contract is executory.' The powers of agents of corporations to enter into contracts in their behalf are limited, by the nature of things, to such contracts as the corporations are by their charters authorized to make." What they cannot do directly, they cannot do indirectly. They cannot bind themselves by the ratification of a contract which they had no authority to make.3 Benefits taken under an ultra vires contract nay be recovered for on a quantum meruit. But as between the parties the contract is often enforced as to the past. Borrowing money is a usual and proper means of carrying out the powers of a corporation."

5

The power to hold lands was a power incident at common law to all corporations, unless they were pecially restrained by their charters or by statute.' Though limited in their duration, they may purchase and hold in fee, and they may sell such real estate whenever they shall find it no longer necessary or convenient. At common law a grant to an individual, without words of perpetuity, such as "heirs or success

8

1 Long v. Georgia Pacific R. R. Co., 91 Alabama, 519; Case v. Kelly, 133 U. S. 21; Jemison v. Citizens' Savings Bank, 122 N. Y. 135; Monument National Bank v. Globe Works, 101 Mass. 57.

' McCullough v. Moss, 5 Den. 567; Central Bank v. Empire Co., 26 Barb. 23; Bank of Genesee v. Patchin Bank, 3 Kern. 315. ' McCullough v. Moss, 5 Den. 567.

• Brunswick, etc., Co. v. United, etc., Co., 85 Maine, 541; Pittsburgh, etc., v. Keokuk, etc., 131 U. S. 371; Beach on Corporations, sec. 423.

5 Bath Gas Light Co. v. Claffy, 151 N. Y. 24.

7

Bradbury v. Boston Canoe Club, 153 Mass. 77.

2 Kent, 281; Co. Litt. 44a, 300b; 1 Kyd on Corp. 76, 78, 108, 115; First Parish in Sutton v. Cole, 3 Pick. 239; Nicoll v. New York & Erie Railroad Co., 12 N. Y. 121.

* People v. Mauran, 5 Denio, 389; 2 Preston on Estates, 50; Nicoll v. New York & Erie Railroad Co., 12 N. Y. 121.

ors," conveyed only a life estate; without such words a grant to a corporation aggregate, or to a mayor or commonalty, conveyed a fee because the grantees were perpetual.1

A loan or sale to one partner binds the partnership in the absence of collusion of the lender or vendor with that partner. The majority of stockholders, no matter how great, have not the right to divert the funds of a joint-stock incorporated company to any other than the purposes for which it was organized; and if such funds are about to be so diverted, a stockholder may file a bill in equity against the company to restrain it by injunction from such diversion or misapplication; but the opinion of the majority of the stockholders must control as to matters within their power and that of the corporation. Any number of incorporators, however great, may not compel one to embark with them into an enterprise not contemplated in their agreement, nor can they compel him, as an alternative, to quit the company. An insolvent corporation may make an assignment for the benefit of its creditors or sell out its entire property against the will of a non-consenting stockholder, but a lease not

1 Viner's Ab., Estate, L. 3; Nicoll v. New York & Erie Railroad Co., 12 N. Y. 121.

Rothwell v. Humphrey and Howell, 1 Espinasse, 406; Bond v. Gibson and Jephson, 1 Campbell, 185.

Bagshaw v. Eastern Counties Railway Co., 7 Hare, 114; 1 Beavan, 1; Marsh v. Eastern Railway Co., 40 N. H. 548.

Foss v. Harbottle, 2 Hare, 461; Dudley v. Kentucky High School, 9 Bush. (Ky.) 576.

'Lord Eldon in Natusch v. Irving, Gow on Partnership, Appendix No. VI, p. 398. Ashton v. Burbank, 2 Dillon, 435, reported in 2 Cooper, Tempore Cottenham, 358. Stevens v. Rutland & Burlington R. R. Co., 29 Vt. 455. Hartford & New Haven R. R. v. Croswell, 5 Hill, 383. Voting trust, West v. Camden, 135 U.S. 507.

contemplated in the contract or articles of incorporation may be set aside on the complaint of a non-consenting stockholder,' as the court will not make a new contract for the parties and will restrain the majority from making a new contract for all."

The power of a copartner to bind the partnership must exist in defiance of expostulations and objections while the relation endures. The stockholders of a corporation are not, in their individual capacities, owners of the property of the corporation as tenants in common, joint tenants, copartners or otherwise." Officers and boards must act in their official or collective capacities. Where covenants are referable to the objects stated in the certificates of incorporation or to powers incident to the corporation, and are authorized by its charter, questions of policy of management, of expediency of contracts or action, of adequacy of consideration not grossly disproportionate, of lawful appropriation of corporate funds to advance corporate interests, are left solely to the honest decision of the directors if their powers are without limitation or restraint. By the by-laws of banking corporations,

Phillips v. Providence Steam Engine Co., 21 R. I. 302.

Parsons v. Tacoma Smelting and Refining Co., 65 Pac. Rep. (Wash.) 765; General and Industrial Trust v. Tod, 180 N. Y. 215; Black v. Delaware and Raritan Canal Co., 24 N. J. Eq. 455, PP. 464-466.

3 Wilkins & Rollins v. Pearce, 5 Denio, 541.

Graham v. Gilson, 28 Cal. 484; Mickles v. Rochester City Bank, 11 Paige, 128; Gashwiler v. Willis, 33 California, 11.

Gashwiler v. Willis, 33 California, 11.

Park v. Grant Locomotive Works, 13 Stew. Eq. 114; aff'd 18 Stew. Eq. 244; Elkins v. Camden & Atlantic R. R. Co., 9 Stew. Eq. 241; Rutland & B. R. R. Co. v. Proctor, 29 Vt. 93; Morawetz Corp. sec. 243; Beach Corp. p. 388; Ellerman v. Chicago Junction R. Co., 49 N. J. Eq. 219, pp. 231-233; Hoyt v. Thompson's Executor, 19 N. Y. 207; Hutchinson v. Green, 91 Missouri, 367, pp. 375,

2

"and by a usage, so general and uniform as to be regarded as part of the law of the land," boards of directors of banks (in Massachusetts) have the general superintendence and general management of all the concerns of the bank, and constitute, to all purposes of dealing with others, the corporation. They may delegate an authority to a committee of their own number, to alienate or mortgage real estate.1 "The general power to perform all corporate acts refers to the ordinary business transactions of the corporation and does not extend to a reconstruction of the body itself, or to an enlargement of its capital stock.' Bank directors (in Pennsylvania), who are gratuitous mandatories, are only liable for fraud, or for such gross negligence as amounts to fraud." "Directors must exercise ordinary care and prudence in the administration of the affairs of a bank, and this includes something more than officiating as figureheads. They are entitled, under the law, to commit the banking business to duly authorized officers, but this does not absolve them from the duty of reasonable supervision; nor ought they to be permitted to be shielded from liability for want of knowledge of wrongdoing if that ignorance is the result of gross inattention."

Authority in an agent of a corporation may be inferred from the conduct of its officers, or from their

Shaw, C. J., in Burrill v. Nahant Bank, 2 Metcalf, 163, pp. 166, 167; see, however, Pub. Sts. ch. 106, sec. 23.

' Mr. Justice Bradley, in opinion of the court in Chicago City Railway Co. v. Allerton, 18 Wall. 233.

Swentzel v. Penn. Bank, 147 Pa. State, 140.

Briggs v. Spaulding, 141 U. S. 132, 11 Sup. Ct. 924; Gibbons v. Anderson, 80 Fed. Rep. 345; see Dorey v. Cory, H. L., 17 Times Law Reports, 732.

knowledge and neglect to make objection, as well as in the case of individuals. And where a contract has been entered into with a neglect of formalities and the corporation has had the benefit thereof, recovery may be had on a quantum meruit, and the contract will be some evidence of the value of that benefit. The seal of a corporation has no mysterious value not possessed by other seals, and a contract under seal executed by the agents of a corporation is subject to the same rules of evidence, and of law, as a similar contract executed by agents of an individual.s

A partner cannot take advantage of his relation of confidence to the partnership to make profit individually. This is true of promoters and directors of corporations.

§ 135. THE COMMON LAW PREVENTS THE USE OF THE RIGHT OF ASSOCIATION TO RESTRAIN TRADE. - A corporation cannot enter into a partnership. But a corporation may in order to attain the objects of the incorporation enter into a special contract with an individual by which the profits and losses of that venture are to be borne equally. But a corporation receiving a benefit from an illegal contract must account for what

1 Emmons v. Providence Hat Manufacturing Co., 12 Mass. 237; Melledge v. Boston Iron Co., 5 Cush. 158; Lester v. Webb, 1 Allen, 34. Roberts v. P. A. Deming Woodworking Co., North Carolina, 432.

Morawetz, Private Corporations, secs. 340, 341; Morrison v. Wilder Gas Co., 91 Me. 492.

• Burton v. Wookey, 6 Madd. 367.

Erlanger v. New Sombrero Phosphate Co., L. R. (1878) 3 A. C. 1218; Greenwood v. Leather Shod Wheel Co., L. R. (1900) I Chancery Division, 421; McElhenny's Appeal, 61 Pa. State, 188. • Whittenton Mills v. Upton, 10 Gray, 582.

Bates v. Coronado Beach Co., 109 California, 160.