Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/195

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 205. Accordingly, if, under circumstances which a party dealing with a corporate agent has no reason to suppose not to exist, the corporate agent has authority to make the contract or do the act in question, the party dealing with him is justified in assuming the existence of the circumstances, and, acting in good faith on such assumption, will be protected. 1 As Justice Swayne said, giving the opinion of the Federal Supreme Court in Merchants' Bank v. State Bank: 2 "Where a party deals with a corporation in good faith — the transaction is not ultra vires — and he is unaware of any defect of authority or other irregularity on the part of those acting for the corporation, and there is nothing to excite suspicion of such defect or irregu- larity, the corporation is bound by the contract, although such defect or irregularity in fact exists. If the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence and the corporation is estopped to deny them." 3 § 205. Accordinglv^when the agent of a corporation has power yr.to make negotiable paper on its behall, a party re- ceiving such paper in good faith may assume that it p^ e p e ° r tiat)le was issued by the agent for an authorized purpose in Money bor- <»ii- i rowed in the ordinary course 01 the business of the corpora- excess of tion. 4 So, if an agent has authority to borrow for his limit. " 7 corporation moneys not exceeding a certain amount, Same v. Clowes, 3 N. Y. 470; Same v. Curtis, 7 N. Y. 466; New York Firemen Ins. Co., v. Sturges, 2 Cow. 664; Ex parte Peru Iron Co., 7 Cow. 540; Blake v. Holley, 14 Ind. 383; Dockery v. Miller, 9 Humph. (Tenn.) 731; Mitchell v. Rome R. R. Co., 17 Ga. 574; Morris and Essex R. R. Co. v. Sussex R. R. Co., 20 N. J. Eq. 542; Oxford Iron Co. v. Spradley, 46 Ala. 98; Hart v. Missouri State Ins. Co., 21 Mo. 91. 1 Bank of Batavia v. N. Y., etc., R. R. Co., 106 N. Y. 195; Steamboat Co. v. McCutcheon, 13 Pa. St. 13; Royal British Bk. v. Turquand, 6 El. & Bl. 327; Eastern Counties Ry. y. Hawkes, 5 H. L. C. 331; McDonald o. Chisholm, 131 111. 273. See Moss y. Rossie Lead Mg. Co., 5 Hill, 137, and cases in following notes. 2 10 Wall. 604, 644. 3 See, also, Gano v. Chicago, etc., Ry. Co., 60 Wis. 12; Schallard v. Eel River N. Co., 70Cal. 144; Louisville, N. A. & C. Ry. Co. v. Louisville Tr. Co., 174 U. S. 552. 4 Monument Nat. Bank v. Globe Works, 101 Mass. 57; Commercial Bank v. St. Croix Mfg. Co., 23 Me. 280; Lafayette Bank v. St. Louis Stoneware Co., 2 Mo. App. 299; Madison and Indianapolis R. R. Co. v. Norwich Saving Society, 24 Ind. 457; Ridgeway v. Farmers' Bank, 12 S. & R. 256; Philadelphia, etc., R. R. Co. v. Lewis, 33 Pa. St. 33; Mclntire v. Preston, 10 111. 48; Stoney v. Ameri- 175