§ 472. Some contracts are of such a nature that every one must know them to be beyond the powers of the corporation with which he is dealing, as e. g., a contract by a railway company to buy a thousand gross of green specta such implied powers will not be held to be within the scope of the charter. Curtiss v. Leavitt, 13 N. Y., 157, 158. Unauthorized act by corporation.] Such an act is void, and cannot be enforced either at law or equity. Mutual Life and Fire Ins. Co. v. McKelway, 1 Beasley's Ch., 133: Pennsylvania Co. v. Danbridge, 8 Gill. & John., 248; Pearce v. Madison R. R. Co., 21 How., 441; Haynes v. Corrington, 13 Sm. & Marsh., 411; Little v. O'Brien, 9 Mass., 423; Commercial Bank v. Nolan, 7 How. (Miss.), 508; Littlewort v. Davis, 50 Miss., 403; Matter of Brooklyn R. R. Co., 72 N. Y., 245; Bank of Michigan v. Niles, 1 Doug., 401; aff'g S. C., 1 Walker (Mich.), 99; Brown v. Winnismap Co., 11 Allen, 326. Corporate acts impliedly prohibited.] Any intentional use by a corporation of any of its powers, with the intention of defeating the objects for which it was created, will be prohibited by implication. East Anglican R. R. Co. v. Eastern Counties R. R. Co., 11 Č. B., 775; S. C., 7 Rail. Cas, 150; McGregor v. Dover and Deal R. R. Co., 18 Q. B., 618; S. C., 7 Rail. Cas., 227; Gage v. Newmarket R. R. Co., 18 Q. B., 457; Eastern Counties R. R. Co. v. Hawkes, 5 House of Lds., 347; South Yorkshire R. R. Co. v. Great Northern R. R. Co., 9 Ex., 55, 643; Patchin v. Doolittle, 3 Vt., 457; Common v. Inhabitants of Cambridge, 7 Mass., 158; Parks v. Boston, 8 Pick., 218; Dudley v. Cilley, 5 N. H., 558; Goodwin v. Milton, id., 458; Third Turnpike Co. v. Champnay, 2 id., 199; Knowle's Petition, 22 id., 361; Dudley v. Butler, 10 id., 281; Guernsey v. Edwards, 26 id, 224; Springfield v. Harris, 107 Mass., 532; Townsend v. Hoyle, 20 Conn., 1. Private party contracting with corporation.] A contract may be ultra vires with respect to the officers or stockholders of a corporation, and not so in relation to a private party. Mount v. Shrewsbury R. R. Co., 13 Beav.. 1; Cohen r. Wilkinson, 5 Rail. Cas., 741; Beaman v. Raffard, 7 id., 48, 75; Simpson v. Dennison, 10 Hare, 51. To effect a private party, he must have known, at the time of entering into the agreement, that it was intended for a purpose foreign to the incorporation of the company. Osipee Manuf'g Co. v. Canney, 54 N. H., 295. Act entirely complete on plaintiff's part] It is a well-settled rule that the defense of ultra vires cannot be pleaded by a corporation, in a case where the contract has been fully postponed, and the corporation has had the advantage of the performance. Parish v. Wheeler, 22 N. Y., 494; Silver Lake Bank v. North, 4 Johns. Ch., 370; Palmer v. Lawrence, 3 Sandf, 161; State of Ind. v. Woram, 6 Hill, 37; Chester Glass Co. v. Dewey, 16 Mass., 94; Steamboat Co. v. McCutchen, 13 Pa. St., 13; Steam Nav. Co. v. Weed, 17 Barb., 378; Whitney Arms Co. v. Barlow, 63 N. Y., 62; Chippendale, ex parte, 4 De G. M. & G., 19; In re National Soc., L. R., 5 Ch., 309; In re Corle, etc., R. C., 4 id., 748; Fishmongers Co. v. Robertson, 5 Mc. & G., 131; Allegheny City v. McClurkson, 14 Pa. St., 81; Bradley v. Ballard, 55 Ill., 413; Rock River Bank v. Sherwood, 10 Wis., 230; Farmers' Bank v. Detroit R. R. Co., 27 Wis., 372. Repayment can be compelled.] Where a contract made with a corporation is void, and for that reason the party cannot maintain an action upon it, he may recover what has been paid, when the parties are not in pari delicto. Robinson v. Bland, 2 Burr., 1077; Howson v. Hancock, 8 Term. R., 577; Utica Ins. Co. v. Scott, 19 John., 1; Same v. Cadwell, 3 Wend., 296; Same v. Bloodgood, 4 id., 652; Little v. O'Brien, 9 Mass., 423; Episcopal Soc. v. Episcopal Church, 1 Pick., 372; White v. Franklin Bank, 22 id., 181; Rich v. Errol, 51 N. H., 361; Whitney v. Peay, 24 Ark., 22. Where money has been paid in advance to a corporation, upon a contract which is ultra vires-Held, that the party so paying might recover the same, and that he need make no previous demand. Dill v. Wareham, 7 Metc., 438. Surrender of possession before action brought.] "The cases in which possession must be surrendered before an action for the purchase money can be cles, or a contract by a company formed to make a railway from A. to B. for the construction of a railway from C. to D. Such contracts as these are equally void, whether the question arise between the company and a stranger or between members of the corporation. But the case is quite different as regards many other contracts which may or may not be really entered into for the purposes of the company. Directors might buy iron rails not really for the purposes of the line but for speculation. This contract would be void as against the shareholders, but might be perfectly good in favor of the vendor to the company. In short, the mere fact that a contract by the directors is ultra vires, as between them and the shareholders, does not necessarily disentitle the other party to the contract from suing upon it. To do so, it is further necessary that the party suing should have known at the time of the contract that it was intended for a purpose unconnected with the incorporation of the company. The nature of the contract will show this in some cases: in others it will not.(g) § 473. From this principle it follows that, where a public company is authorized to take land for extraordinary purposes, a person who agrees to sell his land to this company is not bound to see that it is strictly required for such purposes; but if he acts bona fide and without knowledge that the land is not so required, or that the transaction is any misapplication of the funds of the company, the contract is binding in his favor, and may be enforced by him in equity;(h) and the same holds goods where the company, really requiring part of an estate, purchase more than is required. (¿)' Green v. Nixon, 23 Beav., 530; Royal British (g) Per Lord Campbell, C. J., and Erle, J., in Mayor of Norwich v. Norfolk Railway Co., 4 El. & Bl, 397, 415, 443; per Lords Campbell and St. Leonards in Eastern Counties Railway Co. v. Hawkes, 5 H. L. C., 338, 355, 372; Re Contract Corporation, L. R 8 Eq, 14; brought, are those where a contract has been made, and possession has been taken thereunder, and the vendee seeks to rescind the contract on the ground of defective title, or the inability of the vendor to perform the contract on his part, or of some fraudulent representations inducing its execution. In these cases the vendee must offer to restore whatever he has received before he can call upon the vendor to refund the purchase money. Where the contract is void, there is nothing to rescind; no rights are acquired, and there are, in consequence, no rights to restore." McCracken v. City of San Francisco, 16 Cal., 591. 1 In the case of the Southern Life Insurance and Trust Co. v. Lanier, 5 Fla., 110, a contract with a corporation was held to be binding on the parties, although it was an abuse of the corporate powers, for which the corporation was answerable to the government who created it. § 474. Furthermore, a contract will not be void as against a third person dealing bona fide with the corporation, because there may have been the omission to observe some formality required by the terms of its constitution, or because there may have been some irregularity on the part of the directors or officers of the body entering into it on their behalf. Thus, for instance, it has been held to be no defense to an action against a company upon a debenture sealed with their common seal that the borrowing of the money thereby secured was not sanctioned by the resolution of an extraordinary general meeting as required by its deed of settlement.()' (j) Royal British Bank v. Turquand, 5 El. & Bl., 248; 6 id., 327; Agar v. Athenæum Life Assurance Society, 3 C. B. N. S., 725; Grady's Case, 1 De G. J. & S., 488; Prince of Wales- 1 The case of Kean v. Johnson, 1 Stockt. (N. J.), proceeds upon this same principle. There, an incorporated company were engaged in a prosperous undertaking. The majority of stockholders and board of directors wished to sell out, and invest the capital in other enterprises, and the minority came for relief to the court of chancery. It was held, that in cases of joint-stock companies there was a contract between all the stockholders and the board of directors, that the joint funds should be used for certain specified purposes, and that any material deviation was a breach of this contract which would not be permitted. CHAPTER XI. OF THE STATUTE OF FRAUDS AND THEREIN OF PART § 475. By the fourth section of the Statute of Frauds (a) it is, amongst other things, enacted that no action shall be brought whereby to charge any person upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them, "unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." § 476. This section affects not the contract itself, but the right of either party to sue the other upon it. Hence it has been decided that it refers not to the solemnities of the contract, but to the procedure, and consequently that an action will not lie in this country on a contract made in a foreign country, and valid there, which, if made here, would have been incapable of being sued on by reason of this section. (b) This decision, though still law, has not escaped criticism,(c) and is difficult to reconcile with the well settled rule (d) which requires that the writing relied on as taking a case out of the statute should be in existence before action brought; a requirement which would be unreasonable and contrary to the usual practice, if it related only to procedure and did not go to the solemnities of the contract. § 477. It is obvious that in many cases a defense to an action for specific performance may be grounded upon this fourth section of the Statute of Frauds. It is, therefore, proposed to consider (1) how such a defense may be raised, and (2) what constitutes a sufficient agreement or memo (a) 29 Car. II, c. 3. (b) Leroux v. Brown, 12 C. B., 801. (c) Williams v. Wheeler, 8 C. B. N. S., 299, 316; Gibson v. Holland, L. R. 1 C. P., 8. The case is, however, cited as an authority for the proposition that the signature required by the fourth section is matter of procedure in the judgment of the Queen's Bench Division in Jones v. Victoria Graving Dock Co., 2 Q. B. D., 323. (d) Bill v. Bament, 9 M. & W., 36. randum or note of agreement within the meaning of the statute. And as, notwithstanding the express language of the statute, it was held by the court of chancery, and is now the law of the land, that certain circumstances may preclude a defense founded upon the statute, it is necessary to consider a third question, namely, (3) what, according to the principles of equity, takes a contract out of the statute.' 1. How the defense may be raised.' § 478. In order to make intelligible the decisions on the present mode of pleading, it will be necessary to state briefly 1 States in which the contract is void, if not in conformity with the statute.] The English statute (Mercantile Law Amendment Act, 19 and 20 Vic., 1856) has been in substance re-enacted in many of the States. In the following the contract is void, if not in conformity with the provisions of the statute: Alabama Code, 1867, § 1862; California Code, § 1741; Michigan Comp. Laws, 1871, vol. 11, p. 1455, ch. 166, § 8; Minnesota Stats., 1873, vol. 1, p. 692, § 12; Nebraska Stats., 1873, p. 392, ch. 25, § 5; New York Rev. Stats. (6th ed.), vol. 3, p. 141; Oregon Gen. Laws, 1872, ch. 8, § 775; Wisconsin Stats., 1871, vol. 11, ch. 106, § 8. "The statute is not a mere rule of evidence, but a limitation of judicial authority to afford a remedy. It requires that contracts for the sale of lands, in order to be enforced by judicial proceedings, must be substantiated by some writing. This provision of law cannot be dispensed with, merely for the reason that the want of such writing was occasioned by mistake, accident or fraudulent representations, unless some other ingredient enters into the case to give rise to equities stronger than those which stand upon the oral contract alone, which estop the other party from setting up the statute." Wells, J., in Glass v. Hulbert, 102 Mass., 25; Stockbridge Iron Co. v. Hudson Iron Co., id., 45. Assignee's contract to pay original purchase money. The assignee of a bond for title, entered into a contract to pay the purchase money to the original vendor. Held, that it was not a parol promise to pay the debt of another, nor a parol contract for the sale of land, and that it would be specifically enforced. Ford v. Finney, 35 Ga., 258. Securities.] "The words of the statute have never yet been extended by any court beyond securities which are subjects of common sale and barter, and which have a visible and palpable form." Somerly v. Buntin, 118 Mass., 279, per cur. Gray, C. J. Examples of promise within the statute.] A judgment to sell a stock of goods, and, as a part of the transaction, the seller verbally agreed to give the purchaser a three years lease of the store-Held, within the statute, and the action dismissed. Strahl v. Evers, 66 Ill., 77; Schulter v. Bockwinkle, 19 Mo., 674; William and Mary's Col. v. Powell, 12 Gratt., 372; Bryant v. Jamison, 7 Mo., 106. * In order that a bill may be taken advantage of under these circumstances, it must not only show the want of an agreement conformable to the statute of frauds, but it must also omit to make any allegations of part performance. Thus, in the case of Field v. Hutchinson, 1 Beav., 599; S. C., 3 Jur., 795, it is said, "where the want of a signature to an agreement for the sale of lands clearly appears on the bill, the objection may be taken advantage of by general demurrer; but the statements of this bill not being inconsistent with a signature by the party to be charged, and containing allegations of part performance, a general demurrer thereto was overruled.' |