Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/262

§ 281. actions in the course of which the contracts were performed, had been generally acquiesced in.

Darst v. Gale is another case frequently cited in support of the alleged rule—which is indeed stated in so many words in the opinion of the court—"that a private corporation cannot avail of the defence of ultra vires where the contract has been in good faith fully performed by the other party, and the corporation has had the benefit of the contract and the performance." But in this case the defence was not set up by or on behalf of the corporation, nor on behalf of any person interested in it. A subsequent grantee of premises belonging to the corporation attempted to have a prior deed of trust covering the same property set aside, on the ground that such deed was ultra vires the corporation; he having bought with full notice of the prior deed. The ultra vires nature of the prior deed had infringed no right of his ; and, consequently, he had no standing in court to interpose the plea of ultra vires.

§ 281. The decision, if not the reasoning, in this case points to an important principle respecting the plea of ultra vires. According to the rules under discussion, the plea cannot be interposed

by the party contracting with the corporation when the corporation has performed: and the reason for this lies not only in the estoppel with which, under the circumstances, such a person is affected, but in the following reason as well: That the transaction was ultra vires infringed none of his 242