cerning the powers of corporations is found alike in the British and in the American law; the differences between the two consist in the application of this principle. The American law is liberal in admitting implied powers, and its tendency is to regulate the acts, transactions, and contracts of corporations, within the scope of their authority, by the same rules which govern the similar acts and obligations of natural persons. As the general principle formulated above defines the nature and extent of all corporate powers, it must be invoked to determine the validity of contracts made by corporations, and its effect upon such contracts is the only question for our present consideration. In the first place, it is the settled rule that all contracts made by a corporation are prima facie valid, and the burden. of proof lies on the party who impeaches any particular corporate agreement.(1) Contracts and other acts of a corporation, which exceed

N. E. R'y Co. v. Stewart, 3 Macq. 382, 414, per Lord WENSLEYDALE; Shrewsbury, etc., R'y Co. v. North W. R'y Co., 6 H. L. Cas. 113, 124, per Lord Cranworth ; Taylor v. Chichester, etc., R'y Co., L. R. 2 Exch. 356, 384, per BLACKBUrn, J.; Bissell v. Michigan So., etc., R. R., 22 N. Y. 262, 281; Curtis v. Leavitt, 15 N. Y. 157; Buffet v. Troy & B. R. R., 40 N. Y. 168; People v. Utica Ins. Co., 15 Johns. 358; N. Y. Fireman's Ins. Co. v. Sturges, 2 Cow. 675; N. Y. Fireman's Ins. Co. v. Ely, 2 Cow. 699; LeCouteulx v. Buffalo, 33 N. Y. 333; Trustees v. Peaslee, 15 N. H. 330; Downing v. Mt. Washington Road Co., 40 N. H. 230; Fuller v. Plainfield School, 6 Conn. 532; Hood v. N. Y. & N. H. R. R., 22 Conn. 1; Shawmut Bk. v. P. & M. R. R., 31 Vt. 491; Com. v. Erie, etc., R. R., 3 Casey, 352; Penn., etc. Nav. Co. v. Dandridge, 8 G. & J. 248; Whites Bk. v. Toledo Ins., 12 Ohio St. 601; R. R. v. Seeley, 45 Mo. 220; Petersburg v. Metzker, 21 Ill. 205; Whitman Mining Co. v. Baker, 3 Nev. 386; Vandall v. S. S. F. Dock Co., 40 Cal. 83; Miner's Ditch Co. v. Zellerbach, 37 Cal. 543; Bk. of Augusta v. Earle, 13 Peters, 587; Dartmouth Coll. v. Woodward, 4 Wheat. 636.

(1) Shrewsbury, etc., R'y Co. v. North Western R'y Co., 6 H. L. Cas. 113, 124, per Lord CRANWORTH; Scottish North Eastern R'y Co. v. Stewart, 3 Macq, 382, 414; Taylor v. Chichester, etc., R'y Co., L. R. 2 Exch. 356, 384, per BLACKBURN, J., who said: "We are entitled to consider the question to be, not whether the defendants had, by virtue of the acts of incorporation, authority to make the contract, but whether they are by those statutes forbidden to make it." Chautauque County Bk. v. Risley, 19 N. Y. 369; Farmers' Loan & T. Co. v. Clowes, 3 N. Y. 470; DeGroff v. American, etc., Co., 21 N. Y. 124; Yates v. Van De Bogert, 56 N. Y. 526; Akin v. Blanchard, 32 Barb. 527; McFarlan v. Triton Ins. Co., 4 Denio, 392; Farmers' Loan & T. Co. v. Perry, 3 Sandf. Ch. 339; Safford v. Wyckoff, 4 Hill, 442; Fireman's Ins. Co. v. Sturges, 2 Cow. 664; Ex parte Peru Iron Co., 7 Cow. 540; Downing v. Mt. Washington, etc., Co., 40 N. H. 230. Middlesex, etc., Assn. v. Davis, 3 Met. 133; Morris & Essex R. R. v. Sussex R. R., 5 C. E. Green, 542; Allegheny City v. McClurkan, 14 Pa. St. 81; Blake v. Holley, 14 Ind. 383! Charleston, etc., Turnp. Co. v. Willey, 16 Ind. 34; Dana v. Bank of St. Paul, 4. Minn. 385; Underwood v. Newport Lyceum, 5 B. Mon. 129; Talmadge v. N. A. Coal Co., 3 Head, 337; Mitchell v. Rome R. R., 17 Geo. 574; Oxford Iron Co. v. Spradley, 46 Ala. 98.

or are beyond the powers conferred by law upon the entire body acting through any of its instrumentalities, are called, in the modern legal nomenclature, ultra vires. This quality inherent in the corporate act should be carefully distinguished from illegality, and from the mere exceeding the powers conferred upon the corporation officers or other agents acting as agents. Cases of illegality are governed by rules applicable alike to corporations and to individuals; while cases of mere transcending the authority held by the corporate agents, are determined by the doctrines of the law as to agency.(1) A contract is ultra vires where it is not within any of the powers expressly or impliedly conferred upon the corporation by its act or acts of incorporation.(2) The question as to the legal effect of corporate contracts or other acts which are ultra vires, may arise in three kinds of actions, namely: 1, in an action against the corporation, brought by the state or by some public officer, for the purpose of revoking its charter, or inflicting some other penalty on account of its violation of the law restraining its corporate authority; 2, in an action against the corporation, brought by an individual corporator, or sometimes by a public officer, for the express purpose of preventing it and its officers from proceeding in violation of their corporate powers; and 3, in an ordinary action, either legal or equitable, upon the contract itself,

(1) See the remarks of SELDEN, J., in Bissell v. Michigan Southern, etc., R. R., 22 N. Y. 258. This distinction is very important, and a failure to observe it has led to no little confusion in some of the decisions.

(2) Earl of Shrewsbury v. North Staffordshire R'y Co., L. R., 1 Eq. 593; Taylor v. Chichester, etc., R'y Co., L. R. 2 Exch. 356; Bissell v. Southern Mich., etc., R. R., 22 N. Y. 258; Miner's Ditch Co. v. Zellerbach, 37 Cal. 543, 578, per SAWYER, C. J.; Whitney Arms Co. v. Barlow, 63 N. Y. 62, 68, per ALLEN, J., who said: "When acts of corporations are spoken of as ultra vires, it is not intended that they are unlawful (qu. illegal ?), or even such as the corporation cannot perform but merely those which are not within the powers conferred upon the corporation by the act of its creation." C. J. SAWYER, in the California case cited above, describes the term as containing several degrees of incapacity. An act is ultra vires absolutely, when not within the scope of the corporate powers, under any circumstances, or for any purpose. "An act is, also, sometimes said to be ultra vires with reference to the rights of certain parties, when the corporation is not authorized to perform it without their consent; or with reference to some specific purpose, when it is not authorized to perform it for that purpose, although fully within the scope of the general powers of the corporation, with the consent of the parties interested, or for some other purpose." This subdivision and gradation of the incapacity designated by the phrase ultra vires, can, in my opinion, produce only confusion. It is better to confine the term to the absolute sense given to it above. Indeed, where the incapacity depends upon some special circum'stances, and does not exist under others, the act cannot be correctly called ultra vires.

brought by or against the corporation. In the first and second classes of suits there can be no doubt that acts in excess of corporate powers will be made the ground of relief; but we are only concerned with those of the third class. How far the defense of ultra vires will be admitted in actions brought to enforce contracts made by corporations, is a question which has given rise to much discussion and to great conflict of judicial opinion. At one time, the defense was favored under the notion that corporations would thereby be kept within the scope of their legitimate functions. Not only in suits by a corporation, but also in suits against a corporation, and even when the defendant had received and retained all the benefit of the transaction, the defense that the contract was ultra vires was admitted, and made the basis of refusing a recovery.(1)

But, in more recent times, the tendency, both of the English and of the American courts, has been in another direction; and, in one of the very latest American decisions, the doctrine is laid down by the court as now settled that, in actions upon contracts, either by or against corporations, where the defendant has received the benefit resulting from the agreement, it is no defense that the contract was not within or incidental to the chartered powers or the purposes for which the corporation was created; and that the defense of ultra vires, as a general rule, will not prevail for or against a corporation when it will not advance justice, but, on the contrary, will accomplish a legal wrong.(2) If the defendant has received the benefit of the agreement, it would be a glaring injustice to allow a recovery on the contract to be defeated, and the benefit to be retained by sustaining the defense of ultra vires, especially as such defense is a matter which only concerns the corporation in its relations with the state and government. If, however, the contract is wholly executory on both sides; if it consists merely in mutual promises, and neither of the parties has given up or received any property in pursuance of its stipulations, there are not the same reasons for rejecting the defense, and the doctrine of the earlier cases will still apply and prevent a

(1) See the cases cited in the first note under this paragraph.

(2) Whitney Arms Co. v. Barlow, 63 N. Y. 62, 68, 69; and see Ex parte Chippendale, 4 De G., M. & G. 19; In re National, etc., Building Soc., L. R., 5 Ch. 309; In re Cork, etc., Ry. Co., L. R., 4 Ch. 748; Eastern Co. Ry. Co. v. Hawkes, 5 H. L. Cas. 381, per Lord ST. LEONARDS; Bissell v. Mich. So. etc., R. R., 22 N. Y. 258; Miner's Ditch Co. v. Zellerbach, 37 Cal. 543. In the last two cases, the subject is discussed in a most exhaustive manner. Buffet v. Troy and Boston R. R., 40 N. Y. 168.

recovery. In the case of municipal corporations, it is settled that the strict rule should be enforced, and the defense of ultra vires should prevail. The reason of this distinction is found in the different nature and objects of the corporations themselves. Municipal corporations are parts of the government; all their powers are held in trust for the public; the public, the state itself, is interested in all their acts; and the rights of the public, which are paramount over all private rights, are protected by keeping these local governmental bodies within the exact limits of their powers.(1)

The contract must be upon a valuable consideration.

SECTION 57. It is a fundamental principle, that equity will not decree the specific execution of a contract, unless the undertaking to be enforced is founded upon a valuable consideration, moving from the party on whose behalf the performance is sought; in other words, the remedy cannot be obtained for a merely voluntary agreement.(2) The common-law rule is theoretically the same, for it does not allow the seal to take the place of a consideration, but to raise a conclusive presumption of its presence. Equity, disregarding mere forms, and looking at the reality, always requires an actual consideration, and permits the want of it to be shown, notwithstanding the seal, and applies this doctrine to covenants, settlements, and executory contracts ef every description.(3) In most of the states, the common-law

(1) Dillon on Munic. Corpn., §§ 381, 749, and cases cited.

(2) Cochrane v. Willis, 34 Beav. 359; Groves v. Groves, 3 Y. & J. 163; Houghton v. Lees, 1 Jur. (N. S.) 862 (STUART, V. C.); Ord v. Johnston, 1 Jur. (N. S.) 1063 (STUART, V. C.); Shepherd v. Shepherd, 1 Md. Ch. 244; Valser v. Valser, 23 Miss. 378; Minturn v. Seymour, 4 Johns. Ch. 497; Burling v. King, 66 Barb. 633; Curlin v. Hendricks, 35 Tex. 225; Butman v. Porter, 100 Mass. 337 (where the consideration failed). Mutual promises to convey are a sufficient consideration. Murphy v. Rooney, 45 Cal. 78. See Ferry v. Stephens, 66 N. Y. 321, where a contract was enforced, although no price had been, in fact, paid, or was intended to be paid, the vendee having, in the written agreement, promised to pay a certain sum, and the vendor having given a receipt in full for such sum.

(3) Jeffreys v. Jeffreys, Cr. & Ph. 138; Hervey v. Audland, 14 Sim. 531; Meek v. Kettlewell, 1 Ph. 342; 1 Ha. 464. In Ord v. Johnston, 1 Jur. (N. S.) 1063, 1065, V. C. STUART said: "This court never interferes in support of a purely voluntary agreement, or where no consideration emanates from the individual seeking the performance of the agreement." In Houghton v. Lees, 1 Jur. (N. S.)

efficacy of the seal has been abolished by statutes. It is made to create a prima facie presumption only of a valuable consideration,

862, 863, the same able equity judge said: "Of the general doctrine of the court, on this subject, there is no doubt whatever. This court will not perform a voluntary agreement, or, what is more, a voluntary covenant under seal. Want of consideration is a sufficient reason for refusing the assistance of the court." The full doctrine was stated by Lord Ch. COTTENHAM, while refusing to enforce a voluntary settlement, in Jefferys v. Jefferys, Cr. & Ph. 138, 141: "I have no doubt that the court will not execute a voluntary contract; and my impression is, that the principle of the court, to withhold its assistance from a volunteer, applies equally whether he seeks to have the benefit of a contract, a covenant, or a settlement." The same principle is recognized or applied in most of the older cases. See Wycherley v. Wycherley, 2 Eden, 177, per Ld. NORTHINGTON; Fursaker v. Robinson, Prec. in Ch. 475; Peacock v. Monk, 1 Ves. Sen. 133; Underwood v. Hitchcox, 1 Ves. Sen. 280; Griffin v. Nanson, 4 Ves. 344; Penn v. Lord Baltimore, 1 Ves. Sen. 450; Williamson v. Codrington, 1 Ves. Sen. 514; Stapilton v. Stapilton, 1 Atk. 10. In a few of the early cases, before the jurisdiction of equity was clearly settled, it was held that voluntary agreements, if under seal, should be enforced; but these decisions and dicta have long since been overruled; as, for example, see Beard v. Nutthall, 1 Vern. 427; Wiseman v. Roper, 1 Ch. Cas. 84; Tyrrell v. Hope, 2 Atk. 562; Edwards r. Countess of Warwick, 2 P. Wms. 176; Husband v. Pollard, cited in 2 P. Wms. 467. In Estate of Webb, 49 Cal. 541, 545, per CROCKETT, J.: "In such cases the point to be determined is, whether the trust has been perfectly created, that is to say, whether the title has passed and the trust been declared, and the trust being executed, nothing remains for the court, but to enforce it. In discussing this question, the court say, in Stone v. Hackett, 12 Gray, 227: 'It is certainly true that a court of equity will lend no assistance toward perfecting a voluntary contract or agreement for the creation of a trust, nor regard it as bihding, so long as it remains executory. But it is equally true, that if such a contract be executed by a conveyance of property in trust, so that nothing remains to be done by the grantor or donor to complete the transfer of title, the relation of trustee and cestui que trust is deemed to be established, and the equitable rights and interests arising out of the conveyance, though made without consideration, will be enforced in chancery.' The same proposition is announced, and the authorities fully collated and examined, in Kekewich v. Manning, 1 DeG. M. & G. 176; Jones v. Lock, L. R. 1 Ch. 25, and Wason v. Colburn, 99 Mass. 342. *** This was not an executed trust, but at most nothing more than a voluntary, executory agreement to ereate a trust in futuro, and such agreements cannot be enforced in equity." There is, however, a distinction in respect to the consideration, between executed and executory agreements. Executed agreements, although voluntary, may raise a trust which will be enforced in equity. An executory agreement, in order to be enforced, must have a valuable considaration. Even in the first class, it is not the agreement itself which is specifically enforced, and the jurisdiction of equity over them belongs to the doctrine of trusts. See Bunn v. Winthrop. 1 John. Ch. 329; Hayes v. Kershaw, 1 Sandf. Ch. 258; Meek v. Kettlewell, 1 Ph. 342; 1 Ha. 464; McFadden v. Jenkyns, 1 Ha. 462; Fletcher v. Fletcher, 4 Ha. 67; Hill v. Gomme, 1 Beav. 540; Davenport v. Bishop, 2 Y. & C. C. C. 451; Collinson v. Patrick, 2 Keen, 123; Godsal v. Webb, ib. 99; Colyear v. Countess of Mulgrave, ib. 81; Doungsworth v. Blair, 1 Keen, 795; Blakely v. Brady, 2 Dr. & Wal. 311.