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Full text of "The true doctrine of ultra vires in the law of corporations; being a concise presentation of the doctrine in its application to the powers and liabilities of private and municipal corporations"

(Sornrll ICaro Srifirol IGibranj 



Cornell University Library 
KF 1386.U5R32 



The true doctrine of ultra vires in the 




3 1924 019 347 479 




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/cu31924019347479 



THE 



TEUE DOCTEINE OF ULTEA YIEES 



IN 



THE LAW OF CORPORATIONS 



BEING 



A CONCISE PRESENTATION OF THE DOCTRINE IN ITS 

APPLICATION TO THE POWERS AND LIABILITIES 

OF PRIVATE AND MUNICIPAL CORPORATIONS 



REUBEN A. REESE, Esq. 

Op the Colorado Bab 



CHICAGO 

T. H. FLOOD AND COMPANY 

1897 




Copyright, 1897, 

BY 

T. H. FLOOD & CO. 



KF 

or 



STATE JOURNAL PRINTING COMPANY, 

Printers and Stbreotyfbbs, 

madison, wis. 



TO THE 



HOE". THOMAS J. BALLINGEE, 

OF TEXAS, 



UNIMPEACHABLE INTEGRITY AS A MAN, 

AND 

UNSWERVING LOYALTY AS A FRIEND, 

MAKE HIS 

ACQUAINTANCE AN HONOR AND HIS COMPANIONSHIP 

A DELIGHT, 

AS A SLIGHT ACKNOWLEDGMENT 

OP THE 

HIGH REGARD IN WHICH HE IS HELD BY THE AUTHOR,. 

THIS VOLUME 

IS RESPECTFULLY INSCRIBED. 



PREFACE. 



The aim and purpose of this volume is to set forth 
in a concise and practical way the established principles 
of the Doctrine of Ultra Vires in its application to 
the acts and contracts of corporations both public and 
private. By the title — " The True Doctrine of Ultra 
Vires " — no reflection is meant to Be made upon other 
writers who have heretofore treated the subject in works 
on corporation law, although, in some respects, the views 
herein expressed are diametrically opposed to those of 
some modern law writers who have casually discussed 
the various phrases of this doctrine. In whatever feat- 
ures, however, this brief exposition of the subject differs 
from its presentation by others, comparison as to the 
number and character of authorities cited to sustain the 
propositions laid down is respectfully invited. In style 
and composition neither classical precision, stilted phrase- 
ology, nor laborious efforts at " fine writing," has been 
attempted, the main object being to furnish a brief and 
practical compendium of the doctrine of ultra vires for 
the practicing attorney; and it is believed the work, 
though purposely condensed, may for that reason be all 
the more useful to him for ready reference. The dim- 



VI PREFACE. 

culties to be overcome in classifying and arranging, under 
separate headings, the several branches of the subject, 
and at the same time avoid discussing in detail the gen- 
eral law of corporations, which has already been fully 
considered by many eminent commentators, are quite ap- 
parent, and this in some measure may account for the 
fact that no American treatise on the doctrine has ever 
been published. The obstacles to be surmounted in the 
preparation of a work of this character will, it is to be 
hoped, insure to the writer the kind indulgence of the 

profession. 

E. A. E. 

Colorado Springs, 

March 4, 1897. 



CONTENTS. 



CHAPTEK I. 

CREATION AND CONSTRUCTION OP CORPORATE CHAR- 
TERS. 

Part I. 

CREATION OF CHARTERS. 

Section. Page. 

1. Introductory 1 

2. A corporation a legal entity 2 

3. Creation of chartered corporations 2 

4. "What acceptance of charter implies 7 

5. Distinction between natural and artificial persons . . 8 
■6. Distinction between corporation and partnership ... 9 
7. Distinction between corporations under general and spe- 
cial act 10 

Part II. 

CONSTRUCTION OF CHARTERS. 

'8. General rule of construction 12 

9. Corporations have only powers given by charters ... 13 

10. Rule peculiarly applicable to corporation organized under 

general laws 16 

11. Ultra vires questions decided by law of organization . 17 

12. Province of court in construing corporate powers . . 20 

13. Powers construed as incidental to those expressly given 21 

14. Discretion of corporations 22 

15. Miscellaneous incidental powers 22 

CHAPTEK II. 

THE DOCTRINE OF ULTRA VIRES. 

THE DOCTRINE GENERALLY. 

16. Introductory 25 

17. Ultra vires — Senses in which term used 26 



Vlll CONTENTS. 

Section. Page - 

18. Principles of doctrine plain %& 

19. Two propositions of doctrine settled 28 

20. Chronological review of doctrine 30 

21. Head v. Providence Ins. Co. 30 

22. People v. Utica Ins. Co 31 

23. New York Firemen's Ins. Co. v. Sturges 31 

24. Bank of United States v. Dandridge . 32 

25. Beach v. Fulton Bank 32 

26. Bank of Augusta v. Earle 32 

27. Barry v. Merchants' Exchange 33 

28. Perrine v. Chesapeake, etc. Canal Co. ...... 34 

29. Hood v. New York, etc. R. Co. 34 

30. Pearce v. Madison, etc. R. Co 37 

31. Bissell v. Michigan, etc. R. Co . . . .39 

32. Monument Nat. Bank v. Globe Works 41 

33. Miners' Ditch Co. v. Zellerbach . . 42 

34. Franklin Co. v. Lewistown Institute for Savings ... 43 

35. Thomas v. Railroad Co. 43 

36. Davis v. Old Colony R. Co 45 

37. Central Transp. Co. v. Pullman's Palace Car Co. . . . 46 

38. Lucas v. White Line Transp. Co. 51 

39. The doctrine as construed by English courts — Colman v. 

Eastern Counties Ry. Co 55 

40. East Anglian Co. v. Eastern Counties Ry. Co. .... 57 

41. Ashbury, etc. Ry. Co. v. Riche 58 

42. Attorney-General v. Great Eastern Ry. Co. 64 

43. Small et al. v. Smith et al 65 

44. Baroness Wenlock v. River Dee, etc 65 

45. Trevor v. Whitworth 66 



CHAPTEE III. 

CONTRACTS OF CORPORATIONS. 

THE DOCTRINE APPLIED TO CONTRACTS GENERALLY. 

46. Introductory 67 

47. Application of doctrine to contracts generally .... 68 

48. Province of court in applying doctrine 69 

49. Tendency of courts to disregard statutory enactments . 70 

50. As to incidental contractual powers 72 

51. Irregularity no defense to liability on corporate contracts 73 



CONTENTS. IX 

Section. Page. 

52. When charter prescribes mode of contracting, must be 

strictly pursued 74 

53. All persons bound to take notice of limits of corporate 

powers 75 

54. Why corporations not liable on ultra vires contracts . . 76 

55. Distinction between ultra vires and illegal contracts . 77 

56. Prohibited contracts regarded as illegal and void ... 79 

57. Unauthorized contracts none the less illegal because ig- 

nored by courts 80 

OHAPTEE IV. 

THE DOCTRINE APPLIED TO EXECUTED CONTRACTS. 

58. Estoppel — Defense of ultra vires to executed contracts ., 83 

59. Same subject ' 84 

60. Same subject — Corporation similar to one under legal dis- 

ability 85 

61. Performance by innocent party to contract ultra vires a 

corporation 86 

62. Position of United States supreme court on alleged rule 89 

63. San Antonio v. Mehaffey 91 

64. Railway Co. v. McCartney 93 

65. Hitchcock v. Galveston 94 

66. Jones v. Guaranty Co. 97 

67. National Bank v. Mathews 97 

68. Central Transp. Co. v. Pullman Car Co. 98 

CHAPTER Y. 

ACTIONS ON ULTRA VIRES CONTRACTS. 

69. General rule as to actions on illegal contracts .... 100 

70. Ultra vires as defense to actions — General rule . . . 102 

71. Court must be satisfied of legality of contract .... 104 

72. Actions on executed ultra vires contracts 105 

73. Actions in courts of equity and at law 107 

74. Quantum meruit — Relief on ultra vires contracts . . 113 

75. Relief on contracts ultra vires and under statute of frauds 116 

CHAPTER YI. 

ADOPTION AND RATIFICATION OF CONTRACTS. 

76. General doctrine of ratification stated 119 

77. Nature and effect of ratification 120 



X CONTENTS. 

Section. _ Pa « e - 

78. Ultra vires contracts of corporations cannot be ratified 121 

79. Ratification by corporation of acts of promoters . . . 123 

CHAPTEK YII. 

THE DOCTRINE APPLIED TO INCIDENTAL POWERS OF 
CORPORATIONS. 

80. Introductory 126 

81. Power to acquire real property 127 

82. Devise to corporations 131 

83. Jus disponendi in corporations 131 

84 Power to sell implies power to mortgage 133 

85. Power of bank to hold real estate 134 

86. Power to acquire by eminent domain 135 

87. Alienation by deed 136 

88. Conveyance by agent 137 

89. Acknowledgment to corporate deeds 137 

90. Affixing seal to deeds 138 

91. Assignment for benefit of creditors 138 

92. Power to act as trustee 139 

93. Trust must be within scope of corporate powers . . . 140 

94. Cannot be compelled to execute repugnant trust . . . 140 

95. Power to take by bequest 141 

96. Power to borrow money 142 

97. Test to determine if transaction is borrowing .... 144 

98. Instances of implied power to borrow 144 

99. Power to loan money 146 

100. Power as to negotiable notes 147 

101. Power as indorsee 149 

102. Power of savings bank to make negotiable paper . . . 149 

103. Power as to discount and purchase 149 

104. Liability on accommodation paper 15 1 

105. Power to pledge securities 151 

CHAPTER VIII. 

POWERS AND LIABILITIES AS TO CAPITAL STOCK. 

106. Introductory — Nature and purpose of capital stock . . 152 

107. Capital stock as a trust fund 153 

108. Limitation on doctrine that capital stock a trust fund . 155 

109. Power to increase capital stock ; 156 



CONTENTS. XI 

Section. Page. 

110. Consent of stockholders necessary to increase capital 

stock 15? 

111. Power of national bank to increase capital stock . . . 158 

112. Irregularity in executing power as affecting stockholders 160 

113. Power to reduce capital stock 160 

114 Reduction of capital stock in England 161 

115. Power to issue new stock 161 

116. Powers as to special stock 162 

117. Power to issue shares at discount 163 

118. Power to issue preferred stock 164 

119. Liability on ultra vires issue of preferred stock" . . . 165 

120. Power to deal in own stock 167 

121. Power to purchase stock of other corporations .... 169 

122. Instances where power denied 169 

123. Power of foreign corporation to purchase stock of domes- 

tic Company 171 

124. Power to declare dividends 171 

125. Power to pledge future calls 172 

126. Liability on dividends declared 173 

127. Liability on illegal stock 174 

CHAPTER IX. 

THE DOCTRINE APPLIED TO RAILROAD CORPORATIONS. 

128. General power to make contracts 175 

129. Contracts to carry beyond own line 176 

130. Traffic agreements between railroads 177 

131. Pooling contracts 178 

132. Railroad bonds — Definition 180 

133. Power to issue bonds 181 

134. Formalities prescribed must be strictly pursued ... 181 

135. Negotiability of railroad bonds 182 

136. Power to guaranty bonds of another company .... 183 

137. Power to lease road and franchises 184 

138. Ultra vires lease will not be set aside at suit of lessor . 189 

139. Instances where power to lease denied 189 

140. Power to mortgage property 190 

141. Power to mortgage franchises 191 

142. Consolidation and amalgamation — Definition. . . . 192 

143. Powers of corporations to consolidate 194 



XII CONTENTS. 

Section. ' Page. 

144. Effect of consolidation 195 

145. Effect of interstate consolidation "198 

146. Rights and liabilities of consolidated company . . . 199 

147. Consolidation as affecting stockholders 200 

148. Consolidation as affecting taxation 202 

149. Trusts and illegal combinations 203 



CHAPTER. X. 

THE DOCTRINE IN ITS RELATION TO DIRECTORS AND 
OTHER OFFICERS AND AGENTS OF CORPORATIONS. 

150. Introductory 207 

151. Distinction between corporate acts and unauthorized acts 

of directors ' 207 

152. Test to distinguish acts of directors from corporate acts 209 

153. Directors as trustees 210 

154. General powers of directors 211 

155. Instances of directors' powers 211 

156. General liability of directors 512 

157. Power of bank directors , 213 

158. Liability of bank directors 214 

159. Powers and liabilities of bank president 215 

160. Powers and duties of bank cashier 216 ' 

161. Instances of cashier's powers 217 

CHAPTER XL 

THE DEFENSE OF ULTRA VIRES AS TO TORTIOUS ACTS 
OF OFFICERS AND AGENTS. 

162. General rule as to liability of corporation for torts . . 219 

163. Liability for tortious acts of agent 221 

164. Authority of agent in fixing liability 223 

CHAPTER XII. 

POWERS AND LIABILITIES OF FOREIGN AND DE FACTO 
CORPORATIONS., 

165. General powers of foreign corporations 225. 

166. The absence of prohibitory legislation presumes a tacit 

adoption of foreign laws 226 



CONTENTS. Xlll 

Section. Page. 

167. Contractual powers similar to domestic corporations . 227 

168. De facto corporations estopped to deny corporate exist- 

ence 227 

CHAPTER XIII. 

THE DOCTRINE OF ULTRA VIRES APPLIED TO MUNICIPAL 
CORPORATIONS. 

169. Introductory— Nature. of municipal corporations . . . 231 

170. Exercise of municipal powers 232 

171. Ordinances — Power to enact 233 

172. Nature and effect of ordinances 234 

173. Ministerial and judicial ordinances distinguished . . . 235 

174. Effect of ultra vires ordinances 236 

175. Instances of ultra vires ordinances . 236 

176. Ordinances must be reasonable 237 

177. Courts cannot interfere with discretion of municipality 239 

178. Courts may restrain passage of ultra vires ordinances . 240 

179. Powers as to taxation 240 

180. Power to tax may be revoked 241 

181. Power can be exercised only fqr public purposes . . . 242 

182. Taxation and power to license distinguished .... 243 
. 183. Power to exercise right of eminent domain 244 

184. Distinction between eminent domain and taxation . . 244 

185. Powers as to property 245 

186. Powers of divided municipality 247 

187. Powers of extinguished municipalities 248 

CHAPTER XIY. 

GENERAL POWERS AS TO CONTRACTS. 

188. Introductory — General rule as to contracts .... 249 

189. The mode prescribed must be strictly pursued .... 252 

190. Ultra vires contracts by officers 254 

191. Implied municipal contracts. 256 

192. When estoppel not applicable 257 

193. When estopped to deny irregularity 258 

194. Ratification of ultra vires contracts 258 

195. Contracts of compromise and arbitration 259 

196. Limitation on contracting indebtedness 260 

197. Instances where increase denied 262 

198. Equity will enjoin illegal creation of debt 233 



XiV CONTENTS. 



CHAPTER XV. 

PARTICULAR. POWERS AND LIABILITIES OF MUNICIPAL 

CORPORATIONS. 
Section. Page. 

199. Exclusive control over streets 265 

200. When estopped to deny existence of street 266 

201. Power to grade and improve streets 266 

202. Discretionary powers as to improvement 268 

203. Liability for consequential damages 269 

204. Liability for accidents upon streets 271 

205. Instances of liability for defective streets 273 

206. Notice to authorities required . . . 274 

207. Sewers — General powers as to 275 

208. Discretion in selecting system 276 

209. Duty to provide sewer outlet 277 

210. City not insurer of condition of sewer 277 

211. Liability for injury from defective sewer 278 

212. Power to abate nuisances 279 

213. Liability as to nuisances 280 

214. Powers as to quarantine regulations 282 

215. Powers as to public wharves 283 

216. Exclusive privileges to gas and water companies . . . 284 

217. Contracts as to gas and water supply 285 

218. Power to regulate rates 285 

219. Liability for damages owing to inadequate water supply 286 

220. Doctrine of respondeat superior 287 

221. Distinction between public gwasi-corporations and munic- 

ipal corporations 289 

222. Not liable for damages arising from ultra vires acts of 

officers • 291 



CHAPTER XVI. 

POWERS AND LIABILITIES AS TO MUNICIPAL SECURITIES. 

223. Power to issue bonds 295 

224. Purposes for which bonds may be issued 296 

225. Instances where power denied 297 

226. Formality in execution as affecting liability .... 298 

227. Irregularity as affecting liability 298 

228. Effect of recitals in bonds 299 



INDEX. XV 

Section. Page. 

229. Who are bona fide holders 301 

230. Power to issue bonds not implied from power to borrow . 302 

231. Limitation on indebtedness as affecting legality of bonds 303- 

232. Invalid bonds cannot be ratified 305 

233. Liability cannot be avoided by reorganization .... 306 
234 Liability in assumpsit on invalid bonds 307 

235. Illegal issue of bonds may be enjoined 308 

236. Municipal-aid bonds 309 

237. Power must be specially granted 309 

238. Power to subscribe to railroad stock 311 

239. Limitation on amount of subscription 312 

240. Levying tax to pay subscription 313 



TABLE OF CASES CITED. 



References are to sections. 



A. 

Abbey, Metropolitan Concert Co. 

v., 139. 
Abbott, Elliott v., 160, 161. 
Abbott v. Johnstown, etc. R. Co., 

137. 
Abbott v. Omaha Smelting Co., 3. 
Abbott v. Packet Co., 70. 
Abbott, Society, eta v., 107. 
Abbott, Thompson v., 144, 146, 

186. 188. 
Abel, March v., 71. 
Aberdeen, State Board v., 191. 
Aberdeen R. Co. v. Blaikie, 153. 
Academy, Moss v.. 96. 
Academy of Music v. Flanders 

Bros., 168. 
Ackerman v. Halsey, 158. 
Acres, Lake Erie R. Co. v., 163. 
Adams, Anthony v., 213, 222. 
Adams v. Farnsworth, 191. 
Adams, Haven v., 87. 
Adams, Tash v., 175. 
Adams, Valparaiso v., 203. 
Adams Co., Quincy Bridge Co. v., 

145. 
Adams Express Co. v. Wilson, 129. 
Addlestone Co., In re, 117. 
Adriance v. Roome, 52. 
.iEtna Bank v. Charter Oak Ins. 

Co., 9, 136. 
.^Etna Ins. Co., Middleport v., 240. 
Agar v. Insurance Co., 160. 
Agnew v. Brail, 195. 
Agricultural Association, Taylor 

v., 96. 
Aicardi v. State, 8. 
Akron, McCombs v., 220. 

B 



Alabama, etc. Co. v. Central As- 
sociation, 70, 96. 

Alabama R. Co., Jordon v., 162. 

Alabama R. Co. v. Smith, 53. 

Alabama R. Co., Waddill v., 53. 

Albany, People v., 212. 

Albany Co., Laramie Co. v., 86. 

Albert Association Co., In re, 137. 

Albert Lea, Graham v., 205. 

Albright v. Town Council, 188. 

Alden v. Minneapolis, 203. 

Aldrich,Lumbard v., 81. 

Aldrich v. Tripp, 222. 

Alers, Sherwood v., 70. 

Alexander v. Brown, 77. 

Alexander v. Cauldwell, 154, 194 

Alexander, Mathews v., 173. 

Alexander v. O'Donnell, 69. 

Alexander v. Relfe, 163. 

Alexander, Richmond Factory 
Co. v., 3. 

Alexander v. Tolleston Club, 81. 

Allegheny City, Amey v., 239. 

Allegheny City v. McClurkan, 70, 
74. 

Allen, Camden v., 224 

Allen, Chouteau v., 105, 194 

Allen v. Galveston, 170. 

Allen v. Herrick, 127. 

Allen v. Inhabitants, etc., 224 

Allen v. Joy, 181, 225. 

Allen v. Lafayette, 233. 

Allen, Page v., 198. 

Allen, Phillips v., 212. 

Allerton, Railway Co. v., 109, 110. 

Alley v. Inhabitants, etc., 170. 

Allison, Bank of Hindustan v., 
127. 

Allison v. Railroad Co., 235. 



XV111 



TABLE OF CASES CITED. 



References are to sections. 



Almada & Tirito Co., In re, 117. 
Almy, Salem Nat. Bank v., 51, 168. 
Alton, Sturtevant v., 188, 201. 
Alvis, Sheward v., 53, 70. 
American Academy v. Howard, 

94. 
American Com. Co. v. Humboldt 

M. Co., 136. 
American Ins. Co., Judah v., 14 
American Ins. Co., Miller v., 74. 
American Preserves Trust v. Man- 
ufacturing Co.. 69, 148. 
American Tube Works v. Boston 

Mach. Co., 116. 
American, etc. Soc, "Wade v., 92. 
American, etc. Union v. Yount, 

81. 
Amery, Rex v., 3. 
Ames, British Am. Land Co. v., 

166. 
Amey v. Allegheny City, 239. 
Amherst, Merrick v., 225. 
Ammon, Miller v., 69. 
Amy, Pendleton v., 227. 
Amy, St. Joseph Township v., 227. 
Anderson, Bliss v., 53. 
Anderson v. City, 175. 
Anderson, Smith v., 153. 
Anderson v. Township of Santa 

Ana, 238. 
Andover, Gassett v., 191. 
Andover v. Grafton, 230. 
Andover, Jenkins v., 224. 
Andreas, Craig v., 69. 
Androscoggin B. Co. v. Auburn 

Bank, 105. 
Androscoggin R. Co., Evansville 

R. Co. v., 129. 
Anglo-Cal. Bank, Mahoney Min. 

Co. v., 96, 98. 
Anita, Davis v., 176. 
Anthony v. Adams, 213, 222. 
. Anthony v. County of Jasper, 226. 
Anthony v. Household Mach. Co., 

116. 
Appeal of City of Erie, 196, 197. 
Appleton, Hayes v., 170. 
Archer v. Terre Haute R. Co., 9. 
Ardesco Oil Co. v. N. A. Min. Co., 

83, 91. 
Argenti v. San Francisco, 188, 190, 

191, 192. 
Arkansas, Curran v., 107. 



Armstrong, Beaver v., 135. 

Armstrong v. Brunswick, 212, 2131 

Armstrong, St. Louis v., 194. 

Armstrong, Winters v., 109, 111. 

Am v. City of Kansas, 211. 

Arnot v. Erie R. Co., 129, 136. 

Arrighi, Jefferson Co. v., 194. 

Arthur v. Bank, 91. 

Arthur v. Griswold, 158. 

Ash, Conservators v., 3. 

Ashbury, Glass v., 170. 

Ashbury Ry. Co. v. Riche, 41, 42, 
43, 44, 45, 52, 53, 72, 78, 137. 

Ashley v. Port Huron, 211. 

Ashton-under-Lynn, Bateman v., 
70. 

Ashville Division, etc. v. Aston, 
81. 

Aspinwall, Eaton v., 106. 

Aspinwall, Knox Co. v., 135, 190, 
193, 227, 228. 

Aspinwall v. Sacchi, 106. 

Assurance Co., In re, 168. 

Aston, Ashville Div. etc. v., 81. 

Atchison, etc. R. Co. v. Commis- 
sioners, 146. 

Atchison, etc. R. Co. v. Denver, 
etc. Co., 131. 

Atchison, etc. R. Co. v. Fletcher, 
136. 

Athenseum, etc. Co. v. Tooley, 74. 

Athens City Water Works, Fow- 
ler v., 217. 

Atkinson v. Marietta, etc. R. Co., 9; 

Atlanta, Cooper v., 222. 

Atlanta, Fulla v., 203. 

Atlanta, Wells v., 177, 188, 217. 

Atlantic, etc. R. Co. v. State, 144 

Atlantic City Water Works v. 
Atlantic City, 216, 217. 

Atlas Bank v. Nahant Bank, 74. 

Attorney-General v. Boston, 145t 

Attorney-General v.' Great East- 
ern Ry.. 42, 43, 44, 47. 

Attorney-General v. Insurance 
Co., 100. 

Attorney-General v. Stevens, 168. 

Attorney-General v. Wilson, 153. 

Atwater, First Cong. Soc. v., 92. 

Atwood, De Camp v., 91. 

Aubert v. Walsh, 69. 

Auburn Bank, Androscoggin R. 
Co. v., 105. 



TABLE OB" CASES CITED. 



XIX 



References are to sections. 



Anburn Plank Road Co. v. Doug- 
las, 8. 

Augusta, Walsh v., 196. 

Augusta, Williams v., 212. 

Augusta, Wright v., 219. 

Auerbach v. Le Sueur Mill Co., 81, 
100. 

Aukland v. Westminster Board, 
53. 

Aurora v. Cobshire, 200. 

Aurora, Faulkner v., 204. 

Aurora v. West, 135, 237. 

Aurora Agl. Soc. v. Paddock, 77, 84. 

Austin, Berrick v., 161. 

Austin, Doyle v., 181. 

Austin v. Mundy, 175. 

Australian, etc. Co. v. Mounsey, 
96, 98. 

Averhill, Moss v., 56, 100. 

Averhill, Rochester Sav. Bank 
v,9. 

B. 

Backman v. Charleston, 194 

Bacon, Holt v., 161. 

Badger v. Bank, 160, 161. 

Badger, Partridge v., 83, 96, 100. 

Bagshaw v. Eastern Counties Ry. 
Co., 53. 

Bagshaw v. Eastern Union Ry. 
Co., 9, 70. 

Bailey v. M. E. Church, 53. 

Bailey, Padrick v., 176. 

Bailey, State v., 143, 143, 147. 

Baird v. Bank, 81. 

Baker v. Boston, 222. 

Baker, City of Madison v., 211. 

Baker, Dixon v., 211. 

Baker, Niagara County Bank v., 
103. 

Baker, Shawneetown v., 195. 

Baker, Whitman M. Co. v., 47, 81. 

Bakersfield Association v. Ches- 
ter, 51, 168. 

Baldwin, Farmers' & M. Bank v., 
103. 

Balfour v. Ernest, 148. 

Ball, Savage v., 100. 

Ballard, Bradlev v., 58, 96. 

Ballou, Litchfield v., 233. 

Ballston Bank v. Marine Bank, 
161. 



Baltimore v. Baltimore, eta Co., 

47. 

Baltimore v. Eschbach, 190, 201, 
222. 

Baltimore v. Gill, 196, 198. 

Baltimore, Horn v., 201. 

Baltimore v. Musgrove, 190. 

Baltimore v. Radicke, 176, 178. 

Baltimore, etc. R Co. v. Glenn, 
166. 

Baltimore, etc. R. Co., Mayor, eta 
v., 128. 

Baltimore, eta R. Co. v. Schu- 
macher, 129. 

Bangor, Darling v., 202. 

Bangor, Smith v., 205. 

Bangor Savings Bank v. Still- 
water, 233. 

Bangor & Slate Co., In re, 118. 

Banigan, Bard v., 119. 

Bank, Arthur v., 91. 

Bank, Badger v., 160, 161. 

Bank, Baird v., 81. 

Bank v. Bruce, 120. 

Bank v. Chillicothe, 96. 

Bank v. Colby, 144. 

Bank, County of Moultrie v., 197. 

Bank, Dabney v., 91. 

Bank, Dana v., 87. 

Bank, Dater v., 83. 

Bank, Farmers' & M. Bank v., 160. 

Bank, Godbold v., 156. 

Bank v. Haskill, 161. 

Bank, Jones v., 168. 

Bank, Lloyd v., 160. 

Bank, Louisville v., 215. 

Bank, Mackay v., 162. 

Bank, McDonough v., 79. 

Bank, Merrick v., 91. 

Bank, Minor v., 160. 

Bank, Norton v., 74. 

Bank, People v., 170. 

Bank, Pomeroy v., 144 

Bank, Potter v., 100. 

Bank, Reese v., 124. 

Bank, Ridgeway v., 96, 100. 

Bank v. St. John, 156. 

Bank, St. Louis v., 171. 

Bank, Smith v., 161. 

Bank, Spohr v., 168. 

Bank, State v., 83. 

Bank, Sturges v., 161. 

Bank v. Transportation Co., 120v 



XX 



TABLE OF CASES CITED. 



References are to sections. 



Bank, Union M. Co. v., 96. 

Bank, Wild v., 160. 

Bank, Williams v., 74, 

Bank of Augusta v. Earle, 8, 9, 26. 

28, 47, 52, 103, 156, 157, 165, 

167. 
Bank of Australasia v. Breillat, 

96, 98. 
Bank of British Columbia, Wil- 
lamette v., 9, 53. 
Bank of Columbia, Mechanics' 

Bank v., 161. 
Bank of Columbia v. Paterson, 76, 

77, 188. 
Bank of England, Coles v., 124. 
Bank of Gennessee v. Patchin 

Bank, 9. 
Bank of Hindustan v. Allison, 

127.. 
Bank of Hindustan, In re, 142. 
Bank of Kentucky, Lewis v., 167. 
Bank of Kentucky v. Schuylkill 

Bank, 79, 160. 
Bank of Lyons v. Demon, 77. 
Bank of Maryland, State v., 100. 
Bank of Michigan v. Niles, 81,85. 
Bank of Pennsylvania v. Comm., 

8. 9, 12. 
Bank of Pennsylvania v. Reed, 

161. 
Bank of St. Paul v. Dana, 14. 
Bank of Sonoma County v. Fair- 
banks, 225. 
Bank of United States v. Dand- 

ridge, 13, 24, 28, 50, 76, 151, 

154, 157, 160. 
Bank of United States v. Fleck- 

ner, 21, 77, 103, 160. 
Bank of United States v. Owens, 

69. 
Bank of Virgennes v. Warren, 

160. 
Banking Co. v. Jersey City, 178. 
Banking Co., Leggett v., 84. 
Banks v. Poitiaux, 83. 
Baptist Society, Chambers v., 94. 
Barber, Erie Co. Iron Works v., 

162. 
Barber, Montgomery Co. v., 188. 
Barber Asphalt Pav. Co. v. Go- 

greve, 189. 
Barber Asphalt Pav. Co. v. Hunt, 

189. 



Barbour v. Ellsworth, 222. 
Barclay Coal Co., Morris R. Cot 

v., 131. 
Bard v. Banigan, 119. 
Bard v. Poole, 166, 167. 
Barker v. Hoff, 69. 
Barker v. Insurance Co., 100. 
Barker District v. Valley Dis- 
trict, 186. 
Barlow, Whitney Arms Co. v., 55, 

56, 58, 61, 63, 64, 66, 68. 
Barnes v. District of Columbia, 

220. 
Barnes v. Lacon, 237. 
Barnes v. Ontario Bank, 96, 98, 

160, 161. 
Barnett v. Denison, 229. 
Barney, Frothingham v., 122. 
Baroness Wenlock v River Dee, 

44. 
Barr v. City of Kansas, 204. 
Barr, Hatch v., 87, 90. 
Barrington v. Neuse River, 86. 
Barritt v. New Haven, 203. 
Barrow, etc. Co., In re, 114. 
Barry v. Merchants' Exchange, 

27, 83, 84, 96, 100, 106, 124. 
Bartholomew, etc. Co. v.- Beatty, 

168. 
Bartlett, Spring Valley Water 

Works v., 235. 
Bartlett v. Viner, 55. 
Barwick v. English, etc. Bank, 

162. 
Bass, White v., 69. 
Bassett, Granger v., 124, 126. 
Bassett, Holbrook v., 96. 
Batelle v. Northwestern Cement 

Co., 79. 
Bateman v. Ashton-under-Lynn, 

70. 
Bateman, City Bank v., 77. 
Bateman v. Covington, 215. 
Bateman v. Mayor, 50,488. 
Bates, Savings Bank v., 91. 
Bates County v. Winter, 190. 
Bauerle, Wilkinson v., 91. 
Baumgartner v. Hasty, 212. 
Bay St. Louis, Chandler v., 230. 
Bayonne, Paret v., 195. 
Beach v. Fulton Bank, 25. 
Beacher, Tyler v., 181. 
Beale, Robinson v., 120. 



TABLE OF CASES CITED. 



XXI 



References are to sections. 



Bean v. Joy, 195. 
Bear River Co., Blen v., 194. 
Bear River Co., Shaver v., 77. 
Bearden v. Madison, 172. 
Beardstowa, etc. R. Co. v. Met- 

calf, 84. 
Beasley, Mayor, etc. v., 176. 
Beatty v. Bartholomew, etc. Co., 

168. 
Beatty v. Insurance Co., 47. 
Beaty v. Knowler, 8, 12, 47. 
Beaufort Co., Satterthwaite v., 

177. 
Beaver v. Armstrong, 135. 
Becker v. Keokuk Water Works, 

219. 
Beckwith, Mount Pleasant v., 186, 

187. 
Beckwith, Winslow Mfg. Co. v., 

88. 
Beecher, Tyler v., 225. 
Beekman v. Saratoga Rv. Co., 86. 
Beers v. Phoenix Glass Co., 96, 160. 
Belding v. Pitkin, 69. 
Bell, State v., 173. 
BelL Weir v., 158. 
Bell Tel. Co., St. Louis v., 170. 
Bell's Gap Ry. Co. v. Christy, 79. 
Bellamy Mfg. Co., Dispatch Co. v., 

77. 
Belleville, St. Louis, etc. Co. v., 192. 
Bellevue, Town of Depere v., 186. 
Bellmeyer v. Marshalltown, 9. 
Belmont v. Erie Ry. Co., 53. 
Belmont, Frost v., 79. 
Beman v. Rufford, 137. 
Bennett v. Filyaw, 129. 
Bennett v. Peninsular S. Co., 129. 
Bennett, Watson v., 161. 
Bennington Ins. Co., Isham v., 90. 
Benson v. Heathorn, 153. 
Bentley v. County Commission- 
ers, 170. 
Bentz, St. Louis v., 212. 
Bergen v. Clarkson, 173, 174 
Bergen v. Fishing Co., 91. 
Bergen County, Merchants' Bank 

v., 226, 229. 
Bergman v. St. Paul, etc. Ass'n, 

53. 
Bernal, Parker v., 122. 
Bernerly, Trumpler v., 86. 
Berrick v. Austin, 161. 



Berry, New Decatur v., 214 
Berry, Pneumatic Gas Co. v., 76, 
Berry, Railroad Co. v., 144. 
Berry v. Yates, 121. 
Bever, Clark v., 115. 
Bevers, State v., 190. 
Bigelow v. Randolph, 219. 
Bigler v. Mayor, etc., 189. 
Bill v. Western Union Tel. Co., 

139. 
Billings, Providence Bank v., 8. 
Binney's Case, 83. 
Biscoe, Ringas v., 91. 
Bishmeyer v. Evansville, 219. 
Birch v. Cropper. 117. 
Bird v. Bird's Pat. Co., 33, 78. 
Birkshire, etc. R. Co., Winchester 

v., 137. 
Birmingham Gas Co., Smith v., 

162. 
Birmington v. Wallis, 69. 
Bishop v. Brainerd, 143. 
Bishop v. Centralia, 200. 
Bishop, Wright v., 235. 
Bissell, Blanchard v.. 171. 
Bissell v. Jeffersonville, 193. 
Bissell v. Kankakee, 181, 225. 
Bissell v. Mich. S. R. Co., 31, 38, 

55, 61. 
Bissell v. Spring Valley Town- 
ship, 226. 
Black v. Columbia, 219. 
Black v. Delaware Canal Co., 53, 

70, 72, 137, 143. 
Black v. United Companies, 8. 
Blackburne v. Selma, etc. R. Co., 

81. 
Blackburne Bldg. Soc. v. Cun- 

liffe, etc. Co., 96, 97. 
Blackshire v. Homestead, 87. 
Blackstone Canal, Fai-num v., 96. 
Blaikie, Aberdeen R Co. v., 153. 
Blair, Fogg v., 115. 
Blair v. Insurance Co., 100. 
Blake, Great Western R. Co. v., 

129. 
Blake v. Mayor, 170. 
Blalock v. Kernesville Mfg. Co., 

120. 
Blanchard v. Bissell, 171. 
Blanchard's Factory v. Warner, 

81. 
Bland, Robinson v., 75. 



XX11 



TABLE OF OASES CITED. 



References are to Sections. 



'Blanke, Egmarm v., 120. 
Blasdell v. Fowler, 69. 
Blazier v. Miller, 117. 
Blen v. Bear River Co., 194 
Bliss v. Anderson, 53. 
Bloodgood, Utica Ins. Co. v., 75. 
Bloom, Slee v., 107. 
Bloom v. Xenia, 170. 
Blunt v. Walker, 81. 
Board, etc., McDermott v., 172. 
Board of Commerce v. Legg, 210. 
Board of Education v. State, 225. 
Boardman v. Hayne, 190. 
Boardman v. Lake Shore E. Co., 

124. 
Boffinger, St. Louis v., 177. 
Bogardus v. Trinity Church, 81. 
Bolles, Commissioners v., 238. 
Bolton v. San Antonio, 235. • 
Bond, Crawfordsville V;, 209. 
Boney, Louisville, etc. R. Co. v., 

146. 
Bonham, Susquehanna Canal Co. 

v., 141. 
Bonner v. New Orleans, 135. 
Boogher v. Life Association, 162. 
Boom Co. v. Paterson, 86, 183. 
Boonville, Hunt v., 203. 
Booth v. Robinson, 96, 98, 122. 
Bornham, Canal Co. v., 15. 
Borough, etc. v. Fitzpatrick, 204 
Borough of Reading, Green v., 

203. 
Bornman, Penn v.< 69. 
Boston, Attorney-General v., 145. 
Boston, Baker v., 222. 
Boston, Brimmer v., 215. 
Boston, Burrill v., 190. 
Boston, Cavanagh v., 183, 212. 
Boston, Child v., 208. 
Boston, Dingley v., 212. 
Boston, Fisher v., 219. 
Boston, Hill v., 219. 
Boston, Lowell v., 69, 179, 181, 

225. 
Boston, Nason v., 205. 
Boston, Shaw v., 176. 
Boston, Thayer v.. 162, 222. 
Boston Association, Roylston 

Market v., 170. 
Boston Carpet Co., Howe v., 122. 
Boston Mach. Co., American Tube 

"Works v., 116, 127. 



Boston, etc. R. Co. v. B. & M. Ry. 

Co., 8. 
Boston, etc. R. Co., Lightner v., 

146. 
Boston, etc. R. Co., Middlesex R. 

Co. v., 137. 
Boston, etc. R. Co. v. New York, 

etc. Co., 137. 
Boston, etc. R. Co., State v., 81. 
Boston, etc. R. Co., Troy, etc. R 

Co. v., 9. 
Boston Water Power Co., Dupee 

v., 83. 
Bostwick, Brinkerhoff v., 156, 158. 
Bostwick, Fishkill Sav. Inst, v., 

77. 
Bott v. Pratt, 172. 
Boucher v. New Haven, 205. 
Boulton v. Crowther, 203. 
Bound v. Wisconsin Cent. R Co., 

197, 235. 
Bousquet, HuthsiDg v., 190. 
Bower, Corgill v., 158. 
Bowes, Patterson v., 198. 
Bowman, Eidman v., 110. 
Bowman, Insurance Co. v., 101. 
Bowman. Jackson v., 215. 
Boyce v. Montauk Gas Co., 52. 
Boyce, Wheeler Mfg. Co. v., 163. 
Bradford, Grant Co. v., 175. 
Bradford v, Mayor, 204, 206. 
Bradley v. Ballard, 58, 96. 
Bradley v. New York, etc. Co., 8. 
Bradley v. South Carolina Phos. 

Co., 8. 
Bradsall v. Clark, 173. 
Brady v. Mayor, 70, 189, 190, 194 

201. 
Brainerd, Bishop v., 143.' 
Brain erd, Moore v., 129. 
Brainerd, New London v., 170, 

175. 
Brainerd v. Railroad Co., 135. 
Brail, Agnew v., 195. 
Branch v. Charleston, 148. 
Branch v. Jessup, 9, 53, 137. 
Branch, Tomlinson v., 146, 148. 
Brandow, Dutch Church v., 95. 
Brannen v. Loving, 159. 
Breillat, Bank of Australasia v., 

96, 98. 
Bremond, International R Co. v., 

143. 



TABLE OF CASES CITED. 



XX111 



References are to sections. 



Brenham v. German Am. Bank, 

224, 230. 
Brenham v. Water Co., 170, 188. 
Brewer Brick Co. v. Brewer, 181. 
Briant, McCoy v., 170. 
Bridenbecker v. Lowell, 161. 
Bridge Co., East Hartford v., 199. 
Bridge Co. v. Frankfort, 191. 
Bridge Co. v. Land & Imp. Co., 8. 
Bridge Co. v. Metz, 145. 
Bridge Proprietors v. Hoboken, 8. 
Bridgeport, Davidson v., 77. 
Bridgeport, Gregory v., 188. 
Bridgeport v. Railroad Co., 170, 

177, 201. 
Bridgeport Hydraulic Co., Nick- 

erson v., 219. 
Bridgewater Nav. Co., In re, 119. 
Brieswick v. Mayor, etc., 171. 
Briggs, Buckley v., 100. 
Briggs v. Cape Cod Canal Co., 168. 
Briggs, Chicago & A. By. Co. v., 8. 
Briggs v. Penniman, 107. 
Briggs v. Spaulding, 154, 156, 157, 

158. 
Brigham, Caine v., 100. 
Brighton, People v., 86. 
Brimmer v. Boston, 215. 
Brinkerhoff v. Bostwick, 156, 158. 
•Brintnall v. Railroad Co., 129. 
Brisham v. Delaware, etc. R. Co., 

126. 
Bristol v. Newchester, 186. 
British Am. Land Co. v. Ames, 

166. 
British Cast-Plate Co. v. Mere- 
dith, 203. 
British Life Ins. Co., In re, 122. 
Briton, Police Jury v., 100, 223, 

237. 
Broadwav Bank, Lionberger v., 

91. 
Broadway Co. v. Hankey, 216. 
Broburg v. Des Moines, 205. 
Brockport, West v., 219. 
Brode v. Insurance Co., 100. 
Brodhead v. Milwaukee, 225. 
Brokaw v. New Jersey R. Co., 162, 

164. 
Bromley, Smith v., 69. 
Bronson v. La Crosse R. Co., 53. 
Bronson, Oberlin v., 175. 
Brookfleld, Oheeney v., 190. 



Brooklyn v. City R. R, 215. 
Brooklyn, Mills v., 202, 208. 
Brooklyn G. R. Co. v. Slaughter, 

9, 50. 
Brooklyn R. Co., Stewart v., 163. 
Brooks, Claihorne Co. v., 223, 237. 
Broughton v. Pensacola, 233. 
Broughton, Water Co. v., 50. 
Brown, Alexander v., 77. 
Brown, Duke v., 229. 
Brown, Eastern R. Co. v., 162. 
Brown, Jackson v., 84, 85. 
Brown, Joint-stock Co. v., 122, 

158. 
Brown v. Lehigh Canal Co., 124, 
Brown v. Mayor, 194. 
Brown, Parkersburg v., 74, 181, 

224. 
Brown, Shrewsbury v., 191. 
Brown, State v., 185. 
Brown, Steamboat Co. v., 129. 
Brown, Townsend v., 8. 
Brown, Tuckerman v., 108. 
Brown v. Vinalhaven, 213. 
Browning v. Owen Co., 222. 
Brownlee, Cashman v., 146. 
Bruce, Bank v., 120. 
Bruffett v. Great Western R Co., 

146. 
Brunswick, Armstrong v., 212, 

213. 
Brunswick G. L. Co. v. United 

Gas Co., 137. 
Bryan v. Chicago, etc. R. Co., 163. 
Bryan v. M. & P. R. Co., 129. 
Bryan v. Page, 191, 194. 
Bryson v. Philadelphia, 215. 
Buchanan v. Litchfield, 196, 224, 

228, 232. 
Buck, Logan City v., 170. 
Buckeye Brewing Co., Easum v., 

122. 
Buckeve Marble Co. v. Harvey, 

72, 74, 123. 
Buckley v. Briggs, 100. 
Buckley v. Prescott, 205. 
Buena Vista Co., Carpenter v., 

228. 
Buffalo, Hodges v., 194. 
Buffalo, Ketchum v., 100, 185, 188. 
Buffalo, La Couteulx, 185. 
Buffalo Ins. Co., Webster v., 5% 
Buffalo Oil Co. v. Oil Co., 162. 



XXIV 



TABLE OF CASES CITED. 



References are to sections. 



Buffalo R. R. Co., Soper v., 154 
Buffit v. Troy, etc. R. Co., 13, 128. 
Buford v. Grand Rapids, 211. 
Buford v. Keokuk Pack. Co., 83, 

131. 
Buhl, Richardson v., 148. 
Building Association. Franz v., 

168. 
Building Association, Massey v., 

101. 
Bullions. Robertson v., 93. 
Burch, Miller v., 212. 
Burke, New Albany v., 115. 
Burlington, French v., 196. 
Burlington, Mills Co. v., 195. 
Burlington, Rogers v., 225. 
Burlington, Starr v., 172. 
Burlington, etc. R. Co., Miller v., 

163, 164. 
Burmeister v. Howard, 172. 
Burnham v. Webster, 160. 
Burnham, Wells v., 189. 
Burr v. Glass Co., 83, 100. 
Burr v. McDonald, 88, 96. 
Burrill v. Boston, 190. 
Burroughs v. Railroad Co., 129. 
Burt v. Rattle, 84, 119. 
Burton's Appeal, 83, 87. 
Butchers' Bank v. McDonald, 168. 
Butler, Lexington v., 228. 
Butts v. Cuthberson, 100. 
Byrnes v. Cohoes, 209, 211. 
Byrnes, Hutchins v., 87, 90. 
Byron, Metropolitan Co., 98. 

0. 

' Cabanniss, Danielly v., 177, 225. 
Cabot v. Rome, 188, 217. 
Cadwell, Utica Ins. Co. v., 75. 
Cahous, Sewell v., 200. 
Caine v. Brigham, 100. 
Calais, Woodcock v., 213. 
Caldwell, Louisville, etc. R. Co. 

v., 100. 
Caledonia R. Co. v. Helensburg, 

70, 79. 
Calhoun, Kelly v., 89. 
California Pac. R. Co. v. Low, 136. 
Callenday v. Marsh, 203. 
Calloway Min. Co. v. Clark, 81. 
Camden v. Allen, 224. 



Camden, Miss. etc. R. Co. v., 237» 
Camden v. Mulford, 173, 174. 
Camden, Simmons v., 203. 
Camden, etc. R. Co., Elkins v., 131, 

155. 
Camden, etc. R. Co. v. Forsyth, 

129. 
Camden, etc. R. Co. v. May's Land- 
ing R. Co., 137. 
Cameron, Chicago v., 53. 
Cameron, Mathes v., 230. 
Campbell v. Marietta R. Co., 137. 
Campbell v. Montgomery, 203, 220. 
Campbell, Nebraska v., 220. 
Campbell's Case, 137, 147. 
Canaan, Coates v., 200. 
Canal Commissioners, Penn. Ry. 

v., 8, 12. 
Canal Co., Black v., 143. 
Canal Co. v. Borham, 15. 
Canal Co., Briggs v., 168. 
Canal Co., Conant v., 77. 
Canal Co., Farnum v., 145. 
Canal Co. v. Fulton Bank, 143, 

148. 
Canal Co., Gue v., 141. 
Canal Co. v. Parnably, 220. 
Canal Co. v. Valette, 83, 91, 96, 

100. 
Canal, etc. R. Co. v. St. Charles 

R. Co., 52. 
Canney, Ossepee Mfg. Co. v., 74, 

75, 81. 
Canton, Leonard v., 170. 
Canton v. Nist, 172. 
Canton Masonio Society, Rock* 

hold v., 7. 
Cape Cod Canal Co., Briggs v., 

168. 
Cape May, Green v., 170, 194. 
Capitol Bank, Pope v., 103. 
Capitol City Water Co. v. Mont- 
gomery, 217. 
Carey v. East Saginaw, 74. 
Carey, Ottawa v., 170, 225. 
Carey, Perin v., 93, 185. 
Carondelet, Taylor v., 213. 
Carpenter v. Buena Vista Co... 

328. 
Carpentier, Oakland v., 215. 
Carr v. Le Fevre, 135. 
Carr v. Northern Liberties, 202,. 

203. 



TABLE OF CASES CITED. 



XXV 



References are to sections. 



Carr v. Rogers, 61. 
Carr, Sherman v., 170. 
Carroll v. East St. Louis, 81. 
Carroll, Farmers' L. & T. Co. v., 

9 14. 
Carroll Co. v. Smith, 190. 
Carter v. Howe Maoh. Co., 163. 
Carter v. Peck, 129. 
Carter, Pontiac v., 203. 
Carter, Wright v., 8. 
Carthage, Cullen v., 170. 
Case v. Kelly, 81, 85. 
Casey v. Galli, 112. 
Cashman v. Brownlee, 146. 
Cass v. Manchester, etc. Co., 53. 
Cass Co. v. Johnson, 227. 
Catherman, Hilbish v., 181. 
Caudy v. Knitting Co., 162. 
Cauldwell, Alexander v., 154, 194. 
Cavanagh v. Boston, 183, 212. 
Cecil, Lamb v., 91. 
Cedar County, Withelm v., 194. 
Cemetery Association v. New 

Haven, 183. 
Central Association, Alabama Ins. 

Co. v., 70, 96. 
Central Bank v. Empire Stone 

Co., 9. 
Central Bank, Merchants' Bank 

v., 77. 
Central Gold Min. Co. v. Piatt, 

83. 
Central Ry. Co. v. Coggin, 146. 
Central Ry. Co. v. Collins, 9. 
Central Ry. Co. v. Georgia, 141, 

143, 144, 148. 
Central Ry. Co., Low v., 9. 
Central Ry. Co., Morris Canal Co. 

v., 8. 
Central Ry. Co. v. Penn. R. Co., 

121. 
Central Ry. Co. v. Smith, 163. 
Central Ry. Co., Stockton v., 137. 
Central Trans. Co. v. Pullman Co., 

9, 10, 12, 37, 52, 53, 54, 55, 68, 

69, 70, 72, 74, 78, 137, 138. 
Centralia, Bishop v., 200. 
Centralia v. Krouse, 206. 
Chadsey, Alvey v., 159. 
Chaffee v. Granger, 188. 
Chaffee v. Rutland R Co., 124. 
Chaffee Co. v. Potter, 53. 
Chamberlin v. Evansville, 176. 



Chamberlin v. Huguenot Mfg. 

Co., 51, 168. 
Chambers v. Baptist Society, 94. 
Chambers v. Falkner, 9, 53, 71, 99. 
Chambers v. Manchester, etc. R. 

Co., 70, 134.. 
Chambers v. Satterlee, 203. 
Chambers v. St. Louis, 81. 
Champaign v. Mclnnes, 205. 
Champlain Ry. Co. v. Valentine, 

81. 
Chandler v. Bay St. Louis, 230. 
Chapin v. Greenlees, 120. 
Chapin v. Vermont, etc. R. Co., 

135. 
Chapman v. Colby, 85. 
Chapman v. Douglas Co., 74, 233. 
Chapman, Walker v., 69. 
Charles River Bridge Co. v. Bridge 

Co.. 8. 9, 28. 
Charleston, Backman v., 194. 
Charleston, Branch v., 148. 
Charleston, Butler v., 201. 
Charleston, Feldman v., 181. 
Charleston, Johnston v., 206. 
Charlotte, Hill v., 202. 
Charlotte, Wilson v., 177. 
Charlton v. New Castle Ry. Co., 

143. 
Charter Oak Ins. Co., iEtna Bank 

v., 9. 
Chase, Harvey v., 100. 
Cheeney v. Brookfield, 190. 
Chemical Bank v. Kohner, 161. 
Chesapeake & Del. Ry., Perrine 

v., 8, 12, 28, 81. 
Chesire, Smith v., 230. 
Chesire Glass Co., Dorley v., 51, 

168. 
Chester, Bakersfleld, etc. Ass'n v., 

51, 168. 
Chetlain v. Insurance Co., 120. 
Chewacla Lime Works v. Dis- 

mukes, 70. 
Cheyenne, Union Pac. Co. v., 177. 
Chicago v. Cameron, 53. 
Chicago, Clay burg v., 220. 
Chicago v. Cleveland, 126. 
Chicago v. Fowler, 204. 
Chicago, Fuller v., 196. 
Chicago, Garrison v., 196. 
Chicago, Kinzie v., 47. 
Chicago v. Laflin, 212. 



XXVI 



TABLE OF CASES CITED. 



References are to sections. 



Chicago, Maher v., 94, 191. 
Chicago v. McGiven, 205. 
Chicago v. McGraw, 222. 
Chicago v. Robbins, 206, 220. 
Chicago, Schnell v., 193. 
Chicago v. Stearns, 206. 
Chicago v. Trotter, 176. 
Chicago. Transportation Co. v., 

81, 203. 
Chicago, Tugman v., 176. 
Chicago, Wheeler v., 191. 
Chicago, etc. Coal Co. v. Hall, 146. 
Chicago, etc. R. Co. v. Briggs, 8. 
Chicago, etc. R. Co., Bryan v., 163. 
Chicago, etc. R. Co., Chicago Co. 

v., 145. 
Chicago, etc. R. Co., Craker v., 

163. 
Chicago, etc. R. Co., Ellerman v., 

247. 
Chicago, etc. R. Co., Hodgman 

v., 235. 
Chicago, etc. R. Co. v. Howard, 

96, 136. 
Chicago, etc. R. Co. v. Lake 

Shore, etc. R. Co., 143. 
Chicago, etc. R. Co. v. Marseilles, 

120. 
Chicago, etc. R. Co. v. Moffitt, 144, 

146. • 
Chicago, etc. R. Co., Peck v., 145. 
Chicago, etc. R. Co. v.* People, 

129. 
Chicago, etc. R. Co. v. St. Anne, 

240. 
Chicago, etc. R. Co. v. Union Pac. 

R. Co., 19, 71. 
Chicago, etc. R. Co., "Wiggins 

Ferry Co., 129. 
Chicago Gas Trust Co., People v., 

121. 122, 137, 148. 
Chichester, etc. R. Co., Taylor v., 

52, 55, 56, 70. 
Child v. Boston, 208. 
Childs v. Smith, 3. 
Chillicothe, Bank v., 96. 
Chin Yan, Ex parte, 1761 
China, Estes v., 213. 
Chorn, Hadden v., 94. 
Chouteau v. Allen, 105, 194 
Christian Union v. Yount, 166. 
Christian University v. Jordon, 

78. 



Christopher v. Christopher, 189. 
Christy, Bell's Gap Ry. Co. v., 79. 
Chubb v. Upton, 106, 112. 
Church v. City, 172. 
Church, Donnelly v., 100. 
Church v. Sterling, 77. 128. 
Churchill, Frankfort Co. v., 79. 
Cincinnati. "Walker v., 170. 
Cincinnati, Wheeler v., 170, 219. 
Cincinnati Co. v. Rosenthal, 71. 
Citizens' Bank v. Wiegand, 159. 
Citizens' Building Ass'n v. Coriell, 

156, 158. 
Citizens' Gas Co. v. Elwood, 216. 
Citizens', etc. R. Co., State Board 

v., 9. 
Citizens' Savings Ass'n v. Topeka, 

181. 
Citizens' "Water Co. v. Hydraulic 

Co., 216. 
Citizens' Water Co., Sherwood v., 

218. 
City, Anderson v., 175. 
City, Church v., 172. 
City, Commissioners v., 209. 
City of Aurora v. West, 237. 
City of Eufaula v. McNab, 224 
City of Flora v. Nancy, 205. 
City of Kahoka, Hill v., 233. 
City of Kansas, Arn v., 211. 
City of Kansas, Barr v., 204. 
City of Louisville v. Bank, 215. 
City of Madison v. Baker, 211. 
Citv of Nevada, Norton v., 233. 
City of New York, Brady v., 189. 
City of Ohio v. New York, etc. R. 

Co., 124. 
City of Paterson, State v., 235. 
City of Raleigh, Tucker v., 96. 
City of Toledo v. Cone, 169, 170. 
City of Topeka v. Huntoon, 177. 
City Bank v. Bateman, 77. 
City Bank, Perkins v., 161. 
City Council, Davis v., 202. 
City Council v. Plank Road Co., 

9,70. 
City Council, Stockton, etc. R. Co. 

v., 181. ■ 
City Council, Winter v., 239. 
City Gas Co., Norwich Gas Co. v., 

216. 218. 
City Railroad. Brooklyn v., 215. 
Claffin V. South, etc. R. Co., 132. 



TABLE OF CASES CITED. 



XX VH 



Keferences are to sections. 



Claflin v. Hopkinton, 175. 
Clapp v. Peterson, 120. 
Claiborne County v. Brooks, 233, 

237. 
Clarendon, Lewis v., 237. 
Clarendon Township, Young v., 

223,230,237. 
Clark v. Bover, 115. 
Clark v. Bradsall, 173. 
Clark, Calloway M. Co. v., 81. 
Clark v. Davenport, 170. 
Clark v. Des Moines, 230. 
Clark v. Edgar, 158. 
Clark v. Farmers' Mfg. Co., 100. 
Clark v. Farrington, 14. 
Clark v. Hancock, 223. 
Clark, Harvester Co. v., 168. 
Clark v. Iowa City, 135. 
Clark v. Lyons Co., 194. 
Clark v. Omaha R. Co., 137. 
Clark v. School District, 100. 
Clark, State v., 171, 176, 181. 
Clark, Stoutmore v., 101, 168. 
Clark v. Sutton, 203. 
Clark v. Titcomb, 83, 96. 
Clarkin, Natoma, etc. Co. v., 81. 
Clarksburg, Richards v., 170. 
Clarkson, Bergen v., 173, 174. 
Clarksville, Gause v., 230. 
Clason v. Milwaukee, 176. 
Clay v. County, 237. 
Clay v. Grand Rapids, 207. 
Clayburg v. Chicago, 220. 
Clayers, Vermont Ry. Co. v., 3. 
Clearwater v. Meredith, 144, 147, 

148. 
Cleary, Marquette v., 202. 
Cleburne, Coler v., 226. 
Cleneay, Junction R. Co. v., 135. 
Cleveland, Chicago v., 126. 
Cleveland, Rhodes v., 211. 
Cleveland v. St. Paul, 206. 
Cleveland, State v., 172. 
Cleveland, Western College v., 

220. 
Cleveland, Williams College v., 

220. 
Cleveland, etc. R. Co. v. Closser, 

131. 
Cleveland, etc. R. Co., Conn. L. 

Ins. Co. v., 135. 
Cleveland, etc. R. Co., Mut. Ins. 

Co. v., 100. 



Cleveland, etc. R. Co. v. Prewitt, 

146. 
Cleveland, etc. R< Co. v. Robbins, 

126. 
Cleveland, etc. R. Co., Zabriskie 

v., 9, 53, 76, 135. 
Clinch v. Financial Corp., 142. 
Clinton, Donelson v., 206. 
Clinton v. Phillips, 176. 
Clinton, Ross v., 211. 
Clinton Water Works, Davis v.; 

219. 
Close v. Glenwood Cemetery, 168. 
Closser, Cleveland, etc. R. Co. v., 

131. 
Coal Float v. Jeffersonville, 176. 
Coal Valley Co., Peoria, etc. R. 

Co. v., 9. 
Coates v. Canaan, 200. 
Coates v. Donnell, 91. 
Coates, Gaines v., 216. 
Cobourg, etc. Ry. Co., Coyley v., 

146. 
Cobshire, Aurora v., 200. 
Cochran, Kennedy v., 69. 
Coe, Pennock v., 8. 
Coggeshill v. Pelton, 95. 
Coggin v. Central R. Co., 146. 
Cohen v. Wilkinson, 53. 
Cohoes, Byrnes v., 209, 241. 
Coit v. N. Car. Gold Co., 108, 115. 
Coke Co., State v., 199. 
Colby, Bank v., 144. 
Colbj', Chapman v., 85. 
Cole, First Parish v., 92. 
Cole, Inhabitants, etc. v., 81. 
Cole v. La Grange, 181, 225. 
Coles v. Bank of England, 124. 
Coleman v. Columbia Oil Co., 120. 
Coler v. Cleburne, 226. 
College, State v., 83. 
Collerne v. London Bldg. Soc, 

120. 
Collier, Ruggles v., 9. 
Collins, Central Ry. Co. v., 9. 
Collins v. Hatch, 212. 
Colman v. Eastern Counties Ry. 

Co., 9, 39, 136. 
Coloma v. Eavis„227, 228. 
Colorado Springs, Cornell v., 81. 
Colter v. Doty, 15. 
Columbia, Black v., 219. 
Columbia Co., Flint v., 87. 



XXV111 



TABLE OF OASES CITED. 



References are to sections. 



Columbia Oil Co., Coleman v., 120. 
Columbus, etc. B. Co., MoAuley 

v., 143. 
Columbus, etc. E. Co. v. Powell, 

146. 
Colvin, Sheridan v., 177. 
Combination Trust Co. v. Wild, 

105. 
Commanche Co. v. Lewis, 228. 
Commercial Bank, Franklin Bank 
* v., 121. 
Commercial Bank v. Iola, 181, 225, 

237. 
Commercial Bank. Lathrop v., 81. 
Commercial Bank v. Newport 

Mfg. Co.. 96, 100. 
Commercial Hotel, Eichwold v., 

83, 91. 
Commissioners, Atchison, etc. R 

Co. v., 146, 
Commissioners v. Bolles, 238. 
Commissioners v. City, 209. 
Commissioners, Comm. v., 179. 
Commissioners v. Cox, 190. 
Commissioners v. Gas Co., 176, 212. 
Commissioners v. Goodrich, 212. 
Commissioners, Haag v., 222. 
Commissioners, Hadley v., 3, 12. 
Commissioners, Inhabitants v.. 86. 
Commissioners v. January, 238. 
Commissioners, Louisville v., 185. 
Commissioners, Memphis R. Co. 

v.. 141. 
Commissioners, Moran v., 193. 
Commissioners, Munn v., 96, 100. 
Commissioners, People v., 189. 
Commissioners, Pother v., 228. 
Commissioners v. Railway Co., 96. 
Commissioners, Reynolds v., 83. 
Commissioners, State v., 148, 173, 

185. 
Commissioners v. Thayer, 227. 
Commissioners v. Worcester, 312. 
Commonwealth, Bank of Penn- 
sylvania v., 8, 12. 
Commonwealth v. Commission- 
ers, 179. 
Commonwealth, Erie Ry. Co. v., 

8, 10, 12. 
Commonwealth v. Franklin Canal 

Co., 12. 
Commonwealth, Kepner v., 171. 
Commonwealth v. Markham, 182. 



Commonwealth v. Pittsburg, 100. 
Commonwealth v. Smith, 83, 133, 

134, 137. 
Commonwealth, Society, etc. v., 3. 
Commonwealth v. Steffee, 176. 
Commonwealth, Williamsport v., 

188. 
Commonwealth v. Worcester, 176. 
Compagnie Francaise v. Western 

Union Co., 121. 
Conant v. Canal Co., 77. 
Concord, Hubbard v., 205. 
Concord, Hutchison v., 204. 
Concord v. Robinson, 223, 228, 230, 

237. 
Concord, etc. R. Co., Manchester, 

etc. R. Co. v., 130. 
Concord, etc. E. Co., Pearson v., 

122. 
Cone v. Hartford, 207. 
Cone, Toledo v., 169, 170, 220. 
Conery v. New Orleans Water 

Works, 177. 
Congregational Church v. Trust- 
ees, 94. 
Congress, etc. Co., Knowlton v., 

109, 119. 
Conn, Flash v., 166. 
Connecticut, etc. Ins. Co. v. Cleve- 
land, etc. R. Co., 100, 135. 
Connecticut Sav. Bank v. Fiske, 

96. 
Conservators, etc. v. Ash, 3. 
Converse, Green Co. v., 144. 
Converse v. Norwich Trans. Co., 53. 
Conybeare, New Brunswick Ry. 

v., 162. 
Cook v. Milwaukee, 205, 220. 
Cook v. Tullis, 77. 
Cook Co. v. Hough, 81. 
Coombs, Ft. Wayne v., 207, 209, 

211. 
Coon, People v., 195. 
Cooper v. Atlanta, 222. 
Cooper v. Corbin, 131. 
Cooper v. Curtis, 161. 
Coose, Sawyer v., 220. 
Copley v. Grover & B. Co., 162. 
Corbin, Cooper v., 131. 
Corgill v. Bower, 158. 
Cork, etc. R. Co., In re, 96. 
Coriell, Building Association v., 

156, 158. 



TABLE OF CASES CITED. 



XXIX 



Keferences are to sections. 



Corn Exchange Bank v. Coal Co., 

77. 
Cornell v. Colorado Springs, 81. 
Cornell v. Guilford, 175. 
Cornes, Gordon v., 225. 
Corporation of Ireland, Guiness 

v., 118. 
Corporation of Ireland, Knight 

v., 168. 
Corrigan v. Gage, 176. 
Corserv. Paul, 161. 
Corwith, Galena v., 50. 
Cory v. County of Somerset, 189. 
Coughlin v. Gleason, 189. 
Coulson v. Portland, 231. 
Coulter, St. Paul v., 171, 212. 
Council Bluffs, Dodge v., 166. 
Council Bluffs, Everett v., 212. 
Council Bluffs, Powers v., 220. 
Council Bluffs v. Stewart, 196. 
County, Clay v., 237. 
County, People v., 230. 
County Commissioners, Bentley 

v., 170. 
Countv Commissioners v. Ducket, 

220. 
County of Daviess v. Huidekoper, 

227. 
County of Douglas, Chapman v., 

233. 
County of Jasper, Anthony v., 

226. 
County of Moultrie v. Bank, 197. 
County of Randolph v. Post, 227. 
County of Somerset, Cary v., 189. 
Cousley, Screw Co. v., 79. 
Coventry, Evans v., 120. 
Covert v. Rogers, 91. 
Covington, Bateman v., 215. 
Covington, Harper v. 224 
Covington, Haynes v., 201. 
Covington, Henderson v., 170, 175. 
Cowan v. Milburne, 69. 
Cowan v. West Troy, 189, 194 
Cowdrey, Galveston v., 141. 
Cowell v. Springs Co., 166. 
Cowgill v. Long, 238. 
Cox, Lafayette v., 9. 
Goyley v. Cobourg, etc. R. Co., 

146. 
Cozart v. Georgia, etc. R. Co., 52, 

136, 137. 
Craig v. Andreas, 69. 



Craig v. Vicksburg, 135. 

Craigie v. Hadley, 162. 

Craker v. Chicago, etc. R. Co., 163. 

Crane, Unity Ins. Co. v., 3. 

Crawford v. Longstreet, 81. 

Crawfordsville v. Bond, 209. 

Creal v. Keokuk, 201. 

Crescent City G. L. Co. v. New 
Orleans G. L. Co., 216. 

Crescent City Ins. Co., New Or- 
leans v., 219. 

Creswell, Williams v., 166. 

Crocker, Shaw v., 203. 

Crompton, Pierce v., 167. 

Crompton v. Zabriskie, 198. 

Cropper, Birch v., 117. 

Cross, Lumsden v., 225. 

Crossett v. Janesville, 203. 

Crowther, Boulton v., 203. 

Crum's Appeal, 76. 

Culbertson, Butts- v., 100. 

Culbertson v. Fulton, 197, 231. 

Cull'en v. Carthage, 170. 

Cumberland, etc. Co., Exchange 
Bank v., 77. 

Cumberland, etc. Co., Hoffman, 
etc. Co. v., 153. 

Cumberland, etc. Co. v. Parish, 
153. 

Cunliffe v. Manchester, etc. R. 
Co., 53. 

Cunliffe, B. & Co., Building So- 
ciety v., 96, 97. 

Cunliffe, Mayor, etc. v., 190, 222. 

Curran v. Arkansas, 107. 

Currier v. Lebanon Co., 120. 

Curry v. Mt. Sterling, 86. 

Curtis, Cooper v., 161. 

Curtis, Farmers' L. & T. Co. v., 
81. 

Curtis v. Leavitt, 13, 74, 96, 98, 
100. 

Curtis, Medomak Bank v., 77. 

Curtis v. Piedmont Co., 74. 

Curtis v. Whipple, 224 

Curzon, Droitwich, etc. Co. v., 
109, 113. 

D. 



Dabney v. Bank, 91. 
Dalley, Wakeman v., 



158. 



XXX 



TABLE OE CASES CITED. 



References are to sections. 



Dana v. Bank, 14, 87. 

Danbury, etc. R. Co. v. "Wilson, 9. 

Dandridge, Bank of U. S. v., 13. 

24, 28, 50, 76, 151, 154, 157, 

160. 
Dandridge. Steam Nav. Co. v., 

201. 
Danielly v. Cabanniss, 177, 225. 
Danville, Small v., 213. 
Danville Seminary, Nutt v., 7. 
Darling v. Bangor, 202. 
Darling v. Railroad Co., 129. 
Darling v. St. Paul, 173. 
Darnell, Coates v., 91. 
Darst v. Gale, 58. 
Darst v. People, 212. 
Dartmouth College v. Woodward, 

9, 21, 28, 50. 
Dater v. Bank, 83. 
Davenport, Clark v., 170. 
Davenport, Davenport, etc.. Co. 

v., 197. 
Davenport, East Lincoln v., 238. 
Davenport, Grant v., 198, 217. 
Davenport, King v., 212. 
Davenport v. Mayor, 204. 
Davenport v. Ruckman, 220. 
Davenport, Van Pelt v., 209, 211. 
Davidson v. Bridgeport, 77. 
Davidson, Hayward v., 81. 
Davidson, Milne v., 172. 
Davidson v. Ward, 158. 
Davidson, Williams v., 170, 172. 
Davidson v. Young, 192. 
Daviess Co. v. Dickinson, 190, 224, 

231. 
Daviess Co. v. Huidekoper, 227. 
Daviess Co., Ogden v., 229. 
Davis v. Anita, 176. 
Davis v. City Council, 202. 
Davis v. Clinton Water Works, 

219. 
Davis v. Des Moines, 197. 
Davis, De Russey v., 170. 
Davis, Home Ins. Co. v., 166. 
Davis, Littlewort v., 70. 
Davis v. Mayor, 199. 
Davis v. Montgomery, 213, 219. 
Davis v. Old Colony R Co., 36, 47, 

53. 136, 137. 
Davis v. Ren. & Sar. Ry. Co., 8. 
Davis' Case, 96. 
Dawson, Iron Co. v., 166. 



Dawson, Revanna Nav. Co. v., 8f,. 

95. 
Day v. Mitford, 204. 
Day v.' Spiral Spring Co., 74 
Dayton v. Quigley, 176. 
Dearborn, England v., 96. 
Dean v. Todd, 177. 
De Camp v. Atwood, 91. 
De Camp v. Dobbins, 81. 
Decatur, Hill v., 171. 
Decker, Evansville v., 209. 
Deering, Seele v., 213. 
De Grand, Russell v., 71. 
De Kay, Hackensack Water Coi 

v., 134. 135, 168. 
Delamon, New Orleans, etc. Co. 

v., 141. 
Delaware, etc. Co., Black v., 53, 

70, 72, 137. 
Delaware, etc. Co., Brisham v., 

126. 
Delaware, etc. Co. v. East Orange, 

176. 
Delaware, etc. Co. v. Penn. Coal 

Co., 77. 
Delaware, etc. Co., Wasmer v., 

137. 
Delaware Bay, etc. R. Co., Joint 

Co. v., 8. 
Delaware Tax Cases, 8, 145, 148. 
Deming Co., Roberts v., 74. 
Demon, Bank of Lyons v., 77. 
Denike v. Lime Co., 143. 
Denison, Barnett v., 229. 
Denison, Simpson v., 130. 
Denton v. Jackson, 3. «• 
Denver, etc. R. Co. v. Atchison,. 

etc. Co., 131. 
Denver, etc. R. Co. v. Harris, 162. 
Depere v. Bellevue, 186. 
Deposit Association, Lamm v., 

194. 
Derby Fishing Co., Witte v., 15. 
Derinzy v. Ottawa, 203. 
De Russey v. Davis, 170. 
De Ruyter v. St. Peter's Church, 

83. 
Des Moines, Broburg v., 205. 
Des Moines, Clark v., 230. 
Des Moines, Davis v., 197. 
Des Moines, Des Moines Gas Co. 

v., 172, 177, 216. 
Des Moines, Hauger v., 170. 



TABLE OF CASES CITED. 



XXXI 



References are to sections. 



Des Moines, Van Horn v., 219. 
Des Moines, etc. R. Co., Teachout 

v., 53. 
De Sota, Land v., 233. 
Des Plaines. Poyer v., 178. 
Detroit. Dewey v., 202. 
Detroit, Goodrich v., 50, 188. 
Detroit v. Hosmer, 189. 
Detroit, Mekellar v., 205. 
Detroit, Wilkins v., 189. 
Devian, Guenther v., 69. 
Dewey v. Detroit, 202. 
Dewitt v. San Francisco, 185. 
Deyo v. Otoe Co., 237. 
Dhlin, Insurance Co. v., 77. 
Dickerman, Somerville v., 170, 195. 
Dickinson, Daviess Co. v., 190, 224, 

231. 
Dickinson v. Poughkeepsie, 191. 
Dickson v. United States, 82. 
Dill v. Inhabitants, eta, 201. 
Dill v. Wareham, 119. 
Dingley v. Boston, 212. 
Dingman v. People, 215. 
Dinsmore v. Atlantic, etc. R. Co., 

137. 
Ditnpfell v. Ohio R. Co., 78. 
Dismukes, Chewacla Lime Works 

v., 70. 
Dispatch Line v. Bellamy Mfg. 

Co., 77. 
District of Columbia, Barnes v., 

220. 
District of Columbia, Johnson v., 

208. 
Dix v. Dummerston, 195. 
Dix, West River, etc. Co. v., 183. 
Dixon v. Baker, 211. 
Dixon Co. v. Field, 53, 190, 228, 

232. 
Dixon Co., Hedges v., 73, 231. 
Dobbins, De Camp v., 81. 
Dodge, Council Bluffs v., 166. 
Dodge, Houghton v., 77. 
Dodge v. Woolsey. 53. 
Donnally, Parker v., 159. 
Donnell v. Lewis Co. Bank, 96. 
Donnelly v. Church. 100. 
Donohue, French v., 168. 
Donovan v. Green, 237. 
Dooley v. Chesire Glass Co., 51, 

168. 
Dore v. Milwaukee, 203. 



Dorman v. Jacksonville, 203. 
Doty, Cotter v., 15. 
Dougherty v, Hunter, 159. 
Douglas, Auburn Plank Road Co. 

v., 8. 
Douglas, Niantic Sav. Bank v., 

146. 
Douglas v. Placerville, 198. 
Douglas v. Virginia City, 50, 188. 
Douglas, Weismer v., 181, 237. 
Douglas Co., Chapman v., 74, 233, 
Doulson v. Clinton, 206. 
Dover & D. Ry. Co., McGregor v., 

9, 55, 56. 70. 
Dow, Memphis, etc. R. Co. v., 96. 
Downey, 111. Cent. R. Co. v., 164. 
Downing v. Marshall, 82. 
Downing v. Mt. Washington, etc. 

Co., 9. 47. 
Doyle v. Austin, 181. 
Doyle v. Migner, 3. 
Drainage Commissioners, Elmore 

v., 221. 
Drake v. Lowell, 204. 
Drake v. Phillips, 198. 
Dranesburg v. Jenkins, 237. 
Drew, National Ex. Co. v., 162. 
Drew, Northern Cent. Co. v., 146. 
Drexel v. Town of Lake, 207. 
Droitwich, etc. Co. v. Curzon, 109( 

113. 
Drurv v. Inhabitants, 94. 
Dry Docks Co. v. Hicks, 81. 
Dubuque, Gelpcke v., 135, 227, 

238. 
Dubuque v. Maloney, 212. 
Dubuque. Manderchid v., 203. 
Dubuque, etc. R. Co. v. Litch- 
field, 9. 
Duckett, County Commissioners- 

v., 220. 
Duckwall v. New Albany, 175. 
Duke v. Brown, 229. 
Dummer, Wood v., 107. 
Dummerston, Dix v., 195. 
Duncomb v. N. Y. etc. R. Co., 105. 
Dunlap, Rabe v., 137. 
Dunlap, Ryan v., 161. 
Dunn, New Orleans, etc. v., 177. 
Dupee v. Water Power Co., 83, 120;. 
Durango v. Pendleton, 201. 
Durant v. Palmer, 206. 
Durer v. Hudson Co. Ins. Co., 77. 



xxxii 



TABLE OF CASES CITED. 



References are to sections. 



Dutch Church v. Brandow, 95. 
Dutch Church, Van Houton v., 

94. 
Dyersburg, Norton v., 223, 230. 

E. 

Eakin v. St. Louis E. Co., 137. 

Eagle Bank. Hooker v., 77. 

Eagle Ins. Co., Strauss v., 9, 47, 50. 

Earl of Shrewsbury v. North Staf- 
ford Ry. Co., 70, 79. 

Earle, Bank of Augusta v., 8, 9, 26, 
28, 47, 52, 103, 156, 157, 165, 167. 

Earle, Taylor v., 122. 

Early's Appeal, 120. 

East Anglian Ry. v. Eastern Coun- 
ties Ry., 9, 40, 53, 70, 72. 

East Haddam Bank, Goodspeed 
v., 162, 164. 

East Hartford, Bridge Co. v., 187, 
199. 

East Lincoln v. Davenport, 238. 

East Montpelier, Montpelier v., 92. 

East Oakland v. Skinner, 190, 224, 
238. 

East Orange, Delaware, etc. R. 
Co. v., 176. 

East Portland, Baltimore v., 201, 
222. 

East River Bank v. Hoyt, 154. 

East Saginaw, Carey v., 74. 

East Saginaw, Stecket v., 201. 

East St. Louis, Carroll v., 81. 

East St. Louis, Gartside v., 178. 

East St. Louis v. Gas Light Co., 
188, 216. 

East St. Louis v. St. John, 86. 

East St. Louis v. Wehrung, 173. 

East Tenn. etc. R. Co. v. Nelson, 
129. 

East Tenn. etc. R. Co. v. Rogers, 
129. 

East Warren, etc. L. Co., Senney 
v., 87. 

Eastern, etc. R. Co., Bagshaw v., 
9, 53, 70. 

Eastern, etc. R Co. v. Brown, 162. 

Eastern, etc. R. Co., Coleman v., 
9, 39. 

Eastern, etc. R Co. v. East An- 
glian, etc. Co., 9, 40, 53, 70, 72. 



Eastern, etc. R Co. v. Hawkes, 9, 

52, 137. 
Eastern, etc. R. Co., Lynch v., 235. 
Eastern, etc. R. Co., March v., 124. 
Eastern, etc. R Co., Sturges v., 

118. 
Eastern Plank Road Co. v. 

Vaughan, 3. 
Eastman v. Meredith, 219. 
Easum v. Buckeye Brew. Co., 122. 
Eaton v. Aspinwall, 106. 
Eaton, Nelson v., 96. 
Eaton v. Pacific Nat. Bank, 127. 
Eaton, etc. R. Co. v. Hunt, 145. 
Eau Claire, Smith v., 203. 
Eavis, Coloma v., 227, 228. 
Ebbw. Vale, eta Co., In re, 109, 

113. 
Eby v. Guest, 120. 
Eddy, Jeverin v., 206. 
Edgar, Clark v., 158. 
Edison E. L. Co. v. New Haven, 

etc. Co., 144. 
Edwards v. Grand Junction R 

Cd., 77. 
Edwards v. Midland Ry., 162. 
Edwards, Springfield v., 196, 235. 
Egmann v. Blanke, 120. 
Eickemeyer, Sheldon Hat Co. v., 

83, 106. 
Eidman v. Bowman, 110. 
Eldridge v. Smith, 141. 
Elkhorn Bank, Rockwell v., 96, 

100, 134. 
Elkins v. Camden, etc. R Co., 131, 

155. 
Ellerman v. Chicago, etc. R. Co., 

47. 
Elliott v. Abbott, 160, 161. 
Elliott, Marietta, etc. R Co. v., 9. 
Elliott, M;,yor v., 95. 
Elliott v. Philadelphia, 219. 
Elliott, Union Bank v., 91. 
Ellsworth, Barbour v., 222. 
Elmore v. Drainage Commission, 

221. 
Elmwood Township v. March, 

238. 
Elwood, Citizens' Gas Co. v., 216. 
Ely v. Grand Rapids, 189. 
Ely, Hooper v., 198. 
Ely, N. Y. etc. Ins. Co. v., 12. 
Emerson v. Newburg, 194 



TABLE OF CASES CITED. 



XXX1U 



Heferenees are to sections. 



Emery, Harper v., 235. 
Emery v. Mariaville, 230. 
Emery v. Ohio Candle Co., 148. 
Emery, Pierce v., 83, 91, 100. 
Emmet v. Reed, 77. 
■ Empire Assur. Corp.. In re, 142. 
Empire Mfg. Co. v. Stewart, 167. 
Empire Stone Co., Central Bank 

v., 9. 
England v. Dearborn, 96. 
English v. People, 181. 
English Joint-Stock Co., Barwick 

v., 162. 
Episcopal Society v. Episcopal 

Church, 77. 
Erie, Grant v., 202, 219. 
Erie, Schwingle v., 221. 
Erie City Iron Works v. Barber, 

162. 
Erie R. Co., Arnot v., 129. 
Erie R. Co., Belmont v., 53. 
Erie R. Co., Comm. v., 8, 10, 12. 
Erie R. Co., Heath v., 53. 
Erie R. Co., McGregor v., 145, 167. 
Erie R. Co., Pennsylvania v., 124. 
Erie R. Co., Vance v., 162, 
Erie R. Co., Woodruff v., 9. 
Erie Trans. Co., Stewart v., 9, 53, 

129, 130. 
Ernest v. Balfour, 148. 
Ernest v. Nichols, 120. 
Errol, Rich v., 74, 75. 
Eschbach, Baltimore v., 190, 201, 

222. 
Estelle v. Lake Crystal, 205, 206. 
Estes v. China, 213. 
Eufaula v. McNab, 185, 224. 
Eureka Basin Co., In re, 181. 
Eureka Flour Mills, Smith v., 47, 

96, 100. 
European, etc R. Co. v. Poor, 153. 
Evans v. Coventry, 120. 
Evans, Holdworth v., 70. 
Evansville, Bishmeyer v., 219. 
Evansville, Chamberlin v., 176. 
Evansville, Decker v., 209. 
Evansville, Evansville R. Co. v., 

177. 
Evansville R. Co. v. Androscog- 
gin, etc. Co., 129. 
Evansville R. Co., Fisher v., 143. 
Evening Journal Association v. 

McDermott, 162, 



Everett v. Council Bluffs, 212. 
Everhardt v. West Chester Ry. 

Co., 118. 
Ewing, Lincoln Sav. Bank v., 92. 
Ewing v. Robeson, 51, 168. 
Ewing, Shiras v., 218. 
Excelsior Co. v. Lacey, 156. 
Exchange Bank, Rice v., 219. 
Exchange Bank v. Sibley, 157, 

158. 
Exchange Bank, Smith v., 103. 
Ex parte Chin Yan, 176. 
Ex parte Frank, 175. 
Ex parte Grady, 70. 
Ex parte Maude, 117. 
Ex parte Mayor, etc., 215. 
Ex parte Scholbred, 72. 
Ex parte Stanley, 125. 
Ex parte Williams, 135. 
Ex parte Williamson, 70, 98. 
Export Co., Taylor v., 120. 
Eyser v. Weissgarber, 74, 75. 

F. 

Fairbanks, Bank of Sonoma v., 

225. 
Falkner, Chambers v., 9, 53, 70, 99. 
Fanning v. Schammel, 238. 
Farmers', etc. Bank v. Baldwin, 

103. 
Farmers', etc. Bank v. Bank, 160. 
Farmers', etc. Bank, John v., 101. 
Farmers', etc. Bank v. Needles, 

101. 
Farmers', etc. Bank, Phelps v., 

124. 
Farmers', etc. Bank, Ridgeway 

v., 96, 100. 
Farmers', etc. Bank v. Sherman, 

77. 
Farmers', etc. Bank, Spohn v., 12. 
Farmers', etc. Bank v. Transpor- 
tation Co., 129. 
Farmers' Ins. Co., Luthe v., 53. 
Farmers' L. & T. Co. v. Carroll, 9, 

14 
Farmers' L; & T. Co. v. Curtis, 81. 
Farmers' L. & T. Co., Harmock 

v., 131. 
Farmers' L. & T. Co. v. Insurance 

Co., 92. 



XXXIV 



TABLE OF CASES CITED. 



References ore to sections. 



Farmers' L. & T. Co., Eacine R. Co. 

v., 144, 145. 
Farmers' L. & T. Co. v. St. Joseph, 

etc. R. Co., 74, 131. 
Farmers' Mfg. Co., Clark v., 100. 
Farnsworth, Adams v., 191. 
Farnum v. Blackstone Canal, 96, 

145. 
Farrington, Clark v., 14. 
Faulkner v. Aurora, 204. 
Faure Elec. Co., In re, 154 
Fay v. Noble, 96, 100. 
Fell v. Gas Co.,' 144. 
Feital v. Middlesex R. Co., 139. 
Feitsam v. Hay, 137. 
Feldman v. Charleston, 181. 
Ferguson v. Meredith, 144. 
Ferris v. Ludlow, 109. 
Festial v. King's College, 124. 
Field, Dixon County v., 53, 190, 

228, 232. 
Field v. West Orange, 203, 211. 
Fifth Ward Savings Bank v. 

First National Bank, 102, 159. 
File Works, McLennon v., 136. 
Filyaw, Bennett v., 129. 
Financial Corporation, In re, 113. 
Financial Corporation, Clinch v., 

142. 
Finnegan, Roddy v., 172. 
Fireman's Ins. Co., Brode v., 100. 
First Cong. Soc. v. Atwater, 92. 
First National Bank v. Fricke, 

77. 
First National Bank v. Graham, 

163. 
First National Bank v. Pierson, 

103. 
First National Bank v. Salem 

Mill, 120. 
First National Bank v. Savings 

Bank, 102, 159. 
First National Bank, Weckler v., 

9,50. 
First Parish, etc. v. Cole, 92. 
Fish v. Mayor, 201. 
Fisher v. Boston, 219. 
Fisher v. Evansville R Co., 143. 
Fisher v. Harrisburg, 176, 207. 
Fisher, Morris Canal Co. v., 135. 
Fisher v. N. Y. etc. R Co., 146. 
Fisher, Schockley v., 91. 
Fishing Co., Bergen v., 91. 



Fishkill Savings Bank v. Bosfc- 

wick, 77. 
Fiske, Conn. Sav. Bank v., 96. 
Fiske, State v., 173. 
Fitchburg, Weare v., 205. 
Fitzpatrick, Borough, etc. v., 204 
Flack v. Hughes, 235. 
Flagg, People v., 201. 
Flagg, Stone v., 3, 12. 
Flanagan, Kansas City v., 170. 
Flanders Bros., Academy of Music 

v., 168. 
Flash v. Conn, 166. 
Fleckner v. Bank, 21, 77, 103, 160: 
Flemming, Louisville, etc. R Co. 

v., 163. 
Fletcher, Atchison, etc. Co. v., 136. 
Flint v. Columbia Co., 87. 
Fogg v. Blair, 115. 
Fogg v. Railroad Co., 162. 
Fond du Lac, Kane v., 195. 
Foote, Newport Bridge Co. v., 203; 
Foote v. Pike Co., 227. 
Forbes v. Marshall, 96. 
Formholz v. Taylor, 74, 75. 
Forsvth, Camden, etc. R Co. v. r 

129. 
Fortier v. New Orleans Bank, 53. 
Fort Scott, United States v., 196, 
Fort Wayne v. Coombs, 207, 209; 

211. 
Fort Wayne, Grove v., 204 
Fort Wayne Elec. Co., Keokuk v., 

137. 
Fort Worth City Ry. v. Smith 

Bridge Co., 9. 
Foster, Iowa LumBer Co. v., 120. 
Foster v. Lookout Water Co., 219. 
Foster, McPherson v., 231, 232. 
Foundry Co., Stoddard v., 124. 
Fowler v. Athens City Water 

Works, 219. 
Fowler, Blasdell v., 69. 
Fowler, Chicago v., 204. 
Fowler v. Robinson, 107. 
Fowler v. Scully, 69. 
Fox v. New Orleans. 190. 
Fox, State Bank v., 120. 
Francis v. Troy, 170. 
Frank, Ex parte. 176. 
Frankenberg, Illinois Cent. R Cov 

v., 129. 
Frankfort, Bridge Co. v., 191. 



TABLE OF CASES CITED. 



XXXV 



References are to sections. 



Frankfort Co. v. Churchill, 79. 
Franklin Bank v. Commercial 

Bank, 121. 
Franklin Bank v. White, 69, 74, 

75, 119. 
Franklin Bridge Co. v. "Wood, 3, 

12. 
Franklin Canal Co., Comm. v., 12. 
Franklin County, German Sav. 

Bank v., 238. 
Franklin County v. Lewistown 

Inst., 9, 34, 53, 55, 70, 121. 
Franklin County, Maupin v., 190. 
Franklin Ins. Co. v. Hart, 79. 
Franklin Wharf Co. v. Portland, 

208, 213. 
Franz v. Building Association, 

168. 
Frasar v. Ritchie, 120. 
Frazee's Case, 175. 
Frazier v. Wilcox, 83, 166. 
Freeberg, Pitzman v., 237. 
Freeman, Home v., 141. 
Freeman v. Minn. etc. E. Co., 137. 
Freeman, State v., 176. 
Freher v. Geiseka, 74, 75. 
French v. Burlington, 196. 
French v. Donohue, 168. 
Fricke, First Nat. Bank v., 77. 
Fricke, Keithburg v.-, 238. 
Frost v. Belmont, 79. 
Frost v. Frostburg Coal Co., 168. 
Frothingham v. Barney, 122. 
Frye v. Tucker, 128. 
Fuller v. Atlantic, 203. 
Fuller v. Chicago, 196. 
Fuller v. Heath, 196. 
Fulton, Culbertson v., 197, 231. 
Fulton v. Lincoln, 170. 
Fulton Bank, Beach v., 25. 
Fulton Bank, Sharon Canal Co. 

v., 143, 148. 
Fulton County. Marsh v., 190, 191, 

193. 194, 201, 224, 233. 
Furnell v. St. Paul, 205. 
Furniss v. Gilchrist, 96. 

G. 

Gabel v. Houston, 172. 
Gage, Corrigan v., 176. 
Gage v. Newmarket, 70. 



Gaines v. Coates, 216. 

Gale, Darst v., 58. 

Gale v. Kalamazoo, 173, 215. 

Galena v. Corwith, 50. 

Gallatin Turnpike Co., Hopkins 

v., 88. 
Galli, Casey v., 112. 
Galveston, Allen v., 170. 
Galveston v. Cowdrey, 141. 
Galveston, Hitchcock v., 62, 65, 

193, 196, 233. 
Garrison v. Chicago, 196. 
Gartside v. East St. Louis, 178. 
Gas Co., Commissioners v., 176, 

212. 
Gas Co. v. Des Moines, 172. 
Gas Co., East St. Louis v., 216. 
Gas Co., Fee v., 144. 
Gas Co., Grand Rapids, etc. Co. v., 

199. 
Gas Co., Indianapolis v., 172. 
Gas Co. v. Light Co., 199, 216. 
Gas Co. v. Manufacturing Co., 

144 
Gas Co. v. Middleton, 199. 
Gas Co. v. San Francisco, 171, 191. 
Gas Co., State v., 215, 216, 218. 
Gas Light Co. v. Gas Co., 199. 
Gas Light Co., East St. Louis v., 

188. 
Gas Light Co., Indianapolis v., 

217. 
Gas Light Co. v. Saginaw, 199, 

216. 
Gas Light Co., State v., 218. 
Gas Light Co. v. United Gas Co., 

74. 
Gas Light Co., Young v., 53. 
Gassett v. Andover, 191. 
Gates v. Hancock, 194. 
Gatling Gun, In re, 114. 
Gause v. Clarkville, 230. 
Geiseka, Freher v., 74, 75. 
Gelpcke v. Dubuque, 135, 227, 238. 
Georg v. Nevada Central R. Co., 

137. 
Georgetown, Goszler v., 21, 203. 
Georgetown, Perley v., 222. 
Georgia, Railroad Co. v., 141, 143, 

144, 148. 
Georgia, etc. R. Co., Cozart v., 52, 

136, 137. 
Georgia, etc. R. Co., Wilkes v., 53. 



XXXY1 



TABLE OF OASES CITED. 



References are to sections. 



German Am. Bank, Brenham v., 

224, 230. 
German Am. etc. Co., National 

Park Bank v., 136. 
German M. Co., In re, 96. 
German Savings Bank v. Frank- 
lin Co., 238. 
German Savings Bank v. Wulfe- 

kehlen, 120. 
Germantown Ins. Co., Dhlin v., 

v., 77. 
Gettys, Kerchner v., 166. 
Gibboney, Union Township v., 

194 
Gibbs' Case, 96. 
Gibbs, Mersey Docks v., 220. 
Gibbs, Overend & G. Co. v., 15*, 

156. 
Gibson v. Goldthwaite, 159. 
Gifford v. Railroad Co., 198. 
Gilchrist, Furniss v., 96. 
Gildersleeve. Hinkley v., 9. 
Gilham v. Wells, 176. 
Gill, Baltimore v., 196, 198. 
Gill, Mayor, etc. v., 177. 
Gillette v. Missouri, etc. R. Co., 

164. 
Gilliam v. South, etc. R. Co., 163. 
Gillison v. Charleston, 211. 
Girard, Vidal v., 92, 93, 94. 
Glasby v. Morris, 207. 
Glasgow v. Rouse, 181. 
Glass v. Ashbury, 170. 
Glass Co.; Beers v., 160. 
Glass Co., Burr v., 100. 
Gleason, Coughlin v., 189. 
Gleason, Mills v.. 194. 
Glenn, Baltimore, etc. R. Co. v., 

166. 
Glenwood Cemetery, Close v., 168. 
Glidden v. Striplen, 61. 
Globe Works, Monument Bank 

v., 9, 32, 74, 100, 104, 162. 
Godbold v. Bank, 156. 
Goddard, Root v., 70. 
Godfrey, Metropolitan Bank v., 

85. 
Goff v. Great Northern R. Co., 

162. 
Gogreve, Barber Paving. Co. v., 

189. 
Gold Mining Co. v. National Bank, 

76. 



Gold Mountain Co., Morrison v., 

79. 
Goldsmith, London v., 205. 
Goldthwaite, Gibson v., 159. 
Goldworthy, Smith v., 113. 
Gooch v. McGee, 86. 
Goodrich, Commissioners v., 212. 
Goodrich v. Detroit, 50, 188. 
Goodspeed v. East Haddam Bank, 

162, 164. 
Goodwin v. Hardy, 124. 
Goodwin v. Ramsey Co., 230. 
Gordon v. Cornes, 225. 
Gordon v. Preston, 84. 
Gordon, Proprietors, etc. v., 77. 
Gordon's Ex'rs v. Richmond, etc. 

Co., 119. 
Gorrell v. Life Ins. Co., 96. 
Goszler v. Georgetown, 21, 203. 
Gottfried v. Miller, 91. 
Goundie v. Water Co., 81. 
Grady, Ex parte, 70. 
Grafton, Andover v., 230. 
Graham v. Albert Lea, 205. 
Graham, Lake Co. v., 53. 
Graham, National Bank v., 163, 

163. 
Grand Chute v. Winegar, 228. 
Grand Junction, etc. Co., Ed- 
wards v., 77. 
Grand Junction, etc. Co., Haven 

v., 135. 
Grand Junction Water Works, 

Ware v., 53. 
Grand Lodge v. Waddell, 70. 
Grand Rapids, Buford v., 211. 
Grand Rapids, Clay v., 207. 
Grand Rapids, Ely v., 189. 
Grand Rapids, McBride v., 189 
Grand Rapids, etc. Co. v. Grand 

Rapids, etc. Co., 170. 
Grand Rapids Elec. Co. v. Gas 

Co., 199. 
Grandjean, Slidell v., 9. 
Granger v. Bassett, 124, 126. 
Granger, Chaffee v., 188. 
Grangers', etc. Ins. Co. v. Kamper, 

3, 109. 
Grant v. Davenport, 198, 217. 
Grant v. Erie, 202, 219. 
Grant Co. v. Bradford, 175. 
Grant Co., Richardson v., 191. 
Graves, Goszler v., 215. 



TABLE OF OASES CITED. 



XXXTU 



References are to sections. 



Gray v. Jackson, 129. 

Great Eastern Ry., Attorney-Gen- 
eral v., 42, 43, 44, 47. 

Great Luxemberg R. Co. v. Mag- 
nay, 153. 

Great Northern R. Co., Gofl v., 162. 

Great Northern R Co. v. Railway 
Co., 137. 

Great Northern Ry. Co., South 
Yorkshire, etc. R Co. v., 55, 
70, 137. 

Great Western Ry. v. Blake, 129. 

Great Western Ry., Bruffett v., 
146. 

Great Western, etc. Ry. Co., Hoole 
v., 118. 

Great Western, etc. Ry. Co.,' Mid- 
land Ry. Co. v., 130. 

Great Western, etc. Ry. Co., Root 
v., 129. 

Great Western, etc. Ry. Co. v. 
Rushout, 53. 

Greeley v. Nashua Sav. Bank, 53. 

Greeley v. People, 185. 

Green v. Borough of Reading, 
203. 

Green v. Cape May, 170, 194 

Green, Donovan v., 237. 

Green, Hutchison v., 155. 

Green v. Omnibus Co., 162. 

Green, State v., 146. 

Green, Underwood v., 212. 

Green Bay, etc. R. Co. v. Union 
S. S. Co., 9, 47, 53, 129, 136, 
137. 

Green County v. Converse, 144. 

Green County, State v., 143. 

Greenbush, Parr v., 190. 

Greenville, Mauldin v., 231. 

Greenville Compress v. Planters' 
Press, 72, 74, 143. 

Greenville, etc. Co., Wiswall v., 9. 

Greenwood v. Louisville, 219. 

Greer, Pittsburg v., 220. 

Gregory v. Bridgeport, 188. 

Gregory v. Jersey City, 189. 

Gregory v. Patchett, 70. 

Greiner v. Ulery, 101. 

Griffin v. New York, 206. 

Grimes v. Hamilton, 195. 

Griswold, Arthur v., 158. 

Griswoldville, Ward v., 107. 

Grove v. Fort Wayne, 204. 



Grover & Baker Co., Copley v., 

162. 
Gruber v. Washington, etc. R. Co., 

162, 163. 
Guaga Iron Co. v. Dawson, 166. 
Guaranty Co., Jones v., 66. 
Gue v. Canal Co., 141. 
Guenther v. Devien, 69. 
Guest, Eby v., 120. 
Guiness v. Corporation of Ireland, 

118. 
Gunness v. Land Corporation, 55, 

56. 
Gunter v. Leckey, 69. 
Gurno, St. Louis v., 203. 
Guthrie Co., Tracy v., 76. 

H. 

Haag v. Commissioners, 222. 

Habersham, Jones v., 81, 93. 

Hackensack, etc. Co. v. De Kay, 
134, 135, 168. 

Hackensack, etc. Co., Zabriskie v., 
53. 

Hackett v. Ottawa, 227, 229. 

Hackettstown v. S wackhamer, 96. 

Hadden -v. Chorn, 94. 

Haddersfleld, Corporation of Ire- 
land v., 86. 

Hadley, Craigie v., 162. 

Hadley v. Commissioners, 3, 12. 

Hafford v. New Bedford, 219. 

Hague v. Philadelphia, 194. 

Hale v. Houghton, 217. 

Hall, Chicago, etc. Coal Co. v., 
146. 

Hall v. Paris, 53, 74. 

Hall, Skinner v., 129. 

Hall v. Sullivan R Co., 141. 

Hall v. Swansea, 74. 

Hallowell Bank v. Hamlin, 159. 

Halsey, Ackerman v., 158. 

Halstead v. Mayor, 175. 

Ham, Railroad Co. v., 144. 

Hamilton v. McLaughlin, 87. 

Hamilton v. New Castle Ry. Co., 
96, 100, 128. 

Hamilton, Vail v., 9. 

Hamilton Co., Grimes v., 195. 

Hamlin, Hallowell Bank v., 159. 

Hamm, McConnell v., 181. 



xxxvm 



TABLE OF CASES CITED. 



References are to sections. 



Hammett v. Philadelphia, 325. 
Hammond v. Straus, 51, 168. 
Hammonton, State v., 188. 
Hams, New Orleans, etc. E. Co. v., 

137. 
Hancock, Clark v., 223. 
Hancock, Gates v.,. 194. 
Hancock v. Holbrook, 83. 
Hancock, Howson v., 74, 75. 
Handley v. Stutz, 107, 109, 110, 

112, 117. 
Hankey, Broadway Co. v., 216. 
Hanmer, Peninsular Bank v., 77. 
Hannauer Oil Works, Mallory v., 

53, 70, 148. 
Hanover Sav. Ass'n, Larwell v., 

96. 
Hansborough, Upton v., 51, 168. 
Hanser, State v.. 173. 
Hanson, Merchants' Bank v., 53. 
Hanson v. Vernon, 181, 224. 
Hapgood, Penn. Match Co. v., 79. 
Harbeck v.. Toledo, 183. 
Harding, etc. v. Eockford, 223. 
Hardy, Goodwin v., 124. 
Hardy v. Merri weather, 100. 
Hare v. London, etc. E. Co., 130. 
Harmock v. Farmers' L. & T. Co., 

131. 
Harned, Manhattan B. Co. v., 127. 
Harper v. Emery, 225. 
Harrington, Webster v., 198. 
Harris, Denver, etc. E. Co. v., 162. 
Harris v. McGregor, 3. 
Harris, People v., 185. 
Harris v. Eunnels, 69. 
Harris v. San Francisco E. Co., 

126. 
Harrisburg, Fisher v., 176, 207. 
Harrison v. State, 199. 
Hart, Franklin Ins. Co. v., 79. 
Hartford, Cone v., 207. 
Hartford, Manchester v., 205. 
Hartford, Portland Ey. Co. v., 235. 
Hartford, etc. Co. v. Sprague, 145. 
Hartford Bridge Co. v. East Hart- 
ford, 187. 
Hartridge v. Eockwell, 120. 
Hartwell, Jackson v., 15, 185. 
Harvey v. Chase, 100. 
Harvey, Marble Co. v., 72, 74, 123, 

136. 
Hasbrouck v. Milwaukee, 235. 



Hascall v. Life Association, 100. 
Haskell, Bank v., 161. 
Haskell v. New Bedford, 208. 
Hastelow v. Jackson, 69. 
Hasty, Baumgartner v., 212. 
Hat Co., Priest v., 168. 
Hatch v. Barr, 87, 90. 
Hatch, Collins v., 212. 
Hauger v. Des Moines, 170. 
Haven v. Adams, 87. 
Haven v. Grand June. etc. E. Co., 

135. 
Hawkes, Eastern Counties Ey. 

Co. v., 9, 52, 137. 
Hay, Feitsam v., 137. 
Hayden, Leland v., 120. 
Hayes v. Appleton, 170. 
Hayes v. Holly Springs, 190, 324, 

229. 
Hayes v. Oshkosh, 219. 
Hayne, Boardman v., 190. 
Haynes v. Covington, 201. 
Hay ward. v. Davidson, 81. 
Haywood v. Pilgrim Society, 77. 
Hazlehurst v. Savannah E. Co., 

53, 121. 
Head v. Providence Ins. Co., 21, 

28, 37, 47, 50, 70, 170. 
Heath v. Erie R Co., 53. 
Heath, Fuller v., 196. 
Heathorn, Benson v., 153. 
Heck v. McEwin, 3. 
Hedges v. Dixon County, 73, 231. 
Hedges v. Paquett, 156. 
Hedley, Williams v., 69. 
Heenrich v. Pullman Co., 163. 
Heineberg, Page v., 81. 
Heland v. Lowell, 171, 172. 
Helensburg, Caledonian Ey. v., 

70, 79. 
Helfrich v. Williams, 164, 
Heller v. Sedalia, 219. 
Hempsted, North Hempsted v., 

187. 
Henckes v. Minneapolis, 205. 
Henderson v. Covington, 170, 175. 
Henley, Mayor v., 220. 
Henley, Warren v., 181. 
Hennesy v. St. Paul, 53. 
Henry Co., Eedd v., 235. 
Hensley v. People, 225. 
Herkimer, Ind. etc. M. Co. v., 3. 
Herley, Mayor v., 162. 



TABLE OF CASES CITED. 



XXXIX 



References are to sections. 



Heme Bay, Webb v., 134. 
Herriok, Allen v., 127. 
Heurson v. New Haven, S13. 
Hewison v. New Haven, 204. 
Hewitt v. School District, 223. 
Hicks, Dry Docks Co. v., 81. 
Hicks, Mott v., 96, 100. 
Higert v. Green Castle, 205. 
Hightower v. Thornton, 106. 
Hilbert, St. Louis Carriage Co. v., 

120. 
Hilbish v. Catherman, 181. 
Hildreth v. Lowell, 86. 
Hill v. Boston, 219. 
Hill v. Charlotte, 202. 
Hill v. City of Kahoka, 233. 
Hill v. Decatur, 177. 
Hill v. Nisbet, 121. 
Hill Mfg. Co. v. Railroad Co., 129. 
Hill v. Memphis, 223, 229, 237. 
Himmelmann v. Hoadley, 201. 
Hines v. Lockport, 202. 
Hinkley v. Gildersleeve, 9. 
Hitchcock v. Galveston, 62, 65, 

193, 196, 233. 
Hitchins Bros. v. Maybard, 211. 
Hoadley, Himmelmann v., 201. 
Hoag, Sawyer v., 103. 
Hoboken, Bridge Proprietors v., 8. 
Hoboken, North Hudson Co. v., 

182. 
Hoboken. State v., 182. 
Hodges v. Buffalo, 194. 
Hodges v. Screw Co., 83, 122, 154, 

156. 
Hodgmau v. Chicago, etc. R. Co., 

235. 
Hodgson v. Powers, 53. 
Hoff, Baker v., 69. 
Hoffman, Moore v., 178. 
Hoffman, etc. Co. v. Cumberland, 

etc. Co., 153. 
Hogie v. People's Association, 

120. 
Holbrook v. Bassett, 96. 
Holbrook, Hancock v., 83. 
Holdsworth v. Evans. 70. 
Holland v. San Francisco, 9, 14. 
Hollister, Salt Lake City v., 9, 53, 

74, 163, 222, 233. 
Holly Springs, Hayes v., 190, 224, 

229. 
Holmes v. Johnson, 69, 71. 



Holmes v. Mead, 82. 

Holmes, etc. Mfg. Co. v. Holmes, 

etc. Co., 121. 
Holt v. Bacon, 161. 
Holt, Wahl v., 129. 
Holt v. Walworth, 107. 
Holt v. Winfleld Bank. 159. 
Home v. Boston Carpet Co., 122. 
Home v. Freeman, 141. 
Home v. Keeler, 194. 
Home Ins. Co., Seignouret v., 113. 
Homestead, Blackshire v., 87. 
Hood v. Lynn, 175. 
Hood v. Railroad Co., 13, 29, 53, 

129, 164. 
Hooker v. Eagle Bank, 77. 
Hoole v. Great Western R. Co., 

118. 
Hooper v. Ely, 198. 
Hope v. International Co., 120. 
Hopkins v. Swanson, 172. 
Hopkins v. Turnpike Co., 88. 
Hopkins, Yancey v., 190. 
Hopkinton, Claflin v., 175. 
Hopper v. Covington, 224. 
Horn v. Baltimore, 201. 
Horn v. People, 171. 
Horton v. Thompson, 194. 
Hosmer, Detroit v., 189. 
Hoth, United States Bank v., 83, 

100. 
Hough v. Cook Co., 81. 
Houghton v. Dodge, 77. 
Houghton, Hale v., 217. 
Housatonic R. Co., Bridgeport v., 

170. 177. 
House, Imhoff v., 74, 75. 
House v. Montgomery Co., 204. 
Household Mach. Co., Anthony 

v., 119. 
Houston, Gabel v., 172. 
Houston & T. C. R. Co. v. Shirley, 

142, 144. 
Hovelman v. Kansas City, etc. 

Co., 216. 
Hovey v. Mayo, 177, 203. 
Howard, American Academy v., 

94. 
Howard, Bermeister v., 172. 
Howard, Chicago, etc. Co. v., 96, 

136. 
Howard, Railroad Co. v., 9. 
Howard v. San Francisco, 219. 



2d 



TABLE OF CASES CITED. 



References are to sections. 



Howard, Stein v., 115. 

Howard, Thornton v., 94. 

Howard, White v., 82. 

Howe, In re, 93. 

Howe, N. Y. Inst, v., 95. 

Howe, Brown & Co., Tool Co. v., 

84. 
Howe Machine Co., Carter v., 162. 
Howe Machine Co., Webster v., 

104. 
Howson v. Hancock, 74, 75. 
Hoyle v. Plattsburg, etc R. Co., 

153. 
Hoyt, East River Bank v., 154. 
Hoyt, Reed v., 91. 
Hoyt, Thompson v., 159. 
Hubbard v. Concord, 205. 
Hubbard v. Investment Co., 55. 
Hubbardston, Stone v., 205. 
Hudson, York, etc. R. Co. v., 153. 
Hudson Co. Ins. Co., Durar v., 77. 
Hughes, Flack v., 235. 
Huguenot Mfg. Co., Chamberlin 

v., 51, 168. 
Huidekoper, Daviess Co. v., 227. 
Hull Glass Co., Smith v., 77. 
Humboldt v. Long, 53. 
Humboldt M. Co. v. Am. Com. Co., 

136. 
Humes v. Mayor, 203, 204. 
Humphrey v. Patrons' Mer. Ass'n, 

77, 168. 
Hunt, Barber Asphalt Paving Co. 

v., 189. 
Hunt v. Boonville, 203. 
Hunt, Eaton, etc. Co. v., 145. 
Hunt v. Knickerbocker, 69, 71. 
Hunter, Dougherty v., 159. 
Huntoon, City of Topeka v., 177. 
Hurford v. Omaha, 170. 
Hussey v. King, 164. 
Hussey v. Norfolk R. Co., 162. 
Hutchins v. Byrnes, 87, 90. 
Hutchins, Lake Shore, etc. R. Co. 

v., 146. 
Hutchinson v. Concord, 204. 
Hutchinson v. Green, 155. 
Huthsing v. Bousquet, 190. 
Hutson v. Mayor, 204. 
Hyde Park v. Oakwood, 183. 
Hydes v. Joyes, 173. 
Hydraulic Co., Citizens' Water 

Co. v., 216. 



Ice Co., Mott v., 164 
Illinois, Turnpike Co. v., 8. 
Illinois Canal Co. v. St. Louis, 215, 
Illinois Cent. R. Co. v. Downey, 

164. 
Illinois Cent. R. Co. v. Franken- 

berg, 129. 
Illinois Cent. R. Co. v. Johnson, 

129. 
Imhoff v. House, 74, 75. 
Ind. Car Co. v. Parker, 210. 
Ind. etc. Co., Indianapolis v., 170, 

1 88 
Ind. Roll. Mill Co. v. Railroad Co., 

159. 
Indiana, etc. R. Co., Ohio, etc. R. 

Co. v., 137. 
Indianapolis v. Gas, etc. Co., 172, 

217. 
Indianapolis v. Ind. etc. Co., 170, 

188. 
Indianapolis v. Scott, 210. 
Indianapolis v. Tate, 211. 
Indianapolis Ins. Co., Ray v., 101. 
Indianapolis, etc. M. Co. v. Herki- 
mer, 2. 
Indianapolis, etc R. Co. v. Jones, 

146. 
Indianapolis, etc. R. Co., Mowrey 

v., 144. 
Indianapolis, etc R Co., Smead 

v., 9, 96. 
Inhabitants, etc., Allen v., 170, 

224. 
Inhabitants, etc v. Cole, 81. 
Inhabitants, etc v. Commission- 
ers, 86. 
Inhabitants, etc., Dill v., 201. 
Inhabitants, etc. v. Field, 211. 
Inhabitants, etc, Morrison v., 134. 
Inhabitants, etc. v. New Orleans, 

177. 
Inhabitants, etc., Prout v., 195. 
Inman v. Tripp, 211. 
In re Addleston Co., 117. 
In re Albert Association Co., 137. 
In re Assurance Co., 168. 
In re Almada & Tirito Co., 117. 
In re Bangor & State Co., 148. 
In re Bank of Hindustan, 142. 
In re Barrow, etc Co., 114, 



TABLE OF CASES CITED. 



xli 



References are to sections. 



In re Bridgewater Nav. Co., 119. 
In re British Life Ins. Co., 122. 
In re Building Society, 70. 
In re Cork, etc. R. Co., 53, 73, 74, 

96. 
In re Corporation of Haddersfleld, 

86. 
InreEbbw. Vale, etc. Co., 109, 

113. 
In re Empire Assurance Corpora- 
tion, 142. 
In re Eureka Basin Co., 181, 
In re Faure Elec. Co., 154 
In re Financial Corporation, 113. 
In re Gatling Gun, 114. 
In re German M. Co., 96. 
In re Howe, 93. 
In re Insurance Co., 120. 
In re International Ins. Co., 96. 
In re London, etc. R. Co., 120. 
In re Marseilles, etc. Co., 120. 
In re Mt. Washington, etc. Co., 

86. 
In re New York, etc. Co., 8. 
In re Northern Coal Min. Co., 120. 
In re Phoenix Co., 74. 
In re Pyle Works, 125. 
In re Quebrada By., 114 
. In re Sage, 145. 

In re Sankey Brook Coal Co., 125. 
In re Sea Foam, etc. Ins. Co., 74 
In re Union Plate Glass Co., 114 
In re United Service Co., 120. 
In re Washington Avenue, 225. 
In re Weymouth Packet Co., 117. 
Insurance Co., iEtna Nat. Bank 

v., 136. 
Insurance Co., Agar v., 160. 
Insurance Co., Attorney-General 

v., 100. 
Insurance Co., Beatty v., 47. 
Insurance Co., Blair v., 100. 
Insurance Co., Chetlain v., 120. 
Insurance Co., Farmers', etc. Co. 

v., 92. 
Insurance Co., Jones v., 172. 
Insurance Co., Kennebec Co. v., 

166. 
Insurance Co., Life & Fire Ins. 

Co. v., 162. 
Insurance Co., Liverpool, eta Co. 

v., 9. 
Insurance Co., Maynard v., 162. 



Insurance Co., McCullough v., 168. 
Insurance Co., Mumford v., 100. 
Insurance Co., Nichol v., 160. 
Insurance Co., Ramsey v., 168. 
Insurance Co., Smith v., 70. 
Insurance Co., Southall v., 143. 
Insurance Co., Susquehanna, etc. 

Co. v., 84 
Insurance Co., Vance v., 156. 
Insurance Co., Williams v., 162. 
International, eta Co. v. Bre- 

mond, 143. 
International, eta Co., Hope v., 

120. 
International, eta Co., Kentle v., 

163. 
International, etc. Co. v. United 

States, 77. 
Investment Co., Hubbard v., 155. 
Iola, Commercial Bank v., 181, 

225, 237. 
Iowa City, Clark v., 135. 
Iowa Lumber Co. v. Foster, 120. 
Iowa Mountain Bank v. Mercan- 
tile Bank, 162. 
Irish v. Railroad Co., 129. 
Iron R. Co. v. Ironton, 86. 
Irvine v. Union Bank. 78. 
Isham v. Bennington Ins. Co., 90. 
Ithica, Saulsbury v., 205. 
Ives v. Smith, 131. 

J. 

Jackson v. Bowman, 215. 
Jackson v. Brown, 84, 85. 
Jackson, Denton v., 3. 
Jackson, Gray v., 129. 
Jackson v. Hartwell, 15, 185. 
Jackson, Hastelow v., 69. 
Jackson's Adm'rs v. Plank Road 

Co., 124 
Jacksonville, Dorman v., 203. 
Jacksonville v. McConnel, 47. 
Jacksonville, Murphy v., 175. 
Jacobs, Union Bank v., 96, 98, 

100. 
James v. Portage, 200. 
Janesville, Crossett v., 203. 
January, Commissioners v., 238. 
Jasper County, Anthony v., 226. 
Jefferson County v. Arrighi, 194 



xlii 



TABLE OF CASES CITED. 



References are to sections. 



Jeffersonville, Bissell v., 193. 
Jeffersonville, Coal Float v., 176. 
Jeffersonville, Shallcross v., 175. 
Jenkins v. Andover, 224. 
Jenkins, Dranesburg v., 237. 
Jermain v. Lake Shore E. Co., 

124. 
Jersey City, Banking Co. v., 178. 
Jersey City, Gregory v., 189. 
Jersey City, Keeney v., 189. 
Jersey City, McConvill v., 175. 
Jersey City, Rouede v., 227. 
Jersey City, State v., 173, 174, 176, 

235. 
Jersey City, Trapshagen v., 207. 
Jessup, Branch v., 9, 53. 
Jeverin v. Eddy, 206. 
Jewett v. New Haven, 219. 
John v. Farmers' Bank, 101. 
Johnson, Cass County v., 227. 
Johnson v. Dispatch Co., 162. 
Johnson v. District of Columbia, 

208. 
Johnson, Holmes v., 69, 71. 
Johnson, 111. Cent. R. Co. v., 129. 
Johnson, Kean v., 137. 
Johnson, Musser v., 87. 
Johnson, "Northern Bank v., 161. 
Johnson v. Philadelphia, 215. 
Johnson v. Shrewsbury, etc. R. 

Co., 71, 137. 
Johnson v. Utica Water Works, 

86. 
Johnson, Wood v., 96, 100. 
Johnson County v. McClintock, 

235. 
Johnston v. Charleston, 206. 
Johnston, Meyer v., 143. 
Johnston Harvester Co. v. Clark, 

168. 
Johnston, etc. R. Co., Abbott v., 

137. 
Joint Co. v. Delaware Bay Ry. 

Co., 8. 
Joint-Stock Co. v. Brown, 122, 158. 
Jones v. Bank, 168. 
Jones v. Guaranty Co.. 66. 
Jones v. Habersham, 81, 93. 
Jones v. Ind. etc. R. Co., 146. 
Jones v. Insurance Co., 172. 
Jones v. New Haven, 220. 
Jones, Quincy v., 203. 
Jones v. Richmond, 188. 



Jones, Stewart v., 141. 
Jones v. Terre Haute R. Co., 124. 
Jones, Wetherell v., 55. 
Jordon v. Alabama R. Co., 162. 
Jordon, Christian Union v., 78. 
Joy, Allen v., 181, 225. 
Joy, Bean v., 195. 
Joy v. St. Louis, 128, 146. 
Joyes, Hydes v. 173. 
Junction R. Co., Cleneay v., 135. 
Junction R. Co., McCrary v., 53, 
147. 

K. 

Kaine, St. Louis v., 172. 
Kaist v. St. Paul, 203. 
Kalamazoo, Gale v., 173, 215. 
Kalamazoo, Shelden v., 163. 
Kamper, Grangers' Ins. Co. v., 3, 

107. 
Kane v. Fond du Lac, 195. 
Kankakee, Bissell v., 181, 225. 
Kansas City v. Flanagan, 170. 
Kansas City v. Kiley, 213. 
Kansas, etc. Co., Hovelman v., 

216. 
Kean v. Johnson, 137. 
Kean y. Van Reuth, 168. 
Keeler, Howe v., 194. 
Keeler, Mead v., 100. 
Keeney v. Jersey City, 189. 
.Keithburg v. Frick, 238. 
Keller v. Leavenworth, 230. 
Kelley, Louisville R. Co. v., 163. 
Kelley v. Milan, 223. 
Kelly v. Calhoun, 89. 
Kelly, Case v., 81, 85. 
Kelly v. Mayor, etc., 96, 100. 
Kelly v. Meeks, 170. 
Kelly v. Milwaukee, 177. 
Kendall Co., Post v., 190. 
Kennebec Co. v. Insurance Co.,, 

166. 
Kennedy v. Cochran, 69. 
Kennedy v. Phelps, 212. 
Kennicott v. Supervisors, 228. 
Kenosha, Paul v., 74, 191. 
Kent v. Quicksilver M. Co., 96, 

106. 124, 127. 
Kentle, International, etc. Co. v., 

163. 
Keokuk, Creal v., 201. 



TABLE OF CASES CITED. 



xliii 



References are to sections. 



Keokuk v. Ft. Wayne Elec. Co., 

137. 
Keokuk v. Soroggs, 170. 
Keokuk, etc. Bridge Co., Pitts- 
burg, etc. E. Co. v., 9, 47, 52, 

53, 54, 69, 74, 76. 
Keokuk Packing Co., Buford v., 

83, 121. 
Keokuk, etc. R. Co., State v., 

144. 
Keokuk Water Works, Becker v., 

219. 
Kep, Utica Ins. Co. v., 69. 
Kepner v. Commonwealth, 171. 
Kerchner v. Gettys, 166. 
Kernaghan v. Williams, 53. 
Kernesville Mfg. Co., Blalock v., 

120. 
Kerr, Troy, etc. R. Co. v., 137. 
Kersey Oil Co. v. Oil Creek R. 

Co., 139. 
Ketchum v. Buffalo, 100, 185, 188. 
Ketchum, N. Y. etc. Co. v., 79. 
Keyser v. School District, 77. 
Kiel, Morris v., 87. 
Kiley, Kansas City v., 213. 
Killam, Lawrence v., 188. 
King v. Davenport, 212. 
King, Hussey v., 164. 
King v. Patterson, 124, 126. 
King, Phillips Academy v., 92. 
King, Trustees v., 95. 
King, Warren v., 119. 
King, Wood Hydraulic Co. v., 

166. 
King Mountain Min. Co., Nason 

v., 87. 
King's College, Festial v., 124. 
Kinmundy v. Mayham, 173. 
Kinzie v. Chicago, 47. 
Kip, ST. Y. etc. E. Co. v., 86. 
Kip v. Paterson, 176. 
Kipp v. Mayor, 176. 
Kirkham v. Russell, 170, 176. 
Kneeland, Lathrop v., 109. 
Kneeland v. Milwaukee, 189. 
Kneeland, Tombigbie v., 165, 166. 
Knickerbocker, Hunt v., 69, 71. 
Knight v. Corporation, 168. 
Knitting Co., Caudy v., 162. 
Knowler, Beaty v., 8, 13, 47. 
Knowlton v. Congress, etc Co., 

109, 119. 



Knowlton, Spring Co. v., 69, 73, 

138. 
Knox Co. v. Aspinwall, 135, 190, 

193, 227. 228. 
Knox Ins. Co., Ogilvie v., 108. 
Kohner, Chemical Bank v., 161. 
Konrad v. Rogers, 185. 
Krightly, Oliver v., 198. 
Krouse, Centralia v., 206. 
Krulevitz v. Eailroad Co., 162. 
Kyle v. Railroad Co., 129. 



Lacey, Excelsior Co. v., 156. 

Lacey, Orr v., 70. 

Lacon, Barnes v., 237. 

La Crosse R. Co., Bronson v., 53. 

Lafayette, Allen v., 233. 

Lafayette v. Cox, 9. 

Lafayette Ave. Bank v. St. Louis 
S. Co., 9. 

Lafayette R. Co., 'Tippecanoe Co. 
v., 53, 78. 

Laflin, Chicago v., 212. 

La Grange, Cole v., 181, 225. 

Laing v. Reed, 98. 

Laing, Solomon v., 53, 121. 

Laird v. De Sota, 233. 

Lake, Terre Haute v., 201. 

Lake County v. Graham, 53. 

Lake County, Sutliff v., 53. 

Lake Crystal, Estelle v., 205, 206. 

Lake Erie Ins. Co., Valley R. Co. 
v., 121. 

Lake Erie, etc. R. Co. v. Acres, 163. 

Lake Erie, etc. R. Co., Paine v., 
144, 146. 

Lake Shore, etc. E. Co., Board- 
man v., 124. 

Lake Shore, etc. R. Co. v. Hutch- 
ins, 146. 

Lake Shore, etc. R. Co., Jermain 
v., 126. 

Lake Shore, etc. R Co., Sage v., 
145. 

Lake View v. Letz, 212. 

Lamb v. Cecil, 91. 

Lamb, Powder River, etc. Co. v., 
74, 75. 

Lambert, Thompson v., 96. 

Lamm v. Deposit Association, 194, 



xliv 



TABLE OF OASES CITED. 



Eeferences are to sections. 



Lamont, Thompson v., 84. 
Lampkin, Nebraska City v., 303. 
Lamson, Boom Co. v., 3. 
Lancaster, Miller, etc. R Co. v., 

144. 
Lancaster, Savanna R Co. v., 96. 
Lancaster, Steck v., 200. 
Land v. Coffmann, 81. 
Land Credit Co. v. Lord Fermoy, 

158. 
Land Corporation of Ireland, Gun- 
hiss v., 55, 56. 
Land & Improvement Co., Bridge 

Co. v., 8. 
Lane's Case, 110. 
Langstone v. S. C. R. Co., 135. 
Lanier, Southern Ins. Co. v., 14, 74. 
Lansing v. Toolan, 203. 
Laramie Co. v. Albany Co., 186. 
Larned, Randolph, v., 141. 
Larue, Minturn v., 170, 199. 
Larwell v. Hanover Savings 

Bank, 96. 
Lathrop, Commercial Bank v., 81. 
Lathrop v. Kneeland, 109. 
Laughton v. Hughes, 71. 
Lauman v. Lebanon V. R. Co., 

137, 142, 144, 147. 
Law v. People, 196, 197, 231. 
Lawrence v. Killam, 188. 
Lawrence, Morrison v., 213, 222. 
Layten, Osgood v., 108. 
Lead Co., Mechanics' Association 

v., 100. 
Leasure v. Life Insurance Co., 

166. . 
Leavenworth, Keller v., 230. 
Leavenworth v. Miller, 225. 
Leavitt, Curtis v., 13, 74, 96, 98, 

100. 
Leavitt v. Palmer, 74. 
Leazure v. Hillegas, 81. 
Lebanon Co., Currier v., 120, 137, 

142, 144. 
Lebanon V. R. Co., Lauman v., 

137, 142, 144, 147. 
Leckey, Gunter v., 69. 
Le Claire, Springfield v., 220. 
Le Couteulx v. Buffalo, 185. 
Lee, Morris v., 157, 158. 
Lee, Thompson v., 238. 
Leech, Waters v., 176. 
Le Fevre, Carr v., 135. 



Legg, Board of Commissioners v_ 

210. 
Leggett v. Banking Co., 84 
Leggett v. New Jersey Mfg. Co, 

8, 13. 
Lehigh Canal Co., Brown v., 124. 
Lehigh Water Co.'s Appeal, 216. 
Lehman v. Tallassee Mfg. Co.. 105, 

135. 
Leland v. Hayden, 120. 
Leo v. Union Pacific R. Co., 105. 
Leonard v. Canton, 170. 
Lessee, etc, Runyan v., 81. 
Leslie v. St. Louis, 86. 
Le Sueur Mill Co., Auerbach v., 

81. 
Letz, Lake View v., 212. 
Levy, Life Association v., 166. 
Levy, Mayor v., 213. 
Lewis v. Bank of Kentucky, 167. 
Lewis v. Clarendon, 237. 
Lewis, Commauche Co. v., 228. 
Lewis County Bank, Donnell v., 

96. 
Lewistown Inst, etc., Franklin 

Co. v., 9, 34, 53, 55, 70, 121. 
Lex, Whitman v., 95. 
Lexington v. Butler, 228. 
Life Association, Boogher v., 162. 
Life Association, Hascall v., 100. 
Life Association v. Levy, 166. 
Life Association, Twiss v., 74. 
Life, etc. Insurance Co., Gorrell 

v., 96. 
Life Insurance Co. v. Insurance 

Co., 162. 
Life Insurance Co., Leasure v., 

166. 
Light. Co., Gas Co. v., 199. 
Lightner v. Boston, etc. R Co., 

146. 
Lincoln, Fulton v., 170. 
Lincoln Co., U. P. R. Co. v., 235. 
Lincoln, etc. R. Co., Peters v., 137. 
Lincoln Savings Bank v. Ewing, 

92. 
Lionberger v. Broadway Bank, 91. 
Lime Co., Denike v., 143. 
Litchfield v. Ballou, 233. 
Litchfield, Buchanan v., 196, 224, 

228, 232. 
Litchfield, Dubuque, etc. Co. v., 9. 
Little v. O'Brien, 74, 75. 



TABLE OF CASES CITED. 



xlv 



References are to sections. 



Little Rock, Vance v., 170. 

Littlewort v. Davis, 70. 

Livingston County v. Weider, 
235. 

Livingstone v. Temperance So- 
ciety, 120. 

Liverpool, etc. Co. v. Insurance 
Co., 9. 

Llanelly Ey. v. London, etc. R. 
Co., 130. 

Lloyd v. Bank, 160. 

Loan Association v. Topeka, 179, 
181, 224, 225, 238. 

Loan Co., Marchaud v., 79. 

Lock Co. v. Railroad Co., 129. 

Lockhart v. Van Alstyne, 134. 

Lockport, Hines v., 202. 

Lockwood, Peck v., 212. 

Lockwood, Railroad Co. v., 9. 

Lockwood v. St. Louis, 177. 

Logan City v. Buck, 170. 

Logan County Bank v. Town- 
send, 74 

Lombard, School District v., 230. 

London v. Goldsmith, 205. 

London, Stuart v., 77. 

London Bldg. Soc, Collerne v., 
120. 

London Omnibus Co., Green v., 
162. 

London, etc R. Co., Hare v., 
130. 

London, etc. R Co., In re, 120. 

London, etc. R. Co., Llanelly Ry. 

v., 130. 
. Long, Cowgill v., 238. 

Long, Humboldt v., 53. 

Longstreet, Crawford v., 81. 

Lookout Water Co., Foster v., 
219 

Lord v.' Oconto, 170, 173. 

Lord Fermoy, Credit Co. v., 158. 

Los Angeles, Og v., 219. 

Los Angeles, etc. R. Co., Smith 
v., 146. 

Log Angeles "Water Co. v. Los An- 
geles, 217. 

Louisiana v. New Orleans, 204, 
233. 

Louisiana v. Wood, 191, 233. 

Louisiana Light Co., New Orleans 
G. L. Co. v., 216. 

Louisiana Ry., Richmond Ry. v.,8. 



Louisiana State Bank v. Orleans 

Nav. Co., 47, 170. 
Louisville v. Bank, 215. 
Louisville v. Commissioners, 185. 
Louisville, Greenwood v., 219. 
Louisville, Murphy v., 201. 
Louisville, Pollock v., 219. 
Louisville v. University, 185. 
Louisville v. Weible, 216. 
Louisville, etc. R. Co. v. Boney, 

146. 
Louisville, etc. R Co. v. Caldwell, 

100. 
Louisville, etc. R. Co. v. Flem- 

ming, 163. 
Louisville, etc. R. Co. v. Kelly, 

163. 
Louisville, eta R. Co. v. Louis- 
ville, 215. 
Lovette v. Sawmill Association, 

89. 
Loving, Brannen v., 159. 
Low v. Central Pac. R. Co., 9, 136. 
Low, Smith v., 96. 
Lowell v. Boston, 69, 179, 181, 225. 
Lowell, Bridenbecker v., 161. 
Lowell, Drake v., 204. 
Lowell, Heland v., 171, 173. 
Lowell, Hildreth v., 86. 
Lowell, Proprietors, etc. v., 213. 
Lucas v. Pitney, 96, 100. 
Lucas v. White Line Transp. Co., 

4, 9, 38, 52, 70. 
Ludlow, Ferris v., 109. 
Lumbard v. Aldrich, 81. 
Lumber Co., Tenney v., 88. 
Lumsden v. Cross, 225. 
Luthe v. Farmers' Ins. Co., 53. 
Lyde v. East Bengal R. Co., 53. 
Lynch v. Eastern, etc. R. Co., 235. 
Lynch v. New York, 208, 211. 
Lynch, Sheidley v., 177. 
Lynchburg, Peters v., 170. 
Lynn, Hood v.. 175. 
Lyons County, Clark v., 194. 

M. 

M. & P. R. Co., Bryan v., 129. 
Mabel, Titus v., 131. 
Mabry, Shea v„ 156. 
Mackay v. Bank, 163. 



xlvi 



TABLE OE OASES CITED. 



References are to sections. 



Maddox, Pollard v., 141. 
Mad River R. Co., Weeden v., 77. 
Madison, Bearden v., 172. 
Madison, State v., 81, 185. 
Madison, Weis v., 211. 
Madison, etc. P. Ed. Co. v. Water- 
town, etc. Co., 9, 99. 136. 
Madison, etc. E. Co., Pearce v., 

9, 30, 52, 53, 70, 143, 148. 
Magee v. Mokelumne, etc. Co., 96, 

98, 100. 
Magnay, Great Luxemburg R. Co. 

v., 153. 
Maher v. Chicago, 74, 191. 
Mahoney v. Mining Co., 168. I 
Mahoney v. State, 3. 
Mahoney Min. Co. v. Anglo-Cal. 

Bank, 96, 98. 
Maine Cent. E Co. v. Maine, 144, 

146, 148. 
Mallett v. Simpson, 81. 
Mallory v. Hannauer Oil Works, 

53, 70, 148. 
Maloney, Dubuque v., 213. 
Manchester v. Hartford, 205. 
Manchester, Ray v., 204. 
Manchester, etc. Co., Cass v., 53. 
Manchester Canal Co., Cunliffe v., 

53. 
Manchester, etc. E. Co., Chambers 

v., 70, 134. 
Manchester, etc. E. Co. v. Con- 
cord, etc. E. Co., 130. 
Manchester Water Co., Brough- 

ton v., 50. 
Manderchid v. Dubuque, 200. 
Manhattan Beach Co. v. Harned, 

127. 
Mankato, Phelps v., 200. 
Mansfield v. Moore, 205. 
Mansfield, State v.. 81. 
Manufacturing Co., Gas Co. v., 

144. 
Manufacturing Co., Eailroad Co. 

v., 129. 
Manufacturing Co., Smith v., 156. 
Manufacturing Co., White v., 79. 
Marble Co. v. Harvey, 136. 
March v. Eastern, etc. E. Co., 124. 
Marchand v. Loan Co., 79. 
Marcy, Elwood Township v., 238. 
Marcy v. Oswego, 53. 
Marcy, Sumner v., 123. 



Mariaville, Emery v., 230. 
Marietta, etc. R. Co., Atkinson 

v., 9. 
Marietta, etc. R. Co., Campbell v.,. 

137. 
Marietta, etc. R. Co. v. Elliott, 9. 
Marine Bank. Ballston Bank v., 

161. , 
Marion Co., State v., 170. 
Markham, Comm. v., 183. 
Marks v. Purdue University, 225.. 
Marquette v. Cleary, 202. 
Marseilles. Chicago, etc. R Co. v., 

120. 
Marseilles, etc. Co., In re, 120. 
Marsh v. Callender, 203. 
Marsh v. Fulton County, 190, 191,. 

• 193, 194, 201, 224. 233. 
Marsh v. N. Y. etc. R Co., 146. 
Marshall, Downing v., 82. 
Marshall, Forbes v., 96. 
Marshall, Turquand v., 158. 
Marshalltown, Bellmeyer v., 9. 
Martin v. Mayor, 215. 
Martin v. Mobile, etc. E Co., 166. 
Martin, Rochester Ins. Co. v., 9. 
Martin, State v., 195. 
Martin v. Webb, 160. 
Marvin Safe Co. v. Ward, 219. 
Maryland, Phil. etc. R. Co. v., 146,. 

148. 
Mason, Greenville v., 186. 
Mason v. M. E. Church, 93. 
Mason v. Shawnee, 172. 
Mason City, Noyes v., 203. 
Massey v. Building Association, 

101. 
Mather v. Ottawa, 170, 225. 
Mathes v. Cameron, 230. 
Mathews v. Alexander, 173. 
Mathews, National Bank v., 53, 67. 
Mathews v. Skinner, 9. 
Maude, Ex parte, 117. 
Mauldin v. Greenville, 231. 
Maund v. Monmouthshire Co., 

162. 
Maupin v. Franklin Co., 190. 
Maw hood, Smith v., 55. 
May, People v., 196. 
Maybard, Hitchins Bros, v., 211. 
Mayer, Western Union Ins. Co. 

v., 166. 
May ham, Kinmundy v., 173. 



TABLE OF CASES CITED. 



xlvii 



References are to sections. 



Maynard v. Insurance Co., 163. 

Mayo, Hovey v., 177. 

Mayor v. Baltimore, etc. R. Co., 

138. 
Mayor, Bateman v., 50, 188. 
Mayor v. Beasley, 176. 
Mayor, Bigler v., 189. 
Mayor, Blake v., 170. 
Mayor, Bradford v., 304, 306. 
Mayor, Brady v., 70, 194, 301. 
Mayor, Brieswick v., 171. 
Mayor, Brown v., 194. 
Mayor v. Comak, 177. 
Mayor v. Cunliffe, 190, 333. 
Mayor, Davenport v., 304. 
Mayor, Davis v., 199. 
Mayor v. Elliott, 95. 
Mayor, Fish v., 301. 
Mayor v. Gill, 177. 
Mayor, Halstead v., 175. 
Mayor v. Henry, 330. 
Mayor v. Herley, 163. 
Mayor, Hovey v., 303. 
Mayor, Humes v., 303, 304. 
Mayor, Hutson v., 304. 
Mayor, Kelly v., 96, 100. 
Mayor, Kipp v., 176. 
Mayor, Levy v., 313. 
Mayor, Martin v., 315. 
Mayor, Maximilian v., 319. 
Mayor, McDonald v., 190, 194 
Mayor, McSpeden v., 191. 
Mayor v. Moag. 170. 
Mayor, Nichol v., 170. 
Mayor, O'Meara v., 319. 
Mayor, Paterson v., 185, 194 
Mayor, People v., 335. 
Mayor, Presbyterian Church v., 

315. 
Mayor, Radcliffe's Ex'rs v., 308. 
Mayor, Eae v., 188. 
Mavor v. Railroad Co., 315. 
Mayor v. Ray, 14, 119, 330, 337. 
Mayor, Reinhard v., 305. 
Mayor v. Reynolds, 190. 
Mayor, Russell v., 330. 
Mayor, Schanck v., 177. '* 
Mayor, Scott v., 330. 
Mayor v. Second Ave. R. Co., 183. 
Mayor, Sharpless v., 334. 
Mayor v. Sheffield. 300, 206. 
Mayor, Smoot v., 220. 
Mayor, State v., 176, 323. 



Mayor, Stuyvesant v., 315. 
Mayor, Tone v., 320. 
Mayor, West v., 178. 
Mayor, Whitney v., 178. 
Mayor, Whyte v., 213. 
Mayor v. Winfleld, 176. 
Maysfield, Stack v., 177. 
Mazet v. Pittsburg, 189. 
Mead, Holmes v., 83. 
Mead v. Keeler, 100. 
Mead v. New Haven, 233. 
Mead v. N. Y. etc. R. Co., 143. 
Mechanics' Association v. Lead 

Co., 100. 
Mechanics' Bank v. Bank of Col- 
orado, 161. 
Mechanics' Bank v. Meriden Co., 

131. 
Mechanics' Bank v. N. Y. etc. R. 

Co., 109. 
Mechanics' Ins. Co., Barker v., 

100. 
Medical College Case, 3. 
Medomak Bank v. Curtis, 77. 
Meeker v. Winthrop Ins. Co., 139. 
Meeks, Kelly v., 170. 
Mehaffey, San Antonio v., 63, 68, 

337. 
McKellar v. Detroit, 205. 
Memphis v. Dean, 53. 
Memphis, Hill v., 223, 230, 337. 
Memphis, Trigally v., 171. 
Memphis v. Water Co., 216. 
Memphis, etc. R Co. v. Dow, 96. 
Memphis, etc. R. Co., People's R. 

R. v., 215. 
Memphis, etc. R. Co. v. Railroad 

Commissioner, 141, 144. 
Menard Co., West v., 90. 
Menser v. Risdon, 173. 
Mercantile Bank, Iowa M Bank 

v., 162. 
Mercer v. Pittsburg, etc. Co., 183. 
Merchants' Bank v. Bergen Co., 

336, 339. 
Merchants' Bank v. Central Bank, 

77. 
Merchants' Bank v. Randolph, 

161. 
Merchants' Bank v. State Bank, 

160, 163. 
Merchants' Exchange, Barry v., 

37, 83, 84, 96, 100, 106, 134 



xlviii 



TABLE OF CASES CITED. 



References are to sections. 



Merchants' Nat. Bank v. Hanson, 

53. 
Meredith, Cast-plate Co. v., 203. 
Meredith, Clearwater v., 144, 147, 

148. 
Meredith, Eastman v., 219. 
Meredith, Ferguson v., 144. 
Meridan Agency Co., Mutual 

Association v., 122. 
Meriden Co., Savings Bank v., 121. 
Merrick v. Amherst, 225. 
Merrick v. Bank, 91. 
Merrick v. Reynolds Eng. Co., 51, 

168. 
Merrick v. Van Santford, 166. 
Merrill v. Monticello, 223, 224, 230. 
Merrill v. Plainfleld, 198. 
Merrill v. Portland, 204. 
Merrimack, etc. R. Co.. Richards 

v., 84, 100, 141. 
Merri weather, Hardy v., 100. 
Mersey Docks v. Gibbs, 220. 
Metealf, Beardstown, etc. Co. v., 

84. 
Methodist Episcopal Church, Bai- 
ley v., 53. 
Methodist Episcopal Church, Ma- 
son v., 92. 
Metropolitan Bank v. Godfrey, 85. 
Metropolitan, etc. Co. v. Abbey, 

139. 
Metropolitan, etc. Co. v. Byron, 

98. 
Metz, Bridge Co. v., 145. 
Metzker, Petersburgh v., 47, 170. 
Meyer v. Johnston, 142. 
Meyer v. Porter, 235. 
Miami County, Moran v., 227, 228. 
Michener v. Philadelphia, 207. 
Michigan, etc. R. Co., Bissell v., 31, 

38, 55, 61. 
Michigan, etc. R. Co., Swartout v., 

168. 
Michigan, etc. R. Co., Williston v., 

124. 
Middleport v. Mtna, Ins. Co., 240. 
Middlesex R. Co. v. Boston, etc. 

R. Co., 137. 
Middlesex R. Co., Feital v., 129. 
Middleton, Ohio, etc. R. Co. v., 77. 
Middleton, Gas Co. v., 199. 
Midland, etc. Ry. Co., Edwards v., 

162. 



Midland R. Co. v. Great Western 
R. Co., 130. 

Migner, Doyle v., 3. 

Migret v. Supervisors, 238. 

Milan, Kelley v., 223. 

Milbank v. N. Y. etc. R. Co., 121. 

Milbourne, Cowan v., 69. 

Milhan v. Sharp, 215. 

Mill Co., Auerbach v., 100. 

Miller v. American Ins. Co., 74. 

Miller v. Ammon, 69. 

Miller, Blazier v., 171. 

Miller v. Burch, 212. 

Miller v. Burlington, eta R. Co., 
163, 164. 

Miller, Gottfried v., 91. 

Miller, Leavenworth v., 225. 

Miller v. Milwaukee, 188. 

Miller, National Trust Co. v., 70, 
72, 78, 137. 

Miller v. Newberg Coal Co., 168. 

Miller v. Norristown, 203. 

Miller v. St. Paul, 205. 

Miller & Miss. R. Co. v. Lancas- 
ter, 144. 

Milliard v. St. Francis, etc. Acad- 
emy, 100. 

Mills v. Brooklyn, 202, 208. 

Mills v. Gleason, 194. 

Mills v. Northern R, Co., 53. 

Mills County v. Burlington, 195. 

Milne v. Davidson, 172. 

Milnor v. N. Y. etc. R. Co., 167. 

Milwaukee, Brodhead v., 225. 

Milwaukee, Clason v., 176. 

Milwaukee, Cook v., 205. 

Milwaukee, Dart v., 203. 

Milwaukee,' Hasbrouck v., 235. 

Milwaukee, Kelly v., 177. 

Milwaukee Kneeland v., 189. 

Milwaukee, Miller v., 188. 

Milwaukee, Owens v., 203. 

Milwaukee, Schultz v., 204. 

Milwaukee, Tyson v., 203. 

Milwaukee, Yates v., 112. 

Milwaukee Gas Light Co., State 
v., 216. 

Miner v. N. Y. etc. R. Co., 9. 

Miners' Ditch Co. v. Zellerbach, 
9, 33, 83, 87. 

Mining Co., Mahoney v., 168. 

Minneapolis, Alden v., 203. 

Minneapolis, Henckes v., 215. 



TABLE OF CASES CITED. 



xlix 



References are to sections. 



Minneapolis, etc. R Co., Snell v., 

53. 
Minnesota, etc. E. Co., Freeman 

v., 137. 
Minor v. Bank, 160. 
Minturn v. Larue, 170, 199. 
Mississippi, etc. R. Co. v. Cam- 
den, 237. 
Mississippi, etc. R. Co. v. Lancas- 
ter, 144. 
Missouri, etc. R. Co., Gillette v., 

164. 
Mitchell v. Rome, 203. 
Mitchell, St. Andrew's Bay Co. v., 

52. 
Mitford, Day v., 204. 
Moag, Mayor v., 170. 
Mobile v. Watson, 233. 
Mobile v. Yuelle, 212. 
Mobile Bank, Reed v., 135. 
Mobile, etc. R Co., Martin v., 166. 
Mobile, etc. R. Co. v. Tallman, 96. 
Mobile, etc R. Co., Warren v., 

146. 
Moffitt, Chicago, etc. R Co. v., 

144, 146. 
Mohawk Bridge Co. v. Utica, etc. 

Co., 8, 216. 
Mokelumne, etc. Co., Magee v., 96, 

98. 100. 
Monmouth, Parsons v., 194. 
Monmouthshire Co., Maund v., 

162. 
Monroe Co., Wall v., 230. 
Monument Nat. Bank v. Globe 

Works, 9, 32, 74, 100, 104, 

162. 
Montague v. School District, 100. 
Montauk Gas Co., Boyce v., 52. 
Montgomery, Campbell v.. 202, 

220. 
Montgomery, Capital City W. W. 

Co. v., 217. 
Montgomery, Davis v., 313, 219. 
Montgomery v. Montgomery, etc., 

53. 
Montgomery, State v., 235. 
Montgomery, Studebaker v., 168. 
Montgomery Co. v. Barber, 188. 
Montgomery Co., House v., 204. 
Monticello, Merrill v., 223, 224, 

230. 
Montpelier v. East Montpelier, 92. 
D 



Moore, Fitchburg R Co. v., 162. 
Moore v. Hoffman, 178. 
Moore, Mansfield v., 205. 
Moore v. New York, 191, 193. 
Moore, Rapho v., 206, 210. 
Moor's Heirs v. Moor's Devisees, 

81, 82. . 
Moran v. Commissioners, 193. 
Moran v. Miami Co., 227, 228. 
Morch v. Abel, 71. 
Morgan, Staten v., 141. 
Morris, Glasby v., 207. 
Morris v. Kiel, 87. 
Morris v. Lee, 157, 158. 
Morris Canal Co. v. Central R. 

Co., 8. 
Morris Canal Co. v. Fisher, 135. 
Morris, etc. R. Co. v. Barclay 

Coal Co.. 131. 
Morris, etc. R. Co.' v. Sussex, eta 

R. Co., 8, 10, 130. 131. 
Morrison v. Gold Mountain Co., 

79. 
Morrison v. Inhabitants, etc., 174. 
Morrison v. Lawrence, 213, 222. 
Morrison, McMahon v., 144 
Morrow v. Nashville, 115. 
Morse v. Brainerd, 129. 
Morse, Smith v., 215. 
Moses v. Ocoee Bank, 109. 
Moss v. Academy, 96. 
Moss v. Averill, 56, 100. 
Moss, McCullough v., 78, 100. 
Moss v. Oakley, 100. 
Moss v. Rossie L. Min. Co., 77. 
Mott v. Hicks, 96, 100. 
Mott v. Ice Co., 163. 
Mott, Shotwell v., 95. 
Moulton, Wheelock v., 90. 
Moultrie Co. v. Bank, 197. 
Moundeville, Ohio Iron Works v., 

225. 
Mounsey, Australia, etc. Co. v., 

96, 98. 
Mount Heimon School, Nims v., 

162. 
Mount Pleasant v. Beckwith, 186, 

187. 
Mount Sterling, Curry v., 86. 
Mount Washington, etc. Co., 

Downing v., 9, 47. 
Mount Washington, etc. Co., In 

re, 86. 



TABLE OF CASES CITED. 



References are to sections. 



Mowrey v. Indiana, etc. R. Co., 

144. 
Mueller, Seeger v., 192. 
Mulford, Camden v., 173, 174 
Mullen, Selma v., 170. 
Mulligan v. Railway Co., 129. 
Mumford v. Insurance Co., 100. 
Mundy, Austin v., 175. 
Munn v. The Commission, 96, 100. 
Munson v. Railroad Co., 79. 
Murdock, McDonough v., 93. 
Murphey v. Louisville, 201. 
Murphy v. Jacksonville, 175. 
Murphy v. Peoria, 202. 
Murphy, Sullivan v., 100. 
Murphy's Flushing Co., Union 

Water Co. v., 64. 
Murray, Ottawa R. Co. v., 77. 
Murray, People v., 233. 
Musgrove, Baltimore v., 190. 
Musser v. Johnson v., 87. 
Mutual, etc. Ass'n v. Meridan 

Agency Co., 122. 
Mutual Life Ins. Co. v. McElway, 

109. 
McAlpine v. Union Packing Co., 

146. 
McAuley v. Columbus R. Co., 143. 
McBride v. Grand Rapids, 189. 
McCann, State v., 225. 
McCartee v. Orphans' Asylum, 81, 

82, 95. 
McCarthey, Railway Co. v., 62, 

,63,64,68. 
McCaslin v. State, 190. 
McClintock, Johnson Co. v., 235. 
McClure v. Oxford Township, 229, 

235. 
McClurken, Allegheny City v., 

70,74. 
McCombs v. Akron, 220. 
McConnell v. Hamrn, 181. 
McConnell, Jacksonville v.,' 47. 
McConvill v. Jersey City, 175. 
McCoy v. Briant, 170. 
McCracken v. San Francisco, 170, 

191, 194. 
McCray v. Junction R Co., 53, 

147. 
McCreery, People v., 181. 
McCullough v. Moss, 78, 100. 
McCullough v. Talldega Ins. Co., 

77, 168. 



McCune, People v., 238. 

McCurdy v. Rogers, 190. 

McDermott v. Board, 172. 

McDermott, Evening Journal As- 
sociation v., 162. 

McDonald, Bank v., 168. 

McDonald, Burr v., 88, 96. 

McDonald v. Mayor, 190, 194 ' 

McDonough v. Bank, 79. 

McDonough v. Murdock, 93. 

McElway, Mutual Life Ins. Co. 
v., 109. 

McEwin, Heck v., 3. 

McGee, Gooch v., 86. 

McGinnity v. New York, 206. 

McGirr, Richmond v., 177. 

McGiven, Chicago v., 205. 

McGraw, Chicago v., 222. 

McGregor v. Dover & D. R. Co., 
9, 55, 56, 70. 

McGregor v. Erie, etc. R. Co., 145. 
167. 

McGregor, Harris v., 3. 

McGuire v. Rapid City, 201. 

Mclnnis, Champaign v., 205. 

Mclhtire v. McLain Ditch Co., 3. 

McKnight v. New Orleans, 217. 

McLain Ditch Co., Mclntire v., 3.. 

McLaughlin, Hamilton v., 87. 

McLennan v. File Works, 136. 

McMahon v. Morrison, 144. 

McMasters v. Reed, 47, 100. 

McMillan v. Railroad Co., 129, 137. 

McNab, Eufaula v., 185, 224. 

McPherson v. Foster, 231, 232. 

McQuade, Van Dyke v., 156. 

McSpeden v. Mayor, 191. 



isr. 

Nagle, Wright v., 199. 

Nahant Bank, Atlas Bank v., 74. 

Nancy, City of Flora v., 205. 

Narragansett Bank v. Silk Co., 100. 

Nash v. St. Paul, 194. 

Nashua, etc. R. Co., Smith v., 128. 

Nashua Savings Bank, Greeley v., 

53. 
Nashville, Morrow v., 115. 
Nason v. Boston, 205. 
Nason v. King Mountain M. Co.. 

87. 



TABLE OF CASES CITED. 



References are to sections. 



Nassau Co., Petersborough R. Co. 

v., 50. 
National Bank, Gold Min. Co. v., 

76. 
National Bank v. Graham, 162. 
National Bank v. Mathews, 53, 67. 
National Bank v. Whitney, 53. 
National Bank v. Young, 104 
National, etc. Co. v. Clarkin, 81. 
National Docks v. Railroad Co., 

168. 
National Exchange Co. v. Drew, 

162. 
National Iron Co. v. Bowman, 101. 
National Park Bank v. German, 

etc. Co., 136. 
National Trust Co. v. Miller, 70, 

72, 78, 137. 
Naugatuck R. Co. v. Button Co., 

53. 
Nauvoo v. Ritter, 227. 
Navigation Co., Louisiana Bank 

v., 170. 
Nebraska, Campbell v., 220. 
Nebraska City v. Lampkin, 203. 
Nebraska Dist. Co., State v., 55. 
Needles, Farmers' Bank v., 101. 
Nelson, East Tenn. etc. R. Co. v., 

129. 
Nelson v. Eaton, 96. 
Nesbit v. Riverside District, 228. 
Neuse River, Barrington v., 86. 
Nevada Cent. R. Co., George v., 

137. 
New Albany v. Burke, 115. 
New Albany, Duckwall v., 175. 
New Bedford, Hafford v., 219. 
New Bedford, Haskell v., 208. 
New Bedford, Pierce v., 204. 
New Bedford, Wilson v., 211. 
New Bedford, etc. R. Co. v. Old 

Colony R. Co., 146. 
New Brunswick, Parker v., 173. 
New Brunswick Ry. Co. v. Cony- 

beare, 162. 
New Decatur v. Berry, 214 
New Haven, Barritt v., 203. 
New Haven, Boucher v., 205. 
New Haven. Cemetery Associa- 
tion v., 183. 
New Haven, Heurson v., 213. 
New Haven, Hewison v., 204 
New Haven, Jewett v., 219. 



New Haven, Jones v., 220. 
New Haven, Mead v., 222. 
New Haven E. L. Co., Edison, etc. 

Co. v., 144 
New Jersey, Williams v., 180. 
New Jersey Mfg. Co., Leggett v., 

8, 13. 
New Jersey, etc. R. Co., Brokaw 

v., 162, 164 
New Jersey, etc. R Co. v. Strait, 

146. 
New London v. Brainerd, 170, 

175. 
New Orleans, Bonner v., 135. 
New Orleans, Crescent City Ins. 

Co. v., 219. 
New Orleans, Fox v., 190. 
New Orleans, Inhabitants v., 177. 
New Orleans, Louisiana v., 204, 

233. 
New Orleans, McKnight v., 217. 
New Orleans v. Phillipi, 212. 
New Orleans, Seibrecht v., 50, 188, 

190. 
New Orleans v. Southern Bank, 

194 
New Orleans, United States v., 

179. 
New Orleans v. Water Co., 180. 
New Orleans Bank, Fortier v., 53. 
New Orleans, etc. Co. v. Delamon, 

141. 
New Orleans, etc. Co. v. Dunn, 

177. 
New Orleans, etc. Co. v. Dry 

Docks Co., 122. 
New Orleans G. L. Co., Crescent 

City, etc. Co. v., 216. 
New Orleans G. L. Co. v. Louisi- 
ana L. Co.,^216. 
New Orleans, etc. R. Co. v. Harnes, 

137. 
New Orleans Water Co. v. Rivers, 

216. 
New Orleans Water Works, Con- 

ery v., 177. 
New Orleans Water Works, Tam- 

any Water Works v., 216. 
New York, Brady v., 189. 190. 
New York, Griffin v., 206. 
New York, Lynch v., 208, 211. 
New York, McGinnity v., 206. 
New York, Moore v., 191, 193. 



lii 



TABLE OF OASES CITED. 



References are to sections. 



New York, Peterson v., 77. 

New York, Reinhard v., 172. 

New York, Wiggins v., 177. 

New York, etc. Canal Co. v. Ful- 
ton Bank, 148. 

New York Inst. v. Howe, 95. 

New York, etc. Ins. Co. v. Ely, 13. 

New York, etc. Ins. Co. v. Sturges, 
23. 

New York, etc. E. Co., Boston, 
etc. R. Co. v., 137. 

New York, etc. R. Co., Bradlev 

v., a 

New York, etc. R. Co., Buffet v., 1 3. 
New York, etc. R. Co., City of 

Ohio v., 124. 
New York, etc. R. Co., Duncomb 

v., 105. 
New York, etc. R. Co., Fisher v., 

146. 
New York, etc. R. Co., Hood v., 

13. 29, 53. 
New York, etc. R. Co. v. Ketchum, 

79. 
New York, etc. R. Co. v. Kip, 86. 
New York, etc. R. Co., Marsh v., 

146. 
New York, etc. R. Co., Mead v., 

143. 
New York, etc. R. Co., Mechanics' 

Bank v., 109. 
New York, etc. R Co., Milbank 

v., 121. 
New York, etc. R. Co., Milnor v., 

167. 
New York, etc. R. Co., Minor v., 9. 
New York, etc. R Co. v. Nickals. 

124. 
New York, etc. R. Co. v. Schuy- 
ler, 109. 
New York, etc. R. Co. v. Wi- 

nans, 9. 
New South Wales Coal Co., Payne 

v., 79. 
Newark, State v., 81. 
Newark, Stoudinger v., 207. 
Newburg, Emerson v., 194. 
Newburg, Smith v., 170, 194. 
Newburg Coal Co., Miller v., 168. 
Newburg Petroleum Co. v. Weare, 

166. 
Newcastle R Co., Charleston v., 

143. 



Newcastle R. Co., Hamilton v., 96, 

100, 128. 
Newcastle R. Co. v. Simpson, 119. 
Newchester, Bristol v., 186. 
Newell v. Smith, 129. 
Newmarket, Gage v., 70. 
Newport Bridge Co. v. Foote, 203. 
Newport Co., Widrig v., 158. 
Newport Mfg. Co., Commercial 

Bank v., 96, 100. 
Niagara County Bank v. Baker, 

103. 
Niantic Savings Bank v. Doug- 
las, 146. 
Nichol v. Insurance Co., 160. 
Nichol v. Mayor, 170. 
Nichols, Ernest v., 120. 
Nickals, N. Y. etc. R. Co., v. 

124. 
Nickerson v. Hydraulic Co., 219. 
Niles, Bank of Michigan v., 81, 

857. 
Niles Water Works x. Niles, 189, 

196. 
Nims v. Mount Hermon School, 

162. 
Nisbet, Hill v., 121. 
Nist, Canton v. 172. 
Noble, Fay v., 96, 100. 
Norfolk R. Co., Hussey v., 162. 
Norfolk R. Co., Norwich v., 52, 55, 

56, 70. 
Norfolk R. Co. v. Shaw, 141. 
Normand v. Otoe Co., 198. 
Norristown, Miller v., 203. 
Norristown v. Thayer, 204, 210. 
North, Silver Lake Bank v., 166, 

167. 
North American Coal Co., Tal- 

mage v., 47, 52. 
North American Min. Co., Ar- 

desco Oil Co. v., 83, 91. 
North Carolina Gold Co., Coit v., 

108, 115. 
North Hempsted v. Hempsted, 

187. 
North Hudson Co. v. Hoboken, 

182. 
North River, etc. Co., People v., 

137, 148. 
North River, etc. Co., Wylde v., 

129. 
North Side Ry. v. Worthington, 7. ' ' 



TABLE OF OASES CITED. 



liii 



References are to sections. 



North Stafford Ry., Earl. etc. v., 

70, 79. 
North Yarmouth v. Skillings, 186. 
Northern Bank v. Johnson, 161. 
Northern Bank v. Porter, 326. 
Northern Bank v. Trustees, 328. 
Northern Cent. R Co. v. Drew, 

146. 
Northern Coal M. Co., In re, 120. 
Northern Liberties, Carr v., 202, 

203. 
Northern Liberties, Pray v., 224. 
Northern Mo. E. Co., Powell v., 

146. 
Northern T. Co. v. Chicago, 81. 
Northwestern Cement Co., Ba- 

telle v., 79. 
Northwestern Pack. Co. v. Shaw, 

53, 74 
Northwestern Ey., Shrewsbury 

Ey. v., 55, 70, 128, 137. 
Norton v. Bank, 74. 
Norton v. City of Nevada, 233. 
Norton, Commercial Bank v., 160. 
Norton v. Dyersburg, 223, 230. 
Norwich v. Norfolk E. Co., 52, 55, 

56, 70. 
Norwich Gas Co. v. City Gas Co., 

216, 218. 
Norwich Transp. Co., Converse v., 

53. 
Noyes v. Mason City, 203. 
Noyes v. Eailroad Co., 129. 
Nugent v. Supervisors, 143, 146. 
Nunnemacher, Ohio Ins. Co. v., 9. 
Nutt v. Danville Seminary, 7. 
Nutting v. Eailroad Co., 129. 

o. 

Oakland v. Carpentier, 215. 
Oakland Bank v. Wilcox, 159. 
Oakley, Moss v., 100. 
Oakwood, Hyde Park v., 183. 
Oberlin, Bronson v., 175. 
O'Brien, Little v., 74, 75. 
O'Brien v. St. Paul, 211. 
Occum Co. v. Sprague Mfg. Co., 

9, 137. 
Ocean Dry Dock Co., New Orleans 

Co. v., 133. 
Ocoee Bank, Moses v., 109. 



O'Connor v. Pittsburg, 203. 
Oconto, Lord v., 170, 173. 
O'Donnell, Alexander v., 69. 
Og v. Lansing, 219. 
Ogden v. Daviess County, 229. 
Ogdensburg, Urquhart v., 202. 
Ogdensburg, etc. E. Co. v. Ver- 
mont, etc. E. Co., 9. 
Ogilvie v. Knox Ins. Co., 108. 
Ogle, Eoberts v., 212. 
Ohio, Shields v., 143, 144. 
Ohio Candle Co., Emery v., 148. 
Ohio Iron Works v. Moundeville, 

225. 
Ohio, etc. Ins. Co. v. Nunne- 
macher, 9. 
Ohio, etc. Ins. Co. v. Trust Co., 74 
Ohio, etc. E. Co., Dimpfell v., 78. 
Ohio, etc. E. Co. v. Ind. etc. B. Co., 

137. 
Ohio, etc. E. Co. v. Middleton, 77. 
Ohio. etc. E. Co. v. Wheeler, 145. 
Oil Co., Buffalo Oil Co. v., 162. 
Oil Co. v. Eailway Co., 81. 
Oil Creek E. Co., Kersey Oil Co. 

v., 139. 
Oil Creek E. Co., Eoot v., 146. 
Olcott, Sutherland v., 109, 113. 
Olcott v. Tioga E. Co., 100. 
Old Colony E. Co., Davis v., 9, 36, 

47, 53. 
Old Colony E. Co., New Bedford, 

etc. Co., 146. 
Oliver v. Krightly, 198. 
Olney v. Chadsey, 159. 
Omaha, Hurford v., 170. 
Omaha R. Co., Clark v., 137. 
Omaha Smelting Co., Abbott v., 3. 
O'Meara v. Mayor, 319. 
Oneida Bank v. Ontario Bank, 74, 

119. 
Onstott v. People, 238. 
Ontario Bank, Barnes v., 96, 98, 

160, 161. 
Ontario Bank, Oneida Bank v., 74 

119. 
Ontario, etc. R. Co., Eome, etc. E. 

Co. v., 146. 
Ooregum G. Min. Co. v. Eoper, 117. 
Opinions of Judges, 181. 
Oregon Ey. v. Oregonian Ey., 3, 

8, 9, 10, 12, 53, 69, 72, 78, 137, 

138. 



liv 



TABLE OF CASES CITED. 



References are to sections. 



Orleans v. Pratt, 228. 
Orleans Navigation Co., Louisi- 
ana State Bank v., 47. 
Orphans' Asylum, McCartee v., 

81, 82, 95. 
Orr v. Lacey, 70. 
Orton, Southern Pac. Co. v., 81. 
Osawkie Township, State v., 325. 
Osborne, Toll Bridge Co. v., 9. 
Osborne v. Tunis, 90. 
Osgood v. Layten, 108. 
Oshkosh, Hayes v., 219. 
Ossepee Mfg. Co. v. Canney, 74, 75, 

81. 
Oswego, Marcy v., 53. 
Otoe County, Deyo v., 237. 
Otoe County, Normand v., 198. 
Ottawa v. Carey, 170, 225. 
Ottawa, Derinzy v., 203. 
Ottawa, Hackett v., 227, 229. 
Ottawa, Mather v., 170, 225. 
Ottawa R. Co. v. Murray, 77. 
Ouachita Co. v. Woloott, 230. 
Overend & Gurney Co. v. Gibbs, 

154, 156. 
Overseers v. Overseers, 186. 
Owen County, Browning v., 222. 
Owens, Bank of U. S. v., 69. 
Owens v. Milwaukee, 203. 
Oxford Ins. Co. v. Spradley, 96, 

100. 
Oxford, etc R. Co., Rogers v., 

53. 
Oxford Township, McClure v., 

229, 235. 



Pacific Nat. Bank, Eaton v., 127. 
Pacific Postal Tel. Co. v. Western 

Union, etc., 53. 
Pacific R. Co. v. Seeley, 85. 
Packer v. Railway Co., 8, 9. 
Packet Co., Abbott v., 70. 
Paddock, Aurora Ag'l Soc. v., 77, 

84. 
Page v. Allen, 198. 
Page, Bryan v., 191, 194. 
Page v. Heinberg, 81. 
Page v. St. Louis, 177. 
Paine v. Lake Erie, etc. Co., 144, 

146. 



Paine v. Spratley, 170. 

Palmer, Durant v., 206. 

Palmer, Leavitt v., 74. 

Palmer, Pritts v., 81. 

Palmer, Railroad Co. v., 144 

Pangborn v. Westlake, 69. 

Paquet, Hedges v., 156. 

Paret v. Bayonne, 195. 

Paris, Hall v., 53, 74. 

Paris Rink Co., Spiller v., 79. 

Parish, Cumberland, etc. Co. v., 

153. 
Parish v. Wheeler, 129. 
Parker v. Bernal, 122. 
Parker v. Donnally, 159. 
Parker, Ind. Car Co. v., 210. 
Parker v. New Brunswick, 173. 
Parker, Wetmore v., 93. 
Parker, Williams v., 116. 
Parkersburg v. Brown, 74 181, 

224 
Parkersburg Gas Co. v. Parkers- 
burg, etc. Co., 170, 199, 216. 
Parks, People v., 181. 
Parnably, Canal Co. v., 220. 
Parr v. Greenbush, 190. 
Parsons v. Monmouth, 194. 
Partridge v. Badger, 83, 96, 100. 
Passaic, State v., 170. 
Patapsco Guano Co., Peebles v., 

162. 
Patchett, Gregory v., 70. 
Patchin Bank, Bank of Gennes- 

see v., 9. 
Paterson, Bank of Columbia v., 

76, 77, 188. 
Paterson, Boom Co. v., 86, 183. 
Paterson v. Bowers, 198. 
Paterson, King v., 124, 126. 
Paterson, Kip v., 176. 
Paterson v. Mayor, 185, 194 
Paterson, Rye v., 212. 
Paterson. State v., 173, 235. 
Patrons' Merc. Ass'n, Humphrey 

v., 77, 168. 
Paul, Corser v., 161. 
Paul v. Kenosha, 74, 191. 
Payne v. N. S. W. Coal Co., 79. 
Payson v. Stoever, 110. 
Pay son, Turnbull v., 127. 
Peacock, Talldega Ins. Co. v., 100. 
Pearce v. Madison, etc. R. Co., 9, 

30, 52, 53, 70, 143, 148. 



TABLE OF CASES CITED. 



It 



Eeferences are to sections. 



Pearson v. Concord, etc. E. Co., 

122. 
Peaslee. Trustees v., 15, 93. 
Peay, Whitney v., 74. 
Peck, Carter v., 129. 
Peck v. Chicago, etc. R. Co., 145. 
Peck v. Lockwood, 212. 
Pedrick v. Bailey, 176. 
Peebles v. Patapsco Guano Co., 

163. 
Peet v. Railway Co., 129. 
Pell, Talmage v., 121. 
Pelton, Coggeshell v., 95. 
Pendleton v. Amy, 227. 
Pendleton, Durango v., 201. 
Peninsular Bank v. Hanmer, 77. 
Peninsular S. Co., Bennett v., 129. 
Penn v. Bornman, 69. 
Pennington, Town of Durango 

v., 189. 
Pennock v. Coe, 8. 
Pennsylvania v. Erie R. Co., 124 
Pennsylvania Coal Co., Del. Canal 

Co. v., 77. 
Pennsylvania Match Co. v. Hap- 
good, 79. 
Pennsylvania R. Co. v. Canal 

Commissioners, 8, 12. 
Pennsylvania R. Co. v. St. Louis, 

etc. R. Co., 9, 53, 72, 74, 136, 

137, 138. 
Pennsylvania R. Co., Central R. 

Co. v., 121. 
Pennsylvania R. Co. v. Perry, 129. 
Penobscot Boom Co. v. Lamson, 3. 
Pensacola, Broughton v., 233. 
Pensacola TeL Co. v. Western 

Union Co., 166. 
People v. Albany, 212. 
People v. Bank, 170. 
People v. Brighton, 86. 
People v. Chicago Gas Trust Co., 

55, 131, 122, 137, 148. 
People v. Chicago, etc. R Co., 129. 
People v. Commissioners, 189. 
People v. Coon, 195. 
People v. County, 230. 
People, Darst v., 212. 
People, Dingley v., 215. 
People, English v., 181. 
People, Flagg v., 201. 
People, Greeley v., 185. 
People v. Harris, 185. 



People, Hensley v., 235. 

People, Horn v., 171. 

People, Law v., 196, 197, 231. 

People v. May, 190. 

People v. Mayor, 225. 

People v. McCreery, 181. 

People v. McCune, 238. 

People v. Murray. 233. 

People v. Onstott, 238. 

People v. Parks, 181. 

People v. Ragg, 225. 

People v. San Francisco, 195, 201. 

People v. Selfridge, 3. 

People v. Smith, 183. 

People v. Special Sessions, 171. 

People, St. Louis Bridge Co. v., 

207. 
People v. Sugar Refining Co., 137, 

148. 
People v. Swift, 194. 
People v. Troop, 176. 
People v. Trustees, 186. 
People, Turnpike Co. v., 9. 
People v. Utica Ins. Co., 9, 12, 22. 
People v. Weber, 170. 
People's Association, Hagie v., 

120. 
People's Railroad v. Memphis, etc. 

R. R. Co., 215. 
Peoria, Murphy v., 202. 
Peoria, etc. R. Co. v. Coal Valley 

Co., 9. 
Peoria, etc. R. Co. v. Thompson, 

131. 
Perin v. Carey, 93, 185. 
Perkins, City Bank v., 161. 
Perkins v. Railroad Co., 129. 
Perkins, South Ottawa v., 224. 
Perkinson v. St. Louis, 190. 
Perley v. Georgetown, 222. 
Perrine v. Ches. & Del. Ry., 8, 12, 

28, 81. 
Perry, Penn. R. Co. v., 129. 
Perry v. Waterproof Co., 77. 
Perry's Case, 158. 
Peru, Wilkinson v., 235. 
Peters v. Lincoln, etc. R. Co., 137. 
Peters v. Lynchburg, 170. 
Petersborough R. Co. v. Nassau 

Co., 50. 
Petersburg v. Metzker, 47, 170. 
Peterson, Clapp v., 120. 
Peterson v. New York, 77. 



hi 



TABLE OF CASES CITED. 



Eeferences are to sections. 



Phelps v. Farmers' Bank, 124 
Phelps, Kennedy v., 212. 
Phelps v. Mankato, 200. 
Philadelphia, Bryson v., 215. 
Philadelphia, Elliott v., 219. 
Philadelphia, Hague v., 194. 
Philadelphia, Hammett v., 225. 
Philadelphia, Johnson v., 215. 
Philadelphia, Michener v., 207. 
Philadelphia, Reilly v., 194. 
Philadelphia v. Ridge Ave. etc. 

Co., 146. 
Philadelphia, Savings Fund v., 

215. 
Philadelphia, Sharpless v., 181. 
Philadelphia, Sower v., 171. 
Philadelphia, etc. R. Co. v. Mary- 
land, 146, 148. 
Philadelphia, etc. R. Co. v. Quig- 

ley, 162. 
Philadelphia, etc. R. Co., Taylor 

v., 98. 
Phillipi, New Orleans v., 212. | 
Phillips v. Allen, 212. 
Phillips, Clinton v., 176. 
Phillips, Drake v., 198. 
Phillips v. Railroad Co., 129. 
Phillips Academy v. King, 92. 
Phoenix Co., In re, 74. 
Phoenix Glass Co., Beers v., 96. 
Picard v. Pullman Car Co., 9. 
Pickering v. Stephenson, 53, 154. 
Piedmont Co., Curtis v., 74. 
Pierce v. Crampton, 167. 
Pierce v. Emery, 83, 91, 100. 
Pierce v. New Bedford, 204 
Pieri v. Shieldsbofo, 212. 
Pierson, First Nat. Bank v., 103. 
Pike Co., Foote v., 227. 
Pilgrim Society, Haywood v., 77. 
Pilkin, Belding v., 69. 
Pimental v. San Francisco, 191. 
Pine Grove Township v. Talcott, 

238. 
Pipes, St. Louis, etc. R. Co. v., 129. 
Pinto Co. Case, 137. 
Pitney, Lucas v., 96, 100. 
Pittsburg, Commonwealth v., 100. 
Pittsburg v. Green, 220. 
Pittsburg, Mazet v., 189. 
Pittsburg, O'Connor v., 203. 
Pittsburg, etc. Co., Mercer v., 

183. 



Pittsburg, etc. R. Co. v. Keokuk, 
etc. Co., 9, 47, 52, 53, 54, 69,74, 
76. 

Pittsburg, etc. R. Co., Shawmut's 
Bank v., 129. 

Pittsford, Taft v., 9, 70, 201. 

Pitzman v. Freeberg, 237. 

Placerville, Douglas v., 198. 

Plainfield, Merrill v., 198. 

Plank Road Co., City Council v., 
9,70. 

Plank Road Co., Jackson's- 
Adm'rs v., 124. 

Planters' Bank v. Sharp, 77. 

Planters' Bank v. Whittle, 91. 

Planters' Press, Greenville Com- 
press v., 72, 74, 143. 

Piatt, Central G. Min. Co. v. r 
83 

Piatt v. Union Pac. R. Co., 105. 

Plattsburg, etc. R. Co., Hoyle v., 
153. 

Plattsmouth, Read v., 224. 

Plume Co., Union Hardware Co, 
v., 74. 

Plymouth B. Co. v. Berry, 76. 

Poitiaux, The Banks v., 81, 83. 

Police Jury v. Britton, 100, 223, 
237. 

Pollard v. Maddox, 141. 

Pollock v. Louisville, 219. 

Pomeroy v. Bank, 144. 

Pontiac v. Carter, 203. 

Poole, Bard v., 166, 167. 

Poole v. "West Point, etc. Ass'n, 
110. ' 

Poor. European, etc. R. Co. v., 
153. 

Pope v. Capitol Bank, 103. 

Port Huron, Ashley v., 211. 

Port Huron, Thomas v., 74 

Portage, James v., 200. 

Porter, Meyer v., 235. 

Porter, Northern Bank v., 226. 

Portland, Coulson v., 231. 

Portland, Franklin Wharf Co. v.,. 
208, 213. 

Portland, Merrill v., 204 

Portland v. Richardson, 206. 

Portland L. & M. Co. v. East Port- 
land, 201. 

Portland, etc. R. Co. v. Hartford* 
235. 



TABLE OF CASES CITED. 



lvii 



References are to sections. 



Post, County of Randolph v., 227. 
Post, Kendall Co. v.. 190. 
Potter v. Bank, 100. 
Potter, Chaffee Co. v., 53. 
Potter v. Commissioners, 228. 
Poughkeepsie, Dickinson v., 191. 
Powder River, etc. Co. v. Lamb, 

74, 75. 
Powell, Columbus, etc.. R. Co. v., 

146. 
Powell v. Northern Mo. R. Co., 

146. 
Powers v. Council Bluffs, 220. 
Powers, Hodgson v., 53; 
Poyer v. Des Plaines, 178. 
Pratt, Bott v., 172. 
Pratt, Orleans v., 228. 
Pratt v. Pratt, 53. 
Pratt v. Railroad Co., 129. 
Pratt v. Short, 74 
Pratt v. Topeka Bank, 161. 
Presbyterian Church v. Mayor, 

etc., 215. 
Prescott, Buckley v., 205. 
Preston, Gordon v., 84. 
Preston v. Railroad Co., 77. 
Price v. Quincy, 196. 
Price v. St. Louis Ins. Co., 137. 
Priest v. Hat Co., 168. 
Pritts v. Palmer, 81. 
Proctor, Rutland, etc. R. Co. v., 

129. 
Proprietors, etc. v. Gordon, 77. 
Proprietors, etc., Lowell v., 213. 
Proprietors, etc., Royce v., 81. 
Proprietors, etc., Woodbridge v., 

77. 
Prout v. Inhabitants, etc., 195. 
Providence, Simmons v., 203. 
Providence Bank v. Bellings, 8. 
Providence Ins. Co., Head v., 21, 

28, 37, 47, 50, 70, 170. 
Pullman v. Upton, 112. 
Pullman Co., Heinrich v., 163. 
Pullman Car Co., Central Trans. 

Co. v., 9, 10, 12, 37, 52, 53, 

54, 55, 68, 70, 72, 74, 78, 137, 

138. 
Pullman Southern Car Co., Pick- 

ard v., 9. 
Purdue University, Marks v., 225. 
Putnam, Smith v., 155. 
Pyle Works, In re, 125. 



Q. 



Quebrada Ry., In re, 114. 
Quicksilver Min. Co., Kent v., 96. 

106, 124, 127. 
Quigley, Dayton v., 176. 
Quigley, Philadelphia, etc. R. Co. 

v., 162, 222. 
Quin v. City of Baltimore, 201. 
Quincy v. Jones, 203. 
Quincy, Price v., 196. 
Quincy Bridge Co. v. Adams 

County, 145. 

E. 

Rabb, Trenton, etc. Co. v., 203. 
Rade v. Dunlap, 137. 
Racine, Teegarden v., 177. 
Racine R. Co. v. Farmers' L. & T. 

Co., 144, 145. 
Radcliff's Ex'rs v. Mayor, 208. 
Radecke, Baltimore v., 176, 178, 

212. 
Rae v. Mayor, 188. 
Ragg, People v., 225. 
Railroad Association, Crawford 

v., 129. 
Railroad Commissioners, Rail- 
road Co. v., 144. 
Railroad Co., Allison v., 235. 
Railroad Co. v. Berry, 144. 
Railroad Co., Bound v., 235. 
Railroad Co., Brainerd v., 135. 
Railroad Co., Bridgeport v., 170, 

177, 201. 
Railroad Co., Brintnall v., 129. 
Railroad Co., Burroughs v., 129. 
Railroad Co., Darling v., 129. 
Railroad Co., Davis v., 136, 1'37. 
Railroad Co., Fogg v., 162. 
Railroad Co. v. Georgia, 141, 143, 

144. 
Railroad Co., Gifford v., 198. 
Railroad Co., Hill Mfg. Co. v., 129. 
Railroad Co., Hood v., 129, 164. 
Railroad Co. v. Howard, 9. 
Railroad Co., Ind. Roll M Co. v., 

159. 
Railroad Co., Irish v., 129. 
Railroad Co., Krulevitz v., 162. 
Railroad Co., Kyle v., 129. 



Iviii 



TABLE OF CASES CITED. 



References are to sections. 



Railroad Co., Lock Co. v., 129. 
Railroad Co. v. Lockwood, 9. 
Railroad Co. v. Manufacturing 

Co., 129. 
Railroad Co. v. Mayor, 215. 
Railroad Co., McMillan v., 129, 137. 
Railroad Co., Mohawk Bridge Co. 

v., 216. 
Railroad Co., Mulligan v., 129. 
Railroad Co., Munson v., 79. 
Railroad Co., National Docks v., 

168. 
Railroad Co., Noyes v., 129. 
Railroad Co., Nutting v., 129. 
Railroad Co., Oil Co. v., 81. 
Railroad Co. v. Palmes, 144. 
Railroad Co., Peet v., 129. 
Railroad Co., Perkins v., 129. 
Railroad Co., Phillips v., 129. 
Railroad Co., Pratt v., 129. 
Railroad Co., Preston v., 177. 
Railroad Co. v. Quigley, 222. 
Railroad Co. v. Railway Co., 199. 
Railroad Co., Ranger v., 162. 
Railroad Co., Richards v.. 84, 100. 
Railroad Co., Ryan v., 156. 
Railroad Co., Salem v., 212. 
Railroad Co., State v., 144. 
Railroad Co., State Board v., 191. 
Railroad Co., Stevens v., 198. 
Railroad Co., Tench v., 162. 
Railroad Co., Thomas v., 35, 47, 52, 

53, 55, 69, 70, 71, 72, 78, 119, 

128, 137. 
Railroad Co., Titus v., 159. 
Railroad Co., Transportation Co. 

v., 129. 
Railroad Co., Tucker Canal Co. v., 

216. 
Railroad Co. v. Union R. Co., 64. 
Railroad Co. v. Vance, 9. 
Railroad Co., Walker v., 162. 
Railroad Co., West Guillimbury 

v., 198. 
Railroad Co., Whitfield v., 162. 
Railroad Co., Whitney v., 224. 
Railroad Co., Woodward v., 129. 
Railroad Co., Wright v., 172. 
Railway Co. v. Allerton, 109, 110. 
Railway Co., Coleman v., 136. 
Railway Co., Commissioners v., 96. 
Railway Co., Great Northern R. 

Co. v., 137. 



Railway Co. v. McCarthey, 62, 64, 

68. 
Railway Co., Railroad Co. v., 199. 
Railway Co. v. Redmond, 7. 
Raleigh, Tucker v., 96. 
Ramsay County, Goodwin v., 230. 
Ramsey v. Insurance Co., 168. 
Randall, Tqppenden v., 69. 
Randall v. Van Veohten, 77, 158. 
Randolph, Bigelow v., 219. 
Randolph v. Larned, 141. 
Randolph County v. Post, 227. 
Ranger v. Railroad Co., 162. 
Rapho v. Moore, 206, 210. 
Rapid City, McGuire v., 201. 
Rattle, Burt v., 84. 
Ray v. Ind. Ins. Co., 101. 
Ray v. Manchester, 204. 
Ray, Mayor v., 74, 119, 230, 237. 
Read v. Plattsmouth, 225. 
Redd v Henry County, 235. 
Reddish, Cottage Co. "v., 100. 
Redmond, Railway Co. v., 7. 
Redmond, South Wales R. Co. v., 

128, 130. 
Reed, Bank of Pennsylvania v., 

161. 
Reed, Emmett v., 77. 
Reed v. Hoyt, 91. 
Reed, Laing v., 98. 
Reed, McMasters v., 47, 100. 
Reed v. Mobile Bank, 135. 
Reed v. Richmond, 3. 
Reed v. Savings Bank, 162. 
Reese v. Bank, 124. 
Reeves v. Wood Co., 86. 
Regents Canal Co., Ware v., 53. 
Ruichwold v. Commercial Hotel, 

83, 91. 
Reilly v. Philadelphia, 194. 
Re International Ins. Co., 96. 
Reinhard v. Mayor, 204. 
Reinhard v. New York, 172. 
Relfe, Alexander v., 163. 
Rensselaer & Saratoga R. Co. v. 

Davis, 8. 
Republic Ins. Co. v. Swigert, 120. 
Requa v. Rochester, 204, 206, 220. 
Rex v. Amery, 3. 
Reynolds v. Commissioners, 83. 
Reynolds, Mayor, etc. v., 190. 
Reynolds v. Shreveport, 203. 
Reynolds v. Stark Co., 81. 



TABLE OF CASES CITED. 



lix 



References are to sections. 



Reynolds Eng. Co., Merrick v., 51, 
168. 

Rhodes v. Cleveland, 311. 

Rice, Exchange Bank v., 219. 

Rich v. Erral, 74, 75. 

Rich v. Southern Pac. Co. 135. 

Rich v. State Nat. Bank, 77. 

Richards v. Clarksburg, 170. 

Richards v. Merrimack R. Co., 84, 
100, 141. 

Richards v. Supervisors of Lyon 
Co., 196. 

Richards v. Warren Co., 190. 

Richardson v. Buhl, 148. 

Richardson, Portland v., 206. 

Richardson v. Sibley, 9, 53, 137. 

Richardson Co. v. Grant, 191. 

Riche, Ashbury R. Co. v., 9, 41, 42, 
43, 44, 45, 52, 53, 72, 78, 137. 

Richmond, Jones v., 188. 

Richmond v. McGirr, 177. 

Richmond, Reed v., 3. 

Richmond, Thomas v., 73, 138, 172, 
190. 

Richmond, Wade v., 198. 

Richmond Factory Co. v. Alex- 
ander, 3. 

Richmond, etc. Co., Gordon's 
Ex'rs v., 119. 

Richmond, etc. R. Co. v. Louisi- 
ana, etc. R. Co., 8. 

Richmond, etc. R. Co. v. Snead, 
100. 

Ridge Avenue, etc. R. Co. v. Phil- 
adelphia, 146. 

Ridgway v. Bank, 96, 100. 

Ridley v. Plymouth Baking Co., 
77. 

Ringas v. Biscoe, 91. 

Risdon, Menser v., 173. 

Ritchie, Fraser v., 120. 

Ritter, Nauvoo v., 227. 

Rivanna Nav. Co. v. Dawson, 81, 
95. 

River Dee, etc. Co., Baroness 
Wenlock v., 44. 

Rivers, New Orleans Water Co. 
v., 216. 

Riverside District, Nesbit v., 228. 

Robbins v. Chicago, 206, 220. 

Robbins. Cleveland R. Co. v., 126. 

Roberts v. Deming Co., 74. 

Roberts v. Ogle, 212. 



Roberts v. Van Buskirk, 129. 
Robertson v. Bullions, 92. 
Robertson v. Rockford, 144. 
Robeson, Ewing v., 51. 
Robie v. Sedgwick, 81. 
Robinson v. Beale, 120. 
Robinson v. Bland, 75. 
Robinson, Booth v., 96, 98, 122. 
Robinson, Comm. v., 176. 
Robinson, Concord v., 223, 228, 

230, 237. 
Robinson, Ewing v., 168. 
Robinson v. Smith, 156, 158. 
Robinson v. St. Louis, 188. 
Rochester, Requa v., 204, 206, 220. 
Rochester, Smith v., 219, 222. 
Rochester Ins. Co. v. Martin, 9. 
Rochester Sav. Bank v. Aver- 

hill, 9. 
Rock River Bank v. Sherwood, 9. 
Rockford, Robertson v., 144. 
Rockford, etc. Co., Harding v., 

223 
Rockford R. R. Co. v. Sage, 79. 
Rockhold v. Canton Masonic So- 
ciety, 7. 
Rockwell v. Elkhorn Bank, 96, 

100, 134, 
Rockwell, Hartridge v., 120. 
Rocky Mountain National Bank, 

Union G. M. Co. v., 77. 
Roddy v. Finnegan, 172. 
Rogers v. Burlington, 225. 
Rogers, Carr v., 61. 
Rogers, Covert v., 91. 
Rogers, East Tenn. R. Co. v., 129. 
Rogers, Konrad v., 185. 
Rogers, McCurdy v., 190. 
Rogers v. Oxford, etc. R Co., 53. 
Rogers. St. Joseph Township v., 

228, 238. 
Rogers, Tapsham v., 194. 
Rogers Locomotive Works v. 

Southern R. Ass'n, 136. 
Rome v. Cabot, 188, 217. 
Rome, Mitchell v., 203. 
Rome, etc. R. Co. v. Ontario, etc. 

Co., 146. 
Roome, Adriance v., 52. 
Root v. Goddard, 70. 
Root v. Great Western R. Co., 129. 
Root v. Oil Creek, etc. Co., 146. 
Roper, Ooregum M. Co. v., 117. 



lx 



TABLE OF CASES CITED. 



References are to sections. 



Ropes, Salem Mill-dam Co. v., 109, 

113. 
Rosenthal, Cincinnati Co. v., 71. 
Ross v. Clinton, 211. 
Rossie L. M. Co., Moss v., 77. 
Rouede v. Jersey City, 227. 
Rouse. Glasgow v., 181. 
Routerberg, Banking Co. v., 99. 
Rowell v. Williams. 220. 
Royal Bank v. Turquand, 160. 
Rovce, Proprietors Claremont 

Bridge v., 81. 
Roylston v. Roylston, etc. Co., 

188. 
Roylston Market v. Boston Asso- 
ciation, 170. 
Ruckman. Davenport v., 220. 
Rudolph, Merchants' Bank v., 161. 
Rufford, Beman v., 137. 
Ruggles v. Collier, 9. 
Runnels, Harris v., 69. 
Runyan v. Lessee, etc., 81. 
Rush v. Steamboat Co., 51, 168. 
Rushout, Great Western R. Co. 

v., 53. 
Rusk v. Walsh, 69. 
Russell v. De Grand, 71. 
Russell, Kirkham v., 170, 176. 
Russell v. Mayor, 220. 
Russell, St. Louis v., 186. 
Russell v. Tapping, 81, 85. 
Rutland, etc. R. Co., Chaffee v., 

124. 
Rutland, etc. R. Co. v. Proctor, 

129. 
Rutland, etc. R. Co., Stevens v., 

9, 129. 
Rutland, etc. R. Co. v. Thrall, 118. 
Ryan v. Dunlap, 161. 
Ryan v. Railroad Co., 156. 
Rye v. Paterson, 212. 

S. 

S. & F. Ry. Co., Whiting v., 224. 
Sacchi, Aspinwall v., 106. 
Safford v. Wycoff, 100. 
Safety Dep. L. Co. v. Smith. 79. 
Sage v. Lake Shore, etc. R. Co., 

145. 
Sage, Rockford R. Co. v., 79. 
Sage, Welch v., 135. 



Saginaw, Gas Light Co. v., 199; 

216. 
Sailor, Savings Association v., 

161. 
Salem v. Railroad Co., 212. 
Salem Mill-dam Co. v. Ropes, 109, 

113. 
Salem Mills, First Nat. Bank v., 

120. 
Salem Nat. Bank v. Almy, 51, 168. 
Salisbury Mfg. Co., Treadwell v., 

83, 133. 
Salt Lake City v. Hollister, 9, 53, 

74,163,222,233. 
San Antonio, Bolton v., 235. 
San Antonio v. Mehaffey, 62, 63, 

68, 227. 
Sanford Tool Co. v. Howe, Brown 

& Co., 84. 
San Francisco. Argenti v., 188, 

190, 191, 192. 

San Francisco, De Witt v., 185. 
San Francisco, Gas Co. v., 171, 

191. 
San Francisco, Holland v., 9, 14, 
San Francisco, Howard v., 219. 
San Francisco, McCracken v., 170, 

191, 194. 

San Francisco, People v., 195, 201. 
San Francisco, Pimental v., 191. 
San Francisco, Water Works v., 

218. 
San Francisco, Wheeler v., 129. 
San Francisco, Zottman v., 201. 
San Francisco Dock Co., Vandell 

v., 9. 
San Francisco R. Co., Harris v., 

126. 
Sangamon Co. v. Springfield, 191. 
Sanger v. Upton, 107, 112. 
Sankey Brook Coal Co., In re, 125. 
Santa Ana Township, Anderson 

v., 238. 
Santa Clara Female Academy v, 

Sullivan, 166. 
Santwood v. St. John, 129. 
Saratoga, etc. R. Co., Beekman, 

v., 86. 
Saratoga, etc R. Co., Weed v., 129. 
Sargent v. Webster, 83, 91. 
Sattirlee, Chambers v., 203. 
Satterthwaite v. Beaufort Co 

177. * 



TABLE OF CASES CITED. 



lxi 



References are to sections. 



Saulsbury v. Ithica, 205. 

Sault Ste. Marie R, Co. v. Van 

Duzen. 194. 
Savage v. Ball, 100. 
Savanna v. Speers, 208. 
Savanna R. Co., Hazelhurst v., 

53, 121. 
Savanna R. Co. v. Lancaster, 96. 
Savings Association v. Sailor, 161. 
Savings Association v. Topeka, 

237. 
Savings Bank v. Bates, 91. 
Savings Bank v. Reed, 162. 
Savings Fund v. Philadelphia, 215. 
Sawmill Association, Lovett v., 89. 
Sawyer v. Coose, 220. 
Sawyer v. Hoag, 108. 
Schammel, Fanning v., 238. 
Schank v. Mayor, 177. 
Schenck, Supervisors v., 227. 
Schenley v. Commissioners, 173. 
Schnell v. Chicago, 192. 
School District, Clark v., 100. 
School District, Hewitt v., 223. 
School District, Keyser v., 77. 
School District v. Lombard, 230. 
School District, Montague v., 100. 
School District, Williams v., 225. 
School District, Wilson v., 194. 
Schrauber, Treadway v., 170, 192. 
Schultz v. Milwaukee, 204. 
Schumaker, Baltimore, etc. R. Co. 

v., 129. 
Schuyler. New York, etc. R. Go. 

v., 109. 
Schuylkill Bank, Bank of Ken- 
tucky v., 77, 160. 
Schwingle, Erie v., 220. 
Scott, Indianapolis v., 210. 
Scott v. Mayor, 220. 
Scott. Utica Ins. Co. v., 74, 75. 
Seoville v. Thayer, 109, 110. 
Scranton, Torrey v., 203. 
Screw Co., Hodges v., 83, 122, 154, 

156. 
Scroggs, Keokuk v., 170. 
Scudder v. Trenton, etc. Co., 183. 
Scully, Fowler v., 69. 
Sea Foam Ins. Co., In re, 74. 
Second Ave. R. Co., Mayor v., 182. 
Sedalia, Hellen v., 219. 
Sedgwick, Robie v., 81. 
Seeger v. Mueller, 192. 



Seele v. Deering, 213. 
Seeley, Pacific R. Co. v., 85. 
Seibrecht v. New Orleans, 50. 
Seignouret v. Home Ins. Co., 113. 
Seip, Slayden v., 155. 
Selfridge, People v., 3. 
Selma v. Mullen, 170. 
Selma, etc. R. Co., Blackburne v., 

81. 
Senney v. East Warren, eta L. 

Co., 87. 
Sewell v. Cahous, 200. 
Sewell v. St. Paul, 222. 
Sewell's Case, 110. 
Shaffner v. St. Louis, 183. 
Shallcross v. Jeffersonville, 175. 
Sharon, Terrett v., 198. 
Sharon Canal Co. v. Fulton Bank, 

143, 148. 
Sharp, Milhan v., 215. 
Sharpe, Planters' Bank v., 77. 
Sharpe v. Teese, 69. 
Sharpless v. Mayor, etc., 224. 
Sharpless v. Philadelphia, 181. 
Shaver v. Bear River M. Co., 77. 
Shaw v. Boston, 176. 
Shaw v. Crocker, 203. 
Shaw v. Norfolk Ry., 141. 
Shaw v. Packet Co., 53, 74, 
Shawmut's Bank v. Pittsburg, etc. 

R. Co., 129. 
Shawnee, Mason v., 172. 
Shawnee Bank, West St. Louis 

Bank v., 160. 
Shawneetown v. Baker, 195. 
Shea v. Mabry, 156. 
Shea, Southern Exp. Co. v., 129. 
Sheffield, Mayor v., 200, 206. 
Sheidley v. Lynch, 177. 
Sheldon v. Kalamazoo, 162. 
Sheldon Hat Co. v. Fickmeyer, 

83, 106. 
Sheridan v. Colvin, 177. 
Sherlock v. Winnetka, 185. 
Sherman v. Carr, 170. 
Sherman, Farmers', etc. Bank v., 

77. 
Sherman, State v., 144 
Sherwood v. Alvis, 53, 70. 
Sherwood, Rock River Bank v., 9. 
Shetucket Co., Stoddard v., 126. 
She ward v. Citizens' Water Co., 

218. 



lxii 



TABLE OF CASES CITED. 



Keferences are to sections. 



Shields v. Ohio, 143, 144. 
Shields, St. Louis v., 101. 
Shieldsboro, Pieri v., 212. 
Shiras v. Ewing, 218. 
Shirley, Houston, etc. E. Co. v., 

142, 144. 
Shockley v. Fisher, 91. 
Shore v. Wilson, 94. 
Short, Pratt v., 74. 
Shotwell v. Mott, 95. 
Shreveport, Reynolds v., 203. 
Shrewsbury v. Brown, 191. 
Shrewsbury, etc. Ry., Johnson v., 

71, 137. 
Shrewsbury, etc. Ry. v. North- 
western Ry., 55, 70, 128, 137. 
Sibley, Exchange Bank v., 157, 

158. 
Sibley, Richardson v., 9, 53, 137. 
Siebrecht v. New Orleans, 188, 

190. 
Silk Co., Narragansett Bank v., 

100. 
Silliman, Wiley v., 223. 
Silver Lake Bank v. North, 166, 

167. 
Simmons v. Camden, 203. 
Simmons v. Providence, 203. 
Simmons v. Troy Iron Works, 53, 

70. 
Simpson v. Denison, 130. 
Simpson, Mallett v., 81. 
Simpson, Newcastle Ry. v., 119. 
Simpson v. Westminster Co., 137. 
Sims, Visalia, etc. Gas Co. v., 137. 
Singer v. St. Louis R. Co., 134. 
Skillings, North Yarmouth v., 186. 
Skinker, Mathews v., 9. 
Skinner, East Oakland v., 190, 224, 

238. 
Skinner v. Hall, 129. 
Skinner, White v., 158. 
Slaughter, Brooklyn Bridge Co. 

v., 9. 
Slaughter, Gravel Co. v., 50. 
Slayden v. Seip, 155. 
Slee v. Bloom, 107. 
Slidell v. Grand jean, 9. 
Small v. Danville, 213. 
Small v. Smith, 43. 
Smead v. Ind. etc. R. Co., 9, 96. 
Smelser v. Turnpike Co., 168. 
Smith v. Alexander, etc. Co., 53. 



Smith v. Anderson, 153. 

Smith v. Bank, 161. 

Smith v. Birmingham Gas Co., 

162. 
Smith v. Bromley, 69. 
Smith, Carroll Co. v., 190. 
Smith, Central Ry. Co. v., 163. 
Smith v. Chesire, 230. 
Smith, Childs v., 3. 
Smith, Comm. v., 83, 133, 134, 137. 
Smith v. Eau Claire, 203. 
Smith, Eldridge v., 141. 
Smith v. Eureka Flour Mills, 47 r 

96. 100. 
Smith, Exchange Bank v., 103. 
Smith v. Goldworthy, 113. 
Smith v. Hall Glass Co., 77. 
Smith v. Insurance Co., 70. 
Smith v. Ives, 131. 
Smith v. Los Angeles, etc. R Co., 

146. 
Smith v. Low, 96. 
Smith v. Manufacturing Co., 156. 
Smith v. Mawhood, 55. 
Smith v. Morse, 215. 
Smith v. Nashua, etc. R. Co., 128. 
Smith v. Newburg, 170, 194. 
Smith, Newell v., 129. 
Smith, People v., 183. 
Smith v. Putnam, 155. 
Smith, Robinson v., 156, 158. 
Smith v. Rochester, 219, 222. 
Smith, Safety Dep. Co. v., 79. 
Smith, Small v.. 43. 
Smith v. State, 77. 
Smith v. St. Louis Ins. Co., 137. 
Smith, Van Co. v., 160. 
Smith v. Washington, 201, 203. 
Smith, Western, etc. Co. v., 146. 
Smith Bridge Co., Fort Worth 

City R. Co. v., 9. 
Smoot v. Mayor, 220. 
Smyth v. Bangor, 205. 
Snead, Richmond, etc. R. Co. v., 

100. 
Snell v. Minneapolis, etc. R. Co., 

53. 
Snyder v. Studebaker, 101. 
Society, etc. v. Abbott, 107. 
Society, etc. v. Comm., 3. 
Solomons v. Laing, 53, 121. 
Somerset Co., Cory v., 189. 
Somerville v. Dickerman, 170, 195, 



TABLE OF CASES CITED. 



lxiii 



Keferences are to sections. 



Soper v. Buffalo R. Co., 154. 
South Ottawa v. Perkins, 224. 
South Carolina Phos. Co., Brad- 
ley v., 8. 
South, etc R Co., Claffln v., 132. 
Suuth, eta R. Co., Gilliam v., 

163. 
Sleuth, etc. R Co. v. Great Mt. Ry. 

Co., 55, 70, 137. 
South, etc. R. Co., Langstone v., 

135. 
South, etc. R. Co. v. Redmond, 

128, 130. 
Southall v. Insurance Co., 143. 
Southern Bank, New Orleans v., 

194. 
Southern Exp. Co. v. Shea, 129. 
^Southern Life Ins. Co. v. Lanier, 

14,74, 
Southern Pac. Co. v. Orton, 81. 
Southern Pac. Co., Rice v., 135. 
Southern Pac. Co., Tex. Pac. R 

Co. v., 131. 
Southern R Ass'n, Locomotive 

Works v., 136. 
Sower v. Philadelphia, 171. 
Spaulding, Briggs v., 154, 156, 157, 

158. 
Spears, Savanna v., 208. 
Special Sessions, People v., 171. 
Spering's Appeal, 147, 153, 154, 

156, 158. 
Spiller v. Paris Rink Co., 79. 
Spiral Springs Co., Day v., 74. 
Spohr v. Farmers' Bank, 12, 168. 
Spradley, Oxford Ins. Co. v., 96, 

100. 
Sprague v. Hartford Ins. Co., 145. 
Sprague Mfg. Co., Occum Co. v., 

9, 137. 
Spratley, Paine v., 170. 
Spring Co., Cowell v., 166. 
Spring Co. v. Knowlton, 69, 73, 

138 
Springfield v. Edwards, 196, 235. 
Springfield v. Le Claire, 220. 
Springfield, Sangamon County v., 

191. 
Springfield. Stanton v., 205. 
Spring Valley Township, Bissell 

v., 226. 
Spring Valley Water Works v. 

Bartlett, 235. 



Spring Valley Water Works v. 

San Francisco, 218. 
Stace & Worth's Case, 109. 
Stack v. Maysville, 177. 
Standard Oil Co., State v., 12, 148. 
Standi fer v. Swann, 88. 
Stanton v. Springfield, 205. 
Stark v. United States Pottery 

Co., 77. 
Stark Co., Reynolds v., 81. 
Starr v. Burlington, 172. 
State, Aicardi, v., 8. 
State, Atlantic, etc. R. Co. v., 144. 
State v. Bailey, 142, 143, 147. 
State v. Baltimore, etc. R. Co., 

146. 
State v. Bank, 83. 
State v. Bank of Maryland, 100. 
State v. Bell, 173. 
State v. Bevers, 190. 
State, Board of Education v., 225. 
State v. Boston, etc. R. Co., 81. 
Sta'te v. Brown, 185. 
State'v. City of Palestine, 235. 
State v. Clark, 171, 176, 181. 
State v. Cleveland, 172. 
State v. Coke Co., 199. 
State v. College, 83. 
State v. Commissioners, 148, 185. 
State v. Fisk, 173. 
State v. Freeman, 176. 
State v. Gas Co., 215, 216, 218. 
State v. Gaslight Co., 218. 
State v. Green Co., 143, 146. 
State v. Hanser, 173. 
State v. Hammonton, 188. 
State, Harrison v., 199. 
State v. Hoboken, 182. 
State v. Jersey City, 173, 174, 176, 

235 
State v. Keokuk, etc. R. Co., 144. 
State v. Madison, 81, 185. 
State, Mahoney v., 3. 
State v. Mansfield, 81. 
State v. Marion Co., 170. 
State v. Martin, 195. 
State v. Mayor, 176. 
State v. Milwaukee G. L. Co., 216. 
State v. Montgomery, 235. 
State v. McCann, 225. 
State, McCaslin v., 190. 
State v. Nebraska Dis. Co., 55. 
State v. Newark, 81, 173. 



Lxiv 



TABLE OF OASES CITED. 



Keferences are to sections. 



State v. Osawkie Township, 225. 

State v. Passaic, 170. 

State v. Paterson, 173. 

State v. Railroad Co., 144. 

State v. Sherman, 144. 

State v. Smith, 77. 

State v. Standard Oil Co., 12, 148. 

State v. Stebbins, 47. 

State v. Swearingen, 177. 

State v. Trenton, 173. 

State v. Tryon, 172. 

State v. White, 175. 

State v. Williams, 172. 

State, Zimmer v., 144. 

State Bank v. Fox, 120. 

State Bank, Merchants' Bank v., 

160, 163. 
State Bank v. Wheeler, 161, 162. 
State Board, etc. v. Citizens' Ey. 

Co., 9, 191. 
State National Bank, Rich v., 77. 
Staten v. Morgan, 141. 
Steam Navigation Co. v. Dan- 

dridge, 201. 
Steamboat Co. v. Brown, 129. 
Steamboat Co., Rush \l, 51, 168. 
Stearns, Chicago v., 205. 
Stebbins, State v., 47. 
Steck v. Lancaster, 200. 
Stecket v. East Saginaw, 201. 
Steele v. Boston, 204. 
Steffee, Comm. v., 176. 
Stein v. Howard, 115. 
Stephenson, Pickering v., 53, 154. 
Sterling, Church v., 77, 128. 
Sterling v. Thomas, 206. 
Stevens, Attorney-General v., 168. 
Stevens v. Railroad Co., 9, 198. 
Stewart v. Brooklyn R. Co., 162. 
Stewart, Council Bluffs v., 196. 
Stewart, Empire Mfg. Co. v.. 167. 
Stewart v. Erie, etc. R. Co., 9, 53, 

129, 130. 
Stewart v. Jones, 141. 
Stillwater, Bangor Savings Bank 

v., 233. 
Stimson, Thomaston Bank v., 85. 
Stockdale v. Wayland School 

District, 231. 
Stockford v. St. Louis, 203. 
Stockton v. Central Ry. Co., 137. 
Stockton, etc. R. Co. v. City Coun- 
cil, 181. 



Stoddard v. Foundry Co., 124. 

Stoddard v. Shetucket Co., 126. 

Stoever, Payson v., 110. 

Stone v. Hubbardston, 205. 

Stoudinger v. Newark, 207. 

Stoutmore v. Clark, 101, 168. 

Stowe v. Flagg, 3, 12. 

Strait, New Jersey, etc. Ry. Co. v., 
146. 

Straus, Hammond v., 51, 168. 

Strauss v. Eagle Ins. Co., 9, 47, 50. 

Striplen, Glidden v., 61. 

Stuart v. London, etc. R. Co., 77. 

Studebaker v. Montgomery, 168. 

Studebaker, Snyder v., 1, 118. 

Sturge v. Eastern, etc. R. Co., 118. 

Sturges v. Bank, 161. 

Sturges, Firemen's Ins. Co. v., 23. 

Sturtevant v. Alton, 188, 201. 

Stutz, Handley v., 107, 109, 110, 
112, 117. 

Stuyvesant v. Mayor, 215. 

Sugar Ref. Co., People v., 137, 148. 

Sullivan v. Murphy, 100. 

Sullivan, Santa Clara Academy 
v., 81, 166. 

Sumner v. Marcy, 122. 

Sunbury & Erie Ry., Packer v., 
8, 9. 

Supervisors, Kennicutt v., 228. 

Supervisors, Migret v., 238. 

Supervisors, Nugent v., 143, 146. 

Supervisors v. Schenck, 227. 

Supervisors, Wells v., 237. 

Supervisors of Lyon County, Rich- 
ards v., 196. 

Susquehanna Bridge Co. v. Insur- 
ance Co., 84. 

Susquehanna Canal Co. v. Bon- 
ham, 141. 

Sussex, etc. R. Co. v. Morris, etc. 
R. Co., 8, 10, 130, 131. 

Sutherland v. Olcott, 109, 113. 

Sutliff v. Lake Co., 53. 

Sutton v. Clark, 203. 

Swackhamer, Hackettstown v., 
96. 

Swann, Standifer v., 88. 

Swansea, Hull v., 74. 

Swanson, Hopkins v., 172. 

Swartout v. Michigan, etc. R. Co., 
168. 

Swearingen, Scott v., 177. 



TABLE OF CASES CITED. 



lxv 



References are to sections. 



Sweet v. Wabash. 175. 

Swift, People v., 194. 

Swigert, Republic Ins. Co. v., 120. 

Syracuse, Weston v., 196. 

St. Andrews Bay Co. v. Mitchell, 

52. 
St. Anne, Chicago, etc. R Co. v., 

240. 
St. Charles R Co., Canal, etc. R. 

Co. v., 52. 
St. Clair County Turnpike Co. v. 

People, 9. 
St. Clara Academy v. Sullivan, 

81. 
St. Francis Academy, Milliard v., 

100. 
St. John, Bank v., 156. 
St. John, East St. Louis v., 86. 
St. John, Santwood v., 129. 
St. Joseph, Thurston v., 211. 
St. Joseph, etc. R Co., Farmers' 

L. & T. Co. v., 74, 131. 
St. Joseph Township v. Amy, 227. 
St. Joseph Township v. Rogers, 

228, 238. 
St. Louis v. Armstrong, 194. 
St. Louis v. Bank, 171. 
St. Louis v. Bell Tel. Co., 170. 
St. Louis v. Bentz, 212. 
St. Louis v. Buffinger, 177. 
St. Louis, Chambers v., 81. 
St. Louis v. Gurno, 203. 
St. Louis Illinois Canal Co. v,, 215. 
St. Louis, Jay v., 128, 146. 
St. Louis v. Kaime, 172. 
St. Louis, Leslie v., 86. 
St. Louis, Lockwood v., 177. 
St Louis, Page v., 177. 
St. Louis, Perkins v., 190. 
St. Louis, Robinson v., 188. 
St. Louis, Russell v., 186. 
St. Louis, Shaffner v., 183. 
St. Louis v. Shields, 101. 
St. Louis, Stockford v., 203. 
St. Louis v. Webber, 9. 
St. Louis Bridge Co. v. People, 

207. 
St. Louis Carriage Co. v. Hilbert, 

120. 
St. Louis Gas Light Co. v. St. 

Louis, 168. 
St. Louis Ins. Co., Price v., 137. 
St. Louis Ins. Co., Smith v., 137. 



St. Louis, etc. R. Co. v. Bellville, 

192. 
St. Louis, etc. R. Co., Eakin v., 137. 
St. Louis, etc. R. Co., Penn. etc. 

R. Co. v., 9, 53, 72, 74, 136, 137, 

138. 
St. Louis, etc. R. Co. v. Pipes, 129. 
St. Louis, etc. R Co., Singer v., 

134. 
St. Louis, etc. R. Co. v. Terre 

Haute, etc. R. Co., 53, 73, 138. 
St. Louis Stone ware Co., Lafay- 
ette Bank v., 9. 
St. Paul, Cleveland v., 206. 
St. Paul v. Coulter, 171, 212. 
St. Paul, Darling v., 173. 
St. Paul, Furnell v., 205. 
St Paul, Hennesy v., 53. 
St Paul, Kaist v., 203. 
St. Paul, Miller v., 205. 
St. Paul, Nash v., 194. 
St Paul, O'Brien v.. 211. 
St. Paul, Sewell v., 222. 
St. Paul v. Traeger, 170. 
St Paul, etc. Ass'n, Bergman v., 

53. 
St. Peter's Church, De Ruyter v., 

83. 
St. Tamany Water Works v. New 

Orleans Water Works, 216. 



Taft v. Pittsford, 9, 70, 201. 

Tainter v. Worcester, 219. 

Talcott, Pine Grove Township v., 
238. 

Talldega Ins. Co.. McCullough v., 
77. 

Talldega Ins. Co. v. Peacock, 100. 

Tallassee Mfg. Co., Lehman v., 
105, 135. 

Tallman, Western Bank v., 128. 

Talmage v. North American Coal 
Co., 47, 52. 

Talmage v. Pell, 121. 

Talman, Mobile, etc. R. Co. v., 96. 

Tash v. Adams, 175. 

Tate, Indianapolis v., 211. 

Taxpayer v. Tenn. etc. R Co., 237. 

Taylor v. Agricultural Associa- 
tion, 96. 



lxvi 



TABLE OF CASES CITED. 



Keferences are to sections. 



Taylor v. Carondelet, 212. 
Taylor v. Chichester, etc. R. Co., 

' 52, 55, 56, 70. 
Taylor v. Earle, 123. 
Taylor v. Export Co., 120. 
Taylor v. Formholz, 74, 75. 
Taylor v. Phil. etc. R. Co., 98. 
Taylor v. Yonkers, 205. 
Taylor Mfg. Co., American Pres. 

Trust v., 69, 148. 
Teachout v. Des Moines, etc. R. 

Co., 53. 
Teegarden v. Racine, 177. 
Teese, Sharpe v., 69. 
Temperance Society, Livingstone 

v., 120. 
Tench v. Railroad Co., 162. 
Tennessee v. Whitworth, 148. 
Tennessee, etc. R Co., Taxpayer 

v., 237. 
Tennessee, etc. R. Co., Winston v., 

235. 
Tenney v. Lumber Co., 88. 
Terre Haute v. Lake, 201. 
Terre Haute, etc. R. Co., Archer 

v., 9. 
Terre Haute, etc. R Co., Jones v., 

124. 
Terre Haute, etc. R. Co., St. Louis, 

etc. R. Co. v., 53, 73, 138. 
Terrett v. Sharon, 198. 
Texas & Pac. R. Co. v. Southern 

Pac. Co., 131. 
Thayer v. Boston, 162, 222. 
Thayer, Commissioners v., 227. 
Thayer, Norristown v., 204, 210. 
Thayer, Scoville v., 109, 110. 
The Banks v. Poiteaux, 81. 
The Commission, Munn v., 96, 

100. 
The Hartford Bridge Co. v. East 

Hartford, 187. 
The Liberty Bell, 175. 
Thomas, County of Scotland v., 

146. 
Thomas v. Port Huron, 74. 
Thomas v. Railroad Co., 35, 47, 52, 

55, 69, 70, 71, 72, 78, 119, 128, 

137,138. 
Thomas v. Richmond, 73, 138, 172, 

190. 
Thomas, Sterling v., 205. 
Thomaston Bank v. Stimpson, 83. 



Thompson v. Abbott, 144, 146, 186. 
Thompson, Horton v., 194. 
Thompson, Hoyt v., 159. 
Thompson v. Lambert, 96. 
Thompson v. Lamont, 84. 
Thompson v. Lee, 238. 
Thompson, Peoria, etc. R. Co. v., 

131. 
Thompson v. Waters, 9, 81. 
Thornton, Hightower v., 106. 
Thornton v. Howe, 94. 
Thrall, Rutland Ry. v., 118. 
Thurston v. St. Joseph, 211. 
Tioga R Co., Olcott v., 100. 
Tippecanoe Co. v. Lafayette R. 

Co., 53, 78. 
Tippets v. Walker, 158. 
Titcomb, Clark v., 83, 96. 
Titus v. Mabee, 131. 
Titus v. Railroad Co., 159. 
Todd, Dean v., 177. 
Todd v. Troy, 210. 
Toledo v. Case, 220. 
Toledo, Harbeck v., 183. 
Toledo Ins. Co., White's Bank v., 

9, 47, 100. 
Toll Bridge Co. v. Osborn, 9. 
Tolleston Club, Alexander v., 81. 
Tombigbee v. Kneeland, 165, 166. 
Tomlinson v. Branch, 146, 148. 
Tone v. Mayor, 220. 
Toolan, Lansing v., 203. 
Tooley, Athenseum, etc. Co. v., 74. 
Topeka, Citizens' Savings, eta v., 

181, 237. 
Topeka v. Huntoon, 177. 
Topeka, Loan Association v., 179, 

181, 224, 225, 238. 
Topeka Bank, Pratt v., 161. 
Tappenden v. Randall, 69. 
Topping, Russell v., 81, 85. 
Topsham v. Rogers, 194. 
Torrey v. Scranton, 203. 
Touche v. Warehousing Co., 79. 
Town Council, Albright v., 188. 
Town of Depere v. Bellevue, 186. 
Town of Durango v. Pendleton, 

201. 
Town of Durango v. Pennington, 

189. 
Town of Lake, Drexel v., 207. 
Town of Middleport v. iEtna Ins. 

Co., 240. 



TABLE OF CASES CITED. 



lxvii 



References are to sections. 



Townsend v. Brown, 8. 
Townsend, Logan Co. Bank v., 74. 
Tracy v. Guthrie Co., 76. 
Traeger, St. Paul v., 170. 
Transportation Co., Bank v., 130. 
Transportation Co. v. Chicago, 

203. 
Transportation Co., Farmers' 

Bank v., 129. 
Transportation Co., Railroad Co. 

v., 129. 
Trapshagen v. Jersey City, 207. 
Treadway v. Schrauber, 170, 190. 
Treadwell v. Salisbury Mfg. Co., 

83, 133. 
Trenton, State v., 173. 
Trenton, etc. Co., Scudder v., 183. 
Trevor v. Whitworth, 45, 117, 120. 
Trigally v. Memphis, 171. 
Trinity Church, Bogardus v., 81. 
Tripp, Aldrich v., 222. 
Tripp, Inman v., 211. 
Troop, People v., 176. 
Trott v. Warren, 194. 
Trotter, Chicago v., 176. 
Troupe's Case, 77. 
Troy, Francis v., 170. 
Troy, Todd v., 210. 
Troy Iron Works, Simmons v., 53, 

70. 
Troy, etc. R. Co. v. Boston, etc. 

R. Co., 9. 
Troy, etc. R. Co., Buffet v., 13, 128. 
Troy, etc. R. Co. v. Kerr, 137. 
Trumpler v. Bernerly, 86. 
Trust Co., Ohio Ins. Co. v., 74. 
Trustees, Congregational Church 

v., 94. 
Trustees v. King, 95. 
Trustees, Northern Bank v., 228. 
Trustees v. Peaslee, 15, 93. 
Trustee, People v., 186. 
Trustees, Walsh v., 3. 
Tryon, State v., 172. 
Tuckahoe Canal Co. v. Railroad 

Co., 216. 
Tucker v. City of Raleigh, 96. 
Tucker, Fry v., 128. 
Tuckerman v. Brown, 108. 
Tugman v. Chicago, 176. 
Tullis, Cook v., 77. 
Tunis, Osborn v., 90. 
Turnbull v. Payson, 127. 



Turner, Vrooman v., 219. 
Turner, Webster v., 83. 
Turnpike Co. v. Illinois, 8. 
Turnpike Co., Smelser v., 168. 
Turquand v. Marshall, 158. 
Turquand, Royal Bank v., 160. 
Twiss v. Life Association, 74. 
Tyler v. Beacher, 181, 225. 
Tyson v. Milwaukee, 203. 

IT. 

Ulery, Greiner v., 101. 
Underwood v. Green, 212. 
Union Bank v. Elliott, 91. 
Union Bank, Irvine v., 76. 
Union Bank v. Jacobs, 96, 98, 100. 
Union Gold Min. Co. v. Rocky 

Mountain Nat. Bank, 77. 
Union Hardware Co. v. Plume 

Co., 74. 
Union Min. Co. v. Bank, 96. 
Union Pac. R. Co. v. Cheyenne, 

177. 
Union Pac. R. Co., Chicago, etc 

R^ Co. v., 19, 71. 
Union Pac. R. Co., Leo v., 105. 
Union Pac. R. Co. v. Lincoln Co. 

235. 
Union Pac. R. Co., McAlpine v, 

146. 
Union Pac. R. Co., Piatt v., 105 
Union Pac. R. Co., Whipple v. 

146. 
Union Plate Glass Co., In re, 114. 
Union R. Co. v. Railroad Co., 64. 
Union Steamboat Co., Green Bay, 

etc. R. Co. v., 9, 47, 53, 129, 

136, 137. 
Union Tool Co., Utley v., 3. 
Union Township, Gibonnev v., 

194, 
Union Trust Co. v. 111. etc. Co., 

138. 
Union Trust Co., Whiting v., 77. 
Union Water Co. v. Memphis, etc. 

Co., 64. 
United Companies, Black v., 8. 
United Gas Co., Gas Light Co. v., 

74, 137. 
Union Service Co., In re, 120. 
United States, Dickson v., 82. 



Ixviii 



TABLE OF CASES CITED. 



References are to sections. 



United States v. Ft. Scott, 196. 
United States, International Co. 

v., 77. 
United States v. New Orleans, 

179. 
United States Bank v. Hoth, 83, 

100. 
United States Pat. Co., Stark v., 

77. 
Unity Ins. Co. v. Cram, 3. 
University, Louisville v., 185. 
University v. Yarrow, 94. 
Upton, Chubb v., 106, 112. 
Upton v. Hansborough, 51, 168. 
Upton, Pullman v., 112. 
Upton, Sanger v., 107, 112. 
Upton v. Tribilcook, 113. 
Upton, Webster v., 106, 112. 
Upton, Whittenton Mills v., 9, 53, 

148. 
Urquhart v. Ogdensburg, 202. 
Utica Ins. Co. v. Bloodgood, 75. 
Utioa Ins. Co. v. Caldwell, 75. 
Utica Ins. Co. v. Kep, 69. 
Utica Ins. Co., People v., 9, 12, 22. 
Utica. etc. Co., Mohawk Bridge 

Co. v., 8. 
Utica Water Works, Johnson v., 

86. 
Utley v. Union Tool Co., 3. 

V. 

Vail v. Hamilton. 9. 

Valentine, Champlain E. Co. v., 

81. 
Valette, Canal Co. v., 83, 91, 96, 

100. 
Valley District, Barker District 

v., 186. 
Valley Railroad Co. v. Insurance 

Co.. 121. 
Valparaiso v. Adams, 203. 
Van Alstyne, Lockhart v., 123. 
Van Buskirk, Roberts v., 129. 
Van Co., Smith v., 160. 
Van Duzen, Sault Ste. Marie R. 

Co. v., 194. 
Van Dyke v. McQuade, 156. 
Van Horn v. Des Moines, 219. 
Van Houton v. Dutch Church, 94. 
Van Pelt v. Davenport, 209, 211. 



Van Reuth, Kean v., 168. 
Van Santford, Merrick v., 166. 
Van Vechten, Randall v., 77, 158. 
Vance v. Erie, etc. R. Co., 162. 
Vance v. Insurance Co.. 156. 
Vance v. Little Rook, 170. 
Vance, Railroad Co. v., 9. 
Vandall v. San Francisco D. Co., 9. 
Vaughan, Eastern Plank Road 

Co. v., 3. 
Vermont, etc. R. Co., Chapin v., 

135. 
Vermont, etc. R Co. v. Clayers, 3. 
Vermont, etc. R. Co., Ogdensburg. 

etc. R. Co. v., 9. 
Vermont, etc. R Co., White v., 

135. 
Vernon, Hanson v., 181, 224 
Vicksburg, Craig v., 135. 
Vidal v. Cirard, 92, 93, 94. 
Vinalhaven, Brown v., 213. 
Vincent, Walker v., 87. 
Viner, Bartlett v., 55. 
Virginia City, Douglas v., 50, 188. 
Visalia, etc. Gas Co. v. Sims, 137. 
Vrooman v. Turner, 219. 



w. 

Wabash, Sweet v., 175. 
Wabash, St. Louis, etc. R. Co. v. 

Ham, 144. 
Waddill v. Alabama R. Co.. 53. 
Waddill, Grand Lodge v., 70. 
Wade v. American, etc. Society, 

99 
Wade'v. Richmond, 198. 
Wahl v. Holt, 129. 
Wakeman v. Dalley, 158. 
Walker, Blount v., 81. 
Walker v. Chapman, 69. 
Walker v. Cincinnati, 70. 
Walker v. Railroad Co., 163. 
Walker v. Tippets, 158. 
Walker v. Vincent, 87. 
Wall v. Monroe County, 230. 
Wallis, Birmington v., 69. 
Walsh, Aubert v., 69. 
Walsh v. Augusta, 196. 
Walsh, Rusk v., 69. 
Walsh v. Trustees, 3. 
Walworth v. Holt, 107. 



TABLE OF CASES CITED. 



lxix 



References are to sections. 



Ward v. Davidson, 158. 
Ward v. Griswoldville, 107. 
Ward v. Johnson, 96, 100. 
Ward, Marvin Safe Co. v., 219. 
Ware v. Grand Junction, etc. Co., 

53. 
Ware v. Regents Canal Co., 53. 
Wareham, Dill v., 119. 
Warehousing Co., Touche v., 79. 
Warner, Blanchard's Factory v., 

81. 
Warner, Whitewell v., 77, 91. 
Warren, Bank of Virgennes v., 

160. 
Warren v. Henley, 181. 
Warren v. King, 119. 
Warren v. Mobile, etc. R. Co., 146. 
Warren, Trott v., 194. 
Warren Bridge, Charles River 

Bridge Co. v., 8, 9, 28. 
Warren County, Richards v., 190. 
Washington, Smith v., 201, 203. 
Washington, Weightman v., 220. 
Washington Avenue, In re, 225. 
Washington, etc. R Co., Gruber 

v., 162, 163. 
Wasmer v. Delaware, etc. R. Co., 

137. 
Waterbury Button Co., Nauga- 

tuck R Co. v., 53. 
Water Co., Brenham v., 170, 188. 
Water Co., Goundie v., 81. 
Water Co., Memphis v., 216. 
Water Power Co., Dupee v., 83, 

120. 
Waterproof Co., Perry v., 77. 
Waters v. Leech, 171. 
Waters, Thompson v., 9, 81. 
Watertown, etc. Co., Madison, 

etc. Co. v., 9. 
Watertown, etc. Co., Plank Road 

Co. v., 96, 136. 
Water Works, New Orleans v., 

180. 
Watson v. Bennett, 161. 
Watson, Mobile v., 233. 
Watts' Appeal, 84, 100. 
Wayland School District, Stock- 
dale v., 231. 
Weare v. Fitchburg, 205. 
Weare, Petroleum Co. v., 166. 
Webb v. Heme Bay. 134. 
Webb, Martin v., 160.. 



Webber, St. Louis v., 9. 
Weber, People v., 170. 
Webster, Buffalo Ius. Co. v., 52. 
Webster, Burnham v., 160. 
Webster v. Harrington, 198. 
Webster v. Howe Machine Co., 

104. 
Webster, Sargent v., 83, 91. 
Webster v. Turner, 83. 
Webster v. Upton, 106, 112. 
Weckler v. First National Bank, 

9,50. 
Weed, Combination Trust Co. v., 

105. 
Weed v. Saratoga, etc. R. Co., 129. 
Weeden v. Mad River, etc. Co., 77. 
Weet v. Brockport, 219. 
Wehrung, East St. Louis v., 173. 
Weible, Louisville v., 216. 
Weider, Livingston Co. v., 235. 
Weightman v. Washington, 220. 
Weirv. Bell, 158. 
Weis v. Madison, 211. 
Weismer v. Douglas, 181, 237. 
Weissgerber, Eyser v., 74. 75. 
Weith v. Wilmington, 170. 
Welch v. Sage, 135. 
Wells v. Atlanta, 177, 188, 217. 
Wells v. Burnham, 189. 
Wells, Gilham v., 176. 
Wells v. Supervisors, 237. 
West, Aurora v., 135. 237. 
West Chester By. Co., Everhardt 

v., 118. 
West Guillimbury v. Railroad 

Co., 198. 
West v. Mayor, 178. 
West v. Menard Co., 90. 
West Orange, Field v., 203. 
West Point, etc. Ass'n, Poole v., 

' 110. 
West River, etc. Co. v. Dix, 183. 
West St. Louis Bank v. Shawnee 

Bank, 160. 
West Troy, Cowan v., 189, 194. 
Western Bank v. Tallman, 128. 
Western College v. Cleveland, 

170, 202, 219. 
Western Cottage Co. v. Reddish, 

100. 
Western News Co. v. Wilmarth, 

162. 
Western Screw Co. v. Cousley, 79. 



lxx 



TABLE OF CASES CITED. 



References are to sections. 



Western Union Tel. Co., Bell v., 

139. 
Western Union Tel. Co., Com- 

pagnie Francaise v., 121. 
Western Union Tel. Co. v. Mayer, 

166. 
Western Union Tel. Co., Pacific 

P. Tel. Co. v., 53. 
Western Union Tel. Co., Pensa- 

cola, etc. Co. v., 166. 
Western Union Tel. Co. v. Smith, 

146. 
Western Union Tel. Co., Will- 
iams v., 124. 
Westiughouse Mach. Co. v. Wil- 
kinson, 7, 9. 
Westlake, Pangborn v., 69. 
Westminster Board, Aukland v., 

53. 
Westminster Co., Simpson v., 137. 
Weston v. Syracuse, 196. 
Wetherell v. Jones, 55. 
Wetmore v. Parker, 93. 
Weymouth Packet Co.. In re, 117. 
Wheeler v. Chicago, 191. 
Wheeler v. Cincinnati, 170, 219. 
Wheeler, Ohio, etc. E. Co. v., 145. 
Wheeler, Parish v., 129. 
Wheeler v. San Francisco, 129. 
Wheeler, State Bank v., 161, 163. 
Wheeler, etc. Mfg. Co. v. Boyce, 

163. 
Wheelock v. Moulton, 00. 
Whipple, Curtis v., 224. 
Whipple v. Union Pac. E. Co., 146. 
White v. Bass, 69. 
White v. Franklin Bank, 69, 74, 

75, 119. 
White v. Howard, 82. 
White v. Manufacturing Co., 79. 
White v. Skinner, 158. 
White, State v., 175. 
White v. Vermont, etc. R Co., 

135. 
White v. Yazoo City, 202, 203. 
White Line Trans. Co., Lucas v., 

4, 9, 38, 52, 70. 
White's Bank v. Toledo Ins. Co., 

9, 47, 100. 
Whitewater Valley, etc. Co. v. 

Valette, 83. 91, 96, 100. 
Whitewell v. Warner, 91. 
Whitfield v. Railroad Co., 162. 



Whiting v. S. & F. R. Co., 224. 
Whiting v. Union Trust Co., 77. 
Whitman M. Co. v. Baker, 47, 81. 
Whitney v. Mayor, 178. 
Whitney, National Bank v., 53. 
Whitney v. Peay, 74. 
Whitney v. Wyman, 51, 56, 79, 168. 
Whitney Arms Co. v. Barlow, 55, 

56, 58, 61, 63, 64, 66, 68. 
Whittenton Mills v. Upton, 9, 53, 

148. 
Whittle v. Derby Fish Co., 15. 
Whittle, Planters' Bank v., 91. 
Whitwell v. Warner, 77. 
Whitworth, Tennessee v., 148. 
Whitworth, Trevor v., 45, 117, 120. 
Whyte v. Mayor, 212. 
Widrig v. Newport Co., 158. 
Wilcox, Oakland Bank v., 159. 
Wild v. Bank, 160. 
Wiggins v. New York, 177. 
Wiggins Ferry Co. v. Railroad 

Co., 129. 
Wiley v. Silliman, 223. 
Wilkes v. Georgia, etc. R. Co., 53. 
Wilkins v. Detroit, 189. 
Wilkinson v, Bauerle, 91. 
Wilkinson, Cohen v., 53. 
Wilkinson v. Peru, 235. 
Wilkinson, Westinghouse Mach. 

Co. v., 7, 9. 
Willamette Co. v. Bank, 9, 53. 
Willey v. Greenbush, 230. 
Williams, Ex parte, 135. 
Williams v. Augusta, 212. 
Williams v. Bank, 7 *. 
Williams v. Creswell, 166. 
Williams v. Davidson, 170, 172. ' 
Williams v. Hedley, 69. 
Williams, Helfrich v., 164. 
Williams v. Insurance Co., 162. 
Williams, Kernaghan v., 53. 
Williams v. New Jersey, 180. 
Williams v. Parker, 116. 
Williams, Rowell v., 220. 
Williams v. School District, 225. 
Williams, State v., 172. 
Williams v. Western Union Co., 

124. 
Williams College v. Cleveland, 

220. 
Williamson, Ex parte, 98. 
Williamsport v. Comm., 188. 



TABLE OF CASES CITED. 



lxxi 



References are to sections. 



Williston v. Michigan R. Co., 124. 
Wilmington, Weith v., 170. 
Wilson, Adams Exp. Co. v., 129. 
Wilson, Attorney-General v., 153. 
Wilson v. Charlotte, 177. 
Wilson, Danbury, etc. R. Co. v., 9. 
Wilson v. New Bedford, 211. 
Wilson v. School District, 194. 
Wilson, Shore v., 94. 
Winans, York, etc. R. Co. v., 9, 

128, 137. 
Winchester v. Birkshire, etc. R. 

Co., 137. 
Windsor Mfg. Co., Beckwith v., 

88 
Winegar, Grand Chute v., 228. 
Winfleld, Mayor v., 176. 
Winnetka, Sherlock v.. 185. 
Winston, Tenn. etc. R Co. v., 

235 
Winter, Bates Co. v., 190. 
Winter v. City Council, 239. 
Winters v. Armstrong, 109, 111. 
Winthelm v. Cedar Co., 194. 
Winthrop Ins. Co., Meeker v., 139. 
Wiegand, Citizens' Bank v., 159. 
Wisconsin Cent. R. Co., Bound v., 

197. 
Wiswall v. Greenville, etc. Co., 9. 
Wittee v. Derby Fishing Co.. 15. 
Wolcott, Ouachita Co. v., 230. 
Wood v. Dummer, 107. 
Wood County, Reeves v., 86. 
Wood Hydraulic Co. v. King, 166. 
Wood, Louisiana v., 191, 233. 
Woodbridge v. Proprietors, etc., 

77. 
Woodcock v. Calais, 213. 
Woodruff v. Erie R Co., 9. 
Woodward, Dartmouth College 

v., 9, 21, 28, 50. 
Woolsey, Dodge v., 53. 
Worcester, Commissioners v., 176, 

212. 
Worcester, Tainter v., 219. 
Workingmen's Banking Co. v. 

Routerberg, 99. 
Worthington, North Side Ry. Co. 

v., 7. 
Wright v. Augusta, 219. 



Wright v. Bishop, 235. 
Wright v. Carter, 8. 
Wright v. Nagle, 199. 
Wright v. Railroad Co., 172. 
Wulfekehlen, German Savings 

Bank v., 120. 
Wyandotte v. Zeitz, 188. 
Wycoff, Safford v., 100. 
Wylde v. North River, etc. Co., 

129. 
Wyman, Whitney v., 51, 56, 79, 

168. 

X. 

Xenia, Bloom v., 170. 



Yancey v. Hopkins, 190. 

Yarrow, University v., 94. 

Yates, Berry v., 121. 

Yates v. Milwaukee, 212. 

Yazoo City, White v., 203, 203. 

Yonkers, Taylor v., 205. 

York, etc R Co. v. Hudson. 153. 

York, etc. R Co. v. Winans, 128, 
137. 

Young v. Clarendon Township, 
223, 230, 237. 

Young, Davidson v., 192. 

Young v. Gaslight Co., 53. 

Young, National -Bank of Repub- 
lic v., 104. 

Yount, American Christian 
Union v., 81, 166. 



Zabriskie v. Cleveland, etc. R. Co., 

9. 53, 76, 135. 
Zabriskie, Crompton v., 198. 
Zeitz, Wyandotte v., 188. 
Zellerbach, Miners' Ditch Co. v., 

9, 33, 83, 87. 
Zimmer v. State, 144. 
Zottman v. San Francisco, 201. 
Zulueta's Case, 120. 



THE DOCTRINE OF ULTEA YIEES 



IN 



THE LAW OF COKPORATIONS. 



CHAPTER L 

CREATION AND CONSTRUCTION OF CORPORATE CHAR- 

TERS. 

Pabt I. 

OEEATION OF CHABTEBS. 

§ 1. Introductory. 

2. A corporation a legal entity. 

3. Creation of chartered corporations. 

4. What acceptance of charter implies. 

5. Distinction between natural and artificial persons. 

6. Distinction between corporation and partnership. 

7. Distinction between corporations under general and special act. 

§ 1. Introductory. — As the doctrine of ultra vires can 
be legitimately applied only to the acts of a corporation 
as such, acting by and through its authorized agents or 
representatives, it might be well to here state, upon the 
threshold of the subject, the position taken in these pages 
regarding the general character and attributes of this 
much anathematized creature of the law, which has oc- 
casioned so much legal investigation and has called forth 
at times such vigorous judicial condemnation. 
1 



2 CREATION AND CONSTRUCTION. [§;$ 2, 3. 

§2. A corporation a legal entity. — It will be assumed,, 
in the examination of the doctrine to be hereafter dis- 
cussed, that a corporation, both under. the common law 
and as now organized and created under our state laws,, 
is a legal entity, separate and distinct from the members- 
who compose it; that in the corporation — the creature of 
the law — is vested all the property and powers of the 
company ; that it can only be affected by such acts and 
agreements as are done or executed on its behalf by its- 
corporate agencies, acting within the legitimate scope of its 
chartered powers; and that no acts or contracts by the 
officers or agents of the company beyond the scope of its 
powers, as prescribed and designated in its charter or ar- 
ticles of association, can be ascribed to the corporation — 
the legal entity — though done and concurred .in by each 
and all of the stockholders. It would seem from a care- 
ful examination of the authorities and adjudications that 
the foregoing propositions as to the nature of a corpora- 
tion would go unchallenged ; but; unfortunately, there is 
now in this country a newer growth of corporation law- 
yers and authors, fostered and fashioned in the same 
school, who would confuse the subject by regarding the 
rights, duties and powers of a corporation as identical 
with the rights, duties and powers of the individuals com- 
posing it. To recognize such an anomalous position would 
clearly nullify, in a great measure, the whole doctrine of 
ultra vires. 

§ 3. Creation of chartered corporations. — Corporations 
can now be created and exist only by virtue of legislative 
enactment. 1 And to create a corporation by legisla- 
tive act no express words are requisite; any words de- 

i Stowe v. Flagg, 72 111. 397; Hadley v. Commissioners, 105 Mass. 
526; Franklin Bridge Co. v. Wood, 14 Ga. 80. 



§ 3.] CREATION OF CHAETEES. 3 

scriptive of the legislative purpose are sufficient. 1 The 
manner in which/ private corporations may be organized 
is now usually prescribed by most of the states of the 
Union by general laws, the constitutions, with perhaps 
few exceptions, prohibiting special acts of incorporation. 
But the authority to organize corporations under general 
laws rather than by special act of the legislature is not 
intended to Avork any material change in their nature or 
character. The legislatures of the respective states have 
prescribed methods for the creation of corporations which 
were unknown to the common law, endowing them with 
special powers of management and limitations as to lia- 
bility, and providing at the same time that all the world 
should have notice who were the persons authorized to 
manage and control the corporation and bind all the 
stockholders thereof by requiring the charter to be re- 
corded, certified by the directors and made accessible to 
all. Under general incorporation law, when the instru- 
ment specifying the objects, conditions and name of the 
association, and whatever else the law may require, has 
been approved by the proper officers and enrolled accord- 
ing to law, the persons so associating become a corpora- 
tion according to the objects and conditions and vested 
with the powers and privileges contained and specified in 
the instrument. These become their charter, and have 
the same force and effect in law as if they were specific- 
ally granted by special act. 2 Powers and privileges speci- 
fied in such instrument, however, which contravene or 
are beyond the provisions of the statute are null and 

iRex v. Araery, 1 Term Rep. 575; Conservators v. Ash, 10 B. & 0. 
349; Grangers' Ins. Co. v. Kamper, 73 Ala. 325; Mahoney v. State 
Bank, 4 Ark. 620; Denton v. Jackson, 2 John. Ch. 325; Walsh v. Trust- 
ees, etc., 96 N. Y. 427. 

2 Society, etc. v. Commonwealth, 52 Pa. St. 125. 



4 CKEATI0N AND CONSTRUCTION. [§ 3. 

void, 1 and all acts done in pursuance of such provisions 
will be void. 2 But whatever be the mode prescribed by 
the act under which incorporation is had, substantial 
compliance with all its provisions is required before the 
corporation can be said to be in esse? A corporation 
created according to the rules of the common law must 
be governed by it in its mode of organization, in the man- 
ner of exercising its powers and in the use of the capacities 
conferred; when created in disregard of those rules, how- 
ever, the existence, powers, capacities, and the mode of 
exercising them, must depend upon the law of its creation. 4 
The charter and not the organization under it creates the 
subscribers a corporation, at least so far as to render con- 
tracts for or against the corporation valid. 5 A corpora- 
tion, being an artificial creation, is the very thing it is 
made by the statute which brought it into being, and 
nothing more. 6 In Ghrangeri Life db Health Insurance 
Company v. Kamjper, supra, the court, in discussing the 
manner of organizing corporations under statutory enact- 
ments, said : " The mode of incorporation the statutes have 

iHeck v. McEwin, 76 Tenn. 97; Eastern Plank Road Co. v. 
Vaughan, 14 N. Y. 546; Grangers', etc. Ins. Co. v. Kamper, 73 Ala. 
325; Medical College Case, 3 Whart. (Pa.) 445. 

2 Eastern Plank Road Co. v. Vaughan, supra, 

3 Harris v. McGregor, 29 Cal. 124; People v. Selfridge, 52 Cal. 331; 
Mclntire v. McLain Ditching Co., 40 Ind. 104; Indianapolis, etc. Mini 
Co. v. Herkimer, 46 id. 142; Reed v. Richmond St. Ry. Co., 50 id. 342; 
Richmond Factory Co. v. Alexander, 61 Me. 351; Grangers' Life, etc. 
Asso. v. Kamper, 73 Ala. 325; Oregon Ry. v. Oregonian Ry., 130 
U. S. 1; Utley v. Union Tool Co., 11 Gray (Mass.), 139; Doyle v. Miz- 
ner, 42 Mich. 332; Abbott v. Omaha Smelt. Co., 4 Neb. 416; Unity 
Ins. Co. v. Cram, 43 N. H. 636; Childs. v. Smith, 55 Barb. (N. Y.) 
45,53. 

4 Penobscot Boom Co. v. Lamson, 16 Me. 224. 
s Vermont Ry. Co. v. Clayes, 21 Vt. 30. 

6 Oregon Ry. Co. v. Oregonian Ry., Co., supra. 



§ 3.] CEEATI0N OF CHAETEES. 5 

carefully prescribed. The persons proposing to be incor- 
porated must file and cause to be recorded in a designated 
public office a declaration in writing stating the name of 
the corporation, the objects for -which it was formed, the 
amount of capital stock, the number of shares into which 
it is divided, the names of the stockholders, and the num- 
ber of shares each may hold. The office and effect of the 
declaration the statutes do not leave in doubt; when re- 
corded, the persons signing it and their successors become 
a body corporate by the name stated therein and with 
the powers conferred by law. It is an acceptance by the 
corporators, under the name designated, for the objects 
expressed, of the corporate powers and capacity the law 
confers, and a statement of the principal constituents of 
the corporation — the amount of the capital stock, the 
names of the stockholders and the quantity of interest 
each has in the capital stock. There is no authority of 
law for introducing more into it, and if more be intro- 
duced it is mere surplusage, not adding to or detracting 
from the force of the declaration. A controlling purpose, 
it may be supposed, in authorizing or compelling the 
creation of private corporations under general law, is to 
secure uniformity and equality of corporate powers, func- 
tions and privileges; that all corporations of the same 
class, formed for like purposes, should possess the same 
capacities and properties, and exercise and enjoy the same 
franchises and privileges. Unless it was intended to work 
a radical change in the nature and character of these arti- 
ficial beings, the mere creatures of the law, and to sub- 
vert the whole theory which has prevailed in reference 
to them, it cannot have been contemplated that they 
should for themselves create powers and privileges by 
declaration or reservation, whether the declaration or 
reservation is expressed in the articles of incorporation, 
or in the constitution or by-laws ordained by the corpora- 



6 0KEATI0N AND CONSTRUCTION. [§ 3. 

tors for their government. Such declarations or reserva- 
tions would soon become more liberal and diverse than 
was the liberality and diversity of the grants of corporate 
powers by special legislative enactment — the evil it was 
intended to remove. Of every corporation formed under 
the general law, the law itself becomes the charter, de- 
fines and enumerates the powers which are to be exer- 
cised, the nature and extent of corporate franchises and 
privileges. The declaration of incorporation, the consti- 
tution and by-laws adopted by corporate government, do 
not form the charter or define or enumerate the corporate 
powers. These are the acts of the corporators. The 
charter is the grant from the sovereign power of the 
state, and by that source only can be varied or enlarged. 
The expression in a declaration of incorporation that it 
is the intention and privilege to increase the capital stock 
or the number of shares, or to invest the corporators 
with any other powers not enumerated in the statute, 
whenever deemed proper and expedient, is vain and nu- 
gatory ; it does not authorize an increase of capital at the 
mere will of the company in such mode as it elects. The 
power must be found in the law from which corporate 
existence is derived, or must be conferred by a subsequent 
law, the provisions of which must be observed in the ex- 
ercise of the power. The implied or incidental powers 
corporations may rightfully exercise never have been ex- 
tended to changes in the constitution or membership of 
the corporate body, or changes of the purposes for which 
the corporation was created. They have been confined 
to such powers as would enable the corporation to exer- 
cise properly its express powers." 1 

i In Oregon Ry. Co. v. Oregonian Ry. Co., 130 U. S. 1, Mr. Justice 
Miller, in speaking of the organization of modern corporations, 
said: 

" A corporation in this country, whatever it may have been in 



§ 4.] CEEATION OF CHAETEES. 7 

§ 4. What acceptance of charter implies. — A corpora- 
tion, as we have seen, 1 exists and exercises its franchises 
only by virtue of a grant from the legislative power. 
" The granting and acceptance of a charter in the case of 

England at the time when the crown exercised the right of creat- 
ing such bodies, can only have an existence under the express law 
of the state or sovereignty by which it is created. And these pow- 
ers, where they do not relate to municipal corporations exercising 
authority conferred solely for the benefit of the public, and in some 
sense parts of the body politic of the state, have in this country, 
until within recent years, always been conferred by special acts of 
the legislative body under which they claim to exist. But the 
rapid growth of corporations which have come to take a part in all 
or nearly all of the business operations of the country, and espe- 
cially in enterprises requiring large aggregations of capital and in- 
dividual energy, as well as their success in meeting the needs of a 
vast number of most important commercial relations, have de- 
manded the serious attention and consideration of law makers. 
And while valuable services have been rendered to the public by 
this class of organizations, which have stimulated their formation 
by numerous special acts, it came at last to be perceived that they 
were attended by many evils in their operation as well as much 
good, and that the hasty manner in which they were created by 
the legislatures, sometimes with exclusive privileges, often without 
due consideration and under 1 the influence of improper motives, 
frequently led to bad results." 

" Whether it was this consideration, or merely the desire to fix 
some more universal rule by which the rights and powers of pri- 
vate corporations, or those for pecuniary profit, should come into 
existence, it is certain that-not many years ago state constitutions 
which were formed or remodeled came to have in them provisions 
for the formation of corporations under general laws, and prohibit- 
ing such creations by special enactment." 

" Outside of the powers conferred and the privileges granted to 
those organizations by the statutes under which they exist, they 
are, in all the states' of the Union which have the common law as 
the foundation of their jurisprudence, governed by that common 
law; and it is the established rule of the federal court, and, with 



i 3. 



8 CEBATION AND CONSTKTTCTION. [§ 5. 

private corporations for pecuniary profit are based on the 
theory that the prosecution of the business proposed will 
be a benefit to the public, and that the investment of 
capital therein will result in pecuniary profit to the stock- 
holders ; and it is an undertaking on the part of the cor- 
poration and all of its stockholders that, in consideration 
of the grant of power, the capital shall be used for the 
prosecution of the purpose named in the charter, and no 
other. There is also an undertaking on the part of the 
corporation with each stockholder that the capital he in- 
vests shall be put to no other use, and subject to no other 
hazard, than that contemplated by the powers expressed 
in the charter, and that those things which are within the 
scope or objects of the corporation shall be done in the 
manner pointed out in the charter and the laws governing 
its action." 

§ 5. Distinction "between a natural and artificial per- 
son. — The distinction between a natural person and one 
of statutory creation — an artificial person — maybe said 

some exceptions, in the states in which that common law prevails, 
as well as of Great Britain, from which it is derived, that such a cor- 
poration can exercise no power or authority which is not granted to 
it by the charter under which it exists or by some other act of the 
legislature which granted that charter. 

"Any authority for the exercise of corporate powers, derived 
from the general laws of a state, must be in accordance with the 
constitution of that state and its statutes upon that subject A 
constitutional provision that corporations shall not be created by 
special laws, but may be formed under general laws, implies that 
no private corporation can be created thereafter until such general 
law has been enacted, and that it thereupon became the funda- 
mental law of the state in regard to all corporations formed under 
it. It is idle to say, therefore, as has been contended, that any cor- 
poration couid assume to itself powers of action by the mere decla- 
ration in its articles or memorandum that it possessed them." 

1 Lucas v. White Line Trans. Co., 70 Iowa, 541. 



§ 6.] CREATION OF CHABTEKS. 9 

to be this : A natural person is not confined in the exer- 
cise of his capacities to any particular acts or business, 
but may do any act or enter into any contract not pro- 
hibited by law. An artificial person may do no acts nor 
enter into any contracts except such as are authorized by 
law; the one's powers being inherent whilst the powers 
of the other are conferred. In the transaction of business 
enterprises a natural person's powers are unlimited in re- 
gard to the mode of their exercise, and he may also em- 
bark in any occupation deemed advisable or advantageous ; 
whilst an artifical person is necessarily restricted to the 
business and the mode of its exercise prescribed in the 
charter or laws of its creation. Much of the conflict en- 
countered in the opinions of judges and text-writers may 
be directly traced to a disregard of this irreconcilable dis- 
tinction, which no amount of specious argument can suc- 
cessfully overcome. That this distinction is technical and 
based, in a measure, on the fictitious character of the arti- 
ficial person created by the legislature, in no wise changes 
the rule of construction regarding the respective powers 
of each. The natural person is born with inherent pow- 
ers — the artificial person has its powers to achieve; and, 
having so achieved them through the aid of the law, it is 
entitled to protection by the law and held to the obeyance 
of the law. 

§ 6. Distinction between corporations and partnerships. 
The principles of the law upon which the liability of cor- 
porations and joint-stock companies is founded are very 
clear and well settled, though not always in practice 
steadily kept in view. The law in ordinary partnerships, 
so far as relates to the power of one partner to bind the 
others, is a branch of the law of principal and agent. It 
is elementary that each member of a complete partner- 



10 CREATION AND CONSTRUCTION. [§ 7. 

ship is liable for himself, and, as agent for the rest, binds 
them upon all contracts made in the course of the ordi- 
nary scope of the partnership business. Any restrictions 
upon the authority of each partner imposed by mutual 
agreement among themselves could not affect third per- 
sons, unless such persons had notice of them; then they 
could take nothing by contract which those restrictions 
forbade. A corporation by common law could only bind 
itself by contract under the common seal. It is obvious 
that the law governing ordinary partnerships would be 
inapplicable to a company consisting of a great num- 
ber of individuals who contribute to the common stock. 
To allow each one to bind the other by any contract 
which he thought fit to enter into, even within the scope 
of the corporate business, would soon lead to the utter 
ruin of the contributors. 

§ 7. As to distinction between corporations organized 
under general laws and special acts. — In ascertaining the 
scope of the powers of corporations, the only difference 
between one organized under general law and one created 
by special statute is that in the former the court will look 
to the certificate of the promoters or incorporators, while 
in the latter but to the special statute. The rule, how- 
ever, in construing the instrument is necessarily the 
same. 1 In both kinds of private corporations their pow- 
ers are such as are specifically enumerated and such others 
as are incidental or necessary to carry the express powers 
into effect. They may not exercise any other powers 
than these. 3 

iRookhold v. Canton Masonic, etc. Soc, 129 111. 440; Nutt v. Dan- 
ville Seminary, 129 111. 403. 

2 Westinghouse Machine Co. v. Wilkinson, 79 Ala. 312; North Side 
Railway Co. v. Worthington, 30 S. W. Rep. 1058 (Tex., 1895); and see 



§ 7.] CREATION OF CHARTERS. 11 

cases cited in § 9, post. In North Side Ry. Co. v. Worthington, supra, 
the court, in discussing the difference between corporations created 
under general and special acts, said: "It occurs to us that in deter- 
mining the powers of a corporation a distinction should be observed 
between such as are created by special charters and such as come 
into existence by virtue of authority conferred by a general law. 
A charter is in the nature of a contract, and it may be that in con- 
struing a special charter we should construe it in the light of the spe- 
cial circumstances attending the enterprise which was intended to 
be promoted ; as, in case of a railroad, its connection with other 
lines of transportation whether by water or land, or its terminus 
at a seaport. The last-mentioned circumstance seems to have had 
•a controlling influence upon the court in the case of Railway Co. v. 
Redmond, 10 C. B. (N. S.) 675, already cited. For pxample, if the 
legislature had the power to grant and had granted a special char- 
ter to the City Company, and it had appeared that a street railway 
was necessary to the success of the corporation, and that this fact 
was known, it may be the power to construct or at least to aid the 
■construction of the street railway would have been implied. But this 
corporation having been created under a general law, we do riot see 
that it can claim the right, by reason of its peculiar surroundings, 
to exercise a power which another like corporation could not exer- 
cise by reason of different circumstances. Our constitution pro- 
vides that corporations shall be created only by general laws, and 
it would seem that one purpose of the provision was to prevent the 
legislature from granting to one company special powers or special 
privileges. At all events the general law, as we think, should be 
construed as a general rule, conferring upon each member of each 
particular class of corporations precisely the same powers." 



12 CREATION AND CONSTEUCTION. [§ 8. 



Paet IT. 

CONSTEUCTION OF CHARTERS. 

§ 8. General rule of construction. 
9. Corporations have only powers given by charter. 

10. Rule peculiarly applicable to corporations organized under 

general laws. 

11. Ultra vires questions decided by law of organization. 

12. Province of court in construing corporate powers. 

13. Powers construed as incidental to those expressly given. 

14. Discretion of corporations. 

15. Miscellaneous — Incidental powers. 

§ 8. General rule of construction. — In all cases of leg- 
islative grants to private corporations the well-established 
rule of construction is this : That grants to private cor- 
porations shall be construed strictly against the grantees ; 
and to prevail they must be express and clear beyond a 
doubt ; a doubt defeats the power. "What is not granted 
in clear and unequivocal language is withheld. 1 The ob- 
ject is to protect the public against improvident grants 
and grants made by implication without clear intention. 
They will not be sustained by doubtful words ; ambiguity 
vitiates them. Eut this rule is qualified by another: 
That such grant, and the statute making it, must receive 

1 2 Dwarris on Stat. 750; 2 Redf. Rys. 445, 446; C. & A. Ry. Co. v. 
Briggs, 2 Zabr. (N. J.) 623, 641, 647; Townsend v. Brown, 4 Zabr. 
(N. J.) 80, 87; Leggett v. New Jersey Mfg. Co.,1 N. J. Eq. 541; Bridge 
Co. v. Land & Imp. Co., 13 N. J. Eq. 81, 94; Joint Co. v. R & Del. 
Bay Ry. Co., 1 C. E. Green (N. J.), 321; Morris Canal Co. v. Central 
Ry. Co., 16 N. J. Eq. 419; Morris & Essex Ry. Co. v. Sussex Ry. Co. r 

20 N. J» Eq. 542; Packer v. Sunbury, etc. L. Co., 19 Pa. St. 211; Bank 
of Penn. [v. Comm., 19 Pa. St. 144; Penn. Ry. Co. v. Canal Comm'rs, 

21 Pa. St. 9; Comm. v. Franklin Canal Co., 21 Pa. St. 125; Comm. 
v. Erie Ry. Co., 27 Pa. St. 339; Beaty v. Knowler, 4 Pet. 168. 



§ 9.] CONSTRUCTION OF CHARTERS. 13 

a reasonable construction, and not be so construed as to 
defeat the intention of the legislature, and that the am- 
biguity must be such as is not removed by the settled 
rules of construction. 1 

§ 9. Corporations have only powers given "by charter. — 
A corporation has, therefore, according to the foregoing 
rule of construction, no powers whatever except those 
given by its charter or law under which it is incorpo- 
rated, either directly or as incidental to its purposes and 
existence. 2 This rule is very clearly stated by Mr. Justice 

i Black v. United Cos., 7 C. E. Green (N. J.), 130; s. C, 9 C. E. 
Green (N. J.), 445; Providence Bank v. Billings, 4 Pet. (U. S.) 514; 
Charles River Bridge Co. v. "Warren Bridge, 11 Pet. (U. S.) 430; Bank 
of Augusta v. Earle, 13 Pet. (IT. S.) 519; Perrine v. Ches. & Del. 
Ry. Co., 9 How. (U. S.) 172; Richmond Ry. Co. v. Louisiana Ry. Co., 
13 How. (U. S.) 71; Pennock v. Cpe, 23 How. (IT. S.) 117; Rice v. 
Railroad Co., 1 Black (IT. S.), 858; Delaware Tax Case, 18 Wall. 
<U. S.) 206; Aicardi v. The State, 19 Wall. (IT. S.)635; Turnpike Co. v. 
Illinois, 6 Otto (IT. S.), 63; Bradley v. South Carolina Phos. Co., 1 
Hughes (IT. S.), 72; Bradley v. N. Y. etc. Co., 21 Conn. 294; Boston, 
etc. Ry. Co. v. B. & M. Ry. Co., 5 Cush. (Mass.) 375; Mohawk Bridge 
Co. v. Utica, etc. Co., 6 Paige (N. Y.), 554; Auburn Plank Road Co. v. 
Douglas, 9 N. Y. 444; Ren. & Sar. Ry. v. Davis, 43 N. Y. 137; In re 
N. Y. & N. H. R. R., 46 N. Y. 546; Briggs v. C. & A. R. R., 2 Zab. 
(N. J.) 623; Wright v. Carter, 3 Dutch. (N. J.) 76; Bridge Prop. v. Ho- 
boken Co., 2 Beas. (N. J.) 81; S. C, 1 Wall. 116; Packer v. Sunbury, 
etc. Ry. Co., 19 Pa. St. 218; Bank v. Comra., 19 Pa. St. 144; Penn. 
R. R. v. Canal Comm'rs, 21 Pa. St. 9; St. Clair Co. Turnpike Co. v. 
People, 82 111. 174. 

2 Dartmouth College v. Woodward, 4 Wheat. (IT. S.) 636; City 
Council v. Plank Road Co., 31 Ala. 76; Holland v. San Francisco, 7 
Cal. 361; Occum Co. v. Sprague Mfg. Co., 34 Conn. 529; Ohio Ins. Co. 
v. Nunnemacher, 15 Ind. 294; Thompson v. Waters, 25 Mich. 214; 
Rochester Ins. Co. v. Martin, 13 Minn. 59; Ruggles v. Collier, 43 Mo. 
353; Downing v. Mt. Washington, etc. Co., 40 N. H. 230; People v. 
Utica Ins. Co., 15 John. (N. Y.) 358; Farmers' L. & T. Co. v. Carroll, 
5 Barb. (N. Y.) 613; White's Bank v. Toledo Ins. Co., 12 Ohio St. 601; 
Lafayette v. Cox, 5 Ind. 38; Green Bay, etc. Ry. Co. v. Union S. Co., 



14 CREATION AND CONSTRUCTION. [§ 9. 

Miller in Thomas v. Railroad Co., 101 U. S. 71, as fol- 
lows : " The powers of corporations organized under leg- 
islative statutes are such, and such only, as those statutes 
confer. Conceding the rule applicable to all statutes, 

107 U. S. 98; Bank of Augusta v. Earle, 13 Pet. (U. S.) 519; Miners' 
Ditch Co. v. Zellerbach, 37 Cal. 543; Vandall v. San Francisco Dock 
Co., 40 Cal. 83; Bellmeyer v. Marshalltown, 44 Iowa, 564; Weckler 
v. First Nat. Bank, 42 Md. 581; St. Louis v. Webber, 44 Mo. 547; 
Mathews v. Skinker, 62 Mo. 329; Brooklin Gravel Road Co. v. 
Slaughter, 33 Ind. 185; East Anglian Ry. Co. v. Eastern Counties Ry. 
Co., 11 C. B. 775; Ogdensburg, etc. R. Co. v. Vermont, etc. Ry. Co., 
63 N. Y. 176; Davis v. Old Colony Ey. Co., 131 Mass. 258; Troy 
& Boston Ry. Co. v. Boston, etc. E. Co., 86 N. Y. 117; Hinkley v. 
Gildersleeve, 19 Grant, Ch. (U. Can.) 212; Archer v. Terre Haute, etc. 
E. Co., 102 111. 495; Pearce v. Madison, etc. E. Co., 21 How. (U. S.) 
441, and cases cited; Taft v. Pittsford, 28 Vt. 286; Franklin Co. v. 
Lewistown Inst., 68 Me. 43; Rock River Bank v. Sherwood, 10 Wis. 
230; Miner v. N. Y. etc. E. Co., 53 N. Y. 363; Monument Bank v. 
Globe Works, 101 Mass. 57; Lafayette Sav. Bank v. St. Louis Stone- 
ware Co., 4 Mo. App. 276; Central Bank v. Empire Stone Co., 26 
Barb. (N. Y.) 23; Madison, etc. Plank Eoad Co. v. Watertown, etc. 
Co., 7 Wis. 59; JEtna Bank v. Charter Oak L. Ins. Co., 50 Conn. 167; 
Bank of Genesee v. Patchin Bank, 13 N. Y. 319; Woodruff v. Erie 
Ry. Co., 25 Hun, 246; Chambers v. Falkner, 65 Ala. 448; Wiswall v. 
Greenville, etc. Co., 3 Jones, Eq. (N. C.) 183; Toll Bridge Co. v. Os- 
born, 35 Conn. 7; Zabrieskie v. Cleveland, etc. Co., 23 How. (U. S.) 
381; Vail v. Hamilton, 85 N. Y. 453; Rochester Sav. Bank v. Averell, 
96 N. Y. 467; Railroad Co. v. Howard, 7 Wall. (U. S.) 392; State 
Board v. Citizens' R. Co., 47 Ind. 407; Low v. Cent. Pac. R. Co., 53 
Cal. 53; Stewart v. Erie Transp. Co., 17 Minn. 372; Whittenton Mills 
v. Upton, 10 Gray (Mass.), 582; Richardson v. Sibley, 11 Allen (Mass.), 
65; Ashbury R. R. Co. v. Riche, 7 H. L. 653; Stevens v. Rutland, etc. 
Co., 29 Vt. 545; Danbury, etc. R. Co. v. Wilson, 32 Qonn. 435; Cole- 
man v. Eastern Counties Ry. Co., 10 Beav. 1 ; Bagshaw v. Eastern 
Counties Ry. Co., 7 Hare, 114; McGregor v. Deal & D. R Co., 18 Q. B. 
618; Eastern Counties Ry. Co. v. Hawkes, 5 H. L. 331; Smead v. 
Ind. P. & C. Ry. Co., 11 Ind. 104; Marietta & Cin. R. Co. v. Elliott, 
10 Ohio St. 57; Atkinson v. Marietta, etc. R. Co., 15 Ohio. St. 21; 
Straus v. Eagle Ins. Co,, 5 Ohio St. 59; Peoria & R. I. R. Co. v. Coal 
Valley Co., 68 111. 489; Railroad Co. v. Vance, 96 IT. S. 450; Pennsyl- 
vania Co. v. St. Louis Co., 118 U. S. 390; Oregon Ry. Co. v. Oregonian 



§ 9.] CONSTRUCTION OF CHARTERS. 15 

that what is fairly implied is as much granted as what is 
expressed, it remains that the charter of a corporation is 
the measure of its powers, and that the enumeration of 
these powers implies the exclusion of all others." The 
proposition laid down by the learned justice in that case 
is sustained by the great weight of authority, both in this 
country and in England. The foregoing rule as to the 
construction of corporate powers was also forcibly ex- 
pressed and upheld by Mr. Justice McCay in Central 
Railroad Co. v. Collins, 40 Ga. 582, in the following 
language : " Corporations are too apt to forget this funda- 
mental law of their being. In the daily habit of transact- 
ing business in the name of the company as though it 
were an individual, they are apt to slide into the notion 
that a corporation is an individual in all respects, so far 
as business matters are concerned. 

. " But a corporation is a mere creature of the law, and 
only exists at all for the pwposes declared in its charter, 
and has absolutely no powers hut those which the law con- 
fers upon it. It is a creature of the law, and in the very 
nature of things is just what the law makes it, no more, 
no less ; and by the word 'law ' here, I do not mean the 

Ry. Co., 130 IX. S. 1; Same v. Same, 145 U. S. 54; Hew York, etc. E. 
Co. v. Winans, 17 How. (U. S.) 30; Branch v. Jessup, 106 U. S. 468; 
Salt Lake City v. Hollister, 118 U. S. 256; Willamette Co. v. Bank 
of British Columbia, 119 U. S. 191; Pittsburg, etc. R. Co. v. Keokuk, 
etc. Co., 131 U. S. 371; Charles River Bridge v. Warren Bridge, 11 
Pet. (U. S.) 420; Dubuque, etc. R. Co. v. Litchfield, 23 How. (U. S.) 
66, 88, 89; Slidell v. Grandjean, 111 U. S. 412; Pickard v. Pullman 
Sou. Car Co., 117 U. S. 34; Railroad Co. v. Lockwood, 17 Wall. 357; 
Liverpool, etc. Co. v. Insurance Co., 129 U. S. 397; Central Transp. 
Co. v. Pullman Car Co., 139 U. S. 24; Fort Worth City Co. v. Smith 
Bridge Co., 151 U. S. 294; Green Bay, etc. Co. v. Union Steamboat 
Co., 107 U. S. 98, 100; Central Ry. Co. v. Collins, 40 Ga. 582; Lucas 
v. White Line Transp. Co., 70 Iowa, 541; Westinghouse Mach. Co. v. 
Wilkinson, 79 Ala. 312. 



16 CREATION AND CONSTRUCTION. [§ 10. 

general law which regulates the powers of persons, but 
the act of incorporation, the charter, the constitution." 

§ 10. Rule peculiarly applicable to corporations or- 
ganized under general laws. — ihe rule of construction 
under consideration is peculiarly applicable to articles of 
association framed under general laws, which are a sub- 
stitute for a legislative charter, and which assume and 
define the powers of the corporation, without any- super- 
vision of the legislature or of any public authority. 1 It 
has been truly said that " the frequency of cases requiring 
the construction of charters excites some surprise, when 
it is considered that an act of incorporation is, and al- 
ways must be, interpreted by a rule so simple that no 
man, whether layman or lawyer, can misunderstand or 
misapply it. That which a corporation is authorized to 
do by its charter or act of incorporation it may do ; be- 
yond that, all its acts are ultra vires and illegal, and the 
power must be given in plain words or by necessary im- 
plication. All powers not given in this direct and un- 
mistakable manner are withheld." 2 " If you assert that 
a corporation had certain privileges, show us the ( words 
of the legislature conferring them. Failing in this, you 
must give up your claims. A doubtful charter does not 
exist ; because whatever is doubtful is decisively against 
the corporation." 3 

1 Oregon By. v. Oregonian Ey., 130 U. S. 26, 27; Central Trans. Co. 
v. Pullman Co., 139 U. S. 24; Commonwealth v. The Erie, etc. Ey. 
Co., 27 Pa. St. 839. 

s Mr. Justice Miller, in Oregon Ey. v. Oregonian, etc. Ey. Co., ISO 
U. S. 26. 

3 Commonwealth v. The Erie & N. E. Ey. Co., 27 Pa. St. 351. In 
the discussion of this question the court, in Morris & Essex E. E. Co. 
v. Sussex Ey. Co., 20 N. J. Eq. 542, says: "The act under which 
a corporation is framed gives an imperative rule of construction con- 



§•11.] CONSTRUCTION OF CHARTERS. 17 

§ 11. Questions of ultra vires decided ~by law of organ- 
ization. — " It must then be carefully borne in mind," says 
Mr. Brice, " that questions of ultra vires relating to the 
express powers of corporations will have to be decided 

cerning corporate powers. And where it is provided in such act 
that no corporation shall possess or exercise any corporate powers 
except those expressly given in the charter, and such as shall be 
necessary to the exercise of the powers so enumerated, its powers 
must be controlled by that act. It is quite apparent from the lan- 
guage of the statutes of the various states on the subject of corpo- 
rate powers and privileges that the legislatures intended to interdict, 
as a matter of public policy, the exercise of any powers except such 
as are referred to in those acts. Whether without those enactments 
the common law would fully reach up to that measure upon any 
implication that powers not so granted or implied are prohibited, it 
is here unnecessary to consider. The common-law powers of cor- 
porations as ably discussed by commentators of the last century are 
not germane to modern corporations, and the attempt made by some 
modern writers to apply the common-law principles to statutory 
creations tends only to mislead, and can serve no purpose save to 
lend apparent dignity and weight to an alleged theory which has no 
foundation in fact. To determine the powers of a corporation under 
the act of its creation, it is sufficient that the terms of the enact- 
ment are plain and its meaning cannot be misunderstood; and when 
a corporation exercises powers outside of those permitted by that 
act, it is an exercise of power not only authorized, but is against an 
express enactment." 

So Mr. Justice Miller, in Oregon Ry. v. Oregonian Ry., 130 U. S. 1, 
says: 

"The construction of corporate powers should undoubtedly be 
reasonable, and so as to accomplish and not defeat the purpose and 
true intent of the charter in its full spirit and scope; and all con- 
tracts bearing upon the purposes for which it was organized that 
the exigencies of the business contemplated and authorized would 
reasonably require would be within the scope of the company's 
powers. There are many reasons not now useful to mention why, 
in justice to the state, the public, and the stockholders, and the very 
stability of the corporate body, the legislature should be jealous of 
its grants of franchises, and seek to confine them within definite 
limits, and to disallow any corporate act outside of them. The leg- 



18 CKEATION AND CONSTETJCTION. [§ 11. 

upon a consideration of the exact language used in the 
law of its organization, while such as concern their im- 
plied powers will be determined by the ratio decidendi to 
be gathered from an examination of numerous conflicting 
decisions. "What is the business which may be under- 
taken by a corporation will be determined in each par- 

islature has a policy in this matter, and contracts in contravention 
of it must be held to be illegal and of no binding obligation. . . . 
It is to be remembered that when a statute making a grant of prop- 
erty, or of powers or of franchises, to private individuals, or a pri- 
vate corporation, becomes the subject of construction as regards the 
extent of the grant, the universal rule is that, in doubtful points, 
the construction shall be against the grantees and in favor of the 
government or the general public. Nothing passes by implication. 
Therefore if the articles of association of a corporation, instead of 
being a mere adoption by the corporators themselves of the declara- 
tion of their own purposes and powers, had been an act of the legis- 
lature conferring such powers on the corporation, they would be 
subject to the rule above stated, and to rigid construction in regard 
to the powers granted. How much more, then, should the rule be 
applied, and with how much more reason should a court, called upon 
to determine the powers granted by these articles of association,, 
construe them rigidly, with the stronger leaning in doubtful cases 
in favor of the public and against the private corporation. 

"We have to consider, when such articles become the subject of 
construction, that they are in a sense ex parte; their formation and 
extension— what shall be put into them as well as what shall be left 
out — do not take place under the supervision of any official author- 
ity whatever. They are the production of private citizens, gotten 
up in the interest of the parties who propose to become corporators, 
and stimulated by their zeal for the personal advantage of the par- 
ties concerned rather than the general good. These articles, when 
signed by the corporators, acknowledged before any justice of the 
peace or notary public, and filed in the office of the secretary of 
state and the clerk of the proper county, become complete and oper- 
ative. They are, so far as framed in accordance with law, a substi- 
tute for legislation, put in the place of the will of the people of the 
state, formerly expressed by acts of the legislature. Neither the 
officer who takes such acknowledgment, nor those who file the arti- 
cles, have any power of criticism or rejection. The duty of the first 



§ 11.] CONSTRUCTION OF CHARTERS. 19 

ticular instance by a reference to, and an examination of, 
the powers actually given to a corporation, read in con- 
nection with the business or other purposes for which it 
has been instituted. That it may carry on such primary 
business is plain — the difficulty arises in determining what 

is to certify to the fact, and of the second to simply mark them filed 
as public documents, in their respective offices. 

"These articles, many of which have been heretofore considered 
of a public character, sometimes affecting the rights of the public 
very largely and very seriously, do not commend themselves to the 
judicial mind as a class of instruments requiring or justifying 
any very liberal construction. "Where the question is whether they 
conform to the authority given by statute in regard to corporate 
organizations, it is always to be determined upon just construction 
of the powers granted them, with a due regard for all the other laws 
of the state upon that subject, and the rule stated above. 

" Another important consideration to be observed, peculiarly ap. 
plicable to the acts of corporations formed by the corporators them- 
selves, declaring what business they are about to pursue, and the 
powers which they purpose to exercise in carrying it on, is, that 
while the thing to be done may be lawful in a general way, there 
are and must be limitations upon the means by which it is to be 
done or the purpose carried out, which the articles of incorporation 
cannot remove or violate. A company might be authorized by its 
articles to establish a large manufactory in a particular locality, and 
might be held to be a valid corporation with sufficient powers to 
prosecute the business described; but such articles, although men- 
tioning the particular place, would not empower the company, in 
the exercise of the powers thus conferred, to carry on a business in- 
jurious to the health or comfort of those living in that vicinity. 

" Instances might be multiplied in which powers described in gen- 
eral terms as belonging to the objects of the parties who thus became 
incorporated would be valid; but the corporation carrying out this 
general purpose would not be authorized to exercise the powers nec- 
essary for so doing in any mode which the law of the state would 
not justify in any private person or any unincorporated body. The 
manner in which these powers shall be exercised, and their subjec- 
tion to the restraint of the general laws of the state and its general 
principles of public policy, are not in any sense enlarged by inserting 
in the articles of association the authority to depart therefrom." 



20 CREATION AND CONSTRUCTION. [§ 12. 

other secondary matter, incidental to such primary busi- 
ness and necessary for the commodious and prolific car- 
rying on and development of the same, are within the 
scope of its powers." x 

§ 12. Province of courts in construing corporate pow- 
ers. — Powers manifestly doubtful should never be recog- 
nized by judicial construction. If not given by plain 
words or by necessary implication, it should be declared 
not to exist. 2 Nor is it the province of the court to enlarge 
the powers of a corporation beyond the limitations of the 
charter because circumstances have changed. The court's 
province is to expound the law as it stands, not to deter- 
mine whether larger powers would not have been given 
if the legislature had anticipated events which have since 
happened. 3 It is not sufficient that the officers or a ma- 
jority of the stockholders of a private corporation believe 
its interests may be advanced by the exercise of additional 
powers. 4 "What the state has not given to it can only be 
obtained by virtue of legislative enactment. 5 The exer- 
cise of corporate franchises, being restrictive of individual 
rights, cannot be extended beyond the letter and spirit of 
the act of incorporation. 6 And the specific grant of cer- 

1 Green's Brice's Ultra Vires, ch. Ill, p. 64. 

2 Bank of Pennsylvania v. Comm, 19 Pa, St. 144; Pennsylvania E. 
Co. v. Canal Comm'rs, 21 Pa. St. 9; Comm. v. Franklin Canal Co., 31 
Pa. St. 117; Comm. v. Erie Ry. Co., 27 Pa. St. 339; Spohn v. Farmers' 
Bank, 13 Norris (Pa.), 432. 

3 Perrine v. Ches. & Del. Canal Co., 9 How. (IT. S.) 173. 

4 State v. Standard Oil Co., 49 Ohio St. 137; Beaty v. Knowler, 4 
Pet. (U. S.) 152, 168. 

sstowe v. Flagg, 72 I1L 397; Hadley v. Commissioners, 105 Mass. 
526; Franklin Bridge Co. v. Wood, 14 Ga. 80. 

6 Oregon Ry. v. Oregonian Ry., 130 U. S. 1; Central Trans. Co. v. 
Pullman Palace Car Co., 138 U. S. 54; Beaty v. Knowler, 4 Pet. (U. S.) 
152. 



.§ 13.] CONSTKIJCTICOT OF CHAETBES.. 21 

tain powers in a charter is an implied prohibition of 
other and distinct powers. 1 

§ 13. Powers construed as incidental to those expressly 
given. — The powers of a corporation are, strictly speak- 
ing, twofold : those that are derived from express grant, 
and those that are incident and necessarily appertain to 
it, whether expressed in the grant or not. 2 An incidental 
power is one that is directly and incidentally appropriate 
to the execution of the specific grant, and not one that 
has a slight or remote relation to it. s For example, the 
power to make by-laws, to make and use a common seal, 
and the right to sue, are incident to every corporation. 4 
In modern times it has been usual to embrace all these 
incidental powers in the act of incorporation, so that it 
may now be considered the general rule that the powers 
of a corporation are regulated and defined by the act 
which gives it existence. It has been a matter of much 
doubt and misapprehension as to whether the power to 
borrow money, to make bills and notes and other similar 
contracts are powers incident to a corporation. These 
and other powers, usually deemed incidental powers of 
corporations, will be hereafter considered. Whatever 
may be the incidental or implied powers of aggregate 
corporations by the common law, and the modes by which 
those powers are to be carried into operation, corpora- 
tions created by statute must depend both for their pow- 
ers and the mode of exercising them upon the true con- 
struction of the statute itself. 5 

1 People v. Utica Ins. Co., 15 Johns. 358; New York Ins. Co. v. Ely, 
2 Cow. (N. Y.) 678. 

2 See cases cited to § 9. 

a Hood v. N. Y. Ry. Co., 22 Conn. 1; Buffet v. Troy, etc. R. Co., 40 
N. Y. 168; Curtis v. Leavitt, 15 N. Y. 9. 
<Leggett v. The N. J. Mfg. Co., 1 N. J. Eq. 541. 
5 Bank of United States v. Dandridge, 12 Wheat. (U. S.) 64 



22 CREATION AND CONSTRUCTION. [§§ 14, 15. 

§ 14. Discretion of corporation in exercise of powers. — 
Where a power is conferred by charter and the mode of 
exercising prescribed, the provisions are said to be de- 
pendent; but where a grant of power is clearly defined 
and no mode prescribed for its exercise, it is for the cor- 
poration to adopt such mode as in its judgment will secure 
the purpose contemplated. 1 On questions as to dealing 
in a corporate capacity with third persons, companies 
must be limited by their respective charters ; but on those 

relating to the mere manner of getting into operation 

of becoming prepared to act — a liberal construction is to 
be adopted. 2 But when an act of incorporation prescribes 
the mode in which a power given by the charter shall be 
executed, the corporation can execute it in no other mode. 3 
A corporation, however, has a reasonable discretion in 
the selection of any of the means usual or proper at the 
time or place, or in the view of the circumstances, to ac- 
complish the object of its incorporation. 4 Although a 
corporation may not transact business other than that for 
which it was chartered, yet it should be made clearly to 
appear that an act or contract was not within its powers 
before a court will so decide it. 5 

'§ 15. Miscellaneous incidental powers.— A corporation 
cannot be a trustee for purposes foreign to its institution. 6 
Nor can it exercise the power of creating perpetuities, 
unless that right be expressly granted. 7 A corporation 

'Holland v. San Francisco, 7 Cal. 361; Southern Life Ins. Co. v. 
Lanier, 5 Fla. 110. 

2 Judah v. American Live Stock Ins. Co., 4 Ind. 333 

* Farmers' L. & T. Co. v. Carroll, 5 Barb. (N. Y) 613 

4 Clark v. Farrington, 11 Wis. 306. 

s Dana v. Bank of St. Paul, 4 Minn. 385 
^Trustees v. Peaslee, 15 N. H. 317; Jackson v. Hartwell, 8 Johns. 

'Cotter v. Doty, 5 Ohio, 393. 



§ 15.] CONSTRUCTION OF CHARTERS. 23 

may not, by resolution or otherwise, donate its property 
to a new corporation, 1 nor grant away its rights and 
franchises which are necessary to the existence and 
maintenance of the object for which it was created. 2 But 
corporations authorized by charter to contract in a pre- 
scribed mode may, nevertheless, by practice render them- 
selves liable on instruments in a different mode. 3 

1 Polar Star Lodge v. Polar Star Lodge, 16 La. Ann. 53. 

2 Canal Co. v. Borham, 9 Watts & S. (Penn.) 27. And see cases 
cited in note to § 137, post. 

s Wittee v. Derby Fishing Co., 2 Conn. 260. 



OHAPTEE II. 

THE DOCTRINE OF ULTRA VIRES. 
THE DOCTRINE GENERALLY. 

§ 16. Introductory. 

17. Ultra vires — Senses in which used. 

18. Principles of doctrine plain. 

19. Two propositions of doctrine settled. 

20. Chronological review of doctrine. 

21. Head v. Providence Ins. Co. 

22. People v. Utica Ins. Co. 

23. New York Firemen Ins. Co. v. Sturges. 

24. Bank of United States v. Dandridge. 

25. Beach v. Fulton Bank. 

26. Bank of Augusta v. Earle. 

27. Barry v. Merchants' Exchange. 

28. Perrine v. Chesapeake, etc. Canal Co. 

29. Hood v. New York, etc. R. Co. 

30. Pearce v. Madison, etc. R. Co. 

31. Bissell v. Michigan, etc. R. Co. 

32. Monument National Bank v. Globe Works. 

33. Miners' Ditch Co. v. Zellerbach. 

34. Franklin Co. v. Lewiston Institution. 

35. Thomas v. Railroad Co. 

36. Davis v. Old Colony R. Co. 

37. Central Transp. Co. v. Pullman Co. 

38. Lucas v. The White Line Transp. Co. 

39. The doctrine as construed by English courts — Colmaa 

v. Eastern Counties Ry. Co. 

40. East Anglian Co. v. Eastern Counties Ry. Co. 

41. Ashbury Co. v. Riche. 

42. Attorney-General v. The Great Eastern Ry. Co. 

43. Small et al. v. Smith et al. 

44. Baroness Wenlock v. The River Dee. 

45. Trevor v. Whitworth et al. 



§ 16.] THE DOCTKINE GENERALLY. 25 

§ 16. Introductory. — It has been, amply demonstrated 
that in financial and commercial circles as in the animal 
kingdom, the law of natural selection dominates the 
world — the weak succumb to the strong — the fight is 
to the most powerful. That aggressive element to be 
found in human nature, which sometimes prompts man- 
kind to shape his end regardless of the rights of his fellow- 
men, has caused the enactment of wholesome laws to re- 
strain this innate tendency of the desire of gain .within 
the bounds of reason and justice, and to protect those 
who by nature and circumstance are unable to success- 
fully defend their just and legal rights against the wanton 
assaults of an abnormal greed, or the unavoidable conse- 
quences of a superior natural sagacity. For the purpose, 
then, of securing to all men equal rights before the law, 
impartial tribunals have been established, endowed with 
authority to determine the rights, and power to redress, 
the wrongs, of every citizen, and to uphold the dignity of 
and command respect for the legislative departments of 
government. This inordinate greed, fed, fattened and 
intensified by growing success, finds a fitting embodiment 
and is strikingly magnified in the management and work' 
ings of our modern corporations. These public-spirited 
associations, though often alleged to be soulless, have 
proved themselves not to be altogether sightless, for they 
have readily seen and promptly taken advantage of every 
opportunity which a combination of capital, skill and in- 
dustry has afforded, to strengthen their advantageous 
positions and to increase their doubtful possessions. This 
unbridled pruriency for illegitimate commercial procrea- 
tion, stimulated by successful efforts in the aggregation 
of wealth and power at the expense of the public weal, 
has led corporations to overstep the boundaries designated 
in their charters within which they are to confine their 



26 THE DOCTRINE GENERALLY. [§ 17. 

acts and undertakings, and to enter upon the private pre- 
serves reserved for individual industry. To this tendency 
■ ^of corporations to attempt the exercise of unauthorized 
powers, and to usurp privileges which have not been 
granted them, must be attributed the evolution by the 
courts of the wholesome doctrine of ultra vires. 

§17. Ultra vires — Senses in which term is used. — Few 
subjects have elicited more discussion or excited more 
general interest in the profession than that disturbing 
element in the law of corporations known as the " Doc- 
trine of Ultra Vires." The term "ultra vires" is the 
'modern legal nomenclature for acts of a corporation which 
exceed or are beyond the powers conferred by law upon 
the legal entity, acting through any of its instrumentali- 
ties. 1 The expression " ultra vires " has been used in dif- 
ferent senses, to express either that the act of the directors 
or officers is in excess of their authority as agents of the 
corporation, or that the act of the majority of the stock- 
holders is in violation of the rights of the minority, or 
that the act has not been done in conformity with the re- 
quirements of the charter, or the act is one which the 
corporation itself has not the capacity to do, as being in 
excess of the corporate powers. This subject has been 
discussed both by the courts of this country and England 
in an able and exhaustive manner. For a time there was 
an element of uncertainty appearing in the views ex- 
pressed by the courts, as to whether or not the doctrine 
should be applied only to the acts of a corporation, as 
such, or whether it should not also be applied to acts of 
the directors or officers which were in excess of the au- 
thority given them in the management of the internal 
affairs of the company. In the former sense only is the 

l Pomeroy's Spec. Perf., § 56. 



§ 17.] THE DOCTRINE GENERALLY. 27 

doctrine legitimately applicable. This rather ambiguous 
conception of the doctrine led the courts into many ave- 
nues of technical reasoning, and precipitated: discussions 
•of the principles of the law governing the relations of 
principal and agent, of trustee and cestui que trust, and 
principles governing other questions of like nature, which 
do not properly belong to the doctrine in its application 
to chartered corporations. As was said by a learned 
judge in the case of Camden, etc. R. Co. v. May's Land- 
ing, etc. Co., 48 N. J. L. 530: "The indiscriminate 
use of this expression with respect to cases different 
in their nature and principles has led to considerable 
•confusion, if not misapprehension. Where an act done 
by directors or officers is simply beyond the powers 
•of the executive department of the corporation — the 
agency by which the corporation exercises its functions — 
and not of the corporation itself, it may be made valid 
and binding by the action of the board of directors, or 
by the approval of the stockholders. Where the act done 
by the directors is not in excess of the powers of the cor- 
poration itself, but is simply an infringement upon the 
rights of the stockholders, it may be made binding upon 
the latter by ratification, or by consent implied by acqui- 
escence. Where the infirmity of the act does not consist 
in a want of corporate power to do it, but in the disre- 
gard of formalities prescribed, it may or may not be valid 
as to third persons dealing bona fide with the corporation, 
according to the nature of the formality not observed, or 
the consequences the legislature has imposed upon non- 
observance. These are all cases depending upon legal 
principles not peculiarly applicable to corporations, and 
the use of the phrase ' ultra vires' tends to confusion and 
misapprehension. In its legitimate use the expression 



28 THE DOCTKINE GENERALLY. [§§ 18, 19*. 

1 ultra vires' 1 should be applied only to such acts as are be- 
yond the powers of the corporation itself." 1 

§18. Principles of the doctrine plain. — The principles 
upon which the doctrine of ultra vires is predicated are 
apparently simple and elementary, being plain even to a 
wayfarer; yet, in construing corporate powers and duties 
under charters and statutory enactments, much doubt 
and no little confusion has certainly arisen. This uncer- 
tainty and confusion, however, has not arisen, it is re- 
spectfully submitted, by reason of any misapprehension 
of the correct construction which should be placed upon 
this doctrine, but rather from a growing tendency of the 
courts of this country — a spreading of the granger ele-1 
ment in our state courts — to disregard purely legal' 
rights and the rules of law controlling them, unwisely 
tempering their questionable judgments with even more 
questionable and unstrained mercy, and basing their find- 
ings upon the equitable rights of the parties, whatever 
may be the cause of action, as they appear to the partic- 
ular court having jurisdiction of the subject-matter; the 
application of the doctrine being dependent, in a great 
measure, upon the temperament and discretion of the 
judge before whom the defense of ultra vires is urged. 
While this manner of adjusting legal complications may 
be commendable in a certain sense, it cannot be regarded 
as judicial wisdom by those who desire the fountains of 
legal jurisprudence maintained in all their pristine purity 
and vigor, undefiled by the wanton influence of class 
prejudice, or the natural flow thereof diverged by the 
misguided inspiration of political zeal. 

§ 19. Two propositions as to the doctrine settled. — It 
has been well said by a learned justice that " the doc- 
1 Depue, J., dissenting. 



§ 19.] THE DOCTRINE GENERALLY. 29 

f 

trine of ultra vires has been thoroughly sifted within the 
last thirty years — its extent and limitations clearly de- 
fined. Two propositions are settled. One is that a con- 
tract by which a corporation disables itself from perform- 
ing its functions and duties undertaken and imposed by 
its charter is, unless the state which created it consents, 
ultra vires. A charter not only grants rights ; it also im- 
poses duties. An acceptance of those rights is an as- 
sumption of those duties. As it is a contract which binds 
the state not to interfere with those rights, so, likewise, 
it is one which binds the corporation not to abandon the 
discharge of those duties. It is not like a deed or patent, 
which vests in the grantee or patentee not only title but 
full power of alienation, but it is more — it is a contract 
whose obligations neither party, state nor corporation, 
can, without the consent of the other, abandon. The 
other is that the powers of a corporation are such, and 
such only, as the charter confers ; and an act beyond the 
measure of those powers, as either expressly stated or 
fairly implied, is ultra vires. A corporation has no nat- 
ural or inherent rights or capacities. Created by the 
state, it has such powers as the state has seen fit to give 
it — only this and nothing more. And so when it as- 
sumes to do that which it has not been empowered by 
the state to do, its assumption of powers is void, the act 
is a nullity ; the contract is ultra vires. These two prop- 
ositions embrace the whole doctrine of ultra vires. They 
are its alpha and omega." 1 Were the two foregoing 
propositions steadily kept in view by the courts in apply- 
ing this doctrine, the diversity of judicial opinion on this 
subject would be much less. 

1 Brewer, J., in Chicago, R. L & P. R. Co. v. Union Pac. Ry. Co., 47 
Fed. Rep. 15. 



30 THE DOCTRINE GENERALLY. [§§ 20, 21. 

§20. Chronological review of the doctrine. — Before 
proceeding in detail to apply the doctrine of ultra vires 
to the different phases of corporate contracts and liabil- 
ities, and that the scope and effect of the same may the 
better be understood, it is deemed advisable to first give 
a brief chronological review of its advent and progress 
in the adjudications of the courts of this country and 
England. To this end the more leading cases where the 
doctrine has been discussed and applied will be consid- 
ered. 

§ 21. Head v. Providence Ins. Co., 2 Oranch, 127 
(1804). — The principles which support the defense of 
ultra vires to unauthorized acts of corporations were first 
enunciated in this country by the supreme court of the 
United States in 1804, when, in the case of Head v. 
^Providence Ins. Co., Chief Justice Marshall, in discussing 
the source of corporate powers, expressed the views still 
held by that court. In that case an action was brought 
on two policies of insurance placed on merchandise on 
board Spanish brigs afterwards lost and destroyed. The 
learned justice there said; "Without ascribing to this 
body, which, in its corporate capacity, is the mere crea- 
ture of the act to which it owes its corporate existence, 
all the qualities and disabilities annexed by the common 
law to the ancient institutions of this sort, it may cor- 
rectly be said to be precisely, what the incorporating act 
has made it, to derive all its powers from that act and 
be capable of exercising its faculties only in the manner 
which that act authorizes. With these bodies which have 
only a legal existence, the act of incorporation is an en- 
abling act. It gives them all the powers they possess. 
It enables them to contract ; and when it prescribes to 
them a mode of contracting, they must observe that 



§§ 22, 23.] THE D0CTBINE GENERALLY. 31 

mode, or the instrument no more creates a contract than 
if the body had never been incorporated." Upon the 
principles enunciated in this case rested the decisions of 
the Dartmouth College Case, 4 "Wheat. 518; Ooszler v. 
Corporation of Georgetown, 6 Wheat. 593; Fleckner v. 
Bank of United States, 8 Wheat. 338, and many others 
at a later day. 

§ 22. People v. Utica Ins. Co., 15 John. 357 {1818).— 
That was a suit on information in the nature of quo war- 
ranto filed by the attorney-general against the defendant 
for exercising banking privileges without authority from 
the legislature, and judgment of ouster was rendered 
against the company. The court there said : " It was, 
however, contended on the argument that the right of 
carrying on banking operations was necessarily incident 
to the corporation, because not expressly prohibited, if 
they had surplus funds which they could spare for that 
purpose. But I cannot assent to this rule of construing 
a charter of incorporation for a specific object. Such an 
incorporated company have no rights except such as are 
specially granted and those that are necessary to carry 
into effect the purposes for which it was established. 
The specification of certain powers operates as a restraint 
to such objects only, and is an implied prohibition of the 
exercise of other and distinct powers. A contrary doc- 
trine would be productive of mischievous consequences, 
especially with us, where charter privileges have been so 
alarmingly multiplied." 

§ 23. New York Firemen ,1ns. Co. v. Siurges, 2 Cow. 
664 {18%li). — This was assumpsit against second indorsers 
on a promissory note, defendant company being one of 
the indorsers. In affirming the principle that corpora- 



32 THE DOCTRINE GENERALLY. [§§ 24-26. 

tions have no powers except such as are specially granted 
and those necessary to effect the powers so granted, 
it was held that a corporation having no power by the 
act of incorporation to discount notes, but created for 
the purpose of insurance, has no right to carry on the 
business of discounting. 

§ 24. Bank of United States v. Dandridge, 12 Wheat. 
64. {1827). — This was an action by the president, directors 
and company of the Bank of the United States upon a 
bond given to the bank to secure the faithful perform- 
ance of the official duties of one of its cashiers. It was 
held that where a cashier is duly appointed, and permit- 
ted to act in his office for a long time, under the sanction 
of the directors, it is not necessary that his official bond 
should be accepted by the board of directors as satisfac- 
tory, according to the terms of the charter, in order to 
enable him to enter legally upon the duties of his office, 
or to make his sureties responsible for the non-perform- 
ance of those duties. 

§ 25. Beach v. Fulton Bank, 3 Wend. 57k {1829).— In 
this case it was held that a contract for the loan of money 
made with an incorporated company, as well as the se- 
curity taken on such loan, is void, if the power to loan 
money is not expressly given, or necessarily incident to 
the powers granted to such company by its charter. 

§ 26. Bank of Augusta v. Earle, 13 Pet. 519 {1839).— 
This was an action in the circuit court of the United 
States for the district of Alabama by the Bank of Au- 
gusta against the defendant, a citizen of Alabama, on a 
bill of exchange drawn at Mobile, Alabama, on New York, 
which had been protested for non-payment and returned 
to Mobile; the bill was made and indorsed for the pur- 



§ 27.] THE D00TBINE GENERALLY. 83 

pose of being discounted by the agent of the bank, who 
had funds in his hands belonging to the plaintiff for the 
purpose of purchasing bills of exchange ; the bill was dis- 
counted by the agent of the bank in Mobile for the bene- 
fit of the bank, with their funds. The question was as 
to the power of the bank to discount bills of exchange, 
and discussed the distinction between discounting and 
purchasing, and is a leading case on that subject. 

§ 27. Barry v. Merchants' Exchange, 1 Samdf. Oh. 280 
(1844)- — The Merchants' Exchange was a corporation 
created with the power to purchase, hold and convey 
real estate, and to erect and build such an edifice or build- 
ing as it might deem necessary or proper for the pur- 
poses of a public exchange in the city of New York. 
The question in this case was as to whether the corpora- 
tion had power to borrow money in order to erect such 
a building, and to secure the repayment of the same by 
issuing bonds and by mortgaging its real estate. It was 
held that it had, the assistant vice-chancellor, who deliv- 
ered the opinion of the court, saying : " "While I have the 
honor of holding a seat in this tribunal I trust that no 
case of hardship, no argument founded upon broken faith, 
will influence me to treat any corporation (or persons 
participating with it) which has usurped powers not del- 
egated to it or infringed any of its privileges with an in- 
dulgence inconsistent with the express injunctions of the 
law. 

" Corporate privileges are generally obtained with a 
view to private interests, and they are ostensibly con- 
ferred to prosecute some single enterprise or to pursue 
some one separate or distinct branch of business. The 
innate tendency of the desire of gain, acting in these in- 

3 



34 THE D0CTBINE GENERALLY. [§§ 28, 29. 

stitutions upon a restricted franchise, is to enlarge the 
authority granted, and this leads to usurpation. 

"The legislature of the several states has inundated 
the country with an infinity of corporations, created for 
almost every business and purpose known to a highly 
civilized and eminently commercial people, and I am 
fully satisfied that the interests of the public, as well as 
their own, will best be promoted by holding them to a 
strict accountability." 

§ 28. Perrine v. Chesapeake & Delaware Canal Co., 9 
How. 172 {1850). — In this case it was held that where the 
charter of a corporation having provided for the payment 
of a certain toll by vessels not having merchandise on 
board, such vessel could not be excluded from the canal 
because they carried passengers; and not having been 
empowered by its charter to demand tolls on passengers, 
or on vessels by reason of their passengers, cannot exact 
such tolls. It is there said by Chief Justice Taney, who 
delivered the opinion of the court: "Now it is the well-' 
settled doctrine of this court that a corporation created 
by statute is a mere creature of the law, and can exercise 
no powers except those which the law confers upon it or 
which are incident to its existence. Head v. *Providence 
Ins. Co., 2 Granch, 127; Dartmouth College v. Woodward, 
4 "Wheat. 636; Bank of United States v. Dandridge, 12 
Wheat. 64; Charles Itvoer Bridge v. Warren Bridge, 11 
Pet. 544; Bank of Augusta v.Earle, 13 Pet. 587." 

§ 29. Hood v. The New Yorlc & K H. R. Co., 88 Com. 
508 (1853). — In this case the powers of corporations are 
very clearly and accurately defined. It was a case where 
the agent of the railroad company, a corporation running 
their cars from New Haven to Plainville, sold the plaint- 
iff a ticket for the fair at Collinsville, which was four 



§ 29.] THE DOCTBINE GENERALLY. 35 

miles beyond Plainville, from which last-named place 
passengers were being conveyed to Oollinsville by means 
of sleighs or carriages upon runners, which stage line 
was owned by another company. Plaintiff was thrown 
out of the sleigh, and sustained severe injuries, and 
brought his action upon a special contract to carry him 
safely by railroad and stage from New Haven to Oollins- 
ville. The defendant pleaded want of power to make 
any such contract, and denied ever having made such con- 
tract. It was held that defendant was not estopped to 
claim that under their charter they had no power to 
enter into the alleged contract, and that it was not ob- 
ligatory upon them. Mr. Justice Ellsworth, who deliv- 
ered the opinion of the court, inter alia, said: "It is 
found that the defendants had no power to enter into the 
undertaking in question, and therefore, as a ground of 
claim, it must be agreed the undertaking merely is of no< 
avail, for the reason that the directors, having no au- 
thority, did not in legal estimation make the contract for 
the company. The question is, are the defendants es- 
topped setting up this in their defense ? The statement 
of the case carries with it, on its very face, conviction to 
the mind that it cannot be so. The defendants estopped 
from denying that they have done what they never could 
have done ! It is a question of power under the charter;, 
and however individuals may be liable and estopped, who 
untruly hold themselves out as clothed with power, the 
defendants cannot be estopped on any such principle of 
law known to the court. The notion of an estoppel in 
pais, to which class, if any, this estoppel belongs, pro- 
ceeds on the idea of acquiescence or consent; a contract 
expressly or impliedly given by the party claimed to be 
estopped. Of course there must be legal possibility or / 
there can be no real or supposed acquiescence and consent. 



36 THE DOCTRINE GENERALLY. [§ 29. 

and where consent may be given silence may be sufficient 
proof that it is given. ... If a corporation has 
the power to do a thing, and is in the habit of doing it 
in a particular way, it may bind itself to third persons, 
though it do not pursue the exact mode prescribed in the 
charter; for the mode is not exclusive but concurrent. 
... It being a question of power, silent acquiescence in 
the acts of subordinate agents does not make a stronger 
case ; for if a formal contract is not obligatory on the 
company, one proved by inferior or circumstantial evi- 
dence certainly is not. The kind of evidence is quite im- 

» material. Should the directors of a savings bank, or of 
any bank, contract with a ship-builder for a steamship to 
navigate the ocean, would this contract bind the company? 
Certainly not; because the directors have no power to 
make it, nor would they have more were they to make 
. such contracts from day to day. The legislature has ab- 
solutely marked the limit of this power, and they cannot 
exceed it under the charter ; and if the directors, even 
with all the stockholders at their side, transcend the 
limits of the charter, and make contracts foreign to their 

.business, they only act for themselves. The reason is, 
there can be no consent of the corporation. The consent 
of individual stockholders, however repeated, is not their 
consent, nor is it admissible proof to establish consent; 
so that, if it were true every stockholder had expressed 
his consent, it would make no difference in the case. If 
this is not so, there are no restrictions or limitations on 
chartered companies, and they may do anything the di- 
rectors please which is not absolutely unlawful. The 
exercise of power is held to prove itself, which is absurd. 
. . . Were the charter a public one, it is agreed that 
the company would not be bound by such acts, however 
repeated; but in truth a private charter is not essentially 



§ 30.] THE DOCTRINE GENERALLY. 37 

different from a public one in this respect ; for the plaint- 
iff must have known that the defendants were incorpo- 
rated by the legislature for the purpose of making or 
using only a railroad. The public know where the charter 
may be seen and what it contains. They hold that a 
principal that can give authority, whether a corporation, 
or a person, may, when one assumes to act for him, and 
he does not object to it, be estopped denying his agency; 
but 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. Could the company by legal possibility do 
the act, it would be otherwise. . . . We repeat that 
the directors and stockholders have no corporate powers 
or relations, and can give no consent, but what is within 
the appropriate business of the charter. Again, it is said 
that the defendants ought not to be permitted to call in 
question the acts of their agents. Why not as much as 
other principals whose agents transcend their authority 
and abuse their trust? If it is replied the directors have 
suffered this course of things for months when they could 
have arrested it at once, we ask whose agents they were? 
Certainly not of the innocent stockholders. The direct-, 
ors represent them 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 stockholders as firmly as if they were 
acting within it. If the directors have done wrong, let 
them suffer the consequences." 

§ 30. Pearce v. Madison & Indiana B. Co., ®1 Sow. Ul 
(1858).— The first case, however, in the United States 
supreme court, where the doctrine of ultra vires was di T 



38 THE DOCTEINE GENEEALLY. [§ 3.0. 

rectly considered, was in the case of Pearce v. Madison 
<& Indiana B. Co., supra, decided in 1858. It was there 
held that two corporations chartered by the state of In- 
diana to construct and manage distinct though connect- 
ing railroads had no power to consolidate themselves into 
one corporation, or to establish a steamboat line on the 
Ohio river to be run in connection with the railroad, and, 
therefore, were not liable on a promissory note sued on, 
which had been given by the officers of the consolidated 
line in payment of a steamboat. The opinion was deliv- 
ered by Mr. Justice Campbell, and in defining the powers 
of corporations he used the following forcible and explicit 
language: "The rights, duties and obligations of the 
defendants are defined in the acts of the legislature of 
Indiana, under which they were organized, and reference 
must be had to these to ascertain the validity of their 
contracts. They empower the defendants respectively to 
do all that was necessary to construct and put into opera- 
tion a railroad between the cities which are named in the 
acts of incorporation. There was no authority of law to 
consolidate these corporations and to place both under 
the same management, or to subject the capital of the 
one to answer for the liabilities of the other; and so the 
courts of Indiana have determined. But in addition to 
that act of illegality, the managers of these corporations 
established a steamboat line to run in connection with 
the railroad, and thereby diverted their capital from the 
objects contemplated by their charters and exposed it to 
perils for which they afforded no sanction. Now, per- 
sons dealing with the managers of a corporation, must take 
notice of the limitations imposed upon their authority h/ 
the act of incorporation. These powers are conceded in 
consideration of the advantage the public is to receive 
from their direct and intelligent employment, and the 



§ 31.J THE DOCTEINE GENERALLY. 39 

public have an interest that neither the managers nor 
stockholders of the corporation shall transcend their au- 
thority." 

§ 31. Bissell v. Michigan Southern & Northern In- 
diana B. Co., 22 W. T. 258 (I860).— This was an action 
against two distinct railroad companies for a breach of 
their duty safely to carry the plaintiff, a passenger upon 
a train of cars, which they, by a contract between them, 
had united in running, and by reason of the negligence of 
their agents suffering a collision with another train, by 
which plaintiff's leg was broken. In the decision of the 
case it was held, by an almost unanimous court (Denio, J., 
dissenting), that where two corporations, chartered re- 
spectively by the states of Michigan and Indiana, with 
power to each to build and operate a railroad within its 
own state, have united in the business of transporting 
passengers over a third road in the state of Illinois, be- 
yond the limits authorized by the charter of either, such 
corporations are jointly liable for injuries to a passenger 
resulting from the negligence of their employees. It was 
further held by the court that corporations, like natural 
persons, have power and capacity to do wrong; that they 
may, in their contracts and dealings, break over the re- 
straints imposed upon them by their charters ; and when 
they do so, their exemption from liability cannot be 
claimed on the mere ground that they have no attributes 
or faculties which render it impossible for them thus to 
act. 

The interest in the Bissell Case, however, and the celeb- 
rity it has attained, have not arisen from the decision 
there rendered, but from the several propositions laid 
down by the learned judges who so exhaustively exam- 
ined and discussed the various phases of the doctrine of 



40 THE DOCTRINE GENERALLY. [§'31. 

ultra vires in its application to chartered corporations. 
The propositions laid down by Mr. Chief Justice Corn- 
stock (and he was alone in his contention) were, among 
others, the following : First. Corporations have no right 
to violate their charters, but they have capacity to do so, 
and to be bound by their acts where a repudiation of 
such acts would result in manifest wrong to innocent 
parties. Second. A corporation is more than an agent 
of the stockholders. Such bodies are clothed with the 
legal title to the property or funds which represent the 
capital, in trust, however, for the shareholders, who are 
the beneficial owners ; and, like other trustees, it is possi- 
ble for them to deal with capital in a manner and for 
purposes not authorized by their charters, and to be 
bound by such dealings. Third. The plea of ultra vires, 
according to its just meaning, imports,' not that the cor- 
poration could not, and did not in fact, make the unau- 
thorized contract, but that it ought not to have made it. 
Such a defense, therefore, necessarily rests upon the 
violation of trust or duty toward the shareholders, and 
is not to be entertained where its allowance will do a 
greater wrong to innocent third parties. The acquiescence 
of the shareholders in the abuse will prevent the inter- 
position of such a plea. Fourth. Where a corporation 
has received the consideration of the unauthorized con- 
tract, and a restitution will not do complete justice, the 
remedy of the other party is not confined to a suit in dis- 
affirmance of such contract, but may be directly upon it, 
So the contract will be enforced under any circumstances 
of controlling equity. 

The propositions contended for by Mr. Justice Seldea 
in the above case, in which Gierke, J., concurred, were 
set forth as follows : First. The powers and privileges of 
corporations are conferred, not for the private conven- 



§ 32.] THE D00TKINE GENERALLY. 41 

ience of the corporators, bat for public purposes and to 
promote the public interest. They are granted at the 
expense of the public, since they create advantages which 
persons unincorporated do not possess. The public bene- 
fit is treated as a compensation for the grant ; and it 
would be an abuse of legislative power to make the grant 
except in contemplation of such benefit. Second. The 
legislature, in conferring corporate power, is presumed, 
in every instance, to have carefully considered the public 
interest, and to have granted just so much power as that 
interest requires. Third. If corporations are permitted 
to usurp powers not granted, it is done at the expense of 
the public. Sound policy, therefore, demands that they 
should be kept strictly within their chartered limits; and 
every contract made by them which exceeds those limits, 
like all other contracts in contravention of public policy, 
is illegal and therefore void. Fourth. It is a good de- • 
fense for a corporation, when sued upon a contract, that, 
in making such a contract, it exceeded its corporate pow- 
ers; this defense being allowed, not for the sake of the 
corporation, but for that of the public. The corporation 
would, however, be estopped from setting up the defense, 
in a case where the other party to the contract could not 
be presumed to be cognizant of the excess of power. 

The arguments advanced by the two learned judicial 
combatants in support of their propositions will be here- 
after noticed. 

§ 32. Monument National Bank v. Globe Works, 101 
Mass. 57 (1869).— It was held in this case that the note 
of a manufacturing corporation in the hands of a holder 
in good faith, for value, who took it before maturity and 
without knowledge that the maker had not received full 
consideration, could be enforced against the corporation, 



42 THE DOOTEINE GENEKALLY. [§ 33. 

although it was made as an accommodation note. This 
on the ground that the corporation had power to make 
promissory notes, and the making of an accommodatiou 
note was only an abuse of that power, which abuse was, 
of course, unknown to the holder or purchaser for value. 

§ 33. Miners' Ditch Co. v. Zellerbaeh, 37 Cal. 5^3 {1869). 
This case has been frequently cited as sustaining the prop- 
ositions contended for by Chief Justice Comstock in the 
Bissell Case, supra. It holds directly the reverse. Chief 
Justice Sawyer, in delivering the opinion of the court, 
says : " From the cases cited it very clearly appears that 
the question, as between stockholders and the corporation, 
is a very different one from that which arises between 
the corporation itself and strangers dealing with it, and 
the principle established, when the contract arises be- 
tween strangers and the corporation, is whether the act 
in question is one which the corporation is not authorized 
to perform under any circumstances, or one that may be 
performed by the corporation for some purposes, but may 
not for others. In the former case the defense of ultra 
vires is available to the corporation as against all persons, 
because they are bound to know from the law of its exist- 
ence that it has no power to perform the act. But in the 
latter case the defense may or not be available, depending 
upon the question whether the party dealing with the 
corporation is aware of the intention to perform the act 
for an unauthorized purpose, or under circumstances not 
justifying its performance. And the test as between 
strangers, having no knowledge of an unlawful purpose, 
and the corporation is to compare the terms of the con- 
tract with the provisions of the law from which the cor- 
poration derives its powers, and, if the court can see that 
the act to be performed is necessarily beyond the powers 



§§ 34, 35.] THE DOOTEINE GENERALLY. 43 

of the corporation for any purpose, the contract cannot 
be enforced, otherwise it can. . . . Strangers are ' 
presumed to know the law of the land, and they are 
bound, when dealing with corporations, to know the pow- 
ers conferred by their charters. These are open to their 
inspection, and it is easy to determine whether the act is 
within the scope of the general powers for that purpose." 

§ 34. Franklin Co. v. Lewiston Institution for Savings, 
€8 Me. JfS (1877). — This was a case where the trustees 
of the Institution for Savings subscribed for $50,000 of 
the capital stock of the Continental Mills, and, having no 
money to pay for it, the Franklin Company, another cor- 
poration, paid that amount to the Continental Mills, tak- 
ing the notes of the savings institution therefor and a 
certificate of the stock in their own name as collateral 
security for the payment of the notes. It was held, on 
suit brought to enforce payment, that the action of the 
trustees of the savings institution was ultra vires; that it ' 
was not within the authority of savings institutions, at a 
time when they have no funds for investment, to purchase 
stocks or other property not needed for immediate use, 
on credit, and thus create a debt binding upon the insti- 
tution ; that the Franklin Company, having participated' 
in the illegal transaction, could not claim the privilege of 
a oonafide holder of commercial paper; and that the sav- 
ings institution, having received no benefit from the trans- 
action, was not estopped to set up the defense of ultra 
vires. 

§ 35. Thomas v. Railroad Co., 101 U. 8. 71 {1879).— 
In this case the doctrine of ultra vires was directly con- 
sidered, and the previous decisions of that court re- 
affirmed. This case has perhaps been cited and approved 



44 THE DOCTRINE GENERALLY. [§ 35. 

by the courts of this country more than any other case 
bearing upon this doctrine. It was there decided that a 
lease for twenty years by a railroad company of its rail- 
road, rolling stock and franchises, in consideration of 
being paid one-half of the gross sums collected from the 
operation of the road by the lessees during the term, and 
reserving to the lessor the right to terminate the lease 
and retake possession of the road at any time, paying to 
the lessee the value of the unexpired term, was void; and 
that the corporation upon terminating the lease and re- 
suming possession when the lessees had been in posses- 
sion five years, and the accounts of the parties for those 
years having been adjusted and paid, was not liable to an 
action by the lessees to recover the value of the unex- 
pired term. Mr. Justice Miller, who delivered the judg- 
ment of the court, in the course of his learned opinion 
said : " The powers of corporations organized under legis- 
lative statutes are such, and such only, as those statutes 
confer. Conceding the rule applicable to all statutes, that 
what is fairly implied is as much granted as what is ex- 
pressed, it remains that the charter of a corporation is 
i the measure of its powers, and that the enumeration of 
those powers implies the exclusion of all others. 

" There is another principle of equal importance, and 
equally conclusive against the validity of this contract, 
which, if not coming exactly within the doctrine of ultra 
vires as we have just discussed it, shows very clearly that 
the railroad company was without the power to make 
such a contract. That principle is that where a corpora- 
tion, like a railroad company, has granted to it by a char- 
ter a franchise intended in a large measure to be exercised 
for the public good, the due performance of those func- 
tions being the consideration of the public grant, any con- 
tract which disables the corporation from performing 



§ 36.] THE DOCTRINE GENERALLY. 45 

those functions, which undertakes, without the consent of 
the state, to transfer to others the rights and powers con- 
ferred by the charter, and to release the grantees from 
the burden which it imposes, is a violation of the contract 
with the state, and is void as against public policy." 

§ 36. Davis v. Old Colony B. Co., 131 Mass. 258 (1879). 
This was an action on an agreement signed by the Old 
Colony Railroad Company to guaranty plaintiffs against 
any deficiency that might arise toward defraying the ex- 
penses of a jubilee and musical festival to be held in Bos- 
ton. The question in the case was whether it was within 
the powers of the railroad company to bind itself by such 
an agreement. It was held that it was not, although 
such agreement was made with the reasonable belief that 
the holding of the proposed festival would be of great 
pecuniary benefit to the corporation by increasing its 
proper business, and the festival was held and expenses 
incurred in reliance upon the guaranty. This case pre- 
sents a most elaborate examination of- the doctrine of 
ultra vires, some fifty-three cases bearing directly on the 
subject being examined. The opinion of the court was 
delivered by Chief Justice Gray (now associate justice of 
the United States supreme court), and is one of the strong- 
est and most convincing opinions on this subject ever de- 
livered in this country. In the course of his opinion the 
learned chief justice, inter alia, says: 
, " Upon full consideration of the elaborate arguments 

'of counsel upon that question, the court is of the opinion 

that the agreement is ultra vires, and therefore no action 

can be maintained upon it against either defendant. . . . 

" The corporation has power to do such business only 

' as it is authorized by its act of incorporation to do, and 
no other. It is not held out by the government nor by 



46 THE D00TBJNE GENERALLY. [§ 37. 

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

" The holding of a ' world's peace jubilee and interna- 
tional musical festival ' is an enterprise wholly outside the 
objects for which a railroad corporation is- established, 
and a contract to pay, or to guaranty the payment of, 
the expenses of such an enterprise, is neither a necessary 
nor an appropriate means of carrying on the business of 
the railroad corporation, is an application of its funds to 
an object unauthorized and impliedly prohibited by its 
charter, and is beyond its corporate powers. Such a con- 
1 tract cannot be held to bind the corporation, by reason of 
the supposed benefit which it may derive from an increase 
of passengers over its road, upon any grounds that would 
not hold it equally bound by a contract to partake in or 
to guaranty the success of any enterprise that might at- 
tract population or travel to any city or town upon or 
near its line." 

§ 37. Central Transportation Co. v. Pullman Palace 
Car Co., 139 U. 8. H (1890).— The doctrine of ultra vires 
has frequently come before the supreme court of the 



§ 37-] THE DOOTKINE GENERALLY. 47 

United States for application and construction, and, when 
directly considered, the court has never wavered from the 
principles first enunciated by Chief Justice Marshall in 
1804 m the case of Head v. Providence Ins. Co., hereto- 
fore alluded to. In Central Transportation Co. v. Pull- 
man Palace Car Co., supra, all the cases bearing upon 
this subject were cited, examined and re-affirmed. In 
that case the doctrine is given one of the most elaborate 
and complete discussions ever extended to the question,, 
and the defense of ultra vires is examined in all its phases. 
To any but a prejudiced mind the opinion and adjudica- 
tion in this case should forever set at rest the question as 
to what construction should be placed on the doctrine of 
ultra vires in this country. It was the province and priv- 
ilege of Associate Justice Gray, who, as chief justice of 
the supreme court of Massachusetts, rendered such an 
elaborate opinion in the Old Colony Railroad Company 
Case, to deliver the opinion in this case, nor could it have 
been left to the elucidation of an abler mind. The facts 
of the case were substantially as follows : The Central 
Transportation Company was a corporation under the 
general laws of Pennsylvania, to exist for twenty years, 
with a certain capital stock, organized for " the transpor- 
tation of passengers in railroad cars constructed and 
owned by the company " under certain patents, and car- 
ried on the business of manufacturing sleeping-cars under 
its patents, and of hiring or letting the cars to railroad 
companies by written contracts, receiving a revenue from 
the sale of berths and accommodations to passengers. 
Seven years after its incorporation, by special act of the 
legislature of Pennsylvania, the charter was extended 
for ninety-nine years, and the corporation was empowered 
by said special act to double its capital stock and to " enter 
into contracts with corporations of this or any other state 



48 THE DOCTRINE GENERALLY. [§ 37. 

for the leasing or hiring and transfer to them, or any of 
them, of its railway cars and other personal property." 
The corporation forthwith entered into an indenture with 
the Pullman Palace Oar Company, a corporation by vir- 
tue of a special act of the legislature of Illinois, engaged 
in a similar business, by which it leased and transferred 
to that corporation all its cars, railroad contracts, patent 
rights and other personal property, moneys, credits and 
rights of action for the term of ninety-nine years, except 
so far as the contracts and patents should expire sooner, 
and covenanted not to " engage in the business of manu- 
facturing, using or hiring sleeping-cars " while the lease 
should remain in force ; and the lessee covenanted to pay 
all existing debts of the lessor, and to pay to the lessor 
annually a large sum of money during the term of ninety- 
nine years unless the indenture should be sooner termi- 
nated. Upon action brought by the Transportation Com- 
pany to recover the amount due for the last three quarters, 
according to the terms of the lease, and after a most 
elaborate examination and discussion of the various de- 
cisions in this country and England, it was held that the 
contract of lease was unlawful and void because beyond 
the corporate powers of the lessor, and involving an 
abandonment of its duty to the public, and therefore no 
action could be maintained by the lessor upon the con- 
tract or to recover the sums thereby payable, even while 
the lessee had enjoyed the benefits of the contract. Mr. 
Justice Gray, in the course of his masterful opinion, says: 
" The charter of a corporation, read in the light of gen- 
eral laws which are applicable, is the measure of its pow- 
ders, and the enumeration of those powers implies the 
exclusion of all others not fairly incidental. All contracts 
made by a corporation beyond the scope of those powers 
are unlawful and void, and no action can be maintained 



§ 37.] THE D0CTKINE GENERALLY. 49 

upon them in the courts, and this upon three distinct J 
grounds : the obligation of every one contracting with a i 
corporation to take notice of the legal limits of its pow- > 
ers ; the interest of the stockholders not to be subjected * 
to risks which they have never undertaken; and, above' 
all, the interest of the public that the corporation shall' 
not transcend the powers conferred upon it by law. A j 
corporation cannot, without the consent of the legislature, , 
transfer its franchises to another corporation, and abne- 1 
gate the performance of the duties to the public imposed 
upon it by its charter as the consideration for the grant 
of its franchise. Neither the grant of a franchise to 
transport passengers, nor a general authority to sell and 
dispose of property, empowers the grantee, while it con- 
tinues to exist as a corporation, to sell or to lease its* 
entire property and franchises to another corporation. 
These principles apply equally to companies incorporated 
by special charter from the legislature and to those formed 
by articles of association under general laws. . . . 

" A contract of a corporation which is ultra vires in the 
proper sense, that is to say, outside the objects of its cre- 
ation as defined in the law of its organization, and there- 
fore beyond the powers conferred upon it by the legisla- 
ture, is not voidable only, but wholly void and of no legal 
effect. The objection to the contract is not merely that; • 
the corporation ought not to have made it, but that it 
could not make it. The contract cannot be ratified by 
either party because it could not have been authorized ^ 
by either. No performance on either side can give the 
unlawful contract any validity, or be the foundation of 
any right of action upon it. 

" When a corporation is acting within the general scope \ 
of its powers conferred upon it by the legislature, the 
corporation, as well as the persons contracting with it, 
4 



50 



THE DOCTRINE GENERALLY. [§ 37. 



may be estopped to deny that it has complied with the 
legal formalities which were prerequisites to its existence 
or to its action, because such requisites might in fact have 
been complied with. But when the contract is beyond 

f the powers conferred upon it by existing laws, neither the 
corporation nor the other party to the contract can be 
estopped by assenting to it, or by acting upon it to show 
that it was prohibited by those laws. 

" A contract ultra vvres being unlawful and void, not 
because it is in itself immoral, but because the corporation, 

r by the law of its creation, is incapdbU of making it, the 
courts, while refusing to maintain any action upon the 
unlawful contract, have always striven to do justice be- 
tween the parties, so far as could be done consistently 
with adherence to law, by permitting property or money, 
parted with on good faith of the unlawful contract, to be 
recovered back or compensation to be made for it. 
"In such case, however, the action is not maintained 

, upon the unlawful contract, nor according to its terms; 
but on an implied contract of the defendant to return, or 
failing to do that, to make compensation for, property or 
money which it has no right to retain. To maintain such 
action is not to affirm, but to disaffirm, the unlawful con- 
tract. 

" The ground and the limits of the rule concerning the 
remedy, in the case of a contract ultra vires, which has 
been partly performed, and under which property has 
passed, can hardly be summed up better than they were 
by Mr. Justice Miller in a passage already quoted, where 
he said that the rule ' stands upon the broad ground that 
the contract itself is void, and that nothing which has 
been done under it, nor the action of the court, can in- 
fuse any vitality into it ; ' and that ' where the parties 
have so far acted under such a contract that they cannot 



§ 38.] THE DOOTKINE GENERALLY. 51 

be restored to their original condition, the court inquires j 
if relief can be given independently of the contract, or 
whether it will refuse to interfere as the matter stands.' 
118 U. S. 317." 

§ 38. Lucas v. The White Line Transportation Co., 70 
Iowa, 6^1. — This was an action to recover contribution as 
co-surety on a bond. The defendant was a corporation 
organized for the purpose of engaging in the " general 
freight and transfer business." By its secretary it joined 
the plaintiff in executing a bond of suretyship for L. and 
M. to the B. Co. Afterwards L. and M. failed, but they 
executed their note to plaintiff and defendant for the 
amount of the bond, in consideration of the payers as- 
suming that amount of their indebtedness to the B. Co. 
( Thereupon the defendant, by its president, joined plaint- 
iff in a letter to the B. Co., assuming liability for the in- 
debtedness of L. and M. to that amount. It also, by its 
officers and attorneys, joined plaintiff in an action on 
said note against L. and ]M. which was aided by attach- 
ment. Defendant refused to pay to the B. Co. any por- 
. tion of the indebtedness thus assumed, and plaintiff paid 
the whole of it, and sought to recover contribution from 
the defendant company as a co-surety. It was held that 
defendant's original contract of suretyship was ultra vires, 
' as was also its assumption of indebtedness by the letter 
signed by its president, and that the other acts of defend- 
ant's officers did not estop it from insisting on that fact 
as a defense, and that no recovery could be had. Both- 
rock, J., in delivering the opinion of the court, among 
other things, says : 

i " The corporation defendant is acting under the gen- 
eral incorporation laws of the state, and from the provis- 
ions of its articles and the statute it derives its powers. 



52 THE DOCTKINE GENERALLY. [§ 38. 

I A corporation exists and exercises its franchises only by 
virtue of a grant from the legislative power. The grant- 
ing and acceptance of a charter in the case of private 
corporations for pecuniary profit are based on the theory 
that the prosecution of the business will be a benefit to 
the public, and that the investment of capital therein will 
result in pecuniary profit to the stockholders, and that it is 
an undertaking on the part of the corporation and all of its 
stockholders that, in consideration of the grant of power, 
the capital shall be used for the prosecution of the purpose 
named in the charter, and no other. There is also an under- 

ir taking on the part of the corporation with each stockholder 
that the capital he invests shall be put to no other use 
and subject to no other hazard than that contemplated 
by the powers expressed in the charter, and that those 
things which are within the scope or object of the corpo- 
ration shall be done in the manner pointed out in the 
charter and the laws governing its action. But corpora- 
tions and their officers do not always keep within their 
powers, and the application of the doctrine of ultra vires 
is often attended with very perplexing questions. By 

' the application of a few plain rules, however, we may 
readily reach the proper answer to the question involved 

fin this case. (1) Every person dealing with a corpora- 
tion is charged with knowledge of its powers as set. out 
in its recorded articles of incorporation. (2) Where a 

I corporation exercises powers not given by its charter it 
violates the law of its organization, and may be proceeded 
against by the state, through its attorney-general, as pro- 
vided by the statute, and the unanimous consent of all 
the stockholders cannot make illegal acts valid. The 

I state has the right to interfere in such case. (3) Where 
a third party makes with the officers of a corporation an 
illegal contract beyond the powers of the corporation as 



§ 38.] THE DOCTRINE GENERALLY. 53 

shown by its charter, such third party cannot recover, 
because he acts with knowledge that the officers have ex- 
ceeded their power, and between him and the corpora- 
tion or its stockholders no amount of ratification by those 
unauthorized to make the contract will make it valid. 
* (4) When the officers of a corporation make a contract 
with third parties in regard to matters apparently within 
their corporate powers, but which upon the proof of ex- 
trinsic facts (of which such parties had no notice) lie 
beyond their powers, the corporation must be held, unless 
it may avoid liability by taking timely steps to prevent 
loss or damage to such third parties ; for in such cases the 
third party is innocent, and the corporation or stockhold- 
ers less innocent for having selected officers not worthy 
of the trust reposed in them. ... (6) When the cor- 
poration has permitted its officers to engage in ultra vires 
transactions, and in the prosecution of such transactions 
the officers commit a wrong or tortious act without the 
fault of the injured party, the corporation is estopped 
from taking advantage of the ultra vires character of the 
original undertaking. These rules do not cover all cases, 
but are sufficient to guide us in the determination of the 
question in this case. 

" The case of Bissell v. Michigan Southern <& JV. I. E. 
Co., 22 K T. 258, is relied upon by appellees as authority 
for holding corporations on ultra vires contracts. It is 
true that the opinion of Oomstock, J., in that case, ap- 
pears not to he in accord with the well-established doctrine 
of ultra vires as applied to corporations; but he says. 
(page 272), ' I do not deny the validity of this excuse in 
many cases — I may say in all cases where it can be re- 
ceived without doing great injustice to others. If the per- 
son dealing with a corporation knows of the wrong done 
Or contemplated, and he cannot show the acquiescence 



54 THE DOOTKINE GENERALLY. [§ 38. 

of the shareholder, he ought not to complain if he cannot 
enforce the contract. Aside from the law of corpora- 
tions, agreements which involve or propose a violation of 
trust will not be enforced by the courts where no greater 
equities demand it.' In that case the defendant had con- 
structed a railroad not authorized by their charter, and 
for some years had been operating the same, and made a 
contract to carry plaintiff over the road. He was injured 
in a collision occasioned by the negligence of defendant's 
employees. The plaintiff's cause of action did not arise 
out of the ultra vires contract to carry him, but out of 
the wrong done on the way, and to which wrong he was 
not a contributing party. This view is consistent with 
the sixth proposition above, and is the one in which 
Selden, J., sustained the right of recovery in a very able 
opinion in the same case, and certaMy m line with well- 
established authorities, and in support of the doctrine of 
ultra vires. ISTone of the other judges sustained the views 
of Comstock, J. ; but all, except Denio, J., sustained the 
right of recovery. A different question would have been 
presented in that case if the plaintiff had sued to recover 
for failure of defendant to transport him according to 
agreement. 

" In the case now before us the plaintiff seeks to re- 
cover contribution from the corporation as co-surety on 
the bond to the brewing company, and claims (1) that 
the contract of suretyship was within the defendant's 
corporate powers; and (2) that, if it were not within de- 
fendant's corporate powers, it had so acted on the con- 
tract as to now estop it from pleading ultra vires. It is 
claimed that the language of the articles of incorporation, 
defining the business to be 'the general freight and 
transfer business, and such other business as may not be 
inconsistent therewith,' is of such a general character as 



§ 39.] THE DOCTRINE GENEEALLT. 55 

to cover almost any kind of business. This position, it 
seems to us, is not tenable, for the language itself implies 
that there may be business inconsistent with the general 
freight and transfer business. The name of the corpora- 
tion indicated its principal business, and the language is 
equivalent to saying it may do such other business as is 
consistent with the freight and transfer business. ' Con- 
sistent ' means standing together, or in agreement with. 
If the capital of the company is diverted into some other 
line of business entirely foreign to the freight and trans- 
fer business, it would be to the detriment of, and there- 
fore not consistent with, the latter. But, whatever mean- K 
ing may be attached to the language of the articles, it is 
quite certain it cannot include the contract of suretyship 
in question. The simple act of going security for another > 
is out of the line of the prosecution of any business. It 
is a mere accommodation, and it cannot be assumed that 
the articles gave the officers of defendant any power to 
jeopardize its capital in any such venture. . . . 
j " It seems to us clear that the corporation defendant 
/had no power to make the contract of suretyship in ques- 
tion; and, for the same reason, it is just as clear that the 
officers of the corporation had no power to sign the let- 
ter of May 27, purporting to assume the payment of the 
amount stipulated in the bond. Both instruments, so far 
as the defendant was concerned, were illegal and void, 
and no attempted ratification by parties having no power 
to make the original contract could make it valid, no 
matter how often such attempts were made." 

§ 39. The doctrine as construed oy English cowrts — 
dolman v. Eastern Counties By. Co., 10 Beav. 1 {1846). 
The first reported case touching the application of the 
doctrine of ultra vvres in England was the case of Col- 



56 THE DOCTRINE GENERALLY. [§ 39. 

•man v. Eastern Counties My. Co., supra, where the ques- 
tion arose on a motion to dissolve a special injunction. 
The directors of a railway company, for the purpose of 
increasing the traffic, proposed to guaranty certain profits 
and to secure the capital of an intended steam packet 
company, who were to act in connection with the rail- 
way. It was held that such a transaction was not within 
their powers, and they were restrained and the injunc- 
tion made perpetual. The Master of the Eolls, in his opin- 
ion, said: 

" Joint-stock companies have funds so extensively large 
and exercise powers so extensive and so materially affect- 
ing the rights and interests of other persons and rights 
which the public or the subjects which her majesty have 
been accustomed to enjoy under the protection of the 
laws established in this kingdom, that to look upon a 
railway company in the light of a common partnership,, 
and as subject to no greater vigilance than common part- 
nerships are, would, I think, be greatly to mistake the 
functions which they perform, and the powers which 
they exercise of interference not only with the public, 
but the private rights of all individuals in this realm. 
"We are to look upon these powers as given them in con- 
sideration for the benefit which, notwithstanding all other 
sacrifices, it is to be presumed and hoped, on the whole, 
will be obtained by the public. But it being to the in- 
terest of the public to protect the private rights of all 
individuals, and to defend them from all liabilities be- 
yond those necessarily occasioned by the powers given 
by the several acts, those powers must always be care- 
fully looked to; and I am clearly of opinion that the 
powers which are given by acts of parliament, like that 
now in question, extend no further than is expressly 
stated in the act, or is necessarily or properly required 



§ 40.] THE DOOTKINE GENERALLY. 57 

for carrying into effect the undertaking and works which 
the act has expressly sanctioned. ... It has been 
stated that these things, to a small extent, have frequently 
been done since the establishment of railways ; but, un- 
less the acts so done can be proved to be in conformity 
with the powers given by the special acts of parliament 
under which these acts are done, they furnish no au- 
thority. To suppose that the acquiescence of railway 
shareholders for the last fifteen years, in any transaction 
conducted by a railway company, is any evidence what- 
ever of their having a lawful right to enter into it, is, I 
think, wholly to forget the sort of frenzy which, during 
that period, the country has been in. ... I must, in 
the absence of any legal decision, say that I consider that 
the acquiescence of the shareholders in such transactions 
affords no ground whatever for the presumption of their 
legality." 

§ 40. East Anglian By. Co. v. Eastern Counties By. 
Co., 11 G. B. 775 {1852). — The question arose in this case 
on an action of covenant wherein the defendant, by an 
indenture under their common seal between themselves 
and the plaintiff, agreed to take a lease of their railways 
upon certain terms mentioned in the indenture, and to 
find the capital necessary for the construction of the ex- 
tensions, branches and works authorized to be constructed 
by the bills then pending in parliament, and to pay the 
costs of preparing and promoting such bills, whether the 
same should pass into a law or not. The declaration fur- 
ther stated that the bills were proceeded with, and two. 
were passed, and that the cost of the bills, amounting to a 
large sum, had not been paid by the defendants to the 
plaintiffs. It was held that it was not competent for the 
directors to enter into a contract with another railway 



58 THE DOCTRINE GENERALLY. [§ 41. 

company to take a lease of their line, and to pay the 

'costs incurred by them in the soliciting and promoting of 
bills in parliament for the enterprise and improvement 

| of such other line of railway, even though such extension 
and improvement would benefit their own company ; and 
that such a contract, if entered into, was illegal and void, 

' -and could not be enforced in a court of law. Chief Jus- 
tice Jervis, in delivering judgment, said : 

. " This act (6 and 7 "W. 4, ch. cvi) is a public act, acces- 
sible to all, and supposed to be known to all, and the 
plaintiffs must therefore be presumed to have dealt with 
the defendants with a full knowledge of their respective 
rights, whatever those rights may be. . . . Every 
proprietor when he takes shares has a right to expect 
that the conditions upon which the act was obtained will 
be performed, and it is no sufficient answer to a share- 
holder, expecting his dividend, that the money has been 
expended upon an undertaking which, at some remote 
period, may prove highly beneficial to the line. . . . 
If the contract is illegal, as being contrary to the act of 
parliament, it is unnecessary to consider the effect of dis- 
sentiate shareholders; for if the company is a corporation 
only 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. . . It is not within the scope 

1 authorized by the company as a corporation and is there- 
fore void." 

§ 41. Aslibwy By. Co. v. Biche, 7 H. L. 653 (1875).— 
The case, however, most frequently quoted, and the one 
wherein the doctrine of ultra vires is most exhaustively 



§ 41.] THE DOCTKINE GENERALLY. 59 

considered and discussed and the question finally set at 
rest in England, came before the House of Lords on appeal 
from the Court of Exchequer in 1875. That was the cele- 
brated case of Ashbury By. Co. v. Riche. The facts 
in that case were about these : A company was registered 
under the Joint-stock Companies Act of 1862. Its ob- 
jects, as stated in the memorandum of association, were : 
" To make and sell, or lend on hire, railway carriages 
and wagons, and all kinds of railway plant, fittings, ma- 
chinery and rolling-stock; to carry on the business of 
mechanical engineers and general contractors; to pur- 
chase, work, lease and sell mines, minerals, land and build- 
ings; to purchase and sell, as merchants, timber, coal, 
metals or other materials, and to buy and sell any such 
materials on commission or as agents." The directors 
agreed to purchase a concession for making a railway in 
a foreign country, and afterwards (on account of difficul- 
ties existing by the law of that country) agreed to con- 
sign the concession to a societe anonyme formed in that 
country, which societe was to supply the materials for the 
construction of the railway, and to receive periodical pay- 
ments from the English company. It was held that this 
contract, being of a nature not included in the memo- 
/ randum of association, was ultra vires not only of the 
' directors but of the whole company, so that even the sub- 
sequent assent of the whole body of shareholders would 
have no power to ratify it. 

. As this is the principal case and the leading decision 
upon which is founded the doctrine of ultra vires in Eng- 
land, it is considered of sufficient importance to take up 
some space in freely quoting from the opinions there de- 
livered. 

The Lord Chancellor (Lord Cairns), in the course of his 
elaborate opinion, said : " The provisions under which that 



60 THE DOCTEINE GENERALLY. [§ 41. 

system of limiting liability was inaugurated were pro- 
visions not merely, perhaps I might say not mainly, for 

t the benefit of the shareholders for the time being in the 
company, but were enactments intended also to provide 
for the interests of two other very important bodies ; in 
the first place, those who might become shareholders in 
succession to the persons who were shareholders for the 

A time; and secondly, the outside public, and more par- 
ticularly those who might be creditors of companies of 
this kind. And I will ask your lordships to observe, as I 
refer to some of the clauses, the marked and entire dif- 
ference between the two documents which form the title 
deeds of companies of this description. I mean the 
memorandum of association on the one hand and the 
articles of association on the other hand. "With regard 
to the memorandum of association, your lordships will 
find, as has often already been pointed out, although it 
appears somewhat to have been overlooked in the present 
case, that that is, as it were, the charter, and defines the 
limitations of the powers of a company to be established 
under the act. With regard to the articles of association,, 
those articles play a part subsidiary to the memorandum 
of association. They accept the memorandum of associa- 
tion as the charter of incorporation of the company, and, 
so accepting it, the articles proceed to define the duties, 
the rights and the powers of the governing body as he- 
tween themselves and the company at large, and the 
mode and form in which changes in the internal regula- 
tion of the company may from time to time be made. 

ifWith regard, therefore, to the memorandum of associa- 
tion, if you find anything which goes beyond their memo- 
randum, or is not warranted by it, the question will arise 
whether that which is so done is ultra vires not only of 
the directors of the company, but of the company itself. 



§ 41. J THE DOCTRINE GENERALLY. 61 

With regard to the articles of association, if you find any- 
thing which, still keeping within the memorandum of 
association, is a violation of the articles of association, or 
in excess of them, the question will arise whether that is 
anything more than an act extra vires the directors, but 
intra vires the company. In a case such as that which 
your lordships have now to deal with, it is not a question 
whether the contract sued upon involves that which is 
malum prohibitum or malum in se, or is a contract con- 
trary to public policy and illegal in itself. I assume the 
contract in itself to be perfectly legal, to have nothing in 
it obnoxious to the doctrine involved in the expressions 
which I have used. The question is not as to the legality ' 
of the contract; the question is as to the competency and 
power of the company to make the contract. Now I 
am clearly of opinion that this contract was entirely, as , 
I have said, beyond the objects in the memorandum of 
association. If so, it was thereby placed beyond thei 
powers of the company to make the contract. If so, my 
lords, it is not a question whether the contract ever was 
ratified or was not ratified. If it was a contract void at 
the beginning, it was void because the company could 
not make the contract. If every shareholder of the com- 
pany had been in the room, and every shareholder of the' 
company had said : ' That is a contract which we desire 
to make, which we authorize the directors to make, to 
which we sanction the placing the seal of the company,' 
the case would not have stood in any different position 
from that in which it stands now. The shareholders 
would thereby, by unanimous consent, have been attempt- 
ing to do the very thing which, by the act of parliament, 
they were prohibited from doing." 

' And Lord Chelmsford, in the same case, in delivering his 
opinion, used the following language: "Now, the incor- 



62 THE DOCTRINE GENERALLY. [§ 41. 

uporation of a company with limited liability is entirely a 
creature of the statute. It was necessary not only for 
the protection of those who might join such companies, 

( but also of persons who might enter into contracts with 
them, that the privilege of creating them should only be 
obtained upon certain conditions which should be made 
known to the public. The legislature, therefore, required 
that the objects for which the proposed company was to 
be established should be contained in the memorandum 
of association, which, when signed and registered, is to 
establish the incorporated company. . . . 

" The real description of the contract entered into by 
the company is an engagement to supply the contractors 
for the construction of a foreign railway with the funds 
necessary to enable them to execute their contract. This 
is clearly not within any of the objects described in the 
memorandum of association, and the contract was ultra 
vires, and therefore not voidable merely, but absolutely 
void. The learned counsel for defendant in error, after 
arguing against the conclusion that the contract was ultra 
vires, contended that the contract having been in part 
performed, and the money of the company having been 
paid in respect of it, the shareholders, in order to have 
the. benefit of their money so misapplied, had a right to 
abstain from objecting to the contract which might then 
be enforced against the directors. ' Because,' he said, ' the 
Companies Act, though it prohibits the contract being 
entered into, does not say, if the directors have made 
such a prohibited contract, what the stockholders may do 
with it.' 

"This argument is really directed to the question 
whether the contract was capable of being ratified by the 
shareholders. . . . I have already observed that the 
contract entered into by the company with Messrs. Eiche 



$ 41.] .THE DOCTRINE GENERALLY. 63 

was not a voidable contract merely, but, being in viola- 
tion of the prohibition contained in the Companies Act, 
was absolutely void. 

" It is exactly in the same condition as if no contract 
at all had been made, and therefore a ratification of it is 
not possible. If there had been an actual ratification it 
could not have given life to a contract which had no 
existence in itself; but at the utmost it would have 
amounted to a sanction by the shareholders to the act of 
the directors, which, if given before the contract was en- 
tered into, would not have made it valid, as it does not 
relate to an object within the scope of the memorandum 
of association." 

And says Lord O'Hagan in the same case : " Having, 
therefore, no doubt that the action of this company was 
ultra vires, I confess I have as little that there was no 
valid ratification of the impeached contract. Again, we 
must keep in mind the purpose of the legislation with 
which we are dealing. It was, as I have said, to give a 
privilege upon a condition ; and the privilege was to be 
enjoyed upon the terms and with the limitations indicated 
in the memorandum of association. The memorandum,, 
'when put on record, was to be for contractors, for cred- 
itors, and for all the world, a reliable description of the 
exact character, purposes and powers of the company 
described in it. And the admission of an authority in 
' shareholders to warrant anything inconsistent with that 
charter, antagonistic to those purposes and beyond those 
powers (and in this case it was so undoubtedly), would 
seem to encourage evasion of the statute to abrogate the 
condition whilst continuing the privilege, and so to give 
the benefit without the burden. By the memorandum 
, the general community is to judge of the association ; but 
how can that be so if shareholders, proposing to bind the 



64 THE DOOTEINE GENERALLY. [§ 42, 

i corporation by resolution, perhaps effective between the 
shareholders themselves, altogether ignore that memo- 
randum, and authorize dealings quite beyond the scope of 
its contemplation? It is plain that if the ratification for 
which the defendant in error contends could validly affirm 
the contract on which he relies, there is no amount of 
divergence from the original object of the company 
which might not have been approved, no extension of the 
limits prescribed by the memorandum which might not 
have been effected by a single resolution of all the stock- 
holders. And if this be so, I cannot think that a conclu- 
sion pregnant with consequences so very serious can prop- 
erly be sustained. It is not warranted by the statute, 
which equally condemns it by affirmative and negative 
provisions; and any such ratification, if relied on, being 

I in clear contravention of the purpose and the letter of the 
law, should, in my opinion, be held void and illegal." 

§ 42. Attorney-General v. Great Eastern By. Co.,5 App. 
Cos. 4.73 {1880). — Extracts from this and the following 
English cases are made for the purpose of showing that 
the rule of construction adopted in the Riche Case, supra, 
relative to the doctrine of ultra vires, has been, strictly 
adhered to, and is the accepted application of the doctrine 
in that country. In this case the Lord Chancellor (Lord 
Selborne) says, among other things : " I assume that your 
lordships will not now recede from anything that was 
determined in Ashbury Ry. Co. v. Riche: it appears to 
me to be important that the doctrine of ultra vires as 
it was explained in that case should be maintained. But 
I agree with Lord Justice James that this doctrine ought 
to be reasonably and not unreasonably understood and 
applied, and that whatever may be fairly regarded as in- 
cidental to or consequential upon those things whioh the 



§§ 43, 44'.] THE DOCTRINE GENERALLY. 65 

legislature has authorized ought not (unless expressly pro- 
hibited) be held by judicial construction to be ultra vires." 
And Lord Blackburn, in the same case, said : " That case 
appears to me to decide at all events this: that where 
there is an act of parliament creating a corporation for a 
particular purpose, and giving it powers for that particu-f 
lar purpose, what it does not expressly or impliedly au- 
thorize is to be taken as prohibited. . . . Those things | 
which are incident to and may reasonably and properly 
be done under the main purpose, though they may not be- 
literally within it, would not be prohibited." 

§ 43. Small et al. v. Smith et al, 10 App. Cm. 119 (1884). 
In this case the Earl of Selborne, L. C, observed: " Now 
I entirely adhere to what was said in this House in the 
case of Attorney- General v. Great Eastern Ey. Co., 5 App. 
Cas. 473, that when you have got a main purpose ex- 
pressed and ample authority given to effect that main 
purpose, things which are incidental to it and which may 
reasonably and properly be done, and against which no 
express prohibition is found, may and ought prima facie 
to follow from the authority for effectuating the main 
purpose by proper and general means. I think it quite 
right to notify your lordships to apply that principle to 
-the present case. In order to see how it applies we must 
ascertain first of all what the main purpose here is, then 
what are the general powers of the directors, then what 
are the special powers, and then, supposing that this is 
not within the natural meaning of these general powers 
■or of these special powers, whether it can be brought in 
as incidental to the main purpose, and a thing reasonably 
to be done for effectuating it." ' 

§ 44. Baroness Wenloclc, etc. v. The Ewer Dee, 10 App. 
<Jas. 35k (1885).— Lord Watson, in this case, where the 

5 



66 THE DOCTRINE GENERALLY. [§ 45. 

question was as to the power of borrowing money, used 
the following language : " "Whenever a corporation is 
created by an act of parliament with reference to the 
purpose of the act and solely with a view for carrying 
those purposes into execution, I am of the opinion not 
only that the objects which the corporation may legiti- 
mately pursue must be ascertained from the act itself, 
but that the powers which a corporation may lawfully 
use in pursuance of these object must either be expressly 
conferred or derived by reasonable implication from its 
provisions. That appears to me to be the principal 
recognized by this House in Ashbury Co. v. Biche and 
in Attorney- General v. Great Eastern By. Co." 

§ 45. Trevor et al. v. Whitworth et al, 12 App. Cas. 
J/.09 (1887). — In passing upon the power of a corporation 
to purchase its own stock, Lord Herchell, in this case, 
said : " It cannot be questioned since the case of Ashbury 
Co. v. Biche that a company cannot employ its funds for 
the purpose of any transactions which do not come within 
the objects specified in the memorandum, and that a 
company cannot, by its articles of association, extend its 
powers in this respect. . . . But it is to be observed 
that at that time it was not so clearly settled as it has 
| been since the judgment in Ashbwry By. v. Biche that a 
transaction not within the scope of the memorandum is 
incapable of ratification." 



CHAPTEE III. 

CONTRACTS OF CORPORATIONS. 

THE DOCTRINE APPLIED TO CONTRACTS GENERALLY. 

§ 46. Introductory. 

47. Application of doctrine to contracts generally. 

48. Province of court in applying doctrine. 

49. Tendency of courts to disregard statutory enactments. 

50. As to incidental contractual powers. 

51. Irregularity no defense to liability on corporate contract. 

53. "When charter prescribes mode of contracting, it must be 
strictly pursued. 

53. All persons bound to take notice of limits of corporate power. 

54. Why corporations not liable on ultra vires contracts. 

55. Distinction between ultra vires and illegal contracts. 

56. Prohibited contracts regarded as illegal and void. 

57. Unauthorized contracts none the less illegal because ignored 

by courts. 

§ 46. Introductory. — While, as a general rule, the ap- 
plication of the doctrine of ultra vires to corporate con- 
tracts has been comparatively uniform in this country 
when the question has been squarely presented to the 
court, yet there has been a distinction made by some of 
the state courts in its application to executory contracts 
and to those that have been partially or wholly performed 
by one or the other of the parties. It is plainly appar- 
ent, however, that this lack of uniformity is not from 
any want of soundness in the doctrine itself, but rather 
from a lack of proper diligence and a more thorough in- 
vestigation by the court called upon to decide the merits 
or demerits of the doctrine in its application to the par- 



68 CONTRACTS OF CORPORATIONS. § 47. 

ticular case under consideration; on such occasions the 
defense being usually denied on the broad ground that 
it would be " unjust, inequitable and unconscionable."! 
And it is a fact easy of verification by an earnest inves-J 
tigator, that the most soothing axioms relative to this 
doctrine — axioms whose rhythmic measures strike the ear 
of equity like unto the lascivious pleasings of the lute — 
have been evolved by a reminiscent court on occasions 
when the defense of ultra vires had not been earnestly 
urged, nor could it properly be applied in deciding th 3 
question submitted for the court's adjudication. It is a 
further fact worthy of mention, that these very musical 
maxims, conceived by a consenting court without legiti- 
mate connection, and brought forth at a period of con- 
vulsive irregularity before proper reflection had wrought 
maturity, are the very phrases most generally quoted by f 
those of both bench and bar, whose equitable consciences 
are so supersensitive as to shrink from even the plainest 
rules of elementary law. 

§ 47. Application of doctrine to contracts generally. — 
It is now the well-established rule that a corporation can 
make no contracts, either within or without the state 
which cheated it, except such as are authorized by its 
charter or law of creation. 1 The doctrine of ultra vires, 

iBank of Augusta v. Earle, 13 Pet. (U. S.) 588; Talmage v. North 
Amer. Coal Co., 3 Head (Term.), 337; Thomas v. Railroad Co., 101 
U. S. 71; Pittsburg, etc. R. Co. v. Keokuk Bridge Co., 131 U. S. 385; 
Green Bay, etc. Co. v. Steamboat Co., 107 U. S. 100; Davis v. Old 
Colony R. Co., 131 Mass. 258; Whitman Gold M. Co. v. Baker, 3 Nev. 
383; Louisiana State Bank v. Orleans Nav. Co., 3 La. Ann. 294; Bal- 
timore v. Baltimore, etc. R. Co., 21 Md. 50: Petersburgh v. Metzker, 
21 111. 205; Jacksonville v. McConnel, 12 id. 138; Kinzie v. Chicago, 
3 id. 187; Smith v. Eureka Flour Mills, 6 Cal. 1; McMasters v. Reed, 
1 Grant Cas. (Pa.) 36; Straus v. Eagle Ins. Co., 5 0"io St. 59; White's 
Bank v. Toledo Ins. Co., 12 id. 601 ; Downing v. Mt. Washington R. 



§ 48.] CONTEACTS OF COBFOEATIONS. 69 



however, in its relation to contracts of corporations, 
should be properly and reasonably applied; and what- 
ever may be fairly regarded as incidental to and conse- 
quential upon those things which are authorized by the 
charter of the company, ought not, unless expressly pro- 
hibited, be held by judicial construction to be ultra vires} 

§ 48. Province of court in applying doctrine. — The 
court, however, in the exercise of a sound discretion in 
the application of this doctrine, should not seek to enlarge 
the domain of judicial speculation beyond the bounds of 
legitimate inquiry, and predicate its judgment upon what 
would seem, from lack of cited authority, a wise discre- 
tion alone, regardless of the provisions of the charter or 
the laws under which the corporation was organized, 
which are the sources of corporate powers. For it is not 
the province of the court, it is submitted, to indulge in 
hypothetical speculation concerning a given question, 
when it has been squarely settled by legislation. The 
doctrine of ultra vires was evolved for ' no other purpose 
than that of restricting corporations in their transactions 
to those acts and contracts with which their creator 
thought fit and proper to endow them. The defense of 
ultra vires is only the means used to arrive at the desired 
end. If a person make a contract which is contrary to 
law, it would seem but a simple matter to so declare it, 
and pronounce it void and of no effect. In an action on 
such a contract, the contract itself is the strongest pos- 
sible evidence that the law has been violated ; and why 

Co., 40 N. H. 230; Beatty v. Insurance Co., 2 John. (N. Y.) 109; Beaty 
v. Knowler, 4 Pet. (TJ. S.) 152; State v. Stebbins, 1 Stew. (Ala.) 299; 
Head v. Providence Ins. Co., 2 Cranch (U. S.), 127. 

1 Attorney-General v. Great Eastern By., 5 App. Cas. 473; Ellerman 
v. Chicago, etc. Co., 49 N. J. Eq. 217, and cases cited in preceding 
note. 



70 CONTRACTS OF CORPORATIONS. [§ 49. 

an inquiry into the relative conditions of the parties to it ? 
Courts should take contracts as they find them, and not 
presume to attempt to make a new and different contract 
founded on the relative conditions and standing of the 
parties at the time of adjudication. Neither is it the 
province of the court, if a statute be clear and unambigu- 
ous, to say that it means something entirely different from 
that expressed. Corporations are very often prohibited, 
either directly or by necessary implication, from doing 
certain acts or making certain contracts, in which case 
the court should dismiss from its consideration any con- 
jecture as to the reason or right of the legislature in en- 
acting a particular statute, unless its constitutionality be 
directly attacked, and only lend its aid and guidance to- 
wards enforcing a compliance with the provisions of the 
law as they stand. It is the province and duty of the 
court, to be sure, to construe the meaning of doubtful 
and ambiguous terms, and to let the light of its judicial 
wisdom shine upon the dark and obscure passages in the 
laws, occasioned perhaps by legislative laxity or ill-ad- 
vised haste ; but when the provisions of a statute are cer- 
tain and their meaning plain, to seek to evade or disregard 
their true import because they may be contrary to the 
preconceived notions of the court as to established prin- 
ciples of equity and justice is certainly stretching the 
"discretion" of the court beyond the pale of judicial 
dignity. 

§49. Tendency of courts to disregard statutory enact- 
ments. — This tendency of the courts to seek to evade the 
plain provisions of a statute has been remarked and com- 
mented upon by a master mind. Mr. Sedgwick, in his 
admirable work on Construction of Statutes, says: "It 
seems to me difficult to deny that the practice of sanction- 



§ 49.] CONTRACTS OF COEPOEATIONS. 71 

ing the evasion or disregard of statutes, which we have 
had occasion to notice in the cases thus examined, has 
been carried beyond the line of sound discretion. This 
idea has been repeatedly expressed : ' I am not very well 
satisfied with the summary mode of getting rid of a stat- 
utory provision by calling it directory,' says Hubbard, J., 
in the supreme court of Yermont. ' If one positive re- 
quirement and provision of a statute may be avoided in 
that way, I see no reason why another may not.' {Briggs 
v. Georgia, 15 Yt. 61, 72.) It is equally obvious, how- 
ever, that serious evils are sure to result from a latitude 
of construction so considerable as we find to exist; and 
I therefore attempt, with great deference for the able and 
learned magistrates who are practically engaged in the 
administration of justice, to frame the following rules as 
those which ought to govern in this department of our 
science : 

" The intention of the legislature should control abso- 
lutely the action of the judiciary; where that intention 
is clearly ascertained, the courts have no other duty to 
perform than to execute the legislative will without any 
regard to their own views as to the wisdom or justice of 
the particular enactment. The means of ascertaining 
that intention are to be found in the statute itself, taken 
as a whole and with all its parts, in statutes on the same 
subject, antecedent jurisprudence and legislation, contem- 
poraneous and more recent exposition, judicial construc- 
tion and usage ; and to the use of these means, and these 
alone, the judiciary is confined. No other extrinsic facts 
are in any way to be taken into consideration. It is not 
until these means fail, and until the attempt to ascertain 
the legislative intent is hopeless, that the judiciary can 
with propriety assume scaj power of construing a statute, 
strictly or liberally, with reference either to the particu- 



72 CONTRACTS OF COKPOKATIONS. [§ 50, 

lar character of the statute, or to their own ideas of pol- 
icy or equity. Where the meaning of a statute as it 
stands is clear, they have no power to insert qualifica- 
tions, engraft exceptions, or make modifications under 
the idea of providing for cases in regard to which the 
legislature has omitted any specific provisions. 

" In cases where the intent of the legislature is ambigu- 
ous, and the effort to arrive at it is hopeless, and in these- 
cases only, does the power of construing a statute strictly 
or liberally exist ; and in regard to its exercise, as of dis- 
cretionary power generally, no other rule can be laid 
down than that it must be exerted under the guidance of 
learning, fidelity and practical sagacity. . . . 

" Every statute may be said to have two aspects : if it 
be severe in regard to an individual, it is beneficial to the- 
community; if it punishes crime, it also prevents fraud; 
if it infringes on some venerable rule of the ancient law,, 
it also introduces more simple, rapid and less expensive 
modes of procedure ; so that every act is capable, if the 
doctrine be admitted, of being construed in two ways 
diametrically opposed to each other, according to the tem- 
per of the magistrate to whom the task is confided. 

"The inconsistencies and discrepancies, as they now 
exist, in truth, too often arise from a desire, often' an un- 
conscious one, to substitute the judicial for the legislative 
will; find they can only be corrected by adhering to the car- 
dinal rule that the judicial functions are always best dis- 
charged by an honest and earnest desire to ascertain and 
effect the intention of the law-making body." x 

§ 50. As to incidental contractual potvers. — Every cor- 
poration, unless restrained by law, has the incidental 
power to make any contract which may be necessary to- 

i Sedgwick, Stat. & Const. Law (2d ed.), 325, 326, 827. 



§ 51.] CONTRACTS OF CORPORATIONS. 73 

advance the objects of its creation. 1 In deciding whether 
a corporation can make a particular contract, it must be 
considered in the first place whether its charter, or. some 
statute binding upon it, forbids or permits it to make 
such a contract; and if the charter and valid statutory- 
law are silent upon, the subject, in the second place, 
whether the power to make such a contract may not be 
implied on the part of the corporation as directly or inci- 
dentally necessary to enable it to fulfill the purposes of 
its existence ; or whether the contract is entirely foreign 
to its purpose. 2 Whenever a corporation makes a con- 
tract, it is the contract of the legal entity — of the artificial 
being created by the charter — and not the contract of the 
individual members. 3 If the foregoing distinctions be 
kept in mind, much doubt and needless confusion will be 
avoided. 

§ 51. Irregularity no defense to liability on corporate 
contract. — A corporation is estopped to deny its liability 
under a contract on the ground that the officers were 
not technically authorized to make it, or that its own pro- 
ceedings in the premises were irregular, when the con- 
tract was in the scope of its powers, was entered into by 
proper officers, and has been recognized by corporate acts.* 

1 Galena v. Cor with, 48 111. 423; Straus v. Eagle Ins. Co., 5 Ohio 
St. 59; Broughton v. Manchester Water Co., 3 B. & A. 1; Seibrecht 
v. New Orleans, 13 La. Ann. 496; Brooklyn Gravel Co. v. Sloughter, 
33 Ind. 185; Weckler v. First Nat. Bank, 42 Md. 581; Goodrich v. De- 
troit, 12 Mich. 279; Bateman v. Ashton-under-Lynn, 3 H. & N. 323; 
Douglas v. Virginia City, 5 Nev. 147. 

2 Weckler v. First Nat. Bank, 42 Md. 581. 

3 Head v. Prov. Ins. Co., 2 Cranch (IT. S.), 127; Dartmouth College 
v. Woodward, 4 Wheat. (U. S.) 636: Bank of U. S. v. Dandridge, 12 
Wheat. (U. S.) 64; Petersborough R. R. Co. v. Nassau Co., 59 N. H. 
385. 

4Bakersfield Ass'n v. Chester, 55 Cal. 98; Dooly v. Cheshire Glass 



74 CONTRACTS OF CORPORATIONS. [§ 52. 

§ 52. But when charter prescribes mode of contracting, 
it must be strictly pursued. — It is not necessary that the 
charter of a corporation should confer the power of con- 
tracting by an officer or agent in order to give him that 
right ; but when the charter prescribes any mode in which 
the officers or agents of a corporation must act, that mode 
must be strictly pursued to render the contract obliga- 
tory upon the corporation. 1 Officers of a corporation are 
special and not general agents ; consequently they have 
no power to bind the corporation by contract except 
within the limits prescribed by the charter and by-laws. 
Persons dealing with sueh officers are charged with notice 
of the authority conferred upon them and of the limita- 
tions and restrictions upon it contained in the charter. 2 
Accordingly, an insurance company was held not liable 
on a contract, and was not estopped from setting up the 
defense of ultra vires, though its agent had led the other 
contracting party to" believe, and he did believe, that the 
company had power to make it, and though no pretense 

Co., 15 Gray (Mass.), 494; Merrick v. Reynolds Eng. Co., 101 Mass. 
881; Salem Nat. Bank v. Almy, 117 Mass. 476; Chamberlin v. Hugue- 
not Mfg. Co., 118 Mass. 532; Ewing v. Robeson, 15 Ind. 26; Hammond 
v. Straus, 53 Md. 1; Rush v. Steamboat Co., 84 N. C. 70; Whitney v. 
Wyman. 101 U. S. 392; Upton v. Hansborough, 3 Biss. (U.S.) 417. 

iSt. Andrew's Bay L. Co. v. Mitchell, 4 Fla. 192; Bank of Augusta 
v. Earle, 13 Pet. (U. S.) 588; Talmage v. Coal Co., 3 Head (Tenn.), 
377; Norwich v. Norfolk P. Co., 4 El. & Bl. 397; S. 0., 82 E. C. L. 396; 
Eastern Counties R. Co. v. Hawkes, 5 H. L. 331 ; Taylor v. Chichester, 
etc. R. Co., L. R. 2 Ex. 356; Canal, etc. R. Co. v. St. Charles R. Co., 
44 La. Ann. 1069; Boyce v. Montauk Gas Co., 37 W. Va. 73; Ashbury 
Ry. Co. v. Riche, 7 H. L. 653; Hazlehurst v. Savannah R. Co., 43 Ga. 13; 
Cozart v., Georgia R. Co., 54 Ga. 379;. Lucas v. White Line Trans. Co., 
70 Iowa, 550. 

2 Adriance v. Roome, 52 Barb. (N. Y.) 399; Pittsburg R. Co. v. Keo- 
kuk Bridge Co., 131 U. S. 371; Pearce v. Madison R Co., 21 How. 
(U. S.) 441; Thomas v. Railroad Co., 101 U. S. 71; Central Co. v. Pull- 
man Co., 139 U. S. 24. 



§ 53.] CONTRACTS OF CORPORATIONS. 75 

was set up by the company, or its agent, that the con- 
tract was ultra vires, until a loss thereunder was known 
by all parties to have occurred. 1 

§ 53. All persons bound to take notice of limits of cor- 
porate powers. — Every person who enters into a contract 
with a corporation is bound at his peril to take notice of 
the legal limits of its capacity. 2 A corporation is not held 
oat by the government nor by the stockholders as author- 
ized to make contracts which are beyond the purposes and 
scope of its charter; and if it exceeds its chartered pow- 

1 Webster v. Buffalo Ins. Co., 7 Fed. Eep. 399. 

2 Davis v. Old Colony Ry. Co., 131 Mass. 258; Whittenton Mills v. 
Upton, 10 Gray (Mass.), 582; Richardson v. Sibley, 11 Allen (Mass.), 
«5; Pearoe v. Madison R. Co., 21 How. (U. S.) 441; East Anglian Ry. 
v. Eastern Counties Ry., 11 C. B. 775; Ashbury Co. v. Riche, 7 H. L. 
053; Central Trans. Co. v. Pullman P. Car Co., 139 U. S. 24; Thomas 
v. Railroad Co., 101 IT. S. 71; Mallory v. Hanauer Oil Works, 86 Tenn. 
598; Zabriskie v. Cleveland, etc. R. Co., 23 How. (U. S.) 381; Pacific 
Postal Tel. Co. v. Western Union Tel. Co., 50 Fed. Rep. 493; Branch 
v. Jessup, 106 U. S. 468; Pennsylvania R. Co. v. St. Louis E. Co., 118 
U. S. 290; Salt Lake City v. Hollister, 118 U. S. 256; Willamette 
Mfg. Co. v. Bank, 119 U. S. 191; Green Bay R. Co. v. Steamboat Co., 
107 U. S. 98; Pittsburg, etc. R. Co. v. Keokuk Bridge Co., 131 U. S. 
371; Oregon R. Co. v. Oregonian R. Co., 130 U. S. 1; Sutliff v. Lake 
County, 147 U. S. 230; Marcy v. Oswego, 92 U. S. 637; Humboldt v. 
Long, 92 U. S. 642; Dixon County v. Field, 111 U. S. 83; Lake County 
v. Graham, 130 U. S. 674; Chaffee County v. Potter, 142 U. S. 355; 
St. Louis Ry. Co. v. Terre Haute, etc. Co., 145 U. S. 393; Bailey v. 
M. E. Church, 71 Me. 472; Franklin County v. Lewiston, etc. Inst., 68 
Me. 43; Hood v. N. Y. etc. R. Co., 22 Conn. 17; S. C, 23 Conn. 622; 
Naugatuck R. Co. v. Waterbury Button Co., 24 Conn. 482; Converse 
v. Norwich Trans. Co., 33 Conn. 179; In re Cork, etc. R. Co., L. R. 4 
Ch. 748; Greeley v. Nashua Sav. Bank, 63 N. H. 145; Hall v. Paris, 
59 N. H. 74; Simmons v. Troy Iron Works, 92 Ala. 427; Sherwood v. 
Alvis, 83 Ala. 115; Smith v. Alabama, etc. Co., 4 Ala. 558; Mont- 
gomery v. Montgomery, etc. Co., 31 Ala. 76; Waddill v. Alabama R. 
Co., 35 Ala. 323; Chambers v. Falkner, 65 Ala. 448; Wilkes v. Georgia, 
etc. R. Co., 79 Ala. 180; N. W. Packet Co. v. Shaw, 37 Wis. 655; Luthe 
v. Farmers' Ins. Co., 55 Wis. 543. 



76 CONTRACTS OF CORPORATIONS. [§ 54. 

ers, not onty may the government take away its charter, 1 
but those who have subscribed to its stock may avoid any 
contract made by the corporation in clear excess of its 
powers, and a court of chancery, on the application of a 
stockholder, will restrain the corporation from carrying 
out the contract. 2 

§ 54. Why corporations not liable on ultra vires con- 
tracts. — The reasons why a corporation is not liable on a 
contract ultra vires are, first, the interest of the public 
that the corporation shall not transcend the limits of the 

1 Merchants' Nat. Bank v. Hanson, 33 Minn. 40; Hennesy v. St. 
Paul, 54 Minn. 219; National Bank v. Mathews, 98 TJ. S. 621; Na- 
tional Bank v. Whitney, 103 U. S. 99; Fortier v. N. O. Bank, 112 U. S> 
439. 

2 Davis v. Old Colony R. Co., 131 Mass. 258; Pratt v. Pratt, 33 Conn. 
446; Belmont v. Erie R. Co., 52 Barb. (N. Y.) 637; Black v. Delaware, 
etc. Canal Co., 22 N. J. Eq. 130; Tippecanoe Co. v. Lafayette R. Co., 50 
Ind. 85; Teachout v. Des Moines, etc. R. Co., 75 Iowa, 722; Chicago 
v. Cameron, 120 111. 447; Bliss v. Anderson, 31 Ala. 612; Bergman v. 
St. Paul, etc. Ass'n, 29 Minn. 275; Cass v. Manchester, etc. Co., 9 Fed. 
Rep. 640; Zabriskie v. Hackensack, etc. Co., 18 N. J. Eq. 178; Zabris- 
kie v. Cleveland, etc. R Co., 23 How. (TJ. S.) 381; Memphis v. Dean, 8 
Wall. (U. S.) 64; Bronson v. La Crosse R. Co., 2 Wall. (U. S.) 283; 
Dodge v. Woolsey, 18 How. (U. S.) 331; Heath v. Erie R. Co., 8 
Blatch. (U. S.) 347; Rogers v. Oxford, etc. R. Co., 2 De G. & J. 662; 
Kernaghan v. Williams, L. R 6 Eq. 228; Hodgson v. Powis, 1 De G., 
M. & G. 6; Cohen v. Wilkinson, 1 Macn. & G. 481; Ware v. Regents 
Canal Co., 3 De G. & J. 212; Pickering v. Stevenson, L. R. 14 Eq. 322; 
Mills v. Northern R. Co., L. R. 5 Ch. Div. 621; Aukland v. West- 

1 minster Board, L. R. 7 Ch. Div. 597; Bagshaw v. Eastern Counties 
Ry. Co., 7 Hare, 114; Ware v. Grand Junction Water-works Cp., 2 
Russ. & Mylne, 470.; Cunliffe v. Manchester, etc. Canal Co., 2 id. 480, n.; 
Great Western R. Co. v. Rushout, 5 De G. & S. 290; Bird v. Bird's 
Pat. Co., L. R 9 Ch. Div. 358; Solomons v. Lang, 12 Beav. 339; Lyde 
v. Eastern Bengal R. Co., 36 Beav. 13; Snell v. Minneapolis, etc. R. 
Co., 45 Minn. 264; Young v. Gaslight Coi, 15 N. Y. Sup. 443; McCray 
v. Junction R. Co., 9 Ind. 358; Stewart v. Erie, etc. Trans.' Co., 17 
Minn. 348. 



§ 05.~\ CONTRACTS OF COEPOBATIONS. 77 

powers granted; second, the interest of the stockholders 
that the capital stock shall not be subjected to the risk 
of enterprises not contemplated by the charter, and there- 
fore not authorized by the stockholders in subscribing for 
the stock ; and third, the obligation of every one entering 
into a contract with a corporation to take notice of the 
legal limits of its powers. 1 

§ 55. As to distinction oetween ultra vires and illegal 
contracts. — It has been confidently asserted in a certain 
class of cases, and the position is restated and adopted by 
a very able author, 2 that when acts of corporations are 
spoken of as ultra vires it is not intended that they are 
unlawful, or even such as the corporation cannot per- 
form, but merely those that are not within the powers 
conferred upon the corporation by the act of its creation, 
and are in violation of the trust reposed in the managing 
board by the shareholders that the affairs shall be man- 
aged, and the funds applied solely, for carrying out the 
objects for which the corporation was created; and that 
whether a contract as originally made was ultra vires is 
not a very important inquiry. 3 The learned judges and 
law writers who have adopted the views promulgated by 
Chief Justice Comstock in the Bissell Case, and to the 
same effect in the Whitney Arms Company Case, seem to 
have taken the position and involved the subject in more 
or less confusion by assuming that no act or contract can 
be unlawful or illegal unless it be infected with the taint 
of moral turpitude, or fruitful of fraud and felony. This 
is certainly an exaggerated idea of an illegal transaction 

1 Railway Oo. v. Keokuk Bridge Co., 131 XT. S. 384; Pearoe v. Madi- 
son, etc. Ry. Co., 21 How. (U. S.) 441; Central Trans. Co. v. Pullman 
Co., 139 U. S. 24, and cases cited in preceding note. 

2 Beach on Priv. Corp., § 422. 

3 Whitney Arms Co. v. Barlow, 63 N. Y. 62. 



78 CONTRACTS OF CORPORATIONS. [§ 55. 

■when considered in connection with corporate undertak- 
ings. An act or contract may be illegal or unlawful be- 
cause expressly or impliedly prohibited by law, and yet be 
for some benevolent and worthy purpose. Such transac- 
tions are made unlawful or illegal because prohibited by 
and contrary to law. The proposition that when acts of 
corporations are spoken of as ultra vires it is not intended 
that they are such as the corporation cannot perform is 
directly refuted by a long line of cases in the United 
States supreme court, and notably in the case of Central 
Transportation Co. v. Pullman Car Co., 139 TJ. S. 24, 
where Mr. Justice Gray, delivering the opinion of the 
court, says: "A contract of a corporation which is ultra 
vires in the proper sense, that is to say, outside the ob- 
jects of creation as denned in the law of its organization, 
and therefore beyond the powers conferred upon it by 
the legislature, is not voidable only, but wholly void and 
of no legal effect. The objection to the contract is, not 
merehj that the corporation ought not to have made it, but 
that it could not make it. . . . JVo performance on 
either side can give the unlawful contract any validity or 
be the foundation of any right of action upon it." 

So in People v. Chicago Gas. Trust Co., 130JU1. 286, 
the court, in discussing this phase of the subject, say: 
" The word ' unlawful ' as applied to corporations is not 
used exclusively in the sense of malum in se or malum 
prohibitum. It is also used to designate powers which 
they are not authorized to make, or acts which they are 
not authorized to do ; or, in other words, such acts, pow- 
ers and contracts as are ultra vires." 1 

1 And to the same effect are Pittsburg, etc. By. Co. v. Keokuk 
Bridge Co., 131 U. S. 371, 389; Mayor of Norwich v. Norfolk Ey., 4 
El. & Bl. (Q. B.) 397; McGregor v. Railway Co., 18 Q. B. 457; Gunness 
v. Land Corp. of Ireland, 22 Ch. Div. 341; Taylor v. Chichester, etc. 



§ 36.] OONTEAOTS OF COEPOKATIONS. 19 

§ 56. Prohibited contracts regarded as illegal and void. 
It is the accepted doctrine of the courts of this country 
'and England that a contract of a corporation which is 
prohibited by its charter or laws under which it is cre- 
ated, either expressly or by necessary implication, is con- 
sidered as illegal and void, and that in passing upon such 

By. Co., L. E. 2 Ex. 356; Wetherell v. Jones, 3 B. & A. 221; Bartlett 
v. Viner, Carth. 252; Smith v. Mawhood, 14. M. & W. 452; South Ey. 
etc. Co. v. Great Northern Ey, 9 Exch. 75. 84; Shrewsbury, etc. Ey. 
Co. v. Northwestern Ey. Co., 6 H. L. 113; Thomas v. Eailroad Co., 101 
U. S. 82; State v. Nebraska Distilling Co., 29 Neb. 700; Franklin Co. 
v. Lewiston Inst, etc., 68 Me. 43. 

In State v. Nebraska Distilling Co., supra, the court say: "A cor- 
poration, therefore, can only be organized under our laws for a 
lawful purpose, and any acts done by such a corporation for the ac- 
complishment of a purpose not lawful is unauthorized, in excess of 
its powers, and therefore illegal and void. The acts of a corporation 
to be unlawful need not necessarily be mala prohibita or malum 
in se, although such acts are illegal in all cases; but every act of a 
corporation which, by the terms of its charter, it is not authorized to 
do, is in excess of its charter, and therefore unlawful." 

So in Franklin Co. v. Lewiston Inst., supra, the court say: "The 
agreement was that the Franklin Company should pay for the stock 
for which the trustee of the bank had subscribed, and take the stock 
and hold it as security. We thus see that by the very terms of the 
agreement the money was to be applied to a specific purpose, and 
that purpose an illegal one. We use the word 'illegal,' not in the 
sense of malum in se nor malum prohibitum, but in the sense in 
which it is used to describe the unauthorized acts of corporations — 
acts and contracts ultra vires." 

And Selden, J., in Bissell v. Michigan, etc. Co., 22 N. Y. 258, says: 
" The contracts of corporations which are not authorized by their 
charters are illegal because they are made in contravention of pub- 
lic policy. . . . Although the unauthorized contract may be neither 
malum in se nor malum prohibitum, but, on the contrary, may be for 
some benevolent or worthy object — as to build an almshouse or 
a college, or to purchase and distribute tracts or books of instruc- 
tion, — yet, if it is a violation of public policy for corporations to exer- 
cise powers which have never been granted to them, such contracts, 
notwithstanding their praiseworthy nature, are illegal and void." 



80 CONTRACTS OF OOEPOEATIONS. [§ 57. 

contracts the courts have construed the meaning of the 
words " illegal " and " ultra vires " as identical. 1 In 
Taylor v. Chichester & Midhurst Ry. Co., supra, Mellor, J., 
said : " I think that the statutes by which the defend- 
ants were incorporated did constitute them a company 
created for particular purposes, with special powers, and 
that the application of the funds to be raised under 
them is limited to prescribed and definite objects; and 
that by reasonable inference from the provisions of the 
statute, the bargain now under consideration is prohib- 
ited, and that its performance by the defendants would 
amount, not merely to a breach of trust, the remedy for 
which would be in equity, out that the contract itself, being 
ultra vires and illegal because prohibited, the defense is 
properly raised in a court of law." So, in Mayor of Nor- 
wich v. Norfolk By., above cited, the court say : " It re- 
mains to be considered whether this contract was illegal, 
as not authorized by the > act incorporating the defendant 
company, and therefore prohibited by that act. ... So 
a contract for a purpose unconnected with the purpose of 
incorporation is, or may result in, an application of the 
funds to a purpose unconnected with the purpose of in- 
corporation, and is therefore held to be prohibited and 
void." 

§ 57. Unauthorized contracts none the less illegal be- 
cause statutes ignored by courts. — It has been contended 
by a very learned author that a contract is not necessarily 
void and not to be enforced because it is prohibited by 
statute, by showing that courts have ignored such pro- 
visions in the statute as though they were not in exist- 

1 Taylor v. Chichester, etc. Ry. Co., L. R. 2 Ex. 356; Gunness v. 
Land Corp. of Ireland, 22 Ch. Div. 349; McGregor v. Railway Co., 18 
Ad. & El. (Q. B.) 457; Mayor of Norwich v. Norfolk Ry., 4 El. & Bl. 
<Q. B.) 397; and see cases cited in preceding section. 



§ 57.] CONTRACTS OF CORPORATIONS. 81 

-ence. 1 This astonishing deduction is stated in the fol- 
lowing language : " Statutes have frequently been passed 
•expressly prohibiting corporations from exercising any 
powers except those conferred by their charters. Some- 
times the prohibitions are enacted in the form of general 
laws applicable to all corporations, and sometimes they 
are incorporated in special charters applicable to partic- 
ular corporations only. 

" Prohibitions of this description are merely declaratory 
■of the general common-law prohibition against any exer- 
cise of corporate powers which have not been authorised by 
the legislator e; and there is no reason for supposing that the 
legislature, in enacting such a prohibition, intends to give 
it any greater force or effect than the common-law rule. 

" There is probably no state or country in which a rule 
contrary to the views above expressed has been system- 
atically enforced. In many instances these legislative 
prohibitions declaratory of the common law have been 
.tacitly ignored by the courts. Thus, the Revised Statutes 
•of New York declare that: 'In addition to the powers 
enumerated . . . and those expressly given in its 
charter, or in the act under which it shall be incorpo- 
rated, no corporation shall possess or exercise any corpo- 
rate powers except such as shall be necessary to the 
exercise of the powers so enumerated and given;' but it 
has never been held that corporate acts and contracts in vio- 
lation of this prohibition are necessarily null and unen- 
forceable at law. There are numerous cases in which 
prohibited acts and contracts falling within the prohibi- 
tion have been recognized and given effect." 2 This is 

1 Morawetz on Corp., § 658. 

2Mor Priv Corp., §§ 658, 659, the numerous cases resolving them- 
selves into three-Mom v. Averhill, 10 N. Y. 460; Whitney Arms Co. 
v. Barlow, 63 id. 63 ; and Whitney v. Wyman, 101 U. S. 392,- the lat- 
ter of which does not sustain any such propositions. 
6 



82 CONTRACTS OF CORPORATIONS. [§ 57- 

indeed a sad commentary on the courts of New York, and 
from some decisions which have been rendered by courts 
in that state the inference might be readily drawn that 
the learned author is speaking with some truth. While 
it is a matter of common knowledge in the profession 
that courts have frequently ignored certain statutes, judg- 
ing from their decisions, yet it would seem to require a 
vast deal of hardihood to claim this as authority for a 
violation of the law. It is certainly one of the weakest 
arguments that could be adduced, and possesses not the 
slightest merit. 



CHAPTER IV. 
THE DOCTRINE APPLIED TO EXECUTED CONTRACTS. 

§ 58. Estoppel — Defense of ultra vires to executed contracts. 

59. Same subject. 

60. Same subject — Corporation similar to one under legal disabil- 

ity. 

61. Performance by innocent party to contract ultra vires a cor- 

poration. 

62. Position of United States supreme court on alleged rule. 

63. San Antonio v. Mehafly. 

64. Railway Co. v. McCarthey. 

65. Hitchcock v. Galveston. 

66. Jones v. Guaranty Co. 

67. National Bank v. Mathews. 

68. Central Transportation Co. v. Pullman Car Co. 

§ 58. Estoppel — Defense of ultra vires as to executed 
contracts. — While a great majority of the courts of this 
country, both federal and state, agree, in the main, that 
a contract ultra vires a corporation must be deemed as 
illegal and void, and no suit can be maintained upon it, 1 
yet if such a contract, though in contravention of law as 
originally made, be executed or partly performed by one 
or the other of the parties to it, in that case it has been 
held by some state courts that the defense of ultra vires ■■ 
should not be allowed. 2 The grounds upon which this ; 
denial is predicated are that the company is estopped from 
setting up its own unauthorized act and its own incapac- 
ity to evade performance on its part, after receiving the 

1 See §§ 9, 53, 54, and cases there cited. 

2 Whitney Arms Co. v. Barlow, 63 N. Y. 62; Bradley v. Ballard, 55 
111. 413; Darst v. Gale, 83 111. 136; Beach on Priv. Corp., § 422. 



8i EXECUTED CONTRACTS. [§ 59. 

fruits of the bargain ; that the court refuses to entertain 
the defense which common honesty forbids the company 
to make ; that a man may become bound by the act of an 
unauthorized agent and be held liable on the contract 
made for him, not on the ground that the agent in fact 
had any authority, but for some conduct on the part of 
the alleged principal which precludes him from raising 
the question of authority. 1 

§ 59. Same subject. — Let us see if the propositions con- 
tained in the next preceding section are not both falla- 
cious and untenable. First, it is contended in the cases 
heretofore cited that the company is estopped from set- 
ting up its own unauthorized act and incapacity to evade 
performance on its part. It is asserted with much con- 
fidence, and it is submitted that the great weight of au- 
thority bears out the assertion, that the act set up as 
unauthorized is not, and by any possibility could not, 
under the charter of the corporation, have been its own, 
but is the unauthorised act of its officer or agent. It could 
not have been the corporate act, for in its creation the 
element of power for performing the particular act was 
left out of its organization — the power is wanting. As to 
the corporation, the legal entity, such act is null — as 
though it had never been performed. It is a creature 
resting under a legal disability. The law has said it may 
not and cannot perform such an act. It is created with 
specified powers only, and for those purposes enumerated 
in the act of its creation. It is not on the same footing 
as a person who may be bound by the act of an unauthor- 
ized agent by conduct of acquiescence or ratification, be- 
cause it cannot ratify an act which it has no power in 
itself to perform. 2 

1 See cases cited in preceding note. 

2 See § 78 post, and cases cited. 



§ 60.] EXECUTED CONTRACTS. 85 

§ 60-. Same subject — Corporation similar to person 
under legal disability. — Ultra vvres acts of corporations 
bear a striking similarity to those of persons resting under 
a legal disability, such as infants and married women; in 
fact a corporation and a married woman have many points 
in common. Neither has any existence until created by 
law. Individuals, by conforming to specified require- 
ments of the law, acquire, in a corporate capacity, cprtain 
rights and powers, and are subject to certain liabilities, 
when acting in such legal capacity. Their individual 
identity is sunk and merged in the corporate entity, and 
in such capacity only are they recognized by the law 
when the acts of the corporation are involved. So, like- 
wise, it may be said of a married woman. She becomes 
such only through methods prescribed by the law, and as 
such — the care and solicitude of the law — she is a crea- 
ture of but slight volition. She rests under a legal disa- 
bility which, when removed by the law, enables her to 
act and contract as &feme sole, free from legal restrictions. 
While such legal disability remains, a married woman is 
incapable of entering into any binding contract, and her 
agreements are not merely voidable, but absolutely void. 
She cannot ratify them during coverture so as to furnish 
a good consideration for a subsequent agreement made 
after she shall have become discovert. She cannot be es- 
topped by anything in the nature of a contract. By the 
policy of the law she is prohibited from such acts and 
contracts, and " common honesty " has no place in the 
consideration of the question. The same is true of a corpo- 
ration. The legislature may remove the legal disability 
by conferring upon it power to perform a given act or any 
act that an individual may do. Until such is done it 
cannot be held responsible for acts which the law says it 
may not and cannot do, though such acts be accomplished 



86 EXECUTED CONTKACTS. [§ 61. 

by its officers or agents. For absurd and contradictory 
would it be to hold that such a creature is absolutely dis* 
abled by legal incapacity from making certain contracts, 
and at the same time hold that an attempted contract, 
though void as a contract, still remains good by way of 
.estoppel. If a corporation may give vitality to a contract 
expressly or impliedly prohibited, by mere representation 
of its power to enter into it, the statutory prohibition could 
be entirely evaded and abrogated. As was said by the 
court in Keen v. Coleman, 39 Pa. St. 299 : " We do not 
see how there can be an estoppel involved in the very act 
to which the incapacity relates, that can take away that 
incapacity. If a legal incapacity can be removed by a 
fraudulent representation of capacity, then the legal in- 
capacity would have only a moral bond or force, which 
is absurd." If estoppel arises against a corporation to 
plead ultra vires to an act beyond its powers to perform 
by the mere performance or part performance by the other 
party, who knows of the jsorporation's incapacity to enter 
into such a transaction, then there is no virtue in legisla- 
tive enactments, and every person may safely become his 
own law-maker. This stand has been taken by some 
courts, but it is not the law. 

§ 61. Performance oy innocent party of contract ultra 

vires a corporation. — Great stress and no little polemical 

r vaporing has been given to the argument respecting the 

\faithful performance of a given ultra vires contract by 

an innocent party. This >sort of sophistrj T has a pleasing 

sound to the ear of equity, but is delusive and without 

merit when urged in support of the enforcement of ultra 

vires contracts of corporations. In all transactions with 

r corporations as now created, innocence may be said to 

I be analogous to negligence, and no one can be allowed to 



§ 61.] EXECUTED CONTRACTS. 87 

plead his own laches as a defense. All persons who deal 
with a corporation are deemed by the law to know its 
powers and the limits imposed upon its acts and under- 
takings. The act by which a corporation obtains its 
powers is a public act open to all the world, and misrep- 
resentations by officers or agents of a corporation regard- 
ing its powers or capacities can have no proper bearing 
in arriving at its liability. The charter is of record and 
open to inspection. There is no reason why a person 
should place greater trust and confidence in corporations 
than iu individuals ; and if he chooses to enter into agree- 
ments or business transactions with corporations without 
investigating as to its powers or liability, and involves 
himself in loss and hardship, he has no reasonable cause 
for complaint, because he is not deceived — it is his own 
fault. He in fact stands in the situation of a wrong-doer. 1 
Even positive acts of encouragement that sometimes op- 
erate to estop one sui juris will not affect one under a 
legal disability. 2 No person who is considered as having 
any reasonable amount of business sagacity will blindly 
enter into an undertaking with another, and expend 
money and labor on such undertaking, without first in- 
vestigating as to the responsibility of the person with 
whom such business venture is contemplated. "Why, then, 
should he relax his vigilance, fling reason to the winds 
and tax his credulity when coming in contact with a legal 
creature which requires the combined watchfulness of the 
courts, the public and its creator to keep it within the 
legitimate confines of its prescribed powers and privi- 
leges? The charter or act of incorporation is supposed 
to be in his mind when he enters into the unauthorized 
agreement. He elects to go on and accept the conse- 

1 Carr v. Rogers, 7 Watts (Pa.), 394. 

2 Glidden v. Striplen, 52 Pa. St. 400. 



88 EXECUTED CONTRACTS. [§ 61- 

quences and run the risk of being confronted with the; 
defense of want of power in the corporation. "When so 
confronted, and he brings suit for specific performance,, 
can it be said that he comes into court with clean hands? 
Is it not more to the purpose and in the cause of truth to 
say : " You have gone on and performed this act in the 
light of a public statute. Tou knew the risks you were 
running and the probable consequences of your act. The 
court cannot help you in enforcing this contract. Tour 
act was, in fact, a fraud upon the stockholders in attempt- 
ing to subject the funds of the corporation, in which they 
all have an interest, to a purpose beyond the scope of the- 
corporate business and to entail on them risks they never 
assumed or agreed to." Is there any room for a plea of 
" good faith " on the part of one who has performed his 
side of a contract which he knew the corporation, for 
want of power, was unable to carry out? Is there any 
room for a plea of fraud or deceit when, at the time the- 
officer or agent of the corporation may have been misrep- 
resenting the corporate powers, he knew or was bound to- 
know that such representation was in fact false ? Laws. 
are not enacted for one person to obey and another to 
(Violate. Honesty of purpose is no excuse for one who- 
I contravenes the law. In plain "English," ignorance, os- 
tensible or bona fide, cuts no figure when the provisions-, 
of a statute have been violated. He is presumed to know 
them ; and if he do not, if allowed to suffer the conse- 
quences of disregarding them, it may so develop his dis- 
cretion that future violation of such enactments will be 
avoided. It is indeed an anomalous procedure to ask the- 
aid of the Jaw to assist one in the violation of its very 
provisions. If the comforting arm of equity is to be ex- 
tended, it may be done in a proper proceeding, and it 



§ 62.] EXECUTED CONTKACTS. 89 1 

should not support those who seek its aid to its own un- 
doing. 1 

§ 6*2. Position of United States supreme court on al- 
leged rule. — This alleged rule, that a corporation cannot 
evoke the defense of ultra vires when the other party has 

1 The doctrine alleged to be established by the "Whitney Arms 
Company Case, the Bissell Case, and others, is so thoroughly ex- 
ploded and the position there taken so learnedly combated by Mr. 
Taylor in his excellent work on Corporations, that it is deemed ad- 
visable and profitable to quote his views rather fully. The learned 
author says: 

" The rules which this case (Bissell v. Michigan Southern & N. 
Ind. R. R. Co., 22 N. Y. 64) and sundry others in New York and else- 
where have tended to establish may be considered here. If the cor- 
poration has performed the contract on its side, the other contract- 
ing party cannot plead that the corporation was not authorized to- 
make such a contract. This is held by Whitney Arms Co. v. Bar- 
low, and even in the absence of all authority would seem clear, 
' One who has received from a corporation the full consideration of 
his engagement to pay money . . . cannot avail himself of the 
objection that the contract thus fully performed by the corporation 
was ultra vires and not within its chartered privileges and powers.' 
(Whitney Arms Co. v. Barlow, 63 N. Y. 70.) Such a person having- 
himself made the contract and received its benefit is clearly estopped 
from making any such allegation. 

" The converse of this proposition is also said to be law. If the 
other contracting party has performed his side of the contract, the 
corporation cannot plead that its charter gave it no power to enter 
into the contract, at least if the corporate property has been bene- 
fited by the performance. It is submitted that this last proposition 
involves a fallacy. If the other contracting party had contracted 
through an agent whose instructions were contained in a written 
instrument which the corporation knew to contain all the authority 
which the agent possessed, and if the contract in question was un- 
authorized by this instrument, could any one maintain that the 
principal would be bound because the corporation had performed its- 
side of the contract? Yet in reality it is in analogy with this to- 
hold the corporation bound because the other contracting party has 
performed. 
"To illustrate, let us imagine that B. is a land-owner, A. his agent 



90 EXECUTED CONTRACTS. [§ 62. 

wholly or in part performed his side of the contract, is 
sought to be invested with added dignity by a citation 
of several cases in the federal supreme court where this 
position is asserted to have been vindicated and adopted. 

and C. a manufacturer of fertilizers. If C, knowing that A. has no 
authority from B. to purchase fertilizers, sells a large amount of 
them to be applied on B.'s lands, and they are so applied, but with- 
out A.'s knowledge, C. has executed the contract on his side and 
B.'s lands have had the benefit. Yet it is clear that G. has no valid 
claim against B. Apply this to the case of a corporation. Let B. 
be the shareholders and creditors; let A. be the board of directors 
and C. the other contracting party. A. makes a contract with C. 
beyond the powers of the corporation — beyond A.'s power to repre- 
sent the corporate interests. In legal intendment C. knows this 
contract to be beyond A.'s authority, but nevertheless performs his 
«ide of it, and the results of his performance are applied to the 
benefit of the corporate enterprise, but without the knowledge of 
the shareholders or creditors. Here the interests of the sharehold- 
ers and creditors have been benefited, but through no voluntary 
action or acquiescence on their part, and through acts which C. 
knew they had not authorized. It is again clear that C. by his per- 
formance acquires no rights which can affect the interests of share- 
holders and creditors. And the same reasoning would apply even 
if the corporation, by a vote in corporate meeting, ratified the con- 
tract; the rights of absent or dissenting shareholders would not 
thereby be affected, provided they were guilty of no laches in as- 
serting their rights. Undoubtedly, if the shareholders know that 
ultra vires contracts are being entered into and performed, and that 
the proceeds are being applied to the corporate enterprise, they can- 
not with honesty stand quietly by, but must do all in their power to 
prevent such application. Therefore, through acquiescence after 
they know, or, if they have been at all observant of corporate af- 
fairs, would have known, of the contracts, they would be estopped 
from objecting. And so. perhaps, might creditors estop themselves. 

"The preceding argument leads to this unavoidable conclusion: 
The mere facts that the other contracting party has executed his 
■side of the ultra vires contract, and that the corporate property has 
thereby been benefited, do nbt affect the rights of persons who have 
done nothing from which assent to the contract can in any way be 
inferred. 

" If one examines with care the cases which are regarded as au- 



§ 63.] EXECUTED CONTRACTS. 91 

These cases are, among others, San Antonio v. Mehaffy, 
96 IT. S. 312; Railway Co. v. McOarthey, 96 U. S. 258, 
and Hitchcock v. Galveston, 96 U. S. 341. 

§ 63. San Antonio v. Mehaffy, 96 U. S. 312.— In this 
case the only reference to the doctrine of ultra vires was 
made in a casual observation, purely dictum, by Mr. Jus- 

thority for this alleged general rule that sounds so just — if the other 
contracting party has performed, and by his performance benefited 
the property of the corporation, the latter cannot plead ultra vires — 
it will appear that the recovery of the other party really does not 
rest on the fact that he has performed, nor on the fact that his per- 
formance has benefited the corporate property, though undoubtedly 
he would not have had the same cause of action had he not per- 
formed; and that corporate interests were benefited may very likely 
have been a material point in establishing his case. It is submitted 
that in these cases the plaintiff's recovery rests on the circum- 
stances that all the persons who would have been entitled to object 
to the contract allowed the plaintiff to go on and perform under 
the reasonable assumption on his part of general acquiescence in 
the contract. To be sure the shareholders are not supposed to be 
continually exercising an actual supervision over the affairs of the 
•corporation. But they have a right to inspect the books, and, if 
they choose, may keep themselves acquainted with what is being 
done by the corporate management. At any rate, unless they keep 
a watch over the course of corporate affairs, they will not be entitled 
on a plea of their own ignorance to come forward at their pleasure 
and cause the repudiation of corporate obligations. Shareholders 
wishing to prevent illegal or ultra vires acts, or to absolve the cor- 
poration from responsibility for them, must be vigilant and swift. 

" Darst v. Gale, 83 111. 186, is another case frequently cited in sup- 
port of the alleged rule — which is indeed stated in so many words 
in the opinion of the court — 'that a private corporation cannot 
avail itself of the defense of ultra vires where the contract has in 
good faith been fully performed by the other party, and the corpo- 
ration has had the benefit of the contract and the performance.' But 
in this case the defense was not set up by or on behalf of the corpo- 
ration, nor on behalf of any person interested in it. A subsequent 
grantee of premises belonging to the corporation attempted to have 
a prior deed of trust covering the same property set aside, on the 



92 EXECUTED CONTRACTS. [§ 63, 

tiee Swayne, who used the following language: " The doc- 
trine of ultra vires, whether invoked for or against a 
corporation, is not favored in the law. It should never 
be applied where it will defeat the ends of justice, if such 
result can be avoided." And citing only Whitney Arms 
Co. v. Barlow, 63 N. Y. 62. The doctrine of ultra vires 
was not " invoked " in this case, and the learned sugges- 
tion of the justice was wholly gratuitous, nor was its ap- 

ground that such deed was ultra vires the corporation; he having 
bought with full notice of the prior deed. The ultra vires nature- 
of the prior deed had injured no right of his; and, consequently, he 
had no standing in court to interpose the plea of ultra vires. 

" The decision, if not the reasoning, in this case points to an im- 
portant principle respecting the plea of ultra vires. As we have 
seen, the plea cannot be interposed by the party contracting witli 
the corporation when the corporation has performed; and the rea- 
son for this lies not only in the estoppel in which, under the circum- 
stances, such a person is affected, but in the following reasons as 
well: That the transaction was ultra vires infringes none of his. 
rights; he cannot, therefore, interpose the defense. This is a plain 
principle which is not only law, but patent common sense. With a 
few special exceptions no one can represent another before the 
courts or elsewhere, without authority, express or implied, to do so. 
To an action brought against himself a man cannot ordinarily plead 
that the rights of another, whom he is not authorized to represent, 
will be affected by the prosecution of the suit. If the court con- 
sider that hardship and injustice will result unless the interests of 
each outside person are regarded, the court — at least a court of 
equity — may require him to be made a party to the suit, in order to 
afford him opportunity to protect his interests. Accordingly, when 
a contract ultra vires is entered into, it is not competent for persons 
whose rights are not infringed, any more than for those who by 
their actions have estopped themselves from complaining, would 
restrain the fulfillment of the contract on the ground that the inter- 
ests of others, which they are not authorized to represent, will be 
injured. It may therefore be stated as a rule that a person whose 
rights are in no way infringed by the fact that a given act is ultra 
vires a corporation can found no action or defense on that fact." 
Taylor on Corp., §§ 275-281. 



§ 64.] EXECUTED OONTKACTS. 93 

plication required in the decision of the case, and the 
■case cited shows very clearly that the learned justice had 
given the subject little thought and less investigation. 

§ 64. Railway Co. v. McCarthey, 96 U. 8. 258.— In 
this case, which has been quite frequently cited as bear- 
ing out the alleged rule heretofore referred to, it was de- 
cided that, unless forbidden by its charter, a railroad com- 
pany may contract for a shipment over connecting lines; 
and having done so is liable in all respects upon them as 
upon its own lines ; also that where such a contract is not, 
on its face, necessarily beyond the scope of the powers 
of the corporation, it will, in the absence of proof to the 
contrary, be presumed to be valid. All of which propo- 
sitions are universally conceded and are too clear to call 
for argument or authority. 'No reference is made to the 
defense of ultra vires by a person who has received the 
benefit of a contract executed by one party or the other ; 
the same justice who delivered the opinion of the court 
in the San Antonio case also speaking for the court in 
this case. In the course of this opinion he says : " The 
doctrine of ultra vires, when invoked for or against a cor- 
poration, should not be allowed to prevail when it would 
defeat the ends of justice or work a legal wrong; " citing 
on this occasion, Union Water Co. v. Murphy's Flat Flush- 
ing Co. et. al., 22 Cal. 620 ; Union Bailroad Co. v. Bail- 
road Co., 29 1ST. J. Eq. 542 ; and the old standby, Whitney 
Arms Co. v. Barlow, 63 K". Y. 62. From the cases here 
cited it would seem that the learned justice had widened 
the field of his investigation somewhat, but from the 
language used it is evident that he clung to the same 
opinion still. The latter part of the sentence last quoted 
has a lulling sound for those who prefer axioms to au- 
thority. Though often quoted, it has never been clearly 
explained what is meant by " working a legal wrong." 



94 EXECUTED CONTRACTS. [§ 65. 

A legal wrong means, if it means anything at all, a wrong 
against the law, and it certainly cannot be considered as 
a legal wrong to see that the provisions of the law are 
vindicated and its terms complied with, in holding cor- 
porations strictly within their statutory powers and priv- 
ileges. "Whether it is " defeating the ends of justice" to 
allow corporations to repudiate the unauthorized and 
illegal acts of their officers and agents is also a proposi- 
tion we will spend no time in vindicating. 

§ 65. Hitchcock v. Galveston, 96 U. S. 341.— We now 
come to the bulwark behind which the adherents to the 
alleged rule under discussion confidently repose them- 
selves — the case of Hitchcock v. Galveston, — which seems 
to call for a more extended examination to show its in- 
applicability. The facts in that case were, briefly stated, 
these : The city of Galveston, under an ordinance, had, 
through its mayor and chairman of the committee on 
streets and alleys, entered into a contract with Hitchcock 
and another for paving the sidewalks of said city, for 
which work the city agreed to pay, and the contractors 
agreed to accept, a specified sum per square yard, payable 
in bonds of the city. "While the ordinance of the city em- 
powered the mayor and the said chairman " to enter into 
and make contracts with proper and responsible parties 
to fill up, grade, curb and pave the said sidewalks," the 
city had no power or authority to issue bonds in payment t 
of such work. Under this agreement Hitchcock made 
contracts for labor and materials, performed a large 
amount of work, completed the curbing and filling of some 
sidewalks, and was going on in earnest to finish the entire 
work, when, at the expiration of some forty-six days, he 
was compelled by force and by authority of the city to 
abandon the work without any fault of his own. After- 
wards the city council declared the contract null and void, 



§ 65.] EXECUTED CONTRACTS. 95 

and directed the mayor to notify the contractors to that 
effect, which he did. Accordingly suit was brought to 
recover damages for the breach of the contract. Mr. Justice 
Stone, in delivering the opinion of the court, said: 

" If it were conceded that the city had no lawful author- 
ity to issue the bonds described in the ordinance and 
mentioned in the contract, it does not follow that the con- 
tract was wholly illegal and void, or that the plaintiffs- 
have no rights under it. They are not suing upon the 
bonds, and it is not necessary to their success that they 
should assert the validity of those instruments. It is 
enough for them that the city council have power to enter 
mto a contract for the improvement of the sidewalks ; that 
such a contract was made with them ; that under it they 
have proceeded to furnish materials and do work as well 
as to assume liabilities ; that the city has secured and now 
enjoys the benefit of what they have done and furnished ; 
that for these things the city promised to pay, and that 
after having received the benefit of the contract the city 
has broken it. It matters not that the promise was to 
pay in a manner not authorized by law. If payments 
cannot be made in bonds because their issue is ultra vires, 
it Would be sanctioning rank injustice to hold that pay- 
ment need not be made at all. Such is not the law. The 
contract between the parties is in force so far as it is law- 
ful. . . . The promise to give bonds to the plaintiffs 
in payment of what they undertook to do was, therefore, 
at farthest, only ultra vires, and in such a case, though 
specific performance of an engagement to do a thing trans- 
gressive of its corporate powers may not be enforced, the 
corporation can be held liable on its contract. Having 
received benefits at the expense of the other contracting 
party, it cannot object that it was not empowered to per- 
form what it promised in return, in the mode in which 
it promised to perform." 



■96 EXECUTED CONTRACTS. [§ 65. 

There was no question in this case as to the power of the 
city to make the contract for paving the sidewalks. How- 
payment should be made was, at most, only incidental to 
the authority to make the contract. Had it been decided 
that the city was devoid of power to make the contract, 
it would have raised altogether a different phase of the 
question. When a corporation has the power to make 
certain contracts, it cannot plead its own irregularity in 
performing them. If it has power to make the contract 
at all, it is liable on it. " Though specific performance 
of an engagement to do a thing transgressive of its cor- 
porate powers may not he enforced, the corporation can 
be held liable on its contract." By this proposition is 
meant that the corporation may be held liable on its im- 
plied contract to pay for what it has received the benefit 
of, as on a quantum meruit. No other construction can 
be put upon it with any reason. To say that specific per- 
formance of an agreement may not be enforced, yet the 
corporation can be held liable under the specific terms of 
that agreement, is decidedly absurd. It is quite apparent 
that these statements were made by the learned justice 
having in mind the circumstances connected with this 
particular case. Does the decision in this case sustain 
the proposition laid down in the Whitney jirms Com- 
pany Case that a corporation, having received benefits 
under a contract which it had no power to make, if exe- 
cuted by the other party, cannot avail itself of the defense 
of ultra vires in an action on that contract? It holds de- 
cidedly the reverse, and while admitting that the contract 
cannot oe enforced against the corporation in the manner 
iu which it agreed to perform it, yet it must be held lia- 
ble for the benefits received by the performance of the 
other party to the contract. In other words, it is liable 
as for money had and received — a clear repudiation of the 



§§ 66, 67.] EXECUTED CONTRACTS. 97 

contract, and all that it is claimed a corporation has a 
right to do. 

§ 66. Jones v. Guaranty Co., 101 U. 8. 622. — Jones v. 
Guaranty Co., supra, is another case which has been cited 
in support of the rule alleged in the Whitney Arms Com- 
pany Case. The nearest approach to the proposition in 
that case was made in the following language of Mr. Jus- 
tice Swain, who delivered the opinion of the court: 
" Where money has been obtained by a corporation upon 
its securities which were irregular and ultra vires, but the 
money was applied for the benefit of the company with 
the knowledge and acquiescence of the stockholders, the 
company and the stockholders were estopped from deny- 
ing the liability of the company to repay it. And the 
same result follows when such securities are issued with 
the knowledge of the shareholders, so far as the money 
thus raised is applied for the benefit of the company." 
If this case sustains the alleged rule it is difficult to under- 
stand the reasoning of its application. 

§ 67. National Bank v. Mathews, 98 TJ. 8. 621.— An- 
other case which has been cited with some frequency in 
this connection is that of National Bank v. Mathews. 
The only question raised in that case was whether or not 
a bank which had parted with its money in good faith 
could be allowed to enforce a trust deed taken as security 
for the debt, when the other party who had received the 
bank's money set up the plea that such a transaction by 
the bank was ultra vires and illegal ; and it was held that 
such a defense could not be allowed. This decision, like 
a great many others frequently cited, applies to the party 
contracting with the corporation and not to the corpora- 
tion ; the reasons why such a defense are not allowed in 
such cases being fully considered and explained by Mr. 
Taylor, quoted in note to section 61. 
7 



98 EXECUTED CONTRACTS. [§ 68. 

§ 68. Central Transportation Co. v. PuUman Car Co., 
139 Z7". S. 2b — The further consideration of this branch 
of the subject will be dismissed with a quotation from the 
recent case of Central Transportation Co. v. PuUman Car 
Co., supra, wherein Mr. Justice Gray expressly repudiates 
the alleged rule enunciated in the Whitney Arms Case. 
In the course of his able opinion he says : " It was argued 
in behalf of the plaintiff that, having been fully performed 
on the part of the plaintiff, and the benefit of it received 
by the defendant for the period covered by the declara- 
tion, the defendant was estopped to set up the invalidity 
of the contract as a defense to this action to recover the 
compensation agreed on for that period. 

"But this argument, though sustained by the decisions 
of some of the states, finds no support in the judgments 
of this court. The passages cited by the plaintiff from 
Railway Co. v. McCarthey, 96 U. S. 258, 267, and San 
Antonio v. Mehaffy, 96 IT. S. 315, are no more than a 
passing remark that ' the doctrine of ultra vires, when in- 
voked for or against a corporation, should not be allowed 
to prevail when it would defeat the ends of justice or 
work a legal wrong,' and a repetition in substance of the 
same remark, adding, ' if such a result can be avoided.' " ' 

i Mr. Morawetz, in his admirable treatise on Corporations, at page 
551, section 581, says: 

" In some of the cases it has been said that, while the general rule 
is that acts and contracts in excess of the charter of a corporation 
are ultra vires, and therefore not binding on a company, yet, after 
a corporation has enjoyed the benefit of an act or contract per- 
formed in its behalf, it will be estopped, when charged with respon- 
sibility on account of the act or contract, from setting up as a 
defense that the transaction was ultra vires. 

" This statement of the law is certainly inaccurate. It has never 
been denied that the principles of the law of agency apply to cor- 
porations and to individuals alike, and it is certain that, according 
to the elementary principles of the law of agency, a person does not 
become responsible for acts performed in his name merely because 



§ 68.] EXECUTED CONTRACTS. 99 

the acts have accrued to his benefit A person may become respon- 
sible for an unauthorized act performed in his behalf by ratifying 
the act; but ratification would imply an intention to adopt the un- 
authorized act. Eatification by a corporation of an act in excess of 
its charter means ratification by the entire body of shareholders; 
no agent of a corporation has authority to ratify an act which he 
had not original authority to do. . . . 

"Statements may be found in some of the authorities to the effect 
that 'a plea of ultra vires' should not prevail when it would 'ac- 
complish a legal wrong.' These statements, however, refer merely 
to the effect of the legal prohibition against unauthorized corporate 
acts; they mean that the fact that a transaction is in excess of the 
charter of the corporation should not be a defense if there would 
be a liability according to the general principles of law applicable 
to unincorporated companies. It certainly cannot be maintained 
that the application of the established principles of the law of 
agency would 'accomplish a legal wrong.' " 

The learned author then quotes the remarks made by Bramwell, B., 
in the case of Bateman v. Mayor of Ashton, 3 H. & N. 340, in the 
court of Exchequer Chamber, where the learned baron used the fol- 
lowing language: "I cannot help adding an observation on the ob- 
jection made to the honesty of a defense of this description. It is 
said that the company lias contracted, and the company repudiates 
its contract. There cannot be a more perfect fallacy. 'Persons 
without authority have affected to contract for the company, and 
the company repudiates the act,' is the true expression. A., B. and 
C. are in partnership as hatters. A. buys boots in the name of the 
firm, and the seller sues A., B. and C, who say they did not contract. 
It may be wrong in A, but are B. and C. to blame? I do not say 
the corporation cases are cases of partnership, but the principle is 
the same." 

So the observation made by Lord Wensleydale in Ernest v. Nich- 
olls, 6 H. L. 400, would seem appropriate in this- connection. He 
there says: "It is a captivating argument for a jury, and jury- 
men are very often misled by it in these cases of joint-stock com- 
panies, that the company has had the benefit of the plaintiff's goods, 
or service, or money, whereas, for the purposes of contract, the com- 
pany exists only in the directors and officers, acting by and according' 
to the deed." 

The learned lord might also truly have added that courts likewise 
are often captivated and misled by the same specious plea, losing 
sight altogether of the true issue involved and resting their decis- 
ions on the doubtful consideration of individual hardship. 



CHAPTER Y. 

ACTIONS ON ULTEA VIRES CONTRACTS. 

§ 69. General rule as to actions on illegal contracts. 

70. Ultra vires as defense to action — General rule. 

71. Court must be satisfied of legality of contract. 

72. Actions on executed ultra vires contracts. 

73. Actions on ultra vires contracts in courts of equity and at law. 

74. Quantum meruit — Relief on ultra vires contracts. 

75. Relief on contracts ultra vires and under statute of frauds. 

§ 69. General rule as to actions on illegal contracts.— 
It is a general rule of law that a contract made in viola- 
tion of a statute is void ; and that when a plaintiff cannot 
establish his cause of action without relying upon an ille- 
gal contract he cannot recover. 1 It is likewise well settled 
by the authorities that any promise, contract or under- 
taking, the performance of which would tend to promote, 
advance or carry into effect any object or purpose which 
is unlawful, is in itself void, and will not maintain an 
action. The law which prohibits the end will not lend 
its aid in promoting the means designed to carry it into 
effect, and in this respect the law gives no countenance 
to the old distinction between malwm m se and malum 
prohibitum. That which the law prohibits either in 
terms, or by affixing a penalty to it, is unlawful; and it 

bollock's Prin. of Cont, pp. 253-265; Penn v. Bornman, 102 111. 
523; Alexander v. O'Donnell, 12 Kan. 608; Gunter v. Leckey, 30 Ala. 
591; Kennedy v. Cochran, 65 Me. 594; Bank of U. S. v. Owens, 2 Pet. 
(U. S.) 527, 539; Pangborn v. Westlake, 36 Iowa, 546; Harris v. Run- 
nells, 12 How. (U. 8.) 79; Miller v. Amnion, 145 U. S. 426; American 
Pres. Trust Co. v. Taylor Mfg. Co., 46 Fed. Rep. 155. 



§ 69.] ACTIONS ON CONTRACTS. 101 

will not promote in one form that which it declares wrong 
in another. So the rule is declared as general that all 
contracts or agreements which have for their objects any- 
thing which is repugnant to the general policy of the law, 
or contrary to the provisions of any statute, are void and 
not to be enforced. 1 It is a principle too' salutary and 
well established to be in any measure infringed, and courts 
of justice ought not to assist an illegal transaction in any 
respect. 2 Though the objection that a contract is illegal 
or ultra vires may sound at all times very ill in the mouth 
of a defendant, it is not for his sake that the objection is 
ever allowed, but it is founded in general principles of 
policy; and whenever from the plaintiff's own stating, 
or otherwise, the cause of action appears to arise from 
the transgression of a positive law of the country, he has 
no right to be assisted. 3 Nor will courts, even with the 
consent of the parties, enforce a contract which is in vio- 
lation of a statute, although not otherwise declared void.* 
" There is a great difference where a party comes to over- 
turn an illegal contract and to be relieved against it. He 
shall not be relieved if he come to take the benefit of an 
illegal contract ; there he never shall be relieved, because, 
to relieve him, the court must affirm the contract." 6 So 

1 White v. Bass, 3 Cush. (Mass.) 448; 1 Comyn, Cont. 30; Hunt v. 
Knickerbocker, 5 John. (N. Y.) 326; Guenther v. Dewein, 11 Iowa, 
133; Craig v. Andreas, 7 Iowa, 17; Pittsburg v. Keokuk Bridge, 131 
U. S. 371; Oregon Ey. v. Oregonian Ry.,130 IT. S. 1; Thomas v. Rail- 
way Co., 101 U. S. 71; Central Trans. Co. v. Pullman Co., 139 U. S. 
24; Spring Co. v. Knowlton, 103 U. S. 49. 

2 Belding v. Pitkin, 2 Caines (N. Y.), 149. 

8 Lord Mansfield in Holmes v. Johnson, Cowp. 343. 

4 Fowler v. Scully, 72 Pa. St. 456. 

'Walker v. Chapman, Lofft, 342; Toppenden v. Randall, 2 Bos. & 
Pull. 467; Chitty, Cont. 533; White v. Franklin Bank, 22 Pick. (Mass.) 
184; Aubert v. Walsh, 3 Taunt. 277; Busk v. Wash, 4 id, 290; Will- 
iams v. Hedley, 8 East, 380, n.; Hastelow v. Jackson, 8 B. & C. 224; 



102 ACTIONS ON CONTRACTS. [§ 70. 

when a contract is tainted with illegality the law will not 
lend its aid to either party for the enforcement of such 
contract ; and neither a court of law nor of equity will 
interpose to grant any relief to the parties, but will leave 
them where it finds them, if they have been equally cog- 
nizant of the illegality. 1 "The attempt to contravene 
the policy of a public statute is illegal. Nor is it neces- 
sary to render it so that the statute should contain an ex- 
press prohibition of such attempt. It always contains an 
implied prohibition ; and to such attempts the principles 
of the common law are invariably and deadly hostile, not 
always by an interference between the parties themselves; 
or by enabling the one to recall to the other, where in 
pari delicto, what may have been obtained; but by at all 
times refusing the aid of the law to carry into effect or 
enforce any contract which may be the result of such in- 
tended contravention." 2 

§ 70. Ultra vires as defense to action — General rule.— It 
is upon the principles stated in the next preceding sec- 
tion that it has been so frequently held that a contract, 
made by the officers or agents of a corporation which is 
outside the pale of the corporate power confers no rights; 
and the making of such contract does not estop the cor- 
poration, in an action on it, from invoking the defense of 
tdtra vires. 3 Accordingly the rule may be declared as 

Utica Ins. Co. v. Kip, 8 Cow. (N. T.) 20; Fowler v. Scully, 73 Pa. St. 
456. 

1 7 "Wait, Act. & Def. 64; Smith v. Bromley, 2 Doug. 696; Birming- 
ton v. Wallis, 4 B. & Aid. 650; Cowan v. Milburn, 2 Exch. 230; Low- 
ell v. Boston, etc. R. Co., 23 Pick. (Mass.) 32; Barker v. Hoflf, 7 Hun 
(N. Y.), 284; Blasdell v. Fowler, 120 Mass. 447. 

zSharpe v. Teese, 9 N. J. L. 352. 

3 Sherwood v. Alvis, 83 Ala. 115; Smith v. Insurance Co., 4 Ala. 
558; City Council v. Plank Road Co., 31 Ala. 76; Chewacla Lime 
Works v.Dismukes, 87 Ala. 347; Abbott v. Packet Co., 1 Md. Ch. 



§ 70.] ACTIONS ON CONTEACTS. 103 

general, that any contract made by a corporation not 
necessary and proper, directly or indirectly, to enable it 
to answer the purpose of its creation, is void, and neither 
a court of law or of equity can enforce it. 1 No perform- 
ance by the corporation of such a contract can give it 
any validity, or be the foundation of any right of action 
upon it. 2 So, where a third party makes with the officers 
of a corporation an illegal contract — beyond the powers 
of the corporation as shown by its charter, — such third 
party cannot recover on the contract, because he acts with 
knowledge that the officers have exceeded their powers 
and the powers of the corporation, and between him and 
the corporation or its stockholders no amount of ratifica- 
tion by those unauthorized to make the contract will 
make it valid. 3 

542; Brady v. Mayor, 20 N. Y. 312; Taft v. Pittsford, 28 Vt. 386 
Franklin Co. v. Lewiston Inst., 68 Me. 43; Root v. Goddard, 3 Mc 
Lean (U. S.), 102; Ex parte Williamson, 5 Ch. Div. 309; South York 
shire Ey. v. Great Northern Ry. Co., 9 Exoh. 55; Bateman v. Ash 
ton-under-Lynn, 3H.&N. 323; Norwich v. Norfolk Ry., 4 El. & Bl. 
397; Taylor v. Chichester, etc. Ry., L. R 2 Exch. 356; East Anglian 
Ry. v. Eastern Counties Ry., 11 C. B. 775; MacGregor v. Dover & D, 
Ry., 18 Q. B. 618; Bagshaw v. Eastern Union Ry., 2 Macn. & G. 389 
Earl of Shrewsbury v. North Staf . Ry. Co. , 1 Eq. Rep. 593 ; Chambers v, 
Manchester, etc. Ry. Co., 5 B. & S. 588; In re Building Society, 5 Ch, 
App. 309; Gregory v. Patchett, 33 Beav. 595; Shrewsbury, etc. Ry. 
v. Northwestern Ry., 6 H. L. Cas. 113; Gage v. Newmarket Ry., 18 
Q. B. 457; Caledonia Ry. Co. v. Helensburgh, 2 Macq. 391; Pearce 
v. Madison Ry. Co., 21 How. (U. S.) 441; Thomas v. Railroad Co., 101 
U. S. 71; Head v. Providence Ins. Co., 2 Cranch (U. S.), 127; Central 
Trans. Co. v. Pullman Co., 139 U. S. 24, and cases cited to §§ 9, 53. 

1 Alabama Ins. Co. v. Central Ass'n, 54 Ala. 73; Grand Lodge v. 
Waddell, 36 Ala. 313; Chambers v. Falkner, 65 Ala. 448; Sherwood 
v. Alvis, 83 Ala. 117; Simmons v. Troy Works, 92 Ala. 427, and cases 
cited in preceding note. 

2 Central Trans. Co. v. Pullman Co., 139 TJ. S. 24; Thomas v. Rail- 
way Co., 101 U. S. 71; Orr v. Lacey, 2 Doug. (Mich.) 230; Littlewort 
v. Davis, 50 Miss. 403. 

'Allegheny City v. McClurkan, 14 Pa. St. 81; Holdsworth v. Evans, 



104: ACTIONS ON CONTRACTS. [§ 71. 

§ Ti. Court must le satisfied of legality of contract— 
Before the court can act in the exercise of its peculiar 
jurisdiction to enforce specific performance of an agree- 
ment, it must be satisfied that there is not a reasonable 
ground for contending that the agreement is illegal or 
against the policy of the law ; 1 and in the next place that 
the agreement is one ascribable to a class in which the 
court has been accustomed or has certainly jurisdiction 
to interfere. 2 In Hunt v. Knickerbocker, 6 Johns. 377, 
Mr. Justice Thompson, speaking for the court, said: "No 
case, I believe, can be found where an action can be sus- 
tained which goes in affirmance of an illegal contract, 
and when the object of it is to enforce the performance 
of an engagement prohibited by law. Wherever an ac- 
tion has been sustained against a party to prevent him 
from retaining the benefit derived from an unlawful act, 
the action proceeds in disaffirmance of the contract, and, 
instead of endeavoring to enforce it, presumes it to be 
void." So also, in Union Pacific By. Co. v. Chicago, 

3 H. L. 263; Ex parte Grady, 9 Jur. (N. S.) 631; Lucas v. White Line 
Tr. Co., 70 Iowa, 541 ; National Trust Co. v. Miller, 33 N. J. Eq. 155; 
Black v. Del. & R Canal Co., 24 N. J. Eq. 455 ; Thomas v. Railway Co., 
101 U. S. 71; Mallory v. Hanauer Oil Co., 86 Tenn. 598. 

'Johnson v. Shrewsbury, etc. Co., 3 De G., M & G. 913; Hunt v. 
Knickerbocker, 5 Johns. (N. Y.) 326; Union Pac. Ey. Co. v. C, E. L 
& P. Ey., 51 Fed. Eep. 309; Laughton v. Hughes, 1 Mau. & Selw. 593; 
Holmes v. Johnson, Cowp. 343; Morch v. Abel, 3 B. & P. 35; Eussell 
v. De Grand, 15 Mass. 39; Shiffner v. Gordon, 12 East, 304; Cincin- 
nati Co. v. Rosenthal, 55 III. 85; Thomas v. Eailway Co., 101 U. S.71. 

2 Johnson v. Shrewsbury, etc. Ey. Co., 3 De G., M & G. 913. 

In Laughton v. Hughes, supra, Lord Ellenborough said: "It may 
be taken as a general rule that what is done in contravention of the 
provisions of an act of parliament cannot be made the subject-mat- 
ter of an action." 

And Le Blanc, J., in same case, said: "It is an established princi- 
ple that the court will not lend its aid in order to enforce a contract 
entered into with a view of carrying into effect anything which is 
prohibited by law." 



§ 72.] ACTIONS ON CONTRACTS. 105 

Rock Island eft Pacific Ry. Co., 51 Fed. Eep. 309, which 
was a suit to compel specific performance of a con- 
tract for joint use and occupancy of a bridge across the 
Missouri river, and which was held not be ultra vires and 
that such joint use would not interfere with the present 
or prospective use thereof by the lessor, or with the dis- 
charge of the duties it owed to the government under 
the provisions of its charter, Sanborn, 0. J., delivering 
the opinion of the court, said: "Corporations created 
under statutory authority are the creatures of the stat- 
ute. By it their powers are measured. Beyond the limit 
of the powers there granted, and those fairly incidental 
thereto, they may not act ; they may not agree to act. 
Their contracts for the just exercise of these powers are 
binding and enforceable ; but their contracts beyond the 
scope of these granted powers are null — as though they 
had not been. They are void as against the state, be- 
cause they are unlawful usurpations of power reserved 
by the. state. They are void as against other parties to 
the contract, because they are bound to take notice of the 
law of the limits of corporate powers there found; and 
no formal assent of corporations or officers, no alleged 
estoppel, can give validity to such contracts, or induce the 
cowrts to enforce them against the objection of the citizen 
or the state." 

§ 72. Actions on executed ultra vvres contracts. — It is 
the generally accepted doctrine of the courts of England 
and a large majority of the courts of this country, where 
the subject has been well considered, that a contract be- 
yond the scope of the powers conferred on the corpora- 
tion cannot, by any partial performance, become the 
foundation of any right of action. 1 The reason for this 

1 Thomas v. Railway Co., 101 TJ. S. 71; Oregon Ry. v. Oregonian 
Ry., 130 U. S. 1; Central Trans. Co. v. Pullman Co., 139 IT. S. 24- 



106 ACTIONS ON CONTRACTS. [§ 72. 

rule is forcibly stated by Mr. Justice Miller in Thomas v. 
Railroad Co., a leading case: "It remains to consider 
the suggestion that the contract, having been executed, 
the doctrine of ulfra vires is inapplicable to the case. 
There can be no question that, in many instances, where 
an invalid contract, which the party to it might have 
avoided or refused to perform, has been fully performed 
on loth sides, whereby money has been paid or property 
has changed hands, the courts have refused to sustain an 
action for the recovery of the property or the money so 
transferred. . . . Having entered into the agree- 
ment, it was the duty of the company to rescind or aban- 
don it at the earliest moment. . . . Though they 
delayed for several years, it was nevertheless a rightful 
act when it was done. Can this performance of a legal 
duty, a duty both to stockholders and the company and 
to the public, give to plaintiffs a right of action? Can 
they found such a right on an agreement void for want 
of corporate authority and forbidden by the policy of 
the law ? To hold that they can is, in our opinion, to hold 
that an act performed in executing a void contract makes 
all its parts valid, and that the more that is done wider a 
contract forbidden by law the stronger is the claim to its 
enforcement by the courts." x 

Pennsylvania Co. v. St. Louis Ry. Co., 118 U. S. 810; Greenville Com- 
press v. Planters' Press, 70 Miss. 669; Ashbury Ry. Co. v. Eiohe, 7 
H. L. 653; East Anglian Ry. v. Eastern Counties Ry. Co., 11 C. B.. 
775; National Trust Co. v. Miller, 33 N. J. Eq. 155; Black v. Dela- 
ware, etc. Co., 24 N. J. Eq. 455; Buckeye Marble Co. v. Harvey, 92 
Tenn. 115. 

1 So Cooper, J., in Greenville Compress v. Planters' Press, 70 Miss. 
669, says: "The agreement between the directors of the respective 
companies was clearly beyond the corporate powers of either com- 
pany to make, and it had not been fully executed when the appel- 
lant withdrew from it. There are some decisions which proceed on 
the apparent postulate that an ultra vires agreement, executed 



§ 73.] ACTIONS ON CONTRACTS. 107 

§ 73. Actions on ultra vires contracts in courts of equity 
and at law. — The general rule, in equity as at law, is in 
pari delicto potior est conditio defendentis; and therefore 
neither party to an illegal contract will be aided by the 

fully by one of the corporations, or so far executed that the status 
quo cannot be restored, may be made the basis of an action. But 
in many of these cases it will be found that the measure of recov- 
ery would be the same, whether the injury done to the plaintiff by 
the failure of the defendant to perform, or the benefit received by 
the defendant under the agreement, is taken as the standard. Cases 
of this sort may therefore be well assigned to that other and far 
more numerous class, in which the right of recovery is not rested 
upon the invalid agreement, but is recognized to exist notwith- 
standing the agreement, upon the principle that the defendant may 
not repudiate the contract and yet retain the benefit which has 
been derived under it. 

"The decided weight of authority in England and America is 
that no action lies upon the void contract; that no decree can be 
made by a court of equity for its specific performance, nor a recov- 
ery had at law for its breach ; but that, by proceeding in the proper 
court, the plaintiff may recover to the extent of the benefit received 
by the defendant from the execution of the agreement by the 
plaintiff." And see Union Pac. Ry. Co. v. C, E. I. & P. Ry. Co., 51 
Fed. Rep. 309; Laughton v. Hughes, 1 Mau. & Sel. 593; Holman v. 
Johnson, Cowp. 343; Morck v. Abel, 3 B. & P. 35; Russell v. De Grand, 
15 Mass. 39; Sheffner v. Gordon, 12 East, 304; Selwyn, Nisi Prius, 69; 
Mayor v. Norfolk Ry., 4 El. & Bl. 397; Cincinnati Co. v. Rosen- 
thal, 55 111. 85; Greenville Compress v. Planters' Press, 70 Miss. 669; 
Buckeye Marble Co. v. Harvey, 92 Tenn. 115. 

In Buckeye Marble Co. v. Harvey, supra, in the supreme court of 
Tennessee, 1892, Lurton, J., in speaking of the defense of ultra vires 
where the contract had been executed, said: 

" But it has been insisted very earnestly by the able and learned 
counsel for complainant, that, when the contract had been fully 
executed by the plaintiff, the defendants should not be permitted 
to invoke such defense in a suit brought to compel performance; 
that to permit such a defense would work injustice, and enable 
defendant to repudiate his liability while holding on to the price 
he has received. There are cases where, the contract being fully 
executed on both sides, the court, in the interest of justice, has re- 
fused to aid either in obtaining a rescission. Arms Co. v. Barlow, 63 



108 ACTIONS ON CONTBAOTS. [§ 73. 

court, whether to enforce it or to set it aside. If the 
contract is illegal, affirmative relief against it will not be 
granted, at law or in equity, unless the contract remains 
executory, or unless the parties are not considered in 

N. Y. 62, is one of this class. So there are cases where the defense 
of ultra vires has not been entertained when the defect was in the 
mode of executing the contract or in the power of the agent. So 
there are many cases holding the party relying upon the defense of 
ultra vires to an accountability for the benefit received. Green's 
Brice's Ultra Vires, 717, and note at end of chapter. Again there 
are cases when the courts have refused to entertain suits to recover 
property from corporations which is held in excess of charter capac- 
ity. In such cases the courts have held that the defect in the power 
could not be set up in a collateral way, and that the state could only 
complain of such violation. To this effect were our own cases of 
Barrow v. Turnpike Co., 9 Humph. 303, and Heiskell v. Lodge, 87 
Tenn. 668. The question here is not like any of these. The com- 
plainant sues upon its contract, and in affirmance of it seeks to have 
the defendant perform an agreement which sprung from and was 
collateral to it. It has received the shares it purchased and holds 
onto them. It simply asks that the defendant be further compelled 
to perform its contract by contributing, in accordance with his 
agreement, his proportion of the liability paid off by complainant 
in protection of the property of the McMillan Marble Company. The 
suit is clearly in furtherance of the original unlawful and void con- 
tract. That the contract has been executed by the plaintiff does 
not make it lawful or entitle it to an enforcement of it. This prop- 
osition was very plainly put in Pittsburg, C. & St. L. Ey. Co. v. Keo- 
kuk & H. Bridge Co., where it was stated as a result of all the pre- 
vious discussions of that court upon this subject, that 'a contract 
made by a corporation, which is unlawful and void because beyond 
the scope of its corporate powers, does not, by being carried into 
effect, become lawful and valid; but the proper remedy for the 
party aggrieved is by disaffirming the contract and suing to recover 
as on a quantum meruit the value of what the defendant has actu- 
ally received.' 131 U. S. 389. The case of Central Transportation 
Co. v. Pullman Car Co. is an exceedingly interesting case, as it in- 
volves a consideration of the circumstances under which a defend- 
ant may interpose the defense of ultra vires, notwithstanding full 
performance by the plaintiff. In that case the Central Transportation 
Company had leased and transferred all its property of every kind to 



§ 73.] ACTIONS ON OONTEAOTS. 109 

equal fault, or where the law violated is intended for the 
coercion of the one party and the protection of the other, 
or where there has been fraud or oppression on the part 
of the defendant. 1 The difference, however, between 

the defendant company, which was engaged in a similar and compet- 
itive business. The lessee company undertook to pay all the debts of 
the lessor company, and to pay it annually the sum of $264,000 for a 
term of ninety-nine years. Possession was taken, and the instal- 
ments paid for a number of years. The suit was for a part of the 
instalment for the last year before suit. The defense of ultra vires 
was interposed and sustained. The court held that the sale was un- 
authorized and in excess of the powers of the selling company. It 
was urged for the plaintiffs, as in this case, that even if the contract 
was void because ultra vires and against public policy, yet that hav- 
ing been fully executed on the part of the plaintiff, and the benefits 
of it received by the defendant for the period covered by its dura- 
tion, the defendant was estopped to set up the invalidity of the con- 
tract as a defense to an action to recover the compensation agreed 
on for that period. After reviewing its own decisions on this branch 
of the case the court said: 'The view which the court has taken of 
the question presented by this branch of the case, and the only view 
which appears to us consistent with legal principles, is as follows: 
A contract of a corporation which is ultra vires in the proper sense, 
that is to say, outside the objects of its creation as defined in the 
law of its organization, and therefore beyond the powers conferred 
upon it by the legislature, is not voidable only, but wholly void, and 
of no legal effect. The objection to the contract is not merely that 
the corporation ought not to have made it, but that it could not 
make it. The contract cannot be ratified by either party because it 
could not have been authorized by either. No performance on either 
side can give the unlawful contract any validity, or be the founda- 
tion of any right of action upon it. When a corporation is acting 
within the general scope of the powers conferred upon it by the 
legislature, the corporation, as well as persons contracting with it, 
may be estopped to deny that it has complied with the legal formal- 
ities which are prerequisite to its existence or to its action, because 
such requisites might in fact have been complied with. But when 
the contract is beyond the power conferred upon it by the existing 

1 St. Louis Ry. v. T. H. R. R, 145 U. S. 407; Thomas v. Richmond, 
12 Wall. (U. S.) 349;- Spring Co. v. Knowlton, 103 U. S. 49. 



110 ACTIONS ON CONTRACTS. [§ 73. 

courts of law and those of equity in respect of such con- 
tracts is mainly one of forms and remedies, rather than 
in the matter of absolute rights and obligations. If a 
contract be pronounced absolutely void in a court of law, 

law, neither the corporation nor the other party to the contract can 
be estopped by assenting to it, or by acting upon it, to show that it 
was prohibited by those laws. ... A contract ultra vires being 
unlawful and void, not because it is in itself immoral, but because 
the corporation, by the law of its creation, is incapable of making 
it, the courts, while refusing to maintain any action upon the un- 
lawful contract, have always striven to do justice between the par- 
ties, so far as could be done consistently with adherence to law, by 
permitting money or property parted with on the faith of the un- 
lawful contract to be recovered back or compensation to be made 
for it. In such case, howevei - , the action is not maintained upon 
the unlawful contract, nor according to its terms, but on an implied 
contract of the defendant to return, or, failing to do that, to make 
compensation for property or money which it has no right to retain. 
To maintain such an action is not to affirm but to disaffirm the 
unlawful contract.' 139 U. S. 60. This seems to us to fully and 
clearly state the rule. The passage cited by counsel from Railway 
Co. v. McCarthey, 96 U. S. 267, 'that the doctrine of ultra vires, when 
invoked for or against a corporation, should not be allowed to pre- 
vail when it would defeat the ends of justice or work a legal wrong,' 
is misleading, and, if literally construed, would result in an errone- 
ous practical extension of the powers of corporations. We do not 
understand that a result required by adherence to the law would 
be either unjust or a legal wrong. The learned judge doubtless in- 
tended to be understood that the defense should be a legal wrong 
only when the law did not require its consideration by the court. 

" This passage, and one of similar character in San Antonio v.. 
Mehaffy, 96 U. S. 313, was uncalled for in the case in which it was- 
used, and in Central Transportation Co. v. Pullman Car Co., supra, 
characterized as a mere passing remark. To sustain the suit as now 
presented would be in affirmance and furtherance of an unlawful 
and void contract. It is in no sense a suit in disaffirmance. Whether 
complainant could tender back the shares recovered, and maintain 
a suit to recover the money paid for the shares upon an implied 
agreement to return money which the defendant had no right to 
retain, is a question not presented upon this record;" 

To the same effect is Mayor of Norwich v. Norfolk Ry., supra. 



§ 73.] ACTIONS ON OONTEAOTS. Ill 

it must expect and should receive the same denunciation 
in a court of equity. Courts of equity, like those of law, 
must accept contracts as they are made, and have no 
power to make contracts for parties. If the contracts 

where the court gay: "Where a corporation has been created for 
the purpose of carrying on a particular trade, or making a rail- 
way from one place to another, and it attempts to substitute an- 
other trade, or to make the railway to another place, the objection 
is to its entire want of power for the new purpose; its life and 
functions are the creation of the legislature, and they do not exist 
for any other than the specified purpose ; for any other, the mem- 
bers are merely unincorporated individuals. ... A transgres- 
sion of the law cannot be the foundation of an action. The cove- 
nant being illegal, the covenanteee can as little maintain an action 
for breach of it as he can file a bill in equity for a specific perform- 
ance of it." 

In Cincinnati Co. v. Rosenthal, 55 111. 85, the court say: "When 
the legislature prohibits an act, or declares that it shall be unlaw- 
ful to perform it, every rule of interpretation must say that the leg- 
islature intended to interpose its power to prevent the act, and, as 
one of the means of its prevention, that the courts shall hold it 
void. This is as manifest as if the statute had declared that it 
should be void. To hold otherwise would give the person, or corpo- 
ration, or individual, the same rights in enforcing prohibited con- 
tracts as the good citizen who respects and conforms to the law. 
To permit such a contract to be enforced, if not offering a premium 
to violate a law, it certainly withdraws a large portion of the fear 
that deters men from defying the law. To do so, places the person 
who violates the law on an equal footing with those who strictly 
observe its requirements." 

Van Vlete, V. C, in National Trust Co. v. Miller, 6 Stew. (N. J.) 155,. 
says: "Nor can the powers of a corporation be in the slightest de- 
gree enlarged or extended by the assent of its stockholders, or by 
any action they may take. . . . And the supreme court of the 
United States has recently declared, following a judgment of the 
House of Lords, in which the present Lord Chancellor (Selborne) 
and the late Lord Chancellor (Cairns) and Lords Chelmsford, Hath- 
erly and O'Hagan concurred, that the broad doctrine is now es- 
tablished that a contract not within the scope of the powers con- 
ferred on a corporation cannot be made valid by the consent of 
every one of the stockholders, nor can it, by any partial perform- 
ance, become the foundation of any right of action. (Thomas v. 



112 ACTIONS ON CONTRACTS. [§ 73. 

which parties attempt to make are void because in defi- 
ance of some statute, they are void alike in either court, 
and neither court can change a void into a valid contract. 1 
As Mr. Justice Brewer, in Hedges v. Dixon County, supra, 
said: "This court can make no contract for the parties. 
It must take the contract which they make. That con- 
tract was one which the county was not authorized to 

West Jersey E. R. Co., 101 U. S. 71.) While it must be admitted that 
this doctrine has not received the sanction of every eminent judge 
who has been called to enforce it, yet I think it is now vouched for 
by such august authority, and is so manifestly supported by sound 
reason and the highest considerations of policy, that it must here- 
after be accepted universally as expressing the true rule of judg- 
ment in such cases.'' 

In the light of the foregoing decisions and extracts, the following 
suggestion of Mr. Wood in his work on Railroads (ed. 1894 P- 570) 
is almost nonsensical: "It has never been contended that a con- 
tract ultra vires could be set up by the corporation which made it, 
and whose want of power is the ground of the invalidity of the con- 
tract. A corporation is bound to know the extent of its own powers, 
and if it makes a contract in excess of them and is worsted it cannot 
be held to complain. It is the other contracting party that is pro- 
tected. . . . The doctrine that a corporation when sued upon a 
contract by it cannot plead the defense of ultra vires, but is estopped, 
except where the contract is void as opposed to public policy or for 
other reasons — that is to say, that the mere fact that the contract 
was beyond the powers of the corporation renders it invalid only— 
has been long recognized and acquiesced in by courts of every juris- 
diction." This is almost as radical a position (but in the opposite 
direction) as that taken by a wise justice of the peace at Buffalo. 
It is reported that some years ago a farmer sued an orphan asylum 
at that place for injury to his sheep by a dog kept at the asylum. 
The case was tried in the justice's court, and the judge held as fol- 
lows: "I have carefully looked over the defendant's charter, and I 
find it is not authorized to keep anything but orphans — keeping a 
dog was therefore ultra vires, and it is not liable in this action."— 
Green Bag. 

1 Hedges v. Dixon County, 37 Fed. Rep. 304; In re Cork & Youghal 
Ry„ 4 Ch. 748; S. C, 9 Ex. 262. 



§ 74.] ACTIONS ON CONTRACTS. 113 

make. The bonds were void as adjudged in a court of 
law, void iu whole and in part, and they must be so ad- 
judged in a court of equity." 

§ 74. Quantum meruit — Belief on ultra vires contract. 
Though courts acting under proper construction of the 
law will sustain no action on contracts made by corpora- 
tions which are beyond the scope of their powers, and 
therefore unlawful and void, yet relief may be had by 
the party aggrieved by disaffirming the contract and 
suing to recover as on a quantum meruit the value of 
what the defendant has actually received the benefit of. 1 

1 Railway Co. v. Keokuk Bridge Co., 131 U. S. 387; Parkersburg v. 
Brown, 106 U. S. 487; Central Trans. Co. v. Pullman Car Co., 139 IT. S. 
24; Chapman v. Douglas Co., 107 U. S. 348; Salt Lake City v. Hol- 
lister, 118 U. S. 256; Pennsylvania R. Co. v. St. Louis, etc. Co., 118 
U. S. 290; Mayor v. Ray, 19 "Wall. (U. S.) 468; Allegheny City v. Mc- 
Clurkin, 14 Pa. St. 81; In re Cork, etc., 4 Ch. Div. 748; Atlas Bank 
v. Nahant Bank, 4 Met. (Mass.) 581; Curtis v. Leavitt, 15 N. Y. 297 
Leavitt v. Palmer, 3 Comst. (N. Y.) 19; Pratt v. Short, 79 N Y. 437 
Norton v. Bank, 61 N. H. 589; Greenville Compress v. Planters' Press, 
70 Miss. 669; Ohio Life Ins. Co. v. Trust Co., 11 Humph. (Tenn.) 1 
Williams v. Bank, 71 Miss. 858; Marble Co. v. Harvey, 92 Tenn. 115 
Powder River Live Stock Co. v. Lamb, 38 Neb. 353; Eyser v. Weiss 
gerber, 2 Iowa, 463; Freher v. Geiseka, 5 Iowa, 472; Formholz v. Tay- 
lor, 13 Iowa, 500; Imhoff v. House, 36 Neb. 28; Ossippee Mfg. Co. v. 
Canney, 54 N. H. 295; White v. Franklin Bank, 22 Pick (Mass.) 181 
Howson v. Hancock, 8 T. R. 577; Utica Ins. Co. v. Scott, 19 John, 
(N. Y.) 1; Little v. O'Brien, 9 Mass. 423; Rich v. Errol, 51 N. H. 361 
National Bank v. Globe Works, 101 Mass. 57; Gas Light Co. v. United 
Gas Co., 85 Me. 541; Twiss v. Life Association, 87 Iowa, 733; Day v. 
Spiral Spring Co., 57 Mich. 146; Union Hardware Co. v. Plume Co., 
58 Conn. 219; Miller v. American Ins. Co., 21 S. W. Rep. 39 (Tenn., 
" 1893); Farmers' L & T. Co. v. St. Joseph R. Co., 1 McCrary (U. S.), 247; 
Carey v. East Saginaw, 79 Mich. 73; Paul v. Kenosha, 22 Wis. 266; 
Hull v. Swansea, 5 Q. B. 526; Athenaeum, etc. Co. v. Pooley, 3 De G. 
& J. 294; In re Phoenix Co., 2 J. & H 441; In re Sea Foam, etc. Ins. 
Co., 5 De G, M. & G. 465; Logan Co. Bank v. Townsend, 139 U. S. 
67; Northwestern Pack. Co. v. Shaw, 37 Wis. 655; Oneida Bank v. 
8 



114 ACTIONS ON CONTRACTS. [§ 74, 

As was said by the court in Pratt v. Short, supra: "It is 
no doubt the general rule that no right of action can 
spring out of an illegal contract. And the rule that an 
illegal contract cannot be enforced applies as well to con- 
tracts malum prohibitum as to contracts malum in se. 
But it does not necessarily follow that all the conse- 
quences attending a contract which is contrary to public 
morals, or founded on an immoral consideration, attend 
and affect a contract malum prohibitum merely. The law 
in the former case will not undertake to relieve parties 
from the position in which they have placed themselves, 
or to adjust the equities between them. But in the lat- 
ter case, while the law will not enforce the prohibited 
contract, it will take notice of the circumstances, and if 
justice and equity require a restoration of money or prop- 
erty secured by either party thereunder, it will, and in 
many cases has, given relief. So also a prohibitory stat- 
ute may itself point out the consequences of its violation, 
and if, on a consideration of the whole statute, it appears 
that the legislature intended to define such consequences, 
and to exclude every other penalty or forfeiture than 
such as is declared in the statute itself, no other will be 
enforced, and if an action can be maintained on the trans- 
action of which the prohibited transaction was a part 
without sanctioning the illegality, such action will be en- 
tertained." Accordingly, in Day v. Spiral Spring Oo., 
supra, plaintiff contracted to sell to defendant corpora- 
tion one hundred and seventy -four tons of excelsior, not to 
be used by defendant in its business, but to be resold by 
it on speculation, as plaintiff was fully advised. After de- 
Ontario Bank, 21 N. Y. 490; Southern Ins. Co. v. Lanier, 5 Fla. 110; 
Hall v. Paris, 59 N. H. 71; Whitney v. Peay, 24 Ark. 22; Roberts v. 
Deining Co., Ill N. C. 432; Curtis v. Piedmont Co., 109 N. C. 401; 
Maher v. Chicago, 38 111. 266; Thomas v. Port Huron, 27 Mich. 323. 



§ 74.] ACTIONS ON CONTBAOTS. 115 

livering a considerable quantity plaintiff refused to deliver 
more, and defendant refused to pay for what had been 
delivered unless the whole amount was delivered as agreed ; 
whereupon plaintiff sued for the value of the excelsior 
delivered, and defendant set up as a counter-claim dam- 
ages resulting from a failure by plaintiff to fully perform 
the contract. It was held, Chief Justice Oooley deliver- 
ing the opinion of the court, that plaintiff was entitled to 
recover for the excelsior actually delivered, although the 
contract was ultra vires, and that defendant was not en- 
titled to recoup the damages arising from the breach 
thereof. So a corporation agreed with plaintiff to sell 
goods of their manufacture on commission at a price to 
be fixed by plaintiff, and to account for all sales. The 
goods were received and sold by the corporation for less 
than the price fixed, and the money received for them ac- 
counted for to the plaintiff. It was held, on suit brought, 
to recover the balance, that the corporation could not set 
up in defense that the undertaking was ultra vires, and 
that plaintiffs were entitled to recover the balance of the 
price agreed on, deducting the defendant's commission 
on the same. 1 

1 Union Hardware Co. v. Plume, etc. Co., 58 Conn. 269. 

In Ohio Life Ins. Co. v. Merchants' Ins. & Trust Co., 11 Humph. 
(Tenn.) 1, the defendant, a corporation created under the laws of the 
state of Tennessee, had entered into a contract beyond its corporate 
powers, and had received benefits therefrom. Being sued in equity, 
it defended upon the ground that it had no power to make the con- 
tract. The court held that while the defendant was not liable on 
the contract, relief should be afforded to the complainant outside of 
it, saying: "We are of opinion, therefore, that the complainant is 
not repelled by reason of the illegality relied upon in -defense, but is- 
entitled to relief, and that in granting it the court will promote both 
the claims of private justice and the ends of public policy. It is to 
be observed, however, that the relief is against the contract and not 
upon the contract; for we have seen that, in the nature of things, 



116 ACTIONS ON C0NTBA0TS. [§ 75. 

§ 75. Belief on contract ultra vires and under statute 
of frauds.— It will be noticed that there is a striking 
similarity in the principles controlling relief granted on 
ultra vires contracts, and recovery had when a contract 

the law cannot enforce an illegal contract, although the parties be 
not in pari delicto. But it is consistent with itself that the law 
shall annul such contracts, and place the parties in all respects in 
statu quo." 

So in Gas Light Co. v. United Gas Co., 85 Me. 541, the court say: 
" But it is claimed that, inasmuch as the defendant company took 
and held possession of the plaintiff company's works by virtue of 
the lease, ultra vires is no defense to an action to recover the agreed 
rent. We do not doubt that the plaintiff company is entitled to 
recover a reasonable rent for the time the defendant company act- 
ually occupied the works; but do not think the amount can be meas- 
ured by the ultra vires agreement. We think that in such a case 
the recovery must be had upon an implied agreement to pay a reason- 
able rent; and that while the ultra vires agreement may be used in 
evidence in the nature of an admission of what is a reasonable rent, 
it cannot be allowed to govern or control the amount. It seems to 
us that it would be absurd to hold that the ultra vires lease is void and 
at the same time hold that it governs the rights of the parties with 
respect of the amount of rent to be recovered. A void instrument 
governs nothing. We think the correct rule is the one stated by 
Mr. Justice Gray in a recent case in the United States supreme 
court. He said that a contract made by a corporation which is un- 
lawful and void because beyond the scope of its corporate powers 
does not, by being carried into execution, become lawful and valid; 
and that the proper remedy of the aggrieved party is to disaffirm 
the contract and sue to recover as on a quantum meruit the value 
of what the defendant has actually received the benefit of. Pitts- 
burgh, etc. Co. v. Keokuk, etc. Co., 131 U. S. 371. We think this is 
the correct rule." 

Another leading case, which might be noticed in this connection, 
is that of Miller v. Insurance Co., 21 S. W. Rep. 39, where this branch 
of the subject is pretty thoroughly discussed. The court there said: 
" We recognize a diversity of opinion in the courts of America as to 
the right of either party to rely upon the defense of ultra vires, 
when the contract is not expressly prohibited, and is not immoral, 
and has been fully executed upon one side. The theory upon which . 
the cases rest which hold that the defense is not to be entertained 



§ 75.] ACTIONS ON CONTRACTS. 117 

is void under the statute of frauds. Thus, where a con- 
tract for the sale of personal property is void under the 
statute of frauds, and there has been a delivery of the 
thing sold to the purchaser and an acceptance thereof by 

when the act is one merely in excess of express authority seems to 
be that such a contract should be regarded as a mere breach of duty 
by the agents of the corporation, and that the state has ample rem- 
edy for such abuse, or for a usurpation of power, in a proceeding to 
annul the charter; that to permit such a defense is of no service to 
the state in preventing corporate usurpation or in promoting the 
public interests, and only operates to encourage dishonesty and 
promote injustice. Resting upon one or more of these arguments 
many cases might be cited. There are, then, a class of cases, which 
make a distinction between acts merely in excess of authority and 
those which, in addition, are affirmatively forbidden, or immoral, or 
in contravention of some principle of public policy. It seems to us 
that the true foundation of the doctrine of ultra vires lies in the 
proposition that every act of a corporation in excess of its powers is 
an act in contravention of public policy, and, for that reason, to be 
held null and void. The ground upon which corporate privileges 
are conferred is that the public interests may be thereby subserved. 
If this is not so, then all such concessions are mere acts of legisla- 
tive favoritism, and contravene the foundation upon which gov- 
ernment is supposed to rest,— that all are to be protected in the 
enjoyment of equal rights and privileges. Charters must be sup- 
posed to be, therefore, granted upon the supposition that some pub- 
lic interest is thereby advanced. 'The legislature is therefore 
presumed,' says Judge Selden in Bissell v. Railroad Co., 22 N. Y. 285, 
'to have granted just so much power, and so many peculiar priv- 
ileges, as those interests are supposed to require.' It must be, there- 
fore, that any act in excess of these granted powers is an act con- 
trary to public policy, and, upon that ground, illegal and void. Any 
other view by which such acts are to be supported because executed 
would operate as an enormous practical extension of the power of 
corporations. The view this court has taken has therefore been 
that ' all acts outside the objects of its creation, as defined in the 
law of organization, and therefore beyond the powers conferred 
upon it,' are acts not voidable only but wholly void. Marble Co. v. 
Harvey, 92 Tenn. 115; Elevator Co. v. Memphis & C. R. Co., 85 Tenn. 
705; Mallory v. Oil Works, 86 Tenn. 598. The rule and the founda- 
tion upon which it rests, as held by the English courts, are identical 



118 ACTIONS ON CONTBAOTS. [§ 75. 

him, the plaintiff may recover the reasonable value of the 
property, if his petition is so framed ; but a party cannot 
recover on a quantum meruit where he pleads and relies 
solely upon a special contract. 1 

with our own. . . . The Tennessee rule is in accord with the 
holding of many of the American courts. Pittsburg, etc. R. Co. v. 
Keokuk & Hamilton Bridge Co., 131 U. S. 389; Central Trans. Co. 
v. Pullman's Car Co., 139 XJ. S. 60; Davis v. Eailroad Co., 131 Mass. 
258; Chambers v. Falkner, 65 Ala. 448; Bank v. Dunkin, 54 Ala. 471. 
The remedy in case one of the parties has received a benefit under 
such a contract, which ex aequo et bono, it ought not to retain, is a 
suit in disaffirmance and for an accounting. Marble Co. v. Harvey, 
supra. The plaintiff's suit is upon the contract, and in affirmance 
of it, and, if there be nothing else in the case, could not be main- 
tained." 

1 Powder River Live Stock Co. v. Lamb, 38 Neb. 353; Eyser v. 
Weissgerber, 2 Iowa, 463; Freher v. Geiseka, 5 Iowa, 472; Formholz 
v. Taylor, 13 id. 500; Imhoff v. House, 36 Neb. 28; Rich v. Errol, 51 
N. H. 361; Little v. O'Brien, 9 Mass. 423; White v. Franklin Bank, 22 
Pick. (Mass.) 181; Howson v. Hancock, 8 T. R. 577; Robinson v. 
Bland, 2 Burr. 1077; Utica Ins. Co. v. Scott, 19 Johns. (N. Y.) 1; Same 
v. Cad well, 3 Wend. (N. Y.) 296; Same v. Bloodgood, 4 Wend. (N. Y.) 
652; Ossipee Mfg. Co. v. Canney, 54 N. H. 295. 



CHAPTER YI. 

ADOPTION AND RATIFICATION OF CONTRACTS. 

§ 76. General doctrine of ratification stated. 

77. Nature and effect of ratification. 

78. Ultra vires contracts of corporations cannot be ratified. 

79. Ratification by corporation of acts of promoters. 

§ 76. General doctrine of ratification stated. — It is the 
general rule that when a contract is made or an act per- 
formed by any officer or agent of a corporation in its be- 
half and for a purpose authorized by its charter, and the 
corporation receives the benefit of the act or contract 
without objection, it may be presumed to have authorized 
and adopted or ratified the act of such agent. 1 In such 
case the maxim omnis ratihabitio retro trahitur et mcmdato 
priori ceguiparatiir applies. This proposition is but an 
application of the doctrine of the law of agency, that 
Avhen a person ratifies the unauthorized act of another 
who has purported to act on his behalf, the legal effect 
of the act will be the same as if it had been authorized 
before it was done. The ratification, to be binding on a 
corporation, however, must be the act or acquiescence of 
some corporate agency which itself would have the power 
to do or authorize the act committed ; for a ratification 
cannot arise from the action either of the officers who did 

1 Pittsburg, etc. R. Co. v. Keokuk, etc. Bridge Co., 131 U. S. 371; 
Pneumatic Gas Co. v. Berry, 113 U. S. 322; Gold Mining Co. v. Na- 
tional Bank, 96 U. S. 640; Zabrieskie v. Cleveland, etc. R. Co., 23 
How. (U. S.) 381; Bank of U. S. v. Dandridge, 12 Wheat. (U. S.) 64; 
Bank of Columbia v. Patterson, 7 Cranch (U. S.), 279. 



120 ADOPTION AND KATIFICATION OF CONTKACTS. [§ 77. 

the unauthorized acts or of those who would have had no 
authority to do them. 1 

§ 77. Nature and effect of ratification.— The general 
nature and effect of ratification is stated by Mr. Justice 
Field as follows : " The general rule as to the effect of a 
ratification by one of the unauthorized act of another re- 
specting the property of the former is well settled. The 
ratification operates upon the act ratified precisely as 
though authority to do the act had been previously given, 
except where the rights of third parties have intervened 
between the act and the ratification. In other words, it 
is essential that the party ratifying should be able not 
merely to do the act ratified at the time the act was done, 
but also at the time the ratification was made." 2 Al- 
though this reasoning was adduced in discussing the law 
of agency, yet the same principle is involved in applying 
the doctrine of ratification by corporations to unauthor- 
ized acts of their officers or agents, such ratification being 
equivalent to antecedent authority. 8 Accordingly, if a 
person assuming to act as agent of a corporation, but 
without legal authority, or an agent in excess of his 
proper authority, make a contract, and the corporation 
knowingly receive and retain the benefit of it, this will 
be ratification of the contract, and render the corporation 
liable as a party to it ; provided, of course, such contract 
be within the scope of the corporate powers. 4 

1 Taylor, Priv. Corp., § 311; Tracy v. Guthrie County Agl. Soo., 47 
Iowa, 127; Crunis' Appeal, 66 Pa. St. 474; Beach on Priv. Corp., §196. 

2 Cook v. Tullis, 18 WalL 332. 

3 Taylor, Priv. Corp., § 211; First National Bank v. Fricke, 75 Mo. 
178; Planters' Bank v. Sharp, 12 Miss. 75; Fleckner v. Bank of United 
States, 8 Wheat. 338, 363. 

* Bank of Kentucky v. Schuylkill Bank, 1 Par. Sel. Cas. (N. Y.) 
180; Merchants' Bank v. Centra) Bank, 1 Ga. 418; Proprietors, eta 



§ 78.] ADOPTION AND RATIFICATION OF CONTRACTS. 121 

§ 78. Ultra vires contracts of corporation cannot be 
ratified. — The foregoing rule must not be confounded, 
however, with the well-settled doctrine that a corpora- 
tion cannot ratify an act or contract beyond the scope of 
its chartered powers ; for it is a well-established principle 
in the law of corporations that an act or contract ultra 
vires a corporation is void, and cannot be made valid by 

v. Gordon, 1 Pick. (Mass.) 297; Randall v. Van Vechten, 19 John. 
(N. Y.) 60; Moss v. Rossie Lead Min. Co., 5 Hill (N. Y.), 137; Episcopal 
Soc. v. Episcopal Church, 1 Pick. (Mass.) 372; Haywood v. Pilgrim 
Soc, 21 Pick. (Mass.) 270; Ohio, etc. R. Co. v. Middleton, 20 111. 629; 
Corn Exch. Bank v. Cumberland Coal Co., 1 Bosw. (N. Y.) 436; Key- 
ser v. School Dist., 35 N. H. 477; McCullough v. Talladega Ins. Co., 
46 Ala. 376; Durar v. Hudson County Ins. Co., 22 N. J. L. 171; Hooker 
v. Eagle Bank, 30 N. Y. 83; Whiting v. Union Trust Co., 65 N. Y. 
576; Conant v. Canal Co., 29 Vt 263; Shaver v. Bear River Min. Co., 
10 Cal. 396; Dispatch Line v. Bellamy Man. Co., 12 N. H. 205; Bank 
of Lyons v. Demon, Lalor, 398; Germantown Ins. Co. v. Dhein, 43 
Wis. 420: State v. Smith, 48 Vt. 266; Stark Bank v. United States 
Pottery Co., 34 Vt. 144; Whitwell v. Warner, 20 Vt. 424; Aurora Agl. 
Soc. v. Paddock, 80 111. 263; Ottowa R. Co. v. Murray, 15 111. 336; 
Houghton v. Dodge, 5 Bosw. (N. Y.) 326; Farmers', etc. Bank v. Sher- 
man, 6 Bosw. (N. Y.) 181; Woodbridge v. Addison, 6 Vt. 204; Bank 
of Columbia v. Patterson's Adm'rs, 7 Cranch (U. S.), 299; Peterson v. 
New York, 17 N.Y. 449; Davidson v. Bridgeport, 8 Conn. 472; Church 
v. Sterling, 16 Conn. 389; Medomak Bank v. Curtis, 24 Me. 36; Emmet 
v. Reed, 8 N. Y. 312; Alexander v. Brown, 9 Hun (N. Y), 641; City 
Bank v. Baltimore, 7 Har. & J. (Md.) 104; Weeden v. Mad River R. 
Co., 14 Ohio, 563; Perry v. Waterproof Co., 37 Conn. 520; Union Gold 
f Min. Co. v. Rocky Mountain Nat. Bank, 1 Colo. 531; S. C, 2 Colo. 248; 
S. C, 96 U. S. 640; Rich v. State Nat. Bank, 7 Neb. 201; Peninsular Bank 
v. Hanmer, 14 Mich. 208; Humphrey v. Patrons' Merc. Ass'n, 50 Iowa, 
607; Fishkill Sav. Inst. v. Bostwick, 19 Hun (N. Y), 354; International, 
etc' Co. v. United States, 13 Ct. of CI. 209; Delaware Canal Co. v. 
Pennsylvania Coal Co., 21 Pa. St. 131; Ridley v. Plymouth Grinding 
Co., 2 Exch. 711; Stuart v. London, etc. R. Co., 15 Beav. 513; Smith 
v. Hull Gas Co., 11 C. B. 897; Ex parte Scholbred, 28 Week. Rep. 339; 
Troup's Case, 29 Beav. 353; Edwards v. Grand June. R. Co., 1 Myl. & 
Cr. 650; Preston v. Railroad Co., 1 Sim. (N. S.) 586; S. C, 7 Eng. L & 
Eq. 124. 



122 ADOPTION AND BATTFIOATION OF 00NTBACTS. [§ 78. 

any subsequent act of the corporation purporting to 
ratify the same, because there is no residuary power to 
confirm it. "What they could not make they cannot ratify. 
Nor can a void act or contract become valid, merely be- 
cause it remains unquestioned. A ratification is in law 
treated as equivalent to a previous authority, and it fol- 
lows that, as a general rule, a person or body of persons, 
or a corporation, not competent to authorize an act, can- 
not give it validity by ratifying it. 1 This rule is stated 
by a learned author thus : " An act which is in excess of 
the charter of a corporation involves an unauthorized ex- 
ercise of corporate power on the part of the company ; 
and this objection cannot be obviated by any subsequent 
ratification, either by the agents or by the shareholders 
of the corporation. So it is clear that, if an act per- 
formed by an agent on behalf of a corporation is prohib- 
ited by statute or by the charter of the company, or by 
some general rule of the common law, no ratification by 
either agents or the shareholders of the corporation can 
cure the illegality of the act. Ratification of an act has 
no greater effect than a previous grant of authority to do 
the act ; it merely obviates the objection that the princi- 
pal did not authorize the act to be done." 2 

1 Tippecanoe Co. v. Lafayette, etc. R. Co., 50 Ind. 86, 112; Irvine v. 
Union Bank, 2 App. Cas. 366; Dimpfel v. Ohio By. Co., 110 U. S. 209; 
Green's Brice's Ultra Vires, ch. VI; Dillon, Munic. Corp., §§ 385, 386 
(3d ed.); Christian University v. Jordon, 29 Mo. 68; Ang. & Ames, 
§ 304; MoCullough v. Moss, 5 Denio (N. Y.), 567; Ashbury Ry. Co. v. 
Riche, 7 H. L. 653, 673; S. C. (below), 9 Exch. 224, 262; Bird v. Bird's 
Patent Co., 9 Ch. 358; National Trust Co. v. Miller, 33 N. J. Eq. 155; 
Thomas v. Railway Co., 101 U. S. 73; Oregon Ry. v. Oregonian Ry., 
130 U. S. 22; Central Transp. Co. v. Pullman's Car Co., 139 U. S. 24. 

*Mor. Priv. Corp., § 619. 

In Ashbury Ry. Co. v. Riche, supra, the Lord Chancellor said: 
"Now, I am clearly of opinion that this contract was entirely, as I 
have said, beyond the objects of the memorandum of association. 



§ 79.] ADOPTION AND RATIFICATION OF CONTRACTS. 123 

§ 79. Batification oy corporation of acts of promoters. 
The promoters, or individuals organizing a corporation, 
are not, of course, the corporation. The legal body, as 
has been shown, is distinct from the individuals compos- 
ing it. The statutes confer no authority upon the pro- 
moters of a corporation, as a general rule, to enter into 
preliminary contracts binding the corporation when it 
shall come into existence. Such contracts may, however, 
bind the individuals who make them. If ratified and 
adopted by the corporation, and they are within the cor- 

If so, it was thereby placed beyond the powers of the company to 
make the contract. If so, my lords, it is not a question whether 
the contract ever was ratified or was not ratified. If it was a con- 
tract void at its beginning, it was void because the company could 
not make the contract. If every shareholder of the company had 
said: ' That is the contract which we desire to make, to which we 
sanction the placing the seal of the company,' the case would not 
have stood in any different position from that in which it stands 
now. The shareholders would thereby, by unanimous consent, have 
attempted to do the very thing which, by the act of parliament, 
they were prohibited from doing. But, my lords, if the sharehold- 
ers of the company could not ab ante have authorized a contract of 
this kind to be made, how could they subsequently sanction the 
contract after it had, in point of fact, been made? I endeavored to 
follow, as accurately as I could, the very able argument of Mr. Ben- 
jamin at your lordships' bar, on this point; but it appeared to me 
that this was a difficulty with which he was entirely unable to 
grapple. He endeavored to contend that when the shareholders had 
found that something had been done by the directors which ought 
not to have been done they might be authorized to make the best 
they could of a difficulty into which they had thus been thrown, 
and therefore might be deemed to possess power to sanction the 
contract being proceeded with. My lords, I am unable to adopt 
that suggestion. It appears to me that it would be perfectly fatal 
to the whole scheme of legislation to which I have referred if you 
were to hold that, in the first place, directors might do that which 
even the whole company could not do, and that then, the sharehold- 
ers rinding out what had been done, could sanction, subsequently, 
what they could not antecedently have authorized." 



124 ADOPTION AND RATIFICATION OF CONTRACTS.. [§ 7&. 

porate powers, and are not otherwise subject to objection, 
they may become the contracts of the corporation and 
enforceable as such. 1 - In respect of contracts of promot- 
ers, Judge Eedfield says : " The promoters are in no 
sense identical with the corporation, nor do they repre- 
sent it in any relation of agency, and their contracts 
could, of course, only bind the company so far as they 
should be subsequently adopted by it, as their successors." * 
Such a contract must derive its vitality from the meeting 
of minds when both parties are in existence ; until then, 
it can be nothing more than an offer by one party. 3 And 

iMunson v. Bailroad Co., 103 N. Y. 58; Eookford R. Co. v. Sage, 
65111. 328; Safety Dep. Life Co. v. Smith, id. 309; Western Screw 
Co. v. Cousley, 72 111. 531 ; Franklin Ins. Co. v. Hart, 31 Md. 59; N. Y. 
R. Co. v. Ketchum, 27 Conn. 170; Marohand v. Loan Co., 26 La. Ann. 
389; Frost v. Belmont, 6 Allen (Mass.), 152; White v. Manufacturing 
Co., 1 Pick. (Mass.) 215; Earl of Shrewsbury v. North Staf. Ry. Co., 
1 Eq. 593; Bell's Gap Ry. Co. v. Christy, 79 Pa. St. 54; Frankfort Co. 
v. Churchill, 6 T. B. Mon. (Ky.) 427; Caledonian Ry. Co. v. Helens- 
burgh, 2 Macq. 391; Payne v. New South Wales Coal Co., 10 Ex. 283; 
Pennsylvania Match Co. v. Hapgood, 141 Mass. 145; Touche v. Ware- 
housing Co., 6 Ch. App. 671; Spiller v. Paris Rink Co.,7 Ch. Div. 368; 
Whitney v. Wyman, 101 U. S. 392; McDonough v. Bank, 34 Tex. 309; 
Morrison v. Gold Mountain Co., 52 Cal. 307. 

2 1 Redf. on Rys., § 9. 

In Bell's Gap Railroad Co. v. Christy, supra, an action was brought 
against a railroad company to recover the value of services per- 
formed before the incorporation, in procuring the charter, making 
surveys, etc. It was held that the plaintiff could not recover in the 
absence of proof that a majority of the incorporators or promoters- 
of the corporation authorized the service. 

In Morrison v. Gold Mountain Co., supra, an agreement was made 
among parties owning a mine, and who expected to incorporate 
themselves but did not then do so, that a person was entitled to two 
thousand five hundred shares of the stock of the company. It was 
held not to be the agreement of the corporation; that the mere ac- 
ceptance of the benefit of a contract does not imply a promise on. 
the part of the company to adopt and perform it. 

3 Pennsylvania Matoh Co. v. Hapgood, 141 Mass. 145. 



§ 79.] ADOPTION AND RATIFICATION OF CONTRACTS. 125 

a contract made by the promoters, to become binding on 
the corporation, should be adopted in the same way that 
its own contracts are made. Formal action by the board 
of directors is necessary in the former case only if it 
would be so in the latter. 1 

As contracts of promoters are peculiarly adapted to 
companies formed under the acts of parliament and the 
Companies Act of England, the subject is not deemed of 
sufficient importance in this country to require further 
consideration here. 

i Batelle v. Northwestern Cement Co., 37 Minn. 89. 



CHAPTER TIL 

THE DOCTRINE APPLIED TO INCIDENTAL POWERS OF 
CORPORATIONS. 

§ 80. Introductory. 

81. Power to acquire real property. 

82. Devises to corporations. 

83. Jus disponendi in corporations. 

84 Power to sell implies power to mortgage. 

85. Power of bank to hold real estate. 

86. Power to acquire by eminent domain. 

87. Alienation by deed. 

88. Conveyances by agent. 

89. Acknowledgment to corporate deeds. 

90. Affixing seal to deeds. 

91. Assignment for benefit of creditors. 

92. Power to act as trustee. 

93. Trust must be within scope of corporate purposes. 
94 Cannot be compelled to execute repugnant trust. 

95. Power to take by bequest. 

96. Power to borrow money. 

97. Test to determine if transaction is borrowing. 

98. Instances of implied power to borrow. 

99. Power to loan money. 

100. Power as to negotiable notes. 

101. Power as indorsee. 

102. Power of savings bank to make negotiable paper; 

103. Power as to discount and purchase. 

104. Liability on accommodation paper. 

105. Power to pledge securities. 

§ 80. Introductory. — In addition to the powers usually 
granted to a corporation by its charter or the laws under 
which it is organized and created, there are certain other 
powers, which a long line of adjudications have estab- 
lished, that are now generally regarded as incidental to 



§ 81.] INCIDENTAL P0WEES OF OOBPOBATIONS. 127 

those specially conferred; and it has usually been in the 
application of the doctrine of ultra vires to these inci- 
dental powers that so much conflict in judicial opinion 
has occurred. In the succeeding sections of this chapter 
will be set forth such powers as have been declared by 
the great weight of authority as incidental to those spe- 
cially enumerated. 

§ 81. Power to acquire real property. — At common 
law, unless in a case where a corporation purchases and 
undertakes to hold real property for purposes wholly out- 
side and foreign to the objects of its creation, or unless 
restricted by its charter or by statute, a corporation 
generally had the legal capacity to take title in fee to 
real property. 1 And even under modern statutes, if the 
objects for which the corporation is formed cannot be 
accomplished without acquiring and holding title to real 
estate, then such power may be implied. 2 In modern 
times, however, and more especially in this country, the 

11 Bl. Com. 478; 2 Kent, Com. 281; 1 Wash. Real Prop. (4th ed.) 75; 
Beach, Priv. Corp., § 377; Boone, Corp., § 40; Natoma, etc. Co. v. 
Clarkin, 14 Cal. 544; Hayward v. Davidson, 41 Ind. 212; Lathrop v. 
Commercial Bank, 8 Dana (Ky.), 114; Inhabitants of Sutton Parish 
v. Cole, 3 Pick. (Mass.) 232; Thompson v. Waters, 25 Mich. 214; Cal- 
loway M. Co. v. Clark, 32 Mo. 305; McCartee v. Orphan Asylum, 9 
Cow. (N. Y.) 437; Champlain E. Co. v. Valentine, 19 Barb. (N. Y.> 
484; Robie v. Sedgwick, 35 Barb. (N. Y.) 319; Reynolds v. Stark Co., 
5 Ohio, 204; Leazure v. Hillegas, 7 Serg. & Rawle (Pa.), 313; The 
Banks v. Poitiaux, 3 Rand. (Va.) 136; Revanna Nav. Co. v. Dawson, 
3 Grat. (Va.) 19; Page v. Heineberg, 40 Vt. 81; Auerbach v. Le Sueur 
Mill. Co., 28 Minn. 291; Ossipee, etc. Co. v. Canney, 54 N. H. 295; 
Ashville Division, etc. v. Aston, 92 N. C. 578; State v. Madison, 7 
Wis. 688; Blanchard's Factory v. Warner, 1 Blatch. (U. S.) 258; Dry 
Dock Co. v. Hicks, 3 McL. 115. 

2 Crawford v. Longstreet, 43 N. J. L. 326; State v. Mansfield, 23 
N. J. L. 510; State v. Newark, 1 Dutch. (N. J.) 315; 2 Kent, Com. 282^ 
Blackburn v. Selma, etc. R. Co., 2 Flip. (U. S.) 525. 



128 INCIDENTAL POWEES OF COEPOEATIONS. [§ 81. 

legislature generally prescribes some limits to the powers 
of corporations to purchase and hold real property, the 
charter and law under which it is organized and created 
being the source to which we must go to ascertain 
whether a corporation possesses such power. 1 But cor- 
porations created for a specific object have no power to 
take and hold real estate for purposes wholly foreign to 
that object. 2 So where the charter of a corporation pre- 
scribed that " the lands, tenements and hereditaments 
which it shall be lawful for the said corporation to hold 
shall be only such as shall be required for its accommo- 
dation in relation to the convenient transacting of its 
business, or such as shall have been bona fide mortgaged 
to it by way of security, or conveyed to it in satisfaction 
of debts previously contracted in the course of its deal- 
ings, or purchased at sales upon judgments which shall 
have been obtained for such debts," it was held that the 
corporation was prohibited from buying or selling or be- 
coming a speculator in real estate. 3 But it has been held 
in many cases that where a corporation has purchased or 
is holding more land than it is authorized to acquire or 
hold, it still has the right to hold it against all others ex- 
cept the state.* In JVatoma W. & M. Co. v. Clarjam, 14 

i Russell v. Topping, 5 McL. (U. S.) 194; Perrine v. Canal Co., 9 
How. (IT. S.) 172; Moor's Heirs v. Moor's Devisees, 4 Dana, 354; Lath- 
rop v. Commercial Bank, 8 Dana (N. Y.), 114; Chambers v. St. Louis, 
29 Mo. 543; Revanna Nav. Co. v. Dawson, 3 Grat. (Va.) 19; Case v. 
Kelly, 133 IT. S. 21; Fritts v. Palmer. 132 IT. S. 293. 

inhabitants of Sutton Parish v. Cole, 3 Pick. (Mass.) 232. 

3 Bank of Michigan v. Niles, 1 Doug. (Mich.) 401. 

4 Natoma, etc. Co. v. Clarkin, 14 Cal. 543; Hough v. Cook County, 
etc. Co., 73 111. 23; Hay ward v. Davidson, 41 Ind. 212; Land v. Coff- 
man, 50 Mo. 243; Whitman M. Co. v. Baker, 3 Nev. 386; De Camp v. 
Dobbins, 29 N. J. Eq. 36; Bogardus v. Trinity Church, 4 Sand. Ch. 
(N. Y.) 633; Farmers' T. & T. Co. v. Curtis, 7 N. Y. 466; Mallett v. 
Simpson, 94 N. C. 37; Leazure v. Hillegas, 7 S. & R. (Pa.) 313; Baird 



§ 81.J INCIDENTAL P0WEES OE COEPOEATIONS. 129 

Cal. 552, Mr. Justice Field, in discussing this subject, said: 
" Whether or not the premises in controversy are neces- 
sary for these purposes it is not material to inquire; that 
is a matter between the government and the corporation, 
and is no concern of the defendants. It would lead to 
infinite inconvenience and embarrassments if, in the suits 
by corporations to recover the possession of their prop- 
erty, inquiries were permitted as to the necessity of such 
property for the purposes of their incorporation, and the 
title made to rest upon the existence of that necessity." 
And in Mallett v. Simpson, 94 H". 0. 37, Ashe, J., in de- 
livering the opinion of the court, used language to the 
same effect, namely : " The authorities go to the extent 
that even when the right to acquire real property is lim- 
ited by the charter, and the corporation transcends its 
power in that respect, and for that reason is incompetent 
to take title to real estate, a conveyance to it is not void, 
but only the sovereign (here the state) can object. It is 
valid until assailed in a direct proceeding instituted by 
the sovereign for that purpose." So in Southern Pacific 
R. Co. v. Orion, supra, it was held that where a cor- 
poration authorized to receive grants of land for the 
purpose of the corporation brings an action against a 
trespasser to recover possession of lands granted to it, 
such trespasser will not be heard to question the title of 
the corporation on the ground that it had no authority to 
take them ; that that was a question between the state and 
the corporation. And where a corporation is authorized 

t. Bank, If id. 411; ©oundie v. Water Co., 7 Pa. St. 233; Blunt v. 
Walker, 11 Wis. 334; Southern Pao. E. Co. v. Orton, 6 Saw. (C. C. 
U. S.) 157; Runyan v. Lessee, etc., 13 Pet. (U. S.) 122; Cornell v. Col- 
orado Springs, 100 XT. S. 55; Jones v. Habersham, 107 U. S. 174; Oil 
•Co. v. Railway Co., 33 Fed. Rep. 22; Alexander v. Tolleston Club, 110 
111. 65. 

9 



130 INCIDENTAL POWEES OF COEPOEATIONS. [§ 81. 

to receive conveyances of and hold title to real estate, 
but is prohibited from so doing for any but specified pur- 
poses, the question as to the validity of the title to the 
real estate conveyed to it cannot be made to depend upon 
proof as to whether the land is held for such specified 
purpose or not. The title will vest in the corporation, 
and the question as to whether the corporation has ex- 
ceeded its powers can be raised only by the state or by a 
stockholder. 1 And corporations chartered in one state, 
and not forbidden by the laws of its creation, may ac- 
quire and hold lands in another state, unless prohibited 
from so doing either by direct enactments of the latter 

1 Hough v. Cook County L. Co., 73 111. 23. 

In Case v. Kelly, supra, the court say: "A corporation, in order 
to be entitled to buy and sell, to receive and hold, the title to rear 
estate, must have some statutory authority of the state in which 
such lands lie, to enable it to do so, and the absence of such provis- 
ion in the law of its incorporation does not create any general stat- 
ute which authorizes any such right. The enumeration of the pur- 
poses for which the corporation could acquire title to real estate 
must necessarily be held exclusive of all other purposes." 

And in Fritts v. Palmer, 133 U. S. 293, Mr. Justice Miller, speak- 
ing of the general powers of corporations to acquire and transfer 
real estate, in his masterly dissenting opinion says: "It has been 
the recognized doctrine of this court for a great many years, per- 
haps a century, that the transfer of title to real estate, whether by 
inheritance, by purchase and sale, or by any other mode by which 
title to property is acquired, is rightfully governed by the laws of 
the state in which the land is situated. The policy of permitting, 
corporations to hold real estate has always been a restricted one. 
Corporate bodies, whether for public use or private purposes, have 
always been subjects of limitation on this right to hold real estate. 
It may be prohibited altogether. It may be allowed with distinct 
limitations as to amount either in quantity or in value. I can con- 
ceive of cases where corporations have been authorized to acquire 
a limited amount of real estate such as the legislature may conceive 
to be useful and necessary to the purpose for which they are organ- 
ized, or to take property for specific uses, in which the question as 
to whether they have exceeded that amount or perverted the use 
may be one for the state alone, and not of any private person." 



§§ 82, 83.]. INCIDENTAL POWERS OF OOEPOEATIONS. 131 

state or by its public policy, to be deduced from settled 
adjudications of its courts. 1 

§ 82. Devises to corporations. — Generally, corporations 
may not take lands by devise unless specially authorized 
so to do, this manner of acquiring real estate being regu- 
lated by statute or by the provisions of its charter. In 
New York corporations have been held incapable of tak- 
ing lands by devise unless so authorized by statute or by 
charter, 8 whilst in Massachusetts 3 and Kentucky 4 no such 
limitations as to devises to corporations existed. And 
where the provisions in the charter of a corporation per- 
mitted it to acquire^ land " by direct purchase or other- 
wise," it was held to have the power to acquire by devise. 5 

§ 83. Jus disponendi in corporations. — The power to 
acquire real or personal property in a corporation as in 
an individual implies absolute jus disponendi, unless such 
power be restrained by statute- or by considerations of 
public policy. 6 It is a necessary incident to ownership, 

1 American, etc. Union v. Yount, 101 IT. S. 352; Thompson v. Wat- 
ers, 25 Mich. 214; Whitman Min. Co. v. Baker, 3 Nev. 386; Luinbard 
v. Aldrich, 8 N. H. 31; State v. Boston, etc. R. Co., 25 Vt. 433; Props. 
Claremont Bridge v. Eoyce, 42 id. 730; Northern T. Co. v. Chicago, 
7 Biss. (C. C.) 45; S. c, 99 IT. S. 635; Carroll v. East St. Louis, 67 111. 
568; Santa Clara Academy v. Sullivan, 116 111. 375. 

2 McCartee v. Orphan Asylum, 9 Cow. (N. Y.) 437; Downing v. 
Marshall, 23 N. Y. 366; White v. Howard, 46 N. Y. 144; Holmes v. 
Mead, 52 N. Y. 332. 

3 Dickson v. United States, 125 Mass. 311. 

4 Moor's Heirs v. Moor's Devisees, 4 Dana (N. Y.), 354 

5 Downing v. Marshall, 23 N. Y. 366. 

6 2 Kent, Com. 281; Burton's Appeal, 57 Pa. St. 213; Reichwald v. 
Commercial Hotel, 106 111. 439; Binney's Case, 2 Bland (Mo.), 97; Ar- 
desco Oil Co. v. N. A. Min. etc. Co., 66 Pa. St. 375, 382; State v. Col- 
lege, 38 Cal. 161; Miners' Ditch Co. v. Zellerbach, 37 Cal. 543; Canal 
Co. v. Vallette, 21 How. (U. S.) 424; Partridge v. Badger, 25 Barb. 



132 INCIDENTAL F0WEES OF COEFOKATIONS. [§ 83. 

and has the power without any express grant. A corpo- 
ration may therefore, in the absence of any such restraint, 
sell whatever it has the right to own. So it may sell all 
its corporate property for a corporate or lawful purpose. 1 
Thus, where a corporation, organized for the purpose of 
creating a water-power, finds that it can no longer profit- 
ably use its privileges, and its waterTpower has been ex- 
tinguished by contract with the state, it may sell its lands 
and receive payment therefor in its own stock. 2 So, a 
corporation organized for the purpose of owning ditches 
for the conveyance and sale of water has power to sell 
and convey all its corporate property, provided the sale 
is made for corporate purposes, and strangers taking a 
conveyance are entitled to assume, as against the corpo- 
ration, that the sale was for a lawful purpose. 8 The fore- 
going rules apply more particularly to strictly private 
corporations, established solely for trading or manufact- 
uring purposes, and in the management of which neither 
the public nor the state has any direct concern. 4 

(N. Y.) 146; Barry v. Merchants' Exchange, 1 Sandf. Ch. (N. Y.) 280; 
Burr v. Glass Co., 14 Barb. (N. Y.) 358; Dater v. Bank, 5 Watts & S. 
(Pa.) 323; Frazier v. Wilcox, 4 Rob. 517; United States Bank v. Huth, 
4 B. Mon. (Ky.) 423; State v. Bank, 6 Gill & J. (Md.) 323; Pierce 
v. Emery, 32 N. H. 484; Reynolds v. Commissioners, 5 Ohio, 205; 
De Ruyter v. St. Peter's Oh., 3 N. Y. 238; Clark v. Titcomb, 42 Barb. 
(N. Y.) 122; Central Gold M. Co. v. Piatt, 3 Daly (N. Y), 263; Banks 
v. Poitiaux, 3 Rand. (Va.) 136. 

i Miners' Ditch Co. v. Zellerbach, 37 Cal. 543; Sargent v. Webster, 
13 Met. (Mass.) 498; Treadwell v. Salisbury Mfg. Co., 7 Gray (Mass.), 
393; Hodges v. Screw Co., 1 R. I. 322, 3 R. I. 9; Dupee v. Boston 
Water-power Co., 114 Mass. 37. 

2 Dupee v. Boston Water-power Co., 114 Mass. 37. 

s Miners' Ditch Co. v. Zellerbach, 37 Cal. 543. 

4 State v. College, 38 Cal. 166; Commonwealth v. Smith, 10 Allen 
(Mass.), 448; Webster v. Turner, 12 Hun (N. Y). 264; Hancock v. 
Holbrook, 4 Woods (U. S. C. C), 52; Sheldon Hat Co. v. Eickemeyer, 
etc. Co., 90 N. Y. 613; Dupee v. Boston Water-power Co., 114 Mass. 37; 
Buford v. Keokuk Packet Co., 3 Mo. App. 159. 



§ 84.] INCIDENTAL POWERS OF COKPOEATIONS. 133 

§ 84. Power to sell and convey implies power to mort- 
gage. — Power in a corporation to alienate its real prop- 
erty absolutely, clearly carries with it the implied power 
to mortgage for corporate purposes. It may therefore, 
in the absence of any prohibition in its charter or the 
law of its organization, borrow money for the purpose of 
carrying out the legitimate objects of its incorporation, 
and mortgage its realty to secure the same. 1 And it has 
lately been held that a corporation, acting in good faith 
and without any purpose of defrauding its creditors, but 
with the sole object of continuing a business which prom- 
ises to be successful, may give a mortgage to directors 
who have lent their credit to it, in order to induce a con- 
tinuance of that credit, and to obtain renewals of matur- 
ing paper at a time when the corporation, although it 
may not be then in fact possessed of assets equal at cash 
prices to its indebtedness, is in fact a going concern, and 
is intending and expecting to continue in business. 2 And 
it has been held that a corporation, authorized by its 
charter to purchase, hold and convey such real estate as 
was requisite and necessary for the transaction of the 
business for which it was created, or such as had been 
mortgaged or conveyed to it for the security or payment 
of debts, due it, might mortgage such realty to secure a 
debt owing by it. 3 So an agricultural society may mort- 
gage its fair grounds to raise money to advance the ob- 

1 Aurora Agl. Soc. v. Paddock, 80 111. 263; Thompson v. Lambert, 
44 Iowa, 239; Beardstown, etc. R Co. v. Metcalf,4 Met. (Mass.) 199; 
Susquehanna Bridge Co. v. Insurance Co., 3 Md. 305; Richards v. 
Railroad Co., 44 N. H. 135; Jackson ex dem. People v. Brown, 5 
Wend. (N. Y.) 590; Barry v. Merchants' Exch., 1 Sandf. Ch. (N. Y.) 280; 
Burt v. Rattle, 31 Ohio St. 116; Gordon v. Preston, 1 "Watts (Pa.), 385; 
Watts' Appeal, 78 Pa. St. 370; Leggett v. Banking Co., 1 Sax. Ch. 
(N. J.) 541; s. C, 23 Am. Dec. 728. 

^Sanford Tool Co. v. Howe, Brown & Co., 157 U. S. 312. 

3 Jackson ex dem. People v. Brown, 5 Wend, (N. Y.) 590. 



I"34 INCIDENTAL P0WEES OE COEPOEATIONS. [§ 85. 

jects of its creation. 1 And a corporation created for the 
purpose of building a public exchange building may mort- 
gage its realty to carry out that object. 2 

§85. Power of lank to hold and sell real estate. — A 
bank is usually authorized by its charter to acquire, hold 
and sell real estate that may be necessary for its banking 
purposes, or conveyed to it in satisfaction of a debt con- 
tracted in the course of its dealings, or purchased by it at 
a sale under a mortgage held by the bank.' But holding, 
acquiring and selling to any greater extent or for any 
other purpose than is set forth in its charter is illegal.* 
So the power to convey real estate includes the power to 
mortgage it; and power to purchase includes power to 
sell. 6 

1 Thompson v. Lambert, 45 Iowa, 239. 

2 Barry v. Merchants' Exchange, 1 Sandf. Ch. (N. Y.) 280. 
3 Thomaston Bank v. Stimpson, 21 Me. 195; Jackson v. Brown, 5 

Wend. (N. Y.) 590. 

4 Metropolitan Bank v. Godfrey, 23 111. 579; Bank of Michigan v. 
Niles, 1 Doug. (Mich.) 401; Pacific R. Co. v. Seeley, 45 Mo. 211; Chap- 
man v. Colby, 47 Mich. 51; Case v. Kelly, 133 U. S. 21; Eussell v. 
Topping, 5 McLean (U. S.), 194. 

8 Jackson v. Brown, supra. 

In Russell v. Topping, supra, the lines are rather finely drawn. 
In that, case a bank under its charter had power to purchase, hold 
and convey real estate as follows: "First, such as shall be required 
for its immediate accommodation in the transaction of its business, 
or such as shall have been mortgaged to it in good faith by way of 
security for loans previously contracted for money due; or second, 
such as shall have been conveyed to it in satisfaction of debts previ- 
ously contracted in the course of its dealings; or third, such as shall 
have been purchased at sales upon judgments, decrees or mortgages 
obtained or made for such debts; and said bank shall not purchase, 
hold or convey real estate in any other case, or for any other pur- 
pose," etc. The facts are stated by the court as follows: It appears 
that a man by the name of Howard, being indebted to the plantiff, 
gave him a mortgage on some real property to secure the debt, 



§ 86.] INCIDENTAL POWERS OF COEPOKATIONS. 135 

§ 86. Power to acquire real property % right of emi- 
nent domain. — Corporations of a jwasi-public character 
have been authorized to take private property for the pur- 
pose of making public highways, turnpike roads and canals, 
of erecting wharves and basins, of establishing ferries, of 
draining swamps and marshes, and of bringing water to 
cities and villages. 1 But statutes delegating the right of 

which included the tract in question. The plaintiff foreclosed his 
mortgage by a proceeding on the equity side of this court. The 
State Bank of Illinois was made a party defendant, and filed an 
answer to the bill, alleging that Howard was largely indebted to the 
bank, for which indebtedness a mortgage had been given by Howard, 
but subsequent to that of the plaintiff, and which included several 
parcels of land conveyed by the plaintiff's prior mortgage, but not 
the lot in controversy. At this time Howard was insolvent, and 
the bank asked that the lands not included in this mortgage should 
first be sold to pay the plaintiff's debt, and that the lands included 
in the mortgage of the bank (and which were also in the plaintiff's 
mortgage) should be sold only in the event of the other lands not 
being sufficient to pay the plaintiff's debt. The court decreed ac- 
cordingly, and ordered that, unless the plaintiff's debt be paid within 
twenty days, the land should be sold by a commission. It was sold 
in pursuance of the decree. At the sale the bank purchased the 
tract in controversy, and a deed was made to the bank by the com- 
missioners. The defendants claim through the bank. The plaint- 
iff received the purchase money paid by the bank. Howard being 
liable to the plaintiff for other indebtedness, suit was brought against 
him by the plaintiff, judgment recovered, execution issued, and the 
tract in question levied on and sold. At that sale the plaintiff was 
the purchaser, and he now holds a deed for the premises. Both 
parties claiming through Howard, his title is not questioned. After 
a thorough examination of the subject it was held by the court 
that such purchase by the bank was ultra vires; that the receipt of 
the purchase price of such property from the bank did not estop the 
persons receiving it from disputing the power of the bank to pur- 
chase the property, and that its grantee in possession of such prop- 
erty could be ejected. 

i Beekman v. Saratoga R. Co., 3 Paige (N. Y), 44; Johnson v. Utica 
Water- works, 67 Barb. (N. Y.) 415; Inhabitants of Way land v. Com- 
missioners, 4 Gray (Mass.), 500; In re Mt. Washington R. Co., 35 



136 INCIDENTAL P0WEES OF COEPOEATIONS. [§ 87. 

eminent domain to corporations are not to be extended 
by implication and must be strictly complied with. 1 The 
real estate acquired by a public corporation in the exer- 
cise of a delegated right of eminent domain and necessary 
for uses in which the public is concerned cannot be sold 
under execution apart from the franchise and its inci- 
dents so as to give the purchaser a title to the property 
divested of all the duties and obligations assumed by the 
company. 2 

§ 87. Alienation T>y deed. — The right of alienation is, 
as we have seen, 3 an incident of ownership, and belongs 
to a corporation as well as to an individual, when no re- 
straint is imposed in the charter. 4 As a general rule, deeds- 
of conveyance by a corporation must be executed in the 
corporate name and under the corporate seal. 5 It is also, 
a general principle that a conveyance of property by a 
corporation may be executed like a conveyance by an in- 
dividual through any agent having authority to represent 
the company for that purpose. 6 

N. H. 134; Hildreth v. Lowell, 11 Gray (Mass.), 345; Reeves v. Wood 
Co., 8 Ohio St. 333; Barrington v. Neuse River, 69 N. C. 165; Curry 
v. Mt. Sterling, 15 111. 320; East St. Louis v. St. John, 47 111. 463; Pat- 
terson v. Boom Co., 3 Dill. (U. S.) 465; Re Corporation of Hadders- 
fleld, 10 Ch. App. 92. 

i Trumpler v. Bernerly, 39 Cal. 490; N. Y. etc. R. Co. v. Kip, 46. 
N. Y. 546; Iron R. R. Co. v. Ironton, 19 Ohio St. 299; People v.. 
Brighton, 10 Mich. 57; Leslie v. St. Louis, 47 Mo. 474. 

2 Gooch v. McGee, 83 N. C. 59. 

» §83. 

4 Burton's Appeal, 57 Pa. St. 213; Dana v. Bank, 5 W. & S. (Pa.> 
243; Walker v. Vincent, 19 Pa. St. 369. 

5 Boone, Corp., § 54; Hatch v. Barr, 1 Ohio, 390; Miners' Ditch Co. 
v. Zellerbach, 37 Cal. 543; Hutchins v. Byrnes, 9 Gray (Mass.), 367; 
Flint v. Clinton Co., 12 N. H. 430; Tenney v. E. Warren L. Co., 4a 
id. 343. 

6 Musser v. Johnson, 42 Mo. 74; Morris v. Kiel, 20 Minn. 531; Nason. 



§§ 88, 89.] INCIDENTAL POWEKS OF CORPORATIONS. 137 

§ 88. Conveyance of corporate lands oy agent. — A cor- 
poration cannot appoint an agent to convey lands except 
by vote of its directors or other managing board, in whom 
the power to sell is reposed by charter or by the general 
laws; and without legal proof of such corporate act a 
deed purporting to be executed in its name by an agent 
is not evidence of title, though it may operate as color of 
title. 1 If the corporation be held to have ratified the 
acts of one assuming to act as its agent in selling and con- 
veying lands, by its knowledge of the fact that he was 
so acting, such a ratification would only operate as an 
equitable estoppel, of which courts of law cannot take 
cognizance in an action involving the legal title. 2 The 
authority of the agent need not be under seal. 3 

§ 89. Acknowledgment of corporate deeds. — The certifi- 
cate to the deed of a corporation should state the minis- 
terial position of the officer who affixes the corporate 
seal, the authority under which he acts, that he knows 
the corporate seal, and that the same is affixed to the 
conveyance by the order of the board of directors or 
other trustees of the corporation, and that he subscribes 
his name thereto as a witness to the execution thereof.* 

v. King Mountain M. Co., 90 N. C. 417; Hutchins v. Byrnes, 9 Gray 
(Mass.), 367; Blaokshire v. Homestead Co., 39 Iowa, 624; Hamilton 
v. McLaughlin, 13 N. E. Eep. (Mass., 1887) 434; Haven v. Adams, 4 
Allen (Mass.), 80. 

1 Standifer v. Swann, 78 Ala. 88; Tenney v. Lumber Co., 43 N. H. 
343; Burr v. McDonald, 3 Grat. (Va.) 215; Hopkins v. Gallatin Turn- 
pike Co., 4 Humph. (Tenn.) 403. 

2 Standifer v. Swann, 78 Ala. 80. 

» Hopkins v. Gallatin Turnpike Co., 4 Humph. (Tenn.) 403, 4 Am. 
& Eng. Ency. Law, 240; Beckwith v. Windsor Mfg. Co., 14 Conn. 
594. 

* 4 Am. & Eng. Ency. Law, 242; Lovett v. Sawmill Ass'n, 6 Paige 
(N. Y.), 54. 



138 INCIDENTAL POWERS OF CORPORATIONS. [§§ 90, 91. 

If no particular mode of acknowledgment of deeds of 
corporations is directed by statute, and a deed is ac- 
knowledged by the officer who affixes the seal thereto, it 
is a sufficient compliance with general laws requiring a 
deed to be acknowledged by the " grantor." 1 

§ 90. Affixing corporate seal to deeds. — The corporate 
name should be used and the corporate seal must be af- 
fixed, though a seal adopted for the occasion has been 
permitted. 2 A deed of trust executed by officers of a 
corporation in their own names by mistake, but intended 
as the deed of the corporation, was held capable of being 
reformed iu equity. 3 Where the president or other offi- 
cer of the corporation executes a deed in his own name 
and under his own seal, it is invalid, because not the deed 
of the company. 4 The deed of the corporation can be 
proved only by proving that the seal affixed is the seal of 
the corporation, or that it was affixed as the corporate 
seal by an officer of the corporation or other person 
thereto duly authorized. 5 

§ 91. Assignment of property for oenefit of creditors. — 
Another mode of alienation by a corporation of its prop- 
erty is by assignment for benefit of creditors ; and, unless 
there be some provision in the statute under which the in- 
corporation takes place prohibiting it, a corporation may 
make an assignment of its property for the benefit of 
creditors. 6 So an insolvent corporation, it has been held, 

i Boone on Corp., § 54; Kelly v. Calhoun, 95 U. S. 710. 

2 Hutohins v. Byrnes, 9 Gray (Mass.), 867. 

3 West v. Madison Co. Ag. Board, 82 111. 205. 

4 Wheelock v. Moulton, 15 Vt. 519; Isham v. Bennington Iron Co., 
19 Vt. 230; Hatch v. Barr, 1 Ohio, 390. 

« Osborne v. Tunis, 25 N. J. L. 633. 

6 Lamb v. Cecil, 25 W. Va. 288; Planters' Bank v. "Whittle, 78 Va» 
737; Whitwell v. Warner, 20 Vt. 425; Dabney v. Bank, 3 S. C. 124; 



§ 92.] INCIDENTAL POWERS OF CORPORATIONS. 139 

may sell and transfer its property, and may prefer its 
creditors, unless prohibited by law. 1 But corporations 
and their officers may not divert the corporate property 
from the payment of debts. 2 An assignment which pur- 
ports on its face to be the contract of the company, and 
is signed by the president for the company, is the com- 
pany's contract. 3 And it has been held that shares of 
stock of a corporation owned by it may be assigned to a 
creditor in satisfaction of a debt, though the creditor may 
have been a trustee, and took part in the proceedings au- 
thorizing the assignment, if the proceedings were after- 
ward ratified by the corporation. 4 

§ 92. Power to act as trustee. — It is now well estab- 
lished, and may be laid down as a general rule, that a 
corporation with legal capacity to hold property may 
take and hold it in trust, in the same manner and to the 
same extent as a private individual may do. 6 As the court 

Ardesco Oil Co. v. North Am. Co., 66 Pa. St. 375; Coates v. Donnell, 
94 N. Y. 168; Arthur v. Bank, 17 Miss. 394; Pierce v. Emery, 32 N. H. 
484; Lionberger v. Broadway Bank, 10 Mo. App. 499; Shockley v. 
Fisher, 75 Mo. 498; Covert v. Rogers, 38 Mich. 363; Merrick v. Bank, 
8 Gill (Mo.), 59; Union Bank v. Elliott, 6 Gill & J. (Md.) 363; Sargent 
v. Webster, 13 Met. (Mass.) 497; Reich wald v. Hotel Co., 106 111. 439; 
De Camp v. Alward, 52 Ind. 468; Savings Bank v. Bates, 8 Conn. 23; 
Ringo v. Biscoe, 13 Ark. 563; Canal Co. v. Vallette, 21 How. (U. S.) 
414 

i Bergen v. Fishing Co., 42 N. J. Eq. 397, 41 N. J. Eq. 238; Wilkin- 
son v. Bauerle, 41 N. J. Eq. 635. 

2 Wilkinson v. Bauerle, supra. 

» Gottfried v. Miller, 104 U. S. 521. 

*Reed v. Hoyt, 51 N. Y. Sup. Ct. 121. 

svidal v. Girard, 2 How. (U. S.) 127; First Cong. Soc. v. Atwater, 
23 Conn. 34; Phillips Acad. v. King, 12 Mass. 546; First Parish, etc. 
v. Cole, 3 Pick. (Mass.) 232; Wade v. American, etc. Soc, 7 Sm. & M. 
(Miss.) 663; Robertson v. Bullions, 11 N. Y. 243; Farmers,' etc. Co. v. 
Insurance Co., 51 Barb. (N. Y.) 33; Lincoln Sav. Bank v. Ewing, 12 
Lea (Tenn.), 518; Utontpelier v. East Montpelier, 29 Vt. 12. 



140 INCIDENTAL POWEES OF COEPOEATIONS. [§§ 93, 94. 

say in Vidal v. Girard, supra: "Although it was in early 
times held that a corporation could not take and hold 
real or personal estate in trust, upon the ground that 
there was a defect of one of the requisites to create a 
good trustee, namely, the want of confidence in the per- 
son, yet that doctrine has long since been exploded as too 
artificial; and it is now held that where a corporation 
has a legal capacity to take real and personal estate, it 
may take and hold it upon trust in the same manner and 
to the same extent as a private individual may do." 

§ 93. Trust must be within scope of corporate purposes. 
But a corporation cannot be a trustee unless the objects 
and purposes which the trust is intended to accomplish 
are within the general scope of the purposes of the cor- 
poration, and the trust relates to matters which will pro- 
mote and aid its general purposes. 1 So a corporation 
may hold and execute" a trust for charitable objects in 
accord with or tending to promote the purposes of its 
creation, although such as it might not, by its charter or 
by general laws, have authority itself to establish or to 
spend its corporate funds for. 2 But where property is de- 
vised to a corporation, partly for its own use and partly 
in trust for others, the power to take the property for its 
own use carries with it the power to execute the trust in 
favor of others. 3 

§ 94. Cannot be compelled to execute repugnant trust. — 
If the trust be repugnant or inconsistent with the proper 

i Trustees v. Peaslee, 15 N. H. 317; Mason v. Methodist Episcopal 
Church, 27 N. J. Eq, 47. 

2 Jones v. Habersham, 107 U. S. 174; Vidal v. Girard, 3 How. (U. S.) 
27; McDonough v. Murdock, 15 How. 367; Perin v, Carey, 24 How. 
465. 

8 In re Howe, 1 Paige (N. Y.), 214; Wetmore v. Parker, 52 N. Y. 
450. 



§ 95.] INCIDENTAL POWEES OF COEPOEATTONS. 141 

purposes for which the corporation was created, it cannot 
be compelled to execute the trust; 1 but iu proper cases, 
the performance of the trusts confided to corporations 
may be enforced.? And a corporation which expressly 
accepts a donation upon the trusts and for the purposes 
for which it was given cannot afterwards renounce it, but 
may be compelled to apply it to those purposes. 3 

§ 95. Power to take by bequest. — In the absence of any 
statutory restriction, corporations may take bequests of 
personal property the same as individuals. 4 So it has 
been held that a bequest to a corporation of its own stock 
is valid. 5 The following bequests have been sustained: 
of money to a church to be laid out in bread, annually, 
for ten years for the poor of the congregation, and of 
another sum for the education of students for the min- 
istry ; 6 a bequest to a city of money to purchase a lot 
and erect thereon a hospital for the indigent blind and 
lame ; 7 of money for the relief of such indigent residents 
as the town trustees should select ; 8 of money to a town 
to buy land and erect a town hall thereon. 9 

1 Vidal v. Girard, supra. 

2 Chambers v. Baptist Soc, 1 B. Mon. (Ky.) 215; Hadden v. Chora, 
8 id. 70; Van Houten v. Dutch Church, 17 N. J. Eq. 126; Congrega- 
tional Church v. Trustees, 19 Pick. (Mass.) 492; University v. Yarrow, 
23 Beas. (N. J.) 159; Thornton v. Howe, 31 Beas. (N. J.) 14; Shore v. 
Wilson, 9 CL & F. 355. 

8 Amer. Acad. v. Howard Co., 12 Gray (Mass;), 582; Drury v. In- 
habitants, 10 Allen (Mass.), 169. 

* Boone, Corp., § 52; McCartee v. Orphan Asylum, 9 Cow. (N. Y> 
437; Trustees v. King, 12 Mass. 546; Dutch Church v. Brandow, 52 
Barb. (N. Y.) 228; New York Inst. v. Howe, 10 N. Y. 84. 

5 Revanna Nav. Co. v. Dawson, 3 Grat. (Va.) 19. 

e Whitman v. Lex, 17 S. & R. (Pa.) 88. 

'Mayor v. Elliott, 3 Rawle (Pa.), 170. 

BShotwell v. Mott, 2 Sand. Ch. (N. Y.) 46. 

9Coggeshell v. Pelton, 7 John. Ch. (N. Y.) 292. 



142 INCIDENTAL POWERS OF CORPORATIONS. [§ 96. 

§ 96. Power to borrow money.— At the present time it 
seems to be generally conceded that private corporations 
organized for the purpose of pecuniary profit have, un- 
less specially restricted in this particular, the implied 
power to borrow money. 1 This power would seem nec- 

i Memphis, etc. Ry. Co. v. Dow, 120 U. S. 287; Mahoney Min. Co. v. 
Anglo-Cal. Bank, 104 U. S. 192; Gorrell v. Life Ins. Co., 63 Fed. Rep. 
371; Chicago, etc. R. Co. v. Howard, 7 Wall. (U. S.) 392; Canal Co. v. 
Vallette, 21 How. 414; Partridge v. Badger, 25 Barb. (N. Y.) 14G; 
Barry v. Merchants' Exchange, 1 Sandf. Ch. (N. Y.) 280; Farnum v. 
Blackstone Canal, 1 Sumn. (U. S.) 46; Lucas v. Pitney, 27 N. J. L. 
221; Munn v. The Commission, 15 John. (N. Y.) 44; Mott v. Hicks, 1 
Cow. (N. Y.) 513; Kelly v. Mayor, etc.. 4 Hill (N. Y), 263; Hacketts- 
town v. Swackhamer, 8 Vroom (N. J.), 191; Beers v. Phoenix Glass 
Co., 14 Barb. (N. Y) 358; Clark v. Titcomb, 42 Barb. (N. Y.) 122; 
Commissioners v. Railway, 77 N. C. 289: Tucker v. City of Raleigh, 
75 N. C. 267; Barnes v. Ontario Bank, 19 N. Y. 152; Smith v. Law, 21 
N. Y 296; Nelson v. Eaton, 26 N. Y. 410; Bradley v. Ballard, 55 111. 
413; Mobile, etc. Ry. v. Talman, 15 Ala. 474; Moss v. Academy, 7 
Heisk. (Tenn.) 283; Oxford Ins. Co. v. Spradley, 46 Ala. 98; Alabama, 
etc. Co. v. Central Association, 54 Ala. 73; Bank v. Chillicothe, 7 
Ohio, 415; Ridgway v. Bank, 12 S. & R. (Pa.) 256; Magee v. Moke- 
lumne, etc. Co., 5 Cal. 258; Hamilton v. New Castle Ry., 9 Ind. 359; 
Rockwell v. Elkhorn Bank, 13 Wis. 653; Fay v. Noble, 12 Cush. 
(Mass.) 188; Commercial Bank v. Newport Mfg. Co., 1 B. Mon. (Ky.) 
13; Holbrook v. Bassett, 5 Bosw. (N. Y.) 147; Furniss v. Gilchrist, 1 
Sandf. Sup. Ct. (N. Y.) 53; Forbes v. Marshall, L. R. 11 Ex. 166; Re 
International Ins. Co., 10 Eq. 312; Australian, etc. Co. v. Mounsey, 4 
K. & J. 733; In re German M. Co., 4 De G., M. & G. 19;'Taylor v. Agl. 
Ass'n, 68 Ala. 229; Savanna, etc. R. Co. v. Lancaster, 62 Ala. 555; 
Smith v. Eureka F. Mills, 6 Cal. 1; Union Min. Co. v. Bank, 2 Colo. 
248; Ward v. Johnson, 95 111. 215; Smead v. Indianapolis, etc. R. Co, 
11 Ind. 104; Thompson v. Lambert, 44 Iowa, 239; Booth v. Robinson, 
55 Md. 419; England v. Dearborn, 141 Mass. 590; Donnell v. Lewis 
Co. Bank, 80 Mo. 165; Connecticut R. Sav. Bank v. Fiske, 60 N. H. 
363; Kent v. Quicksilver M. Co., 78 N. Y. 159; Curtis v. Leavitt, 15 
N. Y. 9; Larwell v. Hanover Sav. Soc, 40 Ohio St. 274; Union Bank 
v. Jacobs, 6 Humph. (Tenn.) 515; Burr v. McDonald, 3 Grat. (Va.) 
215; Gibbs' Case, L. R. 10 Eq. 312; Bank of Australasia v. Breilat, 
6 Moore, P. C. 152; 4 Am. & Eng. Enc. Law, 222. 

In Hackettstown v. Swackhamer, supra, the court say: "This 



§ 96.] INCIDENTAL POWEES OF OOEPOEATIONS. 143 

essarily incident to every corporation whose business in- 
volved the expenditure of large sums of money, and often 
upon sudden and unforeseen contingencies. Bat when 
there is an express prohibition against borrowing, it must 
be obeyed, and in a case of a company or society consti- 
tuted for special purposes, no borrowing can be permitted 
without express authority, unless it be properly incident 
to the course and conduct of the business for its proper 
purposes. 1 

result is the appropriate product of the principle that corpo- 
rate powers which are the necessary accompaniments of powers 
conferred will be implied. In these instances the ability to borrow 
money is so essential that without it the business authorized could 
not be conducted with reasonable efficiency; and, as it cannot be 
supposed that it was the legislative intent to leave the company in 
so imperfect a condition, the inference is properly drawn that the 
power to raise money in this mode is inherent in the very constitu- 
tion of such corporate bodies. Such a deduction is simply, in effect, 
a conclusion that the law-maker designed to authorize the use of 
the means fitted to accomplish the purpose in view. It has been 
often said that the means which can thus be raised up by implica- 
tion must be necessary to the successful prosecution of the enter- 
prise, and that the circumstance that they are convenient will not 
legalize their introduction. But the necessity here spoken of does 
not denote absolute indispensableness, but that the power in ques- 
tion is so essential that its non-existence would render the privileges 
granted practically inoperative or incomplete. It is, consequently, 
obvious that a presumption resting on such a basis as this must 
spring up in favor of almost the entire mass of commercial and 
manufacturing corporations, for, without the franchise to effect 
loans, the chartered business could be but imperfectly transacted. 
And yet, even in such instances, the usual inference that such an 
implied power exists may be repelled by the language of the par- 
ticular charter or the peculiar circumstances of the case. In a 
word, the rule of law in question is nothing but the discovery, by 
the courts, of the legislative intent, such intent having been ascer- 
tained by a construction of charters, as applied to the subject-mat- 
ter." 

iBlackburne Bldg. Soc. v. Cunliffe, Brooks & Co., 29 Ch. Div. 902; 
Record & Q. R. Co., 4 Ch. Div. 748; Davis' Case, L. R 12 Eq. 516. 



144: INCIDENTAL POWERS OF COEPOEATIONS. [§§ 97, 98. 

§ 97. Test to determine if transaction is borrowing. — 
In Blackhurne Building Society v. Cunliffe, Brooks & Co., 
supra, the test as to whether a given transaction was a 
borrowing or not was said to be this: "Has the transac- 
tion really added to the liabilities of the company? If 
the amount of the company's liabilities remain in sub- 
stance unchanged, but there is, merely for the convenience 
of payment, a change of the creditor, there is no sub- 
stantial borrowing in the result, so far as relates to the 
position of the company. Eegarded in that light it is 
■consistent with the general principles of equity that those 
who pay legitimate demands, which they are bound in some 
way or other to meet, and have had the benefit of other 
people's money advanced to them for that purpose, shall 
not retain that benefit so as, in substance, to make those 
other people pay their debts. I take that to be a prin- 
ciple sufficiently sound in equity; and if the result is that 
by the transaction, which assumes the shape of an advance 
or loan, nothing "is really added to the liabilities of the 
company, there has been no real transgression of the prin- 
ciple on which they are prohibited from borrowing." 

§ 98. Instances as to implied power to 'borrow. — Banks 
have implied power to borrow money, when necessary 
in the prosecution of their business, and may issue the 
usual evidences of debt therefor. 1 A railroad company, 
under an authority to borrow money, has no right to 
raise money by the issue of irredeemable bonds entitling 
the holder merely to a share of the earnings after the 
payment of a certain dividend to the stockholders. 2 But 
a benefit society has no power to borrow money unless 

1 Curtis v. Leavitt, 15 N. Y. 9; Barnes v, Ontario Bank, 19 N. Y. 
153; Bank of Australasia v. Breilat, 6 Moore's P. C. 152, 194; Magee 
v. Mokelumne, eto. Co., 5 Cal. 258. 

2 Taylor v. Philadelphia, eto. R. Co., 7 Fed. Rep. 386. 



■§ 98.] _ INCIDENTAL POWERS OF CORPORATIONS. 145 

its rules specifically authorize it to do so. The directors 
of a benefit building society, the rules of which gave no 
power to borrow money, borrowed a sum of money for 
the purpose of advancing it to their members on the se- 
curity of their shares. The lender of the money after- 
wards presented a petition for an order to wind up the 
company. It was held by the court that the transaction 
was ultra vires and that the petitioner had no legal or 
equitable debt against the company, and the petition was 
dismissed. 1 Where a mining company, among others, 
had the power to " enter into any obligation or contract 
essential to the transaction of its ordinary affairs, or for 
the purposes for which it was created," it was held that 
the board had authority not only to designate the bank- 
ing institution in which the money of the company should 
be deposited, but to prescribe the mode in which, and the 
officers by whom, it should be withdrawn, from time to 
time, for the use of the company ; that it was equally 
clear that the board had, as incident to the general pow- 
ers conferred by law upon the company, power to bor- 
row money for the purposes of the corporation, and to 
invest certain officers with authority to negotiate loans, 
to execute notes, and to sign checks against its bank ac- 
count. 2 So a corporation created for the purpose of con- 
structing a road has the power to borrow money as one 
of the implied means necessary to carry into effect the 
specified powers; and this is so though the charter di- 
rects that the funds shall be raised by subscription. 3 
Though there be no express power given to a corpora- 
tion in its charter to borrow money on mortgage, but 

lEx parte Williamson, L. R 5 Ch. 309; Laing v. Reed, L. R. 5 
Ch. 4. 
2 Mining Co. v. Anglo-California Bank, 104 U. S. 192. 
' Union Bank v. Jacobs, 6 Humph. (Tenn.) 515. 
10 



146 INCIDENTAL POWEKS OE CORPORATIONS. [§ 99. 

power is conferred on the directors to make all necessary 
contracts, and to sell or otherwise dispose of any portion 
of its property, whenever in their judgment it shall be 
found to the interest of the company, the exercise of the 
power to borrow, and to secure the loan by mortgage 
from the company, has been held valid. 1 So the raising 
money by debentures in the case of a trading company 
simply established for the conveyance of passengers and 
luggage by omnibuses was held within the powers of the 
company, although there was no express authority con- 
ferred either by the memorandum or articles of associa- 
tion for borrowing. 3 And a shipping company without 
any express powers in the memorandum or articles of 
association has power to borrow money for the purposes 
of the company. 3 

§ 99. Power to loan money. — A corporation has no 
power to loan money unless there is a special clause to 
that effect in its charter. The rule is declared to be that 
if the means employed are necessarily adapted to the ends 
for which the corporation was created, they come within 
the implied or incidental powers, though they may not 
be specifically designated by the act of incorporation. 4 
So where a corporation had no express grant of power 
to lend money, no such power could be implied from the 
declared purposes and objects for which the charter was 
granted; on the contrary, such power was held to be ex- 
cluded by the declaration that the corporation was not 
created for pecuniary profit. 8 So, also, it has been held 

1 Booth v. Robinson, 55 Md. 419. 

2 Byron v. Metropolitan Co., 3 De G. & J. 123. 

3 Australian Steam Clipper Co. v. Mounsey, 4 K. & J. 733. 

4 Madison Plank Road Co. v. Watertown R. Co., 5 Wis. 173; Cham- 
bers v. Falkner, 65 Ala. 448; Workingmen's Banking Co. v. Routen- 
berg, 103 I1L 460; S. C, 43 Am. Rep. 26. 

5 Chambers v. Falkner, supra. 



§ 100.] INCIDENTAL POWERS OE COEPORATIONS. 147 

that where a director, while indebted to his bank for an 
amount greater than seventy-five per cent, of the stock 
held by him, obtained a loan for a farther amount, giving 
his note therefor, guarantied by A., when the charter of 
the bank prohibited its lending to a director more than 
seventy-five per cent, of the amount of his stock, the note 
was void, and could be enforced neither against the di- 
rector nor against the guarantor. 1 

§ 100. Powers as to negotiable instruments. — It is now 
the well-established rule that corporations authorized gen- 
erally to engage in a particular business have, as an inci- 
dent to such authority, the power to contract debts in 
the legitimate transactions of such business, unless they 
are restrained by their charters from so doing. 2 It is 
likewise an equally acknowledged rule, that the right to 
contract debts carries with it the power to give nego- 
tiable notes or bills in payment or security for such debts, 
unless the corporations are in like manner prohibited. 
It may therefore be laid down as a general rule, that a 
corporation not prohibited by law from so doing, and 
without any express power in its charter for that pur- 
pose, may make a negotiable promissory note, payable 
either at a future day or on demand, when such note is 
given for any of the legitimate purposes for which the 
company was incorporated. 3 And it has been repeatedly 

1 Workingmen's Banking Co. v. Eoutenberg, supra. 

2 See cases cited to § 96. 

« Moss v. Averell, 10 N. Y. 449; Rockwell v. Elkhorn Bank, 13 "Wis. 
653; Barker v. Mechanics' Ins. Co., 3 Wend. (N. Y.) 94; Moss v. Oak- 
ley, 3 Hill (N. Y.), 265; Safford v. Wyckoff, 4 Hill (N. Y), 442; White- 
water Valley Co. v. Vallette, 21 How. (N. Y.) 414; Partridge v. Badger, 
25 Barb. (N. Y.) 146; Barry v. Merchants' Exchange, 1 Sandf. Ch. 
(N. Y.) 280; Burr v. Glass Co., 14 Barb. (N. Y.) 358; United States. 
Bank v. Hoth, 4 B. Mon. (Ky.) 423; State v. Bank of Maryland, 6 G. 
& J. (Md.) 205; Pierce v. Emery, 32 N. H. 484; Conn. Mut. Ins. Co. v. 



148 INCIDENTAL POWEES OF COBPOBATIONS. [§ 100. 

held that a law forbidding certain corporations from issu- 
ing commercial paper as a circulating medium, or from 
dealing in commercial paper, will not be construed as 
prohibiting such corporations from issuing and receiving 
such commercial paper in the course of their ordinary 
business. 1 

Cleveland R. Co., 41 Barb. (N. Y) 9; Monument Nat. Bank v. Globe 
Works, 101 Mass. 57; Fay v. Noble, 12 Cush. (Mass.) 1; Narragansett 
Bank v. Silk Co., 3 Met. (Mass.) 282; Smith v. Flour Co., 6 Cal. 1; 
"Union Bank v. Jacobs, 6 Humph. (Tenn.) 515; Richmond, etc. B. Co. 
v. Snead, 19 Grat. (Va.) 354; Oxford Iron Co. v. Spradley, 46 Ala. 98; 
Caine v. Brigham, 39 Me. 35; Lucas v. Pitney, 27 N. J. L. 221; Clarke 
v. School District, 3 B. I. 199; Ward v. Johnson, 95 111. 215; Olcott 
v. Tioga R. Co., 40 Barb. (N. Y.) 179; s. 0., 27 N. Y. 546; Clark v. Farm- 
ers' Mfg. Co., 15 Wend. (N. Y.) 256; Mead v. Keeler, 24 Barb. (N. Y.) 
20; Mechanics' Ass'n v. Lead Co., 35 N. Y. 505; Munn v. Commission 
Co., 15 Johns. (N. Y.) 44; Auerbach v. Mill Co., 28 Minn. 291; Ham. 
ilton v. Railroad Co., 9 Ind. 359; McMasters v. Reed, 1 Grant Cas. (Pa.) 
36; Hardy v. Merriweather, 14 Ind. 203; Buckley v. Briggs, 30 Mo. 
452; Commercial Bank v. Newport Mfg. Co., 1 B. Mon. (Ky.) 13; Ridg- 
way v. Farmers' Bank, 12 S. & R. (Pa.) 256; Butts v. Cuthberson, 6 
Ga. 166; Richards v. Merrimac, etc. R. Co., 44 N. H. 127; Harvey v. 
Chase, 38 N. H. 278; Montague v. School District, 34 N. J. L. 218; 
Curtis v. Leavitt, 15 N. Y. 9; McCullough v. Moss, 5 Denio (N. Y.), 
567; Donnelly v. Church, 26 La. Ann. 738; Brode v. Firemen's Ins. 
Co., 8 Rob. (La.) 244; Magee v. Mokelumne, etc. Co., 5 pal. 258; 
Ketchum v. Buffalo, 14 N. Y. 356; Savage v. Ball, 17 N. J. Eq. 142; 
Milliard v. St. Francis, etc. Academy, 8 111. App. 341 ; Hascall v. Life 
Ass'n, 5 Hun (N. Y), 151; Louisville, etc. R. Co. v. Caldwell, 98 Ind. 
245; Talladega Ins. Co. v. Peacock, 67 Ala. 253; Sullivan v. Murphy, 
23 Minn. 6; Attorney-General v. Insurance Co., 9 Paige (N. Y), 470; 
Mott v. Hicks, 1 Cow. (N. Y.) 513; Kelley v. Brooklyn, 4 Hill (N. Y), 
.263; Police Jury v. Britton, 15 Wall. (U. S.) 566; Watts' Appeal, 78 
Pa. St. 370; Comm. v. Pittsburg, 41 Pa. St. 278. 

1 Blair v. Insurance Co., 10 Mo. 561; Buckley v. Briggs, 30 Mo. 452; 
Western Cottage Co. v. Reddish, 51 Iowa, 55; Smith v. Eureka Flour 
Mills, 6 Cal. 1 ; Attorney-General v. Insurance Co., 9 Paige (N. Y), 
470; Partridge v. Badger, 25 Barb. (N. Y.) 146; White's Bank v. To- 
ledo Ins. Co., 12 Ohio St. 601; Mumford v. Insurance Co., 4 N. Y. 463; 
Potter v. Bank, 28 N. Y. 641. 



§§ 101-103.] INCIDENTAL POWEKS OF OOBPOBATIONS. 149 

§ 101. Power of corporation as indorsee. — "Whenever 
a corporation exceeds its powers in taking commercial 
paper as payee or indorsee, the parties liable on the paper 
cannot take advantage of that fact as a defense to the 
action on the paper by the corporation ; for, having made 
the paper payable to the corporation, and received its 
funds as a consideration therefor, the maker, drawer, ac- 
ceptor or indorser, as the case might be, is estopped from 
denying the capacity of the corporation to take the paper. 1 

§ 102. Power of savings lank to make negotiable paper. 
A savings bank incorporated by special charter has the 
implied power, inherent in corporations created for busi- 
ness purposes, of borrowing money required in the course 
of its business, and of making negotiable paper or a 
pledge of its securities as a means of borrowing ; and a 
purchaser of such paper before maturity from a third 
person, in whose hands it is apparently as business paper, 
has a right to act on the assumption that it was made 
for a purpose which gives validity to the paper and to 
the pledge of securities therewith. 2 

§ 103. Power to discount does not include power to pur- 
chase. — A bank empowered to discount negotiable notes, 
it has been held, has no power to purchase such notes. 8 In 

iTied. Com. Paper, § 118; Farmers,' etc. Co. v. Needles, 53 Mo. 17; 
National Ins. Co. v. Bowman, 60 Mo. 252; St. Louis v. Shields, 62 
Mo. 247; Stoutimore v. Clark, 70 Mo. 471; John v. Farmers' Bank, 2 
Blackf. (Ind.) 367; Snyder v. Studebaker, 19 Ind. 462; Ray v. Indian- 
apolis Ins. Co., 39 Ind. 290; Greiner v. Ulery, 20 Iowa, 266; Massey 
v. Building Ass'n, 22 Kan. 624. 

2 Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. L. 513, and 

cases cited. 

8 Bank of Augusta v. Earle, 13 Pet. (IT. S.) 519; Farmers' & Mer- 
chants' Bank v. Baldwin, 23 Minn. 198; First Nat. Bank v. Pierson, 
24 Minn. 140; s. C, 16 Alb. Law Jour. 319; Niagara County Bank v. 
Baker, 15 Ohio St. 68. 



150 INCIDENTAL POWEBS OF COKPOBATIONS. [§ 103. 

Farmers' & Merchants? Bank v. Baldwin, supra, the bank 
was authorized "to carry on the business of banking by 
discounting bills, notes and other evidences of debt, by re- 
ceiving deposits, by buying and selling gold and silver bull- 
ion, foreign coin and foreign and inland bills of exchange, 
by loaning money on real and personal security, and by 
exercising such incidental powers as may be necessary to 
carry on such business." In a suit by the bank upon a 
promissory note, the defense was that the bank had no 
title to the note, since it had purchased it outright in- 
stead of discounting it. It was held by the court that 
the bank had no capacity to purchase promissory notes, 
and the attempted act of purchase was ultra vires and 
conferred no right whatever. The court distinguish be- 
tween purchasing and discounting' and say : " The power 
to carry on the business of banking, by discounting notes, 
bills and other evidences of debt, is only an authority to 
loan money thereon, with the right to deduct the legal 
rate of interest in advance. This right can be fully en- 
joyed with the possession of the unrestricted power of 
buying and dealing in such securities as choses in action 
and personal property. Though, as is urged by the 
plaintiff, the bank acquires a title to discounted paper, 
and hence may, in a certain sense, be said to have pur- 
chased it, yet it is a purchase by discount — which is per- 
mitted, — and does not inv.olve the exercise of a power of 
purchase in any other way than by discount." The term 
" discounting " has, however, in other cases, been held to 
include purchase as well as loan, and the purchase of ne- 
gotiable paper by a bank empowered to discount notes 
has been sustained. 1 

1 Pope v. Capitol Bank of Topeka, 20 Kan. 440; Smith v. Exchange 
Bank, 26 Ohio St. 141; Fleokner v. Bank of United States, 8 Wheat. 
(U. S.) 338. 



§§ 104, 105.] INCIDENTAL POWEES OF OOEPOEATIONS. 151 

§ 104. Liability on accommodation paper. — The note 
of a corporation in the hands of a holder in good faith, 
for value, who took it before maturity and without 
knowledge that the maker had not received full consider- 
ation, can be enforced against the corporation, although 
it was made as an accommodation note. 1 Notice which 
would put a prudent man on inquiry, and lead to discov- 
ery of fraud, will not vitiate the corporation's negotiable 
paper. 2 

§ 105. Power to pledge securities. — Where a corpora- 
tion has power to contract a debt, it may lawfully pledge 
its securities for its payment. 3 Accordingly, a corpora- 
tion may pledge its bonds and stock issued by itself for 
its own debts. 4 In Leo v. Union Pacific It. Go., s-wpra, 
the court say : " The purpose to raise money to meet 
debts or for other corporate uses, by pledge of these 
securities, seems to be clearly within the scope of the cor- 
porate powers, and lawful and proper. The corporation 
has these securities not yet due. ... It owes debts, 
and was created with the expectation that it would owe 
them, and has implied power to raise money to pay them. 
It is not disputed that it could sell these securities to raise 
money to pay its debts, and the power to pledge them is 
included fairly in the power to sell for the same pur- 
pose." 

i Monument National Bank v. Globe Works, 101 Mass. 57; Web- 
ster v. Howe Machine Co., 54 Conn. 394; National Bank of Republic 
v. Young, 41 N. J. Eq. 531. 

2 National Bank v. Young, 7 AtL Rep. 488; Webster v. Howe Ma- 
chine Co., 8 AtL Rep. 483; 54 Conn. 394. 

s Leo v. Union Pac. R. Co., 17 Fed. Rep. 273; Piatt v. Union Pac. 
R. Co., 99 U. S. 48. 

< Combination Trust Co. v. Weed, 2 Fed. Rep. 24; Mor. Corp., § 349; 
Lehman v. Tallasse Mfg. Co., 64 Ala. 567; Androscoggin R. Co. v. 
Auburn Bank, 48 Me. 335; Duncomb v. N. Y. etc. R. Co., 84 N. Y. 
190; Chouteau v. Allen, 70 Mo. 290. 



CHAPTEE VIII. 

POWERS AND LIABILITIES AS TO CAPITAL STOCK. 

§ 106. Introductory — Nature and purpose of capital stock. 

107. Capital stock as a trust fund. 

108. Limitation on doctrine that capital stock a trust fund. 

109. Power to increase capital stock. 

110. Consent of stockholders necessary to increase capital stock, 

111. Power of national bank to increase capital stock 

112. Irregularity in exercising power as affecting stockholders. 

113. Power to reduce capital stock 

114. Reduction of capital stock in England. 

115. Power to issue new stock 

116. Powers as to special stock. 

117. Power to issue shares at discount 

118. Power to issue preferred stock. 

119. Liability on ultra vires issue of preferred stock. 

120. Power to deal in own stock. 

121. Power to purchase stock of other corporations. 

122. Instances where power denied. 

123. Power of foreign corporation to purchase stock of domestic 

company. 
124 Power to declare dividends. 

125. Power to pledge future calls. 

126. Liability on dividends declared. 

127. Liability on illegal issue of stock 

§106. Introductory — Nature and purpose of capital 
stock. — The capital stock of a corporation has been de- 
fined to be the aggregate amount of the funds of a corpo- 
ration, which are combined together under a charter, for 
the attainment of some common object of public conven- 
ience or private utility. 1 This amount is usually fixed in 

1 Barry v. Merchants Exch., 1 Sandf. Ch. 305; Hightower v. Thorn- 
ton, 8 Ga. 486; Webster v. Upton, 91 U. S. 65; Chubb v. Upton, 5 



§ 107.] CAPITAL STOCK. 153 

the charter or articles of incorporation, and a limit placed 
on its increase by statutory enactment. This limit is 
fixed in deference to the convenience, information and 
security of the public at large, as well as to the conven- 
ience of the intended corporation. To the corporators it 
prescribes the amount and subdivisions of their respective 
contributions to the common fund, the voice which each 
shall have in its control and management, and the appor- 
tionment of the profits of the enterprise. To the com- 
munity it announces the extent of the means contributed 
and forming the basis of the dealings of the corporate 
body, and enables every man to judge of its ability to 
meet its engagements and perform what it undertakes. 
And when the statute requires the stock to be paid in be- 
fore the corporation can transact business, security to 
those contracting with it is thereby superadded to the in- 
formation of its resources. 1 

§ 107. Capital stoclc as a trust fund. — The capital stock 
of an incorporated company is also said to be a trust 
fund set apart for the payment of its debts ; that it is a 
substitute for the personal liability which subsists in pri- 
vate copartnerships; that when debts are incurred, a 
contract arises with the creditors that it shall not be with- 
drawn or applied otherwise than upon their demands, 
until such demands are satisfied; that the creditors have 
a lien upon it in equity, and, if diverted, they may follow 
it as far as it can be traced and subject it to the payment 
of their claims, except as against holders who have taken 
it bona fide for a valuable consideration and without no- 
tice;" and that it is publicly pledged to those who deal 

Otto (U. S.), 665; Eaton v. Aspinwall, 19 N. Y. 119; Aspinwall v. Sac- 
chi, 57 N. Y. 331; Kent v. Quicksilver, etc. Co., 78 N. Y. 159; Sheldon 
Co. v. Eickemeyer Co., 90 N. Y. 613. 
1 See cases cited in preceding section. 



154: CAPITAL STOCK. [§ 107. 

with the corporation for their security. 1 " Unpaid stock 
is as much a part of this pledge and as much a part of 
the assets of the company as the cash which has been 
paid in upon it. Creditors have the same right to insist 
upon its payment as upon the payment of any other debt 
due to the company. And, as regards creditors, there is 
no distinction between such a demand and any other 
asset which may form a part of the property and effects 
of the corporation." 2 These objects for the public benefit 
are sometimes defeated by fraud and deception, but they 
are such as the legislature have in view in limiting the 
amount of capital stock and requiring a specified sum or 
proportion to be paid in. As was said in Handler/ v. 
Stutz, supra: " The stock of a corporation is supposed to 
stand in the place of actual property of substantial value, 
and as being a convenient method of representing the in- 
terest of each stockholder in such property, and to the 
extent to which it fails to represent such value it is either 
a deception and fraud upon the public or an evidence 
that the original value of the corporate property has be- 
come depreciated. The market value of such shares rises 
with an increase in the value of the corporate assets, and 
falls in the case of loss or misfortune, whereby thq value 
of such assets is impaired. And the increase of value of 
such stock is taken to represent either an appreciation in 
value of the company's property beyond the par value 
of original shares, or so much money paid to the corpora- 
tion as is represented by such shares. The law implies a 

i Sanger v. Upton, 91 U. S. 60; Curran v. Arkansas, 15 How. (U. S.) 
304; Wood v.Dummer, 3 Mason (U. S.), 308; Slee v. Bloom, 19 Johns. 
<N. Y.) 456; Briggs v. Penniman, 8 Cow. (N. Y.) 387; Society, etc. v. 
Abbott, 2 Beav. 559; Walworth v. Holt, 4 Myl. & C. 789; Ward v. 
Oriswoldville Co., 16 Conn. 593; Fowler v. Robinson, 31 Me. 189; 
Handley v.. Stutz, 139 U. 8. 417. 

2 Sanger v. Upton, supra. 



% 108.] CAPITAL STOCK. 155 

promise by the original subscribers of stock who did not 
pay for it in money or other property to pay for the 
same when called upon by creditors, and a contract be- 
tween themselves and the corporation that the stock shall 
be treated as fully paid and non-assessable, or otherwise 
limiting their liability therefor, is void as against credit- 
ors." 

§ 108. Limitation on doctrine that capital stock is trust 
fund.— The general proposition that the capital stock of a 
corporation is a trust fund for the benefit of creditors can- 
not with reason be controverted or denied, but this theory 
applies only to corporations after they have become insolv- 
ent. Prior to its insolvency, and while the corporation is 
still a going concern, it holds its property as absolutely 
and with as great a power of dominion and control as 
any other person exercises over his individual possessions. 1 
"But when a corporation becomes insolvent, then, ac- 
cording to the holding of courts of equity, its property 
becomes a trust fund for the payment of creditors. The 
trust embraces all the property of a corporation ; embraces 
its real estate and choses' in action. If debts are due to 
the corporation they are part of that fund, and may be 
collected by the proper representatives of the corporation, 
whether a trustee appointed by a court of equity, an as- 
signee in bankruptcy, or other agent, for the parties in- 
terested. But it is only those claims or assets which a 
company has that belong to the trust fund. Unpaid in- 
stalments on stock in the ordinary case are assets; they 
are claims which a company could enforce, and therefore 
they are claims which the creditors can compel the en- 

1 Coit v. North Carolina Gold Co., 14 Fed. Eep. 12; Sawyer v. Hoag, 
17 Wall. (U. S.) 610; Tuckerman v. Brown, 33 N. Y. 297; Ogilvie v. 
Knox Ins. Co., 22 How. (TJ. S.) 380; Osgood v. Laytin, 3 Keyes (N. Y.), 
521; 37 How. Prac. 63, affirming 48 Barb. 463. 



156 CAPITAL STOCK. [§ 109. 

forcement of through the instrumentality of a court of 
equity." x 

§ 109. Power to increase capital stock. — As a general 
rule, corporations are not invested with the power or au- 
thority to increase or diminish their capital stock. But 
this power is sometimes conferred, with express limita- 
tions, by some of the states in the general law under 
which they are organized and created ; otherwise applica- 
tion must be made to the legislature for such authority, 
and every application for such an increase or diminution 
of their capital stock is regarded as equivalent to a request 
for an amendment of their charter powers in that respect, 
and all attempts on their part to effect such increase with- 
out the sanction or approval of the sovereign are desti- 
tute of authority and wholly wanting in legal validity. 2 
The implied or incidental powers corporations may right- 
fully exercise never have been extended to changes of the 
purpose for which a corporation was created. And it has 
been held changes of the capital stock of corporations in- 
volve changes in organization, and a displacement of the 
power and influence of the original stockholders, or their 
legitimate successors, who are of right entitled to exer- 
cise the privilege of electing officers and have general 
management of the corporate affairs and business. 3 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 

1 Mr. Justico Bradley in Coit v. North Carolina Gold Co., 14 Fed. 
Rep. 12. 

2 Grangers', etc. Ins. Co. v. Kamper, 73 Ala. 325; Green's Brice's 
Ultra Vires, § 112; Thompson, Liab. Stock, § 115; Lathrop v. Knee- 
land, 46 Barb. (N. Y.) 432; Mutual Life Ins. Co. v. McElway, 12 N. J. 
Eq. 133; New York, etc. R Co. v. Schuyler, 34 N. Y. 30; Railway 
Co. v. Allerton, 18 Wall. (U. S.) 233; Scovill v. Thayer, 105 U. S. 143. 

8 Cases cited in preceding note. 



§ HO.] CAPITAL STOCK. 157 

enlargement of its capital stock. A corporation, like a 
partnership, it has been stated, is an association of natural 
persons who contribute a joint capital for a common pur- 
pose, and, although the shares may be assigned to new- 
individuals in perpetual succession, yet the number of 
shares and the amount of capital stock cannot be in- 
creased except in the manner authorized by the charter 
or the general law regulating such procedure. 1 So where 
a corporation, formed under a general law, of its own act, 
without legislative consent, attempted to increase its cap- 
ital stock, it was held that such attempt to increase the 
capital stock of the company beyond the limit fixed by 
the charter was ultra vires, and the stock itself therefore 
void, and conferred on the holders no rights and subjected 
them to no liabilities. 2 

§ 110. Consent of stockholders necessary to increase cap- 
ital stock. — Authority to increase the capital stock of a 
corporation may be conferred by a law passed subsequent 
to the grant of a charter; but such a law should regularly 
be accepted by the stockholders, and such assent may be 
inferred by subsequent acquiescence ; but in some form or 
other it must be given to render the increase valid and 
binding on them. 3 And it has been held that an increase 

1 Railway Co. v. Allerton, supra. 

2 Railway Co. v. Allerton, 18 Wall. (IT. S.) 233. And see generally, 
Scovill v. Thayer, 105 U. S. 143; Knowlton v. Congress, etc. Co., 14 
Blatch. (U. S.) 364; Grangers', etc. Ins. Co. v. Kamper, 73 Ala. 325; 
Moses v. Ocoee Bank, 1 Lea (Tenn.), 398; Ferris v. Ludlow, 7 Ind. 
517; In re Ebbw. Vale, etc. Co., 4 Ch. Div. 827; Droitwioh, etc. Co. v. 
Curzon, L. R. 3 Exch. 35, 42; Stace & Worth's Case, L R. 4 Ch. 
682; Salem Mill Dam Co. v. Ropes, 6 Pick. 23; New York, etc. R. Co. 
v. Schuyler, 34 N. Y. 30; Sutherland v. Olcott, 95 N. Y. 93, 100; Me- 
chanics' Bank v. New York, etc. R. Co., 13 N. Y. 599; Lathrop v. 
Kneeland, 46 Barb. (N. Y.) 432; Handley v. Stutz, 139 U. S. 417; 
Winters v. Armstrong, 37 Fed. Rep. 508. 

'Railway Co. v. Allerton, supra; Eidman v. Bowman, 58 111. 444; 



158 CAPITAL STOCK. [§ 111. 

in the capital stock of a corporation, if made with consent 
of all the stockholders, is binding, although not made 
with all the statutory formalities. 1 

§ 111. Power of national oanlts to increase capital stock. 
In Winters v. Armstrong, 37 Fed. Rep. 508, Mr. Justice 
Jackson, speaking of the power of national banking asso- 
ciations to increase their capital stock, said : " National 
banking associations have no authority of law by their 
own action to increase their capital stock to any amount 
whatever. They can make no increase to any extent 
without the approval of the comptroller, as the repre- 
sentative of the government. His approval confers the 
right to make and fixes the limit or amount of such in- 
crease. "Within its own powers and by its own action a 

Payson v. Stoever, 2 Dill. (U. S.) 428; Se well's Case, L. E. 3 Ch. 131; 
Lane's Case, 1 De G, J. & S. 504. 

i Poole v. West Point, etc. Ass'n, 30 Fed. Rep. 513. 

In Scovill v. Thayer, supra, an action was brought by the as- 
signee in bankruptcy of a mining company against a stockholder to 
recover unpaid assessments upon stock. The statutes of Kansas 
provided that any corporation might increase its capital stock to 
any amount not exceeding double the amount of its auth irized capi- 
tal. The corporation in question had increased its capital stock, as 
it was authorized to do, by doubling it, thus quadrupling the orig- 
inal amount, the defendant in the case having attended by proxy 
the meeting at which such illegal increase was voted, and received 
a quantity of the stock thus issued. It was held that such increase 
was ultra vires and void, and that the defendant was not estopped 
from denying the validity of the overissue, or his obligation to pay 
for it. 

There has been some criticism made relative to the decision in 
this case as compared with that of Handley v. Stutz, 139 U. S. 417, 
but there is a distinct difference between these two cases; as in the 
Scovill Case the corporation had no power, by statute or other- 
wise, to so increase its capital stock; while in the Handley Case tlie 
power was conferred by the General Statutes of Kentucky, and the 
legality of the stock was attacked on the ground of irregularity in 
its issue — a wide difference in affecting the legality of the issue. 



§ HI-] CAPITAL STOCK. 15& 

national bank can make no increase of its capital stock. 
It might and doubtless would be true that with or after 
the comptroller's approval of an increase, which involves 
the exercise of discretion, supervisory on his part, and 
wholly beyond the control and independent of the action 
or wish of the association or of its stockholders, the steps 
taken or mode of procedure adopted by the bank might 
not strictly conform to the requirements of the law ; that 
for want of such conformity the action on the part of 
the association might be illegal; and that the stock- 
holders or subscribers for such stock who had accepted 
an allotment of shares thereunder, and acquiesced in the 
steps taken and the proceedings had by the association 
in the preliminaries to be performed on its part, would 
be bound. In effecting an increase of its capital stock 
the association may, as far as relates to its own action, 
proceed in an irregular and informal manner, which 
a stockholder who has acquiesced therein may not, as 
against either the corporation or its creditors, take advan- 
tage of or insist upon as invalidating his subscription, or 
the stock issued to him thereunder. But in regard to the 
sovereign's consent to such increase, to be expressed in 
and by the approval of its comptroller of the currency, 
that is an essential prerequisite or condition precedent, 
like a special enabling act, in conferring the power and 
authority to make the proposed increase valid. Such ap- 
proval involves the grant of power to complete and per- 
fect the proceedings commenced by the association look- 
ing to an increase of its capital stock. It is something 
lying beyond the action or control of the association and 
its stockholders seeking to effect an organic and funda- 
mental change in the constitution of the bank; and in 
respect to this essential thing, in nowise involved in the 
action or steps taken by the association, the question of 



160 CAPITAL STOCK. [§§ 112, 113.. 

irregularity or informality in its own mode of procedure, 
and the consequences then resulting, do not apply." 

§ 112. Irregularity in exercising power as affecting 
stockholder. — Where the power to increase its capital 
stock exists, and is exercised, the corporation's failure to 
perform some act devolving upon itself in connection 
therewith, such as recording and publishing its action, 
constitutes an irregularity or neglect of duty of which 
the state only can complain or take advantage in a direct 
proceeding against the corporation ; but stockholders who 
have accepted portions of such increased stock are es- 
topped from denying the validity of the increase upon 
any such irregularity or neglect. 1 

§ 113. Power to reduce capital stoclc. — As a general 
rule, power conferred on a corporation to increase its 
-capital stock gives it no power to diminish the same. 2 
And where the constitution and laws provide for an in- 
crease and are silent as to decrease of stock, the power to 
decrease has been held intentionally denied. 3 So if a cor- 
poration is created with a fund limited by the act, it can- 
not enlarge or diminish that fund but by license from the 
legislature, and if the capital stock is parceled out into a 
fixed number of shares, this cannot be changed by the 
corporation. 4 A decrease of capital stock affects injuri- 

i Upton v. Tribilcock, 91 U. S. 47; Stutz v. Handley, 41 Fed. Rep. 
531; s. c, 139 U. S. 417; Sanger v. Upton, 91 U. S. 56; Webster v. Up- 
ton, 91 U. S. 65; Chubb v. Upton, 95 U. S. 665; Pullman v. Upton, 96 
U. S. 328; Casey v. Galli, 94 U. S. 673. 

2 Salem Mill Dam Co. v. Ropes, 6 Pick. (Mass.) 23; Droitwich Pat- 
ent Salt Co. v. Curzon, L. R. 3 Exoh. 42; In re Financial Corporation, 
L. R. 2 Ch. App. 714; Smith v. Goldworthy, 4 Ad. & El. (N S) 430- 
Sutherland v. Olcott, 95 N. Y. 93; In re Ebbw. etc. Co., 4 Ch. Div 827* 

aSeignouret v. Home Ins. Co., 24 Fed. Rep. 332; Sutherland v. Ol- 
cott, 95 N. Y. 93. 

4 See cases cited in note 2. 



§§ H4, 115.] CAPITAL STOCK. 161 

ously more parties and interests than would an increase. 
Creditors and customers have a claim to the preservation 
of the capital stock in its original integrity, and a reduc- 
tion of the capital stock is practically the dissolution of 
the company and the organization of a new one. 1 

§ 114. As to reduction of capital stock in England. — 
There seems to be a lack of uniformity in the English 
courts as to the reduction of the capital stock of a corpo- 
ration, the diversity of opinion arising, however, in exer- 
cising this power relative to common and preferential 
shares; some cases holding that it is not essential that 
the reduction should be made equally, or ratably, on all 
the shares, 2 while others hold that the court has power 
to sanction a special resolution for the reduction of some 
only of the shares of a company. 3 The controversy 
which has been going on between Mr. Justice North and 
Mr. Justice Kay relative to this question had not, up to a 
late date, been settled by the court of appeals. 

§ 115. Power to issue new stock. — The question as to 
whether an active corporation — a " going concern " — 
may not, for the purpose of recuperating itself and pro- 
viding new conditions for the successful prosecution of its 
business, issue new stock, put it upon the market and sell 
it for the best price that can be obtained, is compar- 
atively a new one in this country, first coming before the 
United States supreme court in Handley v. Stutz, 139 
-U. S. 417, in 1890. It was held in that case that a corpo- 
ration had such power, Mr. Justice Brown, in delivering 

1 Seignouret v. Home Ins. Co., supra. 

2 Re Union Plate Glass Co., 42 Ch. Div. 513; In re Quebrada Ry., 40 
Ch. Div. 363. 

3 In re Barrow, etc. Co., 39 Ch. Div. 582; In re Gatling Gun, Lim., 
43 Ch. Div. 628. 

11 



162 CAriTAL STOCK. [§ 116, 

the opinion of the court, saying: "To say that a corpo- 
ration may not, under the circumstances above indicated, 
put its stock upon the market and sell it to the highest 
bidder, is practically to declare that a corporation can 
never increase its capital by a sale of shares, if the orig- 
inal stock has fallen below par. The wholesome doc- 
trine, so many times enforced by this court, that the 
capital stock of an insolvent corporation is a trust f and 
for the payment of its debts, rests upon the idea that the 
creditors have a right to rely upon the fact that the sub- 
scribers to such stock have put into the treasury of the 
corporation, in some form, the amount represented by it \ 
but it does not follow that every creditor has the right to 
trace every share of stock issued by such corporation,, 
and inquire whether its holder, or the person from whom 
he purchased, has paid its par value for it. It frequently 
happens that corporations, as well as individuals, find it 
necessary to increase their capital in order to raise money 
to prosecute their business successfully, and one of the 
most frequent methods resorted to is that of issuing new 
shares of stock and putting them upon the market for 
the best price that can be obtained; and so long as the 
transaction is bona fide, and not a mere covering for 
'watering' the stock, and the consideration obtained 
represents the actual value of such stock, the courts have 
shown no disposition to disturb it." 1 > 

§ 116. Powers as to special stock. — In Massachusetts 
they have what is termed " special stock," the character- 

!See New Albany v. Burke, 11 Wall. (U. S.) 96; Coit v. Gold Co., 
119 U. S. 345; Clark v. Bever, 139 tl. S. 96; Fogg v. Blair, id. 118; 
Morrow v. Nashville, etc. Co., 87 Term. 263, which hold that the gen- 
eral rule that holders of stock in favor of creditors must respond 
for its par value is subject to exceptions where the transaction is 
not a mere cover for an illegal increase. See, also, Stein v. Howard, 
65 Cal. 616. 



§ H7.] CAPITAL STOCK. 163 

istics of which are that it is limited in amount to two- 
fifths of the actual capital; it is subject to redemption by 
the corporation at par after a fixed time, to be expressed 
in the certificates; the corporation is bound to pay a 
fixed half-yearly sum or dividend upon it as a debt; the 
holders of it are in no extent liable for the debts of the 
corporation beyond their stock, and the issue of special 
stock makes all the special stockholders liable for all debts 
and contracts of the corporation until the special stock is 
fully redeemed. 1 

§ 117. Power to issue sliares at a discount. — As a gen- 
eral rule, a company limited by shares under the act of 
its creation has no power to issue shares at a discount so 
as to render the shareholder liable for a smaller sum than 
that fixed for the value of the shares by the charter or 
memorandum of association. 2 Such an act would be 

IMass. Stat. 1855, ch. 290; 1870, ch. 224, §§ 25, 39, el. 4; Pub. Stat., 
ch. 106, §§ 42, 61, el. 3; Williams v. Parker, 136 Mass. 204; American 
Tube Works v. Boston Machine Co., 139 Mass. 5. 

2 In re Almada & Tirito Co., 38 Ch. Div. 415; Trevor v. Whitworth, 
12 App. Cas. 409; In re Addlestone Co., 37 Ch. Div. 191; In re Wey- 
mouth Packet Co., 1 Ch. Div. 66; The Ooregum G. Min. Co. v. Roper, 
61 L. J. (N. S.) 337, 66 L. J. (N. S.) 427 (1892). 

The decision in Handley v. Stutz, supra, has called forth from the 
legal profession, generally, a vast deal of adverse criticism. A posi- 
tion directly opposite has been taken by the House of Lords in the 
case of Ooregum Gold Mining Co. v. Roper, supra. The question in 
that case was whether it was or was not competent for a company 
limited by shares to issue shares at a discount so as to relieve per- 
sons taking shares so issued from liability to pay up their amount 
in full. The House of Lords expressly held that where a corporation 
puts its new stock on the market and sells it for the best price it can 
get, — in that case for double what the old stock was selling for,— 
the purchasers are liable for the difference between what they paid 
and the par value of the stock, not only to the creditors of the cor- 
poration, but also to the corporation itself. 

It must be admitted that both the logic and the law would seem 



164 CAPITAL STOCK. [§ 118. 

ultra vires, and such issue would be invalid, although the 
contract with the shareholders under which the shares 
were issued had been registered under the act regulating 
such transactions. There is no practical distinction, it 
has been held, between issuing shares at a discount and 
returning to the shareholder a portion of the capital to 
which the creditors have a right to look as that out of 
which they are to be paid. 1 

§ 118. Power to issue preferred stock. — The question 
as to whether a corporation has or has not power to issue 
shares of stock to which a preferential dividend shall be 
attached has been the subject of much legal controversy. 
"When such power is expressly granted in the charter by 
which the company is incorporated, then, of course, there 
is no question as to the legality of the issue. 3 It seems 
pretty well settled by the weight of authority, however, 
that a corporation has no implied power, either at the 
time of its organization or at any subsequent time, to 
issue preferred stock. The power can exist only when 
expressly conferred by the charter or by statute. 8 In 

to be with the House of Lords on this particular question, and it is 
doubtful whether the Handley v. Stutz case will be generally ac- 
cepted as a final disposition of this important question. 
f ! In re Almada, etc. Co., 38 Ch. Div. 415; Trevor v. Whitworth, 12 
App. Cas. 409; In re Addlestone Co., 37 Ch. Div. 191; In re Wey- 
mouth Packet Co., 1 Ch. Div. 66 (1890); Ex parte Maude, L. R. 6 Ch. 
51; Birch v. Cropper, 14 App. Cas. 525; Ooregum Gold M. Co. v. 
Roper, 61 L. J. (N. S.) 337, 66 L. J. (N. S.) 427 (1892); s. C, 28 Am. L. 
Rev. 861. 

2 Cook, Stock & Stockholders, § 268; Everhardt v. West Chester 
Ry. Co., 28 Pa. St. 339; Rutland, etc. Ry. v. Thrall, 35 Vt. 536; Tay- 
lor, Corp., §§ 571, 572. 

3 Hutton v. Scarborough Co., 4 De G„ J. & S. 672 ; Sturge v. Eastern, 
etcRy. Co., 7 De G., M. & G. 158; Guiness v. Corporation of Ireland, 
22 Ch. Div. 349; Hoole v. Great Western Ry. Co., L. R. 3 Ch. App. 
262. 



§ 119.] CAPITAL STOCK. 165 

American Tube Works v. Boston Machine Co., supra, 
the court say: "Corporations have sometimes, no doubt, 
at the outset of their organization, assumed the authority 
to divide their capital stock into two classes, preferred 
and common ; and when such stockholder subscribes for 
and takes his shares of common stock with fall knowl- 
edge and consent, there is perhaps no legal objection to 
this course. The question is a different one whether a 
corporation, with an existing capital stock all subscribed 
for and taken, can increase its capital by the issue of 
further shares which shall be preferred, and if so, under 
what circumstances this may be done, and whether by a 
mere majority or only by a unanimous vote of the exist- 
ing stockholders." A company may, however, when it is 
authorized to issue preferred stock, contract with the pre- 
ferred stockholders that they shall be entitled to a pref- 
erence not only in the payment of dividends, but also in 
the distribution of the company's assets. 1 

§ 119. Liability on ultra vires issue of preferred stock. 
In the light of what has heretofore been shown in pre- 
ceding sections as to the power of corporations to issue 
preferred stock, the general rule may be declared to be 
that, if a corporation issue preference shares of stock 
without authority so to do either in its charter or the law 
urider which it is organized, such issue is ultra vires and 
void, and no liability attaches to the company on such 
stock; but an action may be maintained against the com- 
pany to recover the money paid for such illegal issue. 2 

iln re Bangor & Slate Co., L. R. 20 Eq. 59. 

2 Anthony v. Household Machine Co., 16 R. I. 571. And see 2 Mor. 
Corp., §§ 721, 722; Dill v. Wareham, 7 Met. (Mass.) 438; Congress, etof 
Co. v. Knowlton, 103 IT. S. 49; Mayor, etc. v. Ray, 19 Wall. (U. S.) 
468; Oneida Bank v. Ontario Bank, 21 N. Y. 490; Thomas v. Railway, 
101 U. 8. 71; New Castle Ry. v. Simpson, 21 Fed. Rep. 533; "White v. 
Franklin Bank, 22 Pick. (Mass.) 181 ; 2 Pars. Cont. 746; Gordon's Ex'rs 



166 CAPITAL STOCK. [§ 119. 

But it has been held that although a corporation issues 
preferred stock without express authority, yet a pur- 
chaser, who voluntarily subscribes and pays for it, for the 
purpose of promoting the scheme under which it was 
issued, eannot hold it for over two years after the condi- 
tion upon which it was issued has been fulfilled, and then, 
on the insolvency of the company, assert the invalidity 
of the stock, and recover back the money paid for it. 1 
!Nor is one's right to recover money paid on an ultra vires 
issue of such stock impaired by reason of a subsequent 
enactment of a statute authorizing the corporation to issue 
preferred stock. 3 

v. Richmond, etc. Co., 78 Va. 501, 81 Va. 621; Warren v. King, 108 
U. S. 389; Burt v. Rattle, 31 Ohio St. 116. 

1 Bard v. Banigan, 39 Fed. Rep. 13. 

In Anthony v. Household Sewing Machine Co., supra, the plaintiff 
was one of several persons who lent a large amount of money to the 
defendant corporation, under agreement with the corporation that 
they were to be repaid in preferred stock, to be subsequently issued 
by it. It was supposed when the money was lent that the corpora- 
tion had power to issue such stock in discharge of the agreement, 
but it was afterwards discovered that as a matter of law it did not 
have power, and therefore the plaintiff demanded a return of the 
money which he had lent, and, upon failure of the company to re- 
turn it, brought an action to recover it. Chief Justice Durfee, in 
delivering the opinion of the court, said: 

" The agreement was not an agreement to repay the loan in pre- 
ferred stock, but an agreement absolutely to repay it in that form. 
It was an agreement by the corporation to do something which it 
had no power to do. It was therefore void, and the plaintiff was en- 
titled to treat it as void and to reclaim the money. Where money 
has been advanced under such a contract, it can be recovered back 
by the party advancing it so long as the contract remains wholly 
•unperformed by the other party, the recovery being had, not under 
the contract but in disaffirmance of it, on a promise implied inde- 
pendent of it." 

2 In re Bridgewater Nav. Co., 39 Ch. Div. 1; Congress Spring Co. v. 
Knowlton, 103 U. S. 49; Anthony v. Household Sewing Machine Co., 
16 R. I. 571. 



§ 120.] CAPITAL STOCK. 



167 



§ 120. Power of corporation to deal in its own stock.— 
It has been held in some of the states of the Union that 
the shares of capital stock of a corporation are the lawful 
subjects of purchase and sale, may be bought and sold in 
the market, and, in the absence of statutory provisions 
to the contrary, a corporation, if it acts in good faith, 
may buy such shares for its own benefit from owners of 
them upon such terms as may be agreed on, subject to the 
•rights of its creditors in proper cases to -resort to its capi- 
tal stock, paid and unpaid, as a trust fund out of which 
they may be entitled to have these debts paid. 1 In many 
of the states, however, this power is regulated by direct 
statutory enactment, but in those states where no such 
statutory provisions exist, such power is left to the deter- 
mination of the courts. The true rule is perhaps laid 
down by the court in Olapp v. Peterson, supra, where it 
is said : " Corporations may purchase their own stock in 
exchange for money or other property, and hold, reissue 
or retire the same, provided such act is had in entire good 
faith, in an exchange of equal value, and is free from all 
fraud, actual or constructive ; this implying that the cor- 
poration is neither insolvent nor in process of dissolution, 
and that the rights of creditors are not thereby injuri- 

iCook, Stockholders, §§ 311, 312; Blalook v. Kernesville Mfg. Co., 
110 N. C. 99; First Nat. Bank v. Salem Mills, 39 Fed. Rep. 89; Bank, 
•etc. v. Bruce, 17 N. T. 510; Taylor v. Export Co., 6 Ohio, 176; In re 
Ins. Co., 3 Biss. (U. S.) 452; Bank v. Transportation Co., 18 Vt. 138; 
■Clapp v. Peterson, 104 111. 26; Dupee v. "Water Power Co., 114 Mass. 
457; Republic Ins. Co. v. Swigert, 135 111. 150; Chicago, etc. R. Co. v. 
Marseilles, 84 111. 145; Chetlain v. Insurance Co., 86 111. 220; Fraser 
t. Ritchie, 8111. App. 554; Eggeman v. Blanke, 46 Mo. App. 318; Le- 
land v. Hayden, 102 Mass. 542; Eby v. Guest, 94 Pa. St. 160; Early's 
Appeal, 89 Pa. St. 160; Coleman v. Columbus Oil Co., 51 Pa. St. 74; 
Iowa Lumber Co. v. Foster, 49 Iowa, 25; State Bank v. Fox, 3Blatch. 
<U. S.) 431; Hartridge v. Rockwell, R. M. Charlt. (Ga.) 260; Robinson 
v. Beale, 26 Ga. 17; Hagie v. People's Ass'n, 107 N. C. 581. 



168 capital stock. [§ 120:. 

ously affected." In Ohio no corporation can buy or sell 
its own shares unless permitted so to do by its charter or 
law of incorporation. 1 So in Kansas, banks organized 
under the laws of that state are held to have no power 
to purchase their own stock, except in some cases for the 
purpose of securing a previously existing debt. 2 In On- 
tario, Canada, it is the rule that a corporation cannot 
cancel or accept the surrender of shares of stock in com- 
promising a claim against it by a shareholder, where 
the validity of the shares or his right to them is not in 
dispute. 3 In England the question has been settled by a 
long line of decisions that no such power exists unless it 
has been specifically granted, and that such a purchase is 
beyond the corporate powers, illegal and void. 4 So it has 
been held that insolvent corporations can neither pur- 
chase, nor receive in payment of debts owing it, shares 
of its own stock. 5 Nor can business corporations exchange 
their goods for their capital stock so as to reduce or re- 
tire the latter. 6 And if the statutes which govern a com- 
pany only allow the company to make advances on the 
security of landed property, a company cannot advance 
money to its members on the security of their shares. 7 

1 Chapin v. Greenlees, 38 Ohio St. 275. 

2 German Sav. Bank v. Wulfekuhlen, 19 Kan. 60. 

3 Livingstone v. Temperance Society, 17 Ont. App. 379. 

* In re London, etc. R. Co., 5 De G. & S. 402; Evans v. Coventry, 5 
De G., M. & G. 911, 8 De G, M. & G. 835; In re Northern Coal Min. 
Co., 13 Beav. 472; Zulueta's Case, L. E. 5 Ch. 444; Ernest v. Nichols, 
6 H. L. Cas. 401; In re United States Co., 5 Ch. 707, L. R. 7 Eq. 76; 
In re Marseilles, etc. Co., 7 Ch. 161; Hope v. International Co., 4 Ch. 
Div. 327; Trevor v. Whitworth, 12 App. Cas. (H. L.) 409. 

»Currier v. Lebanon Co., 56 N. H. 262; Savings Bank v. Wulfekuh- 
len, 19 Kan. 60; Taylor, Corp , § 135. 

6St. Louis Carriage Mfg. Co. v. Hilbert, 24 Mo. App. 338. 

' Collerne v. London Bldg. Soc, 25 Q. B. Div. 485. 



§§ 121, 122.] CAPITAL STOCK. 169 

§ 121. Power to purchase stocli of another corpora- 
tion. — It is now well settled that a corporation cannot 
purchase or deal in the stock of other corporations unless 
expressly authorized by law so to do! 1 But a corpora- 
tion may take stock in another company in payment of 
a debt. 2 Though a corporation may take the stock of 
another corporation by way of security for a debt, it has 
no right to invest its corporate funds in the purchase of 
such stock. 3 So it is beyond the scope of the powers of 
a corporation, having the right to mine, to organize an- 
other corporation for mining purposes or to deal in the 
stock of such corporation. 4 

§122. Instances where power denied. — A corporation 
formed for the purpose of manufacturing and selling gas 
has no power to purchase and hold or sell shares of stock 
in other gas companies as an incident to the purpose of 
its formation, even though such power is specified in its 
articles of incorporation. 5 Nov has an insurance company 
the power or legal right to subscribe for stock in a sav- 
ings bank and building association; 6 nor to purchase 

iTalmage v. Pell, 7 N. Y. 348; Berry v. Yates, 34 Barb. (N. Y.) 
300; Milbank v. New York, etc. R. Co., 64 How. Pr. (N. Y) 30; 
Mechanics' Sav. Bank v. Meriden, etc. Co., 34 Conn. 159; Central R. 
Co. v. Penn. R. Co., 31 N. J. Eq. 475; Hazlehurst v. Savannah, etc. 
R Co., 43 Ga. 13; Valley R. Co. v. Lake Erie Ins. Co., 46 Ohio St. 
44; People v. Chicago Gas Trust Co., 130 111. 368, 384; Franklin Co. 
v. Lewiston, etc., 68 Me. 43; Hill v. Nisbet, 100 Ind. 341; Compagnie 
Francaise v. Western Union Co., 11 Fed. Rep. 863; Solomans v. 
Laing, 13 Beav. 339; Franklin Bank v. Commercial Bank, 36 Ohio 
St 350; Buford v. Keokuk Co., 3 Mo. App. 159. 

2 Holmes, etc. Mfg. Co. v. Holmes, etc. Co., 137 N. Y. 353; Howe v. 
Boston Carpet Co., 16 Gray (Mass.), 493. 

'Milbank y. N. Y. etc. R. Co., 64 How. Pr. (N. Y) 30. 

* McMillan v. Carson Min. Co., 13 Phila. (Pa.) 404. 

» People v, Chicago Gas Co., 130 111. 368. 

6 Mutual, etc. Ass'n v. Meriden Agency Co., 34 Conn. 159. 



170 CAPITAL STOCK. [§ 122. 

stock in another insurance company. 1 So it has been held 
that neither a note-selling company, 2 nor a lumber com- 
pany, 3 has power to invest in the shares of a bank; nor a 
steamship company to subscribe for stock in a dry-dock 
company. 4 On the other hand, it has been held that a 
steamboat company may purchase stock in another rival 
line, even though the evident purpose be to injure it.' 
And it is clearly legal for a manufacturing company to 
take the stock of another in payment of a debt. 6 So re- 
ligious and charitable, and other like corporations, not 
for profit, have, it seems, implied power to invest their 
funds in stock of other corporations. 7 There has been some 
controversy, however, whether one corporation could sell 
all its property to another corporation, taking pay in 
stock of the latter, and dividing such stock, among the 
shareholders of the selling corporation. The weight of 
authority holds that such a transaction is ultra vires, and 
may be prevented by any stockholder of the former cor- 
poration. 8 So a contract by a corporation created under 
the laws of Ohio, while solvent and engaged in a profit- 
able business, to sell its plant and assets for a consider- 
ation, the greater part of which is stock and bonds of 
another corporation to be organized to carry on the busi- 
ness, no exigency making such a sale necessary for the 
protection of the stockholders, is ultra vires, as, under 

i Re British Life Ins. Ass'n, 8 Ch. Div. 679; Berry v. Yates, 24 Barb. 
(N. Y.) 199. 

2 Joint Stock Co. v. Brown, L. R. 8 Eq. 381. 

3 Sumner v. Marcy, 3 W. & M. (IT. S.) 105. 

4 New Orleans Co. v. Ocean Dry-Dock Co., 28 La. Ann. 173. 

6 Booth v. Robinson, 55 Md. 419; Parker v. Bernal, 66 Cal. 112. 

6 Howe v. Boston Carpet Co., 82 Mass. 493. 

'Pearson v. Concord R. R. Co., 62 N. H. 537; Hodges v. Screw Co., 
1 R. I. 322, 3 R. I. 9. 

« Taylor v. Earle, 8 Hun (N. Y.), 1; Frothingham v. Barney, 6 Hun 
(N. Y), 306. 



§§ 123, 124.] CAPITAL STOCK. 171 

the laws of that state, one corporation cannot become the 
owner of stock in another, unless such power is clearly 
conferred by statute. 1 

§ 123. Power of foreign corporation to purchase stoclt 
of domestic company. — So it has been held that the pur- 
chase by a foreign corporation of the stock of a domestic 
corporation for the purpose of controlling it is ultra vires 
and void, though they are engaged in a similar business ; 
and in an action by the foreign company to recover half 
of a debt of the domestic company, which the plaintiff 
was obliged to pay to protect the property of such com- 
pany, brought against the president of the domestic com- 
pany, who had agreed, in consideration of the prioe paid 
for the stock, to discharge one-half of the debts of the 
domestic company, defendant is not estopped to set up 
the invalidity of the contract, though he received the 
benefits of it. 2 

§124. Power to declare dividends.— A dividend is a 
fund which a corporation sets apart from its profits to be 
divided among its members. 3 It is ordinarily a matter 
of discretion resting with the managers or directors of . 
a corporation whether a dividend shall be made, how 
much it shall be, and when and where payable. 4 "While, 
as a general rule, the officers of a corporation are the sole 

lEasum v. Buckeye Brew. Co., 51 Fed. Rep. 156; Buckeye Marble, 
etc. Co. v. Harvey, 92 Tenn. 115. 

2 Buckeye Marble Co. v. Harvey, 92 Tenn. 115. 

sLockhart v. Van Alstyne, 31 Mich. 76; Pennsylvania Co. v. Erie 
R. R, 108 Pa. St. 621; Williston v. Michigan R. Co., 13 Allen (Mass.), 

404. 

4 Williams v. Western Union Tel. Co., 93 N. Y. 162; Chaffee v. Rut- 
land R. Co., 55 Vt. 110; Barry v. Merchants' Exch., 1 Sandf. Ch. 
(N. Y.) 280; New York, etc. R. Co. v. Nickals, 119 U. S. 296; Jackson 
v. Plank Road Co., 31 N. J. L. 277. 



172 CAPITAL STOCK. [§ 125. 

judges as to the propriety of declaring dividends, and the 
courts will not interfere with the proper exercise of their 
discretion, where the right to a dividend is clear and fixed 
by contract, and requires the directors to take action be- 
fore the right can be asserted by an action at law, a court 
of equity will interfere to compel such action, and, when 
necessary, to restrain by injunction any action adverse to 
such right. 1 "While it is usually left to the directors' dis- 
cretion as to the amount of the dividend to be declared, 
yet the directors have no power to discriminate between 
its stockholders, where no such power of discrimination 
is conferred by the charter of the corporation. 2 

§ 125. Power to pledge or mortgage future calls. — Under 
the power to pledge, mortgage or charge the works, her- 
editaments, plant, property and effects of a company, in 
order to secure the payment of moneys borrowed, the 
proceeds of a call already made, but not yet paid, may be 
charged, but not the proceeds of a future call. 3 But where 
power to mortgage a future or unpaid-up capital is given 
by the memorandum or articles of association, a mortgage 
by the company of its future or uncalled capital is valid, 
even as against creditors in a winding up, the calls in a 
winding up being part of the assets or capital of the com- 
pany. 4 

i Boardman v. Lake Shore, etc. Co., 84 N. Y. 167, and cases cited. 

2 Jones v. Terre Haute R Co., 57 N. Y. 196; Phelps v. Farmers' 
Bank, 26 Conn. 269; Stoddard v. Foundry Co., 34 Conn. 542; Good- 
win v. Hardy, 57 Me. 143; March v. Eastern, etc. R. Co., 43 N. H. 515; 
Coles v. Bank of England, 10 Ad. & Ell. 437; Festial v. King's Col- 
lege, 10 Beav. 491; City of Ohio v. N. Y. etc. R Co., 5 Abb. Pr. (N. Y.) 
277; King v. Paterson R. R. Co., 29 N. J. L. 82; Brown v. Lehigh 
Canal Co., 49 Pa. St. 270; Granger v. Bassett/98 Mass. 462; Kent v. 
Quicksilver Min. Co., 78 N. Y. 159; Reese v. Bank, 81 Pa. St. 78. 

'In re Sankey Brook Coal Co., L. R. 10 Eq. 381, 9 Eq. 721; Ex 
parte Stanley, 33 L. J. (Ch.) 335. 

*In re Pyle Works, 44 Ch. Div. 534. 



§ 126.] CAPITAL STOCK. 173 

§ 126. Liability of corporation on dividend declared — 
When a dividend upon its stock has been declared by a 
■corporation, it belongs to the holders of the stock at the 
time of the declaration, without regard to the source from 
which, or the time during which, the funds derived were 
acquired by the corporation. 1 Accordingly, when such 
dividend is declared, it thereupon becomes the individual 
property of the stockholder, and he is entitled to receive 
the same on demand of the proper agent, and if not paid 
on demand he may maintain an action therefor. 2 Al- 
though directors haye the right to fix the time and place 
■of payment of such dividend, the time should not be re- 
mote, or the place so far distant as to prejudice the rights 
■of the stockholders; and if directors select a banking 
house of good credit and deposit the money there to pay 
dividends, and give notice to each stockholder of such de- 
posit, and the stockholder, after receiving such notice, 
neglects to draw the money within a reasonable time and 
a loss is incurred by a failure of the bank, it will fall 
upon the stockholder, and he cannot call upon the com- 
pany to reimburse him. 3 But if a dividend is declared 
payable elsewhere than at the office of the corporation, 
the party through whom it is paid becomes the agent of 
the company ; and if such agent fail to pay it over to the 
stockholder, the loss falls upon the corporation. 4 

1 Jermain v. Lake Shore Ey. Co., 91 N. Y. 483; Brisbane v. Dela- 
ware, etc. E. Co., 94 N. Y. 204, 25 Hun (N. Y), 438; Cleveland E. Co. 
v. Bobbins, 35 Ohio St. 483. 

3 Granger v. Bassett, 98 Mass. 462; King v. Paterson, etc. E. Co., 29 
N. J. L. 82; Stoddard v. Shetucket Co., 34 Conn. 542; City of Chicago 
•v. Cleveland, 6 Ohio St. 489; Harris v. San Francisco R. Co., 41 CaL 
-393. 

3 King v. Paterson, supra. 

4 King v. Paterson, supra. 



174: CAPITAL STOCK. [§ 127. 

§127. Liability on illegal issue of stock. — "W"hen the 
issue of shares by a corporation is illegal, and no suffi- 
cient steps have been taken to authorize the creation of 
the capital stock, where a person has acted and been 
treated as a stockholder in respect of shares which the 
company had no power to issue, the person taking them 
cannot, by estoppel or otherwise, become a member of 
the company in respect to them, nor is the corporation 
liable on such illegal issue. 1 But where a clerk of the 
corporation fraudulently filled out a certificate of shares 
of its stock in the name of a fictitious person, procured 
the signatures of the officers and negotiated it, signing the 
name of the fictitious person to the assignment and power 
of attorney, and the transferee bought in good faith, and 
obtained a transfer on the books and a new certificate to 
himself, the corporation was held estopped from denying 
its validity and consequent liability. 2 

1 Lindley on Part. 134; Allen v. Herrick, 81 Mass. 274; Turnbul 
v. Payson, 95 U. S. 418; American Tube Works v. Boston Mach. Co., 
139 Mass. 5; Bank of Hindustan v. Alison, L E. 6 C. P. 54. 

2 Manhattan Beach Co. v. Harned, 23 Blatch. (U. S.) 494? S. C., 27 
Fed. Rep. 484. And see Kent v. Quicksilver M. Co., 78 N. T. 159; 
Eaton v. Pacific National Bank, 144 Mass. 260. 



OHAPTEE IX. 

THE DOCTRINE APPLIED TO RAILROAD CORPORATIONS. 

§ 128. General power to make contracts. 

129. Contracts to carry beyond own line. 

130. Traffic agreements between railroads. 

131. Pooling contracts. 

132. Railroad bonds — Definition. 

133. Power to issue bonds. 

134. Formalities prescribed must be strictly pursued. 

135. Negotiability of railroad bonds. 

136. Power to guaranty bonds of another company. 

137. Power to lease road and franchises. 

138. Ultra vires lease will not be set aside at suit of lessor. 

139. Instances where power dented. 

140. Power to mortgage property. 

141. Power to mortgage franchises. 

142. Consolidation and amalgamation — Definition. 

143. Power of corporations to consolidate. 

144. Effect of consolidation. 

145. Effect of interstate consolidation. 

146. Rights and liabilities of consolidated company. 

147. Consolidation as affecting stockholders. 

148. Consolidation as affecting taxation. 
149.' Trusts and illegal combinations. 

§128. General power to make contracts. — A railroad 
company, like other corporations, has the implied power 
to enter into contracts which are necessary to its business, 
and incidental to the proper construction, maintenance 
and operation of its road. 1 But a railroad corporation, 

1 Pierce on Railroads, § 499 ; South Wales R. Co. v. Redmond, 10 
C. B. (N. S.) 675, 100 E. C. L. 674; Mayor, etc. v. Baltimore, etc. R. Co., 
6 Gill (Md.), 297, 21 Md. 50; Hamilton v. Newcastle R. Co., 9 Ind. 359; 



176 BAILE0AD COEPOBATIONS. [§ 129. 

being in its nature of a quasi-Tpxxblic character, may not 
enter into any contract or obligation whereby it releases 
itself from any of its duties or obligations to the public. 1 

§ 129. Contract to carry beyond own line. — It is now 
well settled that a railroad company may make contracts 
with passengers or shippers for carriage beyond its own 
lines ; and in order to fulfill such contracts may make suit- 
able arrangements with connecting lines of railway or 
steamship. Such contracts have been held not to be ultra 
vires in numerous cases. 2 And where such contract is en- 
tered into, the company so contracting is liable not only 
for the loss of the goods upon their own line, but also for 
loss of any goods upon connecting lines. 3 And it has been 

Frye v. Tucker, 24 111. 180; Joy v. St. Louis, 138 U. S. 1; Shrewsbury, 
etc. E. Co. v. Northwestern E. Co., 6 H. L. 113; Smith v. Nashua, etc. 
E. Co., 27 N. H. 86; Burnt v. Troy, etc. E. Co., 40 N. Y. 168; Church 
v. Sterling, 16 Conn. 388; Eorer on Bailroads, .228: Western Bank v. 
Tallman, 17 Wis. 530. 

1 Thomas v. Eailroad Co., 101 U. S. 71; York, etc. E. Co. v. Winans, 
17 How. (U. S.) 39. And see cases cited in § 137, post. 

2 Beach, Priv. Corp., § 407; Thompson, Com. Corp., § 5871; Taylor, 
Priv. Corp., § 308; Weed v. Saratoga, etc. B. Co., 19 Wend. (N. Y.) 
S34; Wylde v. North Eiver, etc. Co., 53 N. Y. 156; Eoot v. Great West- 
ern E. Co., 55 N. Y. 524; East Tenn. etc. R Co. v. Nelson, 1 Coldw. 
(Tenn.) 276; Newell v. Smith, 49 Vt. 255; Eoberts v. Van Buskirk, 31 
N. Y. 661; Steamboat Co. v. Brown, 54 Pa. St. 77; Noyes v. Eailroad 
Co., 27 Vt. 110; Peet v. Eailway Co., 19 Wis. 118; St. Louis, etc. E. 
Co. v. Pipes, 13 Kan. 505; Wahl v. Holt. 26 Wis. 703; Illinois Cent. 
E. Co. v. Johnson, 34 111. 389; Pennsylvania E. Co. v. Berry, 68 Pa. St. 
272; Southern Ex. Co. v. Shea, 38 Ga. 519; Bryan v. M. & P. E. Co., 
11 Bush (Ky.), 597; Bennett v. Peninsular S. Co., 6 C. B. 775. 

8 Great Western Ey. Co. v. Blake, 7 H. & N. 986; Stewart v. Erie, 
etc. Ey. Co., 17 Minn. 372; Wiggins Ferry Co. v. Chicago E. Co., 73 
Mo. 389; Green Bay, etc. E. Co. v. Union S. Co., 107 U. S. 98; Arnot 
v. Erie E. Co., 5 Hun (N. Y), 608; Parish v. Wheeler, 22 N. Y. 494; 
Wheeler v. San Francisco E. Co., 31 Cal. 46; Eutland, etc. E. Co. v. 
Proctor, 29 Vt. 93; Shawmut's Bank v. Plattsburg Ey., 31 Vt. 491; 



§130.] RAILROAD CORPORATIONS. 177 

held in many cases that even the acceptance of goods for 
shipment whose destination is beyond the company's own 
lines implies a contract to deliver at destination. 1 How- 
ever, the general rule in the United States seems to be that 
the acceptance of goods for shipment beyond the com- 
pany's own lines, in the absence of any contract, obligates 
the carrier only to transportation to end of own line and 
a delivery there to the next connecting carrier. 2 

§ 130. Traffic agreements between rail/road companies. 
A railroad company may, if not restrained by its charter, 
enter into contracts with connecting carriers for the pur- 
pose of providing for through transportation over its 
road and over the line of such carrier, if made with a 
ionafide purpose of regulating traffic in a reasonable and 

Feital v. Middlesex R. Co., 109 Mass. 398; Morse v. Brainerd, 41 Vt. 
550; Railroad Co. v. Transportation Co., 16 Wall. (U. S.) 324; Evans- 
ville Ry. Co. v. Androscoggin, etc., 22 Wall. (U. S.) 594; Phillips v. 
Railroad Co., 78 N. C. 294; Pratt v. Railroad Co., 22 Wall. (F. S.) 132; 
Hill Mfg. Co. v. Railroad Co., 104 Mass. 122; Gray v. Jackson, 51 N. H. 
9; Woodward v. Railroad Co., 1 Biss. (U. S.) 403. 

1 Illinois Cent. R Co. v. Frankenberg, 54 111. 88; Chicago, etc. R. Co. 
v. People, 56 111. 365; Adams Ex. Co. v. Wilson, 81 I1L 339; Southern 
Ex. Co. v. Shea, 38 Ga. 519; Kyle v. Railroad Co., 10 Rich. (S. C.) 382; 
Carter v. Peck, 4 Sneed (Ky.), 201; Bennet v. Filyaw, 1 Fla. 403; Mul- 
ligan v. Railway Co., 36 Iowa, 181 ; East Tenn. etc. Co. v. Rogers, 6 
Heisk. (Tenn.) 143; Lock Co. v. Railroad Co., 48 N. H. 339. 

2 Nutting v. Railroad Co., 1 Gray (Mass.), 502; Darling v. Railroad 
Co., 11 Allen (Mass.), 295; Hood v. Railroad Co., 23 Conn. 502; Per- 
kins v. Railroad Co., 47 Me. 573; Skinner v. Hall, 60 Mo. 477; Rail- 
road Co. v. Manufacturing Co., 16 Wall. (U. S.) 318; Santwood v. St. 
John, 6 Hill (N. Y.), 158; Railroad Co. v. Pratt, 23 Wall. (U. S.) 133; 
Brintnall v. Railroad Co., 32 Vt. 665; Farmers,' etc. Bank v. Trans- 
portation Co., 23 Vt. 186; McMillan v. Railroad Co., 16 Mich. 79; 
Crawford v. Railroad Ass'n, 51 Miss. 222; Burroughs v. Railroad Co., 
100 Mass. 26; Camden, etc. R Co. v. Forsyth, 61 Pa. St. 81; Balti- 
more, etc. R. Co. v. Schumaker, 29 Md. 176; Irish v. Railroad Co., 54 
N. Y. 502. 

12 



178 BAILKOAD COKPOKATTONS. [§ 131. 

just manner. 1 All contracts between rival railroad com- 
panies which prevent competition are not necessarily 
contrary to public policy, illegal and detrimental to the 
public welfare, the vehement declarations of demagogic 
politicians to the contrary notwithstanding. When such 
contracts prevent an unhealthy competition, and furnish 
the public with adequate facilities at fixed and reasonable 
rates, they are beneficial and in accordance with sound 
principles of public policy. 3 So where two groups of 
railway companies, being respectively the owners of inde- 
pendent coterminous routes, agreed to divide the profit* 
of the whole traffic in certain fixed proportions, calculated 
on the experience of the past course of traffic, it was held 
that such agreement was not ultra vires? 

§ 131. Pooling contracts. — " Pools " have been defined 
by a very able writer to be contracts between rival rail- 
way companies whereby, in order to prevent competition, 
their business is united in one common total, from which 
the business or the money received therefor is divided 
among the combining companies in fixed percentages.* 
The same author has further declared them to be of two 
kinds — traffic pools and money pools. A traffic pool is 
an agreement allotting a certain percentage of tlie total 
traffic to each road, and providing that, if any road ex- 
ceeds its share of the ( business, freight shall be diverted 

1 Stewart v. The Erie, etc. Transp. Co., 17 Minn. 372; South Wale* 
Ry. v. Redmond, 100 E. C. L. 674; Sussex, etc. Ry. v. Morris, etc. R. 
Co., 19 N. J. Eq. 13; Simpson v. Denison, 10 Hare, 51 j Midland Ry. 
Co. v. Great Western Ry. Co., L. R. 8 Ch. 841, 7 Moak's Rep. 408; 
Llanelly Ry. v. London, etc. Ry., L. R. 7 H. L. 550, 13 Moak's Rep. 73. 

2 Hare v. London, etc. Ry. Co., 2 Johns. & H 80, 7 Jur. (N. S.) 1145, 
30 L. J. Ch. 817; Manchester, etc. Ry. Co. v. Concord R. R, 20 Atl. 
Rep. (N. H.) 383; 1 Redf. Rys., § 146; Mor. Priv. Corp., § 1131. 

3 Hare v. London, etc. Ry. Co., supra. 

* The Railways of the Republic, Hudson, 196. 



§ 131. J KAILK0AD COKPOBATKOiTS. 17i> 

from it to the other roads until the agreed proportion is 
restored. A money pool is an agreement whereby the 
money received by all the combining roads for transporta- 
tion is brought together into one total and divided among 
the roads in certain fixed percentages, which do not nec- 
essarily correspond to the proportion of the freight act- 
ually carried by each road. 1 Whether or not pooling 
contracts are illegal and void would seem to depend upon 
the laws of the state under which the company was or- 
ganized. For instance, in New Jersey, such contracts 
have been recognized by the courts as valid ; 2 while in 
Louisiana it has been quite recently held that pools are 
not enforceable, as contrary to public policy. 3 But in 
New York it has been decided that a pooling combina- 
tion for dividing certain territory between parallel rail- 
roads is not contrary to public policy. 4 The railroad 
commission of that state, however, has declared pooling 
contracts invalid. 5 And in Pennsylvania a pool formed 
for the division of a coal district, whereby the committee 
were to fix prices of coal, rates of freight, etc., was held 
to be both against the statute of New York — where the 
contract was made — and also against the public policy 
of the state, wherein the coal district was situated. 6 So 
in Indiana combinations between common carriers to pre- 
vent competition are regarded as prima facie illegal, and 
in order to establish the legality of any pool the burden 
is on the carrier to show that the pool was formed to 
prevent ruinous competition, and that it does not establish 

1 The Railways of the Republic, Hudson, 197. 

2 Sussex R. Co. v. Morris, etc. Co., 19 N. J. Eq. 13, 20 N. J. Eq. 543 ; 
Elkins v. Camden, etc. R. Co., 36 N. J. Eq. 241. 

8 Tex. & Pac. R. Co. v. Southern Pac. R Co., 41 La. AnD. 970. 
* Ives v. Smith, 3 N. Y. Supp. 645; affirmed, 55 Hun (N. T.), 606. 
5 1 N. Y. Railroad Com. Rep. (1885), 77. 
« Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 186. 



180 EAILEOAD COEPOBATIONS. [§ 132. 

unreasonable rates, unjust discrimination or oppressive 
regulations. 1 The regulation of rates and freight charges 
between railroad corporations is now, in many of the 
states, intrusted to the wise discretion of a railroad com- 
mission, these officers usually being men with little or no 
railroad experience, and whose resplendent abilities to- 
ward confusing seemingly plain business transactions is 
strikingly exemplified in the number of suits brought in 
the United States courts praying relief from the heavy 
hand of these political blunderers. It must be added, in 
concluding this branch of the subject, that interstate com- 
merce pooling has been forbidden by act of congress. 8 

§ 132. Railroad oonds — Definition. — Kailroad bonds 
are instruments under seal containing an acknowledg- 
ment of certain debts and an agreement to pay the same 
upon the terms stated. They are a kind of public funds 
put on the market and dealt in as such. Coupons, or in- 
terest certificates for each instalment of interest accruing 
during the time the bonds have to run, are attached to 
them and form a part of the original bonds. 3 The mort- 
gage provides for the security of the particular bonds it 
describes, and the company puts the bonds out from time 
to time as occasion requires. When thus put upon the 
market they are treated as current until past due or act- 
ually retired. The security is considered a continuing 
one, and the bonds negotiable by the company so as to 
carry the mortgage security until they have become com- 

1 Cleveland, etc. R. Co. v. Closser, 126 Ind. 348. And see Denver, 
etc. Co. v. Atchison, etc. R Co., 110 U. S. 667. 

2 Interstate Commeroe Act, 24 Stat, at L. 380. 

s 19 Am. & Eng. Ency. Law, 719 ; Cooper v. Corbin, 105 111. 224; Peoria, 
etc. R Co. v. Thompson, 103 111. 187; Harmock v. Farmers' L. & T. 
Co., 105 U. S. 77; Farmers' L. & T. Co. v. St. Joseph, etc. R Co., 3 
Dill. 412, 2 Fed. Rep. 117; Titus v. Mabee, 25 111. 257. 



§§ 133, 134 J KAXLKOAD COEPOEATIOlirS. 181 

mercially dishonored, or something else has been done to 
deprive the company of its power of floating them. 1 

§ 133. Power to issue ootids. — The power of a railroad 
corporation to issue bonds for the purpose of raising 
money for its extension, maintenance and operation is 
now so well established that it would almost seem a work 
of supererogation to cite authorities to support the prop- 
osition. This is one of the incidental powers necessary 
for its very existence. A bond is merely an obligation 
under seal; and such corporation having the right to 
make contracts under which it may incur debts, and the 
right to make and use a common seal, a contract under 
seal is not only within the scope of its powers, but was 
originally the usual and peculiarly appropriate form of 
corporate agreement. 2 This power, however, is usually 
given by charter or by general statute. 

§ 134. Formalities prescribed must be strictly pursued. 
"When the statute under which the corporation was or- 
ganized prescribes certain formalities to be followed in 
the issuance of bonds, they must be strictly complied with 
by the officers of the company, or they will be void as 
against the corporation, even though such bonds be in the 
hands of lona fide holders. 3 So where the statutes pre- 
scribed that such bonds should be certified across their 
face, and further required them to be registered, bonds 

1 Claffln v. South Carolina, etc. E. Co., 8 Fed. Eep. 118, 4 Hughes, 
12, 4 Am. & Eng. Ry. Cases, 231, 19 Am. & Eng. Ency. Law, 719. 

2Comm. v. Smith, 10 Allen (Mass.), 448; Tread well v. Salisbury 
Mfg. Co., 7 Gray (Mass.), 393. 

SHackensack Water Co. v. De Kay, 36 N. J. Eq. 548; Singer v. 
St. Louis R Co., 6 Mo. App. 427; Webb v. Heme Bay, L. R. 5 Q. B. 
642; Chambers v. Manchester, etc. R. Co., 5 Best & S. 588; Comm. v. 
Smith, 10 Allen (Mass.), 448; Rockwell v. Elkhorn Bank, 13 Wis. 653; 
Morrison v. Inhabitants, etc., 7 Vroom (N. J.), 219. 



182 RAILROAD CORPOEATIONS. [§ 135. 

that were issued without these formalities were held to he 
void. 1 As was said by the court in Hackensaeh Water 
Co. v. De Kay, supra: " Persons taking securities of this 
character are chargeable with knowledge of the power to 
make them as conferred by the charter. If the power 
granted by the charter is subject to a condition, relating 
either to the form in which the security shall be made in 
order to be valid, or to some preliminary proceeding 
extraneous to the acts of the corporation or its officers, 
securities issued not in the prescribed form, or without 
the preliminary proceedings had, are subject to defenses 
in consequence thereof even in the hands of bona fide 
holders." 

§ 135. Negotiability of railroad bonds. — Coupon bonds 
of a railroad company, issued under special legislative au- 
thority and designed for the purpose of raising money 
on a credit, if they contain words of negotiability, are ne- 
gotiable instruments the same as ordinary commercial 
paper, and the same immunity from defenses in the hands 
of bona fide holders applies to mortgages securing such 
bonds as to the bonds themselves. 2 Railroad bonds are 
usually made payable to the trustee named in the mort- 
gage or the bearer, and pass by delivery from hand to 
hand with all the ordinary properties of negotiable in- 
struments.' Under the law merchant such bonds are not 

1 Morrison v. Inhabitants of Bernards, 7 Vroom (N. J.), 219. 

2 Hackensack Water Co. v. De Kay, 36 N. J. Eq. 548, and cases 
cited. 

3 White v. Vermont, etc. E. Co., 21 How. (U. S.) 575; Clark v. Iowa 
City, 20 Wall. (U. S.) 583; Gelpcke v. Dubuque, 1 Wall. (U. S.) 175; 
Aurora City v. West, 7 Wall. (IT. S.) 82; Haven v. Grand Junction, 
etc. Co., 109 Mass. 88; Connecticut Life Ins. Co. v. Cleveland R. Co., 
41 Barb. (N. Y.) 9; Reed v. Mobile Bank, 70 Ala. 199; Lehman v. Tal- 
lahassee Mfg. Co., 64 Ala. 567 : Morris Canal Co. v. Fisher, 9 N. J. Eq, 



§ 136.] BAILEOAD COEPOEATIONS. 183 

regarded so strictly negotiable as are promissory notes 
or bills of exchange ; but being expressly designated to 
pass from hand to hand, they are by common usage act- 
ually transferred and capable of passing by delivery so as 
to enable the holder to maintain an action on them in his 
own name. 1 

§ 136. Power to guaranty oonds of another company. — 
Unless express authority be given by charter -or by stat- 
ute, a railroad company has no power or authority to 
guaranty the bonds of or lend its credit to another corpo- 
ration. 2 But it has been held that on sufficient consider- 
ation such corporation may guaranty the payment of the 
bonds of another company, eve,n if there is no authority 
conferred upon them by charter or by statute. 3 So it has 
been held that a railroad corporation which has power by 
its charter to issue its bonds has power to guaranty the 
bonds of another, which it receives in payment of a debt 

667; Carr v. Le Fevre, 27 Pa. St. 413; Chapin v. Vermont, etc. R. Co., 
8 Gray (Mass.), 575; Langstone v. Southern Carolina R. Co., 2 S. C. 
248; Ex parte Williams, 18 S. C. 299; Bonner v. New Orleans, 2 Woods 
<U. S.), 135; Zabrieskie v. Cleveland, etc. R. Co., 23 How. (U. S.) 381; 
Knox County v. Aspinwall, 21 How. (U. S.) 539; Beaver County v. 
Armstrong, 44 Pa. St. 63; Craig v. Vicksburg, 31 Miss. 216; Rice v. 
Southern Pac. R. Co., 9 Phila. 294; Brainerd v. Railroad Co., 25 N. Y. 
496; Welch v. Sage, 47 N. Y. 143; Junction R. Co. v. Cleneay, 13 Ind. 
161. 

1 Carr v. Le Fevre, supra; Junction R. Co. v. Cleneay, supra. 

2 Humboldt Min. Co. v. American Com. Co., 62 Fed. Rep. 361; Mor. 
Priv. Corp., § 423; McLennan v. File Works, 56 Mich. 579; JEtna Nat. 
Bank v. Insurance Co., 50 Conn. 167; National Park Bank v. German 
Am. etc. Co., 116 N. Y. 281; Madison, etc. Plank Road Co. v. Water- 
town, etc. Co., 7 Wis. 59; Davis v. Railroad Co., 131 Mass. 258; Cole- 
man v. Railway Co., 10 Beav. 1; Pennsylvania R. Co. v. St. Louis, 
etc. Co., 118 U. S. 290; Marble Co. v. Harvey, 92 Tenn. 115; Green 
Bay, etc. Co. v. Steamboat Co., 107 U. S. 98. 

'Low v. Cent. Pac. R. Co., 52 Cal. 53; Chicago, etc. Co. v. Howard, 
7 Wall (U. S.) 392; Arnot v. Erie R. Co., 67 N. Y. 315. 



184 EAILEOAD OOKPOKATIONS. [§ 137, 

due to it, and which it sells for value or transfers in pay- 
ment of its own debt, the guaranty being given as the 
means of strengthening and increasing the credit of the 
bonds, or to enable it to obtain an adequate price for 
them. 1 And it has been held that where a corporation 
guaranties the bonds of another company, its stockhold- 
ers may be estopped from repudiating the guaranty,, 
though the indorsement of guaranty be ultra vires? 

% 137. Power to lease its road and franchises. — It is a 
general rule that, unless specially authorized by its charter 
or aided by some other legislative action, a railroad com- 
pany cannot, by lease or by any other contract, turn over 
to another company for a long period of time its road 
and all its appurtenances, the use of its franchises and the 
exercise of its powers, such contract not being among the 
ordinary powers of a railroad company, and is not to be 
presumed from the usual grant of powers in a railroad 
charter. 3 This rule is based on the theory that public or 

1 Rogers Locomotive Works v. Southern R. Ass'n, 34 Fed. Rep. 278. 

2 Cozart v. Georgia, etc. R Co., 54 Ga, 379; Atchison,- etc. R. Co. v- 
Fletcher, 35 Kan. 336. 

s Thomas v. Railroad Co., 101 U. S. 71; Green Bay, etc. R. Co. v. 
Steamboat Co., 107 17. S. 98; Davis v. Railroad Co., 131 Massi 258; 
Eastern Counties R. Co. v. Hawkes, 5 H. L. 331; Ashbury Ry. v. 
Riche, 7 H. L. 653; Pennsylvania R. Co. v. St. L. etc. R. Co., 118 
U. S. 290; Oregon Ry. Co. v. Oregonian Ry. Co., 130 U. S. 1; Central 
Trans. Co. v. Pullman Co., 139 U. S. 24; Beman v. Rufford, 1 Sim. 
(N. S.) 550; Johnson v. Shrewsbury, etc. R. Co., 3 De G., McN. & G» 
914; Shrewsbury, etc. R Co. v. Northwestern, etc. Co., 6 H. L. 113;, 
South Yorkshire R. Co. v. Great Nor. Ry. Co., 3 De G., M. & G. 576; 
Winch v. Birkenhead Ry. Co., 5 De G. & Sm. 562; Great Nor. R Co. v. 
Railway Co., 9 Hare, 306; Troy, etc. R. Co. v. Kerr, 17 Barb. (N. Y.) 
601 ; Ohio, etc. R Co. v. Indianapolis, etc. Co., 5 Am. L. Reg. (N. S.) 
733; York, etc. R Co. v. Winans, 17 How. (U. S.) 39; Comm. v. Smith, 
10 Allen (Mass.), 448; Richardson v. Sibley, 11 Allen (Mass.), 66; 
Georg v. Nevada Cent. Ry. Co., 38 Pac. Rep. (Nev.) 441 ; Visalia Gas, 



§ 137.] EAILEOAD CORPOKATIONS. 185 

quasi-public corporations, which possess and exercise the 
right of eminent domain or its equivalent, owe duties to 
the public as well as to their stockholders ; and they can- 
not sell or lease their corporate powers and privileges, and 

etc. Co. v. Sims, 104 Cal. 326; Eabe v. Dunlap, 51 N. J. Eq. 40; Stock- 
ton v. Central By., 50 N. J. Eq. 52; National Trust Co. v. Miller, 33 N. 
J Eq. 155; Brunswick Gas L. Co. v. United Gas Co., 85 Me. 532; Keo- 
kuk v. Fort Wayne Elec. Co., 57 Mo. 689; Wasmer v. Delaware, etc. 
R Co., 80 N. Y. 312; Abbott v. Johnstown, etc. R. Co., 80 id. 27; 
Dinsmore v. Atlantic, etc. R Co., 46 How. Pr. (N. Y.) 193; Peters v. 
Lincoln, etc. R. Co., 2 McCrary (U. S.), 275; Ohio, etc. R. Co. v. In- 
dianapolis, eta R Co., 5 Am. L. Rep. 733; Freeman v. Minnesota, 
etc. R Co., 28 Minn. 443; Middlesex R Co. v. Boston, etc. R Co., 115 
Mass. 347; Camden, etc. R Co. v. May's Landing R. Co., 48 N. J. L. 
530;'.Kean v. Johnson, 9 N. J. Eq. 407; Black v. Delaware, etc. R Co., 
22 N. J. Eq. 130, 24 N. J. Eq. 455; Clarke v. Omaha R. Co., 4 Neb. 458; 
McMillan v. Mich. So. R. Co., 16 Mich. 79; Occum Co. v. Sprague Co., 
34 Conn. 529; Campbell v. Marietta R Co., 23 Ohio St. 138; Launian 
v. Lebanon Valley R Co., 30 Pa. St. 42; Pinto Co. Case, 8 Ch. Div. 
273; Boston, etc. R Co. v. New York, etc. Co., 13 R I. 260; Camp- 
bell's Case, 9 Ch. App. 1; Simpson v. Westminster Co., 8 H. L. 712; 
Smith v. St. Louis Ins. Co., 2 Tenn. Ch. 727; Price v. St. Louis Ins. 
Co., 3 Mo. App. 262; Cozart v. Georgia R Co., 54 Ga. 379; New Or- 
leans R. Co. v. Harris, 27 Miss. 517; In re Albert Ass. Co., 6 Ch. App. 
381; Eakin v. St. Louis R Co., 3 Cent. L Jour. 655. 

In Stockton v. Central R R Co., supra, Chancellor McGill says: 
" Corporate bodies that engage in a public or quasi-public occupa- 
tion are created by the state upon the hypothesis that they will be 
a public benefit. They enjoy privileges that individuals cannot 
have. Perpetual or certain life is accorded to them. Usually the 
authority of the right of eminent domain is delegated to them, 
often to be exercised in whatever locality they may be pleased to 
locate. . . . The use of the common highways is frequently sub- 
ordinated to their operations, and, indeed, the individual is com- 
pelled even in his own home to submit without redress to discom- 
forts incident to their lawful operation which he would not be re- 
quired to tolerate from other sources. . . . Thus they are given 
special privileges because of the benefits they are presumed to con- 
fer upon the communities. Railways afford speedy and comfortable 
i to and from divers parts of the country, carry produce of 



186 EAILEOAD COEPOEATIONS. [§ 137. 

thereby disable themselves from performing their public 
duties, without legislative authority. 1 Accordingly, where 
a railroad corporation, under a provision of its charter 
declaring it to " be lawful for the said company, at any 
time during the continuance of its charter, to make con- 
tracts and engagements with any other corporation, or 
with individuals, for the transporting or carrying any 
kind of goods, merchandise, freight or passengers, and to 
•enforce the fulfillment of such contract," leased its road, 
franchises and property for a period of twenty years, 
yielding complete control of it to the lessees, and receiv- 
ing as rent one-half the gross sum collected by the lessee 
from the operation of the road ; the agreement containing 

mines, farms and factories to markets, distribute the industries 
"throughout the land, feed the multitudes in populous cities, and ac- 
complish many other beneficent ends. Water, gas, telegraph and 
similar corporations also render to the public benefits which readily 
suggest themselves to the mind as it contemplates their work. 
While the state confers special privileges upon these favorites, it at 
the same time exacts from them duties which also tend to the pub- 
lic welfare. The whole scheme of the laws of their organization 
is to equip and control them as instruments for the public good. 
Such corporations hold their powers not merely in trust for the 
pecuniary profit of their stockholders, but also in trust for the public 
weal. The impress for the public good is stamped upon their very 
being, and it becomes a duty which, though not prescribed in ex- 
press language of the law, is to be implied from the nature of every 
power conferred. When, therefore, it appears that such a corpora- 
tion, unmindful of this plain duty, acts prejudicially to the public 
in order to make undue gains and profits for the stockholders, it 
uses its powers in a manner not contemplated by the law which 
confers them. The use becomes abuse, and is tantamount to ex- 
cess of power." 

iFietsam v. Hay, 122 111. 293; People v. Chicago Gas Trust Co., 
130 111. 268; People v. Sugar Ref. Co., 121 N. Y. 582; Brunswick Gas- 
light Co. v. United Gas, etc. Co., 85 Me. 533; City of Keokuk v. 
Fort Wayne Elec. Co., 57 Mo. 689; Visalia Gas & E. Co. v. Sims, 104 
Cal. 326; Mor. Corp., §§ 658, 1114, 1116, 1129. 



§ 137.] EAILEOAD COEPOKATIONS. 



18< 



a condition that the railroad company might at any time 
terminate the contract and take possession of the prop- 
erty, and, under said agreement, did so take possession, 
and suit was brought to recover the value of the lease for 
the remaining period of twenty years to which the lease 
extended, — it was held that the charter did not grant per- 
mission to the railroad company to sell, lease or transfer 
to others the entire railroad and the rights and franchises 
of the corporation, and that such lease of its road and 
•corporate franchises was ultra vires and void. 1 So it was 
held that a lease for ninety-nine years of a railroad in 
Illinois and Indiana from a railroad corporation of In- 
diana, whose road connected with the road leased, though 
within the authority conferred on the lessor by the stat- 
ute of Illinois, yet was unlawful and void because beyond 
the authority conferred upon the lessee by the statute of 
Indiana. 2 And again, where under a general law author- 
izing companies to organize themselves by written articles 
of association filed with the secretary of state for " any 
lawful enterprise, business, pursuit or occupation " desig- 
nated in the articles, including " making or constructing 
any railroad, and to purchase, possess and dispose of such 
real or personal property as may be necessary and con- 
venient to carry into effect the object of the incorpora- 
tion," it was held that such provisions did not authorize a 
railroad company to be incorporated either for leasing its 
railroad to another corporation, or for taking leases from 
other corporations of their roads, although these objects 
were included in their articles of association. 3 But where 

1 Thomas v. Railroad Co., 101 TJ. S. 71. 

3 Pennsylvania, etc. R. Co. v. St. Louis, etc. R. Co., 118 U. S. 290. 

8 Oregon Ry. v. Oregonian Ry., 130 U. S. 1. 

In Oregon Ry. v. Oregonian Ry., supra, Mr. Justice Miller, deliv- 
ering the opinion of the court, says: "One of the most important 
powers with which a corporation can be invested is the right to 



188 RAILROAD CORPORATIONS. [§ 137. 

a railroad company by its charter had power " to have, 
purchase, possess, enjoy and retain lands, rents, here- 
ditaments, tenements, goods, chattels and effects of what- 
soever kind, nature or quality the same may be, and the 
same to sell, grant, demise, alien or dispose of," which 
power was transferred to another company, which com- 
pany by its charter might at any time incorporate its 
stock with the stock of any other company, it was held 
that the latter company had express power to incorporate 
its stock with the stock of any other company, and that 
the sale of its road, equipment and franchises was not 
ultra vires, but lawful and void. 1 So also, on the same 

sell out its whole property together with the franchises under 
which it is operated, or the authority to lease its property for a 
long term of years. In the case of a railroad company these privi- 
leges . . . would be the most important which could be given 
it, and this idea would impress itself upon the legislature. Natu- 
rally we would look for the power to do these things in some ex- 
press provision of law. We would suppose that if the legislature 
saw fit to confer such rights, it would do so in terms which could 
not be misunderstood. To infer, on the contrary, that it either in- 
tended to confer them or to recognize that they already existed by 
the simple use of the word 'assigns,' a very loose and indefinite 
term, is a stretch of the power of the court in making implications 
which we do not feel to be justified." 

1 Branch v. Jessup, 16 Otto (U. S.), 468. 

In Branch v. Jessup, supra, Mr. Justice Bradley says: "Gener- 
ally the power to sell and dispose has reference only to the trans- 
actions in the ordinary course of business incident to a railroad 
company, and does not extend to a sale of the railroad itself, or of 
the franchise connected therewith. Outlying lands not needed for 
railroad uses may be sold. Machinery and other personal prop- 
erty may be sold. But the road and franchises are generally 
inalienable; and they are so not only because they are acquired 
by legislative grant, or in the exercise of special authority given 
for the specific purposes of the incorporating act, but because 
they are essential for the fulfillment of those purposes; and it 
would be a dereliction of the duty owed by the corporation to the 
state and to the public to part with them." 



§§ 138, 139.] EAILEOAD COEPOEATIONS. 189 

principle, where an electric light and gas company has 
a franchise granted by a municipal corporation to operate 
its gas and electric works and to supply the inhabitants 
of the city with gas and electricity, it is bound to operate 
its gas and electric works, and a lease thereof to a third 
party for a period of years is ultra vires and void as against 
public policy. 1 

§ 138. Ultra vires lease will not oe set aside at suit of 
lessor. — A lease, however, by one railroad corporation of 
its road and franchises to another railroad corporation 
which is ultra vires of one or of both will not be set aside 
by a court of equity at the suit of the lessor, where the 
lessee has been in possession, paying the stipulated rent 
for a number of years, and has taken no steps to repudi- 
ate or rescind the contract. 2 This relief is denied under 
the general rule that in pari delicto potior est conditio de- 
fendentis; and therefore neither party to an illegal con- 
tract will be aided by the court, whether to enforce it or 
to set it aside. If the contract is illegal, affirmative relief 
against it will not be granted, at law or in equity, unless 
it remains executory, or unless the parties are considered 
not in equal fault, or where there has been fraud or op- 
pression on the part of the defendant. 3 

§ 139. Instances where power to lease denied. — "Where 
the charter of a corporation only empowers it to sell the 

1 Visalia Gas & E. L. Co. v. Sims, 104 CaL 326. 

2 St. Louis R. Co. v. Terre Haute R. Co., 145 U. S. 393; Thomas v. 
Railroad Co., 101 U. S. 71 ; Pennsylvania, etc. R. Co. v. St Louis, etc. 
R. Co., 118 U. S. 290, 630; Oregon Ry. v. Oregonian Ry., 130 U. S. 1; 
Central Trans. Co. v. Pullman Co., 139 U. S. 24 

3 St. Louis R. Co. v. Terre Haute R. Co., 145 U. S. 393; Thomas v. 
Richmond, 12 Wall. (U. S.) 349, 355; Spring Co. v. Knowlton, 103 
IT. S. 49; Story, Eq. Jur., § 298; Penn. R. Co. v. St. Louis R. Co., 118 
U. S. 290; Union Trust Co. v. Illinois, etc. Co., 117 U. S. 434. 



190 EAILEOAD COBPOBA.TIONS. [§ 140. 

real estate necessary for the transaction of its business 
when not required for the uses of the corporation, it can- 
not lease such real estate nor maintain an action for rent 
under the lease, such leasing not being necessary to the 
exercise of the purposes for which the charter was given. 1 
An unauthorized lease made by the officers of a corpora- 
tion is void, and the acquiescence of the corporation is not 
to be inferred from silence merely. 2 So directors of one 
company, who are also directors of another which owns 
two-fifths of the stock of the former, cannot properly 
vote to lease the former company to the latter. 3 The 
holders of a majority of the capital stock of a corpora- 
tion, by their votes in a stockholders' meeting, cannot, 
lawfully authorize the officers to lease its property to 
themselves, or to another corporation formed for the pur- 
pose, and exclusively owned by them, unless such lease is 
made in good faith and is supported by an adequate con- 
sideration. 4 

§ 140. Power to mortgage its road and property. — The 
broad rule that the power of a corporation to mortgage 
its property is dependent upon the general right of dis- 
posal s cannot be applied to railroad or other jwasi-pablic 
corporations, as by this means they could abandon the 
duties they owe to the public and disable themselves from 
such performance. The power to mortgage, like a power 
to lease the property and franchises of a railroad corpo- 
ration, must be given by charter or by statute. 6 

1 Metropolitan Concert Co. v. Abbey, 52 N. Y. Sup. Ct. 97. 

2 Kersey Oil Co. v. Oil Creek E. Co., 12 Phila. (Pa.) 374 
'Bill v. Western U. TeL Co., 16 Fed. Rep. 143. 

4 Meeker v. Winthrop Iron Co., 17 Fed. Eep. 48. 

5 §§ 83, 84 ab ante. 

6 See § 137 and cases cited. 



«!•] EAILE0AD OOBPOEATIONS. 



191 



§ 141. Power to mortgage or transfer its franchises.— 
It is now well settled that a railroad corporation cannot 
mortgage, sell or transfer its franchises unless express 
authority is given so to do. 1 This power is denied on the 
hypothesis that a corporation is an artificial being which 
only the law can create, and when created it cannot trans- 
fer its own existence into another body, nor can it enable 
natural persons to act in its name, save as its agents or 
as members of the corporation acting in conformity with 
the modes required or allowed by its charter. 2 As a con- 
sequence of this principle, the franchise of a corporation 
cannot be levied upon by execution, although the prop- 
erty of the corporation may be taken. 3 Where authority 
to mortgage its franchises by a corporation is given, such 
authority necessarily implies the power to bring the fran- 
chises so mortgaged to sale, and to transfer them with 
the corporeal property of the company to the purchaser. 4 
"Where a mortgage or transfer of franchises is made, how- 
ever, without legislative authority, it may be ratified by 
subsequent enactment, and such ratification in reality con- 
stitutes a grant of franchises. 5 There has been a distinc- 
tion declared, however, between a franchise to he a corpo- 
ration and a franchise as a corporation to maintain and 

1 Thomp. Corp., §§6137-6144; Beach, Priv. Corp., § 389 ; Home v. Free- 
man, 14 Gray (Mass.), 566; Shaw v. Norfolk Ry., 5 Gray (Mass.), 162 f 
Staten v. Morgan, 28 La. Ann. 482. And see cases cited in § 137. 

2 See cases in preceding note. 

3 Que v. Canal Co., 24 How. (TJ. S.) 257; Randolph v. Larned, 27 N. 
J. Eq. 557; Stewart v. Jones, 40 Mo. 140; Susquehanna Canal Co. v. 
Bonham, 9 W. & S. (Pa.) 27. 

*New Orleans, etc. Co. v. Delamore, 114 TJ. S. 501; Memphis R. Co. 
v. Commissioners, 113 U. S. 609, 623; Galveston v. Cowdrey, 11 Wall. 
(U. S.) 459. 

s 8 Am. & Eng. Ency. Law, 634d; Richards v. Merrimack R. Co., 44 
N. H 127; Shaw v. Norfolk Co., 5 Gray (Mass.), 162; Pollard v. Mad- 
dox, 28 Ala. 321. 



192 EAILEOAD OOBPOEATTOITS. [§ 142. 

operate a railway; the latter may be mortgaged without 
the former, and may pass to a purchaser at a foreclosure 
sale. But such mortgage confers no right upon purchas- 
ers at foreclosure sale to exist as the same corporation; 
if it confers any right of corporate existence upon them, 
it is only a right to reorganize as a corporation, subject 
to laws existing at the time of reorganization. 1 

§ 142. Consolidation and amalgamation — Definition. — 
The " consolidation " of a corporation has been defined 
to be " a surrender of the old charters by the companies, 
the acceptance thereof by the legislature, and the forma- 
tion of a new corporation out of such portions of the old 
as enter into the new." 2 The more modern understand- 
ing of a consolidation, however, might be better stated 
by saying that when the rights, franchises and effects of 

1 Memphis R Co. v. Commissioners, 112 U. S. 609; Railroad Co. v. 
Georgia, 98 U. S. 359; Eldridge v. Smith, 34 Vt. 484. 

In Eldridge v. Smith, supra, the court say: " When a railroad com- 
pany mortgages its road and appurtenances as a security for debt, 
and also its franchise, it is not to be understood as conveying its 
corporate existence or its general corporate powers, but only the 
franchise necessary to make the conveyance productive and bene- 
ficial to the grantees, to maintain and support, manage and operate 
the railroad, and receive the tolls and profits therefor for their own 
benefit. If it were held that all the corporate franchises, including 
the power of corporate existence, were conveyed by the mortgage, 
the conclusion would seem to be logical that, on breach and fore- 
closure, the mortgagees would step into the shoes of the company 
a,nd merely succeed to their rights in the property, and also to their 
corporate liabilities — a result by no means favorable to their inter- 
ests. Or, if it were held that the mortgagees did not succeed to the 
corporate existence and functions of the railroad company, and that 
they did not remain in the company, then it must operate as a dis- 
solution of the company, and lands taken compulsorily for their road 
would revert to the owners in fee." 

2 State v. Bailey, 16 Ind. 46; Lauman v. Lebanon Valley R Co., 30 
Pa. St. 43. 



■§ 142.] EAILKOAD COEPOEATIONS. 



193 



two or more corporations are by legal authority and 
agreement of the parties combined and united into one 
whole, and committed to a single corporation, the stock- 
holders of which are composed of those of the companies 
thus agreeing, this is in law a consolidation, whether 
the consolidated company be a new one then created, or 
•one of the original companies continuing in existence 
with only larger rights, capacities and property. 1 " Amal- 
gamation " has been declared to be when the existing 
■companies agree to abandon their respective articles of 
association and regulation, and to register themselves 
under new articles as one body. This would be a new 
■company formed by the coalition or amalgamation of the 
companies previously existing. 3 The expression "amal- 
gamation," however, is of English origin, has never ap- 
pealed to the judicial sense of this country, and is seldom 
used to designate the union of two or more corporations, 
the word " consolidation " being the term in common use. 3 

1 Meyer v. Johnston, 64 Ala. 603; Houston & Tex. Cent R. R v. 
•Shirley, 54 Tex 125, 4 Am. & Eng. Ency. of Law, 272. 

2 In re Bank of Hindustan, 2 Hen. & M. 66, L. R. 5 Ch. 400; Clinch 
-v. Financial Corp., 4 Ch. App. 117; In re Empire Assurance Corp., 
L. R. 4 Eq. 341. 

8 In Meyer v. Johnston, supra, Manning, J, in discussing the adop- 
tion of the word "amalgamate," says: "In its origin and use it is 
peculiarly technical. It pertains especially to the arts, and belongs 
to the language of physical science; and inasmuch as by amalgama- 
tion, as ordinarily understood, a material product results which, by 
transfusion into it of the properties and qualities of the two or more 
materia] things from whose union it proceeds, partakes of the nature 
of each, and is yet unlike either, it is not surprising that English 
judges have had trouble in perceiving the appropriateness of the 
■word to not a few of the cases of united corporations that have 
come before them. When parties and parliament, in providing for 
the union of two or more corporations, passed by familiar words 
that were not inapplicable, and have a broader meaning — such as 
•combination, conjunction, association, union, coalition, consolida- 
13 



194 RAILROAD CORPORATIONS. [§ 143. 

§ 143. Power of companies to consolidate. — It is well 
settled that corporations can only consolidate with the 
consent and authority of the legislature. 1 Such authority 
to consolidate may be conferred in the original charter, 2 or 
by the provisions of a general or special act of the legis- 
lature, 3 or, it has been held, even by the express sanction 
of an unauthorized agreement. 4 But such consolidation 
to be valid must obtain the assent of the legislature either 
by express grant or necessary implication. 5 Accordingly, 
it was held in a leading American case that where two 
separate corporations were created to build railroads, they 
had no right, without express authority, tp unite and con- 
duct their business under one management, nor to estab- 
lish a steamboat line to run in connection with railroads. 6 ' 
So, in the absence of authority conferred by the charter, 
an agreement between directors of corporations to con- 
solidate and merge the two into a new corporation is 
ultra vires, although such invalid agreement has been 
partly performed. 7 

tion — and selected, as expressive of their purpose, so technical a 
term as 'amalgamation,' judges felt constrained to preserve, as far 
as possible, its original and peculiar signification, in their new ap- 
plication of it to legal subjects." 

1 International R. Co. v. Bremond, 53 Tex. 96; Charlton v. New- 
Castle R. Co., 5 Jur. (N. S.) 1096; State v. Bailey, 16 Ind. 46; Central 
Ry. Co. v. Georgia, 40 Ga. 582; s. C, 92 U. S. 665; State v. Green Co., 
54 Mo. 540; Denike v. Lime Co., 80 N. Y. 599; s. 0., 5 Fed. Rep. 19; 
Shields v. Ohio, 95 U. S. 319; Sharon Coal Co. v. Fulton Bank, 7 Wend. 
412; Pearce v. Madison R. Co., 21 How. (U. S.) 441". 

2 Nugent v. Supervisors, 19 Wall. (IT. S.) 241. 

'Bishop v. Brainerd, 28 Conn. 289; Black v. Canal Co., 22 N. J. Eq. 
130; Southall v. Insurance Co., L. R. 11 Eq. 65. 

<McAuley v. Columbus R. Co., 83 III 348; Mead v. N. Y. etc. R. 
Co., 45 Conn. 199. 

6 Fisher v. Evansville R. Co., 7 Ind. 407. 

6 Pearce v. Madison, etc. R. Co., 21 How. (U. S.) 441. 

i Greenville Compress v. Planters' Press, 70 Miss. 669. 



§ 144.J RAILROAD CORPORATIONS. 195 

§ 144. Effect of consolidation. — The effect of consoli- 
dating two or more corporations has been variously stated 
by different courts. Declaring that one of the companies 
loses its actual identity, abandons its name, and therefore 
its legal identity and its corporate existence, and can no 
longer claim any legal recognition ; that such a merger is 
a dissolution destroying the actual identity of both, while 
the legal identity of one of them is preserved. 1 That such 
consolidation or amalgamation works a dissolution of the 
corporations previously existing, and at the same instant 
creates a new corporation, with property, liabilities and 
stockholders derived from those passing out of existence. 2 

1 Lauman v. Lebanon Valley E. Co., 30 Pa. St. 42. 

2 Miller & Mississippi, etc. R. Co. v. Lancaster, 5 Coldw. (Tenn.) 514; 
Clearwater v. Meredith, 1 Wall. (IT. S.) 40; Mowrey v. Indiana, etc. 
R Co., 4 Biss. (IT. S.) 85; State v. Railroad Co., 66 Me. 488; Shields v. 
Ohio, 95 U. S. 324; Railroad Co. v. Georgia, 98 U. S. 359; Central R. 
Co. v. Georgia, 92 U. S. 665; State v. Sherman, 22 Ohio St. 411; State 
ex rel. Wine v. Keokuk, etc. R. Co., 99 Mo. 30; Maine Cent. R. Co. 
v. Maine, 96 U. S. 499; Atlantic, etc. R. Co. v. State, 55 Ga. 312; 
Railway Co. v. Berry, 113 U. S. 465; Memphis, etc. R. Co. v. Railroad 
Comtn., 112 U. S. 609; Railroad Co. v. Palmes, 109 IT. S. 244; Keokuk, 
etc. R. Co. v. State, 152 U. S. 301; Edison E. L. Co. v. New Haven 
E. L. Co., 35 Fed. Rep. 233; Bank v. Colby, 21 Wall. (IT. S.) 609; Pom- 
eroy v. Bank, 1 Wall. (U. S.) 23; Racine R. Co. v. Farmers' L. & T. 
Co., 49 111. 331; Houston R. Co. v. Shirley, 54 Tex. 125; Ferguson v. 
Meredith, 1 Wall. (IT. S.) 25; Fee v. Gas Co., 35 La. Ann. 413; Gas Co. 
v. Manufacturing Co., 115 IT. S. 697. 

In Railroad Co. v. Georgia, 98 IT. S. 359, Mr. Justice Strong, in re- 
ferring to the act under whioh the respective companies were em- 
powered to consolidate their stocks, and discussing the effect of 
such consolidation, said: 

" It is conceded that under this act a consolidation took place. It 
is therefore a vital question, What was its effect? Did the consoli- 
dated companies become a new corporation, holding its powers and 
privileges as such under the act of 1863? Or was the consolidation 
a mere alliance between two pre-existing corporations, in which 
each preserved its identity and distinctive existence? Or, still fur- 



196 EAILEOAD COEPOEATIONS. [§ 144. 

That the effect of consolidation upon former companies, 
except so far as the contrary may be provided by statute, 
is to dissolve all the old corporations and to create a new 
one, assuming the liabilities and succeeding to the rights 

ther, was it an absorption of one by another, whereby the former 
was dissolved, while the latter continued to exist? The answer to 
these inquiries must be found in the intention of the legislature as 
expressed in the consolidating act. "We think that intention was 
the creation of a new corporation out of the stockholders of the two 
previously existing companies. The consolidation provided for was 
clearly not a merger of one into the other, as was the case of Cen- 
tral Railroad & Banking Co. v. Georgia, 92 U. S. 665. Nor was it a 
mere alliance or confederation of the two. If it had been, each 
would have preserved its separate existence as well as its corporate 
name. But the act authorized the consolidation of the stocks of the 
two companies, thus making one capital in place of two. It con- 
templated, therefore, that the separate capital of each company 
should go out of existence as the capital of that company; and, if 
so, how could either have a construed separate being? True, the 
proviso to the first section declared that nothing therein contained 
should relieve or discharge either of the companies from any con- 
tract theretofore entered into by either, adding: 'But this company 
■(that is, the company created by the act) shall be liable on the 
same.' 

" It is thus distinguished between the two original companies and 
the one contemplated to be formed by this consolidation. And the 
proviso would have been quite unnecessary had it not been thought 
by the legislature that the consolidation would work a dissolution 
of the amalgamated companies. Hence it was considered necessary 
to preserve the rights of parties who might have contracted with 
them. Only their contracts were mentioned in the proviso, and 
that in order to authorize a novation. . . . Looking thus at the 
legislative intent appearing in the consolidation act, we are con- 
strained to the conclusion that a new corporation was created by 
the consolidation effected thereunder in the place and in lieu of the 
two companies previously existing, and that whatever franchises, 
immunities or privileges it possesses it holds them solely by virtue 
of the grant that act made. That generally the effect- of consolida- 
tion, as distinguished from a union by merger of one company into 
another, is to work a dissolution of the companies consolidating, 



§144.] RAILROAD CORPORATIONS. 197 

of the old companies. 1 That the consolidation of two 
companies does not necessarily work a dissolution of 
both, and the creation of a new corporation. "Whether 
such be its effect is dependent upon the legislative intent 
manifested in the statute under which the consolidation 
takes place. 2 That consolidation is not a sale, and when 
two companies are authorized to consolidate their roads 
it is to be presumed that the franchises and privileges of 
each continue to exist in respect to the several roads so 
consolidated. 3 And that upon such consolidation the busi- 
ness of the old corporations is not wound up, nor their 
property sequestered or disturbed ; but the very object 
of the consolidation, and of the statutes which permit it, 
is to continue the business of the old corporation; Whether 

and to create a new corporation out of the elements of the former,, 
is asserted in many cases, and it seems to be a necessary result. . . . 
When as in this case the stock of two companies is consolidated, 
the stockholders become partners, or guasi-partners, in a new con- 
cern. Each set of stockholders is shorn of the power which, as a 
body, it had before. Its action is controlled by a power outside of 
itself. To illustrate: The stockholders of the Savannah & Albany 
Railroad Company could not, after consolidation, have exercised 
any of the powers or franchises they had prior to their consolida- 
tion with the stockholders of the Atlantic & Gulf Railroad Com- 
pany. They could not have built their road or controlled its man- 
agement. They could not, therefore, have performed the duties 
which by their original charter were imposed upon them. . . . 
Their powers, their franchises and their privileges were therefore 
gone, no longer capable of exercise or enjoyment. Gone where? 
Into the new organization, the consolidated company, which exists 
alone by virtue of the legislative grant, and which has all its pow- 
ers, facilities and privileges by virtue of the consolidation act." 

iMcMahan v. Morrison, 16 Ind. 172; Paine v. Lake Erie, etc. Co., 
31 Ind. 283; Zimnier v. State, 30 Ark. 677; Robertson v. Rockford, 
21 111. 451; Railroad Co. v. Maine, 96 IT. S. 499; Thompson v. Abbott, 
61 Mo. 176; Chicago, etc. Co. v. Moffitt, 75 111. 524. 

2 Central R. Co. v. Georgia, 92 U. S. 665. 

8 Green Co. v. Conness, 109 U. S. 104. 



198 KAILEOAD CORPOKATIONS. [§ 145. 

the old corporations are dissolved in the new corporation, 
or are continued in existence under a new name and with 
new powers, and whether in either case the consolidated 
company takes the property of each of the old corpora- 
tions charged with a lien for the payment of the debts 
of that corporation, depends upon the terms of the agree- 
ment of consolidation and the statutes under whose au- 
thority the consolidation is effected. 1 

§145. Effect of interstate consolidation. — In general, 
the status of a consolidated company, formed by the 
union or consolidation of two or more companies of dif- 
ferent states, is an association incorporated in and by each 
of the states, and where acting as a corporation in either 
of the states, it acts under the authority of the charter of 
the state in which it is then acting, and that only, the 
legislation of the ojher states having no operation beyond 
its territorial limits. 2 Nor does the consolidation of the 
stock of two companies of different states constitute the 
corporations thus consolidated one corporation of both 
states, or of either, but the corporation of each state con- 
tinues a corporation of the state of its creation, although 
the same persons, as officers and directors, manage and 
control both corporations as one body. Such a consoli- 
dation does not convert the respective corporations into 
one company in the same way and to the same degree 
that might follow a consolidation of two companies within 
the same state. 3 So, where two corporations of different 

1 Wabash, St. Louis, etc. Co. v. Ham, 114 U. S. 587. 

2 Quinoy Bridge Co. v. Adams Co., 88 111. 615; Attorney-General v. 
Boston, etc. R. Co., 109 Mass. 99; Bridge Co. v. Metz, 32 N. J. L. 199; 
McGregor v. Erie, etc. R. Co., 85 N. J. L. 115, Id. 89; Chicago, etc. 
Co. v. Chicago, etc. R. Co., 6 Biss. 219; Sprague v. Hartford, etc. Co., 
5 R. I. 233. 

3 Racine, etc. R. Co. v. Farmers,' etc. Co., 49 111. 331; Ohio, etc. R. 



§ 146.] RAILROAD CORPORATIONS. 199 

states are consolidated by virtue of acts of assembly of 
the two states, the consolidated company is subject to the 
control of each state as far as concerns its property and 
business therein, 1 and is to be treated in each state as a 
domestic corporation. 2 And where two corporations of 
different states are consolidated under lawful authority, 
one of which was subject in one state to a mortgage prior 
to such consolidation, the courts of the other state do not 
thereby acquire jurisdiction so as to enforce a foreclosure 
of the mortgage. 3 

§ 146. Rights and liabilities of consolidated company. — 
As a general rule a consolidated company has all the 
rights and powers and is subject to all the liabilities of 
the various corporations of which it may be composed. 4 
Accordingly, it may take advantage of all contracts and 

Co. v. Wheeler, 1 Blaokf. (U. S.) 297; Farnum v. Canal Co., 1 Sumn. 
<U. S.) 46; Delaware Tax Cases, 18 Wall. (U. &) 206. 

i Peck v. Chicago & N. W. R. Co., 94 U. S. 164. 

^ Sage v. Lake Shore, etc. R Co., 70 N. Y. 220. 

3 Eaton, etc. Co. v. Hunt, 20 Ind. 457. 

* Philadelphia v. Ridge Ave. etc. R. Co., 143 Pa. St. 444, 102 Pa. St. 
190; Root v. Oil Creek, etc. Co., 31 Phila. Leg. 140; Lake Shore, etc. 
Co, v. Hutchins, 37 Ohio St. 282; Coyley v. Coburg, etc. Co., 14 Grant's 
Cas. (Pa.) 571; Cashman v. Brownlee, 128 Ind. 266; Ridge Ave. etc. 
Co. v. Philadelphia, 124 Pa. St. 219; McAlpine v. Union Pac. Co., 23 
Fed. Rep. 168, 129 U. S. 305; Warren v. Mobile, etc. Co., 49 Ala. 582; 
New Bedford, etc. Co. v. Old Colony Co., 120 Mass. 397; Marsh v. New 
York, etc. Co., 45 Conn. 199; Paine v. Lake Erie, etc. Co., 31 Ind. 283; 
Chicago, etc. Coal Co. v. Hall, 34 N. E. Rep. 704; Western, etc. Co. v. 
Smith, 75 111. 497; Joy v. St. Louis, 138 U. S. 1; Whipple v. Union 
Pac. R. Co., 28 Kan. 474; Louisville, etc. Co. v. Boney, 117 Ind. 501; 
Cleveland, etc. Co. v. Prewitt. 33 N. E. Rep. 367; Indianapolis, etc. 
Co. v. Jones, 29 Ind. 465; Columbus, etc. Co. v. Powell, 40 Ind. 37; 
Chicago, etc. Co. v. Moffitt, 75 111. 524; Coggin v. Central R. Co., 62 
■Ga. 685; State v. Baltimore, etc. R. Co., 77 Md. 489; Northern Cent. 
R. Co. v. Drew, 3 Woods (U. S.), 391; Smith v. Los Angeles, etc. Co., 
78 CaL 289. 



200 EAILEOAD COEPOEATTOITS. [§ 147". 

enforce all debts of the old companies. 1 So a consolidated 
company is liable for all torts committed by the compa- 
nies of which it is composed, prior to consolidation. 2 The 
presumption is, however, that where two companies are- 
consolidated, each of them will be respectively held with 
the privileges and burdens originally attaching thereto,, 
unless the contrary is expressed. 3 But where one corpo- 
ration goes entirely out of existence by being consolidated 
or merged into another, and no arrangements are mad& 
respecting the property and liabilities of the extinguished 
corporation, the newly-created one will be entitled to all 
the property. 4 And where the indebtedness of an old 
company has not ripened into a lien, the effect of consoli- 
dation with another is to release the former of all in- 
debtedness where the latter becomes the proprietor of 
the property and franchises of the former. 5 

§ 147. Consolidation as affecting stockholders. — As a 
general rule stockholders are not bound by an act of con- 
solidation without their consent. 6 The relation between 

1 Atchison, etc. R Co. v. Commissioners, 25 Kan. 261 ; Niantic Sav. 
Bank v. Douglas, 5 111. App. 579; Powell v. North. Mo. R. R. Co., 42 
Mo. 63. 

2 Chicago, etc. Co. v. Moffltt, 75 111. 524; Coggin v. Central R Co., 
62 Ga. 685; New Bedford R. Co. v. Old Colony R. Co., 120 Mass. 397. 

3 Tomlinson v. Branch, 15 Wall. (U. S.) 460; New Jersey, etc. Ry- 
Co. v. Straight, 35 N. J. L. 322; Fisher v. New York, etc. Co., 46 N. Y- 
644; Rome, etc. R. Co. v. Ontario, etc. Co., 16 Hun (N. Y.), 445; Rail- 
road Co. v. Maine, 96 U. S. 497; Philadelphia, etc. R Co. v. Maryland, 
10 How. (U. S.) 376. 

4 Thompson v. Abbott, 61 Mo. 176; Lightner v. Boston, etc. R. Co., 
1 Low. (IT. S.) 338; County of Scotland v. Thomas, 94 U. S. 682; 
State v. Green Co., 54 Mo. 540; Nugent v. Supervisors, 19 WalL 
(U. S.) 241. 

5 Bruffett t. Great Western R. Co., 25 111. 353. 

« McCray v. Junction, etc. R Co., 9 Ind. 358; Campbell's Case, 8- 
Eng. Rep. 678; Clearwater v. Meredith, 1 Wall. (U. S.) 25; State v. 



§ 147.] RAILROAD CORPORATIONS. 201 

a stockholder and a corporation is one of contract, and 
any legislative enactment authorizing a material change 
in the powers or purposes of a corporation not in aid of 
the original object, if acted upon by the corporation, is 
not binding upon the stockholder without his consent. 1 
Accordingly, stockholders of the old corporations who do 
not enter into the new are entitled to withdraw their 
shares and may enjoin until they are secured. 2 The rea- 
sons why non-consenting shareholders are not bound by 
such act of consolidation are forcibly and clearly stated 
by Mr. Justice Lowrie in Lauman v. Lebanon R. Co., supra. 
He there said : " The disseutiate shareholder may object 
that his co-corporators have no power to make a new 
contract for him and thereby constitute him a member 
of a new and different corporation ; for it is of the very 
nature of a contract relation that it can be instituted only 
by real parties to it, unless it be a mere constructive con- 
tract, which is only a convenient form or fiction of law, 
invented to enforce a corresponding legal duty. He may 
object that even the legislature cannot authorize this, for 
by so doing they would authorize the destruction of one 
private contract and the compulsory creation of another 
in its stead, and would take away the remedy by due 
course of law which the dissenting shareholder is entitled 
to because of the departure or the diversion of the asso- 
ciation from its agreed purposes; and would, besides 
this, change the essential nature of contracts, which even 
legislative power cannot do, and much less legislative au- 
thority." 

Bailey, 16 Ind. 46; Spering's Appeal, 71 Pa. St. 11; Lauman v. Leb- 
anon R. Co., 80 Pa. St. 42. 

1 McCray v. Junction By., 9 Ind. 358. 

2 State v. Bailey, 16 Ind. 46; Spering's Appeal, 71 Pa. St. 11; Clear- 
water v. Meredith, 1 Wall. (U. S.).25. 



202 EAILBOAD COKPOKATIONS. [§ 148. 

§ 148. Consolidation as affecting taxation.— When two 
corporations are consolidated into one by act of the legis- 
lature, an exemption from, taxation contained in the 
charter of one of such corporations will not, by such con- 
solidation, be extended to the property of the other, 
whose charter contained no such exemption, which by 
the consolidation became joint property ; and in the ab- 
sence of a clear expression of intent to the contrary, the 
property of each of the united corporations will be held, 
after such consolidation, with the same privileges and 
burdens as ordinarily attached thereto. 1 So where two 
or more corporations, subjected to a special tax upon the 
net income of their roads, with immunity from other tax- 
ation, the amount of such special tax being dependent 
upon reports to be made and information to be communi- 
cated by their directors and other officers, are consolidated 
into a new corporation with different directors and other 
officers, who are neither bound nor able to make reports 
and give the information required of the original com- 
panies, the new corporation thus created is not entitled 
to the immunity of the original corporations from general 
taxation. 2 But where two railroad corporations whose 
shares are, by a state statute, exempt from taxation in 
the state, consolidate themselves into a new company 
under a state law, which makes no provision to the con- 
trary, and issues shares in the new company in exchange 
for shares in the old company, the right of exemption 
from taxation in the state passes into the new shares,' and 
into each of them. 3 The same is true where three rail- 

1 State v. Commissioners, 37 N. J. L. 228; Philadelphia, etc. Co. v. 
Maryland, 10 How. (IT. S.) 376; Tomlinson v. Branch, 15 Wall. (U. S.) 
460; Delaware Tax Cases, 18 Wall. (U. S.) 206; Central Railroad v. 
Georgia, 92 IT. S. 665; Branch v. Charleston, 92 XJ. S. 677. 

2 Railroad Co. v. Maine, 96 U. 8. 499. 

a Tennessee v. Whitworth, 117 U. S. 129. 



§ 149.] EAILR0AD COKPOKATIONS. 203 

roads consolidate, one of which is a corporation of an- 
other state, unless the law of that state makes provision 
to the contrary. 1 

§149. "Trusts" or illegal combinations.— A. "trust" 
may be denned to be a voluntary association by and be- 
tween the stockholders of two or more corporations, 
engaged in a like business, to contribute their stock shares 
and agree to share the profits of such business on all the 
shares when placed in a common fund, agreeing indi- 
rectly also to share the losses naturally falling upon stock- 
holders in other companies in which no profits are made. 2 
Such a trust or combination is usually consummated by an 
agreement where all or a majority of the stockholders 
of a corporation transfer their stock to certain trustees, 
in consideration of the agreement of the stockholders of 
other companies and of the members of limited partner- 
ships engaged in the same business to do likewise ; by 
which agreement all are to receive, in lieu of their stocks 
and interests so transferred, trust certificates, to be is- 
sued by the trustees, equal at par to the par value of their 
stock and interests ; and by which the trustees are em- 
powered, as apparent owners of the stock, to elect direct- 
ors of the several companies, and thereby control their 
affairs in the interests of the trust so created ; and are to 
receive all dividends made by the several companies and 
limited partnerships, from which, as a common fund, 
dividends are to be made by the trustees to the holders 
of the trust certificates. Such a trust or combination en- 
tered into by corporations has been held as tending to 
create a monopoly, to control production as well as prices, 
and is against public policjr, illegal and void. 3 

x Pearce v. Madison, etc. R. Co., 21 How. (U. S.) 441; Balfour v. 
Ernest, 5 C. B. (N. S.) 691, 28 L. J. (C. P.) 170. 

2 The Legality of Trusts, p. 621, by Theodore W. Dwight. 

3 State v. Standard Oil Co., 49 Ohio St. 137; American Preserves 



204 RAILROAD CORPORATIONS. [§ 149. 

Trust v. Taylor Mfg. Co., 46 Fed. Rep. 152; People v. Chicago Gas 
Trust, 130 111. 268; Emery et al. v. Ohio Candle Co., 24 N. E. Rep. 
600; Richardson v. Buhl, 77 Mich. 632; People v. North River Sugar 
Refining Co., 131 N. Y. 582; Mallory v. Hannauer Oil Works, 86 
Tenn. 598; New York, etc. Canal Co. v. Fulton Bank, 7 Wend. (N. Y) 
412; Clearwater v. Meredith, 1 Wall. 29; Whittenton Mills v. Upton, 
10 Gray (Mass.), 582. 

In People v. The North River Sugar Refining Co., supra, in a gen- 
eral discussion of this subject, the court say: 

"It remains to determine whether the conduct of the defendant 
in participating in the creation of the trust, and becoming an ele- 
ment of it, was illegal, and tended to the public injury; and we may 
consider the two questions together, and without formal separation. 
It is quite clear that the effect of the defendant's action was to di- 
vest itself of the essential and vital elements of its franchise by 
placing them in trust; to accept from the state the gift of corporate 
life, only to disregard the conditions on which it was given; to re- 
ceive its powers and privileges merely to put them in pawn ; and to 
give away to an irresponsible board its entire independence and self- 
control. When it had passed into the hands of the trust, only the 
shell of a corporation was left standing as a seeming obedience to 
the law, but with its internal structure destroyed or removed. Its 
stockholders, retaining their beneficial interests, have separated 
from it their voting powers, and so parted with the control which 
the charter gave them and the state required them to exercise. It 
has a board of directors nominally and formally in office, but quali- 
fied by shares which they do not own, and owning their official life 
to the board which can end their power at any moment of disobedi- 
ence. It can make no dividends, whatever may be its net earnings, 
and must incumber its property at the command of its master, and for 
purposes wholly foreign to its own corporate interests and duties. 
At the command of that master it has ceased to refine sugar, and, 
without any doubt, for the purpose of so far lessening the market 
supply as to prevent what is termed 'overproduction.' In all these 
respects it has wasted and prevented the privileges conferred by the 
charter, abused its powers, and proved unfaithful to its duties. But 
graver still is the illegal action substituted for the conduct which 
the state has a right to expect and require. It has helped to create 
an anomalous trust, which is, in substance and effect, a partnership 
of twenty separate corporations. The state permits in many ways 
an aggregation of capital, but, mindful of the possible dangers to the 
people, overbalancing the benefits, keeps upon it a restraining hand, 



§ 149.] EAILEOAD COEPOEATIONS. 205 

and maintains over it a prudent supervision, where such aggrega- 
tion depends upon the permission and grows out of corporate grants. 
It is a violation of law for corporations to enter into partnerships. 
. . . That the combination of the refineries partakes of the nature 
of a partnership is not denied. Indeed, in one of the papers added 
to the appellant's brief, it is not only admitted, but asserted and 
defended. This paper shows quite clearly that by force of the ar- 
rangement there was a community of interest in the fund created 
by the corporate earnings before division, and that each member 
of the trust shared in the profit and loss of all. It is said, however, 
that a consolidation of manufacturing corporations is permitted by 
the law, and that the trust or combination or partnership, however 
it may be described, amounts only to a practical consolidation, which 
public policy does not forbid, because the state permits it. . . . 
The refineries did not avail themselves of the statute. They chose 
to disregard it, and to reach its practical results without subjecting 
them to the prudential restraints with which the state accompanied 
its permission. If there had been a consolidation under the statute, 
one single corporation would have taken the place of the others dis- 
solved. They would have disappeared utterly, and not, as under the 
trust, remained in apparent existence to threaten and menace other 
organizations, and occupy the ground which otherwise would be 
left free. Under the statute, the resultant combination would itself 
be a corporation deriving its existence from the state, owing duties 
and obligations to the state, and subject to the control and super- 
vision of the state; and not, as here, an unincorporated board, a 
colossal and gigantic partnership having no corporate functions and 
owing no corporate allegiance. Under the statute, the consolidated, 
taking the place of the separate, corporations, could have capital 
stock only in an amount equal to the fair aggregate value of the 
rights and franchises of the companies absorbed; and not, as here, 
a capital stock double that value at the outset, and capable of an 
elastic and irresponsible increase. The difference is very great, and 
serves further to indicate the inherent illegality of the trust com- 
bination. 

" And here I think we gain a definite view of the injurious tend- 
encies developed by its organization and operation, and of the public 
interests which are menaced by its action. As corporate grants are 
always assumed to have been made for the public benefit, any con- 
duct which destroys their nominal functions, and maims and crip- 
ples their separate activity and takes away their free and independ- 
ent action, must so far disappoint the purpose of their creation as 



206 RAILROAD CORPORATIONS. [§ 149. 

to affect unfavorably the public interests; and that to a much 
greater extent when, beyond their own several aggregations of cap- 
ital, they compact them all into one combination which stands out- 
side the ward of the state, which dominates the range of an entire 
industry and puts upon the market a capital stock proudly defiant 
of actual value and capable of an unlimited expansion. It is not a 
sufficient answer to say that similar results may be lawfully accom- 
plished, that an individual having the necessary wealth might have 
bought all their refineries, manned them with his own chosen agents 
and managed them as a group at his sovereign will; for it is one 
thing for the state to respect the rights of ownership and protect 
them out of regard to the business freedom of the citizen, and quite 
another thing to add to that possibility of further extension of those 
consequences by creating artificial persons to aid in producing such 
aggregations. The individuals are few who hold in possession such 
enormous wealth, and fewer still who peril it all in a manufactur- 
ing enterprise; but if corporations can combine and mass their fort- 
unes in a solid trust or partnership, with little added risk to the 
capital already embarked, without limit to the magnitude of the 
aggregation, a tempting and early road is opened to enormous com- 
binations vastly exceeding in number and in strength and in their 
power over industry any possibilities of individual ownership: and 
the state, by the creation of the artificial persons constituting the 
elements of the combination, and failing to limit and restrain their 
power, becomes itself the responsible creator, the voluntary cause, 
of an aggregation of capital which it simply endures in the individ- 
ual as the product of its free agency. What it may bear is one 
thing; what it should cause and create is quite another." 



- CHAPTEE X. 

THE DOCTRINE IN ITS RELATION TO DIRECTORS AND 

OTHER OFFICERS AND AGENTS OF CORPORATIONS: 
§ 150. Introductory. 

151. Distinction between corporate acts and unauthorized acts of 

directors. 

152. Test to distinguish acts of directors from corporate acts. 

153. Directors as trustees. 

154. General powers of directors. 

155. Instances of directors' powers. 

156. General liability of directors. 

157. Power of bank directors. 

158. Liability of bank directors. 

159. Powers and liabilities of bank president. 

160. Powers and duties of bank cashier. 

161. Instances of cashier's powers. 

§ 150. Introductory. — In the adjudications by the 
courts of the various questions arising out of the dealings 
and business transactions of corporations in this coun- 
try, the unauthorized acts and contracts of the directors 
and other agents of the corporation have been so fre- 
quently confounded and regarded as the acts and con- 
tracts of the corporation itself, thereby involving the 
doctrine of ultra vires in a maze of uncertainty and con- 
fusion, that it is deemed proper to give some attention 
and devote some space to the examination of the office 
and powers of this very numerous class of corporate rep- 
resentatives. 

§ 151. Distinction letween corporate acts and unauthor- 
ized acts of directors. — Much of the unintelligible con- 
fusion which has arisen in many of the state courts in the 
application of the doctrine of ultra vires is the result of 



208 DIKECTOES AND AGENTS. [§ 151. 

confounding the distinction between a corporation and 
its directors or other representatives. To properly apply 
this doctrine and arrive at its legitimate construction, 
such distinction should be carefully observed and kept 
steadily in mind, to avoid confusion. Ordinarily, the man- 
aging officers or directors of a corporation and the corpo- 
ration itself are regarded as identical ; and as the acts of 
such officers or directors, when within the scope of the 
corporate powers, are held to be the acts of the corpora- 
tion itself, the former is often meant when the latter is 
mentioned, and the acts of the one confounded with the 
acts of the other. As was remarked in one of the open- 
ing paragraphs of this work, a corporation is an ideal 
person, intangible, invisible, and, to a certain extent, is 
invested with the elements of immutability. 1 The direct- 
ors are simply the agents of the corporation, and when 
their acts are confined within the limits of the agency 
they are a perfect representative. Beyond that — acts 
committed ultra vires the corporation — their actions may 
be regarded as unlawful usurpations. The charter of the 
corporation may properly be said to be its constitution, 
and the powers therein recited the limit of its authority. 
"Whatever may be attempted, therefore, outside the, scope 
of its prescribed powers, is not the act of the corpora- 
tion — the ideal person — but is the unauthorized act of 
the agent. As the corporation can act only by law, the 
logical deduction would be that whatever it does must be 
lawful. A priori, that which is unlawful, because made 
so by the law of its creation, is not the act or deed of the 
corporation, but is a wrong or usurpation of those who 
falsely act in'its name. 2 

1 See § 2, ante. 

2 In Bank of United States v. Dandridge, 13 Wheat. 64, the court 
say: "It is most manifest that the corporation is altogether a dis- 
tinct body from the directors, possessing all the general powers and 



I 152.] JDIEEOTOES AND AGENTS. 20$ 

§ 152. Test to distinguish acts of directors from corpo- 
rate acts.— To distinguish the acts of a corporation from 
the unauthorized acts of the directors, a test has been 
very clearly laid down by Vice-chancellor Wickens in the 
case of Pickering v. Stephenson, L. K. 14 Eq. 340. The 
learned vice-chancellor, in discussing the powers which 
directors may exercise, said: "To distinguish unauthor- 
ized acts of directors from those of the corporation, the 
test is whether the acts performed or the contracts en- 
tered into are for purposes which are reasonably in- 
cidental to the carrying on of the business of the com- 
pany. To arrive at this determination, the charter, which 
is the constitution of the corporation, and the law under 
which it is organized, must be consulted. Bona fides can- 
not be the sole test ; otherwise, it is truly said, you might 
have a lunatic conducting the affairs of the company, and 
paying away its money with both hands in a manner per- 
fectly bona fide, yet perfectly irrational. The test must 
be what is reasonably incidental and within the reason- 
able scope of carrying on the business of the company." 

attributes of an aggregate corporation, and entitled to direct and 
superintend the management of its own property and the govern- 
ment of the institution, and to enact by-laws for this purpose. So 
far as the act delegates authority to the directors, the latter possess 
it, and may exercise it, not as constituting the corporation itself, 
hut as its express statutory agents to act in the ordinary business 
of the institution. The directors are created a board, and not a cor- 
porate body. If the authority delegated to them can only be ex- 
pressed by them when assembled as a board, with a proper quorum, 
and not by the separate assent of a majority of the whole body, 
still it is clear that their meeting and acts are but the meetings and 
acts of a board of agents acting ex officio, and not the meetings and 
acts of the corporation itself. The whole structure of the charter, 
and the whole proceedings under it, as well as the by-law3 and reg- 
ulations which have come under our review, demonstrate that this 
has been the uniform construction of the corporation itself and of 
the directors." 
14 



210 DIEECTOES AND AGENTS. [§ 1531 

§ 153. Directors as trustees. — The relation of a di- 
rector to the stockholders of the corporation is generally 
regarded as analogous to the position of a trustee towards 
his cestui que trust. 1 This statement of his relation, how- 
ever, must be taken with some modification, as, technic- 
ally, there is an essential distinction between a director 
and a trustee, which has been stated as follows: "A 
trustee is a man who is the owner of property and deals 
with it as a principal, as owner, and as master, subject 
only to an equitable obligation to account to some per- 
sons to whom he stands in the relation of trustee, and who 
are his cestui que trust. The same individual may fill the 
office of director and also be a trustee having property^ 
but that is rare, exceptional, and a casual circumstance. 
The office of director is that of a paid servant of the com- 
pany. A director never enters into a contract himself, but 
he enters into contracts for his principal, that is, for the 
company of whom he is a director, and for whom he is 
acting. He cannot sue on such contracts, nor be sued on 
them unless he exceeds his authority. That seems to be 
the broad distinction between trustees and directors." 2 

1 Cumberland, etc. Co. v. Parish, 42 Md. 598; Aberdeen R. Co. v. 
Blaikie, 1 Macq. (H. L.) 461; Great Luxembourg R. Co. v. Magnay, 25 
Beav. 586; Hoffman, etc. Co. v. Cumberland, etc. Co., 16 Md. 456'; 
s. 0., 20 Md. 117; Attorney-General v. Wilson, 1 Craig & P. 1; Ben- 
son v. Heathorn, 1 Younge & C. 326; York, etc. R Co. v. Hudson, 
16 Beav. 495; Hoyle v. Plattsburg, etc. R. Co., 54 N. Y. 314; European, 
etc. R Co. v. Poor, 59 Me. 277; Ency. Law, vol. 17, p. 91, and cases 
cited; Spering's Appeal, 71 Pa. St. 11. 

2 Smith v. Anderson, 15 Ch. Div. 275. 

In Spering's Appeal, supra, Sharswood, J., speaking for the court, 
says: "It is by no means a well-settled point what is the precise re- 
lation which directors sustain to stockholders. They are undoubt- 
edly said in many authorities to be trustees, but that, as I appre- 
hend, is only in a general sense, as we term an agent or any bailee 
intrusted with the care and management of the property of an- 
other. It is certain that they are not technical trustees. They can 



§§ 154, 155.] DIRECTORS AND AGENTS. 211 

§ 154. General powers of directors. — It is a well estab- 
lished rule that the directors of a corporation are merely 
its agents for limited purposes, and they have no power 
to bind it by any acts or contracts outside the general 
scope of the powers conferred by the charter and by-laws 
of the corporation. 1 Being but agents, it can never be 
presumed that they have authority to transact business 
which the corporation itself is not authorized to engage 
in. 2 The power of directors of private corporations to 
bind them by contracts depends exclusively upon the 
charters and by-laws of such corporations. So the dec- 
larations and acts of directors will not bind or affect in 
any manner the corporation, unless they are within the 
scope of their ordinary powers. 3 

§155. Instances of directors' powers. — Directors of an 
insolvent corporation .cannot, as creditors of such corpo- 

only be regarded as mandataries — persons who have gratuitously- 
undertaken to perform certain duties, and they are therefore bound 
to apply ordinary skill and diligence, but no more. Indeed, as the 
directors are themselves stockholders, interested as well as all others 
that the affairs and business of the corporation should be success- 
ful, when we ascertain and determine that they have not sought to- 
make any profit not common to all the stockholders, we raise a 
strong presumption that they have brought to the administration 
their best judgment and skill. Ought they to be held responsible 
for mistakes of judgment or want of skill and knowledge? . . . 
I do not mean to say, by any means, that their responsibility is lim- 
ited to these cases, and that there might not exist such a case of 
negligence, or of acts clearly ultra vires, as would make perfectly 
honest directors personally liable." 

iBank of U. S. v. Dandridge, 12 Wheat. 64; Pickering v. Stephen- 
son, L. E. 14 Eq. 340; In re Faure Electric Co., 40 Ch. Div. 141; 
Spering's Appeal, 71 Pa. St. Ill; Overend & Gurney Co. v. Gibbs, 5. 
H. L. 480; Hodges v. Screw Co., 1 E. I. 322; Briggs v. Spaulding, 141 
U. S. 132. 

2 Alexander v. Cauldwell, 83 N. Y. 480. 

» Soper v. Buffalo R R Co., 19 Barb. (N. Y.) 310; East River Bank 
v. Hoyt, 41 id. 441. 



212 DIBE0TOE8 AND AGENTS. [§ 156. 

ration, secure to themselves a preference. 1 They may 
make a valid assignment of the property of the corpora- 
tion for the benefit of its creditors, even against the will 
of the stockholders. 2 "Where directors declare a dividend 
with knowledge that there are no profits, such action is 
illegal. 3 "Where an agreement has been made by the 
president of a railroad company, subject to the approval 
of the directors and stockholders, to do something which 
is ultra vires, and the directors have approved it, the 
court will interfere by injunction upon application of a 
single stockholder. 4 A director of a corporation cannot 
enforce a contract made with his co-director under which 
he is to have one-third of the profit for selling a railroad 
property, such contract being beyond the powers of the 
director to make. 5 So, also, resolutions passed by di- 
rectors, without any authority either by statute or charter, 
to assume the debts and to buy a majority of the stock 
and bonds and the equipments of a rival company, are 
ultra vires, and the proposed purchase could not be exe- 
cuted even if ratified by the stockholders. 6 

§ 156. General liability of directors. — As a general 
rule the directors of a corporation are only required in 
the management of its affairs to keep within the limits 
of its powers and to exercise good faith and honesty. 7 
They only undertake by virtue of the assumption of the 

1 Smith v. Putnam, 61 N. H. 632. 

2 Hutchinson v. Green, 91 Mo. 367. 
aSlayden v. Seip, 25 Mo. App. 439. 

«Elkins v. Camden, etc. R. Co., 36 N. J. Eq. 5; Hubbard v. Invest- 
ment Co., 14 Fed. Rep. 675. 

s Hubbard v. Investment Co., 14 Fed. Rep. 675. 

6 Elkins v. Camden, etc. R. Co., 36 N. J. Eq. 5. 

'Bank v. St. John, 25 Ala. 611; Smith v. Manufacturing Co., 29 
Ala. 503; Ryan v. Railroad Co., 21 Kan. 365; Shea v. Mabry, 1 Lea 
(Tenn.), 319; Vance v. Insurance Co., 4 Lea (Tenn.), 385. 



§ 157.] DIBECTOES AST) AGENTS. 213 

duties incumbent on them to perform those duties accord- 
ing to their best judgment and with reasonable diligence, 
and a mere error of judgment will not subject them to 
personal liability for its consequences. 1 And unless there 
has been some violation of the charter of the company, 
or unless there is shown to be a want of good faith, or a 
wilful abuse of discretion, or negligence, there will be no 
personal liability. 2 The degree of care and prudence 
which directors must exercise depends upon the subject 
to which it is applied, and each case must be determined 
in view of all the circumstances. 3 Directors are person- 
ally liable if they suffer the corporate funds or property 
to be wasted by gross negligence and inattention to the 
duties of their trust. 4 But a director will not incur per- 
sonal liability if the other party knew, or had equal 
means with the officer of knowing, that the act was be- 
yond his powers. 5 

§ 157. Powers ofbarilt directors. — However broad and 
general the powers of the directors may be for the gov- 
ernment of a bank by the general language of the charter 
and by-laws, those powers are not unlimited. The bank,, 
being a body corporate under the law, is a person, although 

1 Godbold v. Bank, 11 Ala. 191; Van Dyke v. McQuade, 86 N. Y. 38; 
Spering's Appeal, 71 Pa. St. 11; Hodges v. Screw Co., 1 R. 1. 322; Cit- 
izens' Bldg. Ass'n v. Coriell, 34 N. J. Eq. 383; Briggs v. Spaulding, 
141 U. S. 132. 

2 Overend v. Gibb, 5 H. L. 480; Hedges v. Pacquett, 3 Oreg. 77; 
Excelsior Co. v. Lacey, 63 N. Y. 422; Vance v. Insurance Co., 4 Lea 
(Tenn.), 385; Godbold v. Bank, 11 Ala. 191. 

3 Briggs v. Spaulding, 141 U. S. 132; Mor. Priv. Corp., §§ 551 et seq.; 
Citizens' Ass'n v. Coriell, 34 N. J. Eq. 383; Hodges v. Screw Co., 1 
R. I. 322. 

4 Robinson v. Smith, 3 Paige (N. Y.),222; Citizens' Ass'n v. Coriell, 
36 N. J. Eq. 383; Brinckerhoff v. Bostwick, 88 N. Y. 52. 

5 Bank of Augusta v. Earle, 13 Pet. (U. S.) 519. 



214 DIRECTORS AND AGENTS. [§ 158. 

artificial, with legal identity, and capable of owning and 
holding its own property. 1 They must exercise ordinary 
care and prudence in the administration of the affairs of 
a bank, and this includes something more than officiating 
as mere figure-heads; they are entitled under the law to 
commit the banking business, as defined, to their duly 
authorized officers, but this does not shield them from 
liability because of want of knowledge of wrongdoing, if 
that ignorance is the result of gross inattention. 2 Directors 
of a bank have no ownership in or title to the assets, and 
cannot act otherwise than as officers and agents of the 
bank. 3 

§ 158. Liability of hank directors. — If the directors of 
a bank knowingly issue spurious stock and obtain a loan 
on it, they are personally liable. 4 Bank directors are not 
chargeable with the assets of the bank as for property to ' 
which they have taken title or possession for some use or 
purpose, and unless they actually misappropriate them 
they cannot be held to account. 5 So a director of a bank 
is not liable to make good a loss occasioned by the fraud 
or misconduct of a co-director in which he had no part 
and which was perpetrated without his connivance or 
knowledge. 6 As a general proposition the liability of 
bank directors is subject to the same rules as apply to di- 
rectors of any other corporation, and the subject needs 
no separate consideration. 

i Morris v. Lee, 30 Fed. Rep. 298; Briggs v. Spaulding, 141 U. S. 132. 

2 Briggs v. Spaulding, 141 IT. 8. 132; Morris v. Lee, 30 Fed. Rep. 298. 

3 Morris v. Lee, supra; Exchange Bank v. Sibley, 71 Ga. 726; Bank 
of Augusta v. Earle, 13 Pet. 519; Bank of U. S. v. Dandridge, 12 
Wheat. (U. S.) 64. 

* Exchange Bank v. Sibley, 71 Ga. 726. 
8 Morris v. Lee, supra. 

6 Morris v. Lee, supra) Corgill v. Bower, 10 Ch. Div. 502; Perry's 
Case, 34 L. T. 716; Joint-stock Co. v. Brown, LE.8 Eq. 381; Weir v. 



§ 159.] DIKECTOKS AND AGENTS. 215 

§ 159. Powers and MaMlities of omik president.— In 
the absence of anything in the act of incorporation be- 
stowing special power upon the president of a bank, he 
has, from his mere official station, no more control over 
the corporate property and funds than any other director; 
and, unless his acts are shown to pertain to his official 
duties, or to be within the scope of his legitimate employ- 
ment, they cannot be regarded as the acts of the corpora- 
tion, and are not binding upon it. 1 So, in the absence of 
authority, the president cannot dispose of the cash and 
credits of the bank for the purpose of settling the demands 
of its creditors. 2 ISTor by virtue of his office can he sur- 
render or release any claims of the bank against any 
one. 3 It has been held, however, that when the president 
has been permitted by the directors to do acts not within 
the sphere of his official duties, and is thus held out to 
the public as having authority to do such acts, the bank 
will be bound on the ground of implied authority. 4 But 

Bell, 3 Exch. Div. 238; Turquand v. Marshall, L. R. 4 Ch. 376; Land 
Credit Co. v. Lord Fermoy, 8 Eq. 7; Wakeman v. Dalley, 51 N. Y. 27; 
Arthur v. Griswold, 55 N. Y. 400; Robinson v. Smith, 3 Paige (N. Y.), 
222. And see, as to general liability, Briggs v. Spaulding, 141 U. S. 
132; Spering's Appeal, 71 Pa. St. 11, 20; Citizens' Bldg. Ass'n v. Cor- 
nell, 34 N. J. Eq. 383; Wakeman v. Dalley, supra; Brinkerhoff v. Bost- 
wick, 88 N. Y. 52; Ackerman v. Halsey, 37 N. J. Eq. 356, 38 id. 501; 
White v. Skinner, 13 Johns. (N. Y.) 307; Randall v. Van Vechten, 19 
Johns. (N. Y.) 60; Tippets v. Walker, 4 Mass. 595; Clark v. Edgar, 84 
Mo. 106; Widrig v. Newport Co., 82 Ky. 512; Ward v. Davidson, 89 
Mo. 445. 

1 Titus v. Railroad Co., 37 N. J. L. 98; Gibson v. Goldthwaite, 7 
Ala. 282; Hoyt v. Thompson, 5 N. Y. 320; S. G, 19 N. Y. 207; Olney 
v. Chadsey, 7 R. I. 224; Parker v. Donnally, 4 W. Va. 648; Dougherty 
v. Hunter, 54 Pa. St. 380; Hallo well Bank v. Hamlin, 14 Mass. 178; 
Holt v. Winfield Bank, 25 Fed. Rep. 812. 

2 Gibson v. Goldthwaite, 7 Ala. 282; Hoyt v. Thompson, supra. 
8 Olney v. Chadsey, supra. 

4 Hoyt v. Thompson, supra; Parker v. Donnally, 4 W. Va. 648; 
Dougherty v. Hunter, 54 Pa. St. 380. 



216 DIEECTOES AND AGENTS. [§ 160. 

a president may, by the acts of the directors or man- 
agers, be invested with capacity to bind the company by 
his acts beyond those powers which are inherent in his 
office ; as where, in the general course of the company's 
business, the directors or managers have permitted such 
officer to assume the control and direction of its affairs,, 
and have held him out to the public as its general agent,, 
his authority to act for the company in a particular trans- 
action may be implied from the manner in which he has 
been permitted by the directors or managers to transact 
its business. 1 If the president of a corporation has, how- 
ever, the power to contract on its behalf, he has power to 
release a contract. 2 But where the charter provides that 
the bank shall not at any time be indebted in excess of 
its paid-up capital, the president is personally liable for 
the amount of a bill which he indorses when the bank is 
indebted in excess of that amount. 3 So the president of 
a bank has been held personally liable for overdrafts 
which he has directed or allowed, 4 and for loss caused 
by his permitting a customer to take away for inspection 
securities of the bank deposited as collateral. 6 

§ 160. General powers and duties of hank cashier. — 
Ordinarily, the cashier of a bank, being the Ostensible 
executive officer, is presumed to have all the power nec- 
essary for such an officer in the transaction of the legiti- 
mate business of banking. 6 Evidence of powers habitually 
exercised by a cashier of a bank with its knowledge and 

1 Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. Eq. 513. 
sind. Roll. Mill v. Railway Co., 120 U. S. 256. 

3 Brannen v. Loving, 6 Ky. 828. 

4 Oakland Bank v. Wilcox, 60 Cal. 126. 
'Citizens' Bank v. Wiegand, 12 Phila. (Pa.) 496. 

6 West St. Louis Bank v. Shawnee Bank, 95 U. S. 557; Martin v. 
Webb, 110 U. S. 7; Merchants' Bank v. State Bank, 10 Wall. (IT. S.) 
604; Bank of United States v. Dandridge, 12 Wheat. 64; Minor v. 



§ 161.] DIEECTOES AND AGENTS. 217 

acquiescence defines and establishes, as to the public, 
those powers, provided that they be such as the directors 
of the bank may, without violation of its charter, confer 
on such cashier. So where, during a series of years, or 
in numerous business transactions, the cashier of a bank 
has been permitted, in his official capacity and without 
objection, to pursue a particular course of conduct, it may 
be presumed, as between the bank and those who in good 
faith deal with it, that he has acted in conformity with 
instructions received from those who have the right to 
control its operations. 1 So far as the public are concerned, 
it is immaterial whether the powers thus exercised are in 
disregard of the by-laws or not, provided they are within 
the corporate powers conferred by the charter. 2 So a 
bank cashier is generally understood to have authority to 
indorse the commercial paper of his bank, 3 receive all the 
funds which come to the bank and give certificates of de- 
posit for the same, and do all those things usually exer- 
cised by a cashier in the performance of his daily duties. 4 

§ 161. Instances of cashier's powers. — The cashier of 
a bank has been held to have the following powers: To 

Bank, 1 Pet. (U. S.) 46; Wild v. Bank, 3 Mason (U. S.), 505; Nichol 
v. Insurance Co., 3 W. & M. 530; Smith v. Van Co., 8 C. B. 668; Agar 
v. Insurance Co., 3 C. B. (N. S.) 725; Royal Bank v. Turquand, 6 E. & 
B. 327. 

1 Martin v. Webb, HO U. S. 7. 

2 Merchants' Bank v. State Bank, 10 Wall. (U. S.) 604, and cases 
supra. 

» St. Louis Sav. Bank v. Shawnee Bank, 95 17. S. 557. 

4Bumham v. Webster, 19 Me. 234; Elliott v. Abbott, 12 N. H. 549; 
Bank of Virgennes v. Warren, 7 Hill (N. Y.), 91; Lloyd v. Bank, 15 
Pa. St. 172; Badger v. Bank, 26 Me. 428; Bank of Kentucky v. Schuyl- 
kill Bank, 1 Park S. Cas. (N. Y.) 182; Fleckner v. Bank of United 
States, 8 Wheat. (IT. S.) 338; Commercial Bank v. Norton, 1 Hill 
(N. Y), 501; Beers v. Glass Co., 14 Barb. (N. Y.) 358; Farmers', etc 
Bank v. Bank, 14 N. Y. 624; Barnes v. Ontario Bank, 19 N. Y. 152. 



*218 DIBECTOKS AND AGENTS. [§ 161. 

take such measures for the security and eventual collec- 
tion of debts owing to the bank as he may deem proper. 1 
He may release a debt secured by a mortgage. 2 He may 
borrow money in the ordinary course of the daily busi- 
ness of the bank, and may bind the bank by a promissory 
note executed therefor. 3 He may draw checks or drafts 
upon the funds of the bank deposited elsewhere. 4 He has 
authority to indorse its negotiable paper and securities 5 
and transfer its shares of stock. 6 He may deliver notes 
to an attorney for collection and bind the bank for costs 
of suit. 7 But he has no general power to compromise 
claims due the bank, 8 nor transfer non-negotiable paper, 9 
nor bind the bank to indemnify an officer for levying upon 
property on execution in favor of the bank, 10 nor power 
to discharge the surety on a note. 11 

1 Bridenbecker v. Lowell, 33 Barb. (N. Y.) 9: Badger v. Bank, 26 
Me. 438; Corser v. Paul, 41 N. H. 24; Bank of Pennsylvania v. Reed, 
1 W. & S. (Pa.) 101. 

2 Ryan v. Dunlap, 17 111. 40. 

3 Ballston Bank v. Marine Bank, 16 Wis. 120; Sturges v. Bank, 11 
■Ohio St. 153; Barnes v. Ontario Bank, 19 N. Y. 152. 

* Mechanics' Bank v. Bank of Colorado, 5 Wheat. (U. S.) 326; Chem- 
ical Bank v. Kohner, 8 Daly (N. Y.), 530; Northern Bank v. Johnson, 
5 Coldw. (Tenn.) 88; State Bank v. Wheeler, 31 Ind. 90; City Bank 
v. Perkins, 29 N. Y. 554; Elliott v. Abbott, 12 N. H. 549; Cooper v. 
Curtis, 30 Me. 488; Pratt v. Topeka Bank, 12 Kan. 570. 

5 State Bank v. Wheeler, 21 Ind. 90; City Bank v. Perkins, 29 N. Y. 
554; Elliott v. Abbott, 12 N. H. 549; Cooper v. Curtis, 30 Me. 488; 
Pratt v. Topeka Bank, 12 Kan. 570. 

6 Smith v. Bank, 4 Cush. (Mass.) 1; Commercial Bank v. Kortright, 
22 Wend. (N. Y.) 348. 

' Eastman v. Coos Bank, 1 N. H. 23. 

8 Chemical Nat. Bank v. Kohner, 8 Daly (N. Y.), 530. 

9 Holt v. Bacon, 25 Miss. 567; Berrick v. Austin, 21 Barb. 196. 
i» Watson v. Bennett, 13 Barb. (N. Y.) 196. 

n Savings Ass'n v. Sailor, 63 Mo. 24; Merchants' Bank v. Rudolf, 5 
Neb. 537; Bank v. Haskell, 51 N. H. 116. 



CHAPTER XL 

THE DEFENSE OF ULTRA VIRES AS TO TORTIOUS ACTS 
OF OFFICERS AND AGENTS. 

§ 162. General rule as to corporation's liability for torts. 

163. Liability for tortious acts of agent 

164. Authority of agent in fixing liability. 

§ 162. General rule as to liability for torts. — As a gen- 
eral proposition, corporations are liable for every wrong 
of which they are guilty, and in such a case the doctrine 
of ultra vires has no application. 1 The rule is stated by 
an eminent author in the following language: "The 
rule is now well settled that, while keeping within the 
apparent scope of corporate powers, corporations have a 
general capacity to render themselves liable for torts, ex- 
cept for those where the tort consists in the breach of 
some duty which, from its nature, could not be imposed 
upon or discharged by a corporation. The rule of liabil- 
ity embraces not only the negligence . and omission of its 
officers and agents who are put in charge of or employed 
in the corporate business, but also all tortious acts which 
have been authorized by the corporation, or which are 

1 Nims v. Mount Hermon School, 160 Mass. 177; Moore v. Fitchburg 
R. Co., 4 Gray (Mass.), 465; Reed v. Savings Bank, 130 Mass. 443; 
Fogg v. Railroad Co., 148 Mass. 513; Philadelphia, etc. R. Co. v. Quig- 
ley, 21 How. (U. S.) 202; Merchants' Bank v. State Bank, 10 Wall. 
(U.S.) 209; National Bank v. Graham, 100 U.S. 699; Gruber v. 
Washington, etc. R. Co., 92 N. C. 1; Hussey v. Norfolk R. Co., 98 N. C. 
34; Green v. London Omnibus Co., 7 C. B. (N. S.) 290; Life & Fire 
Ins. Co. v. Insurance Co., 7 Wend. (N. Y.) 31; Green's Brice's Ultra 
Vires, 364. 



220 torts. [§ 162. 

done in pursuance of any general or special authority to 
act in its behalf on the subject to which they relate, or 
which the corporation has subsequently ratified." 1 It 
was formerly argued that such torts as implied malice, as 
batteries, libels, and the like, could not be committed by 
corporations, because the state, in granting^ rights and 
privileges, had conferred no power to commit unlawful 
acts, and such torts, if committed by corporate agents, 
must consequently be ultra vires and the individual 
wrongs of the agents themselves. 2 This idea, however, 
has long since been exploded, and the great weight of 
modern authority holds a corporation liable for such tor- 
tious acts of officers and agents. Accordingly, corpora- 
tions are now held liable for malicious prosecution, 3 or a 
libel, 4 or false imprisonment, 5 or the false representation 
of its agent. 6 So a corporation may be liable even where 

i Cooley on Torts, 120, citing Mayor v. Herley, 1 Bing. N. C. 222, 
240; Smith v. Birmingham Gas Co., 1 Ad. & El. 526; Maund v. Mon- 
mouthshire Co., 4 M. & G. 452; Eastern R. R. Co. v. Brown, 6 Exch. 
314; Gofl v. Great Nor. R. Co., 3 El. & El. 672; Phila. & Bait. R. Co. 
v. Quigley, 21 How. 202; Thayer v. Boston, 19 Pick. 511; Monument 
Nat. Bank v. Globe Works, 101 Mass. 57; Shelden v. Kalamazoo, 24 
Mich. 383; Brokaw v. New Jersey R. Co., 32 N. J. L. 328. 

* Cooley on Torts, 119. 

3 Vance v. Erie Ry., 32 N. J. L. 334; Copley v. Grover & Baker Co., 
2 Woods (U. S.), 494; Goodspeed v. East Haddani Bank, 22 Conn. 530; 
Carter v. Howe Mach. Co., 51 Md. 290; Wheless v. Bank, 1 Baxter 
(Tenn.), 469; Williams v. Insurance Co., 57 Miss. 759; Iowa Mountain 
Bank v. Mercantile Bank, 4 Mo. App. 505; Walker v. Railway Co., 
L. R. 5 C. P. 640; Edwards v. Midland Ry., 6 Q. B. Div. 287; Boogher 
v. Life Ass'n, 75 Mo. 319. 

* Phila. etc. R. Co. v. Quigley, 21 How. (U. S.) 202; Whitfield v. 
Railway Co., 1 E. B. & E. 115; Maynard v. Insurance Co., 34 CaL 48;. 
S. C, 47 Cal. 207; Johnson v. Dispatch Co., 2 Mo. App. 565; Evening 
Journal Ass'n v. McDermott, 44 N. J. L. 430; Tench v. Railway Co.,. 
32 Up. Can. (Q. B.) 452. 

^Denver, etc. R. Co. v. Harris, 122 U. S. 597. 

6 Bar wick v. English, etc. Bank, L. R. 2 Exch. 259; Mackay tv 



§ 163.] tokts. 221 

a fraudulent or malicious intent is necessary to be proved, 
the fraud or malice of its authorized agents being imput- 
able to the corporation. 1 There is some doubt, however, 
as to whether a corporation can be held liable for slander 
uttered by its officer or agent. Mr. Odgers is of the opinion 
that they cannot be so held, " unless it can be proved that 
the corporation expressly ordered and directed that offi- 
cer to say those very words, for a slander is the voluntary 
and tortious act of the speaker." i So an action may be 
maintained against a corporation to recover damages 
caused by conspiracy. 3 

§ 163. Liability for tortious acts of agent. — It is also 
generally admitted that corporations are liable for the 
acts of their agents and servants, while engaged in the 
business of their employment, in the same manner and 
to the same extent that individuals are liable. 4 Corpora- 
tions are likewise responsible for acts not strictly within 
the corporate powers, but done in their corporate name 
and by corporate officers, who were competent to exer- 
cise all the corporate powers. 5 Accordingly, a corpora- 
tion when sued for tort cannot defend on the ground 

Bank, L. R. Priv. Coun. App. 394; Ranger v. Railway Co., 5 H. L. 72; 
Erie City Iron Works v. Barber, 102 Pa. St. 156; Peebles v. Patapsco 
Guano Co., 77 N. C. 233; Cragie v. Hadley, 99 N. T. 131; Caudy v. 
Knitting Co., 37 N. J. Eq. 175. 

i National Exch. Co. v. Drew, 2 Maoq. 103; New Brunswick Ry. 
Co. v. Conybeare, 9 H. I* 711; Barwick v. English, etc. Bank, 2 Exch. 
259. 

2 Odgers, Lib. & Slan., § 368. 

s Buffalo Oil Co. v. Oil Co., 106 N. Y. 669; Reed v. Bank, 130 Mass. 
443; Krulevitz v. Railway, 140 Mass. 573; Western News Co. v. Wil- 
marth, 33 Kan. 510; Jordon v. Alabama R. Co., 74 Ala. 85. 

* Wheeler, etc. Mfg. Co. v. Boyce, 36 Kan. 350; Lake Erie Ry. Co. 
v. Acres, 108 Ind. 548; First Nat. Bank v. Graham, 100 U. S. 699; 
Gruber v. Washington, etc. R. Co., 92 N. C. 1. 

'Salt Lake City v. Hollister, 118 U. S. 256. 



222 toets. [§ 163. 

that the act from which the tort resulted was ultra vires. 1 
For example, a corporation cannot defeat liability for an 
injury caused by the negligence of an officer on a steam- 
boat with the plea that the running of the steamboat 
was ultra vires, it being chartered only as a railroad and 
banking company. 2 So a corporation was held liable 
in damages for its conductor's forcible osculation of a 
lady passenger, for it was the duty of the conductor, how- 
ever great the temptation might have been, to smother 
and subdue his amatory emotions, and protect passengers 
from wanton insult. 3 And where there has been acquies- 
cence and ratification by the corporation, such as accept- 
ing the benefits of an ultra vires tort, it will be estopped 
from pleading ultra vires.* 

iGruber v. Washington, etc. R. Co., 92 N. C. 1; First Nat. Bank v. 
Graham, supra. 

2 Central R. Co. v. Smith, 76 Ala. 572; a C, 52 Am. Rep. 353. 

3 Craker v. Chicago, etc. R. Co., 36 Wis. 657. See, also, generally,. 
Stewart v. Brooklyn R Co., 90 N. Y. 588; Louisville, etc. R. Co. v. 
Kelley, 13 Am. & Eng. R. Cas. 1; Gilliam v. South, etc. R. Co., 15 id. 
138; Bryan v. Chicago, etc. R. Co., 16 id. 335; International, etc. R. 
Co. v. Kentle, id. 337; Louisville, etc. R Co. v. Flemming, 18 id. 347; 
Heenrich v. Pullman Co., id. 379; Miller v. Burlington, etc. R. Co., 8 
Neb. 219; Alexander v. Relfe, 74 Mo. 495. 

4 Alexander v. Relfe, supra. Mr. Taylor, in his excellent work on 
Private Corporations, § 336, in discussing the general doctrine as to- 
the liability of corporations for the torts of their agents, says: "If 
the corporation, acting within the scope of its corporate .authority, 
employs agents or servants in such a manner as to put it within their 
power to cause a violation of a duty owed by the corporation, the 
corporation will not be sustained in the defense that the violation 
complained of was not authorized by it. And thus it is if the tort 
was committed in the course of an employment, or in connection 
with transactions which the corporation had completely authorized 
or acquiesced in, and the duty owed by the corporation is violated 
by the tort, it will be no valid defense to the corporation that the 
tort itself was not only unauthorized, but was even ultra vires the 
corporation. To the tort itself, under such circumstances, the doc- 



§ 164] tokts. 225 

§ 164. Authority of agent in fixing liability. — To fix 
the liability of the corporation for the tortious act of one 
of its agents or employees, done in obedience to com- 
mands of its officers, the act must be connected with the 
transaction of the business for which the company was 
incorporated. For the acts of the servant, within the 
general scope of his employment, while engaged in his. 
master's business and the master's interest, the master 
will be responsible, whether the act be done negligently,, 
wantonly, or even wilfully. 1 In Brohaw v. Railroad Co., 
32 N. J. L. 328, Depne, J., discussing this point, said: 
" In considering the question whether the agent has the 
authority of the corporation, so as to make it answerable 
for his act, the purpose for which the company was in- 
corporated must not be overlooked. An authority given 
even by the board of directors in express terms will not, 
in all cases, be the authority of the corporation. The 
directors are only agents themselves, and their powers 
are necessarily limited within the scope of the purposes, 
for which the corporation was created, beyond which the} r 
are not authorized to bind the corporation. ... If 
the directors should order an agent to take a person out 
of his house and beat him, the corporation could not be 
held for an assault and battery; or if the directors of a 
banking company should purchase a steamboat and en- 
trine of ultra vires has no application; but it does apply where the 
employment in the course of which, or the transaction in connec- 
tion with which, the tort was committed was ultra vires the corpo- 
ration." 

iMott v. Ice Co., 73 N. Y. 543; Miller v. Burlington R. Co., 8 Neb. 
219; Goodspeed v. Bank, 22 Conn. 530; Gillette v. Missouri, etc. R. 
Co., 55 Mo. 315; Brokaw v. New Jersey, etc. R. Co., 32 N. J. 328, 332; 
Helfrich v. Williams, 84 Ind. 553; Illinois Cent. R. Co. v. Downey, IS 
I1L 260; Hussey v. King, 98 N. C. 34; Hood v. Railroad Co., 23 Conn. 
502; Taylor, Priv. Corp., § 341. 



224 toets. [§ 164. 

gage in transporting passengers, the corporation would 
be liable for the misfeasance or non-feasance of agents 
employed in that business. But if the directors of a cor- 
poration, having power to hold lands, order an agent to 
enter on lands and take possession of them for the legiti- 
mate uses of the company, his entry, if unlawful, will be 
the trespass of the corporation. So if the directors, act- 
ing in their official capacity, adopt rules and regulations 
for the transaction of the corporate business of the com- 
pany, and provide for the enforcement of those rules and 
regulations, and authorize its agents or servants to carry 
them into effect, the corporation will be liable for the 
acts of such agents or servants in the course of such em- 
ployment." 



CHAPTEE XII. 

TOWERS AND LIABILITIES OP FOREIGN AND DE FACTO 
CORPORATIONS. 

r§ 165. General powers of foreign corporations. 

166. The absence of prohibitory legislation presumes a tacit adop- 

tion of foreign laws. 

167. Contractual powers similar to domestic corporation. 

168. De facto corporation — Estopped to deny corporate existence. 

§ 165. General powers of foreign corporations. — It is a 
general rule so universally accepted as to need no citation 
of authorities, that a corporation created by a state can 
exercise none of the functions or privileges conferred by 
its charter in any other state, except by the comity and 
consent of the latter. By the law of comity among na- 
tions, a corporation created by one sovereignty is permitted 
to make contracts in another and to sue in its courts; and 
the same law of comity prevails among the several sover- 
eignties of this Union. The comity of suit brings with it 
the comity of contract; and where one is adopted the 
•other must be presumed. 1 Every power which a corpo- 
ration exercises in another state depends for its validity 
upon the laws of the sovereignty in which it is exercised ; 
and a corporation can make no valid contract without 
their sanction, express or implied. Courts of justice have 
always expounded and executed contracts made by cor- 
porations in a foreign country according to the laws of 
the place in which they are made ; provided that law was 

1 Bank of Augusta v. Earle, 13 Pet. (IT. S.) 519; Tombigbie, etc. Co. 
v. Kneeland, 4 How. (U. S.) 16. 
15 



226 FOKEIGIir AND DE FACTO COKPOKATIONS. [§ 166. 

not repugnant to the laws or policy of their own country.. 
The comity thus extended to other nations, it has been 
said, is no impeachment of sovereignty. It is the volun- 
tary act of the nation, by which it is offered, and is inad- 
missible when contrary to its policy or prejudicial to its 
interests. 1 

§ 166. The absence of prohibitory legislation presumes 
a tacit adoption of foreign laws. — In the silence of any 
positive rule affirming or denying or restraining the 
operation of foreign laws, courts of justice presume the 
tacit adoption of them by their own government, unless 
they are repugnant to its policy or prejudicial to its in- 
terests. 2 Accordingly it is held that where there is no 
prohibitory legislation or action by a state excluding for- 
eign corporations, individual citizens cannot complain be- 
cause a foreign corporation is doing business in the state. 3 
Agreeably to the foregoing principles, a corporation of 
one state, not forbidden by the laws of its being, may 
exercise within any other state the general powers con- 
ferred by its own charter, unless it is prohibited from so- 
doing either by the direct enactments of the latter state, 
or by its public policy to be deduced from the general 
course of its legislation, or from the settled adjudications- 
of its highest court. 4 

1 Bank of Augusta v. Earle, supra, 

2 Story, Conf. Laws, pp. 36, 37. 

sPensaoola TeL Co. v. Western Union Tel. Co., 96 IT. S. 1. 

< Christian Union v. Youht, 101 U. S. 352; Tombigbie, etc. Co. v. 
Kneeland, 4 How. (U. S.) 16; Cowell v. Springs Co., 100 U. S. 55; Will- 
iams v. Creswell, 51 Miss. 817; Silver Lake Bank v. North, 4 John. Ch. 
370; Bard v. Poole, 12 N. Y. 495; Merrick v. Van Santford, 34 N. Y. 
208; British Am. Land Co. v. Ames, 9 Mete. (Mass.) 391; Martin v. 
Mobile, etc E. Co., 7 Bush (Ky.), 116; Guaga Iron Co. v. Dawson, 4 
Blackf. (Ind.) 202; Leasure v. Life Ins. Co., 91 Pa. St 491; Dodge v. 
City of Council Bluffs, 57 Iowa, 560; Frazier v. Wilcox, 4 Rob. (La.) 



§§ 167, 168.] FOREIGN AND DE FACTO CORPORATIONS. 227 

§ 167. Contractual powers similar to domestic corpora- 
tion. — Any foreign corporation doing business in a state 
under permission of the legislature of such state must be 
deemed as to its contracts made in the course of such 
business to possess the powers and be subject to all the lia- 
bilities of similar domestic corporations as adjudicated 
by the courts of that state. 1 It must be borne in mind, 
then, that two questions should be considered in deter- 
mining the contractual powers of a foreign corporation : 
first, whether it has been endowed with the power in the 
state of its creation ; and second, conceding the original 
existence of the power, whether the state in which it pro- 
poses to exercise the power will permit such exercise. 
These questions being resolved,, such corporations, gen- 
erally speaking, are governed by the same principles and 
rules of law. as are applicable to domestic corporations. 

§ 168. De facto corporations — Estopped to deny corpo- 
rate existence. — "Where a corporation is proceeding in the 
performance of corporate functions, and the public are 
dealing with it on the supposition that it is what it 
professes to be, and the questions suggested are only 
whether there has been exact regularity and strict com- 

517; Life Association v. Levy, 33 La. Ann. 1203; Kennebec Co. v. 
Insurance Co., 6 Gray (Mass.), 204; Flash v. Conn, 16 Fla. 428; New- 
burg Petroleum Co v. Weare, 27 Ohio St. 343; Western Union TeL 
Co. v. Mayer, 28 Ohio St. 521; Santa Clara F. Acad. v. Sullivan, 116 
111. 375; Baltimore, etc. E. Co. v. Glenn, 28 Md. 287; Wood Hydraulic 
Co. v. King, 45 Ga. 34; Home Ins. Co. v. Davis, 29 Mich. 238; Kerch- 
ner v. Gettys, 18 S. C. 521; Taylor, Priv. Corp., § 384; 8 Am. & Eng. 
Ency. Law, 331, 332, and cases cited. 

iMilnor v. New York, etc. E. Co., 53 N. T. 363; Bard v. Poole, 13 
N. Y. 495; Silver Lake Bank v. North, 4 John. Ch. 370; McGregor 
v Erie E. Co., 35 N. J. L. 115; Bank of Augusta v. Earle, 13 Pet. (U. S.) 
539; Lewis v. Bank of Ky., 12 Ohio, 132; Pierce v. Crompton, 13 
E.L312, 



228 FOREIGN AND DE FACTO CORPORATIONS. [§ 168. 

pliance with the provisions of the law relating to incor- 
poration, in controversies between such de facto corpora- 
tion and those who have entered into contract relations 
with it, it will be estopped from denying the legality of 
its corporate organization and existence. 1 So one who 
deals with a corporation as existing in fact will also 
be estopped to deny as against the corporation its legal 
incorporation when sued on his contract. 2 So, also, it is 
the general rule of law that the regularity and validity 
of the organization of a corporation, effected under color 
of its charter, cannot be impeached in any collateral pro- 
ceeding, and the acts of its officers de facto under color 
of an election are valid and binding upon the corpora- 
tion. 3 And where a corporation assumed to act before 

1 McCullough v. Insurance Co., 46 Ala. 376; Empire Mfg. Co. v. 
Stewart, 46 Mich. 482; Booley v. Chesire Glass Co., 15 Gray (Mass.), 
494; Merrick v. Reynolds Engine Co., 101 Mass. 381; Humphrey v. 
Patrons' Merc. Ass'n, 50 Iowa, 607; Close v. Glen wood Cemetery, 107 
U. 8. 466; Swartout v. Michigan, etc. R. Co., 24 Mich. 389; Bakers- 
field, etc. Ass'n v. Chester, 55 Cal. 98; Ewing v. Robeson, 15 Ind. 
26; Hammond v. Straus, 53 Md. 1; Priest v. Hat Co., 115 Mass. 380; 
Salem Nat. Bank v. Almy, 117 Mass. 476; Chamberlin v. Huguenot 
Mfg. Co., 118 Mass. 532; Rush v. Steamboat Co., 84 N. C. 70; Whit- 
ney v. Wyman, 101 U. S. 392; Upton v. Hansborough, 3 Bias. (U. S.) 
417; Taylor, Priv. Corp., § 146. 

2 Taylor, Priv. Corp., § 146; Frost v.Frostbueg Coal Co., 24 How. 
(U. S.)278; French v. Donohue, 29 Minn. Ill; Johnston Harvester 
Co. v. Clark, 30 Minn. 308; Franz v. Building Ass'n, 24 Md. 259; 
Keene v. Van Reuth, 48 Md. 184; Ramsey v. Insurance Co., 55 I1L 
311; Stoutimore v. Clark, 70 Mo. 471; Studebaker Co. v. Montgom- 
ery, 74 Mo. 101; Beatty v. Bartholomew, etc., 76 Ind. 91; Smelser 
v. Turnpike Co., 82 Ind. 417; Butchers' Bank v. McDonald, 130 Mass. 
264; Spahr v. Bank, 94 Pa. St. 429; Jones v. Bank, 8 B. Mon. (Ky.) 
122. 

3 Attorney-General v. Stevens, 1 N. J. Eq. 369; National Docks v. 
Railway Co., 5 Stew. (N. J.) 755; Knight v. Corporation, Lutw. 508; 
In re Assurance Co., 5 Ch. App. 288; Mahoney v. Mining Co., 7 H. L. 
869; Hackensack Water Co. v. Dekay, 36 N. J. Eq. 548. 



§ 168.] FOREIGN AND DE FACTO CORPORATIONS. 229 

the amount of its capital stock had been taken and ten 
per cent, of that amount had been paid in, and with- 
out a compliance with this condition, it was held that 
it had exceeded its powers in thus commencing and 
prosecuting its business ; that such action was ultra vires 
and void, and any promise or undertaking which induced 
it to pursue such a course was in contravention of the 
law and could not be invoked an an estoppel in a suit to 
recover the amount of stock subscribed. 1 So where a 
corporation continued to prosecute its business in its cor- 
porate name just as it had done before its charter ex- 
pired, after the expiration of its legal right to exist, it 
was held to have become a corporation de facto, and that 
the acts and dealings had by and with it were not nec- 
essarily legally ineffective and of no binding force. 2 

1 Academy of Music v. Flanders Brothers, 75 Ga. 14; Hackensack 
Water Co. v. Dekay, 36 N. J. E. 548. 

2 Miller v. Newberg Coal Co., 31 W. Va. 836; Mor. Priv. Corp., 
§§ 1002, 1003; St. Louis Gas Light Co. v. St. Louis, 11 Mo. App. 55; 
Briggs v. Cape Cod Canal Co., 137 Mass. '71. 

In Miller v. Coal Co., supra, the court say: "The principle, it 
seems to me, to be deduced from our statute and these author- 
ities is that a private business corporation, acting and carrying 
on its corporate business in its corporate name after its legal ex- 
istence has ended by the expiration of its charter, must be held 
to be a corporation de facto; and that as such, so long as it in 
fact carries its business and contracts and incurs liabilities with or 
to third persons dealing with it as such de facto corporation, it may 
sue and be sued at law, either in actions ex contractu or ex delicto, 
and it cannot defeat such action by alleging that its charter had 
expired .before the cause of action arose.'' 

Hackensack Water Co. v. Dekay, supra, was a case where a water 
company was incorporated in 1869 with a capital of $50,000. The 
charter provided for an organization as soon as $20,000 of the capital 
stock should be subscribed and paid in. In 1873 the corporation 
was organized and directors elected. Very little of the stock had 
been subscribed, and less of it had been paid in. The directors were 
not qualified for the office and were irregularly chosen. Under this 



230 FOKEIGN AND DE FAOTO COEPOKATIONS. [§ 168. 

organization the company bought and took title for lands in its 
own name, constructed its works, acquired property to a consider- 
able amount and contracted debts to a larger amount. The charter 
authorized the company to increase its capital stock to $100,000. 
The charter also empowered the company to borrow money not ex- 
ceeding two-thirds of the capital paid in, and to secure the same by 
bonds and mortgage upon the property and franchises. In August, 
1873, a resolution was passed to increase the capital to $100,000. In 
September, 1873, the directors adopted a resolution that one hundred 
and thirty-three bonds of $500 each be issued, payable to a trustee or 
bearer, with coupons for the semi-annual interest. The bonds au- 
thorized by this resolution, and in fact issued, amounted to $66,500, 
nearly two-thirds of the capital authorized when increased. At 
that time not over $2,000 of capital had been paid in. In a suit to 
foreclose a mortgage made in pursuance of this resolution by the 
company, duly executed under the corporate seal, it was held that 
the corporation was a corporation de facto and its directors offi- 
cers de facto, and that the acts of the latter were binding on the 
corporation. Further, that the mortgage being within the powers 
granted by the charter, and on its face having the appearance of 
being within the company's power to mortgage, was a valid security 
in favor of bona fide holders of the bonds, notwithstanding the di- 
rectors acted illegally in making the mortgage and the bonds, and 
putting the bonds in circulation without first obtaining subscrip- 
tions to the capital to be made and paid in sufficient amount to 
justify them in making the mortgage. 



CHAPTEE XIII. 

THE DOCTRINE OF ULTRA VIRES APPLIED TO MUNICI- 
PAL CORPORATIONS. 

GENERAL MUNICIPAL POWEBS. 

§ 169. Introductory — Nature of municipal corporation. 

170. Exercise of municipal powers. 

171. Ordinances — Power to enact. 

172. Nature and effect of ordinances. 

173. Ministerial and judicial ordinances distinguished. 

174. Effect of ultra vires ordinances. 

175. Instances of ultra vires ordinances. 

176. Ordinances must be reasonable. 

177. Courts cannot interfere with discretion of municipality. 

178. Courts may restrain passage of ultra vires ordinances. 

179. Powers as to taxation. 

180. Power to tax may be revoked. 

181. Power can be exercised only for public purposes. 

182. Taxation and power to license distinguished. 

183. Power to exercise right of eminent domain. 

184. Eminent domain and taxation distinguished. 

185. Powers as to property. 

186. Powers of divided municipality. 

187. As to extinguished municipality. 

§ 169. Introductory — Nature of municipal corpora- 
tions. — The underlying principle of municipal govern- 
ment is that the management of local affairs shall be 
intrusted to local authorities, while general affairs are 
left to the state legislature. Under the power given by 
constitutions to general assemblies to provide for the or- 
ganization of cities and incorporated villages, these cor- 
porations are made the depositaries of certain limited 
governmental powers, to be exercised on behalf of the 



232 MUNICIPAL COBPORATIONS. [§ lVO- 

state for the public welfare. 1 They are agencies or in- 
strumentalities to which the general assembly, vested 
with the legislative power of the state, delegates a por- 
tion of its governmental power in order to meet those- 
local wants of the people in cities and villages for which 
state laws make only general provisions, leaving a more 
particular provision to local councils. 2 

§ 170. Exercise of general municipal powers. — The 
manner and extent to which governmental powers dele- 
gated to municipal corporations for the public good are 
to be exercised must rest in a large measure in their judg- 
ment and discretion ; but, acting as state instrumentalities, 
they cannot be held liable to individuals for a defect in the 
execution of such powers, unless a right of action is given 
by statute. 3 Municipal corporations can exercise only 
such powers as are expressly granted to them, or such as 
are necessary to carry into effect those that are granted. 4 

^ City of Toledo v. Cone, 41 Ohio St. 149. 

2 City of Toledo v. Cone, supra. 

* City of Toledo v. Cone, 5 Am. & Eng. Corp. Cas. 623; Wheeler v.. 
Cincinnati, 19 Ohio, 19; Western College v. Cleveland, 12 Ohio St.. 
375. 

4 Richards v. Clarksburg, 30 W. Va. 491; Parkersburg Gas Co. v. 
Parkersburg, etc. Co., 30 W. Va. 435; Grand Rapids, etc. Co. v. Grand 
Rapids, etc. Co., 35 Mich. 265; Petersburg v. Metzker, 21 111. 205; 
People v. Weber, 89 111. 347; Mather v. Ottawa, 114 III. 659; New 
London v. Brainerd, 32 Conn. 552; Bridgeport v. Railway Co., 15- 
Conn. 475; Somerville v. Dickerman, 127 Mass. 272; Roylston Market 
v. Boston Association, 113 Mass. 528; Clark v. Davenport, 14 Iowa,. 
494; Keokuk v. Scroggs, 39 Iowa, 447; Hauger v. Des Moines, 52 
Iowa, 193; Green v. Cape May, 41 N. J. L. 45; State v. Passaic, 41 
N. J. L. 90; Fulton v. Lincoln, 9 Neb. 358; Hurford v. Omaha, 4 Neb. 
350; Brenham v. Water Co., 67 Tex. 542.; Williams v. Davidson, 43:. 
Tex. 33; Allen v. Galveston, 51 Tex. 302; People v. Bank, 1 Doug.. 
(Mich.) 282; Smith v. Newburgh, 77 N. Y. 130; Francis v. Troy, 74 
N. Y. 338; Paine v. Spratley, 5 Kan. 525; State v. Marion Co., 21 



§ 1(1.] MUNICIPAL CORPORATIONS. 233 

No powers can be implied except such as are essential to 
the objects and purposes of the corporation as created 
and established. To the extent of their authority they 
can bind the people and the property subject to their 
regulation and governmental control by what they dp, 
but beyond their corporate powers their acts are of no 
effect. 1 

§ 171. Ordinances — Power to enact— Municipal ordi- 
nances are laws passed by the governing body of a mu- 
nicipal corporation for the regulation of the affairs of the 
corporation. They are not merely rules or regulations 
in the ordinary sense of those terms, but they are in the 
nature of laws, being decreed by a body vested with defi- 
nite legislative authority, coupled with power to enforce 
obedience to its enactments. 2 The legislature may dele- 
gate to a municipal corporation the power to enact ordi- 

Kan. 419; Hayes v. Appleton, 24 Wis. 544; Lord v. Oconto, 47 Wis. 
386; Kansas City v. Flanagan, 69 Mo. 22; Kelly v. Meeks, 87 Mo. 
396; St. Louis v. Bell TeL Co., 96 Mo. 623; St. Paul v. Traeger, 25 
Minn. 248; Bentley v. County Com'rs, 25 Minn. 259; Mayor, etc. v. 
Moag, 53 Ala. 561; Selma v. Mullen, 46 Ala. .411; McCracken v. San 
Francisco, 16 Cal. 591; McCoy v. Briant, 53 Cal. 247; Glass v. Ash- 
bury, 49 Cal. 571; Vance v. Little Rock, 30 Ark. 435; De Eussey v. 
Davis, 13 La. Ann. 468; Louisiana State Bank v. Navigation Co., 3 
La. Ann. 294; Walker v. Cincinnati, 21 Ohio St. 14; Bloom v. Xenia, 
32 Ohio St. 461; Indianapolis v. Ind. etc. Co., 66 Ind. 396; Cullen v. 
Carthage, 103 Ind. 196; Nichol v. Mayor, etc., 9 Humph. (Tenn.)252; 
Head v. Prov. Ins. Co., 2 Cranch (U. S.), 128; Minturn v. Larue, 23 
How. 435; Kirkham v. Russell, 76 Va. 956; Peters v. Lynchburg, 76 
Va. 927; Logan City v. Buck, 3 Utah, 301; Blake v. Mayor, 53 Ga. 
177; Sherman v. Carr, 8 R. I. 431; Henderson v. Covington, 14 Bush 
(Ky.), 312; Alley v. Inhabitants, etc., 53 Me. 446; Weith v. Wilming- 
ton, 68 N. C. 24; Treadway v. Schrauber, 1 Dak. 236; Leonard v. 
Canton, 36 Miss. 189. 

1 Ottawa v. Carey, 108 U. S. 110; 1 Dill. Mun. Corp., § 89, and cases 
cited. 

2Horr & Bemis, Munic. Ord., §§ 1, 2. 



234 MUNICIPAL COKPOKATIONS. [§ 172. 

nances for the government of the municipality, and, if the 
organic law contains nothing restricting the exercise of 
the power to any particular part of the municipal body, 
it may be conferred upon any department thereof, as may 
appear to be most just and expedient in the judgment of 
the legislature. 1 

§ 172. Nature and effect of ordinances. — Ordinances 
are to be made in subordination and not contrary to the 
general laws of the state. Still, they go far beyond the 
general laws in prescribing the civil conduct of persons in 
relation to their conduct and property. In order to make 
these additional regulations binding, the charter of the 
city must be put in operation by an organization, or by 
the action of officers under it. 2 Public policy demands 
the delegation of various powers of local legislation to 
the municipal body, and ordinances enacted in the execu- 
tion of these powers have, within the limits of the corpo- 
ration, the force of laws. They are just as binding as the 
laws of the state and general government ; they are en- 
forced in a similar manner and under like rules of con- 
struction. 3 A grant of power to pass ordinances is under- 

1 Boone, Corp., § 292; St. Paul v. Coulter, 12 Minn. 41; State v. 
Clark, 8 Fost. 176; Trigally v. Memphis, 6 Coldw. (Tenn.) 383; Hill 
v. Decatur, 22 Ga. 203; Brieswick v. Mayor, etc., 51 Ind. 639; Horn 
v. People, 26 Mich. 321; Blanchard v. Bissell, 11 Ohio St. 96; St. 
Louis v. Bank, 49 Mo. 574; Heland v. Lowell, 3 Allen (Mass.), 407; 
Gas Co. v. San Francisco, 6 Cal. 190; Kepner v. Comm., 40 Pa. St. 
124; Sower v. Philadelphia, 35 Pa. St. 231; Blazier v. Miller, 10 Hun 
(N. Y.), 435; People v. Special Sessions, 10 Hun (N. Y.), 214. 

2 Williams v. Davidson, 43 Tex. 1. 

'Horr & Bemis, §2; Dill. Mun. Corp., §308; Sedgw. Stat. Law, 
463; Bish. Stat. Cr., § 11; Cooley, Const. Lim. 211; Jones v. Insurance 
Co., 3 Daly (N. Y.), 307; McDermott v. Board, 5 Abb. Pr. (N. Y.) 433; 
Milne v. Davidson, 5 Martin (La.), 409; State v. "Williams, 11 S. C. 
288; Gabel v. Houston, 29 Tex. 336; Bearden v. Madison, 73 Ga. 184; 
Heland v. Lowell, 3 Allen (Mass.), 407; State v. Tryon, 39 Conn. 183; 



§ 173.] MUNICIPAL COKPOKATIONS. 235 

stood to be subject to the implied limitation that they 
shall not be contrary to the general laws of the state. 1 
And a power to pass ordinances and appoint officers to 
enforce them includes all necessary power to make such 
ordinances effectual. 2 

§ 173. Ministerial and judicial ordinances distin- 
guished. — The true principle seems to be that ordinances 
directing the mere repairing or repaying of streets, or the 
reconstruction of sewers or bridges, which are enjoined 
upon municipal corporations as matters of duty, are purely 
ministerial ; while ordinances directing new streets to be 
opened or altered, new sewers to be constructed, or other 
similar public improvements to be made, by which the 
property of individuals is taken or affected, are in their 
nature judicial. 3 So when a municipal corporation is 
authorized by ordinance to require the paving of streets, 
not as a matter of ordinary repair, but upon specified con- 
ditions only, and to impose the burden not upon the city 
treasury, but upon a specified class of individuals, the 
ordinance is in its nature judicial. 4 Municipal powers re- 
quiring the exercise of discretion cannot be delegated, yet 
such corporations may appoint agents and committees to 
discharge duties of an administrative or ministerial char- 
acter. 5 

Hopkins v. Swanson, 4 M. & W. 621; Burmeister v. Howard, 1 Wash. 
' Ty. 207; Wright v. Railroad Co., 7 111. App. 438; Church v. City, 5 
Cow. (N. Y.) 538; Mason v. Shawnee, 77 111. 533; Bott v. Pratt, 33 
Minn. 323; Gas Co. v. Des Moines, 44 Iowa, 508; Starr v. Burlington. 
45 Iowa, 87; Indianapolis v. Gas Co., 66 Ind. 396. 

1 St. Louis v. Kaime, 2 Mo. App. 66; Canton v. Nist, 9 Ohio St. 439; 
Thomas v. Richmond, 12 WalL (U. S.) 349. 

2 Boone, Corp. § 292; Reinhard v. New York, 2 Daly (N. Y), 243; 
State v. Cleveland, 3 R. I. 117; Roddy v. Finnegan, 40 Md. 490. 

3 Camden v. Mulford, 26 N. J. L. 49. 
* Camden v. Mulford, supra. 

'State v. Trenton, 42 N. J. L. 72; Parker v. New Brunswick, 1 



236 MUNICIPAL COKPOEATIONS. [§§ 174, 175, 

§ 174. Effect of ultra vires ordinances. — An ordinance 
passed by a municipal corporation which it has no power 
to pass, as levying a tax for a purpose not authorized by 
its charter, is an act of usurpation, and all proceedings 
under it are void ; but where the corporation has the 
power to pass an ordinance for a certain purpose, but 
exercises that power in an unauthorized manner, the or- 
dinance is valid and binding until set aside by legal pro- 
ceedings brought for that purpose, and its validity cannot 
be brought in question collaterally as a matter of defense 
to an action under it. 1 

§ 175. Instances of ult/ra vires ordinances. — An ordi- 
nance making an appropriation of the funds of a city, 
derived from taxation, for purposes wholly beyond the 
purview of municipal government, is a wrongful appro- 
priation of the funds held in trust for the tax-payers and 
people to pay the legitimate expenses of the city, and is 
illegal, ultra vires, null and void. 2 An ordinance passed 

Vroom (N. J.), 395; State v. Paterson, 5 Vroom (N. J.), 163; Dill. 
Mun. Corp., § 60; Meuser v. Eisdon, 36 CaL 239; Mathews v. Alex- 
andria, 68 Mo. 115; Gale v. Kalamazoo, 23 Mich. 344; Lord v. Oconto, 
47 Wis. 386; State v. Hauser, 63 Ind. 158; Bradsall v. Clark, 73 N. Y. 
73; East St. Louis v. Wehrung, 50 111. 28; Kinmundy v. Mayham, 72 
I1L 462; State v. Fiske, 9 E. I. 94; Hydes v. Joyes, 4 Bush (Ky.), 464; 
State v. Jersey City, 25 N. J. L. 209; State v. Newark, 47 N. J. L 117; 
State v. Trenton, 51 N. J. L. 498; Schenley v. Commissioners, 36 Pa. 
St. 62; State v. Bell, 34 Ohio St. 194; Darling v. St. Paul, 19 Minn. 
389. 

>City of Camden v. Mulford, 26 N. J. L. 49; Bergen v. Clark- 
son, 1 Halst. (N. J.) 352; State v. Jersey City, 5 Dutch. (N. J.) 175. 

2 The Liberty Bell, 23 Fed. Eep. 843; Dill. Mun. Corp., § 52; Hood 
v. Lynn, 1 Allen (Mass.), 103; Tash v. Adams, 10 Cush. (Mass.) 252; 
Claflin v. Hopkinton, 4 Gray (Mass.), 502; Murphy v. Jacksonville, 
18 Fla. 318; Grant Co. v. Bradford, 72 Ind. 455; Henderson v. Cov- 
ington, 14 Bush (Ky.), 312; Cornell v. Guilford, 1 Denio (N. Y.), 510; 
Halstead v. Mayor, etc., 3 N. Y. 433; New London v. Brainerd, 22 
Conn. 552. 



*§ 176.] MUKICIPAL C0EF0RATI0NS. 237 

■by the city council of New Orleans appropriating $5,000 
to pay the expenses incurred in transporting from Phila- 
delphia to said city and return the " Liberty Bell " ob- 
tained for exhibition at the " World's Industrial and 
Cotton Centennial Exposition, " and also for paying the 
expenses of a "junketing expedition" to go to Philadel- 
phia, ostensibly in charge of said bell, though patriotic 
and praiseworthy, was held illegal and void. 1 So an or- 
dinance of a city that declares it unlawful for any person, 
society, association or organization, under whatsoever 
name, to parade any public street, avenue or alley of the 
city, shouting, singing or beating drums or tamborines» 
or playing upon any other musical instrument, etc., 
without first having obtained in writing the consent of 
persons named in the ordinance, is illegal and void. 2 

§ 176. Ordinances must be reasonable. — Ordinances to 
be valid must be reasonable. 3 An unreasonable ordinance 
is void. 4 And where a charter expressly grants a power, 

i The Liberty Bell, supra. 

2 Anderson v. City, 10 Pao. Rep. 719 ; Frazee's Case, 30 N. W. Rep. 72 ; 
Sweet v. Wabash, 41 Ind. 7; McConvill v. Jersey City, 39 N. J. L. 38; 
Bronson v. Oberlin, 41 Ohio St. 476; Austin v. Mundy, 16 Pick. (Mass.) 
121- Duckwall v. New Albany, 25 Ind. 283; Shallcross v. Jefferson- 
ville, 26 Ind. 193; State v. White (N. H.), 5 Atl. Rep. 828. 

a State v. Clark, 54 Mo. 17; Coal Float v. Jeffersonville, 112 Ind. 19; 
Chamberlain v. Evansville, 79 Ind. 542; Corrigan v. Gage, 68 Mo. 
541; Kirkham v. Russell, 76 Va. 956; Baltimore v. Radecke, 49 Md. 
217; Boston v. Shaw, 1 Met. (Mass.) 130; Comm. v. Worcester, 3 Pick. 
<Mass.) 462; Delaware, etc. R. Co. v. East Orange, 41 N. J. L. 127; 
Kipp v. Mayor, etc., 2 Dutch. (N. J.) 298; Dayton v. Quigley 29 N. J. 
Eq 77; People v. Troop, 12 Wend. (N. Y.) 183; Ex parte Frank, 52 
Ca\ 606; Mayor, etc. v. Winfleld, 8 Humph. (Tenn) 767; Wa Hers v 
Leech, 3 Ark. 110; Fisher v. Harrisburg, 2 Grant s Cas. (Pa ) 291 
Mayor etc. v. Beasley, 1 Humph. (Tenn.) 232; Pednck v. Bailey 12 
Gra 7 ; (Mis,), 161; State v. Freeman, 38 N. H. 426; Tugnian v. Chi- 
cago, 78 111. 405; Clason v. Milwaukee, 30 Wis. 316. 

4Cooley, Const Lim. 243; Chicago v. Trotter, 26 N. E. Rep. (HI-) 359. 



238 MUNICIPAL COEPOEATIONS. [§ 176. 

but prescribes neither the time nor the mode of its exer- 
cise, it must be exercised in a mode and at a time deemed 
reasonable by the court. 1 An ordinance cannot be held 
to be unreasonable, however, if expressly authorized by 
the legislature. 2 But the courts will, in certain cases, de- 
clare a municipal ordinance void, simply on the ground 
that the unreasonableness of the ordinance amounts to 
an abuse of authority. 3 Thus, an ordinance was held to 
be unreasonable and so void, which required druggists 
to furnish quarterly statements of the kind and quantity 
of intoxicating liquors sold and to whom the sales were 
made. 4 Also requiring the building of a sidewalk in an 
uninhabited portion of the city. 5 So an ordinance requir- 
ing all persons who sell hay or other produce, who deliver 
the same within the limits of the city, to pay a fee of five 
cents, was held unreasonable, unauthorized by the charter 
and illegal : not because the fee was regarded as exorbi- 
tant and would have a tendency to restrain trade and 
hence against public policy, but because, under the gen- 
eral power vested in the council of passing such ordi- 
nances as they may deem expedient for regulating the 
general police and the peace and good order of the city, 
there was no power to impose a tax on persons occupying 
market stands in the streets, or huckstering or selling 
produce, by way of raising a revenue. 6 

1 Commissioners v. Gas Co., 12 Pa. St. 318 ; Comm. v. Robinson, 5 Cush, 
(Mass.) 438; Davis v. Anita, 73 Iowa, 325; Comm. v. Steflee, 7 Bush 
(Ky.), 161; Ex. parte Chin Yan, 60 Cal. 78; Gilham v. Wells, 64 Ga. 
192. 

2 Coal Float v. Jeffersonville, 112 Ind. 19; Chamberlain v. Evans- 
ville, 79 Ind. 542; State v. Clark, 54 Mo. 17. 

'Baltimore v. Radecke, 49 Md. 217. 

* Clinton v. Phillips, 58 111. 102. 

8 Corrigan v. Gage, 68 Mo. 541. 

6 Kip v. Paterson, 2 Dutch. (N. J.) 298; State v. Mayor, 4 Vroom 
(N. J.), 283; State v. Jersey City, 5 Vroom (N. J.), 431. 



§ 177.] MUNICIPAL C0KP0KATI0NS. 239 

§ 177. Courts cannot interfere with discretion of mu- 
nicipality — Power to do an act is often conferred upon 
municipal corporations in general terms without being 
accompanied with any prescribed mode of exercising it. 
In such a case the council necessarily have, to a certain 
extent, a discretion as to the manner in which the power 
shall be used. This discretion, where it exists, cannot be 
judicially interfered with or questioned, except where the 
power is exceeded, or fraud is imputed or shown, or there 
is a manifest invasion of private rights. 1 So if a city has 
power to grade streets, the courts will not inquire into 
the necessity of the exercise of it, or the refusal to exer- 
cise it ; nor whether a particular grade adopted, or the 
particular mode of exercising the power, is judicious. 2 The 
discretion of municipal corporations within the sphere of 
their powers is as wide as that possessed by the govern- 
ment of the state. 3 The law-making power of munici- 
pal corporations, within its prescribed limits, is as much a 
co-ordinate branch of the state government as, the general 
assembly, and it is no more competent for the judiciary 
to interfere with the legislative acts of one than the 
other. 4 A tax-payer cannot set the courts in motion to 

1 City of Topeka v. Huntoon (Kan.), 33 Am. & Eng. C. C. 67; Evans- 
ville R Co. v. Evansville, 15 Ind. 395; Kelly v. Milwaukee, 18 Wis. 
83; Stack v. Maysville,13 B. Mon. (Ky.) 1; Bridgeport v. Housatonic 
R Co., 15 Conn. 475; Page v. St. Louis, 20 Mo. 136; Mayor v. Gill, 31 
Md. 375; Union Pacific R Co. v. Cheyenne, 113 U. S. 516. 

2 Teegarden v. Racine, 56 Wis. 545; Sheridan v. Colvin, 78 111. 237; 
Hovey v. Mayo, 43 Me. 722; Richmond v. McGirr, 78 Ind. 192. 

s St Louis v. Boffinger, 19 Mo. 15; Des Moines Gas Co. v. Des 
Moines, 44 Iowa, 505. 

* State v. Swearingen, 12 Ga. 23; Danilly v. Cabanness, 52 Ga. Ill; 
Mayor v. Comak, 75 Ga. 429; Satterthwaite v. Beaufort Co., 76 
N. C. 153; Wilson v. Charlotte, 74 N. C. 748; Inhabitants v. New Or- 
leans, 14 La. Ann. 455; New Orleans, etc. v. Dunn, 51 Ala. 128; Lock- 
wood v. St. Louis, 24 Mo. 20; Sheidley v. Lynch, 95 Mo. 487; Dean v. 



240 MUNICIPAL OOEPOEATIOITS. [§§ 178, 179. 

interfere with the exercise of municipal powers upon 
the ground that the act done is unwise or oppressive; 
to sustain such interference it must appear either that the 
act was ultra vires, fraudulent or corrupt. 1 So where 
the city has power to contract for a water supply, the 
price, kind of water, and amount, are matters of legisla- 
tive discretion vested in the city council ; and when the 
city confines herself within the limits of her power to 
contract, its legal discretion exercised by the council will 
not be inquired into by the courts, in the absence of fraud 
and corrupt and extravagant legislation, which are be- 
yond the objects and purposes of municipal government. 2 

§ 178. Courts may restrain passage of ultra vires ordi- 
nances. — The courts have jurisdiction to grant an injunc- 
tion to restrain the passage of a municipal ordinance 
when the same would be beyond the power of the munic- 
ipal officers and where the passage of snch ordinance 
would work an irreparable injury. 8 Equity cannot, how- 
ever, stand between the public and their regularly elected 
authorities, unless the latter exceed their power, and, so 
long as they do not, the people must bear the conse- 
quences of their folly or choose wiser representatives. 

§ 179. Power of municipality as to taxation. — "While 
the general proposition that the exclusive power of taxa- 
tion belongs to the legislative branch of government can- 

Todd, 22 Mo. 90; Schanck v. Mayor, 69 N. Y. 444; Wiggins v. New 
York, 9 Paige, 16; Kelly v. Milwaukee, 18 Wis. 83. 

1 Wells v. Atlanta, 43 Ga. 67. 

2 Conery v. New Orleans Water Works, 39 La. Ann. 770. 

3 Poyer v. Des Plaines, 20 111. App. 30; Moore v. Hoffman, 2 Cin. 
(Ohio), 453; Whitney v. Mayor, 28 Barb. (N. Y.) 232; Baltimore v. 
Eadecke, 49 Md. 217; Gartside v. East St. Louis, 43 111. 47; West v. 
Mayor, 10 Paige (N. Y), 539; Banking Co. v. Jersey City, 12 N. J. Eq. 
258. 



■§ 180.] MUNICIPAL COEPOEATIONS. 211 

not be denied, yet under our system of government such 
, power may be delegated to municipal corporations, which 
are merely the instrumentalities of the state for the bet- 
ter administration of the government in matters of local 
•concern. Where such a corporation is created, the power 
of taxation is vested in it as an essential attribute for all 
.the. purposes of its existence, unless its exercise be in ex- 
press terms prohibited. 1 

§ 180. Power to tax may le revoked.— The power of 
-taxation on the part of a municipal corporation is not 
-private property or a vested right of property in its hands ; 
but the conferring of such power is an exercise by the 
■legislature of a public and governmental power which 
cannot be imparted in perpetuity, and is always subject 
! to revocation, modification and control. 2 

1 United States v. New Orleans, 98 U. S. 392, 393; Loan Ass'n v. To- 
peka, 20 Wall. (U. S.) 660; Comm. v. Commissioners, etc., 37 Pa. St. 
277; Lowell v. Boston, ill Mass. 460. 

In United States v. New Orleans, supra, the court, by Mr. Justice 
Field, says: "For the accomplishment of those purposes, its au- 
thorities, however limited the corporation, must have the power to 
raise money and control its expenditure. In a city even of small 
extent they have to provide for the preservation of peace, good order 
and health, and the execution of such measures as conduce to the 
general good of its citizens; such as the opening and repairing of 
"streets, the construction of sidewalks, sewers and drains, the in- 
troduction of water, and the establishment of a fire and police de- 
partment. All of them require for their execution considerable 
expenditures of money. Their authorization without providing the 
means for such expenditures would be an idle and futile proceeding. 
-Their authorization, therefore, implies-and carries with it the power 
to adopt the ordinary means employed by such bodies to raise funds 
for their execution, unless such funds are otherwise provided. And 
the ordinary means in such cases is taxation." 

2 Williamson v. New Jersey, 130 U. S. 190, and cases cited; New 
Orleans v. Water Works, 142 U. S. 79. 
16 



242 MUNICIPAL CORPORATIONS. [§ 181. 

§ 181. Power can le exercised only for public purposes. 
It is well settled by the courts of this country that no 
taxation is valid unless imposed for public purposes; and 
municipalities cannot, therefore, impose taxation for other 
than such purposes, nor can the legislature sanction the 
imposition of taxation which is intended for private ends. 1 
Accordingly a municipality has no power to levy a tax 
the purpose of which is to assist or encourage private or 
corporate enterprises for manufacturing or mining. 2 As 
the court say in Lowdl v. Boston, supra: " The power to 
levy taxes is founded on the right, duty and responsibility 
to maintain and administer all the governmental func- 
tions of the state, and to provide for the public welfare. 
To justify any exercise of the power requires that the 
expenditures which it is intended to meet shall be for 
some public service, or some object which concerns the 
public welfare. The promotion of the interests of indi- 
viduals, either in respect of property or business, although 
it may result incidentally in the advancement of the pub- 
lic welfare, is, in its essential character, a private and not 
a public object. However certain and great the result- 

iDill. Mun. Corp., §736; Hanson v. Vernon, 27 Iowa, 38; People 
t. MoCreery, 34 Cal. 432; Doyle v. Austin, 47 Cal. 360; Weismer v. 
Douglas, 64 N. Y. 91; Hilbish v. Catherman, 64 Pa. St. 154; Glasgow 
v. Rouse, 43 Mo. 489; Warren v. Henley, 31 Iowa, 31; Stockton, etc 
Ey. Co. v. City Council, 41 Cal. 149; Opinion of Judges, 58 Me. 591; 
Allen v. Joy, 60 Me. 124; Feldman v. Charleston, 23 S. C. 57; Sharp- 
less v. Philadelphia, 21 Pa. St. 147; Citizens' Sav. etc. v. Topeka, 20 
Wall. 655; Parkersburg v. Brown, 106 U. S. 487; Cole v. La Grange, 
113 U. S. 1; Lowell v. Boston, 111 Mass. 454; Brewer Brick Co. v. 
Brewer, 62 Me. 62; State v. Clark, 29 Wis. 664; In re Eureka Basin 
Co., 96 N. Y. 42; English v. People, 96 111. 566. 

« Loan Ass'n v. Topeka, 20 Wall. (U. S.) 655; Weismer v. Douglas, 
64 N. Y. 91; People v. Parks, 58 Cal. 624; Bissell v. Kankakee, 64 111.. 
249; McConnell v. Hamm, 16 Kan. 228; Tyler v. Beacher, 44 Vt. 648; 
Allen v. Joy, 60 Me. 124; Commercial Bank v. Iola, 2 Dili (C. C.) 353. 



§ 182.] MUNICIPAL C0BP0BATI0NS. 243 

ing good to the general public, it does not, by reason of 
its comparative importance, cease to be incidental. The 
incidental advantage to the public, or to the state, which 
results from the promotion of private interests, and the 
prosperity of private enterprises or business, does not jus- 
tify their aid by the use of public money raised by taxa- 
tion, or for which taxation may become necessary. It is 
the essential character of the direct object of the expendi- 
ture which must determine its validity, as justifying a 
tax, and not the magnitude of the interests to be affected 
nor the degree to which the general advantage of the 
community, and thus the public welfare, may be ulti- 
mately benefited by their promotion." So taxes cannot 
be imposed to aid persons suffering from a great fire or 
flood, either by providing them with money, food, seed,, 
or otherwise. 1 Nor to pay the selectmen the costs and 
damages sustained by them in resisting criminal proceed- 
ings at the instance of the town. 2 

§ 182. Taxation and power to license distinguished. — 
The distinction between the power to license as a police 
regulation and the same power as a revenue measure is- 
of the utmost importance. If granted with a view to 
revenue, the amount of tax, if not limited by the charter,, 
is in the discretion and judgment of the municipal author- 
ities; if given as a police power, it must be exercised a& 
a means of regulation only and cannot be used as a 
source of revenue. 8 So a provision in its charter granting 
power to " license and regulate " does not authorize the 

1 Lowell v. Boston, 111 Mass. 460. 

2 Lowell v. Boston, supra. 

8 North Hudson Co. v. Hoboken, 41 N. J. L. 71; State v. Hoboken,. 
4 Vroom (N. J.), 280; Mayor v. Second Ave. E. Co., 32 N. Y. 281; 
Commv. Markham, 7 Bush (Ky.), 486; State v. Cassidy, 22 Minn. 
312. 



244 MUNICIPAL COKPOBATTONS. [§§ 183, 184. 

city to exact license fees for revenue purposes. 1 A power 
to license is a police power. The exaction of license fees 
for revenue purposes is the exercise of the power of tax- 
ation. 

§ 183. Power to exercise right of eminent domain. — The 
right of eminent domain, that is to say, the right to take 
private property for public uses, may be exercised by mu- 
nicipal corporations under delegated legislative authority 
in the execution of works in which the public is interested'. 2 
This is a right which appertains to and is inherent in 
every independent government, and one that is without 
any legal limitations except such as may exist in the or- 
ganic resti'aints upon legal action. It requires no consti- 
tutional recognition; it is an attribute of sovereignty. 
When the use is public, the necessity or expediency of ap- 
propriating any particular property is not subject to judi- 
cial interference. 3 

§ 184. Distinction between eminent domain and taxa- 
tion. — The distinction between the right of eminent do- 
main and that of taxation is very clearly explained by 
Mr. Justice Euggles in People v. The Mayor, etc., 4 N. Y. 
421. 4 The learned justice says : " Private property*may be 

1 North Hudson Co. v. Hoboken, supra; Cooley, Const. Lim. 201; 
Dill. Mun. Corp., § 357. 

2 Boom Co. v. Paterson, 98 U. S. 406; Dill. Mun. Corp., § 584 et seq.; 
Cavanagh v. Boston, 139 Mass. 426; People v. Smith, 21 N. Y. 595; 
Hyde Park v. Oakwoods Cemetery, 119 111. 141; "West Eiver, etc. Co. 
v. Dix, 6 How. (U. S.) 507; Mercer v. Pittsburg, etc. Co., 36 Pa. St. 
99; Scudder v. Trenton, etc. Co., 1 Saxt. (N. J.) 694; Harbeck v. To- 
ledo, 11 Ohio St. 219; Shaflner v. St. Louis, 31 Mo. 364; Cemetery 
Ass'n v. New Haven, 43 Conn. 234. And see cases cited in § 604, Dill. 
Mun. Corp. 

8 Boom Co. v, Paterson, supra. 

<And see Dill. Mun. Corp., § 738, and cases cited. 



§ 185.] MUNICIPAL COBPOKATKWTS. 245 

constitutionally taken for public use in two modes; that 
is to say, by taxation and by eminent domain. These are 
rights which the people collectively retain over the prop- 
erty of individuals to resume such portions of it as may 
be necessary for public use. The right of taxation and 
the right of eminent domain rest substantially on the 
same foundation. Compensation is made when private 
property is taken in either way. Money is property. Tax- 
ation takes it for public use ; and the tax-payer receives 
or is supposed to receive his just compensation in the pro- 
tection which government affords to his life, liberty and 
property, and in the increase of 4he value of his posses- 
sions by the use to which the government applies the 
money raised by the taxes. When private property is 
taken by right of eminent domain, special compensation 
is made, for the reasons hereinafter stated. . . . Taxa- 
tion exacts money or services from individuals as and for 
their respective shares of contribution to the public bur- 
thens. Private property is taken for public use by right 
of eminent domain, not as the owner's share of contribu- 
tion to the public burthen, but in so much beyond his 
share. Special compensation is therefore to be made in 
the latter case because the government is a debtor for* 
the property so taken ; but not in the former, because the 
payment of taxes is a duty and creates no obligation to 
repay otherwise than in the proper application of the 
taxes. Taxation operates upon a community or upon a 
class of persons in a community, and by some rule of ap- 
portionment. The exercise of the right of eminent do- 
main operates upon an individual, and without reference^ 
to the amount or value exacted from any other individual 
or class of individuals." 

§ 185. Powers as to property. — A municipal corpora- 
tion may, unless restrained by statute, purchase and 



246 MUNICIPAL OOEPOEATIONS. [§ 185. 

hold all such real property as may be necessary to the 
proper exercise of any power specifically conferred, or , 
essential to those purposes of municipal government for 
which it was created. 1 So when a municipal corporation 
has power to purchase "any property" in connection 
with a given object, it may purchase both real and per- 
sonal property necessary to the object specified. The 
omission of the word " real " does not limit the power so 
as to exclude the purchase of real property from its exer- 
cise. 2 And it has been held that where a city council has 
power to " purchase a site for a city hall and lockup," the 
power was not exhausted by a single purchase; but that 
it appearing afterwards that a larger lot was necessary, 
it might be purchased, and the one first purchased turned 
in in part payment. 3 But a municipal corporation has no 
authority to purchase lands and erect buildings for any 
but municipal purposes. 4 So a charter authorizing a city 
to buy real estate and personal property " for the use, 
convenience and improvement of the city " does not au- 
thorize it to purchase land within the city limits for the 
benefit of an agricultural and mechanical association, and 
to give such association the " exclusive use of the prem- 
ises " for holding its " annual fairs." 6 

1 Dill. Mun. Corp., § 562; Ketchum v. Buffalo, 4 Kernan (N. T.), 
356; Lie Couteulx v. Buffalo, 33 N. Y. 333; Paterson v. Mayor, 17 
N. T. 449; Perin v. Carey, 24 How. (U. S.) 465; State v. Madison, 7 
Wis. 688; State v. Commissioner, etc., 33 N. J. L. 510; State v. Brown, 
27 N. J. L. 13; Louisville v. Commissioners, 1 Duvall (Ky.), 295; Louis- 
ville v. University, 15 B. Mon. (Ky.) 642; Greeley v. People, 60 111. 19; 
People v. Harris, 4 Cal. 9; Konrad v. Rogers, 70 Wis. 492. 

2 De Witt v. San Francisco, 2 CaL 289. 

8 Konrad v. Rogers, 70 Wis. 492. 

* Sherlock v. Winnetka, 59 III 389,68 111. 531; Jackson v. Hart- 
well, 8 Johns. (N. Y.) 422. 

»Eufaula v. McNab, 67 Ala. 588. 



§ 186.] MUNICIPAL CORPORATIONS. 247 

§ 186. Powers concerning divided municipalities. — Old 
municipalities may be divided under legislative regula- 
tion, and new ones incorporated out of such parts of the 
territory of those previously organized ; and in enacting 
such regulations the legislature may apportion the com- 
mon property and the common burdens, and may, as be- 
tween the parties in interest, settle all the terms and 
conditions of the division of their territory, or the alter- 
ations of their boundaries, as fixed by any prior law. 1 The 
powers exercised in the division of public corporations 
being purely legislative, the power to prescribe the rule 
by which the property of the corporation shall be divided 
and the debts apportioned, being incidental to the-power 
' to divide the territory, must also be strictly legislative ; 
and the courts have no authority over the subject, and 
can only construe the act of the legislature and see that 
the legislative will is' carried into effect. 2 But where no 
regulation is made by the legislature for any apportion- 
ment of the property, in case of division the old corpora- 
tion owns all the public property within her limits, and 
is responsible for all the debts of the corporation con- 
tracted before the act of separation was passed. 3 And 
where the charter of one corporation is vacated and ren- 
dered null, the whole of its territory being annexed to 
two others, if no legislative arrangements are made, the 
effect of the annulment and annexation will be that the 
two enlarged corporations will be entitled to all the pub- 

1 Mount Pleasant v. Beckwith, 100 U. S. 514 

2 Barker Dist. v. Valley Dist., 20 Am. & Eng. Corp. Cas. (W. Va.) 11 ; 
Bristol v. Newchester, 3 N. H. 524; Overseers v. Overseers, 18 Johns. 
(N. Y.) 382; St. Louis v. Russell, 9 Mo. 507. 

a Dill. Mun. Corp., § 189; Mt. Pleasant v. Beckwith, 100 U. S. 514; 
Laramie Co. v. Albany Co., 92 U. S. 307; North Yarmouth v. Skill- 
ngs, 45 Me. 141; Greenville v. Mason, 53 N. H. 515; People v. Trust- 
ees, etc., 86 111. 613; Town of Depere v. Bellevue, 31 Wis. 120. 



248 MUNICIPAL COEPOEATIONS. [§ 187, 

lie property and immunities of the one that ceases to exist, 
and they will become liable for all the legal debts con- 
tracted prior to the time when the annexation was carried 
into operation. 1 

§ 187. Powers of extinguished municipalities. — Extin- 
guished municipalities neither own property nor have 
they any power to levy taxes to pay debts. Whatever 
power such municipality may have had to levy taxes 
when the act passed annulling her charter terminated, 
and from the moment the annexation of her territory was 
made to the new town, such power of taxation became 
vested in the proper authorities of the town to which the 
territory and jurisdiction were by that act transferred. 2 

i Thompson v. Abbott, 61 Mo. 176. 

2 Mt. Pleasant v. Beckwith, 100 U. S. 514; North Hempsted v. 
Hempsted, 2 "Wend. (N. T.) 109; Hartford Bridge Co. v. East Hart 
ford, 16 Conn. 149. 



CHAPTEK XIV. 

GENERAL POWERS AS TO CONTRACTS. 

§ 188. Introductory— General rule as to contracts. 

189. The mode prescribed must be strictly pursued. 

190. Ultra vires contracts by officers. 

191. Implied municipal contracts. 

192. When estoppel not applicable. 

193. When estopped to deny irregularity. 
194 Ratification of ultra vires contracts. 

195. Contracts of compromise and arbitration. 

196. Limitation on contracting indebtedness. 

197. Instances where increase denied. 

198. Equity will enjoin illegal increase of debt. 

§ 188. Introductory — General rule as to contracts. — 
A municipal corporation, unless in some way restrained 
by charter, has the same general powers with other cor- 
porations to make contracts in furtherance of the corpo- 
rate objects. 1 It is elementary that under the law govern- 

1 Boone, Corp., § 289; Douglas v. Virginia City, 5 Nev. 147; Good- 
rich v. Detroit, 12 Mich. 279; Albright v. Town Council, 9 Rich. 399; 
Williamsport v. Comm., 84 Pa. St. 487; Bateman v. Mayor, etc., 3 
Hurl. & N. 322; East St. Louis v. Gas Light Co., 98 111. 432. 

In East St. Louis v. Gas Light Co., supra, Mr. Justice Walker 



" The long and well-established doctrine of the law is that all 
acts performed without authority are void. This applies as well to 
corporate bodies as to natural persons. The most simple and ele- 
mentary rules hold that corporate bodies derive all their powers 
from their creator, whether they be granted by the legislature or 
(as in England) by the executive department of government. They 
are by their charters endowed with all their franchises and facul- 
ties, and any attempt to exercise others is usurpation that the law 



250 MUNICIPAL CONTEACTS. [§ 188. 

ing the acts of municipal corporations they may adopt 
all the ordinary means which may be necessary to the 
execution of the powers expressly given in their charters 

can never sanction. Natural persons are born with faculties, rights 
and powers, but corporate bodies possess none but such as are con- 
ferred by law, in express terms, or by clear and unmistakable impli- 
cation. These rules are so elementary that it is almost inexcusable 
to refer to them. 

"If, then, this is true, how can it be said that a municipal or pri- 
vate corporation can enter into a valid contract which is prohibited 
"by law, or one that is not in conformity with the requirements Of 
the law, or where no authority is possessed to so contract? It 
would seem to be so clear that such a contract would be utterly 
void as to require no discussion to establish its truth. It must fol- 
low that if a contract by a corporate body is void for want of power 
to make it, such a body is equally powerless to ratify it, or to per- 
form acts that would estop it from asserting its invalidity. There 
must be the same quantum, of power to ratify a void as is required 
to enter into a binding contract. The stream can never rise higher 
than its source, and a contract void for want of power cannot be 
ratified or the body estopped where the power is only the same and 
no greater than when it was first executed. This would seem to be 
axiomatic; but I am fully aware that some courts of respectability 
have announced an opposite rule, and some text-writers have fol- 
lowed such decisions. But I can never indorse the doctrine, and 
dissent to it in its entire length and breadth. 

"Who ever heard of its being claimed that, under the operation 
of the common law, a contract of a married woman, or a person non 
compos mentis, could be ratified, or they could be estopped during 
the continuance of the disability? So of the contract of a minor, 
which may be only voidable. I presume it was never urged that 
such a contract would be rendered valid by a further contract, or 
the infant be estopped by his acts . before arriving at his majority. 
And this is so because of the want of power to bind himself at the 
time of making the contract, and therefore a subsequent agreement, 
or the performance of acts that otherwise would operate as an 
estoppel, cannot produce such results. And the same must be true, 
to its full extent, of corporate bodies acting without power. No 
well-founded reason or distinction can be taken. A rule that a 
party under disability, entering into a contract, may, during such 
disability, ratify it, or may so act as to become estopped, is not sane- 



§ 188.] MUNICIPAL CONTRACTS. 251 

or those which are incidental thereto. 1 The power to 
make contracts is usually conferred in general terms in 
tbe incorporating act. But where the power is conferred 
in this manner, it is not to be construed as authorizing 

tioned by any rule, and is opposed to every well-founded legal prin- 
ciple; nor can any rule or principle be found that can sanction it as 
an exception. 

"But if such an exception could be maintained against private 
corporations, what possible reason can be assigned for applying it 
to a public corporation? They are dissimilar in the purpose of their 
creation and in the powers with which they are endowed. The one 
class is created for business purposes, and the other as aids to the 
government in conducting public affairs. The one is endowed with 
a portion of the powers of natural persons, and the other with a 
portion of governmental functions. In this consists a broad differ- 
ence between the two. If deemed necessary to make tbe exception 
against private corporations to enforce void contracts made in the 
course of their business, it does not, by any means, follow that the 
■same exception should be applied to public corporate bodies. To 
■sanction such an exception is to abolish all distinction between 
rightful exercise of power and action without power by such bod- 
ies, and if carried to its logical conclusion must destroy legislative 
power to limit and restrict these bodies by their charters. It would 
be to enable persons to procure a charter with specified franchises 
and powers, and to exercis9 all other enumerated franchises and 
corporate powers. Whilst it is desirable that contracts entered into 
by such bodies shall be protected and enforced, it is not desirable 
that all or any of the well-defined principles of the law should be 
overturned to accomplish the purpose. 

"It may be that the general assembly has authority to empower 
a corporation to ratify a contract made by it without power, or to 
declare that certain acts performed by it shall operate as an estop- 
pel to assert the want of power; but no proposition can be plainer 
than that the courts have no such power, and to exercise it is to in- 
fringe upon the powers and functions of the legislative department 
of government. If maintained, it will operate as judicial enact- 
ments that find no sanction in the fundamental law conferring judi- 
cial powers. The functions of the different departments must be 



iSee§170, ante. 



252 MUNICIPAL CONTRACTS. [§-'lS9." 

the making of contracts of all descriptions, but only such 
as are necessary and usual to enable the corporation to; 
secure or to carry into effect the purposes for which it 
was created. 1 > 

§ 189. The mode prescribed must le strictly pursued. — 
Where the mode of procedure in respect to contracts of 
municipal corporations is. prescribed by law, such mode 

kept distinctly separate and well defined to avoid confusion and to 
carry out the purposes of the founders of our system of government. 

"I, however, do not understand the main opinion to sanction or 
indorse this doctrine, but it refers to cases and text-books that do as- 
sert it, and I feel constrained to avoid even the semblance of its 
indorsement, as I regard the question of more than ordinary impor- 
tance. The past generation has been prolific in creating these arti-i 
ficial bodies, and their number and extent are vast, and thus this 
question assumes importance. 

" The courts have held that private or business corporations are 
artificial persons, endowed with rights that are entitled to the same 
protection as those of natural persons, and if natural persons under 
disabilities cannot bind or estop themselves, it may be asked why 
corporate bodies under like disabilities should not receive like pro- 
tection? This is not a question of policy, but of right. But if it 
were, it is not for the courts, but the legislature, to inaugurate the 
policy." 

iKetchum v. Buffalo, 14 N. Y. 356; Douglas v. Virginia City, 5 
Nev. 148; Indianapolis v. Ind. etc. Co., 66 Ind. 396; Goodrich v. De-< 
troit, 12 Mich. 279; Chaffee v. Granger, 6 Mich. 51; Rae v. Mayory 
etc., 51 Mich. 526; Bank of Columbia v. Patterson, 7 Cranch (U. S.), 
299; Montgomery County v. Barber, 45 Ala. 245; Siebrecht v. New 
Orleans, 12 La. Ann. 412; Albright v. Town Council, 9 Rich. L. (S. C.) 
399; Bateman v. Mayor, etc., 3 H. & N. 322; Williamsport v. Comm.; 
84 Pa. St. 487; Wells v. Atlanta, 43 Ga. 67; Rome v. Cabot, 28 Ga. 50;. 
Lawrence v. Killam, 11 Kan. 512; Wyandotte v. Zeitz, 21 Kan. 649;. 
Jones v. Richmond, 18 Grat. (Va.) 517; Miller v. Milwaukee, 14 Wis. 642;. 
Brenham v. Water Co., 67 Tex; 542; Sturtevant v. Alton, 3 McLean 
(U. S.),393; Robinson v. St. Louis, 28 Mo. 488; Royalton v. Royalton, 
etc. Co., 14 Vt. 311; Gregory v. Bridgeport, 41 Conn. 76; State v. 
Hammonton, 38 N. J. L. 430; Argenti v. San Francisco, 16 CaL 255; 
Dill. Mun. Corp., § 443. 



§ 189.] MUNICIPAL CONTRACTS. 253 

must be strictly pursued by the corporation iu relation 
to the awarding and making of contracts or their subse- 
quent ratification. If it is not done the contract will be 
void. 1 And this is so although the contract entered into 
relates to a subject-matter with respect to which the cor- 
porate authorities have capacity to contract. If the pro- 
visions of the charter as to the mode of entering upon 
such contracts be violated, the contract is void. 2 Illustra- 
tions of this doctrine are to be found in those cases in 
which it is required of the corporate body to put out the 
public work to the lowest bidder; for, as such a requisi- 
tion is a circumscription of the power of the corporation, 
it has invariably been held that any other method of 
.contracting is illegal, and consequently cannot be subse- 
quently validated by a ratification. 3 Accordingly, where 
it is provided by statute that city contracts for work or 
material shall be given to the "lowest responsible bidder, 
under such regulations as shall be prescribed by ordi- 
nance," it is essential that an ordinance providing for the 
awarding of a contract should designate certain plans 
and specifications on which to bid, as otherwise there can 
be no competitive bidding. 4 So a contract let under an 
ordinance directing the paving of a street, without speci- 

'Town of Durango v. Pennington, 8 Colo. 257; MoBride v. Grand 
Eapids, 56 Mich. 95; Niles Water Works v. Niles, 59 Mich. 811; Kee- 
ney v. Jersey City, 47 N. J. L. 449. 

2 Gregory v. Jersey City, 34 N. J. L. 397; Brady v. City of New 
York, 20 N. Y. 312; Christopher v. Same, 13 Barb. (N. Y.) 557; Cowan 
v. West Troy, 43 Barb. (N. Y.) 48. 

3 Cory v. County of Somerset, 45 N. J. L. 445, and cases cited. 
*Mazet v. Pittsburg, 137 Pa. St. 548; Wilkins v. Detroit, 46 Mich. 

120; Detroit v. Hosmer, 79 Mich. 384; People v. Commissioners, 4 
Neb. 150; Wells v. Burnham, 20 Wis. 112; Kneeland v. Milwaukee, 
18 Wis. 411; Barber Asphalt Pav. Co. v. Hunt, 100 Mo. 22; Same v. 
Gogreve, 41 La. Ann. 251 ; Ely v: Grand Eapids, 84 Mich. 336; Cough- 
lin v. Gleason, 121 N. Y. 631. 



254 MUNICIPAL CONTRACTS. [§ 190. 

fying the kind of paving to be done, is illegal and void 
when no specifications for the kind of pavement con- 
tracted for were prepared, and the advertisement invit- 
ing bids referred bidders to specifications on file in a cer- 
tain office, all of which related to other kinds of paving. 1 
And again, where by statute the making and filing of 
plans and specifications of the work to be done are con- 
ditions precedent to the power of the commissioners to 
advertise for proposals and award contracts for such work,, 
the due filing of full specifications of the work will not 
render such contracts valid, if the plans have not been 
made and filed as required by statute. 2 So where a mu- 
nicipal charter provides that contracts for work shall be 
let to the lowest responsible bidder, the officials author- 
ized to let a contract may not arbitrarily reject the lowest 
bid and accept a higher, without any facts justifying it.* 

§ 190. Ultra vires contracts by officers. — The officers, 
agents, or even city council, of a municipal corporation 
cannot bind it by any act or contract which transcends 
their lawful or legitimate power; and the municipal cor- 
poration may set up the plea of ultra vires or its own 
want of power under its charter, or statute under which 
it was organized, to enter into a given contract, or to do 
a given act in excess of its corporate power and author- 
ity. 4 A person contracting with public officers must take 

1 Mazet v. Pittsburg, supra. 

SKneeland v. Milwaukee, 20 Wis. 437; Walls v. Burnham, 20 Wis. 
113. 

8 Coughlin v. Gleason, 121 N. Y. 631; Bigler v. Mayor, etc., 5 Abb. 
N. Cas. (N. Y.) 51. 

4 Dill. Mun. Corp., § 457; Mayor, etc. v. Cunlifle, 2 Comst. (N. Y.) 
175; Marsh v. Fulton County, 10 Wall. (IT. S.) 676; Thomas v. Rich- 
mond, 13 Wall. (U. S.) 349; Hayes v. Holly Springs, 114 U. S. 120; 
Knox County v. Aspinwall, 21 How. (U. S.) 539; East Oakland v. 
Skinner, 94 U. S. 255; Post v. Kendall Co., 105 U. S. 667; Bates Co. 



§ 190.] 



MUNICIPAL CONTRACTS. 255 



notice of their powers; and he is charged with a knowl- 
edge of the law, and makes a contract in violation of the- 
law at his own risk. 1 So where the law commands pub- 
lic officers, before entering into contracts, to advertise^, 
and contract with the lowest bidder, a contract made 
without advertising and without competition is wholly 
void, and imposes no obligation upon the public body as- 
sumed to be represented. 2 So an offer of a reward for 
the arrest and conviction of thieves who robbed the treas- 
ury of the county and for the recovery of the money, 
made "by order of the board of supervisors, H. D. Lucas, 
chairman," is ultra vires of the county commissioners and 
void, nor are the commissioners themselves personally 
liable. 9 

v. Winter, 97 U. S. 83; Daviess Co. v. Dickenson, 117 TT. S. 657; Car- 
roll Co. v. Smith, 111 U. S. 556; Dixon Co. v. Field, 111 U. S. 83;: 
Burrill v. Boston, 2 Cliff. (IT. S.) 590; Seibreicht v. New Orleans, 13 
La. Ann. 496; Fox v. New Orleans, id. 154; Mayor, eta v. Reynolds, 
20 Md. 1; Baltimore v. Eschbach, 18 Md. 276; Baltimore v. Mus- 
grove, 48 Md. 272; Maupin v. Franklin Co., 67 Mo. 327; Perkinson v. 
St Louis, 4 Mo. App. 322; Cheeney v. Brookfield, 60 Mo. 53; Mc- 
Caslin v. State, 99 Ind. 428; Commissioners v. Cox, 6 Ind. 403; State- 
v. Beyers, 86 N. C. 588; Yancey v. Hopkins, 1 Munf. (Va.) 419. 

1 Parr v. Greenbush, 72 N. Y. 463; Brady v. New York, 20 N. Y. 312 r 
McDonald v. Mayor, etc., 68 N. Y. 23; Argenti v. San Francisco, 16 
Cal. 255. 

2 Parr v. Greenbush, 73 N. Y. 463. 

'Huthsing v. Bousquet, 2 McCrary (IT. S.), 152, 156; Treadway v. 
Schnauber, 1 Dak. Ty. 236. 

In Huthsing v. Bousquet, supra, the court say: "When an agent 
makes a contract in the name of his principal, but without author- 
ity, he binds himself, for the reason that if he (the agent) is not 
bound there is no one to respond to the third contracting party. If 
in such case the agent were not bound, his act in representing him- 
self to have authority would operate as a fraud upon the other con- 
tracting party. But if in such case the agent were to tell the third 
contracting party that he had no authority to bind the principal, it 
would be the folly of the other contracting party to enter into such 



256 MUNICIPAL CONTBAOTS. [§ 191. 

§ 191. Implied municipal contracts. — Although it is a 
well-settled principle that ultra vires contracts of mu- 
nicipal corporations are void, and that those who have 
dealt with such corporation under a misapprehension have 
no standing to demand the fulfillment of such contracts, 
there are occasions when this principle is modified ; the 
modification being spoken of as the " doctrine of implied 
municipal liability." l This doctrine applies to cases 
where money or other property of a party has been re- 
ceived under such circumstances that the general law, 
independent of express contract, imposes the obligation 
upon the city to do justice with respect to the same; that , 

a contract, and he could not claim to be defrauded. Neither could 
he count upon a contract against the agent, because that would be 
contrary to the very terms of the manifest intent of the contract. 
He would have to lie upon the bed which he had made for himself 
with his eyes open. The law aims to relieve a party against the 
consequences of his own folly. The case before us stands upon this 
principle. The board of supervisors had no authority by law to make 
the contract on which the plaintiff relies in this action. The plaint- 
iff was bound to know the law, and we must proceed, therefore, 
upon the assumption that he did, when he accepted the offer and 
performed the services, know that the board had no authority to 
offer the reward. The offer was ultra vires; the plaintiff knew it; 
it was his own folly to accept such an offer, and the court cannot 
relieve him." And see McCurdy v. Rogers, 21 Wis. 197; Richards v. 
Warren Co., 31 Iowa, 389; Boardman v. Hayne, 29 Iowa, 339. 

1 Wheeler v. Chicago, 24 111. 105; Sangamon Co. v. Springfield, 63 
111. 66; Moore v. New York, 73 N. Y. 238; State Board, eta v. Railway 
Co., 47 Ind. 407; Louisiana v. Wood, 102 U. S. 294; Gas Co. v. San 
Francisco, 9 CaL 453; Paul v. Kenosha, 22 Wis. 266; Bridge Co. v. 
Frankfort, 18 B. Mon. (Ky.) 41; Marsh v. Fulton Co., 10 Wall. (U. S.) 
676; Adams v. Farnsworth, 15 Gray (Mass.), 423; Shrewsbury v. 
Brown, 25 Vt. 197; Gassett v. Andover, 25 Vt. 342; Maher v. Chicago, 
38 I1L 266; Bryan v. Page, 51 Tex. 532; State Board v. Aberdeen, 56 
Miss. 518; McSpeden v. Mayor, etc., 7 Bosw. (N. Y.) 601; McCracken 
v. San Francisco, 16 Cal. 591; Pimental v. San Francisco, 21 Cal. 351; 
Dickinson v. Poughkeepsie, 75 N. Y. 65; Richardson v. Grant Co., 27 
Fed. Rep. 495; Argenti v. San Francisco, 16 Cal. 255. 



§ 192.] MUNICIPAL CONTRACTS. 257 

if the city obtains money of another by mistake or with- 
out authority of law, it is her duty to refund it, not from 
any contract entered into by her on the subject, but from 
the general obligation to do justice which binds all per- 
sons, whether natural or artificial; and that if the city 
obtains other property which does not belong to her, it 
is her duty to restore it, or, if used by her, to render an 
equivalent to the true owner from the like general obli- 
gation. 1 

§ 192. When estoppel not applicable to municipal corpo- 
rations. — It is of the essence of an estoppel in pais that 
the party having the authority to act in the matter shall 
have knowingly done an act to influence the conduct of 
another, and that the other must have acted in the faith 
of that act. 2 A person having no authority to act can- 
not by his conduct estop others not responsible for his 
conduct. Accordingly, no estoppel can ordinarily arise 
from the act of a municipal corporation or officer done in 
violation of or without authority of law. 3 Every person 
is presumed to know the nature and extent of the powers 
of municipal officers, and therefore cannot be deemed to 
have been deceived or misled by acts done without legal 
authority. 4 So a city will not be estopped by the acts or 
promises of a committee of the city council, or the acts of 
the city attorney, such committee being known to have 
no power to do the act which is sought to be effected by 
estoppel.' 

i Field, J., in Argenti v. San Francisco, supra. 
2 St. Louis, etc. R. Co. v. Belleville, 123 111. 376; Davidson v. Young, 
38 111. 145; Schnell v. Chicago, 38 111. 382; Blgelow on Estoppel, 480. 
s Bigelow on Estoppel, 480. 
« Seeger v. Mueller, 133 111. 86. 
*St. Louis, etc. R. Co. v. Belleville, 123 111. 376. 
17 



258 MUNICIPAL COSTTr-ACTS. [§§ 193, 194. 

§ 193. When estopped to deny irregularity. — Although, 
as has been shown, a municipal corporation may set up 
as a defense to an action upon a contract alleged to have 
been made by it, its own want of power to contract, yet 
it may be estopped from availing itself of irregularities 
in the exercise of powers conferred. 1 Acts of the general 
governing body of a municipal corporation, within their 
general powers, which were published, represented and 
held out as valid, with invitations to individuals to enter 
into engagements and expend money and labor on the 
faith of them, may be assumed by those dealing with the 
municipal authorities to be as represented ; and the corpo- 
ration having received the fruits of contracts entered into' 
on the faith of such representations will be estopped from 
alleging a mere irregularity, not of the substance of the 
power or jurisdictional in its character, to avoid them. 2 

§ 194. Ratification of ultra vires contracts. — As a mu- 
nicipal corporation has no authority to contract in excess 
of its chartered powers, therefore no ratification by it 
could validate such contracts; nor will ratification validate 
an abuse of authority by an officer where his act goes be- 
yond the charter powers. An act which does not follow 
the requirements of a statutory enactment, under no cir- 
cumstances binds the corporation. 3 So where the charter 
or statute binding upon the corporation has committed a 

i Moore v. New York, 73 N. Y. 238; Knox County v. Aspinwall, 21 
How. (IT. S.) 539; Moran v. Commissioners, 2 Black (U. S.), 722; Bis- 
.sell v. Jefferson ville, 24 How. (U. S.) 287; Marsh v. Fulton County,. 
10 Wall. (U. S.) 676. 

2 Moore v. New York, supra; Hitchcock v. Galveston, 96 U. S. 341; 
Dill. Mun. Corp., § 457. 

3 Paterson v. Mayor, 17 N. Y. 449; Brady v. Mayor, 17 N. Y. 312; 
Hodges v. Buffalo, 2 Denio (N. Y.), 110; Gates v. Hancock, 45 N. H. 
528; Eeilly v. Philadelphia, 60 Pa. St. 467; Withelm v. Cedar County, 
50 Iowa, 524; Smith v. Newburgh, 77 N. Y. 130. 



§ 195.] MUNICIPAL CONTRACTS. 259 

class of acts to particular officers or agents other than 
the governing body, or where it has prescribed certain 
formalities as conditions to the performance of any de- 
scription of corporate business, the proper functionaries 
must act and the designated forms must be observed, 
and generally no act of recognition or ratification can 
supply a defect in these respects. 1 Persons dealing with 
a municipal corporation are bound to know the extent 
of its authority, and when the charter has not been 
complied with they are not in a position to set up a rati- 
fication. 2 While ratification is equivalent to previous 
authority, the assent of the municipality must be shown. 
So ratification may be inferred from acquiescence after 
knowledge of all the material facts, or where the acts of 
the corporation are inconsistent with any other supposi- 
tion. 3 

§ 195. Contracts of compromise and arbitration. — It is 
well settled that a municipal corporation has power to 

1 Paterson v. Mayor, supra. 

2 Marsh v. Fulton County, 10 Wall. (U. S.) 676; Cowen v. West 
Troy, 43 Barb. (N. T.) 48; Brown v. Mayor, 63 N. Y. 239; McDonald v. 
Mayor, 68 N. Y. 23; Horton v. Thompson, 71 N. Y. 513; Hague v. 
Philadelphia, 48 Pa. St. 528; Green v. Cape May, 41 N. J. L 45; 
Sault Ste. Marie County v. Van Duzen, 40 Mich. 429; Jefferson 
County v. Arrighi, 54 Miss. 668; Nash v. St. Paul, 11 Minn. 174; Mc- 
Cracken v. San Francisco, 16 Cal. 591; Alexander v. Caldwell, 83 
N. Y. 480; Union Township v. Gibboney, 94 Pa. St. 534; Parsons v. 
Monmouth, 70 Me. 262; Bryan v. Page, 51 Tex. 532. 

3 Wilson v. School District, 32 N. H. 118; People v. Swift, 31 Cal. 26; 
Blen v. Bear River County, 20 Cal. 602; Clark v. Lyons County, 
8 Nev. 181; Howe v. Keeler, 27 Conn. 538; Emerson v. Newburgh, 13 
Pick. (Mass.) 377; Mills v. Gleason, 11 Wis. 470; Backman v. Charles- 
ton, 42 N. H. 125; Trott v. Warren, 2 Fairf. (11 Me.) 227; Topsham 
v. Rogers, 42 Vt. 199; St. Louis v. Armstrong, 56 Mo. 298; Lamm v. 
Deposit Association, 40 Md. 233; Chouteau v. Allen, 70 Mo. 290; New 
Orleans v. South Bank, 31 La. Ann. 560. 



260 MUNICIPAL CONTEACTS. [§ 196. 

effect the compromise of claims held against it. 1 So a 
city council has authority to compromise with a party 
against whom the city holds a judgment, by accepting, 
before the expiration of the time for appeal, one-half of 
such judgment and costs as payment in full. 2 And where 
a judgment had been obtained against a fire district for 
injuries resulting from the conducting of electricity into 
a house by means of one of the wires in the district's elec- 
tric fire-alarm system, it was held that a settlement of 
the claim by compromise was not ultra vires or without 
consideration. 3 So, also, a municipal corporation, unless 
disabled by positive law, can submit to arbitration all un- 
settled claims, with the same liability to perform the 
award as would rest upon a natural person; but such 
power must be exercised by ordinance or resolution of 
the corporate authorities. 4 But where a way was laid 
out under what was termed the " betterment law," for 
determining the amount of the damages of the land- 
owners by the laying out of a street under such law, an 
agreement by which a city undertook with the owners of 
land taken for a street to submit the assessment of dam- 
ages and betterments to arbitration was held ultra vires 
and void, and the city could not maintain an action to 
enforce the award made under such submission. 8 

§ 196. Limitation on contracting indebtedness. — Con- 
stitutional provisions exist in many of the states of the 

•People v. San Francisco, 37 CaL 655; People v. Coon, 25 Cal. 648; 
Grimes v. Hamilton Co., 37 Iowa, 290; Mills Co. v. Burlington, 47 
Iowa, 66; State v. Martin, 43 N. W. Rep. 244; Bean v. Joy, 23 Me. 117, 

2 Agnew v. Brail, 124 111. 312. 

3 Prout v. Inhabitants, etc., 28 N. E. Rep. 679. 

4 Shawneetown v. Baker, 85 111. 563; Kane v. Fond du Lac, 40 Wis. 
495; Dill. Mun. Corp., § 478; Dix v. Dummerston, 19 Vt 263; Paret 
v. Bayonne, 39 N. J. L. 559. 

6 Somerville v. Dicker man, 127 Mass. 272. 



§ 196.] MUNICIPAL CONTRACTS.. 261 

Union prohibiting municipal corporations from increas- 
ing their indebtedness beyond certain designated limits, 
the limit usually being fixed by reference to some speci- 
fied per centum of the taxable property of the munici- 
pality. Therefore, where a city or other municipal cor- 
poration is so prohibited, when such municipality shall 
have reached the limit prescribed by the constitution it 
is prohibited from making any contract whereby an in- 
debtedness is created, even for the necessary current ex- 
penses in the administration of the affairs and govern- 
ment of the corporation. 1 Such constitutional provisions 
cannot be evaded by contracting indebtedness to be dis- 
charged in the future out of taxes which are to be levied 
in the future, nor can a city by any device actually in- 
crease its indebtedness, — such increase above the limit 
fixed being illegal. 2 So if a contract is void because it 
creates a liability in excess of the limit of indebtedness, 
the municipality has no power to make any appropria- 
tion therefor, or to levy a tax to pay interest. 3 And if 
an action be brought against the municipal authorities to 
compel them to levy a tax for the payment of an in- 
debtedness in excess of the constitutional limit, a tax- 
payer is entitled to intervene and defend if the munici- 
pal authorities refuse to set up the defense. 4 All persons 

1 Price v. Quinoy, 105 111. 138; Baltimore v. Gill, 31 Md. 375; Spring- 
field v. Edwards, 84 111. 77; "Weston v. Syracuse, 17 N. Y. 110; Hitch- 
cock v. Galveston, 96 U.S. 341; United States v. Ft. Scott, 99 U. S. 
152; French v. Burlington, 42 Iowa, 614; Council Bluffs v. Stewart, 
51 Iowa, 385; Appeal of City of Erie, 91 Pa. St. 398; Buchanan v. 
Litchfield, 102 U. S. 278; Walsh v. Augusta, 67 Ga. 293. 

^Springfield v. Edwards, 84 I1L 626; Law v. People, 87 III. 385; 
Fuller v. Chicago, 89 111. 282; Fuller v. Heath, 89 III 296; Garrison 
v. Chicago, 7 Biss. 480. 

» Law v. People, supra. 

* Richards v. Supervisors of Lyon County, 69 Iowa, 612. 



262 MUNICIPAL CONTRACTS. [§ 197. 

are chargeable with notice of the constitutional limita- 
tion on the power of municipal corporations to become 
indebted. 1 

§ 197. Instances where increase denied. — If the munic- 
ipal indebtedness has reached the constitutional limit, a 
city cannot enter into an agreement to pay a stated sum 
as rent for a market-house, if its annual revenues are in- 
sufficient, over and above the interest of its indebtedness 
and the ordinary expenses of the city, to meet the rent 
proposed to be paid. 2 In order to bring the indebtedness 
within the constitutional limit, however, it is not neces- 
sary that the debt contracted should be actually payable. 
Thus, where a city contracted for the construction of 
water-works, it was held that it became indebted at the 
time of making the contract, and not merely upon com- 
pletion and acceptance of the work. 3 But a constitutional 
provision limiting the amount of indebtedness does not 
affect contracts made before the adoption of the provis- 
ion. 4 It has been held in Iowa that a contract made by 

i People v. May, 9 Colo. 404; Law v. People, 87 111. 385; French v. 
Burlington, 42 Iowa, 614. 

In People v. May, supra, the court say: "The hardships and in- 
conveniencies resulting from this construction are urged upon our 
attention. To such appeals the language of the courts is uniform. 
The province of the judiciary is not to make the law, but to con- 
strue it. The meaning of a constitutional provision being plain, it 
must stand, be recognized and obeyed as the supreme law of the 
land. It is not for us, but for those who made the instrument, to 
supply its defects. If the legislature or the court may take that 
office upon themselves, or under color of construction, or upon any 
other specious ground, they may depart from that which is plainly 
declared, the people may well despair of ever being able to set any 
boundary to the powers of the government." 

2 Appeal of City of Erie, 91 Pa. St. 398. 

sCulbertson v. Fulton, 127 111. 30; Law v. People, 87 111. 385. 

* County of Moultrie v. Bank, 92 U. S. 631; Davenport, etc. Co. v. 



§ 198.] MUNICIPAL CONTRACTS. 



263 



a city whose indebtedness has already reached the con- 
stitutional limit, by which a contractor agrees to construct 
a sewer, and to accept in payment of the contract price 
certificates assessing the benefits against the property 
benefited, does not create any liability on the part of the 
municipality, and is not within the constitutional pro- 
hibition. 1 Where the charter of a municipal corporation 
provided that the common council should have no power 
" to contract debts, incur liabilities, or make expenditures 
in any one year which shall exceed the revenue for the 
same year," a contract entered into without submitting 
the question to the tax-payers, for a supply of water for 
a term of years at a cost per year which would not exceed 
any such percentage as could be allowed in any one year, 
was held void, and there could be no recovery thereon 
for any water that had been furnished thereunder. 3 

§198. Equity will enjoin illegal, creation of debt — A 
municipal corporation will not be permitted to dispose 
illegally of corporate money or to illegally create a debt, 
and may be prevented by an application of resident tax- 
payers for an injunction. 3 " Of the right of resident tax- 
Davenport, 13 Iowa, 229; Bound v. "Wisconsin Cent. E. Co., 45 Wis. 
543. 

1 Davis v. Des Moines, 71 Iowa, 500. 

2 Niles Water-works v. Niles, 59 Mich. 311. 

3 Crampton v. Zabriskie, 101 U. S. 601; Gifford v. Railroad Co., 10 
N.J. Eq. 171; Baltimore v. Gill, 31 Md. 375; Wade v. Richmond, 18 
Grat. (Va.) 583; Page v. Allen, 58 Pa. St. 338; Stevens v. Railroad 
Co., 29 Vt. 546; Webster v. Harrington, 32 Conn. 131; Terrett v. 
Sharon, 34 Conn. 105; Merrill v. Plainfield, 45 N. H. 126; Normand 
v. Otoe Co., 8 Neb. 18; Oliver v. Krightley, 24 Ind. 514; Drake v. 
Phillips, 40 111. 388; Grant v. Davenport, 36 Iowa, 396; Hooper v. 
Ely, 46 Mo. 505; Douglass v. Placerville, 18 Cal. 643; Patterson v. 
Bowes, 4 Grant (Canada), 170; West Guillimbury v. Railroad Co., 23 
Grat. (Va.) 383. 



264 MUNICIPAL CONTRACTS. [§ 198. 

payers to invoke the interposition of a court of equity to 
prevent an illegal disposition of the moneys of the county, 
or the illegal creation of a debt which they in common 
with other property holders of the county may otherwise 
be compelled to pay, there is at this day no serious ques- 
tion. The right has been recognized by the state courts 
in numerous cases, and from the nature of the powers 
exercised by municipal corporations, the great danger of 
their* abuse, and the necessity of prompt action to prevent 
irremediable injuries, it would seem eminently proper for 
courts of equity to interfere upon the application of the 
tax-payers of a county to prevent the consummation of a 
wrong, in excess of their power, to create burdens upon 
property holders. Certainly in the absence of legislation 
restricting the right to interfere in such cases to public 
officers of the state and county, there would seem to be no 
substantial reason why a bill by or on behalf of individual 
tax-payers should not be entertained to prevent the mis- 
use of corporate powers." * 

1 Field, J., in Crampton v. Zabriskie, 101 U. S. 601. 



CHAPTER XV. 

PARTICULAR POWERS AND LIABILITIES OF MUNICIPAL 
CORPORATIONS. 

§ 199. Exclusive control over streets. 

200. "When estopped to deny existence of street. 

201. Power to grade and improve. 

202. Discretionary powers as to improvement 

203. Liability for consequential damages. 

204. Liability for accidents upon streets. 

205. Instances of liability for defective streets. 

206. Notice to authorities required. 

207. Sewers — General powers as to. 

208. Discretion in selecting sewer system. 

209. Duty to provide sewer outlet. 

210. City not insurer of condition of sewer. 

211. Liability for injury from defective sewer. 

212. Power to abate nuisances. 

213. Liability as to nuisances. 

214. Powers as to quarantine regulations, 

215. Powers as to public wharves. 

216. Exclusive privileges to gas or water companies. 

217. Contracts as to gas and water supply. 

218. Power to regulate rates. 

219. Liability for damages owing to inadequate water supply. 

220. Doctrine of respondeat superior. 

221. Distinction between public gwasi-corporations and municipal 

corporations. 

222. Not liable for damages arising from ultra vires acts of officers. 

§ 199. Exclusive control over streets. — When the charter 
of a city does not confer upon it in express terms the ex- 
clusive power over its streets, it has not the control of 
them to the exclusion of the sovereign power of the state. 1 

1 Grand Rapids Electric Co. v. Gas Co., 21 Am. & Eng. Corp. Cas. 
270; Dill. Mun. Corp., § 547; State v. Coke Co., 18 Ohio St. 262; Gas 



266 STEEETS, SEWERS, ETC. [§§ 200, 201. 

Nothing short of the whole sovereign power of the state 
can confer exclusive rights and privileges in public streets 
dedicated or acquired for public use, and which are held 
in trust for the public at large. It is the general doctrine 
that municipalities, under the power of exclusive control 
over their streets, may allow any use of them consistent 
with the public objects for which they are held. 1 

§ 200. Wlien estopped to deny existence of street. — If 
the authorities of a city or town have treated a place as 
a public street, taking charge of it and regulating it as 
they do other streets, and an individual is injured in con- 
sequence of the negligence and carelessness with which 
this is done, the corporation cannot, when it is sued for 
such injury, throw the party upon an inquiry into theTegu- 
. larity of the proceedings by which the land became a 
street or into the authority by which the street was origi- 
nally established. 2 

§ 201. Power to grade, improve and alter streets. — If 
the authorities of a municipal corporation are authorized 
by an act of the legislature to grade, improve, alter or 

Co. v. Light Co., 115 U. S. 659; Cooley, Const. Lim. 38, 207, 208; Gas 
Light Co. v. Gas Co., 25 Conn. 19; Gas Light Co. v. Saginaw, 28 Fed. 
Eep. 529; Gas Co. v. Middleton, 59 N. Y. 228; East Hartford v. Bridge 
Co., 10 How. (U. S.) 511; Minturn v. Larue, 23 How. (U. S.) 435; Har- 
rison v. State, 9 Mo. 530; "Wright v. Nagle, 101 U. S. 796; Davis v. 
Mayor, 14 N. Y. 506; Railroad Co. v. Railway Co., 10 Wall. (U. S.) 52; 
Same v. Same, 12 Fed. Rep. 308; Parkersburg Gas Co. v. Parkers- 
burg, 4 S. E. Rep. (W. Va.) 650. 

1 Grand Rapids Electric Light Co. v. Grand Rapids, etc. Gas Co., 
supra. 

2 Mayor v. Sheffield, 4 Wall. (U. S.) 189; James v. Portage, 48 Wis. 
677; Bishop v. Centralia, 49 Wis. 609'; Coates v. Canaan, 51 Vt. 131; 
Sewell v. Cahous, 75 N. Y. 45; Steck v. Lancaster, 57 N. H. 88; Man- 
derchid v. Dubuque, 25 Iowa, 108; Aurora v. Cobshire, 55 Ind. 484; 
Phelps v. Mankato, 23 Minn. 277. 



§ 201.] STREETS, SEWERS, ETC. 267 

re-lay streets, such authority extends only to public streets 
or highways, and will not give authority to alter any 
road owned by other persons. 1 As a municipal corpora- 
tion cannot contract in any other mode than is author- 
ized by its charter, if the preliminaries to be observed, 
and the manner in which a contract for a local improve- 
ment shall be entered into, are prescribed by a manda- 
tory charter provision or law, its directions must be com- 
plied with. 2 And if such contract be invalid when made 
for a failure to comply with the statutory requirements, 
its subsequent ratification by the corporation requires the 
observance of the same formalities and provisions neces- 
sary to be complied with in the making of a valid contract. 3 
A general power to lay out and open streets in a city im- 
plies power to establish the grade of such streets; 4 and 
power to grade streets includes power to make contracts 
relating to the same, with respect to the work to be done 
and compensation to be paid. 5 Accordingly, when to 
make a contract for the improvement of a street, and to 
provide the funds to pay for it, the charter prescribed 

iQuin v. City of Paterson, 27 N. J. L. 35; McGuire v. Rapid City, 
43 N. W. Rep. 706. 

STerre Haute v. Lake, 43 Ind. 480; People v. San Francisco, 36 
Cal. 595; Butler v. Charleston, 7 Gray (Mass.), 12; Zottman v. San 
Francisco, 20 Cal. 96; Brady v. Mayor, 20 N. Y. 312; Murphey v. 
Louisville, 9 Bush (Ky.),189; Stecket v. East Saginaw, 22 Mich. 104; 
Taft v. Pittsford, 28 Vt. 286; Dill v. Inhabitants, 7 Met. (Mass.) 438; 
Bridgeport v. Railroad Co., 15 Conn. 475; Marsh v. Fulton Co., 10 
Wall. (IT. S.) 676; Horn v. Baltimore, 30 Md. 218; Steam Nav. Co. v. 
Dandridge, 8 Gill & J. (Md.) 248; Baltimore v. Eschbach, 18 Md. 276; 
Haynes v. Covington, 13 Sm. & M. 408. 

3 Town of Durango v. Pendleton, 8 Colo. 257. 

* Smith v. Washington, 20 How. (U. S.) 135: Himmelmann v. Hoad- 
ley, 44 Cal. 213; Fish v. Mayor, 6 Paige (N. Y.), 268; Creal v. Keokuk, 
4 Greene (Iowa), 47. 

s Sturtevant v. Alton, 3 McLean (U. S.), 393; People v. Flagg, 17 

N. Y. 584 



268 STEEETS, SEWEKS, ETC. [§ 202. 

that it should only be done by local assessments on abut- 
ting property, this amounts to a direct inhibition against 
making any contract for such improvement only as such 
mode is pursued, and the failure or omission of the city 
to create the fund from the sources indicated to pay for 
such improvement, when made, will not subject the city 
to any general liability therefor. 1 

§ 202. Discretionary power as to improvement. — "Where 
a city, by special charter or otherwise, is vested with the 
exclusive control of its streets and with power to regu- 
late or improve the same, the manner in which they may 

■ 1 Portland L. & M. Co. v. East Portland, 18 Oreg.'21. 

In Portland, etc. Co. v. East Portland, supra, Lord, J., in discuss- 
ing this question, said: 

"The reason is plain. As the city is -without any general power 
to contract for and provide the funds to pay for such improvements 
except by way of local assessment, it necessarily results that it can- 
not be subject to any general liability. To subject the city to a 
general liability there must be some general power under which it 
would be authorized to raise the funds to pay for such improve- 
ments. But when such general power is conferred, and an improve- 
ment is projected to be paid for out of funds to be derived from local 
assessments, and the city authorities upon whom is devolved the 
duty neglect or fail to take the requisite proceedings to create the 
lien which is to supply the funds to pay for such improvement, 
the improvement being within the scope of the general power of the 
corporation independent of the special mode by local assessments, 
such neglect or omission after the improvement is made will subject 
the city to a general liability to pay therefor. . . .1 
. "A general liability is based upon the general power conferred to 
make such improvements and to defray the expenses thereof out of 
the general fund; for if the city has not such general power, but is 
confined exclusively in making and defraying the expenses of such 
improvements to the fund derived from local assessments upon 
abutting property, there would be no authority even though there 
was a failure to perform all the required acts intended to provide 
such fund, and to subject the acts to a general liability. It would 
be ultra vires." 



§ 203.] STREETS, SEWEES, ETC. 269 

be improved must, in a large measure, be left to the dis- 
cretion of the authorities ; but when the discretion has 
been exercised and the street or improvement made, the 
duty of keeping it in repair is ministerial, and for neglect 
to perform such duty an action will lie. 1 So the authori- 
ties of a city may rightfully cause a street to be graded, 
and when the entire width is not needed for travel they 
may cause a strip in the center thereof to be sodded, in- 
stead of graveling the entire street, and provide for the 
payment of the cost thereof by special assessment upon 
the property benefited thereby. 2 

§ 203. Liability for consequential damages caused by 
improvement. — It is the general doctrine that persons 
appointed or authorized by law to make or improve a 
highway are not answerable for consequential damages 
if they act within their jurisdiction and with care and 
skill. 3 Accordingly, a municipal corporation is not liable 
for consequential damages where the act complained of 
was done by it or its officers under and pursuant to au- 
thority conferred by a valid act of the legislature, and 

1 Urquhart v. Ogdensburg, 91 N. Y. 67; Hines v. Lookport, 50 N. Y. 
238; Mills v. Brooklyn, 33 N. Y. 489; Lansing v. Toolan, 37 Mich. 152; 
Marquette v. Cleary, id. 296; Darling v. Bangor, 68 Ma 113; Davis 
v. City Council, 51 Ala. 139; Campbell v. Montgomery, 53 id. 527; 
White v. Yazoo City, 27 Miss. 357; Hill v. Charlotte, 72 N. C. 55; 
Dewey v. Detroit, 15 Mich. 307; Carr v. Northern Liberties, 36 Pa. St. 
334; Grant v. Erie, 69 Pa. St. 430; Western College v. Cleveland, 12 
Ohio St. 375. 

2 Murphy v. Peoria, 119 111. 509. 

3 Transportation Co. v. Chicago, 99 TJ. S. 641; British Cast-plate Co. 
v. Meredith, 4 Durnf. & E. 794; Sutton v. Clarke, 6 Taunt. 28; Boul- 
ton v. Crowther, 2 Barn. & Cres. 703; Green v. Borough of Reading, 
9 Watts (Pa.), 382; O'Connor v. Pittsburg, 18 Pa. St. 187; Callendar 
v. Marsh, 1 Pick. (Mass.) 418; Smith v. Washington, 20 How. (U. S.). 
135. i 



270 STREETS, SEWERS, ETC. [§ 203. 

there had been no want of reasonable care or want of 
reasonable skill in the execution of the power. 1 So a 
municipal corporation authorized by law to improve a 
street by building on the line thereof a bridge over or 
a tunnel under a navigable river where it crosses the 
street incurs no liability for the damages unavoidably 
caused to adjoining property by obstructing the streets 
or the river, unless such liability be imposed by statute. 2 
Nor is a municipal corporation liable for consequential 
injury to abutting lots owing to a change in the grade of 
a street where such change is made under authority of 
law and with due care. 3 And if in the process of repairing 
or grading a street the walls of a dwelling-house or other 
building lose their support and in consequence fall, the 
owner cannot recover damages, provided due care has been 
used. 4 Where, however, the city, in grading the streets 

1 Dill. Mun. Corp., § 987; Transportation Co. v. Chicago, 99 U. S. 
635; Smith v. Washington, 20 How. (U. S.) 135; Goszler v. George- 
town, 6 Wheat. (U. &.) 593; Tyson v. Milwaukee, 50 Wis. 78; Owens 
v. Milwaukee, 47 Wis. 461; Humes v. Mayor, 1 Humph. (Tenn.) 403; 
Nebraska City v. Lampkin, 6 Neb. 27; Stookford v. St. Louis, 4 Mo. 
App. 564; Hunt v. Boonville, 65 Mo. 620; White v. Yazoo City, 27 
Miss. 357; Alden v. Minneapolis, 24 Minn. 254; Kaist v. St. Paul R. 
Co., 22 Minn. 118; Pontiao v. Carter, 32 Mich. 164; Reynolds v. Shreve- 
port, 13 La. Ann. 426; Newport Bridge Co. v. Foote, 9 Bush (Ky.), 
264; Noyes v. Mason City, 53 Iowa, 418; Quincy v. Jones, 76 111. 231; 
Fulla v. Atlanta, 66 Ga. 80; Dorman v. Jacksonville, 13 Fla. 538; 
Simmons v. Camden, 26 Ark. 276; Shaw v. Crocker, 42 Cal. 435; Tren- 
ton, etc. Co. v. Rabb, 36 N. J. L. 335; Carr v. Northern Liberties, 35 
Pa. St. 324; Barritt v. New Haven, 42 Conn. 174; Simmons v. Provi- 
dence, 12 R. L 8; Hovey v. Mayor, 43 Me. 322. 

2 Transportation Co. v. Chicago, 99 U. S. 635. 

'Smith v. City of Eau Claire, 78 Wis. 457; Dore v. Milwaukee, 42 
Wis. 108; Dill. Mun. Corp., §§ 988, 990. 

« Mitchell v. Rome, 49 Ga. 19; St. Louis v. Gurno, 12 Mo. 414; Pon- 
tiac v. Carter, 32 Mich. 164; Quincy v., Jones, 76 111. 231; Chambers 
v. Satterlee, 40 Cal. 297; Crossett v. Janesville, 28 Wis. 420. 



§ 204.] STREETS, SEWERS, ETC. 271 

and making public improvements, fails to exercise proper 
care and skill in the selection of a plan, and by reason 
thereof an injury to the owner of private property occurs, 
which by the exercise of reasonable care and skill could 
have been avoided, the city is liable for such injury. 1 No 
responsibility attaches, it has been held, for damages 
done by the diversion of surface water, where the diver- 
sion is merely incidental to and occasioned by the making 
or alteration of street grades. 2 But it has been held, on 
the other hand, that where a municipal corporation puts 
into execution a scheme of improvement by which sur- 
face water, collected from a large area, is prevented from 
following the grades of the street, and is carried by arti- 
ficial means from where it would otherwise be discharged 
and made to flow onto the land of one person in ease of 
the lands of others, there an actionable wrong is commit- 
ted. 3 And where the quantity of surface water sent to 
the point of discharge is increased by an enlargement of 
the area of drainage, but such enlargement results en- 
tirely from making the grade of the streets conform to 
the grade established by the proper authority, any injury 
resulting from the increase in the quantity of water dis- 
charged at that point is regarded in law as damnum 
absque, injuria.* 

§ 204. Liability for accidents upon streets.— A munici- 
pal corporation is not an insurer against accidents upon 
its streets and sidewalks, as seems to be quite generally 
supposed by the community at large, nor is every defect 

i City of Valparaiso v. Adams, 123 Ind. 250; Derinzy v. Ottawa, 15 
Ont. Rep. 712. 

2 Miller v. Norristown, 47 N. J. Eq. 62. 

3 Miller v. Norristown, supra; Field v. West Orange, 36 N. J. Eq. 
118, 37 id. 600; Torrey v. Scranton, 133 Pa. St. 173. 

4 Miller v. Norristown, supra. 



272 STREETS, SEWERS, ETC. [§ 204. 

therein, though it may cause the injury sued for, action- 
able. It is sufficient if the streets are in a reasonably 
safe condition for travel in the ordinary modes, by night 
as well as by day. 1 Accordingly, a city is not liable for 
injuries caused to a person by others while using the 
public streets for coasting. 2 Nor to a person injured by 
the discharge of a cannon by a crowd collected together 
for the purpose of firing the cannon for their amusement. 8 
Nor for injury caused by the fall of snow and ice from a 
roof overhanging the sidewalk. 4 Nor by the fall of a 
weight attached to a flag suspended across the street. 5 
But it has been held that where a city permits a wooden 
awning or roofing to be constructed over the sidewalk, 
it is liable for an injury occasioned by a defect therein, 
although it is not apparently in bad repair. 6 Nor is a 
city liable for injury done to property by a mob, unless 
it is so specially provided by statute. 7 But when it is 
shown that the city officers had actual knowledge of the 
defect, the city is liable for injuries sustained by a person 
falling into a sewer, owing to the displacement of a man- 

1 Dill. Mun. Corp., §789. 

2 Faulkner v. Aurora, 3 Am. & Eng. Corp. Cas. 520; Pi§rce v. New 
Bedford, 129 Mass. 534; Ray v. Manchester, 46 N. H. 59; Schultz v. 
Milwaukee, 49 Wis. 254; Hutchinson v. Concord, 41 Vt. 271; Steele v. 
Boston, 128 Mass. 583. 

'Borough, etc. v. Fitzpatrick, 94 Pa. St. 121. 

<Norristown v. Thayer, 67 Pa. St. 355; Hutson v. Mayor, 9 N. Y. 
163; Davenport v. Mayor, 37 N. Y. 568; Requa v. Rochester, 45 N. Y. 
120; Hume v. Mayor, 74 N. Y. 264; Grove v. Ft. Wayne, 45 Ind. 429; 
House v. Montgomery Co., 60 Ind. 580; Drake v. Lowell, 13 Met. 292; 
Day v. Mitford, 5 Allen, 98; Merrill v. Portland, 4 Clif. C. C. 438. 

5 Hewison v. New Haven, 34 Conn. 136; Chicago v. Fowler, 60 111: 
322. 

6 Dill. Mun. Corp., § 959, and cases cited; Louisiana v. New Orleans, 
109 U. S. 285. 

' Louisiana v. New Orleans, supra. 



<§ 205.] STREETS, SEWEES, ETC. 273 

hole cover in the street; 1 and for injury to an ox which 
stepped into a hole in an embankment, when the street 
overseer had neglected to repair it or place a warning 
' -signal at its approach. 2 

§ 205. Instances of liability for defective streets and 
sidewalks. — It is the duty of a municipal corporation not 
only to keep its streets and highways unobstructed and 
in repair, but also to maintain its sidewalks free from ob- 
structions and defects. 3 And a city is liable in damages 
for an injury resulting from such defects, although the 
•sidewalk may not have been constructed by authority of 

' the city. 4 For if a municipal corporation knowingly per- 

: mits a way or walk constructed Upon one of its streets by 
a private person, and designed for the use of pedestrians, 
to remain and be so used, the authorities by their official 

' acts inciting and inducing such use, the duty devolves 
upon the corporation to keep the way in proper repair as 
a sidewalk. 5 The duty of a city to exercise reasonable 
care to keep its sidewalks in a safe condition does not ex- 
tend to the removal of ice, which constitutes no other 

- effect than slipperiness, there being no such accumulation 
of ice as to constitute an obstruction to travel, and no 
ridge or inequalities of such height, or lying at such in- 
clination or angle, as would be likely to trip passengers 

iBarr v. City of Kansas, 105 Mo. 550. 

2 Bradford v. Mayor, 8 So. Rep. 683. 

SReinhard v. Mayor, 2 Daly (N. Y.), 243; Higert v. Greencastle, 43 
Ind. 574; Furnell v. St. Paul, 20 Minn. 117; Manchester v. Hartford, 
30 Conn. 118; Hubbard v. Concord, 35 N. H 52. 

* Higert v. Greencastle, supra; Boucher v. New Haven, 40 Conn. 

457 

■ Graham v. Albert Lea, 50 N. W. Eep. (Minn.) 1108; Estelle v^ake 
Crystal, 2.7 Minn. 243; Champaign v. Mclnnis, 26 111 App. 338; Wears 
v. Fitchburg, 110 Mass. 334; Saulsbury v. Ithaca, 94 N. Y 27; C ty of 
Flora v. Nancy, 26 N. E. Rep. 645; Mansfield v. Moore, 124 111. 133. 
18 



274 STREETS, SEWERS, ETC. ' [§ 206:. 

or cause them to fall. 1 A municipal corporation is under 
no obligation to construct a street crossing on the same 
level as the sidewalk. 8 And it has been held that where 
a sidewalk was at an elevation of four inches above the 
level of the crossing, it was not such evidence of negli- 
gence in the construction of the crossing as to make the 
corporation liable for injury to a foot passenger sustained 
by striking her foot against the curbstone while attempt- 
ing to cross the street. 3 

§ 206. Notice to authorities required. — But a city will 
not be held liable, as a general rule, for injuries from a 
defective sidewalk or street, unless the authorities have 
notice of the defect, or unless they have notice of such 
facts and circumstances as would; by the exercise of rea- 
sonable diligence, lead a prudent person to such knowl- 
edge. 4 Actual notice to the public authorities is not, in 
all cases, however, required, and it has been held that 
negligence may be inferred from the omission by the cor- 
poration to cause dangerous obstructions to be removed 
from the streets after sufficient time has elapsed to afford 

JHenckes v. Minneapolis, 42 Minn. 530; Stanton v. Springfield, 12 
Allen (Mass.), 566; Nason v. Boston, 14 Allen (Mass.), 508; Stone v. 
Hubbardston, 100 Mass. 49; Smyth v. Bangor, 72 Me. 249; Mekellar 
v. Detroit, 57 Mich. 158; Taylor v. Yonkers, 105 N. Y. 202; Chicago v. 
MoGiven, 78 111. 347; Broburg v. Des Moines, 63 Iowa, 523; Cook v. 
Milwaukee, 24 Wis. 270; Buckley v. Prescott, 12 Ont. App. 637. 

2 Miller v. St. Paul, 38 Minn. 134. 

'London v. Goldsmith, 16 Sup. Ct. Can. Rep. 231. 

4 City of Chicago v. Stearns, 105 111. 554; Centralia v. Krouse, 64 
111. 19; Rapho v. Moore, 68 Pa. St. 404; Cleveland v. St. Paul, 18 Minn. 
279; Doulson v. Clinton, 33 Iowa, 397; Mayor v. Sheffield, 4 Walk 
(U. S.) 189; Portland v. Richardson, 54 Me. 46; Chicago v. Robbins, 
2 Black (U. S.), 418; Johnston v. Charleston, 3 S. G. 332; McGinnity 
v. New York, 5 Duer (N. Y), 674; Griffin v. New York, 9 N. Y. 456; 
Durant v. Palmer, 5 Dutch (N. J.) 544; Sterling v. Thomas, 60 I1L 
264; Jeverin v. Eddy, 52 111. 189; Estelle v. Lake Crystal, 27 Minn. 243. 



§ 207.] STREETS, SEWEES, ETC. 275 

a presumption of knowledge of their existence and an 
opportunity to effect their removal. 1 And four hours has 
been held to be a reasonable time. 2 

§ 207. Sewers — General powers as to. — The authority 
to construct sewers is a general one, and resides in all mu- 
nicipal corporations, unless expressly denied to them by 
the legislature. 3 This authority is one which may be 
rightfully exercised upon any of the highways of the mu- 
nicipality, for it is invested with exclusive authority over 
all streets and highways within its limits. 4 Upon the 
principle that a grant of power carries with it, by impli- 
cation, the right to use all means and instrumentalities 
necessary to a beneficial exercise of the power, the grant 
of a general power to construct sewers, without any re- 
striction as to the mode in which they are to be built or 
operated, must be construed with reference to the situa- 
tion and requirements of the district in which the sewers 
are to be constructed, and must be held to confer author- 
ity to construo^Jbem in such a manner and with such ap- 
pliances as may be necessary to render them serviceable 
and effective. 5 So, where a system of sewerage of the or- 
dinary kind cannot be used to advantage for want of suf- 
ficient fall to carry away the contents of the mains and 
pipes by the force of gravitation, villages and other mu- 
nicipal corporations under a general grant of power to 

iRequa v. Rochester, 45 N. Y. 136. 

2 Bradford v. Mayor, 8 S. Rep. 683. 

'Ft. Wayne v. Coombs, 107 Ind, 75; Leeds v. Richmond, 103 Ind. 
372. 

4 Ft. Wayne v. Coombs, supra. 

8 Drexel v. Town of Lake, 127 111. 54; St. Louis Bridge Co. v. Peo- 
ple, 125 111. 226; Cone v. Hartford, 28 Conn. 363: Fisher v. Harnsburg, 
2 Grant Cas. (Pa.) 291 ; Stoudinger v. Newark, 28 N. J. Eq. 187 ; Glasby 
v. Morris, 18 N. J. Eq. 72; Trapshagen v. Jersey City, 29 N. J. Eq. 206; 
Michener v. Philadelphia, 118 Pa. St. 535. 



276 STREETS, SEWERS, ETC. [§ 20$. 

construct main drains and sewers, etc., without any lim- 
itation or restriction as to the mode in which they shall 
be built or operated, will have the right to construct 
pumping works, to be used in the working and use of 
sewers. 1 But a city council'has not the power, by calling 
in its ordinance a "sewer" a "street," to construct the 
one under the pretense of repairing the other, so as to lay a 
' burden of taxation, which should have been borne by the 
public at large, upon a few adjacent property-holders. 3 

§ 208. Discretion of city in selecting sewer system. — The 
duties of the municipal authorities in adopting a general 
plan of drainage and determining when and where sewers 
shall be built, of what size and of what level, are of a 
quasi-judicial nature, involving the exercise of deliberate 
judgment and large discretion and depending upon con- 
siderations affecting the public health and general con- 
venience throughout an extensive territory; and the 
. exercise of such judgment and discretion in the selection 
and adoption of the general plan or system of drainage is 
not subject to revision by a court. 3 But the construc- 

i Drexel v. Town of Lake, 127 111. 54. 

2 Clay v. Grand Rapids, 27 N. W. Rep. 695. 

8 Johnson v. District of Columbia, 118 U. S. 19; Child v. Boston, 4 
Allen (Mass.), 41; Mills v. Brooklyn, 32 N. Y. 489; Radoliff's Ex'r v. 
Mayor, 4 N. Y. 195; Franklin Wharf Co. v. Portland, 67 Me. 46; Has- 
kell v. New Bedford, 108 Mass. 208; Savannah v. Spears, 66 Ga. 304; 
Lynch v. New York, 76 N. Y. 60. 

In Mills v. Brooklyn, supra, the court say: "The duty of draining 
the streets and avenues of a city or village is one requiring the ex- 
ercise of deliberation, judgment and discretion. It cannot, in the 
nature of things, be so executed that in every single moment every 
square foot of the service shall be perfectly protected against the 
consequence of water falling from the clouds upon it. This duty is 
not in a technical sense a judicial one, for it does not concern the 
administration of justice between citizens; but it is of a judicial 
nature, for it requires, as I have said, the same qualities of delibera- 



§§ 209, 210.] STBEETS, SEWEKS, ETC. 277 ' 

tion and repair of sewers according to the general plan 
so adopted are simply ministerial duties, and for any neg- 
ligence in so constructing a sewer, or keeping it in repair, 
the municipality which has constructed and owns the 
sewer may be sued by a person whose property is thereby 
injured. 1 

§ 209. Duty to provide sewer outlet. — It is the law that 
if a municipal corporation by its system of construct- 
ing sewers renders an outlet necessary, it must provide 
one. 2 The outlet is a necessary part of the sewer, and if 
the municipal corporation enters upon the work of con- 
structing a sewer it assumes control over the entire work, 
and must construct and maintain it with ordinary care 
and skill. This obligation extends to the entire sewer, 
not merely to such parts of it as are on property owned 
by the city, and it cannot escape the consequences result- 
ing from negligence by asserting that part of the sewer 
was constructed on private property. 3 

§ 210. City not insurer of condition of sewer. — A mu- 
nicipal corporation is not an insurer of the condition of 
its sewers, but it is bound to use ordinary care and skill 
in constructing and maintaining them, and for a failure 
so to do is responsible to a citizen who suffers loss from 

tion and judgment. It admits of a choice of means, and the deter- 
mination of the order of time in which improvements shall be made. 
It involves, also, a variety of prudential circumstances relating to 
the burdens which may be discreetly imposed at a given time, and 
the preference which one locality may claim over another." 

1 Johnson v. Distriot of Columbia, supra. 

2 City of Evansville v. Decker, 84 Ind. 325; Crawfordsville v. Bond,. 
96 Ind. 236; Van Pelt v. Davenport, 42 Iowa, 308; Byrnes v. Cohoes, 
67 N. Y. 204. 

3 Ft. Wayne v. Coombs, 107 Ind. 75; Commissioners v. City, 79> 
Ind. 491; Angell on Highways, § 216; Dill. Mun. Corp., §§ 656, 688. 



278 STREETS, SEWERS, ETC. [§ 211. 

such negligence. This care and skill requires the mu- 
nicipality to take notice of the liability of timbers to 
decay from time and use, and to take such measures as 
ordinary care and skill dictate to guard against a sewer 
becoming unsafe because of the decay of the materials 
used in its construction. 1 

§ 211. Liability for injuries from defective sewer. — 
Though a sewer is constructed with care and skill, a mu- 
nicipal corporation is liable for injuries for negligently fail- 
ing to keep it in repair, and where it is suffered to remain 
out of repair for such a length of time as that it was the 
duty of the corporate authority to take notice of its condi- 
tion, the law will charge the corporate officers with notice 
of its condition. 2 And though a city is not responsible be- 
cause of any failure to provide proper sewerage, yet if 
the effect of the construction of one of its public works 
shall be to collect water and cast it upon the land of an 
individual where it would not overflow, the city is lia- 
ble. 3 And where the property of private persons is 
flooded, either directly by water being set back, when 
this is the result of the negligent execution of the plan 

1 Indianapolis v. Scott, 73 Ind. 196; Board of Com'rs v. Legg, 93 
Ind. 523; Indiana Car Co. v. Parker, 100 Ind. 181; Rapho v. Moore, 
68 Pa. St. 404; Norristown v. Thayer, 67 Pa. St. 335; Todd v. Troy, 
61 N. Y. 506. 

2 Fort Wayne v. Coombs, 107 Ind. 75; City of Madison v. Baker, 
103 Ind. 41; Dill. Mun. Corp., § 1025. 

SBuford v. Grand Rapids, 53 Mich. 98; Ashley v. Port Huron, 35 
Mich. 296; Dixon v. Baker, 65 I1L 518; Weis v. Madison, 75 Ind. 241; 
Indianapolis v. Tate, 39 Ind. 282; Ross v. Clinton, 46 Iowa, 606; Van 
Pelt v. Davenport, 42 Iowa, 308; Wilson v. New Bedford, 108 Mass. 
261; O'Brien v. St. Paul, 25 Minn. 333; Thurston v. St. Joseph, 51 
Mo. 510; Byrnes v. Cohoes, 67 N. Y. 204; Rhodes v. Cleveland, 10 
Ohio, 159; Inman v. Tripp, 11 R. I. 520; Gillison v. Charleston, 16 
W. Va. 282. 



§ 212.] STREETS, SEWEES, ETC. 279 

adopted for the construction of sewers, or of the neg- 
ligent failure to keep the same in repair and free from 
obstructions, the municipality is liable, and this whether 
the land injured is below grade of street or not. 1 And 
it has been held that if a city constructs a sewer in 
such a manner that an additional flow of surface water 
into a lot is caused thereby, in other words, if the sewer 
gathered other than surface water, the owner of such lot 
may recover such damages as may have been caused by 
such increased flow. 2 

§ 212. Power to abate nuisances. — The power to abate 
nuisances is a portion of police authority necessarily 
vested in all municipal corporations and populous towns ; 
and the legislature may invest a municipal corporation 
with power to abate nuisances summarily, without re- 
quiring resort to legal proceedings. 3 The power so con- 
ferred is for the public good and not for any private ad- 
vantage, and for failure of its officers to properly exercise 
the power the municipality is not liable. 4 But, in the 
absence of authority, neither the board of health nor the 
city council of a city has any power to erect a dam on a ■ 
person's land without his consent for the purpose of abat- 
ing a nuisance existing on adjacent land. 5 But where a 
municipal corporation, however, is authorized by its char- 
ter or general laws to remove and prevent nuisances, 

1 Hutchins Bros. v. Mayor of Hurlburg, 20 Am. & Eng. Corp. Cas. 
(Md., 1887) 400; Lynch v. Mayor, 76 N. Y. 60; O'Brien v. St. Paul, 25 
Minn. 333; Inhabs. W. Orange v. Field, 37 N. J. Eq. 600; Ashley v. 
Port Huron, 35 Mich. 296. 

2 Arn v. City of Kansas, 4 McCrary (U. S.), 558. 
3 Baumgartner v. Hasty, 100 Ind. 575; King v. Davenport, 98 I1L 

-305; Kennedy v. Phelps, 10 La. Ann. 227; Dill. Mun. Corp., § 374 
* Armstrong v. Brunswick, 79 Mo. 319. 
5 Cavanagh v. Boston, 139 Mass. 426. 



280 STREETS, SEWEKS, ETC. [§ 213„ 

the only restriction upon that right is that what is done-, 
shall clearly be done for the public health, safety and 
convenience. 1 The mere declaration by the city coun- 
cil that a certain structure is an encroachment or ob- 
struction does not make it so, nor can such declaration 
make it a nuisance unless in fact it has that character.. 
That which is authorized by legislative authority cannot 
be declared a nuisance by a city corporation. " It is a 
doctrine not to be tolerated in this country that a mu- 
nicipal corporation, without any general laws either of 
the city or of the state within which a given structure 
can be shown to be a nuisance, can, by the mere declara- 
tion that it is one, subject it to removal by any person 
supposed to be aggrieved, or even by the city itself. This 
would place every house, every business and all the prop- 
erty in the city at the uncontrolled will of the temporary 
local authorities." 2 

§ 213. Liability as to nuisances. — It is the duty of a 
municipal corporation to provide wholesome laws within 
its sphere for the protection of the persons and property, 
of its citzens, but it cannot guaranty them against the- 

1 Dubuque v. Maloney, 9 Iowa, 450; Commissioners v. Worcester, 
S Pick. (Mass.) 462; Roberts v. Ogle, 30 111. 459; Commissioners v. Gas- 
Co., 12 Pa. St. 318; Salem v. Railroad Co., 92 Mass. 431; Dingley v. 
Boston, 100 Mass. 544; Lake View v. Letz, 44 111. 81; Commissioners.. 
v. Goodrich, 13 Allen (Mass.), 546; Whyte v. Mayor, 2 Swan (Tenn.), 
864; People v. Albany, 11 Wend. (N. Y.) 539; St. Paul v. Coulter, 12 
Minn. 51; Williams v. Augusta, 4 Ga. 509; St. Louis v. Bentz, 11 Mo. 
611; Collins v. Hatch, 18 Ohio, 523; New Orleans v. Phillipi, 9 La. 
Ann. 44; Peck v. Lookwood, 5 Day, 22; Taylor v. Carondelet, 22 Mo.. 
105; Phillips v. Allen, 41 Pa. St. 481; Mobile v. Yuelle, 3 Ala. 137? 
Baltimore v. Radecke, 49 Md. 217. 

2 Yates v. Milwaukee, 10 Wall (U. S.) 497; Pieri v. Shieldsboro, 42. 
Miss. 393; Underwood v. Green, 42 N. Y. 140; Darst v. People, 50 111. 
286; Miller v. Buroh, 82 Tex. 209; Everett v. Council Bluffs, 46 Iowa, 
66; Rye v. Paterson, 45 Tex. 312; Chicago v. Laflin, 49 111. 172. 



§ 213.] STEEETS, SEWEES, ETC. 281 

infringement of such laws. 1 Accordingly, a municipal 
corporation is not liable in damages for a failure to abate 
a nuisance existing upon private property when not cre- 
ated by its agents, though such nuisance exists in viola- 
tion of its ordinances. 2 JSTor is a town liable for an act 
which results in creating a nuisance to tbe property of 
one of its citizens, when the act complained of is not 
within the scope of its corporate powers. 3 

iLevy v. Mayor, 1 Sandf. (N. Y.) 465. 

2 Kansas City v. Kiley, 13 Am. & Eng. Corp. Cas. (Mo., 1885) 446; 
Davis v, Montgomery, 51 Ala. 139; Levy v. New York, 1 Sandf. (N. Y.) 
465; Heurson v.. New Haven, 37 Conn. 475; Armstrong v. Brunswick, 
79 Mo. 319. 

3 Seele v. Deering (Me.), 10 Atl. Rep. 45. 

In Seele v. Deering, supra, which was an action for damages for 
injuries to plaintiff's mill-pond, caused by the highway surveyor of 
the defendant town digging a ditch which turned the drainage 
from a tripe factory into the pond, thereby rendering the water 
unfit for use, the court say: 

" To create a liability on the part of the town not connected with 
its private advantage, the act complained of must be within the 
scope of its corporate powers as defined by statute. If the partic- 
ular act relied on as the cause of action be wholly outside the gen- 
eral powers conferred on towns, they can in no event be liable there- 
for, whether the performance of the act be expressly directed by a 
majority vote, or was subsequently ratified. . . . 

"It is quite evident that a town, independent of any statutory 
authority, has no corporate authority to dig ditches across another's 
land. Such an act is ultra vires; and any express majority vote, 
based on a proper article in a warrant calling a meeting of the de- 
fendants, directing such acts, would create no liability on the part 
of the town. Cushing v. Bedford, 125 Mass. 526; Lemon v. Newton, 
134 Mass. 476." 

See, also, Morrison v. Lawrence, 98 Mass. 219; Brown v. Vinal- 
haven, 65 Me. 402; Small v. Danville, 51 Me. 359; Woodcock v. Ca- 
lais, 66 Me. 234; Anthony v. Adams, 1 Met. (Mass.) 284; Estes v. 
China, 56 Me. 407; Franklin Wharf Co. v. Portland, 67 Me. 46; Pro- 
prietors, etc. v. Lowell, 7 Gray (Mass.), 223. 



282 STREETS, SEWERS, ETC. [§ 214. 

§ 214. Powers as to quarantine regulations. — It has 
been held that a town organized under general laws with 
the usual and ordinary powers has no power to establish, 
a quarantine against property and persons, and a con- 
tract for services to be rendered in connection therewith 
is ultra vires and void. 1 In New Decatur v. Berry, supra, 
the court say : " How the power to prohibit persons from 
coming into the town under any circumstances can in 
any just sense be said to be incident to any one of the 
powers enumerated, we are unable to see. Every power 
•conferred may be fully exercised and effected without the 
exercise of the power here claimed. No power conferred 
would in the slightest degree be aided by the exercise of 
the power claimed here. The power claimed is not ex- 
pressly granted ; it is not implied in or incident to any 
power granted ; it is not essential to the declared objects 
and purposes of the corporation ; it does not exist. The 
employment of the appellee by the corporate authorities 
as ' chief of the quarantine guard ' cannot find justifica- 
tion or authorization under the power ' to establish night 
and day watches and patrols, and to appoint captains 
thereof.' The watches and patrols thus provided for are 
for the ordinary police of the town, charged with the 
conservation of the peace and good order and the en- 
forcement of authorized ordinances of the municipal gov- 
ernment. None of these duties were to be performed by 
the alleged quarantine guard, or the appellee as chief of 
that guard. He was employed, if. at all, solely for the 
purpose of discharging functions with which the munici- 
pality had no power to clothe him, and rendering serv- 
ices which were not in furtherance of any municipal ob- 
ject or purpose." 

iNew Decatur v. Berry, 90 Ala. 432; DilL Mun. Corp., §§ 89, 463-465. 



§ 215.] STEEETS, SEWEES, ETC. 2S& 

§ 215. Powers as to puolic wharves. — In the absence 
of any special statutory authority a city has no power to 
lease a public wharf to private persons. "When it under 
takes to confer on a private individual such a right in 
streets or wharves as will produce a conflict between the 
public and the private use, the act is ultra vires} So an 
ordinance giving to private persons the right to occupy a 
portion of the public wharf with a grain elevator for fifty 
years, without reserving the right to resume pdssession 
and regulate the charges, is void. 2 The use and control 
of public highways, such as streets and wharves, belong- 
ing to the city, cannot be surrendered by contract to a 
private individual to the exclusion of the public. Such 
highways are public property, intended for public use, 
and placed under the control of the city government for 
the benefit of the public; and any other disposition of 
such property, without special authority conferred by the 
law-making power, must be disregarded. 3 It is a doctrine 
which has often been decided and is settled law that a 
municipal corporation mast at all times retain the full 
possession of its legislative powers so as at all times to be 
able to discharge its public duties. 4 

JBateman v. Covington, 14 S. W. Eep. 361 (Ky., 1890); City of 
Louisville v. Bank, 3 B. Mon. (Ky.) 138; Dill. Mun. Corp., §§ 659-661. 

2 Illinois Canal Co. v. St. Louis, 2 Dill. C. C. 70. 

3 Bateman v. Covington, supra. 

4 Gale v. Kalamazoo, 23 Mich. 344; People's R. R. v. Memphis R. R., 
10 Wall. (U. S.) 38,50; Louisville Ry. v. Louisville, 8 Bush (Ky.), 415; 
Brooklyn v. City R. R., 47 N. Y. 475; Milhan v. Sharp, 27 N. Y. 611; 
Presbyterian Church v. Mayor, etc., 5 Cow. (N. Y.) 538; Smith v. 
Morse, 2 Cal. 524; Stuyvesant v. Mayor, 7 Cow. (N. Y.) 588; Saving 
Fund v. Philadelphia, 31 Pa. St. 175; Ex parte Mayor, etc., 23 Wend. 
<N. Y.) 277; Railroad Co. v. Mayor, 1 Hill (N. Y.), 362; Martin v. 
Mayor, 1 Hill (N. Y.), 545; Bryson v. Philadelphia, 47 Pa. St. 329; 
Dingman v. People, 51 111. 277; Brimmer v. Boston, 102 Mass. 19; 
Johnson v. Philadelphia, 60 Pa. St. 445; State v. Gas Co., 18 Ohio St. 



284 STREETS, SEWERS, ETO. [§ 216. 

§ 216. Exclusive privileges as to gas and water supply. 
It is perfectly competent, of course, for the legislature to 
confer upon an individual or a private corporation the 
exclusive right to furnish gas or water supply to the in- 
habitants of a city, and to erect works and lay pipes there- 
for within the limits of a municipal corporation. 1 But a 
municipal corporation has no power to grant such exclu- 
sive privileges without express authority conferred by 
charter so to do. No such authority can be derived by 
implication. 2 

262; Jackson v. Bowman, 39 Miss. 671; Oakland v. Carpentier, 13 
Cal. 540; Bateman v. Covington, 14 S. W. Rep. 361. 

In Bateman v. Covington, supra, the court say: "We perceive no 
authority in the city charter or any legislative enactment empower- 
ing the city to make such a contract, or to deprive the public of its 
use. The city has the power to impose certain duties upon those 
availing themselves of wharf privileges, and to make such regula- 
tions as may be necessary to keep the wharf in repair for public use; 
but it has no power to confer absolute control to an individual who- 
leases it for his own private use. The city must control the use, and 
for this purpose may place the ground in charge of a wharf-master, 
or some agent who acts for the city, that the public may enjoy the 
use. A city has the exclusive control of its streets, and a like con- 
trol over its wharves; and in appropriating the use of either for the 
benefit of a private person, to the exclusion of the public, it is going 
beyond its power, and such a contract is void. The city is a mere 
trustee for the public, and' all have the right to use streets and 
wharves, one citizen having the same right as another." 

1 State v. Milwaukee Gaslight Co., 29 Wis. 454; New Orleans Gas- 
light Co. v. Louisiana Light Co., 115 TJ. S. 650; New Orleans Water 
Co. v. Rivers, 115 U. S. 674; St. Tamany Water Works v. New Orleans 
Water Works, 120 U. S. 64; Crescent City Gaslight Co. v. New Or- 
leans Gaslight Co., 27 La. Ann. 138; Hovelman v. Kansas City, etc. 
Co., 79 Ma 632; Memphis v. Water Co., 5 Heisk. (N. J.) 495; Broad- 
way Co. v. Haukey, 31 Md. 346; Atlantic City Water Works v. At- 
lantic City, 48 N. J. L. 378; Citizens' Water Co. v. Hydraulic Co., 50 
Conn. 1; Lehigh Water Co.'s Appeal, 102 Pa. St. 515; Louisville v. 
Weible, 84 Ky. 290. 

2 Tuckahoe Canal Co. v. Railroad Co., 11 Leigh, 42; Gaines v. Coates, 



■§§ 217, 218.] STREETS, SEWEKS, ETC. 285 

§ 217. Contracts as to gas or water supply. — Under a 
general authority to make all contracts necessary for its 
welfare, a city has the implied power to make contracts 
for water or gas supply. 1 And having the power to make 
a contract touching the matter, it may make it according 
to its own discretion, as to its prudence or good policy, 
within the limits of its franchise. 2 And where the charter 
of the city provides that the city may establish water- 
works or contract for the furnishing of water for the city, 
it has the power to make a contract with a water com- 
pany to furnish water for the city upon payment of a 
monthly rental therefor; 3 or it may receive its water 
supply by leasing its own water-works to another com- 
pany for that purpose. 4 

§ 218. Power to regulatewater, gas and telephone rates. 
Municipalities may, under delegated legislative authority, 
regulate the rates at which water or gas supply may be 
furnished or telephone service enjoyed. 5 But the power 
of regulating rates is not a power of confiscation, or to 

51 Miss. 235; Mohawk Bridge Co. v. Railroad Co., 6 Paige (N. T.), 554; 
State v. Cincinnati Gas Co.. 18 Ohio St. 262; Norwich Gas Co. v. City- 
Gas Co., 25 Conn. 20; East St. Louis v. Gas Co., 98 111. 415; Des Moines 
Gas Co. v. Des Moines, 44 Iowa, 505; Gas Co. v. Light Co., 115 U. S. 
659; Gaslight Co. v. Saginaw, 28 Fed. Rep. 529; Gas Co. v. Middleton, 
59 N. Y. 228; Parkersburg Gas Co. v. Parkersburg, 4 S. E. Rep. (W. 
Va., 1887) 650; Citizens' Gas Co. v. Elwood, 114 Ind. 332. 

i Cabot v. Rome, 28 Ga. 50; Wells v. Atlanta, 43 Ga. 67; Atlantic 
City Water Works v. Atlantic City, 39 N. J. Eq. 367; McKnight v. 
New Orleans, 24 La. Ann. 412; Grant v. Davenport, 36 Iowa, 396; 
Hale v. Houghton, 8 Mich. 458. 

2 Indianapolis v. Gaslight Co., 66 Ind. 396. 

3 Capitol City Water Co. v. Montgomery, 9 S. Rep. 343. 
* Los Angeles Water Co. v. Los Angeles, 55 Cal. 178. 

5 State v. Gas Co., 18 Ohio St. 262; Norwich Gaslight Co. v. Gas 
Co., 25 Conn. 19: State v. Gaslight Co., 29 Wis. 452; Spring Valley 
Water Works v. San Francisco, 82 Cal. 286. 



286 STEEETS,' SEWEES, ETC. [§ 219. 

take the property of a company without just compensa- 
tion. The municipal authorities have no right to fix rates 
arbitrarily without investigation, or without the exercise 
of judgment and discretion in determining what is a fair 
and reasonable compensation. 1 And where a city ordi- 
nance granting a franchise to a gas company and accepted 
by the gas company fixes the maximum price of gas, the 
city cannot subsequently reduce such price. 2 An ordi- 
nance of a cit3 r regulating water rates is not invalid be- 
cause it fixes different rates for the consumers of the same 
class ; one section providing that when there is a large 
consumption of waste water the company may apply a 
meter and collect a certain amount for certain quantities 
of water used, although another section of the ordinance 
fixes certain specific rates for the use of water according 
to the size of the house. 3 

§ 219. Liability for damages owing to inadequate water 
supply. — It is the general rule that, in the absence of an 
express statute so declaring, municipalities are not liable 
to actions for injuries occasioned by reason of negligence 
in using or keeping in repair the fire-engines owned by 
them, or furnishing them with an inadequate supply of 
water. 4 So a city making a contract with a water com- 

i Spring Valley Water Works v. San Francisco, 82 Cal. 286; State- 
v. Gas Co., 18 Ohio St. 262. 

2 State v. Gas Light Co., 102 Mo. 472. 

3 Sheward v. Citizens' Water Co., 90 Cal. 635; Shiras v. Ewing, 20 
Pac. Rep. 320. 

4 Black v. Columbia, 19 S. C. 415; Wheeler v. Cincinnati, 19 Ohio 
St. 19; Eastman v. Meredith, 36 N. H. 284; Bigelow v. Randolph, 14 
Gray (Mass.), 541; Hafford v. New Bedford, 16 Gray (Mass.), 297;. 
Jewett v. New Haven, 38 Conn., 368; Og v. Lansing, 35 Iowa, 495; 
Elliott v. Philadelphia, 75 Pa. St. 347; O'Meara v. Mayor, 1 Daly 
(N. Y.), 425; Smith v. Rochester, 76 N. H. 506; Howard v. San Fran- 
cisco, 51 Cal. 52; Maximilian v. Mayor, 62 N. T. 160; Greenwood v. 



•§ 220.] STEEETS, SEWEES, ETC. 28T 

pany to furnish water for fires is not liable to its citizens 
or residents on account of the failure of the company to 
furnish water or to perform the conditions of the con- 
tract. The contract in such case is between the city and 
the water company. 1 Nor is a city liable, it has been 
held, for its neglect in cutting water off from a hydrant, 
but for which the fire might have been extinguished. 2 

§ 220. The doctrine of respondeat superior. — The rule 
respondeat superior, though well recognized in fixing the 
liabilities of private corporations and natural persons, has 
been the source of much doubt and perplexity in its ap- 
' plication to municipal corporations. It is now well set- 
tled, however, that such corporations, when acting in a 
certain capacity, are liable as superiors and employers 
for injuries to third persons resulting from the negligence 
and unskilfulness of their agents or servants while in the 
line of their employment. 3 And it has been said that 

Louisville, 13 Bush (Ky.), 226; Pollock v. Louisville, 18 Bush (Ky.), 
221; Fisher v. Boston, 104 Mass. 87; Hayes v. Oshkosh, 33 Wis. 314; 
Heller v. Sedalia, 53 Mo. 159; Bishmeyer v. Evansville, 29 Ind. 187; 
"Western College of Medicine v. Cleveland, 12 Ohio St. 375; Grant v. 
Erie, 69 Pa. St. 420; New Orleans v. Crescent City Ins. Co., 25 La. 
Ann. 390; Davis v. Montgomery, 51 Ala. 139; Hill v. Boston, 122 
Mass. 324; Tainter v. Worcester, 123 Mass. 311; Foster v. Lookout 
Water Co., 3 Lea (Tenn.), 42; Wright v. Augusta, 78 Ga. 241; Van 
Horn v. Des Moines, 4 Am. & Eng. Corp. Cas. 339. 

1 Becker v. Keokuk Water Works, 79 Iowa, 419; Davis v. Clinton 
Water Works, 54 Iowa, 59; Van Horn v. Des Moines, 63 Iowa, 447; 
Nickerson v. Bridgeport Hydraulic Co., 46 Conn. 24; Fowler v. Ath- 
ens City Water Works, 83 Ga. 219; Vrooman v. Turner, 69 N. Y. 280; 
Weet v. Brockport, 16 N. Y. 161; Marvin Safe Go. v. Ward, 46 N. J. 
L. 19; Exchange Bank v. Rice, 107 Mass. 37. 

2 Tainter v. Worcester, 123 Mass. 311; New Orleans v. Insurance' 
Co., 25 La. Ann. 390; Wheeler v. Cincinnati, 19 Ohio St. 19. 

'Toledo v. Cone, 41 Ohio St. 149; Dill. Mun. Corp., § 974; Barnes 
v. District of Columbia, 91 U. S. 540; Rowell v. Williams, 29 Iowa, 



288 STREETS, SEWEES, ETC. [§ ^20. 

under analogous conditions there seems to be no founda- 
tion in reason or public policy for exempting such public 
corporations any more than private individuals from lia- 
bility for injuries inflicted on others through the negli- 
gence of their agents. 1 

210; Powers v. Council Bluffs, 50 Iowa, 97; Russell v. Mayor, etc., 
2 Demo (N. Y), 461; Tone v. Mayor, etc., 70 N. Y. 157, id. 459; 
Campbell v. Montgomery, 53 Ala. 527. 

1 Toledo v. Cone, supra. 

In Toledo v. Cone, supra, the court say: 

"While they (municipal corporations) act in a public character 
or capacity and exercise public powers, they may and do also act in 
a private capacity, like private corporations, and as such are held 
to a like responsibility. Thus, i£ a municipal corporation acquires 
real or personal property, and in the discharge of what may be 
deemed ministerial duties in respect to the same an individual 
receives injury through the negligence of its officers or servants, it 
should be held responsible to that individual. Though not liable 
for a defect of judgment or discretion while acting as a state in- 
strumentality in the exercise of legislative functions, yet, having 
like a private corporation or natural person become the owner or 
obtained the control of property, it should not be relieved from the 
operation of the general maxim that one should so use his own as 
not to interfere with that which belongs to another. Thus, if a city 
. neglects its ministerial duty to cause its sewers to be kept free from 
obstructions, to the injury of a person who has an interest in the 
performance of that duty, it is liable to an action for the damages 
thereby occasioned. Emery v. Lowell, 104 Mass. 13. So, if a city 
owns a wharf and has the exclusive control of it and receives 
wharfage or profit for the use thereof, it will be held liable to a pri-" 
vate action for an injury suffered by an individual by reason of a 
defect in the structure. Pittsburg v. Grier, 22 Pa. St. 54. And the 
same rule applies in respect to a city's failure to keep its streets 
in a safe condition for public use, where this is a duty resting 
upon it. 

" Of course, before a municipal corporation is subjected to liabil- 
ity for the misfeasance or neglect of its agents or servants, it be- 
comes material and sometimes difficult to determine whether they 
are in fact the agents or servants of the corporation. It is said by 
. an approved text-writer that if the municipal corporation appoints 



§ 221.] STREETS, 8EWEKS, ETC. 289 

§ 221. Distinction oetween puolic quasi-corporations 
■and municipal corporations. — The authorities establish- 
ing the doctrine that a city is responsible for its mere 
negligence are so numerous that the law must be deemed 
to be settled in accordance therewith. 1 A distinction 
must be noted, however, between the liability of a munic- 
ipal corporation made such by acceptance of a charter, 
and the involuntary quasi-corporations known as counties, 
towns, school districts, and especially the townships of 
New England. The liability of the former is greater than 

or elects them and can control them in the discharge of their duties, 
can continue or remove them, can hold them responsible for the 
manner in which they discharge their trust; and if those duties re- 
late to the exercise of corporate powers and are for the peculiar 
benefit of the corporation in its local or special interest, they must 
justly be regarded as its agents or servants, and the corporation 
will be held responsible for their acts within the scope of their em- 
ployment. And in broad terms to the same effect, it is laid down 
dn Wood on Master and Servant, section 459, that if an independent 
public officer, or some one whose duties are denned or specified by 
law, is in any measure subject to the discretion or control of a mu- 
nicipal corporation, and acts in obedience to its instructions, the 
relation of master and servant exists and the rule of respondeat 
superior applies. The rule is predicated upon the right of the em- 
ployer to discharge and control the servant. Blake v. Ferris, 5 
N. Y. 48," 

1 Barnes v. District of Columbia, 91 U. S. 551 ; Mayor v. Henley, 3 CI. 
& Fin. 331; Mersey Docks v. Gibbs, 1 H. L. Cas. 93; Canal Co. v. Par- 
nably, 11 Ad. & E1L 223; Scott v. Mayor, 37 Eng. L. & Eq. 465; Weight- 
man v. Washington, 1 Bl. 39; Nebraska v. Campbell, 2 Bl. 590; Rob- 
bins v. Chicago, 4 WalL (U. S.) 658; Davenport v. Kuckman, 37 N. Y. 
569; Requa v. Rochester, 45 N. Y. 129; Clayburg v. Chicago, 25 111. 
525; Springfield v. Le Claire, 49 111. 476; Smoot v. Mayor, 24 Ala. 112; 
Jones v. New Haven, 34 Conn. 1; County Commissioners v. Duckett, 
20 Md. 468; Pittsburg v. Greer, 22 Pa. St. 54; Erie v. Schwingle, 22 
Pa. St. 388; Cook v. Milwaukee, 24 Wis. 270; Sawyer v. Coose, 17 
Grat (Va.) 241; Williams College v. Cleveland, 12 Ohio, 377; Mc- 
Combs v. Akron, 15 Ohio, 476. 
19 



290 STREETS, SEWERS, ETC. [§ 221. 

that of the latter, even -when vested with corporate capac- 
ity and the power of taxation. 1 

1 Barnes v. District of Columbia, 91 U. S. 551; Dill. Mun. Corp., 
§§ 10, 11, 13, 961 ; Elmore v. Drainage Commissioners, 135 111. 269. 

In Elmore v. Drainage Commissioners, supra, the court say: 

" That a private corporation formed by voluntary agreement for 
private purposes is held to respond in a civil action for its negli- 
gence or tort goes without saying, and yet, in deciding the mooted 
question at issue in this case, it seems convenient to restate that 
proposition. So, also, it is admitted law that municipal corpora- 
tions proper, such as villages, towns and cities which are incorporated 
by special charters or voluntarily organized under general laws, are 
liable to individuals injured by their negligent or tortious conduct 
or that of their agents or servants in respect to corporate duties. 
In regard to public involuntary gitasi-corporations the rule is other- 
wise, and there is no such implied liability imposed upon them. 
These latter, such as counties, townships, school districts, road dis- 
tricts and other similar gwasi-corporations, exist under general laws 
of the state, which apportion its territory into subdivisions for the 
purpose of civil and governmental administration, and impose upon 
the people residing in the said several subdivisions precise and lim- 
ited public duties and clothe them with restricted corporate func- 
tions co-extensive with the duties devolved upon them. In such 
organizations the duties and their correlative powers are assumed 
in invitum, and there is no responsibility to respond in damages in 
a civil action for neglect in the performance of duties unless such 
action is given by statute. 

" The grounds upon which the liability of the municipal corpora- 
tions proper is usually placed are that the duty is voluntarily as- 
sumed and is clear, specific and complete, and that the powers and 
means furnished for its proper performance are ample and ade- 
quate. ... In such case there is a perfect obligation and a con- 
sequent civil liability for hegfect in all cases of special private dam- 
ages. The non-liability of public gnasi-corporations, unless liability 
is expressly declared, is usually placed upon these grounds: that the 
corporators are made such nolens volens, that their powers are lim- 
ited and specific, and that no corporate funds are provided which 
can, without express provisions of law, be appropriated to private 
indemnification. Consequently, in such case the liability is one of 
imperfect obligation, and no civil action lies at the suit of an indi- 
Tidual for non-performance of the duty imposed." 



§ 222.] STREETS, SEWERS, ETC. 291 

§ 222. Not liable if damages arise from ultra vires act 
of officer. — Where the officers of a municipal corporation 
assume the power to do some act on behalf of the mu- 
nicipality which is ultra vires the corporation, no liability 
is in consequence imposed. 1 To establish the liability of 
a municipal corporation for damages resulting from the 
alleged negligence or want of skill of its agents or serv- 
ants in the course of their employment, it is essential to 
show that the act complained of was within the scope of 
the corporate powers; if outside the powers of the cor- 
poration as conferred by statute or by special charter, 
the corporation is not liable, whether' its officers directed 
the performance of the act or it was done without any 
express direction. 2 Or, to state the proposition in differ- 

1 Mayor, etc. v. Cunliff, 2 Comst. (N. Y.) 165; Browning v. Owen 
Co., 44 Ind. 11; Eaag v. Commissioners, 60 Ind. 511; Smith v. Roches- 
ter, 76 N. Y. 506; Anthony v. Adams, 1 Met. (Mass;) 284; Baker v. 
Boston, 12 Pick. (Mass.) 184; Thayer v. Boston, 19 Pick. (Mass.) 511; 
Perley v. Georgetown, 7 Gray (Mass.), 464; Baltimore v. Eschbach, 
18 Md. 276; State v. Mayor, 27 Md. 85; Railroad Co. v. Quigley, 21 
How. (U. S.) 202; Cooper v. Atlanta, 53 Ga. 638; Sewell v. St. Paul, 
20 Minn. 511; Aldrich v. Tripp, 11 R. I. 141; Chicago v. McGraw, 75 
111. 566; Mead v. New Haven, 40 Conn. 72; Morrison v. Lawrence, 98 
Mass. 219; Barbour v. Ellsworth, 67 Me. 294. Cf. Salt Lake City v. 
Hollister, 118 U. S. 256. 

2 Smith v. Rochester, 76 N. Y. 506. 

In Salt Lake City v. Hollister, supra, a distinction has been drawn, 
and a rather fine one, it must be confessed, between the liability of 
a municipality for the wrongful acts of its agents and officers in the 
course of the corporate business and its liability on contracts which 
the law does not authorize it to make. That was a case where a 
suit was instituted by Salt Lake City to recover of Hollister a sum 
of money said to be illegally exacted by him as collector of internal 
revenue for the district of Utah from the city for a special tax upon 
spirits alleged to have been distilled by said city and not deposited 
in the bonded warehouse of the United States by plaintiff as re- 
quired by law. The plaintiff, under threat of selling sufficient prop- 
erty of the city to pay said taxes, paid the sum demanded under 



292 STREETS, SEWEES, ETC. ' [§ 222. 

ent language: When individuals, although professing to 
act under color of authority from municipal corporations, 
do acts which are injurious to others, if the objects and 

protest, appealed to the commissioner of internal revenue, who 
failed to refund the money, and after waiting six months brought 
suit. It was held that a municipal corporation cannot, any more 
than any other corporation or private person, escape the taxes due 
on liquor, whether distilled legally or illegally; and it cannot make 
the want of legal authority to engage in the business a shelter for 
the taxation imposed by the government on such business, by whom- 
soever conducted. Mr. Justice Miller, in delivering the opinion of 
the court, said: 

" While it may be true that the rule we have been discussing may 
require a more careful scrutiny in its application to municipal cor- 
porations than to corporations for pecuniary profit, we do not agree 
that they are wholly exempt from liability for wrongful acts done, 
with all the evidence of their being acts of the corporation, to the 
injury of others, or in evasion of legal obligations to the state or 
the public. . . . The question of the liability of corporations on 
contracts which the law does not authorize them to make, and 
—which are wholly beyond the scope of their powers, is governed by 
a different principle. In such case the party dealing with the cor- 
poration is under no obligation to enter into the contract. No force 
or restraint or fraud is practiced on him. The powers of the cor- 
poration are matters of public law, open to his examination, and he 
may and must judge for himself as to the power of the corporation 
to bind itself by the proposed agreement. It is to this class of cases 
that most of the authorities cited by appellant belongs — cases where 
the corporations have been sued on contracts which they have suc- 
cessfully resisted because they were ultra vires. But even in this 
class of cases the courts have gone a long way to enable parties who 
had parted with property or money on the faith of such contracts 
to obtain justice by recovery of the property or the money specific' 
ally, or as money had and received to their use." 

Judge Dillon, in discussing this case in his valuable work on Mu- 
nicipal Corporations, in a note to section 973, observes: 

"The opinion of the court in this novel case seems to assert the 
proposition that the city, although acting ultra vires in the strongest 
sense of that expression, i. e., in respect of a matter manifestly and 
necessarily outside of the scope of its powers either general or spe- 



§ 222.] STEEETS, SEWEKS, ETC. 293 

i 

purposes which they propose to accomplish are not within 
the scope of the corporate powers of the municipality, 
and not done in the execution of any corporate duty im- 

cial, would be liable in tort, although perhaps not in contract, for 
the acts of its agents and servants in the course of such unauthor- 
ized business. But the action, viz., to recover back taxes actually 
though involuntarily paid, being equitable in its nature, the judg- 
ment of the court, which on the special facts was unquestionably 
sound (for the tax was a tax upon property and was justly due), 
need not necessarily rest upon so broad a basis as the one above in- 
dicated, and the observations of the court in the opinion must be 
limited accordingly. If not thus limited, and the court is to be 
understood as laying down the broad principle that the city would 
be liable in the conduct of such business to the same extent as if 
the business was infra vires (for example, that it would be liable in 
damages to the manager of the distillery for a negligent injury to 
him happening in the course of the business), it would be, as it seems 
to us, an extension of the doctrine of liability of municipal corpora- 
tions for ultra vires acts beyond the limits heretofore and generally 
recognized, since such extended liability would appear to rest upon 
a supposed estoppel created by the mere fact of conducting an ultra 
vires business, and this in the face of the limitations imposed by the 
charter of the city upon its corporate powers. Such view, if sound 
as respects private corporations, would seem not to be so as respects 
municipal corporations, whose powers are defined and limited for 
the express purpose of protecting the inhabitants from just such 
liability. Cases within the apparent or possible powers of the mu- 
nicipality, where the other party acted in good faith and had no 
reasonable means of protecting himself from loss or damage, may 
stand upon different grounds." 

Mr. Jones, in his recent work on Negligence of Municipal Corpo- 
rations, in reviewing this criticism, remarks: 

"This decision has been somewhat criticised by an eminent au- 
thority, and quite a limited construction is. put upon the opinion in 
the case. But the learning of the justice who wrote the opinion, 
and his familiarity with the subject under discussion, as well as a 
recent reference to the case (Central Transp. Co. v. Pullman's Car 
Co., 139 TJ. S. 24, 46 — 1890), all give evidence that the opinion was a 
deliberate expression of the view of the court upon the general ques- 
tions discussed. The effect of this decision is to broaden materially 



291 STREETS, SEWERS, ETC. [§ 222. 

posed upon the corporation by law, the city is not liable 
for the damages occasioned by such acts. 

the view of liability of municipal corporations for torts, and it is a 
strong authority in support of the contention that these bodies 
should be liable for negligence in respect to their ultra vires acts. 
Following its reasoning it may be said that an individual who con- 
tracts with a corporation is under the obligation of ascertaining the 
powers of the particular body with which he assumes to deal. But 
when, as a member of society, he is acting within his own rights, and 
is not dealing with or interfering with other independent members 
of the community, he should not be without remedy when injured by 
an ultra vires act of a corporation done in violation of his right of 
personal safety. Such an act*of the corporation is made doubly 
wrongful by the fact that it is in excess of the corporate powers, 
and for the damages resulting from it the corporation should re- 
spond." 



CHAPTEE XVI. 

POWERS AND LIABILITIES AS TO MUNICIPAL SECURITIES. 

§ 223. Power to issue bonds. 
224 Purposes for which bonds may be issued. 

225. Instances where power denied. 

226. Formality in execution as affecting legality. 

227. Irregularity as affecting liability. 

228. Effect of recitals in bonds. „ 

229. Who are bona fide holders. 

230. Power to issue bonds not implied from power to borrow. 

231. Limitation on indebtedness as affecting legality of bonds. 

232. Invalid bonds cannot be ratified. 

233. Liability cannot be avoided by reorganization. 
234 Liability in assumpsit on invalid bonds. 

235. Illegal issue of bonds may be enjoined. 

236. Municipal-aid bonds. 

237. Power must be specifically granted. 

238. Power to subscribe to railroad stock. 

239. Limitation on amount of subscription. 

240. Levying tax to pay subscription. 

§223. Power to issue oonds. — Municipal corporations, 
unless authorized by their charters, have no power to 
make and place on the market commercial paper, and all 
persons dealing in municipal bonds must see that the 
power to issue them exists. 1 There is no presumption 

Police Jury v. Britton, 15 Wall. (U. S.) 566; Claiborne County v. 
Brooks, 111 U. S. 400; Concord v. Robinson, 121 U. S. 165; Kelley v. 
Milan, 127 U. S. 139; Young v. Clarendon Township, 132 U. S. 340; 
Norton v. Dyersburg, 127 U. S. 160; Hill v. Memphis, 134 U. S. 198; 
Merrill v. Monticello, 138 U. S. 673; Hewitt v. School Bist., 94 111. 
428; Harding v. Rockford; etc. R. Co. 65 111. 90; Wiley v. Silliman,63 
I1L 170; Clark v. Hancock, 27 111. 305. 



296 MUNICIPAL SECTTKJTIES. [§ 224. 

that such paper has been issued within the scope of their 
powers, as in the case of corporations created for business 
purposes, and even oonafide holders cannot recover upon 
bonds or their coupons where there was no authority to 
issue the bonds. 1 

§ 224. Purposes for which hands may he issued. — Mu- 
nicipal bonds cannot be issued for other than public pur' 
poses, inasmuch as the taxation, from the proceeds of 
which the principal and interest must be met, can only 
be imposed for public purposes. 2 Accordingly a munici- 
pal corporation cannot, without legislative authority, issue 
bonds in aid of an extraneous object; and every person 
dealing in them must, at his peril, take notice of the ex- 
istence and terms of the law which conferred the power 
to issue them, no matter under what circumstances he 
may obtain them. 8 

1 Hewitt v. School Dist., supra, and cases cited. 

In Hewitt v. School Dist., supra, the court say: "The fact, then, 
that the bond was not issued for an authorized purpose undeniably 
rendered it void. Municipal corporations are not usually endowed 
with powers to enter into traffic or general business, and are only 
created as auxiliaries to the government in carrying into effect 
some special governmental policy, and to aid in preserving the order 
and in promoting the well-being of the locality over which their au- 
thority extends. . . . Being created for governmental purposes, 
the borrowing of money, the purchase of property on time and the 
giving of commercial paper are not inherent or even powers usually 
conferred; and, unless endowed with such power in their charters, 
they have no authority to make and place on the market such paper, 
and persons dealing in it must see that the power exists." 

2 City of Eufaula v. McNab, 67 Ala. 588; Hanson v. Vernon, 27 
Iowa, 47; Parkersburg v. Brown, 106 U. S. 487; Camden v. Allen, 2 
Dutch. (N. J.) 398; Pray v. Northern Liberties, 31 Pa. St. 69; Sharp- 
less v. Mayor of Philadelphia, 21 Pa. St. 147; Allen v. Inhabitants of 
Jay, 60 Me. 124; Loan Association v. Topeka, 20 Wall. (U. S.) 655; 
Curtis v. Whipple, 24 Wis. 350; Whiting v. S. & F. Ry. Co., 25 Wis. 
167; Jenkins v. Andover, 103 Mass. 94 

3 South Ottawa v. Perkins, 94 U. S. 260; Brenham v. German Anv 



§ 225.] MUNICIPAL SEOUKITIES. 297 

§ 225. Instances where power to issue denied. — It has- 
been held that a city has no power to incur a debt and 
issue bonds to raise money to build a dam across a river 
within its limits, for the purpose of introducing the water 
of such river into the city, with the view of developing 
the natural advantages of the city for manufacturing pur- 
poses. 1 Nor has a municipal corporation power to au- 
thorize the issuance of bonds and levying of taxes in 
support of private manufacturing and mining companies ; * 
nor to aid persons suffering from a great flood. 3 But 
bonds may be issued for the making and paving of streets,* 
to sustain public schools, 5 and to construct public build- 
ings. 6 

Bank, 144 U. S. 173; Marsh v. Fulton County, 10 Wall. (U. S.) 676; 
East Oakland v. Skinner, 94 U. S. 255; Buchanan v. Litchfield, 103' 
U. S. 278; Hays v. Holly Springs, 114 IT. S. 120; Daviess County v. 
Dickinson, 117 U. S. 57; Hopper v. Covington, 118 XL S. 148; Merrill 
v. Monticello, 138 U. S. 673. 

1 Mather v. Ottawa, 11 A. & E. Corp. Cas. 348 (111., 1885); Ottawa v. 
Carey, 108 U. S. 110. 

2 Commercial Bank v. Iola, 3 D.ll. (II. S.) 353; Loan Association v. 
Topeka, 3 Dill. (U. S.) 376; s. c, 20 Wall, (IT. S.) 655; Ohio Iron 
Works v. Moundeville, 11 W. Va. 1; Allen v. Jay, 60 Me. 124; Tyler 
v. Beecher, 44 Vt. 648; Bissell v. Kankakee, 64 111. 249; Brodhead v. 
Milwaukee, 19 Wis. 624; Cole v. Le Grange, 113 IT. S. 1. 

3 Lowell v. Boston, 111 Mass. 454; State v. Osawkie Township, 14 
Kan. 418. 

4 People ex rel. v. Ragg, 46 N. Y. 401 ; Lumsden v. Cross, 10 Wis. 
282; Hammett v. Philadelphia, 65 Pa. St. 155; In re Washington 
Avenue, 69 Pa. St. 352; Rogers v. Burlington, 3 Wall. (IT. S.) 654; 
People v. Mayor, 4 N. Y. 419. 

'Harper v. Emery, 14 Me. 375; State v. McCann, 21 Ohio St. 198; 
Williams v. School District, 33 Vt. 271; Danielly v. Cabaniss, 52 Ga. 
211; Gordon v. Cornes, 47 N. Y. 608; Read v. Plattsmouth, 107 IT. S. 
568; Merrick v. Amherst, 12 Allen (Mass.), 500; Hensley v. People,. 
84 111. 544; Marks v. Purdue University, 37 Ind. 155; Board of Edu- 
cation v. State, 26 Kan. 44; Bank of Sonoma County v. Fairbanks, 
53 Cal. 196. 

6 Leavenworth v. Miller, 7 Kan. 749, and cases cited in note 5. 



298 MUNICIPAL SECURITIES. [§§ 226, 227. 

§ 226. Formality in execution as affecting legality. — 
When a statute authorizing the issue of bonds provides 
that the bonds shall be signed by the mayor, they must 
be signed by the person who is mayor of the city when 
they are signed, and not by any other person, and the 
city council cannot empower any other person to sign 
them. And where it affirmatively appears that the per- 
son who was mayor of the city at the time when the 
bonds were signed took no part in signing, delivering or 
issuing them, the city is not estopped from contesting the 
validity of such bonds upon the ground that they had 
not been signed by the mayor of the city as required by 
statute. 1 

§ 227. Irregularity as affecting liability. — Where mu- 
nicipal bonds are in the hands of a bona fide holder, and 
the recitals therein are to the effect that the same are 
lawfully issued, mere irregularities cannot be taken ad- 
vantage of by the city in suits brought thereon against 
the municipality. 2 The persons who execute and deliver 
the bonds are the agents of the city authorizing their 
issue, and if these agents exceed their authority as to 

i Coler v. Cleburne, 131 U. S. 162; Anthony v. County of Jasper, 
101 U. S. 693; Bissell v. Spring Valley Township, 110 TJ. S. 162; North- 
ern Bank v. Porter Township, 110 TJ. S. 608; Merchants' Bank v. Ber- 
gen Co., 115 U. S. 384 

2 Rouede v. Jersey City, 18 Fed. Rep. 719; Knox Co. v. Aspinwall, 
21 How. (U. S.) 439; Moran v. Miami Co., 2 Black (U. S.), 722; Super- 
visors v. Schenck, 5 Wall. (U. S.) 772; Gelpcke v. Dubuque, 1 Wall 
<U. S.) 175; St. Joseph Township v. Amy, 16 Wall. (U. S.) 644; Pen- 
dleton v. Amy, 18 Wall. (TJ. S.) 297; Coloma v. Eavis, 92 TJ. S. 484; 
County of Randolph v. Post, 93 U. S. 502; Commissioners v. Thayer, 
94 U. S. 631; Cass County v. Johnson, 95 TJ. S. 360; San Antonio v. 
Mehaffey, 96 U. S. 312; Nauvoo v. Bitter, 97 TJ. S. 389; Daviess Co. 
v. Huidekoper, 98 U. S. 98; Hackett v. Ottawa, 99 U. S. 86; Foote v. 
Pike Co., 101 U. S. 688. 



§ 228.] MUNICIPAL SECURITIES. 299 

form, manner, detail or- circumstance, the loss must fall 
on those whom they represent, and not on those who deal 
with them. 1 

§ 228. Effect of recitals in municipal bonds. — The effect 
of recitals in municipal bonds is like that given to words 
of negotiability in a promissory note. They simply relieve 
the paper in the hands of a bona fide holder from the bur- 
den of defenses other than the lack of power growing 
out of the original issue of the paper, and available as 
against the original payee. If municipal bonds contain 
recitals which, upon fair construction, amount to a repre- 
sentation that the municipality's indebtedness, increased 
by the amount of bonds in question, is within the consti- 
tutional limit, the municipality will be estopped from dis- 
puting the truth of such representation as against a bona 
Jide holder of its bonds. 2 And where legislative author- 
ity has been given to a municipality or to its officers to 
subscribe to the stock of a railroad company, and to issue 
municipal bonds in payment, but only on some precedent 
condition, such as a popular vote favoring the subscrip- 
tion, and where it may be gathered from the legislative 
enactment that the officers of the municipality were in- 
vested with power to decide whether the condition prece- 
dent has been complied with, their recital that it has 
been, made on the bonds issued by them and held bv a 
bona fide purchaser, is conclusive of the fact, and binding 
upon the municipality. 3 But if the officers authorized to 
issue bonds upon a condition are not the appointed tri- 

1 County of Daviess v. Huidekoper, 98 U. S. 100. 

2 Buchanan v. Litchfield, 102 U. S. 278; Coloma v. Eavis, 92 TJ. S. 
484; Orleans v. Pratt, 99 U. S. 676; Nesbit v. Kiverside District, 144 
U. S. 620. 

3 Coloma v. Eavis, 92 U. S. 484; Orleans v. Pratt, 99 U. S. 676; Bu- 
chanan v. Litchfield, 102 U. S, 278. 



300 MUNICIPAL SECUEITIES. [§ 228, 

bunal to decide the fact which constitutes the condition, 
their recital will not be accepted as a substitute for proof. 
The grounds of the estoppel is that the recitals are the 
official statements of those to whom the law refers the 
public for authentic and final information on the subject. 1 
So a recital in a bond that it was issued in accordance 
with authority conferred by an act, specifying it, and in 
accordance with a vote of a majority of the qualified 
voters, is sufficient to validate the bond in the hands of a 
bona fide holder, and the certificate of its regularity by 
the auditor of the state is conclusive upon the munici- 
pality. 2 And the recitals in a bond issued under an act 
of the legislature, authorizing counties to fund their debts, 
which show full compliance with the act but not the 
amount of issue, will estop the county from alleging, 
against a bona fide holder, that the bond was issued in 
violation of the constitutional limitation. 3 But when the 
bonds issued by a municipal corporation do not contain 
any recitals to the effect that the corporation is actually ■ 
authorized to issue them, the corporation is not estopped 
from denying the authority of its supervisor and clerk to 
issue them. 4 From the foregoing it may be seen that the 
principle is well established that where the power exists 
by legislative authority to issue negotiable securities, and 
the local officers, who by the statute are invested with 
the duty to carry out or execute this power, issue the 
bonds with recitals that the right to issue them exists, or 
has arisen, and the bonds have passed into the hands of 
bona fide holders for value, they are not open to the de- 
fense of consideration or fraud on the part of the officers, 

1 Dixon County v. Field, 111 TJ. S. 83. 

2 Commanohe County v. Lewis, 133 IT. S. 198. 

3 Potter v. Commissioners of Chaffee Co., 33 Fed. Rep. 614 

* Concord v. Robinson, 121 TJ. S. 165. 



§ 229.] MUNICIPAL SECURITIES. 301 

or non-compliance with precedent conditions to the right 
to exercise the power. 1 

§ 229. Who are bona fide holders. — To be a bona fide 
holder, one must be himself a purchaser for value with- 
out notice, or the successor of one who was. Every man 
is chargeable with notice of that which the law requires 
him to know, and of that which, after being put upon in- 
quiry, he might have ascertained by the exercise of rea- 
sonable diligence. As an essential preliminary to protec- 
tion as a bona fide holder, authority to issue municipal 
bonds must appear. If such authority did not exist, the 
doctrine of protection to a bona fide purchaser has no ap- 
plication. This is the rule even with commercial paper 
purporting to be issued under a delegated authority. 
This delegation must be first established before the doc- 
trine can come in for consideration. 2 So every dealer in 
municipal bonds, which upon their face refer to the stat- 
ute under which they were issued, is bound to take notice 
of the statute and of all its requirements. 3 And all per- 
sons taking securities of municipal corporations having 
only special powers must see to it that the conditions 
prescribed for the exercise of the power existed. So it 
has been held that persons who purchase bonds issued 
under an unconstitutional act, upon the certificate of the 
municipal authorities that a majority of the voters had 

1 Carpenter v. Buena Vista Co., 5 Dill. (U. S.) 560; Knox v. Aspin- 
wall, 21 How. (U. S.) 539; Moran v. Miami Co., 2 Black (U. S.), 722; 
St. Joseph Township v. Rogers, 16 WalL (U. 8.) 644; Grand Chute v. 
Winegar, 15 Wall. (U. S.) 373; Kennicott v. Supervisors, 16 Wall. 
<U. S.) 452; Lexington v. Butler, 14 Wall. (U. S.) 282; Northern Bank 
v. Trustees, 110 U. S. 608; Dixon County v. Field, 111 U. S. 83. 

2 Merchants' Bank v. Bergen Co., 115 U. S. 384; McClure v. Oxford 
Township, 94 U. S. 429; Ogden v. Daviess County, 102 U. S. 634; 
Hayes v. Holly Springs, 114 IT. S. 120; Hackett v. Ottawa, 99 U. S. 86. 

3 McClure v. Oxford Township, supra. 



302 MUNICIPAL SECURITIES. [§ 230. 

voted for the issue, are not to be protected as innocent 
and bona fide purchasers without notice, being charged 
with knowledge of the illegal origin of the bonds. 1 And 
where the charter of a municipal corporation requires 
that bonds issued by it shall specify for what purpose 
they are issued, a bond which purports on its face to be 
issued by virtue of an ordinance, the date of which is 
given, but not its title or its contents, does not so far sat- 
isfy the requirements of the charter as to protect an in- 
nocent holder for value from defenses which might other- 
wise be made. 2 

§ 230. Tower to issue bonds not implied from power to 
torrow. — The implied power of a municipal corporation 
to borrow money to enable it to execute the powers ex- 
pressly conferred upon it by law, if existing at all, does 
not authorize it to create and issue negotiable securities 
to be sold in the market and to be taken by the purchaser 
freed from the equities that might be set up by the maker 
of it. 3 As a general rule, whether a municipal corpora- 
tion possesses the power to borrow money and to issue 
negotiable securities therefor depends upon a true con^ 

1 Duke v. Brown, 17 A. & E. Corp. Cas. (N. C, 1887), 336. 

2 Barrett v. Dennison, 145 U. S. 135, and cases there cited. 
'Merrill v. Monticello, 138 U. S: 673; Brenham v. German Bank, 

144 U. S. 173; Hill v. Memphis, 134 U. S. 198; Young v. Clarendon, 
132 U. S. 340; Norton v. Dyersburg, 127 IT. S. 139; Concord v. Robin 
eon, 121 U. S. 165; Mayor v. Ray, 19 Wall. (U. S.) 478; Emery v. 
Maria ville, 56 Me. 315; Willey v. Greenbush, 30 Me. 452; Clark v. 
Des Moines, 19 Iowa, 199; School District v. Lombard, 2 Dill. (U. S.) 
493; Keller v. Leavenworth Co., 6 Kan. 510; Goodwin v. Ramsay 
Co., 11 Minn. 31; Smith v. Chesire, 13 Gray (Mass.), 318; Andover v. 
Grafton, 7 N. H. 298; Mathes v. Cameron, 68 Mo. 504; People v. 
County, 11 Cal. 170; Chandler v. Bay St. Louis, 57 Miss. 327; Wall 
v. Monroe County, 103 U. S. 704; Ouachita Co. v. Wolcott, 103 U S 
557. 



§ 231.] MUNICIPAL SECURITIES. 303 

struction of its charter and the legislation of the state 
applicable to it. It has no incidental or inherent author- 
ity under the usual grants of municipal powers as a means 
of discharging its ordinary municipal functions. Such 
authority may be inferred from special and extraordinary 
powers, which require the expenditure of unusual sums 
of money, when such appears to have been the legislative 
intent. 1 

§ 231. Limitation on indebtedness as affecting legality 
oflonds. — As a general proposition, all bonds issued by a 
municipality in excess of the constitutional or statutory 
limitation placed upon its indebtedness, even in the hands 
of a bona fide holder, are illegal and void. But, in cases 
of this kind, a municipal corporation's liability is usually 
dependent upon the peculiar circumstances governing the 
particular case. This branch of the question cannot be 
better explained than by giving instances where the ques- 
tion has arisen and been decided. Thus, where the in- 
debtedness of a city was restricted to $50,000, an issue of 
bonds for $300,000 by such city was held to be invalid,, 
notwithstanding the fact that the bonds were not payable 
for twenty years, and the yearly tax levied with interest, 
upon them would not exceed $50,000 annually. 2 But it has- 
been held that where the amended charter of a city au- 
thorized the city council to borrow money and issue bonds 
for an amount not to exceed $100,000, the bonded debt of 
the city is thereby limited to $100,000, and the city has 
authority for the public use of the corporation to issue 
bonds at any one time to the extent of $100,000. 3 Cer- 
tificates of indebtedness issued to procure temporary loans 

^ause v. Clarksville, 5 DilL (T7. S.) 165; Dill. Mun. Corp., § 124. 

2 Coulson v. Portland, Deady (U. 8.), 481. 

'Mauldin v. Greenville, 31 A. & E. Corp. Cas. 604 (S. C, 1890)' 



304 MUNICIPAL SECURITIES. [§ 231. 

of money for current expenses are ultra vires if, at the 
time they were issued, the debt of the municipality had 
reached the constitutional limit. 1 But generally only that 
part of the indebtedness incurred which exceeds the con- 
stitutional limitation will be held to be void. 2 And a 
judgment may be recovered for bonds first delivered up 
to the amount authorized. 3 

1 Law v. People, 87 I1L 385. 

2 McPherson v. Foster, 43 Iowa, 48; Culbertson v. Fulton, 18 N. E. 
Rep. 781 ; Stockdale v. Wayland School District, 47 Mich. 226 ; County 
of Daviess v. Dickinson, 117 TJ. S. 657; Hedges v. Dixon County, 37 
Fed. Rep. 304 

8 County of Daviess v. Dickinson, supra. 

In the case of Hedges v. Dixon County it was held that, if a county 
contracts to issue bonds as a donation of a specific sum in aid of the 
•construction of a railroad, the contract is to be deemed entire and 
indivisible, although the amount of the donation is represented by 
a number of bonds. The whole donation is therefore ultra vires and 
the whole bonds are void, and the jurisdiction of a court of equity 
•cannot be invoked by the bondholders for the purpose of scaling 
■down the donation in so far as it exceeds the constitutional limit. 
Mr. Justice Brewer, in delivering the opinion of the court in this 
cas~, said: 

"•The contract in this case, in its inception, was, on the part of the 
county, a single and indivisible obligation; that is, an attempted 
donation of $87,000 to the railroad company. The bonds are merely 
•evidences of the contract, the contract standing behind them, and, 
whatever separate and divisible obligations of the county exist after 
the issue of the bonds, the contract in the first instance was single 
and entire. Now, that was an attempted donation of $87,000 to the 
railroad company. Such donations the county had no right to make, 
and, after it had finished its action, nothing which the promisee, the 
other party to the contract, could do could give validity to the obli- 
gation of the county. It was either good or bad, dead or alive, when 
it left the hands of the promisor. Take this illustration: If, in a 
state where usury avoids the entire contract, a usurious note be 
given, the note is void, and no willingness of the payee, no act of his, 
can transform that invalid into a valid contract. Of course it 
would be very satisfactory if the promisee, by consenting to a re- 
duction of the interest, could give validity to a void promise — va- 



§ 232.] MUNICIPAL SECUKITIES. 305 

§ 232. Invalid bonds cannot be ratified. — As we have 
heretofore seen, 1 it is impossible to ratify a contract the 
•original making of which was outside the scope of the 
•corporate powers. So the express assent of all the in- 
habitants of a municipality will not validate bonds issued 
in excess of the constitutional limit. 2 Nor is the payment 
of interest on the whole bonds issued a ratification of 
those which have been issued beyond the lawful limit. 3 
The inhabitants of a city are not estopped from contest- 
ing the validity of bonds by standing by in silence and 
permitting the bonds to be issued ; nor is the municipality 
estopped by knowledge and long acquiescence in the act 
of the officers issuing them, and by the levy of taxes and 
the payment of interest. 4 

lidity to a dead contract. So here, if the promisee, the railroad 
company, could reduce the extent of the promise, it doubtless would 
be satisfactory, but it would thereby be making a contract, or at- 
tempting to make a contract, different from that which the prom- 
isor proposed. The fact that eighty^seven bonds were issued instead 
of one in no manner changes the primary obligation attempted to 
be assumed by the county." 

To a casual reader the case just quoted from would seem to con- 
flict with Daviess County v. Dickinson. In the last-named case, 
the county having authorized the issue of bonds to the amount of 
$250,000, the county officers issued $320,000; but the cases are not at 
all parallel. In the Daviess County case the principal had proposed a 
valid contract. It had done that which it had a right to do, and 
the wrong and misconduct of its agents was held not to invalidate 
that which the county had lawfully authorized. In the Hedges 
case the action of the principal was ultra vires and created no valid 
obligation. 

i§ 78, ante. 

2 McPherson v. Foster, 43 Iowa, 48; Dill. Mun. Corp., §529; Bu- 
chanan v. Litchfield, 102 IT. S. 278; Dixon County v. Field, 111 U. S. 83. 

'County of Daviess v. Dickinson, 117 U. S. 657; Dill. Mun. Corp., 
§548. 

4 McPherson v. Foster, 43 Iowa, 48; DilL Mun. Corp., § 546. 
20 



306 MUNICIPAL SECURITIES. [§ 233. 

§ 233. Liability cannot be avoided by reorganisation. — 
Municipal corporations cannot extinguish their debts by 
changing their names, or reorganizing under new char- 
ters, or by failure to exercise their corporate powers. A 
debt once contracted by a municipal corporation will sur- 
vive as a debt against whatever corporate -entity is sub- 
sequently created to take its place and exercise its powers 
of local government over substantially the same people 
and territory. 1 Even if a municipal corporation can for- 
feit its franchise by non-user, such forfeiture will not op- 
erate to extinguish debts of the corporation contracted 
before the forfeiture was incurred or declared. 2 

iBroughton v. Pensaoola, 93 U. S. 266; Mobile v. Watson, .116 U.S. 
289; Laird v. De Soto, 22 Fed. Rep. 421; People v. Murray, 73 N. T. 
535; Hill v. City of Kahoka. 35 Fed. Rep. 32. 

2 Hill v. City of Kahoka, supra. 

In Broughton v. Pensacola, supra, the court say: "Although a 
municipal corporation, so far as it is invested with subordinate legis- 
lative powers for local purposes, is a mere instrumentality of the 
state for the convenient administration of government, yet, when 
authorized to take stock in a railroad company, and issue its obliga- 
tions in payment of the stock, it is to that extent to be deemed a 
private corporation, and its obligations are secured by all the guar- 
anties which protect the engagements of private individuals. The 
inhibition of the constitution which preserves Against the inter- 
ference of a state the sacredness of contracts applies to the liabilities, 
of municipal corporations created by its permission; and although 
the repeal or modification of the charter of a corporation of that 
kind is not within the inhibition, yet it will not be admitted, where 
its legislation is susceptible to another construction, that the state 
has in this way sanctioned an evasion of, or escape from liabilities, 
the creation of which is authorized. When, therefore, a new form 
is given to an old municipal corporation, or such a corporation is re- 
organized under a new charter, taking in its new organization the 
place of the old one, embracing substantially the same corporators 
and the same territory, it will be presumed that the legislature in- 
tended a continued existence of the same corporation, although 
different powers are possessed under the new charter, and different 



§ 234.] MUNICIPAL SECURITIES. 307 

§ 234. Liability in assumpsit on invalid "bonds. — It is 
the settled doctrine that if a municipal corporation has 
received money for an authorized purpose, derived from 
the issue of illegal and void bonds, and has applied it to 
that purpose, an action will lie as for money had and re- 
ceived, although the corporation had no authority to 
issue the bonds. 1 So where money is borrowed by a mu- 
nicipal corporation without authority of law, but for 
a legitimate purpose, although warrants issued to the 
lender of such money may be ultra vires and void, yet 
the corporation is liable as on an implied assumpsit for 
money had and received; but this principle does not apply 
when there is an express prohibition of the power to 
borrow money. 2 And when negotiable certificates of in- 
debtedness issued by a city have been sued upon by the 
payee, and declared invalid for want of power to issue 
negotiable instruments, the payee may maintain an action 
for money had and received, provided the city had power 
to make the contract out of which the indebtedness- 
arose. 3 Where, however, bonds of a city are void be- 
cause issued under a provision of the constitution of the 
state which declares that the general assembly shall not. 

officers administer its affairs; and, in the absence of express pro- 
visions for their payment otherwise, it will also be presumed in 
such case that the legislature intended that the liabilities as well 
as the rights of property of the corporation in its old form should 
accompany the corporation in its reorganization." 

1 Bangor Savings Bank v. Stillwater, 49 Fed. Rep. 721 ; Louisiana 
v. New Orleans, 102 U. S. 204; Chapman v. County of Douglas, 107 
U. S. 348; Hitchcock v. Galveston, 96 U. S. 341; Norton v. City of 
Nevada, 41 Fed. Rep. 582. 

2 Allen v. La Fayette, 89 Ala. 641; Salt Lake City v. Hollister, 118 
U. S. 256; Marsh v. Fulton County, 10 Wall. (U. S.) 676; Louisiana 
v. "Wood, 102 U. S. 294; Chapman v. County of Douglas, 107 XJ. S- 
348; Litchfield v. Ballou, 114 U. S. 190. 

3 Bangor Savings Bank v. Stillwater, supra. 



308 MUNICIPAL SECURITIES. [§ 235. 

authorize any city to loan its credit to any corporation 
unless two-thirds of the qualified voters assent thereto, 
the purchaser cannot maintain an action for money had 
and received to recover the amount paid to the city for 
such bonds, as, the city having no power to create the 
debt, no implied power can arise for its payment, notwith- 
standing the general statutes gave the board of trustees 
power " to borrow money for the improvement " of the 
town, the money having been borrowed in violation of 
the constitution, and not for the improvement of the 
town, but to buy a right of way and depot grounds for a 
railroad. 1 

§ 235. Illegal issue of bonds may be enjoined. — Any citi- 
zen and tax-payer may restrain the illegal issue and sale 
of bonds by a municipal corporation if there is no ade- 
quate remedy at law, if valid in the hands of an innocent 
purchaser for value. 2 But a tax-payer cannot enjoin the 
issue of bonds voted by a city which would be void even 
in the hands of a bona fide purchaser, since neither he 
nor the city could suffer injury from the issue. 8 It is not 
necessary for a person to wait until his liability is fixed 
before he can have redress. It is enough that he may be 
affected by an illegal ordinance or resolution to entitle 
him to a hearing, before any attempt has been made to 

1 Norton v. City of Nevada, 41 Fed. Eep. 582. 

2 Johnson County v. McClintock, 51 Ind. 325; Livingston County 
v. Weider, 64 111. 249; Allison v. Railway Co., 9 Busb (Ky.), 247; 
Bound v. Railway Co., 45 Wis. 543; Wright v. Bishop, 88 111.302; 
Springfield v. Edwards, 84 111. 266; Flack v. Hughes, 67 111. 384; Win- 
ston v. Tennessee, etc. Ry., 1 Bax. (Tenn.) 60; State v. Montgomery, 
74 Ala. 226; Lynch v. Eastern, etc. Ry., 57 Wis. 430; Wilkinson v. 
Peru, 61 Ind. 1; Meyer v. Porter, 65 Cal. 67; Hodgman v. Chicago,- 
etc. R. Co., 20 Minn. 48; Redd v. Henry County, 31 Grat. (Va.) 695. 

3 Bolton v. City of San Antonio, 21 S. W. Rep. 64. 



§§ 236, 237.] municipal secueities. 309 

enforce it. 1 So courts of equity have jurisdiction to en- 
join the board of supervisors of a municipal corporation 
from passing an ordinance which is not within the scope 
of their powers, where the passage of such ordinance would 
work irreparable injury. 2 . 

§ 236. Municipal-aid bonds. — Some twenty-five or 
thirty years ago a veritable railroad epidemic swept over 
this country, depositing its infectious germs in almost 
every county, township and city in the land. Under the 
influence of this frenzied excitement, the honest but en- 
thusiastic tax-payer voted such an avalanche of indebt- 
edness upon himself that in many communities he has 
scarcely yet recovered from the effects of his March-hare 
madness. He has learned a thing or two, however, and 
it would not be considered safe, or at least wise, for a 
sleek and smiling emissary of a proposed railroad corpo- 
ration to again go through such rural districts soliciting 
aid for some gigantic enterprise the completion of which 
would certainly make every tiller of the soil rich be- 
yond the wildest dreams of avarice. 

§ 237. Same subject — Power must be specifically granted. 
The power of municipal corporations, when authorized 
by the legislature, to engage in works of internal im- 
provements, such as building of railroads, canals, har- 
bors, and the like, or to loan their credit in aid thereof, 
and to defray the expenses of such improvements by an 
exercise of the power of taxation, has always been sus- 

1 State v. City of Paterson, 34 N. J. 163; State v. Jersey City, 5 
Dutch. (N. J.) 170. 

2 Spring Valley Water Works v. Bartlett, 61 Cal. 3. And see gen- 
erally as to injunction, Dill. Mun. Corp., § 519; Union Pacific R. Co. v. 
Lincoln County, 3 Dill. (U. S.) 300; McClure v. Oxford Township, 94 
U. S. 429; Portland, etc. R. Co. v. Hartford, 58 Me. 23. 



310 MUNICIPAL SECUEITIES. [§ 237. 

tained on the ground that such works, by reason of the 
facilities which they afford for trade, commerce and inter- 
communication between different and distinct portions of 
the country, are indispensable to the public interests and 
public functions. 1 The power of municipalities to issue 
bonds in aid of such enterprises, however, does not exist 
unless specifically granted by the legislature. 2 And where 
the power does not exist, the bonds issued are void, no 
matter in whose hands they may be found. 8 A grant to 
a municipal corporation of power to appropriate money 
in aid of the construction of a railroad, accompanied by 
a provision directing the levy and collection of taxes to 
meet such appropriation, and prescribing no other mode 
of payment, does not authorize the issuing of negotiable 
bonds in payment of such appropriation. 4 Whilst a mu- 
nicipal corporation, authorized to subscribe for the stock 
of a railroad company, or to incur any other obligation, 
may ^ive written evidence of such subscription or obliga- 
tion, it is not thereby empowered to issue negotiable 
paper for the amount of indebtedness incurred by the 
subscription. 5 But municipal bonds issued without au- 
thority of law, and therefore void, may be validated by 

1 Hasbrouok v. Milwaukee, 13 "Wis. 43. 

2 Mississippi, etc. R. Co. v. Camden, 23 Ark. 300; Pitzman v. Free- 
berg, 92 111. Ill; Barnes v. Lacon, 84 111. 461; City of Aurora v. West, 
22 Ind. 88; Dranesburgh v. Jenkins, 46 Barb. (N. Y.) 294; Taxpayer* 
v. Tennessee C. R. Co., 11 Lea (Tenn.), 329; Wells v. Supervisors, 102 
TJ. S. 625; Lewis v. Clarendon, 5 Dill. (IT. S.) 329. 

3 Donovan v. Green, 57 III. 63; Clay v. County, 4 Bush (Ky.), 154; 
Weismer v. Douglas, 61 N. Y. 91; Police Jury v. Britton, 15 Wall. 
(U. S.) 566; Savings Association v. Topeka, 3 Dill. (U. S.) 376; Com- 
mercial Bank v. Iola, 2 Dili (U. S.) 353. 

* Concord v. Robinson, 121 U. S. 165. 

8 Hill v. Memphis, 134 U. S. 198; Police Jury v. Britton, 15 Wall. 
(U. S.) 566; The Mayor v. Ray, 19 Wall. (U. S.) 468; Claiborne County 
v. Brooks, 111 U. S. 400; Young v. Clarendon Township, 132 U. S. 340. 



§ 238.] MUNICIPAL SECURITIES. 311 

an act of the legislature passed for that purpose, if the 
legislature of the state could authorize the issuing of simi- 
lar bonds. 1 

§ 238. Power to subscribe to railroad stoclc. — A munici- 
pal corporation cannot subscribe for stock in a railroad 
corporation unless it has the authority of the legisla- 
ture for the act. 2 The legislature usually requires the 
approval of the electors of incorporated towns and cities, 
or other municipalities, at an election for that purpose, as 
a condition to such subscription, and when the sanction 
of a popular vote is required it must be obtained. So 
where an act of the legislature, authorizing a town to sub- 
scribe to the capital stock of a railroad company, provided 
that if a majority of the legal voters, voting at an election 
held for that purpose, shall be found to be in favor of 
such subscription, it shall be deemed and held that such 
town has. taken stock in said company according to the 
proposals made, it was held that the statutes make such 
a majority vote equivalent to, and a substitute for, a sub- 
scription by the town upon the books of the company. 8 
Accordingly where, upon the performance of certain condi- 
tions precedent, the issue of bonds to a railroad company by 
the proper officers of a municipality is authorized by law, 
the bonds when issued, if they recite such performance, 
are, in the hands of a bona fide holder for value, binding 

1 Deyo v. Otoe County, 37 Fed. Rep. 246. 

2 Town of Bast Oakland v. Skinner, 94 U. S. 255 ; Township of Elm- 
wood v. Marcy, 92 U. S. 289; Gelpcke v. Dubucme. 1 Wall (U. S.) 175; 
Thompson v. Lee County, 3 Wall. (U. S.) 327; jr-ine Grove Township 
v. Talcott, 19 Wall (U. S.) 666; Loan Association v. Topeka, 20 Wall. 
(U. S.) 655. 

'East Lincoln v. Davenport, 94 U. S. 801; Migret v. Supervisors, 
19 Wall. (U. S.) 241. 



312 MUNICIPAL SECURITIES. [§ 239„ 

upon the municipality. 1 And if a legislature has power 
to authorize a subscription to stock of a railroad by a 
township, and to provide, as a condition precedent to such 
subscription, that a majority of the legal voters of such 
township signify their assent thereto, it has the power to 
legalize an election held for that purpose before the pas- 
sage of the act of authorization, and to validate a sub- 
scription so made. 2 Where the statute authorizing a 
county to subscribe to the capital stock of a railroad com- 
pany declares that subscriptions should not be valid and 
binding until conditions precedent imposed by the vote 
should have been complied with, and a vote is had in 
favor of a subscription payable in county bonds, " said 
bonds to be issued upon the following conditions, and not 
until they are complied with," a condition that the road 
shall be commenced and completed within a specified 
time is a condition precedent, and if bonds are issued 
without a compliance therewith they are void. 3 So it 
has been held that if a county has voted an issue of bonds 
in aid of the construction of a railroad upon the condi- 
tion that the road shall be constructed and in operation 
by a certain day, and that the company should locate 
their machine shops at a certain specified place, bonds 
issued by the county are invalid if the company has not 
fulfilled the conditions. 4 

§ 239. Limitation on amount of subscription. — Where 
the amount of the subscription fixed by the legislature 

1 Commissioners v. January, 94 U. S. 302; Commissioners v. Bolles^ 
94 U. S. 104 

2 Anderson v. Township of Santa Ana, 116 TJ. S. 356; St. Joseph 
Township v. Rogers, 16 Wall.(U. S.) 644; Cowgill v. Long, 15 111.202; 
Keithburg v. Frick, 34 111. 405; Fanning v. Sohammel, 68 Cal. 428; 
People v. MoCune, 57 Cal. 153. 

3 German Sav. Bank v. Franklin Co., 128 U. S. 526. 
* Onstott v. People, 15 N. E. Rep. 34. 



§ 240.] MUNICIPAL SECURITIES. 313 

has been reached, any subscription beyond that amount 
and any issue of bonds therefor will be invalid. 1 So 
where the amount of subscription is properly limited in 
the submission, and the election results in favor of the 
proposition, this does not fix the amount of subscription, 
but vests in the proper authorities a discretionary power 
as to the amount of stock to be taken and bonds issued 
not to exceed the amount specified in the submission. 2 

§ 240. Levying a tax to pay subscription. — Where the 
law authorizes the donation of money by a municipal 
corporation to aid in the construction of a railroad, and 
provides for levying a tax to raise the amount to be do- 
nated, the officers of the corporation cannot adopt any 
other mode of paying the same, and bonds issued by them 
for the purpose of paying such indebtedness are void.* 
And where an act of the legislature gives to a town au- 
thority to vote a donation in aid of a railroad company, 
and levy and collect taxes to pay the same, the railroad 
company cannot be compelled to accept bonds issued by 
the municipality, because the road has only a claim for 
money and has no right to say how the money shall be 
raised. 4 

1 Amey v. Allegheny City, 24 How. 364. 

2 Winter v. City Council, 65 Ala. 403. 

'Town of Middleport v. ^Etna Ins. Co., 83 111. 562. 
* Chicago, etc. R. Co. v. St, Anne, 101 111. 151. 



INDEX. 



References are to sections. 

A. 

ABATEMENT OF NUISANCES (see Nuisances). 
ABUTTER: 

assessment on, for street improvements, 201. 

ACCIDENTS UPON STREETS (see Streets and Sidewalks): 
liability of municipal corporation for, 204 
city not insurer against, 204 

not liable for injuries caused to person by others coasting on, 204. 
nor to person injured by discharge of cannon, 204 
nor by fall of snow from roof, 204 
nor by fall of weight attached to flag across street, 204 
nor injury by mob, 204 
but liable for injuries when officers have knowledge of defect, 

204 
liable for injuries from awning over sidewalk, 204 
from injuries from falling in sewer, 204 
for injuries from hole in embankment, 204 
for injuries from defective sidewalk, 205. 
not liable for injuries from ice on sidewalk, 205. 

ACCOMMODATION PAPER (see Negotiable Instruments): 
liability of corporation on, to bona fide holder, 104 

ACKNOWLEDGMENTS : 

what certificate should state, 89. 
when no particular mode directed, 89. 
by officer who affixes seal, 89. 

ACTIONS (see Courts; Executed Contracts): 
on illegal contracts, general rule, 69. 

any undertaking to promote unlawful object will not maintain, 
69,74 



316 INDEX. 

References are to sections. 

ACTIONS (continued): 

no distinction between acts malum in se and malum prohibitum 

relative to, 69. 
courts will not assist in maintaining, on ultra vires acts, 69, 70. 
ultra vires as defense to, 70. 
no performance of ultra vires contract gives foundation for right 

of, 70, 72. 
court must be satisfied of legality of contract before, 71. 
no alleged estoppel can give right of, 71. 
on executed ultra vires contract, 72. 
in courts of equity and at law, 73. 
for relief on ultra vires contract, 74, 75. 
suing to recover as on quantum meruit, 74, 75. n 
relief on quantum meruit and under statute of frauds compared, 

75. 

AGENTS (see Officers and Agents; Directors): 
acts of, confounded with corporate acts, 150. 
distinction between, 151. 
directors are, of corporations, 151. 
ultra vires acts of, not imputable to corporation, 151. 
test to distinguish acts of, from corporate acts, 152. 
what reasonably incidental to corporate business, 152. 
have no power to bind by contracts outside corporate business, 

152. 
cashier of bank as, 160. 
liability of corporation for torts of, 162, 163. 
for negligence and omissions of, 162. * 

for malicious prosecutions, libel, false imprisonment or false 

representations of, 162. 
doubt as to liability for slander, 163. 
defense of ultra vires for torts of, not allowed, 163. 
authority of in fixing liability, 164. 
acts must be connected with business for which employed, 164. 

AID TO RAILROADS (see Municipal Corporations; Bonds; 
Municipal Bonds). 

ALIENATION (see Conveyances). 

AMALGAMATION (see Consolidation and Amalgamation; Rail- 
road Corporations). 



INDEX. 317 

References are to sections. 
ARBITRATION: 

municipal corporation may submit unsettled claims to, 195. 

power must be exercised by ordinance or resolution, 195. 

when assnssment of damages may not be submitted to, 195. 
ASSIGNMENT: 

directors may make, for benefit of creditors, 11, 155. 

insolvent corporations may make, 91. 

may not divert property from payment of debts by, 91. 

by president, is company's contract, 91. 

shares of stock may be assigned to creditors, 91. 
ASSUMPSIT (see Quantum Meruit). 

B. 

BANKS (see National Banks): 

may own and convey real property, 85, 157. 

but only for purposes prescribed in charter, 85. 

power to convey includes power to mortgage, 85. 

may make negotiable paper, 102. 

power to discount does not imply power to purchase, 103. 

power to increase capital stock, 111. 

directors' powers over affairs of, limited, 157. 

must exercise care and prudence in administration of affairs, 
157. 

may commit affairs of to duly authorized officers, 157. 

directors are liable to, for wrong-doing resulting from gross in- 
attention to business, 157. 

have no ownership in assets of, 157. 

when not chargeable with assets of, 158. 

not liable to, for misconduct of co-director, 158. 

president of, no more control of property than any other di- 
rector, 158. 

acts of, outside official duties, not binding on, 159. 

cannot dispose of cash and credits of, to settle creditors' de- 
mands, 159. 

cannot release claim of, against any one, 159. 

personally liable for overdrafts allowed on, 159. 

cashier presumed to have necessary power to transact busi- 
ness of, 160. 

may indorse commercial paper of, 160. 

receive funds coming to and give certificates for, 160. 



318 INDEX. 

References ore to sections. 
BANKS (continued): 

collect debts owing to, 161. 

release debt secured by mortgage, 161. 

may borrow money for, and bind bank by promissory note, 161. 

may draw checks on funds of, 161. 

may transfer shares of stock of, 161. 

may deliver notes of to attorney for collection, 161. 

but may not compromise claims of, 161. 

nor transfer non-negotiable notes of, 161. 

nor discharge surety on note to, 161. 
BEQUEST: 

corporation may take personal property by, 95. 

may take its own stock by, 95. 

of money to church, 95. 

to corporation, for education of students, 95. 

to city, of money for hospital, 95. 

to city, for relief of blind and lame, 95. 
BORROWING: 

power of corporation as to, 96. 

incidental to every corporation, 96. 

but prohibition against must be obeyed, 96. 

not permitted by company constituted for special purposes, 96. 

test to determine if transaction is, 97. 

banks have implied power to, 98. 

power to borrow gives no right to issue irredeemable bonds, 96. 

benefit society no power without special authority, 98. 

where power to borrow gives right to secure loan, 98. 

instances where power allowed, 98. 
BONDS (see Municipal Bonds; Railroad Bonds). 

0. 

CALLS (see Capital Stock): 
future calls as assets, 125. 
as to mortgage or pledge of, 125. 

CAPITAL STOCK (see Stock and Stockholders): 
definition of, 106. 
nature and purpose of, 106. 
as a trust fund, 107. 
unpaid stock as assets, 107. 



INDEX. 319 

References are to sections. 

CAPITAL STOCK (continued): 

limitation on doctrine as trust fund, 108. 
only when corporation insolvent, 108. 
power to increase, 109. 

power may be conferred subsequent to grant of charter, 110. 
consent of stockholders necessary, 110. 
power of national bank to increase, 111. 
power to reduce not implied by power to increase, 113. 
fund cannot be increased or diminished without legislative li- 
cense, 113. 
reduction of as dissolution of old corporation, 113. 
reduction of in England, 114 
power to issue new stock, 115. 
as to special stock under Massachusetts statute, 116. 
ultra vires to issue shares at discount, 117. 
power to issue preferred stock, 118. 
must be expressly conferred, 118. 
liability on ultra vires issue of, 119, 127. 
dealing in own stock, 120. 
purchasing stock of another corporation, 121. 
may take in payment of debt, 121. 
declaring dividends, 124. 
liability on declared dividends, 126. 
as individual property of stockholder, 126. 
declaration of, discretionary with directors, 126. 
future calls as assets, 125. 
mortgage or pledge of, 125. 

CHARTERS (see Construction of Charters): 
grant from sovereign power of state, 3. 
must be-certified by directors and recorded, 8. 
what must specify, 3. 

powers in, which contravene statute, void, 8/ 
creates subscribers a corporation, 3. 
what acceptance of, implies, 4, 
general rule of construction, 8. 
to be strictly construed, 8. 
ambiguity in, vitiates grant, 8. 
province of court in construing, 12, 48. 
construction of, as to incidental powers, 18. 
not only grants rights, but imposes duties, 19. 



320 INDEX. 

References are to sections. 

CHARTERS (continued): 

acceptance of rights is assumption of duties, 19. 

contract which binds both state and corporation, 19. 

when prescribes mode of contracting, must be strictly pur- 
sued, 52. 
CITIES AND TOWNS (see Municipal Corporations). 
CONDITIONS PRECEDENT (see Municipal Bonds). 
CONSOLIDATION AND AMALGAMATION (see Railroad Cor- 
porations): 

definition of consolidation, 142. 

definition of amalgamation, 142. 

corporations can consolidate only with consent of legislature, 
143. 

authority may be conferred by original charter, 143. 

or by general or special act of legislature, 143. 

or even by express sanction of unauthorized agreement, 143. 

agreement between directors to, ultra vires, 143. 

effect of variously stated, 144. 

effect of interstate consolidation, 145. 

of stock, does not constitute one corporation of both states, 145. 

subject to control of each state, 145. 

treated in each state as domestic corporation, 145. 

consolidated company has all rights and subject to liabilities of 
corporations of which composed, 146. 

may take advantage of all contracts and enforce all debts, 146. 

liable for all torts committed by various corporations, 146. 

newly-created company entitled to all property, 146. 

where indebtedness of old company has not ripened into lien, 
146. 

stockholders not bound by, without consent, 147. 

stockholders of old entitled to withdraw shares, 147. 

where two corporations consolidate, exemption of one from taxa- 
tion will not inure to the other, 148. 

when immunity of old corporation does not inure to new, 148. 

when exemption of shares of old passes into new, 148. 

CONSTRUCTION OF CHARTERS (see Charters): 
general rule of construction, 8. 
charters to be strictly construed, 8. 
ambiguity vitiates grant, 8. 
province of court in, 12, 48. 



INDEX. "** 



References are to sections. 



CONSTRUCTION OP CHARTERS (continued): 
of incidental powers, 13. 

tendency to disregard statutory enactments, 18, 49. 
intention of legislature should control, 49. 
substitution of judicial for legislative will, 49. 

CONTRACTS (see Corporations ; Ultra Vires): 
doctrine of ultra vires applied to, 47. 
incidental powers as to, 50. 
corporate contract is act of legal entity, 50. 
irregularity no defense to liability on, 51. 
officers cannot bind by, beyond charter limits, 52. 
ultra vires and illegal; alleged distinction, 55. 
prohibited contracts, illegal, 56. 
courts cannot legalize by ignoring statutes, 57. 
Morawetz on unauthorized and illegal, 57. 
ultra vires contracts not enforceable, 69, 70, 71. 
performance or part performance will not make valid, 70, 72. 
as to performance by innocent party, 58, 61, 63. 
as to relief on ultra vires contracts, 74, 75. 
relief under statute of frauds compared with, 75. 
general doctrine of ratification, 76. 
■effect of ratification, 77. 

ultra vires contracts incapable of ratification, 78, 194. 
promoters' contracts may be ratified, 79. 
as to unauthorized contracts of directors, 151. 
actions on illegal, 69. 

action on executed ultra vires contracts, 73. 
in courts of equity and at law, 73. 
of municipal corporations, 188. 
general powers as to, 188. 
prescribed mode must be pursued, 189. 
not bound by ultra vires contracts of officers, 190. 
implied municipal contracts, 191. 
of compromise and arbitration, 195. 
limitation on indebtedness by, 196. 

CONVEYANCES: 

power to acquire implies power to convey, 83. 
corporation may sell all property for lawful purpose, 83, 85. 
power to convey implies power to mortgage, 84. 
must be executed in corporate name under seal, 87. 
21 



322 INDEX. 

References are to sections. 

CONVEYANCES (continued): 

may be made by agent having authority, 87, 88. 

as evidence of title when made by agent, 88. 

what certificate to should state, 89. 

when no particular mode of acknowledgment directed, 89. 

affixing corporate seal, 90. 

invalid when officer executes in own name, 90. 

CORPORATIONS (see Db Facto Corporations; Foreign Corpo- 
rations; Municipal Corporations; Railroad Corpora- 
tions; Powers of Corporations): 

a legal entity, 3. 

general character and attributes, 2. 

property and powers vested in, 2. 

acts within chartered powers only affect, 2. 

acts of officers beyond, not ascribed to, 2, 17. 

confusion of with individuals composing, 2. 

created only by virtue of legislative enactment, 3, 4. 

no express words required to create, 3. 

manner of creation prescribed by general laws, 3. 

special acts of incorporation now generally prohibited, 3. 

nature of not changed by organization under general laws, 3. 

act of incorporation, enabling act, 21. 

limited management and liability under legislative acts, 3. 

charters of, to be recorded, 3. 

specifications in charter which contravene statute, void, 3. 

strict compliance with law required before in esse, 3. 

powers of, depend on law of creation, 3, 19. 

have no natural or inherent capacities, 19. 

charter creates subscribers a corporation, 3. 

creation of, based on theory of benefit to public, 4, 

distinction between and natural persons, 5. 

distinction between and partnerships, 6. 

as organized under general and special laws, 7. 

general powers possessed by, 7, 9, 13, 21, 22. 

powers granted to be strictly construed, 8. 

object of construction to protect public, 8. 

construction not to defeat legislative intent, 8. 

strict construction peculiarly applicable to organization under 
general laws, 10. 

province of court in construing powers, 12, 18. 

should not enlarge powers beyond limits of charter, 12, 



INDEX. 323 

References are to sections. 

CORPORATIONS (continued): 

specific grant of powers implies inhibition of others, 13. 

what are incidental powers, 13. 

discretion in exercising powers, 14. 

when mode prescribed can be exercised in no other way, 14 

miscellaneous incidental powers, 15. 

contracts of, disabling performance of duties, ultra vires, 19. 

acts under assumption of powers, void, 19. 

all persons bound to take notice of limits of powers, 53. 

if powers are exceeded, state may take away charter, 53. 

not liable on ultra vires contracts, 54. 

capacities of, analogous to those resting under legal disability, 

60. 
performance of ultra wres contract by innocent party, 58, 61, 62. 
San Antonio v. Mehaffey, 63. 
Railway Co. v. McCarthey, 64. 
Hitchcock v. Galveston, 65. 
Jones v. Guaranty Co., 66. 
National Bank v. Mathews, 69. 
Central Trans. Co. v. Pullman Co., 68. 

COURTS (see Actions; Construction of Charters): 
province of in construing charters, 12, 18. 
tendency of to disregard statutes, 18, 49. 
substitution of judicial for legislative will, 49. 
will not enforce contract violative of statute, 69. 
or ultra vires, 70. 

must be. satisfied of legality of contract, 71. 
and one over which accustomed to exercise jurisdiction, 71. 
no estoppel will induce to enforce ultra vires contract, 71. 
neither in equity nor at law, 73. 
difference between merely forms and remedies, 73. 
must accept contracts as they find them, 73. 
no power to make contracts for parties, 73. 
will grant relief on ultra vires contracts as on quantum meruit, 
74. 

D. 

DEEDS (see Conveyances). 
DE FACTO CORPORATIONS: 

when estopped from denying legality of organization, 168. 

when person dealing with, also estopped, 168. 



324 INDEX. 

References are to sections. 

DE FACTO CORPORATIONS (continued): 

validity of organization cannot be impeached collaterally, 168. 

acts of officers under color of election, binding on, 168. 

effect of presuming to act before capital paid in, 168. 

continuing to act after expiration of charter, 168. 
DIRECTORS (see Agents; Officers and Agents): 

confounding acts of with corporate acts, 150. 

distinction between and corporate acts, 151. 

acts of within limits of corporate powers, 151. 

are agents of corporation, 151. 

acts outside sphere of agency unlawful usurpations, 151. 

acts of beyond prescribed corporate powers, not corporate acts, 
151. 

test to distinguish from corporate acts, 153. 

to determine, charter must be consulted, 152. 

bona fides not sole test, 152. 

relation to stockholders as that of trustees, 153. 

essential distinction between and trustees, 153. 

general powers of, 154. 

no power to bind outside corporate powers, 154 

not presumed to have powers corporation itself has not, 154. 

cannot, as creditors, secure to themselves preference, 155. 

may make valid assignment for benefit of creditors, 155. 

declaration of dividends with knowledge of no profits, illegal, 
155. 

courts will enjoin ultra vires act approved by, 155. 

cannot enforce contract made with co- director, 155. 

resolutions by, to assume debts of rival corporation, ultra vires, 
155. 

general liability of, 156. 

error of judgment will not subject to liability, 156. 

personally liable for violation of charter, 156. 

liable for want of good faith or wilful abuse of discretion, 156. 

or gross negligence, 156. 

personally liable for waste of corporate funds, 156. 

powers of bank directors, 157. 

may commit affairs of bank to duly authorized officers, 157. 

liable for wrong-doing, when, 157. 

have no title to assets, 157. 

personally liable for issue of spurious stock, 158. 

not chargeable with assets unless appropriated by, 158. 

not liable for loss occasioned by fraud of co-director, 158. 



INDEX. 325 

References are to sections. 
DIVIDENDS: 
definition, 124 

declaration of, discretionary with directors, 124. 
where right to fixed by contract, court will compel declaration, 

124. 
directors cannot discriminate between stockholders, 124. 
after declaration of, belongs to stockholder, 126. 
as to liability after notice of, 126. 
as to liability if declared payable elsewhere than at office, 126. 

E. 

EMINENT DOMAIN: 
definition, 183. 

for what purposes may be exercised, 86, 183. 
right not to be extended by implication, 86. 
as to sale of real property acquired by, 86. 
distinction between and taxation, 184 

ESTOPPEL: 

the doctrine as applied to executed contracts, 58, 59, 60. 

not applicable to unauthorized act of officer, 59, 192. 

doctrine of, no more applicable to corporations than to persons 

under legal disability, 60. 
powers of corporation and married woman compared relative 

to, 60. 
EXECUTED CONTRACTS (see Contracts; Corporations; Ultra 

Vires): 
doctrine of ultra vires as applied to, 58-62. 
as to alleged rule that doctrine should not be applied to, 58. 
fallacy of alleged rule shown, 59, 60, 61, 62. 
cases cited to support rule not applicable, 63, 64, 65, 66, 67, 68. 
Taylor on alleged rule, 61. 

FOREIGN CORPORATIONS: 

general rule as to powers of, 165. 

powers depend on laws of sovereignty where exercised, 165. 

can make no contract without sanction of such sovereignty, 

165. 
absence of prohibitory legislation relative to, presumes tacit 

adoption of foreign laws, 166. 



326 INDEX. 

References are to sections. 

FOREIGN CORPORATIONS (continued): 

individuals cannot complain because business is being done by, 

166. 
contractual powers similar to domestic corporation, 167. 

FRANCHISES: 

cannot be leased or transferred without legislative authority, 
137. 

lease of, ultra vires. 138, 

cannot mortgage, 141. 

cannot be levied upon by execution, 141. 

mortgage or transfer of, may be ratified by subsequent enact- 
ment, 141. 

alleged distinction between franchise to be a corporation, and 
as a corporation to operate railway, 141. 
FUTURE CALLS (see Calls). 

G. 

GAS COMPANIES (see Municipal Corporations): 

as to exclusive privileges to, 316. 

municipal corporations may contract with, for gas supply, 217. 

rates of, may be regulated by city, 218. 
GUARANTY: 

railroad company no power to guaranty bonds of another with- 
out express authority, 136. 

has power to guaranty bonds received in payment of debt due 
it, 136. 

where guaranty ultra vires, stockholders estopped from repudiat- 
ing, 136. 

H. 

HYPOTHECATION OF STOCK (see Pledge). 

I. 

ILLEGAL COMBINATIONS: 
definition, 149. 

how combination usually consummated, 149. 
power of trustees under, 149. 
dividends made from common fund, 149. 



INDEX. 327 

References are to sections. 

ILLEGAL CONTRACTS (see Contracts; Ultra Vires). 

IMPLIED POWERS (see Incidental Powers). 

INCIDENTAL POWERS (see Powers of Corporations): 
definition of, 13. 

power to acquire real estate, 81, 85. 
power to borrow money, 96. 
to make negotiable paper, 100. 

INCREASE OF CAPITAL STOCK (see Capital Stock). 

J. 

JURISDICTION (see Actions; Courts). 

L. 

LAND (see Real Estate). 
LEASE: 

road and franchises may not be transferred by without express 

authority, 137. 
denied on theory of duties to public, 137. 
instances where denied, 137. 

will not be set aside at suit of lessor, though ultra vires, 138. 
relief denied under rule in pari delicto potior est conditio de- 

fendentis, 138. 
affirmative relief denied unless executory, 138. 
when cannot lease real estate where power to sell exists, 139. 
when made by officers unauthorized, void, 139. 
where holders of majority of stock cannot lawfully authorize, 

139. 

LEVY: 

cannot be made on franchises in execution, 141. 

LIABILITY OF CORPORATIONS (see Corporations; Railroad 
Corporations; Municipal Corporations): 
where irregularity of proceedings no defense to, 51. 
why not liable on ultra vires contracts, 54. 
on accommodation paper, 104. 
on ultra vires issue of preferred stock, 119, 127. 
on declared dividends, 126. 
for consequential damages, 203. 
for accidents upon streets, 204. 



328 INDEX. 

Keferences are to sections. 

LIABILITY OF CORPORATIONS (continued): 
for defective streets and sewers, 205, 211. 
as to nuisances, 213. 

for damages for inadequate water supply, 219. 
doctrine of Respondeat superior, 220. 
as to ultra vires acts of officers, 222. 
general rule as to torts, 162. 
for tortious acts of agents, 163. 
authority of agent in fixing, 164. 
irregularity in bonds as affecting. 227. 
effect of recitals in, as affecting, 228. 
limitation on indebtedness as affecting, 231. 
cannot be avoided by reorganization, 233. 
in assumpsit on invalid bonds, 234 

LIBEL: 

corporation's liability for, 162. 

LIEN: 

where indebtedness of old company on consolidation has not 
ripened into, 146. 

M. 

MUNICIPAL BONDS (see Municipal Corporations;: 
power of municipality to issue, 223. 
no presumption as to legality of, 223. 
purposes for which may be issued, 224. 
instances where power to issue denied, 225. 
formality in execution as affecting legality, 226. 
irregularities in issuing, no defense to liability on, 227. 
recitals in, as affecting liability, 228. 
who bona fide holders of, 229. 

lower to issue not implied from power to borrow, 230. 
limitation on indebtedness as affecting legality, 231. 
when invalid cannot be ratified, 232. 
liability on, cannot be avoided by reorganization, 233. 
liability in assumpsit on invalid issue, 234. 
illegal issue of, may be enjoined, 235. 
power to issue municipal-aid bonds, 137, 238. 
limitation on subscription to, 239, 240. 



INDEX. 320 

References are to sections. 

MUNICIPAL CORPORATIONS: 

general nature of, 169. 

exercise of general powers of, 170. 

manner of rests in their judgment, 170. 

when not liable for defects in execution of powers, 170. 

can exercise only such powers as granted them, 170. 

no powers implied except essential to purposes, 170. 

acts beyond powers of no effect, 170. 

power requiring exercise of discretion cannot be delegated by,. 
173. 

courts cannot interfere with discretionary powers of, 177. 

ordinances of, definition, 171. 

legislature may delegate power to enact, 171. 

may be conferred upon any department of municipality, 171. 

must be made in subordination to general laws, 172. 

must be reasonable, 176. 

but ordinances expressly authorized by legislature cannot be- 
unreasonable, 176. 

within limits of corporation have force of laws, 172. 

power to pass includes power to make effectual, 172. 

distinction between judicial and ministerial ordinances, 173. 

effect of ultra vires ordinances, 174. 

ordinance levying tax for purpose unauthorized, void, 174, 

where power exists, but exercised in unauthorized manner, 174. 

validity of cannot be questioned collaterally, 174. 

when ordinance making appropriation ultra vires, 175. 

instances of illegal and void ordinances, 175, 176. 

courts may restrain ultra vires ordinances, 178. 
Taxation — 

power relating to, 179. 

may be delegated by state, 179. 

essential attribute to municipal government, 179. 

power may be revoked, 180. 

can be exercised only for public purposes, 181. 

cannot levy taxes to aid private enterprises, 181. 

or to aid sufferers by fire or flood, 181. 

taxation and power to license distinguished, 182. 
Eminent Domain — 

power to exercise right of, 183. 

distinction between and taxation, 184. 

powers as to real property, 185. 



330 INDEX. 

Eef erences are to sections. 

MUNICIPAL CORPORATIONS (continued): 
Eminent Domain (continued) — 

apportionment of between old and new municipality, 186. 

powers of extinguished municipalities, 187. 

powers revert to new town, 187. 
Contracts — 

powers as to, 188. 

usually conferred in incorporating act, 188. 

mode prescribed must be strictly pursued, 189. 

void, if mode prescribed violated, 189. 

for public work to lowest bidder, 189. 

advertisement and specifications, 189. 

officers cannot bind by ultra vires contract, 190. 

persons contracting with must take notice of powers, 190. 

contracts by, when law requires advertising, 190. 

as to implied contracts, 191. 

when estoppel not applicable, 192. 

no estoppel arises when act violative of law, 192. 

acts without authority not misleading, 192. 

when estopped to deny irregularity, 193. 

ratification of ultra vires contracts, 194 

no act of can supply defect in, 194 

may be inferred by acquiescence, 194 

<may make contracts of compromise, 195. 

or submit unsettled claims to arbitration, 195. 

but must be exercised by ordinance or resolution, 195. 

when submission to arbitration ultra vires, 185. 

limitation on contracting indebtedness, 196. 

when limit reached in, 196. 

cannot be evaded by future levies, 196. 

cannot make appropriation for indebtedness beyond, 196. 

all persons charged with notice of limitation on, 196. 

instances where increase beyond limit denied, 197. 

equity will enjoin illegal creation of, 198. 
^ treets — 

powers as to, 199. 

exclusive control over, 199. 

whole sovereign power required to confer, 199. 

use of must be consistent with public objects, 199. 

when estopped to deny existence of, 200. 

power to grade, improve and alter, 201. 



INDEX. 331 

References are to sections. 

MUNICIPAL CORPORATIONS (continued): 
Streets (continued) — 

power to open, implied power to grade, 201.~ 

to improve by assessment, inhibits any other mode, 201. 

manner of improvement discretionary, 202. 

duty to keep in repair, ministerial, 202. 

liability for consequential damages, 203. 

when not liable for, 203. 

instances of liability for, 203. 

liability for accidents upon, 204 

not insurers against accidents, 204 

instances of liability for accidents, 204 

instances of liability for defective streets, 205. 

notice of defects in, required, 206. 
Sewers — 

authority to construct, 207. 

discretion as to mode, 207. 

discretion as to selection of system, 208. 

liability for negligence in construction, 208. 

duty to provide outlet, 209. 

not insurer of condition of, 210. 

liability for injuries from defects in, 211. 

liability for property flooded from, 211. 
Nuisances — 

power to abate, 212. 

power conferred for public good, 212. 

not liable for proper exercise of power by officers, 212. 

when not liable for failure to abate, 213. 

when not liable for act which results in, 213, 
Quarantine Regulations — 

powers as to, 214 
Wharves — 

no power to lease to private persons, 215. 
Water and Gas Supply — 

exclusive privileges to, 216. 

no power to grant without express authority, 216. 

contracts for, 217. 

mode of furnishing supply discretionary, 217. 

power to regulate rates of, 218. 

ordinance regulating not invalid because different rates fixed, 
218. 

liability for inadequate water supply, 219. 



332 INDEX. 

References are to sections. 

MUNICIPAL CORPORATIONS (continued): 
Respondeat Superior — 
doctrine of, 220. 
when liable, 220. 

distinction between public-gwcm and municipal corporation, 221. 
not liable for ultra vires act of officer, 222, 

K 

NATIONAL BANKS (see Banks): 

power of to increase capital stock, 111. 
NEGOTIABLE PAPER: 

may make for legitimate purposes, 100. 

corporation as indorsee of, 101. 

power of savings bank to make, 102. 

liability of corporation on accommodation note, 104 

o. 

OFFICERS AND AGENTS (see Agents; Directors): 
are special agents of corporation, 52. 

when mode of acting by prescribed must be strictly pursued, 96. 
have no power except within limits of charter, 52. 
parties dealing with, charged with authority of, 52. 
execution of deeds by, 90. 
may prove corporate seal, 90. 
President of Bank — 
powers and liability of, 159. 

control over corporate property as other director, 159. 
cannot settle demands of creditors without authority, 159. 
cannot release claims of bank, 159. 
may be invested with capacity to do acts not inherent in office, 

159. 
having power to contract, may release same, 159. 
liable for indorsement in excess of paid-up capital, 159. 
and for overdrafts which he directed, 159. 
and loss caused by permitting securities to be carried away, 159. 
Cashier — 
powers and duties of, 160. 
presumed to have necessary powers to transact business, 160. 



INDEX. 333 

References are to sections. 

OFFICERS AND AGENTS (continued): 
Cashier (continued) — 

powers habitually exercised define powers as to public, 160. 

has authority to indorse paper of bank, 160. 

to receive funds and give certificates of deposit, 160. 

to collect debts owing to bank, 160. 

to release debt secured by mortgage, 161. 

to borrow money and bind bank by note, 161. 

to draw checks upon funds of bank, 161. 

to transfer shares of bank, 161. 

to deliver notes for collection, 161. 

but no power to compromise claims, 161. 

nor transfer non-negotiable paper, 161. 

nor to discharge surety on note, 161. 

nor indemnify officer for levying execution, 161. 
Torts — 

general liability of corporation for, 162. 

rule stated by Cooley, 163. 

liable for malicious prosecution of, 162. 

for libel, 162. 

for false imprisonment, 162. 

for false representation, 162. 

doubt as to liability for slander, 162. 

for conspiracy, 162. 

for assault by, 163. 

vitro, vires no defense for tort, 163. 

authority in fixing liability, 164. 
ORDINANCES (see Municipal Corporations). 

P. 

PLEDGE: 

power of corporation to, 105. 

where may contract debt, may pledge securities for payment, 

105. 
call already made may be pledged, 125. 
proceeds of future call may not be, 125. 

POWERS OF CORPORATIONS (see Municipal Corporations): 
to acquire real property under common law, 81. 
and under modern statutes, 81. 
limits on power generally prescribed by statute, 81. 



334 INDEX. 



References ace to sections. 



POWERS OP CORPORATIONS (continued): 

no power for purposes other than objects of creation, 81. 

power to acquire by eminent domain, 861 

to take by devise, 82. 

by bequest, 95. 

power to dispose of property, 82. 

power to sell implies power to mortgage, 84 

power of bank to hold and convey, 85. 

alienation by deed, 87. 

conveyance by agent, 88. 

to assign property for benefit of creditors, 91. 

to act as trustee, 92. 

must be within scope of powers, 93. 

to borrow money, 96. 

instances of implied power to borrow, 98. 

to loan money, 99. 

as to negotiable instruments, 100. 

to pledge securities, 105. 

to increase capital stock, 109. 

irregularity of exercising powers as affecting stockholders, 112. 

to reduce capital stock, 113. 

power to increase gives no power to diminish, 113. 

to issue new stock, 115. \ 

as to special stock, 116. 

to issue at discount, 117. 

to issue preferred stock, 118. 

to deal in own stock, 120. 

to purchase stock of another corporation, 121. 

instances where power denied, 122. 

of foreign to purchase stock of domestic corporation, 123. 

such purchase ultra vires, 123. 

to declare dividends, 124 

discretionary with directors, 124 

to mortgage future calls, 125. 
PREFERRED STOCK (see Capital Stock). 
PROMOTERS: 

no statutory authority to make preliminary contracts, 79. 

if ratified by corporation and within its powers, enforceable, 79. 

should be adopted in same way corporate contracts are made, 
79. 

PROPERTY (see Real Property). 



mDEx. 335 

References are to sections. 

Q. 

QUANTUM MERUIT (see Actions): 

relief against ultra vires contract on, 74. 

E. 

RAILROAD BONDS: 
definition of, 132. 
power to issue, 133. 

formalities prescribed in issuing must be strictly pursued, 134, 
negotiability of, 135. 

usually payable to trustee named in mortgage, 135. 
not strictly negotiable under law merchant, 135. 
railroad company no power to guaranty bonds of another com- 
pany, 136. 

RAILROAD COMPANIES: 

general power to make contracts, 128. 

may not release itself by from public duties, 128. 

may contract to carry beyond own lines, 129. 

acceptance of goods where destination beyond own lines, 129. 

American doctrine as to, 129. 

traffic agreements between, 130. 

contracts which prevent competition between, not necessarily 

contrary to public policy, 130. 
powers as to pooling contracts, 131. 
definition of pools, 131. 
traffic and money pools, 131. 

as to regulation of rates by railroad commission, 131. 
bonds of, definition, 132. 
for what purposes bonds may be issued, 133. 
formalities prescribed should be strictly pursued, 134. 
negotiability of railroad bonds, 135. 
power to guaranty bonds of another company, 136. 
power to lease road and franchises, 137. 
power must be expressly conferred, 137. 
where power to lease denied, 137, 139. 
ultra vires lease not set aside at suit of lessor, 138. 
power to mortgage road and franchise, 140, 141. 
power to consolidate, 142, 143. 



336 INDEX. 

References are to sections. 

KAILROAD COMPANIES (continued): 

definition of consolidation and amalgamation, 142. 

effect of consolidation, 144. 

effect of interstate consolidation, 145. 

rights and liabilities of consolidated company, 146. 

consolidation as affecting stockholders, 147. 

consolidation as affecting taxation, 148. 

RAILWAY AID BONDS (see Municipal Bonds). 

RATIFICATION: 

general doctrine stated, 76. 

to be binding must be act of corporate agency, 76. 

cannot arise from action of officer who had no authority to do 
original act, 76. 

nature and effect of ratification, 77. 

ultra vires contracts cannot be ratified, 78. 

by corporation of acts of promoters, 79. 
REAL ESTATE: 

power of corporation to acquire, 81. 

special authority to acquire by devise, 83. 

power to acquire implies power to dispose of, 83. 

power to sell implies power to mortgage, 84 

power of bank to hold and sell, 85. 

but only for purposes set forth in charter, 85. 

power to acquire by eminent domain, 86. 

to alienate by deed, 87. 

conveyance of, by agent, 88. 

acknowledgment of deeds to, 89. 

affixing corporate seal, 90. 

assignment of, for benefit of creditors, 91. 
REDUCTION OF CAPITAL STOCK (see Capital Stock). 
RESPONDEAT SUPERIOR (see Municipal Corporations). 

B. 

SALE OF ROAD AND FRANCHISES (see Railroad Corpora- 
tions). 

.-STOCK AND STOCKHOLDERS (see Capital Stock): 
stockholders not the corporation, 2. 
consent of, necessary to increase capital stock, 110. 



INDEX. 



Eeferences are to sections. 



337 



STOCK AND STOCKHOLDERS (continued): 

stockholders who have accepted portions of increased stock can- 
not deny validity of, 112. 
powers as to new stock, 115. 
may issue if not cloak for watering, 115. 
powers as to special stock, 116. 
characteristics of, 116. 
issuing shares at discount, 117. 
issuing preferred shares, 118. 
power must be expressly conferred, 118. 
liability on ultra vires issue of, 119. 
power to deal in own stock, 120. 
power in many states regulated by statute, 120. 
purchasing stock of another corporation, 121. 
instances where power denied, 122. 
powers of foreign corporations as to, 123. 
power to declare dividends on stock, 124. 
stockholders may not be discriminated against in, 124 
after declaration of, is individual property of stockholders, 126t 
stockholder cannot become member of company on illegal issue, 
127.. 

T. 

TAXATION (see Municipal Corporations): 

power may be delegated to municipal corporations, 179. 
is essential attribute of municipality, 179. 
but power may be revoked by legislature, 180. 
can be exercised only for public purposes, 181. 
power to license distinguished from, 182. 
distinguished from eminent domain, 184. 

TL 

DLTRA VIRES (see Contracts; Corporations; Powers op Cor- 
porations, etc.): 
legitimately applicable only to corporate acts, 1, 17. 
senses in which term used, 17. 
questions of to be decided by charter, 11. 

principles governing relations of trustee not properly applica- 
ble, 17. 

22 



338 INDEX. 

References are to sections. 

ULTRA VIRES (continued): 

principles of doctrine plain, 18. 

two propositions as to doctrine settled, 19. 

chronological review, of doctrine, 20-45. 

principles supporting doctrine first enunciated in United States 

in 1804, 21. 
application of doctrine to contracts generally, 47. 
province of court in applying doctrine, 12, 18, 48. 
evolved to restrict corporations to granted powers, 48. 
estoppel as to defense of, 58, 59, 60. 
analogy of ultra vires acts of corporations to those of persons 

under legal disability, 60. 
defense of to actions, 70. 

actions on executed ultra vires contracts, 72, 73. 
relief on ultra vires contract, 74, 75. 

w. 

WHARVES (see Municipal Corporations).