Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/236

 § 252.] THE LAW OF 1'KIVATE CORPORATIONS. [CHAP. VII. and certificate were held to be void. Morrison v. Inhabitants of Bernards, 7 Vroom, 219. & », alao, whuro tho statute re- q airoo, aa a preliminary to the issuing ' of bonds by a cou n ty, tawj n ) nn ntlin.n nm-pnvitinn^ that, thp ;i«cnf. nf a. j^rtain pivt p or- tion nf vntntT i nr t . M . v pay ers s hall fii-gt. lio nhfnimv^ thj s req uisite i f, on nr.nt.ial r ft-ml- t,l rP, akftwp of it w ill n.voi r l the hnndgj prpn as a gainot i npocreTftrthird parties. 1 " But this doctrine does not prevail in those instances in which the right to issue such securities is by the charter condi- tioned upon the performance of acts by the corporation or its officers relating to the management of the affairs of the com- pany. In such cases, as said by Vice-Chancellor Wood, ' if the party contracting with the directors finds the acts to be within the scope of their power under the deed of settlement, he has a right to assume that all such conditions have been complied with.' 2 .... " The doctrine which validates securities within the apparent powers of the corporation, but improperly, and therefore ille- gally, issued, applies only in favor of bona fide holders for value. A person who takes such a security with knowledge that the conditions on which alone the security was authorized were not fulfilled, is not protected, and in his hands the security is in- valid, though the imperfection is in some matter relating to the internal affairs of the corporation, which would be unavailable against a bona fide holder of the same security." 3 ., requiring the contracts of certain coxperatea^ents to Approval ^ © ^__^— *t © be approved by other corporate agents. Such provi- sions will not affect the rights of a person acting in good faith in^ignorance that the agent with whom he deals is rem: by other officers. 1 Citing Hudson v. Inhabitants of Winslow, 6 Vroom, 437, a case of municipal bonds. See §§315 et seq. 2 7/i re Athenaeum Society ex parte Eagle Co., 4 K. & J. 549. See, also, Connecticut Mut. Life Ins. Co. v. Cleveland, C. and C. and C. K. R. Co., 41 Barb. 9; Berks, etc., Turnpike Road v. Myers, 6 S. & R. 12; Royal 216 British Bank v. Turquand, 6 El. & Bl. 327; Webb v. Commissioners, L. R. 5 Q. B. 642; Mahouy v. East Holy- ford M'g Co., L. R. 7 H. L. 893, 894. 3 36 N. J. Eq. 505. See, also, Nichols v. Mase, 94 N. Y. 160. 4 Medbury v. New York and Erie R. R. Co., 26 Barb. 564.