receives of the urgency it imports. A thing may be necessary, very necessary, absolutely or indispensably necessary. To no mind would the same idea be conveyed by these several phrases." In conclusion upon this subject, he says, page 421, same case: "We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."

Now if this be true doctrine in relation to the constitution of the United States, surely it will not be contended that a more stringent rule will be applied in the construction of the powers of a corporation than is applied in the construction of the powers of congress under the constitution of the United States.

To apply these principles, as established by the authorities cited, to the case under consideration. The Hiwassee Railroad Company is chartered to construct a railroad, a thing of itself necessarily involving a heavy expenditure of money; but in addition thereto it is empowered to sue and be sued, to acquire and hold, sell, lease and convey estates, real, personal and mixed, which necessarily involves the power of making contracts for the same. How shall these contracts be made, both for the construction of the road and the purchase of the property? It is argued that the capital stock of the company is the only means provided for the payment, and that no other can be resorted to for that purpose; or, in other words, that it must pay cash for every contract, for that no power is given by which it may contract upon time; for if it may create a debt of necessary consequence, it may create written evidences of that debt, and these may be either promissory notes or bills of exchange. It is true that the capital stock of the company is the source from whence an ultimate payment of the debts of the company must be made; but to hold that a sufficient amount of this stock must always be on hand to pay immediately for every contract made would be destructive of the operations of the company. By the provisions of the charter not more than one-fourth of the stock shall be called for in any one year, and this upon thirty days' notice; and if, within thirty days after such notice, the amount called for be not paid, the company is authorized to take steps against the delinquent stockholders to enforce payment. Now it is obvious that it never was intended that all the stock should be paid in before the company commenced operations. The early completion of the road was a desirable object for commercial purposes, and can it be pretended that the expenditures of the company were to be limited and restricted to the amount of capital actually paid in by the stockhold

60-WIL. CASES.

ers, and that under no circumstances was the company to exceed them? If, upon failure of the means on hand, the stockholders should neglect to pay upon a proper call, are the works to be suspended until such time as payments could be enforced? Are the persons who may have done work for it, and for which they have not been paid, to wait the slow process of the law before they can receive satisfaction? And shall the company not be permitted to use its credit in such emergency? It is so argued for the defendant. This construction of the charter would be ruinous in its consequences. The company might be compelled to suspend all operations at a time when great loss would result from deterioration to unfinished work, and be greatly injured also in its credit.

The restriction contended for is too refined and technical. It might have suited the days of the Year Books, when it was held that a corporation could contract for nothing except under its corporate seal; but it is strange that it should be urged at this day of enlightened jurisprudence, when the substance of things is looked to rather than forms. A corporation is, in the estimation of law, a body created for special purposes, and there is no good reason why it should not, in the execution of these purposes, resort to any means that would be necessary and proper for an individual in executing the same, unless it be prohibited by the terms of its charter or some public law from so doing.

There is no principle which prevents a corporation from contracting debts within the scope of its action; and, as has been observed, if it may contract a debt, it necessarily may make provision for its payment by drawing or indorsing or accepting notes or bills. It is not pretended that this power extends to the drawing, indorsing or accepting of bills or notes generally, and disconnected from the purposes for which the corporation was created.

Judgment reversed.

Note. Power to issue negotiable instruments.

1. Corporations have such power whenever it is a necessary or convenient method of conducting their proper business: 1797, Phelps v. Livingston, 2 Root (Conn.) 495; 1838, Hayward v. Pilgrim Soc., 38 Mass. (21 Pick.) 270; 1848, Stevens v. Hill, 29 Maine 133; 1849, Butts v. Cuthbertson, 6 Ga. 166; 1860, Brown v. Donnell, 49 Maine 421, 77 Am. Dec. 266; 1871, Downer v. Read, 17 Minn. 493; 1873, In re Great West. Tel. Co, 5 Biss. 363, Fed. Cas. 5740; 1875, Watts' Appeal, 78 Pa. St. 370; 1877, Franklin Co. v. Lewiston Inst. for Sav., 68 Maine 43, supra, p. 938; 1882, Wright v. Pipe Line Company, 101 Pa. St. 204; 1889, National Bank v. German Mut., etc., Co., 116 N. Y. 281; 1892, Am. Ex. Nat'l Bank v. Oregon, etc., Co., 55 Fed. Rep. 265; 1896, Farmers' Mut. Ins. Co. v. Meese, 49 Neb. 861; 1896, Kneeland v. Braintree, 167 Mass. 161; 1899, National Loan & Inv. Co. v. Rockland Co., 94 Fed. Rep. 335; 1899, G. V. B. Min. Co. v. First Nat'l Bank, 95 Fed. Rep. 23; 1899, McGarry v. Tanner, etc., 21 Utah 16, 59 Pac. Rep. 93.

But corporations, unless expressly_authorized, have no power to deal in notes or bonds: 1863, Goodrich v. Reynolds, 31 Ill. 490, 83 Am. Dec. 240; 1899, Indiana Bond Co. v. Ogle, 22 Ind. App. 593, 72 Am. St. Rep. 326.

2. As between the original parties to the negotiable instrument, the officer who acts for the corporation must have express or implied authority to bind the corporation, but generally no formal proceedings upon the part of the cor-

poration are necessary: 1897, Blake v. Domestic Mfg. Co., N. J. Eq. 38 Atl. Rep. 241; 1898, Washington Times Co. v. Wilder, 12 App. D. Č. 62; 1898, Dexter Savings Bank v. Friend, 90 Fed. Rep. 703; 1899, Monroe Mercantile Co. v. Arnold, 108 Ga. 449, 34 S. E. Rep. 176; 1899, Porter v. Winona & D. G. Co., 78 Minn. 210, 80 N. W. Rep. 965; 1899, G. V. B. Min. Co. v. First Nat'l Bank, 95 Fed. Rep. 23; 1900, Crawford v. Albany Ice Co., 36 Ore. 535, 60 Pac. Rep. 14.

But if the corporation has power to issue promissory notes for any purpose a bona fide holder for value, with no knowledge of lack of authority of the agent, or of other irregularity, or that it was in fact issued by the corporation for an ultra vires purpose, will be protected: 1825, Ridgway v. Bank, 12 Serg. & R. (Pa.) 256; 1848, McIntire v. Preston, 10 Ill. (5 Gil.) 48; 1869, Monument Nat'l Bank v. Globe Works, 101 Mass. 57; 1886, National Bank v. Young, 41 N. J. Eq. 531; 1889, National Park Bank v. G. A. M. W. & S. Co., 116 N. Y. 281; 1895, Jacob's Pharmacy Co. v. So. B. & T. Co., 97 Ga. 573; 1895, Marshall Nat'l Bank v. O'Neal, 11 Texas Civ. App. 640.

As in other cases, there is much uncertainty as to the extent of the power of the president to bind the corporation by notes issued without express authority. The two following cases illustrate this: 1899, G. V. B. Mining Co. v. First Nat'l Bank, 95 Fed. Rep. 23 (holding that president has implied authority); 1900, Crawford v. Albany Ice Co., 36 Ore. 535, 60 Pac. Rep. 14 (holding that express authority must be shown).

Sec. 271. Same.

BATEMAN v. THE MID WALES RAILWAY COMPANY.1

1866. IN THE COURT OF COMMON PLEAS. 35 L. J. Rep. (C. P.) 205-210, 1 Com. Pleas 499.

The plaintiffs in these actions, as indorsees, sued the defendants, as acceptors of certain bills of exchange; and the defendants pleaded that they did not accept.

The defendants were a railway company, constituted under the 22 & 23 Vict., ch. lxiii. This special act was in the usual form, both as to the powers given to and the restrictions placed on the company, and as to the incorporation of general acts; and there was no difference between the cases, except that in the last case evidence was given of the defendants having actually commenced business.

The bills were directed to the Mid Wales Railway Company, and were accepted in the following form: "Accepted by order of the board of directors, and payable at the Agra & Masterman's Bank, John Wade, Secretary," with the seal of the company affixed under these words. And there was no question but that there was a resolution of the board of directors to the above effect.

At the trial a verdict was entered for the plaintiffs, with leave to the defendants to move to enter a verdict for themselves on the grounds, first, that the defendants had no power by law to accept the bills, and, secondly, that the acceptances were not binding on them, and that even if bills could be accepted by them the bills were not accepted in such a form as to be binding on them.

1 Arguments, and opinions of Erle, C. J., Byles & Keating, JJ., omitted.

Rules nisi were obtained, pursuant to such leave.

MONTAGUE SMITH, J. The plaintiffs as indorsees sue the defendants as acceptors, so that the action is not between the immediate parties to the bills. I think a railway company is not competent to accept bills of exchange. A railway company is incorporated to make and maintain a railway; its powers and resources are limited by the incorporating statutes; but if they may accept bills of exchange, they either may do so to any extent, or there would have to be an inquiry whether the purposes for which the bills were accepted were within their powers in each particular case. I think the legislature did not intend to give them the power. It is admitted that there is no authority in favor of it; and there is a great abundance of authority to show that in the analogous cases of mining, water-works, gas, and other companies, the companies can not draw bills of exchange, though they are more trading companies than a railway company. The first object in the constitution of a railway company is to make a railway, though, it is true, they may, and practically always do become carriers. Corporations for the purposes of trade have the power of issuing bills of exchange as incidental to such trading; but this doctrine only applies where the primary object is trade, buying and selling. In addition to the authorities referred to, there is the distinct authority of various eminent text-writers that such a company as this can not accept a bill of exchange. Amongst others, Mr. J. W. Smith, in his treatise on Mercantile Law, says: "However, it has been considered that a trading corporation may differ from others as to its powers of contracting and its remedies on contracts relating to the, purposes for which it was formed. Thus, such

a corporation may in some cases bind itself by promissory notes and bills of exchange; and it was even held that the Bank of England might without deed appoint an agent for such purposes. But a corporation will not have these extraordinary powers unless the nature of the business in which it is engaged raises a necessary implication of their existence." Now clearly, here there is no express power, nor is there any necessary implication. For these reasons, I am of opinion that the defendants were not competent to accept a bill of exchange; and on the other point I also agree with the rest of the court.

Note. The above case gives the general doctrine in England, but the power to give notes or accept bills of exchange exists "where upon a fair construction of the memorandum and articles of association it appears that it was intended to be conferred." 1866, Peruvian R. v. Thames & M. M. I. Co., 36 L. J. Ch. 864, L. R. 2 Ch. 617. Or where "it is necessary to carry on the business under ordinary circumstances and in the usual way." 1887, In re Cunningham & Co., 36 Ch. Div. 538, 57 L. J. Ch. 169; 1889, Atkin v. Wardle, 61 L. T. 23. This power seems to be implied in purely trading companies. 1869, In re Land Credit Co., L. R. 4 Ch. App. 460; but not in railway (Bateman & Mid Wales, etc., supra), gas (1837, Bramah v. Roberts, 3 Bing. N. C. 963, 32 E. C. L. 404), water-works (1819, Broughton v. Manchester, etc., Co., 3 B. & Ald. 1, 5 E. C. L. 11), or mining companies (1829, Dickinson v. Valpy, 10 B. & C. 128, 21 E. C. L. 63).

Sec. 272. Same. Accommodation paper.

MONUMENT NATIONAL BANK v. GLOBE WORKS.1

1869. IN THE SUPREME JUDICial Court of Massachusetts. ΙΟΙ Mass. Rep. 57-59.

HOAR, J. The single question presented for our decision in this cause, all others which arise upon the report having been waived, is, whether the note of a manufacturing corporation, in the hands of a holder in good faith for value, who took it before maturity, and without any knowledge that the makers had not received the full consideration, can not be enforced against them, because it was in fact made as an accommodation note.

The argument for the defendants takes the ground that to issue an accommodation note is not within the powers conferred upon the corporation; and that, as any persons taking it had notice that it was the note of the corporation, they had notice that it was of no validity unless issued for a purpose within the scope of the corporate powers, and were, therefore, bound to ascertain not only that it was executed by the officer of the corporation who had the general authority to sign the notes which they might lawfully make, but that the purpose for which it was issued was such as the charter authorized them to entertain and execute.

The court are all of opinion that this position is not tenable, and that the defense can not be maintained.

It has long been settled in this commonwealth that a manufacturing corporation has the power to make a negotiable promissory note. Narragansett Bank v. Atlantic Silk Co., 3 Met. 282. And it was held in Bird v. Daggett, 97 Mass. 494, as a just corrollary to that proposition, that such note in the hands of a holder in good faith for value is binding upon the maker, although made as an accommodation note. The question was not discussed, nor the reasons for the decision fully stated in Bird v. Daggett; but it was assumed that the doctrine announced was clear and undoubted law.

The doctrine of ultra vires has been carried much farther in England than the courts in this country have been disposed to extend it; but, with just limitations, the principle can not be questioned, that the limitations to the authority, powers, and liability of a corporation are to be found in the act creating it. And it no doubt follows, as claimed by the learned counsel for the defendants, that when powers are conferred and defined by statute, every one dealing with the corporation is presumed to know the extent of those powers.

But when the transaction is not the exercise of a power not conferred on a corporation, but the abuse of a general power in a particular instance, the abuse not being known to the other contracting party, the doctrine of ultra vires does not apply. As was said by Selden, J., 1 Part of opinion omitted.