Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/251

 PART in.] ACTS BEYOND THE CORPORATE POWERS. [§ 269. take shares in a manufacturing corporation. 1 Neither can the board of directors of a national bank bind their bank by guar- anteeing to a banking house issuing a letter of credit, the obli- gation of the person receiving the letter. 2 JSTor can the direct- ors of a railroad corporation, or of a corporation organized to manufacture and sell musical instruments, bind their respective corporations by an agreement to guarantee the expenses of a musical festival. 3 § 268. An act beyond the corporate powers cannot validly be done by the body corporate acting as such (i. e., through the vote of a majority in a duly assembled ordinate meeting), nor can it be thus ratified. For the major- ru e ' ity have no authority by such an act or ratification to bind absent or dissentient shareholders ; and persons dealing with the corporation are affected with knowledge of this. 4 The majority cannot make a disposition of the corporate property unauthorized by the constitution of the corporation. 3 § 269. As the different classes of persons interested in the corporate enterprise ratify or acquiesce in the unau- thorized act they estop themselves from questioning ordinate its validity. An ultra vires contract is invalid because enforcing' it would Cormick, 85 Tex. 417 ; Alexander v. Cauldwell, 83 N". Y. 480; Elevator Co. v. Memphis, etc., R. R. Co., 85 Tenn. 703. See Downing v. Mount "Wash- ington Road Co., 40 N. H. 230 ; City Elec. St. R'y Co. v. First Nat. Bk., 65 Ark. 543. 1 Franklin Co. v. Lewistonlnst. for Savings, 68 Me. 43. See Wilbur v. Stockholders, 18 Bankr. Reg. 178. So the officers of a corporation au- thorized to do a general insurance agency, commission, and brokerage business, cannot on its behalf sub- scribe to stock in a savings bank, and the bank cannot enforce the sub- scription. Mutual Savings Bank v. Meriden Agency Co., 24 Conn. 159. 2 Seligman v. Charlottesville Nat. Bk., 3 Hughes C. Ct. 647. See John- ston v. Same, ib. 657. 3 Davis v. Old Colony R. R., 131 Mass. 258. See, also, Lucas v. White Line Transfer Co., 70 Iowa, 541. 4 Bird v. Bird's Patent, etc., Co., L. R. 9 Ch. 358 ; Steiner v. Steiner Land and Lumber Co., 120 Ala. 128. 5 Kean v. Johnson, 9 N. J. Eq. 401; Taylor v. Earle, 8 Hun, 1 ; Forrester v. B. & M. Min. Co., 21 Mont. 544. A single dissenting shareholder may enjoin the majority from applying the corporate property to unauthor- ized purposes. Natusch v. Irving, Gow on Part. App. ii. ; Lyde v. East- ern Bengal Ry. Co., 36 Beav. 10. See §§ 556, 557. A shareholder in a rail- road corporation may bring suit to set aside an ultra vires lease of the road. Board, etc., Tippecanoe Coun- ty v. Lafayette, etc., R. R. Co., 50 Ind. 85. 231