Corporations derive their power from the government which creates them, and if they act beyond the limits of power given them by that government, their acts are at least unwarranted by law and, according to many authorities, absolutely band's credit. Bobs v. Johnson, 125 111. App. 65. A set of "Stoddard's Lectures" was held not necessaries in Shuman v. Steind, 129 Wis. 422, 109 N. W. 74, 7 L. R. A. (N. S.) 1048, 116 Am. St. Rep. 961.
90Supra, Sec.Sec. 243, 265.
91Knox v Bushell, 3 C. B. (N. S.) 334; Paule v. Goding, 2 F.& F. 585.
92Zeigler v. David, 23 Ala. 127; Gilbert's Ex. v. Plant, 18 Ind. 308; Anderson v. Cullen, 18 Duly, 15; Schwarting v. Bislsnd, 4 N. Y. Misc. 534; Marshall v. Perkins, 20 R. I. 34, 37 Atl. 301, 78 Am. St. Rep. 841; Gill v. Read, 5 R. I. 343, 73 Am. Dec. 73.
93Harris v. Lee, 1 P. Wms. 482; Matter of Wood's Est., 1 De G. J. ft 8. 465; Jenner v. Morris, 3 De G.
F. ft J. 45; Dears v. Soutten, L. R. 9 Eq. 151; Kenyan v Farria, 47 Conn. 510, 36 Am. Rep. 86; Reed v. Crissey, 63 Mo. App. 184; Walker v. Simpson, 7 Watts ft S. (Pa.) 83,42 Am. Dec. 216. See, however, Leuppie v. Osbom's Ex., 52 N. J. Eq. 637, 29 Atl. 433, where the court refused to apply the rule to a case where the husband's default was the result of misfortune.
94 Skinner v. Tirrall, 159 Mass. 474, 34 N. E. 692, 21 L. R. A. 673, 38 Am. St. Rep. 447. It is perhaps a fair implication from the decision that the court would not have allowed recovery even though the money had been borrowed on the credit of the husband, but the decision was primarily rested on the ground that the wife borrowed the money on her own credit.
void. It is beyond the scope of this work to enter upon a full discussion of the law of ultra vires, but the effect upon contracts made by a corporation without charter power to enter into such a transaction may be briefly stated. If the contract in question is wholly executory on both sides it will not be enforced.95 It is unnecessary to decide in such cases whether the invalidity is due to lack of power or simply to violation of authority. In the case of contracts which have been executed wholly or partly on either side the distinction becomes important. All jurisdictions agree in allowing some relief to the party which has parted with consideration, but the grounds and the measure of recovery differ. The view which has the support of perhaps a majority of the most authoritative courts is that the contract is absolutely void because the corporation was wholly lacking in capacity to make such a bargain and, consequently, that recovery must be had, on principles of quasi-contract, for the benefit that has been rendered to or by the corporation rather than for what was actually promised.96 A number of American courts, however, refuse to adopt this view and probably with greater justice hold that the contract is not void, that the corporation in fact made it and that it is merely a question of public policy, using the words in a broad sense, whether the contract should be enforced. These courts hold that if the contract has been partly executed on either side, the other party will not be allowed to set up the defence of ultra vires in order to defeat liability on a promise made in return.97
95 Ashbury Ry. Carriage Co. v. Riche, L. R. 7 H. L. 663; Atty.-Gen. v. Gt. Eastern Ry. Co., 5 A. C. 473; Camden, etc., R. R. Co. v. May's Landing, etc., R. R. Co., 48 N. J. L. 530, 7 Atl. 523; Jemison v. Citizens' Sav. Bank, 122 N. Y. 135, 25 N. E. 264, 19 Am. St. Rep. 482. See many decisions collected and discussed in an article by Prof. E. H. Warren, 24 Harv. L. Rev. 534.
96 Central Transportation Co. v. Pullman's Co., 139 U. S. 24, 11 Sup. Ct. 478, 35 L. Ed. 55; Pullman's Co. p. Central Transportation Co., 171
U. S. 138, 18 Sup. Ct. 808, 43 L. Ed. 108; Davis v.. Old Colony R. R. Co., 131 Mesa. 258, 41 Am. St. Rep. 221; Tennessee Ice Co. v. Raine, 107 Tenn. 151, 64 S. W. 29. See many decisions collected and discussed is an article by Prof. E. H. Warren in 23 Harv. L. Rev. 495. See also in regard to a municipal corporation, Shoemaker v. Buffalo Steam Roller Co., 83 N. Y. Misc. 162, 144 N. Y. S. 721.
97 Haims Brewing Co. v. Flannery, 137 111. 309, 27 N. E. 286; Rehberg v. Tontine Surety Co., 131 Mich. 135, 91 N. W. 132; Vought v. Eastern Bldg.
In the early law it was held that a corporation could not contract except under its corporate seal,98 and this rule has persisted in England with some relaxation into the nineteenth century.99 But in the United States "a corporation may bind itself, in a matter within its charter powers, by a writing not under seal to the same extent as an individual may." l
Under the early common law one convicted of a felony was incapable of suing though liable to be sued on a contract; 2 but no such rule prevails generally in America.3 By statute in some States spendthrifts and aged persons may be under guardianship and, if under guardianship, become thereby unable to contract as do insane persons under similar circumstances.4
Assoc., 172 N. Y. 508, 65 N. E. 496, 92 Am. St. Rep. 761. See many decisions collected in 29 Am. ft Eng. Encyc. 67.
98See for the early authorities, 2 2 Harv. L. Rev. 117.
99East London Water Works v. Bailey, 12 Moo. 532, s. o. 4 Biog. 283; Homeraham v. Wolverhampton Water Works Co., 6 Ex 137; Copper Miners v. Fox, 16 Q. B. 229. Cf. Crampton v. Varna Railway Co., L. R. 7 Ch. 562.
1 Green Co. v. Blodgett, 159 111. 169, 42 N. E. 176; Grimng Bros. Co. v. Winfield, 53 Fla. 689, 43 So. 687; Muscatine Water Co. v. Muscatine Lumber Co., 86 Ia. 112, 52 N. W. 108, 39 Am. St. Rep. 284; Speirs v. Union, etc., Co., 174 Mass. 175, 54 N. E. 497; Leinkauf v. Caiman, 110 N. Y. 50, 17 N. E. 389; Merahon, etc., Co. v.
Morris, 148 N. C. 48, 61 S. E. 647. As to the capacity of a corporation to appoint an agent without a seal see infra, Sec. 275.
1Banyetar v. Trussel, Cro. Elis. 516; Harvey v Jacob, 1 B. A Ald. 159.
2See Estate of Nerac, 35 Cal. 392, 95 Am. Dec. 1ll; Coffee v. Haynes, 124 Cal. 661, 67 Pac. 482, 71 Am. St. Rep. 99; Estate of Donnelly, 125 Cal. 417, 68 Pac. 61, 73 Am. St. Rep. 62, in which reference is made to a California statute copied from a New York statute, depriving one who has been imprisoned for life of the capacity to sue, and of all civil rights. See further Platner v. Sherwood, 6 Johns. Ch. 118; Davis v. Duffie, 8 Bosworth, 617.
4Lynch v. Dodge, 130 Mass. 468 (spendthrift).