Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/247

PART III.] Railway aid bonds, § 317. Federal decisions, § 318. Municipality has no inherent power to issue railway aid bonds, §319. Special authority requisite. Holders charged with notice, § 320. Constitutional limitations, §321. Railroad not yet in existence, § 322. Effect of a consolidation of the railroad company, §§ 323, 324. Municipal bonds may be validated, §325. Bonds and coupons negotiable, 326. Holder not affected with notice of lis pendens, §327. Presumptions, §328. Effect of recitals, §§329-331. Recitals. Recent decisions, § 332. Power of municipal corporations to tax. Mandamus, § 333. Municipal property exempt from execution, §334.

§ 264. So far as to responsibility for acts within the scope of the corporate powers. Very different questions arise as to whether acts beyond the corporate powers are binding and on whom. These are questions of ultra vires. The term ultra vires like most other legal terms, has been used in more senses than one; and objections have been taken to it on the ground that so-called questions of ultra vires —"beyond the powers"—are not really questions of the power, but of the legal right of corporations to act. It seems proper, however, in legal writing to use words in a legal sense; and, in a legal sense, the term "power" signilies legal competence, capacity, or right.

The term ultra vires is convenient, pretty well imbedded in the law, and may be used to advantage if care is taken to apply it only in respect of corporate powers, and not in respect of the powers of corporate officers. The term, moreover, should not be used in the sense of illegal. See the dissenting opinion of Blackburn, J., in Taylor v. Chichester and Midhurst R'y Co., L. R. 2 Ex. 356. As Judge Allen said, in Whitney Arms Co. v. Barlow, 63 N. Y. 62, 68: " When acts of corporations are spoken of as ultra vires, it is not intended that they are unlawful or even such as the corporation cannot perform, but merely those which are not within the powers conferred upon the corporation by the act of its creation, and are in violation of the trust reposed in the managing board by the shareholders, that the affairs shall be managed, and the funds applied solely for carrying out the objects for which the corporation was created." See, also, Nat. Pemberton Bank v. Porter, 125 Mass. 333, 335.A different view is taken by the Supreme Court of Illinois: " The word 'unlawful' as applied to corporations, is not used exclusively in the sense of malum in se or malum prohibitum. It is also used to designate powers which corporations are not authorized to exercise, or contracts which they are not authorized to make, or acts which they are not authorized to do,—or, in other words, such acts, powers, and contract as are ultra vires. People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268, 292, quoted approvingly in Nat. Home B'ld'g. Ass'n v. Bank, 181 Ill. 35, 41.

227