^P^si:^r.j ■>-2 4if'i i^i^: ?&. |ft*"ji»,iJ^ ■ ""-J t -' ■ ■ . ■ ' -*■ Siiii-'i'*-'i'B.jV. *■.■•■■ ■'AI"''. ." ■;.•■: ■-•:•'■ ..>^-S Powers of ionsolidated Railway 3pmpanies. Hassler H3S' Cornell University Law Library The Moak Collection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 IN HEnORY OF JUDGE DOUGLASS BOARDMAN FIRST DEAN OF THE SCHOOL By his Wife and Daug:hter A. M. BOARDMAN and ELLEN D. WILLIAMS CORNELL UNIVERSITY LIBRARY 924 062 071 28 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924062071281 POWEES OF CONSOLIDATED Railway Companies; Being an Argument in the Case of FREDERICK P. DIMPFEL, versus The OHIO and MISSISSIPPI RAILWAY COMPANY, and others, Ii| tl)e Ui|ited >^tatet4 Cirduit Com't, FOR THE SOUTIIEItX DISTRICT OF ILLIXOIS, BY CHARLES W. HAJSSLER, Of the New York Bar. NEW YORK : Jones Printing Co., Steam Printers, 42 BroaJ St., X. Y. 1879. INDEX OF CASES CITED. Page. Alexander, City v 69 Allen «. Inhabitants of Jay 79 Allerton, Railway Co. D 75 Alton and S. R. R. Co., Banet v 57 •Anderson v. Union M. F. Ins. Co 9 Aspinwal] v. Ohio and M. R. R. Co 10 Aspinwall «. Davies Co 80 Attorney General 1). Boston and M. R. R. Co 50 Aurora City D. West 45, 69, 78 Bagshaw v. Eastern Union Ry 7 Baldwin, Farmers and M. Bank v 79 Ballard, Bradley v 83 Balier, Shawneetown v 84 Bank of Augusta «. Earle 4, 13, 42, 43, 44 BanlcofU. S. D. Dandridge 4 Bank of U. S., Voorhees« 33 Bank of Illinois, Frye v 6, 77 Banet v. Alton and S. R. R. Co 57 Beach v. Fulton Bank 59 Beatty B. Lessee of Knowler 5, 7, 77 Blackstone Canal Co., Farnum b 53 Boston, Lowell « 79 Boston and M. R. R Co., Attorney General u 50 Boston, Burrilli) 73 Bradley!). Ballard 83 Branch, Tomlinson «■. ^ 37, 54 Bridge Co., Coryell v 73 Burrill ®. Boston 73 Butler's Appeal 49 Caldwell v. City of Alton 5 Canal Commissioners, Penn. R. R. Co. v 8 Carroll «. East St. Louis 44, 51 Charles R. Bridget). Warren Bridge 8, 36, 80 Chesapeake and D. Canal Co., Perrine « 4, 14 Chicago, Ducat v 44 Chicago, &c. R. E. Co., Waldo v 57 Chichester, &c. Ry. Co., Taylor d ,,,.,,,,,.„ 9 IV Cincinnati and C. A. L. R. R. Co., Pullan v 4 City D. Alexander 6*^ City of Muscatine, Meyer v ''I City of Alton, Caldwell v •'"> Clay, Rollins!' 9 Cleveland, C. and C. R. R. Co , Zabriskie v T Coleman D. Eastern Counties Ry 6, '!, 85 Commercial Bank v. lola "(S Commissioners, Treadvvell r 69 Commissioners of Miami Co . , Moran v 22 CommissionersofTippecanoeCo.il. Railroad Co 86 Commomvealtii i\ ErieandN. E. R. E. Co 8, 15, 34 Cook, Marshall Co. r 69 Cook County Land Co. , Hough e 59 Cooper, Illinois College r 6, 77 Coryell r. Bridge Co 73 Cumberland Coal Co. B. Shearman , 84 Cumberland Co., Hoffman Coal Co. u.-. 85 Curtiss V. Lcavitt 5, 74 Dandridge, Bank of U. S. f 4 Dartmouth College c. Woodward 4, 5 Davies County, Aspin wall v 80 Delaware R. K. Tax Case ; 27, 53 Dows, Muller r 38 Ducat J'. CliicTgo 44 Dunbar, Ohio & M. R. R. Co. r 35, 57, 58 Earl, Bank of Augusta r 4, 13, 42, 43 44 East Anglian R'y r. Eastern Counties R'y C, 7, 10, 15, 57, 86 East St. Louis, Carroll r 44 51 Eastern Counties R'y c. Hawkes 7 10 '• Coleman i- G, 7, 85 " East Anglian R'y r 0, 7, 10, 15, 57, 86 Eastern Union R'y, Bagshaw r 7 Ely, Insurance Co. r gg Erie & X. E. R. R. Co , Commonwealth ?) y, 1,5 ;j4 Farnuni < , Elackstone Canal Co jg Farmers & M. Bank 1 . Baldwin 70 First Nat. Bank, M'ecklor /■ 70 Flagg, Stowe /: q Floyd Aci:?i)td:i:-L'3 , 70 Fowler r. Scully 7() Frye v. Bank of Illinois 6 77 Fulton Bank, Beach c 59 Faltou County, Marsh t 00, 77, 78, 80, 83, 86 Galena, &c., R. E. Co., Newhall i- 9 Genoa, Starin r 69 Goddarcl, Root f 70, 78 Goodridji r\ Reynolds 19 Great Northern R'y, S. Yorkshire, &c., R'y r 7, 79 Gross, U. S. Mortgage Co. t 53 Hackett, Mercer County e 69 Harris, Ihiilroad Co. r 6, 1,5, 37, 54, 81 Hawkes, Eastern Counties R'y c 7, 10 Hays i\ Ottawa, &r., R'y 73 Head i:. Providence Ins. Co 4, 84, 85 Hoffman Coal Co. t<. Cumberland Co 85 Hoodr. N. Y. &N. H. K. R. Co 5, 9, 81, 84, 85 Houghs. Cook County Land Co 59 Howard, Railroad Co. v 71 Hunt (1. Shrewsbury, &o., R'y 59 Huntington ('. Savings Bank 5, 15, 35, 41, 77 Illinois College r. Cooper 0, 77 Illinois Midland R. R. Co. v. People 50 Indianapolis, &c., R R. Co., Smead f 70 Ohio & M. R. R. Co e 79 Inhabitants of Jay, Allen i- 79 Insurance Co. e. Ely 59 " " 4). Insurance Co 59 " " r. Lawrence 59 lola, Commercial Bank r 79 Johnson r. Joljet & C. R, R. Co 19 " Kean r 58 Joliet .e confined within ten miles on either side of the Grreat Western Mail Route from St. Louis to Vincennes." Ambiguity is wanting in these words. There is no hidden, occult, "implied" construction for them, but just their plain English meaning. The company thus chartered, or the company suc- ceeding to its rights could, in the language in Perrine V. Oanal Co. (9 How., 184), " exercise no powers except those which the law confers upon it, or which are incident to its existence." It has 15 "no powers and has no rights except such as are expressly given or necessarily implied." Huntington v. Savings Bank, 96 U. S., 387, 393. And " can do only what is authorized by its charter. " B. B. Co. T. Harris, 12 Wall., 65, 81. ''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 in the act." Hast Anglian B. v. KC.B, 11 C. B., 803. " If you assert that a corporation has certain privileges, show us the words of the Legislature conferring them. Failing in this, you give up your claim, for nothing else can possibly avail you.." Com. T. E., ^c, B. B. Co., 27 Pa. St., 339, 351. Power was given to the company " to unite its railroad with any other railroad." " Section 15. Said Company shall have the power to unite its rail- road with any other railroad now constructed, or which may hereafter be constructed, either in this state or the state of Indiana, upon such terms as may be mutuaUy ageed upon between the companies so con- necting, and for that purpose full power is hereby given to said com- pany to unite and execute such contracts with any other company as will secure the objects of such connection." It had power to borrow money for a certain definite purpose : " Sec. 16. Said company is hereby authorized, from time to time, to borrow such sum or sums of money as may be necessary for com- pleting or finishing or grading the said railroad, and to issue and dis- pose of their bonds * * * and to mortgage their corporate property, and franchise, or convey the same by deed of trust to secure the payment of any debt contracted by said company for the pur- poses aforesaid.''' As if this Section 16 of the original charter was not suflSciently specific the first section of the first 16 amendment passed 22d June, 1852, provides that the company " are hereby authorized to borrow money, from time to time, on the credit of the company, at any rate of interest not exceeding seven per cent, per annum, as may be agreed between the parties, for the sole purpose of constructing said road, and furnishing the same with cars, locomotives and other machinery necessary to carry on the operations of said company * * * and may issue its corporate bonds therefor, * * and may mortgage their corporate prop- erty or franchises, or convey the same by deed of trust for said purposes." No impression having then taken possession of any- one that the company had power to build any other line than that named in the charter, nor even any ex- tension, or branch, or division of the same, the Legis- lature passed an act 27th February, 1854, in amendment of the charter, by which it was provided that the " com- pany" might "extend their railroad over and across Bloody Island." No powers are given the company to buy, build, own, or operate, or enjoy any other line of railway than that named in these statutes. To the Illinois Southeastern Kailway such power was given by Section 7 of its Charter, passed by the same Legislature. The State of Missouri, by its Legislature, gave a re- cognition of the company by an act approved 23d Feb- ruary, 1853. The preamble recites : " Whereas, The Legislature of the State of Illinois, on the 12th day of February, 1851, passed an act incorporating the Ohio and Mississippi Railroad Company to construct a railroad from lUinois- town, in the State of Illinois, to Vincennes, in the Slate of Indiarta ; Theeefobe, there was conferred " upon said company power to purchase and hold sufficient lands in said city for the use of passenger and freight depots, and for a ferry landing. ' " 17 The company to whom this privilege was conferred was the company chartered to build a line of railroad particularly described in the charter of 12th of Febru- ary, 1851, and to none other was it given. We hold, then, that the Ohio and Mississippi Rail- road Company of Illinois had no powers under which it could construct, or purchase, or maintain any other line of railroad than that especially designated in the char- ter and the amendments thereto, nor could it issue any bonds for any other purpose than to construct and equip its said road. The Legislative authority to do so was wanting. 1849, November 5th, the Legislature of Illinois passed a general railroad law (1 Gross, 541). By that act twenty-five persons might form a corporation for con- structing, owning and maintaining a railroad. The articles of association were required to set forth, among other things, "the place to and from which the proposed road is to be con- structed." Section 4 (1 Gross, 542, § 42) provided that when the certificate of association shall have been filed, the company named in it shall " be capable in law of purchasing, holding and conveying any real estate and property whatever necessary for the construction of such road, and for the erection of all necessary buildings, yards and appur- tenances for the use of the same." Section 20 provides that before proceeding to con- struct their road, every company ' ' shall make a map and profile of the route intended to be adopted by such company." Section 21, after speaking of the " proposed rail- road," gives power "to borrow money to be applied to the construction of their railroad and fixtures, and purchase of engines and cars." 18 Section 22 provides that the persons intending to organize "may present a petition to the legislature, stating the place /ro?re and to which they purpose to construct their road, and its location and route, with reasonable certainty, or that they intend to run the same road on the most direct and eligible route between the points of terminus, and praying the legislature to determine whether the construction of the said proposed road will be of sufficient public use to justify the taking of private property for the construction of the same. And if the legislature shall determine and decide by law that such proposed road will be of sufBcient utility to justify the taking of private property for constructing and maintaining said road, under the pro- visions of this act, then such company, when organized, may enter upon, take possession of and use all such lands and real estate as may be required for the construction and maintenance of their raUroad, and the convenient accommodation appertaining to the same.'' It ^Yill be seen from this section that an application to the Legislature was necessary even after the passage of this act, and hence it is not at all wonderful that we find the volumes of acts of successive Legislatures filled with special statutes confirming the rights of certain named parties to form a railroad company for the pur- pose of building a certain " proposed " line " between the points of terminus " named in their petition. And with this general statute in existence, the Legis- lature passed the act of the 12th of February, 1851, granting certain powers to the proposed O. & M. R. K. Co., and empowering it to build and own a line of rail- road from the Mississippi Kiver, "and running thence on the most eligible route " to the east line of the State, and within ten miles of a certain well-known highway and mail route. No power was given to build, own or operate any other or different line of road, but the act defined the powers of the com- pany and limited them to a certain " most eligible route " between two designated points. The O. & M. E. K. Co. could own no other line of road. 19 How absurd it is to say that these acts gave simply a " right of way " to an Indiana corporation. And this act of 12th of February, 1851, was passed when the constitution of 1848 was in full force. Art. X. CoRPOEATiON, § 1, says : " Corporations, not possessing banking powers or privileges, may be formed under general laws, bat sliall not be created by special acts, except for municipal purposes, and in cases wbere, in the judgment of tbe General Assembly, the objects of the corporation cannot be obtained udder general laws." But we need not defend this statute of 12th Febru- ary, 1851. It cannot be attacked collaterally in these proceedings. Such an attempt was made in Missouri in Ohio and Blississippi Railroad Co.y: McPherson, 35 Mo. 13, and in that case it was the opinion of the Court that the persons named became ipso f ado, on the passage of the act, a body corporate and politic to build and own the line of road specified — not that they were the 0. & M. E. E. Co. of Indiana and Ohio, and that this act gave them a mere " right of way " in Illinois. See, also Goodrich V. Reynolds, 31 111., 490. Price V. R. I. & A, 21 111., 93. McCarty v. LavasJie, 10 0. L. K. 342. A. & A. Corporations, § 777. In this Court the ruling of the Supreme Court in Railroad Company v. Vance, 96 U. S., 450, is authority, and Mr. Justice Harlan, delivering the opinion of the Court, after citing Johnson v. Joilet and Chicago Rail- road Company (23 111., 207,) says, page 459 : " In that case it appears that a special act creating a railroad com- pany, passed in 1855, contained no statement of the inability of the General Assembly to accomplish the object of the incorporation under the general law. The Court said : It is too late now to make this objection, since, by the action of the General Assembly under this clause, special acts have been the order of the day, and the ruling passion of every Legislature which has been convened under the Con- 20 stitution, until their aJota of this description fill a large and misshapen volume, and important and valuable rights are claimed under them^ The clause has been wholly disregarded, and it would now produce far spread ruin to declare such acts unconstitutional and void. It is now safer and more just to all parties to declare that it must b& understood that in the opinion of the General Assembly, at the time of passing the special act, its object could not be attained under the- ■ general la\jr, and this without any recital by way of preamble." We contend, then, that with these two acts of No- vember 5th, 1849, and of February 12th, 1851, upon the records of the Legislature the O. & M. E. E. Co. had no power to build or own any other line of rail- road than that specified in the latter act. IV. FOEECLOSUEE AND EeOEGANIZATION PrOCEEDINSS. These companies so organized in each of these States- soon met with financial difficulties, and foreclosure pro- ceedings were instituted in each of these States. First, Illinois. In Illinois the bill was brought in the name of Henry D. Bacon and others, and such pro- ceedings were had that at the March adjourned term, 1862, a final decree was entered. In this decree, entered in this Court, it was duly found that the Ohio and Mississippi Eailroad Company was ' ' a corporation duly created and incorporated by and organized under and in pursuance of the acts," hereinbefore recited, ' ' and with capacity to take, purchase, hold, lease, sell and convey estate and property, real, personal and mixed, so far as it miglit be necessary for tte^Mrposes mentioned in said act of incorporation, and to have and exercise all powers, rights, privileges and immunities wMcIi might be necessary to carry into effect the purposes and objects of the said act. " 21 This was a finding of this Court. "And tte Court doth further find, that by said incorporating act said company was duly empowered to locate, construct, finish, perfect and maintain a railroad commencing at Illinoistown, on the Mississippi river, in the county of St. Clair and State of Illinois, and rurmingfram thence on the most eligible route to the east line of the State of Illinois, in the direction of Vinbennes, in the State of Indiana. " This was the line of railroad which lids Court found the O. and M. E. K. Co. had authority to own. ' ' And the Court further find that iy said act of incorporation said Ohio and Mississippi Railroad Company was authorised, from time to time, to borrow such sum or sums of money as might he necessary for completing and finishing, and operating their said railroad." « * * This Court then further found, that it being necessary for the company "to avail itself of the charter power conferred upon it to borrow money for constructing, completing and operating said road " certain bonds were actually issued and disposed of for value. And, thereupon, the order provided that the premises, property and franchises of the company be sold at public auction, on the 2d day of June, 1862. February 5, 1861, the Legislature of Illinois passed an act to incorporate the Ohio and Mississippi Railway Company. It provides that certain persons therein named, and such persons as might be associated with them, were constituted " a body politic and corporate, by the name and style of the Ohio AND Mississippi Railway Company, /or i/te^Mrpose of purchasing and taking a conveyance of all the railway property, real and per- sonal, rights and franchises of the Ohio and Mississippi Railroad Company, incorporated by the act of the General Assembly of this State, entitled "An act to incorporate the Ohio and Mississippi Railroad Company, and for other purposes," approved February 13th, 1851, or any part of said property, rights and franchises, either by private contract, or at a judicial sale thereof, which may hereafter ake place. " 22 "■ Section 3. The said corporation shall possess all the powers and privileges conferred on the Ohio and Mississippi Railroad Company hy the act incorporating the same, referred to in the first section of this act, or by any amendment or amendments thereof, and shaU he subject to all the provisions of the said act, * * * and of making any contracts or arrangements with any other person or persons, corporation or corporations, conducive to the objects of its incorporation, or the convenient and effective management of the business of trans- portation of passengers and freight, and of regulating the rates of charges for such transportation." It cannot be claimed that this act gave the Ohio and Mississippi Railway Company of Illinois any larger power than the Ohio and Mississippi Eailroad Com- pany of Illinois previously had. By the order of this Court, the "Ohio and Mississippi Railway Company, a corporation created by the laws of this State," was declared the highest bidder, as in said order re- cited, ' • whereupon said property was declared sold to said highest bidder ■ — said railway company — and that said company was entitled to a deed therefor." And a deed was thereupon made to said Railway Company. "Was'this new Company, by the act of 5th February, 1861, or by any construction of that act by this Court, permitted to locate, construct, finish and maintain a new road, or roads, or any other road than that for which the Ohio and Mississippi Railroad Company was originally organized to locate, construct, finish and maintain ? Are the words "conducive to the objects of its incor- poration " ambiguous? Do they give increased power? Admit that they are ambiguous. In the case of Moran V. Commissioners of 3Iiami County (2 Black, 722, 723), the Supreme Court held : "That neither privileges, powers nor authorities can pass unless they are given in unambiguous words, and that an act giving special privileges must be construed stricUy." 23 ut these words are not ambiguous. They are plain words. In 1869 this present consolidated Ohio and Mississippi Railway Company, defendant, considered them so plain that it was deemed necessary to ask a further act from the legislature of this State — not of the legislature of Indiana or of Ohio — authorizing it " to locate, build, construct, operate and maintain a branch railroad from some convenient point on their present railroad, between Casey- ville and East St. Louis, in St. Clair county, with single o'r double track to connect with any bridge pr ferry now existing, or to be here- after established between the Illinois shores of the Mississippi River and the City of St. Louis.'' It is worthy of note that this act was passed after the consolidation forming the present defendant company, and no claim seems to have been made that any law was then operative within the state of Illinois to increase the power of the company so that it could build, pur- chase, or otherwise acquire any "branch," even though the original act of the Indiana legislature proposed to in- corporate a company with power to build from Cincin- nati " to the city of St. Louis, iu the state of Missouri ! " Evidently no one then thought that an act of the state of Indiana could act extra-territorially, or that unam- biguous words could be called ambiguous, and then twisted to mean far differently from their plain signi- fication. Let it also be noted that these acts of the Illinois leg- islature were more than mere acts permitting the taking of the right of way and the exercising certain franchises by a corporation of Indiana. They differed materially from those passed by the Ohio legislature. For by the Act of February 12, 1851, certain persons and their associates " are hereby made and constituted a body corporate and politic by the name and style of the Ohio and Mississippi KaUroad Company," InO. & M. R. R. Co. v. BIcPIierson, (35 Mo., 13), the 24 Supreme Court of Missouri construed these words to mean just what they say. No idea that the act merely granted a "right of way" to an Indiana corporation was entertained by that Court. But, again, in the act of February 5th, 1861, certain named persons and their associates " are hereby constituted a body politic and corporate. " Had the legislature intended merely to grant the right of way in this state, other words would have been used and not those invariably employed when the legislature intends to pass an act of incorporation. Did the O. & M. Railway Company, organized under the act of 12th February, 1861, have the power to build, own, or operate any other line of railway than the line of railroad specified in the act of 5th February, 1851 ? This question must be answered in the negative, for applying the rules for construction of statutes the plain conclusion is that the O. & M. Eailway Company, did not, by any statute of the State of Illinois, obtain any powers other than those connected with the building and maintaining of the line originally designated. Second, Indiana and Ohio. In the meantime, foreclo- sure proceedings in Indiana and Ohio, instituted in the name of E. T>. Morgan and others, progressed slowly, but finally concurrent decrees having been made in each State, a sale was had on the 9th day of January, 1867, " at the door of tlie United States Court House in Cincinnati," (as recited in the decree,) and certain trustees, previous- ly authorized thereto, purchased the propertj*. Did these concurrent decrees of the U. S. Circuit Courts for the District of Indiana and the Southern District of Ohio direct a sale of the whole line of rail- 25 road extending from Cincinnati to St. Louis ? The de- cree entered in the latter court on Monday, April 29, 1861, contains the following : "And the Court having carefully examined the pleadings and proofs, and upon due deliberation thereon being had, the Court do find that the said Ohio and Mississippi Railroad Company is a cor- poration duly authorized and incorporated by the several acts of the Legislatures of the States of Ohio and Indiana ; that said corpora- tion, by said acts of said Legislatures of Indiana and Ohio, was duly authorized and invested with power to locate, construct, maintain, repair and operate a railroad, and all its appendages between (and in- cluding) the City of Gineinnaii, in Ohio, and Vincennes, on the Wa- bash River, in Indiana." Indiana and Ohio have general laws relating to the reorganization of companies whose road has bsen sold under foreclosure. I In Indiana such an act was passed 3d March, 1865, and provides that the purchaser or purchasers of any line of railroad situate wholly or partly within that State may form a corporation, ' ' and the persons signing said certificate, and their successors, shall be a body corporate and politic, with powers to sue and be sued, contract and be contracted with, and maintain and operate the railroad in the certificate named. " Section 3 provides that such corporation " shall possess all the powers, rights, privileges, immunities and franchises in respect to said railroad, or the part thereof purchased as aforesaid, and of all the real and personal property appertaining to the same, which were possessed or enjoyed by the corporation that owned or held the said railroad previous to such sale, by virtue of its charter and the amendments thereto.'' In Ohio the act of 11th of April, 1861, relates to this matter, and after providing for the purchase by trus- tees for creditors of all classes, it says in Section 7 : " and a corporation of another State possessing part of a railroad which is partly in such other State, and partly within this State, may exercise and enjoy within this State all its privileges, powers, facilities and franchises, /or the purpose of said railroad andi its busi- ness, not inconsistent with the laws of this State and the provisions of ihis act." 26 In Ohio V. Shearman, 22 O. St., 412, it is held that this section gives foreign railroad corporations, whose roads lie partly in that State, the right to run, operate and maintain their roads in Ohio in the same manner as domestic railroad companies. The seventh section of the Indiana act of 3d March, 1865, provides for the acquiring by purchase, or contract, branch or cross roads, " luitlan the Stale of Indiana,'^ the vesting in the purchaser the rights of the companies owning such latter roads, the assuming the liabilities of the latter company, and gives the general power to complete and maintain the road purchased. The certificate of incorporation of the O. and M. Railway Company filed in the office of the Secretary of State of Ohio, on the 26th November, 1867, and in the office of the Secretary of State of Indiana, on the 14th November, 1867, recites : "Whereas, In certain judicial proceedings in the Circuit Court of the United States for the State of Indiana and the Southern District of Ohio * * * the Ohio and Mississippi Kailroad, running from Cincinnati, in the State of Ohio, to the -western boundary of the State of Indiana, in the city of Vincennes, * » * vras imrchased by * * * as trustees of an express trust, * * * " And, WnEEEAS, We are desirous to form a corporation for the legal ownership of said road, and for the control and government tliereof ; "Now, Thekeporb, In conformity to the provisioas of an act of the Legislature of the State of Indiana » * * (the act of 3d March, 1865) * * * and with the view and purpose to adopt and make available so much of t^e powers and privileges granted and con- tained in the seventh section of the act of the General Assembly of the State of Ohio * * * (the act of 11th April, 1861) * * • as are applicable to a corporation of the State of Indiana possessing a raUroad partly in Indiana and partly in Ohio : Wb, the undersigned, purchasers as aforesaid of the Ohio and Mississippi Kailroad, do hereby certify;" and then follows certain formal statements in con- formity with the provisions of the statute. These purchasers bought the railroad situated in 27 Ohio and Indiana. They bought that " part " of the "through" line which lay in those States. They as- sumed no rights as such purchasers over the corpora- tion existing in Illinois, or over its line of railway. An 0. & M. Railway Company having thus been or- ganized in ludiana and Ohio, and another O. & M. Railway Company having been organised in Illinois, under the provisions of the Act of the Legislature of that State, dated 5th February, 1861, agreements of consolidation were entered into. The 0. & M. Rail- way Company of Illinois adopted the articles of con- solidation on the 21st of November, 1867, and the Illinois compaDy adopted them on the 18th December following. After specifying that both companies shall consoli- date their stock and property, assume all the debts of each, that the name of the consolidated company shall be the " Ohio and Mississippi Railway Company," and providing, for a corporate seal, it is provided "that the consolidated company shall be governed by a Board of Directors, who shall have all the powers, rights and privileges en- joyed hy the Board of Directors of the several companies." Under the authority of P. W. i B. B. B. Go. v. Mary- land, (10 How., 375), of Delaware B. E. tax case (18 Wall., 206), of Tomlinson v. Branch (15 Wall., 460), of Bailroad Company v. Harris (12 Wall., 65) and of Bail- road Company v. Vance (96 U. S., 450) it is evident that the Board of Directors of this consolidated company could have no greater or other powers in either State than had the Board of Directors of the company pre- viously existing in that State. In the learned opinion to which reference is made when speaking of the negotiations resulting in the pur- chase of the branch to Springfield the following lan- guage is used : " If the powers granted by the Legislature of ludiana can be con- 28 sidered applicable in the State of IlliBois, tlie power of your company to buy and hold this road and mortgage it in the manner proposed would appear to be clear enough. The law of Illinois under which the consolidation of your Illinois and Indiana companies took place, transfers to the consolidated companies, in by opinion whatever power either of the two consolidated companies was possessed of and could lawfully have exercised immediately before or at the time of the consolidation. Whether the Indiana company could, in virtue of its mere Indiana powers, without express premises from the State of Illinois and in the absence of any express prohibition hy Illinois laws have been permitted anterior to this consolidation to come into -the State of Illinois and buy and hold this branch railroad is a ques- tion which must at least be regarded as doubtful, depending, in a great degree, upon questions of comity and public policy which, as yet, so far as I can ascertain, appear to be not fully settled in Illi- nois, and if it could not have done so and therefore did not possess the required power the moment of consolidation, I cannot advise that the act of consolidation vested any such power in the consolidate company." These articles were duly filed in the offices of the Sec- retaries of State of the states of Ohio, Indiana and Illi- nois, and it is this consolidated company, so formed, that is the principal defendant herein. It is the grantee in the deed of conveyance of the Springfield and IlUnois Southeastern Railway, mortgagor in the deed of trust dated 30th January, 1875, and the maker of the bonds held by certain parties, admitted defendants hereto at their own request. To sustain these transactions, they mast have been made by authority of law. We contend that this company had no legal capacity to make the purchase, nor execute the mortgage deed, nor make the bonds held by certain of the defendants and others, and that the same are void. 2» V. POWEES OF THE CONSOLIDATED EaiLWAY COIIPANIES. We will consider: (A). Oonsolidation Acts of Illinois. (B). Consolidation Acts of Indiana. (C). Extra-territorial effects of legislative acts. (D). Does this consolidation permit the exercise in Illi- nois of other powers than those granted by the Legislature of Illinois ? (A.). Gonsolidatluti Acts of Illinois. The O. ct M. Eailway Company of Illinois agreed to and did consolidate with the O. & M. Kailway Co. of Indiana and Ohio. This action of the Illinois corporation was effected under the laws of this State, and was had either under the special acts of 1851 and 1851, or under the general statutes relating to consolidations. The special act of 1851 provides : " Seo. 15. Said company shall have power to unite its railroad with any other railroad * * * either in this State or the State of Indiana, upon such terms as may be mutually agreed upon." " Unite its railroad " are words which, we submit, can- not be tortured into giving authority to " said com- pany " to consolidate with any other railroad company. The uniting of railroads and not of companies was here provided for. " Unite its railroad " are not ambiguous words, but they are explained — if explanation is neces- sary — by the subsequent words in the same section — " and for that purpose full power is hereby given to said company to make and execute such contracts with any other company as will se- cure the objects of such connecting" not as will consolidate said companies. 30 The special act of 1861, after conferring on the rail- way company the powers of the railroad company, fur- ther provides that the former "shall, in addition, possess the power * * * of making any contracts or arrangements with any other person or persons, cor- poration or corporations, conduoive to the objects of its incorporation.'" These words may have been meant to permit consolida- tion of the Illinois corporation with that of Indiana and Ohio. If such were the intention, we submit that they are rather blind ; are, indeed, especially so when it is remembered that February 28, 1854, the legislature had passed a general law fully providing and authorizing consolidations. It may, however, have been intended by the words quoted to show especially that, at least in the case of this company, no consolidation should take place unless it toere "conducive to the objects of its incorporation." And we submit that, if the consolida- tion did actually take place under the powers supposed to be granted by these words, that the new consolidated company did not come into existence with any other powers than those which are "conducive to the objects" of the incorporation of the parent company owning and operating the railroad specified in the act of 1851. But the legislature had passed, February 28, 1854, this general act, (1 Gross, 537,) and by it all companies were (Section 1) " authorized and empowered to consolidate their property and stock with each other, and to consolidate with companies out of this State whenever their lines connect with the lines of such companies out of this State," provided they " have their termini fixed by law,'' and their roads intersect by continuous lines. And in Section 2 it was, among other things, pro- vided that the consolidated company 31 ' ' shall have all the powers, franchises and immunities which the said respective companies shall h^ve by virtue of their respective charters before such consolidation passed wrrnm the State of Ilunois." After reading the provisions of this statute, it is non- sensical to put forward any claim that by it the new consolidated company can have in Illinois any greater powers than had the Ohio and Mississippi Kailway Company of Illinois, by virtue of its charter, " before such consolidation passed within the State of Illinois " These words are words of limitation. If there could be any doubt in regard to them, such doubt mnst be against the possible enlargement of power specifically granted. If it is claimed that " before " refers generally to the period of time before the passage of this act, and not specially to the date of the charter, the claim that enlarged powers are thereby granted is not assisted. The Ohio and Mississippi Eailway Company, of Illi- nois, had only certain specified powers within this State before this act of 1854, and if "before" is to be thus construed, the question is pertinent, how did it acquire any enlarged power after that point of time ? For, most assuredly, this act cannot then be claimed to give greater powers, "by virtue of their respective charters, * * passed within the state of Illinois," than were given by those very charters. February 13, 1865, the legislature of this State passed a further act relating to consolidations. It was repealed by the general repealer which took effect 1st July, 1874, but was in full force when the consolidated defendant railway company was formed. The first section required " It shaU not be lawful for any railroad company of Illinois, or for the directors of any railroad company of Illiaols, to consolidate their road with any railroad out of the State of Illinois, or to lease their 32 road to any railroad company out of tte State of Illinois, witliout having first obtained the written consent of all of the stockholders of said roads resident in the State of Illinois, and any contract for Bach consolidation or lease which may be made without having first ob- tained said written consent, signed by the resident stockholders in Illinois, shall be null and void." (Laws 1865, page 103.) This act provided for consolidation ■with foreign com- panies, but especially states that if certain forms have not been complied with, the contract for such consolida- tion "shall be null and void." And thus the legislature provided for the contingency of an attempt on the part of directors to form close alliances with foreign corpora- tions without the consent of the citizens of this State. Whatever might be the powers of directors in other States and in other respects, the legislature of this State intended to place at least this restriction upon them. On the 16th of iFebruary, 1865, three days after the passage of this act, the legislature passed another, of which the above forms a part of the first section, and then continues as follows : "Provided, that it shall be lawful for the directors of any railroad company created by the laios of this State to contract for the use and operation of any raUroad connecting with their line beyond the limits of the State; and in all contracts for the use and operation of any rail- road by another corporation, it shall be lawful for the parties to provide for the usb of any of the powers and privileges of eitlier or both of the corporations parties thereto : "And provided, further, that nothing in this act shall be so construed as to authorize the consolidation of any of said railroads with railroads out of the State of Illinois: Provided, that nothing contained in the first proviso of this act shall in any wise apply to or be taken advan- tage of by the Great Weatem Railroad Company (of 1859), a corpora- tion of the State of ^Illinois." (Laws 1865, page 103.) Both of these acts took effect from their passage. For the three days, 13th, 14th and 15th February, 1865, the directors of an Illinois corparation might legally have agree! upon the terms of a contract for consolida- 33 tion of their company with a foreign corporation — which contract should be "null and void," unless assented to by all the resident stockholders — but in its wisdom the legislature, on the 16th of the same month, re-enacted the act passed by it on the 13 th, with the very noticeable Proviso which simply prevented ^ny such consolidation under this act. la Voorhees v. Bank of U. S. (10 Peters, 449), the Supreme Court says : "A proviso, in deeds or laws, is a limitation or exception to a graiit made or authority conferred, the effect of which is to declare that one shall not operate or the other be exercised unless in the case pro- vided." In Waymanv. Southard (10 "Wheat, 1, 30), the Supreme Court holds : " The proviso is generally intended to restrain the enacting clause, and to except something which would otherwise have been within it." The operations of this act, except on the T3th, 14th and 15 til .February, 1865, were then restricted and limited to leasing to a foreign corporation, or leasing a " railroad out of the State " by a domestic company. The act of 30th March, 1875, to which we have re- ferred, contains the following : " Provided, that nothing in this act shall be so construed as to authorize any corporation acting by, or organizing under the laws of any other State, to purchase or otherwise become the owner of any railroad in this State." But we are told that the words immediately following the first "Provided" give a general 'power to all cor- porations to vest in a consolidated company " any of the powers and privileges of either." This is arguing in a circle. If power given to an Illinois railroad cor- poration " to contract for the use and operation " of a rail- road out of the State can give power to consolidate with any railroad company out of the State, with the words, "Arid provided further, that NOTHlNa in this act shall be construed so as to authorize " 34 such consolidation, then we might admit that this statute might possibly be so construed as to confer upon a home company consolidating with a foreign corporation the powers exercisable within this State of that foreign corporation granted to it by the foreign State. But the words of this statute are too plain. If they were of doubtful meaning they would be against the claim made. " Whatever is doubtful is decisively certain against the corporation." Com. V. E. & N. E. B. B., 27 Penn., 351. This act does not make it " lawful " for the parties to a consolidation " to provide for the use of any of the powers and privileges of either or both parties," in! the case of a consolidation with a foreign corporation ; for the last expression of the will of the legislature is, "Nothing in the act shall be so construed as to authorize consoli- dation mill 3. foreign company." The consolidation effected between the Ohio and Mis- sissippi Eailway Companies of IlUnois, and the Indiana and the Ohio, in December, 1867, could not then have been under the provisions of the act of 1865. It was not a lease, or a " contract for the use and operation " of a foreign railroad. It was a consolidation formed in accordance with the 'laws of the several States. It pur- ported to be nothing more nor less. It was nothing more nor less. It must have taken place under the act of 1854, pre- viously referred to. Section 3 of that act provides that railroad companies shall have power to make certain specified contracts, and also "to make any other contracts aathorized by the by-laws of the said corporation or corporations, within the purview of their said cluwters." The two clauses of Sections 2 and 3 read together : "shall have all the powers, franchises and immunities which the said 35 respective oorapauies shall have by virtue of their respective charters, before such consolidation passed witJiin the State of lllinoii" and may make contracts "authorized by the by-laws of the said corporation or corporations, •within the purview of their said charters," is conclusive of the fact that the legislature of this State intended that the consolidated company should have in this State only the powers previously, — "before such consolidation," — granted "within the State of Illinois.'' In Petersburg v. Meizker (21 111. 205, 206), Judge Breese said : " The powers of all corporations are limitei by the grants in their charters, and cannot be extended beyond them." In Huntington v. Savings Bank (96 U. S., 388), the Supreme Court says : ' ' A corporation created by statute can exercise no powers and has no rights except such as are expressly given or necessarily implied." We have ])reviously cited many cases sustaining the same view. In 0. d- 31. E. E. Co. v. Dunhar (20 111., 623), the power of this company to rid itself of liability by leas- ing its road to one Jenks came before the Supreme Court of this State, and the Court denied that power, using the following language (page 627) : "We are unable to perceive that it is necessary that they should lease the road and franchises to perform any act expressly authorized by the charter, or to effectuate the objects of its creation." Should it not be equally forcibly said that no one can perceive that it is necessary that they should pur- chase the Springfield branch to perform any act ex- pressly authorized by their charter, or to effectuate the objects of its creation 1 36 Again, the Supreme Court, in 0. ^ M. B. B. Co. v. McClelland (25 111., 140), referring to the powers and rights conferred by the charter, says : "Wien Buch a grant is made, whilst the grantee takes the thing granted with all the reasonable and proper means to its enjoyment, yet nothing else passes hy implication." In the Charles Biver Bridge case (11 Peters, 420), the Supreme Court said : "Nothing passes by implication." It is evident,then, that no acts of the Illinois legislature providing for consolidation of railroad companies give to the consolidated company any other or different or greater powers within the State of Illinois than those previously possessed within that State by the corporation of that State entering into the consoli- dation. The company chartered 12th February, 1851, and its successor, by the act of 5th February, 1861, had the power to build and operate a railroad on the most eligible route between two definite points and within ten miles of a certain highway, and it had no other powers. The consolidation laws of Illinois did not authorize it to purchase the Springfield and Illinois Southeastern Eailway. (B). Consolidation Acts cf Indiana. The O. & M. Eailroad Company, chartered by the act of the Indiana legislature of 14th February, 1848, became by the act of the Ohio legislature of 15th March, 1849, a quasi corporation of the latter State, but yet a remained distinct corporate entity in each State. 0. ^ M. B. B. Co. V. Wheeler, 1 Black, 286. Foreclosure proceedings having been terminated by a sale made " at tho door of the United States Court House in Cincinnati," 37 of all the property in both States, and the reorganiza- tion having been agreed upon in pursuance of which there came into being " a corporation of tlie State of Indiana possessing a railroad partly in Indiana and partly in Oliio," — as permitted by the policy of the State of Ohio, {Ohio T. Shearman, 22 O. St. 412), — subject neverthe- less that the powers therein claimed to be exercisable shall not be " inconsistent with the laws " of Ohio — and possessing certain powers under the statutes of In- diana. The Act of 11th May, 1852, (I G. & H., 504), author- ized the formation of companies for the purpose " of constructing, owning and maintaining the line of railroad specified in the articles of associa- tion, and permitted the " purcliasing, holding and conveying any real and personal prop- erty whatever, necessary for the construction of such road.'' Power was also given to " borrow such sums of money as they may deem necessary for completing or operating their railroad." This statute was followed by that of 23d Febru- ary, 1853, by which railroad companies were authorized ' ' to consolidate their stocle with the stock of railroad companies in this or in an adjoining State, and to connect their roads with the roads of said companies." Section 2 of this act provided that companies owning lines of road terminating at the boundary line of the State might ' ' extend said railroad into or through any other State or States, under such regulations as may be presented iy the laws of such State or States, into or through which said road may he so extended," and then it essayed to give to the home company the same powers over said extension 38 " as if their railroad had been constructed wholly within this State." The Legislature of Vermont, in solemn assembly con- vened, passed, on the 10th November, 1868, " An act to establish the incorporation of the Tehuantepec Rail- way Company," and conferred corporate powers upon certain persons named, giving them authority to exer- cise these powers in Mexico. Chief- Justice Taney said, in 0. (& M. R. B. Go. v. Wheeler, "Neither State could confer on it (the 0. & M. E. K. Co.) a corpor- ate existence in the other, nor add to or diminish the powers there to be exercised." But, then. Chief- Justice Taney expressed that opinion in 1862, and now the respondents say, in effect," Nous avous change tout cela ! " True, the world moves, but the respondent's learned counsel strives to move faster. In Mailer v. Dow^ (94 U. S., 407), decided at the October term, 1876, the Supreme Court says : " The laws of Missouri had no operation in Iowa." And then adds : " It is, however, uuneoeasary to discuss this subject farther." / 5 March, 1861, the Indiana Legislature passed an act providing that purchasers of a railroad sold under foreclosure might form a newj company (2 G. & H., 291), but the act under which the 0. & M. E. E. Co. of Indiana was reorganized in that dated 3 March, 186-5 (a G. & H., 395). This act, as we have seen, gave the purohisurs, upon their signing a certificate and filing tlio same with the Secretary of State, corporate powers, and especially "all the powers, rights, privileges, immunities and franchises in respect to said railroad, or the part thereof purchased as aforesaid, and of all the real and personal property appertaining to the same, which were possessed or enjoyed by the corporation that owned or held the said railroad previous to such sale, bj/ virtue of its charter and the amendments thereto." 39 Thus the Ohio and Mississippi Railway Company of Indiana became, in Indiana, the owners of the rights, privileges, immunities and franchises of the Ohio and Mississippi Railway Company of Indiana, and possessed of " all the powers " originally conferred upon it by the act of 14 February, 1848. But the seventh section of this act of 3 March, 1865, conferred new powers to corporations formed under its provisions. The text of the section on this point is : " and, also, shall have the power and authority to construct, equip, maintain and operate branch railroads leading from the main line, or from the terminus of such railroad from and to such points within this State or any adjoining State as may be deemed expe- dient. • * « " ^ovided, that the provisions of this act shall iwt be so construed as to authorize any railroad company organizing under the same to consolidate with or acquire by contract or purchase the road, road- bed, real and personal property, rights and franchises of any railroad already built, equipped and operated within the State of Indiana, and wldch may cross or intersect the line of the road of any company or- ganized under this act ; but the power of consolidation and purchase is hereby limited and restricted to such roads vrithin the State of Indi- ana as may cross and intersect the same, and which have not been equipped and operated in whole or in part. " Here, again, we find a j)^ov^so ; not, in this case, indeed, nullifying, but here simply qualifying the pur- view of the statute. Abandoned railroads were, in 1865 as now, frequently to be met with in Indiana, and the special provisions of this act permitted the utiliza- tion of those roads — roads in name, road-beds in fact — which the proviso not only defines as appertaining to the class of those "which have not been equipped and operated in whole or in part," but goes further, and says that this power ''is hereby limited and restricted to such road within the State of Indiana as may cross and intersect the same;" i. e., the road of the purchaser. There was not even an attempt here to legislate for 40 Illinois. This legislation was intended for the State of Indiana, and it is a fact that the so-called LouisTille branch purported to be acquired in Indiana under its provisions. The Fort "Wayne and Southern Eailroad Company was chartered 15th January, 1849. On the 6th March, 1854, the General Assembly of Kentucky passed an act authorizing and empowering the company to extend their road into Kentucky to a certain point, and under certain restrictions. No idea of " implied " comity had tkken possession of the minds of the legislators of that State, and no claim seems to have been then advanced by any one that the Indiana corporation could act in the neighboring State of Kentucky, except by permis- sion of that State. " Implied " extra territorial effect of legislative acts was not then invented. Claiming to proceed under the statute now cited, that portion of the incompleted Fort Wayne and Southern Eailroad lying between North Vernon and the Ohio Eiver, was purchased. This branch was situated en- tirely in Indiana. We do not here criticise it. It is not in the case. This act provided for the consolidation of such reor- ganized companies in the following words : "Any railroad company incorporated under the provisions of tliis act, shall also have power to consolidate with other raOroad corpo- rations in the continuous line, either within or without the State, upon such terms as may be agreed upon by the corporations owning the Is the Springfield and lUiaois Southeastern Railway in a continuous line with the O. & M. ? It were folly to say that " Springfield Division " lies in a continuous line between Vincennes and East St. Louis. The certificate of incorporation filed with the Secre- 41 tary of State of Indiana, 14 Novembei", 1867, recites that the new company is organized ' ' In conformity to the provisions " of this act. Hence, to this act we must look for the power of the new company, and it is evident that by it no greater powers were conferred on the railway company than had been possessed by the railroad company, except so far as to purchase uncompleted railroads in Indiana. But it is claimed that the clause of the act just quo- ted, which permits consolidations, grants authority to make such consolidation, " upon such terms as may be agreed upon by the corporations." It is hardly necessary to discuss the question, Can corporations increase the powers given them in their charters by forming a consolidation with other corpo- rations ? Incorporated companies are not partnerships, but are to be treated with reference to the objects of their cre- ation and to the express powers with Avhich the legisla- ture may have invested thf m, and to that extent the general law of partnership is superseded by the charter. Purton V. N. 0. jf- 0. R. It., 3 La. Ann., 19- Do these words, " upon such terms," give an implied authority to enlarge the powers originally granted ? If so, why specifically give any powers whatever 1 Why not say in a charter " shall have all powers to do any- thing in any manner except such things and in such manner as are herein expressly forbidden 1" How different from this view is that of the present Supreme Court, as expressed in Huntington v. Savings Bank (96 U. S., 388, 393) : " A corporation created by statute can exercise no powers and has no rights except such as are expressly given or neoessarily implied." 42 It cannot be claimed that these words of this Indiana statute can export into Illinois the powers granted by it and make them there operative. (C). Extra territorial effect of Legislative acts. In the middle ages the Franks, the Burgundians and the Goths lived on the same soil, each under their own laws, but now, within each jurisdiction, the law binds all alike. And it is well settled that while every nation possesses exclusive jurisdiction within its own boimdaries no statutes can have, ex proprio vigore, any intrinsic force beyond the territory of the sover- eignty by which they are enacted. Judge Story, in his Conflict of Laws, § 23, says : ' ' A State may prohibit the operation of all foreign laws, and the rights growing out of them, within its own territories. It may prohibi t some foreign laws, and it may admit the operation of others. It may recognize and modify and quality some foreign laws ; it may enlarge and give universal effect to others." Lank of Augusta v. Larle (13 Peters, 588) is relied upon by demurrants. In that case the Court held that although the corporation must have its being in one State only, yet it did not follow that its existence will not be recognized in other places, and that its residence in one State creates no insuperable objection to its power of contracting in another. But the Court did not say that the corporation of one State could ex- ercise its power within another without permission. In Paul V. Virginia (8 Wall, 168), the Court again considered this subject. Certain insurance companies of New York, because of the clause in the Constitution of the United States, " the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States," claimed special privi- 43 leges in Virginia, refusing to take out the license required by the statute of Virginia. Says the Court, page 181 : ' ' A grant of corporate existence is a grant of special privileges to the corporators, enabling tliem to act for certain designated purposes, as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation, being the mere creation of local law, can ham no legal existence beyond the limits of the sovereignty where created. As said by this Court, in Bank of Augusta v. Earle, ' It must dwell in the place of its creation, and cannot migrate to another sovereignty.' The recognition of its exist- ence eiien by other States, and the enforcement of its contracts made therein, depend purely upon the comity of these States — a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudicial to their interests, or repugnant to their policy. Saving no absolute rights of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, aa a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose.'' The act of 30th March, 1875, passed by the Illinois Legislature, contains the following : "Provided, that nothing in this act shall be so construed as to authorize any corporation acting by, or organizing under the laws of any other State, to purchase or otherwise become the owner of any railroad in this State." Continues the Court, in Faul v. Virginia: "If, on the other hand, the provision of the Constitution could be construed to secure to citizens of each State in other States the peculiar privileges conferred by their laws, an extra-territorial opera- tion would be given to local legislation bitterly destrrirtive of the inde- pendence and the harmony of the States." The " Connecticut Land Company " was chartered by the General Assembly of Connecticut 27th July, 1860, with power to buy and sell real estate ad libitum and anywhere. But the Supreme Court of this State held that the operations of the company so chartered could not be exercised in Illinois. 44 The Court says : — {Carroll v. East St. Louis, 67 III., 568)— "All persons in the profession, we presume, will admit that a cor- poration, created in one State can not exercise its function in another State or different sovereignty without permission. This is the doc- trine announced in The Bank of Augusta v. Earle (13 Peters, 589) ; 0. & M. R. R. Co. V. Wheeler (1 Black, 297) ; Dmat v. City of Chi- cago. 48 Ills. , 172) ; and Paul v. Virginia (8 Wall., 168) ; and if the proposition were not so fully understood and so firmly established, numerous other cases might be cited on confirming the rule. " Not only is no law found expressly permitting a rail- road corporation of another State to come into Illinois and purchase a railroad, but the act of 1875, on the contrary, expressly provides such a thing shall not be done. Is it possible to torture that act into an "implied" authority to do the very thing forbidden ? Even "implied" comity should have some founda- tion to rest upon. In any discussion of this point one cannot but be re- minded of the learned historian of Ireland, who, in his chapter entitled " Snakes in Ireland," informs the in- quisitive reader " There are no snakes in Ireland." (D.) Does this consolidation permit the exercise in Illinois of the poicers granted hy the Legislature of Indiana. It is not claimed by the learned counsel for demur- rants that the purchase, as a purchase, could be effected under the Illinois law. Hence the claim is made that this branch road was obtained by consolidation, and much time is spent in the endeavor to show that the purchase was not a pur- chase, but a consolidation, and that as a consolidation it was a legal transaction, and binding upon the defend- ant corporation. It is not intended to waste many words to prove that a spade is a spade. 45 The Legislature of Illinois has passed several gen- eral acts regarding railroads. One of them provides for the consolidation of railroad companies. Another per- mits making contracts for connecting their lines of road ; another permits the leasing of other roads ; while still another grants general powers for construct- ing and operating a road. And the general railroad law of 1872, after granting the usual corporate powers, especially provides in § 22 (Kev. Stat., 1877, page 764, 23): "No corporation shall consolidate its capital stock wltli any rail- way owning a, competing line. And in no case sliall any consolida- tion take place, except upon sixty days' notice thereof given, which notice shall be in manner and form as prescribed in the fifteenth seo- fion of this act.'' This section is but a repetition of a part of § 11 Art. 11 of the constitution of 1870, and at the same time the previous acts authorizing contracts of lease and connections were not repealed. It is not claimed by demurrants that any of the forms directed by the Constitution or statutes regarding con- solidations were observed in the transaction by which the defendant company purported to acquire the Spring- field road. "And in no case shall any consolidation take place, except upon " the observance of certain formalities — a compliance with which is not pleaded. The bill states that the Springfield road was acquired by purchase. This fact cannot be controverted ore tenus in argument upon a general demurer. It can only be denied by answer. " The party demurring having had his option to plead or demur, shall be taken, in adopting the latter alternative, to admit that he has no ground for denial or traverse." Aurora City v. West, 7 Wall., 82, 99. 46 The parties admitted defendants, at their own re- quest, have not answered the bill. They have chosen to demur to it. The deed of conveyance from Torrance and wife contains the language of sale and purchase. The language of consolidating agreements is Hot used in regard to this transaction. In a case now on appeal before the U. S. Supreme Court the learned counsel insists upon it that the word "sold" means "sold" when used in the contract of sale made by Michael Schall with the C. D. & V. E. E. Co., and we are inclined to think that the word " sold" used in the deed of 30th January, on the part of Mr. Torrance has only one correlative word on the part of the railroad company, and that word is "purchased." If we believed "sold" means "leased" in the Schall appeal, we might be inclined to think " sold " might mean "consolidated" in this case. But we do neither. It may be proper further to remark that if this Springfield road had been acquired by consolidation and not by purchase, then the plea would doubtless have been entertained by the Court, which should have set up the fact that the defendant company was not a consolidation of the O. & M. Eailway Companies of Illinois and of Indiana and Ohio, but that it was another and quite a different corporation, composed of not only these O. & M. Eailway Companies, but also of a company owning the Springfield road. It is not a company such as this last would be that is the defend- ant in this action. It is not such a company that the bill alleges " had no authority to be or to become the owner of said line of railway," formerly the Springfield and Illinois Southeastern Eailway. Failing to import into Illinois the powers of the In- diana company by any express provision of statute, or by any " terms " of an agreement of consolidation, and 47 not attempting to defend this purchase, but denying, on the hearing of a demurer, the fact of purchase, and claiming a " consolidation " — perhaps an " impUed con- solidation " — an endeavor is made to take shelter under an "implied" comity, and an appeal is made to the Court for its opinion in favor of consolidating railroad companies generally. The Massachusetts Eailroad Com- missioners' report is read from — so might also articles lately appearing in the Atlantic Monthly— hvit the legal- ity of a company in Illinois performing an act beyond its corporate powers is not discussed, either in the Commissioners' report nor in the Atlantic Monthly, and can not be seriously insisted upon by the learned coun- sel again appearing for M. Hildreth Bloodgood, Esq, The essay on Railioay Morals by Herbert Spencer, is exceedingly interesting. If reference is made to the acts of the legislatures of other states regarding other railroad companies, and especially to such acts as permit a corporation of an- other state to act as a home corporation, and the claim is made that such acts of such other states are precedents for the guidance of the court in the case at bar, we might reply by simply saying that what another state has done regarding another corporation cannot apply here, unless the same state of facts and similar statutes are found to exist. " Implied " comity must have a basis to rest upon in each individual State. For instance, the New York and Erie Eailroad was incorporated by the legislature of the State of New York, 24th April, 1832. Several amendatory acts were subsequently passed by the legislature of that State, defining the route and specifying, with great particu- larity, the powers and privileges of the company. After making considerable progress in the work of construction " through the southern tier of counties " in 48 New York, it was found that in Broome County the company were " opposed in tlie construction of said road by a mountain of suoh magnitude as to require tunneling, or to be surmounted by stationary power, witli immense expense to said company," and it being ■" also represented that by being permitted, in the construction of said road, to follow the valley of the Susquehanna River, a distance of about fifteen miles in the neighborhood of and near to said county of Broome (though within the State of Pennsylvania), said company might enjoy the advantages of a level and easy route," the legislature of Pennsylvania was applied to, and on the 16th of January, 1841, an act was passed by that body, authorizing the construction of the road through "a portion of Susquehanna County, in the State of Pennsylvania." The language just quoted is found in the preamble of the act, and is followed by an expression of the views of the legislature of the State of Pennsylvania, (not of Illinois) in these words : "AjsT) Whereas, It is alike politic and just that amity between adjoining States, in respect to their internal improvement operations, should be respected and maintained, therefore " certain privileges were granted sub modo to the corpor- ation previously chartered in New York. Subsequently two supplements were adopted which permitted the construction of the road in other portions of Pennsylvania, but in all three acts the route was specially designated, and the rate per mile per ton for coal was not to " exceed one and a half cents per ton per mile," annual statements were required to be trans- mitted to the Legislature, the stock was to be taxable, and the right of repeal was reserved in case of non- compliance by the company with certain other require- ments of these acts or of the general statutes. This was a special grant given under certain re- strictions, to a certain specially-named corporation 49 because of special, natural causes interfering with the construction of the contemplated line. But what does a reading of these acts of the Legis- lature of Pennsylyania show ? Nothing more nor less than that that body intended by these acts to make the New York and Erie Railroad Company a domestic cor- poration, quofid that part of their line in Pennsyl- vania, but having such other powers out of that State as the State of New York might confer upon it. Under the authority of Railroad Company v. Vance (96 U. S., 450), it is evident, that any claim set up that be- cause the Pennsylvania Legislature saw fit to adopt and legitimize the corporation of another State, but re- straining and specifying its powers, therefore the Leg- islature of Illinois has, or ought to — for that is what the argument amounts to — yes, ought to adopt the 0. & M. Eailway Company of Indiana and Ohio, and legitimize all its acts, and this Court sliould declare in advance of legislative enactment that it has done so. It has generally been supposed that Courts were not constituted to advise legislatures. In the case of Butler's Appeal (73 Pa. St., 448, 461) Justice Mercure, delivering the opinion of the Court, says : " We caDnot review the wisdom or expediency of legislative en- actments.'' In 1875, 30 th March — after the transactions com- plained of in the bill — the Legislature of Illinois passed an act the proviso to which reads : "Provided, that nothing in tliis act shall be so construed as to authorize any corporation acting by or organized under the laws of any other State to purchase or otherwise become the owners of any railroad in this State.'' This is the action of the Illinois Legislature, not of that of Pennsylvania. 50 If reference is made to the fact that the States af Minnesota and Wisconsin gave their consents to the construction Jof the Northern Pacific Eailroad within their boundariesjas organized under the Act of Con- gress, it must also be noticed that a section of the char- ter passed by Congress, and approved July 2, 1864, especially enacted "That said Norfheru Pacific^Kailroad Company shall obtain the consent of the Legislature of any State through which any portion of said railroad line may pass, previous to the construction thereof." Congress does not seem to have had even a faint idea of that "implied comity" claimed by respond- ents. The case of The Attorney Creneral v. Boston ^ Maine M. B. Co. (109 Mass., 99), is not in point. The Court, after referring to " the important question as to the relative powers of the several States by whose concurrent action, a consolidate corporation like this has been created," says (page 101) : "But we have not found it necessary to consider these questions, because we are of opinion that the State of Massachusetts has assented to and sanctioned the action of the defendants in the premises under the authority conferred on them by the State of Maine ;" and then the statute of Massachusetts is cited, and the Court say that it " is in effect an unqualified permission of the defendants to proceed under the authority granted by the Legislature of said State and by necessary implication permits them to exercise all the powers includ- ed in such authority." Eeference to this case on the part of the respondents. is unfortunate for their claim. It fails to support their proposition, but confirms the contrary, viz. : a corpo- ration can exert its powers out of the State of its crea- tion only by permission of the State where it is desired to exercise those powers. , , 51 JFilliamson v. N. J. Soutliern R. It. Co. (26 N. J. Equity [11 C. E. Green], 398), simply shows that under the provisions of a special statute of New Jersey the purchase of stock in another company was, in view of that statute, considered a consolidation of the two com- panies. Diiferent organizations were kept up. How that case can prove that under the statute of Illinois a purchase is a consolidation it is difficult to see. TJiompson v. Waters (25 Mich., 214), is cited to sus- tain the demurer. This was a case where the title to certain real estate was in question, and the Court distinctly say : " Tlie mere rig-lit of a corporation to purchase and sell property not being in its nature strictly a franchise, but a. right existing- equally in individuals without special grant is very generally recog- nized in States other than its creation." Even upon this latter point the Supreme Court of Illinois has expressed its dissent very forcibly in Carroll v. East St. Louis. (67 111., 568.) And yet that is the only thing in this Michigan case which can give comfort to the respondents ; for on page 221, (25 Mich.,) is the following : " Bat the laws of Indiana have no force or operation (as laws giv- ing powers, or creating or enforcing obligations), within the State of Michigan. No State has power to create corporations, or to regulate their powers, or to authorize the exercise of corporate franchises in other States. It may confer powers in the nature of a commission, to be exercised anywhere upon condition that their exercise be assented to by the State or sovereignty where their exercise is sought, but without this assent, express or implied, such powers would be nugatory outside of the State granting them. Each State, by its own legislation, must determine for itself all such questions of public policy arising within its limits. " The Carroll case shows that the State of Illinois has expressed its dissent to a foreign corporation holding real estate in Illinois, except as authorized by the stat- 52 ute of Illinois. U. S. Mortgage Company v. Q-ross (11 0. L. N., 331), does not overrule the Carroll case on {lis point — and tlie Legislature, by the act of 1875, showed that it would not favor foreign railroad com- panies coming into this State and purchasing railroads, for it said, (Laws, 1875, page 96,) : " Promded, that notliing in this act shall be so construed as to au- thorize any corporation acting by, or organizing under the laws of any other State to purchase, or otherwise become the owners of any railroad in this State." This Michigan case falls far short of proving the legality of the transaction complained of in this ac- tion. Shearman v. Ohio (22 O. St., 411), does not apply. In that case the Court says (page 434) : " There is not only no law of Ohio prohibiting the ownership and use of railroads iu the State by foreign corporations, and no public policy of the State to be contravened thereby, iut there is abundant legislation directly to the contrary." Does the proviso to the act of 1875 indicate that the Illinois Legislature entertained the same views as to comity — "implied," or of any other nature — as the legislature of Ohio 1 The act of 1877, post, gives power to purchase completed roads only to Illinois corporations organized under the act of 1872. The provision in the statute of Illinois regarding the holding of real estate by foreign corporations is thus ex- pressed in Rev. Stat., Chap. 32, § 26 : " Foreign corporations, and the officers and agents thereof, doing business in this State, shall be subjected to all the liabilities, restric- tions and duties that are or may be imposed upon corporations of like character organized under the general laws of this State, and shall have no other or greater powers. And no foreign or domestic corpo- ration established or maintained in any way for the pecuniary profit of its stockholders or members, shall purchase or hold real estate in this State, except as provided for iu this act. In Philadelphia, Wilmington and Baltimore li. B. v. 53 Maryland, (10 How. 376,) the Supreme Court considered the case of a consolidated corporation claiming exemp- tion from taxation on the whole of its line because the road of one of its component companies had, by act of legislature, been exempted from such taxation. The consolidation is spoken of as a " union duly made," and Mr. Chief. Justice Taney says : " The plaintifE is now in a corporation composed of seyeral railroad companies wWcli had been previously chartered by the States of Mary- laud, Delaware and Pennsylvania, and which, by corresponding laws of the respective States, were united together, and form one corporation. " Further on he says that the (Maryland) law author- izing the consolidation declares that the consolidated company ''shall be entitled within this State to all the powers and privileges and advantages at that time belonging to these two companies. It grants nothing more. 'S^ow, as these companies held their corporate privileges under different charters, the evident meaning of the pro- vision is, that whatever privileges and advantages either of them possessed should in like manner be held and possessed by the new company, to the (Xtent of the road they had hefoi'e their union." The act of the Legislature of Delaware under which the consolidation was effected declared that the respec- tive companies should " coustitate one company, and be en itled to all the riglits, privileges, and immunities which each and all of them possess, have and enjoy, under and by virtue of their respective charters." In the case of Mlnot v. P W. (& B. R. B. Co., known as the Delaware Bailroad Tax case, (18 "Wall, 206,) the rights of the consolidated company again came before the Supreme Court as to the Delaware portion of the line, and it was held that the provisions of the statute of that State, just quoted, "in no respect" altered the position '• of the new company in one of the States from that of the old com- pany in such State." In Farnmi v. Blackstone Canal Co. (1 Sumner, 46), 54 Mr. Justice Story lield that an act of incorporation should be deemed not to authorize any act to be done which would exceed the jurisdictional power of the State. These caS3S cannot be cited to sustain the claim that because of the "union" of the Indiana and Illinois companies, therefore the former can exercise in' Illinois the privileges granted by the State of Indiana. Ohio saw fit to act differently from Illinois in regard to) this very road. But the situs of the property, the purchase of which is complained of, is in Illinois. Tomlinsoii v. Brancli, (15 Wall, 460,) is not more favor- able to demurrants, for, after citing the P. W. & B. B. R. Co. V. Maryland, the Court says : "It seems to us that this decision is directly in point." Bailroad Company v. Harris (12 Wall., 65, 81), does not sustain this demurrer, for the Court says that in that case the "assent of the foreign authority is express." If the Illinois Legislature had not enacted the special charter of 5th February, 1851, incorporating an O. & M. E. E. Co. of Illinois, but had simply granted a right of way to an Indiana company and giving it within this State the right to exercise all its powers, and had then authorized the reorganized railway company to do the same — as the Ohio Legislature did — the assent of Illi- nois would have been clear, but it chose the former and not the latter course. The obtaining control of the late Eockford, Eoek Island and St. Louis Eailroad by the Chicago, Burling- ton and Quincy E. E. Co., and of the late Oilman, Clin- ton and Springfield Eailroad by the Illinois Central E. E. Co. are cited in support of the power of the defendant company to obtain possession of the Springfield and Illinois Southeastern Eailway. As cases occurring within a short time within the State of Illinois they are in point in this discussion, for no claim that these transactions need the shield of any " implied comity " can be made. Let us look at these transactions. The Chicago, Burlington and Quincy Eailroad Com- pany did not purchase the Rockford, Bock Island and St. Louis Railroad ; but a new corporation having been formed for the ownership of the latter, a contract of lease was entered into between the two companies 1 February, 1877, by which the former company leased the road of the latter, subject to a mortgage lien placed upon it by the latter. Whether the Chicago, Burling- ton and Quincy had the right to execute this lease is not now before this Court, and we are not aware that the Courts have ever been called upon to decide on the legality of the transaction. Perhaps, in that case, " whatever is, is right," but that transaction falls far short of proving the legality of the transaction com- plained of in this action. Again, the Illinois Central Eailroad Company did not purchase the Gilman, Clinton and Springfield Eailroad; but a new corporation, having been formed for the own- ership of the latter, a lease was made. Whether the Illinois Central had a right to execute this lease is not now before the court. We understand the fact to be that the advice of counsel learned in the law was that the company could not purchase the road, although it could make a lease of it. Perhaps, in that case, also, " whatever is, is right," but that transaction falls far short of proving the legality of the transaction com- plained of in this action. In 1875 the Legislature of Illinois, as we have seen, passed an act permitting the remaining interest in roads of other States then held under lease to be purchased by corporations of this State, but forbidding a corpora- 56 tion of another State from "purchasing or otherwise" becoming the owners of any railroad in this State. It is a matter within the intimate knowledge of the Court that many railroad properties have been sold under foreclosure within the past few years, and that not a few of them have been situated in the State of Illinois. The Court is, doubtless, aware that grave doubts existed in the minds of eminent counsel whether the statute of the State permitted the organization of a corporation for the purpose of obtaining the ownership of a railroad aZread?/ huilt. The statutes fully provided for the organization of companies to construct and then own railroads ; and in view of this doubt the Legisla- ture was applied to, and the act of May 11, 1877, was passed in amendment of the general railroad law of 1872, and by it it was provided that companies organized under the act of 1872, might "purchase, own, operate and maintain, any railroad Bold or trans- ferred under order, or powers of sale, or decree of, or sale under fore- closure of mortgage or deed of trust." This amendment went into effect 1 July, 1877, and is now embodied in the first section of Chapter 114, Revised Statutes, 1877, page 759. The Eock Island and Peoria Railway Company was organized under this act, and acquired possession of the property of the late Peoria 'and Eock Island Eailway Company. Transactions coming under this statute, fall far short of proving the legality of the transaction com- plained of in this action. In Illinois Blidland Railroad Co. v. People (84 111., 426), the attention of the Court was called to an ope- rating contract between two companies. No purchase of the property of one company by the other was al- leged, and no question as to the power to purchase waa before the Court. 57 But it is said that this so-called purchase — yclept consolidation by counsel — was of great benefit to the de- fendant company, and a glowing picture was attempted of that benefit and a measuring of miles from Beards- town via Flora and Vincennes given as compared with the distance from St. Louis to Flora. "What additional power do they acquire from the fact that the undertaking may in some way benefit their line ? " Asks Lord Chief Justice Jervis in East Anglian R. Co. T. Eastern Counties B. Co., (11 C. B. 803.) If the corporation might embark in other business than that for which it was chartered, merely because it might be profitable, where would be the safety in grant- ing any charter powers ? Waldo V. C , rf-c, B. B. Co., 14 Wis., 581. In 0. & M. B. B. Co., v. Dunhar (20 111., 623), the Court says : "The privileges of such bodies imist be either expressly or im- pliedly granted. The rights and privileges legally exercised by them are exclusive in their nature, and for that reason they should be held strictly to act within the powers granted. It mU not do to say that it is more convenient, or more profitable to act in a particular man- ner and that we may infer such authority." The " most eligible route " was designated, and it was to " be confined within ten miles on either side of the Great Western Mail Eoute from St. Louis to Vincen- nes." Had it been proposed to build on any other route — from St. Louis via Springfield to Vincennes, for instance — the company chartered in Illinois by the Act of 12th February, 1851, could not have constructed the road. In Banet v. Alton ck Sangamon B. B. Co. (13 111., 508), the charter provided for the building of a railroad from Alton via Carlinville and New Berlin to Spring- field. The Court reviewed, at some length, the authori- 58 ties in regard to the alteration of charters, and the effect upon a contract of subscription, and then came to the conclusion that a slight deviation would not release a subscriber to the stock, but that any act is a change which attaches to the corporation a new and different enterprise. On page 513 the Court says : " If the charter had l)een so amended as to authorize the construc- tion of a road from Alton to Vandalia or Shelbyville, or from Spring- field to Beardstown or Peoria, instead of the one originally designated, the company would be committed to a new and different enterprise, and the stockholders might with much force and justice say, this is Tiot the undertaking in which we engaged." Before the purchase complained of in this action the stockholders of this company were not even treated with that degree of politeness which might have been indicated by an application to the Legislature to ex- tend their charter powers. But the purchase was con- summated instanter. To the same effect, Kean v. Johnson, 9 N. J. Eq. [1 Stock. Ch.J, 401. Angel and Ames, § 393. In this case of the 0. & M. JR. JS. Co. v. Dunbar, (20 111., 623,) an attempt was made because of a lease made 25th January, 1856, to one Jenks, to relieve the com- pany of its liability for damage done. The Court says, page 626 : " We are unable to perceive ^that it is necessary that they should lease the road and franchises to perform any act expressly author- ized by their charter or to effectuate the objects of its creation," and overruled the plea. This was the Illinois, O. & M. E. E. Co. of which the Supreme Court of this State makes this pertinent remark. It was not of the Wabaslj or some other. And this was a decision of the Supreme Court of 11- 59 linois, construing powers of the very company now be- fore this Court. The case oi Hough v. Cook Couniij Land Co. (73111., 23) is readily distinguished from the case at bar. The powers of that Land Company were very general, and the Court says that if the plaintiff's claims were correct a reference to a Master would have to be had whenever and as often as any purchase of property might be proposed. In the case of the defendant company no reference to a Master could possibly be asked for. The plain common sense of any one acquainted with the geography of Illinois and the relative locations of St. Louis and Yincennes is all that is necessary. Com- mon sense is presupposed. Let counsel contend never so laboriously that the purchase complained of was advantageous to the com- pany — as the lease to Jenks may have been, or as it may have been supposed it would be — we are " un- able to perceive" that this corporation had any power to enter into the transaction complained of in this action. It is an old principle of law that — The specific grant of a particular power excludes the idea that the corporation can exercise any other power. The grant of power to do a particular act, and in a par- ticular way, without any negative words, excludes all power to do any other act. Ins. Co. V. Ely, 2 Cowan, 678. Jns. Co. V. Lawrence, 3 Wend., 482. Ins. Co. V. Ins. Co., 7 Wend., 31. Beech v. Ful/on Bank, 3 Wend., 573. In Hunt V. Shreivshury, &c., B. Co. (3 Eng. L. & Eq., 149), the Court says : " As the Act of Parliament contains no powers which extend to this case, the company, who have funds applicable only to the par- ticular purposes authorized by the act, cannot apply them, to other purposes. I do not think that this question has ever been before 60 the House of Lords ; but so far as the Court of Chancery extends, it has unalterably decided, that companies possessed of funds for objects which are distinctly defined by act of Parliament cannot be allowed to apply them for any other purposes whatever, however bene- ficial or advantageous it may appear." VI. PUBCHASE OF THE SPBINGFIELD AND ILLINOIS SOUTH- EASTERN Bail WAY. On the 7th December, 1869, articles of consolidation were entered into between the Pana, Springfield and Northwestern Eailroad Company, and the Illinois Southeastern Railway Company, corporations of Illi- nois, by which the Springfield and Illinois South- eastern Railway Company was formed. As of the 21st January, 1870, this consolidated com- pany made a mortgage trust deed to secure an issue of $3,400,000 of bonds. January 10, 1874, a bill to foreclose this mortgage^ was filed, and C. A. Beeeher, Esq., Vice-President of the company, was appointed Receiver by this Court. On the 3d July following, a decree of sale was entered,, and on the 15th September the sale was had and the property was sold to M. Hildreth Bloodgood, Esq., for the nominal sum of $500,000. The fact, however, was that only about $40,000 was paid in cash and about $3,000,000 in bonds and over-due coupons. By a fur- ther decree, dated 18th January, 1875, Henry Crawford, Esq., appearing for the Farmers' Loan and Trust Com- pany, Trustees, complainants in the foreclosure suit, and M. Hildreth Bloodgood, Esq., purchaser at tha 61 sale, appearing by Henry Crawford, Esq., the Master was directed to execute and deliver to Bloodgood a deed of confirmation, whicli deed was thereupon and of that date executed and delivered to said Bloodgood. And the railway company defendant in that action was required to unite in the execution of that deed, and did so unite by signing the same by Charles A. Beecher, Esq., its then Vice-President. Thus M. Hildreth Bloodgood (who, at his own re- quest, has been admitted a party defendant in this cause, and now demurs to the bill and asks to be " hence dismissed " with his " reasonable costs "), be- came the possessor of the property, premises, rights and things formerly belonging to the Springfield and Illinois Southeastern Eailway Company. By deed dated ten days afterwards, 28th January, 1875, M. Hildreth Bloodgood transferred and conveyed this property to Frederick Schuchardt and John Bloodgood, the consideration named in the deed being $500,000. As of the next day Schuchardt and John Bloodgood and their wives executed a conveyance of this property to Daniel Torrance, the consideration named in the deed being $1,750,000. As of the next day (30th January), Torrance and wife purported to execute a conveyance of this prop- erty to the Ohio and Mississippi Eailway Company, the consideration named in the deed being $1,750,000. As of this same last date (30th January), the officers of defendant railway company purported to execute a mortgage trust deed conveying to the Farmers' Loan and Trust Company all and singular the property, prem- ises, rights and things theretofore belonging to the Springfield and Illinois Southeastern Eailway Company, in trust to secure a proposed issue of bonds to the amount of $3,000,000. 62 This indenture of mortgage was signed by Daniel Torrance, as^^President, and by Daniel Torrance and wife as'grantorSjjin the deed of conveyance of the same date. Copids of the decree of this Court and all of the deeds are contained in the printed document submitted upon this hearing. It is to be'noticed that the conveyances of Blood- good, Schuchardt and Bloodgood, and wives, of Tor- rance and wife, and the trust deed are all acknowledged on the 18th day of February, ^1875. They were all a part of the same transaction : A transaction which, beginning with the purchase of the property by Blood- good, ended by^what purported to be its purchase by the defendant railway company and the payment for it, not by the $1,750,000 "lawful money of the United States of America," as stated in the deed, but by a por- tion of the proposed issue of the $3,000,000 of bonds as set forth in the bill and not denied by demurrants. Mr. Torrance signed this mortgage as President, but he and his wife also^signed it individually. What was the necessity compelling Mr. and Mrs. Torrance to sign this mortgage'of property they had granted — at least so the deeds say — they had granted to another party 1 It would be introducing a new feature in the execution of mortgages were it to be required that the grantors of real estate should join with the grantee in the exe- cution of a mortgage made subsequent to the transfer. Who is the owner of this property ? Who is the party who can legally execute a mortgage upon it ? are ques- tions that wouldj immediately arise in the mind of any one. And especially|^would such a singular proceeding attract the curious attention of parties having business with a railroad corporation, or dealing in, or purchas- ing its securities. The purchaser of a bond secured by mortgage is bound not only by the notice given in 63 the bond itself, but also by the contents of the mort- gage securing it. Of what then would be the fact that the grantor to the railroad company joined in the mort- gage trust deed, even though in "further assurance and confirmation of the same," be notice to all parties? Certainly it could not be claimed that it was notice that there was no infirmity in the title? If Mr. and Mrs. Torrance had conveyed this property to a party legally entitled to become the owner of it, would such a roundabout method have been adopted ? A merchant in failing circumstances wishing to convey property to his wife, does so through a third party. Schuchardt and Bloodgood deeded to the rail- way company via Torrance. And in this deed Mr. and Mrs. Torrance especially "provided, always," that they did not assume any personal liability for the payment of the bonds or the interest thereon. Why was all this done ? Simply because the opinion of eminent counsel having been obtained and that opinion being adverse to the claim that the company had the legal power to make the contemplated pur- chase, the advice of that eminent counsel was followed in so far as it recommended that if the purchase should nevertheless, be decided upon the title to the property should be taken in the name of some reliable third party in order that if at any time the Courts, notwith- standing the fact that forms of an actual purchase had been gone through with, should, nevertheless, decide that the purchase was illegal, then and in that case the prop- erty might revert to that third party. Mr. Torrance continues now to be a good third party to whom the property should revert. When the petition for the removal of the Keceivers appointed by this Court, in thesuit of William King and others was before this Court, one of the Keceivers, 64 Jolm King, Jr., in his answer to that petition referred to the opinion ■which we have mentioned as having been given by the firm of Evarts, Southmayed & Choate, and stated that they had been employed by Mr. Torrance "to counsel him" in connection with this purchase. Infirmity of title was openly shown in this mortgage deed— infirmity of title was evident to any one and to every one who might propose to own a bond. How was this property to be paid for? The deed from Torrance and wife stated that the consideration was $1,750,000 "lawful money of the United States." But the allegation of the bill that this was not true is not denied, and the fact is that payment was accepted by Messrs. Schuchardt and Bloodgood by the issue of $1,- 995,000 of the new bonds with two years' coupons cut off. On the 10th October, 1878, $1,686,000 of these bonds stood registered on the books of the company in the name of John Bloodgood & Co. The bill, folio 65, states that John Bloodgood are the owners of a majority of these bonds, and these figures, which can be readily inspected, are proof of that statement. The demurer does not deny these facts. On the same day $285,000 of these bonds stood reg- istered in the name of Frederick Schuchardt & Co. $1,686,000 and $285,000 = $1,971,000— the amount of these bonds which went into the hands of the grantors to the defendant company, via Torrance, its president. The bUl, in its eighteenth paragraph, relates the facts regarding the bill filed 17th November, 1876, in the Circuit Court for the District of Indiana, by one William King, and others. In that bill William King alleged that he was the owner of $250,000 of the so-called Springfield Division bonds, and after alleging default in the payment of 65 interest on certaiu first and seconil mortgage bonds of the defendant, but without alleging any default on the bonds claimed by him, alleged the insolvency of the company, and averring that it would be necessary to sell all the property, prayed for the appointment of a Beceiver. The railway company appeared by Mr. Beecher, its attorney. Now, who was this "William King, of New Jersey," plaintiff? The bill alleges (folio 68; that he was an employee in the office of John Bloodgood & Co., and that the bonds claimed by him were in fact the property of John Bloodgood & Co., and were handed over to William King for the purpose of instituting those pro- ceedings. On demurrer that statement can not be controverted. It is a fact, and can never be denied. The proceedings whereby Mr. Torrance and Mr. John King, Jr., were appointed temporary receivers in the suit of Wm. King, the application for the dropping of Mr. Torrance, and the appointment of Mr. King as permanent receiver, are well known. Upon the hearing of the petition for j removal of receiver, Mr. Crawford appeared for Mr. King. Beceiver King's answer contains the statement, here- tofore referred to, regarding the opinion of eminent counsel as to the legality of this purchase. Beceiver King says he was "advised by the Presi- dent" that eminent counsel had advised him. Mr. King was a Director at the time of the purchase. In the answer of Mr. Torrance, also filed at the time of the petition for his removal, there is a marked ab- sence of all allusion to this advice. In the one case there was the effort to take shelter under the cover of great names ; in the other knowl- edge of what had been actually "advised" induced silence. The conclusion, then, is irresistible that when the 66 directors of defendant company effected the purchase they were not " advised " that its legality was uncontro- vertible, but they were distinctly and positively " ad- vised " that there were very grave doubts regarding its legality. Hence the " reliable third party." This plaintiff now asks an order of this Court pro- viding that the legal owner of this property may assume possession of it. VII. The Bonds aee Void. Has the corporation a right to bind itself in the form adopted ? is the first question to be made regarding any instrument purporting to be that of a corporation. The inquiry is of the first importance, for if the cor- poration exceeded its powers, its act is a nullity, and however ignorantly or innocently the party dealing with it may have been, he cannot enforce the instru- ment made with it. It is idtra vires, and being a nullity, circulation from hand to hand can impart no validity to it, and as against the corporation he can stand on no better footing than his predecessors. In Pearce v. M. & I. R. R. Co., (21 How., 441, 443,) the Supreme Court says : " Persons dealing with the managers of a corporation must take notice of the limitations imposed upon -their authority by the act of incorporation. " Has the defendant company power to make and issue these bonds? 67 No power to issue bonds was given by the original Indiana charter. By the second amendment the com- pany were authorized to borrow money " for the sole purpose of constructing said road," and for that " sole purpose " it was authorized to issue its corporate bonds. Ohio adopted this charter. In Illinois authority was given by the Act 12 Febru- ary, 1851, " to borrow such sums of money as may be necessary for completing or finishing, or operating their said railroad," that is, the railroad built eastwardly from St. Louis on the definite, "most eligible route, to the east line of the State of Illinois in the direction of the city of Yin- cednes, in the State of Indiana," within a ten miles' limit of a well-known thoroughfare. The general railroad act of 1872 reiterates these views, when power is given to corporations created under it, "to borrow such sums of money as may be necessary for completing, finishing, improving or operating any such railway," and the act of May 7, 1873, especially provides that the concurrence of two-thirds of the stockholders to be ex- pressed at a meeting to be called for that purpose ''shall be necessaey to the validity of any such mortgage." The notices for such meeting shall be given sixty days prior, and the resolution authorizing the bonds and the execution of the mortgage shall be recorded in the different counties. None of these formalities were gone through with. And yet we do not propose to discuss the force of a statute containing the words "shall be necessary.'' Were this a case of a general creditor, and the com- pany or bondholders were to plead a bonded debt 68 sufficient to swallow up all tlie assets, then it might properly arise, and the effect of the words "shall he necessary," as a condition precedent, and of the require- ments as to the recording, would be clearly against the bondholders. We do not argue those questions. But where a company is authorized to build a rail- road between two certain specified points, and within a certain definite and easily known limit, issues a bond which on its face shows that it is secured on property which the company has no right to own, it cannot be claimed that such bond is a negotiable instrument, and good in the hands of even a lona fide holder. " FirEt Mortgage Bond on the Springfield Diyiaion," * * * » " is secured by mortgage upon the Springfield Division of the Ohio and Missiaaippi Kailroad, extending from Shawneetown, on the Ohio river, northwesterly through the towns of Fairfield in Wayne county, Flora in Clay county, Pana in Christian county, Springfield in Sangamon county to Beardstowu on the Illinois River." These words are from the bond exhibited in court. Here was a description of a line of road which the Ohio and Mississippi Eailroad Company had no au- thority to own — had no authority to call its " Spring- field Division " — ^which was not on the " most eligible " route, nor within the ten-mile limit, and yet we are told by the learned counsel for the owner of these bonds that the stockholder is estopped by the allega- tion in these bonds from denying the title of the supposed mortgagor and maker of the bonds. That if the Court does not sustain the demurrer the whole law of negotiable securities will be subverted, and infinite damage done. We do not so understand the matter. In the case of bonds issued by muncipal corpora- tions, we understand the rule to be that where the bonds recite that the power to issue was exercised in the man- 69 ner required by the Legislature, and the existence of certain facts is by law to be ascertained by a certain officer, and such officer, on behalf of the corporation, executes or issues the bonds with the recital that the fact has taken place, or exists, the bonds are valid in the hands of a bona fide owner. Kennicott v. Supervisors of ll'ai/ne County, (16 Wall., 452), is cited by counsel for demurrants to the effect that negotiable securities are good in the hands of a bona fide holder, notwithstanding infirmity [in their issue. We do not propose to dispute or discuss the well- known rules governing negotiable securities, but it can not be conceded that every holder of what purports to be such is therefore protected. In the very case of Kennicott v. Supervisors it is said : "There must, however, be an original authority by statute, to the municipality to issue the bonds," and Judge Dillon, in 1 Dillon's Eeports, 263, note, says : "A municipal corporation may successfully defend against a bond, though negotiable in form, and in the hands of innocent purchasers, on the ground that its officers or agents had no power by law to issue it. This sound, safe and true rule of law has had the uniform appro- val of the State Courts: Aurora v. West (22 Ind., 88,); City d. Alexander (23 Mo., 583) ; Starin «. Genoa (23 N. Y., 439) ; Mercer Co. e. Pittsburg (27 Pa. St., 389) ; Mercer Co. n. Hackett (1 Wall., 83) ; Marshall Co. ■». Cook (38 111., 44) ; Treadwell v. Commissioners (11 Ohio St. , 183) ; and has received the express sanction of the Supreme Court of the United States, in Marsh c. Fulton Co. (10 WaU., 676." In this latter case, Marsli v. Fulton Courdy (10 Wall., 676), the bonds, set out in full on page 679, were in the most approved negotiable form. The words " For the performance of all which the faith of the said County of Fulton is irrevocably pledged, as also the property, revenue, and re- sources of said County of Pulton," were plainly legible in them, and were intended to in- spire confidence. 70 But Mr. Justice Field, delivering the opinion of the Court, says : " Were they valid when issued ? The answer depends upon the law of Illinois in force.'' (1 .Gross, 552.) That law provided " No subscription shall be made * * * or bonds issued by any County unless a majority of the qualified vo'ers of such County * * shall vote for the same." And the law further required that the notices calling for the election should specify the company in which stock was proposed to be subscribed. Bonds, by the vote of the citizens of Fulton County ,^ were authorized to be issued to the Mississippi and Wabash and to the Petersburg and Springfield Eail- road companies. The bonds were issued to another company, and the court held that they were invalid in the hands ;of an innocent person, even though they were couched in negotiable words. In Root V. Goidard, (3 McLean, 102,) it is said : " Are the notes void in the hands of a bona fide holder without notice ? If they were void ab initio, they must be held to be so in the hands of such a holder." In The Floyd Acceptances (7 Wall, 666, 676), the Court says : " In each case the person dealing with an agent, knowing that he acts only by virtue of a delegated power, must, at his peril, see that the paper he relies upon comes within the power under which the agent acts. And this applies to every person who takes the paper after- wards ; for it is to be kept in mind that the protection which commer- cial usage throws around negotiable paper cannot be used to establish the a/uthority by which it was oiigin/iMy issued." In Smead v. Indianapolis, &c., R. R. Co. (11 Ind., 104,) the company was chartered for the specific purpose of constructing a railroad from Indianapolis to the Ohio 71 State line, and made notes for tlie purpose of building another line. "It liad no power to execute merely accommodation paper, or paper to aid an undertaking not contemplated by its charter, and such paper executed hy it would be void. * * * ^^ bill or note executed witliin tlie power of the corporation, but by an abuse of the power in the particular instance would, if governed by the law mer- chant, be valid in the hands of a bona fide holder; but vhen executed rntirtlij icltlwut the corporate power it would not, if indeed there could he a bona fide holder of such a bill." But as tlie company was held to have accepted cer- tain amendments to its charter by which it was per- mitted to issue the notes in suit, tliey were held valid. Again, in Railroad Company v. Hoioard (7 Wall, 393, 415), the Court, referring to the objection raised in argument based upon the claim ttiat the certificates were negotiable, says : "But the objection is entitled to no weight, because it is based ■upon cm erroneous dieory. Written contracts are not necessarily nego- tiable simply because by their terms they enure to the benefit of the bearer." Mr. Justice Clifi'ord, in St. Joseph Toiunshlp v. Rogers (16 Wall, 644, 659), says : ' ' Bonds payable to bearer, issued by a municipal corporation to aid in the construction of a railroad, if issued in pursuance of a power conferred by the legislature, are valid commercial instruments ; but, if issued by such a corporation which possessed no power from the legislature to grant such aid, they are invalid, even in the hands of innocent holders." * * * * "If it appears that it was the sola province of the municipal officers who executed the bonds to decide whether or not there had been an antecedent compliance with the regulation, condition or qualification which it is alleged was not fulfilled," then, and then only, would the corporation be estopped. In Meyer v. City of 3Iuscatme (1 Wall., 384), the city had power by its charter " To borrow money for any object at its discretion," and the bonds issued were held binding upon the city. 72 But on page 393 we read : " A party taking tlie bonds was bounci- to look to the legal au- iJiority," and further, that only "If that were sufficiently comproliensive, " the bonds were valid. The defendant company has never had any power "to borrow money for any object at its discretion." The statutes and the constitution define and limit its power to borrowing money for certain special, defined and restricted objects. In Burrill v. Boston (2 Clifford, 590), it was held that the plaintiff was not even entitled to maintain an action against the city upon certain contracts promising to pay moneys, inasmuch as the corporation had no authority to incur such an obligation. The bonds and the mortgage in the case at bar do not contain recitals estopping the stockholder from ques- tioning the acts of the officers of the company. The bond, as we have seen, distinctly describes property which the company had no authority to own. The mortgage does the same. The fact of Mr. and Mrs. Torrance joining in the latter is evidence of question- able title. The bonds contain notice to every one that they are not negotiable instruments in the holding of which a bona fide owner would be protected. In Hays v. Oitaiua & F. E. V. B. E. Go. (61 111., 422), the Court say they had not been referred to the char- ter of the company, and had no knowledge of its pow- ers, and that " if authority was given,'' to the corporation to do the act complained of, then it might act, and adds, with force : " Persons contracting with it must be presumed to act with full knowledge of its ^ovfeisandcannotaomplain when its acts are not in accordance with the law of its creation." 73 But if the act was " without authority granted in the charter, it was merely an unlaioful aUcvipt to accomplish what can only be done by the Legislature." The rule of law which prevented a mortgagor from denying his own title is not applicable to a corporation whose officers have acted outside its powers. If it were so, directors, though special agents for certain purposes within boundaries easily known, might enlarge the powers of the corporation to an indefinite extent. The policy of the laws of Illinois has been against any such conduct. These laws authorize the issue of bonds only for the purposes specified in the act of incorporation, and only on a vote of two-thirds of the stockholders, which vote shall be recorded in the difl^er- ent counties, and if these conditions precedent are not complied Avith, the act, though purporting to be that of the corporation, is simply that of individuals. In Coryell v. Bridge Co. (9 N. J. Eq. [1 Stock], 457), the Chancellor considered that where the charter of a company required five managers to constitute a quo- rum, and there were but four present when a resolution was passed authorizing the execution of a mortgage, the mortgage is null and void, from the fact that it never received the sanction of the Board of Directors. The O. & M. Eailway Company being a corporation with limited powers only, could not, by its own corpo- rate act, nor by the act of an agent, even though subse- quently ratified by it, exceed those powers and extend its privileges without having previously obtained the con- sent of the Legislature thereto. " The security against danger is in a steady adherence to the prin- ciple stated, that corporations can only exercise their powers over their respective members for the accomplishment of limited and well- defined objeots." Spaulding v. LoweV, 23 Pick., 74. 74 In Curtis v. Leavilt (15 N. T., 9, 274), after citing a, great many cases, the Court says : ' ' We liave here an array of authority which no Court could be justi- iied in disregarding. There are few legal principles upon which the au- thorities are more uniform and decided. Difficult, therefore, as may be the task of determining the validity of corporate acts under a rule which requires ua to have regard not only to the substantial nature and the object of the act, but to the manner of its execution, we have, nevertheless, no alternative but to hold that corporations are not bound by contracts made by their ofBcers in their behalf which exceed their corporate powers ; and may set up their own want of power as a de- fence to such contracts. It is impossible, then, to support the mortgage lioTids as valid tecuritiea. " Counsel for demurrants attempts to show the Court that this action is a " most scandalous " proceeding. It is termed "A bold attempt to take and destroy $3,000,- 000 of bonds in general circulation in good faith," and that in this iconoclastic excursion the Trustee and the Bondholders have been summoned before the Court. It is admitted that the proposition of the bill may appear bold — to some. It is an attempt of a stockholder to protect his rights against an illegal transaction. The Bondholders now before Court have been admit- ted parties at tJieir oion request. The Trustee, holding the legal title to the property alleged to have been purchased, is a necessary party to this litigation. The appearance of this counsel for the Trustee is special for this hearing. The bill states that the purchase complained of was made from the company's President. It also alleges that he was but a convenient conduit, so to speak, by which the title could be transferred — a safe "third party" — as recommended by counsel, to whom the prop- erty might revert if the purchase were declared illegal at any time. Sometimes the forms of a legal transaction are gone 15 through with. But in this case the deeds were all ex- ecuted without the least attempt at compliance with the statute, which says that in order to the validity of an issue of bonds it "shall be necessary" for certain acts to be performed. " "We have purchased " was the lan- guage used by the Directors. The deeds contain the language of sale. The allegations of the bill, that the facts of large losses from the operations of the road while under the control of the Receiver, now a Director of defendant company, were fully known to Torrance, President and Chairman of the Executive and Finance Committee, and to Schuchardt, Director and member of that Committee, as also one of the grantors in the deed to Torrance — these allegations are not denied. The Supreme Court affirmed, at the October term, 1873, the decree of this Court in the case reported in 18th Wallace, 233, Railway Company v. Allerton. In that case the directors proposed to increase the capital stock. This was opposed by one Allerton, who cited in support of his opposition the Constitution of this State, Art. 11, Sec. 13, which declared as follows : "No railroad corporation shall issue any stock or bonds except for money, labor or property actuaMy received and applied to the purposes for which such corporation was created, and aU stock-dividends and other fictitious increase of the capital stock or indebtedness of any such corporation shaU be void." This Court decreed in favor of Allerton, and the company took the appeal, which was decided against them. "We are satisfied (says the Court) that the decree must be af- firmed on the broad ground that a charge so organic and funda- mental as that of increasing the capital stock of a corporation beyond the limit fixed by 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 treinsac- tions of the corporation, and does not extend to a reconstruction of the body itself, or to an enlargement of its capital stock." 76 With, the charter of the defendant company specifying the building of a road between two specified points and "confined" within a certain ten mile limit, "a change so organic and fundamental" as purchasing a road not lying between 'those points nor "confined" within those limits would be much more than a " reconstruction." The Court considers the powers of directors, and holds that they are confined to the ordinary business of the corporation, and that they could not issue new stock, and further, that none could be issued except in accordance with the charter and other statutes of the State. "If (says the Court) tlie charter provides that the capital stock may be increased, or t?iat a new biLsiness may be adopted by the corpora- tion, this is undoubtedly an authority for the corporation {that is, the stockholders), to make such a change by a stockholder's vote in the regular way. ' ■ But (continues th e Court) if it is desired to confer such a power on the directors, so as to make their acts binding and final, it should be expressly conferred." It should be " expresdy conferred " even in such cases as where the " charter provides^'' and only if it does so provide. The Court does not consider the case where a claim is made that even though such power was not provided in the charter, yet the power is conferred. What its reasoning would be in such a case is easily seen. In the case at bar the directors of the defendant company proposed to largely increase the amount of the bonded debt. This could have been done only " if the charter provides," and only by the corporation — "that is, the stockholders") — and in "the regular way." No by-law, no resolution of the Directors, no reso- lution of the corporation could make any other way 77 " the regular way " than that way which was in accord- ance with the constitution and laws of the State. "No railroad corporation," says tlie Constitution, " shall issue any stocks or bonds except for money, labor or property actually received and applied to the purposetfor wMoh such corporation was created, and ail stock dividends, and other fictitious increase of the capital stock or indebtednest of any such corporation shall be void." The O. & M. Railway Company has power to own, operate and enjoy a line of railway situated on the " most eligible route " between Bast St. Louis and Vin- cennes, which " most eligible route " shall be " confined within ten miles on either side of the Great Western Mail Eoute from St. Louis to Vincennes." " iy the charter provides * * * that a new business may be adopted by the corporation, this is undoubted authority * to make such a change * * in the regular way." There was no authority given the O. & M. to make the contract complained of. "It is a case vrhere the power to contract never existed. " Marsh V. Fulton County, 10 Wall., 676, 683. Says the Supreme Court, in Beatty v. Knoivler (4 Pe- ters, 152) : "A corporation is strictly limited to the exercise of those powers which are especially conferred upon it." And in Fdersburgk v. Meizker (21 111., 205), said the late Judge Breese, whose naAe stands second in the list of corporators of this company : "The powers of all corporations are limited by the grants in their charter, and cannot be extended beyond them." To the same effect, Frye v. Bank of Illinois, 5 Gillman, 332. Illinois College v. Cooper, 25 111., 148. ' ' A corporation created by statute can exercise no power, and has no rights except such as are expressly given or necessarily implied. " Huntington v. Savings Bank, 96 U. S., 388. 78 The cliarter is the index to the powers of the corpo- ration. Aurora v. West, 9 Ind., 74. Root V. Croddard, 3 McLean, 103. But the charter of this company did not provide that the corporation could own any other line of railway than that " confined " within certain limits. ' ' This is not a case wliere the party executing the instruments possessed a general capacity to contract." Marsh V. FuUon County, 10 Wall., 683. The bonds are void. VIII. The Doctrine of Estoppel does not Apply. "An estoppel by matter of deed," says Bigelow on Estoppel, 267, " may be defined to be a preclusion against the competent parties to a ncdid sealed instrument and their privies, to deny its force and efEect by any evidence of inferior solemnity." But it is an essential element of estoppel by deed that the deed itself should be a valid instrument; a void instrument under seal does not work estoppel. "But where a body of individuals is ve ted with power only to engage in a special business, any attempt on the part of such a cor- poration to change the object of their association, or undertake new and distinct pursuits from those described ia their organic law, such assumptions are ipso facto illegal, and whenever brought to the notice of courts by third persons, or the parties themselves to the contract, will not be maintained. In such case there is no estoppel, for there is no legal competency in the contracting pa/rties ; and the affirmance or disaffirmance of their acts, by matter in pais, or by corporate resolu. tions, can give no validity to that act which never legally existed. If a corporation could be estopped from setting up its want of authority 79 to enter into contracts made by its agents, its power might be indejinitdy enlarged, and what it was 7u>t permitted to do hy its charter would become obligatory by its acquiesence.'' 0. ^ M. B. R. Co. V. I. ^ a E. B. Co., 5 Am. L. E., 733. Any other rule of law would soon become a reductio ad ahsurdum. It would be folly to claim that the legal capacity of a corporation could be enlarged by estoppel. "Having no corporate capacity to make the contract of purchase, the plaintifE never acquired any title to the note in suit, and the at- tempted act of purchase was strictly ultra vires." F. ^ 3L Bank v. Baldwin, 23 Maine, 198. In Matthews v. Shinher (62 Mo., 329), the Court holds that a national bank has no power to take a mortgage to secure a contemporaneous loan, and says : "If they do, the security taken is ultra nrei and iimd, and may ie pleaded by the party as a defence against its enforcement." In the similar case of Fowler v. Scully (72 Pa. St., 456), it is held : "The defendant has the right to avail himself of the defence and prevent a recovery.'' To the same effect. Woods V. People's Nat. Bank, 83 Pa., 54, 57. Wechler v. First Nat. Bank, 42 Md., 581. Loan Association v. Topeka (20 Wall, 665), Commercial Bank v. lola (2 Dillon, 353), AUen v. Inhabitants of Jay, (60 Me., 124), Lowell v. Boston (111 Mass., 454), and Weisner v. Village of Douglass (64 N. Y., 91), all confirm the proposition that however negotiable in form the bonds of cities or towns may be, yet if issued in aid of purely private purposes, such bonds are void in the hands of all parties, and the party issuing them is not estopped setting up defence founded on that fact. In South Yorkshire, ^c, v. Q-reat Northern, ^c. (9 Ex- 80 clieqr., 55, 84), Baron Parke says that, generally speak- ing, all corporations are bound by their acts under the corporate seal properly affixed, which is the legal mode of expressing the will of the entire body, and are bound as much as an individual is by his own deed. " But," he then proceeds, " when a corporation is created by an act of Parliament for particular purposes with special powers, then, indeed, .another question arises : their deed, though under their corporate seal, and that regu- larly affixed, does not bind them, if it appear by the express provisions of the statute creating the corpora- tion, or by^necessary or reasonable inference from its enactments, that the deed was ultra vires — that is, that the Legislature'meant that such a deed should not be made." The Charles River Bridge v. Warren Bridge, 11 Peters, 420. In Marshy. Fulton County (10 Wall, 683), the Su- preme Court says : " The authority to contract must exist before any protection as an innocent purchaser can be claimed by_the holder," of a bond, and this^decision simply followed Aspinwall v. Davies County (22jHow., 361) — a case in which the O. & M. E. E. Co. of Indiana was interested. No interest has been paid upon the securities issued under the mortgage specified in the bill, and complaint is made of that fact. ^ Had an installment of interest been paid, no greater claim would exist on the part of the defendants. Says Mr. Justice Miller, in Loan Asso- ciation V. Topeka (20 Wall, 655, 667) : " We do not attach any importance to the fact that the town au- thorities paid one installment of interest on these bonds. Such a payment works no estoppel." In this case in 20th Wallace, not only did the bonds have every appearance of being legally issued, but there was in fact an act of the Legislature especially 81 authorizing their issue, and yet as the act was uncon- stitutional the Supreme Court held that in a suit brought on such bonds or the interest coupons attached they were properly declared void. In San Antonio v. Mehaffy (96 U. S., 312), the city was held estopped from denying the verity of the re- cital in certain bonds, and that they were valid in the hands of a bona fide purchaser for value before matu- rity. But it will be noticed that in that case the Coxu:t held that the act of the Legislature authorizing these /bonds was a valid act, and that the issue of the bonds not being ultra vires of the corporation, the doctrine of estoppel was applicable. The rule that a mortgagor is estopped to deny his own title does not apply to corporations created with definite powers. This is a case where the corporation had no general power to contract. "The chief point of difference between the natural and the ar- tificial person is that the former may do whatever is not forbidden by law ; the latter can do only what is authorized by its charter." Bailroad Company v. Harris, 12 Wall., 65, 81. Having no legal capacity to own, it is not estopped from denying its ownership. " The mere fact that a corporation has received the consideration of, or otherwise derived advantage from a contract ultra vires does not involve it in any liability upon such contract." Briee's Ultra Vires, 608. In Eood V. N. Y. # N. R. 7?. R. Co. (22 Conn., 501), the Court says : " The defendants were incorporated by the Legislature for the pur- pose of making or using only a railroad. Their very name, as well as the location and business of their road, is sufficient notice that they are not incorporated for running stages throughout the State ; and no person can assume or suppose the defendants are to go beyond the appropriate business of a railroad. The idea of an imposition on the public as to these stages running ofi from the road, to and from Litchfield and other places, as the defendants' stages, is incredible and preposterous. The pvMic kneio where the charter may be seen, and what it contains. * * * "An infant is never estopped, nor a married woman, nor ought a body of stockholders to be, united as they are under a specific charter; especially when the directors have disregarded it and assumed to act according to their own pleasure. * * * " To hold that the entire body of stockholders gave their con- sent to the contract in question, and that therefore it is good, is ab- surd and puerile. But suppose they did ; this was not a corporate act, and has therefore no corporate character. We repeat that the direc- tors and stockholders have no corporate powers or relation, and can give no corporate consent, but what is within the appropriate busi- ness of the charter. * * * The Legislature has absolutely marked the limit of their power, and they cannot exceed it, under the charter ; and if the directors, even with all the stock- holders at their side, transcend the limits of the charter, and make contracts foreign to their business, they only act for thenlselves. The reason is, tliere can be no consent of the corporation. The con- sent of individual stockholders, however Repeated, is not their con- sent, nor is it admissable proof to establish consent ; so that, if it was true every stockholder had expressed his consent, it would make no difEerence in the case. If this is not so, there are no restric- tions or limitations on chartered companies, and they may do any- thing and everything the directors please which is not absolutely unlawful. The exercise of power is held to prove itself ; which is absurd. * * * ' ' The directors represent them (the stockholders) only while they act within the scope of the charter ; the charter is the measure of their power, and sad would it be if directors could trample upon this, and yet bind the stockholder as firmly as if they were acting within it. If the directors have done wrong, let them suffer the conse- quences. "We place our judgment upon a plain principal of equity and law, viz. : that these defendants are not bound by a contract they had no power to make and are not estopped setting up this matter in de- fence. " The 0. & M. E. E. Co. of Illinois was chartered to own and operate a railroad on a certain specified route which is specifically set forth in the charter. In Bradley y. Ballard (55 111., 413), the complainant bscame a stockholder, and, as the Court says, "from 83 the name and character of the company he must have known it was organized for the purpose of running beyond the limit of this State," and therefore he was estopped from denying the validity of notes given for prosecution of such operation. IX. The Purchase and the Issue of Bonds Could not be Ratified. Quod ah initio non valet in tractu tempor'is not conval- escit. Debile fundament urn falit opus. Quod non hahet principium not halet finem. These " expressions of condensed wisdom " apply to the case at bar. If a corporation ratify the legal act of its agents, the corporation is bound thereby, but it is essential that the party ratifying should be able to do the act. Eatification operates on a past transaction and effects nothing beyond dating back the utterances of the prin- cipal, but a contract ultra vires the charter cannot be made valid by any subsequent act of the corporation. Says the Court, in Marsh v. Fulton County (10 Wall., 676, 684) : "It is also contended that if fhe bonds in suit were issued with- out authority, their issue was subsequently ratified, and various acts of the Supervisors of the County are cited in support of the sup- posed ratification. These acts fall very far short of showing any attempted ratification even by the Supervisors. But the answer to them all is that the power of ratification did not lie with the Super- Visors. A ratification is, in its effect upon the act of the agent, 84 equivalent to the possession by Mm of previous authority. * • The Supervisors possessed no authority. * * They could not, therefore, ratify a subscription. * * « That would be equiva- lent to saying that an agent, not having the power to do a particular act for his principal, could give validity to such act by its direct recognition." A void act is not susceptible of ratification. Story on Agency, § 240. The charter of this company and the statutes do not give a general authority to issue bonds. " The act of incorporation is to them an enabling act. It gives them all the power they possess." Head v. Providence Ins. Co., 2 Cranch, 167. The corporation having no power to obtain the prop- erty, the directors could not legally do any act which would result in their obtaining possession of it. "One principal, however, will always hold, viz. : that whatever is beyond the power of the corporation is, a fortwri, 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 ultra vires, such proceeding will be simply void as far as the corporation is concerned. " Green's Brice's Ultra Fires, 411. No amount of ratification can make good an act without the scope of the corporate authority. Martin v. Zellerbaoh, 38 Cal., 300 Peterson v. Maijor of N. Y., 17 N. Y., 449. Hood V. N. Y. d:c., B. B. Co., 27 Conn., 50. Shaioneetoivn v. Baker, 85 111., 563. In Cumberland Coal Co. v. Shearman (40 Barb., 573, 000), Judge Davies says : ' ' But even if the confirmation had been legally made, and by a majority of the stockholders, which it clearly was not * * the sanction of the major part will not be obligatory on the rest." &5 Acquiescence for years, by stockliolders, in appro- priating funds to carry out schemes beyond the powers of a corporation will not legalize the act. Coleman v. Eastern Counties R. Co., 4 E. Ey. Cases, 513. Said Vice-Chancellor Stewart, in Pridax v. Londsddle (11 Weekly Eeporter, 531) : " Acquiescence, 'without full and sufficient knowledge of the real nature and efEect of the instrument, can he of no avail." To render ratification conclusive, the principal must, at the time of ratification, be fully aware of every material fact, and his act of ratification be an inde- pendent substantive act, and he must not only be aware of the facts, hut apprised of tJie law as to how those facts imuld de dealt ivith if hrought hefore a Court of equity. Hoffman Coal Company v. Cumberland Co., 16 Md., 456. In Hood V. N. Y. (£• K H. R. R. Co. (27 Conn., 50), it was said that the stockholders had given their con- sent, but the Court replied : " The Legislature has ahsolutely marked the limit of their power, and they cannot exceed It, under the charter, and if the directors, even icith ail the stockholderi at their side, transcend the limits of the charter, and make contracts foreign to their business, they only act for themselves. The answer is, there can be no consent of the cor- poration." What a corporation can authorize its officers to do, it can ratify when done, is not more clearly a just rule than its converse, that what a company cannot do the corporation cannot ratify if done by an agent. Speaking of the power of corporate bodies to con- tract, Chief Justice Marshall, in Head v. Providence In- surance Co. (2 Cranch, 169), says : " He who acts hy another acts for himself. He who authorizes another to make a writing for him makes it himself. But with these bodies which have only a legal existence it is otherwise. 86 The act of incorporation is to them an enabling act ; it gives them aU the power tliey possess; it enables them to contract, and when it prescribes to them a Tnode of contracting they rrnut observe that mode, or the instrument no more creates a contract than if the body had never been inxarporatedP In Commissioners of Tippecanoe Co. v. R. JR. Co., 50 Ind., 85, 112, the Supreme Court of Indiana say : "It is also claimed by the appellees that if the contract was originally lUtra vires, the corporation, the parties complaining of it, have acquiesced in its terms such a length of time, received benefits under it, and confirmed it by so many acts, that they are now estopped from questioning its validity. A contract idira vires, the charter is void, and cannot be made valid by any subsequent act of the corpora- tion, because there is no residuary power to confirm it. What they could not make they cannot confirm. A void act can never become valid merely because it remains unquestioned." In Marsh v. Fulton County (10 Wall., 676, 684), the Court says : " A ratification can only be made when the party ratifying pos- sesses the power to perform the act ratified. " Lord Chief-Justice Jervis, in East Anglian Railway Co. V. Eastern Counties Railway Co. (11 C. B., 775), says : ' ' If the contract is illegal as being contrary to the act of Parliament, it is unnecessary to consider the effect of dissentient shareholders ; for if the company is a corporation for a limited purpose, and a contract like that under discussion is not within their authority, the assent of all the shareholders to such a contract, though it may make them all personally liable to perform such contract, would not bind them in their corporate capacity, or render liable their corporate funds." There was no power in the corporation to ratify the purchase and issue of bonds. " The practical difficulty " in the way of the Court 87 granting the prayer of the bill is only an imaginary one. The learned counsel says that as only $1,995,000 of the $3,000,000 bonds were paid to the owners of this property — who are thus acknowledged to have been the Bloodgoods, Schuchardt, and the owners of $24,000 other bonds — it would not now be justice to turn back the property to its owners burdened with the $3,000,000 bonded debt. That is to say, while those parties were perfectly willing— nay, anxious — to get securities of the defend- ant company, even though only two-thirds of the whole sum to be secured upon their so valuable prop- erty, yet now there is in their minds a dreadful " prac- tical" difficulty. We can see none. This plaintiff, believing that he who comes into a Court of Equity seeking equity should do equity,, has no desire to ask, and does not ask, that while the bonds are declared void and the purchase illegal the defend- ant company shall be allowed to retain one iota of benefit which may have been derived either from the possession of the property or the issue of the bonds. As to the bonds not paid over to the Bloodgoods and Schuchardt via Torrance, they are pledged for loans to the defendant company, and it is responsible for the money borrowed, even though the same had been ob- tained on void bonds as collateral. The same rule would hold good as if it had been obtained on forged bonds. The lenders have their remedy against the company for the amount loaned. As to the bonds paid over to Torrance being declared void instruments, they are not secured on the property. Let this Court order the property delivered to Tor- rance and declare the bonds void, and there is not a vestige of a practical difficulty. But the defendant company has been in possession of this property, and the claim is made that it has been greatly damaged thereby, and that the former owners have lost because of such possession by de- fendant. Let the order of the Court granting the prayer of the bill also direct possession to be delivered over to the grantors to the defendant, and further also direct, if to the Court it shall seem proper so to do, a reference to a Master to take testimony and report the damage, or benefit, if any, done the property while in the possesion of the defendant company, and the cash expenditure thereon. This plaintiff asks nothing but justice. Owing to the indisposition of Perry Belmont, Esq., associate counsel, the preparation of this printed brief has been delayed, and I regret not having been able to avail myself of his valuable services. CHAELES W. HASSLEE. 120 Broadway, New York. KF 2293 H35 , Author Vol. Hassler, Charles William. — ; Title - Copy Bowers. of consolidated Railway companxes . — Date Borrower's Name —