rights, or impose a liability on him as such, provided the rights of third parties do not intervene. To constitute an officer de facto there must be a color of election or appointment, or an exercise of the funct ons of the office under such circumstances and for such a length of time, without interference. as to justify the presumption of a due election or appointment. The mere exercise of the functions of office is not in itself sufficient to establish a title de facto. Thus, where the bill alleged only two official acts, "it may well be doubted whether the aliegations make a prima facie case of directors de facto." 8 1 Moses v. Tompkins (1888), 84 Ala. 613. 2 Atlantic etc. R. R. Co. v. Johnston, 70 N. C. 348; Taylor on Corporations (2nd ed. 1889), § 809. 3 8 Vict. ch. 16, § 99. 4 Moses v. Tompkins, 84 Ala. 613. 5 Moses v. Tompkins, 84 Ala. 613. 6 Moses v. Tompkins, E4 Ala. 613; Thorington v. Gould, 59 Ala. 461; Insurance Co. v. Westcott, 14 Gray, 440. 7 Moses v. Tompkins, 84 Ala. 613; Cary v. State, 76 Ala. 78. 8 Moses v. Tompkins, 84 Ala. 613. CHAPTER XX. UNAUTHORIZED, ULTRA VIRES AND ILLEGAL CONTRACTS. I. § 499. Definitions of "unauthorized,” “ultra vires," and "illegal" acts. Of unauthorized acts of directors, officers and agents. § 500. § 501. The same subject, continued-Implied and incidental powers of agents. § 502. The same subject, continued-Certain acts held not incidental to powers of agents. § 503. The same subject, continued-Acts apparently within the agents' authority. § 504. § 505. Of the ratification of unauthorized acts. Accepting the fruits of the contract a bar to pleading want of authority in the agent. § 506. Of ultra vires acts. II. § 507. Of necessarily incidental powers. § 508. Examples of necessarily incidental powers. § 509. Additional examples of necessarily incidental powers. § 510. Additional examples-Of fostering other enterprises. § 511. § 512. § 513. § 514. (a). Infra vires acts rendered ultra vires by the manner of performance. § 515. (b). Infra vires acts rendered ultra vires by the purpose of per formance. § 516. (c). Infra vires acts rendered ultra vires by the extent of per formance. § 517. The personal liability of directors herein. § 518. Who may plead "ultra vires"-(a). A single dissenting stockholder. § 519. (b). Corporate creditors of a failing concern. § 520. (c). The other contracting party, until the corporation has per formed. § 522. § 323. § 521. § 5.1. The consideration to be surrendered when the contract is set aside. ultra vires." § 531. § 532. Of running privileg.s. Of the compensation for running privileges. § 553. No estoppel with respect to illegal acts. § 534. Proceedings by the attorney-general. I. § 499. Definitions.of "unauthorized," "ultra vires," and "illegal" acts.-The expression, "unauthorized acts," is used to designate those contracts or transactions which a corporation, without exceeding its charter or statutory powers, might have authorized its directors, officers and agents to perform, but which they have entered into without that authority, either express or implied. Ultra vires acts are such as are done, either by the stockholders of a company in their corporate capacity, or by the directors, officers and agents, beyond the powers conferred expressly or by implication upon the corporation by its charter or by the general laws of the State. An illegal corporate act is one which, in addition to being ultra vires, is also in contravention of some prohibitory statute, or against public policy, or malum per se.2 While the same act may be both illegal and ultra vires, yet there are cases in which the corporation may exceed its charter powers in performing an act which is neither malum per se nor malum prohibitum.3 1 Scottish etc. R'y Co. v. Stewart, 3 Mecq. 382, 415; South Yorkshire R'y Co. v. Great Northern R'y Co. 9 Ex. 55, 84; Taylor v. Chicester etc. R'y Co. Law R. 2 Lx. 555, 379, where Justice BLACKBURN says: "I think it very unfortunate that the same phrase of ultra vires' has been used to express both an excess of authority as against the shareholders and the doing of an act illegal as being malum prohibitum, for the two things are substantially different, and I think the use of the same phrase for both has produced confusion." Cf. Ashbury Railway Carriage etc. Co. v. Riche, Law R. 7 H. L. 653. 2 Whitney Arms Co. v. Barlow, 63 N. Y. 62, 68; 20 Am. Rep. 504; Bissell v. Michigan etc. R. R. Co. 22 N. Y. 264. 3 Bissell v. Michigan etc. R. R. Co. 22 N. Y. 264. 3 $500. Of unauthorized acts of directors, officers and agents.—A corporation is not bound by any act of its directors, officers or agents which has not been authorized either expressly or by implication,' unless it be done by them while apparently acting within the scope of their authority." A company is not liable for the fraud of directors or agents before its incorporation, unless the act be ratified, or acquiesced in by the corporation.5 While a corporation will not be held liable on contracts made on its behalf by its promoters, previous to its organization, it may adopt them subsequently thereto just as it may contract anew, and it will be necessary for formal action to be taken by the directors only when it would be required in the making of a like original contract. 1 Kelsey v. Sargent, 40 Hun, 150; De Bost v. Albert Palmer Co. 35 Hun, 366; Dale v. Donaldson Lumber Co. 48 Ark. 188; Moshannan Land etc. Co. v. Sloan (Pa. 1357); Mutual Ins. Co. v. McSherry, 68 Md. 41; Little v. Kerr, 41 N. J. Eq. 253; Rice v. Peninsular Club, 52 Mich. 87; Gregory v. Lamb, 16 Neb. 205. 2 Eaglesfield v. Marquis of Londonderry, 4 Ch. Div. 693, where a company was held bound by erroneous representations of fact made by its agents while acting in the scope of their authority. So, also, it would seem the company is liable for frau lulent misrepresentations of an agent while acting within the scope of his authority: Weir v. Bell, 3 Ex. Div. 238; Weir v. Barnett, 3 Ex. Div. 32; Sev.re v. Francis, 3 App. C. 106; Mackay V. Commercial Bank, Law R. 5 P. C. 394; Barwick v. London Joint Stock Bank, Law R. 2 Ex. 259; Swift v. Jewsbury, Law R. 9 Q. B. 301. See dicta to the contrary in Western Bank v. Addie; Law R. 1 H. L. 145. At any rate, when the company has profited thereby: Browne & Theobald's Railway Law, 169. But proof must be adduced of bad faith or want of reasonable grounds of beli f, before recovery can he had in a suit against a corporation for the deceit or false representations of its agent: Erie City Iron Works v. Barber, 106 Pa. St. 125; 51 Am. Rep. 508. 3 Western Bank v. Addie, Law R. 1 H. L. 145; Browne & Theobald's Railway Law, 109. 4 Mutual etc. Ins. Co. v. McSherry (1883), (8 Md. 41. Cf. Metropolitan etc. Co. v. Domestic etc. Co. (1558) 43 N. J. Eq 626. 5 Vide infra, §§ 504, 505. 6 Battelle v. Northwestern etc. Pavement Co. (1887) 37 Minn. 89. 3 2 § 501. The same subject, continued-Implied and incidental powers of agents.-Persons doing business with the officers of a corporation are presumed to know that they have no power to bind the corporation beyond the scope of their authority.1 A person, in acting at the instance of a director who assumes powers never delegated to him, does so at his own peril and creates no charge against the corporation. A corporation is not bound by an act of its officers, which virtually amounts to a gratuitous and unnecessary payment of a sum of money. An act done by an agent after the expiration of his term of office cannot bind the corporation. The authority of an agent need not be proven to have been expressly conferred. His authority to act may be implied from his official position or from custom.5 Thus, a corporation will be presumed to have authorized its officers to issue its promissory note from its having acquiesced in or recognized their acts in the regular course of its authorized business. So also a corporation is estopped from denying the power of one, who has passed himself off as its agent, on the ground that he was not duly chosen by the directors, after having once confirmed acts done by him.' Or a custom 6 |