Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/334

 § 338.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. tort or wrong which it commits, however foreign to its nature or beyond its grunted powers the wrongful transaction or act may be. 1 .... But in this case the false certificates were issued and the spurious stock transferred by an. officer of the corporation. A corporation aggregate being an artificial body — an imaginary person of the law, so to speak — is, from its nature, incapable of doing any act except through agents to 1 New York and New Haven R. R. Co. v. Schuyler, 34 N. Y. 30, 49, citing the following cases, not one of which sustains the proposition as stated: Life and Fire Ins. Co. v. Me- chanic Fire Ins. Co., 7 Wend. 31, which held that a corporation author- ized to loan on bond and mortgage could not recover money loaned in any other way [?] ; and that when an illegal loan is made by the officers of the corporation who have power to loan for it, the company is affected with the illegality of the transaction. Albert v. Savings Bank, 2 Md. 1G9, a case where, in violation of a pro- vision in its charter, a savings bank made a loan to one of its directors on the security of stock which the borrower held in a fiduciary capacity. The suit was brought by the cestui que trust to set aside the transfer to the bank, and recover the divi- dends received by it. The court said that any loan made to a director was void, and could not be recovered (on this point this case seems overruled in Lester v. Howard Bank, 33 Md. 558). It will be noticed that the suit was brought to set aside an illegal trans- action arising out of the abuse of a general power conferred on the bank, .Philadelphia, etc., K. R. Co. v. Quig a transaction which, though illegal, was clearly connected with the ordi- nary course of the bank's business ; and certainly was not a transaction "foreign to the nature" of the bank. Goodspeed v. East naddam Bank, 22 Conn. 530, 541, a case where a bank was held liable for a vexatious suit in- 314 stituted by its directors. But it is clearly within the province of direct- ors to institute suits on behalf of their bank, and so this was but the abuse of a general power confided to an agent. Bissell v. Mich. So., etc., Rail- road Cos., 22 N. Y. 305, 309, a case re- ferred to elsewhere, §§ 275, 290. In this case Judge Selden did hold the contract ultra vires and incapable of sustaining an action, but that plain- tiff could recover on the ground of tort, on account of the " duty to ob- serve care' 1 which " in these cases arises, not upon any contract, but from the obligation which rests upon all persons, whether natural or arti- ficial, so to conduct as not through their negligence to inflict injury on others." But to this it may be said that, except as the persons interested in the corporate enterprise acqui- esced in the transactions in the course of which the tort was committed, and so were estopped from objecting, they owed the plaintiff no duty which would give him any right to funds in which they had rights. Frankfort Bank v. Johnson, 24 Me. 490. In this case the officers wore acting within the general scope of their powers. ley, 21 How. 209. Here, also, the officers were acting within the scope of their employment. Green v. Lon- don Omnibus Co., 7 C. B. N. S. 290. And in this case, too, the acts were connected with the objects of incor- poration, and done in the course of the employment of the servant.