where a statute provided that no liability for an amount exceeding five hundred dollars except against the person incurring it, should bind such an association unless reduced to writing and signed by at least two of the managers of the concern,1 a person entering into a contract with it involving a greater amount but signed by only one of the managers has no remedy either at law or in equity; the statutory provisions being equally binding upon courts of equity and law.*

§ 179. Cost-book mining companies.- Mining companies, or cost-book companies as they are called in England, differ from ordinary partnerships in that a member has a right to transfer his interest in the mine at any time, and the transferee may become a member of the association, without the consent and even against the wishes of the other partners; neither does the transfer dissolve the partnership so as to compel a winding up of its affairs. They are governed by many of the rules relating to ordinary partnerships, but also by some peculiar to themselves. For example, the law does not imply any authority either in a member of the association or in its managing agent to bind the company or its members by a contract in the name of the company.' The managing superintendent can bind the company only upon such contracts as are usual and necessary in the ordinary prosecution of the work, unless especially authorized thereto. Each member of a cost-book mining company is generally liable to creditors who have furnished the mine with necessaries for its due working, ordered according to the customary course in such concerns, and this whether the creditors knew at the time of

town Coke Co., Limited, (1889) 39 Fed. Rep. 353; Melting Co. v. Reese, 118 Pa. St. 355; Pearce v. Madison &c. R. Co., 21 How. 443.

1 Pa. Act of June 2, 1874, § 5. 2 Melting Co. v. Reese, 118 Pa. St. 355.

3 Andrews Brothers Co. v. Youngstown Coke Co., (1889) 39 Fed. Rep. 353, holding that a court of equity will not decree a reformation of the instrument so that it may appear to

8

This

crediting the mine that he was a shareholder or not. liability arises, however, from the law of agency and not from the partnership relation of the members. For none of the co-adventurers has, as such, any authority to pledge the credit of the general body for money borrowed for the purposes of the concern. And the fact of his having the general management of the mine, makes no difference, in the absence of evidence of facts from which an implied authority for that purpose can be inferred. Stockholders in mining corporations, organized under the laws of California, there being no subscribed capital stock, are not liable by contract, or by operation of law, to pay to the corporation the nominal par value of their stock, even though such nominal value has not been paid in.*

§ 180. Car-trust associations. A car trust is an association of persons formed, under an instrument in writing, for the purpose of buying, selling and leasing railroad rolling stock." The essential features of the New England Car Trust as stated in a leading Massachusetts case may be taken as illustrating the nature of these organizations. In that case "the members of the car trust were to furnish money for the purchase of the rolling stock, and were to have certificates for the amounts so furnished, providing that the principal sum contributed by each member should be repaid in ten annual instalments, with interest; both principal and interest being payable only out of the rentals received for the rolling stock. Instead of the

also in respect of ditch companies for the sale of water. McConnell v. Denver, 35 Cal. 365. "Car Trust Securities," by Francis Rawle, (1885) 3 Am. Bar Assoc. Rep. 277.

1 Collier on Mines, 93; Word worth's Law of Mining, 193. Cf. Hawkin's Case, 2 Kay & J. 253.

Co., (1885) 140 Mass. 346, 347, per C. Allen, J. "Car Trust Securities," by Francis Rawle, (1885) 8 Am. Bar Assoc. Rep. 277. The questions relating to car trusts generally involve the validity of the conditional contract of lease under which the rolling stock is supplied to the railway

2 Ricketts v. Bennett, 4 M. G. & S. companies as against the mortgagees 686.

3 Ricketts v. Bennett, 4 M. G. & S. 686.

In re South Mountain Consolidated Mining Co., 8 Sawyer C. C. 366; s. c. 14 Fed. Rep. 347.

Ricker v. American Loan & Trust

of the latter; and will be treated in a subsequent chapter. Cf. Central Trust Co. v. Ohio Central R. Co., 36 Fed. Rep. 520; Farmers' Loan & Trust Co. v. Chicago & A. Ry. Co., (1889) 8 Ry. & Corp. L. J. 184.

lease being made to the railroad company directly by the car trust, a plan was adopted by which the car trust delivered the property to the American Loan and Trust Company, as trustee, which trustee issued the certificates to the members of the car trust, and also executed the leases to the railroad company, with provisions for a rental sufficient to meet the above payments of principal and interest, in addition to the expenses, including the taxes. In this manner, the railroad company became bound by its covenants in the leases to make payments which in the course of ten years would pay in full for the rolling stock, so that the rolling stock would become the property of the railroad company at the end of that time. All contracts relating to any business of the car trust, involving liabilities for the payment of money, were to be in writing and made under the direction of the board of managers. The original board of managers was named in the articles of association, but the shareholders were to have power to remove them and to elect others. At all meetings every shareholder was to have one vote for each share of stock owned by him, and provision was made for the transfer of shares, and the association was not to be dissolved by the death of members. Every owner of one or more shares was to be entitled to a proportionate share of the rentals received. The contemplated profits were limited to six per cent. interest on the money advanced. The losses if any must be borne proportionally. This constituted a partnership. There were provisions looking to the purchase of rolling stock from time to time, and to the issue of new certificates to those who should advance the money on the occasion of each purchase, and to the making of a new and separate lease of each lot or series of rolling stock. As such new certificates might be issued to different persons from those who contributed money for the first purchase, it would seem that the holders of each series, or separate issue of shares, would constitute a partnership by themselves under the same general provisions and management." A car-trust association is not a corporation. It is a mere voluntary association; and in States such as Massachusetts, where no intermediate form of organization be

1

1C. Allen, J. in Ricker v. American Loan & Trust Co., (1885) 140 Mass. 346, 347, 348.

tween a corporation and a partnership, like the joint-stock companies of England and some of the United States, are known and recognized, its members must be treated as partners. They can not be regarded as simply co-owners. Yet it is to be distinguished from a partnership in that any member may transfer his shares at pleasure without the consent of the other members, and in that it is not dissolved by the death or withdrawal of any member. The members of an unincorporated railway construction and equipment company can not be held bound upon a contract entered into by its trustees beyond the purposes for which the company was organized,' and the fact that a number of the members have entered into an agreement to authorize the trustees to make a contract of that character does not render them liable upon the contract unless all the members have joined in the authorization. All the members must be individually bound or none."

1 Ricker v. American Loan & Trust Co., (1885) 140 Mass. 346, holding the property of a car trust to be taxable as the personal property of a partnership "in the place where their business is carried on," under Mass. Pub. Stat. ch. 11, § 24.

2 Ricker v. American Loan & Trust Co., (1885) 140 Mass. 346, 349.

32 Lindley on Partnership, (Ewell's ed.) 1085.

4 Roberts' Appeal, (1880) 92 Pa. St. 407, 423.

5 Roberts' Appeal, (1880) 92 Pa. St. 407, 423.

CHAPTER X.

OFFICERS AND AGENTS.

§ 181. Appointment of officers and | § 193. Unauthorized acts of officers

§ 181. Appointment of officers and agents.-The power to appoint agents rests primarily in the body of the corporators unless some particular body within the corporation is legally vested with it. Although boards of directors, managers, etc., are themselves only agents of the corporation,2 they are now usually empowered to appoint most other agents of the corporation even including the president himself. In New York, the presidents of railroad companies are elected by the directors from their own number. The appointment of

1 Angell & Ames on Corp. § 277. 2 Angell & Ames on Corp. § 280. 3 So on the death of the president, it has been held, that the vice president might act in his stead, though that office was not provided for by name in the by-laws, the directors

simply being authorized to create other offices, and they having created that of vice president. Coleman v. West Virginia Oil & Oil Land Co., (1884) 25 W. Va. 148.

4 N. Y. Laws of 1850, ch. 140, § 6.