corpora tions to contract. Powers of of their matter, by the powers of the corporation, given either in express terms or by implication in the instrument of incorporation; for corporations exist for no other purpose and have no greater capacity or powers than are conferred by their creation, and contracts which exceed the limits of those powers are void. Contracts ultra vires. Generally speaking, all corporations are bound by a covenant under their corporate seal, properly affixed, which is the legal mode of expressing the will of the entire body, and are bound as much as an individual is by his own deed. -But where a corporation is created by an Act of Parliament for particular purposes, with special powers, another question arises: their deed, though under their corporate seal, and that regularly affixed, does not bind them, if it appear by the express provisions of the statute creating the corporation, or by necessary or reasonable inference from its enactments, that the deed was ultra vires, that is, that the legislature meant that such a deed should not be made" (a). And it is said that "when the legislature constitutes a corporation it gives to that body primâ facie an absolute right of contracting. But this primâ facie right does not exist in any case where the contract is one which, from the nature and object of incorporation, the corporate body is expressly or impliedly prohibited from making; such a contract is said to be ultra vires" (b). Accordingly, a railway company, incorporated by Act of Parliament for the purpose of making a particular railway, and invested with all the powers necessary for that purpose, were held not to have power to covenant with another railway company to take a lease of their railway, and to pay the costs of certain bills then pending in Parliament for authorizing extensions and branches of the railway leased; and the covenant made to that effect was held void, as being beyond the scope (a) Per Parke, B., South Yorkshire Ry. Co. v. Great Northern Ry. Co., 9 Ex. 55, 84; 22 L. J. Ex. 305, 314; adopted by the Court in Chambers v. Manchester & Milford Ry. Co., 5 B. & S. 588; 33 L. J. Q. B. 268; see per Erle, J., Mayor of Norwich v. Norfolk Ry. Co., 4 E. & B. 397, 413; 24 L. J. Q. B. 105, 111; Bateman v. Mayor of Ashton-under-Lyne, 3 H. & N. 323; 27 L. J. Ex. 458, 463. (b) Per Cranworth, L.C., Shrewsbury &Birmingham Ry. Co. v. London & N.W. Ry. Co., 26 L. J. C. 482, 493; per L. Wensleydale, Scottish N.E. Ry. Co v. Stewart, 3 Macq. 382, 415. of the authority conferred by the Act of incorporation (a). So, a covenant executed by a railway company to pay a sum of money, which the promoters of the company had agreed should be paid to a landowner for his countenance and support to their bill, was held to be ultra vires of the company, and could not be enforced against them (b). But a contract by an existing railway company, who had applied to Parliament for an Act to make a branch line, to purchase land which they would require for that line, was held to be a contract in furtherance of the general objects of the company and not ultra vires; and the company were held to specific performance, though they had afterwards determined not to make the branch line (c). A railway company incorporated by Act of Parliament were authorized by their Act to borrow money to a certain amount by mortgage, when their whole capital was subscribed for; the company borrowed money otherwise than by mortgage, and when part only of the capital had been subscribed for, and in order to secure this debt they executed bonds under the seal of the company acknowledging the debt to be owing to the creditor and covenanting to pay it; it was held that such bonds, though duly executed in point of form, were invalid, because executed for the illegal purpose of borrowing money which the company were not empowered to borrow (d). But it has been held that bonds of a similar nature executed by a railway company, might be lawfully issued in payment to a contractor for the works under his contract, although the company had not any borrowing. powers (e). A railway company has no power to accept bills of exchange for any purpose, even under seal (ƒ). A contract by an incorporated trading company to purchase the goodwill of the business of another company, (a) East Anglian Ry. Co. v. Eastern Counties Ry. Co., 11 C. B. 775; 21 L. J. C. P. 23. (b) Earl of Shrewsbury v. North Staffordshire Ry. Co., 35 L. J. C. 156; L. Rep. 1 Eq. 593; and see Preston Liverpool, Manchester, & Newcastle Ry. Co., 5 H. L. C. 605. V. (c) Eastern Counties Ry. Co. v. Hawkes,5 H. L. C. 331; 24 L. J. C.601. (d) Chambers v. Manchester & Milford Ry. Co., 5 B. & S. 588; 33 L. J. Q. B. 268. (e) White v. Carmarthen & Cardigan Ry. Co., 33 L. J. C. 93. (f) Bateman v. Mid-Wales Ry. Co., 35 L. J. C. P. 205; L. R. 1 C. P. 499; ante, p. 252. Corporation must authorized. is not within the ordinary powers of the directors (a). A company formed for the object of manufacturing articles by machinery, for which a patent had been granted, were held to have power to purchase the patent (b). A company, incorporated for the working, preparation, and sale of china clay and its products, and for carrrying on mining operations incidental to that business, were held to be empowered to make a valid mining lease for twenty-one years of the whole of the property and works of the company, which they had failed to work successfully (c). So, a trading company may give a bill of sale as security for a debt (d). A corporation can affix its corporate seal, or contract withcontract by out seal, only by some agent, duly authorized in that behalf. agent duly Where a person, pretending to be, but not really being, the mayor of a municipal corporation, put the corporation seal to a deed, it was held that it did not thereby become the deed of the corporation (e). Where an agent, entrusted with the custody of the seal of a corporation, applied it without authority to a power of attorney for selling stock and obtained the proceeds, it was held that the corporation was not bound by the unauthorized use of the seal, and that the sale of the stock was invalid (ƒ). The Companies Clauses tion Act. The authority to affix the corporate seal is generally given and defined by the charter or statute of incorporation. Joint stock companies constituted for making railways and for other undertakings of a public nature are generally Consolida incorporated by a special Act of Parliament, and regulated by "the Companies Clauses Consolidation Act, 1845," (8 Vict. c. 16), the provisions of which are incorporated in the special Act, so far as they are applicable. That Act provides generally for the appointment of directors, (ss. 81-89) who, either by themselves or by committees of directors appointed by themselves, have the management and superintendence (a) Ernest v. Nicholls, 6 H. L. C. 401; and see Balfour v. Ernest, 5 C. B. N. S. 601; 28 L. J. C. P. 170. (b) Leifchild's case, L. R. 1 Eq. 231. (c) Featherstonhaugh v. Lee Moor Porcelain Clay Co., L. R. 1 Eq. 318; 35 L. J. C. 84; and see Simpson v. Westminster Palace Hotel Co., 8 H. L. C. 712; 29 L. J. C. 561 ; Australian (d) Shears v. Jacob, 35 L. J. C. P. 241; L. R. 1 C. P. 513. (e) Per Holt, C.J., Anon. 12 Mod. 423. (f) Bank of Ireland v. Evans Charities, 5 H. L. C. 389. of the affairs of the company, and exercise all the powers of the company, subject to the provisions of that and the special Act (s. 90). By s. 97 the power to make contracts on behalf of the company may be exercised as follows:-"With respect to any contract which, if made between private persons, would be by law required to be in writing, and under seal, such committee or the directors may make such contracts on behalf of the company in writing, and under the common seal of the company, and in the same manner may vary or discharge the same :-With respect to any contract which, if made between private persons, would be by law required to be in writing, and signed by the parties to be charged therewith, then such committee or the directors may make such contract on behalf of the company in writing, signed by such committee or any two of them, or any two of the directors, and in the same manner may vary or discharge the same: -With respect to any contract which, if made between private persons, would by law be valid although made by parol only, and not reduced into writing, such committee or the directors may make such contract on behalf of the company by parol only, without writing, and in the same manner may vary and discharge the same." 1862. Joint stock companies incorporated and regulated by " the The ComCompanies Act, 1862," 25 & 26 Vict. c. 89, which applies to panies Act, trading companies in general, are also managed by directors, who exercise all the ordinary powers of the company, subject to the provisions of the general Act, and of the articles of association of the company. This Act does not contain any special provisions as to the exercise of the powers of the company to contract; but leaves it to be regulated by the articles of association (a). the powers In dealings with a joint stock company so incorporated Notice of the public are deemed to have notice of the Act of Parlia- of corporament, and the registered articles of association, which define tions." (a) See ss. 14, 15; 1st sched. Table A, regulations 55, 66-71. "The Joint Stock Companies Act, 1856," 19 & 20 Vict. c. 47, repealed by the above Act, contained a provision (s. 41) as to the contracts of the company similar to that in the Companies Clauses Consolidation Act, 1845, s. 97, supra. the powers tions. Notice of the purposes for which the company is incorporated, and the of corpora- powers of the directors; and all persons who contract with the directors are taken to be cognizant of the extent of the authority so conferred upon them. The company, or whole body of shareholders, can be charged with the contracts made by the directors only when the latter have strictly followed the provisions which regulate their authority (a). But though parties dealing with joint stock companies may be taken to know all the limitations of the authority of the directors prescribed by the general Act and the articles of association of the company, they are not taken to know all the acts and proceedings of the company and of the directors; and they are entitled to assume, as against the company, that all meetings have been duly held, and all proper resolutions passed, and necessary acts done, in order to appoint the directors or other agents of the company, and to give them the powers which they assume to exercise consistently with the constitution of the company (b). By the deed of settlement of a joint stock company, registered under the 7 & 8 Vict. c. 110, the directors were authorized to borrow under the common seal of the company such sums as should from time to time by a resolution passed at a general meeting of the company be authorized to be borrowed; it was held that persons lending money to the directors on bond under the common seal of the company had a right to infer that such a meeting had been held, and such a resolution passed, as were requisite to authorize the directors to borrow the money; and in an action on the bond, the plea that no such resolution was passed was held bad (c). (a) Ridley v. Plymouth Grinding and Baking Co., 2 Ex. 711; Smith v. Hull Glass Co., 11 C. B. 897; Balfour v. Ernest, 5 C. B. N. S. 601; 28 L. J. C. P. 170; per Lord Wensleydale, Ernest v. Nicholls, 6 H. L. C. 401, 419. These and the following cases occurred under the Act for the registration of joint stock companies, 7 & 8 Viet. c. 110 (since repealed), and with reference to the registered deed of settlement of the company required by that Act, but they seem to be equally applicable in principle to joint stock companies as at present constituted. (b) Smith v. Hull Glass Co., 11 C. B. 897, 927; Royal British Bank v. Turquand, 5 E. & B. 258; 6 Ib. 327; 25 L. J. Q. B. 317; Agar v. Athenæum Ass. Co., 3 C. B. N. S. 725; 27 L. J. C. P. 95; Prince of Wales Ass. Co. v. Harding, E. B. & E. 183; 27 L. J. Q. B. 297, 309; Totterdell v. Fareham Blue Brick & Tile Co., 35 L. J. C. P. 278. (c) Royal British Bank v. Turquand, 5 E. & B. 248; 6 ib. 327; 24 L. J. Q. B. 327; 25 ib. 317; Agar v. Athenæum Life Ass. Co., 3 C. B. N. S. 725; 27 L. J. C. P. 95. |