Page:Federal Reporter, 1st Series, Volume 7.djvu/408

 396 FEDERAL REPORTER. �bnt he was not interested in the earnings of the Company beyond a cer- tain flxed per centum, (the legal rate of interest in that state ;) the princi- pal waa payable at a flxed time, and he was relieved of the liability to creditors prescribeo. by the constitution upon a stockholder. �PRIVATE CORPORATIONS. �I. DBFIKITIOIf, SODBCB, AND EXTENT OF PoWBRS, ETC. An act of a �corporation is described as being vll/ra vires when it is beyond the char- tered powers of the corporation. A corporation derives all its power from its charter, and possesses only such powers as are thereby expressly or impliedly given. Many authorities hold that the charters of corpora- tions are to be construed strictly against the corporation, and that conse- quently by implied powers are meant only such as are necessarily incident to those expressly granted. Hunlington v. Savings Bank, 96 D. S. 388, 393 ; Bradley v. N. T., etc.,B. Co. 21 Conn. 306 ; Pa. B. Go. v. Ganal Gom'rs, 21 Pk.St. 22; Field, Corps. {248. For a full discussion of the subject, se« Cotteron Corps. { 31 et seq: Where the charter fixes the amount of the capital stock and the number of sha^es, the amount cannot be in- creaged or the number changed except in the manner expressly authorized by the charter, subsequent law accepted by the stockholders, or articies of association. BailwayCa.T. Atten-toni\& Wall:'338; JT; T., etc., B. Oo. V. Sehuyler, 34 N. Y, 30 ; Saiem, efc, Corp. v. Bopest 6 Pick. 23 ; Green'a Brice's Ultra Vir. (2d Ed.) 158, note a. Contra, Belmont v. Erie B. Ce. 52 Barb. (N. Y.) 637 ; but see this case criticised, Jones, Rail. Secur. } 97. . Nor cai»' the character of the stock be, change;!, as by cr^ating a preferred stock, wittout express, au thority therefor, ^ Kent y. Quioksilveir Min. Co. 73;'lT.'i'. i59; Green's Brice's Ultra Vires,. (2d Ed.), 164, and note a. Yetj'iif all'the stockholders aasentcjl to such.change, it wjjl be aupportcd, in favor of one who bas acted thereon in good fait.h. Epnt v. Quicksilper Min. Go,, supra. But, to accomplish the purposes of its creation, the corporation, by implication, has, to a large extent, the powers that aa individual would haye in the same position. Thompson v. Lambert, 44 lowa, 239, 244; Pield, Corp. § 271. For -example, the power. to borrow money, and give the usual obligations therefor, is an acknowledged inci- dent, of a private corporation. Eield, Corp. i{ 249, 271; Green's Brice's Ultra Virps, (2d Ed.) 213. n. (a,) 223, note a, and cases cited. �II. IiiLEGALiTT Are contracts merely ultra vires illegal i The earlier English cases certainly so held. Bast Anglian By, Co. v. EasternGo.'s Ry. Uo. 11 C. B. 775; McOregor v. Beal, etc., B. Go. 18 Q. B. 618; see, also, Leake, Contracts, 582 et seq.; 5 Am. Law Rev. 272, 282, article by O. W. Holmes, Jr. ; Green's Brice's Ultra Vires, (2d Ed.) 39 et seq. In the view taken by these decisions, ccirporate charters were encroachments upon public right, and it was public policy to keep them strictly within the, limita prescribed by the organic law ; the law impliedly prohibiting acts beyond them. Consequently every act exceeding such limits violated such public policy and implied prohibition, and was illegal and void. Aa to such contracts, t^ere could be no ratification or estoppel. Id. ; Leake, Contracta, 602. These vlews were at flrst accepted in this country, and the earlier cases rest on that basis. In an article lu the Central Law ��� �