purchase it, to one Bennett. The lease was made to prevent the property from going into the control of such adverse directorate. Nominally, Bennett was the actual lessee, but there were strong grounds to believe that the real persons represented by him were certain of the directors who made the lease. Held, that it was fraudulent and void and should be canceled. Mahoney Mining Co. v. Bennett,* 5 Saw., 141.

§ 740. Where vendors of a mine were directors of the company which became purchaser of it, they are bound to exercise the utmost good faith in their dealings with the company and co-directors. A more rigorous rule applies than that which obtains between vendor and vendee ordinarily. Emma Silver Mining Co. v. Park, 14 Blatch., 416.

§ 741. Generally the rule is that the directors of a corporation must act in compelling an account and reparation by its ministerial officers. Heath v. Erie R'y Co.,* 8 Blatch., 347.

§ 742. In breaking a contract with the engineer of a company by discharging him, directors act officially and within the scope of their powers, as much as in making such a contract and carrying it into execution. Smith v. Poor,* 3 Ware, 148.

§ 743. The board of trustees of a mining corporation had no power to authorize the secretary to file a petition in bankruptcy on behalf of the corporation, and such filing gave the court no jurisdiction to adjudge the corporation a bankrupt. In re Lady Bryan Co., 1 Saw., 351.

§ 744. The directors of a manufacturing corporation, who have the management and superintendence of its business, and the agents of the corporation engaged in conducting the business, are liable for and may be restrained from manufacturing and selling articles which are an infringement of a patent. Goodyear v. Phelps, 3 Blatch., 91.

§ 745. A transfer of a charter made by directors without authority of stockholders is invalid, and the transferees take nothing. Upton v. Jackson, 1 Flip., 413 (§§ 137–141).

§ 746. Stockholders of an iron company in embarrassed circumstances authorized their directors to effect a loan to be secured by mortgage of the corporate property. These directors were themselves creditors of the company. They held a meeting, but failed to notify the regular secretary of the company to attend, he being also a creditor of the company. They elected one of their number secretary pro tem. They executed in the name of the company a note and mortgage for $15,000 to D. Koehler and C. Bircher, who were to let the company have $1,200 in money, $800 in provisions, and pay the following debts of the company:

Fuhr, Jacob Koehler and Levy were directors of the company. The mortgage was delivered to Jacob Koehler, who represented the mortgagees, neither of whom were present, and who made no advances to the company until some time afterwards. Bircher, the mortgagee, subsequently transferred his entire interest to Koehler and Pfiffner, two of the directors. Held, that this was a security by the directors of their own debts in fraud of other creditors, and void. Koehler v. Black River Falls Iron Co., 2 Black, 717.

§ 747. A director of a corporation is a trustee of its property and assets for its stockholders and creditors, and he cannot equitably deal with such property for his own advantage and to their injury. A mortgage of the corporate property to secure him for liability upon a note upon which the corporation is also liable is invalid. Corbett v. Woodward, 5 Saw., 417. § 748. Powers and liabilities of the president. The general power conferred by a railroad corporation upon its president to borrow money on behalf of the company, in such sums, and for such length of time, and at such rate of interest, as he might think proper; and to purchase iron, rails, locomotives, machinery, etc., for the company on such terms as he might deem advisable; and, in order to carry out these powers and authority, to make, execute and deliver obligations, bills of exchange, contracts and agreements of the company, includes the power to give collaterals as security for money borrowed, or for the payment of a debt incurred by the purchase of iron, etc. Hatch v. Coddington, 5 Otto, 48.

§ 749. Where an insurance corporation have held out their president as authorized to make oral contracts of insurance, no secret limitation of this authority will affect third persons dealing with him without notice of such limitation. Commercial, etc., Ins. Co. v. Union Mut. Ins. Co., 19 How., 318.

§ 750. A corporation may borrow money from its president; and while a contract for a loan made between the president of a corporation and the company is looked upon with suspicion and disfavor by the court, it may be enforced when shown to have been made for the' benefit of the company and to be just. Combination Trust Co. v. Weed,* 2 Fed. R., 24.

§ 751. A corporation borrowed $10,000 from its president and secured payment thereof by delivering to him a number of shares of unissued stock, left with directors of the company to be applied to the advancement of its best interests as they might judge. The president deducted from this $10,000 $1,000 as a commission for negotiating the loan, which was in fact made by a third party, and $1,000 further in payment of previous indebtedness justly due to him. On a bill filed by the company to compel an accounting and to enjoin the president from disposing of said securities, decree that unless the corporation should pay $8,000, with interest thereon from the date of the loan, the injunction should be made to apply only to such securities as should remain unsold after enough had been sold to pay the sum of $8,000 and interest as aforesaid, allowing the lender to proceed and sell to the extent necessary to raise that amount. Ibid.

$752. The president of a corporation occupies a position of trust and confidence and is liable to be called upon to account for and make restitution of any part of the property confided to his management and care which is improperly applied to his own use. (Citing Jackson v. Ludeling. 21 Wall., 616; Twinlick Oil Co. v. Marbury, 1 Otto, 587; Koehler v. Iron Co., 2 Black, 721; Drury v. Cross, 2 Wall., 297; Luxemburg R. Co. v. Maquay, 25 Beav., 586; Cumberland Coal Co. v. Sherman, 30 Barb., 553; Dodge v. Woolsey, 18 How., 331; Hill v. Frayer, 10 Har., 324; Ashurst's Appeal, 10 P. F. Smith, 314.) Ibid.

§ 753. The president of a corporation is not liable in trespass for the infringement of a patent, where he ordered of a car-builder a certain number of cars to be built and delivered containing a certain improvement on which a third person owned a patent, as it cannot be said that he authorized the contractor to use the patent without authority. Lightner v. Brooks, 2 Cliff., 287.

§ 754. The execution of an assignment of a patent by the president of a corporation, held, to carry not only the interest of the corporation, but the individual interest of the president also. Campbell v. James, 17 Blatch., 51.

§ 755. An overdraft of money by the president and secretary of a corporation, acting without authority from directors, may be ratified by resolution of such directors authorizing the president and secretary of the company to execute a note for the amount of the overdraft, and the company would be liable to pay such note. Anglo Californian Bank v. Mahoney Mining Co.,* 5 Saw., 255.

§ 756. The president of a Kentucky railroad company may acknowledge a mortgage made by it in Ohio. (Kelly v. Calhoun, 95 U. S., 710; Martin v. Mobile & Ohio R. Co., 7 Bush, 177; 11 Wall., 476.) Hodder v. Kentucky & Great Eastern R'y Co.,* 7 Fed. R., 793.

§ 757. Authority of agents.-Upon a petition in bankruptcy filed by a corporation, it is sufficient that the petition be verified by an agent of the corporation. Such agent need not be an officer of the corporation. The authority of the agent to act for the corporation should be set forth in the affidavit, or otherwise established. It is not sufficient to state it by way of recital in the affidavit. In re Hanibel,* 9 Ch. Leg. N., 165.

§ 758. If an agent of a company, without authority so to do, borrows money in its name, and the president of the company is informed of such borrowing and the amounts, and a demand is made for payment, and within a reasonable time the company fails to disavow the acts of its agent in borrowing the money, it will be considered as assenting to the loan in its name. Gold Mining Co. v. National Bank, 6 Otto, 644.

§ 759. Where the United States had contracted with the agent of a corporation for the manufacture of certain locks, and the corporation adopted the agent's agreement by manufacturing and delivering a portion of the locks contracted for, it became the agreement of the corporation without reference to precedent authority to the agent. The United States could not after that question the agent's authority. International Co. v. United States,* 13 Ct. Cl., 209.

§ 760. Where the board of directors or the executive committee of a company have full power to make contracts on its behalf, they may authorize any other person, as the agent of the company, to sign such contracts. In re Great Western Tel. Co., 5 Biss., 363.

§ 761. A corporation cannot, in equity, question the authority of its agent to make a contract while it receives the benefit of the contract. W. U. Tel. Co. v. W. & Atl. R. R. Co., 1 Otto, 283.

§ 762. The agents of a corporation may bind it by parol. Fanning v. Gregoire, 16 How.,

533.

$763. The agent of a corporation may in many cases bind it, and subject it to an action of assumpsit. Chesapeake & Ohio Canal Co. v. Knapp, 9 Pet., 565.

§ 764. Where an agent of a corporation has a continuing authority exhibited to him to perform certain acts in behalf of the corporation, persons who deal with the agent before notice of the withdrawal of these powers are not affected by the recall. Hatch v. Coddington, 5 Otto, 48.

§ 765. Where an agent of a corporation had authority to make a contract disposing of certain bonds belonging to the corporation, but which contract was to be inoperative unless the board of directors should, after being advised thereof, ratify and confirm it, it was held that a resolution of the board, sent to the person with whom the agent had contracted, asserting an impossibility to comply with its terms, speaking of the contract as made, and authorizing another agent to procure a surrender of the contract and a return of the bonds, was a recognition of the contract as a binding obligation, and an assertion of a wish to obtain a release from it. Ibid.

§ 766. Liability of officers for debts.- Under a general act, in pursuance of which a banking corporation was created, providing that "the total amount of debts which such associations shall at any time owe, exclusive of property deposited in the bank, shall not exceed three times the amount of the capital stock actually paid in and possessed; and for all excess and all deficits occasioned by the insolvency of such bank, the directors, in the first place, shall be liable in their individual capacity, in the full amount of their real and personal property; and each other stockholder shall thereafter be also liable to the amount of stock which he shall hold in such association, in proportion to his or her amount of stock," it is held that the directors are liable for all excess of debts without regard to the insolvency of the bank; and they are responsible for all deficits, in case of insolvency, without reference to excess of debts incurred. White v. How, 3 McL., 111. See $$ 680–685.

§ 767. Where a law amending the charter of a bank makes the directors responsible for the debts of the bank on its becoming insolvent, it is immaterial whether the debts were incurred before or after the amendatory act was passed. Ibid.

§ 768. In an action on the notes of a bank against the directors thereof, under a law making the directors liable in their individual capacity for all excess of indebtedness over a certain amount, and all deficits occasioned by the insolvency of the bank, it is no defense that the notes were obtained by a third party and fraudulently issued, the plaintiff being a bona fide holder; nor is it a defense that the affairs of the bank have been placed in the hands of a receiver with a view of closing the operations of the bank. Ibid.

§ 769. Frands. At a meeting of the trustees of a bank the secretary was authorized by vote to discharge and release all mortgages belonging to the bank. In recording this vote upon the minute book of the directors, the secretary fraudulently inserted the word “assign between the words "discharge" and "release," and subsequently assigned a note and mortgage to a third person, to whom he gave a certificate to the effect that the vote of the trustees authorized him to "discharge, assign and release all mortgages," etc. Held, that such third person was a bona fide purchaser without notice of the fraud as against the receiver of the bank. A corporation is estopped, as against bona fide purchasers, to prove any fraud or irregularity of its officers when they are acting within the scope of their authority. Whiting v. Wellington, 10 Fed. R., 811.

§ 770. Power as to commercial paper.— An agent who, as agent, signs a note for a loan of money to a company which he represents, cannot be held personally liable on such note to one who discounts knowing such person to be agent, and that the loan is intended for his company. Bradley v. McKee,* 5 Cr. C. C., 298.

§ 771. In the case of business corporations the power to make commercial paper is a necessary incident to the business which the corporation is created to transact, and the usual executive officers of the company are presumed to act within the scope of their authority, and every intendment should be to support the paper given, especially when given by the financial officer of the company. In re Great Western Tel. Co., 5 Biss., 363.

§ 772. Where, according to the by-laws of a company, a promissory note belonging to it can only be indorsed by the secretary, held, that a director of a company and his partner in business would be chargeable with notice of this by-law, and that an indorsement of such promissory note to them by the president of the company would not pass the title thereto. Leavit v. Conn. Peat Co., 6 Blatch., 150.

§ 773. A note was indorsed "E. F. Drake, Presdt.," and transferred and delivered by the president of the Columbus Insurance Company. Held, per Hall, J.: "The usage is universal for the president and cashier of incorporated companies, acting as the executive officers and agents of such companies, to make in their behalf indorsements and transfers of negotiable paper by simply indorsing their names, with the addition of their titles of office. I cannot doubt that such an indorsement is sufficient to charge the corporation under whose authority the indorsement is made, and to transfer the note to the indorsee so that the latter can maintain an action thereon in his own name." (Citing Folger v. Chase, 18 Pick., 63; Brockway v. Allen, 17 Wend., 40; Watervliet Bank v. White, 1 Denio, 603; Babcock v. Beamen, 1 Kern., 200.) State Bank of Ohio v. Fox,* 3 Blatch., 431.

§ 774. The authority of the president and secretary of a mining company to draw and sign checks upon its bank account may be created by the usage of such officers to draw

checks with knowledge of the board of directors; a person taking checks signed by such president or secretary may rightfully presume that they have the necessary authority to sign such checks. Mining Co. v. Anglo Californian Bank,* 14 Otto, 192.

$775. An agreement made by the president and cashier of a United States bank, that the indorser of a promissory note shall not be held liable on his indorsement, is ultra vires of such officers and not binding. It is not the duty of the cashier and president to make such contracts, nor have they power to bind the bank except in the discharge of their ordinary duties. All discounts are made under the authority of the directors, and it is for them to fix any conditions which may be proper in loaning money. The bank would not be liable even in case the assurances to the indorser were made in so specific and direct a manner as to create a personal responsibility on the part of the cashier and president. United States Bank v. Dunn, 6 Pet., 58.

$ 776. The treasurer or manager of a trading corporation may, by the law of Massachusetts, bind the company to the payment of promissory notes made in pursuance of the business of the company, but he has no such authority in respect to notes given for the accommodation of third persons. If, however, a note of the latter kind is held by an indorsee, who took it for value before it was due and without notice, his title is good. (Monument Bank v. Globe Works, 101 Mass., 57.) Ex parte Estabrook,* 2 Low., 547.

$777. Usage may authorize the treasurer of a corporation to bind it by a promissory note. In re Great Western Tel. Co., 5 Biss., 363.

§ 778. Officers chargeable with notice. A director of a corporation is chargeable with knowledge of its insolvency, even though he has no such knowledge in fact. Corbett v. Woodward, 5 Saw., 417.

$779. The president of a corporation, the plaintiff in the case, induced the defendant to subscribe to certain shares of the capital stock of the company under an agreement for the payment of $3,000 in cash, and the execution by defendant of his note for $10,000 in ninety days; said shares to be deposited with plaintiff as collateral to the note, and with the privilege to defendant of renewal, and, within one year, to forfeit the cash paid and the shares of stock, and be discharged of all further obligation on the note. In order to negotiate the note and enable the corporation to realize thereon, plaintiff became the last indorser. The last holder obtained judgment, and the plaintiff, as indorser, was forced to pay one-half of the amount thereof, and now brings suit to recover from the defendant. The court held that what the plaintiff knew as president of the company he knew privately. He knew, consequently, that the note was to be renewed, and that the obligation of the maker was to cease on notice given, and the shares of stock in his hands to be forfeited, whereby the maker of the note (the defendant) was to lose the $3,000 in cash paid by him, and all interest in the shares of stock. Held, also, "if the court looks carefully into the transaction it may be that the plaintiff, in order to raise funds for the corporation, or for his private purposes, disposed of the note, with his indorsement, regardless of the agreement made. He had the shares in his hands as collateral, and subject to forfeiture, and may have been satisfied therewith as sufficient indemnity. If the note had never been negotiated, then, on notice given by the defendant, the $3,000 paid in cash and the shares of stock would have been forfeited to the corporation, and the transaction closed. But the corporation, despite the agreement, set the note afloat, whereby innocent holders for value were protected, but the plaintiff, who was not an innocent holder, and who knew the facts, cannot hold the defendant for what he (the plaintiff) has had to pay through his own agency in this scheme to defeat the rights of the defendant. If the plaintiff acted in this matter. at the outcome, for said corporation, it may or may not be that he has a cause of action against said corporation. He cannot, however, sever his knowledge as president from his private knowledge of what he did as president. He knew the equities, and is chargeable therewith. Lancaster v. Collins,* 2 McC., 352.

VII. POWERS, DUTIES AND LIABILITIES.

SUMMARY - Limited by the charter, $$ 780-786. Power to borrow money, § 787.- Use of seal, § 788.— When acts must be in writing. §§ 789, 795, 797.— Presumptions from acts done, §§ 790, 791.— Existence of charter presumed, § 791.- Acceptance of grants, etc., presumed, 792.- Acts proved by parol, § 793.- Meetings, $ 794.- Provisions of charter directory, § 796. — Power to hold real estate, §§ 798–801.— Compositions with creditors, § 802.— May issue bonds to contractors, 803.- Issue of irredeemable bonds, § 804.- Loan of money on note, $ 805.- Disabling contracts, §§ 806, 825.- Lease of telegraph line, § 807812. Contracts against public policy, $ 806, 813.- Contract to transmit messages without charge, § 813, 819.— Assigning right to construct telegraph line, § 814.— Telegraph

lines acquired under an illegal contract, § 815.- Special advantages to an individual, § 816.-Duty to maintain telegraph, § 817.— Grant accepted with conditions, § 818.— Purchased railway subject to mortgage, § 820.- Power to mortgage, § 821.- Power to purchase railroad, § 822.- Ratification of lease, § 823.- Compensation for unexpired part of railway lease, § 824.- Ultra vires act cannot be validated, § 826.- Power to sell or lease road, $$ 827, 828.- Power of manufacturing company to lease, § 829.— Consolidation, §§ 830– 832.-Corporate capacity of plaintiff may be attacked, when, § 833.- Power to receive tolls, SS 834-839.- May be estopped by silence, § 840.- Power to guaranty bonds, §§ 840, 841.- Acceptance of powers conferred, § 842.

§ 780. Corporations created by statute depend for their powers and the proper mode of exercising them upon the terms and true construction of the statute itself. Bank of United States v. Dandridge, §§ 843-854. See § 932.

§ 781. The powers of a corporation are such as the charter creating it confers, expressly or by necessary implication. American Union Telegraph Co. v. Union Pac. R'y Co., §§ 875–881; Thomas v. Railroad Co., §§ 908-914.

§ 782. A corporation can only act in the manner indicated in its charter; anything absolutely prohibited by its charter, if attempted to be done, is a nullity. Russell v. Topping, $$ 855-861.

§ 783. Corporate powers are strictly limited to those conferred by the charter, especially where they are in derogation of individual rights. Beaty v. Knowler, §§ 862–866.

§ 784. A corporation created by statute is a mere creature of the law and can exercise no powers except those which the law confers upon it or which are incident to its existence. Perrine v. Chesapeake & Delaware Canal Co., § 921-925.

§ 785. An averment that a corporation has power to execute a contract must be considered in connection with the charter of the company, from whence all its power to contract is derived. Western Union Tel. Co. v. Union Pac. R. Co., §§ 884-889.

§ 786. Any ambiguity in the terms of the grant must operate against the corporation and in favor of the public. The corporation cannot claim anything not clearly given by the law. Perrine v. Chesapeake & Delaware Canal Co., §§ 921-925.

§ 787. Express power to borrow money is not necessary, for that is implied in the creation of all business corporations. Branch v. Atlantic & T. R. Co., §§ 901-907. See § 957.

§ 788. In ancient times corporations could do nothing except by deed under their common seal. Now, however, they can do many things by agents duly appointed and authorized by votes and by-laws to act as such. Bank of United States v. Dandridge, §§ 843-854. See S$ 1038, 1069.

§ 789. Unless the general law or the special statute creating the corporation requires that particular acts of the corporation be evidenced by writings, written proof of such acts is not necessary. Ibid.

§ 790. The acts of artificial persons confer the same presumption as the acts of natural persons. Each confers presumptions, from acts done, of what must have preceded them as matters of right or matters of duty. Ibid.

§ 791. The most vital acts and incidents of a corporation may depend upon presumption. Even the existence of a charter will sometimes be presumed. Ibid.

§ 792. The acceptance and assent of a corporation to grants and deeds beneficial to it will be presumed as in the case of natural persons. Ibid.

§ 793. Acts of a corporation not recorded may be established by parol proofs and by presumptive proof. Ibid.

§ 794. Under the charter of the Bank of the United States, the directors were a body of agents, and their meetings did not constitute meetings of the corporation. Ibid.

§ 795. The directors of a bank were required, as a board, to approve of the bond of its cashier. They were required to keep books, which should disclose the general state of the bank's affairs, but it was not in terms required that their approval of the cashier's bond should be in writing or entered of record. This matter was left to the general discretion of the corporation and of the directors. Held, that the approval of such cashier's bond need not be shown by writing or record, but might be proved by secondary evidence. Ibid.

796. Where the provisions in a charter or by-law of a corporation are merely directory, third persons cannot take advantage of an omission. Ibid.

$797. The acts of a single authorized agent, acting within the scope of his authority, will bind his principal, whether such principal be a natural or an artificial person, although there be no written minutes of the act. The rule is the same with reference to the acts of a board of directors. Ibid.

§ 798. A corporation at common law may purchase, hold and convey real property. Russell v. Topping, §§ 855-861. See §§ 962, 965.