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the construction contract to it, together with the admission into the construction company of two officers of the railroad company, was unlawful and vitiated the contract; that although the contract with the construction company to build the road was openly made and reported to the board of directors of the railroad company and by them approved, without any apparent effort at secrecy, and the construction of the road was carried on by the company under such contract for several years; from which facts it might be inferred that the railway stockholders generally were advised of the particulars of the contract, including the fact that two members of the board of directors were interested in it, it did not follow that such contract should be upheld and enforced in a court of equity as against the stockholders. Held, that a ratification of such contract, to be valid, must be by a board of directors, else such ratification would be tainted by the vice of the original contract; that the contract was vitiated to such an extent that the construction company could not be relieved even to the extent that the railroad company had been benefited by the contract. (Citing Marshall v. R. Co., 16 How., 314; Bank of United States v. Owens, 2 Pet., 539; Wight v. Rindskopf, 43 Wis., 314; McWilliams v. Phillips, 57 Mass., 176; Guernsey v. Cook, 120 Mass., 501; Letter v. Alvey, 15 Kan., 157.) Thomas v. Brownsville, etc., R. Co., 1 McC., 394.

§ 989. Power to sue. A corporation has a right to sue in all cases which relate to its business without any resolution by its board of directors authorizing or directing it to sue. But if the suit were brought in the name of the corporation for the benefit of somebody else, it might be necessary, if such action could be maintained at all, to show that there was authority for permitting the third party to use the name of the corporation. Kenton Furnace Railroad & Mfg. Co. v. M'Alpin,* 5 Fed. R., 741.

§ 990. Right of mining company to use water.- A company organized for mining purposes may appropriate to its benefit any water discovered by it in making tunnels and excavations. It may, after reserving so much of such water as is necessary to supply its cwn needs, sell the remainder to any other person or corporation. Another mining company has no right to undermine and stop the first company's supply of water, and will be restrained by injunction from so doing. The fact that the first company was organized for a purpose other than getting water is no defense to its action for an injunction. If the first company has exceeded its powers, only the government can object. It is not available as a defense to trespassers. (Citing Far. & M. Bk. of Mil. v. D. & M. R. R. Co., 17 Wis., 372; Austin Glass Co. v. Dewey, 16 Mass., 94; Whet. M. Co. v. Baker, 3 Nev., 386; Natoma Water & M. Co. v. Clarkin, 14 Cal., 552.) Cole Silver M. Co. v. Virginia, etc., Water Co., 1 Saw., 474.

$ 991. Power to tax.- Directors of a company known as "the proprietors of the half million of acres of land lying south of Lake Erie," under a power conferred to levy a tax on said lands to defray "all necessary expenses of said company," possessed no power to lay a tax to meet a tax imposed by the state of Ohio upon such lands in common with all others in the state. Knowles v. Beaty, 1 McL., 43.

§ 992. Mortgage to directors.- Where lenders of money to a corporation, who took a mortgage upon the property of the corporation to secure their debt, were also directors of the company; and the terms of the contract were sanctioned by the stockholders; and the money loaned was necessary to complete the building for the erection of which the corporation was formed; and the money was applied to effect the purpose for which its was borrowed, the bonds of the corporation which evidenced the debt, and the mortgage which secured it, were held not to be invalid, because the directors became the holders of the bonds and advanced the money. Hotel Co. v. Wade, 7 Otto, 13.

§ 993. Deed in favor of directors. A corporation's deed of land to certain of its directors is void as against its creditors. Cleveland v. Railroad Co.,* 7 Am. Law Reg. (O. S.), 536.

§ 994. Pledge to president. A railway company which was in embarrassed circumstances pledged its earnings to its president, who was invested with its financial management, to secure certain payments of interest advanced by the firm of which he was the head. Held, that such pledge was simply for the security of the president, and that he might apply such earnings to the payment of other debts of the company, if in his judgment it was for the interest of the company so to do. Duncan v. Mobile & Ohio R'y Co., 3 Woods, 577.

§ 995. Adopting by-laws.- Where a statute provides that "the written assent of the holders of two-thirds of the stock, or of two-thirds of the members if there be no capital stock, shall be effectual to adopt a code of by-laws without a meeting for that purpose," the adoption of a by-law is established by records of the corporation showing that the written assent of the requisite number of the stockholders was obtained. In re Collateral L. & S. Bank, 5 Saw., 332. § 996. May be trustee. A corporation may be a trustee if not prohibited. Jones v. Habersham, 3 Woods, 477.

§ 997. May act as salvor.- A wrecking company is not, by the fact of its being incorporated, rendered incapable of being in law a salvor, and of receiving compensation for its services as such. The Camanche, 8 Wall., 462.

§ 998. Confession of judgment in favor of a director.— A resolution by directors, authorizing and directing the solicitor of the company to confess a judgment in favor of one of their number and against the corporation for the amount of his claim sued for, is fraudulent and void. Coons v. Tome,* 9 Fed. R., 532.

$ 939. But where a judgment so confessed represents a bona fide debt, it is not to be treated as a nullity or postponed to a judgment obtained by another creditor against the company. Neither can it be allowed priority over such creditor's judgment. But it is entitled to share pro rata with the other creditor's judgments in the assets of the company available for the payment of its debts. Ibid.

§ 1000. Bonds - Bona fide holders.- If bonds are delivered in payment for work done and material furnished, it is equally as good as if they had been sold for cash; their holders are bona fide holders. Hodder v. Kentucky & Great Eastern R'y Co.,* 7 Fed. R., 793.

§ 1001. Bound by acquiescence. A corporation as well as an individual may be bound by acquiescence in an account rendered. Bradley v. Richardson,* 23 Vt.. 720. See § 840. § 1092. Power to receive notes and securities.- Banks, insurance companies, and other like corporations have the power to take and hold negotiable notes and other securities in the general conduct of their business, and this includes the power to negotiate them. (Citing Hardy v. Merryweather, 14 Ind., 203; McIntyre v. Preston, 5 Gilm., 48; Nichols v. Oliver, 36 N. H., 218; Spear v. Ladd, 11 Mass., 94; Northampton Bank v. Pepoon, 11 Mass., 288.) Alexander v. Horner, 1 McC., 641.

§ 1003. Purchase of land at fraudulent valuation.— Where land is sold to a corporation at a fraudulent overvaluation, the contract of sale may be rescinded and the consideration recovered by the corporation; or it may abide by the contract and recover damages from the perpetrators of the fraud. Foreman v. Bigelow, 4 Cliff., 543.

§ 1094. Establishing branch offices. A corporation known as the President, Directors & Company of the Bank of the United States, incorporated to carry on business at Philadelphia, at which place the president and directors were elected, was authorized to establish offices of discount and deposit at such places as the president and directors should think fit, and commit the management of such offices to such persons as they should think proper. They established an office of deposit and discount at Richmond, in Virginia. The business of the bank at this office was conducted in the name of the corporation, and the president and directors of this office were as much the agents of the corporation as the president and directors doing business at Philadelphia. This corporation was held to be a resident of Virginia with reference to a contract made with the agents of the bank at Richmond. Bank of United States v. McKensie, 2 Marsh., 393.

§ 1005. Usury.- Statutes against usury apply to corporations as well as individuals, though such are not referred to except under the general language of persons. Bank of Alexander v. Mandeville, 1 Cr. C. C., 552.

§ 1006. Loan payable out of earnings.- Where a banking firm, which is the financial agent of a corporation, makes a temporary loan to it to enable it to pay maturing coupons, such loan is a confidential debt, which, with the concurrence of the company, may be paid out of the earnings of the road. Duncan v. Mobile & Ohio R'y Co., 3 Woods, 577.

§ 1007. Firm dealing with a corporation whose president is a member of the firm.-A banking firm, being largely interested in the stock, securities and indebtedness of a railway in failing circumstances, and the head of the firm being the president of the railway and invested with full control of its financial affairs, and the company being unable to pay interest on its coupons, the banking firm arranged to pay, and did pay, the coupons as they matured, and, with the concurrence of the company, held them uncanceled. Held, that, under the circumstances, the banking firm was held to good faith, but that there was nothing in the situation of the parties which made the arrangement an improper one. Ibid.

§ 1008. Liable for wrongs - Ultra vires.- Corporations are liable for every wrong of which they are guilty, and in such cases the doctrine of ultra vires has no application. (Citing Phila. & Balt. R. Co. v. Quigley, 21 How., 209; Green v. London Omnibus Co., 7 C. B. (N. S.), 290; Life & Fire Ins. Co. v. Mechanic Fire Ins. Co., 7 Wend., 31.) Merchants' Bank v. State Bank, 10 Wall., 645.

§ 1009. Corporations are liable for the acts of their servants, while engaged in the business of their employment, in the same manner and to the same extent that individuals are liable under like circumstances. Ibid.

§ 1010. A corporation is liable for a libel published by one of its agents acting within the scope of his employment. Philadelphia, etc., R. Co. v. Quigley, 21 How., 210.

§ 1011. A railway company is not liable for a libel contained in a report of an investigation of the conduct of one of its employees, if such report be made bona fide only to directors of the company. But it would be liable if such report were printed and copies were distributed among members of the corporation and among members of the community. Ibid.

§ 1012. For acts done by agents of a corporation, either in contractu or in delicto, in the course of its business and of their employment, the corporation is responsible, as an individual is responsible under similar circumstances. Ibid.

§ 1013. A water company agreeing to grade its excavations in laying water pipes in a city, "and to become responsible for all damages which may occur by reason of the neglect of their employees in the premises," is liable for an injury occasioned by the negligence of a servant of the company's subcontractor. Water Co. v. Ware, 16 Wall., 566.

§ 1014. An action will lie against a private corporation for malicious prosecution. Copley v. Grover & Baker Sewing Machine Co., 2 Woods, 495.

$ 1015. A corporation is a “person” within the protection of the act of April 20, 1871 (17 U. S. Stat. at Large, 13), declaring "that any person who, under color of any law, statute, ordinance, regulation, custom or usage of any state shall subject, or cause to be subjected, any person within the jurisdiction of the United States to the deprivation of any rights, privileges or immunities secured by the constitution of the United States, shall, any such law, statute, ordinance. regulation, custom or usage to the contrary notwithstanding, be liable to the party injured, in any action at law, suit in equity or other proper proceeding for redress." The fact that persons hold their rights or property under the name of a corporation does not deprive them of the rights and remedies conferred by law and the constitution. Northwestern Fertilizing Co. v. Town of Hyde Park, 3 Biss., 480.

§ 1016. Illegal contracts between railway and telegraph companies.- An agreement by a railroad company not to transport men or materials for any other telegraph company than the one with which the agreement was made at less than the regular rates for passengers and freight, and not to give permission to any such company to erect another line on its lands or roadway, appears to be in opposition to the act of congress of 1866 (14 St., 221) to aid in the construction of telegraph lines, and is, perhaps, on this account, without effect; but such agreement may be eliminated from the contract containing it without impairing its other provisions. Western Union Tel. Co. v. Kansas Pac. R. Co.,* 4 Fed. R., 284. See §§ 807-812. $ 1017. A paragraph in a contract made by a railway company with a telegraph company, providing that the family, private and social messages of the executive officers of the railway shall be transmitted without charge over the lines of the telegraph company may be rescinded by the railway company, although not repudiated for more than thirteen years, during which time it was constantly made available by railway officers and their successors; but rescission will not authorize either the railway company or the telegraph company to appropriate to its own use the joint property of both acquired under the contract without paying therefor. Ibid.

§ 1018. A railroad company which buys a railroad at a foreclosure sale, and ratifies a contract made by the old company with a telegraph company for the construction and maintenance of a telegraph line on the road, cannot repudiate such contract, take possession of the wires and eject the telegraph company without an accounting and settlement. A railroad company cannot give a telegraph company the exclusive privilege of constructing and operating a line of telegraph along the line of the railroad. A contract so to do is void; and should any telegraph company desire to erect a line along the railroad the railway company cannot object thereto. (Citing Western Union Telegraph Company v. American Union Telegraph Company, Supreme Court of Georgia, 1880.) Western Union Tel. Co. v. St. Joseph & Western R'y Co., 1 McC., 568.

§ 1019. A telegraph company contracted with a railroad company for the building and maintenance of a telegraph line. Subsequently the railroad company seized the telegraph line and deprived the telegraph company of the possession, benefit and control of its wires and batteries. A bill was filed for an injunction to restrain the railroad company from preventing the telegraph company from reconnecting the wires and resuming its possession thereof. The contract was to run for twenty-five years, or until 1896, but the charter of the railroad company expired by law in 1877, and it was contended, that, because the contract extended beyond the period fixed for the continuance in existence of the railroad company, it was ultra vires and void. The court refused to decide whether such a contract is void in toto or only void as to that part of the contract which by its terms was to be performed after the expiration of the charter, but held that the contract having been entered into and not being tainted with moral turpitude, and a line of telegraph having been built and operated under it, and a valuable business created in the nine years during which the contract was recognized and executed, it was not the province of either party to declare the contract void, and assume without process and without a settlement to seize the lines and property. Ibid. § 1020. Liability of members.— An article in the by-laws of a corporation which declares that every person dealing with them "disavows having recourse on any pretense whatever to the person or separate property of any present or future member of the company," does not prevent a laborer from recovering a judgment at law against the members of the com

pany with whom he contracted. But a court of equity will restrain him from enforcing such judgment against the person or separate property of the members. Davis v. Beverly, 2 Cr. C. C., 35.

§ 1021. Instituting bankruptcy proceedings.- Article XV of the by-laws of a corporation provided: "In case any stock of the corporation is not represented at any meeting of stockholders, either in person or by proxy, such stock may be voted at such meeting by any director selected by the board of directors for that purpose, and such selection shall be deemed by the stockholders of the corporation a power of attorney for such purpose." At a meeting of shareholders called for the purpose of putting the company into bankruptcy, only fifteen out of two hundred shares were represented, either in person or by proxy, and the vote of the absentees was cast by a person designated by the directors at a previous meeting, and bankruptcy proceedings were authorized. ~Held, that although this by-law might be held invalid and inoperative to give legality to proceedings which savored of fraud, or abuse, or were in violation of the wishes of stockholders, yet the corporation being in fact hopelessly bankrupt and insolvent, it should not be held to be so absolutely void as to totally divest the meeting held under it of the character of a legal meeting of stockholders, and to render its action so nugatory that the proceedings in bankruptcy taken pursuant to its resolution must be pronounced void ab initio. In re Collateral L. & S. Bank, 5 Saw., 335.

§ 1022. A call for a meeting with corporators "to vote upon the proposition to put said bank into bankruptcy" sufficiently states the purpose of the meeting to be to authorize the filing of a petition in bankruptcy. Ibid.

§ 1023. Un ler the provisions of the bankrupt law, requiring that the petition of a corporation to be adjudicated a bankrupt must be “duly authorized by a vote of a majority of the corporators at any legal meeting called for the purpose," held, that this required the holders of a majority of the shares of the capital stock to authorize the filing of the petition. In re Lady Bryan Co., 1 Saw., 351.

§ 1024. When a corporation seeks to avail itself of the provisions of the bankrupt act, it can do so only in the mode prescribed by that act. Ibid.

§ 1025. Where the filing by the secretary of a corporation of a petition to have it adjudicated a bankrupt was unauthorized and void, no subsequent ratification by the corporators can make the proceeding valid, the defect being one of jurisdiction. Ibid.

§ 1026. Miscellaneous.- Under a statute requiring a water company to furnish water without charging, "in case of fire or other great necessity," held, that it was the duty of the water company to furnish water free to the city and county, in case of fire, and also in case it is demanded for irrigating the parks and squares, watering streets, flushing sewers, and in case of any other demand based on the requirements which are incidental to the discharge, by the supervisors, of their duty as local legislators. Hawes v. Contra Costa Water Co.,* 5 Saw., 287.

§ 1027. A corporation authorized by its charter to "saw and vend lumber and manufactures from wood " possesses no authority to invest money in banking shares, nor to issue its promissory notes to pay for such shares. Sumner v. Marcy,* 3 Woodb. & M., 105.

§1028. The charter of a boom company conferred power to erect a boom half way across a river, to be so constructed as to admit the safe passage of rafts, boats and lumber, and not impede the navigation of the river; provided that a free and unobstructed passage shall at all times be kept open. Held, that when the legislature granted this franchise to the corporation, it was on the representation of the grantees, and the understanding of all concerned, that a boom could be kept up which would not necessarily infringe the public right of navigation. So the interference with navigation by a boom erected under the charter will be enjoined, though it appears that a boom could not be erected under the charter without producing such interference. Mason v. Boom Co., 3 Wall. Jr., 256.

§ 1029. A. G. Farwell & Co. were creditors of a railway corporation, whose board of directors and executive committee included Henry N. Farwell, a member of the firm named. The firm's accounts were reported for approval, and the executive committee passed the following votes: (1) That the schedule showing the account of the trustees and the account of A. G. Farwell & Co. was approved, and that the treasurer was directed to settle with the parties on the basis of said items. (2) That the treasurer was instructed to settle the account of A. G. Farwell & Co. upon the following terms: Give four notes of the corporation for the amount due, one for $200,000 on demand, and interest thereon; the others in equal amounts, due April, May and June 1, 1871, and interest added at eight per cent., and place as collateral security to said notes $700,000 of so called "Berdell" bonds. Subsequently the executive committee held another meeting and voted that the treasurer be instructed to draw an order on Baring Brothers for any amount now due, or that may become due, on the $3,000,000 of bonds of the state committed to them for negotiation or sale in favor of A. G. Farwell & Co., said amount drawn for to be collateral to the claims they hold against this

corporation. The board of directors subsequently passed two votes: (1) To approve of the doings of the executive committee shown on their records. Before the second vote was passed the resignation of H. N. Farwell was presented by the clerk. It was not accepted, but was laid upon the table. Subsequently it was voted: (2) That the treasurer be instructed to draw an order on Baring Brothers & Co., in favor of A. G. Farwell & Co., for any amount due to, or that may be in their hands to the credit of, this company, accruing out of any sale that may be made of the scrip delivered to the company by the state under the act of May, 1867, over and above the eighty per cent. sterling on said bonds, such amount when received to be collateral to or in payment of the claims of said A. G. Farwell & Co. against the company. Positive instructions were given to the treasurer to draw the described order, and he executed and delivered to A. G. Farwell & Co. the four promissory notes of the corporation, and also delivered to them the $700,000 in bonds described in the vote. At all these meetings and votes H. N. Farwell was present, although he did not vote or act in relation to the claims of his firm. Held, that, in the opinion of the court, he must be considered to have approved or fully acquiesced in each of these several votes; that these votes were in fraud of the complainants, as assignees of the bankrupt corporation, it being insolvent at the time such votes were made, and that the firm acquired no valid rights under such votes to said bonds or to said assigned fund in the hands of Baring Brothers & Co., and they were perpetually enjoined from setting up any right, title, claim or interest in or to said bonds and fund by virtue of said votes, or either of them. Bradley v. Farwell,* 1 Holmes, 433.

$ 1030. The New Orleans Herald Printing Company bought at a sheriff's sale, on a twelve months' bond, for $20,100, the New Orleans Picayune newspaper and printing establishment, giving as surety upon the bond Joseph Hernandes. The Herald company then conveyed the Picayune establishment to A. M. Holbrook, who agreed to pay the $20,100 bond. A new company, the New Orleans Picayune Printing Company, was then formed. The Herald Company was merged in it, and A. M. Holbrook conveyed to it the Picayune establishment purchased by him. The capital of the new printing company was $30,000, divided into one hundred and twenty shares of $250 each. A. M. Holbrook had sixty-five shares, and Hancock and Walker, both of the old Herald establishment, fifteen and ten shares respectively, those being the number of shares held by them in the Herald company before its merger in the new company. A verbal understanding existed that Hancock was to be managing editor, Walker chief editor, and Holbrook business manager of the new Picayune company, but the charter provided that A. M. Holbrook, Peter St. Armand, R. W. Holbrook, Alexander Walker and E. C. Hancock were to be directors, with power "to adopt such by-laws as may be necessary to manage the company and appoint such officers and clerks as may be required." A. M. Holbrook, St. Armand and R. W. Holbrook, a majority of the directors, then passed a by-law, deviating from the verbal arrangement, in that it authorized the president, A. M. Holbrook, to "organize the various departments of the paper, and employ and discharge all editors and employees, and fix their salaries, and to have the general supervision of all the operations and transactions of the corporation." Both Walker and Hancock dissented from this arrangement, on the ground that it was in violation of the verbal understanding, and Hancock retired at once from the board of directory and from the establishment. Hancock was an able and influential newspaper man, and his defection was a serious drawback to success, and the enterprise eventuated in a failure. This being certain to result, Holbrook announced his inability to pay the bond without selling the Picayune establishment, which he declared it his intention to do, and subsequently did do, through the board of directors, a majority of whom he controlled. The sale was made after Holbrook offered the property to Walker, if he or any of his friends would pay the bond. Mr. Walker being unable to do this, the sale of the Picayune property was made to Governor Warmouth. Subsequently a special meeting of the stockholders, called by the directory, ratified this sale and conveyance, and the dissolution of the corporation. Warmouth afterwards sold the establishment to Holbrook, taking his notes for it, whereupon Hancock, complainant, files his bill to have this sale to Warmouth and to Holbrook set aside on the ground that Holbrook was acting as and with the responsibility of a trustee, and when he purchased the property he held it in trust for complainant Hancock to the extent of his former proportionate interest in the corporation. Held, on the evidence, that the sale by Holbrook to Warmouth and from Warmouth to Holbrook did not appear to be fraudulent and collusive, Holbrook having before such sale fairly offered the property to Walker and his friends, if he or they would pay the indebtedness of which it was the security, and the sale being absolutely necessary to pay the bona fide debt of an insolvent corporation; that under the Revised Statutes (Voorhies edition), section 687 (Acts of 1852, p. 130, section 5), providing that "it shall be lawful for the stockholders of any corporation, at a general meeting convened for that purpose, to make any modification, addition or change in the act of incorporation, or to dissolve it, with three-fourths of the stock represented at such meeting,” the stockholders possessed ample power to appropriate all the property of the corporation to

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