made for it by an unauthorized agent is estopped from pleading his want of authority to act in the transaction. Upon this principle it is expressly provided by statute in New York, that where directors have exceeded their authority in borrowing money for the corporation, the contracts are not to be deemed invalid as against the company by reason thereof. So, in a recent case in Alabama, it is held that a company retaining the proceeds of a note executed by its president cannot deny his authority to make it. In another late case in which a corporation had accepted a deed of land, bought by one of its officers, it was held estopped from denying the authority of the offic. r to agree to pay a price additional to the consideration set forth in the deed. In another case a director of a corporation, after proposing a loan to the corporation at a regular meeting of the directors, sought the advice of counsel as to the authority of the corporation to borrow, and a form of bonds was drawn up by the counsel with the knowledge of the corporation, though without his being actually employed by it. The corporation was declared liable for the services of the counsel.5 Where the promoters of a corporation, after the signing, but before the filing of articles of incorporation, and before the fixing of a time for the commencement of business, selected a president and authorized him to make a note in payment for certain property, which came duly into the possession of the corporation and was used and enjoyed by it, recovery was allowed an assignee of the note.® But to impute to a corporation liability for services rendered prior to its creation, under an agreement with the pro

moter thereof, it must be shown that the services resulted to the interest of the corporation, and were performed on the corporate credit rather than on the individual credit of the promoter."

1 Tuscaloosa etc. Co. v. Perry, 85 Ala. 158; Holmes v. Kansas City Board of Trade, 81 Mo. 137; Kickland v. Menesha etc. Co. 68 Wis. 34; Paxton Cattle Co. v. First National Bank, 21 Neb. 621; 53 Am. Rep. 852; Pa lding v. London etc. R'y Co. 8 Ex. 867; Beverly v. Lincoln Gas Light etc. Co. 6 Ad. & E. 829. But see Williams v. Chester etc. R'y Co. 15 Jur. 828.

2 N. Y. Laws of 1845, ch. 230, § 1.

3 Tuscaloosa etc. Co. v. Perry, 85 Ala. 158.

4 Kickland v. Menesha etc. Co. 68 Wis. 34.

5 Holmes v. Kansas City Board of Trade, 81 Mo. 137.

6 Paxton Cattle Co. v. First National Bank, 21 Neb. 621; 59 Am. Rep. 852.

7 Perry v. Little Rock R'y Co. 44 Ark. 383.

II.

§ 506. of ultra vires acts.-A corporation has power to perform only such acts as are authorized by its charter and by the general laws of the State, or such as are necessarily incident thereto.1 In New York, this principle of the common law is reduced to statutory form in the provision that no corporation shall exercise any corporate powers beyond those enumerated in the statute, or in its charter, or in the law under which it is incorporated, except such as shall be necessary to the exercise of the powers so conferred. There is a similar statute in New Jersey;" and by the constitutions of Alabama, Louisiana, Missouri, California and Pennsylvania, corporations are prohibited from engaging in any business other than that expressly authorized by their charters or the law under which they are formed. A corporation is not vested with all the capacities of a natural person, or of an ordinary partnership, but with such only as its

c' arter confers. If it exceeds its chartered powers, not only may the government take away its charter, but those who have subscribed to its stock may avoid any contract made by it clearly in excess of its powers. It it makes a contract manifestly beyond the powers conferred by its charter, a court of chancery, on the application of a stockholder who has not participated or acquiesced in the act, will restrain the corporation from carrying out the contract. And under certain circumstances' a corporate creditor also may set aside or restrain such n ultra vires act. 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. But the presumption is in favor of the power of the corporation to contract, and where there is no evidence that a corporation has acted without autority or contrary to the terms of its cha: ter, a contract made by it is prima facie valid, and will not be set aside as ultra vires.9

1 Davis v. Old Colony R. R. Co. 131 Mass. 253; 41 Am. Rep. 221.

2 N. Y. Rev. Stat. (7th ed.) 1530; Curtis v. Leavitt, 15 N. Y. 9; Halstead v. New York, 3 N. Y. 43, 433.

3 Morris etc. R. R. Co. v. Sussex R. R. Co. 20 N. J. Eq. 542.

4 Stimson's Am. Stat. Law (1886), § 446.

5 Davis v. Old Colony R. R. Co. 131 Mass. 258; 41 Am. Rep. 221.

6 Davis v. Old Colony R. R. Co. 131 Mass. 2:8; 41 Am. Rep. 221.

7 Stated infra, § 519.

S Pearce v. Madison etc. R. R. Co. 21 How. 441; Davis v. Old Clony P. Co. 131 Mass. 218; 41 Am. Rep. 221; Ashbury Ry etc. Co. v. Rice, Law R. 7 II. L. 653; East Anglian R'y Co. v. Eastern Counties P'y Co. 11 Com. B. 775.

9 Rider Life Raft Co. v. Roach, 97 N. Y. 378.

-It

§ 507. Of necessarily incidental powers would be impossible to specify or enumerate in a charte: all the acts which a corporation may perform;

accordingly, it is left for the courts to say what powers, as incidental to those granted, the corporation uay be deemed to possess; and looking at the actual powers and the purposes of the grant, the courts uphold all acts which are necessary to give effect thereto.' If the power to do a thing is clearly conferred, either expressly or by fair inference, the corporation is at liberty to adopt any appropriate means for its execution not expressly forbidden; as the mode and manner of its execution, in the absence of limitations, is left to the sound discretion of the corporate authority.2 But the principle of necessarily incidental powers cannot be made to cover acts which are illegal, as in contravention of statute, against public policy, or mala per se.3

1 Wo d's Railway Law, 467; Thomas v. The Railroad, 101 U. S. 71; Central R. R. Co. v. Collins, 40 Ga. 582; Mobile etc. R. R. Co. v. Franks, 41 Miss. 49; Baltimore v. Baltimore et. R. R. Co. 21 Md. 50: State v. Baltimore ctc. I. R. Co. 6 Gill (Md.), 3.3; Davis v. Old Colony R. R. Co. 131 Mass. 256; 41 Am. Rep. 221; Commonwealth v. Erie etc. R. R. Co. 27 Pa. St. 339: 67 Am. Dec. 471; Delaware etc. Canal Co. v. Camden etc. R. R. Co. 16 N. J. Eq. 321; Morris Canal etc. Co. v. Central R. R. Co. 16 N. J. Eq. 413; Morris etc. R. R. Co. v. Sussex R. R. Co. 20 N. J. Eq. 542; Hurlbut v. Marshall, 62 Wis. 500; Attorney-General v. Great Eastern R'y Co. Law R. 5 App. C. 473. See, also, Railway Co. v. McCarthy, 96 U. S. 258; Green Bay etc. R. R. Co. v. Steamboat Co. 107 U. S. 98.

2 Wood's Railway Law, 458; Cleveland & M. R. R. Co. v. Himrod Furnace Co. 37 Ohio St. 321.

3 Vide infra, § 525 et seq.

§ 508. Examples of necessarily incidental powers. As incidental to its other powers, and in order to raise funds for the purpose of conducting its business, a corporation may mortgage its property,' and issue negotiable paper for use in the course of its business; although, of course, it may not become a party to bills or notes for the accommodation of others. As incidental to its expressly granted powers a corporation may build side-tracks

to the establishment of large shippers,3 erect telegraph lines along its route, maintain restaurants at its stations, cart freight from and to its depots," offer and pay a reward for the arrest and conviction of persons maliciously obstructing its tracks,' and out of its funds give gratuities to servants or directors of the company. In a case recently decided in England it was held that dissenting shareholders could not enjoin as ultra vires the payment of an annuity to the family of a deceased superintendent of a banking company, for, it was said, the act was conducive to the interests of the company!!9

1 Lehigh etc. Co. v. West Depere etc. Works, 63 Wis. 45.

2 National Bank of Republic v. Young, 41 N. J. Eq. 531; Fifth Ward etc. Bank v. First National Bank, 48 N. J. 513.

3 Wilson v. Furness R'y Co. Law R. 9 Eq. 28.

4 Prather v. Western Union Telegraph Co. 89 Ind. 501; Western Union Telegraph Co. v. Rich, 19 Kan. 517; 27 Am. Rep. 159.

5 Flanagan v. Great Western R'y Co. Law R. 7 Eq. 116.

6 Attorney-General v. Grand Trunk R. R. Co. 16 Dec. des Trib. (L. C.) 9.

7 Central R. R. etc. Co. of Georgia v. Cheatham, 85 Ala. 292; where it was also held that such an offer woull be binding upon the company, although male by the superintendent of its road without authority from the directors, on the ground that it is within the scope of his general duties.

8 Hutton v. West Cork R'y Co. 23 Ch. Div. 654; Browne & Theobald's Railway Law, 97.

9 Henderson r. Bank of Australasia, per Lord NORTH, 21 Q, B. Div. 362; 4 R'y & Corp. Law J. 214.

§ 509. Additional examples of necessarily incidental powers.-Under authority to purchase land, in order to procure stone and other material needed in the construction of its road, a railway company may make purchases of land for the purpose of procuring cross-ties and firewood.1 would seem that a company possessing rolling-stock acquired or manufactured for the purposes of the

It