Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/215

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 232 a fortiori they have no power to wind up the affairs of the^or- poration. 1 § 231. The last of the three general rules above mentioned, 2 is that directors have no authority to bind the cor- „ . J Second poration in matters not relating to the corporate general business. On the face of it, this rule seems self- evident. All the powers of directors to represent the corpora- tion, whether derived directly from the corporate constitution or conferred by a vote of the body corporate, have their ulti- mate basis in that constitution and in the agreement of the associates embodied in it. Consequently, directors have no power to do any act ultra vires the corporation ; 3 and as the corporate constitution and the agreement embodied in it relate only to the corporate enterprise, any acts having no relation to the corporate enterprise must be beyond the authority of di- rectors. As Yice Chancellor Wickens said in Pickering v. Stephenson : 4 " The special powers, given either to the directors or to a majority by statutes or other constituent documents of the association, however absolute in terms, are always to be construed as subject to a paramount and inherent restriction that they are to be exercised in subjection to the special pur- poses of the bond of association." Accordingly, directors have no p^ro 1 to give the note of the corporation for a debt having no relation to its business, due to the payee of the note ; and the note will be void in the hands of any person having notice of the circumstances under which it was given. 5 § 232. On the other hand, if directors acting within the ap- 1 Bank Commissioners ». Bank of Brest, Harrington's Ch. (Mich.) 106; Smith v. Smith, 3 Des. Ch. (S. C. ) 547; Angell and Ames on Corp., §772. See, State v. Mitchell, 104 Tenn. 336. But it is held that direct- ors may make an assignment of the corporate property for the equal benefit of all creditors, when the cor- poration is insolvent. Descombes v. Wood, 91 Mo. 196; Hutchinson v. Green, 91 Mo. 367. But a minority of the diiectoi - s cannot make such an assignment. Calumet Paper Co. v. Haskell Show Pr. Co., 144 Mo. 331. See § 225. 2 § 222. 3 § 267. Minor v. Mechanics' Bank, 1 Pet. 46, 71. 3 Hall ». Auburn Turnpike Co., 27 Cal. 255. See Salem Bk. v. Glou- cester Bk., 17 Mass. 30. 195
 * L. R. 14 Eq. 322, 340. See, also,