixed capital, divided into a fixed number of shares, can 
 have no power, of its own volition, or by any act of its officers and agents, to enlarge 
 its capital or increase the number of shares into which it is divided. The supreme 
 legislative power Of the State can alone confer that authority and remove, or consent 
 to the removal of, restrictions which are part of the fundamental law of the corporate 
 being; and hence, every attempt of the corporation to exert such a power before it 
 is conferred, by any direct or express act of its officers, is void." N. Y. <fe N. H. E. 
 R. V. Schuyler, 34 N. Y. 30. See, also, Salem Mill Dam Co. v. Ropes, 6 Pick. 23 ; 
 Curran v. Arkansas, 15 Ho-w|. 304 ; Wood v. Dummer, 3 Mason, 308 ; Curry v. Scott, 
 54 Penn. St. 2'?0 ; Mechanics' Bk. ». N. Y. & N. H. R. R. 13 N. Y. 599. 
 
 If the capital of a company is not limited, it is held that it may issue new stock, 
 and may give the holders thereof a preference, this being deemed a mode of raising 
 money. Rutland R. E. Co. v. Thrall, 35 Vt. 536 ; but see post, section v, p. r64. If 
 the capital is only confined between two limits, the corporation may begin with 
 the smaller capital and afterwards increase to the larger. Gray v. Portland Bank, 
 3 Mass. 364. See, also, Somerset R. R. Co. v. Cushing, 45 Me. 524. 
 
 In case of increase of stock, the holders of the old stock have a prior right to 
 take the new, in proportion to the amount of their shares. Gray v. Portland Bank, 
 3 Mass. 364; Eidman v. Bowman, 58 HI. 444 ; Reese v. Bank of Montgomery Co. 31 
 Penn. St. 78. But see, contra, Curry v. Scott, 54 Penn. St. 270 ; Ohio Ins. Co. v. 
 Nunnemacher, 16 Ind. 294. 
 
 Where there is a power to change the capital, expressly given to the corporation, 
 it must be exercised by the stockholders, not by the directors. Railway Co. v. AUer- 
 ton, 18 Wall. 233; Eidman v. Bowman, 58 111. 444. The assent of the stockholders 
 can be shown by their conduct and acquiescence without a formal vote. Payson «. 
 Stoever, 2 Dill. 428. 
 
 Stock lawfully received by the corporation may be reissued. Williams v. Savage 
 Mfg. Co. 3 Md. Ch. 418; City Bank of Columbus v. Bruce, 17 N. Y. 507. The cap- 
 ital stock of a corporation is not necessarily the limit of its property. Barry v. 
 Mer. Exch. Co. 1 Sandf. Ch. 280 ; South Bay Co. v. Gray, 30 Me. 547 ; State v. Mor- 
 ristown Fire Ass. 23 N. J. Law, 195. 
 
160 SHARES AND STOCK. 
 
 sive upon the shareholders." The deed provided that the capital 
 should be £2,000,000, divided into 20,000 shares of £100. By 
 resolutions, passed and confirmed at meetings duly convened and 
 holden, it was resolved that the capital should be reduced to 
 £1,000,000 in £50 shares. The Court of Queen's Bench held that 
 such reduction -was ultra vires of the company. Denman^ 0. J., 
 said : " The amount of shares is properly part of the constitution 
 of the company, and does not strictly depend upon any clause, 
 regulation, or provision of the deed. The alteration of shares 
 seems, therefore, not to come within the meaning of the 29th 
 clause. * * * The defendant further argues that the effect of 
 the resolutions reducing the shares was to dissolve the company. 
 We do not think any such effect followed, but rather that they 
 were simply void and inoperative. We think the shares always 
 were, in point of law, £100 shares." Supposing this to be a de- 
 cision merely that the amount of the separate shares cannot sub- 
 sequently be lowered, it necessarily follows that neither can the 
 capital (wben this is divided into shares) be lowered. 
 
 A strong opinion has also been expressed by the present Lord 
 Chief Baron, that no corporations have, apart from express arrange- 
 ment, such a power. " If such a proceeding were permitted, the 
 shareholders' liability would be limited, not, as was intended, by 
 the amount of their shares, but by the amount of the already 
 paid-up portion of their shares." ^ 
 
 With regard to " companies," which are merely large partner- 
 ships, e. y., one of the old joint-stock companies, it is 'manifest 
 that these, like other partnerships, may vary their capital or 
 shares with or without provision for so doing in their deed of set- 
 tlement ; but where these register under 25 & 26 Yict. c. 89, they 
 become liable to all the disabilities imposed by that act, one of 
 which is an implied prohibition against reducing the capital.^ 
 
 The increase of capital is a somewhat different matter, being 
 beneficial to shareholders and creditors alike : to the former as 
 tending to diminish and not to add to their individual risks ; to 
 the latter as increasing the amount of their security. It would 
 nevertheless work such a radical change in the scope of a cor- 
 
 ' L. R. 8 Ex. 42, where the Lord Chief into shares. Compare Re Financial Corp. 
 
 Baron is apparently referring, not so Holmes' Case, L. R. 2 Ch. 714. 
 ipuoh to a registered company, as to all ■' Droitwioh Patent Salt Company v. 
 
 companies possessing a capital divided Curzon, L. R. 3 Ex. 86. 
 
AMOUNT AND DIVISION OF CAPITAL. 161 
 
 poration, and in the extent of its operation, as well as in tlie posi- 
 tion of any one shareholder relatively to the whole body, that it 
 can, under ordinary circumstances, be scarcely considered as other 
 than ultra vires} 
 
 A corporation may, by provision in its own constating 
 instruments, be authorized to vary its capital. Where this is so 
 the power will be construed liberally. In Bardwell v. Sheffield 
 W works Co.,' a company incorporated by act of parliament, 
 being already in possession of works constructed by means of 
 capital raised by the issue of shares, obtained by a later act power 
 to raise more capital for the construction of additional works; 
 These works were of a peculiar kind, and could not be constructed 
 by means of contracts taken in the usual way, but required that 
 the company should find the plant and employ workmen to act as 
 directed by the engineer. The capital for the works was raised 
 by the exercise of borrovring powers and by preference shares, 
 the holders of which had certain options to convert them into 
 ordinary shares. It was held that the company were entitled to 
 add to the capital required for the construction of the works, the 
 amount of the interest or dividends on the loans or shares by 
 means of which it was raised, until the completion of the works. 
 
 (3.) Division of capital into shares. 
 
 Shares may be of one description only, being of one and the 
 same amount, and conferring on all holders thereof the same 
 rights, privileges and liabilities ; or they may be of various 
 classes, and with various denominations, the possessors of shares 
 of one class having rights and being under liabilities differing 
 widely from those belonging to the shares of other classes. The 
 number and respective amounts are usually fixed by the acts of 
 parliament and the other instruments creating a company ; and 
 when this is so, the characteristics of such shares become essential 
 facts of the corporation, and cannot be changed by the action of 
 any or all of the members thereof. But, if and in so far as such 
 matters have not been determined upon, it is competent for the 
 
 ■ See, however, Teasdale's Case, L. E. Case), L. R. 9 Eq. lOY. See Be Financial 
 
 9 Cb. 64, where, under peculiar circum- Corp. (Holmes' Case), L. E. 2 Ch. 714 ; 
 
 stances, an arrangement was upheld, the Droitwich Patent Sal t Co. v. Curzon, L. 
 
 direct effect of which was to increase the E. 3 Ex. 36. 
 
 capital. Compare Kelk's Case (Pahlin's * L. R. 14 Eq. 517. 
 
 11 
 
162 SHARES AND STOCK. 
 
 corporation, either in general meeting or by its directors, to deter- 
 mine upon them, and from time to time to vary them. Smith v. 
 Goldsworthy ^ is sometimes cited, as showing that once the value 
 of the shares fixed, no change therein can ever afterwards be 
 made.(a) But this case seems rather to be an authority to the efiect 
 that the amount of capital cannot be reduced, not that the shares, 
 cannot be varied if the capital remain unaltered, since, in the 
 subsequent case of Ambergate Eailway Company v. Mitchell," it 
 was decided that, under certain circumstances, this might be done.. 
 The act incorporating the Ambergate Kailway Company provided 
 that, for the purpose of voting, £25 of the capital should repre- 
 sent a share, and that no one should vote in respect of any less, 
 proportion. After the formation of the company the shares were 
 altered to £20 each, and the directors made a call on such ; and it 
 was held that the calls were not illegal by reason of the shares 
 having been altered. The judgment is not very clearly reported ; 
 but it evidently lays down that where the constating instruments- 
 fix the amount of the shares, not /b?* all purposes,\)yiX only for 
 some particular purpose, then it is competent for the company to 
 fix the amount. 
 
 The majority of companies, however — at least, of tradlng^ 
 companies — are within the Companies Acts of 1862 and 1867 ; and 
 it seems that such companies can not, in virtue of the former 
 statute only, in any respect vary the nature of their shares, save 
 by consolidation,' whether by altering their amount,* or by sub- 
 dividing them.' The latter, however, may now be done by virtue 
 of the express enactment contained in the 21st section of 30 & 31 
 Vict. c. 131, which enables any company, limited by shares, by a 
 special resolution, so far to modify the conditions contained in its 
 memorandum of association, if authorized so to do by its regula- 
 tions as originally framed, or as altered by special resolution, as to 
 subdivide its existing shares or any of them. 
 
 Previously to this enactment such a subdivision was, as to 
 these companies, illegal, even though done in pursuance of an ex- 
 
 ' 4 Q. B. 430 ; 12 L. J. (Q. B. ) 192. ■> Per Cairns, L. J., Holmes Case, L. R. 
 
 » 4 Ex. 540 ; 19 L. J. (Ex.) 89. 2 Ch. 714, 733. 
 
 3 26 <fe 26 Vict. c. 89, s. 28 ; see Giis- ^ Foiling & Rimington's Case, L. R. 
 
 tard's Case, L. R. 8 Eq. 438 ; per Cairns, 2 Ch. 714 ; Savell's Case, L. R. 3 Ch. 131 ; 
 
 L. J., in L. R. 2 Ch. 733 ; Peninsular Co. Teasdale's Case, L. R. 9 Ch. 54. 
 V. Fleming, 27 L. T. (N. S.) 93. 
 
 (a) See ante, p. 163, note. 
 
AMOUNT AND DIVISION OF CAPITAL. 163 
 
 press authority contained in the constating instruments. The 
 Memorandum of Association of the Financial Corporation pro- 
 vided that the capital should consist of shares of £100 each, and 
 the articles (clause Y) gave the board power, " by a resolution 
 passed by a majority, consisting of not less than two-thirds of th& 
 whole number of directors, to reduce the nominal value of the 
 shares, or any of them, by dividing the same into a larger number 
 of shares of any nominal value authorized by law." This power 
 the directors exercised by converting each £100 share into five 
 £20 shares ; but it was decided that such conversion was unauthor- 
 ized and void.^ Lord Cairns, L. J., said : " I am clearly of opin- 
 ion that, under these sections [i. e., 8, 12, 22, 25 and 28 of 25 & 
 26 Yict. c. 89], the amount of shares into which the capital is di- 
 vided must be stated in the memorandum ; that these shares must 
 be identified by numbers ; that no transfer of less than one share 
 can be made ; that no departure from the memorandum, by way 
 of lowering the value of or subdividing the shares, can be ad- 
 mitted ; and that no person can become a member or corporator, 
 except through the ownership of at least one share, which share is 
 to be of at least the amount named in the memorandum. The 
 provisions in the sections to which I have referred for the consol- 
 idation and increase in the nominal value of the shares, and for 
 the notice to the registrar of such consolidation and increase, seem 
 to me to make more emphatic the prohibition against any change 
 lowering the nominal value of the shares." 
 
 But a person may, by his acquiescence in such a division, be 
 estopped from afterwards denying the legality of the same ; ' (a) 
 and if the original shares which have been thus subdivided can be 
 traced and identified, the holders of them will still remain liable, 
 and may be placed on the list of contributories.' 
 
 The Companies Clauses Act of 184:5, by sections 6, 8 and 9, 
 and the Companies Act of 1862, by sections 22 and 25, require 
 with respect to companies, which fall under their regulations, that 
 a register shall be kept, and that the shares shall be numbered. 
 
 1 Ee Financial Corp. (Feillng and ^ HuU Flax, <fcc. Co. v. Wellesley, 30 
 
 Rimington's Case), L. R. 2 Ch. 714, 732. L. J. (Ex.) 5 ; Me Financial Corp. (King's 
 
 See New Zealand Banking Corp. (Sewell's Case), L. E. 2 Ch. 714. 
 Case), L. E. 3 Ch. 131 ; and Teasdale's ^ Foiling and Eimington's Case, uU 
 
 Case, li. R. 9 Oh. 54. supra; Sewell's Oa,se, ubi mpra. 
 
 (ffl) The acceptance by a stockholder of a dividend upon his stock is not a ratifi- 
 cation of illegal conduct of directors. HUlos v. Parrish, 14 N. J. Eq. 380. 
 
164 SHARES AND STOCK 
 
 The provision as to numbering was held to be satisfied where, 
 though the register did not show the numbers of the defendant's 
 shares, it could be proved, aliunde, that the shares had been in 
 fact distinguished by numbers which had been inserted in a book 
 kept by the plaintiffs.^ In a later case. Bacon, V.-C, decided 
 that the regulation as to keeping the register itself, was, as far 
 as the liability of members is concerned, purely directory.' 
 
 Section V. — Peefeeence Shaees. 
 
 I. Corporations must have express power in order to create 
 preference shares or stock, (a) 
 
 Very frequently a company issues shares, having a dividend 
 payable in priority to that upon the ordinary shares. Whether or 
 
 ' East GloiSceBter By. Co. v. Barthol- the effect of the existence of two sets of 
 
 omew, L. E. 3 Ex. 16. Compare Irish shares with the same numbers, see Lon- 
 
 Peat Co. V. Phillips, 1 B. & S. 629 ; SO L. don <fe County Ins. Co. (Jones's Case), 27 
 
 J. (Q. B.) 363 ; Wolverhampton W'works L. J. (Ch.) 666. 
 
 Co. V. Hawkesford, 29 L. J. (C. P.) 121, ' Adams's Case, L. E. 13 Eq. 474, 483. 
 
 ■where the contrary was decided. As to 
 
 (ffl) Preferred shares can only be issued where a power to do so is expressly given 
 in the charter or in some general statute, or where the language of the charter or 
 statute does not limit the corporation to one class of stock. The power to issue pre- 
 ferred stock has sometimes been claimed to exist &om the power to borrow money 
 and to secure such borrowed money by a pledge of income, it being contended that 
 the issuing of preferred stock is in theory, as it certainly is in practicS, a mode of 
 borrowing money, as distinguished from an investment at the hazard of the enter- 
 prise, as in the case of the original subscriptions to the capital stock. Unless the 
 contract by which preference shares are issued, having a sum stipulated as interest, 
 expressly provides that the interest shall be cumulative, the holders of such stock 
 will be entitled to payment only out of the income earned in any one year ; and in 
 estimating such earnings, the entire year should be considered, and not any iraction 
 of a year. There is this distinction between dividends or income upon preferred 
 stock and those upon common stock, that, whereas in regard to the latter, the ques- 
 tion of their declaration is a matter of discretion with the directors with which 
 courts will not generally interfere (see next chapter), in regard to the former, the 
 question of ability to pay is to be decided by the court whose interposition is invoked, 
 and the decision of the directors is not conclusive. See Bailey v, E. E. Co. 17 Wall. 
 fl6; s. 0. 1 Dill. 174; St. John v. Erie E. R. Co. 22 Wall. 136; s. o. 10 Blatchf. 271; 
 Bates V. Andf. & Ken. E. E. Co. 49 Me. 491 ; Eutland E. R. Co. v. Thrall, 35 Vt. 
 B36; Eichardson v. Vt. & Mass. E. E. Co. 44 Vt. 613 ; Barnard v. Vt. <fe Mass. E. E. 
 •Co. 7 Allen, 512 ; Davis v. Proprietors, 8 Mete. 321 ; Williston v. M. S. & K I. E. E. 
 'Co. 13 Allen, 400; Taft v. Hart., Prov. & P. E. R. Co. 8 E. I. 310; Thompson v. Erie 
 
PREFERENCE SHARES. 165 
 
 not as to companies governed by the Companies Clauses Consoli- 
 dation Acts these shares can be issued by virtue of the Act of 
 
 R. R. Co. 46 N. T. 468 ; Prouty v. M. S. & N. I. B. R. Co. 1 Hun, 655 ; Chase v. 
 Vanderbilt, 83 N. T. Supr. Ct. 334; 87 Supr. Ct. 344 ; West Chester & Phila. R. R. 
 Co. -0. Jackson, 11 Pa. St. 321 ; McLaughlin v. D. & M. R. B. Co. 8 Mich. 100; Lock- 
 hart V. Van Alstyne, 31 Mich. 16 ; Evansville, &c. Ry. Co. v. Evansville, 15 Ind. 
 395; Hazlehurst v. Savannah R. B. Co. 43 Ga. 18 ; Totten v. Tiaon, 64 Ga. 139. 
 
 Kent V. Quicksilver Mining Co. 12 Hun, 63, was a case where a joint-stock 
 corporation, pursuant to the provisions of its charter, established its capital at 
 $10,000,000, divided into 100,000 shares of $100 each, and issued certificates there- 
 for in the usual form. The charter in terms conferred no power to issue preferred 
 stock. The company, however, had power to make, alter, amend and repeal by-laws, 
 and to issue certificates of stock in such form and subject to such regulations as it 
 might from time to time, by its by-laws, prescribe. It was held that while the compa- 
 ny, under this general authority, might have had the corporate power in the first in- 
 stance to provide by its by-laws for the issuing of a portion of its certificates as pre- 
 ferred shares, it had not power afterwards, by vote of a majority of the stockhold- 
 ers, to provide that the holders of common stock might convert the same into pre- 
 ferred stock, entitled to certain privileges, upon payment of a specified sum. Dan- 
 iels, J., delivering the opinion of the court, states the rule thus : " Without the actual au- 
 thority of law or the consent of the holders of the common shares, the power to issue, 
 preferred stock of the description of that presented in this case, does not seem to- 
 have been successfully maintained in even a single instance. And as the shares 
 themselves are issued in a form clearly importing a right in the holder to demand 
 and receive a corresponding portion of the net earnings of the company, it cannot 
 consistently be held that he can be deprived, without his own consent, of that right 
 by the combined act of the directors and other shareholders in the corporation. If 
 that could be done, corporations would be enabled, under the sanction of the law, to- 
 perpetrate the most gross frauds ; for they could receive the subscriber's money, os- 
 tensibly and expressly for one thing, and afterwards deprive him of its substantial 
 benefit, by converting it into another entirely dififerent, and of inconsiderable value. 
 Persons do not subscribe for, nor deal in, the stock of corporations upon any such 
 understanding. They proceed upon the expectation, justified by law, that the shares 
 they have shall not be destroyed by giving others a preference over them, without 
 first obtaining their consent, where no power of that nature has been created by stat- 
 ute, or reserved to be exercised afterwards by the corporation itself. Property of 
 this description is protected from spoliation by the same safeguards as have been 
 devised for the preservation of the interest of the owner in that of a more tangible 
 character. He cannot be deprived of it contrary to the essence of the contract cre- 
 ating it, or without his expressed or implied consent.'" 
 
 The case of Hoyt v. Quicksilver Mining Co. 11 Hun, 169, is part of the same gen- 
 eral litigation. The decision of the General Term of the second department seems to 
 be based upon ratification and acquiescence. It is only in the dissenting opinion of 
 Gilbert, J., that the principles governing the power to issue preferred stock are con- 
 sidered. 
 
 The several cases involved in this litigation were argued together before the 
 Court of Appeals, and have just been decided (Sept. 1879) by that court. As 
 
166 SHAKES AND STOCK. 
 
 1845 alone, without an additional express power in this behalf, is 
 not fuUy settled. But the balance of authority, as well as of rear 
 
 they will, doubtless, become leading cases upon this subject, it is thought best to 
 quote, at some length, the opinion of the court, written by Folger, J. After stating 
 that the purpose in each case is to reach a final and binding judgment whether cer- 
 tain "preferred stock" is so far valid as to be recognized, in the future business of 
 the company, as giving to the holders the peculiar rights expressed in the certifi- 
 cates ; and after considering, in a general way, the extent of the implied powers of 
 the corporation, and especially of its implied power to borrow money. Judge Folger 
 proceeds as follows : " This corporation was in need of money to carry on its au- 
 thorized business. It did get money for that purpose, and because of that need, 
 from some of the stockholders in it ; and in that instance from some of them alone. 
 If the mode by which that money was got was a borrowing, within the sense which 
 the law and common acceptation give to that term, then the transaction so far 
 would have been lawful ; and it would have remained to inquire, whether the obli- 
 gation given was a lawful instrument. But it was not a borrowing. The idea of a 
 borrowing is not filled out, unless there is in the agreement therefor a promise or 
 understanding that what is borrowed will be repaid or returned, the thing itself, or 
 something like it of equal value, with or without compensation for the use of it in 
 the meantime. To borrow is the reciprocal action with to lend ; and to lend, or to 
 loan, say the dictionaries, is the parting with a thing of value to another for a time 
 fixed, or indefinite, yet to have some time an ending, to be used or enjoyed by that 
 other, the thing itself, or the equivalent of it, to be given back at the time fixed, or 
 when lawfully asked for, with or without compensation for the use, as may be agreed 
 upon. In this transaction with some stockholders, that corporation had not the 
 right, nor was it under the liability, to ever pay back the five dollars per share fur- 
 nished by them to it ; that was not named in the terms of the obligation given, nor 
 was it contemplated in the negotiation and bargain. The stockholder had not by 
 the scope of his bargain, nor by the terms of the written evidence of it, any right 
 ever to ask for repayment of the money furnished by him. In short, there was not 
 proved thereby the relation of debtor and creditor. The stockholder parted for- 
 ever with the money furnished, inasmuch as the charter of the company is perpetual, 
 and the company made a perpetual charge upon its net earnings. Though there was 
 a compensation fixed for the use of the money, and though it was to take the form 
 of a yearly payment, and at a rate the same as the then lawful rate of interest, yet 
 we cannot conceive that the transaction was a loan and borrowing of money, with a 
 compensation for the use of it. If it had been, though the compensation was 
 great for the sum furnished, yet it was not a violation of the many laws of which the 
 corporation could avail itself; Laws of 1850, chap. 172; and the courts might not 
 overhaul it, save, perhaps, as an unconscionable and extortionate agreement; 1 
 Story's Eq. Juris. §§ 246-3ai ; as to which we will speak again before the close. 
 The transaction is not to be looked upon as other than a preference of one class of 
 stockholders to another, as giving to the first class a perpetual, inextinguishable 
 prior right to a portion of the earnings of the company, before the other class might 
 have anything therefrom. It was none other than the creation of a 'preferred 
 stock.' Then there arises the query, whether there was at that time power in the 
 corporation to distinguish between the stockholders in it, to form them into two 
 
PREFERENCE SHARES. 167- 
 
 soning, is in the negative.^ The Act of 1845 ^ provides, in section 
 6, that " The capital of the company shall be divided into shares 
 
 ' Sturge V. Eastern Union Ry. Co. 1 376 ; Fielden v. Lancashire and York- 
 De G. M. & G. 158 and 1T5 ; Matthews shire Ry. Co. 2 De a. <fc Sm. B31. 
 V. Great Northern Ry. Co. 28 L. J. (Ch.) » 8 & 9 Vict. c. 16. 
 
 •classes, and to give to one class rights in the corporate property, business and earn- 
 ings, from which the other was shut out. We are not prepared to say, that, at the 
 first, the corporation might not have lawfully- divided the interest in its capital 
 stock into shares arranged in classes, preferring one class to another, in the right it 
 should have in the profits of the business. The charter gave power to make' such 
 lay-laws as it might deem proper, consistent with constitution and law, and to issue 
 ■certificates of stock representing the value of the property. We know nothing in 
 the constitution or the law that inhibits a corporation from beginning its corporate 
 action by classifying the shares in its capital stock, with peculiar privileges to one 
 share over another, and thus offering its stock to the public for subscriptions thereto. 
 No rights are got until a subscription is made. Each subscriber would know for 
 -about what class of stock he put down his name, and what right he got when he 
 thus became a stockholder. There need be no deception or mistake, there wwild be 
 ao trenching upon rights previously Acquired ; no contract, express or implied, 
 would be broken or impaired. This corporation did otherwise : a by-law was duly 
 imade, which declared the whole value of its property, and the whole amount of its 
 capital stock, and divided the whole of it into shares equal in amount, and directed 
 the issuing of certificates of stock therefor. It is not to be said, that this by-law 
 authorized anything, but shares equal in value and in right; or that the taker of 
 one did not own as large an interest in the corporation, its capital, affairs and profits 
 to come, as any other holder of a share. Certificates of stock were issued under 
 this by-law, that gave no expression of anything different from that. When that by- 
 law was adopted, it was as much the law of the corporation as if its provisions had 
 been a part of the charter. Presbyterian Church v. City of New York, 5 Cow. 538. 
 So it is said In Grant on Corporation, page 80, in a qualified way. Thereby, and 
 ■by the certificate as between it and every stockholder, the capital stock of the com- 
 pany was fixed in amount, in the number of shares into which it was divisible, and 
 In the peculiar and relative value of each share. The by-law entered into the com- 
 pact between the corporation and every taker of a share ; it was in the nature of a, 
 •contract between them. The holding and owning of a share gave a right which 
 could not be divested without the consent of the holder and owner; or unless the 
 power so to do had been reserved in some way. Mech. Bk. v. N. Y. & N. H. R. R. 
 Co. 13 N. Y. 599-627. Shares of stock are in the nature of choses in action, and give 
 the holder a fixed right in the division of the profits or earnings of a company so 
 long as it exists, and of its effects when it is dissolved. That right is as inviolable 
 as is any right in property, and can no more be taken away or lessened, against the 
 will of the owner, than can any other right, unless power is reserved in the first in- 
 stance, when it enters into the constitution of the right, or is properly derived after- 
 wards from a superior lawgiver. 
 
 " The certificate of stock is the muniment of the stockholder's title and evidence of 
 his right. It expresses the contract between the corporation and his co-stockholders 
 and himself; and that contract cannot, he being unwilling, be taken away from him. 
 
168 SHARES AND STOCK. 
 
 of the prescribed number and amount ; and such shares shall be 
 numbered in arithmetical progression beginning with number 
 
 or changed to him, without his prior dereliction or under the conditions above- 
 stated. 
 
 " Now it is manifest, that any action of a corporation which takes hold of the shares 
 of its capital stock already sold, and in the hands of lawful owners, and divides them 
 into two classes, one of which is thereby given a prior right to a receipt of a fixed 
 sum from the earnings before the other may have any receipt therefrom, and is given 
 an equal share afterwards with the other in what earnings may remain ; destroys the 
 equality of the shares, takes away a right which originally existed in it, and mate" 
 rially varies the effect of the certificate of stock. 
 
 " It is said that when a corporation can lawfully buy property, or get money on 
 loan, any known assurance may be exacted and given which does not fall within the. 
 prohibition express or implied of some statute ; Curtis v. Leavitt, 15 N. Y. R. 7 ; and 
 that is sought to be applied here. But the prohibition to such action as this is found,, 
 not, indeed, in a statute commonly so called, but in the constitutional provision, which 
 forbids the impairment of vested rights save for public purposes and on due com- 
 pensation. The right which a stockholder gets on the purchase of his shares and the^ 
 issue W him of the certificate therefor, is suoh a vested right. 
 
 " It is contended that the power so to do is an incidental and implied power, neces- 
 sary to the use of the other powers of the corporation ; and is a legitimate means of 
 raising money and securing the agreed consideration therefor. We have already 
 conceded that it is legitimate to borrow money and to secure the repayment of it, 
 with a compensation for the use of it. But that is when it is done in such ways as to 
 put the burden upon all : every share of stock alike, and to enable every share of 
 stock to be relieved therefrom alike, in such way as to preserve the equality of right 
 and privilege and value of the shares, and maintain intact the contract thereto with 
 the stockholder. 
 
 " Citations are made to us for the converse of this, but they do not come up — some- 
 times in their facts, sometimes in their declarations — to the necessity of thg proposi- 
 tion. Either, it is where the capital is not limited, and it is new shares that may be 
 issued with a preference, and where there is express power to borrow on bond and 
 mortgage; 2 Eedf. on R'ways, ch. xxxiii, sect, iv, p. 287 ; Harrison v. R. W. 12 Eng. 
 Bep. 793 ; or, the amount of the capital has not been reached and such stock is issued 
 therefrom Hazlehurst v. Savannah R. R. 43 Ga. 13; Totten v. Tison, 54 lb. 139; 
 or, there was legislative authority ; Davis v. Proprietors, 8 Mete. 32 ; Rutland E. R.. 
 Co.D.Thrall, 35 Vt. 645 ; or, a restriction to authorized capital, and there was unani- 
 mous consent of the stockholders ; Prouty v. M. S. & N. I. R. R. 1 Hun, 665 ; 43 Ga. 
 rupra ; or, there was power to redeem, which was a transaction in the nature of 
 a debt ; West Chester, &c. R. R. Co. -a. Jackson, 77 Penn. St. 821 ; or, the opinion 
 was obiter ; Bates v. Androscoggin R. R. Co. 49 Me. 491 ; or, it was the case of a sub- 
 scription for stock, with a condition for interest until the corporation was in opera- 
 tion ; Richardson v. Vt. & Mass. R. R. Co. 44 Vt. 613 ; or, it was an action on a sub- 
 scription more favorable to defendant than to other subscribers, and it was held that 
 defendant could not set up the lack of equality; Evansville R. R. Co. v. Evansville, 
 15 Ind. 895 ; or, a solemn determination of this question was not necessary for the- 
 disposal of the case ; Williston v. M. S. & N. I. R. R. Co. 13 Allen, 400 ; or, the issue 
 was authorized by the articles of association ; In re A. D. St. Nav. & Col. Co. 20 
 
PREFERENCE SHARES. 16* 
 
 one ; and every such share shall be distinguished by its appro- 
 priate number." The doubts which have been raised have not 
 
 L. R. Eq. 339 ; or, there was full knowledge on the part of all concerned ; Lockhart 
 V. Van Alstyne, 31 Mich. 81 ; or, the power in the corporate body was conceded,, 
 and it was denied that it existed in the directors ; McLaughlin v. T>. & M. R. R. S- 
 lb. 100. 
 
 " We will not say, for we are not called upon here to say, that neyer can a corpora- 
 tion, rightfully against the dissent of a portion of its stockholders, make some of the- 
 stock preferred ; what we assert is that this case does not present a state of facts in 
 which a power so to do exists. 
 
 " There is a power in this charter to alter, amend, add to or repeal at pleasure by- 
 laws before made. It is argued from this, that it was in the power of the corporate 
 body, in due form and manner, to alter the by-law which had fixed the amount of the- 
 capital stock, and the number and relative value of the shares thereof. The power to 
 make by-laws is to make such as are not inconsistent with the constitution and the 
 law, and the power to alter has the same limit ; so that no alteration could be made 
 which would infringe a right already given and secured by the contract of the cor- 
 poration. Nor was the power to alter to the extent of affecting the contracted rela- 
 tive value of a share, reserved when the share was sold to the stockholder, so as to 
 enter into and form part of the contract. An alteration is a pro tarda repeal, but na 
 private corporation can repeal a by-law so as to impair rights which have been givto 
 and become vested by virtue of the by-law afterwards repealed. All by-laws must 
 be reasonable and consistent with the general principle of the laws of the land ; 
 which is to be determined by the courts when a case is properly before them. The 
 Master, <fec. v. Green, 1 Ld. Kenyon, 113. A by-law may regulate or modify th& 
 constitution of a corporation, but cannot alter it. Rex v. Cutback, 4 Burr, 2204 ; R.^ 
 W. Oo. V. AUerton, 18 Wall 233. The alteration of a by-law is but the making of 
 another upon the same matter. If the first must be reasonable and in accord with 
 principles of law, so must that which alters it. If, then, the power is reserved to 
 alter, amend or repeal, and that reservation enters into a contract, the power reserved 
 is to pass reasonable by-laws agreeable to law. But a by-law that will disturb a. 
 vested right is not such. See Gray v. Portland Bank, 3 Mass. 363 ; Grant on Corps. 
 91. And it differs not when the power to make and alter by-laws is expressly given 
 to a majority of the stockholders, and that the obnoxious ordinance ia passed in due 
 form. It needs not that we consider the position, that the issue of the preferred stock 
 was an authorized increase of the capital, and so legal. It did not profess to be, nur 
 was it in fact. For each share of preferred stock given out, a share of common stock 
 was taken in, so that the gross amount of the capital stock was still the same, and so' 
 were the number of shares and the nominal value of each share. 
 
 " We are, therefore, of the opinion, that there was no power in the corporate body, 
 nor in a majority of the stockholders, to provide by by-law for the creation of a pre- 
 ferred stock so as to bind a minority of the stockholders not assenting thereto." 
 
 The laches and acquiescence of the common stockholders is then considered, and 
 therein is found ample ground for the protection of the right of the holders of the- 
 preference shares. So that while the court decides that the creation of these shares; 
 was illegal, it does not allow the common stockholders to take the benefit of such ille- 
 gality, but gives to the preference shares the same effect as if they had been legally- 
 
ITO SHARES AND STOCK. 
 
 been settled as to whether this act alone authorizes companies 
 to create preference shares or stock ; but most companies which 
 incorporate this act, contain in addition express authority in 
 ihis behalf; and now the Companies Clauses Act, 1863, pro- 
 vides by sections 13, 14, 15, that preference shares and stock may 
 be created. 
 
 The Companies Acts, 1862 and 1867, contain no direct pro- 
 vision on this point. Therefore to issue preference shares, reg- 
 istered companies must have the power given to them in their 
 constating instruments as originally framed.^ They cannot sub- 
 sequently be altered by resolution of the shareholders to give 
 such power,^ and if there be a power to issue a certain number, 
 this authority cannot by resolution be extended to a greater 
 number.' 
 
 With regard to shares of various descriptions, the Companies 
 Act, 1867, 30 & 31 Vict. c. 131, provides, by section 24, that any 
 company under the Companies Act, 1862, may, if authorized by its 
 regulations as originally framed, or as altered by special resolution, 
 make " arrangements on the issue of shares for a difference be- 
 tween the holders of such shares in the amount of calls to be paid, 
 and in the time of payment of such calls." But whether this-en- 
 actment will justify the issue of preference shares, unless' pl^^^^s 
 in that behalf have been given to a company at its inception,^TBfiuBt 
 be considered doubtful.* 
 
 II. The power to issue preference shares or stock nw/y he con- 
 ferred hy wide Icmguage amihorizvng the creation of fresh 
 capital. 
 
 It is advisable that the power should be given expressly and in 
 
 ' iJe National Patent steam Fuel Co., '^ Hutton «. Soarborougli Cliff Hotel 
 
 ^ parte Worth, 4 Drew. 529 ; 28 L. J. Co. (No. 2), 2 Dr. <fe Sm. 621. 
 {Ch.) 689 ; Button v. Scarborough CUff 8 Melhado v. HamUtbn, W. N. 1873,- 
 Hotel Co. (No. 1) 2 Dr. & Sm. 614 ; Moss 92, 172; 28 L. T. (N. S.) 578 ; 29 L. T. 
 1). Syers, 11 W. E. 1046. (N. S.) 364. 
 
 * See the case next cited. 
 
 created. The latter part of the opinion will be referred to hereafter, in treating of 
 the subject of Ratification and Acc[uie3Cence. 
 
 The case of Burt v. Rattle, 31 Ohio St. 116, has no real bearing upon the question 
 Tmder consideration. In the act under which that suit arose, the use of the name 
 ■"preferred stoct" seems, from the opinion of the court, to have been a misnomer. 
 
PREFERENCE SHARES. 171 
 
 SO many words, and it has been thought that this is necessary. 
 The present master of the rolls has, however, decided, in Harrison 
 V. Mexican K.y. Oo.^ that the power to issue preference capital 
 need not be given in so many words. The memorandum of asso- 
 ciation of the defendant company, which was incorporated under 
 the Companies Act, 1862, declared that the capital was £2,700,000, 
 •divided into 135,000 shares of £20 each. It was provided by 
 ■the articles of association that the directors might, with the sanc- 
 tion of a special resolution of the company previously given in 
 general meeting, increase the capital by the issue of new shares, 
 such increase of capital to be made in such manner, to such 
 amount, and to be with and subject to such rules, regulations, 
 privileges and conditions as the company in general meeting 
 should think fit. Jessell, M. E., said : " Words of larger import 
 could hardly be imagined. Yet it is said that the language is not 
 sufficient to convey the power to authorize the shares which are 
 issued for the purpose of increasing the capital to be issued with 
 the privilege of having attached to them a preferential dividend. 
 The capital is to be raised or to be increased in such manner, and 
 with and subject to such rules, regulations, privileges and condi- 
 tions as the company may think fit. I can find no such limit 
 either in the term privilege or in the term condition as has been 
 suggested. It seems to me that they are words of extensive 
 meaning, and fully ample to cover all that is proposed to be 
 done." 
 
 Preference shares and stock taKe a multiplicity of forms, ac- 
 cording to the needs of the coi"poration creating, and the ingenuity 
 of those who control, such corporations. What has been said in 
 the preceding subsection as to the power to create, and will be 
 said in the fourth subsection as to the incidents, wiU apply equally 
 to all varieties of preference shares and stock. 
 
 Of the special incidents of such forms of capital, the most im- 
 portant is their relative priority. This can be determined only 
 by an examination in every particular emission of the constating 
 instruments, and of the contract made at and by the previous 
 issues of any of such shares and stock. This contract can be al- 
 tered only in one of two ways : (1) by the consent of the parties 
 thereto ; (2) by the interference of the Legislature. 
 
 > L. E. 19 Eq. 358. 
 
172 . SHARES AND STOCK. 
 
 The former for obvious reasons seldom occurs. The latter not 
 unseldom happens. It may be done, as is the more usual course, 
 by a special act. "With regard to railway companies there is a 
 general statute,^ which enables directors to prepare a scheme of 
 arrangement, where a company are unable to meet their engage- 
 ments with their creditors, between the company and their cred- 
 itors, which must be assented to by three-fourths of the m6rt- 
 gagees and holders of bonds, debenture stock and preference 
 stock respectively affected by it, and if so assented to, may be con- 
 firmed by the Court of Chancery.^ 
 
 Preference shares and stock will generally be only what they 
 purport to be, viz., shares and stock giving the holders a priority 
 of dividends, but not of assets or capital, as to which they will 
 rank with ordinary shareholders.^ But preference capital in the 
 strict sense may be issued. There must be a clear power in this 
 behalf, but provided it does exist and has been properly exercised 
 the holders of such capital in the division of assets will rank before 
 and perhaps to the entire exclusion of the ordinary members.* 
 
 The term "guaranteed" is sometimes employed instead of 
 " preference," and in one case great stress was laid in the argu- 
 ments upon the difference, both terms having been used ; but 
 Page "Wood, Y. C, considered that the words had not there re- 
 ceived, nor had they by custom acquired, such definite and distinct 
 meanings as would justify him in attributing to them a difference 
 in legal effect.' {a) 
 
 ' 30 (fe 31 Vict. 127, SB. 6-17. Financial Assoc, v. Stevens), L. R. 8Ch. 
 
 'For instances of such schemes see 1064; London Financial Assoc, w. Wrex- 
 
 Re Bristol <fe North Somerset Ry. Co. L. ham, &c. & Connahs Quay By. Co. L. E. 
 
 R. 6 Eq. 448 ; Re Devon &, Somerset Ey. 18 Eq. 566. 
 
 Co. (1) L. R. 6 Eq. 610 ; (2) ibid. 616 ; Re ^ Re London India Rubber Co. L. E. 
 
 Cambrian Ey. Co.'s Scheme, L. E. 3 Ch. 6 Eq. 619. 
 
 278; Re Potteries, <fec. <fe North Wales * Re Bangor, Ac. Slab Co. L. E. 20 
 
 Ey. Co. L. E. 6 Ch. 67 ; Re East & West Eq. 69. 
 
 Junction Ey. Co. L. E. 8 Eq. 87 ; Munns ' Henry v. Great Northern Ey. Co. 4 
 
 ■0. Isle of Wight Ey. Co. L. E. 8 Eq. 653 ; K. <fe J. 1, 21-6. 
 Stevens v. Mid Hants Ey. Co. (London 
 
 (ffl) Bradley, C. J., in Taft v. E. R. Co. 8 R. L 335, after reviewing the authorities, 
 says : " It is perfectly apparent that the guarantee of a dividend by a railway com- 
 pany is considered by the courts, and, it seems from the course of argument by the 
 counsel in these causes, who, doubtless, faithfully represent the interests and wishes 
 of their clients, by the business community also, to mean nothing more than a pledge 
 of the funds legally applicable to the purposes of a dividend ; that, in short, it is a 
 dividend, and not a debt, which is thus preferred and guaranteed; and as the state- 
 
PEEFERENCE SHARES. 173 
 
 What will be the precise incidents of preference shares and 
 what the exact rights of the holders will depend entirely upon the 
 provisions creating them. Usually the holders thereof are en- 
 titled to be paid arrears of dividend out of future profits,^ and 
 this was so decided where it was expressly provided as to some, 
 but not as to others, that they should be so paid,' unless there 
 should be express statutory provisions to the contrary.' 
 
 But the interest or dividends on such shares can be paid only 
 out of profits actually earned, any agreement to the contrary being 
 absolutely ultra vires} (a) 
 
 It is almost needless to add, that the rights of preference, 
 guaranteed, and other similar classes of secured stock of share- 
 holders, whether individually or in a body, cannot be modified, 
 save by the acquiescence of the individuals afiected ; and the Court 
 of Chancery will, where necessary, interfere to restrain acts of the 
 company in derogation of their rights.^ But these members are 
 not creditors, not even as to dividends in arrear, and therefore in 
 
 ' Henry v. Great Northern Ry. Co. 4 ' Corry v. Londonderry, &c. Ry. Co. 
 
 K. (fe J. 1 ; 27 L. J. (Ch.) 1 ; Corry ». Lon- vbi mpra. 
 
 donderry, Ac. Ry. Co. 29 Beav. 263 ; 30 » See 26 & 27 Vict. c. 118, s. 14 
 
 L. J. (Ch.) 290; Coates v. Nottingham (amended by 32 & 33 Vict. c. 48), which 
 
 W'works Co. SOBeav. 86; Webb«. Earle, enacts that a deficiency in dividends in 
 
 L. R. 20 Eq. 856, the case of a registered any one year is not to be made up out of 
 
 company. As to the rights of holders of subsequent years. 
 
 different kinds of preference shares, see * See Macdougall v. Jersey Imp. Hotel 
 
 Matthews v. Great Northern Ry. Co. 28 Co. 2 H. & M. 528. 
 
 L. J. (Ch.) 375 ; Coey v. Belfast, <fec. Ry. = Henry v. Great Northern Ry. Co. 4 
 
 Co. Ir. L. Rep. 2 CX. 112. K. & J. 1 ; 1 De G. <fc J. 606. 
 
 ment of facts admits that dividends have not been earned in this case, the plaintiff, 
 if there were no other difficulties in his way, could not recover." 
 
 (a) Payments of interest on preferred stock can only be made out of profits hona 
 fide earned; for a corporation has no power to contract for the payment of interest 
 or dividends on its capital stock in excess of the earnings of the company. Pitts- 
 burgh, (fee. R. R. Co. V. Allegheny Co. 63 Penn. St. 126. An agreement by a corpor- 
 ation to pay annual premiums to preferred stockholders, without reference to ability 
 to pay them from earnings, is void as opposed to public policy. Lockhart v. Van 
 Alstyne, 31 Mich. 76 ; see Curran v. Arkansas, 16 How. 304, and compare Evans- 
 yille R. R. Co. v. EvansyiUe, 16 Ind. 896, and other cases cited in note to page 164. 
 Holders of preferred stock in a corporation, who are entitled, by their contract and 
 by the charter, to receive interest in preference to the payment of dividends on the 
 common stock, and after payment of the mortgage interest, cannot be deemed preju- 
 diced by the corporation's issuing mortgage bonds consolidating prior and subse- 
 quent indebtedness, Thompson v. Erie R. Co. 11 Abb. Pr. (N. S.) 188 ; 42 How. Pr. 68. 
 
174 SHARES AND STOCK. 
 
 a winding-up they can rank only pa/ri passu with the other mem- 
 bers,^ unless indeed they are holders of what is in the strictest 
 sense preference capital.' 
 
 When the power to create preference shares exists, it must be 
 employed solely and expressly for its special purpose, viz., the 
 obtaining additional capital. In Hoole v. Great Western Eailway 
 Company,' where the defendants had power to raise additional 
 capital by the issue of shares, and to allot to them a preferential 
 dividend, it being enacted that dividends should not be paid out 
 of any moneys received for the shares, and that no share should 
 be issued until one-fifth of the amount had been paid, they were 
 restrained from paying dividends in preference shares. 
 
 Section VI. — Scrip. 
 
 " Scrip" is often issued by the projectors of companies, gener- 
 ally of those coming under the operation of special acts. This 
 consists of certificates or other documents, entitling the holder to 
 become a proprietor in the future company. The liability im- 
 posed upon the scrip receiver will principally depend upon the 
 engagement he has entered into with the projectors ; he may ne- 
 gotiate the scrip, but he will nevertheless remain liable if the com- 
 pany be formed, until the name of the purchaser be entered upon 
 the register.^ (a) 
 
 ' Ee London India Eubber Co. L. R. 6 ' Midland Great Western Ry. Co. o. 
 
 Eq. 519. Gordon, 16 M. & W. 804; 16 L. J. (Ex.) 
 
 ' Ante, p. 172. 165. But eee Jackson v. Cocker, 4 Beav. 
 
 ^ L. R. 3 Ch. 262. 69, and tlie cases cited in next two notes. 
 
 (a) Preliminary subscriptions to stock become vested in the corporation when 
 formed ; the right of membership is a sufficient consideration for such subscription, 
 and there results a promise to pay, implied, if not express, which will support an 
 action to recover on calls on such subscriptions by the company, after its complete 
 incorporation. In the general laws providing for the incorporation of companies, 
 which may now be considered the accepted mode in this country for the creation of 
 corporations, preliminary subscriptions and payments to certain amounts are re- 
 quired from some of the corporators of the inchoate body, as a condition precedent, 
 and these subscriptions become part of the assets of the corporation when fully or- 
 ganized. See Penobscot R. R. Co. -o. Dummer, 40 Me. 172 ; Watkins v. Eames, 9 
 Cush. 537 ; People's Ferry Co. ii. Balch, 8 Gray, 308 ; Danbury & Norwalk R. R. Co. 
 
SCRIP. 1Y5 
 
 Sometimes, after the formation of a company, scrip is issued 
 to applicants, instead of an allotment of shares. "What is the 
 exact effect of such an arrangement is not settled. It must, how- 
 ever, it is presumed, be determined by the terms under which 
 such scrip is issued, as read in connection with the constating in- 
 struments of the corporation. A decision in point is that of Re 
 Littlehampton, &c. Steamship Co., Ormerod's Case.^ The articles- 
 of association of the company provided that the directors, instead 
 of entering allottees of shares on the register of members, might 
 issue to them scrip certificates entitling the holders to the shares, 
 therein named, subject to the payment of the installments at the 
 times therein mentioned ; that the word " shareholder" should in- 
 clude scripholder; that the shares for which scrip was issued 
 should be transferable by delivery of the scrip, and the holder of 
 the scrip should be the only person recognized as entitled to the 
 shares, and that the scripholder on surrendering his scrip should 
 be entitled to be entered on the register of members in respect of 
 the shares mentioned in the scrip certificate. In November, 1863, 
 Ormerod applied in writing for 100 shares. These were allotted 
 him, and he paid a deposit of £1 per share ; but his name was put 
 on the register for ten shares only, and for the remaining ninety 
 he received provisional scrip certificates, declaring the holder en- 
 titled to the shares tlierein numbered. One Grregg similarly ap- 
 
 ' L. R. 5 Eq. 110. Compare Eustace ». Dublin Trunk Connecting Ry. Co. L. R. 
 
 6 Eq. 182. 
 
 V. Wilson, 22 Conn. 435 ; Buffalo & N. Y. E. R. Co. ®. Dudley, 14 N. Y. 336 ; East- 
 ern PI. R. Co. V. Vaughan, 14 N. Y. 546 ; Late Ontario R. R. Co. ti. Mason, 16 N. Y. 
 461 ; Ren. <& Wash. PI. R. Co. ». Barton, 16 N. Y. 467 ; Stanton v. Wilson, 2 Hill, 
 153; Ham. & Deansville Co. o. Rice, 7 Barb. 167; Refd Prot. Dutch Ch. *. Brown, 
 29 Barb. 336 ; s. o. 4 Abb. Ct. App. Dec. 31 ; Taggart i>. West Md. R. R. Co. 24 Md. 
 663; SeUna & Tenn. R. R. Co. v. Tipton, 5 Ala. (K S.) 787; Anderson v. New. <fc 
 Rich. E. R. Co. 12 Ind. 376; Johnson v. Wabash PI. R. Co. 16 Ind. 389; Heaston v. 
 Cin. <fc Ft. W. E. R. Co. 16 Ind. 276 ; Griswold v. Peoria Univ. 26 111. 41 ; Johnston 
 V. Ewing Fern. Univ. 35 IlL 618 ; Tonica R. E. Co. v. McNeeley, 21 111. 71 ; Oregon 
 Central E. E. Co. v. Scoggin, 3 Oreg. 161 ; but see Strasburg R. R. Co. v. Echter- 
 nacht, 21 Penn. St. 220 ; Gleaves v. Brick Ch. T. Co. 1 Sneed, 491. 
 
 As to when the preliminary subscriptions become obligatory, see Troy & Boston 
 R. R. Co. V. Tibbits, 18 Barb. 297; Burt v. Farrar, 24 Barb. 618; Poughkeepsie <fc 
 S. P. PI. B. Co. </. Griffin, 21 Barb. 464; s. o. 24 N. Y. 150; Thrasher v. Pike R. R. 
 Co. 25 111. 393. 
 
1T6 SHARES AND STOCK. 
 
 plied for shares, and received a notice from the company that he 
 might have scrip certificates for the shares allotted him ; -but he 
 did not obtain the certificates, and the directors subsequently en- 
 tered his name on the register of members. The Master of the 
 Eolls held Ormerod not to be, and Gregg to be, a contributory.* 
 The judge followed the principle laid down in Ellis's Case,' that 
 the articles of association made a clear distinction between mem- 
 bers of the company and mere scripholders, these latter not be- 
 coming members or liable as such tiU shares were issued to them, 
 and their names put on the register. 
 
 In a later case, Esu parte Collum,' the scripholder was not a 
 member. He had applied for and received provisional certificates, 
 but refused to pay more than one installment. 
 
 In this country there have been various crude forms of trans- 
 ferable shares. Scrip companies were an instance, viz., unincor- 
 porated companies with shares denoted by scrip certificates, trans- 
 ferable by delivery, and they have been decided to be perfectly 
 legal.* 
 
 So ordinary scrip is thus transferable,^ and this is very cus- 
 tomarily the case with shares in cost book mining companies. 
 
 As to companies within the Companies Clauses Act, 1845, it 
 has been expressly decided that their shares may not be transferred 
 by parol.' 
 
 So also this power is apparently not possessed by ordinary joint 
 stock companies.'' 
 
 It, therefore, belongs only to such companies as are within the 
 provisions of the act of 1867, which, by section 27, allows com- 
 panies, under certain conditions, with respect to any share which 
 is fully paid up, or with respect to stock, to issue, under their 
 
 ' Compare Ellis's Case, arising from ' Re Asiatic Banking Co. L. E. 9 Eq. 
 
 the ■winding up of the same company be- 236. 
 
 fore the M. R. 84 Beav. 266 ; affirmed on * See Ex parte Barclay, 26 Beav. 17T ; 
 
 ' 2 De G. J. <fe Sm. 521 ; 34 L. J. Ex parte Aston, 4 De G. & J. 320 ; Ex 
 
 (Ch.) 237. See other cases of scrip cer- parte Grisewood, 4 De G. <fe J. 644. 
 
 tificates, Newry and Enniskillen Ry. Co. also, Garrard ®. Hardey, 6 M. <fc Gr. 471 ; 
 
 V. Edmunds, 17 L. J. (Ex.) 102 ; Hyam's Harrison v. Heathorn, 6 M. & Gr. 81 ; 
 
 Case {Be Mexican, <fcc. Co.\ 1 De G. F. k Sheppard v. Oxenford, 1 K. <fe J. 491. 
 J. 76 ; 29 L. J. (Ch.) 243 ; De Pass's Case, ' See Walker v. Bartlett, 18 C. B. 846 ; 
 
 4 De G. <fe J. 644. As to certificates of Northey v. Johnson, 19 L. T. 104. 
 shares, see 8 <fc 9 Vict. c. 16, ss. 11-13, * McEuen ». West London Wharves, 
 
 and 26 & 26 Vict. c. 89, s. 31 ; and Broad- Ac. Co. L. R. 6 Oh. 666. 
 bent V. Varley, 12 0. B. (N. S.) 214. ^ Re General Co. for Promotion of 
 
 ' Vhi supra. Land Credit, L. R. 6 Ch. 363. 
 
TRANSFER OF SHARES. 1T7 
 
 common seal, a warrant, stating that the bearer of the warrant is 
 entitled to the shares or stock therein specified. 
 
 SEcnoN VII. — Teansfee of Shaees. 
 
 L In the absence of egiypress provision to the contrary, a share- 
 holder may bona fide transfer his interest as and when he 
 pleases, {a) 
 
 There is such a provision in section 16 of the Companies 
 Clauses Consolidation Act, 1845 : " No shareholder shall be enti- 
 tled to transfer any share, after any call shall have been made in 
 respect thereof, until he shall have paid such call, nor until he 
 shall have paid all calls for the time being due on every share held 
 by him." ^ 
 
 ■ Hubbersty v. Manchester Ry. Co. L. R. 2 Q. B. ill. 
 
 (a) The right of transfer is incidental to the ownership of stock, as it is to the 
 ownership of any personal property ; so much so, that any by-law restraining such 
 transfer, and amonnting to more than a reasonable regulation of the method, is void, 
 unless specially authorized by the charter of the corporation. See Field on Corpo- 
 rations, § 110; Angell <fc Ames on Corporations, § SB"?; Sargent v. Franklin Ins. Co. 
 8 Pick. 90 ; Quiner v. Harblehead Ins. Co. 10 Mass. 476 ; Moore v. Bank of Com- 
 merce, 62 Mo. Z11. But as to the validity of a by-law forbidding transfer when the 
 owner is indebted to the corporation, see Mechanics' Bank v. Merchants' Bank, 45 
 Mo. 613; Re Bachman, 12 Nat. Bankruptcy Reg. 223; Lockwood v. Mech. Nat. 
 Bank, 9 R. I. 808. Even proper regulations have been held to be effectual only for 
 the benefit of the corporation. Duke v. Cahawba Nav. Co. 10 Ala. 82. See, also, 
 Eames v. Wheeler, 19 Pick. 442 ; Sargent v. Essex Mar. Ry. Co. 9 Pick. 202 ; Stone 
 V. Hackett, 12 Gray, 231 ; Lockwood v. Mechanics' Nat. Bank, 9 R. I. 308 ; Gilbert 
 ». Manchester, 4c. Co. 11 Wend. 627; Mechanics' Bank v. N. T. &o. R. R. Co. 13 N. 
 Y. 699; N. T. <fcc. R. R. Co. u. Schuyler, 34 N. Y. 30 ; Mount Holly T. Co. v. Ferree, 
 17 N. J. Eq. 117; Chambersburg Ins. Co. v. Smith, 11 Penn. St. 120; St. Louis, <fec. 
 Ins. Co. V. Goodfellow, 9 Mo. 149 ; Chouteau Spring Co. v. Harris, 20 Mo. 382. 
 But see Fisher v. Essex Bank, 6 Gray, 373. Where the corporation acquiesces in an 
 informal transfer, not made in the manner provided by the charter or by-laws, and 
 recognizes the transferee as owner of the stock, the original stockholder will not be 
 liable to calls after such transfer. Isham v. Buckingham, 49 N. Y. 216. And see 
 Chambersburg Ins. Co, v. Smith, 11 Penn, St. 120. See, also, notes, post, pages 
 178-181. 
 
 13 
 
178 SHARES AND STOCK. 
 
 There is no similar provision in the Companies Acts. There- 
 fore companies within these acts must give themselves the power 
 to interfere, or members cannot, on any ground, be prevented 
 transferring.^ 
 
 The transfer must be a lona fide and out-and-out transfer, or 
 it may be set aside ; ' though if so it will be perfectly good for 
 whatever purpose, for whatever consideration, and whenever 
 made.' 
 
 II. Powers to regulate transfers will he discretionary, unless 
 clearly expressed to he unlimited. 
 
 In every case, ordinary powers of this kind are merely discre- 
 tionary and controllable by the courts, when a company or its 
 directors are acting capriciously ; ^ but the degree of discretion 
 will vary with the language used, and the courts will hesitate to 
 interfere.^ (a) 
 
 ' See Gibberte' Case, L. E. 6 Ch. 559, Bishop's Case, L. E. T Ch. 296, n. ; Ha- 
 
 565 ; Weston's Case, L. E. 4 Ch. 20. kirn's Case, Ibid. ; Masters' Case, L. R. 7 
 
 2 Hyam's Case, 1 De G. F. 4 J. 76 ; Ch. 292. 
 Budds' Case, 3 Be G. F. & J. 297; Cos- ^ See Shepard's Case, L. E. 2 Ch. 16. 
 
 tello's Case, 2 De G. F. <fc J. 302 ; Lankes- ^ See E% parte Penney, L. R. 8 Ch. 
 
 ter's Case, L. E. 6 Ch. 905. 446. 
 
 2 De Pass's Case, 4 De G. & J. 544 ; 
 
 (o) Although in some of the earlier American cases shares of corporations were 
 treated as real estate (see Howe v. Starkweather, 17 Mass. 240; Welles v. Cowles, 2 
 Conn. 567 ; Meason's Estate, 4 Watts, 841), and to obyiate this rule express provis- 
 ions were inserted in railway and other charters, that the capital stock^should ha 
 deemed and taken as personal estate (see, e. g., N. Y. 1 E. L. 247 ; Laws of If. J. 
 1830, p. 83, sect. 17), it is now well established that shares of aU corporations are 
 personal property. Bank of Waltham v. Waltham, 10 Mete. 834 ; Hutchins v. State 
 Bank, 12 Meto. 426; Wheelock v. Moulton, 15 Vt. 519; Isham o. Ben. Iron Co. 19 
 Vt. 230 ; Arnold v. Buggies, 1 R. I. 165; Denton ». Livingston, 9 Johns. 96 ; Gil- 
 pin V. Howell, 5 Penn. St. 41 ; Slajsuaker v. Gettysburgh Bank, 10 Penn. St. 373; 
 State V. Franklin Bank, 10 Ohio, 91: Johns ». Johns, 1 Ohio St. 350; Heart «. State 
 Bank, 2 Dev. Eq. Ill ; Plan. <fe Mer. Bank v. Leavens, 4 Ala. 788; Union Bank v. 
 State, 9 Yerg. 490 ; Brightwell v. Mallory, 10 Yerg. 196; GrifBth j). Watson, 19 
 Kan. 28. 
 
 The capital stock of an incorporated company has not, neither has the certificate 
 or other evidence of title or ownership, any of the qualities of commercial or nego- 
 tiable paper. As a rule, the purchaser or assignee of shares of the capital stock in a 
 corporation acquires no other or better title than the seller or assignor has, and takes 
 it subject to the legal and equitable rights of third persons. Weaver v, Barden, 3 
 Lans. 838 ; s. c. 49 N. Y. 286 ; Mech. Bank v. N. Y. <Ss N. H. E. R. Co. 13 N. Y. 599 v 
 Dunn V. Commercial Bank, 11 Barb. 680. 
 
 The common practice of passing the title to stock by delivery of the certificate 
 
FORFEITURE AND SURRENDER. 119 
 
 Section VIII. — Coepoeate Powees in Eelation to Shaees and 
 Stock aftee issue. 
 
 The capacities of corporations with respect to the creation of 
 shares and stock have been considered. There now remain for 
 
 with blank assignment and power, has been repeatedly shown and sanctioned ia 
 cases which have come before our courts. Such was established to be the common 
 practice in the city of New York, in the case of the N. T. <fc N. H. R. R. Co. v. 
 Schuyler, 34 N. Y.. 30, and the rights of parties claiming under such instruments 
 were fuUy recognized in that case. The holder of the certificate, as between himself 
 and the person from whom he received it, acquires a perfect title to the stock ; 
 against the corporation he has a right of action for damages, the measure of which 
 is the market value at the time of demand and refusal to transfer ; but a subsequent 
 bona fide purchaser from him, in whose name the stock still stands upon the books, 
 after a transfer permitted by the corporation, becomes vested with a complete title 
 to the stock, and cuts off all the rights and equities of the holder of the certificate to 
 the stock itself. Holbrook v. New Jersey Zinc Co. 5T N. Y. 616 ; McNeU a. Tenth 
 National Bank, 46 N. Y. 325 ; s. o. 55 Barb. 69 ; Weaver v. Harden, S Lana. 338 ; 
 s. 0. 49 N. Y. 286; Merchants' Bank of Canada v. Livingston, 6 Reporter, 178; 
 Broadway Bank v. McElrath, 13 N. J. Eq. 24; Hunterdon Co. Bank v. Nassau Bank, 
 17 N. J. Eq. 496 ; Mt. Holly, <fec. T. Co. ». Ferree, 17 N. J. Eq. 117; Bridgeport 
 Bank v. N. Y. A N. H. R. R. Co. 30 Conn. 270 ; Smith v. Crescent City Co. 30 La. 
 Ann. 1378. In Bank v. Lanier, 11 Wall. 369, the Court say: "Stock certificates of 
 all kinds have been constructed in a way to invite the confidence of business men, 
 so that they have become the basis of commercial transactions in all the large cities 
 of the country, and bre sold in open market the same as other securities. Although 
 neither in form nor character negotiable paper, they approximate to it as nearly as 
 practicable. * * * No better form could be adopted to assure the purchaser that 
 he can buy with safety." See further, on this subject, Webster v. Upton, 91 U. S. 65 ; 
 Williams v. Mechanics' Bank, 5 Blatchf. 59; Grymes v. Hone, 49 N. Y. 17; Johnson 
 v. Underbill, 52 N. Y. 203 ; State v. Warren Foundry, <fcc. Co. 32 N. J. L. 439 ; Stin- 
 son V. Thornton, 56 Ga. 377; First Nat. Bk. v. Gifford, 47 Iowa, 675. 
 
 It is held in Illinois (Peoples' Bk. «. Gridley, 8 Reporter, 76), that where a char- 
 ter requires transfer on the books of the company, an assignment without such trans- 
 fer is good only between the parties, and not agathst proceedings in execution. 
 
 Where a person holding corporate stock as trustee for another, by certificates 
 which show on their face that he holds as trustee, borrows money on the certificates, 
 depositing them as collateral security and using the money in his own business with- 
 out authority from or knowledge of the cedui qm trust, the parties who lend and take 
 the certificates have constructive notice, and are liable to the cestui gtie trust. Dun- 
 can V. Jaudon, 15 Wall. 165 ; Shaw v. Spencer, 100 Mass. 382. See, also. Merchants' 
 Bank of Canada v. Livingston (N. Y. Ct. of App. 1878), 6 Reporter, 178. 
 
 In Loring v. Salisbury Mills, 125 Mass. 138, Gray, C. J., holds: "Where the 
 holder of a certificate of shares in a corporation is the absolute owner, Ms assign- 
 ment and delivery thereof will pass the title to the assignee; and the latter, upon 
 surrendering the former certificate, may obtain a new one in his own name. Stone 
 
180 SHARES AifD STOCK. 
 
 investigation the powers which they possess with respect to such, 
 after their issue and allotment. Such matters will almost entirely 
 
 11. Hackelt, 12 Gray, 227; Gen. St. c. 60, §§ 9, 10, 13; St. 1870, c. 224, §§ 22, 23, 
 26. If the holder appears, upon the face of the old certificate, to be the absolute 
 owner, and the corporation has no notice that the fact is otherwise, it may safely 
 issue a new certificate to the assignee, which, if taken in good faith, and for a valu- 
 able consideration, will vest a perfect title in him. Salisbury Mills v. Townsend, 109 
 Mass. 117; Pratt v. Taunton Copper Co. 123 Mass. 110. But, for the protection of 
 the rights of the lawful owner of the shares, the corporation is bound to use reason- 
 able care in the issue of certificates, and if, by the form of the certificate, or other- 
 wise, the corporation has notice that the present holder is not the absolute owner, 
 but holds the shares by such a title that he may not have authority to transfer them, 
 the corporation is not obliged, without evidence of such authority, to issue a certifi- 
 cate to his assignee ; and if, without making any inquiry, it does issue a new cer- 
 tificate, it is liable to the rightful owner if he is injured by its negligent and wrongful 
 act, without proof of fraud or collusion. See Lowry v. Commercial <fe Farmers' 
 Bank, Taney, 310 ; Bayard v. Farmers & Mechanics' Bank, 62 Penn. St. 232 ; Atkin- 
 son V. Atkinson, 8 Allen, 15; Shaw v. Spencer, 100 Mass. 382; Fisher v. Brown, 104 
 Mass. 259; Duncan v. Jaudon; 15 Wall. 165." 
 
 Under by-laws of a company prescribing that shares shall be transferable only 
 on the books of the company, a purchaser acquires, as against the company, only an 
 equitable title by the purchase and delivery to him of assigned certificates. Until 
 he presents the certificate to the transfer agents of the company and demands a 
 transfer, his rights are subject to just claims of the company against the former 
 owner of the shares. Bank of Commerce's Appeal, 73 Penn. St. 59 ; Geyer v. West- 
 ern Ins. Co, 3 Pittsb. 41 ; Brown v. Adams, 5 Biss. 181. 
 
 A mandamus to compel the transfer of stock wUl not be granted where the peti- 
 tioner can be indemnified by recovery of damages in an action at law for the refusal 
 to transfer. Murray v. Stevens, 110 Mass. 95; State v. Eombauer, 46 Mo. 155. But 
 see State v. Mclver, 2 S. C. 25. 
 
 Where the by-laws of a corporation, lawfully adopted in pursuance of its charter, 
 authorize and require its certificates of stock to be issued under the corporate seal 
 and signed by its president and treasurer, in the absence of any express provision or 
 exception, no other or different form of certificate is required in the case of stock 
 owned by one of the officers named ; but they are authorized to issue certificates to 
 themselves in the same manner a* to other stockholders. Titus v. Great Western 
 Tump. Road, 61 N. T. 237 ; 5 Lans. 250. 
 
 The by-law of a bank forbidding the transfer of stock where the owner is in- 
 debted to the bank may be valid, although inconsistent with the general law of the 
 State governing the transfer of property. Mechanics' Bank v. Merchants' Bank, 45 
 Mo. 513. 
 
 That a lien reserved by the by-laws on the stock, for the debts of stockholders, 
 
 generally, extends to a debt due from two stockholders in partnership, as well as to 
 
 debts which each owes in severalty, — see Matter of Bigelow, 2 Ben. 469 ; Geyer v. 
 
 Western Ins. Co. 3 Pittsb. 41 ; German Security Bank v. Jefferson, 10 Bush, 326. 
 
 The transfer agents of a company have no right to withhold a transfer because. 
 
SURRENDER. 181 
 
 resolve themselves into an answer to the question, assuming that 
 a person is a member of a joint-stock company; what are the 
 powers of the company in respect of the determination of his 
 liability as such ? 
 
 (1.) Surrender. 
 
 This is the transfer by a member of his interest, whole or 
 partial, in a company, to the company, or to trustees for, or nom- 
 inees of it. The proceeding resembles a mere ordinary transfer ; 
 it resembles a dealing by the company in its own shares; it 
 resembles, and is often a condition and parcel of a compromise 
 between the company and the retiring shareholder ; it resembles, 
 and not unseldom involves a cancellation of shares. But it is 
 neither of these : it is sui generis; it is a transfer to or for the 
 company, or through the company, of the pecuniary interests of a 
 shareholder, under circumstances which render it advisable for the 
 company to be a party to such an arrangement. And a transac- 
 tion which purports to be a surrender, will be good only when it 
 is so rendered justifiable.* (a) 
 
 ' See Bennett's Case, 6 De G. M. & G. 284. 
 
 in their judgment, the motives and purposes of the parties are improper, or because 
 the transfer may affect injuriously the interests of the company. State v, Mclver, 2 
 S. C. 25 ; s. p. State v. Smith, 48 Vt. 266. 
 
 As the capital stock of a corporation is a trust fund for creditors, no transfer can 
 be allowed to operate to relieve the transferring stockholder from liability for his 
 subscription to stock, and substitute that of another person to the prejudice of cred- 
 itors. Re Bachman, 12 Bankr. Reg. 223. 
 
 A transfer of shares made for the purpose of escaping liability to creditors when 
 the owners knew the insolvency of the bank, was held void, for that reason, as against 
 the creditors, in Bowden v. Santos, 1 Hughes, 158 ; Nathan v. Whitlock, 9 Paige, 152. 
 
 (a) In general, the courts refuse to, allow a corporation to release either stock- 
 holders or subscribers from their liabilities in any way not allowed in its charter, as 
 against the rights both of creditors and stockholders. In Burke v. Smith, 16 Wall. 
 390, the Court say: "It has been settled by very numerous decisions that the di- 
 rectors of a company are incompetent to release an original subscriber to its capital 
 stock, or to make any arrangement with him by which the company, its creditors or 
 the State, shall lose any of the benefit of his subscription. Every such arrangement 
 is regarded in equity not merely as ultra vires, but as a fraud upon the other stock- 
 holders, upon the public, and upon the creditors of the company ; " and in Bedford 
 R. R. Co. V. Bowser, 48 Penn. St. 29 : " Directors of a railroad company are trustees 
 for all the stockholders, and in a very just sense for the commonwealth. It is an 
 abuse of their trust, wholly unauthorized, and at war with the design of their 
 
182 SHARES AND STOCK. 
 
 I. A power to accept surrenders rrmy lie given hy wide general 
 authority to contract. 
 
 But it is established that the directors of the company, and 
 therefore the company itseK, will have such a power, not only 
 when it is expressly given them, but also when necessarily im- 
 plicated in the language used in appointing them.^ Thus 
 authority to enter into any contract, " and afterwards to release 
 and discharge, or modify and vary, the terms of any such contract 
 or agreement," ^ and "to enter into, alter, rescind or abandon 
 contracts in such manner as they shall think fit," ^ coupled with 
 
 1 See Snell's Case, L. R. 5 Ch. 22 ; » Cockburn's Cage, 4 De G. <fe Sm. 111. 
 Campbell's Case, L. R. 9 Ch. 1. ' Thomas's Case, L. R. 13 Eq. iS"?. 
 
 charter, to single out some of the stockholders and r elease them from their liability, 
 No such authority has ever been recognized." Putnam v. New Albany, 4 Biss. 365 ; 
 Be Bachman, 12 Bankruptcy Reg. -223 ; Mann v. Cooke, 20 Conn. 1*78 ; Mann v. 
 Pratt, 2 Sandf. Ch. 257; Mann ti. Ciirrie, 2 Barb. 294; Slee ». Bloom, 19 Johns. 
 456; Hughes v. Antietam, Ac. Co. 34 Md. 316; Melvin v. Lamar Ins. Co. 80. HI. 446; 
 Osgood V. King, 42 Iowa, 478. 
 
 A receiver has not discretionary power to compromise with stockholders on their 
 subscriptions, as against the rights of other stockholders. Chandler v. Brown, 77 
 111. 335. 
 
 Where stock has been surrendered and assessments already paid returned, any 
 stockholder may, by a bill in equity, have the money refunded and the subscriber 
 made liable upon his subscription. Melvin v. Lamar Ins. Co. 80 lU. 446. 
 
 In Putnam v. New Albany, 4 Biss. 365, where a city had subscribed to the stock 
 of a railroad agreeing to give its bonds in payment, and the bonds were largely 
 depreciated in value, and the railroad was involved in debt, and the railrgad com- 
 pany agreed to release the city from its subscription on condition that it should fur- 
 nish a sum of money toward the discharge of the debt : it was held that while this 
 would be good as against all but creditors, it was not good as against them. It was 
 held, however, by the Supreme Court (New Albany v. Burke, 11 WaU. 96), that this 
 was not a surrender of the subscription but a purchase of its bonds by the city, and 
 was valid against creditors. 
 
 There are dicta in one or two cases indicating an inclination to hold a release 
 valid if boTia fide and upon a valuable consideration. Zirkel v. Jolict Opera House 
 Co. 79 111. 334 ; Melvin v. Lamar Ins. Co. 80 111. 459 ; or if at the time of the release 
 the corporation was not indebted. Zirkel v. Joliet Opera House Co. 79 lU. 334 ; but, 
 contra, see Bedford R. R. Co. v. Bowser, 48 Penn. St. 29. 
 
 In opposition to the controlling doctrine is City Bank of Columbus v. Bruce, 17 
 N. Y. 507, where a large amount of stock was surrendered under a resolution allow- 
 ing stockholders to redeem stock notes by returning stock at a certain rate ; and 
 Cooper V. Frederick, 9 Ala. 738, where half of the stock was surrendered and the 
 assessments previously paid credited to the stock which was retained, the court sus- 
 taining the validity of the action on the ground that it was done for' the good of the 
 company, as otherwise the holders would probably forfeit their stock from failure to 
 pay assessments. See ante, p, 142, n. 
 
SURRENDER. 183 
 
 power to deal in shares, has been held sufficient to enable them to 
 accept a surrender of shares, and otherwise to relieve from the 
 liability in respect thereof. 
 
 II. A power to accept surrenders may he assumed hy corpora- 
 tions subsequent to their creation. 
 
 Where there is no general statutory power, a company may 
 confer upon itself such power by proyisions in its own private 
 constating instruments. 
 
 And if the constating instruments as originally framed do not 
 contain this power, the company may subsequently vary them 
 by taking the necessary proceedings for the bona fide purpose of 
 creating the power. This is the result of the decision in Teas- 
 dale's Case.^ Two thousand £10 shares in a company had been 
 issued, of which 901 (called X shares) had been fuUy paid up, and 
 on the other 1,099 (called A shares) £2 10«. per share had been 
 paid. Special resolutions were duly passed that the X shares 
 should be cancelled, and two shares of £10 each, with £5 per 
 share paid thereon, given in lieu of each, and that the A shares 
 ishould be cancelled, and one share of £10, with £5 paid, be given 
 in lieu of every two of them. These resolutions were assented 
 to by all the shareholders and duly registered, and the share- 
 holders generally accepted in lieu of their old shares new shares 
 {which were called in the proceedings B shares) with £5 each paid. 
 Teasdale, a holder of A shares, having thus accepted B shares, 
 sold and transferred them, and in the annual lists sent to the reg- 
 istrar, was treated as having then ceased to be a member. About 
 seven years after the passing of the resolutions, the company was 
 ordered to be wound up, and the liquidator placed on the list of 
 contributories the names of Teasdale and others. It was decided 
 that the resolutions were not ul^a vires, but were effectual as 
 special resolutions, altering the articles of association, and that a 
 surrender of the old shares made in pursuance of them was valid, 
 And that consequently Teasdale was not a contributory. 
 
 When it does exist, the requisites for the due exercise of it — 
 cause, formalities, acquiescence, &c. — wiU be very similar to those 
 which will be examined in connection with the authority to 
 forfeit.' 
 
 1 L. E. 9 Ch. hi; Duke's Case, 1 Ch. ' Post, (2.), p. 185. 
 
 D. 622. 
 
184: SHARES AND STOCK. 
 
 Here it will suffice to reiterate that this, like every other 
 power, must be used honafide for the purpose for which created ; 
 in other words, what purports to be, must reallj be, a surrender 
 and for the benefit of the company. 
 
 This is well illustrated by Hunt's Case and Hall's Case. In 
 the former ^ there was a disagreement between two sections of di- 
 rectors of a joint-stock company ; it was agreed that one section 
 should retire and transfer their shares to the continuing directors. 
 The shares were transferred accordingly, and were afterwards again 
 transferred, and at the date of the winding-up order stood in the 
 names of other persons. The Lords Justices affirming the Master 
 of the Eolls, held that the first arrangement was invalid, and that 
 Mr. Munt, one of the retiring directors, was stUl a contributory, 
 notwithstanding the subsequent transfer. 
 
 Hall's Case arose thus : Hall, one of the directors of a company, 
 subscribed the memorandum of association for 500 shares, but only 
 250 were allotted to him. The articles of association, among other 
 clauses relating to forfeiture, gave power to the directors to accept 
 from any shareholder the surrender and forfeiture of his shares. 
 The company were expressly prohibited from dealing in shares. 
 The directors agreed to release Hall from all liability with respect 
 to the 250 shares not allotted to him ; and a deed was executed 
 and sealed with the company's seal, and approved at a general 
 meeting of shareholders, by which Hall was released from all 
 future calls, and indemnified against all past liability in respect of 
 those shares. Afterwards the company was wound up. It was 
 decided, on appeal, affirming the decision of the Master of the 
 Rolls, that the deed of release and indemnity was not an accept- 
 ance of a surrender and forfeiture under the articles, but was a 
 dealing in shares by the company, and as such was ultra vires on 
 the part of the directors and the company ; and, consequently, that 
 Hall must be on the list of confributories for all the shares for 
 which he had signed the memorandum of association." 
 
 When the authority exists, it may be employed to relieve an 
 applicant from his liability to take shares which have not yet been 
 allotted, that is, the power to accept a surrender of " shares " will 
 
 ' 22 Beav. 55 ; Bennett's Case, 5 De G. 3 Jur. (N. S.) 803. See also the analogous- 
 M. <fc G. 284; Daniell's Case, 22 Beav. 43 ; cases under forfeiture. 
 
 i* L. R. 5 Ch. 707. 
 
FORFEITURE. 185 
 
 not be restricted to full and complete " shares," but will justify^ 
 under proper circumstances, the dissolution of an agreement to take 
 shares.^ 
 
 It is, of course, essential that a transfer of shares to be construed 
 a surrender, and therefore void, in the absence of the necessary 
 power, should really be made with the knowledge both of the trans- 
 • feror* and of the company or its directors, to its nominees. Sus- 
 picious circumstances will not alone suffice to prevent the transac- 
 tion being considered an ordinary transfer,' unless the court can 
 gather that the arrangement was not what it purports.* 
 
 (2.) Forfeitwre. 
 
 III. There must he express poioer to forfeit given hy statute, or 
 at the inception of a corporation, (a) 
 
 Statutory powers to forfeit shares are contained in some of the 
 general joint-stock acts. In particular the Companies Clauses 
 Consolidation Act, 1845, contains a series of regulations on the 
 point. If a shareholder fail to pay a call payable by him, together 
 with the interest, if any, that may have accrued thereon, the direc- 
 tors, after the expiration of two months from the day appointed 
 for payment of the call, may declare the share in respect of which 
 the call was payable forfeited, and this whether the company has- 
 
 ' Snell's Case, L. R. 6 Ch. 22. Mr. understand at the time I was induced ta 
 Snell had agreed to become a director of join the direction." 
 the Natal Investment Co., but he with- ^ Nicoll's Case, 8 De G. <fc J. 387 ; 
 
 drew upon finding the arrangements " so Grady's Case, 1 De G. J. ife S. 488. 
 very different from what I was given to ' Jessopp's Case, 2 De G. ife J. 638. 
 
 * Cross's Case, 38 L. J. (Ch.) 583. 
 
 (a) 'The power to forfeit stock is not incidental to the existence of a corporation, 
 but can be exercised only by virtue of provisions in its charter, and only in strict 
 accordance with them. Lewey's Island R. R. Co. v. Bolton, 48 Me. 451 ; Eastern PI. 
 Road V. Vaughan, 20 Barb. 155 ; Matter of Long Island R. R. Co. 19 Wend. 37 ; 
 Downing v. Potts, 23 N. J. Law, 66 ; Field on Corporations, § 96. Where the statute 
 gives power to provide for forfeiture, but no such provision is made either in the 
 constitution or by-laws of the corporation, it cannot exercise the power. Perrin v. 
 Granger, 30 Vt. 595. The forfeiture cannot be for failure to pay an assessment, any 
 part of which is illegal. Lewey's Island R. R. Co. v. Bolton, 48 Me. 451; Stoneham 
 Br. R. R. Co. V. Gould, 2 Gray, 277. A general resolution not specifying the shares 
 does not create a valid forfeiture, Johnson v. Albany, dtc. R. R. Co. 40 How. Pr. 
 193. Shares may be redeemed after declaration of forfeiture and before sale. Walker 
 V. Ogden, 1 Biss. 287 ; Mitchell v. Copper Mining Co. 67 N. T. 280 ; s. c. 40 N. Y. 
 Super. Ct. 406. See ante, p. 152, n. 
 
186 SHARES AND STOCK. 
 
 sued for the call or not.^ Section 30 requires notice to be given 
 to the shareholder before this declaration of forfeiture, and which, 
 by section 31, is afterwards to be confirmed by a general meeting 
 of the company. After confirmation, the directors may sell the 
 forfeited shares,^ but no more shares are to be sold than are suffi- 
 cient for payment of the calls in arrear ; ' and if the arrears, with 
 interest and expenses, are paid- before the forfeited shares are act-- 
 ually sold, they revert to their former owner.* 
 
 The Stannaries Act (32 & 33 Yict. c. 19) contains a very simi- 
 lar series of enactments as to forfeiture. 
 
 lY. A power to forfeit will not he raised iy implication, and 
 cannot be assumed subseqicent to the creation of a corpora- 
 tion. 
 
 But if there be no such power,^ neither the company in general 
 meeting, by special resolution or otherwise,^ nor a fortiori the di- 
 rectors,' can forfeit shares for any reason whatever — not even for 
 the good of the company.' 
 
 Assuming the power to exist, the following are the chief con- 
 siderations relating to it : 
 
 1. Its exercise whether as against a shareholder,' or a fortiori 
 against the company,^" is a matter strioti Juris, to be put in force 
 for its true purpose, with due regard to formalities, and under cir- 
 cumstances justifying the forfeiture. 
 
 2. A power of forfeiture is a power of putting pressure on a 
 shareholder who cannot or will not pay up his calls. " It is true 
 that, by the 125th clause, the directors had the power of declaring 
 
 ' 8 <fe 9 Vict. c. 16, a. 29. See Harris ' See, however, Dixon v. Evans, L. R. 
 
 V. North Devon Ry. Co. 20 Beav. S84; 6 H. L.'606, 618. 
 
 Preston v. Grand Collier Dock Co. 11 ' Clarke v. Hart, 6 H. L. C. 63S; 
 
 Sim. 82'?; Great Northern Ry. Co. a. Sweny ». Smith, L. R. Y Eq. 324; Glass 
 
 Xennedy, 4 Ex. 417. v. Hope, 16 Grant. (TJpp. Can. Ch. 1869), 
 
 ' Ibid. s. 32. 420, where, on the death of a shareholder, 
 
 ' Ibid. s. 34. an intestate, no one for a time was ap- 
 
 * Ibid. s. 3B. pointed his administrator, and his calls 
 
 * The Companies Act, 1862, contem- ran into arrear, whereupon the directors 
 plates that directors can forfeit (Table forfeited his shares, but the court set 
 A, cl. 17 & 19), but does not itself positive- aside the forfeiture on account of the ab- 
 ly enact this. sence of a personal representative. The 
 
 ' Barton's Case, 4 De G. <!c J. 46 ; most important as well as the most recent 
 
 ■Clarke v. Hart, 6 H. L. C. 633 ; Fletcher's case is Garden Gully United Quartz Min- 
 
 Case, 37 L. J. (Ch.) 49. See Kelk's Case, ing Co. v. McLiater, L. R. 1 App. 39, 
 
 (Pahlen's Case), L. R. 9 Eq. 107; Camp- which should be very carefully consid- 
 
 bell's Case, L. R. 9 Ch. 1. ered. 
 
 ' Stanhope's Case, L. R. 1 Ch. 161. '« See Gower's Case, L. R. 6 Eq. 77; 
 
 and the cases cited, post, in notes. 
 
FORFEITURE. 187 
 
 forfeited the shares of any shareholder neglecting or refusing to 
 pay his calls. But this obviously, looking to the context, refers 
 to a case where the directors are unable to obtain payment of the 
 call. It was not intended to supply them with machinery where- 
 by, under the pretence of forfeiture, they should be able to de- 
 prive the continuing shareholders of the liability to all those for 
 whose joint liability with themselves [they had originally stip- 
 ulated." 1 
 
 Therefore it cannot be employed, on the one hand, as a means 
 of punishment or to satisfy feelings of dislike ; ^ (a) or, on the 
 other, to assist members wishing to leave the corporation. It 
 must be used strictly and solely for this purpose. No other ob- 
 ject, however bona fide or equitable or beneficial, will satisfy. 
 Consequently, under the following circumstances, the forfeiture 
 was held invalid : where directors, with a view to induce subscrip- 
 tions, had taken shares in trust for their own company ; ' where a 
 director took shares upon an understanding that he should not be 
 liable thereon, in order that the company might obtain registra- 
 tion ; ^ where a dispute was compromised by forfeiting shares which 
 the shareholder contended he was entitled to repudiate for fraud ; ' 
 where, upon persons ceasing to be directors, their shares were for- 
 feited to relieve them from further liability.^ 
 
 3. As to the circumstances under which a non-observance of 
 formalities will invalidate a forfeiture there is some doubt. Till 
 quite recently it has been considered, first, that the acts of de facto 
 directors not questioned at the time, are, here as in other matters, 
 perfectly valid, and, secondly, that a substantial observance of for- 
 malities, unless immediately taken objection to, is sufficient. But 
 both these points have beeii rendered questionable by the decision 
 of the privy council in Garden Gully United Quartz Mining Co. 
 V. McLister,' Here a forfeiture for non-payment of calls by a de 
 
 ' Per Cranworth, L. C, in Stanhope's ■• Ex parte Jones, 27 L. J. (Oh.) 666. 
 
 Case, L. R. 1 Ch. 161, 169. See_pCT- Page Compare Hall's Case, L. R. 5 Ch. tOI. 
 
 Wood, V.-C, in Richmond's Case, 4 K. <fc ' Sower's Case, L. R. 6 Eq. 77 ; Dixon 
 
 J. 305, 324 ; aaA per Cranworth, L. C, in v. Evans, L. R. 5 H. L. 606, 621-3. 
 
 Spackman v. Evans, L. R. 3 H. L. 171, « Manisty's Case, 17 Sol. J. 745. 
 
 186, 230. ' L. R. 1 App. 39. See, also, Naylor v. 
 
 * Sweny v. Smith, L. R. 7 Eq. 324. South Devon Ry. Co. 1 De G. <fe Sm. 32 ; 
 
 ' Richmond's Case (Painter's Case), Catchpole v. Ambergate Ry. Co. 1 E. <fc 
 ubi supra. 
 
 (a) Bedford R. R. Co. v. Bowser, 48 Penn. St. 29. 
 
188 SHARES ANI) STOCK. 
 
 facto board of directors, acting as such, elected by the corporators, 
 though irregularly elected, without the fuU notice requisite to the 
 shareholder who, however, did not file his bill for relief for nearly 
 six years, was declared invalid. For the respondent it was argued, 
 that in order to effect a valid forfeiture of shares for non-payment 
 of a call, (1) the call must have been regularly made by a board 
 of directors (2) who had been duly elected, and the shares after 
 non-payment of the call must have been (3) duly declared to be 
 forfeited by a board of directors (4) who also have been duly 
 elected ; and the privy council, though the judgment is not very 
 explicit as to the principles involved, apparently judicially ap- 
 proved of the accuracy of each of these four points. 
 
 4r. Invalid forfeitures may subsequently, by acquiescence 
 express or tacit, be so far confirmed that they cannot be opened.^ 
 
 There may be, first, a power to forfeit on a honafide forfeiture 
 but wanting in formalities. In such case slight circumstances or a 
 short lapse will suffice to bind the parties,** or the forfeiture may 
 be honest and formal, but nevertheless for the accomplishment of 
 some other object than its strict purpose. This may be affirmed by 
 acquiescence, but it seems that the acquiescence must be that of 
 all the members, whereas in the former case the laches of the 
 directors or other general agents of the company will be suffi- 
 cient,' or the forfeiture may be purely collusive. Even this, it 
 seems, may be affirmed, but evidence must be given that all the 
 shareholders knew the exact nature of the arrangement,* and yet 
 agreed to it — a result which is not very likely, though it seems to 
 be legally possible.' 
 
 Secondly. There may not be a power to forfeit. In such case 
 a forfeiture will be vltra vires in the narrow sense, and therefore 
 invalid ; but it may nevertheless be confirmed, like a collusive 
 
 B. Ill ; Dalton i>. Midland Ey. Co. 13 C. Case, Ibid. 714, 731 ; Kelk's Case, L. E. 9 
 
 B. 474 ; Howbeach Coal Co. a. Teague, 5 Eq. 107; Austin's Case, 24 L. T. (N. S.) 
 
 H. & N. 151; Nolan v. Arabella Gold 932; Lyster's Case, L. R. 4 Eg. 283. 
 Mining Co. 6 W. W. & A. B. (Australian) » Campbell's Case, L. R. 9 Ch. 1 ; Teas- 
 
 88. dale's Case, Ibid. 54. Compare cases in 
 
 ' As to this see generally tbe Agricul- last note, and in n. 5. See Phosphate of 
 
 turist Ins. Co.'s Cases, collected in Lindley Lime Co. v. Green, L. E. 7 C. P. 43. 
 on " Partnership," pp. 760-3 ; and poet, * See Houldsworth v. Evans, L. E. 3 
 
 " Ratification and Acquiescence." H. L. 263. 
 
 2 WooUaston's Case, 4 De 6. & J. 487 ; ' See Brotherhood's Case, 31 Beav. 
 
 Webster's Case, 32 L. J. (Ch.) 185; 365; Spackman v. Evans, L. R. 3 H. L. 
 
 Knight's Case, L. R. 2 Ch. 321 ; King's 171. 
 
CANCELLATION. 189 
 
 forfeiture, by the subsequent knowledge and acquiescence of alJ 
 the members.^ 
 
 (3.) Comcellation. 
 
 Whether this proceeding difiPers in legal effect from forfeiture, 
 may be doubted. The answer partly depends on the question, 
 . not yet finally determined, whether a forfeiture or a surrender is 
 &pro tanto destruction of capital. But the Legislature has drawn 
 a distinction, by providing that forfeited shares which cannot be 
 sold, may be cancelled.' 
 
 Y. A power to cancel must he given exjpressly, either hy statute, 
 or at the inception of a corporation. 
 
 What is meant by this power is the capacity, after shares are 
 allotted and accepted when no dispute exists as to the liability of 
 the shareholder, to cancel such shares and determine the liability 
 thereon. This must not be confused with the closely allied pro- 
 ceedings : (1) compromise of disputes, and (2) rescission of what 
 has been wrongly done by inadvertence. These two are pro- 
 ceedings which every corporation may engage in without express 
 authority. 
 
 The latter closely resembles cancellation, but it is not so, and 
 it may be done, although in the result there is a cancellation of 
 shares. Thus, in Hartley's Case,* shares had been allotted and 
 accepted as fully paid-up in pursuance of a contract, but which, 
 through inadvertence, had not been registered in accordance with 
 section 25 of the Companies Act, 1867. Upon discovery of the 
 omission, the directors removed the name of the allottee from the 
 register, then filed the contract, and subsequently issued fresh 
 shares to the allottee. The company being subsequently wound 
 up, it was held, that although the directors had no power to 
 cancel shares, they could rectify a mistake commorf to them and 
 the allottee without applying to the Court of Chancery for an 
 order directing them to do so ; and consequently, that the aEottee 
 could not be placed on the list of contributories in respect of 
 those shares. 
 
 ' See cases in notes 2 and 3, p. 188. ' L. R. 10 Ch. 157. See p. 190, n. 2. 
 
 2 26 4 27 Yiot. c. 118, ss. 4-11. 
 
190 SHARES AND STOCK. 
 
 The power must be created by express words. It will not be 
 raised by implication,^ nor can a corporation, nor a fortiori its 
 directors, cancel either an agreement to take shares, or the allot- 
 ment of them, even though the allottee alleges that he has taken 
 them under a mistake,' or enter into an agreement that shares shall 
 be issued, e. g., by way of mortgage, and at the option of the 
 allottee, be afterwards cancelled,' if the power be not expressly 
 given to the company. 
 
 VI. Sut the whole corporation, in general meeting, may cancel 
 shares. 
 
 This seems to be the effect of Marshall v. Glamorgan Iron and 
 Coal Co.^ By the 74th of the articles of association of the de- 
 fendants, a limited company, it was provided that no contract, 
 entered into by the directors, to which the assent of the company 
 in general meeting should be given, should be afterwards im- 
 peached on any ground whatsoever. In December, 1866, the 
 directors entered into a contract with the plaintiff, one of the 
 terms of which was that the company would " forthwith " cancel 
 all shares in the company then standing in the plaintiff's name 
 which were not fully paid-up. The contract was assented to by 
 the company in general meeting, and was largely part-performed, 
 but the plaintiff's shares were not cancelled on the 13th of Feb- 
 ruary, 186Y, when resolutions were passed for a voluntary wind- 
 ing-up, which was afterwards continued under supervision. 
 Giffard, V. C, held, that the agreement for cancellation of the 
 shares could not be impeached ; that it was warranted by the 
 terms of article Y4, the object of which was " to provide that the 
 assent of the company in general meeting should validate that 
 which but for such assent might have been invalidated as being 
 ull/ra vires." 
 
 ' Richmond's .Case (Painter's Case), 4 Wright's Case, L. R. 7 Ch. 55 ; and ex 
 K. & 3. 305. See Adams* Case, L. R. IS parte Keightley, W. N. 1874, 18, i1. See 
 Eq. 474 ; Stanhope's Case, 3 De G. <fc Sm. Wheatcroft's Case, 29 L. T. 824. 
 198. = Addison's Case, L. R. 5 Ch. 294. 
 
 « Fletcher's Case, 87- L. J. (Ch.) 49. ■> L. R. 7 Eq. 129. 
 Qtuere, if this case is not inconsistent vAth. 
 
RE-ISSUE. 191 
 
 VII. Powers to cancel will be construed strictly, and whether 
 an invalid exercise can he rendered binding by an acqui- 
 escence, quaere. 
 
 What has been said as to a power to forfeit with reference to 
 the purposes for which it may be used, to formalities, to acqui- 
 escence,^ and other incidental facts, wiU apply to a power to cancel. 
 
 The strictness with which the actual existence and the due ex- 
 ercise of this power will be viewed by the courts, is well shown by 
 two leading decisions. 
 
 In the former of these. Stanhope's Case,* the deed of settle- 
 ment declared that in all cases not provided for, it shall be lawful 
 for the directors to act in such manner as should appear to 
 them best calculated to promote the interest and welfare of the 
 company. Disputes arose betweett the directors, and ultimately 
 one of them. Stanhope, retired upon the terms that his shares 
 should be cancelled, but he was, nevertheless, ten years later, held 
 a contributory. 
 
 In the latter case,' Addison, being desirous of lending money 
 to a company, accepted 100 shares of £5 each, and paid £500, the 
 whole amount of calls due thereon, upon condition that if he gave 
 notice within a certain time his money should be repaid and the 
 shares cancelled. He afterwards gave notice in pursuance of the 
 agreement, and thereupon the money was repaid to him, and he 
 executed a transfer of the shares to a nominee of the company,, 
 and his name was removed from the register of shareholders. 
 Eight years afterwards the company was wound up, and it was 
 held that Addison was a contributory. G-iflEard, C. J., said, " This 
 is a case of great hardship, and if, consistently with the law, I 
 could release Mr. Addison, I should be glad to do so. * * * The 
 company had no power to cancel shares, nor to buy up shares." 
 
 (4.) He-issue of Shades. 
 
 VIII. — Shares coming to the possession of a company on what- 
 ever ground, may be re-issued, (a) 
 
 ' Welsby and Anderson's Case, W. N. most there was only an unexecuted threat 
 
 1878, 200j Marshall v. Glamorgan Iron, to forfeit, and yet the shareholder was 
 
 &c. Co. L. R. 7 Eq. 129. held not a contributory. 
 
 = 3 De 6. & Sm. 198. Compare Wool- ^ ^ Patent Paper Mfg. Co. (Addison's 
 
 laston's Case, 4 De G. & J. 437, where at Case), L. R. 5 Ch. 294. 
 
 [a) It is generally held that shares of its own stock coming into the possession of 
 a corporation, do not necessarily merge and become extinguished, but that it depends 
 
192 SHARES AND STOCK. 
 
 It is often assumed that a forfeiture or a surrender is . neces- 
 sarily, in the absence of express controlling language, a de- 
 struction of the shares in question ; and it is consequently urged, 
 as an argument against the existence of such implied powers, that 
 their exercise would be pro tanto a diminution of capital. But 
 such reasoning is founded on a fallacy, or rather on a mistaken 
 notion of what is involved in these powers. A forfeiture, and a 
 fortiori a surrender of shares, especially when it is by way of 
 transfer to a nominee of the company, puts an end to the share- 
 holder's future ^ rights and liabilities. But it does not destroy the 
 thing styled " share " or " interest " in the company : this still re- 
 mains intact as an actual entity unless and until the company, by 
 some further act, expressly destroys it. " Cancellation of shares 
 is no more a reduction of capital than is forfeiture of shares." ^ 
 
 It is perhaps even more generally laid down that cancellation 
 involves the diminution of capital. The objection is worth more 
 than when applied to forfeiture, because ex vi termini a cancella- 
 tion denotes the destruction of shares. But all that is meant by 
 this is simply the destruction of the rights and liabilities of a par- 
 ticular shareholder, and, if necessary, of the pieces of paper or 
 other documents representing the same. But the capital of the 
 company is totally distinct from the rights of shareholders therein. 
 The powers of the company with respect thereto remain unaltered, 
 and immediately upon the cancellation of one member's interests, 
 it may issue new shares of an equivalent amount. This seems the 
 only rational conclusion ; and it is supported by the diGtum al- 
 ready cited,* and by the provisions of the Companies Clauses Act, 
 1863, that new shares may be issued in lieu of cancelled shares.* 
 
 ' Usually his past liabilities remain in- ^ Per Giffard, V. C, in Marshall!), 
 
 tact. See the Companies Act, 1862, table Glamorgan Iron Co. L. R. 7 Eq. 129, 137. 
 
 A, arts. 17-19; the Companies Clauses 'Ante, n. 2. 
 
 Act, 1846, ss. 29-35. " 26 A 27 Vict. c. 118, s. 11. 
 
 on the intention of the corporation, and it may be re-issued. Currier v. Slate Co. 66 
 N. H. 262; State v. Smith, 48 Vt. 266 ; City Bank of Columbus v. Bruce, 17 N. Y. 
 507 ; Taylor v. Miami Exporting Co. 6 Ohio, 176. In Williams v. Savage Mfg. Co. 3 
 Md. Ch. 418, it is held that such stock merges but may be re-issued. Though stock- 
 holders have a right to take amounts in a new issue of stock, in proportion to the 
 amoimt of stock in their possession, they have no such rights in the re-iesue of old 
 stock which has come into the possession of the corporation. State v. Smith, 48 Vt. 
 266; Hartridge v. Rockwell, Charlton (Ga.), 260. See, also, ante, p,94, n. 
 
DEALING IN SHARES. 193 
 
 (5.) Dealings in a compomy's own shares. 
 
 The extent and circumstances to and under whicli a company 
 may deal in shares, whether of its own or another corporation, 
 have already been considered. Here the question is — not the 
 dealing in shares for ordinary business purposes, but — similar pro- 
 ceedings for the object of relieving a shareholder from his shares 
 or of compromising a dispute. This is a matter totally distinct 
 from the former. Therefore it is submitted that : 
 
 IX. A power to deal in a company's own shares does not per 
 se authorize the company to enter into an a/rrangement for 
 discharging a sha/reholder hy the transfer of his interests 
 to the company or its nominees, (a) 
 
 A clause relating to dealing in shares may be ' expressed in 
 such wide language as to justify any dealing for any reason, just 
 as by proper provisions in the constating' instruments a corpora- 
 tion may have the capacity to transact any business. But usually 
 it will be limited expressly or impliedly to dealings in the ordinary 
 way of business. "When this is so, it seems to follow that a com- 
 pany cannot, merely by the exercise of such power,* relieve a mem- 
 ber of his shares : first, for the general reason that every power 
 must be used bona fide for the ends for which created ; and, 
 secondly, because the discharge of a shareholder by the interven- 
 tion of the company is a matter stricti jwris, requiring, even 
 when the discharge is by means of a positive power in this behalf, 
 that the existence of the special power should be clearly estab- 
 lished. 
 
 Consequently, if there be not a power to deal in this way, and 
 there are powers to accept a surrender, &c., and a transaction as- 
 
 ' Of course there may be power to accept a surrender, Ac. 
 
 (a) A corporation cannot buy shares of its own stock in order to relieve holder. 
 Currier v. Slate Co. 56 N. H. 262 ; Bedford E. R. Co. v. Bowser, 48 Penn. St. 29. But 
 in Taylor v. Miami Exporting Co. 6 Ohio, 176, where the directors had power to dis- 
 pose of the funds of the corporation as they should think most advantageous for the 
 corporation, it was held that they had power to buy the stock of the corporation, to 
 take it in payment from solvent debtors, and to release a subscriber from the pur- 
 chase of stock for which he bad notapaid, but on which he had voted for directors. 
 See, also, onfe, p. 94, n. , 
 
 13 
 
194 SHARES AND STOCK. 
 
 similates tlie appearance of a surrender, but is in reality a dealing- 
 by the company in its own shares, such transaction will be void.^ 
 
 X. This power will not he raised hy implication from the 
 nature of the business ; hut it may he given in wide, gen- 
 eral language, semble. 
 
 The first part of this proposition is not positively laid down in 
 any judgment, but it follows, from the authorities and also from 
 the general principle, that only such implied powers are created in 
 connection with the business or any other corporate matter as are 
 requisite for the proper carrying on of the same. 
 
 Undoubtedly it is the safer plan to set forth the power by 
 clear and explicit language. 
 
 But, according to a decision of Lord Komilly, this is not an 
 absolute necessity.'^ The 126th clause of the articles of an insur- 
 ance company empowered the directors to do all such acts, enter 
 into all such contracts and engagements, and pay and apply and 
 dispose of any of the moneys of the company, and generally act 
 in such manner as they should from time to time deem necessary 
 or expedient for carrying out all or any of the objects or purposes 
 of the company. Some of the shareholders became dissatisfied 
 with the conduct of the business, and an arrangement was made, 
 in accordance with which they were to transfer their shares to 
 nominees of the company, and to receive the amounts paid therein. 
 This was done, and many of such shares were re-transferred. The 
 company being subsequently wound up, Komilly, M. K., decided 
 that the dissatisfied transferors were not contributories, mainly 
 because the transaction was to be treated as a sale of shares to the 
 company, and fell within the powers given by the above clause. 
 
 1 HaU's Case, L. R. 5 Ch. 707 ; ante, » Singer's Case, W. N. 1869, 206. 
 
 p. 184. 
 
CHAPTEE V. 
 
 PROFITS. 
 
 (1.) What are Profits and Dividends} 
 
 I. Profits cam, he decla/red only out of moneys actually earned, 
 hut it is not necessary that all outstanding liaiilities should 
 he first cleared off. {a) 
 
 The term " profits " (5) is ambiguous. It may denote either 
 the net earnings, (o) deducting merely current working expenses, 
 not therein including the interest on money borrowed, or what, if 
 anything, remains after defraying every expense, as paying off 
 loans, if any falling due, as well as the interest thereof. 
 
 Where money has been raised in virtue of express powers in 
 ^that behalf, Corry v. Londonderry and EnniskiUen Ky. Co.* has 
 
 ' As to bonuses, see Eance's Case, L. ^ 29 Bear. 263. 
 
 R. 6 Ch. 104. 
 
 (ffl) Of course this must be limited to cases of solvent corporations. Where an 
 incorporated company becomes insolvent before its surplus funds have been appor- 
 tioned as dividends among the stockholders, such surplus funds, as well as the capital 
 stock, must, if necessary, be applied to satisfy its debts, to the exclusion of any prior 
 claim of the stockholders on such surplus. Scott v. Eagle Ins. Co. 1 Paige, 198; see 
 Karnes v. Rochester & Genesee Valley R. R. Co. 4 Abb. Pr. (N. S.) 107. 
 
 (6) " It is undoubtedly true that ' profits ' and ' income ' are sometimes used as 
 synonymous terms ; but, strictly speaking, ' income ' means that which comes in, or 
 is received from any business or investment of capital, without reference to the out- 
 going expenditures ; while ' profits ' generally means the gain which is made upon 
 any business or investment when both receipts and payments are taken into the ac- 
 count. ' Income,' when applied to the affairs of individuals, expresses the same idea 
 that revenue does when applied to the affairs of a State or nation, and no one would 
 think of denying that our government has any revenue because the expenditures for 
 a given period may exceed the amount of receipts." Bronson, J., in People v. Super- 
 visors, 4 Hill, 20. 
 
 (c) " Ifet earnings are, properly, the gross receipts, less the expense of operating 
 the road (or other business of the corporation) to earn such receipts. Interest on 
 debts is paid out of what thus remains, that is, out of the net earnings. Many other 
 liabilities are paid out of the net earnings. When all liabilities are paid, either out 
 of the gross receipts or out of the net earnings, the remainder is the profit of the 
 shareholders, to go towards dividends, which, in that way, are paid out of the net 
 earnings." St. John v. Erie R. R. Co. 10 Blatchf. 271 ; s. o. 22 Wall. 136. 
 
196 PROFITS. 
 
 settled that profits will have the former and wider meaning. The 
 Master of the Eolls, in that case, was of opinion " that all the debts 
 of the company are first payable, other than those which, for want 
 ■of a better expression, may be called funded debts ; for instance, 
 if the defendants have raised money by mortgage, under the 
 powers contained in their act, for the purpose of completing their 
 line, this does not constitute such a debt as can be paid off out of 
 the profits, before the profits are divided. But, on the other hand, 
 any debts which have been incurred, and which are due from the 
 directors or the company, either for steam engines, for rails, for 
 completing stations, or the like, which ought to have been and 
 would have been paid at the time, liad the defendants possessed 
 the necessary funds for that purpose — those are so many deduc- 
 tions from the profits, which, in my opinion, are not ascertained 
 tiU the whole of them are paid." * His lordship accordingly de- 
 cided that the holders of preference shares, created in pursuance 
 of the company's statutory powers, were not entitled to be paid ofE 
 out of the surplus profits remaining after the interest on such 
 preference shares had been met. 
 
 The case, however, would be different with respect to ordinary 
 loans to the company while transacting its usual every-day busi- 
 ness — e. g., advances by bankers. These loans are simply debts 
 which have to be defrayed before profits or dividends can be de- 
 clared, (a) 
 
 ' As to what itema are properly charge- remarks of the Lord Chancellor, in Mills 
 
 ahle to revenue and capital account re- v. Northern Ey. of Buenos Ayres Co., L. 
 
 spectirely, see the schedule to the Regu- R. 6 Ch. 621, 631. 
 lation of Railways Act, 1868 ; and the 
 
 (a) Karnes v. Rochester & Genesee Valley E. R. Co. 4 Abb. Pr. (N. S.) 107, was a 
 suit brought against a corporation by one of its stockholders, to compel it to declare 
 and pay a dividend from funds on hand. It appeared that the corporation had on 
 deposit and in securities thirty-six thousand dollars ; that the floating debt was one 
 thousand dollars, which would probably never be called for ; that the funded debt 
 was seventy thousand dollars, payable in seventeen years at six per cent, interest ; 
 the yearly current expenses, including interest on funded debt, was about ten thou- 
 sand dollars ; and that the corporation had no need of any part of the money on hand 
 or of its earnings, except to pay current expenses. The Court said : " The property 
 of every corporation, including all its earnings and profits, belongs primarily to such 
 corporation exclusively, and not to its stockholders, individually or collectively. 
 They have a certain claim, it is true, but their claims are always subordinate to the 
 claims of creditors, and the latter approach much nearer to the condition of owner- 
 ship than the former. No stockholder can entitle himself to any dividend, or to any 
 
WHAT ARE PROFITS. 197 
 
 A company not unseldom inserts in its constating instruments 
 a clause allowing interest to be paid, sometimes to preference, 
 sometimes even to ordinary shareholders, out of capital before it 
 has commenced business, or it may be afterwards, during times of 
 adversity, when its losses counterbalance its gains. "Whether such 
 a provision is legal and valid may fairly be questioned — ^the mani- 
 fest tendency of it is to waste, and in the result to destroy, the 
 capital of the company in carrying out objects aliunde those for 
 the prosecution of which it was created, (a) 
 
 But, certainly without it, shareholders can receive interest only 
 out of the net earnings. The leading case is MacdougaU v. Jersey 
 Imperial Hotel Co., Limited,^ where, in overruling a demurrer to 
 a bill, which stated that at an ordinary general meeting it had 
 been determined that interest should be paid to the shareholders, 
 although as yet no profits had been realized, and which prayed an 
 injunction to restrain the same. Page Wood, Y.-C, said ; " On 
 
 ' 2 H. <fe M. 628. Followed in Salis- any other act relating to the company, 
 
 bury V. Metropolitan Ry. Co. 38 L. J. (Ch.) authorized to be raised by oalla in respect 
 
 249, where, however, the 196th section of of shares or by the exercise of any power 
 
 the defendant's act expressly provided of borrowing, to pay interest or dividend 
 
 tliat : " It shall not be lawful for the com- to any shareholder," <fco. 
 pany, out of any money by this act or by 
 
 portion of the capital stock, until all the debts 'are paid. The funds on hand, which 
 the plaintiff asts to have divided and distributed among the several stockholders, ar© 
 only about half sufficient to pay the indebtedness of the defendant. It is of no sort 
 of consequence, in a legal point of view, that the debt is not yet due, and has a num- 
 ber of years to run before it matures. The creditors still have the better right to 
 the funds, which the defendant holds for them in trust. The court cannot undertake 
 to say judicially that the future business of the corporation will be prosperous ; nor 
 has it any right to postpone the rights and claims of creditors to future earnings and 
 accumulations, even if it could be certain they would accrue. The board of directors, 
 in their discretion, and in view of all the facts within their knowledge, might do this \ 
 but no court, I apprehend, would ever undertake to deal in such a manner with the 
 funds of a corporation, which was indebted to an amount at least double the fund 
 sought to be distributed. The corporation does not stand in any fiduciary relation to 
 its stockholders. The stockholders are in no sense creditors of the corporation, nor 
 are they in the situation of partners. They are constituent parts of the corporate 
 body. In a general sense, a corporation may be regarded as the trustee of its cred- 
 itors, but not of its stockholders. The action has, therefore, no foundation of a trust 
 to support it ; " and the suit was dismissed. See remarks of Denio, 0. J., in Utica v. 
 Churchill, 33 N. Y. 238 ; People v. Commissioners, 38 N. Y. 430. 
 
 (o) There is nothing against the law or public policy in the agreement of a rail- 
 road company to allow a city interest on the stock subscribed by her. Evansville 
 R. R. Co. V. Evansville, 15 Ind. 395 ; see note, p. 198. 
 
198 PROFITS. 
 
 grounds of public policy, and on every principle, not only of hon- 
 esty as regards the public generally, but of the interests of this 
 company itself, I feel bound to prevent this proceeding." {a) 
 
 In Bloxam v. Metropolitan Ry. Co.,* the same judge decided, 
 and, on appeal, the Lord Chancellor Chelmsford inclined to the 
 same opinion, that it was ultra vires of the defendants to declare 
 a dividend upon their ordinary stock, out of a sum of money re- 
 ceived from the contractors, as penalty and interest in respect of 
 unfinished lines. 
 
 Whether interest can be capitalized, that is to say, vrhether a 
 company when, either in the course of constructing its works or 
 subsequently, it makes no profits, can declare interest on its share- 
 holders, and treat such interest as a debt due from the company, 
 or in lieu thereof issue shares — either of which proceedings is 
 plainly very different from payment out of capital — must, upon 
 the authorities, be considered doubtful, (b) But in Bardwell v. 
 
 • L. R. 3 Ch. SSI. 
 
 (a) The unearned pTemiums received by an insurance company in advance upon 
 policies of insurance, are not surplus profits, which the directors are authorized to 
 distribute as dividends, but are the ordinary means or primary fund out of which the 
 losses upon the policies are to be paid. Scott v. Eagle Ins. Co. 7 Pa'ge, 198 ; De Pey- 
 ster V. Ins. Co. 6 Paige, 486. The compensation paid to a corporation for part of its 
 real estate taken by right of eminent domain, and distributed as a dividend to the 
 shareholders, — Held, to belong to the capital and not to the income of a trust fund in- 
 vested in the shares. Heard v. Eldredge, 109 Mass. 268. A corporation formed by 
 the consolidation of previously existing companies, has no power to declare a' divi- 
 dend, as such, of the earnings made prior to the consolidation by one of the companies 
 which was merged in the consolidation, or dividends on the stock of that company 
 out of the earnings of the consolidated one, and the courts will not compel it to 
 jeclare such a dividend. Chase v. Vanderbilt, SI N. Y. Superior Ct. 334, 344. 
 
 (6) A railroad pompany has authority to stipulate that each stockholder shall be 
 entitled to interest on sums paid on stock subscriptions, while its road is in process 
 of construction, till it is completed and goes into operation, payable whenever the 
 surplus earnings shall enable it properly to do so ; that is, whenever the company 
 has such pecuniary ability as would, but for the obligation to pay this interest, justify 
 the payment of a dividend to stockholders. Richardson v. Vt. & Mass. R. R. Co. 44 
 Vt. 613. See, also, Rutland, &c. R. R. Co. v. Thrall, 35 Vt. 636; Wright v. Vt. & 
 Mass. R. R. Co. 12 Cusli. 76 ; Waterman v. Troy & Greenfield R. R. Co. 8 Gray, 433 ; 
 Cunningham v. Vt. & Mass. R. R. Co. 12 Gray, 411 ; McLaughlin v. Detroit, &c. R. 
 B. Co. 8 Mich. 100 ; City of Ohio v. CI. & Tol. R. R. Co. 6 Ohio St. 489. An agree- 
 ment to pay interest to stockholders would not create an absolute liability, binding 
 the corporation at all events, and to be paid and discharged in preference to, or even 
 on an equality with, the debts of the corporation due to third persons, and founded on 
 
DIVISION OF PROFITS. 199 
 
 Sheffield W works Co.,^ where the defendants had power to in- 
 ■crease their capital, and they enlarged their works, obtaining the 
 funds for the same by the issue of new shares, it was determined 
 that they could pay interest on such new shares, during the con- 
 struction of the works, out of capital. 
 
 (2.) Division of Profits. 
 
 II. Profits and dividends must he paid in money.{a) 
 
 This was so determined in Hoole v. Great "Western Ey. Co.^ 
 The revenue of the Great "Western Kailway Company during a 
 
 > L. R. 14 Eq. 611. ^ L. R. 3 Oh. 262. 
 
 considerations of a valuable nature. Barnard v. Vt. & Mass. R. R. Co. 1 Allen, 512. 
 Payment of interest at regular intervals out of the capital, before any profits or earn- 
 ings are made, is within a charter provision prohibiting payment of dividends out of 
 •capital. Pittsburgh, <fec. R. R. Co. v. Alleghany County, 63 Pa. St. 126. 
 
 (a) Under ordinary circumstances, where a company has earned a dividend, and 
 ■desires at the same time to retain the moneys so earned, for the purposes of the com- 
 pany, in making improvements of its property, or for payment of its debts, it would 
 be no violation of law to retain such moneys, and in lieu thereof to issue to stock- 
 -holders a corresponding amount of stock. The election to do either rests with the 
 directors, and if the company has the power to increase the capital stock for any 
 purpose, either mode of making the increase is not a violation of law, and affords no 
 ground for an injunction to restrain them. Howell v. Chicago & N. W. R. R. Co. 61 
 Barb. 378 ; see, to the same effect, Minot v. Paine, 99 Mass. 101 ; Boston <fc Lowell 
 R. R. Co. V. Commonwealth, 100 Mass. 399 ; Daland v. Williams, 101 Mass. 61). ; 
 Leland v. Hayden, 102 Mass. 542; Rand v. Hubbell, 116 Mass. 461; in which cases, 
 it is also held, that cash dividends are to be regarded as income, and stock divi- 
 dends, however made, as capital. See, also, Earp's Appeal, 28 Penn. St. 368 ; Wilt- 
 bank's Appeal, 64 Penn. St. 256, which support the main proposition above, but hold 
 that stock dividends are income, (but see comments in Moss's Appeal, 83 Penn. St.264) ; 
 see, also, Clarkson v. Clarkson, 18 Barb. 646 ; Simpson v. Moore, 30 Barb. 637 ; Lord 
 V. Brooks, 52 N. H. 72. A bank duly authorized, reduced the par value of its shares 
 in consequence of certain supposed losses. Upon the recovery of the sums supposed 
 to have been lost, it issued additional stock to its shareholders. Held, that a legatee 
 having a right for life to the income of certain shares under a will approved prior to 
 these changes, was not entitled to an unconditional certificate of the new dividend 
 ■stock. Parker v. Mason, 8 R. I. 427. In Ehle v. Chittenango Bank, 24 N. Y. 648, it 
 is said that a dividend of the profits of a bank, declared by the directors " payable 
 in N. Y. State currency," is payable in cash ; that the directors have no authority to 
 declare it payable otherwise ; and that a dividend declared becomes a debt payable 
 ■only in legal tender. In Scott ti. Central R. R. & Banking Co. of Ga. 52 Barb. 46, 
 
200 PROFITS. 
 
 particular half-year had been sufficient to pay a dividend, after 
 providing for aU charges properly payable out of the revenue ; 
 but, owing to the refusal of creditors of the company to give 
 time, the revenue was absorbed in payment of sums properly 
 chargeable to capital. In these circumstances the company in 
 general meeting sanctioned a plan for offering to each share- 
 holder, at par, preference shares to an amount equal to the divi- 
 dend which would have been payable to him if the revenue had 
 not been diverted for capital purposes. These shares were sala- 
 ble, but only at a considerable discount. A shareholder filed his 
 bill on behalf of himself and the section of shareholders to 
 which he belonged, to restrain the issue of shares for the above 
 purpose, to have those already issued cancelled, and to restrain the 
 payments of dividends on them. On an application by a share- 
 holder, an injunction was granted to restrain this issue, on the 
 ground that the scheme was ultra, vires. Assuming that the 
 shares could lawfully be issued at a discount (an issue under this 
 scheme being in reality an issue at a discount), and assuming that, 
 owing to the diversion of the revenue to capital purposes, they 
 could lawfully be treated as assets for payment of a dividend. 
 Page Wood, V. C, first, and the lord justices affirming his de- 
 cision, held, that each shareholder who was not willing to accept 
 an allotment of them in specie, had a right to insist that the pro- 
 ceeds of the whole should be applied ratably in payment of a 
 dividend to all the shareholders. 
 
 From this case the following conclusions may be deduced r 
 first, that it is ultra vires of a company to expend its profits in 
 any manner whatever other than in paying dividends to those 
 entitled thereto ; and, secondly, that any one shareholder may 
 refuse to receive the profits coming to him in any shape, prefer- 
 ence shares, &c., other than that of hard cash, (a) 
 
 attempt was made to prove, by proof of surrounding circumstances, that a dividend 
 declared in general terms in the State of Georgia was payable in Confederate money. 
 Dividends are to be considered as divided and paid over to stockholders, when the 
 stockholders have received the same in credits on stock notes in possession of the 
 company. Citizens, Ac. Ins. Co. i>. Lott, 45 Ala. 185. 
 
 (a) Examination of the American cases cited in the notes to pages 196, 199, will 
 show that the conclusions arrived at in the text from the last case, do not hold good 
 in this country. Profits may be applied by the corporation in the payment of its 
 floating or funded debts, or in the development of its business ; see Pratt v. Pratt, 83. 
 
DIVISION OF PROFITS. 201 
 
 It seems also, according to a dictum expressed in an English, 
 case, that with respect to companies within the Companies Act, 
 1862, in the absence^ of express provision to the contrary, the 
 whole of the profits must be periodically divided ; that is, that 
 . the company has not impliedly any option in the matter, and can- 
 not create, for instance, even a contingency fund wherewith to 
 meet future unforeseen losses.' But this is scarcely reconcilable 
 with the principle that a company is supreme in its own internal 
 arrangements and can conduct its enterprises in the way most 
 conducive to its own prosperity. Moreover, the 122d section of 
 the Companies Clauses Consolidation Act, 1845, provides as to com- 
 panies within it, that a fund may be set apart for " meeting con- 
 tingencies, or for enlarging, repairing, or improving the works 
 connected with the undertaking."(a) 
 
 Probably the following is a correct statement of the law as to 
 keeping reserve or contingency funds, viz. : 
 
 (1) All companies may retain such a reserve as is necessary to 
 meet current outstanding debts, or for repairs or renewals of 
 works, plant, &c. ; 
 
 ' In table A. of the Companies Act, templated that companiea will give them- 
 
 1862, there is a clause (Art. 74,) allowing selves such a power, 
 a reserve fund for contingencies to be ' Per Giffard, L. J., L. R. 4 Ch. 494, 
 
 kept, showing that the Legislature con- 495. 
 
 Conn. 446; and, secondly, while it is true that there are some dicta in the opinions- 
 which seem to support the idea that nothing but hard cash can be divided among 
 stockholders, the books are fall of cases relating to stock or scrip dividends ; see 
 State V. Bait. & 0. R. R. Co. 6 GUI, 363 ; and it is well known, that it has been for 
 years the practice of American corporations to make, as it were, forced loans from 
 their stockholders of some portion of their profits, issuing to them new stock, created 
 in lieu of cash dividends, to the same amount. As to the rights of old stockholders in 
 this new stock, see Leland v. Hayden, 102 Mass. 542 ; in re Wheeler, 2 Abb. Pr. (If.. 
 S.) 361 ; Miller v. 111. Cent. R. R. Co. 24 Barb. 312 ; Currie v. White, 45 N. Y. 822 ; 
 Wiltbank's App. 64 Penn. St. 256 ; see notes on pages 158, 159, 199. 
 
 (o) The American cases do not support the rule, that the whole of the profits 
 must be periodically divided. On the other hand, unless there is some obligation 
 created by the charter or by contract to the contrary, it is entirely a matter of dis- 
 cretion with the directors whether any, or what, dividend be declared. They are to 
 manage the affairs of the corporation in this, as in every other respect, as wise, 
 prudent and honest men manage their own affairs; and so long as they act in good 
 faith the courts will not interfere, even though they may deem their judgment erro- 
 neous. Ely V. Sprague, Clarke Ch. 351 ; Karnes v. Rod). & Gen. V. R. R. 4 Abb- 
 Pr. (N. S.) lOT; Luling v. Atl. Mut. Ins. Co. 46 Barb. 510; State of La. o. Bank of 
 La. 6 La. T45. 
 
'202 PROFITS. 
 
 (2) Those companies which, like insurance corporations, have 
 a business where the liabilities are constantly fluctuating, and 
 Tvhose debts may be largely increased at any moment, may keep, 
 and indeed ought to keep, in hand, such an amount as will suffice 
 to meet any reasonable liability that may suddenly become due ; 
 
 (3) There are other companies, such as banks, discount associ- 
 ations, &c., the very character of whose business implies the con- 
 stant possession of a balance or reserve fund more or less large; 
 
 (4) All corporations may be endowed with Express authority 
 to keep such a fund. 
 
 (3.) Declaration of Dividends. 
 
 III. This is a matter of internal government, iut dividends 
 can be paid only out of profits aclMally earned. 
 
 Whether a dividend or bonus can or cannot be declared, is a 
 matter of internal arrangement for the determination of the gen- 
 eral body of members. " The company were the parties to direct 
 "what should be done with reference to declaring a dividend. They 
 had full power to say whether there should or should not be a div- 
 idend." ^ The Court of Chancery, in the absence of fraud, will 
 generally refuse to interfere in such a matter, whether to direct 
 -or to restrain against the declaration of a dividend, nor will it suf- 
 fice that its interference is sought on the ground that a contem- 
 plated dividend has been calculated on a wrong principle, (a) or 
 
 » 
 ' Per Page "Wood, V.-C, 4 K. & J. 17. 
 
 (a) While a court of equity will not interfere with the officera of a corporation, 
 while acting within the scope of their powers and authority, yet when it is apparent 
 that they have erred and wronged some of its stociholders, it should see that injus- 
 tice is not done. Equity will thus interfere to prevent an unjust discrimination in 
 the distribution of profits ; Luling v. Atlantic Mut. Ins. Co. 45 Barb. 610; or, to pre- 
 "vent the declaration of a dividend in the absence of surplus profits ; Carpenter v. IS. 
 T. & N. H. R. R. Co. 5 Abb. Pr. 277 ; or, to restrain payment of dividends until a true 
 list of the shareholders is obtained. Underwood v. N. Y. <fe N. H. R. R. Co. 17 How. Pr. 
 637. A court of equity will not compel the declaration of dividends, except in case 
 of willful abuse of discretion on the part of the directors. Pratt o. Pratt, 33 Conn. 
 446 ; Scott v. Eagle Fire Ins. Co. 7 Paige, 198 ; Howell v. Chicago & N. W. R. R. Co. 
 51 Barb. 378; Ely v. Sprague, Clark Ch. 361 ; Smith v. Prattville Co. 29 Ala. 603. 
 Nor will equity enjoin the declaration of dividends by a corporation having neither 
 ■ofiBcers nor place of business in the State. Williston v. Mich. S. <fc N. I. R. R. Co. 
 13 Allen, 400. See also Howell v. C. &. N. W. E. R. Co. mpra. 
 
DECLARATION OF DIVIDENDS. 203 
 
 tliat an account honestly made out and openly declared contains 
 errors in calculation/ or that there is not actually cash in hand or 
 at the bankers to the amount of the proposed dividend.^ 
 
 The mode contemplated by the Legislature as to keeping ac- 
 counts and determining balances, is shown in articles 79, 80, 81, of 
 table B., of the Companies Act, 1862. 
 
 Till a dividend is declared, a shareholder has no legal title nor 
 even an equitable right thereto, which can be enforced by suit.' 
 Bat when the declaration is made, each shareholder has a right for 
 "which he can bring his action to the amount coming to his share ; * 
 and this right is individual so that no shareholder can sue on be- 
 half of the others, but each must bring his own special action.'(a) 
 
 ' See Tool v. Great Western Ry. Co. Hare, 318 ; Dalton v. Midland Ry. Co. 13 
 
 20 L. T. (N. S.) 1i ; Ranee's Case L. R. 6 C. B. 474. 
 
 Ch. 104. * See cases in last note. 
 
 ^ Per Selwyn, L. J. L. R. 4 Ch. 402-3. ' Carlisle v. South Eastern Ry. Co. 2 
 
 ' See Faweett v. Laurie, 1 Dr. & Sm. H. & T. 366 ; 19 L. J. (Ch.) 477 ; Morgan 
 
 192; Stevens n. South Devon Ry. Co. 9 v. Great Eastern Ry. Co. 1 H. <feM. 560. 
 
 (a) A shareholder in a corporation has no legal title to the property or profits of 
 the corporation, until a division is made or a dividend actually declared. Goodwin 
 V. Hardy, 57 Me. 143 ; Minot v. Paine, 99 Mass. 101 ; Granger ». Bassett, 98 Mass. 
 462 ; Phelps v. Farmers, Ac. Bank, 26 Conn. 269 ; Karnes v. Rochester <fe G. V. R. 
 R. Co.4 Abh. Pr. (N. S.) 107; Hyatt v. Allen, 66 N. Y. 653; Jones v. Terre-Hante, <fec. 
 R. R. Co. 57 N. y. 196 ; Brundage v. Brundage, 1 N. Y. Supr. Ct. ^T. & C.) 82 ; Bur- 
 roughs V. North Car. R. R. Co. 67 N. C. 376; Curry »>. Woodward, 44 Ala. 305; 
 Lockhart v. Van Alstyne, 31 Mich. 78. 
 
 But a dividend declared of the earnings of the company, becomes thereupon the 
 individual property of the stockholder, to be received by him on demand. It is a 
 severance from the common fund of the company, of so much for the use and benefit 
 of each corporator in his individual right, which may be demanded by him, and if re- 
 fused become the subject of an action for money had and received to his nee. A 
 dividend declared, becoming the individual right of the stockholder, is thereafter 
 held as a trust fund that cannot be devoted to other objects. Accordingly, the action 
 of assumpsit lies to recover the dividend as a debt due from the corporation to the 
 individual stockholder, after demand of payment. Keppell v. Petersburg R. R. Co. 
 Chase Dec. 167; Stoddard v. Shetucket F. Co. 34 Conn. 642; Kane v. Bloodgood, 7 
 Johns. Ch. 90 ; Carpenter ». N. Y. <fe N. H. R. R. Co. 5 Abb. Pr. 277; Jones v. Terre- 
 Haute (fe R. R. R. Co. 29 Barb. 363; s. o. 57 N. Y. 196; King v. Patterson <fe H. E. R. 
 R. Co. 20 N. J. Law, 82; s. o. Ibid. 604; Jackson v. Plank-road Co. 31 N. J. Law, 
 277 ; Brown v. Lehigh Coal <fe Nav. Co. 49 Penn. St. 270 ; P. W. <fc B. R. R. Co. a. 
 Cowell, 28 Penn. St. 329; Marine Bank v. Biays, 4 H. <fe J. 338 ; State v. Bait. <fe O. 
 R. R. Co. 6 Gill, 363; City of Ohio v. CI. & Tol. R. R. Co. 6 Ohio St. 489. In Le Roy 
 V. Globe Ins. Co. 2 Edw. Ch. 657, the Vice Chancellor was of opinion, that a bill in 
 equity would lie to recover possession of the money as a trust fund. 
 
 A mere letter of inquiry is not sufficient demand to support an action for divi- 
 
204 PROFITS. 
 
 But if the declaration of dividends be fraudulent or unjust to 
 particular shareholders,^ (a) the courts will interfere both to pre- 
 
 1 See Coey v. B.lfast, &c. Ry. Co, Ir. L. R. 2 Ch. 112. 
 
 dends ; Scott v. Central R. R. Co. 52 Barb. 45 ; nor is a demand while the shares art 
 under attachment by the corporation. Hagar v. Union Nat. Bank, 63 Me. 509. 
 Where dividends have been declared to be placed to the credit of stockholders on 
 the books of the company, and to be payable at such time as the directors shall 
 order, they must be paid within a reasonable time; and when such dividends 
 have been transferred by the directors to the credit of the surplus fund, and 
 invested in real estate and other property for the development of the business of 
 the company, the court, at the suit of a stockholder, will compel the payment of 
 the dividends, though the company have no cash surplus. Beers v. Bridgeport 
 Spring Co. 42 Conn. I'J. It is said in Curry v. Woodward, 44 Ala. 306, that un- 
 paid dividends are assets, liable for the debts of the corporation. But in Matter 
 of Le Blanc, 14 Hun, 8, where a dividend had been declared, and a fund deposited 
 for its payment, but the fund was withdrawn by the receiver of the corporation, 
 it was held that a stockholder who had not drawn his dividend had a lien on the 
 fund and could follow it into the hands of the receiver. And see Beers v. Bridgeport 
 Spring Co. 42 Conn. 17. A party cannot, upon refusal of a corporation to regard 
 him as a stockholder, bring suit in damages for the conversion of the stock, and at 
 the same time claim dividends on the stock declared after the bringing of the suit. 
 Hughes V. Vt. Copper Mining Co. 72 N. Y. 207. A corporation may retain dividends 
 as pledge for debts due to it from the stockholders. Hagar ». Union Nat. Bank, 6S 
 Me. 509 ; Sargent v. Franklin Ins. Co. 8 Pick. 90 ; Bates v. N. Y. Ins. Co. 3 Johns. Cas. 
 238. In an action against a corporation by a stockholder, to recover a dividend de- 
 clared by the directors, if all the other stockholders have received and retain their 
 dividends, the corporation cannot set up in defense, that the dividend has not been 
 earned, and that its payment would withdraw a part of the capital. Stoddard v. She- 
 tucket Foundry Co. 34 Conn. 642. The right to the dividends is in those who hold 
 the stock when they are declared. Goodwin v. Hardy, 57 Me. 143 ; Marsh v. 
 Eastern R. R. Co. 43 N. H. 515 ; Gifford v. Thompson, 115 Mass. 478; Brundage «. 
 Brundage, 65 Barb. 397; Central R. R. Co. v. Papot, 69 6a. 342. In Burroughs v. 
 N. C. R. R. Co. 67 N. C. 876, it was, however, held that a dividend declared payable 
 at a certain future day, belonged to him who owned the stock on the day of payment; 
 but where the dividend was declared, but the day of payment left indefinite, it was 
 held that it belonged to the owner at the time of declaration. Hill v. Newichawaniek 
 Co. 48 How. Pr. 427. 
 
 (a) The dividends must be general, on all the stock, so that each stockholder will 
 receive his proportionate share. The directors have no authority to declare a divi- 
 dend on any other principle. Jones v. Terre-Haute & R. R. R. Co. 29 Barb. 353 ; s. o. 57 
 N. Y. 196 ; Luling i;. Atlantic Mut. Ins. Co. 45 Barb. 510 ; Jackson v. Plank-road Co. 
 31 N. J. Law, 277 ; Atlantic, &c. Tel. Co. v. Commonwealth, 3 Brews. 366 ; State v. 
 Bait. & 0. R. R. Co. 6 Gill, 363; Ryder v. Alton <fe Sangamon R. B. Co. 13 111. 616. 
 No discrimination can be made to the prejudice of holders of stock issued after the 
 fund was earned, out of which the dividends are declared. Jones v. Terre-Haute, 
 &c. R. R. Co. 57 N. Y. 196. 
 
DECLARATION OF DIVIDENDS. 206 
 
 vent such declaration or the subsequent acting upon it. In Great 
 Britain if dividends be fraudulently declared and, paid, they 
 may be followed and recovered from the corporate officials,^ and 
 probably from ordinary shareholders.' {a) 
 
 The Companies Act of 1862 contains a special and stringent 
 provision on this point. By section 165 of this act, power is 
 given to the court in a winding up, to order a director or other ' 
 oflScial to pay to the official liquidator any moneys misapplied or 
 retained in his hands, &c. This section is construed widely, and 
 has been held to authorize the making of an order to repay divi- 
 dends not merely when paid under a fraudulent balance-sheet, but 
 also when paid. under an account negligently made out,* as also to 
 repay sums received from promoters,^ and to make good losses 
 occurring in other ways to the company.' 
 
 But though dividends must actually be earned before they can 
 be paid or even declared, yet, on the other hand. Mills v. Northern 
 Ky. of Buenos Ayres Co.,' shows that where a company have paid 
 for things properly chargeable to capital out of revenue, they are 
 justified in recouping the revenue account at a subsequent time 
 out of capital ; and may, if necessary, raise fresh capital under 
 their borrowing powers for that purpose. In this case Lord Hath- 
 erley, L. C, said : " No doubt many great frauds have been prac- 
 ticed by companies, both upou themselves and sometimes, unfor- 
 tunately, upon the public, by carrying to capital account things 
 that ought to go to revenue account, and thereby leaving an imag- 
 inary profit, which is no profit at all. But the bill avers nothing 
 
 ' Soe Turquand v. Marshall, L. E. 4 the representatives of deceased officials. 
 
 Ch. 376; Evans v. Coventry, 8 De 6. M. See Felton's Exrs. Case, L. R. 1 Eq. 219 ; 
 
 <Sc (J. 836. Peek v. Gurney, L. E. 6 H. L. Z11. 
 
 ' See Ranee's Case, L. R. 6 Ch. 104. ' London & Provincial Starch Co. 20 
 
 'A banker is not an official. Re L. T. (N. S.) 390; Hunt's Case, 38 L. J. 
 
 National Bank, L. R. 10 Eq. 298; Ex (Ch.) 278. See Adamson's Case, L. R. 18 
 
 parte Same, L. R. 14 Eq. 607. Eq. 670. 
 
 * Stringer's Case, L. R. 4 Ch. 478 ; « See Crenver Mining Co. ex parte 
 
 Ranee's Case, L. R. 6 Ch. 104. The sec- Wilson, L. R. 8 Ch. 45. 
 tion does not authorize proceedings against ' L. R. 6 Ch. 62], 630. 
 
 (a) Dividends improperly declared and paid may be recovered back. The assets 
 of a corporation are a trust fund for the payment of its debts, and its creditors have 
 a lien thereon and the right to priority of payment over its stockholders. Where 
 property of a corporation has been divided among stockholders, before its debts have 
 been paid, a judgment creditor, after return of execution unsatisfied, may maintain 
 an action, in the nature of a creditor's bill, against a stockholder to reach what was 
 so received by him. It is immaterial, whether he got it by fair agreement or by a 
 
206 PROFITS. 
 
 of this kind distinctly and definitely, and tlie afBdavit does not go 
 beyond it. The affidavit verifies a quantity of reports, out of 
 which I am to pick the items as I best may, and to ascertain 
 whether they should or should not have been charged to capital 
 or revenue account. If I saw anything grossly extravagant or 
 fraudulent in them, such as the working expenses of the year or 
 the wages of the men carried to capital account, in order to make 
 things look pleasant, as it is called, I should have to pause, and 
 consider how it might be proper for this court to deal with trans- 
 actions of that kind. * * * Therefore, the whole of the aver- 
 ment, as I read it here, is really this, that the directors have said 
 in their report, that they are going to carry back to revenue what 
 they have borrowed from it, for the purpose of capital ; and when, 
 they have carried that back to revenue, then they are going to 
 make a dividend. I do not see anything ultra vi/rea in what is 
 either there alleged or suggested." 
 
 ■wrongful act. Bartlett v. Drew, 57 IS. T. BS*?; Osgood v. Laytin, 3 Keyes, 521; 
 Gratz V. Bedd, 4 B. Mon. 178; Curran v. State of Ark. 15 How. 804; see Reid v, 
 Eatonton Co. 40 Ga. 98; Stoddard v. Shetucket Foundry Co. 34 Conn. 642; Lexing- 
 ton, &o. Ins. Co. «, Paige, 17 B. Mon. 412. 
 
CHAPTER VI. 
 
 FINANCIAL MATTERS. 
 
 Section I. — Debts. 
 
 I. AU corporations vna/y incur debts. None a/re restricted to 
 paying for materials svppUed or work done he/ore or on the 
 receipt of the same. 
 
 The word debt is here used in its narrow acceptation of liabil- 
 ity for small daily wants ; for property acquired, services rendered, 
 goods supplied, and the like. Using the terra in this restricted 
 sense, it is manifestly impossible, speaking practically, for a cor- 
 poration, any more than a private individual, to avoid, under cer- 
 tain circumstances, running into debt. 'Eo matter what the ob- 
 ject of a corporation — whether it be the Royal Literary Fund to 
 raise money for aged authors, or an ordinary co-operative associa- 
 tion to buy and sell tea and sugar — it is evident that those objects 
 involve the employment of servants and agents, the occupation of 
 offices and the purchase and repair of furniture and stationery, 
 and, generally, they will also involve the purchase of articles and 
 materials of other description. All these are necessary expenses, 
 and there is no rule or inference of law or equity which forbids 
 the incurring of them, or which requires that they should be 
 liquidated in advance. 
 
 First: To this extent, therefore — that is, to the extent to 
 which such expenses are incurred honafide, and in the prosecution 
 of the corporate objects — any and every corporation may run into 
 debt and may be sued, as also e contra/rio it may sue, in virtue of 
 contracts so made with or by it. 
 
 jft is also established, secondly, that all corporations, trading 
 or not, have an implied authority to contract for the supply of 
 such articles as are essential for the continued existence of the 
 corporations in question. What is the extent and what the limits 
 of this rule are by no means clear, but it will include at least all 
 
208 FINANCIAL MATTERS. 
 
 those " cases of utility amounting to necessity " where the need 
 of sealing has been dispensed with. Perhaps, also, a doubt may 
 be expressed as to whether this principle goes farther than the 
 rendering corporations, which are, not for trading purposes, liable 
 after the articles now in consideration have been actually received 
 by them — that is to say, whether non-mercantile corporations can, 
 upon this ground alone, be rendered liable upon a mere executory 
 contract. 
 
 II. OommerGial corporaUons may obtain goods and otherwise 
 conduct their enterprise upon credit, if and so far as such 
 a course may he ciistomary. 
 
 Commercial corporations, however, have a much greater license 
 as to the incurring of debts than is permitted by the above rule 
 read most widely. Not only may they become indebted, first, for 
 absolute necessaries, and, secondly, for articles essential to their 
 continued and prosperous existence; bat also if, and so far as, 
 their enterprise involves the dealing in or acquisition of things 
 movable or immovable of any description, they will be justified 
 in carrying on their transactions with regard to the same upon 
 credit principles. 
 
 This power of running into debt is, nevertheless, a special 
 power even in the case of the most distinctively trading corpora- 
 tions. It will be strictly confined by the scope of the enterprise. 
 It must be employed lona fide. And it is totally different from 
 and does not involve that of borrowing. 
 
 Five operations there are which equally end in debts, and 
 which, in many respects, bear a close resemblance, but which 
 must be carefully discriminated. These are : 1. Borrowing, stricto 
 sensu ; 2. Overdrawing a bank account; 3. Issue of negotiable 
 instruments; 4. The acquisition of goods, materials, &c., nomi- 
 nally but not really for the purposes of the undertaking ; 5. The 
 acquisition of goods, materials, &c., lona fide, and in the ordinary 
 way of business. 
 
 In each of the transactions here mentioned a " debt," in the 
 strict and limited sense of that word, will arise. But it by no 
 means follows that a corporation will in each case be liable for 
 and suable upon such debt, simply and solely because it has au- 
 thority to incur ordinary debts, that is to say, such as result from 
 the fifth of the above classes of proceedings. 
 
DEBTS. 209 
 
 Such a power, i. e., to run into debt is, as already mentioned, 
 a special power, and it does not authorize a corporation to do 
 «ither of the acts first and thirdly enumerated. It does, however, 
 authorize it to overdraw its banking account. It may be thought 
 that as the practical result of these three operations, *'. e., borrow- 
 ing, overdrawing, and issuing bills, &c., is the same, so the legal 
 result and legal inferences would be the same, and that the power 
 to do the one would involve the others. But not so. The three 
 powers, even viewed with respect merely to the liability for 
 debts, are totally distinct, and the courts, therefore, discriminate 
 not only the powers, but also the acts themselves. The question, 
 and consequently the liability, is purely one of the intention of 
 the parties, and in Jie Cefn Cilicen Mining Co.,^ Stuart, V.-C, 
 well points this out : " Borrowing and lending are things per- 
 fectly well understood, and although the procuring of money by 
 means of a bill of exchange confers the same benefit on the 
 person who procures it as if he were to borrow the amount, yet it 
 is impossible to consider transactions upon bills of exchange given 
 in this manner as borrowing and lending within the meaning of 
 the 56th article of the company's articles of association. It has 
 been well decided that the balance due to a bank by a company 
 which keeps an account with it, and has had the benefit of the 
 money, is a debt but not a loan in the proper sense." 
 
 A later decision of this same judge, Waterlow v. Sharp,' is 
 even stronger, as showing that actual advances by bankers, as dis- 
 tinct from pure overdrawing, wiU, under ordinary circumstances, 
 be deemed to create a simple debt, and not to be loans in the 
 strict sense, and this even though such advances have been de- 
 scribed and treated by the parties as loans. In this case, the 
 London and County Banking Company had permitted their cus- 
 tomers, a railway company, to draw checks against a sum entered 
 in the books of the bank under the title " Loan Account." The 
 company being insolvent, the claim of the bank was disputed as 
 being an unauthorized loan. It was held, that though the trans- 
 actions between the banking company and the railway company 
 were recorded in the bank books under the title of " Loan Ac- 
 count," yet they were not the less mere overdrawing in the 
 regular course of a banking business, and that there was no bor- 
 
 ' L. E. T Eq. 88. « L. R. 8 Eq. 501. 
 
 14 
 
210 FINANCIAL MATTERS. 
 
 rowing or loan in the proper sense of the word, which could be' 
 questioned as ultra vires. The Yice-Chancellor delivered a short 
 and lucid judgment : " None of the transactions, in respect of 
 which this banking company claims to be a creditor, are other 
 than transactions in the ordinary course of dealing between bank- 
 ers and their customers. It is in the ordinary course that there 
 should be a fixed amount beyond which the customer is not per- 
 mitted to overdraw his account. Because the transactions were 
 recorded in an account called the ' Loan Account,' they were not. 
 the less transactions in the regular course of banking business. 
 The title of that account was adopted because the amount to- 
 which the railway company was allowed to draw was limited. 
 There seems, therefore, to be no sufficient reason for saying that 
 there was any borrowing or loan in the proper sense of the word,, 
 or within the meaning of the act of parliament. The claim of 
 the bank must, therefore, be allowed." 
 
 jFrom .these two cases it follows that, first, at least commercial 
 corporations have, impliedly, the authority both to open banking ac- 
 counts ^ and to overdraw the same ; that, secondly, advances made 
 by bankers in connection with such accounts will he presumed to- 
 be in connection with, and for the ordinary purposes of, such 
 accounts, and that this presumption will not be rebutted by shgbt 
 contrary evidence ; but that, thirdly, positive proof that such 
 accounts have been employed for the raising of money or other- 
 wise misused, will destroy the character of such advances, and 
 will disentitle the bankers from recovering against the cofporation 
 upon the ground of a simple debt. 
 
 In other words, where custom sanctions the keeping of a bank- 
 ing account, the hona fides of the parties will be assumed, and will 
 be a secondary consideration, the burden of proof being thrown 
 upon those who question it. 
 
 The same observations apply to most, if not all, other cases of 
 " debts." Nevertheless, a debt may be incurred under such sus- 
 picious circumstances as to render the intention of those concerned 
 a primary, or rather a preliminary matter. Thus, in Scott v. Col- 
 burn,'' the directors of the Strand Music HaU Company were pro- 
 hibited from giving bills of exchange, but they had powers to bor- 
 
 ' See, however, Alliance Bank !). Kear- phia, <fec. R. R. Co. v. Lewis, 33 Penn.. 
 Bley, L. R. 6 C. P. 483. 33 ; White Water Valley Canal Co. i), 
 
 "^ 26 Beav. 276. Compare Philadel- Henry Vallette, 21 How. 414. 
 
DEBTS. 211 
 
 row on mortgage. They, however, gave bills to secure an existing 
 debt, and a mongage was at the same time executed under the seal 
 of the company, which was made subject to redemption on pay- 
 ment of the bills. It was held, upon the facts, that the mortgage 
 was given to secure the debt, and not the payment of the bills, and 
 therefore was not invalid on that account. Romilly, M. E., said : 
 " I am of opinion that the object of the deed is not to secure pay- 
 ment of the bills of exchange, but to secure the payment of the 
 £6,000 and interest due to the plaintiff. * * * I think that this 
 is not a mortgage to secure bills of exchange, but to secure the 
 payment of the principal and interest actually due to the plaintiffs, 
 but for the payment of which it is recited that bills had also been 
 given." 
 
 The third point, i. e., the issue of negotiable instruments, has 
 been incidentally mentioned in the above authorities, and it will 
 be examined at length hereafter. Here it will suffice to observe 
 that this power is a very special one, and belongs impliedly to only 
 a few of even commercial corporations ; ^ and that, consequently, 
 iji connection with the points now under investigation, the ques- 
 tions will be, first, has the corporation authority, express or im- 
 plied, to issue the negotiable instrument upon which it is sought 
 to be charged ? and, secondly, if so, was that instrument issued in 
 hona fides and as such, and in the ordinary way of business, or was 
 it issued in order to raise money ? ^ 
 
 The fourth point is the purchase or hiring of goods, materials, 
 or other property, immovable or movable, in quantities or under 
 circumstances which show that this was not done purely in the 
 conduct of the corporate enterprise. If property, although in the 
 result a much greater amount than actually needed, has been ac- 
 quired honafide for the purposes of a corporation, the corporation 
 will be liable to pay for the same.' 
 
 On the discharge of debts there is little to be said. Corpora- 
 tions may discharge their debts and other liabilities in any way 
 that may be most convenient to themselves, by actual payment, by 
 compromise, &c. There is, of course, this qualification, that they 
 
 " See Batemau v. Mid-Wales By. Co. they may be issued as a security for ad- 
 L. R. 1 0. P. 499. vanoes already made. 
 
 " It should also be here observed, by ' Forrest v. Manchester, <fec. Ky. Co. 30 
 ■way of caution, that when there is a Bear. 40 ; Simpson v. Westminster Palace 
 power to issue negotiable instruments, Hotel, 8 H. L. C. 12; Horsey's Claim, L. 
 
 B. 5 Eq. 561. 
 
212 FINANCIAL MATTERS. 
 
 cannot engage in vlt/ra vires proceedings merely because they wish 
 to escape from impending liabilities, or because their creditors are 
 pressing them. But, on the other hand, when in extreme need, 
 they may certainly deal with their property, dispose of it out-and- 
 out,' and do and engage in many other matters which, under other 
 circumstances, would be prohibited. 
 
 There is, also, with respect to registered companies, the further 
 restriction as to fraudulent preference contained in section 164 of 
 the Companies Act, 1862 : " Any such conveyancCj mortgage, de- 
 livery of goods, payment, execution, or other act relating to prop- 
 erty as would, if made or done by or against any individual trader, 
 be deemed, in the event of his bankruptcy, to have been made or 
 done by way of undue or fraudulent preference of the creditors of 
 such trader, shall, if made or done by or against any company, be 
 deemed, in the event of such company being wound up under this 
 act, to have been made or done by way of undue or fraudulent 
 preference of the creditors of such company, and shall be invalid 
 accordingly ; and for the purposes of this section the presentation 
 of a petition for winding up a company, shall, in the case of a com- 
 pany being wound up by the court, or subject to the supervision 
 of the court, and a resolution for winding up the company shall, 
 in the case of a voluntary winding up, be deemed to correspond 
 ■with the act of bankruptcy in the case of an individual trader ; and 
 any conveyance or assignment made by any company formed under 
 this act of all its estates and effects to trustees for the benefit of all 
 its creditors, shall be .void to all intents." ' 
 
 1 See Lord v. Copper Miners of En- Case, L. R. 5 Eq. 286 ; Sykes' Case, L. R. 
 
 gland, 2 Phill. T40 ; Wilson v. Miers, 10 13 Eq. 256 ; Patent File Co. {Ez parte Bir- 
 
 C. B. (N. S.) 348; Featherstonhaugh v. mingham Banking Co.) L. R. 6 Ch. 88; 
 
 Lee Moor, <fec. Co. L. R. 1 Eq. 318, Adamson's Case, L. R. 18 Eq. 670; JBk 
 
 5 Inns of Court Hotel Co., L. R. 6 Eq. parte Ashbury, L. R. 5 Eq. 228. See, also, 
 
 S2 ; Gaslight Improvement Co. v. Terrell s. 133 of the act. 
 L. R. 10 Eq. 168; and see Habershon'a 
 
BORROWING. 213 
 
 Section II. — Boeeowing. {a) 
 
 1. Any corporation may he expressly authorised to borrow. 
 
 Express borrowing powers are such as are given by positive 
 and explicit provisions in this behalf. They are contained either 
 in the special constating instruments or in general statutes. 
 
 Apparently corporations of every description may be endued 
 at their inception with such a capacity. 
 
 It would also seem that it is competent for any corporation 
 whose constating instruments, as originally framed, do not au- 
 thorize borrowing, to modify and supplement those instruments,^ 
 by going through the necessary formalities as to special resolu- 
 tions, &c., so as to confer upon it the required power. Bryon v. 
 Metropolitan Saloon Omnibus Co.' is usually considered to have 
 so decided. The defendant company was incorporated under the 
 Joint-Stock Companies Act, 1856, as a limited company, for the 
 purpose of conveying passengers and luggage in patent omni- 
 busses. There were no special articles of association. A majority 
 of more than three-fourths in number and value of the share- 
 holders present at a general meeting, passed a special resolution 
 empowering the directors to borrow on debentures of the com- 
 
 ' Of course, only in those cases where panies Acts, or other similar general stat- 
 there is such a power to modify or sup- utes. 
 plement, e. g., companies under the Com- ' 3 D. G. <fe J. 123. 
 
 (a) Every corporation, unless prohibited by law, can incur obligations, as a bor- 
 rower of money, to carry on the legitimate business for which it was incorporated, 
 although not specially authorized to borrow by its charter. Curtis v. Leayitt, 1 5 TS^ 
 Y. 9; Beers v. Phoenix Glass Co. 14 Barb. 3fl8; Mead v. Keeler, 24 Barb. 20; Par- 
 tridge V. Badger, 25 Barb. 146; Clark v. Titcomb, 42 Barb. 122; Barry o. Mer- 
 chants' Exch. Co. 1 Sandf. Ch. 280; Life Ins. Co. v. Mech. Ins. Co. 1 Wend. 31 : 
 Barnes v. Ontario Bank, 19 N. Y. 152 ; Smith v. Law, 21 N. Y. 296 ; Nelson v. Eaton, 
 26 N. Y. 410; Holbrook v. Bassett, 5 Bosw. 147; Lucas v. Pitney, 27 N. J. L. 221 ; 
 Hackettstown v. Swaokhamer, 37 N. J. L. 191; Ridgeway v. Farmers' Bank, 12 S. & 
 R. 256 ; Oxford Iron Co. v. Spradley, 46 Ala. 98 ; Ala. cStc. Ins. Co. v. Central, <fcc. 
 Ass'n, 54 Ala. 73; Union Bank v. Jacobs, 6 Humph. 616; Moss v. Harpeth Acad. 7 
 Heisk. 283 ; Commercial Bank a. Newport Mfg. Co. 1 B. Men. 14 ; Bank of Chilli- 
 cothe V. Chillicothe, 7 Ohio, 31 ; Hamilton v. Newcastle R. R. Co. 9 Ind. 369; Rock- 
 well V. Elkhorn Bank, 13 Wis. 663 ; Thompson v. Lambert, 44 Iowa, 239 ; Bradley 
 V. Ballard, 65 111. 413 ; Ganse v. City of Clarkesville, 7 Reporter, 519 ; Union Mining 
 Co. V. Rocky Mt. Nat. Bank, 2 Col. 248 ; Magee v. Mokelumne Hill Canal Co. 6 Oal. 
 268. See, also, cases cited in note to the next section. 
 
214 FINANCIAL MATTERS. 
 
 pany any sums not exceeding in the whole a certain amount. 
 Some dissentient shareholders filed a bill on behalf of themselves 
 and the other shareholders, except the directors, to prevent such 
 borrowing, as being ultra vires, and praying that the directors 
 might be restrained from issuing any more debentures under this 
 resolution, and should be decreed to indemnify the company 
 against those already issued. Kindersley, V.-C, refused a motion 
 for an injunction in terms of the prayer. 
 
 From this the plaintiffs appealed, and the defendants having 
 demurred, the appeal motion and the demurrer were by consent 
 heard together by the Lords Justices. On the appeal, both the 
 Lords Justices overruled because " the question could be better 
 disposed of at the hearing of the cause than on the demurrer." 
 As to the motion for an injunction, Knight Bruce, L. J., doubted. 
 Turner, L. J., however, agreed with the Yice-Chancellor in refus- 
 ing it. 
 
 Now this case can scarcely be said to .have decided that cor- 
 porations may, subsequent to their creation, confer upon them- 
 selves the power now in statement. In fact no decision was given ; 
 "the demurrer was overruled, without prejudice to any ques- 
 tion," ^ and the " question was reserved till the hearing of the 
 cause." ^ And, indeed, so far as Turner, L. J., expressed aa 
 opinion, he proceeded, not upon any general rule or principle 
 applicable to all corporations, but upon the very comprehensive 
 enactment contained in the 33d section of the Companies Act, 
 1856.8 
 
 Express powers to borrow, whether contained in private con- 
 stating instruments, or in public statutes, are frequently expressed 
 "in such language or with such stipulations, &c., as to their exer- 
 cise, that it is diflBcult to decide what is their effect or when they 
 will be deemed validly exercised. Ex parte European, &c. Corp.'' 
 is a well-known decision upon this point. The 35th clause of the 
 articles of association of the Strand Company ran thus : " The 
 Company in special meeting may authorize the borrowing of such 
 sums of money, &c., as they may think fit," &c. Clause 78 pro- 
 vided that the directors " may borrow in the name, &c., of the 
 
 ' Per Turner, L. J. 3 D. G. A J. 128. or in addition to any regulation of the 
 
 ' Per Knight Bruce, L. J. Ibid. court," <fec. 
 
 ' By 19 <fe 20 Vict. c. 47, s. 33, •' Any ^ jte Strand Music Hall Co. S D. G. J. 
 
 company may in general meeting » • » ,Si gm. 147. 
 alter and make new provisions in lieu of 
 
BORROWING. 215 
 
 «ompafty, such sums as they might think expedient, either by way 
 •of mortgage of the whole or any part of the property of the com- 
 pany, or by bonds or debenture notes, or in such other manner as 
 they may deem best ; provided, nevertheless, that the aggregate 
 of principal money to be so borrowed shall not, at any one time, 
 exceed £10,000, unless the borrowing of a larger amount shall 
 have been previously authorized by a general meeting, in which 
 case the directors may borrow to such extent as is so authorized." 
 It was held that the former clause — "special" and "general" 
 nieetings being different — did not restrict the latter, and that a 
 borrowing to the extent of £30,000, authorized by an ordinary 
 general meeting, was valid. 
 
 II. Corporations may borrow without express authority in 
 that behalf, provided the nature of their undertakings 
 or concerns he such as to render borrowing, if not actu- 
 ally indispensable, at least very useful, for the proper 
 conduct of the same. 
 
 Between increasing capital and raising money are many im- 
 portant differences. The capital of a company must be considered 
 one of the constituent facts of a company — change it and the 
 company is pro tanto changed ; but a corporation, like a private 
 individual, cannot avoid occasionally running into debt, and how- 
 ever great its debts, it nevertheless remains the corporation it 
 originally was. The power of incurring debts for goods, and for 
 carrying on a business, does not, however, necessarily involve that 
 -of raising money to pay them. The latter may be turned to a 
 wrong Recount far more easily than the former, and consequently 
 although in all ordinary partnerships any member will bind the 
 firm by obtaining articles necessary to the firm upon the credit of 
 the firm, yet it by no means follows that the firm would be liable 
 for an advance of money obtained under the same circumstances.^ 
 
 Whether, in fact, a partnership is liable upon loans obtained 
 for it, will have to be determined, in each case, by a consideration 
 of the mode of carrying on, and the customs observed in, the par- 
 
 ' Compare Dickinson v. Valpy, 10 B. W. 853 ; 28 L. J. (Ex.) 66 ; Re Worcester 
 
 <Se C. 139, and Brown v. Byers, 16 M. & Corn Exchange Co. 3 I)e G. M. <fc G. 180; 
 
 W., with Rothwell v. Humphreys, 1 Esp. Lloyd v. Freshfield, 2 C. & P. 325 ; 8 D. 
 
 406, and Foster v. Mackreth, L R. 2 Ex. <& R. 19; Greenslade v. Dower, 1B.&C. 
 
 163. See, also, Hawtayne v. Bourne, T 635; Fisher v. Taylor, 2 Hare, 218. 
 M. & W. 695 ; Brown v. Zidger, 3 H. <fc 
 
216 riNANCIAL MATTERS. 
 
 ticiilar business engaged in, and by the same principles -frill b& 
 decided the liabilities of, at least, those joint-stock companies 
 which are not, and probably also of such as actually are, incorpo- 
 rated. " It is said that a mining company which, as was decided 
 in Dickinson v. Valpy, is not necessarily formed with power to 
 pledge the credit of individual members by the drawing of bills, 
 is also not formed with power to bind each other by dealing on 
 credit ; but these are two very different propositions. "Whether 
 the directors have such a power must depend on the general 
 nature of the concern ; it is a matter for the jury to decide upon, 
 unless the party gives evidence to show that their authority was 
 expressly limited ; and if it had been left to the jury in this case,, 
 I think they would not have had much difficulty in saying that it 
 is in the general nature of mining concerns to deal on credit for 
 the purpose of carrying on their business." This was the opinion 
 of Lord Abinger, in Tredwen v. Bourne,^ and it has been recog- 
 nized and followed in subsequent cases. 
 
 Accordingly an implied power to borrow exists in the case of 
 a colliery company ; '^ of a bank ; ^ of a firm of merchants ; * and 
 generally of trade partnerships, " the copartners in which have' 
 the usual power to accept biUs and borrow money for the partner- 
 ship purposes." ' 
 
 It does not exist in the case of a cost book mining company ; ' 
 of an ordinary mining company, *. e., a tin or copper as distinct 
 from a coal mining company ; ' of a firm of farmers ; ' of a firm, 
 of attorneys ; ° of a partnership " en participation," i. e., an asso- 
 ciation for one single definite enterprise, e. g., the building of a 
 house." 
 
 It has also been determined that the authority to borrow does 
 not necessarily involve that of opening a banking account, and 
 that consequently there is no implication of law, from the mere 
 
 ' 6 M. <fe W. 466 ; see Hawker v. Bank of New South Wales v. Undaunted 
 
 Bourne, 8 M. <fe W. Y03. Gold Mining Co. 1 W. B. <fc W. 146. 
 
 2 Brown v. Kidger, 3 H. ife N. 853. ' Dickinson o. Valpy, 10 B. & C. 
 
 3 See Sadler v. Lee, 6 Beav. 824; 12 128; Eicketts v. Bennett, 4 C. B. 686; 1 
 L. J. (Ch.) 407; Royal British Bank v. Jur. 1062; 17 L. J. (C. P.) 17; Sedgwick 
 Turquand, 6 E. & B. 327; 7 Jur. 407. v. Daniell, 2 H. <fe N. 319 ; 27 L. J. (Ex.) 
 
 * Ex parte Bonbonus, 8 Ves. 640. 116 ; Brown v. Byers, 16 M. <t W. 252. 
 
 s Per Channell, B., 28 L. J. (Ex.) 68 ; « See Greenslade v. Dower, 7 B. <fe C. 
 
 Fisher v. Taylor, 2 Hare, 218. 636. 
 
 « Tredwen v. Bourne, 6 M. <fe W. 461 ; « Foster v. Mackreth, L. R. 2 Ex. 163.. 
 
 Hawtayne v. Bourne, 7 M. A W. 596; '" See joer Cranworth, C, 3 De G. M. & 
 
 Hawker v. Bourne, 8 M. <fe W. 703; Bur- G. 187. 
 mester v. Norris, 6 Ex. 796. But see 
 
BORROWING. 217 
 
 existence of a trade partnership, that one partner has authority to 
 bind the firm by opening a banking account on its behalf in his 
 own name.^ 
 
 In the Australian Auxiliary Steamship Company v. Mounsey,^ 
 mortgages of the company's ships executed by the directors, who, 
 by the articles of association, could " exercise and do all such 
 powers, discretions, acts, deeds, and things, as the company might 
 exercise and do," were held valid. Page Wood, Y.-C, observing,. 
 " the act complained of is this : The company being in want of a 
 sum of money for the purposes of their business, application is 
 made to the bankers, who, being already creditors of the com- 
 pany, require security for the advance. The question is, might 
 not the bankers stipulate that they should have a mortgage on the 
 assets, and might not the company consent to that stipulation ? 
 It was first argued, that the company could not do it, because the 
 majority had no power to bind the minority, the case being^ 
 argued as if it were one of ordinary partnership ; but the case of 
 a joint-stock company .differs from that of an ordinary partner- 
 ship, inasmuch as it is a corporate body, and it is clear that, with. 
 regard to everything which is within the powers of the company, 
 the majority have full power to deal with the assets of the com- 
 pany, in order to carry on their affairs, and to bind the minority. 
 The next question is, can the acts complained of be considered a 
 legitimate exercise of the powers of the company, they being 
 ship-owners and not dealers in ships ? I cannot see why it should 
 not be within their ordinary province to raise money by mort- 
 gage of their ships, either for the purpose of buying new ships 
 or paying creditors." 
 
 It would seem, also, that any and every commercial corpora- 
 tion may, under circumstances of absolute necessity, borrow 
 money for the conduct and continuance of their business. rThiSy 
 at least, is the effect of the decision of Malins, Y.-C, in Gibbs 
 and West's Case, {re International Life Assurance Company).* 
 The deed of settlement of the International Assurance Com- 
 pany contained no express power of borrowing, but author- 
 ized the directors to do and execute all acts, deeds, and 
 things necessary, or deemed by them proper or expedient, for 
 
 1 Alliance Bank v. Kearsley, L. R. 6 Company, 3D. G. & J. 123; 27 L. J. 
 C. P. 433. • (Oh.) 685. 
 
 '4 K. <fc J. 733 ; 27 L. J. (Ch.) 730; » L. R. 10 Eq. 312. Compare Ux parte 
 
 Bryon v. Metropolitan Saloon Omnibus Birmingham Banking Company (Be Pat- 
 ent Kle Company), L. R. 6 Ch. 83. 
 
218 FINANCIAL MATTERS. 
 
 carrying on the concerns and business of the company, and to do, 
 enforce, perform and execute all acts and things in relation to the 
 company, and to bind the company, as if the same were done by 
 the express assent of the whole body of members thereof. It 
 was decided that the directors had acted within their powers in 
 borrowing money from the bankers to meet pressing demands 
 upon the company, and charging the proceeds of a call already 
 made, but not immediately payable, with the repayment of the 
 loan ; and that two of the directors, who had become sureties for 
 the company and had repaid the loan, were entitled to the benefit 
 of the charge on the call. The Vice-Chancellor, in the course of 
 a careful judgment, observed : " 'Now it has been very strongly 
 urged in this case, that the company having no power to borrow, 
 Ihe borrowing was ultra vires and improper, and that, therefore, 
 no debt was created. I should say, as, indeed, 1 have already 
 ^aid on many occasions, that in the ordinary course of transac- 
 tions of a mercantile concern, whether it be an insurance oflice or 
 anything else, where the possession of mpney is essential for the 
 purpose of carrying on the business, if the company finds itself 
 in temporary difficulties for want of money, I cannot consider it 
 beyond the powers of the directors to obtain money from their 
 bankers or others who will temporarily lend it to them, for the 
 purpose of preventing that which would be disastrous to all, 
 namely, the stoppage of the company ; that is to say, I cannot 
 consider it beyond their powers to prevent that disaster by means 
 of loans to a moderate extent, such as would not be unreasonable, 
 having regard to the nature and extent of the business in which 
 the company is engaged, for the purpose of carrymg on the busi- 
 ness of the company." 
 
 This judgment is expressed in very general language, much 
 wider, indeed, than was necessary for the actual decision which 
 might have been founded upon the rule set forth in the next 
 proposition. No necessity, however great, will, per se, justify a 
 borrowing on behalf of a partnership. * 
 
 Moreover, if the above dictum is to be held as applying to 
 mining and similar "mercantile concerns," it is impossible to 
 reconcile it with the string of decisions commencing with the 
 ■German Mining Oo.'s Case.* In these decisions, one and all, the 
 
 ' TJc German Mining Co. {Bx parte Chippendale), 4 De G. M. & G. 19. 
 
BORROWING. 219 
 
 borrowing has been held ultra vires, and therefore no loan, in the 
 proper sense, has been made or debt created ; but the money hav- 
 ing been actually applied to .the corporate necessities, the persons 
 making such advances have been allowed, on principles of equity, 
 to prove against the corporation to the extent to which it has re- 
 ceived benefits. The cases where this has happened, where, con- 
 sequently, the existence of a power to borrow as such was denied, 
 have been to a mining company,^ a manufacturing company,^ 
 a steam navigation company,' a telegraph company,* a railway 
 company.' 
 
 On the other hand, there is the decision just cited of Malins, 
 V.-C, and another of Page Wood, Y.-C.,* to the effect that com- 
 mercial corporations may, in all cases of need, if not in the ordi- 
 nary conduct of their business, borrow if not positively forbidden. 
 To the same purport are the decision of and the expressions used 
 by the Lords Justices, and especially the language of Mellish, 
 L. J., in the Patent File Co. {Expa/rte Birmingham Banking Co.). ' 
 
 To some businesses an implied power to borrow is so essential 
 that it has been said with regard to a bank which 'had issued bank 
 post bills : " The partnership itself gives authority to the mem- 
 bers of it to deal in the ordinary way as partners, and it is almost 
 unnecessary to loqk at the deed : and I should think that even if 
 the deed prohibited such dealing, the defendant would, under the 
 present circumstances, be liable." ' We need add only that cer- 
 tain kinds of business seem necessarily to require, that companies 
 transacting them should have a power to raise money, not merely 
 to meet their daily outgoings, but for the actual carrying on of 
 their business ; such, for instance, is banking.' 
 
 If the business of the company be of such a kind that it is not 
 
 ' Ibid. ; Lowndes v. Garnett, <fec. Gold plaintiff company's memorandum of asso- 
 
 Mining Co. 33 L. J. (Oh.) 416, 418. elation was held to entitle it to issue ne- 
 
 ' Sx parte Bignold (TJe Norwich Yarn gotiable instruments, although it would 
 
 Co.) 22 Beav. 143. not, from the nature of its business, have 
 
 ' Re Magdalena Steam NaT. Co. John, had any other implied power to do so. 
 690. ' L. R. 6 Ch. 83 ; cited folly, pod, pp. 
 
 ' Troup's Case, 29 Beav. 353. 223-226 ; see Re General Provident Ass. 
 
 ' Re Cork <fe Toughall By. Co. L. R. Co. L. R. 14 Eq. 507; Re General South 
 
 4 Ch. 748. Ass. Co. 2 Ch. D. 340. 
 
 « 4 K. & J. 733 ; 27 L. J. (Ch.) 729, s p^^ Martin, B., in Forbes v. Marshall, 
 
 730 ; Patent File Co. L. R. 6 Ch. 83 ; 24 L. J. (Ex.) 305. 
 
 Bryou v. Metropolitan Saloon Omnibus ' Bank of Australasia v. Breillat, 6 
 
 Co. 3 De 6. <fc J. 123 ; 27 L. J. (Ch.) 685. Moore P. C. 152; 12 Jur. 192. Compare 
 
 Compare Peruvian Rys. Co. v. Thames & Royal British Bank v. Turquand, 6 E. & 
 
 Mers^ Marine Ins. Co. L. R. 2 Ch. 617, B. 327 ; 25 L. J. (Q. B.) 317; and Forbes 
 
 ■where the wide language inserted in the v. Marshall, 11 Ex. 166 ; 24 L. J. Ex. 305. 
 
220 FINANCIAL MATTERS. 
 
 necessary or usual in the conduct of it to borrow money, then it 
 cannot do so without an express authority in that behalf. " This 
 company is what is called a benefit building society. Until the 
 recent decision of the court, in Laing v. Eeed,^ it was doubted 
 whether, even if you put a limited borrowing power among the 
 rules of a society of this sort, that particular rule would be legal. 
 But, what we have here is a limited benefit building society with- 
 out any power to borrow, and the rules and very nature of that 
 society show that it would be contrary to its constitution to bor- 
 row money so as to bind the company, or to make the individ- 
 ual members of the company, as members, liable for borrowing 
 money ; because the whole constitution of the society is that the- 
 members are to make certain monthly payments, and in considera- 
 tion of these monthly payments and the fines provided by the 
 rules, they are to receive certain loans. 
 
 "After the rules had been certified and published, and the 
 nature of the company had been fixed, a prospectus was issued, 
 and by that prospectus the directors chose to say, ' that they have 
 made arrangements to borrow sums to be advanced to such mem- 
 bers as desire to receive an advance before their turn for it regu- 
 larly arrives, such members, of course, paying interest on the sum 
 lent until their turn arrives.' If we look at the nature of the 
 company, that can only amount to this : that the directors have 
 chosen to pledge their personal liability. It is not a statemient 
 that the company were liable, or that any person who was a mem- 
 ber of the company was at all bound, or was personally made lia- 
 ble in respect of any debt of the company. This being so, let us 
 see on what ground this winding up order was made. It was 
 made upon the petition of a creditor, and in order to support 
 that petition, the petitioner must have made out that he was a 
 creditor, either legal or equitable — either character would be suf- 
 ficient. I have already said, that this benefit building society 
 could not incur a debt by borrowing money upon loan. . Indeed, 
 the contrary has hardly been argued. It could not do so any 
 more than a mining company, or any other of the companies 
 which have not authority or power to bind their members by bor- 
 rowing money." ^ 
 
 1 L. R. 6 Ch. 4. parte Williamson), L. R. 6 Ch. 309, 312, 
 
 2 Per GlflFard, L. J., in Ee Nationa,! 318. 
 
 Permanent Benefit Building Soc. {Ex * 
 
BOEEOWING. 221 
 
 A restriction as to tKe amount which may be raised by loan is 
 not a directory formality which can be waived, but is an absolute 
 condition which must be observed.^ Consequently, a borrowing in 
 excess of such amount will, qua the special contract purporting to 
 be entered into, be void, and securities given therefor will be use- 
 less.* Perhaps the true conclusion is this : that if a definite limit 
 be fixed and that limit is exceeded} then, I. If the company have a 
 general power to borrow, or if the loan be made under the circum- 
 stances hereinbefore stated as justifying it, though the special con- 
 tract will be void and no right of action of any kind will exist in 
 respect of it, or of the securities given under it, yet the lender 
 will be entitled to sue in assumpsit for money lent. But, II. If 
 the company have no power to borrow other than that so expressly 
 given it, the lender will have no remedy whatever other than that 
 indicated in the chapter on " Liability for TJll/ra Vifes acts." 
 
 A power to borrow may be validly exercised by giving ac- 
 knowledgniients of indebtedness, e. g., debentures for an amount 
 exceeding the sum advanced, that is, by issuing them at a discount, 
 and the debentures so issued will be perfectly good for their nom- 
 inal value,* even though issued to a director * or other oflScial who 
 cannot ordinarily make profit out of his position. 
 
 As to interest, where there is nothing in the constating instru- 
 ments to limit the amount, the corporation may give any rate — 
 10, 20, 30 per cent. — which suits their necessities.' The Com- 
 panies Clauses Consolidation Act, 1863, s. 22, limits the rate on 
 debenture stock, when no rate is prescribed in the special act, to 
 4 per cent.(a) 
 
 III. A power to 'borrow may he validly executed, though it he 
 accompanied hy the gvuing of ultra vires documents intended 
 to le securities. 
 
 It sometimes happens that a power to borrow exists, and the 
 company exercises it and obtains a loan, and gives, to secure the 
 
 ' See 8 (t 9 Vict. o. 16, s. 39; Foun- N. 599; Be Pooley Hall Colliery Co. W. 
 
 taine v. Carmarthen By. Co. L. R. 6 Eq. N. 1869, p. 225 ; 21 L. T. (N. S.) 690. 
 316 ; At*.-6en. v. Mayor, <fcc. of Cam- ^ ^^ ADglo-Danubian Steam NaT. <fec. 
 
 bridge, L. E. 6 H. L. 303. Co. L. E. 20 Eq. 339 . 
 
 '■* Fountaine's Case in note 1 ; see Gor- * He Campagnie de Bellegarde (Camp- 
 don V. Sea, Fire <fc Life Ass. Co. 1 H. ife bell's Case), W. N. 1816. p. 299. 
 
 5 Per Jessel, M. R., L. E. 20 Eq. 341. 
 
 (o) In several of the States corporations are not allowed to plead usury. As to 
 the effect of the N. T. statute on this subject, see Eosa v. Butterfield, 33 If. Y. 666. 
 
222 FINANCIAL MATTERS. 
 
 advances, securities, e. y., mortgages -which are outside its powers 
 — these illegal documents, though themselves void, will not avoid 
 the loan. 
 
 In Scott V. Colbum,^ the directors of the Eoyal Surrey Gardens 
 Company were prohibited giving bills of exchange ; but they had 
 powers to borrow on mortgage. They, however, gave bills to 
 secure an existing debt, and a mortgage was at the same time exe- 
 cuted under the seal of the company, which was subject to redemp- 
 tion on payment of the bills. It was held that the mortgage was 
 given to secure the debt, and not the payment of the bills, and 
 therefore was not invalid on that account. 
 
 Still stronger instances are those which have arisen under the 
 Municipal Corporations Act. Section 94 of that statute provides 
 that it shall not be lawful for the council of any body corporate 
 to be elected under this act to sell, mortgage or alienate the lands, 
 tenements or hereditaments of the said body corporate, or any 
 part thereof, except upon the conditions therein set forth, or with 
 the consent of the commissioners of the treasury. Notwithstand^ 
 ing this, the Courts of Queen's Bench,* of Common Pleas * and of 
 Exchequer^ have, one and all, declared securities of this descrip- 
 tion, not made subject to such conditions or with such consent, to 
 be perfectly good as constituting debts, and apparently as bonds 
 and covenants to pay, though perhaps not as mortgages. In the 
 last, the Brecon Case, Bramwell, B., well expressed the principle 
 involved. " The utmost that can be said is, that the mortgage is 
 a nullity as regards the transfer of the property under it, but that 
 the section remains good, and, consequently, the covenant is good 
 as against the corporation." ' 
 
 '26 Eeav. 276; 6 Jur. (N. S.) 183. learned judge also said : " In the present 
 
 Compare De Winton v. Mayor, <fec. of case, I think 'It shall not be lawful,' 
 
 Brecon, 26 Beav. 533. means that the corporation may not do 
 
 ' Holdsworth ii. Mayor, (fee. of Dart- such and such a thing, and that, as re- 
 mouth, 11 A. <fe E. 490. gards third parties, if they choose to do 
 
 ^ Palllster v. Mayor, (fee. of Gravesend, ' it, the contract is not unlawful." This 
 
 9 C. B. 774; 19 L. J. (C. P.) 358. dictum, which was unnecessary to the de- 
 
 . * Payne v. Mayor, (fee. of Brecon, 3 H. cision, is, as a principle of construction, 
 
 (fe N. 572 ; 27 L. J. (Ex.) 495. expressly OTerruled by the House of Lords 
 
 " See, also, the judgment of Watson, in Eiche v. Ashbury Carriage, <fec. Co. L. 
 
 B. ; and compare Kerrison v. Cole, 8 East, B. 7 H. L. 653, 686-8. 
 231; Monys v. Leake, 8 T. K. 411. The 
 
SECURITIES. 223 
 
 Section III. — Secubities. 
 
 I. Cw'porations having the power to mour debts or to borrow, 
 have also an. implied power to give securities vpon their 
 assets for the payment of the sums so borrowed, (a) 
 
 As regards securities for debts, the leading case is that which, 
 arose from the claims of the Birmingham Banking Company in 
 
 (o) If a corporation has power to borrow, it may give as evidence of and security 
 for indebtedness, a note, bond or mortgage. A corporation, in order to attain its 
 legitimate objects, may deal precisely as an individual who seeks to accomplish the 
 same ends. If chartered for the purpose of building a bridge, it may contract a debt 
 for labor, or materials, or the land upon which the bridge is abutted. If more ad- 
 vantageous, it may borrow money to purchase such land or materials, or to pay for 
 such labor ; and, as the evidence of the indebtedness, it may execute to the creditors 
 a note, a bond, or a mortgage, whether the debt be for the money borrowed, or the 
 wort, materials, or land. Barry v. Merch. Exch. Co. 1 Sandf. Ch. 280 ; Thompson 
 V. Lambert, 44 Iowa, 239 ; Tucker v. Raleigh, 75 N. C. 267 ; Com'rs of Craven v. At- 
 lantic, (fee. R. R. Co. 77 N. C. 289. A corporation may, without special authority, 
 mate a note or draft, or accept a draft, for a debt contracted in its legitimate busi- 
 ness. See Story on Bills of Exch. § 79 ; Edw. on Bills, 77 ; In re Hercules Assur- 
 ance Soc. 6 Ben. 35 ; Fay v. Noble, 12 Cush. 1 ; Harcall v. Life Association, 6 Hun, 
 151 ; Curtis v. Leavitt, 16 If. Y. 9; Munn a. Commission Co. 15 Johns. 44; Moss v. 
 Oakley, 2 Hill, 265 ; Mott v. Hicks, 1 Cow. 513; Mead v. Keeler, 24 Barb. 20 ; Par- 
 tridge V. Badger, 25 Barb. 146 ; Olcott v. Tioga R. R. Co. 40 Barb. 179 ; Barker v.. 
 Mech. Ins. Co. 3 Wend. 94; Ketchum v. Buffalo, 14 N. Y. 356: Lucas v. Pitney, 27 
 N. J. Law, 221 ; Oxford Iron Co. v. Spradley, 46 Ala. 98 ; Com. Bant of N. O. v. 
 Newport Mfg. Co. 1 B. Mon. 14; Bank of ChiUioothe v. Town of C. 7 Ohio, part ii, 
 31 ; Hamilton v. Newcastle R. R. Co. 9 Ind. 359 ; Bradley v. Ballard, 55 lU. 413 ; 
 Rockwell V. Elkhoru Bank, IS Wis. 663 ; Magee v. Motelumne Hill Canal Co. 6 CaK 
 258. In like manner a corporation may indorse a note or bill, or give a certificate 
 of deposit, as evidence of indebtedness. Barnes v. Ontario Bank, 19 N. Y. 152 ; Lu- 
 cas V. Pitney, 27 N. J. Law, 221 ; Hardy v. Merriweather, 14 Ind. 203 ; Union Bank 
 11. Jacobs, 6 Humph. 516. 
 
 An insurance company cannot issue bonds in order to lend its credit. Ala. Life 
 Ins. Co. V. Smith, 4 Ala. (N. S.) 558. The power to issue notes, &c., in the legiti- 
 mate business of the corporation, cannot be extended so as to give banking powers.. 
 Att.-Gen. v. Ins. Co. 9 Paige, 470 ; see, also, Safford v. Wyckoff, 4 Hill, 442 ; People 
 V. Utica Ins. Co. 15 Johns. 358. Although a company may borrow money in order 
 to carry on its legitimate business, it is not authorized to purchase stock of banks or 
 to unite with others in that business in institutions already in existence, so as to be 
 able in this way to lend to themselves. Sumner v. Marcy, 3 Woodb. & M. 105. 
 
 Corporations having the power to borrow money may mortgage their property as 
 security. Although it was at one time a question whether express legislative con- 
 sent was not required in order to authorize a mortgage of any corporate property, as, 
 for example, in Steiner's Appeal, 27 Penn. St. 313, where it was held that neither 
 tolls nor real estate necessary for enjoyment of the cbrporate franchises can be rnort. 
 
224: FINANCIAL MATTERS. 
 
 the winding up of the Patent File Company.' It deserves the 
 carefullest attention because of the wide language used by the 
 ■Court of Appeals. The facts were as follows : The memorandum 
 of association of the Patent File Co., whose nominal capital was 
 JlOOjOOO, stated its objects to be the manufacturing and selling 
 
 ' L. R. 6 Ch. 83. 
 
 gaged unless by special authority from the Legislature (see, also, Coe v. Col. <fe Piqua 
 R. R. Co. 10 Ohio St. S12), yet the rule now is, that a general right to borrow money 
 implies the power to mortgage all corporate property except franchises, unless re- 
 strained by express prohibition in the act of incorporation, or by some general stat- 
 ute. See Pennock v. Coe, 23 How. ll'J ; Richards v. Merrimack & Conn. R. R. R. 
 Co. 44 N. Hamp. 127; Miller v. Chance, 3 Edw. 399; Barry o. Mer. Exch. Co. 1 
 Sandf. Ch. 280 ; Farmers' Loan <fe T. Co. v. Hendrickson, 25 Barb. 484 ; King v. Mer. 
 Exch. Co. 6 N. Y. 547 ; Curtis v. Leavitt, 16 N. T. 9 ; Leavitt v. BlatcMord, 17 N. 
 T. 521 ; Parish v. Wheeler, 22 N. Y. 494; Nelson v. Eaton, 26 N. Y. 410; Burr v. 
 McDonald, 3 Gratt. 206 ; Susquehanna Bridge Co. v. Gen. Ins. Co. 3 Md. 305 ; Bards- 
 town <& LouisYiUe R. R. Co. u. Metcalfe, 4 Mete. (Ky.) 199 ; Coe v. Johnson, 18 Ind. 
 218. The power to purchase lands and dispose of them Implies the power to mort- 
 gage to secure debts. Jackson v. Brown, 5 Wend. 590; Gordon v. Preston, 1 Watts, 
 .385 ; Watt's Appeal, 78 Penn. St. 370 ; Taber -u. Cincinnati R. R. Co. 15 Ind. 469 ; 
 M'Allister v. Plant, 54 Miss. 106 ; West v. Madison Co. Agr. Board, 82 BL 205. 
 Corporations, as a rule, have power to mortgage their property, real and personal, 
 for the security of their debts. Pierce v. Emery, 32 N. Hamp. 484 ; see, also, opinion 
 in Com. of Mass. v. Troy & Greenfield Railway, 1 Redf. Amer. Railway Cases, 575 ; 
 Commonwealth v. Smith, 10 Allen, 448 ; Shaw v. Norfolk R. R. Co. 5 Gray, 162 ; 
 Robins v. Embry, 1 S. dt M. Ch. 207 ; Trustees v. Shulze, 61 Ind. 511 ; Burt v. Rat- 
 tle, 31 Ohio St. 116 ; Thompson v. Lambert, 44 Iowa, 244. Recognition and ratifica- 
 tion by the Legislature may cure the defect of lack of power to mortgage. White 
 Water Valley Canal Co. v. Vallette, 21 How. 414 ; Shepley v. A. & St. L. R. R. Co. 
 55 Me. 395 ; Portland & K. R. R. Co. v. Kennebec <fc P. R. R. Co. 69 Me. 9 ; Rich- 
 ards V. Merrimack & Conn. R. R. R. Co. 44 N. Hamp. 127; Shaw v. Norfolk B. R. 
 Co. 6 Gray, 162 ; see Black R. & Utica R. R. Co. v. Barnard, 31 Barb. 268 ; Oroville 
 R. R. Co. <,. Plumas Co. 37 Cal. 354 ; Hall v. Sullivan R. R. Co. 2 Redf. Amer. Railw. 
 Cases, 621. Power to mortgage real property is so far Incidental to or implied in 
 power to acquire and hold real estate for corporate uses, that an agricultural society 
 which has borrowed money upon a mortgage of its fair grounds, for money borrowed 
 for erecting buildings upon them, may well be deemed estopped from repudiating the 
 mortgage as ultra vires. West v. Madison County Agricultural Board, 82 HI. 205 ; 
 s. p. Aurora Agricultural, <fec. Soc. v. Paddock, 80 III. 263. But on the power of cor- 
 porations to mortgage property necessary to the performance of their corporate func- 
 tions, see Commonwealth, 10 Allen, 448 ; Richardson v. Sibley, 11 Allen, 65: Hen- 
 dee «. Pinkerton, 14 Allen, 486 ; Black v. Del. <fe Rar. Can. Co. 22 N. J. Eq. 399 ; 
 Canal Co. •». Bonham, 9 W. & S. 27 ; Shamokin Valley R. E. Co. v. Livermore, 47 
 Penn. St. 470; Steiner's Appeal, 27 Penn. St. 313. And on the power of a railroad 
 <iompany by sale or mortgage to divide the road, see State v. Morgan, 28 La. Ann. 
 482. 
 
SECURITIES. 225 
 
 of files and steel, and the doing all such other things (including 
 the acquiring and " disposing of " lands and buildings) as were 
 incidental or conducive to the attainment of those objects. The 
 articles of association provided that the company might, with the 
 sanction of an extraordinary general meeting, borrow on mortgage 
 ■of its property, any sums not exceeding one-half of its nominal 
 capital, and provided that the directors might exercise all such 
 powers of the company as were not, by the Companies Act, 1862, 
 -or by the articles, required to be exercised by the company in 
 general meeting. The company passed a resolution : " That the 
 directors be, and are hereby authorized to borrow and take up, 
 from time to time, on mortgage of the lands, buildings and fixed 
 machinery of the company, or on such part thereof as they deem 
 fit, or upon debentures under the seal of the company, such sum 
 or sums of money not exceeding in the whole one-third of the 
 nominal capital of the company." 
 
 A few weeks after this, the account of the company with their 
 bankers being overdrawn to the extent of more than £23,000, and 
 the bankers pressing for security, the directors deposited with them 
 the title deeds of the property on which the company carried on 
 their business, and gave a memorandum of deposit under the seal 
 X)f the company, making the deeds a security for the balance of 
 account up to £25,000. Within six months after this, a resolu- 
 tion was passed for winding up. It was held by the Lords Justices, 
 affirming the decision of Stuart, Y.-C, that the charge so created 
 was valid. 
 
 The court was also of opinion that, in the absence of any pro- 
 hibition ia the articles, a commercial company may secure a past 
 debt by deposit of title deeds. As to this point, Mellish, L. J., 
 said : " The third objection is the only one that could raise any 
 serious doubt, namely, whether a joint-stock company of this kind 
 can raise money or give security for a past debt by deposit of 
 ■title deeds. It was urged that no company can mortgage unless 
 expressly authorized to do so. JS'ow the company has property 
 which it is authorized to deal with, and I should say that the true 
 rule is just the contrary, namely, that the company can mortgage 
 unless expressly prohibited from doing bo. The 43d section of 
 ihe act appears to recognize the creation of mortgages as an ordi- 
 nary incident to a company. The memorandum in the present 
 15 
 
228 FINANCIAL MATTERS. 
 
 case mentions as a purpose of the company tlie " disposing of " its 
 landed property. The articles give to the directors the whole 
 powers of the company, subject to the provisions of the articles, 
 and of the Companies Act, 1862, and I cannot find anyljiing, 
 either in the act or the articles, to prohibit their making a mort- 
 gage by deposit. It would, in my opinion, be most undesirable to 
 lay down a rule, that no joint-stock company can raise money in 
 this way. A mortgage by deposit is the kind of security most 
 usually given by mercantile men to bankers, and such a rule 
 would seriously cripple joint-stock companies in their business 
 transactions. There being nothing in the articles to prohibit the 
 giving such a security, I am of opinion that the company can give 
 it as well for a past debt as for a future one. In fact the case is 
 stronger in favor of a security for a past debt, as it would be ab- 
 surd to say that a company has not power to pay past debts, and 
 if so, why should it be debarred from giving security, which is 
 one way of applying its property in payment of its debts ? " 
 
 This judgment is conclusive as to the authority of corporations 
 to pledge their assets for debts. It would seem equally conclusive 
 as to the validity of securities for loans. A loan, supposing it to 
 be unobjectionable and binding, qua loan constitutes eo instanti a 
 " debt." This being so it follows, according to the above decision, 
 that a valid security may be taken from the corporation viewing 
 it as a debt. Moreover, Malins, Y.-C, has decided,* that in all 
 cases of extreme necessity, trading corporations may raise money. 
 Assuming this to be correct, there is, under such circflmstances, 
 no need to investigate the validity of any other or further implied 
 authority to borrow. 
 
 In addition, the security will, or at least may, be good as being 
 a security for the debt, even though it expressly purports to be a 
 security for a prohibited loan.' 
 
 But whether or not this reasoning be correct, viz., that, in ac- 
 cordance with general principles, corporations having the power 
 to borrow have as incidental thereto by implication the power to 
 give security for advances, the question seems settled by the ex- 
 press decision of Page "Wood, V.-C, in the Australian Steam ISTav. 
 Co.'s Case.' There the Vice-Chancellor considered it a legitimate 
 exercise of the powers of the company, who were mere shipowners 
 
 I Gibba <fe West's Case, L. R. 10 Eq. « See Scott v. Colbtirn, 26 Beav. 276. 
 
 812. ' See ante, p. 21Y. 
 
SECURITIES. 227 
 
 and not dealers in ships, to mortgage their ships for a loan, they 
 not having an express power in that behalf : " I cannot see why 
 it should not be within their ordinary province to raise money by 
 mortgage of their ships." 
 
 II. An express power to give security for money torrowed 
 negatives the implication of a/ny other power to this 
 effect, {a) 
 
 This would seem to be the effect of Lord Romilly's decision in 
 Re Pooley Hall Colliery Oo.^ This company, by virtue of its ar- 
 ticles of association and of a special resolution, had power to issue 
 mortgages and debentures to an amount not exceeding £8,000. 
 The directors, however, exceeded this amount, and the Master of 
 the EoUs held that the holders of the debentures so issued in ex- 
 cess had not a prior charge upon the company's assets, but must, 
 and might, come in and prove their claim in the winding up as 
 simple contract creditors. 
 
 The rationale of this decision is not clear, and its validity is 
 somewhat questionable. Reference was made in the argument to 
 the non-registration of the debentures as required by the Compa- 
 nies Act, 1862 ; but charges not registered are not void.' 
 
 Perhaps the Master of the Rolls viewed the question as one to 
 be considered as a matter purely of the powers of the directors ; 
 but under very analogous circumstances it has been decided that 
 where directors had power to issue bills to a certain amount only, 
 the company was nevertheless liable upon biUs issued in excess of 
 this amount.' 
 
 III. Corporations having power to gvoe secitrities ma/y exercise 
 such power lihe ordinary individuals, hut every instrument 
 of a corporation which pv/rports to he a cha/rge upon its as- 
 sets will he construed strictly. 
 
 > 21 L. T. (N. S.) 690; W. N. 1869, p. » Gordon v. Sea, Fire <fc Life Ass. Co. 
 
 265. 1 H. & N. 699. 
 
 ' Ex parte Valpy and Chaplin, L. R. 7 
 Ch. 289. 
 
 (ffl) Express authority to mortgage, for a particular purpose, will not take away 
 or abridge the general power of a corporation to mortgage for security of creditors. 
 Allen V. Montgomery R. E. Co. 11 Ala. (N. S.) 43^ ; Mobile, &o. R. R. Co. v. Talman, 
 15 Ala. (N. 8.) 472. Kor does the authority to pledge one class of property as se- 
 curity negative the power to use other property for this purpose. Phillips v. Win- 
 slow, 18 B. Mon. 431 ; Uncas Nat. Bank v. Rith, 23 Wis. 339. 
 
228 FINANCIAL MATTERS. 
 
 Assuming that a corporation lias authority, whether by express 
 provision or by implication arising from the custom of the trade 
 or nature of its enterprise, to create charges, difficult questions 
 will often arise ; in the first instance as to the manner in which 
 such authority may be executed, and subsequently after the execu- 
 tion thereof, as to the effect of such execution. These questions 
 will spring from one or other of the following matters, viz. : 
 
 First, the form of security given ; 
 
 Secondly, the property or assets which may be charged ; 
 
 Thirdly, the formalities to be observed ; 
 
 Fourthly, the effect of the instruments under consideration. 
 
 (1.) Form of the Instruments, {a) 
 
 If there be any directions in the constating instruments which 
 positively limit the "form" of the instruments to be used in 
 charging, and which by express words or necessary implications 
 void instruments of every other kind, then those directions must 
 be strictly and closely followed, and documents of another nature 
 will not constitute charges. Seldom, however, is there such a 
 direct prohibition. Usually, when the affirmative provision is 
 present, e. g., a power to mortgage, the negative is absent, that is 
 to say, there is not a prohibition against charging in other ways. 
 When this is so, the courts hesitate to raise the negation by mere 
 implication.^ 
 
 Thus, in Commercial Bank of Canada v. Great "Western Ey. of 
 Canada,' the defendant company, by their original statute of incor- 
 poration, had no power given to borrow money, but a subsequent 
 statute authorized them to borrow money from time to time for 
 maintaining and working the railroad, to pledge the lands, tolls 
 and revenues for due payment thereof, and to make bonds or de- 
 bentures for securing the repayment of any sums so borrowed on 
 
 ' See the argument and judgment in ' 3 Moore P. 0. C. (N. S.) 295 ; 13 L. 
 
 Ex parte Birmingham Banking Co. L. R. T. (N. S.) 105. 
 6 Ch. 83; and^jej-Malins, Y.-C, L. R. 14 
 Eq. 512-4. 
 
 (a) The form of the instrument may be either that of a mortgage or a trust deed ; 
 the usual practice in the United States now is to call the instrument " a deed of trust 
 or mortgage." White Water Valley Canal Co. v. Vallette, 21 How. 414 ; Pullan v. 
 Cin. <fe Ch. R. R. Co. 4 Biss. 35; Coe v. Johnson, 18 Ind. 218 ; Coe v. McBrown, 22 
 Ind. 262 ; see, however, in re Tork <fe Conn. Railway, 60 Me. 652, as to construction 
 of statute of that State. 
 
SECURITIES. 229 
 
 certain terms. Upon these facts the Privy Council held that the 
 securities on which the company had power to borrow were not 
 restricted to bonds or debentures. 
 
 Assuming that there are no provisions, express or implied, as 
 to the mode or nature of the security, then securities of every de- 
 scription, which are in use in the case of private citizens, are valid, 
 as also are various others which have been devised by the skill of 
 the legal advisers of corporations, and which, perhaps, are pecu- 
 liar to such bodies. 
 
 1. Ordinary money hands are of course legal, that is to say, 
 documents under seal which contain acknowledgments of money 
 lent and agreements to repay the same, upon conditions and terms 
 stated, but which do not purport to be charges upon the corporate 
 assets, or to give the holders of such bonds priority over other 
 specialty creditors. 
 
 2. Negotiable Instruments. — Eef erence has already been made 
 to the expedient which is sometimes, under stress of circum- 
 stances, adopted of raising money indirectly by the issue and dis- 
 counting of negotiable instruments. Closely allied to this opera- 
 tion is that of issuing negotiable instruments as a security for money 
 advanced, and not as the actual means of obtaining the money. 
 There are, however, important differences between the two expe- 
 dients, at least, in so far as concerns the immediate parties to 
 them and such as have notice thereof. If the note or bill be in- 
 tended merely as a security, then plainly either it should not be 
 circulated at all, or it should be circulated with reference to the 
 facts which have caused its creation, that is to say, with notice of 
 the equities springing out of the contract entered into by the orig- 
 inal parties. But a negotiable instrument, made as a means of 
 raising money, is intended to circulate just like any other nego- 
 tiable instrument. 
 
 From this it would seem to follow that, while the validity of 
 instruments of the latter description will depend mainly, if not 
 solely, upon the question whether or not the corporation can issue 
 negotiable instruments, the validity of those of the former kind 
 will be determined exclusively by the considerations, first, whether 
 the corporation was authorized to raise the loan for which the se- 
 curity has been given ; and, secondly, whether the corporation did 
 ionafide give the instrument as a security for such loan — in other 
 words, that a bill or note, qua security, will be good and binding 
 
230 FINANCIAL MATTERS. 
 
 if the corporation had the capacity to give a security of any kind, 
 although, qua bill or note, it may be void.^ 
 
 But the question here at once arises, if the bill or note be bad 
 at all, as such, is it not bad altogether ? Is not the primary and 
 governing question, in any matter relating to their validity, the 
 simple one, whether or not they are good as negotiable instru- 
 ments ? The subject will be better discussed, as a whole, in the 
 next section. 
 
 3. Bills of sale may be given by trading and probably by all 
 commercial corporations. " The first question presented is, whether 
 the giving of this security by the directors was ultra vires. This 
 being a trading company, it seems to me that they had power to 
 buy and sell and to contract for work to be done in the course of 
 their business." ^ 
 
 And bills of sale in the form of debentures are not invalid for 
 want of registration in a voluntary winding-up continued under 
 supervision aa against the liquidator.* 
 
 4. Mortgages of the actual assets of a corporation are appa- 
 rently allowable in all cases where there is authority, express or im- 
 plied, to give security.* They may be either legal or equitable,^ and 
 they may contain all the usual stipulations as to term of repay- 
 ment, interest, «fcc. 
 
 5. Debentures are perhaps the commonest mode of security 
 issued by corporations. They may be defined as instruments 
 under seal, creating a charge according to their wording upon the 
 assets specified therein of the corporation, and to that extent con- 
 ferring upon the grantees a priority over other subsequent cred- 
 itors or existing creditors not possessed of such a charge. Under 
 this term, however, are often included two other varieties of in- 
 struments which do not answer this definition strictly. There are 
 consequently three varieties of debentures : I. Instruments which 
 do not confer a charge, and which are nothing more nor less than 
 ordinary bonds and ought to be so styled. II. Debentures in the 
 true and proper sense. III. Instruments which contain more 
 than a mere charge, which are mortgages in fact, and which, from 
 
 • Aa to the effect of giving a promia- ' Re Marine Mansion Co. L. E. 4 Eq. 
 
 sory note as collateral security to a mort- 601. 
 
 gage, see Walker. «. Jonea, L. E. 1 P. 0. < See Re Patent File Co. (Ex parte Bir- 
 
 50. mingham Bank), L. E. 6 Ch. 83, ante, pp. 
 
 ' Per Erie, C. J., In Shears v. Jacob, 223-6. 
 L. E. 1 C. P. 51S ; Deffell v. White, L. R. ' See Re Patent File Co. in last note. 
 
 2 C. P. 144. 
 
SECURITIES. 231 
 
 possessing in addition thereto the characteristics of debentures, 
 may be for convenience, and often are, called mortgage deben- 
 tures. 
 
 What is the exact nature and effect of debentures, and what 
 are their various incidents, has not yet been fully determined. 
 As already mentioned, they resemble ordinary mortgages in that 
 they constitute charges more or less extensive over the assets, or 
 some particular portion thereof, of the company issuing them ; 
 and, in so far as this charge extends, they entitle their holders to 
 a priority over other creditors. But they differ from them in not 
 amounting to an assignment, in being merely a charge, and con- 
 sequently, in not investing the chargee with the legal title, or 
 with any of the ordinary rights of ownership over the property 
 charged. Whatever other rights the holders of debentiires, 
 strictly so called, not mortgage debentures, may be endowed with, 
 they have no means, save so far as Chancery may aid them, of 
 preventing the owner of the property from using or removing the 
 property charged, or otherwise dealing with it as he pleases, and 
 this power of interfering with the owner is the true test as to 
 whether the relationship of mortgagor and mortgagee does or does 
 not exist.^ (a) 
 
 Their effect as charges depends entirely upon the language 
 used, which may be wide enough, the company having the neces- 
 sary powers to vest the entire property, present and future, of 
 the corporation in their holders to the exclusion of other subse- 
 quent creditors.' 
 
 Debentures may be issued at a discount,' and where this was 
 done the present Master of the EoUs allowed the proof in winding 
 up for the full nominal amount,* though in a similar case Lord 
 HomiUy allowed the holders to prove only for the sum actually 
 advanced.' 
 
 6, Charges may also be created by parol, or rather, as perhaps 
 
 ' Holroyda. Marshall, 10 H. L. C. 191. by the bill, and incidentally discussed in 
 
 " Be General South American Co. 2 Fosa v. Harbottle, 2 Hare, 461 ; White v. 
 
 Ch. D. 337. Carmarthen, 4c. By. Co. 83 L. J. (Ch.) 93. 
 ^ Re Anglo-Danubian Steam Wav. <fec. * Ibid. 
 
 Co. L. E. 20 Eq. 339 ; see Re Regent ^ Re Blakely Ordnance Co. L. E. 8 Eq. 
 
 Canal Ironworks Co. 24 W. R. 687. This 244; 17 W. E. 869. 
 
 was also one of the points complained of 
 
 (a) See Garret v. May, 19 Md. 177. 
 
232 FINANCIAL MATTERS. 
 
 it should be said, an agreement to charge may be made by parol, 
 by writing if it relates to land (Statute of Frauds), by mere word 
 of mouth in other cases, of which agreement the Court of Chan- 
 cery will decree specific performance to grant a debenture,* or to 
 execute a mortgage,' as the case may be. 
 
 As to the formalities or proceedings requisite to constitute a 
 valid charge, in Re Strand Music Hall Co.,^ Turner, L. J., said : " I 
 apprehend that where this court is satisfied that it was intended 
 to create a charge, and that the parties who intended to create it 
 had the power to do so, it will give efi^ct to the intention, not- 
 withstanding any mistake which may have occurred in the attempt 
 to affect it." 
 
 In this case it was expressly decided that an informal agree- 
 ment will suffice to create a charge. It was one of the cases aris- 
 ing out of the winding np of the Strand Music Hall Co., and the 
 facts were these : The directors borrowed £5,000 from A. B. 
 nnder a written agreement, one of the terms of which was that 
 200 incomplete mortgage bonds of £50 each, forming part of 
 £25,000 of mortgage bonds, constituting a first charge on the 
 property of the company, should be deposited with A. B. as col- 
 lateral security for the sum which was secured by two promissory 
 notes of £2,500 each. The Lords Justices, affirming the Master of 
 the Rolls, held that, as the directors had power to charge the 
 property of the company, and the intention to create a charge ap- 
 peared from this agreement, a valid charge was created though the 
 mortgage bonds were invalid through incompleteness. . 
 
 The directors afterwards borrowed a further sum of £2,Y0O 
 from A. B., and deposited with him other incomplete mortgage 
 bonds with a letter stating that they were deposited " as collateral 
 security for our promissory note for £2,Y00, the securities to be 
 held on same terms and conditions " as those under the agreement 
 with reference to the two previous notes of £2,600 each. It was 
 held that there was a valid charge for this sum also.* 
 
 So where a canal company executed a bond which did not 
 contain direct words of charge, but stated that the receiver was 
 " entitled to such security therefor (*. e., the money lent) as is 
 
 ' Compare Peto v. Brighton, <Sec. By. ' 3 De G. J. <St S. 147, 158 ; Milford's 
 
 Co. 1 H. & M. 468. "Pleading," 4th ed. p. 116. 
 
 = See Ashton v. Corrigan, L. R. 13 * Re Strand Music Hall Co. 3 De G. 
 
 Eq. '?6. J. & S. 147. 
 
SECURITIES. ■ 233 
 
 mentioned in the said recited act," and the act in question, whicli 
 authorized the borrowing, provided that " all such bonds or mort- 
 gages * * * shall take precedence and have priority of lien 
 on the said canal and the tolls thereon and other property of the 
 said company over all claims, &c.," the court held' beyond all 
 doubt that the plaintiffs, holders of such bonds, were entitled to a 
 charge upon the canal and toUs, and to the appointment of a re- 
 ceiver thereof .■' 
 
 7. Amongst other forms of securities may be mentioned the 
 various varieties of shares and stock having preferential divi- 
 dends : Debenture, Preferred and Preference, Guaranteed, De- 
 ferred, &c., Shares or Stock, often of several classes, " A," " B," 
 " C," &c. These are, at once, expedients for raising money and 
 for securing the same, or, rather, securing the interest thereof ; 
 for the holders of such shares and stock are, very generally, in 
 virtue of their holding, members of the corporation, and, as such, 
 cannot claim a priority to true creditors, but only to other ordi- 
 nary shareholders. 
 
 It must be borne in mind that shares (1) must be paid for, and 
 (2) in cases within the Companies Act, 1867, paid for in what is 
 actually or legally hard cash.' Consequently, unless proper pre- 
 cautions be taken, it may happen that shares, intended to be 
 issued and taken merely as a security and without involving the 
 acceptor in any liability, may entail the full payment thereof. 
 This has been so repeatedly decided with respect to ordinary 
 shares,' that there is no reason why the decision should not be 
 precisely the same under analogous circumstances with respect to 
 preference and similar shares or stock. 
 
 Of course the rights of secured or other creditors cannot be 
 varied without their assent. But various statutes contain pro- 
 visions in this behalf. One of these is the Eailway Companies 
 Act, 1867, which provides " where a company are unable to meet 
 their engagements with their creditors, the directors may prepare 
 a scheme of arrangement between the company and their cred- 
 itors (with or without provisions for settling and defining any 
 rights of shareholders of the company as among themselves, and 
 for raising, if necessary, additional share and loan capital, or 
 either of them), and may file the same in the Court of Chancery 
 
 ' Town of Dundas v. Desjardins Canal ' Post, pp. 143-9. 
 
 Co. 17 Grant. (Upper Can. Ch. 1810), 27. ^ ii,}^ 
 
234 FINANCIAL MATTERS. 
 
 in England or in Ireland, according to tlie situation of the prin- 
 cipal office of the company, with a declaration in writing, under 
 the common seal of the company, to the effect that the company 
 are unable to meet their engagements with their creditors." ' 
 
 The scheme must be assented to by three-fourths of the mort- 
 gagees and holders of bonds, debenture stock, and preference 
 stoct respectively affected by it,* and, if so assented to, may be 
 confirmed by the Court of Chancery.' 
 
 (2.) Property or Assets which may be Charged. 
 
 It is not everything belonging to a corporation, possessing a 
 value at present or in prospective, which may be charged. Certain 
 forms of property there are, coming fairly within the designation 
 of " assets," and having actuality or potentiality, now or in a 
 ■winding up a realizable value, which nevertheless cannot — ^except, 
 perhaps, under very special circumstances — be the subject of a 
 charge, or be otherwise appropriated in favor of some particular 
 creditors. 
 
 lY. Capital not yet called up cannot ie mortgaged. 
 
 Of these, calls not yet made are an instance. No matter how 
 extensive the authority given to a company, or vested in its officers 
 to raise money and to create securities for the same, future calls 
 cannot be mortgaged^ by companies within the Companies Acts, 
 1862 and 1867, without an express power for such purpose, and 
 probably not even then.^ 
 
 It seems, however, that in those cases where the Companies 
 Clauses Consolidation Act, 1846, applies, this may be done, though 
 very clear and explicit language in this behalf would be required.' 
 
 ' 30 <fe 31 Vict. 127, d. 6. Ac. Conuahs and Quay Ey. Co. L. R. 18 
 
 " Ibid. as. 9-16. Eq. 566. 
 
 = Ibid. s. 17. For instances of such « He British Provident Life <fe Fire 
 
 scliemes, see He Bristol <fe North Som- Ass. Co. {M parte Stanley) 4 De G. J. & 
 
 erset Ry. Co. L. E. 6 Eg. 448 ; iJe Devon S. 407; 33 L. J. (Ch.) 53B ; King v. 
 
 & Somerset Ey. Co. (1) L. R. 6 Eq. Marshall, 33 Beav. B6B ; 34 L. J. (Ch.) 
 
 610; (2) Ibid. 616; Be Cambrian Ey. 163; iJe Sankey Brook Coal Co. (No. 2), 
 
 Co.'s Scheme, L. R. 3 Ch. 278; Se Pot- L. E. 10 Eq. 881 ; Bank of South Australia 
 
 tenes, Ac. and North Wales Ry. Co. L. R. v. Abrahams, L. R. 6 P. C. 265. 
 5 Ch. 67 ; iSe East A West Junction Ry, 6 p^ Knight-Bruce, L. J., in Ex parte 
 
 Co. L. R. 8 Eq. 87 ; Munne <y. Isle of Stanley, uM supra ; but see J2e Colonial, 
 
 Wight Ry. Co. L. R. 8 Eq. 653 ; Stevens Ac, Gas Co. (Leshman's Claim), 23 L. T. 
 
 V. Mid. Hants Ry. Co. (London Financial (N. S.) 758. 
 
 Assoc, u. Stevens), L. R. 8 Ch. 1064; '«>«»• Cairns, L. J. Gardner ». London, 
 
 London Fmancial Assoc, v. Wrexham, Chatham A Dover Ry. Co. L. R. 2 Ch. 201 , 
 
 216. 
 
SECURITIES. 235 
 
 But " no such mortgage (although it should comprise future calls 
 on the shareholders) shall, unless expressly so provided, preclude 
 the company from receiving and applying to the purposes of the 
 company any calls to be made by the company." ^ 
 
 But calls already made, although the time for payment has not 
 yet come, may be validly assigned as security for existing debts 
 ■when the company possesses an express power to mortgage calls ; ' 
 and it would seem, even without such a power, provided only that 
 it has a general authority to borrow,' or if, owing to emergencies, 
 it becomes absolutely necessary for the continuance of the business 
 to raise money upon almost any terms,* but clear words must be 
 used showing that the existing unpaid calls were included in the 
 charge.' 
 
 But where a bank refused to renew the notes of a company 
 given for advances properly made, save upon the agreement that a 
 call should at once be made, and the proceeds assigned to the bank 
 as security for these advances, it was held, upon the agreement 
 being carried out, that the mortgage, being of the proceeds of a 
 call already determined, was distinguishable from an attempt to 
 pledge future calls, and was therefore valid.' 
 
 V. Ordinary property to he acquired hereafter may ie mort- 
 gaged, (a) 
 
 After-acquired property of other descriptions than mere calls 
 can be mortgaged, but there must be clear language in the charg- 
 
 ' 8 <fc 9 Vict. c. 16, s. 43. * JRe International Life Ass. Co. (Gibbs 
 
 « Be Humber Ironworks Co. 16 W. R. and West's Case), L. R. 10 Eq. 312. 
 
 474, 667 ; Re Sankey Brook Coal Co. * King v. Maraliall, 33 Beav. 565 ; 34 
 
 (No. 1), L. R. 9 Eq. 721. L. J. (Ch.) 163. 
 
 ' Pickering w.nfraoombeRy. Co. L.R. « iJe Sankey Brook (No. 1), L. K. 9 
 
 3 C. P. 235. Eq. 721. 
 
 (a) A railroad company may mortgage as security not only the then acquired 
 property, but also such property requisite for the exercise of its franchises as may 
 be acquired in future. Pennock v. Coe, 23 How. 117 ; Dunham ir. Cincinnati, <fcc. R. 
 R. Co. 1 Wall. 254; Galveston R. R. Co. v. Cowdrey, 11 WalL 480; U. S. v. New 
 Orleans R. R. Co. 12 Wall. 362; Shaw v. Bill, 6 Otto, 15 ; Williamson o. New Albany 
 & Salem R. R. Co. 1 Biss. 198 ; Dunham v. Earl, 2 Redf. on Railways, 506 ; Morrill 
 V. Noyes, 56 Me. 458; Seymour v. Can. <fe N. Falls R. R. Co. 26 Barb. 284 ; Stevens 
 V. Buffalo & N. Y. R. R. Co. 31 Barb. 596 ; Buffalo, N. Y. <fc Erie R. R. Co. v. Lamp- 
 son, 47 Barb. 633 ; Benjamin ».* Elmira R. R. Co. 49 Barb. 441 ; Fisk v. Potter, 2 
 Abb. Ot. App. Deo. 138 ; Stevens v. Watson, 4 Abb. Ct. App. Dec. 302 ; Willink v. 
 Morris Canal Co. 4 N. J. Eq. 377; Williamson v. N. J. (fee. R. R. Co. 25 N. J. Eq. 
 
336 FINANCIAL MATTERS. 
 
 ing instruments, showing not only that such was the intention of 
 the parties, but also that they have actually, in point of law, given 
 a valid and enforceable charge thereon.'' 
 
 . This question, it should be borne in mind, becomes all-impor- 
 tant in a winding up or other dissolution. If a charge in any form 
 extends to after-acquired property, the charges have thereby a 
 priority over all others ; and, as they must- in consequence be paid 
 first, the assets very probably will be insufficient to discharge any 
 claims by other creditors.* 
 
 YI. Permanent plant may not he mortgaged in the ordinary 
 sense. 
 
 The permanent way and fixed plant of railway companies, and, 
 for analogous reasons, of gas, water, and similar companies, cannot 
 be validly mortgaged, at least, not in the ordinary sense of that 
 
 ' Bloomer v. Union Coal, <fec. Co. L. R. ^ Se General South Amer. Co. 2 Ch. 
 
 16 Eq. 383 ; He Marine Mansions Co. L. B. 337. 
 R. 4 Eq. 601 ; Willink v. Andrews, Ir. R. 
 16 C. L. 201. 
 
 13 ; Same v. Same, 29 N. J. Eq. 311 ; Phil., Wil. <fe Bait. R. R. Co. v. Woelpper, 64 
 Penn. St. 366 ; State v. N. Central R. R. Co. 18 Md. 193 ; Butler v. Rahm, 46 Md. 
 641 ; Meyer ii. Johnston, 53 Ala. 324 ; Ludlow v. Hnrd, 1 Disney (Ohio), 552 ; Coe 
 V. McBrown, 22 Ind. 252 ; Pierce v. Milwaukee & S. P. R. R. Co. 24 Wis. 651 ; but 
 see Bath v. Miller, 53 Me. 318; Brainerd v. Peck, 34 Vt. 496; Pierce v. Emery, 32 
 N. H. 484; Howe v. Freeman, 14 Gray, 566 ; Moody v. Wright, 13 Mete. 17; Coe v. 
 Col. (Sec. R. R. Co. 10 Ohio St. 372 ; State v. Mexican Gulf R. R. Co. 3 Rob. (La.) 513. 
 A mortgage made, with authority, upon all the property and franchises, will 
 cover subsequently acquired property, as incident to the right of acquiring and hold- 
 ing it. Pierce v. Emery, 32 N. H. 484 ; Shamokin, &c. R. R. Co. v. Lirermore, 47 
 Penn. St. 469 ; and see Willink v. Morris Canal Co. 4 N. J. Eq. 877 ; see, on mortgage 
 of separate divisions, Farmers' Loan & Trust Co. v. Commercial Bank, 11 Wis. 207. 
 A railroad company may mortgage future net earnings to secure payment of interest 
 on its bonds. Jessup v. Bridge, 11 Iowa, 572 ; Dunham v. Isett, 15 Iowa, 284 ; State 
 V. Northern Central R. R. Co. 18 Md. 193. The rights of mortgagees to such after- 
 acquired property are to the property subject to such liens as are attaching to it at 
 the time -when it comes into the hands of the mortgagor. U. S. v. New Orleans R. 
 B. Co. 12 Wall. 362 ; Scott v. C. & S. R. R. Co. 6 Bias. 634 ; Willink v. Morris Canal 
 Co. 4 N. J. Eq. 377; see Dunham v. R. R. 1 Wall. 264; Galveston R. R. Co. </. Cow- 
 drey, 11 Wall. 362 ; Fox v. Seal, 22 Wall. 424; Pierce v. Emery, 32 N. H. 484. Ac- 
 cordingly where a sale of property to the mortgagor has been fraudulently induced, 
 the seller may avoid the sale and recover the property, any rights of mortgagees 
 notwithstanding. Williamson v. N. J. &c. R. R. Co. 29 N. J. Eq. 311. But a vendor's 
 lien is not superior to that of the mortgagees. Pierce v. Milwaukee, &o. R. R. Co. 
 24 Wis. 551. 
 
SECURITIES. 237 
 
 expression, so as to give the intended mortgagees the right to 
 enter upon the property, or to otherwise interfere with the com- 
 panies user and possession of the same.^ 
 
 The exception here set forth has been acted on by the Legis- 
 lature, by the statutes which prevent rolling stock being taken 
 into execution.* {a) 
 
 YII. Franchises cannot he mortgaged. (5) 
 
 Franchises stand in the same position : they cannot be mort- 
 
 > Gardner v. London, CJhatham <fe Do- Exch. 246 ; 22 L. J. (Ex.) 20 ; "Wickham v. 
 
 ver Ry. Co. L. R. 2 Ch. 201 ; Fer Giffard, New Brunswick, &e. Ry. Co. L. R. 1 P. 
 
 L. J., L. R. 5 Ch. 321. Compare Doe d. C. 64. 
 
 Myatt V. St. Helena, <fec..Ry. Co. 2 Q. B. °- See, 36 cfe 36 Vict. c. 60. 
 
 364 ; Hart v. Eastern Union Ry. Co. 7 
 
 (a) Seeposi, 238, n. 
 
 (b) The implied power to mortgage property does not extend to franchises. It 
 is well settled that no corporation can, without express legislative authority, either 
 sell or mortgage its franchises. York <fe Md. R. R. Co. v. Winans, It How. 39 ; Pul- 
 lan V. Cincinnati <fe Chic. R. R. Co. 4 Biss. 36 ; Pierce ». Emery, 32 IS. Hamp. eOV ; 
 Commonwealth v. Smith, 10 Allen, 448 ; Richardson v. Sibley, 1 1 Allen, 66 ; Hendee 
 d. Finkerton, 14 Allen, 381 ; East Boston Freight R. R. Co. v. Eastern R. R. Co. 13 
 Allen, 422 ; Daniels v. Hart, 118 Mass. 543 ; Troy <fe Rut. R. R. Co. v. Kerr, 17 Barb. 
 601 ; Carpenter v. Black Hawk Gold Min. Co. 65 N. Y. 48 ; Black v. Del. & Rar. 
 Canal Co. 22 N. J. Eq. 399 ; Susquehanna Canal Co. v. Bonham, 9 "W. <fe S. 27 ; 
 Steiner's Appeal, 27 Penn. St. 313 ; Wood v. Bedford, <fec. R. R. Co. 8 Phila. 94 ; 
 "Winchester & Lexington Turnpike Co. v. Vimont, 5 B. Mon. 1 ; Arthur v. Commer- 
 cial Bank, 17 Miss. 394; Coe v. Columbus <fe Piqua R. R. Co. 10 Ohio St. 372 ; At- 
 kinson o. Marietta, &c. R. R. Co. 15 Ohio St. 21; Stewart v. Jones, 40 Mo. 140; 
 State n. Morgan, 28 La. Ann. 482 ; but see, cmitra, Shepley v. A. <fe St. L. R. R. Co. 
 55 Me. 407 ; Kennebec <fe P. R. R. Co. v. Portland cfe K. R. R. Co. 59 Me. 23 ; Meyer 
 ». Johnston, 63 Ala. 324. See, also, Hall v. Sullivan R. R. Co. 2 Redf. Railway Cases, 
 663 : Butler v. Rahm, 46 Md. 547. . In Bardstown, <fec. R. R. Co. v. Metcalfe, 4 Mete. 
 (Ky.) 199, it is held that a railroad cannot mortgage its corporate existence, or any 
 prerogative franchise ; but that the right to build and use a railroad is not a prerog- 
 ative franchise. As to what will amount to legislative authority to mortgage fran- 
 chises, see Jones on Railroad Securities, §§ 6 & 7 ; East Boston Freight R. R. Co. v. 
 Eastern R. R. Co. 13 Allen, 422 ; Dunham v. Isett, 16 Iowa, 284 ; Pollard v. Maddox, 
 28 Ala. 321 ; Pullan v. Cincinnati, <fec. R. R. Co. 4 Biss. 35 ; Pierce v. Milwaukee <fe 
 St. Paul R. R. Co. 24 Wis. 561 ; McAllister v. Plant, 64 Miss. 106. A mortgage of a 
 franchise made without legislative authority may be ratified. Shaw ». Norfolk 
 County R. R. Co. 6 Gray, 162; and see ante, p. 124, note. A mortgage of property 
 and franchises does not cover the franchise of being a corporation. " When a rail- 
 road company mortgages its road and appurtenances as a security for debt, and also its 
 franchise, it is not to be understood as conveying its corporate existence, or its gen- 
 eral corporate powers, but only the franchise necessary to make the conveyance pro- 
 ductive and beneficial to the grantees, to maintain and support, manage and operate, 
 
238 FINANCIAL MATTERS. 
 
 gaged ; but for the different reason, that these are privileges per- 
 sonal to the grantee, the corporation, and not alienable in any 
 shape, wholly or partially, or for any purpose. Such a power 
 may, however, be given, or an invalid mortgage of franchises may 
 be confirmed, by the Legislature. 
 
 These are the most important forms of property with respect 
 to which questions have arisen and general principles been laid 
 down. But innumerable other points have come before the 
 courts as to particular species of property. Here the decisions 
 have turned, not so much upon the admitted general principles, as 
 upon the special language used in connection with the peculiar 
 incidents of the property charged. As to these, reference only 
 can be made to the decision in relation to tolls ; ^ rolling stock of 
 railway companies;^ (a) surplus lands;' stations;* and other inci- 
 dental property.(5) 
 
 ' Fripp V. Chard Ry. Co. 11 Hare, 241 ; ^ Be Bagnalstown, Ac. Ry. Co. Ir. L. 
 Bowen v. Brecon Ry. Co. L. R. 3 Eq. 541 ; R. 1 Eq. 282 ; Gardner «/. London, Chat- 
 Russell V. East Anglian Ry. Co. S M. N. ham <fe Dover Ry. Co. L. R. 2 Ch. 201. 
 & G. 125. * Leg^ v. Mathieson, 2 Giff. 71 ; 29 L. 
 
 2 Blackmore ». Yates, L. R. 2 Ex. 225 ; J. (Ch.) 385. 
 35 & 36 Vict. c. 60 ; Waterlow *. Sharp, 
 W. N. 1867, p. 64. 
 
 the railroad, and receive the tolls and profits thereof for their own benefit." Eldridge 
 V. Smith, 34 "Vt. 484. See, also. Smith v. Gower, 2 Duv. (Ky.) 17 ; Meyer v. John- 
 ston, 63 Ala. 326 ; Butler v. Kahm, 46 Md. 547 ; Coe v. Col. <fe Piqua R. R. Co. 10 
 Ohio St. 372. It is provided in many of the States that in case of the foreclosure of 
 mortgages of property and franchises of railroad corporations, the purchasers may 
 organize as a new corporation. See Jones on Railroad Securities, §§• 661-684. A 
 mortgage given to the State by legislative anthority, on " roads, lands and fran- 
 chises," by forclosure, passes all the franchises, including the right to be a corpora- 
 tion. St. Paul, (fee. R. R. Co. v. Parcher, 14 Minn. 297. 
 
 (a) In connection with the law of corporate mortgages, attention may properly be 
 called to the subject of " rolling stock" of railways, concerning the character of 
 which in this country, there has existed, and still exists, great diversity of opinion. 
 There is a class of cases holding that such property is a fixture of the railroad. 
 Another class holds it to be an accessory, passing by a deed or mortgage as a nec- 
 essary incident. Another class takes the ground that rolling stock, being indis- 
 pensable to the exercise of the franchises, cannot be sold under execution, because 
 the sale would prevent the use of the franchise. A fourth class adjudges it to be per- 
 sonalty, and that mortgages covering it are void as against judgment creditors, unless 
 the requirements of law relating to mortgages of chattels are complied with. In consid- 
 ering the several decisions, reference must be had to the dates of their rendition, and to 
 the changes in method of operating railways in this country. In the early history of 
 railroads, they were designed to be public highways, open to the use of all persons 
 
 (6) As to bonds pledging income. Garret v. May, 19 Md. 177. 
 
SECURITIES. 239 
 
 (3) Formalities to he observed. 
 
 This subject will be treated fully in a subsequent chapter. 
 Here it will suffice to state the broad rules, first, that if formali- 
 
 ■with their own vehicles, subject only to the payment of toUa and the proper regula- 
 tions of the companies owning and controlling the roads. This plan, being found 
 inexpedient and insufficient to accommodate the public needs, gave way to another, 
 by which the corporation owning the highway became a common carrier of persons 
 and property upon it by its own cars and motive power. Later on, however, the ne- 
 cessities of inter-State commerce, and the competition between rival roads, led to the 
 running of cars over connecting roads, so that it is an every-day occurrence for the 
 cars of a railroad company to be seen hundreds of miles away from the road owned 
 by it, and outside of the territorial limits of the State creating it. In addition to 
 this, more recently, the requirements of commerce demanding transportation under 
 a common management, have led to the establishment of independent companies 
 owning cars, which are used upon the tracts of several connecting roads. And still 
 further, other corporations have come into existence, as proprietors of rolling stock, 
 which is hired to those railway companies whose necessities demand the use of more 
 of such property than their means permit them to possess as owners. 
 
 In- some States, the question has been settled by legislation, and such must be the 
 ultimate solution of the matter. 
 
 Until recently it had been taken for granted by the profession, that in the Fed- 
 eral courts it was not an open question, but that rolling stock was, in them, consid- 
 ered as part of the realty. But in the case of Farmers' Loan <fe Trust Co. o. St. 
 Joseph & Denver City R. R. Co., argued at the June (1876) term of the U. S. Circuit 
 Court, Mr. Justice Miller held the matter under advisement, stating that he did not 
 consider that the point had been authoritatively settled by the Supreme Court. The 
 opinion which he subsequently wrote in deciding the case, will be found in 3 Dillon, 
 412, and is as follows : 
 
 " After having taken time to consider the question involved in this case, my judg- 
 ment is that it was not necessary as to the roUing stock to record the instrument as a 
 chattel mortgage. As to this it is sufficient even as to creditors, that the mortgage 
 was duly registered as a mortgage of real estate. In my opinion, rolling stock and 
 other property strictly and properly appurtenant to the road, is part of the road and 
 covered by the mortgage in question, which, in terms, embraces rolling stock. The 
 cases arc confficting on the point as to the nature of roUing stock, but considering 
 the peculiar character of a railroad, the true principle is the one above stated. Un- 
 der the provisions of this mortgage a different principle would apply to fuel or other 
 property personal in its nature and which is used, or is such as is commonly used, 
 for other than railway purposes. Such property would be subject to the levy, and 
 not be held by the mortgage." 
 
 Coe V. Hart (U. S. Circuit Ct. Northern District of Ohio, July 1, 1851) 6 Am. Law 
 Reg. 27 ; 2 Redfield Railway Cases, 667, was a biU filed by the trustees of a mort- 
 gage made by a railroad corporation, for an injunction to stay an execution on a 
 judgment at law, obtained by the defendants against the corporation, by virtue of 
 which a levy had been made by the United States marshal upon locomotives and 
 cars on the road. The Court (McLean, J.) says : "From the nature of the property 
 
240 FINANCIAL MATTERS. 
 
 ties are imperative, that is, expressly eajoined in the constating 
 instruments, as essential to a certain transaction, whether the 
 
 levied on, it could not be separated from the road without suspending, iif. whole or 
 in part, its operations. The operation of the machinery on the road, in the trans- 
 portation of passengers and freight, constitutes its chief value. The railroad, like a 
 complicated machine, consists of a great number of parts, a combined action of which 
 is essential to produce revenue, and as well might a creditor claim a right to levy on 
 and abstract some essential part from Woodworth's planing machine, or any other 
 combination of machinery, as to take from a railroad its locomotives or its passenger 
 cars. Such an abstraction would cause the operations to cease in both cases. A 
 stronger ground for an injunction than is taken in this case could not well be con- 
 ceived. The defendants, under a judgment at law, have levied upon a large part of 
 the rolling stock on the road, which, if sold and removed, will stop its operations, 
 while the same stock is under mortgage to creditors whose lieu is prior to that of 
 the defendants. Such a procedure, if carried out, in this and other cases, would de- 
 feat the liens of creditors in such cases to many millions of dollars, and put an end 
 to the structure, if not the maintenance, of railroads." This cause was taken up to 
 the Supreme Court on appeal, 23 How. 117, sub nom. Pennock v. Coe. The Court (p. 
 127) says: "The first question is, whether or not the after-acquired rolling stock of 
 the company placed upon the road attaches, in equity, to the mortgage, if within the 
 description, from the time it is placed there, so as to protect it against the judgment 
 creditors of the railroad company. * * In conclusion, upon this point, we are 
 satisfied that the mortgage attached to the future acquisitions, as described in it, 
 from the time they came into existence. As to the claim of the judgment creditors 
 there are several answers to it. In the first place, the mortgage being a valid and 
 effective security for the bondholders of prior date, they present the superior equity 
 to have'ihe property in question applied to the discharge of the bonds. It is true, if 
 the property covered by the mortgage constituted a fund more than sufficient to pay 
 their demands, the court might compel the prior incumbrancer to satisfy the execu- 
 tion, or, on a refusal, the mortgage having become forfeited, compel a foreclosure and 
 satisfaction of the bond debt, so as to enable the judgment creditor to reach the sur- 
 plus. Or the court might, upon any reasonable resistance of the claim of the execu- 
 tion creditor or inequitable interposition for delay, and to hinder and defeat the ex- 
 ecution, permit a sale of the rolling stock suflBcient to satisfy it. But no such ground 
 has been presented, or could be sustained, upon the facts before us. On the contrary, 
 it cannot be denied but that the whole of the property mortgaged is insuificient to 
 satisfy the bondholders under the first mortgage, much less when those under the 
 second are included. To permit any interference, therefore, on the part of the judg- 
 ment creditors, with a view to the satisfaction of their debt, consistent with the supe- 
 rior equity of the bondholders, would work only inconvenience and harm to the 
 latter, without any benefit to the former." The court held (and this was all that was 
 necessary to the decision), in the second place, that the judgment sought to be en- 
 forced by the defendants, being recovered upon bonds secured by the mortgage 
 upon the property seized, in common with other bonds of that issue, the defendants 
 should, therefore, not be permitted to obtain an advantage over those having a com- 
 mon lien upon the property seized. 
 
 In Gue V. Tide-water Canal Co. 24 How. 257, the court sustains an injunction 
 prohibiting the sale of sundry canal locks, <fec., under fieri facias issued upon a 
 
SECURITIES. 241 
 
 granting of a security or otherwise, then ex vi termini the absence 
 of such formalities will render the transaction nugatory ; secondly, 
 
 judgment at law. It was admitted that the property levied on waa necessary for 
 the uses and working of the canal. The court held that whatever was essential to 
 the operation of the canal could not be sold under execution, and that no prop- 
 erty could be dissevered from the franchise which was essential to its useful 
 existence. 
 
 In Minnesota Co. v. St. Paul Co. 2 Wall. 609, the question was argued before the 
 court, but was not discussed in the opinion of the majority, though it would seem 
 that there was no difference of opinion between the majority and minority of the 
 court upon that point. Nelson, Justice, in whose dissenting opinion Clifford and 
 Field, JJ., concurred, says : " We agree that the rolling stock upon this road, covered 
 by the several mortgages, and as respects any other valid liens upon the same, is in- 
 separably connected with the road ; in other words, is in technical language, a fixture 
 to the road, so far as, in its nature and use, it can be called a fixture." In the subse- 
 quent case of Railroad Co. v, James, 6 Wall. 760, which was part of the same liti- 
 gation as that in 2 Wall. 609, Mr. Justice Nelson, delivering the unanimous opinion 
 of the court, holds that the rolling stock owned by a railroad company, " and used 
 and employed in connection with the road, is made a fixture by an express statute of 
 the State of Wisconsin, and such, we think, is the law, according to the true construction 
 of the charter, independent of the statute," citing Fennock v. Coe. In a note to 2 Wall. 
 p. 645, will be found the learned brief of Mr. Carpenter on the question. And in 
 the brief of Mr. Cary, who was opposed to Mr. Carpenter in the litigation, it is said 
 that the Supreme Court and the Circuit Courts of the U. S. have uniformly held that 
 rolling stock was in its nature a fixture, in the absence of a statute upon the subject. 
 In a branch of the same litigation, in the District Court of Wisconsin, A. G. Miller, 
 District Judge, held, upon the authority of Pennock v. Coe, that the rolling stock 
 having been procured by the company as owners, and adapted to the road as a means 
 of operating, so long as it was thus used, should be considered as a fixture^ even 
 without statute law. 
 
 In PuUan v. Cin. & Chic. R. R. Co. 4 Biss. 35, McDonald, D. J., on a motion for a 
 temporary injunction and the appointment of a receiver, while inclining to the opin- 
 ion that a mortgage of » railroad covered the rolling stock, reserved the question 
 until the final hearing. For other authorities in the Federal courts, see Galveston 
 R. R. V. Cowdrey, 11 Wall. 469 ; U. S. v. New Orleans R. R. 12 Wall. 362 ; Scott v. 
 Clinton, <&c. R. R. Co. 6 Biss. 629. 
 
 The opinion of the court in Morrill v. Noyes, 66 Me. 458, contains the following : 
 " But if the engines and ears are not fixtures, they are so connected with the railroad, 
 and so indispensable to its operation, that there is a clear distinction between them 
 and other kinds of personal property. They may well be held to be exceptions to 
 the general rule that property not in esse cannot be conveyed." 
 
 Boston, Concord <t Montreal R. R. Co. v. Gilraore, 37 N. H. 410, was an action of 
 trespass against a sheriff, who had levied upon certain rolling stock of the plaintiff 
 rmder an attachment. The property seized constituted the largest part of the ordi- 
 nary rolling stock of the plaintiff, and without the same the plaintiff had not suflS- 
 cient rolling stock for the transaction of its ordinary business. The action was 
 sought to be maintained on the ground that the rolling stock was an incident to the 
 18 
 
242 FINANCIAL MATTERS. 
 
 that if, on the other hand, they are merely directory, then their 
 absence will vitiate the security where given to a person affected 
 
 franchise of the corporation, and necessary for the discharge of its public duties, and 
 could not be severed from its connection by attachment pr seizure on execution. The 
 Court held rolling stock not to be fixtures, and that it was liable to seizure and sale^ 
 to discharge the corporate debts. See Pierce v. Emery, 32 N. H. 486. 
 
 Vermont General Statutes, 1863, p. 23Y, sees. 101 and 102, passed 1856, provide 
 as follows : All mortgages of railroad franchises, furniture, cars, engines, and rolling 
 stock of any kind, when properly executed and recorded, shall be effectual to vest in 
 the mortgagee a valid mortgage interest in, and lien upon, all such property, without 
 delivery or change of possession ; and for the purpose of mortgage, all such property 
 shall be deemed part of the realty. But this shall not prevent the attachment of furni- 
 ture, cars, engines, or rolling stock, by any person having a claim against the corpo- 
 ration, (1) for an injury sustained on the road by neglect ; or (2) for services rendered 
 or materials furnished for the purpose of keeping the road in repair or in running 
 the same ; or (8) for any liabilities as common carriers ; or (4) for loss of any property 
 while in possession of the railroad company. See Miller v. Rutland & Washington R. 
 R. Co. 36 Vt. 462, 490; Gen. Stat. ISTO, ch. 28, §§ 100, 102. 
 
 In Howe v. Freeman, 14 Gray, 566 (reversed on question of jurisdiction in 24 
 How. 450), the mortgage was recorded in the registry of deeds of the counties, and 
 oflBoes of the clerks of the towns, through which the railroad passed. The defendant, 
 as United States marshal, levied on certain cars in use upon the road of the mort- 
 gagor, and this was an action of replevin by the mortgagees. The court seem to 
 assume that the cars were chattels or personal property, but placed the decision en 
 the effect of a special act of l,he Legislature ratifying and confirming the particular 
 mortgage. It would appear that the mortgage had been recorded as a chattel 
 mortgage. See General Statutes Mass. 1860, p. 766, § 1. 
 
 In Hoyle*. Plattsburgh & Montreal R. R. Co. 54 N. Y. 314 (1873), Johnson, 
 Com., thus reviews the decisions of the New York courts : 
 
 " The first question necessarily to be decided in this case is, wheyier the rolling 
 stock of a railroad is personal property, or whether it is to be deemed constructively 
 annexed to the road upon which it runs, so as in law to be regarded as part of the 
 realty. If it be determined that rolling stock retains its character of personal prpp- 
 erty, then the question arises whether a mortgage of a railroad and its equipment 
 needs to be filed under the statute of 1833, requiring mortgages of personal property 
 to be filed when the possession of the property is not immediately delivered to the 
 mortgagee. Laws of 1833, chap. 279, p. 402. The questions thus presented are not 
 authoritatively determined in this State. The opinion of the Supreme Court has 
 been given in four reported cases. The earliest was that of the Farmers' Loan & 
 Trust Co. V. Heridrickson, 26 Barb. 484, in which the judgment rendered in October, 
 1857, by Justices S. B. Strong, Birdseye and Davies, declared that as between mort- 
 gagees and judgment creditors the rolling stock was to be deemed fixtures, and, con- 
 sequently, that such a mortgage did not need to be filed under the act of 1833. In 
 this case, the mortgage specified engines, tenders, cars,'<fec., as part of the property 
 mortgaged, and the rights of the plaintiffs might have been sustained by holding 
 either that the chattel mortgage law did not apply to railroad mortgages, or that 
 engines and cars were fixtures. The court rejected the former ground, and placed 
 
SECURITIES. 243 
 
 with notice of the informality, or who, from his position, e. g., as 
 being a corporate official, was bound to see that the formalities 
 were duly observed. ' 
 
 the decision on the position that the rolling stock ■wras part of the realty. In Ste- 
 vens V. The Buffalo <fe If. Y. City R. R. 81 Barb. S90, decided in September, 1868, 
 Justices Greene, GroTer and Marvin held that rolling stock was personalty, and that 
 a mortgage thereof was required to be filed under the act of 1833. Elaborate opin- 
 ions were written in support of these conclusions, in which the Hendrickson case, 
 before cited, and that of Coe v. Hart, In the United States Circuit Court, before Mr. 
 Justice McLean, that of Covey v. The Pittsburgh <fe F. W. R. Co., ahd Mitchell v. 
 Winslow, 2 Story, 690, were examined with the result before mentioned. In Decem- 
 ber, 1859, Mr. Justice Allen decided Beardsley v. Ontario Bank, 31 Barb. 619. The 
 mortgage was of the railroad, real estate, chattels and franchises of the corporation. 
 It was held that the rolling stock was not covered by the mortgage, not being part of 
 the realty. The last two decisions were acquiesced in ; the first, the case of Hen- 
 drickson, was taken to the Court of Appeals, in 1863, and resulted in an order for 
 reargument, and subsequently the case was settled. The case now under considera- 
 tion is reported in il Barb. 109, before Justice Sutherland, at special term, in 1867. 
 He held that rolling stock does not become a part of the realty, and that it passed, 
 by the two mortgages in question, as specially named, and not as part of the realty. 
 He also held that mortgages of the corporate property and franchises of railroads 
 should not, aa to the personal property covered by them, be deemed to be subject to 
 the provisions of the chattel mortgage act of 1833. At general term the case came 
 before Justices Ingraham, Sutherland and G. G. Barnard, and the decision appealed 
 from was affirmed. Judge Ingraham giving the only opinion. After declaring him- 
 self not prepared to accede to the opinion at special term, that rolling stock is in all 
 cases to be considered as personal property, he holds that the intent of the parties is 
 evident that the rolling stock should pass as part of the realty, and that such a con- 
 struction should be given to the transaction. He further holds that the chattel 
 mortgage act does not apply to a mortgage executed by a railroad company under 
 authority of section 28 of the general railroad act of 18S0. That section warrants 
 a mortgage of the corporate property and franchises of a railroad company to raise 
 money for completing, finishing or operating its road. . Such a mortgage was in- 
 tended by the Legislature, the learned judge says, to be treated as a mortgage of the 
 road and its accessories, and, therefore, need qot be filed as a chattel mortgage. 
 While upon each proposition involved, a majority of judges appear to have been 
 against the claim that rolling stock may be effectually mortgaged without filing 
 under the act of 1833, the question still remains open for decision." Judge Johnson 
 then discusses the law of fixtures and the character of rolling stock, and holds it to 
 be personal property and subject to the provisions of the law requiring the filing of 
 chattel mortgages where no change of possession takes place. Reynolds, Com., 
 while holding that, whether roUingstock of a railroad company is to be regarded as 
 a fixture or not, it cannot Ije considered as any part of the company's real estate, 
 still dissents from the majority of the commissioners on the point of the necessity of 
 filing a mortgage covering it as a chattel mortgage. In Randall v. Elwell, 52 N. Y. 
 B21 (18'73), the question arose whether horse railroad cars were real or personal 
 property, upon the validity of a levy and sale to pay a tax assessed against the rail- 
 
•244 FINANCIAL MATTERS. 
 
 For example, section 43 ' of the Companies Act, 1862, requires 
 a register of all mortgages and charges to be kept, upon which is 
 
 ' So the Companies Clauses Consoli- Reg. v. Wilts, &c. Canal Co. S A. & E. 
 
 <3ation Act (1845), 645, requires a similar 477 ; Birmingham, <feo. Ry. Co. v. White, 
 
 register to be kept. See Athpnseum Life 1 Q. B. 282. 
 Ass. Co. V. Pooley, 28 L. J. (Ch.) 119 ; 
 
 road company. The court, Grover, J., delivering the opinion, held them to be per- 
 sonal property, and, as such, liable to be seized and sold for the collection of a tax 
 against the company. The act of May 9, 1868, 7 N. Y. Stat, at Large, Edmond's ed. 
 337, provides: It shall not be necessary to file, as a chattel mortgage, any mortgage 
 which has been, or shall hereafter be, executed by any railroad company upon real 
 and personal property, and which has been, or shall be, recorded as a mortgage of 
 real estate in each county in or through which the railroad runs. See Benjamin 
 ». Elmira, Jeff. & Can. R. R. Co. 54 N. T. 676. 
 
 In State Treasurer v. Someryille & Easton R. R. Co. 4 Dutch. 21, Green, C. J., in 
 passing upon the charter of, the defendants to determine their liability for a tax, 
 speaks of the equipment as not being part of the road. He says as to the word 
 " appendages ; " " I think it wUl be found on examination that the phrase is never 
 used by the Legislature in railroad charters in any other than its ordinary and pop- 
 ular sense. It is never used to include the equipment, rolling stock, furniture, or 
 other personal property of the company, hut it is invariably applied to its real estate, to 
 the accessories of the road itself," and holds that defendants were " not required to 
 pay tax upon the costs of their engines, cars, boats, or other personal property." 
 
 A very thorough discussion of the nature of rolling stock, has lately been had in 
 the courts of New Jersey, in the case of Williamson ». N. J. Southern R. R. Co. The 
 ■Chancellor, in an elaborate opinion reported in 28 N. J. Eq. 279, held it to be part of 
 the realty. His decision was, however, reversed by the Court of Errors and Ap- 
 peals, the opinion of the latter court being reported in 29 N. J. Eq. 311. Judge 
 Depue, writing the opinion of the court, reviews the authorities which have consid- 
 ered the nature of rolling stock, and other authorities upon the law of fixtures. He 
 holds that " the criterion for determining whether property ordinarily regarded as 
 personal, becomes annexed to and part of the realty, is the union of three requisites ; 
 First. Actual annexation to the realty or something appurtenant thereto. Second. 
 Application to the use or purpose to which that part of the realty is appropriated. 
 Third. The intention of the party making the annexation, to make a permanent ac- 
 cession to the freehold ; " and his conclusion is expressed as follows : " Tested by 
 the foregoing criterion, it is manifest that the rolling stock of a railroad must be re- 
 garded as chattels which have not lost their distinctive character as personalty, by 
 being aflBxed to, and incorporated with, the realty. It is true that engines and cars 
 are adapted to move on the track of the railroad, and are necessary to transact the 
 business for which the railroad was designed. But unattached machinery in a fac- 
 tory, the implements of husbandry on a farm, and furniture in a hotel, are similarly 
 adapted for use in the factory, on the farm, or in the hotel, and are equally essential 
 to the profitable prosecution of the business in which they are employed. When re- 
 gard is had to the fundamental and necessary condition under which the law permits 
 chattels to become part of the realty, engines and cars and the rolling stock of a 
 railroad utterly fail to answer the requirement of the law." 
 
SECURITIES. 245 
 
 to be entered a short description of any property mortgaged or 
 charged. This has been held to invalidate unregistered deben- 
 
 In, 18'?6, the Le^slature of New Jersey passed an act providing that nothing in 
 the laws of the State should be held to require the .filing of record in the clerk's 
 office, of any mortgage, by any railroad or canal corporation, conveying the fran- 
 chises and including chattels, if such mortgage shall be duly lodged for record as a 
 conveyance of real estate. P. L. 1876, p. 307, § 4 ; Revision of N. J. (1877), p. 
 924, § 4. 
 
 In Covey v. Pittsburgh, Fort Wayne & Chicago R. R. Co. 3 Philadelphia Rep. 173, 
 Agnew, P. J., (approving Coe v. Hart), holds, that although cars and other rolling 
 stock may be ordinarily termed personal properSy, yet, that a mortgage of the rail- 
 road and fixtures, and aU its other property, is not invalid, as to rolling stock, 
 against an execution, without delivery of possession. This is put on the ground that 
 the general principle that chattel mortgages are invalid under such circumstances, 
 is subject to exceptions, where from the nature or condition of the property and the 
 object to be accomplished by the parties, it is necessary that the possession should be 
 retained by the mortgagor. See Ammant v. New Alexandria & Pittsburgh Turnpike 
 Co. 13 8. & R. 210 ; Susquehanna R. R. Co. v. Bonham, 9 W". <fe S. 28 ; Plymouth R. 
 R. Co. u. Colwell, 39 Penn. St. 339 ; Trunsick v. Smith, 63 Penn. St. 18. 
 
 In State v. Northern Central Rw. Co. 18 Md. 193 (1861), the mortgage conveyed 
 to the complainant, the entire line of railroad belonging to the defendant from Balti- 
 more to Sunbury, in the State of Pennsylvania, with all the revenues and tolls there- 
 of. The Court of Appeals reversing the Chancellor's decision, held, on the authority 
 of Seymour v. Canandaigua & Niagara Falls R. R. Co. 25 Barb. 309, and Farmers' 
 Loan <fc Trust Co. v Hendrickson, 25 Barb. 484 (supra), that the mortgage covered 
 the line of road from Baltimore to Sunbury, and all the rolling stock and fixtures, 
 whether movable or immovable, essential to the production of tolls and revenues. 
 But in New England Car Spring Co. v. Bait. & Ohio R. R. Co. 11 Md. 81 (1857), where 
 it is determined that coal cars used upon a railroad are not within the meaning of a 
 law giving mechanics a lieu upon " machines," the court uses language which would 
 seem to imply that rolling stock was not part of the realty. 
 
 In Coe V. Columbus, Piqua & Ind. R. R. Co. 10 Ohio St. 372 (1859), "locomotives, 
 CW3 and the like personal property" are held subject to execution. See Ludlow v. 
 Hund, 6 Am. Law Reg. 502 ; 1 Disney, 552. 
 
 In Phillips V. Winslow, 18 B. Mon. 431, cars are held to be incident and indispen- 
 sable to the use and enjoyment of the thing conveyed, «. e., the railway. See Ap- 
 plegate v. Ernest, 3 Bush, 649 ; Winchester Turnpike Co. </. Vimont, 5 B. Mon. 1 ; E. 
 <fc P. R. R. Co. V. Elizabethtown, 12 Bush, 233 ; Douglas v. Cline, Id. 608. 
 
 Palmer v. Forbes, 23 111. 301 (1860), holds that rolling stock and material pro- 
 vided for the repair of the track are part of the real estate. See also Hunt v. Bul- 
 lock, 23 111. 320 ; Titus v. Mabell, 25 111. 257 ; Titus v. Sinheimer, 27 HI. 462. This 
 question is settled in Illinois by the constitution which topk effect August 8th, 1870, 
 art. xi, § 10 : " The rolling stock and all other valuable property belonging to any 
 railroad company or corporation in this State, shall be considered personal property 
 and shall be liable to execution and sale in the same manner asthe personal property of 
 individuals, and the general assembly shall pass no law exempting any such property 
 from execution and sale." As to the effect of this provision, see Scott «. Clinton, &c. 
 R. R. Co. 6 Biss. 535. 
 
 In Indiana, rolling stock " is treated as realty for the purpose of taxation, as be- 
 
2i6 FINAirCIAL MATTERS. 
 
 tures in the hands of the solicitors,^ or directors,^ of the company, 
 but not similar debentures or charges in the hands of the com- 
 pany's bankers' or a fortiori of ordinary persons.^ 
 
 (4.) Effect of Securities. 
 
 This subject has incidentally been investigated in the pre- 
 ceding pages. Reference may be made to the decisions there 
 cited to determine the extent of property covered by particular 
 instruments. This will depend mainly on the language employed, 
 and will therefore vary, so .that general principles cannot advan- 
 tageously be set forth. But there are two questions which occur so 
 
 ' En, parte Valpy and ChapliD, L. R. ^ Re General Provident Ass. Co. L. R. 
 
 1 Ch. 289. 14 Eq. 607. 
 
 2 Re Wynn Hall Coal Co. L. R. 10 Eq. * Re General South American Co. 2 
 515; Re Native Iron Ore Co. 2 Ch. D. Ch. D. 337. 
 346. 
 
 ing intimately connected with the purpoae and uses of the railroad track and super- 
 structure." Louisville & New Albany R. E» Co. v. State, 25 Ind. 177. 
 
 Pacific R. R. Co. v. Cass County, 53 Mo. 17, holds rolling stock to be personal 
 property, and taxable in the county where the principal office of the company is lo- 
 ■cated. Rolling stock is personal property by art. xii, of § 16, Const, of 1875. 
 
 In HiU V. La Crosse & Milwaukee R. R. Co. 11 Wis. 214, it was held, though not 
 necessary to the decision of the case, that rolling stock was personal property. See 
 Commercial Bank v. Farmers' Loan & Trust Co. 11 Wis. 207. 1 Taylor's Stat. Wis. 
 p. 1048, § 63, provides, that all rolling stock of any railroad company, used and em- 
 ployed in connection with its railroad, shall be a fixture; and that when acquired 
 subsequently to the execution of a trust deed or mortgage of locomotives, tenders, 
 <fee., it shall be subject to the same lien as the property owned by the company at 
 the time of execution. See construction of this statute in Chicago <fe Northwestern 
 Rw. Co. a. Borough of Fort Howard, 21 Wis. 44. See also, Laws 1872, ch. 119, 
 g§ 39 & 40; L&ws 1877, ch. 144, § 1. 
 
 In Nebraska, the Constitution of 1875, art. xi, § 2, adopts the language of the 
 Illinois Constitution, cited supra. The same provision has been adopted in Arkansas 
 (Const. 1874, arti xvii, § 11), in Texas (Const. 1876, art. x, § 4; see also. Gen. R. 
 E. Act. 1876, ch. 97, § 24), and in West Virginia (Const. 1872, art. xi, § 8). 
 
 For other statutory provisions upon this subject see the following : Massachusetts, 
 Act 1874, ch 372, § 49 ; Act 1876, chs. 88 <fe 144: Connecticut, Public Acts 1877, ch. 
 S8: West Virginia, Act Apl. 3, 1873; Acts 1872, 1873, ch. 88: Florida, Act 1874, 
 ch. 1987, §§ 9, 31 : Minnesota, 1 Stat, at L. 1873, p. 431 : Iowa, Code 1873, §§ 1284, 
 1285: Dakota, Rev. Code, 1877, p. 304: Nebraska, Gen. St. 1873, ch. 11, § 120: 
 Montana, Laws 1873, p. 102: California, Civil Code, §§ 2956, 2959, 2961. 
 
 See State v. Rives, 5 Ired. 297; City of Dubuque v. 111. C. R. R. Co. 39 Iowa, 56 ; 
 Nelson v. Iowa Eastern R. R. Co. 9 Cent. L. J. 17; Macon <fe Western R. R. Co. u. 
 Parker, 9 Ga. 377 ; City of Bath v. Miller, 63 Me. 308 ; 2 Washburn on Real Prop- 
 erty (3d ed.), 149 ; 2 Redfield on Railways, § 236 ; Herman on Executions, g 362 ; 1 
 Hilliard on Mortgages (4th ed.), 7; Jones on Railway Securities, 5i§ 146-187. 
 
SECURITIES. 247 
 
 often as to need some special attention : first, when is the "land " 
 of a corporation charged ? secondly, what is the precise effect of 
 the term "undertaking?" 
 
 First. When Land is Charged. — Ashton v. Lord Langdale * is 
 perhaps the leading case upon- this point. Here questions arose as 
 to the effect of inter alia the following instruments : First, two 
 mortgages of turnpike tolls,* under acts of 3d and 8th George IV, 
 for improving the road from the end of Ardwick Green, near 
 Manchester, to Hyde Lane Bridge, under which acts the trustees 
 of the turnpike-road were seized or possessed of the turnpikes, 
 toll-houses and toll-bars on the road, and entitled to take and re- 
 ceive tolls, and to borrow money at interest upon the credit of the 
 tolls. These mortgages were in the statutory form, and pui-ported 
 to " assign to the testator, his executors, administrators and assigns, 
 such proportion of the tolls arising and to arise on the said turn- 
 pike-road, and the toll-gates and toll-houses erected or to be erected 
 for collecting the same, as the suin of £880 should bear to the 
 whole sum then or thereafter to become due and owing on the se- 
 curity thereof." Secondly, a railway mortgage or debenture, 
 under the seal of the Manchester and Birmingham Kailway Com- 
 3)any, purporting to " assign the undertaking, and all and singular 
 the rates, tolls and sums of money arising by virtue of the said 
 act, and all the estate, right, title and interest of the said company, 
 of, in and to the same, to the testator, his executors, administrators 
 and assigns, until the said sum of £30,000, together with interest 
 at 4i per cent, per annum should be fully paid and satisfied ; " and, 
 thirdly, mortgages or debentures for £10,000 of the Sheffield and 
 Ashton-under-Lyne Railway Company in a similar form. 
 
 Knight Bruce, V.-C, held both classes of charges created by 
 the two former instruments to be "interests in land" within the 
 mortmain acts ; but that the railway debentures not being mort- 
 gages, as also certain shares in railway, canal, water-works and 
 banking companies, and scrip shares in projected railway com- 
 panies, were not within the act. 
 
 So shares in the London Gaslight and Coke Co.,' in the 
 London and East and "West India Docks Cos.,* dock and canal 
 shares and bonds secured by an assignment of the rates,' have 
 
 ' 4 De G. <fe Sm. 402. See Cluff v. ' Thompson v. Thompson, 1 Coll. 381 ; 
 
 Cluff, 2 Ch. D. 222, aa to stock of the and see Sparling v. Parker, 9 Bear. 460. 
 Metropolitan Board of Works. * Hilton v. Giraud, 1 D. G. <fc Sm. 183. 
 
 ' Knapp V. Williams, 4 Yes; 430, n. ' Walker v. Milne, 11 Bear. 507. 
 
248 FINANCIAL MATTERS. 
 
 been decided not to be subject to the restrictions against mort- 
 main. 
 
 Secondly. Effect of the term " Undertaking" — The cases re- 
 lating to this point fall into two classes, according to the nature 
 of the corporation and the subject-matter consequently involved. 
 The one class consists of those companies which have not, the 
 other of those which have assets fixed to a definite locality, and 
 essential as such to their continued existence in active business 
 Operation. 
 
 The expression " the undertaking," in charging instruments 
 given by the former class, whether alone or in connection with 
 other words, has been repeatedly the subject of judicial decision. 
 In one case the terms employed were " all the lands, tenements 
 and estates of the company, and all their undertaking," ^ and this 
 did not include calls, whether to be made or merely unpaid. In 
 another, " the undertaking and all the real and personal estate," * 
 and this included all the then existing personal estate, but not 
 subsequently acquired personalty. 
 
 In all these cases, the questions are, first, is the charge a charge 
 upon mere income or on property also ? Secondly, if on prop- 
 erty, is it limited to the then property, and if so, what varieties 
 of it does it cover ? These two questions are of comparatively 
 small importance. The third, which is the correlative of the 
 second, is the chief one : Is after acquired property charged, and 
 if so, what kinds ? (a) 
 
 In lie Marine Mansions Co.,' the debentures issued pledged 
 "the property belonging to us for the time being during the 
 subsistence of the debenture, with all the buildings and stock on, 
 and connected with, our said property, and all the receipts and 
 revenues to arise therefrom ; " and declared that the entire de- 
 benture loan and interest should be a first charge on " our under- 
 taking and property, and receipts and revenues aforesaid." The 
 business of the company was to buy and sell land, to build, buy 
 and sell houses, to furnish houses for hotels, and to carry on the 
 business of hotel keepers. Upon the company being wound up 
 Wickens, V.-C, held that the effect of the debentures was to 
 
 ' King V. Marshall, 33 Beav. 665 ; 34 « i?e New Clydaoh Sheet <fe Bar Iron 
 
 L. J. (Ch.) 163. Co. L. R. 6 Eq. 514. 
 
 3 L. R. 4 Eq. 601. 
 
 (o) See ante, p. 236, n. 
 
SECURITIES. 249 
 
 give the holders a charge, in priority to other creditors, upon the 
 land and other property of the company. 
 
 In a later case, a steamship company having power to issue 
 mortgages, bonds or debentures, issued mortgage debentures, 
 charging "the undertaking, and all sums of money arising there- 
 from," with the repayment, at a specified time, of the money 
 borrowed, with interest in the meantime. Before the debentures 
 became due, the company was wound up, and the ships and other 
 property of the company were sold. It was here held that the 
 debenture holders acquired a charge upon all the property of the 
 company, past and future, by the term " undertaking," and that 
 they were entitled to be paid out of the property of the company 
 in priority to the general creditors. Giffard, L. J., thus inter- 
 preted the effect of these debentures : " I have no hesitation in 
 saying that, in this particular case, and havihg regard to the state 
 of this particular company, the word ' undertaking ' had reference 
 to all the property of the company, not only which existed at the 
 date of the debenture, but which might afterwards become the 
 property of the company.(a) And I take the object and meaning 
 of the debenture to be this, that the word ' undertaking ' neces- 
 sarily infers that the company will go on, and that the debenture 
 holder could not interfere until either the interest which was due 
 was unpaid, or until the period had arrived for the payment of 
 his principal, and that principal was unpaid. I think the mean- 
 ing and object of the security was this : that the company might 
 go on during that interval ; and, furthermore, that during the 
 interval the debenture holder would not be entitled to any 
 account of mesne profits, or of any dealing with the property 
 of the company in the ordinary course of carrying on their 
 business." ^ 
 
 ^ Re Panama, Ac, Eoyal Mail Co, L. E. 8 Ch. 318-322. 
 
 (a) A mortgage, given to the State by legislative authority, on " roads, lands 
 and franchises " by foreclosure, passes all the franchises, including the right to be a 
 corporation. St. Paul <fe Pacific R. R. Co. v. Parcher, 14 Minn. 297. Lands acquired 
 by a I'ailroad company, lying outside of the legal limits of the track and branches, 
 not used for shops, depots and other legitimate purposes of the company, are not 
 covered by a mortgage conveying, in general terms, the railway and its appurte- 
 nances. Seymour v. Can. & N. Falls R. R. Co. 2S Barb. 286 ; Eldridge v. Smith, 34 
 Vt. 484; also, on construction of a mortgage, see Parish v. Wheeler, 22 W. Y. 494; 
 LoudenscMager v. Benton, 3 Grant's Cases, 384 ; Farmers' Loan & T. Co. v. Com- 
 mercial Bank, 15 Wis. 424 ; Shamokjn Valley R. R. Co. v. Livermore, il Penn. St. 
 466 ; Calhoun v. Padncah, <fcc. K. E. Co. 9 Cent. Law J. 66. 
 
250 FINANCIAL MATTERS. 
 
 The last decision is Re General South American Co.,^ where 
 bonds were issued indorsed that " the holder for the time being 
 of the within-mentioned debenture is to be entitled to the bene- 
 fits of the mortgage and charge by the within written debenture 
 upon the property, book debts, credits, assets, moneys, and other 
 effects of the company ratably with the other holders of the 
 said debentures." In a winding-up, the holders of these bonds 
 were held entitled to a charge prior to aU the other creditors on 
 all the property of the company. 
 
 The leading case, in this country, upon the effect of a mort- 
 gage by a railway company of its " undertaking," is that of Gard- 
 ner v. London, Chatham & Dover Ey. Co.' 
 
 The security, the subject of dispute in this case, was as 
 follows : 
 
 " London, Chatham, & Dover Eailwat (under Yarious Powers 
 
 Act of 1861.) 
 
 " Mortgage Deed. 
 " No. 225 £600 Three Years 
 
 " By virtue of the London Chatham & Dover Eailway (Yari- 
 ous Powers) Act 1861 "We the London Chatham and Dover 
 Eailway Company in consideration of the sum of £600 paid to 
 us by Joseph Gardner &c. do assign unto the said Joseph Gard- 
 ner his executors administrators and assigns the General Under- 
 taking of the company as defined by that Act and all the tolls 
 and sums of money arising upon or out of the said General 
 Undertaking by virtue of the several acts relating thereto and all 
 the estate right title and interest of the company in the same to 
 hold unto the said Josepl; Gardner his executors administrators 
 and assigns until the said sum of £600 together with interest for 
 the same at the rate of £5 for every £100 by the year (subject to 
 deduction in respect of property or income tax) be satisfied the 
 principal sum to be repaid at the end of three years from the 1st 
 of July 1863 and the interest to be payable half yearly on the 
 30th day of June and the 31st day of December at the bankers of 
 the company." 
 
 1 2 Ch. D. 337. « L. R. 2 Ch. 201. 
 
SECURITIES. 251 
 
 The chief contention was as to whether this instrument gave 
 to the mortgagee a charge upon the surplus lands of the com- 
 pany, for it was admitted that the plaintiff had no such charge 
 upon the permanent way, &c., as would entitle him to occupy or 
 otherwise interfere with the same. Upon appeal the Lords Jus- 
 tices held that this debenture did not give the holder thereof a 
 specific charge upon the surplus lands of the company or the pro- 
 ceeds of the sale of them, so as to entitle him to an order for a re- 
 ceiver of the sale moneys, or interim rents : that the " undertak- 
 ing " of a railway company which is pledged in such a mortgage 
 is the going concern created by the Act, which cannot be broken 
 up or interfered with by the mortgagee, the " sums of money " 
 are moneys ejusdem generis as the tolls, and are the earnings of 
 the undertaking which may be made available to satisfy the mort- 
 gage ; and that the court will not appoint a manager of a railway. 
 They also added, as a dictum, that by the use of proper language, 
 a railway company may give a specific charge on the moneys to 
 . arise from the sale of its surplus lands for a debt due to the con- 
 tractors who have constructed the works, there being no illegality 
 in or legislative prohibition against such a charge. 
 
 With regard to the main question, Cairns, L. J., said : " A 
 railway is made and maintained by means of its capital, by means 
 of its borrowed money, of its land, of its proceeds of sale of sur- 
 plus land, of its permanent way, of its rolling stock. All of 
 these may be said in a sense, to be connected with, to be parts of, 
 to make up the undertaking. If a mortgage of the undertaking 
 carries in specie the sale moneys of surplus lands, it must equally, 
 and on the same principle, carry in specie the ordinary land of the 
 company, the capital, the permanent way, the rolling stock, nay 
 even the very money itself lent on the mortgage. The assign- 
 ment made by the mortgage debentures is immediate and is to 
 continue for three years at the least. If the debenture holders 
 are right in their argument, they become immediate assignees in 
 specie of all the ingredients which I have enumerated as going to 
 make up the undertaking, and they might, from the first, have 
 asserted their rights as mortgagees by taking and impounding not 
 merely the proceeds of surplus lands, but the capital, the cash 
 balances, the roUihg stock, and even their own money advanced. 
 Now, it is beyond question that the great object which parliament 
 has in view when it grants to a railway company its compulsory 
 
252 
 
 FINANCIAL MATTERS. 
 
 and extraordiaary powers over private property, is to secure in 
 return to the public the making and maintaining of a great and 
 complete means of public communication, and yet, according to 
 the necessary consequence of the plaintifE's argument, the moment 
 the company borrowed money on debentures, it would depend on 
 the will or caprice of the debenture holder whether the railway 
 was made at all." 
 
 This decision has since been approved and thus explained by 
 Giffard, L. J. : " In that case there was a peculiar subject-matter 
 on which the debentures operated — that is to say, a permanent 
 railway which, it was well known to everybody, was permanent, 
 and could not be mortgaged, or sold, or dealt with in any way, 
 and all that that case decided was that, in that particular instance, 
 having regard to the position of the parties, there was a peculiar 
 subject-matter which was intended to be affected by the instru- 
 ment and no other. The same may be said of the other cases 
 which relate to railways." ' 
 
 , Section IY. — Sueettship. 
 
 It is no part of the ordinary business of commercial, and a 
 fortiori, still less so of non-commercial corporations, to become 
 security for others. Under ordinary circumstances, without posi- 
 tive authority in this behalf in the constating instruments, all en- 
 gagements of this description are ultra vires, whether they take 
 the direct form of suretyship,^ or the indirect forms of foining in 
 accommodation bills, or otherwise becoming liable for the debts 
 of others, or the still more indirect form of guaranteeing profits 
 or expenses, or otherwise assisting the business of others, or in 
 the development thereof, or obtaining further powers therefor. 
 Therefore, there ought properly to be an express power to this 
 effect. Probably, also, there are ca§es where, as matters of man- 
 agement, and of arrangements with debtors, such proceedings 
 would be upheld.' (a) 
 
 ' L. R. 6 Ch. 321. Haddon v. Ayres, 6 Jur. (N. S.) 408 ; 
 
 ^ Crewer, <fec. Mining Co. v. Willyams, Barker v. Allen, 8 H. <fe N. 61. 
 
 14 W. R. 1003. Compare Ridley v. » See per Campbell, L. C. J., in Kirk 
 
 Plymouth, (fee. Baking Co. 2 Ex. 711; «. Bell, 16 Q. B. 290. 
 
 (a) A corporation cannot issue or indorse simple accommodation paper in which 
 
POWER AS TO NEGOTIABLE INSTRUMENTS. 253 
 
 Section Y. — Powee as to Negotiable Insteuments. (a) 
 
 I. A corporation will ha/oe the power to he a party to negotiable 
 instruments when eaipressly given to it. 
 
 A corporation has not, as one of the incidents of its existence, 
 the power to accept bills, or mate notes, or be one of the imme- 
 diate parties, other than as a mere payee, to negotiable instruments 
 of other descriptions, (b) Such power must be given to it ex- 
 
 it has no interest. Such paper will be void in the hands of parties who have notice 
 of its character. 
 
 " I entertain no doubt but that a bank may lawfully indorse the commercial paper 
 which it holds, with a view to raise money upon it. * * * But the officers of « 
 bank have no right to indorse, in its behalf, the paper of other persons in which it 
 has no interest, or to make the bank a party to paper for the accommodation of any 
 one. Such contracts are void, upon the same principle that an indorsement by a 
 partner, of [the firm name, without the consent of his copartners, for the accommoda- 
 tion of a third person, would be inoperative against the firm. But if a copartner of 
 a mercantile firm affixes the partnership name to paper in which the firm has no in- 
 terest, and such paper is negotiated to an innocent holder for a valuable considera- 
 tion, the firm is bound. The same principle applies to the acts of the officers of a 
 corporation." Denio, J., in Bank of Genesee v. Patchin Bank, 13 N. Y. 309; s. o. 
 19 N. Y. 812; Mx parte Estabrook, 2 Lowell, 647; Monument Nat. Bk. «. Globe 
 Works, 101 Mass. 57 ; Mech. etc. Ass. v. White Lead Co. 36 N. Y. 606 ; Central Bk. 
 V. Empire Stove, <fec. Co. 26 Barb. 23 ; Murford v. Farmers' Bk. 26 Barb. 568 ; 
 Bridgeport City Bk. v. Empire, <fec. Co. 30 Barb. 421 ; Farmers, &o. Bk. v. Empire, 
 <fec. Co. 5 Bosw. 275 ; Savage Mfg. Co. v. Worthington, 1 Gill, 284 ; Madiaon, <fec. R. 
 R. Co. V. Norwich Saving Soo. 24 Ind. 467, modifying 11 Ind. 104; Lafayette Sav- 
 ings Bk. V. St. Louis, &c. Co. 2 Mo. App. 299. 
 
 A railroad or turnpike company cannot be held on a guarantee of bonds of a con- 
 necting road, induced simply by the consideration of the increase of business to be 
 acquired by its construction. Smead i). Indianapolis R. R. Co. 11 Ind. 104; 
 Madison, <fec. Plank-road v. Watertown, <fec. Plank-road, 7 Wis. 53. But authority to 
 aid such connecting road, given in quite general terms, will enable a road to guaran- 
 tee its bonds. Zabriskie v. C. O. & C. R. R. Co. 23 How. 381 ; Smead v. Indianap- 
 olis, &a. R. R. Co. ] 1 Ind. 104. Such guarantee may be made part of a contract of 
 lease. Opdyke v. Pacific R. R. Co. 3 Dill. 66; Low v. Cal. Pao. R. R. Co. 52 Cal. 53. 
 
 A railroad may guarantee the bonds of a town, issued in payment of a subscrip- 
 tion to the stock of the railroad. R. R. Co. ly. Howard, 7 Wall. 392. See Stark Bk. 
 V. U. S. Pottery Co. 34 Vt. 144; Rahm v. Bridge Manufactory, 16 Kan. 277. 
 
 (a) The discussion of this subject in the second English edition is carried to con- 
 siderable length. It has not seemed necessary to reprint it in full, by reason of the 
 comparatively settled state of the law in this country. 
 
 (6) "No question is better settled upon authority than that a corporation, not pro- 
 hibited by law from doing so, and without any express power in its charter for that 
 
254 FINANCIAL MATTERS. 
 
 pressly or impliedly. A corporation may possess it expressly 
 either : (1) by the provisions of its own constating instruments ; 
 or (2) by the direct enactments of the Legislature ; ' or (3) indi- 
 rectly from the language used in general acts of parliament which, 
 though not positively providing, indirectly assume that corpora- 
 tions within them have such power, and, therefore, by necessary 
 deduction, confer it where otherwise wanting. 
 
 Thus, the Joint-Stock Companies Act of ISM (7 & 8 Vict. c. 
 110), having, in section 45, laid down certain regulations as to the 
 mode in which bills should be accepted, &c., on behaK of com- 
 panies coming within this statute, it was assumed as a matter of 
 course that such companies thereby acquired the power to issue 
 bills and notes." The Companies Act of 1862 contains a section 
 (47) very similarly worded ; and Malins, V.-C, thought that it, by 
 
 1 Stark V. Highgate Archway Co. 6 Co. 16 Q. B. 442; 20 L. J. (Q. B.) 160; 
 
 Taunt. 792; Murray v. East India Co. 5 Aggs v. Nicholson, 1 H. A N. 165 ; 25 L. 
 
 B. <fe Aid. 204. J. (Ex.) 348. 
 
 ^ See Halford v. Cameron's, &o. Ry. 
 
 purpose, may make a negotiahle promissory note, payable either at a future day or 
 upon demand, when such note is given for any of the legitimate purposes for which 
 the company was incorporated." Per WiUard, J., in Moss v. Averell, 10 N. T. 457, 
 citing Att.-Gen. v. Life & Fire Ins. Co. 9 Paige, 470 ; Mott o. Hicks, 1 Cowen, 513 ; 
 Barker v. Mechanics' Ins. Co. 3 Wend. 94 ; Moss v. Oakley, 2 Hill, 265 ; Safford v. 
 Wypkoff, 4 Hill, 442 ; Kelley v. Mayor of Brooklyn, 4 Hill, 263 ; Moss v. Rossie 
 Lead Mining Co. 5 Hill, 137 ; Conro v. Port Henry Iron Co. 12 Barb. 27. See, also. 
 Police Jury v. Britton, 15 Wall. 566 ; Fay v. Noble, 12 Cash. 1 ; Olcott v. Tioga R. R. 
 Co. 40 Barb. 179 ; 27 N. Y. 546; Clark v. Farmers' Woolen Mfg. Co. 15 Wend. 266 ; 
 Mead v. Keeler, 24 Barb. 20 ; Conn. Mut. L. Ins. Co. v. Cleveland, <fec. R. R. Co. 41 
 Barb. 9 ; Mechanics' Ass'n v. White Lead Co. 35 N. Y. 506 ; Barry v. Merchants' Exch. 
 Co. 1 Sandf. Ch. 280 ; Munn v. Commission Co. 16 Johns. 44; Lucas v. Pitney, 27 N. 
 J. Law, 221 ; Richmond, cfcc. R. R. Co. v. Snead, 19 Gratt. 354 ; Strauss v. Eagle Ins. 
 Co. 5 Ohio St. 59 ; Oxford Iron Co. «. Spradly, 46 Ala. 98 ; Smith v. Eureka Flour 
 Mills, 6 Cal. 1 ; Union Bank v. Jacobs 6 Humph. 515. But the power to issue notes 
 cannot be so extended as to give banking powers. Att.-Gen. v. Ins. Co. 9 Paige, 470. 
 See, also, Safford v. Wyckoff, 4 Hill, 442 ; People v. Utica Ins. Co. 16 Johns. 368. An 
 insurance company cannot issue bonds in order to lend its credit. Ala. L. Ins. Co. n. 
 Smith, 4 Ala. (N. S.) 668. Similarly, a corporation may, without express authority, 
 make a bill or draft or accept a draft for the purpose of carrying on its legitimate 
 business. Story on Bills of Exchange, § 79 ; Munn v. Commission Co. 15 Johns. 
 44 ; Mott V. Hicks, 1 Cow. 513 ; Partridge tr. Badger, 25 Barb. 146 ; Olcott v. Tioga, 
 &c. R. R. Co. 40 Barb. 179 ; 27 N. Y. 546 ; Mechanics, <fec. Bank v. White Lead Co. 
 35 N. Y. 506 ; Ketchum v. Buffalo, 14 N. Y. 35fi ; Barnes v. Ontario Bank, 19 N. Y. 
 152; Rockwell v. Elkhorn Bank, 13 Wis. 653; Hardy v. Merriweather, 14 Ind. 
 203. 
 
POWER AS TO NEGOTIABLE INSTRUMENTS. 255 
 
 implication, invested companies with such a power ; but, upon ap- 
 peal. Cairns, L. J ., overruled this opinion.^ 
 
 II. This power may arise lyy implication from the nature of a 
 particular business or enterprise. 
 
 " Corporate bodies may issue promissory notes and bills of ex- 
 change where the nature and character of their business warrants 
 it. Here the nature and character of the business is such that the 
 issuing negotiable instruments would be an ordinary and almost 
 necessary incident to it." ' 
 
 The mere fact that a corporation trades or otherwise engages 
 in business, even in the most pronounced form of " trade," is not 
 sufficient to enable it to issue negotiable instruments. Conse- 
 quently such a power has been denied to water-work companies,* 
 to mining companies,^ to railway companies,' to cemetery com- 
 panies,^ to gas companies,' to a salt and alkali company,' to a sal- 
 vage company,' to a washing company,^" to a highway board." 
 
 But in one English case the power was allowed to a colliery 
 
 company." {a) 
 
 ♦ 
 
 ' Peruvian Ry. Co. v. Thames aEd 21 L. J. (Ex.) 43. See Barrett's Case, 4 
 
 Mersey Marine Ins. Co. L. R. 2 Ch. 617. De 6. J. <fe S. 758. 
 
 " JPer Paee Wood, L. J., Me General ' Bateman v. Mid-Wales Ry. Co. L. R. 
 
 Estate Co. (JEx parte City Bank), L. R. 3 1 C. P. 499. Compare Peruvian Ry. Co. 
 
 Ch. 758, 761. Compare ife Land Credit ». Thames <St Mersey Marine Ins. Co. L. R. 
 
 Co. of Ireland (Bx parte Overend, Gurney 2 Ch. 617. 
 
 <fc Co.) L. R. 4 Ch. 460, which was the ^ Steele v. Harmer, 14 M. <fc W. 831 ; 
 
 case of a finance company; and He Mose- 4 Ex. 1. 
 
 ley Green, <feo. Coal Co. 4 De G. J. <fe S. ' Bramah ». Roberts, 3 Bing. N. C. 
 
 766, where a promissory note was held 963. 
 
 " duly and validly given " by a colliery * Bult v. Morell, 12 Ad. & E. 745. 
 
 company. ' Thompson v. Universal Salvage Co. 
 
 ' Bronghton v. Manchester W'works 1 Ex. 694; 18 L.J. (Ex.) 242. 
 Co. 3 B. <fe A. 1 ; followed in East London '» Neale v. Turton, 4 Bing. 149. 
 W'worts Co. a. Bailey, 4 Bing. 283. " Per Kelly, C. B., Mill v. Hawker, L. 
 
 * Dickinson v. Valpy, 10 B. & C, 128. R. 9 Ex. 822-4. 
 Compare Burmester v. Norris, 6 Ex. 796; " Barrett's Case, 4 De G. J. & S. 758. 
 
 (a) The right to make prdmissory notes belongs to mining companies. Moss v. 
 Averell, 10 N. Y. 457 ; railway companies, Olcott v. Tioga R. R. Co. 27 N. Y. 546 ; 40 
 Barb. 179 ; Lucas v. Pitney, 27 N. J. Law, 221 ; Hamilton v. Newcastle R. R. 9 Ind. 
 359; insurance companies. Barker v. Mech. Fire Ins. Co. 3 Wend. 94; manufacturing 
 companies, Mott v. Hicks, 1 Cow. 613 ; Clarke v. Farmer's Woolen Mfg. Co. 16 Wend. 
 256 ; Smith v. Eureka Flour Mills, 6 Cal. 1. 
 
 As to power of municipal corporations to make negotiable instruments, see 1 Dillon 
 on Mun. Corp. §§ 81-83, 404-406. 
 
256 FINANCIAL MATTERS. 
 
 III. This power may arise Try vrnplioation from the wide ca- 
 pacity of engaging in business generally given to a corpo- 
 ration hy its constating iustruments?- 
 
 ly. The power may arise hy implication from the wide lan- 
 guage used in the private constating instruments as to the 
 means of carrying out the corporate business? 
 
 Y. Corporations of all descriptions may draw checks. 
 
 As to tlie accuracy of this statement, there seems no doubt. 
 This power has never been contested in any of the questions as to 
 the liability of corporations upon negotiable instruments, or even 
 upon checks,' while it is admitted in every case as to the banking 
 accounts of corporations.^ 
 
 YI. Go-extensive with the capacity to create, is the capacity to 
 indorse, negotiable paper, {a) 
 
 This power is not strictly co extensive with the former. In 
 one sense it is wider than it. It is quite clear that a corporation, 
 like an infant, yithout power to make, may indorse a negotiable 
 instrument, so as to pass the interest therein to the indorsee. 
 This will most often occur in cases where a corporation has 
 received payment by means of a negotiable instrument. Such 
 payment may be validly made, certainly under special circum- 
 stanees, and probably under aU circumstances, by instruments 
 requiring indorsement. * 
 
 VII. A corporation may not become security for the nego- 
 tiable paper of others, without an express power to 
 do so.{b) 
 
 The corporate seal is not unseldom affixed to notes and bills 
 
 ' Re General Estate Co. {M parte City man v. Mid-Wales Ry. Co. L. R. 1 C. P. 
 Bank), L. R. 3 Ch. 758 ; Stark v. High- 499. 
 gate Archway Co. 6 Taunt. 792. ' See Serrell </. Derbyshire, <fec. Ry. 
 
 « PeruTian Ry. Co. v. Thames <fe Mer- Co. 10 C. B. 910 ; 19 L. J. (C. P.) 371. 
 sey Ins. Co. L. R. 2 Ch. 617, 624; Bate- * See Waterlow v. Sharp, L. R. 8 Eq. 
 
 601. 
 
 (a) A corporation may, as a rule, as an incident to its business, receive notes and 
 bills ; and what It can receive, it can transfer. Mclntire v. Preston, 10 111. 48 ; 
 Lucas V. Pitney, 27 N. J. Law, 221 ; Hardy v. Merriweather, 14 Ind. 20S ; Frye «. 
 Tucker, 24 lU. 180; Buckley v. Briggs, 30 Mo. 462. 
 
 (6) See ante, p. 262. 
 
NATURE OF NEGOTIABLE BONDS. 257 
 
 issued by corporations ; ^ but it would seem tliat the seal in such 
 case is simply inoperative, not interfering with the negotiability 
 of the instrument, if otherwise valid, and not converting into a 
 deed a document purporting to be negotiable, but which the cor- 
 poration had no power to make.' 
 
 It has not yet been distinctly decided, but it follows as a 
 natural consequence, that the power to issue negotiable deben- 
 tures belongs, not to all corporations, nor even to those authorized 
 to borrow by means of ■ debentures.* At the most it can only 
 exist where there is authority to issue ordinary negotiable 
 instruments. But it does not follow that the latter power will 
 imply the other. Negotiable bonds are given for very different 
 purposes from ordinary negotiable instruments, and it is only 
 when those purposes exist that the power to create these bonds 
 can be implied. 
 
 In connection with this point, the Mortgage Debenture Acts 
 of 1865 and 1870 (28 & 29 Yict. c. 78, and 33 & 34 Yict. c. 20), 
 should be noticed. They authorize corporations, whether gov- 
 erned by the Companies Acts or incorporated by special statutes, 
 whose objects are the advancing of money upon real securities 
 and other analogous purposes, to issue transferable mortgage de- 
 bentures, provided their capital be not less than £100,000, in 
 shares of not less than £50 nominal value. 
 
 Section VI. — ^Nature oe Negotiable Bonds. 
 
 The Effect of these Instruments in Chancery. — The claim of 
 the New Zealand Banking Co. {Be Blakely Ordnance Co.),* arose 
 thus : Blakely and Dent agreed, in writing, with the promoter of 
 a pi'oposed company, viz., the Blakely Ordnance Company, to sell 
 their business to the company when formed, part of the purchase- 
 money to be paid in debentures of the company, payable to bearer. 
 The articles of association adopted this agreement, and directed 
 
 ' See Bateman v. Mid- Wales Ey. Co. hams v. Anglo-Australian Ass. Assoc. 8 
 
 L. R. 1 C. P. 499. Giff. 238, where a deposit note, and Re 
 
 ' See Aggs v. Nicholson. 1 H. & N. Agra and Masterman's Bank, (Ex parte 
 
 166; 26 L. J. (Ex.) 348; Halford «. Cam- Asiatic Banking Corp.) L. R. 2 Ch. 391, 
 
 eron'a Coalbrook, <feo. Ry. Co. 16 Q. B. where a letter of credit wag held assiga- 
 
 442. able free from the equities. See, also. Re 
 
 ' See per Rolt, L. J. In re Blakely Blakely Ordnance Co. (Ex parte Metro- 
 Ordnance Co. L. R. 3 Ch. 154, 158. politan and Provincial Bank), W. N. 1869, 
 
 ■* L. R. 8 Ch. 164. Compare Wood- p. 148. 
 
 17 
 
258 FINANCIAL MATTEES. 
 
 it to be carried into effect. The directors accordingly gave to 
 Blakely and Dent debentures under the seal of the company, by 
 each of -which the company covenanted to pay the sum therein 
 mentioned to " Blakely and Dent, their executors, administrators, 
 and assigns, or to the bearer hereof." Some of these debentures 
 were passed by delivery to the New Zealand Banking Corpora- 
 tion, who were bona fide holders for value. In the winding up of 
 the Blakely Ordnance Company, the Lords Justices decided, that 
 as these debentures were conformable to the agreement between 
 Blakely and Dent and the promoter, which had been made bind- 
 ing on the company, effect must be given to them in equity, 
 according to their tenor, and that, consequently, the New Zealand 
 Banking Corporation could prove on them in their own name, 
 without being subject to any equities existing between the com- 
 pany and Blakely and Dent, the original grantees thereof. The 
 ground of the decision was that the Blakely Company had con- 
 tracted themselves out of their right to set up the equities. " The 
 right to this money was assignable in equity ; and though, in the 
 absence of anything more than a mere assignment, the assignee 
 would take subject to the equities existing between the original 
 parties to the contract, I am of opinion that there is nothing in- 
 equitable in allowing the debtor in an obligation to contract with 
 his creditor, that he will not avail himself of any such equities, 
 that he wiU pay the amount due on the obligation to the assignee 
 of the creditor (whether he be such assignee by instrument in writ- 
 ing or by mere delivery of the obligation), without regard to any 
 such equities ; and I have already said that, in my opinion, in this 
 case the Blakely Company have so contracted. The debt to be 
 proved is the money due on this contract, and not the amount due 
 on an instrument purporting to be a promissory note. The laws 
 which regulate the stamps to be affixed to promissory notes are 
 not, in my opinion, applicable to the case, and it would, I think, 
 be inequitable to deny the assignee of the creditor the full benefit 
 of the contract entered into between the original contracting par- 
 ties. In lie Agra and Masterman's Bank {Expa/rte Asiatic Bank- 
 ing Corp.),* it was held that the rule which makes assignments of 
 choses-in-action subject to the equities existing between the orig. 
 inal parties to the contract, must yield when a contrary intention 
 appears from the nature or terms of the contract. I adopt that 
 
 ' L. R. 2Ch.391. 
 
NATURE OF NEGOTIA.BLE BONDS. 259 
 
 decision. I think it applicable, as above explained, to the facts of 
 this case." ' 
 
 The accuracy of this decision was recognized and followed by 
 Page-Wood and Selwyn, L. JJ., in Re General Estates Co. {Ex 
 parte City Bank),' where the directors of the General Estates Com- 
 pany had given to H., for value, an instrument under the seal of 
 the company, headed " debenture," and stamped as a deed, by 
 which the company "undertake to pay to the order of J. H., on 
 1st July, 1867," £1,000, with interest half-yearly on presentation 
 of the annexed interest warrants. The Lords Justices, reversing 
 the decision of the Master of the Kolls, allowed the indorsee and 
 transferee for value of this instrument, to prove on it against the 
 company, free from equities between H. and the company. 
 
 The latest case in Chancery on the subject is that of lie Im- 
 perial Land Co. of Marseilles {Ex parte, Colborne and Straw- 
 bridge).' Here the directors of a company, having power by its 
 memorandum of association, to borrow money and to issue trans- 
 ferable or other bonds, mortgages or debentures, had, under its 
 articles of association, large powers for issuing " debentures, bonds, 
 obligations or other securities, either specifically charged on any 
 property of the company, or not so charged, in any form or man- 
 ner, or for any amount," not exceeding the nominal capital of the 
 company, and a specific power to issue and indorse negotiable in- 
 struments. The company issued in payment to vendors of land 
 to them, instruments described on their face as " debenture bonds," 
 and stamped as bonds, and which expressed that the company 
 "bind themselves and their successors to pay the bearer the prin- 
 cipal sum of £20." The words with respect to interest were in 
 a similar form, and there was no charge on any of the property of 
 the company. The instruments were sold in open market. The 
 company came to be wound up, and it was decided, it being 
 admitted that the company had equities against the parties to 
 whom the instruments were originally issued : 1. That the instru- 
 ments were promissory notes, or, if not promissory notes, nego- 
 tiable instruments, and amounted to contracts to pay any one who 
 might happen to be the bearer; 2. That, consequently, holders 
 
 ' Per Lord Justice Eolt, L. R. 3 Ch. General Gas Co. (Lishman's Claim), 23 L. 
 159, 160. T. (N. S.) 40. See Mso Brunton's Claim, 
 
 « L. R. 3 Ch. T58. L. R. 19 Eq. 302. 
 
 3 L. R. 11 Eq. 478; Re Colonial and 
 
260 FINANCIAL MATTEES. 
 
 for value, without notice of the equities, were entitled to prove 
 for the amount due, free from equities ; 3. That the right to 
 prove was not affected by the fact that holders had purchased, 
 after the passing of resolutions to wind up the company, though 
 without notice of their having been passed. All the prior author- 
 ities were referred to and commented upon, and Malins, Y.-C, in 
 the course of a very careful judgment, said : " I am clearly of 
 opinion that, whether they [*. e., the instruments in question] 
 were promissory notes, or bonds, or debentures, it was within the 
 powers conferred upon the directors, by the clauses I have read 
 from the memorandum and articles of association, to issue them. 
 Are they then promissory notes or debentures, or does it make 
 any difference which they are in the result ? My opinion is that, 
 whichever they are, the result is the same, because they, in any 
 case, make a contract by which the company have bound them- 
 selves to pay, not to any particular person, but to any person who 
 may be the bearer, the sum appearing to be due upon their face." 
 
 On the other hand there is the well known decision of Lord 
 Cairns, when Lord Chancellor,, in lie Natal Investment Co. 
 (Claim of the Financial Corp.),^ to the effect that debentures pay- 
 able to " C, or to his executors, administrators, or transferees, or to 
 the holder, for the time being," were taken subject to equities. 
 Lord Cairns, after commenting upon the form of the document, 
 and the circumstances under which it was issued, said : " There is 
 nothing, therefore, here in any engagement antecedent to the de- 
 benture, nothing in the surrounding circumstances of the "case, and 
 nothing in the construction of the debenture itself, to show that 
 the Natal Company intended to forego or to renounce the, ordi- 
 nary rule, that the assignee of a chose-in-action must take subject 
 to the equities between the original parties." 
 
 This construction is, however, in flat opposition to that placed 
 by the Lords Justices Eolt, Page-Wood, and Selwyn, by the 
 Court of Exchequer, and by Malins, V.-C, upon exactly simUar 
 instruments, they laying down, as has been already seen, that even 
 if such instruments are not promissory notes, the companies 
 making them have debarred themselves, either by the contract 
 entered into by them with the first holder, or by their holding 
 out to the world, from subsequently setting up the equities 
 
 ' L. E. 8 Ch. 365, 366, followed in Re Rhoa Hall Iron Co. (^x joaWe Birmingham 
 
 Bank), 17 W. R. 343 ; W. N. 1868, 223. 
 
NATURE OF NEGOTIABLE BONDS. 261 
 
 ■which have existed between them and the first holders of these 
 instruments. 
 
 The Effect of these Instruments at Law. — In the Blakely Com- 
 pany's Case, Lord Justice Eolt expressed some doubts whether 
 the debentures there sued upon would have been valid at law. 
 This point has since been settled, to some extent at least, by the 
 Court of Exchequer, in Higgs v. Northern Assam Tea Co. Lim- 
 ited.^ There the plaintiff had sold an estate to the defendants, 
 receiving, in part payment, debentures payable with interest to 
 him, " his executors, administrators, and assigns." Some of these 
 the plaintiff transferred to C. and S., and the defendants, in vari- 
 ous ways, recognized C. and S. as proprietors of the same, ^e 
 plaintiff became indebted to the defendants for unpaid calls upon 
 shares held by him in the company, and, by the articles of associa- 
 tion, the defendants had a primary lien on the debentures of any 
 member of the company who might be absolutely or contingently 
 liable to the company in any amount or any accoimt whatever. 
 Some of the debentures assigned to C. and S. having become due, 
 upon action brought by C. and S., in the name of the plaintiff, to 
 recover the amounts so due, it was held that " the defendants and 
 Higgs contemplated and intended that Higgs should assign these 
 debentures ; that he could not practically do so if subject to such 
 equities as these now set up ; that, consequently, Higgs and the 
 defendants contemplated and intended that Higgs should assign 
 free from those equities, and that the defendants have dealt with 
 Messrs. C. and S. on that footing. Holding this, and guiding 
 ourselves, as best we can, by the cases cited, we think the plaintiff 
 entitled to our judgment." 
 
 This, however, must not be considered a decision to the effect 
 that such documents are negotiable at law, but only that the 
 parties thereto, having entered into the contracts thereby ex- 
 pressed, will, under certain circumstances, be bound by such con- 
 tracts, into whosesoever hands the documents may come, as has 
 been laid down in a subsequent case : ** "If Mackin \i. e., the 
 original payee] were suing in his own name for the benefit of an 
 assignee, as in Higgs v. Assam Tea Co. ; or if the assignee were 
 proceeding in equity in his own name, as in Be Blakely Ordnance 
 Co. ; and the defendants set up some equitable defense, good as 
 against the original contractee, and, therefore, generally good 
 
 ' L. R. 4 Ex. SST, 396. " L. E. 8 Q. B. 386. 
 
262 FINANCIAL MATTERS. 
 
 against the assignee also, it would be a good answer to say that 
 the defendants had, with a view to induce persons to become 
 assignees of such instruments, represented that there were no 
 such equities, and that the now holder was induced to take this 
 instrument on the faith of that representation." 
 
 The case, Crouch v. Credit Foncier of England,^ from the 
 judgment in which the above extract is taken, would seem, taken 
 by itself and admitting the dicta therein expressed, to be conclu- 
 sive against the negotiability, at common law, of these instru- 
 ments. The circumstances were as follows : In May, 1869, the 
 defendants, a limited company registered under the Act of 1862, 
 &<M to M. a document under the seal of the company, and signed 
 by two directors and the secretary. It was numbered and headed 
 with the name of the company, and called " Debenture," and 
 proceeded : The company hereby promise, subject- to the condi- 
 tions indorsed on this debenture, to pay to the bearer £100 on 
 the Ist of May, 1872, or upon any earlier day upon which this 
 bond shall be entitled to be paid off according to the conditions, 
 and interest, at 8 per cent., on the first of Ifovember and the 1st 
 of May in each year ; and, also, a further sum of £10 by way of 
 interest or bonus at the same time as the principal sum is paid 
 off. In witness whereof, the common seal of the company has 
 been aiiixed this 9th of May, 1869." By the conditions in- 
 dorsed, a certain number of the bonds were to be drawn for 
 twenty-one days before the days for the payment of the half- 
 yearly interest, and any bond drawn was to be advertised and 
 paid off with the interest and bonus due, the bond being given 
 up and no further interest being payable. In July, 1869, the 
 bond was stolen from M. In October, 187J , the number of the 
 bond was drawn. At the end of 1871 the plaintiff purchased the 
 debenture from S., who afterwards absconded. The defendants, 
 having notice of the robbery, refused to pay the debenture to the 
 plaintiff, and he brought an action in his own name, alleging that 
 he was lawful bearer of the debenture. At the trial it was 
 admitted that similar documents had been treated as negotiable ; 
 it was also admitted that the plaintiff derived title from the thief, 
 but the jury found that the plaintiff had given value for the 
 debenture without notice. The Court of Queen's Bench were 
 
 ' L. R. 8 Q. B. 3Y4. See this decision questioned, post, 263, 264. 
 
NATURE OF NEGOTIABLE BONDS. 263 
 
 unanimous, first, that the contract contained in the conditions 
 prevented the debenture from being a promissory note, even if it 
 had been under hand only ; secondly, that it was not competent 
 to the defendants to attach the incident of negotiability to such 
 instruments, contrary to the general law ; and that the custom 
 to treat them as negotiable, being of recent origin, and not the 
 law merchant, made no difference, as such a custom, though gen- 
 eral, could not attach an incident to a contract contrary to the 
 general law. And they held, therefore, that the plaintiff could 
 not recover. 
 
 But there is a still more recent decision by the Exchequer 
 Chamber, Goodwin v. Eobarts,^ which, both from the actual de- 
 cision therein, and also from the principles laid down, throws 
 great doubt upon the above case. It was there decided that 
 scrip ^ issued in England by the agent of a foreign government, 
 by which the holder is to be entitled, on payment in full of the 
 installments due from him, to delivery by the agent of definitive 
 bonds of the foreign government on their arrival in this country, 
 and which, by the usage of bankers and dealers in public securi- 
 ties, is transferred by mere delivery, passes by such delivery to a 
 bona fide holder for value without title. With regard to the de- 
 cision in Crouch's Case, the Court observed : " It was there held, 
 by three judges of the Court of Queen's Bench, that the plaintiff 
 could not recover : first, because, even assuming that a promise to 
 pay under seal could be considered a promissory note, here the 
 conditions annexed to the promise took away that character from 
 the instrument. No evidence had been offered at the trial as to 
 whether these or similar documents were in practice treated as ne- 
 gotiable, nor was any express admission made as to the point ; but 
 it was assumed from the report of the learned judge before whom 
 "the cause was tried, that this had been tacitly admitted. But it 
 was said that these instruments, having been only of recent intro- 
 duction, it followed that such custom, to whatever extent it had 
 gone, must also have been quite recent. Under these circum- 
 stances, the court held that, while it was incompetent to the de- 
 
 ' L. B. 10 Ex. 337. pounds stock; and on payment of the re- 
 ' The scrip in question was thus maining installments at the periods spe- 
 -worded, " Scrip for one hundred pounds cified, the bearer will be entitled to re- 
 stock, No. . Received the sum of ceive a deflnitire bond or bonds for one 
 twenty pounds, being the first installment hundred pounds, after receipt thereof 
 of twenty per cent, upon one hundred from the imperial government." 
 
264 FINANCIAL MATTERS. 
 
 f endants, as an individual company, to give to that which was not 
 a negotiable instrument at law the character of negotiability by 
 making it payable to bearer, the custom could not have that effect, 
 because being recent, it formed no part of the ancient law mer- 
 chant. For the reasons we have already given, we cannot concur 
 in thinking the latter ground conclusive. While we quite agree 
 that the greater or less time during which a custom has existed, 
 may be material in determining how far it has generally prevailed, 
 we cannot think that, if' a usage is once shown to be universal, it 
 is the less entitled to prevail because it may not have formed part 
 of the law merchant as previously recognized and adopted by the 
 courts. It is obvious that such reasoning would have been fatal 
 to the negotiability of foreign bonds, which are of comparatively 
 modem origin, and yet, according to Gorgier v. Mieville,* are to 
 be treated as negotiable. We think the judgment in Crouch v. 
 The Credit Foncier,' may well be supported on the ground that 
 in that case there was substantially no proof whatever of general 
 usage. We cannot concur in thinking that if proof of general 
 usage had been established, it would have been a sufficient ground 
 for refusing to give ejffect to it that it did not form part of what 
 is called ' the ancient law merchant.' " 
 
 The Exact Impoi't of Instruments of this Descrvption. — It follows 
 that the great preponderance of authority in chancery generally and 
 at common law, with certain qualifications, is in favor of the opinion 
 that, when these documents are payable to the " holder," " bearer," 
 or " transferee," the company is compellable to pay them, free 
 from the equities primarily attaching to them. But this is not 
 sufficient to determine the exact nature of them. Corporations 
 and private individuals may be liable to discharge to any possessor 
 of a document the debt of which such document is good, and per- 
 haps conclusive, evidence ; but if the liability be based simply and 
 solely upon the contract entered into by the maker of such docu- 
 ment, or upon the ground that the said maker is estopped by his 
 deed or his admission in pais, the complete negotiability of such 
 document is by no means established ; in fact, it is by implication ■ 
 denied. Now, in considering this point, we have to bear in mind 
 that by the strict rules of law, a corporation could bind itself by 
 no engagement to which the corporate seal had not been duly 
 
 I S B. A C. 4B. ' L. R. 8 Q. B. 374. 
 
NATURE OP NEGOTIABLE BONDS. 265 
 
 affixed ; and, consequently, the real question to be determined is, 
 not why in each particular instance has the seal been affixed, but 
 what is the effect of language prima faoie importing negotiability, 
 appearing in instruments under the seal of corporations. To this 
 question one of three answers must be returned. 
 
 Either, first, the document is a deed, nothing more, and the 
 words " to order " or "bearer," or the like, must either be struck 
 out as inconsistent with its general tenor, or be read as Lord 
 Cairns read them in the Natal Investment Oo.'s Case : ^ " We 
 [*. e., the corporation] undertake that we will fulfill this contract, 
 either to yourself personally, or to your executors, or to your ad- 
 ministrators, or to your assigns, by deed, or to any person whom 
 you may make the holder of this debenture, even without a deed ; 
 but what we undertake to fulfill, whether to you or to any other 
 of these parties, is the contract, and nothing but the contract, 
 which we have made with you ; * and if, in our dealings with you, 
 there is anything that might affect that contract, the person who 
 takes the contract by assignment must take subject to the equity 
 between us." 
 
 This, however, it is submitted,- is a very strained construction 
 of language otherwise clear and unambiguous, and it is impossible 
 to reconcile it with the interpretation put in later cases upon ex- 
 pressions almost identical. 
 
 Or, secondly, the document is negotiable as regards the corpo- 
 ration, but not as regards any other party. It is the acknowledg- 
 ment of a debt owing, the evidence of a contract entered into, by 
 the corporation, having the seal affixed as a necessary formality, 
 and binding the corporation to fulfill such contract modo et forma, 
 that is, to pay the sum of money thereby stated to be due, to any 
 person who may lawfully be entitled to the said document. It 
 will, therefore, bear a twofold character. As between the corpo- 
 ration and aU other parties it will be negotiable ; but, like every 
 other negotiable instrument, free from those equities onJ/y which 
 do not appear on the face of it. This latter qualification is most 
 important, but it has to a great extent been overlooked. What- 
 ever equities or trusts are attached to an ordinary bill or note in 
 its inception, or become attached to it in the course of its circula- 
 tion, e. g. by a restrictive indorsement, qualify and limit the nego- 
 
 ' L. E. 3 Oh. 355, 361. = Compare Chartered Bk. of India v. 
 
 Henderson, L. R. 6 P. C. 501. 
 
266 FINANCIAL MATTERS. 
 
 tiability of the instrument, which henceforth passes subject to 
 such equities or trusts. ' 
 
 Apply this principle to the cases now in question. First, a 
 corporation has certain powers only ; secondly, those powers are 
 those which are expressly given it by its constating instruments, 
 or which, by implication therefrom, it must possess for the due 
 and advantageous carrying on of its business ; thirdly, it incurs 
 no liability by engaging in transactions aliunde those for the 
 prosecution of which it has been created ; fourthly, persons deal- 
 ing with it directly or through its agents, .are bound to inform 
 themselves by an examination of its constating documents of 
 the purposes for which it exists, of the powers with which it 
 is endowed, and of the limitations, if any, placed upon the 
 exercise, in manner or degree, of such powers. These facts are 
 admitted, and they determine the liability ex contractu of every 
 corporation. 
 
 Take the IS'atal Investment Co.'s Case. The company agreed 
 to purchase of one A. Coqui, certain land in Natal, paying him 
 partly in cash, partly in debentures; and, in pursuance of this 
 agreement, they gave him debentures payable to himself, " or to 
 his executors, administrators or transferees, or to the holder for 
 the time being," and commencing thus : " "Whereas, the ]!l^"atal In- 
 vestment Company, Limited, hereinafter designated the company, 
 is indebted to A. Coqui in the sum of £500 ; now these presents 
 witness, that in consideration of the premises the company hereby 
 declares that the funds, assets, and property of the company, shall 
 be subject, &e." These bonds were issued not in an absolute and 
 unqualified manner, or as binding the company to pay at all events, 
 but " in consideration of the premises ; " that is, in consideration 
 of the due performance of the contract so entered into, the com- 
 pletion of which, therefore, became an equity attaching to the de- 
 bentures and, being apparent on the face of them, affecting every 
 one into whose hands they came with notice thereof. Coqui, 
 however, whoUy failed to carry out his contract, having no title to 
 the land he had agreed to sell. Consequently the company was 
 not indebted to him, and the bonds given to him in consideration 
 of such indebtedness became null and void, whether as bonds or 
 as negotiable instruments, and whether in his hands or in those of 
 any other party. The Natal Company had power to issue negoti- 
 
NATURE OF NEGOTIABLE BONDS. 267 
 
 able bonds, in payment or otherwise in fulfillment of contracts en- 
 tered into in the ordinary course of their business, but not for any 
 other purpose ; and persons taking such bonds were simply placed 
 in the usual position of persons dealing with the company ; that 
 is, were bound to inform themselves of the extent of the powers 
 possessed by the company, and of the restrictions placed upon 
 these powers. Whether, however, the word " premises " in the 
 above bond can be read as meaning the contract made between the 
 company and Coquij is at least doubtful ; and, perhaps, the only 
 conclusion to be come to, is that the Natal Company's Case is 
 irreconcilable with other authorities. 
 
 Or, thirdly, the document is fully negotiable. This seems to 
 be not only the only logical conclusion at which, in a majority of 
 cases, a reasoner can arrive, but also, since Goodwin v. Eobarts,^ 
 the only conclusion allowed by the authorities. The fact that the 
 seal was affixed is of slight importance. It denotes that the cor- 
 poration has duly executed the instrument, nothing more, not con- 
 verting it into a deed, nor rendering necessary that a transfer 
 should be under seal. It is, in a word, a negotiable instrument, 
 pure and simple, belonging to the class of simple contracts, and 
 attested by the corporate seal as a formality solely. Accordingly 
 in the two latest and most considered decisions on the subject, He 
 General Estates Co. {Ex pa/rte City Bank),' and JRe Imperial Land 
 Co. of Marseilles (.£03 parte Colborne and Strawbridge),' instru- 
 ments, in the former case styled " debenture," and made payable 
 " to the order of " J. C. H.., and in the latter " debenture bond," 
 and payable " to the bearer," both expressed to be given under the 
 common seal, and bearing each a deed stamp, have been so held, 
 and persons taking them by the customary parol transfer were al- 
 lowed to prove in the winding up for the full amount of their 
 claims. 
 
 Lastly, there is the very wide provision contained in the-llth 
 clause of the 25th section of the Supreme Court of Judicature Act, 
 that " generally in all matters not hereinbefore particularly men- 
 tioned, in which there is any conflict or variance between the 
 rules of equity and the rules of common law with reference to the 
 same matter, the rules of equity shall prevail." This enactment, 
 read in connection with the rules relating to equitable rights con- 
 
 1 L. R. 10 Ex. SSI : ante, p. 263. 3 L. R. 11 Eq. i18. 
 
 ^ L. R. 3 Ch. 15S. 
 
268 FINANCIAL MATTERS. 
 
 tained in the section imraediatelj preceding, must, it is conceived, 
 render most mortgage debentures purporting to be transferable, 
 whether by indorsement or simple delivery, to be really and fully 
 negotiable. The decisions, and therefore the rules in Chancery, with 
 the solitary exception of the Natal Company's Case, are uniform, 
 that such documents are assignable, either absolutely so, like ordi- 
 nary bills and notes, or if restricted at all, subject only to the equities, 
 that is to say, the conditions appearing on the same. These de- 
 cisions and rules, in future, are to prevail at law ; consequently 
 mortgage debentures must, under ordinary circumstances and if 
 in the ordinary language, in future be negotiable at law as in 
 equity,(a) 
 
 (a) The interesting discusBion contained in the text in the preceding section is 
 without practical importance in this country, in view of the rule, now well estab- 
 lished, that obligations providing for the payment of money, made by States, munic- 
 ipal and private corporations, and intended to pass by delivery, although under 
 seal, have the properties of negotiable instruments, and when transferred before ma- 
 turity to bona fide purchasers have the usual Jiharacteristics of commercial paper. 
 The reason for the rule does not seem to be based upon their being made payable to 
 bearer or being issued ia blank, except so far as such language or such mode of ut- 
 tering them may be taken as evidence of the intention of the maker to impress upon 
 them the qualities of negotiable commercial instruments. The decisions of the 
 courts are based as well upon the intentions of the parties, as upon the necessities of 
 trade. See Myers v. York <fe Cumberland E. R. Co. 43 Me. 232. Mr. Justice Grier, 
 in Mercer Co. v. Hacket, 1 Wall. 96, holds the following language : " This species oT 
 bonds is a modern invention, intended to pass by manual delivery, and to have the 
 qualities of negotiable paper, and their value depends mainly upon this character. 
 Being issued by States and corporations, they are necessarily under seaL^ But there 
 is nothing immoral or contrary to good policy in making them negotiable, if the ne- 
 cessities of commerce require that they should be so. A mere technical dogma of the 
 courts or the common law, cannot prohibit the commercial world from inventing or 
 using any species of security not known in the last century. Usages of trade and 
 commerce are acknowledged by the courts as part of the common law, although they 
 may have been unknown to Bracton or Blackstone. And this malleability to suit 
 the necessities and usages of the mercantile and commercial world, is one of the most 
 valuable characteristics of the common law. When a corporation covenants to pay 
 to bearer, and gives a bond with negotiable qualities, and by this means obtains 
 funds for the accomplishment of the useful enterprises of the day, it cannot be al- 
 lowed to evade the payment by parading some obsolete judicial decision that a bond, 
 for some technical reason, cannot be made payable to bearer. That these securities 
 are treated as negotiable by the commercial usages of the whole civilized world, and 
 have received the sanctions of judicial recognition, not only in this court, but of 
 nearly every State in the Union, is well known and admitted." In the case of Mor- 
 ris Canal & Banking Co. -o. Fisher, 9 N. J. Eq. 699, decided in 1855, the Court of Ap- 
 peals say: "That under ordinary circumstances, the property of bank notes and of 
 
NATURE OF NEGOTIABLE BONDS. 269 
 
 bills and promissory notes, payable on their face, or by a blank indorsement, to a 
 bearer, follows the possession, has long been settled. By analogy to this class to cases 
 the exigencies of business have, from time to time, introduced other securities into 
 the same catagory. The Court of King's Bench, seems to have hesitated to recognize 
 India bonds as belonging to it. Glyn <;. Baker, 13 East, 509. But parliament im- 
 mediately interfered and declared them negotiable instruments. Exchequer bills 
 were so regarded in "Wookey v. Pole, 4 B. ife Ad. 1. In the case of Gorgier v. Mie- 
 viUe, 3 B. <& C. 45, bonds of the King of Prussia, which were shown, to be ordinarily 
 passed from hand to hand by delivery, and so designed, were held to be like money 
 or bills so as to give a bona fide possessor the legal title. And in the case of Lang 
 V. Smith, 1 Bing. 284, the same principle was applied to the case of instruments is- 
 sued by the government of Naples, although in that case they were held not to be 
 negotiable because it was found that they did not usually circulate without a certifi- 
 cate, which did not accompany them. The manner in which these bonds are en- 
 graved, with coupons making the interest payable half-yearly to the bearer of them, 
 and all the evidence before us, conspire to show that the company which issued them, 
 and which now disputes the title of the holder, on the ground that they put them 
 into the hands of the seller for a special purpose, which did not authorize him to dis- 
 pose of them as he did, really intended them to circulate, as in fact they do. This 
 design is indeed quite as apparent as if it was engraved on their face in express 
 words. The objection now made, that the legal character of the instrument adopted 
 is such as to frustrate this design, certainly comes with a bad grace from the party 
 which put them in circulation. -Even as between third parties, we suppose the com- 
 mon usage to transfer them by delivery, without inquii-y as to the title of the trans- 
 ferrer, would justify us in holding these securities to differ from common obligations, 
 in being so far negotiable that the bona fide possessor shall be held to have a good 
 title. But the case is still stronger against the party which made and issued them, 
 with full knowledge of the prevailing usage and with the manifest design that they 
 should be so circulated. To permit such parties to dispute this result of the usage, 
 would be to permit them to take advantage of their own wrong. And besides, the 
 obvious interest of the companies is that these bonds should be salable free from all 
 questions of equity. They are generally issued for the express purpose of raising 
 money by their sale. To declare them subject to the equities existing in the case of 
 ordinary bonds upon every transfer of them, would be to strike a blow at the credit 
 of the great mass of these securities now in the market, the consequences of which 
 it would be impossible to predict." 
 
 To the same effect are White v. Vermont R. R. Co. 21 How. 676 ; Moran v. Com'rs, 
 2 Black, 722 ; Gelpcke v. City of Dubuque, 1 Wall. 206 ; Meyer v. City of Muscatine, 
 1 Wall. 384; Murray v. Lardner, 2 Wall. 110; Thomson v. Lee Co. 3 Wall. 327 ; 
 Aurora City v. West, 7 Wall. 82; City v. Lamson, 9 Wall. 477 ; Smith v. Sac Co. II 
 Wall. 150; Pendleton Co. f. Amy, 13 Wall. 297; City of Lexington j). Butler, 14 
 Wall. 282; Kennicott v. Supervisors, 16 Wall. 452; St. Joseph v. Rogers, 16 Wall. 
 644 ; Clark v. Iowa City, 20 Wall. 583 ; Durant v. Iowa Co. 1 Woolw, 72 ; McCoy v. 
 Washington Co. 3 Wall. Jr. 381 ; MUler v. B. & W. R. R. Co. 40 Vt. 399 ; Chapin 
 V. Vt. <fe Mass. R. R. Co. 8 Gray, 577 ; Haven v. Grand Junction R. R. Co. 109 Mass. 
 88 ; Nat. Exch. Bank v. H. P. & F. R. R. Co. 8 R. I. 375 ; Soc. for Savings v. City 
 of N. London, 29 Conn. 174 ; State of III. v. Delafield, 8 Paige, 627 ; s. o. 2 HiU, 169 ; 
 Bank of Rome v. Village of Rome, 19 N. Y. 20 ; Brainerd v. N. Y. <fe Har. R. R. Co. 
 25 N. Y. 496 ; s. o. 10 Bosw. 332 ; Conn. Mut. Life Ins. Co. o. Cleveland, &c. B. R. 
 
270 rmANCiAL matters. 
 
 Co. 41 Barb. 9 ; Blake v. Livingston Co. 61 Barb. 149 ; Hubbard v. N. Y. & H. R. R. 
 Co. 36 Barb. 286 ; Morris Canal Co. „. Lewis, 12 N. J. Eq. 323 ; Winfield v. City of 
 Hudson, 28 N. J. Law, 265 ; Carr v. LefeTPe, 27 Penn. St. 418 ; Beaver Co. v. Arm- 
 strong, 44 Penn. St. 63 ; Bunting's Adm'rs v. Camden, <fec. E. R. Co. 81 Penn. St. 
 264 ; City of Elizabeth «. Force, 29 N. J. Eq. eSY ; Virginia o. Maryland, 32 Md. 
 647 ; Arents v. Com. 18 Gratt. 764 ; De Voss v. Richmond, 18 Gratt. 338 ; Langaton 
 „. S. C. R. R. Co. 2 S. C. 248 ; Craig v. City of Vicksburg, 31 Miss. 216; Maddox v. 
 Graham, 2 Mete- (Ky.) 66; N. Albany PI. R. Co. <;. Smith, 23 Ind. 363; Junction 
 R. R. Co. v. Cleneay, 13 Ind. 161 ; Johnson v. County, 24 111. 92 ; Clapp v. County 
 of Cedar, 6 Clarke (Iowa), 15 ; Clarke v. City of Janesville, 10 Wis. 136 ; Barrett v. 
 Schuyler Co. 44 Mo. 197; Smith «. Clarke Co. 54 Mo. 58 ; Jones on Raiboad Se- 
 curities, chap, vi, div. ii. 
 
 The case of Clark v. Woolen Mfg. Co. 15 Wend. 266, has been attempted to be 
 distinguished from the later cases on this point ; but if it is in conflict with them, it 
 must be considered as overruled, Mr. Justice Nelson, who delivered the opinion, 
 having since united with his associates in the Supreme Court of the United States in 
 rendering judgment in the eases heretofore cited, which hold the contrary doctrine. 
 
 In Diamond v. Lawrence Coimty, 37 Penn. St. 358, which was a case relating to 
 municipal bonds, as to which gross frauds were alleged, the Supreme Court of Penn- 
 sylvania, while admitting that the uniform current of authority is as stated in this 
 note, refuse to follow the rule thus established. An explanation of this case will be 
 found in note to Miller v. Race, 1 Smith's Leading Cases (7th Am. ed.) 819 ; see, also, 
 Phil, tfe Sunbury R. R. Co. v. Lewis, 33 Penn. St. 38; Com. v. Pittsburgh, 34 Penn. 
 St. 496 ; Carpenter v. Romm?ll, 5 Phil. 34. Isolated cases contra are also Clark v. 
 City of Janesville, 1 Biss. 98 ; Jackson v. Y. & G. R. R. Co. 48 Me. 151. 
 
 For a review of the decisions upon the Iowa municipal railway aid bonds, see 
 King V. Wilson, 1 Dill. 665. 
 
 The following propositions in reference to coupons or interest warrants may be 
 considered as established : 
 
 1. That coupons may be dissevered from the bonds and be sued upon as separate 
 instruments by the holder, although he be not the holder of the bonds. Com'rs of 
 Knox Co. V. Aspinwall, 21 How. 639 ; Thomson v. Lee Co. 3 Wall. 327; City of Ke- 
 nosha V. Lamson, 9 Wall. 477 ; Cromwell v. County of Sac, 4 Otto, 362 ; Spooner v. 
 Holmes, 102 Mass. 503 ; Miller v. Grand June. R. R. Co. 109 Mass. 88 ; National Exch. 
 Bank v. Hart., Prov. & Fish. R. R. Co. 8 R. I. 376 ; Evertsen v. Nat. Bk. of Newport, 4 
 Hun, 692 ; Beaver Co. -o. Armstrong, 44 Penn. St. 63 ; Virginia v. Maryland, 82 Md. 
 647; Arents v. Com. 18 Gratt. 767; San Antonio v. Lane, 32 Tex, 406; Johnson si. 
 County, 24 111. 76 ; but see Myers v. York &, Cumb. R. R. 43 Me. 232 ; Crosby v. 
 New London, ifec. R. R. Co. 26 Conn. 121 ; Rose v. City of Bridgeport, 17 Conn. 243. 
 
 2. That coupons thus dissevered have the like qualities of commercial paper as 
 the bonds to which they were attached. See cases ante. 
 
 3. That interest can be recovered on coupons as damages for non-payment. It is 
 held that this runs from the maturity of the coupon, in Gelpcke v. City of Dubuque, 
 1 Wall. 178, 206; Aurora City v. West, 7 Wall. 105; Cromwell v. County of Sac, 6 
 Otto, 61 ; HolUngsworth o. City of Detroit, 3 McLean, 472 ; Conn, Mut. L. Ins. Co. 
 V. Cleveland, &c. R. R. Co. 41 Barb. 9 ; Beaver Co. v. Armstrong, 44 Penn. St. 63 
 (see citation in next case) ; N. Penn. E. R. Co. v. Adams, 54 Penn. St. 94 ; Virginia 
 V. Maryland, 82 Md. 647; Langston v. S. C. R. R. Co. 2 9. C. 248; Jeffersonville v. 
 Patterson, 26 Ind. 16 ; Mills v. Jefferson, 20 Wis. 60. It is suggested in Aurora 
 
NATURE OF NEGOTIABLE BONDS. 271 
 
 CSty V. West, and Beaver Co. v. ArmstroDg, that there should be a demand and 
 refusal before suit for interest ; but it is said in N. Penn. B. E. po. v. Adams, and 
 LangstoD v. S. C. R. R. Co., that demand need not be proved or averred unless con- 
 tinued readiness to pay is pleaded by the corporation. It is held that interest runs 
 from demand and refusal, in "Whitaker v. H., P. <fe F. R. R. Co. 8 E. I. 47 ; Nat. Excb. 
 Bk. V. Same, Ibid. 375 ; Burroughs ». Richmond, 65 N. C. 234, though this last case 
 is somewhat obscure. San Antonio v. Lane, '32 Tex. 405, allows interest on coupons, 
 but does not indicate when it shall begin to run. In opposition to the other author- 
 ities, it is held, in Rose -o. City of Bridgeport, 17 Conn. 243, that no interest can be 
 recovered. 
 
 4. As to the statute of limitations applicable to coupons, the cases of City v. Lam- 
 son, 9 Wall. 477, and Lexington v. Butler, 14 Wall. 282, were understood to hold 
 " that a suit upon a coupon is not barred by the statute of limitations, unless the 
 lapse of time is sufficient to bar also a suit upon the bond," but these cases are ex- 
 plained in the later case of Clark v. Iowa City, 20 Wall. 583, and the Court there 
 says : " Most of the bonds of municipal bodies and private corporations in this coun- 
 try are issued in order to raise funds for works of large extent and cost, and their 
 payment is, therefore, made at distant periods, not unfrequently beyond a quarter of 
 a century. Coupons for the different installments of interest are usually attached to 
 these bonds, in the expectation that they wiU be paid as they mature, however dis- 
 tant the period fixed for the payment of the principal. These coupons, when severed 
 from the bonds, are negotiable and pass by delivery. They then cease to be inci- 
 dents of the bonds, and become in fact independent claims ; they do not lose their 
 validity, if for any cause the bonds are cancelled or paid before maturity ; nor their 
 negotiable character; nor their ability to support separate actions; and the amount 
 for which they are issued draws interest from its maturity. They, then, possess the 
 essential attributes of commercial paper, as has been held by this court in repeated 
 instances. Every consideration, therefore, which gives efficacy to the statute of lim- 
 itations, when applied to actions on the bonds after their maturity, equally requires 
 that similar limitations should be applied to actions upon the coupons after their ma- 
 turity. Coupons, when severed from the bonds to which they were originally at- 
 tached, are in legal effect equivalent to separate bonds for the different installments 
 of interest. The like action may be brought upon each of them, when they respect- 
 ively become due, as upon the bond itself, when the principal matures ; and to each 
 action, to that upon the bond and to each of those upon the coupons, the same limi- 
 tation must upon principle apply. All statutes of limitation begin to run when the 
 right of action is complete, and it would be exceptional and illogical to hold that the 
 statute sleeps with respect to claims upon detached coupons, while a complete right 
 of action upon such claims exists in the holder." The court, therefore, holds that 
 the statute of limitations commences to run against actions upon detached coupons 
 from the maturity of the coupons respectively. 
 
 5. Coupons, when detached from the bond, are still liens under the mortgage 
 given to secure the bond, whether the holders are entitled to a pro rata distribution 
 or are entitled to payment in the order in which the coupons fall due. See Sewall 
 V. Brainerd, 38 Vt. 364 ; Miller v. Rutland and Washington R. R. Co. 40 Vt. 399 ; 
 Haven v. Grand June. R. R. Co. 109 Mass. 96 ; Ketchum v. Duacan, 6 Otto, 659 ; 
 Stevens v. N. Y. & 0. M. R. E. Co. 13 Blatchf. 412. 
 
272 FINANCIAL MATTERS. 
 
 Section VII. — Impeopee Isstje of Negotiable Instettments. 
 
 I. Where no special power exists to issue or join in negotiable 
 vnst/ruments, a corporation is not liable thereon^. 
 
 II. Corporations with power to issue negotiable instruments, 
 are liable on them, though issued 'for improper purposes, 
 but only when in the hands of bona fide holders, (a) 
 
 ' Bateman v. Mid-Walea Ry. Co. L. R. 1 C. P. 609. 
 
 (a) Persons dealing with a corporation must be assumed to know the extent of its 
 corporate powers, and take notice of any restrictions in its charter. So, too, where 
 the duties and powers of the officers of a corporation are prescribed by statute or by 
 charter, all persons dealing with such officers must take notice of any limitation im- 
 posed upon their authority by such statute or charter. Dillon on Munic. Corp. § 381 ; 
 Pearce v. Mad. & Ind. R. R. Co. 21 How. 441; Merritt v. Lambert, Hofim. Ch. 166; 
 Farmers' Loan & Trust Co. v. Perry, 3 Sandf. Ch. 339 ; Brady v. Mayor, 2 Bosw. 
 173* affi'd 20 N. Y. 312 ; Hayes v. State Bank, Mart. <fc Y. 179 ; see, also. Root v. 
 Goddard, 3 McLean, 102 ; Root v. Wallace, 4 McLean, 8. There is a distinction be- 
 tween the defenses arising from the want of power to issue negotiable instruments 
 and those arising from Irregularities in the exercise of the power. la the former case 
 the defense is good against all persons. See review of authorities in 1 Dillon on 
 Munic. Corp. §§ 415-426 ; Police Jury v. Britton, 16 Wall. 666; see Mayor «. Ray, 
 19 Wall. 468. In the latter, if there is nothing on the face of the instrument to indi- 
 cate that its issue is ^iltra vires, that defense cannot be set up against a bona fide 
 holder for value without notice. Com'rs of Enox Co. v. Aspinwall, 21 How. 539 ; 
 Zabriskie o. C. C. & C. R. R. Co. 23 How. 397 ; Mercer Co. v. Hacket, 1 WaU. 88; 
 Gelpcke v. City of Dubuque, 1 Wall. 203 ; Meyer v. Muscatine, 1 Wall, 393 ; Super- 
 visors V. Schenck, 6 Wall. 784 ; City of Lexington v. Butler, 14 WaU. 282 ; Moran v. 
 Com'rs, 2 Black, 722 ; Moss v. Averell, 10 N. Y. 449 ; Bissell v. Mich. Southern R. 
 R. Co. 22 N. Y. 258 ; Att. Gen. v. Ins. Co. 9 Paige, 470 ; Stoney v. Am. L. Ins. Co. 
 11 Paige, 635 ; Delafield v. Dl. 2 HiU, 159 ; Conn. Mut. L. Ins. Co. k. C. C. & C. R. R. 
 Co. 41 Barb. 9 ; Allegheny City v. McClurkan, 14 Penn. St. 81 ; PhU. <fc Sunbury R. 
 B. Co. V. Lewis, 33 Penn. St. 83; DeVoss v. Richmond, IS Gratt. 338; Belo v. 
 Com'rs of Forsythe Co. 76 N. C. 489 ; Maddox v. Graham, 2 Mete. (Ky.) 86 ; State «. 
 Van Home, 7 Ohio St. 327; Clark v. City of Janesville, 10 Wis. 136. And on va- 
 lidity of accommodation paper in hands oi bona fide holders, see a«<e„note, p. 262. 
 
 A corporation may be held liable upon promissory notes issued by its treasurer 
 in accordance with a usage, as well as upon those which it has expressly authorized. 
 Be G. West. Tel. Co. 5 Biss. 363. 
 
 In Ehrgott v. Bridge Manufactory, 16 Kan. 486, it was held that when officers of 
 a corporation, having general authority to execute promissory notes for their cor- 
 poration in proper cases, but having no authority in the particular case in question, 
 executed, in the name of their corporation, but without any benefit to it, to a third 
 person who had no actual knowledge of their want of authority, a promissory note 
 for a claim which be held against a difi^erent corporation, the first-mentioned cor- 
 
IMPROPER ISSUE OF NEGOTIABLE INSTRUMENTS. 273 
 
 The leading case in this country, is Balfour v. Ernest.*- 
 Cockburn, C. J., in delivering judgment for the defendant said : 
 " It is contended that the plaintiffs, not having had any knowl- 
 edge of the want of such authority, are entitled to treat this bill 
 as a bill taken from a partner having a general power of drawing 
 bUls, and which might be considered as drawn for partnership 
 purposes, though, in fact, it was drawn by one partner in fraud of 
 the others. There is, however, this difference between that case 
 and the present one, that there, there would be no reason for sup- 
 posing that the bill was not given for partnership purposes, 
 whereas here, the bill was taken by the plaintiffs in payment of a 
 debt, for the discharge of which they knew it was not within the 
 general scope of the authority of the directors of this society to 
 draw bills, for the plaintiffs must have known that the company 
 were constituted unider a deed of settlement, to which, being reg- 
 istered pursuant to the statute, the plaintiffs could have had access, 
 and the case which has been referred to by my brother Willes, 
 shows that a man must be taken to have knowledge of the con- 
 tents of a deed of this kind." 
 
 III. Corporations a/re liable upon negotiable instruments if 
 with power to issue them, though the issue may be ultra 
 vires of their officials. 
 
 This is a question which frequently arises. Seldom or never 
 does a corporation itself in general meeting make or direct nego- 
 tiable instruments. Its agents do so in virtue of delegated 
 powers. But these powers never are as wide as those of the cor- 
 poration. In Balfour v. Ernest, this question was involved, 
 though not made the principle of the decision. 
 
 The principle was, that the directors, though having a general 
 authority, had this only for the purposes of the company, that 
 the plaintiff was affected with notice of the nature of the trans- 
 action, and that the bill was given for the accomplishment of an 
 1 5 C. B. (N. S.) 601 ; 28 L. J. (C. P.) 170. 
 
 poration was not liable on the note, to the payee thereof, there being nj subsequent 
 ratification, by the corporation, of the acts of its officers. 
 
 In Bradley v. Ballard, 55 111. 413, it was held that, where a corporation had given 
 a note for money lent, with knowledge of the lender, for an object ultra vires of the 
 corporation, the corporation having received the benefit of the loan, was estopped 
 from setting up the defense of ultra vires against the lender. 
 18 
 
274 FINANCIAL MATTERS. 
 
 object dehors the purposes for which the society existed. Would 
 the decision have been different if the plaintiff had been an inno- 
 cent holder, e. g., an indorsee for value ? It is submitted that it 
 would have been the reverse. The directors had a general au- 
 thority to issue bills, and it was the court which raised, by impli- 
 cation, a limitation to issue only for certain purposes, and it was 
 merely the accident of the plaiutiff's peculiar position which 
 affected him with notice of the particular purpose. Had he been 
 an outsider, all that he could have known from the deed of settle- 
 ment would have been the general authority. The improper ex- 
 ercise of that would have been a matter for the corporation and 
 its officials, not for himself.^ 
 
 It is not necessary that bills and notes issued by corporations 
 should be under seal. Provision has, therefore, usually been 
 made for the issue of such instruments by the directors or other 
 officials, on behalf of the corporation, and various formalities are 
 also attached to prevent fraudulent or improvident issues. These 
 formalities ought to be strictly observed, or, whatever the nature 
 of the documents in other respects, those actually making them 
 will usually be liable thereon.* As a rule, however, the corpora- 
 tion will also be liable to such persons as received or negotiated 
 the instruments unaware of the informalities,' provided the instru- 
 ments actually purport to be the company's instruments.* 
 
 Where a company or its directors have authority to issue ne- 
 gotiable instruments, this is an absolute and general authority, and 
 it cannot be restricted in degree or amount, subsequent clauses 
 limiting the liability of the company or its members to certain 
 sums being repugnant and void. Consequently, bills drawn or 
 notes made under such authority, even in the hands of a holder 
 with notice of the limitation, bind at law and in equity both the 
 company and the individual shareholders to the full extent.' Such 
 a restriction, it is evident, differs in toto from the imposition of a 
 
 ' See notes following. and want of power will, vitiate, but a 
 
 « Penrose v. Martyr, E. B. <fe E. 499 ; mere limitation of this kind is inoper- 
 
 28 L. J. (Q. B.) 28; Scott v. Ebury, L. R. ative. 
 
 2 C. P. 255 ; Button v. Marsh, L. R. 6 Q. ■• See Serrell ii. Derbyshire, Ac. Ry. 
 
 B. 861. Compare Lindus v. Melrose, 3 Co. 10 C. B. 910, and cases in note 2. 
 
 H. & N. 1T7 ; 27 L. J. (Ex.) 326. 6 Gordon v. Sea, Fire <& Life Ass. Co. 
 
 8 Gordon v. Sea, Fire <fe Life Ass. Co. ] H. & N. 599 ; 26 L. J. (Ex.) 202 ; Re 
 
 1 H. <fe N. 699 ; 26 L. J. (Ex.) 202. A dis- State Fire Ins. Co. (Ex parte Meredith), 32 
 
 tinction must be drawn between the ab- L. J. (Ch.) 300; Pedell v. Gwjmne, 1 H. 
 
 sence of a power or an informality and a AN. 690 ; 26 L. J. (Ex.) 199. 
 
 limitation on amount. Informality may, 
 
IMPEOPER ISSUE OF NEGOTIABLE INSTRUMENTS. 275 
 
 formality. A company may well require, for its protection, that 
 the powers which it confers upon its agents shall be exercisable in 
 certain ways only, and parties dealing with the company will fre- 
 quently have to see that such formalities are duly observed ; but 
 to say that its agents may engage in transactions up to a certain 
 amount only, would be to lay down that every person entering 
 into any contract with the company shall investigate the state of 
 the company's business. 
 
CHAPTER VII. 
 
 LEGAL PROCEEDINGS. 
 
 OoEPOEATiONS may undertake, whether by instituting or defend- 
 ing, all such legal proceedings as may be necessary for the protec- 
 tion of their own rights and their own legitimate business, (a) 
 Such a power is simply necessary for the existence of every cor- 
 poration, and is therefore an essential legal fact in its constitution. 
 The corporation sues and is sued in its corporate name.^ (h) Being 
 a legal entity existing apart from its members, it may maintain 
 any proceedings in any court of competent jurisdiction as well 
 against its own members as against strangers ; and all the ordi- 
 nary rules of procedure and of pleading, e. g., cross claims, set-off, 
 notice, &c., will be as applicable in the one case as the other. 
 Thus they can validly execute bonds as security for costs, although 
 they might not ordinarily have power to make money bonds.* (c) . 
 
 Not only can a corporation sue, but it is the proper party, and, 
 indeed, the only party, to bring actions in all cases where the 
 ground of action is a matter affecting the corporation as a whole, 
 
 1 Woolf V. City steamboat Co. 1 C. B. S.) 704 ; 27 L. J. (C. P.) 823 ; and Towne 
 
 108 ; 18 L. J. (C. P.) 126. See Pilbrow v. v. London, <feo. Ship Co. 5 C. B. (N. S.) 
 
 Pilbrow's Atmospheric Ry. Co. 3 C. B. 730. 
 
 730 ; Fell v. Burchett, 7 E. <St B. 537 ; In- '■' Young v. Brompton, Ac. Waterworks 
 
 gate V. Austrian Lloyd's Co. 4 C. B. (N. Co. 1 B. A S. 676 ; 31 L. J. (Q. B.) 14. 
 
 (o) It is one of the incidental powers of a corporation. Kyd on Corp. 69 ; 2 Kent, 
 278 ; Angell & Ames, § 110 ; The Camanohe, 8 Wall. 448; McKim v. Odom, 3 Bland 
 Ch. 419 ; Gordon v. Baltimore, 5 Gill, 231. But the power to sue is limited to mat- 
 ters within the scope of the legitimate purposes of the corporation. Ancient City 
 Club V. Miller, 7 Laus. 412. 
 
 (6) Bradley v. Richardson, 2 Blatchf. 843 ; s. o. 23 Vt. 720 ; Minot v. Curtis, 7 
 Mass. 444 ; Bartlett v. Brickett, 14 Allen, 62 ; Norton „. Hodges, 100 Mass. 241 ; 
 Lucas V. Johnson, 8 Barb, 244; Bundy v. Birdsall, 29 Barb. 81 ; Leonardsville Bank 
 V. Willard, 25 N. Y. 574; Porter v. Nekervis, 4 Rand. 369; Legrand v. Hampden 
 Sidney CoU. 5 Munf. 824 ; Mauney v. Motz, 4 Ired. Eq. 196 ; Dart v. Houston, 22 Ga. 
 606; Trustees of Lexington v. McConnell, 3 A. K. Marsh. 224; Hay v. McCoy, 6 
 Blackf. 69; 111. Insane Hospital v. Higgins, 15 111. 185 ; Curtis ». Murray, 26 Cal. 683. 
 
 (c) As to the power of corporations to sue in courts other than those of their 
 domicile, and as to the "citizenship" of corporations in reference to the jurisdiction 
 of United States courts. See Field on Corps. § 363 et seq. See, also, ante, pp. 8-7 n. 
 
LEGAL PROCEEDINGS. 277 
 
 and not some particular members or classes of members. The 
 commonest instances where questions arise as to who are the 
 proper and necessary parties to a suit, and to be plaintiffs and 
 defendants respectively, are when the officials of the corporation 
 have gone beyond their authority, or have done or omitted to do 
 some act whereby the corporation has been prejudicially affected. 
 The acts or omission in question will be either ultra vires of the 
 corporation, or about or with reference to matters which are 
 themselves ultra vires ; if so, it will generally be incompetent for 
 the corporation to attempt to take cognizance of them ; or within 
 the authority of the corporation, to approbate or reprobate, to affirm 
 or repudiate. If of the latter description, then it is for the cor- 
 poration to take proceedings or not — individual shareholders can- 
 not interfere. 
 
 It cannot be too clearly or plainly laid down, that the corporar 
 tion as such alone is competent to deal with what concerns it as a 
 corporation. No matter how grievously members, whether few 
 or many, are damnified by the transactions in question, provided 
 such transactions concern the whole body collectively in their cor- 
 porate character and are not ultra vires, and provided also that 
 they are not a fraud on or a special hardship to particular mem- 
 bers, the members in their private capacity will be without rem- 
 edy. They, the members complaining, cannot bring a suit either 
 individually, or as a class, or in the name of some one or more, 
 " on behalf of themselves, &c. ;" unless, indeed, the corporation — 
 that is to say, the majority — are acting fraudulently towards the 
 members complaining, by refusing to institute the necessary pro- 
 ceedings.* {a) 
 
 This part of the subject more properly falls under the consid- 
 eration of the interference of the courts in the internal affairs 
 of corporations ; but one or two of the leading cases may be 
 quoted in illustration. 
 
 ■ Atwool V. Merryweather, L, R. 6 Eq. 464, n. 
 
 (a) The primary party to bring suit in regard to corporate rights or corporate 
 property is the corporation itself ; but where the corporation refuses to bring the 
 action, or the parties to be proceeded against are in control of the corporation, one 
 stockholder may bring action in equity in his own name in behalf of all, to which 
 suit the corporation must be a party defendant. Dodge v. Woolsey, 18 How. 331 ; 
 Samuel v. Holladay, 1 Woolworth, 400 ; Heath v. Erie R. E. Co. 8 Blatchf. 347 ; 
 Brewer v. Proprietors of Boston Theatre, 104 Mass. 378 ; Brown a. Vandyke, 8 N. J. 
 Eq. 796; Butts v. Wood, 38 Barb. 181; s. o. 37 N. Y. 317; and seejoosi, "Actions." 
 
278 LEGAL PROCEEDINGS. 
 
 Mozley v. Alston^ is a decision often cited. The bill was filed 
 by two sbareholders against the corporation and twelve other 
 members, who were alleged to have usurped the office of directors, 
 and to be exercising the functions thereof, as a majority of the 
 governing body, injuriously to the interests of the company, pray- 
 ing that those twelve defendants might be restricted from acting 
 as directors, and be ordered to deliver the common seal, and the 
 property and books of the company in their possession, to six 
 other persons who were alleged to be the only duly constituted 
 directors. The defendants demurred, and the Lord Chancellor, 
 upon appeal, allowed the demurrers, on the ground that " if it 
 were an injury at all, it was an injury not to the plaintiffs person- 
 ally, but to the corporation of which they were members." {a) 
 
 Grayv. Lewis* is the most recent authority. The facts, stated 
 very concisely, were these : The directors of Charles Lafitte & 
 Company, Limited, were concerned in certain transactions which, 
 if bearing the construction put upon them by some of the share- 
 holders, and among them the plaintifiF, were ultra vires, and 
 which, in the result, entailed great loss upon the company. Gray, 
 a shareholder, filed a bill in his individual capacity against these 
 directors, and other parties mixed up with them, to make them 
 recoup the company for this loss. On appeal, the J)ill was dis- 
 missed. James, L. J., said : " Now, in this case, I am of opinion, 
 that the only person, if you may call it a person, having a right 
 to complain, was the incorporated society called Charles Lafitte 
 & Co. In its corporate character it was liable to be sued, and was 
 entitled to sue ; and if the company sued in its corporate char- 
 acter, the defendant might allege a release or a compromise by 
 the company in its corporate character ; a defense which would 
 not be open in a suit where a plaintiff is suing on behalf of 
 himself and other shareholders. I think it is of the utmost im- 
 portance to maintain the rule laid down in Mozley v. Alston, and 
 Fobs v. Harbottle, to which, as I understand, the only exception 
 is where the corporate body has got into the hands of directors 
 and of the majority, which directors and majority are using their 
 power for the purpose of doing something fraudulent against the 
 
 ' 1 Phill. 790; Fobs v. Harbottle, 2 « L. E. 8 Ch. 1036, 1051 
 
 Hare, 461 ; 16 L. J. (Ch.) 21T. 
 
 («) The refusal of the directors is essential. Memphis v. Dean, 8 Wall. 64. 
 
LEGAL PROCEEDINGS. 279 
 
 minority, who are overwhelmed by them, as in Atwool v. Merry- 
 weather, where Page-Wood, Y.-C, under those circumstances, 
 sustained a bill by a shareholder on behalf of himself and others, 
 and there it was after an attempt had been made to obtain a 
 proper authority from the corporate body itself in public meetTng 
 assembled." 
 
 I. A corporation may interfere i/n, either hy instituting or 
 assisting, legal proceedings in respect of matters which, 
 either direct^ or indirectly, affect itself or its privileges. 
 
 When any measures, legal or otherwise, are taken against a 
 corporation directly, the question is quite clear ; a corporation, 
 like every other person when attacked, may adopt in defense 
 every and any course allowed by law, whether such course may, 
 or may not, necessitate an appeal to the legal tribunals. Of 
 course, if upon the true construction of constating instruments 
 and facts it turns out that a corporation has not the right set up, 
 it cannot sue, any more than an ordinary citizen, on behalf of the 
 public or on any similar ground.^ 
 
 But whether a corporation may take part in proceedings insti- 
 tuted against its members, which in the result and indirectly im- 
 peach its own status, is somewhat doubtful, although the balance 
 of authority is decidedly in the affirmative. In The Att.-Gren. v. 
 Mayor, &c. of Norwich,' Lord Cottenham was of opinion, though 
 he did not actually decide, that it is no improper application of 
 the funds of a municipal corporation to defend proceedings on 
 quo warranto informations, which have for their object to 
 destroy the corporation of which the individuals attacked are 
 members. 
 
 In the following cases the costs were deemed properly incurred 
 by the corporations concerned, and therefore payable out of their 
 funds. 
 
 (1.) Eeg. V. Town Council of Lichfield.' {a) Here the town 
 council had, by resolution, removed the town clerk from his office 
 for misconduct. His claim for compensation being refused, he 
 sued out a mandamus to assess the same, and the jury ultimately 
 
 1 See Mayor, <fec. of Exeter v. Earl of = 2 My. cfe Or; 406, 428. 
 
 Devon, L. B. 10 Eq. 232. « 10 Q. B. 634; 16 L. J. (Q. B.) 333. 
 
 {a) See Hadsell v. Inhab. of Hancock, 3 Gray, 626. 
 
280 LEGAL PROCEEDINGS. 
 
 found the issues raised in his favor. An attorney was employed 
 to oppose the mandamus, and it was determined that his costs 
 were chargeable upon the borough fund, it not being shown that 
 the town council had acted with mala fides in the removal. 
 
 •(2.) Holdsworth v. Mayor, &c. of Dartmouth.^ (a) Quo war- 
 rantos were filed against the plaintiff and several of his friends, to 
 try their right to be members of a corporation, and they were in 
 the result ousted. These informations the plaintiflF, without the 
 direction or authority of the defendants, caused to be defended, 
 and subsequently thereto the defendants sealed and delivered to 
 the plaintiff bonds to reimburse him for the costs of such defenses, 
 and for no other consideration. These bonds were adjudged to be 
 good. 
 
 This, it will be seen, is a strong case. The plaintiff defended 
 without the authority first obtained of the defendants, the issues 
 were found against him, it was not shown that thereby the exist- 
 ence or rights of the corporation were compromised ; afterwards, 
 when the proceedings were at an end, the bonds were given, and 
 yet they were binding on the corporation. 
 
 (3.) In Reg. v. Town Council of Lichfield,' the Court of 
 Queen's Bench thought that the council of a borough may prose- 
 cute at the expense of the corporation for an assault upon the 
 mayor in the execution of his duty. (J) 
 
 (4.) Eeg. V. Prest.' Here a municipal corporation had im- 
 posed a rate which they intended to enforce, but concerning which 
 they were threatened with litigation if they persevered in dieir in- 
 tention. They employed a solicitor, who took counsel's opinion 
 as to the legality of the rate, and it was held that his costs were 
 properly chargeable upon the borough funds. 
 
 (5.) Lewis V. Mayor, &c. of Eochester.* (c) This case arose 
 thus: The defendants, at a court duly' held, expunged the names 
 of several burgesses from the borough list, who thereupon ob- 
 
 > 11 A. & E. 490 ; 4 Jnr. 605. » 16 Q. B. 83 ; 20 L. J. (Q. B.) 17. 
 
 2 4 Q. B. 893 ; 12 L. J. (Q. B.) 308. • 9 C. B. (N. S.) 401 ; 30 L. J. (C. P.) 
 
 See Eeg. v. Town Council of Stamford, 4 169. See Eeg. v. Mayor, <fcc. of Mou- 
 
 Q. B. 900, n. ; 13 L. J. (Q. B.) 177. mouth, L. E. 5 Q. B. 251. 
 
 (a) See Mayor v. Cummins, 47 Ga. 321, in which the life of the corporation was 
 attacked in an action against its agents, and the corporation was allowed to come in 
 and defend and move for removal to United States court. 
 
 (6) Contra, Butler v. City of Milwaukee, 15 Wis. 493. 
 
 (c) Nelson v. Milford, 7 Pick. 18 ; Bahbitt v. Savoy, 3 Cush. 530. 
 
LEGAL PROCEEDINGS. 281 
 
 tained rules nisi, calling upon the mayor to show cause why he 
 should not hold another court to revise the list. The corporation, 
 nnder their common seal, retained the plaintiff, an attorney, to 
 show cause and otherwise defend the rules. He accordingly did 
 so, but the rules were made absolute. The plaintiff then sued the 
 corporation for his costs, and the court held that the costs were 
 legally incurred, and that he was, consequently, entitled to recover 
 the same against the corporation, (a) 
 
 (6.) Baker v. Inhabitants of Windham,^ which was a suit by 
 an individual involving the question of a town boundary. 
 
 II . A corporaUon cwmiot in any "way interfere in legal proceed- 
 ings which do not involve or question the corporate rights or 
 jyrivileges. 
 
 In the authorities just cited, the rights and franchises of the 
 corporation either were directly affected, or, in the result, might 
 have been compromised by the proceedings that had been insti- 
 tuted. But if this be not so, if individuals only are attacked as 
 such, and in their private capacity, even though it be for exercis- 
 ing corporate offices, then the corporation cannot interfere. The 
 courts consider such proceedings to concern these individuals only, 
 who must, consequently, themselves bear any expenses which may 
 be incurred by them in respect thereof. The chief decisions on 
 this point are the following : 
 
 (1.) Keg. V. Mayor, &c. of Leeds.^ On the election of coun- 
 cillors for a borough, a question arose which of two candidates 
 had been duly declared to be elected. The mayor took counsel's 
 opinion, on which he acted by rejecting the vote of one of the 
 candidates. The council had given the mayor a general authority 
 to take such opinion in case of need. The excluded candidate ob- 
 tained a rule nisi for a mandamus to the mayor, aldermen and 
 burgesses to receive his vote, and permit him to act as councilor ; 
 and the council resolved, by a majority, that cause should be shown 
 against the rule. It was determined that the costs of such oppo- 
 
 ' 13 Me. 74. . « 4 Q. B. 796. 
 
 (a) A municipal corporation which has employed an attorney to file a bill seek- 
 ing to destroy, by auit, the existence of the corporation itself, cannot apply the 
 corporate funds in payment for such services. Daniel v. Mayor, H Humph. (Tenn.) 
 682. 
 
282 LEGAL PROCEEDINGS. 
 
 sition, and of tlie case submitted to counsel, could not be charged 
 on the borough fund, under stat. 5 & 6 Will. IV, c. 76, s. 92, 
 though it was sworn that the proceedings were taken honajide, 
 and not for the purpose of supporting one candidate against the 
 other at the public expense. 
 
 (3.) In Eeg. v. Bridgewater, and Eeg. v. Paramore,^ expenses 
 incurred by a corporation under similar circumstances were dis- 
 allowed. The town council of Bridgewater had ordered pay- 
 ments from the borough fund for defraying the expenses of 
 opposing two rules, one for a quo warranto against a party 
 who had been declared duly elected a councilor, and had 
 accepted the office, for exercising that office ; the other for a 
 criminal information against an alderman of the borough, for 
 alleged misconduct at an election of councillors. On motion for 
 a certiorari, made at the instance of a burgess, the Court of 
 Queen's Bench, quashed the orders which directed the payments 
 in question, holding that the purposes for which the expenses had 
 been incurred were, clearly, not public purposes. 
 
 (3.) In Reg. v. Town Council of Stamford,'"' a rule was made 
 absolute to remove by certiorari into the Queen's Bench an order 
 of a town council to defray out of the borough funds the expenses 
 entailed upon two police officers of the borough in the prosecu- 
 tion of a party for an assault committed upon them in the execu- 
 tion of their duty ; and also the expenses of their defense to an 
 indictment preferred against them by him for an assault upon the 
 same occasion. The court determined that the payment of such 
 expenses was not justified by sect. 92 of 5 & 6 Will. lY, c. 76 ; 
 and that a resolution of the watch committee which had been 
 passed approving of such payment was not an award of expenses 
 within sect. 82 of that statute. 
 
 (4.) Eeg. V. Mayor, &c. of Tamworth,* is to the same effect. 
 The court laid down the general rule, that the costs of litigation 
 undertaken by a corporation, if mala fide and from improper 
 motives, or in respect of a matter in which the corporation is only 
 collaterally interested, cannot be charged upon the borough fund ; 
 but, if in the honajide assertion of the rights of the corporation, 
 
 ' 10 A. <fc E. 281. where a police officer had summoned a 
 
 » 4 Q. B. 900, n. ; 13 L. J. (Q. B.) Ill ; person for libel, and the corporation pro- 
 
 Eeg. V. Thompson, 6 Q. B. 47Y ; D. <fe M. posed to pay the officer's expenses so 
 
 497 ; Reg. v. Mayor, etc. of Liverpool, incurred; See Eeg. v. Dunn, 5 Q. B. 959. 
 
 41 L. J. (Q. B.) ITS; 20 W. R. 389; 3 11 W. R. 231; 19 L. T. (N. S.) 438. 
 
LEGAL PROCEEDINGS. 283 
 
 they may be charged upon the fund, although the litigation has 
 not resulted in favor of the corporation. 
 
 (5.) Reg. V. Mayor, &e. of Sheffield.^ A waterworks com- 
 pany, in the borough of SheflSeld, were by their act bound, on 
 the requisition of the town council, to give a constant supply of 
 water, and they were empowered to make regulations to be 
 observed by the consumers, subject to the approval of two 
 justices, any person aggrieved having the right to oppose the 
 regulations before the justices. The town council having re- 
 quired the company to give a constant supply, the company 
 proposed certain regulations, which were opposed before the 
 justices by the corporation on the ground that they imposed too 
 onerous conditions on the consumers, and the justices modified 
 the conditions accordingly. The town council made an order for 
 the payment of the expenses so incurred, but the Queen's Bench 
 quashed the order, as not being justified by sect. 92 of 5 & 6 
 Will. ly, c. 76, and there being no surplus rates from which the 
 payment could be made. 
 
 The result of the above cases would seem to be this : Jirst, 
 that it is only the invasion, actual or contemplated, of either the 
 franchises, the rights, or the property of a corporation, which will 
 justify an expenditure of the corporate funds, not an action, a 
 quo warranto information, or the like brought against individual 
 members of even the governing body ; secondly, that, save under 
 very exceptional circumstances, a corporation may not indemnify 
 a member for expenses incurred by him in maintaining his rights 
 as a member ; but, thirdly, that the courts construe the corporate 
 " rights " somewhat liberally ; and, therefore, if legal proceedings 
 be necessary to protect the mayor or other member of the govern- 
 ing body in the discharge of his functions, or to secure the corpo- 
 ration against the doing of acts which may, though remotely, 
 prejudicially affect its interests, the costs of such proceeding may 
 be defrayed out of the corporate assets ; provided, however, 
 Jvurthly, that there be no prohibition, express or implied, 
 against undertaking the proceedings in question ; for if so, no 
 measures, no damage, no benefit, present or prospective, will 
 justify the same.* (a) 
 
 1 L. R. 6 Q. B. 662. See, now, 35 ^ See Reg. v. Mayor, <fcc. of Sheffield, 
 
 & 36 Vict. c. 91. L. R. 6 Q. B. 662, and similar cases. 
 
 (a) It is competent for a town to take upon itself the expense of defending a suit 
 
284 LEGAL PROCEEDINGS. 
 
 It has just been seen that a corporation may expend its funds 
 in maintaining its own corporate privileges, but not those of 
 
 to restrain its school comniittee from making expenditures for educational purpoEes 
 according to their discretion. Babbitt v. Selectmen of Savoy, 3 Cush. 630. A town 
 may appropriate money to indemnify its school committee for expenses incurred in 
 defending an action for an alleged libel, contained in a report made by them in good 
 faith. Fuller v. Inhab. of Groton, 11 Gray, 340. And, again, a municipal corpora- 
 tion may indemnify an executive officer for expenses caused by a judgment against 
 him for acts committed in good faith in the discharge of his official duty. Sherman 
 V. Carr, 8 E. I. 431; Nelson v. Milford, 1 Pick. 18; Bancroft </. Lynfield, 18 Pick. 
 566 ; Hadsell v. Inhab. of Hancock, 3 Gray, 526 ; Briggs v. Whipple, 6 Vt. 95. The 
 agreement of a town to pay the expenses of a suit by an individual, which involves 
 the determination of the town line, is valid and binding. Baker v. Inhab. of Wind- 
 ham, 13 Me. 14. 
 
 On the other hand, a Massachusetts town is not bound by its corporate vote to 
 pay the expenses of a field driver, incurred in a suit brought against him for wrong- 
 fully impounding cattle. The town is not responsible for his acts, and, therefore 
 has no interest in the suit. Vincent v. Nantucket, 12 Cush. 103. So, too, a city 
 cannot employ counsel to aid in criminal prosecutions on behalf of the State, against 
 persons lately officers of the city, for misconduct in office. Butler v. City of Mil- 
 waukee, 16 Wis. 493. Nor can a town properly vote to pay money to its selectmen, 
 or those who have acted in that capacity, for costs or damages sustained by them in 
 resisting criminal prosecutions brought against them for their official conduct. Mer- 
 rill V. Plainfield, 45 N. H. 126, in which case the judge makes the following statement 
 of the law on this general subject : " It has been held, that a town may indemnify a 
 surveyor of highways for liabilities incurred in the honafde discharge of his duties, 
 because the town is bound to repair highways, and is responsible for defects in them, 
 and, therefore, has so direct an interest in the subject that it can adopt the acts of 
 the surveyor, acting as the agent of, and for the benefit of, the town, in a matter of 
 town affairs. His duties are the duties of the town. Bancroft v. Lynfield, 18 Pick. 
 566. So towns may bind themselves by vote to indemnify a collector of taxes from 
 the costs and expenses of defending actions brought against him for acts done in the 
 performance of his duties, because he acts by authority of the town and as their 
 agent, at least, in collecting the taxes raised by the town ; and the town may ratify 
 and affirm his act as the act of the town. Pike v. Middleton, 12 N. H. 278. But it 
 has been equally well settled that in case of officers of the town who act, not as the 
 agents or servants of the town, but in a judicial capacity, where the town has no 
 direction or control of them, is not responsible for their fidelity, gains nothing by 
 their diligence, and loses nothing by their carelessness, where the duties are imposed 
 specifically by statute on the officer, and the town has no duty to perform, no right 
 to defend, and no direct interest to protect, the town cannot properly indemnify the 
 officer in the discharge of his duties, and any attempt to do so, any vote or contract 
 to that effect, will be void. Anthony v. Adams, 1 Mete. 284 ; Stetson v. Kempton, 13 
 Mass. 272; Parsons i;. Goshen, 11 Pick. 396; Vincents. Nantucket, 12 Cush. IDS; 
 Martin v. Mayor of Brooklyn, 1 Hill, 645, 561 ; Wadsworth v. Henniker, SS N. H. 
 189; Gove v. Epping, 41 N. H. 539." See, also, Gregory v. City of Bridgeport, 41 
 Conn. 76, and cases cited, and Dillon on Munie. Corp. §§ 98, 99. 
 
LEGAL PROCEEDINGS. 285 
 
 private persons. A fortiori, it may not institute or aid proceed- 
 ings against parties who may have injured or made attacks upon 
 its members, and thereby damaged the pecuniary position of the 
 corporation. 
 
 This was so decided in Pickering v. Stephenson.^ The direc- 
 tors of a foreign railway company had prosecuted a person for a 
 libel published by him, as secretary of a committee, with respect 
 to the council of administration of the company. It was ad- 
 mitted that the libel had prejudicially affected the prospects of 
 the company, and that upon the commencement of the prose- 
 cution the prospects were improved. But Wickens, V.-C, laid 
 down " that where a quasi partnership of this sort is divided 
 into a majority and minority, who differ on a question of internal 
 administration, and litigation results from the difference, it is 
 contrary to the spirit of the partnership to pay the expense of the 
 litigation out of the general fund ; and that this is independent 
 of the question whether the majority is overwhelming, or a bare 
 majority." He therefore decided that the prosecution of the pro- 
 ceedings in question, at the company's expense, was ulfy'a vires, 
 and he, consequently, restrained the directors from paying any 
 further costs out of the company's funds, although he did not, 
 under the circumstances, order them to refund the costs which 
 they had thus already discharged. 
 
 III. A corporation may not adopt legal proceedings which were 
 not originated hy or on iehalf of itself. 
 
 Generally speaking, a corporation may ratify, and thereby be- 
 come liable for, acts not initiated by itself, provided that they are 
 not ultra vires. This power of ratification is in respect of legal 
 measures, subject to the qualification that these measures must 
 have been commenced by persons purporting to represent the cor- 
 poration, and to act on its behalf. Proceedings not so originated 
 cannot subsequently be adopted or aided by the corporation, how- 
 ever beneficial to it may be the continued prosecution of such pro- 
 ceedings. This is well shown by the decision in Kernaghan v. 
 Williams,^ which arose out of the following circumstances : Three 
 directors in the Dublin Trunk Connecting Kailway Company insti- 
 tuted a suit (Williams v. O'Meara) on behalf, &c., "against the com- 
 
 ■ L. R. 14 Eq. 322. = L. R. 6 Eq. 228. Compare Elborough 
 
 V. Ayres, L. R. 10 Eq. 367. 
 
286 LEGAL PROCEEDINGS. 
 
 pany, the directors, and other persons, for the purpose of recovering 
 for the company moneys alleged to have been misapplied." Shortly 
 afterwards the hoard of directors was reconstructed, and Williams 
 and two of his co-plaintiflEs became directors. Somewhat later, at 
 an extraordinary general meeting, the directors were authorized 
 to prosecute the suit of "Williams v. O'Meara, for the benefit and 
 at the expense and risk of the company. But upon a bill filed by 
 a shareholder to prevent the directors so acting, the Master of the 
 Eolls decided that this resolution was ultra vires, and he restrained 
 the directors from acting upon it. {a) 
 
 This principle, of course, does not in any degree qualify the 
 liability of corporations with respect to proceedings actually, though 
 perhaps not nominally, instituted or defended on their behalf by 
 persons duly authorized by statute or otherwise to represent tbem, 
 such as public ofiicers,* clerks to public boards," and the like. Nor 
 does it modify or otherwise affect their liability to indemnify direc- 
 tors,' persons holding shares as trustees for a company,^ and others 
 who, from their position in relation to the company, have incurred 
 expense on its account. (5) 
 
 1 7 Geo. IV, c. 46, s. 14. See Croxton's * He National Financial Co. L. R. 3 
 Case, 6 De G. <fe Sm. 432. Cb. 791 ; James v. May, L. R. 6 H. Lds. 
 
 2 See HaU v. Taylor, E. B. & E. 107 ; 328. See, also, Re Oriental Commercial 
 27 L. J. (Q. B.) 311. Bant, L. R. 12 Eq. 601 ; and ante, pp. 
 
 ^ See General Exchange Bank v. Hor- 139-141. 
 ner, L. R. 9 Eq. 480. 
 
 (o) Where the general agent of a corporation, in charge of its lands and buildings, 
 made a lease (by virtue of his general authority, but without special authority to 
 lease) for the purpose of trying title to land, into which he had entered for condition 
 broken, a suit prosecuted by the corporation in the name of the lessee does not operate 
 as a ratification of the act^ of the agent so as to make the lease effectual. Gillis v. 
 Bailey, 17 N. H. 18. 
 
 (i) In determining whether a corporation should conduct or defend at its own ex- 
 pense legal proceedings not directly by or against itself, directors; charged with the 
 administration of its affairs, should be governed by the rules adopted by prudent 
 men in the conduct of their own business. Many questions arising in the progress of 
 actions are determined upon principles which may involve the property or very exist- 
 ence of the corporation not a party, and it is believed that, in such an event, it would 
 not be ultra vires for the corporation to contribute to the employment of counsel and 
 other legitimate expenses of the litigation. It certainly is competent for a corporation 
 to defend its title to property, though the action of ejectment may be brought against 
 its tenant as defendant. These considerations would doubtless determine the ques- 
 tion, if presented to a court of equity on an application to prevent an agreement to 
 conduct or defend being made. 
 
 The liability of a corporation for expenses already incurred by its officers or di- 
 
LEGAL PROCEEDINGS. 28Y 
 
 rectors in proBecution or defense of such actions, as tlie officers and directors are 
 mere agents, should depend upon the law of agency. 
 
 The law of agency is thus stated by Mr. Justice Story (^ Story on Agency, §§ 336, 
 336): 
 
 " Another right of agents is, to be reimbursed all their advances, expenses and 
 disbursements made in the course of their agency, on account of, or for the benefit of, 
 their principal. This is naturally, nay necessarily, implied, from the very character 
 of every agency to which such advances, expenses and disbursements are incident, 
 whenever they fall within the appropriate duty of the agent. Hence, all the incidental 
 charges and expenses incurred for warehouse room, duties, freight, lighterage, general 
 average, salvage, repairs, journeys, and other acts done to preserve the property of 
 the principal, are to be fully paid by the latter. So, if an agent has, at the express 
 or the implied request of his principal, necessarily incurred expenses in carrying on 
 or defending suits for the benefit of his principal, those expenses must be borne by 
 the latter, and the agent will be entitled to recover them from him. But this liability 
 of the principal proceeds upon the ground that the advances, expenses and disburse- 
 ments have been properly incurred, and reasonably and in good faith paid, without 
 any default on the part of the agent. Under such circumstances, it will constitute no 
 objection to the claim, that the advances, expenses or disbursements have not been 
 attended with all the benefits to the principals which were expected or intended by 
 the agent ; for his acts being in good faith, in the exercise of a sound judgment, and 
 according to the ordinary course of business, the agent ought not, in justice, to be 
 made responsible for any ultimate failure of success in the Agency. Cases may in- 
 deed occur of such peculiar exigency as will justify an agent in making advances or 
 incurring expenses beyond what ordinarily appertains to the regular course of busi- 
 ness, for which, nevertheless, the principal will be bound to make him a full reimburse- 
 ment. And, a fortiori, this rule will apply where the agent is clothed with a discre- 
 tionary authority. However, if the agent has voluntarily, and officiously and without 
 any authority, made advances or payments, or has incurred unreasonable, useless or 
 superfluous expenses, the principal will not be bound to any reimbursement thereof, 
 for it will be imputed to the fault, or negligence, or unskUlfulness of the agent." 
 
CHAPTER VIII. 
 
 APPLICATIONS TO PARLIAMENT. 
 
 It lias been seen that a corporation may extend its legitimate 
 business by every legitimate means. Will applications to parlia- 
 ment, and agreements with reference to the same, made at the 
 expense of the company by its duly appointed agents, either in 
 virtue of their own inherent authority, or in pursuance of resolu- 
 tions promulgated at an extraordinary meeting, be a " legitimate 
 means" ? The answer is not clear ; but, as far as can be gathered 
 from the many conflicting decisions, it appears that such applica- 
 tions and agreements will be legal and binding, if made honafide 
 for the purpose of developmg the existing business, and of render- 
 ing the working of the same more easy, expeditious, and econom- 
 ical ; but that they will be ultra vires, if the intention be to add 
 to the business, and, per oonsequentiam, to increase the liabilities 
 of the corporation as a whole, and of individual shareholders, or if 
 the manifest tendency of the same be in this direction. 
 
 Many of the cases under this head have arisen from proceed- 
 ings by shareholders, to restrain directors from making such ap- 
 plication. It was at first doubted whether the Court of Chancery 
 could thus interfere between the Legislature and parties proposing 
 to address it ; but the jurisdiction of the court was amply vindi- 
 cated by Lord Cottenham in Heathcote v. North Staffordshire 
 Railway Company,' and it has since been frequently admitted, 
 theoretically, at least.' 
 
 ' 2 Mac. A G. 100 ; 20 L. J. (Ch.) 82. gard to the jurisdiction of the court, there 
 
 * See Lancaster & Carlisle Railway can be no doubt whatever of its power to 
 
 Company v. North Western Railway Com- interfere after the decisions that have 
 
 pany, 2 K. & J. 293 ; 25 L. J. (Ch.) 228, been arrived at." 
 
 •where, per Page Wood, V.-C, "With re- 
 
APPLICATIOIirS TO PARLIAMENT. 289 
 
 Section I. — Power to make Applications to Parliament. 
 
 I. Both private individuals and corporations may, without 
 hindrance from the courts, make any applications whatever 
 to parliament, (a) 
 
 In considering this question we must carefully discriminate 
 two proceedings closely allied and very similar, but widely difEer- 
 
 (a) The right of petition is one which could not be " practically denied, until the 
 spirit of liberty had wholly disappeared, and the people had become so servile and 
 debased as to be unfit to exercise any of the privileges of freemen." Story on the 
 Constitution, § 1894 ; see Coqley on Const. Lim. 349. Federal and State Constitu- 
 tions have established three departments of government — executive, legislative, a»d 
 judicial, each of which, within its prescribed limits, is supreme. The due order and 
 regular administration of public affairs reqqire, that each department should be en- 
 tirely independent of the others. "The law-making power of the State recognizes 
 no restraints, and is bound by none, except such as are imposed by the constitution. 
 That instrument has been aptly termed a legislative act by the people themselves in 
 their sovereign capacity, and is, therefore, the paramount law. Its object is not to 
 grant legislative power, but to confine and restrain it. Without the constitutional 
 limitations the power to make laws would be absolute. These limitations are created 
 and imposed by express words, or arise by necessary implication. The leading fea- 
 ture of the constitution is the separation and distribution of the powers of the gov- 
 ernment. It takes care to separate the executive, legislative, and judicial powers, 
 and to define their limits. The executive can do no legislative act, nor the Legisla- 
 ture any executive act, and neither can exercise judicial authority." Sill v. Corning, 
 15 N. Y. SOS. The legislative and executive departments must be free to act, within 
 constitutional restrictions, each according to its best judgment, and must be responsi- 
 ble for its conduct only to the sovereign power residing in the people. For this rea- 
 son the courts wUl not interfere by mandamus with the exerci^ of executive or legis- 
 lative action not purely ministerial. Marbury v. Madison, 1 Cranch, 137; State v. 
 The Governor, 25 N. J. L. 331 ; Hawkins v. The Governor, 1 Ark. 670 ; Mauran v. 
 Smith, 8 R. I. 192; Ex parte Pickett, 24 Ala. 91 ; Ex parte Echols, 39 Ala. 698. It 
 is also weU established, that the courts, though having the power to declare a legis- 
 lative act unconstitutional, will be indisposed to do so, except in clear cases, for the 
 reason that a co-ordinate branch of the government has passed judgment on the mat- 
 ter. Oooley on Const. Lim. 160. With much greater reason should the courts hesi- 
 tate to oppose legislation beforehand, by preventing a citizen from seeking from the 
 Legislature the exercise of such judgment. It is, therefore, held, in People v. Canal 
 Board, 65 N. Y. 399, that " courts will not and cannot restrain the Legislature, either 
 directly or indirectly ; * * * nor restrain or prohibit a citizen from petitioning 
 the Legislature, or any public body, or asking action by either in Ms behalf, whether 
 with or without the authority of law, unless to do so would be a violation of some 
 covenant or agreement with others." 
 
 In New York, the courts would, moreover, be without power to compel obedience 
 to an injunction against an individual to prevent his petitioning the Legislature, or to 
 punish disobedience of such injunction ; for it is provided by statute, 1 R. S. Ed- 
 19 
 
290 APPLICATIONS TO PARLIAMENT. 
 
 ent in their legal import and bearings, viz., first, applications to 
 parliament without more, by the corporation itself, acting, of 
 
 monds ed. p. 85, sec. 19, that, "it is the right of the citizens of this State to petition 
 the governor or either house of the Legislature, and all commitments and prosecu- 
 tions for such petitioning are illegal." 
 
 Story V. Jersey City and Bergen Point Plank-road Co. 16 N. J. Eq. 13, was a case 
 in which a bill was filed by a stockholder of the company, praying, among other 
 things, that the plank-road company, defendant, be enjoined from making any appli- 
 cation to the Legislature for authority to abandon any part of its road, or to change 
 fundamentally the objects of the company, or to alter fundamentally the structure of 
 its road. The Chancellor says: "This, it is believed, is the first instance in this 
 country of an application to a court of equity to restrain, by writ of injunction, an 
 application to the Legislature for any purpose, either of public or private concern. 
 It is admitted that there is no American precedent for the exercise of such power. 
 This fact in itself, though not decisive, is a persuasive argument against the propriety 
 of its exercise. In England, though applications to parliament have been restrained 
 by injunction, the practice is of very recent origin, and there are but few reported 
 cases of its exercise. It was adopted by Vice-Chancellor Shadwell, in 18S1, in Cun- 
 liff V. The Man. <fe Bolt. C. Co. and in Ware v. The Grand Junction W. W. Co. 2 Kuss 
 <fe M. 470, and note. The former case was compromised without appeal ; the latter 
 was reversed on appeal by the Lord Chancellor. In 2 Phillips, 666 (1848), an injunc- 
 tion was granted by Vice-Chancellor ShadweU to restrain a railroad company from 
 opposing a bill brought before parliament by another railroad company for the amal- 
 gamation of the two companies. On appeal, the injunction was dissolved upon the 
 merits, though the jurisdiction of the court was maintained by Lord Cottenham. In 
 2 Macn. & Got. 100 (1860), an injunction was granted by the Vice-Chancellor, re- 
 straining the defendants from making application to parliament for any act to au- 
 thorize them to abandon certain branch railways, or to authorize anything to be 
 done or omitted by the company inconsistent with, or repugnant to, a covenant en- 
 tered into by them with the complainant. This injunction was also dissolved by 
 Lord Cottenham upontthe merits. In no one of these cases was the injunction re- 
 straining a party from making application to parliament, either in support of or in 
 opposition to a bUl, finally sustained. There are a number of cases in which the 
 courts have enjoined a corporation having funds for distinct objects, from using them 
 to promote an application to parliament for a fundamenatl change in its charter. 
 But this, it is obvious, is an exercise of power resting on very different prini^les. 
 It is simply a restraint upon the corporation of a diversion' of its funds from the pur- 
 poses for which they are held in trust, to other and different purposes. 16 Simons, 226 ; 
 13 Beav. 1 ; lb. 48 ; 5 De G. 4 Sm. 290 ; 10 Hare, 51 ; 16 Jur. 828. The rule seems 
 to be well settled in England, that a court of equity will not, either at the instance 
 of a stockholder or of a third party, restrain a corporation from applying to parlia- 
 ment for an alteration of its charter. Aa has been already intimated, the jurisdiction 
 of the Court of Chancery to restrain a party from petitioning parliament for or against 
 a measure, has been repeatedly affirmed by the English chancellors. Thus, in 2 
 Phillips, 666, Lord Cottenham said : ' There is no question whatever about the juris- 
 diction ; a party who comes to oppose a railway bill in parliament, does so solely in 
 respect of his private interest, not aa representing any interest of the public, or for 
 the purpose of communicating any information to parliament. This court, therefore, 
 
APPLICATIONS TO PARLIAMENT. 291 
 
 t 
 course, by its duly accredited agents, or by tbe members thereof, 
 whether the governing body or private persons, but always in 
 
 if it sees a proper case connected with priyate property or interest, has just the same 
 .jurisdiction to restrain a party from petitioning against a Mil in parliament, as if he 
 were bringing an action at law, or asserting any other right connected with the en- 
 joyment of the property or interest which he claims.' And in the earlier case of 
 Ware it. The Grand Junction Water-works Company, Lord Chancellor Brougham 
 said : ' It is quite idle to represent this as an attempt to restrain by injunction the 
 proceedings of parliament.' It wiU be freely admitted, that the injunction operates 
 directly, not upon the Legislature, but upon the party enjoined, and in no wise inter- 
 feres with the exercise by the Legislature of its rightful powers. But I cannot resist 
 the conviction that such exercise of power, under our form of government, is an in- 
 fringement of the rights of the people and of their representatives. If not a direct 
 iniraction of the bill of rights and of the letter of the constitution, it is in conflict 
 with the spirit of republican government and the structure of its institutions. Every 
 citizen hag an unquestioned right to petition either branch of the Legislature upon any sub - 
 ject of legislation in which he is interested. Every legislator has a right to be informed 
 of the vieyjs and wishes of all parties interested in the enactment of a law. This right to 
 perfect freedom of intercourse between the representative and his constituents is not 
 founded upon any constitutional provision or bill of rights, but springs from the very 
 structure of the government. By what authority shall this court step between the 
 representative and his constituents, and deny to the one or the other the exercise of 
 his political rights in their fullest freedom ? It is conceded that the legislative 
 powers cannot be trammeled by injunction. The Legislature can neither be restrained 
 from legislating upon any subject, nor from exercising their authority to obtain in- 
 formation upon any matter of legislation. And if the Legislature cannot be restrained 
 from asking the information, can the citizen be restrained from giving it ? Are the 
 rights of the representative more sacred than those of his constituents ? It appears 
 to me that the granting of such an injunction is an unauthorized abridgment of the 
 political rights of the party enjoined. The proper b£Sce of courts of justice is to 
 maintain and enforce the legal and equitable rights of parties litigant, as established 
 by existing law. It is no part of their office to determine in advance what laws ought 
 or ought not to be enacted, or to interfere, directly or indirectly, with the course of leg- 
 islation. The complainant's bill is framed upon the theory that the charter of an in- 
 corporated company cannot be altered in any essential particular, even with the con- 
 sent of the corporation, without the consent, express or implied, of every stockholder; 
 and that such alteration would be unconstitutional, as impairing the obligation of the 
 contract entered into between the State and such stockholder. If this doctrine 
 should be admitted in its fullest extent, it is not perceived that it can affect the result 
 of the present application. » * * Whatever limitation may exist to the reserved 
 right of the Legislature to alter or repeal the contract, I am clear that the reservation 
 is in itself valid, and that this court ought not, upon a motion for a preliminary in- 
 junction, to pronounce any alteration, suspension, or repeal of the charter to be un- 
 constitutional or illegal. Much less should this court make such declaration in ad- 
 vance of any actual legislation. The plank-road company were incorporated with 
 power to construct a plank-road upon an ancient public highway, and with the fran- 
 chise of taking tolls thereon. No limit is fixed for the duration of the charter. The 
 
292 APPLICATIONS TO PARLIAMENT. 
 
 their individual character; and, secondly, similar applications, 
 coupled with a proposition to support and defray the same by 
 pledging or charging the corporate funds and assets. 
 
 Legislature have since incorporated a company to construct a horse railroad between 
 the same termini. They have authorized the railroad company to purchase the 
 plank-road. They have also authorized the plank-road company to lay rails upon 
 their track. They have, however, provided that if the plank-road is purchased by 
 the railroad ' company, the plank-road shall be continued ; and if the rails are laid 
 thereon by the plank-road company, they shall be so laid as not to hinder or obstruct 
 public travel. It must be presumed that the public convenience demanded the in- 
 creased facility to be afforded by the construction of the railroad. Of that the Legis- 
 lature were the peculiar exclusive judges. The complainant, a stockholder in the 
 plank-road company, now asks that the company shall be restrained from making 
 any application to the Legislature to abandon or change any part of their route, for 
 this, it is insisted, would be fundamentally changing the objects of the company 
 without his consent ; and that the railroad company, its officers, stockholders, and 
 promoters shall be enjoined from aiding and abetting such application. If this claim 
 have any foundation in law or in equity, which is by no means admitted, and if it be 
 recognized, it would place it in the power of a single stockholder, for his own pecu- 
 niary interest, against the wish of every other stockholder and the convenience of the 
 whole community interested in the line of travel, to prevent even a petition for a 
 change." 
 
 That the English authorities are not applicable to this country, will be, moreover, 
 apparent, when we consider the difference between the power of parliament and that 
 of onr Legislatures. In the United States, " the will of the people, as declared in the 
 Constitution, is the final law, and the will of the Legislature is only law when it is in 
 harmony with, or at least not opposed to, that controlling instrument which governs 
 the legislative body equally with the private citizen." Cooley on Cons. Limit. 4. 
 But the power and jurisdiction of the British parliament " is so transcendent and 
 absolute that it cannot be confined either for persons or causes within any bounds. 
 * * * It can, in short, do everything that is not naturally impossible ; and, 
 therefore, some have not scrupled to call its power, by a figure rather too bold, 
 the omnipotence of parliament." 4 Coke's Inst. 36. So that while in America, the 
 constitutionality of laws can be reviewed in the courts, and the rights of citizens 
 protected from unconstitutional attacks by the Legislature, in Great Britain, the will 
 of parliament is the final law, and no appeal can be taken from its decision to the 
 courts. When, therefore, the action of the parliament takes place, there is no redress 
 for the individual, no matter how unjust the action towards him or the injury he may 
 suffer. The English Courts of Chancery may, therefore, with some show of reason 
 and justice, intervene to prevent private persons or corporations from applying for 
 or setting in motion such parliamentary action. 
 
 In Stevens v. Rut. & Bur. R. R. Co. 29 Vt. App. 545, Chancellor Bennett ob- 
 serves: "It is evident that Lord Brougham, in the case of Ware v. The Grand Junc- 
 tion Water-Works, grounds himself upon the sovereign and uncontrollable powers of 
 the parliament. The change in the charter asked for in that case, would, under 
 most, if not all, the decisions in this country, be regarded as a fundamental one- 
 The argument of Lord Brougham, at least in one particular, does not seem very 
 
APPLICATIONS TO PARLIAMENT. 293 
 
 Now, as has just been seen, it has often been asserted " by- 
 judges of great eminence that the court has power to interfere, by 
 injunction, to prevent an application to parliament ; but they all 
 decline to define the occasion which would justify such an inter- 
 ference, and even to express an opinion as to the difficulty of con- 
 ceiving a case in which any one could be so restrained. Although, 
 in common with my predecessors, I assert th« right to grant an 
 injunction in a proper case, like them, I will not attempt to define 
 my power, but will simply say that this is not a case in which I 
 think I ought to interfere." ^ 
 
 These are the erpressions of Lord Chelmsford, and it is diffi- 
 cult to avoid the conclusion at which, apparently, he arrived, viz., 
 the jurisdiction of chancery in reference to the matters in ques- 
 tion is more of myth than reality. It is the undoubted privilege 
 of every person, legal as well as natural, to petition and otherwise 
 to apply to the crown, that is to say, the supreme legislature, in 
 a formal and respectful manner, whensoever and for whatsoever 
 he pleases. This is a constitutional right, in the exercise of 
 which no subject may be hindered even by the sovereign. How, 
 then, can the Court of Chancery interfere ? 
 
 The ground upon which the English judges have proceeded, 
 or rather have based their dicta, for they have never gone further, 
 is well expressed by Lord Cottenham.** " There is no question 
 whatever about the- jurisdiction : a party who comes to oppose a 
 railway bill in parliament, does so solely in respect to his private 
 interest, not as representing any interest of the public, or for the 
 
 1 Per Lord Chelmsford, L. C. in L. R. Ry. Co. 2 Ph. 666, 6'70; "Ware v. Grand 
 2 Ch. 243. Junction Water-Works Co. 2 R. <fe M. 
 
 * Stockton, (fee. Ry. Co. v. Leeds, <fcc. 4*70, per Broughaifi, L. C. 
 
 sound. He says the company ought to have the power of obtaining an alteration in 
 their constitution, or that the plaintiff ought to have come in as a member of it, un- 
 der certain conditions and limitations. Bpt would the conditions and limitations be 
 more sacred than the constitution itself? And if parliament might change the con- 
 stitution, might they not dispense with the conditions and limitations ? See Amer. 
 Law Mag. vol. 6, p. 93. But with us no Legislature can transcend the bounds of the 
 oonstitution. It is not a constitutional tribunal to hear and settle the rights of the par- 
 ties, as Lord Brougham seems to consider the British parliament. I apprehend 
 that, in this State, no Court of Chancery would restrain a corporation from applying 
 to the Legislature for a fundamental change in their charter ; and a sufficient reason 
 would be, that if the additional power and authority changed the character of the 
 original contract, and defeated the vested, rights of the stockholders, the act would 
 bind such of the stockholders only as consented to the alteration." 
 
294 APPLICATIONS TO PARLIAMENT. 
 
 purpose of communicating any information to parliament. He is 
 not even allowed to be heard as a petitioner against the bill, un- 
 less he has a locus standi in respect of some property or interest 
 liable to be affected by it if it should pass into a law. This court, 
 therefore, if it sees a proper case connected with private property 
 or interest, has just the same jurisdiction to restrain a party from 
 petitioning against a bill in parliament, as if he were bringing an 
 action at law, or asserting any other right connected with the en- 
 joyment of the property or interest which he claims." 
 
 But another body has to be considered, parliament. Any in- 
 junction by chancery, against an application to it, would be an 
 infringement of its privileges, and it need scarcely be observed 
 that the issue of such an injunction would be a contempt of either 
 the House of Lords or the House of Commons, or both, and that 
 every person concerned in any attempt to enforce the same would 
 also be guilty of a similar contempt, and would be liable to a com- 
 mittal to prison as punishment therefor. Accordingly, in the case 
 from the judgment in which the extract on the preceding page is 
 taken, Steele v. North Metropolitan Kailway Company,' the Chan- 
 cellor did not venture to put in motion the asserted powers of his 
 court, and the result has been the same in all other cases.^ The 
 defendant company had agreed to purchase the land of a land- 
 owner, and had a clause to that effect inserted in their bill, where- 
 upon he withdrew his opposition to the bill. They afterwards 
 promoted a bill to enable them to abandon the branch which affected 
 the land in question, and to repeal that clause. Eoth Page-Wood, 
 V.-C, and the Lord Chancellor, on appeal, declined to restrain the 
 company from making the application. 
 
 Indeed, there is but one, and that a peculiar case, where the 
 Court of Chancery has interfered to prevent such an application. 
 In the case in question, "Ward v. Society of Attorneys,' Knight- 
 Bruce, Y.-C, granted, until the hearing, an injunction, restraining 
 the majority of the members of a corporation from surrendering 
 their charter, with a view to obtaining a new charter for an object 
 different from that for which the original charter was granted. 
 
 ' L. R. 2 Ch. 237. Leeds, (fee. Ky. Co. 2 Ph. 666 ; and 
 
 * See Cunliff v. Manchester, <fec. Ry. Heathcote v. North Staffordshire Ry. Co. 
 
 Co. 2 R. <S[ M. 480, n., where an injunc- 2 M. & G. 100, where injunctions were 
 
 tion was granted by Shadwell, V.-C, but either not granted or dissolved on ap- 
 
 the case was compromised on appeal, peal, 
 
 ■Waren. Grand Junction Water-Works-Co. s \ Qq]] 31^0. 
 
 2 R. & M. 470; Stockton, Ac. Ry. Co. v. 
 
APPLICATIONS TO PARLIAMENT. 295 
 
 The injunction was only temporary, and the Yice-Ohancellor ap- 
 parently considered that the proceedings of the majority were 
 detrimental to the corporation, and that on that ground the 
 minority had an equity enabling them to call for the interference 
 of chancery. But whether the decision can be upheld or not, it 
 has not since been followed. Chancellors and courts have reiter- 
 ated their inherent jurisdiction to restrain applications to the 
 crown ; but they have never done so. Cases have arisen impera- 
 tively demanding chancery to intervene, if it could do so — appli- 
 cations made or about to be made, not merely with mala fides, 
 but in direct breach of solemn engagements — but the courts have 
 been content to lament the want of good faith, and to comment 
 in strong terms upon the fraud ; but they have not gone further. 
 
 In Att.-Gen. v. Manchester & Leeds Railway Company,^ a 
 cause had been commenced with respect to the building of a 
 bridge by the defendants in a manner detrimental to the public, 
 afld, pending a motion, an agreement was come to, that no change 
 in the existing state of things should be made until the hearing of 
 the cause. Notwithstanding this the defendants inserted, in a bill 
 which they had before parliament, a clause liberating them from 
 the agreement, and enabling them to do what they had under- 
 taken not to do ; and the Lord Chancellor Cottenham, while com- 
 menting very strongly on the conduct of the defendants, declared 
 himself unable to interfere. 
 
 In Lancaster and Carlisle Railway Company v. North- West- 
 ern Railway Company,' the defendants had expressly agreed, in 
 consideration of the plaintiffs withdrawing their opposition to a 
 biU which the defendants were promoting, to erect their terminus 
 at a certain spot, and not to carry their line in certain directions 
 without the consent of the plaintiffs. Afterwards they brought 
 forward another bill in parliament, authorizing them to make 
 their line, terminus, &c., without paying any regard to this agree- 
 ment ; and Page-Wood, Y.-C, refused a motion on behalf of the 
 plaintiffs for an injunction to restrain them. 
 
 Perhaps the strongest instance reported is that of lie London, 
 Chatham and Dover Railway Arrangement Act {Ex parte Hart- 
 
 • 1 Eail. Gas. 436. Junction 'Water-Works Company, 2 B. <fe 
 
 5 2 K. <fc J. 303; 25 L. J. (Ch.) 223. M. 470; Astley v. Manchester, Sheffield 
 
 See also Stevens v. South Devon Railway and Lancashire Railway Company, 2 D. 
 
 Company, 13 Beav. 49 ; Ware v. Grand G. <fc J. 463. 
 
296 APPLICATIONS TO PAELIAMENT. 
 
 ridge and Alleiider).i The "arrangement" act (30 & 31 Vict. c. 
 ccix) provided that no suits or other proceedings against the com- 
 pany, with certain exceptions, should be prosecuted during a pe- 
 riod of ten years, without the consent of the Court of Chancery. 
 Hartridge and Allender had been appointed by the court the rep- 
 resentatives of the stock and shareholders of the company, to 
 prosecute certain inquiries. A bill was introduced into parlia- 
 ment for conferring additional powers on the company, and was 
 promoted by the directors on behalf of the company. Its pro- 
 visions were approved of by the mortgagors and shareholders in 
 general meeting; but while in the House of Commons it was 
 very materially modified. Thereupon Hartridge and Allender, as 
 the representatives of the stock and shareholders, applied to the 
 court to restrain the directors from further promoting, in the name 
 of the company, the said bill, or any other bill in parliament, af- 
 fecting the rights and interests of the stock and shareholders, 
 without obtaining the previous sanction of the court. Stuart) 
 Y.-C, having commented very strongly upon the conduct and 
 general proceedings of the directors and certain other persons of- 
 ficially connected with the company, granted the injunction. On 
 appeal, however, the Lords Justices, while agreeing with the Vice- 
 Chancellor that the court " has a power to act in personam, and 
 if a proper case should be proved, to restrain any person from 
 making an improper application to parliament," held that this was 
 not a fit occasion for the court's interference, and accordingly dis- 
 charged the injunction. 
 
 It has sometimes been attempted to draw a distinction between 
 applications to the Legislature which are based on puhUc, and those 
 on private grounds, and to assert that though the former cannot 
 be restrained, yet the latter may be. Bacon, Y.-C, thus alludes to 
 this distinction : ^ " The main stress of the argument, which Mr. 
 Eddis has urged so ably and so fully, is, that no such relief as the 
 plaintiff asks in this case can be given to him, because it would, in 
 fact, be restraining an application to parliament by a public body 
 in the discharge of a public duty, and in which public interests are 
 concerned. I thought that the law on this subject was at least as 
 
 ■ L. R. 6 Ch. 671. way Company, 2 K. i& J. 298, 304 ; 26 L. 
 
 = L. R. 13 Eq. 594. Compare Page- J. (Ch.) 223, 227. See also Att. Gen. v. 
 
 Wood, V.-C, in Lancaster and Carlisle Ely, <Scc. Railway Company, L. R. 4 Ch. 
 
 Railway Company v. North Western Rail- 194. 
 
APPLICATIONS TO PARLIAMENT. 297 
 
 well settled as any other law of this court. You cannot restrain a 
 man from going to parliament on public grounds; you cannot 
 usurp that authority which rests only with the Legislature ; you 
 can shut no man's mouth ; but if he is going on in violation of a 
 plain contract, which is personal to himself, with which the public 
 interests have nothing whatever to do, you cannot, under the pre- 
 tense that he is going to parliament, refuse the relief which, if 
 there were no question about parliament, this court would be 
 bound to give." 
 
 The distinction may perhaps exist ; but, if so, the only effect of 
 it must be this, viz., the Court of Chancery would decline to inter- 
 fere with applications to parliament, when based upon public 
 grounds, for the simple reason that, apart from any question of its 
 jurisdiction, it would not allow its powers to be turned to the 
 detriment of the public. 
 
 II. The courts will prevent both corporations and ordinary 
 citizens from hreahvng agreements not to oppose applica- 
 tions to pa/rliamient, semble.(a) 
 
 The right to petition against, and that of promoting, a bill in 
 parliament would seem to depend upon exactly similar considera- 
 tions. But it has been asserted, in the most unqualified manner, 
 that the court has jurisdiction to restrain parties, if not generally 
 from opposing bills, at least from breaking agreements not to op- 
 pose. " This court, therefore, if it sees a proper case connected 
 with private property or interest, has just the same jurisdiction to 
 restrain a party from petitioning against a bill in parliament, as if 
 he were bringing an action at law or asserting any other right con- 
 nected with the enjoyment of the property or interest which he 
 claims." This was the opinion of the Lord Chancellor Cottenham, 
 in Stockton and Hartlepool Eailway Company v. Leeds and Thirsk 
 Eailway Company,^ where, however, his lordship refused the in- 
 junction prayed, holding that the alleged contract had not finally 
 been agreed on. But the jurisdiction in the two cases of opposi- 
 tion to and of promoting a bill, claimed on the same grounds, and 
 supported by the same "arguments, must in each case alike stand or 
 
 ' 2 PhUl. 666. 
 
 (o) See People v. Canal Board, 86 N. Y. 400, and post, note to page 299. 
 
298 
 
 APPLICATIONS TO PARLIAMENT. 
 
 fall. The constitutional principles affected in the one. case are 
 equally affected in the other, and the reasoning that is bad or good 
 when applied to the one must be pronounced equally bad or good 
 when applied to the other. As a matter of fact, the court has not 
 yet restrained against a breach of a covenant not to oppose, much 
 less the simply opposing a bill.^ 
 
 III. Corporations will not he restrained from merely appl/ying 
 to the swpreme government of a/nother nation, for the 
 purpose of a/mending their powers or otherwise modifying 
 their constitution. 
 
 Nor will the court prevent an application to a foreign Legisla- 
 ture. There can be no doubt of the jurisdiction of the courts in 
 this respect. The legal tribunals of this country are under no 
 duties to foreign States, and may exercise their functions without 
 regard to their wishes or intervention. Nevertheless, they do not 
 interfere in such cases, unless it can be shown that the proposed 
 applications amount to a fraud on the members complaining, or 
 are to be carried on at the corporate expense. In BiU v. Sierra 
 Nevada Lake, &c. Company,' a company had been formed in 
 California, for purposes connected with land in that country ; but 
 nearly all the shareholders were resident in England. A resolu- 
 tion was passed, at a meeting of English shareholders, authorizing 
 the trustees to take steps for increasing the preference shares 
 to an extent not allowed by the existing constitution of the 
 company. One of the shareholders, objecting to the creation 
 of these preference shares, filed a bill to restrain the company and 
 its directors from issuing the same. It appeared that there was 
 no intention to create the preference shares, except with the 
 sanction of the California Legislature; and the Lords Justices 
 discharged the order of the Yice-Chancellor, and decided that an 
 injunction ought not to be granted to restrain the company from 
 acting on the resolution, holding that the court will not in general 
 restrain parties from applying to the Legislature, whether of this 
 or of a foreign country. 
 
 ' Parker v. River Dunn Navigation '1 D. G. F. <fe J. 177 ; see as to the 
 
 Company. 1 D. G. <fe Sm. 192; Maunsell jurisdiction of the court in analogous 
 
 ■0. Midland Great Western Railway Com- cases, Bulkeley v. Sohntz, L. R. 8 P. C. 
 
 pany of Ireland, 1 H. <fe M. 162. 764 ; Smith v. Wegnelin, L. R. 8 Eq. 198. 
 
APPLICATIONS TO PARLIAMENT. 299 
 
 IV. Though jpersons will not he restrmned from applying to 
 parliament, even in hreach of agreements to the contrary, 
 they will he Gompelled to observe contracts which they may 
 have entered into collateral to such application.{a) 
 
 It must, however, be conceded that the Court of Chancery 
 has jurisdiction, on a proper case made out, to restrain parties froy 
 
 (ffl) Qiuere. While it is true, that it is against public policy to prevent the exer- 
 cise of the right of petition, in regard to subjects of political interest, ^hat consid- 
 erations prevent the waiver of this right as regards matters purely personal ? Why 
 may not a contract be enforced, founded on proper consideration, to forego applica- 
 tion to, or opposition against, legislative action in matters affecting only the 
 contracting parties, neither of whom is a legislator ? The only doubt is to be found 
 in the anxiety which courts manifest to avoid even the appearance of evil. See 
 Marshall v. Bait. & Ohio R. R. Co. 16 How. 314. 
 
 In Low V. Railroad, 46 N. H. 284, the court say : " If the Vermont Central 
 Railroad was making opposition to this bill, upon grounds not of a public character, 
 but to protect or advance its private interests, the plaintiff might lawfully induce 
 that corporation to withdraw such opposition by considerations bearing upon its 
 private interests. In repeated instances this has been sanctioned by the English 
 courts, in cases where individuals and turnpike and bridge companies have been 
 induced to cease opposition to the incorporation or extension of railways, by indem- 
 nities for the injuries likely to be caused by such railways. There might be cases 
 where the withdrawal of opposition to such bills, caused by compensation secured 
 to the persons making it, would be against public policy and illegal, although such 
 opposition was merely of a private nature, as when the fact of compensation was by 
 design concealed from the Legislature by the parties, knowing that the nature of the 
 case was such that the Legislature would be misled by the withdrawal of opposition, 
 and might be induced to do what, with a knowledge of all the circumstances, they 
 would not do. If, however, the opposition was of a private character, and merely to 
 protect private interests, and it was afterwards withdrawn in consideration of a 
 satisfactory indemnity for the injury anticipated, and there was no purpose to con- 
 ceal the arrangement from the Legislature, we do not perceive that it would be open 
 to objection ; and the cases are numerous in England where such arrangements are 
 held to be valid." But in Pingrey v. Washburn, 1 Aik. 264, Skinner, C. J., says : 
 " The record shows that the defendant below offered to give evidence of a contract 
 or agreement between himself and the corporation " (for whose use the plaintiff 
 sued), "that if he would not oppose the passing of the Act of 1822, the defendant, 
 and all the inhabitants of Mount Holly, should pass the gate toll free. Whether the 
 testimony was rejected on the ground that defendant did not desist, or that he pro- 
 cured the conditions to be annexed to the act without the consent of the corpora- 
 tion, or that the contract is against sound policy, does not appear ; but that such a 
 contract is against sound policy, prejudicial to correct and just legislation, and, of 
 course, void, is not to be questioned." See, also, Reed v. Tobacco Warehouse Co. 2 
 Mo. App. 82. 
 
300 APrLICATIONS TO PARLIAMENT. 
 
 entering into contracts and making arrangements derogatory to 
 their own agreements, or to the rights of third persons, prelim- 
 inary and incidental to applying to parliament. Telford v. Met- 
 ropolitan Board of Works ^ is in point. It arose out of the 
 following circumstances : After the passing of the Metropohtan 
 Commons Act, 1866, the plaintiff, a part owner, and the other co- 
 owners, of a manor, the. waste of which became, under the above 
 statute, a metropolitan common with the board of works as its 
 local authority, sold and conveyed the manor, with the knowl- 
 edge of the board, for a sum of £10,200, to two trustees, who 
 afterwards sold and conveyed the same to the board of works. 
 By the former conveyance, the plaintiff (being the owner of 
 house property near the common) stipulated that, if within five 
 years from the date of the deed the common should not be 
 inclosed and dedicated to the public, having no part of it sold or 
 let on building leases, he (the plaintiff) should repurchase his share 
 of the manor on giving the same price for it as he was then 
 receiving. The board of works, with notice of this stipulation, 
 memorialized the inclosure commissioners to prepare and certify a 
 scheme of local management, and the commissioners, on the sug- 
 gestion of the board, published a scheme, whereby it was proposed 
 to give the board power to sell or let, on building leases, a small 
 outlying portion of the common, for the purpose of recouping to 
 the board their expenses of and attending the inclosure. There- 
 upon the plaintiff filed his bill to restrain the board from promot- 
 ing the scheme, or any scheme inconsistent with the stipulation 
 originally made with him ; and Bacon, Y.-C, decided that the 
 board of works were bound by the stipulation in the conveyance 
 by the plaintiff, and also that his right, under the stipulation, to 
 sue in equity, was not affected by the circumstance that the 
 scheme, in order to become operative, must be submitted to par- 
 liament ; and he granted the injunction as prayed. 
 
 Y. It is not ultra vires of corporations, to make applications 
 to the supreme legislature, and to support them at the cor- 
 porate expense, if none of their members raise objections. 
 
 These applications are ultra vires in the narrower signification 
 of the term ; in other words, they may be, and very generally are, a 
 
 ' L. R. 13 Eq. 574. Compare Att.- Company, 1 Rail. Cas. 436; see Fremn 
 Gen. V. MancheBter & Leeds Railway v. Lewis, i My. & Cr. 249. 
 
APPLICATIONS TO PARLIAMENT. 301 
 
 breach of trust on the part of the corporation, considered as a part- 
 nership, as against its members. But this is all ; if the members 
 acquiesce, it is not open to any one else, whether the corporation it- 
 self or third parties, to make the objection of illegality. Such, at 
 least, is the effect of the decision in Bateman v. Mayor, &c. of Ash- 
 ton-under-Lyne.^ A company had been incorporated by 5 & 6 
 Will. lY, c. 61, to supply A. with water; and by 18 Yict. c. 70, the 
 water-works were transferred to defendants. The original act 
 fixed the share capital of the company, and defined the area from 
 which the water was to be taken and to which it was to be sup- 
 plied. Complaints having arisen of the defective supply, the com- 
 mittee of management resolved, having obtained the sanction of 
 the shareholders, to apply to parliament for power to make fresh 
 works, so as to include a much larger area ; and they entered into 
 a contract with the plaintiff to prepare the necessary parliamentary 
 plans. It was held by two of the judges of the Court of Ex- 
 chequer, Bramwell, B., dissenting, that such contract was not 
 ultra vires, and that, consequently, the defendants were liable to 
 pay the plaintiff for the work done. 
 
 Now, in comparing this case with others of the same kind, and 
 which will be dealt with later on, it must be remembered that the 
 latter arose in chancery, where the question was whether a ma- 
 jority of shareholders could compel a dissentient to submit to a 
 considerable variation and to incurring expense in obtaining power 
 to make such variation in both the nature and the magnitude of 
 the undertaking. The question was raised nxerely as between the 
 corporation and its members, and not as to whether such applica- 
 tions are ultra vires, in the strict sense, of the corporation. In 
 Bateman's Case, on the other hand, this was what was in dispute ; 
 and Martin and Channell, BB., though Bramwell, B. dissented, 
 held the negative. Unquestionably the decision here arrived at 
 satisfied the requirements of justice, but, whether it is in perfect 
 accord with the judgment delivered under other not very dissim- 
 ilar circumstances, may, perhaps, be open to doubt. 
 
 YI. It is not ultra vires to make contracts and to incur expense 
 prelminary to applications to parliament. 
 
 This proposition would almost seem to be incltided in the last. 
 
 ■ 3 H. & N. 323 ; 27 L. J. (Ex.) 458. 
 
302 APPLICA.TIONS TO PARLIAMEIfT. 
 
 If applications to parliament are allowable, it mast follow that the 
 incidentals to, and preliminaries of, such applications (not being 
 otherwise objectionable), must also be allowable. In addition this 
 was the precise point decided in Bateman's Case. 
 
 The next question is whether this power can be exercised as 
 between a corporation, and some of its members objecting, that is, 
 whether or not the exercise is uWra vires in the improper sense. 
 In considering this, two matters must be clearly distinguished, viz., 
 applications to the Legislature, and their purpose or result. The 
 former is what is now directly in consideration ; but it will be con- 
 venient to deal with the latter so far as it bears upon the subject. 
 
 VII. The constitution of a corporation may he changed hy the 
 act of the Legislature, without the assent, and even con- 
 trary to the wishes, of the corporators. 
 
 First. If a person proposes, e. g., by making an offer to take 
 shares,^ to become a member of a corporation having a definite 
 constitution, or engaging in a particular enterprise, and a material 
 change be made in the constitution or the enterprise, it is quite 
 clear that such person cannot be compelled to complete his pro- 
 posal or inchoate contract. 
 
 Secondly. It is equally clear that no material change may be 
 made in the constitution or enterprise by a corporation itself, by 
 its own resolutions, contrary to the wishes of any one of its mem- 
 bers. 
 
 Thirdly. But suppose such a change be made by the Legisla- 
 ture ; suppose a statute to this effect actually passed ; what then is 
 the position of dissentients ? 
 
 The State may, with or without the assent of the corporators, 
 with or without directly directing compensation to be made by 
 act of parliament, make any alterations and deal in any way what- 
 ever with the constitution, property, rights, franchises of corpora- 
 tions or their members of every description.(a) 
 
 In Canada, Car. &c. Co. v. Harris,^ where the plaintiffs had 
 first been incorporated by letters patent and subsequently by stat- 
 
 ' See Goldsmid's Case, 16 Bear. 262; « 24 Can. C. P. (ISYS) 380. 
 
 Blake's Case, 34 Beav. 639. 
 
 (a) See note on alteration of charters, ante p. 96, 
 
APPLICATIONS TO PARLIAMENT. 303 
 
 ute, which greatly altered the company's constitution and the rights 
 and liabilities of the members, it was held that the defendant, an 
 original member, was bound by such alteration, and that the court 
 could not in any way relieve him from the provision and effects 
 of the statute. 
 
 But though the abstract power thus exists, as a fact, it is never 
 despotically put into force. Every person, corporator or private 
 individual, liable to be affected by any proposed private bill, has 
 a right to be heard, and is heard most patiently before and by the 
 committees to whom the bill is submitted. 
 
 VIII. Corporations may apply and join in applications to the 
 Legislatwre, provided this is not done at the corporate 
 expense, {a) 
 
 This proposition is indeed only a re-enunciation of the prin- 
 ciples set forth in the first part of this chapter. But there the 
 question was dealt with in an abstract and general form ; here 
 the practical effect comes into play, the effect which is caused by 
 the fact that an application supported by a majority of coirporators 
 against a dissentient minority may be made in the name of the 
 corporation. This, though, perhaps, theoretically unimportant, 
 since it is competent for the minority to appear before parliament 
 and oppose the application, has, it is needless to remark, very 
 great weight in practice. The outside investing public see and 
 know that the corporation is making or supporting the applica- 
 tion ; they do not know what the opposition is. Such a proceed- 
 ing, it has been repeatedly decided, is perfectly allowable. 
 
 In the Great "Western Ey. Co. v. Eushout,^ the Oxford, "Wor- 
 cester & Wolverhampton Ey. Co., of which Eushout and others 
 
 ' 6 De G. lit Sm. 290, 307. From this ment, may make these applicatioDs in the 
 
 case it follows that the directors or other corporate name. See, also, Lyde v. Eas* 
 
 governing body of a corporation, if en- ern Beilgal Ey. Co. 36 Beav. 10. 
 dowed with general powers of manage- 
 
 (a) The principle upon which these rules are founded is the same as that which 
 forbids the use of corporate funds for purposes not authorized by the charter. If any 
 individual stockholder chooses to employ his own money, in legitimate expenditure, 
 to obtain any a&endment to the charter, he is at liberty to do so, but he cannot em- 
 ploy for this end the money of the corporation, which has been contributed for other 
 objects. 
 
304: APPLICATIONS TO PARLIAMENT. 
 
 were directors, (a) and in wliicli the plaintiffs held shares, were pro- 
 moting a hill in parliament, and the plaintiffs filed a hill to re- 
 strain the defendants from employing their company's name, and 
 from expending or pledging its funds in support of the same, 
 Parke, V.-C, thus expressed himself: "The design of the appli- 
 cation to parliament, which is the subject of this suit, is to vary 
 the scheme of this railway company. Now, in my opinion, hav- 
 ing regard to the cases which have been referred to, the design of 
 the application to parliament is a lawful design if lawfully pur- 
 sued. Parliament created this company, and I think the power 
 must rest with parliament to vary the constitution of the com- 
 pany, to control it, to annihilate it, or to deal with it as in its wis- 
 dom it shall think fit. It is clearly not in dispute that the com- 
 pany mean to make use of the funds, and to pledge the credit, 
 and to enter into contracts on behalf of the Oxford, Worcester & 
 Wolverhampton Ey. Co., for the purpose of promoting this un- 
 dertaking. Now, upon all the authorities referred to, that is an 
 unlawful application of the funds,, and an application which this 
 court will not permit." He, therefore, granted an injunction to 
 restrain the entering into such contracts, or the use of the com- 
 pany's funds or the pledging its credit for the purpose of promot- 
 ing the bill ; but he would not go further and prevent the de- 
 fendants from soliciting the bill or another like it in parliament, 
 or from using the company's name and seal for such purpose. 
 
 It should be noticed that the Yice-Chancellor, in his judgment 
 in the above case very carefully distinguishes between a simple 
 application to parliament, " which is a lawful design if lawfully 
 pursued," and such an application defrayed out of the corporate 
 property, which is unlawful if any one shareholder objects. On 
 this point Page-Wood, V.-O., commented in Yance v. East Lanca- 
 shire Ky. Co.^ — " Mr. Bird contended that if it was once admitted 
 that the directors had power to come to parliament for the act, 
 
 ' 3 K. <fe J. 50. 
 
 (a) The general powers given by the charter of a manufacturing company to the 
 directors, to manage the stock, property and affairs of the corporation, do not enable 
 them to apply to the Legislature for an enlargement of the company's powers ; such 
 application could be made by the authority of the company only. The resolye of 
 the assembly giving power to the company to assess the stockholders, was void, be- 
 cause the application was made by the directors only, without any authority from 
 the company. Marlborough Manuf. Co. v. Smith, 2 Conn. 588. 
 
APPLICATIONS TO PARLIAMENT. 305 
 
 all powers incidental to that must be inferred. It is quite clear 
 that this is too large an inference ; for instance, one of the most 
 necessary consequences of applying for an act, viz., the incurring 
 expense, is just what this court will not permit. If they apply to 
 parliament for an act, the court will not prevent them from so 
 doing on the ground of dissenting shareholders objecting to it ; 
 but they are not permitted to apply any portion of the funds to- 
 wards any part of the expenses necessary for this new purpose. 
 They cannot divert the funds to any purpose other than those 
 sanctioned by the existing act pf the corporation." 
 
 Stevens v. South Devon Ey. Co.,* is another well-known 
 authority. Here there were two classes of shareholders. A gen- 
 eral meeting authorized the directors to apply to parliament for 
 an act which would materially alter the existing rights and in- 
 terests of the two classes, inter se. A shareholder of one of the 
 two classes moved for an injunction to restrain the application to 
 parliament, and the use of the corporate seal, and the expenditure 
 of the corporate funds for such purposes; but the court refused 
 to restrain the application to parliament, or the use of the corpo- 
 rate name and seal in support thereof ; though it would not per- 
 mit the expenditure of the funds of the company in the payment 
 of the costs of such application. 
 
 IX. It is, if not actually ultra vires, at least improper on the 
 part of a corporation, which is applying to parliament, 
 to make contracts and to enter into other transactions, on 
 the assumption that its application will ie suecessfvl. 
 
 But though the courts allow applications to be made in the 
 corporate name, provided the corporation does not thereby incur 
 liability, yet they watch the permission very jealously, and will 
 not allow any arrangements to be made which actually or by their 
 tendency involve the corporation in liability. Arrangements of 
 the kind now referred to may easily enough be made, and gener- 
 ally are made, contingent on the granting the application ; and 
 they, consequently, do not involve the corporation in any liability 
 till the result thereof is known. Nevertheless, the tendency of 
 such contingent arrangements is bad ; for, despite all precautions, 
 the corporation may become involved in liabilities actual, and not 
 
 ' 13 Beav. 49. 
 20 
 
306 APPLICATIONS TO PARLIAMENT. 
 
 contingent, on obtaining the contemplated increase of powers. 
 Consequently, the Court of Chancery sets itself against such pro- 
 ceedings, and, on proper cause shown, restrains them, (a) It will 
 be understood that the arrangements which are within this rule 
 and obnoxious, are such as raise the idea that the corporation has 
 what in reality it has not, viz., the capacity in question, or is en- 
 tering into definite and binding, not contingent, arrangements. 
 The rule does not apply to other agreements collateral to applica- 
 tions to parliament, many of which, as will be seen in the next 
 section, are perfectly good. 
 
 Yance v. East Lancashire Ry. Co.^ is a case in point. This 
 was an application by a shareholder to restrain his directors from 
 issuing certain shares, &c. At an extraordinary general meeting 
 the directors had been authorized, almost unanimously, to apply 
 for a bill for an extension of their line ; and in contemplation of, 
 and conditional upon, the passing of the act, to issue new £5 per 
 
 ' 3 K. <fe J. 60. Compare Hattersley v. Earl of Shelburne, 31 L. J. (Ch.) 873. 
 
 (a) In New Haven <fc Northampton Co. v. Hayden, 107 Maas. 626, an agreement 
 had been made by the defendants with the plaintiff, that if the plaintiff would extend 
 its road to a point beyond the limits authorized by its charter, the defendants would 
 make certain subscriptions, pay the installments thereon, procure rights of way, and 
 obtain needful legislation to enable the plaintiff to merge or consolidate itself with 
 other railroad companies named in the agreement. The plaintiff at this time had no 
 authority to extend its railroad, but subsequently obtained authority from the Legis- 
 lature ; an action was sustained against the defendants for failure to secure the right 
 of way. The Court say : " It is true that, at the date of this transaction, the plaintiff 
 had no authority to extend their railroad farther north than Northampton, and if their 
 contract had been simply to do what they had no legal capacity or right to do, it 
 would have been whoUy void. But this is not the true interpretation of the contract. 
 It was a part of the defendants' proposition to obtain from the Legislature of the 
 commonwealth a statute for the purpose of removing the difficulty, that is to say, as 
 we understand it, they undertook to make an application, and to take the usual and 
 proper means for obtaining such a statute. This was a matter in which neither party 
 had reason to apprehend difficulty, and the desired authority was in due time granted 
 for the extension of the road, and the increase in the capital stock of the company 
 necessary for that purpose. * » « The agreement was, in substance, to do some- 
 thing not at that time legal, but which the passing of an expected statute would 
 render legal; and both parties must have understood that, if the sanction of the 
 Legislature should be withheld, the contract would not go into effect. The contract 
 does not import that the plaintiffs bound themselves to construct the road at all 
 events and without legislative authority. Many cases have arisen in which contracts 
 made in anticipation of such authority have been before the courts." See Mor. <fe Es. 
 R. R. Co. V. Sussex R. R. Co. 19 N. J. Eq. 13 ; s. o. 20 N. J. Eq. 542 ; StrasburgR. R. 
 Co. <;. Echternacht, 21 Penn. St. 222. 
 
APPLICATIONS TO PARLIAMENT. 307 
 
 cent, preference shares upon certain terms, &e. The directors, 
 by their affidavit, stated that the subscription to these shares was 
 entirely conditional upon the act, that they did not intend to pay 
 any dividend till the same was obtained, and that the £3 deposit 
 paid upon these shares was carried to a separate account, and de- 
 voted solely to the preliminary expenses. 
 
 The Vice-Chancellor, after admitting the right of the directors 
 to apply for the act, held that they were not justified in the way 
 they were issuing the shares : " All this is done, it is true, in an- 
 ticipation of a new act of parliament. But I apprehend that it 
 was a course of proceeding altogether irregular. It may not have 
 been intended, perhaps, so to be ; but it strikes me as being a very 
 irregular course of proceeding on the part of the directors. They 
 are not put forward as the servants and agents of the promoters 
 of the proposed new line, and as authorized to receive subscrip- 
 tions to that line, and to engage in inducing parties so to sub- 
 scribe ; that the act to be applied for shall enact that aU the share- 
 holders in the undertaking shall be deemed to be shareholders in 
 the old undertaking; that the shares shall form part of the original 
 stock, and shall have a preferential dividend of £5 per cent. That, 
 as it seems to me, would have been the regular and ordinary course 
 of proceeding, * * * It may be difficult, at this moment, to 
 show that any positive liability would be cast upon the plaintiff or 
 any other shareholder of the company by issuing these specific 
 shares ; but that is a question which he may fairly say is not now 
 to be mooted. * * * The broader ground which the plaintiff 
 may take is this : ' I am a shareholder in a company which has 
 nothing to do with the 0. & B. extension ; you are acting as di- 
 rectors of my company, and you are not to put anybody in pos- 
 session of documents, and teU those persons that, on the faith of 
 those documents, they are to be treated as shareholders in my rail- 
 way ; and that if a certain act of parliament shall pass making 
 them shareholders in a certain other railway, then they are to have 
 a considerable advantage over me.' " 
 
 X. If the necessary powers he inserted m the constating in- 
 struments, it will not be ultra vires to make these appli- 
 cations even at the corporate cost. 
 
 It is quite possible for the constitution of a corporation to be 
 such as to enable it, at the corporate expense, to apply to par- 
 
308 APPLICATIONS TO PARLIAMENT. 
 
 liament for additional powers, and the like. And when this is so, 
 ;the authority to make such application may be vested, either ex- 
 pressly or impliedly, in the directors or other governing body. 
 Under such circumstances no shareholder, nor any number of 
 shareholders less than a majority, will be competent to prevent 
 the corporation, or its managing body, from defraying, out of the , 
 wrporate funds, the costs of any application to the Legislature 
 'which may be thought necessary. Lyde v. Eastern Bengal Ey. 
 'Co.i establishes this proposition. The defendants were incorpo- 
 rated by an act of parhament. Subsequently to the act their 
 deed of settlement was executed, whereby, amongst other very 
 wide powers, it was provided that " the directors shall have the 
 fullest power from time to time, at their discretion, to apply to 
 parliament for an act or acts for conferring on the company aU 
 such powers for extending the undertaking * * as the direc- 
 tors from time to time think fit." The directors introduced a bill 
 into parliament to enlarge the objects and purposes of the com- 
 pany ; thereupon the plaintiff, on behalf of himself and the other 
 shareholders, filed a bill, and moved for an injunction to restrain 
 the payment of the costs of this bill out of the company'^ funds, 
 but the Master of the KoUs refused the motion, holding that the 
 powers, unprecedented and, indeed, dangerous, as far as the share- 
 holders were concerned, given to the directors, fully justified them 
 in their application. 
 
 XI. Commercial corporations not so specially empowered, 
 may not make applications to parliamient for any pur- 
 pose whatever at the corporate expense, if any members 
 object to the same. 
 
 Such applications are ultra vires in the narrower and restricted 
 meaning of the term. A corporation may, with the assent of all 
 its members, defray the expense of these applications out of its 
 general funds. Such proceedings are not ultra vires in the sense 
 that a corporation may not concur in them, but only in the sense 
 "that any single member may refuse to allow them to be supported 
 at the corporate cost. 
 
 One of the strongest cases as to this proposition is that of 
 Munt V. Shrewsbury & Chester Ry. Co.' The defendants here 
 
 ' 36 Beav. 10. Ry. Co. 13 Beav. 49 ; Simpson v. Deni- 
 
 ^ 13 Beav. 1 ; Stevens v. South Devon son, 10 Hare, 51 ; Great Western Ry. Co. 
 
APPLICATIONS TO PARLIAMENT. 309 
 
 had been by various acts empowered to make several railways and 
 also to build wharfs and warehouses for the purposes of the traffic 
 of the company on the banks of the river Dee, the conservancy of 
 which was vested in other persons. They brought a bill into par- 
 liament to preserve and improve the navigation of the river ; but 
 they had no express power to apply any of the capital of the com- 
 pany for that purpose. Upon a bill filed by one shareholder, it 
 was held, that the directors of the railway company could not 
 legally devote any of the railway capital to payment of the ex- 
 penses of preparing, prosecuting or promoting the bill in parlia- 
 ment; and the injunction prayed for to restrain the same was 
 granted. 
 
 XII. Commercial corporations man) resist applications hy others 
 which have, as the direct object or result, the curtailment 
 of thei/r own powers or enterprise. 
 
 The limitations under which corporations may themselves ap- 
 ply to the supreme legislature have been considered. These lim- 
 itations do not apply so strictly to the resisting similar applications 
 made by other parties, which directly or in their result prejudi- 
 cially affect the corporate powers, franchises or enterprise. 
 
 First. Applications which only indirectly concern a corpora- 
 tion are not within this rule. These the corporation affected 
 thereby has no implied — of course it may have express — authority 
 to resist, at its own expense, contrary to the wish of any corpora- 
 tors. 
 
 Secondly. It is only such applications which amount to a 
 direct attack upon the property or rights, or of which the necessary 
 result will be an infringement of the special capacities of fran- 
 chise of a corporation which will justify it resisting the same. 
 This has been so decided in the case of municipal and other chari- 
 table corporations,^ and these decisions wiU a fortiori apply to 
 commercial corporations whose rights and capacities are expressly 
 intended for the corporate welfare, to be employed in the manner 
 which is best fitted to secure this. 
 
 In respect of the corporations already considered, and in the 
 authorities hitherto cited in this chapter, the ratio decidendi has 
 
 V. Rushout, 5 De G. <fe 8m. 290 ; Vance Uen. v. Andrews, 2 M. <fe G. 230 ; Att.- 
 V. East Lancashire Ry. Co. 3 If. <t J. 50. Gen. v. Mayor, <fec. of Wigan, 6 De G. M. 
 ' Bright v. North, 2 Ph. 216; Att.- & G. 64. 
 
310 APPLICATIONS TO PARLIAMENT. 
 
 been the principle of ultra vires, pure and simple. Corporations 
 have or have not been restrained according as they were acting or 
 proposing to act in excess of or within their powers. But, with 
 respect to corporations and analogous bodies existing for other 
 than commercial purposes, a different principle comes in and qual- 
 ifies the former, if, indeed, it does not frequently actually become 
 the sole ground of decision. Most of the decisions, however, 
 coming under this head, may be supported on the ground either 
 of ultra vires or of a breach of trust. 
 
 XIII. Corporations which possess their property under conditions, 
 express or implied, constituting a trust in respect of such 
 property, may not apply to parliament in 'breach of the 
 trust so imposed upon them. 
 
 This trust, as already pointed out, will be created in various 
 ways. Charitable corporations evidently hold their property upon 
 trust ; so do municipal corporations since the statute 5 & 6 Will. 
 lY, c. 76 ; so apparently do all corporations and^ ^'was^eorporar 
 tions which have been called into being for the accomplishment 
 of public purposes. However the trust be created, it appears that 
 each and every application to parliament, at the expense of the 
 trust funds, will amount to a breach of trust, and be restrained. 
 
 In Att.-Gen. v. Mayor, &c. of Norwich,' the defendants were 
 restrained from paying out of the borough fund the expenses of 
 a bill in parliament to enable them to improve the navigation of 
 the river flowing through their city. Shadwell, Y.-C, grtmnded 
 his jurisdiction on the fact that the mayor, &c., were trustees who 
 would have been allowed their expenses if application had been 
 made to the court, and that the acts regulating the corporation 
 did not authorize them to apply funds in obtaining powers which 
 were not then vested in them, and could not be vested in them 
 except by an act of parliament specially passed for that pur- 
 pose. 
 
 In Att.-Gen. v. Guardians of the Poor of Southampton,' the 
 same judge restrained the defendants from defraying out of the 
 poor rates costs of an unsuccessful application to parliament. 
 
 In Att.-Gen. v. Eastlake,' which is perhaps now the leading 
 
 ' 16 Sim. 225 ; affirmed on appeal, 21 « 11 Hare, 205. Here the Vioe-Chan- 
 
 L. J. (Ch.) 139. cellor gave the very good advice to per- 
 
 ' IV Sim. 6. sona having charge of acts of this descrip- 
 
APPLICATIONS TO PARLIAMENT. 311 
 
 case, and whicliwas si precisely analogous application, Page Wood, 
 Y.-C, went very carefully into the question as to whether com- 
 missioners empowered to levy rates for paving, lighting, cleans- 
 ing, washing and improving the streets of a town were trustees of 
 the money levied by them. He decided that these purposes being 
 beneficial, not only to the inhabitants of the town, but to all others 
 having occasion to visit it, were within 43 Eliz. c. 4, and that the 
 commissioners were trustees. He therefore. granted the injunc- 
 tion prayed, viz., to restrain them, the coinmissioners, from ap- 
 plying the funds they had raised towards soliciting an act to 
 increase their powers, which had been diminished by the Munici- 
 pal Corporation Act (5 & 6 WiU. lY, c. Y6). 
 
 To the same purport is Att.-Gen. v. Andrews.' By a local 
 act, the commissioners thereby appointed were authorized to 
 construct reservoirs and other works for supplying the town of 
 Southampton with water, and to do aU things necessary for that 
 purpose, to levy rates, &c., for these purposes, and otherwise for 
 carrying the act into execution. The supply of water being insuf- 
 ficient, the commissioners were desirous of extending their works. 
 ■ It was held that they were not justified in applying the moneys 
 so raised to defraying the expenses of an application to parliament 
 for another act to extend their powers. 
 
 Almost exactly similar to the facts and decision in this case, 
 were those in the Att.-Gen. v. "West Hartlepool Improvement 
 Com'rs." This was an information at the relation of certain 
 ratepayers to restrain the defendants from applying the rates 
 and funds under their control 'in payment of the costs and ex- 
 penses incurred by them in the promotion of a biU in parliament 
 to extend the area of their district. Their existing act empowered 
 them, inter alia, to " do all acts, matters and things for promot- 
 ing the health, comfort and convenience of the inhabitants." 
 James, Y.-C, being of opinion that these words did not include 
 the power of applying to parliament, and, moreover, that the case 
 was governed by Att.-Gen. v. Andrews and Att.-Gen. v. Eastlake, 
 issued the injunction as prayed. 
 
 tion, to insert therein among the powers Langdale and Eolfe, affirming the de- 
 given "including, if necessary, the power cision of Shadwell, V.-O., 19 L. J. (Ch.) 
 of applying to parliament." 191. 
 
 ' 2 Mao. & G. 225 ; 20 L. J. (Ch.) 467 ; « L. R. 10 Eq. 152. 
 
 on appeal before Lords Commissioners 
 
312 APPLICATIONS TO PARLIAMENT. 
 
 There is, however, one contrary decision, Eeg. v. Mayor, &c. 
 of Liverpool,* where the defendants having arranged to purchase 
 the tramways of a tramway company, and as one of the terms of 
 purchase to pay the expenses of a bill promoted by the company, 
 were allowed on the passage of the bill to pay such expenses out 
 of the borough funds. 
 
 XIY. Corporations of this description may oppose at the cor- 
 porate expense application to parliament hy other parties, 
 which ma/y, in the result, he damaging to the interests of 
 the trust under which, or of the persons for whose henefit 
 they possess their property. 
 
 Whether this statement is correct as a general proposition is 
 doubtful. In Bright v. North,' it was held that river conservators 
 were authorized to apply a portion of their funds in watching, and, 
 if necessary, opposing a bill in parliament for a project lower down 
 the river, which was likely to be injurious to the banks under their 
 own superintendence. The bill in this case was filed by three land- 
 owners, on behalf of themselves and all other persons subject to be 
 assessed under the act constituting the conservators. Lord Cotten- 
 ham observed : " You do not find, on the face of the act, an author- 
 ity to apply funds for that purpose, because it is incident to every 
 trust. Every trustee would be allowed the proper expenses in- 
 curred in defending the property intrusted to his care." 
 
 This judgment, taken in its full significance, apparently laid 
 down that such opposition so supported is not ultra vires in either 
 the wide or the more restricted meaning. There is also one other 
 decision to the same effect, viz., that any corporation — municipal, 
 charitable, &c. — ^may resist proceedings which, if successful, will 
 prevent the due discharge of its own duties and aims. This was 
 in Att.-Gen. v. Mayor, &c. of Wigan,' where an application for an 
 injunction to restrain the raising of a borough rate was refused 
 under the following circumstances : A bill had been introduced 
 into parliament which would very materially diminish the volume 
 
 1 21 W. R. 674; 28 L. T. (N. S.) 600. Hartlepool Improvement Com'rs, L. R. 10 
 
 ^ 2 Phil. 216, followed in Bower v. Eq. 152. 
 Com'rs of Sligo, &c. Ir. R. 4 C. L. 489 ; = Kay, 268 ; on appeal, B De G. M. & 
 
 and Reg. v. Mayor, <fec. of Dublin, 9 L. T. G. 62 ; 23 L. J. (Ch.) 483 ; Reg. v. Lich- 
 
 (N. S.)123. Compare Att.-Gen. ». West field, 10 Q. B. 634 ; 16 L.J. (Q. B.) 333. 
 
APPLICATIONS TO PARLIAMENT. 313 
 
 of water in the river running through Wigan, and as the river 
 acted as a sewer for the town, such a result would have been very 
 detrimental to the inhabitants ; the corporation, therefore, opposed 
 the bill, and obtained the insertion of clauses which provided for 
 the restoration of the water so abstracted. To meet the expenses 
 entailed by thus opposing the act, the mayor and corporation pro- 
 posed to levy a borough rate, and both Page Wood, V.-C, and the 
 Lords Justices, on appeal, held that they were Justified in what 
 they had done. Turner, L. J., said : " The act of parliament has 
 devoted the whole income of the corporate property to public and 
 municipal purposes. It has made no express provision for the ex- 
 penses which are incident to the protection of the property, and 
 it has left the provision for those expenses to the general law. 
 * * * They [*'. e., the expenses in question] have been bona 
 fide incurred for the benefit and protection of the corporate prop- 
 erty, and, having been so incurred, this court ought not to inter- 
 fere by injunction in the present stage of the suit." {a) 
 
 But it would seem, from subsequent authorities, that, under 
 many circumstances, persons interested in, or liable to contribute 
 towards, corporate funds, may refuse to allow those funds to be 
 devoted even to opposing in parliament projects which may be 
 detrimental, directly or indirectly, to the corporation, and there- 
 fore to themselves.^ However, in most, if not all, of these decis- 
 ions, it will be observed that the application of the funds them- 
 selves as such," in question, has been limited, expressly or impliedly, 
 to certain defined purposes. 
 
 In consequence of the latest of these, the Sheffield Case, the 
 statute 35 & 36 Yict. c. 91 was passed, entitled " An Act to au- 
 
 ' See Reg. v. Mayor, <fcc. of Sheffield, the corporations ; that even they might 
 
 L. R. 6 Q. B. 652. incur debts in support thereof; but that 
 
 ^ I. «., the principle of these decisions such proceedings could not be supported, 
 
 may, perhaps, be not that the proceedings nor such debts defrayed, out of the funds 
 
 were uUra vires or a breach of trust by contemplated. 
 
 (a) No duty is by law imposed upon a town to resist, before the Legislature, or a 
 committee thereof, a change in its boundaries, or its annexation to another city or town ; 
 and, therefore, a town has no authority to tax its inhabitants for expenses incurred 
 in such proceedings. Coolidge v. Brookline, 114 Mass. 592. 
 
 A Massachusetts town has no authority to appropriate money for the pajrment of 
 expenses incurred by individuals, prior to the corporate existence as a town, in pro- 
 curing the passage of its charter. Frost v. Belmont, 6 Allen, 162. 
 
314 APPLICATIONS TO PARLIAMENT. 
 
 thorize the application of funds of municipal corporations and 
 other goTeming bodies^ in certain cases." By section 2, the costs 
 of promoting or opposing parliamentary and other proceedings for 
 the benefit of inhabitants, may be charged on and paid out of the 
 borough and local funds, except in certain specified cases ; but no 
 payment to any member of such governing body shall be so 
 charged. The expense and costs of promoting or opposing bills 
 are to be first sanctioned by special meetings ; ' and there is a pro- 
 viso as to approval of local government board, &c., to any such 
 resolution passed at such meeting,' which also has power to direct 
 a local inquiry in respect of any application under the act.* 
 
 XV. In proper cases non-commercial corporations will he au- 
 thorized hy the courts to mahe these applications. 
 
 The Court of Chancery, in virtue of its general jurisdiction 
 over trusts, itself frequently authorizes proceedings to be taken 
 with respect to the subjects of such trusts which would be alto- 
 gether improper if otherwise taken. Among such proceedings 
 are included applications to parliament. These, if absolutely re- 
 quired for the due performance of the trust, will often, upon 
 proper cause shown, be directed to be had at the corporate expense. 
 "If this court had sanctioned the application to parliament, it 
 would have allowed the corporation the expenses of the applica- 
 tion ; but if trustees, whether they be a public body or private 
 individuals, think proper to apply to parliament, without the sanc- 
 tion of the court, to enable them to carry into effect a project, 
 which, however beneficial it may appear to be, may eventually 
 fail, the court will not allow them to retain their expenses out of 
 the trust fund.^ 
 
 ' Sect. 1. " The term ' governing district within whicli the governing body 
 
 body ' in this act shall mean the council may for the time being have jurisdic- 
 
 of any municipal borough, the board of tion." 
 
 health, local board, commissioners, trus- '^ Ibid. s. 4. 
 
 tees, or other body acting under any gen- ^ Ibid. b. 5. 
 
 eral or local act of parliament for the man- * Ibid. s. 7. 
 
 agement, improvement, cleansing, paving, « Per ShadweU, V.-C, in Att.-Gen. v. 
 
 lighting, and othervrise governing places Mayor, <fcc. of Norwich, 16 Sim. 225, 229 ; 
 
 or districts; and the term 'district' shall ante, p. 310. 
 mean the borough, place, township or 
 
APPLICATIONS TO PARLIAMENT. 315 
 
 XYI. It is ultra vires of a corporation to promote applications 
 to pmiiament not made directly and bona fide l>y it- 
 self or its constituted agents for its own proper pur- 
 poses. 
 
 But although corporations may themselves apply to parliament, 
 and defray the expenses of such applications out of the corporate 
 funds — that is, assuming no member objects — yet such applica- 
 tions must be really and honafide their own. Bills proinoted and 
 measures of other kinds instituted by other persons or by them- 
 selves as the nominees of or for the benefit of other persons, they 
 cannot legally concern themselves with. AH such proceedings 
 will be ultra vires in the wider sense, and cannot be made binding 
 upon the corporation or chargeable upon its assets, either by reso- 
 lutions antecedent or by subsequent attempted ratification. 
 
 East Anglian Ry. Co. v. Eastern Counties Hy. Co.* is not only 
 the first case on this point, but also the first case where the ques- 
 tion of ultra vires was distinctly raised in an English court at 
 common law. The defendants had agreed with the plaintiffs by 
 a deed duly sealed, inter alia, to pay the costs of preparing and 
 soliciting bills introduced by the plaintiffs, and then pending in 
 parliament. Two of the bills passed ; the defendants refused to 
 pay the costs ; and on action brought it was decided that the agree- 
 ment was ultra vires. 
 
 Six months later, Macgregor v. Dover and Deal Ey. Co.^ was 
 taken to the Exchequer Chamber. The action was originally 
 brought by the managing committee of the proposed Dover and 
 Deal Railway Company, but it was subsequently carried on by the 
 official manager appointed under the Winding-up Acts. The 
 plaintiff in error, as chairman of the South-Easlern Railway Com- 
 pany, had covenanted with this committee, that — in consideration 
 that they would not abandon their objects, but would proceed 
 therewith and apply to parliament for an act to authorize the 
 making of the Dover and Deal Railway, and would hand over the 
 scheme to the South-Eastem Railway Company in the event of an 
 act being obtained — ^in the event of the application failing, the 
 South-Eastern Railway Company would insure the company rep- 
 
 > 11 C. B. 115; 21 L. J. (0. P.) 23; M8 Q. B. 618; 22 L. J. (Q. B.) 69 ; 
 
 Hill V. Manchester, <feo. Wworks Co. 2 B. Mayor, <feo. of Norwich v. Norfolk Ky. Co. 
 <fe Ad. 544 ; 5 lb. 866. 4 E. A B. 397. 
 
316 APPLICATIONS TO PARLIAMENT. 
 
 resented by the eominittee against any loss which might be caused 
 to the said company by such rejection and failure, and would de- 
 fray and pay all expenses that should be incurred by them in en- 
 deavoring to obtain the act of parliament. This covenant was 
 also unanimously adjudged to be not binding upon Macgregor, upon 
 the ground that, if made by the South-Eastem Eailway Company 
 itself, it would have been ultra vi/res, and that, this being so, both 
 the plaintiff and defendants must be taken with full knowledge 
 of the powers conferred on the South-Eastem Eailway Company 
 to have made a contract by which the plaintiff in error was to 
 bind the company to do an illegal act. 
 
 These two decisions have ever since been recognized and fol- 
 lowed ; some of the dicta put forward have not been implicitly 
 acquiesced in; but the principle actually involved stands un- 
 shaken.* Indeed, if any meaning at all is to be attached to the 
 expression ultra vires, it is difficult to conceive bow it could be 
 within the scope of one corporation to assist the efforts of another 
 corporation to modify its constitution, as in East Anglian Ey. Co. 
 V. Eastern Counties Ey. Co., or a fortiori in the creation of such 
 other, as was the object of the contract made by Macgregor. 
 
 In Maunsell v. Midland Great "Western (Ireland) Ey. Co.,' an 
 agreement that a railway company should contribute towards the 
 parliamentary deposit required for bills promoted by another 
 company, and in Spackman v. Lattimore,' a similar agreement 
 that it should assist in repaying money subscribed by the pro- 
 moters in compliance with the standing orders, were each^djudged 
 to be vltra vires. 
 
 Section II. — Agreements Collateral to Applications to 
 Parliament. 
 
 The last question is, supposing that a corporation has express 
 authority to apply to parliament, or that no member dissents, how 
 far will agreements incidental to such application be ultra vires 
 of the corporation ; to what extent will it be liable for, and can it 
 take advantage of such agreements ? What engagement collateral 
 
 ' See, ho-wever, Reg. v. Mayor, &,c. of Hare, 664, where the defendants indem- 
 Liverpool, ante, p. 811. See, also, E. of uified the plaintiff, <fec. 
 Lindsey v. Great Northern Ry. Co. 10 M H. <fe M. 130. 
 
 ' 3 Giff. 16. 
 
AGREEMENTS COLLATERAL TO. 317 
 
 to such applications, and made with reference to, and often in aid 
 of them, will be binding ? 
 
 It is necessary to separate from the agreements now in consid- 
 eration the analogous arrangements made by promoters of com- 
 panies before their creation, as also the arrangements, in a sense 
 collateral, which have been considered. Collateral agreements, 
 taking the expression in its greatest latitude, are : (1) Transactions 
 which are absolutely preliminary, as in Bateman v. Mayor, &c. of 
 Ashton-under-Lyne ; ^ (2) Arrangements which relate to matters 
 prior and not subsequent to the application to parliament, and of 
 which the consideration is the application itself or something done 
 previously thereto, and not something to be done after and by 
 means of the application, of which Telford v. Metropolitan Board 
 of Works and New Haven E. E. Co. v. Hayden are instances ; ' 
 (3) Arrangements conditional upon the application and relating 
 to matters to be carried out under it and by virtue of the provis- 
 ions of the act thereby obtained. The two former classes have 
 already been dealt with. It is the third which is now to be ex- 
 amined. 
 
 The precise question here, is : What contracts collateral to ap- 
 plications to parliament or dependent upon the success thereof, 
 made by existing corporations, are good ? 
 
 I. bribes are illegal, and arrangements of this nature are con- 
 sequently ultra vires. 
 
 First. Of these collateral agreements the first class to be noted 
 are mere bribes : payments and agreements to buy off opposition, 
 and having no other consideration. These are void, however dis- 
 guised, and whether made to private individuals or to members of 
 the Legislature. " If that sum was agreed to be paid as a bribe 
 to buy off opposition to the new bill, I think the agreement could 
 not be sustained; it would have been an unwarrantable application 
 of the funds of the company." ' 
 
 But without taking the form of avowed bribes, arrangements 
 savoring of this nature will be equally void. No matter what 
 their conditions, what their apparent purpose, if in reality they 
 
 ' See ante, p. 301. North-Eaatern Ky. Co. v. Stewart, 3 Macq. 
 
 2 See ante, p. 300. 408. 
 
 ^ Per Lord Cranworth in Scottish 
 
318 APPLICATIONS TO PARLIAMENT. 
 
 are mere payments for no other consideration than pure parlia- 
 mentary interest and support, they will be void and not enforce- 
 able. The leading case upon the subject now is Earl of Shrews- 
 bury V. North Staffordshire Ey. Co.* Here the promoters of a 
 railway company contracted with a landowner, being a peer of 
 parliament, to pay him £20,000 personally, for his countenance 
 and support in obtaining their act, such sum to be independent of 
 the ordinary payment for land, severance and other usual compen- 
 sations. After the passing of the act the directors of the com- 
 pany, when formed, ratified the contract, but having doubts 
 whether, under the Lands Clauses Act, the landowner was entitled 
 to the money personally, they covenanted by deed to pay interest 
 upon the amount, which was to be retained by the company or 
 paid into court. A separate agreement stipulated for the quantity 
 of land to be taken by the railway, and the amount to be paid by 
 the company. Kindersley, Y.-C, held that the original contract 
 and the contract by the directors after the formation of the com- 
 pany, to pay a sum of money for countenance and support, pre- 
 viously given in procuring the act, were vltra vires, and that they 
 could neither be enforced against the company as such, nor as 
 payment of expenses of obtaining the act, under the 65th section 
 of the Companies Clauses Act, or otherwise, (a) 
 
 ' L. R. 1 Eq. 593. This was also one of the points involved in Preston v. Liv- 
 erpool, &B. Ry. Co. 5 H. L. C. 605. 
 
 (a) Personal solicitation to influence legislation cannot constitute tjje subject- 
 matter of a legal contract. Agreements for services as a lobby agent before the 
 Legislature, are void, as being against public policy and prejudicial to sound legisla- 
 tion. Harris n. Roof's Executors, 10 Barb. 489 ; Powers v. Skinner, 34 Vt. 280 ; 
 Rose V. Truax, 21 Barb. 861 ; Brown v. Brown, 34 Barb. 633 ; Hatzfield v. Gulden, 
 7 Watts, 152; see, also, Frankfort v. Winterport, 54 Me. 250 ; Fuller v. Dame, 18 
 Pick. 479 ; Gray v. Hook, 4 N. Y. 449 ; Davison v. Seymour, 1 Bosw. 89 ; Clippinger 
 V. Hepbaugh, 5 W. & S. 315 ; Hunt v. Test, 8 Ala. 719 ; Bryan v. Reynolds, 5 Wis. 
 200 ; Wood V. MeOann, 6 Dana, 366. 
 
 But there is a distinction between the services of a lobbyist, who works by secret 
 personal influence, and those of an agent who appears before the Legislature, or a 
 committee thereof, as a body, to exert an honest influence by the open statement of 
 facts and arguments. Persons may, no doubt, be employed to conduct an application 
 to the Legislature, as well as to conduct a suit at law ; and may contract for and 
 receive pay for their services in preparing or making oral or written arguments, 
 provided these are used before the Legislature itself, or some committee thereof, as 
 a body ; but they cannot with propriety be employed to exert their personal influence 
 with individual members. The one class of services tends to pervert, the other to 
 enlighten, the legislative mind. Public policy, therefore, forbids the former, but 
 
AGREEMENTS COLLATERAL TO. 319 
 
 II. Agreements to huy off opposition from persons who home 
 a locus standi for opposmg the application, are perfectly 
 good. 
 
 This proposition must be understood as referring to the case 
 where what is bought off is not the mere personal influence of 
 the opposer, but his opposition founded upon? his legal right to 
 oppose. If an agreement in reality relates to and is based upon 
 the former not the latter fact, or is separable so that the consider- 
 ation can be apportioned, part to the personal influence, part 
 to the legal right, it will be wholly or partially void, as the 
 case may be.^ The consideration to support such agreements 
 must be purely and entirely the purchase of legal rights, not of 
 personal influence. 
 
 ' See E. of Shrewsbury i;. North Staf- £20,000 was quite apart from the purchase 
 f ordshire Ry. Co. L. R. \ Eq. 593, 604. of land, and was altogether a separate af- 
 " The contract to pay Lord Shrewsbury fair." 
 
 allows the latter. Sedgwick v. Stanton, 14 N. Y. 289 ; Brown v. Brown, 34 Barb. 
 6.33 ; see, also, Marshall v. Bait. & Ohio R. R. Co. 16 How. 314 ; Powers v. SMnner, 
 34 Vt. 280; Frost v. Belmont, 6 Allen, 169; Lyon v. Mitchell, 36 N. Y. 236 ; Mills 
 V. Mills, 40 N. Y. 643 ; 8. o. 36 Barb. 474; Barker v. Cairo <fe Fulton R. R. Co. 3 N. 
 Y. Supr. Ct. (Thomp. <fe Cooke) 328; Hatzfield v. Gulden, 1 Watts, 152; Wildey v. 
 Collier, 1 Md. 273. 
 
 The courts, however, have not been slow to find, in a contract for services in pro- 
 curing le^slation, evidence of a purpose to use improper means. Where a contract 
 is general in its terms, as, e. g., " to labor faithfully before the Legislature for a char- 
 ter," the courts, in their eagerness to protect the public morality, seem almost to 
 have discarded the rule that a contract is to be presumed to be for a legal rather 
 than an Ulegal purpose, and to have held that the terms of the instrument must dis- 
 tinctly indicate legal services only, or the contract will be void. They have found 
 in the mere tendency of such general contracts, a principle which public policy con- 
 demns. Powers V. Skinner, 34 Vt. 274. In Mills v. MiUs, 40 N. Y. 543, the Court 
 uses the following language : " It is not necessary to adjudge that the parties stipu- 
 lated for corrupt action, or that they intended that secret and improper resorts should 
 be had. It is enough that the contract tends directly to those results. It furnishes 
 a temptation to the plaintiff, to resort to corrupt means and improper devices to 
 influence legislative action. It tends to subject the Legislature to influences destruct- 
 ive of its character, and fatal to public confidence." So, too, in Marshall v. B. & O. 
 R. E. Co. 16 How. 334, Mr. Justice Grier says : " Public policy and sound morality 
 do, therefore, imperatively require that courts should put the stamp of their disap- 
 proval on every act, and pronounce void every contract, the ■ultimate and probable 
 tendency of which would be to sully the purity or mislead the judgments of those to 
 whom the high trust of legislation is confided." See, also, Trist v. Child, 21 WalL 
 441, and cases cited. 
 
320 APPLICATIONS TO PARLIAMENT. 
 
 If, however, this is so, the courts have gone to very great 
 lengths in supporting these agreements. Thus, in Simpson v. 
 Lord Howden,' an agreement of this kind to give Lord Howden 
 £5,000 for withdrawing his opposition and as compensation for 
 injury to his land, was held valid both by the Lord Chancellor, 
 overruling Langdale, M. E., and by the Exchequer Chamber. 
 And in Lord Petre i). Eastern Counties JRy.,' a similar agreement 
 giving the plaintiff £120,000 was also supported by the same 
 Chancellor. But this decision, as Lord Cranworth said in Preston 
 V. Liverpool, &c. Ry. Co.,' " made everybody start when they 
 heard it ; " and it has since been repeatedly questioned.* These 
 decisions, if they are to stand, lay down that a legislator may do, 
 not merely what ordinary persons can do, i. e., sell his land at the 
 highest price, &c., but may actually make a profit out of his posi- 
 tion as a legislator, a result which is contrary to every principle of 
 trust, of constitutional morality, and of public policy. 
 
 It has, moreover, been expressly decided by the Privy Council, 
 that a member of the governing body of a municipal corporation 
 may not bargain for his own private advantage.' 
 
 The other collateral engagements now in consideration are : 
 
 Secondly. Agreements to pay compensation, which constitute 
 the most extensive species, and which are of two classes: (1) 
 where the compensation is for damage done to property and pro- 
 prietary rights pure and simple ; (2) where it is as a recompense 
 for invasion of privacy, or for other detriment to pergonal en- 
 joyment. 
 
 Thirdly. Agreements to take lands. 
 
 Fourthly. Agreements to perform works. 
 
 Under some circumstances, there are special principles appli- 
 cable to these agreements separately ; but there are also general 
 rules which apply to all alike, and which, therefore, it wiU be con- 
 venient to deal with first. 
 
 Most of the disputes, as to the principles involved, have arisen 
 
 ' 3 M. & 0. 9*7 ; 1 Kail. Gas. 326 ; at Cranworth, L. C, in Caledonian Ry Co 
 
 law, 10 A. & E. 19S, 807 ; 1 Rail. Gas. v. Magistrates of Helensburgh, 2 Macq. 
 
 847; following, Stanley v. Chester, <feo. 391; and per Kindersley, V -C , In E of 
 
 Ry. Co. 3 M. <fe C. 773, 9 Sim. 264. Shrewsbury v. North Staffordshire Ry 
 
 2 1 Rail. Cas. 462. Co. L. R. 1 Eq. 693. 
 
 2 5 H. L. G. 631 ; 25 L. J. (Gh.) 421. ^ ^owea v. City of Toronto, 11 Moore's 
 
 * See per Lord Brougham in Preston P. C. C. 463. 
 V. Liyerpool, <fec. Ry. Co. ubi supra; per 
 
AGREEMENTS COLLATERAL TO. 321 
 
 out of agreements coming under the second and third class. 
 There have, however, been numerous decisions relating to agree- 
 ments to perform works, whether made purely by the parties 
 themselves or under section 68 of the Eailways Clauses Consoli- 
 dation Act, 1845.^ 
 
 III. Agreements of this description will he binding only when 
 made conditional upon the passing of the act. 
 
 There is, perhaps, no positive decision to this effect, but the 
 proposition is correct upon principle, and it is supported by the 
 dicta in many cases, and, in particular, by the language of Lord 
 Ilatherly, ,L. C, in delivering his judgment in the very recent 
 case of Taylor v. Chichester, &c. Ey. Co."'' The facts were as fol- 
 lows ; The defendants, being about to apply to parliament for an 
 act to sanction a branch railway which would pass through the 
 plaintiff's property, entered into articles of agreement with him, 
 in the second of which they covenanted to purchase from him (he 
 covenanting to sell) at the price of £2,000, the land required, &c., 
 and in the third, to pay to him, within three calendar months of 
 the biU passing, the further sum of £2,000, " as and for a personal 
 compensation to him for the annoyance, inconvenience and dis- 
 turbance, &c., which he has sustained and may or will sustain in 
 respect of the sporting and preservation of game upon his said 
 estate, by or in consequence of the construction of the said in- 
 tended railway, and of the parliamentary and other surveys, and 
 other works connected therewith and incidental thereto." Each 
 of the stipvilations began : " In the like event," i. e., " of the said 
 bill in its present or any amended, modified or altered form with 
 the like object being passed into an act in the present session of 
 parliament." The bill did pass, and on action brought by Sir 
 Charles Taylor, for the £2,000, the price of the land set forth in 
 the second clause, and £2,000, stipulated for in the third clause, 
 the House of Lords held that the agreement was not ultra vires. 
 
 In his judgment. Lord Hatherly, L. C, after stating the posi- 
 
 ' See Reg. v. Fisher, 3 B. <fc S. 191 ; ' L. R. 4 H. L. 628. Compare Pres- 
 32 L. J. M. C. 12 ; Lytton ti. Great North- ton v. Liverpool Ry. Co. 5 H. Lds. C. 
 era Ry. Co. 2 K. & J. 394; Harby v. 60.5; 28 L.J. (Ch.) 421 ; Earl of Shrews- 
 East & West India Docks, <fcc. Ry. Co. 1 bury v. North Staffordshire Ry. Co. L. 
 De G. M. <fe G. 290 ; Raphael v. Thames R. 1 Eq. 593; Scottish North-Eastern Ry. 
 Valley Ry. Co. L. R. 2 Ch. 14"? ; Firth v. Co. v. Stewart, 3 Macq. 382. 
 Midland Ry. Co. L. R. 20 Eq. 100. 
 
 21 
 
322 APPLICATIONS TO PARLIAMENT. 
 
 tion of affairs at the time the ahove covenants were entered into, 
 thns proceeded : " Now what was there in that state of circum- 
 stances, assuming the bill passed (the agreement being founded, 
 as it is founded, wholly on the condition of its passing) — what was 
 there on the face of this state of things to make it apparent to Sir. 
 Charles Taylor, that he, on the one band, was incompetent to 
 enter into such a contract, or that the directors, on the other hand, 
 were incompetent to enter into it on behalf of the company? 
 Dependent as it was entirely on the passing of the act, he would 
 have a right to contemplate it as if the act had been passed, and 
 the agreement had been entered into undep its powers, though, in 
 fact, the powers had to be obtained before the agreement could 
 have any force or validity. He, accordingly, would find indi- 
 viduals incoi-porated as a company, with the ordinary powers of 
 purchasing lands and paying compensation in respect of damage, 
 paying it out of their funds. When I say out of their funds, I 
 will state in a few moments what exactly constitutes the character 
 of those funds. The company was in existence, its directors were 
 persons capable of entering into engagements under a common 
 seal, engagements conditioned, of course, upon obtaining powers, 
 but in a state in which they could enter into a contract subject to 
 that condition. He found them in possession of an act whereby 
 they were authorized to make a certain line of railway ; he found 
 them about to extend that line. He must be taken to have made 
 his engagement entirely subject to their obtaining the act author- 
 izing them to do so. When we come to that act we find that they 
 meant to raise a larger amount of capital than they before pos- 
 sessed. Their first act, of course, restrained the application of 
 their capital to the purposes authorized by that act. It is not nec- 
 essary to read the clauses to that effect: they are always inserted 
 in every railway act. These clauses restrained them from apply- 
 ing their capital to anything but the original railway which, under 
 its powers, they brought into existence ; so they sought new pow- 
 ers to raise additional capital to make a new line." 
 
 In connection with this question of the legality of contracts 
 for the acquisition of lands which are made dependent on the 
 passing of an act. Lord Wensleydale, in Scottish North-Eastern 
 Ey. Co. V. Stewart,^ laid down broadly that "no objection can, I 
 
 ' 3 Macq. 382, 416. 
 
AGREEMENTS COLLATERAL TO. 323 
 
 think, be made on the ultra vires doctrine to a contract by a com- 
 pany who wish to alter one of the branches of its raiboad, and are 
 about to apply to parliament for authority to do so, engaging to 
 purchase land from a neighboring proprietor if they should ob- 
 tain their act. The contract to purchase land in this case will, 
 therefore, I think, probably prove valid." 
 
 IV. These agreements will he good only when they relate to the 
 siibject-matter of the act, and are within its contemplated 
 provisions, or the additional powers or enterprise intended 
 to ie conferred or authorised hy it. 
 
 The arrangements in question must . relate to matters within 
 the enterprise or powers authorized by the new act. A corpora- 
 ation may not engage in any transaction not incidental to its enter- 
 prise ; and this rule invalidates transactions collateral to applica- 
 tions to parliament, exactly the same as other transactions. A 
 railway company or a gas works proposing to extend its enterprise 
 through White Acre, estate of a person, could not validly agree 
 to take lands or to erect works thereon belonging to the same per- 
 son, situate in another locality, unconnected with and untouched 
 by the extended enterprise. But it is sufficient if any portion of 
 the subject-matter of the agreement is within the act with refer- 
 ence to which it was made. In Eastern Counties Ey. Co. v. 
 Hawkes,^ only two acres were within the line of i-ailway as actually 
 authorized. 
 
 Y. Being so contingent upon the act and relating to the enter- 
 prise, these agreements will ie hinding and enforceahle 
 immediately on the act passing, unless they are condi- 
 tional upon some other event. 
 
 This, understood in all its import, is a strong proposition, but 
 it is fully established. It amounts to this, that if a corporation 
 agrees to take land, pay for damage, &c., admittedly connected 
 with the extension of its enterprise or powers, then immediately 
 on the passing of the extension statute, and before the taking of 
 the land, or the commission of the damage — which indeed from 
 subsequent circumstances may never be required for, or committed 
 
 ' 6 H. L. C. 331. 
 
324: APPLICATIONS TO PARLIAMENT. 
 
 about the purposes of the enterprise — the other contracting party- 
 can enforce performance of his contract. 
 
 The whole argument against the validity of such agreements 
 has been well stated and rebutted repeatedly. The principles and 
 reasoning upon which the answer is based have been clearly ex- 
 pressed by Lord Westbury, in Taylor v. Chichester and Midhurst 
 Ey. Co.^ " Can it be contended that directors of a railway com- 
 pany can never, before they commence their works, enter into an 
 agreement to take lands unless they make that agreement condi- 
 tional upon the land being required ? If such a proposition can 
 be maintained, then undoubtedly it is unnecessary to inquire 
 whether the agreement is in terms conditional or not, for the act 
 of parliament would then disable them from entering into any 
 but conditional agreements, l^ow is there any trace of any such, 
 enactment in the acts of parliament ? Nothing of the kind. The 
 land-owner is empowered, and the directors are empowered, to 
 enter into a private agreement without resorting to compulsory- 
 purchase. No time is stipulated for the making of that agree- 
 ment. It is not incumbent upon the directors to wait and see 
 what they may require when their line reaches a particular point 
 of the lands of the individiial with whom they have to deal, but 
 they are at perfect liberty by the act of parliament to anticipate 
 the making of the line, and to enter into agreements accordingly, 
 so long as the agreements affect a matter which comes clearly 
 within the scope of their powers, and the lands are property which 
 they are clearly empowered and authorized to take for the pur- 
 poses of the railway. As it has been pointed out most conclusively 
 by my noble and learned friend on the woolsack, it would be most 
 mischievous to railway companies themselves if we were to con- 
 strue acts of parliament as giving them only conditional and con- 
 tingent powers ; it would at once put an end to the possibility of 
 their dealing advantageously and effectively with land-owners. If 
 they could enter only into conditional agreements, every land- 
 owner would wait until the railway approached his land. He 
 would then have the directors at this disadvantage, that, unless 
 they yielded to his terms, they would be unable to go on with, 
 their undertaking. It would therefore be a very unhappy thing 
 
 » L. R. 4 H. L. 628, 646, 047; Bland v. Direct London, &c. Ry. Co. 1 De G 
 V. Crowley, 6 Ex. 522; Eastern Counties M. & G. 521, 
 Ry. Co. V. Hawkee, 5 H. L. C. 331 ; Webb 
 
AGREEMENTS COLLATERAL TO. 325 
 
 for railway companies if, by our interpretation of the act, we were 
 "to adopt what has been contended for, namely, that the directors 
 are not authorized to enter into any agreements but such as they 
 shall hereafter be enabled to perform by making the railway for 
 which the agreements refer." 
 
 Of course it is quite possible for an agreement to be really 
 conditional upon land being taken or some other act being done 
 by the company contracting. If so, there is no contract which 
 the other side can call upon the company to perform until the 
 happening of such condition. This was decided by the common 
 law courts to be the true construction of the agreement sued on 
 in Gage v. Newmarket E.y. Co.^ The clause there relied on by 
 the plaintiff was : " That in the event of the bill hereinbefore 
 mentioned being passed in the present session of parliament, the 
 said company shall, before they shall enter upon any part of the 
 lands of the ^aid Sir Thomas Kokewood Gage, in the said county 
 of Suffolk, pay to the said Sir Thomas Kokewood Gage, his heirs 
 or assigns, the sum of £4,900 purchase money, for any portion of 
 Jais lands, not exceeding forty-three acres, which the said company 
 may, under the powers of their act, require and take for the pur- 
 poses of their undertaking." Lord Campbell, 0. J., in delivering 
 the judgment, said : " The £4,900 is declared to be the purchase- 
 money for the land to be required and taken ; and the only time 
 of payment mentioned is before the company enter on the land- 
 Therefore, if no land is required or taken, and the company never 
 enter on any part of the land, there seems great difficulty in say. 
 ing that there has been a breach of covenant in not paying the 
 money." 
 
 The facts and decision were very similar in the chancery case 
 of Preston v. Liverpool, &c. Ry. Co.* The plaintiff entered into 
 an agreement with the projectors of a railway company, whose 
 projected line was marked in the plans as intended to run through 
 his property, to withdraw his opposition to their proposed bill, 
 and they agreed that in case the company should, in that or any 
 subsequent session, obtain an act of incorporation, the company 
 
 ' 18 Q. B. 457 ; 21 L. J. (Q. B.) 398. « 8 H. L. C. 605 ; 25 L. J. (Ch.) 421. 
 
 Compare Webb v. Direct London, Ac. Ry. The agreement was similarly conditional 
 
 Co. 1 De G. M. & G. 621 ; 21 L. J. (Ch.) in Scottish North-Eastern Ry. Co. v. Stew- 
 
 337 ; Stuart v. London <fe North-Western art, 3 Macq. 382. 
 Ry. Co. 1 r>e G. M. & G. 721, where the 
 .agreements were not conditional. 
 
326 APPLICATIONS TO PAKLIAMENT. 
 
 should pay to him £1,000 for all lands required, and £4,000 for 
 residential injury, and there were special provisions as to making 
 a tunnel and a passenger station. The plaintiff received the usual 
 notices, and his lands were surveyed and marked out, but the pro- 
 jected company was afterwards amalgamated with another, and 
 the amalgamated company took a different line of route, and did 
 not require his lands. The House of Lords held, that this was 
 not a contract which the company was bound under these circum- 
 stances to perform, as the provisions of it showed that it was to 
 be conditional on the taking of the plaintiff's land, and his land 
 had not been taken. 
 
 YI. Being so contingent on the act, agreements of this descrip- 
 tion will he hinding, even though the subject-matter thereof 
 is not within the provisimis qf the act as jmalVy passed. 
 
 Bills undergo many modifications in parliament. It not un- 
 seldom happens that what is authorized by the act is very different 
 from what was contemplated by the bill ; so different that the sub- 
 ject-matter of agreements collateral to the bill, which was entirely 
 within the purview of the bill, of the extended enterprise and 
 powers intended to be authorized by the bill, is absolutely outside 
 and unconnected with the extended enterprise and powers actually 
 authorized by the statute as passed. "What then ? What becomes 
 of these agreements ? 
 
 It might have been thought and concluded, that in such case the 
 agreements would, by operation of law, become void ; but the pre- 
 sent proposition seems correct upon the authority of Eastern Coun- 
 ties Ry. Co. v. Hawkes.^ The appellants, having a bill before par- 
 liament for enabling them to make a railway from "W. to S., entered 
 into an absolute agreement with Hawkes, a land-owner on the pro- 
 
 ' 5 H. L. C. 331 ; affirming the judg- Webb v. Direct London, <fec. Railway 
 
 ments of Knight-Bruce, V.-C, and Lord Company, 21 L. J. (Ch.) 337 ; and Stuart 
 
 St. Leonards, L. C, 22 L. J. (Ch.) 7'7. v. London and North-Western Railway 
 
 This case was preceded by three other Company, 21 L. J. (Ch.) 460; Preston v. 
 
 similar decisions, very questionable on Liverpool, he. Railway Company, 5 H. 
 
 grounds of public policy if not on legal Lds. 605. See, also, on the question of 
 
 principles, viz., Stanley v. Chester <fe Birk- the legality of agreements of this descrip- 
 
 enhead Railway Company, 3 My. <Sc Cr, tion entered into by or with peers. Earl 
 
 773; 9 Sim. 264; 1 Rail. Cas. 58; Simp- of Lindsey v. Great Northern Railway 
 
 son V. Lord Howden, 9 CI. & F. 61 ; 1 Co. 10 Hare, 664. Compare Greenhalgh 
 
 Rail. Cas. 326; 8 L.J. (Ex.) 261; and v. Manchester, <fec. Ry. Co. 3 M. & Cr. 
 
 Lord Petre v. Eastern Counties Railway 784 ; Bland v. Crowley, 6 Ex. 522. 
 Company, 1 Rail. Cas. 462. Compare 
 
AGREEMENTS COLLATERAL TO. 327 
 
 posed line, in consideration of his withdrawing his opposition to the 
 bill, to purchase a house and six acres of land, which stood settled 
 on him for life, with remainders over, for the price of £8,000, and 
 £5,000 additional by way of compensation, and undertook to ob- 
 tain all such powers and to do all such acts as would enable 
 Hawkes to sell the estate. The bill was passed, containing no 
 special powers as to Hawkes' estate, but the company, under their 
 compulsory powers, could have taken two acres of the estate as 
 within their line of deviation. No funds were raised under the 
 act, and no part of the line was commenced. The company hav- 
 ing totally abandoned the line, sent a notice to Hawkes that they 
 should not require his estate. Upon a bill filed by Hawkes against 
 the company before their compulsory powers had expired, both 
 the Yice-Ohancellor and the Lord Chancellor decided that the con- 
 tract was good and binding upon the company. The latter then 
 finally appealed to the House of Lords, who also held the contract 
 to be neither illegal nor ultra vires : " It was to apply the funds 
 of the company to purposes within the scope of its original incor- 
 poration," ^ and, therefore, affirmed the. decrees for specific per- 
 formance thereof. This is a very strong case, the sum to be paid 
 was exorbitant, none of the land referred to was taken or to be 
 taken by the bill which passed, and tlie line was abandoned, so 
 that the company received absolutely nothing for their outlay. 
 Yet specific performance was decreed, thus showing that the 
 House of Lords were satisfied, not only as to the clearness of 
 plaintifi's title at law, but also that an action for damages would 
 not give him full compensation. 
 
 The above principles and rules apply equally to all the various 
 agreements above set forth, but as those relating to personal 
 compensation have received special and reiterated attention, and 
 they differ in many respects from the others, it may be advisable 
 to give them some special and separate consideration. 
 
 YII. Agreements to pay compensation of this hind are good 
 provided damage is actually done. 
 
 It has already been seen that not only direct bribes, but also 
 all agreements in the nature or savoring of bribes, are bad. But 
 
 ' 5 H. L. C. 831, 349. 
 
328 APPLICATIONS TO PARLIAMENT. 
 
 tMs is SO only when there is absolutely no consideration. Where 
 there is something given in return, the courts have supported 
 agreements which, to ordinaiy apprehension, were preposterous 
 and contrary to public morality.^ And though these last men- 
 tioned proceedings are now of doubtful legality, yet it seems 
 quite clear that a person may stand upon his own rights of 
 exclusion and user and exact any payment he chooses for relin- 
 quishing any fraction thereof, and that, although the mere 
 invasion of privacy is not, under ordinary circumstances, e. g., 
 the opening of a window upon private grounds, a legal injuria, 
 nor does it give rise to an equitable right of action, yet such a 
 matter is sufiBcient consideration to support a contract to pay 
 compensation therefor.' 
 
 VIII. The last proposition holds good with respect to other 
 agreements for compensation. 
 
 It follows that the reasoning, upon which agreements of the 
 kind last considered are supported, must apply a fortiori to other 
 allied forms of agreement. Provided the agreements are hona 
 fide what tliey purport on the face to be, provided also they are 
 supported by the consideration of damage actually done by the 
 company in question, then such agreements are valid whatever 
 their form, whether to pay personal compensation for damage of 
 the second kind, or in lieu thereof to take land, perhaps much 
 more than is absolutely required by the company,' or to erect 
 works.* 
 
 Possibly, however, circumstances may arise which will cause 
 the Court of Chancery to decline to decree specific per- ' 
 formance.' 
 
 Assuming the exact nature of the contracts and transactions 
 hitherto in investigation determined, and the exact position of 
 the corporation with respect to them established, the last question 
 which arises is : Out of what funds are these contracts and the 
 liability upon them to be discharged ? Not out of the original 
 
 1 Ante. pp. 319, 320. ' See Webb v. Direct London, <fco., 
 
 ^ Taylor v. Chichester, <fcc. Ky. Co. Rv. Co. 1 De G. M. & G. 521 ; Stnart v. 
 
 L. R. 4 H. L. 628. London <fe N. W. Ry. Co. 1 De G. M. <fe 
 
 3 Ante, pp. 323, 324. G. 721. 
 ■> Ante, p. 321, n 1. 
 
AGREEMENTS COLLATERAL TO. 329 
 
 capital ; this would be ull/ra vires, as is admitted by the Lord 
 Chancellor and by Lord Westbury in Taylor v. Chichester and 
 Midhurst Ry. Co:^ "Their first act, of course, restrained the 
 application of their capital to tlie purposes authorized by that act 
 * * * so they sought new powers to raise additional capital to 
 make a new line." 
 
 Consequently the new act must provide either that the old 
 capital shall be liable for the contracts made with reference to the 
 new act, which provision would be perfectly legal and constitu- 
 tional in this country, and is often inserted, especially in acts 
 incorporating new companies, or that new capital may be raised. 
 
 ' L. R. 4 H. L. 639. Compare Baj- liDes of railway, was restrained from 
 
 shaw V. Eastern Union Ry. Co. 2 Mac. i applying the capital raised under one 
 
 Gr. 389, where a company empowered by act to the line authorized by the other, 
 two distinct acts to make two different 
 
CHAPTEE IX. 
 
 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 It is now completely established that a corporation can 
 commit most varieties of torts, and, consequently, expose itself to 
 actions for the same. At first sight it would seem, tliat such acts 
 must ex necessitate rei be ultra vires, that torts and crimes cannot, 
 by any species of reasoning, be brought within the objects for the 
 attainment of wbich a number of individuals are incorporated. 
 This is true enough, but it is only one-balf of the case. The 
 fallacy consists in assuming that the commission of torts and 
 crimes is one of such objects, and in overlooking the fact that in 
 the pursuit of its legitimate business a corporation may, from 
 inadvertence, render itself guilty of a tort or crime. The whole 
 argument has been met, and the fallacy exposed on several occa- 
 sions. Thus, in Eanger v. Great Western Ry. Co.,' Lord Cotten- 
 ham said : " Strictly speaking, a corporation cannot itself be 
 guilty of fraud. But where a corporation is formed for the 
 purpose of carrying on a trading or other speculation for profit, 
 such as forming a railway, these objects can only be accomplished 
 through the agency of individuals ; and there can be no doubt 
 that if the agents employed conduct themselves fraudulently, so 
 that if they had been acting for private employers, the persons for 
 whom they were acting would have been aflEected by their fraud, 
 the same principles must prevail where the principal under whom 
 the agent acts is a corporation." 
 
 Similarly, per Erie, C. J., in Green v. London General 
 Omnibas Company:^ "I take the whole tenor of authorities, 
 from Yarborough v. The Bank of England down to the case of 
 Whitfield v. The South Eastern Eailway Company, to sbow that 
 an action for a wrong does lie against a corporation, wbere the 
 thing done is within the purpose of the incorporation, and that 
 
 '5H.L.C.72. Compare ^erChelms- "7C. B. (N. S.)290; 29L. J. (C.P.)13. 
 
 ford, L. C. in Royal Britisli Bank {Ex 
 parte Niool), 28 L. J. (Ch.) 257. 
 
LIABILITIES OF CORPORATIONS EX DELICTO. 331 
 
 it has been done in such a manner as to constitute what would be 
 an actionable wrong if done by a private individual." {a) 
 
 In respect of liability for torts under ordinary circumstances 
 and apart from questions of ultra vires, it makes no difference, 
 whether the corporation is a trading one making profits out of its 
 undertaking, or exists merely for public purposes. In the latter 
 case, as in the former, it is equally under obligations to all persons 
 with whom it may come into contact, and is bound so to carry on 
 its affairs as to keep within its powers, and not to cause injury to 
 others. Failing this, it is liable for the damage resulting.* 
 
 Under the same circumstances the various boards of commis- 
 sioners, and other similar bodies appointed to conduct and carry 
 
 ' Southampton <fe Itchin Bridge Co. ». Williams, 3 H. <fe N. 308 ; Brownlow v. 
 Southampton Local Board, 8 E. <fe B. Metropol. Board, 16 C. B. (N. S.) 646. 
 801 ; 28 L. J. (Q. B.) 41 ; Ruck v. 
 
 (a) " Corporations are liable for the acts of their servants, while engaged in the 
 business of their employment, in the same manner and to the same extent that indi- 
 viduals are liable under like circumstances. Corporations are liable for every wrong 
 of which they are guilty, and in such cases the doctrine of ultra vires has no applica- 
 tion." Merchants' Bank v. State Bank, 10 Wall. 646. "The liability of the 
 corporation for the consequences of acts of its officers, done within the scope of their 
 general powers, is not affected by the fact that the act which the officer has assumed 
 to do is one which the corporation itself could not rightfully do. A corporation may 
 do wrong through its agents as well as a private individual." Booth v. Farmers' <fe 
 Mechanics' Bank, 60 N. Y. 400. " A corporation is liable to the same extent and 
 under the same circumstances as a natural person, for the consequences of its wrong- 
 ful acts, and will be held to respond in a civil action, at the suit of an injured party, 
 for every grade and description of forcible, malicious or negligent tort or wrong 
 which it commits, however foreign to its nature or beyond its granted powers the 
 wrongful transaction or act may be." N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y. 
 30; see, also, Phil. & Bait. R. R. Co. v. Quigley, 21 How. 209; Frankfort Bank v. 
 Johnson, 24 Me. 490; Thayer v. Boston, 19 Pick. 511 ; Goodspeed v. East Haddam 
 Bank, 22 Conn. 541 ; Life and Fire Ins. Co. v. Mechanics' Fire Ins. Co. 1 Wend. 31 ; 
 Bissell V. Mich. S. & N. I. R. R. Co. 22 N. Y. 258 ; Albert v. Savings Bank, 2 Md. 
 159 ; Vinas!). Merchants, <fec. Ins. Co. 27 La. Ann. 367; Hays v. Houston, &c. R. R. Co. 
 46 Tex. 272; Western Union Tel. Co. v. Eyser, 2 Col. T. 141. " A corporation aggre- 
 gate being an artificial body, an imaginary person of the law, so to speak, is, from its 
 nature, incapable of doing any act, except through agents, to whom is given by its 
 fundamental law, or in pursuance of it, every power of action it is capable of pos- 
 sessing or exercising. Hence, the rule has been established, and may now also be 
 stated as an indisputable principle, that a corporation is responsible for the acts or 
 negligence of its agents while engaged in the business of the agency, to the same 
 extent and under the same circumstances that a natural person is chargeable with 
 the acts or negligence of his agent." N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y. 
 60 ; Peebles v. Patapsco Guauo Co. 77 N, C. 233. 
 
332 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 out public improvements, and deriving therefrom no personal 
 advantage whatever, will, in their corporate or guasi-corpor&te 
 capacity, unless expressly by statutory provision relieved, be 
 responsible to the parties injured.^ 
 
 Section I. — Feauds. 
 
 Frauds form the most important class of torts in connection 
 with tlie liability of corporations, and they have given rise to 
 many complicated and difficult questions. The requisites to sup- 
 port, at common law, an action for fraud are well known. First, 
 the defendant, i. e., the party guilty of the fraud, which is 
 oftenest misrepresentation, and must be as to a matter of fact, 
 must have committed the fraud either knowingly or recklessly, 
 and negligently, and without the belief that his statement was 
 true.' Secondly, he must have intended some other to act upon 
 it.' Thirdly, the plaintiffs must have relied upon the fraud ; 
 dolus dans locum contractui,^ though it is sufficient if there was a 
 fraudulent representation as to any part of that which induced 
 lira to enter into the contract.^ Fourthly, the plaintiff must 
 have sustained damage. 
 
 These requisites should be carefully kept in mind when exam- 
 ining a case of fraud at common law, whether it concerns a cor- 
 poration or a private individual. But chancery proceeds upon 
 somewhat different considerations, often holding that to be con- 
 structive fraud which would afford no ground for an action at 
 law, and very frequently granting to a suitor some redress when 
 he would be utterly remediless at law, as by ordering the wrong- 
 doer to recoup the plaintiff, as far as he (the wrong-doer) has bene- 
 fitted by the wrong. 
 
 In considering the question of fraud, it will be convenient to 
 take, first, frauds and misrepresentations which can be imputed to 
 corporations, directly and immediately, and, secondly, those which 
 can be imputed to them only indirectly, and by implication. 
 
 * See the cases cited in the last note, made to the public generally, as in a 
 
 and also the Mersey Docks Trustees v, prospectus or adyertisement. Gerhard 
 
 Oibbs, L. E. 1 H. Liis. 98, v. Bates, 2 E. <t B. 476. 
 
 2 Taylor v. Ashton, 11 M. & W. 415. " Attwood v. Small, 6 01. A F. 232. 
 
 ' Thorn V. Bigland, 8 Ex. 725 ; but it ' Kennedy v. Panama Royal Mail 
 
 is sufficient if a misrepresentation be Company, L. E. 2 Q, B. 580. 
 
FRAUDS. 333 
 
 I. Corporations are liable, like individuals, for frauds com- 
 mitted directly hy themselves or hy their direction, {a) 
 
 JSTot a shadow of doubt now exists, either at law or in chan- 
 cery, as to a corporation's liability when the circumstances are 
 
 (a) In Sharp v. Mayor, 40 Barb. 273 (see 8 Keyes, 133 ; 40 N. Y. 454 ; Id. 573), 
 the Court say: "The suggestion that a corporation cannot be liable for a fraud com- 
 mitted, may be correct as to fraud not in any way connected with or committed in 
 the course of, and tending to carry out, some power or act which it is authorized to 
 perform. But it is not correct as to fraud so connected or committed. A fraudulent 
 representation is, in effect, a wrongful and unlawful action ; and the argument is, 
 that a corporation has no power to commit a wrongful or unlawful act, and having- 
 no power to commit it, it is not liable therefor. But it is held that a corporation 
 may be saed for an unlawful conversion of goods, and damages recovered, if it be 
 found to have unlawfully converted them. Beach v. Fulton Bank, 7 Cow. 485. So, 
 also, it may be sued and damages recovered for an unlawful refusal to permit stock 
 to be transferred. Bank of United States v. Davis, 2 Hill, 451. In these cases, the 
 argument that the corporation is not invested by its charter, or by its stockholders, 
 with power to commit any unlawful act or wrong, and that it could not, by any 
 ■^vrongful or unlawful act affect the interests of the stockholders, was applicable to 
 the same extent as it is in the present case; and those arguments were strenuously 
 urged in the case in 7 Gowen. It is urged, that corporations will not be affected by 
 any representation made by an agent, unless the agent was directly authorized by 
 resolution to make the particular statement. The principal is liable for the false rep- 
 resentations of the agent, made in and about the matter for which he was appointed 
 agent, not on the ground of express authority given to the agent to make the state- 
 ment, but on the ground that, as to the particular matter for which the agent is ap- 
 pointed, he stands in the place of the principal, and whatever he does or says in and 
 about that matter, is the act and declaration of the principal, for which the principal 
 is just as liable as if he had personally done the act or made the declaration. Th& 
 power of the agent to render the principal liable for representations, flows from his 
 mere appointment to do the act or transact the business, in and about which the rep- 
 resentations are made. This is clearly the doctrine of the case in 23 Wendell. There 
 is no principle of the common law, by which the incidents attaching to the appointment 
 of an agent, when that appointment is made by a corporation, are more restricted 
 than when the appointment is by an individual. No train of reasoning has presented 
 itself which leads to the conclusion, that there is any necessity or propriety in estab- 
 lishing the doctrine, that when an agent is appointed by a corporation, the incidents 
 attaching to that agent are more restricted or of a different nature, than in other 
 cases. It is not meant to be asserted, that a corporation can bind itself in all mat- 
 ters to the same extent as an individual can, or that, by the appointment of an agent, 
 it can bind itself in matters as to which its own act would not bind. But it is meant 
 to be said, that where a corporation has power to do some act, and as incident to 
 that act, to render itself liable for representations made in and about the doing of 
 that act, it can appoint an agent to do that act, and from the mere fact of such ap- 
 pointment, the same powers will flow to the agent, as if he had been appointed by an 
 individual; provided only, that the powers so flowing could have been exercised by 
 the corporation itself." 
 
334 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 such that the fraud can be imputed to the corporation itself. 
 When will this be the ease ? The answer given by Westbury, L. 
 C.,^ is : " That if reports are made to the shareholders of a com- 
 pany by their directors, and the reports are adopted by the share- 
 holders at one of the appointed meetings of the company, and 
 these reports are afterwards industriously circulated, misrepre- 
 sentations contained in those reports must undoubtedly be taken, 
 after their adoption, to be representations and statements made 
 with the authority of the company, and, therefore, binding upon 
 the company." Similarly, in National Exchange Company of 
 Glasgow V. Drew,' Lord St. Leonards said : " I have certainly 
 come to this conclusion that, if representations are made by a com- 
 pany fraudulently, for the purpose of enhancing the value of their 
 stock, and they induce a third person to purchase stock, these rep- 
 resentations so made by them for that purpose do bind the com- 
 pany. I consider representations by the directors of a company 
 as representations by the company ; and, although they may be 
 representations made to the company, it is their own representa- . 
 tion." This was explained, or rather restated in a subsequent 
 case' by Kindersley, Y.-C, thus : (a) "It was laid down in the 
 National Exchange Company v. Drew (I do not say that the point 
 was actually decided, but the opinion of some of the most eminent 
 judges of the present day was expressed), that where there is a 
 body like this, consisting of a great number of shareholders, and 
 the directors make a report to the body at large, in performance 
 of their duty, then, if such report contain a representation of the 
 affairs of the company which is false, and if that is made to a pub- 
 lic and general meeting of the shareholders of the company, and 
 is adopted by the company as the report of the directors to that 
 general meeting, although there be no order to publish it, either 
 hy the directors or the body at large, yet, from the very nature 
 of the case, it must be regarded as the representation of the com- 
 pany." 
 
 ' New Brunswick, &c. Ry. Co. v. ^ Re National Patent Steam Fuel Com- 
 
 Conybeare, 9 H. L. C. 725. pany (ExparteVfovih), 4 Drew, 529, 632; 
 
 2 2 Macq. 103. 28 L. J. (Ch.) 590. 
 
 (a) See Kerr on Fraud (Amer. ed., p. 117) : Nicol'a Case, 3 D. & J. 427. Quoire. 
 Is there any sound distinction to be made between statements published under the 
 express sanction of the whole body of the stockholders, and those made by officers, 
 directors or other agents while acting within the apparent scope of their authority ? 
 
FRAUDS. 335 
 
 As illustrating the liability at common law, may be mentioned 
 Denton v. Great Northern Kailway Company.^ This was an ac- 
 tion against the defendant for fraudulently publishing in their 
 time tables a train which had ceased to run, whereby the plaintiff, 
 who had, relying on the tables, left London for Peterborough, 
 with the intention of going on thence to Hull by the train, which, 
 on arriving at Peterborough, he learnt bad been discontinued, 
 was put to expense ; and it was unanimously held by the Queen's 
 Bench that the defendants were liable for the expenses so in- 
 curred. 
 
 II. Corporations a/re, at common law, liable to an action for 
 damages for the frauds and misrepresentations of their 
 agents in the due course of their employment, {a) 
 
 These are such frauds as are committed by the agents of the 
 corporation in the management and furtherance of its business. 
 
 1 5 E. A B. 860; 25 L. J. (Q. B.) 129 ; Williams v. Swansea Harbor Trustees, 14 
 
 C. B. (N. S.) 845. 
 
 (a) 1. As corporations can act only through agents, the liability of corporations 
 for fraud depends upon the rules adopted aa to the liability of principals for the 
 frauds of agents. " As directors and managing officers exercise all the powers of the 
 corporation, and are its only direct medium of communication with outside parties, 
 they must, in respect to all external relations, be considered as identical with the 
 corporation itself." Perkins v. N. Y. Central R. R. Co. 24 N. Y. 213 ; Lee ti. Village 
 of Sandy Hill, 40 If. Y. 451. Hunter v. Hudson River Iron Co. 20 Barb. 607, was a 
 case where a purchasing agent, while contracting for goods for the corporation de- 
 fendant, made certain false representations in regard to the condition of the company. 
 The court held the rule concerning principal and agent applicable, and that the cor- 
 poration, as a principal, was liable for the fraud or misconduct of the agent, while 
 acting apparently within the limits of his authority, in the same manner as if the 
 principal were an individual. See Brokaw v. N. J. R. R. <t T. Co. 32 N. J. L. 331. 
 A corporation is liable to an action fur deceit, and for false and fraudulent represen- 
 tations by its agent in dealing in its behalf. Peebles v. Patapsco Guano Co. 77 N. C. 
 233. Fraudulent representations by a railroad company through its ofiScers or agents, 
 as to its pecuniary condition, are ground for avoiding a contract of sale of land ob- 
 tained thereby. McClellan ti. Scott, 9 Wis. SI. Such representations by an officer 
 of an insurance company, are ground for annulling an assignment of a policy, in- 
 duced thereby, to one who was settling claims against the company. Derrick v. 
 Lamar Ins. Co. 74 111. 404. " On general principles, it would seem not to admit of 
 question, that one who, by false and fraudulent representations and inducements, 
 held out to him by the company, had been deceived and misled into making an in- 
 jurious contract, by which he became a stockholder and member of the company, 
 might maintain an action against it, to rescind the contract and dissolve the connec- 
 
336 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 For these frauds it is now fully establisLed at common law that 
 the corporation is liable, provided the agents guilty of the frauds 
 
 tion. * * The representations, declarations and admissions of the agent of a cor- 
 poration, stand npon the same footing with those of the agent of an individual. And 
 nothing is better settled than that the fraud of an authorized agent will invalidate a 
 contract, though, in perpetrating the fraud, the agent acted without the knowledge 
 or consent of the principal." Henderson v. R. R. Co. lY Tex. 560. 
 
 2. The cases in which fraud is alleged against corporations grow, for the most 
 part, out of misrepresentations in soliciting subscriptions, or out of false statements 
 as to the condition of the company during its existence, in circulars and other docu- 
 ments drawn in extravagant terms. See Fogg v. Griffin, 2 Allen, 1 ; Litchfield Bank 
 V. Peck, 29 Conn. 384 ; Kelsey v. Nor. Light OU Co. 64 Barb. Ill ; s. o. 45 N. T. 
 505 ; Hughes v. Antietam Mfg. Co. 34 Md. 316 ; Rives v. Montgomery S. P. R. Co. 
 30 Ala. 92 ; Henderson v. Railroad Co. 11 Tex. 660; Miss. ifec. R. R. Co. v. Cross, 20 
 Ark. 443 ; Wight v. Shelby R. R. Co. 16 B. Mon. 5 ; Nugent v. Cincinnati, Ac. R. R. 
 Co. 2 Disney, 302 ; Maccoun v. Ind. &c. R. R. Co. 9 Ind. 262 ; Johnson v. Crawfords- 
 ville R. R. Co. 11 Ind. 280; Brownlee ». Ohio, <fec. R. R. Co. 18 Ind. 68; Carey v. 
 Cin. <Ss Chic. R. R. Co. 5 Iowa, 356 ; Waldo v. Chicago, St. P. & F. du L. R. R. Co. 14 
 Wis. 675. In order to avoid the contract of subscription, it must appear to have 
 been made on the faith of false representations of the agent, in regard to a matter of 
 fact, material to the value and success of the enterprise. The mere statement that 
 the company would earn certain dividends is regarded as matter of opinion upon 
 which the subscriber has no right to rely. Hughes v. Antietam Mfg. Co. 84 Md. 
 316 ; Vawter v. Ohio <fe Miss. R.R. Co. 11 Ind. IW; Oregon Cent. R. R. Co. v. Scog- 
 gin, 3 Oreg. 161. It is not competent for a subscriber (his subscription being gen- 
 eral and unconditional) to prove declarations, made by a soliciting agent, in his 
 speeches, as to the location of the road, unless the substance of them had been incor- 
 porated in the contract of subscription. Miss., 0. & R. R. R. R. Co. ii. Cross, 20 Ark. 
 443 ; Piscataqua Ferry Co. v. Jones, 39 N. H. 491 ; Conn. & Pass Rivers R. R. Co. v. 
 Bailey, 24 Vt. 477 ; Kennebec, Ac. R. R. Co. v. Waters, 34 Me. 369 ; N. C. R. R. Co. 
 V. Leach, 4 Jones (Law), 340 ; Thigpen v. Miss. Cent. R. R. Co. 32 Miss. 347 ; Vicks- 
 biirg, Ac. R. R. Co. v. McKean, 12 La. Ann. 638 ; E. Tenn. &. Virg. R. R. Co. v. Gam- 
 mon, 6 Sneed, 567; Wight ii. Shelby R. R. Co. 16 B. Mon. 5 ; compare N. Y. Ex- 
 change Co. v. De Wolf, 31 N. Y. 273. 
 
 3. Persons setting up fraud on the part of corporations in obtaining subscriptions 
 will not be relieved, where they either are participes criminis, or have acquiesced so 
 long that the rights of creditors or of other persons acting hoTiafide have supervened. 
 Ogilvie V. Knox Ins. Co. 22 How. 380 ; Upton j'. Hansbrough, 3 Biss. 417 ; Blodgett 
 V. Morrill, 20 Vt. 609. In Custar v. Titusville Gas & Water Co. 63 Penn. St. 381, 
 the court held that when the representation of the agent is contrary to the intertsts 
 and duty of the corporation, as that he will release or has authority to release the 
 subscription he is taking, it is not a reasonable presumption that he has such author- 
 ity, and a subscriber on such terms would be particeps criminis, and held to all the 
 responsibilities of a bona fide subscriber. See Litchfield Bank v. Peck, 29 Conn. 384 ; 
 Railroad Co. v. Rodrigues, 10 Rich. (S. C. Law), 278. 
 
 4. Actions for fraud arising otherwise against corporations, are not frequent. 
 There is, however, an important class of cases, in which corporations have been held 
 
FRAUDS. 337 
 
 kept -within the limits of their authority. In Barwick v. English 
 Joint Stock Bank,^ the Court of Exchequer Chamber, on a bill of 
 
 ' L. R. 2 Ex. 269 ; recognized and fol- Council, in Mackay v. Commercial Bank 
 lowed in Swift v. Winterbotham, P. 0., of New Brunswick, L. R. 5 P. C. 394. 
 L. R. 8 Q. B. 244 ; and, by the Privy 
 
 liable for the fraudulent representations of their agents, as of officers in overissuing 
 stock, or of cashiers or tellers in falaeljr certifying checks, not on the ground of ex- 
 press or implied authority given to the agent, which is generally the basis of the 
 principal's responsibility, but rather because these agents have been held out to the 
 world as the proper sources of information, in regard to those matters concerning 
 which their false representations have been made. This is an application of the rule 
 as expressed by Ashhurst, J., in Lichbarrow v. Mason, 2 T. R. 63, that where one of 
 two innocent persons must suffer by the acts of a third, he who has enabled such 
 third person b) occasion the loss must sustain it. Merchants' Bank v. State Bank, 10 
 Wall. 604; Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 14 N. Y. 623 ; 
 s. o. ] 6 N. Y. 1 25 ; s. 0. 28 N. Y. 425 ; Meads v. Merchants' Bank of Albany, 25 U. Y. 
 143 ; New York & N. H. R. R. Co. v. Schuyler, 34 N. Y. 30; Irving Bank v. Wether- 
 ald, 36 N. Y. 336 ; Rounds v. Smith, 42 111. 245 ; Bickford v. First Nat. Bank of C. 
 lb. 238 ; Brown v. Leckie, 43 Til. 497 ; see Story on Agency, § 127. Answering 
 questions about the solvency of parties is not part of the business of a cashier, and 
 a bank wUl not be liable for fraud in such answers. Horrigan v. Nat. Bank, 6 Re-, 
 porter, 188. In Griswold v. Haven, 25 N. Y. 695, 600, it is said: " The idea that 
 the responsibility of a principal for the frauds of his agent rests in all cases upon the 
 ground that he has in some way, either actually or apparently, authorized the fraud- 
 ulent act, or has received the benefit of the fraud, and therefore adopted it, must be 
 given up. It would be a very artificial and unnatural mode of reasoning that should 
 apply that doctrine to the principal's liability for the negligence of his agent, and 
 this liability and that for fraud belong to tbe same class, and rest upon the same rea- 
 son. That reason is, that every person employing an agent is under obligation to 
 pay some regard to the diligence, skill and integrity of the agent he selects, and to 
 his fitness to perform the duties with which he is charged. The decision of this 
 court in the case of the Batchers' A Drovers' Bank, supra, was placed explicitly upon 
 this ground, and can be sustained upon no other. The act of the teller, in that case, 
 in certifying the checks, was wholly unauthorized. There was not even a semblance 
 of authority, if the holder was bound to ascertain whether the drawer had funds to 
 meet them. The court, nevertheless, held the bank liable, and every judge who wrote 
 in the case (except Judge Comstock, who dissented), concurred in the rule laid down 
 in tbe case of the North River Bank v. Aymar, 3 Hill, 262. This rule is restated in 
 the Ciise of the Butchers' & Drovers' Bank, as follows : ' Where the party dealing 
 with an agent has ascertained that the act of the agent corresponds, in every partic- 
 ular in regard to which such party has or is presumed to have any knowledge, with 
 the terms of the power, he may take the representation of the agent as to any extrinsic 
 fact, which rests peculiarly within the knowledge of the agent, and which cannot be 
 ascertained by a comparison of the power with the act done under it. * * * The 
 doctrine must be considered as established, that where the authority of an agent de- 
 pends upon some facts outside the terms of his power, and which, from its nature, 
 rests particularly within his knowledge, the principal is bound by the representation 
 33 
 
338 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 exceptions, held the defendants responsible for the fraud of their 
 naanager. No objection was taken — in fact, the point was not 
 even raised by either the counsel or the bench — to the action it- 
 self, as being against a corporation. It was assumed throughout 
 that a corporation, like any other principal, is liable for the acts of 
 its agents. 
 
 So in Kennedy v. Panama, &c. Mail Company,^ which was an 
 action brought on the ground of misrepresentation in a prospectus 
 issued by the directors, to recover calls paid by plaintiflF, the same 
 liability was assumed as beyond all argument. Indeed, the judg- 
 ment of the court notices it only incidentally. " These would not 
 be legitimate consequences, if there had been fraud in those acting 
 for the company. DovMless, in such a case, the company must 
 bear all the consequences of ths fraud of those they employ." 
 
 III. Corporations a/re not liable in chancery for the frauds of 
 their agents — semble ; (a) but they cannot reiavn any 
 benefit derived by them, from such frauds. 
 
 But the authorities and dicta in chancery are very conflicting, 
 if not absolutely irreconcilable. On the one side it is urged that 
 
 ^ L. R. 2 Q. B. 580, 889. 
 
 of the agent, although false, as to the existeDce of such fact.' " In Butler v. Watkins, 
 13 Wall. 466, an action was sustained against a foreign corporation and its managing 
 agent, sent to conduct its affairs in this country, for fraudulently pretending a pur- 
 pose to conclude an agreement with the plaintiff to make use of his patent, while the 
 real purpose of the defendants was, by means of protracting the negotiations, to keep 
 the plaintiff's invention out of the market, the defendant corporation being largely 
 interested in another invention, which would have been interfered with by that of 
 the plaintiff. The court held that, if the fraud and deceit which lay at the basis of 
 the action were proved, the action could be maintained against both the defendants. 
 This case would seem to reach the extreme limit to which the doctrine should be 
 carried. 
 
 6. Corporations cannot, any more than individuals, repudiate part of a transac- 
 tion. If the agent of a corporation has made false statements in regard to matters 
 of which it claims the benefit, it wiU be bound by them, for it cannot ratify the con- 
 tract and at the same time avoid responsibility for the representations which formed 
 its basis or led to its being made. Story on Agency, §§ 239, 250 ; Concord Bank v. 
 Gregg, 14 N. H. 331 ; Crump v. U. S. Mining Co, T Gratt. 362. 
 
 As to suits against directors personally for fraudulent representations, see Bruff v. 
 Mali, 36 N. Y. 200; Wakeman v. Dalley, 51 N. Y. 27 ; Arthur i;. Griswold, 55 N. Y. 
 400; Cazeaux v. Mali, 25 Barb. 678 ; Newberry v. Garland, 31 Barb. 121 ; Cross v. 
 Sackett, 2 Bosw. 617 ; Mabey v. Adams, 3 Bosw. 846 ; Morse v. Swits, 19 How. Pr. 
 276; in which cases the liability of corporations is incidentally discussed. 
 
 (a) The distinction as to remedies at law and in equity in cases of fraud by cor- 
 
FRAUDS. 339 
 
 the agents of a corporation are its agents for carrying on its oper- 
 ations honestly and legally, and cease to be so when they act 
 fraudulently and illegally. On the other side it is urged, with 
 equal justice, that no distinction can be drawn between a principal, 
 who is merely a legal entity, and an ordinary human being ; and 
 that, as a corporation must act by agents, so, like other principals, 
 it ought, in common fairness, to be responsible for the frauds as 
 well as the other acts of these. 
 
 In support of the former view we have the following : 
 
 porate bodies and their agents, indicated in the text, will, on examination, be found 
 to be rather in the dicta of judges, consequent upon the peculiar circumstances of 
 each case, than in any well established principle. Courts of Chancery have un- 
 doubted jurisdiction to relieve against every species of fraud, and it would indeed 
 be " strange " if that deemed fraud by courts of law should be refused to be recog- 
 nized as such by courts of equity. When it has been settled, as cannot now be dis- 
 puted, that the same rules of law are to be applied in cases where a corporation is a 
 party as where private individuals are litigants, there can be no difSculty in deter- 
 mining the general principles upon which any given controversy is to be decided. 
 The only difference between actions at law to recover damages for false representa- 
 tions and suits in equity to relieve against such representations, is that in the one 
 case the scienter is the gist of the action, and, therefore, the representations must not 
 only be false, but known to be so by the party making them ; Kerr on Frauds (Am. 
 ed.), p. 325, notes; Pettigrew v. Chellis, 41 N. H. 95 ; King v. Eagle Mills, 10 Allen, 
 648; Marshall v. Gray, 57 Barb. 414; Allen tr. Wanamaker, 31 N. J. L. 370; while 
 in equity, " whether the party misrepresenting a material fact knew it to be false, or 
 made the assertion without knowing whether it were true or false, is wholly imma- 
 terial." Story Eq. Juris. § 193. 
 
 The case of Bennett v, Judson, 21 W. T. 238, has sometimes been relied on as es- 
 tablishing a different doctrine, and as applying the rule in equity to actions at law, 
 and thus as sweeping away the great mass of cases in which knowledge of the falsity 
 of the representations or fraudulent intent, on the part of the person making it, must 
 be proved, in order to entitle the injured party to recover. Kelsey v. Northern 
 Light Oil Co. 64 Barb. Ill, 130. But "that case has always been considered to 
 have carried the doctrine of liability for an alleged fraudulent representation to the 
 extremest verge of the law, and the courts have been very careful to discriminate 
 and apply it only to the state of facts presented by the case itself." Weed v. Chase, 
 55 Barb. 534, 648; see Marsh n. Falker,40 N. Y. 562; Craig v. Ward, 3 Keyes, 38'7; 
 Lefler v. Field, 52 N. Y. 621 ; Dubois v. Hermance, 66 N. Y. 673. 
 
 The question, what kind of fraud could be set up as a defense in an action at law 
 (see Hartshorn v. Day, 19 How. 211, 222; Dorr v. Munsell, 13 Johns. 430; Cham- 
 pion V. White, 5 Cow. 509 ; Hazard v. Irwin, 18 Pick. 95), has ceased to be a prac- 
 tical question in those States which, like New York, California, and Ohio, have abol- 
 ished distinctions between actions at law and suits in equity, and allow defendants to 
 interpose equitable as well as legal defenses in all actions. See Dobson v. Pearce, 12 
 N. Y. 156 ; Despard v. WaUbridge, IB K. Y. 374. 
 
310 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 (1) Il^orth of England Joint-Stock Banking Company {Ex parte 
 Bernard),' per Parker, Y.-C. : "As to the argument tbat Mr. Ber- 
 nard was induced to take these shares by incorrect representations, 
 that point was taken in Dodgson'^s Case, and Knight-Bruce, V.-C, 
 said, that, whatever fraud there might be, if fraud there was, it 
 was charged against the directors, who could not be the agents of 
 the body of shareholders to commit a fraud. For these reasons 
 the motion must be refused." 
 
 (2) Re Athenaeum Life Assurance Company {Ex parte Shef- 
 field),^ per Page- Wood, V.-C. : "With regard to any fraud in mis- 
 representing what the deed itself was, I apprehend nothing can 
 be made of that. Of course, the representations made by the sec- 
 retary could have no effect at all, if the deed were difEerent 
 from what it was represented to be ; for, though companies have 
 been held to be bound in some cases by the act of all the directors, 
 acting in the due execution of their powers, it has never yet been 
 held that an officer of a company misrepresenting the eflEect of a 
 deed, it being no part of his functions to explain or expound that 
 deed, could release a shareholder." 
 
 (3) Duranty's Case,' per Komilly, M. R. : " The directors are 
 not the agents of the company to commit a fraud." 
 
 (4) Re HuU and London Life Assurance Company {Ex pa/rte 
 Gibson),* where Lord Chelmsford,' L. C, expressed himself thus : 
 " There is no doubt that, if a person has been drawn in by misrepre- 
 sentations of an individual member of the company, he cannot ex- 
 onerate himself from liability by reason of such false representation. 
 If he has any remedy, it is against the individual shareholder who 
 has deceived him. With respect to misrepresentations by the 
 company itself, or its agents, the case would be difEerent ; but 
 there has always appeared to me to be great diflBculty in establish- 
 ing such a case. The company is represented by its directors, who, 
 for certain purposes, are its agents ; but the difficulty is in saying 
 that they are its agents for the purpose of making false represen- 
 tations." 
 
 (5) In Re Eoyal British Bank (Mixer's Case),^ Lord Campbell, 
 L. C, said : " Clearly there was fraud, and gross fraud, on the part 
 
 1 5 D. G. A Sm. 283; 21 L. J. (Ch.) J. 306, two cases also growing out of the 
 
 468, 470, following Dodgs' n's Case, 3 D. windiDg up of the Athenseuiu Company. 
 G. <fe Sm. 85, which, however, is not ^ 26 Beav. 268, 274. 
 
 clearly reported. " 2 D. G. <fe J. 276, 283. 
 
 « 1 John. 451 ; 28 L. J. (Ch.) 326. See M D. G. <fe J. 675, 586. 
 
 JEx parte Richmond and Painter, 4 K. <fe 
 
FRAUDS. 341 
 
 of the directors, and I have no doubt that he {i. e., the appellant) 
 was induced by fraud to take his shares. I think, however, that it 
 was a fraud on the part of the directors, which cannot be imputed 
 to the company." 
 
 The above cases, however, cannot be considered binding at the 
 present time, at least not to the full extent of the language em- 
 ployed. It would indeed have been strange, if that could have con- 
 tinued to be deemed fraud in a court of law which chancery re- 
 fused to recognize as such ; and if a party, injured by the misrepre- 
 sentations of the agents of a company, would have been compelled 
 to apply to law for the relief and redress which equity denied him. 
 Five recent judgments, four by the House of Lords, and one by 
 the Privy Council, have partially removed this anomaly, and have 
 at length determined that a corporation cannot in chancery, any 
 more than at common law, shield itself from liability for the 
 frauds of those it employs, by the absurd fiction that, not possess- 
 ing real existence, mental or bodily, the mental element, intention, 
 requisite to constitute fraud, is wanting, and that therefore, on 
 the one hand, it is not liable to an action for deceit, while on the 
 other, it can hold to an agreement an unfortunate person, who has 
 been inveigled into it by the fraud of the corporate oflScials. 
 
 In the first of these decisions. New Brunswick KaUway Land 
 Company v. Conybeare,^ Lord Cranworth said : " If the directors, 
 or the secretary acting for them, had fraudulently represented 
 something to him (i. e., the plaintiff) which was untrue, he then ad- 
 hered to the opinion which he had expressed in former cases, that 
 the company would have been bound by that fraud." 
 
 In the "Western Bank of Scotland v. Addie,^ Lord Chelmsford 
 laid down that, " where a person has been drawn into a contract 
 to purchase shares belonging to a company, by fraudulent misrep- 
 resentations of the directors, and the directors, in the name of the 
 company seek to enforce that contract, or the person who has been 
 deceived institutes a suit against the company to rescind the con- 
 tract on the ground of fraud, the misrepresentations are imputable 
 to the company, and the purchaser cannot be held to his contract, 
 because a company cannot retain any benefit which they have 
 obtained through the fraud of their agents." 
 
 In Oakes v. Turquand,* the same judge quoted this last ex- 
 
 1 9 H. Lds. V25; 81 L. J. (Ch.) SOT. = L. R. 2 H. Lds. 825, 344. 
 
 " L. R. 1 S. & D. 146, 151. Coinpare 
 2 Macq. 103. 
 
342 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 tract, and adhered to it as being a correct exposition of the liability 
 of a corporation for the fraud of its agents. 
 
 But in eacb of the above cases, the actual decision was that the 
 corporation was not liable under the circumstances. Moreover, 
 two of them only were equity cases, the first and third ; and even 
 taking the statements bere cited to be actual and binding judg- 
 ments, and not, what they really were, mere dicta, they do not 
 go as far as those at law. In Barwick v. The English Joint-Stock 
 Bank, the Exchequer Chamber held unanimously, and in the most 
 unqualified manner, that an action for fraud lies against a corpora- 
 tion as against any private individual, whether the fraud be that 
 of the principal directly, or of the agents employed, provided 
 only that the latter are acting within the ordinary scope of their 
 occupation. But in Westem Bank of Scotland v. Addie, the 
 Lord Chancellor said : " But if the person who has been induced 
 to purchase shares by the frauds of the directors, instead of seek- 
 ing to set aside the contract, prefers to bring an action for dam- 
 ages for the deceit, such an action cannot be maintained against 
 the company, but only against the directors personally." To the 
 same effect was the decision of Lord Cranworth :^ "An attentive 
 consideration of the cases has convinced me that the true principle 
 is, that these corporate bodies, through whose agents so large a 
 portion of the business of the country is now carried on, may be 
 made responsible for the frauds of those agents to the extent to 
 which the companies have profited from these frauds ; but that 
 they cannot be sued as wrong-doers, by imputing to them the 
 misconduct of those whom they have employed. A person de- 
 frauded by directors, if the subsequent acts and dealings of the 
 parties have been such as to leave him no remedy but an action 
 for the fraud, must seek his remedy against the directors per- 
 sonally," 
 
 Of the other two cases last mentioned, the one is that of Peek 
 V. Gurney,' decided in July, 1873, by the House of Lords. This 
 was a suit in chancery by a shareholder induced by fraud to take 
 shares in a worthless company, against the directors thereof, who 
 had published the fraudulent statements, for an indemnity. It 
 will be observed that this case did not involve the precise point 
 now in consideration, viz., whether or not a corporation can be 
 
 ' L. R. 1 S. <fe D. leY ; see, also, Barry Chelmsford in Peek v. Gurney, L. E. 6 H. 
 V, Croskey, 2 J. A H. 1 ; and per Lord Lds. Z11, 390. 
 
 « L. R. 6 H. L. 377. 
 
FRAUDS. 343 
 
 made liable in an action in a chancery court for damages for 
 fraud committed by its agents, but as to the general principle, 
 Lord Chelmsford observed : " This case is entirely different from 
 suits instituted either to be relieved from, or for the enforcement 
 of, contracts induced by the fraudulent concealment of facts which 
 ought to have been disclosed ; nor does it resemble such cases as 
 Burro wes v. Lock^ and Slim v. Croucher,* where a person making 
 an untrue representation to another, about to deal in a matter of 
 interest upon the faith of that representation, has been compelled 
 to make good his representation, whether he knew it to be false, 
 or made it through forgetfulness of the fact. It is a suit insti- 
 tuted to recover damages from the respondents for the injury the 
 appellant has sustained by having been deceived and misled by 
 their misrepresentations and suppression of facts, to become a 
 shareholder in the proposed company, of which they were the 
 promoters. It is precisely analogous to the common law action 
 for deceit. There can be no doubt that equity exercises a concur- 
 rent jurisdiction in cases of this description, and the same princi- 
 ples applicable to them must prevail both at law and in equity." 
 
 The latter of these cases, Mackay v. Commercial Bank of New 
 Brunswick,' was decided* in March, 1874, by the Privy Council. 
 It was an action on the case for deceit by the acceptor of a bill, 
 which he had paid, against a banking corporation, to recover the 
 amount of such bill, which he had been fraudulently induced to 
 accept by the manager of the bank. The Privy Council held the 
 bank liable. But even this case only determined that in a com- 
 mon law court a corporation can be so sued. As to this point the 
 court was quite clear. They adopted the opinion of Lord Oran- 
 worth in Eanger v. Great Western Ey. Co.,* and said : " It ap- 
 pears to their lordships to follow that an action of deceit is main- 
 tainable, wherein, as laid down by the Exchequer Chamber, the 
 fraud of the agent may be treated, for purposes of pleading, as the 
 fraud of the principal. Kor do they see any valid reason for ex- 
 empting incorporated more than unincorporated companies from 
 this action." Nevertheless, however positively this is expressed, 
 the court was not sitting as an equity court, and their actual de- 
 cision was nothing more than this, viz., " It is enough in this case 
 to decide that the plaintiffs, having established that they have suf- 
 fered damage, and that the defendants commensurately profited 
 
 I 10 Ves. no. 3 L. R. 6 P. C. 394. 
 
 = 1 De G. F. & J. 618. " 5 H. L. C. 86 j ante, p. 330. 
 
344 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 by the fraudulent representation of [the manager], made within 
 the scope of his authority, are entitled to maintain their verdict." 
 This is very different from holding that a corporation is liable in 
 damages for frauds whether or not they have benefited thereby. 
 
 This, then, is the state of the English authorities. Of course 
 the question here considered is not to be confused with the ques- 
 tion as to whether chancery courts have jurisdiction to receive ac 
 tions for damages. The dicta above cited have no reference to this 
 point. They simply lay down the broad rule that corporations 
 are liable only for their own direct and express misdeeds. It 
 should also be borne in mind that, if this be the law, then in those 
 countries where the courts administer both law and equity, and in 
 this country in future, corporations will not be liable, even at law, 
 for indirect fraud, since the Supreme Court of Judicature Act, 
 1873, expressly provides that where the rules of law and equity 
 conflict, those of equity are to prevail.^ This result — the holding 
 corporations not liable for the frauds of their agents — will cause 
 a considerable qualification of the law, as at present existing, of 
 principal and agent, and it will be a strange exemplification of 
 the unexpected effects produced by sweeping legislative enact- 
 ments passed without a due consideration of the matters affected 
 thereby. 
 
 IV. Corporations can le made liable for the frauds of their 
 agents ord/y when acting within their authority, express or 
 implied. * 
 
 There are many diflSculties in the way of a satisfactory answer 
 to the question : What frauds are within an agent's authority to 
 commit? 
 
 As has been pointed out by the Privy Council, in Mackay v. 
 Commercial Bank of New Brunswick : " "It is seldom possible to 
 prove that the fraudulent act complained of was committed by the 
 express authority of the principal, or that he gave his agent gen- 
 eral authority to commit wrongs or frauds. Indeed, it may be 
 generally assumed that, in mercantile transactions, principals do 
 not authorize their agents to act wrongfully, and, consequently, that 
 frauds are beyond ' the scope of the agent's authority ' in the nar- 
 ' 36 <fc S"? Vict. 0. 66, s. 25, subs. 11. « L. R. 5 P. C. 894, 411. 
 
FBAUDS. 345 
 
 rowest sense of whicli the expression admits. But so narrow a 
 
 sense would have the effect of enabling principals largely to avail 
 
 themselves of the frauds of their agents without suffering losses 
 
 or incurring liabilities on account of' them, and would be opposed 
 
 as much to justice as to authority. A wider construction has been 
 
 put upon the words. Principals have been held liable for frauds, 
 
 when it has not been proved that they authorized the particular 
 
 fraud complained of, or gave a general authority to commit' frauds; 
 
 at the same time, it is not easy to define with precision the extent 
 
 to which this liability has been carried. The best definition of it, 
 
 in their lordships' judgment, is to be found in the case of Barwick 
 
 V. English Joint-Stock Bank.^ * * * With respect to the 
 
 question whether a principal is answerable for the act of his agent 
 
 in the course of his master's business, and for his master's benefit, 
 
 no sensible distinction can be drawn between the case of fraud 
 
 and the case of any other wrong. The general rule is, that the 
 
 master is answerable for every such wrong of the servant or agent 
 
 as is committed in the course of the service and for the master's 
 
 benefit, though no express command or privity of the m.aster is 
 
 proved. The principle is acted upon every day in running down 
 
 cases. It has been applied also to direct trespass to goods." After 
 
 • enumerating other instances of its application, the Court proceeds: 
 
 " In all these cases it may be said, as it was said here, that the 
 
 master had not authorized the act. It is true he has not authorized 
 
 the particular act, but he has put the agent in his place to do that 
 
 class of acts, and he must be answerable for the manner in which 
 
 that agent has conducted himself in doing the business which it 
 
 was the act of his master to place him in." 
 
 Perhaps an investigation of all the authorities will establish 
 this proposition, viz. : 
 
 V. If an agent has OMthority^ express or implied, to do apa/r- 
 ticular act — the entering into a contract, the making of a 
 representation or otherwise — he has incidental thereto au- 
 thority to do all such things and acts as are ordinarily 
 done lyy primjdpals themselves, or 5y the agents of private 
 persons, in and about analogous acts, including the com- 
 mission of frauds and other torts,^ and the corporation 
 
 1 L. E. 2 Ex. 259. bert Life Ass. Co. 16 Sol. J. 199 ; Allen 
 
 ' Therefore, torts by an o£Scial, but v. London & South Western Ry. Co. L. 
 
 not relating to hia own duties, will not R. 6 Q. B. 66. 
 
 bind the corporation. Partridge v. Al- ' See per Willes, J., in Barwick v. 
 
346 LIABILITIES OF COKPORATIONS EX DELICTO. 
 
 will he hound thereby, unless it can he shown either that the 
 tort was the personal affair of the agent^ or that the other 
 party had Tcnowledge, at the commission of the tort, of the 
 escact authority of the agent. 
 
 It results that no rules more definite than here set forth can be 
 laid down, to determine either the precise extent of an agent's au- 
 thority in this behalf, or whether in fact he acted as agent. There- 
 fore, the circumstances of each particular case must be carefully 
 considered. 
 
 Accordingly, a bank has been held in some cases liable,' and in 
 others not liable for the fraudulent representation' of its man- 
 agers. 
 
 So it is with regard to all other varieties of corporations. They 
 will be liable if the deceit be that of the corporate agent as such, 
 and acting within the reasonable limits of his authority. 
 
 Most of the cases which have come before courts of equity 
 have not involved this exact point as to liability of a corporation 
 in damages, but have arisen from the attempts of persons who, 
 induced by flowery prospectuses and glowing reports, have taken 
 shares, to get themselves relieved from their responsibilities upon 
 the statements pnt forth, and relied on by them, turning out in- 
 correct. In all such cases, if the fraud be imputable to the corpo- 
 ration, as having been committed by itself or its duly authorized 
 agents, and the injured party has not debarred himself by laches, 
 relief will be granted, (a) 
 
 .Conybeare «. New Brunswick, &e. Land Company* is a lead- 
 ing authority. Here the House of Lords, reversing the decision 
 of the Lords Justices, decided that the plaintiff was not entitled 
 to have his name removed from the list of shareholders, on the 
 grounds, first, that there had not been any concealment, inasmuch 
 as an act of parliament, the absence of which from a certain re- 
 English Joint-Stock Bank, L. E. 2 Ex. ' Swift v. Jewsbury, P. 0. L. E. 9 Q. 
 259; amXe, p. 342; Seymour v. Green- B. 301; reTersinsrSwilta. Wlnterbotham, 
 ■wood, 30 L. J. (Ex.) 327. L. E. 8 Q. B. 244. 
 
 ' Ab in Croft o. Alison, 4 B. <fe Aid. « 9 H. Lds. 711 ; 31 L. J. (Ch.) 297 ; 
 
 590 ; Swift V. Jewsbury, L. E. 9 Q. B. New Brunswick Eailway Company «. 
 301, B60. Muggeridge, 1 Dr. k Sm. 363 ; 30 L. J. 
 
 ' Barwick v. English Joint-Stock (Ch.) 242 ; Rosa v. Estates Inyestment 
 Bank, L. E. 2 Ex. 259 ; Maokay v. Com- Company, L. E. 3 Ch. 682. 
 mercial Bank of New Brunswick, L. E. 5 
 P. C. 394. 
 
 (a) Aiiti, note pp. 335 et aeg. 
 
FRAUDS. 347 
 
 port published by the company was the concealment alleged, was 
 recited in the articles of association, which he (plaintiff) must be 
 held to have perused ; and, secondly, that the misrepresentation 
 complained of, thus stated in the bill : " The said report of July, 
 1858, referred to the lands of the said company in terms calcu- 
 lated to convey to the mind an impression that such lands were 
 the absolute and indefeasible property of the company," was not 
 a representation, but an inference that was left to be drawn from 
 the expressions used in the report. Their lordships, however, 
 threw no doubt on the liability of a corporation for frauds which 
 can be imputed to itself directly. The general tenor of their 
 judgments is well expressed in the foot-note in the House of 
 Lords' Reports, viz. : " If reports are made to the shareholders of 
 a company by their directors, and the reports are adopted by the 
 shareholders, and afterwards industriously circulated, representa- 
 tions contained in those reports miust be taken to be representa- 
 tions made with the authority of the company, and therefore 
 binding the company. And if those reports, having been indus- 
 triously circulated, be clearly shown to have been the proximate 
 and immediate cause of shares having been bought from the com- 
 pany, the company cannot be permitted to retain the benefit of 
 the contract, and keep the purchase money that has been paid. 
 Eepresentations made by the secretary to a person in a general 
 conversation, without a view to any definite statement by that 
 person that he wants Jto purchase shares, are not binding on the 
 company." 
 
 Another very recent case is that of Central Railway Company 
 of Yenezuela, Limited, v. Kisch.'^ The defendant, the original 
 plaintifi', filed a bill to have his name removed from the list of 
 shareholders in the railway, and to have the payments he had 
 made on account of calls returned to him. He had taken the 
 shares on the faith of a prospectus which referred to a concession 
 made by the Venezuelan government to the company for making 
 a railway, and stated that the contractor had guaranteed a dividend 
 of two and a half per cent, on the paid-up capital during the con- 
 struction of the works, while, in fact, this guarantee was limited 
 to £20,000, and that the contract had been entered into " at a price 
 considerably within the available capital," when, in reality, on ac- 
 
 ' L. R. 2 H. Lds. 99, affirming the Company of Venezuela, Limited, 3 D. G. 
 Lords JuaticeB ; Kiach a. Central Railway J. <fe Sm. 122. 
 
34:8 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 count of the company having paid £50,000 for the concession, 
 which payment was not mentioned in the prospectus, and which 
 concealment the defendant alleged as a ground of complaint, it 
 left but a margin of £30,000 out of £500,000. On these grounds 
 of misrepresentation and concealment, and more especially of the 
 latter, the House of Lords granted the relief prayed. 
 
 So, in many other cases, shareholders have been relieved of 
 their shares on the ground that they were induced to take them 
 by misrepresentation, the false statements being on some occasions 
 with respect to the capital subscribed or shares taken ; ^ on others 
 as to the profits to he made iy new eompa/nies^ or aclmally made 
 and declared hy existing cornpa/nies ; ' upon another, as to the 
 nature of the business to be undertaken,* or as to the value'' or 
 locality ' of property already or to be thereafter acquired by the 
 company. In a word, misleading facts of any description, mate- 
 rial to the contract to take shares, and actually the inducement to 
 such contract, render such contract voidable on the part of the 
 person so induced to enter into the same, always providing that 
 the misleading facts in question were promulgated by the company 
 itself, or its duly authorized agents.' 
 
 VI. Contracts induced hy fraud heing only voidable, the pa/r- 
 ties aggrieved must take the necessary steps to repudiate 
 such contracts, within a reasonable time, and hefore other 
 persons home acquired rights in respect thereof, {a) 
 
 It must not here be forgotten that, in determining whether a 
 company can hold a shareholder to the contract into which, by 
 
 ' Ross V. Estates Investment Co. L. R. * Blackburn's Case, 3 Drew. 409. 
 
 3 Ch. 682 ; Henderson v. Lacon, L. R. 6 ' Reese River Mining Co. v. Smith, L. 
 
 Bq. 2i9 ; Wateriiouse v. Jamieson, L. R. R. 4 H. L. 64 ; Denton v. Macneil, L. R. 
 
 - 2 So. & D. 29. Compare Wrights Case, 2 Eq. 352. 
 
 L. R. 12 Eq. 831. « Lawrence's Case, L. R. 2 Ch. 412; 
 
 ^ See Reese River Mining Co. v. Smith, He Russian Vyksounsky Ironworks Co. 
 
 L. R. 4 H. L. 64 ; Denton v. Macneil, L. (Stewart's Case), L. R. 1 Ch. 575. 
 R. 2 Eq. 352. i See Frowd's Case, 30 L. J. (Ch.) 822 ; 
 
 2 Jackson ti. Turquand, L. R. 4 H. L. Burnes v. Fennel, 2 H. L. C. 497. 
 305. 
 
 (a) It is too late for stockholders, induced to become such by false or fraudulent 
 statements in regard to the condition of a company, to seek to avoid their liability 
 on such grounds, after the company has become insolvent, and the investment has 
 been found to be unprofitable. Upton v. Hansbrough, 3 Biss. 417; see Payson v. 
 Stoever, 2 Dill. 427 ; Gloucester Bank v. Salem Bank, 17 Mass. S3 ; Kelsey v. 
 Northern Light OU Co. 46 N. Y. 505 ; Ex parte Booker, 18 Ark. 338, and cases cited 
 ante, p. 152, note. 
 
FRAUDS. 349 
 
 their own fraud, they have induced him to enter, other equities 
 have to be considered, and a totally different result will be arrived 
 at than when we are examining whether that person will be liable 
 to third parties, the creditors of the company, for its debts. Be- 
 tween the company and the person whom they have duped, the 
 subject is clear, if we put the question on the simple ground that 
 no one can be allowed to retain that which he has acquired by 
 fraud ; but, as regards third parties, such person is a de facto 
 shareholder, as long as he has not, from whatever cause, taken 
 measures to denude himself of his shares ; and it has, consequently 
 been decided that, as such, as a member of the company, he is 
 subject to the company's liabilities.^ 
 
 The period within which a shareholder can so repudiate, ends 
 with the dissolution of the corporation, and in the case of such as 
 are within the Winding-up Acts, with an order for winding up.* 
 After sach an order it is too late for a corporator to attempt to get 
 rid of his liability. He is then fixed as a contributory for debts, 
 whatever may be his position against the other members. 
 
 Moreover, it is only the party originally defrauded — with, per- 
 haps, exceptions arising in very special cases — who can repudiate 
 the contract. For instance, a person who buys shares from one 
 who could have repudiated these shares as having been issued to 
 him under circumstances of fraud, cannot, on the ground of the 
 original fraud, have such shares cancelled.* (a) 
 
 At common law, an action of deceit may be brought at any 
 time against a corporation as against a private individual, till the 
 plaintiff's right is barred by the statute of limitations ; but it is 
 different when a shareholder seeks the relief of the Court of Chan- 
 cery. A contract induced by fraud is voidable, not void, and the 
 injured party will be deemed to have acquiesced, unless he dis- 
 played ordinary precautions and care at the making of the con- 
 tract, and has been prompt in appealing to the court on discover- 
 ing the fraud.^ 
 
 1 Oakes v. Turquand, L. R. 2 H. Lds. wood's Case, 4 D. G. <fr J. 644 ; Peek v. 
 325; Peek v. Gurney, L. R. 13 Eq. 79 ; Gurney, ubi ixipra. 
 
 L. R. 6 H. Lds. 377 ; compare Pawle's * Deposit and General Life Ass. Co. 
 
 Case, L. R. 4 Ch. 497. v. Ayscongh, 6 E. <fe B. 761 ; 26 L. J. (Q. 
 
 2 Cases in last note. B.) 29 ; Clarke v. Dickson, 27 L. J. (Q. B.) 
 2 Duranty's Case, 26 Beav. 268 : Grise- 223 ; Scholey v. Central Ry. Co. of Vene- 
 
 (a) See Cross v. Sackett, 3 Bosw. 617, and the arguments of Mr. Lord and Mr. 
 CConor. 
 
350 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 "We may thus summarize the authorities : 
 
 I. At law. — However the fraud be committed, if it can be im- 
 puted to the corporation, whether directly or indirectly, an action 
 for fraud may be brought against the corporation for the damage 
 thereby caused. 
 
 II. In chancery. — (1) If the fraud be imputable to the corpo- 
 ration directly, that is, if it has been done or ratified by the share- 
 holders' in general meeting, then the corporation is liable for the 
 consequences resulting therefrom. 
 
 (2) If it be imputable only indirectly, then the corporation can 
 neither take advantage of the fraud, nor retain against the wish 
 of the injured party any benefits that may have accrued to it (the 
 corporation) from such fraud. But the person aggrieved may, at 
 his election, confirm or repudiate the transaction. 
 
 (3) It seems that the corporation cannot, by any proceedings 
 in chancery, be rendered liable for damages resulting from fraud 
 imputable to it indirectly. 
 
 Section II. — Othee Toets. 
 
 I. Corporations are liable, at least at law, for torts of all de- 
 scriptions committed hy tJiemsel/oes, or their duly constituted 
 agents, in the course of their duties and with thei/r authority, 
 amd not irwol/ving intention on the part of the wrong^er. {a) 
 
 What has been said with regard to fraud will apply, with 
 proper qualifications, to other torts. Corporations are not cre- 
 
 zuela, L. R. 9 Eq. 266, n.; Heymann v. (Smith's Case), L. R. 2 Eq. 264, and L. R. 
 
 European Central Ry. Co. L. K. 7 Eq. 2 Cb. 604; Central Ry. Co. of Venezuela 
 
 154 ; compare the judgments in Re Royal v. Kisch, L. R. 2 H. Lds. 99 ; and in Peek 
 
 British Bank (Nicol's Case), 28 L. J. (Ch.) v. Gurney, ubi supra. 
 257 ; In re Reese River Silver Mining Co. 
 
 (a) In the earlier cases, it was held, that an action of trespass could not be main- 
 tained against a corporation aggregate, for the technical reason, that a capias and 
 exigent, the proper process in actions of trespass, would not lie against a corporation ; 
 but this technical objection was not uniformly yielded to, as inslances of actions of 
 trespass against corporations are to be met with as early as the Year Books. As 
 corporations have become more numerous, and have been multiplied, untU aggregated 
 capital, seeMng investments for the purposes of business, is generally invested under 
 acts of incorporation, to protect individuals from personal liability, technical objec- 
 
OTHER TORTS. 851 
 
 ated, it is no part of their business, to commit torts. Neverthe- 
 less courts of law have decided that they must be held liable for 
 torts committed by their agents and sei-vants acting within their 
 
 tions, which stood in the way of subjecting corporations to actions founded on torts, 
 have been entirely swept away, and corporations have been held liable for all torts, 
 the same as individuals. That they may be sued in trover, case, trespass quare 
 claumm /regit, trespass n H armis, and ejectment, is abundantly established by the 
 cases cited by Green, C. J., in State v. Morris ifc Essex R. R. Co. 23 N. J. L. 367. 
 And, generally, it may be stated, that a corporation is liable eiviliter, the same as a 
 natural person, for the tortious acts of its servants or agents in the course of their 
 employment, committed by the authority of the corporation, express or implied, 
 whether such acts fall within the designation of forcible, negligent, malicious or 
 fraudulent torts, without regard to the form of action by which the appropriate rem- 
 edy is sought. See Brokaw v. N. J. B. & T. Co. 32 N. J. L. 328. 
 
 Corporations, as well as individuals, are liable for injuries to their servants, re- 
 sulting from negligence or willful misfeasance in the selection and retention of fellow- 
 servants, or in procuring and maintaining physical appliances used in their undertak- 
 ings ; and cannot escape such liability upon the ground that the negligence or mis- 
 feasance was that of co-servants, to whom was entrusted the discharge of the duties 
 of the corporations in these respects. " Corporate bodies must, of the necessity of 
 their being, act through agents. But they may not avoid the duty which they owe 
 to their servants, of furnishing them with sound mechanical contrivances, and accom- 
 panying them with competent fellows, by conferring upon superior servants the duty 
 of selecting and purchasing, or hiring." Laning v. N. Y. Cent. B. R. Co. 49 N. T. 
 672, limiting Wright v. R. R. Co. 26 N. Y. 562. " The fact that it is a duty which 
 must always be discharged, when the employer is a corporation, by officers and 
 agents, does not relieve the corporation from the obligation. The agents who are 
 charged with the duty of suppljdng safe machinery are not, in the true sense of the 
 rule relied on, to be regarded as fellow servants of those who are engaged in operat- 
 ing it. They are charged with the master's duty to his servant." Ford v. Fitchburg 
 
 B. R. Co. no Mass. 260. See, also, to the same effect, Snow v. Housatonic R. R. Co. 
 8 Gray, 44Y ; Gilman v. Eastern R. B. Co. 10 Allen, 238 ; Same v. Same, 13 Allen, 
 433; Coombs «. New Bedford Cordage Co. 102 Mass. 433; Brickner v. N. Y. Cent. 
 R. R. Co. 49 N. Y. 672 ; Flike v. B. & A. R. R. Co. 53 N. Y. 549 ; Hofnagle v. N. Y. 
 
 C. & H. B. B. B. Co. BS N. Y. 611 ; Malone v. Hathaway, 64 N. Y. 9 ; Besel v. N. Y. 
 C. & H. B. R. R. Co. 70 N. Y. 173 ; Booth v. B. & A. R. B. Co. 73 N. Y. 38 ; Ross v. 
 W. Y. <fec. E. B. Co. 5 Hun, 494 ; Cone v. Del., L. & W. B. R. Co. 15 Hun, 172 ; Fra- 
 zier.w. Penn. R. B. Co. 38 Penn. St. 104; Little Miami B. B. Co. v. Stevens, 20 Ohio, 
 438 ; Chic. & JST. W. R. B. Co. v. Swett, 45 111. 197 ; Chic. & N. W. R. B. Go. v. Tay- 
 lor, 69 111. 461 ; C. B. dt Q. B. R. Co. d. McLallen, 84 111. 109 ; Couch v. Watson Coal 
 Co. 46 Iowa, 17; Harper v. Ind. <fc St. Louis R. R. Co. 47 Mo. 567; Cook v. Hann. 
 & St. Jo. B. B. Co. 63 Mo. 397 ; Brabbits v. Chic. <fe If. W. B. B. Co. 38 Wis. 289 ; 
 Wharton on Law of Negligence, §§ 222, 241, 280. But see Hard v. Vt. & Can. B. E. 
 Co. 32 Vt. 473 ; and Columbus, &c. R. B. Co. v. Arnold, 31 111. 174. According to 
 the latter a corporation would seem to be liable for the negligence of its directors, 
 but not for that of those to whom the directors may delegate their duties of superin- 
 tendence. 
 
352 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 authority, -upon the same principles and by precisely analogous, 
 reasoning as they have been made responsible for fraud. Thus an 
 action for trespass to the person ^{a), for trespass to the property, 
 in any of the numerous ways in which this is done, for trover,' 
 will lie against a corporation as against an individual. (5) The 
 
 ' Seymour v. Greenwood, 7 H. <fe N. ' Tattan v. Great Western Railway 
 
 355 ; 30 L. J. (Ex.) 327 ; Limpua v. Lon- Company, 29 L. J. (Q. B.) 184 ; Mears v. 
 
 don General Omnibus Company, 1 H. <fe London <fc South-Western Railway Com- 
 
 C. 526; 32 L. J. (Ex.) 34; Goff v. Great pany, 11 C. B. (N. S.) 850; 21 L. J. (C. 
 
 Northern Railway Company, 30 L. J. (Q. P.) 220. 
 B.) 148. 
 
 (ffl) That a corporation may be sued for trespass to the person for assault and bat- 
 tery, see Phil. R. R. Co. v. Derby, 14 How. 468 ; Moore ii. Fitchburg R. R. Co. 4 
 Gray, 466 ; Ramsden v. Boston <fe A. R. R. Co. 104 Mass. 117; Coleman v. N. Y. <fc 
 N. H. R. R. Co. 106 Mass. 160 ; Crocker v. N. London, <fcc. R. R. Co. 24 Conn. 249 ; 
 .Jackson v. Second Ave. R. R. Co. 47 N. Y. 274 ; Day v. Brooklyn R. R. Co. 19 N. Y. 
 Supr. Ct. 435 ; Hamilton v. Third Aye. R. R. Co. 35 N. Y. Superior Ct. (3 J. & S.) 
 118 ; s. 0. 63 TS. Y. 25 ; Brokaw v. N. J. R. & T. Co. 32 N. J. L. 328 ; Phil. &e. R. R. 
 Co. V. Wilt, 4 Whart. 143; Penn. R. R. Co. v. Vandiver, 42 Penn. St. 365 ; Evans- 
 YJlle, <fec. R. R. Co. V. Baum, 26 Ind. 70 ; Jeffersonville R. R. Co. •</. Rogers, 38 Ind- 
 116 ; Chic. & N. W. R. R. Co. v. WUliams, 55 111. 186 ; Kline v. Cent. Pao. R. R. Co. 
 39 Cal. 587. Compare Little Miami R. R. Co. v. Wetmore, 19 Ohio St. 110 ; Graham 
 V. Pac. R. R. Co. 66 Mo. 636 ; Brown v. Hannibal, <fcc. R. R. Co. 66 Mo. 588. The 
 authority of Orr v. Bank of U. S. 1 Ohio, 36, has been expressly denied In the cases 
 of St. Louis, A. & C. R. R. Co. v. Dalby, 19 111. 363, 371, and Brokaw v. N. J. R. & 
 T. Co. 3 Vroom, 328. In the latter case the court say that the case in 1 Ohio pro- 
 ceeds on principles long since obsolete, and is against all the later authorities. As to 
 actions for negligence causing death or injury to persons, see Shearman and Redfield 
 on Negligence, chs. 17, 27, 33, and Sedgwick on Damages, 6th ed. p. 694, and note, 
 post. 
 
 (b) The cases against corporations for trespass to property are too numerous to 
 be particularly referred to. Actions will lie for stopping water-courses ; for injury 
 to property by canals ; for blasting rocks to the injury of another's land ; for enter- 
 ing and carrying away soil or cutting timber ; for nuisance ; for trover and conver- 
 sion ; for ejectment ; for negligence causing damage to property. In the light of the 
 modern cases upon the subject, it may be safely stated that, wherever an action for 
 injury to property will lie against an individual, corporations will, in like circum- 
 stances, be equally liable for injuries committed by their officers and agents, acting 
 within the apparent scope of their authority. See, among other cases, Lyman v. 
 Bridge Co. 2 Aik. (Vt.) 256 ; Hazen v. Boston R. R. Co. 2 Gray, 574 ; Bloodgood ». 
 Mohawk <fe H. R. R. Co. 18 Wend. 9 ; Dater v. Troy Turnpike Co. 2 Hill, 629 ; Hay 
 V. Cohoes Co. 3 Barb. 42; Watson v. Bennett, 12 Barb. 196 ; Lee v. Sandy Hill, 40 
 N. Y. 442 ; Chestnut Hill, Ac. Co. v. Rutter, 4 S. & R. 6 ; Delaware Canal Co. v. Com. 
 60 Penn. St. 867 ; Whiteman v. Wil. & Susq. R. R. Co. 2 Harr. (Del.) 514 ; Humes v. 
 Knoxville, 1 Humph. 403 ; Underwood v. Newport Lyceum, 5 B. Mon. 130 ; Craw- 
 fordsville E. R. Co. ». Wright, 6 Ind. 262 ; Terre-Haute Gas Co. v. Teel, 20 Ind. 131'; 
 111. Cent. R.R. Co. v. Reedy, 17 111. 580; Chic. <fe R. L R. R. Co. v. Whipple, 22 111. 
 106; Chic. & Iowa R. R. Co. o. Davis, 86 111. 20. 
 
OTHER TORTS. 353 
 
 agent of tte corporation must, of course, be acting within his au- 
 thority, and upon this point difficult questions arise as to, first, 
 when the agent can be deemed to have acted as such so as to bind 
 his principal ; and, secondly, as to the extent of his authority, 
 and, more especially, of his implied authority. 
 
 II. CorporaUons are Halle for torts committed Iry their agents 
 about the oorforate enterprise, if acting in the usual man- 
 ner of carrying out their duties, {a) even though contrary to 
 partioula/r and specific instructions, (h) 
 
 This proposition undoubtedly holds as a general statement, but 
 it is subject to limitations not easy to indicate precisely. They 
 seem to be, however, as follows : (1) the agent must have a general 
 authority founded on the ordinary custom or mode of performing 
 his duty ; (2) he must have acted with bona fides, and believing 
 and intending that he was carrying out his duties as agent ; and 
 (3) the special instructions must be really so, definite and pointing 
 to particular matters, and not amount to a general limitation of 
 authority. 
 
 In Betts V. De Yitre,^ it was expressly decided that it was no 
 answer to a suit against the directors of a company for the in- 
 fringement of a patent, to allege that the acts were done by work- 
 men employed by the directors, but contrary to their orders. " I 
 will assume that the orders not to work in a particular manner 
 were given, and. that the disobedience to those orders was secret, 
 although the evidence hardly warrants this conclusion. But 
 granting all this to be the case, I should still hold that the direc- 
 tors would be liable." ' 
 
 ' L. E. 3 Ch. 429, 441. the principal was liable for a nuisance 
 
 ^ Ibid. p. 442, per Chelmsford, L. C; committed by his workmen contrary to 
 Beg. t;. Stephens, L. R. 1 Q. B. 702, where his express directions. 
 
 (a) Indianapolis R. R. Co. v. Anthony, 43 Ind. 183. 
 
 (6) A corporation is liable to the injured party for damages caused by the agent 
 of the corporation in carelessly firing a signal gun under instructions from the cor- 
 poration's ship, although the agent acted contrary to instructions as to the manner 
 of firing. Oliver v. North Pacific Transp. Co. 3 Oreg. 84. See, also, Phil. R. R. Co. 
 V. Derby, 14 How. 468 ; Turner v. N. B. & M. R. R^ Co. 34 Cal. B94; Hays v. H. G. 
 N. R. R. Co. 46 Tex. 272. 
 
 33 
 
354 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 In Bayley v. Manchester, &c. Ry. Co.,^ this question was very 
 fully considered. The plaintiff, a passenger on the defendants' 
 line of railway, sustained injuries in consequence of being- 
 violently pulled out of a railway carriage, just after the train had 
 started, by one of the defendants' porters, who acted under an 
 erroneous impression that the plaintiff was not in the right train 
 for the place to which he had booked. The defendants' rules, a 
 copy of which was given to each porter in their employ, assigned 
 various specific duties to the porters, among others, that of not 
 suflFering passengers to get in or out of trains in motion, and con- 
 cluded with a general direction, that they were to do all in their 
 power to promote the comfort of the passengers and the interests 
 of the company. It was proved, and on the appeal admitted as 
 facts, first, that it was the duty of the porters to prevent passen- 
 gers going by wrong trains, as far as they could do so, but, 
 secondly, that it was their duty, if they found passengers in a 
 wrong train or carriage, to report the same to the guard, and not 
 to remove them therefrom. Both the Court of Common Pleas 
 and the Exchequer Chamber, on these facts, decided that there 
 was evidence on which the jury might find that the act of the 
 porter, in pulling the plaintiff out of the carriage, was an act 
 done within the course of his employment as the defendants' 
 servant, and one for which they were, therefore, responsible. 
 Kelly, 0. B., in his judgment, very clearly points out the principle 
 involved in the decision: "Here, among many precepts and 
 directions to the porters, we find it distinctly provided that they 
 are, as far as they are able, to prevent persons from traveling in the 
 wrong carriage. We do find it, no doubt, also stated that it was not 
 the duty of the porters to remove a person from the wrong car- 
 riage; but where orders are given to some extent inconsistent, 
 and such that it may not always be easy, under all circumstances, 
 to comply literally with the provisions of all of them, for 
 instance, where, as in the present case, there is a general order to 
 prevent persons from traveling in the wrong carriage if possible, 
 accompanied by a direction not to remove them from the carriage, it 
 is, obviously, very likely that the servant may, while acting in the 
 performance of the general duty cast upon him, neglect the par- 
 ticular direction as to the mode of doing it. But it appears to 
 
 1 L. R. 8 C. P. 148 ; M'Kenzie v. M'Leod, 10 Bing. 385. 
 
OTHER TORTS. 355 
 
 me that he will be none the less acting within the scope of his 
 employment." (a) 
 
 III. Corporations are liable for at least some varieties of torts 
 which require, as an essential ingredient, intention on the 
 part of the tortfeasor.^)) 
 
 Other torts there are with respect to which the liability of a 
 corporation may be fairly considered doubtful. Ordinarily it is 
 sufficient to render a person responsible for a tort, whether com- 
 mitted by himself or his agent, if only there has been negligence, 
 heedlessness, or rashness. Sometimes, however, the mental in- 
 
 (a) To render a corporation liable for the wrongful act of one of its employees, 
 done in obedience to the commands of its officers, the act must be connected with 
 the transaction of the business for which the company was incorporated. But 
 where the directors, acting in their official capacity, adopt rules and regulations for 
 the transaction of the corporate business, and provide for the enforcement of such 
 rules and regulations, and authorize its agents or servants to carry them into effect, 
 the corporation will be liable for the acts of such agents or servants, in the course of 
 such employment, even for unnecessary violence. Brokaw v. Kew Jersey R. R. <fec. 
 Co. 32 N. J. L. 328. 
 
 If a corporation authorizes its servants to use force, when necessary, in execut- 
 ing its orders, and if, while executing such orders, through misjudgment or violence 
 of temper, the servant uses more force than is necessary, the corporation is liable. 
 Rounds V. Delaware, &c. R. R. Co. 64 JT. Y. 129. 
 
 (6) There is a class of cases which, at first sight, would seem to be founded upon 
 the willful misconduct of agents of a corporation, in which it has been held liable. 
 An examination, however, will show that the action is really against the corporation 
 for a breach of contract or neglect of duty, which is confessed and sought to be 
 avoided, by setting up as an excuse, the willful wrong or intentional default of an 
 ^ent. In every such case, the principal holds out his agent as competent and fit to 
 be trusted, and thereby, in effect, he warrants his fidelity and good conduct in all 
 matters within the scope of his agency. Stokes «. Saltonstall, 13 Pet. 181. The 
 law, therefore, will not permit a corporation to set up, as a reason for its breach of 
 contract or neglect of duty, the intentional violation of such duty by agents, to 
 whom it has intrusted the execution of its contracts or the performance of its duties. 
 See Weed v. Panama R. R. Co. 17 N. Y. 362, s. o. 6 Duer, 196, where the distinction 
 is run, after a review of authorities, between cases of willful, unauthorized, wrongful 
 acts by agents, unapproved by their principals, occasioning damage, but which do 
 not involve nor work any omission or violation of duty by their principals to the 
 persons injured, and cases where the principal should be held liable for breach of 
 contract or obligation assumed, unless the willful wrong of the agent is a legal justifi- 
 cation. See, also, Phil. R. R. Co. v. Derby, 14 How. 468 ; Goddard v. Grand Trunk 
 R. R. Co. ST Me. 202; Ford v. Fitchburg R. R. Co. 110 Mass. 240; Milwaukee <fc 
 Miss. R. E. Co. o. Finney, 10 Wis. 388. 
 
356 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 gredient becomes intention, actual or constructive. Can a corpo 
 ration be made amenable for those torts, which require, on the 
 part of the wrong- doer, knowledge or willfulness ? (a) 
 
 (a) Vance v. Erie Kailway Co. 32 N. J. L. 334, waa an action of trespass on the 
 case for malicious prosecution. The declaration was demurred to on the ground, 
 among others, that an action for malicious prosecution cannot be maintained against 
 a corporation. The Court say : " It is argued by counsel, that a corporation being 
 an ideal entity, is incapable of entertaining malice, which is an intent of the mind, 
 and is an essential ingredient of an action for malicious prosecution. We have seen, 
 by the cases cited in 3 Vroom, 330, that a corporation is liable for false and fraud- 
 ulent representations ; for maliciously obstructing a party in his business ; for main- 
 taining a vexatious suit, and for a malicious libel, in each of which actions an intent 
 of the mind is quite as much involved as in an action for malicious prosecution . 
 * * * When the nature of the action is considered, it comes strictly within the 
 principles by which the actions above enumerated are maintainable. It must appear 
 that the prosecution was instituted maliciously and without probable cause. In a 
 legal sense, any act done willfully, to the injury of another, which is unlawful, is, as 
 against that person, malicious, and it is not necessary that the perpetrator of such 
 act should be influenced by ill-will towards the individual, or that he entertain and 
 pursue any bad purpose or design. The proof of malice need not be direct. It may 
 be inferred by the jury from the want of probable cause, and involves nothing more 
 than a wrongful act intentionally done. To hold a corporation amenable in this 
 particular action is strictly in accordance with well settled legal principles. The 
 wrong for which the action is the appropriate remedy, is susceptible of being com- 
 mitted by a corporation by means of its agents and servants.x No technical diffi- 
 culties are in the way of the institution of the suit, and at the trial, the cause can be 
 conducted upon the established rules of evidence. To afford redress against a cor- 
 poration for other intentional vrrongs done by them, and deny it in this case, is an 
 anomaly which can only be justified because of the interposition of insurmountable 
 obstacles. No such obstacles stand in the way of the prosecution or maintenance 
 of the action." See Stevens v. Midland Ry. Co. 10 Exch. 352 ; Copley v. Groyer 
 A Bater Co. 2 Woods, 494 ; Merrills v. Tariff Mfg. Co. 10 Conn. 384 ; Fenton v. 
 WUson Mach. Co. 9 Phil. 189 ; Jeff. R. R. Co. v: Rogers, 28 Ind. 1 ; Vinas «. Merchants' 
 Ids. Co. 27 La. Ann. 368 ; Hewitt v. New Orleans, Ac. R. R. Co. 28 La. Ann. 685. 
 Coidra, Cumberland & O. Can. Co. v. Portland, 66 Me. 78. In Childs v. Bank 
 of Missouri, 17 Mo. 213, it is held that an action for assault and battery, or for 
 malicious prosecution, or for slander, cannot be maintained against a corporation ; 
 but in Gillett v. Mo. VaUey R. R. Co. 55 Mo. 816, the court admits that this ruUng 
 is too extensive, and that the current of modern authorities does not go to that extent. 
 The court, in the case in 55 Mo., reviews the decisions as to libel, trespass, assault, 
 and other actions founded on torts; and while holding that a corporation for railroad 
 purposes is not liable for a malicious prosecution, instituted by its agents against an 
 individual in the name of the State, for a crime committed against the laws of the 
 State, without showing power, given expressly or impliedly, to the corporation to 
 engage in such prosecutions, yet it approves of the doctrine, that an action for a 
 maUcious prosecution could be sustained against a corporation, for bringing a nvil 
 suit, by way of attachment in the name of the corporation, vexatiously, maliciously. 
 
OTHER TORTS. 357 
 
 In Stiles v. Cardiff Steam Navigation Company,^ it was deter- 
 mined that a corporation would be liable for knowingly keeping 
 a miscliievous animal. Shee, J., asserted broadly, in reference to 
 the scienter, that " corporations are, in this respect, in no different 
 position from private owners ; and if it could be shown that the 
 mischievous propensity of the dog was known to any person 
 having control of tlie business or of the yard, or even of the dog, 
 or wbose duty it would be to inform the company of what the 
 dog had done, it might do, but the evidence fails on that 
 point."(a) 
 
 In Whitfield v. Soutb-Eastern Eailway Company," a corpora- 
 tion was beld liable for publishing a libel contained in a telegram 
 
 1 4 N. R. 483 ; 33 L. J. (Q. B.) 310. and Oil Company, L. R. 4 Q. B. 262 ; 
 " 1 E. B. & E. 115 ; 27 L. J. (Q. B.) 229. Gwynn v. South-Eaatern Ry. Co. 18 L. T. 
 See Lawless ii. Anglo-Egyptian Cotton (N. S.) 738. 
 
 and witliout probable cause. See dissenting opinion of Adams, J., which, it is sub- 
 mitted, is more logical in its conclusions, and more in accordance with the current of 
 modem authority than the prevailing opinion. In Owsley v. Mont. <fe West Point 
 E. E. Co. 37 Ala. (JST. S.) 560, the court sustained an action for false imprisonment, but 
 denied it for malicious prosecution, placing its distinction on the ground that a 
 corporation is incapable of malice. In South Royalton Bank v. Suffolk Bank, 27 Vt. 
 505, a demurrer to a declaration for maliciously keeping the bank notes of the 
 plaintiff out of circulation, was sustained, upon the ground that as malice, without 
 want of probable cause, will not sustain an action for a vexatious suit, so the plaint- 
 iffs could not recover of the defendants for calling on the plaintiffs without suit to 
 pay the bank notes, which they lawfully held, though done with malice. In Mc- 
 Lellan v. Cumberland Bank, 24 Me. 666, the court, while doubting whether a 
 corporation can be held liable for malicious arrest in a civU suit, place their decision 
 on the ground that there was no proof of want of probable cause. See Goddard v. 6. 
 T. R. R. Co. 57 Me. 202. Goodspeed v. East Haddam Bank, 22 Conn. 535, was an 
 action based on the provisions of a statute to prevent vexatious suits, and was sub- 
 ject to the same general principles as actions on the case for malicious prosecutions 
 at common law. The court held the corporation liable, and that whatever may have 
 been the views of Coke and Blackstone, new relations having been formed, and new 
 interests created in the progress of the development of the nature and influence of 
 corporations, legal principles of a practical character, adapted to such progress, 
 rather than those of a technical or theoretical character, must be applied. In 
 WhelesB v. Nat. Bk. 67 Tenn. 469, the corporation was held liable for suing but a 
 malicious attachment. In Carter v. Howe Mach. Co. (Md.) 7 Reporter, 621, which 
 was a suit for malicious prosecution and false imprisonment, the Court say : " It 
 would seem to be now clear, whatever may have been the former state of judicial 
 opinion on the subject, that corporations are liable for all acts, whether willful or 
 malicious, of their agents or servants, done in the course of thieir employment." 
 (a) See note, ante, p. 389. 
 
358 LIABILITIES OF COEPOBATIONS EX DELICTO. 
 
 which passed over their wires ; and e converso, a corporation, 
 though intangible and without personal incidents, may sue for 
 libel upon it.^ (a) 
 
 In Henderson v. Midland Ey. Co.,^ a majority of the Court of 
 Exchequer set aside a non-suit in an action for malicious prosecu- 
 tion. Bramwell, B., dissented, laying down that no action for 
 malicious prosecution would lie against the railway company, for 
 a corporation aggregate is in law incapable of acting maliciously.(5) 
 
 ' Metropolitan Saloon Omnibus Com. « 20 W. E. 23. 
 
 pany a. Hawkins, 4 H. & N. 87 ; 28 L. J. 
 (Ex.) 201. 
 
 (ffl) Corporations are responsible in damages for the publication of libelous mat 
 ter. P. W. & B. R. E. Co. v. Quigley, 21 How. 202; Samuels v. Evening Mail Ass, 
 9 Hun, 288; Howe Machine Co. v. Louder, 58 Ga. 64; Vinas v. Merchants, <fcc. Ins. 
 Co. 27 La. Ann. 367 ; Hawkins v. Ifew Orleans Printing Co. 29 La. Ann. 134 ; HewitI 
 V. Pioneer Press Co. 23 Minn. 178 ; Johnson a. St. Louis Despatch Co. 2 Mo. App, 
 665. The self-evident liability for libel of corporations, now common in this coun- 
 try, organized for the printing of newspapers and other matter for publication, 
 illustrates the fallacy of the argument used in opposition to the doctrine of corporate 
 responsibility for this class of torts. Aldrich v. Press Co. 9 Minn. 133; Daily 
 Post Co. V. McArthur, 16 Mich. 447, were suits against such corporations. See 
 Hovey v. Eubber Co. 67 N. T. 119; Western C. M. Co. ». Lawes C. M. Co., L. E. 9 
 Exch. 218. As to suits by corporations for defamation, see Trenton Ins. Co. v. 
 Perrine, 23 N. J. L. 402 ; Shoe <fe Leather Bank v. Thompson, 18 Abb. Pr. 413 ; s. o. 
 23 How. Pr. 253 ; Knickerbocker Life Ins. Co. v. Ecclesine (2 J. <fe S.), 34 N. Y. 
 Superior Ct. Eep. 76 ; Hahnemannian Ins. Co. u. Beebe, 48 111. 87; Brennan v. Tracy, 
 2 Mo. App. 540. 
 
 (6) The courts have carried the modern idea, that corporations are capable of evil 
 intention, so far as to allow against them even vindictive damages ; so that it may be 
 laid down as the prevailing rule in this country, that corporations stand on the same 
 footing as individuals, as to damages awarded by way of punishment for wrong in- 
 tent. Corporations may be subjected to exemplary or punitive damages for tortious 
 acts of their agents or servants, done within the scope of their employment, in all 
 cases where natural persons acting for themselves, if guilty of like tortious acts, 
 would be liable to such damages. On the general principle, the courts of the differ- 
 ent States seem to be in agreement, but differences appear as to the extent of its 
 application. 
 
 Those authorities which carry the doctrine to the extreme, place the liability of 
 corporations to exemplary damages for the gross negligence of their agents, on 
 the broad grounds that the public have an interest in having these companies employ 
 capable, honest and reliable men, that it is their duty to see that their employees are 
 of a proper character, and that the courts will, therefore, hold them to a strict ac- 
 countability if this duty is not fully performed. Under this idea, it is held that it is 
 not necessary to prove previous authority or subsequent ratification, nor to bring the 
 incompetency of the agent to the knowledge of the corporation. The corporation is 
 thus made absolutely responsible for the character of its employees, and, under this 
 
OTHER TOETS. 359 
 
 TV. An agent has implied authority to do only such acts as re- 
 late to his own particular duties. 
 
 It is liere that the greatest difficulties arise in fixing the extent 
 of a principal's liability. The theoretical principle is easily enough 
 
 "view, it is not enougli to save it from punishment, that it has used the utmost care in 
 the choice and supervision of its agents. See Beale v. Railway Co. 1 Dillon, 568. In 
 Ooddard v. Grand Tr. R. R. Co. 57 Me. 202 (which see for an elaborate discussion of 
 "the cases on this subject), the court reasons from its inability to distinguish between 
 "the mind, voice, guilt or malice of the servant and the mind, voice, guilt or malice 
 of the corporation, and from the impossibility of the ideal existence called a corpora- 
 "tion having any corrective influence brought to bear upon it, except that of pecuniary 
 loss, that the doctrine of exemplary damages is more beneficial in its application to 
 corporations than in its application to natural persons, and therefore concludes that 
 actions against corporations, for the willful and malicious acts of . their agents and 
 servants in executing the business of the corporations, should not form exceptions to 
 the rule allowing exemplary damages. The learned judge, in his opinion, uses the 
 following language : " If those who are in the habit of thinking that it is a terrible 
 hardship to punish an innocent corporation for the wickedness of its agents and serv- 
 ants, will for a moment reflect upon the absurdity of their own thoughts, their anxi- 
 ety will be cured. Careful engineers can be selected, who will not run their trains 
 into open draws ; and careful baggagemen can be secured, who will not handle and 
 smash trunks and bandboxes, as is now the universal custom ; and conductors and 
 '^"" — en can be had, who will not assault and insult passengers ; and if the courts 
 y let the verdicts of upright and intelligent juries alone, and let the doctrine 
 apiary damages have its legitimate influence, we predict, these great and grow- 
 .vils will be very much lessened, if not entirely cured. There is but one vulner- 
 point about these ideal existences called corporations, and that is the pocket of 
 noneyed power that is concealed behind them ; and if that is reached, they will 
 e. When it is thoroughly understood that it is not profitable to employ careless 
 udifferent agents, or reckless and insolent servants, better men will take their 
 as, and not before." A calmer, but no less decided opinion of the same learned 
 je will be found in Henson v. K. R. Co. 62 Me. 84. See, also, Hopkins v. A. & St. 
 ',. R. Co. 36 N. H. 9 ; Taylor v. R. R. Co. 48 N. H. 304 ; Bait. <fe O. R. R. Co. v. 
 her, 27 Md. 277; Phil., W. & B. R. R. Co. v. Larkin, 47 Md. 155; Gasway w. 
 nta & West Point R. R. Co. 58 Ga. 216 ; New Orleans, &o. R. R. Co. v. Bailey, 
 Has. 395 ; M. & C. R. R. Co. v. Whitfield, 44 Miss. 466 ; Pittsburgh, Ft. W. <fe C. 
 ;. Co. 0. Slusser, 19 Ohio St. 157; Atlantic <fe G. W. R. R. Co. v. Dunn, 19 Ohio 
 i62 ; Jeffersonville R. R. Co. v. Rogers, 38 Ind. 116 ; Singer Mfg. Co. v. Holdfodt, 
 11. 465; Gillett v. Mo. Valley R. R. Co. 85 Mo. 315, 322. 
 
 3n the other hand, there are cases which would never be doubted except for the 
 aence of the idea of public policy, and which restrict the application of the doc- 
 le by rules which seem to be founded in reason. Thus, it is held, that corpora^ 
 18 are not to be visited with punishment for the act of an agent, without proof 
 fc they directed the act or subsequently ratified it ; Hagan v. Prov. & W. E. 'R. 
 3 R. I. 88 ; Mil. & Miss. R. R. Co. v. Finney, 10 Wis." 388 ; Turner v. N. B. & M. 
 ' . Co. 34 Cal. 594 ; that notice of incompetency must be brought home to the 
 
360 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 expressed and comprehended : an agent binds his principal when 
 acting within his authority, express or implied ; but the difficulty 
 
 corporation, in order to interpret the retention of an agent who is unfit for his place, 
 as authorizing his future tortious acts or ratifying those which are past. Caldwell v, N. 
 J. Steamboat Co. i1 N.T. 296. In Cleghorn v. N.Y. Cent. & H. R. R. R. Co. 66 N.Y. 44, 
 the Court says : " For injuries by the negligence of a servant while engaged in the bus- 
 iness of the master, within the scope of his employment, the latter is liable for com- 
 pensatory damages ; but for such negligence, however gross or culpable, he is not 
 liable to be punished in punitive damages, unless he is also chargeable with gross 
 misconduct. Such misconduct may be established by showing that the act of the 
 servant was authorized or ratified, or that the master employed or retained the serv- 
 ant, knowing that he was incompetent or from bad habits unfit for the position he 
 occupied. Something more than ordinary negligence is requisite ; it must be reck- 
 less and of a criminal nature, and clearly established. Corporations may incur this 
 liability as well as private persons." See, also, Hamilton v. Third Ave. R. R. Co. 35 
 N. Y. Super. Ct. (J. & S.) 118, 130; B. u. 53 N. Y. 25; Hays v. H. G. N. R. R. Co. 
 46 Tex. 272 ; Daily Post •</. McArthur, 16 Mich. 447 ; Gt. West. R. R. Co. -o. Miller, 
 19 Mich. 305; Craker v. Chic. & N. W. R. R. Co. 36 Wis. 657; Bass v. Same, 39 
 Wis. 636 ; Same v. Same, 42 Wis. 654; Fink v. Coe, 4 Greene (Iowa), 655 ; Perkins v. 
 Mo. K. A T. R. R. Co. 55 Mo. 201, 213 ; Mendelssohn v. Anaheim Lighter Co. 40 
 Cal. 657. 
 
 Again, it is held that where a railroad company adopts all rules and regulations 
 needful for the safety of passengers, and employs competent agents whose duty is 
 to see that these rules and regulations are observed, the company, in case of injury 
 to passengers, happening by reason of the failure of an agent to perform his duty, 
 cannot be held liable for punitive damages ; Ackerson v. Erie R. R. Co. 32 N. J. L. 
 264 ; and that a corporation is not liable in exemplary damages for the act of its agent, 
 where the plaintiff would not have been entitled to recover such damages, had the suit 
 been against the agent. Hamilton ii. Third Ave. R. R. Co. 53 N. Y. 26 ; Townsend v. 
 K Y. Cent. <Ss. Hud. R. R. R. Co. 56 H. Y. 295. See further on the general, subject of 
 liability of corporations in vindictive damages, Phil. <!tc. R. E. Co. u. Quigley, 21 How. 
 213 ; Milwaukee, &c. R. R. Co. v. Arms, 1 Otto, 489 ; Parker v. Long Island R. R. 
 Co. 13 Hun, 819; Bannon v. Bait. & Ohio R. E. Co. 24 Md. 108 ; Bait. <fe. Y. T. Co. 
 «/. Boone, 46 Md. 344 ; Vicksburg & I. R. R. Co. v. Patton, 31 Miss. 156 ; New Orleans, 
 (fee. R. R. Co. V. Hurst, 36 Miss. 660; New Orleans, &c. R. R. Co. ■;;. Burke, 53 Miss. 
 200; Hill V. N. 0. 0. & G. W. R. R. Co. 11 La. Ann. 292; Bowler v. Lane, 3 Mete. 
 (Ky.) 311; Jeffersonville R. R. Co. </. Rogers, 28 Ind. 1; Illinois Cent. R. R. Co. «. 
 Hammer, 72 Bl. 353; Hewitt v. Pioneer Press Co. 23 Minn. 178 ; Graham ti. Pacific 
 E. E. Co. 66 Mo. 536; Newman v. St. Louis, <fco. E. R. Co. 2 Mo. App. 402; Edel- 
 mann v. St. Louis Transfer Co. 3 Mo. App. 503; L. L. <fe G. R. R. Co. v. Rice, 10 
 Kan. 426; Kan. Pac. R. R. Co. v. Kersler, 18 Kan. 523 ; Eyser v. West. Union Tel- 
 Co. 2 Col. 141 ; s. 0. 1 Otto, 495 ; McKeon v. Citizens' R. R. Co. 42 Mo. 79 ; Ward- 
 robe V. Cal. Stage Co. 7 Cal. 118. 
 
 In Samuels v. Evening Mail Ass. 9 Hun, 288, Davis, P. J., in a dissenting opinion, 
 which, on appeal, was adopted by the Court of Appeals (Dec. 1878), distinguishing 
 the cases which have been cited, says: "But, in libel cases, the falsity of the libel 
 being proof of malice snfiioient to uphold exemplary damages, the right to recover 
 
OTHER TORTS. 361 
 
 "whicli is met with in practice is : Has the agent, in any given in- 
 stance, implied authority to do the act, to commit the tort, which 
 he has done or committed ? 
 
 Bayley v. Manchester, &c. Ky. Co. and Eeg. v. Stephens,' which 
 have already been given,'' and Goff v. Great Northern Ey. Co.* 
 are good illustrations. In neither case had the agents express au* 
 thority ; indeed, in the two former, they acted against positive in- 
 structions ; but in each the court determined that the acts com- 
 plained of were reasonably incidental to the duties of the agents. 
 
 But there are other decisions where, to ordinary understand- 
 ings, the torts were committed in the course of the agent's em- 
 ployment, but the corporations concerned have escaped. 
 
 In Edwards v. London & North-Western Ey. Co.* it was de- 
 cided that a foreman porter in the service of a railway company, 
 who, in the absence of the station-master, is in charge of a station, 
 has no implied authority to give in charge a person whom he sus- 
 pects to be stealing the company's property ; and, consequently, 
 that if he gives in charge on such suspicion an innocent person, the 
 company are not liable.(a) 
 
 In Allen v. London & South-Western Ey. Co.° a similar de- 
 cision was come to with regard to the arrest, by direction of a 
 • 
 
 ' L. R. 1 Q. B. 102. Great Ifortherii Ry. Co. S E. <fe E. 672; 
 
 ' Ante, pp. 363, 354. 30 L. J. (Q. B.) 148, a railway company 
 
 s 3 E. & E. 672; 30 L. J. (Q. B.) 148, was liable to an action for false imprison- 
 As to the extent of an agent's authority, ment for the act of a ticket-collector in 
 see Giles v. Taff Vale Ry. Co. 2 E. <fe B. giving into custody the plaintiff for not 
 822. being able to produce the right half of a 
 
 ■• L. R. 5 C. P. 445. return ticket. 
 
 5 L. R. 6 Q. B, 66. But in Goff v. 
 
 them in the discretion of a jury, rests in the very act done in the publication of the 
 false libel ; and whoever is chargeable with that act is chargeable with the legal 
 consequence, which is the right of the jury, to redress the injury by imposing reason- 
 able damages beyond any injury actually shown. There is no doubt the corporation 
 is chargeable with the act of publication." 
 
 When exemplary damages are allowable against a corporation, the condition and 
 circumstances of the defendant are material. Belknap v. Boston & Me. R. R. Co. 49 
 N. H. 368. 
 
 As to punitive damages against municipal corporations, see Dillon on Mun. Corp. 
 § 789 ; Hull V. Richmond, 2 Woodb. <fe M. 337 ; Wallace v. Mayor, 2 Hilt. 440 ; Chi- 
 cago )). Langlass, 52 HI. 256 ; Decatur v. Fisher, 53 111. 407. On the general subject 
 of " vindictive," "punitive," and "exemplary" damages, see Sedgwick on Damages, 
 6th ed., pp. 566-573. 
 
 (a) Owsley v. Montgomery R. E. Co. 37 Ala. (N. S.) 560. 
 
362 LIABILITIES OF CORrORATIONS EX DELICTO. 
 
 ticket-distributor, of an innocent person whom he had suspected 
 "wrongly of an attempt to rob the till. The Jury found that the 
 ticket-distributor acted in defence of the company's property, but 
 the court unanimously held, that he had no implied authority 
 from the company to order the arrest, and that consequently the 
 •company were not liable for the same. In this case, as in the 
 former, the court thought that the respective oflBcials concerned, 
 had an implied authority to take such proceedings only, as were 
 imperatively demanded for the immediate protection of the prop- 
 erty under their charge ; and that the moment any attempt to injure 
 or steal such property was abandoned, this implication ended, any 
 steps they might then direct not being called for, for such pro- 
 tection, would be of their own motion and at their own peril. Lex 
 ita scrvpta. 
 
 One rule on this subject seems to be this : that if a corpora- 
 tion has by-laws or rules, whether for the conduct of its business, 
 or to indicate the duties of its officials, and an official, in carrying 
 out such by-laws, commits a tort, the corporation is liable therefor. 
 As Montague Smith, J., said in the last case : ^ " No doubt if, in 
 furtherance of the particular business of the company, it is neces- 
 sary to arrest a person, the servants of the company have an im- 
 plied authority to do it, thus, if there is a by-law of the company, 
 and power to arrest any person infringing it, it must be presumed 
 that the company give authority to any one they put in charge of 
 the station so to enforce it, since this can only be done by the 
 company's servants on the spot." 
 
 What a corporation cannot do, its agents cannot under ordi- 
 nary circumstances, and in the case of contracts, do so as to bind 
 it. From this it necessarily follows, that there can be no author- 
 ity to an agent, implied or otherwise, to enter into contracts or to 
 institute proceedings in the nature of contracts, which would be 
 ultra vires of the corporation ; and that the corporation cannot in 
 any way be rendered amenable for such proceedings, or for mat- 
 ters incidental thereto, or torts committed by one of their servants 
 in the course thereof. 
 
 This principle holds with regard to torts, at least to this extent, 
 that if a tort be altogether ultra vires of a corporation, as arising 
 out of a' matter which the corporation itself has no authority to 
 
 ' L. E. 6 C. P. 450. 
 
OTHER TORTS. 363 
 
 direct, then there can be no implied authority to a corporate of- 
 ficial to_commit such tort. This is well shown by the case of 
 Poulton v. London & South-Western Ky. Co.^ The facts were 
 these : the plaintiff, who had taken a horse to an agricultural show 
 by defendants' railway, was entitled, under arrangements adver- 
 tised by the defendants, to take the horse back free of charge on 
 the production of a certificate. The plaintiflE accordingly pro- 
 duced a certificate, and the horse was put into a box without pay- 
 ment or booking ; and the plaintiff having taken a ticket for him- 
 self proceeded by the same train. At the end of the journey, the 
 station-master demanded payment for the horse, and the plaintiff, 
 refusing to pay, was detained in custody by two policemen under 
 the orders of the station-master, until it was ascertained by tele- 
 graph that all was right. An action having been brought by the 
 plaintiff against the defendants for false imprisonment, it was held, 
 that though a railway company has power to apprehend a person 
 traveling on the rail-^ay without having paid his own fare, it can 
 only detain the goods for non-payment of the carriage ; that, as the 
 defendants themselves would have had no power to detain the 
 plaintiff, on the assumption that he had wrongfully taken the 
 horse by the train without paying, there could be no authority im- 
 plied from them to the station-master to detain the plaintiff on 
 this assumption ; and that they were, therefore, not liable for this 
 act of the station-master. 
 
 The last case decided only, that no implied authority as to de- 
 tention was possessed or could be possessed by the station-master. 
 He might have had express authority to act as he did, but the 
 liability of the corporation under such circumstances is very 
 doubtful. Such authority would have been ultra vires of the 
 company purporting to confer it, yet upon principle it would 
 seem that they would have been responsible for the results thereof. 
 There is a great distinction between tortious and contractual liability 
 for acts ultra vires. Every tort in a manner is ull/ra vires, and it 
 is no defense to legal proceedings in tort merely to set up this 
 argument, if the torts which have been done by the corporation, 
 or by their direction, express or implied, are reasonably incidental 
 to the business, the powers or the duties of the corporation. 
 
 Suppose, however, this is not so — suppose a corporation directs 
 
 ' L. R. 2 Q. B. 534. 
 
364 LIABILITIES OF CORPORATIONS EX DELICTO. 
 
 a proceeding, whether knowing it to be outside its powers or en- 
 terprise, or lona fide believing it to be within or incidental there- 
 to, but in the result the contrary being the case, and such pro- 
 ceeding is carried out by the agents so authorized. This is the 
 precise point now in consideration : What is the position of the 
 corporation ? Is it liable ? 
 
 Y. An agent has no implied authority to commit, and cannot 
 on that ground merely hind his principal, a corporation, 
 hy committing an ultra vires tort / hut, semble, if a corpo- 
 ration expressly direct a/n ultra vires tort, or proceedings 
 necessa/rily causing such a tort, it is liable therefor, (^d)^ 
 
 At present this question remains without precise decision. In 
 Harman v. Tappenden,^ corporators were held not liable for an 
 iiltra vires tort committed by them as a corporate meeting in the 
 corporate name, and in Maund v. Monmouthshire, &c. Canal Co.,* 
 the plaintiff recovered in trespass for the seizing and converting 
 under the orders of the defendants certain barges and a quantity 
 of coal. 
 
 But neither of these cases involved the present point pure and 
 simple. In both it can fairly be argued that the tort complained 
 of was really a corporate tort — ^was one committed in and about 
 a matter necessarily incidental to the corporate enterprise. 
 
 In Mill V. Hawker,^ the point did arise in the arguments, 
 though not in the actual decision. This was an action for trespass 
 against the surveyor and members, in their private capacity, of a 
 highway board, committed by the surveyor in carrying out an 
 order of the board, admitted to be ultra vires. It was decided 
 that the action would lie at least against the surveyor, and there- 
 fore no decision was arrived at as to the liability of the board as a 
 corporation. Kelly, C. B., dissented, and expressed a very strong 
 
 ' 1 East, 655. ^ L. R. 9 Ex. 809 ; Ibid. 10 Ex. 92. 
 
 « 2 Dowl. (N. S.) 113. 
 
 (a) In an action to recover from a corporation damages for an injury occasioned 
 by the negligence of its employees, the fact that the act from which the injury re- 
 sulted was not authorized by the charter, is not a defense, if the corporation in any 
 clear and explicit manner recognized the act as done in its business, as by employ- 
 ing agents to superintend it, or receiving the profits arising from it. Hutchinson v. 
 Western, <fec. R. R. Co. 6 Heisk. 684. 
 
OTHER TORTS. 365 
 
 opinion that the board was liable and no one else. He said : " It 
 was argued that no action could be maintained against the board 
 on the ground that the resolution and the order to the surveyor 
 were ultra vires. But I apprehend that this is a misapplication 
 of the term ultra vires. If the board, by resolution or otherwise, 
 had accepted a bill of exchange, directed their clerk or other offi- 
 cer to write their corporate name or title across a bill drawn upon 
 them for a debt, this would have been ultra vires, and no holder 
 of the acceptance could have recovered the amount against them. 
 It would have been void upon the face of it, and it is immaterial 
 to consider whether the individuals who had written or authorized 
 the acceptance would have been liable to any, and, if any, to what 
 action at the suit of a holder for value. But it is otherwise with 
 an act merely unlawful or unauthorized, as a trespass or the con- 
 version of a chattel. If such an act is to be deemed ultra vires, 
 and therefore no action would lie against the corporate body by 
 whom it had been authorized, it is clear that a corporation would 
 not be liable for any tort at aU committed or authorized by them, 
 and the decisions above cited would be contrary to law." 
 
CHAPTER X. 
 
 CRIMES. 
 
 The liability of corporations has been extended to even some 
 varieties of crimes. The notion of crime, as -asually held, requires 
 intent on the part of the criminal, but this is not the view taken 
 by our lavf. Many acts which, if productive of harm to a single 
 person, are mere torts, become crimes when they result in damage 
 to a large number of people ; and all proceedings which are in- 
 vasions of the rights or privileges, not of some one individual 
 specially, but of the public at large, or which are detrimental to 
 the general well-being or to the interests of the State, similarly 
 fall under the category of crimes, {a) In such cases, the intent is 
 notional and constructive, rather than real ; ^ it suffices if the 
 wrong-doer has caused, whether directly by his own proceedings, 
 or indirectly by those of his agents, the wrong in question. (5) 
 Manifestly a corporation can commit such wrongs, can have such 
 an intent, and, by consequence, at least to such extent, render it- 
 self amenable to the criminal law. 
 
 Accordingly, it has been decided that a corporation may be in- 
 dicted for misdemeanors which are in reality public torts, e. g., for 
 disobedience to an order of justices requiring them to execute 
 works pursuant to a statute ; ^ for misfeasance in cutting through 
 and obstructing a public highway ; * for non-repair of an highway, 
 and the like.* 
 
 ' See, also, upon this point Reg. v. United Kingdom Electric Telegraph Corn- 
 Stephens, L. R. 1 Q. B. 702. pany, 2 B. <fe S. 647, n. ; 3 F. <fe F. 73. 
 
 ^ Reg. V. Birmingham and Gloucester * Compare Reg. v. Mayor, <fec. of Man- 
 Railway Co. 3 Q. B. 223. Chester, 7 E. & B. 463 ; 26 L.J. M. C. 65 ; 
 
 ' Reg. V. Great North of England Rail- and the many authorities in the books of 
 
 way Company, 9 Q. B. 315 ; Eeg. «. Long- indictments against counties, townships, 
 
 ton Gas Company, 2 E. <& E. 651 ; Reg. v. and parishes, for not repairing roads, 
 
 bridges, tfec. (c) 
 
 (a) See note by Mr. Bennett, 1 Lead. Cases on Crimes, p. 174. 
 
 (6) Corporations necessarily transact business by means of agents. If they are 
 held responsible criminally, it must generally, perhaps always, be for acts or neglects 
 of those agents. Boston, C. & M. R. R. Co. v. State, 32 N. H. 215. The rule that 
 there can be no agency in commission of misdemeanors applies only to those misde- 
 meanors to which malus animus is essential. See State v, Ohio & Miss. R. R. Co. 23 
 Ind. 362. ^ 
 
 (c) Dill. Mun. Corp. §§ 745-748. 
 
CRIMES. 36 T 
 
 The authoritieB hitherto have gone only so far as to render 
 them liable criminally for a non-feasance or misfeasance where the 
 mental element is negligence. Whether this can ever be extended 
 to felonies or misdemeanors, the essence of which is malice, will- 
 fulness, or other such determinate fact, is very doubtful.^ Being 
 mere abstractions, they cannot have actually the mental element 
 therein involved, and to raise it by implication is directly opposed 
 to every principle of criminal law. {a) 
 
 1 See the arguments in Reg. ». Great v. "Willcox, 1 Sim. (N. S.) 334 ; 19 L. J. 
 North of England Railway Company, 9 (Ch.) 488. 
 Q. B. 315 ; and King of the Two Sicilies 
 
 (a) There are crimes (perjury for example) of which a corporation cannot, in the 
 nature of things, be ^ilty. There are other crimes, as treason and murder, for which 
 the punishment imposed by law cannot be inflicted upon a corporation, and, there- 
 fore, indictment and trial would be useless formalities which the law never goes 
 through. So, corporations cannot be liable for any crime of which a corrupt intent 
 or malvs animus is an essential element. But the creation of a mere nuisance inrolves 
 no such element. It is totally immaterial whether the party erecting the nuisance 
 does it ignorantly or by design, with a good intent or an evil intent ; and there is no 
 reason why, for such an offense, a corporation should not be indicted. State v. Morris 
 & Essex R. R. Co. 23 N. J. L. 360. Corporations are, therefore, liable to indictment for 
 the neglect of duties resting upon them. Mower v. Leicester, 9 Mass. 247 ; Common- 
 wealth V. Central Bridge Co. 12 Cush. 242 ; People v. Corporation of Albany, 1 1 Wend. 
 639 ; People v. Goshen Turnpike Road, 11 Wend. 597; Susquehanna & Bath T. Co. v. 
 People, 15 Wend. 267; Waterford and Whitehall T. Co. v. People, 9 Barb. 161 ; State 
 V. Barksdale, 5 Humph. 154 ; State v. Murfreesboro', 11 Humph. 217 ; and see cases 
 cited in Dillon on Mun. Corps. § 745. In Cumb. A Ox. C. Co. v. The City of Port- 
 land, 56 Me. 77, which was an action of debt, to recover a penalty for filling up the 
 plaintiff's canal, the Court say : " Towns are undoubtedly liable to indictment for 
 neglect of duties imposed by statute, when the statute so prescribes. But a town 
 could not be indicted for assault and battery, though committed by one of its officers 
 in accordance with its express vote. Whether a town might or might not be liable 
 in trespass, in such a case like the present, is a question not now presented for de- 
 termination. The object of the statute was to protect the corporation against illegal 
 acts done willfully and maliciously. The penalty is imposed on those who do willful 
 and malicious injury to the corporation, and upon these alone. But towns cannot do 
 an act willfully and maliciously.'' See Same v. Same, 62 Me. 504. 
 
 An attempt has been made to distinguish between the liability of a corporation 
 for non-feasance and for misfeasance, and it has been urged that while a corporation 
 may render itself indictable, by neglecting that which it is its duty to do, yet it can- 
 not be indicted for doing that for which it has no authority. Thus, in State v. 
 Great Works M. & M. Co. 20 Me. 41, which was an indictment charging defendant 
 with a nuisance in the erection of a dam across the Penobscot river, Weston, C. J., 
 says : " A corporation is created by law for certain beneficial purposes. They can 
 neither commit a crime or misdemeanor hy amy positme or affirmative act, nor incite 
 others to do so, as a corporation. While assembled at a corporate meeting, a ma- 
 
368 CKIMES. 
 
 On the other hand, it has been determined that, notwithstand- 
 ing the broad rule that a principal cannot be rendered criminally 
 
 jority may, by a vote entered upon their records, require an agent to commit a bat- 
 tery ; but if he does so, it cannot be regarded as a corporate act, for which the cor- 
 poration can be indicted. It would be stepping aside altogether from their corpo- 
 rate powers." See, also. State v. Ohio & Miss. E. R. Co. 23 Ind. 362; Common- 
 wealth V. Swift Run Gap Turnpike Co. 2 Va. Cas. 362. The contrary view, however, 
 prevails in this country, as well as in England. Bigelow, J., in Commonwealth v. 
 New Bedford Bridge, 2 Gray, 339, says : "The indictment in the present case is for 
 a nuisance. The defendants contend that it cannot be maintained against them on 
 the ground that a corporation, though liable to indictment for nonfeasance, or an 
 omission to perform a legal duty or obligation, are not amenable in this form of a 
 prosecution for a misfeasance, or the doing of any act unlawful in itself and injurious 
 to the rights of others. There are dicta in some of the earlier cases which sanction 
 this broad doctrine, and it has been thence copied by text-writers and adopted to its 
 full extent in a few modern decisions. But, if it ever had any foundation, it had its 
 origin at a time when corporations were few in number and limited in their powers, 
 and in the purposes for which they were created. Experience has shown the neces- 
 sity of essentially modifying it ; and the tendency of the more recent cases in courts 
 of the highest authority, has been to extend the application of all legal remedies to 
 corporations, and assimilate them, as far as possible, in their legal duties and respon- 
 sibilities, to individuals. To a certain extent, the rule contended for, is founded in 
 good sense and sound principle. Corporations cannot be indicted for offenses which 
 derive their criminality from evil intention, or which consist in a violation of 
 those social duties which appertain to men and subjects. They cannot be 
 guilty of treason or felony ; of perjury or offenses against the person. But be- 
 yond this, there is no good reason for their exemption from the consequences 
 of unlawful and wrongful acts committed by their agents, in pursuance of au- 
 thority derived from them. Such a rule would, in many cases, preclude all ade- 
 quate remedy, and render reparation for an injury committed by a corporation im- 
 possible; because it would leave the only means of redress to be sought against irre- 
 sponsible servants, instead of against those who truly committed the wrongful act, 
 by commanding it to be done. There is no principle of law which would thus fur- 
 nish immunity to a corporation. If they commit a trespass on private property, or 
 obstruct a way to the special injury aud damage of an individual, no one can doubt 
 their liability therefor. In like manner and for the same reason, if they do similar 
 acta, to the inconvenience and annoyance of the public, they are responsible in the 
 form and mode appropriate to the prosecution and punishment of such offenses. If, 
 therefore, the defendants have been guilty of a nuisance, by obstructing unlawfully a 
 navigable stream, an indictment may well be maintained against them. It may be 
 added, that the distinction between u non-feasance and a misfeasance is often one 
 more of form than of substance. There are cases where it would be difficult to say 
 whether the offense consisted in the doing of an unlawful act, or in the doing of a 
 lawful act in an unlawful manner. In the case at bar, it would be no great refine- 
 ment to say that the defendants are indicted for not constructing their draws in a 
 suitable manner, and thereby obstructing navigation, which would be a non-feasance, 
 and not for unlawfully placing obstructions in the river, which would be a misfeas- 
 ance. The difficulty of distinguishing the character of these offenses, strongly illus- 
 
CRIMES. 369 
 
 liable for the acts of its agents, yet there are circumstances when 
 an indictment on this ground will lie. In Eeg. v. Stephens,^ on 
 
 ' L. R. 1 Q. B. T02. 
 
 trates the absurdity of the doctrine, that a corporation are indictable for a non-feas- 
 ance, but not for a misfeasance." See, also, to the same effect, Boston, C. & M. 
 R. R. Co. V. State, 32 N". H. 215 ; State v. Vermont Central R. R. Co. 27 Vt. 103 ; 
 Commonwealth v. Nashua & Lowell R. R. Co. 2 Gray, 64 ; Commonwealth v. Vt. & 
 Mass. R. R. Co. 4 Gray, 22; State v. Morris & Essex R. R. Co. 23 N. J. L. 360; 
 Louisville R. R. Co. v. State, 3 Head, B23; L. & N. R. R. Co. v. Com. 13 Bush. 388. 
 
 A corporation is liable to indictment for the act of its officer or employee in issu- 
 ing papers, which the law requires to be stamped, without the proper stamps, with 
 intent to evade the provisions of the act of Congress. U. S. v. Bait. R. R. Co. 7 Am. 
 Law Reg. (N. S.) 151. 
 
 Most of the States have provided by statute, in one way or another, for compen- 
 sation for death caused by the carelessness or negligence of the servants or agents of 
 railroad and other companies. Their purpose has been to obviate a supposed defect 
 of the common law, lying in the principle that a party is not liable civiliter for the 
 destruction of human life, whether the acts causing death are felonious or not. In 
 Massachusetts, Maine, New Hampshire, Connecticut, and Rhode Island, the remedy 
 is by indictment (the penalty, however, to go to the widow, children, or heirs) which 
 gives rise to a peculiar class of cases in those States. The action brought under 
 those statutes is, in form, criminal, but in mode of procedure and practical effect 
 scarcely differs from a civil action, which might have been brought by the injured 
 party himself, had he survived his injuries. It is accordingly held, in State v. Grand 
 Trunk R. R. Co. 58 Me. 176, that "the same rules of evidence and the same princi- 
 ples of law should be applied as in like cases, when redress is sought by a civil 
 action for damages." This opinion is approved in State v. Railroad, 52 N. H. 628, 
 where the Court, after remarking upon the various provisions of the different States, 
 say : " But in all the different forms of proceeding, the same end is to be attained, 
 and substantially the same rules are to be applied, as though they were civil actions 
 for damages." See, also, Boston, C. & M. R. R. Co. v. State, 32 N. H. 215. On the 
 construction of these statutes, see State v. Grand Trunk R. R. Co. 60 Me. 145 ; State 
 V. Maine Cent. R. R. Co. 60 Me. 490; State ■«. Grand Trunk R. R. Co. 61 Me. 114; 
 State V. GUmore, 24 N. H. 461 ; Commonwealth v. Boston <fe W. R. R. Co. 11 Cush. 
 512; Commonwealth v. Vermont <fe Mass. R. R. Co. 108 Mass. 1. F£r the terms of 
 these statutes, and also of those of the other States in which the action is civil, and 
 which resemble Lord Campbell's act (9 & 10 Vict. o. 93, s. 1 ; Godefroi & Shortt, 
 p. 405), see Shearman & Redfield on Negligence, chap. xvii. 
 
 A subject akin to the liability of corporations for crime, is their liability for con- 
 tempt. Baltimore & Ohio R. R. Co. v. Wheeling, 13 Gratt. 40. Compulsion may 
 be exercised against a corporation, in case of disregard of the orders of the court ; 
 not by attachment, which is a remedy confined to unprivileged natural persons, but 
 by sequestration, which is the proper remedy both against natural persons privileged 
 from attachment, and artificial persons not susceptible of it. Lord Mansfield lays 
 ■ down the rule in Rex v. Windham, Cowp. 377, that the personal property is to be 
 taken first, and if that is not effective, that the rents and profits are to be sequestered. 
 McKim V. Odom, 3 Bland Ch. 407, is an early American case on this point, and con- 
 tains a discussion of the entire subject of the coercive relation of the Court of Chan- 
 cery to corporations. See, also. Bank of Bellows Falls v. R. & B. R. R. Co. 28 Vt. 
 24 
 
370 CRIMES. 
 
 an indictment for a nuisance, the Court said: "It is quite true 
 that this, in point of form, is a proceeding of a criminal nature, 
 but, in substance, I think it is in the nature of a civil proceeding, 
 and I can see no reason why a different rule should prevail with 
 regard to such an act as is charged in this indictment between pro- 
 ceedings which are civil and proceedings which are criminal. I think 
 there may be nuisances of such a character that the rule I am ap- 
 plying here would not be applicable to them ; but here it is per- 
 fectly clear that the only reason for proceeding criminally is, that 
 the nuisance, instead of being merely a nuisance aflEecting an indi- 
 vidual or one or two individuals, affects the public at large ; and 
 no private individual, without receiving some special injury, could 
 have maintained an action. Then, if the contention of those who 
 say the direction is wrong is to prevail, the public would have 
 great difficulty in getting redress. The object of this indictment 
 is to prevent the recurrence of the nuisance. The prosecutor ca,n- 
 not proceed by action, but must proceed by indictment ; and if 
 this were strictly a criminal proceeding, the prosecution would be 
 met with the objection that there was no vnens rea; that the in- 
 dictment charged the defendant with a criminal offense, when, in 
 reality, there was no proof that the defendant knew of the act, or 
 that he himself gave orders to his servants to do the particular act 
 he is charged with. StiU, at the same time, it is perfectly clear 
 that the defendant finds the capital, and carries on the business 
 which causes the nuisance, and it is carried on for his benefit ; al- 
 though, from age or infirmity, the defendant is unable to go to the 
 premises, the business is carried on for him by his sons, or, at all 
 events, by his agents. Under these circumstances, the defendant 
 must necessarily give to his servants or agents all the authority that 
 is incident tc|the carrying on of the business." 
 
 The principle here enunciated, if carried out to its legitimate 
 result, will render corporations liable for many varieties of crime. 
 They have hitherto been held responsible for their own acts, 
 though, of course, done or omitted through the medium of agents. 
 It is a great step to extend this responsibility to the proceedings 
 of governing officials. 
 
 470; Jones v. Boston Mills Corp. 4 Pick. 5U; Atlas Bank v. Nahant Bant, 2S Pick. 
 480 ; Grew v. Breed, 12 Mete. 363 ; Devoe v. Ithaca & Owego R. R. Co. 6 Paige, 621 ; 
 Judaon v. Rossie Galena Co. 9 Paige, 5.98 ; Ammant v. N. A. & P. Turnpike Co. 13 S. 
 & R. 210 ;■ Reid v. N. W. R. R. Co. 32 Peun. St. 257 ; 1 Daniell's Ch. Pr. 477 ; Aug. 
 <fe Ames on Corp. §§ 667-673. 
 
PART III. 
 
 THE DOCTREStE OF ULTRA VIRES CONSIDERED WITH REFERENCE 
 TO THE POWERS AND PRIVILEGES OP CORPORATIONS, AND 
 THE MANNER AND PURPOSES IN AND FOR WHICH SUCH MAT 
 BE EMPLOYED. 
 
 CHAPTER I. 
 
 THE SPECIAL POWERS AND PRIVILEGES OF CORPORATIONS. 
 
 Section I. — The Usee op Special Powers and PEiviLEGEs.(a) 
 
 I. Powers conferred upon corporations for the attainment of 
 certain dejmed objects must he em/ployed hy them strictly 
 and solely with reference to those objects only. 
 
 It is now established beyond question, that not only are the]ca- 
 pacities of corporations limited in degree, but so, also, are the pur- 
 
 (a) Special powers and privileges are granted to corporations by the State as a 
 portion of the sovereignty. Under this head are included the granting of the fran- 
 chises of taking tolls, making of highways and the like, and also that portion of the 
 right of eminent domain which subjects private property to public use. 
 
 I. There are certain rights which are incidents of sovereignty, and which cannot 
 be exercised without legislative authority. Such are the franchises of ferries, fairs, 
 markets, toll bridges, turnpikes and railroads. "A railroad for popular use is 
 piiUici juris ; it cannot be legally erected without a legislative permission.'' R; <!t 
 D. B. R. R. Co. V. Del. <fe Rar. C. Co. 18 N. J. Eq. 670. " The right to build and rnu 
 a railroad and take tolls or fares, is a franchise of the prerogative character, which 
 no person can legally exercise without some special grant of the Legislature." State 
 J). B., 0. & M. R. R. Co. 25 Vt. 433; see Blissett ». Hart, WiUes, 508; Bank of Mid- 
 dletown v. Edgerton, 30 Vt. 182; Newburgh Turnpike Co. v. Miller, 5 Johns. Ch. 
 101; Auburn <St Cato Plank-road Co. v. Douglass, 9 N. Y. 444; Aikin v. Western R. 
 R. Co. 20 N. Y. 370; Erie Ry. Co. v. D., L. k W. R. R. Co. 21 N. J. Eq. 283 ; Penn 
 R. E. Co. V. Nat. Ry. Co. 23 N. J. Eq. 441. Compare Hughes o. Chester & Holy- 
 
3Y2 SPECIAL POWERS OF CORPORATIONS. 
 
 poses and ends for which they propose to employ those capacities. 
 Corporations are created for the accomplishment of certain ends, or 
 
 head R. R. Co. 1 D. <St S. B45; s. o. 3 De G., ¥. & J. 3B2; Tuckahoe C. Co. v. Tnck- 
 ahoe R. R. Co. 11 Leigh, 72. 
 
 II. There exists in every sovereignty, the rightful authority to appropriate and 
 control individual property for the public benefit, as the public safety, necessity, 
 convenience or welfare may demand. Cooley on Cons. Lim. 624. In the exercise of 
 the power of eminent domain, any real estate, property, franchise or easement of any 
 corporation, however exclusive the grant, may be taken for public use, provided 
 suitable compensation be made. Piscataqua Bridge v. N. H. Bridge, 1 N. H. 35 ; 
 Northern R. R. Co. v. C. <fe C. R. R. Co. 27 N. H. 183 ; Crosby v. Hanover, 36 N. H. 
 404, and cases post. This power belongs to the United States Government. Kohl v- 
 V. S. 1 Otto, 367. 
 
 III. This power of eminent domain may either be exercised by the State itself, 
 or, in proper cases, be delegated to corporations or individuals. " Upon the same 
 principle of public benefit, not only the agents of the government, but also individ- 
 uals and corporate bodies, have been authorized to take private property for the 
 purpose of making public highways, turnpike roads, and canals ; of erecting and 
 constructing wharves and basins ; of establishing ferries ; of draining swamps and 
 marshes ; and of bringing water to cities and villages. In all such cases, the object 
 of the legislative grant of power, is the pubUc advantage expected fipom the contem- 
 plated improvement, whether such improvement is to be effected directly by the 
 agents of the government, or through the medium of corporate bodies, or of indi- 
 vidual enterprise." Beekman v. S. & S. R. R. Co. 8 Paige, 73 ; Reus. <fe Sara. R. R. 
 Co. V. Davis, 43 N. Y. 137; In re R. R. Co. v. Kip, 46 N. Y. 546 ; In. re Fowler, 63 
 N. Y. 60; Kramer v. C. & P. R. R. Co. 6 Ohio St. 146, and other cases cited in notes 
 to this chapter. And this delegation may be given by general statute to corpora- 
 tions organized thereunder. Buff. & N. Y. R. R. v, Brainard, 9 N. Y. 100. Even a 
 foreign corporation may be the agency employed. Matter of Townsend, 39 N. Y. 
 171. 
 
 IV. There are no limitations to the exercise of the right, except the necessity 
 arising in order to promote the public interest ; and that private property shall not 
 be taken without just compensation. There is no restraint upon the power, except 
 that requiring compensation to be made. Secombe v. R. R. Co. 28 Wall. 108. 
 
 The necessity for appropriating private property for the use of the public, or of the 
 government, is not a jvduiial question. The power resides in the Legislature. Peo- 
 ple II. Smith, 21 N. Y. 69B. It is one of the legislative prerogatives to decide the 
 important question, whether an enterprise or scheme of improvement be of such 
 public utility as to justify a resort for its furtherance to the exercise of the power of 
 taxation or eminent domain. Whether a road, a turnpike, a bridge, or a canal, will 
 subserve public or private needs, are inquiries addressed exclusively to the law 
 making power, whose answers, according to the genius of our government, must be 
 final and irreversible. This doctrine has been often propounded as the undoubted 
 rule of law, by the most eminent elementary writers, and has received the sanction 
 of much judicial adoption. Tide-Water Co. v. Coster, 18 N. J. Eq. 618; s. o. Ibid. 
 55. But, although it rests in the wisdom of the Legislature to determine when 
 public use requires the assumption of private property (2 Kent, 340), it is not to be 
 understood by this, that the Legislature is to be the sole judge of what is meant by 
 public use. The determination of the Legislature is not conclusive, that a purpose 
 
THE USEE OF SPECIAL POWERS. 373 
 
 for the transaction of certain business which could not be so well at- 
 tained or carried out by individual effort, and in this behalf they are 
 
 for which it directs private property to be taken is a public use ; but is conclusive, 
 if tlie use is public, that the necessity exists which requires that property be taken. 
 Talbot V. Hudson, 16 Gray, 417. The right of eminent domain is to be exercised 
 only when the public exigencies require it. And when such exigency is declared by 
 the Legislature, as the representative of the sovereignty, the courts cannot rightfully 
 question the wisdom of the declaration. But if the Legislature attempts, under the 
 power of taking property by the right of eminent domain, to take property confess- 
 edly not for public use, then the courts may prevent it. Water Works Co. u. Burk- 
 hart, 41 Ind. 364. See, upon this question generally, CottriU v, Myrick, 12 Me. 222 ; 
 Tyler v. Beacher, 44 Vt. 648 ; Concord R. R. Co. v. Gr^ely, 17 N. H. 47 ; /» re 
 Fowler, 63 N. Y. 60 ; Matter of Deansville Cemetery Assoc. 66 N. Y. 569 ; People 
 V. Salem, 20 Mich. 462 ; Chicago, <tc. Ry. Co. v. Lake, 71 111. 333 ; Bankhead v. 
 Brown, 28 Iowa, 640 ; Speer v. BlairsvUle, 60 Penn. St. 150 ; Sadler v. Langham, 34 
 Ala. 311 ; Mills on Eminent Domain, §§ 10 and 11. But under the general railroad 
 law in New York, the courts are also to judge of the necessity. Rensselaer & Sar. R. 
 R. Co. V. Davis, 43 If. Y. 137 ; Matter of N. Y. C. R. R. Co. 66 N. Y. 407. 
 
 V. As to what is a public use, it is generally conceded that highways, including 
 turnpikes, canals, railways, courts of justice, school-houses, aqueducts, sewers, are 
 public purposes. 
 
 It is now quite too late to object, that the objects and purposes of a railroad cor- 
 poration are not public, or that the duties devolved upon them, and the services ren- 
 dered by them are not of a public character, and in furtherance of public interests. 
 In re N. Y. <fe H. R. R. Co. v. Kip, 46 N. Y. 546 ; Buff. & N. Y. R. R. Co. v. Brainard, 
 9 N. Y. 100; Olcott v. Supervisors, 16 Wall. 678; Secombe v. Railroad Co. 23 Wall. 
 108 ; Bonaparte v. C. <fe A. R. R. Co. Bald 205 ; Bradley v. W. Y. <fc N. H. R. R. Co. 
 21 Conn. 294; Davis v. Tus. C. L. D. R. R. Co. 4 S. <fe P. (Ala.) 421 ; Brown v. 
 Beatty, 34 Miss. 227 ; Swan v. Williams, 2 Mich, 427 ; Weir v. St. Paul R. R. Co. 18 
 Minn. 155 ; San Francisco A. & S. R. R. Co. v. Caldwell, 31 Cal. 367 ; Gibson v. Ma- 
 son, 5 Nev. 283. As to railroad to transport coal, see New Cent. Coal Co. v. George's 
 Creek Coal & Iron Co. 37 Md. 537 ; Harvey «. Thomas, 10 Watts, 66. 
 
 The words " public use " are not equivalent to the words " public ownership." 
 Concord R. R. Co v. Greely, 17 N. H. 47. 
 
 Whether the power of eminent domain can rightfully be exercised in condemna- 
 tion of lands for manufacturing purposes, where the manufactories are to be owned 
 and occupied by individuals, is a question upon which the authorities are at vari- 
 ance. See French v. Braintree Mfg. Co. 23 Pick. 216 ; Great Falls Mfg. Co. v. Fer- 
 nald, 47 N. H. 444 ; and other cases cited in note, Cooley on Cons. Lim. p. 534 ; also 
 Mills on Eminent Domain, § 1 5. " The Legislature of this State [New York], it is 
 believed, has.never exercised the right of eminent domain in favor of mills of any 
 kind. Sites for steam engines, hotels, churches, and other public conveniences, 
 might as well be taken by the exercise of this extraordinary power."' Hand, J., in 
 Hay V. Cohoes Co. 3 Barb. 47. Judge Cooley remarks ; " It is quite possible that, in 
 any State in which this question would be an entirely new one, and where it would 
 not be embarrassed by long acquiescence, or by either judicial or legislative preced- 
 ents, it might be held that these laws are not sound in principle, and that there is no 
 such necessity, and consequently no such imperative reasons of public policy, as 
 would be essential to support an exercise of the right of eminent domain. But ac- 
 
374 SPECIAL POWERS OF CORPORATIONS. 
 
 endowed with various powers and privileges other than such as are 
 possessed by private persons ; but these powers and privileges are 
 
 cepting as correct the decisions whicli have been made, it must be conceded that the 
 term 'public use,' as employed in the law of eminent domain, has a meaning much 
 controlled by the necessity, and somewhat different from that which it bears gener- 
 ally." Cooley on Cons. Lim. p. 636. As illustrative of what is a public use, reference 
 may be had to tax cases and cases involving the aid voted to railroads by towns and 
 counties (see Dillon on Mun. Corp. §§ 104, 415; Dillon on Municipal Bonds), 
 in which caaes, the decision has turned upon the question whether the taxation by 
 which this aid was afforded was for a public purpose ; see Loan Ass'n v. Topeka, 20 
 Wall. 665, where, it is held, that a statute of the State of Kansas, which authorized 
 the town to issue bondsto aid and encourage a company in establishing and operating 
 manufactories, is void. See also, AUen v, Inhab. of Jay, 60 Me. 124; Lowell v. City 
 of Boston, 111 Mass. 464; Jenkins v. Andover, 103 Mass. 94 ; Olmstead v. Camp, 33 
 Conn. 532; Todd ». Austin, 84 Conn. 78; Curtiss v. Whipple, 24 Wis. 350; People 
 m. Salem, 20 Mich. 452; Guernseys. Burlington, 4 Dill. 372. 
 
 In Bloomfield Gas Co. u. Richardson, 63 Barb. 437, the question as to what is a 
 public use is discussed by Talcott, J., in connection with a grant of the right of cou- 
 ■demnation to a company chartered to supply a city with natural gas, and he holds, 
 that the use of gas for illuminating purposes having become almost a necessity of 
 modern civilization, its supply and means to that purpose, are within the category of 
 those public improvements which authorize the Legislature to delegate the power of 
 eminent domain to the company so supplying it, more especially as the act contem- 
 plated the lighting of the streets with the gas so furnished. In the able brief of Mr. 
 Pomeroy, in this case, a classification will be found of the different kinds of uses 
 •which have been held public, both in reference to eminent domain and other govern- 
 mental powers of the same general character. He separates them into the following 
 groups : "1. All purely governmental purposes, whether carried on by the State 
 itself, through some of its departments, or by local governments, such as those of 
 counties and towns. Under this class it has been held that private property may be 
 taken for a public school-house (Williams v. School District, 33 Vt. 271), for a fort 
 (Gilmer v. Lime Point, 19 Cal. 229), and this class would undoubtedly include build- 
 ings for State houses, capitols, court-bouses, public prisons and the like. 2. AH 
 means and methods for transit of passengers or goods, whether constructed by the 
 State, * * or by private enterprise. This class includes public highways, turn- 
 pikes, bridges, railroads, canals, docks and wharves. * * * 8. Measures of police, 
 and especially those which are designed to promote health. In this class there are 
 several particular instances, not resembling each other in their outward and physi- 
 cal features ,♦ but it will be seen that in all of them, the element which makes the use 
 ■^ public,' belongs to that branch of governmental functions termed police, and in 
 most of them this element is purely sanitary. This class includes : (1) Waterworks 
 to supply cities with water. Health, the necessity of pure and wholesome water as 
 much as of pure and wholesome air, and not mere convenience, and emphatically not 
 gain, is the public use which renders these works and enterprises valid (Reddall v. 
 Bryan, 14 Md. 444 ; Burden v. Stern, 27 Ala. 104 ; Lumbard v. Stearns, 4 Cusb. 60 ; 
 Mayor, &c. v. Bailey, 2 Denio, 452, per Gardiner, President). (2) Provisions and 
 means for draining swamps, marshes and low lands (Hartwell v. Armstrong, 19 Barb. 
 166 ; People v. Nearing, 27 If. T. 306 ; Anderson v. Kerns Draining Co, 14 Ind. 199, 
 
THE USER OF SPECIAL POWERS. 375 
 
 given to corporations in a qualified manner only, and not abso- 
 
 202). This last case expressly holds that draining for sanitary purposes is a public 
 use but for other purposes is not. (3) Provisions and means for removing dams and 
 permitting stagnant and offensive waters to flow off, thus abating a great public nui- 
 sance, and rendering a whole district salubrious which was before pestilential (Miller 
 II. Craig, 3 Stock. 176 ; Talbot v. Hudson, 16 Gray, 417 ; Dingley v. Boston, 100 Mass. 
 544). (4) Drains and Sewers in cities (Hildreth v. LoweU, 11 Gray, 345). (5) Pub- 
 lic burying grounds (Edwards v. Stonington gemetery Assoc. 20 Conn. 466). The 
 cases generally, that is throughout the United States, go no further than the fore- 
 going ; but, 4. In Massachusetts, Connecticut, and perhaps in a very few other 
 States, statutes have existed from an early day, known as the ' flowage acts,' by 
 whicb land is permitted to be taken for mill-dams, <fec. These statutes form part of 
 the peculiar local systems of those States, and have been sustained on the ground 
 that the means of promoting manufactures was a public use (See Hazen v. Essex Co. 
 12 Cush. 475 ; Boston Mill Dam Co. v. Newman, 12 Pick. 467, and many other Mas- 
 sachusetts cases ; Olmstead v. Camp, 33 Conn. 532 ; Todd v. Austin, 34 Id. 78). In 
 the latter case the necessities of the position and the logic of the judge force him to 
 hold, * * that ' whenever a person carries on any business, and furnishes arti- 
 cles which members of the community find it convenient or advantageous to buy, 
 then his business is a public use.' This is the reducHo ad abmrdum. It is saying 
 that the Legislature may empower a person to take private property to carry on 
 «very trade or occupation conceivable. It utterly abolishes the word 'public,' from 
 the constitutional provisions. These doctrines have not been followed to any extent 
 in other States. In Alabama, a similar statute was recently declared void, although 
 it had stood for a long time. Sadler v. Langham, 34 Ala. 311. In Tennessee, a very 
 early case had held that a grist mUl was a public use, but that a saw mill or a paper 
 mill was not (Harding v. Goodlett, 3 Yer. 41). And even the former part of this de- 
 cision was recently overruled in Memphis Freight Co. v. Memphis, 6 Cold. 419. 
 Finally, this New England doctrine has been expressly repudiated in New York 
 (Hay V. Cohoes Co. 3 Barb. 42). * » » The object, to be a public use, must 
 cither be, (1) something which ipso facto, by its mere existence and of necessity, 
 produces some great common good to all the inhabitants of a particular district, 
 such as sanitary measures for draining, water supply and the like ; or, (2) it must be 
 something in which the public at large, that is, every individual if he please, has a 
 legal interest and right, such as a highway, railroad, and the like; or, (3) it must be 
 something directly governmental, such as a fort, state house, and the like." The mill 
 cases are discussed in Tyler v. Beacher, 44 Vt. 648. As to water mills, see Guernsey 
 V. Burlington Township, 4 Dill. 372. As to water-way for mining purposes, see 
 Hand Gold Mining Co. v. Parker, 69 Ga. 419. As to parks, see Matter of Gom'rs of 
 Central Park, 63 Barb. 282. As to pipe lines, see West Va. Transp. Co. v. Volcanic 
 Oil, (fee. Co. 4 W. Va. 382. As to booms, see Patterson v. Miss. Boom Co. 3 Dill. 465 ; 
 and Att.-6en. v. Evart Booming Co. 34 Mich. 462. A rural cemetery is held not to 
 be a public use in Matter of Deausville Cemetery Assoc. 66 N. Y. 669. 
 
 VI. So far-reaching is this power that it extends to the condemnation of rights 
 acquired under contracts made by the State for exclusive franchises and privileges. 
 West River Bridge v. Dix, 6 How. 507 ; s. o. 16 Vt. 446 ; Richmond E. R. Co. v. La. 
 R. R. Co. 13 How. 71 ; Arnington v. Barnett, 15 Vt. 745 ; White River T. Co. v. Vt. 
 Cent. R. R. Co. 21 Vt. 894 ; Piscataqua Bridge v. N. H. Bridge, 7 N. H. 36 ; Boston 
 
376 SPECIAL POWERS OF CORPORATIONS. 
 
 lutely. " It has become a well settled head of equity, that any 
 
 & Lowell R. R. Co. v. Salem & Lowell R. R. Co. 2 Gray, 1 ; Central Bridge Co. v. 
 Lowell, 4 Gray, 4Y4 ; Boston Water Power Co. ». Boston & Wor. R. R. Co. 23 Pick. 
 360 ; Enfield Bridge Co. v. H. & N. H. R. R. Co. 17 Conn. 40; Id. 454 ; N. T. <fec. 
 R. R. Co. V. Boston, <fec. R. R. Co. 36 Conn. 196 ; In re Kerr, 42 Barb. 119 ; Sixth 
 Ave. R. R. Co. v. Kerr, T2 N. Y. 330 ; Del. & R. C. Co. v. R. & D. B. R. R. Co. 16 
 N. J. Eq. 321 ; Shorter v. Smith, 9 Ga. 629 ; R. R. Co. </. Kenney, 39 Ala. (N. S.> 
 307 ; RaUway v. Railway, 30 Ohio St^ 604 ; N. & R. R. R. Co. v. P. & I. R. R. Co. 3 
 Ind. 464 ; Bridge Co. u. Clarksville, 1 Sneed, 176 ; 111. <fe Mich. C. Co. v. Chicago & 
 Rock Island R. R. Co. 14 111. 314. 
 
 This doctrine, it may be confidently stated, has proved a bulwark of defense to 
 the rights of the people against monopolies and other aggressions of corporate power. 
 The rule established by the Dartmouth College Case, 4 Wheat. 518, that charters of 
 corporations unlimited in their duration, and not expressly made subject to altera- 
 tion or repeal, were contracts between the States and the corporators, within the 
 meaning of the constitutional inhibition against the passage of laws impairing the 
 obligation of contracts, gaVe opportunity for the granting of charters, which cre- 
 ated monopolies, odious in their nature, and which in some cases effectually pre- 
 vented legitimate competition, and in others placed the national highways under 
 the absolute control of the corporations to which such exclusive charters had been 
 granted. During the time which elapsed between Ihe decision above named and 
 the change of public policy, which, either by constitutional or legislative enactment, 
 made charters subject to alteration, amendment or repeal, many such monopolies 
 were chartered. Where such monopolies, affecting inter-State commerce, were 
 coupled with the payment of revenue to the State as compensation for the grant, as 
 in transit duties, tonnage, taxes, (fee, the Federal courts declared them unconstitu- 
 tional, as interfering with the power to regulate commerce dormant in Congress, and 
 which, after a protracted struggle so far as railways and bridges were concerned, has 
 been exercised by Congress. U. S. Rev. Stat. § 52B8, p. 1022 ; see Waison v. Black- 
 bird Creek Co. 2 Pet. 246; Penn. v. Wheeling Bridge Co. 13 How. 518; s. c. 18 How. 
 421 ; GUman v. Phila. 3 Wall. 713 ; Crandall v. Nevada, 6 Wall. 36 ; Readifig R. R. 
 V. Penn. 15 Wall. 284; Minot v. Phila. R. R. 18 Wall. 206 ; a. o. 2 Abb. U. S. 323 ; 
 State ti. Bait. & Ohio R. R. Co. 34 Md. 344; s. c. 21 Wall. 456. But it was only by 
 the application of the doctrine of eminent domain to these monopoly contracts, that 
 the judiciary of the several States were able to free their citizens from the burden 
 which, in some cases, careless or corrupt legislation, and in others a narrow-minded 
 and selfish policy, had imposed upon them. See Enfield Bridge Case and other cases 
 cited ante. 
 
 The right of eminent domain, extending over all the property in the State, is 
 limited simply by the boundaries of the sovereignty. It is not affected by the char- 
 acter of the owner, whether an individual, a municipal corporation, a private corpo- 
 ration, or even the Federal government. Property condemned by a corporation is 
 held by no higher or better right than property acquired by purchase, and is no 
 , more free from the subsequent operation of the like right of eminent domain. U. S. 
 ■0. Bridge Co. 6 McLean, 517 ; Barber v. Andover, 8 N. H. 398 ; Newburyport T. Co. 
 V. Eastern R. R. Co. 23 Pick. 326 ; Boston Water Power Co. v. B. <fe W. R. R. Co. lb. 
 360 ; Inhab. of Springfield v. Conn. R. R. Co. 4 Cush. 63 ; Commonwealth v. Erie & 
 N. B-. R. R. Co. 27 Penn. 339 ; Bait. <fe Havre de Grace T. Co. v. Union R. R. Co. 35 
 
THE USER OF SPECIAL POWERS. 377 
 
 company authorized by the Legislature to take compulsorily the 
 
 Md. 224 ; C, R. I. <fc P. R. R. Co. v. Lake, 71 Ul. 333 ; Met. City Ry. Co. v. Chicago, 
 Ac. Ry. Co. 87 lU. 817. Where lands are reserved or held by the general govern- 
 ment for specified and national purposes, it may be admitted that a State cannot con- 
 struct an easement which shall, in any degree, affect such purposes injuriously. No 
 one can question the right of the Federal government to select sites for its forts, ar- 
 senals, and other public buildings. But over that land which the Federal govern- 
 ment holds only as general proprietor, the right of eminent domain may be ex- 
 ercised, as over the property of individuals. U. S. v. R. R. Bridge Co. 6 McLean, 
 B17. 
 
 But to enable a corporation to take property which has already been devoted to 
 another public use, authority must be shown, either express or based on necessary 
 implication. Thus, in In re Boston & Albany R. R. Co. 68 N. T. 574, it is said, that 
 this iyuthority " must be expressly conferred ; that is, in direct terms or by necessary 
 implication ; and the implication does not arise, if the powers expressly conferred 
 can, by reasonable intendment, be exercised without the appropriation of property 
 already actually held and used for another public use." So, too, in Inhab. of Spring- 
 field V. Conn. R. R. R. Go. 4 Cush. 68, the Court say: " But when it is the intention 
 of the Legislature to grant a power to take land already appropriated to another 
 public use, such intention must be shown by express words or by necessary implica- 
 tion. There may be such a necessary implication. Every grant of power is intended 
 to be efficacious and beneficial, and to accomplish its declared object; and carries 
 with it such incidental powers as are requisite to its exercise." Instances are given 
 in which authority to occupy a turnpike or highway would be necessarily implied, as 
 in ease of authority to make a railroad through a narrow gorge already occupied by 
 a turnpike. But an act df the Legislature, authorizing the construction of a railroad 
 between certain termini, does not prima facie confer power to lay out the road on 
 or along an existing public highway. In State v, Montclair R. R. Co. 85 N. J. Law, 
 828, on the subject of taking the highway for railroad purposes, the Court say: "The 
 presumption is in favor of the public and against the necessity of taking the highway 
 longitudinally by a private corporation, although for a public purpose, such as a 
 railroad. To authorize it, the Legislature should either so indicate it in the language 
 of the act, by express words or necessary construction, or it should result as a neces- 
 sity, in order to accomplish the object intended in the grant of the franchises ; " and 
 the presumption is still stronger against the necessity of taking a reservoir belonging 
 to the public. See, also, Troy v. Cheshire R. R. Co. 23 N. H. 88 ; Northern R. R. 
 Co. V. Concord & Claremont R. R. Co. 27 N. H. 182; Boston & Worcester R. R. Co. 
 V. Old Colony R. R. Co. 12 Cush. 605 ; Lowell & Lawrence R. R. Co. v. Boston & L. 
 R. R. Co. 7 Gray, 27; Eastern R. R. Co. o. Boston & Me. R. R. Co. Ill Mass. 125; 
 Boston & Me. R. R. Co. o. Lowell & Lawrence R. R. Co. 124 Mass. 368 ; N. Y. <fe 
 Hous. K. R. Co. V. Boston, H. & E. R. R. Co. 36 Conn. 196; Brooklyn Cent. R. R. 
 Co. a. Brooklyn City R. R. Co. 33 Barb. 420; N. Y. <fe Harlem R. R. Co. </. Forty- 
 second street R. R. Co. 50 Barb. 809 ; In re Central R. R. Co. 1 N. Y. Sup. Ct. (T. <fe 
 C.) 419; N. Y. C, R. R. Co. v. Metropolitan Gas-Light Co. 5 Hun, 201 ; s. c. 63 N. Y. 
 826 ; Matter of City of Buffalo, 68 N. Y. 167 ; Starr v. Cam. & Atl. R. R. Co. 24 N. 
 J. L. 592; Morris & Essex R. R. Co. v. Newark, 10 N. J. Eq. 352 ; Same v. Central 
 B. R. Co. 31 N. J. L. 206 ; Inhab. of Greenwich v. Easton & Amboy R. R. Co. 24 N. 
 J. Eq. 217 ; s. o. 25 N. J. Eq. 565 ; N. J. Southern R. R. Co. v. Com'rs, 89 N. J* L. 
 
378 SPECIAL POWERS OF CORPORATIONS. 
 
 iand of another for a definite purpose, will, if attempting to 
 
 28; Cleveland <fe P. K. R. Co. v. Speer, 56 Penn. St. 325; Little Miami, <fec. R. R. Co. 
 It. Dajton, 23 Ohio St. 510 ; Newcastle <fe Rich. R. R. Co. v. Peru <fe Ind. R. R. Co. 3 
 Ind. 464. The general railroad law of California has not given to any company the 
 right to condemn or use any lands owned or previously located and appropriated by 
 another railroad company, except where it may be necessary for one road to cross 
 another. Contra Costa R. R. Co. v. Moss, 23 Cal. 324. The law in Oregon is similar. 
 See Oregon Cascade Co. w.Baily, 3 Oreg. 164. One railroad company may acquire, 
 by condemnation, the right to use the lands of another company, which the latter 
 company holds by lease, if it appear that such lands are not eligible or necessary for 
 any purpose of the latter company, but are indispensable to the former ; and espec- 
 ially, if it appear that the latter company had acquired a lease of the lands, to ob- 
 struct the former company in the enjoyment of its franchises. Peoria, P. & J. R. R. 
 Co. ,/. Peoria & S. R. R. Co. 66 111. 1'74. 
 
 VII. This power of condemnation of private property for public use is not to be 
 confounded with the power of taxation ; see Oilman v. City of Sheboygan, 2 Black, 
 510; People v. Mayor of Brooklyn, 4 N. Y. 419; Lichfield v. Vernon, 41 N. T. 123; 
 nor with what is called " the police power ; '' Com. o. Alger, 7 Cush. 84 ; Thorpe v. 
 Rut. & Bur. R. R. Co. 27 Vt. 140 ; nor with the power asserted, to regulate the use 
 of corporate rights, which has given rise to one of the most interesting political and 
 judicial discussions of modern times, known as the "Granger" question, as to which 
 see ante, p. 96, note. 
 
 VIII. The protection of private property from condemnation is guaranteed by the 
 Federal constitution, which, however, is a limitation on the power of the Federal gov- 
 ernment, and was not intended as a restraint on the State!%overnments ; Barron v, 
 Baltimore, 1 Pet. 243 ; Withers v. Buckley, 20 How. 84 ; Pumpelly v. Green Bay Co. 
 13 Wall. 166 ; and by most, if not all, of the State constitutions. In some of the 
 latter it is provided that just compensation must be made before the property is taken, 
 and this difference in the language of the State constitutions should be borne in mind 
 in comparing the decisions of the courts of the respective States on the subj'ect under 
 consideration. 
 
 IX. There is a class of cases which naturally suggests itself in this connection, 
 though not properly coming within the subject of eminent domain. They arise when 
 the Legislature attempts to transfer that which is public property from one public use 
 to another. When property is put into the hands of a municipal corporation, it is 
 not out of the control of the State ; but the corporation occupies the position of 
 trustee for the public, amenable to the orders of the cestui que trust, as expressed by 
 the Legislature ; and there is no relation of contract, as in the case of private corpo- 
 rations. E. Hartford v. Hartford Bridge Co. 10 How. 511. The property is public 
 property, and, therefore, no exercise of eminent domain is needed to transfer it to a 
 private corporation, as a railroad company. The public gives away its own, and no 
 compensation is necessary. It is accordingly held, in People v. Kerr, 27 N. Y. 188, 
 that the fee of streets being acquired, by the right of eminent domain, by the city of 
 New York, and being held in trust for the public, such property is under the unqual- 
 ified control of the Legislature, and the appropriation by it to the use of a horse 
 railroad is not a taking of private property, so as to require compensation to the city 
 to fender it constitutional. See, also. In re Boston <fe Albany R. K. Co. 53 N. Y. 574 ; 
 
THE USER OF SPECIAL POWERS. 379 
 
 take it for any other object, be restrained by tbe injunction of the 
 Court of Chancery from so doing." ^ (a) This principle is, with 
 the qualification mentioned below, as to the license or discretion 
 allowed to public corporations, strictly enforced. Whatever be the 
 purposes for which special powers and authorities are given, to 
 the attainment of these purposes alone can they be devoted, no 
 deviation therefrom being permitted, however slight and however 
 much the corporation would thereby be benefited. (5) 
 
 ' L. R. 1 H. Lds. 43 : compare Cross- man v. Bristol and South Wales Railway 
 
 Company, 1 H. <fe M. 5S1. 
 
 Phila. & Trenton R. R. Co. 6 Whart. 43 ; City of Clinton v. Cedar Rapids & Mo. R . 
 E. R. Co. 24 Iowa, 456. 
 
 Similarly, land belonging to the State, and devoted to the use of an asylum under 
 State control, may be taken under authority to take public land for a railroad, with- 
 out compensation. Ind. Cent. R. R. Co. v. State, 3 Ind. 421 ; see, also, Penn. R. E. 
 Co. V. N. Y. (fee. E. R. Co. 23 N. J. Eq. 157 ; Sugar Refining Co. v. Jersey City, 26 
 N. J. Eq. 247. 
 
 In Stevens v. Paterson ifc Newark R. E. Co. 34 N. J. L. 532, the corporation had 
 authority " to construct and run their railroad along the Passaic river," and claimed 
 that this gave them the right to lay their road along the river below high water, as 
 such lands belonged to the State. Depue, J., whose decision against the company 
 was affirmed on appeal, held, that " to give to a legislative grant the effect of a con- 
 veyance to private uses of land, the proprietorship of which is in the State, it must 
 clearly appear that the Legislature intended to make a grant of that character and 
 description, or that the use of the public property is necessary to the enjoyment of 
 the franchises which are granted. In this case no consideration was received by the 
 State for the alienation of public domain, nor does there appear to have been any 
 intent by the Legislature to aid the defendants in their enterprise, by donating pub- 
 lic property to their use. The course of legislation for the last few years shows the 
 legislative appreciation of the great value of the lands under water which belong to 
 the State. An intent to alienate any portion of them without any consideration will 
 not, in the absence of a formal grant, in express words, be implied, except upon the 
 clearest necessity to effectuate the purpose of the Legislature in investing the grantee 
 with public franchises." Many cases are cited as supporting this position. But see 
 Penn. K. R. Co. v. N. T. & Long Branch E. R. Co. 23 N. J. Eq. 157. See, as to the 
 use of highways for railroads, note to page 99, cmie. See, also, Savannah, Albany 
 <fc Gulf R. R. Co. V. Shiels, 33 Ga. 601 ; Ingraham v. Chic, D. & M. E. R. Co. 34 
 Iowa, 249 ; Lexington & Ohio R. R. Co. v. Applegate, 8 Dana, 289. 
 
 On the general subject of the right of eminent domain, and its exercise, consult 
 Sedgwick on Stat. L. 498; Cooley on Const. Lim. ch. xv; Mills on Eminent Do- 
 main; Dillon on Mun. Corp. ch. xvi; Redfield on Railways, ch. x. As to the meas- 
 ure of damages, and principles upon which they are assessed, see Sedgwick on 
 Damages, 6th ed., p. 714. 
 
 (a) As to using land for a purpose other than that for which it was taken, see note 
 to page 99 ; also. Proprietors of Locks & Canals v. N. & L. E. R. Co. 104 Mass. 1 ; 
 Lance's App. 55 Penn. St. 16. 
 
 (6) The authority of incorporated companies to take land for their works, is 
 
380 SPECIAL POWERS OF CORPORATIONS. 
 
 In Bentinck v. Norfolk Estuary Company ^ the defendants had 
 power to make and maintain certain cuts and works, with author- 
 ity to take and use such of certain lands " as might be necessary 
 or proper for them to enter for the purpose of executing these 
 works." Within the limits of their line of deviation they pro- 
 ceeded to take lands for the purpose, not of forming their works, 
 but of digging materials for the same. It was held by Page- 
 Wood, V.-C, that they had no authority to do so ; and this judg- 
 ment on appeal was aflBrmed, and, therefore, an injunction granted 
 by the Vice-Chancellor against them was made perpetual. It 
 should be noticed that the act constituting the defendants, incor- 
 porated the Companies Clauses and the Land Clauses Acts, but 
 not the Hallways Clauses Act, which does contain provisions for 
 the entering upon lands merely for the purpose of obtaining ma- 
 terials, (a) 
 
 ' 8 De G. M. <fe G. 714; 26 L. J. (Ch.) pany, 34 L. J. (Ch.) 540 ; Edinburgh and 
 
 404 ; Webb v. Manchester, &c. Railway Glasgow Railway Company v. Campbell, 
 
 Company, 4 My. <fe C. 116; Cother v. 9 L. T. (N. S.) H. Lds. 157; See Evers- 
 
 Midland Railway Company, 2 Ph. 469 ; field v. Mid-Sussex Railway Company, S 
 
 17 L. J. (Ch.) 235 ; Flower v. London, De G. <fe J. 286 ; 28 L. J. (Ch.) 107. 
 Brighton and South Coast Railway Com- 
 
 speeial, limited and conditional, and is not to be extended bj' inference or implica- 
 tion. Bonaparte v. C. <fe A. R. R. Co. Bald. 205 ; Ren. <fe S. R. R. Co. a. Davis, 43 
 N. Y. 137; N. T. &c. R. R. Co. v. Kipp, 46 N. Y. 546 ; Browning v. Cam. & Wood. 
 R. R. Co. 3 Green's Ch. 47 ; Stevens v. Erie R. R. Co. "21 N. J. Eq. 259 ; Cleveland 
 <fe Pitts. R. R. Co. II. Spear, 56 Penn. St. 325 ; Hannibal Bridge Co. d. Schaubacher, 
 49 Mo. 555. 
 
 Grants of franchises from the State are construed strictly and most strongly in 
 favor of the public against the grantee, subject, however, to the qualification that the 
 grant must receive a reasonable construction, so as not to defeat the intention of the 
 Legislature. Especially is this strictness of construction adopted in cases where the 
 right of eminent domain is delegated. The power granted must also be strictly pur- 
 sued. See Proprietors of Locks v. Nashua & Lowell R. E. Co. 104 Mass. 1 ; N. Y. <fe 
 H. R. E. Co. V. Kipp, 46 N. Y. 546 ; Van WicHe v. R. R. Co. 14 N. J. L. 162 ; 
 Doughty V. S. <fe E. R. R. Co. 21 N. J. L. 442; State v. Jersey City, 25 N. J. L. 309 ; 
 Zack». Penn. R. R. Co. 25 Peno. St. 394; Currier v. M. & C. R. R. Co. 11 Ohio St. 
 228 ; Lackland v. Northern Mo. R. R. Co. 31 Mo. 180; Gilmer v. Lime Point, 19 Cal. 
 47. 
 
 (a) The power to construct public improvements authorizes the taking of lands 
 for the necessary buildings and other appendages, such as workshops, depots, turn- 
 outs. See Eldridge v. Smith, 34 Vt. 484 ; N. Y. <fe H. R. R. Co. v. Kipp, 46 N. Y. 
 546 ; N. Y. Cent. R. R. Co. ». Met. GasLight Co. 63 N. Y. 326 ; State o. Mansfield, 
 23 N. J. L. 510 ; Phila., Wil. <fe Bait. R. R. Co. v. Williams, 54 Penn. St. 103 ; Cum- 
 berland Valley R. R. v. McLanahan, 59 Penn. St. 23 ; Lance's Appeal, 55 Penn. St. 
 
THE USER OF SPECIAL POWERS. 381 
 
 There have been many subsequent decisions on this subject ; 
 the latest is that of Lord Carington v. "Wycombe Kailway Com- 
 pany.^ The defendants' company gave to land-owners notice to 
 treat in respect of a close of land containing 1 acre 27 perches, 
 part of the 0. estate. The price was settled between the parties 
 and the land conveyed to the company by a deed not in the stat- 
 utory form, including the mines and all the estate of the vendors. 
 The company used about three perches of the land for their rail- 
 way ; and, about two years after their purchase, they, in pursu- 
 ance of a contract which, before the notice to treat, they had 
 made with W. Terry, to convey to him all such part of the 0. es- 
 tate as lay between his land and the railway, conveyed the remain- 
 ing 1 acre 24 perches to him by a deed which recited that it was 
 superfluous land, (a) The land was situate within the limits of a 
 borough, but was at some distance from the mass of houses form- 
 ing the town. There were two cottages upon it. The Lords 
 Justices held, that apart from other considerations, the vendors 
 would have been entitled to relief, on the ground that the com- 
 pany had taken the land, not for the purposes of their act, but in 
 order to enable them to fulfill their contract with Terry. Cairns, 
 L. J., in his judgment, said : " There is no controversy as to the 
 facts ; and it appears to me that a more distinct and more openly 
 avowed case of the use of parliamentary powers for purposes not 
 intended by parliament, never has been presented to the court ; 
 and this is exactly one of those cases which was described by Lord 
 Cranworth in Galloway v. Mayor & Commonalty of LonSon,^ 
 
 ' L. R. 2 Eq. 826 ; L. R. 3 Ch. S11 ; » L. R. 1 H. Lds. 34, 43. 
 
 Beauchamp v. Great Western Railway 
 Company, L. R. 3 Ch. 745. 
 
 16; Hamilton v. Annapolis & E. R. R. R. Co. 1 Md. 563 ; New Orleans, &c. R. R. 
 Co. V. N. 0. 1 La. Ann. 128; Knight v. Carrollton R. R. Co. 9 La. Ann. 384; Nash- 
 ville Bank v. Cowardin, 11 Humph. 348; Protzman v. Indianapolis, &a. R. R. Co. 9 
 Ind. 467; Giesy v. Cin. <fec. R. R. Co. 4 Ohio St. 308; Chicago R. R. v. Wilson, 17 
 111. 123 f Low V. Galena R. R. 18 111. 324; Lackland v. N. Mo. R. R. Co. 31 Mo. 180; 
 Hannibal R. R. v. Muder, 49 Mo. 165; Strohecker v. Ala. R. R. Co. 42 Ga. 509. 
 
 (a) No more property can be taken compulsorily than is necessary to accomplish 
 the public purpose contemplated. Stacey v. Vt. Cent. R. R. Co. 27 Vt. 39 ; Hill v. 
 Western Vt. R. R. Co. 32 Vt. 68 ; Rens. <fc Sar. R. R. Co. v. Davis, 43 N. Y. 137 ; 
 Lance's App. S5 Penn. St. 16 ; Giesy v. Cin. (fee. R. R. Co. 4 Ohio St. 308 ; Miami 
 Coal Co. V. Wigton, 19 Ohio St. 560; Oregon Cascade Co. ». Bailey, 3 Oreg. 164. 
 
382 SPECIAL POWERS OF CORPORATIONS. 
 
 where his lordship said : ' The principle is this, that when persons 
 embarking in great undertakings, for the accomplishment of which 
 those engaged in them have received authority from the Legisla- 
 ture to take, compulsorily, the lands of others, making to the lat- 
 ter proper compensation, the persons so authorized cannot be 
 allowed to exercise the powers conferred on them for any collat- 
 eral object.' The land here, in my opinion, was taken, and is 
 avowed to have been taken, for that which was an object entirely 
 collateral, namely, to give to Mr. Terry that which he had bar- 
 gained for as part of the consideration for the sale of the £20,000 
 stock." (a) 
 
 Another series of cases are those which have arisen in connec- 
 tion with the surplus lands of privileged corporations. These 
 lands, houses, &c., in the first place, can be taken only ithonajide 
 required for the purposes of the corporation ; and, secondly, if in 
 the result it turns out that they are not required, then — in the 
 absence of special provisions to the contrary — very seldom, and if 
 the corporation be within the Lands Clauses Consolidation Acts 
 never, can such lands, &c., be retained by the corporation. 
 
 Apart from other considerations, and apart from collateral cir- 
 cumstances which may, of themselves, create a liability which 
 would not otherwise arise. 
 
 II. A corporation will not he liable merely iecause in the care- 
 ful and bona fide exercise of its powers it has produced 
 , damage to a neighbor. 
 
 Corporations are endued with compulsory powers and other 
 forms of privileges for their own benefit and in the expectation 
 that they will employ them. In the legitimate employment 
 thereof they are protected, and consequently, whatever the loss 
 they may thereby inflict upon other citizens, they will themselves 
 be exempt from liability. " l^o action at common law lies on be- 
 half of a man who sustains a private injury by the execution of 
 
 (o) In Aldrich v. Drory, 8 R. I. 654, it is held that a railroad company cannot 
 sdl the surplus earth, stone or other materials found upon condemned land, though 
 it may we them upon the property, and carry them from one point to another of the 
 road, as required for its purposes. See Blake v. Rich, 34 N. H. 382 ; Chapin v. Sul- 
 livan R. R. 39 N. H. 564 ; Henry v. Dub. <fe Pac. R. 2 Iowa, 288 ; Mills on Em. Dom. 
 §210. 
 
THE USER OF SPECIAL POWERS. 383 
 
 powers given by an act of parliament, those powers being exer- 
 cised with judgment and caution." ^ 
 
 From this it necessarily follows that the right of action, which 
 the party damnified would ordinarily have, is gone. Usually the 
 Legislature provides, in the constating instruments, another sup- 
 plemental means and procedure for redress, but if this has been 
 omitted, the corporation may exercise its powers without making 
 compensation for any loss arising therefrom.' 
 
 " If the thing done is within the statute, it is clear that no 
 compensation can be afforded for any damages sustained hereby, 
 except so far as the statute itself has provided it, and this is clear 
 on the legal presumption that the act creating the damage, being 
 within the statute, must be a lawful act." ' 
 
 " Where authority is given by the Legislature to do an act, 
 parties injured by the doing of it have no legal remedy, but 
 should appeal to the Legislature." * {a) 
 
 ' Per Lord Truro, C, London & North- quenoes of its being done in the ordinary 
 
 Western Ey. Co. v. Bradley, 3 Mac. & G. way. If it is not so done, it is a question 
 
 336, 341. See per Pollock, C. B., in of negligence." 
 
 Whitehouse v. Birmingham Canal Co. 27 ' Brand v. Hammersmith Ry. Co. L. 
 
 L. J. Ex. 25, 27. "It is a general prin- R. 4 H. L. 171. 
 
 ciple that when something is authorized ' Duncan v. Findlater, 6 CI. & F. 907. 
 
 to be done by an act of parliament, no * Pilgrim a. Southampton & Dorches- 
 
 aotiou can be maintained for the eonse- ter Ry. Co. 7 C. B. 226. 
 
 (a) As to liability, where one acts without fault under the sanction of legislative 
 authority, see note to page 74, and Eaton v. B. C. & M. R. R. Co. 51 N. H. 506, 
 where the cases are also collected and reviewed on the power of the Legislature to 
 authorize the erection of works which inflict " ponsequential damage " without mak- 
 ing provision for compensation. In Pumpelly v. Green Bay Company, 13 Wall. 166, 
 which was a Wisconsin case, and involved the construction of the constitution of 
 that State, Mr. Justice Miller observes : " The argument of the defendant is, that 
 there is no taking of the land within the meaning of the constitutional provision, and 
 that the damage is a consequential result of such use of a navigable stream as the 
 government had a right to, for the improvement of its navigation. It would be a 
 very curious and unsatisfactory result, if in construing a provision of constitutional 
 law, always understood to have been adopted for protection and security to the 
 rights of the individual, as against the government, and which has received the com- 
 mendation of jurists, statesmen and commentators, as placing the just principles of 
 the common law on that subject beyond the power of ordinary legislation to change 
 or control them, it shall be held, that if the government refrains from the absolute 
 conversion of real property to the uses of the public, it can destroy its value entirely, 
 can inflict irreparable and permanent injury to any extent, can, in effect, subject it 
 to total destruction, without making any compensation, because, in the narrowest 
 sense of that word, it is not taken, for the public use. Such a construction would 
 
384: SPECIAL POWERS OF CORPORATIONS. 
 
 In all cases of the user of compulsory powers and privileges, 
 in order that a corporation may be justified in the proceedings 
 which it is about, and free from liability on account of the same, 
 four requisites must concur in the user : It must be, 1. within the 
 authority expressed or implied possessed by the corporation ; 2. 
 with due regard to formalities, whenever essential formalities have 
 been imposed ; 3. without negligence; 4. with iona fides. 
 
 The absence of any one of these four requisites will render 
 the proceeding in question ultra vires in the widest sense — ^in the 
 sense that any person, member of the corporation or not, affected 
 thereby, may take legal measures to restrain the same, and that 
 the concurrence and approval of each and every member cannot 
 legalize the proceeding, so as to deprive the injured party of his 
 redress. 
 
 A corporation is not liable any more than an ordinary indi-_ 
 
 peryert the constitutional provision into a restriction upon the rights of the citizen, 
 as those rights stood at the common law, instead of the gorernment, and make it an 
 authority for invasion of private right under the pretext of the public good, which 
 had no warrant in the laws or practices of our ancestors. We are not unaware of 
 the numerous cases in the State courts in which the doctrine has been successfully 
 invoked, that for a consequential injury to the property of the individual, arising 
 from the prosecution of improvements of roads, streets, rivers and other highways, 
 for the public good, there is no redress ; and we do not deny that the principle is a 
 sound one, in its proper application, to many injuries to property so originating. 
 And when, in the exercise of our duties here, we shall be called upon to construe 
 other State constitutions, we shall not be unmindful of the weight due to the deci- 
 sions of the courts of those States. But we are of opinion that the decisions referred 
 to have gone to the uttermost limit of sound judicial construction in faVor of this 
 principle, and in some cases beyond it, and that it remains true, that where real 
 estate is actually invaded by superinduced additions of water, earth, sand, or other 
 material, or by having any artificial structure placed on it, so as to effectually de- 
 stroy or impair its usefulness, it is a taking, within the meaning of the Constitution, 
 and that this proposition is not in conflict with the weight of judicial authority in 
 this country, and certainly not with sound principle. Beyond this we do not go, 
 and this case calls us to go no further." 
 
 As to consequential damages, see cases cited by counsel in last case, and Sedg- 
 wick on Dam^es, 6th ed. p. 125. See, also, the full consideration of the authorities 
 in Mills on Eminent Domain, ch. xvii; Harding v. Stamford Water Co. 41 Conn. S? ; 
 People D. Kerr, 27 N. T. 188; Coster v. Mayor, 43 N. T. 399; Kellinger v. Forty- 
 second St. (fee. R. R. Co. 60 N. Y. 206; Fearing v, Irwin, 55 N. Y. 486; Trenton 
 Water Power Co. v. Raff, 36 N. J. L. 335 ; Carpenter v. Easton, Ac. R. R. Co. 26 TS. 
 J. Eq. 168; Att,-Gen. v. N. Y. & L. B. R. R. Co. 24 N. J. Eq. 49; Perry v. New Or- 
 leans, (fee. R. R. Co. 65 Ala. 418; Peoria, <fec. Ry. Co. v. Schertz, 84 111. 135 ; Frith 
 V. Dubuque, <fec. R. R. Co. 45 Iowa, 406 ; Barr v. Oskaloosa, 46 Iowa, 275 ; Davis v. 
 C. <fe N. W. R. Co. 46 Iowa, 389 ; Kucheman v. C. C. & D. Ry. Co. 46 Iowa, 366. 
 
THE USER OF SPECIAL POWERS. 385 
 
 vidual would be, so long as it keeps within its.powers and uses 
 them for the proper purposes.'' 
 
 "When these powers and purposes are expressly named and set 
 forth, little diflSculty can arise in determining the limits or degree 
 of the respective rights and responsibilities of the corporation and 
 of those with whom it comes into contact. But it is very difEerent 
 with regard to objects and purposes which are implied or contem- 
 plated in the constating instruments. 
 
 Some of the most difficult questions arise as to the means and 
 acts which corporations have, by implication, authority to employ 
 and to do in the carrying out of their compulsory powers. These 
 means and acts wiU include the usual and customary means and 
 acts. But more than this : they will include aU such as can be 
 deemed to have been " contemplated " by the Legislature or other 
 supreme authority at the inception of the corporation. And it is 
 often a matter of extreme doubt as to what was so " contemplated 
 and authorized." 
 
 In Rex V. Pease,^ a railway company had been incorporated 
 and empowered to use locomotive engines upon the railway. The 
 railway was made, in accordance with the plans, parallel and adja- 
 cent to an ancient highway, and in some places came within five 
 yards of it. It did not appear whether or not the line could have 
 been made in those instances to pass at a greater distance. The 
 locomotive engines on the railway frightened horses of persons 
 using the highway as a carriage road. On indictment against the 
 company for a nuisance, it was held that this interference with 
 the rights of the public must be taken to have been contemplated 
 and sanctioned by the Legislature, since the words of the statute 
 authorizing the use of the engines were unqualified, and the public 
 benefit derived froni the railway (whether it would have excused 
 the alleged nuisance at common law or not) showed at least that 
 there was nothing unreasonable in a clause of an act of parliament 
 giving such unqualified authority, {a) 
 
 ' See Ricket v. Metropolitan Ry. Co. Bristol, L. R. 2 0. P. 322 ; Reg. -o. 
 L. R. 2 H. L. 175 ; Hall v. Mayor, <fec. of Vaughan, L. R. 4 Q. B. 190. 
 
 M B. 4 Ad. SO. 
 
 (a) See The Elevated Railroad Cases, 8 Abb. Kew Cases, 301-609, especially 
 Story V. N. Y. Elevated R. R. Co. p. 478, and Sixth Ave. R. R. Co. v. Gilbert Ele- 
 vated R. Co. p. 372, and oases cited in opinions and briefs, 
 25 
 
386 SPECIAL POWERS OF CORPORATIONS. 
 
 In Caledonian, Ey. Co. v. Ogilvy,^ similar questions arose. 
 The appellant company were authorized to lay down a railway 
 across a public thoroughfare, and to place gates across the high- 
 road to prevent persons from passing along the road at the time 
 when it would be dangerous, by reason of trains being near at 
 hand ; it was held that a person who had been delayed and im- 
 peded in his journey along the highroad by reason of the neces- 
 sary closing of the gates, had no right of action against the railway 
 company for the injury he had sustained. It was also held that 
 the owner of an estate had not any right of action against the 
 company for laying down their railway across a turnpike road 
 close to the entrance of his estate, by means whereof he was im- 
 peded and. hindered in going from and returning to his house, and 
 his horses were frightened and became ungovernable from the 
 noise of the trains. 
 
 In Hammersmith Ry. Co. v. Brand,' it was decided, first, that 
 the Lands Clauses Consolidation Acts and the Railways Clauses 
 Consolidation Act do not contain any provisions under which a 
 person whose land has not been taken for the purposes of a rail- 
 way, can recover statutory compensation from the railway com- 
 pany in respect of damage or annoyance arising from vibration 
 occasioned (without negligence) by the passing of trains after the 
 railway is brought into use, even though the value of the property 
 has been actually depreciated thereby; and, secondly, that the 
 right of action for such damage is taken away. 
 
 Keg. V. Bradford Navigation ' is a decision where the defend- 
 ants were rendered liable for doing acts admitted to have been 
 " contemplated " by the Legislature. They were a canal company, 
 empowered by an act of parliament to take the water of certain 
 brooks, and use it for the purposes of their canal. The water in 
 one of the brooks at the time the act was passed was pure, but it 
 afterwards became polluted by drains, &c., before it reached the 
 canal, and it was then penned back in the canal, and became a 
 public nuisance. The Court of Queen's Bench decided that the 
 company were liable to be indicted for the nuisance, on the 
 ground that there was nothing in the act either compelling them 
 to take the water, or expressly authorizing them to use it so as to 
 create a nuisance. Cockburn, C. J., referred to Eex v. Pease,* 
 
 1 2 Macq. Sc. App. 229. a 34 L. J. (Q. B.) 191. 
 
 « L. R. 4 H. L. 181. * Vbi supra. 
 
THE USER OF SPECIAL POWERS 38Y 
 
 and said : " But that is very distinguishable from the present case. 
 On the facts here, it must be taken that the thing actually done 
 was never in the contemplation of the Legislature. All parties, 
 no doubt, contemplated that it should be lawful for the company 
 or their lessees to take the water of certain becks, and accumulate 
 it in their reservoirs or locks for the purposes of their canal, but 
 it was contemplated that the water should be taken in its then 
 comparative state of purity. And I am clearly of opinion that 
 when statutory powers are conferred under circumstances in which 
 the powers may be exercised without in themselves causing any 
 nuisance, and new and unforeseen circumstances render the exer- 
 cise of the powers impossible, without a breach of the law, those 
 powers cannot be exercised without rendering the parties liable." 
 
 The simple result of Eex v. Pease and this case is, that the 
 Legislature " contemplated," though it did not expressly provide 
 for, exactly similar circumstances in exactly opposite ways — in the 
 former case relieving, and in the latter not relie\'ing the company 
 from liability ^r nuisances of a very similar kind. 
 
 III. Corporations may not go heyond or aside, or otherwise em- 
 ploy their ^privileges in order to ienefit or injure thi/rd pa/r- 
 ties, or even to henefit themselves, {a) 
 
 In Dodd V. Salisbury & Teovil Ky, Co.,^ the defendants were 
 authorized to change the inclination of a road, which was within 
 their limits of deviation, so as to carry it over their line. After- 
 wards they proposed to alter the course of the road according to a 
 new plan, which rendered it necessary to pull down the plaintiff 's 
 house, which likewise stood within the limits of deviation. Notice 
 of the intention to take the house having been served upon the 
 plaintiff, he filed his bill to restrain the defendants, alleging that 
 the new road was not reaUy required for the purposes of the un- 
 dertaking, but was intended only as an accommodation to a large 
 landholder in the neighborhood. Stuart, V.-O., granted the in- 
 junction prayed for, and on appeal the Lords Justices declined to 
 
 ' 33 L. T. 254, 311, following Evers- 286 ; 28 L. J. (CSi.) 107 ; see Great West- 
 field V. Mid-Sussex Ry. Co. 3 De G. <fe J. em Ry. Co. v. May, L. R. 1 H. L. 283. 
 
 (a) Union Bridge Co. v. Troy, <tc. K. R. Co. 1 Lans. 240 ; Rens. & Sar. R. R. Co. 
 ■u. Davis, 43 N. T. 137. 
 
388 SPECIAL POWERS OF CORPORATIONS. 
 
 ■discharge his order, because, although they considered that the 
 •corrupt bargain had not been established, they were nevertheless 
 of opinion that it was a question to be determined in a court of 
 law, whether the defendants actually needed, and if so, were en- 
 titled to take for the making of their railway, property situated so 
 far as the plaintiff's was from their line of railway. 
 
 The following is another illustration of this principle. An act 
 ior supplying with water the town and port of Cardiff and the 
 neighborhood, after reciting that the town of Cardiff and the 
 neighborhood were insufficiently supplied with water, incorporated 
 a company and gave it the usual powers, and enacted that the 
 limits of the act for the supply of water, should comprise the 
 whole of the town and port of Cardiff and the parishes and places 
 within and adjoining to such town. The company was proceeding 
 to lay down pipes which they alleged were necessary for the sup- 
 ply of Cardiff, but which they admitted they intended to use for 
 the purpose of carrying water beyond the limits of their powers. 
 At the suit of the board of health of Cardiff the cpurt restrained 
 the company from carrying out such contemplated arrangement.' 
 
 If the circumstances are at all doubtful, the corporation will 
 be compelled to adduce clear evidence that the proceedings they 
 are about to institute are requisite for their undertaking. It wiU, 
 for instance, not be sufficient to put in a vague statement or affi- 
 davit by their engineer or other such interested party, to the effect, 
 " that the lands in question are required or will be required for 
 the purposes of the act, or for the railway and works authorized 
 by the act."^(a) As to this Lord Hatherley, L. C, thus observed 
 
 > Mayor, &c. of Cardiff v. Cardiff Wa- 380 ; 34 L. J. (Ch.) 540. Compare Stock- 
 
 ter-works Co., 5 Jur. (N. S.) 953. ton and Darlington By. Co. v. Brown, 9 
 
 ^ If there is a distinct difference of H. L. 246 ; South Yorkshire, &o. Co. v. 
 
 opinion among engineers equally eminent, Great Northern Ey. Co. 3 De G., M. A G. 
 
 the court will hesitate to interfere with 676 ; 22 L. J. (Ch.) 161 ; and the other 
 
 the company's discretion. Moore ». Grand cases of this kind where the court has re- 
 
 Biver Nav. Co. 13 Grant. (Upper Can. Ch. fused to enforce agreements, although not 
 
 186'7) 660 ; Flower t. London, Brighton clearly shown to be ultra vires. 
 .-and South Coast Ry. Co. 2 Dr. & Sm. 
 
 (o) See Kens. & Sar. R. R. Co. v. Davis, 43 N. Y. 137; S. C. R. R. Co. v. Blake, 
 •9 Rich. L. 228, overruling on this point Ux parte S. C. R. R. Co. 2 Id. 434 ; Jefferson 
 & Pontchartrain R. R. Co. v. Hazeur, 1 La. Ann. 182. As to the meaning of the 
 ■word " necessary," in connection with special powers, see Inhab. of Greenwich v. 
 Easton & Amboy R. R. Co. 24 N. J. Eq. 217. No more of the title is divested, by 
 -the exercise of the right of eminent domain, than is necessary for the public use. 
 Mills on Em. Dom. § 49. 
 
THE USER OF SPECIAL POWERS. 389 
 
 in Kerap v. South-Eastem Rj. Co.* : " I ought to have noticed 
 one subject which was pressed in the argument, and which is of 
 considerable general importance, namely, how far we are or are 
 not bound by the engineer's evidence about lands being wanted 
 for the purpose of the railway * * * tut the company may 
 want two or three acres for the purpose of a goods station, and 
 the manager and engineer have sworn that the two or three acres 
 were taken with a prospective view of making a station for the 
 wants and necessities of the railway. I apprehend it is the duty 
 of the company, and quite within their province, if they think 
 there is a reasonable probability that such a station may be wanted, 
 to secure the land for that purpose, and not to wait unitil their 
 powers have expired. The company must calculate their wants 
 according to the intention and objects of their scheme, and of the 
 likelihood of a traflBc coming. Those wants must be supplied 
 within the limited time, and if their officers pledge their oaths 
 that this is done with a view to a traffic likely to come, I think 
 that is all the court is authorized to look to, and the court cannot 
 speculate as to whether or not it is too much or too little, always 
 subject to the jurisdiction of this court, in any case of manifest 
 fraud upon an agreement, or upon an act of parliament. As 
 "Vice-Chancellor Kindersley, in Flower v. London, Brighton and 
 South Coast Ry. Co.,' said : 'the court will not act upon the mere 
 oath of an engineer that he wants so much, and there must be 
 some appearance of probability before the court will act upon 
 it. I think that here the land may well be wanted for railway 
 purposes.' " 
 
 lY. Hestrictions as to mode or time must he carefully observed 
 to constitute a due exercise of privileges. 
 
 In the next place, compulsory powers and other privileges of 
 the nature now treated of, must be exercised not only for the pur- 
 poses intended, but also in the manner and time, if any limit is pre- 
 scribed. An open cutting may not be substituted in place of a 
 tunnel, nor a road with an inclination of 1 in 20, if the act of par- 
 liament says that the gradient is not to exceed 1 in 30.' A well- 
 known decision is that of Simpson v. South Staffordshire Water- 
 
 1 L. R. Y Oh. 364. South.Eaatern Railway Company, L. R. 
 
 ' 2 Dr. <fe Sm. 330; 11 Jur. (N. S.) 406. 3 Ch. 100. 
 ' Attorney-General v. Mid-Kent and 
 
390 SPECIAL POWERS OF CORPORATIONS. 
 
 works.^ Here, a water-works company were, by their special act, 
 authorized to make and maintain reservoirs, aqueducts, &c. The 
 works authorized, so far as they related to a particular field, which 
 was situated within marked limits of deviation, were described as 
 " an aqueduct constructed in tunnel or otherwise, as shown on the 
 original plans," which plans indicated no surface works upon the 
 field, but merely showed that it was intended to construct, at a 
 depth of at least forty feet under the same, an aqueduct in tunnel. 
 After the special act was passed, the company served the owners 
 of the field with a notice to treat for the purchase of it, with a 
 view of sinking shafts, in order to obtain an additional supply of 
 water, and also of erecting thereon permanent pumping engines' 
 for raising water from beneath its surface. Upon a bill filed by 
 the owners of the field against the company for an injunction to 
 restrain the company from proceeding to summon a jury to assess 
 the value of the field, and from using it for any other purpose 
 than the construction of an aqueduct, it was held, on appeal, that 
 the company were not authorized to take or use the field perma- 
 nently, for any other purpose than that indicated upon the de- 
 posited plans, (a) 
 
 ' 4 De G., J. <fe Sm. 679 ; 34 L. J. (Ch.) tice to that effect; and it was held that 
 380 ; Lamb v. North London Railway they were not precluded by their former 
 Company, L. R. 4 Ch. 522. With these notice from so doing. And Breynton v. 
 decisions may be compared Stamps v. L. & N. W. Ry. Co. 10 Beav. 238, where 
 Birmingham, <fec. Railway Company, 1 the deposited plans showed that the de- 
 Hare, 251; 17 L. J. (Ch.)431 ; where the fendants' line would pass a certain road 
 defendants, empowered to take certain on the level, and they were authorized to 
 land, had first given notice to the plaintiff make the railway " in the line and upon 
 of their intention to make a tunnel under the lands delineated," yet ttey were al- 
 his land, but finding this operation too lowed to carry their railway in a tunnel 
 difficult, had afterwards determined to under the said road, 
 make an open cutting, and had given no- 
 
 (a) A railroad company cannot, under the right of eminent domain, condemn a 
 right of way for the term of three years, to be used until the construction of the main 
 line is completed over another route. Currier v. Mar. & Cin. R. R. Co. 11 Ohio St. 
 228. As to taking land for temporary purposes, see Redfield on Railways, §§ 66, 
 67; Bonaparte v. Cam. & Am. R. R. Co. Bald. 205 ; Cushman v. Smith, 34 Me. 247; 
 Nichols V. Som. & Ken. R. R. Co. 43 Me. 366 ; Hazen v. Boston & Maine R. R. Co. 2 
 Gray, 574; Bait. <fe Susq. R. R. o. Compton, 2 Gill, 20; Fox v. W. Pac. R. R. Co. 31 
 Cal. 538. A railroad company is not confined, in taking laud, to immediate need. 
 See Lodge v. Phil. <fec. R. R. Co. 8 Phil. 345. But when private property is de- 
 manded by a corporation under the power of eminent domain, based upon an alleged 
 prospective increase of its business, which will require increased accommodations, it 
 should be established, beyond reasonable doubt, that such increase will occur. Opin- 
 ions on this subject, based upon conjecture and the execution of collateral enterprises 
 not yet undertaken, should have but little weight. Reus. <fe Sar. R. R. Co. </. Davis, 
 43 N. Y. 137. 
 
THE USER OF SPECIAL POWERS. 391 
 
 Att.-Gen. v. Mid-Kent Eailway Company and Sontheastern 
 Railway Company,^ is a similar decision. A local board of health, 
 &c., withdrew its opposition to a railway bill, upon the insertion 
 in the act of a clause providing that no bridge carrying a road 
 over the railway within their district s]jould have an approach 
 with a slope of more than one in thirty. The making a slope of 
 one in thirty required an encroachment on the land of a person 
 who obtained an injunction to prevent such encroachment, and 
 the company thereupon made a bridge with a slope of one in 
 twenty. On appeal the Lords Justices (reversing the decision of 
 Stuart, Y.-C), decided that the company must not have a bridge 
 with a slope of more than one in thirty, and that it was no answer 
 to say that this requisition could not be complied with without 
 stopping the railway. So in Att.-Gen. v. Toronto Street Ey. Co.,'' 
 where the rails of a street railway were fixed not so as to conform 
 , to the requirements of the statute, a decree was made for their 
 removal. 
 
 In these and similar cases, although the principles of law and 
 equity are clear, it is generally very diflScult to determine what 
 are the special powers and what the exact nature of those powers 
 possessed by corporations, {a) This question will have to be de- 
 cided by an examination of the clauses often expressed in the crab- 
 bed and obscure language of acts of parliament and the like, and it 
 need scarcely be said that judges of the highest eminence not un- 
 seldom differ widely in their interpretation of such instruments. 
 Thus where the defendants, who certainly had power to take the 
 plaintiff's land for the purpose of building thereon a market 
 house, were about to take it to erect on it a covered building in 
 addition to the market house, the Master of the Kolls restrained 
 them from taking it for this latter purpose, saying : " I am satis- 
 fied that, upon the construction of this act of parliament, it does 
 
 'L. R. 3 Oh. 100; Manchester, &e. Co, 32 L. J. (Oh.) 482 ; Raphael W.Thames 
 
 Ry. Co. V. Reg. 3 Q. B. 528 ; Clarke v. Valley Ry. Co. L. R. 2 Ch. U1. 
 
 Manchester, &c. Ry. Co. 1 J. & H. 631 ; ^ IB Grant. (TTpper Can. Ch. 1868), 
 
 Att.-Gen. v. Tewtesbury & Malvern Ry. 187. 
 
 (a) As to conflicting rights, where both corporations claim under like legislative 
 anthority, see In re Kerr, 42 Barb. 119; Waterbury v. R. R. Co. 54 Barb. 388; 
 Morris <fc Essex R. R. Co. „. Blair, 9 N. J. Eq. 635 ; Erie R. R. Co. v. Del., Lack. & 
 West. R. R. Co. 21 N. J. Eq. 283 ; Penn. R. R. Co. v. N. Y. <fc L. B. R. R. Co. 22 N. 
 J. Eq. 16V; Morris & Essex R. R. Co. v. Central R. R. Co. 81 N. J. L. 205. 
 
392 SPECUI; POWERS OF CORPOEATIONS. 
 
 not authorize that which the company are about to do." ^ But on 
 appeal the Lords Justices dissolved the injunction, holding that 
 the company were proceeding within their powers." 
 
 Another illustration is found in the recent case of Duke of 
 Bedford v. Dawson.' IJy the Eailways Clearing House Extension 
 Act (37 Vict. c. 16), which incorporated the Lands Clauses Act, 
 1845, the railway clearing committee were empowered to take 
 certain lands, and to erect thereon any buildings and works for 
 the purpose of the clearing system. The plaintiffs, the owners of 
 a neighboring house, filed a bill to restrain the erection of a build- 
 ing on land acquired under the act, on the ground that it inter- 
 fered with their ancient lights ; but it was held that the clearing 
 committee could not be restrained 'by injunction, and that the 
 plaintiff's remedy was under section 68 of the Lands Clauses Act, 
 1845. 
 
 Assuming, however, that no doubt exists as to the powers, 
 general and special, with which a corporation is endowed, and that 
 it is both keeping within its authorization and acting iona fide, 
 the court will not interfere with its operation. It wiU be deemed 
 the best judge, not only of what is most conducive to its own 
 interest, but also of what is proper and fitting as regards third 
 parties, and it wiU be left unchecked to take or not to take 
 lands, &c.^ {a) 
 
 As to the time within which works have to be carried out, in 
 most, if not all, acts conferring compulsory powers, a time is fixed 
 
 ' Richards v. Scarborough Market Co. J. (Ch.) 432 ; Cother v. Midland Ry. Co. 
 
 23 L. J. (Ch.) no. 2 Phil. 469; Stockton, (fee. Ey. Co. j;. 
 
 ' 23 L. J. (Ch.) 115. Brown; 9 H. Lds. 246 ; compare Att.-Gen. 
 
 8 L. R. 20 Eq. 353. „. Ely, <fec. Ry. Co. L. R. 4 Ch. 194 ; and 
 
 <" Richards v. Scarhorongh Market Co. especially Flower v. London, Brighton, 
 
 uU supra ; Beardmer v. London & North- and South Coast Ey. Co. 2Dr & Sm 330. 
 western Ry. Co. 1 Mac. <fe G. 112 ; 18 L. 
 
 (a) " While courts will not allow railroad corporations to avail themselves of the 
 statutory grant of power, to take lands in invitum, by taking that which they do not 
 require for a bona fide purpose, sanctioned by the act of the Legislature, when really 
 required in good faith for the purposes of the act, they will not interfere to prevent 
 the taking." In re N. T. <fe H. R. R. Co. 46 N. T. 546. Where there is a difference 
 in the feasibility of routes between designated points, some reasonable discretion 
 must be allowed to the corporation in the selection of its location. Newcastle cfc 
 Richmond R. R. Co. v. Peru <fe Indianapolis E. R. Co. 3 Ind. 464. Before actual con- 
 demnation, a company may abandon proceedings, and change its route. N. Mo. E. 
 R. Co. V. Lackland, 25 Mo. 515 ; see Bensley v. Mountain Lake Co. 13 Gal. 306. 
 
THE USER OP SPECIAL POWERS. 393 
 
 for the execution of those powers. Within such period the com- 
 pany may exercise their option of taking lands, &c./ but not after- 
 wards — the time and the powers expire together. If, however, 
 before this period has elapsed, they have signified their intention 
 to exercise their powers, they may afterwards continue and com- 
 plete the works thereby entailed upon them, unless some period 
 be stated before the expiration of which the said works are to be 
 finished,^ or unless they have expressly or impliedly abandoned 
 their intention.' (a) 
 
 The doctrines set forth above apply to private persons as to 
 corporations and public companies. The only difference in the 
 application of the doctrines arises from the difference in the 
 powers and capacities of the one and the other. A corporation is 
 created for definite purposes ; an ordinary individual may direct 
 his attention to any object he pleases ; but the case is altered with 
 
 ' Hedges v. Metropolitan Railway ' Sparrow v. Oxford, &c. Railway 
 
 Company, 28 Beay. 109 ; and see Sadd v. Company, 9 Hare, 436. 
 Maldon, <fec. Railway Company, 6 Ex. ^ Hedges v. Metropolitan Railway 
 
 143; 20 L. J. (Ex.) 102 ; and Ricnmond J). Company, nbi supra; Ystalyfera Iron 
 
 North London Railway Company, L. R. 3 Company v. Neath and Brecon Railway 
 
 Ch. 619. Company, L. R. 1*? Eq. 142. 
 
 {a) The power of a corporation to take the land of individuals is determined by the 
 expiration of the time limited for its exercise. Moreover, as a rule, this power, when 
 once exercised, is exhausted. Although a railroad company may use some discretion 
 in constructing its road, it cannot, after the road is actually located, mate a relocation 
 or abandon a route once adopted, for a more eligible one, or use this power for the 
 purpose of making an extension. Peavy v. Calais R. R. Co. 30 Me. 498 ; Morris & 
 Essex R. R. Co. v. Central R. R. Co. 31 N. J. L. 205; Moorhead v. Little Miami R. R. 
 Co. 17 Ohio, 340 ; Bruning v. N. 0., C. & B. Co. 1 2 La. Ann. 541. It is, however, held, 
 in Virginia <fe Truckee R. R. Co. v. Lovejoy, 8 Nev. 100, that the fact that a railroad 
 has been completed according to the surveys and maps originally filed, does not 
 prevent it from condemning other land which may be necessary and proper for its 
 purposes. And, under a charter very broad in its terms, it is held, in Ux parte S. C. 
 R. R. Co. 2 Rich. Law, 434, and in 8. C. R. R. Co. it. Blake, 9 Rich. Law, 228, that the 
 corporation can change its location as convenience and interest may require. See, 
 also, Johnson v. Utica Water-works Co. 67 Barb. 415. ; 
 
 In regard to the exercise of special power for purposes merely incidental to the 
 general tusiness, and in respect to those things, the need for which is a continuing 
 one, and one continually changing, such as making side tracks, workshops, taking 
 gravel, &c., from the roadway for the purpose of leveling, and the like, it seems that 
 the completion of the general work is not a limit to such exercise. See Brainard v. 
 Clapp, 10 Cush. 6 ; Toledo <fe Wabash R. R. Co. v. Daniels, 16 Ohio St. 390 ; Chicago, 
 Burl. & Q. R. R. Co. v. Wilson, 17 111. 123. Title to land occupied in the construction 
 of a railroad may be acquired at any time when there is no limitation in the charter. 
 Coster V. N. J. R. R. Co. 24 N. J. L. 730. See Mills on Em. Dom. § 68. 
 
394 SPECIAL POWERS OF CORPORATIONS. 
 
 respect to special authority given him, whether by express words 
 or by necessary implication, for particular purposes. Thus, where 
 the owners of cotton mills on the banks of a canal, were authorized 
 by the act of parliament under which the canal was made, to draw 
 water from the canal, " for the sole purpose of condensing the 
 steam used for working any steam engines" erected in those mills, 
 they were restrained from drawing off the water of the canal for 
 any other purpose.'' 
 
 It was at one time supposed in England, as it seems to have 
 been thought in Scotland, that permissive powers given by an 
 act of parliament to a company, were obligatory upon them. 
 The case of Philip v. Edinburgh, &c. Railway Company,^ in Scot- 
 land, and that of Eeg. v. York and North Midland Railway Com- 
 pany,' in 1852, in England so decided. The latter case, however, 
 was reversed in 1 853, in the Exchequer Chamber, and the former 
 in the House of Lords, in 185Y ; and there can be now no doubt 
 that corporations will be left free to put permissive powers into 
 action or not, as may seem to them best to advance their own 
 interests, {a) 
 
 It should also be observed that special powers vested in any 
 body for the express purpose of carrying out some special object 
 will not be overridden by mere general powers given in a subse- 
 quent act, upon the maxim that " generalia specialibus non dero- 
 gant." * (b) 
 
 ' Rochdale Canal Company v. King, 2 ■* London and BlackwaU Railway Coni- 
 
 Sim. (N. S.) IS. pany v. Board of Works for Limehouae 
 
 2 On appeal, 2 Macq. 514. District, 3 K. & J. 128; 26 L. J. (Ch.) 
 
 « 1 E. <fe B. 178 ; 22 L. J.f{Q. B.) 41 ; 164 ; Trnstees of the Birkenhead Docks 
 
 on appeal, 1 E. & B. 858 ; 22 L. J. (Q. B.) v. Birkenhead Dock Company, 23 L. J. 
 
 225. (Ch.) 457. 
 
 (a) Upon this point, in respect to municipal corporations, see DiUon on Munic. 
 Corps, g 62; Com'rs of Public Schools j;.Com'rs of County, 20 Md. 449; Goodrich «. 
 City of Chicago, 20 111. 445. And as to private corporations, see People v. Alb. & 
 Yt. R. R. Co. 24 N. Y. 261. See, also, remarks of Lord Wensleydale in 1 Ellis & 
 Bl. 858, and in 3 McQueen, 414. As to forfeiture for non-user, see Angell & Ames, 
 %11i; and, post, chapter on Dissolution. 
 
 (6) See Gowen v. Penobscot R. R. Co. 44 Me. 140 ; Eaton ii. European & N. A. R. 
 R. Co. 59 Me. 520 ; Vischer v. Hudson R. R. R. Co. 15 Barb. SI ; Clarksou v. Same, 
 12lS'.T. 304; Staats v. Same, 3 Keyes, 196; North Mo. R. R. Co. v. Gott, 25 Mo. 540; 
 McCrea v. Port Royal R. R. Co. 3 S. C. (N. S.) 381. 
 
THE USER OF SPECIAL POWERS. 395 
 
 V. It seems that a wider and more liberal oonstrucUon will he 
 put up&n the powers vested in bodies such as local govern- 
 ment boards, mimicipal corporations, and sewage commis- 
 sioners, whose duties are the accomplishment of public 
 improvements, (a) 
 
 It is not unfrequently asserted, and asserted without positive 
 contradiction, that the strictness of the principle now in statement, 
 is, or ought to be, sometimes modified : that powers given for the 
 public benefit must be interpreted liberally, and persons intrusted 
 with the exercise of them allowed very considerable discretion. 
 It is argued that there is a great distinction between acts grant- 
 ing compulsory powers to joint-stock companies in respect of 
 what are really private speculations, and acts empowering and 
 requiring corporate bodies, having no private interests to promote, 
 to carry into effect public improvements. In the latter case, in 
 order to avoid taxing the public, there may well be permission 
 granted to a corporation to take more land than is actually neces- 
 sary for the purpose of making certain specified improvements, 
 and by a sale of the superfluous land, rendered more valuable by 
 the improvements themselves, to raise funds for the execution of 
 a great public work. (5) The full force of this argument may be 
 admitted, but it only amounts to this, that bodies intrusted with 
 powers for the public benefit will, like persons having analogous 
 powers for their own advantage, under ordinary circumstances, be 
 deemed the proper and only judges of the best method of utilizing 
 such powers for the ends designed. 
 
 It may, perhaps, also be admitted, that it is not "the province 
 of a court of equity to interfere to compel defendants who have 
 done something ull/ra vires, but bona fide, with a view of accom- 
 modating the public, to do something other than they have done 
 which would be intra vires, and therefore legal, but would be 
 more inconvenient to the public or the persons complaining than 
 that which exists." ^ (c) But to admit this would be to do little 
 
 ' Per Romilly, M. R., in Att.-Gen. v. Ely, <feo. Railway Company, L. R. 6 Eq. 
 
 106, 111. 
 
 (a) When the power of eminent domain is delegated to a mimicipal or other cor- 
 poration, its exercise is subject to the inflexible rule that the power must be strictly 
 pra'sned. State v. Jersey City, 26 N. J. L. 309 ; Dillon on Munio. Corp. § 469. 
 
 ifi) See Brooklyn Park Com'rs v. Armstrong, 3 Lans. 429 ; s. c. 45 N. Y. 234. 
 
 (c) Injunction will not be granted where, by interrupting traffic carried on over a 
 
398 SPECIAL POWERS OF CORPORATIONS. 
 
 more than recognize the discretion which the Court of Chancery 
 reserves to itself of refusing to interfere under circumstances 
 where its interference would be productive of far more harm than 
 good. Whether the dictum just quoted of Lord Komilly is, in 
 the way he stated it, correct and good law, may be doubted, but, 
 in so far as it is correct, it is simply a result of the court's discre- 
 tion. Moreover, whether it be correct or not, a corporation or 
 other person will not be permitted to avoid specific performance 
 by alleging, as a defense to a bill, that the public would be incon- 
 venienced by a decree being made against liim.* Nor is a corpo- 
 ration justified in doing an act which is ultra vires or illegal, e. g., 
 a nuisance, although it acts with perfect iona fides for the public 
 benefit, and although in fact a public benefit is thereby conferred 
 which more than counterbalances the damage.' 
 
 The real existence of this qualification is, however, a matter of 
 doubt. It has not been made the ratio of any decision, and, in- 
 deed, a logical absurdity would arise by laying down that corpora- 
 tions and other like bodies have certain capacities and powers 
 only, and then saying that the same powers given for the same 
 specific purposes are to receive a construction varying with the na- 
 ture of the bodies to which they are given. A railway company, 
 a municipal corporation, and a hospital, are each authorized by 
 act of parliament to pull down certain houses to make room for, 
 say, a station, a new street, an additional wing, respectively. It 
 tui-ns out that in each case only some of the houses are required, 
 and each of the bodies mentioned thereupon proposes to turn the 
 houses which it does not require to some other purpose more ben- 
 eficial to itself than the returning them to their original owners. 
 These owners, however, apply for an injunction. Will it be held 
 that the court wiU deal differently with each case, and will restrain 
 the railway company, though it will not either of the others ? 
 
 And if private rights come into collision with public interests 
 
 ' Raphael v. Thames Valley Railway '^ Town of Dundaa v. Hamilton, Ac. 
 
 Company, L. R. 2 Ch. 147; see Reg. ii. Road Co. 18 Grant. (TJpp. Can. Ch. 1871), 
 
 Bradford Navigation Company, 6 B. <fe S. 310 ; Spokes v. Banbury Board of Health. 
 
 631. L. R, 1 Eq. 42. 
 
 railroad, it would not only cause great injury to the defendants, but might be of serious 
 ' detriment to the public, without corresponding advantage to any one. Torrey v. C. 
 <fc A. R. R. Co. 18 N. J. Eq. 293; Hackensack Impr. Com. is. N. J. Midland R. R. Co. 
 22 N. J. Eq. 94 ; Erie R. R. Co. j,. Del., Lack. &, West. R. R. Co. 21 N. J. Eq. 283. 
 
THE USER OF SPECIAL POWERS. 39T 
 
 it is the latter, not the former, which will have to give way. This 
 oftenest happens in questions of sewage {a) and other nuisances 
 committed, necessarily it may be, byhodies existing for the express 
 purpose of carrying out works for the general well-being. The 
 plea of necessity, however, will be of no avail ; the court will not 
 regard the advantage of the public and exact a sacrifice from the 
 individual, but it will, upon the application of the latter, restrain 
 the doing of the acts — e. ^., the fouling of streams — which con- 
 stitute an invasion of his rights.^ (b) 
 
 It has been, on many occasions, most emphatically decided that 
 private persons must be protected if they possess rights which are 
 being infringed without legislative authority, however disastrous 
 the results of such protection may be to the corporations thus for 
 public purposes injuring private parties. Consequently, injunc- 
 tions in their favor have been granted, although it was asserted in 
 one case that compliance therewith was practically impossible 
 without compelling the corporation to infringe an act of parlia- 
 ment, and that a sequestration to compel compliance would be 
 ineffectual and injurious to the public,^ and in another,' that the 
 
 ' Att.-Gen. v. Mayor of Kingston, 13 '' Spokee v. Banbury Board of Health, 
 
 "W. R. 888; Goldamid v. Tunbridge Wells L. R. 1 Eq. 42; see Att.-Gen. v. Cocker- 
 
 Improvement Com'rs, L. R. 1 Eq. 165 ; mouth Local Board, L. R. 18 Eq. 1^72, 
 
 compare Biddulph v. St. George's vestry, and cases there cited, as to the liabilities 
 
 33 L. J. (Ch.) 411; see Galloway v. of a local government board in respect of 
 
 Mayor of London, L. R. 1 H. L. S4 ; the discharge of sewage. 
 Quinten v. Mayor of Bristol, L. R. 17 ' Att. -Gen. ». Proprietors of the Brad- 
 
 Eq. 624; Stratton v. Metropolitan Board ford Canal, L. R. 2 Eq. 71. 
 of Works, L. R. 10 C. P. 81 ; Metcalf </. 
 Hetherington, 24 L. J. (Ex.) 314. 
 
 (ffl) See Dillon on Munic. Corp. §§ 801, 802 ; Rochester White Lead Co. o. Ro- 
 chester, 3 N. T. 463; Columbus v. Woolen Co. 33 Ind. 435. 
 
 (6) The statements in the text, that, if private rights come into collision with 
 public interests, the latter, not the former, must give way, and that the plea of neces- 
 sity will be of no avail, are undoubtedly correct, if it be meant that such necessity is 
 no justification for the commission of a nuisance (Dillon on Munic. Corp. § 780; 
 Eastman v. Meredith, 36 N. H. 284; Weet v. Brockport, 16 N. Y. 161; Weeks v. 
 Milwaukee, 10 Wis. 268), and that public bodies have no more right than private 
 bodies or individuals, to interfere with private property without just compensation. 
 But the statement is erroneous, if applied to the doctrine of eminent domain. For, 
 as is said by Hogeboom, J., in People v. Mayor of N. Y. 32 Barb. 102, " Property is 
 subject to be taken under the right of eminent domain. And when it is in this 
 way required for public purposes, the right of the property holder must yield to the 
 paramount right of the public. Title to property is always held upon the implied 
 condition, that it must be surrendered to the government, either in whole or in part, 
 when the public necessities, evidenced according to the established forms of law, de- 
 mand." See, also. Patten v. Northern Cent. R. R. Co. 33 Penn. St. 426. 
 
398 SPECIAL POWERS OF CORPORATIONS. 
 
 company might be obliged to close their canal, and expose them- 
 selves to an indictment on that ground, (a) 
 
 Section II. — The Teaitsfee, by one Coepoeation to anothee, 
 OF ITS Special Fowees and Peivileges. 
 
 I. Corporations may fiot transfer to others their own peculiar 
 powers and privileges. (&) 
 
 Such a transfer, whether permanently and absolutely, or only 
 for a definite period, is, it has been repeatedly decided, in the ab- 
 sence of statutory powers, illegal. Thus, Turner, V.-C, in Great 
 Northern Eailway Company v. Eastern Counties Eailway Com- 
 pany,^ observed, with reference to this question : " It is impossible 
 
 ' 21 L. J. (Ch.) 837 ; Winch v. Birken- Johnson v. Shrewsbury, &c. Ry. Co. 3 De 
 head, &c. Ry. Co, 1 Rail. Cas. 334; see G. M. & G. 914. 
 
 (a) The only protection ■which is afforded to private persons, is that property 
 shall only be taken for public uses, and upon just compensation. Whatever private 
 right stands in the way of the public necessity, the public health, the public safety, 
 or the public convenience, must give way. For the paramount condition upon which 
 aU property is holden, is that, when properly demanded by the rightftd authority of 
 the State, it must be yielded up for the public good. See cases cited ante, and Rus- 
 sell V. Mayor, 2 Denio, 461 ; American Print Works o. Lawrence, 21 N. J. L. 248; 
 Hale V. Lawrence, Id. 714; Miller v. Craig, 11 N. J. Eq. 175 ; Dingley v. Boston, 100 
 Mass. 644. 
 
 (6) See note to page 124, and arguments of counsel and opinion in Black v. Del. 
 <fe Rar. Canal Co. 22 N. J. Eq. 130. A lease by one railroad company of its railroad 
 for a hundred years to another, does not vest in the lessee any power to exercise the 
 right of eminent domain, but this power remains in the lessor, and the Legislature 
 may deal with the lessor exclusively in amending its charter. Mayor of Worcester 
 V. Norwich & W. R. R. Co. 109 Mass. 103. A railroad cannot, by leasing its corpo- 
 rate property and franchises, relieve itself from liability to the public for injuries 
 sustained and damages resulting from breach of contract or duty by the lessee. R. 
 R. Co. V. Winans, 17 How. 30; Whitney v. Atlantic & St. L. R. R. Co. 44 Me. 362; 
 Wyman v. Pen. & Ken. R. R. Co. 46 Me. 162 ; see Mahony v. Atlantic & St. Law. R. 
 R. Co. 63 Me. 68; Barter v. Wheeler, 49 N. H. 9; Nelson v. Vt. & Can. R. R. Co. 26 
 Vt. 717 ; Langley v. Boston & Maine R. R. Co. 10 Gray, 103 ; McCluer v. Man. <fe 
 Law. R. R. Co. 13 Gray, 124; Ohio <fe Miss. R. R. Co. v. Dunbar, 20 HI. 623; 
 Pitts., C. & St. L. R. R. Co. V. Kain, 35 Ind. 291; Scott v. Gr. Tr. R. R. Co. 51 
 N. T. 655 ; Wylde v. Northern R. R. Co. 53 N. Y. 156. In Noll v. Dubuque, B. 
 & M. R. R. Co. 32 Iowa, 66, it is held that, as the right of way for a railroad, ac- 
 quired under the general right of way act, is taken by the State for a public use, it is 
 competent for the Legislature to provide for its transfer to another company on fail- 
 ure of the first, upon compensation made to the latter. 
 
TRANSFER OF. 399 
 
 to read the agreement between the plaintiffs and the East Anglian 
 Railway Company, without being satisfied that it amounts to an 
 entire delegation to the plaintiffs, of all the powers conferred by 
 parliament upon the East Anglian Eailway Company. All the 
 stock of that company is to be taken by the plaintiffs, without any 
 obligation to restore it. The plaintiffs are to manage and regu- 
 late the railways of the East Anglian Railway Company, for the 
 purposes of the agreement ; and although in form it is declared 
 that the instrument shall not operate as a lease or agreement, it 
 amounts, in substance, either to the one or the other. It is framed 
 in total disregard of the obligations and duties which attach to 
 these companies, and is an attempt to carry into effect, without 
 the intervention of parliament, what cannot lawfully be done ex- 
 cept by parliament, in the exercise of its discretion, with reference 
 to the interest of the public. * * * I think it is the duty of 
 this court to withhold its interference, when called upon to act in 
 aid of agreements of such a nature." He accordingly refused an 
 injunction prayed for by the plaintiffs, to restrain the defendants 
 from obstructing the engines, &c., of the former, in passing over 
 the junction of the East Anglian Eailway with the Eastern Coun- 
 ties Eailway, near Wisbeach. 
 
 In Beman v. Eufford,^ a bill was filed by certain shareholders 
 in the Oxford, Worcester and Wolverhampton Eailway Company, 
 to restrain the directors from applying the funds of the company 
 in carrying out an agreement entered into by the directors, with 
 the London and Northwestern Eailway Company, under which a 
 narrow gauge rail was to be laid down, and the line, when com- 
 pleted, to be worked by the London and ISTorthwestern Eailway 
 Company. The court was of opinion that the agreement was 
 invalid, for, although the directors had power under their act of 
 parliament to lay down narrow gauge rails, they had no power to 
 allow the line to be worked by another company. Lord Cran- 
 worth, V.-C, said : " What they {i. e., the Oxford, Worcester and 
 Wolverhampton Eailway Company) are to do is this : the whole 
 concern, without incumbrance, when completed, is to be worked 
 
 ' 1 Sim. (N. S.) 650 ; 20 L. J. (Ch.) 5S1 ; Brighton and South Coast Railway Corn- 
 London <fc Sontnwestern Railway Com- pany v. London and Southwestern Rail- 
 pany II. Southeastern Railway Company, way Company, 28 L. J. (Ch.) 521; and 
 8 Ex. 584; 22 L. J. (Ex.) 193; West see also, Rhymney Railway Company w. 
 London Railway Company v. London and Taff Vale Railway Company, 30 L. J. 
 Northwestern Railway Company, 11 C. B. (Ch.) 482. 
 327; 22 L. J. (C. P.) Ill; London, 
 
400 SPECIAL POWERS OF CORPORATIONS. 
 
 by the London and JSTorthwestem Eailway Company, who shall 
 have perfect control and exercise all the rights of the Oxford, 
 "Worcester and Wolverhampton Eailway Company. Now, I need 
 not go farther into the case than to say, in my opinion that is del- 
 egating the functions, which the Legislature has given them, to 
 other parties, which they have no possible right to do." 
 
 It is not unfrequently very difficult to determine whether a 
 certain agreement is nothing more than a traffic arrangement, or 
 whether it amounts to a transfer of special powers. Commercial 
 corporations, it need scarcely be repeated, may make all such hona 
 fide business arrangements as will tend to their own emolument, 
 and at the same time are. not contrary to public policy. They may 
 covenant to use or not to use their powers in certain modes and 
 under certain restrictions ; but the line must be drawn somewhere, 
 and it is drawn at the point where such covenants expressly, or by 
 implication, amount to the abandonment or the transfer of powers. 
 The best illustration of this part of our subject, and of the diffi- 
 culties involved therein, is afforded by the series 6f cases reported 
 as the Shrewsbury and Birmingham Eailway Company «. London 
 and Northwestern and Shropshire Union Eailways and Canal 
 Company. These cases will be dealt with at some length in the 
 next chapter ; but in so far as they more particularly concern the 
 present subject (*. e., the user and transfer of special powers), ref- 
 erence may be made to the decision of the Lords Justices.^ The 
 facts involved in the particular case which came before the Lords 
 Justices were these : The plaintiffs, viz., the Shrewsbury Cempany, 
 had withdrawn their opposition to a bill brought into parliament 
 by the London and Northwestern Eailway Company, to authome 
 a lease to them of the Shropshire Union Eailway, on an agreement 
 that the profits arising from the Shrewsbury and Shropshire lines 
 should be divided between the plaintiffs and defendants in stated 
 proportions. The act passed, and the agreement was re-executed 
 under seal. The London and Northwestern Eailway Company, 
 however, did not carry out their contract. Thereupon the Shrews- 
 bury Company filed a bill for the specific performance of the 
 agreement, but the Vice-Chancellor dismissed the bill. 
 
 They appealed against this dismissal, and the Lords Justices 
 held, that the directors of the London and Northwestern Eailway 
 
 I 4 De G., M. k G. 115 ; 22 L. J. (Ch.) 682. 
 
TRANSFER OF. 401 
 
 Company were trustees for their shareholders, and that their en- 
 tering into such a contract was a breach of trust as between them 
 and the shareholders, since it created a partnership between the 
 London and Northwestern Eailway Company and the Shrewsbury 
 Company, determinable only at the option of the latter, which 
 varied the rights of the London and Northwestern Company's 
 shareholders in the gross receipts of their business, and that the 
 Shrewsbury Company knowingly participated in such breach of 
 trust, {a) 
 
 II. Corporations may sometimes be enabled, either by authority 
 in their constating instruments or by general statutes, to 
 enter into contracts regulating thei/r business, and other- 
 wise to deal with their powers in a manner which would be 
 absolutely ultra vires without such provisions. 
 
 Few words need to be added to this statement. Manifestly, 
 the supreme power which has endowed corporations with peculiar 
 privileges, may endow them with the further privilege of using, 
 or even misusing, those privileges in any way that pleases them. 
 This has been done with certain classes of corporations by general 
 acts. Thus, 26 & 27 Vict. c. 92, by sections 22 to 29, enables 
 railway companies, with the sanction of three-fifths of their share- 
 holders, and the approval of the board of trade, and now of the 
 railway commission, to enter into working agreements of the kind in- 
 dicated. The Eailway and Canal Trafiic Act, 1854, contains various 
 compulsory clauses, viz. : In section 2 as to through trafiic, and in 
 sections 2 and 3 as to affording equal facilities to all parties.^ The 
 jurisdiction to enforce these clauses was given to the Court of 
 Common Pleas, and it is now, by 36 & 37 Yict. c. 48, vested in 
 the railway commission. So the Hallways Clauses Consolidation 
 Act (8 & 9 Yict. c. 20, s. 87) enables railway companies to make 
 
 ■ See also 31 & 32 Vict. o. 119, a. 16. 
 
 (a) Althoiigh a corporation cannot, without the consent of the Legislature, lease 
 its corporate works and property, with its franchises, to another corporation, yet, 
 upon such legislative authority heing granted, and upon provision being made for 
 compensation for the shares of such of the stockholders as dissent, such lease will he 
 valid. In the exercise of the right of eminent domain, the Legislature may author- 
 ize shares in corporations and franchises to be taken for public uses upon just com- 
 pensation. Black V. Del. & Ear. Canal Co. 24 N. J. Eq. 455. See ante, 99, 372, 376, 
 notes. 
 
 26 
 
402 SPECIAL POWERS OF CORPOEATIONS. 
 
 certain contracts of this description, and 8 & 9 Vict. c. 42,^ con- 
 tains somewhat similar enactments with regard to canal companies, 
 providing that they may, subject to certain conditions, lease their 
 tolls, &c. So, in many special acts, provisions have been inserted 
 giving similar powers. In all such cases, all the regulations and 
 formalities imposed by the statutes as to conditions precedent, 
 must be duly observed. This well appears from the case of the 
 Kent Coast Railway Company v. London, Chatham and Dover 
 Kailway Company.' An act had empowered one railway com- 
 pany to grant, and another to accept, a lease of a railway upon 
 certain terms, provided that the power to lease should not arise 
 till the board of trade had certified, &c. Heads of an agreement 
 were subsequently entered into, and duly sanctioned by majorities 
 of three-fifths at meetings of the two companies, but without the 
 certificate of the board of trade first obtained, and were acted upon 
 for several years, but no formal lease was ever executed. The heads 
 of the agreement were also invalid, as providing for payment of 
 the rent out of profits not so applicable ; it was held that the ar- 
 rangement was not ratified by references to it in subsequent local 
 and personal acts of parliament, not expressing any direct in- 
 tention to confirm it, nor had it been rendered valid by acquies- 
 cence, (a) 
 
 III. Corporations ma/y decline to use special powers and rights 
 conferred upon them, and may decline to complete or carry 
 on, the whole of their undertakings, semble. (5) 
 
 Somewhat allied to the transfer is the abandonment of special 
 
 ' See also 21 <fe 22 Vict. c. 75, s. 3 ; ° L. R. 3 Ch. 6B6 
 
 and 23 & 24 Vict. c. 41. 
 
 (a) As to legislatiye recognition or ratification, see cases cited in note, p. 22. 
 "Where, by its charter, a railroad company was authorized to lease, rent or sell the 
 railroad, its appurtenances and franchises, to any other incorporated railroad com- 
 pany of the State, and the president, under authority of a resolution of the stock- 
 holders, invited proposals for the purchase of the iron alone, or any part thereof, and 
 distinct proposals for the road bed, and all the real estate, together with the franchise 
 and privileges of the company, it was held that such a sale would be in violation of 
 the charter, and might be restrained by injunction. Upson County E. R. Co. ii, Shar- 
 man, 37 Ga. 644. 
 
 (6) See cases cited in notes, pp. 69, 70, 394 ; Dillon on Munic. Corps. §§ 62, 669. 
 A franchise granted to a railroad company can only be legally exercised by the cor- 
 poration operating its entire road. There is no privilege granted or right obtained 
 
TRANSFER OF. 403 
 
 ^powers and privileges. Questions of this description, like those 
 relating to the transfer, have generally arisen in connection with 
 Tailway companies. These companies are incorporated for the 
 «pecific purpose of constructing a line between two given termini. 
 Their authorities are conferred upon them with distinct reference 
 to the accomplishment of such object, and the whole of it. Per- 
 sons become shareholders and subscribe to its funds, with a view 
 to the attainment of the whole of such object, and they may justly 
 complain of, and refuse to acquiesce in, any proposal to complete a 
 portion only of the total project. Not unseldom, however, before 
 the railway is finished, circumstances arise which may make it 
 desirable to modify the original scheme, by abandoning a portion 
 of the undertaking, or the like.. The questions which then arise 
 are two-fold : first, as between the corporation and its members ; 
 secondly, as between the corporation and outsiders. As to the 
 first question, in some of the earlier cases it was determined that 
 such proceedings are, unless provided for in the act, in every case, 
 whatever the constitution of the corporation, as a matter of prin- 
 ciple, ultra vires, and that they will be restrained at the instance 
 of any shareholder or creditor. " The company is not like a part- 
 nership for general trading, a partnership in which one portion of 
 the business may be encouraged and another discouraged or aban- 
 doned, according to the contingencies of trade, and in which there 
 is a general authority to use the capital to the best advantage ; but 
 it is a partnership for a public purpose, for effecting a work which 
 it is a duty to complete, and for which alone the capital is ad- 
 vanced in shares, or authorized to be raised. The obligation to 
 complete the work appears to be co-extensive with the authority 
 ■to make it. Neither this act nor any of these acts contains au- 
 
 to operate a part thereof, and if it should undertake so to do, it is exercising a fran- 
 chise without legal sanction. People v. Albany <fe Vt. R. R. Co. 24 IS. Y. 261. A 
 sale and conveyance by a turnpike company of a part of its road to a municipal cor- 
 poration, and neglect thereafter to repair that portion, is a willful, deliberate act in 
 •violation of its plain duty, which warrants a judicial decree of forfeiture of its char- 
 ter. State V. Pawtuxet Turnp. Co. 8 E. I. 182, 621. See Superyisors v. United 
 States, 4 Wall. 4-35; State v. H. <fe N. H. R. R. Co. 29 Conn. 538; Lauman a. Lebanon 
 Valley R. R. Co. 30 Penn. St. 42; Canal Co. v. R. E. Co. 4 G. <fe J. 1 ; Buck Moun. 
 tain Coal Co. v. Lehigh Coal Co. 50 Penn. St. 91 ; Louisville h Nash. R. R. Co. v. 
 Covington, 2 Bush (Ky.), 526 ; City of Columbus v. Col. <fc Shelby R. E. Co. 37 Ind. 
 294. 
 
404r SPECIAL POWERS OF COEPORATIONS. 
 
 thority to substitute a less work, or part for the whole." This 
 was the decision of Lord Langdale, M. K. in Cohen v. Wilkinson/ 
 in which case the directors of a company who had obtained powers 
 to construct a line from Epsom to Portsmouth, were restrained, on 
 bill filed by one of the shareholders, from completing it as far as 
 Leatherhead only. 
 
 But there is considerable doubt as to whether this is either the 
 right mode of expressing the point, or, if so, is the law now. In 
 the first plade, it is extremely difficult to point out how such a. 
 decision could be carried into effect, how such an injunction could 
 be practically worked. The directors could not be compelled to 
 raise the funds, and to do all the other multitudinous operations 
 necessary for completing the work. Even if they were willing, 
 whence is the requisite capital to be obtained, supposing that 
 already raised to have been spent ? 
 
 This question has already been examined,'' and it has been seen, 
 first, that corporations, even as between themselves and their 
 members, which, of course, holds a fortiori as regards creditors, 
 may relinquish some of their objects, and confine their attention 
 to the remainder when the objects are clearly separable; and, 
 secondly, that when the objects are indivisible, it is a simple ques- 
 tion of contract and of construction of the constating instruments, 
 in each particular case, whether a corporation can be compelled to 
 attempt to keep going its whole enterprise. 
 
 The second question remains. This also was considered, wnte, 
 
 112 Beav. 125; 18 L. J. (Ch.) STS, Birkenhead, &o. Railway Company, 2 
 
 411; Reg. v. Eastern Counties Railway Mac. <fe G. 160; 20 L. J, (Ch.) 445, where 
 
 Company, 8 L. J. (Q. B.) 340 ; Bagshaw plaintiff was debarred by his laches, hav- 
 
 ■t). East Union Railway Company, 2 Mao. ing remained passive eighteen months.(o) 
 & (t. 389; 18 L. J. (Ch.) 193; Logan v. ^ See anie, pp. 393, 394. 
 
 Courtown, 20 L. J. (Ch.) 347 ; Graham v. 
 
 (a) As to acquiescence, it is held that in public works, the shortest period of 
 clear acquiescence, so as fairly to lead the company constructing them to infer that 
 the party intends to waive any claim, or consents to the work proceeding, will be 
 held to conclude the right to assert the claim in any such form as to stop the com- 
 pany in the progress of its enterprise, and especially to stop the running of the road 
 after it has been put in operation, and thus aflFect the interests or convenience of the 
 public. Basset o. Salisbury Mfg. Co. i1 N. H. 426 ; MoAulay v. Western Vt. R. R. 
 Co. 3S Vt. 811 ; Hentz v. Long Island R. R. Co. 13 Barb. 646 ; Sherman v. McKeon, 
 38 IS. Y. 266 ; compare Jessup v. Loncks, 65 Penn. St. 351 ; see Ffooks v. London <fe 
 S. W. Ry. Co. 1 Sm. <fc G. 142; Erie R. R. Co. v. D., L. <fe W. R. R. Co. 21 N. J. Eq. 
 283 ; Calkins v. Bloomfield & Roch. Gas Co. 1 N. Y. Supreme Ct. (T. & C.) 541. 
 
TRANSFER OF. 405 
 
 pp. 69, 10, in connection with the wider and more general ques- 
 tion of the abandonment of a business or enterprise. The result 
 seems to be, at the present time, that corporations cannot be com- 
 pelled to put into effect any of their privileges, whether compul- 
 sory powers or otherwise, whether upon an information,* or a 
 mandamus, unless the language giving the powers is most clearly 
 imperative, {a) 
 
 I Att.-Gen. v. Birmingham Ey. Co. 4 De G. <fc S. 490 ; 3 Mac. & Q. 458. 
 
 (a) In York & N. Mid. Ry. Co. v. Reg. 1 El. & Bl. 858, in the Exchequer Cham- 
 "ber, reversing same case, lb. 178, in Queen's Bench, where a portion only of the line 
 was constructed, the decision was put on the ground that the ^ct being enabling, not 
 compulsory, mandamus would not lie. Jervis, C. J., in delivering the unanimous 
 opinion of the Exchequer Chamber, declined to pass on the question whether the 
 exercise of compulsory powers might in any case be enforced by mandamus. See 
 opinions of Lord Wensleydale (who was of the court in 1 El. & Bl. 858), in Edin- 
 burgh, (fee. Ry. Co. V. Philip, 2 McQ. 514, and Scottish S. E. Ry. Co. v. Stewart, 8 
 JMcQ. 882 ; Rex v. Severn & WyS Ry. Co. 2 B. <fe Aid. 646 ; Rex v. Brecknock C. 
 Co. 3 A. <fe E. 217 ; Reg. v. Eastern Counties Ry. Co. 10 A. <fc E. 531 ; Reg. v. Bristol 
 Kock Co. 2 A. <fe E. (N. S.) 64; Reg. v. Bristol & E. Ry. Co. 4 A. & E. (N. S.) 162 ; 
 Reg. V. R. <fe H. T. Co. 12 A. & E. (N. S.) 448 ; Reg. v. York, New. & B. Ry. Co. 16 
 
 A. & E. (N. S.) 886 ; Reg. «. Ambergate Ry. Co. 17 A. & E. (N. S.) 862 ; s. o. 1 E. & 
 
 B. 872 ; Reg. (1. Great Western Ry. Co. 1 E. 4 B. 253 ; reVd Ibid. 874. 
 The law in this country may be thus stated : 
 
 I. Mandamus will not lie, where there is an adequate remedy at law by the ordi- 
 nary modes of procedure. 
 
 There is a dictum of Bronson, J., in McCuUough v. Mayor, 23 Wend. 458, to the 
 effect that this is not universally true in relation to corporations, but which, when 
 critically examined, does not militate against the rule as above expressed; See State 
 V. N. H. & N. Co. 45 Conn. 331 ; People v. Supervisors of Chenango, UN. Y. 573 ; 
 People V. Green, 1 Hun, 1 ; Com. v. Rosseter, 2 Binn. 860 ; Firemen's Ins. Co. v. 
 JMayor of Bait. 23 Md. 296 ; People v. State Ins. Co. 19 Mich. 392. 
 
 II. Mandamus will lie only to enforce a statutory duty, and not the performance 
 ■of an obligation, or the satisfaction of a liability arising out of contract. State v. 
 Zanesville Turnpike Co. 16 Ohio St. 308. Thus mandamus does not lie to compel a 
 corporation to issue its bonds to one of its creditors, in order to obtain the benefit of 
 a mortgage security, especially where the right of the creditor to such security is 
 doubtful, and the property sought to be affected has passed into the hands of third 
 parties as purchasers. Ham v. Toledo Ry. Co. 29 Ohio St. 174. 
 
 III. Before the precise provisions of the legislative act granting the privileges 
 are accepted or acted upon by the corporation, the grant is permissive merely, not 
 obligatory ; and, of course, no mandamus will lie — the remedy being forfeiture for 
 non-user. People v. Albany <fe Vt. R. R. Co. 24 N. Y. 261. But, after the grant is 
 Accepted, the writ wUl be issued to compel the performance of duties owed to the 
 public. In TreadweU v. Salisbury Co. 7 Gray, 404, it is said, that corporations may 
 perhaps be compelled to appropriate their property to specific purposes by mandamus 
 
406 SPECIAL POWERS OF CORPORATIONS. 
 
 or proper process ; and in State v. Hart. & N. H. R. R. Co, 29 Conn. 638, a railroad 
 corporation was compelled by mandamus to operate a portion of its road to a station 
 which it had discontinued, and to carry passengers to a steamboat wharf at such 
 station. 
 
 Mandamus is a proper remedy to compel a railroad company to deliver to a par- 
 ticular warehouse or grain elevator, grain consigned thereto in bulk, the warehouse 
 itself being situated upon the line of the respondent's road, with facilities for the de- 
 livery of grain equal to those of other warehouses at which the railway delivers, and 
 the carriage of the grain in bulk being part of the regular business of the road. 
 Chicago <St Northwestern R. R. Co. v. People, 66 111. 366 ; see People v. Chicago & 
 Alton R. R. Co. 55 111. 95. In People v. Manhattan Gas Co. 45 Barb. 136, it is held, 
 that where a gas-light company have by law the exclusive right and duty of furnish- 
 ing gas to the public, a mandamus lies, on the relation of an individual whom they 
 refuse to supply, to compel them to do so. In State of Minnesota o. Southern Min- 
 nesota R. R. Co. 18 Minn. 40, the Court say : " Where the charter of a corporation, 
 or the general statute In force, and applicable to the subject, imposes a specific duty 
 either in terms or by fair and reasonable construction and implication, and there is. 
 no other specific or adequate remedy, the writ of mandamus will be awarded. But 
 the writ will not be awarded unless the right sought to be enforced is a complete and 
 perfect legal right, and, of course, the reciprocal obligation is a complete and perfect 
 legal obligation." In R. R. Com'rs v. P. <fe 0. C. R. R. Co. 63 Me. 269, it is held that 
 railroad corporations " being creatures of law, intrusted with the exercise of sovereign 
 powers to subserve public necessities and uses, are bound to conduct their affairs in 
 furtherance of the public objects of their creation. ' It is true,' observes Shaw, C. J., 
 in Worcester v. Western R. R. Co. 4 Mete. 564, ' that the real and personal property 
 necessary to the establishment and management of the railroad is vested in the cor- 
 poration, but it is in trust for the public. The company have not the general power 
 of disposal incident to the absolute right of property ; they are obliged to use it in 
 a particular manner, and for the accomplishment of a well-defined public object.' In, 
 order to enforce such use of their franchises, the writ of mandamus has been held to 
 be an appropriate process. * » * This writ lies to compel persons or corpora- 
 tions to do a certain specific act, as being the legal duty of their office, character or 
 situation (A. & A. 694). In State v. R. R. Co. 29 Conn. 538, the Court say : 'All 
 jurists and judges will at once agi'ee that chartered companies are obliged fairly and 
 fully to carry out the objects for which they were created, and that they can be com- 
 pelled by mandamus to do so.' In that case, the court compelled the company to run 
 its cars over its track to a railroad station that it had discontinued. This writ lies 
 to compel a railroad company, bound by act of parliament to set out their deviations 
 and make their compulsory purchases within stated periods, to do those acts within 
 the times limited; also to compel a company to reinstate and lay down again the 
 railway it had taken np, or a water power company to erect and maintain a bridge 
 at its own expense, rendered necessary by extending its trench across the highway,, 
 at the suit of the attorney-general, where the public interests are involved, or to com- 
 pel a railroad company to keep railroad crossings in repair, or to remove obstructions 
 to navigation, caused by the improper manner in which the road was built. A. & 
 A. 711 <!i 713; State v. Gorham, 37 Me. 461; State v. N. E. R. R. Co. 9 Pick. 212; "^ 
 see Rogers Locomotive Works v. Erie R. R. Co. 20 N. J. Eq. 379. 
 
 Where a railroad company, whoso track crosses a highway, fails to restore the 
 road to its former condition, or to such state as not unnecessarily to impair its use- 
 
TRANSFER OF. 407 
 
 fulness, the proper remedy is a mandamus compelliog it to perform the omitted acts. 
 People V. Dutchess <fe Columbia E. R. Co. 58 N. Y. 152 ; N. Y. Central R. E. Co. v. 
 People, 12 Hun, 193. 
 
 IV. " There is some contrariety of opinion in this country, whether private per- 
 sons may he prosecutors or relators in a mandamus proceeding to enforce a public 
 duty, but the decided weight of authority is in favor of the doctrine. The leading 
 case asserting it is The People v. Collins, 19 Wend. 66, 1837, where the court, after 
 an examination of the English decisions and practice, reaches the conclusion that, in 
 a matter of public right, any citizen of the State may, where mandamus is the proper 
 remedy, be a relator, or enforce the execution of the common law, or an act of the 
 Legislature, though it was admitted to be otherwise in cases of private or corporate 
 rights, where the rule or right of the relator to relief must appear." Dillon, J., ia 
 Hall V. Union Pacific R. R. Co. 3 Dill. 516; citing, also, to the same effect, Hamilton 
 1/. State, 3 Ind. 462; Ottawa v. People, 48 111. 233; State v. County Judge, 1 1owa, 
 186, 202 ; lb. 390, 397 ; People v. Halaey, 37 N. Y. 344; s. c. 53 Barb. 647; State v. 
 Rahway, 33 N. J. L. 110 ; Watts v. Carroll Parish, 11 La. Ann. 141 ; State v. Turn- 
 pike Co. 16 Ohio St. 308 ; Dillon Munic. Corp. § 695, and cases cited ; contra, People 
 V. University Regents, 4 Mich. 98 ; Sanger v. Com'rs, 26 Me. 291 ; Heffner v. Comm. 
 28 Penn. St. 108 ; compare Comm. „. Meeser, 44 Penn. St. 341. And the court held 
 that the attorney-general was not a necessary party to the proceedings. This case, 
 in an earlier stage, will be found in 2 Dillon Rep. 527. Upon the return of the al- 
 ternative writ, a motion was made for a peremptory writ, and the opinion delivered 
 on the decision of that motion, will be found in 4 Dill. 479. This was a proceeding 
 by mandamus to compel the railroad company to operate its road as a continuous 
 line, by running its regular through trains to and from the Iowa or eastern shore of 
 the Missouri river, at a point in the State of Iowa, claimed by the relator to be the 
 eastern terminus of the road ; while, on the other hand, the respondent insisted the 
 legal as well as actual terminus was on the western shore of the river, in the State of 
 Nebraska. The court held that the legal terminus was on the Iowa shore, that the 
 bridge over the river was part of the continuous line of the road contemplated by the 
 acts of Congress empowering the corporation, that a peremptory mandamus should 
 issue to compel the company to operate its road over the bridge in the same general 
 manner that it operates the other portions of the road, and that the device of a sep- 
 arate transfer over the bridge by local trains, was in violation of the duty of the com- 
 pany to the public. Affirmed, 1 Otto, 343. 
 
 V. There is some diversity of opinion, whether a bill in equity will lie against a 
 railroad company for the specific performance of a duty imposed by its charter ; but 
 all authorities agree that if such bill is sustained it must be brought not by a private 
 person, but by the attorney-general. See People v. Albany & Vermont R. R. Co. 24 
 N. Y. 268 ; if. 0. 37 Barb. 216 ; People v. Troy & Boston R. R. Co. 37 How. Pr. 427. 
 In Buck Mountain Coal Co. v. Lehigh Coal Co. 60 Penn. St. 91, it is held that if a 
 corporation is formed for the performance of a public duty, a bill in equity will not ■ 
 lie against it, at the suit of a private person, to enforce the performance of such 
 duties, in the absence of special right or authority, but the Court remark : " It may 
 not be out of place to add that we have no doubt but the remedy by an injunction 
 sued out on the part of the commonwealth by the attorney-general, would lie against 
 a company to compel them to observe their chartered obligations." In Port Clinton 
 R. E. Co, V. Cleveland & Toledo E. R. Co. 13 Ohio St. 644, the court refused specific 
 performance of a contract to operate a railroad, doubting whether it would in any 
 
408 SPECIAL POWEES OF CORPORATIONS. 
 
 case be competent to decree specific performance of such a contract requiring, as it 
 would, personal acts involving the continuous exercise of skill and judgment under 
 varying circumstances and emergencies. 
 
 VI. There are cases where writs of mandamus have been issued to compel cor- 
 porate bodies to construct bridges over streams, in accordance with their charter.s, 
 and to maintain crossings over public highways, which seem to be based upon the 
 rule that common law courts can remove by mandamus all common nuisances or any- 
 thing done to the prejudice of the public. Rex v. St. John College, 4 Mod. 233. And 
 the fact that an indictment or presentment would lie, furnishes no objection, for the 
 fine may be satisfied or the penalty paid, and yet the public duty be unperformed. 
 State V. Halliday, 8 'S. J. L. 252 ; see In re Trenton Water Power Co. 20 N. J. L. 
 659; State «. Wilmington Bridge Co. 3 Harring. 312; State ». Northeastern R. R. 
 Co. 9 Rich. L. 247 ; Habersham v. Sav. & Ogeechee Canal Co. 26 Geo. 665 ; Ind. <fe 
 Cin. R. R. Co. v. State, 37 Ind. 489. 
 
 As to mandatory injunctions in like cases, see Del. <St Rar. Canal Co. v. Cam. & 
 Atl. R. E. Co. 16 N. J. Eq. 321, and authorities cited; s. c. 18 N. J. Eq. 546. 
 
 Mandamus will lie upon the petition of a private manufacturing corporation to 
 compel the surrender to its lawful ofiicers of books and papers pertaining to their 
 offices, and held by persons actually, but unlawfully, exercising the functions of those 
 officers under a claim of right, having usurped them under the choice of a minority 
 of the stockholders by the use of iUegal votes. American Railway-Frog Co. v. Haven, 
 101 Mass. 398. 
 
 The power of the Supreme Court to compel by mandamus the exhibition of the 
 transfer books of a domestic corporation, containing the names of the stockholders, 
 at any time when it is necessary to preserve and protect the interests of the stock- 
 holders, is undoubted ; but the reasons for granting the mandamus should be clear 
 and cogent. People v. Lake Shore, <feo. R. R, Co. 11 Hun, 1; Inre Sage, 70 N. Y. 223. 
 
 As to mandamus to municipal corporations, see Dillon, ch. xx. 
 
 On the general subject of this chapter, and of the writ of mandamus to enforce 
 public duties by railway corporations, see Goddefroi <fe Shortt, pp. 156, 177, 188, 204, 
 820, 359, 371. 
 
CHAPTER II. 
 
 TRAFFIC ARRANGEMENTS. 
 
 A coEPOEATioN may carry on and extend its legitimate business 
 by every legal means ; it may, consequently, in the furtherance of 
 these objects, enter into all such engagements with rival companies 
 and other competing bodies as it may deem most conducive to its 
 own interests, provided, however, that it does not, in so doing, 
 either exceed its powers, or enter into engagements which, how- 
 ever skillfully disguised, are only a transfer or delegation of spe- 
 cial powers and privileges. Of these engagements, the commonest, 
 as well as the most noticeable, are the arrangements entered into 
 by railway companies for the forwarding and division of traffic, {a) 
 Such arrangements, if bona fide what they purport to be, viz., 
 conventions for more economically or expeditiously conducting 
 their several business in circumstances where they clash, are valid, 
 and are valid only when of this description. It is, however, in 
 many cases, extremely difficult to say under which head — that of 
 legal traffic arrangements or illegal transfers of powers — a partic- 
 ular agreement is to be placed, and different courts come to con- 
 trary conclusions. 
 
 I. Arrangements for the cowoenient or economical working of 
 traffic are p&rfecUy good. 
 
 It may be laid down broadly that all hona fide traffic arrange- 
 ments for the more convenient, speedy or economical forwarding, 
 or otherwise working the traffic which comes to a particular com- 
 pany and group of companies, usually railway companies, will be 
 supported. But such arrangements must be in reality what in 
 name they purport to be, simply agreements necessitated as matters 
 of manageinent, by which the business that comes to the one com- 
 pany or, if more than one, within the scope of all, is carried on 
 
 (a) As to contracting to carry beyond a contracting railroad's line, see ante, 
 . 90. 
 
410 TRAFFIC ARRANGEMENTS. 
 
 commodioQsly and cheaply, and for the benefit of the company or 
 companies concerned and of the public, and not transfers of the 
 powers of some of such companies to the others — ^not transfers of 
 powers, nor amounting to joining in the enterprise of other com- 
 panies, {a) 
 
 In Beman v. Eufford,^ where a railway act enacted that the 
 railway should be constructed in all respects to the satisfaction of 
 the engineer of the Great Western (a broad gauge railway), and 
 that it should be formed of such gauge, and according to such 
 mode of construction as to admit of its being worked contin- 
 uously with the Great Western, the court was of opinion that the 
 railway might be constructed on the narrow gauge as well as the 
 broad. 
 
 II. Pro rata forwarding agreements are perfectly good. (&) 
 
 Agreements by transport companies to carry or forward traflSc 
 over other lines than their own, or to places beyond their own 
 termini, entered into with their own customers, are valid ^ under 
 ordinary circumstances, (c) Indeed certain of them have been ex- 
 pressly recognized by the Legislature, and made lawful.' As a 
 necessary result, the consequent arrangements requisite for carry- 
 ing out such agreements are equally valid. 
 
 More than this, agreements are good, not merely which pro- 
 vide for the forwarding of such traific and for payment to the 
 latter (second) carrying company of their charges, but also which 
 pro-side that the whole cost and charges of the through' carriage 
 from first receipt to final destination shall be put into one lump 
 
 ' 1 Sim. (N. S.) 650. ^ gge post, p. 416 ; and compare 17 
 2 Kent V. Midland Ry. Co. L. R. 10 Q. <fe 18 Vict. c. 31, s. 2. 
 B. 1. 
 
 (a) An agreement by a railroad company to build its road so as to connect with 
 another, and that the charges for transportation shall be regulated by both com- 
 panies together, is a valid contract which will give ground for an injunction restrain- 
 ing such a change of gauge as would break up the connection. Columbus, <fec. R. R. 
 Co. V. Ind. (fee. R. R. Co. 5 McLean, 460. And so, also, of a contract to maintain a 
 connection between two railroads. Androscoggin, <fec. R. R. Co. ■</. Androscoggin R. 
 R. Co. 52 Me. All; see, also, Bartlette «. Norwich, <fcc. R. R. Co. 38 Conn. B60; 
 Arnot V. Erie Ry. Co. 5 Hun, 608 ; Holmes v. Old Colony R. R. Corp. 5 Gray, 68 ; 
 Darling v. Boston, &c. R. R. Co. 11 Allen, 296 ; Gass v. New York, 4c. R. R. Co. 99 
 Mass. 220. 
 
 (i) See poit, p. 415, note. 
 
 (<•) See ante, p. 90, note. 
 
TRAFFIC ARRANGEMENTS. ill 
 
 sum and defrayed by the original customer, and this sum divided 
 among the carrying companies in fixed proportions. These are 
 the true pro rata forwarding agreements. They are almost es- 
 sential to the well working of locomotive and transport enterprise,, 
 whether by land or water, and have become very common in aU 
 countries. There is a distinct decision in England as to their 
 legality,^ which has also been recognized in many other cases.' (a)" 
 
 III. Arrangements giving to one company running powers over 
 the line of another company a/re valid. (J) 
 
 One of the earliest cases determining the validity of such ar- 
 rangements is that of South Yorkshire and Eiver Dun Company 
 V. Great [Northern Railway Company, the conflicting judgments 
 rendered in which in chancery and at common law well evidencing 
 the diverse interpretation put upon these agreements, and the 
 difficulties involved in a determination of their true legal nature 
 and bearing. This suit arose thus : In 1851 and 1852 negotiation* 
 were carried on between the South Yorkshire Railway and River 
 Dun Company and the Great Northern Railway Company, chiefly 
 with reference to the regulation of the coal traflSc, and the division 
 between the two companies of the tolls received therefrom. In 
 the result an agreement was entered into under seal between the 
 two companies, by which it was covenanted that the latter com- 
 pany should have the use of the line of the former for a term 
 
 ' Hare v. London & Northwestern Ry. ^ As in Kent v. Midland Ry. Co. L. R.. 
 
 Co. 2 J. (& H. 80. 10 Q. B. 1, and similar decisions. 
 
 (a) Stewart v. Erie, (fee. Transportation Co. lY Minn. 372. 
 
 (5) Contracts giving to one railroad company running powers over tlie line of an- 
 other are common in this country. But whether they can be made without legisla- 
 tive authority, is doubtful. For instances, see Webb v. Portland, (fee. R. R. Co. 57 
 Me. 117; Sawyer v. Rut. & Burl. R. R. Co. 27 Vt. 370; Murch v. Concord R. R. Co. 
 29 N. H. 9 ; Boston & Lowell R. R. Co. v. Boston &. Maine R. R. Co. 5 Cush. 376 ; 
 Boston <fc W. R. R. Co. v. Western R. R. Co, 14 Gray, 253 ; Naugatuck R. R. Co. v. 
 Waterbury Button Co. 24 Conn. 468 ; Parker v. Rens. & Sar. R. R. Co. 16 Barb. 315 ; 
 Smith V. N. T. (fe Har. R. R. Co. 19 N. Y. 127 ; Wylde v. Northern R. R. Co. 53 N. 
 Y. 156; Stanley II. C. C. (fc C. R. R. Co. 18 Ohio St. 552; Indianapolis & Mad. R. R. 
 Co. V. Solomon, 23 Ind. 634. Judge Storer, in Ohio & Miss. R. R. Co. v. Ind. <fe Cin. 
 R. R. Co. 5 Amer. Law Reg. (N. S.) 733, holds, that a railroad chartered in one State 
 cannot contract with companies in other States for the permanent privilege of running 
 cars on their lines. See Ogdensburg & Lake Cham. R. R. Co. v. Vt. & Can. R. R. Co. 
 6 N. Y. Sup. Ct. (T. (fe C.) 488, 494. 
 
412 TRAFFIC AKEANGEMENTS. 
 
 certain at stated tolls, according to tlie tonnage carried ; and it 
 was agreed that these tolls should be charged on the tolls and dues 
 of the company who had the use of the line, and that upon non- 
 payment the other company might take and impound such, tolls 
 and dues, and deal with the same i'n the same way as with distress 
 for rent. In accordance with the agreement the Great Northern 
 Railway Company had the use of the other company's line for a 
 time, but refused to make any payments in respect thereof. 
 Thereupon a bill was iiled^ by the former company to restrain the 
 other company of the line from dividing their funds among their 
 shareholders, by way of dividend, until the debts alleged to be due 
 to the other company were paid. The Court of Chancery, how- 
 ever, declined to interfere by way of injunction, but left the 
 plaintiflFs to proceed by action or distress, as they might be ad- 
 vised. But though the Lords Justices declined to interfere, they 
 inclined to the opinion, first, that a railway company cannot, legally 
 or equitably, mortgage its undertaking without the authority of 
 parliament ; {a) and, secondly, that such — the agreement here in 
 question — was not a contract for the use of the line, nor for an 
 apportionment of tolls, within the 87th section of the Eailways 
 Consolidation Act, 8 & 9 Vict. c. 20. An action was then 
 brought at law, and the Court of Exchequer Chamber, afiirming 
 the judgment of the court below, considered the contract to be 
 uot only in other respects legal, but also within the powers of the 
 directors.' "It is a contract, the object of which is, and by 
 which it is provided, that the plaintiffs in error may pass their 
 carriages laden with coals over the line of the defendants in error ; 
 and so far as its purpose and general stipulations provide for 
 effecting this, it is clearly a contract which the two bodies are 
 competent to enter into. But it is a condition imposed on which 
 the validity of the contract depends, that this use of the line shall 
 be granted on payment of tolls." And the court came to the con- 
 clusion that the payments to be made under the contract were 
 " tolls " within the meaning of the 87th section of the Eailways 
 Clauses Consolidation Act, 8 & 9 Vict. c. 20. 
 
 In Great Northern Eailway Company v. Manchester, &c. Eail- 
 
 ■ 3 DeG.,M. & G. 576 ; 22 L. J. (Ch.) ^ 9 Ex. 642; 28 L. J. (Ex.) 186. 
 '761. ^____ ' ^ ' 
 
 (a) See ante, pp. 228, 237, and notes. 
 
TRAFFIC ARRANGEMENTS. 413 
 
 way Co.'' an agreement that two companies might mutually use the 
 railway of one of the companies on certain specified terms, was 
 held good as being consistent with a proper user of the railway and 
 with the rights of the granting company. 
 
 The latest decision on this subject is that of Midland Eail- 
 way Company v. Great Western Railway Company.' The H. 
 Railway Company, whose line ran into the defendant company's 
 line at B., had a parliamentary right to use the defendants' station 
 at B. The plaintiffs' company had running powers over the de- 
 fendants' line, and were anxious to run trains through the B. sta- 
 tion over the H. line. The H. company applied to parliament for 
 power to lease their line to the plaintiffs, but through the opposi- 
 tion of the defendants the proposed bill was thrown out. The.H. 
 company then entered into an agreement with the plaintiffs, ter- 
 minable on six months' notice, by which they agreed to allow the 
 plaintiffs to use the H. line, and all its stations, sidings, &c., and 
 to afford them every facility for so doing ; the plaintiffs to keep 
 the line in repair, and appoint and pay their own oflBcers, and fix 
 the rates and fares of through trafiSc, paying to the H. company a 
 proportion of the through rates and fares by way of commuted 
 toll. It was also provided that if the H. company should desire 
 the plaintiffs to undertake the local traffic of the H. line, the 
 plaintiffs would do so, paying the H. company a proportion of the 
 fares. The plaintiffs, under this agreement, claimed the right to 
 run their trains over the defendants' junction at B., and filed their 
 biU to establish the right, which the defendants resisted, on the 
 ground that the agreement between the plaintiffs and the H. com- 
 pany was ultra vires and illegal. The Lords Justices, reversing 
 the decision of the Master of the Kolls, held that the agreement 
 
 ' 5 De 6. & Sm. 138 ; compare Midland quiescence (a) by one company in the en- 
 Railway Company v. Ambergate, <fec. Rail- joyment by another company of rights of 
 way Company, 10 Hare, 369 ; Lancashire user. Great Northern Railway Company 
 and Yorkshire Ry. Co. ». East Lancashire v. Lancashire and Yorkshire Railway 
 Ry. Co. 5 H. L. C. 792; 25 L. J. (Ex.) Company, 1 Sm. & Giff. 81; and.Shrews- 
 278. bury and Birmingham Railway Company 
 
 ' L. R. 8 Ch. 841 ; see, also, Llanelly v. Stour Valley Railway Company, 2 De 
 
 Railway and Dock Company v, London G., M. & G. 866. As to the import of an 
 
 and Northwestern Railway Company, L. arbitrator's award, see Eastern Union 
 
 R. 8 Ch. 942 ; Wolverhampton and Wal- Railway Company v. Eastern Counties 
 
 sail Railway Company v. London and Railway Company, 2 E. & B. 630 ; 22 L. 
 
 Northwestern Railway Company, L. R. 16 J. (Q. B.) 371. 
 Eq. 438 ; see, also, as to the effect of ac- 
 
 ^ (a) See ante, p. 404, note. 
 
414 TRAFFIC ARRANGEMENTS. 
 
 ■was not ultra vires or illegal, and that the plaintiffs were entitled 
 to the relief prayed. 
 
 No test exists, no fixed line marking off legal business regula- 
 tions from illegal delegation of special powers, but here may be 
 mentioned the case of London, Brighton and South Coast Eail- 
 way Company v. London and Southwestern Eailway Company,* as 
 illustrating the nature of agreements which will be considered not 
 to come under the head of traffic arrangements. The Brighton 
 Company and the Southwestern Company became jointly entitled 
 to a line of railway under au act of parliament made in 1847, by 
 which this joint line was placed under the management of a joint 
 committee. By this act it was provided that each of the two com- 
 panies might use the joint line for all purposes necessary for the 
 traffic of the same respective company. The Southwestern Com- 
 pany afterwards, without parliamentary authority, entered into 
 agreements with the Portsmouth Company, by which the South- 
 western Company was to have the exclusive use of the line of the 
 Portsmouth Company, paying £18,000 a year. On bill filed by 
 the Brighton Company to prevent this agreement being carried 
 out, and in particular to restrain the Southwestern Company from 
 using the Landport station,'' it was decided that the act of 1847 
 did not create a joint tenancy, carrying with it the right of using 
 for every kind of traffic a station appurtenant to the joint line, 
 and that the Southwestern Company had no right to use it except 
 for what was properly traffic of that company. The court also 
 held that the agreements between the Southwestern ^Company 
 and the Portsmouth Company were ultra vires and illegal, and 
 that the conveyance of passengers and goods under them did not 
 constitute traffic which could be considered traffic of the South- 
 western Company within the meaning of the act of 1847, and that 
 therefore the Brighton Company were entitled to an injunction 
 restraining the Southwestern Company from using the joint sta- 
 tion ioY the purposes of any traffic destined for or coming from 
 the Portsmouth Eailway or any part thereof, {a) 
 
 ' 4 De G. & J. 362 ; 28 L. J. (Ch.) B21 ; of stations, see Midland Ry. Co. d. Amber- 
 
 Furness Eailway Company v. Smith. 1 De gate Ry. Co. 10 Hare, 359 ; Shrewsljury, 
 
 '6. <fe Sm. 299 ; Shrewsbury, &c. Railway <!fc. Ry. Co. v. Chester, <fec. Ry. Co. 14 L. 
 
 Company v. Chester, <fec. Railway Com- T. 217,433; Eastern Union Ry. Co. j/.East- 
 
 ', 14 L. T. 217, 433. ern Counties Ry. Co. 2 E. <fe B. 530. 
 As to agreements relating to the use 
 
 (a) See Del., Lack. &, Western R. R. Co. v. Erie Ry, Co. 21 N. J. Eq. 298, for a 
 
TEAFFIC ARRANGEMENTS. 415 
 
 IV. Agreements for apportioning hetween different companies 
 the " tolls " receivable hy the whole of them collectively, may 
 he vaUd. (a) 
 
 Whether such agreements ■would, apart from statutory enact- 
 ment, be considered good is doubtful.^ Contracts between com- 
 
 ' Per Lord Cranworth, 6 H. of Lds. Cases, 135, and per Lord Chelmsford, 4 
 
 De G. & J. 389. 
 
 case somewhat similar in facts to the case cited in the text, but in which the court 
 declined to pass upon the point on motion for a preliminary injunction, and in which 
 the matters in controversy having been adjusted by an agreement between the com- 
 panies, the suit did not come to a final hearing, See post, p. 421, note ; see, also, 
 Sussex R. R. Co. v. Morris <fc Essex R. R. Co. 19 N. J. Eq. 13 ; s. o. 20 Id. 642. 
 
 (a) Contracts between railroads foi; the purpose of providing through transporta- 
 tion of passengers and freight between distant points, over several lines, and which 
 are generally tnown as "pro rata" agreements, are exceedingly common in this 
 country. The authority to make such arrangements, provided that they are bona 
 fide, and do not create a legal monopoly, cannot be denied. In Hartford and New 
 Haven R. R. Co. v. N. T. & N. Haven R. R. Co. 3 Rob. 411, an agreement providing 
 for a, pro rata division of the fares of thiiough passengers on three continuous roads, 
 owned and operated by diflferent corporations, was held legal. In Stewart «. Erie 
 and Western Transportation Co. IV Minn. 372, it is said : " In view of the present 
 modes of transacting business of this kind, this authority would seem to be an inci- 
 dent to railroad corporations, unless withheld by the terms of their charters ; and 
 contracts of this kind, when made with a hona fide purpose to regelate traffic in a 
 reasonable and just manner, are generally held good." The division of the tolls and 
 fares in such case may be according to any plan which is agreed upon, and need not 
 be based upon the relative distances traversed by the connecting roads. Stewart v. 
 Erie & Western R. R. Co. mpra. The Sussex R. R. Co. v. Morris & Essex R. R. Co. 
 19 N. J. Eq. 13, B. 0. 20 Id. 542, involved a kindred question: it was, whether the 
 defendant could make a contract with the complainant (a connecting railroad com- 
 pany) to allow the complainant one-third the amount received from each passenger 
 brought by the complainant to the defendant's road, or in any way to pay more than 
 what was paid by the passenger for the complainant's fare. The chancellor, after a 
 review of the English cases, says : " I find no adjudication whatever in this country 
 upon the point. Yet we know that it is, and has been for years, the constant practice 
 of railway companies to run in connection, passing freight and passengers over a 
 number of lines forming one route, and to divide the receipts by an arbitrary sched- 
 ule fixed upon, and not always, or in most cases, giving to each line the share earned 
 on it, and that only. In many cases, as in the present, there may be good reasons 
 for making a difference in the division of the profits. If an advantageous arrange- 
 ment can be made by a line at the south end of a route, with a line at the north end, 
 for carrying passengers in common, which could not profitably (and therefore would 
 not) be entered into by the north line, unless it received a larger proportion of the 
 earnings than in proportion to its work, there is no reason or principle of law why 
 the south line should be prohibited from making an arrangement profitable to its 
 
416 TRAFFIC ARRANGEMENTS. 
 
 panics whicli create in fact, if not in name, partnerships, are Toid 
 on the double ground of being ultra vires and also contrary to 
 public policy, and any arrangement for the division of tolls must, 
 it is presumed, be objectionable upon the same grounds. With re- 
 gard, however, to railway companies it is expressly provided by 8 
 and 9 Yict. c. 20, s. 87, that 
 
 " It shall be lawful for the company from time to time to enter into any 
 contract with any other company, being the owners or lessees, or in possession 
 of any other railway, for the passage over or along the railway, by the spe- 
 cial act authorized to be made, of any engines, coaches, wagons, or other car- 
 riages of any other company, or which shall pass over any other line of rail- 
 way, or for the passage over any other line of railway of any engines, coaches, 
 wagons, or other carriages of the company, or which shall pass over their line 
 of railway, upon the payment of such tolls, and under such conditions and 
 restrictions as may be mutually agreed upon ; and for the purposes aforesaid, 
 it shall be lawful for the respective parties to enter into any contract for the 
 division or apportionment of the tolls to be taken upon their respective 
 railways. "(<*) 
 
 shareholders, on the ground that the division of earnings must be unequal. The di- 
 rectors of such companies have the right to make contracts as to carrying passengers 
 and freight. They can make such contracts for one trip, for one day, for one year, 
 or for the whole existence of the company. They can make such contracts at prices 
 lower than those limited in their charter, and lower than charged to others. The 
 commutation contracts constantly made on all leading roads are in exercise of this 
 power. They are made for months, a year, and sometimes for life. Their validity 
 is founded upon well settled principles of law, and has never been doubted. They 
 are made for the supposed advantage of the business and of the shareholders ; and 
 the expediency of making them must depend on the judgment of some one, and in all 
 these corporations, the management of all the concerns is committed to the directors. 
 There is nothing in such contracts against public policy or any law of this State. The 
 want of such power would be a great injury to most railway corporations, as well as to 
 the public, who, as in this case, are much benefited by the arrangement. Contracts by 
 which commuters are carried for less than cost have been held good policy by railway 
 managers, as tending to build up and populate towns along their lines. They may 
 misjudge as to the policy, but contracts thus made in good faith are valid." See, also, 
 March v. Eastern R. R. Co. 43 N. H. 515 ; Darling v. B. & W. R. R. Co. 11 Allen, 295 ; 
 Gass V. N.T., P. <fe B. R. R. Co. 99 Mass. 220 ; Hartford <fe N. H. R. R. Co. v. N. Y. <fe 
 N. H. R. R. Co. S Rob. 411 ; Root ?/. Great Western R. R. Co. 45N.Y. 524; s.o. 2Lans. 
 199. An agreement by a railroad to build its road so as to connect with another, and 
 that the charges for transportation shall be regulated by both companies together, is 
 a valid contract which will give ground for injunction restraining such a change of 
 gauge as would break up the connection. Columbus, P. <fe I. R. R. Co. v. Indianapolis 
 & B. R. R. Co. 5 McLean, 450. A contract to maintain a connection between two rail- 
 roads is valid. Androscoggin & Ken. R. R. Co. v. Androscoggin R. R. Co. 52 Me. 417 ; 
 see, also, Bartlette v. Nor. & Wor. R. R. Co. 33 Conn. 560. 
 (o) See Goddefroi & Shortt, p. 396. 
 
TRAFFIC ARRANGEMENTS. 417 
 
 What will be " tolls " williin the meaning of this section is by 
 no means clear ; the authorities on this point, as upon so many 
 others in connection with ultra vires, being very conflicting. It 
 would seem that any payment of money, whether a lump sum or 
 not, in consideration of the conveyance or passage over the line 
 of the contracting company, of goods or passengers, is a '' toU," 
 although the payment be not calculated by reference to the num- 
 ber of individuals or separate articles.^ But an agreement pro- 
 viding for a fixed dividend upon the capital of either of the con- 
 tracting companies is not so.* The best cases illustrative of this 
 point are those arising out of the agreement, which has already 
 been referred to and commented upon,* made between the Great 
 I^'orthern Kailway Company, the South Yorkshire Eailway Com- 
 pany, and the Kiver Dun Company.* 
 
 V. Agreements providing for the division of profits arising 
 from the whole existing traffic of a district, in proportions 
 calculated on the past course of traffic, are not ultra vires 
 or otherwise void.{a) 
 
 This proposition seems to be established, but it requires the 
 greatest care and consideration to discriminate agreements of this 
 
 ' Great Northern Railway Company ' See ante, pp. 411,412. 
 V. South Yorkshire and River Dun Com- ■* See also East Anglian Railway Com- 
 pany, 9 Ex. 55, in the Exchequer pany v. Eastern Counties Railway Corn- 
 Chamber, pany, 21 L. J. (C. P.) 23. 
 
 ' Simpson v. Denison, 10 Hare, 51. 
 
 (o) Agreements of the nature referred to would not only be ultra vires, unless ex- 
 pressly authorized by the Legislature, but illegal, and therefore void as preventiDg 
 competition and tending to create a monopoly. Powers for such purpose, or having 
 such effect, cannot be implied, nor can privileges of this sort be enlarged by implica- 
 tion. Taney, C. J., in Charles River Bridge v. Warren Bridge, 11 Pet. 420; stepost, 
 p. 434, and note ; see Currier v. Concord R. R. Corp. 48 N. H. 321, which was a suit 
 in equity by private citizen against railroad corporations under an act of the Legis- 
 lature, which provides that rival and competing lines of railroad shall not be al- 
 lowed to be consolidated, and that neither of said lines shall be run or operated by 
 any such rival or competing line, under any business contract, lease or other ar- 
 rangement, bnt each and every such railroad shall be run, managed and operat,ed 
 separately by its own officers and agents, and be dependent for its support on its 
 own earnings from its local and through business in connection with other roads, and 
 the facilities and acccimmodations it shall afford the public for travel and transporta- 
 tion under fair and open competition, unless such lease, contract or arrangement be 
 authorized by the Legislature and approved by the governor and council. The Court 
 27 
 
-418 TRAFFIC ARRANGEMENTS. 
 
 class, on the one hand, from transfers'of powers, and, on the other 
 hand, from partnerships between the various companies concerned. 
 
 say : " The object of the law is to prevent the consolidation of rival and competing 
 lines of railroad, by contracts or arrangements between them, by means of which 
 competition is removed, the purpose being to prevent the increase of the charges of 
 such railroads beyond what might be expected under the influence of a free competi- 
 tion. In the promotion of this object every citizen having occasion to use snch 
 roads, or to purchase articles transported over them, has an interest ; but his in- 
 terest is not of a character which may be protected by a suit to recover damages. 
 It is mUch like the interest which every citizen has in a public highway, its being 
 kept in repair, and there, independent of statute provisions, he can maintain no 
 action on account of any defect in its condition ; and by statute he can maintain 
 action only in case he suffer special damages while in the use of the road, and not 
 for being deprived of the use of it altogether by its being permitted to become im- 
 passable, as held in Griffin v. Sanborntown, 44 N. H. 246. Upon the same principle 
 no person has such an interest in preserving free competition between rival railroails, 
 as to be entitled to maintain a suit for diminishing or removing such competition ; 
 but the wrong which arises from the violation of the provisions of the statute is 
 essentially a public wrong in which no citizen has a special or private interest." In 
 Morris Run Coal Co. u. Barclay Coal Co. 68 Penn. St. 173, a combination of five coal 
 companies, not to sell except in proportions and at prices f.xed by a committee, by 
 which combination a virtual monopoly of all the coal of a certain class was created, and 
 the supply limited, was held void as against public policy ; and not only so, but it 
 was said to be a criminal conspiracy. 
 
 In Hart. & N. Haven R. R. Co. v. N. Y. & N. H. R. R. Co. S Rob. 411, a contract 
 was adjudged void as against public policy as an infringement of the rights of travel 
 The Court say : " It is a compact between the parties, intended to affect the facilities 
 for public travel over a route of railroad, which had been or might be authorized by 
 law. The defendants were lessees of the New Haven and Northampton railroad, 
 then in part constructed. The lessors had covenanted not to extend the road north- 
 erly beyond Granby station (a point a little north of the Connecticut line) without 
 the consent of the defendants, and had given over to the defendants all the franchises 
 and corporate powers of such lessors, for the purpose of locating or constructing any 
 railroad or extension of any railroad northerly from Granby station. By the agree- 
 ment with the plaintiffs, of March 16, 1850, the defendants covenanted to hold the 
 franchises and corporate powers conveyed to them by such lease, until the Ist of 
 July, 1869, and during such time not to extend such railroad north of Granby station. 
 Such an arrangement was intended to prevent the extension of the N. H. & N. rail- 
 road to any point north of its terminus at Granby, and to prevent any competition 
 in travel, detrimental to the interests of the plaintiffs' road, which had a monopoly 
 of the carrying trade from Springfield and points north of Springfield via Northamp- 
 ton and Springfield road, which such extension might afford. The completion of the 
 N.*H. <fe N. R. R. to Northampton, would open a new line for travel southward, which 
 would be a competitor and rival of the road of the plaintiffs. Such competition and 
 rivalry it was not lawful for these parties to prevent, or attempt to prevent, and any 
 contract to effectuate such purpose is void. Public policy is opposed to any infringe- 
 ment of the rights of travel, or of any of the facilities which competition may furniflh ; 
 
TRAFFIC ARRANGEMENTS. 419 
 
 In the last chapter (a) the well-known Shrewsbury Railway Com- 
 pany's cases were mentioned, as exemplifying these difficulties, {b) 
 These arose out of the following circumstances : The London 
 and North-Western Eailway Company and the Shropshire Union 
 Railways and Canal Company, together promoted a bill to enable 
 the former to use a portion of the line of the latter company. 
 This biU the Shrewsbury and Birmingham Railway Company 
 opposed. To get rid of their opposition an agreement was en- 
 tered into with the opposing company, by which the other two 
 companies agreed to conduct their traffic in a certain specified 
 manner, to keep certain accounts, and to pay over to the Shrews- 
 bury Company a portion of their receipts.* This agreement gave 
 rise to an enormous amount of litigation. On the opening of the 
 Shrewsbury and Birmingham Railway, in ISiY, that company 
 called upon the London and North-Western Railway Company to 
 keep the accounts stipulated for in the agreement, and this being 
 refused a bill was filed to compel them to do so. This bill was 
 met by a demurrer on the part of the London and North- Western 
 Railway Company, and the demurrer was allowed by the Vice- 
 Chancellor of England, on the ground that the agreement had not 
 come into operation.' From this there was an appeal, and Lord 
 Cottenham overruled the demurrer, being of opinion that the 
 . agreement had come into operation and was valid and hinding? 
 Thereupon a motion for the injunction prayed by the bill, *. e., 
 that the London and North-Western Railway Company should not 
 (see. the tbird clause of the agreement) carry traffic on certain 
 
 ' See the agreement at length, 2 Mac. ^ 2 Mac. <fe G. 324 ; 2 Hall & T. 257 ; 
 
 & G. 331-335. 20 L. J. (Ch.) 95. 
 
 ' 20 L. J. (Ch.) 90. 
 
 aud the law -will not uphold any agreement which doea or may Injuriously affect such 
 rights or facilities." Citing Doolin v. Ward, 6 Johns. 194; Hooter v. Vandewater, 4 
 Den. 349 ; Stanton v. Allen, 5 Id. 434 ; State v. Hart. & N. H. R. R. Co. 29 Conn. 538 ; 
 Hood V. N. Y. & N. H, E. R. Co. 22 Id. 502. The grants by the State of Georgia, of 
 charters to several railroads from the seaboard to the interior, indicate a public policy 
 to secure a reasonable competition between those roads for public patronage. It is con- 
 trary to that policy for one of those roads to attempt to secure a controlling interest in 
 another ; and any contract made with that view, will be set aside by a court of equity 
 as illegal, beyond the objects of the charter, and contrary to the public policy of the 
 State. Central R. R. Co. v. Collins, 40 Ga. 682. 
 
 (a) Page 400. 
 
 (J) See Sussex R. E. Co. v. Morris <fc Essex R. E. Co. 19 N. J. Eq. 13, 22. 
 
420 TRAFFIC ARRANGEMENTS. 
 
 specified portions of their lines, was made and granted by the 
 Vice-Chancellor ; * this, also, was appealed from, and the then 
 Chancellor, Lord Truro, dissolved the injunction upon the ground 
 of comparative inconvenience, and without giving any opinion as 
 to the merits of the case ; holding that the questions, both as to 
 the agreement having come into operation and as to its legal 
 validity, ought to be tried at law.^ (a) An action was next brought 
 upon the agreement, and the Court of Queen's Bench held, that 
 it was not void ; either as being a fraud on the Legislature, or as 
 depriving the public of the benefit of competition, or as being a 
 fraud on the shareholders.' A further motion for an injunction 
 was then made before the Master of the Rolls, to whom the cause 
 had been transferred ; and he ultimately dismissed the bill — or, 
 rather, all the bills, for three cross suits were pending — and with 
 it the motion for the injunction.* Against this dismissal there 
 was an appeal unto the Lords Justices, who also decided against 
 the plaintiffs, holding that the agreement was a breach of trust on 
 the part of the directors as between themselves and their share- 
 holders, and that the plaintiffs had knowingly participated in such 
 breach of trust. They also held, that the contract, being to alien- 
 ate the tolls of a given portion of a railway, was contrary to the 
 authority given by parliament, and was against public' policy ; and 
 that, therefore, whether it were valid or invalid at law, the court 
 could not lend its assistance to enforce specific performance of the 
 same.' The plaintiffs thereupon appealed to the House of Lords, 
 where, finally, it was determined, that whatever were the charac- 
 ter of the covenants in question, the time had not yet come when 
 they were to be put into operation.* 
 
 The result of these numerous judgments is thus summed up 
 by Page Wood, Y.-C. : ' " I think the positive opinions are only 
 two : Lord Cottenham on the one hand (i. e., in favor of the legal- 
 ity of the agreement), the Y.-C. Turner on the other; and the 
 present Master of the Rolls, whether bound by the weight of au- 
 
 ' 20 L. J. (Ch.) 102. 5 4 De (j _ jj. 4 Q. ng . 22 L. J. (Cb.) 
 
 « 3 Mac. &G.10; 20 L. J. (Ch.) 103. 682. 
 
 ' 11 Q. B. 662 ; 21 L. J. (Q. B.) 89. « 6 H. Lds. 113 ; 26 L. J. (Ch.) 482. 
 
 * 16 Beav.441. .^ 2 J. <Si H. 113, 114; 30 L. J. (Ch.) 
 
 832. 
 
 (o) See Prudden v. Morris & Easpx R. R. Co. 19 N. J. Eq. 386; b. 0. reVd, 20 N. 
 J. Eq. 680 ; Black v. Del. & Rar. Canal Co. 22 N. J. Eq. 130, 426. 
 
TRAFFIC ARRANGEMENTS. 421 
 
 thority or otherwise, adheres to the view of Lord Cottenhatn and 
 the judges at common law. In equity the authorities stand in the 
 manner I have described ; there are only two authorities directly 
 opposed, and the others, perhaps, may be taken to be neuter be- 
 tween those two contending views. Then we have the opinion of 
 the Court of Queen's Bench, which consisted at the time of the 
 present Lord Chancellor, Mr. Justice Patteson, Mr. Justice Cole- 
 ridge, and Mr. Justice Wightman ; certainly a very great weight 
 of authority is there found united in favor of the contract which 
 there existed." (a) 
 
 Another equally well-known, and perhaps more important as 
 heing the more recent, authority is that of Hare v. London and 
 North- Western Railway Company.* Here two groups of railway 
 companies, being respectively the owners of independent conter- 
 minous routes from London to Edinburgh, the west route and 
 
 ' 2 J. <6 H. 80; 30 L.J. (Ch.) SIT ; lisle Railway Company «. North- Western 
 Hodgson V. Earl Powis, 1 T>e G., M. <fe G. Railway Company, 2 K. <fe J. 293 ; 25 L. 
 6 ; 21 L. J. (Ch.) 11 ; Lancaster and Car- J. (Ch.) 223. 
 
 {a) The case of Del., Lack. & West. R. R. Co. v. Central R. R. Co. of N. J. (unre- 
 ported) arose upon a contract between the two corporations providing for the opera- 
 lion and management, as a joint estate, of all the roads of the contracting companies, 
 " held as owners, lessees, or otherwise ; and also all railroads, properties and inter- 
 ests thereafter by either or both of said companies built or acquired." It also pro- 
 vided for equal dividends, and that the receipts should be regarded as joint receipts, 
 and the expenses as joint expenses, the surplus to be disposed of as should be directed 
 ty a joint committee of both boards, in which each company was equally represented . 
 The contract prescribed, that for the present the ordinary and current business of 
 «ach company should be managed and controlled by the respective boards and officers 
 of each company, but required that the directors, managers and officers of each com- 
 pany should do and perform all such legal acts and things as the joint committee 
 should request — the agreement to be perpetual, its purpose and object of being de- 
 clared to be to effect an equal and perpetual union, and as soon as possible to consoli- 
 date their capital stock, property and assets, to the end that the management might 
 be simplified and rendered more efficient. There was a covenant for such further 
 agreements as, in the opinion of the joint committee, might be necessary to give per- 
 fect effect to the purposes and objects of the agreement. A motion for injunction 
 was elaborately argued before Dodd, V.-C. (N. J.), but the point was not decided. 
 The motion was denied, on the ground that the agreement had not been recorded 
 pursuant to a general act of the Legislature. See Laws of N. J. 1871, ch. 426,,p. 11. 
 Supplemental bills were afterwards filed and injunctions obtained, and the American 
 editor is informed by counsel engaged in the case, that the agreement was never pro- 
 nounced illegal or void. The litigation was afterwards settled. It is to be regretted 
 that the profession has not the benefit of the views of the learned Vice-Chancellor, or 
 of the able and exhaustive investigations contained in the briefs used in the cause. 
 
422 TRAFFIC ARRANGEMENTS. 
 
 the east coast route, agreed to divide the profits of the whole 
 trafiic in certain fixed proportions, calculated on the experience of 
 the past course of traffic. Asa result of that agreement, a portion 
 of the earnings of the London and North-Western Railway Com- 
 pany was handed over to the other companies ; and the plaintiff, 
 a shareholder in this company, applied, though after several years 
 of acquiescence, for an injunction to restrain the companies from 
 carrying out the agreement. The application was refused. The 
 Viee-Chancellor considered not only that on principle such an 
 arrangement was legal, there being in it nothing prejudicial to 
 either the shareholders or the public, but also that he was con- 
 cluded by the judgments of Lord Cottenliam and the Court of 
 Queen's Bench in the Shrewsbury Case : " Until that judgment is 
 overruled by a higher authority, I think I ought to adhere to it in 
 a case which seems to be entirely parallel." 
 
 In the present case the validity of the agreement was examined 
 as far as it concerned companies and lines existing at the moment 
 of its making ; more recently it has been decided that it is not so, 
 if applied to others not then existing. Midland Railway Com- 
 pany V. London and North-Western Railway Company^ is the case 
 in point. The plaintiffs here, by extending their old line and by 
 adding a new branch, and thence by running powers obtained 
 over the line of the defendants, one of the parties to the agree- 
 ment, had acquired, subsequently to the date of the same, a new 
 through route from London to Edinburgh ; and the suit arose in 
 reference to the proceeds of the traffic on such new through route. 
 Kindersley, Y.-C, after determining that the agreement did not 
 either expressly or by implication include the plaintiffs, consid- 
 ered that if it had done so it would have been illegal : " It would 
 be ultra vires of the board of directors of such a company to enter 
 into a contract fixing and regulating the future traffic which might 
 be carried upon a line of railway which the company might here- 
 after be empowered to construct, and the profits of such traffic, so 
 as to give to another railway company an interest in such traffic 
 and profits." 
 
 > L. R. 2 Eq. 524. Compare Maunsell -which was, that an agreement makinff 
 V. Midland Great Western of Ireland Rail- traffic regulations applicable to future ex- 
 way Company, 1 H. <fc M. 130; 32 h. J. tensions was nltra vires. 
 (Ch.) 613 ; one of the questions decided in 
 
TEAFFIO ARRANGEMEIfTS. 423 
 
 YI. Agreements ietween com/pa/nies which create a partnership 
 letween the parties thereto, are void, (a) 
 
 It ha8 ju8t been seen that certain kinds of agreements for the 
 division of the receipts obtained by different companies in fixed 
 
 (o) The adjudications in this couatry upon the power of corporations to enter 
 into partnerships vary somewhat, according as the question affects third persons, or 
 only the parties themselves. No authority has been found which asserts this power 
 as between the parties. And, indeed, the general rule here is the same as that 
 stated in the text, that corporations are incapable of forming partnerships, either 
 among themselves or with individuals. In N. Y. 4 Sharon Canal Co. v. Fulton 
 Bank, 7 Wend. 412, it is said that " corporations at common law have certain powers, 
 but not such as would authorize the forming of a partnership, or the consolidation 
 of two companies into one." See Angell <fe Ames on Corp. § 272 ; Parsons on Part- 
 nership, p. 29 ; Story on Partnership, p. 20, n. ; Pearce v. Mad. & I. K. R. Co. 21 
 How. 441 ; Marine Bank ii. Ogden, 29 111. 248; and as to consolidation, see post. 
 In Van ICuren ». Trenton Locomotive, (Sec. Co. 13 N. J. Eq. 302, the point is raised 
 as ground for the dissolution of an injunction, but is reserved for a final hearing, 
 as being "a nice or doubtful question of law." When, however, the interests of 
 third parties are concerned, there is not entire uniformity of opinion. And 
 under the influence of the modern tendency to assimilate the rules of law regard- 
 ing corporations to those affecting natural persons, the Supreme Court of New 
 York has held that corporations may become liable to creditors as partners with in- 
 dividuals. In Catskill Bank v. Gray, 14 Barb. 471, the Court says: " Strictly, per- 
 haps, corporations should be and are restricted from contracting partnerships with 
 individuals or corporations, and as between the parties to the contract, acting upon 
 equal knowledge, a question of validity might be raised; but a corporation may con- 
 tract with an individual in furtherance of the object of its creation, the effect of 
 which contract may be to impose upon the company, as respects the community, the 
 liabilities of a partner. I cannot thiuk that a corporation may so shape its contracts, 
 relating to the business for which it was incorporated, as to share jointly with an in- 
 dividual in the profits of such business ; subtract its interest in the profits from the 
 fond on which the creditors of the concern had a right to rely for the payment of the 
 debts due to them ; and when called upon by such creditors, be permitted to escape 
 liability altogether, on the ground that the profit? were realized as the partner of an 
 individual, which relation the corporation could not legally occupy. 1 know of no 
 sound reason why a corporation more than an individual who participates in the 
 profits, as such, of a particular business in which it may lawfully engage, should not 
 be holden liable to the public for losses." In Massachusetts a different view prevails. 
 In Whittenton Mills v. Upton, 10 Gray, 682, the following language is used : " The 
 second section of chapter 38 of the Revised Statutes, provides, that the business of 
 every such manufacturing corporation shall be managed and conducted by the presi- 
 dent and directors thereof, and such other officers, agents and factors, as the com- 
 pany shall think proper to authorize for that purpose. It is plain that the provis- 
 ions of this section cannot be carried into effect where a partnership exists. The 
 partner may manage and conduct the business of the corporation and bind it by his 
 acts. In so doing, he does not act as an officer or agent of the corporation, by au- 
 
424 TRAFFIC ARRANGEMENTS. 
 
 proportions between such companies are allowable, but it is only 
 such agreements which can be upheld. Others which closely re- 
 
 thority received from it, but as a principal in a Bociety in which all are equals, and 
 each capable of binding the society by the act of its individual will. » * * The 
 power to form a partnership is not only not among the powers granted expressly or 
 by reasonable implication, but is wholly inconsistent with the scope and tenor of the 
 powers expressly conferred, and the duties directly imposed upon a manufacturing 
 corporation under the legislation of the commonwealth." The language of the statute 
 under which this case is decided, is not peculiar to Massachusetts, nor to manufactur- 
 ing companies, but similar provisions are found in the States generally, in regard to 
 all kinds of private corporations. The reasoning of the court would apply as well in 
 Hew York, and this case is, therefore, in direct opposition to Catskill Bank v. Gray, 
 tupra. This difference of opinion would seem to be not strictly as to the power of 
 corporations to form partnerships, but as to the admissibility of the plea of ultra 
 vires in certain circumstances. See BisseU v. M. S. <fe N. I. R. R. Co. 22 N. Y. 268. 
 There is nothing, however, to prevent a corporation from becoming interested 
 in a transaction jointly with another corporation, or with an individual, so as 
 to be joint plaintiffs or defendants in an action. See IS. Y. & Sharon Canal Co, 
 *. Fulton Bank, 1 Wend. 412; Oloott v. Tioga R. R. Co. 27 N. Y. 546; Marine 
 Bank);. Ogden, 29 lU. 248; Peckham v. North Parish of Haverhill, 16 Pick. 287; 
 Stanley v. C. C. <fe G. R. R. Co. 18 Ohio St. 652. That the courts are indisposed 
 to find in a contract of a corporation the creation of a partnership, see Holmes 
 V. Old Colony R. R. Co. 5 Gray, 58 ; Darling v. B. <fe W. R. R. Co. 11 Allen, 296 ; 
 Gass V. N. Y., P. & B. R. R. Co. 99 Mass. 220; Mohawk <fe Hudson R. R. Co. v, 
 Niles, 3 HUl, 162. Col., Piqua <fe Ind. R. R. Co. v. Indianapolis & B. R. R. Co. 6 Mc- 
 Lean, 450, was a case where two railroad companies agreed to build a road from cer- 
 tain cities to connect with each other at a given place, and that the charges for the 
 transportation should be regulated by both companies ; an injunction was granted to 
 restrain one company from changing gauge so as to break up the connection. The 
 Court remarks: " It is further alleged that under the contract the respective compa- 
 nies, by acting 'together in fixing the rates for the transportation of passengers and 
 freight, conveyed a part of their franchise which they had no right to do. There is 
 no part of the contract which, in this respect, affects the franchise of either company. 
 The companies may agree, as individuals may agree, to certain rates of transporta- 
 tion which may be considered mutually advantageous. Neither company has parted 
 with its corporate powers ; each acts for itself and under its own powers in fixing 
 the rates of transportation, and they both agree that the charge shall be uniform 
 throughout the line." The language of some of the decisions upon the validity ef 
 agreements, providing for the division of net profits of corporations, and providing 
 for the formation of quasi partnerships, must be admitted to be somewhat loose. The 
 principles, however, upon which the decisions are based, would seem to be capable of 
 being reconciled. For, while it is properly determined that a partnership cannot 
 exist between corporations, because, first, each partner is the agent of the other, and, 
 second, because coiporations can only exercise their powers through the regularly 
 constituted ofiicers, mentioned in their charters ; yet when the corporate organiza^ 
 tions are kept distinct, and the functions of each corporation are performed by its 
 own officers, without the interference of the other corporation, there would appear 
 to be no legal reason why, upon the consent of stockholders, the net profits of each 
 
TKAFFIC ARRANGEMENTS. 425 
 
 Bemble tliese are illegal, as establishing a partnership between the 
 companies concerned, and consequently producing a transfer of 
 the powers, and a merger pro tanto of each separate company in 
 the constituted whole. Reference has already been made to these 
 agreements, and their illegality expressly laid down in the judg- 
 ments in the authorities cited in the last few pages, in illustrating 
 the nature of legal conventions of this description. 
 
 Perhaps the leading case on this point is that of Charlton v. 
 Newcastle and Carlisle Railway Company,^ where the arrangement 
 was held to constitute a partnership. The heads of the agreement 
 here in question, made between the Newcastle and Carlisle Rail- 
 way Company and the Northeastern Railway Company, provided 
 shortly that the two railways should be amalgamated on the prin- 
 ciple of each company receiving a proportion of the net receipts, 
 and out of such proportion paying their own debts, dividends on 
 share capital, and other special charges ; that the rolling stock and 
 works belonging to the two companies should become joint prop- 
 erty ; that the gross receipts of the two lines should be charged 
 with the total working expenses, and so on. Page Wood, V.-C, 
 said : " It is plain, in this state of things, that the companies are 
 desirous of doing that which the law will not allow them to do ; 
 or, at all events, to go as near to the object which they have in 
 
 ' 5 Jut. (N. S.) 1097. See Ontario 641 ; McDonald v. Upper Canada Mining 
 Salt Co. V. Merchants' Salt Co. 18 Grant. Co. 15 Grant. 179. 
 
 corporation should not constitute a common fund to he divided between the corpora- 
 tions according to agreement. In determining the legality of all Bueh arrangements, 
 the rule that the franchises and other delegated powers of a corporation cannot be 
 transferred to, or exercised by, another corporation, or an individual, without the 
 sanction of the Legislature granting the franchise or delegating the power, must not 
 be overlooked ; and perhaps the rule will eventually be established that partnerships 
 between companies, which do not amount in any wise to a transfer of corporate pow- 
 ers, or interfere with the performance of corporate duties to the public, or which are 
 not in other respects against public policy, will be upheld. See construction of 
 agreement for operation by one company of a road owned by another, and division 
 of receipts. Bloasburg <fe Corning R. R. Co. v. Tioga R. R. Oo. 1 Abb. Ct. App. Dec. 
 149. The case of Allen ». Woonsocket Co, 11 R. I. 288, which is peculiar in its facts 
 and therefore in its result, is not believed to sustain any doctrine contrary to those 
 herein laid down. In that case a contract of partnership, entered into by a corpora- 
 tion was held valid, because, first, there was but one stockholder and he assented ; 
 secondly, there was no special provision in the charter as to how the corporate affairs 
 should be managed; and, thirdly, the partnership was terminable at the pleasure of 
 the corporation. 
 
426 TEAFFTC AERANGEMENTS. 
 
 view as the law will allow them ; " and he, accordingly, made an 
 order restraining the companies from acting upon the proposed 
 agreement. In reference to the distinction between the arrange- 
 ments amounting to partnership and such as merely provide for a 
 division of the tolls, which may be good, as seen in the last few 
 pages, the Vice- Chancellor obsei-ved : " The agreement itself is one 
 of an extremely suspicious character on the face of it. They in- 
 tend to go a step farther, and that not an unimportant one, than 
 that agreement, which has been held valid by the Court of Ex- 
 chequer Chamber, in the case of the South Yorkshire and River 
 Dun Company v. Great JS'orthern Railway Company.^ They 
 go this step farther: having recited the heads of amalgama- 
 tion, by which the intention of all parties is that there shall be a 
 clear partnership between the companies so far as the law will 
 allow ; and that the total profits of the two companies shall be 
 thrown into one fund, and then the net profits divided between 
 the two companies, which would be clearly illegal, they say : 
 ' What we .will do is this, we will adjust the bargain for tolls which 
 the law allows to meet the scheme as nearly as we can, and we will 
 likewise say the tolls shall be diminished by the one company or 
 the other, so as to make the net profits received by the other com- 
 pany as nearly as possible one-tenth and nine-tenths of the gross 
 profits received by the two. We cannot agree to have a protit-and- 
 loss account ; the law will not allow us to do it directly ; but so far 
 as we can, by the mechanism of tolls, we will arrange to do it ; and 
 there shall be a sliding scale of tolls which shall be adjusted to 
 make a profit-and-loss account.' Finding a contract in this form, 
 and the parties being convicted of an illegal act in the first instance, 
 I am bound to restrain them from doing anything which will amount 
 to an illegal contract for the future." (a) 
 
 On the other hand, with respect to the Shrewsbury Cases (as to 
 the legality of the agreement therein in question there was decid- 
 edly a majority of legal opinion), Page Wood, Y.-C, has stated : 
 " The agreement, moreover, was to constitute a complete partner- 
 
 ' 9 Ex. 642. 
 
 (a) See, as to a contract between two mining and transportation companies, Penn. 
 Coal Co. V. Del. <fe Hudson Canal Co. 1 Keyes, 72 ; 31 N. Y. 91 ; 3 Abb. Ct. App. Deo. 
 470 ; 60 N. T. 260 ; 29 Barb. 689 ; see 8 Wall. 276 ; Com. i). Del. & Hudson Canal 
 Co. 43 Penn. St. 296 ; Morris Run Coal Co. v. Barclay Coal Co. 68 Penn. St. 178. 
 
TRAFFIC ARRANGEMENTS. 42T 
 
 ship, in every sense, because the whole profits over the specified 
 lines were to be divided in fixed proportions." ^ 
 
 VII. Corporations may not give up to others their special 
 powers, or the eontr'ol of their tmdertahings, whether on 
 pretence of business conventions or otherwise. 
 
 This has been shown in the last chapter, and the cases there 
 cited, in connection with the authorities here referred to, will sufii- 
 ciently indicate the present state of the law. Corporations may 
 make all necessary arrangements for cheaply and expeditiously de- 
 veloping or carrying on their particular business ; but it is another 
 thing going beyond this, to enter into contracts, for instance, by 
 which the exclusive control or the exclusive right of working the 
 line is handed over to other parties. All such arrangements, what- 
 ever their form, however disguised,' are ultra vires and void, {a) 
 
 This applies with peculiar force in the case of those bodies 
 which have been created for what may be conveniently styled 
 public purposes. " When parliament, acting for the public inter- 
 est, authorizes the construction and maintenance of a railway, both 
 as a highway for the public and as a road on which the company 
 may themselves become carriers of passengers and goods, it con- 
 fers powers and imposes duties and responsibilities of the largest 
 and most important kind, and it confers and imposes them upon 
 the company which parliament has before it, and upon no other 
 body of persons. These powers must be executed and these du- 
 ties discharged by the company. They cannot be delegated or 
 transferred. The company will, of course, act by its servants, for 
 a corporation cannot act otherwise, but the responsibility will be 
 that of the company. The company could not by agreement hand 
 over the management of the railway to the debenture holders. It 
 is impossible to suppose that the Court of Chancery can make it- 
 self or its officers, without any parliamentary authority, the hand 
 
 ' 2 J. <tH. 114. nally gmng running powers waa held 
 
 ' See, as to this, Simpson v. Denison, void, as in reality amounting to a delega- 
 10 Hare, 51, where an agreement nomi- tion of powers. 
 
 (a) See ante, p. 417, note ; also Taylor v. Earle, 15 N. Y. Sup. Ct. 1. A contract 
 by which one railroad company is to discontinue running on part of its line, and 
 another is to prevent the extension of the road of a third, which would interfere 
 with the business of the first, is void. State v. H.. <fe N. H. E. R. Co. 29 Conn. 538 ; 
 Hartford <fe N. H. R. R. Co. v. N. Y. & N. H. R. R. Co. 3 Rob. 411. 
 
428 TRAFFIC ARKANGEMENTS. 
 
 to execute these powers ; and all the more impossible, when it is 
 obvious that there can be no real and correlative responsibility for 
 the consequences of any imperfect management. It is said that 
 the railway company did not object to the order for a manager. 
 This may well be so. But, in the view I take of the case, the 
 order would be improper, even if made on the express agreement 
 and request of the company." ^ 
 
 Beman v. Eufford,' which is one of the earliest, and may be 
 considered the leading case, has already been referred to.* 
 
 Another well-known case is Winch v. Birkenhead, &c. Ey. Co.* 
 Here heads of a proposed agreement were drawn up between the 
 directors of two railway companies, by which one company was to 
 allo\y^ the other company for ninety-nine years to work the lines 
 and use the property and plant of the granting company, except 
 certain specified lands and buildings, upon certain terms of allow- 
 ance for working expenses and charges, and the maintenance of 
 works and ways, the property and plant to be restored on the ter- 
 mination of the agreement, on profitable terms to the granting 
 company ; and provision was made for application to parliament 
 for powers, if needful. On a bill by a shareholder in the grant- 
 ing company, on behalf of himself and all the other shareholders 
 in that company, except the directors, against that company and 
 the other company, the court decided, first, that the proposed 
 agreement was a delegation of some of the statutory powers of 
 one of the companies to the other, which was contrary to the 
 policy of their acts, and could neither be granted nor accepted 
 without further powers from parliament ; that it was a contract 
 
 ' Per Cairns, L. J., in Gardner v. Lon- Hare, 306 ; Midland Ry. Co. v. Great 
 
 don, Chatham and Dover Ry. Co L. R. 2 Western Ry. Co. L. R. 8 Ch. 841. Not un- 
 
 Ch. 201, 212, where the Lord Justice, in seldom, though a delegation of powers is 
 
 dealing with the question of appointing a bad, yet the plaintiff may be debarred 
 
 receiver and manager of the defendants' from suin^ .by his acquiescence, aa in 
 
 line, and pointing oat the objection to Gray v. Chaplin, 2 Rusa. 126, where a 
 
 such app intinent .la necessitating a dele- lease, by a canal company, of its tolls, 
 
 gation iif the company's powers. had been going on for 4'7 years. In 
 
 ^ 1 Sim. (N. S.) 550. This case was Hinckley ».Gilderslave, 19 Grant (Upper 
 
 not taken to law to determine the legal Can. Ch. 1862), 212, a lease by a railway 
 
 question as to the validity of ihe agree- and canal, of all its property and powers, 
 
 ment, which, upon the opinion of Lord was held void. Compare Southampton 
 
 Cranworth, was treated as invalid. See Dock Co. v. Southampton Pier <Se Harbor 
 
 Great Western Ry. Co. v. Rushout, 6 De Board, L. R. 14 Eq. 595, where one of the 
 
 G. & Sm. 290, 293. points was as to the effect of a lease with- 
 
 ' Ante, p. 410. out statutor.y authority, by the defend- 
 
 * 5 De G. <fe Sm. 662 ; Great Northern ants, of their tolls, upon the rights of 
 
 Ry. Co. <;. Eastern Counties Ry. Co. 9 third parties. 
 
TRAFFIC ARRANGEMENTS. 429 
 
 savoring of illegality, which at the suit of any shareholder the 
 courts would restrain, and the court, on motion, restrained the com- 
 pany from perfecting the agreement ; secondly, that such an 
 agreement is not distinguishable, on principle, from a lease, to 
 grant which is clearly not within the statutory powers of the 
 granting company ; thirdly, that the 8Tth section of the Lands 
 Clauses Consolidation Act merely gives to one company a limited 
 power to run a portion of its traffic, only when it is necessary for 
 the purposes of its own traffic, over the line of another railway 
 company. 
 
 In the latest case, Richmond Water-Works, &c. Co. v. Yestry 
 of Richmond,^ this proposition was strictly applied. Here a pre- 
 liminary question arose and it' was determined that a water-works 
 company is not, within the meaning of the 52d section of the 
 Public Health Act, 1875, able and willing " to supply water 
 within the district of a local authority" unless it has both the 
 necessary powers and the requisite supply of water. This being 
 so construed, the important and main question remained as to 
 • delegation of powers. The Richmond company had the necessary 
 powers but no water ; the Southwark company had the requisite 
 supply of water but no powers within the district ; so the Rich- 
 mond company sold its plant to the Southwark company, and cer- 
 tain members of the Southwark company bought all the shares in 
 the Richmond company with the intention of allowing the South- 
 wark company to exercise the powers of the Richmond company. 
 But it was decided that the powers could not be so delegated. 
 
 The proposition, however, and the principle enunciated, must 
 be taken subject to two qualifications. 
 
 The first is that where a corporation with special privileges is 
 utterly unable to utilize them, it may — certainly if the non-user 
 be a matter prejudicing the public, and probably so when it con- 
 cerns itself only — enter into agreements for the proper utilization 
 thereof by others, even though the result is a delegation of powers. 
 This would seem justifiable upon the special principles relating to 
 management. As to this, and generally as to agreements of this 
 description, Mellish, L. J., thus commented in Midland Ry. Co. v. 
 Great Western Ry. Co. : * " A great deal has been said about the 
 ' policy of the act of parliament ' and about the ' policy of the law,' 
 
 ' 3 Ch. D. 82. 5 L. R. 8 Ch. 841, 807. 
 
430 TRAFFIC ARBANGEMENTS. 
 
 but you cannot find out the policy except by reading the act, and 
 seeing what has been enacted in it. What is it that the act of 
 parliament has done ? It has not made it compulsory on a rail- 
 way company to act as carriers on their own line. Yet parlia- 
 ment must be taken to have known, what is beyond all question 
 the truth, that there may be comparatively short railways forming 
 part of through lines of communication between important places, 
 having no great traffic of their own, which cannot practically be 
 worked by their own company at a profit. Looking at the map, 
 it appears to me extremely probable that the Hereford company is 
 in that position ; that a large portion of their traffic, almost all of 
 it, depends on the through traffic. If they were simply to start 
 with their carriages, taking up passefngers at one end of their line 
 and carrying them to another part where they have no terminus, 
 but which is just near the Barton station at Hereford, and there 
 to disembark them, it practically could not be worked at all. 
 Then how are they to work it ? They may open it to all persons, 
 if they can make regulations, or they may make regulations for 
 working the traffic with any railways which are in communication • 
 with them, and if, instead of only making one agreement with the 
 Midland company they make three or four agreements, one with 
 the Great Western, another with the Mid Wales, another with the 
 Merthyr company, could it be said there was anything illegal -in 
 it 1 Then, can it be said that it is illegal because it happens that 
 there is only one railway company which desires to make such an 
 agreement with them ? I cannot see how that makes- it illegal. 
 It may be in that sense contrary to the policy of the law that a 
 railway company shall give up its entire powers of working to 
 another company, and shall prevent itseK, by contract, from 
 allowing other companies and persons to use its railway beside the 
 particular railway company with -whom it makes the contract. 
 But, supposing a railway company is in such a position that it can- 
 not practically work its own line with a profit, and can practically 
 get no other company except one to enter into a working agree- 
 ment with it, does that make it illegal ? Is it the policy of the 
 law that the railway shall remain unworked, or is it more con- 
 sistent with the policy of the law that if there is only one com- 
 pany which is practically willing to work it, it shall make an 
 agreement with that company ? " 
 
TRAFFIC ARRANGEMENTS. 431 
 
 Immediately afterwards, however, the judge lays down the 
 limitations and conditions subject to which such a transfer or del- 
 egation, even when so excused by surrounding circumstances, can 
 only be made; it must not be an absolute delegation, an absolute 
 giving up of the rights of ownership and power of entry and con- 
 trol. " I caimot allow that it is the same thing, whether there is 
 an agreement which practically amounts to a lease, and which, by 
 contract, prevents them entering into an agreement with other 
 companies, and an agreement like this, which has no exclusive 
 clauses in it ; although it may be that that company alone will 
 work the line." 
 
 The second qualification is that which was pointed out in the 
 last chapter, viz., that by express legislative provisions, whether 
 contained in general or special statutes, corporations may be en- 
 abled to divest themselves of their own peculiar powers or to ac- 
 quire those of others. Such enactments sometimes lead to unfore- 
 seen results, by conferring upon corporations indirectly and through 
 adventitious circumstances capacities which they would not other- 
 wise possess. 
 
 This is well shown by the case of Eogers v. Oxford, &c. Ey. 
 Co.^ By an act of 1846, a. railway company was authorized to 
 purchase the S. canal, and was bound to maintain the canal and 
 keep it open for traffic when purchased. This act provided that, 
 as soon as the purchase was completed, the railway company might 
 exercise all the rights, powers and privileges which the canal com- 
 pany might before the sale have exercised in relation to the canal, 
 under any acts relating to the canal which might be in force at the 
 time of the conveyance. The canal company did not, before the 
 sale, take any steps to adopt the powers of 8 & 9 Vict. c. 42, the 
 act " to enable canal companies to become carriers of goods upon 
 their canals." After the purchase, the railway company proceeded, 
 under the 8th section of the last-mentioned act, to take a lease of 
 the tolls of the W. canal. The clerk of the Gr. canal company, 
 which was likely to be injured by the granting of the lease, took 
 shares in the railway company, and filed a biU, on behalf of himself 
 and the other shareholders, to prevent the acceptance of the lease, 
 as being ultra vires. The court, composed of Knight-Bruce and 
 Turner, L. JJ., assisted by Erie, J., held, that by the purchase of 
 
 ' 2 De G. <fe. J. 662. Compare M'Don- nell v. Midland Great Western (Ireland) 
 
 Ey. Co. 3 Ir. Ch. 578. 
 
432 TRAFFIC ARRANGEMENTS. 
 
 the S. canal, the railway company had become a canal company so 
 as to be entitled to avail itself of the powers given to canal com- 
 panies by the 8 & 9 Vict. c. 42, and that the taking of such lease 
 was therefore not ultra vires. 
 
 VIII. In determinmg wheiher a given l/raffio arrangement he 
 or he not valid, no attention will he paid to any so-called 
 public interests.{a) 
 
 It has often been considered that all such arrangements as les- 
 sen the amount of competition are illegal, on the ground, without 
 
 (o) The American aathoritiea are uuiform in holding the contrary doctrine to 
 that stated in the text. See cases cited ante, pp. 417, 418, note, as to railroad com- 
 panies being agents of the government for public purposes, and only on such ground 
 entitled to the exercise of eminent domain, and to receive municipal aid In their con- 
 struction. See Chic, Bur. & Q. R. R. Co. v. Att.-Gen. U. S. Cir. Ct. Iowa, 9 West. Jur. 
 347, fur one of the most recent and forcible expositions of the relations between the 
 public interests and the duties of traffic corporations. See, also. People «. Boston h 
 Albany R. R. 70 N. Y. 569; Com'rs of Tippecanoe Co. v. L. M. & B. R. R. Co. 50 
 Ind. 85. 
 
 The clearness with which the subject is presented will justify the following some- 
 what lengthy quotation from the opinion in R.' R. Com'rs v. P. &, 0. C. R. R. Co. 63 
 Me. 269 : '• The duty of governments to provide facilities for public travel and trans- 
 portation at the public expense, by means of roads, turnpikes, canals and other arti- 
 ficial structures, has been recognized and discharged by all civilized governments 
 from the earliest times. » * * In the progress of events, however, as business 
 and population increased, and weallh accumulated, it was found that this function of 
 government might, in many cases, be conveniently and safely performed by private 
 individuals associated together under a grant from the government, the corporation 
 giving the public the right to use the highway built by it in consideration for the fran- 
 chise received. Among the instrumentalities thus employed, railroads stand pre- 
 eminent. » * » In the circumstances of their origin, and in their powers uses and 
 duties, railroad corporations are clearly distinguishable from other merely private cor- 
 porations; and unless we keep these characteristics in view when we come to deter- 
 mine the rights, powers and duties of such corporations, and the authority, express, 
 implied or reserved, of the Legislature and court in respect to them, we shall run 
 the hazard of confounding dissimilar distinctions and committing grave errors. What 
 analogy, it may be. asked, do manufacturing, mining, and other like corporations, 
 evoked by no public necessity, exercising no sovereign powers, subserving no public 
 uses, and sul ject to no public duties, bear to railroad corporations, that both should 
 alike have the same legal status ? Do not these distinguishing characteristics make 
 railroad corporations qumi public corporations In respect to the authority of the court 
 and Legislature to determine and enforce the public duties enjoined upon them ? if 
 not, what redress have the public for a neglect, infringement or violation of those 
 duties ? The recent decisions of this court, affirming the constitutional power of the 
 
TRAFFIC ARRANGEMENTS. 433 
 
 more, that the public is thereby put at a disadvantage, (a) It has 
 been said that at least railway, if not all large, companies, do not 
 
 Legislature to authorize municipal corporations to aid in the construction of rail- 
 roads, and denying its power to authorize such corporations to aid manufacturing 
 and other purely private corporations or parties ; and also those requiring railroad 
 corporations to protect the passengers on their road, and making them liable for the 
 negligence and misconduct of their servants in this behalf, as well as that further de- 
 cision prohibiting railroad corporations from making injurious discriminations with 
 respect to the persons or corporations entitled to do business over' their road, or the 
 business to be done thereon, enunciate principles of great importance for determining 
 the various questions not unlikely to arise in respect to the relations subsisting be- 
 tween railroad corporations and the public, the powers granted and the public duties 
 enjoined under their charters, and the constitutional authority of the court and leg- 
 islature concerning them. These decisions, it is believed, lay the foundation for a 
 harmonious superstructure of judicial authority upon a subject replete with apparent 
 intricacies and antagonisms. While the law affords railroad corporations adequate 
 and complete protection in the exercise of their chartered rights, it also holds them 
 to a strict performance of the public duties enjoined upon them as a consideration for 
 the rights and powers thus granted. In cases of apparent conflict between the rights 
 and powers conferred and the duties imposed, the solution may oftentimes be ren- 
 dered easy by regarding the admitted right of public use as the touchstone of judicial 
 interpretation. Belfast <fe Moosehead Late R. R. Co. n. Inhabitants of Brooks, ante ; 
 Allen V. Jay, 60 Me. 124; Goddard v. Grand Trunk Railway Co. 51 Me. 202; N. E. 
 Express Co. -ij. M. C. R. R. Co. 6Y Me. 194. Railroad charters are contracts made 
 by the Legislature in behalf of every person interested in anything to be done under 
 them. In consideration of the franchise they receive from the State, railroad corpo- 
 rations agree to perform certain duties toward the public. The power of determining 
 those duties and enforcing their performance is vested in the appropriate tribunals of 
 the State. Without such power, there would be danger that railroad corporations, 
 from the number and extent of their operations, might become the most powerful in- 
 struments of oppression in our whole system of administration. Being creatures of 
 the law, entrusted with the exercise of sovereign powers to subserve public necessi- 
 ties and nses, they are bound to conduct their affairs in furtherance of the public ob- 
 jects of their creation. * * » The duties enjoined upon the corporation are 
 ministerial duties, to do and perform what the public convenience and necessity rea- 
 sonably require in respect to the particulars specified. Nor is it within the discretion 
 of the directors to determine ultimately what these public ministerial duties are, or 
 the manner in which they are to be performed. To hold so, would be to concede to 
 the directors the power to promote the private interests of the corporation, by sub- 
 verting the public objects to be subserved by the charter. The power, both of de- 
 termination and enforcement, ia necessarily vested in State authority." 
 
 (a) In West. Union Tel. Co. v. Atl. tk P. Tel. Co. 7 Biss. 367, a contract by which 
 a railroad company agreed to allow no other telegraph line to be constructed on its 
 line, was held not to be void on account of public policy, because there were several 
 other railroads between the main points ; it was not necessary to construct telegraph 
 lines along a railroad, but tiiey might be constructed any where ; and if this were 
 necessary, the right of way for the telegraph might be condemned, s. r. West. Un. 
 Tel. Co. V. Chic. & P. R. R. Co. 86 111. 246. 
 28 
 
434 TRAFFIC ARRANGEMENTS. 
 
 exist for their own advantage merely, but that the public has, as 
 it were, a vested interest in their objects and privileges, to the 
 extent of having the right to say that under all circumstances 
 cheapness of locomotion shall be especially sougbt after. What 
 reliance is to be placed on such assertions is to be gathered from 
 the following opinion of Page-Wood, V.-C. : ^ " I see nothing in 
 the alleged injury to the public arising from the prevention of 
 competition ; and find no indication in the course taken by the 
 Legislature of an intention to create competition by authorizing 
 various lines. From my own experience in parliamentary com- 
 mittees, I should rather be disposed to say that the Legislature 
 wisely inclined to avoid authorizing the construction of -two lines 
 which would necessarily compete with one another. * * * 
 Except by fixing a maximum rate of tolls, and as far as practica- 
 ble a maximum amount of profit, the Legislature has imposed no 
 conditions in favor of the traveling public." {a) 
 
 ' 2 J. & H. 103 ; 30 L. J. (Ch.) 823. 
 
 (a) Railroads being part of the public highways, they are open to all, subject to 
 the proper regulations of the corporations owning them as to their use ; and such 
 corporations being also transportation companies for the traiBc over them, they are 
 common carriers, and therefore come under the law in that capacity also. Therefore, 
 agreements into which railroad companies sometimes enter, not to acquire monopolies 
 themselves, but to grant them to others, such as contracts by which exclusiye privi- 
 leges and monopoly of transportation on their lines, or on particular trains, are given 
 to express companies and the like, are illegal. This subject, however, belongs rather 
 to the law of common carriers than to that of corporations strictly, and'gives rise to 
 questions of illegality rather than of ullra vires. All common carriers are bound to 
 receive and carry all goods ofiFered for transportation, subject to all the responsibili- 
 ties incident to their' employment, and are liable to- an action in case of refusal. New 
 Jersey Steam Nav. Co. v. Merchants' Bank, 6 How. 344, 382. In Sandford v. Railroad 
 Co. 24 Penn. St. 378, it is decided that a railroad cannot give to an express company, 
 by contract, the exclusive privilege of transporting express matter on passenger 
 trains ; and the Court say : " The power to regulate the transportation on the road 
 does not carry with it the right to exclude any particular individuals, or to grant ex- 
 clusive privileges to others. Competition is the best protection to the public, and it 
 is against the policy of the law to destroy it, by creating a moncipoly of any branch 
 of business. It cannot be done except by the clearly expressed will of tlie legislative 
 power. * * * A regulation, to be valid, must operate on all alike. If it deprives 
 any persons of the benefits of the road, or grants exclusive privileges to others, it is 
 against law and void." In like manner, a contract between the Maine Central R. R. 
 Co. and the Eastern Express Co., giving to the latter the use of a separate apartment 
 in a car attached to each passenger train, and excluding all other express companies 
 from similar privileges, was declared void in New England Express Co. v. Maine 
 
TRAFFIC ARRANGEMENTS. 435 
 
 Cent. R. R. Co. 57 Me. 188. The Court uses the following language: " The very 
 definition of a eomnaon carrier excludes the idea of the right to grant monopolies, or 
 to give special and unequal preferences. It implies indifference as to whom they may 
 serve, and an equal readiness to serve all who may apply, and in the order of their 
 application. The defendants derive their chartered rights from the State. They owe 
 an equal duty to each citizen. They are allowed to impose a toll, but it is not to he 
 so imposed as specially to benefit one and injure another. They cannot, having the 
 means of transporting all, select from those who may apply, some whom they will, 
 and reject others whom they can, but will not, carry. They cannot rightfully confer 
 a monopoly on individuals or corporations. They may regulate transportation, but 
 the right to regulate gives no authority to refuse, without cause, to transport certain 
 individuals and their baggage or goods, and to grant exclusive privileges of trans- 
 portation to others. The State gives them a charter for no such purpose. Such is 
 the common law on the subject." Beasley, C. J., in Messenger v. Pennsylvania 
 R. R. Co. 36 N. J. L. 407, says : " I have insisted that a common carrier was to be 
 regarded, to some extent, at least, as clothed with a, public capacity, and I now main- 
 tain that even if this theory should be rejected and thrown out of the argument, still 
 the defendants must be considered as invested with that attribute. In my opinion, a 
 railroad company, constituted under statutory authority, is not only, by force of its 
 inherent nature, a common carrier, as was held in the case of Palmer v. Grand Junc- 
 tion Railway, 4 M. <fc W. 749, but it becomes an jigent of the public in consequence 
 of the powers conferred upon it. A company of this kind is invested with important 
 prerogative franchises, among which are the rights to build and use a railway, and to 
 charge and take tolls and fares. These prerogatives are grants from the government, 
 and public utility is the consideration for them. Although in the hands of a private 
 corporation, they are still sovereign franchises, and muatjbe used and treated as such ; 
 they mu3t be held in trust for the general good. If they had remained under the 
 control of the State, it could not be pretended that, in the exercise of them, it would 
 have heen legitimate to favor one citizen at the expense of another. If a State should 
 build and operate a railroad, the exclusion of everything like favoritism, with respect 
 to its use, would seem to be an obligation that could not be disregarded without vio- 
 lating natural equity and fundamental principles ; and it seems to me impossible to 
 concede that when such rights as these are handed over, on public considerations, to 
 a company of individuals, such rights lose their essential characteristics. I think 
 thej are unalterably parts of the supreme authority, and in whatsoever hands they 
 may be found, they must be considered as such. In the use of such franchises, all 
 citizens have an equal interest and equal rights, and all must, under the same circum- 
 stances, be treated alike. It cannot be supposed that it was the legislative intention, 
 when such privileges wei-e given, that they were to be used as private property, at the 
 discretion of the recipient; but, to the contrary of this, I think an implied condition 
 attaches to such grants, that they are to be held as a quasi public trust, for the benefit, 
 at least to a considerable degree, of the entire community. In their very nature and 
 constitution, as I view this question, these companies become, in certain respects, public 
 agents, and the consequence is, they must, in the exercise of their calling, observe to all 
 men a perfect impartiality." See, also, McDuffee v. Railroad, 52 N. H. 430 ; Sargent r. 
 Boston <fe Lowell R. R. Corp. 1\6 Mass. 416; Eeekman v. Sar. & Sch. R. R. Co. 3 Paige, 
 45 ; Erie Ry. Co. v. Union Loc. <fe Ex. Co. 35 N. J. L. 240 ; Rogers L, <fe M. Works v. Erie 
 Ry. Co. 20 N. J. Eq. 379 ; Camblos v. Phil. & Reading R. R. Co. 4 Brews. 663 ; Shipper v. 
 Penn. R. R. Co. 47 Penn. St. 338 ; Cumberland Valley R. R. Co. Appeal, 62 Penn. St. 
 
436 TRAFFIC AREANGEMENTS. 
 
 218 ; Audenreid v. Phila. A-Reading R. R. Co. 68 Penn. St. 370; Chicago, B. A Q.R. 
 R. Co. T,. Parks, 18 lU. 460 ; Galena & CM. R. R. Co. v. Rae, 18 111. 488 ; Vincent v. 
 Chicago & Alton E. R. Co. 49 111. 33 ; Chicago & N. W. R. R. Co. v. People, 56 III. 
 365 ; Pruitt v. R. R. Co. 62 Mo. 527 ; Eclipse Towboat Co. v. Pontchartrain R. R. Co. 
 24 La. Ann. 1 ; People v. Chicago & Alton R. R. Co. 5 Chicago Legal News, 436 ; Gil- 
 bert's Railway Law in Illinois, p. 253. 
 
 Railroads may, donbtless, discriminate between tbe amount of fare where a ticket 
 is purchased and where it is paid on the train. Jeffersonville R. R. Co. v. Rogers, 38 
 Ind. 116. Still they would have no right to discriminate between persons, and sell 
 tickets to some and refuse others, without just cause. Indianapolis, &c. R. R. Co. v. 
 Rinard, 46 Ind. 293. An agreement granting to a coal company all the facilities of 
 navigation which a canal will afford, not exceeding one-half of its whole capacity, is 
 not invalid as creating monopoly, unless it appear that the public is injured, or that 
 a function has been exercised which is exclusive of the public right. Commonwealth 
 V. Del. <fe Hud. Canal Co. & Penn. Coal Co. 43 Penn. St. 295. In Fitchburg R. R. Co. 
 V. Gage, 12 Gray, 393, a qualification of the general doctrine against discrimination 
 is given as follows : " The principle derived from the common law is very plain and 
 simple. It requires equal justice to all. But the equality which is to be observed in 
 relation to the public and to every individual, consists in the restricted right to 
 charge, in each particular case of service, a reasonable compensation and no more. 
 * * * If, for special reasons, in isolated cases, the carrier sees fit to stipulate for 
 the carriage of goods or merchandise of any class for individuals, for a certaiu time, 
 or in certain quantities, for less compensation than what is the usual, necessary and 
 reasonable rate, he may undoubtedly do so without thereby entitling all other persons 
 and parties to the same advantage or relief." 
 
 In the same general direction is the case of Barney v. The Oyster Bay Steamboat 
 Co. 67 N. Y. 302, where the Court say : " It is the general duty of a carrier of pas- 
 sengers to carry all persons who offer themselves as passengers, provided there is 
 room in the conveyance, upon being paid the usual fare. The carrier, however, may 
 make reasonable rules and regulations for the conduct of his business, and when they 
 are made known, passengers are bound to observe them. He may carry on, in con- 
 nection with his business of carrier, any other business, and may use his'^roperty in 
 any way he may choose to promote his interests, not inconsistent with the duty he 
 owes to passengers. The vessel or vehicle which he uses is his own, and except to 
 the extent to whicll he has devoted it to public use by the business in which he 
 has engaged, he may manage and control it for his own profit and advantage, to the 
 exclusion of all other persons. For instance, the sale of books, papers or refresh- 
 ments are common incidents to the business of a carrier by certain modes of convey- 
 ance, and the carrier may avail himself of the opportunity which his business gives 
 him to supply the special wants of travelers in these and other respects, and appro- 
 priate to himself the profits of the business, and exclude third persons from entering 
 the car or vessel to carry on the same business in opposition to him. He may grant 
 or refuse the privilege at his option. In this no right of a passenger is invaded. The 
 passenger has the right to be carried and to enjoy equal privileges with others, or, at 
 least, to be exempt from unjust or offensive discrimination in favor of other passen- 
 gers. But he has no right to demand that, in matters not falling within the contract 
 of carriage, the carrier shall surrender, in any respect, rights incident to the owner- 
 ship of his property. So, also, a carrier may establish for the convenience of pas- 
 sengers and for his own profit, on his car or vessel, an agency for the delivery of 
 
TRAFFIC ARRANGEMENTS. 437 
 
 baggage of passengers, and exclude all other persons from entering to solicit or re- 
 ceive orders from passengers, in competition with the agency established by him. 
 This is in no just sense a monopoly. It is simply saving to the carrier a legitimate 
 advantage, which his position and business gives him. * * * The defendant re- 
 fused to carry the plaintiff, unless he would discontinue the business of an express- 
 man while on the boat. This, we think, the defendant was justified in doing. Story 
 on Bailments, § 591, a; Angell on Car. § 530; Jenks v. Coleman, 2 Suran. 22." 
 
 These views are similar to those expressed by Hunt, J., in 11 Blatchf. 233, The 
 D. R. Martin. A railroad company may make and act upon a regulation setting 
 apart a car for females. Peck v. N, Y. G. & H. R. R. Co. TO N. Y. 681. Common 
 carriers are bound to accept freight only for carriage upon their own lines. They 
 are common carriers beyond their own lines only by express contract. Pittsburgh, 
 C. <fe St. L. R. B. Co. V. Morton, 61 Ind. 539. See, also, upon the subject of this note 
 generally, Lake Shore, &e. R. R. Co. v. Perkins, 25 Mich. 329; Michigan, Ac. R. R. 
 Co. 1). Burrows, 33 Mich. 6; Michigan, <fec. R. B. Co., v. McDonough, 21 Mich. 165; 
 Great Western Railway Co. j>. Burns, 60 111. 284 ; Faulkner v. S. Pac. R. B. Co. 51 
 Mo. 311; Kansas Pac. R. R. Co. v. Nichols, 9 Kan. 236 ; Pittsburgh, <fec. R. R. Co. v. 
 Hays, 49 Ind. 201 ; Milliman v. N. Y. Ac. R. R. Co. 66 N. Y. 642 ; Railway Co. v. 
 Moore, 49 Tex. 31 ; Pittsburgh, Ac. Ry. Co. v. Vandyne, 51 Ind. B16. 
 
CHAPTER III. 
 
 THE EXERCISE OF THE POWERS OF A CORPORATION BY THE COR- 
 PORATION ITSELF. 
 
 Section I. —Meetings of thk Members of a Cobpoeation. 
 
 Though a corporation is distinct from the individuals com- 
 posing it, yet, being intangible, it can transact its business and 
 manifest its wishes only by and through these individuals. Con- 
 sequently meetings of the members have to be held from time to 
 time for the various purposes connected with the corporation. At 
 aU meetings every member has a right, apart from provision ex- 
 press or implied to the contrary, to be present. Notice must 
 therefore, in some way or other, be given to each person entitled 
 to be present, and the omission of such notice to any one, though 
 he may have given a general dispensation of notice, and though 
 also the omission be accidental,* wiU invalidate the proceedings at 
 the meeting.' (a) Though all members have primarily a right to 
 
 ' Rex V. Langborn, 4 A. <fe E. 538. it is necessary to give notice of an ad- 
 
 " Rex V. Langhorn, ubi supra ; Rex v. journed meeting to tliose who attended 
 
 Chetwynd, 7 B. <fe C. 696; see Moore v. the original one, see Wills v. Murray, 4 
 
 Hammond, 6 B. & C. 456. Asto whether Ex. 843. 
 
 (o) It is not only a plain dictate of reason, but a general rule of law, that no 
 power or function entrusted to a body consisting of a number of persons, can be 
 legally exercised, without notice to all the members composingthe body. People v. 
 Batchelor, 22 N. Y. 128 ; People's Ins. Co. v. Westcott, 14 Griy, 440 ; see, also, cases 
 cited in the other notes on this section. The absence of a member from home will 
 not excuse the want of notice. Jackson v. Hampden, 20 Me. ST. On the other hand, 
 the mental imbecility of a member, rendering him incapable of receiving notice, will 
 not invalidate the proceedings. Stebbins v. Merritt, 10 Cush. 27. The pledgee of 
 stock is not such an owner as to be entitled to notice. McDaniels v. Flower Brook 
 Mfg. Co. 22 Vt. 274. In some cases the proper notice is presumed, in the absence of 
 proof to the contrary. Thus, where, by the records, a meeting of directors was" held 
 and a quorum was present, notice to the others is presumed. Sargent v. Webster, 
 13 Mete. 497; Lane v. Brainerd, 30 Conn. 665 ; see, also, Middlesex Husbandmen v. 
 Davis, 3 Mete. 133. Moreover, the validity of the acts of directors cannot be ques- 
 tioned collaterally on the ground of irregularity of notice. Chamberlain v. Paines- 
 
MEETINGS OF THE MEMBERS. 439 
 
 receive notice and to attend, yet the constating instruments or 
 custom,* or the by-laws of the corporation,' may restrict the num- 
 ber having this right ; but restrictive by-laws which are repug- 
 nant to the constating instruments, or otherwise illegal, will be 
 invalid.' 
 
 On the other hand, a corporation may make and enforce by- 
 laws for compelling, by means of pecuniary penalties, the attend- 
 ance of members at corporate meetings.* 
 
 But if all the persons entitled to be present at any meeting are 
 actually present thereat, whether with or without notice, and do 
 not object to the same on the ground of informality, the want of 
 notice wiU be excused, and they will be unable afterwards to re- 
 pudiate the proceedings of such meeting.^ Even persons not 
 present, and who did not receive notice, may by subsequent ac- 
 quiescence in the resolutions passed or other business transacted 
 at any meeting, be bound by the same, if intra vires, and be un- 
 able to object to the want of notice.' (a) 
 
 The requisites of the notice so required to be given vary ex- 
 
 ' See Bex v. Attwood, 4 E. <& Ad. Re Britigh Sugar Refining Company {^Ex 
 
 481 ; N. <fe M. 286. parte Paris), 3 K. & J. 408 ; 26 L. J. (Ch.) 
 
 '' Rex V. Weatwood, 7 Bing. 1 ; 4 B. <fe 369. 
 
 C. 781 ; Eex v. Bird, 13 East, 367; Rex « Turquand v. Marshall, L. R. 4 Ch. 
 
 «. Durham, 1 Burr. 127. 376 ; Smallcombe v. Evans, L. R. 3 H. L. 
 
 ' Tucker v. Bex, 2 Bro. P. C. 304 ; 249. See, also. Phosphate of Lime Com- 
 
 Hoblyn v. Rex. 2 Bro. P. C. 329. pany v. Green, L. R. 7 C. P. 43, where 
 
 * Tobacco Pipe Makers' Company it. the matters acquiesced were apparently 
 
 Woodroffe, 7 B. <fe C. 838. idtra vires. 
 
 " Rex V. Chetwynd, 7 B. 4 C. 695 ; 
 
 ■ville, &c. R. R. Co. 15 Ohio St. 225; see, also, Edgarly ». Emerson, 3 Post. 555; and 
 Dispatch Line of Packets v. Bellamy Mfg. Co. 12 N. H. 205. Notice of the time and 
 place of holding meetings of stockholders, to be effectual, must be given in the mode 
 prescribed by the charter. Shelby R. R. Ccjl, v. Louisville R. R. Co. 12 Bush, 62. 
 And if the by-laws of a corporation provide that meetings of the stockholders shall 
 be called by the trustees, the action of the board of trustees is necessary to convene 
 a legal meeting. The president of the corporation has no authority to call such a 
 meeting. State v. Pettineli, 10 Nev. 141. As to municipal corporations, see Dillon 
 on Mun. Corp. §§ 200-225. 
 
 (o) The want of irregularity of notice is waived by the presence and consent of all 
 who have a right to attend a meeting. Angell & Ames on Corp. § 495 ; Slebbins v. 
 Merritt, 10 Cush. 27; People v. Peck, II Wend. 604; Jones v. Milton T. Co. 7 Ind. 
 847. But if one person is absent, or refuses his consent, the proceedings are invalid. 
 People's Ins. Co. ». Westcott, 14 Gray, 440. Notice may be waived by the recogni- 
 tion of the authority of an agent appointed at the meeting in question. Bryant v. 
 Goodman, 6 Pick. 228. 
 
440 EXERCISE OF POWERS BY CORPORATIONS. 
 
 tremely. Generally its essential parts will be set forth by the 
 constating instruments ; with joint-stock companies this will in- 
 variably be the case, but custom, more especially with municipal 
 and eleemosynary corporations, will sometimes determine these 
 requisites wholly or in part. Special circumstances or arrange- 
 ments apart, the notice should contain, first, the date and time, 
 and secondly, the place of meeting, unless there be some standing 
 rule or established custom, known to all the members, which fixes 
 these,^ and even then it will be more advisable to issue a proper 
 notice to remind forgetful members ; and thirdly, the business to 
 be considered.' However, the transaction of business at a meet- 
 ing foreign to the objects specified in the notice will not make the 
 whole meeting irregular.' (a) 
 
 ' See Rex v. Hill, 4 B. <fe C. 426. ny, ubi supra ; Graham v. Van Dleman's 
 
 ' Wills j;. Murray, 4 Ex. 843 ; i?e Land Company, 1 H. & N. 541 ; 26 L. J. 
 
 Bridport Old Brewery Co. L. R. 2 Ch. (Ex.) 78 ; Me Irrigation Company of 
 
 191 ; Re Silkstone Fall Coll. Co. 1 Ch. France (Fox's Case). L. R. 6 Ch. 176 ; 
 
 D. 38. Cleve v. Financial Corp. L. R. 16 Eq. 363. 
 
 * Re British Sugar Refining Compa- 
 
 (a) The requisites of notice are in this country the same in general as those stated 
 in the text : 
 
 1. Time, unless a regular time is fixed in the charter or in some by-law, of which 
 every member is presumed to hare notice. Angell <fe Ames on Corp. § 488 ; People 
 V. Batchelor, 22 N. T. 128. In Atlantic Ins. Co. v. Sanders, 36 If. H. 252, it is said 
 that if the time lias been fixed by usage, a tacit understanding of the members, or in 
 any other way, it is enough to obviate the necessity of notice. 
 
 2. Place, unless that is in like manner established. Angell & Ames, § 496; Jones 
 T,. Milton <fe Rush. T. Co. 7 Ind. 547. 
 
 3. The business to be transacted, except in case of stated general meetings for the 
 transaction of all business, and meetings regularly held for a particular object. Samp- 
 son 0. Bowdoinham Steam Mill Corp. 36 Me. 78; Warner v. Mower, 11 Vt. 385; 
 Merritt v. Farris, 22 111. 303 ; see, also, note on ordinary and extraordinary meetings, 
 post, p. 441. 
 
 4. The notice must be personal, unless otherwise provided by charter or a by-law. 
 SteTens v. Eden Meeting-House Soc. 12 "Vt. 688; Wiggin v. Free Will Baptist Church, 
 8 Mete. 301 ; Stow v. Wyse, 7 Conn. 214; Savings Bank v. Davis, 8 Conn. 191 ; Tay- 
 lor V. Griswold, 2 Green, 222. 
 
 6. The summons must be issued by one who has authority. Angell & Ames on 
 Corp. § 491 ; Evans v. Osgood, 18 Me. 213; Stevens v. Eden Meeting-House Soc. 12 
 Vt. 688 ; Bethany v. Sperry, 10 Conn. 200. Where the corporation has no officer 
 by whom a meeting can be called, its powers are suspended till a new charter is 
 granted, unless the charter or the general law provides some remedy. Goulding v. 
 Clark, 34 N. H. 148. But a by-law providing that a meeting shall be called by the 
 president, on application by a certain number of members, does not preclude the 
 directors from calling without such application. Citizens' Mut. Fire Ins. Co. v. Sort- 
 
MEETINGS OF THE MEMBERS. 441 
 
 The length of time which notices must be issued previous to 
 meetings is usually fixed by the constating instruments. In com- 
 panies governed by 8 & 9 Vict. c. 16, it must be fourteen days/ 
 while the Companies Act, 1862, requires at least seven days.^(a) 
 
 Meetings may be adjourned, but nothing may be transacted at 
 any adjourned meeting save the unfinished business of the former 
 meeting.' (b) 
 
 Meetings are of two kinds, ordinary or general, and extraor- 
 dinary or special. The former are held periodically at appointed 
 times, and for the consideration of matters in general. The latter 
 are called upon emergencies, and for the transaction of particular 
 business. Extraordinary meetings being thus summoned unex- 
 pectedly, the notice relating to them ought to specify very care- 
 fully and exactly the occasion of the summons, and all the busi- 
 ness proposed to be transacted thereat, so as to call the attention 
 of each member in an especial manner to the circumstances.* (c) 
 
 ' Sec. 71 and sec. 138. ' Reg. v. Grimshaw, 10 Q. B. 1i1. 
 
 = 25 and 26 Vict. c. 89, sec. 52, and * See He Bridport Old Brewery Corn- 
 
 Table A, clauses 95-97. pany, L. R. 2 Ch. 191. 
 
 well, 8 Allen, 217; see, also. Chamberlain v. Painesville, <fec. R. R. Co. 15 Ohio St. 
 225. 
 
 In some cases no notice whatever is necessary, on the ground that the members 
 are notified in all the particulars by the charter or by-laws of the corporation. War- 
 ner V. Mower, 11 Vt. 386. 
 
 So, too, the terms of the charter may, of course, be such as to remove the neces- 
 sity of any one or more of the ordinary requisites. 
 
 (a) When the charter does not provide the length of time, before the meeting, 
 requisite for notice, the general law of corporations is to be followed ; and, in the 
 absence of any such general lavr, a reasonable time is required, or the usual time if a 
 custom has prevailed. Wiggin v. Free Will Baptist Soc. 8 Mete. 301 ; In re Long 
 Island R. R. Co. 19 Wend. 37; Angell <fe Ames on Corp. § 491. 
 
 (6) Business which may be transacted at any meeting may also be at an adjourn- 
 ment of such meeting; but no other business can be done without special notice. 
 Smith ». Law, 21 N. Y. 296; People v. Batchelor, 22 N. Y. 128 ; Farrar v. Perley, 7 
 Me. 404; Schoff -u. Bloomfleld, 8 Vt. 472. In Warner v. Mower, 11 Vt. 385, Red- 
 field, J., says: "It is too well settled to require comment, that all corporations, 
 whether municipal or private, may transact any business at an adjourned meeting 
 which they could have done at the original meeting. Whether the meeting is con- 
 tinued without interruption for many days, or, by adjournment, from day to day, or 
 from time to time, many days intervening, it is evident it must be considered the 
 same meeting, without any loss or accumulation of powers." 
 
 (c) In regard to the distinction between ordinary and extraordinary meetings, it 
 is to be observed, that these terms are used at different times with different mean- 
 
442 EXERCISE OF POWERS BY CORPORATIONS. 
 
 But beyond this, and the further fact that the proceedings of an 
 extraordinary meeting are usually not final, but require confirma- 
 tion at some subsequent meeting,^ there is little difference in the 
 requirements of both kinds of meetings, and the notice to be pre- 
 vious to either, and the formalities to be observed will be very 
 similar, if not actually identical, (a) 
 
 ' See Dean v, Bennett, L. R. 6 Ch. 489; Clinch v. Financial Corporation, L. 
 
 R. 5 Eq. 450. 
 
 ings. Sometimes the distinction has regard to the time or place, and at other times 
 to the business to be transacted. This is also true as to the terms general and special, 
 or stated and special, meetings. It is e-rident that a meeting may be ordinary in one 
 sense, particular and extraordinary in another. The general rule is, that in whatever 
 respects the meeting is extraordinary, as to that notice must be given, although, as to 
 other particulars, ordinary in their character, no notice is required. Thus, a meeting 
 which is regular or ordinary as regards time, but extraordinary in the business to be 
 done, requires special notice of its object. ZabrisHe v. C. C. & C. B. R. Co. 23 How. 
 S81 ; Sampson v. Bowdoinham Steam Mill Corp. 36 Me. 78 ; People's Ins. Co. v. West- 
 cott, 14 Gray, 440; Atlantic Delaine Co. ■/. Mason, 5 R. I. 463. And, on the other 
 hand, notice of a meeting, special or extraordinary in point of time, need not state 
 the object, when it is for the transaction of ordinary business. Savings Bank v. Davis, 
 8 Conn, 191. A member is not presumed to know all which takes place at a regular 
 meeting, although he is bound by the action of the majority in matters coming within 
 the scope of such meetijig. Kotioe of a special meeting given at a regular or general 
 meeting is, therefore, tjp notice to one who is absent. People v. Batchelor, 22 N. Y. 
 128. In Warner v. Mower, 11 Vt. 385, Redfield, J., says: "It is to be borne in mind, 
 too, that a manifest distinction obtains between general stated meetings of a corpora- 
 tion and special meetings. I know that stated meetings may,' nevertheless, be special, 
 i. c, limited to particular business. But stated meetings of a corporation are usually 
 general, i. c, for the transaction of all business within the corporate powers. Unless 
 the object of such meeting is restricted by express provision of the by-laws, it would 
 ordinarily be understood to be general ; and so every corporator would be bound to 
 understand it. But if the object of the meeting be limited by the by-laws, it is then 
 a special meeting, and no other business could lawfully be transacted unless special 
 notice was given. Where the meeting is stated and general, no notice is required, 
 either of the time or place of holding the meeting, or of the business to be trans- 
 acted," See, also, Redfield on Railways, ch. iv, sec. 4. 
 
 (a) The question whether meetings of a corporation or of its managing body can 
 be held outside of the State of its domicile, is one of some importance in this coun- 
 try. The general subject of the powers of corporations beyond their domiciles has 
 already been considered See ante, pp. 3-7, notes. The cases are uniform in hold- 
 ing that : 1. A corporation exists only within the territory of the jurisdiction creating 
 it. 2. A corporation can only be organised within the bounds of the State creating 
 it. 3. Corporate acts, strictly so called, cannot be performed outside that territory. 
 4. The acts of duly authorized agents can be performed anywhere not forbidden by 
 positive enactment. But, 6. Courts differ as to what are corporate acts and what are 
 
MEETINGS OF THE MEMBERS. 44?l 
 
 acts purely of agents ; some holding that the dh'eetors are only agents, and others 
 holding their acts as directors to be corporate acta. 
 
 The following are the principal cases on the subject of meetings : 
 
 " It is next objected that the mortgages were not properly executed, because the 
 meetings of the directors by which the mortgages were authorized to be executed 
 were held in the city of New York. It is not denied that the mortgages were exe- 
 cuted in good faith, imder the corporate seal, and signed by the president and coun- 
 tersigned by the treasurer of the company, and duly recorded in the proper offices of 
 registry in the State of Texas. No doubt it can be true, in many cases, that the ex- 
 traterritorial acts of directors would be held roid, as where a set of directors of a 
 New Jersey corporation met at Philadelphia, against a positive prohibitory statute of 
 New Jersey, and improperly voted themselves certain shares of stock. And other 
 cases might be put where their acts would be held void without a prohibitory stat- 
 ute ; and it is generally true that a corporation exists only within the territory of 
 the jurisdiction that created it. But it is well settled that a corporation may, by its 
 agents, make contracts and transact business in another territory, and may sue and 
 be sued tlierein." Galveston Railroad v. Cowdrey, 11 Wall. 476, 477. 
 
 In Arms v. Conant, 36 Vt. 745, where the validity of the mortgage of a Vermont 
 corporation, authorized by a directors' meeting held in Massachusetts, came in ques- 
 tion, the Court said : " The conferring of authority by the directors of a corporation 
 upon an agent to execute a deed is not a corporate act. The directors act in such a 
 case not as the corporation, but as the agents of and in behalf of the corporation. 
 And tliis authority may be conferred by a vote passed at a meeting of the directors 
 without the State where the corporation was created and exists. The orator's coun- 
 sel makes no question of the general power of the directors of the railroad company 
 to act, even in their aggregate capacity as a board, out of this State, in all matters 
 of ordinary business or contract, where they have authority to bind the corporation, 
 but claims that the authorizing an agent to deed, which must be by vote under the 
 statute, is a corporate act, and therefore can only be done in the State. We have no 
 occasion now to discuss or decide whether a corporation created in one State can 
 legally hold a corporate meeting and pass corporate votes in another. There certainly 
 seems to be strong reason for holding that they cannot act in a strictly corporate 
 capacity where they have no legal existence. But we do not regard this conferring 
 authority by the directors upon an agent to execute a deed as being a corporate act 
 any more than any and every other act or contract they do or make on behalf 
 of the corporation. It is a mere question of authority in the directors, and not 
 one of corporate power ; and when it is established that the power is vested in the 
 directors, it cannot with any more propriety be said that they are performing a 
 corporate act in conferring it, than in every other matter where they bind the com- 
 pany by their official agency as directors. They act in neither case as the corporation, 
 but as the agents of and on behalf of the corporation.'' 
 
 A meeting of the corporators of a corporation, of the State of Maine, was called, 
 under its charter for organization, in the city of New York, and the chaiter was 
 there accepted, and the officers of the corporation — president, secretary and direc- 
 tors — were chosen. There was no proof that any meeting for the organization of the 
 company, or for the choice of its officers, had ever been held in Maine. The Court 
 said : " If directors of the corp )ration, legally chosen, might transact business as such 
 by vote of the board, at a meeting held in another State, and might authorize persona 
 to execute a conveyance of real estate, yet it would be necessary to show that such 
 
444 EXERCISE OF POWERS BY CORPORATIONS. 
 
 persons were legally chosen directors, before any conveyance made by their direction 
 could be considered as legally made. All votes and proceedings of persons professing 
 to act in the capacity of corporators, when assembled vpithout the bounds of the 
 sovereignty granting the charter, are wholly void. The directors of a corporation 
 are not a corporate body when acting as a board, but a board of officers or agents, 
 and they may exercise their powers as agents be>ond bounds where the corporation 
 exists. Whether the statute provisions of this State, and the intention of the legis- 
 lative power, or the general rules of law respecting corporations, be examined, the 
 conclusion must be the same : that this corporation could hold no meeting for the 
 election of its ofScers or for the regulation of its affairs without the limits of this 
 State, and all such meetings and proceedings were without right or authority, and 
 wholly void." Miller v. Ewer, 27 Me. 517. 
 
 No legal organization by the corporators, under a charter granted by the State of 
 Maine, can be effected by their action in another State. Freeman v. Machias Water 
 Power <fe Mill Company, 38 Me. 343. 
 
 But contra. The proceedings at such meeting could not be regarded as illegal 
 and void, though held by the appointment of a magistrate, in the State of New Hamp- 
 shire, where the proprietors resided, the statute not prescribing any place of meeting. 
 Copp V. Lamb, 12 Me. 312. 
 
 It is competent for the directors of a manufacturing company, incorporated by 
 the Legislature of Connecticut, without restriction as to the place of holding their 
 meetings, to meet in another State, and there appoint a secretary. McCall v. Byram 
 Manufacturing Co. 6 Conn. 428, 429. 
 
 Corporate acts performed by the body of the corporation while sitting out of the 
 State which creates it, are void and of no effect. Aspinwall et al. v. Ohio & Missis- 
 sippi R. R. Co. et al. 20 Ind. 49Y. 
 
 In "Wright V. Bundy, 11 Ind. 404, which was a suit to foreclose a mortgage made 
 by an Indiana railway company executed in Ohio, it was said : " We do not think 
 the contract void because executed out of the State. There is nothing in our rail- 
 road act requiring the directors of the corporations to transact their business within 
 the State. It is true that corporations cannot migrate from one sovereignty into 
 another, so as to become legal local existences within the latter sovereignty ; but it is 
 true that the migration of the directors of a corporation from one sovereignty into 
 another, does not terminate the existence of such corporation within the sovereignty 
 which created it, for by our statute (1 R. S. p. 409) the stockholders are the corpo- 
 ration, the directors its agents; and by interstate and international courtesy, corpo- 
 rations created in one State are permitted to contract and sue in others; and if all 
 the directors could there, as agents of the corporation, make a contract, why can 
 they not there authorize one of their number to make it ? The mere place where the 
 active agents of a corporation enter into a contract, must, in general, be immaterial. 
 The important question arising must be one of power, not of place. The exercise of 
 the power has relation to the place of their legal establishment, where the contract 
 may be subsequently acted under. The meetings of the directors of a business cor- 
 poration are not analogous to the sessions of a judicial tribunal. The corporation is 
 organized by the election of directors ; but the mere organization of the directors 
 into a formal meeting for business afterwards is quite a different thing. States can- 
 not migrate ; but, by their agents, they are daily making contracts without their 
 territorial boundaries. Besides, our law seems to contemplate that corporations 
 chartered in this State, and local to it, may have offices for business in other States. 
 
MEETINGS OF THE MEMBERS. 445 
 
 1 E. S. p. ] 13, § 32 ; Acts of 1853, p. 102. Such, also, is the spirit of our legislation 
 authorizing railroad companies in this State to consolidate with those in other States." 
 
 Directors may meet and act outside of the chartering State. Bellows v. Todd, 
 39 Iowa, 209. 
 
 The directors are the agents of the corporation, not the corporation itself; 
 although they meet without the limits of the State creating the corporation, yet 
 their proceedings will be valid and binding upon the company. Where a charter 
 granted by the State of Illinois declared certain persons to be a, corporation, and 
 named the directors thereof, such directors could meet and act in the State of Mis- 
 souri. Ohio <fc Miss. R. R. Co. v. McPherson, 35 Mo. 13. 
 
 In Ormsby v. Vermont Copper Mining Co. 56 S. Y. 623, the defendant was a 
 Vermont corporation. A meeting of the stoctholders was held in the city of New 
 York, at which neither D. nor G. were present or represented. At that meeting an 
 amendment of the by-laws was adopted authorizing the directors to assess the stock 
 to pay debts, and to furnish means to carry on the company, and empowei-ing the 
 treasurer to sell the shares of any stockholder refusing or neglecting to pay the 
 assessment. Held, that, according to the settled law of corporations, neither stock- 
 holders nor directors can do a corporate act, out of the jurisdiction creating the cor- 
 poration, which shall haye any force to bind those who do not participate in it, and 
 that, therefore, neither of the meetings in New York, ex propria vigore, bound D. or 
 G., or imposed upon them any obligations, even conceding that the corporation had 
 power to impose further assessments on full-paid stock. The opinion of the court is 
 not reported in full, but it may be doubted whether the court intended to lay down 
 so broad and general a rule, as chat directors of a corporation can do no valid corpo- 
 rate act outside of the jurisdiction creating it. The decision of the case called for no 
 such expression ; and an examination of the record shows that the statute of Vermont 
 was capable of a construction forbidding the corporation from doing business out- 
 side of that State. See Merrick v. Van Santvoord, 38 Barb. 574 ; s. c. 34 N. Y. 208 ; 
 Smith V. Alvord, 63 Barb. 416; New York Floating Derrick Co. v. New Jersey Oil 
 Co. 3 Duer, 648; Stoney v. American Life Ins. Co. H Paige, 635; Mumford v. Same, 
 4 N. Y. 463; Bard v.. Poole, 12 N. Y. 495 ; "Wood Hydraulic H. M. Co. v. King, 45 
 Ga. 34. 
 
 In a case touching an election, held in Pennsylvania, of directors of a New Jersey 
 corporation, the Court, after quoting the general acts concerning corporations, by 
 which it was enacted that all companies incorporated under the laws of New Jersey, 
 whose charters do not designate their places of meeting, shall hold their business 
 meetings and the meetings of their directors in the State, said : " Independent of 
 this statutory provision, it is a rule of law that a private corporation, whose charter 
 has been granted by one State, cannot hold meetings and pass votes in another State. 
 It exists by force of the law that created it, and when that law ceases to exist, and is 
 not obligatory, the corporation can have no existence. When it appears that resolu- 
 tions of a board of directors of a corporation of this State, authorizing the transfer of 
 stock, were passed at a meeting held in Philadelphia, such resolutions are void, and 
 the transfer of stock, in pursuance of them, to the directors who participated in the 
 illegal proceedings, can vest no title in them." Hilles v. Parrish, 1 McCarter, 380. 
 
 A corporation created by the concurrent legislation of two States, may hold cor- 
 porate meetings in either. Covington, &c. Bridge Co. o. Mayer, 31 Ohio St. 317. 
 
 The subject of meetings of directors is considered in the text in the chapter on 
 Formalities, post. 
 
446 EXERCISE OF. POWERS BY CORPORATIONS. 
 
 Section II. — The Necessity foe Sealing, (a) 
 
 TJnder the strict common law, all the contracts of corporations 
 must be attested by the fixing of their seal. They being invisible 
 
 (o) The doctrine of the common law as to the necessity of sealing is universally 
 abandoned in the United States. The rules prevalent here on the subject of the 
 modes in which a corporation may contract could not be more correctly expressed 
 than by the language of the statute of 8 & 9 Vict. c. 16 ; see post, p. 464. The 
 tendency of modern decisions is to assimilate the powers, duties and responsibilities 
 of corporations, to the powers, duties and responsibilities of individuals. It would 
 follow, therefore, that wherever, by law, private persons must contract by writing 
 under seal, there corporations must contract by sealed instrument. Wherever, by 
 law, private persons must contract by writing signed by the parties to be charged, 
 therewith, there some body or authorized agent of the corporation, by vote or other 
 writing, must make the contract, in order that it may be binding on the corporation. 
 Wherever, by law, private persons would be bound by a parol contract, there a parol 
 contract made by the officers or agents of the corporation, acting within the apparent 
 scope of their authority, and purporting to be in behalf of the corporation, will be 
 held obligatory on the corporate body. There is, however, an exception frcm these 
 general rules, which may be here referred to : " The common law rule with regard 
 to natural persons, that an agent, to bind his principal by deed, must be empowered 
 by deed himself, cannot in the nature of things be applied to corporations aggregate." 
 Angell <fe Ames, § 224; citing Hopkins v. Gallatin T. Co. 4 Humph. 403; Beckwilhw. 
 Windsor Manuf. Co. 14 Conn. 594 ; Howe v. Keeler, 27 Conn. 638 ; Burr v. McDonald, 
 3 Gratt. 215; see other notes on this section. A few extracts from the earlier 
 decisions in the Supreme Court of the United States must suffice as authority for the 
 general propositions laid down. For cases supporting them, see 1 Redfield on Rail- 
 ways, §§ 113, 143 ; Angell & Ames on Corp. chs. VII and VIII ; Dillon on Mun. 
 Corp. § 130. " The technical doctrine that a corporation could not contract except 
 under its seal, or, in other words, could not malse a promise, if it ever had been fully 
 settled, must have been productive of great mischiefs. Indeed, as soon as the doc- 
 trine was established that its regularly appointed agent could contract in their name 
 without seal, it was impossible to support it ; for otherwise the party who trusted 
 such contract would be without remedy against the corporation. Accordingly, it 
 would seem to be a sound rule of law, that wherever a corporation is acting within 
 the scope of the legitimate purposes of its institution, all parol contracts made by 
 its authorized agents are express promises of the corporation ; and all duties imposed 
 on them by law, and all benefits conferred at their request, raise implied promises, 
 for the enforcement of which an action may well lie. And it seems to the court, 
 that adjudged cases fully support the position." Bank of Columbia v. Patterson, 7 
 Craneh, 299; citing Gray v. Portland Bank, 3 Mass. 364; Worcester T. Corp. v. Wil- 
 lard, 5 Mass. 80 ; Gilmore v. Pope, 5 Mass. 491 ; Andover & Medford T. Corp. v. 
 Gould, 6 Mass. 40; see Bank of Metropolis v. Gmtschlick, 14 Pet. 19. The Bank of 
 U. S. !). Dandridge, 12 Wheat. 64, came up on writ of error to the Circuit Court of 
 the United States for the District of Virginia, of which C. J. Marshall was the circuit 
 judge. Mr. J. Story, in delivering the prevailing opinion, reversing the judgment 
 
THE NECESSITY FOK SEALING. 447 
 
 — aud as Coke adds (10 Eep. 32), without a soul — cannot manifest 
 their intentions by any personal act or oral discourse. They, there- 
 
 of the court below, says : " In ancient times, it was held that corporations aggregate 
 could do nothing but by deed under their common seal. But this principle must 
 always have been understood with many qualifications, and seems inapplicable to 
 acts and votes passed by such corporations at corporate meetings. It was probably, 
 in its origin, applied to aggregate corporations at the common law, and limited to 
 such solemn proceedings as were usually evidenced under seal, and to be done by 
 those persons who had the custody of the common seal, and had authority to bind 
 the corporation thereby, as their permanent official agents. Be this as it may, thes 
 rule has been broken in upon, in a vast variety of cases in modern times, and cannot 
 now, as a general proposition, be supported. And it is now firmly established both 
 in England and America, that a corporation may be bound by a promise, express or 
 , implied, resulting from the acts of its authorized agent, although such authority be 
 only by virtue of a corporate vote unaccompanied with the corporate seal." The 
 question under consideration by the court did not depend upon the poiut whether 
 the acts of a corporation might be proved otherwise than by some written docu- 
 ment; but the court consider it as illustrative upon the point then in judgment. 
 Marshall, C. J., in his dissenting opinion, while admitting that a corporation can ex- 
 press its assent by vote, insists that such vote must be evidenced by a written record. 
 On the question, whether a corporation can speak directly .in any way but by writ- 
 ing, he says : " Can such a being speak or act otherwise than in writing ? Being 
 dessitute of the natural organs of man, being distinct from all its members, can it 
 communicate its resolutions or declare its will without the aid of some adequate sub- 
 stitute for those organs ? If the answer to this question must be in the negative, 
 what is that substitute ? I can imagine no other than writing. The will to be an- 
 nounced is the aggregate will. The voice which utters it must be the aggregate 
 voice. Human organs belong only to individuals. The words they utter are the 
 words of individuals. These individuals must speak collectively to speak corpo- 
 rately, and must use a collective voice. They have no such voice, and must com- 
 municate this collective will in some other mode. That other mode, as it seems to 
 me, must be by writing. A corporation will generally act by its agents ; but those 
 agents have no self-existing power. It must be created by law, or be communicated 
 by the body itself. This can be done only by writing. If, then, corporations were 
 novelties, and we were required now to devise the means by which they should trans- 
 act their affairs, or communicate their will, we should, I think, from a consideration 
 of their nature, of their capacities and disabilities, be compelled to say, that where 
 other means were not provided by statute, such will murt be expressed in writing." 
 After a review of authorities, he concludes that, " According to the decisions of the 
 courts of England, and of this court, a corporation, unless it be in matters to which 
 the maxim de minimis non curat lex applies, can act or speak, and, of course, contract 
 only by writipg. This principle, which seems to be an essential ingredient of its 
 very being, has been maintained by all the judges who have ever discussed the sub- 
 ject. Upon this principle, and the authority of these cases, I have supposed that a 
 corporation cannot receive and assent to a deed of any description, unless this assent 
 be expressed regularly in writing. It ought to be entered on the books of the cor- 
 poration." The opinion closes with the following remark : "1 have stated the view 
 
448 EXERCISE OF POWERS BY CORPORATIONS. 
 
 fore, act and speak only by their common seal. For thoiagh tlie 
 particular members may express their private consent to any act 
 by words or signing their names, yet this does not bind the corpo- 
 ration ; it is the fixing of the seal, and that only, which unites the 
 several assents of the individuals who compose the community, 
 and makes one joint assent of the whole. As expressed byEolfe, 
 B., in Mayor, &c. of Ludlow v. Charlton : ^ " The seal is required 
 as anthentieating the concurrence of the whole body corporate. 
 If the Legislature, in creating a body corporate, invest any mem- 
 ber of it, either expressly or impliedly, with authority to bind the 
 whole body by his mere signature or otherwise, then, undoubtedly, 
 the adding of a seal would be matter purely of form, and not of 
 
 1 6 M. & W. 816. 
 
 which was taken by the Circuit Court of this case. I have only to add, that the law 
 is now settled otherwise, perhaps to the advancement of public convenience. I acquiesce, 
 as I ought, in the decision which has been made, though I could not concur in it." 
 
 " The ancient doctrine, that a corporation can act in matters of contract only under 
 its seal, has been departed from by modern decisions." Chesapeake & Ohio Canal 
 Co. ». Knapp, 9 Pet. 541. 
 
 Whenever a corporation has power to deal through agents, the necessity of the 
 seal is diminished, and it may be bound by agreements into which it could not have 
 entered directly without a seal. And, it is to be observed, that a corporation whose 
 affairs are, by the charter, to be managed by a board of directors, does almost all its 
 business by agents. The directors are its agents. In Bank of IT. S. v. Dandridge, 
 12 Wheat. 64, Judge Story says : " It is most manifest that the corporation is alto- 
 gether a distinct body from the directors, possessing all the general powers and attri- 
 butes of an aggregate corporation, and entitled to direct and superintend the manage- 
 ment of its own property, and the government of the institution, and to enact by-laws 
 for this purpose. So far as the act delegates authority to the directors, the latter pos- 
 sess it and may exercise it, not as constituting the corporation itself, but as its express 
 statute agents to act in the ordinary business of the institution. The directors are 
 created a board, and not a corporate body." Accordingly, it was held in Fleckner 
 V. Bank of U. S. 8 Wheat. S38, that " whatever may be the original correctness of 
 this doctrine (that corporations can act only by their seal) as applied to corporations 
 existing by the common law, in respect even to which it has been certainly broken 
 in upon in modern times, it has no application to corporations created by statute, 
 whose charters contemplate the business to be transacted exclusively by a special 
 body or board of directors. And the acts of such body, evidenced by a written 
 vote, are as completely binding upon the corporation, and as complete authority to 
 their agents, as the most solemn acts done under the corporate seal." See, also, Shef- 
 field School Township v. Andress, 66 Ind. 167 ; Christian Church of Wolcott v. John- 
 son, 63 Ind. 273 ; Town of New Athens v. Thomas, 82 111. 259 ; Paret v. City of 
 Bayonne, 39 N. J. L. 669. 
 
THE NECESSITY FOR SEALDiTG. 4:49 
 
 substance. Every one becoming a menaber of such a corporation 
 knows that he is liable to be bound in his corporate character by 
 such an act, and persons dealing with the corporation know that 
 by such an act the body will be bound. But in other cases the 
 seal is the only authentic evidence of what the corporation has 
 done or agreed to do. The resolution of a meeting, however 
 numerously attended, is, after all, not the act of the whole body. 
 Every member knows he is bound by what is done under the cor- 
 porate seal, and by nothing else. It is a great mistake, therefore, 
 to speak of the necessity of a seal as a relic of ignorant times. It 
 is no such thing ; either a seal, or some substitute for a seal, which 
 by law shall be taken as conclusively evidencing the sense of the 
 whole body corporate, is a necessity inherent to the very nature of 
 a corporation." {a) 
 
 The rigid application of this rule has necessarily entailed not a 
 little moral injustice, as in the case just cited. Two other noto- 
 rious instances are Arnold v. Mayor of Poole, and Diggle v. Lon- 
 don and Blackwall Railway Company.^ In the former case, the 
 plaintiff, an attorney, had been appointed by the defendants to 
 conduct their suits and to perform other legal business for them, 
 but his appointment not having been under the common seal, it was 
 held that he could not recover his bill of costs. (J) In the latter 
 case, the plaintiff had, in accordance with an agreement not under 
 seal, entered into with the defendants, executed certain works and 
 improvements upon their line. He was dismissed before the com- 
 pletion of the work, and on action brought it was held he could 
 not recover for the services rendered. 
 
 However, owing to the vast increase in modern times in the 
 number of trading corporations, it has been found advisable, if 
 not absolutely necessary, to qualify the rule, and to hold many 
 contracts made by or with corporations valid though not under 
 seal. These exceptions are now to be examined, (c) but it must 
 
 ' 4 M. <fe Gr. 860, and 5 Ex. 442, res- pectively; see Sutton «. Spectacle Makers' 
 
 Co. 12 W. R. 742. 
 
 (a) This language is repeated with approval by Pollock, B., in Mayor of Kidder- 
 minster V. Hardwick, L. R. 9 Exeh. 24. 
 
 (i) See Mumford v. HawMna, 5 Den. 355 ; Western Bank v. Gilstrap, 45 Mo. 419. 
 
 (c) Compare exceptions to the general rule in England as stated by Best, C. J., in 
 East London "Water-works v. Bailey, 4 BiDg. 283 ; see L. R. 3 C. P. 463 ; L. R, 4 C. 
 P. 617. 
 
 29 
 
450 EXERCISE OF POWERS BY CORPORATIONS. 
 
 be premised that under no circumstances will any exception be 
 allowed to prevail against the express directions of the Legisla- 
 ture. Whenever a statute makes sealing an essential condition 
 for the validity of a contract, this formality must be observed.^ 
 
 This being borne in mind, the following seem to be the chief 
 cases in which the absence of a seal will be excused. 
 
 a. Matters of trivial and every-day occv/rrence. 
 
 From earliest times it has been admitted that to enforce the 
 rigid rule in the insignificant affairs of daily life would be need- 
 less, if not utterly impracticable.^ (a) 
 
 b. Cases of utiUty amounUng to necessity. 
 
 It is now fully established that when the constitution and end 
 of a corporation require that certain contracts should be made and 
 work done, and such contracts have been formed by agents law- 
 fully authorized, and work has been performed and materials sup- 
 plied in pursuance of the same, under such circumstances the cor- 
 poration wiU be liable to an action, if not upon the special contract, 
 at least on the common counts.* 
 
 In the following cases similar claims were allowed : Sanders v. 
 Guardians of St. Neot's Union,^ for iron gates, the order given 
 being merely oral ; De Grave v. Mayor, &c. of Monmouth,' for 
 weights and measures sent to the mayor at his request, afterwards 
 examined in the town hall by the full corporate body, and«aecepted 
 and used by them ; Beverley v. Lincoln Gas-Kght, &c. Co.,* for 
 gas meters supplied to the defendants ; Church v. Imperial, &c. 
 Co.,' where the Exchequer Chamber held that the defendants 
 could maintain assumpsit for the breach of a contract by the 
 
 1 Freud •«. Dennett, 27 L. J. (0. P.) « 6 Ad. <fe E. 829. Compare London 
 
 314. Compare Cunningham v. Local, <fec. Gas-light, &a. Co. v. NichoUs, 2 C. <fe P. 
 
 Wolverhampton, 26 L. J. (M. C.) 33. 365 ; Mayor, &c. of Stafford v. Till, 4 
 
 ' Horn V. Ivy, 1 Ventr. 47 ; Randle v. Bing. 76 ; Church v. Imperial Gas-light, 
 
 Deane et al. (2 Lut. 1496), 12 Will. Ill, Ac. Co. 6 Ad. & E. 846. 
 
 C. B. ; Manby v. Long et al. 3 Lev. 107. ■■ 6 Ad. & E. 846. But in Smith v. 
 
 8 Clarke v. Cuctfield Union, 21 L. J. London Gas Co. 7 Grant. (U. C. 0.) 112, 
 
 (Q. B.) 349. it was held that a special contract for the 
 
 * 8 Q. B. 810. supply of gas upon unusual terms must 
 
 » 4 C. & P. 111. be under seal to bind the company. 
 
 (a) "De minimis non curat lex." Marshall. C. J., in Bank of U. S. v. Dandridge, 
 12 Wheat. 64. 
 
THE NECESSITY FOR SEALING. 451 
 
 plaintiff in error to accept gas from year to year at the ordinary 
 rates and terms ; Brewster v. Canada Co.,^ where a land company 
 were held bound by a contract by their agent, not under seal, for 
 the sale of certain lands, they having also to some extent acqui- 
 esced in the contract ; Nicholson v. Bradfield Union,' for coals 
 supplied at various times by the plaintiff to the defendants for 
 their workhouse, under an agreement between the plaintiff and 
 the guardians, signed by the former, but not under the seal of the 
 latter. 
 
 In the following they were disallowed : Paine v. Guardians of 
 Strand Union,' for making a plan of one of the parishes of the 
 union ; Lamprell v. Billericay Union,* for making alterations in 
 and additions to a workhouse, such being directed by parol, though 
 the contract to build the workhouse was itself under seal ; Homer- 
 sham V. "Wolverhampton Water-works Co.,' also for variations 
 made in pursuance of orders given by the defendants' engineer, 
 while carrying out a contract duly sealed ; Pim v. Municipal 
 Council of Ontario,' for erecting a gaol and courthouse ; Barker 
 V. Municipal Council of Olunes,'' for the refusal to carry out a 
 tender accepted by parol for the erection of a dam for a reservoir.^ 
 
 The latest case is "Wells v. Mayor, &c. of Hull.' A verdict 
 was found for the plaintiff, and the court upheld it on the ground 
 that it was a contract which was binding, though not under seal, 
 because relating to a matter of constant occurrence. 
 
 We have already seen that common servants may be appointed 
 by parol, at least by such corporations as have a head.(a) This 
 
 ' 4 Grant. (U. C. C.) 443. 8 gge Pegge v. Lampeter Union, L. R. 
 
 ' L. R. 1 Q. B. 620. 9 C. P. 378 ; Reg. v. Mayor, &c. of Wigan, 
 
 ' 8 Q. B. 326 ; 16 L. J. (M. C.) 89. L. R. 5 Q. B. 267 ; County of Wentworth 
 
 * 3 Ex. 283 ; 18 L. J. (Ex.) 282. v. City of Hamilton, 34 U. C. (Q. B.) 585. 
 ' 6 Ex. ISY ; 20 L. J. (Ex.) 193. " L. R. 10 C. P. 402 ; 44 L. J. (C. P.) 
 
 ' 9 U. C. (C. P.) 302, note 8. 289. 
 ' 2 W. <fe W. (Vict.) 315. 
 
 (a) The rule is well settled in America, that in general, whatever may be the pur- 
 pose of the agency, a valid appointment of an agent, by a corporation, may be made 
 without affixing the corporate seal. Bank of Columbia v. Patterson, 1 Cranch, 299. 
 See Angell & Ames, § 283, citing Merchants' Bank of Alexandria v. Bank of Colum- 
 bia, 5 Wheat. 326 ; Owings v. Speed, 6 Wheat. 424 ; Osborn v. Bank of U, S. 9 
 Wheat. 738; Warren v. Ocean Ins. Co. 16 Me. 439; Methodist Chapel Co. v. Her- 
 rick, 25 Me. 354; Badger v. Bank of Cumberland, 26 Me. 428 ; Tundy v. Farrar, 
 32 Me. 225; Haven v. New Hampshire Asylum, 13 N. H. 632; Goodwin a. Union 
 Screw Co. 34 N. H. 378 ; Andover Turn. Co. v. Hay, 7 Mass. 602 ; Essex Turn, Co. 
 
452 EXERCISE OF POWERS BY CORPORATIONS. 
 
 has of late been extended to employees of a higher grade, the 
 principle being not so much the urgency or the triviality, but the 
 utility of such appointments.^ 
 
 However, it would seem that this rule extends to those cases 
 only, where the urgency or utility of the appointment demands 
 that the seal should be dispensed with. Accordingly, in two of 
 the latest decisions, Dyte v. St. Pancreas Board of Guardians,^ and 
 Austin V. Guardians of Bethnal Green,' it has been held that a 
 person elected by a corporate body, clerk to the master of a work- 
 house, but not engaged by a formal contract under seal, could not 
 sue the corporation for wrongful dismissal, (a) 
 
 ' Haigh V. North Bierly Union, 28 L. (Ex.) 345 ; Smart v. West Ham Union, 24 
 
 J. (Q. B.) 62 ; Totterdell j;. Fareham Brick, L. J. (Ex.) 201; Lamprell d. Bellericay 
 
 (fee. Co. L. R. 1 C. P. 674; Browning v. Union, Homprsham v. Wolverhampton 
 
 Great Mining Central Company, 5 H. <fe Water-works Company, p. 451 ; Bateman 
 
 N. 866 ; 29 L. J. (Ex.) 399. Compare v. Mayor, <fec. of Ashton-nnder-Lyne, 3 H. 
 
 South of Ireland Colliery Company v. <fe N. 323; 27 L. . I. (Ex.) 468. 
 Waddle, L. R. 4 C. P. 617 ; see Cope v. ^ L. R. 9 C. P. 91. 
 
 Thames Haven, Ac. Company, 18 L. J. ^ 27 L. J. (N. S.) 342. 
 
 V. CoUinp, 8 Mass. 292; Hayden v. Middlesex T. Co. 10 Mass. 397; Narragansett 
 Bank v. Atlantic Silk Co. 3 Mete. 282; Wright v. Lankton, 10 Pick. 290; Thayer 
 V. Middlesex Ins. Co. 10 Pick. 326; Topping v. Bickford, 4 Allen, 120; Savings 
 Bank v. Davis, 8 Conn. 191 ; Stamford Bank v. Benedict, IB Conn. 445 ; Dunn v. St. 
 Andrew's Church, 14 Johns, 118; Powell v. Newburg, 19 Johns. 284; Randall v. 
 Van Vechten, 19 Johns. 60; Perkins v. Washington Ins. Co. 4 Cow. 645; Clarke v. 
 Benton Manufacturing Co. IB Wend. 256 ; Inhab. of Mendham v. Losey, 1 Penning. 
 847; Inhab. of Saddle River v. Colfax, 1 Hals. 115; Baptist Church v. Mulford, 3 
 Hals. 182; Chestnut Hill Turn. Co. n. Kutter, 4 S. & R. 6 ; Wolf v. Goddard, 9 
 Watts, 544 ; Elysville Manf. Co. v. Okisco Co. 1 Md. Ch. 392 ; Union Bank of Mary- 
 land V. Ridgeley, 1 Harris <fe G. 424; Kennedy v. Bait. Ins. Co. 3 Harris <fe J. 367; 
 Northern Cent. R. R. Co. v. Bastian, 15 Md. 494; Buncombe Turnp. Co. v. McCarson, 
 1 D. A B. 306; Bates v. Bank of State of Alabama, 2 Ala. 461; Everett v. United 
 States, 6 Por. 166; St. Andrew's Bay Land Co. v. Mitchell, 4 Fla. 192; Lathrop v. 
 Com. Bank, 8 Dana, 114; Richardson »i. St. John Ins. Co. 5 Blackf. 146; Legrand 
 V. Hampden Sidney Coll. 6 Munf. 324; Gamain v. Combs, 7 J. J. Marsh. 85; City of 
 Detroit v. Jackson, 1 Doug. (Mich.) 106. 
 
 In Dispatch Line of Packets v. Bellamy Manf. Co. 12 N. H. 205, the Court say : 
 "The weight of authority in this country seems to be in favor of the position, that 
 private corporations, or boards of directors through which their business is trans- 
 acted, may appoint an agent for the conveyance of real estate, by vote, without a 
 power or instrument under the corporate seal. If the formality of an instrument 
 under seal, conferring the power upon the agent who is to make the conveyance, 
 should be required, it would add nothing to the authenticity of the conveyance, if 
 the individual who affixes the seal to the power, derive his authority from a mere 
 vote of the corporation.'' See ante, p. 65, and note. 
 
 (a) The English cases cited by our author, illustrate the " hesitation among the 
 English courts and text writers to accept the acknowledged rule of the American 
 
THE NECESSITY FOR SEALING. 453 
 
 c. Contracts entered into hy trading corporations, (a) 
 
 The doctrine is now fully established that a trading corpora- 
 tion may make binding contracts in furtherance of the purposes of 
 their incorporation, without using their seal, provided such con- 
 tracts do not relate to matters of a special and unusual nature. 
 This principle, suggested in Broughton v. Manchester Water- 
 works Company,^ and recognized by the judgment in Copper 
 Miners' Company v. Fox,^ was completely confirmed by the unan- 
 imous decision of the Court of Queen's Bench in Henderson v. 
 Australian Royal Mail Steam Navigation Company.' 
 
 As to Mayor, &c. of Ludlow v. Charlton, and Arnold v. Mayor, 
 &c. of Poole,* Wightraan, J., said that they "proceed on a prin- 
 
 ' 3 B. <fe Aid. 1. ing company ia created by charter, while 
 
 '16 Q. B. 229, per Campbell, C. J.: acting within the scope of the charter, it 
 
 " If the contract had been shown to be may enter into the commercial contracts 
 
 in any way incidental or auxiliary to car- usual in such a business in the usual man- 
 
 rying on the business of copper miners, ner." 
 
 the contract would have been binding, ^ 6 E. & B. 409 ; 24 L. J. (Q. B.) 322. 
 
 though not under seal; for where a trad- * Ante, pp. 448, 449. 
 
 courts, that a corporation may as well contract by mere words, without writing, or 
 by implication of law, or by vote, or by writing without seal, as a natural person ; in 
 short, that in the case of a contract by a corporation, a seal is of no more necessity 
 or significance than in the case of a contract by a natural person." Redfield on Rail- 
 ways, § 143. 
 
 (a) " The assertion, that a corporation alone speaks by its corporate seal, is not 
 true, even in respect of political corporations. Although at first it was adopted, the 
 doctrine was only of short duration. * * * As to corporations created for com- 
 mercial purposes, and transacting their business by a board of directors, the above 
 doctrine, if it ever existed, was annulled more than a century since." Savings Bank 
 V. Davis, 8 Conn. 191. It is now firmly established, both in England and in America, 
 that a corporation may be bound by a promise, express or implied, resulting from 
 the acts of its authorized agents, although such authority be only by virtue of a cor- 
 porate vote, unaccompanied with the corporate seal. Bank of U. 8. v. Dandridge, 
 12 Wheat. 64. 
 
 "In general, throughout the United States, it is well settled that the acts of a 
 corporation, evidenced by vote, written or unwritten, are as completely binding upon 
 it, and are as complete authority to its agents, as the most solemn acts done under 
 the corporate seal." Angell & Ames on Corps. § 237 ; citing Bank of U. S. v. Dan- 
 dridge, 12 Wheat. 68 ; Brady v. Mayor, 1 Barb. 584 ; St. Mary's Ch. v. Cagger, 6 
 Barb. 576; Bank of Columbia v. Patterson, 1 Cranch, 305; New York R. R. Co. v. 
 New York, 1 Hilt. 667; Merrick v. Burlington P. R. Co. 11 Iowa, 75; Buckley v. 
 Briggs, 30 Mo. 452 ; Mechanics' Bank v. Bank of Columbia, 5 Wheat. 326 ; f leckner 
 II. JJ. S, Bank, 8 Wheat. 367 ; American Ins. Co. v. Oakley, 9 Paige, 496, and cases 
 decided by courts of nearly every one of the United States. 
 
45i EXERCISE OF POWERS BY CORPORATIONS. 
 
 ciple framed at a time when there were few corporations except 
 municipal corporations, and applicable to these corporations," evi- 
 dently implying that the principle does not apply to corporations 
 of a difEerent description. 
 
 So in Australian Royal Mail, &c. Company v. Marzetti,^ which 
 came before the Court of Exchequer two days after the decision 
 in Henderson v. Australian, &c. Company, tlie learned barons 
 unanimously abandoned the old rule, which they had strictly en- 
 forced in the Mayor, &c. of Ludlow v. Charlton, Arnold v. Mayor, 
 &c. of Poole, and Diggle v. London and Blackwall Railway Com- 
 pany, and admitted the newer one. J*er Pollock, C. B. : " It is 
 now perfectly established by a series of authorities that a corpora- 
 tion may, with respect to those matters for which they are ex- 
 pressly created, deal without seal." It has also been confirmed 
 by the unanimous decision of the Court of Common Pleas in 
 South of Ireland Colliery Company v. Waddle.^ Per Bovili, 
 0. J. : "A company can only carry on business by agents, man- 
 agers, and others, and if the contracts made by these persons are 
 contracts which relate to objects and purposes of the company, 
 and are not inconsistent with the rules and regulations which 
 govern their acts, they are valid and binding upon the company, 
 though not under seal. It has been urged that the exceptions to 
 the general rule are still limited t.o matters of frequent occurrence 
 and small importance. The authorities, however, do not sustain 
 that argument." 
 
 Henderson v. Australian, &c.. Company has been followed in 
 Renter v. Electric Telegraph Company,' in which Campbell, C. J., 
 said : " No reliance can be placed upon the objection that the de- 
 fendants are a corporation, and that the agreement on which they 
 are sued is not under seal. They are a corporation for carrying 
 on a particular business, and the services done by the plaintiff 
 were in the direct course of the business which by their charter 
 they were to carry on. We adhere to the decision of this court in 
 Copper Miners' Company v. Fox, and Henderson v. Australian 
 Royal Mail Company." 
 
 In a still later case, He Contract Corporation, Claim of Ebbw 
 
 ^ 11 Ex. 228 ; 24 L. J. (Ex.) 273. ruled a well known opposing authority, 
 
 ' L. R. 3 C. P. 463; on appeal con- viz., East London Water-worba v. Bailey, 
 
 firmed unanimously by a very strong 4 Bing. 288. 
 
 court, L. R. 4 C. P. 617. This case over- ' 6 E. ife B. 341. 
 
THE NECESSITY FOR SEALING. 455 
 
 Vale Company,' the Master of the Rolls held that a company hav- 
 ing power to enter into a contract for the purchase of goods was 
 bound by such contract, although it was not under seal, although 
 the goods were not intended for the use of the company, and 
 although this fact was known to the person with whom the con- 
 tract was entered into. 
 
 It may, therefore, now be considered that the exception relat- 
 ing to commercial and other trading corporations is established 
 beyond question. Difficulties will arise in determining whether 
 given acts are or are not of ordinary occurrence in the business of 
 a given corporation, for it is equally certain that the exception 
 does not extend to unusual or uncommon acts. Consequently, in 
 one case a railway company were held not liable to an action on a 
 contract not under seal for work done by a party in substituting a 
 new line of railway for the old one ; " and in another case a dock 
 company could not sue on a similar contract for cleansing and 
 removing the filth and dirt accumulating in their docks and 
 basins ; ^ {a) though, under almost precisely similar circumstances, a 
 municipal corporation has been liable for dredging their harbor, 
 although the work was done under a parol agreement.* 
 
 d. A corporation may always sue (semble) and sometimes be 
 sued upon an informal executed contract, (b) 
 
 The principle involved in this exception may be thus stated : 
 Though no action will lie against a corporation merely on the 
 ground that it has received and adopted the benefit of a contract 
 entered into without due formalities on its own part, yet, under 
 certain exceptional circumstances, it may be sued on the considera- 
 tion so received, and e contrario it seems that it may always main- 
 
 ' L. R. 8 Eq. 14 Can this decision ' London Dock Company v. Sinnott, 
 
 he supported? 8 E. & B. 34Y; 27 L. J. (Q. B.) 129. 
 
 ^ Biggie V. London & Blackwall Rail- * Brown v. Corp. of Town of Belle- 
 way Company, 5 Ex. 442; 19 L. J. (Ex.) ville, SO N. C. (Q. B.) 373 (18Y0). 
 808; Whitehead v. Buffalo, <fec. Ry. Co. 1 
 Grant. (Up.' Can. Ch., 186'?) 367. 
 
 (a) There is no necessity, in this country, for an attempt to reconcile particular 
 English cases which appear to be conflicting. The uniform American doctrine is 
 stated arUe, p. 446, note. 
 
 (S) See notes on chapter on lAahilitg fcfr Ultra Vires Acta, post. 
 
466 EXEECISE OF POWERS BY CORPORATIONS. 
 
 tain either assumpsit or debt against a person who has received 
 from it the benefit of such a contract. 
 
 As to the first portion of this statement, it was at one time 
 thought that though a corporation could not be sued on a contract 
 whilst it remained executory, they might be so on one which had 
 been executed,^ but the distinction does not now exist ; under no 
 circumstances will an action lie upon the contract itself if the con- 
 tract do not fall within one of the exceptions.' 
 
 But more than once an action has been held maintainable 
 against the corporation to recover payment up to the extent of 
 the benefit derived.' (a) 
 
 On the other hand, the liability of the person who has received 
 from a corporation, under an informal contract, the consideration 
 thereof to pay for the same, seems fully established in all circum- 
 stances. (5) 
 
 In the Fishmongers' Company v. Kobertson,^ Tindal, C. J., in 
 delivering the judgment of the court, said : " We agree in the 
 general rule of law \i. e., as to necessity for a seal] as above stated, 
 and that the case now under consideration does not fall within 
 any of those exceptions which are so well known as to require no 
 enumeration ; but whatever may be the consequences where the 
 
 ' See judgment of Best, C. J., in East (Q. B.) 361 ; Barber Surgeons of London v. 
 
 London Water-works v. Bailey, 4 Bing. Pelson, 2 Ley. 252; Pauling v. London & 
 
 283. N.W. Ry. Co. 8 Ex. 867 ; 28 L. J. (Ex.) 105. 
 
 '^ See Mayor, <fec. of Ludlow v. Charl- Compare Finlay a. Bristol and Exeter Rail- 
 ton, 6 M. <fe W. 815; Paine v. Strand way Company, 7 Ex.409; 21 L. J. (Ex.) 
 Union, 8 Q. B. 326. 117; and Hall v. Mayor, <fec. of Swansea, 
 
 * Lowe V. London and Northwestern 5 Q. B. 526. 
 
 Railway Company, 18 Q. 3. 682 ; 21 L. J. ^ 5 M. <fe G. 131, 192. 
 
 (a) Moss V. Rossie Mining Co. 5 Hill, 137; Peterson v. Mayor of New York, 17 
 N. Y. 449; Hooker v. Eagle Bank, 30 N. Y. 83; McCutcheon v. Steamboat Co. IS 
 Penn. St. 18. 
 
 (6) Chester Glass Co. v. Dewey, 16 Mass. 102; Parish v. Wheeler, 22 N. Y. 495 ; 
 Palmer v. Lawrence, 3 Sand. S. C. 170; Steam Nav. Co. v. Weed, 17 Barb. 378; 
 Mott V. U. S. Trust Co. 1 9 Barb. B68. On the general rule that a party taking the benefit 
 of a contract is bound to fulfill it on his part. Abbott v. Hermon, 7 Greenl. 118; 
 Risby V. Ah. Soc. 15 Me. 306 ; Davis v. Bradford, 24 Me. 349 ; Hatch v. Purcell, 7 Post. 
 544; Wilson v. School Diet. 32 N. Hamp. 118; Pratt v. Swanton 15 Vt. 147; Chaplin 
 V. Hill, 24 Vt. 628 ; Phelps v. Townsend, 8 Pick. 392 ; Loper v. Brookline, 13 Pick. 843 ; 
 Thomas v. Dickinson, 12 N. Y. 364; Curtis v. Leavitt, 16 N. Y. 47; Bonesteel v. The 
 Mayor, 22 N. Y. 162; Johnson v. Hathorn, 3 Keyes, 126; Hague v. City of Philadel- 
 phia, 48 Penn. St. 527 ; City of Baltimore v. Reynolds, 20 Md. 1 ; Commercial Bk. v. 
 Nolan, 7 How. (Miss.) 508; Couviu v. Wallace, 17 Iowa, 334; Richard ii. Warren 
 County, 31 Iowa, 381 ; Zoltman v. San Francisco, 20 Cal. 96. 
 
THE NECESSITY FOR SEALING. 457 
 
 agreement is entirely executory on the part of tlie corporation, yet 
 if the contract, instead of being executory, is executed on their 
 part — ^if the persons who are parties to the contract with the cor- 
 poration have received the benefit of the consideration moving 
 from the corporation — in that case, we think, both upon principle 
 and upon decided authorities, the other, parties are bound by the 
 contract, and liable to be sued by the corporation. * * * Inde- 
 pendently, however, of the reasonableness of such construction, 
 there appears authority in law to support such a position. In the 
 case of the Barber Surgeons of London v. Pelson ^ — assumpsit 
 for forfeiture under a by-law — where the objection was expressly 
 taken that a promise cannot be made to a corporation aggregate 
 without deed, the court held that the action will lie, and that the 
 objection had been overruled in Mayor, &c. of London v. Gloree. * 
 Again, in Mayor, &c. of London v. Hunt,' assumpsit was held to 
 be maintainable by a corporation for toUs. In Mayor, &c. of 
 Stafford v. Till,* use and occupation was held to be maintainable 
 by a corporation aggregate, though there was no demise under 
 seal, the tenant having occupied and paid rent ; and the same 
 point was ruled in the case of Dean and Chapter of Kochester v. 
 Pierce." ' 
 
 In Australian Eoyal Mail Steam Navigation Company v. Mar- 
 zetti,' Martin, B., approved of this doctrine, as did Byles, J., in 
 South of Ireland Colliery Company v. Waddle,'' and the liability 
 of persons so dealing with and obtaining advantages from corpo- 
 rations has been frequently confirmed and enforced.^ In the Eccle- 
 siastical Commissioners «. Merral ^ this was extended by holding 
 that the defendant — though not liable to an action directly upon 
 the contract, which was void, not being by deed — had received the 
 
 ' 2 Lev. 252. » UU. supra, p. 454. 
 
 ' 1 Vent. 298. The declaration here ' Ubi mpr-a, p. 454. 
 
 was in indebitatus assumpsit " upon the ' Mayor, <6c. London v. Hunt, 3 Lev. 
 
 custom of London, that every one who 37 ; Dean, <feo. Rochester v. Pierce, 1 
 
 exposes foreign goods to sale, which had Camp. 466 ; Trinity House v. Clark, 4 M. 
 
 been entered in the custom-house, shall ife Sel. 288 ; Mayor, <fec. Carmarthen v. 
 
 pay so much for showing of them." After Lewis, 6 Car. <Ss P. 608 ; Mayor, &o. Staf- 
 
 verdiet, it was alleged in arrest of judg- ford v. Till, 4 Bing. 76 ; Denton w. East 
 
 ment, that no assumpsit lay for such a Anglian Railway Company, 3 C. iSc K. 16; 
 
 duty, for there ought to be a contract ex- Doe d. Pennington v. Taniere, 18 L. J. (Q. 
 
 press or implied to maintain an assump- B.) 49 ; compare Marshall v. Corporation 
 
 sit. But the court held the declaration of Queensborough, 1 Sim. <fe St. 520 ; 
 
 was good. Wilmot v. Corporation of Coventry, 1 Y. 
 
 = 8 Lev. 37. & C. 518. 
 
 * 4 Bing. 11. 9 L. R. 4 Ex. 163 ; Wood v. Tate, 2 B. 
 
 ' 1 Camp. 466. & P. N. R. 247. 
 
458 EXERCISE OF POWERS BY CORPORATIONS. 
 
 consideration, as far as he had received it, upon the terms of the 
 contract, and was therefore liable for non-fulfillment of the same. 
 The defendant had entered upon and paid rent for corporate prop- 
 erty under a demise for a term made on behalf of the corporation, 
 but not under their seal. One of the terms was to repair, and he 
 was held liable for not so repairing. 
 
 e. When cwporaUons cam, he deemed to have recognized the validity 
 of informal contracts, (a) 
 
 As will be shown fully hereafter, corporations may ratify en- 
 gagements of many descriptions entered into by themselves or 
 
 (a) See, on general subject of ratification, chapter on that subject, post ; also ante, 
 p. 338, note ; Angell & Ames on Corp. § 304. The evidence of ratification must be 
 of as high a nature as would have been required to show prior authority. When- 
 ever a seal is necessary to give authority, the ratification likewise needs a seal. If a 
 written vote of the corporation is needed, the ratification must be by written vote. 
 So that, while a corporation may ratify, by implication from its corporate acts, such 
 doings of its agents as might have been authorized by parol, or by direction of its 
 managing officers ; yet, in those matters in which it is limited to certain forms, ratifi- 
 cation by a corporation is not governed by the same rules as in case of individuals 
 not so restricted. See Story on Agency, § 242, and cases cited. In Dispatch Line 
 of Packets v. Bellamy Mfg. Co. 12 N. H. 206, it is said : " A ratification of an act done 
 by one assuming to be an agent, relates back, and is equivalent to a prior authority. 
 When therefore the adoption of any particular form or mode is necessary to confer 
 the authority in the first instance, there can be no valid ratification except in the 
 same manner. If a sealed power were not necessary to this, as a conveyance of the 
 real estate, but a written vote would have been sufficient, because a corporation may 
 constitute an attorney by vote for such purpose, then such vote at least must be held 
 necessary to a ratification." With this limitation, a corporation may ratify the act 
 of an agent so as to cure a defect in the form of his appointment. See Fleckner v. 
 U. S. Bank, 8 Wheat. 338. " As regards individuals, the principle is familiar, that 
 if one, with a full knowledge of the facts, ratifies the doings of another who has as- 
 sumed to act in his name and behalf, he will be bound thereby as fully as if he had 
 originally conferred authority upon him in the premises. This ratification may be 
 by express assent, or by acts or conduct of the principal inconsistent with any other 
 supposition than that he intended to adopt and own the act done in his name. I am 
 of opinion that the principle is as applicable to corporations as to individuals. Chan- 
 cellor Kent says, the doctrine that corporations can be bound, by implied contracts 
 to be deduced by inference from corporate acts, without either a vote or deed or 
 writing, is generally established in this country with great clearness and solidity of 
 argument. In applying it to a particular case, care must be taken that other princi- 
 ples of the law are not violated. For instance, no sort of ratification can make good 
 an act without the scope of the corporate authority. So where the charter or a stat- 
 ute binding upon the corporation has committed a class of acts to particular officers 
 or agents other than the general governing body, or where it has prescribed certain 
 
THE NECESSITY FOR SEALING. 459 
 
 upon their behalf. Within certain limits it would also seem that 
 corporations, by acting upon, without expressly " ratifying," a con- 
 tract — not necessarily relating to a subject essential to their exist- 
 ence — which does not bind them for want of sealing, may so far 
 adopt it as to render themselves liable to an action either for use 
 and enjoyment, or upon the common counts, the nature and extent 
 of their liability being estimated by a reference to the terms of the 
 invalid agreement. It may, perhaps, be considered that the cor- 
 poration has thereby actually ratified the agreement in question, 
 but it would probably be the simpler and more reasonable explana- 
 tion to say that the corporation, by so acting, is estopped from sub- 
 sequently repudiating and denying the transaction, (a) Whatever 
 view be taken, contracts so adopted become binding on both par- 
 
 formalities as conditions to the performance of any description of corporate business, 
 the proper functionaries must act, and the designated forms must be observed, and 
 generally no act of recognition can supply a defect in these respects." Peterson v. 
 Mayor of N. T. 11 N. Y. 449. 
 
 (a) A corporation may be estopped from denying its liability for acts of its agents 
 which were not 'formally authorized. Estoppel, however, operates before the fact 
 sought to be charged to the corporation, through representations trusted and subse- 
 quently acted upon. A corporation, like an individual, may be bound by the appear- 
 ance of authority which it gives to its agents, and prevented from setting up infor- 
 mality where the thing done is within the apparent scope of its powers. Ratification, 
 on the other hand, operates on a past transaction, and effects nothing beyond dating 
 back the utterance of the principal to a time previous to the act assumed to be per- 
 formed by an agent. For example, if the cashier of a bank acts openly as such, with 
 the knowledge and assent of directors who have the power of appointment, his acts 
 would bind the corporation, though his appointment could not be established by a 
 previous written vote. See Story on Agency, 8th ed., § 62, citing Bank of XJ. S. v. 
 Dandridge, 12 Wheat. 64; Clark v. Corporation of Washington, 12 Wheat. 40; Fleck- 
 ner v. Bank of U. S. 8 Wheat. 338 ; Bank of the Metropolis j;. Guttschlick, 14 Pet. 19 ; 
 Flint V. Chilton Co. 12 N. H. 480; Goodwin v. Union Screw Co. 34 N. H. 380; Essex 
 Turnpike Co. v. Collins, 8 Mass. 299 ; Danforth v. Schoharie & Duane T. Co. 12 Johns. 
 227. But neither ratification nor estoppel will be held to bar a corporation from re- 
 sisting alleged liability, unless the party claiming it is a bona fide third person, or if 
 the act involved is expressly or by necessary implication prohibited by its charter. 
 See ante, p. 40, note ; Downing v. Mt. Washington Co. 40 N. H. 230 ; McCuUough v. 
 Moss, 5 Denio, SB*?. 
 
 A corporation cannot defend an action on negotiable paper indorsed with their 
 name by their agent, for the accommodation of a third person, on the ground that the 
 agent had no authority so to indorse it, io a case where the proof shows that the 
 agent had frequently before indorsed the paper of the company, and procured it to be 
 discounted by the plaintiff, and that the corporation had received the avails and 
 recognized the validity of such transactions. Bank of Auburn v. Putnam, 1 Abb. 
 App. Dec. 80. 
 
460 EXERCISE OF POWERS BY CORPORATIONS. 
 
 ties, and are enforceable by and against the corporation. When a 
 corporation will be so estopped does not clearly appear. Filing a 
 bill to enforce the contract is sufficient, and so is the suing at law 
 to judgment, and probably some other facts. 
 
 This is the correlative of the last exception, but is not so ex- 
 tensive in its operation. The former extends to all cases where 
 the defendant has obtained the benefit of the contract ; this to 
 some only. Both have reference to executed considerations only, 
 though it has been thought that they apply to executory cases also. 
 In the Fishmongers' Company v. Robertson,^ Tindal, 0. J., laid 
 down : " Even if the contract put in suit by the corporation had 
 been on their part executory only, not executed, we feel little 
 doubt but that their suing upon the contract would amount to an 
 admission on the record by them that such contract was duly en- 
 tered into on their part, so as to be obligatory on themselves, and 
 that such admission on the record would estop them from setting 
 up as an objection in a cross action that it was not sealed with 
 their common seal." This dictum has, however, been so positively 
 dissented from in subsequent eases,^ that we must consider it to 
 be overruled, and that the mere institution by a corporation of 
 proceedings at law in respect of an informal contract does not 
 render it binding. 
 
 f. Whether parol contracts are binding on the other party. 
 
 Here the'question may be noticed, as to whether an agreement 
 entered into with a corporation, (a) not under seal, is binding upon 
 the other contracting party, so that he can be compelled to carry 
 it out. Sealing is undoubtedly required, not for the protection of 
 the corporation, but of those with whom it is contracting. It is 
 
 ' 6 M. & G. 131, 192. 20 L. J. (Q. B.) Hi, and by Kelly, C. B. 
 
 ' By Campbell, C. J., in Copper Miners' in Mayor of Kidderminster v. Hardwick, 
 Company of England v. Fox, 16Q. B. 229 ; L. R. 9 Ex. 13, 21. 
 
 (o) Where the common seal of a corporation is afSxed to a contract introduced in 
 evidence, and the signatures thereto of the proper officers are proved, the presump- 
 tion is that the officers did not exceed their authority. The seal itself is prima fade 
 evidence that it was affixed by proper authority. Such facts are sufficient to rebut 
 an answer iu equity denying that such contract was signed and sealed by authority 
 of the corporation. Solomon's Lodge, No. 1, A. F. M. v. MontmoUin, 58 Ga. 547 ; 
 Union Gold Min. Co. v. Bank, 2 Col. Terr. 226 ; Conine v. Junction, <fec. R. R. Co. 8 
 Houst. 288; Morris v. Keil, 20 Minn. 531 ; Musser v. Johnson, 42 Mo. 74; Evans v. 
 Lee, 11 Nev. 194, 
 
THE NECESSITY FOR SEALING. 461 
 
 therefore fairly arguable that the seal is not an essential pa/rt of 
 the contract per se, which may exist without it, but is an essential 
 part of the proof of the contract when sought to be enforced 
 against the corporation, (a) The construction put upon the fourth 
 section of the statute of frauds is exactly analogous. The written 
 agreement satisfying that statute need be signed by the party 
 charged therewith — that is, the party against whom the action is 
 lyrought only. As was pointed out by Tindal, C. J., in Laythoarp 
 V. Bryant : ^ "It is said that, unless the defendant signs, there is 
 a want of mutuality. Whose fault is that ? The defendant might 
 have required the vendor's signature to the contract, but the ob- 
 ject of the statute was to secure the defendant '«." Now apply 
 this reasoning to our present subject. The common law says : 
 " No action shall be brought upon any contract entered into with 
 a corporation, unless the agreement upon which such action shall 
 be brought shall be under the common seal of the corporation ; " 
 but it does not say that it must be under the seal of the other 
 party also. Consequently, following the interpretation given to 
 the statute of frauds, it would result that it neither, in the absence 
 of sealing, voids the contract on behalf of the corporation when 
 
 ' 2 Bing. (N. C.) V35 ; 3 Scott, 238. 
 
 (a) " The obligation is mutual, where both parties are required by the agreement 
 to do something ; the agreement of the one being a consideration for that of the 
 other. It makes no difference in this respect whether the obligation of the one is 
 secured by bond and that of the other not thus secured ; nor that, when the cause 
 comes on for hearing, the plaintiff's part of the agreement has not actually been per- 
 formed, if its fulfillment is tendered and can be secured by the same decree which 
 compels specific performance by the defendant ; and especially if the defendant has 
 sustained no damage, or none which cannot be compensated by the decree. In such 
 case the agreement sought to be enforced will be regarded as mutual, and the tie re- 
 ciprocal." Ewing V. Gordon, 49 N. H. 444. "It is no legal, unyielding obstacle to 
 the court's making a decree, that the contract is signed only by one of the parties. 
 In that sound legal discretion by which a court of equity exercises this branch of its 
 jurisdiction, it frequently does refuse to decree a specific performance of a contract 
 which is not mutually binding on both parties ; not, however, because it is a settled 
 principle that the court will not enforce such u contract, but because that want of 
 mutuality often constitutes an equitable ground for such refusal, as if the party not 
 signing the agreement, and therefore not legally bound, takes advantage of his posi- 
 tion, and delays its fulfillment till it is ascertained whether the bargain is advan- 
 tageous to him." Young v. Paul, 2 Stockt. 401. See Ives v. Hazard, 4 R. I. 14 ; 
 N. Y. A N. H. R. R. Co. *. Pixley, 19 Barb. 428 ; L'Amoreux v. Gould, 7 N. Y. 349 ; 
 Canal Co. v. R. R. Co. 4 G. & J. 1 ; McMillan v. M. S. & N. I. R. B. Co. 16 Mich. 79. 
 
462 EXERCISE OF POWERS BY CORPORATIONS. 
 
 plaintiffs,^ nor requires, on the part of the defendant to bind him, 
 any additional formality than the consent required in all contracts. 
 
 It is, however, now fully established, that as the corporation 
 will not, so neither will the other side be bound by an agreement 
 not sealed, if that agreement does not fall within one of the ex- 
 cepted cases. In Mayor, &c. of Kidderminster v. Hardwiek,^ the 
 defendant was the highest bidder at an auction for the letting of 
 certain of the municipal tolls, and was declared by the auctioneer 
 the purchaser thereof. He duly signed the draft contract, paid a 
 month's rent in advance, but did not ultimately fulfill all the con- 
 ditions, whereupon the plaintiffs, in pursuance of a provision to 
 that effect, resold the tolls at a loss, and sued him for the differ- 
 ence. It was determined that the contract was one which ought 
 to have been under seal, or signed on their behalf by some one 
 appointed under seal, and that they could not recover, (a) 
 
 The ground taken by the court was that there was no mutual- 
 ity. Usually, however, not to say invariably, mutuality means 
 mutuality of consent, and not of obligation, and seldom, if evef, 
 has a person been disabled at law ' from being able to enforce an 
 agreement, on the ground that he himself is under no obligation, 
 or that the other side cannot sue him/ (5) 
 
 g. Cases of part performance. 
 
 It is well known that the Court of Chancery will, under certain 
 circumstances, order specific performance of a contract when acts 
 have been done and expense incurred under and in reference to 
 it, although such contract is not actually valid at law, from the ab- 
 
 ' Compare Smith v. Neale, 2 C. B. (N. * See the many circumstances under 
 
 S.) 67 ; North Staffordshire Ry. Co. o. which one party to a contract required to 
 
 Peek, 10 H. Lds. 4*73. be in writing by the statute of frauds can 
 
 * L. R. 9 Ex. 13. _ sue the other party, although he himself 
 
 3 It is often different in chancery. See cannot be sued, not having signed the 
 
 Flight V. BoUand, 4 Russ. 298. same. 
 
 (a) In this case the defendant had received no benefit, and had not entered on the 
 enjoyment of the fruits of the sale. Pollock, B., remarks, that he could perhaps have 
 recovered back the deposit. The court showed evident reluctance in arrinng at the 
 judgment pronounced. 
 
 (6) See Browne on Statute of Frauds, § 366 ; Old Colony R. R. Co. v. Evans, 6 
 Gray, 26. 
 
THE NECESSITY FOR SEALING. 463 
 
 sence of some formality, usually writing, as required by the 14th 
 and 15th sections of the statute of frauds, {a) 
 
 It will similarly decree specific performance against a corpora- 
 tion when the formality wanting is the seal ; ^ of course only in 
 those cases where it would do so if the contract were by au ordi- 
 nary individual. Thus, as the court cannot manage or otherwise 
 supervise a work or enterprise requiring constant supervision, 
 it will not decree specific performance of a contract to build a 
 railway, (b) 
 
 In "Wilson v. West Hartlepool Harbor, &c. Company,^ an 
 officer of the defendants had proposed terms for the sale by the 
 company of some of its land ; the plaintiff accepted the terms un- 
 conditionally and took possession, and with the apparent con- 
 nivance of the directors put it to various iises. On the subsequent 
 repudiation of the contract by the company, on the ground that 
 no valid contract was ever made by the company, a decree for 
 specific performance was made by the Master of the EoUs, and this 
 decree was affirmed on appeal. 
 
 Part performance must be something done under a contract 
 and with reference to the contract. Acts of other kinds done by 
 the plaintiff propria moi/w, or not in reliance upon the contract, 
 will be no ground for the court's interference in his favor, and he 
 will be left to obtain redress by a common law action for damages. 
 If a corporation lies by and allows a person to erect works and in 
 other ways to go to expense upon the faith of an informal agree- 
 ment made with them, or of the interpretation which he has put 
 upon a disputed agreement, the Court of Chancery will, a fortiori, 
 
 1 Earl of Lindsey v. Great Northern ^ 2 De G., J. & Sm. 476 ; .S4 L. J. (Ch.) 
 
 Ey. Co. 22 L. J. (Ch.) 995 ; Laird v. Bir- 241 ; see Crampton v. "Varna Rv. Co. L. 
 
 kenhead Ry. Co. John. 500 ; 29 L. J. (Ch.) R. 1 Ch. 562, and Leominster Canal Co. 
 
 218; Steevens' Hospital i;.Dyas, 15 Ir.Ch. v. Shrewsbury, <fec. Ry. Co. 3 K. & J. 
 
 405 ; London & Birmingham Ry. Co. v. 654 ; 26 L. J. (Ch.) 764. 
 Winter, 1 Cr. & Ph. 57 ; Maxwell v. Dul- 
 wich College, 7 Sim. 222. 
 
 (a) Story Eq. Juris. §§ 759 et seq. ; Willard Eq. Juris, p. 282 ; Chitty on Con- 
 tracts, 11 Am. ed. 1450-1457; Lester v. Foxcroft, 1 Leading Cases in Equity, 2d ed. 
 625 ; Neale v. Neale, 9 Wall. 1 ; Peckham v. Barber, 8 R. I. 17 ; Freeman v. Freeman, 
 43 N. Y. 34; Trenton Water Power Co. v. Chambers, 1 Stockt. 471. 
 
 (6) Specific performance of a contract to build a railroad will not be enforced in 
 equity. Ross v. Union Pacific Ey. Co. Wool. 27 ; Fallon v. Eailroad Co. 1 Dillon 
 Eep. 121 ; Danforth v. Railroad Co. 80 N. J. Eq. 12, nnd oases cited in reporter's note. 
 
464 EXERCISE OF POWERS BY CORPORATIONS. 
 
 upon the double ground of acquiescence {a) and part performance, 
 order them to carry out their side of the agreement.* 
 
 h. Statutory Enactments. 
 
 The Legislature has, by express provision in various general 
 acts, relaxed the stringency of the old rule. Thus the Companies 
 Clauses Act, 8 & 9 Vict. c. 16, (5) after enabling by section 95 the 
 directors to appoint committees, enacts (section 97) that : 
 
 "With respect to any contract which, if made between private persons, 
 would be by law required to be in writing, and under seal, such committee 
 or the directors may make such contract on behalf of the company in writing, 
 and under the common seal of the company, and in the same manner may 
 vary or discharge the same. 
 
 "With respect to any contract which, if made between private persons, 
 would be by law required to be in writing, and signed by the parties to be 
 charged therewith, then such committee or the directors may make such con- 
 tract on behalf of the company in writing, signed by such committee, or any 
 two of them, or any two of the directors, and in the same manner may vary 
 or discharge the same. 
 
 "With respect to any contract which, if made between private persons 
 would by law be valid although made by parol only, and not reduced into 
 writing, such committee or the directors may make such contract on behalf 
 of the company by parol only, without writing, and in the same manner may 
 vary or discharge the same. 
 
 "And all contracts made according to the provisions herein contained 
 shall be effectual in law, and shall be binding upon the company and their 
 successors, and all other parties thereto, their heirs, executors or administra- 
 tors, as the case may be; and on any default in the execution of any such 
 contract, either by the company or any other party thereto, such actions or 
 
 ' Crook V. Corporation of Seaford, L. performance was refused of an agreement 
 R. 6 Ch. 651.. See Crampton v. Varna by a contractor to let cottages to the de- 
 Ry. Co. L. R. 7 Ch. 562, where specific fendants. ' 
 
 (a) The facts that the vice-president of a railway company had b(?en for years in 
 the habit of appointing local agents to look after its timbered lands; that these had 
 sold stumpage and timber thereon ; that the company had brought suit on one of 
 these contracts of sale and obtained judgment, the amount of which was paid to the 
 local agent ; that the latter was accustomed each year to make a full report in writ- 
 ing to said vice-president, and pay the moneys in his hands into the treasury of the 
 company, would authorize a jury to find that the company knew and acquiesced 
 in the authority thus exercised, and was bound by such a contract of sale made by 
 its local agent. Chic. <fc IS. "W. R. R. Co. ». James, 24 Wis. 388 ; see Curtis v. Leavitt, 
 15 N. Y. 49, 138, 249. 
 
 (6) Goddefroi &, Shortt, p. 89. 
 
THE NECESSITY FOR SEALING. 465 
 
 suits may be brought, either by or against the company, as might be brought 
 had the same contracts been made between private persons only." 
 
 A provision in the same words, contained in section 41 of 19 
 & 20 Vict. c. 47, the Joint-stock Companies Act of 1858,^ was 
 omitted from tlie Companies Act of 1862, which, however, con- 
 tains a section, 47, as to the making of negotiable instruments,* 
 but it has been inserted in section 37 of the amending Act of 
 1867, 30 & 31 Yict. c. 131. (a) 
 
 So 23 & 24 Vict. c. 125 (the Metropolis Gas Act, 1860), pro- 
 vides by section 20 that "every contract of the gas company, en- 
 tered into in accordance with this act, shall without seal be bind- 
 ing on them, if the contract be signed by at least two of their 
 directors, or by their secretary or other officer by the authority of 
 at least two of their directors." (J) 
 
 1 See Eales v. Cumberland, Ac. Min- v. Browne, 12 C. B. 723; 22 L. J. (C. P.) 
 
 ing Co. 30 L. J. (Ex.) 141, where the con- 51. See, also. Prince a. Prince, L. K. 1 
 
 tract, the appointment nf a manager by Eq. 490. 
 
 resolution of the direetors, was held eood ' See Peruyian Ey. Co. v. Thames and 
 
 under this section. Compare 7 <fe 8 Vict. Mersey Marine Ins. Co. L. E. 2 Ch. 617. 
 c. 110, B. 44, and British Empire, Ac. Co. 
 
 (a) See. 37 ; Buckley on the Law and Practice under the Companies Acts, 2d ed. 
 481. This act in regard to parol contracts provides that the contract may be made 
 by parol, " on behalf of the company, by any person acting under the express or im- 
 plied authority of the company." As to what companies have the benefit of these 
 acts, see Buckley, p. 350 ; Act of 1862, part VIIl. 
 
 (6) A corporation, unless restricted by charter, may use what seal it will. Porter 
 II. Androscoggin & Ken. E. E. Co. 37 Me. 349; Flint v. Clinton Co. 12 N. H. 432 ; 
 Tcnney v. Lumber Co. 43 N. H. 343 ; Warner v. Mower, 11 Vt. 385 ; Bank of Middle- 
 bury V. Eutland & W. E. E. Co. 30 Vt. 171 ; Mill-dam Foundry v. Hovey, 21 Pick. 
 417; Stebbins v. Merritt, 10 Cush, 27; South Baptist Soc. v. Clapp, 18 Barb. 35 ; 
 Ransom v. Htonington Bank, 2 Beas. 212 ; Susquehanna Bridge v. General Ins. Co. 3 
 Md. Ch. 305; Charleston v. Morehead, 2 Eich. 450; Phillips a. Coffee, 17 111. 154. 
 Thougli a corporation have adopted a particular seal, yet they will be bound by a 
 deed otherwise sufficient, which is seahd with any seal. Tenney v. East Warren 
 Lumber Co. 43 N. H. 343 ; Porter v. Androscoggin & Kennebec E. R. Co. 37 Me. 
 349; Hutchins ?;. Byrnes, 9 Gray, 367; Haven o. Adams, 4 Allen, 80; Shermans. 
 Fitch, 98 Mass. 59; Miinn v. Pentz, 3 Sanilf. CI). 271, 280. It is said that the fact of 
 the seal used being the seal of the company may appear otherwise than frnra the 
 device of tiie seal Bank of Middlebury v. Eutland E. R. Co. 30 Vt. 172. Corporate 
 seal does not prove itself. Jackson ». I'rjtt, 10 Johns. 381 ; Mann v. Pentz, 2 Sandf. 
 Ch. 271 ; Forster v. Shaw, 7 Is. <fc E. 155; Leasun v. Hillegas, 7 8. <fe E. 313 ; Den v. 
 Vree'and, 2 Halst. 352 ; Denne'.t v. Dreliens, 4 Terg. 7 ; Farmers' Trans. Co. v. Mc- 
 Cullough, 25 Penu. St. 303 ; Charleston v. Moreheail, 2 Eicli. 450. The seal of a cor- 
 poration IB prima facie eviilence of the assent of the corporation. Eeed v. Bradley, 
 17 HI. 321. To an " indenture" between a corporation and an individual, the parties 
 30 
 
466 EXEECISE OF POWERS BY CORPORATIONS. 
 
 ■•'set their hands," no reference in terms being made to the seals, which were mere 
 bits of paper attached to the instrument by wafers, and set against each signature. 
 Neither of the seals had any impression indicaiive of tlie common seal of a corpora- 
 tion. Held, that this was the deed as well of the corporation as of the indiyiduale. 
 Mill-dam Foundry v. Hovey, 21 Pick. 417. If an instrument is executed by an au- 
 thorized agent, the seal will be presumed to be the corporate seal. Woodman v. 
 York & Cumberland R. R. Co. 60 Me. 549 ; Damon v. Granby, 2 Pick. .S45 ; Stebbens 
 V. Merritt, 10 Cush. 2'?; see Mill-dam Foundry v. Horey, 21 Pick, ill; Bates v. Bos- 
 ton & N. Y. C. R. R. Co. 10 Allen, 251 ; Bowen v. Irish Pres. Cong. 6 Bosw. 263. 
 As to who may affix seal, see Koehler «. Black R. Falls Iron Co. 2 Black, 715 ; Bank 
 of U. S. V. Dandridge, 12 Wheat. 68 ; Eureka Co. v. Bailey Co. 11 Wall. 458 ; Howe 
 V. Keeler, 27 Conn. 538 ; Hoyt v. Thompson, 5 N. Y. 321); Berks & Dauphin T. R. -o. 
 Meyers, 6 S. <fe E. 12 ; Susquehanna Bridge and Bank Co. v. Gen. Ins. Co. 3 Md. 306 ; 
 Hbpkins v. Gallatin T. Co. 4 Humph. 403 ; Levering v. Mayor, 7 Humph. (Tenn.) 553 ; 
 St. Louis Pub. Schools v. Risley, 28 Mo. 416; Choquette v. Barada, Id. 491; Bene- 
 dict V. Denton, Walk. (Mich.) 336. Corporate seal imports a consideration. Sturte- 
 vant V. City of Alton, 3 McLean, 393. And makes the instrument a specialty. Por- 
 ter •«. Androscoggin <fe Kennebec R. R. Co. 37 Me. 349 ; Clark v. Farmer's W. M%. 
 Co. 15 Wend. 266; Benoist ». lohab. of Carondelet, 8 Mo. 260. 
 
CHAPTER IV. 
 
 THE POWERS OF DIRECTOKS AND OTHER SIMILAR OFFICIALS. 
 Section I. — The Exact Position filled by Directoes and 
 
 OTHER SmiLAE PERSONS. 
 
 The constitution of every corporation determines the extent 
 to which individual members can interfere in its managijment; 
 Where no special provision has been made, then each corporator 
 has a right to be notified of meetings for the transaction pi 
 business, though it sutiiced if tlie major part actually present con- 
 curred. The power of managing and controlling the corporate 
 affairs has, however, usually been confined to a small portion of 
 the whole body, the presence of all being required on very special 
 occasions only, when acts had to be done vitally affecting the 
 interests of the corporation, the surrender of its charter and the 
 ■like, (a) 
 
 (fl) While the directors of a corporation must be regarded aa agents, the relatioa 
 of agency in their case is in certain respects peculiar. The board is the agent of the 
 corporation strictly, and not of the stockholders. The powers of these statute 
 agents are given by the charter, the nature of their ofEce is determined at the crea- 
 tion of the corporation, and it does not ordiuirily lie in the power of the stockhold- 
 ers either to limit the authority of the board or to superintend their exercise of it. 
 They may say, at the appointed times, who shall fill the offices, but the functions 
 appertaining to those offices are determined entirely by the charter. The division 
 of the powers of the corporation being made by the charter creating it, may, of 
 course, be varied by the Legislature, which can, if it please, give more authority to 
 the stockholders and less to the directors, and the constating instruments must 
 therefore, in all cases, be examined. But as » matter of fact, in almost all the 
 private corporations in tliis country, little power is left with the stockholders, save 
 the right to elect directors and to have a voice in regard to any fundamental 
 change. The administration of the affairs of a corp iratibn, except where expressly 
 provided otherwise, is committed to the board of directors. In Dana v. Bank of 
 United States, 6 W. & S. 246, the act of incorporation directs that a board of 
 directors be elected and organized "for the management of the affairs of the said 
 corporation." The Court says that "the presi lent and directors, though elected by 
 the strickholders, are constituted the agents of the corporation, not of the stockhold- 
 ers, and derive all their authority from the act or charter. JPer Marshall, C. J., in 
 
468 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 Bank of United States v. Dandridge, 12 Wheat. 113. The management and 
 direction of the affairs of the institution are committed to them by the express 
 terms of the act of incorporation. They are thereby made the representatives of it, 
 and they alone have the power to manage its concerns, and are left without control 
 to exercise their own best discretion in doing so. The stoctholders, therefore, haye 
 no absolute right to interfere directly with, and to exercise any immediate control 
 over, the directors in the management of its affairs." And in Dayton <fe Cin. R, R. 
 Co. V. Hatch, 1 Disn. 84, 91, the following language is used: "It might well ha 
 doubted whether a general meeting of the stoctholders of the plaintiff could bft 
 legally held for any other purpose than the selection of a board of directors. Such 
 a meeting, as to any other purpose or object, could ouly be, in its character, advisory 
 to the board of directors. It would have no power to take under its charge, or put 
 under the charge of others, the affairs of the company. The president and directors 
 of such a corporation as the plaintiff, have been said to be the agent i of the stock- 
 holders; but this expression must be understood in view of, snd must be limited to, 
 the subject under consideration. In anything like a general or universal sense, it 
 will be readily seen that it cannot be true. Indeed, so far as third persons and 
 especially the government or creating power of the corporation are concerned, the 
 president and directors, and the stockholders, may rather be considered as the mem- 
 bers and limbs, each acting within its appropriate sphere, of that artificial being, or 
 entity, to which the name and powers of the corporation have been assigned by the 
 law of its creation. When, therefore, a question arises, by whom the conferred 
 powers are to be exercised, it will be determined rather by the law of the creation 
 of the company, showing in each case on whom the governing or controlling power 
 has been conferred, than by any consideration of the rights and interests of thosa 
 concerned in the corporation, as among themselves." In Conro v. Port Henry Iroii 
 Co. 12 Barb. 27, 63, a lease is declared void because made by the autliority of the 
 stockholders instead of the directors. The Court say: " It is quite obvious from the 
 charter, that the company could do no act except through its directors. When the 
 charter prescribes the mode of its action, its injunctions must be rigidly pursued. 
 * * * The stockholders in this case had no power to make a lease, or do any 
 other administrative act in the management of the affairs of the corporation. If a 
 lease could be made at all, it could be executed only in pursuance of the act of the 
 directors, who are the body appointed by the charter for the management of ita 
 affairs. It is no answer that imliviilual stockholders who were present at the meet- 
 ing, when the lease was ordend, were also directors. They did not meet or act as 
 directors, but as stockholders." See, also, Fleckner v. D. S. Bank, 8 Wheat. 3'iS; 
 Whitwell V. Warner, 20 Vt. 425 ; Com. a. Trustees of St. Mary's Church, 6 S. & R. 
 SOS; Ridgway v. Farmers' Bank of Bucks Co. 12 S. A R. 256; I3ank of Kentucky 
 V. Schuylkill Bank, 1 Pars. Sel. Cas. 18o; Gashwiler v. Willis, 33 Cal. 11; State of 
 La. V. Bank of La. 6 La. 745. Where the corporate powers are vested in a board of 
 directors or trustees, the proceedings of a stockholders' meeting canm.t be shown to 
 establish a disavowal, by the corporation, of the acts of one who, without authority, 
 has assumed to contract for it. The delegation of power to the trustees is exclusive. 
 Union Gold Mining Co. v. Rocky Mt. Nat. Bank, 2 Col. 565. If the genei-al power 
 of making by-laws is left by the charter to the corporation at large, tlie power of 
 the board of directors may be circumscribed by them. Salem Bank v. Gloucester 
 Bank, 17 Mass. 29. 
 
 The powers of directors nre defined either by the express language of, or by 
 necessary implication from, the charter. Tlie questions arising upon this subject 
 
POSITION FILLED BY DIRECTORS. 469 
 
 will, therefore, be those of interpretation or construction. Hut whatever powers do 
 not vest either expre-sly or by necessary implication in the board of directors, or 
 are not exercised by it, must reside in the whole body of the corporation, and, on 
 this principle, it was held in In re Wheeler, 2 Abb. I'r. Rep. (N. S.) 361, which was 
 an election case where the inspectors refused to act, that in emergencies and con- 
 tingencies, in which the forms of procedure prescribed by the charter fail to accom- 
 Piish the purposes contemplated, the stockholders have the right to exercise the 
 powers required, in order to preserve the corporate existence. The power to change 
 fundamentally the character or extent of a corporation is not contained in the power 
 vested in the board of directors to manage the business or affairs of the company. 
 This is a right of individual stockholders, and can only be exercised with the con- 
 sent of each stockhoLler, or upon compensation being made to the dissentients. See 
 •a«t«, pp. '77, 78, 79, 96-99, notes. " A change so organic and fundamental as that of in- 
 •creasing the capital stock of a corporation beyond the limit fixed in the charter, 
 •cannot be made by the directors alone, unless expressly authorized thereto. The 
 general power to perform all corporate acts refers to the ordinary business transac- 
 tions of the corporation, and does not extend to a reconstruction of the body itself, 
 or to an enlargement of its capital stock. » » * Changes in the purpose and 
 object of an association, or dn the extent of its constituency or membership, involv- 
 ing the amount of its capital stock, are necessarily fundamental in their character, 
 and cannot, on general principles, be made without the express or implied consent 
 -ot the members. The reason is obvious. First, as it respects the purpose and 
 object. This may be said to be the final cause of the association, for the sake of 
 which it was brought into existence. To change this without the consent of the 
 associate:, would be to commit them to an enterprise which they never embraced, 
 and would be manifestly unjust. Secondly, as it respects the constituency, or 
 •capital and membership. This is the next most important and fundamental point in 
 the constitution of a body corporate. To change it without the consent of the 
 ttockholders, would be to make them members of an association in which they never 
 consented to become snch. It would change the relative influence, control, and 
 ■profit of each member. If the directors alone could do it, they could always per- 
 petuate their own power. Their agency does not extend to such an act, unless so 
 ■expressed in the charter, or subsequent enabling act ; and such subsequent act would 
 hot bind the stockholders without their acceptance of it, or assent to it in some 
 form." Railway Co. v. Allerton, 18 Wall. 233 ; Black v. Del. <fe Rar. Can. Co. 22 N. 
 J. Eq. 133. But, on the other hand, it is held that the somewhat similar power of 
 aceepting an amendment of the charter does rest in the directors. See Dayton & 
 Cin. R. R. Co. v. Hatch, 1 Disn. 84. The amendment there was to allow subscription 
 in real estate to be received by the company. The Court say : " Upon examining 
 the charter of the plaintiffs, there would be some difficulty in determining by what 
 power, and in what mode, the amendment could be accepted, if not by the directors 
 of the company. That both the special charter of the plaintiff and the general rail- 
 road law contemplated that all corporate acts, including an assent to such an amend- 
 ment as the one authorized, should be done by the board of directors, appears to me 
 ■to be clear. The Legislature has, in some cases, in respect to some matters, author- 
 ■iaed action on the part of stockholders, and directed their assent to be obtained. 
 Such provisions will be found in the general railroad law, and they are on points 
 aitally affecting the interests of the stockholders. These provisions appear to show, 
 strongly, that without them such changes might be made, under authority of the 
 
4Y0 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 Sucli an arrangement is, indeed, absolutely necessary in the 
 case of canal, railway, and other similar corporations, (a) consist- 
 ing of hundreds, or perhaps thousands, of members; and accordr 
 ingly the acts and charters creating the same provide for the ap- 
 pointment of managers, styled directors, with powers more or less, 
 limited. These directors are the agents, and the only primary 
 agents, of the corporation. Are they general or special agents? (J). 
 
 Legislature, by the directors alone. It is admitted in all the authorities that the- 
 acceptance of an amendment to its charter is a power incident to a corp oration ; and 
 if, from the organization of the company, there be no other active or governing body 
 bnt its board of directors, then, I conceive, with that board must rest the right to 
 exercise the powers of the corporation, and, among them, tlie power to accept an 
 amendm<'nt of its charter." See, also, case of St. Mary's Church, 6 S <fe R. 498 ; '1 
 Id. 617; Commonwealth v. CuUen, 13 Penn. St. 133 ; Marlborough Mfg. Co. v. Smith, 
 2 Conn. 619 ; Miitter of Excelsior Ins. Co. 16 Abb. Pr. 8 ; HI. River R. R. Co. ,v, 
 Zimmer, 20 111. 6B4; Joy v. Jackson, <ii;c. P. E. Co. 11 Mich. 155; Hope Mut. Fir» 
 Ine. Co. V. Beckman, 47 Mo. 93. 
 
 (a) " There is a great difference between the powers of the trustees of an eleemosy- 
 nary corporation, with visitorial powers, like a college or a hospital, and those of a 
 private moneyed corporation, like a bank or railroad. The latter are composed of 
 shareholders, each of whom is a member of the company, who make the by-laws and 
 all lawful regulations, elect directors for a limited period, and themselves compos* 
 the corporation. Amendments to the charter, not in violation of its objects, may be 
 accepted by the shareholders, but the trustees have no general powers, are simply 
 agents, and are under their control. The law of visitation, as applied to charities, 
 has no application to them. But in eleemosynary corporations thei-e are no stock- 
 holders; and regulations that in ordinnry corporations are made by them, and dis- 
 putes that are submitted to the courts, are made and decided by those intrusted with 
 visitorial power. * * * In this country the visitorial power over schools and 
 colleges, together with all other powers and rights belonging to them, are usually 
 vested in boards of curators or trustees, established by the charter creating the cor- 
 poration, who must be governed by the provisions of the charter as embodying the 
 statutes of the founder. The power of these boards is great, but by no means abso- 
 lute." State V. Adams, 44 Mo. 570, 578. 
 
 (6) The gist of this discussion is the determination of the question, Are third 
 parties bound to notice the restrictions and limitations upon the power of the direct- 
 ors, contained in the charter and by-laws of the corporation? The terms "special 
 agent" and "general agent" are not such as to add to the clearness of the discussion^ 
 They are terms which cannot be accurately defined. That their relative meanings 
 are changeable finds illustration in the conclusion of the author, that the complex 
 word " special general" is needed to describe the nature of the agency. Judge Corn- 
 stock says, in Mech. Bank v. IST. Y. & N. H. R. R. Co. 13 N. Y. 599, 632: "There 
 are in the hooks many loose expressions concerning the distinction between a gen- 
 eral and special agency. The distinction itself is highly unsatisfactory, and will ia 
 found quite insufiioient to solve a great variety of cases. It is not pi-ofitable to dwell 
 upon that distinction. Underlying the whole subject, there is this fundamental prop- 
 
POSITION FILLED BY DIKECTORS. 471 
 
 Have they or have they not all the powers of the body which they 
 represent? In other words, will their contracts,, when not ultra, 
 
 osition, that a principal is bound only by the authorized acts of his agent. This 
 authority may be proved by the instrument which creates it ; and beyond the terras 
 of the instrument, or of the verbal commission, it may be shown that the principal 
 has held the agent out to the world, in other instances, as having an authority which 
 will embrace the particular act in question. I know of no other modfe in which a 
 controverted power can be established." Similarly Mr. Parsons, in his work on 
 Contracts, Vol. I, p. 44, says : " Of late years, courts seem more disposed to regard 
 this distinction, and the rules founded upon it, as altogether subordinate to that 
 principle which may be called the foundation of the law of agency ; namely, that a 
 principal is responsible, either when he has given to an agent sufficient authority^ 
 or, when he justifies a party dealing with his agent, in believing that he has given 
 to this agent this authority." See, also. Farmers' & Mech. Bank v. Butchers' & 
 Drover^ Bank, 16 N. Y. 125; Chitty on Contracts, 11th Am. ed. 284; Story on 
 Agency, § 17. 
 
 In Adriance v. Eoome, 62 Barb. 399, it is said that " officers of a corporation are 
 special and not general agents; consequently they have no power to bind the corpora- 
 tion except within the limits prescribed by charter and by-laws. * * * The 
 principle that persons dealing with the officers of a corporation are charged with 
 notice of tlie authority conferred upon them, and of the limitations and restrictions 
 upon it contained in the charter and by-laws, is too well established to require to be 
 supported by a citation of authorities, and we cannot assent to the proposition that 
 there is any grant of power in the name by which the officer is designated, especially 
 when the authority given is specified in the by-laws." See, also, Wild v. Bank of 
 Passamaquoddy, 3 Mason, 605 ; State v. Commercial Bank, 6 Sm. & M. 218. 
 
 The directors of a bank are but its authorized agents, and can incur no obligation 
 binding on the corporation, except while acting in the mode prescribed by, and 
 within the limits of, the charter. If they exceed the anthority granted by the char- 
 ter, their principal is not bound by their unauthorized act. Bank of Kentucky v. 
 Schuylkill Bank, 1 Pars. Sel. Cases, 180, 236. "The president is at most the agent 
 •of the company, created under a special legislative act defining the rights and privi- 
 leges of the body, and the manner in which they should be enjoyed. This the 
 plaintiff is to be regarded as knowing. For all persons dealing with the officers or 
 agents of corporations, are bound to know that they act either under its charter or 
 by-laws, or the usages which may be shown to exist, defining the extent of their 
 authority. Thoy must, in doubtful cases, acquaint themselves with the extent of that 
 authority, or otherwise submit to the consequences resulting from their ornission to 
 do that." JPer Daniels, J., in Kisley v. Ind., B. <fe W. R. R. Co. 1 Hun, 202 ; see s. o. 
 62 N. Y. 240 ; citing Angell & Ames, §§ 291, 297 ; North River Bank v. Aymar, 3 
 Hill, 262 ; Mechanics' Bank v. New York & New Haven R. R. Co. 13 N. Y. 699; Mo- 
 Cullough V. Moss, 6 Den. 667 ; Adriance v. Roomo, 62 Barb. 399 ; Dabney v. Stevens, 
 a Sweeny, 416 ; see Salem Bank v. Gloucester Bank, 17 Mass. 1, 28 ; Lowell Savings 
 Bank v. Winchester, 8 Allen, 109. 
 
 There is, however, a distinction drawn by some courts between the provisions of 
 charters, which parties are bound to know, and of by-laws, of which actual notice 
 mast be brought home to third parties. 
 
 Thus, it has been held that persons dealing with a manufacturing and trading 
 
4T2 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 vires of the corporation, bind the corporation as regards persons 
 dealing with them in honafide ignorance of the limitation (if anj) 
 placed upon their authority, or is it incumbent on such persons to 
 ascertain the extent of their authority % 
 
 This is a most important point. It is totally distinct from, 
 though often confounded with, the question of ultra vires. If 
 we consider the responsibility of corporators as analogous to that 
 of partners,(a) the answer is easy and evident : directors are gen- 
 corporation, are not bound by the specifically enumerated powers of its officers, as ex- 
 pressed in its by-laws ; but that as against third persons, such officers shall be taken 
 to have the authority which their designations ordinarily imply, although certain 
 special and enumerated powers, not excluding others, are conferred upon such officers 
 by the by-laws. Fay v. Koble, 12 Cush. 1. A by-law made by directors for their 
 own government does not affect contracts with third persons. Samuel v. HoUaday, 
 1 Woolw. 40. 
 
 " It has been urged in argument, that the principles which are applied to con- 
 tracts made by agents for another, upon an authority implied from fonner employ- 
 ment of the same agent for similar purposes, would be justly applicable to the de- 
 fendants in the case before us. But there is a material difference. The individual 
 stockholder commits no authority to its officers but that which is given by the char- 
 ter of incorporation and by a vote of a major part in interest of the individuals 
 acting in a, corporate form. No sanction of any act, beyond the authority so 
 derived, can be implied by the repetition of such act. For the company as such, 
 or the individuals composing it, might not, and generally would not, know of any 
 transactions of this singular nature. They may reasonably trust that the duty of 
 each will be faithfully performed." Wyman v. Ilallowell <fe Augusta Bank, 14 
 Mass. 68. 
 
 In Salem Bank v. Gloucester Bank, supra, Parker, J., commenting on this distinc- 
 tion, says: "And there is reason for this distinction; for in the first case (that of 
 individuals only) the extent of the authority is known only between the principal 
 and the agent; whereas, in the latter (in regard to agents of a corporation), the 
 authority is created by statute, or is matter of record in the books of tlie corpora- 
 tion, to which all may have access who have occasion to deal with the officers." He 
 further says: "In certain things the directors of a bank have all the authority of 
 the corporation vested in them by a vote; and, in respect to such things, the engage- 
 ment, express or iitiplied, of the body of the directors will bind the corporation. 
 But in matters not intrusted to them, their undertaking or assent cannot be binding 
 upon any but themselves. Directors are not authorized to pay money for a bank 
 which it does not owe; and, therefore, no act of theirs, tending to create an obliga- 
 tion to that efi^ect, can be operative." Followed in State v. Commercial Bank of 
 Manchester, 6 Sm. & M. 237. 
 
 Where the duties and powers of an officer of a corporation are created or regu- 
 lated by the act of incorporation or by-laws of the company, persons dealing with 
 such officer are chargeable with notice of all limitations and restrictions upon his 
 authority contained therein ; and the burden of proof is upon them to show that 
 debts contracted by him are debts of the corporation. Dabney v. Stevens, 2 Sweeny, 
 415. 
 
 (a) See Angell <fe Ames on Corp. §§ 41, 691. 
 
POSITION FILLED BY DIRECTORS. 473 
 
 eral agents empowered to carry on all sucli business as fairly falls 
 within due scope of the company's operations. But there are 
 strong objections to such a conclusion. The check that is present 
 in a partnership, *. e., the personal liability of each member, is 
 almost wanting in a joint-stock company, where the directors are 
 liable up to their shares only, which may be very few or even 
 none. The weight of authority at present seems to be in favor of 
 lioldiug directors to be special agents. In Ernest v. Nicholls,^ 
 Lord Wensleydale said : " All persons must take notice of the 
 deed {i. e., of settlement), and the provisions of the act (*. e., 
 7 & 8 Yict. c. 110), If they do not choose to acquaint themselves 
 with the power of the directors, it is their own fault ; and if they 
 give credit to any unauthorized persons, they must be contented 
 to look to them only, and not the company at large. The stipula- 
 tions of the deed which restrict and regulate their authority are 
 obligatory on those who deal with the company ; and the directors 
 can make no contract so as to bind the whole company of share- 
 holders, for whose protection the rules are made, unless they are 
 strictly complied with. The contract binds the person making it, 
 but no one else." 
 
 So in Smith v. Hull Glass Company,' Jervis, 0. J., laid down : 
 " Joint-stock companies, it is now admitted, are not to be treated 
 as ordinary partnerships ; they are only bound by contracts made 
 by the directors within the scope of their authority. The public 
 have no right to complain. They know that the company is 
 acting under the sanction and direction of an act of parliament 
 and of a deed of settlement ; and they have a ready access to that 
 deed." {a) Similarly, j?er Maule, J. : " To some extent no doubt 
 these joint-stock companies differ from ordinary partnerships. 
 The statute Y & 8 Vict. c. 110, required the deed of settlement to 
 be registered, and that defines the purposes for which the com- 
 pany is incorporated, and the powers of the directors; and all per- 
 sons who contract with the directors must be taken to be cogni- 
 
 ' 6 H. Lds. 419. general authority as partners, but having 
 
 ' 11 C. B. 897, 926-7; compare per certain powers wliich are defined by a 
 
 Bovill, arguendo, in Hambro' v. Hull, <fec. deed of settlement, to which the public 
 
 Insurance Company, 3 H. <fe N. 789, 795, have access." See, also. Agar v. Athe- 
 
 " A joint-stock company differs from a naeum Life Insurance Society, 3 C. B. 
 
 private partnership in this respect, that (S.S.)725; and Athenaeum Life Assurance 
 
 the directors are not persons having a Society v. Pouley, 3 De G. <fe J. 294. 
 
 (o) Angell & Ames on Corp. § 299 ; Salem Bank v. Gloucester Bank, 17 Mass. 1. 
 
474 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 sant of the extent of the authority conferred upon them." Again, 
 Giffard, L. J., expressed liimself to the same effect in lie County 
 Life Assurance Company : ^ " The few, as I take it to be, deduced 
 from the authorities, is this : in the first place, a stranger must be 
 supposed to have read the articles of association, but nothing more ; 
 and if he knows nothing to the contrary, he is justified in assum- 
 ing that as against the company all matters of internal manage- 
 ment have been duly arranged." 
 
 This question must probably now be considered settled. The 
 directors of a corporation are its special agents, so far as their au- 
 thority is limited by the charter, act of parliament, deed of settle- 
 ment, or articles of association. 
 
 I. Directors ha/ue all the atithorities vested in them iy the con- 
 stating instruments except as regards parties actually cog- 
 nizant of limitations or conditions imposed thereon. 
 
 But it is only so far. To the instruments just named the pub- 
 lic have access — they have not to the books and memoranda of 
 private partnerships — and it is their own fault if they do not take 
 the trouble to consult them.(a) If, however, directors make con- 
 tracts or enter into other engagements within the limits of the 
 authority so intrusted to them, their corporation will be bound, 
 although in fact they have exceeded their real authority. In the 
 case of the governing body of corporations, " the authority is 
 created by statute or is matter of record in the books of the cor- 
 poration to which all may have access who have occasion to deal 
 with the otficers." 
 
 The authority of directors so apparently given them by the 
 constating instruments may be, and indeed often is, limited still 
 further by the resolutions of the shareholders ; and very gen- 
 erally certain formalities are required for its due ^xercise. Such 
 precautions are very necessary, but to require outsiders to be under 
 aU circumstances acquainted with them would be, as Giffard, L. J., 
 in the case last cited pointed out, imposing restrictions hostile to 
 the due carrying on of the business. (J) 
 
 ' L. R. 5 Ch. 288; 39 L. J. (Ch.) 4'7l. 
 
 (a) tee Lester v. Webb, 1 Allen, 34; Torrey v. Duetln Monument Asso, 6 Allen, 
 327 ; Beers v. Phosnix Glass Co. 14 Barb. 358 ; Allen v. Citizens' Steam Nav. Co. 22 
 Cal. 28; Alabama R. R. Co. v. Kidd, 29 Ala. (If. S.) 221. 
 
 (A) On the contrary, parties dealing -with trading companies have a right to infer 
 
POSITION FILLED BY DIRECTORS. 475 
 
 It has accordingly been' many times decided, that though 
 directors are in one sense special ageuts, yet they, as well as other 
 officials, possess the powers Impliedly belonging to persons in 
 analogous positions. Consequently they have a general authority 
 to do all such acts as are indispensable for the proper performance 
 of such engagements of the corporation, as ihej, prima facie, are 
 justified in entering into.^ Moreover, the absence of some formal- 
 ity, not made by statute absolutely necessary, will not vitiate the 
 transaction as against third parties, who have acted honafide. 
 
 A good illustration of the extent to which a person, dealing 
 with a director of a corporation, will be required to examine the 
 authority of such director, and to see whether the proposed dealing 
 is in. all respects correct and legal, is found in the recent case of 
 the Shropshire Union, &c. v. Eeg." Holyoake, a banker, was the 
 banker of a railway company ; he was also one of its directors. 
 Under certain business arrangements of the company, he Was in- 
 trusted with the possession of certificates which represented shares, 
 and those shares he held as trustee for the company ; he converted 
 the shares ; the conversion was noticed ; he gave an explanation, 
 replaced the shares, and continued to hold the certificates as be- 
 fore, and stood on the register as the apparent owner of them. He 
 borrowed money of Kobson, and deposited the certificates with 
 Eobson, who held them for some time, and died without having 
 taken any step to be registered as the owner of the shares. Rob- 
 son's widow and executrix applied to be registered as the owner ; 
 her application was refused. She moved for a mandamus to com- 
 pel registration. On appeal to the House of Lords, it was held 
 that this was the ordinary case of a trustee abusing his trust ; that 
 if Kobson had made proper inquiries he would have found that 
 Holyoake was only a trustee ; that negligence sufficient to affect 
 their equitable title could not be imputed to the directors and the 
 company, and that, consequently, the equitable title of Eobson, 
 could not prevail against the earlier equitable title of the company. 
 
 ' See Pmilh v. Hull Glass Co. 19 L. J. Wesleyan Newspaper Assoc. 8 C. B. 849 ; 
 (d P.) 123 ; 8 C. B. 668; Thompson v. 19 L. J. (C. P.) 114. 
 
 '^ L. R. 7 H. L. 496 ; see eases cited. 
 
 that all formalities have been had TvMch are requisite to authorize directors to act, 
 where their authority is not limited by the constating instruments. See Royal 
 British Bant v. Turquand, 5 E. & B. 248. 
 
4:76 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 II. Corporations cannot he hound by the acts of their officials 
 who go heyond either the corporate powers or their own 
 special and delegated authority. 
 
 This proposition, supplementing what is already stated, must 
 be remembered. Whatever be the extent of authority delegated 
 to oflScials by the constating instruments, that authority they have, 
 but no more. Beyond it, whatever the transactions, whatever the 
 hona fides, whatever the fraud of the oflScials, the corporation 
 cannot be bound. In such circumstances the only remedy of an 
 aggrieved party is against the officials whom he has trusted. 
 
 Athenaeum Life Ins. Soc. v. Pooley ^ is, or rather has been, a 
 leading case. The actual decision turned upon a question of fraud, 
 but it well illustrates the present point. It is now doubted as a 
 decision on the particular facts,' but the principles enunciated in 
 it are unquestioned. The facts were these : Debentures under the 
 common seal of a joint-stock company, incorporated under 7 & 8 
 Vict. c. 110, were given to Pooley in July, 1854, in pursuance of 
 an arrangement made between Pooley and the chairman of the 
 directors, which was a fraud upon the company. Both the com- 
 pany had power and the directors were authorized to issue these 
 debentures. These debentures were afterwards bought by Laurie 
 in the market in the ordinary course of business. The transfer to 
 Laurie was registered in the books of the company, and interest 
 was paid to July, 1855, inclusive, but the matter was not made 
 known to the shareholders till December in that year, when an 
 investigation of the affairs of the company took place, in conse- 
 quence of which the directors resigned, and the further payment 
 of interest was refused. The Lords Justices held, that Laurie, 
 though a purchaser hona fide for value without notice, yet being 
 only the purchaser of a chose-in-action not assignable at law, must 
 take it subject to the equities attaching to it ; and that, under the 
 above circumstances, neither the registration nor the payment of 
 interest has the effect of a confirmation of Laurie's title, and that 
 he ought to be restrained from suing at law upon the debentures. 
 
 In Agar v. Athenaeum Life Ass. Soc.,' where the facts were 
 very similar, except that there was no fraud, only informality in- 
 
 ' 3 De G. <fe J. 294. ' 3 C. B. (N. S.) 72B. 
 
 ' See Brunton's Claim, L. E. 19 Eq. 
 302; Exparte Chorley, L. R. 11 Eq. 157. 
 
POSITION FILLED BY DIRECTORS. 477 
 
 Btead, the debentures were at law held to be enforceable against 
 the company. 
 
 Ridley v. Plymouth, &c. Banking Co.* is often cited. The 
 secretary of the defendant company, purporting to act on their 
 behalf, agreed to sub-let to the plaintiff certain shops and stores. 
 The superior landlord afterwards put in a distress and seized some 
 of the plaintiff's goods for rent due from the company to him. 
 The plaintiff thereupon sued the defendants for the loss so caused 
 to him ; but the court held that the action would not lie, inasmuch 
 as the secretary had no authority to make such contract, and it 
 had not been either authorized or ratified by the directors. " The 
 case fails because it is not shown that the persons who entered 
 into the contract, that is, the directors present at the board meet- 
 ing, when there was some evidence of their sanctioning the agree- 
 ment, was competent to bind the company. It is said that there 
 is some usage of trade, that the directors of these companies shall 
 bind them. That must depend on the particular terms upon 
 which the business of the company is carried on ; and no evidence 
 has been given on that subject. Therefore, in the first place, the 
 plaintiff has failed in showing a competent authority to enter into 
 the contract ; and when the deed is produced, it appears that the 
 directors present at the meeting when tiie agreement was by im- 
 3)lication sanctioned, were not of a sufficient number to bind the 
 rest of the shareholders ; and, unless all are bound, the action can- 
 not be maintained." 
 
 The fiducia/ry position of directors. 
 
 Directors come within the designation of persons filling a 
 fiduciary relationship, (a) They are not trustees, taking the term 
 
 ' 2 Ex. 'Til. Kingsbridge Flour Mill also failed, because no proper board of 
 
 Co. D. Same, 2 Ex. 718, was an action directors had authorized or ratified the 
 
 against the same company for flour sup- purchase, 
 plied by order of the secretary, which 
 
 (o) "Whether a director of a corporation is to be called a trustee or not, in a 
 strict sense, there can be no doubt that his character is Jiducinry, beinjj; intrusted bj' 
 others with powers which are to be exercised for the common and general interests 
 of the corporation, and not for his own private interests. He fa'.ls, therefore, within 
 the jupt rule by which equ'ty requires that confidence shall not be abufed by the 
 party in whom it is reposed, and which it enforces by imposing a disability, either 
 partial or complete, upon the party intrusted, to deal, in his own behalf, in respect to 
 any matter involyed in such confidence. Nor is it possible to limit the duty of a 
 
478 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 in its strict and technical meaning, i. e., persons having the legal 
 title to property, the beneficial ownership of which belongs to 
 
 director of a corporation, in this respect, to the time while he is acting as a director 
 under any special delegation of power, or is in attendance at meetings of the board. 
 He cannot, while director, divest himself of the knowledge which he has acquired in 
 confidence of corporate affairs, or of the value of corporate property, nor be allowed 
 to use it to his own advantage." The director was also a plaintiff in a judgment 
 against the corporation, and the court held he had a clear right to sell, upon execu- 
 tion on his judgment, the personal property of the corporation which was liable to 
 sale on execulion. The court does not pass on the point whether he might purchase 
 at such sale, but intimates the opinion that he might, subject to the right of the com- 
 pany to demand a resale. Hoyle v. Plattsburgh & Montreal R. R. Co. 54 N. Y. 314, 
 328. " The directors are the trustees or managing partners, and the stockholders 
 are the cestuis gne trust, and have a joint interest in all the property and effects of 
 the corporation." Koehlcr v. Black River Falls Company, 2 Black, 715. 
 
 As establishing the rule that directors occupy a fiduciary position towards stock- 
 holders and creditors of the corporation, refer to Diury v. Cross, T Wall. 302 ; Jack- 
 son V. Ludeling, 21 Wall. 616; Koehler v. Black River Falls Co. 2 Black, 715; Wood 
 ■V. Dummer, 3 Mason, 308 ; Heath v. Erie Ky. Co. 8 Blatchf. 34*7 : European, (fee. Ry. 
 Co. V. Poor, 59 Me. 277 ; Richards v. New Hampshire Ins. Co. 43 N. H. 263 ; Fuller 
 V. Dame, 18 Pick. 472 ; Peabody v. Flint, 6 Allen, 52; Hodges v. N. E. Screw Co. 1 
 R. 1.312; Butts v. Wood, 37 N. Y. 317 ; s. o. 38 Barb. 181 ; Coleman v.. Second Ave. 
 R. R. Co. 38 If. y. 201 ; Ogden v. Murray, 89 TS. Y. 202 ; Bliss v. Matteson, 45 N Y, 
 22 ; s. 0. 52 Barb. 848 ; Blake v. Buffalo Creek R. R. Co. 66 N. Y. 486 ; Scott v. De 
 Peyster, 1 Edw. Ch. 613 ; Conro v. Port Henry Iron Co. 12 Barb. 64 ; Cumberland 
 Coal Co. V. Sherman, 30 Barb. 553; see case between the same parties, 20 Md. 117; 
 Cumberland Coal Co. v. Parish, 42 Md. 598 ; Fremont v. Stone, 42 Barb. 169 ; Buffalo, 
 Ac. R. R. Co. V. Lampson,'47 Barb. 633 ; Blatchford «. Ross, 6 Abb. Pr. (N. S.) 434; 
 Davison v. Seymour, 1 Bosw. 88 ; Risley v. Ind., B. <fe W. R. R. Co. 1 Hun, 202 ; see 
 s. 0. 62 N. Y. 240 ; Gray v. TS. Y. & Virginia S. S. Co. 3 Hun, 383 ; Redmond v. Dicker- 
 son, 9 N. J. Eq. 607; Black v. Del. & Rar. Can. Co. 24 N. J. Eq. 463 ; Hoffman Steam 
 Coal Co. V. Cumberland Coal Co. 16 Md. 466 ; Cov. ife Lex. R. R. Co. v. Winslow, 
 Zinn's Gases on Trusts, 466; s. o. 9 Bush, 468 ; United Society of Shakers v. Under- 
 wood, 9 Bush, 617 ; Goodio v. Cin. & W. Canal Co. 18 Ohio St. 169 ; Port v. Russell, 
 36 Ind. 60'; Buell v. Buckingham, 16 Iowa, 284; San Francisco & N. Pac. R. R. Co. 
 t. Bee, 48 Cal. 398; Flint <fe Pere Marquette R. R. Co. v. Dewey, 14 Mich. 477; Hale 
 V. The Bridge Co. 8 Kan. 466 ; Mussina v. Goldthwaite, 34 Tex. 125. This rule will 
 not prevent directors or officers, who are also creditors, from protecting themselves 
 from loss, by the same means open to other creditors. In Buell v. Buckingham, 16 
 Iowa, 284, the president of the company, constituting with two other directors a full 
 quorum, and being the only stockholders at the time, sold property of the company 
 to the president, in consideration of a past indebtedness, and of an agreement to pay 
 other specified debts of the corporation. A judgment creditor of the corporation, 
 having levied upon the property thus sold, was enjoined from proceeding under his 
 levy. Dillon, J., holds : " Being an officer of the corporation did not deprive Buell 
 of the right to enter into competition with other creditors, and run a race of vigilance 
 with them, availing himself in the contest, of his superior knowledge, and of the ad- 
 vantage of his position, to obtain security for a payment of his debt. The act of 
 
POSITION FILLED BY DIRECTORS. 479 
 
 others, for the property of a public company is vested in the com- 
 pany itself ; but they are so far trustees for the company that 
 they cannot derive, directly or indirectly, out of their position any 
 profits or other advantage save with the knowledge and concur- 
 rence, expressly or impliedly given, of the company. They are 
 not absolutely precluded from making contracts with the company, 
 or being interested in contracts made between the company and 
 third parties ; but in order that any such arrangement may stand, 
 as between the company and the director concerned, there must 
 be full and complete disclosure by the latter of the extent and 
 nature of his interest in the matters in question.^ {a) 
 
 • York & North Midland Uy. Co. v. tion v. Coleman, L. R. 6 H. Lds. 189 ; 
 
 Hndson, 16 Bear. 485 ; Bank of London Aberdeen Ry. Co. v. Blaikie, 1 Macq. 
 
 V. Tyrrell, 10 H. Lds. 26; 31 L. J. (Ch.) 461. 
 369 ; Imperial Mercantile Credit Associa- 
 
 Buell was not legally or constructively fraudulent, in consequence of his being an 
 officer or member of the corporation." To same effect, Whitwell v. Warner, 20 Vt. 
 425 ; Sargent v. Webster, 13 Meto. 497 ; Hayward v. Pilgrim Soc. 21 Pick. 270; Smith 
 «. Lansing, 22 N. Y. 520; Stratton v. Allen, 16 N. J. Eq. 229; Gordon v. Preston, 1 
 Watls, 386 ; Central R. E. Co. v. Claghorn, 1 Speer's Eq. 54 S ; City of St. Louis v. 
 Alexander, 23 Mo. 483 ; see Hoyle v. Plattsburgh <fe Mon. E. R. Co. 64 N. Y. 314 ; 
 Mrirray v. VanderbUt, 39 Barb. 140 ; Van Hook v. Somerville Mfg. Co. 6 N. J. Eq. 
 137, 633 ; Merrick v. Peru Coal Co. 61 111. 472. But the directors of an insolvent 
 corporation, whUe it is nnder tlieir management, hold the position of trustees of its 
 assets for the benefit of its creditors. If they are themselves creditors, they are pre- 
 cluded by their trust from securing to themselves by their official action any prefer- 
 ence of advantage over other creditors. Bradley v. Farwell, 1 Holmes, 433. So a 
 mortgage given to secure bonds of a company is valid, though one of the officers ia 
 the trustee to whom the mortgage is made. In Ellis v. Boston, Hart. & Erie R, R, 
 Co. 107 Mass. 1, where the validity of a mortgage to secure bonds of a railway com- 
 pany was involved, the Court say : " The question has been suggested whether E. F. 
 <fc H. were competent to act as trustees for the bondholders, they being at the time 
 officers of the corporation. This fact cannot affect their capacity to hold and pass 
 the title, which is the only question now before us ; for the individuals who are offi- 
 cers are distinct from the corporation itself, and may make contracts with it, make 
 conveyances to it, and receive conveyances from it ; and, in general, all persons are 
 competent to be trustees." A mortgagee, though an officer of the corporation, may 
 purchase at a foreclosure sale the property covered by it. South Baptist Church v. 
 Clapp, 18 Barb. 35 ; see Olcott v. Tioga R. R. Co. 27 N. Y. 546. The doctrine that 
 directors are trustees does not extend to cover their private dealings with stockhold- 
 ers, as the purchase of stock, in which they take advantage of their superior knowl- 
 edge. Coiii'rs of Tippecanoe Co. v. Reynolds, 44 Ind. 609. 
 
 (a) Directors cannot be interested either directly or indirectly in contracts made 
 with the corporation. Siich contracts are voidable at the instance of the company 
 or of the shareholders, and this rule applies to cases where the majority of the 
 
480 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 In order that a director may retain any advantage which he 
 may have obtained at the expense of the company, there must 
 
 directors in one corporation contract with another corporation in which they are 
 also directors. See cases cited, mite, in notes under this section ; also Wardell v. Union 
 Pacific R. K. Co. 4 Dill. S30 ; Alford v. Miller, 32 Conn. 543 ; Polar Star Lodge v. 
 Polar Star Lodge, 16 La. Ann. 16 ; Paine v. Late Erie & Louisville R. R. Co. 31 
 Ind. 283 ; Abbott v. Am. Hard Rubber Co. 33 Barb. 578 ; St. James' Ch. v. Church 
 of the Redeemer, 45 Barb. 356 ; Rice's Appeal, 79 Penn. St. 168 ; Van Cott v. Van 
 Brunt, 2 Abb. N. C. 283 ; Levisee v. Shreveport R. R. Co. 27 La. Ann. 641 ; Stev- 
 enson V. Bay City, 26 Midi. 44 ; First Nat. Ek. v. Reed, 36 Mich. 263; Gallery v. 
 Nat. Exeh. Bk. (Mich.) 9. Cent. L. J. 236; San Diego v. San Diego & L. A. E. R. 
 Co. 44 Cal. 1 06. So, too, when tlie interest in the contract is subsequently acquired 
 by a director. Gilman, Ac. R. R. Co. v. Kelly, 77 111. 426 ; Ryan tr. L., A. & N. 
 W. R. R. Co. 21 Kan. 365. The contract must be avoided in a reasonable 
 time. Twin Lick Oil Co. v. Marburj', 1 Otto, 587 ; Stewart v. Lehigh Val. R. R. 
 C >. 38 N. J. L. 605. But no ratification by the company will be binding if done 
 in ignorance nf the facts. Gilman, Ac. R. R. Co. v. Kelly, 77 HI. 426. The mere fact 
 that a minority of the members of one board of directors are members of another 
 will not render voidable a contract made by the two boards. U. S. Rolling Slock Co. 
 V. Atl. & G. W. R. R. Co. 34 Ohio St. 450, and cases cited. The fact that some of the 
 officers of a city were officers of a railroad company will not invalidate bonds issued 
 by the city to the company. Mayor of Griffin v. Inman, 57 Ga. 870. In Cook v. 
 Berlin Woolen Mill Co. 43 Wis. 433, a distinction is taken between directors and 
 mere ministerial officers. The former are said to be regarded in equity as trustees, 
 the latter as sigents. The contracts of the latter are held to be valid if their fair- 
 ness affirmatively appears, otherwise to be voidable. There is no legal inability on 
 the part of a bank to transfer a promissory note to its president through the agency 
 of the president. Palmer o. Nassau Bk. 78 111. 380. A court of equity will not 
 restrain a sale of property to a director at the suit of a general creditor, when there 
 is no fraud, and when no stockholder objects to the sale. Barr v. Bartram Mfg. Co. 
 41 Conn. 506. 
 
 Contracts made with directors or officers of a railroad corporation individually, 
 to induce them to establish depots or otherwise construct their works to promote 
 private interests, are again&t public policy, as tending to sacrifice public rights and 
 interests of stockholders. See Fuller v. Dame, 18 Pick. 472; Bliss v. Matteson, 45 
 N. Y. 22; Pacific R. R. Co. » Seely, 45 Mo. 212; Bestor ». Wathen, 60 111. 138; 
 Linder v. Carpenter, 62 111. 309 ; Union Pacific R. R. Co. v. Durant, 'i Dill. 343. 
 
 "It is the duty of the directors of a corporation to act for the best interests of 
 such corporation. If a director be a party to a contract entered into with himself, 
 his duty as an officer is in conflict with his interests as an individual. This is 
 equally so vhether lie enters into the contract in its inception or subsequently acquires 
 an interest in it. The general rule is, that directors cannot legitimately acquire au 
 interest adverse to the corporation, and that if they purchase any claim against ihe 
 company it is in trust for the company.'' Appleton, C. J., in European <$t N. Amer. 
 Ry. Co. V. Poor, 59 Me. 277 ; Ryan v. L., A. & N. W.' E. R. Co. 21 Kan. 365. 
 
 A purchase made by an agent of a corporation, of claims subEisting against it, if 
 made by authority of the corporation, does not extinguish the demands, unless the 
 corporation furnishes or refunds the purchase money. And when the purchase is 
 
POSITION FILLED BY DIRECTORS. 481 
 
 have been upon his part such a communication to his co-directors, 
 or the shareholders at large, as will enable them to make a perfect 
 
 made without authority, even if the claims are extinguished, the consequence that 
 the corporation is thereby relieved of its indebtedness does not necessarily follow. 
 Sullivan v. Triunfo, <fec. Mining Co. 39 Cal. 459. 
 
 Ashhurst's Appeal, 60 Penn. St. 291, was a bill filed, by a minority of stockhold- 
 ers, to set aside a sale of the property of an insolvent corporation to certain cred- 
 itors, some of whom were also directors. Strong, J., delivering judgment at Nisi 
 Prius (affirmed on appeal), says : " I come, then, to consider the fact that the pur- 
 chasers were the same persons as those who, as directors, sold, and as stockholders, 
 authorized the sale. It is often said, and truly, that the same persona cannot be 
 both buyers and sellers in one transaction. They were not, strictly, in this. All 
 the purchasers were not directors who made the sale. But I make no account of 
 that. Still, why may not directors of a corporation sell to themselves? Each 
 director has an interest distinct and antagonistic to his interest as a mere man. 
 There is identity of person, but not of interest. There must be many things which 
 directors can do for their individual benefit, which are binding upon a corporation 
 of which they are directors. If they have advanced money, I cannot doubt they 
 may pay themselves with the corporate funds. If they have become liable as sure- 
 ties for the corporation, they may provide for their indemnity. And though ordi- 
 narily the law frowns upon contracts made by them in their representative character 
 with themselves as private persons, such contracts are not necessarily void. They 
 are carefully watched, and their fairness must be shown. But I repeat the question, 
 why may not directors sell to themselves in any case ? It is because of the danger 
 that the interests of stockholders may suffer if such sales be permitted, for want of 
 antagonism between the parties to the contract. But such sales are supported in 
 equity where the fiduciary relation of the purchasers has ceased before the pur- 
 chase, where the purchase was made with full consent of the stockholders, or where 
 stockholders have, by their acquiescence, debarred themselves from questioning the 
 transaction. I do not, however, deem it necessary to decide that the sale in this 
 case was absolutely indefeasible. The utmost the complainants claim is, that it was 
 voidable. Certainly, nothing more can be claimed. Let it be, then, that it might 
 have been set aside at the instance of the corporation, or even of a stockholder, as 
 against the policy of the law, and constructively fraudulent. Still it was valid in 
 equity, as well as in law, unless one or the other chose to avoid it ; and in all cases 
 in which an attempt is made to fasten a constructive trust upon a purchaser, the 
 attempt must fail, unless made in a reasonable time. Acquiescence is presumed from 
 delay. Lapse of time, indeed, is no bar to the assertion of a direct trust, but not so 
 when the trust is constructive.'' See, also. Twin Lick Oil Co. v. Marbury, 1 Otto, 
 687. That the court will not consider the question of the fairness of the contract. 
 See Stewart ■„. Lehigh Val. R. R. Co. 38 N. J. L. 505 ; Oilman, &c. R. R. Co. v. 
 Xelly, 11 111. 426. Where a company is insolvent, and the directors have given the 
 stockholders an opportunity to make advances and relieve the embarrassment, the 
 directors may buy the indebtedness, and acquire title to corporate property at a sale 
 under a deed of trust to secure the indebtedness, free from objection on the part of 
 the stockholders.- Harts v. Brown, 11 111. 226. 
 
 In Fuller v. Dame, 18 Pick. 472, this principle was carried to the extreme limit of 
 
 31 
 
482 DIRECTOES AND OTHER SIMILAR OFFICIALS. 
 
 and exact estimate of the profits accruing or likely to accrue to 
 the director in question.(a) 
 
 Parker v. McKenna,^ affords a good illustration of the princi- 
 ples now in statement, as also of the circumstances and commer- 
 cial transactions to which it has often to be applied. The defend- 
 ants, in 1864, were four of the directors of a joint-stock bank. 
 
 ^ L. R. 10 Ch. 96. The defendants were, however, let off, owing to the- 
 
 frame of the bill, on easy terms. 
 
 holding void a contract made with a member of a corporation, though not a director 
 or oflScer, for the payment of a pecuniary consideration, upon a depot being located 
 in a specified place, the court holding, that the corporation was in some sense agent 
 for the public, that the interests of the coifipany and the public interests were 
 identical, and that all its members were required to exercise their best and unbiased 
 judgment upon the question of the fitness of the location, without being influenced 
 by distinct and extraneous interests. The controlling question is one of bona fides, 
 and this must be left to the jury to pass upon. Stark Bant v. U. S. Pottery Co. 34 
 Vt. 144. 
 
 In Simons v. Vulcan Oil Co. 61 Penn. St. 202, parties purchased oil land, and 
 shortly afterwards, with others, formed a corporation, to whom the land was con- 
 veyed at an advance. It was held, that an action could be maintained in the name 
 of the company for the difference between the price paid by the defendants and that 
 paid to them by the company ; and that the defendants could have been allowed to 
 retain the profits only in case they had in the prospectus issued by them described 
 the exact siun paid for the land, and refused to sell, except at the advanced price. 
 See McElhenny's Appeal, Ibid. 188; Getty ?;. Devlin, 54 W. T. 403; Blake «. Buf- 
 falo Creek R. R. Co. 56 N. Y. 485 ; McAUen v. Woodcock, 60 Mo. 174. 
 
 (a) Although the corporation and the individual shareholders may, after knowl- 
 edge of a voidable transaction with an oflScer, by laches, be deemed to have acqui- 
 esced in it and thus be debarred from attacking it ; yet where the act is forbidden 
 by statute, neither the directors nor stockholders can waive the provisions of the 
 statute. " It is true that a party may waive a statutory proceeding for his own 
 benefit, as, for instance, notice made preliminary to an ejectment (3 N. Y. 197) ; but 
 I have yet to find a case where directors, or even the stockholders of a corporation 
 may waive the provisions of a prohibitory statute, enacted for good reasons, expressly 
 forbidding the directors of a company from participating in the benefits of a contract 
 for building their road." AUen, J., in Barton v. Plank-road Co. 17 Barb. 397. 
 
 In Flint & Pere Marquette R. R. Co. v. Dewey, 14 Mich. 477, Christiancy, J., in 
 commenting upon a contract made with a company, in which two of the directors 
 were interested, remarks : " Certainly nothing short of a ratification by the board, 
 after a full explanation and knowledge of their interest and of all the circumstances, 
 could render such a contract binding upon tlie company. And I think it at least 
 questionable whether a ratification by the board with such knowledge could render it 
 valid, while D. &. H. remained influential members of the board, especially if they 
 took any part in such ratification. See European R. R. Co. v. Poor, 59 Me. 279. 
 Stockholders who have ratified » contract with directors, cannot avoid it on the 
 ground of the trust relations of the directors. Hotel Co. v. Wade, 7 Otto, 13. 
 
POSITION FILLED BY DIRECTORS. 483 
 
 In that year, resolutions were passed to increase the capital hy 
 20,000 new £50 shares, which were to be offered to the old share- 
 holders at the rate of one new share for each old share held by 
 them, each allottee paying for each share £25 premium, and £5 
 as a first call. The shares not taken up by them, were to be dis- 
 posed of by the directors at £30 premium. The directors entered 
 into an arrangement with Stock, for him to take at £30 premium 
 all the shares not taken np by the old shareholders. In pursuance 
 to this, 9,178 shai-es were allotted to Stock, who paid only £5 per 
 share, it being arranged that the certificate for these shares should 
 be withheld, that the bank should have a lien on them for the 
 premiums, and that no transfer from him to any purchaser should 
 be registered, till the £30 per share, on the shares transferred, had 
 been paid. Stock, Jjeing unable to take up so many shares, ap- 
 plied to the defendants to relieve him of some of them, and they 
 severally took from him considerable numbers at £30 per share, 
 and afterwards disposed of them at a profit, the £30 per share 
 being paid to the bank at the times when the shares were respec- 
 tively registered in the names of the purchasers. The Court of 
 Appeals, aflBrming the decision of Bacon, V.-C, held that the de- 
 fendants must respectively account to the bank for the profits 
 made by them respectively by sale of the shares. 
 
 Section 164 of the Companies Act, 1862, declares payments 
 made, securities given, &c., by insolvent companies, immediately 
 previous to liquidation, to be acts of fraudulent preference. Con- 
 sequently, as a director will be presumed cognizant of the state of 
 his corporation, securities, &c., obtained by him in view 'of, or 
 followed by, a winding up will frequently be invalid.^ 
 
 It has also been laid down that greater and more careful at- 
 tention to their duties, and greater and more watchful supervision 
 over the interests of their employers, will be exacted from them 
 than from persons placed in analogous positions. "The company 
 have a right to the service of their directors, whom they remu- 
 nerate by considerable payments; they have a right to their entire 
 services ; they have a right to the voice of -every director, and to 
 the advice of every director in giving his opinion upon matters 
 
 ' Gas-light Improvement Co. v. Terrell, thus fraudulent. Adamson's Case, L. R. 18 
 L. R. 10 Eq. 168. But not every pay- Eq. 670. 
 ment when a, company is in extremis is 
 
48i DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 ■which are brought before the board for consideration, (a) and that 
 the general rule that no trustee can derive any benefit from deal- 
 ing with those funds of which he is a trustee, applies with stiU 
 greater force to the state of things in which the interest of the 
 trustee deprives the company of the benefit of his advice and as- 
 sistance." ^ But this language would seem too stringent, and if 
 not, at least it is quite certain that provided all the attendant cir- 
 cumstances are made known, companies and their directors may 
 validly enter into stipulations permitting the latter to have private 
 and personal interests in the companies' contracts. 
 
 ISTor can directors benefit or favor any particular shareholder 
 or class of sharebolders.(J) Every authority possessed by them 
 {e. g., to forfeit shares), " is a power and discretion in the directors 
 .who are trustees for the benefit of all the shareholders, wliich is to 
 be exercised for the benefit of all; and it is the duty of the di- 
 rectors to direct a forfeiture when it is for the benefit of all the 
 shareholders, and to abstain from doing so when it is not for their 
 benefit.^ 
 
 Directors are boimd to display in the conduct of their com- 
 pany's affairs, at least ordinary common sense and prudence, and 
 they will be liable to recoup, to the company, losses which have 
 occurred, not merely from their fraud and willful malfeasance, 
 but also from their negligence and imprudence.(c) The courts, 
 
 ' IFer Lord Chaocellor Hatherly, L. E. ris v. North Devon Railway Company, 20 
 6 Ch. 567. Beav. 384. 
 
 ' Per the Master of the Rolls, in Har- 
 
 (o) The stockholders and creditors of a corporation are entitled not only to the 
 TOtes of directors in the board, but to their influence and argument in the discussion 
 ■which leads to the passage of resolutions before it. Per Grover, J., in Ogden v. 
 Murray, 89 N. T. 202, 207. See McCortle v. Bates, 29 Ohio St. 419. 
 
 (6) " Directors of a corporation, in reference to the corporate property, act in the 
 relation of trustees. The stockholders are the cestuis que trust. The directors can 
 make no disposition of the corporate property which shall not inure to the eqiial ben- 
 efit of all the stockholders. If they attempt to di-ride, they must so divide that each 
 shall receive his proportionate share. They cannot agree for, and bind the stock- 
 holders to any other division." Hale ii. The Bridge Co. 8 Kans. 466 ; Percy v. Mil- 
 laudon, .S La. 568; Jones v. Terre-Haute R. R. Co. 29 Barb. 3B9; Barton v. Port 
 Jackson & U. F. Plank-road Co. 17 Barb, 397 ; Chase v. Vanderbilt, 62 N. Y. 307. 
 
 (c) " Every director present at a board, is responsible for any act of it for which 
 he votes, or which he does not oppose, and in the latter case, for all the injurious 
 consequences of the act, which he does not fairly labor to avert. Mery absent di- 
 rector is equally responsible in case of extreme neglecl in his attendance at the board. 
 
POSITION FILLED BY DIRECTORS. 485 
 
 however, deal liberally witli them ; and though chancery exacts 
 from them a more rigorous attention to their duties than is re- 
 quired at law, and often holds them responsible for constructive 
 fraud in circumstances where no liability would be imposed at 
 law, yet not even chancery requires of them more than that they 
 should display bona fides, act to the best of their judgment, and 
 not knowingly go beyond their powers. " The best of their judg- 
 ment " will be estimated by comparison with the judgment of or- 
 dinary business men. Therefore where directors did not, in ac- 
 cordance with a clause in that behalf, contained in the articles, 
 cause the business to be stopped in good time, they were decreed 
 to pay the losses thereby resulting.' [a) 
 
 ' Western Bank of Scotland ». Bairds, Gurney &, Company u. Gurney, L. E. 4 
 cited L. R. 4 Ch. 381 : Turqnand v. Mar- Ch. 701. 
 shall, L. R. 4 Ch. 376 ; compare Overend, 
 
 or in case, after the act comes, or must have come to his knowledge, had he used due 
 diligence, he does not labor to avert the injurious consequences." Per Martin, J., in 
 Percy v. Millaudon, 3 La. Rep. 668. See Smith v. Poor, 3 Ware, 148 : Ramsey v. 
 Gould, 52 Barb. 398 ; Robinson v. Smith, 3 Paige, 222 ; Black v. Del. & Rar. Can. Co. 
 22 N. J. Eq. 420; Shea v. Mabey, 1 B. J. Lea, 319. The vice-president of a bank is 
 bound, and conclusively presumed, to know its condition. Germau Sav. Bk. v. Wul- 
 fekuhler, 19 Kans. 60. In United Society v. Underwood, 9 Bufh, 61-7, directors were 
 held liable for misappropriation by a bank of special deposits, where they ought or 
 could have known of the wrong being done. Directors may be made to account for 
 fraud or abuses of trust. But when they are only unwise, or merely extravagant or 
 improvident, or slightly negligent, or merely misjudge in the performance of their 
 duties, the only remedy of the stockholders is to elect other persons directors in 
 their places. Ramsey v. Erie Railway Co. 7 Abb. Pr. (N. S.) 1.56; see also Belmont 
 V. Erie Railway Co. 52 Barb. 637; Howe v. Deuel, 43 Barb. 504 ; Sears v. Hotchkiss, 
 25 Conn. 171. In Hedges v. Paquett, 3 Oreg. 77, it is said that the court will not in- 
 terfere, unless there is cause for the displacement of the oflacer or for winding up the 
 company. A stockholder cannot have a separate action at law, for negligence 
 against the directors, The action must be in such form as to protect the interests of 
 all stockholders and creditors. Craig v. Gregg, 83 Penn. St. 19. A bill in equity 
 may be maintained against the directors for waste or misapplication of funds, though 
 an adequate remedy at law exists. Citizens Loan Assoc, v. Lyon, 29 N. J. Eq. 110. 
 It is said in Mussina v. Goldthwaite, 34 Tex. 125, that when the directors are 
 charged with fraud, it is not necessary for a stockholder, before bringing suit against 
 them, to apply to them for the use of the corporate name. A creditor cannot bring 
 an action against a director for misfeasance or fraud in the management of the cor- 
 porate funds. Zinn v. Mendel, 8 W. Va. 580. 
 
 (ffl) " It is by no means a well settled point what is the precise relation which di- 
 rectors sustain to stockholders. They are undoubtedly said by many authorities to 
 be trustees, but that, as I apprehend, is only in a general sense, as we term an agent 
 or any bailee intrusted with the care and management of the property of another. 
 
486 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 Not only may not directors make actual profits out of the com- 
 pany's business, but also they must employ their powers rigidly 
 
 It is certain that they are not technical trustees. They can only be regarded as man- 
 datory persons who have gratuitously undertaken to perform certain duties, and who 
 are therefore bound to apply ordinary skill and diligence, but no more. Indeed, as 
 the directors are themselves stockholders, interested aa well as all others that the 
 affairs and business of the corporation should be successful, when we ascertain and 
 determine that they have not sought to make any profit not common to all the stock- 
 holders, we raise a strong presumption that they have brought to the administration 
 their best judgment and skill. Ought they to be held responsible for mistakes of 
 judgment or want of skill and knowledge 1 They have been requested by their co- 
 stockholders to take their positions, and they have given their services without com- 
 pensation. We are dealing now with their responsibility to stockholders, not to 
 outside parties, creditors and depositors. Upon a close examination of all the re- 
 ported cases, although there are many dicta not easily reconcilable, yet I have found 
 no judgment or decree which has held directors to account, except where they have 
 themselves been personally guilty of some fraud on the corporation, or have known 
 and connived at some fraud in others, or where such fraud might have been prevented 
 had they given ordinary attention to their duties. I do not mean to say by any 
 means that their responsibility is limited to these cases, and that there may not exist 
 such a case of negligence or of acts clearly ultra vires, as would make perfectly honest 
 directors personally liable." After citing numerous authorities, the judge proceeds : 
 " These citations, which might be multiplied, establish, as it seems to me, that while 
 directors are personally responsible to the stockholders for any losses resulting from 
 fraud, embezzlement, or willful misconduct, or breach of trust, for their own benefit 
 and not for the benefit of the stockholders, for gross inattention and negligence by 
 which such fraud has been perpetrated by agents, officers or co-directors ; yet they 
 are not liable for mistakes of judgment, even though they may be so gross as to 
 appear to ns absurd and ridiculous, provided they are honest, and provided they are 
 fairly within the scope of the powers and discretion confided to the managing body." 
 In regard to the question, whether the directors should be held responsible for any 
 of their acts as ^tltra vires, the court say that, " conceding that the directors did vio- 
 late the charter, it was a question upon which, with all due care, they might have 
 made an honest mistake ; and, moreover, it appears that they acted throughout by 
 advice of their counsel. It is well settled that trustees will be protected from re- 
 sponsibility under such circumstances.'' Sharswood, J., in Sperring's Appeal, 71 
 Penn. St. 11. In Scott v. Depeyster, 1 Edw. Ch. 513, the rule is laid down, that di- 
 rectors are not to be held personally liable as between themselves and a stockholder, 
 unless there has been negligence or fraud ; that they are answerable not only for 
 their own fraud and gross negligence, but also for all the faults which are contrary 
 to the care required of them ; that they are looked upon as bailees of the property, 
 and as they are persons generally having an interest in the stock, they are not bailees 
 who are to derive no benefit from their undertaking, and therefore to be held respor- 
 sible for slight neglect, but they act in relation to a bailment beneficial to both par- 
 ties, the stockholders and themselves; and the rule then is, they must answer for 
 ordinary neglect — that is, the omission of that care which every man of common pru- 
 dence takes of his own concerns." See Godbold v. Mobile Bank, U Ala. 191 ; Smith 
 11. Prattville Man. Co. 29 Ala. 503 ; Christ Cb. v. Barksdale, 1 Strob. Eq. 197 ; Wil- 
 
POWERS POSSESSED BY DIRECTORS. 487 
 
 and strictly for the furtherance of the company's objects, even 
 though thereby they inflict loss or inconvenience upon them- 
 selves. Thus, where the directors, having power to receive pay- 
 ment of calls in advance, paid into the bank the amount remain- 
 ing uncalled on their own shares, and on the same day appro- 
 ;priated this money in payment of their fees, for which there were 
 at the time, as they knew, no other available assets, the court de- 
 termined that there had been no bona Jlde 'pa.jvaent in anticipation 
 ■of calls, and that the directors, being bound to exercise the powers 
 given to them for the benefit of the company generally, and not 
 with a view to their own private interests only, were not relieved 
 from liability upon their shares.^ (a) 
 
 But in Eales v, Cumberland Black Lead Mining Co.,* where 
 provisional directors appointed one of their number the manager, 
 the appointment was held good, although the court "entirely 
 agreed that if we hold this contract binding, we furnish a dangerous 
 precedent for other companies." 
 
 Section II. — ^Powers Possessed bt Direotoes and other similab 
 
 Persons. 
 
 Mapress Powers of Directors. 
 
 Such, then, is the position of directors and other similar offi- 
 cials. They are at once the general and yet the special agents of 
 the corporation : special, because they have only the authority de- 
 :fined and pointed out by the instruments of incorporation ; but 
 general, in so far that they have this extent of authority, and that 
 it cannot be limited or circumscribed by the internal regulations 
 
 ' Be European Central Railway Com- ^ 30 L. J. Ex. 141. 
 
 pany (Syke's Case), L. R. 13 Eq. 256; 
 compare Gilbert's Case, L. R. 5 Ch. 659. 
 
 liams.w. Gregg, 2 Strob. Eq. 316 ; Gratz v. Re.dd, 4 B. Men. lYS ; Lexington R. R. 
 Co. V. Bridges, 1 B. Mon. 569; Bank v. St. John, 25 Ala. 666; Bayless v. Orne, 1 
 Freem. (Miss.) Ch. 161, 174; Pontchartrain E. R. Co. v. Paulding, 11 La. 41 ; Hodges 
 V. BTew England Screw Co. 1 R. I. 312 ; Lewis v. St. Albans' Iron and Steel Works, 
 ^0 Vt. ill. 
 
 (o) See Hilles v. Parrish, 14 N. J. Eq. 380 ; Knowlton v. Congress Spring Co. 51 
 N. Y. B18 ; Same v. Same, 14 Blatchf. 364. 
 
488 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 .of the corporations. Trustees, too, they are in some respects, 
 though not in all, but always trustees of the authority and powers 
 so possessed by them. These powers will be given either expressly 
 by the constating instruments, or impliedly by the operation of 
 law as necessary incidents of their position. 
 
 In reference to the former, few observations need be made. 
 What they actually are will be gathered from the language em- 
 ployed, not unseldom somewhat obscure and contradictory. They 
 cannot be contrary to statutory enactments or to public policy ; 
 and if any acts of parliament — for instance, the Companies Acts — 
 contemplate, even though they do not verbally provide, that asso- 
 ciations coming within their purview, or the members thereof, 
 shall have certain rights, or discharge certain functions only, all 
 provisions or by-laws derogatory thereto will be simply void.' 
 
 It must also not be forgotten, that, in respect of limited liability 
 companies, the memorandum indicates primarily the purposes of 
 the company, and consequently limits in a general, though definite, 
 manner its scope and powers.^ 
 
 Implied Powers of Directors. 
 
 The implication of powers is a much more difficult matter. 
 The directors of public companies are the special general agents of 
 their companies. The executive portion of most other associations 
 — the mayor and councilmen of municipal bodies, {a) the trustees 
 of friendly societies, the governors of charities, the members of 
 local government boards, and the like — stand towards those whom 
 they represent in a relation similar in its essential aspects, though 
 varying somewhat with the varying objects in view. To this rela- 
 tionship the principles of agency are with some degree of qualifiea- 
 tion applicable. "What is the effect of this qualification? What is 
 the exact extent of the authority possessed by these special general 
 agents ? 
 
 ' See ;)«• Giffard, L. J., in Re General * See re New Zealand Banking Corpo- 
 
 Company for the Promotion of Laud ration (Sewell'a Case), L. R. 3 Ch. 131 -, 
 
 Credit, L. R. 5 Ch. 363, 377 ; and per Riche v. Ashbury By. Carriage, <fec. Co. 
 
 Cairns, L. J., in Re Financial Corporation L. B. 7 H. L. 653, 
 (Felling's Case), L. B. 2 Ch. 714, 728, 729. 
 
 (a) Dillon on Mun. Corps. §g 376, 884 ; San Diego v. S. D. & L. A. R. R. Co. 44 Cal. 
 106. 
 
POWERS POSSESSED BY DIRECTORS. 489 
 
 The reply is, that no universal rules, valid and binding under 
 all circumstances, can be laid down for determining the one or the 
 other, but that regard must be had to the nature of the business 
 and the customary methods of transacting it, and account be taken 
 of attendant facts. 
 
 One principle, however, will always hold, viz., that whatever is 
 beyond the power of the corporation is, a fortiori, beyond that of 
 the directors, and therefore in considering the legal effect of any pro- 
 ceeding done, entered upon, or ratified by them, we must first con- 
 sider whether such proceeding could have been done, entered upon, 
 or ratified by the corporation itself. If not so, then evidently, in 
 accordance with the most elementary of the principles flowing from 
 the doctrine of uli/ra vires, such proceeding will be simply void as 
 far as the corporation is concerned. 
 
 But the converse of this is not to be affirmed. Directors will 
 have not all, but only some of the powers impliedly belonging to 
 the corporation, (a) They will have none which are denied them 
 either expressly by the instruments or resolutions constituting them, 
 or impliedly by necessary deduction therefrom. 
 
 They will have none which are not required to enable them 
 properly and expeditiously to accomplish their duties, and to 
 carry on economically and successfully the affairs of their constit- 
 uents. (5) 
 
 (o) The board of directors ordiaarily may do any act, in the general range of the 
 buBiuesB of the company, which the company can do, unless restrained by the charter 
 and by-laws. Whitwell v. Warner, 20 Vt. 425 ; Bank of Middlebury v. Rut. <fe W. R. 
 R. Co. 30 Vt. 169 ; Wright v. Oroville Mining Co. 40 Cal. 20. And this authority 
 extends to contracting debts, and pledging or conveying real or personal estate in 
 payment or as security. Augusta Bant v. Hamblet, 35 Me. 491 ; Dispatch Line of 
 Packets v. Bellamy Mfg. Co. 12 N. H. 225; Bank of Middlebury v. Edgerton, 30 Vt. 
 182 ; Miller v. Rutland & Wash. R. R. Co. 36 Vt. 452 ; Burrill v. Nahant Bank, 2 Mete. 
 163 : Sargent v. Webster, 13 Mete. 497 ; Hoyt v. Thompson, 19 N. Y. 207 ; Gordon v. 
 Preston, 1 Watts. 385. Officers cannot be examined as " parties " under the New 
 York Code. People v. Mutual Gas Light Co. 14 Hun, 157. Charter directors have 
 power only to set the corporation in motion, and not to make contracts for it. AJlman 
 V. R. R. Co. (m.) 7 Reporter, 236. 
 
 (6) Directors have no power to apply to the Legislature for enlargement of corpo- 
 rate powers; Marlborough Mfg. Co. v. Smith, 2 Conn. 679 ; nor to alienate corporate 
 property essentially necessary for the transaction of the companj''s business ; Rollins 
 V. Clay, 33 Me. 132 ; nor to destroy the corporate existence, or give away its funds, 
 or deprive it of any of its means to accomplish the full purpose for which it was char- 
 tered. Burke v. Smith, 16 Wall. 395; Penobscot & Ken. R, R. Co. v. Dunn, 39 Me. 
 
490 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 The above observations must be carefully borne in mind in 
 connection with the remainder of this chapter. The powers of a 
 corporation must at once limit and in part determine those of its 
 directors. The former have been considered; consequently, in 
 treating of the latter, reference will necessarily be often made to 
 matters already dealt with in reference to corporations themselves, 
 and repetition may occasionally be the result. 
 
 I. Directors may not delegate authority which it is intended 
 they shall exercise personally, hut with respect to all other 
 matters they may appoint inferior officials. 
 
 The maxim delegatus non potest delegare applies to directors 
 as strictly as it applies to other forms of agency, in so far as it 
 applies at all. The diflBculty lies in determining this point. 
 One rule, perhaps only another form of stating the above, is that 
 they must personally exercise any discretion given to them as 
 directors. 
 
 Of course this does not apply where there is in fact not a dele- 
 gation, but only the appointment of the necessary subordinate 
 officials. Such officials any governing body may appoint, unless 
 positively prevented therefrom by express provisions. 
 
 And when directors have such authority, whether altogether 
 raised by implication, or in virtue of an authority, general or spe- 
 cial, given them to employ servants and other inferior agents, they 
 may exercise such authority, both in the engagement and dismissal, 
 without regard to any special regulations that may have been laid 
 down. This, however, does not of itself dispense with the seal in 
 such cases, as this is necessary.' 
 
 But there are cases where a delegation is allowable. 
 
 (1.) The constating instruments may contain express authority 
 to do 80.^ 
 
 (2.) Such authority may also be given in virtue of wide powers 
 
 ' See ante, pp. 446 et seq. ! Harris's Case, L. R. 1 Ch. 687. See 
 
 Howard's Case, L. R. 1 Ch. 561. 
 
 S81 ; Bedford R. R. Co. </. Bowser, 48 Penn. St. 29. See Black v. Del. & Rar. Can. Co. 
 22 N. J. Eq. 133. As to the power of directors to transfer all property to one of the 
 creditors, or to a trustee, for the purpose of closing up its afifairs, see Sargent v. Web- 
 ster, 13 Mete. 497 ; Dana v. Bani of U. S. 6 W. & S. 247 ; Bank Com'rs v. Bank of 
 Brest, Harring. Ch. 106 ; Union Bank v. Ellicott, 6 6. <fe J. 363. 
 
POWERS POSSESSED BY DIRECTORS. 491 
 
 of management, if such contain any reference to the employment 
 of agents in their own stead ; ^ though power to " exercise a gen- 
 eral superintendence and control " will not suflBce.^ 
 
 (3.) This restriction extends only to those acts which the direct- 
 ors are personally required to attend to, or which, involving per- 
 sonal judgment and discretion, they are by implication intrusted 
 personally with, and so have with. respect thereto a duty thrown 
 upon them. What these latter acts are will often be very 
 doubtful. 
 
 In Cartmell's Case,' directors could not delegate a power to buy 
 their own shares even to a general manager. " It appears to me 
 that a mere power to appoint a general manager would not author- 
 ize the directors to transfer to him the power to purchase shares ; 
 because that power is by the articles expressly giv.en to the direct- 
 ors themselves ; whilst the only duties which they could delegate 
 to the general manager are those which belong to the management 
 of the ordinary commercial business of such a company. It is true 
 that a company of that kind must act by its manager, but the di- 
 rectors could not delegate to another person those powers which 
 they would not have had except under the peculiar provision in 
 the articles." 
 
 (4.) So the latter part of the proposition holds without qualifi- 
 cation. A governing body, at the most, is under the obligation of 
 personally acting in cases which either are of a peculiar and special 
 nature, or which closely affect the well-being or existence of the 
 corporation. With respect to other matters, it is sufficient if they 
 exercise a general control, and they may leave the actual carrying 
 out of such to inferior officials.'' 
 
 (5.) Lastly, there is another set of cases where the restriction 
 does not apply, or rather, where in reality there is not, though 
 apparently there is, a delegation of authority. This is when a 
 preliminary or investigation committee is appointed to prepare 
 matters for the consideration of the general body, who, in fact, 
 themselves examine and decide upon, possibly in a perfunctory 
 manner, the matter so referred, investigated and reported on. 
 This was what happened in Osgood v. Nelson.' The corporation 
 of London having the power to dismiss one of its officers, holding 
 
 ■ See Harris's Case, uhi mp-a. ■• L. R. 9 Oh. 691, 695. 
 
 » Ibid. 5 L. R. 5 H. L. 636. 
 
 «L. R. 9 Ch. 691,695. 
 
492 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 a freehold office, on complaint against him, referred to a committee 
 of its own body the task of examining into the complaint and re- 
 ceiving evidence upon it, and reporting thereon. The committee 
 performed this duty. The report and evidence were duly furnished 
 to the inculpated oEBcer, who was then called on for his defense. 
 He was afforded the opportunity of being heard, and counsel was 
 heard for him, but the corporate body itself did not re-hear the 
 evidence. He was ordered to be dismissed from his office. The 
 House of Lords held that this was not a ease of delegation of law- 
 ful authority, but was a due exercise of that authority by the cor- 
 porate body itself, {a) 
 
 (a) The authorities are not in agreement, as to whether the directors of a corpo- 
 ration, being agents, are to be governed by the maxim delegatus non potest delegare. 
 The case of Gillis v. Bailey, 21 N. H. 149, after an elaborate review of cases, holds 
 that directors cannot, without express authority, delegate the power to do any act 
 involving discretion, waiving the question in regard to mere ministerial acts. The 
 Court say, in conclusion : " The power to lease involved the exercise of judgment 
 and discretion. According to the uniform current of the authorities, it would seem 
 quite clear, that an agent cannot delegate to another any portion of his power re- 
 quiring the exercise of discretion or judgment, unless, in the power conferred upon 
 the agent is involved the power of substitution by the agent, in express terms, or at 
 least by necessary implication. But no such power of substitution was conferred 
 upon the directors in the present case. The by-laws, to be sure, allowed ' the exer- 
 cise of a general superintendence and control by the directors, or a majority of them, 
 over the affairs of the corporation.' But this did not include the right to confer au- 
 thority upon others to exercise the same power. Here was clearly no express power 
 of substitution given to the directors, and there was nothing in the nature of the 
 authority to be exercised which could render the aid of others necessary. No power 
 of substitution is therefore to be implied. The power was conferred upon the di- 
 rectors, and upon them alone, by the terms of the by-laws, ' to sell lands and tene- 
 ments, (fee, belonging to the corporation, upon such terms and conditions as they 
 may deem advantageous to the corporation.' The exercise of this power is put ex- 
 pressly upon the discretion of the directors. From this language, no power of sub- 
 stitution can be implied. The directors, then, were the agents of the corporation, 
 upon whom the power to lease the lands of the corporation was conferred ; and no 
 power, either express or implied, is found to delegate that authority to others ; and 
 the power to be exercised involved necessarily the exercise of judgment and discre- 
 tion." The power of attorney was therefore declared void. On this ground the di- 
 rectors cannot delegate the power to make calls. Mut. Ins. Co. v. Chase, 56 N. H. 
 341; Silver Hook Road o. Greene (R. I.), 1 Reporter, IS"?. But see Read v. Mem- 
 phis Gas Co. 9 Heisk. 545. So the commissioners to receive subscriptions to the 
 stock of a corporation, must all be present in order to perform judicial duties assigned 
 to them. Crocker v. Crane, 21 "Wend. 211. But a city council may delegate to the 
 mayor the power of making a contract for paving streets, that being a ministerial 
 act. Hitchcock v. Galveston, 6 Otto, 341. In Burrill v. Nahant Bank, 2 Mete. 168, 
 
POWERS POSSESSED BY DIRECTORS. 493 
 
 (1.) Implied Powers relating to the Corporate Business, and the 
 General Management thereof. 
 
 On this point it is impossible to lay down anything but the 
 vaguest generalities. The aims and objects of corporations are 
 co-extensive with human needs and inclinations ; consequently 
 the methods of attaining those objects will be infinitely various, 
 as must also he the powers given for the attainment of the same. 
 Directors, being the special general agents of their principals, will 
 have most, if not all, the powers of management possessed by their 
 principals as to binding them to third parties, except so far as the 
 constating instruments restrain them, {a) But the general powers 
 of management thus belonging to directors will, of course, not 
 authorize their engaging in any transactions foreign to the proper 
 and ordinary business of the company ; for the latter could not by 
 directly engaging in such transactions render itself liahle to per- 
 sons dealing with them, so manifestly it cannot incur liability 
 
 hgwever, a different yiew is taken. It is said : " A board of directors of the banks 
 of Massachusetts is a body recognized by law. By the by-laws of these corporations, 
 and by a usage, so general and uniform as to be regarded as part of the law of the 
 land, they have the general superintendence and active management of all the con- 
 cerns of the bank, and constitute, to all purposes of dealing with others, the corpo- 
 ration. We think they do not exercise a delegated authority, in the sense in which 
 the rule applies to agents and attorneys, who,exercise the powers especially conferred 
 on them and no others. We think, therefore, that a board of directors may delegate 
 authority to a committee of their own number, to alienate or mortgage real estate." 
 See Waite v. Windham Mining Co. 36 Vt. 18 ; Corn Exch. Bank v. Cumberland Coal 
 Co. 1 Bosw. 436 ; Olcott v. Tioga R. R. Co. 27 N. Y. 546 ; Com'rs v. Bank of Buffalo, 
 6 Paige, 497 ; Western Bank v. Gilstrap, 45 Mo. 419 ; Percy v. Millaudon, 3 La. 568. 
 A board of twenty-three directors may delegate, by by-law, to a quorum of five, the 
 power to transact ordinary business. Hoyt v. Thompson, 19 N. Y. 207. And the 
 Court say : " The directors convened as a board are the primary possessors of all 
 the powers which the charter confers, and like private principals they may delegate 
 to agents of their own appointment the performance of any acts which they can 
 themselves perform." Where directors have power to appoint agents, the authority 
 of those agents does not necessarily cease with the termination of that board. An- 
 derson V. Longden, 1 Wheat. 86 ; Exeter Bank v. Rogers, 7 N. H. 33 ; Brown v. Co. 
 of Somerset, 11 Mass. 221; Northampton Bank v. Pepoon, 11 Mass. 288; Dedham 
 Bank v. Chickering, 3 Pick. 335; Union Bank v. Ridgely, 1 Har. <fe G. 431; see 
 Thompson v. Young, 2 Ohio, 334. Directors have power to authorize one of 
 their number to assign any securities belonging to the company. See Stevens 
 V. Hill, 29 Me. 133; Spear v. Ladd, 11 Mass. 94; Northampton Bank i/. Pepoon, 
 11 Mass. 288. 
 
 (a) See ante, p. 470, note (6). 
 
494: DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 when it acts through the medium of others. Most of the cases 
 already cited in Part II, Chapter 3, are illustrations of this.' 
 Such general powers will, however, be construed liberally, and 
 with due consideration for the best interests of the company. 
 This well appears from the case of Wilson v. Miers," where the 
 directors of a steamship company endued with the powers, i7iter 
 alia, of " selling and letting to hire, and chartering of the vessels," 
 and of " the general conduct and management of the business of 
 the company," were held authorized to sell all the vessels belong- 
 ing to the company, and consequently a contract entered into by 
 them for that purpose was adjudged to be binding. 
 
 (2.) Implied Powers as regards the Monetary Affairs of the 
 
 Corporation, (a) 
 
 It has been shown that the amount of the capital, if any, of a 
 corporation, and its division into shares, if so divided, are usually 
 
 ' See especially Ernest v. Nicholls, 6 pp. 12] 'et seg.; compare Clay v. Rufford, 
 
 H. L. 401 ; Athenaeum Life Assurance 5 Do G. <fe Stn. 768 ; Gregory v. Patchett, 
 
 Society v. Pooley, 3 De G. & J. 294. 33 Beav. 597 ; Beer v. London & Pari% 
 
 2 10 C. B. (N. S.) 348 ; 3 L. T. (N. S.) Hotel Co. L. R. 20 Eq. 412. 
 780. The facts are given fully, ante, 
 
 (a) Evidence of powers habitually exercised by a cashier of a bank, with its 
 knowledge and acquiescence, defines and establishes, as to the public, those powers, 
 provided that they be such as the directors of the bank may, without violation of its 
 charter, confer on such cashier; and where the authority of the agent is left to be 
 inferred by the public from powers usually exercised by the agent, it is enough if the 
 transaction in question involves precisely the same general powers, thou^ applied 
 to a new subject-matter. Merchants' Bank v. State Bank, 10 Wall. 604. As to 
 powers of cashiers and liability of banks therefor, see Fleckner v. Bank United States, 
 8 "Wheat. 338 ; Minor v. Mechanics' Bank, 1 Pet. 46 ; Bank United States v. Dunn, 6 
 Pet. 51 ; United States v. Bank of Columbus, 21 How. 356 ; Baldwin v. Bank of New- 
 bury, 1 Wall. 234 ; St. Louis Bank v. Parmlee, 3 Dill. 403 ; s. o. 6 Otto, 557 ; Badger 
 V. Bank of Cumberland, 26 Me. 428 ; Cocheco Bank v. Haskell, 51 N. H. 116 ; Mussey 
 V. Eagle Banky 9 Mete. 306 ; Faneuil Hall Bank w.Bank of Brighton, 16 Gray, 534; 
 Farmers' Bank v. Butchers' Bank, 4 Duer, 219; s. o. 16 N. Y. 125; Cooke v. State 
 Bank, 52 N. Y. 96 ; Yerkes v. Nat. Bank, 69 N. Y. 382; Bank of Penn. v. Reed, 1 W. 
 <& S. 101 ; Ridgway v. Farmers' Bank, 12 S. & R. 256 ; Merchants' Bank v. Marine 
 Bank, 3 Gill, 96 ; Sturges v. Bank of Circleville, 11 Ohio St. 153 ; Robinson v. Bealle', 
 20 Ga. 275; Ryan v. Dunlap, 17 111. 40; State -o. Commercial Bank, 6 Sm. & M. 
 218 ; Morse on Banking, 137, et seg. 
 
 " The cashier of a bank is, virtvie officii, generally intrusted with the notes, se- 
 curities, and other funds of the bank, and is held out to the world by the bank as its 
 general agent in the negotiation, management, and disposal of them. Prima facie, 
 therefore, he must be deemed to have authority to transfer and indorse negotiable 
 
POWERS POSSESSED BY DIREefORS. 495 
 
 —and if the corporation come within the Companies Acts are 
 necessarily — fixed at the constitution of the same. But statutory 
 provisions apart, it is competent for any corporation to invest its 
 governing body with the authority to add to, reduce, or otherwise 
 modify its capital or its division, {a) This is sometimes done,^ 
 and perhaps it may be considered one of the common law inci- 
 dents of the governing section of such corporations as exist at 
 common law. But without such express authority, directors have 
 no implied power to vary the capital, or to determine when or 
 how it shall be raised. (5) 
 
 Both, the Companies Act of 1862,* (c) and the Companies 
 
 ' Ambergate Railway Company o. ^ See 25 & 26 Vict. c. 89, Table A, 
 
 Mitchell, 4 Ex. 540. arts. 4 & 26. 
 
 Beourities, held by the bank, for its use and in its behalf. Ko special authority for 
 the purpose is necessary to be proved.. If any bank chooses to depart from this gen- 
 eral course of business, it is certainly at liberty to do so ; but in such ease it is in- 
 cumbent on the bank to show that it has interposed a restriction, and that such re- 
 striction is known to those with whom it is in the habit of doing business." Wild 
 ■u. Bank of Passapiaquoddy, 3 Mason, 605. See, however. State v. Commercial Bank, 
 6 Sm. <fe Mar. 237. Mr. Brlce, after embodying in his text this quotation from the 
 note of the first American edition, adds : " This judgment is perhaps somewhat too 
 strongly expressed with regard to the particular official therein considered, but the 
 principle laid down as to the implication of authority which arises when a person 
 holds out another as his agent, and intrusts him with particular functions, is beyond 
 dispute," citing Swift ii. Winterbolham, L. E. 8 Q. B. 244 ; Beer v. London <fc Paris 
 Hotel Co. L. R. 20 Eq. 412. 
 
 The directors of a bank have a right to sell and transfer a promissory note dis- 
 counted and owned by it. Planters' Bank v. Sharp, 6 How. 301 ; Marvine v. Hymers, 
 12N. y. 223. 
 
 It has been decided that the position of director does not imply a power to sell 
 bonds of the company ; Titus v. Cairo R. R. Co. 37 N. J. L. 98 ; to sell a steamboat ; 
 6 Robt. 312 ; to allow overdrafts; Market St. Bank v. Stumpe, 2 Mo. App. 645 ; to 
 bind the company to aid the extension of a railroad ; New Haven, &c. R. R. Co. v. Hay- 
 den, 107 Mass. 626. It has also been decided that a superintendent of a mine has no 
 power to borrow money ; Union Mining Co. v. Rocky Mt. Nat. Bank, 1 Col. 531 ; 
 that a president, who by by-law is "business and financial agent," has no power to 
 mortgage a locomotive ; Luse v. Isthmus Transit R. R. Co. 6 Oreg. 125 ; that an 
 officer cannot bind the company by a contract which involves the issue of additional 
 stock; Finley Shoe Co. v. Kurtz, 34 Mich. 89; that the managing oflncers have 
 power to employ counsel.without authority from the board of directors; Western 
 Bank v. Gilstrap, 45 Mo. 419 ; Southgate v. Atlantic <fe Pac. R. R. Co. 61 Mo. 89-; 
 that a railroad superintendent has power to hire a' physician to attend an employee 
 Injured in the coarse of his employment; Pacific R. R. Co. v. Thomas, 19 Kan. 257. 
 
 (a) See ante, pp. 158 et seg. 
 
 (b) See Railroad Co. ti. AUerton, cited ante, p. 158, note. 
 
 (c) Buckley's Companies Acts, 2d ed., pp. 378, 409. 
 
496 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 Clauses Consolidation Act/ (a) contemplate the making of calls 
 by the directors, but neither act distinctly confers upon them the 
 power so to do, which therefore has to be given them, as it gener- 
 ally is, by an article in the constating instruments, or by resolution 
 of the shareholders. 
 
 With certain exceptions, corporations have no implied power 
 to accept a surrender of, or to cancel, shares. A fortiori, direct- 
 ors have no such implied power. (6) The leading decisions are 
 Stanhope's Case and Munt's Case. In the former the deed of set- 
 tlement declared that in all cases not provided for, it shall be law- 
 ful for the directors to act in suQh manner as should appear to 
 them best calculated to promote the interest and welfare of the 
 company. Disputes arose between the directors, and ultimately 
 one of them. Stanhope, retired upon the terms that his shares 
 should be cancelled ; but he was nevertheless, ten years later, held 
 a contributory.^ In the latter (o) the facts were very similar, Mr. 
 Munt having been a director, and upon differences arising at the 
 board, having retired in pursuance of an agreement entered into 
 with his eo-directors, that his shares should be transferred to the 
 company. The Lords Justices, however, affirming the judgment 
 of the Master of the Rolls, held him a contributory, and that, 
 
 ' 8 <fe 9 Vict. c. 16, s. 27. most there was only an unexecuted threat 
 
 i' 3 De 6. <fe Sm. 198. Compare Wol- to forfeit, and yet the shareholder was 
 laston's Case, 4 De G. <!i! J. 43Y, where at held not a contributory. 
 
 (a) Godefroi & Shortt, p. 28. 
 
 jj>) " Directors of a railroad company are trustees for all the stockholders, and, 
 in a Tery just sense, for the commonwealth. It is an abuse of their trust, wholly 
 unauthorized, and at war with the design of the charter, to single out some of the 
 stock subscribers and release them from their liability. No such authority in them 
 has ever been recognized." Bedford R. R. Co. v. Bowser, 48 Penn. St. 29. In Burke 
 V. Smith, 16 Wall. 395, Strong, J., says; "It has been settled by very numerous 
 decisions that the directors of a company are incompetent to release an original sub- 
 scribier to its capital, or to make any arrangement with him by which the company, 
 its creditors, or the State shall lose any of the benefits of hia subscription. Every 
 such arrangement is regarded in equity not merely as ultra vires, but as a fraud upon 
 other stockholders, upon the public, and upon the creditors of the company." See 
 ante, note, pp. 142, 181. See, also, Alford v. Miller, 32 Conn. 543; Bank v. St. John, 25 
 Ala. (N. S.) 566 ; Percy v. Millaudon, 3 La. 568; Jones v. Terre-Haute & Rich. R. R. 
 Co. 51 N. Y. 196. 
 
 (c) See Howe v. Deuel, 43 Barb. 608. 
 
POWERS POSSESSED BY DIRECTORS. 49T 
 
 although the shares so surrendered by him had been subsequently 
 retransferred by the company.^ 
 
 The principle here involved has subsequently been repeatedly 
 affirmed, and enforced with considerable strictness. This is well 
 shown by the decision in Richmond's Case,' one of the numerous 
 cases growing out of the winding up of the Athenaeum Life As- 
 surance Society. One of the directors proposed to his co-directors, 
 that, for the benefit of the company, each of them should take a 
 certain number of shares to be held in trust for the company ,- 
 and, to set the example, he signed the deed of settlement for 2,000 
 shares. No note of the proposal was entered on the minutes, nor 
 were the shares handed over to him. No other director followed 
 his example ; but subsequently, he being still a director, his name 
 was returned to the stamp office for the shares. Afterwards, hav- 
 ing ceased to be a director, and having reason to know that the 
 company was in failing circumstances, he procured his shares to 
 be cancelled by the directors. Held, upon the terms of the com- 
 pany's deed of settlement, that this was ultra vires of the direct- 
 ors, they having no power to cancel or diminish the capital, but 
 only to forfeit shares for the benefit of the company ; and was a 
 fraud on the part of the shareholder, who was accordingly held to 
 be a contributory in respect of those shares. This is, perhaps, a 
 somewhat hard decision, but it only illustrates the care with which 
 directors must keep within their admitted powers. 
 
 The authority to permit the surrendering of shares must be 
 expressly vested in directors, and wiU not be raised by implication 
 from the nature of the business ; and it can be applied only strict- 
 ly for the purposes for which intended. Thus, where they had 
 power to accept a surrender of shares, but the company was 
 expressly prohibited from dealing in shares, it was determined 
 that a deed of release and indemnity by which the directors dis- 
 charged a person, who had subscribed the memorandum of associa- 
 tion for 500 shares, from all liability in respect of 250 of these 
 shares not allotted to him, was a dealing in shares, and therefore 
 illegal and void.' Similarly, directors cannot relieve a person 
 from a contract to take shares, and who has not yet taken them.* 
 
 ' 22 Beav. 56. Compare Knight's ' Re United Service Company (Hall's 
 
 Case, L. R. 2 Ch. 321, where, notwith- Case), L. R. 5 Ch. T07. 
 
 standing informalities, the forfeiture was ■* Ee United Ports' Company (Adams' 
 
 held perfect. Case), L, R. 13 Eq. 474 ; but oompnre 
 
 ••' 4 K. (St J. 305. Snell's Case, L. R. 6 Ch. 22 ; Barnett's 
 32 
 
498 DIRECTOES AND OTHER SIMILAR OFFICIALS. 
 
 On the other hand, directors will have such a power, not only 
 Tvhen it is expressly given them, but also when necessarily im- 
 plicated in the language used in appointing them. Thus, author- 
 ity to enter into any contract, " and afterwards to release and dis- 
 charge, or modify and vary, the terms of any such contract or 
 agreement,"^ and "to enter into, alter, rescind, or abandon con- 
 tracts in such manner as they shall think fit,"" coupled with power 
 to deal in shares, has been held sufficient to enable them to accept 
 a surrender of shares, and otherwise to relieve from the liability 
 in respect thereof. 
 
 But general powers of management do not enable directors to 
 issue paid-up shares, or make contracts with shareholders for the 
 taking up of shares or the payment of calls thereon in an unusual 
 and anomalous manner, e. g., by the shareholder supplying goods 
 in lieu of payment.^ (a) 
 
 The authority to forfeit shares, like that to cancel them or 
 accept a surrender, exists, as to both corporations and their ninn- 
 aging bodies, only when actually given.* (5) The Companies Act 
 of 1862, itself contemplates that directors can forfeit,' but does 
 not itself positively enact that they can do so, and therefore this 
 must be provided for by the articles of association. The Compa- 
 nies Clauses Consolidation Act,' expressly enables the directors of 
 ■companies falling within it, under certain circumstances and upon 
 •certain conditions, to forfeit shares. 
 
 This power, it need scarcely be added, is like every other 
 power, a trust to be exercised bona fide for the benefit of the 
 whole corporation and of the general body of members, and not 
 in the favor or to the detriment of some one or more.'' 
 
 •Case, L. R. 18Eq. 507; Mackley's Case, * Re Aafriculturista' Cnttle Insurance 
 
 1 Ch. D. 247; and Thomas's Case, L. R. Coin|ianv (Stuniiope's Case), L. K. 1 Oh. 
 
 13 Eq. 437. 161. 
 
 ' Cockburn's Caso, 4 De G. <& Sm. \11. * See 26 & 26 "Vict. c. 89 ; Table A, cl. 
 
 ' Thomas's Case, L. R. IS Eq. 437. 17 & 19. (c) 
 ^ Re Richmond Hill Hotel Compnny « 8 & 9 Vict. c. 16, ss. 29-35. 
 
 (Pellalt's Case), L. R. 2 Ch. 527; sen, ' ^e(• I.ici mond's Oi se and Paintei^s 
 
 also, ante, pp. 145-9, and the cas s tliere Case, 4 K. & J. S>ii5; Bweny v. Sii.i.h, L, 
 
 cited. • K. 7 Eq. 3 '24. 
 
 (a) See ante, pp. 146 et aeq. 
 
 (b) The power of forfeiture for non-payment of call-" depends upon the charter or 
 some general law. As to remedy, see ante, pp 152, 185, notes. 
 
 ((.) See Buckley's Companii'S Acta, pp. 393-407, where will be found collected 
 the recent cases on the forfeiure of shaies, and an intere ting chart e.\' ildting the 
 conflicting opinions of the judges in the cases gi owing out of the Agricn.turiata' Cat- 
 tle Insurance Company. 
 
POWEE^ POSSESSED BY DIRECrORS. 499 
 
 As to the powers whicli have now been considered — surrender, 
 cancellation, forfeiture — it is quite clear that the principles and re- 
 strictions relating to these do not intervene, and indeed have no 
 meaning, in those circumstances where there is really nothing to 
 surrender, cancel, or forfeit ; where what was intended to be an 
 issue of shares is altogether invalid and ultra vires, and therefore 
 no shares in reality exist. In such a case the directors may, apart 
 even from any reference to compromising disputes, undo what was 
 attempted, and which, thougb in itself not binding, may by laches 
 create liabilities and difficulties hereafter. Thus, in Bamett's 
 Case,^ a company was formed in 1871, with a capital divided into 
 shares of £5 each. The capital not having been all taken up, the 
 directors passed a resolution that each of the existing shareholders 
 should have the option of taking the unissued shares at £i each in 
 proportion to his holding. Allotments were made of shares, in 
 pursuance of this resolution, to various persons, including Barnett, 
 one of the directors. Afterwards it was discovered that the trans- 
 action was ultra vires, and the directors passed a resolution re- 
 scinding their previous resolution and the allotments, and Bar- 
 nett's name was never placed on the register of shareholders in 
 respect of them. The company having been wound up compul- 
 sorily, it was held, that the rescission was valid, and that Barnett 
 was not a contributory in respect of the shares so allotted to him. 
 
 Borrowing is one of those powers which directors may have, 
 either as expressly given or as implied from the nature of the 
 business, (a) "When expressly given it may be so in so many 
 words,^ or by necessary deduction from general powers of man- 
 agement conferred upon them.' The authority may be to borrow 
 by way of loan simply;* or by mortgaging the funds and other 
 property of the company, whether the existing assets only ^ (5) or 
 
 ' Re Essex Brewery Co. L. R. 18 Eq. v. Mounaey, 4 K. & J. V33; Gibbs and 
 
 607; Hartley's Case, L. R. 10 Ch. 157; West's Case, L. R. 10 Eq. 312. 
 Mackley's Case, 1 Ch. D. 248. ■! See Strand Music Ha.l C mpany, 3 
 
 ' Hryon v. Metropolitan Saloon Omni- De G., J. & Sm. 147. 
 bus Conjpany, 3 De G. <fe J. 123 ; Scott v. ^ Re Siinkey Brook Ciial Companv, 
 
 Colburn, 26 Beav. 276; Stanley's Case, No. 1, L. R. 9 Eq. 721 ; JSo. 2, L. li. io 
 
 33 L. J. (Ch.) 535. Eq. 3S1. 
 
 ' Australian Steam Clipper Company 
 
 (a) See Curtis v. Leavitt, 15 N. Y. 9; Lawrence v. Gebhard, 41 Barb. 576; An- 
 gell & Ames on Corp. § 297. 
 
 (6) The directnrs. of a railway corporation are competent to exercise the power 
 of the corporatioa to conyey or mortgage the lands of the company, and may mort- 
 
600 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 the future assets as well, that is to say, book debts accruing, 
 though not yet due ; ^ but not calls hereafter to be made, which 
 cannot validly be pledged ;^ or by the issue of debentures.' 
 
 (3.) Implied Powers of Directors as regards Legal Proceedings. 
 
 One of the chief points in connection with the authority of 
 the managing body of a corporation to bind it, by conducting or 
 concurring in legal proceedings on its behalf, is that of notice, 
 knowledge, or admission. ITotice to an agent is notice to his 
 principal, (a) consequently notice to one partner is notice to all 
 those then actually belonging to the firm.* The exception to this 
 rule will be found on investigation to be apparent, not real, and 
 to be due to the fact that under the circumstances the partner af- 
 fected with the notice was not in truth the agent of the firm.' 
 
 This rule holds in the case of an acting or de facto and, of 
 course, of an ordinary director,* or of any other duly authorized 
 agent of a company.' (J) 
 
 ' Bloomer v'l Union Coal &. Iron Com- ' See Peruvian Railway Company v. 
 
 pany, L. R. 16 Eq. 383. Thames and Mersey Marine Insurance 
 
 "See Stanleys's Case, and Re Santey Company, L. R. 2 Ch. 61'7; and Worces- 
 
 Brook Coal Company, No. 2, uM supra. ter Corn Exchange Company, 3 De G., M. 
 
 ' As to which, and the assets charged & G. 180. 
 thereby, see ante, pp. 223 et acq. ' Re Solvency Mutual Guarantee Soci- 
 
 * Collinson v. Lister, 7 De G., M. & G. ety (Hawthorne's Case), 31 L. J. (Ch.) 
 
 634. 626; Thompson v. Spiers, 13 Sim. 469. 
 
 ' See Bignold v. Waterhouse, 1 M. <fe 
 S. 255 ; M parte Heaton, Buck, 386. 
 
 gage property to secure debts which they are authorized to contract, even without 
 any express authority from the corporation to do so. Hendee v. Pinkerton, 14 Allen, 
 381. Where the agent of a manufacturing corporation was authorized by a vote of 
 the directors to raise money for his own use, as pay for services, upon the credit of 
 the company, and to give a " company note " therefor, it was held that the directors 
 had not exceeded their authority. Tripp v. Swanzey Paper Co. 13 Pick. 291 ; see, 
 also, Ridgway v. Farmers' Bank of Bucks Co. 12 S. & R. 256. On the power of 
 corporations to borrow, make notes, mortgage, etc., see ante, pp. 213 et seq. notes. 
 
 (a) See Story on Agency, § 140, and Angell <Sc Ames on Corporations, § 805 ; 
 Bank of U. S. v. Davis, 2 Hill, 451. 
 
 (6) " The knowledge of an agent in matters pertaining to his agency, and within 
 the scope of his authority, is the knowledge of the principal. This principle is pe- 
 culiarly applicable to corporations, which must transact their business through 
 agents." Perry v. Simpson Waterproof Mfg. Co. 37 Conn. 520; see, also, Cumber- 
 land Coal Co. V. Sherman, 30 Barb. 553 ; Smith v. Board of Water Commissioners, 
 38 Conn. 208; New Eng. Car Spring Co. v. Union Rubber Co. 4 Blatchf. 1 ; Hazard 
 
POWERS POSSESSED BY DIRECTORS. 501 
 
 The notice must be express, and to the agents of the company 
 as such. Therefore, where bankers with wbom policies of in- 
 
 ». Durant, 11 R. I. 195; Smith t;. "Water Com'rs, 38 Conn. 208; Fisher «. Murdook, 
 13 Hun, 485 ; Gaston v. Am. Exch. Bk. 29 N. J. Eq. 98 ; Huntingdon, &o. R. R. Co. 
 *. Decker, 82 Penn. St. 119; Bank of America v. McNeil, 10 Bush, 54; Quincy Coal 
 €o. V. Hood, 11 111. 68 ; Singer Mfg. Co. v. Holdfodt, 86 m. 455 ; Phelps v. Max- 
 well's Cr. Mining Co 49 Gal. 336 ; and see cases cited in Angell <fe Ames on Cor- 
 porations, §§ 305-8. Where a corporation has two agents of equal power and 
 authority, notice to one is constructive notice to the other, and therefore notice to 
 -the corporation. Perry i;. Simpson Mfg. Co. 31 Conn. 520. In order to affect a cor- 
 poration by the knowledge of a fact on the part of one of its directors, it is neces- 
 sary that he should have such knowledge while acting officially in the business of 
 "the corporation, unless he is acting at the time under some special authority conferred 
 on him other than what he would possess as merely one of its directors. Farrell 
 Foundry Co. v. Dart, 26 Conn. 376; Nat. Security Bk. v. Cushman, 121 Mass. 490; 
 Piatt V. Birmingham Axle Co. 41 Conn. 255 ; Pres. &c. of Westfield Bk. v. Cornen, 37 
 N. Y. 320 ; First Nat. Bk. of Hightstown v. Christopher, 40 N. J. L. 435 ; Pittsburgh, 
 <Sec. R. B. Co. 0. WooUey, 12 Bush, 461 ; WoUs v. American Ex. Co. 44 Wis. 342 ; 
 First Nat. Bk. of Davenport v. Gifford, 47 Iowa, 675 ; see Ang. & A. on Corp. 
 §§ 306, 308. Knowledge of a director of a bank, as to the object for which certain 
 bills of exchange were delivered to a party applying to the bank for a discount 
 thereof, such director not being present at the meeting of the directors at which 
 such application was made and such bills discounted, and not having communicated 
 his knowledge to any other director or officer of the bank, is not to be regarded as 
 notice to the bank. Farmers' and Citizens' Bank v. Payne, 25 Conn. 444. Where a 
 director of a bank, authorized on certain conditions to procure notes for discount, 
 -got a note under pretense of having it discounted, when the conditions were not sat- 
 isfied, and the maker knew of the conditions, it was held that the director did not 
 act offioiaHy, and that the bank, to which the note had been passed by the director 
 in pledge for a loan to himself, was not affected with notice of the circumstances 
 under which the note was given, but could recover on it from the maker. Washing- 
 ton Bank v. Lewis, 22 Pick. 24. A director of a corporation bought lands from it, 
 and united with others in forming a new company. He subscribed for almost all ot 
 its stock, became one of its officers and directors, and on the next day, in pursuance 
 of an entire plan, conveyed the same lands to the new company in payment of his 
 subscription. The new company was held to be affected -jpith notice of the circum- 
 stances impairing his title. Hoffman Steam Coal Co. v. Cumberland Coal <fe Iron Co 
 16 Md. 456. A rule has been laid down by some authorities in regard to notice to 
 a director in the absence of any special agency, which is clearly put by the court in 
 tr. S. Ins. Co. u. Shriver, 3 Md. Oh. 381. "The sound and safe rule on the subject 
 is this: that notice given to a director privately, or which he acquires from rumor, 
 or through channels open to all alike, and which he does not communicate to his as- 
 •sociates at the board, will not bind the institution. But if the notice is given to him 
 officially for the purpose of being communicated, although such notice should not be 
 so communicated, the institution is bound by it." The judge there gives his opinion 
 that the weight of authorities sustains this rule. See Union Mining, Co. v. Rocky 
 Mt. Nat. Bk. 1 Col. 531 ; s. o. 2 Col. 248; Ibid. 565. In the case of National Bank 
 
502 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 surance were deposited by the assured as security, gave no notice 
 in writing to the offices, though the secretaries of tiie insurance 
 companies were casually made aware of the fact of the deposit, 
 
 V. Norton, 1 Hill, 672, this rule appears, but only as a dictum. It is there said, that 
 the director to whom notice is given ofBcially, for communication to the board, 
 "must necessarily, perhaps, be considered as the agent of the bank, to that extent." 
 In Bank of U. S. v. Davis, 2 Hill, 451, a different principle is adopted, which is fol- 
 lowed in North River Bank v. Aymar, 3 Hill, 262 : it is to the effect that, no matter 
 how Ihe knowledge is acquired by a director, if lie acts as a member of the board 
 upon the transaction in regard to which he has notice, his knowledge is the knowl- 
 edge of the board. The judge in TJ. S. Ins. Co. u. Shriver, ante, diistinctly disap- 
 proves of these cases, and refers to Story on Agency, among other authorities (se& 
 Story on Ag. §§ 140 b, and 140 c). The case of Commercial Bank v. Cunningham, 24 
 Pick. 2T0, seems also opposed to this principle. In that case one of the directors 
 was also one of those contracting with the corporation. The Court, in deciding that 
 his knowledge of matters concerning the contiact was not notice to the bank, say: 
 " To admit the stockholders or directors of a bank to subject it to liability, or to 
 affect its interests, unless they have authority so to do expressly by its charter, 
 would be attended with the most dangerous consequences, and is certainly not sanc- 
 tioned by any authority." Notice to an individual corporator, if he be not consti- 
 tuted by the charter or by laws an organ of communication betwixt the corporation 
 and those who deal with it, is not notice to it. But knowledge actually imparted to 
 the board by a director at a regular meeting, is notice to the corporation. Bank of 
 Pittsburgh v. Whitehead, 10 Watts, 397 ; see Custer v. Tompkins Co. Bank, 9 Penn. 
 St. 27. 
 
 Where an officer of a corporation is dealing with them in a matter in which his 
 own interest is opposed to theirs, he cannot be deemed to represent them in the trans- 
 action with effect to charge them with knowledge he may possess, but has not com- 
 municated to them, and which they do not otherwise possess, of facts derogatory to 
 the title he conveys. Barnes v. Trenton Gas Light Co. 27 N. J. Eq. 33 ; Commercial 
 Bank v. Cunningham, 24 Pick. 270 ; Winchester v. Baltimore <fe Susq. R. R. Co. 4 
 Md. 231 ; First Nat. Bk. of Hightstown v. Cliristopher, 40 N. J. L. 435 ; Stevenson v. 
 Bay City, 26 Mich. 44 ; Wickersham v. Chicago Zinc Co. 18 Kan. 481. 
 
 In Great Western Railway v. Wheeler, 20 Mich. 419, it is said that as a corpora- 
 tion has no memory, except through its agents and its records, the knowledge of any 
 fact by an agent of a corporation does not constitute notice of such fact to the 
 company after the termination of the agency, where the subject of notice has no re- 
 lation to any usage, system, course of business, or persistently impressive circum- 
 stance upon which a presumption can be raised, that knowledge of it once brought 
 home to an agent must permanently attach to the corporation. Thus, knowledge of 
 the arbitrary mark of a consignee of goods by railroad, possessed by a former officer 
 or agent of the railroad company, such knowledge not having been acquired by any 
 usage, custom, or course of business of the company, is not the knowledge of the com- 
 pany. Notice of such fact should attach to the principal only so long as the knowl- 
 edge remains present in the agency. Where a corporation or its stockholders sue 
 directors for fraudulent management, the knowledge of these directors cannot be 
 set up as the knowledge of the corporation, in order to raise the bar of the statute 
 of limitations to the action. Ryan v. L., A. & N. W. R. B. Co. 21 Kan. 365, 404. 
 
POWERS POSSESSED BY DIRECTORS. 503 
 
 and the assured became bankrupt and died, it was held, on a bill 
 being filed by the bankers to realize their security, that the poli- 
 cies remained in the bankrupt's order and disposition, and that his 
 assignees were entitled to the proceeds, less the premiums paid 
 by the bankers.* 
 
 But, on the other hand, a mere verbal, and it would seem even 
 casual, notification to the directors or other responsible agents of 
 a corporation, provided only that it be during the actual course pf 
 business, is sufiicient.* 
 
 Similarly a corporation, like an ordinary firm or individual, is 
 bound by the representations' and the admissions^ of its directors 
 and other agents, but only while these are acting within their au-^ 
 thority, and in due course of business.' Therefore either the 
 representation or admission must be that of the directors, or a 
 quorum thereof as a body, or if of one director or other agent, 
 some evidence must be given of the authority of such person to- 
 bind the companj'-.* (a) Thus, the law agent of a corporation 
 
 ' Edwards v. Martin, L. R. 1 Eq. 121. 105 ; Deposit Life Assurance Company v. 
 
 " Re Worcester (Bx parte Agra Bank), Ayacouj^h, 6 E. & B. 763. 
 L. R. 3. Ch. 5.55. Compare Ex parte ^ Meux's Exe utor'a Case, 2 De G., M. 
 
 Bonlton, 1 De G. A J. 163, and North & G. 522; Burnes ■.. Pennell, 2 H. L. 
 
 British Insurance Companv v. Hiillett, 1 497. 
 
 Jur. (N.S.) 1263, and A'e Solvency Mutual » jjoifg Case, 22 Beav. 48; Wicol's 
 
 Guarantee Soc. (Hawthorne's Case), 31 Case, 28 L. J. (Ch.) 257, where will be 
 
 L. J. (Ch.) 625. See, also, British and found a most exhaustive judgment by the 
 
 American Telegmph Company v. Albion Lord Chancellor. 
 Bank, L. R. 7 Kx. 119. « Holt's Case, 22 Beav. 48 ; Moody v. 
 
 ' Conybeare v. New Brunswick Rail- Brighton and South Coast Railway Corn- 
 way Corapiiny, 9 H. L. 711 ; National pa, y, 31 L. i. (Q. B.) 54; Re Trinff, <fec. 
 Exchange Company «. Drew, 2 Macq. Railway Company, 3 De G. & Sm. 10. 
 
 (a) PoUeys v. Ocean Ins. Co. 14 Me. 141 ; Franklin Bk. v. Cooper, 36 Me. 179 ; 
 Bank v. Stewart, 37 Me. 619 ; Lime Rock Bk. v. Hewett, 52 Me. 531 ; Bank of Graf- 
 ton, V. Woodward, 6 N. H. 301 ; Pemigewasset Bk. v. Rogers, 18 N. H. 235 ; Low 
 V. Conn. & Pass. R. R. Co. 45 N. H. 370 ; s. o. 46 N. H. 284 ; Cocheco Bk. v. Haskell, 
 51 N. H. 116; Chelmsfork Co. v. Demaresf, 7 Gray, 1 ; Fogg v. Pew, 10 Gray, 409 ; 
 McGenness v. Adriatic Mills, 116 Mass. 177 ; Bk. of Hartford v. Hart, 3 Day, 491 ; 
 Turnpike Co. v. Thorp, 13 Conn. 173 ; Toll Bridge Co. o. Betswortb, 30 Conn. 380; 
 Osgood V. Manhattan Co. 3 Cow. 612 ; First Baptist Ch. v. Brooklyn Ins. Co. 28 N. 
 Y. 153 ; Bk. of Lyons v. Ocean Bk. 60 N. Y. 278 ; Matteson v. N. Y. Cent. R. R. Co. 
 62 Barb. 364; Soper v. Buff. & Roch. R. R. Co. 19 Barb. 310; East River Bk. v. 
 Hoyt, 41 Barb. 441 ; Spelman v. Fisher Iron Co. 56 Barb. 15 1 ; Harvey v. West Side 
 El. R. R. Co. 13 Hun, 392 ; Ins. Co. .,. Woodruff, 26 N. J. L. 541 ; Penn. R. R. Co.'s 
 Appeal, 80 Penn. St. 265; Huntingdon, &c. R. R. Co. v. Decker, 82 Penn. St. 119 ; 
 Harrisburg Bk. v. Tyler, 3 W. & S. 373 ; Bank v. Davis, 6 W. <fe S. 285 ; Crump v. 
 U. S. Mining Co. 7 Gratt. 352 ; Muhleman v. Nat. Ins. Co. 6 W. Va. 508 ; Smith v. 
 N. C. B. B. Co. 68 N. C. 107; Thew v. Porcelain Mfg. Co. 5 S. C. 415 ; Charleston <fc 
 
604 DIRECTORS AND OTHER SIMILAR OFFICIALS. 
 
 cannot bind it by representations as to its position ; ^ nor a fortiori 
 can an ordinary and mere shareholder do so.^ 
 
 In accordance with this principle, corporations having com- 
 mon officials are not necessarily affected through these with 
 knowledge of each other's transactions. (a) Thus, where company 
 A. borrowed of company B., on the security of a mortgage, money 
 to be devoted to a purpose that was ultra vires of company A., 
 and the person who negotiated the loan was a director in both 
 companies, while the solicitor employed was the solicitor of both 
 companies, it was nevertheless held that company B. was not af- 
 fected with notice of the illegality.' 
 
 II. Subordinate officials of corporations have all the authority 
 which either is given them expressly hy their principals, or 
 raised by implication from the -nature of their appointment 
 and consequential duties. 
 
 This is the general rule ,as to agency. The chief questions 
 arise under the latter sections of it. As to this it should be ob- 
 served that a principal cannot even expressly limit his liability by 
 reason of the implied authority so arising, except to such persons 
 as are positively made aware of such limitation ; to all others he 
 
 ' BurnesD. Pennell, 2 H. L. C. 497. sland), L. R. 1 Ch. 161; Re European 
 
 ' Ibid. ; Thompson v. Spier, 13 Sim. Bank, L. R. 5 Ch. 358. Compare Re 
 
 469. Contract Corporation [Ex parte Ebbw 
 
 ' Re Marseilles Extension Railway Vale Company), L. R. 8 Eq. 14 ; Gray v. 
 
 Company {Ex parte Credit Foucier of Eq- Lewis, L. R. 8 Eq. 526. 
 
 SaT. R. R. Co. u. Blake, 12 Rich. Law, 634; Mitchell v. Rome R. R. Co. 11 Ga. 574; 
 Vicksburg R. R. Co. v. Ragsdale, 54 Miss. 200; Sewanee Mining Co. o. McMahon, 
 1 Head, 582; Jones v. Planters' Bk. 9 Heisk. 455; Hogg v. Zanesville Mfg. Co. 
 Wright (Ohio), 139 ; Sturges v. Bk. of CircleTille, 11 Ohio St. 153 ; Toledo, W. & 
 W. R. R. Co. V. Fisher, 13 Ind. 258 ; Heller v. Crawford, 37 Ind. 279; New Eng. 
 Ins. Co. V. ScMettler, 38 111. 171; Chic, B. <fe Q. R. R. Co. v. Coleman, 18 III. 297 ; 
 Mich. Cent. R. R. Co. v. Gougar, 65 111. 503 ; American Express Co. v. Gilbert, 57 
 111. 468 ; Farmers' Bk. v. Troy Bk. 1 Dougl. (Mich.) 457 ; Kalamazoo Mfg. Co. v. Mc- 
 Alister. 36 Mich. 327; Troy Ins. Co. v. Carpenter, 4 Wis. 20; Hazleton v. Union Bk. 
 32 Wis. 34 ; Howe Machine Co. v. Snow, 32 Iowa, 433 ; Northrup v. Miss. Ins. Co. 
 47 Mo. 436 ; Kennedy v. Otoe Nat. Bk. 7 Neb. 59 ; Union Mining Co. v. Rocky Mt. 
 Nat. Bk. 1 Col. 531 ; s. o. 2 Col. 248 ; Ibid. 565 ; Green v. Ophir Mining Co. 45 Cal. 
 622. As to declarations and acts of municipal officers, see Dillon on Mun. Corps. 
 §§ 176, 242. 
 
 (a) See Fulton Bank v. N. Y. & Sharon Canal Co. 4 Paige., 126 ; Miller v. Illinois 
 Central R. R. Co. 24 Barb. 312 ; New Hope & Del. Br. Co. c. Phoenix Bk. 3 N. ?. 
 156 ; Goodin v. Canal Co. 18 Ohio St. 169. 
 
POWERS POSSESSED BY DIRECTORS. 505 
 
 will be liable, however much, the agent may have exceeded bis 
 explicit instructions.^ 
 
 III. Agents who heep within their authority are entitled to he 
 indemnified for all contracts, and for such torts as did 
 not appear to be so. 
 
 This is the broad principle whereby an agent is protected. 
 Provided he does not exceed the authority given liim by his prin- 
 cipal, and provided he proceeds with due care and caution, and in 
 the regular course of business, he is entitled to be repaid all losses, 
 expenses, and damages by hira incurred, whether in respect of 
 contracts entered into, or torts committed in the course of his em- 
 ployment as such agent.^ 
 
 As to torts, the principle is, that, though there can be no in- 
 demnity between tort-feasors, yet if an agent does an act which 
 may be right, and he has no reasonable grounds for believing the 
 contrary, and it turns out to be a tort, then he must be recouped 
 for the expense, if any, thereby caused him.' 
 
 The right to indemnity applies to governing bodies as to other 
 varieties of agents, and perhaps with greater force, owing to the 
 special fiduciary relationship existing between them and their 
 principals. It also applies to them as being, and in so far as they 
 are, trustees, in the especial way in which it applies to all trustees 
 and quasi trustees. They have not merely a right to indemnity, 
 but actually a lien upon the subject of their trust for expenses 
 properly incurred. This, however, will not be so construed in 
 the case of the shares held by a trustee for a company, as to re- 
 lieve him from liability thereon with respect to outsiders ; it is 
 purely a matter as between him and his co-shareholders.'' 
 
 ' See Ramazotti v. Bowring, 1 C. B. Chapman v. Shepherd, L. R. 2 C. P. 228 ; 
 (N. S.) 851 ; 29 L. J. (C. P.) 30; Hey- Dugdale v. Levering, L. R. 10 C. P. 196. 
 worth ». Knight, 17 C. B. (N. S.) 298; As to negligence disqualifying the agent, 
 Edmunds v. Bushell, L. R. 1 Q. B. 97. In see Capp v. Topham, 6 East, 392. As to 
 Smith V. Hull Glass Co. 11 C. B. SQ?, expenses incurred out of the ordinary 
 92S, Maulp, J., thus observed: " The case course of business, see Wolfs;. Horn- 
 differs in no respect from the ordinary castle, 1 B. & P. 316 ; Sentance v. Haw- 
 one of dealings at a shop or counting- ley, 13 C. B. (N. S.) 4,')8 ; Westropp v. 
 house : thi customer is not called upon to Solomon, 8 C. B. 345. 
 prove the character or the authority of * Betts v. Gibbins, 2 A. 4 E. 67 ; 
 the shopman or clerk with whom he Rawlings v. Bell, 1 C. B. 951. 
 deals ; if he is acting without or contrary ' See Chapman and Barker's Case, L. 
 to the, authority conferred upon him by R. 3 Eq. 361; Easum's Case, 15 Sol. J. 
 his employers, it is their own fault." (Alb. arb.) 750; Gray's Case, 1 Ch. D. 
 
 'Biyley v. Wilkins, 7 C. B. 886; 668. 
 
CHAPTER V. 
 
 ACTS INTRA VIEES, BUT INFORMAL. 
 
 Section I. — Foemalities to the Obseevance of which Ceetain 
 Parties aee Unable to See. 
 
 For its own protection a corporation may, and generally does, 
 require that the engagements into which it enters, and the acts 
 which it does, shall be accompanied with certain formalities, just 
 as the law requires its contracts to be under seal. Such precau- 
 tions are very necessary, as a security not only to the corporation 
 as a whole, but also to the individual members thereof. "Without 
 them the former might, by the incompetence or rashness of its 
 agents, or by the fraud or sharp dealing of third parties, become 
 engaged in improvident or unwise speculations, in which, as the 
 inevitable consequence, the latter would also be involved. Without 
 them, too, there would be no certain test of Hhe participation or ac- 
 quiescence of the corporation in any given transaction. It is an in- 
 tangible entity, it can acquire rights or incur liability only through 
 the medium of agents. What are the circumstances by which to 
 determine whether persons, pretending to act on behalf of the cor- 
 poration, are really and legally so acting, and are its agents in that 
 behalf ? These circumstances are the employment of such persons 
 by the corporation, and the use by such persons of the formalities 
 imposed, (a) 
 
 (a) The directors of a company, as has been shown {ante, pp. 465 et seq. notes), are 
 general agents for the management of its ordinary affairs. The by-laws and resoln- 
 tions respecting their general powers are to be considered ia the light of the power 
 of attorney or instructions given to the agent of an indiyidual. In all cases of 
 principal and agent, care must be taken " carefully to distinguish between the au- 
 thority given to the agent and the private instructions given to him as to his mode 
 of executing that authority. For, although where a written authority is^Icnown to 
 esdst, or is, by the very nature of the transaction, presupposed, it is the duty of 
 persons (JeaBng with the agent to make inquiries as to the nature and extent of such 
 authority, and to examine it ; yet no such duty exists to make inquiries as to any 
 private letter of instructions from the principal to the agent; for such instructions 
 may well be presumed to be of a secret and confidential nature, and not intended to 
 
FORMALITIES. 507 
 
 These formalities are usiially arranged under the three heads 
 of discretionary, directory, and imperative. Discretionary for- 
 
 be divulged to third persons. In like manner, If the written authority apparently 
 justifies the act, it is no objection that the agent has secretly applied his authority to 
 other purposes than those for which it wag given. Indeed, it may well be doubted 
 whether in these respects there is any solid distinction between the case of a special 
 authority to do a particular act, and a general authority to do all acts in a particular 
 business. Each includes the usual and appropriate means to accomplish the end. 
 In each case, the agent is apparently clothed with full authority to use all such usual 
 and appropriate means, unless upon the face of the instrument a more restrictive au- 
 thority is given or must be inferred to exist. In each case, therefore, as to third 
 persons innocently dealing with his agent, the principal ought equally to be bound 
 by the acts of the agent executing such authority by any of tliose means, although 
 he may have given to the agent separate, private, and secret instructions of a more 
 limited nature, or the agent may be secretly actin;; in violation of his duty." Story 
 on Agency, § 73. While, however, in extraordinary matters at least, a prudent per- 
 son, when dealing with the officers of a company, will require an inspectioiv of the 
 resolutions and by-laws, by means of which the authority for their acts is conferred, 
 yet in such dealings as are within the apparent scope of the usual powers of such 
 officials, such requirements would be inconvenient, if not impossible, in the transac- 
 tion of the ordinary business of the corporation, and tlierefore may safely be omitted. 
 The charter of the company rests on a different basis, and persons dealing with offi- 
 cers are bound by the restrictions contained in it ; for any act done against its express 
 provisions, would not (subject to the effect of acquiescence, ratification or estoppel, 
 where such principles could be legally invoked), bind the party contracting. The 
 resolutions conferring authority, or the by-laws, may be in some sense secret or inac- 
 cessible to those transacting business with the corporation, but the charter, being a 
 public law, is open to the examination of all. In addition to these rules, another is 
 applicable, namely, that the law looks to substance and justice, and not to mere form. 
 Therefore, the mode of exercise of powers, so long as it does not substantinlly affect 
 the rights of the corporation, will not be considered, where the party contracting has 
 acted in good faith and without actual knowledge of the lack of formality ; and, in- 
 deed, where the contract is not executory, even this last element will not be allowed 
 to enter, so as to defeat a just claim. Moreover, where agents of corporations are 
 acting within the apparent scope of their powers, every presumption will arise as to 
 their acts being authorized by all needful formalities by the lawfully constituted cor- 
 porate body; and where the acts are such as are usually performed by like officials, 
 or where the person performing them has, to the knowledge of the corporation, done 
 similar acts for a considerable period, and for the benefit of the corporation, it wiU 
 be bound by such acts, though informal in some regard, prescribed by the by-laws or 
 by resolution. Selden, J., in Bissell v. M. S. & N. I. R. R. Go. 22 N. Y. 258, 2»1 (Sept. 
 1860), observes : " There are, in England, a class of corporations organized under 
 general laws, which do not specify the manner in which the objects and purposes of 
 the incorporation are to be effected, but leave this to be arranged by a deed of uttle- 
 ment between the corporators themselves. By this deed, the companies prescribe 
 and limit the powers and functions of their various officers, so far as tliey are left 
 uncontrolled by the statute and the general laws of the kingdom. Now it is plain 
 
608 ACTS INTRA VIRES, BUT INFORMAL. 
 
 malities are, as the term imports, such as the director or other 
 agents may adopt or omit at their option. They are intended to 
 
 that there is no analogy between an act which merely transcends the limits of this 
 deed of settlement, and one which violates the provisions of this organic act. The 
 deed of settlement is the private act of the shareholders ; and its provisions have 
 respect solely to their private interests. It is a mere power of attorney, and bears 
 no resemblance to a law enacted with a view to the interests of the pnblio. There is 
 evidently no question of public policy involved, when the question is, whether the 
 officers have exceeded the authority conferred by this deed." And he therefore ex- 
 cludes from the doctrine of ultra vires, properly so called, acts which simply exceed 
 the powers conferred by the deed of settlement upon the officers as the agents of the 
 shareholders. "The Companies Act, 1862," however, now provides for the registra- 
 tion of the "memorandum," and of the "articles of association" (sec. 17), and that 
 (sec. 1Y4) every person may inspect the documents so registered, and procure copies. 
 Buckley, pp. 15, 345. The same act (sec. 65) provides, that the business of the com- 
 pany shell be managed by the directors, subject to such regulations as may be pre- 
 scribed by the company. Mr. Buckley (p. 427), states the English rule thus : " Al- 
 though, alter much difference of opinion, it must be taken to be settled that persons 
 dealing with a registered company are bound to acquaint themselves with the limits 
 imposed by the deed of settlement or articles of association, on the authority of the 
 directors (Ernest v. Nichols, 6 H. L. C. 401,419 ; Fountaine v. Carmarthen Railway 
 Co. L. E. 5 Eq. 316, 322), yet strangers to the company dealing with directors cannot 
 be affected by by-laws, which may under the articles be from time to time made and 
 varied by the directors, unless notice of such by-laws is proved (Royal Bank of India's 
 Case, L. R. 4 Ch. 252)." See Smith v. Smith, 62 111. 493. That some of the provis- 
 ions of the charter and by-laws may well be deemed directory to the officers, and not 
 conditions, without which their acts would be utterly void, will scarcely be disputed. 
 "What are to be deemed such provisions must depend upon the sound construction of 
 the nature and object of each regulation, and of public convenience, and apparent 
 legislative intention. If a regulation be merely directory, then any deviation from 
 it, though it may subject the officers to responsibility both to the government and to 
 the stockholders, cannot be taken advantage of by third persons. Bank of U. S. v. 
 Dandridge, 12 Wheat. 64, 89 ; referring to U. S. v. Kirkpatrick, 9 Wheat. 720, and IT. 
 S. V. Van Zandt, 11 Wheat. 1 84 ; see, also. Bank of Northern Liberties v. Cresson, 12 
 S. & R. 306 ; Jackson Ins. Co. a. Cross, 9 Heisk. 283. A corporation cannot vary from 
 the object of its creation, and persons dealing with a company must take notice of 
 whatever is contained in the law of its organization, but the corporation will be held 
 liable in those cases where it acts within the range of its general authority, but faUs 
 to comply with some formality or regulation which it should not have neglected, but 
 which it has chosen to disregard. Zabrislde v. Cleveland, C. & C. R. R. Co. 23 How. 
 381. In Salem Bank v. Gloucester Bank, 17 Mass. 1, it is said, that the duties of 
 directors and officers " are pointed out by statute, or prescribed in the by-laws which 
 are the promulgated will of the company," and again, that the authority of the agents 
 of corporations " is created by statute, or is matter of record in the books of the cor- 
 poration, to which all may have access who have occasion to deal with the officers." 
 See Bank of Augusta v. Earle, 13 Pet. 587 ; Pearce v. M. & I. R, R. Co. 2 1 How. 441 ; 
 Union Mutual Fire Ins. Co. «/. Keyser, 32 N. H. 313. As to what is merely formal, 
 
FORMALITIES. 509 
 
 serve merely as evidence, and their adoption or omission does not 
 in the least affect the validity of the act to which they relate.* 
 Directory formalities are intended to protect the corporation 
 against its governing members, but not against its creditors. They 
 differ from discretionary in that the directors can be compelled by 
 the corporation to make use of them in exercising their powers, 
 and may, perhaps, be liable to the company for any damage occa- 
 sioned by the omission.* Such acts may be improper as between 
 the corporation and its directors, and may constitute breaches of 
 trust on the part of the latter, but as these formalities are. not 
 imperative, their presence or absence does not affect the legality 
 of transactions entered into by persons unaware of the want of 
 them. Imperative formalities are essentially requisite for the legal 
 validity of the acts to which they are incident. Without them — 
 very peculiar and special occurrences apart — the acts contem- 
 plated will not be legally done. 
 
 ' See Re Royal Britiah Bank (Mcol's = ggg p^ Page- Wood, V.-C, L. R. 5 
 
 Case), 3 De G. & J. 387 ; 28 L. J. (Ch.) Eq. 323. 
 
 2 57. 
 
 see Johnson v. Jones, 4 Barb. 369. A provision in a bank charter, conferring upon 
 the directors power to make and prescribe such by-laws, rules and regulations as 
 shall be needful, touching " the time, manner and terms upon which discounts and 
 deposits shaU be made," will be construed as giving to the directors power to mate 
 by-laws, Ac, to operate and control the internal conduct of the business of the bank, 
 merely, and to restrain and direct its own officers and servants in the management of 
 its affairs, and not to affect the public at large, or the rights and interests of third 
 persons. Seneca County Bank v. Lamb, 26 Barb. 595 ; Mechanics' <fe Farmers' Bk. v. 
 Smith, 19 Johns. 115. Wild v. Bank of Passamaquoddy, 3 Mason, 606, holds that a 
 corporation must show a restriction preventing its cashier from doing the ordinary 
 acts of such officer, as transferring and indorsing notes, and that the party who has 
 dealt with him had notice thereof. See State v. Commercial Bank, 6 S. A M. 237 ; 
 East River Nat. Bk. ■;;. Gove, 57 N. Y. 597 ; Spelman v. Fisher Iron Co. 56 Barb. 151. 
 Where by-laws are not referred to in the policy of insurance, the insured is not bound 
 to take notice of anything therein. Kingsley v. New England Ins. Co. 8 Cush. 403. 
 It is to be presumed that acts which an officer of a corporation usually and custom- 
 arily performs in its behalf are authorized by the directors. Fleckner ii. Bk. of U. S. 
 8 Wheat. 338; Elwell v. Dodge, 33 Barb. 336. And that directors are acting law- 
 fully in what they do. Knox Co. v. Aspinwall, 21 How. 539 ; Zabriskie v. Cleveland, 
 C. & C. R. R. Co. 23 How. 381 ; De Voss d. Richmond, 18 Gratt. 338. See ante, 
 pp. 470-2, 474. 
 
610 ACTS INTRA VIKES, BUT INFORMAL. 
 
 Section II. — Dibectoet Foekalotes. 
 Sub-Section I. Persons hound to see to them. 
 
 In treating of these .formalities, since they are not absolutely 
 essential, it is most convenient to consider separately the persons 
 who are, and the persons who are not, bound to see that they are 
 duly observed. With respect to the former class, they become, in 
 a manner, imperative. Generally, too, as practical matters, it is 
 convenient to consider them under two distinct heads, or rather 
 as having reference to two distinct matters : 
 
 First, in so far as they concern parties entering into contracts 
 with the corporation ; 
 
 Secondly, in so far as they affect the acts, other than contracts, 
 of the corporation or its officials. 
 
 Now it cannot be too carefully borne in mind that the exact 
 point to be determined is the effect of contracts undertaken, 
 transactions and other engagements entered into, and torts and 
 other acts committed and done, whether by a corporation itself, 
 or more usually by the agents thereof, in accordance with the 
 powers actually given them by the instruments of incorporation, 
 which matters are deficient in some formality prescribed, though 
 not made absolutely essential, by these instruments ; or, if done 
 by agents, are in excess of the powers as subsequently Jimited 
 by the private resolutions of the corporation. The point has 
 nothing to do with acts ull^a vires, using this term in its proper 
 meaning of outside the powers of the corporation as a whole. 
 What the corporation cannot do, a fortiori its agents cannot en- 
 gage in so as to bind it, and any questions as to formalities will be 
 irrelevant. In all questions of this kind there must be considered, 
 first, what are the powers, express or implied, of the corporation 
 or of the agents concerned in respect of the given contract, trans- 
 action, or other proceeding, sucli being admitted to be within the 
 purview of the corporation enterprise or "scope," or connected or 
 incidental thereto ; then, secondly, this being admitted, whether 
 those powers have b3en duly exercised; and, thirdly, if not,^ 
 whether the formality omitted is essential or not. 
 
DIRECTORY FORMALITIES. 511 
 
 I. The want of a directory formality cannot he set up hy, 
 hut may he set up against, a person hound, to see to its 
 ohservamoe. 
 
 Certain persons there are, who, from their position, will be 
 "presumed to know, and upon whom consequently the law throws 
 the duty of knowing whether or not formalities have been ob- 
 served. 
 
 If they do not see to this, the law will not allow them to take 
 advantage of their own carelessness so as to relieve themselves 
 from liability. Thus a director who had transferred shares to a 
 person who already held as many shares in the company as he was 
 allowed by the deed of settlement, was held a contributory.^ So 
 an auditor who had transferred shares without seeing all formali- 
 ties duly observed, was held a contributory.^ 
 
 On the other hand, the absence of the formality may be set up 
 against these persons by the corporation, or those claiming under 
 it, such as creditors or liquidators.' 
 
 The last two cases are equally illustrations of this. So, more 
 than once, directors have not been allowed debentures and other 
 securities not duly or completely registered.^ The decision was 
 the same where solicitors employed for one particular purpose did 
 not obtain the due registration of a charge given them for costs.' 
 And, again, where money had been advanced by the company's 
 solicitors upon an informal resolution, giving them a lien upon a 
 house, the court refused to let them into possession of the house.® 
 What persons are bound to see to observance of formalities ? 
 Directors, it has just been seen, and solicitors, are under this ne- 
 cessity ; but bankers are not.' Nor are ordinary mortgagees or 
 
 ' Newcastle Marine Ins. Co. {Ex parte Though where mortgages given to di- 
 
 Brown)/ 19 Bear. 97. rectors and not registered had been real- 
 
 ^ Newcastle Marine Ins. Co. {Ex parte ized, the directors were not ordered to re- 
 Henderson), 19 Beav. 107. pay the proceeds, iJe Borough of Hack- 
 
 ' Except when and so far as an in- ney Newspaper Co. 3 Ch. D. 669. Com- 
 
 formal transaction may have been con- pare British Prov. Ass. Co. 9 Jur. (N. S.) 
 
 firmed by the acquiescence of the party 1308. 
 
 entitled to open it. Taylor v. Hughes, 2 J. ^ Ex parte Valpy and Chaplin, L. E. 
 
 & Lat. 24 ; Bargate v. Shortridge, 5 H. 7 Ch. 289. 
 L. C. 297 ; tmipost, subs. iii. " General Provident Ass. Co. 38 L. J. 
 
 * Re Wynn Hall Coal Co. L. R. 10 (Ch.) 390; W. N. 1869, p. 58. 
 Eq. 616; Re Native Iron Ore Co. 2 Ch. i Re General Prov. Ass. Co. {Ex parte 
 
 D. 346, where the debentures were reg- National Bank), 7 L. R. 14 Eq 598 ; this 
 
 iatered, but the property charged was not was, however, a mortgage by deposit, 
 fully described. 
 
512 ACTS INTRA VIRES, BUT INFORMAL. 
 
 ehargees, even though they are shareholders.^ Whether an auditoi: 
 is thus liable is doubtful. In one case, where he had transferred 
 his shares irregularly, he still remained a contributory ; ^ in another, 
 where there was neither an application for shares by, nor notice of 
 allotment to, an auditor, but there was a de facto allotment, he was 
 deemed a shareholder;' but in a third, where the circumstances 
 were similar, but the auditor declared he knew nothing about the 
 shares, he was not liable.^ The case of a surveyor to a building 
 society may be mentioned, where there was an allotment, but he 
 was not made a contributory.' 
 
 But what is the precise answer ? Does it depend upon the fact 
 that the parties so bound are officials ? Apparently not. Unques- 
 tionably there are many circumstances under which officials will 
 be conclusively presumed to know what comes within their ordi- 
 nary course of official duty, and against other persons, corporators 
 or not, such presumption will not be raised.' But it is submitted 
 that this is not the real principle which constitutes the liability ; 
 that the presumption of knowledge and the consequent liability 
 arise from general circumstances, not from any peculiar position of 
 an individual ; that the correct view is : 
 
 II'. Where a person can reasonably hs presumed to know 
 whether or not a formality is observed, he is iound to see 
 that this is done. 
 
 The principle thus expressed, becomes clearer in statement, 
 though, perhaps, not easier in application ; and the liability of 
 directors and other officials is but one branch or application of it. 
 They are liable for non-observance of official formalities, because 
 they are by law presumed to do and attend to what is their duty. 
 On the other hand, no such presumption can ordinarily be raised 
 as against private members and outsiders. Therefore, these ques- 
 tions usually affect only the governing portion and the officials of a 
 corporation. Certain of them, however, equally concern the pri- 
 vate members. Such, for instance, are all the general regulations 
 prescribing the formalities or conditions of the transfer or aban- 
 
 ' Re General South Am. Co. 2 Ch. " Land Shipping Colliery Co. 18 L. T. 
 
 D. 337. (N. S.) 786. 
 
 ^ Note 2, p. 511 . * Empaon's Case, L. R. 9 Eq. 697. 
 
 8 Wheateroft's Case, 29 L. T. (N. S.) . « See last two notes. 
 824. 
 
DIRECTORY FORMALITIES. 513 
 
 •donment of shares ; ^ and whether these regulations be expressly 
 laid down in the constating instruments of the company, or have 
 become established merely by custom and uniform usage.^ 
 
 Lastly, as another result of the general principle, whatever be 
 the nature of these formalities, whatever be the mode in which 
 they have been created and rendered in a manner essential to the 
 validity of the transactions to which they relate — provided their 
 existence can be clearly proved and brought home to the knowl- 
 edge of the persons engaged in such transactions, e. ff., private 
 members disposing of their interests — they must be duly ob- 
 served, or their absence waived by the consent, express or tacit, 
 of the whole corjioration. These formalities are generally the 
 execution of the deed of transfer by the transferee, and the reg- 
 istration of the transfer;' and sometimes also the obtaining of 
 the consent of the directors or other officials to the transfer ; and 
 it is the duty of the transferor to see that everything is done 
 modo et forma. 
 
 But, nnder such circumstances, if he has taken all the precau- 
 tions that an ordinary man of business would take to secure this, 
 and there has been a non-observance of some requisite through 
 the default, carelessness,* or delay ^ of the corporation, or its 
 responsible officers, he will be exempted from liability ; ^ though 
 even in such case there may be countervailing laches on his part, 
 ^nch as to debar him from the relief to which, otherwise, he 
 would be entitled.' 
 
 It must also not be forgotten that a person cognizant of, and 
 -a party to, the want of a formality will, upon the ordinary prin- 
 ciples of equity, be estopped by his admission, and be prevented 
 
 ' See, especially, Re Biitiah Provident, Caae), L. R. 4 Oh. 768 ; and Hill's Case, 
 
 Ac. (Gradj-'s Case), 32 L. J. (Uh.) 327 ; Re L. R. 4 Ch. 769 n. 
 
 ■Overend.Gurney and Co. (Walker's Case), ' iJe Hercules Ins. Co. (Lowe's Caae), 
 
 L. R. 2 Eq. 554 ; Re Contract Corp. L. R. 9 Eq. 589. 
 
 {Head's Case), L. R. 3 Eq. 84 ; Bieder- * Always provided that the question 
 
 man ». Stone, L. R. 2 C. P. 504 ; Re is really one of form, not of power. This 
 
 Merchants' Co. (Heritage's Case), L. R. 9 caution must be Tei;y carefully remem- 
 
 Eq. 6 ; Re European Central Ry. Co. (Hoi- bered. See Cartmell's Case, L. R. 9 Ch. 
 
 •den's Case), L. R. 8 Eq. 444. Compare, 691, where the member was liable, not 
 
 also, Spackman v. Evaus, L. R. S H. L. because of informality, but because of 
 
 171, and the cases there cited. the absence of the power. 
 
 ' ife Imperial Mercantile Credit Assoc. ''Be Anglo-Danubiaa Steam Kar., <fec. 
 
 (Marino's Case); L. R. 2 Ch. 596. Co. (Walker's Case), L. R. 6 Eq. 30. 
 
 ' See cases cited in the last two notes. Compare Yelland's, Case, 5 De G. ifc 8m. 
 
 * See cases already cited, and, also, 395. 
 Re Joint-Stock Discount Co, (Fyfe's 
 
 33 
 
614 ACTS INTRA TIRES, BUT INFORMAL. 
 
 availing himself of such inforinalitj.H») This, however, applies^ 
 to both sides. It may be laid down as a general principle, that if 
 one party to a transaction, e. g., a company forfeiting shares, will- 
 fully omits a formality, it is for the other party to say whether or 
 not he will hold the former to the informal transaction.' 
 
 Sub-Section. II. Persons not hound to see to Formalities. 
 
 The question next arises as to who are not bound to look after 
 the due observance of formalities. It is submitted that the only 
 rule which can be laid down upon this point is that enunciated 
 in proposition II. This proposition makes the liability de- 
 pend upon the knowledge, which, again, is a question of fact, and 
 never a conclusive presumption. It has, however, often been 
 considered and laid down that there are parties who must be pre- 
 sumed unable to see to or to secure the due observance of formal- 
 ities imposed by a company upon its own oiBcials, and in favor o£ 
 whom, consequently, the absence of such formalities will be ex- 
 cused, whenever they personally have acted with hona fides. 
 And it is further stated that it is different with directors and 
 others in a similar position ; that they are affected with notice of 
 the required formality, and of the want of it when absent, when- 
 ever the matter comes within their own duties, and, therefore, no 
 acts in which they participate, and which ought to be transacted 
 in a particular manner or under particular arrangements, will, 
 as between themselves and the company, be binding upon the 
 latter.* 
 
 But this contention seems entirely rebutted by the cases 
 which have decided that even in matters of negligence or derelic- 
 tion of duty, it is not the mere fact that a person is a director or 
 member of a group of officials, who have collectively been guilty 
 of improper conduct, which will render each individual member 
 
 > Cromford, Ac. Ry. Co. v. Lacey, 3 Y. parte Brown), 19 Beav. 97, and Ex parte 
 
 <fc J. 80. Henderson, 19 Beav. 107; Swansea Dock 
 
 ' Phosphate of Lime Co. (Austin's Co. v. Levien, 20 L. J: (Ex.) 447; British 
 
 Case), 24 L. T. (N. S.) 932. Provident Ass. Co. v. Norton, 8 N. R. 
 
 ' See Newcastle Marine Ins. Co. {Ex 147 ; 9 Jur. (N. S.) 1308. 
 
 (a) See Mott v. U. S. Trust Co. 19 Barb. 569 ; Bates v. Bk. of Alabama, 2 Ala. 
 461 ; Allen v. Freedman's Trust Co. 14 Fla. 418 ; Littlewort v. Davis, 50 Miss. 403 ; 
 Jackson Ins. Co. v. Cross, 9 Heisk. 283 ; Union Mining Co. v. Rocky Mt. Nat. Bk. a 
 Col. 248 ; 8. 0. 96 U. S. 640. 
 
DIRECTORY FORMALITIES. 515 
 
 thereof amenable to proceedings to recover satisfaction, but the 
 fact that he had knowledge, actual or constructive, of the wrong- 
 ful act.^ If this applies to actual proceedings, a fortiori, it does 
 to the incidents and accidents thereof. And in Bush's case ^ the 
 informality was one of which the retiring director was cognizant, 
 and yet he was not held bound to see to it. 
 
 III. When any transactions of a corporation ought to he, hut 
 are not, accompanied with certain formalities, such for- 
 malities heing directory only and not essential, the said 
 transactions will he hinding upon the corporation as re- 
 gards persons dealing with it, not having notice, express or 
 implied, of the need of the formality in question. 
 
 The leading case at common law is Eoyal British Bank v. 
 Turquand.' (a) By the deed of settlement of a joint-stock com- 
 pany, the directors were authorized to borrow, under the common 
 seal of the company such sums as should, from time to time, by 
 a resolution passed at a general meeting of the company, be au- 
 thorized to be borrowed, not to exceed a certain sum. At a gen- 
 eral meeting the directors were authorized to borrow such sums 
 and at such interest and for such periods as they might deem ex- 
 pedient, in accordance with the provisions of the deed of settle- 
 ment and the act of parliament. The directors having borrowed 
 £1,000 on bond, under the common seal of the company, it was 
 held that the company must repay the amount, whether the reso- 
 lution was or was not a sufficient authority to the directors to 
 borrow, for though parties dealing with joint-stock companies are 
 bound to take notice of any limitation of the authority of the di- 
 rectors in the deed of settlement, yet where the directors, as in 
 this case, have power to borrow, the lenders of the money have a 
 right to presume that the company, which put forward their di- 
 
 ' Land Credit Co, of Ireland v. Lord mining company borrowed money and 
 
 Fermoy, L. R. 5 Ch. 763 ; Joint-Stock mortgaged the company's property with- 
 
 Discount Co. v. Brown, L. R. 8 Eq. 381. out first calling an extraordinary meeting 
 
 '^ L. R. 6 H. L. 37. of the shareholders, as ought to have been 
 
 3 6 E. <fe B. 827 ; 26 L. J. (Q. B.) 317 ; done, and the shareholders did not subae- 
 
 Colonial Bank of Australia v. Willan, quently ratify, it was held that the lender 
 
 L. R. 5 P. C. 417. So in Jie Tyson's Reef was justified in assuming the meeting to 
 
 Co., Ex parte Holmes, 3 W. W. <fc A. B. have been called, and that he could re- 
 
 ( Victoria) 162, where the directors of a cover. 
 
 (o) See Bisaell v. M. S. & N. I. R. R. Co. 22 N. Y. 268, 292. 
 
516 ACTS INTRA VIRES, BUT INFORMAL. 
 
 rectors as authorized to borrow, have taken every step requisite 
 to empower them to do so. The decision was based upon the 
 short ground, that, apart from any question as to the validity or 
 sufficiency of the resolution, or even as to the existence of such a 
 resolution, the company was liable to persons dealing ho7ia fide 
 with the directors, not knowing that the latter were exceeding 
 their powers. 
 
 Prince of Wales Life Assurance Co. v. Harding ' («) is very 
 similar. The deed of settlement of the plaintiff company pro- 
 vided that " the common seal shall not be affixed to any policy, ex- 
 cept by an order signed by three directors and countersigned by 
 the manager." The seal was affixed to a policy without the order 
 first obtained, but in other respects in accordance with the deed 
 of settlement. It was held that this provision was directory 
 merely, and that consequently such policy was not void, the as- 
 sured having been honafide ignorant of the informality. 
 
 Re Athenaeum Life Assurance Co.' {Ex parte Eagle Co.),* is 
 the leading decision in chancery. This was a claim against the 
 Athenaeum Assurance Society on account of an agreement by the 
 directors to grant a policy — not one actually granted. In the 
 course of his judgment, Page-Wood, Y.-C, pointed out very clearly 
 the principle upon which these decisions depend. " There is, no 
 doubt, an important distinction to be drawn, and it is drawn in the 
 case of the Eoyal British Bank v. Turquand, between that which 
 on the face of it is manifestly imperfect when tested by the re- 
 quirements of the deed of settlement of the company, *and that 
 which contains nothing to indicate that those requirements have 
 not been complied with. Thus, where the deed requires certain 
 instruments to be made under the common seal of the company, 
 every person contracting with the company can see at once 
 whether that requisition is complied with, and he is bound to do 
 so ; but where, as in the case I have last referred to, the condi- 
 tions required by the deed consist of certain internal arrange- 
 ments of the company, for instance, resolutions of meetings and 
 the like, if the party contracting with the directors finds the acts 
 
 ' E., B. <feE. 183, 21 L. J. (Q. B.) 297. Gordon v. Sea, Fire, Ac. Co. 1 H. <t N. 
 •■' 4 K. <fe J. 649; 21 L. J. (Ch.) 829; 699; 26 L. J. (Ex.) 202. 
 
 (o) See Bt. of United States v. Dandridge, 12 Wheat. 64 ; Zabriskie v. Cleyeland, 
 (fcc. R. R. Co. 23 How. 381. 
 
DIRECTORY FORMALITIES. 517 
 
 to he within the scope of their power under the deed, he has a 
 right to assume that all such conditions ha/oe heen complied vnth. 
 In the case last supposed, lie is not bound to inquire -whether the 
 resolutions have been duly passed or the like, otherwise he would 
 be bound to go further back, and to inquire whether the meetings 
 have been duly summoned, and so ascertain a variety of other 
 matters, into which, if it were necessary to make such inquiry, it 
 would be impossible for the company to carry on the business for 
 which it is formed." He accordingly allowed the claim, ground- 
 ing his decision on the fact that though the deed of settlement 
 required (section 28) every policy, &c , to be under the hands of 
 not less than three of the directors, and sealed with the common 
 «eal of the society, yet " in every other contract " it was sufficient 
 if there should be " a reference to these presents, and a proviso 
 limiting, «fec.," which had actually been inserted in the instrument 
 upon which the claim was based. The Vice-Chancellor said : " In 
 the case before me I find in the deed of this society the 28th section, 
 distinguishing between certain completed instruments which it re- 
 quires to be under the common seal of the society, and other 
 contracts which, like the former, are to be satisfied out of the 
 funds of the society, but as to which there is no such requisition 
 with reference to the manner in which they are to be executed, 
 I find in the 38th section a power given to the directors, wherever 
 the deed is silent, to do everything which is necessary for carrying 
 on the business of the company ; and I then find a contract, exe- 
 cuted by three of the directors, which is a reasonable contract 
 and within the precise scope and object of the society, viz.,, a con- 
 tract to issue a policy in the very form which the society was 
 constituted for the purpose of issuing.^ Under these circum- 
 stances it appears to me that the contract in question is one into 
 which the directors were authorized to enter, and which, upon 
 bill filed, the society would have been decreed to perform. I 
 therefore hold that the debt is established, if not at law, as a good 
 equitable debt." {a) 
 
 ' Compare, per Page Wood, V.-C, in L. R. 6 Eq. 322. 
 
 (a) Third parties dealing with a corporation nre bound to know the law ; that is, 
 they are bound to take notice of the extent of its powers, but they have a right to 
 assume, in the absence of anything suggesting inquiry, that it has proceeded regu- 
 larly in the execution of its powers. It is not necessary to inquire or decide whether 
 
518 ACTS INTRA VIRES, BUT INFORMAL. 
 
 Next to be considered are directory formalities as affecting the 
 validity of the other proceedings of corporations. 
 
 First. There are certain matters, torts and crimes, and perhaps 
 some others, with respect to which no questions as to formalities 
 can arise. 
 
 Secondly. Another class, comprising most of the decisions, 
 relate to the transfer or acquisition of interests, shares, stock, [a) 
 or other rights, in the corporate property and privileges; and 
 these have just been treated of. 
 
 Thirdly. Other decisions relate to internal matters. Of these 
 some have turned upon the making of calls, the forfeiture of 
 shares, and the like. The regulations perhaps require the calling 
 of meetings, either of the corporation, or of its officials, or the 
 giving a certain length of notice before such acts can be done. 
 Kequisites of this description, will probably, in every instance, be 
 adjudged to be directory merely, not prejudicing innocent parties, 
 but binding those acquainted with them, although, of course, 
 waivable at the option of all parties. Thus, where a company's 
 deed of settlement provided that twenty-one days' notice should 
 be given to the shareholders who were in arrears of calls, and that 
 if payment were not made within such time, the directors might 
 then declare the shares forfeited ; and the directors sent a notice 
 saying that certain shares would be forfeited, if payment were not 
 made within twenty-one days, instead of actually waiting till the 
 expiration of this time, and then forfeiting the shares, such for- 
 feiture, the shareholder having acquiesced, and nothing more hav- 
 ing been done, was held good.^ This case, however, probably de- 
 pends npon the fact that both parties concurred, and that the 
 company were bound by their subsequent acquiescence ; it would 
 
 ' Re Home Counties, <feo. Ass. Co. (Wollaston's Case), 4 De G. & J. 437 ; 28 
 
 L. J. (Ch.) 721. 
 
 the acts of the defendant were authorized or ratified by a vote of the stockholders 
 in accordance with the provisions of the General Statutes, if the defendants had the 
 general power to make the guarantees ; for these provisions were intended for the 
 protection of the shareholders, and relate rather to the mode or manner of the exe- 
 cution of the power; and the plaintiff had a right to presume that the defendant had 
 done its duty, and had proceeded regularly in the execution of its power. Con- 
 necticut Mut. Life Ins. Co. v. Cleveland, &c. R. R. Co. 41 Barb. 8. 
 (a) See, ante, pp. 177, 178, notes. 
 
DIRECTORY FORMALITIES. 519 
 
 seem that the length of notice, specified as a condition precedent 
 to a forfeiture, is an imperative requisite.^ (a) 
 
 Again, as persons who have become members of a company 
 thereby become responsible for its liabilities, although not actually 
 upon the list of members, it follows that mistakes in the registra- 
 tion of the name* or the address* of a member, can in no degree 
 affect the question of his membership. Nor do informalities in 
 making out the memorials or other lists of shareholders required 
 "by statute,* or in numbering the shares,' or entitling the register 
 book.' 
 
 What formalities will be considered directory as between a 
 corporation and persons having dealings with it, whether immedi- 
 ately with it as contracts, or only of such a kind that the corpo- 
 ration has control over or is otherwise concerned therein, as with 
 respect to shares, cannot be positively stated. There is no defi- 
 nite rule which will always act as a test. Therefore, such formal- 
 ities can be determined only by the light of existing decisions. 
 
 Perhaps as one general rule, it may be stated that all formali- 
 ties are such, which relate merely to the internal arrangements and 
 ■organization of the corporation. 
 
 It may be added as a second general proposition, that where 
 
 the constating instruments provide that certain transactions shall, 
 
 as regards the corporation, be valid and binding only when done 
 
 -or concurred in under given circumstances or regulations, whether 
 
 ' See Cockerell v. Van Dieman'a Land " East Gloucestershire Ry. Co. v. 
 
 Co. 26 L. J. (C. P.) 203. Bartholemew, L. R. 3 Ex. 15, 37 ; L. J. 
 
 " Yelland's Case, o De G. <fe Sm. 395 ; (Ex.) 11 ; and see He Int. Oontr. Co. (Ind's 
 
 ■Clowes n. Brettell, 11 M. <fe W. 461. Case), L. R. t Ch. 486. But in Irish Peat 
 
 ' Wills V. Murray 4 Ex. 843 ; 19 L. J. Co. v. Phillips, 1 B. <fc S. 598 ; 30 L. J. (Q. 
 
 ^Ex.) 209. B.) 363 ; an alottee whose shares were not 
 
 * Powis V. Harding, 1 C. B. (N. S.) specifically appropriated and numbered, 
 
 533, 26 L. J. (C. P.) 107, and Henderson was held not liable to pay calls. 
 
 V. Royal British Bank, 26 L. J. (Q. B.) * Bainjj. Whitehaven Ry. Co. 3 H. L. 
 
 112 ; Daniell v. Royal British Bank, 1 H. C. 1. 
 .&N. 685. 
 
 (a) See Lewey's Island R. R. Co. v. Bolton, 48 Me. 451 ; Rutland R. R. Co. v. 
 Thrall, 35 Vt. 546; Lexington R. R. Co. v. Chandler, 13 Mete. 311; Bodie v. Che- 
 nango Ins. Co. 2'S. Y. 53 ; Schenectady & Saratoga Plank-road Co. v. Thatcher, 1 1 
 N. Y. 102 ; Lake Ontario, <fec. R. R. Co. v. Mason, 16 N. Y. 451 ; Bangs v. Duckin- 
 field, 18 N. Y. 592 ; Sands v. Sanders, 26 N. Y. 239 ; Jackson o. Roberts, 31 N. Y. 
 304 ; Harlem Canal Co. v. Seixas, 2 Hall, 504 ; Mitchell v. Vt. Copper Mining Co. 40 
 N. Y. Super. Ct. 406; Hays v. Pittsburgh R. R. Co. 38 Penn. St. 81 : New Albany R. 
 
 .R. Co. V. McCormick, 10 Ind. 499; Heaston v. Cin. <fc Ft. W. R. R. Co. 16 Ind. 275 ; 
 .Smith V. Plank-road Co. 30 Ala. 650 ; Eppes v. Mississippi R. R. Co. 35 Ala. 33 ; 
 
 -Mississippi R. R. Co. v. Gaster, 20 Ark. 455 ; ante, p. 185, note. 
 
520 ACTS INTRA VIRES, BUT INFORMAL. 
 
 these take the shape of formalities or not, if such circumstances or 
 regulations are matters which the corporation alone possesses the- 
 adequate means of securing the due and stipulated occurrence or 
 observance of, then the other party will be excused from looking 
 after the same; and, in the absence of notice to the contrary, he 
 will be allowed to assume that the corporation has provided for 
 them. Thus, in Webb v. Com'rs of Heme Bay,* debentures were 
 issued by a body corporate, to one of their commissioners, in pay- 
 ment of bricks supplied by him for the purposes of the act. , The 
 statute constituting the body, however, enacted that no person be- 
 ing a commissioner should enter into any contract under the act. 
 It was, nevertheless, decided that the debentures were valid in the- 
 hands of a transferee for value, unacquainted with the circum- 
 stances under which they were originally issued, (a) 
 
 The difficulty consists in the application of these rules, and the 
 other rules and principles already examined in this section, to spe- 
 cial circumstances. It seems that the following requisites are 
 directory merely : 
 
 First. The holding of meetings of, and the passing of resolu- 
 tions by, the individual members, prior to the exercise by the di- 
 rectors of their powers.' (J) 
 
 ' L. E. B Q. B. 642. parte Eagle Ins. Co.) 4 K. &. J. 649 ; il 
 
 ^ See cases at law. Royal British L. J. (Ch.) 829 ; Fountaine v. Carmarthen 
 
 Bank v. Turquand, 26 L. J. (Q. B.) 317 ; and Cardigan Ry. Co. L. E. 5 Eq. 316 r. 
 
 Agar V. AthensBum Life Ins. Co. C. 3 B. (N. North Hallenbeagle Mining Co. (Knight's. 
 
 S.) 726 ; 27 L. J. (C. P.) 95 ; and compare Case), L. R. 2 Ch. 321 ; the judgments of 
 
 North Eastern Ry. Co. v. McMichael, 5 the Lords Justices in Land CA'dit Co. of 
 
 Ex. 855; 20 L. J. (Ex.) 6, and Lowe v. Ireland (Ez parte Overend, Gurney and 
 
 London and North Western Ry. Co. 18 Q. Co.) L. R. 4 Ch. 460 ; and compare Mair 
 
 B. 632; 21L.J. (Q.B.)361. Seecasesin «. Himalaya Tea Co. L. R. 1 Eq. 411. 
 Chancery. Athensenum Life Ins. Co. (Ex 
 
 (a) Gold Mining Co. v. Nat. Bank, 96 XJ. S. 640. 
 
 (6) See Amerman v. "Wiles, 24 N. J. Eq, 13. As to acts of commissioners to re- 
 ceive subscriptions, and other acts prior to organization. Unity Ins. Co. v. Cram, 43 
 N. H. 636; Walker v. Devereaux, 4 Paige, 239; Crocker v. Crane, 21 Wend. 217; 
 Bank of Toledo v. International Bank, 21 N. Y. 542; Leonardsville Bank v. Willard, 
 25 N. T. 674; Buffalo <fe Allegheny R. R. Co. v. Cary, 26 N. Y. 76 ; Black River & 
 Utica R. K. Co. d. Barnard, 31 Barb. 268; Holmes v. Gilliland, 41 Barb. 568 ; Socie- 
 ty V. Commonwealth, 52 Peon. St. 125; Field v. Cooks, 16 La. Ann. 153; Harris *.. 
 McGregor, 29 Cal. 124. Mere irregularities in proceedings of incorporation cannot, 
 be taken advantage of in collateral proceedings by either corporation, stockholders, , 
 or strangers. Sanger v. Upton, 1 Otto, 66 ; Com'rs of Douglas Co. v. BoUes, 4 Otto,, 
 101 ; Chubb v Upton, 6 Otto, 665 ; Upton v. Hansbrough, 3 Biss. 417 ; AUer v. Town 
 of Cameron, 1 Dill. 198 ; Ossipee Mfg. Co. v. Canney, 64 N. H. 296 ; Narragansett Bk. 
 V. Atlantic Silk Co. 2 Mete. 282 ; Dutchess Mfg, Co, v. Davis, 14 Johns, 237 ; Eaton ».. 
 
DIRECTORY FORMALITIES. 521 
 
 Secondly. Umisual conditions as to requiring the direction, 
 whether verbal or in writing, of particular directors or other officers, 
 prior to affixing the corporate seal to any document.* (a) 
 
 Thirdly. Special regulations as to the signature or counter- 
 signature of particular officers.'' (J) 
 
 ' Ex parte Overend, Gurney and Co. Compare Prince of Wales Ina. Co. v, 
 
 L. R. 4 Ch. 460 ; Prince of Wales Ins. Co. Hiding, uhi supra; Allard v. Bourne, 15 
 
 V. Harding, E., B. & E. 183; 27 L. J. (Q. C. B. (N. S.) 468; Bargate v. Shortridge, 
 
 B.) 297. Compare Hill v. Manchester 5 H. L. C. 297; 24 L. J. (Ch.)457; He 
 
 W'works Co. 5 B. & A. 866 ; Township Norwich Yarn Co. (Ex parte Bignold), 22 
 
 of Brock V. Toronto, <fec. Ry. Co. 17 Grant. Beav. 143 ; 25 L. J. (Oh.) 601 ; Re Straf- 
 
 (Upper Can. Ch. 1870), 425, where a, fon's Executors, 1 De G., M. & 6. 576 ; 22 
 
 by-law directed that municipal debent-' L. J. (Ch.) 194. But where a check did 
 
 ures should be signed by the " Reeve," not, on the face of it, purport to be drawn 
 
 and it was held that the council could on behalf of the company, the company 
 
 appoint another person to sign. were not liable even to a bona fide holder 
 
 ' Allen V. Sea, Fire, and Life Ins. Soc. for value. Serrell v. Derbyshire, <fec. Ry> 
 
 9 C. B. 574 ; 19 L. J. (C. P.) 305 ; Aggs v. Co. 9 C. B. 811 ; 19 L. J. (C. P.) 371 ; on 
 
 Nicholson, 1 H. <fe N. 165 ; 25 L. J. (Ex.) appeal 10 C. B. 910 ; Murray v. Bush, L. 
 
 348 ; Defifell v. White, L. R. 2 C. P. 144. R. 6 H. L. 37. 
 
 Aspinwall, 19 N. Y. 115 ; Methodist Episcopal Ch. v. Pickett, 19 N. Y. 482 ; Buffalo, 
 Ac. R. R. Co. V. Cary, 26 N. Y. 76 ; Persse, <feo. Paper Works v. Willett, 19 Abb. Pr. 
 41 6 ; Abbott v. Aspinwall, 26 Barb. 202 ; Doyle v. Peerless Petroleum Co. 44 Barb. 
 239 ; Merriman v. Magiveney, 12 Heisk. 494 ; Wight v. Shelby R. R. Co. 16 B. Mon. 
 4 ; Bartholomew v. Bentley, 1 Ohio St. 38 ; Heaston v. Cin. & Ft. Wayne R. R. Co. 
 16 Ind. 404; Aurora ife Cin. R. R. Co. v. Lawrenceburgh, 66 Ind. 80; Thompson o. 
 Candor, 60 111. 244 ; Meeker v. Chic. Cast Steel Co. 84 III. 276; Swartwout v. Mich. 
 Air Line R. R. Co. 24 Mich. 389; Kansas City Hotel Co. v. Harris, 51 Mo. 464 ; Oc- 
 cidental Ins. Co. V. Ganzhorn, 2 Mo. App. 205 ; Pape v. Capital Bk. of Topeka, 20 
 Kan. 440. But see Boyce v. Trustees, 46 Md. 359. Nor can irregularities in the issue 
 of additional stock. Chubb v. Upton, 6 Otto, 665 ; Upton v. Hansbrough, 3 Biss. 417. 
 
 (o) See Medbury v. N. Y. <fe Erie R. R. Co. 26 Barb. 564 ; Berks <fe Dauphin Turn- 
 pike Co. ii. Myers, 6 S. <fe Raw. 12. A policy of insurance, one of the conditions of 
 which requires that consent to any prior or subsequent insurance upon the same 
 property shall be given in writing, will not be rendered void when the agent of the 
 company gives such consent verbally, and the insured in good faith acts upon 
 it. Carrugi v. Atlantic Fire Ins. Co, 40 Ga. 135. The decision was on the ground 
 that, " this is an attempt to change the rules of evidence, to regulate the proceedings 
 of the courts — a simple attempt to change the mode by which the courts should 
 arrive at whether there has been a performance or breach of contract." 
 
 (b) See Head v. Providence Ins. Co. 2 Cranch, 127 ; Mech. Bank v. Bank of Colum- 
 bia, 6 Wheat. 326; Commercial Ins. Co. v. Union Ins. Co. 19 How. 318; Leavitt ». 
 Conn. Peat Co. 6 Blatohf. 139; New England Ins. Co. v. DeWolf, 8 Pick. 66; Sanborn 
 V. Fireman's Ins. Co. 16 Gray, 448 ; Bulkley v. Derby Fishing Co. 2 Conn. 264 ; Beatty 
 V. Marine Ins. Co. 2 Johns. 109; Dawes v. North River Ins. Co. 7 Cow. 462 ; Safford «. 
 Wyckoff, 4 Hill, 446; Kelley v. The Mayor, 4 Hill, 263 ; Barnes v. Ontario Bank, 19 
 N. Y. 162; De Groflf «. Am. Linen Thread Co. 21 N. Y. 124; Smith v. Smith, 62 111. 
 493 ; Melvin v. Lisenby, 72 111. 63; Merrick v. Burlington, <fcc. Plankr. Co. 11 Iowa, 
 74 ; Rockwell v. Elkhorn Bank, 13 Wis. 653 ; Dana v. "Bank of St. Paul, 4 Minn. 385 ; 
 Henning v. U. S. Ins. Co. 47 Mo. 425. A life policy, which provided that it should 
 
522 ACTS INTRA VIRES, BUT INFORMAL 
 
 Fourthly. Preliminaries, sucli as the issuing of formal notices, 
 the publishing of advertisements and the like, prior to meetings ; 
 and regulations relating to the manner of conducting such meet- 
 ings.^ (a) 
 
 Fifthly. Forms to be followed in making out lists of members, 
 or in keeping the books of the corporation.^ (h) 
 
 Sixthly. Formalities laid down for the appointment of directors 
 and other officials ; i. e., de facto directors will be presumed legal- 
 Jy appointed, and so on.' 
 
 Sub-Section III. De facto officials. 
 Questions as to the exact position of such parties, and as to their 
 capacity of acting for and binding corporations, are of very fre- 
 quent occurrence, for the twofold reason that a corporation acts by 
 agents, and that there must be regulations as to the mode of their 
 appointments. It is quite settled that the proceedings of de facto 
 officials bind the corporation in all cases, as regards persons unaware 
 ■of the absence of a due appointment, and in many eases where 
 they haive knowledge of the informality.(c) " An officer de facto 
 
 ' He Worcester Corn Exchange Co. 3 (N. S.) 624 ; 26 L. J. (C. P.) 107 ; Bain v. 
 
 T>e G., M. <fe G. IjSO ; 13 Jur. 960 ; Clarke v. Whitehaven Rv. Co. 3 H. L. C. 1. 
 Imperial Gas Co. 4 B. <fc A. 315 ; Foun- » Re County Ins. Co. L. R. 5 Ch. 288; 
 
 taine v. Carmarthen and Cardigan Ry. Go. Anderson v. Duke, <tc. Mining Co. 1 Aus- 
 
 L. R. 6 Eq. 316. traliim Jurist, 161, where a quorum 
 
 ^ Daniel v. Royal British Bank, 1 H. ought to have been appointed, Lut was 
 
 ife N. 681 ; Dossett v. Harding, 1 C. B. not, and the company was held liable. 
 
 not be in force till countersigned by tbe agent, was invalid till so countersigned, even 
 though the agent was himself the party insured. Badger v. Am. Popular Life Ins. 
 Co. 103 Mass. 244. 
 
 (a) See post, p. 6S1. 
 
 (6) Provisions in charters and by-laws providing for books of record of the pro- 
 ceedings of managing boards, are merely directory, and do not affect the validity of 
 the unrecorded acts. Angell & Ames on Corps. § 291«. citing Bank of XT. S. v. Dan- 
 ■dridge, 12 Wheat. 16 ; U. 8. v. Kirkpatrick, 9 Wheat. 720; Same v. Van Zandt, 11 
 Wheat. 184 ; Cram v. Bangor House, 12 Me. 354 ; Trott v. Warren, 11 Me. 227 ; Bas- 
 sett V. Marshall, 9 Mass. 312 ; Russell v. MoLellan, 14 Pick. 68 ; Middlesex Husband- 
 men V. Davis, 3 Mete. 133 ; Goodwin o. XJ. S. Annuity & L. Ins. Co. 24 Conn. 591 ; 
 Bank of Ky. v. Schuylkill Bank, 1 Parsons' Sel. Cas. 251, 263 ; Burgess v. Pue, 2 Gill, 
 254. See Sampson v. Bowdoinham Steam Mill Co. 36 Me. 78 ; Township of Rock 
 Creek v. Strong, 6 Otto, 271. 
 
 (c) Contracts and other acts of de facto directors are valid. Angell & Ames, §§ 286, 
 287 ; citing Minor v. Mechanics' Bank, 1 Pet. 46 ; Cooper v. Curtis, 30 Me. 488 ; 
 Despatch Line of Packets v. Bellamy Mfg. Co. 12 N. Hamp. 205 ; Charitable Asso- 
 ciation V. Baldwin, 1 Mete. 359 ; McCall v. Byram Mfg. Co. 6 Conn. 428 ; Green v. 
 Oady, 9 Wend. 414; All Saints' Church v. Lovett, 1 Hall, 191 ; Vernon Society v. 
 
DIRECTORY FORMALITIES. 523 
 
 is one who lias the reputation of being the officer he assumes to 
 be, and yet is not a good officer in point of law." ^ This definition 
 requires the addition of something to fix the corporation with ac- 
 quiescence in the acts of the so-called officer — the mere assumption 
 or reputation is not per se sufficient, (a) Where a person acted 
 notoriously as the cashier of a bank without giving a bond (5) or 
 taking an oath,(o) as required by the charter ; and where a director 
 was elected at a meeting less than a quorum and acted a direct- 
 or, {d) the corporation was held bound. 
 
 It is the same in all cases where there has been, on the part of 
 a corporation, either an appointment or an acquiescence in the 
 proceedings of one holding himself out as their agent, but whose 
 appointment is defective for the want of some formality which 
 
 ' Per Lord EUenborough, C. J., in Rex v. Corp. of Bedford Level, 6 East, 
 
 368-9. 
 
 Hills, 6 Cow. 23 ; Ex parte Rogers, "7 Id. 530, n.; LoTett v. German Reformed Church, 
 12 Barb. 61 ; Riddle v. County of Bedford, 1 S. <fe. R. 392 ; Baird v. Bank of Wash- 
 ington, 11 S. <fe R. 411 ; York County v. Small, 1 W. & S. 320; Kingsbury v. Led- 
 yard, 2 W. <fe. S. 41 ; McGargell v. Hazleton Coal Co. 4 W. <fe S. 425 ; Del. Canal Co. 
 V. Penn. Coal Co. 21 Penn St. 131 ; Burgess v. Pue, 2 Gill, 254 ; Smith v.. Erb, 4 Gill. 
 437 ; Union Bank of Md. *. Rldgely, 1 Harris <fc G. 421 ; Burr v. McDonald, 3 Gratt. 
 215 ; Elizabeth City Academy v. Lindsey, 6 Ired. Law, 476 ; Bank of St. Mary's ». 
 St. John, 25 Ala. (N. S.) 666. See, also, to the same effect, Rockville, &c. T. Co. ■</. 
 Van Ness, 2 Cranch. C. C. 449 ; Anglo-Californian Bk. v. Mahoney Mining Co. 6 Re- 
 porter, 705 ; Sampson v. Bowdoinham Steam Mills Co. 36 Me. 78 ; Penobscot & Ken. 
 R. R. Co. ti. Dunn, 39 Me. 587 ; People v. Runkle, 9 Johns. 147 ; lie Mohawk & Hud- 
 son R. R. Co. 19 Wend. 135; Ebaugh v. German Ref. Church, 3 E. D. Smith, 60 ; 
 Hardenburgh v. Farmers'* Mechanics' Bk. 3 N. J. Eq. 68 ; Ellis ». N. C. Institution, 68 
 N. C. 423 ; Atlantic, <fec. R. R. Co. v. Johnston, 70 N. C. 348 ; Chamberlain v. Paines- 
 ville A H. R. R. Co. 15 Ohio St. 225 ; Newcastle, <feo. T. Co. v. Bell, 8 Blaekf. 589 ; 
 Covington, lie. P. R. Co. d. Moore, 3 Ind. 510 ; Eakwright ». LogansportR.R.Co.lSInd. 
 404; Smith v. Bank of the State, 18 Ind. 327 ; Cahill v. Kalamazoo Mut. Ins. Co. 2 
 Dougl. 124; Ohio <fe Miss. R. R. Co. v. McPherson, 35 Mo. 13. And with regard to 
 o£Scers. Charitable Ass. v. Baldwin, 1 Mete. (Mass.) 359 ; McGargell v. Hazleton 
 Coal Co. 4 S. <fe R. 424 ; Hall v. Carey, 5 Ga. 239 ; Milliken ,;. Steiner, 56 Ga. 257. 
 Also, limiting the application of the principle. People's Ins. Co, i/. Westcott, 14 
 Gray, 440; Vestry of St. Luke's Ch. v. Mathews, 4 Dessaus. 578; Walker v. Flem- 
 ing, 70 N. C. 483 ; see Anglo, <fec. Bk. v. Mahoney Mining Co., snpra ; Macon iSr Au- 
 gusta R. R. Co. V. Vason, 67 Ga. 314 ; and see Johnston v. Jones, 23 N. J. Eq. 216. 
 
 (a) See Litchfield Iron Co. u. Bennett. 7 Cow. 234 ; Clark v. Farmers' M%. Co. 
 15 Wend. 256; Waite v. Mining Co. 36 Vt. 18. 
 
 (J) Bank of United States v. Dandridge, 12 Wheat, 64. 
 
 (c) State Bank at Eliz. v. Chetwood, 3 Hals. 1. 
 
 (i) Baird v. Bank of Washington, 11 S. <fe R. 41 1. 
 
524 ACTS INTEA VIRES, BUT INFORMAL. 
 
 the corporation alone could enforce. These, indeed, are the com- 
 moner instances. The true legal ground on which they proceed 
 is, however, rather that of estoppel than de facto agency. 
 
 It should be observed, that whenever the corporation is bound 
 by the proceedings of such persons, so also will third parties be 
 bound to it.(a) 
 
 A very late case to a similar effect, illustrative of the capacity 
 of such officials to bind corporations, is Re County Life Ass. Co.,' 
 the circumstances of which were as follows: In 1863 the County 
 Life Assurance Company was registered. In the articles of asso- 
 ciation certain persons were named as first directors, with power 
 to add to their number until the first general meeting. P. was 
 named as first manager, or managing director. Policies were to be 
 executed by three directors, and the whole control of the company 
 was to be in the hands of the directors. The directors named in 
 the articles being dissatisfied with the constitution of the company, 
 refused to carry on business, and passed a resolution that nothing 
 should be done in the affairs of the company, and no meetings 
 held ; but they did not proceed farther and wind up the company. 
 Shortly after P. and one of the subscribers of the memorandum, 
 other than the directors, took steps to carry on business : they 
 elected new directors, issued and allotted shares, made a seal, and 
 granted policies. It was held that a policy granted by the de facto 
 directors, and executed by them in a manner according with the 
 articles, and sealed with the above-mentioned seal, was binding 
 upon the company. Giffard, L. J., on appeal, confirming the de- 
 cision of the Master of the Rolls, said : " The [original and dejure\ 
 directors of this company might at any moment, had they chosen 
 to do so, have restrained these transactions and put an end to the 
 company. In this state of things the respondents, in the ordinary 
 course of business, effected a policy. They knew nothing of the 
 internal arrangements of the company, or that any irregularity 
 had taken place. * * * The company is bound by all that 
 takes place in the usual course of business, with anybody who deals 
 ionafide with those who may be termed de facto directors, and 
 who, so far as the stranger could possibly tell, were de jure di- 
 
 ' L. R. 5 Ch. 288. 
 
 (a) See, for example. State Bank at EUz. v. Chetwood, 3 Hals. 1. 
 
DIRECTORY FORMALITIES. 525 
 
 rectors. * * * I do not hesitate to say, that the business of 
 companies of this description could not be carried on, if this order 
 be not supported as good law." 
 
 The power of officials informally appointed to represent the 
 corporation for whom they purport to act, has been expressly 
 recognized by the Legislature, with respect to certain companies, 
 by section 99 of the Companies Clauses Consolidation Act, 1845. 
 " All acts done by any meeting of the directors or of a committee 
 of directors, or by any person acting as a director, shall, notwith- 
 standing it may -be afterwards discovered that there was some de- 
 feet in the appointment of any such directors or persons acting as 
 aforesaid, or that they or any of them were, or was disqualified, 
 be as valid as if every such person had been duly appointed, and 
 was qualified to be a director."(a) 
 
 ^ 
 Sub-Section TV. Acquiescence and waiver. 
 
 Directory formalities may be expressly waived. The same 
 may be done impliedly. In both cases, of course, the persons 
 waiving the formality must be competent to bind the others, if 
 any, concerned. The general subject of ratification, whether as 
 such or in the form of acquiescence, laches, or waiver, wiU be exam- 
 ined at length in the next chapter. Here it will suffice to observe, 
 with respect to directory formalities, that their absence may be 
 waived ; that informal transactions may be acquiesced in, and a 
 fortiori may be positively ratified, by parties competent to act on 
 behalf of a corporation, and fully cognizant of the circumstances, 
 so that the corporation and all persons claiming through it, will 
 not subsequently be able to set up the want of the formality as a 
 defense to claims. 
 
 Thus, in "Walton's Case,^ the seven days' notice required by the 
 charter and deed of settlement of a bank, previous to any proposed 
 transfer of shares, was held to have been dispensed with by uni- 
 versal practice. 
 
 To the same eflFect is the case of Bargate v. Shortridge,' (J) 
 
 ' Re Royal British Bank (Walton's ^ 5 jj. L. C. 29T ; 24 L. J. (Ch.) 467. 
 
 Case), 26 L. J. (Ch.) 646, and see the cases 
 there cited. 
 
 (a) Godefroi & Shortt, p. 99. 
 
 (6) See Zabriskie v. Cleveland, 0. <fe C. R. R. Co. 23 How. 381, 398. 
 
626 ACTS- INTRA VIRES, BUT INFORMAL. 
 
 ■which is the leading authority on this point. The deed of settle- 
 ment of a banking company, allowed shareholders to dispose of 
 their shares upon obtaining " the consent of the board of direct- 
 ors," which was to be testified by " a certificate in writing, signed 
 by three of the directors." During the whole time that the bank 
 carried on business, a managing director received the applications 
 for sales of shares, consented, and signed the certificate of " con- 
 sent," which was afterwards signed by two other directors, but 
 was never signed by the three assembled as a board. Shortridge, 
 a shareholder, had at various times, with such consents, sold his 
 shares. The directors, under 7 Geo. lY, c. 46, made a return to 
 that ejffect. The company failed, and the directors passed a reso- 
 lution that there had been no valid transfer of the shares of Short- 
 ridge. It was held, however, that as between him and the com- 
 pany, the consents given by the directors, although informal and 
 irregular, were valid, and that they could not afterwards treat 
 Shortridge as a member of the company. 
 
 This case, indeed, goes farther than this, for it was a creditor 
 of the company who was attempting to get his debt paid by pro- 
 cess against a shareholder, and the decision was that, as the com- 
 pany itself was estopped by its acquiescence, so also its creditors 
 claiming through it were barred by the same acquiescence.* 
 
 As illustrating the principles, both as to acquiescence and as to 
 the necessity for officials to see to formalities which concern their 
 own acts, may be mentioned Bush's Case, or as it is known in the 
 House of Lords, Murray v. Bush.* The case also shows* the diffi- 
 culty of applying the law to circumstances such as were there in- 
 volved. The original decision was reversed by the Lord Chancel- 
 lor, and though the reversal was upheld, it was only by the fact 
 that the law lords were equally divided. A company being in 
 difficulties, and disputes having arisen, it was determined to admit 
 new directors. Bush, one of the existing directors, agreed to 
 transfer his shares to an incoming director, and in pursuance of 
 such agreement, a deed of transfer was executed by both, but the 
 transferee did not execute a deed of covenant as required by the 
 
 ' In fact the Court of Exchequer has judgments in the different cases arising 
 
 decided that the defendant still remained out of the ^^inding up of this company are 
 
 a shareholder. Bosanquet v. Shortridge, simply irreconcilable. See Spackman v. 
 
 i Ex. 699. Evans, L. R. 3 H. L. 171 ; and per Gif- 
 
 2 L. R. 6 H. L. SI; L. R. 6 Ch. 246, fard, L. J., in Dixon's Case, L. R. 6 Ch. 
 
 Re Agriculturist Cattle Ins. Co. The '79. 
 
DIRECTORY FORMALITIES. 52T 
 
 deed of settlement. The Master of the KoUs, on the winding up 
 of the company, held Bush to be still liable upon the shares, and 
 placed his name on the list of contributories. " It is true that 
 there are many cases in which the undue neglect of forms by di- 
 rectors has not invalidated a iona fide transfer of shares ; but, so 
 far as I have observed, this has always been in cases between 
 strangers, who had not the power to compel the directors to ob- 
 serve the proper forms, or in cases where they were ignorant of, 
 and had no means of ascertaining, the informality which had been 
 committed. But the case is very different when, as here, the 
 transfer is by a director himself, whose object is to fetire from the 
 company, and who has the power to see that everything is done 
 according to due regularity, and still more different when the trans- 
 fer is made to another person acting as director of the company ; 
 and it is something more than form when the director, who makes 
 the transfer, does not follow the form prescribed by the act of 
 parliament in that very case, and when, by reason of the omission 
 BO to do, the transferee becomes in no respect bound by the deed 
 of settlement, the execution of which was, by the rules of the so- 
 ciety, prescribed as a preliminary condition to his becoming a 
 member of the company." This judgment of Lord Eomilly, con- 
 tains a very clear statement of the law on the point. From it, as 
 an exposition of law, the Lord Chancellor did not dissent, but 
 he, nevertheless, discharged the order of the Master of the Eolls, 
 upon the grounds : partly, of lapse of time, and of the acquiescence 
 of the shareholders in the transaction ; (a) partly, that it was the 
 duty solely of the remaining directors to see to the execution of 
 the deed of covenant by the transferee. Upon this latter point 
 his lordship observed : " It is quite true that Mr. Bush was a di- 
 rector when he dealt with the shares, but when he parted with his 
 shares he was no longer a director or shareholder, and he had no 
 
 (o) A corporation may incur a liability different from the prescriptions of its 
 charter. Like individuals, it is responsible for the manner in which it permits its 
 agents to hold it out to the world. The corporation should disavow the practice, or 
 the usages of their agents in the transaction of business shall be presumed to have 
 their sanction. An authority to contract in a particular mode, may be proved by a 
 vote of the stockholders ; and in prevention of fraud and prosecution of justice, it 
 may be presumed. It may be implied from their acquiescence in the usual mode of 
 transacting the business of the corporation, and expressing no objection against it- 
 Buckley V. Derby Fishery Co. 2 Conn. 262 ; Witte v. Same, Ibid. 260 ; see Stafford 
 V. Wyckoff, i HUl, 442. 
 
528 ACTS INTRA VIRES, BUT INFORMAL. 
 
 control over the matter beyond having the right to file a bill. 
 The persons who were to see that within a month the deed was 
 executed, were the directors of the company, and the duty of 
 seeing the deed executed was thrown upon them, and not upon 
 Mr. Bush." 
 
 But it is submitted that the questions to be settled in this and 
 similar cases, were and are, first, whether a director proposing to 
 retire from a company, is or is not bound to see to the perform- 
 ance of the proper formalities, and has or has not thrown upon him 
 the duty of doing all that he can do to secure their due observance ; 
 secondly, which was a special point here, whether when there is 
 a transfer to another official, it is not a part of that official's con- 
 tract to see to the formalities ; and thirdly, whether failing these, 
 he ceases to be a shareholder. 
 
 In the House of Lords, the Chancellor's decision was affirmed 
 by Lord Cairns and the Chancellor himself, against the judgments 
 of Lords Chelmsford and Colonsay : partly, on the ground that the 
 transfer made by Bush, though irregularly, was not in validly made, 
 and the persons then known as directors having, at a meeting of 
 shareholders, recognized the transferees as shareholders, and having 
 then and there declared them to be elected as directors, and the 
 shareholders, at such meeting, having accepted them as directors, 
 and this having been acted on for years, the validity of the trans- 
 fer to them and their title to office, could not afterwards be im- 
 peached ; and, partly, upon the ground that the objection to the 
 non-execution by the transferee of the deed of covenant, was 
 cured by the 30th section of Y & 8 Yict. c. 110 ; that the moment 
 the transferee assumed to act as a director, and allowed himself to 
 be returned as a shareholder, he lost all right to question his lia- 
 bility. 
 
IMPERATIVE FORMALITIES. 529 
 
 Section III. — Imperative Foemalities. 
 
 These are requisites of form of such a description that thej 
 are part and parcel of the transaction in question : of its " essence," 
 not one of its " accidents." It may fairly be doubted whether 
 any matter thus essential, can fairly be put under the head of for- 
 malities, strictly so-called. Without, however, determining this 
 logical question, it is undoubted that there are in certain cases, and 
 with respect to certain transactions, various requisites more or less 
 in the nature of formalities which must be duly observed, or the 
 transaction contemplated is not valid. The following are the 
 •chief of these : 
 
 1. Conditions precedent. — These exvi termini are not formal- 
 ities, but it is weU to mention them, both to separate them from 
 pure formalities, and also to remember their connection with the 
 present subject. 
 
 2. Personal conditions. — These are requisites, usually in the 
 nature of disabilities, as to the persons by or with whom trans- 
 actions, generally contracts, may be made. Ernest v. Nicholls^ 
 is a case in point. There the actual decision of the House of 
 Lords was, that the contract sued on, being made with a director, 
 was void under Y & 8 Yiet. c. HO, s. 29. 
 
 3. Requirements as to evidence. — When such requirements 
 ■exist, whether at common law or by statute, then in their absence 
 the transaction affected thereby cannot be enforced. Whether it 
 will be good at all, will depend on the question whether the re- 
 quirement is so expressed as to be merely one relating to the ev- 
 idence, or as to strike the transaction with absolute nullity if it be 
 not observed.' 
 
 4. Sealing. — This is the great essential of corporate proceed- 
 ings. It has already been considered. 
 
 5. True imperative formalities. — Having separated the above 
 four groups of matters, there remain many regulations and provis- 
 ions which must be put under the head of " requisites " or " for- 
 malities." They will be instituted either by general acts of par- 
 liament, or by private constating instruments. Many, the greater 
 
 ' 6 H. L. C. 401 ; iJe Cardiff Preserved 2 See for example the difference be- 
 
 Coal, <fec. Co. 32 L. J. (Ch.) 154, See tween section 3 and section 17 of the 
 
 ■contra, Webb v. Oom'rs of Heme Bay, L. Statute of Frauds 
 K. 5 Q. B. 642. 
 
 34 
 
5o0 ACTS INTRA VIKES, BUT INFORMAL. 
 
 number, will be merely directory. But some undoubtedly are: 
 imperative, obligatory, or essential. Which of them are so? 
 
 First— Formalities expressly declared to ie imperative^ 
 are so. 
 
 This is clear. If it be positively provided that certain formal- 
 ities must be observed, that a contract can be entered into only in 
 a certain mode, or subject to certain conditions, it follows, even in 
 the absence of any positive enactment, that contracts of a contrary 
 form are void, that such will be invalid.^ It makes no difference 
 how gross may be the dishonesty, how great the hardship, if a req- 
 uisite be imperative, it must be duly observed, or the parties 
 will not be bound. " Certainly this case is the strongest I ever 
 met with : a company declining to perform honestly, that which 
 has been so strictly and honestly fulfilled, up to a certain time,, 
 in pursuance of one of those arrangements which are generally 
 supposed to be binding on mankind." ^ 
 
 Secondly. — Formalities relating to the destruction of rights- 
 are imperative. 
 
 This rule seems quite established. Whenever circumstances 
 are set forth which will justify the destruction of existing rights, 
 tlie actual existence of such circumstances, and the due perform- 
 ance of all other matters incidental thereto, and to the formal de- 
 struction of such rights, will be strictly scrutinized. Thus, in 
 Watson V. Eales,* a nine days' notice, where the rules of a cost- 
 book mining company required ten days, invalidated a forfeiture. 
 
 This was a ease of forfeiture. Most of the reported examples 
 coming under and illustrating the proposition are instances of this 
 kind. The decisions are not altogether reconcilable as to the cir- 
 cumstances which (1) will justify a forfeiture,^ or (2) will amount 
 
 ' Homeraham v, Wolverhampton d. Hutt, 3 Ex. 18 ; Catchpole v. Amber- 
 
 W works Co. 6 Exch. 137 ; 20 L. J. (Ex.) gate Ry. Co. 1 E. <fe B. Ill ; 22 L. J. (Q. 
 
 193 ; Leominater Canal Co. v. Shrewebury, B.) 36 ; Birmingham, &c. Ry. Co. v. Locke, 
 
 Ac. Ry. Co. 3 K. <fe J. 664 ; 26 L. J. (Ch.) 1 Q. B. 256 ; Graham v. Van Diemen'a 
 
 764. Compare Hambro' v. Hull, <fec. Fire Land Co. 1 H. <fe N. 541 ; 26 L. J. (Ex.) 
 
 Ins. Co. 3 H. <fe N. 789 ; 28 L. J. (Ex.) 62. 73 : p. 531, n. 3. 
 
 ''Per Page Wood, V.-C. 3 K. <fe J. " See Swenz u. Smith, L. R. 7 Eq. 324 ; 
 
 671. Stockin's Case, L. R. 3 Ch. 412; Count 
 
 3 23 Beav. 694; Cockerell v. Van Die- Pahlen'a Caae, L. R. 9 Eq. 107; Thomas'* 
 
 men'a Land Co. 1 C. B. (N. S.) 732; 26 L. Caae, L. R. 13 Eq. 437 ; the cases in the- 
 
 J. (C. P.) 203. Compare, as to what ia nee- Houae of Lords, ante, pp. 626-8 ; and the- 
 
 essary or sufficient for a forfeiture, Giles notes following. 
 
IMPERATIVE FORMALITIES. 531 
 
 to valid forfeiture.* Apparently as between the corporation and 
 a member, if there is really a power to forfeit, and there has been 
 a substantial and bona fids attempt to exercise it, and both parties 
 have acquiesced, the forfeiture is complete.' But the member may, 
 if he chooses, put the corporation to the strictest exercise of the 
 power, and if so, there is a decision that the forfeiture will not 
 be valid, unless not only all the formalities of the act of forfeiture 
 be duly observed, but also all the preliminary circumstances and 
 conditions leading up to the forfeiture have happened modo et 
 forma? 
 
 Thirdly. — Formalities imposed in terms which on the whole 
 are mandatory,* are generally imperalme, and 
 always so when imposed by the supreme legislatv/re. 
 
 This statement, perhaps, does not much simplify- matters or 
 otherwise assist. But probably it cannot be expressed in more 
 definite or positive language. The latter part of it seems estab- 
 lished. The courts apparently incline to construe statutory pro- 
 visions of this description somewhat strictly, and therefore to hold 
 a formality directed by the Legislature to be imperative,' which, if 
 prescribed by ordinary individuals and corporations, would be 
 directory merely. 
 
 Thus, if the Legislature empowers a county, town or other like 
 corporation to take certain proceedings, e. g., issue bonds, but re- 
 quires as a preliminary that the assent of the voters, ratepayers, 
 &c., shall first be obtained, then this requisite is essential, and the 
 absence of it will void the proceedings even as against innocent 
 third parties, (a) 
 
 But it is settled beyond doubt that, (1), if the statutory regu- 
 lations are not conditions precedent, but formalities, and (2), if the 
 
 'See Gower's Case, L, R. 6 Eq. 11; strued mandatory pro visions, see the case9 
 
 and"laet note. relating to registration of charges, such as 
 
 " See ante, pp. 187, 188. Liverpool Borough Bank v. Turner, 2 De 
 
 ^ Garden Gully, <fec. Mining Co. v. G., F. & S. 502 ; Keith v. Burrows, 1 C. 
 
 McLlster, 1 App, 39, which is now the P. D. 722. 
 
 leading case ; ante. p. 187. ' See, for example, Frend v. Dennett, 
 
 * For illustrations of what will be con- 27 L. J. (C. P.) 314. 
 
 (o) See Dillon on Municipal Bonds ; also, Marsh v. Fulton Co. 10 Wall. 676 ; Town 
 of Concord v. Portsmouth Sav. Bk. 2 Otto, 626 ; Town of Eagle v. Cohn, 84 111. 292 ; 
 Leavensworth R. R. Co. <i. County Ct. 42 Mo. 171 ; Steines v. Frankl'n Co. 48 Mo. 
 167 ; Smith v. Co. of Clark, 64 Mo. 68. 
 
632 ACTS INTKA VIRES, BUT INFORMAL. 
 
 language appointing these is not clearly mandatory, the formalities 
 will be not imperative but directory; and, consequently, third 
 parties will be under no necessity of seeing that they are fulfilled, 
 in the absence of notice to the contrary. Thus, if tbe Legislature 
 provides, in addition to obtaining a vote, holding meetings, &c., 
 certain formalities as to time, place, or manner of obtaining such 
 vote, &c., these additional requisites will, at least as regards inno- 
 cent parties, be deemed discretionary, provided the vote has been 
 de facto taken, the meeting held, &c.(«) 
 
 With regard to imperative formalities, there are two other ob- 
 servations to be remembered : 
 
 First. Although the neglect of them will usually invalidate 
 the whole arrangement, yet if anything be done under the arrange- 
 ment so purporting to be entered into, whether by the company 
 or the party contracting with it, equities may and often will arise 
 enforceable in chancery on behalf of the party suffering loss as 
 against the party benefited thereby.'' 
 
 ' See, ^osf, chapter on "The liability absolutely u/fo-a vires" and ante, p. 511, 
 of corporation in respect of transactions n. 4. 
 
 (a) See Dillon on Municipal Corporations, §§ 416o-t26 ; Dillon on Municipal 
 Bonds ; Com'rs of Knox Co. v. Aspinwall, 21 How. 539 ; Bissell v. City of Jeffer- 
 sonville, 24 How. 287; Pendleton Co. v. Amy, 13 Wall. 297; Grand Chute v. Wine- 
 gar, 15 Wall. 355 ; Town of Coloma v. Eaves, 2 Otto, 484: Town of Venice «. Mur- 
 dock. Id. 494 ; Town of Genoa v. Woodruflf, Id. 602 ; Co. of Moultrie v. Savings Bank, 
 Id. 631 ; Marcy v. Town of Oswego, Id. 637 Humboldt Township v. Long, Id. 642 ; 
 Com'rs of Douglas Co. v. BoUes, 4 Otto, 104; Com'rs of Marion Co. o. Clark, Id. 278 ; 
 Co. of Daviess v. Huidekoper, 8 Otto, 98 ; Mygatt v. City of Green Bay, 1 Biss. 292 ; 
 Davis V. City of Kendallville, 5 Bias. 280 ; Miller v. Town of Berlin, 13 Blatchf. 245 ; 
 Nicolay v. St. Clair Co. 3 DiU, 163 ; Huidekoper v. Buchanan Co. Id. 175; Judson v. 
 City of Plattsbnrg, Id. 181 ; Pollard v. Pleasant Hill, Id. 195 : Guernsey v. Burling- 
 ton Township, 4 Dill. 372 ; Adams v. Lawrence Co. 2 Pittsb. 60 ; Wood v. Allegheny 
 Co. 3 Wall. Jr. 267; Woodhull v. Beaver Co. Id. 274; First Nat. Bk. of St. Johns- 
 bury V. Town of Concord, 50 Vt. 257 ; Lane v. Schomp, 20 N. J. Eq. 82 ; Belo v. 
 Com'rs of Foraythe Co. 76 N. C. 489 ; State v. Board of Educ. of Perry sburg, 27 Ohio 
 St. 96. Provisions with regard to the rate of interest to be paid on town bonds, and 
 the length of time which they are to run are " directory and not of the essence of the 
 power." Township of Rook Creek v. Strong, 6 Otto, 271 ; Gilchrist v. Little Rock, 1 
 Dill. 261. Provisions which limit the loana of corporations to those made on certain 
 securities do not avoid loans not so made. Mott v. U. S. Trust Co. 19 Harb. 669 ; 
 AUen V. Freedmen'a Trust Co. 14 Fla. 418 ; Littlewort v. Davia, 50 Miss. 403 ; Union 
 Mining Co. )•. Rocky Mt. Nat. Bk. 2 Col. 248 ; a. o. 96 U. S. 640. A statute ri quiring 
 foreign corporations to file copies of their charters with the county clerk, but not ex. 
 pressly -forbidding them to do business until aueh filing is made, and imposing on the 
 officers of the company a penalty for failure to file, does not render their contracts void. 
 Northwestern Mut. Ins. Co. «. Overholt, 4 Dill. 287. See, ante, pp. 5 and 6, note. 
 
IMPERATIVE FORMALITIES. 533 
 
 Secondly. It would also seem tliat some at least of even im- 
 perative formalities may be so universally disregarded by the cor- 
 poration as to cease to be operative. Thus, in Walter's Case,^ 
 shares had been transferred with the assent of the directors of a 
 company, but without regard to certain formalities as to obtaining 
 such consent. The company's deed provided that " no assignment 
 or transfer, without the approbation of the directors, to he 
 manifested as hereinafter mentioned, shall have any force either 
 at law or in equity." It was, however, shown that this latter 
 provision had been systematically neglected, and the Vice-Chan- 
 cellor accordingly settled the transferee on the list of contrib- 
 utories. 
 
 This appears very like a true imperative formality, and if so, 
 it is an instance of its waiver. Walton's Case and Bargate v. 
 Shortridge, which have already been cited,' are also sometimes 
 mentioned as similar instances. But it may very fairly be ques- 
 tioned, whether the formalities referred to in either of the above 
 cases, and more particularly either of the two last, were really im- 
 perative. Imperative formalities, if not of such a kind as by their 
 absence to void absolutely and irremediably the transactions with 
 respect to which they are enjoined, must mean at least this : that 
 they cannot be waived by any agreement or acquiescence of the 
 parties immediately concerned, so as to affect the rights of third 
 parties ; that third parties, unaware of the arrangement, are entitled 
 to say that the contract entered into, the forfeiture made, or the 
 transfer permitted, without the observance of such formalities, is, 
 as regards the existing rights of such third parties, simply void ; 
 and that, consequently, the parties liable before such transaction, 
 remain liable afterwards. 
 
 Moreover, in each of the three decisions just cited, the dispute 
 was between the corporation and the individual, between parties, 
 that is, vnpari delicto, the former attempting to take advantage 
 of informalities in which it had been concerned and had long ac- 
 quiesced. Had it been a question between creditors of the cor- 
 poration and its members, then the decision must have been that 
 the absent formality was directory only, and therefore the transac- 
 tion was valid ; or that it being imperative, the transaction was in- 
 valid ; there could have been no middle course. 
 
 .' He Vale of Neath, <fec. Co. (Walter's ' Ante, p. 525. 
 
 Case), 3 De G. & Sm. 149. 
 
534 ACTS INTRA VIRES, BUT INFORMAL. 
 
 It should also be noticed that the formalities in the three cases 
 quoted, were created by the corporation itself ; had they been im- 
 posed by the supreme legislature directly, they must have been 
 strictly followed. 
 
 Section IY. — Obseevance of Formalities ot PEES.(a) 
 
 Sometimes circumstances arise rendering it impossible to com- 
 ply with the necessary formalities. In such case they must be 
 observed cy jprls. In Exeter and Crediton Ky. Co. v. Buller,* a 
 dispute arose between the directors and the shareholders of the 
 railway company, a majority of the former wishing to lease the 
 line to the Bristol and Exeter Railway, a broad-gauge company — 
 a minority of the former and a majority of the latter wishing to 
 lease it to the Tamar Yalley Eailway, a narrow-gauge company. 
 The majority of the directors got possession of the common seal, 
 whereupon {he minority, with the concurrence of the sharehold- 
 ers, filed a bill in the name of the company to restrain them from 
 leasing the line to the Bristol and Exeter Railway Company, or 
 opening it on the broad-gauge system. The defendants demurred 
 because th&biU was not under seal, but both the Vice-Chancellor and 
 the Lord Chancellor overruled the demurrer upon the ground that 
 it had been sanctioned by a general meeting of the shareholders, 
 who could do no more " because they had not the seal, which had 
 been withdrawn from the original custody of the secretary, ob- 
 viously for the purpose of preventing the company from doing 
 what they intended to do." 
 
 In Foss V. Harbottle,^ the bill filed by some of the shareholders 
 in a company, alleged that there had ceased to be a sufiScient num- 
 ber of qualified directors to constitute a board, that the company 
 had no ofiice or secretary, and that consequently general meetings 
 
 ' 5 Rail. Cas. 211 ; 16 L. J. (Ch.) 449. = 2 Hare, 461. 
 
 (a) See Matter of Wheeler, 2 Abb. Pr. (N. S.) 361 ; People v. Runkle, 9 Johns. 
 147; Matter of Mohawk <fe Hudson R. R. Co. 19 Wend. 135; People v. Peck, 11 
 Wend. 604 ; Matter of Union Ins. Co. 22 Wend. 591 ; Ex parte Willcocks, 1 Cow. 
 402 ; People v. Cook, 14 Barb. 259 ; a. c. affi'd 8 N. Y. 6'7 ; People v. Albany & Sus- 
 quehanna E. R. Co. 55 Barb. 344 ; Coles Co. v. Allison, 23 111. 43'7; People v. Town 
 of Fairbury, 51 111. 149. 
 
LIMITATION OF AUTHORITY IN EXTENT. 535 
 
 -could not duly be summoned or held, and it therefore prayed inter 
 -alia for the appointment of a receiver. The Yice-Ohancellor, 
 liowever, held that, assuming the statements to be correct as to 
 the impossibility of convening meetings in the way laid down in 
 the Companies Act, it would be sufficient if some of the share- 
 holders, having convened the others, met together and purported 
 to act on behalf of the whole body, {a) 
 
 Section Y. — Limitation of Atithoeity in Extbsnt. 
 
 This is a matter allied to and somewhat resembling the subject 
 of formality, but when narrowly examined important differences 
 are observed between them. It takes two forms : First, limita- 
 tion of liability generally in respect of any transactions ; secondly, 
 limitation of the extent or degree to which an authority, whether 
 possessed by a corporation or by its officials, may be exercised. (6) 
 
 The former of these was a very important matter in the times 
 when the liability of the members in registered companies almost 
 without exception, and in many other companies, was unlimited. 
 Its importance in this respect is now greatly lessened, but it has 
 not altogether disappeared ; for it may be raised in questions af- 
 fecting (1) the liability of a corporation as such, (2) the liability 
 of members who have not yet paid up in full, to do so to meet 
 the claim put forward. 
 
 It will be convenient, therefore, to state the results of the de- 
 cisions as they stand. They seem to be thus : 
 
 1. If it be agreed expressly or by necessary implication that 
 :the liability arising out of a given transaction shall be met and 
 
 (a) In Jenning v. United States Ins. Co. i1 Mo. 425, where the incorporating act 
 •of an insurance company declared that " all the conditions of policies issued by the 
 said company shall be printed or written on the face thereof," it was held that no 
 verbal contract of insurance was binding on the company. Compare Security Fire 
 Ins. Co. V. Kentucky, <fec. Ins. Co. 7 Bush, 81. 
 
 (6) The limitatipp of the amount which can be loaned to one person by a national 
 bank is directory, and does not avoid loans in excess of the limit. Gold Mining Co. 
 V. Nat. Bank, 96 U. S. 640; Shoemaker v. Nat. Mech. Bank, 2 Abb. U. S. 418 ; 
 Stewart v. Nat. Union Bank, Id. 424 ; O'Hare v. Second Nat. Bank of Titusville, 11 
 Penn. St. 96. See, also, Ossipee Mfg. Co. c. Canney, 54 N. H. 295 ; ,.De Camp v. Dob- 
 bins, 29 N. J. Eq. 36 ; Germantown Farmers' Ins. Co. v. Dhein, 43 Wis. 420. 
 
536 ACTS INTRA VIRES, BUT INFORMAL. 
 
 discharged only in a given way or out of definite property or 
 funds, then the liability, if any, arising, can be enforced only, in 
 such way or against such property or funds,^ provided, however, 
 the person liable does not willfully make away, &c., with such 
 funds ;^ but the restriction must be clear and express, and the- 
 presumption is against the person setting it up.* 
 
 2. The liability of a corporation may consequently be confined 
 purely to the actual existing corporate funds or definite portions 
 thereof, and not be enforceable against the members individually.* 
 
 3. Eut to relieve the members, whether from unlimited 
 liability or from liability to pay up the amounts due on their 
 shares, there must be the clearest provisions in this behalf in the 
 engagement made by the corporation with the person now claim- 
 ing thereunder. 
 
 Where there is this evidence, the claimant can go against the 
 corporation only ; that has been several times aflJrmed.' But the 
 decision is far oftener the other way ; and consequently members, 
 and a fortiori corporations themselves as such, have been held 
 liable to meet negotiable instruments,' policies,' and other claims,* 
 notwithstanding attempts to show that the claimants were re- 
 stricted to certain other funds only. 
 
 It is settled beyond question that the validity of a restriction 
 of this kind is purely one of contract — that it is not in the nature 
 of a formality — that therefore no provisions in the constating in- 
 struments not imported into the transaction out of which the 
 claim arises, will be sufficient or throw on the claimant the neces- 
 sity of investigating whether or not his particular transaction is 
 within the restriction.' 
 
 ' " If I say to a mail, ' I will insure Athenteum Life Ass. Soc. 3 De G. & J. 
 
 you against all losses either by fire or sea, 660, 
 provitled always that my estate of Black- ^ See n. 6. 
 
 acre onlv shall be liable to make p;ood to " Re Athenseum Life Ass. Soc. 3 De 
 
 you the loss,' he would have no right to G. <fe J. 660 ; Halket v. Merchant Trader's 
 
 say that I am bound personally to pay ; Loan Assoc. 13 Q. B. 360; Durham's 
 
 my answer would be : 'Personal liability Case, 4 K. <fe J. 517. 
 is beyond my contract, non hoec infmdera ' See last note. 
 
 ■uerd, I agreed with you to such an extent, « Greenwood's Case, 3 De G , M. & G. 
 
 but no further.'" Per Cranworth, L. C, 459; Gordon «. Sea, Fire & Life Ass. 
 
 in Greenswood's Case, 3 De G., M. & G. Soo. 1 H. <fe N. 599 ; 26 L. J. (Ex.) 202 ; 
 
 459, 483; Sunderland Marine Ins. Co. v. Re State Fire Ins. Co. (Meredith's Claim)! 
 
 Kearney, 1 6 Q. B. 925 ; Mathew v. Black- 32 L. J. (Ch ) 300 
 more, 1 H. A N. 762. See Ilallett •„. ' See n. 1. 
 
 Dowdale, 18 Q. B. 2 ; King v. Accumu- * Hancock v. Hodgson, 4 Bing 269 
 
 lative Ass. Co. 3 C. B. (N. S.) 151 ; Grain's » See notes 4 <fe 6 ; compare Eoyaf 
 
 Case, 1 Ch. D. 822. British Bank v. Turquand, ante, p. 516. 
 
 2 Higgms V. Hopkins, 3 Ex. 163 ; Hal- But see the cases, mUe, pp. 512-14 
 lett V. Dowdale, 18 Q. B. 2. See Re 
 
FORMALITIES RELATING TO THE MANAGING BODY. 53T 
 
 The second question is not one of contract, at least not purely 
 60, but involves the principle relating to powers. The decisions^ 
 it must be admitted, are somewhat contradictory. It might have 
 been thought that the cases already cited on the first point would 
 have governed this : that a limitation of extent, being merely a 
 special limitation, would, like a limitation of liability, which is the 
 general form, be inoperative as against claimants, unless positively 
 introduced into and made a condition of their claim. 
 
 But apparently this cannot be so laid down universally, and 
 there is at least one express decision that acts done in excess of 
 such limitation are simply void. This was Fountaine v. Car- 
 marthen Ey. Co.* 
 
 In a later case. He Pooley Hall Colliery Co.," where debentures- 
 were issued in excess of the amount allowed, those in excess were 
 void, but the holders were allowed to rank as simple contract 
 creditors. 
 
 Section VI. — Foemalities Specially eblating to the Managing 
 
 Body. 
 
 One other class of formalities remains to be considered, viz. : 
 those relating to the meetings of managing bodies. The meetings, 
 of members of corporations, and the various requisites thereof, 
 have already been considered ; * and what is there said will apply 
 equally to the meetings of those officials, perhaps always directors, 
 and other similar governing bodies, who do not act singly. Other 
 requisites •and formalities than those there set forth may perhaps 
 be necessary, but what these are cannot be precisely stated, as they 
 depend upon the custom, the acts of parliament, the charter, &c., 
 applicable to each particular case, (a) 
 
 ■ There is one point which requires some special attention in 
 connection with the present subject, viz. : the question whether 
 
 ' L. R. 6 Eq. 316. Compare He Pat- '« 21 L. T. (N. S.) 690; W. N. 1869, 
 
 ent File Co. L. R. 6 Ch. 83 ; ante, p. 224. p. 255 ; see ante, p. 227, for the facta. 
 
 ^ Ante, pp. 438 el scq. 
 
 (a) In regard to notice of meetings see ante, pp. 438 et seq., where, on the subject 
 of meetings of the general body, mapy rules and principles will be found equnlly ap- 
 plicable to the subject of this section. 
 
538 ACTS INTRA VIRES, BUT INFORMAL. 
 
 •directors can act otherwise than at a hoard nieeting.(a) This, 
 which was first raised in Glover v. North-Western Ky. Co.,^ was 
 
 ■ 5 Ex. 66; 19 L. J. (Ex.) 172; per Parke, B., Ibid. 173. 
 
 (a) It may be stated, as a general rule, that the governing body of a corporation, 
 as such merely, are agents of the corporation only as a board, and not individually; 
 and, accordingly, that they cannot act save when assembled at a board meeting ; and 
 in all cases consultation among a part of the directors, at least, is necessary. Sea 
 Redfield on Railways, § 23 ; Despatch Line of Packets v. Bellamy Mfg. Co. 12 N. H. 
 205 ; Edgerly v. Emerson, 23 N. H. 565 ; Cammeyer v. German Churches, 2 Sandf. 
 ■Ch. 186 ; Corn Exchange Bank v. Cumberland Coal Co. 1 Bosw. 436 ; Dey v. Jersey 
 City, 19 K J. Eq. 412; Schumm v. Seymour, 24 N. J. Eq. 153 ; Shorlz v. XJnangst, 
 3 W. (fe S. 45 ; Stoystown & Greensburg T. Co. v. Craver, 46 Penn. St. 886 ; Boss ». 
 Crockett, 14 La. Ann. 811 ; Junction B. R. Co. v. Reeve, 15 Ind. 236; Yellow Jacket 
 Mining Co. v. Stevenson, 5 Nev. 224. But the rule has been broken in upon by some 
 authorities, and it has been held that directors for some purposes may act otherwise 
 than at a board meeting. Thus, in Bank of Middlebnry v. Rut. <fe Wash. B. B. Co. 
 30 Vt. 159, where the question was whether an agent was duly authorized by the di- 
 rectors, the Court say : " The directors, in the absence of restrictions in the charter 
 or by-laws, have all the authority of the corporation itself in the conduct of its or- 
 dinary business. And it is not important that this authority be conferred at an as- 
 sembly of the directors, unless that is the usual mode of their doing such acts. If 
 they adopt the practice of giving a separate assent to the execution of contracts by 
 their agents, it is of the same force as if done at a regular meeting of the board. If 
 this were not so, it would lead to very great injustice : for it is notorious that the 
 transaction of the ordinary business of railways, banks, and similar corporations in 
 this country, is without any formal meetings or votes of the board. Hence there 
 follows a necessity of giving effect to the acts of such corporations according to the 
 mode in which they choose to allow them to be transacted." This decision is fol- 
 lowed in Bradstreet v. Bank of Royalton, 42 Vt. 128, in which the following language 
 is used : " The question of law then is simply this : whether, in all cases, a contract 
 for service to the bank, concluded by two directors professing to act for the bank, 
 and subsequently approved by a third, is unauthorized for want of a formal vote or 
 conference with the other two members of the board. It is very tru6 that there 
 might be contracts of such a kind that the action of the board, by formal vote, would 
 be essential to their validity. But, on the other hand, it is not necessary that the 
 whole board should be consulted or a vote taken upon every trifling detail of the 
 business. If a particular line of procedure has been resolved upon, or is necessarily 
 incident to the business of the bank, it is not essential that every expenditure of 
 money, or engagement of service, or other item within the line so marked out, should 
 receive the consideration of all the directors outside a meeting, or that a meeting of 
 the board should act upon it." 
 
 In Edgerly v. Emerson, 23 N. H. 655, Bell, J., discusses the question as to the 
 modes in which directors may act. He says : " It was also objected that the meeting 
 of the directors was illegal and their proceedings invalid, because it was a special 
 meeting at which only four of the seven directors were present or notified. In the 
 case of the Despatch Line of Packets v. Bellamy Mfg. Co. 12 N. H. 206, certain ques- 
 tions were determined, in relation to the powers of directors of corporations, by 
 
FORMALITIES RELATING TO THE MANAGING BODY. 539 
 
 apparently decided in the negative in D'Arcy v. Tamar, &c. Ey. 
 Co./ where the prescribed quorum of a meeting of directors being 
 
 1 L. E. 2 Ex. 158 ; 36 L. J. (Ex.) 31; 4 H. <St C. 463. 
 
 ■which we feel bound to abide. The case was considered with great care and ability. 
 In that case it was held : I. That if the authority of the directors to manage and 
 exercise a general superintendence and control over the affairs of the corporation, 
 had been conferred by the charter itself, it would have been in the nature of an 
 original corporate power in a definite number, and a majority of the whole number, 
 being duly assembledat a regular meeting, might act by major vote of those present. 
 II. That where the by-laws of a private corporation confer upon the directors power 
 to act in behalf of the corporation, without special limitation as to the manner, a 
 majority may act within the scope of the authority given to the board, and bind the 
 corpojaiion, either where there is a consultation of all together and a concurrence of 
 a majority, or where there is a regular meeting at which all might be present, and a 
 majority actually meet and act by major vote. III. That the act of a majority of 
 such board, in the case last supposed, does not bind the corporation, unless: (1) 
 There was an assent of all the directors at a meeting, or perhaps separately obtained. 
 (2) Or there was a meeting and consultation of the whole board, and a vote of a 
 majority. (3) Or a meeting, held at some regular period, at which a majority were 
 present, and acted by a major vote. (4) Or a meeting regularly notified, at which a 
 majority assembled, and acted by major vote. IV. When the act purports to be the 
 act of the board, it may be presumed it was the act of a majority, until the contrary 
 is shown." The judge concurs in the doubt expressed as to the case where the assent 
 of directors is separately obtained; and proceeds, without intending to disturb the 
 decision in Despatch Line of Packets v. Bellamy Mfg. Co., as to the questions which 
 arose there, and which dealt with the case where directors derived their powers from 
 the corporation by by-law or vote, to examine the question whether the powers of 
 officers of corporations, conferred upon them by law, are in all cases subject to the 
 limitations, " that a majority of the whole number, being duly assembled at a regular 
 meeting, might act by a major vote of those present," He says : " We assent to the 
 rule as stated. It relates to the acts of a majority of those present, when less than, 
 the whole board are present at a regular meeting. If a quorum, usually a majority 
 of the whole number, are present, a majority of that quorum may act. But this ap- 
 plies only to a regular meeting, at which^all have, of course, the needful notice and 
 opportunity to be present, or a special meeting, at which all have been duly notified 
 to be present. The question which arises in this case is different. The meeting in 
 question was not a stated meeting, nor a meeting at which all had been duly notified 
 to be present. Four only of the seven directors were present, and no others had 
 been notified. The general priooiples applicable to the exercise of joint powers are 
 well settled. When individuals or corporations give an authority jointly to two or 
 more persons, in order to bind the principal, all the agents must act. But where a 
 number of persons are by law intrusted with power, not of mere private convenience, 
 but in some respects of a general nature, and all of them are regularly assembled, the 
 majority will conclude the minority, and their act will be the act of the whole. There 
 are, however, many cases where an authority is granted to a board, or to several 
 persons, or a majority of them, or a certain limited number, either more or less than 
 a majority, who are thereby constituted a quorum. Thus, in the usual form of bank 
 
540 ACTS INTRA VIBES, BUT INFORMAL. 
 
 three, the defendants were held not liable on a bond to which the 
 secretary had affixed the seal of the conapany, after having ob- 
 tained the written authority of two directors at a private inter- 
 view, and at another private interview, the verbal promise of a 
 third, to sign the authority. 
 
 But this decision has since received a somewhat strained inter- 
 pretation, by which its importance is very considerably qualified : 
 " There the action was an action of debt upon a bond under the 
 seal of the company; the plea was non est factum, anA under 
 that plea it was, of course, competent to the company to prove 
 the truth of the plea. They did prove it conclusively. There 
 could be no valid bond in that case unless the seal of the company 
 was affixed to it, and the seal appeared to be so affixed. The seal 
 could not be lawfully affixed but by the direction of the three 
 directors, and it was proved beyond question that the seal had 
 been affixed when only two directors, and not three, had given 
 any kind of authority for it. The authority of the third was 
 obtained at a later period, and upon the plainest principles of 
 common law pleading there could be only one way of dealing 
 with the case. It is true that the judges in D'Arcy v. Tamar Ky. 
 Co. did, though not necessarily for the purpose of decision, say 
 that what the law required was, that there should be the combined 
 action of at least three directors before the seal could be affixed to 
 a bond." 
 
 This is the comment of Bacon, V.-C, in lie Bonelli's Tele- 
 
 charters, there is a provision that 'no less than four directors shall constitute a board 
 for the transaction of business, etc' The effect of this clause we deem the same as a 
 provision, that the directors, or any four of them, shall be competent to transact any 
 business of the bant. Four constitute a quorum, and, when assembled, possess all 
 the powers of the entire board. The position of the directors in such a case must be 
 closely like that of the selectmen of a town, of whom a majority are by statute made 
 competent to act in all cases.'' After enlarging upon the powers of selectmen, the 
 judge concludes : " We are, therefore, of opinion, that where a quorum of the directors 
 of a bank meet, and unite in any determination, the corporation are bound, whether 
 the other directors are or are not notified." See, also. Cram v. Bangor House, 12 Me. 
 359. Where the charter directed that the by-laws should be made by the directors, 
 the fact that, in adopting them, they called their meeting a stockholders' meeting does 
 not invalidate them, when all the stockholders constituted the board of directors and 
 all were present. People v. Sterling Mfg. Co. 82 111. 457. A mandamus issued to the 
 trustees as individuals has the same effect as if issued to the board. State v. Wright,. 
 10 Nev. 167. 
 
FORMALITIES RELATING TO THE MANAGING BODY. 541 
 
 graph Co. (Collie's Claira),^ where the circumstances were very 
 similar to those in D'Arcy's Case. The articles of association of 
 the company provided that three directors should be a quorum, 
 and endued them with wide powers of sale, appointment of 
 agents, &c. The company resolved to sell their undertaking to 
 the postmaster-general, and in July, 1869, a letter was written, 
 addressed to Collie, appointing him to act as agent for the direct- 
 ors in the matter of the sale, and agreeing that if he succeeded in 
 obtaining from the postmaster-general the sum of £20,000 or up- 
 wards, his commission should be 25 per cent. The letter con- 
 cluded by saying : " We engage to sign a legal obligation to the 
 above effect when called upon, and to get the signatures of our 
 brother directors." This letter was written in C.'s office, and 
 there signed by two of the directors and handed to C, who for- 
 warded it to a third director in the country, by whom it was 
 returned to C. confirmed and signed by himself and a fourth 
 director. This agreement, though not appearing to have been 
 resolved upon or confirmed at any meeting of directors, was re- 
 ferred to at a subsequent meeting of shareholders and not 
 repudiated, but no such legal obligation as referred to in the letter 
 was executed. The sale having been effected through C.'s 
 agency for a sum of more than £20,000, Bacon, Y.-C, determined 
 that the agreement was not ultra vires, and that, though informal 
 according to the internal regulations of the company, it was bind- 
 ing against the company in favor of a person dealing with them, 
 and consequently that C. was entitled to commission at the rate 
 of 25 per cent. 
 
 If these two decisions are to be considered valid and recon- 
 cilable '\i must be upon the distinction taken by Sir John Stewart, 
 viz., that D'Arcy v. Tamar Ey. Co. was a common law case de- 
 cided upon common law pleadings, the only question being 
 whether the seal was properly affixed. But even admitting this 
 distinction, could Collie have successfully sued at law upon the 
 agreement entered into in manner aforesaid ? "When a quorum of 
 directors is made necessary for the transaction of a company's 
 business, what difference is there between the making of a special 
 and a simple contract? And if none, if Collie's agreement, 
 
 1 L. E. 12 Eq. 246, 269. 
 
642 ACTS INTRA VIRES, BUT INFORMAL. 
 
 looked at as a simple contract," was void at law, what claim could 
 he have in chancery save upon a quantum meruit f 
 
 Perhaps the correct view is, that it is suflBcient, if there is actu- 
 ally a meeting, intended to be such, of a quorum of the governing 
 body ; or, as it is expressed in a United States judgment : ^ " Where 
 a quorum of directors meet and unite in any determination, the 
 corporation are bound whether the other directors are or are not 
 notified." 
 
 From D'Arcy v. Tamar Ey. Co.,* it would seem that when the 
 constating instruments are silent as to the place of meeting, the 
 law is so too. Martin, B., in his judgment, said : "Now it is not 
 necessary that there should be any fixed place of meeting, but it 
 is quite clear that the directors are to act together and in a meet- 
 ing, whereas the authority on which the secretary acted, was given 
 by two only, acting together, and by the subsequent assent of a third. 
 The authority, therefore, was not of such a character as enabled 
 the secretary to affix the seal so as to bind the company." 
 
 At any meeting, it is almost unnecessary to say that the majority 
 will bind the minority, unless the concurrence of sCU has been^ 
 for special reasons, rendered necessary, (a) 
 
 As to the nwmber which will constitute a quorum : First, if 
 the constating instruments fix some definite number, thep at least 
 this number must be present. (5) In Kirk v. Bell ' the deed of a 
 
 ' Eagerly v. Emerson, 3 Post. 556, ' 16 Q. B. 290 ; Ducarry v. GUI, 4 C. 
 
 joer Bell, J. <fe P. 121; Brown v. Andrew, 13 Jur. 
 
 * Ubi supra. Compare Wills v. Mur- 938 ; 18 L. J. (Q. B.) 153. » 
 ray, 4 Ex. 843. 
 
 (a) See Cram v. Bangor House, 12 Me. 3B4; Edgerly v. Emerson, 23 N. H. 655; 
 Sargent v. Webster, 13 Mete. 497; Lockwood v. Mech. Nat. Bank, 9 R. I. 308; Jir 
 parte Willcooks, 1 Cow. 402 ; Field v. Field, 9 Wend. 403 ; Wells v. Rahway Rubber 
 Co. 19 N. J. Eq. 402; Booker v. Young, 12 Gratt. 303; CahlU v. Kalamazoo Ins. Co. 
 2 Doug. (Mich.) 124; Buell v. Buckingham, 16 Iowa, 284. 
 
 (6) " There is a distinction taken between a corporate act to be done by a select 
 and definite body, as by a board of directors, and one to be performed by the con- 
 stituent members. In the latter case a majority of those who appear may act, but 
 in the former a majority of the definite body must be present, and then a majority of 
 the quorum may decide. This is the general rule upon the subject ; and if any cor- 
 poration has a different modification of the expression of the binding will of the cor- 
 poration, it arises from the special provisions of the act or charter of incorporation.'' 
 2 Kent, 293. In the absence of provisions in the charter or by-laws, a majority of 
 the directors is a quorum. See Angell & Ames, § 502; Cram v. Bangor House, 12 
 Me. 364; Edgerly v. Emerson, 28 N. H. 655 ; Sargent v. Webster, 18 Mete. 497 ; Ek 
 
FORMALITIES RELATING TO THE MANAGING BODY. 5iS 
 
 banking company provided that the directors should not be fewer 
 than five, three to be a quorum, with power to transact ordinary 
 business. The number having fallen to four, these executed a 
 deed compromising a large debt due to the firm. It was held that 
 this not being an ordinary business, and consequently requiring^ 
 the concurrence of five directors, was not binding on the bank. 
 
 Card V. Carr* is to the same purport, ^erefioe trustees of a 
 building society had been constituted a quorum, and the plaintiff, 
 a member, after being in arrear of payment on seven consecutive 
 occasions, had paid arrears to two trustees, who received the pay- 
 ment in ignorance of the rules, but it was held that such receipt 
 had not bound the society, but that the society could, on returning 
 the payments, forfeit the shares of the said member. 
 
 Nor can the managing body transfer their authority to less. 
 than a quorum of the same,'' imless express authority in that be- 
 half is vested in them.* 
 
 Secondly. The clauses appointing the quorum may, however,, 
 be directory only,^ or controlled by subsequent clauses.' 
 
 Thirdly. "When the constating instruments are silent, then " it 
 is the duty of the court to find out what was the usual number of 
 directors who conducted the business of the company." * 
 
 As the managing body are, in effect, but a committee of the 
 whole body of members, so they may also, for the sake of con- 
 
 ' 1 C. B. (N. S.) igV) ; 26 L. .T. (C. P.) * Thames Haven Dock and Ry. Co. v. 
 
 lis. But compare ^x/KiWe Biguold, 22 Rose, 4 M. <fe G. 552; 12 L. J. (0. P.> 
 
 Beav. 143, and AUard v. Bourne, 15 C. B. 90. 
 (N. S.) 468. * Smith v. Goldeworthy, 4 Q. B. 430 ; 
 
 « Re Leeds Banking Co. (Howard's 12 L. J. (Q. B.) 192. 
 Case), L. R. 1 Ch. 561 ; 36 L. J. (ChJ 42. « Lyster'a Case (Be Tavistock Iron- 
 
 ' Totterdell v. Fareham Brick Co. L. works Co.) L. R. 4 Eq. 233, 237 ; 36 L. J. 
 
 R. 1 C. P. 674. As to delegation of au- (Ch.) 616. 
 • thority, see ante, pp. 490-3. 
 
 parte Wlllcocks, 1 Cow. 402 ; Lockwood v. Mech. Nat. Bank, 9 R. I. 308 ; Field ». 
 Field, 9 Wend. 403 ; Price v. Grand Rapids & Ind. R. R. Co. 13 Ind. 58 ; Cowley v. 
 Same, Ibid. 61 ; Hamilton v. Same, Ibid. 347 ; Cahill -o. Kalamazoo Ins. Co. 2 Doug: 
 (Mich.) 124. The expression, " president and directors," often used in charters, is 
 equivalent to " board of directors," and the president is not an essential part of a 
 quorum by reason of its use merely. Sargent v. Webster, 13 Mete. 497. In the- 
 absence of any different regulation in the charter, a majority of the directors forms a 
 quorum, aod a vote of a majority of a quorum, at a meeting duly convened, deter- 
 mines the action of the board. If there are five directors, a resolve passed by a 
 vote of two, at a meeting at which three are present, is presumably binding. Wells- 
 v. Rahway White Rubber Co. 19 N. J. Eq. 402. 
 
5i4 ACTS INTRA. VIRES, BUT INFORMAL. 
 
 venience, constitute, whether for general or special purposes, com- 
 mittees of themselves, and transfer to such committees, but not 
 to a stranger,^ the requisite powers and authority to act on behalf 
 of the whole body, (a) Such transfer must not amount to a dele- 
 gation or abandonment, but the whole body must stiU retain, and 
 under certain circumstances, e. g., the dismissal of an officer, 
 actually exercise a general control over the doings of such com- 
 mittee.^ 
 
 At all meetings the proceedings must be carried on with due 
 regard to order and regularity. If, by custom or express provis- 
 ion, any special business takes precedence of other kinds, it must 
 be first attended to.^ 
 
 If it has to be done seriatim, as, for instance, in electing mem- 
 bers, a collective vote upon the whole matter will not suffice.* 
 
 Sometimes minutes or other records of the proceedings have 
 to be kept and signed by the chairman or other official, or such 
 minutes or records so kept and signed, are admissible in evidence 
 without further proof .^ 
 
 At most ordinary, and at all extraordinary meetings, only 
 certain kinds of business can be transacted, and usually, when 
 notification has to be given beforehand of such meetings, the 
 notice must contain a statement, more or less definite, of the pur- 
 poses for which the meeting is called, and of the business to be 
 deliberated upon thereat. 
 
 If certain powers are vested in a select body, a meeting of this 
 body may be summoned by the proper authority without specify- 
 
 > Rex «. Biril, 13 East, 36T ; Rex v. Co. 16 Jurl (H. L.) 895; ShefiBeld, Ac. 
 
 Westwood, 4 Bligh (N. S.), 213 ; Rex v. Ry. jjo. v. Woodcock, 1 M. & W. 674; 
 
 Attwood, 4 B. & A. 481. Milea v. Bough, 3 Q. H. 845; 12 L. J. (Q. 
 
 2 Ossood n. Nelson, L. R. 5 H. L. B.) 74 ; West London Ry. Co. v. Bernard, 
 636. 3 Q. B. 87K; IS L. J. (Q. B. ) 68 ; Llan- 
 
 3 Rex V. Tarkyns, 3 B. <!r Aid. 668. harry Hematite Iron Co. (Tothill's Case), 
 < Rex V. Player, 2 B. A Aid. 707. L. R. 1 Ch. 85. 
 
 * See Inglia v. Great Northern Ry. 
 
 (a) See Burrill v. Nahant Bant, 2 Mete. 163 ; Waite v. Windham Mining Co. 38 
 Vt.l8 ; Corn Exchange Bank v. Cumbeiland Coal Co. 1 Bosw. 4S6 ; Hoyt v. Thomp- 
 son, 19 N. Y. 207 ; Olcott v. Tioga R. R. Co. 27 N. Y. 646 ; Blatclifurd v. Roas, 64 
 Barb. 42 ; St. Louis Domicile Association v. Angustin, 2 Mo. App. 123, and note to 
 page 492, ante; Dillon on Mun. Corps. §| 60,221. In general, snch committees 
 would he governed in their mode of action by the same rules which apply to boards 
 of directors. See State v. Jersey City, 27 N. J. L. 493; Junkins ». Union School Dis- 
 trict, 39 Me. 220. 
 
FORMALITIES RELATING TO THE MANAGING BODY. 545 
 
 ing the objects of the same, since it can be summoned only for 
 certain limited purposes.^ 
 
 The whole meeting will not be rendered irregular simply be- 
 cause of the transaction of business foreign to that set forth in 
 the notice paper,^ or foreign to that which the meeting can 
 validly transact.' (a) 
 
 1 Rex ». PulsfArd, 8 B. & C. 350. » Wills v. Mvirray, 4 Ex. 843 ; 19 L. 
 
 * jRe British Sugar Refining Co. {Ex J. (Ex.) 209. 
 jaarte Fans), SK.&3. 408 ; 26 L. J. (Ch.) 
 369. 
 
 (a) Where by-laws of a corporation are prescribed, not by the stockholders aft 
 large, but by the directors, if the directors disregard a by-law providing what 
 notice shall be given of a special meeting, the corporation cannot set up this irregu- 
 larity in order to impair, as towards third persons, the directors' acts. Samuel *. 
 Holladay, 1 Wool. 400. 
 
 35 
 
CHAPTER VI. 
 
 RATIFICATION AND ACQUIESCENCE. , 
 Section I. — EATiFiCATioif by a Coepoeation Itself. 
 
 The principles of ratification whicli concern private individ- 
 uals, will, in tlie main, be found applicable to corporations, due 
 regard being had to the limited capacities of the latter, (a) It 
 
 (a) " The law is well settled, that a principal who neglects promptly to disavow an 
 act of his agent, by which the latter has transcended his authority, makes the act his 
 own; and the maxim which makes ratification equivalent to a precedent authority, 
 is as much predicable of ratification by a corporation, as it is of ratification by any 
 other principal, and it is equally to be presumed from the absence of dissent." Kel- 
 sey I/. National Bank, 69 Penn. St. 426 ; citing Bredin ». Dubarry, 14 S. 4 R. SO ; 
 Gordon v. Preston, 1 Watts, 38Y; Bank of Penn. v. Reed, 1 "W. <fe S. 101. "Ratifica- 
 tion may be by express assent, or by acts or conduct of the principal, inconsistent 
 with any other supposition than that he intended to adopt and own the act done in 
 his name (Story on Agency, §§ 239, 252), and the principle is as applicable to cor- 
 porations as to individuals." Peterson v. Mayor of N. T. 17 N. Y. 449, and cases 
 cited. See, also, Fleckner v. XJ. S. Bank, 8 Wheat. 363 ; Salem Bank v. Gloucester 
 Bank, 17 Mass. 28 ; Burrill v. Nahant Bank, 2 Mete. 163 ; Hayward ». Pilgrim Soci- 
 ety, 21 Pick. 270 ; Despatch Line of Packets v. Bellamy Mfg. Co. 12 N. H. 206 ; Bil- 
 liard V. Goold, 34 N. H. 230; Bulkley v. Derby Fishing Co. 2 Conn. 252 ; Church v. 
 Sterling, 16 Conn. 388; Hoyt v. Thompson, 19 N. Y. 207; Bank of Penn. v. Reed, 
 1 W. & S. 101; Planters' Bank v. Sharp, 4 S. <fc M. 76; Walworth Co. Bank 
 t). Farmers' Trust Co. 16 Wis. 629; Rich v. State Bank, 7 Neb. 201; and other 
 cases cited in the notes to this chapter; Story on Agency, §§ 239, 260. As to 
 ratification by municipal corporations, see Dillon on Mun. Corps. §§ 386, 886. In 
 order to establish ratification by a corporation, it is requisite to prove acts by a 
 board of directors, with full knowledge of the circumstances, if the transaction was 
 within the powers of the directors, or that the corporation itself, i. e., the body of 
 shareholders, has done some act significative of approbation or adoption. See Salem 
 Bank v. Gloucester Bank, 17 Mass. 1. To warrant applying the doctrine of ratifica- 
 tion, those who ratify must be those who might have given authority at first. A 
 board acting collectively, can ratify a contract made in their behalf without original 
 authority, if it is one within their general powers to make. But individual members 
 of the board cannot ratify it. Taymouth v. Koehler, 35 Mich. 22 ; Tracy v. Guthrie 
 Co. Agric. Soc. 47 Iowa, 27. " Ratification operates upon the act ratified, precisely 
 as though authority to do the act had been previously given, except where the rights 
 of third persona have intervened between the act and the ratification. The retroac- 
 
EATIFICATION BY A COEPOEATION ITSELF. 647 
 
 must also be remembered, that the tendency of modern judicial in. 
 terpretation and legislation has been to waive needless formal- 
 ities,(a) and that consequently, at the present day, many agree- 
 ments are held binding on corporate bodies, even without ratifica- 
 tion, which a few years since would, from technical reasons, not 
 have been so. 
 
 Ratification may be either express or implied. Sewell's Case 
 '{He New Zealand Banking Corp.),^ furnishes an example of the 
 former. The directors of a company whose capital was £300,000, 
 divided into 3,000 shares of £100 each, made an unauthorized 
 issue of 1,000 additional shares beyond their capital. They after- 
 wards called general meetings, at which special resolutions were 
 passed, extending, as the company had the power by their articles 
 of association in that way to extend, their capital to £600,000. It 
 "was held that the issue of the 1,000 shares, though originally ultra 
 vires of the directors and invalid, was confirmed by these resolu- 
 tions. (5) 
 
 Ratification is, however, much oftener inferred from the pro- 
 ceedings and conduct of the parties, whether private individuals 
 or corporations, than plainly and positively declared. It is not 
 easy, perhaps correctly speaking it is not possible, for a corpora- 
 tion, which is invisible and unable by itself to perform any act, to 
 ratify immediately ; ' it can do so only indirectly, by the acquies- 
 cence of either of its members as a whole, or its agents to whom 
 it had intrusted a general authority. That it can thus bind itself 
 
 ' L. R. 3 Ch. 131. J. (0. p.) 224 ; in both of which the com- 
 
 " See Williams v. St. George's Har- pany was held to have ratified a contract, 
 
 hour Co. 2 De G. & J. 547 ; and compare by allowing judgment to go by default. 
 
 Edwards v. Kilkenny, <fec. Ey. Co. 26 L. 
 
 tive efficacy of the ratification is subject to this qualification. The intervening rights 
 •of third persons cannot be defeated by the ratification. In other words, it is 
 essential that the party ratifying should be able, not merely to do the act ratified at 
 the time the act was done, but also at the time the ratification was made." Cook v. 
 Tullis, 18 Wall. 332; see Wood «/. McCain, 1 Ala. 806; Taylor v. Robinson, 14 Oal. 
 396 ; McCracken v. San Francisco, 16 Cal. 591. 
 
 (a) See preceding chapter. 
 
 (6) A contract entered into by the president, or the directors, or other agents of 
 a corporation, without authority from the corporation to make it, may yet be rendered 
 obligatory upon the corporation by a ratification from the stockholders. Perry v. 
 Simpson, <fec. Manuf. Co. SI Conn. 520; Aurora Agricultural, &e. Soc. v. Paddock,, 80 
 m. 263. So an unauthorized payment by a town treasurer, may be ratified by a vote 
 of a town meeting accepting his report in which such payment appears. Arlington 
 *. Pierce, 122 Mass. 270. 
 
548 RATIFICATION AND AGQUIESCENCE. 
 
 is now completely established, as is shown by the decision ive 
 Phosphate of Lime Co. v. Green.* By the articles of association, 
 the company^ -was -prohihited from purchasing their own shares. 
 They lent the defendants £3,500, to enable them to take up iOO 
 shares, which the latter had bought in the open market ; and some 
 time after, the defendants being unable to repay this loan, they 
 compromised the matter by accepting the 400 shares, £10 paid up, 
 in lieu of the loan, which they thereupon cancelled. At a subse- 
 quent meeting of the shareholders, an account was handed round 
 to every one present, wherein the sum of £4,000 was set down as 
 the price of " shares cancelled," and the account of the defendants 
 in the company's ledger was credited with £4,000 " as per shares' 
 forfeited account." This was acquiesced in for five years, when, 
 on the liquidation of the company, the liquidator brought an ac- 
 tion to obtain payment of the 400 shares. It was decided that, 
 assuming that the compromise with the defendants by the accept- 
 ance and cancellation of the 400 shares was ultra vires of the di- 
 rectors, the subsequent conduct of the shareholders, in assenting 
 to the transfer of the old to the new company with knowledge, or 
 the opportunity and means of knowing if they thought proper to- 
 inquire, that such transfer was in part founded upon such cancel- 
 lation, was a ratification and acquiescence in what the directors 
 liad done ; and that it sustained a plea of accord and satisfaction 
 to an action brought in 1870 against the defendants, in the name 
 of the old company, for the recovery of the £6,500 advance. 
 
 The different judgments rendered in this case, examined 
 rather carefully the circumstances under which a corporation can 
 be deemed to have impliedly ratified an informal transaction, and 
 one which otherwise would not be binding upon it. From them 
 it may be gathered that in the case of joint-stock companies and 
 other similar corporations, as it is perhaps not possible so it is not 
 in law necessary, in order to establish either direct or implied rat- 
 ification, or the still vaguer form of acquiescence on the part of 
 the corporation, to prove the acquiescence of each individual 
 shareholder ; but that it is enough to show circumstances which 
 
 ' L. R. 7 C. P. 43. chase of its own shares, although it had 
 2 The marginal note says, "the di- no power to do this, then the ease is di- 
 rectors," but this is wrong ; it was "the rectly contrary to numerous other decis- 
 company," though the decision appar- ions. See ante, p. 96. Indeed, in any 
 ently proceeded upon the other supposi- view, the decision seems to be bad, unless 
 tioD. If not, if it decided that the com- the proceedings were ultra vires in the 
 pany, notwithstanding, could ratify a pur- narrow sense only. 
 
RATIFICATION BY A CORPORATION ITSELF. 549 
 
 are reasonably calculated to satisfy the court or a jury, that the 
 thing to be ratified came to the knowledge of all who chose to in- 
 quire — all having full opportunity and means of inquiry.^ 
 
 Very generally questions of ratification, when the point to be 
 determined is the immediate and direct acquiescence of the cor- 
 j)oration itself, relate to shares, their acceptance, forfeiture, trans- 
 fer, and the like. In these matters, it is quite clear that directory 
 formalities may be neglected, and that if a company agree to an 
 informal transfer or other dealing with shares, both parties will be 
 bound thereby, and neither of them, nor any third person, can 
 afterwards take advantage of the informality, assuming it not to 
 be essential to the dealing under consideration, so as to open and 
 «et aside the transaction. But if the omitted formality be essen- 
 tial, so that for want of it the arrangement is a nullity, no subse- 
 quent proceedings of the whole body of the members can supply 
 the defect. As they could not have dispensed with it by express 
 agreement at the time the arrangement was entered into, so neither 
 can they do so in an indirect manner, by ex post facto acquies- 
 cence. In such eases the mere passage of time is of no avail ; 
 " lapse of time, clearly, would not make valid that which at the 
 beginning was invalid." ^ 
 
 I. Any transaction, not actually illegal or ultra vires, hut not 
 originally binding on a corporation, may he ratified hy it. 
 
 Engagements of every, description entered into on behalf of 
 an existing corporation, which are not in themselves illegal, but 
 which do not at present bind, or rather, more accurately, which 
 may be repudiated by the corporation, may be duly ratified by it 
 whatever be the defect, whether it be the absence of some formal- 
 ity, or the want of authority on the part of those who have pur- 
 ported to act for the corporation, or the like — always provided 
 that the defect be not essential to the validity of the engage- 
 ment, (a) Such ratification will have its usual effect, of always 
 rendering the principal liable, and of generally discharging the 
 
 ' Compare, per Lord Chelmsford, in ' Fer Lord Cairns, L. R. 3 H. L. 275. 
 Spackman v. Evans, L. R. 3 H. L. 171, 
 233. 
 
 (a) Whatever a corporation can authorize its officers to do, it can ratify when 
 done. McLaughlin v. D. & M. R. R. Co. 8 Mich. 100. 
 
550 RATIFICATION AND ACQUIESCENCE. 
 
 agent from liability, e. g., wlien he has signed a contract on behalf 
 of a named principal.^ 
 
 II. Transactions which a/re absolutely illegal or ultra vires can- 
 not he ratified. 
 
 As to illegal proceedings nothing need be said. As to those- 
 which are ultra vires in the strict sense, the question seems equally 
 clearly decided in the negative. "In my opinion, beyond all 
 doubt, on the true construction of the statute of 1 862, creating 
 this corporation, it appears that it was the intention of the Legis- 
 lature, not implied, but actually expressed, that the corporation 
 should not enter, having regard to its memorandum of association, 
 into a contract of this description. If so, according to the words 
 of Mr. Justice Blackburn, every court, whether of law or of 
 equity, is bound to treat that contract, entered into contrary to- 
 the enactment, I will not say as illegal, but as extra vires, and 
 wholly null and void, and to hold, also, that a contract wholly void 
 cannot be ratified." "(a) 
 
 " I have already observed that the contract entered into by 
 the company with Messrs. Eiche was not a voidable contract 
 merely, but being in violation of the prohibition contained in the 
 Companies Act, was absolutely void. It is exactly in the same 
 condition as if no contract at all had been made, and therefore a 
 ratification of it is not possible. If there had been an actual rati- 
 fication, it could not have given life to a contract which had no 
 existence in itself ; but at the utmost it would have amounted to 
 a sanction by the shareholders to the act of the directors, which, 
 
 ' See Higgins u. Senior, 8 M. ife W. ' L. R. 7 H. L. 673, per Lord Cairns, 
 
 834 ; Armstrong v. Stokes, L. R. 7 Q. B. L. C. 
 
 598. 
 
 (a) "No sort of ratification can make good an act without the scope of the cor. 
 porate authority." Peterson v. The Mayor, &c. 17 N. T. 449. An act by a corpora- 
 tion contrary to law, is incapable of ratification. No amount of ratification can give 
 it vitality. Martin v. Zellerbach, 38 Cal. 300 ; Taymouth «. Koehler, 35 Mich. 22 ; and 
 see ante, p. 482, n. Where a director sells land of a company to himself, a majority of a 
 corporation cannot ratify the transaction so as to bind the minority. Cumberland Coal 
 Co. 0. Sherman, 30 Barb. S53. But the corporation itself can. Twin Lick Oil Co. v. 
 Marbury, 1 Otto, 687 ; see Zabriskie v. Cleveland C. & C. R. R. Co. 23 How. 381. See 
 post, chapter on lAabilityfor Ultra Vires ^efe, where the exclusion of the defense of ultra 
 vires, when the contract has been executed on one part, and where the benefit has. 
 been received by one party, will be considered. 
 
RATIFICATION BY A CORPORATION ITSELF. 551 
 
 if given before the contract was entered into, would not have 
 been valid, as it does not relate to an object within the scope of 
 the memorandum of association." ' 
 
 If, however, a transaction be ultra vires, in the narrow or 
 secondary sense, it may be ratified or acquiesced in and thereby 
 rendered binding. Such transactions are not outside the powers 
 of the corporation, but are outside the powers of any majority, 
 however numerous, not amounting to the entire body of corpora- 
 tors. If the whole body, one and all, agree, all are bound, and 
 therefore the corporation is bound also. Consequently if all could 
 have agreed and directed the objectionable proceeding beforehand, 
 so afterwards by unanimous assent it can be approved. It is upon 
 this principle, though, certainly, it was not made the ratio deci- 
 dendi, that Phosphate of Lime Co. v. Green ' may be supported. 
 It was not absolutely outside the power of the plaintiff company 
 to cancel the shares there in dispute. Such a proceeding was 
 within their possible and potential powers, within the powers 
 which they could have invoked into active life by proper resolu- 
 tions, without the assent of any outside authority. It was, how- 
 ever, not within their active powers then actually existing, and, 
 consequently, it was ultra vires in the secondary sense ; but, hav- 
 ing been acted upon and acquiesced in for a long time, under cir- 
 cumstances which justified the inference that all the members 
 were cognizant of, and not desirous to upset, the proceeding, the 
 presumption necessarily followed that they had approved and 
 aflSrmed that which they could, by taking the ordinary measures^ 
 have directed beforehand, {a) 
 
 ' Ibid., p. 679, per Lord Chelmsford. ' L. R. 7 C. P. 43 ; ante, pp. 548, 549. 
 
 « 
 
 (ffl) " Eyery charter is a contract between the public and the corporators, anci 
 between the corporators themselves. An act of the officers (and a corporation can 
 act in no other way) may violate the contract with the public. According to the 
 authorities, such an act is an illegal contract, contrary to public policy, and void. 
 But if the act only violate the contract between the corporators, it may or may not 
 be void, accordingly as the corporators may have directed, assented to, or acquiesced 
 in it. The former class of acts includes those which relate to enterprises or fran- 
 chises not granted. The latter class includes such acts as violate those provisions of 
 the charter which regulate the rights of the corporators with each other. It is ap- 
 parent that there is a wide difference in the nature of things between these two 
 classes of acts. * * * But acts of the officers of a corporation are often said to 
 be uUra vires when they are wholly within the scope of the franchise granted in the 
 charter, but they are beyond the authority conferred upon the officers. Such acts. 
 
352 RATIFICATION AND ACQUIESCENCE. 
 
 III. EngagemenU on Uhalf of a future corporation cannot 
 in any manner or for any purpose, le ratified ly the cor- 
 poration when existing, [a) 
 
 though directly contrary to the provisions of the charter, if they he authorized by 
 the stockholders, or he acquiesced in, or confirmed, cannot be avoided after third 
 persons have acted upon them. They are regulated by the rules which govern the 
 relation of principal and agent to third persons." Hazlehurst i>. Savannah, <fec. R. R. 
 Co: 43 Ga. 53. 
 
 The Quicksilver Mining Company cases (Kent v. Quicksilver Mining Co.; 
 Hoyt V. Quicksilver Mining Co.) have already been referred to in connection with 
 the question of the power to issue preferred stock (see ante, p. 165, note), and a 
 large part of the opinion by Judge Folger in the Court of Appeals has been quoted. 
 Those cases have a bearing, perhaps even more direct, upon the subject now under 
 consideration, inasmuch as the real basis of the decision of the court of last resort 
 was the acquiescence of stockholders. Judge Folger, after considering the question 
 of power, says : " But there remains a serious question, whether, though there was at 
 the outstart a minority of the stockholders who gave no assent to the corporate act, 
 itliere has not been such tacit acquiescence, and delay in action by that minority as 
 to amount to indefensible laches, and estoppel upon those who constituted it and 
 their assigns. In our judgment there has ; and we find here a safe place on which to 
 j-est our decisions of .these cases. The findings show that the by-laws empowering 
 the creation and issue of the preferred stock were authorized at a stockholders' meet- 
 ing, regularly called and held and conducted ; that the stock was at once offered for 
 subscription to all of the stockholders; that a circular informing thereof was issued 
 'by authority and distributed to the stockholders ; that though all of them did not 
 avail themselves of the chance to take it, it was not because the chance was not 
 Tcnown ; a large number of them did subscribe, and paid money for the privilege to 
 the corporation, and that money went into the assets and business of the company ; 
 certificates for the preferred stock were thereupon issued, and it, as well as the com- 
 mon stock, was dealt in by the public, sales were made of the two kinds openly in 
 the stock exchange at prices for the one larger than for the other, and quoted in the 
 "daily public prints, and from year to year for four years the annual reports of the 
 ■directors to the stockholders spoke of the two kinds of stock. There was ample 
 knowledge, or means of knowledge, on the part of all stockholders, of the action of 
 tthe corporation in the creation of the two kinds of stock, of the issue of certificates 
 tfor the preferred stock, of the entry of that stock into the channels of trade, of the 
 public dealings in it at the special marts for the sale of such property, and of the 
 continued recognition of its existence and validity by the company and the public. 
 It is not to be conceived that the owners of the common stock of this corporation 
 'did not have actual knowledge that there had been created a stock having ostensibly 
 greater right and value than their own, and that it had gone into the market and 
 was dealt in by the public interested in the validity of it. For the lapse of four 
 years, however, there was no action of the company or of an individual stockholder 
 to have a judicial declaration that the company had exceeded its powers in the crea- 
 tion of the stock, and that it was invalid. We think that these facts, most of which 
 
 (o) See next chapter. 
 
RATIFICATION BY A CORPORATION ITSELF. 553 
 
 What will be the effect of ratification when the engagement 
 was formed on account of a non-existing corporation, is not alto- 
 gether certain. 
 
 First. It has been laid down that it will not relieve those 
 already responsible. Scott v. Lord Ebury,^ was a suit by the pub- 
 lic ofiBcer of the Union Bank of London against the promoters, of 
 whom Lord Ebury was one, of the E. A. & C. Eailway Company, 
 upon a check signed by two of them — the check being headed 
 " E. A. & 0. Eailway Company," and expressed to be for " Par- 
 liamentary expenses : House fees," and explained by a collateral 
 agreement that it was " to be repaid out of the calls on shares." 
 An act authorizing the railway passed, the promoters being named 
 therein as the first directors ; and, at a meeting subsequently held, 
 the directors passed a resolution that the acts of the secretary — one 
 of them being the obtaining the above loan — should be adopted 
 and confirmed. No shares were allotted or calls made, and the 
 undertaking was not proceeded with. It was decided that the ad- 
 
 'L. R. 2C. P. 265. Compare, as to 7 Bing. 110 ; Burbridse ». Morris, 3 H. ifc 
 the liability of persons holding themselves C. 664; 34 L. J. (Ex.) 181; Beattie v. 
 out as directors, Doubleday v. Muskett, Lord Ebury, L. R. 3 Ch. 'J'l'J. 
 
 are set forth in the findings in two of the cases, warrant the conclusion of law thereiD, 
 that the stockholders, by acquiescing in the action of the corporation in making the 
 preferred stock, have ratified and assented thereto, and that the same is binding on 
 them by reason of such assent and ratification. la the application of the doctrine of 
 vMra vires, it is to be borne ia mind that it has two phases : one where the public is 
 concerned; one where the question is between the corporate body and the share- 
 holders in it, or between it and its stockholders and third parties dealing with it, 
 and through it with them. When the public ia concerned to restrain a corporation 
 within the limit of the power given to it by its charter, an assent by the stockholders 
 to the use of unauthorized power by the corporate body will be of no avail. When 
 it is a question of the right of a stockholder to restrain the corporate body within its 
 express or incidental powers, the stockholder may, in many cases, be denied, on the 
 ground of his express assent or his intelligent 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 «« illegal, or are malum prohi- 
 hitum. 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 a reliance upon those acts." See, also, Empire Transfer Co. v. Blanch- 
 ard, 31 Ohio St. 6B0; Sanderson v. Mtna. Iron & Nail Co. (Ohio S. C. 1879) 8 Cent. 
 L. J. 266. 
 
554 RATIFICATION AffD ACQUIESCENCE. 
 
 vance was made upon the personal responsibility of those who 
 signed the check, and that the subsequent adoption of their acts 
 by the directors did not alter their position. 
 
 The only point to be determined in this case, was whether the 
 money, sought to be recovered, was advanced by the plaintiff to 
 be repaid by the company after its incorporation, or by the direct- 
 ors personally. If the defendants were originally liable, they 
 could not have subsequently been relieved from responsibility. 
 
 But it had been decided a few weeks previously, in the case of 
 Kelner v. Baxter,* that even if not originally liable the subsequent 
 attempted ratification by the company would not have affected 
 the position of the parties. Here an agreement for the purchase 
 of the plaintiff's premises, &c., was come to between the plaintiff 
 and the projectors of an hotel company, in the following form : 
 
 " January Qlth, 1866. 
 " To John Daciee Baxter, &c., on behalf of the proposed Graves- 
 end Royal Alexandra Hotel Company, limited. 
 " Gentlemen: I hereby propose to sell the extra stock now at 
 the Assembly Eooms, Gravesend, as per schedule hereto, for the 
 sum of £900, payable on the 25th February, 1866. 
 
 " John Kelnee." 
 At the end was written : 
 " To Me. John Kelner. 
 
 " Sir : We have received your offer to sell the extra stock, as 
 above, and hereby agree to and accept the terms propose^ 
 
 " J. D. Baxter, &c., &c., on behalf of the Gravesend Royal 
 Alexandra Hotel Company, limited." 
 
 In pursuance of this agreement, the goods in question were 
 handed over to the projected company and consumed by them. 
 On 1st February, a meeting of the proposed directors took place,, 
 who passed a resolution that the above arrangement should "be and 
 the same is hereby ratified." On 20th February the company was 
 registered, but it collapsed. Thereupon Kelner sued the persons 
 who had signed the above agreement, and the court held them liable 
 upon the ground that as the company was not in existence when 
 they made the contract, they alone were then liable upon it,' and 
 
 ' L. R. 2 C. P. 174. responsible as principal. Per Byles, J., 
 
 ' Because "persons who contract as L. R. 2 C. P. 185; Furnlvall v. Coombes, 
 
 agents are generally personally responsi- 6 M. &. G. 736 ; Doubleday v. Muskett, 7 
 
 ble when there is no other person who is Bing. 110. 
 
ACQUIESCENCE BY A CORPORATION ITSELF. 556 
 
 that it was not competent upon the company, after its incorpora- 
 tion, to ratify the contract, so as either to relieve them of liability 
 or to impose upon itself any liability in respect thereof. 
 
 Secondly. What is the effect npon the company ? The answer 
 to this question given in the above case is that the corporation can 
 never ratify, can never assume liability for, such a transaction.^ 
 But the so-called ratification there set up, was no ratification by 
 the company at all, which was not then incorporated ; it was only 
 by persons intending to be its directors thereafter. However, this- 
 decision has, in subsequent cases, been assumed to be a decision 
 that a corporation cannot by ratification render itself liable for a 
 contract made before its existence ; and, so construed, it has been 
 more than once emphatically approved, especially by the judges of 
 the court where it was decided.' 
 
 Section II. — Acquiescence by a Coepoeation itself. 
 
 Acquiescence, as distinct from positive ratification, may be de- 
 scribed as that course of conduct by a person who has notice, or, 
 but for his own carelessness and inattention, would have notice,, 
 of the doing or happening of certain acts, proceedings, or trans- 
 actions which concern himself, and which are done, engaged in,^ 
 or concurred in by persons purporting to represent him, bat which, 
 though not void or ultra vires, do not originally bind him, where- 
 by the presumption arises that such person — though not having ex- 
 pressly assented thereto — has assented to and intended to be bound 
 by such acts, proceedings, or transactions. 
 
 Many expressions in addition to acquiescence are used to sig- 
 nify this legal result. A person is said to be bound by laches or 
 negligence, to be estopped by his conduct, &c. But the gist of 
 the matter is always the same, viz., that there is an implied, a pre- 
 sumptive, and not an active or declared ratification. And the 
 principle involved is the same as that in cases of ratification : 
 " omnis ratihdbitio reProtrahitur et mandato priori cequipara- 
 tur."^(a) 
 
 ' See Payne v. New South Wales, <fec. '' See Melhado v. Porto Alegre Ky. Cc 
 
 Co. 10 Ex. 283 ; 24 L. J. (Ex.) 117, where L. R. 9 C. P. 603. 
 eimUarly decided. ^ It is not possible or necessary here 
 
 (a) An insurance company with a capital fixed by its charter, which gave au- 
 
556 RATIFICATIOlf AWD ACQUIESCENCE. 
 
 I. There must he facts which will raise the presumption of 
 an intention to acquiesce. 
 
 It is not sufficient that after a voidable or informal transaction, 
 time elapses without proceedings being taken to set aside the same. 
 There must be more than this to fix a person with liability. " No 
 mere lapse of time can alter the character of a transaction : ' Quod 
 ab initio non valet, in tractu temporis non cowoalescit? Length 
 of time may, in many cases, materially assist in establishing the 
 presumption of acquiescence in an act which requires confirma- 
 tion to give it validity. But then it is not time, but the acqui- 
 escence, which changes what would otherwise be a void act into a 
 valid one." ' (a) 
 
 to investigate all the various circum- v. Marshall, 10 C. B. (N. S.) 711 ; Eams- 
 
 ^tances requisite to constitute acquies- den v. Dyson, L. K. 1 H. L. 129 ; Bankart 
 
 cenoe in particular cases, the expenditure ii. Tennant, L. R. 10 Eq. 141 ; WUUaoM 
 
 of money, &c. Reference may be made •</. Evans, L. R. 19 Eq. 547. 
 to the leading authorities. Duke of ' L. R. 3 H. L. 260, per Lord Chslms- 
 
 Beaufort v. Patrick, 17 Beav, 60; Davies ford. Compare Id. p. 256, ^ej- Cairns, L. 
 
 thority to its stockholders in tTieir discretion to increase the stock to a certain limit, 
 issued additional stock without a formal vote of the stockholders. It was held, in a 
 suit by its assignee in bankruptcy, to enforce the collection of an assessment on the 
 new stock, that the requisite assent of the stockholders might be shown by acquies- 
 -cence, and that the receipt of dividends for several years upon the basis of the in- 
 creased capital, with the knowledge and assent of a large majority of the stock 
 holders, constituted a complete ratification. Payson v. Stoever, 2 Dill. 427. A 
 corporation having allowed its officers to give notes for property, the power to hold 
 some of which was doubtful, and having taken possession of it and employed it in 
 legitimate corporate purposes, was said to have unequivocally ratified the acts of the 
 officers. Moss v. Averill, 10 N. Y. 449, citing Corning v. Southard, 3 Hil!, 652; 
 Moss V. Rossie Lead Co. 6 Hill, 137; Conro v. Port Henry Iron Co. 12 Barb. 27; 
 Clark's Executors v. Van Riemsdyk, 9 Cranch, 133. See Church -i). Sterling, IS 
 ■Conn. 388; Chicago Building Soc. v. Crowell, 65 111.453, and cases cited. The 
 open and public establishment and advertising of tariffs of fare and freight by the 
 president of a railroad company, presupposes a delegated authority from the corpora- 
 tion, and the act of the corporation in receiving and appropriating the tolls thus 
 established, without objection, amounts' to a ratification. Hilliard v. Goold, 84 N. H. 
 230. See Penu., Del. & Md. Nav. Co. v. Dandridge, 8 Gill <fe J. 248. If an officer of 
 a corporation is continuously suffered to exercise general authority, in the corporate 
 business, the corporation may become bound by his acts, within the scope of the 
 powers so assumed, in the same manner as if authority had been expressly granted. 
 Union, <fec. Mining Co. v. Rocky Mt. Nat. Bank, 2 Col. T. 248 ; Gold Mining Co. ». 
 Jfat. Bank, 96 TJ. S. 640; see, also. Insurance Co. o. McCain, 96 U. S. 84; Pacific R. 
 R. Co. V. Thomas, 19 Kan. 256 ; Bennett v. Md. Fire Ins. Co. 14 Blatchf. 422 ; Soc. 
 for Savings v. New London, 29 Conn. 174 ; Wall's Appeal, 78 Penn. St. 370. 
 (a) Ormsby v. Vermont Copper Mining Co. 56 N. T. 623. 
 
ACQUIESCENCE BY A CORPORATION ITSELF. 557 
 
 II. Persons will not he hound hy aoquiesoence in respect of 
 proceedings other than those of which they have received 
 notice. 
 
 The question not unseldom arises, admitting there has been 
 acquiescence, how far or tg what facts does it extend ? Here the 
 rule is that above enunciated : that the acquiescence does not ex- • 
 tend beyond the notice, actual or constructive, that is to say, that 
 where the fair presumption of an intention to be bound ceases, 
 the legal liability and bond also cease. The consequent result 
 sometimes is — and the same remark applies to ratification — that 
 though acquiescence is clearly established, yet it having been ac- 
 quiescence in transaction A simpliciter, while the actual transac- 
 tion entered into was B or even A not simpliciter, but with certain 
 qualifications, the acquiescent is not bound. 
 
 Most of the cases illustrative of this point have arisen in 
 connection with acquiescence by corporators in the ultra vires 
 proceedings of their managing body.(a) It is quite established that 
 the corporators will be bound by acquiescence only so far as they 
 have actual knowledge ; that if a part only of the transaction be 
 communicated to them, they will not be estopped, but will be 
 entitled to reopen the whole affair. 
 
 The leading decision is that of the House of Lords in Houlds- 
 worth V. Evans.* A general meeting of the shareholders of a 
 company had agreed to certain conditions on which dissenting 
 members were to be allowed to retire from the company, one of 
 which fixed the date at which assent to the arrangement was to 
 be declared. It was held that that date was an essential part of 
 the proceeding, and that the directors had no power, after the 
 •expiration of that date, to receive proposals and enter into 
 arrangements, with any member who desired to retire but had not 
 expressed his wish to do so within the stipulated time. Under 
 the circumstances, a majority of the House of Lords considered 
 
 C. "If by acquiesceDoe is meant a course way in which the afifaire of the company 
 
 of conduct which amounts to active and were being conducted, and its property 
 
 intelligent consent, I think it very likely was being managed, and of the rights and 
 
 that many of those shareholders could interests which were being created with 
 
 not be held to have actively or intelli- 'regard to the stock of the company ? " 
 gently consented to what was going on. ' L. R. 3 H. L. 263. Stewart's Case, 
 
 But what I think is the real question to L. R. 1 Ch. 611, was precisely the same, 
 
 be looked at in any case of this kind is and Stanhope's Case, L. B. 1 Ch. 161, 
 
 this : Had the shareholders notice of the was very similar. 
 
 (a) See ante, pp. 651-563. 
 
558 RATIFICATION AND ACQUIESCENCE. 
 
 that the shareholders were not fixed with knowledge of the in- 
 formalities. 
 
 Lord Cranworth came to a different conclusion on the facts, but 
 he was very clear and explicit as to the effect of acquiescence : 
 " I thiak (with the Lord Chancellor) that it is a most essential 
 proposition, to be rigidly enforced, that in these joint-stock com- 
 panies absent shareholders should never be bound to do anything 
 more than to assume that the directors are doing their duty, un- 
 less in cases where they are informed that although the directors 
 have not intended to defraud the company, yet, exercising powers 
 not legally conferred upon them, they have gone beyond what 
 they ought to do. If, with knowledge of that fact, the share- 
 holders remain a long time, and take no step whatever, still more 
 if they so remain while great alterations are going on in the com- 
 pany, they must be taken to have retrospectively sanctioned what 
 has been done." 
 
 It may be added, as ^ general proposition, that members of a 
 corporation will be bound by acquiescence in the informal acts of 
 their managing body, only when such acts are within the apparent 
 powers of such directors ; and that to bind them when the acts 
 in question are clearly ultra vires of the directors, though intra 
 vires of the corporation, it must be shown that the members 
 were duly informed of the same.^ (a) 
 
 Another case, to the same effect, is Spackman v. Evans,^ the 
 facts and general principle laid down in which are thus stated in 
 the marginal note : " Though the directors of a company may 
 grant to a dissenting shareholder leave to retire from the com- 
 pany on conditions which they deem prudent and advisable to be 
 granted in his case, yet, if such conditions are not in accordance 
 with the terms of the deed of settlement, or with conditions for 
 retirement, notice of which was distinctly given to all the share- 
 holders, and which were agreed on at a public meeting of the 
 shareholders, though he performs the conditions on which such 
 leave was granted, and his name is for years removed from the 
 lists of shareholders, and the company changes its form of con- 
 ducting its business (of which he has no notice), and dividends are 
 
 ' Downes v. Ship.'L. R. 3 H. L. 348, ' L. R 8 H L 171 
 389. 
 
 (o) See Kent v. Quicksilver Mining Co. ante, p. 652, note, and other cases cited in 
 notes to this section. 
 
ACQUIESCENCE BY A CORPORATION ITSELF. 559 
 
 received (in which he does not participate), he is liable to have his 
 name inserted in the list of contributories on the final winding-up 
 of the company." ^ 
 
 III. Memihers of corporations will receive sufficient notice hy 
 the publication of voidable or informal transactions in the 
 usual way in which the ordinary general proceedings of 
 the corporation are notified to the members. 
 
 There may, perhaps, be some slight doubt as to whether the 
 principle here expressed has been strictly followed, or even ad- 
 mitted, in all the decisions. But it is submitted that this has been 
 done. Some discrepancies may appear, but they can be explained 
 consistently with the correctness of the proposition, by stating 
 that the "publication " must be a true and complete publication, 
 sufficient, and so worded as to call attention to the precise matter 
 which the members are to confirm, ratify, or acquiesce in.* 
 Where there has been such publication and such subsequent pro- 
 ceedings as to justify the presumption of acquiescence, the mem- 
 bers have always been bound.' 
 
 With regard to notice of the proceedings of directors and the 
 like, it seems to be decided that though all persons, and a fortiori 
 the directors themselves, will be presumed acquainted with the 
 provisions of the constating instruments, and, therefore, of the 
 powers of directors ; yet, not even corporators will be presumed 
 acquainted with the precise manner in which such powers are ex- 
 ercised. Consequently, to bind shareholders by acquiescence in 
 acts of their directors in excess of their powers, it must be shown 
 by evidence, other than the mere acts, that the shareholders had 
 knowledge, actual or constructive, of the same.* 
 
 ' These facts are manifestly rather every shareholder by the circular of the 
 
 strong evidence of notice, and Lord St. 4th of November, 1848. The important 
 
 Leonards and Lord Romilly dissented question is, whether the information com- 
 
 from the judgment. Lord Cranworth municated to them did communicate this 
 
 thus expressed himseif: " LooMng to all knowledge. I have, but not without re- 
 
 which was thus done, I should certainly luctance, come to the conclusion that it 
 
 hold that the conduct of the continuing did not." 
 
 shareholders amounted to a ratification of ' See Stanhope's Case, L. R. 1 Ch. 
 
 the illegal or irregular acts of the direct- 161 ; Spackman v. Evans, L. R. 3 H. L. 
 
 ors, provided it be clear that the share- lYl. 
 
 holders knew that they were illegal or ' Brotherhood's Case, 4 De G., F. <fe 
 
 irregular, that is, knew that they were J. 666 ; Evans v. Smallcombe, L. R. 3 H. 
 
 acts not authorized by the deed, and not L. 249. 
 done in pursuance of the notice given to * Compare ^osi, p. 566. 
 
\ 
 
 560 RATIFICATION AND ACQUIESCENCE. 
 
 Thus, in Dowries v. Ship,^ L. Chelmsford laid down : " The 
 knowledge which is imputable to a shareholder, under the circum- 
 stances above mentioned, is of the engagement by which he has 
 bound himself, and with which it is not an unreasonable presump- 
 tion that he has made himself acquainted. This case must be 
 distinguished from those where it has been sought to bind share- 
 holders by the acts of directors of a company which were ultra 
 vires. A shareholder must be considered to be fully informed of 
 the powers given to directors by the deed of association to which 
 he is, either actually or constructively, a party. But he is not 
 bound to know, and, practically, he rarely does know, whether the 
 directors are acting within, or exceeding, the scope of the author- 
 ity intrusted to them. Therefore, as your lordships lately held, 
 in a case, of Spackman v. Evans," where the directors had exceeded 
 their powers in allowing certain shareholders to forfeit their 
 shares, and retire from the company, the acquiescence of the re- 
 maining shareholders was not to be presumed, in the absence of 
 proof of actual knowledge, or of means of knowledge, of which 
 they had neglected to avail themselves." 
 
 lY. Provided a person has notice of a voidable or informal 
 transaction which affects himself, he wiU he hound thereby 
 unless he takes active steps to express his dissent. 
 
 " I on]y desire to add one word with regard to a phrase which 
 I think, in matters of this kind, is sometimes somewhat misap- 
 plied, namely, the phrase ' acquiescence.' If, by ' acquiescence,' is 
 meant a course of conduct which amounts to active and intelligent 
 consent, I think it very likely that many of those shareholders 
 could not be held to have actively and intelligently consented to 
 what was going on. But what I think is the real question to be 
 looked at, in any case of this kind, is this : 
 
 " Had the shareholders notice of the way in which the affairs 
 of the company were being conducted, and its property was being 
 managed, and of the rights and interests which were being created 
 with regard to the stock of the company " ? ' 
 
 ' L. R. 3 H. L. 348, 359. by their omiasion to take the necessary 
 
 2 L. R. 3 H. L. 171. measures for relief. Taite's Case, L. R. 3 
 
 3 Per Lord Cairns, L. C, in L. R. 3 Eq. 796 ; Lawrence's Case, L. R. 2 Ch. 
 H. L. 256. Compare Crook v. Corp. of 412; Heyman ti. European Central Ry. 
 Seaford, L. R. 6 Ch. 551 ; and the nu- Co. L. R. 1 Eq. 169 ; Perrett's Case, L. R. 
 merous cases where shareholders, who 15 Eq. 260; Sharpley ji. Louth, <fcc., Ry. 
 could originally have repudiated their Co. 2 Ch. D. 663. 
 
 allotments, have been fixed as members 
 
ACQUIESCENCE BY A CORPORATION ITSELF. 661 
 
 Y. Mere directory formalities may he waived^, and being 
 waived, the informal transaction may be rendered binding 
 by aoquiescence. 
 
 This is the simplest example of acquiescence. Dir^tory for- 
 malities have nothing to do with the essence of a transaction. 
 They are simply indicia, simply fetters, so to speak, called into 
 existence to secure the parties concerned against being hurried 
 into rash and unfortunate transactions. But the means so pro- 
 vided may be set aside at the option, express or implied, of those 
 for whom they have been provided. Of course, difiSculties will 
 arise as to (1) what are directory formalities, and (2) what will 
 amount to an implied waiver. Upon both reference must be had 
 to the remarks already made.^ 
 
 As to what are the cases when formalities of this description 
 wiU be waived, and the informal transaction rendered binding by 
 acquiescence, it may probably be affirmed, without any qualifica- 
 tion, that every kind of formality which is clearly directory may 
 be so waived, provided the parties actually knew or can reason- 
 ably be presumed to have known the informality, and have not 
 taken early opportunity to repudiate the transaction in question. 
 
 VI. Certain kinds of essential formalities may be waived, 
 semble. 
 
 This proposition appears on the face of it to be false. It reads 
 like a contradiction in terms to state that a formality is essential 
 and yet that it may be waived. Nevertheless it seems by the 
 authorities that various formalities, and regulations in the nature 
 of formalities, there are, of such a kind that, if absent from the 
 transaction to which they relate, either party, and not merely the 
 one for whose protection they are created, may at the time take 
 advantage thereof and repudiate the transaction, and yet, by lapse 
 of time and acquiescence, both parties will become — perhaps 
 estoppel is the true explanation — bound and be estopped from set- 
 ting up the defect, (a) 
 
 First. The need of the corporate seal may be so dispensed 
 
 ' Ante, pp. 606-22, a3 to Formalities; and pp. 625-6, as to Acqniescence. 
 
 (a) See chapter on JUability/or Ultra Vires Acta, and naXea, post. 
 
 ae 
 
562 RATIFICATION AND ACQUIESCENCE. 
 
 with. In various cases, as already seen/ this is allowed without 
 reference to other facts than the nature of the particular transac- 
 tion. Secondly. In addition there are instances not coming within 
 these exceptions — at least there are decisions to this effect — where 
 the seal Vvas wanting ; where, consequently, in incepto, the ar- 
 rangement was not binding on either side, yet, however, after 
 acquiescence therein the formality has been held waived and the 
 corporation liable thereon. Thirdly. One or two other somewhat 
 doubtful instances have also been mentioned,* where imperative 
 formalities of other descriptions than sealing have, under particu- 
 lar circumstances, been deemed to be excused. 
 
 YII. Acts, agreements, c&c, done, made, or concurred in hy 
 the managing body, and, a fortiori, if hy subordinate 
 agents, ultra vires of such body or agents, but intra vires 
 of the corporation, may be conf/rmed by acquiescence. 
 
 Hitherto reference has been made to formalities and other 
 matters of a similar nature. Here the question is, not of form 
 but of substance, not of acquiescence in the want or omission of a 
 formality, but in the absence or abuse of an agent's authority. 
 The above proposition seems fully established without qualifica- 
 tion, it being only necessary to bear in mind — what of course ap- 
 plies equally to all cases of ratification and acquiescence — that 
 there must be (1) full disclosure of the exact nature and extent of 
 the absence or abuse of the agent's authority,' and (2) full knowl- 
 edge or means of knowledge on the part of the corporation and 
 its members of the acts, &c., in question, their precise nature, and 
 the probable consequences thereof.* 
 
 YIII. Acts, agreements, c&c., done, made, or concurred in by 
 the corporation itself, which are ultra vires va the im- 
 proper sense, may be confirmed by acquiescence. 
 
 These matters, it will be remembered, are not absolutely out- 
 side the constitution of the corporation. They are within its 
 powers — not, perhaps, its actual, but its potential powers — ^but 
 
 ' Ante, p. 450 et seq. action acquiesced in waa ultra vires of the 
 
 ^ Ante, p. 532. company, not of the directorg. 
 
 2 Phosphate of Lime Co. v. Green, L. " Spackman v. Evans, L. K. 3 H. L. 
 
 R. 1 C. P. 43, -where, howeyer, the trans- 171. See Murray v. Bush, L. E. 6 H. L. 
 
 37. 
 
RATIFICATION AND ACQUIESCENCE BY OFFICIALS. 563 
 
 they are of such a description that any one single corporator may 
 object to them, and may refuse to permit his corporation to en- 
 gage therein and expend its funds about them.^ But they will be 
 perfectly valid, perfectly intra vires, if directed by the whole col- 
 lective body of members. As then they may be directed before- 
 hand, so on principle it follows that when done they may be 
 acquiesced in by each and every corporator, and being so acqui- 
 esced in they will bind both the corporators individually and the 
 corporation itself. This indeed was what was expressly decided 
 in the case already cited and examined, Phosphate of Lime Co. v, 
 Green.^ 
 
 Section III. — Ratificatiok and Acquiescence by Officials. 
 
 I. Whatever an agent has authority to do directly, he can hind 
 his principal by ratifying or hy acquiescing in. 
 
 It is comparatively seldom that the attempt is made to prove 
 ratification or acquiescence by the corporation, that is, by the 
 whole body of corporators as such individually or when assembled 
 in general meeting. It is much the commoner proceeding to 
 charge it on account of the acts and conduct of its officials. Usu- 
 ally, of course, it is the governing body who have ratified or acqui- 
 esced. But no distinction can in point of law be drawn between 
 them and subordinate officials other than the distinctions neces- 
 sarily flowing from the difference of authority possessed by the 
 two classes, {a) 
 
 ' Compare anie, p. 551, and Part V, ^ Ante, pp. 548, 649. 
 
 chap. vi. 
 
 (a) The directors of a railroad company, after having allowed its president to 
 purchase locomotives and to give bills in payment therefor, and for three years to 
 operate the road with them, and to manage the property in his discretion without 
 interference, afterwards resumed the charge of the road, and took possession of the! 
 locomotives thus obtained, not questioning the accounts rendered by the president of 
 the transaction. This acquiescence was held to be such a ratification as to be evi- 
 dence of the president's original authority, so as to bind the corporation for the bills 
 issued by the president in payment for the locomotives. Olcott v. Tioga Railroad 
 Co. 2T N. T. 546. 
 
 A corp«ration increased their capital by new subeeriptions ; and by resolution 
 of the board of managers, directed the installments on the stock held in the State 
 of New York to be paid in at the defendants' bank, in the city of New York, 
 
564 RATIFICATION AND ACQUIESCENCE. 
 
 With regard to the extent to which directors can ratify, in 
 Wilson V. West Hartlepool Harbor, &c. Co.,^ it was laid down by 
 
 ' 2 De G., J. & S. 475; 34 L. J. (Ch.) 241. 
 
 "which was accordingly done to a large amount. The defendants* cashier, who was 
 also one of the managers of the plaintiffs' bant, drew out and loaned a portion of 
 the &nds so deposited, to be repaid on demand, and sent a statement of such loans 
 to the plaintiffs' cashier, at the office of the plaintiffs, kept in Philadelphia, requesting 
 at the same time to he informed if the loans were not satisfactory, so that he might 
 call them in. The plaintiffs' cashier replied that aU was satisfactory. The board of 
 managers afterwards met, and took action in relation to the business in New York, 
 but expressed no dissatisfaction in respect to the loans so made, nor in any manner 
 repudiated them. Held, that the managers were chargeable with notice of the fact 
 that the loans had been made, from the time it was communicated to their cashier, 
 or, at all events, from the time of their subsequent meeting. And held, further, that 
 by their silence and acquiescence they had ratified the loan, and, therefore, that the 
 defendants were not liable for permitting the funds to he withdrawn from their bank 
 and loaned without authority. New Hope & D. Bridge Co. v. Phcenix Bank, 3 N. Y. 
 156. 
 
 A corporation is held liable for the act of an officer in paying out bank notes con- 
 trary to a general statute, when knowledge of such payment is brought home to the 
 governing board and no disapprobation is manifested. Christian University v. Jor- 
 dan, 29 Mo. 68. 
 
 The manager of a mining company, who had been in the habit of making such 
 contracts as he deemed necessary for the good of the corporation, purchased in the 
 name and for the use of the corporation a house, to be used as an office for the cor- 
 poration and as a boarding-house for its laborers. He took possession of the prem- 
 ises, and subsequently several meetings of the trustees of the corporation were held 
 in the house. Six weeks after the purchase, at a meeting of the trustees, a resolution 
 was offered and rejected declaring the contract legal and binding. Subsequently 
 the premises were destroyed by fire, and in a suit for the balance of purchase money, 
 it was held, that if the authority of the manager to make the purchase were doubtful, 
 the acts stated amounted to a ratification. The court remarked, that " the entry of 
 the resolution was a very singular mode of repudiating a contract. It would have 
 been more in accordance with correct notions of propriety and justice, if a resolution 
 refusing to accept the contract had been passed, accompanied by an offer to cancel 
 the deed, which had not been recorded, and return the property of which they were 
 in possession." Shaver v. Bear River Co. 10 Cal. 896. 
 
 Receipt of dividends from the assignee of an insolvent, pursuant to an agreement 
 to release, made by the treasurer of a corporation, which he was not authorized to 
 enter into, wiU not amount to a ratification of the release, unless with full knowledge 
 of the agreement by the trustees of the company. Dedham Savings Inst. o. Slack, 6 
 Cush. 408. 
 
 The articles of a joint-stock association prohibited the officers intrusted with the 
 conduct of its business from making purchases on credit. They, notwithstanding, 
 made a purchase on credit, frsl giving the seller a copy of (he articles. The ^oods were 
 forwarded pursuant to the direction of the agent purchasing them, and there was 
 evidence tending to show that they were seen in the store of the association by its 
 
RATIFICATION AND ACQUIESCENCE BY OFFICIALS. 565 
 
 Turner, L. J., that whatever directors can do personally in refer- 
 ence to a company, they can ratify when done by others. " It is 
 not disputed that the directors had power on behalf of the com- 
 pany to sell the land in question ; and liaving this power, it must, 
 as it seems to me, have been competent to them to ratify a con- 
 tract made by the manager of the company for the sale of it." 
 
 Renter v. Electric Telegraph Co.^ is a well-known case upon 
 ratification by directors. By the deed of settlement of the defend- 
 ants, who had been incorporated by royal charter, it was provided 
 that the directors should manage the business, but all contracts 
 above a certain value were to be signed by at least three directors, 
 or sealed with the seal of the company under the authority of a 
 special meeting. The plaintiff sued the company on an agreement 
 above the prescribed value. It was made by parol by the chair- 
 man, who himself entered a memorandum of it in the minute-book 
 of the company ; and it was recognized in correspondence with 
 the secretary. The plaintiff did work under it, and received pay- 
 ment by checks for it, which payments were audited in the com- 
 pany's accounts. It was within the scope of the company's busi- 
 ness ; but it was not signed by three directors or sealed at a special 
 meeting. The court held that the contract had been ratified by 
 the directors, and, per consequentiam, by the company ; since the 
 deed of settlement declared that " the directors shall conduct and 
 
 ' 6 E. <fe B. 341 ; 26 L. J. (Q. B.) 46 ; Smith v. Hull Glass Co. 11 C. B. 89Y. 
 
 members. It was held that this was not a ratification, and that the officers them- 
 selves were not authorized to ratify their unauthorized net. Hotchiu v. Kent, 8 Mich. 
 526. Ratification of a mortgage purporting to be of corporate property, though 
 signed by the president individually, and sealed with his individual seal, without 
 special authority, is presumed from the knowledge of all the members of the board of 
 directors, and their long continued acquiescence. Sherman v. Fitch, 98 Mass. 69 ; 
 see Lyndeborough Glass Co. v. Mass. Glass Co. Ill Mass. 315; Brown v. Winnisim- 
 met Co. 11 AUeu, 326 ; Stridor v. Western College, 31 Iowa, 547. 
 
 The president of a mining company leased in the name of the company, but with- 
 out its authority, certain of its mining ground, and the money paid as rent was re- 
 ported to the board of trustees, by the superintendent of the property, as received for 
 ores sold. The facts of the receipt of the money and of the knowledge on the part of 
 the president and a minority of the board of trustees of the lease, did not create a 
 ratification of the lease. Where it is sought to charge a corporation with the ratifi- 
 cation of an unauthorized act by reason of its acceptance of some benefit or advan- 
 tage from it, it should appear that such benefit was accepted with fuU knowledge of 
 the character of the act. Yellow Jacket Mining Co. v, Stevenson, 6 Nev. 224. See, 
 also, Darat v. Gale, 83 111. 136; Anglo-Californian Bank v. Mahoney Mining Co. 
 (U. S. C. C. Cal. 1878), 6 Reporter, 705. 
 
666 RATIFICATION AND ACQUIESCENCE. 
 
 manage the affairs of the company, and shall exercise all the pow- 
 ers which rday be exercised bj the company at large." 
 
 Browning v. Great Central Mining Co.'^ arose thus: The 
 plaintiff was employed by R., one of the promoters of a company, 
 to make surveys, reports, &c., as to a mine which he proposed to 
 assign to the company. Afterwards, by resolution of the promot- 
 ers, before registration, it jvas agreed that the plaintiff should be 
 " captain " of the mine, at a salary " to commence with the com- 
 pletion of the company's contract with R." This contract was 
 afterward entered into between R, on one side and N. and F. on 
 the other, on behalf of the company. The memorandum and arti- 
 cles of association were next prepared, authorizing the directors 
 to complete the contract with R., and to " elect and dismiss " the 
 secretary, manager, and other servants ; and then the company 
 was duly registered. The contract was, however, not carried out. 
 After registration, prospectuses were published by the company, 
 in which the plaintiff" was described as " manager," and reports 
 from him in that capacity were printed. There was no other evi- 
 dence of any actual "election" of the plaintiff as manager, and 
 two of the directors were called to prove that there had never 
 been any. The court decided that there was evidence to go to 
 the jury that the plaintiff had been employed by the company ; 
 and the jury having found for him, the verdict was not set aside. 
 
 It need hardly be" said that in order to render a corporation 
 liable, whether upon express ratification or by reason of acquies- 
 cence by directors or other agents, there must be ratification or 
 acquiescence in hona fides, and with the genuine intention to ben- 
 €fit the company. The ofiicials are trustees for all the members. 
 As they may make no contract, &c., either with a view to their 
 own exclusive advantage, or eollusively to benefit others at the 
 expense of the company ; so neither may they ratify or acquiesce 
 ior similar purposes, nor conceal from general meetings of the 
 corporation such facts as would probably cause such meetings to 
 refuse their assent to engagements otherwise not binding on them.^ 
 Apart from this, however, the facts which will be sufficient to 
 constitute acquiescence by a corporation, will be equally so in case 
 of its agents. 
 
 ' 6 H. cfe N. 856; 29 L. J. (Ex.) 3M. ' Athenaeum Life Ins. Soc. v. Pooley, 
 
 Compare Totterdell v. Fareham Blue 3 De G. <fe J. 294 • 28 L J (Ch U19 
 Brict, Ac. Co. L. E. 1 C. P. 6M. • >. •' 
 
CHAPTER VII. 
 
 THE LIABILITY OF CORPORATIONS FOR THE ENGAGEMENTS ENTERED 
 INTO UPON THEIR BEHALF BY THEIR PROMOTERS, (a) 
 
 It is in connection with the formation of companies that the 
 doctrine of ultra vires arose, and that many most conflicting 
 
 (a) The subjects discussed in this chaptfir are only of practical importance to the 
 profession in this country, so far as their limited application to our corporations 
 may illustrate analogous questions. The subject of the liability of corporations for 
 the engagements of their projectors or promoters, is discussed in but few cases in 
 our reports. The mode of instituting corporate enterprises in England has been 
 essentially different from that adopted in the United States ; although since the 
 ■cbange in the policy of the law here, which in most States confines the incorporation 
 of companies to general laws, rather than by special charters, and the passage, in 
 England, of acts like the " Companies Acts, 1862 and 186Y " (Buckley, pp. 1, 463), the 
 difference is materially diminished. The last named acts provide for the formation 
 of an incorporated company, with or without limited liability, by any seven or more 
 persons, associated for any lawful purpose, subscribing to a memorandum of associa- 
 tion, and otherwise complying with the requisitions of the act ; see §§ 4, 6, Buckley, 
 pp. 2, 4. The Companies Act, 1862, § 4, provides that : " No company, association, or 
 partnership, consisting of more than ten persons shall be formed, after the com- 
 mencement of this act, for the purpose of carrying on the business of banking, 
 unless it is registered as a company under this act, or is formed in pursuance of some 
 •other act of parliament, or of letters patent ; and no company, association, or part- 
 nership consisting of more than twenty persons shall be formed, after the commence- 
 ment of this act, for the purpose of carrying on any other business that has for its 
 object the acquisition of gain by the company, association, or partnership, or by the 
 individual members thereof, unless it is registered as a company under this act, or is 
 formed in pursuance of some other act of parliament, or of letters patent, or is a 
 •company engaged in working mines within and subject to the jurisdiction of the 
 Stanneries." By § 209, Buckley, p. 3Y3, certain companies formed before the com- 
 mencement of the act are required, under certain penalties prescribed by § 210, to 
 register. Companies formed after the passage of the act are illegal. These acta 
 are applicable to trading, railway, banking, manufacturing, insurance, and indeed 
 every kind of company or partnership. §§ 179, 180, Buckley, p. 349. It is said, in 
 Hodges on Law of Railways, 4th ed. p. 2, that "there are so many difficulties at- 
 tending the transactions of a railway company not registered in accordance with the 
 provisions of ' the Companies Act, 1862,' or incorporated by special act of parliament, 
 for, though not exactly partners in the strict sense of that term, the projectors may 
 very likely, without intending to do so, incur a liability similar to that of partners : 
 Bright V. Hutton, 3 H. L. C. 358 ; Hamilton v. Smith, 6 Jur. (N. S.) 32 ; and if the 
 
568 LIABILITY FOR ACTS OF PROMOTERS. 
 
 decisions have been given. The corporation is distinct from its 
 members, and a fortiori from the promoters who originated it, 
 
 company consists of more than twenty persons, it ivill be illegal, unless registered : 
 that when a sufficient number of persons, I. e., seven or more, can agree as to the 
 formation of a company for the purpose of making a railway, the best course for 
 them to pursue, until they can get a special act of parliament conferring the neces- 
 sary powers upon them, is to avail themselves of the provisions of the act of 1862, 
 and register themselves as a preliminary company for the purpose of obtaining a 
 special act of parliament." 
 
 The " Companies Clauses Consolidation Act," 1845, and the " Land Clauses Consoli- 
 dation Act," 1845 (Godefroi & Shortt, pp. 1, 141), were passed to consolidate the pro- 
 visions usually inserted in acts with respect to the constitution of companies incor- 
 porated for carrying on undertakings of a public nature, and for authorizing the 
 taking of lands for such purposes. The term promoters is, in the latter statute, 
 defined to mean "the parties, whether company, undertakers, commissioners, 
 trustees, corporations, or private persons, by the special act empowered to execute- 
 the works or undertaking." The term special act, in the latter statute, means any 
 act passed to authorize the taking of lands for the undertaking to which the same 
 relates; and in the former statute, any act passed incorporating a joint-stock com- 
 pany for the purpose of carrying on any undertaking which shall, by this special 
 act, be authorized to be executed. The formalities to be observed by persons desir- 
 ous of obtaining parliamentary authority for the construction of works, and the 
 proceedings before the lords and commons, and the committees of each house, are 
 prescribed in standing orders, and form a branch of the law peculiar to Great 
 Britain. See Godefroi & Shortt, App. p. ccxxii; Hodges on Railways, ch. 11; May 
 on the Law and Usage of Parliament, 7th ed. p. 670. The " special act " obtained 
 usually adopts the provisions of the general acts, or modifies some provisions of 
 them, and then incorporates the company by name, as a body corporate, with per- 
 petual succession, and with power to purchase and hold lands, within the restrictions 
 therein and in the consolidation acts contained. As soon as the "special act" is 
 obtained, all the powers which the railway company previously enjoyed, by reason 
 of registration, cease and terminate, except so far as may be otherwise provided by 
 the special act. Hodges, p. 41. The special act names the first board of directors. 
 Hodges, p. 44. Previous to the passing of a bill through parliament, the managing 
 or provisional committee usually issue letters of allotment, and, subsequently, scrip 
 certificates of chares. Hodges, p. 87. As to the formation of English companies, 
 see Lindley on Partnership, chap, v, p. 102, 3d ed.; Shelford on JointStock Com- 
 panies, 2d ed. p. 9. Compare Laws of New York, 1875, chap. 611, p. 755. This 
 statement, incomplete as it is, will show how diiferent are the methods pursued in 
 Great Britain and in this country as to creating corporations and investing them 
 with compulsory powers. 
 
 In this country, corporations are created by special act, or organized under gen- 
 eral laws. "When created by special acts, they are either made so in prcesenti, or 
 after the subscription of stock, or the issuing of patent by the executive. The pre- 
 liminary contracts of the projectors of the enterprise, therefore, cannot be said to be 
 made by the corporation in any sense, nor by the projectors as agents of the incipi- 
 ent company. 
 
 The only logical ground on which liability for such contracts rests, is, that where 
 
LIABILITY FOR ACTS OP PROMOTERS. 569 
 
 and who may not even be amongst its members. Can these, the 
 promoters, bind the future corporation ? In other words, can one 
 
 the corporation claims the benefit of the contract, it must take it cum onere, and 
 assume the liabilities also ; and this is the ground upon which Low v. Conn. <fe Pass. 
 R. R. Co. 46 N. H. 370, is placed. There, after the charter and before the organiza- 
 tion of the corporation, the plaintiff rendered service in obtaining subscriptions to 
 the capital stock, and other acts requisite to complete the organization, and after the 
 organization the corporation took the benefit of the services, knowing that they were 
 rendered with the understanding with the projectors that compensation was to be 
 made. See Low v. Conn. & Pass. R. R. Co. 46 If. H. 284. This case has been much 
 criticised, and cannot be reconciled with N. Y. & N. H. R. R. Co. v. Ketchum, 21 Conn. 
 170, where it is said : " The services for which it is claimed that the plaintitrs were 
 liable to pay the defendant, were rendered * * at a time before the stock was taken 
 up in conformity to the charter, and before the company hada proper existence. Hence, 
 it is not easy to see how they could be rendered for or at the request of the company 
 (or rather the first bona fide stockholders, for they must be looked at as the company), 
 and if they were not so rendered, then how the company could be liable for them upon 
 any known principle of law. We are aware that it is no uncommon practice for corpo- 
 rations to assume and pay these preliminary and antecedent charges after the com- 
 pany has become organized, but we do not see how the company, if it should object, 
 could be compelled to pay them, and in some cases it would be most inequitable to 
 require it. Can a few persons combine for their own interest to get up a railroad, 
 agree with one of their number to give him a large commission or bonus for every 
 stockholder he can aUure into the company, and privately makes this commission or 
 bonus a charge upon the corporation when formed ? This would be a breach of 
 faith towards honest and unsuspecting stockholders who pay the charter price for 
 their stock, and expect to take it clear of all incumbrances. The effect would be the 
 same, as if commissioners should enter into a private bargain with subscribers to let 
 them subscribe on terms which the charter does not allow. * * * It is soon 
 enough for corporate bodies to enter into contracts incumbering their property, when 
 they are duly organized according to their charters, and have their chosen and im- 
 partial directors to conduct their business. If a vote was necessary in this case to 
 make these charges a debt against the company, the grant, for that very reason, 
 cannot stand, for the directors had no power to assume or to crtate such a debt for 
 such a service.'' The case of Low v. Railroad, 45 N. H. 370, was largely placed 
 upon the authority of Hall v. Vermont & Massachusetts K. R. Co. 28 Vt, 401, which 
 was a suit for those services, rendered by the plaintiff at Boston, in conjunction with 
 other citizens of Brattleboro, in procuring the charter of the company; the Court 
 say : " They appear to have been voluntarily rendered, as it was anticipated by him 
 that the construction of the road would give an increased value to his real estate. 
 The plaintiff could not have been employed by the defendants to render these services, 
 for the corporation at that time had not a legal existence, nor has there been any 
 subsequent promise to pay for them; and certainly none can be implied against par- 
 ties, when at the time the services were rendered they were incapable of making an 
 express contract.' Other charges were for services in attending various meetings of 
 the corporators after the charter was granted, and previous to the organization of the 
 company in the choice of directors. As to the latter, the Court say : " Those 
 
570 LIABILITY FOR ACTS OF PROMOTERS. 
 
 person, assuming to act on behalf of another yet unborn, so far 
 be the " agent " of this latter, as to bind him by, and to enable him 
 
 charges, we think, were properly allowed. The plaintiff, with others and their suc- 
 cessors, were, by charter, made a corporation, having powers and privileges, and 
 subject to the duties and liabilities contained in the general act of Massachusetts 
 relating to railroad corporations. Among other matters required by the charter, 
 subscriptions to the capital stock of the company, to the amoant of five thousand 
 shares, were necessary before aa organization could be perfected. The duty rested 
 upon the corporators to do whatever was required by the charter to effect that result, 
 It may be true that the company were not invested with full corporate powers, lintil 
 after the stock was subscribed and their organization perfected in the choice of di- 
 rectors ; yet, the corporation was in esse before that event ; it had an inchoate exist- 
 ence, and the corporators had the power, and were so far the agents of the corpora- 
 tion, as to bind them by any act which they were required to do, or which was 
 necessary to perfect their organization under their charter." It must be admitted 
 that this case lays down a rule " of too great laxity, and too susceptible of abuse to 
 afford a safe guide in these lax times, when every possible avenue to corruption is 
 sure to find some one desperate to enter." 1 Redfield on Railways, § 14, note. A 
 town has no authority to appropriate money to pay the expenses of persons 
 engaged in getting the charter. Frost v. Belmont, 6 Allen, 152. In Rockford, Rock 
 Island & St. Louis R. R. Co. v. Sage, 65 III. 328, which was an action of assumpsit 
 by Sage against the railroad company, to recover for services rendered and expenses 
 incurred before the organization, by Sage, who was a director, the Court remark ^ 
 ■" For services and expenses before the organization of the company, which, subse- 
 quently, the company accepts and receives the benefit of, and promises to pay for, 
 we will not say a party might not recover, in virtue of such express promise ; but 
 ■we are disposed to deny the right of recovery for such services and expenses upon 
 any implied promise resulting from the facts, although 46 N. H. 284, seems to sanc- 
 tion such a right of recovery ; as does also 28 Vt. 401, as respects services rendered 
 subsequent to the act of incorporation and prior to perfecting the organization of 
 the company, but not for services prior to the act of incorporation. A right of 
 recovery against a corporation for anything done before it had a proper existence, 
 does not appear to rest on any very satisfactory legal principle. It appears more 
 reasonable to hold any services performed or expenses incurred prior to the organi- 
 zation of a corporation to have been gratuitous, in view of the general good or pri- 
 vate benefit expected to result from the object of the corporation. It seems unjust 
 to stockholders, who subscribe and pay for stock in a company, that their property 
 should be subject to the incumbrance of such claims, and which they had no voice 
 in creating. N. Y. & N. H. R. R. Co. v. Ketchum, i'J Conn. 170, is an authority 
 which denies the liability of a corporation on account of services rendered prior to 
 the perfecting of its organization, and we accept the authority of that case as, in 
 our judgment, establishing the more just and satisfactory rule." See, also. Safety 
 Life Deposit Ins. Co. v. Smith, 65 111. 309 ; Western Screw Co. v. Cowsley, 72 111. 
 £31 ; Marchand v. Loan, <fec. Ass. 26 La. Ann. 389 ; Allman v. R. R. Co. 1 Reporter, 
 236; Franklin Fire Ins. Co. ». Hart, 31 Md. 59 ; Bell's Gap R. R. Co. v. Christy, 
 79 Pa. 64. In Chater u. San Francisco Sugar Refinery Co. 19 Cal. 220, several 
 persons agreed to form a corporation, and to divide the stock in a certain way 
 
WHEN THE ACTS ARE ULTRA VIRES. 571 
 
 to take advantage of, engagements purporting to have been made 
 for his account ? 
 
 Section I. — When the Engagements aee Ultea. Yiees. 
 
 The rights and liabilities of a corporation, when fully estab- 
 lished, for the acts of its promoters, vrill, of course, have to be 
 
 among themselveB. An action was brought by one of the original parties to the 
 agreement against the corporation, to compel the delivery of the stock according 
 to the agreement. The company was held liable. The Court, on a rehearing, 
 say : " We asserted no such doctrine as that, by force of a secret agreement 
 between the original incorporators in a commercial corporation, whether made 
 before or after the act of incorporation, the stock issued by the corporation to inno- 
 cent parties, without notice of the agreement, could be charged or affected by it. 
 There was no case before us for the application of such a principle. But the right 
 to incorporate for such a purpose as that here, is a statutory right, which is free to 
 everybody. The rights in the corporation can be adjusted by contract, and the 
 terms fixed by contract. The corporation is little more under our laws than a joint- 
 stock company under the English laws; indeed, in its true nature more nearly 
 resembling a limited partnership under special articles, than a corporation at com- 
 mon law. This corporation was organized under an agreement, which was in itself 
 legal and binding. The original corporators were really the men who were bound 
 to execute it. They had the power to execute it; for they had on the organization 
 the power, subject to re strictions which do not apply here, to control their own busi- 
 ness in their own way. A man may as well make an agreement with another for 
 certain stock in a corporation to be organized hereafter, as an agreement for stock in 
 a present existing corporation." A company, when fuUy incorporated, may assume 
 the liabiUties of a preliminary association, incurred in preparatory arrangements. 
 Salem Mill-dam Co. v. Ropes, 6 Pick. 23. It is held that where an association be- 
 comes incorporated, and the corporation accepts an assignment of all the property of 
 the association, for the purpose of carrying out its object, the corporation is pri- 
 marily liable for its debts. Hasiett v. Wotherspoon, 1 Strobh. Eq. 209 ; but see 
 Georgia Co. v. Castleberry, 43 Ga. 187. The association would not, however, be 
 relieved, unless by the acquiescence of creditors. Witmer v. Schlatter, 2 Rawle, 
 369. See Whitwell v. Warner, 20 Vt. 425. 
 
 An understanding between original subscribers, that advances are to be repaid 
 when funds are sufficient, is not binding after incorporation, unless there is a reser- 
 vation in the conveyance of the property of the association to the corporation. 
 BluehUl Academy v. Witham, 13 Me. 403. 
 
 As to acts of commissioners and others prior to organization, see ante, p. 520, 
 note; Renssel. & W. Plank-road Co. v. Barton, 16 N. Y. 457. 
 
 Those who have subscribed to the stock of a corporation whose organization has 
 never been completed, cannot be made liable as partners with those who have under- 
 taken to contract as officers of the inchoate corporation. Ward v. Brigham (Mass.), 
 9 Cent. L. J. 45. 
 
572 LIABILITY FOR ACTS OF PROMOTERS. 
 
 determined primarily by an appeal to the general principles of 
 ultra vires of the promoters purporting to represent the future 
 corporation. If these acts or agreements are ultra vires of the 
 corporation as constituted, it evidently will not be liable for, nor, 
 e oontrario, be able to take advantage of them, not even though 
 the directors have attempted, after the creation of the corpora^ 
 tion, to ratify such prior proceedings.* (a) 
 
 Section II. — "When the Engagements aee not Ultra Vires — 
 LiABiLrrT OF Statutory Coepoeations. 
 
 Miff agements provided for in, the constatinff instruments. 
 
 The attempt is seldom, perhaps nevei", intentionally made by 
 persons assuming to act on behalf of a proposed corporation, to 
 bind it to enter into transactions which are beyond the powers 
 given it. It is manifestly a mere simple and necessary precaution , 
 to endow it with all the authorities that may be needed for the 
 due discharge of its contemplated business, and the other contin- 
 gencies. Provision for this may be made in one of two ways, 
 either by giving it all the powers and capacities that can possibly 
 be required for the accomplishment of the purposes in view, or by 
 not only doing this, but also by inserting in the constating instru- 
 ments, which, in the case of these corporations, is a special statute, 
 which may or may not incorporate other general statutes, clauses 
 investing it, at the moment of its creation, with particular duties 
 and liabilities. 
 
 It is these instruments which primarily determine, due regard 
 being had to the rules of common law and equity, the capacity 
 and the responsibilities of the corporation. Consequently, speak- 
 ing generally, whatever powers and rights they give to the cor- 
 poration it can enforce, and whatever obligations they throw upon 
 it can be enforced against it. No cases need be quoted — they are 
 
 ' Earl of Shrewsbury v. North Staf- Leominster Canal Navigation v. Shrews- 
 
 fordshire Railway Company, L. R. 1 Eq. bury, &c.. Railway Company, 3 K. & J. 
 
 693 ; Caledonian, (fee. Railway Company 664 ; 26 L. J. (Ch.) 764. 
 V. Helensburgh, 2 Macq. 391. Compare 
 
 (a) See wnie, pp. 318, 319, note, and jiost, p. 581, note; Pingry v. Washburn, 1 
 Aiken, 264. 
 
WHEK THE ACTS ARE NOT ULTRA VIRES. 573 
 
 of everyday occurrence — to illustrate the capacity of a corporation 
 to enforce its rights and powers ; but it is much less frequently 
 that actions are successfully brought upon the express provisions 
 of its constating instruments, to enforce claims arising from pro- 
 ceedings carried on before its creation. 
 
 1. When a statute incorporating a corporation contains clauses 
 in favor of a^y persons, rights are th£reby conferred which 
 may he enforced hy action. 
 
 Statutory constating instruments frequently contain ^ a special 
 clause, that the expenses, costs and charges incidental and pre- 
 paratory to the formation of the corporation shall be paid by it 
 after it is created. These create a legal liability to the corpora- 
 tion to pay the proper expenses of obtaining its charter or special 
 act ;^ but, it would seem, no other charges or expenses whatever.^ 
 
 'So definite and positive rule can be laid down as to the pre- 
 liminary expenses, which will be considered to come within a 
 clause of the constating instruments, which provides for the pay- 
 ment out of the funds of the company " of the expenses incidental 
 to the formation of the company ;" but, on this point, Terrell v. 
 Hutton,* and the observations of Bovill, C. J., in Scott v. Lord 
 Ebury,' should be consulted. 
 
 As mentioned above, registration and other similar official fees 
 and payments will be allowed. So, apparently, will be the pro- 
 fessional services of legal agents and of surveyors, accountants, 
 valuers, and other persons of special technical knowledge in cases 
 where their aid is indispensable.* 
 
 Of course there cannot be charged, under this head, sums of 
 money which are only disguised bribes. As stated by Lord Cran- 
 
 ' See 8 tfe 9 Vict. c. 16, a. 86. nection with collateral agreements, com- 
 
 ' Fer Bovill, C. J., in Scott v. Lord pare iJ« Brampton, <fec. Hy. Co. (ShaVs 
 
 Ebnry, L. R. 2 C. P. 255, 264, Claim), L. R. 10 Ch. 177 ; Savin v. Hoy- 
 
 ' Tilson tr. Warwick Gas Co. 4 B. <fe lake Ry. Co. L. R. 1 Ex. 9. 
 C. 962; Carden v. General Cemetery Co. * 4 H. L. 0. 1091. As to the prelim- 
 5 Bing. N. C. 263 ; Clowes v. BrettaU, inary expenses of a solicitor, see Re TU- 
 10 M. <fe W. 506; Hitchins v. Kilkenny leard, 3 De G., J. & Sm. 519; 23 L. J. 
 Ry. Co. 9 C. B. 536; Manning ». London, (Ch.) 765; Shaw's Claim, L. K. 10 Ch. 
 Worcester, Ac, By. Co. 17 L. T. (X S.) 177; -Be Kensington Station Act, L. B. 
 68. Compare Midland, &c. By. Co. w. Gor- 20 Eq. 197; ife Hereford, <to. Engineer- 
 don, 16 M. & W. 804 ; 16 L. J. (Ex.) 166 ; ing Co. 2 Ch. D. 621. 
 and Nixon v. Brownlow, 3 H. & N. 686 ; » L. R. 2 C. P. 255. 
 26 L. J. (Ex.) 273. As to statutory rights » See per Bovill, C. J., L. R. 2 C. P. 
 of this kind, and their effect taken in con- 264 ; ante, n. 2, above. 
 
674 LIABILITY FOR ACTS OF PROMOTERS. 
 
 worth, in Scottish North-Eastern Ey. Co. v. Stewart :* "If that 
 sum was agreed to be paid as a bribe to buy off opposition to the 
 new bill, I think the agreement could not be sustained ; it would 
 have been an unwarrantable application of the funds of the com- 
 pany." ^ 
 
 Statutory rights of this and similar descriptions will be con- 
 strued somewhat strictly, and will not be deemed to exist either 
 at all or in favor of any particular person, unless clearly so en- 
 acted. Care must, therefore, be taken to examine carefully the 
 language of the act in question, before affirming that a given in- 
 dividual has a statutory right of action.^ 
 
 In connection with this statutory liability of corporations, ref- 
 erence may also be made to the various cases which have decided 
 that corporations taking lands, &c., by virtue of compulsory 
 powers, must pay the costs incidental to the investment and due 
 application of the purchase-money of or compensation for such 
 lands.* Such costs are generally payable in virtue of the pro- 
 visions of the Lands Clauses Consolidation and other similar acts. 
 But they may equally be incurred and enforceable under special 
 or private statutes.' 
 
 Engagements not provided for in the constating instruments. 
 
 Hitherto the subject has been comparatively clear ; questions 
 of fact and of interpretation may arise, but the law is settled. 
 There remains a large number of contradictory decisiens, many 
 of them irreconcilable with each other, upon the question as to 
 
 ' 3 Macq. 408. See per Kindersley, 283; 24 L. J. (Ex.) 117; Job w. Lamb, 11 
 
 V. C, L. E. 1 Eq. 619; and ante, pp. Ex.639; 26 L. J. (Ex.) 87 ; Gunn «. Lon- 
 
 317-19. don and Lancashire Fire Insurance Com- 
 
 " 7 <fe 8 Vict. c. 110, enabled, by sec- pany, 12 C. B. (N. S.) 694, n. The 
 tiou 23, persons engaged in getting up a statute is now repealed, but these author- 
 company to enter Into certain contracts, ities are useful as illustrating the liabili- 
 and to incur certain expenses on behalf of ty, or rather the non liability of com- 
 the Intended company, the contracts to panics for their founders. ' 
 be " conditional on the completion of the ' Wyatt v. Metropolitan Board of 
 company, and to take effect after the cer- Works, 11 C. B. (N. S.) 744; 21 L. J. (0. 
 tificate of complete registration," per Aid- P.) 217. 
 
 erson, B., in Taylcr v. Crowland Gas and * Re Bethlem Hospital, L. R. 19 Eq. 
 
 Coke Co. 1 Ex. 288, n. ; 23 L. J. (Ex.) 264. 459 ; Ezparte Northwicke, 1 T. <St C. (Ex.) 
 
 Upon this section several decisions have 166 ; Ex parte Trafford, 2 lb. 622 ; Re 
 
 been given, in none of which were the London, Brighton and South Coast 'fiy. 
 
 company held liable ; «.<?., Hutchinson v. Co. 18 Beav. 608; Ex parte Beddoes, 2 
 
 Surrey Gas Consumers' Co. 11 C. B. 689 ; Sm. & Giff. 466. 
 
 21 L. J. (C. P.) 1 ; Bull V. Chapman, 8 Ex. » Re Earl of Berkeley's Will, L R. 10 
 
 444 ; 22 L. J. (Ex.) 257; Payne v. S. S. Ch. 66; Re Aubrey's Estate, 17 Jur. 874; 
 
 W. Steam Navigation Company, 10 Ex. Re Strathmore Estate, L R 18 Eq 338. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 5Y5 
 
 bow far a corporation can be deemed liable for the proceedings of 
 its promoters when no liability has been imposed upon it from 
 the outside. The simpler way will be to consider first the cases : 
 
 (1.) Where the corporation has in no way recognized these pro- 
 ceedings, {a) 
 
 The term " recogiiition " is used rather than " adoption " or 
 " ratification," as having the wider meaning, viz., that absolutely 
 no notice, whatever, has been taken of these acts, and that the 
 powers of the corporation have not been employed to the detri- 
 ment of the person contracting with the promoters. Justice 
 would seem to require that a corporation should be answerable for 
 all the engagements entered into in good faith with its promoters, 
 and that when its existence has been secured by the buying off of 
 fair opposition and by compromises made with opposing interests, 
 it should not be allowed to repudiate the arrangements thus ar- 
 rived at. But, on the other side, it is urged that the corporation 
 is totally distinct from the association which originated it, and 
 that shareholders who have joined it on the faith of the facts set 
 forth in its constating instruments have a right to say that they 
 do not assume liabilities other than are contained in the same. 
 Moreover, persons who form agreements with promoters have 
 their remedy in their own hands ; they may easily frame their 
 agreements so as to render the promoters personally liable.^ 
 These considerations have in many — it cannot be said in all — cases 
 prevailed, and, perhaps, it may be laid down as an established 
 rule on this branch of the subject, that engagements entered into 
 by or with promoters not expressly provided for in the constating 
 instruments cannot, even though within the powers and scope of 
 the corporation when created, be enforced by or against it, unless 
 in some manner adopted by it. 
 
 This conclusion was arrived at and thoroughly vindicated by 
 Lord Cranworth in the well-known and leading case of the Cale- 
 donian, &c. Ky. Co. V. Helensburgh.^ " "When such a body {i. e., 
 
 ' Barton v. Hutohifison, 2 Car. <fe K. meuts in Taylor v. Chichester & Midhurst 
 
 '712 ; Lake v. Duke of ArgyU, 6 Q. B. 477. Ry. Co. 4 H. & C. 409 ; in Exoh. Cham. 
 
 « 2 Jut. (N. S.) 695 ; 2 Macq. 391 ; L. R. 2 Ex. 366; and in Dom. Proc. L. R. 
 
 Earl of Shrewsbury v. North Staffordshire 4 H. L. 628 ; in Scottish North Eastern 
 
 Ry. Co. L. R. 1 Eq. 593. Compare judg- Ry. Co. v. Stewart, 3 Macq. 382 ; and in 
 
 (a) Stainsby v. Frazer's Metallic Lifeboat Co. 3 Daly, 98. 
 
576 LIABILITY FOR ACTS OF PROMOTERS. 
 
 proprietors, &c.) applies for an act of incorporation, what they 
 ask of the Legislature is not an act incorporating and giving 
 powers to those only who are applying, not necessarily even in- 
 corporating and giving powers to any of them ; but an act incor- 
 porating all persons who may be willing to subscribe the specified 
 sums, and so to become shareholders in the company. If the 
 Legislature accedes to the application, the act, when passed, be- 
 comes the charter of the company, prescribing its duties and de- 
 claring its rights ; and all persons becoming shareholders have a 
 right to consider that they are entitled to all the benefits held out 
 to them by the act, and liable to no obligation beyond those which 
 are there indicated. * * * Ihe principle on which all railway 
 acts, and acts of a similar character, proceed, is to specify the sum 
 to be raised and the shares into which the funds of the company 
 are to be divided, to incorporate the shareholders, and to prescribe 
 the objects to which the funds are to be applied. It is inconsistent 
 with the policy of such acts to hold that there can be any other 
 terms binding on those who subscribe their money beyond what 
 appear on the face of the act itself. Not only is such a doctrine 
 calculated to occasion injury to the shareholders, but it may often 
 be a fraud, or at least a surprise, upon the Legislature. The stat- 
 utory powers are given on the faith of the terms apparent on the 
 act itself. It may well be that the additional terms, if communi- 
 cated to parliament, would have prevented the passing of the 
 special act at all. Special terms as to particular cases or particular 
 persons are often made the subject of special clauses, and then 
 neither the Legislature nor any person taking shares can complain. 
 * * * In holding that the company is a body different from 
 its promoters, in substance as well as in form, I am acting on what 
 is the mere truth, and no injustice can arise to those who have 
 dealt with the projectors, for against them, and all under whose 
 authority they acted, there will be a clear right of action, if the 
 company does not fulfill the engagements which they have con- 
 tracted that it shall perform, and that is surely all which those 
 who have dealt with the projectors can claim as their right. For 
 these reasons I am of opinion that, on principle, there is no ground 
 
 Preston v. Liverpool, Manchester, Ac. Ry. to a bill on an agreement that the com- 
 
 Co. 6 H. L. C. 605 ; 28 L. J. (Ch.) 421. pany should buy his lands; the bill pasped, 
 
 Gooday v. Colchester, dc. Ry. Co. 17 the company did not take his lands, the 
 
 Beav. 132, illustrates this principle. A court refused to decree specific perfonn- 
 
 land-owner had withdrawn his opposition ance. 
 
"WHEN THE ACTS ARE NOT ULTRA VIRES. 677 
 
 for holding that a company is bound by any engagement made by 
 those who obtained its act of incort)oration, unless those engage- 
 ments are embodied in the terms of the act itself." 
 
 In this case an agreement had been come to between the re- 
 spondents and three gentlemen calling themselves " a quorum of 
 the committee of management of the Caledonian and Dumbarton- 
 shire Railway Company," then unincorporated, whereby the re- 
 spondents on one hand agreed not to oppose the railway company to 
 obtain an act of parliament, at the expense of the railway com- 
 pany, for the formation of a quay and harbor, and to apply the 
 dues, &c., arising from the same in defraying the expense of 
 management, and in paying interest on £3,000 to be borrowed by 
 them from the company ; and the company, on the other hand, 
 agreed- to advance to the respondents the whole costs already in- 
 curred, and to be hereafter incurred, in reference to the said harbor 
 and act of parliament, and to make the advance of £3,000 stipu- 
 lated for. The company, after its incorporation, having refused 
 to perform the agreement on the ground that it was ultra vires, 
 the Court of Session held this defense unsustainable. Thereupon 
 an appeal was brought, and the House of Lords unanimously re- 
 versed the decision. 
 
 There is one case, however, where it was apparently assumed 
 that, even though a corporatian does not adopt or recognize such 
 prior transactions, still it will, or at least may, in equity, often be 
 liable upon the ground of a relation between cestui que trust 
 and trustee. This was in Spooner v. Parsons.* Here a solicitor 
 who had projected, and at his own expense brought forward, a 
 scheme for making a railway, entered into an agreement with the 
 persons who became the provisional committee for prosecuting the 
 undertaking, that the costs and expenses should be paid by such 
 solicitor and projector, and that the members of such provisional 
 committee should be personally liable to him for such costs and 
 disbursements, but that the same should be paid out of the fund 
 to arise from the deposits to be paid on the shares. Wigratri, 
 Y.-C, held that this agreement was not illegal as between the 
 provisional committee and the shareholders, regarded as trustee 
 and cestui que trust, inasmuch as the trustee was entitled to be 
 indemnified by his cestui que trust in respect of the costs and ex- 
 
 ' 6 Hare, 102. Compare sect, iv, pp. 594 et acq. 
 37 
 
678 LIABILITY FOR ACTS OF PROMOTERS. 
 
 penses properly incurred. He assumed, apparently without argu- 
 ment, that the provisional committee being bound by the agree- 
 ment, the future corporation, as cestui que trust of them, would 
 in equity have been equally bound thereby and compellable to in- 
 •demnify its trustees. 
 
 ■(2.) Cases where the corporation has either recognised or acted 
 upon these proceedings. 
 
 II. A corporation may ratify, expressly or iy implication, 
 agreements entered into on its iehalf lefore its origin, if 
 there he consideration for the ratification. {a) 
 
 If the " recognition " has amounted to ratification, and the pro- 
 ceedings were such as could be ratified, then no doubt can exist 
 that the corporation will be bound. There is, however, a very 
 great doubt whether a corporation can in any way or by any means 
 so " ratify " a transaction of this kind as to render itself liable at 
 law thereon. 
 
 But without actually ratifying, a corporation, like an individ- 
 ual, may so conduct itself in reference to a given transaction, as 
 to be afterwards estopped from denying the validity of the same.' 
 
 In the next place, a corporation, by acting on or otherwise 
 adopting a transaction, having a consideration whereby it is bene- 
 fited, thereby adopts the agreement, so that it is as a whole en- 
 forceable against it in equity. 
 
 On this point the first case to be mentioned is tliat of the 
 Yauxhall Bridge Co. v. Earl Spencer.^ The promoters of a com- 
 pany for making a bridge across the Thames, in order to buy off 
 the opposition of the trustees of the Battersea bridge, covenanted 
 by deed to pay them for the use of their company, if the act of 
 parliament should be obtained, the sum of £5,000. The act was 
 passed, and the obligors of the bond thereupon paid over, out of 
 
 ' Williams v. St. George's Harbor Co. cisions in Blackmore v. Yates, L. R. 2 Ex. 
 
 2 De G. & J. 547 ; Edwards v. Kilkenny, 225. 
 &c. Ky. Co. 2 C. B. (N. 8.) 397 ; 26 L. J. « Jac. 64. 
 
 (C. P.) 224. Compare the facts and de- 
 
 (a) Titus V. Catawisa R. R. Co. 6 Phila. Rep. 172. Where an agent acted without 
 authority in taMng a subscription for stock, bringing suit upon the subscription was 
 an adoption and ratification by the corporation. Walker v. Mobile & Ohio R. R. Co. 
 S4 Miss. 24K. 
 
WHEN THE ACTS AEE NOT ULTEA VIRES. 5t9 
 
 the funds of the company, the £5,000. The company having 
 afterwards filed a bill to have the bonds cancelled and the stock 
 retransferred : held, by Lord Eldon, that the agreement was not 
 in itself illegal, and that therefore the bill must be dismissed. 
 
 This decision was thus commented upon by Lord Cranworth, 
 and distinguished from the ordinary case, where it is sought to 
 render a corporation liable for the proceedings of its promoters : 
 " In the Yauxhall Bridge Case there was no attempt to make any 
 one liable on the bond but the obligors, and the only question was 
 as to the validity of the engagement itself. It is true that the 
 £5,000 was in fact advanced out of the funds of the company, but 
 that arrangement did not form any part of the contract- with the 
 Battersea Bridge proprietors, who looked only to the person with 
 whom they contracted." ' 
 
 Edwards v. Grand Junction Ey. Co." arose thus : The promo- 
 ters of a railway company, a bill for the incorporation of which 
 was then pending in parliament, having designed the railway so 
 as to cross a certain turnpike road, the trustees of the road took 
 measures to oppose the bill. After some negotiation the promo- 
 ters agreed with the trustees that the turnpike road should be car- 
 ried over the railway by a bridge fifty feet wide (the width of the 
 existing road), with proper approaches, &c., and thereupon the 
 trustees withdrew their opposition, but clauses confirmatory of 
 this arrangement were not, on account of the expense, inserted in 
 the bill. The bill passed, but the company commenced operations 
 for making the bridge only thirty feet wide. Both the Yice-Chan- 
 cellor and Lord Cottenham granted an injunction to restrain the 
 company from interfering with the road in any manner, other than 
 that agreed to by the promoters. 
 
 Petre v. Eastern Counties Ey. Co.^ is another decision on this 
 point, and one which has aroused a great deal of commeut.(a) 
 Here the committee of the promoters of a certain line agreed 
 with the plaintiff, a peer, that in consideration of his withholding 
 his opposition to their bill, the incorporated company, in the event 
 of the railway being under the powers of their act, made to pass 
 through his estates, should pay him previous to entering upon his 
 
 ' JPer Lord Cranworth, 2 Macq. 415. ' 1 Ry. Cas. 462 ; see ante, p. 320. 
 
 ' 1 My. <fc Or. 650; 1 Ry. Cas. 173. 
 
 (o) As to cases of this character, see ante, p. 318, note ; and post, p. 681, note. 
 
580 LIABILITY FOR ACTS OF PROMOTERS. 
 
 lands £120,000. The company, after the passing of the act, being' 
 empowered to take compnlsorily the plaintiff's land, served on him 
 a notice to treat for the same. The plaintiff thereupon obtained 
 an injunction from the Lord Chancellor to restrain the defendants 
 from proceeding to assess the value of such land, and the Yice- 
 Chancellor afterwards refused to dissolve such injunction. Tlie 
 amount of compensation, seems enormous, but the company had 
 the choice of two lines, one of which Lord Petre would not 
 have opposed so strongly ; but they chose the other, which 
 passed close by the mansion house and intersected the private 
 grounds, {a) 
 
 In Stanley v. Chester and Birkenhead Ey. Co.,' the projectors 
 of the Birkenhead and Chester railway had agreed with the 
 plaintiff to give him, for fourteen acres of land, and as compen- 
 sation for injury to his estate, £20,000. Other parties had started 
 a competing line, the Chester and Birkenhead railway, and in 
 committee on the rival bills, it was agreed that the merits of the 
 two bills should be referred to arbitration, and that the adopted 
 company should take the engagements with the landholder into 
 which the rejected company had entered, and to this agreement 
 all parties signified in writing their assent. The Chester and 
 Birkenhead railway was adopted, and their bill passed, which 
 would require sixteen acres of land in a place different from that 
 where the fourteen acres were situated. The plaintiff filed his 
 bin against the Chester and Birkenhead company to compel them 
 to keep the agreement entered into with him by the Birkenhead 
 and Chester company, and to restrain them from entering upon 
 any of his lands till after the payment of the first installment, 
 which was already due. To this the defendants demurred gener- 
 ally, and Lord Cottenham, affirming the Vice-Chancellor's decis- 
 ion, overruled the demurrer with costs, and without calling upon 
 the respondent's counsel. " The case as it appears on the face of 
 the bill, is one of the grossest frauds I have ever seen attempted." 
 
 There is also another case which should be mentioned, and in 
 which both Lord Cottenham and the common law courts decided 
 that an agreement, for a valuable consideration, by a peer to with- 
 
 ' 3 My. <fe Cr. 11S ; 1 Ry. Cad. 58. 
 
 (a) See Preeton v. Liverpool, Manchester, <fee. Ry. Co. 6 H. L. C. 606 ; 26 L. J. 
 (Ch.)421. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 581 
 
 draw opposition to a bill then in parliament, is not fraudulent, but 
 binding on the parties. This was Simpson v. Lord Howden.^ 
 The projectors of a railway, when applying for an act of parlia- 
 ment, had agreed with the defendant, a peer, through whose 
 estates the intended line would pass, and who was opposing the 
 bill, that if he would withdraw his opposition, in case the bill then 
 pending should pass into an act, the plaintiffs or the company to 
 be incorporated, would pay to him £6,000 as compensation for the 
 detriment to his estates, etc. The bill passed, but the company 
 resolved to adopt a line differing from that authorized by the act 
 and pointed out in the agreement, and by which the estates of the 
 defendant were altogether avoided. The defendant in equity, 
 having brought an action in the Queen's Bench for the £5,000, 
 and the plaintiffs in equity, having filed a biU praying that he 
 should be ordered to deliver up the agreement, and be restrained 
 from proceeding with his action, it was held by the Lord Chan- 
 cellor, that the illegality of the instrument, if any, appeared on 
 the face of it, and was a question cognizable at law. He therefore 
 dismissed the bill. The defendant thereupon continued his action, 
 and the Court of Exchequer Chamber also adjudged the agreement 
 to be valid.'(ffl) 
 
 It lias been commonly considered that in these cases the Lord 
 Chancellor laid down that the projectors are quodam modo tlie 
 agents of the future corporation, and that the contracts and en- 
 gagements of the former bind as such, i. e., as being entered into 
 
 • 9 C. & F. 61 ; 3 Ry. Cas. 294. « Howden v. Simpson, 10 A. & E. 793 
 
 1 Ry. Cas. 326. 
 
 (a) The cases cited on pp. 679-584, and the comments of the author, will 
 strike those who have not before noticed the decisions, with surprise. Their ten- 
 dency, all must concede, is towards a laxity of administration, which is danjrerous to 
 public morality, and is opposed to purity of government. No substantial difference 
 can be found between contracts made with influential parties to withdraw their op- 
 position to measures of pubMo improvement, and contracts with lobbyists to influence 
 legislation. More especially are such contracts immoral when made with a peer or 
 other legislator. Public sentiment has recently very decidedly reprobated the cours| 
 of legislators in this country, suspected of being influenced in their votes by their 
 private interests ; and the American courts are unanimous in condemning contracts 
 which lead to the use of improper means or theexercise of undue influence in obtain- 
 ing the passage of public or private acts by the Legislature, or the probable tendency 
 of which would be, to sully the purity or mislead the judgment of those to whom the 
 high trust of legislation is confided. See Marshall v. Bait. <fe Ohio R. R. Co. 16 How . 
 814; Trist v. Child, 21 Wall. 441 ; and cases cited ante, p. 318, note. 
 
582 LIABILITY FOR ACTS OF PROMOTERS. 
 
 by an agent on behalf of his principal ; but his language scarcely 
 admits of such a construction. His words, in Edwards v. Grand 
 Junction Ky. Co. are : " But the question is, not whether there be 
 any binding contract at law, but whether this court will permit the 
 company to use their powers under the act, in direct opposition to 
 the arrangement made with the trustees prior to the act, upon th& 
 faith of which they were permitted to obtain such powers. If the 
 company and the projectors cannot be identified, still it is clear 
 that the company have succeeded to, and are now in possession of, 
 all that the projectors had before ; they are entitled to all their 
 rights, and subject to all their liabilities. If any one had individ- 
 ually projected such a scheme, and in prosecution of it had entered 
 into arrangements, and then had sold and assigned all his interest 
 in it to another, there would be no legal obligation between those 
 who had dealt with the original projector and such purchaser, but 
 in this court it would be otherwise. So here, as the company stand 
 in the place of the projectors, they cannot repudiate arrangements 
 into which such projectors had entered ; they cannot exercise the 
 powers given by parliament to such projectors in their corporate 
 capacity, and at the same time refuse to comply with those terms, 
 upon the faith of which all opposition to their obtaining suck 
 powers was withheld. * * * What right have the company 
 to meddle with the road at all ? The powers under the act give 
 them the right, but before that right was so conferred it had been 
 agreed that the right should only be used in a particular manner. 
 Can the company exercise the right without regard to such agree- 
 ment ? I am clearly of opinion that they can not." 
 
 Similarly in Stanley v. Chester and Birkenhead Ey. Co. : * 
 " Would any court of equity permit the company first to obtain 
 the concurrence of the plaintiff in an agreement like this, and 
 then to turn round and say they will disregard it altogether, and 
 put in force the adverse powers of the act as if no such agreement 
 was in existence ? " 
 
 And in the subsequent case of Greenhalgh v. Manchester, &c. 
 Ry. Co.,' Lord Cottenham explained more clearly the reasons upon 
 which his judgments Lad been founded : " The right [i. e., which 
 plaintiff has against the defendants] is not properly speaking a 
 right of contract, but rather arises out of the contract ; for neither 
 
 ' Vbi supra. the delay of the plaintiff in making his 
 
 ' 3 My. <fe Cr. 784, 790, where, from application, an injunction was refused. 
 
WHEN THE ACTS ARE NOT ULTRA. TIRES. 583 
 
 in this case, nor in the case of Edwards v. Grand Junction Ry. 
 Co., was it a matter of contract/ but the equity is this, that 
 what has subsequently taken place, and the position in which the 
 parties stand, give the party seeking the benefit of the contract, 
 a right to the interference of this court, by virtue of an equity 
 which induces the court to prevent the company from exer- 
 cising their legal right, unless upon the terms of adopting and 
 giving effect to the contract which has been entered into by other 
 parties." 
 
 Whether any exception can be taken to, or any flaw found in, 
 this reasoning ; whether the assertion ever will be made in a court 
 of equity, that because the fiction of an artificial existence is 
 thrown round a body of individuals, its jurisdiction is ousted and its 
 power to prevent fraud and injustice gone ; that by the operation 
 of law, a being can be created, endowed with rights, and having 
 powers obtained for it to the detriment of other persons, and on 
 the faith of solemn engagements purporting to be made on its be- 
 half, for the compensation of the individuals thus damnified, that 
 this being may approbate and reprobate, may employ its rights 
 and powers to the ruin of those who have permitted its creation, 
 and that the court cannot interfere, is more than doubtful. 
 
 Lord Oottenham perhaps expressed himself, at least the reports 
 make him do so, in too general a manner. It is evidently neces- 
 sary to except all engagements which are either ultra vires of the 
 constituted company or mere bribes to secure the good will of 
 powerful interests, neither of which can, under any circumstances 
 be enforced against the company. 
 
 A large landowner may from various reasons, more or less 
 whimsical and exclusive, object to a railway, a manufactory, or a 
 colliery, invading his domain, and his opposition may be a great 
 obstacle to the success of the scheme, but beyond the damage done 
 to the estate directly and indirectly, including under this fair 
 compensation for the loss of privacy, it is difficult to see to what 
 extent injury will be caused to the person of the owner. He is 
 not a rival C9.rrier, manufacturer, or coalmaster, whose business 
 will be destroyed by the institution of the proposed undertaking ; 
 he is simply a powerful opponent, a member, it may be, of the 
 Legislature, able by his social influence and by his command of 
 able agents and counsel, to hinder, perhaps to thwart totally, the 
 nascent corporation. Being such, he is perfectly justified in using 
 
58i LIABILITY FOR ACTS OF PROMOTERS, 
 
 his sociaP influence for Ms own emolument, but he should take 
 care to have any bargains which he may makefor his private sup- 
 port duly entered on the constating instruments of -the corpora- 
 tion. If this provision be not made, there is no principle of law 
 or equity by which such a bargain can be enforced. The corpora- 
 tion does not, simply by commencing its operations, "recognize" 
 the agreement or inflict any damage on the party to the same ; it 
 is only when it proceeds to take his land, or to usurp his business, 
 or the like, that it does really cause him tangible and manifest in- 
 jury, and that, in Lord Cottenham's words, " the position in which 
 tlie parties stand, give the party seeking the benefit of the con- 
 tract, a right to the interference of the Court of Equity." It is 
 therefore submitted that, with the qualifications pointed out above. 
 Lord Cottenham's decisions still hold good.^ 
 
 Leominster Canal Navigation v. Shrewsbury and Hereford Ry. 
 Co.' is a case which at first seems to militate against them, but the 
 actual decision there, was based on the ground of informality on 
 the part of the directors of the defendants. An arrangement had 
 been come to between the promoters of the Shrewsbury and 
 Hereford Eailway Company, and the Leominster Canal Company, 
 in pursuance of which an act was obtained by the Leominster Ca- 
 nal Company, empowering them to sell their canal, and " authorized 
 and required the Shrewsbury and Hereford Railway Company, 
 with the consent of at least three-fifths of the proprietors " in the 
 same, to purchase the said canal. A meeting was accordingly lield 
 
 ' Not his political influence as a mem- weighed hereafter, one of his marked 
 her of the Legislature. See ante, p. 319. characteristics will be found to be the 
 Of course in many cases it must be ex- skill and boldness with which, as for exnm- 
 tremely difficult to separate the social pie in Walworth jj. Holt, 4 My. <fe Or. 619, 
 from the political side of the matter ; but he accommodated the practice of the court 
 if, and so far as, this is done, and the so- to new commercial exigencies. Wheth- 
 cial power alone is taken into account, er as regards the interests of the share- 
 the agreements, the legislator having also holders or of the public, Lord Cottenham 
 s loeus standi (see ante, p. 819) are good, was the last man to shrink from restrain- 
 Whcther a legislator should be permitted ing with a strong hand any undue exer- 
 to use even his social and personal infln- ciae of power by a company ; and, there- 
 once in this way, is another question, but fore, when 1 find him taking a view fa- 
 he is eo permitted. vorable to the company, his opinion is 
 
 ' See Earl Lindsey v. Capper, 3 H. L. entitled to even more than the weight 
 C. 293 ; and Earl Lindsey v. Great North- which would always belong to it.'' This 
 em Ey. Co. 10 Hare, 665 ; 22 L. J. (Ch.) eulogium may be worth little in point of 
 995, where Wood, V.-C, approves of, and law, but it is evidence of the high opinion 
 follows the principle of Lord Cottenham's entertained of Lord Cottenham as a law- 
 decision. The same learned judge also maker, and of the respect that is justly 
 thus speaks of Lord Cottenham, 2 J. <fe H. due to his decisions. 
 114 : " When the merits of Lord Gotten- « 3 K. & J. 654 ; 26 L. J. (Ch.) 764 ; 
 ham as an equity judge come to be 3 Jur. (N. S.) 930. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 585 
 
 in pursuance of the above act, at which the directors were duly 
 authorized to complete the purchase, but without referring to the 
 agreement. The directors having failed to take any further steps 
 toward the completion of the purchase, it was held that there being 
 no agreement signed by two of the directors, as required by the 
 97th section of the Companies Clauses Consolidation Act, specific 
 performance could not be decreed. Page-Wood, V.-C, after re- 
 ferring to the Helensburgh Case as deciding " that that which the 
 directors could not do after the formation of the company, cer- 
 tainly the provisional directors could not do before, for the pur- 
 pose of binding the company," stated, that the purchase of the 
 canal by the Shewsbury and Hereford Railway Company, would, 
 before the passing of the act, have been ^lUra vires of this com- 
 pany, and that consequently there was, at the time of its passing, 
 no agreement binding on this company. He then pointed out 
 that the act did not refer to the agreement, even in its imperfect 
 and inchoative form, and considered that it was left to the parties 
 after the act passed, to enter into such arrangement and agree- 
 ment as they might be advised to do. He therefore determined 
 that, the agreement being invalid from the absence of the neces- 
 sary signature, there was nothing binding, of which the court 
 could enforce specific performance. 
 
 The recent cases in which Lord Cottenham's decisions have 
 been especially questioned, are Preston v. Liverpool, Manchester, 
 &c. Ky. Co.,"- and the Scottish North-Eastern Ky. Co. v. Stewart,^ 
 both in the House of Lords, the one in 1856, the other 1859. The 
 facts in each were very similar: an agreement by the promoters 
 of a company to take land at certain rates, which the company, 
 after incorporation, refuse to carry out, and in both cases the lords, 
 considering the agreement to be conditional on the land being 
 taken, which had not been done, gave judgment in favor of the 
 company, without actually deciding whether a corporation is under 
 any, and if any, under what circumstances, liable for the acts of 
 its originators. 
 
 Another case may here be mentioned, one which has hitherto 
 received but little attention. Bedford and Cambridge Ry. Co. v. 
 Stanley,* was a bill filed by the plaintLfiEs and two of the promoters 
 
 ' 5 H. L. C. 606 ; 25 L. J. (Ch.) 421. abire Ry. Co. L. R. 1 Eq. 593, where sim- 
 
 See, also, Caledonian Ry. Co. v. Magis- ilar doubts are raised; ante, p. 320. 
 trates of Helensburgh, 2 Macq. 391, and * 3 Macq. 382 ; 6 Jur. (N. S.) 607. 
 
 Earl of Shrewsbury v. North Stafford- ' 2 J. <fc H. 746 ; 32 L. J. (Ch.) 60. 
 
586 LIABILITY FOR ACTS OF PROMOTERS. 
 
 of the company, who were joined to obviate any objection that 
 might have been raised as to want of parties, for specific perform- 
 ance of an agreement entered into by a landowner with the agent 
 of the promoters, before the formation of the company, by which 
 he agreed that, in the event of the company obtaining an act of 
 parliament, he would sell them such land as might be reqiiired, at 
 the rate of thirty years' purchase upon the annual rental. Page- 
 Wood, V.-C, for certain technical reasons dismissed the bill, but 
 he considered the contract to have been binding on the defendant 
 and apparently on the plaintiff. His words were : " If an agree- 
 ment of this description is entered into before the passing of the 
 act, which it would be competent to the directors of the company? 
 as soon as the act should be passed, to enter into, it is known of 
 necessity, from the character of acts of parliament governing these 
 matters, that those powers will be included in the act when it is 
 passed, and if the contract be beneficial and intra vires of the di- 
 rectors when the act shall be passed, there can be no conceivable 
 reason, as it appears to me, for saying that parties are not bound 
 by an arrangement of that kind, entered into by the promoters of 
 an intended company, for the benefit of that company, as soon as 
 the act is obtained." 
 
 This is strong and unqualified language. It must, however, 
 not be understood too literally. The learned Vice-Chancellor pro- 
 bably intended to lay down, only that a person may be bound to a 
 corporation in posse, by a contract which that corporation, when 
 actually in esse, can take advantage of and enforce ; a prbposition 
 to which some little exception may be taken on the ground, first, 
 that the corporation is not a party to the said contract, and se- 
 condly, that it is only the parties to contracts who can sue or be 
 sued upon the same. If his honor intended to go farther, and to 
 state that agreements entered into by persons assuming to repre- 
 sent a corporation not yet existing, but made conditional on the 
 creation of such corporation, will bind the same on its coming into 
 being, then this is an assertion which, if not absolutely irreconcil- 
 able with, is at least a considerable qualification of, the decision in 
 Caledonian Ey. Co. v. Magistrates of Helensburgh. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 587 
 
 Section III. — Whbn the Engagements aee not Ultea Yiees — 
 Liability of Kegisteeed Coepoeations. 
 
 When the Engagements are Embodied m the Constating Instru^ 
 
 ments} 
 
 These differ from statutory corporations in this, that they are 
 constituted, and their powers, rights and liabilities determined, 
 purely and solely by their originators, and not by the direct action 
 and interference of the Legislature. Consequently their constitu- 
 tion and their capacities are subjects which concern the individual 
 corporators only. Any liabilities such a corporation may be under 
 at its inception,, must be given it by those (1) who are actually par- 
 ties to its inception, that is to say, in cases within the Companies 
 Acts 1862 and 1867, the subscribers to the memorandum and arti- 
 cles ; or (2), who subsequently by joining it can, by relation back, 
 be deemed to have been and to be similarly parties. It results, 
 therefore, that persons intending to take advantage of, and to en- 
 force provisions contained in the constating instruments, must make 
 themselves parties thereto, at least do this, and probably even this 
 will often be insufficient. 
 
 Equitable reasons may, however, sometimes intervene and give 
 rise to rights and equities in respect of matters occurring before 
 the birth of a corporation, which may be enforced against, in a 
 court of equity .' It will be convenient to take these latter in- 
 stances first. The principle may be thus enunciated : 
 
 I. When a registered company, having provided in its constat- 
 ing instalments for the doing or carrying out of certain 
 tra7isaotions, or the repayment of certain expenses incurred 
 on its hehaHf, then, if it really has or attempts to get the 
 ienefii of such transactions, it will be compelled by a court of 
 equity to carry out such provisions. 
 
 In the Madrid Bank v. Pelly' the articles of association of a 
 
 ' See, generally, in addition to the L. R. 20 Eq. 621 ; Crickmer's Case, L. R. 
 
 cases cited in this section, as to the legal 10 Ch. 616, ifec. 
 
 import of the constating instruments of ' See Spooner ». Parsons, 6 Hare, 102 ; 
 
 registered companies, Ke Appletreewick, ante, p. 67Y. 
 
 Ac. Mining Co. L. R. 18 Eq. 96; Perm- i » L. R. 7 Eq. 442. See Ex parte Wil- 
 
 stone's Case, L. R. 20 Eq. 626; Maxwell's Hams, L. R. 2 Eq. 216, where a claim by 
 
 Case, L. R. 20 Eq. 686 ; Addison's Case, the promoters of the Madrid Bank for the 
 
588 LIABILITY FOR ACTS OF PROMOTERS. 
 
 banking company with a nominal capital of £1,200,000 in 60,000 
 shares, of which the prospectus stated that the first issue would be 
 30,000, empowered the directors to commence business as soon as 
 they should think fit, notwithstanding the whole capital might 
 not have been subscribed for, and provided that upon the first al- 
 lotment of shares £10,000 should be paid to the promoters. 
 When only 5,000 shares had been subscribed for, and before the 
 company was in a situation to commence business, the directors 
 allotted shares, and paid £5,000 to the promoters, who immedi- 
 ately paid to four of the directors £500 apiece. The company 
 having been ordered to be wound up, and the official liquidator 
 having brought a suit in the name of the company against the di- 
 rectors, to which the promoters were not parties, it was decided 
 that the directors could not be charged with the money paid to 
 the promoters, but that each of the four directors must repay to 
 the company the £500 received by him from the promoters.(a) 
 
 Another later case may be cited, as showing the nature of the 
 engagements for which provision may be made in the constating 
 instruments, and the conditions under, and the extent to which 
 the corporation may then be liable in respect thereof. Touche v. 
 Metropolitan Ry. Warehousing Co.,^ arose thus : The plaintifiii 
 had incurred labor and expense in organizing a scheme for certain 
 Exhibition Rooms, and had entered into negotiations with, and 
 sent the plans to, some of the promoters of a certain company, and 
 offered to accept £2,000 for remuneration. The company was 
 formed, and by the articles of agreement it was recited that the 
 plaintiffs had incurred labor and expense in organizing the Exhi- 
 bition Rooms, and thus it had been arranged with one of the pro- 
 moters that he should pay them £2,000 when and so soon as the 
 company should be in a position to commence business. And it 
 was agreed that no expense should be incurred until 10,000 shares 
 had been subscribed, and at least £2 a share paid thereon, and 
 that if the company was not in a position to carry on the under- 
 
 balance of the £10,000 was disallowed; ' L. R..6 Ch. 671. 
 
 Me Hereford, &c. Engineering Co. 2 Ch. 
 
 D. 621. 
 
 (a) Blatchford v. Ross, 6 Abb. Pr. (N. S.) 433; Gardner v. Ogden, 22 N. Y. 825; 
 Coleman v. Second Ave. R. R. 38 N. Y. 201 ; Bliss v. Matteson, 46 N. Y. 22; Davi- 
 son V. Seymour, 1 Bos. 88 ; Redmond v. Dickerson, 9 N. J. Eq. 501 ; McElhen/s Ap- 
 peal, 61 Penn. St. 188 ; Simons v. Vulcan Oil Co. Id. 202. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 589 
 
 taking before a certain day, then neither the promoters nor the 
 officers of the company should have any claim upon the funds of 
 the company. It also provided that when the shares were sub- 
 scribed for and paid up to the amount aforesaid, the directors should 
 pay the above-mentioned promoter the sum of £2,000. Copies 
 of the articles of association were sent to the plantiffs. The shares 
 in the company were subscribed for and the deposits were paid, 
 but the company was unable to obtain a site, and never actually 
 commenced business. The Lord Chancellor, on the evidence, 
 held, that the company had adopted the agreement as to the pay- 
 ment of £2,000 to the plaintiffs through the promoter ; and, as to 
 the contract, he decided that the performance of the agreement 
 was not contingent on the actual commencement of business by 
 the company, and that consequently the company were liable.* 
 
 In Mb parte Williams,^ a promoter was not allowed to claim in, 
 a winding-up for his services. But he was so allowed in lie Here- 
 ford, &c., Engineering Co. ; * a decision which is important, not 
 only on the special point as to promoters' claims, but on the gen- 
 eral subject now in consideration. The facts were : By an agree- 
 ment made between the vendor of certain iron-works and Walter 
 and Head, it was agreed that, if Walter and Head succeeded, within 
 three months, in getting up a company for the purchase of the 
 iron-works at a valuation, they should out of the purchase-money 
 receive £1,500. By an agreement dated a few weeks later, the 
 vendor agreed with Walter, as trustee for the company, that the 
 company should buy the iron-works at a valuation. Walter and 
 Head did not get up a company within three months, but after 
 some time they formed a company with seven shareholders, who 
 were also directors. The company was registered, and by the 
 articles of association the agreement for the purchase of the prop- 
 erty at a valuation was adopted, and it was provided that the di- 
 rectors should pay all expenses incurred in getting up and reg- 
 istering the company. Yery few other shares were applied for^ 
 none were allotted, and the company was wound up. Walter and 
 Head claimed in the winding-up remuneration for their services, 
 both before and after the company was formed, and the valuer 
 
 ' It is impossible to gather from the ment ; but nowhere is there a positive, 
 
 judgment what were the grounds upon direct statement to that effect. 
 which the chancellor proceeded. Ap- ' L. R. 2 Eq. 216. 
 
 parently it was thought that the com- s 2 ch. D. fi21. 
 
 pany had affirmed or adopted the agree- 
 
690 LIABILIT? FOB ACTS OF PROMOTERS. 
 
 claimed his charges for valuing. The Lords Justices held that 
 though Walter and Head might not have a legal claim as to services 
 before the formation of the company, they would have a good 
 equitable claim, so far as the company derived benefit from them, 
 and would have a legal claim as to services rendered after the for- 
 mation of the company.^ 
 
 II. But no action will lie at law^ at the suit of a person not a 
 member of the corporation, upon such a provision inserted 
 in the constating instruments. 
 
 This seems settled beyond dispute by the effect of two very 
 recent decisions. In the former of these, Melhado v. Forto 
 Alegre, &c. Ry. Co. ' the articles of association of the defend- 
 ants, a joint-stock company, registered under the Companies Acts 
 1862 and 1867, provided that the company should defray such ex- 
 penses incurred in its establishment as the directors should con- 
 sider might be deemed and treated as preliminary expenses, to an 
 amount not exceeding £2,000. The plaintiffs, who were pro- 
 moters of the company, had incurred preliminary expenses in the 
 establishment of the company. It was held that no action would 
 lie at the suit of the plaintiffs against the company for non-pay- 
 ment of such preliminary expenses in accordance with the articles 
 of association. 
 
 The latter case, Eley v. Positive, &c. Life Ass. Co.,* is to the 
 same effect, and is the unanimous decision of the Appeal Court. 
 The defendants' articles of association contained a clause in which 
 it was stated that the plaintiff should be solicitor to the company, 
 and should transact all the legal business of the company, includ- 
 ing parliamentary business, for the usual and accustomed fees and 
 charges, and should not be removed from his oflSce, unless for 
 misconduct ; the articles were signed by seven members of the 
 company, and were duly registered, and the company incorporated 
 
 ' But bad, however, lost their right by such an engagement as such and without 
 
 reason of concealment as to the bargain more, but that he can sue (1) if and when 
 
 for £1,600. the corporation adopts it, and (2) so far 
 
 ' Nor, apparently, in Chancery ; see as they obtain benefit therefrom. 
 per the L. C. in Touche v. Metropolitan ' L. R. 9 C. P. 603. 
 
 Warehousing Co. L. R. 6 Ch. 671,which de- * 1 Ex. D. 88. See Re Hereford, <tc. 
 
 cision, apparently,^ must be held to have Engineering Co. 2 Ch. D. 621, where the 
 
 been, not that a third party can sue upon principle of this decision is rea£Brmed. 
 
WHEN THE ACTS ARE NOT ULTRA VIRES. 591 
 
 under the Companies Act, 1862. The plaintiff acted as solicitor 
 to the company for some time, but, ultimately, the company 
 ceased to employ him and employed other solicitors. The plaint- 
 iff brought an action against the company for breach of contract 
 in not employing him as solicitor to transact their legal business, 
 on the terms of the articles. The court decided that the articles 
 of association were a matter between the shareholders inter se, or 
 the shareholders and the directors, and did not create any contract 
 between the plaintiff and the company. 
 
 Lord Cairns, L. C, in delivering judgment, said : " This case 
 was first rested on the 118th Article. Articles of association, as 
 is well known, fqllow the memorandum, which states the objects 
 of the company, while the articles state the arrangements be- 
 tween the members. They are an agreement inter socios, and in 
 that view, if the introductory words are applied to Article 118, it 
 becomes a convenant between the parties to it that they will em- 
 ploy the plaintiff. Now, so far as that is concerned, it is res inter 
 alios acta, the plaintiff is no party to it. No doubt he thought 
 that by inserting it he was making his employment safe as against 
 the company, but his relying on that view of the law, does not 
 alter the legal effect of the articles. This article is either a stip- 
 ulation, which would bind the members, or else a mandate to the 
 directors. In either case, it is a matter between the directors and 
 the shareholders, and not between them and the plaintiff." 
 
 There is an earlier, though modem case, Pilbrow v. Pilbrow's 
 Atmospheric, &c. Co.,^ which can scarcely stand consistently with 
 the last two decisions. The declaration had been executed under 
 7 & 8 Vict. c. 110, the defendants agreed on the purchase of a 
 patent to pay the plaintiff £16,000 " out of the money raised by 
 the first installments or calls on the shares of the company," which 
 they had not done. The second count set out the articles of 
 agreement, stating that the plaintiff had sold his patent to the 
 company, and containing a covenant that the company should pay 
 him £15,000 in cash, &c., which they had not done. It was con- 
 tended by the defendants that the money was not to be paid at all 
 events, but only out of the first installments, and that as none had 
 been obtained they were not liable. But the court considered 
 this was not the correct construction of the contract ; and they, 
 
 ' S C. B. 440 ; 17 L. J. (C. P.) 166. 
 
592 LIABILITY FOR ACTS OF PROMOTERS. 
 
 therefore, decided that the second count was good on general de- 
 murrer ; although the plaintiffs, in their third plea to the first 
 count, had alleged that the deed of settlement was obtained by the 
 fraud of the plaintiffs.'' 
 
 Where the Engagements are not Provided for in the Constating 
 
 Instruments. 
 
 The conclusions of this sub-section will be substantially if not 
 precisely the same as those arrived at in the corresponding part of 
 Section 11.^ 
 
 I. At Law. The position may be thus summarized. First : — 
 Such engagements cannot be enforced by or against the corpora- 
 tion, unless both parties ratify them ; and secondly, even in case 
 of such attempted ratification, it is more than doubtful whether 
 any liability is incurred by any rights created in favor of the cor- 
 poration ; unless, thirdly, the new proceeding, instead of being or 
 assimilating a ratification, is really a remaking of the engagement.* 
 
 II. In Equity. As to this it is submitted, that the position 
 and the principles are precisely the same with respect to registered 
 companies as have already been considered in relation to statutory- 
 corporations.^ In the one case, as in the other, a corporation does 
 not, by the mere fact of coming into existence, "recognize" an 
 antecedent transaction or otherwise assume liability therefor. This 
 seems to be the view of the courts, and consequently there must 
 be something done by or on behalf of the corporation, when ex- 
 isting, in order to bind it. 
 
 1 The above case was under 7 & 8 Consumers' Co. 11 C. B. 689 ; 21 L. J. (C. 
 
 Vict. c. 110. This statute enabled, by P.) 1; Bull v. Chapman, 8 Ex. 444; 22 L. 
 
 section 23, persons engaged in getting up J. (Ex.) 257; Payne v. N. S. W. Steam 
 
 a company to enter into certain con- Nav. Co. 10 Ex. 283; 24 L. J. (Ex.) 117; 
 
 tracts, and to incur certain expenses on Job «. Lamb, 11 Ex. 639 ; 25 L. J. (Ex.) 
 
 behalf of the intended company, the con- 87 ; Gunn v. London and Lancashire Fire 
 
 tracts to be " conditional on the comple- Ins. Co. 12 C. B. (N. S.) 694, u. The stat- 
 
 tion of the company, and to tate effect iite is now repealed, but these authnrities 
 
 after the certificate of complete reglstra- are useful as illustrating the liability, or 
 
 tion." Per Alderson, B., in Taylor «. rather the non-liability of companies for 
 
 Crowland Gas and Coke Co. 10 Ex. 288, their founders, (a) 
 n.; 23 L.J. (Ex.) 254. Upon this section ^ Ante, ^. hli et aeq. 
 
 several decisions have been given, in ' Ibid, 
 
 none of which were the company held * Ibid, 
 
 liable, e. g., Hutchinson v. Surrey Gas 
 
 (a) Table A, Art. 56, Companies Act 1862 (Buckley, p. 419), provides that the 
 directors "may pay all expenses incurred in getting up and registering the 
 company.'' 
 
RIGHTS OF CORPORATIONS. 593 
 
 Whether or not a corporation is bound, in any or every case, 
 to account for and repay expenses necessarily incident to its origin, 
 and, if so, how far this extends — what will be such expenses — ^ia 
 at present doubtful.^ 
 
 Section IV. — Eights of Coepoeations. {a) 
 
 General Rights apart from Trusts. 
 
 The last two sections have been devoted to the consideration 
 of the liabilities of corporations. What are their rights in respect 
 of the same matters — of transactions which have been, sometimes 
 actually completed, sometimes merely originated and left m fieri, 
 previous to their own inception ? It is submitted that their rights 
 depend upon analogous considerations to those establishing a lia- 
 bility (apart, of course, from particular legislative enactment^ 
 creating anomalous incidents, '■^privilegia" favorable or onerous) ; 
 that right and liability are correlative; that, special circum- 
 stances apart, where the one exists the other exists, what will cre- 
 ate the one will equally impose the other. Consequently, the 
 language and clauses, whether of statutes or of private constating 
 instruments, which confer rights as against a corporation, will confer 
 in their favor, under like circumstances, similar rights. If and so 
 far as this is correct, the rights of corporations now in statement 
 will be shown by a similar examination to that which has been had 
 in the last two sections as to their liabilities, of course, mutatis mu- 
 tandis, the chief fact to be transposed being that it is the other 
 
 ' ^ee post, p. 699, where this same point is referred to. 
 
 (a) As to right of corporations to take the benefit of transactions before organ- 
 ization, see Kennebec & Portland R. R. Co. v. Palmer, 34 Me. 366 ; Penobscot R. R. 
 Co. V. Dummer, 40 Me. 172; Vermont Central R. R. Co. o. Clayes, 21 "Vt. 30; Chester 
 Glass Co. V. Dewey, 16 Mass. 94; Salem Mill-dam Co. v. Ropes, 6 Pick. 23; Danbury 
 & "Sov. R. R. Co. 0. Wilson, 22 Conn. 435 ; Lake Ontario R. R. Co. v. Mason, 16 W. Y. 
 451 ; Wayne <fe Ontario Collegiate Inst. v. Blackmau, 48 N. T. 661 ; Dutch Ch. v. 
 Brown, 4 Abb. Ct. App. Dec. 31 ; Troy & Boston R. R. Co. o. Tibbits, 18 Barb. 297; 
 Dorris «. French, WS.Y. Sup. Ct. (4 Hun), 292 ; Del. <fc Atl. R. R. Co. v. Irick, 23 N. 
 J. L. 321 ; MoElhenny's Appeal, 61 Penn. St. 188 ; Simons v. Vulcan Oil Co. Ibid. 
 202 ; Tonioa & Petersburg B. R. Co. v. McNeely, 21 111. 71. 
 38 
 
694 LIABILITY FOR ACTS OF PROMOTERS. 
 
 party who must act upon or " recognize " an inchoate liability in 
 order to render it enforceable against him by the corporation. 
 This examination would involve much repetition, and would not 
 introduce any really new matter. Therefore, instead, reference 
 shoiild be made to the correlative subjects of the two preceding 
 sections. 
 
 The rights of corporations to enforce engagements of the kind 
 now in statement are, however, a very secondary affair. It so 
 very generally happens that when any dispute arises about such 
 engagements, it is because of the hardness of the bargain against 
 the corporation. They are remarkably uniform in this respect. 
 They are, in so far as the courts have had cognizance of them, 
 transactions, without exception, altogether one-sided, and not un- 
 seldom so hard and unfair as to be mere swindles, which would 
 not be attempted by one commercial man towards another.* Con- 
 sequently, as a matter of fact, the only promoters' engagements 
 here requiring consideration, are those which have been made 
 with persons acting on behalf, as trustees or quasi trustees, of an 
 intended corporation. 
 
 EngagemenU of Trustees on.hehalf of Projected Companies. 
 
 These engagements are of constant occurrence, and may, per- 
 haps, be styled " inseparable accidents " of registered corporations 
 for commercial purposes. Seldom, if ever, is such a company 
 now created purely and solely for the purpose of starting clear 
 and working up a business from nothing. Almost invariably at 
 its birth, and as its direct object, it " takes over" an existing busi- 
 ness, or it " acquires " a concession, or it " adopts " agreements, or 
 in some other way it affects to assume some other liability, or to 
 make itseK a party to some other transaction. What is its real 
 liability in respect thereof ? 
 
 1 This does not apply to all engage- to be estimated only by those familiar 
 
 ments, only to those where a corporation with such undertakings ; and it is grossly 
 
 has sought legal relief. Public works— indecent to slamp without distinction 
 
 railways, docks, gas works, drainage, and every promoter, financier, and conces- 
 
 the like — cannot be initiated without ex- sionaire as a rogue, 
 pense, often enough very heavy expense. 
 
RIGHTS OF CORPORATIONS. 595 
 
 First. — At Common Law. 
 
 Here, according to what has been said in the last two sections, 
 it would seem to follow that in no case, however the agreement 
 was framed, can a corporation or the opposite incur or enforce 
 liability in respect of an agreement, not of statutory obligation, 
 made before its inception and purporting to be on its behalf, un- 
 less and until something more has been done by both parties after 
 the creation of the corporation. Some doubt, however, is thrown 
 upon this by the 38th section of the Companies Act, 1867. 
 This enacts : " Every prospectus of a company, and every notice 
 inviting persons to subscribe for shares in any joint-stock com- 
 pany, shall specify the dates and the names of the parties to any 
 contract entered into by the company, or the promoters, directors, 
 or trustees thereof, before the issue of such prospectus or notice, 
 whether subject to adoption by the directors or the company, or 
 otherwise, and any prospectus or notice not specifying the same 
 shall be deemed fraudulent on the part of the promoters, direct- 
 ors, and officers of the company, knowingly issuing the same as 
 regards any person taking shares in the company on the faith of 
 such prospectus, unless he shall have had notice of such contract." ' 
 
 This section is so delightfully vague that none but rash suitors 
 will attempt to construe it. However, it seems wide enough, and 
 to have been intended to include contracts on behalf of nascent or 
 projected corporations. It does not declare that such corporations 
 are already liable, nor does it enact that they shall hereafter be 
 liable at common law upon, and able to enforce, such agreements. 
 But it evidently assumes this. Such an assumption, of course, is 
 worth just as much as are other assumptions or opinions by the 
 Legislature as to what law is. 
 
 But though the enactment may be valueless in this way, yet it 
 distinctly provides that, under the circumstances, the persons 
 therein named, or at least pointed out, shall some of them incur 
 liabilities, and others have rights to the extent and in the manner 
 therein provided. And more than this, the section is general, 
 absolute, unconditional. It includes " any contract * * * 
 whether subject to adoption or not." Consequently, unless in the 
 
 ' See Askew'e Case, L. R. 9 Oh. 664 ; L. R. 20 Eq. 114 ; 1 Ch. D. 182 ; Hartley's 
 Charlton ». Hay, 23 W. R. 129; Cornell Uaae, L. R. 10 Ch. 167; Craig *. Phillips 
 V. Hay, L. R. 8 C. P. 328 ; Guver's Case, 8 Ch. D. 722. 
 
596 LIABILITY FOR ACTS OF PROMOTERS. 
 
 result the section be held to impose a liability on every company 
 by reason of such contracts, either its wide language must be re- 
 stricted, or shareholders, who can only claim as members of their 
 company and through their company, will, nevertheless, have 
 rights gratuitously given them whenever the company does not 
 adopt the contracts aimed at by the statute. 
 
 Secondly. — In Equity. 
 
 I. No rights, legal or equitable, arise in famor of a corporation 
 in respect of transactions, whether completed or inchoate, 
 merely because entered upon in contemplation of the creation 
 of such corporation ; hut if a person, party to such transac- 
 tion, enters into it as a trustee or otherwise on behalf of the 
 future corporation, or with the intention that the corpora- 
 tion shall subsequently acquire the subject of the transaction, 
 then such person ipso facto and eo instanti is placed in a 
 fiduciary relation towards the corporation. 
 
 First. Prior to the incorporation, statutory rights and liabilities 
 may, of course, be imposed on a created corporation as incidents 
 of its inception with respect to any matters whatever, whether or 
 not they occurred before the creation. But in default of this, 
 with respect to prior transactions, carried on under or in connec- 
 tion with the engagements now in consideration, at common law 
 no rights exist or can be made to exist, even by most express rati- 
 fication, for or against the corporation. 
 
 In equity, the conclusion seems to be the same, and has been 
 so decided in Albion Steel, &c. Co. v. Martin.^ 
 
 There are two other recent decisions, which, however, have 
 not assisted in the elucidation of the present matter. In the 
 former of these, Gover's Case,^ Mappin agreed with Skoines, the 
 owner of a patent, to purchase the patent for £85,000, to be paid 
 partly in cash, and partly in the shares of a company to be formed 
 by Mappin. Three months afterwards, Mappin made an agree- 
 ment with "Wright as trustee for an intended company, to sell 
 the patent to "Wright, as such trustee, for £125,000, payable 
 partly in cash and partly in the shares of a company. Shortly 
 afterwards the company was formed, Mappin being a director. 
 
 ' 1 Ch. D. 680. » Re Coal Economizing Gas Co. 1 CIk 
 
 D. 192; Craig *. Phillips, 3 Ch. D. 722. 
 
RIGHTS OF CORPORATIONS. 597 
 
 A prospectus was issued whicli did not mention the first agree- 
 ment for purchase. It was determined by James, L. J., and 
 Bramwell, B., that, under the circumstances, Mappin was not, 
 when he made the first agreement with Skoines, the patentee, a 
 promoter of, or otherwise in a fiduciary relation towards the com- 
 pany, and that the omission to specify that agreement was not 
 fraudulent either under the general law, or under 30 & 31 V^ict. 
 •c, 131, s. 38 ; while Mellish, L. J., considered, that as Mappin, 
 after he had made and by virtue of this agreement, both stood in 
 A fiduciary relation towards and became a promoter of the com- 
 pany, consequently he ought to have disclosed that agreement to 
 the company. 
 
 The second of the above mentioned cases is the New Som- 
 brero Phosphate Co v. Erlanger.^ Erlanger and others purchased 
 an island for £55,000, which they shortly sold for £110,000 to a 
 -company promoted by themselves. The prospectus contained 
 statements as to the value of the island which were not true, but 
 their untruth might have been ascertained by an examination of 
 ■documents therein referred to. The prospectus also contained a 
 statement that a provisional contract for the purchase of the island 
 had been entered into by the directors, the fact being that of the five 
 -directors named in the prospectus, three only were present at the 
 meeting at which the contract was approved, and of those three 
 only one was in a position to exercise an independent judgment, 
 the other two being agents or creatures of the vendors. The 
 -company was not advised upon the purchase by any independent 
 solicitor, tlie same solicitor acting for the vendors and the com- 
 pany. Upon a bill being filed by the company to set aside the 
 ■contract and obtain repayment of the purchase money, or in the 
 alternative to obtain the repayment of £55,000, the difference be- 
 tween the price at which the vendors bought the island and that 
 at wTiich they sold it to the company, Malins, V.-C, considered, 
 that the subsequent formation by the vendors of the purchasing 
 ■company, did not constitute them trustees or agents for the com- 
 pany, and that they were at liberty to sell to the company at as 
 high a price as they could get the company to give, {a) 
 
 ' 26 W. E. 18. 
 
 {a) See Simons v. Vulcan Oil Co. 61 Penn. St. 202; McElhenny'a Appeal, Ibid. 
 188 ; Getty v. Devlin, Ibid. 403 ; Coleman v. Second Ave. E. R. Co. 38 N. T. 201 ; 
 Blake v. Buffalo Creek E. R. Co. 66 N. T. 485 ; McAllen v. Woodcock, 60 Mo. 174. 
 
598 LIABILITY FOR ACTS OF PROMOTERS. 
 
 Whatever other conclusions flow from these three decisions, 
 they seem at least to establish the above proposition. The doubt- 
 ful clause perhaps is " or with the intention," but it is submitted 
 that there is nothing inconsistent with this in either of the four 
 judgments, while the opinion of Mellish, L. J., is unreservedly in 
 favor of its accuracy. 
 
 The proposition, it will be observed, places the party assuming 
 to act on behalf of the future corporation, in rather an awkward 
 position. The rights are one-sided — the corporation has the op- 
 tion, is under no compulsion, of taking or refusing the transac- 
 tion. But then unilateral contracts are common enough, and this 
 objection, therefore, cannot affect the matter. In addition, (1) 
 the party has voluntarily put himself into the position, and cannot 
 complain of bis own acts ; (2) he can call upon the corporation, 
 when created, to elect to carry out or reject the engagement, and 
 if the corporation takes, it must take cum onere and pay legiti- 
 mate expenses ; (3) he can protect himself from liability, and very 
 generally does so, by an apt clause in the engagement in question ; 
 (4) the hardship of not being permitted to make profit out of his 
 bargain is the hardship enforced even by the common law, that an 
 agent shall not make secret profits out of his principal. 
 
 Secondly. After incorporation, when recognized. If the en- 
 gagements be recognized as mutually binding upon the corpora- 
 tion and the other parties, then, apparently without exception, 
 such engagements are deemed made between and binding upon 
 the parties at the moment of incorporation, and their relative 
 rights and liabilities are determined by their position and the facta 
 there.^ There is the strong objection to this, that the engage- 
 ments are not binding, if the paragraph following be correct, upon 
 the corporation, merely by the fact of incorporation, but must be 
 made so by some act subsequent thereto amounting to a recogni- 
 tion thereof assented to by both parties. 
 
 Thirdly. After incorporation, when not recognized. In such 
 case it is submitted that no rights or liabilities arise ; that what- 
 ever the form of an engagement, whether or not expressed to be 
 made on trust for or otherwise on behalf of a corporation to be 
 constituted, the corporation acquires no rights, is under no liabili- 
 ties in respect thereof merely because it is created ; that a corpo- 
 ration is not merely by creation subjected to the incapacity (or the 
 
 ' See ante, pp. 678, 679, and notes following. 
 
AGREEMENTS AS TO EXTENSION. 599 
 
 privilege) of being a cestui que trust. This is tiie conclusion 
 arrived at in Caledonian, &c. Ey. Co. v. Helensburgh,^ but it is 
 not altogether consistent with the dicta and assumptions in Par- 
 sons V. Spooner,' Bedford & Cambridge Ey. Co. v. Stanley,' and 
 Albion Steel, &c. Co. v. Martin.* 
 
 One point should be noticed. Does the fact of incorporation, 
 entail a liability to pay for necessary preliminary expenses, such 
 as official stamps, printing and advertising? As to statutory 
 corporations this is generally provided for. But in other cases, 
 though there may be a provision in the constating instruments,' 
 yet such a provision gives no right of action to third parties at 
 law,® and it is more than doubtful whether it will be held to do so 
 in equity.'' 
 
 Section Y. — ^Agreements by Existing Ooeporations as to 
 
 Extension. 
 
 It will be sufficient to notice these agreements and to point out 
 that their validity and incidents will depend on the general doc- 
 trine of ultra vires, not on special principles relating to extensions 
 of enterprise or to promoters' engagements. "With the latter, 
 indeed, they have nothing to do, and they are here referred to as 
 a precaution, so that the two may be distinguished. One party 
 entering into them by an existing, not a prospective corporation, 
 their validity as a question of ultra vires will depend simply and 
 solely upon the question whether or not the corporation has kept 
 within its own powers. * 
 
 One class should be specially considered : applications to the 
 Legislature to extend the corporate enterprise or powers. These, 
 in some respects, bear a resemblance to promoter's engagements. 
 In their general aspects they have already been dealt with.' Here 
 it may be added that agreements relating to such extensions and 
 additional powers, and to matters and transactions to be done and 
 
 > 2 Macq. 891 ; ante, pp. 576, 576. = Ante, p. 690. 
 
 ' 6 Hare, 102 ; anU, p. 611. ' But see Re Hereford, <fec. Engineer- 
 
 3 2 J. & H. 746 ; 32 L. J.J (Oh.) 60 ; ing Co. 2 Oh. D. 621. 
 
 ante, p. 685. s ggg g^^g^ pp 77_86. 
 
 * 1 Ch. D. 580. 9 Ante, p. 288 et seq. 
 
 ' See Companies Act, 1862; TaUe A. 
 cl. 56 
 
600 LIABILITY FOR ACTS OF PROMOTERS. 
 
 carried on in pursuance thereof, and clearly on the face of them 
 conditional thereon, are good ; ^ provided they are so clearly condi- 
 tional and are hona fide, and not attempts to do presently and 
 indirectly what the corporation has no capacity to do till the Leg- 
 islature so authorizes it ;^ and provided, also, they are not objec- 
 tionable as being ambiguous, and so apparently involving the 
 corporation or its members in present liability.^ 
 
 ' Eastern Counties v. Hawkes, 5 H. L. '■' Hattereley v. Earl of Shelburn, 31 
 
 C. 331 ; 22 L. J. (Ch.) T? ; Bedford <fc L. J. (Ch.) 878 ; see last note. 
 Cambridge Ry. Co. v. Stanley, 2 J. <fe H. ' See Vance v. East Lancashire Ry. 
 
 746 ; 82 L. J. (Ch.) 60 ; GaEoway v. Co. 3 K. <fe J. 50. 
 Mayor, Ac. of London, L. R. 1 H. L. 34. 
 
CHAPTER VIII. 
 
 AMALGAMATION. 
 
 Section I. — Novation, {a) 
 
 Many of the most important questions relating to ultra vires 
 have arisen on the amalgamation of corporations. For the better 
 understanding of the doctrine as applied to this subject, it will be 
 advisable to consider very briefly what is meant by the principle 
 of Novatio, and what is sufficient to constitute, under ordinary 
 circumstances, a Novatio, before proceeding to an examination of 
 the main subject. 
 
 " Novatio est prioris dehiti in aliam dbligationem transfusio 
 atque ivanslatio : hoc est cum ex proBcidenti causa ita nova con- 
 stituai/ar ut prior perimaturP ^ This is Ulpian's well-known defi- 
 nition of Novatio / " the transfer of an already existing claim into 
 another obligation." !N^o matter what were the nature of his 
 prior claim, even though it were one which could not, for want of 
 a " causa" be enforced, either at law or in equity, yet it could be 
 the subject of a novatio, that is, it was sufficient to form the con- 
 sideration of a new contract: "qualiscunque igitur olligatio sit 
 quas prcBcessit, novari verbis potest, dummodo sequens dbligatio 
 aut civiliter teneat aut nal/uraliter j utputa sipupillus sine tutoris 
 auctoritate promiserit." 
 
 , The only conditions were, first, that neither the original claim 
 nor the substituted agreement should be illegal ; and, secondly, 
 that there should have been the intention to work a novation — 
 " dv/mmodo scia/mus novationem ita demum fieri, si hoc agatur, 
 ut novetur dbligatio — novationem fieri, si modo id actum sit ut 
 novetur.''\ This latter condition is as important as the former, 
 and is many times repeated. 
 
 ■ Dig. 46, 2, 1 pr. 
 
 (a) Ab to novation, see 1 Parsons on Contracts, 6th ed. p. 217; 2 Chitty on Con- 
 tracts, 11th Am. ed. 18T1, and cases in Mr. Perkins' notes. 
 
602 AMALGAMATION. 
 
 The result, in every case, was, that the former obligation was 
 destroyed: ^Hicet posterior stvpulatio mutilis sit, tamen prima 
 novationis jure toUatur.'"^ As a necessary consequence the cred- 
 itor might be deprived of his remedy ; the former claim was gone 
 by the novatio, the substituted one might, as in the instance above 
 given of the ward acting without his guardian's intei-position, be 
 merely " naturalis" i. e., binding in morality only. 
 
 The French code gives no definition of novation, but enumer- 
 ates the various ways in which it is brought about : " 1. Lorsque 
 le debiteur contracte envers son creancier une nouvelle dette qui 
 est substituee ^ I'ancienne laquelle est eteinte ; 2. Lorsqu'un nou- 
 veau debiteur est substitu^ ^ I'ancien qui est d^charge par le 
 creancier ; 3. Lorsque par I'effet d'nn nouvel engagement un nou- 
 veau creancier est substitu^ k I'ancien envers lequel le debiteur se 
 trouve deeharg^."* There must be an unequivocal intention : (a) 
 " La novation ne se presume point : il fant que la volonte de 
 I'operer resulte clairement de I'acte." ' And the novation can be 
 between those only who are able to contract ; it is, therefore, evi- 
 dent that the substituted contract must be one enforceable at law, 
 i. e., not giving rise to a moral claim merely. 
 
 The principle of novation is familjar to the English legal sys- 
 tem. All cases of accord and satisfaction depend upon it ; but in 
 these the application of the principle has been needlessly per- 
 plexed from the rigidity of the old common law, and from its lack 
 of general principles. The law, as at present established, seems to 
 be this : 
 
 I. To an action on a specialty contract, accord and satisfaction : 
 (1.) If entered into before breach, is not a good plea ; the discharge 
 must be by a bond expressly purporting to discharge the obligee ; * 
 (2.) If entered into after breach, it is a good plea when the breach 
 gives rise to a claim for unliquidated damages ; secus, if it pro- 
 duces a debt, or throws any "certain duty" on the obligee." , 
 
 II. To an action on a simple contract, accord and satisfaction : 
 
 ' Inst. Bk. 3, 29, 3. equitable plea under the C. L. Proc. Act, 
 
 2 Code Civil, Art. 1211. 1854, stating a valuable consideration for 
 
 ' -^rt- 1273. such a release, and Smith v. Trowsdale, S 
 
 * See judgment in Mayor, <fec. of Ber- E. <fe B. 83 ; 23 L. J. (Q. B.) 107: 18 Jur. 
 
 wick V. Oswald, 1 E. <fe B. 295 ; 22 L. J. B52. 
 
 (Q. B.) 129 ; but compare the effect of an « Blake's Case, 6 Rep. 44. 
 
 (o) See Lord Westbury, in BlundelVs Case, Reilly (European Arb.), 94. 
 
NOVATION. 603 
 
 (1.) If entered into before breach, is a good plea ; (2.) If entered into 
 after breach, then : First. When unliquidated damages have re- 
 sulted, it is a good plea. Secondly. When a liquidated claim has 
 resulted, it is not a good plea, if it be an agreement to pay a less 
 sum of money,^ though it is if to do any other act, as to give a 
 peppercorn,* and the like. Thirdly. When the liquidated claim 
 has resulted from a negotiable instrument, it would almost seem 
 that it may be discharged by parol.* 
 
 Of accord and satisfaction, the instance which shows most de- 
 cidedly the efEect of a novatio, is where a negotiable instrument is 
 taken in satisfaction and discharge of a cause of action arising 
 from a simple contract or a tort. In such case the original right 
 is gone, and the taker of the instrument has to look to the instru- 
 ment alone, and the maker or acceptor of it, for payment.* (a) 
 
 Other frequently occurring examples of novation are where, 
 on the total dissolution of a partnership, the existing liabilities and 
 assets are, by arrangement with creditors, and by due notice to the 
 debtors, transferred to one or more members ; or where, on the 
 partial dissolution, by the withdrawal of some member, they are 
 in like manner transferred to those who remain and continue the 
 business. As stated by Parke, B., in Hart v. Alexander : ^ " I ap- 
 prehend the law now to be settled, that if one partner goes out of the 
 firm, and another comes in, the debts of the old firm may, by the 
 consent of all three parties (the creditors, the old firm, and the 
 new firm), be transferred to the new firm." All that it is now 
 requisite to prove is the consent of all parties : of the creditors to 
 discharge the late or old firm ; of the new firm in order to charge 
 them.' 
 
 But the most important instances in connection with the sub- 
 ject of ultra vires, are those which arise upon the so-called amal- 
 gamation of corporations in determining the rights of members in, 
 or creditors of, either of the corporations concerned in the amal- 
 gamation. These are considered in the next section of this 
 chapter. 
 
 ' Cumber v. Wane, 1 Smith L. C. 439. « 2 M. <fe W. 484; 7 C. & P. 746. 
 
 ' Pionel's Case, 6 Rep. 117. * See Thompson v. Percival, 3 N. ifc 
 
 3 Foster v. Dawber, 6 Ex. 839. M. 167 ; 6 B. <fc A. 925 ; L^th «. Ault, 1 
 
 " Goldshede v. Cottrell, 2 M. <fe W. Ex. 669; 21 L. J. (Ex.) 217. 
 20; Sibree v. Tripp, 15 M. & W. 23. 
 
 (a) See 2 Parsons on Contracts, Btb ed. 681 ; 1 Smith Leading Cases, 7 Am. ed. 
 622 ; Strang v. Hohnes, 7 Cow. 224 ; Keeler v. Salisbury, 33 N. Y. 648. 
 
604 AMALGAMATION. 
 
 Sectioit II. — Power to Amalgamate. 
 
 (1.) Meaning of Amalgamation. — The idea commonly at- 
 tached by the unlearned, and even by many lawyers, to the term 
 *' amalgamaj;ion " in connection with corporations, is very simple, 
 viz., the absorption of one corporation by another, the former 
 being ipso facto destroyed, and its members relieved and de- 
 prived — both individually and collectively — from and of all exist- 
 ing liabilities and rights, save such as have been expressly reserved 
 to them by the constating instruments and the deed of arrange- 
 ment relating to the amalgamation. 
 
 How far this idea has any real basis may be gathered from the 
 observations of Page-Wood, V.-C, in Ee Empire Ass. Corp. {Ex 
 parte Bagshaw) : ^{a) " I think it is impossible to give to the word 
 ' amalgamate ' the force which is contended for. It is diflBcult to 
 say what the word 'amalgamate' means. I confess at this 
 moment I have not the least conception of what the full legal 
 effect of the word is. We do not find it in any law dictionary, or 
 
 ' L. R. 4 Eq. 341, 84V; 36 L. J. (Ch.) 663 ; 15 W. R. 889; 16 L. T. (N. S.) 346. 
 
 (a) Jn re Bank of Hindustan, .fee. (Higgs' Case), 2 H. & M. 666, Page-Wood, V.-C, 
 observes : " I do not find anywhere any technical definition of the term ' amalga- 
 mate,' and I have some difficulty in getting at its exact meaning ; hut whatever its 
 definite meaning may be, it certainly does not imply an authority from a stockholder 
 to his directors to execute a deed to another company, and so to make him liable for 
 all the engagements of that other company. Mr. Jessel says it consists in making 
 two companies into one; but that is scarcely sufficient. That might suit the case of 
 two companies whose articles of association were identical, because then the share- 
 holders would be bound by no new stipulations ; all would remain the same, except that 
 the business, still similar, would be extended, and the capital would be somewhat 
 larger ; but when you have two companies with different articles, this notion would 
 not apply. Mr. Lindley, vol. 3, p. 44, says : 'In the case of the Era Insurance Com. 
 pany (Williams' Case), and the Anchor Insurance Company's Case, 2 J. <fe H. 400, it 
 was held that it is ultra vires to amalgamate one company with another ; that is to 
 say, it is not competent for the directors, or the majority of the shareholders, of one 
 company to bind it by an agreement to take the assets and liabilities of another 
 company, unless such transaction is expressly warranted by the constitution of the 
 said company.' Take the assets and liabilities — ^that I can understand ; but that is 
 not any such amalgamation as Mr. Jessel suggests, but is simply a sale of its business 
 by one company to the other. I should rather assume an amalgamation to be where 
 both companies agree to abandon their respective articles of association and to reg- 
 ister themselves under new articles as one body. That would be a new company 
 lormed by the coalition or amalgamation of the two old companies." 
 
POWER TO AMALGAMATE. 605 
 
 expounded by any competent authority. But I am quite sure of 
 this, that the word ' amalgamate ' cannot mean that the execution 
 of a deed shall make a man a partner in a firm in which he wag 
 not a partner before, under conditions of which he is in 
 no ways cognizant, and which are not the same as those con- 
 tained in a former deed. It is true, that, in this instance, part- 
 ners engaged in a concern for insurance of a particular character, 
 have authorized their directors to amalgamate with another com- 
 pany. It is possible that this authority may go thus far ; it may 
 empower the directors, without being called to account for so 
 doing in this court, or by any other jurisdiction, to sacrifice, or to 
 give up (which implies something more) the whole of their busi- 
 ness, and to transfer their assets, if they think fit, to some other 
 company, allowing that other company to carry on the business on 
 the best terms they can make with them. In carrying out this, 
 the directors may possibly be authorized by the clause to say : 
 ' You who do not like this arrangement must simply lose ; we 
 have amalgamated one company with the other ' (which seems to 
 be a process of annihilation or extinction rather than anything 
 else), ' and we have placed all our assets in the hands of another 
 concern.' But that does not imply, that the dissentient share- 
 holders, besides losing all their assets, are personally bound to take 
 their part and lot in the new concern. It is one thing to say (not 
 ' probably ' but) ' possibly you may find all the assets gone, and 
 your shares of no value ; ' but it is a prodigious step further to 
 say that a dissentient shareholder, having been concerned in an 
 insurance company, shall be obliged to become subject to all the 
 liabilities of another company, which is not only an insurance 
 company, but a guarantee company, and a company for the pur- 
 chase of houses and various other things as well. I am here as- 
 suming that the words of this clause are large enough to embrace 
 all the assets of one company, and mix them up with those of 
 another. Here I apprehend the applicants have never consented 
 to take shares in this company, unless they consented under the 
 words whereby they authorized the directors to amalgamate, and 
 to execute all necessary deeds for the purpose. Now, no doubt 
 people are very foolish, and I dare say if express words were put 
 into a deed, under which subscribers to company A. purported to 
 give their directors full powers to make them subscribers to com- 
 pany B., C, or D., plenty of people would be found ready to 
 
606 AMALGAMATION. 
 
 execute such a deed. But I think this much may be said, that 
 persons who execute those deeds ought to know that the word 
 ' amalgamate ' is not a word by which, having subscribed to com- 
 pany A., they may be compelled to become subscribers to com- 
 pany B. It is just possible that directors may, under this clause, 
 be justified in transferring all the assets of a dissentient share- 
 holder to another company ; but it does not appear to me that 
 these words go to anything like the extent of saying that the 
 applicants in this case shall be put on the list of a totally different 
 concern, to being members of which concern they entirely object." 
 
 The term amalgamation pointed out in this judgment, has no 
 definite and positive signification. It is employed loosely to 
 denote various operations, in themselves widely different, which 
 more or less completely work a transfer of corporate affairs from 
 one corporation to another, and a merger of the former body in 
 the latter. 
 
 Here the expression " true " amalgamation will be used to sig- 
 nify what is intended to be accomplished by such an operation 
 when thoroughly carried out in all its details, and as regards all 
 the parties concerned. An amalgamation in this sense involves 
 the following processes : 1. A destruction, either actually by dis- 
 solution or substantially by abeyance, of the entity of the original 
 or transforming corporations ; 2. A transfer of corporate rights 
 and liabilities out-and-out, present or contingent — a transfer, in 
 short, of the legal corporate persona y 3. A transmutation of the 
 members of the former corporation into members of tlie latter ; 
 4. A novation of the rights of creditors of the former corpora- 
 tion, so that their rights and claims against it are gone, and, 
 instead, the latter corporation is their debtor. 
 
 These matters it will be convenient to deal with separately in 
 the sub-sections following. The first and second are in some 
 respects connected, being matters specially relating to corpora- 
 tions themselves. The third and fourth are totally distinct, and 
 depend upon principles, not of corporate powers, but of the rights 
 of individual shareholders and creditors. 
 
 In addition to the word "true," the adjectives " perfect " and 
 " direct," will for greater accuracy be employed. " Perfect " 
 amalgamation will denote the operation whereby every corporate 
 right, power, capacity, &c., is transferred. In the case of regis- 
 tered and other corporations not possessing franchises, special 
 
POWER TO AMALGAMATE. 60T 
 
 powers or otker peculiar privileges/ true and perfect amalgama- 
 tion will be substantially the same. " Direct " amalgamation will 
 denote tbat arrangement wherein the first of the above processes 
 is accomplished at cue blow, in one operation, ipso facto with 
 the second process ; as opposed to " indirect " amalgamation, when 
 this is accomplished by means of a second, a later, or subsidiary 
 proceeding. 
 
 (2.) Destruction or Abeyance of Corporate Entity. — This is 
 one of the incidents of an amalgamation with respect to which 
 there has been considerable misconception. It has been seen 
 clearly enough that there can be nothing like what is intended by 
 an amalgamation, if the corporation which is amalgamated remains 
 in active legal existence. Therefore the arrangements have 
 always attempted to provide against this, by securing the destruc- 
 tion, as far as possible, of this original" corporation. But this has 
 seldom been accomplished. Years after, the destroyed corpora- 
 tion has been discovered to be legally alive, and capable of mani- 
 festing its existence in many unwelcome ways. Direct amalga- 
 mation, as meaning the destruction of a corporation by the mere 
 will of the parties concerned, has been found impossible. 
 
 In reality the whole gf this matter lies in a very small com- 
 pass. A corporation is an existence owing all its qualities, powers, 
 and capacities to the law. The law which caUs it into being has 
 also appointed the manner in which its existence shall be deter- 
 mined, but "it has not said that it may commit civil suicide. 
 In whatever mode — ^by surrender or forfeiture of the charter, by 
 winding-up, '&c., a corporation be ended — it is found that the 
 law, i. e., the State, intervenes. A corporation is something dis- 
 tinct from its members ; all these may leave it, yet it still exists ; 
 how, then, is it possible that any action of theirs, unrecognized 
 by the law, can destroy that which depends for its origin and con- 
 tinuance on the law alone ? In fact, Page-Wood, Y.-C, expressed 
 clearly the gist of the whole matter when he said : " I should 
 rather assume an amalgamation to be, where both companies agree 
 to abandon their regulations and articles of association, and to reg- 
 ister themselves under new articles as one body.^ 
 
 But though a corporation cannot directly put an end to its ex- 
 istence, and merge it by any process of amalgamation in that of 
 another, yet it may accomplish this in an indirect and circuitous 
 
 1 Compare ante, p. 621. ' 2 H. <fe M. 666. 
 
608 AMALGAMATION. 
 
 manner. It may do so by transferring its property, funds, rights, 
 and liabilities to the other contracting corporation, and then vol- 
 untarily dissolving itself, usually by winding-up. Generally the 
 arrangement is supplemented by a proviso, whereby the trans- 
 feree, the purchasing company, indemnifies the selling company 
 against the liabilities which it may be under in respect of claims, 
 existing or prospective.'' This, after all, is not an amalgamation, it 
 is not a union of one corporation with another, but is simply a 
 transfer of assets with attendant responsibilities, {a) It is, how- 
 ever, a sufficient amalgamation for all practical purposes, and it is, 
 therefore, the process always adopted.^ 
 
 (3.) Transfer of Legal Corporate Persona. — This is the sec- 
 ond question ; what are the capacities of a corporation with respect 
 to the transfer of its whole concern, its legal entity or persona to 
 another corporation ? This question must be considered in two 
 aspects, according as it is proposed to do this directly or indirect- 
 ly. As to the direct process it seems quite clear that 
 
 I. Corporations may, hy means of, hut cannot without^ a very 
 clear power in this hehalf, directly tra/nsfer their legal 
 entity to another corporation? 
 
 The questions here are: Can a corporation itself have this 
 power ? (Jan the constating instruments, as originally framed, be 
 so worded, as to enable a majority of the members, by special 
 resolutions or otherwise, to transform, to comrrmte, so, to speak, 
 their own corporate concern, and their individual rights therein, 
 into the concern of another association ? 
 
 In Clinch v. Financial Corp.,* A. company had agreed to pur- 
 
 ' Anglo-Auatralian Co. v. British ProT- cident. As to the difference between 
 
 ident Ins. Co. 3 Giff. 521 ; 4 De G., F. & these, see ante, p. 604, and post, sect. 4. 
 J. 341 ; Re Albert Life Ass. Co. {Exparte * L. R. 4 Ch. 117; Higgs's Case and 
 
 Western Life Ass. Soc.), L. R. 11 Eq. 164. Martin's Case, 2 H. 4 M. 657, 669 ; Los's 
 
 ' See po»t, pp. 612 et seq. Case,34 L.J. (Ch.) 609 ; Empire Ass. Corp. 
 
 It must be clearly borne in mind (^i parte Bagshaw), L. R. 4 Eq 341: 86 
 
 that what is here in statement ia not a L. J. (Ch.) 663; London, Bombay and 
 
 transfer of assets, but every corporate in- Mediterranean Bank (Drew's Case) 86 L 
 
 J. (Ch.) 785. 
 
 (a) See Hodges v. New England Screw Co. 1 R. I. 312 ; s. o. 3 R. I. 1 ; Booth v. 
 Brace, 33 N. T. 139; Rorke v. Thomas, 56 N. T. 659; Barclay v. QuioksilTer Mining 
 Co. 9 Abb. Pr. (N. S.) 283; Same v. Same, 6 Lans. 25; KeUy v. Mariposa Mining Co. 
 11 N. Y. Sup. Ct. (4 Hun), 632; Zinc Co. v. Frantlinite Co. 13 N. J. Eq. 822 ; s. c. 15 
 N. J. Eq. 418; ante, p. 124, note. 
 
POWER TO AMALGAMATE. 609 
 
 chase the good-will and property of B. company, and such agree- 
 ment was confirmed at a special meeting of B. company. Clinch, 
 one of the shareholders in B., objected, and filed his bill against 
 the other shareholders and the directors to set aside the arrange- 
 ment. Lord Cairns, L. C, said : " The arrangement between A. 
 and B., which has been called an amalgamation or combination, 
 was, in substance, a transfer by B. to A. of the business, good- will, 
 connection, and property of the former in consideration of 25,000 
 shares in the latter. It was admitted in the argument, and, in- 
 deed, it could not be denied, that there was no power in the 
 special constitution of B. which could warrant an arrangement 
 of this nature ; and that if it could be supported at all, it must 
 be supported under the provisions of section 161 of the Act 
 of 1862."^ His lordship decided that it clearly was not au- 
 thorized by this section ; and he then proceeded : '* It was 
 argued, however, that a large number, and, indeed, a majori- 
 ty of shareholders in B., had assented to the arrangement, and 
 had actually taken shares in A. under it, and that the plaintiff 
 could not sustain this as a biU on behalf of himself and all other 
 members of the corporation, without making all or some of those 
 parties who had assented to the arrangement, parties to the suit. 
 But the contract was one between the two companies, and if the 
 contract was ultra vires of B., it is a contract which, in the eye of 
 this cowrt, it is for the henefit of all the shareholders in B. to 
 arrest ; and, in my opinion, a proper form of suit in which to ac- 
 complish this end, is a suit of one member of the company on be- 
 half of himself and all other members, making the directors of B. 
 and A. parties as defendants." 
 
 This case was approved of and followed in Bank of Hindustan 
 V. Alison.' Here two incorporated banking companies agreed, 
 under the powers contained in their respective articles of asso- 
 ciation, to amalgamate, the business of C. being transferred to H., 
 and the shareholders in C. having the option of taking newly- 
 created shares in H. at a premium. H. issued circulars informing 
 the shareholders in C. of the arrangement. The defendant, a 
 shareholder in C, in consequence, in 1864 applied for and ob- 
 tained an allotment of 25 shares, paid a portion of the deposit and 
 
 ' 25 <fe 26 Yict. c. 89. bell's, Hippisley's, and Alison's Cases), L. 
 
 « L. K. 6 C. P. 54, 222, with which R. 9 Ch. 1. 
 compare Re Bank of Hindustan (Camp- 
 
 39 
 
610 AMALGAMATION. 
 
 premium thereon, and by his letter of application engaged to pay 
 the residue on a given day. Several calls were afterwards made, 
 of which defendant had notice, but he never repudiated his liabil- 
 ity, until an action was brought against him in 1837 for non-pay- 
 ment of those calls. In 1868 the supposed amalgamation of the 
 two banks was, by a decree of Giffard, V. 0., in a suit^ by dissen- 
 tient shareliolders in C, declared to be void, on the ground that 
 whatever the legal meaning of " amalgamation," the proposed ar- 
 rangement would have imposed additional liabilities on the share- 
 holders of C, and it, therefore, could not be supported under 
 either the articles of association of the company, or under 25 & 
 26 Viet. c. 89, s. 161. 
 
 The Court of Common Pleas accordingly held, on action 
 brought to recover calls, that the directors of H. had no power to 
 issue the new shares, and that the defendant was not, by any ac- 
 quiescence or conduct on his part, estopped from denying that he 
 was a shareholder in H. 
 
 Clinch v. Financial Corp. may, perhaps, be considered an 
 autbority to the effect that the arrangement in question was in- 
 valid only as between the corporation and its members ; but it 
 would seem that most, if not all, agreements of this description 
 are uUra vires in the fullest sense ; in the sense that they do not 
 become good even by the acquiescence of all the shareholders in 
 each of the companies concerned. 
 
 Such is the result of the decision in He London and l^orthem 
 Ins. Corp. (Stace and "Worth's Case).' By the articles of associa- 
 tion of the London, &c. Corporation, the directors were to be 
 elected by the sbareholders, and power was given to purchase the 
 business of any other company. Power was also given, by any 
 extraordinary meeting of the company to amalgamate with any 
 other company. An agreement was made for the amalgamation 
 of this company with another company, on the terms that the 
 second-named company should sell their assets to the first-named 
 company; that the directors of the amalgamated board should 
 consist of the present five directors of the purchasing company, 
 and of seven of the directors of the selling company. This agree- 
 ment was acted upon, but was never confirmed by an extraor- 
 
 ' Imperial Bank of China v. Bank of Commercial Bank (Alabaster's Case), L. 
 
 Hindustan, <fec. L. R. 6 Eq. 91. R. 7 Eq. 273 ; and lie Empire Ass. Corp. 
 
 = L. E. 4 Ch. 682; Jamea v. Eve, L. (Challis's Case), L. R. 6 Ch. 266. 
 E. 6 H. L. 335. Compare ife Oriental 
 
POWER TO AMALGAMATE. 611 
 
 dinary meeting of the purchasing company. Both James, Y.-C, 
 and the Lords Justices, on appeal, held, that this agreement was 
 Toid, and that two of the directors of the selling company, who 
 had been allotted shares in the purchasing company in exchange 
 for shares in the selling company, and had acted as directors of 
 the amalgamated company, were not liable to be put on the list of 
 contributories to the purchasing company. The ground of the 
 decision, as stated by Giffard, L. J., was this, that the agreement 
 " was a material alteration of the constitution of the London and 
 Northern Corporation, being nothing less than giving to the in- 
 vestment [*. e., the purchasing] company the power of appointing 
 a majority of the board of the amalgamated company. The agree- 
 ment was therefore void, and not merely voidable." (a) 
 
 As the arrangement was acted upon for ten months, and not 
 questioned till the winding-up of the corporation, when Stace and 
 "Worth objected to being placed upon the list of contributors of 
 this company, this decision must be considered conclusive to the 
 effect that the agreement was ultra vires in the widest meaning of 
 that term. 
 
 The amalgamation of companies then, so far as it means or in- 
 volves a transfer of the corporate persona, is impossible, save by 
 the direct interposition of the Legislature. It is, in the absence 
 of a very clear power in this behalf expressly given, ultra vires, 
 not merely of the directors but of the company. How far, when 
 all the members of a corporation have agreed to what this term 
 implies, and have profited by the arrangement, they can be per- 
 mitted to repudiate the agreement and yet to retain the benefit — 
 to reprobate and approbate at the same time — is a question which 
 will be considered in subsequent chapters. 
 
 "Whether even a clear and positive authority to this effect will 
 enable such a transfer to be made against the wish of any member, 
 is at least doubtful. There is a strong opinion of Page-Wood, 
 Y.-C, to the negative. In a case already mentioned. He Empire 
 Ass. Corp. {Ex parte Bagshaw),^ where the articles provided that 
 the directors might, with the consent of an extraordinary general 
 meeting, " transfer and sell the business of the company, or pur- 
 ' Ante, pp. 604, 606; L. R. 4 Eq. 341. 
 
 (a) Fremont ». Stone, 42 Barb. 168 ; Bliss v. Matteson, 62 Barb. 335 ; s. o. 45 
 N. T. 22. 
 
612 AMALGAMATION. 
 
 chase or amalgamate with the business of any other company of a 
 like nature;" this learned judge expressed yery great doubt 
 whether these words authorized the directors, with the consent of 
 an extraordinary meeting, to dispose of all the assets of the com- 
 pany, and he held that they were not suflBcient to empower them, 
 with such consent, to compel a dissentient shareholder to become 
 a member in a new company with more extended objects, or 
 {senible) in any new company at all. 
 
 But it is certain that this proceeding may be done with the 
 assent or acquiescence of all the members. And in several recent 
 decisions, especially those growing out of the European winding- 
 up, it seems to have been assumed that an amalgamation, so far as 
 meaning the question now in consideration, i. e., the transfer of 
 the corporate persona, is purely a question of internal constitu- 
 tion, and that consequently this may be done whenever there is a 
 power, express or implied, in this behalf.^ 
 
 It should be added, that beyond question corporations having 
 franchises or other special privileges cannot, save by positive leg- 
 islative sanction, amalgamate or engage in any other transaction, 
 so as to delegate or transfer such privileges to others.' 
 
 II. A corporation may, in an indirect ma/nner, transfer its per- 
 sona to another corporation, and thus accomplish nearly the 
 same purposes as were intended hy a direct amalgamation. 
 
 This proceeding has already been referred to. Ante, p.*607. It 
 consists of a transfer accompanied by an actual dissolution by 
 the ordinary processes. Here the original concern is gone qua 
 the original corporation. Whether it is transferred wholly or 
 partly to the other corporation of course depends on the actual na- 
 ture of the arrangement. 
 
 The modus operandi is well illustrated by the attempted amal- 
 gamation between the Progress Ass. Co. and the United Ports 
 Co., which led to Wynne's Case.' Negotiations tpok place be- 
 tween the directors of the two companies, for the purpose of 
 
 ' Hort's Case, 1 Ch. D. SOT, which, ' Re United Ports and General Ina. 
 
 liowever, was an unincorporated com- Co. (Wynne's Case), L. R. 8 Ch. 1,002. 
 
 pany ; Barman's Case, 1 Ch. D. 326 ; See another case arising out of the same 
 
 Cocker's Case, 3 Ch. D. 1 ; Eivington's transaction, wlieve the shareholder was 
 
 Case, 3 Ch. D. 10 ; Doman's Case, 8 Ch. D. estopped by acquiescence in the arrange- 
 
 21; where the .power did not originally ment from denying its validity. Perrett's 
 
 exist, hut was created by resolution. Case, L. R. 15 Eq. 250. 
 
 ' Ante, p. 398 et aeq. 
 
POWER TO AMALGAMATE. 613 
 
 "bringing about an amalgamation. Terms being agreed to, they 
 were embodied in an agreement under the seals of the two com- 
 panies, dated the 8th of June, 1869, whereby it was provided that 
 the Progress Company should sell all their business and property 
 to the United Ports Company ; that the United Ports Company 
 should pay £12,000 in cash or bills, and should issue to the paid- 
 up shareholders in the Progress Company shares of £1 each in the 
 United Ports Company, on' which the full sum of £1 should be 
 considered as paid-up, to the same amount as their former shares, 
 and that no further liability should attach to the holders thereof ; 
 and that they should issue to the holders of partly paid-up shares 
 in the Progress Company, shares in the United Ports Company, 
 on which an amount should be considered to have been paid pro- 
 portionate to the amount credited on the shares in the books of 
 the Progress Company. It was further agreed that the purchase 
 should be completed on the 8th June, and that from that day the 
 United Ports Company should take upon itself all the debts, en- 
 gagements, and liabilities of the Progress Company, and should, 
 at all times thereafter, protect and indemnify the directors and 
 officers of the Progress Company against the same ; and that the 
 Progress Company should be forthwith wound-up voluntarily, 
 either with or without the supervision of the court. This agree- 
 ment was engrossed in two parts, and one part was sealed with 
 the seal of the Progress Company and delivered to the United 
 Ports Company, but the United Ports Company, before executing 
 their part, added a proviso at the end of the agreement, which 
 altered it in some material points. The agreement, as executed 
 by the United Ports Company, was accepted by the directors of 
 the Progress Company, and entered on their minutes on the 10th 
 June, 1869 ; and an extraordinary meeting of the shareholders 
 was held on the 24th June, when it was confirmed, and a resolu- 
 tion was passed to wind-up the company voluntarily. 
 
 In this way it is manifest that, supposing nothing to happen 
 to disturb the arrangement, the Progress Company would have 
 been put an end to, its assets and liabilities being transferred to, 
 and its shareholders becoming members of, the United Ports 
 Company ; and to that extent an amalgamation of the two com- 
 panies would have resulted. 
 
 But on the 22d June, a petition was presented, and on the 
 26th, an order was made to wind-up the Progress Company com- 
 
614 AMALGAMATION. 
 
 pulsorily. Wynne, a director of this company, and the holder of 
 twenty fiilly paid-up shares in it, had, in pursuance of the above 
 agreement, applied for 100 shares in the United Forts Company. 
 In November foUov^ing, an order was made to wind-up this latter 
 company, and, in the winding-up, the question arose whether or 
 not Wynne was a contributory in respect of the 100 shares so ap- 
 plied for by him. The lords justices determined that he was not 
 a member of the United Ports Company, on the ground that, ow- 
 ing to the variance in the agreement as above mentioned, the two 
 companies never had agreed upon the terms of the amalgamation, 
 but they expressed no doubt whatever, that if the terms had been 
 agreed upon, the amalgamation would have been complete and 
 binding on the shareholders in each company. 
 
 Arrangements of this kind being in substance arrangements 
 for winding-up, or otherwise dissolving some one or more of the 
 companies participating therein, are manifestly matters of inter- 
 nal government only. Consequently their validity, and the extent 
 and circumstances to and under which they are binding upon re- 
 calcitrant members, will be determined by the constating instru- 
 ments. Probably in every case, express powers * in this behalf are 
 necessary, in order that a corporation may itself enter into such 
 arrangements,* and a fortiori in order to bind dissentients. These 
 absent, it seems that the arrangement wiU not be binding on the 
 shareholders as a whole, and if not, then manifestly only such of 
 them as actually accept its terms will be bound thereby.'. 
 
 Creditors, policy-holders, and other third parties, having simi- 
 lar claims against the company about to be dissolved, may, of 
 course, intervene in the ordinary manner in the winding-up or 
 other mode of dissolution ; but they cannot call upon the Court of 
 Chancery to prevent the contemplated arrangement being per- 
 fected, on the ground that it is ultra vires?' It is indeed possible 
 
 ■But might not pfeneral powers of 184; Anglo-Greek Steam Co. L. R. 2 
 
 management or for conducting the enter- Eq. 1. 
 
 prise be sufficient to authorize an amalga- ^ See Re Empire Ass. Corp. (Challis's 
 
 mation of this kind ? See Cleve v. Finan- Case, Somerville's Case), L. R. 6 Ch. 266, 
 
 cial Corp. L. E. 16 Eq. 363, where resolu- where Challis was held bound, and Som- 
 
 tions to wind-up were held good, though erville not bound, by an agreement for 
 
 in Clinch «y. Same, ante, p. 608, they did amalgamation. See, also, the cases in the 
 
 not justify an amalgamation. last note, and Perrett's Case, L. R. 16 Eq. 
 
 * Smith V. Bank of Victoria, 41 L. J. 250, which was another case arising out 
 
 (P. C.) 34; Dougan's Case, L. R. 8 Ch. of the winding-up of the United Ports 
 
 540; ■poal, pp. 617, 618. See, also. Re Ins. Co. and where, as in Brown's and 
 
 United Ports Ids. Co. (Brown's and Tuck- Tucker's Cases, a shareholder in a limited 
 
 er's Cases), 41 L. J, (Ch.) 157. company, which had no express pQwer to 
 
 ^ See Mx parte Fox, L. R. 6 Ch. 176, amalgamate, was held to have agreed to 
 
POWER TO AMALGAMATE. 615 
 
 that it is ultn^a vires, even as regards third parties ; but this can be 
 so only when conditions have been introduced which are contrary 
 to express statutory enactment, or to some fixed policy of the 
 law.^ 
 
 (4.) Amalgamation as regards corporators. 
 
 III. Corporations cannot amalgamate so as to transfer their 
 members without, nor semble even with, a very clear power 
 in this hehalf. 
 
 Next to the meaning and effects of amalgamation in relation to 
 corporations themselves, which have been considered in the last 
 three sub-sections, comes the question as to its efifect and import, in 
 relation to individual corporators. Here two points arise : first, 
 the corporate power to bind corporations by a transfer of the joint 
 concern ; and, secondly, the power to transfer the corporators them- 
 selves to the new corporation. Of these, the former has been con- 
 sidered in the last two sub-sections ; and tlie latter alone remains. 
 
 Now, in considering this question in connection with the sub- 
 ject of amalgamation, it must be remembered that the exact point 
 is whether or not a corporation can compel its members to " amal- 
 gamate " with, or become members of, another corporation. This is 
 altogether different from the question closely allied, and which very 
 generally grows out of it, viz., whether or not the members have 
 themselves, by their own action, become members in the other cor- 
 poration. This will be determined purely by a consideration of the 
 acts and conduct of these members individually. The question as 
 to their membership, depends on precisely the same considerations 
 which have already been examined, as to what will constitute 
 membership in other and ordinary cases. They will become so 
 only if they accept, actually or by acquiescence, shares in the new 
 company. And it may be that if a proposed amalgamation goes 
 off, a person will find himself a member of the second corporation 
 and yet with his shares remaining in the original one, in other 
 words a member of both.' 
 
 become, and consequently to be a share- Worth's Case, L. R. 4 Ch. 682 ; and in 
 
 holder in an imlimited company with Jie Irrigation Co. of France (Fox's Case), 
 
 which the former was attempting to amal- L. R. 6 Ch. 176. 
 
 gamate. * As in Hare's Case, L. R. 4 Ch. B03 ; 
 
 'See the judgments io Stace and seean<e, p. 131. 
 
61.6 AMALGAMATION. 
 
 As to this power of corporations so to bind their members, 
 there is no actual decision. But there is the very strong opinion of 
 Page- Wood, V.-C, in Ex parte Bagshaw,^ that no language, how- 
 ever explicit, would give such a power. Probably, at the least, if 
 a shareholder refused his assent in a case where there was such an 
 authority, the courts would not interfere to compel him to assent 
 to a transfer. 
 
 As an illustration of the effect on members of the variety of 
 amalgamation now in statement, may be mentioned the attempted 
 union of the Bank of Hindustan, &c., and the Imperial Bank of 
 China, &c., and the litigation which grew thereout. The first case 
 in this litigation was that of the Bank of Hindustan v. Alison.^ 
 The above-mentioned banks, being two incorporated companies 
 registered under the Companies Act, 1862, agreed under the powers 
 contained in their respective articles, to amalgamate, the business 
 of the China Bank being transferred to the Hindustan Bank, the 
 shareholders therein having the option of taking newly created 
 shares in the Hindustan Bank at a premium, and the China Bank 
 being voluntarily woand up. The Hindustan Bank issued circu- 
 lars informing the shareholders in the China Bank of the arrange- 
 ment. The defendant, a shareholder in the China Bank, in conse- 
 quence, in 1864 applied for and obtained an allotment of twenty- 
 five shares, paid a portion of the deposit and premium thereon, 
 and, by his letter of application, engaged to pay the residue on a 
 given day. Several calls were afterwards made, of which the de- 
 fendant had notice, but he never repudiated his liability until an 
 action was brought against him in 1867, for non-payment of those 
 calls. 
 
 In 1868, the supposed amalgamation of the two banks was, by 
 a decree of V.-C. Giffard, in a suit by dissentient shareholders in 
 the China Bank, declared to be void on the ground that, whatever 
 the legal meaning of " amalgamation," it would have imposed ad- 
 ditional liabilities on the shareholders of the China Bank, and it 
 therefore could not be supported under either the articles of as- 
 sociation of the company, or under 25 & 26 Yict. c. 89, s. 161.' 
 
 It was now held by the Court of Common Pleas, in an action 
 brought to recover calls, that the directors of the Hindustan Bank 
 had no power to issue the new shares, and that the defendant was 
 
 ' Ante, pp. 604-6. s Imperial Bank of China, &c. v. Bank 
 
 ' L. R. 6. C. P. 64, 222. of Hindustan, &c. L. R. 8 Eq. 91. 
 
POWER TO AMALGAMATE. 6 17 
 
 not, by any acquiescence of conduct on his part, estopped from 
 denying that he was a shareholder in the Hindustan Bank.^ 
 
 But the matter did not end here. The Hindustan Bank 
 shortly afterwards went into compulsory liquidation. In the liqui- 
 dation, the shareholders, plaintiffs in the action before Giffard, 
 V.-C, were paid, by way of compromise, a sum of money by the 
 official liquidator of the buying company, then in liquidation, and 
 the suit in Chancery was stayed. Certain former shareholders of 
 the China Bank, holders of what purported to be new shares in 
 the buying company, then applied to be repaid the money which 
 they had paid to the buying company for premium, and for calls 
 upon their shares. As to this application, the Court of Appeal 
 held* that the Hindustan Bank did really acquire (by a title which, 
 though originally defective as against the dissentient shareholders, 
 had been in the end confirmed) the property of the China Bank, 
 and as the shares were issued 'bona fide, the holders of the new 
 shares could not now repudiate them. 
 
 With regard, however, to Alison, the defendant in the action 
 mentioned above, they held that the judgment in that action, not 
 being set aside, was conclusive ; and that consequently he not 
 only was not a shareholder in the Hindustan Bank, but also must 
 be repaid what he had paid for premium and calls on the shares. 
 
 In reference to members, the power to " amalgamate," in the 
 sense and manner now in discussion, must be expressly given in 
 the constating instruments, it will not be raised by implication. 
 Thus in Re Empire Ass. Corp. (Dougan's Case),' the articles of 
 association of a company made it lawful for a special general 
 meeting " to determine upon the propriety of selling, disposing 
 (sic), or otherwise dealing with, the business, good-will, property, 
 and effects of the company." The directors agreed to amalga- 
 mate with another coinpany, and the agreement was duly submit- 
 ted to and approved by meetings of the shareholders. The lords 
 justices, however, held that the agreement was ultra vires, Mel- 
 lish, J., observing : " There are no special words in the clause giv- 
 ing power to amalgamate with another company ; and I cannot 
 help thinking that if it had been intended by the clause, that a 
 special general meeting of the company should have power abso- 
 
 ' Ante, p. 618, note 2, ' L. K. 8 Ch. 540. 
 
 ' L. R. 9 Ch. 1. 
 
618 AMALGAMATION. 
 
 lutely to bind all the shareholders, and to hand them over to 
 another company, that, in fact, it should have power to effect 
 what is commonly called an amalgamation, that word would have 
 been made use of." 
 
 Where the constating instruments contain express powers thus 
 to amalgamate, the provisions must be carefully observed, and the 
 powers exist only to the extent, and for the exact purposes given. 
 Thus, where the directors of a fire and life assurance company 
 were authorized, with the consent of an extraordinary general 
 meeting, " to amalgamate with the business of any other company 
 of a like nature," Page-Wood, V.-C, held that these words did 
 not empower the directors to compel a dissentient shareholder to 
 become a member in a company with more extended objects.'' 
 
 Moreover, if an agreement of this kind be either wholly or in 
 part ultra vires, then, as has already been frequently mentioned, 
 each and any member may refuse his assent thereto, though all the 
 others agree, which, indeed, actually 'happened in Fox's Case," 
 where a solitary shareholder, who objected to an arrangement of 
 the kind now in question, was held entitled to relief.(a) 
 
 (5.) Amalgmnation as regards Creditors. — In connection with 
 creditors two questions arise : (1) whether the transferring com- 
 pany is justified, notwithstanding its creditors' claims, in so, as 
 proposed, transferring its assets; that is, whether it can per- 
 form the second of the processes above enumerated as being 
 involved in a true amalgamation ? (2) whether the company can 
 compel the creditor nolens volens, not only to allow this first pro- 
 ceeding, but, further, to undergo a novation, and to accept the 
 recipient company as his debtor in lieu of the original debtor. 
 Many of the chief points have arisen, and decisions have been 
 given in conaeetion with policy-holders, but it will be the simpler 
 to take the ordinary creditors first, and afterwards to refer specially 
 to policy-holders. 
 
 ' iJ« Empire Ass. Corp. (.Etjoarte Bag- other decision of a court, may render 
 
 shaw), L. R. 4 Eq. 341 ; see the judgment valid and binding an " amalgamation " 
 
 cited in part, ante, pp. 604-6. Compare which would otherwise be void as being 
 
 Los's Case, 34 L. J. (Ch.) 609. It would ultra vires. 
 
 eeem from expressions of Bacon, V.-C, in ' Re Irrigation Co. of France (Fox's 
 
 his judgment in Re United Ports, &c. Co. Case), L. E. 6 Ch. 176. See the judg- 
 
 (Brown's and Tucker's Cases), 41 L.J. raents in Clinch n. Financial Corp. L. R. 4 
 
 (Ch.) 15'7, that an order in winding-up, or Ch. 117. 
 
 (a) See cases cited in note at the end of this chapter. 
 
POWER TO AMALGAMATE. 619 
 
 lY. A corporation may amalgamate in the sense of trans- 
 ferring its assets without the consent of its creditors, 
 except and so far as hy its contracts with these it has 
 agreed not so to do. 
 
 In Kearns v. Leaf,^ {a) where there was in a policy a clause so 
 restricting the power of the company to deal with its assets, they 
 were, at suit of the holder, restrained from parting with them. 
 
 But, without clear provision in this behalf, a corporation, not 
 bankrupt, may deal with its property as it pleases, without regard 
 to the wishes of its creditors. Hort's Case,' which has been fol- 
 lowed and approved in Cocker's Case,' both decisions of the pres- 
 ent Court of Appeal, is the leading authority. By the deed of 
 settlement of the A. insurance company, it was provided that the 
 funds and property of the company should, alone, be answerable 
 for the claims on the company; provision was also made for 
 enabling the proprietors to dissolve the company, and, thereupon, 
 the directors were to obtain from some other company an under- 
 taking to pay the claims on the A. company, and were to transfer 
 to that company a sufficient amount of the assets of the A. com- 
 pany. Tlie A. company was accordingly dissolved, and a portion 
 of its funds was transferred to the B. company, which covenanted 
 to satisfy the liabilities of the A. company. Full notice of this 
 transaction was sent to the policy-holders of the A. company, and 
 in the policies of that company it had been declared that the 
 funds and property of the company should alone be liable to make 
 good the claims under the policy, and the deed of settlement was 
 also referred to. Both companies were wound-up, and came 
 under the European Assurance Society Arbitration Acts. The 
 Court held, that the A. company had, without the consent of the 
 poUoy-holders, a right to dissolve itself and transfer its liabilities 
 to the B. company, and that a policy-holder could claim only 
 against the B. company. 
 
 ' 1 H. <fe M. 681. ' 3 Oh. D. 2 ; and in Dowse's Case, S 
 
 2 Re European Ass. Soe. 1 Ch. D. Ch. D. 385. 
 307 ; and see cases cited, especially Re 
 India, Ac. Life Ass. Co. L. R. 7 Ch. 651. 
 
 (a) This case is not applicable to the United States. See post, Part IV, note to 
 Chapter I. 
 
620 AMALGAMATION. 
 
 Y. Corporations cannot, without express stipulation in their 
 contracts, compel their creditors to accept a novatio of their 
 claims. 
 
 The second of the questions above mentioned is as to com- 
 pelling a novation. This also arises, as has been seen in reference 
 to members, as to whether they can be transferred to the new 
 corporation ; but with respect to a creditor of an amalgamating 
 company, the considerations are much simpler than in the case of 
 a member. That he must, in all crises of novation, consent ' to 
 the arrangement, would seem so thoroughly in accordance with 
 common sense and the simplest maxims of law as to call for no 
 proof, (a) Numerous cases have, however, come before the 
 courts where the attempt has been made, against the will of the 
 creditor, to substitute a new person, firm, or corporation for his 
 old debtor. It cannot be too clearly borne in mind that when 
 once an obligation has been brought into being, whether by 
 breach of a contract, or by committal of a tort, it can be destroyed 
 only by the means provided by law, and amongst these it is 
 nowhere found that the obligee can, of his own accord, free him- 
 self from the liabilities in which he has involved himself. A 
 very explicit exposition of the law is contained in the judgment 
 of James, Y.-Q., in Be Manchester, &c. Loan Assoc. {Ex parte 
 Pike) : ^ " The policy-holder whom [the petitioner] represents, 
 effected his policy in Manchester and London, &c. Association. 
 That association transferred their business to the W. ofSce. It is 
 stated that the transfer in some way or other had deprived the 
 policy-holder of his remedy against the office that undertook to 
 pay him the amount assured. * * * It would be a very 
 strong thing, indeed, to say that a policy-holder is to be deprived 
 of his remedy against the persons with whom he contracted, be- 
 cause those persons entered into an arrangement of that kind, and 
 only gave him that notice [^. e., an alteration in the heading of the 
 receipt]. * * * It would be monstrous, that a person having 
 a contract of this kind, should be told that he has lost his right 
 
 ' Of course, excepting those cases ' L. R. 9 Eq. 648, 
 
 where the Legislature intervenes, see 
 post, sect. IIL 
 
 (o) See cases cited in note at the end of this chapter. 
 
POWER TO AMALGAMATE. 621 
 
 under his original contract, and must take such remedy as he may 
 get from some other office, because he pays his premiums and 
 takes receipts at the place where he is told to do so." 
 
 With this judgment maybe compared that of Lord Chancellor 
 Hatherley in Re Family Endowment Soc.,' which is instructive, as 
 showing the amount of proof necessary to bind a creditor by ac- 
 quiescence in a novation. In this case it was held, that though the 
 petitioner had to a great extent recognized the amalgamation of 
 the company, from which he had bought an annuity, with another 
 company, and had received several payments from this latter com- 
 pany, yet he had not so completely acquiesced in the arrangement 
 as to have debarred himself from going against the original com- 
 pany on the bankruptcy of the latter. The question is one of 
 fact, and therefore in Be National Provident Life Ass. Co.,' where 
 the holder of a life assurance policy, having notice that the N. 
 assurance office, with which the policy was effected, had trans- 
 ferred its business and assets to the A. assurance office, and had 
 ceased to carry on its business, paid the premiums on his policy to 
 the A. office for thirteen years, and upon the dropping of the life 
 sent in a claim upon the policy to the A. office, it was held, that 
 there had been a complete novation of the contract, and that the 
 ]Sr. office was released from liability on the policy. 
 
 A novation is, so to speak, a tripartite contract. It is an 
 arrangement to which three persons must be parties, viz., the 
 original contractors and the new contracting party. There is 
 necessary in addition an agreement, express or implied, by which 
 the creditor in the existing contract gives up his rights against his 
 debtor under that contract, and accepts instead the responsibility 
 of the new debtor. When the agreement is expressly made, little 
 difficulty arises beyond that involved in interpreting the exact 
 purport of the agreement which has been entered into. 
 
 If, on the other hand, there is no such express consent, but 
 this has to be gathered from the acts of the creditor or his concur- 
 rence in other arrangements, the question becomes far more diffi- 
 cult. No general principles can be extracted from the many cases 
 that have been decided, for the facts of each and their significance 
 vary excessively. Payment of insurance premiums to a new com- 
 
 ' L. E. 6 Ch. 118, 131-33. « L. R. 9 Eq. 306. 
 
622 AMALGAMATION. 
 
 pany may,^ but usually will not,' constitute a novation, while the 
 acceptance of a bonus is generally sufficient for that purpose.' 
 So, upon the transfer of a business, the payment by the new com- 
 pany of interest upon debts or deposits due to creditors of the old 
 company will,* or will not,' according to the circumstances, dis- 
 charge the old, and charge the new debtor. The receipt of an 
 annuity from a new company, or other new source, has never been 
 held fer se to work a novation.* 
 
 It should be mentioned that, in the Albert Arbitration, Lord 
 Cairns was content with the minimum of evidence as to the assent 
 of the creditor, holding in many cases that a novation had been 
 worked, where undoubtedly the Court of Chancery would not have 
 so decided.' 
 
 Lord Westbury, however, in the European Arbitration, went 
 to the other and more equitable extreme, placing the onus of 
 proof, where it properly lies, on the debtor, and requiring the 
 clearest proof of novation. " To raise the new contract, there 
 must be on the part of the company power to make it ; there 
 must be on the part of the policy-holder a knowledge of the com- 
 pany's right so to contract with him ; and there must be conduct 
 on the part of the policy-holder, when it is an incomplete contract, 
 or where there is no evidence in writing, that unmistakeably 
 shows his intention to accept a new contract and to discharge the 
 old one." {a) 
 
 ' Per Malina, V.-C, in Re National He Anchor Ass. Co. L. R.. 5 Ch. 632 ; 
 
 Provincial Life Ass. Soc. L. B. 9 Eq. Spencer's Case, L. K. 6 Ch. 362. 
 
 306 ; and compare the same case before * See Rolfe v. Flower, L. R. 1 P. C. 
 
 Bacon, V.-C, and the L. JJ., Fleming's 21 ; and Fleming's Case, L. R. 6 Ch. 393. 
 
 Case, L. R. 6 Cb. 393. See also i?e Times ' iSe Smith, Knight, and Co. (Et/JoWe 
 
 Life Ass. &c. Co. L. B. 6 Ch. 381; and Gibson), L. R. 4Ch. 662; ife Commercial 
 
 JEx parte Blood, L. R. 9 Eq. 316 ; Miller's Banking Corp. of India (Jones' Claim), 16 
 
 Case, 3 Ch. D. 391 ; and now the provis- W. R. 968. 
 
 ion in 35 & 36 Vict. c. 41, s. 7, which " Re Family Endowment Soc. L. R. 5 
 
 expressly provides that this alone shall Ch. 118; Re India, (fee. Ass. Co. L. R. 1 
 
 not be a novation. Ch. 651. 
 
 '' Re Manchester, <fec. Life Ass. Assoc. ' See, especially, Kennedy's Case, 16 
 
 L. R. 9 Eq. 643 ; 6 Ch. 640; Re Medical Sol. J. 729; Wernick's Case, 15 Sol. J. 
 
 Invalid, .fee. Society (Griflath'a Case), L. 767; Pagan's Case, 15 Sol. J. 856; Bud- 
 
 E. 6 Ch. 374. den's Case, 16 Sol. J. 462 ; Aliens Case, 
 
 * Re Times Life Ass. Co., ubi supra ; 16 Sol. J. 657. 
 
 (a) See article by Mr. Bunyon, 1 Law Mag. & Rev. (N. S.) p. 404. The Albert and 
 European arbitrations are anomalies, and, according to Lord Westbury, " only to be 
 justified by their necessity, and their necessity is a great reproach to the judicial 
 institutions '' of Great Britain. They arose out of the failme of two life insurance 
 
STATUTORY AMALGAMATION. 623 
 
 The precise position and rights of policy-holders will depend 
 partly upon the constating instruments, partly upon their own 
 particular contract of assurance.^ They may be creditors merely, 
 or both creditors and members.^ In either case, apart from 
 express provision to the contrary, they will have all the rights of 
 other persons in the same category of creditors or members, as 
 the case may be. The Life Assurance Companies Act, 1870, 
 enables a policy-holder to petition for a winding-up,' and gives 
 him various other rights. 
 
 Section III. — Statutoey Amalgamation. 
 
 I. It is only hy legislatvve enactment that true, direct, per- 
 fect, amalgamation can he worked. 
 
 By the direct interposition of the Legislature, of course amal- 
 gamations in every form may be effectuated. As already seen, 
 this is the only mode by which sucli proceedings, when they 
 amount to a delegation or transfer of franchise, or special privileges 
 
 ' See Kearns v. Leaf, 1 H. & M. 681 ; ' See, for an instance, where they were 
 
 Re European Life Ass. Soo. L. R. 9 Eq. actually if not theoretically members, 
 
 122 ; 33 ife 84 Vict. o. 61, as to which see Harman's Case, 1 Ch. D. 826. 
 Re National Funds Ass. Co. 2^ W. R. ^ ibij. 
 
 1066. * ' 
 
 companies which had previously absorbed numerous other companies. By reason of 
 the complications thus arising, it seemed requisite to create a special court of most 
 arbitrary powers, whose decisions were to be final and conclusive on all parties, and 
 not subject to review by any other tribunal — in fact, depending only upon " the 
 absolute and unfettered discretion of the arbitrator," and determined as he should 
 " think most fit, equitable and expedient," and as fully and e£fectually as could be 
 done by act of parliament. §§ 5, 8, 21, European Act; §§ 5, 11, 21, 24, Albert Act. 
 Lord Cairns was the arbitrator for " the Albert," and Lord Westbury for " the 
 European." After Lord Westbury's death. Lord Romilly was chosen his successor ; 
 and he, though believing it to be his duty to follow Lord Westbury, in the end felt 
 constrained to follow Lord Cairns : holding, among other rules, that it was not neces- 
 sary that the three parties, i. e., the assured and the two companies, must concur, 
 and all join together to make a fresh contract, in order to constitute novation. Tal- 
 bot's Case, 18 Sol. J. 758 ; Pratt's Case, 19 Sol. J. 68. See 1 Law Rev. & Mag. (N. S.) 
 p. 480 ; Buckley on Companies Acts, 320-825 ; Bliss on Life Insurance, 2d ed. 762. 
 These decisions are not considered as of binding or indeed any authority, save as 
 being the opinions of able and learned jurists. Fisher's Digest, 1872, preface, 17 
 Sol. J. 761. 
 
624 AMALGAMATION. 
 
 — that is " perfect " amalgamation — can be carried out.* So, also, 
 even in ordinary cases, and with non-privileged corporations, it is 
 by legislative enactments alone that a " true " amalgamation in the 
 complete sense can be accomplished. It is doubtful whether 
 members can by any provision in the constating instruments, 
 against their individual consent, be handed over to, and made 
 members of another corporation ; ' and it is quite certain that dis- 
 senting creditors cannot be compelled to submit to a novation, 
 except and so far as it may be a part of their contract to submit.' 
 But all this may be done by the enactments of the Legislature, (a) 
 
 Statutes of this kind are special adhoo enactments. The com- 
 monest instances are those relating to the amalgamation or merger 
 of railways, gasworks, &c.,* or the acquisition, compulsory or not, 
 of these by other corporations. 
 
 But though the amalgamation of railway and other similar 
 companies possessing compulsory powers is usually effected by 
 means of a special act of parliament obtained for the particular 
 case, there are also certain statutes containing general provisions 
 in this behalf. Thus 26 & 27 Xict. c. 92 (the Eailways Clauses 
 Act, 1863) lays down in Part Y, a series of regulations in reference 
 to the amalgamation of railway companies, but they apply only to 
 such companies as shall be amalgamated by a special act there- 
 after passed and incorporating that piart of the act. 
 
 So, 33 & 34 Yict. c. YO (the Gas%ind "Water Facilities Act, 
 1870) authorizes two or more companies or persons, supplying gas or 
 water in any district, or in adjoining districts, to manufacture and 
 supply gas or to supply water, and to enter into agreements jointly 
 to furnish and supply, and to amalgamate their undertakings. 
 
 Amalgamation iti Wi7iding-up. — The chief statutory enact- 
 ments on this point are those contained in the Companies Act, 
 1862, and in the Life Assurance Companies Act of 1870.^ (5) 
 
 ' Jnte, p. 398 etaeq. 6 ggg^ also, 30 & 31 Vict. c. 12T, " The 
 
 ' Ante, pp. 611, 612. Railway Companies Act, 1867 ;" ante, pp. 
 
 ' ^n<«, pp. 619-21. 172, and 233 ; 33 A 34 Vict. c. 104. "The 
 
 * See, for example, Purnell v. Wolver- Joint-Stock Companies Arrangement Act, 
 
 hampton New W'works Co. 10 C. B. (N. 1870," as to arrangements and compro- 
 
 S.) 576; London, Brighton, Ac. Ry. Co. mises in winding-up between companies 
 
 V. Goodwin, 3 Ex. 320; Eastern Union and their creditors, as to which see Be 
 
 Ry. Co. d. Cockrane, 9 Ex. 197. Albert Life Ass. Co. L. R. 6 Ch. 381. 
 
 (o) See note on " Eminent Domain," ante, p. 371 el teg. 
 (b) 33 & 34 Vict. c. 61 ; Buckley, p. 607. 
 
STATUTORY AMALGAMATION. 625 
 
 Upon section 16i of the Companies Act, 1862, (a) the Master 
 of the Rolls, in Re Bank of Hindustan, &c. (Ex parte Los),* after 
 observing " the law undoubtedly is that you cannot, without his 
 consent, make a person a sharebolder in another company than 
 that of which he consented to become a shareholder," decided that 
 a member of a company which . was being wound-up voluntarily, 
 and whose business was to be transferred to another company in 
 consideration of shares in such company, could not be compelled, 
 under the powers given to the liquidators by the above, to take 
 shares in the other company, and that he did not forfeit his right 
 to refuse to become such shareholder by failing to express his dis- 
 sent from the arrangement within seven days after the holding of 
 the meeting at which it was determined upon. Under such cir- 
 cumstances the shareholder forfeits all claims he may have upon 
 the original company in respect of his shares, but he is also re- 
 lieved from any further liability.* 
 
 In Clinc!i v. Financial Corp.,' Page- Wood, V.-C, considered 
 the efEect of this section to be : " That if a company be desirous 
 of merging themselves in another company, inasmuch as a minor- 
 ity of dissentient shareholders cannot he compelled to tahe shares 
 in the other company, it may be desirable that the first company 
 shall have a power of closing its concerns and winding-up its 
 affairs, and upon so doing, of selling its assets to the other com- 
 pany, which may be disposed to purchase those assets, paying for 
 them in shares. Then it would be for the shareholders in the 
 company which ^as being wound-up td say whether they wiU 
 take shares or not. If they refuse to take shares, they lose all 
 interest in the purchase-money; they are so far bound by the 
 resolution of their own company as to lose all right of claiming 
 any portion of it ; but the sale may still be a good sale of the one 
 concern to the other." 
 
 In the same case, on appeal,^ Lord Chancellor Lord Cairns said : 
 " I think that section 161 clearly contemplates a sale of the assets 
 of the liquidating company for such an equivalent in value as is 
 
 ' 34 L. J. (Ch.) 609. V.-C, and in which his honor gave a aim- 
 
 " Compare Mx. parte Higga, 2 H. <fe M. liar decision. 
 65T, an exactly similar case arising out of ' L. R. 5 Eq. 450, 472. 
 
 the same circumstances as Ex parte Los, '' L. R. 4 Ch. 118, 121. 
 
 heard a few days later by Page- Wood, 
 
 (a) Buckley, p. 330. 
 40 
 
626 AMALGAMATION. 
 
 pointed out in that section, and does not contemplate the subject- 
 ing of the shareholders in the liquidating company, without their 
 unanimous decision, to a fresh and original liability in the shape 
 of a guarantee." His lordship then went on to lay down, to this 
 extent overruling the decision of Vice-Chancellor Page-Wood, 
 that not even could the shares of dissentients be forfeited : " It is 
 suflSoient to say that, in my opinion, the liquidators of a company 
 would have no right to place a shareholder of a company in this 
 position ; that he must either dissent altogether from the arrange- 
 ment, and be subject to have his shares taken from him at a valu- 
 ation, or else come in under the arrangement, and thus be forced 
 to subject himself to the liability of guaranteeing the sufficiency 
 of the assets." 
 
 And Selwyn, L. J., in his judgment, expressed himself simi- 
 larly : " The words of the 161st section are doubtless veiy wide 
 and comprehensive, but it contains no power to impose any new 
 or additional liability upon the shareholders of the selling com- 
 pany, and provides only for the payment of the purchase-money 
 of the shares of dissentient shareholders, which is directed to be 
 paid before the company is dissolved, and to be raised by the 
 liquidators in such manner as may be determined by special 
 resolution.^ 
 
 The exact position of a dissentient shareholder under this sec- 
 tion seems to be this. First, he may assent to the proposed 
 arrangement, either simpliciter, or with modifications adapted to 
 his particular case. Secondly, he may dissent therefrom. Thirdly, 
 if he dissent, he can require the liquidators, at their option, " either 
 to abstain from carrying the resolution into eflect, or to purchase 
 his interest at a price to be determined by arbitration," i. e., as 
 provided by section 162, that is, he is not compelled to accept 
 the liquidator's Yaluation.^ Fourthly, if he dissents and wishes 
 his interest to be valued, he must give the requisite notice in that 
 behalf within seven days, or he may dissent simply and abandon 
 
 _ ' As to the powers of the court under ' The shareholder has a right of ac- 
 this section, and the schemes which will tion upon non-payment of the purchase- 
 be enforced, see Marine Investment Co. money agreed on or awarded to him, in 
 L. R. 8 Oh. "702 ; Tunis Rys. Co. 31 L. T. case of arbitration. De Rosaz v. Anglo- 
 (N.S.)264; W. N. 18H, pp. 121, 165; Italian Bank, L. R. 4 Q. B. 462. Com- 
 SoHthall It. British Mutual Life Aes. Soc. pare 2ie Anglo-Italian Bank and De Rosaz, 
 L. R. 6 Ch. 614 ; He Imperial Land Co. of L. R. 2. Q. B. 452. 
 Marseilles, L. R. 6 Ch. 96, and cases in 
 notes following. 
 
STATUTORY AMALGAMATION. 627 
 
 all interest in the company. Fifthly, if lie dissents, and his in- 
 terest is purchased by the liquidators, he nevertheless, remains 
 liable up to the amount of that interest to the creditors of the 
 company;^ though if he dissents and abandons his interest, it 
 seems that his liability thereupon ceases.^ 
 
 Though the section speaks of a winding-up " altogether volun- 
 tarily," yet it applies to a winding-up under the court, which can, 
 like the official liquidator, direct a sale of the assets under section 
 95, and such a sale is regulated by the principles laid down in this 
 section.^ 
 
 Foreign companies may avail themselves of this section.* So 
 may companies not formed under this act, but they must first reg- 
 ister themselves so as to bring themselves within its provisions. 
 In Southall v. British Mutual Life Ass., Soc' it was decided that 
 an unregistered company, which has no power, under its deed of 
 settlement, to sell or transfer its business to another company, 
 may carry into effect an agreement for that purpose by register- 
 ing under the Companies Act, 1862, passing a resolution for vol- 
 untarily winding-up and directing the liquidators to carry out the 
 agreement. 
 
 Life Assurance Companies. The mismanagement of life as- 
 surance companies having produced great distress and absolute 
 ruin to many, the Legislature has lately interfered, and enacted 
 regulations with respect to the conduct of their business and the 
 control of their affairs. The greater portion of the disasters 
 brought about by these bodies, has arisen from the amalgamation 
 or fusion of many small associations into one large and unwieldy 
 concern. True enough, the policy-holders and other creditors of 
 the original associations, would not be bound by any such arrange- 
 ments, unless they agreed thereto; but their recourse to their 
 original debtors, is usually of theoretical rather than practical 
 value. What use is it to preserve them their remedy, when the 
 assets and funds of their debtors are gone, or very seriously dimin- 
 ished ? The unfortunate shareholders, too, have to be considered. 
 
 ' Re Imperial Land Co. of Marseilles bert Life Ass. Co. L. R. 6 Ch. 381 ; 33 & 
 
 (Vining's Case), L. R. 6 Ch. 96. 34 Vict. c. 104, s. 2. 
 
 ^ See Los's Case and Higgs' Case, iM * Re Irrigation Co. of France (Ex parte 
 
 supra ; and Martin's Case, 2 H. <fe M. 669. Fox), L. R. 6 Ch. 176. 
 
 3 ife Imperial Mercantile Credit Assoc. ^ L. R. 6 Ch. 614. Compare Droit- 
 
 L. R. 12 Eq. 504 ; Re Agra and Master- wich Patent Salt Co. v. Curzon, L. R. 3 
 
 man's Bank, L. R. 12 Eq. 509, n. ; Re Al- Ex. 35 ; and Princess of ReuBS v. Bos, L. 
 
 K. 6 Ch. 363 ; L. K. 5 H. L. 176. 
 
628 AMALGAMATION. 
 
 Like the creditors, they need not agree to an amalgamation if 
 they do not so choose. But this also is a merely theoretical privi- 
 lege, for they are, to a great extent, in the hands of the managing 
 body, and unable to protect their own interests. Consequently 
 parliament has decided that the amalgamation of these companies 
 shall be to some extent under the supervision of the courts. Ac- 
 cordingly 33 & 34 Vict. c. 61, the Life Assurance Companies 
 Act, 1870, contains various provisions referring to the accounts 
 and other internal matters relating to amalgamation. 
 
 Section I v^. — Quasi oe Simulated Amalgamation by meee 
 Tbansfee of Assets.' 
 
 By this is meant any operation which is, or usually by a direct 
 and simple purchase involves, a transfer of corporate property en 
 l)loo, but is not, and does not, involve the transfer of the corpora- 
 tion ^j^rsowa, or the destruction or abeyance of the corporation as 
 a legal entity. This is a matter which mainly and directly comes 
 under the head of enterprise or business, and it has accordingly 
 already been investigated.' 
 
 But in some of its aspects it bears such a resemblance to amal- 
 gamation, especially where it is a transfer of such assets as perforce 
 to work an abeyance of the transferring corporation, that it is ad- 
 visable to refer to it again, in order to distinguish this operation 
 of a purchase from a true " amalgamation." 
 
 In not a few reported cases, the two terms are greatly con- 
 fused.^ Indeed, it is not unseldom very diflScult to determine the 
 nature of a given transaction, one court or judge considering that 
 to be an " amalgamation " which another styles a purchase. A 
 series of judgments, illustrative not only of this particular point, 
 but of the whole subject of novation, will be found in the various 
 cases growing out of the winding-up of the Saxon Life Assurance 
 
 ' It should te noticed that, besides a powers, its franchises. A mortgage of 
 
 transfer by wny of direct purchase, which this latter description, given to another 
 
 is the only mode examined in the text, corporation, would practically be an amal- 
 
 there may be a transfer by way of mort- gamation, if not an absolute absorption 
 
 gage. See ante, pp. 223-S8. Under or- in the latter, 
 dinary circumstances, and with ordinary '' Ante, p. 116 rf aeq. 
 
 powers, a corporation can mortgage only » See Anglo-Australian, <fec. Co. v. 
 
 its assets and property. But by legisla- British Provident, &c. Ins. Co. 3 Giff. 621, 
 
 tive authority, it may mortgage every before Stuart, V.-C., and, on appeal, 4 De 
 
 incident connected with it ; its special G., F. & J. 341 ; and the case npxt cited. 
 
TRANSFER OF ASSETS. 6-J9 
 
 Society. In 1857, the Era Assurance Society purchased the busi- 
 ness of the Saxon Life Assurance Society, received all its assets and 
 undertook all its liabilities. The Era paid some of the liabilities 
 to an amount exceeding the assets received by them. They also 
 gave a mortgage and covenant to the Anchor Insurance Company, 
 for a debt due to them from the Saxon, in substitution for a sim- 
 ilar security held by the Anchor against the Saxon, which was 
 given up and cancelled. The Saxon and Era Companies were both 
 ordered to be wound-up ; and, in the matter of the Era, Page-Wood, 
 V.-C, held that the security given by it to the Anchor was void, 
 on the ground that the transfer to it, of the business of the Saxon, 
 was ultra vires} This transfer he considered to be an " amalga- 
 mation." " Both these cases seem to me to turn in a very great 
 measure on the question, what power the directors of the Era Com- 
 pany had to ' amalgamate,' that is to say, to take upon themselves 
 the responsibilities of another company." Such power was not 
 contained expressly in the deed of settlement, and the learned 
 Vice-Chan cellor determined that the 38th clause, " whereby the di- 
 rectors were authorized generally, where these presents are silent 
 or do not otherwise provide, to act, in the direction of the con- 
 cerns of the society, in such manner as, at their absolute discre- 
 tion, they shall think most conducive to the interests of the 
 society," could not be construed as giving such power. But, on 
 appeal. Turner, L. J., held that the transfer was a " purchase," and 
 within the authority possessed by the directors. " It was con- 
 tended that it {i. e., the deed of 1857) was absolutely void as being 
 ultra vires as to both of these companies. Whether it was so as 
 to the Saxon, I will say nothing ; but, looking to the deed of set- 
 tlement of the Era Society, I think that it was within the power 
 of that company, with the consent of a general meeting, to enter 
 into the agreement and to bind themselves by it. It was said that 
 the Era had no power to take the assets, and to subject them- 
 selves to the liabilities of the Saxon Society. But those were 
 the terms of the agreement itself, and if they had power to pur- 
 chase the business, they must have the power to carry into effect 
 the terms of the purchase." 
 
 In all cases of this kind, several distinctions have to be drawn : 
 
 ' Be Saxon Life Ass. Soc. (Anchor appeal, lb. and 1 De G., J. & Sm. 29; on 
 Case, Era Case), 2 J. <fe H. 400; iiO L. J. rehearing bef6re Page-Wood, V.-C, lb, 
 (Ch.) 137; also 32 L. J. (Ch.) 206; on 211, and 1 H. <& M. 672. 
 
630 AMALGAMATION. 
 
 First, there may be a sale, pure and simple, for a consideration 
 more or less valuable, by S. company to P. company, of aU its as- 
 sets and liabilities, no covenants beyond what are necessary to 
 secure the payment of the consideration being entered into by P. 
 company. 
 
 Here it is patent that S. has not relieved itself of its liabilities. 
 Its position with regard to its creditors is in no way changed ; no 
 novatio has been made ; to them, therefore, it still remains respon- 
 sible. What has been done is this : S. company has simply sold 
 its business, nothing more, and has to discharge claims upon it, out 
 of the consideration received for such sale. 
 
 Secondly, there may be a similar transaction, with the addition 
 of a covenant by P. company, to indemnify S. company against all 
 claims upon it. 
 
 Under these circumstances S. will still remain liable for its 
 debts, &c., but can compel P. to indemnify it against the same, 
 though should such indemnity' fail in whole or in part, S. must 
 nevertheless discharge the claims of its creditors.^ 
 
 In these two transactions there are merely a sale and a purchase, 
 the contracting parties remaining as distinct after the arrange- 
 ment, as before. ISTo one would pretend, not even the companies 
 concerned, that under such circumstances the seller has become 
 defunct ; the arrangement was not intended to have tbis result, a 
 dissolution, but simply to be a transfer of assets and liabilities. 
 The selling company will, therefore, remain liable to its own cred- 
 itors, unless by the acquiescence, express or tacit, of these, a nova- 
 tion has been worked, and the P. company substituted as debtors 
 in place of the S. company. 
 
 Thirdly, there may be, not a sale by S. company, but an " amal- 
 gamation " of itself with P. company. 
 
 This means, as already seen, that S. company is dissolved, but 
 its assets and liabilities have previously been made over to, and 
 accepted by, P. company. Its members, too, generally assumed 
 to be made members of P. company, and to have allotted to them, 
 and to be compellable to receive shares in that company, pro- 
 portionate to the value of those which they previously held in S. 
 company. It may however, very fairly be questioned whether 
 
 ' As to the legal import of such an in- Co. (Ex parte Western Life Ass. Co.) L. E. 
 demnity, and the manner in which it will 11 Eq. 164. See, also, Hemming v. Mad 
 be e£fectuate(l, see Re Albert Life Ass. dick, L. R. "7 Ch. 395. 
 
CONSOLIDATION. 631 
 
 membership can be thus compulsorily transformed, save by the 
 consent of each individual concerned. 
 
 On the one side it is argued that the term " amalgamate " must 
 mean, if it means anything more than merely " sell " or " transfer " 
 Bssets, the pov^er to exchange the shares of the one company for, 
 and to commute them into, those of some other company, and, by 
 consequence, to substitute membership in the new company for 
 membership in the old one. On the other hand, it is urged in the 
 iirst place, that a person by entering into a company, even though 
 its constating instruments contain provisions for amalgamation, 
 intends and enters into a contract to be a member of that partic- 
 ular company and no other ; and, secondly, that no one can be- 
 come a member of a company save by his consent given ad hoc, 
 and that no vague and general authority, given beforehand, and 
 least of all, such as is to be implied from the fact that he belongs 
 to a company whose articles contain such a power, can suffice for 
 this purpose. This question has not yet been judicially decided, 
 though the dictum of Page-Wood, Y.-C, is in the negative.^ 
 Hitherto, however, the liability of persons as members of amalga- 
 mated companies, has always been determined by considering 
 whether they have or not, by their own application, acts, or 
 laohes, constituted themselves members of the company with 
 which the amalgamation was proposed.^ {a) 
 
 ' See Ex parte Bagshaw, ante, p. 616. 41 L. J. (Ch.) 157; 20 W. R. 88; and 
 ■' See United Ports Co. (Tuoker'a Case), Adam's Case, L. R. 13 Eq. 474. 
 
 (a) The term " amalgamation " is seldom applied to corporations in this country. 
 That which takes its place as much as any is " consolidation." But, though it is 
 difficult accurately to define amalgamation as commonly used in English law, it cer- 
 tainly hag a wider meaning than consolidation has with us. Consolidation would, 
 e. g., be inapplicable to a union of two or more companies, in such a way that one of 
 the original corporations only was continued in existence, while the others were 
 merged or absorbed in it. An absorption of one corporation by another would, 
 according to some of the decisions, be an amalgamation in England ; but it would 
 not be a consolidation here. In McMahan v. Morrison, 16 lud. 172, a case frequently 
 cited with approval in later decisions, it was said, that the effect of the consolidation 
 ^' was a dissolution of the three corporations named, and, at the same instant, the 
 creation of a new corporation, with property, liabilities, and stockholders derived 
 from those then passing out of existence." Similarly, in State v. Bailey, 16 Ind. 46, 
 ■consolidation is said to amount to "a surrender of the old charters by the companies, 
 the acceptance thereof by the Legislature, and the formation of a new corporation 
 out of such portions of the old as enter into the new." See, also, Clearwater v. Mere- 
 dith, 1 Wall. 40; and Shields v. Ohio, 95 U. S. 319, where the new corporation was 
 
632 CONSOIJDATION. 
 
 held subject to the power of alteration reserved to the Legislature in a constitution 
 adcipted after the incorporation of the original companie?, but before consolidation. 
 8. c. 26 Ohio St. 86 ; also, R. R. Co. v. Maine, 96 U. S. 499 ; s. c. 66 Me. 488 ; R. R. 
 Co. 0. Georgia, 98 U. 8. 859 ; Lauman v. Lebanon, Ac. R. R. Co. 30 Penn. St. 42. 
 Where, by the terms of the statute and deed, the first corporation was extinguished, 
 the second only continued in existence, this was held not to bo " an amalgamation or 
 consolidation of the two corporations into one." Powell v. Northern Missouri R. R. 
 Co. 42 Mo. 63. See, however, Central R. R. Ac. Co. v. Georgia, 92 U. S. 665, where 
 it is held that whether dissolution of the old companies takes place, depends upon the 
 statute under which consolidation takes place, s. o. 54 Ga. 401. See, also, South- 
 western R. R. Co. V. Georgia, 92 U. S, 676, n. ; County of Scotland v. Thomas, 94 
 U. S. 652; State v. Greene Co. 54 Mo. 640. In the American view, there 'ore, it 
 would seem that the dissolution of all the old corporations and the creation of one 
 new one are as a rule involved in consolidation. And this idea must not be over- 
 looked in determining the rights of creditors. For if all the corporations cease, the 
 consolidated company is liable to the creditors of each, in the absence of special 
 agreement, only so far as it is assignee of its property ; while if one is continued in 
 existence, the debts of that one which continues, would seem to burden the whole 
 property, however acquired. 
 
 It should be observed, also, that consolidation in England means, to put two or 
 more shares of stock of the same company into one share, or to consolidate "shares" 
 into "stock." See Buckley, pp. 9, 80; 2 Sbelford on Railways, 4th ed. pp. 113, 718; 
 Godefroi & Shortt, pp. 58, 478. 
 
 The power of corporations to consolidate must be considered from two stand- 
 points, viz., that of the State and that of the individual stockholders. These parties 
 have separate interests and rights which cannot be disregarded. 
 
 I. As to the Legislature. — A charter being a contract, giving to a corporation all 
 the powers which it can exercise, any alteration which the corporation desires to 
 make therein, must, in the first place, have the sanction of the Legislature. The au- 
 thority to consolidate is not to be implied from general powers of management of 
 particular business. Clearly, if the consolidation works the dissolution of the old 
 bodies and the creation of a new one, express legislative authority is the first essen- 
 tial. " The power of the Legislature to confer such authority cannot be questioned, 
 and without the authority, railroad corporations organized separately, could not 
 merge and consolidate their interests." Clearwater.?). Meredith, 1 Wall. 25. This 
 authority maybe given in the original charters; Nugent ti. Supervisors, 19 Wall. 
 241 ; or by act passed previous to consolidation ; Black v. Del." & Ear. Canal Co. 
 24 N. J. Eq. 455 ; or by the express sanction of an unauthorized contract of consoli- 
 dation ; Bishop v. Brainerd, 28 Conn. 289 ; McAuley v. Columbus, <fec. R. R. Co- 
 83 111. 348 ; Mead v. N. Y., Housatonic, <fec. R. R. Co. 45 Conn. 199. Almost aU the 
 cases cited in this note will be found to uphold the necessity of legislative authority 
 in order to the consolidation of corporations. As to what language will authorize 
 consolidation, see Pearce v. Madison <fe Ind. R. R. Co. 21 How. 441 ; Bishop v. Brain- 
 erd, 28 Conn. 289 ; Fisher v. Evansvil'e & Crawfordsville R. R. Co. 7 Ind. 407. 
 Power given to one raUroad company to consolidate with any otJier is sufficient au- 
 thority to such other as it may choose to join. Matter of Prospect Park, &c. R. R. 
 Go. 67 N. T. 371. But see State v. Consolidation Coal Co. 46 Md. 1. All precedent 
 formalities must be completed to perfect consolidation. Peninsular R. R. Co. ». 
 Thorp, 28 Mich. 506 ; Mansfield, Ac. B. R. Co. v. Dunker, SO Mich. 124 ; Tuttle *. 
 Mich. Air Line R. R. Co. 85 Mich. 247. Under the very general laws of Illinois a» 
 
CONSOLIDATION. 633 
 
 to coDBolidation, great liberality will be used in sustaining the validity of the pro- 
 ceedings. Dimpfel v. Ohio & Miss. R. R. Co. (U. S. C. C. 111.) 8 Reporter, 641. 
 
 11. The first essential, authority from the Legislature, having been obtained, the 
 rights of individual stockholders are next to be considered. There is a contract with 
 the stockholders, as well as with the State, and the rights of the one party can no 
 more be disregarded than the rights of the other. Without the intervention of the 
 right of eminent domain, the consent of every stockholder is necessary for consolida- 
 tion, for the reason that it changes the nature and purpose of the organization to 
 which the stockholder has confided his property, and with which he has contracted. 
 The Legislature cannot authorize a majority of the corporation to make any such 
 change, against the will of the minority, for such act would " impair the obligation 
 of a contract." In Kean v. Johnston, 9 N. J. Eq. 401, 407, it is said: " As stockhold- 
 ers, they own the road in common, to be employed in specified uses. Each owns a 
 share in the whole, and is to have a proportionate share in its profits. They have 
 invested a portidn of their capital in it, and in it alone. They have a right in the 
 road and in every dollar it earns. The directors are their trustees, to employ the 
 j oint capital in the management of the road, and the road only, to the end that, from 
 the investment the stockholders have chosen, they may reap the contemplated profits. 
 And this is the agreement of the stockholders among themselves. They each con- 
 tract with the other that their money shall be so employed. What the majority de- 
 termine within the scope of this mutual contract, they each agree to abide by, but 
 there their mutual contract ends, and no majority, however large, has a right to 
 divert one cent of the joint capital to any purpose not consistent with, and growing 
 out of this original fundamental joint intention. To sell the road, to abandon the 
 contemplated investment and embark in another scheme, whether entirely different 
 or only more extensive then the original contemplation as apparent on the face of 
 the charter, is, it seems to me, clearly contrary to the rights of the individual stock- 
 holders. If they had any right as partners or beneficiaries, it would seem to be this, 
 that their money should be devoted to that use, and never employed in any other, 
 nor returned to them before they desire it. The mere statement of the propofition 
 seems to irie to prove it. No argument, however lengthened, can add to the force of 
 the naked position." In Black v. Del. & Rar. Canal Co. 24 N. J. Eq. 455, 468, the 
 Court use the following language : " The proposition now considered is whether, after 
 shareholders have entered into a contract among themselves, under legislative sanc- 
 tion, and expended their money in the execution of the plan mutually agreed upon, 
 the scheme can be radically changed by the majority, by virtue of legislative enact- 
 ment, and a dissentient stockholder compelled to engage in a new and totally differ- 
 ent undertaking, without impairing the obligation of his contract with his associates 
 and with the State. That this cannot be done, is as well supported by every con- 
 sideration of justice and right, as it is firmly imbedded in judicial decision." Again, 
 in Lauman v. Lebanon Valley R. R. Co. 30 Penn. St. 46, Lowrie, C. J., says: the 
 dissentient stockholder " may object that his co-corporators have no power to make 
 a new contract for him, and thereby constitute him a member of a new and different 
 corporal ion. * * * He may object that even the Legislature cannot authorize 
 this, for by so doing they would authorize the destruction of one private contract, 
 and the compulsory creation of another in its siead, and would take away the rem- 
 edy by due course of law, which the dissenting stockholder is entitled to, because 
 of the departure or diversion of the association from its agreed purposes ; and would, 
 besides this, cliange the essential nature of contracts, which even legislative power 
 cannot do, and much less legislative authority." Also, in Clearwater v. Meredith, 
 
634 CONSOLIDATION. 
 
 1 Wall. 25, it is remarked : " Clearwater (the stockholder) could have prevented this 
 consolidation, had he chosen to do so; instead of that, he gave his assent to it, and 
 merged his own stock in the new adventure. If a majority of the stockholders of the 
 corporation of which he was a member had undertaken to transfer his interest against 
 his wish, they would liave been enjoined. There was no power to force him to join 
 the new corporation, and to receive stock in it on the surrender of his stock in the 
 old company.'' See, also, Nugent v. Supervisors, 3 Biss. 105 ; s. o. 19 Wall. 241 ; Mc- 
 Mahan v. Morrison, 16 Ind. 172 ; Mowry v. Ind. <fc Cin. R. R. Co. 4 Biss. IS. 
 
 It thus appears that the dissent of a single stockholder may prevent a consolida- 
 tion consented to by the Legislature. In corporations having duties to perform to 
 the public, however, this hindrance may be removed by the exercise of the right of 
 eminent domain. The stock of an individual is just as much subject to this right as 
 any other property. See ante, p. 375 et seq. notes. In Black v. Del. <fe Rnr. Canal Co. 
 24 N. J. Eq. 455, 468, the Court aays: "From the conclusions thus far reached, does 
 it result that one unwilling stockholder may obstruct the growth and development of 
 every enterprise of this character in which he may have participated, and thus hinder 
 the union, under one management, of these important public highways, which have 
 been constructed at different periods and under separate charters, when the necessities 
 of interstate commerce, and the convenience of public travel may unite in urging it? 
 The necessity for rapid and speedy transit seems to demand imperatively that this 
 difficulty shall not be insurmountable. In the exercise of the right of eminent do- 
 main, the Legislature may authorize shares in corporations, and corporate franchises, 
 to be taken for public uses, upon just compensation. Tiie title to this species of prop- 
 erty is no more secure against invasion, when the public use requires it, than is the 
 ownership of real estate. Under this paramount right in the public, subject to which 
 ■all private property ia held, the franchises of one corporation have been, and may be 
 taken and bestowed upon another. « * * When authority is granted for the con- 
 solidation of existing connected routes, the presumption flows from the fact of the 
 enactment being made, that the Legislature decided upon its necessity. This results 
 from the familiar rule, that every intendment will be made in support of the consti- 
 tutionality of the acts of a co-ordinate branch of the government." In case of such 
 exercise of the right of eminent domain, provision must of course be< somehow 
 made for compensation to dissenting stockholders, and they can enjoin until such 
 compensation is made. Lauman v. Lebanon Valley R. R. Co. 30 Penn. St. 42. When, 
 also, in such case, the authority to consolidate is permissive only, the act should pro- 
 vide how the option shall be made, whether by a majority, two-thirds, or some other 
 number. For if it be left without qualification to the stockholders, in a matter so ex- 
 traordinary, the majority have no power to bind the minority, according to the con- 
 tract between the stockholders. In the case of Black v. Del. <fe Rar. Canal Co., the 
 authority was permissive only, but it was provided that it should be lawful for the 
 united companies to consolidate, " by and with the consent of two-thirds in interest 
 of the stockholders in each.'' In regard to the different effect given to reservations 
 of power in the Legisliiture to alter, repeal, or amend charters, and the consequent 
 difference of opinion upon the necessity of unanimity of action on the part of stock- 
 holders, see an/e, p. 90 et seq. notes. 
 
 In any case, consolidation without consent of a stockholder, relieves him from 
 liability on his subscription, or gives him the right to recover his interest. Lauman 
 ". Lebanon Valley R. R. Co. 3U Penn. St. 42 ; Fisher v. Evansville R. R. Co. 7 Ind. 
 407; McOi-ay v. Junction R. R. Co. 9 Ind. 358 ; State v. Bailey, 16 Ind. 46; Shelby- 
 ville, dc. T. Co. V. Barnes, 42 Ind. 498 ; 111. Grand Trunk R. R. Co. v. Cook, 29 111. 
 
CONSOLIDATION. 635 
 
 2Z1. Where, however, at the time of subscribing, the fubscriber knows that a con- 
 solidation may take place, as when authority is given in the charter, or in an act 
 passed before the subscription, the preceding principles would not apply. Thus, in 
 Nugent V. Supervisors, 19 Wall. 241, where an attempt was made to avoid a sub- 
 scription by a county to a company which became consolidated with another, on au- 
 thority existing at the time of the creation of the company, it is said : " It must be 
 conceded, as a general rule, that a subscriber to the stock of a railroad company is 
 released from obligation to pay his subscription by a fundamental alteration of the 
 charter. The reason of the rule is evident. A subscription is always presumed to 
 have been made in view of the main design of the corporation, and of the arrange- 
 ments made for its accomplishment. A radical change in the organization or pur- 
 poses of the company may, therefore, take away the motive which induced the sub- 
 scription, as well as affect injuriously the consideration of the contract. For this 
 reason, it is held that such a change exonerates a subscriber from liability for his 
 subscription ; or, if the contract has been executed, justifies a stockholder in resorting 
 to a court of equity to restrain the company from applying the funds of the original 
 organization to any project not contemplated by it. But while this is true as a gen- 
 eral rule, it has no applicability to a case like the present. The consolidation * * 
 was no departure from its original design. The general statute of the State [111.], 
 approved Feb. 28th, 1854 [the subscriptions were made in 1869 and later], authorized 
 all railroad companies, then organized or thereafter to be organized, to consolidate 
 their property and stock with each other, and with companies out of the State, when- 
 ever their lines connect with the lines of such companies out of the State. * * Nor 
 is this all ; the special charter of the K. & I. R. R. Co. contained an express grant to 
 the company of authority to unite or consolidate. * * The consolidation, there- 
 fore, wrought no change in the organization or design of the company to which they 
 [the voters of the county] subscribed, other than they contemplated at the time as 
 possible and legitimate. It cannot be said that any motive for their subscription has 
 been taken away, or that the consideration for it has failed. Hence the reason of 
 the general rule we have conceded does not exist in tliis case, and consequently the 
 rule is inapplicable. * * The American authorities uniformly assert that the sub- 
 scriber for stock is released from his subscriptions by a subsequent alteration of the 
 organization or purposes of the company, only when such alteration is both funda- 
 mental and not provided for or contemplated by either the charter itself or the gen- 
 eral laws of the State." In Hanna v. Cincinnati & Ft. W. R. R. Co. 20 Ind. 30, one 
 who subscribed to the stock of a corporation, formed under a general law which re- 
 served the power to amend or repeal, was held bound by his subscription, although a 
 consolidation took place on authority subsequently given, for the reason that the arti- 
 cles of association showed that such consolidation was one of the purposes for which 
 such association was organized, and the alteration was one which the subscriber might 
 have reasonably anticipated at the time he subscribed. See Hamilton Ins. Co. i. 
 Hobart, 2 Gray, 543 ; Gardner v. Hamilton Ins. Go. 33 N. Y. 421 ; Sparrow v. Evans- 
 ville, <&c. R. R. Co. 1 Ind. 369 ; Bish v. Johnson, 21 Ind. 299 ; Mowry ./. Ind. <fe 
 Cin. R. R. Co. 4 Biss. 78; see, also, ante, p. 133 ei seq, notes. Where the articles of 
 association of a company prohibited the union or consolidation of the company with 
 any other, without the consent of a majority of the stockholders, but contained a 
 clause providing for an amendment of the articles, by a concurrent vote of two- 
 thirds of the executive committee and a majority of the trustees, it was held that 
 this authority to amend gave no power to take away from the stockholders the 
 
636 CONSOLIDATION. 
 
 power to prohibit merger, wliich they had ■ expressly reserved. Blatchford v. Eois, 
 54 Barb. 42. 
 
 In order to obviate, in some cases, the necessity of unanimous consent of stoct- 
 holders, and to enable a majority merely to enter into a consolidation, the following^ 
 argument has been urged : The contract which alone stands in the way is the contract 
 between the stockholders. That contract is to the effect that the property of the stock- 
 holders shall be devoted to the purposes for which it was given, and shall not be 
 diverted to any other. It can never be diverted to a diflFerent purpose without his 
 consent. But must it always be devoted to the particular purpose ? Is there any- 
 thing in the contract which compels the particular business to be carried on perpet- 
 ually, or as long as any one stockholder may desire ? If there is in the original 
 agreement a specified time during which the corporation must continue, the case is 
 clear. But it is not such cases which are here spoken uf. If the contract is indefinite 
 as to this point, is there anything to prevent the majority, with consent of the State, 
 from giving up the business entered upon, whenever it seems to them desirable '! 
 Zabriikie, C, in Black v. Del. <fe Kar. Canal jDo. 22 N. J. Eq. 404, says: "But there is 
 no case that holds that a majority of corporators, where a time is not specified for 
 which the enterprise must be continued, may not abandon the enterprise and sell out 
 the property of the company. The dictum of Parker, Master, in Kean v. Johnson, 1 
 Stockt. 413, is .the only authority which I find in support of the doctrine. The dic- 
 tum, in my own opinion, in Zabriskie v. Hack, ife N. Y. R. R. Co. 3 C. E. Green, 193, 
 that a single stockholder can prevent all others from changing or abandoning the 
 work, must be taken with the qualification annexed to it in the former part of the 
 opinion, p. 183, that is, ' where they became members for definite purposes specified 
 in their charter, and for a time settled by it.' * * Becoming incorporated for a 
 specified object, without any specified time for the continuance of the business, is no 
 contract to continue it forever, any more than articles of partnership without stipu- 
 lation as to time. * * A doctrine that all the stockholders but one may be com- 
 pelled to continue a business which they find undesirable and unprofitable, and wish 
 to abandon, is so unreasonable and unjust, that it will not be held to arise by impli- 
 cation, unless that implication is a necessary one." If, then, a corporation may, by a 
 majority vote, give up its business and bring about a dissolution, and if Consolidation 
 is the dissolution of the old corporations and the creation of a new one, it is asked, why 
 is not a majority competent to make such consolidation against the will of the minor- 
 ity ? The dissenters are not forced to enter into the new corporation. Their prop- 
 erty is not devoted to another purpose against their will. They may refuse to enter 
 into the new venture, and enjoin until they receive the value of their shares. They 
 are only forced to choose whether they will take their property back, or join with the 
 others in a new investment. If there was no obligation upon the company to con- 
 tinue in the business entered upon, and if the shareholder has received his share of 
 the property, he has no cause of complaint, and no ground for interfering with those 
 stockholders who prefer to transfer their property to the new companj', taking lis 
 shares rather than receiving the value in money. But it is submitted, in answer to 
 this argument, that the contract between the stocldiolders includes the idea, that, 
 whenever the corporation shall give up its business, each stockholder shall receive 
 his share of the property, determined in the ordinary way of winding-up, by a public 
 sale in the manner recognized by law. McVicker v. Ross, 56 Barb. 247 ; Frothingham 
 .;. Barney, 6 Hun, 36<; ; Taylor v. Earle, 8 Hun. 1. In this way alone can the value 
 of the whole property, and consequently of each interest, be legally determined. A. 
 
CONSOLIDATION. 637 
 
 dissolution in which there is no such valuation of the savcral interests, therefore, vio- 
 lates the implied contract with the stockholders ; and no authority of the Legislature, 
 unless through the exercise of the right of eminent domain, can be set up as justifica- 
 tion for an act resembling spoliation. So, too, in those States in which it is held that 
 the reservation by the Legislature of power to repeal, alter or amend, enables a ma- 
 jority to accept an amendment or dissolution authorized by a permissive act of the 
 Legislature, it might be urged that a majority vote would be sufficient to effect con- 
 solidation. The same answer is pertinent here. The power to repeal means the 
 power to put an end to the corporation merely, and in no way does the provision au- 
 thorize the assenting corporators to appropriate the property at an estimated value, 
 or affect the implied contract that, in case of dissolution, the property shall be divided 
 in the regular way. 
 
 ITI. The effect of comolidaiion, generally speaking, is to put an end to the old 
 corporations and create a new one. A new entity is created, to which pass the com- 
 bined rights and obligations of the old ones. The general rule, as to the effect of 
 consolidation, is laid down in Paine v. Lake Erie <Sr Louisville R. R. Co. 31 Ind. 283, 
 349, where it is said : " It is clear to our minds that the new company succeeded to 
 the rights of the old corporations. The new was composed of the elements of the 
 old ; it was the same under a new form. It is only a play upon words to say that, 
 phoenix-like, the new arose from the ashes of the old. There was no turning to ashes 
 required. It only required a commingling of the elements of which the old was com- 
 posed. The new assumed the liabilities and succeeded to the rights of the old." 
 The court, therefore, decide that the new company may compromise and settle a 
 claim against one of the original companies and sustain an action to enforce a settle- 
 ment, tjirailarly, in Miller v. Lancaster, 5 Coldw. (Tenn.) 514, 520, after citation of 
 many authorities, it is said : " The foregoing authorities suffice, if any were needed, to 
 establish the position, that where such consolidation and merger of corporations are 
 made, and such transfer of rights and properties and assumption of liabilities be- 
 tween the old and new companies are effected, the new company stands in the 
 stead of the old companies and may enforce the rights of the old companies 
 and be subjected to their liabilities." See, also, Columbus R. R. Co. v. Powell, 40 
 Ind. SI ; Chicago, &c. R. R. Co. v. Moffitt, 16 111. 524 ; Thompson v. Abbott, 61 Mo. 
 176; Zimmer v. State, 30 Ark. 677. It would seem, therefore, that all choses in ac- 
 tion belonging to the old companies could be enforced by the new, in the same way and 
 to the same degree. And, indeed, it might be said that all the rights were trans- 
 ferred and could be exercised as before. The power of towns and counties to sub- 
 scribe to a railroad, has thus been held a transmissible privilege. Lewis v. City of 
 Clarendon (U. S. C. C. Ark.) 6 Reporter, 609 ; State v. Greene Co. 64 Mo. 540 ; 
 County of Scotland v. Thomas, 94 U. S. 682 ; County of Henry v. Nicolay, 95 U. S. 
 619; Nugent u. Supervisors, 19 Wall. 241; s. o. 3 Biss. 105. But, in Harshman v. 
 Bates Co. 92 U. S. 569, it was held that where a county could make no subscription or 
 issue of bond?, unless by vote of two-thirds of the voters, and after such vote consol- 
 idation was made, bonds issued to the new company, without a new vote, were void. 
 But rights such as a franchise, or special privilege, will not in all cases be possessed 
 by the consolidated body as by one of the original bodies. This would, in some cases, 
 be extending the privilege, not merely transferring. Thus it has been decided, that 
 in case of the consolidation of three companies, two of which were exempted from 
 taxation, while the third was not, the exemption would still apply to the property 
 originally belonging to the former, but would not be extended to cover that of the 
 
638 CONSOLIDATION. 
 
 latter. Phil., Wilm. & Bait. K. R. Co. v. Maryland, 10 How. 376. See, on the subject 
 of taxation in this connection, Tomlinson v. Branch, 16 Wall. 460; City of Charles- 
 ton V. Branch, Id. 470 ; Branch v. City of Charleston, 92 XT. S. 611 ; Central R. R. 
 &c. Co. V. Georgia, 92 U. S. 665 ; Southwestern R. R. Co. v. Georgia, 92 U. S. 676 ; 
 R. R. Co. V. Maine, 96 U. S. 499 ; s. c. 66 Me. 488 ; R. R. Co. v. Georgia, 98 U. S. 
 359: Chesapeake, &c. R. R. Co. v. Virginia, 94 U. S. 718. Similarly, where two 
 booms were owned by separate companies, and each was bound to deliver the logs at 
 its own boom, in which they were caught, they were held bound still to do-so after 
 they had been consolidated, the Court saying: "We are to interpret the two statutes 
 authorizing the two booms separately, though both booms now belong to one com- 
 pany." Gould V. Langdon, 43 Penn. St. 365. In case of consolidation, the new com- 
 pany may lawfully use a patented axle-box which bolh of the old corporations had been 
 licensed to use. Lightner v. Boston & Albany R. R. Co., 1 Lowell's Dec. 338 ; see, 
 also, Farnum ». Blackstone Canal Co. 1 Sumner, 46; Shaw u. Norfolk Co. R. Co. 16 
 Gray, 407 ; Bishop v. Brainerd, 28 Conn. 289 ; Mead v. N. Y. Housatonic, (fee. R. R. 
 Co. 45 Conn. 199 ; Fisher v. New York Central & Hud. R. R. R. Co. 46 N. Y. 644 ; 
 Matter of Rome, &c. R. R. Co. v. Ontario, Ac. R. R. Co. 16 Hun, 445 ; New Jersey Mid- 
 land Ry. Co. ». Strait, 35 N. J. L. 322 ; Commonwealth v. Atlantic & G. Western R. R. 
 Co. 53 Penn. St. 9 ; Hubbard v. Chappel, 14 Ind. 601 ; Robertson v. Rockford, 21 III. 
 451. All precedent formalities must be completed to enable the consolidated com- 
 pany to take the rights of the former companies. Mansfield, <fec. R. R. Co. v. Dunker, 
 30 Mich. 124; Peninsular R. R. Co. v. Tharp, 28 Mich. 506; Tuttle v. Mich. Air-Line 
 R. R. Co. 35 Mich. 247. 
 
 IV. As to the creditors of the original corporation. — The obligatinhs of the origi- 
 nal companies also become binding on the new one, either by express assumption 
 (Prouty V. Lake Shore & M. S. R. R. Co. 52 N. Y. 363), or by reason of the property 
 and effects of the old company being considered as a trust fund in the hands of the 
 consolidated company for the payment of creditors, and being followed by courts of 
 equity and charged therewith. Eaton <fe Hamilton R. R. Co. v. Hunt, 20 Ind. 463 ; 
 Powell V. North Missouri R. R. Co. 42 Mo. 63. The rights of creditors cannot pre- 
 vent consolidation ; but they can be protected and enforced, notwithstanding the 
 consolidation. Provisions as to the debts of the old companies, and methods of en- 
 forcing them, are usually inserted in the special or general statutes authorizing con- 
 solidation (see statutes cited, post, p. 642), and generally it is provided by the law 
 under which the companies are consolidated, that separate existence shall continue 
 as to all outstanding obligations to third parties, including those arising out of torts 
 (see Selma, Rome & D. R. R. Co. v, Harbin, 40 Ga. 706) ; and actions begun before 
 the consolidation against one of the companies are not abated by the consolidation. 
 Baltimore & Susq. R. R. Co. v. Musselman, 2 Grant's Cases,»348; Prouty ». Lake 
 Shore & M. S. R. R. Co. supra; see, also, Philadelphia, Wil. & B, R. R. Co. v. How- 
 ard, 13 How. 307; Pennsylvania College Cases, 13 Wall. 190; Houston v. Jefferson 
 College, 63 Penn. St. 428; The Key City, 14 Wall. 663; Shaw v. Norfolk Co. R. F. 
 Co. 16 Gray, 407 ; Matter of Rome, (fee. R. R. Co. v. Ontario, <feo. R. R. Co. 16 Hun, 
 445 ; Taylor v. Atlantic, Ac. R. R. Co. 57 How. Pr. 26 ; Taggart v. Northern Central 
 R. R. Co. 29 Md. 557 ; Warren v. Mobile, <fro. R. R. Co. 49 Ala. 582 ; Ketcham t'. 
 Madison, Ind. <fe P. R. R. Co. 20 Ind. 260; Indianapolis, Cin. & L. R. R. Co. v. Jones, 
 29 Ind. 465; Columbus R. R. Co. v. Powell, 40 Ind. 37; Bruffett v. Great West- 
 ern R. R Co. 26 111. 353 ; Racine <!i Mississippi R. R. Co. );. Farmers' Loan & Trust 
 Co. 49 III. 331 ; Mitchell v. Deeds, Id. 416; Peoria, Ac. R. R. Co. v. Coal Valley Co. 
 
CONSOLIDATION. 63& 
 
 68 111. 489; "Western Union R. R. Co. v. Smith, 16 111. 496; Chicago, &c. R. R. Co. 
 
 ■V. Moffitt, 76 111. 524; Thompson v. Abbott, 61 Mo. 176; Zimmer v. State, 30 Ark. 
 
 677 ; Miller v. Lancaster, 5 Cold. 614; Carey v. Cincinnati <fe Chicago R. R. Co. 5 
 
 Iowa, 357 ; Selma, <fec. R. Co. v. Harbin, 40 Ga. 706 ; Montgomery, <fec. R. R. Oo. v. 
 
 Boring, 51 Ga. 682; Shackleford v. Miss. Cent. R. R. Co. 52 Miss. 159; East Tenn. 
 
 &c. R. R. Co. V. Evans, 6 Heist. 607. An action on a promissory note may be brought 
 
 against the company under the name assumed on consolidation. Columbus, <fec. R. 
 
 R. Co. V. Skidmore, 69 111. 566. 
 
 V. Questions, somewhat complex in their character and difficult of decision, have 
 
 arisen upon the consolidation of corporations created by several States, and upon 
 acts permitting the corporations of one State to become quasi corporations of another 
 State — ^principally as to the domicile of the corporations and the jurisdiction of the 
 Federal courts over them. The case of Ohio & Miss. R. R. Co. v. Wheeler 1 Black, 
 286, arose on demurrer to a plea to the jurisdiction of the Circuit Court of the United 
 States for the district of Indiana. The declaration described the plaintiff as a, cor- 
 poration created by the laws of the States of Ohio and Indiana, having its prin- 
 cipal place of business in the State of Ohio, and being a citizen of that State. 
 The plea set up that the defendant was a citizen of Indiana, and that the 
 plaintiff was created a corporation by the laws of that State. Taney, C. J., 
 says : " It is true that a corporation, by the name and style of the plaintiff, 
 appears to have been chartered by the States of Indiana and Ohio, clothed with 
 the same capacities and powers, and intended to accomplish the same objects, 
 and it is spoken of in the laws of the States as one corporate body, exercising the 
 same powers and fiUfilling the same duties in both States. Yet it has no legal exist- 
 ence in either State, except by the law of the State ; and neither State could confer 
 on it a corporate existence in the other, nor add to or diminish the powers to be there 
 exercised. It may, indeed, be composed of and represent, under the corporate name, 
 the same natural persons. But the legal entity or person, which exists by force of 
 law, can have no existence beyond the limits of the State or sovereignty which brings 
 it into life or endues it with its faculties and powers. The 0. & M. R. R. Company 
 is, therefore, a distinct and separate corporate body in Indiana from the corporate 
 body of the same name in Ohio, and cannot be joined as one and the same plaintiff, 
 nor maintain a suit in that character against a citizen of Ohio or Indiana in a Circuit 
 Court of the United States." But in Railroad Company v. Harris, 12 Wall. 65, the 
 court expressly rules, that anything in 1 Black, 286, in conflict with the opinion in 12 
 Wall. 65, is intended to be restrained and qualified by the latter case, which holds 
 that there is "no reason why several States cannot, by competent legislation, unite 
 in creating the same corporation, or in combining several pre-existing corporations 
 into a single one. *i * * The jurisdictional effect of the existence of such a cor- 
 poration, as regards the Federal courts, is the same as that of a copartnership of in- 
 dividual citizens residing in different States." In Railroad Company v. Whitton, 1 3 
 Wall. 270, however, the court considered that there was no conflict between the case 
 in 1 Black, 286, and that in 12 Wall. 66, and supported the jurisdiction of the Federal 
 courts of the district of Wisconsin, in an action brought by a citizen of Illinois 
 against a railroad corporation, which was created by, and existed under, the laws of 
 Illinois, Wisconsin and Michigan. See also Marshall v. Bait. & 0. R. R. Oo. 16 How. 
 314 ; City of Wheeling v. Mayor of Baltimore, 1 Hughes, 90. In Bishop v. Brainerd, 
 28 Conn. 289, 299, the Court say : " It appears that by the terms of the charters of 
 the Rhode Island and Connecticut corporations, a new consolidated corporation has 
 
640 CONSOLIDATION. 
 
 been created, provided it was competent for those two States, by such united action, 
 to create, under their joint authority, such a corporation. It is not questioned by 
 the plaintiff, and indeed could not be in view of the authorities, that a State may 
 create a corporation which shall be composed of two or more corporations created by 
 the same State, as well as of two or more natural persons, or that a State may create 
 a corporation composed of natural persons belonging to different States. And there 
 is substantially no more objection to a State creating a corporation to be composed of 
 corporations chartered by different States, than of natural persons belonging to those 
 States. Nor do we see any objection, technical or otherwise, to the parting, by two 
 or more States unitedly, in the exercise of their sovereign authority, with such of 
 their respective powers as shall be necessary, in order to confer upon persons, natural 
 or artificial, the franchise or privilege of being a corporation, and with such powers 
 and privileges as they shall deem it proper to grant to them. And this power has 
 been not unfrequently exercised by States without objection or question. These 
 views do not conflict with the case of Farnum v. Blackstone Canal Co. 1 Sumn. 46, in 
 which the court held only, as a matter of construction, that in that particular case it 
 was not the intention of the Legislatures of Massachusetts and Rhode Island to con- 
 solidate or amalgamate the two corporations there in question, or to do more than to 
 empower them to unite for the promotion of their common interests. No question 
 was there made as to the competency of those Legislatures to consolidate those cor- 
 porations into one, or even to extinguish their original individual existence.'' The 
 Richmond and Miami Kailroad Company, created under the laws of Indiana, and 
 owning a railroad running from Richmond, Indian^, to the State line of Ohio, and the 
 Eaton and Hamilton Railroad Company, created under the laws of Ohio, and owning 
 a railroad running from Eaton, Ohio, to the State line of Indiana, in the direction of 
 Richmond, were consolidated into one company, called the Eaton & Hamilton R. R. 
 Co. The law in neither State, in terms, surrendered to the other any jurisdiction 
 over tlie property of said companies. Prior to the consolidition, the Indiana com- 
 pany issued bonds. By the articles of consolidation, it was agreed that the com- 
 panies should become united as one, under the name of E. <fe H. R. R. Co. ; that the 
 corporate name, franchises, Ac, of the E. & H. R. R. Co. should be preserved and 
 remain intact, except so far as modified by the enlarged interest of the company and 
 a compliance with the laws of Indiana ; that all the property and franchises of the 
 Indiana company were thereby transferred to and merged in the Ohio company, and 
 the organization and name of the former should cease. Action was brought against 
 the consolidated company to enforce the payment of the bonds issued by the Indiana 
 company, by foreclosure of the mortgage on the Ind'ana road. Held, (1), that the 
 E, <fe H. R. R. Co. was the proper party defendant ; (2), that the Ohio company took 
 the Indiana road subject to the mortgage ; (3), that the courts ot Ohio had no juris- 
 diction to foreclose. Eaton & Hamilton R. R. Co. v. Hunt, -20 Ind. 457. In Racine 
 & Miss. R. R. Co. V. Farmers' Loan & Trust Co. 49 111. 331, which concerns a mort- 
 gage on the road in Illinois, belonging to a company consolidated with another of 
 the same name in Wisconsin, the Court say : " Our view of the effect of the consolida- 
 tion contract between the Rocbton company and tlie Wisconsin company, which we 
 hold to have been legally made, is briefly this : While it created a community of 
 stock and of interest between the two companies, it did not convert them into one 
 company in the same way and to the same degree that might follow a consolidation 
 of two companies within the same State. Neither Illinois nor Wisconsin, in author- 
 izing the consolidation, can have intended to abandon all jurisdiction over its own 
 
CONSOLIDATION. 641 
 
 corporation created by itself. Indeed, neither State could take jurisdiction over the 
 property or proceedings of the corporation beyond its own limits. * * * In dis- 
 missing this question of consolidation, it may be remarked that where continuous 
 lines of road, passing through different States, are consolidated by legislative author- 
 ity, as we believe is not nnfrequently the case, although the consolidated company 
 must, from the very nature of a corporation, be regarded as a distinct entity in each 
 State, yet the objects of consolidation would be very liable to be defeated, unless the 
 entire line should be placed under one board of directors. The principle that a sin- 
 gle corporation cannot be created by the joint legislation of two States, while an irre- 
 sistible inference from the established law in regard to corporate bodies, is neverthe- 
 less a technical and abstract principle, and when adjoining States authorize consoli- 
 dations, as in the present instance, and the consolidated lines are placed under a 
 common board, with a common name and seal, such board will naturally act as if the 
 consolidated lines made but one company; and when their contracts assume that 
 form, the courts must, for the protection of the public, and to enforce good faith, 
 hold, as we have done ia this case, that the contract is to be construed as made by 
 the corporation of each State, in which the subject-matter of the corporation lies, wi 
 res magin valeat quam. pereat." In Delaware R. R. Tax Case, 18 Wall. 206, it is held, 
 that where two companies are consolidated under the laws of different States, the 
 new company stands in the same relation to each State as the original company in 
 that State, a. o. 2 Abb. U. S. 823. In Muller v. Dows, 94 U. 8. 444, it is held that 
 a corporation made by the consolidation of one corporation of Iowa and one of an- 
 other State, is in Iowa a citizen of that State only. The Supreme Court of Illinois, in 
 the case of Quincy Bridge Co. v. Adams Co. 88 111. 615, uses the following language: 
 " The States of Illinois and Missouri have no power to unite in passing any legislative 
 act. It is impossible, in the very nature of their organization, that they can do so. 
 They cannot fuse themselves into a single sovereignty, and as such create a body 
 politic which shall be a corporation of the two States, without being a corporation 
 of either State. As argued by appellee, the only possible status of a company acting 
 under charters from two States, is, that it is an association incorporated in and by 
 each of the States, and when acting as a corporation in either of the States, it acts 
 under the authority of the charter of the State in which it is then acting, and that 
 only, the legislation of the other State having no operation beyond its territorial 
 limits." But see Bridge Co. v. Mayer, 31 Ohio St. 317. " A corporation may have a 
 "twofold organization, and be, so far as its relation to one State is concerned, both 
 foreign and domestic. It may have a corporate entity in each State, yet in its gen- 
 eral character be of a bifold organization." Per Bedle, J., McGregor v. Erie Ry. 
 Co. 38 N. J. L. 115 ; see, also, upon this subject, Wilmer v. Atlanta R. R. Co. 2 Woods, 
 409; Peik v. Chicago, &c. R. R. Co. 94 U. S. 164; Railroad Co. v. Vance, 96 U. S. 
 450 ; Phillipsburgh Bank v. R. B. Co. 27 N. J. L. 206 ; State v. Del. &, W. R. R. Co. 
 30 N. J. L. 473 ; 8. o. 31 N. J. L. B31 ; State v. Metz, 32 N. J. L. 199 ; Richardson v. 
 Vermont <fc Mass. R. R. Co. 44 Vt. 613 ; Att'y-General v. Boston &. Maine R. R. Co. 
 109 Mass. 99; Sprague v. Hartford, Prov. <fc F. R. R. Co. 5 R. I. 233 ; Mead v. N. Y 
 Housatonic, <fec. R. R. Co. 45 Conn. 199 ; Dennistoun v. New York & New Haven R. R. 
 Co. 1 Hilt. 62 ; Matter of Sage v. L. S. & M. S. R. R. Co. 70 N. Y. 220 ; Taylor v. A. 
 & G. W. B. R. Co. 57 How. Pr. 9 ; Matter of U. S. Rolling Stock Co. Ibid. 16 ; Alle- 
 gheny County 0. Cleveland & Pittsburgh R. R. Co. 51 Penn. St. 228; Cleveland <fe 
 Pittsburgh R. R. Co. v. Speer, 56 Penn. St. 325 ; Commonwealth v. Pittsburgh & 
 Connellsville R. R. Co. 58 Penn. St. 26 ; Binney's Case, 2 Bland, 99 ; Canal Co. v. R. 
 41 
 
f)i2 CONSOLIDATION. 
 
 "R. Co. 4 Gill & J. 1 ; State v. Northern Central Ry. Co. 18 Md. 193 ; Bait. & Ohio R. 
 R. Co. V. Glenn, 28 Md. 287; Bait. & Ohio R. R. Co. v. Gallahue, 12 Gratt. 668; Go- 
 shorn V. Supervisors, 1 West Va. 308 ; Bait. & Ohio R. R. Co. v. Supervisors, 3 West 
 Va. 319 ; Farmers Bank v. Gettinger, 4 West Va. 305 ; City of Covington a. Coving- 
 ton & Cinn. Bridge Co. 10 Bush, 69 ; Aspinwall v. Ohio & Miss. R. R. Co. 20 Ind. 
 492, 498 ; Union Branch R. R. Co. v. East Tennessee R. R. Co. 14 Ga. 327 ; Att'y- 
 General v. Railroad Companies, 35 Wis. 426; Northwestern R. R. Co. v. Chicago 
 and Pacific R. R. Co. 1 Chic. Leg. News. 51. 
 
 VI. One of tlie chief reasons which led to the formation of the Federal Constitu- 
 tion was, the necessity of the freedom of interstate commerce, and of the removal of 
 all ohstructions to, and burdens upon, traffic (see Federalist, No. 22). American policy 
 has tended towards the prcper obliteration of State lines, so as to permit the trans- 
 portation of property without breaking bulk, and of passengers without the delay 
 incident to the change of vehicles. Consolidation of railway interests, whether by 
 actual amalgamation of corporate existence- or by leases of the lines of one company 
 ■to another, has thus come to be the rule rather than the exception, and the Legisla- 
 tures of the several States, sometimes by special authority to individual corporations, 
 but more frequently by general laws, have granted the requisite power to consolidate 
 connecting lines of railway. See, fur example, Webb's Railroad Laws of Maine, 
 p. 8"? etpamm; 1 N. Y. Stat, at Large (Edmond's ed.), p. 629 ; 2 Rev. St. (Banks, 6 ed.) 
 556-9 ; Railroad Laws of N. Y. pp. 39,' 63, 15, 80, 120, 126, 128 ; Laws of N. J. (1 87S), 
 chap. 413, § 17, p. 98; Revision of N. J. (1877), p. 930; Brightly's Purdon's Dig. 
 (Penn.) 1222-6; Pm-dcn's Ann. Dig. (1873-6), p. 1991 ; Battle's Revis. N. 0. p. 749 ; 
 Rev. Stat. S. C. p. 368; Session Laws, Ala. 1869-70, p. 318; Code of Ala. (1876), 
 p. 542 ; Eev. Stat. Ark. (1874), p. 866 ; Rev. Stat. Ky. (Stanton), vol. 2, p. 648 ; Stat, 
 of Tenn. 1140, a; Rev. Stat. Ohio (Curwen), pp. 1882, 2791; Gayler's Statutes, 
 pp. 409, 1872 ; Wilcox R. R. Laws of Ohio, p. 134 ; Rev. Stat. Ind. (1876), pp. 717-21, 
 730; Rev. Stat. 111. (1877), pp. 72, 290, 293, 764; Gilbert's R. R. Law of 111. p. 229 ; 
 ■Compiled Laws of Mich. chap. 75, p. 812, § 41; Stat, of Minn.(1878), p. 381 ; Rev. 
 St. Wis. (1878), p. 535 ; Edgerton's R. R. Law of Minn. p. 19; Code of Iowa (1873), 
 p. 233, g 1275; Wagner's Missouri Stat. p. 314, g 56; Laws of 1869, p. 76; Mo. 
 Const, of 1875, Art. xii, § 17, 18; Gen Stat. Neb. p. 196, § 114; Compiled Laws of 
 Nev. (1873), vol 2, p. 301, § 3465 ; Laws of Kansas (I87(i), chap. 92, § 1, p. 195; Com- 
 piled Laws Kan. (1879), p. 787 ; Gen. Laws of California, 1850-64, p. 186 ; Codes and 
 Stat. Cal. (1876), par. 5473 ; Rev. Stat. Colorado, chap. 18, § 67, p. 137; Gen. Laws' 
 Col. (1877), pp. 184-9; Rev. Code Dakota (1877), pp. 304-6; Comp. Laws Utah, 
 pp. 217, 229. 
 
PART rv. 
 
 THE DOCTRINE OF ULTRA VIRES CONSIDERED WITH RESPECT 
 TO THE ACTIONS WHICH MAY BE INSTITUTED IN RELA- 
 TION TO CONTRACTS, TORTS, AND OTHER PROCEEDINGS 
 AND MATTERS WHICH ARE ULTRA VIRES. 
 
 CHAPTER I. 
 
 ACTIONS IN RESPECT OF PROCEEDINGS WHICH ARE ULTRA VIRES IN 
 THE STRICT SENSE. 
 
 Section I. — "When an Action may be Instituted. 
 
 An action may be instituted in respect of an ultra vires 
 matter, contract or tort, whether actually entered upon or merely 
 contemplated. 
 
 I. Consequently, any memher of a corporation may, T>y himself, 
 in his own sole right, sue to prevent or put a stop to pro- 
 ceedings of any hind which are ultra vires, (a) 
 
 This proposition, perhaps, more correctly belongs to the next 
 section, but there is one point which may be more conveniently 
 dealt with here, viz., whether or not every ultra vires (in strict 
 sense) proceeding is a wrong to each and every member, or only 
 to some class or group of members. This is the question which 
 has been repeatedly raised, and which, even now, does not, in 
 Some quarters, seem absolutely settled. It is the question of 
 pleading, whether or not one corporator, so suing, can be sole 
 plaintiff in his own person, and without joining other persons, or 
 suing " on behalf of himself and all other corporators." But 
 
 (a) Zabriskie v. Cleveland C. & C. R. R. Co. 23 How. 381 ; Memphis v. Dean, 8 
 Wall. 64 ; March v. Eastern R. R. Co. 40 N. H. B6B ; Belmont v. Erie Ry. Co. 52 Barb. 
 637 ; Bliss v. Anderson, 31 Ala. (N. S.) 613 ; and oases cited, ante, p. 77, note. 
 
64:4 ACTIONS. 
 
 there seems no ground for the doubt. " We are all familiar with 
 one large class of cases which are certainly the first exception to- 
 the rule. They are cases in which an individual corporator sues 
 the corporation to prevent the corporation either commencing or 
 continuing the doing of something which is beyond the powers of 
 the corporation. Such a bill, indeed, may be maintained by a 
 single corporator, not suing on behalf of himself and of others, 
 as was settled in the House of Lords in the case of Simpson v, 
 Westminster Palace Hotel Co." ^ 
 
 There are, however, some doubts as to the absolute universal 
 application of this principle. There are, possibly, exceptions in 
 the case of equitable shareholders, persons not themselves on the 
 list of members, but in whose stead other parties are registered, 
 who hold, and are admitted to hold, the shares standing in their 
 name in trust for others. The exact position of these cestuis 
 que trustent is by no means clear. In one case they were allowed 
 to sue,* but in a later case their right was greatly questioned.^ {a) 
 
 ' Pn- Jessel.M.R., in Russell «. Wake- * Greatwestern Ey. Co. «. Rushout 5 
 
 field W'works Co. L. R. 20 Eq. 474; see De G. & Sm. 290. 
 
 H. L. C. 712; see CasB v. Ottawa Agricul- ^ Mills v. Northern Ry. Co. of Buenos 
 tural Co. 22 Grant. (Up. Can. Ch. 1876), Ayres, L. R. 5 Ch. 621. 
 612. 
 
 (a) The general rule, in suits by and gainst strangers, as well as in suits between- 
 parties interested in a trust inter ae, is that all the trustees and all the cestuis que 
 tniM, as together constituting one interest, must be made parties ; but this rule is 
 subject to much qualification, and is subordinated to the other rule, that where there 
 are numerous parties having the same interests, one or more of such parties may sue 
 or be sued on behalf or for the benefit of all parties so interested. Lewin on Trusts 
 (6th ed.), 796; I Daniell's Ch. Pract. (4th Am. ed.) 220. Compare N. Y. Code of Civ. 
 Pro. § 449, with Supreme Court of Judicature act, 36 & 37 Viot. c. 66, Schedule, rule 10. 
 
 Where a mortgage is made to trustees to secure bonds held by many parties, the 
 individual bondholders cannot sue independently of the trustees, unless, after de- 
 mand and refusal of trustee to sue, or in case of vacancy in the office of trustee, or 
 violation of duty by trustee, or action by or position of trustee prejudicial or inimical 
 to the rights or interests of the cestuis que trust. See Coal Co. a. Blatchford, 11 
 Wall. 172, 177 ; Galveston v. Cowdrey, 11 Wall. 459 ; Rihn v. E. R. Co. 16 W^all. 450 ; 
 R. R. Co. V. Orr, 18 Wall. 471 ; Knapp v. Railroad Co. 20 Wall. 117 ; Alexander v. 
 Central R. R. Co. 3 Dill. 487 ; Stnrges v. Knapp, 31 Vt. 1, 55 ; Shaw v. Norfolk Co. 
 R. R. Co. 5 Gray, 162; Ashton v, Atlantic Bank, 3 Allen, 217; Western R. R. Co. v. 
 Nolan, 48 N. T. 613; N. J. FranWinite Co. «. Ames, 1 Beas 611 ; Van Doren v. Rob- 
 inson, 1 C. E. Green, 256 ; Williamson v. New Jersey Southern R. R. Co. 10 C. E. 
 Green, 1 ; Coe v. Columbus, &c. R. R. Co. 10 Ohio St. 410; Weetjen v. Vibbard, 5 
 Hun, 265 ; s. o. 4 Hun, 529 ; Campbell v. Railroad Co. 1 Woods, 368; Mason v. York 
 & Cumberland R. R. Co. 52 Me. 82 ; Richards v. Chesapeake & Ohio E. E. Co. 1 
 Hughes, 28 ; SMddy v. Atlantic, Ohio <fe Miss. R. E. Co. 8 Hughes, 360. 
 
 In a suit for foreclosure by bondholders on refusal of the trustr-es, other bond- 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 645 
 
 Section II. — Parties, {a) 
 
 Hereafter will be considered the circumstances under which 
 one person, member of a class, may institute legal proceedings to 
 
 liiolders, residents in other States, are not necessary defendants. Hotel Co. v. Wade, 
 «7 TJ. S. 13 ; and see Kerrison «. Stewart, 93 U. S. 186. 
 
 {a) " That a stockholder may bring a suit when a corporation refuses, is settled in 
 Dodge V. Woolsey, but such a suit can only be maintained on the ground that the 
 rights of the corporation are involved. These rights the individual shareholder is 
 .allowed to assert in behalf of himself and associates, because the directors of the 
 -corporation decline to take the proper steps to assert them. Manifestly the proceed- 
 ings for this purpose should be so conducted that any decree which shall be made on 
 the merits shall conclude the corporation. This can only be done by making the 
 corporation a party defendant. The relief asked is on behalf of the corporation, not 
 ithe individual shareholder, and if it be granted, the complainant derives only an 
 incidental benefit from it. It would be wrong, in case the shareholder were unsuc- 
 cessful, to allow the corporation to renew the litigation in another suit, involving 
 precisely the same subject-matter. To avoid such a result, a court of equity will not 
 take cognizance of a bill brought to settle a question in which the corporation is the 
 essential party in interest, unless it is made a party to the litigation." Davenport v. 
 Dows, 18 Wall. 626 ; Hersey v. Veazie, 24 Me. 9 ; Smith v. Hurd, 12 Mete. 871 ; Allen 
 ■V. Curtis, 26 Conn. 466 ; Robinson v. Smith, 3 Paige, 222 ; Cunningham v. Pell, 5 Paige, 
 613 ; Western R. R. Co. v. Nolan, 48 N. Y. 513 ; Greaves v. Gouge, 69 N. Y. 164 ; s. 
 <i. 16 Abb. Pr. (N. S.) Zll ; Charleston Ins. Co. v. Sebring, 6 Rich. Eq. 342 ; Mem- 
 phis, cfec. Co. V. Williamson, 9 Heisk. 314. 
 
 In Memphis City v. Dean, 8 Wall. 64, Nelson, J., commenting on Dodge v. Wool- 
 sey, 18 How. 331, says : " This refusal of the board of directors is essential in order to 
 give the stockholder any standing in cojirt, as the charter confers upon the directors 
 representing the body of stockholders, the general management of the business of the 
 company. There must be a clear default, therefore, on their part, involving a breach 
 •of duty." See, also, Davenport v. Dows, 18 Wall. 626 ; Samuels v. Express Co. 
 McCahoD, 214 ; s. 0. 1 Woolw. 400 ; Hersey v. Veazie, 24 Me. 9 ; Peabody v. Flint, 6 
 Allen, 52 ; Hodges v. N. E; Screw Co. 1 R. I. 3 12 ; Allen v. Curtis, 26 Conn. 456 ; Wilkie 
 A). Rochester, Ac. Ky. Co. 12 Hun, 242; Robinson v. Smith, 3 Paige, 222; House v. 
 •Cooper, 30 Barb. 157 ; Rochester v. Barnes, 26 Barb. 657 ; Bayless v. Orne, 1 Freem. 
 Ch. 161 ; Gardiner v. Pollard, 10 Bosw. 677. An action to recover money be- 
 longing to a corporation cannot be maintained by a stockholder thereof, unless 
 the complaint shows that the corporation had been applied to, and had refused to 
 bring the action. Wilkie v. Rochester, Ac. Ry. Co. swpra. A stockholder cannot 
 ' maintain a bill for the protection of corporate property, without alleging a refusal of 
 the corporation to act in its corporate name. Ware v. Bazemore, 68 Ga. 316. That 
 a bondholder may, in like case, bring suit, see Newby v. Oregon Cent. R. R. Co., Deady, 
 609 ; s. c. 1 Saw. 63. It is held, however, that such refusal is not necessary when it 
 appears that application would have been useless, as when the guilty parties are the 
 directors who control the corporate action. Brewer v. Boston Theatre, 104 Mass. 378 ; 
 Mussina v. Goldthwaite, 34 Tex. 125; Morgan v. R. R. Co. 1 Woods, 15 ; Greaves v. 
 
646 ACTIONS. 
 
 prevent or redress an injury to that class. Reference may be 
 made to those observations and to the principles which will be 
 
 Gouge, 16 Abb. Pr. (N. S.) 3'?'?; 69 N. Y. 154 ; Black v. Huggins, 2 Tenn. Ch. 780 ; 
 Samnels v. Central, &c. Exp. Co. McCahon, 214. Where the board of directors are 
 themselves the -wrong-doers, or they refuse to prosecute to restrain or redreiss the 
 wrong, or where one board, claiming to he directors, are the wrong-doers, and the 
 other board, claiming and alleged to be the legal directors, refuse to prosecute, stock- 
 holders may file the bill. Pond v. "Vermont Valley K. R, Co. 12 Blatcbf. 280. If the 
 acts complained of are ziUra vires, the application to directors is unnecessary. In 
 Heath v. Erie Ey. Co. 8 Blatchf. 347,406, which contains a very full discussion of the- 
 principles and authorities bearing on this subject, it is said : " Now, so far as the bill 
 sets out acts ullra vires, in issuing stock, and breaches of trust, which are frauds on 
 the stockholders, such acts and breaches of trust are beyond the power of the corpo- 
 ration or, its directors to affirm, or sanction, or make good ; and, in such case, the 
 authorities agree, that the reason of the rule for an application to the corporation, or 
 its board of directors, to bring the suit, does not exist. Such reason is, that while 
 the stockholder is prosecuting his suit, the corporation, through its board of direct- 
 ors, may affirm and make good the acts complained of. But the rule ceases when the- 
 reason ceases. The bill is, therefore, clearly maintainable, in respect to the acts wUra 
 vires which it sets forth, and the prcTentive relief it seeks, founded thereon, without 
 reference to anything else contained in it." 
 
 In Samuel v. HoUaday, 1 Woolw. 400, Justice Miller holds, that this rule, allowing- 
 stockholders to bring suit, is entirely confined to preTcntiye remedies. Commenting 
 on the decision in Dodge v. Woolsey, he says : " But no case is cited " (in that case),, 
 "nor does any dictum, in the opinion of the court, go to the length of asserting,. 
 that when a corporation has been injured by a tort or a breach of contract, or has 
 any right of action, legal or equitable, against a party, a shareholder can come into- 
 court and prosecute that cause of action, because the corporation fails or refuses to 
 do so. * * * In the case before us we have no attempt to transcend the powers 
 of the corporation, nor any breach of trust on the part of the directors, but simply a 
 neglect to bring a suit which one of the stockholders thinks should be brought. 
 » * * If a stockholder is aggrieved by the refusal of the board of directors to- 
 accept his views, his remedy is to unite with other stockholders and change those 
 directors. But if irreparable mischief to his interests may ensue in the mean time, 
 equity will administer preventive justice, until such time as the will of the body of 
 stockholders can be ascertained." See, also, Allen v. Curtis, 26 Conn. 456 ; Abbot v^ 
 Merriam, 8 Cush. 588 ; Smith «j. Hurd, 12 Mete. 371; McAleer d. McMurray, 58 
 Pcnn. St. 126 ; Harden v. Newton, 14 Blatchf. 376. 
 
 A court of equity has jurisdiction, at the instance of stockholders in a corpora- 
 tion, to restrain the corporation, and those who have control and management 
 thereof, from acts tending to the destruction of its franchises, from violation of the 
 charter, from misuse or misappropriation of the corporate powers or property, and 
 from other acts prejudicial to the stockholders, amounting to a breach of trust- 
 Such jurisdiction will be entertained, notwithstanding the case may involve, as an 
 incidental question, the inquiry which of two boards of directors is the legal one. 
 Pond D. Vermont Valley R. R. Co. 12 Blatchf. 280. 
 
 In Hazard v. Durant, II R. I. 195, which was a suit in equity, brought by a 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 647 
 
 there laid down. These will apply with qualifications to injuries 
 arising from transactions which are ultra vires in the primary 
 sense, as well as to those which are so in the secondary sense, or 
 which are wrongs caused by the unlawful acts of a majority. 
 
 The chief differences between the cases now in consideration 
 and these other two classes, arise from the fact that every proceed- 
 ing which is strictly ult/ra vires gives to any corporator a right to 
 sue, to prevent its being done when merely contemplated, or its 
 continuance or repetition when once done or commenced, even 
 though every other member were arrayed against him, that, con- 
 sequently, as seen in the last section, each individual member in 
 such ease may in his own behalf sue. 
 
 stockholder, to charge a former officer for fraudulently comrerting to his own use- 
 the funds of the corporation, while acting as its president and controlling its affairs. 
 The Court, after a review of the authorities, says : " It is said that the proper 
 party to bring such a suit is the corporation, and that a stockholder, if he can do so. 
 at all, cannot do it unless the corporation is under the control of the guilty party,, 
 which in the case at bar is not pretended, or unless the corporation or its directors, 
 being requested, refuse to bring the suit, and it is claimed that no such request and 
 refusal are alleged, or are sufficiently alleged in the bill." The clause of the bill is 
 recited. It simply averred that the complainant had hoped the corporation would 
 protect the interests of the stockholders and take proceedings against the former offi- 
 cer, and that he would account. It is also averred, that though requested, the defend- 
 ants had wholly neglected and refused to comply with these reasonable expectations 
 and requests of the complainant. The Court proceeds : " The request might have 
 been more explicitly alleged, but we do not think it can be fairly said that it is not 
 alleged at all. But it is claimed that, if it is alleged, it is not sufficiently alleged, in- 
 asmuch as it is not alleged to have been made to the stockholders at any corporate 
 meeting, nor to the directors in office at the commencement of the suit. The allega- 
 tion in the bill is simply an allegation of a request to the corporation, without par- 
 ticularizing how, or when, it was made. The allegation will be sustained by proof 
 of a request to the stockholdei'S in corporate meeting, or to the directors in office 
 when the suit began, or in any other mode, so that it be, in legal effect, a request to 
 the corporation. We have examined the cases cited for the petitioner, and do 
 not find that they show that any fuller allegation is required. In Brewer v. Boston 
 Theatre, 104 Mass. 378, 389, which is chiefly relied on, no request was alleged to 
 have been made, either to the corporation or to the directors, and it did not even 
 appear that the directors, in office when the suit was brought, knew of the facts on 
 which it was grounded. A demurrer filed by the corporation was sustained. But 
 even in that case the Court remark, that ' a formal application and refusal need not 
 be alleged, if enough appears to show that such an application would be un- 
 availing.' " 
 
648 ACTIONS. 
 
 Plavntiffs. 
 
 Assuming that the last proposition is correct, the onlj points 
 necessary to be adverted to are : first, the amount of interest 
 which will constitute membership ; secondly, that the corporation 
 must ; and thirdly, that the third parties, if any, concerned in the 
 ultra vires proceedings may, and probably must, be made par- 
 ties as defendants ; ' fourthly, that the proceedings may be insti- 
 tuted by the plaintiff, either on behalf of himself and all other. 
 ' members of the corporation, or, at his option, simply in his own 
 name and behalf ;^((») and fifthly, that when the acts in question 
 compromise, directly or indirectly, public interests, the public 
 must be represented, which matters are considered more fully in 
 Chapter V. 
 
 I. Any person actually a corporator, or so related to a corpo- 
 ration, that he can he compelled to become a full member or 
 is liable for its debts, may sue. 
 
 In the case of corporations other than joint-stock companies, 
 any member may sue,'(5) but he must be a full and complete 
 member for all purposes ; and not simply a person having an in- 
 choative right of membership.* Thus, ratepayers,' the members of 
 charitable corporations who have no pecuniary interest in the 
 
 ' Salomons v. Laing, 12 Beav. 37'7 ; '^ See, for example, Ward v. Soc. of 
 
 Hodgson w. Fowls, 1 De 6., M. AG. 6; Attornies, 1 Coll. 370; Adl^ v. Whit 
 
 21 L. J. (Ch.) 17; Hare w. London nnd stable Co. 19 Ves. ?04; Rendall ». Crys- 
 
 North Western Ry. Co. 1 J. <fe H. 252. tal Palace Go. 4 K. & J. 326 ; and the 
 
 See cases in next note. cases cited passim. 
 
 ' See ante, pp. 643-'? ; and compare '^ Compare Wiston v. Dean and Chap- 
 
 Hoole V. Great Western Ey. Co. L. R. 3 ter of Rochester, 1 Hare, 532. See Spaok- 
 
 Ch. 262, 272 ; Menier v. Hooper's Tele- man v. Lattimore, 3 Gifif. 16. 
 graph Works, L. B. 9 Ch. 350; and Bird = Bromley v. Smith, 1 Sim. 8; Evans 
 
 V. Bird's Patent, <fec. Sewage Co. L. R. 9 v. Corp. of Avon, 29 Beav. 144. 
 Ch. 358. 
 
 (a) Qucere. See Samuel v. Holladay, 1 Wool. 400 ; Allen v. Curtis, 26 Conn. 466 ; 
 McAleerti. Murray, 58 Penn. St. 126. 
 
 (6) Courts of equity in England and the United States entertain bills in equity by 
 a shareholder against the directors, to compel the company to refund any of the 
 profits improperly applied. And the powers of a court of equity may be put in mo- 
 tion at the instance of a sinffh shareholder, if he can show that the corporation was 
 applying its powers for purposes not within the scope of the institution. Dodge *, 
 Woolsey, 18 How. 381 ; Samuel v. Holladay, 1 Wool. 400. 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 649 
 
 assets/ and the like, are entitled to sue on behalf of themselves 
 and their co-corporators, (a) 
 
 As regards joint-stock companies, any complete shareholder 
 or stockholder may be by himself sole plaintiff, but lie must 
 actually be a member of the company, and therefore a person who 
 has sold his shares, even though he may still remain under liabili- 
 ties, canaot institute proceedings.' So, many other persons having 
 analogous interests : a shareholder who has not complied with all 
 the requisite formalities ; ^ (&) a person who has definitely applied 
 for shares, and his application accepted, though the shares have 
 not yet been issued ;* a company which is the owner of shares in 
 another company ;' ortheequitableowner of shares ;*(c) or a scrip 
 holder ; ' or a creditor, such as a policy holder,^ (d) whose contract 
 gives him an actual interest in the corporation's affairs. 
 
 ' Armstrong v. Church Soc. of To- ' Great 'Westem Ey. Co. v. Rushout, 
 
 Tonto, 13 Grant. (Upper Can. Ch. 1867), 5 De G. & Sm. 290. But in Mills v. 
 
 552 ; here the Attorney-General was a Northern Ry. Co. of Buenos Ayres, L. R. 
 
 defendant. 6 Ch. 621, a doubt was raised as to the 
 
 ^ See Doyle v. Muntz, 6 Hare, 509 ; right of an equitable non-registered share- 
 
 Scarth v. Chadwick, 14 .Jur. 300. holder to sue. See ante, p. 644. 
 
 ' Spaekman v. Lattimore, 3 Giff. 16; ' Bagshaw v. Eastern Union Ify. Co. 
 
 but see n. 4, p. 648. 2 Mac, & G. 389. 
 
 * See Lake Superior Nav. Co. v. Mor- * Kearns v. Leaf, 1 H. <fe M. 681; Al- 
 
 rison, 22 Upp. Can. C. P. (1872), 217. debert v. Leaf, 12 W. R. 462 ; 3 N. R. 455. 
 
 ' Great Western Ry. Co. v. Oxford, Compare Evans v. Coventry, 5 De G., M. 
 
 Ac. Ry. Co. 3 De G., M. & G. 341 ; Bank & G. 9U ; and ante, p. 619 et seq. 
 of Switzerland v. Bank of Turkey, 5 L. 
 T. (N. S.) 549. Compare nexl note. 
 
 (a) See Walker v. Devereanx, 4 Paige, 229. 
 
 (6) Spaekman v. Lattimore can hardly be said to be a case where the plaintiff had 
 not complied with requisite formalities in order to become a shareholder. S. was 
 a shareholder in the N. & E. Company. By act of parliament, all persons and 
 corporations, who were shareholders in the N. & E. Company, were re-incorporated by 
 the name of the N. & A. Company ; and it provided that all persons holding shares 
 in the old company, on which £9 had been paid, should be deemed instead thereof to 
 hold a share of £10 in the new company, subject to a call of £1, and should be enti- 
 tled to receive a certificate in the new company, upon presenting, within one month 
 from the passage of the act, his certificate in the old company. S. had never pre- 
 sented his old certificate. The court held that he was a shareholder in the N. & A. 
 Company. The principle is the same with that of the American cases, which hold 
 that the certificate is only evidence of the fact of membership, and its possession is 
 not necessary in order to constitute membership. 
 
 (c) In Groat Western Ry. Co. v. Rushout, the court simply held, that under the 
 circumstances of the case, the cestuis que trust of shares, the legal title of which was 
 iu trustees who were made defendants, could sue to prevent injury to the trust 
 estate. 
 
 {d) Kearns v. Leaf was compromised after argument, but before judgment. Aide- 
 
650 ACTIONS. 
 
 But it has been said that a trustee cannot sue, since he is not 
 actually concerned in the company .*(») 
 
 Apparently, indeed, any one who would be liable upon a dis- 
 solution to contribute to the expenses thereof, or to the liquida- 
 tion of the corporation of the debts of the company, is entitled to 
 interfere and prevent ultra vires proceedings. Numerous individ- 
 uals tliere are who can repudiate their membership, but who, till 
 such repudiation, are to all intents and pui-poses members. These, 
 by acquiescence or by doing any acts as members, and amounting 
 to a recognition of their position as such, become fixed as members ; 
 and so also on a dissolution, if their names still remain upon the 
 
 ' Doyle V. Muntz, 5 Hare, 509. 
 
 bert V, Leaf was an application for injunction against any sale or transfer of assets to 
 another company. The injunction was refused. The only point involved was, 
 whether the relief asked for was not too broad. These cases turned upon the pecu- 
 liar language of deeds of settlement, which bore no resemblance to /any provisions in 
 charters or general acts, under which insurance companies are organized in the 
 United States. It la to be observed, also, that the courts expressly repudiate the 
 power of policy holders to Interfere with the management or internal affairs, as par- 
 alyzing the company to the prejudice of shareholders and policy holders alike. 
 "The policy holders have no right to meddle with anything, wise or unwise, which the 
 company may do in accordance with the deed ; for example, if the company invest in a 
 hazardous or even ruinous security, the policy holders are not entitled to interfere. It 
 would be extremely mischievous to allow such interference." There were some un- 
 guarded expressions of Turner, L. J,, and Page-Wood, V.-C, in Law v. Indisputable 
 Company, 1 K. <fe J. 223, and in Evans u. Coventry (cited in note supra), that liens 
 or charges werfe created by the language of the policies and deeds of settlement, 
 upon the funds of the corporations, to enforce which the chancery jurisdiction 
 was sought to be invoked, but the courts perceived that the result would be that the 
 business of companies could not possibly be carried on, and that every claim on a 
 policy might be made the foundation of a suit in equity, and therefore withdrew their 
 assent to the broad propositions founded on such expressions, and limited the inter- 
 ference in such cases to restraining waste or breach of trust. See, also, In re State 
 Fire Ins. Co. 2 New Kep. 665; 34 L. J. Ch. 436; 1 H. & M. 457; 1 De G., J. & S. 
 634; In re International Life Ass. Soc. L. R. 5 Ch. 424; Lindley on Partn. (Sd ed.) 
 393. 
 
 (a) The statement in the text from Doyle v. Muntz, is a mere dictum not neces- 
 sary to the decision of the case. The suit was not brought by the plaintiff in the 
 character of trustee. The bill was filed by the plaintiffs on their own behalf and on 
 behalf of all other shareholders; and the court threw out the suggestion that in such 
 case (the other) shareholders must be represanted by parties having the same interest 
 as themselves, adding that the rule allowing one of a numerous class to sue for the 
 benefit of all, " would not permit a mere trustee, who has no beneficial interest, to 
 represent the absent shareholders, and thereby, in fact, enable him to represent his 
 own cestui que trust who is not before the court." 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 651 
 
 corporate roll, thej' are placed on the list of contributors. Amongst 
 such will be included : (a) persons induced by fraud to become 
 members ; ^ (b) the holders of shares or stock improperly issued ; ' 
 
 (c) the owners of shares nominally paid up, but which have not 
 been paid up in a manner satisfying the requirements of the law ; * 
 
 (d) transferrers, whose transfers have been made under circum- 
 stances which enable the company, or the liquidators, to set aside 
 and cancel such transfers ; * (e) semble persons liable to be placed 
 upon " B " or other supplemental lists of contributories, and all 
 persons whose responsibility for the corporate transactions does 
 not cease ipso facixt with their loss of membership, but only after 
 the lapse of a period of longer or shorter duration ; (f ) persons 
 who have entered into a contract to take shares, but which have 
 not yet been allotted. 
 
 No authorities can be quoted ' where a person coming within 
 the classes (d) or (e) has sued to prevent ultra vires proceedings, but 
 as such proceedings tend directly to add to bis liability, and as in 
 neither case, and more especially in the former, has the person 
 ceased absolutely to be a member, it is submitted that he is enti- 
 tled like ordinary members to the protection of the courts. 
 
 It might also seem upon the same principles of responsibility, 
 that persons coming within the class (f ) — they being liable upon a 
 winding-up to be made contributories — might sue to restrain ille- 
 gal proceedings. Such persons, however, are not members, and it 
 is their own fault if they do not take the proper and necessary 
 steps to have their agreement effectuated or annulled, (a) 
 
 It has been decided that a simple contract creditor cannot 
 institute such a suit.' The same reasoning would apply to all 
 
 " See Oakes v. Turquand, L. R. 2 H. L. * See, especially, Williams' Case, L. R. 
 
 326, and similar decisions. 9 Eq. 225, n. 
 
 "^ See, for instance, Worth's Case, 4 ' But see Re Times Fire Ins. Co. 
 
 Drew. 629; 28 L. J. (Oh.) 689; Felling 30 Beav. 596, where on the petition of 
 
 and Rimington's Case, L. R. 2 Ch. 714; late members a company was ordered to 
 
 Sewell's Case, L. B. 3 Ch. 131 ; Teasr'ale's be wound-up. 
 
 Case, L. R. 9 Ch. 54. . " Mills v. Northern Rv. Co. of Buenos 
 
 ' See Forbes and Judd's Case, L. R. 5 Ayres, L. R. 6 Ch. 621. " 
 Ch. 270; FothergiU's Case, L. R. 8 Ch. 
 270 ; aide, pp. 142-60. 
 
 (o) In Busey v. Hooper, 35 Md. 15, it was decided, that persons who had subscribed 
 for stock ia a railway company, but had not paid their subscriptions, because the 
 board of directors were improperly constituted — though they were willing to do so 
 "whenever legally required" — could not sustain a bill for an injunction to restrain 
 the ie faclo directors from interfering in the concerns of the corporation. 
 
652 ACTIONS. 
 
 varieties of creditors, whemer possessing a lien on the company's 
 property or not, except to those who have, by virtue of the provis- 
 ions of their contract, the right thus to interfere.^ In such case 
 it seems clear on principle and authority, that the parties so enti- 
 tled can come to the courts to prevent ultra vires proceedings, 
 not merely because they are ult/ra vires, but because being so they 
 are also breaches of the contract between the company and them. 
 
 The smallness of the plaintiffs interest is no objection, (a) 
 and it would seem that where he is suing on behalf of himself and 
 all other shareholders, the ordinary rule as to suits for a subject 
 matter less than £10 does not apply.'' 
 
 II. Any interest 'will suffice^ hut the suit must really he that 
 of the nominal plaintiff. 
 
 The mere fact that the plaintiff is a member of another 
 company, or upon other grounds is opposed to the defendant's 
 company, wiU not debar him from taking proceedings. A cor- 
 poration may not engage in matters which are ultva vires, and 
 any hona fide member may for any reason whatever decline to 
 permit the corporation to do so. A person may even buy shares 
 with the open and avowed object of instituting proceedings to 
 restrain the company from committing unauthorized acts, and so 
 to compel them to buy off his litigation ; * but the plaintiff on the 
 record must be the person urging on the suit — he cannot be the 
 mere nominee and tool of others in the background ; ' and in one 
 case Malins, V.-C, directed a bill filed under such circumstances 
 to be taken off the file,* though this perhaps was scarcely war- 
 ranted by the facts or law. {b) 
 
 ' Ante, p. 649, n. 8. Co. 3 Macq. T99, and caaea cited in the 
 
 ' Seaton v. Grant, L. E. 2 Ch. 459 ; next note. 
 McDonell v. Grand Canal Co. Ir. K. 3 Ch. * Foirest v. Manchester, &e. Ey. Co. 
 
 578; Charlton ». Newcastle, Ac. Ey. Co. 4 De G., F. <fe J. 126; Eogers ». Oxford, 
 
 e Jur. (N. S.) 1097 ; Armstrong v. Church <fec. Ey. Co. 2 De G. & J. 662 ; Filder «. 
 
 Soc. 13 Grant. (Upp. Can. Ch. 1867) 5B2. London, Brighton, &o. Ey. Co. 1 H. <t M. 
 
 » See last note. 489. Compare Thomas v. Hobler, 4 De 
 
 * Seaton v. Grant, L. E. 2 Ch. 459 ; G., F <fe J. 199. 
 Bloxam v. Metropolitan Ey. Co. L. E. 3 « Eohson v. Dodds, L. E. 8 Eq. 301 
 
 Cb. 337.' See Orr v. Glasgow, <fec. Ey. 
 
 [a) Kean v, Johnston, 1 Stock. 401. 
 
 (J) In Sparhawk v. Union Pass. Ey. Co. 54 Penn. St. 401, the court had refused 
 an injunction against the running of cars on Sunday at the suit of S., a stranger. 
 Thereupon one K: bought five shares of the stock of the defendant corporation, at the 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 653 
 
 Defendants. 
 
 III. The corporation itself must he a party. {a) 
 
 This would seem to be an absolute necessity from the mere 
 nature of the action itself. This is a proceeding, not against par- 
 
 BuggeBtion of 8., and attempted to obtain the injanction as a stockholder, on the 
 ground that his stock was endangered. Woodward, C. J., held, that though the acts 
 complained of were clearly illegal, and a stockholder might be admitted to sue for 
 an injunction, yet it ought not to be granted, for the reason that the suit was not a 
 bona fide stockholder's bill, but only a bill in aid of the private bill of S. He says : 
 " A chancellor will always look to the genuineness of the character in which a party 
 comes before him. A stockholder is bound to come with clean hands, with a sincere 
 complaint, free from all false pretenses, as much as every other party who comes into 
 a court of equity. Injunction is not of right but of grace, and to move an upright 
 chancellor to interpose this strongest arm of the law, he must have, not a sham case 
 but a well-grounded complaint, the bona fides of which is unquestioned, or capable of 
 vindication if questioned." See Sandford v. R. R. Co. 24 Penn. St. 378 ; First Parish 
 in Sutton v. Cole, 3 Pick. 232 ; Occum Co. tr. Sprague Co. 34 Conn. 529 ; Camblos v^ 
 Phil. & Reading R. R. Co. 4 Brews. 663 ; Belmont v. Erie Ry. Co. -52 Barb. 637. 
 Waterbury v. Mer. Un. Exp. Co. 50 Barb. 167, was brought to obtain a decree dis- 
 solving the company, and for the appointment of a receiver to wind-up its affaire- 
 The answer alleged that the plaintiff was not the real party in interest, but that the 
 suit was prosecuted at the instigation of, and in the interest of, rival companies. This 
 was not denied in the plaintiff's affidavit, and was, therefore, taken as true. " And 
 taking it to be true," says the court, "it is fatal to the suit. An illusory suit in the 
 name of a shareholder, but really prosecuted by and in the interest of a rival and 
 competing company, cannot be maintained for the purpose of dissolving or restrain- 
 ing another association or company, of which the nominal plaintiff may be a mem- 
 ber." In Ffooks V. Lond. & S. W. Ry. Co. 1 Sm. & G. 142 ; 17 Jur. 365, it is said: 
 " If it had been established that the real object of seeking this injunction had been to 
 serve the interests of a rival company, I should have considered that a circumstance 
 of great importance in determining the rights of the plaintiffs to any relief. No doubt 
 it has been held in several cases, that the, mere fact that the plaintiffs are shareholders 
 in a rival company is no reason for the court in a proper case refusing its aid to pre- 
 vent the violation of contracts. But when the fact is established that, under pretense 
 of serving the interests of one company, the shareholders in a rival company, by pur- 
 chasing shares for the purpose of litigation, can make this court the instrument of 
 defeating or injuring the company into which they so intrude themselves, in order to 
 raise questions and disputes on matters as to which all the other members of the com- 
 
 (a) See Davenport v. Dows, 18 Wall. 626 ; Heath v. Erie Ry. Company, supra ; Hor- 
 sey V. Veazie, 24 Me. 9 ; Allen v. Curtis, 26 Conn. 456 ; Cunningham v. Pell, 6 Paige, 
 607; Gray v. N. Y. <fe Va. S. S. Co. 6 N. Y. Sup. Ct. (T. <fe C.) 224; Greaves v. Gouge, 
 49 How. Pr. 79 ; s. o. 69 N. Y. 164 ; Gardiner v. Pollard, 10 Bosw. 674 ; Tyson v. Vir- 
 ginia R. R. Co. 1 Hughes, 80. See, also, note to p. 646. 
 
€54 ACTIONS. 
 
 ticular members or officials on accouut of their misdeeds, though 
 possibly they may also be joined, but against the corporation on 
 account of corporate transactions, and the relief sought mainly and 
 primarily affects the corporation itself. There are, however, two 
 decisions by Lord Eomilly, M. E., where the absence of the cor- 
 poration was excused. The former of these was Daugars v. 
 Eivaz,* {a) where the plaintiff complained that he had been wrong- 
 
 ' 28 Beay. 233. 
 
 pany may be agreed, I cannot consider that in such a case it is the province of this 
 court ordinarily to interfere." But in Ramsey v. Erie E. R. Co. 8 Abb. Pr. (N. S.) 1Y4, 
 the following language is used ; " It is argued by defendant's counsel, also, that this 
 suit is brought in bad faith ; that, inasmuch as the plaintiff made himself the holder 
 of stock and bonds of this company, for the very purpose of complaining that his 
 rights, as such, were invaded, and with full knowledge that the very acta of which he 
 complains had been done, when he made the purchase, he is to be regarded rather as 
 a mover and promoter of strife than a bona fide suitor ; and that he does not come into 
 court with clean hands, as the familiar rules of equity require, and should therefore 
 be dismissed. I do not see that the equity rule invoked has any application here. 
 That has reference to the relation of the parties in respect to the matter in contro- 
 Tersy. If there is any abuse of that relation by the plaintiff, he does not come with 
 clean hnnds to enforce an advantage thus obtained. Here the plaintiff has no 
 inequitable advantage, which he is seeking to enforce against the defendants. His 
 buying the stock and bonds was no wrong done to them, wilh whatever intent it was 
 done. The relative rights of the parties are the same as if the suit was brought by 
 plaintiff's vendor. The intent with which he purchased does not affect those rights 
 or raise any equities respecting them in favor of the defendants. In regard to them 
 his hands are clean, and the rule requires no more. His brining the suit, after hav- 
 ing become invested wilh tiie bonds and stock, as he did, is not bad faith^such as the 
 courts will relieve against. I do not find any cases where the courts have perpetu- 
 ally stayed proceedings as ag;cinst good faith, except where the suits are brought in 
 violation of some arrangement or understanding between the parties." 
 
 The same principles would seem to apply to illusory suits as to fictitious suits, to 
 bring which is a contempt of court. See Lord v. Veazie, 8 How. 251; Cleveland v. 
 Chamberlain, 1 Black, 419; Butterworth v. Stagg, 2 Johns. Cases, 291; Smith i. 
 Junction Ry. Co. 29 Ind. 646. 
 
 (a) This is an exceptional case, and cannot be considered as nfflitating against the 
 rule now well settled in America, that the corporation must be a party to the suit. 
 The plaintiff had been dismissed from his ofSce of pastor of the French Protestant 
 Church in London, by the defendants, who were the elders and deacons of the church, 
 having control of the funds of the institution, and who had practically the power of 
 withholding from the plaintiff the emoluments assigned to and accepted by him as 
 pastor. Tills constituted the relation of trustees and cestui que trust between the de- 
 fendants and the plaintiff. In 1650, " The Superintendent and Ministers of the Church 
 of the Germans and other foreigners, of the foundation of King Edward VI, in the city 
 of London," were created a corporation by letters patent. The German and French 
 Protestants soon separated, and built and occupied different edifices. The charter of 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 655 
 
 fully dismissed from his post, and filed his bill for restoration 
 thereto against the governing body only. Here the objection that 
 the corporation ought also to have been made a defendant was 
 overruled, for the reason that the corporation had not, for a long 
 series of years, been kept np by the appointment of the members 
 necessary to constitute it. In the latter case, Gregory v. Patch- 
 et,^ {a) the action was against the directors only in respect of pro- 
 ceedings ultra vires in the second sense, and amounting to a fraud 
 on the minority of shareholders,' and a similar objection was again 
 overruled. 
 
 IV. All parties directly concerned in the ultra vires transaotii/n 
 must he represented. 
 
 The third point is as to the parties, if any other than the cor- 
 poration, necessary as defendants to actions of this kind. Here, 
 possibly, if the objectionable transaction is not in the nature of a 
 contract, although it may perhaps affect non-members ; or even if 
 it be a contract or similar arrangement, but there are outsiders not 
 actually and immediately participating therein, though perhaps 
 really interested in it ; such non-members, in the former case, and 
 such distant outsiders, in the latter case, may not be necessary par- 
 ties. The corporator suing complains not that outsiders are, or may 
 be, concerned by what his corporation is proposing or about, but 
 that it, is doing something beyond its powers ; his complaint is 
 against the corporation directly, and he will generally be satisfied 
 by putting an end to its proceedings. 
 
 But where third parties are actually and immediately interested 
 
 ' S3 Bear. 595. ' See Chap. II, s. I, p. 660. 
 
 
 tribuion of its fiWis, and the corporation had not been kept up by the appoint- 
 ment of a superintendent, which office was, on a vacancy occurring, to be filled by 
 election and presentation to the king. It appeared, also, that the funds from which 
 the pastor of tlie French church was to be supported, had been bequeathed to the 
 separate use of such church. It was this original corporation of " The Superintend- 
 ent, &c.," which the Master of the Rolls decided was not a necessary party (the 
 minister, elders, and deacons of the French church, who were the trustees of the 
 fund, and the consistory of the church, being all parties to the suit), holding the ob- 
 jection, that the original corporation in its corporate capacity should be a party, at 
 once technical and insuperable. 
 
 (a) See Heath v. Erie Ry. Co. 8 Blatchf. 347, 401. 
 
656 ACTIONS. 
 
 in the arrangements, it seems established on principle, and is con- 
 sistent with natural justice, that they should be brought before, or 
 allowed to come before, the court in proceedings instituted to de- 
 stroy their present and apparent rights, and which proceedings 
 may be simply collusive. In Hare v. London and Northwestern 
 Rj. Co.,* where a company had entered into and acted upon an 
 agreement with several other companies, which was alleged to be 
 ultra vires, it was held that all the companies were necessary par- 
 ties to a bill by a shareholder of the first company, praying that the 
 agreement might be declared invalid, and that the company might 
 be restrained from further acting upon it. 
 
 In Brogdin v. Bank of Upper Canada,^ the debentures had 
 passed into the hands of a bank who were made defendants. 
 
 In Att.-Gen. v. Toronto Street Ky. Co.,^ where a railway com- 
 pany, under an agreement with a municipal corporation, was lay- 
 ing its rails in such a way as to be a nuisance, the latter corporation, 
 was a necessary party. 
 
 Whether, when the transactions are being carried on by the 
 governing body or other ofiicials, it is requisite that the actual 
 officials concerned should be made defendants, is somewhat doubt- 
 ful. Probably this is not so required as a general rule, or, indeed,, 
 in any case where no direct relief is required from or against such 
 officials.* But if such relief be sought, as where they are about to 
 do an improper act,^ or a fortiori where it is desired to hold them 
 responsible for the proceeds of, or damage by, ultra vires proceed- 
 ings,* it is better, and, indeed, in the latter case it is necessary, to 
 join them. (a) 
 
 The fourth point, as to the suit being either in the name of 
 the corporator solely in his own personal right as plaintiff, or " on 
 behalf of himself and his co-members," has been sufficiently 
 examined.' The fifth point, as to the public, belongs to Chap- 
 ter V. • 
 
 ' IJ. & H. 252 ; p. 667, n. B. per Cairns, L. J., in Ferguson v. Wilson, 
 
 5 18 Grant. (Upp. Can. Ch. 18611 644. L. R. 2 Oh. 90. 
 
 ' 14 Grant. (Dpp. Can. Ch. 1868), 673. « See Att.-Gen. v. Wilson Or <fe Ph. 
 
 "See Winch v. Birkenhead, Ac. Ky. 21; Belts v. DeVitre, 11 Jur (N S)9 
 
 Co. 6 De 6. & Sm. 562. 11 ; Hardy v. Metropolitan Land, <tc. Co." 
 
 ^ Fawcett v. Laurie, 1 Dr. <fe Sm. 192 ; L. R. 7 Ch. 427. 
 
 ' Ante, pp. 643-7. 
 
 {a) Heath v. Erie Ry. Co. 8 Blatchf. 347, 411, 412 ; People v. Sturtevant, 9 N. Y. 
 263 ; 8. c. 1 Duer, 451, and cases cited. 
 
PE0CEEDING3 ULTRA VIRES IN THE STRICT SENSE. 657 
 
 Section III. — Fkame of Suit. Eelief Sought. 
 
 As a general statement, it may be said the relief asked for will 
 be, first, the prevention of further, or the carrying out of contem- 
 plated ultra vires proceedings, and, secondly, the placing of matters, 
 as far as possible, in their original position ; but, of course, the 
 exact nature and form of relief will vary indefinitely with the cir- 
 cumstances. 
 
 Anticipated transactions will be restrained upon the same 
 grounds, and the same evidence, which will cause the courts to in- 
 terfere against other wrongful acts which are still va. fieri} Thus, 
 where, for the purpose of erecting a market-house, a municipal cor- 
 poration would require to levy a higher rate than that authorized, 
 it was restrained, at suit of a ratepayer, from erecting such build- 
 ing, or devoting any funds towards the same.^ . So a preferential 
 shareholder may file a bill to restrain his company from making a 
 dividend prejudicial to his rights, without waiting until there are 
 funds to make a dividend.' 
 
 It should also be remembered, in connection with this point, 
 that, in adjudicating upon any question, the courts will consider 
 only the actually existing powers of the corporation, and will not 
 take into account the possibility of its acquiring other and fuller 
 capacities.* This, however, will not invalidate transactions entered 
 into by corporations, in view of the acquisition of such additional 
 powers which will render these transactions, otherwise without, 
 within the corporate powers, if the transactions be expressly contin- 
 gent upon' the new powers ; or if these have been obtained, and the 
 objection of ultra vires is made only subsequent thereto, when the 
 company proposes to enforce or carry out such conditional transac- 
 tions.* Nor does it take from the courts their discretion, if, wUen 
 the question comes before them, the corporation is applying to the 
 
 ' See Haines v. Taylor, 2 Phil. 209 ; tan Ry. Co. 32 L. J. Ch. 382 ; see Hatters- 
 
 Hepbnrn v. Lordan, 2 H. & M. 845 ; Ker- ley v. Earl of Shelburne, 31 lb. 873. 
 not V. Potter, 3 De G., F. & 3. 447, 457 ; ' Winch v. Birkenhead, &c. Ry. Co. 5 
 
 Crompton v. Lea, L. E. 19 Eq. 115. De G. <fe Sm. 562 ; Maunsell v. Midland 
 
 » Wilkie V. Corp. of Clinton, 18 Grant. Great Western (Ireland) Ry. Co. 1 H. A M. 
 
 (Upp. Can. Ch. 1871), 557. ISO ; last note, and ante, p. 323 etseq. 
 
 ' Sturge V. Eastern ITnion Ry. Co. 7 ' See Galloway v. Mayor, &o. of Lon- 
 
 De G., M. <fc G. 158. don, L. R. 1 H. L. 37. 
 
 * Great Western Ry. Co. ». Metropoli- 
 
 42 
 
658 ACTIONS. 
 
 Legislature for the necessary additional powers to direct the 
 action to stand over to abide the result of such application, 
 which, of course, may be the grant of such powers, and perhaps 
 also the express ratification of the transaction in question, what- 
 ever the objection to it — informality, ultra vires, or even ille- 
 gality.* 
 
 I. Corporate property, funds, t&c., alienated upon the consid- 
 eration of ultra vires transactions may be recovered. 
 
 Suppose an ultra vires transaction more or less completed, and 
 corporate property or funds, as a consequence and upon the con- 
 summation thereof, alienated, can such property or funds be re- 
 covered always or sometimes, and if so, when and by whom ? The 
 answer is not quite clear, but it is submitted that the above 
 proposition is the correct view of the law. The person who has 
 obtained the property or funds, has obtained what the parties deal- 
 ing with him had no power, no authority, to alienate ; he has, ia 
 fact, obtained it wrongfully, though perhaps not tortiously — it be- 
 longs to the corporation, not to himself. Therefore, as in every 
 other case of a person obtaining, however lonafide, that which be- 
 longs to another, such person must make restoration in specie or in 
 value, it seems necessarily to follow that restoration must similarly 
 be made when the alienation was ultra vires. 
 
 Upon this point Jessel, M. E., thus observed, in Russell v. 
 Wakefield Wworks Co. : * " When you have got the second cor- 
 poration or person a party to the suit, it may happen that, iu ad- 
 dition to the relief that you are entitled to as regards the first, you 
 are entitled to have relief against the second for something that 
 has been done under the ultra vires agreement. You may be en- 
 titled to have money paid back, which has been paid under the 
 ultra vires agreement, as in the case of Salomons v. Lairig,^ and 
 you may be entitled to have property returned or other acts done. 
 If the detainer or holder of the money or property, that is, the 
 second corporation or other person, is already a party, and a neces- 
 sary party, to the suit, it would be indeed a lame and halting con- 
 clusion, if the court were to say it could not do justice in a suit so 
 
 ' As was done in Richmond W'works ' L. R. 20 Eq. 474, 480. 
 
 Co. Ac. V. Vestry of Richmond, 8 Ch. D. =12 Beav 377 
 
 82. 
 
PROCEEDINGS ULTRA VIRES IN THE STRICT SENSE. 659 
 
 framed, by ordering the money to be returned, or the property 
 restored. It is a necessary incident to the first part of the relief 
 which can be obtained by individual corporators, and will do com- 
 plete justice on each side, and that has always been the practice of 
 the court. Therefore, in a case so framed, there is no objection to 
 a suit by an individual corporator to recover from another corpo- 
 rator, or from any other persons, being strangers to this corpora- 
 tion, the money or property so improperly obtained. But that is 
 not the only case. Any other case in which the claims of justice 
 require it is within the exception." 
 
 The leading ease is Salomons v. Laing.^ Here the directors of 
 one incorporated railway company paid over its funds to another 
 railway company, for purposes wholly unauthorized ; and the 
 latter received them with knowledge of the breach of trust. It 
 was held by Lord Zangdale, on demurrer, that the second company 
 were properly made parties to a suit to bring back the fund ; and, 
 secondly, that, in such a case, an individual shareholder in the first 
 company might sue the second company " on behalf," &c., without 
 alleging that the corporation of which he was a member had re- 
 fused to sue. 
 
 The exact form of the suit, then, will be generally, perhaps 
 invariably, for an injunction, and often for nothing more than this, 
 except costs ; sometimes for an account against those who have 
 participated in the ultra vires proceedings ; sometimes, also, as 
 against the oflacials concerned — ^though it seems only when they 
 have been guilty of fraud or of negligence, additional to the mere 
 fact of participating in ultra vires transactions — ^that they may 
 be ordered to reimburse the corporation for all losses or expenses 
 incurred. 
 
 In those countries where there is the distinction between law 
 and equity, the action will lie in the equity courts. In this coun- 
 try there is not now any such necessity, though such would be 
 highly advisable, and if an account be asked for, the Chanceiy 
 Division is the proper conrt.^ 
 
 ' 12 Beav. S11. Compare Att.-Gen. v. « See Judicature Act, 1873, a. 34. 
 
 Daugars, 38 Bear. 621. 
 
CHAPTER II. 
 
 ACTIONS IN" RESPECT OF PROCEEDINGS BY A MAJORITY. 
 
 Section I. — The Inteefekence of the Coubts in the Internal 
 Affaiks of Cokpoeationb. 
 
 (1.) General Statement as to the Jurisdiction of the Courts. 
 
 The majority of an ordinary partnership have, while acting 
 l)ona fide and apart from express provisions, full power over the 
 operations and property of the firm. They cannot enter into en- 
 gagements foreign to the, purposes for which they have combined, 
 nor employ the joint funds in support of such ; but within the 
 scope of the partnership they can compel the concurrence, of a dis- 
 sentient minority. The minority must, however, be fairly con- 
 sulted, and have an opportunity of expressing their objections to 
 any proposed scheme, and these reasons the majority must duly 
 weigh and consider. On this point there are some well-known ob- 
 servations by Lord Eldon, in Const v. Harris : * " I call that act the 
 act of all, which is the act of the majority, provided all are consulted, 
 and the majority are acting hona fide, meeting not for the purpose 
 of negativing what any one may have to offer when they are met 
 together, but for the purpose of negativing what they may, after 
 due consideration, think proper to negative. For a majority of 
 partners to say, we do not care what one partner may say, we, 
 being the majority, will do what we please, is, I apprehend, what 
 this court will not allow. * * * In all partnerships, whether 
 it is expressed in the deed or not, tlie partners are bound to be 
 true and faithful to each other ; they are bound to act upon the 
 joint opinion of all, and the discretion and judgment of any one 
 cannot be excluded. What weight is to be given to it is another 
 question ; the most prominent point on which the court acts in 
 appointing a receiver of a partnership concern, is the circumstance 
 of one partner having taken upon himself the power to exclude 
 
 ' Turn. & R. 496, 626-7. 
 
INTERFERENCE OF THE COURTS. 661 
 
 another partner from as full a share in the management of the 
 partnership as he who assumes that power himself enjoys. * * * 
 The lessees of the seven-eighths could not, withont consulting the 
 parties interested in the one-eighth, take upon themselves, merely 
 because they were lessees of seven-eighths, to do those acts 
 which could only be done by the body, or by a majority of the 
 body representing the whole of the body ; and the majority of 
 the body never represents the whole of the body, except where 
 there has been a voice called for from the minority, and submit- 
 ted to and fairly overruled by the majority." His lordship accord- 
 ingly held : " That the proprietors of seven shares out of eight in a 
 theatre, had not power to alter the manner in which it had 
 been origina,lly agreed that the profits should be disbursed."(ffi) 
 
 The principle here so strongly enunciated applies to corpora- 
 tions, though perhaps with lessened force on account of the differ- 
 ence in the nature and purposes of these associations. 
 
 So Kindersley, V.-C, in his judgment in Grissell's Case,^ laid 
 down that a company is only a large partnership modified in many 
 important particulars by special enactment, but still in essence a 
 partnership ; and that where statutes do not expressly or implied- 
 ly vary the principles to be applied, those principles which ap- 
 plied to an ordinary partnership are applicable to a company.(5) 
 Consequently, one of the principles of the law of partnership 
 being that none of the partners can claim any debt owing to him 
 from the partnership estate, till all the creditors have been paid in 
 f ull,(c) he held that a shareholder in a company, who was also a 
 creditor under contract, was not, in the event of the company 
 being wound up, entitled to set-off the debt due to him against the 
 
 ' iJeOverend, Gurney, <fe Co. (GriBsell's Case), L. R. 1 Ch. 528. 
 
 (a) The rule of the common law was, that in associations of a public or general 
 nature, the choice of the majority governed in regard to the management of the in- 
 terior concerns of the partners among themselves ; but in private associations, the 
 majority could not conclude the minority. 3 Kent's Com. 46 ; see Story on Partner- 
 ship, §§ 123, 126; Abbott v. Johnson, 32 N. H. 9; Ormsbee «. Davis, 6 R. I 442; 
 Welles V. March, 30 N. Y. 344 ; Fisher v. Murray, 1 E. D. Smith, 341 ; Kirk v. Hodg- 
 son, 3 Johns. Ch. 400 ; McCullough v. Sommerville, 8 Leigh, 416 ; Johnston v. Button, 
 21 Ala. 245 ; Western Stage Co. v. Walker, 2 Iowa, 604 ; Stein v. La Dow, 13 Minn. 412. 
 
 (6) See Livingston v. Lynch, 4 Johns. Ch. 673 ; Hartford A N. H. R. R. Co. v. 
 CrOBwell, 6 Hill, 383 ; Kean v. Johnston, 1 Stockt. 401. 
 
 (e) See Kendall v. Rider, 35 Barb. 100. 
 
662 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 calls, nor to set-off against the calls, a dividend which might after- 
 wards come to him.(a) The judgment was affirmed upon some- 
 what different grounds by the Lord Chancellor. The doctrine put 
 forth by the Vice-Chancellor does not hold with regard to all cor- 
 porations, but with proper qualification and within limits it applies 
 to trading corporations, at least in so far as it concerns the busi- 
 ness to be engaged in, the management of the same, and the au- 
 thority of the majority of the members. 
 
 A corporation is, of course, theoretically distinct from its "mem- 
 bers, but both it and a partnership are, after all, made up of nat- 
 ural persons. A corporation, moreover, though in the eye of the 
 law it may have an actual and separate existence, can manifest its 
 existence and commit torts, engage in contracts, and direct other 
 proceedings only by and through the individuals composing it. 
 Lastly, a corporation generally, and a commercial corporation al- 
 most invariably, consists of a great number of members, a partner- 
 ship of but few ; it is therefore comparatively easy to find in the 
 former a few factious individuals, ready to oppose any change or 
 innovation, and the results of such opposition can seldom be so 
 disastrous to them personally as it would be were they members 
 of a small firm. Consequently, for all these reasons, we must be 
 careful how we apply Lord Eldon's reasoning to public companies ; 
 observing this caution, however, we shall find it applicable in the 
 main. 
 
 I. The majority of the members of a corporation may manage 
 its affairs, and modify its constitution, in a/ny way they 
 please, so long as they act with bona fides, and do not go he- 
 yond the capacities of the corporation as fixed by the con- 
 stating instruments. 
 
 In the first place it must be repeated, by way of caution, that 
 what the corporation itself as a united whole cannot do, a forti- 
 ori a majority, however great, of its members cannot do; what is 
 ultra, vires of the constituted whole must manifestly be equally so 
 of any and each of the constituent parts.(5) 
 
 (a) See Ux parte Henry Winsor, S Story, 411 ; McLaren v. Pennington, 1 Paige, 
 102 ; Osgood o. Ogdeu, 4 Keyes, '70; Scammon v. Kimball, 92 U. S. 362. 
 
 (i) The rule as stated in the text must be limited, so far as modifications of the 
 "constitutions" of corporations are concerned, to matters not fixed or controlled by 
 
INTERFERENCE OF THE COURTS. 663 
 
 But within the scope of the corporate ajEfairs, the majority not 
 merely represent but actually are, for most purposes, the corpora- 
 tion. Contracts entered into, and arrangements made or sanc- 
 tioned by them, with due regard to formalities, and being author- 
 ized by the constitution of the corporation, are valid, notwith- 
 standing the opposition or dissent of some of the members. Lord 
 V. Governor & Co. of Copper Miners ^ is an illustrative case. The 
 bill was filed by one shareholder, on behalf of himself and the 
 •others, against the company, the members of the governing body, 
 and other parties ; and it impeached several transactions of that 
 body, which had been sanctioned by majorities at general meet- 
 ings of the shareholders, and amongst which was a project to vest 
 all the property of the company in trustees for the piirpose of liqui- 
 dating its affairs. The defendants demurred, and the demurrer 
 was allowed, notwithstanding some vague and general charges of 
 fraud and misconduct on the part of the defendants, and an alle- 
 
 ■ 2 Phill. HO. 
 
 the charter or other legislative act. Within the purpose of the corporation, accord- 
 ing to the implied contract between the corporators, where the organic law is silent, 
 the voice of the majority is supreme, so long as they act with bona fidet. " The fun- 
 damental principle of every association for the purposes of self-government Is, that 
 no one shall be bound except with his own consent, expressed by himself or his rep- 
 resentatives ; but actual asseat is immaterial, the assent of the majority being the 
 assent of all; and this is not only constructively but actually true; for that the will 
 of the majority shall in all cases be taken for the will of the whole, is an implied but 
 essential stipulation in every compact of the sort ; so that the individual who becomes 
 a, member, assents beforehand to all measures that shall be sanctioned by a majority 
 of the voices." Be St. Mary's Church, 7 S. & R. 51Y, 543. " It is not to be doubted, 
 that, as a general rule, the acts of a majority of a corporation are binding on the 
 whole, when confined to its ordinary transactions, and consistent with the original ob- 
 jects of its formation." Mowrey v. Ind. & Cin. R. R. Co. 4 Biss. ^8 ; Troy ife Rutland 
 R. R. Co. V. Kerr, 17 Barb. 581 ; see Horton v. Baptist Church, 34 Vt. 316 ; Gifford 
 V. N. J. R. R. Co. 2 Stockt. 171 ; Zabriskie v. Hackensack & N. Y. R. R. Co. 8 C. E. 
 <Jreen, 178 ; Black v. Delaware &, Rar. C. Co. 1 C. E. Green, 130 ; s. o. 9 C. E. Green, 
 455 ; Lauman v. Lebanon Val. R. R. Co. 30 Penn. St. 42 ; East Tennessee & Va. R. R. 
 ■Co. V. Gammon, 5 Sneed, 567 ; Sprague v. Illinois River R. R. Co. 19 111. 174. Courts 
 of equity, therefore, will not restrain corporations in the exercise of their powers, 
 •where there is no fraud or breach of trust alleged. Treadwell v. Salisbury Mfg. Co. 
 7 Gray, 393 ; see, also, Newby v. Oregon Central R. R. Co. 1 Saw. 63 ; Durfee v. Old 
 Colony, Ac. R. R. Co. 5 Allen, 230 ; Bailey v. Power St. Church, 6 R. I. 491 ; Bayless 
 V. Orne, 1 Freeman Ch. 161 ; State of Louisiana v. Bank of Louisiana, 6 La. 746 ; 
 Dudley v. Kentucky High School, 9 Bush (Ky.), 676 ; Southern Plank-road Co. <-. 
 Hixon, 5 Ind. 165 ; Newhall v. Galena & Chic. Union R. R. Co. 14 111 278. 
 
664 ACTIONS m PROCEEDINGS BY A MAJORITY. 
 
 gation that, by the constitution of the company, no one but the 
 governing body could convene a general meeting. The court held, 
 that the specific acts complained of primarily concerned the inter- 
 nal administration of the company, and were not clearly such as it 
 was incompetent to a majority of shareholders to sanction. 
 
 Similarly, in Stupart v. Arrowsmith,^ a railway scheme having 
 proved abortive, the majority of the subscribers, at a public meet- 
 ing duly convened, approved of the accounts and dissolved the 
 company. A bill filed subsequently by one shareholder, to set 
 aside the arrangement and open the accounts, was dismissed with 
 costs, on the ground that, apart from the plaintiff being bound by 
 acquiescence, the proceedings having been sanctioned and adopted 
 by the majority of the shareholders, could not, afterwards be dis- 
 turbed. 
 
 The broad rule is, that in all matters of purely internal econ- 
 omy the majority are supreme, and the courts will not interfere, 
 whether before, to prevent the doing of acts, or subsequently, to 
 relieve from the consequences thereof.((z) 
 
 The leading, and perhaps the earliest, case upon this point is 
 Foss V. Harbottle," and the principle there laid down has not since 
 been departed from or qualified.* (J) The biU was filed by two 
 shareholders in a statutory corporation on behalf of tliemselves, 
 
 ' 3 Sm. & G. 176; Kent v. Jackson, 2 ' See Mozley v. Alston, 1 Phil. 790 ; 
 
 De G., M. & G. 49. Kent v. Jackson, 2 De G., M. <fe G. 49 ; 
 
 ^ 2 Hare, 461. Inderwick v. Snell, 2 Mac. <fe G. 216. 
 
 (a) Courts of equity will not interfere unless the corporation is about to do some- 
 act outside of the scope of its authority, or in disobedience to theprovisions of its 
 constitution. Each and every stockholder contracts that the will of the majority 
 shall goTern in all matters coming within the limits of the act of incorporation ; and 
 in cases involving no breach of trust, but only error or mistake of judgment upon the- 
 part of the directors who represent the company, individual stockholders have na 
 right to appeal to the courts to dictate the line of policy to be pursued by the cor- 
 poration, even where such error may result in loss to the stockholders. Dudley v. 
 Kentucky High School, 9 Bush, 516. In Newhall v. Galena & Chic. Union R. R. 
 Co. 14 111. 278, the court refused to enjoin the company from building lateral roads, 
 which the company in their discretion had power to build, at the suit of a shareholder 
 claiming that by such construction his dividends would be diminished, and the re- 
 sources of the company impaired. See Barnard o. Vermont & Mass. R. R. Co. 1 
 Allen, B12: Thompson v. ErieRy. Co. 11 Abb. (N. S.) 188 ; Joslyn v. Pacific Mail S. 
 S. Co. 12 Abb. (N. S.) 329; Bach v. Same, 12 Id. 373 ; Howell v. Chicago & N. W. K. 
 R. Co. 51 Barb. 378; State of La. v. Bank of La. 6 La. 745; Rogers v. Lafayette- 
 Agric. "Works, 52 Ind. 304. 
 
 (6) See Gregory v. Patchett, 83 Beav. 595 ; Gray v. Lewis, L. R. 8 Eq. 626. 
 
INTERFERENCE OF THE COURTS. 665 
 
 &c., against the five directors (three of whom bad become bank- 
 rapt), and against a proprietor who was not a director, and the 
 solicitor, and architect -of the company, charging the defendants 
 with concerting and effecting various fraudulent and illegal trans- 
 actions, whereby the property of the company was misapplied and 
 wasted ; that there had ceased to be a sufiicient number of qualified 
 directors to constitute a board ; that the company had no clerk or 
 office ; that in such circumstances the proprietors had no power to 
 take the property out of the hands of the defendants, or satisfy 
 the liabilities, or wind-up the affairs of the company. It prayed 
 that the defendants might be decreed to make good to the com- 
 pany the losses and expenses occasioned by the acts complained 
 of ; and for the appointment of a receiver to take and apply the 
 property of the company in discharge of its liabilities, and to 
 secure the surplus. The defendants demurred and the demurrers 
 were allowed, chiefly upon the grounds that upon the facts stated, 
 the continued existence of a board of directors de facto must be 
 intended ; that the possibility of convening a general meeting of 
 proprietors capable of controlling the acts of the existing board 
 was not excluded by the allegations of the bill ; and that in such 
 circumstances there was nothing to prevent the company from 
 obtaining redress in its corporate character in respect of the mat- 
 ters complained of. 
 
 The rationale of this decision is simple enough, viz., that the 
 corporation, being the best judge, mast be held the only judge of 
 what concerns its own interests, and that consequently so long as 
 it is actiug — that is to say the majority are acting — with hona 
 fides, and a due consideration for the opinions of dissentients, no 
 appeal lies from its domestic forum. It makes no difference what 
 is the nature of the corporation, for public or private, for reli- 
 gious (a) or secular purposes ; nor what the dispute, if the question 
 be one upon which the general body is competent to determine, 
 and if they have determined after a fair hearing of objection, the 
 Courts will not re-hear the case. Thus, in Neate v. Denman,' 
 where the plaintiff wished to withdraw from an Inn of Court, but 
 refused to accede to the conditions imposed by the Inn upon with- 
 drawal. Hall, V.-C, decided that this was unquestionably an affair 
 
 ' li. R. 18 Eq. 127. 
 
 (a) See, as to interference in affairs of religious corporations, ante, pp. 52 el seg. 
 
666 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 of internal jurisdiction, and that consequently he was unable to 
 interfere to compel the Inn to give up or modify the conditions. 
 
 But in several cases the principle has been somewhat miscon- 
 ceived, and consequently extended to matters not coming within 
 its application. It has to do only with such transactions as are 
 intra vires, but it has been applied to, and held to disqualify per- 
 sons from obtaining relief in respect of proceedings done or con- 
 templated which certainly approach to, if they are not actually, 
 ultra vires in the secondary sense. 
 
 Yetts V. Norfolk Ry. Co.' is a case in point. An incorporated 
 railway company issued new shares in pursuance of a resolution 
 declaring the purpose of such new issue to be the raising of a suf- 
 ficient amount to pay off the existing mortgage and bond debts of 
 the company. The holder of some of the new shares filed a bill, 
 on behalf of himself and other holders of the shares, against the 
 directors and the company, alleging facts to show and charging 
 that they were about to apply the money paid in respect of the 
 shares otherwise than in conformity with the resolution, and pray- 
 ing for a declaration that the money ought to be applied according 
 to the tenns of the resolution, and for a specific performance of 
 the agreement thereby entered into, and for an injunction. The 
 Court allowed demurrers of the directors and the company, hold- 
 ing that the ease fell within the principle laid down in Mozley v. 
 Alston, (a') 
 
 Edwards v. Shrewsbury & Birmingham Ry. Co.,' is another 
 case where this principle was strictly applied. Here a shareholder 
 in an incoi-porated railway company filed a bill, on behalf of him- 
 
 ' 3 De G. <fe Sm. 293. bead, Ac. Ry. Co. 12 Beav. 433. Cora- 
 
 ' 2 De G. <fe Sm. b<i1 ; Inderwick v. pare Bagahaw?'. Eastern Union Ry. Co. 1 
 Snell, 2 Mac. & G. 216 ; BaUey v. Birken- Hare, 114, and 2 Mac. &, G. S89. 
 
 [a) The counsel in support of the demurrers argued, first, that the intended acts 
 ■with which the defendants were charged, if wrong, were wrongs to the company gen- 
 erally, and therefore not the proper subjects of a suit framed as the one at bar ; and, 
 secondly, that the suit was defective as regards the parties to it. The vice-chancel- 
 lor's opinion was as follows ; " I give no opinion as upon the question as to the.partiet 
 to the suit. Upon the question of equity, I am not sure that, independently of recent 
 authorities which have been cited at the bar, I should not have held the demurrers 
 sustainable ; but those decisions, and the judicial opinions expressed with reference 
 to them, are, as it appears to me, inconsistent with sustaining the bill. What course 
 I should have taken, in a different state of the authorities, it is needless to say. As 
 it is, I allow the demurrers." 
 
INTERFERENCE OF THE COURTS. 66T 
 
 self and other shareholders, to restrain the directors from issuing 
 preference shares, on the ground that they were about to be issued 
 contrary to the company's acts, and for the purpose of constructing 
 the original line instead of the branch (for which alone additional 
 shares were to be created), and were intended to be distributed in a 
 manner contrary to the. directions of the act, which authorized the 
 creation of additional shares. The bill, filed on the 22d of Sep- 
 tember, stated that the plaintiff, on the 17th of September, became 
 aware of resolutions passed on the 12th of September, under which 
 the preference shares were to be offered to the shareholders on the 
 23d of September, but the bill did not otherwise show that the 
 plaintiff had not the means of procuring a suit to be instituted in 
 the name of the corporation. The corporation and the directors 
 demurred to the bill, and Knight-Bruce, V.-C, decided that their 
 demurrers could not be overruled consistently with the principles 
 stated in, or to be extracted from, Mozley v. Alston and Exeter & 
 Crediton Ey. Co. v. Buller,' whether the proceedings souglit to be 
 restrained were legal or not. 
 
 On the bill being amended, and stating that a majority of the 
 shareholders supported the views of the directors, and refused to 
 authorize the plaintiff or any other person to institute a suit in the 
 name of the company, the Yice-Chancellor again allowed a demur- 
 rer, considering that the case as amended was still within the 
 influence of the above authorities. («) 
 
 It admits of reasonable doubt, whether either of the two cases 
 last cited fell within the rule now in consideration. The matters 
 
 ' 6 Rail. C. 211 ; ante, p. 534. 
 
 (o) The peyeralacts of parliament seem to justify the construction contended for 
 by the counsel for the demurrants, namely, that the new shares were to be a part of 
 the general capital of the company, applicable to the purposes of the original under- 
 taking, and that it was the intention of the Legislature to invest the company with 
 the most absolute power, as to the terms upon which they should issue the new 
 shares. Inderwick v. Snell turned on the construction of a deed of settlement, giv- 
 ing power to a meeting to censure directors for negligence, misconduct in office, or 
 any other reasonable cause ; and it was held that this was a subject for the considera- 
 tion of the meeting solely, and that as no fraud had been shown, the court would not 
 interfere. In Bailey v. Birkenhead, <fec. Ry. Co., Lord Langdale said, the case could 
 only be considered as an attempt to induce the court to interfere in the internal man- 
 agement of the affairs of the company, and to take upon itself to determine a ques- 
 tion which might well and ought to be determined by the shareholders themselves 
 at general meetings. 
 
668 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 there complained of, viz., the employment of the proceeds of 
 shares to improper purposes, would seem rather to come under 
 the head of ultra vh'es, if not strictly so called at least in the 
 secondary sense, than of mere internal arrangement. Foss v. 
 Harbottle, (a) as it has been judiciously stated, " does not go 
 further than this : that if the act, though it be the act of the 
 directors only, be one which a general meeting of the company 
 could sanction, a bill by some of the shareholders, on behalf of 
 themselves and others, to impeach that act cannot be sustained, 
 because a general meeting of the company might immediately 
 confirm and give validity to the act of which the bill complains." 
 Accordingly, in the case of Bagshaw v. Eastern Union Ry. Co.* — 
 from the judgment in which this extract is taken — Wigram, T.-C, 
 determined that the application of moneys derived from a particu- 
 lar issue of shares was not a pure question of internal administra- 
 tion. Here the defendants were authorized by several acts of 
 parliament to make railways from Colchester to Ipswich, Ipswich 
 to Bury St. Edmunds and Norwich, and from Ipswich to Harwich, 
 and for thdfee purposes to raise money by shares and loans, not 
 exceeding certain sums in the whole. The same company was 
 also, by a distinct act, authorized to purchase and complete the 
 Hadleigh Junction Railway, and for that purpose, by shares or 
 loans, to raise a sum not exceeding £100,000. A suit was insti- 
 tuted by the proprietor of a scrip certificate for stock, forming 
 part of the capital raised in pursuance of the acts authorizing the 
 company to purchase the Hadleigh Junction Railway and make 
 the Harwich line, charging that the company was about to misap- 
 ply the £100,000 raised under the Hadleigh Act in the construc- 
 tion of the Norwich line, and seeking to restrain such misapplica- 
 
 ' 7 Hare, 114; 2 Mae. &G. 389. 
 
 (a) In regard to Foss v. Harbottle and Mozley v. Alston, " it Is apparent from the 
 opinion of the court in the case of Gray v. Lewis, L. R. 8 Eq. Cases, 626, 541, that 
 those cases are regarded by the Court of Chancery in England only as holding that a 
 shareholder cannot maintain a suit, on behalf of himself and other shareholders, 
 where the acts complained of are capable of being released or confirmed by the cor- 
 poration, and that in such a case the corporation itself is the only proper plaintiff ; 
 but that those cases are not regarded as holding, and that it is not the law in the 
 Court of Chancery in England, at this day, that a shareholder cannot maintain a suit, 
 on behalf of himself and the other shareholders, where the acts complained of are 
 ultra vires of the corporation." Ptr Blatohford, J., in Heath r. Erie Railway Co. 8 
 Blatchf 898. 
 
INTERFERENCE OF THE COURTS; 669 
 
 tioD. To this suit the company and directors demurred for want 
 of equity, but Wigram, V.-C, overruled the demurrers. On ap- 
 peal, the Lord Chancellor aflSrmed this decision. He said : " The 
 question really is, whether the law will permit money advanced 
 for one purpose to be applied contrary to the wish of the owner 
 of that money to another, and whether the bill states such a case 
 as brings it within that principle." And after examining the 
 facts and authorities, he decided that, " the plaintiff was in equity 
 entitled to the interposition of the Court for the purpose of keep- 
 ing the company in the application of his money to those purposes 
 for which it was said to be advanced." 
 
 And as the courts will not interfere in favor of the minority 
 as against the majority, so a fortiori they will not interfere, in 
 favor of the majority or the whole corporation, to re-open a ques- 
 tion of internal management which has been considered and de- 
 termined upon by the corporation. 
 
 Finally, in the two most recent cases. Gray v. Lewis* and 
 McMuiray v. Northern Ky. Co.,^ the principle has been strictly 
 enforced and the courts have refused to interfere on the ground 
 that the matters, however objectionable and calling for investiga- 
 tion, were for the internal government of the corporations con- 
 cerned. 
 
 It manifestly follows that the majority from time to time may 
 make such modifications as they think fit in the business to be 
 carried on, and the other matters to be engaged in by the corpora- 
 tion,' always provided that they do not go beyond its constitution 
 as fixed by the constating instruments. 
 
 (2.) When the Courts will interfere. 
 
 II. The Court will interfere for the general henefit of the cor- 
 poration when disputes ha/ve arisen which prevent its affai/rs 
 being properly carried on. {a) 
 
 This was so decided in Featherstone v. Cooke.'' Here the 
 board of directors of a company divided into two parties in refer- 
 
 ' L. E. 8 Ch. 1,035. ' Att.-Gen. v. Gould, 28 Bear. 486. 
 
 ■' 22 Grant. (Upper Can. Ch. 1875), * L. R. 16 Eq. 298. 
 
 476, where all the authorities are very 
 carefully examiDed. 
 
 (a) Statutory provisions are found in many, if not all, the States, regulating in 
 
670 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 ence to the mode of conducting the company's buBiness. Each 
 endeavored to exclude the other party from the government of 
 the company, the result being the stoppage of the company's 
 works, and serious consequent losses to the company. Finally, 
 one of the directors filed a biU against the company and the di- 
 rectors adverse to him, to restrain the latter from interfering in 
 the management. Upon motion, Malins, V.-C, granted an in- 
 terim injunction, and appointed a receiver and manager, exclud- 
 ing all tlie directors from any voice in the management until a 
 general meeting of the shareholders had been called, after which 
 he discharged the receiver, and left the management in the hands 
 
 some degree the mode in which disputes affecting the orderly continuance of cor- 
 porations are to be settled. 
 
 Thus, in California, on application of any person or corporation, that may be ag- 
 grieved by any election, held by any corporate body, the district judge of the district 
 in which the election is held is directed, upon hearing affidavits, proofs and allega- 
 tions, to establish the election, or order a new election, or make such order, or give 
 such relief in the premises, as right and justice may seem to him to require. Codes 
 and Statutes of Cal. (1876), § 5316; see Brewster v. Hartley, 37 Cal. 15. 
 
 In New York the Code of Procedure provides (see. 432), that an action may be 
 brought by the attorney-general, in the name of the people, upon his own informa- 
 tion, or upon the complaint of any private party, against the parties offending, when 
 any person shall usurp, intrude into, or unlawfully hold or exercise any office in a cor- 
 poration created by the authority of the State ; and (sec. 440) that where several per- 
 sons claim to be entitled to the same office or franchise, one action may be brought 
 against all such persons, in order to try their respective rights to such office or fran- 
 chise. See People v. Albany & Susquehanna R. R. Co. 55 Barb. 344 ; s. c. 1 Lans. 
 308; 57 N. Y. 161; People v. Hills, 1 Lans. 202; also, 2 N. Y. R. S. (Edmonds' ed.) 
 p. 603 ; Schoharie R. R. Case, 12 Abb. (N. S.) 394. 
 
 Mandamus will lie to compel an election of the officers of a corporation, in the 
 absence of statutory provisions on the subject. See Angell <fe Ames on Corp. sec. 
 700; People v. Albany Hospital, 61 Barb. 397; State v. Wright, 10 Nev. 167. 
 
 As to enjoining elections and individuals from voting, see Hoppin v. Buffum, 9 R. 
 I. 513; People v. Albany & Sus. R. R. Co. 65 Barb. 344; Webb ■». Ridgely, 38 Md. 
 364. 
 
 A court of chancery in New Jersey has no jurisdiction to determine the validity 
 of an election of directors of a private corporation. The only adequate remedy is in 
 the courts of law, which have power to adjudge the office vacant, and to compel the ad- 
 mission of a person properly elected, by means of the remedies of quo warranto and 
 mandamus. Owen v. Whitaker, 5 C. E. Green, 122. When, however, the question 
 comes up incidentally, and must be decided to obtain equitable relief, such court is 
 competent to inquire into and decide the validity of an election for the purpose of the 
 suit. Johnston v. Jones, 8 C. E. Green, 216. 
 
 On the subject of quo warranto against officers claimed not to have been legally 
 elected, by reason of illegal votes, see Hoppin v. Bnffum, 9 E. I. 518; and High on 
 Extr. Rem. ch. xv. 
 
INTERFERENCE OF THE COURTS. 671 
 
 of the new governing body chosen at such meet]'ng.(a) As to the 
 jurisdiction the Vice-Chancellor observed : " With regard to pri- 
 vate partnerships nothing is of more frequent occurrence than the 
 quarrels of partners. If parties quarrel, oust each other from the 
 management, or so conduct themselves that the partnership can- 
 not go on with advantage, it is every day's practice for the court 
 to interfere by injunction, and appoint a receiver if necessary. 
 With regard to public companies, I apprehend the same principle 
 is applicable. If a state of things exists in which the governing 
 body are so divided that they cannot act together, and there is the 
 same kind of feeling between the members as there frequently is 
 in the case of private partnerships, it is clearly within the rule of 
 this court to interfere, and it will do so." 
 
 III. The Court will interfere to protect any individual member 
 if the proceedings of the majority constitute an injustice to 
 him individually. Q)) 
 
 The majority must act with regularity and hona fides. They 
 must be duly summoned, and all usual formalities must be ob- 
 served in the conduct of their meetings. The minority are, of 
 coarse, also entitled to notice of any meeting, and of the matters 
 to be there transacted.(<3) More than that ; they can demand a 
 fair hearing, and that their wishes and arguments should be lis- 
 tened to and duly weighed.^ 
 
 A fortiori, if the conduct of the majority amounts to a fraud 
 
 ' See the judgments of Lord Eldou 10 Hare, 493 ; Wood v. Woad, L. R. 9 
 in Natusch w. Irving, and Const v. Harris, Ey. 190. 
 ■M supra. Compare Blissett v. Daniel, 
 
 (o) " If a stockholder is aggrieved by the refusal of the board of directors to ac- 
 cept his views, his remedy is to unite with other stockholders and change those di- 
 rectors. But if irreparable mischief to his interests may ensue in the meantime, 
 equity will administer preventive justice until such time as the will of the body of 
 stockholders can be ascertained." Samuel v. Holladay, Wool. 400. 
 
 (6) See Jackson v. Ludeling, 21 Wall. 616 ; Heath v. Erie Railway Co. 8 Blatchf. 
 406 ; March v. Eastern R. R. Co. 40 N. H. 848 ; s. o. 43 N. H. 515 ; Abbott v. Merriam, 
 8 Cush. 590; Peabody v. Flint, 6 Allen, 52; Sears -o. Hotchkias, 25 Conn. 170; Rob- 
 inson V. Smith, S Paige, 222 ; Cunningham v. Pell, 5 Paige, 607 ; Wood v. Draper, 24 
 Barb. 187; Butts «. Wood, 38 Barb. 181 ; s. o. 37 N. Y. 317; Taylor v. Miami Co. 5 
 Ohio, 162; Neall !). Hill, 16 Cal. 146; Smith v. Pagan, 17 Cal. 178: Mussina v. Gold- 
 thwalte, 34 Tex. 126 ; East Rome Town Co. v. Nagle, 58 Ga. 474. 
 
 (c) AnJk, p. 438 et seg. 
 
6T2 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 upon, or to undue influence with respect to, the minority, the 
 court will protect the interests of the latter.(a) In Re London 
 Mercantile Discount Co.,^ after a resolution to wind-up the" com- 
 pany voluntarily, several of the shareholders presented a petition, 
 complaining of certain transactions by the directors which they 
 alleged to be fraudulent and improper, and to have caused great 
 loss to the company, and praying that proceedings might be di- 
 rected to be taken at the risk of the company in respect to such 
 improper transactions. Page-"Wood, Y.-C, in the first instance, 
 ordered the petition to stand over, to enable the sense of the com- 
 pany to be taken on the question of such further litigation. The 
 petitioners, however, did not call any meeting, asserting that their 
 votes would be overborne by the votes of the parties implicated 
 in transactions complained of and their friends ; and thereupon 
 the petition was dismissed.' The Yice-Chancellor observed: 
 " The Legislature has thought that the shareholders should meet 
 and regulate that part of their own business as they would regu- 
 late any other part of it, by the views of the majority ; and, pro- 
 vided the votes of the majority are given fairly and reasonably, 
 there is no ground whatever for the interference of the court. At 
 the same time, no doubt, it was foreseen that there might arise 
 cases of such decided undue influence and such a course of over- 
 bearing authority by those whose acts were sought to be im- 
 peached, as would render it desirable that the court should inter- 
 fere, and, therefore, in such cases there was reserved to the court 
 the power of superintending a voluntary winding-up, by putting 
 in force its coercive jurisdiction where anything improper should 
 
 ' L. R. I Eq. 277. See, also, Exeter ' But without prejudice to the peti- 
 
 and Crediton Ry. Co. v. Buller, 5 Rail. Co. tioners at their own risk filing a bill, 
 
 211, and East Pantdn Lead Mining Go. v. which, as seen in the last chapter, sec. 1, 
 
 Merryweather, 2 H. <& M. 264, both which any single individual can do, to prevent 
 
 were suits by members of a minority, and acta or to obtain compensation for acts 
 
 which were ordered to stand over till tbe which are ultra vires. 
 sense of the whole body could be taken. 
 
 (a) Equity will interfere on application of minority to prevent the misappropria- 
 tion of funds, or the commission of any fraud against stockholders, or breach of trust by 
 corporators or officers of corporations. See cases cited in notes to this chapter. But 
 it may be doubted whether there is any power in a court of equity, to protect against 
 the effects of undue influence in regard to corporate affairs, unless such influence is 
 " corrupt and improper," amouDting to actual fraud. The case cited in the text must 
 be considered with reference to the provisions as to winding-up, of the Companies 
 Act, 1862, §§ 147-163 (Buckley, pp. 281-7). 
 
INTERFERENCE OF THE COURTS. 673 
 
 be attempted on the part of those who might endeavor to screen 
 their own actions by procuring a voluntary winding-up. It is 
 only by bringing the case as near as possible to the latter alterna- 
 tive that the petitioners conid be entitled to entertain any hope of 
 success in the attempt to obtain the order sought. I have dili- 
 gently sought to ascertain, therefore, whether in truth this minor- 
 ity, or apparent minority, of shareholders have been overborne 
 by improper or corrupt influence ; if such a case were proved, no 
 doubt the court would interfere. That is one of the very objects 
 which the Legislature had in view when it declared that, not- 
 withstanding a voluntary winding-up, there should be a power 
 of interference ; but I cannot find any trace of that." 
 
 The Yice-Chancellor accordingly, being of opinion that the ap- 
 plicants had not satisfactorily proved their allegations, dismissed 
 the petition. But this, as he said, simply left them in their origi- 
 nal position. " By abstaining from interference I throw no ob- 
 stacle in the way of the petitioners prosecuting any litigation they 
 may think right at their own risk ; I only throw on them the risk 
 of such litigation." 
 
 Eraser v. Whalley ^ is another case somewhat in point. Here 
 the directors of a railway company, proposing to issue shares in 
 pursuance of an old resolution passed for a particular purpose, were 
 restrained from so doing at the suit of a shareholder, although it 
 was asserted that he belonged to a small minority, and that the 
 majority were favorable to the issue of shares proposed.(a) 
 
 ' 2 H. <fe M. 10. Compare Hatteraley R. 881 ; Bluck v. Malalue, 27 Beav. 
 D, Shelbnrne, 31 L. J. (Ch.) 873; 10 W. 398. 
 
 (a) That courts will interfere to prevent acta which are beyond the corporate 
 powers is clearly settled. That in like manner they will restrain a majority from 
 doing acts which, though within the power of the corporation, reqnire the unani- 
 moiis consent of the stockholders, is equally well established. The suit, however, 
 must be brought by a party having a legal interest, that is by a stockholder or cred- 
 itor of the corporation. See Dodge v. Woolsey, 18 How. 381; Samuel v. HoUaday, 
 Wool. 400; March v. Eastern R. R. Co. 40 N. -H. 548; Same parties, 43 N. H. 516; 
 Kean v. Johnson; 1 Stockt. 401; Gifford v. N. J. R. R. Co. 2 Stbckt. 171; Mander- 
 sori «.' Commercial Bank, 28 Pcnn. St. 379; Lauman v. Lebanon Valley R. P. Co. 30 
 Penn.' St. 46. " It is now no longer doubted, either in England or the United States, 
 that courts of equity, in both, have a, jurisdiction over corporations, at the instance 
 of one or more of their members, to apply preventive remedies by injunction, to re- 
 strain those who administer them from doing acts which would amount to a violation 
 of charters, or to prevent any misapplication of their capitals or profits, which might 
 result in lessening the dividends of stockholders or the value of their shares, as 
 43 
 
674 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 Section II. — When Redeess mat be Obtained by one oe moee 
 Membees Complaining of the Peoceedings of the Majoeitt. 
 
 But thoTigli it must be considered as fully established that the 
 courts will interfere on behalf of and protect a minority against 
 proceedings which are or amount to fraud or improper conduct on 
 the part of the majority, yet it is by no means clear when and 
 
 either may be proteoteql by the fi-anchises of a corporation, if the acts intended to be 
 done create what is in the law denominated a breach of trust; and the jurisdiction 
 extends to inquire into and to enjoin, as the case may require, any proceedings by 
 individuals, in whatever character they may profess to act, if the subject of com- 
 plaint is an imputed violation of a corporate franchise or the denial of a right grow- 
 ing out of it, for which there is not an adequate remedy at law." Dodge v. Wool- 
 sey, 18 How. 331. 
 
 In French v. Gifford, 30 Iowa, 148, Day, J., after an elaborate review of authori- 
 ties, says : " Those cases in which the jurisdiction of equity is denied, are cases in 
 which that jurisdiction was invoked for the purpose of depriving the corporation of 
 its franchises, winding-up its affairs, and distributing its assets ; those in which it is 
 recognized, are cases in which proceedings were instituted on behalf of stockholders, 
 against the ofiScers of the corporation, for fraudulent misapplication of funds, or 
 breach of trust in the dischafge of official duties. They are not only consistent with 
 themselves, but in harmony with Ihe general doctrines of equity jurisprudence which 
 forbid the interposition of courts of equity in cases where the law affords ample re- 
 lief, but always concede it for the enforcement of trusts and the prevention of frauds. 
 The doctrine best sustained by authority, and most in consonance wilh reason and 
 justice, seems to be that courts of equity, aside from statutory provisions, do not ex- 
 ercise a jurisdiction over a corporation, as over a partnership, to dissolve it and dis* 
 tribute its assets ; but that it will afford a stockholder relief from the malfeasance of 
 those intrusted with the management of the corporate business.'' In Wright v. 
 Oroville M. Co. 40 Cal. 20, it is said: " The corporate authority is considered to have 
 been conferred by the stockholders upon the trust and confidence that it will be ex- 
 erted at least with a view to advance the interest of the stockholders, and not used 
 with a purpose to injure and destroy that interest ; and it is settled, that courts of 
 equity in this country will, at the instance of a stockholder, control a corporation and 
 its officers, and restrain them from doing acts, even within the scope of corporate 
 authority,if such acts, when done, would under the particular circumstances amount 
 to a breach of the very trust upon which, as we have seen, the authority itself has 
 been conferred." In Hedges v. Paquett, 3 Oregon, 77, it is held that " it cannot be 
 considered the province of a court, to superintend the current business of corpora- 
 tions, with a view to measure the degree of industry, skill, and shrewdness to be re- 
 quired of or exercised by the directors and other officers or agents. As a consequence, 
 a court of equity will not interfere to review or correct their proceedings, on the 
 ground of fraud or mismanagement, unless there is cause for an absolute displace- 
 ment of the officer or officers complained of, or for a final winding-up of the affairs of 
 the corporation.'' 
 
WHEN REDRESS MAY BE OBTAINED. 675 
 
 how, under what precise circumstances, and by what mode of ap- 
 plication their interference can be invoked. Perhaps, however, 
 the following statement, as far as it goes, will be found correct 
 and borne out by the .authorities, it being remembered that the 
 matters in question are not ul^a vires in the strict sense. 
 
 (1.) Wrongs to the whole Corporation. 
 
 I. If any particular trcmsactions or matters are a fraud ^ on, 
 or otherwise give a right of action to the corporation as a 
 whole, then no single corporator can sue unless specialhf 
 damnified. 
 
 First. The majority may confirm and condone such, provided 
 they are not ultra vi/res, thereby relieving the parties responsible 
 therefor of their liability, (a) This applies equally whether the 
 
 ' But query. Is not every case of fraud priation of funds, at the same time a 
 on tbe whole corporation, e. g. misappro- fraud on each individual corporator ? 
 
 (a) Ante, p. 546. Can a majority confirm or condone sl fraudulent act so as to 
 affect the rights of dissenting shareholders ? In Hazard v. Durant, 11 R. I. 204, 
 a suit by a stockholder against a former officer of the corporation for an account, the 
 objection was raised that the suit could not be maintained, because it was in the 
 power of the corporation to release or condone the wrong complained of, as the Court 
 say : " Meaning, we suppose, that it may do this gratuitously and by mere refusal or 
 neglect to prosecute. To this point are cited cases : Gray v. Lewis ; In re Mercantile 
 Discount Company, and Atwool o. Merryweather." After a review of these and 
 other English oases, the Court say: "The jurisdiction does not appear to be so 
 firmly settled and defined in England as in this country; but we do not believe that 
 any English judge has ever decided that a president or director, who fraudulently 
 converts or embezzles corporate funds, cannot be sued in equity by a stockholder, 
 when the corporation willfully neglects or refuses to bring the suit. Indeed, to hold 
 that a corporation could gratuitously condone or release such a fraud, by anything 
 short of unanimous consent, would be monstrous ; for it would be in effect to hold 
 that a president or director, who can control a majority vote in the corporation, may 
 rob or despoil it with impunity. There are numerous American cases which hold 
 that, in such circumstances, a stockholder may sue for himself and other stockholders, 
 making the corporation a co-defendant with the guilty parties. Robinson et al. v. 
 Smith et al. 3 Paige, 222 ; Verplanck et al. v. Mercantile Ins. Co. 1 Edw. Ch. 84 ; 
 Bayless v. Orne Bybee et al., 1 Freem. (Miss.) 161 ; Cunningham v. Pell, 5 Paige, 607 ; 
 Butts V. Wood, 38 Barb. S. C. 181 ; also in 37 N. Y. 317; Hodges v. N. E. Screw Co. 
 et al. 1 R. I. 212, 340, 341; Spering's Appeal, 71 Penn. St. 1. A mere majority, m 
 our opinion, could no more condone such a wrong gratuitously than it could origi- 
 nally have sanctioned it; and, if the claims in suit have been compromised, or released 
 in any lawful and binding manner, we think that is matter of defense which should 
 be pleaded, not presumed." 
 
676 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 responsible parties are outsiders or actual members of tlie corpora- 
 tion. But, whenever the latter is the case, in determining the 
 majority the votes of the guilty parties themselves must be ex- 
 cluded. This was done in Atwool v. Merryweather,^ where the 
 number of votes for rescinding a fraudulent contract was 324, and 
 for upholding it, 344 ; but, of the latter, 106 belonged to the per- 
 sons implicated. (a) 
 
 Secondly. The minority complaining, if by thus striking ofE 
 improper votes they form the acting majority, and consequently 
 are competent in respect of the matters in question to act for and 
 represent the coi-poration, may then file a bill to obtain redress, 
 either in the name of the corporation, against the wrong-doers 
 simply, or in their own behalf — i. e., one or more members on be- 
 half of themselves and all the shareholders, except such as are 
 defendants thereto, who will include both the guilty parties and 
 the corporation itself as a formal defendant.^ (b) 
 
 Thirdly. Great care must be taken in the practical applica- 
 tion of the principle here in stateiiient. Wrongs or other proceed- 
 ings which damnify the corporation as such, may be itltra vires ; 
 and, if so, of course they cannot be ratified. So, as just seen, the 
 corporators participating in a transaction which, though intra vires, 
 is objectionable, and is, therefore, practically, though perhaps 
 not legally, a wrong to the individual corporator, eannot them- 
 selves ratify their own misdeeds. In either of these cases the 
 other members may be entitled to. sue. 
 
 But it is only in such cases. In all others the corporation, that 
 is, the whole body of members, may condone what, being intra 
 vires, concerns them all. As was said by James, L. J., in Gra.y v. 
 Lewis : ' " Where there is a corporate body capable of filing a bill 
 for itself to recover property, either from its directors or officers, 
 or from any other person, that corporate body is the proper plaint- 
 ifi; and the only proper plaintiff. * * I think it is of the utmost 
 importance to maintain the rule laid down in Mozley v. Alston,^ 
 and Foss v. Harbottle,^ to which, as I understand, the only ex- 
 
 ' L. R. 6 Eq. 464. Compare Re Lon- ^ l. R. 8 Ch. 1036, 1050. 
 don Mercaniile Discount Co. ubi m/pra.. * 1 Ph. 790. 
 
 '^ Atwool V. Mgrryweather, vM supra. * 2 Hpre, 461. 
 
 (a) American Railway Frog Co. v. Haven, 101 Mass. 398. 
 (6) See Bronson v. La Crosse R. R. Co. 2 Wall. 288 ; Brown a. "Van Dyke, 4 
 Halst. Ch. 795; Bayle3S v. Orne, 1 Freem. Ch. 161; Gorham v. Gilson, 28 Cal. 479. 
 
WHEN REDRESS MAT BE OBTAINED. 67t 
 
 ception is where the corporate body has got into the hands of the 
 directors and of the majority, which directors and majority are 
 using their power for the purpose of doing something fraudulent 
 against the minority, who are overwhelmed by them, as in Atwool 
 V. Merryweather,^ where Vice-Chan cellor Wood, under those 
 circumstances, sustained a bill by a shareholder on behalf of him- 
 self and others, and there it was, after an attempt had been made 
 to obtain a proper authority from the corporate body itself in 
 public meeting assembled." (a) 
 
 (2.) Wrongs specially affecting Particular Members. 
 
 It is often extremely difficult to discriminate fraud or otlier 
 injury on or to a coi-poration from similar fraud or injury to or on 
 a section only of the members thereof. What concerns, what 
 militates against, the rights of the whole body, will generally, to a 
 greater or less degree, similarly concern and militate against the 
 rights of classes and of individuals. But it is not, on the other 
 hand, equally true that the interests of the members separately are 
 synonymous with those of the members collectively. What 
 prejudices one particular corporator or class of corporators may 
 not be prejudicial — indeed, may even be beneficial — to the rest of 
 the community. Or a certain transaction may be harmful, in a pro- 
 portionate degree, to every member, and advantageous to none ; but 
 some may desire to pass it over, while others may wish to seek re- 
 dress for the same. Or, without raising any question of loss or benefit, 
 
 ' L. R. 5 Eq. 464, n. 
 
 (a) In absence of a statutory authority, stocWiolders cannot plead and defend 
 for the corporation, in a suit against the corporate body, to which the stockholder 
 seeking to intervene is not made a party. If the action is groundless or collusive, 
 and the corporation fails to defend, the remedy of stockholders is to be sought by 
 instituting an action in their own names. When the corporation, as such, is sued, 
 the stockholders, as such, are not before the court. Blackraan v. Central R. R. &c. 
 Co. 68 Ga. 189. The fact that the same persons were directors of a leasing and a 
 leased railroad, although it may entitle either corporation to do so, does not justify 
 one or more stockholders in bringing an action to have the contract declared void. 
 Wallace v. Long Island R. R. Co. 1 2 Hun, 460. An action against an officer of a 
 corporation to recover damages for a fraudulent misappropriation and conversion 
 by him of the corporate property, can only be brought by a stockholder in his own 
 name after application to, and refusal on the part of, the corporation, to bring the 
 action. In such case, the corporation must be made a defendant, and the refusal al- 
 leged and proved. Greaves v. Gouge, 69 N. Y. 164. 
 
678 ACTIONS IN PROCEEDINGS BY A MAJORITV. 
 
 the many may actively urge or passively acquiesce in the prosecu- 
 tion of certain matters which the few object, and, if they have 
 the power, decline to engage the corporation in. The exact point 
 to be determined is : when will the courts interfere on behalf of 
 the minority, thus refusing to submit to arrangements and pro- 
 ceedings of which they disapprove ? It is, of course, assumed that 
 the affairs in question are intra vires, are affairs of internal gov- 
 ernment only, and prima facie within the scope of corporate 
 authority. 
 
 As far as can be gathered from cases not always reconcilable, 
 and sometimes even conflicting, it appears that a minority or a 
 single individual will be protected under the following circum- 
 stances : 
 
 II. When the constating instruments confer expressly or l>y 
 implication rights or interests upon particular individuals, 
 or upon the members generally, and these rights or interests 
 are being infringed. 
 
 There may be a direct and unjustifiable attack upon, and vio- 
 lation of, the rights and interests of some one member or class of 
 members, (a) Thus, at the suit of preference shareholders, com- 
 panies and their directors have been repeatedly restrained from 
 paying dividends in derogation of the contracts entered into with 
 them.' Here the principle involved was breach of contract, but a 
 very analogous principle will come into play whenever definite 
 interests are given by the constating instruments to ordinary 
 shareholders, as indeed often happens in joint-stock companies.^ 
 What are the exact interests of such shareholders may not be 
 altogether clear, and even call ■ for judicial determination ; ' but, 
 
 ' Henry v. Great Northern Ey. Co. 4 done proceedings whereby officials have 
 
 K. & J. 1, and 1 De G. <fc ,\. 606. See made profits at the expense of the cor- 
 
 ffKte, pp. 173, 174; and Chap. IT of this poration, or misapplied the corporate 
 
 Part. . assets. Salomons v. Laing, 12 Bear. 877. 
 
 " For instance, with respect to the Though they may do this as to negligence, 
 
 division and appropriation of profits. See &c. Gray v. Lewis, L. K. 8 Ch. 1035. 
 
 Pawcett V. Laurie, 1 Dr. <fe Sm. 192 ; ' See, for example, Maughan v. Leam- 
 
 Menier v. Hooper's Telegraph Works, L. ington Gas Co. 15 W. E. 333. 
 E. 9 Ch. 360. So a majority cannot cou- 
 
 (a) Gray v. Portland Bank, 3 Mass. 383 ; Jackson v. Newark Plank Road Co. 2 
 Vroom, 277; Gifford v. N. J. R. R. Co. 2 Stock. 171 ; Nazro v. Merchants' Mut. Ins. 
 Co. 14 Wis. 295; Mx parte Booker, 18 Ark. 388 ; Barnstead v. Empire Mining Co. 5 
 Cal. 299. 
 
WHEN REDRESS MAY BE OBTAINED. 619 
 
 whatever they are, it is beyond the power of the corporation to 
 vary them.(a) 
 
 So, powers of making by-laws and of disfranchising must be 
 employed in a proper manner. In Adley v. Whitstable Co.,' a 
 naember had been, in pursuance of a by-law, excluded from partici- 
 pation in the company's profits; but Lord Eldon, holding the 
 exclusion to be under the circumstances not only uncalled for 
 but unlawful, decreed that the plaintiff should, upon terms, be 
 restored to his original rights, {b) 
 
 And, as already seen, powers to forfeit shares and the like must 
 be put in force ionafide / and, when the circumstances require, 
 not for the purpose of punishing or damaging a shareholder.^ (c) 
 
 III. When a transaction constitutes a peculiar and special 
 hardship to a particular memher or members. 
 
 The second case is wJien the corporation is doing acts of such 
 a kind or in such a way as to affect, unduly and unfairly, some of 
 its members only ; when these acts can be so done, and, conse- 
 quently, if done at all, ought to be so done as to affect, in a pro- 
 portionate degree, every member. 
 
 This chiefly occurs in the making of calls, it has already 
 been pointed 'out that this is a trust to be exercised for the general 
 benefit. Consequently it necessarily follows that calls must be 
 levied alike, as to time, convenience and amount, and every other 
 circumstance, upon every shareholder. 
 
 In Preston v. Grand Collier Dock Co.,' nine persons had sub- 
 scribed for 1,000 shares each, under special circumstances, and to 
 benefit the company, and afterwards they made a declaration that 
 
 ' 19 Vea. 304; 1 Mer. 107. peculiar to the shareholder concerned, 
 
 " Hart V. Clarke, 6 De G., M. & G. 232; but a matter atFecting the whole corpora- 
 
 Stubbs V. Lister, 1 Y. <fc C. Eq. C. 81 ; tion, and to annul which such shareholder 
 
 Wataon v. Eales, 23 Beav. 294 ; ante, pp. may consequently file a bill " on behalf of 
 
 18V, 498. See Sweny v. Smith, L. R. himself and all other," Ac. 
 
 7 Eq. 324, where it was decided that an ' 11 Sim. 326. • 
 illegal forfeiture of shares is not a wrong 
 
 (o) Bailey v. R. R. Co. 1 DilL 174 ; a. u. 17 Wall. 96. 
 
 (6) In caae the proper officers of a manufacturing corporation refuse to perform 
 the duty imposed upon them, a stockholder has a remedy by mandamus to compel 
 such performance. People ex rel. Miller v. Cumminga, 72 N. Y. 433. For a full re- 
 view of the authorities, see American Railway Frog Co. v. Haven, 101 Maaa. 398. 
 
 (c) Ante, p. 187, note. 
 
680 ACTIONS IN PROCEEDINGS BY A MAJORITY 
 
 they held these shares on trust for the company. Subsequently 
 the company, in public meeting, unanimously resolved that these 
 shares should be transferred to the secretary, and calls were made 
 omitting these subscribers. Shadwell, Y.-C, however, on bill filed 
 by one of the other shareholders to render these nine liable, held 
 that the calls must be made upon them: "This court never 
 would allow the directors of a company so to proceed as to require 
 some shareholders to pay a deposit and calls, and not to require 
 others to make similar payments. It is quite obvious to me that 
 no fraud was intended, and that the thing really meant was a 
 benefit to all the subscribers, namely, that the subscribers should 
 get the act of parliament they wished for. But, nevertheless, 
 as that purpose was accomplished by these nine gentlemen becom- 
 ing shareholders of 1,000 shares each, my opinion is that there has 
 been an error which this court shall set right, namely, that when 
 the directors thought proper to make the call as they did, they 
 stopped short of that which was their duty, and that they ougiit 
 to have gone on to direct the same sums to be paid upon each of 
 those shares as had been directed to be paid upon the other shares 
 which were held by those who were called the registered share- 
 holders. Therefore, it is evident that, in whatever manner it is 
 to be done, this court will rectify the error that has. been made, 
 and will take care that all the shareholders shall be put upon the 
 same footing with respect to the liability to pay calls." {a) 
 
 lY. Misuse or abuse of powers of government to the special 
 and particula/r injury of particular members. 
 
 Members in their private capacity may demand the inter- 
 ference of the courts when their corporation, or as more frequent- 
 ly happens the governing portion thereof, are employing powers, 
 whether of management or otherwise vested in them for the gen- 
 eral good, in such a way as to entail special detriment on particu- 
 lar individuals. 
 
 (a) Upon refusal of directors of a corporatioii, upon their issuing new stock to 
 stockholders generally, to issue to particular stockholders their due proportions, a 
 suit in equity to compel the proper issue is maintainable (so long as the company still 
 own stock applicable to the purpose), as well as an action for damages for the refusal. 
 Such suit should be in behalf of each individual stockholder, not by one for himself and 
 all others who may come in ; and it should be against the corporation, not against 
 the directors as individuals. Dousman v. Wisconsin, <fec. Smelling Co. 40 Wis. 418. 
 
WHEN REDRESS MAY BE OBTAINED. 681 
 
 Perhaps the best illustrations of this principle occur in connec- 
 tion with the transfer of 8hares.(a) The directors of companies 
 have not, impliedly, any discretion as to refusing to register a trans- 
 fer of shares, even in cases where the proposed transfer would be 
 contrary to the interests of the shareholders.^ But generally such 
 a discretion is expressly conferred on them by the articles of asso- 
 ciation. The discretion so given must, however, be exercised 
 reasonably : for instance, a refusal to make any transfer at all to 
 anybody will not be reasonable, and the court will control such an 
 improper exercise of the power.^ So a corporation may not de- 
 cline, acting under the influence of the majority, to register 
 transfers merely in order to prevent the intended transferees from 
 voting at a contemplated general meeting.* (J) 
 
 Not only may not powers be employed so as to be a positive 
 abuse and a hardship to particular members, but, also, they must 
 be used, and the transactions of a corporation carried out, with due 
 order and regularity. A corjiorator is entitled to require that 
 proper business usages and habits shall be observed in the con- 
 duct of the corporate affairs, that the oflicials shall be duly and 
 regularly appointed, and the like. Thus in Davidson v. Grange,* 
 the Court of Chancery of Upper Canada determined that it had 
 jurisdiction to set aside, at the suit of a minority of shareholders, 
 an election of directors by persons who were subscribers only 
 
 ' ife Smith, Knight, and Co. (Weston's judgments. The objection was taken 
 
 Case), L. R. 4 Ch. 20. But ns was ob- that the plaintiff could not sue ; that this 
 
 served by the Lord Justice Selwyn : " No was one of the oases of internal govern- 
 
 doubt, if the directors had reason to be- ment where the courts will not interfere, 
 
 lieve that the transaction was fraudulent As to this, Blake, C, observed: " It was 
 
 or fictitious, they might refuse to be par- argued in the next place that the frame of 
 
 takers in any such fraudulent or fictitious this record is defective in this, that the 
 
 transaction." L. R. 4 Oh. 30. And com- bill should have been filed in the name of 
 
 pare He National and Provincial Marine the company. The practice of the court 
 
 Ins. Co. {Ex parte Parker), L. R. 2 Ch. in that respect has been the subject of 
 
 68S. , much discussion in modern cases, and 
 
 ^ Robinson v. Chartered Bank, L. K. 1 cannot be considered perhaps as quite 
 
 Eq. 32. settled yet, but it does not appear to me 
 
 ' Re StrantoQ Iron, &c. Co. L. R. 16 that the objection can be sustained in the 
 
 Eq. 559. present. " See Wandsworth, <frc. Coke Co. 
 
 ■* 4 Grant. (Upper Can. Ch. 1854) 377. ». Wright, 18 W. K. 728;, 22 L. T. (N. 
 
 All the then English authorities were S.) 404. 
 examined in the arguments and in the 
 
 (a) See Angell <fe Ames on Corps. §§ 355, 567 ; United States v. Vaughan, 3 Binn. 
 394 ; Sargent v. Franklin Ins. Co. 8 Pick. 90. 
 
 (6) Mandamus will not lie to compel a transfer of shares of a corporation, if the 
 petitioner can be indemnified for the refusal to transfer in an action at law. Mur- 
 ray V. Stevens, 110 Mass. 95; State v. Guerrero, 12 Nev. 105. 
 
682 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 nominally and not honafide. "It is said, in the first place, that 
 this court has no jurisdiction to interfere with the internal man- 
 agement of the affairs of this corporation. I cannot say that I en- 
 tertain any doubt upon that part of the case. The bill, which is 
 very carefully and clearly drawn, respresents * * * that a very 
 ^reat fraud was perpetrated [*. e., by persons voting who were not 
 hmia fide subscribers]. * * * Are the members of public 
 companies to be deprived of that protection against frauds to 
 which every other individual in the community is entitled? 
 Neither Mozley v. Alston nor Lord v. The Governor & Co. of 
 Copper Miners, nor any other case to which we were referred, 
 establishes any such proposition. It may be that the jurisdiction 
 of equity in relation to such companies has not. been as yet fully 
 developed, and these cases certainly do evince a reluctance to in- 
 terfere in what is called their internal management ; but they cer- 
 tainly do ndt negative the jurisdiction of the court in a case cir- 
 cumstanced like the present ; on the contrary, they in my opinion 
 affirm it." 
 
 The special qualification here involved must not be pushed too 
 far. Thus, in MacDougall v. Gardiner,' the court refused to in- 
 terfere under such circumstances. The articles of association of a 
 company gave power to the chairman at any general meeting of 
 the company, with the consent of the meeting, to adjourn the 
 meeting, and also provided for the taking a poll if demanded by 
 five shareholders. At a general meeting of the company, the ad- 
 journment of the meeting was moved, and on being put was de- 
 clared by the chairman, who was one of the directors, to be car- 
 i-ied. A poll was duly demanded, but the chairman ruled that 
 there could not be a poll on the question of adjournment, and left 
 the chair. The shareholders who sided with the plaintifi" then 
 passed a resolution, among others, removing one of the directors. 
 It was held by Malins, V.-C, on bill filed by shareholder averring 
 these facts, and charging that the directors or some of them had 
 combined to. take this course with the view of stifling discussion, 
 that this made a ease of improper conduct bordering upon fraud, 
 which entitled the plaintiff to maintain his suit for restraining 
 proceedings by the directors, which the plaintiff and his party de- 
 sired to prevent. The Court of Appeal, however, reversed the 
 
 ' 1 Cb. D. 14 ; but soe contra, Cannon v. Trask, L. R. 20 Eq. 669. 
 
WHEN REDRESS MAY BE OBTAINED. 683 
 
 decision. The ground of reversal is thus expressed by James, L. 
 J. : "I cannot conceive that there is any equity on the part of a 
 shareholder, on behalf of himself and the minority, to say : ' True 
 it is that the majority have a right to determine everything con- 
 nected with the management of the company, but then we have a 
 right, and every individual has a right, to have a meeting held 
 in strict form in accordance with the articles.' Has a particular 
 individual the right to have it for the purpose of using his power 
 of eloquence to induce the others to listen to him and to take his 
 view ? That is an equity which I have never yet heard of in this 
 court, and I have never known it insisted upon before ; that is to 
 say, that this court is to entertain a bill for the purpose of en- 
 abling one particular member of the company to have an oppor- 
 tunity of expressing his opinions viva voce at a meeting of the 
 shareholders. If so, I do not know why we should not go further, 
 and say not only must the meeting be held, but the shareholders 
 must stay there to listen to him and to be convinced by him." 
 
 V. Nothing may ie done hy a corporation or a majority which 
 substantially amounts to a fraud upon the minority or par- 
 ticular members. 
 
 This follows a fortiori from what has already been stated as to 
 the protection afforded to individual corporators. The principle 
 was enforced in favor of the minority in Menier v. Hooper's Tele- 
 graph Works,' where the facts and principle were thus expressed 
 by Mellish, L. J. : " It so happens that Hooper's company are the 
 majority in this company, and a suit by this company was pend- 
 ing, which might or might not turn out advantageous to this com- 
 pany. The plaintiff says that Hooper's company being the ma- 
 jority, have procured that suit to be settled upon terms favorable 
 to themselves, they getting a consideration for settling it in tlie 
 shape of a profitable bargain for the laying of a cable. I am of 
 opinion that although it may be quite true that tlie shareholders 
 of a company may vote as they please, and for the purpose of their 
 own interests, yet that the majority of the shareholders cannot 
 sell the assets of the company and keep the consideration, but 
 must allow the minority to have their share of any consideration 
 which may come to them. I also entirely agree that, under the 
 
 ' L. R. 9 Ch. 350. Compare p. 675, n. 1 
 
684 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 circumstances, the suit is properly brought in the name of the 
 plaintiff on behalf of himself and all the other shareholders." (a) 
 
 YI. Where there is a wrongful dealing with the propeiiy, as- 
 sets or rights of a corporation iohose constitution is such 
 as to confer on each member definite rights to or interests 
 in such property, assets or rights.^ 
 
 The instances within this proposition will generally be pro- 
 ceedings by commercial corporations or their officials, whereby the 
 assets of the company have been misappropriated and devoted to 
 purposes not within those contemplated by the constating instru- 
 ments. Manifestly, the individual corporators have interests 
 amounting to or in the nature of rights in the corporate assets — 
 the corporation has been created for the attainment of profits for 
 its members — and it necessarily follows that the parties having 
 such interests are entitled to have thiem protected. Probably 
 t^ese will be considered to be cases of ultra vires in the secondary 
 sense, and thfSVefore properly referable to Chapter Y of this 
 Part. But they are in many respects so analogous to the other 
 matters already discussed in this section, that it is convenient here 
 to mention them, and to enimciate the above proposition as con- 
 taining the principle which governs them.' 
 
 It should also here be mentioned by way of caution, that 
 however harshly or cruelly, judged by the standards of morality 
 or the customs of society, a corporation, or a quasi-(i%T^ovaX& 
 body, or a majority of its members — acting, it may be, against 
 the wish of a minority — are proceeding with respect to an em- 
 ployee or other person not a member of their body, the courts 
 cannot interfere on behalf of the aggrieved party upon any 
 ground connected with the internal administration. The person 
 so complaining must apply to the courts upon some ground of 
 law or equity, some right peculiar to himself which has been in- 
 fringed. Moral considerations are insufficient. A corporate body 
 had not in Coke's time, and it has not now, a soul, and therefore 
 
 ' Wardj). Sittingboume, (fee.Ry. Co. L. ^ Does not this principle coTer the 
 
 R. 9 Ch. 488. Compare proposition II, p. cases of fraud already referred to ? Page 
 678, of which proposition, taking the term 675, n. 1. 
 "rights" in its full sense, this is but a 
 particular example. 
 
 (a) See note, ante, p. 673. 
 
PARTIES. 685 
 
 it may, and not seldom does, deal with its servants and others 
 compelled to trust to its good faith with great harshness, but the 
 courts can only censure such proceedings, and not interfere to 
 prevent them. If the party damnified thereby cannot allege some 
 fraud or legal injustice to himself personally, or some legal abuse 
 or misuse of the corporate powers which may affect the public, 
 the decision of the corporate tribunal will as against himself be 
 final j and not examinable by any ulterior authority .^(a). 
 
 Section III. — Parties. 
 
 Plaintiff. 
 
 I. The plaintiff must sue on behalf of himself, and all the 
 other memhers in the same position. 
 
 If only oBe individual be aggrieved, then that one alone will 
 be plaintiff,' and the corporation, and if deemed advisable the 
 acting members, the defendants.(5) It is, however, more than 
 doubtful whether any cases of the kind now in consideration — the 
 transactions complained of being admittedly within the power of 
 the corporation — can be such as to affect one person wholly and 
 solely and not even theoretically concern others.^ 
 
 But when the wrong is actually or potentially to a class or 
 nunniber of the members, then one or more of these will be the 
 actor or actors, the proceedings being instituted by him or them 
 on behalf of all.(c) But how to express this common interest is 
 
 ' Hayman v. Governors . of Rugby holder was fiot allowed to sue on behalf. 
 
 School, L. R. 18 Eq. 28; Whiston w Dean <fec., to restrain directors from paying.a 
 
 iand Chapter of Rochester, T Hare, 532 ; dividendalready declared, with Sweny v. 
 
 17 Q. B; 1. Smith, anfe, p. 679, n. 3 ; and see post 
 
 = Stevens v. South Devon Ry. Co. 9 pp. 689-91. 
 Hare, 313. Compare Fa wcett i;. Laurie, * But would not a disfranchisement or a 
 
 1 De G. <fc' Sm. 192, where one share- refusal to allow a transfer be an instance ? 
 
 . (a) See Sparhawk v. Union Pass. Ry. Co. 54 Penn. St. 401. 
 
 (6) Allen v. Talbot, 30 Law Times, 3,16 ; Henry v. Great Northern Ry. Co. 4 E. 
 & J. 1 ; Carpenter v. New York and New Haven R. R. Co. 6 Abb. Pr. 277. 
 
 (c) In Smith v. Swormstedt, 1 6 How. 302, the bill was filed by the complainants 
 for themselves and in behalf of the traveling and worn-out preachers in connection 
 with the Society of the Methodist Episcopal Church South. An objection was taken, 
 
686 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 scarcely yet determined. lu Edwards v. Shrewsbury and Birming- 
 ham Ry.Co.^ the plaintiff sued "on behalf of himself and all other the 
 shareholders in the Shrewsbury and Birmingham Railway Company, 
 except such of the other shareholders of the said company as are 
 respectively represented by those shareholders hereinafter named as 
 defendants hereto ;" but the Vice-Chancellor, though he did not de- 
 cide this point, doubted whether this described, with sufficient 
 clearness and precision, the persons on whose behalf the suit was 
 brought. In Bailey v. Birkenhead Ry. Co.^ the title was " on be- 
 half of himself and all other the holders of shares of £3 1 each in 
 the company, except snch (if any) of the defendants as were hold- 
 ers of such shares." Some of the holders of the £31 shares had 
 
 ' 2 Be G. <fe Sm. 537. See White v. ' 12 Beav. 433. Similarly in Yetts v. 
 
 Carmartheii, <fec. Ry. Co. 1 H. <fe M. 786 ; Norfolk Ry. Co. 3 De G. & Sm. 293. 
 33 L. J. (Ch.) 93 ; and Carlisle v. Sonth 
 Eastern Ry. Co. 1 Mao. & G. 689. 
 
 on the argunnentL to the bill, for want of proper parties to maintain the suit. 
 Mr. Justice Nelson" said : " The rule is well estabished that, where ^e parties inter- 
 ested are numerous, and the suit is for an object common to them all, some of the 
 body may maintain a bill in behalf of themselves and all the others; and a bill may 
 also be maintained against a portion of a numerous body of defendants representing 
 a common interest. Story, J., in his valuable treatise on Equity Pleadings, § 97, 
 after discussing this subject, arranges the exceptions to the general rule as follows : 
 1st. Where the question is one of a common or general interest, and one or more sue 
 or defend for the benefit of the whole. 2d. Where the parties form a voluntary 
 association for public or private purposes, and those who sue and defend may fairly 
 be presumed to represent the rights and interests of the whole. 3d. Where the par- 
 ties are very numerous, though they have, or may have, separate and distinct inter- 
 ests, yet it is impracticable to bring them all before the court. Where the parties 
 interested in the suit fire numerous, their rights and liabilities are so subject to 
 change and fluctuation, by death and otherwise, that it would not be possible, 
 without very great inconvenience, to mate all of them parties ; and, it wiU oftentimes 
 prevent the prosecution of a suit to » hearing. For convenience, therefore, and to 
 prevent a failure of justice, a court of equity permits a portion of the parties in inter- 
 est to represent the entire body, and the decree binds all of them the same as if all 
 were before the court." See, also, 1 Daniel's Chancery Practice, 4th Am. ed. p. 238 ; 
 48th Equity Rule, U. S. Sup. (X ; Beatty v. Kurtz, 2 Pet. 666 ; West v. Randall, 2 
 Mason, 181; Heath v. Erie Railway Co. 8 Blalchf. 347; Moore «. Veazie, 32 Me. 
 356 ; Mason v. York and Cumberland R. R. Co. 52 Me. 107 ; March v. Eastern R. E. 
 Co. 40 N. Hamp. 548 ; Crease f.Babcock, 10 Mete. 525 ; Heath v. Ellis, 12 Cush. 601 ; 
 Peabody v. Flint, 6 Allen, 52 ; Williston v. M, S. & N. I. R. R. Co. 13 Allen, 406 ; 
 Sears v. Hotchkiss, 25 Conn. 175 ; Hallett v. Hallelt, 2 Paige, 14; Robinson v. Smith, 
 3 Paige, 222 ; Cunningham v. Pell, 5 Paige 607 ; Morgan v. New York & Alb. R. R. 
 Co. 10 Paige, 290 ; Mann v. Butler, 2 Barb. Ch. 362 ; Willis v. Henderson, 4 Scam. 
 20 ; Whitney v. Mayor, 15 111. 261 ; Putnam v. Sweet, 1 Chand. (Wis.) 286. 
 
PARTIES. 687 
 
 paid their calls, and some had not, and the Vice-Chancellor con- 
 sidered the biU defective as to parties in thns suing on behalf of 
 all such holders (it being alleged that the calls were made 
 for an improper purpose) and in not sufi&ciently alleging 
 that the holders of the other shares were represented by the 
 defendants. In Bagshaw v. Eastern Union Ey. Co.^ the suit was 
 " on behalf of himself and all other the proprietors of scrip cer- 
 tificates for perpetual six per cent, stock, 1849, in the Eastern 
 Union Railway Company, who should come in and seek relief 
 under and contribute to the expenses of the suit, other than and 
 except the eighteen defendants." It was objected that, as there 
 might be a conflict of interests between the parties whom the plain- 
 tiff affected to represent, the suit could not be thus brought, but 
 the Yice-Chancellor held that the bill was properly framed, (a) 
 
 In the above^ cases it will be observed that, though many per- 
 sons were affected by the acts in question, they were not neces- 
 sarily affected to the same degree, or even in the same way, so 
 that some of them might even have approved of the arrangements. 
 Whenever this is so, it is necessary to make the latter parties de- 
 fendants, naming one or more amongst them as representatives of 
 
 '7^are, 114. 
 
 (a) In Black v. Del. & Rar. Canal Co. 7 C. E. Green, 1 30 ; s. o, 9 C. E. Green, 46 5, the 
 bill was filed by the complainants as well for themselves as for any other of the stock- 
 holders as might choose to cause themselves to be made parties, except those stockhold- 
 ers who, by reason of their assent to any of the acts complained of, might be deprived 
 of a right to complain of those acts. In Heath v. Erie Railway Co. S Blatchf. 347, the 
 bill was filed by eight complainants, six of whom were common stockholders, one was 
 a preferred stockholder, and the remaining one was an owner of preferred shares not 
 standing in his own name, but which he had been wrongfully prevented from having 
 transferred to him. The bill alleged that the holders of the preferred stock, as well 
 as the holders of the common stock, were very numerous, as well as constantly chang- 
 ing, and that it was impracticable to make them parties, ejther plaintiff or defendant, 
 in the suit, and that the bill was, therefore, filed on behalf of the plaintiffs and all 
 other bona fide shareholders who should elect to unite in the suit and contribute to 
 the expenses thereof. The usual allegation of the bill is that it is filed on behalf of 
 the complainants and all others similarly situated. This is a sufficient averment so 
 far as the complainants or plaintiffs are concerned. The N. Y. Code of Civil Proced- 
 ure, § 448, provides that " when the question is one of common or general interest of 
 many persons, or when the parties are very numerous, and it may be impracticable 
 to bring them all before the court, one or more may sue or defend for the benefit of 
 the whole." But the right to be enforced must be common to all. Reed v. The Ever- 
 greens, 21 How. Pr. 319 ; see Brooks «. Peck, 38 Barb. 519, and eases collected ia 
 Voorhies's N. Y. Code, 10th ed. p. 108 ; Bliss' Annotated Code, p. 228 et seg. 
 
688 ACTIONS IN PKOCEEDINGS BY A MAJORITY. 
 
 the others, (a) and to use such language in specifying the plaintiffs 
 as clearly limits them to the parties complaining.' 
 
 In every suit of this kind, the persons upon whose behalf it is 
 brought must be necessarily interested in obtaining the relief 
 sought, modo et forma ^ none having conflicting claims can be 
 joined with them ;'(&) while the defendants will include actually, 
 or by representation, all the opposing interests. Thus, in "Ward v. 
 Sittingbourne Ey Co.,' the bill was " on behalf of all the creditors 
 and shareholders ;" but, as the interests of the ordinary and pre- 
 ferential shareholders were totally opposed, a demurrer ore tenus 
 was allowed, without costs. 
 
 Sometimes .the wrong is, by its very nature, a wrong to a defi- 
 nite class ; or, to a group of shareholders bearing a particular 
 description — for instance, when a company is doing, or about to 
 do, acts in derogation of the rights of its preference shareholders. 
 In such case, evidently, one member of the class or group may 
 represent the others, and there will be none to oppose. Thus, in 
 Henry v. Great Northern Hy. Co.,^ the suit was by the plaintiffs 
 " on behalf of themselves and all other the holders of preference 
 stock in the Great Northern Railway Company." So, in Coates 
 
 ' As in Kent v. Jackson, 2 De G., M. South Eastern Ey. Co. 1 Mac. & G. 689 ; 
 
 AG. 49 ; and Cramer v. Bird, L. E. 6 Eq. Thomas v. Hobler, 4 De G., F. & J. 199 ; 
 
 143.. See Wjlliamsii. Sahnond, 2K. <feJ. Hallows ». Fernie, L. E. 3 Ch. 467. 
 463. s L. B. 9 Ch. 488. 
 
 = See Jones v. Garcia Del Rio, T. <fe « 4 K. 4 J. 1 ; 1 De G. A J. 606, and 
 
 E. 297, 300 ; Weale o. West Middlesex 27 L. J. (Oh.) 1 ; Corry v. Londonderry 
 
 W'works, 1 J. <fc W. 358, 370; Carlisle v. and Enniskillen Ey. Co. 29 Beav. 263. 
 
 (a) It -will not be necessary to make any parties defendants against whom no relief 
 is songht ; nor where the bringing them in will oust the court of jurisdiction, unless 
 their presence is absolutely requisite for determining the cause. See Busael v. Clarke, 
 7 Cranch, 98 ; Shields v. Barrow, 17 How. 130 ; Wood v. Davis, 18 How. 467 ; Bank 
 V. CarroJtouE. R.,Co.,ll Wall. 624; Samuel o. Holladay, 1 Wool. 400, 414. And 
 the decree will be without prejudice to the rights and claims of all absent parties. 
 See TJ. S. Sup. 01. Equity Rule 48. The principle upon which all these classes of 
 cases stand is, that the court must either wholly deny the plaintiffs an equitable re. 
 lief to which they are entitled, or grant it without making other persons parties, and 
 the latter it deems the least eril, as it can consider other persons as quasi parties to 
 the record, at least for the purpose of taking the benefit of the decree, and of en- 
 titling themselves to other equitable relief, if their rights are jeoparded. The same 
 doctrine is applied, and with the same qualification, to cases where a material party 
 is beyond the jurisdiction of the court, as if the party be a partner with the defend- 
 ant and resident in a foreign country, so that he cannot be reached by the process of 
 the court. West v. Randall, 2 Mason, 181. 
 
 (i) See Grant v. Van Schoonhoven, 9 Paige, 265. 
 
PARTIES. 689 
 
 V. Nottingham W'works Co.,i it was by one person " on behalf 
 of himself and all other the holders of shares in the Nottingham 
 Waterworks Company, created previously to the 12th May, 1854, 
 or issued in lieu of shares so created, except the defendants." 
 
 II. The plaintiff must not himself be personally incompetent to 
 sue. 
 
 Whenever the injury is of the above description, any member 
 of the class may thus sue, although he stand alone in his com- 
 plaint, (a) and although some even take a contrary view ; but, in 
 this latter case, they must be represented among the defendants. 
 However, if the actual plaintiflE on the record be llimseK, at the " 
 commencement of the action, precluded from suing, he cannot 
 subsequently acquire a sufficient title ; ' nor can the proceed- 
 ings be, as it were, revived and continued by others in the 
 same position, and desirous to continue them. "As, on the one 
 hand, a plaintiff who has a right to complain of an act done to a 
 numerous society, of which he is a member, is entitled effectually 
 to sue on behalf of himself and aU others similarly interested, 
 though no other may wish to sue, so although there are a hundred 
 who wish to institute a suit, and are entitled to sue ; still, if they 
 sue by a plaintiff only who has personally precluded himself from 
 suing, that suit cannot proceed." ' (5) 
 
 It must be clearly borne in mind that it is only when the 
 wrong is actually or potentially to a class that a shareholder can 
 thus sije on behalf of himself and others, the "others" being 
 either some particular group of members or the whole of them, 
 according as a portion or the whole are in exactly the same 
 position and interest as himself. It is by no means clearly es- 
 tablished what will constitute such a community of interest. 
 Thus, with regard to persons induced by fraud to become share- 
 
 ' 30 Beav. 86. Assoc. 4 De G. A J. 168, 174; 28 L. J. 
 
 ' See Evans v. Bagshaw, L. B. 5 Ch. (Ch.) 731, Compare Scarth v. Chadwick, 
 
 340, and similar cases. 14 Jur. 300; and see White v. Carmarth- 
 
 3 Burt V. British Nation Life Ass. en, <fec. Ry. Co. 1 H. A M. 786. 
 
 (a) An indiyidual member of a corporation cannot bring a suit in the name of the 
 corporation for his indiyidual benefit, or to protect his own rights or interests, with- 
 out the consent of a legal majority of the stockholders. Silk Mfg. Co. v. Campbell, 
 S Dutch. 639. 
 
 (6) See Hubbell v. Warren, 8 Allen, 173. ^ 
 44 
 
690 ACTIONS IN PROCEEDINGS BY A MAJORITY. 
 
 holders in existing companies, or subscribers to inchoative compa- 
 nies, it was decided, in Croskey v. Bank of Wales,^^) that a bill 
 will not lie by one subscriber, on behalf of himself and others, to 
 obtain a return of their subscriptions ; while, in Macbride v. Lind- 
 say,^ (h) the exact contrary was determined — it being there held 
 that a shareholder, induced by the fraudulent representations of 
 the directors of a company to become a member, could not sue, in 
 his own name and sole rights merely, the company and the direct- 
 ors for a rescission of his contract and the necessary incidental re- 
 lief, but must make the others, who had been similarly defrauded, 
 parties to his suit. 
 
 So, also, a -bill may not have a double aspect : it may not pray 
 relief on behalf of all the shareholders, or, failing that, on behalf 
 of himself.' (c) But, in Sweny v. Smith,* an objection of this 
 kind was overruled.((?) The plaintiff was a shareholder in a com- 
 pany whose shares had been forfeited, as he contended, improperly. 
 He filed his bill on behalf, &c., first to be relieved from the for- 
 
 ' 4 Giff. 314 ; 9 Jur. (N. S.) 596. Where the company's asaffta have been 
 
 ' 9 Hare, 674. Similarly decided in fraudulently misappropriated by ita 
 
 Seddon v. Connell, 10 Sim. 58, and Beech- officials, apparently the suit should be 
 
 ing V. Lloyd, 3 Drew. 227; but these " on behalf otV Ac. Hitchens ti. Congreve, 
 
 cases must be now considered overruled 4 Russ. 662 ; but see Colt v. Woollaston, 
 
 by Kisch v. Venezuela Ry Co. L. R. 2 H. 2 P. Wms. 154. 
 
 L. 99 ; and Smith v. Reese River Mining ' Thomaa v. Hobler, 8 Jur. (N. S.) 125 ; 
 
 Co. L. R. 4 H. L. 64. See, alao, Menier 4 DeG., F. & J. 199. 
 
 V. Hooper's Telegraph Works, L. R. 9 Ch. * L. R. 7 Eq. 324. 
 
 350. 
 
 (ffl) See Jones v. Garcia del Rio, T. & R. 297; Hallows v. Fernie, L. K. 3 Ch. 467 ; 
 Ross II. Estates Investment Co. L. R. 3 Eq. 122 ; L. K. 3 Ch. 682. 
 
 (6) Turner, V.-C, held, that either the plaintiff had or had not a common interest 
 with other parties ; if he had, then he only had a right to sue on behalf of himself 
 and all others similarly interested ; if he had not, then all the other parties inter- 
 ested must be made parties defendants to his suit. The plaintiff has made himself a 
 member of this company, and there is no sufficient ground made by the bill for grant- 
 ing the relief prayed (i. e., for a decree that the directors repay the auma paid for 
 calls, and be enjoined from proceeding with business in the name of the eumpany), 
 in the absence of the other shareholders. If it be out of the scope of the deed of 
 settlement, that the business of the company should be carried on at all under the 
 circumatances in which the company is placed, then the remedy is at common law. 
 See Ship v. Croaskill, L. R. 10 Eq. 73, 83. 
 
 (c) See Story Eq. Plead. § 40; Shields v. Barrowa, 17 How. 130; Coltont;. Ross, 
 2 Paige, 396 ; Lloyd v. Brewater, 4 Paige, 637. 
 
 (d) As to power of plaintiff to diamiss bill, see 1 Daniel's Ch. Pr. 4th Am. ed. 
 244; Hubbell v. Warren, 4 Allen, 173; Atlas Bank u. Nahant Bank, 23 Pick. 480; 
 Updike V. Doyle, 7 R. I. 446; Collins v. Taylor, 3 Green Ch. 168; Innes v. Lansing, 
 7 Paige, 583 ; Mahlon v. Demarest, 1 Robt. 717 ; Mass. Gen. St. 1862, o. 218, § 8. 
 
PARTIES. 691 
 
 feiture ; and, secondly, to set aside a contract entered into by his 
 company for the purchase of certain patents. Lord Eomilly, M. E., 
 overruled the objection of multifariousness mainly upon the ground 
 that the suit was occasioned in the first instance by the forfeiture, 
 and that, till the validity of this had been determined, it could 
 not be decided whether or not the plaintiff was entitled to raise 
 the other question raised in the suit. 
 
 Defendants. 
 
 Among the defendants, as has been just observed, must ap- 
 pear, personally or by representatives, all the parties concerned in 
 objecting to the suit.* Consequently, there must be, first, the cor- 
 poration itself ; * {a) secondly, the governing body, or at least those 
 of them who are implicated in the objectionable proceedings, they 
 being excepted from the description of the plaintiffs ; ' (5) thirdly, 
 representatives of other sections, if any, of the members who 
 favor the proceedings in question ; ^ lastly, representatives of that 
 portion of the class suing, which, if any, similarly favor the said 
 proceeding8,(c) that portion being by proper words also expressly 
 excepted from the description of the plaintiffs. 
 
 ' I. ft, when it is merely an internal 653, el seg. especially Winch v. Birken- 
 
 matter. If it be a question of ultra vires, head, &c. Ry. Co. 6 De G. & Sm. 662. 
 
 the corporation may be sued alone. ' Kent v. Jackson, 2 De Gr., M. & G. 
 
 ' See, however, Gregory v. Patchett, 49 ; Ward v. Sittingbourne Ry. Co. L. R. 
 
 38 Beav. 699 ; and Daugars v. Riraz, 28 9 Ch. 488 ; and the cases cited, ante, pp. 
 
 Beav. 238 ; ante, pp. 648, u. 1, 653. 685-8. As to representation see now, 
 
 ' Because the governing body are the Order 16, Rule 9, ot the new Rules of 
 
 persons to be affected by the decree in Practice, 
 the first instance. See, however, ante, p. 
 
 (<z) See note (a), ante, p. 663, 
 
 (6) It is doubtful whether the governing body are necessary or even proper par- 
 ties, unless for purposes of discovery. See Hatch jj. Chic, R. I, 4 Pac. R. R. Co. 6 
 Blatchf. 106, 115; Heath v. Erie Ry, Co. 8 Blatchf. Sif, il2. There is no need of 
 directors being parties in order to prevent the consummation of a contemplated 
 fraud, ultra vires act, or other illegality. The effect of an injunction or decree re- 
 straining any acts of a corporate body, and addressed in the ordinary way to it, or 
 its agents, <fec., is to bind not only the intangible artificial being, but also all the in- 
 dividuals who act for the corporation in the transaction of its business, to whose 
 knowledge the injunction or decree comes. Unless this be so, it would be necessary 
 in order to effectually bind a corporation by an injunction, to make every person a 
 party to the suit, who could, by any possibility, be its agent in doing the prohibited 
 act. People v. Sturtevant, 9 N. Y. 263; s. o. 1 Duer, 451, and oases cited. 
 
 (c) As to representative defendants, see 1 Daniel's Ch. Pr. 4th Am. ed. 256, 266, 
 272 ; Mandeville v. Riggs, 2 Pet. 482 ; Ogilvie v. Knox, 22 How. 380,; a. o. 2 Black, 
 639; Johnson v. Candage, 81 Me. 28. 
 
692 ACTIONS IN PROCEEDINGS BT A MAJORITY. 
 
 Section IV. — Feame op Action. 
 
 Assuming it established that the proceedings — whether styled 
 fraud, undue influence, or what not — are of such a description as- 
 to entitle* the parties specially aggrieved to some relief in respect 
 thereof, the next and main question is as to the means by which 
 the relief can be obtained. 
 
 As said in the last chapter, with regard to the legal proceed- 
 ings there considered, the suit must usually, perhaps invariably, 
 be brought in Chancery.^ A court of law recognizes the corpora- 
 tion only, not its members as distinct from and having rights 
 against it, nor a fortiori one class of members as endued with 
 powers and privileges, or subject to duties and liabilities, not in 
 their ordinary capacity of citizens, but by virtue of their status 
 as corporators, against or with respect to another class or section of 
 members.(a) And even if a common law tribunal could, under pe- 
 culiar circumstances, take cognizance of such rights and duties and 
 of disputes arising therefrom, the only redress it could afford the 
 sufferers would be a money compensation by way of damages. 
 But what they need is, not so much recompense for wrong already 
 inflicted, as a security against future transactions similar to the 
 past; and for this redress the intervention of equity must be 
 sought.(5) 
 
 The exact nature of the relief asked for will, of course, vary 
 with the circumstances, but the general principles will be those 
 already indicated with respect to actions relating to matters ultra' 
 vires in the strict sense.'' 
 
 ' /. «., in those countries where there ^ See ante, pp. 657-9. 
 
 is the distinetion between law and equity. 
 
 (o) Hodsdon v. Copeland, 4 Shepley, 314; Smith v. Hurd, 12 Mete. 871 ; Allen v. 
 Curtis, 26 Conn. 466 ; see Hinsdale v. Larned, 16 Mass. 69 ; Dale v. Grant, 5 Vroom, 
 142 ; Hartridge v. Rockwell, R. M. Charlt. 265. 
 
 (b) Craig v. Gregg, 83 Penn. St. 19. 
 
CHAPTER HI. 
 
 ACTIONS BY THIRD PARTIES IN RESPECT OF ULTRA VIRES 
 PROCEEDINGS. 
 
 These proceedings must be discriminated and dealt with sepa- 
 rately according as they do or do not result in matters which are 
 torts, or in the nature of torts, to persons not members of the cor- 
 poration concerned. 
 
 I. When a corporation exceeds its powers, and thereby does 
 an act which damages, and is in the nature of a tort to, a third 
 party. 
 
 Upon this point little need be said. The whole of the law, in 
 so far as the present subject is concerned, may be summed up in the 
 two statements : first, that as no person can instittite legal pro- 
 ceedings on account of illegal acts, however great their detriment 
 to the public or to others than himself, whether to obtain damages 
 from them or to restrain their repetition, unless he has been per- 
 sonally damnified, so neither can he do so if the acts are vli/ra 
 vires of a corporation instead of a private individual. Secondly, 
 if, on the other hand, a private person be wronged by such acts 
 he may, in every case, sue for damages or to restrain them, and 
 that although the matter complained of would not have been a 
 tort if done by an ordinary citizen. In a word, torts committed 
 by corporations stand, as regards legal proceedings by aggrieved 
 parties in respect thereof, in exactly the same position as torts by 
 private persons, with the single qualification arising from the doc- 
 trine of ultra vires, that every act directed or concurred in by a 
 corporation in excess of its powers will, if it causes harm to any 
 third party, be a tort, and give to such party a right of action. 
 
 II. When the ultra vires proceeding does not tortiously affect 
 third parties. 
 
 Here the third party may stand in various positions with regard 
 to the corporation. First, he may be a creditor, and his contract 
 may give him an interest or right more or less definite in the 
 assets of the corporation so as to constitute him, in a manner, a 
 
694 ACTIONS BY THIRD PARTIES. 
 
 member thereof. This was so in Keams v. Leaf,^(a) where the 
 plaintiff was a policy-holder by whose policy the funds of a com- 
 pany were made liable to pay the sum insured and certain shares 
 of profit by way of bonus. He was held by Page-Wood, Y.-C, 
 entitled to an injunction to restrain the company from transfer- 
 ring its business and assets to another company, contrary to the 
 provisions of the deed of settlement, and without making provis- 
 ions out of its own assets for payment of the plaintiff's policy. 
 
 On the other hand, the same judge, when Lord Chancellor, de- 
 cided that a simple contract creditor of a company cannot sustain 
 a biU to restrain the company from dealing with their assets as 
 they please, on the ground that they are diminishing the fund for 
 payment of his debt.' 
 
 Another case of this kind may be mentioned: Trevillian v. 
 Mayor, &c., of Exeter.' In this case, the defendants, a municipal 
 corporation, in order to complete a canal, had raised money by 
 mortgage of the canal and of other property. They obtained 
 an act, enabling them to borrow money, to complete the 
 canal, by mortgage of the canal and tolls. They applied part 
 of the money raised under the act in paying off the former 
 mortgages. On a bill being filed by one of the statutory mort- 
 gagees, the Lords Justices held, overruling a decision of one of 
 the Vice-Chancellors, that the corporation had no authority to pay 
 off the former mortgages out of the money raised under the act ;. 
 that the corporation was liable to repay to the statutory mortgagees 
 the money so applied ; that the statutory mortgagees had a lien 
 on the corporation estates, other than the canal, included in the 
 former mortgages to the amount of the money so applied ; and 
 that as between the statutory mortgagees and the corporation, the 
 estates of the corporation, other than the canal, included in the 
 former mortgages, constituted the primary fund for the payment 
 of the money so declared due to them. 
 
 Secondly. Another class of examples of non-members being 
 entitled to sue to prevent ultra vires proceedings on the ground 
 of a contractual relationship between them and the corporation, 
 
 1 1 H. <fe M. 681. Compare Hort's ^ Mills v. Northern Ry. Co. of Buenoa 
 
 Case, 1 Ch. D. SOI; Dowae's Case, S Ch. Ayres, L. R. 5 Ch. 621. 
 D. 385. See ante, p. 649. » 24 L. J. (Ch.) 157. 
 
 (o) See note, anie, p. 649. 
 
ACTIONS BY THIRD PARTIES. 695 
 
 arises in tliose cases where a person has transferred property to a 
 corporation to be used only in certain ways or for certain purposes. 
 These have already been examined ; and the general result seems 
 to be that the person so transferring is entitled to prevent pro- 
 ceedings by the corporation, whether ultra vires or not, whenever 
 he has reserved to himself certain rights with respect to such 
 property which the corporation is infringing, but only in such 
 cases.^ 
 
 There may, however, be circumstances where a contract of this 
 kind will cause him peculiar damage, and so entitle him to sue. 
 Thus, in Hinckley v. Gildersleeve,* where a canal corporation had 
 leased its canal, the plaintiffs, the owners of a steamboat, were 
 held entitled as one of the public specially affected by the lease to 
 maintain a bill to have it declared void. 
 
 If, however, a non-member does not bring himself within one 
 of the above exceptions — if he is purely an outsider, and no con- 
 tract made with him, no right belonging to him is infringed — 
 then he cannot come before the courts to put a stop to uWra vires 
 proceedings, even though in point of fact he is suffering unde- 
 niable pecuniary damage thereby.' 
 
 ' See ante, p. 104 etteg. Co. v. Corp. of Bradford, L. R. 16 Eq. 
 
 « Post, p. 699. 167. 
 
 ' See, for example, Pudsey Coal Gas 
 
CHAPTER IV. 
 
 ACTIONS IN RESPECT OF PROCEEDINGS WHICH ARE ULTRA VIRES 
 IN THE IMPROPER SENSE. 
 
 These actions, it would seem, must be by the member suing, 
 not purely by himself, but " on behalf of himself and all the other 
 members," except those, if any, who are made defendants. In 
 White V. Carmarthen, &c. Ey. Co.,^ which was a suit by a single 
 shareholder to prevent his company issuing Lloyd's bonds, Page- 
 Wood, Y.-C, said : " I am also of opinion that the plaintiff cannot 
 maintain this biU without suing on behalf of all the shareholders ;, 
 though, if he made out a case of illegality, it would not be neces- 
 sary that they should, in fact, concur with him, because the court 
 assumes that all shareholders are interested in preventing illegali- 
 ty. The suggestion, that the Chancery Improvement Act (15 & 
 16 Vict. c. 86, s. 42), enables a single shareholder to sue the di- 
 rectors as trustees without joining the other shareholders, is, I 
 think, unfounded, the act not contemplating any case of this de- 
 scription. It would be most improper to allow a single share- 
 holder to file a biU of this character, with the view of summoning 
 the other shareholders in Chambers after a decree." « 
 
 The other points in connection with actions for this object, 
 the parties thereto, and the relief sought, and the answers thereto, 
 will probably be exactly the same as those given in respect to the 
 analogous points arising in connection with actions to prevent 
 matters ultra vires in the strict sense.^ Both classes of matters 
 are ultra vires ; the difference is that the former are absolutely so, 
 whereas the latter, those now in statement, though outside the 
 actually existing powers of the corporation, are not outside the 
 capacity of all the corporators to agree to and thereby bind the 
 corporation. 
 
 Difficulties, however, arise not so much with reference to the 
 precise form of action, but as to whether the matters are ultra 
 vires at all, and whether, consequently, the complainant has any 
 
 ' 1 H. A M. 786, 792. - 2 See ante, pp. 646-69. 
 
ACTIONS. • 697 
 
 right of suit. As to this, the decisions are very contradictory. 
 But supposing the court, to hold that the particular matter is not 
 ult/ra vi/res in either sense, then it necessarily follows that the suit, 
 in any shape, is not maintainable, unless, indeed, the plaintiff can 
 establish such a case as will take his complaint out of the rule of 
 ' Mozley v. Alston, and so bring himself withiu one of the excep- 
 tions which have been set forth as justifying the interference of 
 the courts in the internal affairs of corporations.* 
 
 ' Ante, pp. 677-86. 
 
CHAPTER V. 
 
 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 Section I. — When the Attoenet-Geneeai, must be a Paktt. 
 
 I. Ifo person may institute proceedings with respect to wrong- 
 ful acts, which if of a private nature are not wrongs to him- 
 self, and if of a public nature do not specially affect him- 
 self {a) 
 
 (a) A bill in equity will not be entertained for an injunction against a public 
 nuisance, unless it show that the plaintiff will sustain a special or peculiar damage 
 from it — an injury distinct from that done to the public at large. Bigelow v. The 
 Hartford Bridge Company, 14 Conn. 566 ; O'Brien «. Norwich & Worcester Railroad 
 Company, 17 Conn. 872; Turnpike Co. v. State, 8 Wall. 210 ; Davis v. The Mayor, 14 
 N. Y. 606 ; Wetmore v. Story, 22 Barb. 414 ; Francis v. Schoellkopf, 53 N. Y. 162. It 
 is well settled that no person affected by a public nuisance, can maintain an action by 
 reason thereof unless he sustains some peculiar special damage, not the kind of injury 
 which all persons or all property similarly situated must sustain. Irwin v. Dixion, 9 
 How. 10; Dover*. Portsmouth Bridge, 17 N. H. 200; Smith o. City of Boston, 7 
 Cush. 254 ; Wesson v. Washburn Iron Co. 13 Allen, 96 ; Clark v. Saybrook, 21 Conn. 
 314 ; Osborn v. Brooklyn R. R. Co. 5 Blatchf. 366 ; Butler v. Kent, 19 John9.228 ; Lan- 
 sing V. Smith, 8 Cow. 146 ; Doolittlet/. Supervisors of Broome Co. 18 N. Y. 156 ; Mil- 
 hau V. Sharp, 27 N. Y. 611 ; Clark ... Blackman, 47 N. Y. 168 ; Kellinger v. Forty- 
 second St. R. R. Co. 60 N. Y. 206 ; Blanchard v. West. Union Tel. Co. 60 N. Y. 610 ; 
 Smith V. Lockwood, 13 Barb. 209 ; Dougherty v. Bunting, 1 Sandf. S. C. R. 1 ; Man- 
 hattan Gas Co. V. Barker, 7 Robt. 623 ; Sixth Ave. R. R. Co. o. Gilbert El. R. R. Co. 
 41 N. Y. Supr. 489, s. o. on appeal, 43 N. Y. Supr. 292 ; Zabriskie v. I. C. <fe B. R. R. Co. 
 13 N. J. Eq. 314 ; Hinchman v. Paterson Horse R. R. Co. 17 N. J. Eq. 75 ; Black v. 
 Phil. <fe Reading R. R. Co. 58 Pa. 249. An individual cannot maintain a suit to 
 restrain a nuisance, which injures him only in rights enjoyed by him as one of the 
 public. In such case an information must be filed for the public, in the name of the 
 attorney-general, on behalf of the State. Higbee <fc Riggs v. Camden <fe Amboy 
 Railroad Co. 4 C. E. Green, 276. In Del. <fc R. Canal Co. v. Rar. <fe Del. Bay R. R. 
 Co. 1 C. E. Green, 321, the Chancellor says: "An injunction is the proper remedy to 
 secure to a party the enjoyment of a statute privilege of which he is in the actual 
 possession, and when his legal title is not put in doubt. And if corporations go be- 
 yond the powers which the Legislature has given them, and in a mistaken exercise of 
 those powers interfere with the right of property of others, equity is bound to inter- 
 fere by injunction, if the exigency of the case require it. * * The powers of a court 
 of equity in regard to nuisances, are corrective as well as preventive. It may order 
 
WHEN ATTORNEY-GENERAL MUST BE A PARTY. 699 
 
 It, is unnecessary to cite authorities to prove that the plaintiff 
 in an action with respect to a private tort must be the person 
 actually damnified. 
 
 As to public torts the proposition, subject perhaps to the 
 qualifications contained in the next two rules, holds without 
 exception. It holds equally with regard to bodies of a quasi-p\ih- 
 lic nature, and having to fulfill qiMsi-puhlic functions, as to private 
 individuals. These bodies have only the defined and limited 
 rights given them by statute or common law, and therefore if any 
 particular wrong be not a wrong to the interests which they are 
 created to protect, and with respect to which they are empowered 
 
 themtobeabated, as well as restrain them from being erected. * * In order to justify 
 the issuing of an injunction to restrain the erection of a nuisance, or to abate it after 
 it is erected, it must appear not only that the complainant's rights are clear, but that 
 the thing sought to be enjoined is prejudicial to those rights. The fact of the nuisance 
 must be clearly established. Mohawk Bridge Co. v. tJtica & Sehenec. R. R. Co. 6 
 Paige, 664. So far as the complainants are. concerned, the erection complained of is 
 no nuisance, however unlawful, unless it occasion injury to them. The groand of 
 relief is thus stated by Mr. Justice Baldwin (Bonaparte -j, Camden & Amboy R. R. 
 Co. Baldwin's R. 231) : ' If the complainants' rights of property are about to be 
 destroyed without antho rity of law, or if lawless danger impends over them by per- 
 sons acting under color of law, when the law gives them no power or when it is 
 abused, misapplied, exceeded, or not strictly pursued, and the act impending would 
 subject the party committing it to damages in a court of law for a trespass, a court 
 of equity will enjoin its commission. So of any act of peculiar trespass, occasioning 
 grievous mischief or lasting injury, destructive of property, a right or franchise.' " 
 This case was affirmed on appeal (4 C. E. Green, 646), on the ground that " when the 
 complainants obtained from the State the right to establish their road that, by the 
 intrinsic force of such grant, such franchise was exclusive against all persons but the 
 State, and that a competing road set up without a legislative license, is a fraud upon 
 such grant, and is a plain public nuisance." In Mississippi & Missouri R. R. Co. o. 
 Ward, 2 Black. 486, the Court hold " that a public nuisance may be abated on a bill 
 in equity, brought by a private party who has suffered special damage. It is neces- 
 sary for the plaintiff in such a bill to show that he has sustained, and is still sustain- 
 ing, individual injury by the nuisance. But where the bill is brought in a Federal 
 court, it is not necessary to show that the plaintiff's damage amounts to the sum 
 which is required to give the courts of the United States jurisdiction. The jurisdic- 
 tion is tested by the value of the object to be gained by the bill, and that object is 
 the removal of the nuisance. The private party, though nominally suing on his own 
 account, acts rather as a public prosecutor on behalf of all who are or may be 
 injured. If he has partners in the particalar business affected by the nuisance, he 
 need not join them as plaintiffs, any more than he need join other persons who have 
 suffered similar injuries." See Hud. <fe DeL Canal Co. v. N. Y. <fe Erie R. R. Co. 9 
 Paige, 323 ; In re Long Island R. R. Co. 3 Edw. Ch. 487 ; Sandford v. R. R. Co. 24 
 Penn. St. 878; Jarden v. Phil., Wil. <fc Bait. R. R. Co. 3 Whart. 602; Moorehead v. 
 Little Miami R. R. Co. 11 Ohio, 340 ; 1 Billiard on Torts, ch. xix. 
 
700 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 to apply to the courts, they cannot sue, whether in equity or at 
 common law, to prevent or punish such act. Of course such 
 bodies are entitled to not less protection than private persons, and 
 their rights and powers will be construed liberally.^ 
 
 Thus in Vestry of Bermondsey v. Brown,' it was held that 
 the vestry of a parish could not maintain a suit to restrain an 
 obstruction to a public right of way except as relators in an in- 
 formation by the attorney-general. 
 
 So Mayor, &c. of Exeter v. Earl of Devon ' shows that a muni- 
 cipal corporation is not entitled to an injunction to restrain the 
 erection of a pier admitted to be a public nuisance. This was a 
 strong case, for the corporation were by statute actually empow- 
 ered to remove obstructions to the navigation of the river Exe, in 
 which the pier in question had been erected, upon paying com- 
 pensation to the owners of the soil. 
 
 II. In all such eases the attorney-general ought to he the 
 actor ^ hut if he refuses he may he made a defendant 
 semble. 
 
 As has been said, the attorney-general must always be a party 
 when the matter is one aifecting the public generally, and not any 
 one person in particular ; but if he refuses to be plaintiff either 
 ex officio, or at the relationship of persons complaining, the par- 
 ties applying to the court must make him a defendant.* 
 
 * 
 
 III. Bui if there is a distinct private injury separahle from the 
 wrong to thepuhlic, the private individual specially affected 
 may sue for his own protection without making the attor- 
 ney-general a party. 
 
 While on the one side it seems quite clear that if the acts 
 complained of alfect private individuals only as being members of 
 the public, or are of such a kind that no judgment can be given, 
 no relief rendered, without incidentally bringing into question 
 public rights, the attorney-general must be joined ; yet on the 
 
 ' Grossman v. Bristol & South Wales Att.-Gen. v. Toronto St. Ey. Co. 14 
 
 Union Ry. Co. 1 H. <fe M. 531. Grant. (Upp. Can. Ch. 1868), 678 ; Tem- 
 
 = L. R. 1 Eq. 204. But see Nuneaton pie v. Flower, 41 L. J. (Ch.) 604 ; Arm- 
 Local Board v. General Sewage Co. L. R. strong v. Church Soc. of Toronto, ante, 
 20 Eq. 12T. p. 645, n. 1 ; Hinctley v. Gildersleeve, 
 
 8 L. R. 10 Eq 232. 19 Grant. (Upp. Can. Ch. 1872), 212. 
 
 •• Lang V. Purves, 8 Jur. (N, S.) 524 ; 
 
WHEN ATTORNEY-GENERAL- MUST BE A PARTY. 701 
 
 other side if the private damage and the rights relating thereto 
 can be separated from the public matters, a purely private suit 
 may be instituted. (a) 
 
 In Spencer v. London and Birmingham Ey. Co.^ the plaintiff, 
 as tenant of a house in Granby Mews, filed a bill to restrain the 
 defendant from stopping up the access thereto from Hampstead 
 Road ; the defendant demurred on the ground that it was a pub- 
 lic nuisance ; but Shadwell, Y.-C, overruled the demurrer. 
 
 Similarly, in Cook v. Mayor, &c. of Bath,' where the facts 
 were very analogous, Malins, Y.-C, decided that the plaintiff, 
 having suffered a particular injury from the obstruction of a pub- 
 lic way, was entitled to an injunction, and that the Attorney-Gen- 
 eral need not be a party to his suit. 
 
 Wilson V. Furness Ey. Co.^ is another case illustrative of this 
 principle. In this case, in consideration of certain land owners ob- 
 taining from the Admiralty a waiver of an obligation imposed 
 upon a railway company, by their act, to construct certain works, 
 and upon conveyance of the necessary land by the land owners, 
 the railway company entered into an agreement with them, to 
 make a carriage road between certain specified points, and also to 
 make and maintain a wharf for loading and discharging vessels at 
 a specified place, of a stipulated length and of a suitable and con- 
 venient height. The obligation imposed upon the company by 
 their act, had been waived by the Admiralty ; and the land required 
 had been conveyed to the company, who had commenced but had 
 not finished the road, arid had not commenced the wharf. Under 
 these circumstances, on a bill being filed by the land owners for 
 specific performance of the agreement, James, Y.-C, decided both 
 that the agreement was not ull/ra vires, and also that the attor- 
 ney-general was not a necessary party to the suit for enforcing 
 specific performance of it, although it had been entered into with 
 the company by the plaintiffs both on their own behalf, and as 
 representing the inhabitants of the district. He therefore decreed 
 the company to specifically perform it. With regard to the ob- 
 jection that the attorney-general was not a party, he said : " Then 
 
 ' 8 Sim. 193; 1 Rail. C. 193. ' L. R. 9 Eq. 28. 
 
 ' L. R. 6 Eq. 177; see, also, Soltau v. 
 De Held, 2 Sim. ;(N. S.) 133. 
 
 (a) See Francis v. Schoellkopf, 68 N. Y. 152, and other case cited in note, p. 
 
 698. 
 
702 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 it is suggested that the attorney-general ought to be here, be- 
 cause this is intended for the good of the public. I do not think 
 the attorney-general is a necessary party. I make an agreement 
 with a person that I will make a road, and that road will after- 
 wards be used as a public road. The person who makes the agree- 
 ment with me has a right to call on me to do it. The agreement 
 is not with the public ; the agreement is with the individual. The 
 public is no party to it, and I do not think the attorney-general 
 is a necessary party to the suit. The demurrer must be over- 
 ruled." 
 
 Besides the above there are numerous other decisions to the 
 effect that unless the rights invaded are clearly those of the public 
 generally, as distinct from those of a city or other corporate dis- 
 trict, there is no necessity for making the attorney-general a 
 party.-' (a) It should be added, that where a person is specially ag- 
 grieved, so as to be entitled to personally commence an action for 
 his own redress, and the circumstances also constitute a public 
 wrong, then compound proceedings in Chancery may be insti- 
 tuted by means of a compound bill and information.^(S) 
 
 ' Town of Guelph v. Canada Co. 4 F. 425 ; Att.-Gen. v. Wilson, 1 Cr. & 
 
 Grant. 632. Ph. 1 ; Att.-Gen. v. Earl of Lonsdale, L. 
 
 « See Att.-Gen. v. Vivian, 1 Russ. 226, R. 1 Eq. 311. 
 233 ; Skinners' Co. v. Irish Soe. 12 CI. & 
 
 (a) Trnsteea of Watertown v. Cowen, 4 Paige, 510. 
 
 (b) See Story Eq. PI. § 8 ; Parker v. May, 6 Oush. 336 ; Att.-Gen. a. Propri- 
 etors of Meeting House, 3 Gray, 1 ; Att.-6en. v. Merrimack Mfg. Co. 14 Gray, 
 586; Att.-Gen. v. Paterson <fe Hudson R. R. Co. 1 Stock. 626; Newark Plank-road 
 Co. V. Elmer, 1 Stock. 764 ; Commissioners v. Andrews, 10 Rich. Eq. 4. " There are 
 many authorities in England and in this country, which deny the right of private 
 parties in their own names (In the absence of special laws), when their interests are 
 only in common with the public, to compel the performance of a duty to the public. 
 The reason is, that if one individual may interpose, any other may, and as the decision 
 in an individual case would be no bar to any other, there would be no end to litiga- 
 tion and strife. The general laws of order, so necessary to good government, for- 
 bid anything like this." Fer Thompson, J., in Buck Mountain Coal Co. v. Lehigh 
 Coal & Nav. Co. 60 Penn. St. 91 ; but see United States v. Union Pacific Rw. Co. 2 
 DiU. 52'7 ; Hall v. Union Pac. R. R. Co. 3 Id. 615 ; where Dillon, C. J., holds that pri- 
 vate persons may be relators in mandamus proceedings to enforce a public duty. See 
 ante, p. 407 note. Judge Dillon observes : " It deserves consideration whether a judg- 
 ment in a suit in which the attorney-general appears, concludes th e public to any 
 greater extent than a similar judgment would in a mandamus proceeding instituted 
 by a private relator, as in each case it is the suit which makes the government formal- 
 ly a party, and the form of proceeding is the same." See, also, U. S. v. Union Pac. R. 
 R. Co. 4 Dill. 479. 
 
WHEN ATTORNEY-GENERAL MUST BE A PARTY. Y03 
 
 And in such a suit, tlie relief prayed on behalf of the pub- 
 lic may be allowed, while that sought for by the private individual 
 may be refused, and each with costs.^ 
 
 IV. The last three propositions apply equally to ultra vires 
 transact io7is. 
 
 Upon this subject there have been three well-known cases. 
 In Mayor, &c. of Liverpool v. Ohorley W'works Co.,* where, by a 
 Water-works Act, the defendant company was empowered to divert 
 the water of a stream (without limit as to quantity) by means of 
 an open channel filled with loose stones, and they were diverting 
 it by means of a culvert, it were held that the plaintiff, another 
 water-works company, who was entitled to the water of a stream 
 into which the diverted stream had flowed, were not entitled to an 
 injunction to restrain a violation of the terms of the act as to the 
 mode of diversion. Lord Cranworth, L. J., said : " The question 
 arises whether the acts of the defendants, departing in these re- 
 spects from the strict parliamentary powers, are acts of which the 
 plaintiffs have any right to complain or demand the prevention, in 
 the actual circumstances ; for though we accede to the general ob- 
 servation, that persons obtaining from the Legislature, by acts of 
 parliament, like those now before us, powers to interfere with 
 rights of property for their own purposes (whether of a local na- 
 ture or merely private), are bound strictly to adhere to the powers 
 so conceded to them, to do no more than the Legislature has sanc- 
 tioned, and to proceed only in the mode which the Legislature 
 has pointed out, yet it does not follow that any one of her Majes- 
 ty's subjects has a right to complain, whenever parliamentary 
 powers of this nature have not been strictly followed, or are in- 
 tended to be transgressed. In such cases (we of course except any 
 proceeding at the instance of the attorney-general), a plaintiff 
 seeking the assistance of a Court of Equity, by way of injunction, 
 is bound to show that he has an interest in preventing the defend- 
 ants from doing what is in fact, or may well be called, a violation 
 of their contract with the Legislature. lie must show not only 
 that the defendants are committing or intend to commit a wrong, 
 
 ' Att.-Gen. v. Cockennouth Local age, Att.-Gen. v. Mayor of Kingston, 34 
 
 Board, L. E. 18 Eq. 172. See, as to dis- L. J. (Ch.) 481 ; Att.-Gen. v. Gee, L. E. 
 
 missal of the bill with costs, where the 10. Eq. 131. 
 
 attorney-general, suing at the relation of ^ 2 De G., M. & G. 852, 860, 861. 
 
 a private individual, fails to prore dam- 
 
704 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 but also that the wrong complained of does occasion or will occa- 
 sion loss or damage to him ; that he has a special or private in- 
 terest in confining the defendants within the limits of their parlia- 
 mentary powers. Now, in this respect, the corporation of Liver- 
 pool appear to us to have failed." {a) 
 
 In another case, Stockport District "W works v. Mayor, &c. of 
 Manchester,* where the defendants were proposing to supply water 
 outside their own limits, and a competing company filed a bill to re- 
 strain such proceeding, Lord Westbury, L. C, allowed a demurrer. 
 In doing so he said : " If I had here a party who had a right to 
 restrain the Manchester corporation within its proper limits, as, 
 for example, the rate-payers, who were interested in having the 
 water at the lowest amount, and in having the certainty of an 
 abundant supply, or, if * * * I had the attorney-general 
 here as informant * * * I should probably not hesitate to 
 restrain the corporation of Manchester from carrying into effect 
 the agreement which they have entered into with the registered 
 company. But here I have a rival company, and whatever may 
 be the general merits of the controversy, the question is whether 
 they \i. e., the public] can be represented by that company." 
 
 The third case is that of Pndsey Coal Gas Co. v. Corp. of 
 Bradford,^ the facts and decision in which were very similar to the 
 last. The defendant, a municipal corporation, having, under the 
 provisions of an act of parliament, bought up a gas company 
 which previously supplied gas to the borough of Bradford, and 
 which had compulsory powers for the purpose within the borough, 
 commenced supplying gas to an adjoining township. A gas com- 
 pany, situate in and supplying the township, filed a bill against 
 the corporation, to restrain them from supplying gas within the 
 township, alleging, as a personal injury, which entitled them to 
 maintain their suit, that the corporation had contracted to supply 
 gas to a particular manufactory within the township, which other- 
 wise they must have supplied, and that they had thereby been de- 
 prived of the profits arising from the supply of gas to the manu- 
 
 1 9 Jur. (N. S.) 266. 19 Grant. 212, which are scarcely recon- 
 
 ^ L. R. 15 Eq. 167. Compare Mayor, cilahle with the three cases here consid- 
 
 <tc. of Cardiff v. Cardiff W'works Co. ered. 
 
 ante, p. 388 ; and Hinckley v. Gildersleeve, 
 
 (o) Bonaparte v. Camden & Amboy R. R. Co. Bald. 231 ; Rar. & D. B. R. R. Co. v. 
 Del. <fe Rar. Can. Co. 3 C. E. Green, 646. 
 
WHEN ATTOENEY-GENERAL MUST BE A PAETT. 705 
 
 factory, and that great loss would be sustained by them. The de- 
 fendant demurred, and it was decided that the injury alleged was 
 not such as entitled the plaintiffs to maintain the suit. 
 
 The last two are especially important decisions. They amount 
 to this, that, although a person may, as a matter of fact, sustain 
 damage or loss by the result of ultra vires transactions, neverthe- 
 less he is not entitled to sue on account thereof, unless he can show, 
 in addition to such damage, that some right belonging. to him has 
 been invaded, or some duty owed him by the corporation in ques- 
 tion has been violated by such corporation.' 
 
 Another case may be mentioned, Thorne v. Taff Vale, &c. Co.,^ 
 where the plaintiff, suing merely as one of the public to restrain a 
 railway company from closing their line, was held not entitled to 
 maintain his suit. 
 
 The authorities hitherto considered have been instances of 
 parties not members of the corporations concerned attempting, 
 without effect, to put a stop to ultra vires proceedings. The law 
 is precisely the same when the complainant is a corporator ; he 
 also must show a private and personal interest to support such a 
 suit. But, of course, there is the very great practical difference 
 that a corporator is almost invariably damnified, actually or 
 prospectively, by such proceedings, and therefore entitled to be 
 heard. 
 
 Under special circumstances, however, it seems that even a 
 corporator may not be directly injured, but the acts alleged to be 
 ult/ra vires may be of a public nature only. This, at least, was 
 the decision in Evan v. Corp. of Avon.' Here a member of a 
 municipal corporation (a) filed a bill to restrain the corporation 
 from selling their estates, and for an account of the estates sold, 
 his alleged rights being in his corporate, and not in his individual 
 capacity. Eomilly, M. E., allowed a demurrer to the bill, and in 
 doing so, he thus expressed his reasons and his view of the law 
 and of the plaintiff's position : " I am of opinion that this biU can- 
 not be supported. This is the case of a single burgess suing a 
 municipal corporation, andasking for an injunction to restrain it 
 
 ' See, however, the facta and decision ° 29 Beav. 144. Compare Att-Gen. o. 
 
 in Hinckley ». Gildersleeve ; anfe, p. 695. Viyian, 1 Rues. 226, 233; Atr.-Gen. d. 
 2 13 Beav 10. East India Co. 11 Sim. 380, 386. 
 
 (a) See Dillon on Mun. Corp. eh. 22; 
 45 
 
706 ACTIOHS BY OR ON BEHALF OF THE PUBLIC. 
 
 from selling certain property, and for an account. The distinc- 
 tion must be borne in mind between a municipal corporation and 
 an ordinary trading corporation, or one in the nature of a partner- 
 ship, established for the purpose of dividing the profits among its 
 members. Prima facie, an ordinary municipal corporation (if not 
 within the Municipal Corporation Act, as this is stated not to be) 
 has full power to dispose of all of its property like any private in- 
 dividual, and the burden of proof lies on the person alleging the 
 contrary to establish a trust. The trust may be of two characters, 
 it may be of a general character or of a private and individual 
 character. * * * Here the plaintiff, a private individual, states, 
 that he also fills a public character as one of the senior burgesses 
 of the borough of Avon, and, so far as appears from the bill, his 
 interest is common to all the other burgesses of the town ; this 
 shows that his interest is of a public character. I am of opinion 
 that there is no trust sufiiciently alleged on the face of this bill to 
 support it." (a) 
 
 Section II. — When the Attoeney-Geneeal may Sue. 
 
 It being then established that the attorney-general must be a 
 party to suits which concern public matters, the next question is, 
 what will be the varieties of ultra vires acts with respect to which 
 he may sue ? When may the attorney-general institute proceed- 
 ings to put a stop to matters which either are actually ultl-a vires or 
 approach closely thereto ? 
 
 Now, the occasions upon which the courts will exercise juris- 
 diction to restrain the doing of acts of this kind seem to fall under 
 the following heads : 
 
 I. First. When a corporation or quasi corporate body has been 
 created for the accomplishment or carrying out of public 
 objects, and if is doing or contemplating acts prejudicial to 
 or inconsistent with such objects. 
 
 In all cases of this kind, the powers and capacities possessed by 
 the corporation have been conferred upon it, not for the advantage 
 of itself or its individual members, but for the public weal. Any 
 
 (o) Davis V. The Mayor, 14 IT. Y. 606. 
 
WHEN THE ATTORNEY-GENERAL MAY SUE. 707 
 
 employment of sueli powers or capacities, save and except for the 
 public purposes, and those-special public purposes for the advance- 
 ment of which they were designed, is consequently ultra vires, 
 and being so, it will, at the same time, ex prcemissis, constitute a 
 public grievance. Under the class of bodies here considered will 
 be included River, Harbor, Dock, Navigation, Fishery, and other 
 similar Commissioners ; Turnpike Trustees ; Drainage, Sanitary, 
 Sewage, and the like authorities ; Boards of Health ; Guardians of 
 the Poor ; and analogous bodies, (a) 
 
 (a) " Upon a survey of decisions in Great Britain and the United States, while 
 they discover some diversity of opinion, it seems to us, in view of the nature of 
 municipal powers, the danger of abuse, the necessity for prompt remedy on the part 
 of those most interested in the proper administration of municipal affairs, to wit, the 
 taxable inhabitants, that the following conclusions rest upon reason ; and have, per- 
 haps, also, the support of the preponderance of judicial authority: 1. The proper 
 parties may resort to equity, and equity will entertain jurisdiction of their suit 
 against municipal corporations and their officers, when these are acting ultra vires, or 
 assuming or exercising a power over the property of the citizen, or over corporate 
 property or funds, which the law does not confer upon them, and where such illegal 
 acts affect injuriously the property owner or the taxable inhabitant. But if, in these 
 cases, the property owners or the taxable inhabitants can have full and adequate 
 remedy at law, equity will not interfere, but leave them to their legal remedy. 2. 
 That in the absence of special controlling legislative provision, the proper public 
 officer of the commonwealth which created the corporation and prescribed and lim- 
 ited its powers, may, in his own name, or in the name of the State on behalf of resi- 
 dents and voters of the municipality, exercise the authority, in proper cases, of filing 
 an Information or bill in equity, to prevent the misuse of corporate powers, or to set 
 aside or correct illegal corporate acts. 3. That the existence of such a power in the 
 State, or its proper public law officer, is not inconsistent with the right of any taxable 
 inhabitant to bring a bill to prevent the corporate authorities from transcending their 
 lawful powers, where the effect will be to impose upon him an unlawful tax, or to in- 
 crease his burden of taxation. Much more clearly may this be done when the right 
 of the public officer of the State to inteifere is not admitted or does not exist ; and, 
 in such case, it would seem that a bill might properly be brought in the name of one 
 or more of the taxable inhabitants, for themselves and all others similarly situated, 
 and that the court should then regard it in the nature of a public proceeding to test 
 the validity of the corporate acts sought to be impeached, and deal with and control 
 it accordingly." Dillon on Mun. Corp. § 736 a. ; see cases cited in notes to ch. 22, 
 lb. ; Roosevelt v. Draper, 23 N. Y. 318 ; Att.-Gen. v. City of Salem, 103 Mass. 138 ; 
 New London v. Brainard, 22 Conn. 552 ; Baltimore v. Gill, 31 Md. 3T6 ; Conklin v. 
 Commissioners, 13 Minn. 454 ; see, also, Davis v. Mayor, 2 Duer, 663 ; People v. Low- 
 ber, 1 Abb. Pr. 158 ; People v. Miner, 2 Lans. 396 ; People v. R. R. Co. 6 Lans. 25 ; 
 People V. Tweed, 13 Abb. Pr. (N. S.) 25 ; Supervisors v. Tweed, lb. 152 ; People v. 
 Booth, 32 N. Y. 397 ; People v. Ingersoll, 58 N. Y. 1 ; Atty.-Gen. v. Detroit, 26 Mich. 
 268. 
 
708 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 II. Secondly. When the corporation holds its funds and prop- 
 erty, whether the whole or a portion thereof, in trust for 
 public purposes. 
 
 The basis of tlie jurisdiction here is rather the trust that has 
 been impressed on the corporate assets, than the public purposes 
 to which they are to be applied. It is on this ground, as has al- 
 ready been seen, that the Court of Chancery supervises many 
 ecclesiastical and eleemosynary corporations, where usually its 
 jurisdiction is excluded by that of the visitor. Within his own 
 province, that is to say, in matters of internal arrangement, the 
 decisions of the visitor, mala fides apart, are final ;^ but his juris- 
 diction does not extend to, or at least does not oust, that of chan- 
 -cery in the case of trusts, {a) Therefore, if a trust can be shown 
 to exist, whether for secular or religious matters,' and whether 
 there be or be not a visitor, the court will take cognizance of such 
 trust, and will, if duly called upon, enforce the observance of 
 the same, and restrain proceedings inimical thereto as being ultra 
 vires. 
 
 III. Thirdly. When any corporation is doing acts detrhnental 
 to the public welfare, or hostile to public policy. {b) 
 
 ' See Whiaton v. Dean and Chapter of J. (Ch.) 625 ; Rex v. Bishop of Ely, 2 T. 
 Rochester, 7 Hare, 532 ; 17 Q. B: 1 ; R. 290. 
 
 Thompson v, UniTeraity of London, 33 L. ' See Daugars v. Riraz, 28 Bear. 283; 
 
 and ante, p. 49 et seq. 
 
 (a) Dartmouth College v. 'Woodward, 4 Wheat. 518; State v. Adams, 44 Mo. 570. 
 
 (6) In Atty.-Gen. v. R. B. Companies, 35 Wis. 425, the court sustained the juris- 
 diction to enjoin a corporation from abuse or excess of franchise or other violation 
 of public law to public detriment, on information in equity filed ex officio by the at- 
 torney-general. The court reviews the authorities, English and American, and says : 
 "There are more cases to the same effect (i. c, that the remedy by injunction can be 
 sustained at suit of private parties, to restrain corporations from committing irrepar- 
 able injury to the parties complaining), an unbroken line of decisions of the most re- 
 spectable authority covering some half a century, most of them going on excess or 
 abuse of corporate franchises, and all fully sustaining equitable jurisdiction in case of 
 private wrong. They seem to establish the jurisdiction of courts of equity in this 
 country, as conclusively as it is established in England, of private suits to restrain 
 private wrong arising from excess or abuse of power by corporations. In such cases 
 public wrong may be considered only as an aggregation of private wrongs. And the 
 jurisdiction once established to enjoin private wrong in each case at the suit of the 
 person wronged, it ia almost a logical necessity to admit the other branch of the ju- 
 
WHEN THE ATTORNEY-GENERAL MAY SUE. 709 
 
 The right of the attorney-general to intervene on these grounds 
 was fully established in Att.-Gen. v. Great Northern Ry. Co.,* 
 where the defendants had engaged in an illegal trade in coals. It 
 
 ' 1 Dr. <fe Sm. 154 ; ante, p. 78. 
 
 risdiction, to enjoin at the suit of the State such a wrong, common to the whole 
 public, as interests the State, and could be remedied by private persons by a vast 
 multitude of suits, only burdensome to each and impracticable for very number ;. 
 more conveniently, effectually, and properly represented by the attorney general as 
 parens patriix. But jurisdiction of informations of this nature has sometimes been 
 denied here ; courts of equity in this country, singularly enough, being sometimes 
 more timid to control corporate power, and less willing to protect the public against 
 corporate abuses than the English Chancery. In both branches of the jurisdiction, 
 it proceeds as for guasi nuisance, and it is difficult to understand why the jurisdiction 
 should be asserted as to private nuisance and denied as to public nuisance ; why, for 
 the same cause, individuals should have a remedy denied to the aggregate of indi- 
 viduals called the public. But, as we remarked before, in this regard the judicial 
 voice in America is less certain in tone than in England. We should be willing' to 
 follow the English rule in this State, unless there were a preponderance of American 
 authority against it. But, fortunately, we find this wholesome jurisdiction sustained 
 here by the great weight of authority, and, with modern experience, we deem it only 
 a question of time when it must be universally asserted and exercised." In Atty.- 
 Gen. -u. Tudor Ice Co. 104 Mass. 239, it is said: "The only cases in which informa^ 
 tions in equity in the name of the attorney-general have been sustained by this court, 
 are of two classes. The one is of public nuisances, which affect or endanger the pub- 
 lic safety or convenience, and require immediate judicial interposition, like obstruc- 
 tions of highways or navigable waters. District Attorney v. Lynn <St Boston R. B. 
 Co. 16 Gray, 242; Atty.-Gen. v. Cambridge, lb. 247 ; Atty.-Gen. «,. Boston Wharf 
 Co. 12 Gray, 653; Rowe v. Granite Bridge Co. 21 Pick. 344, 347. The other is 
 of trusts for charitable purposes, where the beneficiaries are so numerous and indefi- 
 nite that the breach of trust cannot be effectively redressed, except by suit in behalf 
 of the public. County Attorney v. May, 5 Cush. 336 ; Jackson v. Phillips, 14 Allen, 
 639, 579i Atty.-Gen. v. Garrison, 101 Mass. 223; Gen. Stats, chap. 14, § 20. If there 
 are any other cases to which this form of remedy is appropriate, that of a private 
 trading corporation, whose proceedings are not shown to have injured or endangered 
 any public or private rights, and are objected to solely upon the gi-ound that they are 
 not authorized by its act of incorporation, and are therefore against public policy, is 
 not one of them." See Atty.-Gen. «. City of Salem, 103 Mass. 138. 
 
 The cases in New York have been much criticised, and are pronounced by hi^h 
 authority conflicting, and not resting on distinct and settled principles. It is con- 
 tended that, inasmuch as the courts will restrain public nuisance, including purpres- 
 ture, at the suit of the attorney-general, therefore, where corporationsjiby unlawful 
 excess or abuse of corporate franchises, encroach upon or injure public rights; th«( 
 remedy by injunction at the suit of the people ought to be sustained. Compare Atty.- 
 Gen. V. Utica Ins. Co. 2 Johns. Ch. 371 ; Atty.-Gen. v. Bank of Niagara, Hopk. 354 ; 
 Atty.-Gen. «. Cohoes Co. 6 Paige, 133; Verplanck v. Mercantile Ins. Co. 1 Edw. Ch. 
 88; People».Albany<feVt. R.R. Co. 24N.Y. 261; s. o. 37 Barb. 216 : People ». Van- 
 derbilt, 26 N. Y. 287; Smith v. Lockwood, 13 Barb. 219, and other N. Y. cases, cited 
 in note po^, p. 713. As to the rule in other States, see Bigelow v. Hartford Bridge 
 
710 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 was objected that it was not competent for him to file an informa- 
 tion, but Kindersley, Y.-C, said : " On this point I entertain no 
 doubt whatever. Wherever the interests of the public are damni- 
 fied by a company established for any particular purpose by act of 
 parliament, acting illegally and in contravention of the powers 
 conferred upon it, I conceive it is the function of the attorney- 
 general to protect the interests of the public by an information ; 
 and that where, in the case of an injury to private interests, it 
 would be competent for an individual to apply for an injunction 
 to restrain a company from using its powers for purposes not war- 
 ranted by the act creating it, it is competent for the attorney-gen- 
 eral, in cases of injury to public interests from such a caase, to file 
 an information for an injunction." 
 
 In each of the above cases it is certain that the attorney-general 
 may institute the proper proceedings to protect the public rights 
 involved ; and there is little doubt that if he refuses to do so, any 
 person may, at his own risk, institute such proceedings, making 
 the attorney-general a defendant.* 
 
 But besides, the above, there are various other instances where 
 a suit at the direction of the attorney-general will lie, if not invari- 
 ably, at least under special circumstances. 
 
 lY. Fourihl/y. Where any corporation is going outside or 
 otherwise misusing its powers. 
 
 This, indeed, is the effect of the decision in Att.-Gen. v. Great 
 Northern Ey. Co.' Whether that case can be considered to have 
 laid down the principle that wherever any corporation commits an 
 nltra vires act, the attorney-general may interfere, is perhaps 
 doubtful. This is a principle which certainly, centuries ago, was 
 upheld and strictly enforced when a needy sovereign wanted funds, 
 and lacking supplies from his dutiful subjects, found a ready and 
 never-failing fund in troublesome corporations which could, with- 
 out much difficulty, be convicted of some improper proceeding or 
 
 ' See ante, p. WO. s Ubi supra. 
 
 • - ■ 
 
 Co. 14 Conn. 618; Atty.-Gen. v. N. J. R. E. Co. 2 Green Ch. 186 ; Atty.-Geu. v. Hud- 
 son R. R. Co. 1 Stockt. 626 ; Commonwealth v. Railway Co. 24 Penn. St. 169 ; Buck 
 Mt. Coal Co. V. Lehigh Coal & Nav. Co. 50 Penn. St. 91 ; Sparhawk v. Union Pass. R. 
 R. Co. 64 Penn. St. 401 ; see, also, Georgetown o. Alexandria Canal Co. 12 Pet. 91 ; 
 Penn. v. Wheeling Bridge Co. 13 How. 518 ; Spooner v. McCounell, 1 McLean, SSI; 
 State V. New Hayen A Northampton Co. 46 Conn. 331. 
 
WHEN THE ATTORNEY-GENERAL MAY SUE. 711 
 
 other. Whether such a principle would, at the present, be con- 
 sidered law, even in the case of chartered corporations, is doubtful. 
 Whether any courts would apply it to other classes of corporations 
 is more than doubtful. 
 
 It is therefore submitted that the wrongful act or misuse of 
 powers to justify the interference of the attorney-general must 
 in addition concern the public. There are, however, decisions, or 
 at least dicta, for instance the judgment in Ware v. Regent's 
 Canal Oo.,* which seem to show that the attorney-general may 
 institute proceedings whenever a corporation is going beyond its 
 special powers, even though no definite injury has been done or is 
 likely to be done to the public. " Where there has been an excess 
 of the powers given by an act of parliament, but no injury has 
 been occasioned to any individual, or is imminent and of irrepara- 
 ble consequences, I apprehend that no one but the attorney-gen- 
 eral, on behaK of the public, has a right to apply to this court to 
 check the exorbitance of the party in the exercise of the powers 
 confided to him by the Legi8lature."(a) 
 
 Y. Fifthly. In case of the non-user of franchises. 
 
 It has been often considered and laid down, at least as a 
 dictum, that corporations are under some species of duty or obli- 
 gation to act on and carry out their franchises, and privileges- 
 But this is certainly incorrect if attempted to be extended to 
 registered corporations. Whether it will hold when applied as a 
 general and unbending rule to all other corporations indifferently, 
 is more than doubtful. The courts, both of law and equity, have 
 in this country refused^ to compel corporations to put into force 
 their privileges, except where there has been clear language in the 
 constating instniments imposing such a duty. These decisions are 
 not entirely conclusive of the question, because in them — cases of 
 railway companies — the courts considered that the corporations 
 were created and had their special privileges conferred on them 
 for their own individual benefit. (J) 
 
 ' 3 De G. <t J. 212, 228; Att.-Gen. v. 862, 860; Att.-Gen. v. Toronto Street Ry. 
 
 Mid-Kent Ry. Co., L. R. 3 Ch. 100. Co, 14 Grant. (Upp. Can. Ch. 1868), 6*73 '; 
 
 Compare Att.-Gen. v. Oxford, <te. Ry. Co. Att.-Gen. v. Great Western Ry. Co. 24 
 
 2 W. R. 330 ; Mayor, <Stc. of Liverpool v. W. R. 1016. 
 Chorley W'works Co. 2 De 6., M. <t G. * Amie, p. 402 a seq. 
 
 (o) Approved in Attorney-General v. Railroad Co. 36 Wis. 425. 
 (6) See ante, pp. 402-08, n. 
 
712 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 Possibly, if similar questions should arise with regard to muni- 
 cipal corporations, local government boards, and the like, it may 
 be held, in the absence of clauses expressly imposing an obliga- 
 tion, that, nevertheless, such bodies are by implication, from the 
 very nature of their objects, under a duty enforceable by the 
 courts to attempt to attain such objects, and therefore to put into 
 action their powers and franchises. But the courts would proba- 
 bly decline to exercise their discretion, unless substantial injury to 
 the public was shown.* 
 
 VI. Sixthly. Whenever puUie interests are endangered. 
 
 Lastly, it may be added, that whenever by the acts or omissions 
 of a corporation public interests actually have been, or are in dan- 
 ger of being, prejudicially affected — whether or not the acts or 
 omissions come within either of the principles above set forth — . 
 the courts will, prevent the doing, repetition, or re-occurrence of 
 such acts or omissions. Perhaps, indeed, it is possible to hold that 
 the special principles already indicated, in this and the last section^ 
 are but branches of the wider principle now in statement, and, if 
 so, to sum up the substance of both the last and the present section 
 in the proposition that 
 
 VII. The attm'ney-general must he a party to any actions against 
 corporations which involve only public rights or interests ) 
 and he may institute such actions when, and only when, 
 such public rights or interests are involved. 
 
 But though the first half of this proposition is correct, as is 
 also the latter half, saving the exception " only when," it is very 
 questionable whether with the exception it is a true view of the 
 law, unless, indeed, " public rights and interests " are construed 
 very widely. What " public " matters were involved when the 
 Great Northern Railway were trading in coal ? ' In that case, 
 however, Kindersley, V.-C, had no doubt, whatever, as to the 
 jurisdiction of the court upon the application of the attorney- 
 general to put a stop to such trading, (a) 
 
 ' See Reg. v. Com'rs of PaTing, Chel- GilderBleeve, 19 Grant. (Upp. Can. Ch. 
 tenham, 4 Jur. 1060. 1872), 218. 
 
 2 1 Dr. <fe Sm. 154 ; see Hinckley v. 
 
 (a) See Society for Establishing Useful Manufactures v. Butler, 12 N. J. Eq. 498 : 
 
FORM OF ACTION. T13 
 
 Sechon III. — FoEM OF Action. 
 
 Wlien the attorney-general sues, how ought the proceedings to 
 be taken — in chancery by information or at law by mandamus ? ^ (a) 
 
 That a writ of mandamus may be obtained, and that this is the 
 commoner, and, perhaps, the more correct mode of enforcing a clear 
 positive duty, is undoubted.(6) " The writ of mandamus is the 
 proper remedy to enforce obedience to acts of parliament and to 
 the King's Charter, and in such case is demandable of right." ^ 
 
 Accordingly, very frequently have' corporations been com- 
 pelled to perform duties imposed on them, or to keep within their 
 powers and abstain from proceedings which are ultra vires, by 
 applications for a mandamus.' 
 
 This, however, is not, in England, the only mode in which the 
 attorney-general may come before the courts to protect the 
 interests of the public. It is quite clear that he may ordinarily do 
 so by way of information in chancery, and it is submitted that an 
 information may be filed in every case and under all circumstances 
 which, as set forth in Section II of this chapter, will justify his 
 interposition.'' (c) 
 
 The relief sought will, of course, vary with the circumstances ; 
 but speaking generally, it will be very similar to, if not precisely 
 the same as, that sought for when the corporators themselves are 
 suing under analogous circumstances.' 
 
 As a rule, however, the relief prayed will be merely the pre- 
 vention of further wrongful acts, not the restoration to the cor- 
 poration of that which it has itself got rid of. This is a matter for 
 the individual corporators to take action on. But there are many 
 
 ' Or quo warranto, or criminal infor- A. & E. 549 ; JEt parte Robins, 'I Dowl. 
 
 matiun under the special circumstances, 566 ; Reg. o. Bristol & Exeter Ry. Co. 4 
 
 for whicb those proceedings are peculi- Q. B. Vjl. 
 arly applicable. * Compare per Eindersley, V.-C, in 
 
 ^ Per Buller, J., in Rex v. Bishop of Att.-Gen. «. Great Northern Ry. Co. I Dr. 
 
 Chester, 1 T.R. 404; Veley J). Burder, 12 <fe Sm. 164, 161, amte, p. 709; but see 
 
 A. <fe E. 266. Att.-6en. v. Conservators of the River 
 
 3 Rex 1). Severn Ry. Co. 2 B. <fe Aid. Thames, 1 H. & M. 1. 
 646 ; Reg. v.. Eastern Counties Ry. Co. 10 ' See ante, p. 657 et seq. 
 
 People V. Kerr, 27 N. Y. 188 ; The Granger Cases, 4 Otto, 156 et seq. ; Bloodgood v. 
 Mohawk & Hudson R. R. Co. 18 Wend. ; ante, p. 709, note. 
 
 (a) See ante, p. 406, n. 
 
 lb) See State v. N. H. & N. Co. 45 Conn. 831. 
 
 (c) See Att.-Gen. v. tJtica Ins. Co. 2 Johns. Ch. 371 ; Att.-Gen. o. Tudor Ice Co. 
 104 Mass. 239. 
 
714 ACTIONS BY OR ON BEHALF OF THE PUBLIC. 
 
 exceptions to this, more especially in connection with trust cor- 
 porations. Thus, where in a suit relating to the validity of the 
 removal of the pastor of the chapel, the trustees had been ordered 
 to pay costs, and they paid them out of the chapel funds, on an 
 information by the attorney-general they were ordered to replace 
 the amount* 
 
 Finally, it should be observed that lapse of time is no bar 
 when the public is concerned; that the public cannot, like a 
 private individual, be bound by delay, laches, or, what in the case 
 of private persons would' be, acquiescence in the doing of wrong 
 acts, the assumption of improper powers, breaches of trust, or pro- 
 ceedings positively illegal.' (a) 
 
 ' Att.-Gen. v. Daugars, 33 Beav. 621. they have misappropriated or otherwise 
 Of course, in any case of the misappro- wrongfully got rid of. 
 priation of charity and other trust funds, 'See Att.-6en. v. Eastlalte, 11 Hare, 
 
 the parties concerned must, apart from 205, 228 ; Att.-Gen. v. Christa Hospital, 
 any question of ultra vires, replace what 3 My. & K. S44; Att.-Gen. v. Mayor, <fcc. 
 
 of Beverley, 6 De G., M. <t G. 268. 
 
 (a) See U. S. Rev. Stat. § 1047. In Att-Gen. v. Del. & Bound Brook R. E. Co. 
 27 N. J. Eq. 1 (s. o. on appeal, p. 631), Eunyon, C, says: "There is still another 
 consideration constraining me to the conclusion at which I have arrived. The de- 
 fendants have acted bona fde, under what they believed to be sufficient legislative 
 authority. They have expended a very large sum of money in their enterprise. It 
 appears by the answer that the estimated cost of tbeir railroad, including viaduct and 
 right of way, is nearly two millions of dollars, of which a million and a quarter have 
 been actually paid on account of the work, and for the balance of the work, to cost 
 nearly six hundred thousand dollars, contracts have been made on which they are 
 liable. At the time of filing the information, the North Pennsylvania Railroad Com- 
 pany had expended on their part of the enterprise nearly a million and a quarter of 
 dollars, making an aggregate of expenditures, by them and the defendants, of about 
 two millions and a half, of which about three hundred and thirty-seven thousand dol- 
 lars were expended on the viaduct alone. The information was not filed until nearly 
 a year after the construction of the viaduct was commenced, and not until it and the 
 road were almost completed, and no excuse is givea for the delay. The State 
 authorities must have been aware of the circumstances, of the great cost of the work, 
 of its vital importance to the enterprises of which it was part, and of the great ex- 
 penditure made upon them. The locality of the viaduct is near the capital of the 
 State. The Legislature has had its usual annual session of many weeks, since the 
 work on the viaduct was begun. The work has been, from its commencement, » 
 matter of public notoriety, and yet no action has been taken on the part of the State 
 authorities, nor even any warning uttered by them against the work. The defend- 
 ants have been permitted to make their immense expenditure upon their enterprise, 
 in the confidence of their convictions that they possessed all requisite legislative 
 authority, without even a word of protest or remonstrance. Under such circum- 
 statces equity will refuse its aid, even to the State, leaving it to its remedy at law." 
 
PART V. 
 
 THE DOCTRINE OF ULTRA VIRES CONSIDERED VlTH RESPECT 
 TO ULTRA VIRES TRANSACTIONS "WHOLLr OR PARTIALLY 
 EXECUTED; AND TO THE RIGHTS AND LIABILITIES WHICH 
 ARISE BY REASON THEREOF. 
 
 CHAPTER I. 
 
 LIABILITY OF CORPORATIONS IN RESPECT OF ENGAGEMENTS,' 
 ULTRA VIRES IN THE PRIMARY SENSE. 
 
 Section I. — Dieect Liabilitt foe Ultea Viees Engagements. 
 
 I. The mere fact that a coi-poration has recei/oed the considera- 
 tion of, or otherwise derived advantage from, a contract 
 ultra vires, does not involve it in any liability upon such 
 contract. {a) 
 
 The liability of corporations, as of partnerships, in respect of 
 contracts and other analogous matters, is founded upon the fact, 
 tTiat the contract is one into which the corporation could enter, 
 and which has actually been made by the corporation or by its 
 constituted agents. This principle, as far as concerns partnerships, 
 has been established by a long series of authorities. It can scarce- 
 ly be stated in terms too general and rigid. Whatever be the 
 nature of the partnership, each member has an implied authority 
 to bind the firm for certain purposes only. If he goes beyond 
 that authority — if, purporting to act on behalf of the firm, he 
 enters into engagements alien to the objects of the firm or exceed- 
 ing his powers — the firm will not be responsible for those engage- 
 ments, even though they have derived advantage therefrom, 
 unless, indeed, they have ratified the same. This non-liability 
 
 ' The term " engagements '' as used is, from transactions in the nature of and 
 perhaps, wider than " contracts ; " but the allied to contracts — of course, not inolud- 
 liability here considered is that arising ing torts. 
 
 (a) See note at the end of this chapter. 
 
716 LIABILITY OF CORPORATIONS. 
 
 exists as strictly in chancery as at common law. Thus in Fisher 
 V. Tayler,^ (a) it was laid down that the implied authority of a 
 partner to bind his copartners for the repayment of money bor- 
 rowed for partnership purposes, in the ordinary course of partner- 
 ship transactions does not necessarily extend to raising money for 
 the purpose of increasing the fixed capital of the firm ; and, there- 
 fore, a party advancing money to one partner, knowing that it was 
 for the latter purpose, cannot as a matter of course charge the 
 other partners with the loan, unless the transaction took place 
 with their express or actual authority. It applies alike to money 
 borrowed on behalf of the firm ; ' and to materials supplied to and 
 work done for the firm under similar circumstances. It applies, 
 a fortiori, to contracts relating to matters not within the partner- 
 ship purposes. 
 
 In considering this principle with reference to corporations, it 
 is only necessary to bear in mind the meaning of the doctrine of 
 vltra vires. Corporations can be bound, whether by their own 
 proceedings or those of their agents, within certain limits only. 
 Outside those limits they are not bound. Neither at law nor in 
 equity will the other contracting party obtain any redress, in any 
 form of suit upon the engagement itself, from the corporation, 
 whatever be the fraud or however unjust the refusal of such- 
 redress. 
 
 ■ 2 Hare, 218. 3 De G., M. <fe G. 180. At law, see Dick- 
 
 ' In Chancery, see the case last cited, inson v. Valpy, 10 B. & C. 141 ; Haw- 
 
 andBevana. Lewis, 1 Sim. 376; Ex parte tayne v. Bourne, 7 M. 4 W. 695'; Emly 
 
 Apsey, 3 Bro. C. C. 265 ; Ex parte Emly, v. Lye, 15 East, 1 ; Lloyd v. Freshfield, 2 
 
 1 Rose, 64; Ex parte Agace, 2 Cox, 312 ; CAP. 333. 
 
 and see Re Worcester Corn Exchange Co. 
 
 (a) See Jaques v. Marquand, 6 Cow. 497 ; Ketchum u. Durkee, Hoffm. 538. In 
 Fisher v. Tayler, the transaction was one of borrowing to pay off the share of a de- 
 ceased partner in an old partnership, which was to he succeeded by a new partner- 
 ship, at the time of the borrowing in nn incipient state. See Story on Part. § 146 ; 
 Gow on Part. 3d ed. p. 153. If a sole trader borrow money for the purposes of his 
 trade, his capital is not increased. If one partner borrows money on his separate 
 credit, and makes it part of the partnership capital, the capital is increased. If a firm 
 borrows money as a partnership obligation, the capital of the firm is not increased by 
 incurring a debt. " When, therefore, it is said that one partner has no implied power 
 to borrow on the credit of the firm for the purpose of increasing its capital, what is 
 meant is, that one partner, as such, has no power to borrow, on the credit of himself 
 and copartners, money whicA each was to obtain on his individual credit, and then 
 to bring into the common stock. Unless the expression means this, it means noth- 
 ing." 1 Lindley on Part. 3d ed. 287, 876. 
 
LIABILITY TO ACCOUNT. 717 
 
 In many of the cases, however, falling within this principle, 
 there has been nothing like fraud or even harsh treatment. The 
 suffering party must be supposed to know the law, {a) and there- 
 fore like one who deals with an infant, or a feine covert, to have 
 entered into agreements which he was aware were simply void 
 against the corporation. The most recent decision is that of Re 
 National Permanent Benefit Building Soc. (^aj^a^-fe Williamson).^ 
 The directors of the building society, the rules of which gave no 
 power to borrow money, borrowed a sum of money for the pur- 
 pose of advancing it to their members on the security of. their 
 shares. The lender of the money afterwards presented a petition 
 for an order to wind-up the company. Giifard, L. J., held that 
 the transaction was idtra vires, and that, as it was not shown that 
 the building society had thereby been benefited, the petitioner 
 had no legal or equitable debt against the society such as would 
 support the petition, which was accordingly dismissed. 
 
 Section II. — Liability to Account. 
 
 But though a corporation cannot be sued, any more than any 
 other citizen, directly upon a contract or analogous transaction 
 which does not bind it, yet if it sets up this defense it must 
 restore to the other party what it has obtained from him. It may 
 repudiate the transaction if it chooses, but if so it must repudiate 
 altogether ; it cannot reprobate and approbate ; it cannot reject 
 and yet keep what in another form it has rejected. 
 
 I. In every case a corporation must account for henefits which 
 it has received under an ultra vires transaction.Q)) 
 
 This is a weU-known equitable doctrine. It has been applied 
 not]|only in persons of full age and under no disability, civil or 
 mental, but also to those who are under some incapacity : to 
 infants,^ and to lunatics.* 
 
 ■ L. R. 6 Ch. 309. ' See Beavan v McDonnell, 10 Ex. 
 
 'Marloww. Pitfield, 1 P. Wms. 658; 184; Jones o. Noy, 2 M. A K. 125; 
 
 Holmes v. Blogg, 8 Taunt. 508 ; Ex parte Sadler v. Lee, 6 Beav. 324. 
 Taylor, 2 Jur. (N. S.) 220. 
 
 (a) See Monument National Bank v. Globe Works, 101 Mass. 67 ; Miners' Ditch 
 Co. V. Zellerbach, 37 Cal. 543. 
 
 (A) See note at the end of this chapter. 
 
718 LIABILITY OF CORPORTIONS. 
 
 From these persons the principle has been extended to cor- 
 porations. First, it applies to transactions which are objectionable 
 as being either merely informal, or, though within the powers of 
 the corporation, outside the capacity of the particular officials con- 
 cerned therein. Here, however, it must be observed that, though 
 the corporation is not liable on such transactions simply because 
 they have been carried out, yet a case of acquiescence or adoption 
 will very soon be raised against it, rendering it directly liable 
 thereon, and not merely to account, unless it expressly repudiates 
 them. 
 
 Secondly, it applies to transactions which have resulted in 
 transferring goods, materials or labor to a corporation. The best 
 illustration of this are the two parallel cases of Hawkin v. Bourne 
 and Hawtayne v. Bourne,^ in the former of which shareholders in 
 a mining company were liable for goods supplied for the necessary 
 working of the mine on the order of the resident agent, while in 
 the latter they were held not liable for money borrowed by the 
 agent in order to pay the arrears of the wages due to the 
 laborers. 
 
 U, Sometimes, if not always, when in pursuance of ultra vires 
 agreements, money has been lent or paid to a corporation, 
 and there has been a total faihire of the consideration for 
 which the loan or payment was made, the lender or payer is 
 held entitled to be recouped by the corporation to the extent 
 to which it has benefited thereby. 
 
 This principle if not openly acknowledged and expressly 
 established as a general rule, holding under all circumstances, has 
 been put in force in several cases for the benefit of persons having 
 claims of a description analogous to those last mentioned. A per- 
 son enters into an arrangement with a corporation bona fide, believ- 
 ing that it also possesses the necessary powers for rendering the 
 arrangement binding, but it turns out that the matter is ultra vires 
 of the corporation. What, then, is the position of the party so 
 contracting? Evidently, whether or not anything has been done 
 under the contract, it is not enforceable by or against the corpora- 
 tion, and the whole proposal falls to the ground. Suppose, how- 
 ever, that something has been done ; that the person so dealing 
 
 ' 8 M. (few. 703, and 7 M. <fe W. 596, respectively. 
 
LIABILITY TO ACCOUNT. 719 
 
 lias gone to expense or done acts whereby advantage lias resulted 
 to the corporation : is he not to be repaid to the extent at least of 
 this advantage ? It is submitted that he is always so entitled, and 
 this is certainly so under particular circumstances. 
 
 In the Anglo-Australian Ass. Co. v. British Provident Ass. 
 Co.,^ where one insurance company, A., transferred all its prop- 
 erty, effects, and liabilities to another company, B., on the terms 
 of A. shareholders being indemnified, on a bill by A. for specific 
 performance of the agreement, the court decreed such indemnity. 
 The other company which was ordered to be wound-up, having 
 by its official manager filed a cross-bill alleging fraud and misrep- 
 resentation and that such agreement was vltra vires, it was held, 
 that the B. company having had the benefit of the agreement was 
 not entitled to object that the agreement was ultra vires and im- 
 properly entered into by the managing body, and the cross-bill 
 was dismissed.* This case is obscurely reported, but power to 
 make such purchase seems to have been contained in the deed of 
 settlement of each company. Moreover, B. had had the benefit 
 of the contract, and being now bankrupt, A. could not be replaced 
 in its original position ; a circumstance which ever greatly infiu- 
 ences the decision of a court of equity. 
 
 Be Sea Fire and Life Ass. Soc. {Ex parte Port of London, &c. 
 Co.),' is another decision illustrative of the liability of corporations 
 in respect of ultra vires transactions of which they have had the 
 benefit. The directors of each company had very wide powers of 
 management, and those of the Sea, Fire and Life Ass. Soc. had in 
 addition " full power and authority to purchase and lease as may 
 seem expedient, at such price, &c., the business of any other Fire, 
 Life or Marine Insurance Company ;" but those of the Port of 
 London Co. were not thus expressly authorized. By deed duly 
 sealed, the latter company transferred its business to the former 
 company, which also covenanted to indemnify it against all 
 claims. In a short time the purchasing company failed; both 
 companies were ordered to be wound-up ; and the official manager 
 of the selling company tendered a proof against the purchasing 
 company in respect of claims which the selling company had been 
 compelled to satisfy. It was held by the lords justices, who did 
 
 ] 3 6i£f_ 621. ^ 5 De G., M. <Sc G. 466. 
 
 ^ AfBrmed with varia'ion on appeal. 
 4 De G., F. <fe G. 341 ; 8 Jnr. (N. S.) 628. 
 
T20 LIABILITY OF CORPORATIONS. 
 
 not go ihto the question of the validity of the amalgamation, 
 that the claim must be allowed, and that although one part of the 
 deed was not forthcoming. " Where a purchaser has taken posses- 
 sion of, and enjoyed the subject-matter of a contract, it is in my 
 opinion the duty of this court to make every reasonable presump- 
 tion in favor of the validity of the contract." (a) 
 
 On appeal to the House of Lords,^ the decision of the lords 
 justices was reversed, and the claim disallowed upon the short 
 ground that section 29 of Y & 8 Vict., c. 110, invalidated every 
 contract in which a director was concerned, unless made in accord- 
 ance with certain regulations, and that in the contract out of 
 which the claim arose one of the directors of the Sea, Fire, &c., 
 Soc. was interested, and, moreover, that the statutory regulations 
 had not been observed, (b) 
 
 In Burges and Stock's Case,^ policy-holders were allowed to 
 prove in winding-up in respect to premiums, which they had paid 
 to a company upon insurances which that company was not 
 authorized to undertake. A life assurance company extended its 
 business to marine insurance. Shortly after the company was 
 wound-up, and the extension being determined to be ultra vires, 
 the holders of the marine policies were- not allowed to prove for 
 the value of them. As to the premiums, however, Page- Wood, 
 V.-C, said : " They have had no consideration for the premiums 
 they paid. The directors, it is true, had no power to issue marine 
 policies, but they had power to receive money and apply it for the 
 benefit of the company. It is proved that they did so receiVe and 
 apply these premiums, and the amount might have been recov- 
 ered even at law as money had and received. The proof must, 
 therefore, be allowed for the amount of the premiums paid." 
 
 There seems to be no substantial reason whatever for not ex- 
 
 ' Sub nmn. Ernest v. MchoUs, 6 If. ' Re Phoenix Life Asa. Co. (Bnrges and 
 
 L. C. 401. Stock's Case), 2 J. & H. 441. 
 
 (a) As to presumption in favor of validity of corporate acts, see notes, anie, 
 p. 38. 
 
 (6) The contract was absolutely void on the ground of illegality. The point on 
 which the reversal was based, was not raised in the court below. Though the point 
 decided below was not passed upon in the House of Lords, the opinion of Lord 
 Wensleydale was plainly against the rule, that a corporation is made liable on ultra 
 vires contracts by receiving benefit from them. 
 
LIABILITY TO ACCOUNT. T21 
 
 tending the principle here involved to all analogous cases. If lia- 
 ble in one case, why should not a corporation be always liable to 
 refund the money or property of a person which it has obtained 
 improperly and without consideration, or if unable to return it, to 
 pay for the benefit obtained thereby 'i To say that a corporation 
 cannot sue or be sued upon an ultra vires arrangement is one 
 thing. To say that it may retain the proceeds thereof which 
 have come into its possession without making any compensation 
 whatever to the person from whom it has obtained them, is some- 
 thing very different, and savors very much of an inducement to 
 fraud. 
 
 In Hall V. Mayor, &c., of Swansea,^ it was decided that the 
 proprietor of tolls wrongfully taken and withheld from him by a 
 corporation, could sue the corporation in assumpsit for money had 
 and received. Lord Denman, C. J., said : " If the corporation 
 have helped themselves to another's money, it would be absurd to 
 say they must bind themselves under seal to return it." If absurd 
 in one case, why not so always ? As Page- Wood, Y.-C, pointed out 
 in Burges and Stock's Case,^ " the directors have power to receive 
 money and apply it for the benefit of the company." Legal and 
 equitable principles would therefore seem to require, as certainly 
 common justice does, that a corporation shall account for what- 
 ever advantage it may derive from an ultra vires agreement. 
 
 The received opinion is that, special circumstances apart, it is 
 not so liable. In addition, however, to the decision already cited, 
 an account has been directed in some other cases of an analogous 
 nature. Thus in Athenaeum Life Ass. Co. v. Pooley,* where de- 
 bentures issued in fraud of the company were held invalid in the 
 hands of an assignee for value without notice, the Lords Justices 
 gave the assignee permission to have an inquiry as to whether the 
 company had derived any benefit from these debentures. So, in 
 Wood's Claim,* and Brown's Claim,' similar accounts were di- 
 rected to be taken for the benefit of the injured party. 
 
 ' 5 Q. B. 626. ' 3 De G. <fe J. 294. 
 
 ' UU aupra. See, alao, by the same * He London and County Ass, Co. 
 
 Vice-Chanoellor, in L. R. 2 Eq. 758 : '■ But (Wood's Claim), 80 L. J. (Oh.) 373 ; 9 W. 
 
 it is said that the contract was with the B. 366. 
 
 company, and that the money has passed ' 10 W. R. 662. See, also, per Kinder- 
 
 into the'ir hands. Whether this gentle- sley, Y.-C, in Jie National Patent Steam 
 
 man could recover against ihem in an ac- Fuel Co. (Baker's Case), 1 Dr. <fe 3m. 65; 
 
 tion for moneys had and reoeired, I tnowr British Provident Soc. ». Morton, 9 Jur. 
 
 not." (N. S.) 1308. 
 
 46 
 
722 LIABILITY OF CORPORATIONS. 
 
 Again, in Ex parte Key,^ where a company took a lease from 
 one of their directors under a void agreement, and the lessor re- 
 covered possession of the premises in an action of ejectment 
 against the company for breach of the conditions, the lessee was 
 allowed to prove in the winding-up for the use and occupation by 
 the company of the premises. 
 
 Ex pa/rte Williamson, which has already been referred to,' is 
 sometimes thought to be opposed to the principle now in state- 
 ment. But if carefully considered it will not be found to be so. 
 Giffard, L. J., in his judgment, says : " I do not think it necessary 
 to go through the evidence. Suffice it to say, that there is no 
 proof, whatever, that one sixpence of this money went inpayment 
 of any debt which was recoverable against the company. In truth 
 all this money went for the purposes of loans to members of this 
 company. It is not for me to say whether the Savings Bank As- 
 sociation that lent the money, have or have not any right either 
 as against the property of this company which was pledged to 
 them, or as against the persons to whom this money was lent. If 
 they have any such rights they can only be asserted by filing a 
 bill, and taking a very different proceeding from that which has 
 been taken here." In other words the decision was, not that the 
 company were under no liability in respect of the loan in ques- 
 tion, but that the proper course had not been adopted for ren- 
 dering them liable. In fact, the Lord Justice more than hinted 
 that they might be liable. 
 
 And in the latest decision, Wilson's Case,^ where a person had 
 made a loan to a building society, which it was ultra vires of the 
 society to accept, and which was secured by a deposit of deeds of 
 the society, it was determined that on the society being wound- 
 up, the official liquidator could not without payment of the money 
 advanced deprive the lender of his securities. Bacon, V.-C, said : 
 "If the official liquidator had filed a bill to have the securities re- 
 turned, he could not get relief except on payment of the money 
 which he confesses was advanced. He has no equitable right 
 other than the society has." 
 
 Two cases somewhat conflicting with this principle have to be 
 
 ' Burslem Paper Mills Co. {Ex parU » Re Durham County, <fec. Building 
 
 Key), 16 W. R. 1103. Soc. (Wilson's Case), L. R. 12 Eq. 521; 
 
 * Ante, p. 717. Compare Pare v. Clegg, similarly decided in Re General Prov. 
 
 29 Beav. B89; 30 L. J. (Ch.) 742. Ins. Co., W. N. 1869, 58. 
 
LIABILITY TO ACCOUNT. 723 
 
 noticed. In the former, Ex parte Cropper,^ a committee was ap- 
 pointed by the shareholders of a defunct company to wind-up its 
 affairs. To do so they went to considerable expense in endeavor- 
 ing to get the Public Acts of Parliament, which were at that 
 time brought forward, made applicable to the company, and also 
 in urging forward the "Winding-up Act itself. Their claim for 
 these expenses were disallowed in winding-up ; and, it is submitted, 
 rightly so in accordance with this principle. They did not ad- 
 vance money to the company, or in any other way bring them- 
 selves within the principle. They were appointed for certain 
 purposes, and with certain powers only ; but they went beyond 
 their powers, and then attempted to charge those who appointed 
 them for the expenses thereby incurred. In the latter, Hill's 
 Case,^ money had been advanced to a benefit building society 
 which was not empowered to borrow. It was held, in the wind- 
 ing-up, that the depositors were not entitled to have a call made 
 upon the members for the repayment of their deposits. But here 
 there was something very different from persons who had lent 
 money or supplied articles to a company, asking simply for an in 
 quiry as to how the company had benefited thereby. In the first 
 place there were no assets to be divided. It was purely a question, 
 whether persons who had entered into an ultra vires agreement 
 could require a call to be made upon the shareholders to recoup 
 them. It need not be said that the doctrine of ultra vires means, 
 among other things, that this cannotTbe done. And, secondly, the 
 persons upon whom it was proposed to make the call, having paid 
 all their subscriptions, had by the rules of the society actually 
 ceased to be members, and were discharged from all further lia- 
 bility. Under such circumstances, even if the borrowing had 
 been vntn^a vwes, the decision probably would have been the 
 same. 
 
 But besides direct benefits obtained immediately in the man- 
 ner last considered, corporations may in other ways become pos- 
 sessed of the fruits of other persons' property or exertions. Here 
 also the principle applies generally if not universally. The com- 
 monest instances are those where advances have been made, not 
 directly, but indirectly, by purchasing therewith goods, &c., re- 
 quired by the corporation. 
 
 ' He St. George Steam Packet Co. {Mc ' Be Victoria Permanent Benefit, <!rc. 
 parte Cropper), 1 De G., M. & G. 147. Soc. (Hill's Case, Jones' Case), L. R. 9 Eq. 
 
 606. 
 
724 LIABILITY OF CORPORATIONS. 
 
 III. Persmis who heme in any way advanced money to a cor- 
 poration, which money has been devoted to the necessaries 
 of the corporation, are considered in Chancery as creditors 
 of the corporation to the extent to which the loan has been 
 so eapended. 
 
 This is the doctrine laid down' in the well-known German Min- 
 ing Co.'s Case/ which arose thus : A joint stock company was 
 formed in England for working mines in Germany, subject to the 
 terms of a deed of settlement, which provided that the capital 
 should be £50,000, and gave no powers to the directors to raise 
 money except by the creation of new shares. That capital was 
 paid up, and proved insufficient for working tiie mines. The 
 wages of the miners being in arrear, and other debts being due, 
 the managing directors obtained advances from some of the share- 
 holders for the purpose of paying those debts and preventing the 
 mines from being seized under the law of the country. The 
 directors also borrowed other sums on their personal guarantee 
 from the bankers of the company, not for payment of debts, but 
 for carrying on the business of the company in its ordinary- 
 course, and they afterwards paid the bankers these advances. The 
 company was wound-up under, the Winding-up Acts. Upon ap- 
 peal, Knight-Bruce and Turner, L.JJ., decided, that, although the 
 advances made by the bankers did not constitute a debt due to 
 them from the company, the directors having no power to bor- 
 row, the directors were entitled to be allowed the amounts repaid 
 by them to the banker, the directors being trustees, and in that 
 character entitled to indemnity from their cestuis que trustent 
 against expenses bona fide incurred. Turner, L. J., based his de- 
 cision on the ground, partly that the directors were trustees for 
 the general body of shareholders, partly that the money had been 
 devoted to payment of debts which could at once, have been en- 
 forced, to the great detriment of the company. He said : " Ap- 
 plying these decisions ' and these principles to the present cases, I 
 
 'The principle itrelf is much older, a loan to the plaintiff company were wi^ra 
 
 One of the earliest cases was Mailoww. «ir««, but the plaintiffs had to repay the 
 
 Pilfii'ld, 1 P. Wms. 558. loan. 
 
 « Be German Min'ng Co. {Ex parte ' Viz., Hawtayne «. Bourne, 7 M. & 
 
 Chippendale), 4 De G., M. & G. 19. In W. 691, and Hawken v. Bourne, 8 M. <fc 
 
 Bank of Australasia v. Breillat, 6 Moo. P. W. 708 ; ante, p. 718. 
 C. 152, some of the stipulations relatinjif to 
 
LIABILITY TO ACCOUNT. 725 
 
 think that the shareholders by whom these advances were made 
 would, in common with the other shareholders, have been liable to 
 the miners and creditors who were paid by means of the advances, 
 and therefore that (assuming the mines to have been properly 
 carried on, upon which I have already observed, and shall pres- 
 ently observe more fully, and assuming the expenditure to have 
 been properly incurred, which upon the footing of the mines 
 being carried on is not disputed), the decision of the Master 
 [allowing the proof] ought to be upheld upon that ground 
 , alone." 
 
 In Ex parte Bignold {Re ITorwich Tarn Co.),^ the directors of a 
 trading company had incurred a large debt on account of the 
 company, and in due conduct of its affairs. They had no express 
 power to borrow, and indeed clause 53 of the deed provided " that 
 the board of directors shall cause all purchases for or on behalf of 
 the company to be made for ready money, so far as the same may 
 be practicable, or they may deem expedient." The subscribed 
 capita] was all exhausted, but the Master of the Rolls, holding 
 that the deed of settlement did not limit the liability of each 
 member to the amount of his shares as named in the deed, de- 
 cided that the directors were entitled to be repaid by a call upon 
 the shareholders. 
 
 Troup's Case * arose thus : The directors of a company having 
 no borrowing powers, being pressed for money by their contractor, 
 obtained for him on credit £2,000 at a banker's upon their guar- 
 antee. The contractor afterwards agreed to abandon the plant, 
 &e., to the company on receiving £600 and being indemnified 
 against the banker's claim.- Subsequentlj' to this the secretary of 
 the company, with the sanction of the directors, borrowed £500 
 in his own name for the company, which was applied in paying 
 the bankers and a judgment debt of the company. The company 
 had the benefit of the plant, &c., which were sold for what the 
 company gave for them. The Master of the HoUs held that the 
 secretary could prove in the winding-up for the money, with in- 
 terest, which had been so bona fide applied for the benefit of the 
 company. 
 
 ' 22 Beav. 148. stances and decision were exactly anal- 
 
 '^ iJe Electric Telegraph Co. of Ireland ogous; iJe Magdalena Steam Nay. Co., 
 
 fTronp'B Case), 29 Beav. 353 ; Hoare's John. 690. 
 
 Case, 80 Beav. 225, where the circum- 
 
126 LIABILITY OF C0RP0R4.TI0NS. 
 
 Lowndes «. Garnett and Moselej Gold Mining Co. of America* 
 is to the same efiPect. One of the directors of a company estab- 
 lished under the Joint-Stock Companies Act, 1844, and having 
 definite borrowing powers, made advances (not in accordance with 
 the borrowing powers) to meet the necessary expenses of carrying 
 on the concern. Subsequently the company, after being regis- 
 tered as a limited company under the Joint-Stock Companies Act, 
 1856, was voluntarily wound-up. Page-Wood, V.-C, held that 
 the director was entitled to rank as a creditor of the company, 
 and to receive payment next after the general creditors in the 
 event of there being any assets. In reference to the principle 
 involved in these decisions, the Yice-Chancellor observed: 
 " When the directors had no money in hand, and the borrowing 
 powers were exhausted, they had a choice of two things : either 
 to stop the business of the company at once, or to carry on the 
 business and pay the necessary expenses themselves, making the 
 shareholders jointly liable for those expenses. If that were not 
 intended, it ought to be provided against by the deed of settle- 
 ment, but I think that very few companies would wish their deed 
 of settlement to provide that the concern should be stopped im- 
 mediately the directors had no money in hand." (a) 
 
 In Ulster Ky. Co. v. Banbridge, &c., Ky. Co.,^ the directors of 
 the plaintiff company, whose borrowing powers had been fully 
 exercised, procured advances from a bank on their own personal 
 security. The moneys so advanced were within the limit of the 
 capital of the company, and were applied in the payment of con- 
 tractors, or otherwise in completion of the imdertaking. The 
 railway company at a general meeting .sanctioned these proceed- 
 ings. It was decided that the directors were entitled to be repaid 
 the amount so paid by them, with interest, out of the profits of 
 the company in priority to preference shareholders. 
 
 The M. E. said : " The money procured from the bank, or a 
 great part of it, is proved to have been applied to pay contractors 
 
 1 33 L. J. (Ch.) 418 ; 3 N. R. 601. The « Ir. L. R. 2 Eq. 1^0. Compare Cham- 
 
 report in 2 J. & H. 282, of the same case, hers v. Manchester, <tc. Ry. Co. 5 B. & S. 
 
 shows that the creditor under these 688, where money lent on Lloyd's Bonds, 
 
 circnmstances, may, upon the winding- applied to the company's purposes, could 
 
 up of the company, file his bill to re- not he recovered at law. 
 cover the amount of his debt, instead of 
 merely proving in the winding-up. 
 
 (a) See Coe v. N. J. Mid. Ry. Co. 31 N. J. Eq. 134; 27 Id. 110, 113; Id. 668. 
 
LIABILITY TO ACCOUNT. 727 
 
 for completing the railway or other necessary expenses for work- 
 ing it. It was therefore expended for objects for which the di- 
 rectors might plainly incur debts on behalf of the company. * 
 
 * * It appears to me a fallacy to speak of this demand as a 
 loan. Any sum advanced by the directors for the purposes of the 
 company is, in one sense, a loan. It is an advance from them to 
 the company, but it is not a loan in the sense in which money 
 borrowed by them on the company's credit is a loan. * * * It 
 is not claimed as money borrowed by the company, but as the 
 amount of debts incurred by, and paid for them by, the directors. 
 
 * * * The several authorities cited in which the doctrine of 
 the German Mining Co.'s Case has been followed, clearly establish 
 that directors making advances for the completion of works or 
 other necessary outgoings of a company, have a claim, at least, in 
 equity, to be recouped such advances similar to the claim of 
 trustees to be recouped advances properly incurred in the execu- 
 tion of their trust."- 
 
 Lastly, this principle was applied in Re Cork and Youghal 
 Ky. Co.,^ to advances made by persons to enable a railway com^ 
 pany to complete its line. The company was in difficulties ; it 
 had spent its authorized capital, and was in debt besides ; and 
 resolutions were passed for the issue of Lloyd's bonds. These 
 were given to persons who lent the company money to pay for 
 land, buy rolling-stock, &c., but the resolutions and the issue were 
 both ultra vires, because the company had exhausted its borrow- 
 ing powers. It was decided by Malins, Y.-C, and on appeal, that 
 the persons to whom the bonds had been issued were entitled to 
 be repaid by the company to the extent to which their loans had 
 been used for the company. The Lord Chancellor considered 
 these persons to be equitable assignees of the original debtors : 
 *' It is shown, I think, that as regards some of the moneys which 
 bave been raised through the medium of Mr. Lewis, some small 
 portions were paid directly to persons who were actually creditors 
 of the company, and, so far, I apprehend, there could be little or 
 no dispute as to the right of Mr. Lewis, or of a person claiming 
 through him, to stand in the place of the original debtor, whose 
 debt, being a valid debt, had been so paid." This, it will be 
 noticed, is different from the ratio decidendi of the German 
 
 ' L. R. 4 (Ch.) 748 ; Re Exmouth Docks Banbridge, <fcc., Ry. Co., Ir. R. 2 Eq. 
 Co., L. R. 17 Eq. 181 ; Ulster Ry. Co. v. 190; 16 W. R. 598. 
 
728 LIABILITY OF CORPORATIONS. 
 
 Milling Co.'s Case, where the Lord Justices went partly upon the 
 ground that directors, being in a manner trustees for their share- 
 holders, are entitled, like other trustees, to be indemnified by their 
 cestuis que trustent for expenses justifiably incurred by them on 
 behalf of the latter. 
 
 There is, however, one decision to some extent at variance. In 
 lie Worcester Corn Exchange Co.,' directors who had themselves 
 advanced money, after all the company's capital had been called 
 up, to complete the undertaking, were not entitled to be recouped 
 by a call upon the shareholders. This case, in some of its circum- 
 stances, resembles, and is therefore often said to be in conflict 
 with, lie Norwich Yam Co., but it is easily distinguishable. 
 Here the company was formed for one single definite purpose, 
 viz., the erection of a com exchange. The building was to cost a 
 certain sum, fixed beforehand, but it cost more, and the directors, 
 ^oprio motu, supplied the excess, although the deed of settle- 
 ment expressly provided that calls should not be made upon the 
 shareholders " beyond the amount for the time being remaining 
 unpaid of their respective shares." In the Norwich Tarn Co.'s 
 Case all this was different : the company was established to carry 
 on a manufacture ; its liabilities were not, and could not, be pre- 
 cisely determined and prescribed beforehand, and the deed did 
 not fix a limit to the amount which the shareholders might be re- 
 quired to pay. 
 
 IV. Corporations must account for ienefits which they receme 
 in other wa/ys than as the proceeds of advances. 
 
 This is the result of the equitable doctrine of following assets. 
 If, as the effect of transactions not enforceable against a corpo- 
 ration directly at the suit of a party who has been concemed 
 therein — whether by action in his own name, or in the name of 
 some other party — such corporation has thereby benefited, and 
 such benefit can be traced, however indirectly, to the party com- 
 plaining, then such party can compel the corporation to repay to 
 him what it has so received. 
 
 In addition, a corporation must pay interest on the amount for 
 which it has to account, which interest is accessory to the prin- 
 
 ' 3 De 6., M. <fe G. 180. 
 
LIABILITY TO ACCaUJJT. 729 
 
 cipal, and follows it, and is recoverable by and subject to the same 
 means and rules.^ (a) 
 
 ■ German Mining Co.'s Case, i De G., M. <fe. 6. 19; UUter Ry. Co. v. Banbridge, 
 
 <fec., Ry. Co., Ir. L. R. 2 Eq. 190. 
 
 (a) In the United States the defense of ultra vires interposed against a contract 
 wholly or in part executed, has very generally been looked upon with disfavor. 
 The result has been that in some cases a liberal construction has been applied, so as 
 to destroy the foundation of the defense ; in others, the courts have allowed the re- 
 covery of the money paid, not upon the contract, but because of the money received 
 and the benefits enjoyed; while in still another class of cases, the doctrine of estoppel 
 in pais has been applied to exclude the defense. The doctrine of estoppel clearly ap- 
 plies when the act is within the general scope of the corporate powers, and is nltra 
 vires only because of the extraordinary circumstances under which the transaction 
 was made, or because of the purposes of the corporation, or because of the absence 
 of the requisite conditions, or because of a lack of formality or the like, the facts 
 being especially within the knowledge of the corporation, but unknown to the party 
 dealing with it. It is clear, however, that estoppel, in its proper sense, will not cover 
 such a transaction as that in Whitney Arms Co. v. Barlow. There was no deception 
 in that case ; for the corporation certainly must be presumed to know its own powers, 
 and could hardly claim that by the representation of the party dealing with it, it 
 was misled to its injury. See Bigelow on Estoppel, p. 467. Some jurists place 
 their decisions against this defense upon the ground of "equitable estoppel," in 
 this, that corporations having received the benefit of the transaction should not, 
 upon the general principles of justice and good faith, be allowed to plead want of 
 power, and thus escape liability. The courts may be said, generally, to be tending 
 toward the doctrine — certainly so far as business corporations are concerned — that 
 corporations are to be held liable upon executed contracts, where the contracts in- 
 volved are not expressly or by necessary implication prohibited by their charters or 
 the general law. "Where the contracts are prohibited jthey are illegal, and not sim- 
 ply ultra vires, and are subject to the rules governiag the action of the courts with 
 reference to illegal contracts. That the courts are not agreed as to these rules will 
 appear from a comparison of National Bank v. Matthews, 98 U. S. 621, and Crocker 
 ii. Whitney, 71 N. Y. 16], and from the examination of several others of the casee 
 referred to in this note. It is also to be noticed that it is not always easy to 
 determine whether a prohibition is implied, or even, in some cases, whether express 
 words are intended to create a prohibition or only a limitation. See remarks upon 
 Crocker v. Whitney, post. There still remains in this country so much difference in 
 judicial opinion, that it has seemed best to show the current of authority in the Fed- 
 eral courts, and in the courts of the different States separately, by reference to the 
 cases. The cases referred to In the subsequent paragraphs of this note are not all 
 of them upon the exact question under consideration, but all are thought to bear 
 upon it by reason of the similarity of the principles involved. Citations have been 
 made more fully Ihan would be necessary to show the law simply as it is, because of 
 the importance of a knowledge of the tendency of the law, as well as its present con- 
 dition, in regard to questions so largely influenced by considerations of public policy. 
 
 Federal Courts.— In Bank of Augusta v. Earle, IS Pet. 519, the opinion of 
 Taney, C. J., at page 587, contains the following: " And it may be safely assumed 
 
730 LIABILirr OF CORPORATIONS. 
 
 that a corporation can make no contracts, and do no acts either within or without 
 the State which creates it,, except such as are authorized byits charter; and those acts 
 must also be done by such officers or agents, and in such manner as the charter au- 
 thorizes. And if the law creating a corporation does not, by the true construction 
 of the words used in the charter, give it the right to exercise its powers beyond the 
 limits of the State, all contracts made by it in other States would be void." This, how- 
 ever, must be regarded as a dictum, and was not uttered in contemplation of the ques- 
 tion now under consideration. 
 
 In Pearce v. Madison, <fco. R. R. Co. 21 How. 441, suit was brought upon notes 
 given by the president of a company formed by an unauthorized consolidation. 
 After the notes were given the connection was dissolved by due course of law, and 
 each of the original corporations managed its own affairs. The plaintiff claimed that 
 the two corporations were jointly liable. A demurrer was sustained in the 
 Circuit Court, and the decision of that court was upheld on appeal, the Supreme 
 Court saying: "The only question is, had the corporation the capacity to make the 
 contract in the fulfillment of which they [the notes] were executed. The opinion of 
 the court is, that it was a departure from the business of the corporation, and that 
 their officers had exceeded their authority.'' Although the facts raised some pecu- 
 liar considerations, this case would seem to sustain the validity of the defense of ultra 
 vires to an action upon an executed contract. 
 
 Zabriskie o. C. C. & C. R. R. Co. 23 How. 381, concerned negotiable bonds, and 
 the decision rested upon estoppel by reason of the representation that the requisites 
 of the law ^ad been complied with. It is said : "A corporation, quite as much as an 
 individual, is held to a careful adherence to truth in their dealings with mankind, 
 and cannot, by their representations or silence, involve others in onerous engage- 
 ments, and then defeat the calculations and claims their own conduct had superin- 
 duced." This case is cited in Railroad Co. v. Howard, 1 Wall. 392, 413. See the 
 numerous cases upon bonds of railroads and of counties and tovms which have been 
 passed upon by tlie Supreme Court of the United States. Dillon on Municipal Bonds, 
 sees. 10-14. Most of these cases rest upon the existence of the general power and 
 estoppel by representations as to the facts which were necessary to give a proper 
 opportunity for the exercise of such power, and as to the due performance of re- 
 quired formalities. San Antonio v. Mehafiy, 96 U. S. 312. See Mayor v. Ray, 19 
 Wall. 468, and as to the right to recover, though the contract be ultra vires, see the 
 opinion of Hunt, J., page 484. 
 
 The case of Railway Co. «. JMcCarthy, 96 TJ. S. 268, concerned the question of 
 the power of a railroad company to contract to carry beyond its own line. The 
 power was affirmed. But the opinion contains the following statement: "The doc- 
 trine of ultra vires, when invoked for or against a corporation, should not be allowed 
 to prevail where it would defeat the ends of justice or work a legal wrong." The 
 case of Whitney Arms Co. v. Barlow, is cited, among others, to support this posi- 
 tion. The same thing is said in San Antonio v. Mehaffy, 96 TJ. S. 312. 
 
 In Hitchcock v. Galveston, 96 U. S. 341, 351, is found this statement of the law 
 upon the subject under consideration: " There may be a difference between the case 
 of an engagement made by a corporation to do an act expressly prohibited by its char- 
 ter, or some other law, and a case where legislative power to do the acts has not been 
 granted. Such a distinction is asserted in some decisions. But the present is not a 
 case in which the issue of bonds was prohibited by any statute. At most, the issue 
 was unauthorized. At most, there was a defect of power. The promise to give 
 
LIABILITY TO ACCOUNT. 731 
 
 bonds to the plaintiffs in payment of what they undertook to do was, therefore, at 
 farthest, only ultra vires ; and, in such a case, though specific performance of an en- 
 gagement to do a thing tranegressive of its corporate power may not be enforced, the 
 corporation can be held liable on its contract. Haying received benefits at the ex- 
 pense of the other contracting party, it cannot object that it was not empowered to 
 perform what it promised in return, in the mode in which it promised to perform. 
 This was directly ruled in The State Board of Agriculture v. The Citizens' Street 
 Railway Co. il Ind. 407." Then follows a quotation from this case, which will be 
 referred to hereafter in this note. 
 
 In Gold Mining Co. v. National Bank, 96 U. S. 640, the defendant set up in de- 
 fense, in an action for an oveEdraft, that the amount of the liability so created was 
 greater than the national banking law allowed. By that law it was provided that 
 "the total liabilities to any association of any person, or of any company, corpora^ 
 tion or firm, * » » j^afl at no time exceed one-tenth part of the amount of the 
 capital slock of such association actually paid in." This was a clear prohibition. 
 Yet the defense was not allowed. The Court say : " After obtaining and holding to its 
 own use the money, can the mining company be allowed to interpose the plea that 
 the bank had no right to loan the money ? » * * We do not think that public 
 policy requires, or that Congress intended, that an excess of loans beyond the propor- 
 tion specified should enable the borrower to avoid the payment of the money actual- 
 ly received by him. This would be to injure the interests of creditors, stockholders, 
 and all who have an interest in the safety and prosperity of the bank." 
 
 The case of National Bank v. Matthews, 98 TJ. S. 621, would seem to go to the 
 length of holding that even an act prohibited to a corporation is not necessarily 
 void, and that though the plea of ultra vires amounts to that of illegality it will not 
 necessarily prevail, unless the intention of the statute making the act illegal, is clear. 
 The case concerns the power of a national bank to loan upon real estate security. See, 
 also. County of Macon v. Shores, 97 U. S. 272, 279 ; Hotel Co. v. Wade, 97 U. S. 13 ; 
 Twin Lick Oil Co. u. Marbury, 91 U. S. 587 ; Zantzinger v. Gunton, 19 Wall. S2 ; Re 
 Jayoox, 12 Blatchf. 209; Slewart v. National Bank, 2 Abb. IT. S. 424; Re Comstock, 
 3 Sawyer, 218 ; Dimpfel v. R. R. Co. 8 Reporter, 641. 
 
 Maine. — The case of Perkins v. Portland, &c. R. R. Co. 47 Me. 573, concerns a 
 contract by a railroad company to carry beyond its line. The Court say: "And 
 though the company miitht have had no special authority, by their charter, to make 
 such contracts, and could, perhaps, have been enjoined or restrained from doing it, 
 by proper proceedings, they could not plead such want of authority against persons 
 so contracting with them. To do so would be taking advantage of their own 
 wrong." See Bangor Boom Corp. v. Whitney, 29 Me. 123. 
 
 New Hampshire. — Downing v. Mt. Washington Road Co. 42 N. H. 230, was a case 
 of assumpsit for omnibuses and wagons sold to a road company. The contract was 
 held to be uUra vires, and for this reason not enforceable, the Court saying : " If a 
 corporation attempt to enforce a contract made with them in a case beyond the legit- 
 imate limits of their corporate power, that fact being shown will ordinarily constitute 
 a perfect defense (cases cited). And if a suit is brought upon a contract alleged to be 
 made by a corporaHon, but which is shown to be beyond its corporate power to enter 
 into, the contract will be regarded as void, and the corporation may avail themselves 
 of that defense." 
 
 In Ossipee, <fec. Mfg. Co. v. Canney, 54 N. H. 295, the question arose as to whether 
 claims against a corporation, the creation of which made the amount of indebtedness 
 exceed that allowed by law, could be enforced by creditors ignorant of the fact of the 
 
732 LIABILITY OF CORPORATIONS. 
 
 excess. The Court uses this language : " For these and other reasons that might be 
 given, we find it impossible to hold that debts contracted beyond the amount limited 
 by law are invalid as against the corporation. Thfere is, besides, the argument of 
 justice in favor of holding that a corporation, equally with an individual, after hav- 
 ing received the benefit of such contracts, shall not be permitted to repudiate them 
 upon the ground that it has violated some statute provision in contracting them. 
 Not only estoppels technically (so called), but estoppels in pais operate both for and 
 against a corporation. » * * And so, too, there are numerous decisions, that 
 where contracts with corporations are illegal, although the other party can maintain 
 no action against the corporation on the contract, he may recover back the considera- 
 tion paid, the parties not being in pari delicto." It was held that the claims could be 
 enforced. This, however, is a case which concerns the abuse of a general power for 
 purposes or under circumstances contrary to law, rather than the exercise of a power 
 not in any case given. 
 
 Vermont. — The animns of the courts of this State in regard to the defense of tdtra 
 vires was shown in the case of Noyes v. Kutland & B. R. R. Co. 27 Vt. 110, in which, 
 however, it was decided that the contract was within the powers of the corporation. 
 
 In Rutland <fe B. R. R. Co. v. Proctor, 29 Vt. 93, the railroad company, having pur- 
 chased the boats and accessories of a transportation company, and having sold one 
 of the boats to the defendants, and, after the sale, having repaired the boats and its 
 furniture at a machine shop bought of the transportation company, at defendants' re- 
 quest, brought suit to recover the value of the furniture and repairs. Redfield, C. J., 
 delivering the opinion of the court, says: "The defense is, that the contract of 
 purchase by which the plaintiff company acquired the title of this boat and furni- 
 ture, sold the defendants, and of the shop at which the repairs were done, was be- 
 yond their powers, or as denominated in the books, ultra vires. * * * The de- 
 fendants seek to make this defense upon the ground that the excess of power thus 
 assumed by the company is illegal, and renders all contracts connected with the trans- 
 action inoperative by reason of such illegality. If there had been a positive prohibi- 
 tion of entering into a particular class of contracts, and especially if such contracts 
 had been declared void by the charter of the company or the general laws of the 
 State, most unquestionably no action would lie upon the prohibited contract. But 
 when no such prohibition exists, and it is only by construction of the charter that a 
 class of contracts are declared to be beyond the power of the company, and when 
 upon this point there is such reasonable ground of doubt as to induce a court to sup- 
 pose the directors may have aoted in good faith, and where the question is raised by 
 one having no interest in it, except for purposes of unjust advantage, courts have 
 never been inclined to listen to the objections." The de.ense was not allowed. 
 
 These two cases were cited with approval in Sturges v. Knapp, 31 Vt. 63. See, 
 also, Vt. & Canada R. R. Co. v. Vt. Cent. R. R. Co. 34 Vt. 2 ; Town of Bennington 
 D. Park, 50 Vt. 178 ; Whitney v. First Nat. Bank of Brattleboro', 50 Vt. 388 ; First 
 Nat. Bank of St. Johnsbury v. Town of Concord, 50 Vt. 257. 
 
 Massachusetts. — The question of ultra vires, as a defense, was raised in the case of 
 Chester Glass Co. v. Dewey, 16 Mass. 94. The defense was not allowed, but the 
 question was not discussed at length in the opinion. In White v. Franklin Bank, 22 
 Pick. 181, the contract was in violation of an express prohibition, and it was held 
 that the contract could not be enforced, but that the money paid on it could be 
 recovered. In Dill v. Wareham, 7 Mete. 438, it was held that where a corporation 
 receives money in advance, on an unauthorized contract, the other party may re- 
 cover back the money in an action for money had and received. ' 
 
LIABILITY TO ACCOUNT. 733 
 
 The general subject under consideration, ia alluded to in Brown v. Winnisimmet 
 Co. 11 Allen, 826, but after a citation of cases is passed by. 
 
 The opinion of the Court in Monument National Bank v. Globe Worts, 101 Mass. 
 ST, contains the following: "The doctrine of ultra vires has been carried much 
 farther in England than the courts in this country have been disposed to extend it ; 
 but, with just limitations, the principle cannot be questioned, that the limitations to 
 the authority, powers and liability of a corporation are to be found in the act 
 creating it. And it no doubt follows » * * that when powers are conferred and 
 defined by statute, every one dealing with the corporation is presumed to know the 
 extent of those powers. But when the transaction is not the exercise of a power not 
 conferred on a corporation, but the abuse of a general power in a particular in- 
 stance, the abuse not being known to the other contracting party, the doctrine of 
 ultra vires does not apply." 
 
 In Attleborough Nat. Bank v. Rogers, 125 Mass. 839, a national bank brought 
 suit to recover money paid for the purchase of promissory notes, upon the ground 
 that it had no power to make such purchase. The Court say : "The defendants had 
 a right to dispose of the notes to whomsoever they chose, and if the plaintifif bought 
 them and paid for them, it could not rescind the contract thus fully performed and 
 executed upon the ground that it was a purchase which it had no authority to make, 
 and recover back the money paid upon it. A corporation, acting without authority, 
 is not in the position with the privileges of an infant to avoid an improvident con- 
 tract, but in the position and subject to the liabilities and disabilities of a wrong- 
 doer, if it exceeds its authority. It cannot complete a bargain with a third party, 
 which such third party has a right to make, and then rescind the contract wholly ex- 
 ecuted, if such contract proves to be an improvident one, and recover back the con- 
 sideration." See, also, Nat. Pemberton Bank v. Porter, 125 Mass. 833. 
 
 Conneclieut.-^ln Philadelphia Loan Co. v. Towner, 13 Conn. 249, where a corpo- 
 ration having power to sue and be sued, and to loan money under certain restrictions, 
 made a loan, and afterwards took a note as security in contravention of the provis- 
 ions of its charter; it was held, the suit being on such note with the money counts, 
 that, although there could be no recovery on the note, the money loaned with legal 
 interest might be recovered on the money counts. This case cannot be said to dis- 
 tinctly pass upon the question of the validity of the defense of ultra vires or illegality. 
 The opinions are, however, proper subjects of study by one seeking to determine what 
 the law upon the question is in that State. 
 
 In Hood V. N. Y. ifc N. H. R. R. Co. 22 Conn. 1, the alleged contract was not 
 proved, and it became unnecessary to pass on the question of ultra vires. The court, 
 however, expressed doubt as to whether the defense of ultra vires would in all cases be 
 allowed to prevail. A new trial was had, and, in the second appeal, 22 Conn, 602, 
 the sole question was whether the defense of ultra vires could be set up. The suit 
 was on an undertaking by a railroad company to carry a passenger beyond its own 
 line. Ellsworth, J., giving the opinion of the court, says : "It is found that the de- 
 fendants had no power to enter into the undertaking in question, and, therefore, as a 
 ground of claim, it must be agreed, the undertaking merely is of no avail, for the 
 reason, that the directors having no authority, did not, in legal estimation, make the 
 contract for the company. The question is, are the defendants estopped from deny- 
 ing that they have done what they never could have done ! It is a question of 
 power, under the charter ; and however individuals may be liable and estopped, 
 who untruly hold themselves out as clothed with power, the defendants cannot be 
 
734 LIABILITY OF COEPORATIONS. 
 
 estopped, on any such principle of law known to the court. The notion of an estop- 
 pel in pais, to which class, if any, this estoppel belongs, proceeds on the idea of ac- 
 quiescence or consent; a consent expressly or impliedly giyen by the party claimed 
 to be estopped. Of course, there must be a legal possibility, or there can be no real 
 or supposed acquiescence and consent, and where consent may be given, silence may 
 be sufficient proof that it is given ; and so, a course of known action may be sufiScient 
 proof; for the law requires no exact form. But,, as we say, it does require a legal 
 possibility, and when there is none, courts cannot consistently hold there is an estop- 
 pel." A bill in equity was thereafter brought upon the theory that in equity at least 
 the defendant should be prevented from interposing the defense of ultra sires, but the 
 bill was dismissed. See 2.3 Conn. 609 ; Buckley v. Derby Fishing Co. 2 Conn. 262 ; 
 N. T. Firemen's Ins. Co. v. Ely, 5 Conn. 660 ; Fuller v. Naugatuck E. R. Co. 21 Conn. 
 657. In Converse v. Norwich <fe N.T. T. Co. 33 Conn. 166, the question was raised as to 
 whether a dbntract to carry beyond the company's line was idira vires, and for that 
 reason not enforceable. The court held that no such contract was proved, and that 
 the question was not material. Still, the following sentence appears in the opinion, 
 showing the tendency of modern judicial thought: " 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." 
 
 New York. — In Silver Lake Bank v. North, i Johns. Ch. 370, where it was alleged 
 that a foreiitn corporation had exceeded its powers in making a loan. Chancellor 
 Kent said : " It would rather belong to the government of Pennsylvania to exact a 
 forfeiture of their charter than for this court, in this collateral way, to decide a ques- 
 tion of misiisers by setting aside a just and bona fide contract." In the State of 
 Indiana v. Woram, 6 Hill, Z1, it was contended that the Staten Island Whaling Co. 
 had no power by its charter to purchase or deal in State bonds ; and Mr. Justice 
 Bronson, in delivering the opinion of the Court, said: " I agree with the counsel for 
 the defendant that this company had no authority to purchase or deal ifl these 
 bonds. But since the decision in Moss v. Rossie Lead Mining Co. 6 Hill, 137, 1 do 
 not see that a corporation can ever avoid its obligation on the ground that it was 
 given for property which the corporation was not authorized to purchase. And if the 
 company was bound, I see no reason why the defendant should not also be bound." 
 The defense of idlra vires was thus disposed of by the Court in Steam Navigation 
 Co. V. Weed, 17 Barb. 378 ; " It ill becomes the defendants to borrow from the plaint- 
 iff one thousand dollars for a single day, to relieve their immediate necessities, and 
 then to turn around and say, • I will not return you this money, because you had no 
 power by your charter to lend it.' Let them first restore the money, and then it 
 will be time enough for them to discuss with the sovereign power of the State of 
 Connecticut the extent of the plaintiff's chartered privileges. We shall lose our re- 
 spect for the law, when it so far loses its character for justice as to sanction the defense 
 here attempted." The case of Tracy v. Talmage, 14 N. Y. 162, contains u full dis- 
 cussion of the doctrine of in pari delicto, both in respect to its effect and as to its 
 applicability to contracts simply ultra vires. Comstock, J., upon the re-hearing, says: 
 " It may well be conceded that a contract entered into by the agents of a corporation 
 which, either in substance or form, transcends its powers, creates no legal obligation, 
 
LIABILITY TO ACCOUNT. 735 
 
 and cannot be enforced. But it is one thing to say that a void or forbidden contract 
 cannot be enforced, Mid quite another to hold that both the parties are involved in 
 moral guilt, so that neither can disaffirm it, and recover upon an implied assumpsit 
 the money or value which be has advanced. A general distinction of this kind has 
 been universally recognized, although the cases do not all agree as to the conditions 
 under which it is to be applied." This was one of the North American Trust and 
 Banking Company's cases. See also Leavitt v. Palmer, 3 N. Y. 19 ; Talmage v. Pell, 
 1 N. Y. 328 ; Curtis v. Leavitt, 15 N. Y. 6. Sackett's Harbor Bank v. Codd, 18 N. y' 
 242, should be examined in this connection, if the progress of the law on this subject 
 is sought. In Oneida Bank ». Ontario Bank, 21 N. Y. 490, Comstock, C. J., expressed 
 the opinion that, although the contract sued upon was expressly prohibited, yet its 
 illegality should not be set up to the prejudice of an innocent person, saying: " But 
 the logic of the law, and certainly its morality, are not opposed to the doctrine that the 
 Legislature may prohibit the contract and punish the guilty parties, and yet leave 
 the contract to stand in favor of innocent persons not included in the terms of the 
 prohibition." The case was decided, however, upon the ground that a party taking 
 from a bank security which the statute prohibits, " can reject the security if it be re- 
 garded as void, and recover the money or value which he advanced on receiving it." 
 In De Groflf v. Am. Lin. Th. Co. 21 N. Y. 127, 128,' it is said : " If it be conceded that 
 the defendants had no power to enter into the contract of sale in this case and bind 
 the company to perform the obligations assumed, viewed as a mere question of cor- 
 porate power, yet having undertaken to do so, and having received the full consider- 
 ation agreed to be paid by the plaintifif, and he having fulfilled his entire contract, 
 they cannot now be permitted to set up that excess of authority to excuse them from 
 that part of the contract which imposes an obligation upon them. * * This prin- 
 ciple has been repeatedly held as applicable to an individual attempting to screen 
 himself from liability when contracting with a corporation, and in the case of a cor- 
 poration when seeking to escape responsibility on the plea of ultra vires for acts delib- 
 erately done with all usual and needful formalities, and where they have received the 
 entire benefit they contracted for, such a defense should no longer be tolerated in our 
 courts. Where the question is merely as to the capacity to contract, a party who has 
 had the benefit of the contract should not be permitted, especially where there is no un- 
 lawful intent charged upon the other party, and he is in no sense in pari delicto, to 
 question its validity. To deny relief to a plaintiff thus situated would be substan- 
 tially to secure to the party deliberately violating one of the laws of its existence, 
 and where no guilty complicity can be charged upon the other party, the fruits of an 
 illegal transaction, and operate as a premium upon repudiation and fraud." Bissell v. 
 M. S. & N. I. R. R. Cos. 22 N. Y. 262, contains the leading discussion upon the defense 
 of ultra vires in New York. Long and elaborate opinions were written by Comstock, 
 C. J., and Selden, J., who, agreeing in the result, differed as to the principles governing 
 the case. For the most part, the opinion of Judge Comstock has prevailed and become 
 the law of the State. In it the distinction between ultra vires and illegality is clearly 
 shown. " The words iiltra vires and illegality represent totally different and distinct 
 ideas. It is true that a contract may have both these defects, but it may also have 
 one without the other. For example, a bank has no authority to engage, and usually 
 does not engage, in benevolent enterprises. A subscription, made by authority of 
 the board of directors and under the corporate seal, for the building of a church or 
 college or an almshouse, would be clearly ultra vires, but it would not be illegal. If 
 every corporator should expressly assent to such an application of the funds, it 
 
736 LIABILITY OF COKPOKATIONS. 
 
 would still be ultra vires, but no wrong would be committed and no public interest 
 violated. So, a manufacturing corporation may purchase ground for a school-house 
 or a place of worship, for the intellectual, religious, and moral improvement of its oper- 
 atives. It may buy tracts and books of instruction for distribution among them. 
 Such dealings are outside of the charter ; but so far from being illegal or wrong, they 
 are in themselves benevolent and praiseworthy. So, a church corporation may deal 
 in exchange. This, although ultra vires, is not illegal, because dealing in exchange 
 is, in Itself, a lawful business, and there is no State policy in restraint of that busi- 
 ness." The injustice of allowing the defense of ultra vires to be in all cases interposed 
 is shown : " Circumstances may and often do exist which estop the offender from 
 taking advantage of his own wrong. The contract may be entered into on the other 
 side without any participation in the guilt, and without any knowledge even of the 
 vice which contaminates it^ An innocent person may part with value, or otherwise 
 change his situation upon the faith of the contracts. A railroad corporation, for exam- 
 ple, may purchase iron rails and give its obligation to pay for them, with a design to 
 sell them again on speculation, instead of using them for continuing its track. Such 
 a transaction is clearly unauthorized, and is therefore said to be illegal. But if the 
 corporation is deemed to make the contract — ^in other words, if, as I have above 
 shown, it is a legal possibility for corporations to make contracts outside of theu- 
 just powers, — how can its illegality be set up against the other party, who knows 
 nothing of the unlawful purpose ? So, an incorporated bank may purchase land, 
 having power to do so, for a banking-house, but actually intending to speculate in 
 the transaction. This is also ultra vires ; but can the want of authority be interposed 
 in repudiation of a just obligation to pay for the land, the vendor not being in pari 
 delicto I Such a doctrine is not only shocking to the reason and conscience of man- 
 kind, but it goes far beyond the law in regard to the illegal contracts of private indi- 
 viduals.'' The position taken by Judge Selden was that corporate contracts made 
 without authority contravene the principles of public policy, and are theuefore illegal 
 and void, and that such illegality may be pleaded in defense. He makes this limita- 
 tion, however, that " if the question of power depends not merely upon the law under 
 which the corporation acts, but upon the existence of certain extrinsic facts, resting 
 peculiarly within the knowledge of the corporate officers, then the corporation would, 
 I apprehend, be estopped from denying that which, by assuming to make the con- 
 tract, they had virtually affirmed " The question again arose in Parish v. Wheeler, 
 22 N. Y. 494, and it was held, that " contracts with corporations made in excess of 
 their powers, which are purely executory on both sides, and where no wrong vidll be 
 done if the parties are left in their previous situation, should not be enforced, be- 
 cause such contracts contemplate an unauthorized diversion of corporate funds, and 
 therefore a breach of private trust. But the executed dealings of corporations 
 must be allowed to stand, for and against both the parties, when the plainest 
 rules of good faith so require." In this case it appeared that the plaintiff knew all 
 the facts. Comstock, C. J., says : " I think it would be very absurd to say that the 
 corporation itself, or the defendant standing in its situation, can repudiate the trans- 
 action, the benefit of which was received in the manner stated. In my judgment, 
 when a sale of a chattel made to a corporation is executed and complete in all things, 
 except the performance of its own promise to pay the price, a plea that it ought not 
 to have made the purchase is not to be entertained, especially so long as it retains, 
 and insists upon retaining, all the benefits of the contract. If the purchase of the 
 steamboat involved any breach of the public law, the corporation alone was guilty, 
 
LIABILITY TO ACCOUNT. 73T 
 
 because all the restraints of the statute oT the common law affecting the transaction 
 are imposed upon it alone. There is certainly no moral turpitude if a railroad corpo- 
 ration buys a steamboat or builds a church ; nor is there any legal turpitude. It may 
 be an excess of power, or a private breach of trust in respect to its stockholders. The 
 latter may complain, or the State may interpose ; but corporations themselves, like 
 individuals, in dealing with other parties, must live up to the rules of common 
 honesty." The principles established in the preceding oases were followed in Buffett 
 V. Troy & Boston R. R. Co. 40 N. T. 168. The case of Whitney Anns Co. v. Barlow, 
 63 N. Y. 62, seems finally to set at rest the question of ultra vires as a defense to an 
 executed contract. In that case the defense was interposed against the corporation 
 and was disallowed. Allen, J., delivering the opinion of the Court, says ; " When 
 acts of corporations are spoken of as ultra vires, it is not intended that they are un- 
 lawful, or even such as the corporation cannot perform, but merely those which are 
 not within the powers conferred upon the corporation by the act of its creation, and 
 are in violation of the trust reposed in the managing board by the shareholders that 
 the affairs shall be manned and the funds applied solely for carrying out the objects 
 for which the corporation was created. Whether the contract, as originally made, 
 was ultra vires is not a very important inquiry at this time. * * * The plea of 
 ultra vires should not, as a general rule, prevail, whether interposed for or against a 
 corporation, when it would not advance justice, but, on the contrary, would accomplish 
 a legal wrong. » * * One who has received from a corporation the full considera- 
 tion of his engagement to pay money, either in services or property, cannot avail 
 himself of the objection that the contract thus fully performed by the corporation was 
 ultra vires, or not within its chartered privileges and powers. It would be contrary 
 to the first principles of equity to allow such a defense to prevail in an action by the 
 corporation. It is now very well settled that a corporation cannot avail itself of the 
 defense of ultra vires when the contract has been, in good faith, fully performed by 
 the other party, and the corporation has had the full benefit of the performance and 
 of the contract. If an action cannot be brought directly upon the agreement, either 
 equity will grant relief, or an action in some other form will prevail, the same rule 
 holds e contrario. If the other party has had the benefit of a contract fully per- 
 formed by the corporation, he will not be heard, to object that the contract and 
 performance were not within the legitimate powers of the corporation." It is impor- 
 tant to call attention to the case of Crocker v. Whitney, 71 N. Y. 161, a suit for the 
 foreclosure of a mortgage taken by a national bank to secure future indebtedness. 
 This is not a case of ultra vires, inasmuch as the court rested its decision upon the fact 
 that such a mortgage was prohibited and not simply unauthorized. The mortgage 
 was held to be malum prohibitum, and therefore void. But the language in which the 
 court found the prohibition is such as to raise the question whether, under its ruling, 
 many instances, seemingly of tdtra vires merely, are not really instances of illegality. 
 The prohibition is found first in the fact of the express grant of the power of loan- 
 ing money on personal security, through the application of the maxim, expressio 
 wnius est alterius exchisio. If this is a prohibition, it would seem that almost all ultra 
 vires acts must be mala prohibita. But, second, a prohibition was found in the 8th 
 section of the National Banking Act, which begins as follows : " It shall be lawful for 
 any such association to purchase, hold, and convey real estate for the following pur- 
 poses, and for no others, Ac." Undoubtedly, these last words strictly make a prohi- 
 bition, although it is open to doubt whether anything more was intended than a 
 limitation of the powers granted. It is, at least, pertinent to inquire whether this is 
 any more of a prohibition than that which is contained in the Revised Statutes and 
 47 
 
738 LIABILITY OF CORPORATIONS. 
 
 applies to all corporations of the State of New York. " In addition to the powers 
 enumerated in the first section of this title, and to those expressly given in its charter, 
 or in the act under which it is or shall be incorporated, no corporation shall possess 
 or exercise any corporate powers, except such as shall be necessary to the exercise of 
 the powers so enumerated and given." 1 R. S. (Edmonds), 557, § 3. N. Y. Trust & 
 Loan Co. v. Helmer, 12 Hun, 36, was a suit upon notes received by the plaintiff in a 
 course of business prohibited to it. Judge Daniels says: "But, notwithstanding the 
 violation, it has been urged that the defendants could not hold and enjoy the avails of 
 the notes and still be allowed to repudiate their liability for payment. And cases 
 have been referred to in which that principle has been applied to transactions appear- 
 ing to be in excess of corporate authority; but they involved no violation of a plain 
 statutory restraint, as the transactions now before the court appear to have done. 
 If the position urged upon the consideration of the court should receive its ' sanction,' 
 the statute whose restraint has been violated would be practically repealed. * * 
 The notes could not be discounted and received in plain violation of the terms of the 
 statute of the State, as they were, and still be made the foundation of legal actions- 
 brought for their recovery." Affirmed April, 1879. See 20 Alb. L. J. 36. Pratt v. 
 Eaton, 18. Hun, 293, was an action to foreclose a mortgage given as collateral to a 
 bond made to a corporation to secure any amount due from defendant. The indebted- 
 ness arose from the discount of notes. The notes were held void by reason of restrain- 
 ing acts as to banking, and therefore the mortgage was held void. Smith, J., giving 
 the opinion of the court, says ; " But it is contended on the part of the plaintiffs that, 
 notwithstanding the notes are void, the loan was within the powers of the corpora- 
 tion and was valid, and they, as the assignees of the insolvent corporation and the 
 trustees of its creditors and stockholders, may compel Eaton to pay back the money 
 which the officers of the corporation lent to him upon the notes thus discounted. 
 The cases known as the Utica Insurance Company cases [19 Johns. 1 ; 8 Cow 20; S. 
 Wend. 296 ; 4 id. 653] are cited by the respondents' counsel in support of the position 
 that, even if the corporation were suing in its own name, it might recover the money 
 lent, although the notes were void. But the soundness of those decisions has been 
 repeatedly questioned, inasmuch as they permitted the violator of the law to recover 
 upon a contract constituting that violation, and the better opinion seems to be that, 
 if the corporation were suing in its own name, the fact that it was particepa eriminii 
 would prevent its recovery of the money parted with in the illegal transaction, on 
 grounds of public policy. This is not upon the ground merely that the transaction 
 was ultra vires, but that it was unlawful. The distinction between want of power and 
 illegality is an answer to the argument derived from the cases which hold thnt, when 
 the question is simply one of capacity to contract, a party who has had the benefit of 
 the contract cannpt, in an action upon it, question its validity. * * • jt has 
 heen held by the federal courts, in some instances, that the question, how a corpora- 
 tion should invest its funds, is a question between itself and the sovereignty that 
 created it, and not between the corporation and the borrower. The application of 
 that principle to cases like the present one, while it would preserve the policy. of the 
 restraining acts, would also permit a recovery in the present case for the money loaned. 
 But we do not understand it to be the law of the courts of this State." See, also, Knowl- 
 ton V. Congress, &c. Spring Co. 67 N. Y. 518 ; Madison Ave. Bap. Ch. v. Oliver St. 
 Church, 73 N. Y. 82 ; Weismer v. Village of Douglas, 64 N. Y. 91 ; Quicksilver Mining 
 Co. cases, ante, p. 552, u. ; Hurd v. Green, 17 Hun, 333 ; Bushnell v. Chautauqua Co. 
 Nat. Bank, 10 Hun, 378 ; Alexander v. Brown, 9 Hun, 641. 
 
 Kew /ersey.— Mutual L. Ins. Co. v. McKelway, 12 N. J. Eq. 133, cited and approved 
 
LIABILITY TO ACCOUNT. 739 
 
 in Morris & Essex RaUroad Co. v. Sussex R. R. Co. 20 N. J. Eq. 542, did not clearly 
 present the question of the validity of the plea of ultra vires in defense upon an exe- 
 cuted contract. The Chancellor, however, said : " I cannot see how the contract 
 with the contributors to this guarantee fund can be enforced in a court of law or 
 equity without repudiating altogether the principle of the common law, which has 
 been but re-enunciated by our statute (Nixon, 138, § 3), that no corporation shall 
 possess or exercise any corporate powers, except such as shall be expressly given in 
 its charter, or which shall be necessary to the exercise of-the powers so enumerated 
 and given." In Morris & Essex R. R. Co. v. Sussex R. R. Co. supra, the section of 
 the statute just referred to is said to be a "prohibition of any acts not within the 
 scope of the powers permitted.* Contracts in contravention of it are against the 
 declared policy of the State, and must be held to be illegal, and of no binding obliga- 
 tion." In Third Avenue Savings Bank v. Dimock, 24 N. J. Eq. 26, an application for 
 leave to file supplemental answers setting up ultra vires as a defense to a bill to fore- 
 close a mortgage, was denied, on the ground that the defense was an unconscionable 
 one, which the court would not extend its indulgence to admit. Wheeler v. Essex 
 Public Road Board, 39 N. J. L. 291, was a case of tort. The following paragraph 
 from the opinion, however, seems to bear upon the present subject: "No rule of law 
 is better seated in theory and in decision, than the proposition that a public corpora- 
 tion cannot be liable to an action for negligence in the performance of any act which 
 it has not authority to do. Any other doctrine would be fraught with much publip 
 inconvenience ; it would remove in a great degree the circumscription on corporate 
 powers which springs from the rule that no power exists except such as is conferred 
 by the charter, and it would obliterate almost entirely the salutary principle that an 
 act which is beyond the corporate competency is, for all purposes, null, and it is like- 
 wise from these same considerations that the doctrine of estoppel which is invoked ia 
 the brief of the counsel of the plaintiff cannot be applied to such a state of affairs as is 
 here presented ; though it may be remarked, in regard to the position so taken, that it 
 is not perceived how the doctrine of estoppel is to be brought into the case, inasmuch 
 as the plaintiff has not changed his position nor waived any right in consequence of the 
 line of action pursued by the defendant." See De Camp v. Dobbins, 29 N. J. Eq. 36. 
 Pennsylvania. — In Alleghany City v. McClurkeu, 14 Penn. St. 81, the Court say : "1 
 take it for granted that it (i. e. the charter of the plaintiff) contains no express 
 authority to the corporation to issue such notes as those embraced in this action. 
 But it does not follow that the corporators are therefore not answerable for them in 
 their corporate capacity. They have recdved value for them in the various public 
 works and improvements erected and made in the city through their instrumentality, 
 and it hardly comports well with fair dealing that they should seek to exonerate 
 themselves from a debt on this account, contracted by and through their accredited 
 agents and with their silent acquiescence." In Farnham v. Del. & Hud. Canal Co, 
 61 Penn. St. 265, an action for damages for injury from the making of a dam, the 
 question of corporate power was raised by the defense, and called forth these w^ords 
 from the Court : " Whatever has been done by the Canal Company has been done 
 under color of their charter, if not distinctly authorized by that instrument ; and 
 according to the well settled doctrine in this State the exercise of this power, privi- 
 lege and franchise can only be questioned by the commonwealth, acting by its legal 
 representative in the mode prescribed. It cannot be questioned by an individual, and 
 certainly not by the plaintiff in this case." In an action by a corporation of Massa- 
 chusetts owning mining leases in Pennsylvania, fur the price of coal sold to a party 
 in the latter State, through an agent here known to the buyer to be such agent, held 
 
740 LIABILITY OF COEPOEATIONS. 
 
 that the defendant could not raise the question of the plaintiff's right to hold such 
 leases. The inquiry into such right could be made only by the commonwealth. Grant 
 V. Henry Clay Coal Co. 80 Penn. St. 208. Where a corporation has entered into a 
 contract, which has been fully executed on the other part, and nothing remains but 
 the payment by the corporation of the consideration, it will not be allowed to set up 
 that the contract was lUtra vires. Oil Greet, Ac. R. R. Co. v. PennsylTania Trans. 
 Co. 83 Penn. St. 160. See National Bank cases, post, p. 14,9, n. ; also, Ely v. Second 
 Nat. Bank, 19 Penn. St. 463. 
 
 Maryland. — In Penn., Del. &c. Co. ■;. Dandridge, 8 Gill. & J. 248, the defense of ultra 
 vires is considered good, and as to the application of the doctrine of estoppel, the 
 Court say: " It has been urged that the defendants Tiaving entered into this contract, 
 are estopped from denying their competency to have done so. To the doctrine of 
 estoppel applied to such cases, we cannot yield our assent. If the corporation is 
 estopped from denying its powfr, the estoppel operates with like effect upon those who 
 contract with them, and the' result would be that no matter how limited the design 
 and powers of a corporation may appear in its charter, practically it is a corporation 
 without limitation as to its powers. Such a doctrine at this day is dangerous to the 
 interests of the community, and is at war with the modern decisions upon the 
 subject. This case is sustained in Boyce ». Trustees, <fec. M. E. Church, 46 Md. 339. 
 In Pres. <fec. of Md. Hospital v. Foreman, 29 Md. 524, the contract upon which the 
 action was based was held to be ultra virfs. The Court expresses the principles in 
 regard to illegal contracts, and then says: "These principles are well settled, and 
 apply where the contract is in violation of some positive law, or involves moral 
 turpitude. The contract made between the appeUants and the appellee is not one of 
 that kind; it was neither malum in se nor malum proJiibitum. The parties, therefore, 
 cannot be said to be in pari delicto ; for, in the proper sense of the word, there is no 
 delictum. Here the objection, which is fatal to the validity of the contract, is, that 
 the power to make it was not conferred upon the corporation by its charter, either 
 expressly or by implication. It was simply ultra vires, and therefore not binding 
 upon the parties. To such a contract the principle in pari delicto does not apply ; 
 but if the party dealing with the corporation has paid money upon it, he is entitled 
 to recover it back." See, also, Baltimore v. Reynolds, 20 Md. 1 ; Albert v. Savings 
 Bank, 1 Md. Ch. 40Y; Nat. Bank Cases, ^si, p. T49. 
 
 South Carolina. — ^The case of Bank v. Hummond, 1 Rich. Law, 281, so far a» it 
 goes, shows that the defense of ultra vires cannot be interposed against an executed 
 contract, although the act claimed to be in excess of the corporate power was not 
 clearly shown to be so. It is not easy to tell upon which ground the court intended 
 to rest its decision. 
 
 Georgia. — Although a corporation can only make such contracts as its charter 
 authorizes, yet it may be held liable for acts and contracts not permitted by its 
 charter. " The general rule would seem to be, that, if a corporation, in the exercise 
 of a fi anchise not granted to it by the Legislature, makes a contract or does an act, 
 they may plead this want of authority on the ground that the courts wiU not interfere 
 to grant redress between two persons engaged in an illegal enterprise. But if the 
 contract be within the scope of the franchise, but fail to conform to the regulations 
 prescribed by the charter for the guidance of the corporate officers and the protection 
 of the rights of the members as to each other, the corporation may be held liable, 
 under the general rules of law as to agents, estoppel, waiver," etc. City Fire Ins. 
 Co, V. Carrugi, 41 Ga. 660. See Screven Hose Co. v. Philpot, 63 Ga. 625. In Hazle- 
 hurst V. Savanr.ah, <tc. R. R. Co. 43 Ga. 13, 64, it is said: "The record in this case 
 
LIABILITY TO ACCOUNT. T4.1 
 
 shows that this contract, both for the issues of the stock and as to the qualification of 
 directors, has been acted upon by the contractors. The contract was reported to 
 the company, and it was acquiesced in. The contractors, on the faith of it, have 
 built the road, and the question is not whether the directors had power to make it, 
 but whether, after it has been made, after the company has upon its part got the ben- 
 efit of the contract, after the other parties have upon the faith of it spent their money, 
 and the company has acquiesced in the act of the directors, either the whole com- 
 pany or a portion of the stockholders can come forward and repudiate the contract. 
 Admitting the want of power in the officers to make the contract, can the company 
 or a portion of it, under the circumstances set forth, now repudiate it as ultra vires ? 
 Without doubt there is an apparent conflict in the authorities upon this subject. It 
 would seem from many cases that an act vltra vires by the officers of a corporation 
 is void, and that no amount of consent or acquiescence by the stockholders can estop 
 them from setting up the illegality. On the other hand, it has often been held that 
 the company or the stockholders may be estopped, like individuals, by consent, ac- 
 quiescence, etc. Upon a close examination, however, of the authorities, it will be 
 found that this conflict is, for the most part, only apparent." See further quotation 
 from this case, ante, p. 651, note. 
 
 Morida. — In So. Life Ins. Co. v. Lanier, 5 Fla. 110, the defendant sought to defeat 
 an action for the foreclosure of his mortgage, by setting up that the company had no 
 power to take the bond and mortgage for the purpose — in payment for stock. The 
 Court say: " The substance of the entire defense made in this case, is based upon the 
 alleged misconduct on the part of the directors of this institution. To say that a 
 party can avoid his contract, and thereby diminish the fund which was designated as 
 security for the benefit of the public, upon the pretence that there was some abuse of 
 the corporate powers * * in making the contract, is to pervert the well settled 
 principles of law, and, under color of its sanction, to open the door for the consumma- 
 tion of fraud upon individuals and the public. Neither party can escape the obliga- 
 tion created by the sale and purchase of this stock. Admitting the contract to have 
 been made contrary to the letter of the charter, it is not thereby void." 
 
 Alabama. — In Smith v. Ala. L. Ins. <fe T. Co. 4 Ala. 558, it was held that the com- 
 pany could not lend its credit, and, having done so, could not enforce the bond and 
 mortgage taken by it therefor. " Contracts of corporations which they have no power to 
 make, are void, and courts of justice will not enforce them. So, also, promissory notes 
 and other instruments given to secure the performance of the contract, are void. No 
 action to enforce the contract, whatever form the pleader's skill may give it, can be 
 maintained. It is true that money loaned may be recovered under a common money 
 count ; but then a recovery under a common count, in this case, would be an enforce- 
 ment of a void contract as effectually as if it had been under a special count setting 
 forth the contract." Grand Lodge of Ala. v. Waddell, 36 Ala. 313. Sustained in 
 Marion Savings Bank v. Dunkin, 54 Ala. 471. In City Council of Montgomery v. 
 M. <fe W. PI. Rd. Co. 31 Ala. 76, it is said : " It is further urged in favor of the main- 
 tenance of this action, that inasmuch as the plank-road company has had the benefit 
 of the city bonds, and obtained them on the faith of the contract which is the subject 
 of this suit, the obligors in this bond should be held estopped from disputing the au- 
 thority of the city to make the contract. If this doctrine be established, then corpora- 
 tions, no matter how limited their powers, may make themselves omnipotent. They 
 have only to induce persona to contract with them beyond the scope of their powers, 
 and their very usurpations have the effect of conferring powers on them which the 
 
742 LIABILITY OF CORPORATIONS. 
 
 Legislature have withheld. A -proposition bo erroneous can scarcely need argument 
 to overturn it." Compare Brootlyn L. Ins. Co. v. Bledsoe, 52 Ala. 538. See, also, 
 Canon v. McNab, 48 Ala. 99. 
 
 J/misstjopi.— Littlewort v. Davis, 50 Miss. 403, was a si it to 'foreclose a mortgage. 
 •' If a corporation make a contract altogether outside of the purposes of its creation, 
 it is void, because it has not power over the subject with reference to which it has 
 acted. But if it contracts with reference to a subject within its powers, but in so 
 doing exceeds them, the person with whom it deals cannot set up such violation of 
 its franchises to avoid the contract." s. p. Haynes v. Covington, 21 Miss. 408. A 
 corporation which buys land and receives a deed in which an express lien is reserved 
 for its price, cannot retain the land and escape paying in money because of incapac- 
 ity to contract or pay in anything but warrants on its treasury. City of Natchez v. 
 Mallery, 54 Miss. 499. 
 
 Louisiana.— In Edwards v. Fairbanks, 2*7 La. Ann. 449, it is held that it does not 
 follow that because a purchase is ultra vires therefore the property remains vested in 
 the seller, so that it may be seized for his debt. A statute, providing that " no cor- 
 poration shall engage in mercantile or agricultural business, nor in commission, 
 brokerage, stock-jobbing, exchange or banking business of any kind," does not in- 
 validate one isolated contract for the purchase of goods. The prohibition only re- 
 fers to the buying and selling of articles of merchandise as an employment, and im- 
 plies operations conducted with a view of realizing the profits which come from skill- 
 ful purchase, barter, speculation, and sale. Graham v. Hendricks, 22 La. Ann. 523. 
 
 Kentucky. — Underwood v. Newport Lyceum, 5 B. Mon. 129, holds that, though a 
 charter of a corporation may not confer the power of banking, or issuing checks to 
 pass as a currency, and it may be a penal offense to issue •such notes or checks, yet 
 the corporation is bound to pay for plates and notes or checks procured to be made 
 by the officers of such corporation. See Murphy v. Louisville, 9 Bush, 191. 
 
 Tennessee. — In Ohio Life Ins. Co. v. Merchants' Ins. & T. Co. 11 Humph. 1, the 
 eontiact sued upon was held to be illegal, in contravention of a statutory restriction. 
 But it was held that where the parties to such contract are not in equal fault and the 
 relief asked will sustain public policy, then relief will be given. The case of Perkins 
 V, Watkins, 58 Tenn. 173, should be read in this connection, although not strictly in 
 point. It properly concerns the question whether a particular penalty prescribed in 
 the case of individuals for usury applies to corporations in the absence of special 
 provisions as to them, or whether a usurious contract by a corporation is void in toto. 
 City of Memphis «. The Memphis Gayoso Gas Co. 9 Heisk. 543, contains the follow- 
 ing: " From the authorities referred to it may be laid down that when a corporation 
 or an agent thereof does an act or makes a promise that is forbidden by its charter, 
 or is not authorized thereby, either expressly or by fair implication, the act or 
 promise is a nullity, and cannot be made binding by a subsequent ratification. But 
 if the corporation has the power, either by express grant or by fair implication, to 
 do the act or make the promise, and it is done or made defectively, then a subse- 
 quent ratification would make the act or promise binding." 
 
 Ohio. — In Bank of Chillicothe v. Swayne, 8 Ohio, 257, the question of the effect 
 of a corporation loaning at a rate greater than that tallowed by law and by its 
 charter was considered at length, and the court decided that the contract was 
 wholly void. The Court say : " This corporation has power to loan money, provided 
 it loans it iit a rate of interest not exceeding six per cent, interest per annum ; but 
 it has no power or capacity to loan money at a rate above or beyond this. And 
 if a contract, as before stated, relative to lands or goods would be void, certainly 
 
LIABILITY TO ACCOUNT. 743 
 
 the unauthorized, the forbidden contract with respect to money must be. That 
 such a contract is void is fully sustained by the opinion of the Supreme Court of 
 the United States in the case of the Bank of the U. S. v. Owens and others, 2 Pet. E. 
 627." In Hayes v. Galion Gas, Ac. Co. 29 Ohio St. 330, 340, the Court, after 
 sayiag that it is unnecessary to consider the question of estoppel, proceed : " It is, 
 however, proper to remark that the defendant, in claiming exemption from cor- 
 porate liability, and in insisting, as it does in argument, that to borrow, and give its 
 notes and mortgage to evidence its obligation to pay, are in excess of and beyond its 
 corporate functions and capacity, sets up its own usurpation of power to avoid the 
 payment of what appears to be an honest debt. That this can be done may well be 
 doubted. The rule seems well established that where a contract has been executed and 
 fully performed, on the part either of the corporation or of the other contracting party, 
 neither will be permitted to insist that the contract and such performance by one 
 party were not within the corporate power of the company." It refers, among other 
 cases, to the case of the Bank of Chillicothe v. Town of Chillicothe, 7 Ohio, 412. In 
 Hamilton & Rossville Hydraulic Co. v. C. H. & D. R. E. Co. 29 Ohio St. 341, it is held, 
 that where a license to fill up a water-course is obtained from a corporation in posses- 
 sion as owner, in consideration of a promise to re-open and restore the water-course 
 when requested so to do, the licensee, when sued for a breach of his promise, is 
 estopped from setting up that the ownership and maintenance of the water-course by 
 the corporation are ultra vires. See, also, Newburgh Petroleum Co. v. Weare, 27 Ohio 
 St. 343, and cases cited in briefs. 
 
 Indiana. — The law is settled by the case of State Board of Agriculture v. Citi- 
 zens' Street R. Co. 47 Ind. 407 — a case which is commented upon and approved 
 in Hitchcock v. Galveston, 96 U. S. 311 — in which it is held that where there is 
 merely a defect of power in the corporation to make a particular contract, but such 
 contract is not in violation of the charter of the corporation, or of any statute prohib- 
 iting it, and the corporation has by its promise induced a party, relying upon such 
 promise and in execution of the contract, to expend money and perform his part 
 thereof, the corporation is liable on the contract ; the Court saying : " A distinction 
 may be well made between the case where an act of a corporation is in violation of 
 an express prohibition in its charter, or in some other law relating thereto, and the 
 case where there is simply a defect of power in the corporation to do the act. So it 
 appears that there are acts of corporations which strictly are idtra vires, and for the 
 doing of which the State may proceed against the corporation, and yet the acts of 
 the corporation, under the particular circumstances, be binding upon the corporation." 
 
 Michigan. — In Orr v. Lacey, 2 Doug. 230, an Indiana corporation had loaned its 
 money at a greater rate than six per cent. Among the powers granted to the corpo- 
 ration was " a power to discount bills and loan money, reserving upon such loan six 
 per cent, per annum, and no more." The contract was held to be void. See Wilson 
 V. Owen, 30 Mich. 474. 
 
 lUino's. — " It is said by counsel for complainant, that a corporation is not estopped 
 to say, in its defense, that it had not the power to make a contract sought to be 
 enforced against it, for the reason that, if thus estopped, its powers might be indefi- 
 nitely enlarged. While the contract remains unexecuted on both sides, this is un- 
 doubtedly true, but when, under cover of this principle, a corporation seeks to evade 
 the payment of borrowed money, on the ground that, although it had power to bor- 
 row money, it expended the money borrowed in prosecuting a business which it was 
 not authorized to prosecute, it is pressing the doctrine of ultra vires to an extent that 
 can never be tolerated,«ven though the lender of the money knew that the corpora- 
 
744 LIABILITY OF CORPORATIONS. 
 
 tion was transactiDg a business beyond its chartered powers, and that his money 
 wonld be used in such business, provided the business itself was free from any intritt- 
 sic immorality or illegality. Neither is it correct to say that the application to 
 corporations of the doctrine of equitable estoppel, where justice requires it to be ap- 
 plied (as when, under a claim of corporate power, they have received benefits for 
 which they refuse to pay, from a sudden discovery that they had not the powers 
 they had claimed) can be made the means of enabling them indefinitely to ex- 
 tend their powers. If that were true, it would be an insuperable objection to the 
 application of the doctrine, even for the purpose of preventing injustice in individ- 
 ual cases. But it is not true. This doctrine is applied only for the purpose of com- 
 pelling corporations to be honest, in the simplest and commonest sense of honesty, 
 and after whatever mischief may belong to the performance of an act ultra vires has 
 been accomplished. But while a contract remains executory, it is perfectly true that 
 the powers of corporations cannot be extended beyond their proper limits for the 
 purpose of enforcing a contract. Not only so, but on the application Of a stockholder, 
 or of any other person authorized to make the application, a court of chancery would 
 interfere and forbid the execution of a contract ultra vires. So, too, if a contract 
 ultra vires is made between a corporation and another person, and, while it is yet 
 wholly unexecuted, the corporation recedes, the other contracting party would prob- 
 ably have no claim for damages. But if such other party proceeds in the perform- 
 ance of the contract, expending his money and his labor in the production of values 
 which the corp'oration appropriates, we can never hold the corporation excused from 
 payment on the plea that the contract was beyond its power. Take, for example, 
 the case of a corporation chartered to build a railway from Chicago to Rock Island. 
 Under such a charter, the company would have no power to build steamboats for the 
 purpose of running a line of such vessels between Rock Island and St. Louis. But 
 suppose the company, notwithstanding the want of power, should make a contract 
 for the building of a vessel, and it is built by the contractor and accepted and used 
 by the railway, could any court permit the corporation, when sued for the value of the 
 vessel, to excuse itself from payment on the ground that, although it has and uses the 
 steamer, it had no authority to do so by its charter ? Or, suppose that, instead of 
 having a vessel built by a contractor, it employs a superintendent to build it and 
 hires mechanics by the day, could it escape the payment of their wages on the 
 ground that it had employed them in a work ultra vires ? In cases of such charac- 
 ter, courts simply say to corporations, you cannot in this case raise the question of 
 your power to make the contract. It is suflScient that you have made it, and by 
 so doing have placed in your corporate treasury the fruits of others' labor, and every 
 principle of justice forbids that you be permitted to evade payment by an appeal to 
 the limitations of your charter. We are aware that cases may be cited in ap- 
 parent conflict with the principles here announced, but the tendency of recent de- 
 cisions is in harmony with them. While courts are inclined to maintain with vigor 
 the limitations of corporate actions, whenever it is a question of restraining the cor- 
 poration in advance from passing beyond the boundaries of their charters, they are 
 equally inclined, on the other hand, to enforce against them contracts, though ultra 
 vires, of which they have received the benefit. This is demanded by the plainest princi- 
 ples of justice. If the complainant in this case had, as a stockholder, asked a court of 
 chancery to enjoin this corporation from mining in Colorado, it would have examined 
 the charter, and if it had arrived at the conclusion that such mining was beyond the 
 powers derived from filing the certificate in question, under our statutfe, would have is- 
 sued the injunction. But this he did not do. On the contrary, he has participated in the 
 
LIABILITY TO ACCOUNT. 745 
 
 work, and so long as there was hope of gain he was willing the money should be bor- 
 rowed by which the work was to be carried forward. The borrowing of the money 
 was not in itself an act uUra vires, nor was the giving of the notes. The money was 
 not borrowed to be used for an illegal or immoral purpose. The lenders have been 
 guilty of no violation of law, nor wrong of any kind. The corporation has received 
 their money and used it for a purpose which, whether ultra vires or not, was unques- 
 tionably the sole purpose for which the corporators associated themselves together, 
 and for which this complainant became a stockholder. Justice requires the corpora- 
 tion to repay the money it has thus borrowed and expended. What we have said 
 applies only to private corporations, organized for pecuniary gain. If, to increase 
 their profits, they embark in enterprises not authorized by their charter, still, as to 
 third persons, and when necessary for the advancement of justice, the stockholders 
 will be presumed to have assented, since it is in their power to restrain their ofiicers 
 when they transgress the limits of their chartered authority. But municipal cor- 
 porations stand upon a different ground. They are not organized for gain, but for 
 the purpose of government, and debts illegally contracted by their officers cannot be 
 made binding upon the tax-payers from the presumed assent of the latter." Lawrence, 
 0. J., in Bradley v. Ballard, 5B HI. 41'?. In Cincinnati, <frc. Co. v. Rosenthal, 55 III. 85, 
 the contract was in violation of an express prohibition and was held void. In Chicago 
 Building Society v. Crowell, 65 111. 458, it is said : " Public policy requires that cor- 
 porations should be confined strictly withjn the limits of their charters, and should nq^ 
 be allowed to exercise powers beyond those expressly conferred that would be hurtful 
 to the public interest. But where corporations have exercised powers incidental to 
 those conferred, and in furtherance of the general objects of the corporation, al- 
 though the subject of the contract may not be within any express right conferred, they 
 wiU be estopped from denying that they had authority to make such contracts. 
 Good faith to third parties who deal with such corporations, and who may have 
 no accurate knowledge of the extent of their powers under their charters, requires 
 the adoption of this salutary rule. The rule has its foundation in the plaiaest prin- 
 ciples of natural justice. When such corporations have received the benefit of a 
 contract, if there is nothing in it contrary to public policy, there can be no just rea- 
 son why they should not be required to enforce it." Darst v. Gale, 83 III. 186, cit- 
 ing Bradley v. Ballard and Whitney Arms Co. v. Barlow, holds, that " the general 
 rule is, that the plea otvltra vires shall not prevail when, instead of advancing justice, 
 it would accomplish a wrong ; and it makes no difference, in this respect, whether it 
 is interposed for or against a corporation." 
 
 Wisconsin. — Rock River Bank v. Sherwood, 10 Wis. 230, concerns the question of 
 the effect of usury in case of a corporate contract. It is held that the usury does not 
 make the contract void on the ground of ultra vires, but calls for the penalty pre- 
 scribed in the case of individuals. Kneeland v. Gilman, 24 Wis. 39, seems, to hold 
 that a- corporation is estopped from setting up that a contract, the benefit of which it 
 has received, is uUra vires. See the case of Madison, &e. PI. R. Co. v. Watertown, <fcc. 
 PI. R. Co, 1 Wis. 69, 80, in which, however, the contract was held to be executory 
 and not executed, so that the question now in consideration was not passed upon. In 
 Northwestern Union Packet Co. v. Shaw, 37 Wis. 655, the rule is stated to be : " That 
 when money has been paid upon an executory agreement, which is free from moral 
 turpitude, and is not prohibited by positive law, but which is invalid by reason of the 
 legal incapacity of a party thereto, otherwise capable of contracting, to enter into 
 that particular agreement, or for want of compliance with some formal requirement 
 
746 LIABILITY OF CORPORATIONS. 
 
 of the law * * * the money so paid may, while the agreement remains execu- 
 tory, be recovered back by the party paying it in an action for money had and 
 received." In Germantown Farmers' Mut. Ins. Co. v. Dhein, 43 Wis. 420, it is held 
 that while contracts of corporations which they have no auihdnly to make may be 
 void, contracts which are within the general scope of their powers, but which are in 
 excess of those powers in some particulars, are valid, unless by reason of such excess 
 they are against public policy. In this case the contract was executed, though no 
 stress is expressly laid upon that fact in the opinion. See Dietrich v. Madison Re- 
 lief Ass. 45 Wis. 19. 
 
 Minnesota. — Rochester Ins. Co. v. Martin, IS Minn. 59. "The facts admitted 
 here show that the plaintiff had no authority to insure against death by accident or 
 disease, and the note [a premium note] must stand or fall with the policy of insur- 
 ance, for it was part of the same transaction, and the policy was the only considera- 
 tion for the note. His action must therefore fall, for no person, natural or artificial, 
 can enforce a contract that is void, illegal, or contrary to the policy of the laiw. It 
 is true that a party by his own acts may be estopped from questioning the validity of 
 his contract; but the doctrine of equitable estoppel can have no application to this 
 case against the defendant. It is only invoked to prevent injustice and wrong, and 
 when the party claiming its protection would in the eye of the law be defrauded, and 
 the other party be guilty of a fraud by the allegation or proof of the truth." Farm- 
 As', <tc. Bank v. Baldwin, 23 Minn. 198, was a suit by a bank upon a note purchased 
 by it; The purchase was held to be ultra vires, and the suit therefore failed, the 
 Court saying : " Having no corporate capacity to make the contract of purchase, the 
 plaintiff never acquired any title to the note in suit, and the attempted act of pur- 
 chase was strictly idtra vires, and conferred no rights whatever." See, also. First 
 Nat. Bank of Rochester j;.-Pierson, 24 Minn. 
 
 Iowa.— The case of McPherson v. Foster Bros. 43 Iowa, 48, concerns the powers of 
 a municipal corporation. The Court there says : " An act of a municipal corporation, 
 done in an attempt to exercise power not possessed by it, is void. * * If it were 
 not so, power could be exercised which is not possessed, and the corporation would 
 possess authority independent of the Legislature^a proposition contrary to the doc- 
 trine above stated, which is well supported by principle and the cases. There is no 
 distinction in reason between the cases of entire absence of enactment conferring 
 power, and a prohibition of its exercise beyond a certain limit. They are in fact one 
 and the same case. In the first instance power is not granted, and is not, therefore, 
 possessed ; in the other it is expressly withheld, and its exercise prohibited, and is, 
 therefore, not conferred. There is in each case a total absence of authority. The 
 same is true where power is granted upon conditions. They must be complied witli' 
 before the power passes to the corporation. It is equally plain that if power be 
 conferred to be exercised to a certain extent and no farther, when the limit is 
 reached the power ceases. These principles are evident, and do not require the sup- 
 port of authority. No other rules would keep corporations in subordination to the 
 State, or be in harmony with the fundamental doctrine above announced, namely: 
 all power of corporations is derived from positive enactment." The bonds issued in 
 excess of the corporate power were held not enforceable. Yet in Thompson v. Lam- 
 bert, 44 Iowa, 239, which, however, concerned a private corporation, it was said: "As 
 we understand the rule, ultra vires prevails in full force only where the contracts of 
 corporations of this character remain wholly executory. This rule prevails even as 
 to public or municipal corporations in analogous cases." See B. 0. R. & M. R. Co- 
 V. Stewart, 39 Iowa, 26'7. 
 
LIABILITY TO ACCOUNT. 747 
 
 Missouri. — Molndoe v. St. Louis, 10 Mo. 516, holds, that in an action of ejectment 
 brought by the city of St. Louis, for a lot purchased by the city, the defendant can- 
 not set up the illegality of the ordinance authoriziug the purchase. In Land v. 
 Coffman, 60 Mo. 243, it is held, that in an ejectment suit the question could not be 
 raised as to the lawfulness of the purpose for which a corporation in the chain of 
 title purchased the land. It is said: "There is a manifest distinction between exec- 
 utory and executed contracts. While a party may not be compelled by a court of 
 equity to carry a contract into specific execution, yet if he should Toluntarily make 
 a deed, it will be good to pass all title." Shewalter v. Pirner, 56 Mo. 218, is to the 
 same effect. In Chambers v. City of St. Louis, 29 Mo. 54S, 516, it is said: "The 
 city had a power to purchase ; if that power has been exceeded, then it has been 
 violated, and the city charter may be forfeited in a suitable proceeding ; and, until 
 that is done, she will hold the land. • * * Nowhere is a corporation in express 
 terms prohibited from taking and holding lands. The city is duly incorporated, 
 with authority to hold, purchase, and convey such real and personal estate as the 
 purposes of the corporation shall require; and if, in holding and purchasing real 
 estate, she passes the exact line of her power, it belongs to the government of the 
 state to exact a forfeiture of her charter ; and it is not for the courts, in a collateral 
 way, to determine the question of misuser by declaring void conveyances made in 
 good faith." The case of Farmers, &c. Bank v. Harrison, 51 Mo. 503, which con- 
 cerns the question of the effect of usury by a corporation, contains the following: 
 "If power be given to a corporation to do an act in a particular way, as to loan 
 money on personal security, and it adopt a different method of performance — as by 
 making a loan on real estate, the act is ultra vires, and void. If, however, the de- 
 parture apply, not to the method itself, but purely to extent or quantity in an 
 authorized feature, then the act is good up to the limit of extent or quantity, and 
 void as to the excess." It concludes that the result is the same as in case of a nat- 
 ural person. In Matthews v. Skinker, 62 Mo. 329, it is held that a mortgage on real 
 estate, given to a national bank to secure a loan, is ultra vires and void, and that this 
 is a good defense to an action to foreclose. The court were of opinion that the 
 National Bank Act had expressly forbidden such a mortgage ; although it would 
 appear that the decision of the court would have been the same had there been no 
 such prohibition, but only the prohibition derived from the grant of express power 
 to loan on personal security, by the application of the principle, Mxpressio unim est 
 exclusio alterius. This case is the same as National Bank v. Matthews, supra. 
 
 Arkansas, — See Whitney v. Peay, 24 Ark. 22; Lewis «. City of Clarendon, 6 Re- 
 porter, 609. 
 
 Colorado. — In Union Mining Co. v. Rocky Mt. Nat. Bank, 2 Col. 256 (the same 
 case as Gold Mining Co. v. National Bank, 96 U. S. 640, supra), it is said: " In addi- 
 tion to this it has been said, that,' as to a contract executed and fully enjoyed, a 
 corporation is estopped to deny its capacity. The reasons upon which this rule is 
 founded apply with great force to a contract for borrowed money, whatever may be 
 said of them when applied to other contracts." 
 
 Oregon. — See Kelly v. People's Trans. Co. 3 Oregon, 189. 
 
 Nevada. — See Whitman Mining Co. v. Baker, 3 Nev. 386. 
 
 California. — " Where the contract is executory, the corporation cannot be held 
 bound unless the contract is made in pursuance of the provisions of its charter ; but 
 where the contract has been executed and the corporation has enjoyed the benefit of 
 the consideration, an implied assumpsit arises against it. It will be presumed, for 
 the purposes of justice, that the authority exercised by the officers of the corporation 
 was properly delegated to them, and that contracts made by them without authority 
 
748 LIABILITY OF CORPORATIONS. 
 
 have been ratified." Gas Co. v. San Francisco, 9 Cal. 453. See, also, a series of cases 
 known as the California "City Slip Cases," yiz.: McCracten v. San Francisco, 16 Cal. 
 591 ; Grogan v. Same, 18 Cal. 590 ; Piemental v. Same, 21 Cal. 351 ; Satterlee v. Same, 
 23 Cal. 314 ; Herso v. Same, 23 Cal. 134. In Argenti v. City of San Francisco, 16 Cal. 
 266, in which the earlier New York cases were approved, and the principles therein 
 laid down held to apply to municipal corporations, the opinion contains the follow- 
 ing : " It docs not follow, however, that even a want of authority is, in all cases, a 
 sufficient test for the exemption of a corporation from liability in matters of contract. 
 Of course, an executory contract, made without authority, cannot be enforced ; but a 
 different question arises where a contract has beea executed and the corporation has 
 received the benefit of it. In such a case the law interposes an estoppel, and will 
 not permit the validity of the contract to be called in question." In Zottman v. San 
 Francisco, 20 Cal. 96, however, this last case is commented upon, and it is said that 
 the justices concurred only in the conclusion; and Cope, J., there says: "I am of 
 opinion, notwithstanding the position taken by me in Argenti v. San Francisco, that 
 the views expressed by the chief justice in this case are correct. The ground 
 assumed in the case of Argenti was not essential to the determination of that case ; 
 and.upon further reflection,I am convinced of the error of the reasoning upon which my 
 conclusions were arrived at. The error arose from paying too little attention to the 
 restrictive provisions of the charter. * • * The fact that the city has received the 
 benefit is not sufficient to create a liability on her part." In Miners' Ditch Co. v Zel- 
 lerbach, 37 Cal. 543, 679, it is said that the term ultra vires, whether with strict 
 propriety or not, is used in different senses. An act is said to be ultra vires when it is 
 not within the scope of the powers of the corporation to perform it under any cir- 
 cumstances or for any purpose. An act is also, sometimes, said to be ultra vires 
 with reference to the rights of certain parties, when the corporation is not authorized 
 to perform it without their consent ; or with reference to some specific purpose, when 
 it is not authorized to perform it for that purpose, although fully within the scope of 
 the general powers of the corporation, with the consent of the parties interested ; or 
 for some other purpose. When an act is ultra vires in the first sense mentioned, it is 
 generally, if not always, void in toto, and the corporation may avail itself of the plea. 
 But when it is ultra vires in the second sense, the right of the corporation to avail 
 itself of the plea will depend upon the circumstances of the case. When the act in 
 queslion is one which the corporation is not authorized to perform, under any cir- 
 cumstances, the defense is available to the corporation against all persons, because 
 they are bound to know from the law of its existence that it has no power to 
 perform the act ; but when the act is authorized for some purposes, but not for 
 others, the defense may or may not be available, depending upon the question 
 whether the party dealing vrith the corporation is aware of the intention to perform 
 the act for an unauthorized purpose, or under circumstances not justifying its per- 
 formance. And the test, as between strangers having no knowledge of an unlawful 
 purpose and the corporation, is to compare the terms of the contract with the pro- 
 visions of the law from which the corporation derives its powers, and if the court 
 can see that the act to be performed is necessarily beyond the powers of the corpo- 
 ration for any purpose, the contract cannot be enforced : otherwise it can." A stat- 
 utory provision that no contract shall be binding upon a railroad company, unless 
 made in writing, applies only to contracts wholly executory. A railroad company 
 may be held liable, as on an implied promise, notwithstanding such statute, where 
 benefits or services have been given or rendered to the company on oral request of 
 its officers, and the company has accepted or had the benefit of them. Foulke v. San 
 Diego, <fec. R. R. Co. 61 Cal. 366. 
 
LIABILITY TO ACCOUNT. 749 
 
 See Chapter on RaMjication and Acquiescence, and notes, ante. 
 
 National Banks. — A number of decisions have been made upon the powers of na- 
 tional bants, in which questions closely allied to those raised in the preceding cases 
 have been considered. Some of them have been already mentioned. Thus it has 
 been held, that loans to any person in excess of one-tenth part of the capital stock of 
 a national bank are not void, and that, in an action to recover such loans, the defend- 
 ant cannot interpose the defense that they were in violation of the National Banking 
 Act. Gold Mining Co. v. National Bank, 96 U. S. 640 ; Shoemaker v. National Mechan- 
 ics' Bank, 2 Abb. U. S. 416 ; Stewart v. Nat. Union Bank of Maryland, 2 Abb. U. S. 
 424 ; O'Hare v. Second Nat. Bank, 77 Penn. St. 96 ; Elder v. First Nat. Bank of Ot- 
 tawa, 12 Kans. 238. But see Allen v. First Nat. Bank, 23 Ohio St. 97. The power of 
 a national bank to take a mortgage to secure an existing indebtedness is established. 
 Woods V. People's Nat. Bank, 83 Penn. St. 57 ; Kansas Valley Nat. Bank v. Eowell, 
 2 Dill. 371; Merchants' Nat. Bank v. Mears, 10 Chic. L. N. 180; Orme v. Mer- 
 chants' Nat. Bank, 16 Kans. 341 ; Upton v. Nat. Bank of S. Reading, 120 Mass. 153 ; 
 Shinkle v. First Nat. Bank, 22 Ohio St. 516; Allen v. First Nat. Bank, 23 Ohio St. 
 97. But as to mortgages to secure contemporaneous loans or future advances, 
 there is a lack of power, and, according to some decisions, a prohibition. As to 
 whether such lack of power or such prohibition constitutes a defense in an action to 
 foreclose a mortgage, the authorities differ. In National Bank v. Matthews, 98 U. S. 
 621, the defense was held to be unavailing. This position, however, was not necessary 
 to the decision of the case, inasmuch as the court there held that, as the mortgage 
 was not made to the bank but was assigned to it as security for a loan to a third 
 party, there was nothiag to bring it " within the letter or the meaning of the prohi- 
 bitions : " the court citing upon this point the case of the First National Bank v. 
 Haire, 36 Iowa, 44?>. See, also, Pittsburgh L. & C. Works v. State Nat. Bank of Keo- 
 kuk, 2 Cent. L. ,J. 692 ; Merchants' Nat. Bank v. Mears, 10 Chic. L. N. 180. See, to 
 the contrary. Fowler v. Scully, 72 Penn. 456 ; Woods v. People's Nat. Bank, 83 Penn. 
 67 ; Matthews v. Skinker, 62 Mo. 329 ; Kansas Valley Nat. Bank v. Rowell, 2 Dill. 371 ; 
 Crocker », Whitney, 71 N.Y. 161. See, also, Richards v. Kountze, 4 Neb. 200 ; Fridley 
 1). Bowe-J", 87 111. 151. The powers and the liabilities of national banks as to special de 
 posits bave been variously determined. See Wiley v. First Nat. Bank, 47 Vt. 546 
 Whitney v. First Nat. Bank, 50 Vt. 388 ; Smith v. First Nat. Bank, 99 Mass. 605 ; First 
 Nat, Bank of Lyons v. Ocean Nat. Bank, 60 N. Y. 278 ; Bushnell v. Chautauqua Co. Nat. 
 Bank, 10 Hun, 378; Pattison v. Syracuse Nat. Bank, 17 Hun, 419; Lancaster Co 
 Nat. Bank v. Smith, 62 Penn. St. 47 ; Scott v. Nat. Bank of Chester Valley, 72 Penn, 
 Sjt. 471 ; First Nat. Bank v. Graham, 79 Penn. St. 106; De Haven o. Kensington 
 ifat. Bank, 81 Penn. Si. 95; Weckler v. National Bank, 42 Md. 581; Third Nat. 
 Bank v. Boyd, 44 Md. 47 ; Chattahoochee Nat. Bank v. Schley, 58 Ga. 369 ; Leach 
 V. Hale, 31 Iowa, 69. As to the right of a national bank to deal in government and 
 railroad securities, see Weckler v. National Bank, 42 Md. 681; Van Leuven v. First 
 Nat. Bank, 54 N. Y. 671; Caldwell v. Mohawk Valley Nat. Bank, 64 Barb. 333.; 
 Yerkes v. Nat. Bank, 69 N. Y. 382 ; First Nat. Bank v. First Nat. Exoh. Bank, 92 U. 
 S. 122. As to the power to buy notes and checks, see First Nat. Bank of Rochester 
 V. Harris, 108 Mass. 614 ; Nat. Pemberton Bank «. Porter, 124 Mass. ; FirstNat. Bank 
 of Rochester v. Pierson, Thompson's Nat. Bank Cases, p. 637, and note appended (24 
 Minn.); Smith v. Exchange Bank of Pittsburgh, 26 Ohio St. 141 ; Lazear t>. Nat. 
 Union Bank (Md.), 20 Alb. L. J. 343 ; Atlas Nat. Bank v. Savery, 9 Cent. L. J. 227; 
 Atlantic State Bank o. Savery, 18 llun, 36. See, generally, upon this subject, 
 " Thompson's National Bank Cases.'' 
 
CHAPTEE II. 
 
 \ 
 
 LIABILITY OF OFFICIALS. 
 Section I. — Contractual Engagements 
 
 General Nature of the Liability of an \^gent upon Contracts. 
 
 As the officials of a corporation, of whfatever rank, stand in the 
 relation — under various circumstances J somewhat modified — of 
 agents to it, their liability as corpora t^ officials will mainly and 
 primarily be determined by reference tA and upon the analogy of 
 the liability of ordinary agents. It m/ay therefore be useful, by 
 way of reminder, to indicate briefly tU^ nature of this liability. 
 
 I. A person who enters into a contract as t<i,gent for a disclosed 
 and responsible principal and within his powers, is not lia- 
 ble upon such contract. \ 
 
 First. The agent must contract expressly and ■poositively as 
 agent. Therefore, if the contract be in writing, it is\advisable, 
 though perhaps not absolutely necessary, that the persoiK should 
 sign as agent and not rest content with describing hinsBeliMn the 
 body of the instrument or elsewhere as agent.'' v 
 
 Secondly. The principal must be disclosed. If not, the agrent 
 will be liable — as also of course will be the principal if he can Vbe 
 discovered.^ \^ 
 
 Thirdly. It has been laid down that the principal must be Ja 
 responsible individual.' But this qualification is very doubtfulV 
 It is fully established that public officers contracting as such incur | 
 no liability,^ and also that if the parties agree to rely upon the 
 
 ' Paice V. Walker, L. R. 6 Ex. I'lS, and ^ Sse Myriel v. Hymensold, Hardw. 
 
 cases cited : but as to the actual decision 205 ; Burls v. Smith, J Bin>f. 705, and 
 
 here, see Southwell v. Bowditch, 1 0. P. the judgment in Rew v. Pettet,-! A. <fc E. 
 
 D. 375; Gaddjj. Houghton, 1 Ex. D. 35S. 196. 
 
 Compare Fairlie v. Fenton, L. R. 5 Ex. ■* In M'Beath v. Haldimand, 1 T. R. 
 
 169. 172; per Lord Wensleydale, in Mersey 
 
 ' See Higgins v. Senior, 8 M. <fe W. Docks Trustees v. Gibbs, L. R. 1 H. L. 
 
 884, and similar cases. 124. I 
 
CONTRACTUAL ENGAGEMENTS. 751 
 
 irreBponsible principal, and not to look to the agent, the latter 
 is not bound.^ But it seems equally established that there must 
 be a principal actually existing.^ 
 
 Fourthly. The agent may, however, sometimes be chargeable. 
 (1). The master of a ship is liable conjointly with the owners for 
 repairs or stores.^ (2). An agent may bind himself by an express 
 undertaking, or by acts equivalent thereto. (3). It seems, that 
 when one contracts for a foreign principal, there is a presumption 
 that he is primarily liable thereon. This presumption has been 
 laid down in the older authorities very strictly against the agent,* 
 but now probably it may be said that in every case the point is 
 mainly one of evidence, the question being, in respect both of a, 
 foreign and of an irresponsible principal — did or did not the 
 parties, tempore the contract, contemplate that the agent should ' 
 be liable? the presumption extending no farther than to throw 
 the burden of proving the negative upon the agent.' 
 
 II. If a person contracting as agent exceeds his powers, hi» 
 principal is not hound, while he himself is liable, as he 
 also is if in reality, he has no existing principal.' 
 
 In such cases the so-called agent is liable, not upon the con- 
 tract as principal^ but upon the implied warranty that he had a 
 principal.* 
 
 A principal may ratify the proceedings of an agent who has 
 gone beyond his authority, and thereby relieve the agent of lia- 
 bility, and 'transfer the same to himself. But if the agent had not, at 
 the time of makingthe contract, an actual existing principal, e.g., 
 where a promoter or other person purports to contract on behalf 
 of a company to be formed the agent alone is and will be liable 
 thereon, and the principal who subsequently comes into existence 
 cannot in any way relieve the agent.' 
 
 ' Mahony v. Keloile, 14 C. B. 390; and Button v. Bullock, L. R. 9 Q. B. 
 
 Parrott v. Eyre, 10' Bing. 283. 672. 
 
 2 Kelner v. Baxter, L. R. 2 C. P. 174. « Mahony v. Kekule, 14 C. B. 390 ; 
 
 3 See Priestly v. Femie, 3 H. <fe C. Dealandes v. Gregory, 2 E. <fe E. 602 ; 
 977. Paicet). Walker, L. R. 5 Ex. 173; Par- 
 
 ■• See De Gaillon v. L' Aisle, 1 B; & P. rott v. Eyre, 10 Bing. 283. 
 368, per Eyre, C. J.; and-Buller, N. P. « CoUen v. Wright, 8 E. <fe B. 647; 
 
 130; and compare cases in next note, Spedding «. Nevell, L. R. 4 C. P. 212. 
 
 -■' Kelner v. Baxter, L.-R. 2 C. P. 174. 
 
Y52 LIABILITY OF OFFICIALS. 
 
 Liability of CorporaU Officials upon Contractual Engagements. 
 
 First. As already seen, persons acting on behalf of others, 
 must clearly and unmistakably both act and give the parties with 
 whom they are dealing to understand that they are acting as 
 agents, and are unwilling to incur any personal liability. Other- 
 wise they will be liable as principals, even though they had no 
 such intention.'^ (a) 
 
 The same rule applies to the agents of a corporation, as is well 
 shown by the decision in Kay v. Johnson.^ This was a suit 
 against the Blackburn Manufacturing, &c. Company, and the di- 
 rectors and the secretary of the company, asking for a specific 
 performance of an agreement to take a lease, and for damages 
 caused by the refusal to do so. An agreement was made for the 
 lease of certain premises, containing a stipulation that the lessees' 
 should execute certain building works, and the lessor should 
 advance £1,000 on mortgage to a limited company. This 
 agreement was executed by the directors and secretary of the 
 company as lessees. The £1,000 was duly advanced, and the les- 
 sor (the plaintiff) in correspondence treated the company as liable 
 to perform the stipulations of the agreement, and evidence was 
 given that the directors and secretary were trustees of the benefit 
 of the agreement for the company, but the memorandum of 
 agreement expressly styled the directors named in it " the lessees." 
 It was therefore held that the directors and secretary who signed 
 the agreement were personally liable, and a decree was "made 
 against them for specific performance of the agreement to take a 
 lease. The Vice- Chancellor said: "On the face of the instrument 
 the presumption which arises is that the directors are liable as 
 principals as between them and the plaintiff, although they were 
 also trustees for the company as between themselves." (5) 
 
 Similarly with respect to every kind of agreement. If it be 
 not ultra vires, and the language used is such as to make the cor- 
 porate officials personally parties to the same, they will ex neoes- 
 
 1 Paice «. Walker, L. R. 6 Ex. 173; » 2 H. <fe M. 118; Pickering's ClMm, 
 
 and cases ante, p. 750, n. 1. L. E. 6 Ch. 625. 
 
 (o) See Story on Agency, §| 266, 267. Thomaen v. Davenport, 2 Smith's Lead- 
 ing Cases (7th Am. ed.), 368, 375. 
 (5) See Story on Agency, § 147. 
 
CONTRACTUAL ENGAGEMENTS. Y53 
 
 sitate be liable thereon, apart from any question as to wbether the 
 corporation is also liable, or as to what rights of indemnity or 
 otherwise they may have against the corporation.* (a) 
 
 Many of the decisions on this head have been in connection 
 with negotiable instruments. Not unseldom directors, trustees, or 
 other agents representing a company makie notes and accept bills, 
 very probably meaning the same to be on behalf of their com- 
 pany, but not using suitable language, nor taking other precau- 
 tions necessary to exclude personal liability. Thus, in Dutton v. 
 Marsh,^ four directors of a joint-stock company signed- their names 
 to a promissory note in the following form : " We, the directors 
 of the Isle of Man Slate Company, Limited, do promise to pay J. 
 
 D. £1,600, with interest at six per cent, till paid, for value re- 
 ceived." And at one comer of the note the company's seal was 
 affixed, with, " "Witnessed by L. L." It was held that the direc- 
 tors were personally liable as makers of the note, because there 
 was nothing in the note itself to exclude this personal liabity, and 
 
 ' Barker v. Allan,. 5 H. ife N. 61; 29 L. rose, 3 H. 4 N. 177; 27 L. J. (Ex.) 326, 
 
 J. (Ex.) 100 ; Haddon v. Ayers, 1 E. <fe and Alexander v. Sizer, L. R. i Ex. I(i2 ; 
 
 E. 118. See Hallet v. Dowdall, 18 Q. B. in neither of which were the directors 
 2 ; 21 L. J. (Q. B.) 98. who signed held liable. See, also, Rob- 
 s' L. R. 6 Q. B. 361. See the cases ertson v. Glass, 20 U. C. C. P. (1869), 
 
 there cited, and especially Lindus v. Mel- 260. 
 
 (a) In regard to all written contracts made by an agent for a corporation, the 
 rule is that in order to exempt the contracting party from personal liability, he must 
 so contract as to bind those he claims to represent. This rule has reference to tfie 
 form of the contract. Seaver v. Coburn, 10 Cush. 324; Pumpe'ly v. Phelps, 40 N. 
 y. 69 ; Lee v. M. E. Church of Ft. Edward, 62 Barb. 116 ; Dean v. Roesler, 1 Hilt. 420. 
 " The difficulty is not in ascertaining the general principles which must govern cases 
 of this natiire, but in applying them to the different forms and shades of expression 
 in particular instruments. In order to exempt an agent from liability upon an instru- 
 ment executed by him within the scope of his agency, he must not only name his 
 principal, but he must express by some form of words that the writing is the act of 
 the principal, though done by the hand of the agent. If he expresses this, the prin- 
 cipalis bound, and the agent is not." Tucker Mfg. Co. v. Fairbanks, 98 Mass. 101. 
 Among the later cases on this question are Carpenter v. Farnsworth, 106 Mass. 661 ; 
 Nichols ». Frothingham, 45 Me. 220; Nicholas «. Oliver, 36 N. H. 218; Slawson b. 
 Loring, 5 Allen, 840 ; Draper v. Mass. Steam Heating Co. 6 Allen, 338 ; Sharpe v. 
 Bellas, 61 I'enn. St. 69; Means v. Sworraestedt, 32 Ind. 87. See, however, the pe- 
 culiar case of Sherman v. N. Y. Central R. R. Co. 22 Barb. 239, in wliich the con- 
 tract was so drawn as to bind neither the principal nor the agent ; not the principal, 
 because the agent did not in any way execute it in their name ; not the agent, for he 
 did not profess in the body of the contract to act for himself. See AngeU & Ames 
 on Corp. § 293. 
 
 48 
 
T54 LIABILITY OF OFFICIALS. 
 
 the fact that the company's seal was affixed was not sufficient to 
 show that the note was signed on behalf of the company, {a)' 
 Secondly. If an agent, or rather one acting as such, has not 
 
 (a) Actions upon negotiable instruments cnn be brought only against that one 
 ■whom the form of the instrument shows to be the contraciing party. If the princi- 
 pal is liable thereby, the agent is not. If the agent is liable, the principal is not ; so 
 that the determination of the liability or non-liability of one party on such instru- 
 ments likewise involyes the non-liability or liability of the other. Upon the ques- 
 tion, what shall be deemed sufficient in form to make the instrument that of the 
 principal, it is difficult to lay down any exhaustive set of rules. A few general 
 statements may, however, be made. 
 
 1. If in the body of the instrument the principal is named, the addition of the 
 word " agent," or the like, to the signnture of the party contracting, will relieve 
 him from liability ; and it is enough that the name of the corporation or other prin- 
 cipal is printed in the margin. Fuller v. Hooper, 3 Gray, 334; Slawsou v. Loring, 
 5 Allen, 340; Mott v. Hicks, 1 Cow. 514. 
 
 2. If the principal is not named in the body of the instrument, and the instru- 
 ment runs in the name of the agent, the addition to his name in the signature of such 
 expressions as " agent for The Churchman," and the like, will be treated as mere sur- 
 plusage, and the agent will be personally liable. Stackpole v. Arnold, II Mass. 2'7 ; 
 Slawson o. Loring, 5 Allen, 340; Moss v. Livingston, 4 N. Y. 208; De Witt «. 
 Walton, 9 N. Y. 571 ; McClure «. Bennett, 1 Blackf. 189; Titus v. Kyle, 10 Ohio 
 St. 444. 
 
 3. Where a note is made payable to one in a qualified character, as to " R. B., 
 treasurer," and he indorses it in the same way, the indorsement creates no personal 
 liability. Babcock v. Beman, 1 E. D. Smith, 69T; s. o. affi'd, 11 N. Y. 200; Bowne 
 V. Douglass, 38 Barb. 312; Mott v. Hicks, 1 Cow. 514; Bank of Genesee v. Patchin 
 Bank, 19 N. Y. 312; same parties, 13 N. Y. 309. 
 
 A distinction is drawn between an agent as indorser and acceptor. See Babcock 
 Ti. Beman, mpra; Bruce v. Lord, 1 Hilt. 247. 
 
 And it is held that a bill drawn to "A. B., cashier," is payable to the bank of 
 which he is an officer, and that an indorsement in the same form is an official in- 
 dorsement. In Bank of N. Y. !). Bank of Ohio, 29 N. Y. 619, Wright, J., says: 
 '' Had there been nothing in the case to connect the bill with the defendant's bank, 
 C. (the cashier) would have been regarded as the payee and indorser individually, 
 and the abbreviation affixed to his name as a descriplio personce ; but when his official 
 position is shown, connected with the fact that the bill was the property of the bank, 
 and in the regular course of business was transmitted to its agent for collection, it ia 
 then shown that the indorsement is an official one." 
 
 Some authorities allow parol evidence to show that the note or bill is binding on 
 the corporation, by reason of the recognition of the particular instrument, or pre- 
 vious reccgnition of similar instruments, by the corporation, as corporate acts. 01- 
 cott V. Tioga K. E. Co. 27 N. Y. 546; Conro v. Port Henry Iron Co. 12 Barb. 27; 
 Elwell «. Lodge, 33 Barb. 330; Thompson t). Tioga R. R. Co. 36 Barb. 79; Mer- 
 chants' Bank v. McCoU, 6 Bosw. 473. Or even to show thnt the plaintiff and de- 
 fendant understood the instrument to be that of the principal. Jlott v. Hicks, 1 
 Cow. 514; Brockway v. Allen, 17 Wend. 40; Bruce v. Lord, 1 Hilt. 247. 
 
CONTRACTUAL ENGAGEMENTS. Y55 
 
 at the time a principal, and there is not then in existence any per- 
 son who could be principal, then, as the contract would otherwise 
 be wholly inoperative, such person will be held to have acted on 
 his own behalf, and he cannot afterwards be relieved from lia- 
 bility by the intervention of some person willing to ratify such 
 contract.? 
 
 In the case of corporations this question will generally arise, 
 when it does arise, with reference to the proceedings of promoters. 
 If promoters make, on behalf of the future corporation, an abso- 
 lute contract, and not merely one which is conditional on the for- 
 mation of such corporation, they will be personally liable thereon, 
 and will not be released from liability by the subsequent adoption 
 of such contract by the corporation when created.* (a) The same 
 I'emarks apply to the very common case, in connection with the 
 inception of corporations, of persons entering into contracts ex- 
 pressed to be so entered into by them as trustees on behalf of the 
 future corporations, and containing' clauses that such corporation 
 when created will ratify and adopt such agreement. Whatever 
 be the effect of such stipulations, it is quite certain that these so- 
 called trustees will not thereby be relieved, and that they must 
 protect themselves by apt clauses in the contract itself.* 
 
 Exoeaa or Misrepresentation of Authority. 
 
 Thirdly. Where the agent of a corporation either expressly or 
 impliedly by his conduct misrepresents the extent of his authority. 
 This is, perhaps, the commonest instance where a person dealing 
 with directors obtains redress from them personally, on the ground 
 of the contract being ultra vires either of themselves or of the 
 corporation. The principle may be thus stated : 
 
 III. If a director or other official of a corporation mahing a 
 contract with a person misrepresent his own authority, 
 whereby a contract not enforceable against the corporation 
 
 ' See ante, p. 761. ' See ante, p. 672 et seq. 
 
 " Kelner v. Baxter, L. R 2 0. P. 174, * See ante, p. 652 et seq. 
 
 the facts of which have been given. Page 
 654. 
 
 (a) Story on Agency, §§ 280-6. Herod v. Rodman, 16 Ind. 241. See note p. B67. 
 
Y56 LIABILITY OF OFFICIALS. 
 
 is made, and the person so contracting was not aware of 
 the limitation of authority, such person will have an ac- 
 tion for damages against the individual guilty of the mis- 
 representation; and it has heen decided that he will have 
 a similar action when the mis?'epresentation is of the 
 powers of the corporation, sed qusere. 
 
 (1.) Misrepresentation of an OfficiaVs Authority. 
 
 Of the accuracy of the first part of this rule there can be lit- 
 tle doubt. It has already been shown in the case of ordinary 
 agents and principals, if the agent misrepresents or exceeds (how- 
 ever innocently) his authority, and his principal refuses to ratify 
 the act in question, the agent is liable — not, indeed, upon the 
 contract as principal, but — to an action at suit of the injured 
 party upon the implied warranty that he had the necessary au- 
 thority.' {a) 
 
 1 CoUen V. Wright, 8 E. <fe B. 647; 27 F. & J. 618. See Edmunds v. Bushell, 
 L. J. (Q. B.) 215 ; Wilson v. Miers, 10 C. L. R. 1 Q. B. 97. 
 B. (N. S.) 348; Slim v. Croucher, 1 DeG., 
 
 (a) See Smout v. Ilbery, 10 M. & W. 1. Upon this point the courts of the United 
 States are not altogether in accord. There is in the first place a difference of opin- 
 ion as to whether the assumed agent, failing to bind his principal, can be held per- 
 sonally liable on the contract. The rule is often laid down that if an agent does not 
 bind his principal, he binds himself. Where the failure to bind the principal results 
 from the form of a written contract, because of the mode of signature or the mode of 
 designating the party contracting, this rule seems to be universally received. If, in 
 such case, the agent uses words which do not suffice to Indicate that his principal is 
 the contracting party, although intended to do so, those words will be regarded 
 as descriptive, and as mere surplusage. This rule, which properly has to do with 
 matters of form, has been extended to matters of substance, and some authorities 
 hold, that if the agent fails to bind his principal, by reason of lack of authority, in 
 a written contract whose form dearly indicates that the agent did not intend to bind 
 himself, everything which the agent had no authority to insert in the contract shall 
 likewise be regarded as surplusage, and the agent's name left bare as the sig- 
 nature of the contracting party. Nor has the application of the rule been confined 
 to written contracts, but it has been held, generally, that any contract which falls 
 to bind the principal, because the agent had no authority from him, shall be re- 
 garded as the contract of the agent. This is the view of the courts of New Hamp- 
 shire. Underbill v. Gileson, 2 N. H. 356; Woodes v. Dennett, 9 N. H. 68; Petlingill 
 1/. M'Gregor, 12 N. H. 191 ; Weare v. Gove, 44 N. H. 196; see, also, Roberts v. But- 
 ton, 14 Vt. 192; Royce». Allen, 28 Vt. 234; Bay v. Cook, 2 Zab. 343. It is also 
 supported by the earlier cases in New York. Dusenbury v. Ellis, 3 Johns. Oas. 70 ; 
 White V. Skinner, 13 Johns. 307; Meach v. Smith, 7 Wend. 315 ; Feeter v. Heath, 
 
CONTRACTUAL ENGAGEMENTS. Y57 
 
 Directors are similarly liable. Thus, in Cherry v. Colonial 
 Bank of Australasia/ two of the directors of a company informed 
 a bank that they had appointed C. to be the manager of the com- 
 pany, and had authorized him to draw checks. They had no 
 
 ' L. R. 3 P. 0. 24 ; 11 W. R. 1031. Compare Eastwood v. Bain, 3 H. & N. 
 
 738; 28 L. J. (Ex.) 74. 
 
 11 Wend. 479 ; but is doubted, if not overthrown, by the later New York authorities 
 (see Walker v. Bank of N. Y. 9 N. Y. 582 ; White v. Madison, 26 N. Y. 117 ; Aspinwallw. 
 Torrance, 1 Lans. 381; Dung v. Parker, 52 N. Y. 494; Baltzen v. Nicolay, 53 N. Y. 
 467), which accord with what seems to be the prevailing opinion, viz. -. that the 
 agent cannot in such case be held liable on the contract. See Koyes it. Loring, 65 
 Me. 408 ; Jefts v. York, 4 Cush. 371 ; s. c. (on new trial), 10 Cush. 392 ; Draper v. 
 Mass. Steam Heating Co., 5 Allen, 338 ; Ogden v. Raymond, 22 Conn. 379; Taylor 
 V. Shelton, 30 Conn. 122; Duncan v. Niles, 32 111. 632; Sheffield v. Ladue, 16 Minn. 
 388. But even where the liability of the agent as a contracting party is denied, still 
 he is held liable by some courts on the ground of fraud and misrepresentation, and 
 by others on that of an implied warranty ; thus in White v. Madison, 26 N. Y. 117, it is 
 said : " Whenever a person enters into a contract as agent for another, he warrants 
 his own authority, unless very special circumstances, or express agreement relieve 
 him from that responsibility. An action upon such warranty must always be ap- 
 propriate where personal liability attaches to an agent, in consequence of his con- 
 tracting without authority. » » If the act of the agent were fraudulent, an action 
 for the deceit would lie, but it would be a concurrent remedy with an action on the 
 warranty, and so I apprehend must be the action on the contract itself, if the cases 
 which sustain such action are to be regarded as correctly decided." And this 
 view is supported by Dung v. Parker, 52 N. Y. 494, and Baltzen v. Nicolay, 63 
 N. Y. 467. 
 
 On the other hand, Shaw, C. J., in Jefts v. York, 10 Cush. 392, says: "If one 
 falsely represents that he has an authority, by which another, relying on the repre- 
 sentation, is misled, he is liable ; and by acting as agent for another, when he is not, 
 though he thinks he is, he tacitly and impliedly represents himself authorized, with- 
 out knowing the fact to be true, it is in the nature of a false warranty, and he is 
 liable. But in both cases his liability is founded on the ground of deceit, and the 
 remedy is by action of tort." See Hegeman v. Johnson, 35 Barb. 200. 
 
 That an action on the case for deceit is a proper action, when one knowingly or 
 through culpable ignorance acts as the agent of another, without authority, seems 
 nowhere to be doubted. See Noyes v. Loring, 55 Me. 408 ; Ballon v. Talbot, 16 
 Mass. 461 ; Abbey v. Chase, 6 Cush. 54; Draper v. Mass. Steam Heating Co. 6 Allen, 
 338; Bartlett ». Tucker, 104 Mass. 336; Ogden «. Raymond, 22 Conn. 379; Taylor 
 ^. Shelton, 30 Conn. 122; Walker v. Bank of New York, 9 N. Y. 682; Duncan v. 
 Niles, 32 111. 532; McCurdy «. Rogers, 21 Wis. 197. That the notion of implied 
 warranty gives a basis for an action ex contractu, cannot be considered as settled. An 
 agent who falsely represents his authority to make a contract on behalf of another, 
 is not liable, however, in contract or in tort, unless the principal would have been 
 bound by the contract made, if the agent had such authority. Dung v. Parker, 52 
 N. Y. 494, and Baltzen v. Nicolay, 53 N. Y. 467, in both of which cases the contract 
 would not have bound the principal by the statute of frauds. 
 
758 LIABILITY OF OFFICIALS. 
 
 authority to do so, but they were held liable upon checks drawn 
 by C, upon the implied warranty that they had the requisite 
 authority. 
 
 The agent will, however, not be so liable if the person with 
 whom he dealt knew, or had the meaus of knowing, that he was 
 exceeding his powers. Such means will, in the case of the officials 
 of corporations, and more especially of joint-stock companies, be 
 generally in the power of the person contracting with them to 
 obtain. They have such powers only as are expressly given them 
 in the constating instruments, or are necessarily deducible there- 
 from in connection with the nature of the company's business. 
 It is, indeed, often difficult to define the limits of the implied 
 powers of corporate officials,^ and therefore on that account ques- 
 tions will occasionally arise, {a) 
 
 Nevertheless, very generally a misrepresentation by a director 
 or other agent of a corporation as to his powers must be a mis- 
 representation of law and not of fact, and when this is so he will 
 not thereby be involved in any liability. Beattie v. Lord Ebury * 
 is the latest case in point. Here three directors of a railway com- 
 pany opened, on behalf of the company, an account with a ba:nk, 
 and sent a letter, signed by the three as, directors, requesting the 
 bank to honor checks signed by two of the directors and counter- 
 signed by the secretary. The account having been largely over- 
 drawn by means of such checks, the bank sued the company at 
 law, recovered judgment in 1865, and issued an^elegit. The pro- 
 
 » See Wilson v. Miers, 10 C. B. (N. S.) House of Lords, L. E. 1 H. L. 102, on 
 348. the short ground that there was no rep- 
 
 ' L. R. 7 Ch. Ill; affirmed in the resentation at all by the directors. 
 
 (a) As to those matters wherein the powers either of the corporation or of the 
 agent are fixed or limited hy public act or by general laws, parties dealing with the 
 agent haye the means of knowing and must be presumed to know the extent of the 
 power, and haying thus constructive notice, cannot set up that they were deceived 
 by any implied representations or warranty of power in the corporation, or of au- 
 thority in the agent. See Story on Agency, § 265, and cases cited ; also Aspinwall 
 V. Torrance, 1 Lans. 381, where it is said: "There is a class of cases in which an 
 agent is held excused from liability, where he had acted in good faith, and the facts 
 were known to both parties. With how much more propriety may that rule be ap- 
 plied, when the agent is induced to act on his supposed agency, by the representa- 
 tion of the party with whom he is dealing." Directors, acting within the scope of 
 their official authority, bind the corporation, but not themselves individually. Any 
 action of theirs in excess of these limits is only personally binding. Smith v. Poor, 
 3 Ware, 148. See post, p. 764. 
 
CONTRACTUAL ENGAGEMENTS. 759 
 
 ceeds being insafficient to satisfy the debt, tbe bank filed a bill to 
 make the directors personally liable for the deficiency. Bacon, 
 V.-C, held that this letter rendered the directors personally re- 
 sponsible for the advances 'so made by the bank, but the Lords 
 Justices reversed his decision on the ground that, assuming the let- 
 ter to contain a representation (which they were greatly inclined 
 to doubt) the directors had power to overdraw the account, and 
 such representation to be erroneous, this was not a representa- 
 tion of fact, which the persons making it were bound to make 
 good, but only a mistaken representation of the law. Mellish, L. 
 J., said : " It appears to me that there is no representation made 
 respecting the authority, except that they were directors of the 
 railway company, and therefore they had such authority as the 
 directors of a railway company hadj' 
 
 IV. The mere fact that a director or other corporate official 
 enters into a transaction in such capacity is no rej>resen- 
 tation or warranty of his own or the corporate powers, or 
 that the corporation will carry out such transaction. 
 
 More than once the attempt has been made, where a corpora- 
 tion has repudiated, refused, or become unable to carry out a 
 transaction, to obtain damages or other relief from the ofiicials 
 making it. But it is fully established that their oflBcial position is 
 not of itself a representation or warranty — there must be some- 
 thing more to fix them with personal liability. 
 
 In Ferguson v. Wilson,^ the plaintiff prayed the specific per- 
 formance of a resolution passed by the board of directors of a. 
 railway company, under which he alleged that he was entitled to 
 have a certain number of shares allotted to him ; and he also 
 prayed that if it should appear that all the shares had been al- 
 lotted to other shareholders, the directors might indemnify him 
 out of their own shares, or might be charged with damages. All 
 the shares had been allotted before the filing of the bill. The 
 bill was dismissed both as against the company and the directors. 
 
 As to the liability of the latter. Cairns, L. J., said : " I think 
 that it ought to be very clearly understood upon what principle, 
 
 ' L. E. 2 Ch. 77. See Swift v. Jews- oonoerned were liable. See, also, Eagles 
 
 bnry, L. R. 9 Q. B. 301 ; Betts v. De field v. Marquis of Londonderry, 23 W. 
 
 Vitre, L. R. 8 Ch. 429; and Henderson v. R. 190. 
 Lacon, L. R. 5 Eq. 249, where the officials 
 
760 LIABILITY OF OFFICIALS. 
 
 and to what extent, directors in suits of this kind are liable to the 
 jurisdiction of this court. This is a bill filed upon a contract. 
 With whom has the contract been made? The bill alleges- that 
 the contract is made with and binds the company. What is the 
 position of directors of a public company? They are merely 
 agents of a company. The company itself cannot act in its own 
 person, for it has no person ; it can only act through directors, 
 and the case is, as regards those directors, merely the ordinary 
 case of principal and agent. Wherever an agent is liable, those 
 directors would be liable ; where the liability would attach to the 
 principal, and the principal ©nly, the liability is the liability of the 
 company. This being a contract alleged to be made by the com- 
 pany, I own that I have not been able to see how it can be main- 
 tained, that an agent can be brought into this court upon a pro- 
 ceeding which simply alleges that his principal has violated a con- 
 tract that he entered into. In that state of things not the agent, 
 but the principal, would be the person liable." 
 
 (2.) Misrepresentation of the Corporate Powers. 
 
 If it is but seldom that corporate officials can in this way be 
 held liable for exceeding their own authority, it is of coui'se still 
 more seldom that an action will lie against them for misrepresent- 
 ing the extent of the corporation's powers, and thereby inducing 
 a person to enter into an ultra vires engagement. In such case, 
 the other party has access to the constating instruments — ^he may 
 therefore make himself acquainted with the exact extent and 
 nature of the capacities of the corporation. He must also be 
 assumed to be informed of the law of the land. Consequently, 
 as (1) the actual existence of particular corporate powers is usually, 
 and (2) their exact nature and legal effect when existing is always, 
 a question of law, not of fact, the misrepresentation by the direc- 
 tors is most often of. a matter of law, and it therefore follows that 
 the person aggrieved is not entitled to redress, unless he can show 
 a clear misstatement of a fact.^ 
 
 ' Though under special and peculiar Turner, L. J., Stone v. Godfrey, 5 De G., 
 circumatancea the court?, it seems, have M. <fc G. 90 ; Broughton v. Hutt, 3 De G. 
 jurisdiction upon equitable grounds to re- & 3. BOX ; per Lord Brougham, Clifton v. 
 lieve against mistakes of law; Bingham Cookburn, 3 My. <feK. ggjjoerLordChelms- 
 jj. Bingham, 1 Ves. Sr. 126 ; Davis o. ford, Earl Beauchamp v. Winn, L. R. 6 H. 
 Morier, 2 Coll. 303 ; Re Saxon Life Asa. L. 234. See Rogers v. Ingham, 8 Ch. D 
 Co. (Anchor Case), 2 J. A H. 408;joe)- 351. 
 
CONTRACTUAL ENGAGEMENTS. 761 
 
 Accordingly, on two occasions, the Court of Chancery has re- 
 fused to grant relief under such circumstances. In the first case, 
 Ellis V. Colinan,^ directors had induced contractors to enter into 
 an ultra vires agreement with a corporation, and on a bill being 
 filed against the company and the directors for specific perform- 
 ance, or that the latter should make good their representations, 
 demurrers for want of equity were allowed, because "the proper 
 relief would be by action at law, for the purpose of compelling 
 the directors to make good the loss that the plaintiff had sustained 
 by their representations." The other case is Eashdall v. Ford,^ 
 where directors had issued Lloyd's bonds that were ultra 
 vires. The plaintiflF who advanced the money filed his bill to 
 make the directors pay the amount he had advanced, with interest, 
 but Page-Wood, Y.-C, allowed a demurrer, saying: "It seems to 
 me impossible to extend the principle of relief arising out of mis- 
 representation to a statement of law, which turns out to be an in- 
 correct statement. * * * It is impossible to say that the directors 
 are more than agents, or that they can be held personally liable 
 for any statements as to the legal effect of a security which they 
 agreed to give, and which the plaintiff agreed to take." 
 
 There is, however, a very strong contrary opinion by Wigram, 
 V.-C, in "Wilson v. Goodman.' " I take the law to be quite clear from 
 Higgins V. Livingstone,^ that if trustees of a turnpike road, canal, 
 or any other public work, act strictly within the line of their duty, 
 they will not be personally liable, unless upon a special contract. 
 If they act beyond the scope of their public powers, and order 
 works to be done for which there is no fund, they may then be 
 personally liable to the parties who advance money to defray the 
 expenses of such works ; that would always depend upon the cir- 
 cumstances of each particular case. In this case there being, as I 
 suppose, no fund whatever, but tolls being expected to be taken, 
 money was borrowed from the bankers in order to make the road. 
 Unquestionably, the parties in such a transaction exceeded their 
 powers, and I should be almost without a doubt as to the personal 
 liability of those who ordered the work to be done, and borrowed 
 the money for the purpose. They considered that by extending 
 
 ' 26 Beav. 662 ; 27 L. J. (Ch.) 611. ■> 4 Hare, 64, 62. 
 
 " L. R. 2 Eq. 760. Compare Eagles- * 4 Dow. P. C. 341. 
 
 field V. Marquis of Londonderry, 26 W. 
 R. 190. 
 
762 LIABILITY OF OFFICIALS. 
 
 their road they should improye their tolls, and thereby acquire 
 funds enough to pay the expense of the works, but they had not 
 tolls coming to an amount sufficient to justify the expenditure at 
 the time — the act, therefore, was altogether one exceeding their 
 powers." 
 
 Similarly at common law, in the case of Macgregor v. Dover 
 and Deal Ry. Co.,^ the facts of which have already been stated, 
 the Exchequer Chamber decided that an action would not lie 
 against the chairman of a railway company, upon a promise by 
 him that the company should do an ultra vires act, at the suit of 
 the person to whom the promise was made. The Court said : " It 
 is a promise that an act shall be done contrary to the public law 
 of the country, of which both parties are bound to take notice. 
 The act is, therefore, illegal; and the promise that it shall be done 
 is a void promise." 
 
 However, in Eichardson v. Williamson,^ the plaintiff was held 
 entitled to recover in such an action. Here the plaintiff had lent 
 £70 to a benefit building society, and received a receipt signed by 
 the defendants, as two directors of the society, certifying that the 
 plaintiff had deposited £70 with the society for three months cer- 
 tain, to be repaid, with interest, after fourteen days' notice. The 
 society was formed under 6 & 7 Wm. IV, c. 82, and had no 
 power to borrow money ; and the plaintiff being unable to get her 
 money back from the society, sued the defendants. On these 
 facts, the Court haying power to draw inferences, the Court of 
 Queen's Bench unanimously decided that the defendants were 
 liable to the plaintiff in damages for a breach of warranty of 
 authority, they having, by signing the receipt, in effect repre- 
 sented that they had authority to make a binding contract of loan 
 on behalf of the society, and so induced the plaintiff to part with 
 her money. 
 
 It is scarcely possible to reconcile this decision with Eashdall 
 V. Ford and Macgregor's Case. The judgments seem to have pro- 
 ceeded upon the ground that the misrepresentation was as to the 
 extent of the directors' powers. But even looked at in that way, 
 it was still a misrepresentation of law, rather than of fact, for the 
 powers of the directors are limited pro tqnto with those of the 
 company, and those of the company being, certainly, at least, as 
 
 ' 18 Q. B. 618; ante, p. 315, where ' L. R. 6 Q. B. 276. 
 
 the facts are stated. 
 
CONTRACTUAL ENGAGEMENTS. 763 
 
 to the borrowing of money,. and similar matters, a question of 
 law, those of the directors must be a question of the same nature. 
 Cockburn, C. J., said : " It cannot be supposed that the plaintiff, 
 on lending money to the society, did so with the knowledge that 
 the society was not authorized to borrow ; and it was not till she 
 wanted her money back that she ascertained the real position of 
 affairs, and is met by the defense that the society is not liable." 
 But, with all submission, that is exactly what the courts, both of, 
 law and equity, do, and in the previous decisons did, suppose 
 viz. : that every person understands the doctrine of rdtra vires, 
 and the restrictions and qualifications which are by consequence 
 of it imposed upon corporations ; and that a misstatement of 
 the capacity of any particular corporation is a matter of law, 
 which a person credits or not, and acts upon or not, at his own 
 peril. 
 
 Mellish, L. J., has thus explained this decision : ^ (a) " There 
 the plaintijBE lent £10 to a benefit building society, and received a 
 receipt signed by the defendants, as two of the directors, certify- 
 ing that the money had been lent, and them it turned out that in 
 point of law they had no power to borrow money. But then 
 their power to borrow money depended upon whether they had 
 made a rule to borrow money, because a benefit building society 
 may receive money, at any rate, to a certain amount, on deposit, 
 if it has a rule enabling it so to receive money. Therefore, that 
 was taken as a representation by the directors that they had such 
 a rule, and that the borrowing was within the rule, when, in point 
 of fact, there was no such rule at all." But, in the judgments as 
 reported, nothing turns upon the want of such a rule ; indeed, no 
 
 • Beattie v. Lord Ebury, L. R. 1 Ch. 801. 
 
 (a) Honeyman, J., In Weeks v. Propert, L. R. 8 C. P. 427 (which was an action 
 against a director of a company, to recover the amount paid for its debentures, is- 
 sned in excess of the borrowing powers of the company), comments upon the judg- 
 ment of Mellish, L. J., in Beattie v. Lord Ebury. " Taking the whole of that (the 
 judgment) together, it amounts to this, that a misrepresentation as to a matter of 
 law, which every man is supposed to know, gives no cause of action. In that, I fully 
 agree. Here, however, the defendant, knowing that the power of borrowing money 
 upon debentures had been fully exercised by this company (a fact which was un- 
 known to the persons with whom he was dealing), represented that the directors had 
 power to issue debentures so as to bind the company. I think, therefore, that the 
 defendant was guilty of a breach of warranty." 
 
764 LIABILITY OF OFFICIALS. 
 
 reference is made to it. The decision was simply that the directors 
 " represented that they had authority to borrow money on behalf 
 of the society, and that the society would be bound to repay it on 
 proper demand ; " whereas, there was no such authority, nor any 
 such liability ; and, consequently, " that the plaintiff was entitled 
 to recover from the defendants the damages she had suffered from 
 not being able to sue the society, on showing that the defendants 
 professed to be able to bind the society." {a) 
 
 (a) The few American decisions which allude to the point of the liability of 
 officials for misrepresentation of corporate powers, appear to have been determined 
 on the ground, rather of breach of an implied warranty, than of actual fraud. It 
 would seem, however, that the following principles should solve the question: (1) 
 If the powers are granted by the laws of the State wbere the representations are 
 made, and the act granting them is a public one, then the extent of the powers is a 
 question of law, of which no one can plead ignorance. See ante, pp. 2*72, 471, 
 606. (2) Misrepresentation of a matter of law does not constitute fraud at law, al- 
 though if a man dealing with another misleads him as to his legal rights and posi- 
 tion, courts of equity wiU interfere to prevent imposition. (3) Mistake of law, both 
 at law and in equity, is no ground for the recovery of money paid ; "but the rule 
 is liable to a qualification, if the man to whom money has been paid has been 
 accessory to the error of the other party, or has got some one to misinform him 
 of the law." See Kerr on Frauds (Am. ed.), 90, 401, and cases cited ; Starr v. Ben- 
 nett, 6 Hill, 303 ; Cook v. Nathan, 16 Barb. 342 ; Mead v. Bunn, 32 N. Y. 276 ; 
 Ktcher v. Hennessy, 48 N. Y. 416; Oliver v. Mutual Ins. Co. 2 Curt. 271. (4) If, 
 however, the corporate powers are granted by the laws of a State other than that 
 where the representations are made, then the extent of the powers is a question of 
 fact. See Owings ». Hull, 9 Pet. 607; Havens «. Foster, 9 Pick. 112; Monroe «. 
 Douglass, 6 N. Y. 447 ; Bank of Chillicothe v. Dodge, 8 Barb. 233. As to actions at 
 law for false representations, see Kerr on Fraud, ch. i, § 2 ; Meyer v. Amidon, 46 N. 
 Y. 169; Oberlander v. Speiss, lb. 173 ; Wakeman v. Dalley, 51 N. Y. 27; and note 
 ante, p. 338. As to relief in equity from mistakes of law and of fact, see Willard 
 Eq. Juris, chap. 2; Story Eq. Juris. g§ 126, 138; Benjamin on Sales, §§ 414, 419, 
 428-502, 607, and cases cited in Mr. Perkins' notes to American edition. 
 
 In McCurdy v. Rogers, 21 Wis. 197, the Court says: " It is not claimed that the 
 appellant ihade any false representations, or practiced any deceptions, unless it was 
 done by making a promise in the name of the town, which he had no authority to 
 make. His assuming to make a contract which he had no authority to make, would, 
 ordinarily, in the case of private agents, be equivalent to a representation that he 
 had authority to make it ; but not so in this case, or if so, its falsity was known at 
 the time to L. ; for the authority which the town had was by virtue of a general 
 statute, which both parties alike are presumed to know." See Ogden v. Raymond, 
 22 Conn. 379. Jefts v. York, 10 Cush. 392, was a suit brought against one who had 
 executed a note in behalf of a church, which was held not to be a corporation, and 
 had no power to authorize an agent to borrow money. Shaw, C. J., held that " where 
 a person, acting as agent, borrows money for his principals, and gives their obli- 
 gation for it, and it turns out that the principals were not of legal capacity to make 
 
1. 
 
 TORTS. 765 
 
 Section II. — Toets. 
 
 Agents are personally lialle for torts committed ly them, 
 though in the purest bona fides, and in the due and proper 
 discharge of their duties. 
 
 Every tort feasor is liable for the result of his acts. It is no 
 excuse whatever that he acted innocently, and under the direc- 
 
 Buch contract, and of course could confer no such power on another, the agent is not 
 personally liable on the contract as his contract. * * If the defect of authority- 
 arises from a want of legal capacity, and if the parties act under a mutual mistake of 
 the law, and are both equally well informed in regard to the facts, so that the 
 lender is not misled by any word or act of the agent, he could hare no legal remedy 
 against the agent ; not in assumpsit, for it is not his contract ; not in tort, for he is 
 chargeable with no deceit." King v. Doolittle, 1 Head, 78, was a suit in equity to 
 rescind a contract for the purchase of a bauV, claiming legal existence under peveral 
 acts of the Legislature of Tennessee, copies of which, certified by the Secretary 
 of State to be full and perfect copies, were procured by the vendor, and upon the 
 faith of which the vendee entered into the contract of purchase. There was no 
 suspicion, much less knowledge, on the part of either party, that there had been 
 omitted from the copy, a clause reserving to the Legislature the right of repeal at 
 pleasure. The Legislature, after the contract of purchase had been completed by the 
 delivery of several negotiable promissory notes, repealed the charter, and totally de- 
 stroyed the legal existence of the bank. The contract was set aside, upon the 
 ground of a mistake of fact, both parties having relied upon the certified copy of the 
 laws above mentioned ; but the Court also held, that the charter of a private bank, 
 which is merely the title of the parties, stood upon the same footing with the laws 
 of other States and governments, ignorance of which is ignorance of fact. The 
 Court observes : " The complainant cannot, we think, be repelled on the ground that 
 the charter, being a public act, the law imputes to the complainant, and charges him 
 with knowledge at the time of making the contract, not only of the entire contents 
 of the charter, as a matter of fact, but likewise of the rules and principles of law 
 applicable to each and all of its several provisions. This position is not tenable. 
 "Whether an act, incorporating a bank for the sole benefit of private individuals, may 
 not, in some sense and for some purposes, be regarded as a public law, is a question 
 we need not now discuss. For, if this were even to be admitted, no one will be heard 
 to say, that it is a general law, afiecting the whole community. And we have held, 
 that the familiar maxim, that ignorance of the law is not excuse for the breach or 
 non-performance of any agreement, because every one is presumed to know the law, 
 applies only to general public laws, which prescribe a rule of action for the whole 
 community; and that it has no application whatever to special or private laws, 
 which are intended to operate upon particular individuals ;" citing Cook v. Sumner 
 Spring Co. 1 Sneed, 698; see State ». Paup, 13 Ark. 129; Russel «. Branham, 8 
 .Blackf. 277; People v. Supervisors, 27 Cal. 656; Weare v. Gove, 44 N. H. 196. The 
 mere fact that one is a director and stockholder in a corporation, does not render 
 
766 LIABILITY OF OFFICIALS. 
 
 tion, and as the agent of another ; it is no excuse that the agent 
 believed himself in a manner bound to obey the directions re- 
 ceived by him, and that the act adjudged to be a tort appeared 
 proper tempore faoti, and was subsequently determined to be a 
 tort only after careful arguments and judicial decision.' 
 
 The liability of corporate officials, at least as to torts other 
 than fraud, is precisely the same. In a very recent case this 
 question was examined very carefully and thoroughly, and the 
 decision, both of a majority of the first court, and unanimously 
 on appeal, was that the agent is always liable. 
 
 This case was Mill v. Hawker.^ Stated briefly, the facts were 
 as follows : At a meeting of the members of a highway board,' 
 it was resolved that a path running through land in the occupation 
 of the plaintiff was a highway, and that the plaintiff be directed 
 to remove a lock from a gate placed across it. The surveyor of 
 the board was afterwards ordered by them to remove the lock, 
 and did so. Thereupon, an action of trespass was brought by the 
 plaintiff against the members of the board, in their personal ca- 
 pacity, and the surveyor and the defendants pleaded justification. 
 At the trial, Kelly, C. B., nonsuited the plaintiff, on the ground 
 that neither the members of the board nor the surveyor were 
 
 ' Mill V. Hawker, L. K. 9 Ex. 809 ; ' Who are a corporation by 25 & 26 
 
 Ibid. 10 Ex. 92. "Vict. t. 61. 
 
 ' Ibid ; ante, pp. 364, S66. 
 
 him liable for the frauds and misrepresentationa of the active managers. Some 
 knowledge and participation in the act claimed to be fraudulent must be brought 
 home to the person charged. It is only where a director lends his name and in- 
 fluence to promote a fraud, or is guUty of some violation of law, or other misman- 
 agement, that he is personally liable. Arthur v. Griswold, 55 N. Y. 400. A director 
 who Imowingly issues or sanctions a prospectus containing false statements, to de- 
 ceive, and to induce the public to purchase the corporate stock, is liable for the 
 damages sustained by one who, rel3-ing upon the statements, makes such a purchase ; 
 if the false statements were one, although they were not the sole inducement to the 
 purchase. But the mere fact that a trustee allows his name and credit to be used to 
 promo'.e the sale of stock, which afterwards turns out to be worthless, without 
 knowledge on his part of any false representations, does not constitute actionable 
 fraud. Morgan v. Skiddy, 62 N. Y. 319. By reason of a failure to comply with the 
 provisions of the law authorizing the organization of a corporation, an attempted 
 organization failed to become a corporation de jure, and could not legally issue stock, 
 but stock was issued. Held, that the mere issue of stock, unauthorized, did not 
 alone make the. directors liable for fraud, though coupled with the fact that the 
 nominal was largely in excess of the actual capital. Nelson v. Luling, 62 N. 
 T. 645. 
 
TORTS. 76Y 
 
 liable individually. No evidence was therefore given in support 
 of the plea of justification, and consequently, in the subsequent 
 proceedings, it was assumed that the path was not a highway. The 
 Court of Exchequer (Kelly, C. B., dissenting) set aside the non- 
 suit, and ordered a new trial, on the ground, first, that assuming 
 that the resolution was illegal, the members of the board who 
 concurred in it were personally responsible ; secondly, that the 
 fact that the surveyor was, by 25 & 26 Vict. c. 61, s. 16, bound to 
 obey the orders of the board, did not excuse him, if, in obeying 
 their orders, he did an unlawful act. Upon appeal, it was held by 
 the Exchequer Chamber, that the surveyor was liable, and that 
 the judgment setting aside the nonsuit must therefore be af- 
 firmed. 
 
 The judgment of Denman, J., perhaps most clearly expresses 
 the views taken by the Exchequer Chamber, and was in these 
 words : " The question as to the liability of the surveyor seems to 
 me to depend entirely on the words of 25 & 26 Yict. c. 61, s. 16, 
 and the words relied upon by Mr. Kingdon are these : ' He shall 
 in all respects conform to the orders of the board in the execution 
 of his duties.' To ascertain the real meaning of these words we 
 must go to the earlier part of the clause, which says, ' he shall act 
 as the agent of the board in carrying into effect all the works and 
 performing all the duties requii-ed to be carried into effect or to 
 be performed by the board.' What are those duties ? They are 
 duties relating entirely to public highways, and for the purposes 
 of this case we are bound to assume that the particular place in 
 which the surveyor attempted to execute his duties on the occa- 
 sion complained of was a place which was not a public highway. 
 If so, I think it follows from the reasons given by my brother 
 Blackburn, that the board had no jurisdiction over that place. 
 Then if the board had no right to do what they did, had the sur- 
 veyor any right to act under their authority in the manner com- 
 plained of ? Well, the words are, ' he shall in all respects conform 
 to the orders of the board in the execution of his duties.' If this 
 was not a highway, he would have no duties there at all, and he 
 cannot therefore resort to this clause as affording him a protection. 
 The* cases relied upon have been cases of a peculiar kind. The 
 case of Dews v. Eiley,^ and the case of Andrews v. Harris,' the 
 only two which told in favor of Mr. Kingdon, were cases relating 
 
 ' 11 C. B. 434 ; 25 L. J. (C. P.) 264. ' 1 Q. B. 3. 
 
768 LIABILITY OF OFFICIALS. 
 
 merely to duties performed by officers under the orders of a court 
 of justice. These cases are not applicable to the present case, but 
 the general rule is applicable that a man who has done a wrong is 
 responsible for that wrong. Here the surveyor has done an act 
 upon an object with which he had no duty to interfere. There- 
 fore he, at all events, is responsible." 
 
 This decision, so long as it stands, is conclusive of the point 
 now under consideration. But there is at least one case somewhat 
 in conflict. In Keane v. Reynolds,^ trespass was brought for pull- 
 ing down a cottage which the magistrates had adjudged to be an 
 encroachment within fifteen feet of the centre of a highway, and 
 convicted the plaintifE of having made the encroachment, against 
 the defendant who, as surveyor of the highways, had pulled down 
 the cottage in the supposed execution of the Act 5 & 6 Wm. lY, 
 c. 60. It appeared that the conviction was void, the way never 
 having been repaired with stones or otherwise. But the court 
 held that the defendant was not liable to the action " on the prin- 
 ciple that the surveyor acted in obedience to the judgment of a 
 court of competent jurisdiction which he was bound to execute." 
 
 As to frauds : it is quite clear that whoever actively partici- 
 pates and assists in the commission is liable just as with other 
 torts. But a person may be a mere instrument in the propagating 
 of frauds, e. g., by being the secretary or chairman of a company, 
 and as such issuing a report or prospectus which contains mis- 
 statements, and is, therefore, to that extent fraudulent. In such 
 cases it is submitted that, assuming the offic-ial to have acted with 
 bona fides, he must be deemed the mere instrument and not the 
 agent of the company, and that, consequently, he will not be re- 
 sponsible for the fraud so committed, although the company will, 
 or at least may, be so." 
 
 Such a result can scarcely happen with respect to other torts. 
 The person causing them, however innocently, is actually the 
 wrong-doer — without his intervention there would not have been 
 the act which is the tort, whureas in the instances of fraud above 
 referred to, the fraud consists in the proceedings of the corpora- 
 tion^ and not in the publication and diffusion of such proceedings. 
 
 ' 2E. &'~B. 148; 18 Jur. 242. 
 
CHAPTER III. 
 
 LIABILITY OF THIRD PARTIES IN RESPECT OF TRANSACTIONS 
 "WHICH ARE ULTRA VIRES IN THE PRIMARY SENSE. 
 
 After the consideration given in the last three chapters to the 
 liabilities and rights of corporations, and of the agents or metnberB 
 thereof who have been concerned, directly or indirectly, in ullafa 
 vires transactions, the liability and rights of the other parties to 
 such transactions — of the persons in no way belonging to the cor- 
 porations — will involve little diflaculty. Put shortly, their liabili- 
 ties and rights wiU be respectively reciprocal to, and the converse 
 of, the rights and liabilities of the former. 
 
 I. Persons who have obtained, at the expense of corporations, 
 henefit hy means of ultra vires transactions, are liable to re- 
 pay to the extent of the benefit so deri/oed. (a) 
 
 As corporations must account for advantages resulting from 
 transactions beyond their powers, so, e contrario, must the oppo- 
 site party, if it is the corporation which has been damnified and is 
 seeking redress. It is a well-known principle of equity that any 
 property, whether trust,' or ordinary property,* which, in the opin- 
 ion of a Court has been wrongfully obtained from a person, may 
 be followed into the hands of all those affected with notice of 
 wrongful proceeding; and if earmarked^ the identical realty or 
 personalty may be recovered. 
 
 The principle applies equally to ultra vires transactions. No 
 matter under what agreement or conditions the corporate funds 
 have been disbursed, if the disbursement was by virtue of, or upon 
 the consideration of, an agreement ultra vires in the strict sense, 
 
 1 Pennell J). Deffell, 4 De G,. M. <fe G. « Pannell <;. Hurley. 2 Coll, 241. See 
 
 372 ; Hardy v. Metropolitan Land, &c. Parker v. Lewis, L. R. 8 Ch. 1044. 
 Co. L. R. 1 Cli. 427. Compare Brown v. ' See Felling & Rimington's Case, L. 
 
 Adams, L. R. 4 Ch. 764 ; & parte Cooke, R. 2 Ch. 714. 
 26 W. R. 171. 
 
 (a) See ante, p. 729, note. 
 49 
 
770 LIABILITY OF THIRD PARTIES. 
 
 then the funds have been parted with improperly. Consequently, 
 as the powers of a corporation are supposed to be known to every 
 one, the other contracting party will be afEected with notice, and 
 will be liable to account for the moneys, &c., so received by him. 
 
 A very good case illustrative of the general principle, and, to 
 some extent, of its application to ultra vires matters, is that of 
 Bryson v. Warwick & Birmingham Canal Co.* The committee- 
 men of the " Extension " Railway Company, which had been pro- 
 visionally registered, entered into an agreement with two incor- 
 porated canal companies for the purchase of the canals of the Ex- 
 tension Company, in the event of the power being obtained from 
 parliament for that purpose, with a proviso that the committee- 
 men should provide, out of their own moneys, a deposit, which was 
 to be forfeited if no act should be obtained. 
 
 The deposit of £10,000 was paid by a check headed with the 
 name of the Extension Company, signed by three committeemen, 
 and countersigned by the secretary. It was paid by means of a 
 credit of £17,000 transferred to the account of the Extension 
 Company, from that of another provisionally registered railway 
 company, the " Warwick & Worcester Co.," by some of the com- 
 mitteemen who were directors of both. This transaction was not 
 within their powers in either capacity, but £14,200 of the money 
 was subsequently repaid to the Warwick & Worcester Company, 
 out of the Extension Company. No act was obtained ; the Exten- 
 sion Company was dissolved, and was ordered to be wound-up. 
 It was decided, (1) that notwithstanding the unauthorized transfer 
 of credit, the deposit was trust money of the Extension Company, 
 as between its subscribers and the canal companies ; (2) that the 
 form of the check and the circumstances under which it was re- 
 ceived, affected the canal companies with notice of the trust ; (3) 
 that a suit sanctioned by the master, under the Winding-up Act, 
 by one of the subscribers to the Extension Company, on behalf of 
 himself and the other subscribers, except those who were defend- 
 ants, against the canal companies, the committeemen, and the offi- 
 cial manager of the Extension Company, for the recovery of the 
 deposit, was properly constituted. 
 
 This case was followed some years after by that of Ernest v. 
 
 ' 1 Sm. <fe G. i^^ ; on Appeal, 4 De 693, where profits by or payments to 
 
 G. M. AG. 711. See Parker t). McKenna, parties, liable to account therefor, have 
 
 L.'e. 10 Ch. 96 ; Hay's Case, L. R. 10 Ch. been traced and recovered for the rightful 
 
 ^ owners. 
 
LIABILITY OF THIRD PARTIES. Ill 
 
 Croysdill,! which was instituted by the official manager of the 
 "Worcester and Warwick Company, against the official manager of 
 the Extension Company, to recover the balance between above 
 mentioned sums of £17,000 and £14,200. A decree having been 
 Obtained, as above stated in Bryson v. Warwick and Birmingham 
 Canal Co., for repayment of the £10,000, and the official manager 
 of the Extension Company, being unable to enforce payment of 
 the decree, assigned the benefit thereof for £7,300, which was ap- 
 plied partly in payment of deposits of the borrowing company, 
 and partly in payment of costs. Seven years later the official man- 
 ager of the Worcester and Warwick Company claimed from the 
 official manager of the Extension Company, the difference between 
 the £1Y,000 and the £14,200. Knight-Bruce and Turner, L. JJ., 
 decided : 1, that this balance might be traced and identified as 
 part of the £7,300 received as the consideration for the assign- 
 ment of the benefit of the decree ; 2, that it was payable to the 
 claimant in full ; 3, that length of time and change of circum- 
 stances, and absence of interference on the part of the lending 
 company, in the suit against the canal companies, constituted no 
 d'efense. 
 
 Zulueta's Claim,* is another important decision. Here the 
 broker of a banking company, acting under the instructions of the 
 directors, bought shares in the company on behalf of the company, 
 and was credited with the price paid by him for the shares in his 
 banking account kept with the company, and the company was 
 afterwards wound-up. The Court of Appeal held, that the broker 
 was not entitled to prove against the company for so much of the 
 balance due to him as represented the price of the shares ; and 
 they expressed a strong opinion that if the price of the shares had 
 been actually paid to the broker by the directors, he would have 
 been liable to refund it. 
 
 A decision was given by Lord Romilly, M. E., in the winding- 
 up of the Contract Corporation, which it is not easy to reconcile 
 with the above authorities,* and which apparently amounted to 
 this: that a company having powers to enter into a contract for 
 the purchase of goods, is bound by such contract, although the 
 goods may not be intended to be used for the purposes of the com- 
 pany, and although this fact may be known to the person with 
 
 > 2 De G., F. <fe J. 175. ' He Contract Corp., Claim of Ebbw 
 
 '^ L. R. 5 Ch. Hi ; Bee cases cited. Vale Co. L. R. 8 Eq. 14. 
 
772 LIABILITY OF THIRD PARTIES. 
 
 whom this contract is entered into. The facts were as follows : 
 The Contract Corporation, which was a limited company formed 
 for the purpose (amongst others) of constructing railways, by a 
 letter from the secretary, gave an order to the Ebbw Vale Com- 
 pany, for 500 tons of rails at a certain price, to be paid for by 
 three months' acceptances from the date of delivery. The man- 
 aging director of the Ebbw Yale Company was also a director of 
 the Contract Corporation, and the rails were required for a line of 
 railway which he, and not the corporation itself, had undertaken 
 to make. The rails were made but were not delivered, in conse- 
 quence of the Contract Corporation being ordered to be wound-up. 
 It was held, first, that the order was binding on the Contract Cor- 
 poration, although not under seal, and although the managing di- 
 rector of the Ebbw Vale Company might have known the purpose 
 for which the rails were to be used ; and secondly that the Ebbw 
 Vale Company was entitled to prove, in the winding-up, for dam- 
 ages occasioned by the non-acceptance of the rails. 
 
 It is submitted that this decision is both inconsistent with Zu- 
 lueta's Claim, and also erroneous upon general principles. If it is 
 not ultra vires of a corporation to purchase goods not for re-sale 
 nor for using in or about its own operations, what possible mean- 
 ing can be given to the term ? In giving judgment in Zulueta's 
 Claim, Giffard, L. J., said : ' "If the money had been paid over to 
 Mr. Henry [*. e., to enable him to buy the shares of a company on 
 the company's account], of course, then it would have been neces- 
 sary to have proceedings to recover the money, which are not nec- 
 essary now ; but if that had been so, I should not have hesitated 
 to say that I should have made a decree against Mr. Henry and 
 every one of those directors, to restore every sixpence." 
 
 Hardy v. Metropolitan Land, &c. Co.' is a rather strong case 
 to the same effect. The directors of a building society deposited 
 money, in a manner unauthorized by their rules, with a finance 
 company, the manager of which was the manager of the building 
 society. Afterwards the deposit was called in, and the directors 
 of the finance company gave a check for the amount to their 
 manager, to be paid by him to the building society. He appro- 
 priated it to his own use. A bill was then filed by the trustees 
 of the building society to recover the money from the finance 
 
 ' L. R. 5 Cb. 462. See ante, p. 111. ' L. R. 7 Ch. 42T. 
 
LIABILITY OF THIRD PARTIES. 773 
 
 company. The Lords Justices held, first, that the manager held 
 the money as agent for the finance company, until he should pay 
 it to some person competent . to give a receipt on behalf of the 
 building society ; and that as he never paid it over, the money 
 must be taken to be still in the hands of the finance company, who 
 were liable to repay it to the building society ; and secondly, that 
 as it was trust money, a suit to recover it was maintainable, and 
 the finance company were accordingly ordered to repay the money 
 with interest. 
 
 This principle is further illustrated by the decision in FeiKng 
 and Kimington's Case.^ Here directors had subdivided £100 
 shares, and converted them into £20 shares. It was decided that 
 this subdivision was ultra vires and therefore void. After the 
 attempted conversion, Felling transferred to Rimington fifty of 
 the new £20 shares. These shares could be identified in the books 
 of tbe company as being the shares into which ten of the original 
 £100 shares had been divided. It was held that the transfer was 
 effectual to pass the ten £100 shares, and that Eimington and not 
 Felling must be on the list of contributories. 
 
 ' L. R. 2 Ch. 714, See ante, p. 163, where the facts are given fully. 
 
CHAPTER IV. 
 
 TRANSACTIONS WHICH ARE ULTRA VIRES IN THE SECONDARY 
 
 SENSE. 
 
 Section I. — Natuee of such Tkansactions. 
 
 A FULL and satisfactory examination of this subject is, perhaps, 
 the most diflScult of the problems in connection with vMra vires. 
 Transactions of the kind now in statement are matters which a 
 corporation both can and cannot engage in, which some corpora- 
 tions always, and others never, can perform. And this being so, 
 it is often asked whether indeed there is any definite, definable 
 class of such transactions ? 
 
 Now, the answer to this will depend upon the question, 
 whether or not these matters can be separated from those which 
 are more or less closely allied to them, viz., from those which are, 
 (1.) Ultra vires in the true sense ; (2.) Objectionable on the part 
 of the majority ; (3.) Ultra vires of the officials ; or, (4.) Breaches 
 of contract ; as well as from those which are, (5.) Absolutely ille- 
 gal ; or, (6.) Merely informal. 
 
 The last four of these classes are clearly separable from the 
 first two. There remain, then, these first two, and the present 
 matters for discussion and demarcation. It is submitted that the 
 three propositions following both establish the distinction, and 
 are sufficient to show the exact nature of transactions which are 
 ultra vires in the secondary sense, as also to indicate the limits 
 and area of such. 
 
 I. First. These transactions must not he ultra vires in the true 
 
 This is plain. Matters strictly ultra vires evidently must be 
 so styled, and, whatever their description, must be put with the 
 class to which they properly belong, and be subjected to its rules, 
 and cannot be dealt with in any other category. 
 
NATURE OF SUCH TRANSACTIONS. 116 
 
 II. Secondly. These trrnisactions, though on the one hand with- 
 in the potential capacity of the corporation, yet on the other 
 hand must not he authorized hy the active capacity of the 
 then actual constitution of the corporation. 
 
 This is the really important proposition. It is so far supple- 
 mental of the former, that, together with it, it distinguishes the 
 present transactions from such as are strictly ultra vires. But it 
 is an independent proposition, as indicating the difference be- 
 tween these transactions and such as are within the power or dis- 
 cretion of a corporate majority. Transactions ultra vires in the 
 secondary sense are not so ; they are what are within the powers 
 of the corporation, but at the same time require, in order to bind 
 any particular corporator, the assent, actual or constructive, of such 
 corporator.^ 
 
 III. Thirdly. The theoretical capacity of the corporation to 
 engage in these transactions must he at the time not ac- 
 tively existing. 
 
 This is a corollary to the second proposition. It is given 
 merely to enforce the necessity of bearing in mind what consti- 
 tutes the rationale in the matters now in statement. On the one 
 hand, there must be a possible capacity of engaging therein, a 
 capacity of so acting if the corporators, one and all, choose. But, 
 on the other hand, this capacity must either never have been 
 called into existence, or, if so at the time, it must be dormant or 
 in abeyance. 
 
 There is another principle to be noticed, which governs many 
 of the cases, and may be thus formulated : 
 
 I Y. If the cmstitfuMon of a corporation secures expressly, or hy 
 implication, certain rights or interests for all the corpora- 
 tors, collectiveh/ or individually, then any infringement of 
 such rights or interests will he ultra vires in the secondary 
 sense.ia) 
 A principle closely analogous to the one here enunciated has been 
 examined in Chapter II of the preceding Part, in connection with 
 
 ' See ante, pp. 33-6. 
 (ffl) Consult Index, Rights of Shareholders. 
 
7Y6 ULTRA VIRES IN THE SECONDARY SENSE. 
 
 the powers of the majority, and it will be seen to be the reason by 
 which many of the questions relating to these are to be determined. 
 But the principle as here expressed, and with reference to the 
 matters here discussed, goes farther. It applies not merely when 
 rights totidem verbis are bestowed or created by the constating 
 instruments, which is the fact to be considered when dealing with 
 a majority, but also the objects contemplated by a corporation, and 
 the cause wherefore persons enter it, are clearly individual profits 
 and advantage generally or under special circumstances. 
 
 Examples of these g'wasi-rights will most often occur in con- 
 nection with commercial and with trust corporations. In other 
 cases, rights or interests of the kinds here in statement will be 
 rights stricto sensu, to be enforced by the ordinary processes and 
 remedies. And the matters with reference to which such ques- 
 tions wiU arise, will, for the greater part, be those of proprietary 
 or pecuniary interest. 
 
 Ayers v. South Australian Banking Co.,^ is not only a good il- 
 lustration of the present principle, but it also clearly exhibits the 
 exact meaning and legal import of ultra vires in the secondary 
 sense, that it relates to matters which primarily concern only the 
 corporators, so that if they acquiesce, outsiders cannot raise the 
 objection. A banking company incorporated by charter, which 
 contained a clause declaring that it should not be lawful for the 
 company to advance money on the security of merchandise, ad- 
 vanced money on the faith of receiving as security a preferential 
 lien on 1>he wool of an ensuing clip, to be shorn from the sheep 
 of the party in whose favor the advances were made, but who was 
 not in the actual possession of the sheep, though a part owner of 
 the sheep, and the agent of the other owners, for whose benefit 
 the advances had been made. On appeal to the Privy Council, it 
 was held, in an action of trover by the company, on such agree- 
 ment giving them a preferable lien, that the same was maintain- 
 able, and that the banking company were entitled to recover for 
 the value for the wool on such preferable lien. 
 
 As to the objection that the matter was ultra vires, the Court 
 said : " Now, unquestionably, a great many questions might be 
 raised on the effect of that clause in the charter, which may be of 
 very great importance, but which also, being of great diflSculty, 
 their lordships do not think it necessary to give any opinion upon ; 
 
 1 L. R. 8 P. C. 648. 
 
NATURE OF SUCH TRANSACTIONS. 777 
 
 tliere may be a question as to what are the transactions which 
 come really within the clause, and whether this particular case 
 does come within it. There may be also question whether, under 
 any circumstances, the effect of violating- such a provision is more 
 than this, that the crown may take advantage of it as a forfeiture 
 of the charter, but the only point which it appears to their lord- 
 ships is necessary to be determined in the present case is this, that 
 whatever effect such a clause may have, it does not prevent prop- 
 erty passing, either in goods or in lands, under a conveyance or 
 instrument which, under the ordinary circumstances of law, would 
 pass it. The only defense which can be set up here (there is no 
 plea of illegality) is under the plea of not possessed, that the right 
 of property and the right of possession never passed to the plaint- 
 iffs. Their lordships are of opinion, that whatever other effect it 
 has, it cannot have the effect of preventing the property passing." 
 
 Y. Whatever not heing originally binding upon a corporation 
 can ie rendered so h/ acquiescence is, at most, ultra vires in 
 the secondary sense, and e converse such ultra vires matters 
 may he acquiesced in.{a) 
 
 Of course, a transaction of this kind may be objectionable as 
 being informal, or outside the authority of an official, or an im- 
 proper exercise of the powers or discretion of the majority. 
 
 But if not, if the objection be a matter of corporate capacity, 
 then on the one hand, if the transaction be ultra vires in the 
 strict sense, it is clear that it can neither be directed beforehand, 
 nor approved when done by express ratification or acquiescence.i 
 But suppose that it is simply ultra vires in the other sense. Then, 
 from the very meaning of the term, the matter is potentially 
 within the potential capacity of the corporation, but tlie objection 
 is, that the corporation did not then actually possess the capacity, 
 as an active fact, to direct or engage in the matter in question. 
 Plainly, this is an objection which only the corporation and its 
 members can raisej" and which neither they nor it can raise, if by 
 their conduct they have waived the objection or estopped them- 
 selves from raising it. The maxim, ",^m non debet, sed factum 
 valet," here holds, and it is a good illustration of its application. 
 
 1 See ante, pp. 650, 563, 161. 
 
 (a) See notes to chapter on Ratification and Aguiescence, ante. 
 
778 . ULTRA VIRES ItiT THE SECONDART SENSE. 
 
 yi. Many, if not all, the instances where a corporation can 
 give itself, after its creation, a capacity or power which 
 it does not actively possess, come under this head. 
 
 The matters here contemplated must be carefully distin- 
 guished from mere formalities. Objections arising from absence 
 of these can be neutralized by the acts or conduct of a majority. 
 But objections on the score of ultra vires in the secondary 
 sense require the assent of every corporator to relieve against 
 them. 
 
 It will be remembered that in certain respects various corpora- 
 tions can modify or supplement their constitution — certain limits 
 within which they can proprio motu alter the express provisions 
 of their constating instruments. These modifications and alter- 
 ations, so far as they are in the nature of capacities, it is sub- 
 mitted, are matters belonging to this form of ultra vires. In 
 other words, transactions engaged in without, or prior to, such 
 alterations — and which so engaged in are not enforceable, but 
 would be so if occurring after the constitution was properly modi- 
 fied — are not binding, if any single corporator chooses to object, 
 but are so, or become so, if all the members agree thereto, or ac- 
 quiesce therein. 
 
 It may be thought this is- purely a question of the majority, 
 since they can always make the alterations, &c., here considered. 
 But not so. After the alterations no doubt this would be the 
 case. Prior thereto, it is altogether different. The majority have 
 authority to modify, but they have no authority to bind dissen- 
 tients by matters outside the corporate capacity, prior and until 
 they have modified or supplemented such capacity. 
 
 Section II. — "What aee such Teansactions. 
 
 It has just been seen that the possible validity of these trans- 
 actions as corporate matters at all — what separates them from true 
 ultra vires proceedings — is the possible, but not active, actual ca- 
 pacity to direct them. To this it is well to add, that the calling 
 into active life of such capacity, and the due exercise thereof, 
 may or may not be attended by certain requisites of formalities ; 
 it may require as preliminaries, prior meetings or resolutions of 
 
"WHAT ARE SUCH TRANSACTIONS. 179 
 
 the whole body of corporators ; or it may be sufficient that the 
 corporators have really invoked the capacity in question. Whether 
 or not anything of this kind be necessary will depend entirely 
 upon the provision of the constating instruments of the given 
 corporation with respect to the particular capacity. 
 
 It will not be possible to enumerate aU the particular cases of 
 ultra vires in the secondary sense. But if the observations and 
 principles set forth in the last section be borne in mind, tlie mat- 
 ter will be simplified ; and these principles, taken in connection 
 with the rules following, will sxiffice for many of the more im- 
 portant and commoner questions. 
 
 I. Mcmy, if not all, transactions relating to the absolute aliena- 
 tion of corporate property will depend upon the principles 
 of ultra vires in the secondary sense. 
 
 Questions of the scope or nature of a corporate enterprise are 
 to be excluded, and attention kept to dealings with property — the 
 alienation, temporary, or out-and-out thereof, or the conversion, of 
 it into money. This subject ha's already been considered in the 
 chapter on Enterprise. There it was seen that transactions of this 
 kind are not ultra vires in the strict sense. It is not certain, 
 however, that some of them may not be merely matters for the 
 majority. It is, however, submitted that this is not so, at least, 
 in those cases where the absolute alienation is an extinction of the 
 active corporate existence.^ 
 
 II. Dealings with the corporate assets or claims wherehy they 
 are dissipated or relinquished without consideration are 
 ultra vires in this sense. 
 
 These matters are not ultra vires in the true sense, except, 
 perhaps, in the case of trust corporations. Most corporations, 
 undoubtedly, may hand over their assets to any one, and for any 
 or no reason. But they may not, without express power in this 
 behalf, do so against the wish of any single corporator. In most, 
 if not all — certainly all commercial — corporations, the members 
 have such an interest in the joint funds and rights that they may 
 refuse to permit these to be destroyed, without sufficient return 
 being nlade, either to themselves individually, or to the corpora- 
 tion as a whole. 
 
 " See ante, p. 116 ci seg. 
 
780 ULTRA VIRES IN THE SECONDARY SENSE. 
 
 III. Many of the questions arising out of financial and other 
 similar and allied eoopedients, and means for carrying on 
 commercial enterprises are to he determined by the prin- 
 ciples (9^ ultra Tires in this sense. 
 
 Borrowing is the first of the matters here to be considered. 
 The circumstances under which this power will exist as given, 
 either expressly or by implication, have already been examined.* 
 When it does not so exist, borrowing cannot be accomplished, 
 and loans, if any made, will not be enforceable as such. But 
 neither the borrowing nor the receipt of the loans will be strictly 
 •ultra vires. Every corporation may, if its founders choose at its 
 inception, be endowed with the express power to borrow, and the 
 absence of this is no express prohibition against it. Therefore 
 the whole body of corporators may borrow. But if the power 
 do not exist as given by the constating instruments, or raised by 
 implication, there the corporation cannot give itself such a power; 
 it can only do so ad hoc by the consent of all, and any one 
 member may decline, even though on other occasions he has con- 
 sented. 
 
 Securities are a second of these expedients.^ Negotiable instru- 
 ments are a third.* There is nothing illegal in these ; nor when 
 given under ordinary circumstances do they amount to engaging 
 in business. Consequently, the capacity to give them, or be a 
 party thereto, is a capacity of which any and every corporation 
 may be possessed. This being so, it necessarily follows that, when 
 objectionable, as not being authorized expressly or by implication 
 by the actual constitution of the corporation, they may neverthe- 
 less be authorized by the assent of the corporators as a whole. 
 
 Whether the commercial expedients and means here men- 
 tioned as being ultra vires in the secondary sense, would be so in 
 the case of any save commercial corporations, is perhaps doubtful. 
 All corporations are allowed to adopt ordinary business modes 
 and arrangements in their pecuniary dealings,* but it is more than 
 probable that, with respect to the " financial" matters to whicb the 
 proposition looks, these are either absolutely within, or absolutely 
 outside, the capacities of all corporations not for commercial pur- 
 poses. 
 
 ' See ante, p. 213 el seq. ' See ante, p. 263 et seq. 
 
 ' See ante, p. 223 ei seq. * See ante, p. 207 et acq. 
 
WHAT ARE SUCH TRANSACTIONS. T81 
 
 ly. Mam,y, if not all, of the questions relating to the creation, 
 issue, or destruction of, or other dealings in or about, shares, 
 depend upon the principles of ultra vires in this sense.{a) 
 
 This proposition must be taken subject to the broad qualifica- 
 tion that a corporation cannot, without clear and positive author- 
 ity in this behalf, destroy or otherwise deal with its capital or 
 shares, so as to diminish the fund to which its creditors can look 
 for payment.^ 
 
 Subject, however, to this proviso, wherever it may come into 
 play, it seems clear that all matters of the kind contemplated by 
 the proposition are, when not clearly intra vires by reason of spe- 
 cific provisions in such behalf, not absolutely ultra vires, but only 
 so^in the secondary sense. There are few if any matters relating 
 to its shares, which a corporation may not be authorized by its con- 
 stating instruments to perform, and as such matters are not mat- 
 ters affecting the scope of the corporate enterprise, it seems clear 
 that, in every case, the whole body of corporators collectively may 
 direct such. 
 
 Many decisions have been given with respect to surrenders, 
 cancellations, or forfeitures of shares,* where the proceeding, at 
 first ultra vires, has been held confirmed by lapse of time, which 
 could not have happened if it had been absolutely ultra vires. 
 
 It is upon this principle alone that Phosphate of Lime Co. v. 
 Green can be supported.' There proceedings were questioned 
 which amounted to both a purchase and a cancellation of shares, 
 though the company had not power to do either the one or the 
 other; but it was decided that all the shareholders had acquiesced, 
 80 that it was not possible for them, individually or collectively, or 
 for the corporation in their place, to reopen the matters. 
 
 1 See Henderson ». Royal British Bank, Case, 4 De G. <fe J. 43T; Brotherhood's 
 J E. & B. 356 ; Oakes v. Turquand, L. R, Case, 31 Beav. 365 ; 4 Pe G., F. & J. 566 ; 
 2 H. L. 3-23 ; Spaokman v. Evans, L. R. 3 Welsby and Anderson's Case, W. If. }S1S, 
 H. L. 171; Hall's Case, L. R. 6 Ch. 101, p. 200; Knight's Case, L. R. 2 Ch. 321; 
 and the other cases upon invalid forfeit- Spaokman v. Evans, L. R. 3 H. L. 171 ; 
 ures or surrenders, ante, p. 179 et seq. Hall's Case, L. R. 5 Ch. 707. 
 
 2 See ante, p. 659 et seq. ; Wqllaston's ^l^.^.l C. P. 43 ; ante, p. S48. 
 
 (a) See, especially, ante, p. 164, n. 
 
782 
 
 ULTRA VIRES IN THE SECONDARY SENSE. 
 
 Section III. — Peimaet and Secondaet Capacities oe Coepoea- 
 
 TIONS. 
 
 It is suggested that many, if not all, the difficulties and anom- 
 alous and contradictory decisions which have arisen in connection 
 with the double meaning of ultra vires can be explained and recon- 
 ciled, and the exact meaning and extent of that term in each of its 
 two uses clearly defined and limited, by drawing a distinction be- 
 tween what may be styled the " primary " and the " secondary " 
 capacities of corporations. 
 
 These are two expressions taken from the language of meta- 
 physics, though not here employed exactly in strict analogy to 
 their metaphysical sense. 
 
 By primary capacities are meant all the various powers, author- 
 ities, and incidents possessed by corporations for the direct attain- 
 ment of their aims, objects, and purposes, and for the doing and 
 engaging in contracts and other transactions immediately in con- 
 nection therewith. 
 
 By secondary capacities are meant all the various powers, au- 
 thorities, and incidents possessed by corporations for the employ- 
 ment of, the doing and the engaging in, and enabling them to 
 employ, to do, and to engage in contracts, transactions, instru- 
 ments, and all matters coming within the denominations of means 
 for the attainment of the main aims, objects and purposes. 
 
 Whatever is outside, or not allowed by the primary capacities, 
 will be ultra vires in the strict and true sense. "Whatever is out- 
 side, or not allowed by the secondary capacities, will be ultra vires 
 in the other sense. This distinction manifestly closely corresponds 
 to the distinction between ends and means ; and probably will be 
 synonymous therewith in every case, except where the employment 
 of a certain means is forbiddeu expressly or impliedly by the con- 
 stating instruments. 
 
 As to the substantial correctness of this distinction, and its ac- 
 curacy in explaining very many of the anomalies apparent in the 
 decisions, there are very strong arguments. No corporation can 
 go outside its strict enterprise or scope. But all corporations must, 
 in prosecuting this, employ certain means : they must have agents, 
 money, offices, and the like. They may, if they choose, by ex- 
 press provision in their constating instruments, take authority to 
 
CORPORATORS AND CREDITORS. 783 
 
 use any and every means. Their enterprise or scope is nar- 
 rowly and closely circumscribed by the constating instruments. 
 But is it not correct to say that the means open to them are not 
 so circumscribed, except so far as certain means are positively for- 
 bidden ? It is quite clear that certain means may not be employed 
 by certain corporations, e. g., negotiable instruments by railway 
 companies.^ But is it not the true view that such employment 
 would be ultra vires in the secondary sense only? Every corpo- 
 ration can be authorized to issue negotiable instruments, but it is 
 only railway corporations which can make railways. 
 
 So with other means. Take borrowing. A mining corpora- 
 tion cannot, without express power, borrow ; but it can give itself 
 such power. Is' this any more than the statement that though acts 
 outside the aims of such a corporation are ult/ra vires in the strict 
 sense, yet the employment of such a means or implement as bor- 
 rowing is only ultra vires in the secondary sense, invalid by the 
 dissent, and restrainable upon suit by any single corporator, but 
 perfectly valid when all agree ? 
 
 Section IY. — Coepoeatoks and CEEDrroEs. 
 
 A few remarks will suffice with reference to the difference, if 
 any, in effect which the principles of ultra vires in the secondary 
 sense have, as applied to corporators themselves, and to creditors 
 and other third parties. 
 
 First, it is quite clear that under ordinary circumstances, if an 
 act be thus ultra vires, a corporator may raise the objection, 
 whether against a corporation, or against a creditor or other con- 
 tracting party, attempting to enforce such act or his alleged claims 
 or rights resulting therefrom. But, secondly, if a corporator de- 
 sires protection against a party who has thus dealt with the corpo- 
 ration, he must have been prompt and energetic in repudiating the 
 transaction. As he can be bound by acquiescence, so if he do not 
 quickly object, and give his objection vitality, the creditor will be 
 justified in assuming that he consents. 
 
 Thirdly, the position of a corporation thus dealing. This is 
 
 ' See ante, p. 266. 
 
T84 ULTRA. VIRES IN THE SECONDARY SENSE. 
 
 the really difficult matter. It is submitted that the true view is as 
 follows : 
 
 f 
 I. A corporation mwy refuse to ca/rry out such a transaction; 
 
 hut after it has ieen completed, am,d prohably even after it 
 has been merely, though substantially, part performed, it is 
 estopped from raising the objection. (cC) 
 
 As to the first part of this proposition there can be no doubt. 
 The latter half, however, is not so clear. But when a transaction 
 of the kind now in consideration is completed on the part of the 
 other contracting party, every principle of common sense and 
 equity requires that the corporation should not be permitted to 
 repudiate payment therefor, or the other due completion thereof 
 by itself, on the ground that the transaction, though admitted to 
 be within its possible capacities, is outside its actual powers then 
 called into existence. The very defense discloses fraud ; discloses 
 what no court of equity has ever allowed a party to rely on, 
 namely, his own laches or chicanery ; discloses that the objector 
 could have given, and can now give himself the capacity which he 
 pretends to be without, and could have done that which, if done, 
 would cut away the ground whereon his objection rests. It is 
 submitted, therefore, that when such a transaction is completed, 
 on one side, it is then too late for the corporation to attempt to 
 wriggle out of that stipulated for on its side. 
 
 Does this hold when the transaction has been only part per- 
 formed ? In other words in such case, if the corporation repu- 
 diated and refused to go on with it, would an action lie against it 
 either (1) for specific performance in those cases where such is 
 awarded, or (2) for damages in other cases ? 
 
 There is no decision expressly in point, and the answer is not 
 certain on principle. But it is suggested that the solution de- 
 pends upon the principle indicated in the proposition, that if there 
 has been " substantial " part performance, such a course of con- 
 duct by the corporation, and such action by the other side as to 
 show that both parties intended the due carrying out of the trans- 
 action, then it is too late for the corporation to object to the 
 invalidity of the matter, and if it does so, it will be in exactly 
 
 (a) See ante, p. T29, d. ; also, p. 164, 
 
CORPORATORS AND CREDITORS. 785 
 
 the same position as if it refused to carry out any other binding 
 contract. 
 
 There is another question, assuming the corporation bound or 
 estopped: what effect thence ensues to the individual corporators? 
 Are they affected in the same way? The answer seems to be in 
 the negative ; that the corporators are not necessarily also bound 
 or estopped from objecting. They can interfere, and by proper 
 proceedings obtain a rescission of the transaction, and prevent any- 
 thing further being done under it, always provided that they have 
 not personally acquiesced. Their position is totally independent 
 of the corporation, and if they can and do thus interfere, however 
 clearly the transaction is enforceable as against the corporation, 
 considered by itself, it is in fact not so enforceable, because of the 
 interposed rights of the innocent dissentient corporators. The re- 
 sult, therefore, would be to deprive the contracting party of his 
 direct claims against the corporation, and leave him only his in- 
 direct claims against the corporation for an account,' or against the 
 officials for misrepresentation and the like.^ 
 
 Fourthly, the position of a governing body or other general 
 agent. Perhaps the chief question which here arises is, what is 
 the precise extent to which such body or agent can bind (1) the 
 individual corporators ; (2) their corporation, by engaging in trans- 
 actions which are ultra vires in the secondary sense ? 
 
 As to the corporators, there is no doubt that they will be in the 
 same position as if the corporation itself were thus acting directly, 
 being bound if they have agreed or acquiesced, but not otherwise. 
 
 The position of the corporation is not so clear. It is fairly ar- 
 guable that a general authority given to officials authorizes them, 
 at least such as constitute a governing body, to do and consent to 
 whatever their corporation could do and consent to. But it is 
 equally arguable, on the other hand, that no authority, however wide, 
 can be anything more than a transfer of the actual and active capaci- 
 ties of the principal ; and that, consequently, a corporation would not 
 be bound merely by the acts and proceedings of its governing body, 
 which are thus ultra vires. This seems the more correct view. 
 
 ' Ante, p. 724 et seq. ' Ante, p. YB5 et seq. 
 
 50 
 
CHAPTER V. 
 
 DISSOLUTION OF CORPORATIONS. 
 
 A coEPOEATioN may be put an end to in the following ways : 
 I. By proceedings against it on the part of the crown, as a punish- 
 ment for the misuse of its franchises. II. By surrender of its 
 charter, or other voluntary dissolution. III. By extinguishment, 
 resulting from the death of all its members, or the total loss of 
 one of its integral parts. lY. By a special act of parliament 
 passed in any particular case. V. By proceedings taken in accord- 
 ance with the provisions of the various winding-up acts.(a) 
 
 First. — Dissolution hy the direct action of the crown. 
 
 The first of these causes of dissolution is distinctly an instance 
 of the effect of the doctrine of ultra vires. From earliest times 
 it has been established, that a corporation which turned its liber- 
 ties to improper purposes, and apparently even if it only neglected 
 its duty, was liable to have those liberties forfeited.^ Without 
 some just reason, the crown cannot revoke a charter of incorpora- 
 tion, or withdraw any of the privileges contained therein.(5) But 
 it may do so whenever the conditions of the grant are not ob- 
 served.^ (c) The method of procedure is by a writ of scire facias 
 
 ' Mayor, &c. of London v. Vanacre, 12 ' Rex o. Amery, 2 T. R. 516 ; Rex v. 
 
 Mod. aTl: Peter v. Kendal, 6 B. <!< C. Ponsonby, 1 Ves. 1, T ; Rex ». Mayor, (fee, 
 703. of London, 1 Show. 280 ; Mayor, Ac, of 
 
 (a) Another mode in which a corporation may be dissolved, is, by reaching the 
 limit of time fixed for its duration by the charter or by general law. See Angell & 
 Ames on Corp. § '1'1& a. Or a limit of time with a condition added. Sala v. City of 
 New Orleans, 2 Woods, 188. If the act of incorporation fixes a, definite time at 
 which the charter shall expire, when the time fixed arrives the corporation is dis- 
 solved. But if its continuance beyond a fixed time is made to depend on the per- 
 formance of 'a certain condition, non-performance is merely ground for forfeiture. 
 La Grange, <feo. R. E. Co. v. Rainey, 7 Cold. 420 ; State v. Fagan, 22 La. Ann. 645. 
 But see Matter of Brooklyn, W. & N. Ry. Co. 72 N. Y. 245. 
 
 (6) See Dartmouth College v. Woodward, 4 Wheat. 518, and cases cited in Angell 
 & Ames, § 767. 
 
 (c) Through neglect or abuse of its franchises, a corporation may forfeit its char- 
 
DISSOLUTION OF CORPORATIONS. 787 
 
 against the corporation to repeal the charter, or against a body 
 claiming to exercise corporate powers to determine the validity of 
 such claims ; ^ and by quo warranto, when the intention is to in- 
 flict the minor punishment of suspending for a while the corporate 
 franchises, and not of actually taking them away and determining 
 the existence of the corporation.* 
 
 The difference -between the two proceedings has been thus 
 stated : "A scire facias is proper where there is a legal existence 
 capable of acting, but who have been guilty of an abuse of the 
 power intrusted to them ; for, as a delinquency is imputed to them, 
 they' ought not to be condemned unheard ; but that does not apply 
 to the case of a non-existing body. And a quo warranto is neces- 
 sary where there is a corporate body de facto, who take upon 
 themselves to act as a body corporate, but, from some defect in 
 their constitution, they cannot legally use the powers they affect 
 to use." * K,a) * 
 
 Lyme v. Henley, 2 C. <fe F. 331 ; Rex ii. °- See " Placita de Quo Warranto," 
 
 W aril, 4 A. (fe E. 384; Att.-Gen. v. Mayor, published by the Record Commissioners, 
 
 <feo. of Shrewsbury, 6 Beav. 220. • pp. 618-21. 
 
 ' Rex V. Bail ffs, (fee. of B^'W.lley, IP. ° Fer Ashurst, J., in Rex v. Pa«more, 3 
 
 "Wms. 207; Mayor, Ac. of Tolchester v. T. R. 199, -244. See Grant on Corp. pp. 
 
 Brooke, 7 Q. B.' 385 ; Reg. v. Arnaud, 9 295-302. 
 Q. B. 806. 
 
 ter as for condition broken, or for a breach of trust. Angell <fe Ames, § 774 ; Ter. 
 rett* Taylor, 9 Cranch, 51 ;• Dartmouth College v. Woodward, 4 Wheat. 518, 658; 
 Mumma v. Potomac Cn. 8 Pet. 281 ; Penobscot Boom Corp. v. Lamson, 16 Me. 224; 
 Hodsdon v. Copeland, lb. 314; Day v. Stetson, 8 Me. 365; State ». Bradford, 32 Vt. 
 50; Commonwealth v. Uniun Ins. Co. 5 Mass. 230; Charle.-! River Bridge v. Warren 
 Bridge, 7 Pick. 371; State v. Pawtuxet T. C'>. 8 R. I. 182, 521 ; People v. Manhattan 
 Co. 9 Wend. 351; People v. Kingston, <fec. Turnp. Co. 23 Wend. 193; People v. 
 Washington Bank, 6 Cow. 21 1 ; People v. Bank of Hudson, lb. 217 ; People v. Dispen. 
 ife Hr)8p. Soc. 7 Lans. 304; Lehigli Bridge Co. v. Lehigh Coal Co. 4 Rawle, 9; Com- 
 monwcilth v. Commercial Hank, 28 Penn. St. 383, 391 ; Com. o. Pittsburgh R. R. Co. 
 68 Penn. St. 26; Washington, <fec. Road v. State. 19 Md. 239; Canal Co. v. Railroad 
 Co. 4 G. <fe J. 1 ; Pas hall «. Whitsett, 1 1 Ala. (N. S.) 472 ; State v. Commercial Bank, 
 83 Miss. 474 ; Atchafalaya Bank v. Dawson, 13 La. Ann. 497 ; State v. White's Creek 
 T. Co. 3 Tenn. (Ch.) 163 ; Mclntire Poor School v. Z mesville Canal Co. 9 Ohio, 203 ; 
 St:ite Bank!/. Stale 1 Blackf. 279 ; John «. FarmL-rs' Bank, 2 Blaokf. 367; Coon «. 
 PUtaouth P. R. ( o. 32 Mich. 248. 
 
 (.r) See Terrett v. Taylor, 9 Cranch, 51 ; Turnpike Co. d. State, 3 Wall. 210; Peo- 
 ple V Soc for Prop. Gosp. 1 Paine C. C. 652 ; State v. Bradford, 32 Vt. 50 ; People 
 V Union Ins Co. 5 Mass. 230 ; People v. Bank of Uudson, 6 Cow. 217 ; Atfy-Gen. v. 
 Utica Ins Co 2 Johns. Ch. 371 ; s. o. 15 Johns. 358; People v. Thompson, 21 Wend. 
 235 • 8 o' 23 Wend. 637 ; Lea v. Am. Canal Co. 3 Abb. Pr. (N. S.) 1 ; Kishacoquil- 
 las T R Co. V. McConaby, 16 S. & R. 145 ; Canal Co. v. R. R. Co. 4 G. & J. 1 ; Univ. 
 
7^88 DISSOLUTION OF CORPORATIONS. 
 
 In former times it was a rather common occurrence for pro- 
 ceedings to be instituted by the crown against corporations for 
 
 of Md. V. Williams, 9 G. <fe J. 365 ; Wash. & Bait. T. R. v. Md. 19 Md. 239; State v. 
 Consolidation Coal Co. 46 Md. 1 ; State v. Mer. Ins. Co. 8 Humpli. 235 ; State v. 
 White's Creek T. Co. 3 Tenn. (Ch.) 163; State v. Cincinnati, 23 Ohio St. 446; Baker 
 V. Backus, 32 111. '79. As to the mode of procedure established in New York, see 
 Code of Procedure, § 428 et seq. ; Wilmusdoerffer v. Lake Mahopao Co. 18 Hun, 38Y. 
 " Where a corporation has abused its power or commitleil acts which are unlawful, 
 it nevertheless continues legally te exist as a corporate body, until the Stnte or gOT- 
 emmcnt which created it shall, by a proper proceeding, procure an adjudication and 
 enforce a forfeiture of the charter. But all such proceedings are at the instance and 
 on behalf of the State or government. Acts which are improper do not of them- 
 Belves work a dissolution." Ormsby v. Vermont Copper Mining Co. 65 Barb. 360 ; 
 Atchafalaya Bk. v. Dawson, 13 La. 497. So, in case of non-performance of a con- 
 dition, " The act declares, that in default of fulfilling the condition, the said corpor- 
 ation shall be dissolved ; that is, in the regular legal manner ; upin the institution 
 and prosecution of the established course of proceedings in such cases, it shall be 
 cause of forfeiture or dissolution.'' People v. PreS^of Manhattan Co. 9 Wend. 351 ; 
 Baker «. Backus, 32 111. 79 ; Haight w. N. Y. Elevated R. B. Co. 49 How. Pr. 20. But 
 conira, see Matter of Brooklyn, W. <fe N. Ry. Co. 72 N. Y. 245. The right of forfeit- 
 ure may be waived by the State. See Angell <fc Ames on Corp. § 777, and the nu- 
 merous cases there cited. State v. Patersori & Hamb. T. Co. 21 N. J. L. 9 ; Matter of 
 N. Y. Elevated R. R. Co. 70 N. Y. 327; Matter of N. Y. Bridge Co. 67 Barb, 295; 
 Patten v. K Y. Elevated R. R. Co. 3 Abb. N. C. 306 ; Central Crosstown R. R. Co. v. 
 Twenty-third St. R. R. Co. 54 How. Pr. 168 ; New Jersey Southern R. R. Co. v. Long 
 Branch Com'rs, 39 N. J. L. 28. The declaration of forfeiture is for the court and not 
 the Legislature. Bruffett v. Great Western R. R. Co. 26 111. 363. When, how- 
 ever, the charter reserves the power to forfeit the charter in case of abuse, or failure 
 to perform a condition, the Legislature may enact a repeal whenever the abuse or 
 failure occurs. See Crease v. Babcock, 23 Pick. 334 ; Erie & N. E. R. R. Co. v. Capey, 
 26 Penn. St. 287. But the Legislature is not the final judge of the existence of the 
 conditions upon which the power is based. The court can inquire whether the facta 
 show such an abuse or breach of condition, and according as they do or do not, the 
 act of the Legislature is valid or void. Commonwealth v. Pittsburgh <fe Connells- 
 ville R. R. Co. 68 Penn. St. 26; Mayor of Baltimore v. Pi;tsburgh, Ac. R. 1!. Ci. 1 
 Abb. U. S. 9. The case of Erie h N. E. R. R. Co. v. Casey, contains a full and able 
 discussion of this question. Reference may also be made to Commonwealth v. Essex 
 County, 13 Gray, 239 ; Delaware R. R. Co. v. Tharp, 6 H:irring. 464 ; State v. Curran, 
 7 Eng. (Ark.) 321 ; Curran v. State, 15 How. 304; Miners' Bank v. U. S. 1 Greene 
 (Iowa), 553. In Flint v. Fentonville P. R. Co. 25 Mich. 99, the Court, criiicising 58 
 Penn. St. 26, hold, that under such provisions the determination, whether a corpora- 
 tion has violated its charter, is judicial in its nature, and that a repealing act, passed 
 by the Legislature prior to such a judicial determination, is absolutnly void. Where 
 the charter or a general statute reserves to the Legislature, the right to repeal at 
 pleasure, without restrictions or conditions, its action cannot be reviewed by 
 the courts. Lothrop v. Stodman, 10 Blatehf. 1S4; s. o. 42 Conn. 683. A sub- 
 stantial performance of conditions is all that is required. People ». Thompson, 21 
 Vend. 235; s. 0. 23 Wend. 537; People v. Kingston T. Co. 23 Wend. 193; People 
 
DISSOLUTION OF CORPORATIONS. T8D 
 
 misusing their franchises, or against individuals for usurping such 
 privileges. State reasons were generally the motive cause. The 
 municipal corporations during the middle ages, and till a period 
 at least as late as the revolution of 1688, formed one of the 
 chief mainstays of English liberty, (a) The sovereigns encour- 
 aged them as the centres of trade, and repressed them by every 
 means, when they attempted to make subservient to pohtical 
 objects the great power which the union and periodical meetings 
 of their members gave them. Other incentives there were, too, 
 which prompted the almost continual interference of the crown 
 with the corporations. Every addition to the importance and 
 strength of them was assumed to he an encroachment upon, and 
 a diminution of, the prerogative. Moreover, the fines imposed 
 upon corporate hodies, and often upon the lucHess corporators 
 themselves, were a lucrative source of revenue. However, vdth 
 the increase of individual freedom, and protection for the expres- 
 sion of individual opinions, the political importance of these 
 bodies has greatly diminished ; consequently, seldom, if ever, does 
 the crown now attack them for an encroachment upon its own 
 privileges, or for any other reason of offense to itself. When the 
 crown does intervene, it is rather the State than the sovereign 
 personally ; the cause is detriment, actual or apprehended, to the 
 public interests. The proceedings are by the attorney-general, 
 and the object sou^t, is to compel the delinquent body to do or 
 forbear from given acts, and not its dissolution temporarily or 
 completely. (5) 
 
 I). Willmnisburg T. Co. 47 N. Y. 586. In the absence of statutory provisions, the 
 question of forfeiture is wholly for courts of law. Att'y-Gen. v. Tudor Ice Co. 104 
 Mass 239 ; Att'y-Gen. v. Bank of Niagara, 1 Hopk. 354 ; Att'y-Gen. v. Utica Ins. Co. 
 2 Johns. Ch. 371 ; Slee v. Bloom, 6 Johns. Ch. 366 ; Verplanck v. Mercantile Ins. Co. 
 1 Edw. Ch. 84; Doyle v. Peerless, &c. Co. 44 Barb. 239 ; Soc. for Estab. Usef. Manuf. 
 V. Mor. Canal <fe Bkg. Co. 1 N. J. Eq. 157 ; Doremus v. Dutch Ref. Church, 3 N. J. Eq, 
 332 ; President, &c. v. Trenton Bridge Co. 13 N. J. Eq. 46 ; Bayless v. Orne, 1 Free- 
 man Ch. 161 ; State v. Merchants' Ins. & Trust Co. 8 Humph. 235; Baker v. Backus, 
 32 111. 79. As to non-user as a ground of forfeiture, see Commonwealth v. Fitchburg 
 E. E. Co. 12 Gray, 180 ; Ward v. Sea Ins. Co. 7 Paige, 294; Matter of Jackson Marine 
 Ins. Co. 4 Sandf. Ch. 559; Att'y-Gen. v. Bank of Niagara, Hopk. 354 ; People o. 
 Northern E. E. Co. 53 Barb. 98; People v. Washington Bank, 6 Cow. 211 ; People v. 
 Bristol T. E. Co. 23 Wend. 222 ; State v. Flavell, 24 N. J. L. 370 ; Canal Co. v. E. E. 
 Co. 4 G. <fe J. 1 ; State v. Commercial Bank, 33 Miss. 474 ; Corwia v. Urbana Ins. Co. 
 14 Ohio, 6. 
 
 (a) See Dillon Mun. Corp. § 713 et seq. 
 
 (b) See High on Extra. Rem. chaps. XT, xvi 
 
'''90 DISSOLUTION OF COEPORATIONS. 
 
 Nevertheless, the power of the crown or the State to cancel a 
 charter, or to withdraw its permission from a corporation when 
 given in another form, for non-observance of its conditions, re- 
 mains in full vigor, and it may be exercised at any moment to the 
 punishment of an offender. Consequently, where a corporation 
 or its officials are acting contrary to the provisions of their 
 charter, or other constating instrument, or in any other man- 
 ner, so as to imperil the existence of the corporation, the Court of 
 Ohanceiy will, upon the request of any member, restrain such 
 acts, {a) In Kendall v. Chrystal Palace Company,* the defendants 
 had been incorporated by royal charter, one of the conditions of 
 which was, that no person should be admitted to the building or 
 grounds on the Lord's day in consideration of any money pay- 
 /ment, whether made directly or indirectly, unless the express 
 sanction of the Legislature should have been obtained. By a pri- 
 vate act of parliament, subsequently passed, power was given to the 
 directors of the company to agree with any proprietor, absolutely 
 entitled to shares or stock in the company, for the conversion 
 thereof into a ticket of admission into the building and grounds 
 for such proprietor, or his nominee, for life, or term of years, as 
 might be determined on, provided, that nothing therein contained 
 should invalidate the charter, or relieve the company from any 
 conditions contained therein, excepting so far as the same were 
 thereby expressly varied. In pursuance of this act, it was pro- 
 posed to give in exchange for each share a ticket entitling the 
 owner to a certain number of admissions, and which should be 
 available on Sundays, as well as other days. Upon a bill being filed 
 by one of the members of the company, on behalf of himself and 
 the rest, to restrain the proposed exchange, Page-Wood, V.-C, 
 considered that such a proposal, if carried into effect, would be 
 an infringement of the condition in the charter, and, also, that it 
 ■was not authorized by the act. He, accordingly, overruled the 
 demurrer which the company and the directors had put in to the 
 bill. 
 
 ' 4 K. <fc J. 326 ; 21 L. J. (Ch.) 397; see Queen v. Eastern Archipelago Com- 
 pany, 22L. J. (Q. B.) 196. 
 
 (a) See ante, p. 643 et seg., notes. 
 
DISSOLITTION OP CORPORATIONS. Y91 
 
 Secondly.— Voluntary Dissolution, {a) 
 
 A corporation may voluntarily dissolve ; it may put an end to 
 its existence by the ordinary means provided for accomplishing 
 this. 
 
 The chief questions of practical importance affecting corporators, 
 which arise on this subject, are, first, whether or not a majority can 
 continue a losing concern against the wishes of the minority ? ^(5) 
 
 ' Apparently not, if clearly insolTPnt. E. 2 Ch. ISl; Re Tutiiacacori Mining Co., 
 
 iJeFactage ParisieD, 34 L. J. (Ch.) 140, but L. R. 17 Eq. B34. But they may do so in 
 
 see the Appeal, 13 W. R. 214, S30; Re other cases. See Joint-Stock Coal Co., L. 
 
 Great Northern Copper Mining Co., 17 R. 8 Eq. 146; London Suburban Bank 
 
 "W. R. 462. See Suburban Hotel Co., L. L. R. 6 Ch. 641. 
 
 (a) See Mummaj;. Potomac Co. 8 Pet. 281; Penobscot Boom Co. v. Lamson, 16 
 Me. 224 ; Hodsdon i. Copeland, 16 Me. 314; Enfield Toll Bridge Co. a. Conn. R, Co. 
 7 Conn. 45; McLaren d. Pennington, 1 Paige, 107; Slee «. Bloom, 19 Johns. 456; 
 Houston V. Jefferson College, 63 Penn. St. 428 ; Canal Co. v. R. E. Co. 4 Gill. <fe J. 1 ; 
 Mobile E. R. Co. v. State, 29 Ala. 573; Att.-Gen. v. Clergy Soc. 10 Rich. Eq. 604; 
 Mclntire Poor School v. Zanesville Canal Co. 9 Ohio, 203. It is essential that the 
 surrender be accepted by the State. Penobscot Boom Corp. v. Lamson, 16 Me. 224; 
 Revere v. Boston Copper Co. IS Pick. 351 ; Boston Glass Co. o. Langdon, 24 Pick. 
 49; Wilson v. Prop, of Central Bridge, 9 R. L 590; Enfield Toll Bridge Co. v. Conn. 
 E. Co. 7 Conn. 46 ; Ward v. Sea Ins. Co. 7 Paige, 294; N. Y. Marbled Iron Works v. 
 Smith, 4 Duer, 362; Norris v. Mayor, 1 Swan, 164; Campbell v. Miss. Union Bank, 
 6 How. (Miss.) 681 ; Curien v. Santini, 16 La. Ann. 27; Polar Star Lodge v. Polar 
 Star Lodge, 16 La. Ann. 63 ; La Grange, &c. R. R. Co. v. Rainey, 7 Coldw. 420 ; 
 Portland Dry Dock, &c. Co. v. Portland, 12 B. Mon. 77; Harris v. Muskingum Mfg. 
 Co. 4 Blackf. 267; Town v. Bank of River Eaisin, 2 Doug. (Mich.) 630; 2 Kent 
 Com. 310. Surrender may in some cases be presumed from neglect of functions. 
 See Brandon Iron Co. c. Gleason, 24 Vt. 228; State v. Bull, 16 Conn. 179; State v. 
 Vincennes Univ. 5 Ind. 77. But non-user, suspension of business, or the sale or as- 
 signment of the corporate property, will not be necessarily a surrender. Penobscot 
 Boom Corp. d. Lamson, 16 Me. 224; Rollins v. Clay, 33 Me. 132; Brandon Iron Co. 
 1). Gleason, 24 Vt. 228; Brinkerhoff «>. Brown, 7 Johns. Ch. 217; Barclay v. Tallman, 
 4 Edw. Ch. 123; People v. Bank of Hudson, 6 Cow. 217; Bradt v. Benedict, 17 N. 
 T. 93 ; State v. Bank of Md. 6 Gill. <fc J. 205 ; Univ. of Md. v. Williams, 9 Gill. & J. 
 365 ; John v. Farmers' Bank, 2 Blackf. 367 ; De Camp v. Alward, 62 Ind. 468 ; Town 
 V. Bank of Eiver Raisin, 2 Doug. (Mich.) 530; Bruffett v. Great Western R. E. Co. 26 
 111. 353. It is held, however, that acts which destroy the end for which the corpora- 
 tion was instituted, do amount to a surrender. Strickland v. Prichard, 37 Vt. 324 ; 
 Slee V. Bloom, 19 Johns. 466; Penniman v. Briggs, 1 Hopk. 3iiO; s. o. 8 Cow. 387; 
 People V. Bank of Hudson, 6 Cow. 217; Webster v. Turner, 12 Hun, 264; Moore v. 
 Whitcomb, 48 Mo. 643. The president and trustees of a charitable corporation, 
 there being no shareholders, have power to dissolve it. The personal estate and real 
 estate acquired by purchase for value thereupon vest in the State. Real estate ac- 
 quired by gift, remaining undisposed of, reverts to the donors. People v. College of 
 California, 38 Cal. 166. 
 
 (6) On the question, whether to surrender the charter is within the power of a 
 
f92 DISSOLUTION OF CORPORATIONS. 
 
 and, secondly, whether or not, when there is to be a winding-up, 
 it shall be purely Toluntarj, or under the Court ? ^ 
 
 So, with regard to any otlier process of dissolution which is purely 
 voluntary, the better opinion is that a corporation may adopt it, 
 "Ward V. Society of Attorneys ^ is often stated to be a decision to 
 the contrary, but this is scarcely correct. What Knight-Bruce, 
 y.-C, did in this case, was to grant an injunction, restraining a 
 corporation, until the hearing, from surrendering its charter, or 
 parting with its assets, and he did this to prevent irreparable 
 damage. His words are : " The two substantial objects of the 
 present application are, to prevent the destruction of the corpora- 
 tion, and to prevent that alienation of the property of the cor- 
 poration which is proposed for no purpose except its destruction. 
 If such opinion as I have at present formed were 'more favorable 
 to the case of the respectable defendants than it is, I could not 
 allow the property to be so importantly affected before the hear- 
 ing of the cause. It seems to me, that to do so would, in the 
 strongest sense of the term, be an irremediable act. How could 
 I, or any court in the kingdom, restore these plaintiifs to their 
 original position, if the act now sought to be restrained were 
 done ? " In this, there is nothing like an assertion that the ma- 
 jority of the members of a corporation cannot dissolve it, either 
 absolutely or to reconstruct it upon a new footing. All that the 
 vice-chancellor meant was, that they may not act in such a manner, 
 whether with a view to dissolution, or otherwise, as to damage the 
 common funds, at least, " not before the hearing of the cause." 
 
 In connection with this question may be mentioned the case of 
 Bank of Switzerland v. Bank of Turkey.' Here, the directors of 
 
 ' See iSe Langley Mills, <fec. Co. L. R. 294 ; compare Kendall v. Crystal Palace 
 
 12 Eq. 26 ; Be West Hartlepool Ironworks Cortipany, 21 L. J. (Cb.) 397. 
 Co. L. R. 10 Cb. 618. ^6 L. T. (N. S.) 649. 
 
 2 1 Coll. 3*70; see the facts, ante, p. 
 
 majority, see pro, Treadwell v. Salisbury Mfg. Co. 7 Gray, 393 ; Revere v. Boston 
 Copper Co. 16 Pick. 361 ; Wilson v. Prop, of Central Bridge, 9 R. I. 590 ; Black v. 
 Del. & Rar. Canal Co. 18 N. J. Eq. 404 ; Lauman v. Lebanon Valley R. R. Co. 30 
 Penn. St. 42 ; McCurdy v. Meyers, 44 Penn. St. 538 ; contra, Kean v. Johnston, 9 N. 
 J. Eq. 401; Zabriskie i;. Hackensack R. R. Co. 22 N. J. Eq. 193; Mobile R. R. v. State, 
 29 Ala. 573; Polar Star Lodge v. Polar Star Lodge, 16 La. Ann. 53. Where time for 
 the duration of the corporation is fixed in the charter, unanimity is held essential to a 
 surrender. Von Schmidt v. Huntington, 1 Cal. 56 ; see, also, ante, p. 686, note. In- 
 quiry may be made collaterally as to whether a corporation has ceased to exist, by 
 its own act. Carey v. Cin. <fe Chic. R, R. Co. 6 Iowa 357. 
 
DISSOLUTION OF CORPORATIONS. 793 
 
 a projected banking company, not being able to carry out the 
 project to its full extent, determined upon winding-up the affairs, 
 and returning to the applicants for shares the full amounts of the 
 deposits made by them. Deposits amounting to two-thirds of the 
 sums deposited had accordingly been returned to the depositors, 
 and tbe remainder was in course of payment, when a bill was filed 
 by purchasers of shares, who were dissatisfied with the termina- 
 tion of the affairs of the proposed company, to restrain the direc- 
 tors from further carrying out the arrangement. Page- Wood, 
 V.-C, however, held, thaf the course which the directors had 
 taken was not ultra vires, and that they were justified in taking 
 it, since it was morally impossible, from the events which had 
 happened, that the project could be carried out in its entirety; 
 and he therefore refused an injunction, in terms of the bill which 
 had been asked for. 
 
 Next to be considered is the question, whether a person not 
 actually a member of, but Interested in, a corporation, such as a 
 creditor, can call upon the courts to prevent such corporation dis- 
 solving by amalgamation, the surrender of its charter, or any volun- 
 tary mode whatever, other than by winding-up, or a similar statu- 
 tory arrangement ? (a) The creditor may fairly say that he is en- 
 
 (a) The rights of creditors are in most cases sufficiently protected by the equity 
 rule, which is now generally established In this country, tbat the funds of a corpora- 
 tion are held in trust for creditors, so that in case of dissolution they can be fol- 
 lowed into the hands of all save bona fide purchasers without notice. See Wood v. 
 Dummer, 3 Mason, 308; Mumma v. Potomac Co. 8 Pet. 281 ; Curran v. State, 15 How. 
 304; Bacon v. Robertson, 18 How. 480; Fisk v. Union P. R. R. Co. 10 Blatohf. B18 ; 
 Read v. Frankfort Bank, 23 Me. 318; Nathan v. Whitlock, 9 Paige, 152; Hastings v. 
 Drew, 50 How. Pr. 254; Tinkham v. Borst, 31 Barb. 407 ; Gillet v. Moody, 3 N. Y. 
 479 ; ShamoHn Valley R. R. Co. v. Malone, 85 Penn. St. 25 ; Hightower v. Thoi nton, 
 8 Ga. 486; Nevitt v. Bank of Port Gibson, 6 Sm. <fe M. 513; Paschall v. Whitsett, 11 
 Ala. (N. S.) 472; MaiT v. Bank of West Tennessee, 4 Coldw. 471; State v. Bailey, 16 
 Ind. 46; Adler v. Milwaukee, <fec. Co. 13 Wis. 57. 
 
 Quite generally, statutes provide for the continuance of the corporation in a semi- 
 existence for the purpose of settling its affairs, after the dissolution has taken place, 
 or fix the liabilities on stockholders, or somehow provide for the protection of cred- 
 itors and others. See Pomeroy v. Bank, 1 Wall. 23 ; McGoon v. Scales, 9 Wall. 23 ; 
 Franklin Bank v. Cooper, 36 Me. 179; Mariners' Bank v. Sewall, 50 Me. 220; Blake 
 P. & C. R. B. Co. 39 N. H. 435 ; Crease v. Babcock, 10 Mete. 525 ; Grew v. Breed, 10 
 Mete. 669 ; Thornton v. Marginal Freight Ry. Co. 123 Mass. 82 ; Lea v. Am. A. & P. 
 Canal Co. 3 Abb. Pr. (N. S.) 1 ; Stetson v. City Bank, 12 Ohio St. 577; Herron v. 
 Vance, 17 Ind. 595 ; Muscatine Turn Vereln v. Funck, 18 Iowa, 469; and statutes of 
 the several States. 
 
794 DISSOLUTION OF CORPORATIONS. 
 
 titled to the protection of the court in so far as, if at all, it can 
 render him assistunee by putting a stop to proceedings, active or 
 passive, on the part of his debtor, whii-h may interpose obstacles 
 to the debtor's discharge of his obligation. Whether this would 
 hold as a general proposition, cannot be afiBrmed, but, at least, in 
 Kearns v. Leaf ,^ {a) relief of this kind was afforded. Here, the 
 plaintiff held a policy in a company, the funds of which were 
 made liable to pay the sum insured, and certain shares of profits 
 by way of bonus. The company having entered into an agree- 
 ment to transfer its business and assets* to another company, con- 
 trary to the stipulations of its deed of settlement, and without 
 making provision out of its own assets for payment of the plaint- 
 iff''s policy, Page-Wood, Y.-C, granted an injunction at suit of 
 the plaintiff to prevent this agreement being carried out. He 
 considered that the plaintiff acquired under his contract " such a 
 species of interest in the funds [of the company] as would entitle 
 him to interfere to save the property from being wasted, contrary 
 to the provisions of the deed," in accordance with which the 
 plaintiff accepted his policy. No doubt the vice-chancellor did 
 not here decide, any more than did Knight-Bruce, V.-C, in Ward 
 V. Society of Attorneys, that a corporation cannot put an end to 
 its existence voluntarily and propria moiu, but he did decide, that 
 it could not, in doing so, be permitted to prejudice the rights of 
 its creditors, or to derogate from the securities which it gave or 
 held out to them as an inducement for them to contract with it. 
 
 Thirdly and Fourthly. — Dissolution hy Demise of the Members, 
 or hy Act of Pa/rUament. 
 
 The doctrine of ultra vires is but slightly concerned with 
 either of these matters. A corporation perishes, whether the 
 whole of its members have died out,, or the whole of those 
 who constitute an integral and essential part,'(J) provided that 
 
 ' 1 H. & M. 681. See, also. Law v. ' Rex v. Morris, 4 East, IT. Com- 
 
 London Indisputable Company, 1 K. & i. pare Kennet & Avon Navigation Com- 
 
 223 • He State Fire Insurance Company, 1 pany v. Witherington, 18 Q. B. 531 ; 21 
 
 D. G., J. & Sm. 634; 34 L. J. (Ch.) 68. L. J. (Q. B.) 419. 
 
 (a) See ante, p. 649 n. 
 
 (A) See Penobscot Boom Corp. v. Lamson, 16 Me. 224 ; Boston Glass Mannf. v,. 
 
DISSOLUTION OF CORPORATIONS. 795 
 
 there is no means for repairing the breach.i It would, how- 
 ever, seem that in such a case the corporation, sometimes at least, 
 IS not absolutely gone, but rather in abeyance, the crown having 
 power by a fresh charter to revive the torpid body, and to clothe 
 it with all the dormant rights and capacities of the original 
 body.«(a) Whether a corporation— that is to say, whether the 
 
 ' See 1 Vict. c. 78, s. 1. Rex v. Pasmore, 3 T. R. 199 ; Colchester 
 
 Mayor, &c. of Colchester v. Brooke, 1 v. Seatar, 3 Burr. 1866 : Newllne v Fran- 
 Q. B. 339; 15 L. J. (Q. B.) 173. Compare cis, 3 T. R. 189. 
 
 Langdon, 24 Pick. 52; Cook v. Kent, 305 Mass. 246; Philips v. Wickham, 1 Paige, 
 596 ; Canal Co. v. R. R. Co. 4 G. <fe J. 1 ; Mclntire Poor School v. Zanesville C. Co. 
 9 Ohio, 203 ; State v. Trustees of Vin. Univ. 6 Ind. 77 ; Angell <fc Ames, §§ 768-77. 
 
 The want of the proper officers, by reason of failure to elect, or by death, does 
 not cause dissolution, though the exercise of the powers of the corporation may be 
 thereby suspended. Vincennes Univ. v. Indiana, 14 How. 268 ; Russell v. McClel- 
 lan, 14 Pick. 63; Knowlton v. Ackley, 8 Cush. 94; Evarts v. Killingworth Co. 20 
 Conn. 447; Philips v. Wickham, 1 Paige, 590; Slee v. Bloom, 6 Johns. Ch. 366; Peo- 
 ple V. Twaddell, 18 Hun, 437; Allen v. N. >T. Southern R. R. Co. 49 How. Pr. 14; 
 Iloboten Building Ass'n v. Martin, 2 Beasl. 427; Rose v. Turnpike Co. 3 Watts, 46; 
 Lehigh Bridge Co. v. Lehigh Coal Co. 4 Rawle, 9 ; Boston Glass Manuf. v. Langdon, 
 24 Pick. 53; Commonwealth v. Cullen, 13 Penn. St. 133; Blake v. Hinkle, 10 Yerg, 
 218; Nashville Bank v. Petway, 3 Humph. 524; Cahill v. Kalamazoo Ins. Co. 2 
 Doug. (Mich.) 140. 
 
 A private corporation does not become dormant, or forfeit its franchises, because 
 a single individual becomes, by purchase of the stock, sole owner of the corporate 
 property and franchises ; and if such sole owner continues the business under the 
 corporate name, without notice to the public, he may be sued as such corporation. 
 Newton, &o. Co. „. White, 42 Ga. 148. See Cook v. Kent, 105 Mass. 246. 
 
 (a) If a corporation is not dead, but lacks only the means for using its powers, as, 
 e. g., if the trustees by failure to elect, are reduced to a number too small to act, a 
 new charter creating a new body is not necessary. The powers of the corporation 
 are not lost, and the means of exercising the powers may be supplied by the Leg- 
 islature filling the vacancies. If the corporation is wholly dissolved, it would seem 
 that no action of the Legislature could, strictly speaking, revive it. A new corpora- 
 tion might be created by a new charter. Moreover, as a condition of the grant of 
 the new charter, the assumption of the liabilities of the old company might be forced 
 upon the new. Still the corporation would be essentially a new body. It is im- 
 portant in certain cases to determine, whether a reorganization comes after the death 
 or mereiy during the " torpidity " of the original body, and whether an act of the 
 Legislature revives an old or creates a new corporation. Upon this subject see Lea 
 v.. Am. All. <fe Pac. Canal Co. 3 Abb. Pr. (N. S.) 1. 
 
 It may be noticed in this connection, that mere insolvency, proceedings in insol- 
 vency, the appointment of a receiver, or non-user of the powers granted, does not of 
 itself work dissolution. See Piatt v. Archer, 9 Blatehf. 559 ; Re Independent Ins. 
 Co. 1 Holmes, 103 ; Proprietors of Baptist Meeting House v. Webb, 66 Me. 398 ; Rol- 
 lins V. Clay, 33 Me. 132; Brandon Iron Co. v. Gleason, 24 Yt. 228; Boston Glass 
 
796 
 
 DISSOLUTION OF CORPORATIONS. 
 
 members — can allow the corporation to die out, may be considered 
 donbtf 111, at least as to all such which may be denominated public. 
 The franchises have been granted to these for public ends and 
 aims, and the original intention must have been that they should 
 be used. With regard to corporate offices, it is admitted that by 
 the common law a corporator can be compelled to undertake them 
 ■when called upon ; ' and by statute the same has been expressly 
 provided with reference to municipal corporations.^^) Pari ra- 
 tione, it would seem that the corporation itself must be compellable 
 to fulfill its duties, and to discharge the purposes for which it has 
 been created, at least whenever such purposes have a distinct and 
 primary reference to the public welfare ; and if compellable to 
 do this, it is apparently compellable to keep up, or at least to make 
 the attempt to keep up, its members, so as not to perish of mere 
 inanition. In the present day, however, there are other ways and 
 means of accomplishing that for which corporations were former- 
 ly frequently established to bring about. Consequently, it may 
 safely be predicated, that whether it is or not theoretically ull/ra 
 vires of a corporation to allow its members to die out totally, or 
 as to any integral part, the crown at least will not intervene to pre- 
 vent this. If the members themselves find the duties too onerous, 
 or do not value their privileges sufficiently to keep them alive, 
 neither political necessities nor public needs can now be deemed 
 sufficiently pressing to require that corporations should be made 
 to discharge their functions. 
 
 This applies even more strongly to private corporations ; that 
 is, to those associations that have been incorporated purely for 
 
 ' Eex V. Bower, 2 D. & E. 842. « 5 A 6 'Will. IV, c. 76, d. 51 ; Reg. v. 
 
 Richmond, 11 W. E. 65. 
 
 Manuf. V. Langdon, 24 Pick. 49; Coburn v. Boston Papier Maohe Mfg. Co. 10 Gray, 
 243; Catlia ». Eagle Bank, 6 Conn. 238; Pondville Co. v. Clark, 26 Conn. 97; 
 Pahquioque Bk. ». Bethel Bk. 36 Conn. 326 ; Kincaid v. Dwinelle, 59 N. Y. 528 ; 
 Green v. Walkill Bk. 1 Hun, 63 ; Huguenot Nat. Bk. v. Stndwell, 6 Daly, 13 ; Hoyt 
 V. Sheldon, 3 Bosw. 267 ; Nimmons v. Tappan, 2 Sweeny, 652 ; City Ins. Co. v. Com- 
 mercial Bk. 68 111. 348 ; State Nat. Bank /). Eobidoux, 57 Mo. 446 ; Kansas City 
 Hotel Co. V. Sauer, 65 Mo. 279. But see Nat. Bank v. Colby, 21 Wall, 609, as to na- 
 tional banks. Where, in pursuance of its charter, a corporation transferred its prop- 
 erty and franchise, it did not thereby lose its corpnnite existence so as not to be 
 able to sue, as a corporation, for the purchase-money. Saugatuck Bridge Co. v. 
 Westport, 39 Conn. 337. 
 
 (a) See Dillon on Mun. Corp. §§ 61, 111, 112. 
 
DISSOLUTION OF CORPORATIONS. 797 
 
 private aims. In these the privileges and capacities that belong 
 to the whole, as distinct from its parts-i. e., the individual mem- 
 bers—belong to them for the private advantage of the latter. 
 Consequently, these may use or not use them as they think fit, and 
 may allow them to pass into desuetude, and the corporation itself 
 to decay.(a) 
 
 So with regard to dissolution by act of parliament.(5) Such an 
 act may not be applied for at the corporate expense, at least not 
 against the opposition of any one member.^ But in all other 
 respects such proceedings will be matters of internal management, 
 within the scope of a general meeting to decide upon. 
 
 Fifthly. — Dissolution hy Winding-up. {c) 
 
 This is the mode by which is ordinarily determined the exist- 
 ence of all corporations coming within the purview of the pro- 
 visions in this behalf contained in the Companies Acts, 1862 {d) and 
 1867. These provisions apply to all corporations registered under 
 
 ' Part II, ch. VI, s. 2. 
 
 (a) Corporations, other than municipal, cannot be compelled to exercise franchises 
 after their own interests shall cease to be subserved thereby, but their non-user 
 nevertheless is ground for forfeiture. See People v. Albany <fe Vt. R. R. Co. 24 TS. 
 Y. 261 ; Treadwell v. Salisbury Mfg. Co. T Gray, 393; see ante, p. 11, note. An in- 
 junction may be issued to restrain a corporation from taking steps to procure its dis- 
 solution in a State court pending a suit against it in the federal courts. Fisk v. 
 Union Pac. R. R. Co. 10 Blatchf. 518. A corporation owning patent rights, having 
 contracted to furnish to another goods for sale, a preliminary injunction was granted 
 to restrain it from dissolving itself and assigning its patent rights, on the ground that, 
 though the court conld not so superintend the business as to enfo ce specific per- 
 formance, yet it was proper to restrain the defendants from putting it out of their 
 power to fulfill their contract until the facts and law were fully ascertained. 
 
 (5) Under the decision of Dartmouth College v. Woodward, i Wheat. 618, the 
 Legislature cannot dissolve a corporation without its consent. No application 
 from the stockholders would make any difference unless it were such as would 
 amount to a surrender. Accordingly, this means of dissolution does not exist in this 
 country, in respect to private corporations, save in cases where the power to repeal 
 is reserved. Penobscot Boom Corp. v. Lamion, 16 Me. 224. For like reasons the 
 Legislature cannot declare new grounds of forfeiture, although it can alter the 
 remedy on old grounds. Aurora T. Co. ». Holthouse, 1 Ind. 59. As to dissolution 
 of municipal corporations, see Dillon on Munic. Corp. §§ 109-16, c. vii. 
 
 (c) See cases cited in Angell & Ames, § 766, n. Statutory provisions in relation 
 to dissolution and the winding-up of the affairs of corporations will be found in the 
 States generally. 
 
 (</) Buckley, pp. 179, 484. 
 
'^98 DISSOLUTION OF CORPORATIONS. 
 
 this act, and also to many unregistered bodies, whether corporate 
 or not. 
 
 (1.) Winding-up under the Court. 
 
 The winding-up may take place either involuntarily, that is to 
 say, by a compulsory order of the Court of Chancery, or volun- 
 tarily, which may be purely so, without the intervention of any 
 tribunal, or under the supervision of the court. As to the for- 
 mer mode, it is provided,* that : 
 
 A company, under this act, may be wound-up by the court, as hereinafter 
 defined, under the following circumstances (that is to say) : 1. Whenever the 
 company has passed a special resolution requiring the company to be wound- 
 up by the court. 3. "Whenever the company does not commence its business 
 ■within a year from its incorporation, or suspends its business for the space of 
 a whole year." 3. Whenever the members are reduced in number to less than 
 seven." 4. Whenever the company is unable to pay its debts." 5. Whenever 
 the court is of opinion that it is just and equitable that the company should 
 be wound-up.' 
 
 The act empowers [section 170 (a)] the Lord Chancellor, with 
 the advice and consent of certain of the chancery judges, to make 
 such regulations for winding-up as may be necessary. By virtue 
 of this authority certain rules have been made, but it has been de- 
 cided that one of them [No. 26 (5)] — which provides that creditors 
 whose debts or claims do not carry interest shall be entitled to in- 
 terest at four per cent, from the date of the winding-up order — is 
 ultra vires, as varying the rights of the parties, and adding to the 
 burden of the contributories.* A similar doubt with respect to 
 
 ' 26 <fe 26 Vict. c. 89, b. 79. There Paris Banking Corp. L. H. 19 Eq. 444; 
 
 follows in s. 80, a statement of the cir- He St. 'Ihoinas Dock Co. 2 Ch. D. 118. 
 
 cumstances under which a company is As to tests of insolvency, see A'e Earo- 
 
 to he deemed unable to pay its debts; pean Life Ass. Soc. L. R. 9 Eq. 122; Ee 
 
 and in s. 81, a definition of "The Court," London, Ac. Industrial Assoc. 1 Ch. D. 
 
 as referred to in s. 79. 466 ; and the Life Assurance Compaiiies 
 
 ' Tumacacori Mining Co. L. R. 17 Eq. Act, 1870, sect 11. 
 
 BS4. ' See note 4. 
 
 ' Sea, (fee. Marine Ins. Co. L. R. 2 Eq. ' Ee East of England Banking Co. L. 
 
 B45. R. 4 Ch. 14. In connection with this 
 
 * Most of the cases have turned upon case may be mentioned a somewhat anal- 
 
 tliis subsection. See the most recent : Ee ogous decision, Fitzgerald «. Champneys, 
 
 West Hartlepool Docks, Ac. Co. L. R. 10 2 J. & H. 31, where an Order in Council, 
 
 Ch. 618; Cadiz W'worka Co. v. Barnett, purporting to be made under s. 3 of 2 <fe 
 
 L. R. 19 Eq. 182; Ee City and County 8 Vict. c. 49, was held to be ultra vires, 
 
 Bank, L. R. 10 Ch. 474; Be London and and, consequently, invalid.- 
 
 (») Buckley, p. 343 (6) Buckley, p. B04. 
 
DISSOLUTION OF CORPORATIONS. , Y99 
 
 Eule 25 was decided in the negative by giving to the language 
 used in that rule a somewhat strained construction.^ The clause 
 in the above section, which is most important in connection with 
 the present subject, is the fifth, the " just and equitable " one. 
 As to this, ultra vires transactions are no ground for granting a 
 winding-up order. This was determined in Spackman's Case,* 
 where an arrangement was come to for allowing, upon terms, cer- 
 tain members to retire from a company. One of the members 
 who objected to the arrangement — and which has since been ad- 
 judged ultra 'yi?'es— thereupon presented a petition to wind-up 
 the company, but the Lord Chancellor dismissed the application. 
 So, in lie Factage Parisien,* where the petitioner alleged that the 
 company were acting in an ultra vires manner, the petition was 
 finally dismissed, it having been first directed to stand over till a 
 meeting of the members was called, and which, having been 
 called, preferred to continue the undertaking. A fortiori, mere 
 irregularities in the management of a company,^ or misconduct on 
 the part of the directors,' or the loss of capital ° — unless it amounts 
 to actual insolvency, or the impossibility of continuing the busi- 
 ness' — are not per se sufficient for compulsory winding-up, 
 though any one or more of these facts taken in connection with 
 other circumstances — especially such as show fraud on the part of 
 the directors, or those who got up the company — may suffice. 
 
 In Chapter I of this Part, has been considered the liability, if 
 any, of corporations in respect of proceedings which are absolutely 
 ultra vires. Whatever may be the nature or extent of this lia- 
 bility, it does not amount to a " debt " within the fourth clause of 
 the above section, so as to enable a person having such a claim 
 against a company to ground thereon a petition to wind-up.* 
 
 ' Re Trent and Humber Co. {Ex parte * Re European Life Assurance So- 
 Cambrian Steam Packet Co) L. R. 4 Ch. ciety, L. R. 10 Eq. 403; Re Spence'a 
 112. Patent, <fec. Cement Company, L. R. 9 
 
 ^ Re Agriculturist Cattle Ins. Co. (Ex Eq. 9 
 parte Spiclsman), 1 Mao. <fe G. 170 ; 18 L. ' See judgments in Re Suburban Hotel 
 
 J. (Ch ) 261; Ex parte Fox, L. R. 6 Ch. Company, L. K. 2 Ch. 737, and Re Joint- 
 
 176, 184. Stock Coal Conipimy (Expurte Green), L. 
 
 3 Hi L. J. (Cb.) 140. R. 8 Eq. 146. 
 
 * Re Anglo-Greek Steam Navigation s^^ National Permanent Benefit Build- 
 Company, L. R. 2 Eq. 1. ing Society {Exparte Williamsou), L. R. 5. 
 
 ° Ex parte Wise, 1 Drew. 465 ; Re Ch. 309. 
 Anglo-Greek Steam Navigation Company, 
 ubi supra. 
 
800 DISSOLUTION OF CORPOEATIONS. 
 
 (2.) Voluntary Winding-ujp. (a) 
 
 The provisions for this, contained in section 129 of 25 & 26 
 Yict., c. 89, are as follows : 
 
 A company, under this act, may be wound-up voluntarily: 1. Whenever 
 the period, if any, fixed for the duration of the company by the articles of 
 association, expires; or whenever the event, if any, occurs, upon the occur- 
 rence of which it is provided by the articles of association that the company 
 is to be dissolved, and the company in general meeting has passed a resolu- 
 tion requiring the company to be wound-up voluntarily. 3. Whenever the 
 company has passed a special resolution requiring the company to be wound- 
 up voluntarily. 3. Whenever the company has passed an extraordinary reso' 
 lution,to the eiffect that it has been proved to their satisfaction that the com- 
 pany cannot, by reason of its liabilities, continue its business, and that it is 
 advisable to wind-up the same. 
 
 In applying the section here cited, it is not always easy to de- 
 termine what companies are "under" the act, so as to be enabled 
 to take advantage of its provisions. The statute itself enacts that 
 it shall apply to the following companies : (1.) Those formed and 
 registered, or merely registered, under the Joint-Stock Companies 
 Acts of 1856, 185Y, 185S (sections 1Y5-8). (2.) Companies 
 registered under the act (sections 79, 129, 180, 196). (5) As to 
 registration, see section 179. (3.) All other associations consisting 
 of more than seven members not registered under this act, but 
 Tsdth the exceptions and qualifications as laid down in section 
 199.1 
 
 As to the application of the act, it has been decided, first, 
 that all English companies duly registered are within its purview, 
 but where the number of members is very small, the court hesi- 
 tates to make a compulsory order, and has refused to do so in two 
 cases ; ' though in a very recent case, where there were only seven 
 shareholders and -no debts, Malins, V.-C, made the order, thereby 
 overruling the previous decision to the contrary.' The act 
 applies alike to friendly, building, and other similar societies, 
 
 ' Cited post, p. 8f)2. ' He Sanderson's Patents Association, 
 
 « Re Natal, <feo. Company, 1 H. <t M. L. R. 12 Eq. 188. 
 639; Re Sea and River Marine Insurance 
 Company, L. E. 2 Eq. 645. 
 
 (o) Bnckley, p. 263. 
 
 (6) Hercules Ins. Co. L.R. 11 Eq. 321 ; and Southall v. British Mutnal Soc L. R. 
 6 Oh. 614. 
 
DISSOIUTION OF CORPORATIONS. 801 
 
 whether registered or ncrt under 25 & 26 Yict., c. 89, now 37 & 38 
 Vict., c. 42,^ to cost-book mining companies,^ to insurance com- 
 panies,* and to companies other than railway companies incor- 
 porated by special act of parliament,* and to companies which are 
 practically defunct, e. g., such as have amalgamated with others,' 
 as well as to such as are carrying on their business. Secondly, as 
 to foreign companies. Kegistered companies formed for carrying, 
 on business partially, or even exclusively, abroad, are within the act, 
 provided they have an office or branch office here,^ or have, or con- 
 template the having, as shareholders, British subjects, or persons 
 resident in England ; ' but probably they are not so if both their, 
 objects and their shareholders are exclusively foreign.^ Thirdly, 
 as to railway companies.' These, if incorporated by special act,, 
 4re by section 199 expressly excluded from this statute. After 
 their undertaking has been abandoned by warrant of the board of 
 trade, any shareholder may, by section 31 of 13 & 14 Yict., c. 83; 
 present a petition to wind-up under any winding-up act for the 
 time being in force, but a creditor cannot do so.^" But- where by 
 a special act a railway company was amalgamated with another, 
 and, in consequence, it entirely ceased to carry on any business as 
 a railway company and continued its existence only for the pur- 
 pose of winding-up its affairs, Malins, Y.-C, overruled a demurrer 
 to a bill filed by one of its creditors, which alleged that the assets 
 were being wasted, and therefore prayed that the company might 
 be wound-up under the court." Here, the Yice-Chaucellor thought 
 that section 199 of the statute has reference only to going con- 
 
 ' Queen's Benefit Building Society, L. ■" Re General Company for Promotion 
 
 R. 6 Ch. 815. See Planet Benefit Soc. L. of Land Credit, L. &. 5 Ch. 363; and 
 
 R. 14 Eq. 441; Professional, (fco. Building Princess of lleusa v. Bos, L. K. 6 H. L. 
 
 §oc. L. R. 6 Ch. 856. l'?6. 
 
 2 See 8 180; and 32 & 33 Vict. c. 19. " See last note. 
 
 * See 33 & 34 Vict. c. 61, § 21 ; and ' In connection with the dissolution 
 
 35 & 36 Vict. c. 41, i^ 4. of railway companies, see the Abandon- 
 
 " Wey and Arun Junction Canal Com- ment of Railways Act, 1850, 13 & 14 
 
 pany L R 4 Eq.' 19Y; Re Bradford Vict: c. 83; (a) and the Railway Com- 
 
 Navigation Company, L. R. 10 Eq. 331; paniea Act, 1867, 30 & 31 Vict. c. 127, 
 
 5Ch. 600. §§ 31-5.(6) 
 
 5 Re Family Endowment Society, L. '" Re North Kent Extension Raihvay 
 
 E 5 Ch 118 Company, L. R. 8 Eq. 356. 
 
 '« iJe Commercial Bank of India, L. R. " Ward v. Sittingbourne and Sheer- 
 
 6 Eq 517 Compare Re Imperial Anglo- neas Railway Company, L. R. 9 Ch. 488. 
 German Bank, 25 L. T. 895 ; 26 L. T. (N. 
 S.) 229; W. N. 1872, p. 40. 
 
 (a) Godefroi & Shortt, Ixxvi. (6) Godefroi & Shortt, 500. 
 
 51 
 
802 DISSOLUTION OF CORPORATIONS. 
 
 cems. In another case he held, that the exception from the 
 power to wind-up unregistered companies, given by that section, 
 applies only to companies whose principal object is the construc- 
 tion and working of a railway, and that where a company's principal 
 object was the construction of docks, it could be wound-up by the 
 court, although it had power also to make a branch railway for 
 purposes connected with the docks.* 
 
 (3.) Unregistered Companies. 
 
 The provisions of the act (25 & 26 Tict., c. 89), with reference 
 to these bodies, are contained in section 199, and are as follows : 
 
 Subject, as hereinafter mentioned, any partnership, association, or com- 
 pany, except railway companies incorporated by act of parliament, consisting- 
 of more than seven members; and no* registered under this act, and herein- 
 after included under the term "unregistered company," may be wound-up 
 under this act, and all the provisions of this act with respect to winding-up shall 
 apply to such company, with the following exceptions and additions : 1. An 
 unregistered company shall, for the purpose of determining the court having 
 jurisdiction in the matter of the winding-up, be deemed to be registered in 
 that part of the United Kingdom where its principal place of business is 
 situate; or if it has a principal place of business situate in more than one 
 part of the United Kingdom, then in each part of the United Kingdom where 
 it has a principal place of business ; moreover, the principal place of business 
 of an unregistered company, or (where it has a principal place of business 
 situate in more than one part of the United Kingdom) such one of its prin- 
 cipal places of business as is situate in that part of the United Kingdom in 
 which proceedings are being instituted, shall, for all the purposes of the wind- 
 ing-up of such company, be deemed to be the registered ofBce of the company. 
 2. No unregistered company shall be wound-up under this act voluntarily, or 
 gubject to the supervision of the court." 3. The circumstances under which 
 an unregistered company may be wound-up are as follows, that is to say , 
 (a) Whenever the company is dissolved or has ceased to carry on business, 
 or is carrying on business only for the purpose of winding-up its affairs, (b) 
 "Whenever the company is unable to pay its debts.' (c) Whenever the court 
 is of opinion that it is just and equitable that the company shoiild be 
 wound-up. 
 
 From the language of the preliminary part of this section, it 
 
 ' Re Exmouth Docks Company, L. E. and under which any company may be 
 
 17 Eq. 181. wound-up under any act or acts for the 
 
 5 But -with regard to industrial and time being in force for winding-up com- 
 
 provident societies, 25 <fe 26 Vict. <i. 87, panies. 
 
 8. 17, provides that, if registered under * See, for the circumstances under 
 
 that act, they may be wound-up Tolun- which a company will be deemed unable 
 
 tarily or by the court in the same man- to pay its debts, the fourth clause of this 
 
 ner and under the sa^ie circumstances in section, ' 
 
DISSOLUTION OF CORPORATIONS. 805 
 
 might have been thought to inchide any association whatever, 
 other than those expressly excepted, but it would seem that a club 
 cannot be wound-up by the conrt.^ A doubt has also been raised, 
 as to whether the court can make an order for the winding-up of 
 an unregistered mutual marine insurance society." {a) Nor can 
 persons who associate themselves for the purpose of forming a, 
 company, which project fails, obtain an order to wind-up suck 
 projected company on the ground that they have acted for and 
 represent such company.* Whether an unregistered company of 
 more than twenty members, formed since the. Companies Act^ 
 1862, can be wound-up, is doubtful.* 
 
 I. A dissolution ipso facto ^uts an end to existing oontraofs'f 
 but rights and liabilities are preserved so far as consistent 
 therewith. 
 
 A dissolution is probably in every case a rescission of every 
 contract, whether by or with the corporation. The corporation, 
 whether absolutely defunct or merely in abeyance as on the mak- 
 ing of a winding-up order, is non-existent to the extent that no 
 further rights can be acquired by or against it. Contracts are re- 
 scinded, but the rescission is a breach thereof, not an excuse for 
 their non-performance. 
 
 Consequently, the parties thereto affected by such breach are 
 entitled to damages for the breach, and can enforce such damages 
 against the assets like other creditors.^ Apparently, however, 
 nothing short of an actual order for dissolution, no pecuniary em- 
 barrassment however great, works such a rescission, or will justify 
 a person in refusing to fulflU a contract with a corporation.* (J) 
 
 ' St. James's Club, 2 De G., M. & G. as to salaries, Ac, Chapman's Case, L. 
 
 38S. E. 1 Eq. 346 ; Ex parte Logan, L. R. 9 
 
 ^ See Be London Marine Insurance Eq. 149 ; SMrre£f's Case, L. R. 14 Eq. 
 
 Association, L. R. 8 Eq. 176. 417 ; Reg. v. Poor Law Board, L. R. 6 Q, 
 
 ' Re Imperial Anglo-German Bank, B. 786 ; and Reg. v. Local Government 
 
 26 L. T. (N. S.) 229 ; "W. N. 1872, p. 40. Board, L. R. 9 Q. B. 148. 
 
 * Re South Wales Atlantic Steamship « Re Phoenix Bessemer Steel Co. {Ex 
 Co. 2 Ch. D". 763. parte Carnforth Haematite Iron Co.) 4 Ch. 
 
 * Re Wiltshire Iron Co. (ExpaHe Pear- D. (C. A.) 108 ; 25 W. R. 187. 
 son), L. E. 3 Ch. 443. See the decisions 
 
 (a) Re Shields Marine Ins. Assoc. L. R. 5 Eq. 368 ; Re Albert Average Assoc. 
 L. R. S Ch. 697; 13 Eq. 629; Re Merchants' <fc Tradesmen's Assurance Soc. L. R. » 
 Eq. 694. 
 
 (6) See Mumma v. Potomac Co; 8 Pet. 281 ; Bacon v. Robertson, 18 How. 480 ; 
 Lum 0. Robertson, 6 Wall. 277; McGoon t. Scales, 9 Wall. 23. 
 
INDEX 
 
 ABANDONMENT of business, 69, 403 et seq. See Dissolution. 
 
 of unprofitable branch of railway, 71 n.{a). 
 
 of part of railway at instance of rival line, 71 n.((i). 
 
 of business and powers by transfer. See Tkansfkk. 
 by actual abandonment, 403 et seq. 
 
 of franchises by non-user, 711. 
 
 of powers to committees by managing body, 544. 
 ABUSE of franchises, ground for forfeiture of charter, 796 n.(fi). 
 ACCEPTANCE of charter, renders powers obligatory, 406. 
 
 of amendment of charter by stockholders, 393, 393 n., 469. 
 
 by stockholder of dividend is not ratification of illegal act of di- 
 rectors, 163 m.(a). 
 ACCOMMODATION PAPER. &« Negotiable iNSTuraiENTs. 
 
 corporation cannot issue or indorse, 253 n.{a). 
 
 good in hands of lona fide holders, 353 re. (a), 373 ?i.(a). 
 ACCORD AND SATISFACTION. -See Novation. 
 
 what is, and effect of, 603, 603. 
 ACCOUNT, liability to, 717. 
 
 corporation must account for benefits received in ultra vires trans.- 
 actions, 717 et seq., 738, 739 re.(a)-749. 
 
 third parties must also account, 769, et seq. 
 ACQUIESCENCE. See Laohbb ; Ratification ; Waivek. 
 
 estoppel by. See Estoppel. 
 
 in public work, 404 n. 1, n.{a). 
 
 of members in resolutions and business of corporation, 439. 
 
 agent's authority implied from, 464 ».(«), 563, 784. 
 
 in informalities, 535, 537 n. 
 
 by a corporation itself, 555 et seq. 
 
 when presumed, 556 et seq. 
 
 there must be notice, 557, 560. 
 
 notice may be constructive, 559. See Notice. 
 
 by waiver of formalities, 581. 
 
 act must not be ultra vires of the corporation, 563. 
 
 but may be uWra vires of agent, 784. 
 
 of shareholder, induced to become such by fraud, 348 w. (a). 
 
 in forfeiture of shares, 518. 
 
 in amalgamation, 616 et seq. 
 
S06 INDEX. 
 
 ACQUIESCENCE— core*in«e(i. 
 
 in application to Legislature, 300. 
 
 in irregular notice of meeting, 439, 439 n.{a). 
 
 in contract tainted with fraud, 348. 
 
 by one railway company in user by another, 331 n. 2. 
 ACQUISITIONS, future, mortgage of, 336 n. 
 ACTIONS. See Injunction ; Legal PROCKBDiifrGS ; Suit in Equity. 
 
 by members of corporations to restrain acts ultra vires, 643. 
 
 when all members must join in, 648, 644, 644 w.(a). 
 
 when one shareholder may sue for all, 645, 645, n.{a), 648 et seq. 
 
 who may and must be parties in. See Paktibs. 
 
 for recovery of property alienated in ultra vires transactions, 658. 
 
 in respect of proceedings by a majority, 660 et seq. 
 
 by one or more members complaining of majority, 674 et seq. 
 
 one member can sue only when specially damnified, 675. 
 
 wrongs specially effecting particular members, 677, 678-685. 
 
 stockholders cannot plead and defend for the company, 677 n.(a), 
 689 re. (as). 
 
 wrongs to the whole corporation, 675. 
 
 by third parties in respect of ultra vires proceedings, 693. 
 
 in respect to acts uUra vires of the directors, etc., 696. 
 
 by or on behalf of the public, 698. See Attobnbt-Gbnbral. 
 
 attorney-general, when a party in, 698 et seq. See Attornet-Gen- 
 
 ERAX. 
 
 when one person may sue for the public, 698 et seq., 698 n. 
 
 separate private injury as ground for, 700. 
 
 acts ultra vires may be restrained on behalf of the public, 703. 
 
 form of action by or on behalf of the public, 713. 
 
 adoption of, between other parties, by corporation, 283 et seq. 
 
 for deceit against corporation, 349, 350. 
 ADMISSIONS of directors and other agents, 503. 
 ADOPTION. See Acquibscbnce ; Ratification. 
 
 by corporation of acts of projectors. See Recognition. 
 of legal proceedings, 285 et seq. 
 ADVANCES to corporation in ultra vires contract, when recoverable, 734. 
 
 by corporation in ultra vires contracts, when recoverable, 769 et seq. 
 ADVERTISEMENT. See Notice. 
 AGENTS. See Acquibscbnce ; Directors ; Officials ; Ratification. 
 
 of corporations in legal proceedings, 286 ra.(J). 
 
 corporations can commit torts through its, 331 n.(a). 
 
 fraud committed by corporation through its, 335 n.(a), 336, 337 »., 
 355 n.(a), n.(b). See Fraud. 
 
 incidental powers of, 845. 
 
 torts committed by, contrary to instructions, 353. 
 
 implied powers of, 359, 506 n. 
 
 do not require seal when they contract, 448 n. 
 
 appointment of, not necessarily under seal, 451 n.{a). 
 
INDEX. 807 
 
 AQ'ENTB— continued. 
 
 acts of, when corporation is estopped to deny, 459 n.(a), 464 n.(a), 
 494 ».(o), 523, 563. 
 
 general and special, 470 n.(b). 
 notice to, when notice to corporation, 600, 500 n.(5). 
 knowledge of, wjien imputed to corporation, 500, 500 n,{b). 
 representations and admissions o^ 503. 
 protection and indemnification of, by corporation, 505. 
 when act of, must be joint, 588 n.(_a), 539 n. 
 liability of, on contracts, 750 et seq. 
 when principal is disclosed, 750. 
 exceeding his powers, 751, 755 et seq. 
 when there is no real principal, 751. 
 when principal is not disclosed, 753 n. (a). 
 on negotiable instruments, 754 n. 
 for torts, 765 et seq. 
 
 when tona Jide, 765 et seq. 
 gross negligence of, ground for exemplary damages, against corpo- 
 ration, 358 n.{b). 
 leases by, 286 n.{a). 
 AGREEMENTS. See Contkacts. 
 ALBEKT ARBITRA.TION, 622, 623 n.^a). 
 ALIENATION of corporate property, not ultra vires, 779. 
 of lands by corporation, 116. See Laitds. 
 of business. See Business ; Tbansfeb. 
 of special powers. See Transfer. 
 ALLOTMENT OP SHARES by means of scrip, 175. 
 ALMSHOUSES, 50. 
 
 ALTERATION relieves subscribers, 133, «.(«). 
 unless anticipated, 134 n. 
 of ^charter or business requires the assent of all stockholders, 8 n. 
 
 (6), 77 w.(6), 636. 
 power of Legislature over, 96 n.{a). 
 of business by eminent domain, 375 n. 
 of seal, 678. 
 
 of number of shares, 157 n.(a). 
 of oBject of corporation, 508 n. 
 
 of purposes of corporation relieves subscribers from calls, 151 n.(b). 
 of canal by canal company, 87 n.(h). 
 of route of railway, not usually allowed, 393 n.{a). 
 
 unless provided for in charter, 393 n.{a). 
 of gauge of railway restrained under contract, 416 n. 
 AMALGAMATION. See Consolidation ; Novation. 
 of corporations, 601 et seq. 
 meaning of the term, 604, 604 ».(a), 631 n.(a). 
 destruction or abeyance of corporate entity, 607. 
 transfer of corporate entity, 608. 
 
808' INDEX. 
 
 AMALGAMMnON— continued. 
 
 power to transfer must be very clear, 608. 
 
 when Legislature must act, 611, 633. 
 
 indirect transfer possible, 613. 
 
 as regards corporators, 613. 
 
 members cannot be transferred without a clear power, 615. 
 
 as regards creditors, 618. 
 
 assets may be transferred without consent of creditors, 619. 
 
 corporation cannot force novation upon creditors, 630. 
 
 effect on policy holders, 633, 633. 
 
 should be by legislative enactment, 633. 
 
 in winding up, 634 et seq. 
 
 of life assurance companies, 637 et seq. 
 
 how far involved in transfer of assets. See Transfer. 
 
 distinguished from consolidation, 631 n.{a). 
 
 this term used only in England, 631 n.{a) 
 AMENDMENT. See Alteration. 
 
 of charter, must be accepted by stockholders, 393, 393 n., 469. 
 APPLICATION TO PARLIAMENT. See Parliament, applications to- 
 APPOINTMENT OF AGENTS. See Agents; Officials. 
 APPORTIONMENT of " tolls," 415 et seq. See Traffic Arrangements. 
 
 of receipts, 417 et seq. 
 
 of profits, based on past profits, 4l7 et seq. 
 ARBITRATION, Albert, 633, 623 7i.(a). 
 
 European, 633, 633 n.(a). 
 
 provided for by rules, 58. 
 ARRANGEMENTS OF TRAFFIC. See Traffic Arrangements. 
 ARREST, illegal arrest, induced by agent of corporation, 361. 
 
 when ultra vires of an agent, 361. 
 ARTICLES OF ASSOCIATION. See Deed of Settlement. 
 
 registration of, 508 n. 
 
 third parties must take notice of, 503 n. 
 ASSAULT. See Torts. 
 
 liability for, of corporations, 353 n.{a). 
 ASSESSMENTS. See Calls. 
 
 raising requisite capital a condition to making, 153-157. 
 
 for preliminary business and purposes, 153 n.{a). 
 
 nature of subscriptions on which right of making, rests, 154 n. 
 ASSETS. See Capital; Corporate Peopbrtt ; Lands. 
 
 private corporations may alienate, 131, 134 n.{a). 
 
 what may be charged, 334. 
 
 transfer of. See Transfer. 
 
 alienation of, not ultra vires, 779. 
 
 dissipation of, not ultra vires, 779. 
 
 transfer of, involving amalgamation, 638. 
 
 are trust fund for payment of debts, 305 n.{a). 
 
INDEX. 809- 
 
 ASSETS— continued. 
 
 creditors have a lien on, 305 n.(a). 
 ASSIGNMENT. See Shaebs and Stock; Trajstspee. 
 
 delivery of certificateof stock with blank, 178, 179 n. 
 
 of letter of credit, 357 n. 4. 
 ASSOCIATION. See Fmbndlt Societies. 
 
 co-operative, 19. 
 
 ASSUMPSIT lies to recover a declared dividend; 308 ra.(a). 
 
 ATTOKNEY-GENERAL. See Dissolution. 
 
 proper person' to enforce specific performance of dutv imoosed bv 
 charter, 407. J f J 
 
 when he must be a party to actions, 698 et seq., 713. 
 when he reftises to be plaintiff, must be a defendant, 700. 
 when he may sue, 706. 
 
 may sue when objects or trusts of corporation are public, 706, 
 707 71., 708. 
 when any corporation is acting against public welfare, 708, 
 708 ».(S), 713. 
 or exceeding powers, 710. 
 or not using powers, 711. 
 
 must be a party in actions against corporations which involve only 
 
 public rights, 713. 
 proceedings by, 789. 
 AUDITOR, transferring shares without observing formalities, 511. 
 
 BANKING ACCOUNT, power to open, 310. 
 
 power to overdraw, 310, 335. 
 BANKING POWERS, power to issue notes does not include, 333 n. 
 BANKS. See National Banks ; Savings Banks. 
 
 liability of, for acts of cashier, 494 n.{a). 
 
 cashiers of. See Cashieb. 
 BENEFIT BUILDING SOCIETIES, English statutes relating to, 56. 
 
 nature of, 56. 
 
 usurious contracts of, 56 n.(a). 
 
 power to borrow, 57. 
 BENEFIT RECEIVED, corporations must account for, in ultra vires transac- 
 tions, 43, 717 et seq., 738. 
 
 and third parties must also so account, 769 et seq. 
 BENEVOLENT SOCIETIES. See Charitable Corporations. 
 BEQUEST, to corporation, of its own stock, 94 n.{a). 
 
 to charitable use controlled by equity, 50 n.(a). 
 
 this power does not depend on the statute of 43 Elizabeth,' 50 n.(a). 
 BILLS IN PARLIAMENT. See Parliament, applications to. 
 BILLS OF EXCHANGE. See Negotiable Instruments. 
 BILLS OF SALE, may be given by corporations, 230. 
 BOARD MEETINGS. ,8«e Directors ; Meetings. 
 
810 INDEX. 
 
 BOAKD MEETINGS— continued. 
 
 of managing bo(Jy, 537 et seq. 
 
 proceedings at, 544. 
 BOND HOLDER, under mortgage, can foreclose independently, when, 
 644 n.(a). t 
 
 trustees must first refuse to sue, 644 n.(a). 
 BONDS. /See Dbbbntuebs ; Negotiable Insteuments. 
 
 power to issue, 323 n.(a), 329. 
 
 as security for costs, 376. 
 
 negotiable, nature of, 357, 368 n.(a). 
 
 effect of, in Chancery, 257, 264, 268 n.(a). 
 
 effect of, in law, 361, 364, 368 n. (a). 
 
 power to issue, when implied, 357. 
 
 negotiable, different from ordinary negotiable instruments, 357. 
 BONUSES, rules as to dividends applied to, 195 n. 1. 
 
 declaration of, 302. See DrvroENDS. 
 BOOKS, formalities in keeping, 532, 532 n.ip). 
 BOROUGH FUNDS. See Corporate Pukds. 
 
 what expenses chargeable on, 381 et teq. 
 
 not liable for application to parliament, 310. 
 
 not liable for unnecessary litigation, 281 et seq. 
 
 when liable to expense of opposing bills in parliament, 312 et seq. 
 BORROWING-. See Debt ; Loans ; Negotiable Instruments ; Securities. 
 
 any corporation may have recourse to, 313, 213 re.(a), 315 et seq., 217. 
 
 valid, although securities are ultra vires, 221. 
 
 when within power of directors, 499. 
 
 debentures issued in excess of borrowing powers, 763 n.(a). 
 
 by benefit building society, 57. 
 
 must be to carry on legitimate business of corporation, 213 n.(a). 
 
 distinguished from increase of capital, 716 n.(a). 
 
 power of, includes power to issue notes, bonds or mortgages, 233 n. 
 
 by negotiable instruments improperly issued, 373, 373 n.{_a). 
 
 by overdrawing bank account, 235. 
 
 to increase capital of partnership, 716 n.(a). 
 BREACH OF TRUST. See Attorney-General; Fiduciabt Position; 
 Trustees. 
 
 applications to Legislature involving, 310, 313. 
 
 gives equity jurisdiction, 48 et seq. 
 
 diversion of property of municipal corporation is, 68. 
 
 by directors in dividing profits, 484 n.(b). 
 
 by directors as trustees. See Fiduciary Position. 
 
 forfeiture of charter for, 786 ra.(c). 
 
 in case of charitable corporations. See Charitable Corpoeations. 
 BRIBES, are ultra vires, 317. 
 
 disguised as payments, 573, 574. 
 BUILDING SOCIETIES. See Benefit Building Societies. 
 
INDEX. 811 
 
 BURDEN OP PROOF. See Pebstjmption, 
 
 in questions of ultra vires, 37 et seq. 
 
 as to necessity of exercising eminent domain, 388. 
 BURGESSES, election of; 281. 
 BUSINESS of commercial corporations, 63, 65. 
 
 includes all matters ancillary to primary object, 65, 86. 
 
 corporations may utilize property lying idle, 66. 
 
 and they may lease or sell such property, 67, 99 ».(a). 
 
 and may alienate their surplus property, 69. 
 
 a corporation may carry on a part only of its, 69. 
 
 power to transact, extended in unforeseen emergency, 71. 
 
 how far corporation may act as private person, 72. 
 
 implied authority under special powers, 73. 
 
 extension and development oft 77, 86, 599. 
 
 ultra vires may be restrained, 77. 
 
 ultra vires object invalidates contract otherwise valid, 80. 
 
 and such contracts may be repudiated, 81. 
 
 and so may all contracts connected with them, 84. 
 
 essential business may be transacted, 91. 
 
 a corporation may deal in shares of another, 91, 91 n.(b). 
 
 power of State to alter, extend, and regulate. See Legislatuee. 
 
 transfer of, from one corporation to another, 116. 
 
 capital must be paid in, 153 n.(a). See Capital. 
 
 profits may be used in developing, 300 n.(a). 
 
 implied powers of directors over, 493, 494. 
 
 alteration of. See AIiTERAtion. 
 
 abandonment of. See Abandonment. 
 
 contracts regulating. See Teapfic Areangbments. 
 
 transacted at meetings. See Meetings. 
 
 profits of. See Peopits. 
 
 suspension of, not necessarily a surrender, 791 n.{a). 
 BY-LAWS, power of corporation to make, 14, 15 n.{a). 
 
 acquaintance with, not presumed in third persons, 471 n. 
 
 when disregarded by directors^who made them, 545 n.{a). 
 
 left to discretion of corporation, 14, 15. 
 
 must not be repugnant to general law, 15 «.(a). 
 
 must not be repugnant to charter, 15 n.{a). 
 
 must not be in excess of powers, 15 re. (a). 
 
 cantiot impose liability on third persons, 15 n.(a). 
 
 cannot create lien on stock, 15 n.{a). 
 
 though void as such, may be valid as contracts, 15 n.{a). 
 
 CALLS. See Assessments. 
 
 by whom made, 150, 151 n.{a). 
 
 must bear equally on all, 151. 
 
 action to recover, against corporation, 838. 
 
 when subscriber is relieved from, 151 re.(5), 151 re.(c). 
 
812 ISDEX. 
 
 CALLS — continued. 
 
 power of Chancery to restrain illegal, 153. 
 by de facto directors, 150 n.(b). 
 power to make, strictly construed, 151. 
 fundamental change relieves subscriber from, 151 h.(5). 
 authority to make cannot be delegated, 151 n.{a). 
 CANAL COMPANY, may alter canal, 87 «.(&). 
 
 railway company purchasing a canal becomes a, 431, 433. 
 may purchase more land than the precise quantity needed, 68 n.(fl). 
 land taken for, by eminent domain, 373 n. 
 may divide surplus land among stockholders, 68 n.{a). 
 power of, to lease, given by charter, 13 n. 
 CANCELLATION. See Fokpbitube. 
 
 of shares, power of, must be expressly given, 189-191. 
 of shares, power of, not implied, 496. 
 CAPACITIES. See Powers. 
 
 CAPITAL. See Assets; Ooeporatb Pkopbbtt; Shares and Stock, 
 amount and division of, 153. 
 
 in connection with commencement of business, 153. 
 must be paid in before business begins, 153 n.ia). 
 variation of, 158, 158 n.{cC), 
 division of, into shares, 161. 
 not yet called up cannot be mortgaged, 334. 
 of partnership, how increased, 716 n.{a). 
 not increased by borrowing, 716 ra.(a). 
 .to make new railways, 331, 333. 
 variation of, by joint-stock company, 160. 
 CAKRIERS. See Common Carriers. 
 
 CASH, shares may be paid for otherwise than in, 145, 145 n.{a). 
 CASHIER, powers of, 494 n.(a). 
 
 liability of banks for acts of, 337 w., 494 n.(a). 
 de facto, 459 n.(a). 
 CEMETERY COMPANIES cannot issue negotiable instruments, 355. 
 CENSURE, right to, 45 n.{l). 
 CERTIFICATE of deposit, corporation may give, 233 n. 
 
 of stock, with blank assignment, how far negotiable, 178, 179 n, 
 CESTUIS QUE TRUSTENT, must all join in actions, 644 n.{a). 
 stockholders are, 484 ra.(J). 
 of a charity are the objects of the charity, 50. 
 CHANCERY, COURT OF. See Equity; Spit in Equity. 
 
 discretion of, 395, 396. 
 CHANGE. See Alteration. 
 
 CHARGES may be created by parol, 331, 332 et seq. 
 CHARITABLE COMMISSIONERS, 53. 
 CHARITABLE CORPORATIONS, what are, 18, 49. 
 visitors of. See Visitor. 
 power of a court of chancery over, 49, 50, 50 n.{a). 
 
INDEX. 813 
 
 CHARITABLE CORPORATIONS— w)iW« ued. 
 usually import a trust, 49. 
 
 doctrine of ultra vires applied to, 51, 52. 
 
 Legislature cannot divert property of, 51 n.{c). 
 
 power to hold real estate in territories of U. 8. limited, 11 n. 
 
 ho-w dissolved, 1Q\ji.{a). 
 CHARITABLE GIFTS in deeds or wiUs, 53 n. 
 
 for specific objects, 53 n. 
 
 constitute a trust, 50. 
 
 by commercial corporation, 36 n.{a). 
 CHARITABLE USES, bequests to, governed by equity, 50 n.{a). 
 CHARTER, sometimes approval of court to, required by statute, 16 n.(a). 
 
 corporations constituted by, 23. * 
 
 when third persons are supposed to know provisions of, 471 n. 
 
 special, seldom granted in U. S. 2 n.(b). 
 
 not unlimited in duration, 8 n,.(a). 
 
 alteration of. ,8ee Alteration. 
 
 amendment of. See Amendment. 
 
 is a contract, 96 n (a). 
 
 power of State to amend, alter and repeal, 97 n. 
 
 power of State over, how reserved, 97 n. 
 
 surrender of, in consolidation, 631 «.(«;. 
 
 forfeiture of. See Foefeitubb. 
 
 acts not permitted by, 729 n., 740. 
 CHECKS, corporations may draw, 256. 
 
 fraudulently certified, 337 n. 
 
 issued ultra vires, 742. 
 CHURCH PROPERTY. See Charitable Corporations. 
 CHURCH WARDENS, Id, 20. 
 CIRCULARS, misrepresentations in, 336 n. 
 CITIES. See Municipal Corporations. 
 CIVIL CORPORATIONS, 18. 
 
 COLLATERAL, AGREEMENTS. &« Parliament, applications to. 
 COLLEGES, 18, 50. 
 
 COLLIERY COMPANIES may issue negotiable instruments, 255. 
 COLLUSION between subscribers and agents, 155 n. 
 
 between stockholder and rival company, 653, 653 n.(b). See Suit 
 IN Equity. 
 COLORABLE SUBSCRIPTIONS, effect of, 154, 155 h. 
 COMMERCIAL, meaning of term, 18 n. 1. 
 COMMERCIAL CORPORATIONS, varieties of, 18. 
 
 business of. See, Business. 
 
 may alienate all their assets, 131. 
 
 may buy, etc. , on credit, 208. 
 
 power of, to apply to Legislature.' See Parliament, applications to. 
 
 power of, to issue negotiable instruments, 255 n.{a). 
 disfranchisement not incident to, 45. 
 
814 INDEX. 
 
 COMMERCIAL CORPORATIONS— confinMec?. 
 
 lands of. See Lakds. 
 
 applications to parliament by. See Pabliamknt, applications to. 
 COMMISSIONERS. <S«« Public Bodies. 
 
 charitable, 32. 
 
 county are qtiasi sole corporations, 20 n.(a). 
 
 hold funds in trust, 311. 
 
 to receive subscriptions, before organization, 154 n. 
 
 subscriptions made to, 154, 155 n. 
 
 acts of, before organization, 520 n.(V), 571 n. 
 COMMITTEE appointed by managing body, 543, 544. 
 
 how summoned to meet, 544, 545. 
 
 rules of action for, 544 n.(a). 
 COMMON CARRIER may contract to carry beyond his line. See Railway 
 Companies. 
 
 cannot make discrimination of persons, 434 11.(0). 
 COMMON OFFICIALS, coiporations having, when chargeable with notice 
 
 thereby, 504. 
 COMMON SEAL. See Seal. 
 COMPANIES. See Cobpokatiosts. 
 COMPENSATION. See Eminent Domain. 
 
 for private property taken for public use, 73 n.(a), 372 n., 378 w., 
 383 re. (a). 
 
 in some States, to be made before the property is taken, 378 n. 
 
 not a condition to entry for surveys, 73 n.(a), 
 
 for temporary occu|>ation of land, 74 n. 
 
 elevated railroads, 385 n. (a). 
 
 not necessary for taking fee of street, 378 n. 
 
 not necessary for taking property of the State, 379 n. 
 COMPETING RAILROADS. /See Rival Companies; Traffic Abrange- 
 
 MBNTS. 
 
 cannot consolidate in New Hampshire, 417 ».(a). 
 COMPETITION, contracts to prevent, 417 «.(«). 
 
 favored by the law, 434 n.(a). 
 
 acquisition of lands by railway company to prevent, 88 n.(a). 
 COMPULSORY POWERS. See Powers. 
 CONDEMNATION. See Eminent Domain. 
 CONDITIONS, precedent, 529. 
 
 personal, 529. 
 
 as to limitation of duration of corporation, 786 n.(a). 
 
 forfeiture of charter for breaking, 786 n.(e). 
 
 the State alone can take advantage of breach of, 787 n. 
 
 subscriptions upon, 155 n. 
 CONGRESS. See Legislature ; Pabliament. 
 CONNECTING RAILROADS, contracts to carry through on, 90 ».(»). 
 
 contracts between, for through transportation, 415 w.(a). 
 
 consolidation of, favored in U. S., 648. 
 
INDEX. 815 
 
 CONSIDERATION for shares. See Shakes akd Stock. 
 
 for preliminary subscription, 174 n.{a). 
 
 implied from a seal, 466. 
 
 must be repaid by corporation repudiating contract ultra vires, 717.. 
 See Account. 
 
 failure of, ground for' recoupment, though the contract is ultra vires, 
 718. 
 CONSOLIDATION, meaning of, 631 ra.(a). 
 
 an American term, supplanting amalgamation, 631 n.(a). 
 
 distinguished from amalgamation, 031 n.{a). 
 
 power of Legislature over, 683. 
 
 consent of Legislature to, 633. 
 
 rights of stockholders, 633-637. 
 
 effect of, 637. 
 
 rights of creditors of original corporation, 638. 
 
 of corporations created by different States, 639-648. 
 
 statutes regulating, 642. 
 
 whether favored in U. S., 418 n., 643. 
 
 single shareholders may prevent, 634. 
 
 effected by eminent domain, 634. 
 
 non-assenting stockholder relieved from liability by, 634, 635, 
 
 old corporation put an end to by, 683, 637. 
 
 new corporation formed by, 633, 687. 
 
 creditors not prejudiced by, 638. 
 
 creditors cannot prevent, 638. 
 
 company may be sued under new name after, 639. 
 
 formalities must be followed in, 638. 
 
 under permissive authority, 634. 
 
 both corporations need not be specified in act authorizing, 633. 
 
 new company liable only as assignee of old, 633. 
 
 what. language will authorize, 633. 
 
 authority for, given in charter, 685. 
 
 provisions as to debts of old companies, 638. ^ 
 
 jurisdiction of federal courts after, 639. 
 
 afterwards dissolved, 730. 
 CONSTATING INSTRUMENTS, 87, 41. 
 
 mode of interpreting, 63. 
 CONSTRUCTION, strict against grantee ii-om State, 63 n. 
 CONTEMPT, liability of corporation for, 369 n. 
 
 fictitious suits are in, 654 n. 
 CONTINGENCY FUND. 5«e Reserve. 
 CONTINUOUS IDENTITY of corporations, 3 w., 8. 
 CONTRACTS. See Business ; Ultra Vires. 
 
 not presumed ultra vires, 37, 38 n. 
 
 ultra vires object invalidates, 80. 
 
 as to shares and stock. See Shakes and Stock. 
 
 referring to applications to the Legislature. See Parliament, ap- 
 plications to. 
 
S16 INDEX. 
 
 CONTRACTS -coraiJMe(Z. 
 
 induced by fraud, 348. 
 
 between directors and corporations, 479, 479 n.{a). 
 
 between corporators and corporation, 481 v., 483 n. 
 
 on behalf of future corporation, 553. 
 
 direct liability of corporation for, when ultra vires, 715 et seq. 
 
 receipt of benefit by corporation does not icake contract valid, 
 though vltra vires, 715. 
 
 but the consideration must be repaid, 717. See Account. 
 
 defense of ultra vires to, when partly executed, not favored, 739 n.(a). 
 
 liability of agents on. See Agents. 
 
 liability of officials on. See Officials. 
 
 liability of corporation on. See Liability. 
 
 charters are, 96 n.(a). 
 
 must have a purpose intra vires, 113. 
 
 distinction between special and simple, 541, 542. 
 
 executory and executed, distinguished as to vltra vires, 43, 739 n.{a). 
 
 executory and executed, distinguished as to formalities, 455 et seq. 
 
 of carriers to carry beyond their own lines must be express, 437. 
 
 of subscription induced by fraud, 330 n. 
 
 induced by fraud, voidable not void, 349. 
 
 indemnity of agent for, 505. 
 
 may be made by a msjoi^ty, 6fi3. 
 
 the United States is a corporation and capable of making, 11 n. 
 
 creating monopolies, void, 418 n. 
 
 of (Zg/acto directors, 533 n.(c). 
 
 obligation of, protected by U. S. constitution, 96 n.{a). 
 
 corporation can make, 65 n.{a). 
 
 presumed valid, 730. 
 
 formed by taking stock, 78 v. 
 
 repudiation of, for cause, 348. 
 
 repudiation of, when ultra viie--, 81. 
 CONVEYANCES to charitable uses, 53 n. 
 
 containing restrictions, 111. 
 CORPOBATE CAPACITIES. See Powers. 
 CORPORATE FUNDS. See Bokough Funds. 
 
 applied to preliminary expenses. See Pkomotbrs and Pkojbctobs. 
 
 applied to legal proceedings. See Costs ; Legal Proceedings. 
 
 cannot be applied to legal proceeding for destruction of corpora- 
 tion, 381 n.(a). 
 
 diversion of, 49 et seq. 
 
 are held in trust for creditors, 793 n. 
 
 may be followed into hands of third parties, 793 n. 
 
 applied to expense of applications to the Legislature, 300 et seq. 
 See Paeliament, applications to. 
 
 applied to opposing applications to parliament, 312. 
 CORPORATE PROPERTY. &e Assets; Capital; Lands. 
 
 power of corporation to utilize, when idle, 66. 
 
INDEX. 817 
 
 CORPORATE FnOp-Bmr-continued. 
 
 and to sell or lease, 67. 
 
 cannot be used for uUm vires purposes, 109. 
 
 mortgage may be executed on after-acquired, 235, 335 n.{a). 
 
 alienation and dissipation of, not ultra vires, 779. 
 
 should be divided upon dissolution, 636, 637. 
 
 may be taken by eminent domain, 876 n., 401 ».(a). 
 CORPORATIONS, definition and description of, 1. 
 
 attributes of, 3, 16. 
 
 location of, 3 n.(b). 
 
 ordinary incidents of, 9, 16. 
 
 varieties of, 17. 
 
 division of, according to their oWect, 17. 
 ■ how created, 21. 
 
 division of, according to method of creation, 21. 
 1. By common law, 21. 
 3. By prescription, 81. 
 
 3. By implication, 23. 
 
 4. By charter, 23. 
 
 5. By act of parliament, 23. 
 membership in. See Membership. 
 meetings of. See Meetings. 
 
 ecclesiastical. See Ecclesiastical Gokporation8. 
 
 charitable. See Chakitablb Cobpobations. 
 
 municipal. See Municipal Cobpoeations. 
 
 commercial. See Commercial Cobpokations. 
 
 non-commercial. See Non-commeiicial Cobpoeations. 
 
 quasi. See Qitasi-Coepobations. 
 
 business of. See Business. 
 
 powers of. See Powees. 
 
 public. See Pcblic Bodies. 
 
 private. See Peivate Coepobations. 
 
 power to form partnership. See Paetnekship. 
 
 created by two States, 445, 689. 
 
 distinguished from partnerships, 472, 473. 
 
 de facto, 787 et seq. 
 
 torts of. See Toets. 
 
 crimes of. See Ceimes. 
 
 dissolution of. See Dissolution. 
 
 are not trustees for stockholders, 197 n. 
 CORPORATORS. See Shaeeholdees ; Members. 
 
 may sue corporation and be sued by it, 3 ra.(a). 
 
 contracts of, with corporation, 481 «., 482 n. 
 
 not estopped when corporation is, 785. 
 
 deed of settlement is private act of, 508 n. 
 COSTS. See Legal Peoceedings. 
 
 bonds as security for, 276. 
 52 
 
818 INDEX. 
 
 COSVSi—eoniinued. 
 
 liability of corporate funds for, 279 et seq. 
 
 funds only liable when corporate interests are affected, 283. 
 
 incidental to applications to parliament. See Parliament, applica- 
 tions TO. 
 
 COUNCILLORS, town, election of, 281. 
 
 COUPONS may be dissevered from bonds, 270, 271. 
 
 retain commercial character of bonds, 270. 
 
 interest on, 270, 271. 
 
 statute of limitations applied to, 271. 
 
 detached, are still liens on the mortgage, 271. 
 
 may be sued on independently by the holder, 270. 
 COURT, and not Legislature, must decide if charter is forfeited, 787 n. 
 COVENANTS in conveyances restricting use of land. 111. 
 
 not to oppose applications to parliament, 297, 298. 
 
 implied, on the part of grantor, 114. 
 CREATION of corporation, by common law, 21. 
 
 by prescription, 21. 
 
 by implication, 22. 
 
 by charter, 23. See Charter. 
 
 by act of parliament, 33. 
 
 by two States, 445, 639. 
 
 under general acts, 3 ra.(J), 33 n.(b). 
 CREDIT. See Debt. 
 
 letter of, assignment of, 257 n. 
 CREDITORS, priority of, over stockholders, 205 re. (a). 
 
 rights of, in case of amalgamation, 618. 
 in case of consolidation, 638. 
 in case of dissolution, 808. 
 
 funds of corporation are held in trust for, 793 n. 
 
 right of, to interfere to prevent dissolution, etc. 793. 
 
 may prevent transfer of assets, 794. 
 
 stockholders are not, 197 n. 
 
 cannot 'prevent consolidation, 638. 
 
 not prejudiced by consolidation, 638. 
 
 have a lien on assets of corporation, 205 n.{a). 
 CRIMES, as ground for disfranchisement of member, 45> 
 
 liability of corporation for, 366, 367 n.(,a). 
 
 in which mental element is negligence, 367. 
 
 contempt. See Contempt. 
 
 malice an element in, 367, 367 n.(a). 
 
 torts against the public are, 366. 
 
 non-feasance and mis-feasance, 367 n. 
 CUSTOM. See Usage. 
 
 waiver implied from, 535. 
 CY-PRB8, observance of formalities, 534. 
 
INDEX. 81® 
 
 DAMAGES necessary to exercise of special powers, 383. 
 
 authorized by the Legislature, 383, 383, 383 n.{a). 
 
 consequential, 383 n.(a). 
 
 exemplary, against corporations, 358 n.(i). 
 DEATH, injury causing, 369 n. 
 DEBENTURES. See Bonds ; Kbqotiablb Instetjments. 
 
 may be issued by corporations, 330, 357, 500. 
 
 issued in excess of borrowing powers, 763 n.(a). 
 
 what are, 280. 
 
 varieties of, 330. 
 
 ordinary bonds, 330. 
 mortgages in fact, 330, 163. 
 
 may be issued under power to issue ordinary negotiahle inStrumentH, 
 357. 
 
 mortgage debenture acts, 357. 
 
 consideration payable in, 257. 
 
 "debenture bonds," 359. 
 
 when taken subject to equities, 360, 368 n., 269 n. 
 
 effect of, in chancery, 357. 
 at law, 261. 
 
 exact import of, 364. 
 
 negotiability of, 265. 
 
 pass by delivery in United States, 268 n. 
 
 legal title of, in bona fide possessor, 269. 
 
 priority of holders of, 230. 
 
 usage as affecting transfer of, 268 n. 
 DEBTS. Bee BoaHOWiNQ ; Loans ; Negotiable Instruments ; Sectjhities. 
 
 power to incur, 307 eit seq. 
 
 commercial corporations may buy, etc., on credit, 308, 311. 
 
 power to overdraw banking account. See Banking Account. 
 
 of consolidating companies survive, 638. 
 
 corporation may give note, bond, mortgage, or certificate of deposit, 
 as evidence of, 233 n. 
 
 See Borrowing ; Negotiable Instkumbnts. 
 
 assets are trust fund for payment of, 205 n.{a). 
 
 to corporation cannot be sot off by shareholder, 661, 663. 
 DECAY of members works dissolution, when, 794. 
 DECLARATION of dividends. See Dividends. 
 
 See Represent ations. 
 DEED OF SETTLEMENT, what is, 507 n. 
 
 act contrary to, 506, 506 n., 507 n. 
 
 is private act of shareholders, 508 n. 
 
 public have access to, 473, 508 n. 
 
 notice to be taken of, 508 n. 
 
 of joint-stock companies, 160. 
 DEED OF TRUST. See Mortgage. 
 DEEDS, title, deposit of, as security, 325. 
 
^20 INDEX. 
 
 DE FACTO DIRECTORS. See Dibectoks. 
 acts of, 523 n.(c). 
 calls made by, 150. 
 power of, cannot be collaterally impeached, 150. 
 
 DEFECT OF iiUTHORITY in agent cured by ratification. See Ratifica- 
 tion. 
 
 in agent as a defense to action on negotiable paper, 459 n.(a). 
 DEPENDANTS. See Actions ; Pakties ; SriTS in Equity. 
 
 in actions to restrain corporations, 653. 
 DEFENSES, vltra vires as a defense, 739 n.(a)-749. 
 
 absence of formalities as a defense. See Formalities. 
 
 to negotiable instruments, arising from want of power, good against 
 all, 372 n.(a). 
 
 to negotiable instruments, for irregularities, good only against those 
 with notice, 272 n.(a). 
 
 fraud as a defense to actions on subscriptions. See Fraitd. 
 
 illegal election of directors not a defense, 150 n.(b). 
 DELEGATION of powers by corporation. See Powers; Tbanspbb. 
 
 of authority by directors to agents, 493 n. 
 
 of power to make calls, 492 n. 
 
 of right of eminent domain by the State, 372 n., 395 v.{a). 
 by general statute, 373 n. 
 DELIVERY, debentures pass by, 268, 268 n., 269 n. 
 
 of certificate of stock with blank assignment, 178 n., 179 n. 
 DEPOSIT, certificate of, as evidence of debt, 223 n. 
 DEPOSIT NOTE assignable, free from equities, 257 n 4. 
 DEPOTS, mortgage covering, 288. 
 
 land taken for, by eminent domain, 380 n.{a). 
 DEVISE, powers of corporations to take land by, 11, 11 n., 12 n. 
 DIRECTORS. See Agents ; Opficiais. 
 
 de facto may make calls, 150. 
 
 cannot vary capital, 159 n. 
 
 discretion of, as to dividends, 201 n.(a). 
 
 as agents of corporations in legal proceedings, 286 n.{l). 
 
 cannot apply to the Legislature for the corporation, 304 n.(a). 
 
 are merely agents, 445. 
 
 can act out of the State, 445. 
 
 exact position filled by, 467 et seq. and notes, 485 n.{a). 
 
 are agents of corporation, not of shareholders, 467 n. 
 
 powers of, derived from cbarter, 438. 
 
 distinguished from trustees of charitable corporations, 470 «. (a). 
 
 as special or general agents, 470, 470 »..(//). 
 
 when third persons must know powers of, 471 «., 758 n.{a), 759. 
 
 misrepresentation of authority by, 755 et seq. 
 
 " u'tra vires " of, 472, 476. See Ultra Vires. 
 
INDEX. 821 
 
 DIRECTORS— co»<j«M«(?. 
 
 third persons are bound by actual notice of limitations to powers of, 
 
 cannot be interested in contracts with the corporation 479 n (a) 
 duties of, 483, 484 et seq. 
 responsibility of, for vote, 484 n.{c). 
 
 for absence from meeting, 484 n.(c). 
 express powers of, 487. 
 
 implied powers of, 488, 489n.(«), 480 n.{b), 493, 494 n.{n). 
 cannot apply to Legislature to enlarge corporate powers, 489 n.('j). 
 cannot alienate necessary property, 489 n.{b). 
 when powers can be delegated by, 490, 493 n.{a). 
 powers of, to permit surrender and cancellation of shares, 496 et seq. 
 
 to forfeit shares, 498. 
 
 to borrow, 499. 
 
 to mortgage, 499, 499 n..(J). 
 knowledge of, and notice to. See Notice. 
 representations and admissions of, 503. 
 formalities in appointing, 533. 
 de facto, 533, 333 n.{e). 
 
 must observe formalities in retiring, 536 et seq. 
 meetings of, 537 et seq. See Meetings. 
 must act as a body, 538 n.{a). 
 quorum of. See Quokctm. 
 meaning of " president and directors," 543 n. 
 may appoint committees, 543, 544. 
 refusal of, to sue, 645 re.(a). 
 ratification of acts pf. See Ratification. 
 ratification by. See Ratification. 
 actions in respect to acts ultra vires of, 696. 
 illegal election of, cannot be raised collaterally, 150 w.(J). 
 powers of, as regards legal proceedings, 500. 
 de facto, acts of, 533 n.(c). 
 
 calls made by, 150. 
 
 power of, cannot be collaterally impeached, 150. 
 may appoint committees. ,8«« Committee. 
 representations of, are representations of corporation, 334. 
 
 personal liability for, 338 n. 
 embezzlement by, 675 n.(a): 
 usurpation of oflBce of, 378. 
 refusal of, to institute legal proceedings, 378«.(a). 
 discretion of, in adopting legal proceedings, 386 n.(5). 
 should be indemnified for advances in legal proceedings, 386. 
 mortgages made by, 317 
 
^22 INDEX. 
 
 MSECTOHS— continued. 
 
 can sell and transfer promissory note, 495 n. 
 cannot sell bonds of the company-, 495 n. 
 
 steamboat, 495 n. 
 cannot allow overdrafts, 495 n. 
 presumption of knowledge of formalities by, 511. 
 illegal act of, not ratified by acceptance of dividend by stockholder, 
 
 163 n.(a). 
 
 DISCOUNT, shares issued at, 143, 144. 
 DISCEETION of directors. See Dikectobs. 
 
 as to exercise of powers, 402 et seq. 
 
 of majority in internal affairs, 664 ».(a). 
 
 of court of equity, 395 et seq., 714re.(a). 
 
 in declaring dividends, 201 n.(fl). 
 DISCRIMINATION in distribution of profits restrained, 202 n.{a}. 
 
 as to fares, 436. ' 
 
 by common carriers, when legal, 436, 437. 
 DISFRANCHISEMENT incident to non-commercial corporations, 45. 
 
 ground for, 45 n.(a). 
 
 member entitled to notice and hearing before, 45 n.(b). 
 
 for crimes, 45. 
 DISPUTES which prevent corporation from acting, 669 et seq., 669 n.{d). 
 
 interference of courts in. 8ee Ihterfekencb of Cotjrt. 
 DISSENTING MEMBERS. See Membeks. 
 DISSOLUTION. See Amalgamation ; Westdino-up. 
 
 of corporation, how far involved in amalgamation, 607. 
 how effected, 786 et seq. 
 by limitation, 786 n.(a). 
 
 by direct act of the crown, 786. 
 
 by forfeiture, 786 n. (e).. See Fobfbiture. 
 
 crown can only cause, for good reason, 786. 
 
 by scire facias, 786, 787. 
 
 fey quo warranto, 787. 
 
 procedure in New York, 788 n. 
 
 not caused by illegal acts, 788 n. 
 
 the State must interfere, 7887?. 
 
 fey surrender of charter. See Stjrkender. 
 
 payment of salaries upon, 803 7i.5. 
 
 voluntary, 791 et seq. 
 
 of charitable corporation, 791 n.{a) . 
 
 right of third parties to interfere to prevent, 793. 
 
 by demise of members, 794. 
 
 by act of parliament, 794. 
 
 not caused by want of officers, 795 »., 795 7i.(a). 
 
 nor by insolvency, 795 n.{a). 
 
 by winding-up, 797 et seq. 
 
INDEX. 823 
 
 HmSOLUTlOlif— continued. 
 
 consent of corporation to, '797 n.(J). 
 
 property should be divided upon, 638, 637. 
 
 effect of, 803. 
 
 BIVERSION of corporate funds, 29 et seq. 
 
 of property of charitable corporation, not in power of .Legislature 
 51 n.(c). ' 
 
 of municipal property is a breabh of trust and ultra vires, 58. 
 of funds to aid application to parliament. See Parliament, appli- 
 cations TO. 
 
 DIVIDENDS. 5e«PK0PiTS. 
 
 milst be earned before paid, 173 ra.(a), 195, 303. 
 
 but all liabilities need not be first cleared off, 195. 
 
 payable in money, or how, 199, 199 n.(a). 
 
 declaration of, discretionary, 201 n.(a). 
 
 when property in, passes, 303 n.(a). 
 
 must be equable, 304 n.(a). . -^ 
 
 improperly declared, may be recovered back, 305 ».(a). 
 
 after declaration of, corporation chopped as to earnings, 304 n. 
 
 become a trust fund after declaration, 203 n.(a). 
 
 may be retained as pledge for debt due from shareholder, 304 n. 
 DIVISIOK of capital into shares, 161. 
 
 of profits. See Dividends ; Pbofits ; Teaffic Arkangembnts. 
 DOMICILE of corporations, 276 «.(c). 
 
 as to United States courts, 276 n.{e). 
 
 powers of corporation outside of its, 443 n.(a). 
 DONATION by commercial corporation to charitable object, 36 fl.(a). 
 DRAFTS. See Negotiable Instruments. 
 
 power of corporation to make and accept, 333 n. 
 DURATION. See Dissolution. 
 
 of corporation usually limited, 8, 8 n.(a). 
 
 may be ended by eminent domain, 8 n.(a). 
 
 effect of limitation of, in charter, 786 n,(a). 
 
 after dissolution, for purpose of settling affairs, 793 n. 
 
 how far majority can control, 636. 
 
 EARNINGS. /»«« Dividends ; Profits. 
 
 net, what are, 195 re.(c). 
 
 mortgage of future, 236 n. 
 EASEMENT taken by eminent domain. See Eminent Domain. 
 
 exercise of eminent domain results in, 113. 
 ECCLESIASTICAL CORPORATIONS in England, 17, 47 et seq. 
 
 subdivision of, 17. 
 
 existing at common law, 31. 
 
 visitors of, 47, 48. 
 
 doctrine of uUra vires applied to, 48. 
 
 right of appointing ecclesiastical corporations sole, 48. 
 
^2i INDEX. 
 
 ECCLESIASTICAL COUVO^ATlOUfS-continued. 
 rights and privileges of, 48. 
 rights over corporate property, 48, 49. 
 jurisdiction of ecclesiastical courts, 49. 
 
 EJECTMENT brought against tenant of corporation may be defended by 
 
 the corporation, 286 n.^i), 
 ELECTION, place of. See Meetings. 
 
 party aggrieved by, remedy of, 670 n. 
 
 mandamus to compel, 670 n. 
 
 enjoining, 670 n. 
 
 quo warranto after, illegal, 670 n. 
 ELEEMOSYNARY CORPORATION. See Charitable Corpobations. 
 
 description of, 18. 
 
 visitors of, 49. 
 
 trustees of, not governed by same rules as directors, 470 n.(a), 
 
 curators of, 470 n.(a). 
 ELEVATED RAILROADS, 385 n.(a). 
 EMBEZZLEMENT by president or director, 675 re.(a). 
 EMINENT DOMAIN. See Powers. 
 
 right of pre-emption of original owner of land taken under, 68, 
 99 7i.(a). 
 
 right of, 73 n.(a), 371 n. 
 
 reverter of land taken under, 99 re. (a), 106 n.(a), 
 
 exercised on streets, depends on whether public owns the fee or an 
 easement, 100 n, 
 
 ownership of land under, 100, 106 n. {a). 
 
 exercise of results in easement, ItS. 
 
 what are public purposes, 373 n., 373 n. et seq. 
 
 exercised by gas companies, 374 n. 
 
 franchises may be taken by, 8 n.(a), 97 n., 372 n., 375 n., 401 n.{a), 634. 
 
 property of the United States may be taken under, 377 n. 
 
 distinguished from taxation and " police power," 378 n. 
 
 right to change use of property taken under, 99 n., 378 n., 379 n.{a). 
 
 extends to lands for necessary buildings and appendages, 380 n.{a). 
 
 superfluous property taken under, 381, 381 n.(a), 882 n.(a). 
 
 consequential damage from, 383 ».(«). 
 
 compensation under, 372 n., 378 n., 383 n.{a). See Compensation. 
 
 right of, must be expressly conferred, 377 n. 
 
 constitutional provisions as to, 378 n. 
 
 exercised by elevated railroads, 385 n.(a). 
 
 how much title taken by, 388 n.{a). 
 
 taking land for temporary purposes under, 390 n.(a). 
 
 conflicting claims of two corporations under, 391 n. (a). 
 
 discretion as to choice of land, 393 n.(a). 
 
 power to change route, 392 n.(a), 393 n.(a). 
 
 exercised by private persons, 393. 
 
 right of, cannot be included in a lease, 398 n.(b). 
 
IJSDEX. 825 
 
 EMINENT nOUAlN-eontinued. 
 
 right of, cannot be transferred, 398. 
 
 shares may be taken under, 401?i.(a). 
 
 consolidation efiected by, 634. 
 
 delegation of right of, by the State, 373 n. 
 
 when delegated, power of, must be strictly pursued, 395 w. (a). 
 
 easements may be taken by, 873 n. 
 
 necessity for taking private property, Legislature must decide, 373 ». 
 
 what is public use. See Public Use. 
 
 manufacturing purposes, 873 n. 
 
 railways, 373 n. 
 
 highways, etc., 373 n. 
 
 aqueducts, canals, 373 n. 
 
 courts, school-houses, 373 n., 374 n. 
 
 gas-works, 374 n. 
 
 water- works, 374 n. 
 
 drains and sewers, 374 n., 375 n. 
 
 mill-dams, 375 n. 
 property of corporation may be taken by, 376 n. 
 right to take land for the purpose of digging materials, 380. 
 compensation to corporation for lands taken by, belongs to its cap- 
 ital, 198 n.(ci). 
 EQUITABLE OWNER. See Ckstuis que trustbnts. 
 
 of shares, may sue to restrain ultra vires acts, 649, 649 n. (c). 
 EQUITIES, transfer of debenture, subject to, 360. 
 transfer of deposit note, free from, 357 n. 4. 
 
 letter of credit, free from, 357 n. 4. 
 EQUITY. See Suit in Equity. 
 
 ESCHEAT of lands held by religious and charitable corporations in Terri- 
 tories of the United States, 11. 
 ESTOPPEL by acquiescence in division of capital, 168. 
 as to validity of mortgage, 334 «. 
 of corporations as to agent's acts, 459 re.(a), 533, 534. i 
 
 receiving advances in contract ultra vires, 734, 739 n.(a). 
 
 for act vltra vires of an agent, 784. 
 
 does not involve estoppel of corporators, 785. 
 distinguished from ratification, 459 n.(a). 
 as to defense of ultra viref, 740. 
 as to acts of projectors. See Recognition. 
 as to formalities, 730. 
 EUROPEAN ARBITRATION, 623, 633 w. (a). 
 EVIDENCE, requirements as to, in case of formalities, 539. 
 of incorporation, user of seal not conclusive, 8. 
 against incorporation, non-user of seal as, 5, 6. 
 of incorporation, recognition by Legislature conclusive, 33 n.(a). 
 EXCESSIVE LOANS. See National Banks. 
 
 valid as against ignorant creditors, 731, 733, 734 et seq. 
 
S26 INDEX. 
 
 EXECUTIVE COMMITTEE. See Committee. 
 EXECUTORS, liability of, for shares, 140. 
 
 EXECUTORY AND EXECUTED CONTRACTS, as to doctrine of ullra 
 vires, di.stinguished, 43, 739 n.{a), 747, 748. 
 
 distinguished as to formalities, 455 et aeq. 
 EXEMPLARY DAMAGES against corporations, 358 n.Q>). 
 
 malice implied as ground for, 358 ?i.(J). 
 
 gross negligence of agents ground for, 358 ra. (5). 
 EXPRESS COMPANY, contract giving monopoly of transportation to, void, 
 
 434 n.{fl). 
 EXPULSION. See Disfbanchisement. 
 
 ground for, 45 n.{a). 
 
 incident to trading corporations, 45. 
 
 right to notice and hearing before, 45. 
 
 FAILURE OF CONSIDERATION, ground for recoupment, though the con- 
 tract is ultra vires, 718. 
 FALSE IMPRISONMENT, liability for, 361, 363. 
 FEDERAL COURTS, domicile of corporation as to, 376 n.(c). 
 
 jurisdiction of, as to corporation created by two States* 639. 
 FICTITIOUS SUITS. See Ilmsoky Suits. 
 
 are in contempt of court, 654 n. 
 FIDUCIARY POSITION of directors, 477 et seq., iTll n.{a), 484 n.(&), 485 
 
 n.{a), 496 n.(b). 
 FINANCIAL MATTERS. See Capital; Debt; Dividends; Mortgages; 
 
 Negotiable Instruments ; Profits ; Shares and Stock. 
 FINES exacted from members for non-attendance at meetings, '439. 
 FIXTURE is rolling stock, 238 n.{a). 
 FORECLOSURE. See Mortgages. 
 FOREIGN CORPORATIONS, status of, 4, 4 n.(^a). 
 power of, to sue, 276 n.(c). 
 to take lands, 12 n. 
 EOREIGN LEGISLATURE, applications to, 298. 
 
 the court will not prevent, 298. 
 FORFEITURE. See Cancellation; Dissolution. 
 of shares for non-payment of calls, 153 n.{a). 
 power of, must be expressly given, 185, 185 n.{a), 186. 
 of shares, power of directors to cause, 498. 
 acquiescence in, 518. 
 
 of charter for neglect or abuse of franchises, 786 n.(e). 
 for condition broken, 786 n.(c). 
 for breach of trust, 786 m.(c). 
 waiver of right of, by the State, 788 n. 
 facts authorizing are for the court, and not for the Legislature, 
 
 788 n., 789 n. 
 for neglect to repair road by turnpike company, 4(53 ». 
 for sale of road by turnpike company, 403 n. 
 
INDEX. 827" 
 
 YOBFrnrVRE— continued. 
 
 of lands held by charitable corporations in territories of the TJ. S., 
 11 n. 
 
 ■where right is reserved, the State must cause, 788 n. 
 
 FORMALITIES usually directory, not imperative, 43. 
 
 in issuing securities, 239 et seq. 
 
 imperative or directory, 339 et seq.., 507. 
 
 when to be observed, 506 et seq., 506 n. 
 
 discretionary, 507. 
 
 directory, 510. 
 
 want of, cannot be set up by one bound to observe it, 511. 
 
 may be set up against him, 511. 
 
 when person is bound to know observance of, 518. 
 
 persons not bound to see to, 514. 
 
 not essential as against such persons when they act in ignorance,^. 
 515, 517 n.{a). 
 
 as to calling meetings, etc., of corporations, 518. 
 
 what are, 530-533 and notes, 533 n.{a). 
 
 waiver of, 535, 537 7i.,.561. 
 
 must be observed by director in retiring, 536 et seq. 
 imperative, 539 et seq. 
 I express, 530, 531. 
 
 implied, 580. 
 
 when equity will relieve against, 533. 
 
 waiver of, 533, 561. 
 observance of, cy pres, 534. 
 in consolidation, must be observed, 638. 
 in making negotiable instruments, ^74. 
 restrictions on amount of negotiable paper are not, 374, 375. 
 ofiScials mu:t see to, as to their own acts, 536. 
 in regard to sealing. See Seal. 
 relating to meetings of managing body, 537 et seq. 
 as to notice of meetings of managing body, 537 n.{a). 
 as to quorum. See Quobtjm. 
 as to committees. See Committee. 
 as to minutes. See Minutes. 
 as to meetings generally. See Meetings. 
 FRANCHISES. &« Eminent Domain ; Powbbs. 
 
 cannot be mortgaged, 334 n., 337, 337 n.(b). 
 
 may be taken under eminent domain, 375 ra., 401 n.{a), 634. See 
 
 Eminent Domain. 
 grants of, how construed, 380 n. 
 Legislature must consent to lease of, 401 n.(a). 
 must be wholly exercised, 403 n.(b). 
 misuse of, 710. 
 non-user of, 711. 
 
 forfeiture of charter for neglect or abuse of, 786 n.(c). 
 suspension of, by quo warranto, 787. 
 
828 XNDEX. 
 
 FBAUCmSES— continued. 
 
 usurpation of, 788 et seq. 
 
 granting of, is incident to sovereignty, 371 n. 
 
 mandamus may issue to compel exercise of, 405 n.(a). 
 
 of railroad, can be exercised only by operating the entire road, 71 
 '«.(fls), 403ra.(J). 
 
 alienation of, 237 re.(6). 
 
 mortgage and alienation of, authorized by State, 237 n.{b). 
 
 mortgage of, does not convey corporate existence, 237 n.{b). 
 FRAUD. See Mtseeprebentation. 
 
 subscriptions obtained by, void, 153 n.{b). 
 
 requisite of, to sustain action at law, 833, 838 n.(a). 
 
 corporations liable for, when directly committed, 333. 
 
 doctrine of ultra vires applied to, 333 n.{a). 
 
 committed through agents, 335, 335 n.(a), 336, 336 71 , 337 v. 
 
 liability in equity for agents, 338, 338 n.{a). 
 
 agents must act in the scope of their authority to make coiToration 
 liable for their, 344, 345. 
 
 contracts induced by only voidable, 848. 
 made valid by laches, 348, 348 n.(a). • 
 
 upon minority or particular members, 683. 
 
 upon the corporation as a whole, 67.5. 
 
 by representations enhancing value of stock, 334. 
 
 by directors, 334. 
 
 in error in time table, 835. 
 
 false representations by agents, 835 n.(a). 
 
 misrepresentations in soliciting subscriptions,- 336 n. 
 
 in falsely certifying checks, 337 n. 
 
 vitiates entire contract, not part only, 338 n. 
 
 personal liability of directors for, 338 n. 
 
 as a defense in an action at law, 38!T n. 
 
 action for, against corporation, 349, 350. 
 
 contract induced by, voidable not void, 349. 
 
 of agent, ratified by corporation, 350. 
 
 repudiation by person aggrieved of contract tainted by, 350. 
 
 interference of equity to prevent, 673 n.(a). 
 
 conduct of majority amounting to, 671, 672. 
 
 on corporation may be conflnned and condoned by a majority, 675. 
 " may be waived, 153 7i.(5). 
 
 FR\.UDS, STATUTE OF, contracts under, 461, 461 n.(a). 
 FRIENDLY SOCIETIES, statutes relating to, 55. 
 
 treasurer or other officer of, made a j'Wrtsi- corporation, sole by stat- 
 ute, 20,31. 
 
 rules of, supplement the statute, 55, 
 FUNDS. See Corpobatb Funds. 
 
 FUTURE ACQUISITIONS, mortgages of, 235, 235 n.(a). 
 FUTURE BUSINESS. See Traffic Abkanqements. 
 
 agreements to divide, 417, 417 n.{a). 
 
IXDEX. 829 
 
 GAS COMPANIES may be endowed with right of eminent domain, 374 n. 
 
 power of, to issue negotiable instruments, 255. 
 GENERAL ACTS usually govern formation of corporations in U. S., 2 n.(J), 
 23 n.(6). 
 
 GIFT, VOLUNTARY, of shares by corporation, invalid, 142, 142 n.{a). 
 GOOD WILL, purchase of, 608, 609. 
 GOVERNORS of States, j'WMi-corporations sole, 20 n.{a). 
 GRANGER QUESTION, 96 rt.{a). 
 
 the State may regulate property of corporation in public employ- 
 ment, 96 n.{n). 
 GRANTS from the State construed strictly against grantee, 63 n. 
 GUARANTEED SHARES AND STOCK. See Shares and Stock. 
 
 what are, 172. 
 GUARDIANS of the poor are jwasj-corporations, 20. 
 
 HIGHWAY may be used by railway without compensation, 100 n., 385 
 n.{a). 
 is for public purpose, 873 n. 
 HOSPITALS, 50. 
 
 HOTEL COMPANIES, letting out part of premises, 67. 
 charge on undertaking of, 248, 249. 
 payment of interest before realizing profits, 197. 
 injunction against refused, for commencing business before capital is 
 all subscribed, 155. 
 
 ILLEGALITY of act, presumption against, 38 n.(a). 
 ILLUSORY SUITS are in contempt of court, 654 n. 
 
 equity will not hear, 653 n.Q>), 653 n. 
 
 in interest of rival company, 653 n. 
 
 by a mere nominee, 652 n.(V) et seq. 
 IMMORTAL, meaning of the term as applied to corporations, 8. 
 IMPLICATION, corporations by, 23. 
 1 >I PLIED POWERS. Bee Powers. 
 
 of corporation, 29 n.{a), 41 et seq. 
 
 must be reasonable, 41. 
 
 for management, 41. 
 INCHOATE COMPANIES. See Promoters a'kd Projectors. 
 INCIDENTS of corporations. See Corporations. 
 INCOME. See Dividends ; Earnings ; Profits. 
 
 meaning of the term, 195 w.(&). 
 
 refers to gross earnings, 195 n.{b). 
 
 not synonymous with profits, 195 n.ifi). 
 
 bonds pledging, 238 n.{b). 
 INCREASE of capital stock. See Capital. 
 
 of capital of partnership, 716 n.(a.) 
 INDEMNITY, agents, when entitled to, 505. 
 
 for contracts, 505. 
 
830 INDEX. 
 
 mD^M.mTY— continued. 
 
 agents, when entitled to, for torts innocently committed, 505. 
 
 for advances in legal proceedings, 386,287 n. 
 INDICTMENT. See Ckimbs. 
 
 for injury causing death, 369 n. 
 against j'Mosi-corporations, 366 ».4. 
 for public nuisance, 369, 370. 
 INDORSEMENT. See Nbgotiablb Instrujients. 
 
 , power of corporation to make, 323 n. 
 INDUSTRIAL AND PROVIDENT SOCIETIES, statute relating to, 56. 
 INFANT, unpaid subscription of, 155 n. 
 INFORMALITIES. See Fohmalitibs. 
 INFORMATION. See Suit in Equity. 
 INJUNCTION. >9ee Actions; Attornby-Gbnbkal ; Suit in Eqdity. 
 
 corporation may be restrained form act ultra vires by, 77. See Ac- 
 tions. 
 to prevent applications to the Legislature, 388. 
 to preveiit the breaking of agreements not to oppose applications to 
 
 the Legistature, 297. 
 to restrain application to foreign Legislature, 398. 
 traffic on railway cannot be stopped by, 395 n.(c). 
 to restrain transfer of assets at suit of creditor, 794. 
 to prevent dissolution, 797 n.{a). 
 granted only to one suing bona fide and not to mere nominee, 653 
 
 re.(5) et seq. 
 to restrain wrongful issue of shares, 666, 667. 
 at instance of one or more members, 673 n.{a). 
 in case of private disputes, 671. , 
 mandatory, as to public duties, 408. 
 to restrain raising of borough-rate, 312. 
 surrender of charter, 793. 
 
 change of gauge between railways, connecting under contract, 
 416 n. 
 INJURY. /S«e Damages ; Torts. 
 
 consequential, from acts under legislative authority, 382, 383, 
 
 383 m. (a) 
 causing death, statutory remedy for, 869 n. 
 in some States by indictment, 369 n. 
 in others by civil actions, 369 n. 
 INSOLVENCY of subscriber whose subscription is unpaid, 155 n. 
 does not dissolve corporation, 795 n. 
 as affecting declaration of profits, 195 n.{a), 
 INSURANCE COMPANIES may make promissory note, 255 n.(a). 
 consent to other insurance may be parol, 521 ».(«). 
 when conditions must be written in policy, 535. 
 amalgamation of. See Amalgamation. 
 transfer of assets by, restrained by policy-holder, 794. 
 
INDEX. 831 
 
 INSURANCE COMPANIEa— continued. 
 
 effect of amalgamation of, on policy-holders. See AMALaAMATioN. 
 
 policy issued by, ultra vires, 746. 
 INTENT, corporations can have, 358 n.(b). 
 INTEREST. See Coupons. 
 
 paid in dividends. See Ditidends. 
 
 on stock, aiUowed to city, 197 n.{a). 
 
 on coupons, 370, 271. 
 
 on bonds. See Cotipons. 
 
 INTERFERENCE OF COURTS. See Actions; Injunction; Suit in 
 
 Equity. 
 in internal affairs, 660 et seq. See Inteknal Affairs. 
 courts will interfere, when necessary to business of corporation, 669, 
 
 669 n.{a). 
 
 to protect individual member from tyranny of majority, 671, 
 677-685. 
 
 to prevent ultra vires acts, 663 et seq., 673 n.(a). 
 complaints against majority, 674 et seq. 
 to prevent act outside of scope of authority, 664 ra.(a). 
 
 disobedience to corporation's constitution, 664 m.(a). 
 denied for mere error in judgment, 664 ra.(a). 
 only authorized by breach of trust, 064 n.{a). 
 to prevent issue of shares, 666, 667. 
 at instance of a shareholder, 668 n.(a). 
 to prevent wrongful diversion of money, 669. 
 to settle disputes obstructing affairs of corporation, 669 et seq., 669 
 
 n. (a). 
 to establish election, 670 n. 
 or to ordfer new election, 670 n. 
 to compel an election, 670 n. 
 by quo warranto, 670 n. 
 on application of minority, 673 n.{a). 
 only stockholders and creditors can ask for, 673 n.(a); 
 when corporation refuses to sue, 675 n. (a). 
 to appoint a receiver, 071. 
 to prevent calls for an illegal object, 153. 
 to prevent amalgamation at instance of creditor, 793 et seq. 
 INTERNAL AFFAIRS, interference of courts in. See Intbefbeence op 
 
 Courts; Injunction; Majority; Suit in Equity. 
 members assembled are supreme as to, 46, 47. 
 how far governed by majority, 660 et seq. 
 application of proceeds of calls may belong to, 153. 
 INTERPRETATION of instruments creating corporations, 63 et seq. 
 intent governed by exact working in, 63. 
 as to express and implied powers distinguished, 64. 
 INTER-STATE CORPORATION, status of, when created by concurrent leg- 
 islation, 445. 
 created by consolidation, 639 et seq. 
 IRREGULARITIES. See Formalities. 
 
833 INDEX. 
 
 JOrNT ESTATE, operation of railroad as a, 414, 414 n.{a). 
 JOINT- STOCK COMPAI^IBS are merely large partnerships, ICO. 
 variation of capital by, 160. 
 
 membership in, depends on the acquisition of bhares, 45. 
 JUBISDICTION over corporations created by two States, 639 ct seq. 
 of equity, where public interests are involved 708 ra.(i). 
 over municipal corporations and oflBcers, 707 n.{a). 
 over fraud, 58. 
 over breach of trust, 58. 
 ousted by provision for arbitration, 58. 
 
 KNOWLEDGE. See Notice. 
 
 of corporate powers presumed, 372 n.{a). 
 
 of agents and directors when imputed to corporation, 500, 500 n.(b). 
 
 acquiescence must be based on, 557. 
 
 when implied as a ground for acquiescence, 559. 
 
 of provisions of charter, presumed in third parties, 471 n. 
 
 by-laws not presumed in third parties, 471 n. 
 of agent's authority in issuing negotiable instruments, 27J ii.{a). 
 
 LACHES. See Acquiescence ; Waiver. 
 
 in rescinding contract vitiated by fraud, 348. 
 LANDS. See Mobtgagbs. 
 
 power of corporation to acquire and hold, 10, 13 n.{a). 
 
 ownership of, when dependent on contract, 97. 
 
 ownership of, under eminent domain, 100. 
 
 cannot be used for ultra vires purposes, 109. 
 
 restrictions on, by whom and for what purposes, enforced, 113. 
 
 implied covenants of grantor, 114. » 
 
 alienation of, by corporation, when valid, 116. 
 
 charged as security, 347. 
 
 eminent domain as to. See Eminent Domain. 
 
 capacity of foreign corporation to take by devise, 13 n. 
 
 if corporation cannot hold in its own name, it cannot hold in name 
 
 of another, 13 «. 
 right to lease or alienate surplus, 67 el seq. 
 right to divide surplus among shareholders, 68 n.{a). 
 reverter of, 100 n., 106 n.(a). 
 power to acquire, not exhausted by appa^'ent completion of railroad, 
 
 snn.(l>). 
 acquisition of, to prevent interference by competing lines, 88 n. 
 taken compulsorily, for railways, 373 n. 
 
 for highways, 373 n. 
 
 for aqueducts, 373 n. 
 
 for canals, 873 n. 
 
 for courts, 373 n. 
 
INDEX. 833 
 
 L A.ND S — continued. 
 
 taken compulsorily, for schoolhouses, 373 n. 
 for gas- worts, 374 n. 
 for water-works, 374 n. 
 for drains and sewers, 374 «., 375 n. 
 for mill-dams, 375 n. 
 
 power to acquire, unlimited, unless restricted by express law, 13 n.{a). 
 
 power of foreign corporations oyer, 13 n., 13 n. 
 
 ejectment brought against the tenant of corporation may be de- 
 fended by the corporation, 286 n.(b). 
 
 increase of amount of, which corporation may take, 78 n. 
 
 right to take for the purpose of digging materials, 380. 
 
 personal property sequestered before, 369 n. 
 LAPSE OF TIME. See Acqtjibscencb ; Laches. 
 LAY corporations, 18. 
 LEASE of railway, what passes by, 398 n.(b). 
 
 of property and franchises, must be authorized, 401 n.{a). 
 
 does not pass power to exercise eminent domain, 398 «.(6).. 
 
 does not relieve lessor from liability, 898 n.(b). 
 
 of corporate property not in immediate use, 67 et aeq. 
 
 of office by foreign corporation, 13 n. 
 
 by general agent of corporation, 386 n.{a). 
 
 power to, given to canal company, 13 re. 
 LEGAL PROCEEDINGS. ;8«« Action; Injunction; Suttin Eqtiitt. 
 
 corporations may be parties to, 276, 276 ».(a), 279. 
 
 where corporation refuses to institute, 377 n.{a). 
 
 must aflfect corporate rights, 281 . 
 
 ratification of, 385, 286 n.g>). 
 
 implied powers of directors as regards, 500. 
 
 refusal of directors to institute, 278 n.(a). 
 
 corporations may defend, when sued, 279. 
 
 light of corporation to interfere, when attacked indirectly, 279 et seq. 
 
 which attack the life of the corporation, 280 n.(n). 
 
 a town may incur expense of defending its school committee, 383 n. («). 
 
 a corporation cannot adopt proceedings not originated by or on be- 
 half of itself, 385. 
 
 discretion of directors in adopting, 286 n.{V). 
 
 may be sustained to defend title in ejectment, 286 n.{b). 
 
 liability of corporation for expenses in, depends on law of agency^ 
 386, 286 «., 287 n. 
 LEGISLATION, tendency to creation of corporations by general, 3 «.(5). 
 
 necessary in U.S. to creation of corporation, by special charter,33 re.(5). 
 to creation of corporation, or general laws, 2 n,(b), 23 ».(&). 
 
 power to enjoin applications for, 389 n., 290 n. 
 
 agreements to influence. See Parliament, applications tc 
 
 applications for foreign, 398. 
 
 how affected by mandamus, 289 n, 
 53 
 
834 INDEX. 
 
 LEGISLATURB. Sea Parliament. 
 
 acts as a visitor, 47 n.{a). 
 
 power of, to extend, alter, and regulate business of corporations, 
 96 n {a). 
 
 applications to. See Parliameht. appiiICATions to. 
 
 power of, over constitution of corporation, 302. 
 
 power of, over consolidation, 632. 
 
 cannot decide finally if charter is forfeited, 788. 
 
 cannot divert property of charitable corporation, 51 «.((;). 
 
 power of, to amend, alter and repeal charters, 97 n. 
 over charters, reserved, 97 n. 
 
 may delegate right of eminent domain. See Eminent Domain. 
 
 consent of, necessary to consolidation, 632. 
 
 recognition of corporation by, 22 n. 
 
 damage consequential upon acts authorized by, 382, 383, 383 n.{a). 
 
 recognition of power to mortgage by, 224 n. 
 LETTER OF CREDIT, assignment of, 257 n. 4. 
 LIABILITY of corporations and members, limitation of, 535. 
 
 on contracts. See Contracts. 
 
 to account. See Acootjnt. 
 LIBEL, liability of corporation for, 858 n.(a). 
 
 on managing body, action by corporation for, 285. 
 LIEN on stock cannot be created by by-law, 15 n.(a). 
 
 of creditors on assets of coi-poration, 205 re.(a). 
 
 coupon, detached, is still a, 271. 
 LIBIITATIONS to liability and authority of corporations and members, 535. 
 
 of corporate powers, knowledge of presumed, 372 n.{a). 
 
 to Ihe duration of charters, 8 n.(fl). 
 
 may be practically raised by eminent domain, 8 n.(a). 
 
 of authority of agent, misrepresentations as to, 755 et seq. 
 knowledge of, 272 n.{a). 
 LIMITATIONS, STATUTE OF, applied to coupons, 271. 
 LIMITED LIABILITY COMPANIES, scope of, defined by memorandum of 
 
 association, 488. 
 LOANS. See Borrowing ; Excessive Loans. 
 
 Ifmitation of amount of, by national bank, 635 n.(J), 731. 
 
 power to take, 213, 213 n.{a), 215 et seq., 217. 
 
 ultra tires, money can be recovered when it has been devoted to- 
 necessaries, 724 et seq. 
 
 calls charged with repayment of, 318. 
 LOAN SOCIETIES, 55. 
 LOBBYING, contracts for, are ultra vires, 318 n.{a). 
 
 distinguished from valid services, 318 n (a). 
 LOCAL GOVERNMENT BOARDS, powers of, 395 et seq. 
 LOCATION of corporation, 3 a. (6). 
 
 ci'eated by several States, 630 et seq. 
 
INDEX. 835 
 
 liOCATlOm—eontinued. 
 
 of railroad, not finally fixed by preliminary maps, 398 n.(a). 
 cannot usually be changed, 393 n.(a), 
 
 MAJORITY cannot divert capital or change business, 77 7i.(S). 
 of members and directors distinguished, 542 n.(J>). 
 powers of, 660 et seq., 661 n.(a). 
 of partnership, QQOetseq, 
 of corporations, 663 et seq., 662 n.(b), 675 n.(a). 
 court will prevent injustice to individual member from, 671, 674.- 
 complaints against, 674 et seq. 
 surrender of charter by, 791, 791 n.{a). 
 binds the minority at meetings, 542. 
 cannot consolidate, 633 et seq. 
 may confirm and condone acts which are a fraud on the corporation, 
 
 675, 675 n.(a). 
 how determined in such case, 676. 
 MALICIOUS PROSEODTION, liability of corporation for, 356 n., 358. 
 MANAGEMENT, capacities of corporation for, 41. 
 
 express and implied, 41. 
 MANAGING ,BODY. See Dibectoes ; Meetings. 
 MANDAMUS to restore member illegally removed, 45 n.(b). 
 , enforcement of compulsory powers by, 405 n.{a) 
 
 when granted, 405 n.(a). 
 only lies to enforce statutory duty, 405 n.(a). 
 lies against railroad company, 406, 407. 
 to compel production of books, 408. 
 
 an election, 670 n. 
 to mayor, etc., to receive vote, 281. 
 
 interference by, with legislative or executive action, 289 n. 
 MANUFACTURING CORPORATIONS. See Commbijcial CoRroRATioNS. 
 MAPS, preliminary, not binding on railway company as to loeation, 398 n.(a). 
 MARRIED "WOMEN, when shares may be held by, 142. 
 MATERIALS, right to take lands for the purpose of digging, 380. 
 
 right to sell surplus on land condemned, 382 n. 
 MEETINGS of members of corporation, 438 et seq. 
 
 notice of, 438 n.(a), 439 n.(a). See Notiob. 
 attendance at, how compelled, 439. 
 right of members to be present, 438. 
 adjourned, 441, 441 n.(b). 
 
 ordinary or general,and extraordinary or apecial,441,441ra.(<;). 
 place of, 442 n.(a). 
 observance of formalities in calling and holding, 518, 520. 
 of managing body (viz., directors), 587 et seq. 
 necessary to action, 538 n.(a). 
 quorum at. See Quorum. 
 proceedings at, 644. 
 minutes, 544. 
 
836 INDEX. 
 
 MEETmOS— continued. 
 
 of managing body, directors not present at, how far responsible for 
 action taken at, i8in.{e). 
 place of, 443 ra. (as). 
 power of majority at, 542. 
 special business at, 544. 
 ordinary and extraordinary, 544. 
 contents of notice of, 544. 
 
 of select body, 544, 545. 
 MEMBERS. See Mbmbbeship ; Shabeholdbks. 
 
 expulsion of, 45. See Disfkanohisement. 
 
 censure of. See Cbnsueb. 
 
 restoration of, 45 ra.(J). 
 
 effect of contracts to become, 136. 
 
 meetings of. See Meetings. 
 
 formal lists of, 533. 
 
 cannot be transferred without clear power. See Amalgamation. 
 
 power of, to restrain acts ultra vires by action, 643. See Action, 
 
 who are, so as to be parties in actions. See Pakties. 
 
 majority of. See Majority. 
 
 minority of. See Minokitt. 
 
 wrongs to particular, 677, 685. 
 
 suits by. See Legal Peocebdings. 
 
 when all must consent to reconstruction, 8 n.(b). 
 consolidation, 633 et seq. 
 
 legal proceedings against, defended by corporation, 279 et seq. 
 
 mistake in registering names of, 519. 
 MEMBERSHIP in corporations, 44, 136. See Shakes and Stock. 
 
 inchoate, 126. 
 
 completion of, 134. » 
 
 how ended, 187. 
 
 mandamus to restore to, 45 n. 
 
 in joint-stock companies depends on the acquisition of shares, 45. 
 
 expulsion from, 45. 
 
 right of, consideration for preliminary subscription, 174 n.(a). 
 MEMORANDUM OP ASSOCIATION. See Abticles op Association. 
 
 defines scope of limited liability companies, 488. 
 MERGER. See Amalgamation ; Consolidation. 
 
 of shares, 94 n.(a), 191, 191 n.(a). 
 MINING- COMPANIES, may make promissory notes, 255 n.{a). 
 
 superintendent of mine cannot borrow money, 495 n. 
 MINORITY. See Majobitt. 
 
 protection of. See Interfebence op Courts. 
 
 must be consulted, 660 et seq. 
 
 complaints against the majority by, 674 et seq. 
 
 frauds upon, are ultra mres, 683 et seq. 
 
 bound by majority at meetings, 542. 
 
INDEX. 837 
 
 MINUTES of meetings of managing body, 523 re. (5), 644. 
 MISDEMEANOR. See Crimes. 
 MISREPRESENTATIONS. See Fkaud. 
 
 in circulars and other documents, 336 n., 388. 
 
 of his authority by a director or other ofladal, 755 et aeq. See Ofpi- 
 
 CIAIS. 
 
 of agents, imputed to corporation, 835 et seq. 
 
 action for damages againsl; corporation for, 335 et seq. 
 as to condition of company, 885 n.{a). 
 in soliciting subscriptions, 336 n. 
 
 should be incorporated in contract of subscription to form a de- 
 fense, 386 n. 
 
 by cashiers, tellers, etc., in falsely certifying checks, 337 re. 
 
 of matter of law, 758, 758 n.{a). 
 
 in time-table, 335. 
 
 liability of official for, 755 et seq. 
 
 not implied from conduct, 759, 760. 
 
 by officials, of coi-porate powers, 760 et seq. 
 MISTAKE of law and fact distinguished, 764 n. 
 
 in registering names of members, -51 9. 
 MONETARY ARRANGEMENTS. See Financial Matters. 
 MONOPOLY, contract creating, void, 418 n. 
 
 of transportation, contracts giving to any one railway company, 
 void, 434 n. 
 
 right of eminent domain is a defense against all kinds of, 376 re. 
 
 pro rata forwarding arrangement must not create, 415 n.(a). 
 MORTGAGE DEBENTURES. See Dbbenttjebs. 
 MORTGAGEE of shares, liability of, 140 et seq. 
 MORTGAGES. See Railway Companies. 
 
 power to execute, 233 n.{a), 330, 499, 499 n.{b), 628 ra.l. 
 
 estoppel as to validity of, 224 n. 
 
 effect of express authority to execute, 327 re. (as). 
 
 capital not yet called up cannot be subjected to, 384. 
 
 other after-acquired property may be mortgaged, 285, 235 n.(a). 
 
 when after-acquired property is covered by, 236 n. 
 
 permanent way and plant of railways cannot be covered by, 236. 
 
 cannot include franchises, 224 n., 337, 237 n.{b). 
 
 made to trustees, vyho can foreclose, 644 n.(a). 
 
 made by directors, 317. 
 
 of calls, 318, 500. 
 
 of book-debts, 500. 
 
 of rolling stock, 238 n.(a). 
 
 organization of new corporation after foreclosing, 338 re. 
 
 lack of power to make, cured by recognition by Legislature, 324 n. 
 
 of vessels, 327. 
 
 made to secure bonds of a railway company, 479 n. 
 
 of undertaking, 348. 
 
 ultravires as a defense to, 741. 
 
838 INDEX. 
 
 MORTMAIN, statutes of, 11, 11 n. 
 MUNICIPAL CORPORATIONS, 19, 58. 
 
 what acts of, are ultra vires, 58-60. 
 
 power of, to make negotiable instruments, 255 n.(a), 268 n. 
 
 may defend for school committee, 283 n.(a). 
 
 no obligation to resist change of boundaries, 313 n.(a). 
 
 expense of obtaining charter, 318 n.{a). 
 
 right to change use of property of, 378 n. 
 
 powers of, whether liberally construed, 395, 395 n.(a). 
 
 when city council may delegate powers, 492 n. 
 
 diversion of property of, is breach of trust, 58. 
 
 interest allowed to, on stock, 197 n.{a): 
 
 right of eminent domain delegated to, 395 n.(a). 
 
 jurisdiction of equity over, 707 n.(a). 
 
 are trustees, 58. 
 
 permissive powers of, 394 n.{a). 
 
 bonds of, to aid railways, 270. 
 
 indictment of, for neglect of duty, 367 n.(o). 
 
 railways assisted by, 432 n.{a). 
 
 are trustees for the public, 58. 
 
 ultra vires acts of, void, 746. 
 
 ejectment by, defense lo, 747. 
 MUTUALITY in contracts, 461, 461 ra.(a), 462. 
 
 NAME, corporation must have, 3. 
 
 may have several names, 3, 3 n.(a). 
 
 acquired by usage, S n.(a). 
 
 omission of part of, 3 n. (a). 
 
 of member, mistake in registering does not affect membership, 519. 
 NATIONAL BANKS, State control over, 5 n. 
 
 limitation of amount of loan made by, 535 ».(6), 731. 
 
 ultra vires as a defense by, 731, 749. 
 
 power of, to loan on real estate, 731. 
 
 powers of, 749. 
 
 powers and liabilities of, as to special deposits, 740. 
 
 power of, to deal in government securities, 749. 
 to deal in railroad securities, 749. 
 to buy notes and checks, 749. 
 NEGLIGENCE, constituting crime in corporation, 367. 
 
 groimd for exemplary damages, 858 n.(J>). 
 
 causing death, 869 n. 
 NEGOTIABLE INSTRUMENTS. SseBoHDS; Coupons; Debbnttjbes. 
 
 power to issue, 311, 223 n.(a), 329, 252 ra.(a), 253, 253 n.Q>), 
 
 accommodation paper. See Accommodation Paper. 
 
 power to receive and transfer, 256 re. (a), 
 to indorse, 252 n.(a), 256. 
 
INDEX. 839 
 
 JJEGOTIABLE INSTRUMENTS— co?i«i«Me£?. 
 effect of seal on, 256, 257. 
 negotiable bonds. See Bonds. 
 improper issue of, 272. 
 
 held tona fide, thougb improperly issued, 272. 
 valid, though issued by wrong officials, 273. 
 liability of agents on, 754 n. 
 
 power to issue included in power to borrow, 333 n. 
 municipal corporation can issue, 355 w.(a), 368 n. 
 issued by treasurer in accordance with usage, 373 n.ia). 
 formalities in issuing, 374. 
 general power to issue cannot be restricted, 874. 
 defenses to actions on, 373 n.{a,). 
 coupoES detached retain qualities of, 371. 
 
 cashier 'hsa prima faaie power to transfer and indorse, 494 n.{a). 
 when directors can sell and transfer, 495 n. 
 NEW SHARES. See Shakes and Stock. 
 NEW STOCK. See Shakes and Stock. 
 NOMINEE of another, equity will not listen to, when plaintiff is not reaS 
 
 party in interest, 653, 653 n.(b). 
 NON- COMMERCIAL CORPORATIONS, varieties of, 18, 19. 
 
 applications to the Legislature by, 814. 
 NON-USER OP FRANCHISES, 711. 
 
 ground for forfeiture of charter, 786 n.{c). 
 not necessarily a surrender, 791 n. 
 when permitted, 711. 
 mandamus as a remedy for, 405 n.{a). 
 NOTES. See Negotiable Instkumbnts. 
 NOTICE of meetings of corporation, 438, 438 n.{a), 439, 533. 
 waiver of irregularity of, 439, 439 n,.(a). 
 all members not necessarily entitled to, 439. 
 requisites of, 440 n.{a). 
 time of, 441, 441 n.{a). 
 to directors and agents, when notice to corporation, 500, 500 n. i^. 
 formal, when not essential, 533. 
 of meetings of managing body, contents of, 544. 
 acquiescence must be based on, 557, 560. 
 may be constructive, 569. 
 where corporations have common officials, 504. 
 to be taken. of limitations of agent's authority, 373 n.(a). 
 of contents of charter, 471 n. 
 of deed of settlement, 508 n. 
 of by-laws, not presumed in third parties, 471 n. ' 
 NOVATION. See Amalgamation; Consolidation. 
 principle of, 601. 
 definition of, 601. 
 
S40 INDEX. 
 
 IfOVATrON— (!0?iiiV.i««d 
 
 in Roman law, 601. 
 
 in French law, 602. 
 
 in English law, 603. 
 
 cannot be compelled by corporation against will of creditors, 630. 
 NUISANCE, suit to restrain public, 698 et seq., 698 ». 
 
 indictment for, 369, 370. 
 
 mandamus to remove, 408. 
 
 cannot be justified upon ground of necessity, 396, 397, 397 n.(b). 
 
 jurisdiction of equity over, 709 n. 
 
 OBLIGATION, former, destroyed by novation. See Amalgamation; Con- 
 solidation ; Novation. 
 
 of contracts, cannot be impaired, 96 n.{a). 
 OBLIGATORY, powers are usually not, 402. 
 
 powers, how enforced, 405 n.{a). 
 OFFICE, usurpation of, 278. 
 OFFICERS. See Agents ; Directors ; Oppioials. 
 OFFICIALS. See Agents ; Directors. 
 
 corporations, when not bound by acts of, 476. 
 
 authority of subordinate, 504. 
 
 signature of, 531, 521 n.(J). 
 
 de facto, 522, 533 n.{c). 
 
 formalities in appointment of, 533. 
 
 ratification and acquiescence by, 563. 
 
 liability of, on contracts, 752 et aeq., 756 n.(a). 
 
 must bind the corporation to evade liability themselves, 753 n.{a). 
 
 liability of, on negotiable instruments, 754 n. 
 
 excess or misrepresentation of their authority by, 755 et aeq. 
 
 action on contract against, for misrepresentation,. 756 n.{a). 
 
 action for deceit against, for misrepresentation, 756 ra.(a). 
 
 third persons must inquire into powers of, 471 n., 768 n.(a), 759. 
 
 misrepresentation of corporate powers by, 760 et aeq., 764 n. 
 of matter of law, 764 n. 
 
 liability of, for torts, 765 et aeq. 
 
 when committed bona fide, 765 et aeq. 
 OPPOSITION to bills in parliament, contract to buy off. Bee Parliament, 
 
 application to. 
 ORDINARY CORPORATIONS distinguished from special, 32, 33. 
 ORGANIZATION, acts prior to, 520 7i.(6), 552. See Promoters and Pro- 
 jectors. 
 
 irregularity in, not considered collaterally, 520 re.(S). 
 
 preliminary existence for, 153 n.[a). 
 
 of new corporation after foreclosing mortgage, 338 n. 
 OVERSEERS OF POOR are jMasi-corporations, 30 n.{<i). 
 
INDEX. 841 
 
 PARLIAMENT. See Legislattjke ; Parliameitt, applications to. 
 corporations constituted by act of, 33. 
 formalities imposed by, imperative, 531. 
 PARLIAMENT, APPLICATIONS TO. 5«6 Bribes; LoBBTore. 
 interference of equity to prevent, 288, 289 n.{a). 
 agreements not to oppose, 297. 
 applications to foreign legislature, 298. 
 agreement not to present, 299 n. 
 contracts collateral to such agreement, 399, 316. 
 waiver of right to object to, 300. 
 expense of, 300, 301, 303, 307, 308. 
 contracts and expense preliminary to, 301. 
 by directors for the corporation, 804 n.(a). 
 whether granting of, can be anticipated, 305, 306 n.(a), 
 when cost of, provided for in charter, etc. 307. 
 commercial corporations cannot make, at corporate expense, if any 
 
 members object, 308. 
 power to resist, 309, 313. 
 cannot be made in breach of trust, 310. 
 obligation to resist, 313 n.(a). 
 by non-commercial corporations, 314. 
 promotion of, indirectly, 315. 
 
 agreements to buy off opposition, 319, 579 et seq., 581 n.{a). 
 • to pay compensation, 330, 337, 328. 
 
 to take lands, 320. 
 
 to perform works, 320. 
 such agreements binding when conditional on passing of the act, 
 
 321, 323. 
 such agreements must be within provisions of the act, 323. 
 unless the bill is modified in the Legislature, 326. 
 to extend corporate enterprise or powers, 599. 
 PARTIES, in actions, 645 et seq. and notes. 
 
 who can be plaintiff in action to restrain ultra vires act, 648 et seq. 
 
 plaintiff must be actual party in interest, 652. 
 
 who must be defendants in actions to restrain corporation, 653, 665, 
 
 688 ra.(a), 691. 
 in such case the corporation itself must be a party, 653. 
 in actions in proceedings by a majority, 674-92. 
 the plaintiff must sue for all others in his position, 685 et seq. 
 the plaintiff must be competent to sue, 689. 
 who must be defendants, 691. 
 
 attorney-general, when a party. See Attobnet-Gbnbeal. 
 PARTNERSHIP. See Traffic Areangembnts. 
 
 agreements between corporations to form, 423, 423 n. 
 increase of capital of, 716 n.(a). 
 distinguished from corporation, 217, 660 et seq. 
 proposed, liability of members of, 156. 
 
842 INDEX. 
 
 PARTNERSHIP— CTnforaMe<f. 
 
 power of, to borrow, 216. 
 
 power of member of, to open bank account, 216, 217. 
 power of majority of, 660. 
 rules of, applied to corporations, 661. 
 PART PERFORMANCE as ground for specific performance, 463. 
 PATENT, injunction to restrain assignment of, 797 n.(a). 
 PATaMENT for shares, 143. See Shakes and Stock. 
 PEERS, agreement by, not to oppose bills in parliament, 579, 581 ».(o). 
 PERJURY, corporation cannot commit, 367 n.(a). 
 PERPETUAL CHARTERS, few in the United States, 8 re. (a). 
 
 may be taken away by eminent domain, 8 n.(a). 
 PERPETUAL SUCCESSION of corporations, 1, 2, 9. 
 PERSONAL LIABILITY of shareholders. See Shareholders. 
 
 of officers, agents, etc. See Agents ; Directors ; Officials. 
 PERSONALTY, whether rolling stock is, 338 n.(a). 
 when covered by mortgage. See Mortgage. 
 shares are, 178 n.(a). 
 
 power of corporation to acquire, hold and deal witli, 10. 
 subject to sequestration before real estate, 869 v. 
 PETITION, right of. See Parliament, applications to. 
 courts cannot restrain, 389 n. 
 
 as to private and political matters, distinguished, 299 n. 
 PLACE for doing corporate acts, 443 n.(a). 
 
 for holding meetings. See Meetings. 
 PLAINTIFFS. See Actions ; Parties ; Suits in Equity. 
 
 in actions to restrain corporations, 648. 
 PLEDGE. See Securities. 
 
 POLICE REGULATIONS do not impair obligation of contracts, 96 n.(a). 
 POLICY HOLDER, effect of amalgamation of companies on. See Amalga- 
 mation. 
 transfer of assets restrained by, 794. 
 POWERS. See Eminent Domain ; Franchises. 
 of corporation to sue and be sued, 9. 
 to perform legal acts, 9, 10. 
 to purchase and hold land, 10, 13 n.(a). 
 to purchase and hold personalty, 10. 
 to sell its property, 10, 14 n.{c). 
 to make by-laws, 14, 15 n.(,a). 
 enumeration of, express and implied, 41, 43, 43. 
 to disfranchise or expel. See Disfranchisement. 
 to censure. See Censure. 
 to buy and sell, 65 n.(a). 
 to do what is ancillary to primary object, 65. 
 of commercial corporations. See Business. 
 of majority. See MAjoRiTr. 
 of corporation, express and implied. See Business. 
 
INDEX. 843 
 
 POWIERB— continued. 
 
 of corporation to deal in shares of other corporations. See Bttsikess, 
 
 over lands. See Lands. 
 special powers. See Eminent Domain ; Pbanchisks. 
 
 must be strictly followed, 371, 387. 
 
 are grants of sovereignty from the State, 371 n. 
 
 requisites of, 384. 
 
 meaning of "necessary " as applied to, 388 «.(a). 
 
 mode and time essential, 389. 
 
 override general powers, 394. 
 
 construed strictly, 380 n. 
 
 how construed as to municipal corporations, 395, 395 n.(a). 
 
 cannot be transferred, 398, 398 n.(b). 
 
 must be authorized, 401, 401 n.{a). 
 
 not usually obligatory, 403. 
 
 how enforced, if compulsory, 405 n. (a). 
 
 not alienable, 437. 
 extra-territorial, 443 n. (a). 
 misuse of, 710. 
 non-user of, 711. 
 to contract, 65 n.(a). 
 to make agreements for the arrangement of traffic. See Tbapfic 
 
 Aebangbments. 
 to borrow. See Borrowing. 
 
 to issue negotiable instruments. See Negotiable Instrtjmbhts. 
 to issue debentures. See Dbbbntdbes. 
 to give mortgages. See Mobtoageb. 
 to give bond to secure costs, 376. 
 to utilize property lying idle, 66. 
 to let out part of property, not in immediate use, 67. 
 to deal in its own shares, 94. 
 
 to take its own shares in payment of debt, 94 n.(a). 
 to hold its own shares in name of trustees, 95. 
 to vary capital. See Capital. 
 to issue preferred shares. See Shares and Stock. 
 to amalgamate. See Amalgamation. 
 to consolidate. See Consolidation. 
 to sell whole concern of corporation. See Transfeb. 
 to form partnership. See Pabtnebships. 
 to make calls. See Calls. 
 
 to use property taken compulsorily. See Eminent Domain. 
 damage from use of. See Damage. 
 alienation of. See Transfer. 
 abandonment of. See Abandonment. 
 abuse of, ground for forfeiture. See Foefbitxtbh. 
 notice of limitations of, 471 n. 
 misrepresentations of, 760 et seq. 
 
844 
 
 INDEX. 
 
 PO WERS— continued. 
 
 of public bodies, 60 et seq. 
 
 of municipal corporations. See Municipal Corporations. 
 
 exercise of, by corporation itself, 438 et seq. 
 
 at general meetings, 438 ef seq. 
 
 necessity of sealing. See Seal. 
 
 necessity of other formalities. See Formalities. 
 
 by directors and other agents. See Agents ; Directors ; Op- 
 
 PICIALS. 
 
 of directors, etc. See Directors ; Officials. 
 notice of limitations of, 372 Ti.(a). 
 misrepresentations as to, 755 et seq. 
 
 charter presumed from long exercise of, 32 n. (a). 
 
 special, of private persons, 393. 
 
 revival pf, 795. 
 PREFEBRED SHARES. See Shares and Stock. 
 PRELIMINARY business before subscription of capital, 153. 
 
 existence for organization, 153 n.(a). 
 
 purposes, assessments for, 153 n.(a,). 
 
 association, liabilities of, assumed by corporation, 571 n. 
 not itself relieved thereby, 571 n. 
 
 maps and surveys for railway. See Maps. 
 
 contracts of promoters and projectors, how far binding upon the ooi- 
 poration. See Promoters and Projectors. 
 PREMIUMS. See Dividends. 
 
 when unearned are not profits, 198 n.{a). 
 
 unearned, are primary fund for payment of losses, 198 n.(fl). 
 PRESCRIPTION. See Usage. 
 
 corporations by, 31. 
 PRESIDENT, meaning of "president and directors," 543 n. 
 PRESUMPTION. See Bttrden of Proof ; Knowledge ; Noticb. 
 
 in cases o( ultra vires, 37, 88 n.{a). 
 
 that person dealing with corporation knows its powers, 373 ».(«). 
 
 against illegality of corporation's dealings, 38 n,(a). 
 
 of validity of contract, 730. 
 
 of knowledge of formalities by directors, 511. 
 
 of knowledge of formalities by solicitors, 511. 
 
 of observance of formalities, 474 n. (J). 
 
 of existence of charter from long exercise of corporate powers, 
 33 n.{a). 
 
 that seal is affixed by proper authority, 460 ra.(a), 465 n.{b). 
 PRINCIPAL. See Agents. 
 
 PRIORITY of holders of old stock, in claim for new, 159 n. 
 of debentures, 330. 
 
 of creditors over stockholders, 205 n.(a). 
 PRIVATE CORPORATIONS may alienate all their assets, 131. 
 
IKDEX. 845 
 
 PRIVATE PERSONS, special po-wers of, 393. 
 
 rights of, in conflict with public interests, 397, 397 n.{b), 398 n.{d). 
 
 bound to know provisions of charter, 471 n. 
 
 not bound to know provisions of by-laws, 471 n. 
 PRIVILEGES. See Fbanchises ; Powers. 
 PROFITS. &« Dividends ; Income. 
 
 meaning of the term, 195. 
 
 distinguished from income, 195 n.(b). 
 
 unearned premiums are not, 198 n.{d). 
 
 prospective, during construction of railway, 198 n,{b). 
 
 may be used in extending business, etc., 300, 7i.(as). 
 
 equity will prevent unjust distribution of, 303 n.{a). 
 
 need not be periodically divided, 301 n.{a). 
 
 declaration of, affected by insolvency, 195 n.{a). 
 PROJECTORS. See Pkomoteks and Peojectoks. 
 PROMISSORY NOTES. See Negotiable Instkuments. 
 PROMOTERS AND PROJECTORS. See Scrip and Soeipholdeb. 
 
 receiving subscriptions, and other acts prior to organization, 530 n. (J) 
 
 liability of corporations for engagements of, 567 et seg., 567 n. 
 
 when engagements of, are ultra vires, 571. 
 
 when engagements of, are not ultra vires, 573 et seq., 587 et seq. 
 
 liability of corporation implied from statute, 573, 573. 
 
 engagements of, provided for in charter, etc., 573. 
 
 engagements of, not provided for in charter, etc., 574, 593. 
 
 recognition and ratification by corporation, of acts of. See Recog- 
 nition. 
 
 where engagements of, are embodied in charter, etc., 587. 
 
 benefit must be taken eum onere, 568 n., 569 n., 587. 
 
 rights of third persons, 590. 
 
 right of corporation to take benefit of acts of, 593 et seq., 593 ».(a). 
 
 general rights apart from trusts, 593. 
 
 engagements of trustees on behalf of projected company, 594. 
 
 rights of corporation at common law, 595. 
 in equity, 596. 
 
 agreements by existing corporations as to extension, 599. 
 
 prospectus as evidence of ratification of acts of, 566. 
 PROPERTY. See Coepoeate Peopekty. 
 PRO RATA AGREEMENTS. Bee Teappic Aeeangements. 
 
 of railway companies for through transportation, valid, 410. 
 
 must not create monopoly, 415 n.(a.). 
 PROSPECTUS, misrepresentations in, 336 n. 
 
 as evidence of ratification of act of promoters, 566. 
 PROVIDENT SOCIETIES, 56. 
 
 PUBLIC, actions by or on behalf of, See Actions; Suit in Equity. 
 PUBLIC AGENTS, railway companies are, 433 n. et seq. 
 PUBLIC BODIES. See Mchicipal Cobpoeations. 
 
 other than municipal, powers of, 60, 61. 
 
846 INDEX. 
 
 PUBLIC BODIES— continued. 
 
 public corporation cannot incapacitate itself, 120. 
 
 hold property upon trust, 310, 
 
 special powers possessed by, 395 et seq. 
 PUBLIC DUTIES of railway companies, 433 n., 433 n. 
 are ministerial, 433 n. 
 
 enforced by mandamus, 405 n.(a), 407, 408. 
 
 specific performance of, 407. 
 
 at instance of attorney-general, 407. 
 
 enforced by mandatory injunctions, 408. 
 PUBLIC HIGHWAYS, railways are, 434 n.[a). 
 PUBLIC INTERESTS, in conflict with prirate rights, 397, 397 n.(J), 398 n.(a). 
 
 endangered by corporation, 712. 
 
 when the attorney-general must be a party in actions affecting, 712. 
 
 must be involved, to authorize the attorney-general to act, 712. 
 
 ■what are, 712. 
 
 jurisdiction of equity to protect, 708, 708 n.(h). 
 
 considered in determining validity of traffic arrangements, 433, 
 433 n. 
 
 PUBLIC POLICY, restraint of acts of corporation against, 708, 70S n.{b), 713. 
 
 abandonment and transfer of powers are against, 400. 
 
 infringement of rights of travel, against, 418 n. 
 
 contract not to extend railway. See Railway. 
 
 contracts of corporation with directors. See Dikbctoks. 
 
 to pay unearned premiums. See Pebmiums. 
 
 some traffic arrangements not against. See Tbaffic Arkanqbments. 
 
 contracts creating monopolies are against. See Monopoi.t. 
 
 lobbying contracts. See Lobbying Conthacts. 
 PUBLIC USE, what is a, 373 n., 373 n. et seq. See Eminent Domain. 
 
 right to change, 99 n., 878 n., 379 n.{a). 
 
 railroads are for, 373 n. 
 
 gas companies are for, 374 n. 
 
 water-works, sewers, etc., are for, 3,74 n., 375 n. 
 PUNITIVE DAMAGES. Sae Exemplaky Damages. 
 PURCHASE, power of, incidental, 10, 13 n.(a). 
 
 of land, 13 ra.(ffl). 
 
 of shares of another corporation, 91, 91 n.(b). 
 
 of corporation's own shares, 94. 
 
 of whole business of corporation, 116, 134 n.(a). 
 
 of special powers, not valid, 398 et seq. 
 
 of good will, 608, 609. 
 
 what may be transferred by. See Tkansfeb. 
 
 ■when vUra vires, 743. 
 PURPOSE. See Eminent Domain; Powers; Public Ush. 
 
 ultra vires, invalidates act otherwise valid, 80. 
 PURPRESTURE, jurisdiction of equity over, 709 n. 
 
INDEX. 847 
 
 QTJASI-COEPORATIONS, 19. 
 
 gMflsi-sole-corporations, 20, 20 n.{a). 
 
 may be indicted, 366 n. 4. 
 
 aggregate, 19. 
 , created by conveyance of land, 23 n.(a). 
 
 for carrying out public works, 60, 61. 
 
 interference of courts with, 60. 
 QUASI-MUNICIPAL CORPORATIONS, what are, 19. 
 QUORUM of directors, what is, 541, 542, 543 w.(S), 543. 
 
 meaning of " president and directors," 548 n. 
 
 of definite body, 542 n.{h). 
 QUO "WARRANTO, suspension of franchises by, 787. 
 
 against a corporation, 787. 
 
 and scire facias distinguished, 786, 787. 
 
 against members, but afiecting corporation, 279. 
 not affecting corporation, 282. 
 
 RAILWAY COMPANIES, must operate entire road, 71 n..{a), 402 w.(6). 
 buying steamboats, 72 n.{a). 
 
 power to build branches includes extensions, 8V n.(b). 
 contract to carry beyond its line, 90, 90 n.{a), 409, 410, 415 n.{a), 730. 
 power of State to regulate charges of, 96 n.(a). 
 prospective profits during construction of road, 198 n.(S). 
 cannot mortgage their permanent way and fixed plant, 236. 
 rolling stock of. See Rolling Stock. 
 mortgages of stations of, 238. 
 
 mortgages of other property of, 238, 249 n.{a), 499 n.(b). 
 may make promissory notes, 255 ra.(a). . 
 
 objects of, are public, 373 n., 433 n. 
 elevated, 385 Ji.(a). 
 
 eminent domain. See Emiitbnt Domain. 
 power of, to change route, 392 «.(a), 398 n.{a). 
 traffic of, cannot be stopped by injunction, 395 n.{c). 
 what passes by lease of railway, 398 n.(b). 
 pro rata forwarding agreements, 410, 415 n.{a). 
 agreement to build road to connect with another, 410 n.(a). 
 agreement allowing another company to use its tracks, 411, 411 n.(b). 
 arrangements for apportioning fares, freight, etc., 415, 415 n.(a). 
 commutation tickets, 416 n. 
 
 arrangements to divide profits of a district, 417, 417 n.{a), 421 n.(a). 
 partnerships between companies, void, 423, 423 n. 
 duties of, to the public, 433 n., 433 n. 
 agreements of, with telegraph companies, 433 n.{a). 
 
 with express companies, 434 n.{a). 
 discrimination in fares, 436. 
 
 contract to build railroad not enforced in equity, 463 n. (by. 
 consolidation of, 642. See Cohsolidation. 
 
848 INDEX. / 
 
 EAILWAT COMPA'NIES— continued. 
 
 must treat all persons alike, 434 n.(a). 
 
 interest on stock of, allowed to city, 197, n.(a}. 
 
 railways cannot be built without legislative permission, 371 n. 
 
 lease of railway does not include power to exercise eminent domain, 
 398«..(6). 
 does not relieve lessor from liability, 398 n.(b). 
 
 right of way of, may be taken by the State, 398 n.(b). 
 
 misrepresentations in time-table, 335. 
 
 assisted by municipal corporations, 433 n. 
 
 control of State over, 433 n., 433 n. 
 
 preliminary maps and surveys of, not binding, 393 n.(a). 
 
 injunction against, to restrain change of gauge under contract, 416 n. 
 
 mortgage to secure bonds of, 479 n. 
 RATIPIGATION. See Acquiescence. 
 
 of acts not ultra vires, 385, 549, 563, 784. 
 
 of legal proceedings, 385. 
 
 cannot be partial, 338 n. 
 
 of torts committed ultra vires, 364 n.(a). 
 
 by Legislature, 33 n. 
 
 of acts by corporation, 458 n. 
 
 what contracts cannot be subject of, 483 n.{a). 
 
 by a corporation itself, 546, 546 n. et seq. 
 
 what acts are subject to, 549 et seq., 551 n.{d). 
 
 cannot affect acts ultra vires, 550, 550 n.{d), 777. 
 
 cannot afEect engagements on behalf of future corporation, 553. 
 
 bv acquiescence. Bee AcQiriBSCBirCB. 
 
 by officials, 563 et seq. 
 
 of purchase, by directors, 563 n.{a). 
 
 must be lonafide, 566. 
 
 recognition of acts of projectors. See Recognition. 
 
 agent relieyed from liability by, 751. 
 
 of acts ultra vires of agent, 784. 
 
 distinguished from estoppel, 459 n.{a). 
 
 of fraud of agent by corporation, 350. 
 
 of acts of promoters, prospectus as evidence of, 566. 
 
 of illegalactof director,not caused by acceptance of dividend,163re.(ai). 
 REAL PROPERTY. See Corpokate Propekty; Lands. 
 RECEIVER, appointment of, 671. 
 
 does not dissolve corporation, 795 n. 
 RECOGIHTION. See Acquiescencb ; Promoters and Projectors ; Ratifi- 
 cation. 
 
 by Legislature, 33 n. 
 
 by corporation of acts of projectors before organization, 575 et seq. 
 must be for a consideration, 578. 
 
 by Legislature of power to mortgage, 334 n. 
 RECONSTRUCTION, members must consent to, 8 n.(b). 
 
 or else dissenting members must receive compensation, 8 n.(b). 
 
INDEX. '849 
 
 RECORDS of meetings. See Minutes. 
 
 REGISTERED COMPANIES, notice to be taken of articles of, 508 «. 
 
 dissolution of, 801. 
 REGISTRATION, of name of member, mistake in, 519. 
 RELEASE of subscriber from calls, 151 n.(b). 
 
 of subscriber on proper consideration, 151 n.{c). 
 by directora, 496. 
 
 agreement to, by agent, no defense, 336 n. 
 RELIGIOUS CORPORATIONS, land of, in territories of tbe United States, 
 limited, 11 ». 
 
 property of, jurisdiction of civil courts over, 53 n.(a). 
 REMEDY by forfeiture for non-payment of calls, 153 ».(c). 
 is cumulative, 152 n.(c). 
 
 by statute for taking private property, 74 «. 
 REPEAL of charter, power reserved by State to cause, 97 n. 
 
 of charter, independent of reservation, 96 n.{a). 
 REPORTS. See CiRcnLAR Pbospeotcs. 
 
 to shareholders, by directors, 334. 
 REPRESENTATION. ;S«6 Misbepbesentatiow ; Reports. 
 
 by agents, 336 n., 337 »., 503. 
 
 by directors, 503. 
 
 in time-table, 335. 
 
 of his authority by agent, 755 et seq. 
 
 of corporate powers, 760 et seq. 
 REPUDIATION of contracts induced by fraud, 348. 
 
 of contracts itltra vires, 81. 
 REQUISITES. See Fobmalities. 
 
 RESERVATION by Le^slature, of power to alter or repeal chnrtpr, 97 n. 
 RESERVE FUND, 301. 
 RESIDENCE of corporations. See Domicile. 
 RESOLUTION, passage of, not an essential formality, 530. 
 RESTRAINT of ultra vires acts. See Injunction; Soit in Eqbity. 
 REVENUE, liability of, to recoup capital, 205. 
 REVERTER of lands, 100 n., 106 n.(a). 
 REVIVAL of corporate powers, 795. 
 RIGHT OF WAY of the railway may be taken by the State, 398 n.(b). 
 
 may be taken for telegraph, 433 n.(a). 
 RIVAL COMPANIES. See Competition. 
 
 suit brought at instance of rival company, 653 n. 
 
 consolidation of. See Consolidation. 
 
 contracts of, when void as against public policy, 418 n. 
 ROLLING STOCK, whether personal or real property, 238 n.(a). 
 
 mortgages of, 338. 
 ROUTES, alteration of, by railway, not usually allowed, 893 n.{a). 
 
 unless provided for in charter, 393 n.{a). 
 RUNNING POWERS given by one company to another over its road, 411, 
 411 n.g>). 
 54 
 
850 INDEX. 
 
 RUNNING POWBB.S— continued. 
 
 between corporations of different States, 411 n.(b). 
 tolls for use of, 411 et seq. 
 
 SALARIES, payment of, on dissolution, 803 n.5. 
 SALE. See Purchase. 
 
 of land, 13 71. (a), 116. 
 
 of whole concern of corporation, 116, 134 n. (a). 
 
 of special powers, 398 et seq. 
 
 of surplus lands, 67 et seq. 
 
 of part of road "by turnpike company, ground for forfeiture, 403 n. 
 
 of corporate property not working dissolution, 791 w.(a). 
 
 of corporate property causing 2"!«a«j'-amalgamation, 638. 
 
 of surplus earth and materials on condemned land, 883 n. 
 
 of corporate property, 779. 
 
 of stock. Bee Transfek. 
 SATISFACTION, accord and. See Accord and Satisfaction. 
 SAVINGS BANKS, character of, 55 n.{d). 
 
 SCHOOL-HOUSES, land taken for, by eminent domain, 373 w., 374 n. 
 SCIRE-FACL4.S, writ of, 786, 787. 
 SCRIP, what is, 174. 
 
 issued before organization, 174. 
 
 issued after organization, 175. 
 
 allotment of shares by, 175. 
 SCRIP-HOLDER, how liable after transfer, 174. 
 SEAL. See Formalities. 
 
 incident of corporations, 5. 
 
 power to change, 6, 7, 8. 
 
 effect of, on negotiable instruments, 356, 357. 
 
 not necessary, 446, 446 n., 453 re.(a). 
 
 not necessary when act is done by agents, 448 n. 
 
 agents appointed without afiBxing, 451 »i.(a). 
 
 presumed to be affixed by proper authority, 460 n.(a), 465 m.(5). 
 
 form and device of, 465 ?i.(6). 
 
 consideration implied from, 466. 
 
 of corporation makes instrument a specialty, 466. 
 
 user of, by bodies not corporate, 8. 
 SECURITIES. See Bonds; Bills of Sale; Charges; Debentures; Mort- 
 gages ; Negotiable Instruments. 
 
 given in consideration oi ultra vires contract, invalid, 84. 
 
 valid borrowing on ultra vires securities, 231. 
 
 power to give, implied from power to incur debt, 233, 223 n., 2*)7. 
 
 construed strictly, 237. 
 
 form of the instruments, 228. 
 
 •what assets may be charged, 234. 
 
 formalities to be observed, 339 et seq. See Formalities. 
 
 effect of, 246. 
 
 effect of, when land is charged, 247. 
 
INDEX. 851 
 
 SECURITIES— continued. 
 
 eflfect of the term, " Undertaking," 348. 
 
 deposit of title deeds as, 235. 
 SELECT BODY. See Committee. 
 
 SEQUESTRATION to enforce orders of the court, 369 »., 397. 
 SERVANTS. See Agents. 
 
 how appointed by corporation, 451, 451 n.(a). 
 SERVICES before organization. See Organization ; Pkomoters and Projectors. 
 
 to^procure charter, 569 h. 
 
 in influencing legislation. See Lobbying; Parliament, applica- 
 tions TO. 
 SET-OFF of debt, by shareholder, 661, 662. 
 SHAREHOLDERS. See Corporators ; Members ; Subscribers. 
 
 who are, 136, 136 n.(a) 
 
 release of, 181 n.(a), 635. 
 
 have no title to corporate property, 303 n.(a). 
 
 rights of, when corporation refuses to sue, 377 n.(a). 
 
 not discharged from liability by informal transfer, 536 et aeg. 
 
 liability of, on stock not paid up, 535, 536. 
 
 liable, when failing to comply with statutory requirements, 3 m.(6), 
 10 n.{a). 
 
 rights of, in consolidation of corporations, 633-637. 
 
 right of, to sue, on refusal of corporation, 645 n.ifl). 
 
 corporate property divided among, on dissolution, 636, 637. 
 
 are not creditors of corporation, 197 n. 
 
 cannot set-oflf debts to corporation, 661, 663. 
 
 mistake in lists of, 519. 
 
 relation of, to corporation is one of contract, 78 n. 
 
 whether corporations can become, 91 et seq., 91 n.(b). 
 
 may sue and be sued by the corporation, 3 n.(a). 
 SHARES AND STOCK. See Shareholders. 
 
 a corporation may deal in the shares of another, 91, 91 «.(5). 
 
 when a corporation can deal in its own shares, 94, 94 n.(a), 193. 
 
 merger of, 94 n.(a). 
 
 contract to take, 137 et seq. 
 
 subscriptions to, 137, 137 n.(a), 138, 128 re. (a), 139, 139 w.(a), 
 174 «.(«). 
 
 ordinary, 136 et seq., 143. 
 
 alteration relieves subscribers, 133 n.{a). 
 
 held by trustee for corporation, 138 et seq. 
 
 held by executors, 140. 
 
 held by trustees, 138 et seq. 
 
 mortgages of, 140. 
 
 when married women may hold, 143. 
 
 payment ifor, 143. 
 
 gifts of. See GrFTs. 
 
 sales of, at discount. See Discount. 
 
852 INDEX. 
 
 SHARES AND STOCK— continued. 
 
 payment for, not in money, 145, 145 n.(a). 
 
 calls and assessments on. See Calls and Assessments. 
 
 forfeiture of, 152 n.(c). See Forpeitbre. 
 
 number of, should be fixed, 157 n.(fl). 
 
 may be re-issued, 159 n., 191, 191 n.(a). See Merger. 
 
 division of capital into. See Capital. 
 
 may be of various classes, 161. 
 
 power to issue preferred shares, 164, 164 n.(a), 170. 
 
 interest on preferred shares must not exceed profits, 173. 
 
 scrip. See Scrip and Sckip-holder. 
 
 transfer of. See Transfer and Transferee. 
 
 are personal property, 178 n.(a). 
 
 pledged by trustee, 179 n. 
 
 surrender of. See Stjkkbnder. 
 
 forfeiture of. See Forfeit okb. 
 
 cancellation of. See Cancellation. 
 
 right of corporation to deal in its own shares not extended by impli- 
 cation, 193, 193 n.{a). 
 
 nor is this right raised by implication, 194. 
 
 may be taken under eminent domain, 401 re.(a). 
 
 not paid up, liability on, 535, 536. 
 
 lien on, cannot be created by by-laws, 15 n.(a). 
 
 interest on, allowed to city, 197 n.{a). 
 
 possession of, constitutes membership in joint-stock companies, 45. 
 
 guaranteed, 172. 
 
 held as collateral, 141 n.(a). 
 SIGNATURE of officers, where not essential, 521, 531 n.{b). 
 SLANDER, liability of corporation for, 356 n. 
 SOCIETIES. See Friendly Societies. 
 SOLE CORPOKATION, 17. 
 SPECIAL CHARTERS not usual in the United States, 2 n.(i). 
 
 corporations created by, 18. 
 
 effect of constitutional provision forbidding, 28 7i.(J). 
 SPECIAL CORPORATIONS distinguished from ordinary, 33, 88. 
 SPECIAL POWERS. Se« Eminent Domain ; Fkanchisb; Pq-wees. 
 SPECIFIC PERFORMANCE. See Suit in Equity. 
 
 of duty imposed by charter, 407. 
 
 of contract signed only by defendant, 461 h.(a), 
 partially performed, 462. 
 to build railroad, 463 n.(5). 
 STATES. See Legislature. 
 
 of the Union are corporations, 17 n.(a), 
 
 grant from, construed strictly against grantee, 62 n. 
 
 may control use of railway, 483, 432 n., 433 n. 
 
 extra-territorial powers of corporation. See DomicHiB. 
 
INDEX. 863 
 
 STATUTE of frauds. See Fkatjds. 
 
 of mortmain. See Mortmain. 
 
 of limitations. See Limitations. 
 
 of wills. See Wills. 
 STATUTES must be interpreted according to state of knowledge at the 
 time of passage; 77 n.{a). 
 
 as to formation of corporations, 24-36. 
 
 imposing formalities, 450. 
 
 making a seal essential to a contract, 450. 
 
 as to amalgamation, 633 et aeq. 
 
 as to winding-up, 797 et aeq., 797 ra.(c) 
 
 as to adjustment of disputes, 669 n.{a). 
 
 failure to comply with, liability of shareholders by, 3 Ji.(6), 10 n.{a). 
 
 provisions of, may be waived, when, 483 n.{a). 
 
 providing for sale of surplus lands, 68. 
 STATUTORY CORPORATIONS, 33 et aeq. 
 STATUTORY REMEDY, for non-payment of calls, cumulative, 153 n.{e). 
 
 tat taking private property, 74 n. 
 STEAMSHIP COMPANIES, mortgage debentures on undertaking of, 349. 
 STOCK. See Shares asd Stock. 
 
 STOCKHOLDERS. See Shareholders ; Shares and Stock. 
 SUBSCRIBERS. See Subscriptions ; Shareholders. 
 
 engagements of, governed by law of contracts, 127 n. 
 
 released by fundamental change in purposes of company, 133 n.{a), 
 151 ».(6). 
 
 may be released on proper consideration, 151 ».(<;). 
 
 failure of, to pay calls, 152 n. (c). 
 
 must elect to take advantage of fraud, 153 n.(b). 
 SUBSCRIPTIONS. See Shares akd Stock; Subscribers. 
 
 induced by fraud, 153 n.(b). 
 
 on conditions, 138 n.{a). 
 
 before organization, 127 n. 
 
 made for fraudulent purpose, 129 n.{a). 
 
 may be qualified, 129 n.{a). 
 
 changes in, after signing, 138 n.{ti). 
 
 sale of shares after effect of, 187 n (a). 
 
 to commissioners, 129 n.{a). 
 
 of insolvents, 155 n. 
 
 of infants, 155 n. 
 
 of married women, 155 n. 
 
 as condition of beginning business, 158 n.(a)- 
 
 misrepresentations in soliciting. See Misrepresentations. 
 
 payment otherwise than in cash, 145, 145 n. (a). 
 
 by one person for another without authority, 154 n. 
 
 private arrangements as to, 129 n.(a), 155 v. 
 SUCCESSION. See Perpetual Succession. 
 
854 INDEX. 
 
 SUIT IN EQUITY, flee Actions; Injottction; Legal Pbocbedings; Spb- 
 
 ciFic Pekfobmakcb. 
 equity will prevent unjust distribution of profits, 303 n.(fl). 
 may be brought by shareholder, when corporation refuses to sue, 
 
 377 n.{a). 
 relief by, against imperative formalities, 533. 
 plaintiff in, must be real party in interest, 653, 653 n.(b). 
 when recourse may be had to, to restrain corporation, 664 n.{a). 
 by attorney-general, 7C7 n. 
 only sustained in a just case, 714 n. (a). 
 by information in behalf of public interests, 708 n.(b). 
 to prevent calls for illegal object, 153. 
 to remove name froih list of shareholders, 346 et seq. 
 for indemnity for subscription induced by fraud, 343. 
 proceedings, otherwise improper, authorized, 314. 
 to restrain payments, 311. 
 
 issues of shares, 306. 
 to prevent de facto directors from acting, 378. 
 dissolution cannot be prevented by, 614. 
 to prevent ultra vires disposal of assets, 619. 
 
 applications to the Legislature, 388. 
 
 agreements to oppose applications to the Legislature, 397. 
 
 applications to foreign legislature, 398, 
 cannot be brought by a mere nominee, 653 n.Qi) et seq. 
 to settle private disputes, 671. 
 to enforce duties to the public, 408. 
 
 contract partially performed, 463. 
 to build railroad, 463 re. (J), 
 against action of majority, 674 et seq. 
 in case of breach of trust, 664 n.{a). 
 to prevent calls for illegal object, 153. 
 
 amalgamation, brought by creditors, 793 et aeq. 
 to restrain surrender of charter, 793. 
 to protect public interest, 708, 708 n.(b). 
 
 to restrain change of gauge between connecting railways under con- 
 tract, 416 n. 
 SUMMONS. See Notice. 
 
 SUPERINTENDENT of poor, a 2i.(agi-sole corporation, 20 n.{a). 
 SUPERVISOR a quasi- so\e corporation, 30 n.(a). 
 SURETY, power of corporation to become, 353, 353 n.(a). See Negotiable 
 
 Instkttmbnts. 
 SURPLUS. See Corpokatb Pkopbett ; Lands. 
 
 lands, statutory provision for the sale of, 08. 
 
 may sometimes be divided, 68 n.(a), 99 Ji.(o). 
 
 disposal of, 68 n.(a), 99 n.(a). 
 
 reverter of, 100 n. 
 material, on land condemned, sale of, 383 n. 
 profits. fle« Profits; Earnings; Dividends. 
 
INDEX. 855 
 
 SURRENDER of shares, what is, 181, 181 ».(a). 
 power to accept, 183, 183, 496. 
 of charters, in cucsolidation, fiSl n. (a). 
 
 not necessarily caused by non-user, transfer or suspension of 
 
 business, 791 n.(a). 
 power of majority to cause, 791 n.(b). 
 
 presumed from acts' which defeat object of corporation, 791 n.{a). 
 where time of duration of charter is fixed, 793 n. 
 restrained by injunction, 793. 
 may be inquired into collaterally, 793 n. 
 SURVEYS for railways may be made without compensation, 73 n.(a). 
 
 preliminary, not binding on railway company as to location, 393 n.(a), 
 SUSPENSION of business. See Business. 
 
 TAKING- by eminent domain. See Eminent Domain. 
 
 TAXATION, power of, not to be confounded with eminent domain, 378 «. 
 
 TELEGRAPH COMPANIES, right of way may be taken for, 433 «.(a). 
 
 contracts of, with railway companies, 433 ra.(a). 
 TERRITORIES OP UNITED STATES, land held by religious and chari- 
 table corporations in, limited, 11 n. 
 THIRD PARTIES liability of, in respect to transactions ultra vires, 769. 
 
 must repay benefit in such transactions, 769. 
 
 right of, to apply to court to prevent amalgamation, 793. 
 surrender, 793. 
 
 presumed to know provisions of charters, 471 n. 
 
 not presumed to have notice of provisions of by-laws, 471 n. 
 
 must know statutory limitations of officers' powers, 373 n.{a). 
 
 rights of, as creditors. See Cbeditoks. 
 TIME of duration of charter, 8, 8 «.(a). 
 
 lapse of. See Aoqxtibscence. 
 
 of notice of meetings. See Notice. 
 
 of duration of charter, where fixed, surrender. See Sttrbendbr. 
 TIME TABLE, misrepresentations in, 335. 
 TITLE DEEDS, deposit of, as security, 325. 
 TOLLS, meaning of, 412, 417. 
 
 agreements for apportioning, between different companies, 415 etseq. 
 
 for use of running powers, ill et seq. 
 
 franchise of taking, an incident of sovereignty, 371 n. 
 TORTS. See Exemplakt Damages ; Fraitd. 
 
 corporation can commit, 330, 350. 
 
 committed through agents, 31 n.{a), 345, 350, 350 n.(a), 353. 
 
 liability in trespass, 350 n.(_a), 353 n.(b). 
 trover, case, &c., 351 n. 
 
 when ul^a vires, committed by agent, 364, 364 re. (a). 
 
 ratification of, 364 n. (a') . 
 
 liability of agents for, 765 et seq. 
 
 indemnity of agent for, 505. 
 
856 
 
 INDEX 
 
 TOUTS— continued. 
 
 liability of corporation for assault. See kssAXTLT. 
 
 slander. See Slandbk. 
 
 libel. See Libbi. 
 
 malicious prosecution. See Malicious Pkosboution. 
 
 false imprisonment. See False Impbisonmbnt. 
 
 negligence. See Negligence. 
 
 injury causing death. See Death. 
 TOWN'S. See Municipal Cokpobations. 
 TRADING CORPORATIONS, 18 n. 1. &« Business; Commbbcial Cob- 
 
 PORATION. 
 
 TRAFFIC ARRANGEMENTS, distinguished from transfers, 400. 
 
 when valid, 409, 410. See Railway Companies. 
 
 amounting to partnership. See Partnbbship. 
 
 giving running powers. See Running Powbks. 
 
 for apportioning tolls. See Tolls. 
 
 to divide profits of a district, 417, 417 n.{a), 421 ».(«). 
 
 to provide through transportation, 415 n.(a). 
 
 pro rata agreements, 41S n.(a). 
 
 creating monopoly. See Monopoly. 
 
 to operate railway as joint estate, 414, 414 n.(a). 
 
 contract by- railway to carry beyond its line, 415 n.{a). 
 
 infringing rights of travel, 418 n. 
 
 to connect lines of railroad, 416 n.. 
 
 public interests as affecting validity of, 433, 433 71.(0). 
 TRANSACTION at meetings. See Meetings. 
 
 at meetings, record of. See Minutes. 
 TRANSFER. See Abandonment. 
 
 of assets, &c., to another corporation. See Amalgamatioh. 
 
 of whole business from one corporation to another, 116, 134 n,(a). 
 See Business. 
 
 of shares, right incidental to ownership, 177, 177 n.(a). 
 how effected, 178, 178 n.(a). 
 
 surrender of shares. See Subrendeb. 
 
 distinguished from traffic arrangement, 400. 
 
 special powers are not subject to, 398, 393 n.(b). 
 I formalities in, must be observed to discharge transferor, 536 et teq. 
 
 of corporate entity, 608. See Amalgamation. 
 
 of assets causing juast-amalgamation, 638. 
 
 of shares, when subscriber relieved from further action on his sub- 
 scription by, 137 n.{a). 
 
 of corporate property, not necessarily a surrender, 791 n.(ffl). 
 restrained by policy-holder, 794. 
 TRANSFEREE of stock, held as collateral, liability of, 141 n.(a,). 
 TRANSPORTATION. See Railway Companies ; Traffic Arrangements, 
 
 contracts to provide through, 415 n.{a). 
 
index: 857 
 
 TRESPASS. See Torts. 
 
 liability of corporation in, 350 n.{a). 
 TROVER. See Torts. 
 
 liability of corporation in, 351 n. 
 TRUST, See Breach of Trust ; Trustees.- - 
 jurisdiction of equity in case of, 58. 
 over visitors in case of, 48. 
 TRUST DEED in the United States, 338 n.{a). 
 TRUST FUND ".for payment of debts, assets are, 305 n.{a). 
 TRUSTEES for corporation, 138 «« seq. 
 liability of, for shares, 138 etseq. 
 engagements of, on behalf of projected companies. See Promoters 
 
 AND Projectors. 
 must all join in actions, 644 n.{a). 
 municipal corporations are, 58. 
 ; how far directors are. ■ See Fiduciary Position^ ' 
 for bondholders, who may be, 479 n. 
 
 must refuse to sue before bondholder can foreclose, 644 n.(a). 
 TURNPIKE COMPANIES, forfeiture of charter by, for sale of road,- 403 n. 
 
 neglect to repair road, 403 n. 
 
 ULTRA VIRES. See Contracts. 
 
 judicial explanations of, 28, 29 n.(fl). 
 
 applied to torts, 330. 
 
 various meanings of, 33, 33 ?J.(a), 774 et seq. 
 
 applied to fraud, 333 7i.(a). 
 
 burden of proof in questions of, 37. 
 
 actions to restrain acts which are. See Actions. - 
 
 leading principles of, 41. : 
 
 defense of, io contract partly or wholly executed, 739 re.(rt)^749. 
 UNDERTAKING, effect of the term, 348. 
 
 mortgage of, 348. 
 UNITED STATES is a corporation, 11 w., 17 w.(«). 
 UNITED STATES COURTS. See Federal Courts. 
 UNREGISTERED COMPANIES, 803. 
 USAGE. See Acquiescence. 
 
 waiver implied from, 525, 527 n., 533. 
 
 name acquired by, 3 «.(«). 
 
 of trade, part of common law, 268 n. 
 
 as affecting ullva vires acts, 51. 
 USER of powers See Powers. 
 USURY in contracts of building society, 5C, n.(a). 
 
 does not make contract ultra vires, 742, 743, 745. 
 
 VARIATION of business. See Business. 
 
 of capital. &e Capital. 
 VESSELS, mortgage of, 337. 
 55 
 
858 INDEX. 
 
 VISITOR, Legislature is, in the United States, 47 n.(a). 
 of charitable corporation, 49. 
 of ecclesiastical corporation, 47, 48. 
 jurisdiction of court of law over, 48. 
 jurisdiction of equity over, in case of trust, 48. 
 
 WAIVER. ;S«e Acqtjiescencb; Laches. 
 
 when unauthorized, 138. 
 
 of right to object to application to the Legislature, 800. 
 
 of irregularity of notice of meeting, 439, 439 ra.(a). 
 
 of formalities, 535, 533, 561. 
 
 of right of forfeiture by the State, 788 n. 
 
 of statutory provisions, 482 n.(a). 
 WARRANTY, implied in acting as agent, 757. 
 WATERCOURSE, license to fill up, 743. 
 
 WATER- WORK COMPANIES cannot issue negotiable instruments, 353. 
 WAY. See Easement ; Right of Way, 
 
 contract by railway companies for. See Running Powers. 
 
 taken by eminent domain. See Right op Wat. 
 WILL, power of corporation to take land under, 11, llre,(a), 13 n. 
 WILLS, STATUTE OP, corporations excepted from, 11 «. 
 WINDING-UP. See Dissolution. 
 
 amnlgamation in, 634. 
 
 dissolution by, 797 et teg. 
 
 under the court, 798. 
 
 voluntary, 800 et seg. 
 
 under the statutes, 797 et seg. 
 
 power of chancery judges over, 798. 
 WORKING AGREEMENTS. See Traffic Arkangemkntb. 
 WORKSHOPS, lands taken for, by eminent domain, 380 w, (a). 
 
 WHOLE NDMBIB OP PAOXfi, 026. 
 
"0