'Point to the letter of your authority. I abide by my contract, and protect you in the rights and franchises I have given. Abide by your contract, and assume to do no act in disregard of the duties I have imposed, or beyond the authority I have conferred.' The rule of strict construction exists in such a case. But a milder rule applies when a corporation seeks to repudiate a contract into which it has formally entered. It is not seemly for a corporation, any more than for an individual, to make a contract and then break it; to abide by it so long as it is advantageous, and repudiate it when it becomes onerous. The courts may well say to such corporation: 'As you have called it a contract, we will do the same. As you have enjoyed the benefits when it was beneficial, you must bear the burden when it becomes onerous, unless it clearly appears that that which you have assumed to do is beyond your powers.'"'4 SECTION 37. POWERS IMPLIED FROM EXPRESS POWERS. In addition to the powers expressly granted to a corporation it also possesses those powers which are derived from the express powers by necessary implication. In order to derive a power by implication it must appear that such power is necessary to the enjoyment of the specially granted right without which the latter would fail.5 "There are two views which may be taken of the power to purchase and hold the capital stock of other gas companies, as designated in said second clause. Chicago, R. I. & P. Ry. Co. vs. 22. Mt. Washington R. Co., 40 Must it be regarded as an original, independent power, intended to exist exclusively and in addition to the power named in the first clause, or may it be considered as merely ancillary to the other power of maintaining and operating works for the manufacture and sale of gas? If the latter view be correct, the main object for which the gas trust company was formed would be that it might itself maintain and operate works for the manufacture and sale of gas, while the purchase of shares of stock in other companies would be merely a subordinate object, incidental only to the main purpose of the corporate formation. An illustration of this idea may be found in the general law of this State in regard to life insurance companies, which makes it lawful for a life insurance company, organized in the State, to 'invest its funds or accumulations in the stocks of the United States, or in such other stocks or securities as may be approved by the auditor.' The main object of forming such a company is to engage in the business of life insurance, but the power to invest surplus funds in certain stocks is given as an incident to such business. "Can the power to purchase and hold the stock of other gas companies be lawfully exercised by the appellee, as incidental to the main purpose of maintaining and operating works for the manufacture and sale of gas? Corporations can only exercise such powers as may be conferred by the legislative body creating them, either in express terms or by necessary implication; and the implied powers are presumed to exist to enable such bodies to carry out the express powers granted, and to accomplish the purpose of their creation. Railroad Co. vs. Marseilles, 84 Ill., 643; Coke Co. vs. Coke Co., 121 Ill., 530, 13 N. E. Rep., 169. An incidental power is one that is directly and immediately appropriate to the execution of the specific power granted, and not one that has a slight or remote relation to it. Hood vs. Railroad Co., 22 Conn., 1; Franklin Co. vs. Institution, 68 Me., 48. Where a charter, in express terms, confers upon a corporation the power to maintain and operate works for the manufacture and sale of gas, it is not a necessary implication therefrom that the power to purchase stock in other gas companies should also exist. There is no necessary connection between manufacturing gas and buying stocks. If the purpose for which a gas company has been created is to make and sell gas, and operate gas works, the purchase of stock in other gas companies is not necessary to accomplish such purpose. "The right of a corporation to invest in shares of another company cannot be implied, because both companies are engaged in a similar kind of business.' 1 Mlr. Priv. Corp., Sec. 431." • By far the greater portion of the powers of a corporation are implied powers, only a few powers being expressly conferred in most charters. Many illustrations of implied powers derived from express powers could be given. Thus the power to borrow money has been held to be implied from the powers, expressly granted, to receive money on deposit and to loan money.' Banking and manufacturing corporations have the implied power to make negotiable paper. The power to sell will always be implied from the power, either to acquire or to manufacture, etc. SECTION 38. CONTRACTS OF A CORPORATION. The power to contract is sometimes expressly granted to a corporation by its charter. Generally, • People, Ex rel., Peabody vs. Chicago Gas Trust Co., 130 Ill., 268; 22 N. E., 798, 799. Ward vs. Johnson, 95 Ill., 215. however, this is not done, and the power to contract comes to a corporation as an implied power, in which cases this power of contracting is limited to contracts which may be necessary or usual in the course of the business for which it was created, or reasonably incident thereto. The power of contracting is always implied, under these limitations, in the absence of a positive restriction in the charter of the corporation. "A corporation and an individual do not stand upon the same footing in regard to the right of contracting. The latter may make all contracts which in the eye of the law are not inconsistent with the interests of society; whereas the former, being created for a specific purpose, must look to its charter, which is, as it were, the law of its nature, to ascertain the extent of its capacity. It can not only make no contracts forbidden by its charter, but it can only make those which are necessary to effectuate the purposes of its creation.”• Express limitations upon the power of contracting of corporations are sometimes contained in statute or charters. For example, a limit is sometimes placed upon the amount of indebtedness which may be contracted by a corporation. SECTION 39. ULTRA VIRES CONTRACTS. A contract which is beyond the power of the corporation to make is called ultra vires. Under this term are included both acts which are an excess of authority as against the stockholders, and also acts which are prohibited by law. • American and English Ency. of Law, Vol. VII, p. 755.; Green 33 Am. St. Rep., 234; Perkins vs. Portland, etc., R. Co., 47 Me., 573, 74 Am. Dec., 507; Morville vs. American Tract Soc., 123 Mass., 137. Blair vs. Perpetual Ins. Co., 10 Mo., 565. In general, an ultra vires contract of a corporation is void. This point was passed upon by the Supreme Court of the United States in the leading cases of Pearce vs. The Madison and Indianapolis Railroad Company.10 "The rights, duties, and obligations of the defendants are defined in the Acts of the Legislature of Indiana, under which they were organized, and reference must be had to these, to ascertain the validity of their contracts. They empower the defendants respectively, to do all that was necessary to construct and put in operation a railroad between the cities which are named in the acts of incorporation. There was no authority of law to consolidate these corporations, and to place both under the same management, or to subject the capital of the one to answer for the liabilities of the other; and so the courts of Indiana have determined. But in addition to that act of illegality, the managers of these corporations established a steamboat line to run in connection with the railroads, and thereby diverted their capital from the objects contemplated by their charters, and exposed it to perils, for which they afforded no sanction. Now, persons dealing with the managers of a corporation must take notice of the limitations imposed upon their authority by the act of incorporation. Their powers are conceded in consideration of the advantage the public is to receive from their discreet and intelligent employment, and the public have an interest that neither the managers nor stockholders of the corporation shall transcend their authority. In McGregor vs. The Official Manager of the Deal and Dover Railway Co., 16 Eng. L. & Eq., 180, it was con 10 21 Howard, 441. |