Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/267

 PART III.] ACTS BEYOND THE CORPORATE POWERS. [§ 284. the application of this stringent rule to private corporations generally, irrespective of whether or not they have public duties to perform. It has been applied in all its strictness to the contracts of national banks. The court has held, for ex- ample, that, as it is ultra vires a national bank to deal in the stocks of other corporations, the shares so acquired by it create no liability on its part to the creditors of the corporation issu- ing them. It makes no difference that the bank has received dividends ; for the transaction was void, and not merely void- able and capable of ratification. The principle of estoppel can- not apply ; and the bank may plead the nullity of its ultra vires act. 1 ___ _ — . ., -, — ,- ^ §1284. Thus, in regard to ultra vires contracts which have been executed by the party dealing with the corpora- /&*■ tion, the rule of the United States Supreme Court is ^or^to the /£*-<^ opposed to the rule of the courts of New York and general ^ -? , rules. Cp<~.~4v^ certain other states. 2 On the other hand there is no conflict respecting ultra vires contracts which neither party has executed ; such will not sustain an action in any court. More- over American courts are in accord on the proposition which 1 California Bank v. Kennedy, 167 I The same rule is held in Nat. U. S. 3*32; Concord First Nat'l Bk. | Home B'ld'g Ass'n v. Bank, 181 111. v. Hawkins, 174 U. S. 364; followed 35; Best Brewing Co. v. Klassen, 185 in Robinson v. Southern Nat'l Bk. | 111. 37; Fritze v. Equitable B. & L. 180 U. S. 295, in which, however, Soc., 186 111. 183; Franklin Nat. Bank the court remarked that while it r. Whitehead, 149 Ind. 560; Chewacla was " not disposed as at present ad- Lime Works v. Dismakes, 87 Ala. vised, to push the principle of these 344; see Penna., etc., Nav. Co. v. cases so far as to exempt such banks Dandridge, 8 Gill & J. (Md.) 248. fx'om liability as other shareholders, I But when the act is one forbidden where they have accepted and hold i by a state statute, and the highest stock in other corporations as col- court of the state has held that such lateral security for money advanced act is not void but merely voidable, (a consideration which we withhold at the suit of the state, the Federal from discussion) we think there is a presumption in such cases against any intention on the part of the lending bank to become the owner of the collateral shares." See, also, Louisville, N. A. & C. Ry. Co. v. Louisville Tr. Co., 174 U. S. 552; De la Vergne Co. v. Germ. Sav. Inst. 175 IT. S. 40; Chemical Nat. Bank v. Havemale, 120 Cal. 601. Supreme Court will follow that de- cision. Sioux City R. R. Co. v. N. A. Ti. Co., 173 U. S. 99. It has been held in a state court that a national bauk may take stock in another cor- poration in payment of a debt. Tourtelet, Rec'r, v. Whithed, 9 N. Dak. 467. 'Ante, §277. 247