This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If a contract is fully performed by the corporation, so that whatever was to be done in excess of corporate power has been done, the corporation can recover on the contract and the adversary party cannot defend on the ground that the contract was ultra vires.1 Thus a lessee of gas works from a corporation was held liable for rent on the lease during the time for which the lessee used it.2 This was a contract between two corporations; and many authorities hold that part performance of such contract can give it no validity.3 The opposite result from that reached in Bath Gaslight Co. v. daffy was reached in Brunswick, etc., Co. v. Light Co.4 The court said: "We do not doubt that the plaintiff company is entitled to recover a reasonable rent for the time the defendant company actually occupied the works; but do not think the amount can be measured by the ultra vires agreement. We think that in such cases the recovery must be had upon an implied agreement to pay a reasonable rent; and that while the ultra vires agreement may be used as evidence, in the nature of an admission of what is a reasonable rent, it cannot be allowed to govern or control the amount."5 A sub-contract was assigned to a national bank, which was obliged to complete the performance of such contract. In an action by the bank on such contract neither the owner nor the original contractor can set up ultra vires.6 A corporation which has issued accommodation paper may recover on an indemnity mortgage given to protect it in becoming surety.7 An ultra vires loan, made by a corporation,8 as a loan to an officer of the corporation,9 a loan for a period of two years made by a corporation authorized to loan money for one year only,10 or a discount by a safe deposit company of a note,11 may be recovered. A loan to an individual in excess of a twenty-five per cent limit imposed by law, is good at least to such limit.12 Thus, where a national bank made an ultra vires loan on real estate mortgage security, the party receiving the money can not use ultra vires as a defense.13 A corporation which has sold and delivered goods in which it is not authorized by its charter to deal, can recover the con-tract price ;14 and where a corporation made an ultra vires contract to construct a railroad in reliance upon subscriptions, and did so construct it, it can enforce such subscriptions.15 This view is not unanimously entertained, however. Some authori-ties insist that no liability exists by reason of the contract, but only on a quantum meruit. Thus, where a corporation bought stock in another corporation, paid for it and had it transferred, the vendor agreeing to indemnify the vendee against such judgments as might be rendered in suits then pending against the corporation whose stock was sold, it was held that the vendee corporation could not enforce the contract of indemnity.16 At any rate the corporation may recover on quantum meruit for the property received under such contract by the adversary party.17
1 Union Gold Mining Co. v. Bank, 96 U. S. 640; Union National Bank v. Matthews, 98 U. S. 621; Union Water Co. v. Fluming Co., 22 Cal. 620; Eckman v. R. R., 169 111. 312; 38 L. R. A. 750; 48 N. E. 496; Lur-ton v. Building Association, 187 111. 141; 58 N. E. 218; affirming, 87 111. App. 395; Poock v. Association, 71 Ind. 357; Chicago, etc., R. R. v. Derkes, 103 Ind. 520; 3 N. E. 239; Bowditch v. Ins. Co., 141 Mass. 292; 55 Am. Rep. 474; 4 N. E. 798; Mc-Indoe v. St. Louis, 10 Mo. 575; Ash-enbroel Club v. Finlay, 53 Mo. App. 256; Equitable, etc., Association v. Bidwell, 60 Neb. 160; 82 N. W. 384; Same v. Baird. 60 Neb. 173; 82 N. W. 385; Whitney Arms Co. v. Barlow, 63 N. Y. 62; 20 Am. Rep. 504; Woodruff v. Erie Ry. Co., 93 N. Y. 609; Bath Gaslight Co. v. Claffy, 151 N. Y. 24; 36 L. R. A. 664; 45 N. E. 390; Oil Creek, etc., R. R. Co. v. Transportation Co., 83 Pa. St. 160.
2 Bath Gaslight Co. v. Claffy, 151 N. Y. 24; 36 L. R. A. 664; 45 N. E. 390.
3 Oregon, etc., R. R. v. Oregonian, etc., R. R., 130 U. S. 1; Brunswick Gas Light Co. v. Light Co., 85 Me. 532; 35 Am. St. Rep. 385; 27 Atl. 525. See post this section, decisions of U. S. Supreme Court.
4 85 Me. 532; 35 Am. St. Rep. 385; 27 Atl. 525.
5 85 Me. 541.
6 Security National Bank v. Power Co., 117 Wis. 211; 94 N. W. 74.
7 Butterworth. etc.. v. Milling Co., 115 Mich. 1; 72 N. W. 990.
8 Union Water Co. v. Fluming Co.. 22 Cal. 620.
10 Germantown. etc., Co. v. Dhcin,
43 Wis. 420; 28 Am. Rep. 549.
11 Pratt v. Short, 79 N. Y. 437; 35 Am. Rep. 531.
12 McClintock v. Bank, 120 Mo. 127: 24 S. W. 1052.
13 Union National Bank v. Matthews. 98 U. S. 621.
14 Chester Glass Co. v. Dewey, 16 Mass. 94; 8 Am. Dec. 128; Whitney Arms Co. v. Barlow, 63 N. Y. 62; 20 Am. Rep. 504.
15 Chicago, etc.. R. R. v. Derkes, 103 Ind. 520; 3 N. C. 239.