Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/266

 § 283.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. legislature, and to those formed by articles of association under general laws. . . . "The plaintiff was not an ordinary manufacturing corpora- tion, such as might, like a partnership or an individual engaged in manufactures, sell or lease all its property to another corpo- ration." [It was a quasi public corporation with duties to the public] "the performance of which, by the corporation itself, was the remuneration that it was required by law to make to the public in return for its franchise. . . . " The contract sued on being clearly beyond the powers of the plaintiff corporation, it is unnecessary to determine whether it is also ultra vires of the defendant, because, in order to bind either party, it must be within the corporate powers of both. " It was argued in behalf of the plaintiff that, even if the contract sued on was void, because ultra vires and against pub- lic policy, yet that having been fully performed on the part of the plaintiff, and the benefits of it received by the defendant, for the period covered by the declaration, the defendant was estopped to set up the invalidity of the contract as a defence to this action to recover the compensation agreed on for that period. " But this argument, though sustained by decisions in some of the states, finds no support in the judgments of this court. . . . " The view which this court has taken of the question pre- sented by this branch of the case, and the only view which ap- pears to us consistent with legal principles, is as follows: — " A contract of a corporation which is ultra vires in the proper sense, that is to say, outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the legislature, is not voidable only, but wholly void and of no legal effect. The objection to the contract is not merely that the corporation ought not to have made it, but that it could not make it. The contract can- not be ratified by either party, because it could not have been authorized by either. ISo performance on either side can give the unlawful contract any validity, or be the foundation of any right of action upon it." ' As already said, the Supreme Court has apparently extended 1 139 U. S. 24, 48 sqq. See the I in California Bank v. Kennedy, 167 reiteration of much of this language I U. S. 362. 240