Page:Federal Reporter, 1st Series, Volume 7.djvu/403

 TATLOE V. PHILADELPHU & EBADING B. 00. 891 �plates a stipulation that the subscribers, in consideration of the Bums paid — not lent — by them, shall be entitled to receive, in a remote and uncertain contingency, a portion of the defendant's earnings, to be measured by a certain rate per cent, upon three times the sums paid by them, and after that shall participate with the oommon shareholders in the division of the residuary earnings. By what allowable defi- nition of a loan or borrowing such a transaction can be embraced I am at a loss to conceive. Nor will the fact that it is to be evidenced by the sealed wxiting of the defendant change its inherent character and bring it within the range of a power to which it is not otherwiae referable. �In one respect, and in one only, does the plan proposed resemble a loan, and that is In the resuit to be attained. They are both expedients for raising money, but the method of accomplishing this resuit is of the essence of the power of the corporation. If its employment bas not explicit legal sanction it cannot be made available. If the defendant were ofifered a rental for its property amply suf&cient to relieve it from the burden of embarassment with which it is now struggling, unless it could show that its legislative creator had endowed it with a right to make a lease, it could not accept such relief. Thomas v. West Jersey R. Co., ante. And, although it bas power to acquire real estate for all necessary corporate purposes, no one would maintain that it could law- fully enter into a contract for the purchase of real estate merely to resell and thereby realize large gains. Authority to raise money by borrowing does not imply the use of another and different method of raising it, however well adapted to the end it may be. Even in the prospectus issued by the president of the defendant (Exbibit 1) the proposed issue of "deferred bonds" is not in any aspect treated as a loan, and the System is correctly stated to be new in the United States, and to have been frequently adopted in Great Britain with great benefit to the companies and to subscribers. But we know that in Great Britain this "system" is expressly author- ized by statute, and hence it may be assumed that such leg- islation was deemed necessary to legalize a resort to it. Is ��� �