Same - Money Paid Under Ultra Vires Contract

A contract made by a corporation beyond the scope of its corporate powers is said to be ultra vires, and is void, but not illegal.7 It is very generally held, therefore, that money paid under such a contract may be recovered.8 In England an exception is made to the right of recovery in the case of money borrowed by the corporation unless it remains unused in its treasury, on the ground that to permit a recovery in this case would be to enforce the void contract of loan;9 but this exception is not recognized by the United States Supreme Court,10 nor by the majority of the state courts.11

173, 9 Am. Dec 680; Waite v. Merrill, 4 Greenl. (Me.) 102, 16 Am. Dec. 238; ante, p. 423. See "Contracts," Dec. Dig. (Key-No.) § 138; Cent. Dig. §§ 681-700.

5 Ante, p. 428. See, also, Bernard v. Taylor, 23 Or. 416, 31 Pac. 9GS, 18 L. R. A. 859, 37 Am. St. Rep. 693; Hermann v. Charlesworth, [1905] 2 K. B. 123, 74 Law J. K. B. 620, 93 Law T. 284, 54 Wkly. Rep. 22, 21 Times Law R. 368. See "Contracts," Dec. Dig. (Key-No.) § 188; Cent. Dig. §§ 681-700.

6 Ante, p. 425.

7 Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 11 Sup. Ct. 478, 35 L. Ed. 55. And see ante, p. 428. See "Payment," Dec. Dig. (Key-No.) § 82; Cent. Dig. §§ 251,-266.

8 In re Phoenix Life Assurance Co., 2 Johns. & Hem. 411; Pullman's Palace Car Co. v. Central Transp. Co., 171 U. S. 138. 18 S. Ct. 808, 43 L. Ed. 108; Northwestern Union Packet Co. v. Shaw, 37 Wis. 655, 19 Am. Rep. 781. See "Corporations," Dec. Dig. (Key-No.) § 446; Cent. Dig. § 1785; "Payment," Dec. Dig. (Key-No.) § 82; Cent. Dig. §§ 251,-266.

9 Chambers v. Railroad Co., 5 Barn. & Cress. 5S8; In re Wrexham, etc., R. Co., [1899] 1 Ch. 440. See "Corporations," Dec. Dig. (Key-No.) § 446; Cent. Dig. § 1785.

10 Aldrich v. Chemical Nat. Bank, 176 U. S. 618, 20 Sup. Ct. 498, 44 L. Ed. 611. See "Corporations," Dec. Dig. (Key-No.) § 1,1,6; Cent. Dig. § 1785.

11 Woodward, Quasi Cont. 255. Money borrowed by a municipal corpora-