562; 1 Black (U. S.), 449. The purchase of stock in another railroad company with intent to hold it, and especially, as is admitted by the answer in this case, with intent to use the power thus acquired to secure an interest in the management, either for good or evil, of the road, seems to come exactly within the principles. which we have deduced from an unbroken series of decisions both in England and in this country.

If the Central Railroad Co. may lawfully buy 12,383 shares in this road, it may lawfully buy all the shares, become the owner of the road, and thus, without any grant from the state of Georgia, this company may have power to manage and maintain two railroads from Savannah to the interior of the state. Nay, the same principles precisely which would derive from its charter this power, would authorize it to become the owner of every railroad in the state, and of every other corporation and enterprise in the state, the management of which may in any way affect the interest of the Central Railroad Co. We do not think the stockholders of the Central Railroad Co., by their subscription, bound themselves to any such indefinite and unlimited enterprise. They contracted to give to the majority of the stockholders a control over their funds, for the purpose of making and keeping up and using a railroad from Savannah to Macon, and the appropriations of the capital, or credit, or funds of the company in any other enterprise, against the consent of any of the stockholders, is a violation of the rights of those stockholders, and a court of equity will restrain the company from such an act.

6. Thus far we have considered this question solely in reference to the right of a stockholder to insist upon it that the company shall not violate his rights by compelling him, against his will, to become a partner in an enterprise not contemplated in the contract. But the stockholder has a right to insist upon it, that the funds of the company, in which he has an undivided interest, shall not be used in violation of the public policy of the state. He does not stand like a mere citizen on his rights as a citizen. He is one of the owners of the funds, property, and credit of the incorporation. Its corporate privileges belong to him; at least he has a legal and pecuniary interest in them, and he has a right to refuse to allow them to be used against public policy, and to protect them against the danger of forfeiture by their uses contrary to that policy. It is, therefore, a pertinent question in this case whether it is or is not contrary to public policy that the Central Railroad Co. shall be permitted to obtain such an interest in the Atlantic & Gulf Rail

road as is contemplated by this purchase. All experience has shown that large accumulations of property, in hands likely to keep it intact for a long period, are dangerous to the public weal. Having perpetual succession, any kind of a corporation has peculiar facilities for such accumulation, and most governments have found it necessary to exercise great caution in their grants of corporate powers. Even religious corporations professing, and in the main, truly, nothing but the general good, have proven obnoxious to this objection, so that in England it was long ago found necessary to restrict them in their powers of acquiring real estate. Freed, as such bodies are, from the sure bound to the schemes of individuals the grave they are able to add field to field, and power to power, until they become entirely too strong for that society which is made up of those whose plans are limited by a single life.

There is, too, in this country, a reason for strictly construing charters, and for confining corporations to their powers, that does not exist in any other. Under other forms of government, if a charter be found to have privileges which prove dangerous, it is in the power of the state to alter or repeal the charter. But getting their grants, as most of our corporations do, from the state, they are held to be contracts, and it is not in the power of the state, under the Constitution of the United States, materially to interfere with the grant, however improvident or unwise it may prove to have been. For these reasons it has, in this country as well as in England, ever been considered the very highest public policy to keep a strict watch upon corporations, to confine them within their appointed bounds, and especially to guard against the accumulation of large interests under their control. Without doubt much of the prosperity of this country is due to the large number of corporations which have been created, and especially have we to be thankful for the good effected by railroad companies. But I am strongly impressed with the conviction, that much of their success in developing the resources of the country is due to the very jealousy which has ever held them strictly to their charters, and has constantly been careful to prevent an undue accumulation of interests under one management. The certainty that each stockholder has, that his funds will be applied to known and declared purposes, has made them favorite investments for prudent men, whilst the rivalry which opposing interests engender begets an energy, economy, skill and enterprise that have had much to do with the remarkable progress which such enterprises have made. A colossal enterprise, assured of handsome dividends by the posses

sion of a monopoly, may well rest upon its position, knowing that however the country may suffer from its exactions, its own profits. are secure. It is the rivalry of opposing interests, the struggle for success, nay, even for life, with dangerous opposition, that gives life, enterprise, and success to railroads as to other human undertaking. It has been the conflict with thirty state lines, each with its opposing interests, and with numerous seaboard cities, each seeking to attract the rich outpourings from the great interior that has begotten the mighty net-work of iron which interlaces our extensive territory, and I am convinced that there is no public policy more striking than that which, whilst it fosters every such undertaking, is yet careful ever to keep in view the danger of monopoly, and the good effect of rivalry and conflict between different companies. The Central Railroad is, and has long been, the pride of Georgia. The skill, energy, and prudence with which its affairs have been managed reflect great credit upon the men who have had these affairs in their control, and the state may well be grateful for the success that has followed. Yet we cannot but think it would be a measure fraught with great public evil to give to that company permission to control and manage its great rival, the Atlantic & Gulf Road.

Already has the state empowered the Central Co. to control the Waynesborough, the Southwestern, and the Eatonton and Muscogee roads, making its whole line about six hundred miles in length. But all these are feeding roads of the line from Macon to Savannah, and there is no rivalry between them. The Atlantic & Gulf Railroad has also Savannah for its eastern terminus, whilst its western end strikes the Flint river at Bainbridge, and, connected thus with the Chattahoochee, it opens an active and effective competition with the Central and Southwestern railroads for the trade of our great cotton region. Indeed the admitted facts of this answer show that the very object of the contemplated purchase, the sole motive which prompts it, is to prevent the ruinous competition which the Gulf road has already entered into for the freights of the Flint and Chattahoochee regions.

Even a petty tradesman cannot legally bind another not to carry on a particular business over any large extent of territory; and here is a contract, the object of which is unblushingly avowed to be to so get control of the Atlantic & Gulf Railroad as that its present mode of carrying freights at low rates shall cease, and the very object of the legislature in granting the charter, and becoming itself a large stockholder, be thwarted.

As a matter of course, if the power to make this contract was granted in the charter, the public policy of such a grant would not be a matter for the consideration of the courts; but, as we are clear there is no such grant, we mention it as an additional reason why the rules for the strict construction of the charter should be adhered to, and the courts should be prompt to lend their aid to the complainants, who, as they are stockholders in these roads, have a right to insist upon it that funds and credit in which they have an interest shall not be used to the detriment of the public interests and in violation of the plain policy of the state. See cases quoted above, as to the rights of a corporation and the authority of even a single stockholder to interfere and restrain the company.

X. Power to Make By-Laws.

"It is implied in the charter of every private corporation formed for pecuniary profit of its members, that the majority have power to make reasonable rules and regulations or by-laws for the better government of the company." Childs v. Hudsons Bay Co., 2 P. William, 207. See also Martin v. Nashville Co., 2 Coldw., 418.

"The validity of by-laws prescribed by the majority depends upon the implied agreement of all the shareholders on forming the corporation, and therefore any by-laws enacted by the majority is as binding upon the members as a provision contained in the charter itself." Cummings v. Webster, 43 Me., 192. See also McDermott v. Board, etc., 5 Abb. Pr. (N. Y.) 422; Brick Church v. N. Y., 5 Cowen (N. Y.), 538.

CHAPTER V.

I.. Rights and Obligations Arising under Ultra Vires Contracts. GRAY, J., IN PITTSBURG, ETC. RAILWAY Co. v. KEOKUK BRIDGE Co.

131 United States Reports 371 (1889)

"The doctrine is not that an express power conferred upon a corporation to accomplish certain objects carries with it, by impli→ cation, all the power which might possibly, under given circumstances, be called into exercise to effectuate those objects. The meaning rather is, that it carries with it, by implication, a grant of the right to use all such powers as a natural person might properly and lawfully use to accomplish the same results under similar circumstances. * * * Subject to these and similar limitations (the prohibitions of constitutions and the general principles of the common law), the general rule therefore is, that if the means employed are reasonably adapted to the end for which the corporation was created, they come within its implied or incidental powers, though they may not be specifically designated by the act of incorporation." 4 Thompson, sec. 5641, and cases cited.

"We know of no rule or principle by which an act creating a corporation for certain specific objects or to carry on a particular trade or business is to be strictly construed as prohibitory of all other dealings or transactions not coming within the exact scope of those designated. Undoubtedly the main business of a corporation is to be confined to that class of operations which properly appertain to the general purposes for which its charter was granted. But it may also enter into contracts and engage in transactions which are incidental or auxiliary to its main business, or which may become necessary, expedient or profitable in the care and management of the property which it is authorized to hold under the act by which it was created." Brown v. Winnisimmet Co., II Allen (Mass.), 326.

"The outlines of the doctrine of ultra vires and the reasons on which it rests, have been clearly stated in previous judgments of this court.

"The reasons why a corporation is not liable upon a contract ultra vires, that is to say, beyond the powers conferred upon it by the legislature, and varying from the objects of its creation as declared in the law of its organization, are: First, the interest of