Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/250

 § 267.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. § 265. The following proposition may now be submitted : An act beyond the scope of the corporate powers, if General done on behalf of a corporation, or if done by the body corporate itself, affects the rights of persons in respect of the corporate enterprise only in so far as the pos- sessors of those rights by their own acts or omissions have estopped themselves from asserting their rights ; provided the act be of such a character that the party dealing with the cor- poration' or its agents could, from an examination of the charter, or enabling statute and articles of association, have ascertained that the act was ultra vires} § 266. The truth and import of this proposition may be illus- trated by three series of cases, the three series re- nate°ruies spectively furnishing authorities for the three folio w- denoted m g propositions, which, taken together, have the same import with the general proposition just stated. (1) An act beyond the corporate powers, if done by any corpo- rate agent, does not bind the corporation. (2) Such an act can- not be executed or ratified by a majority vote of the body cor- porate so as to bind the corporation. (3) But, as the different classes of persons interested ratify or acquiesce in such an act they become estopped from alleging that it was not authorized or binding on the corporation and their interests in the corpo- rate enterprise. A fourth series of cases will illustrate the proviso or qualification to the general proposition. § 267. An act beyond the scope of the corporate powers, if done by the board of directors or any other corporate ordinate agency, is not binding on the corporation ; for per- rule ' sons dealing with a corporation through its agents are affected with notice of its powers, and cannot assume that any agent has authority to transact business which the corpo- ration was not authorized to engage in.' Accordingly, it has been held that the trustees of a savings bank, when to the knowledge of persons dealing with them there are no funds in the bank for investment, cannot bind the bank by a contract to 1 This proposition, as well as the reasoning of the following para- graphs, seems fully supported by Lucas v. White Line Transfer Co., 70 Iowa, 541, 545-547. See, also, In 230 re National Permanent Building Society, ex parte Williamson, L. R. 5 Ch. 309 ; Knoxville ». Knoxville, etc., R. R. Co., 22 Fed. Rep. 758. Franco-Texas Land Co. v. Mc-