Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/177

 PART II.] ACTS WITHIN THE CORPORATE POWER. [§ 185. lations between the corporation and outsiders dealing with it in good faith, this general rule requires modification. Great hardship would be worked if an outsider were compelled to see to it at his peril that all the formalities which the corporate body before action or in acting should observe were in fact observed. Accordingly, the non-observance of antecedent for- malities in regard to notifying the meeting will not affect the rights of outsiders acting in good faith on the assumption that the corporate action was regular. 1 On the other hand, it may be said, since ordinarily only acts of great importance are done by the body corporate, outsiders knowing the manner in which corporations usually act, ought carefully to examine the pro- ceedings of the body corporate when their rights are to be based directly on its action. § 185. Further, if there are in the constitution of a corpora- tion provisions of an imperative nature relating to the action of shareholders, every one will be affected with notice of them, and bound at his peril to see to it that they are observed. Thus, when a statute re- quires the assent of two-thirds of the shareholders present in a shareholders' meeting as a condition to a lease of a Formalities required by statute. Cousent of share- holders. although not authorized by any cor- porate action, and will estop the stockholders from claiming the land on the dissolution of the corporation. Aransas P. H. Co. v. Alarming, 94 Tex. 558. Such acts are ultra vires ; and their legal effect is the subject of Part III. of the present chapter. i See §§ 204, 259, for like principles applying to acts of directors and other corporate officers. If the corporate records show that a meeting was duly called on proper notice, and that business was trans- acted at the meeting, it is to be pre sumed, in the absence of direct con- trary evidence, that a quorum was present. Citizens' Ins. Co. v. Short- well, 8 Allen, 217. See Sargent v. Webster, 13 Mete. 497; Chouteau Ins. Co. v. Holmes, 68 Mo. 601. At a meeting duly convened, a majority of those present have power to trans- act business, though they are a mi- nority of the whole number. Granger v. Grubb, 7 Phila. 350. Still, it has been held that a vote purporting to authorize an agent of the corporation to convey its real es- tate, passed at a meeting which had not been notified to the holders of about one-third of the stock, was void; and gave no validity to a deed executed pursuant to it; but the case was actually decided on another point. Stowe v. Wise, 7 Conn. 214. Failure to enter at the time on the records of the corporation a resolu- tion increasing the capital stock does not invalidate it. Handley v. Stutz, 139 U. S. 417. 157