exposed before innocent parties became involved.' The bill does not proceed on fraud or abuse, but against the exercise of powers that did not belong to the corporation, and which the body could not confirm except by unanimous vote. There may have been irregularities or defects in the notices or proceedings; but from an external view these were not seen. The community had a right to judge of the matter from the published resolutions, from the bonds being placed on the open market, and from all parties acquiescing therein. Corporations as well as individuals are held to a careful adherence to truth in dealing with mankind; they can not by silence involve others, and then defeat the claims their own conduct had superinduced.

SECTION FOUr.

Green Bay & Minnesota R. Co. v. Union Steamboat Co., 107 U. S. 98; 2 U. S. S. C. Rep. 221.

Railroad company may guarantee income to a steamboat company to induce it to make connection.

Action by the Union Steamboat Company against the Green Bay & Minnesota Railroad Company, alleging that the latter ing Co. v. A. M. M. & M. Co. (also Circuit Court of Appeals, 62 Fed. Rep. 356), 10 C. C. A. 415, in

Chapman v. Mad. R. R. R. Co., 6 Ohio (N. S.), 119; State v. Van Horne, 7 Id. 327.

*Foss v. Harbottle, 2 How. 461; 2 which it is held, after consideraPhil. Ch. R. 740.

An instructive recent case on guaranty by one corporation of the bonds of another is Marbury v. Kentucky Union Land Co., Circuit Court of Appeals, 62 Fed. Rep. 335, 10 C. C. A. 393, in which, in an opinion of some twenty pages, reviewing many authorities, it is held that under the power to a land company to buy timber lands and mines and export its product, and in furtherance thereof to make a "temporary or permanent consolidation" with any railroad company, it could guarantee the bonds of a railroad company if thereby the construction of a railway could be obtained. The court regards this, in one view of the case, as a sort of temporary consolidation.

Quite the counterpart of the last case can be found in Humboldt Min

tion of many cases, that an Ohio corporation organized for making iron work for mining plants can not guarantee the performance of the contract of another corporation for the erection of a mining plant, though thereby it would secure a sale of its iron work to be used in such plant. "The objection to the guaranty is that it risks the funds of the company in a different enterprise and business, under the control of another and different person or corporation, contrary to what its stockholders, its creditors and the state have the right from its charter to expect.”

An extensive discussion of practically this entire topic of guaranty is found in "Cook on Stock and Stockholders and Corporation Law," 3d ed. 1894, Vol. II, Sec. 775.

was organized to and did construct a road across Wisconsin from Green Bay to the Mississippi; that it became important for the defendant to make arrangements for carrying passengers and freight further east, destined for points east of and beyond Green Bay and out of the state, also to secure business in carrying persons and freight west; hence they entered into a contract under seal, whereby the plaintiff was to run its propellers between Buffalo and Green Bay and intermediate points for the purpose of carrying passengers and freight to and from Green Bay in connection with defendant's railway, and for this the defendant guaranteed that the gross earnings of each propeller would be $45,000 for each of the two years, and if less the defendant would pay the difference.

No bill of exceptions being tendered, the only question raised is whether the said contract was outside of the power conferred by the defendant's charter. The law is well settled that the charter of a corporation, read in connection with the general laws applicable to it, is the measure of its powers. A contract manifestly beyond those powers will not sustain an action; but whatever may be regarded as incidental to the objects for which the corporation was created is not to be taken as prohibited. The directors of the road have power by its character to make such agreement with any person or corporation whatsoever "as the construction of their railroad or its management and the convenience and interest of the company and the conduct of its affairs may in their judgment require."

The company had incidental power to agree to transport over connecting railroad and steamboat lines passengers and freight intrusted to it for carriage over its own lines. The general statutes authorized railroad companies to make contracts with other railroad companies whose roads terminate on the eastern shore of Lake Michigan, to run their roads in connection with each other, and to build, construct and run as part of their corporate property such number of steamboats as may be deemed necessary to facilitate their business operations. Wisconsin railroads are also authorized to exercise

'Thomas v. Railroad Co., 101 U.S. 71; Attorney-General v. Great Eastern Ry. Co., 5 App. Cas. 473; Davis v. Old Colony R. Co., 131 Mass. 258.

258.

Priv. Laws Wis. 1866, Ch. 540, §7.
Railway Co. v. McCarthy, 96 U. S.

Gen. Laws Wis. 1853, Ch. 76.

their power in other states, and may accept any additional powers or privileges applicable to the carrying of persons or freight by railway or steamboat in the other state.'

The legislature is thus seen to have recognized that the geographical position of the state required railroads to connect with steamboats to form a through line across the continent. The act of 1853 conferred express power to build and run steamboats, and hence, considering all the statutes, it is equally within the railroad's power to hire steamboats by the trip or season, or to employ them under a guaranty as alleged.

SECTION FIVE.

Railway Company v. McCarthy, 96 U. S. 258.

Validity of contract for through carriage.

Suit for damages from failure by defendant to properly carry plaintiff's cattle from East St. Louis to Philadelphia; the negligence occurred on the connecting lines over which the defendant forwarded the cattle. The contract was undertaken by the defendant to forward the cattle to Philadelphia; no other company is named; no compensation is provided for any other; nothing is said about change to cars of any other company. Such corporations, unless forbidden by their charters, have the power to contract to carry the entire distance over any connecting lines. This principle is so well settled that further citations are unnecessary. The company is liable in all respects on the connecting line as on its own; the public has the right to assume that it has made all necessary arrangements throughout.' A contract not on its face necessarily beyond the scope of the corporation's power will, in the absence of proof to the contrary, be presumed valid. Corporations are presumed to contract within their powers. "The doctrine of ultra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice or work a legal wrong." Judgment for plaintiff affirmed.

1 Gen. Laws Wis. 1872, ch. 109, § 51. 4 Union Water Co. v. Murphy's Flat Railroad Co. v. Pratt, 22 Wall. 123. Fluming Co., 22 Cal. 620; Morris R. R. 3 Great Western Ry. Co. v. Blake, Co. v. Railroad Co., 29 N. J. Eq. 542; 7 H. & N. 986; Weed v. Railroad Whitney Arms Co. v. Barlow, 63 N. Co., 19 Wend. (N. Y.) 534; Knight v. Y. 62. Portland, etc. Co., 56 Me. 234.

痴

SECTION SIX.

Railroad Company v. Pratt, 22 Wall. 123.

Same topic continued.

Suit for loss of horses taken by defendant, a New York corporation, to be carried into Massachusetts, lost not on defendant's road, but on a Vermont road connecting therewith, and not belonging to defendant. It is held that the defendant had power to contract for the through transportation. The statute recognizes such power by providing that either of connecting lines receiving freight to be carried to any point on the other shall be liable as common carrier for the freight to such point, and, if it must pay any sum by reason of the other's neglect, may recover it from the other.' This statute is merely declaratory.'

The power to contract to make the through shipment has been sustained in New York, where the contract was made, in Massachusetts, where it was to be completed, and in Vermont, where the injury occurred. The single exception to this holding, so far as the court is aware, is said to be in Connecticut, where the supreme court has held the contrary. Judgment for plaintiff affirmed.

1 Statutes of 1847, 299, § 9; 2 Revised Statutes (5th ed.), 693, § 67.

? Root v. Great Western R. R., 45 N. Y. 524.

* Bissell v. Michigan R. R. Co., 22 N. Y. 258; Buffet v. Troy & Boston R. R.. 40 Id. 168; Root v. Great Western R. R., 45 Id. 524; Burtis v. Buffalo & St. L. R. R., 24 Id. 269; Hill M. Co. v. Boston & L. R. Co., 104

Mass. 122; Feital v. Middlesex R. R.. 109 Id. 398; Noyes v. Rutland & B. R. R. Co., 27 Vt. 110; Morse v. Brainerd, 41 Id. 550; Railroad Co. v. Manufacturing Co., 16 Wall. 334; Evansville, etc., R. R. Co. v. Androscoggin Mills, 22 Id. 594.

4 Converse v. N. & N. Y. T. Co., 33 Conn. 166; 22 Id. 502.

CHAPTER II.

COMBINATIONS MADE BY RAILWAY CORPORATIONS WITH RAILWAY OR OTHER CORPORATIONS HELD INVALIDTHE DOCTRINE OF ULTRA VIRES APPLIED.

Cases herein considered present the principles that corporations owing duties to the public can not enter into any engagements disabling themselves from performing the same, unless consent be first obtained through legislative act.

The terms of such consent must be strictly followed. The enumeration of powers in such act or in a charter implies the exclusion of all others.

Invalid contractual acts, if not immoral in their nature or against public policy, if executed, may be sustained, but if executory, will not be enforced unless perhaps to estop one who has received benefits thereunder from pleading ultra vires against a demand for making compensation for the same.

The majority of stockholders can not, against the objections of the minority, divert the company's property from the purposes of its formation.

Doctrine of ultra vires, though not favored when used to defeat just compensation for things already done, is greatly favored when used to prevent the perpetration of unauthorized acts not yet done.

What can not be done directly will not be tolerated if done indirectly; a railroad can not be sold to a third party for the purpose of effecting a forbidden sale to a competing line; nor can this be accomplished by the absorption of one company of another by means of purchasing its stock, franchises and property.

Powers reserved in articles of association are to be as strictly construed as those granted in statutes; none are to be implied from mere incidental, or perhaps loose, expressions

used.

Power to either make or accept a lease of a railroad prop