own number ()'; but in many companies, and in all which are governed by Table A. in the schedule to the Companies act, 1862, the directors are authorized to delegate their powers to a few, and even to one only, of themselves; and such a delegation will be presumed if one or two directors act for the company in a matter incidental to its legitmate business. (1)

Where the proper number of direc ors does not exist.

Where the power to act for a company is vested in a given number of directors, and that number does not exist, the company has no agents by which it can properly transact its business. At the same time, if a company does in fact carry on business by certain persons who are allowed by the shareholders to act as if they were the duly constituted directors of the company the company will be bound by the acts of such persons in all ordinary matters of business in favor of all persons bona fide dealing with them, without notice of their insufficiency in number or defective appointment. (m) But as to matters out of the ordinary course of business the company will not be bound. In Kirk v. Bell (n), where a company's deed of settlement contained a clause to the effect that there should not be less than five directors, and that three should be a quorum for the transaction of ordinary business, and where there were in fact only four directors, it was held that a deed executed by these four on behalf of the company did not bind it, the deed being of an unusual description, and not a matter of ordinary business.

Kirk v. Bell.

Closely connected with the present subject is the question *246 *whether an act which ought to be done by a Board of directors is valid when done by the requisite number but not at a board meeting. There certainly is authority for not by a board. answering this question in the negative (o); and as

Acts done by directors but

(k) Cartmell's case, 9 Ch. 691; Howard's case, 1 Ch. 561; Ex parte Birmingham Banking Co. 3 Ch. 651; Cook v. Ward, 2 C. P. D. 255.

'See Evans on Agency, 44, 45. (1) Totterdell v. Fareham Brick Co. L. R. 1. C. P. 674; Lyster's case, 4 Eq. 233; Ex parte The Contract Corporation, 3 Ch. 116.

(m) See Mahony v. East Holyford Mining Co. L. R. 7 H. L. 869; Thames Haven Dock Co. v. Rose, 4 Man. & Gr. 552, a case relating to calls where the

court was asked to set aside a judgment. (n) 16 Q. B. 290.

(0) Bosanquet v. Shortridge, 4 Ex. 699; Darcy v. Tamar, etc. Rail. Co. L. R. 2 Ex. 158.

Where the constitution of a private association provides that an act shall be done by and with authority of the directors, the authority of the directors acting together as a board is required; and the assent of the individual directors, separately given, is not sufficient. Skinner v. Dayton, 5 Johns. Ch. 351.

between the company and any person having notice of the irregularity, that answer is probably correct. But as between the company and persons having no notice of the irregularity, the preponderance of authority is in favor of holding the company bound. (p)

Moreover, in order that a majority of persons present at a meeting may exercise the powers of a meeting, the meeting itself must not be too small. (g)

the agents of

Although the directors of a company are the agents of the company, and although, as a member of the company, Directors not each of the directors is liable for the acts of its agents on each other. the same ground as other members, still, unless a director has done something to make his co-directors his agents in some other sense than this, he is no more liable for their acts than any other shareholder. In this respect directors are like promoters, each being answerable for his own acts and for the acts of the others so far as he has made them his agents, but no further. (r)

Agents who are not directors.

Agents who are

The directors of a company are not necessarily its only agents. It may, and indeed generally must, be competent for them to employ other persons to act for the company;' not directors. and where this is the case, those persons also will have power to bind the company within the limits of their agency, but not *further. In dealing with the agents of companies there is *247 great danger of finding their authority altogether repudiated,

(p) See Mahony v. East Holyford Mining Co. L. R. 7 H. L. 869; Collie's claim, 12 Eq. 246; County Life Ass. Co. 5 Ch. 288. In Collie's claim it was said, but surely not correctly, that D'Arcy v. Tamar, &c. Rail. Co. turned on a technical rule of pleading. See, further, the cases as to irregularities cited infra.

(q) Howbeach Coal Co. v. Teague, 5 H. & N. 151; Ex parte Morrison, De Gex, 539.

(r) See Brown v. Byers, 16 M. & W. 252; Heraud v. Leaf, 5 C. B. 157; Bramah v. Roberts, 3 Bing. N. C. 963; Lord Londesborough's case, 4 De G. M. & G. 411; Walker's case, 8 De G. M. &

G. 607. The liability of directors to the shareholders is not here in question. See, as to this, book iii. c. 1, § 1.

1 By the articles of agreement under which an unincorporated manufacturing association went into operation, it was declared to be the duty of the president and directors to appoint a general agent to transact the business of the firm, under the direction of the president and directors. Held, that the president and directors might transact the business of the company without the appointment of an agent. Skinner v. Dayton, 19 Johns. 513.

Now,

on the ground that they have not been duly appointed. although directors have no implied power to delegate the authority conferred upon themselves, yet they must necessarily employ persons not only to do the every-day work of the company, but also to transact special branches of business requiring peculiar knowledge.' Upon principle, therefore, where persons are in fact employed by directors to transact business for a company the authority of those persons to bind a company within the scope of their employment cannot be denied by the company, unless-1, their employment was altogether beyond the power of the directors; or unless, 2, the persons employed have been appointed irregularly, and those who dealt with them had notice of the irregularity. (s) Where the power to appoint an agent for a given purpose exists, irregularity in its exercise is immaterial to a person dealing with the agent bonâ fide and without notice of the irregularity in his appointment. The following cases are important on this point.

Smith v. Hull

In Smith v. The Hull Glass Company (t), it was held that a company registered under 7 & 8 Vict. c. 110, was liaGlass Company. ble to pay for goods ordered by persons in its employ, and that it was not necessary for the plaintiff to prove that those persons were authorized by the directors to order the goods in ques tion. Maule, J., went further than this, and his judgment is an authority for the broad proposition that a company is bound by the acts of persons who take upon themselves, with the knowledge of the directors, to act for the company, provided such persons act within the limits of their apparent authority; and that strangers dealing bona fide with such persons, have a right to assume that they have been duly appointed. (u)

This view is in accordance with later authorities. Thus, a company has been held bound by a verbal contract with the *248 *chairman of directors, although a sealed contract countersigned by three directors was required by the company's deed

1 See the doctrine of the delegation of authorities, and the exceptions to the general rule upon the subject, considered in Ewell's Evans on Agency, pages 38, 42, and notes.

(8) See Hawken v. Bourne, 8 M. & W. 703, and the cases cited in the next few notes.

(t) 8 C. B. 668, and 11 ib. 897.

(u) See 11 C. B. 927. The other judges relied more on the fact that the directors had sanctioned and adopted the contracts. But as the knowledge on the part of the directors of what was done was assumed rather than proved, there was little if any difference in the views of the different members of the Court.

of settlement (x); so by orders for repairs given by a secretary instead of by the directors (y); so by an agreement for the sale of land made by a company's manager who was allowed by the directors to make such contracts (2); so by cheques drawn by de facto but improperly appointed directors. (a) Again, in Giles v. The Taff Railway Company (b), it was held that a railway company was liable Giles v. Taff for a tort committed by one of its servants in the pany. course of his employment, although there was no proof, except that afforded by the fact of employment, that he was the servant of the company.

Railway Com

Browning .

Mining, Com

Even as between the agent himself and the company, if the directors appoint him and allow him to act as agent of the company, and he does so act bonâ fide and without Great Central notice of any irregularity in his appointment, the com- pany. pany will be liable to him for his salary although he may not have been appointed precisely in the manner prescribed by the regulations of the company. (c)

These cases must not be confounded with others in which com

panies have been held not bound by acts done by their Limits to auagents when acting beyond the limits set by the nature thority of agent, of their employment. (d)

*2. Authority of agents of companies.

*249

Having seen who are to be considered agents of a company, it is necessary to examine the limits within which a com- Limits of the pany is answerable for their acts. The first question authority.

(x) Reuter v. Electric Telegraph Co. 6 E. & B. 341.

(y) Allard v. Brown, 15 C. B. N. S. 468.

(z) Wilson v. West Hartlepool Rail. Co. 34 Beav. 187, affd. 2 De G. J. & Sm. 475. Compare Moody v. London and Brighton Rail. Co. 1 Best & Sm. 290.

(a) Mahony v. East Holyford Mining Co. L. R. 7 H. L. 869.

(b) 2 E. & B. 822. See, further, infra, § 4.

Central Min

(c) Browning v. Great ing Co. 5 H. & N. 856. an appointment under the company was not necessary.

In this case
seal of the
See also

directors'

Totterdell v. Fareham Brick Co. L. R. 1 C. P. 674.

(d) See as to buying shares, Cartmell's case, 9 Ch. 691; as to policies of insurance issued by local agents, Linford v. Provincial Horse and Cattle Insurance Co. 34 Beav. 291; as to orders by station masters for surgical attendance, Cox v. Midland Counties Rail. Co. 3 Ex. 268; Walker v. Great Western Rail Co. L. R. 2 Ex. 228; statements by solicitors as to the flourishing condition of the company, Burnes v. Pennell, 2 H. L. C. 497; sales by a solicitor not instructed to sell by the directors, Moody v. Lond. and Brighton Rail. Co. 1 B. & Sm. 290.

which arises with reference to this subject is, whether the directors are to be regarded as the general agents of the company, for the purpose of transacting its business, or whether they are to be regarded as its special agents for certain defined purposes, and for those only? Upon this question opinions have greatly differed, but the tendency of the courts is in favor of holding directors to be special rather than general agents. At the same time it is established that what the directors of a company have power to do, and do in the name of the company and on its behalf (e), binds the company, although they may not have acted in the manner preDistinction be- scribed by the regulations of the company. A distinctween acts ultra vires and tion is thus taken between what directors have no acts intra vires, but irregular. power to do at all, and what they have power to do, provided certain requisites are observed; in other words, between acts which are altogether ultra vires and those which are intra vires but irregular; and whilst it is held that companies are not bound by acts of the former class, it is held that they are bound by acts of the latter class in favor of all persons dealing with their directors bonâ fide and without notice of the irregularities of which they may be guilty. (ƒ)

Acts altogether

(a) Of acts which are ultra vires.

With respect to those acts which directors have no power to do at all, it must be borne in mind that trading and simiultra vires. lar corporations which are created for certain definite purposes have no greater capacity than is conferred upon them by their constitution. They exist for certain purposes, more or less

well defined in the instrument incorporating them, but they *250 *exist for no other purposes; and a corporation created for

one purpose cannot lawfully do anything which is foreign to the purpose for which alone it was created. If, therefore, it can be predicated of any contract entered into by or on behalf of a body corporate, that such contract is one into which the corporation, even with the assent of all its members, cannot legally enter, such contract must necessarily be invalid. This is not the consequence of any doctrine of the law of agency, but of the nature of corpora

(e) See Hambro' v. Hull, &c., Insurance Co. 3 H. & N. 789.

(f) See generally on the subject of

the ensuing pages a treatise on the doctrine of ultra vires by Seward Brice.