Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/302

 § 311.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. tract nor in any way acquiesced in it. 1 In ascertaining the liability of tbe corporation, either directly on the contract, or indirectly for the benefits which through the contract have ac- crued to the corporate property, it must continually be borne in mind that the rights of different persons regarding the cor- porate property are distinguishable. Some persons may be in a position to say to the other contracting party, " take back what you can reach without disturbing my rights." The above- mentioned qualification, however, is applicable only where the benefits from the ultra vires contract have become indistinguish- ably interwoven with the corporate property, so as to make impossible a restitution in integrum. § 311. The simplest conceivable case for the application of the general rule is where a corporation has received specific property, Specific rea l or personal, the distinguishing characteristics of chattels which remain unimpaired after it has come into the must be. L returned. possession of the corporation. In such case the prop- erty must be returned upon the repudiation of the contract in pursuance to which the corporation received it. 3 If money has been loaned to a corporation in furtherance of some scheme known to the lender to be ultra vires, it does not neces- sarily follow that the corporation will have to return the money, which may never have been applied to corporate purposes. Thus, where the directors of a building society, the rules of which gave directors no power to borrow, borrowed money for the purpose of advancing it to the members on the security of their shares, the lender's claim was disallowed on the wind- ing up of the society. 3 In this case there was no proof that the money was ever applied to the proper purposes of the society or to the payment of any debt for which the society was liable. On the other hand, when through an ultra vires transaction money has come into the possession of a corporation and has been applied to proper corporate purposes, the corporation in repudiating the transaction will have to refund the money so iSee Hill's Case, L. R. 9 Eq. 605. 2 A national bank, on being repaid a loan, must return property which came into its hands in pursuance of a contract it had no authority to make. Logan County Nat. Bank v. 282 Townsend, 139 U. S. G7. Compare §277. 3 In re Nat. Permanent Benefit B'ld'g Asso., ex parte Williamson, L. R. 5 Ch. 309. I