Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/264

 § 283.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. cannot be questioned by the promisor. 1 Nor can irregularities in a mortgage made by a corporation betaken advantage of by a subsequent grantee of the mortgaged premises. 2 Likewise, the power of a corporation to assign a chose in action cannot be questioned in an action thereon by the assignee ; 3 and although the purchase of a piece of land may have been ultra vires a rail- road company, still when the railroad company sells the land the title of its vendee is good. 4 Again, when both plaintiff and defendant claim under a common source, — from a rail- road corporation, — the plaintiff by conveyance at an execution sale of its property, the defendant under deeds of trust exe- cuted by it, neither can set up that the acquisition of the property was ultra vires the corporation. 5 And, finally, where the president with other officers of a corporation bought stock for the company, and subsequently converted it unlawfully to their own use, they cannot plead when sued for the conversion 7/ that the original purchase made by them on behalf of the cor- poration was ultra vires. 6 <*ret?%,e § 283. We pass now to the third view taken of the doctrine J- The °^ u ^ ra vires, which is held by the Supreme Court Federal Q f the United States. According to this view a cor- 2,>V poration cannot make a contract be}~ond its pur- pose and powers as defined and conferred by the legislature creating it. Such a contract is a nullity ; it cannot be ratified, nor can it through performance on either side, or by the application of any principles of estoppel, become the foundation of a right of action upon the contract. A corporation thus is viewed as a creation of the law ; it derives its powers from the charter of its creation ; in the eye of the law it has no other or further powers, and its attempted acts outside of them are a vain beating of the air. This doctrine was primarily formulated by the Supreme Court with respect to corporations, like railroad companies, having public duties 1 Ehrman v. Union Cent. Life Ins. Co., 35 Ohio St. 324. 2 Beecher v. Marquette, etc., Mill Co., 45 Mich. 10:); Darstv. Gale, ante, § 280. 3 Small >■. C. R. I. and P. R. R. Co., 55 Iowa, 582. 244 Ragan v. McElroy, 98 Mo. 349. 5 Morgan v. Donovan, 58 Ala. 241. 6 St. Louis Stoneware Co. v. Part- ridge, 8 Mo. App. 217.
 * Walsh?). Barton, 24 Ohio St. 28;