Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/300

 § 310.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. tract," 1 The words of the court here recognize a right on the part of the other contracting party, not to compel the corpora- tion to perform, but to compel it to make restitution of what it has received. Certainly, if the corporation refuses to perform its side of the contract, property may have come into its pos- session to which it has no right ; and it is not ultra vires a cor- poration to restore that which it has no legal right to keep. And often the performance on the part of the other party will be the measure of the restitution to which he is entitled from the corporation. 2 Accordingly, some courts state the following rule : The fact that an ultra vires contract has been executed by the other con- tracting party and that the corporation has received the benefit will not sustain a suit against the corporation on the contract ; the remedy is a suit in disaffirmance and for an accounting for benefits received ; in which case the plaintiff's right rests on an implied contract on the part of the corporation to return prop- erty received or make compensation for what it is not entitled gratuitously to retain. 3 There is nothing in these propositions repugnant to the gen- eral doctrine of the Federal Supreme Court upon the subject of ultra vires. Indeed in the case of the Central Transporta- tion Co. v. Pullman's Palace Car Co., the court, through Jus- tice Gray, intimated that the court would permit property to be recovered back : " In such case, however, the action is not maintained upon the unlawful contract, nor according to its terms : but on an implied contract of the defendant to return, or, failing to do that, to make compensation for, property or money which it has no right to retain. To maintain such an action is not to affirm, but to disaffirm, the unlawful contract." 4 And in a subsequent suit in equitj 7 between the same parties, 1 Railroad v. Railroad, 66 N. H. 100, 129; see also International Tr. Co. v. Company, 70 N. II. 118. 2 There may be cases where no res- titution can be made. For instance, in a recent Massachusetts case, the plaintiff agreed to procure a cus- tomer for a national bank, and in re- turn was to have certain business put into bis bands. Tbe court held that 280 the contract was ultra vires, and could not be enforced. The plaintiff had performed. Dresser v. Traders 1 Nat. Bank, 165 Mass. 120. 3 Miller v. American, etc., Ins. Co., 21 S. W. Rep. 39 (Tenn.); Brunswick G. L. Co. v. United G., etc., Co., 85 Me. 532; Railway Co.'s v. Keokuk Bridge Co., 131 U. S. 371, 389. 4 139 U. S. 60.