Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/83

 CHAP. V.] PROMOTION OF A CORPORATION. [§88. to it had its promoters been its agents at the time when they contracted on its behalf. 1 The English courts, moreover, have gone a step further, and have held, even where there has been no ratification by the corporation, that a corporation should not be allowed to use its powers, which it has been enabled to ob- tain through the engagements of its promoters, in disregard of those engagements and to the prejudice of the persons with whom those engagements were made. § 88. On this point, the leading case is Edwards v. The Grand Junction Eailway Co. 2 There the promoters of a railway company met with opposition from the trustees of a turnpike road. It was agreed between them that the trustees should withdraw their opposition to the company's bill, and that the company should, if the bill passed, carry the turnpike road over a bridge of certain dimensions. The trustees withdrew their opposition, and the bill passed ; but the company refused to perform. An injunction was granted to restrain the company from violating the agreement, and sustained on appeal. In giving judgment in the case, Lord Cottenham said: " But the question is not whether there be any binding contract at law, but whether this court will permit the company to use their powers under the act, in direct opposition to the arrangement made with the trustees prior to the act, upon the faith of which they were permitted to obtain such powers." This case has been repeatedly questioned, 3 and its authority shall pay the reasonable legal ex- penses of its organization. This agreement, undoubtedly, the corpo- ration can adopt and ratify; for, not only can it legally fulfil this agree- ment, but it could itself compe- tently agree to pay those very ex- penses. As to what will not constitute a ratification by the company, it is held in England that articles of associa- tion are a contract of the sharehold- ers inter se, and therefore an out- sider cannot base an action against the company on any of their provi- sions. Eley v. Positive Assurance Co., 1 Ex. D. 20 and 88; but see Touche v. Metropolitan Warehousing Co., L. R. 6 Ch. 671. 1 Rogers v. New York, etc., Land Co., 134 N. Y. 197, 211; Stanton v. New York, etc., R. R. Co., 59 Conn. 272; Battelle v. Pavement Co., 37 Minn. 89; Mc Arthur v. Times Print- ing Co., 48 Minn. 319; Shreyer v. Flouring Co., 29 Oreg. 1. See Propo- sitions VII. and VIII., § 75. 2 1 M. & Cr. 650 ; ace. Petre v. Eastern Counties R. Co., 1 Eng. R'y Cas. 462. See In re Hereford Wagon Co., 2 Ch. D. 621; 1 Lindley on Part., 398-400. But compare In re Rother- ham Alum, etc., Co., 25 Ch. Div. 103. 3 See Preston v. Liverpool aud Man- 63