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 has been fully performed on both sides, neither party can take advantage of the fact that it was ultra vires.1 The right of attacking transaction ultra vires, but fully executed, belongs to the state alone.2 Thus, the right of a corporation to hold land can be questioned only by the state, not by a private individual.3 An illustration of several of these propositions is found in a case,4 in which A, who" had subscribed for stock, defended a suit for his subscription on the ground that some of the stock was subscribed for by corporations; that such subscriptions were ultra vires; and that accordingly he could not be held, since the corporation had organized without a complete list of subscribers. The court held that as long as the subscriptions were executory, they were "illegal in the sense that they were ultra vires, and such corporations could make that defense or not at their pleasure";5 yet when fully performed they were absolutely binding. A national bank erected an office building upon realty on which it held a ninety-nine year lease at an annual rental, under a contract whereby the bank was to pay all taxes. Subsequently the bank became insolvent; rent and taxes were in arrears, and the income from the building did not pay fixed charges. Under these circumstances the bank agreed with the lessor to surrender the lease and to turn over the building to him, in consideration of his releasing the bank from all liability under the lease. Thereafter a receiver was appointed for the bank; and he sued the lessor in equity to set aside the lease and the surrender thereof. It was held that he had no such right.6
5 National, etc., Association v. Bank, 181 111. 35; 72 Am. St. Rep. 245; 54 N. E. 619.
6 Chemical National Bank v. Ha-vermale, 120 Cal. 601; 65 Am. St. Rep. 206; 52 Pac. 1071; White v. Bank, 66 S. C. 491; 97 Am. St. Rep. 803; 45 S. E. 94.
7 Boynton v. Gas Light Co., 124 Mass. 197.
1 Brown v. Schleier, 194 U. S. 18; Pennsylvania R. R. Co. v. R. R., 118 U. S. 290; Cincinnati, etc., Co. v. McKeen, 64 Fed. 36; 12 C. C. A. 14; Reorganized Church, etc., v. Church, etc., 60 Fed. 937; Long v. Ry. Co., 91 Ala. 519; 24 Am. St. Rep. 931; 8 So. 706; Bedford Belt Ry. Co. v. McDonald, 17 Ind. App. 492; 60 Am. St. Rep. 172; 46 N. E.
1022; Miller v. Turnpike Co., 109 Ky. 475; 59 S. W. 512; Hennessy v. St. Paul, 54 Minn. 219; 55 N. W. 1123; Manchester, etc., R. R. v. R. R., 66 N. H. 100; 49 Am. St. Rep. 582; 9 L. R. A. 689; 20 Atl. 383; Camden, etc., R. R. Co. v. R. R., 48 N. J. L. 530; 7 Atl. 523; Holmes, etc., Co. v. Metal Co., 127 N. Y. 252; 24 Am. St. Rep. 448; 27 N. E. 831; Parish v. Wheeler, 22 N. Y. 494.
2 Benton v. Elizabeth, 61 N. J. L. 693; 40 Atl. 1132; affirming 61 N. J. L. 411; 39 Atl. 683, 906; Barrow v. Turnpike Co., 9 Humph. (Tenn.) 304; Heiskell v. Chickasaw Lodge, 87 Tenn. 668; 4 L. R. A. 699; 11 S. W. 825; Zinc Carbonate Co. v. Bank, 103 Wis. 125; 74 Am. St, Rep. 845; 79 N. W. 229; see Sec. 1086.