Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/188

 § 197.] THE LAW OP PRIVATE CORPORATIONS. [CHAP. Vll. in favor of the general rule that outsiders are not charged with knowledge of the by-laws of a corporation. 1 An examination of the ratio decidendi of a few cases may point to some rule on this important point. Smith v. Smith 2 holds that outsiders are not affected by the bylaws of a corporation, because " these are private, and only accessible to the officers of the company." So in Samuel v. Holladay 3 it was held that a by-law made by a board of directors for their own government, providing how special meetings of the board should be called, could not affect contracts made with third persons having no actual notice of the by-law ; Justice Miller saying that the effect of such a by- law on outsiders differed from the effect of " by-laws made by the stockholders at the annual or stated meeting, under author- ity and direction of a provision of the charter." 4 § 197. The principle underlying these decisions seems to be that a stranger should not be charged with knowledge of by- laws because of the difficulty he would have in acquainting himself with them, and because the authority of the corpora- tion to make by-laws was not intended to affect the rights of outsiders. 5 But if the statutes regulating the organization of the company should require by-laws to be passed at the first meeting of the subscribers or shareholders, and be filed with the articles of association in some public office, it would seem reasonable that persons dealing with the corporation should be charged with notice of such by-laws filed in pursuance of statute in a public place for public inspection. Finally, whether outsiders are charged with notice of the by-laws or not, if a course of action is unauthorized by reason of some by-law, but is acquiesced in by the corporation, the 1 Fay v. Noble, 12 Cush. 1; Ten Broeck v. Boiler Compound Co., 20 Mo. App. 19; and cases in the fol- lowing notes. See, also, Kingsly v. New England Ins. Co., 8 Cush. 393, 403; Mechanics' etc., Bank o. Smith, 19 Johns. 11."); In re Asiatic Bank- ing Corp., Royal Bank of India's Case, L. R. 4 Ch. 252; Anglo-Cali- fornia Bank v. Grangers' Bank, 63 Cal. 359; Barnes Bros. v. Coal Co., 168 101 Tenn. 354; Gordon v. Muchler, 34 La. Ann. 604. Last case holding depositor in hank not bound by by- law. 2 62 111. 493, 497. 3 1 Woolw. 400, 408; S. C. Mac- Cahon, 214. 4 See Cummings v. Webster, 43 Me. 192. 5 See Mechanics' etc., Bank v. Smith, 19 Johns. 115, 124.