plation of the state when the charter was granted, is evident from several considerations:

(1) The coal, iron and timber, and the manufactured products of the contemplated mills and factories could not be profitably utilized without cheap transportation.

(2) That the company should engage in transportation is indicated. by the original title of the corporation. It was to be a transportation company as well as a mining and manufacturing company.

(3) The power to consolidate with any railroad company, chartered or to be chartered, is expressly conferred.

(4) In case of such consolidation the companies were to exercise the powers of both, and act in the name of either, or in an agreed name. The power did not stop here. There might be a "temporary consolidation" with a railroad company.

There is nothing in this charter to indicate that only a technical consolidation was authorized. On the contrary, the power to make a "temporary consolidation," looking to all the four corners of this charter, clearly implies the power to make such an alliance or bring about such a union and co-operation of interests between the land company and the railway company as shall be to the mutual interest of each, and place both under the same control and management. This could be done by the plan suggested by Mr. Morawetz in section 942, whereby the shares of one company should be held by the other, or by the same persons. This meaning seems reasonable and proper, looking to the objects and purposes of this corporation, and any steps which brought about unity of interest and co-operation in purpose as being legitimate and authorized. Under the power we are of opinion that the Kentucky Union Land Company had the power to acquire the shares in the railway company, and the right to exercise control over the railway company through the ownership and control of those shares.

Having authority to acquire this stock the land company became the sole stockholder in the railway company. Each had express authority to borrow money and issue bonds to carry out the purposes of the organization. The completion of this railway was an object within the scope of its charter powers. It could do so by its own name, or by aiding the railway company to negotiate its securities by guarantying their payment. The guaranty was not for the accommodation of the railway company. The guarantor being the sole shareholder of the railway company, it was a contract for its own benefit, and therefore rested upon a sufficient security. In addition, the land company was a creditor of the railway company, and was to, and did receive the proceeds arising from sale of one-half million of these bonds. The remainder of the money thus raised was to be applied to the building of the railway line. The consideration was sufficient to fully support the contract.

One railway company, under authority of law, leased the line of another for a term of years. The consideration of the lease was an annual rental, and that the lessee company should guaranty the principal

and interest of bonds to be issued by the lessor company. The contract of guaranty was challenged as ultra vires. The lessee company had no express authority to make such contract of guaranty, but did have power to make all such contracts as were usual and proper in the building and operation of the railway, and it likewise had power to lease the line of the lessor company. It was held that the consideration was sufficient and the guaranty valid. The court was of opinion that it was as competent for the company to promise to pay conditionally as to promise to pay absolutely; that the validity of the agreement depended upon the sufficiency of the consideration. The right to take the lease being express, it was a good consideration for the conditional promise involved by a contract guaranty. Low v. Railroad Co., 52 Cal. 53. See, also, Smead v. Railroad Co., 11 Ind. 104, and Zabriskie v. Railroad Co., 23 How. 381, where a general authority to aid a connecting railroad company was held sufficient to authorize the guarantying of the bonds of such road. Also, Mor. Priv. Corp., § 423.

Guaranties held valid.

Note. Power to be surety or guarantor.

1. The general rule is that a corporation has no implied power to become surety or guarantor in a matter not clearly authorized: 1846, Coleman v. R. Co., 10 Beav. 1; 1858, Smead v. R. Co., 11 Ind. 104; 1865, Hall v. Auburn T. P. Co., 27 Cal. 255, 87 Am. Dec. 75; 1895, Northside R. Co. v. Worthington, 8 Texas 562, 53 Am. St. Rep. 778; 1899, Gilbert v. Seatco Mfg. Co., 98 Fed Rep. 208; 1899, M. V. Monarch Co. v. Farmers' & D. Bank, 20 Ky. L. Rep. 1351, 49 S. W. Rep. 317. But it seems that a guaranty may be binding if all the shareholders agree, and no bona fide creditor's rights are affected, though the purpose may be ultra vires. 1898, First National Bank, etc., v. Winchester, 119 Ala. 168, 72 Am. St. Rep. 904, and Murphy v. Ark. & L. L. Imp. Co., supra, p. 950, and note.

2. There are, however, some well-defined exceptions to the general rule: e. g., A corporation holding the securities of another party has the right to dispose of them, and guarantee their payment in the ordinary course of business: 1868, Railroad v. Howard, 7 Wall (74 U. S.) 392; 1876, Arnot v. Erie R. Co., 67 N. Y. 315; 1891, Ellerman v. Chicago J. R. Co., 49 N. J. Eq. 217; 1898, National Bank of Com. v. Allen, 90 Fed. Rep. 545.

A railroad company may guarantee the payment of the bonds and interest of a company whose road it is authorized to lease: 1877, Low v. Railroad Co., 52 Cal. 53, 28 Am. Rep. 629; or the bonds of cities that are lawfully issued to aid in its construction, 1868, Railroad v. Howard, 7 Wall. (74 U. S.) 392; or a note given by a party for its right of way, 1900, Lake St. El. R. Co. v. Carmichael, 184 Ill. 348, 56 N. E. Rep. 372; but a railroad company can not guarantee the profits of a connecting steamship company, 1846, Colman v. Railroad Co., 10 Beav. 1.

A land company-with power to do whatever is necessary to the development of the land-may guarantee the bonds of a railroad company necessary to the success of the land company: 1870, Vandall v. Dock Co., 40 Cal. 83; 1893, Mercantile Trust Co. v. Kizer, 91 Ga. 636; 1894, Marbury v. Kentucky Union Land Co., 62 Fed. Rep. 335. But see, 1895, Northside R. Co. v. Worthington, 88 Texas 562, 53 Am. St. Rep. 778. Such company may also build, or help another corporation build, a saw-mill, 1875, Watts's Appeal, 78 Pa. St. 370; or a bridge, 1894, Fort Worth City Co. v. Smith Bridge Co., 151 U. S. 294, 14 Sup. Ct. Rep. 539.

So a lumber company may be a guarantor for a railroad necessary for its success: 1893, Mercantile Co. v. Kizer, 91 Ga. 636; or for a builder who gets his material from such company, 1896, Wheeler, Osgood, etc., Co. v. Ever

ett, etc., Co., 14 Wash. 630; 1900, Wittmer Lumber Co. v. Rice, 23 Ind. App. 586, 55 N. E. Rep. 868.

Sec. 275. (5) Partnership.

MALLORY v. HANAUR OIL WORKS.1

1888. IN THE SUPREME COURT OF TENNESSEE. 86 Tenn. Rep. 598-609, 20 Am. & E. C. C. 478.

Appeal in error from circuit court of Shelby county.

LURTON, J. This is an action of unlawful detainer, brought by the Hanaur Oil Works, a corporation created under the General Incorporation Act of 1875, and engaged in the manufacture of cottonseed oil at Memphis, Tenn.

The facts which raise the question to be determined are these: In July, 1884, a contract was entered into by and between four corporations engaged in manufacturing cotton-seed oil at Memphis for the formation of what is designated in the agreement as a "combination,” "syndicate," and "partnership." The contracting mills agreed to select a committee, composed of representatives from each corporation, and to turn over to this committee the properties and machinery of each mill, to be managed and operated by this committee, through officers, agents and employes selected by them, for the common benefit, the profits and losses of such operations to be shared in proportions agreed upon. This arrangement was to last one year, but, with consent of all, might be renewed for two additional years, and, as appears, was at the end of first year renewed for two other years, terminating August 1, 1887.

*

The argument here has largely turned upon the correctness of the charge of the circuit judge, who distinctly instructed the jury that the contract between the Hanaur Company and the other four corporations was a contract for a partnership between corporations, and that under the charter of the Hanaur Oil Works it had no power to make such a contract, and that it was, therefore, void, and that it had a right to recover possession of its property, it being withheld solely under and by virtue of an agreement ultra vires.

"A partnership," says Judge Story, "is usually defined to be a voluntary contract between two or more competent persons to place their money, effects, labor and skill, or some or all of them, in lawful commerce or business, with the understanding that there shall be a communion of the profits thereof between them."

Pothier says that "a partnership is a contract whereby two or more persons put, or contract to put, something in common to make a lawful profit in common, and reciprocally engage with each other to render an account thereof." Story Part., § 2.

A careful examination of this agreement discloses every material element to a contract of partnership. The absolute ownership of the 1 Only part of opinion given.

corporate property, the mills, machinery, etc., is not conveyed to the partnership, nor is this necessary. The beneficial use of all such property is surrendered to the common purpose. The provisions for the complete possession, control and use of the properties of the several corporations by the partnership or syndicate is perfect. Nothing is left to the several corporations but the right to receive a share of the profits and participate in the management and control of the consolidated interests as one of the new association. The contract is, both technically and in its essential character, a partnership in so far as it is possible for corporations to form such an association.

It is, however, argued by the learned counsel for appellants that if it be a partnership, that it does not, therefore, follow that it is ultra vires; that such a contract, not being prohibited by law or the charter of the defendant in error, or against public policy, is not void, even if in excess of power expressly conferred; that the business proposed by the contract, being within the purposes of the charter, is, therefore, within the implied powers of the corporation, and not ultra vires. In other words, "that the question is not whether the corporation had, by virtue of the act of incorporation, authority to make the contract, but whether they are by those statutes forbidden to do it." In this doctrine we do not concur. There is, however, respectable authority for the position. A corporation, being an artificial creation, is the very thing it is made by the statute which brings it into being, and nothing more. The extent of its powers are those enumerated in its charter, or implied by fair and natural construction of powers expressly conferred.

The charter is the measure of its powers, and the enumeration thereof implies the exclusion of all others. We are not to look to the charter to see whether the thing done be prohibited, but whether there is authority to do it. These principles we understand to have the support of the great weight of authority in this country, and to have the sanction of the supreme court of the United States. Thomas v. Railroad Co., 101 U. S. 71.

This view of the law has been the one entertained by this court, and clearly and distinctly enforced in an opinion by the present chief justice in the case of Elevator Company v. Memphis and Charleston R. Co., I Pick. 703. The power to enter into a partnership is not expressly or impliedly conferred by our act of 1875, under which the Hanaur Oil Works is incorporated. Neither is such authority within the implied powers of corporations. A partnership and a corporation are incongruous. Such a contract is wholly inconsistent with the scope and tenor of the powers expressly conferred and the duties expressly enjoined upon a corporation, whether it be a strictly business and private corporation or one owing duties to the public, such as a common carrier. In a partnership each member binds the firm when acting within the scope of the business. A corporation must act through its directors or authorized agents, and no individual member can, as such member, bind the corporation.

Now, if a corporation be a member of a partnership it may be bound by any other member of the association, and in so doing he would act, not as an offieer or agent of the corporation, and by virtue of authority received from it, but as a principal in an association in which all are equal, and each capable of binding the society by his acts. The whole policy of the law creating and regulating corporations looks to the exclusive management of the affairs of each corporation by the officers provided for or authorized by its charter. This management must be separate and exclusive, and any arrangement by which the control of the affairs of the corporation should be taken from its stockholders and the authorized officers and agents of the corporation would be hostile to the policy of our general incorporation The decided weight of authority is that a corporation has not the power to enter a partnership, either with other corporations or with individuals. Says Mr. Morawetz: "It seems clear that corporations are not impliedly authorized to enter into partnership with other corporations or individuals. The existence of a partnership not only would interfere with the management of the corporation by its regularly appointed officers, but would impair the authority of the shareholders themselves, and involve the company in new responsibilities through agents over whom it had no control." I Morawetz Corp., § 421; Whittenton Mills v. Upton, 10 Gray 528 (s. c. 71 Am. Dec. 681); Angell & Ames Corp., § 272.

acts.

It is unnecessary to consider this contract as constituting a mere traffic arrangement; for the conclusion already announced that it was an effort to form a partnership, determines that in its scope and effect it sought to accomplish much more than would be understood by the phrase "traffic arrangement."

Affirmed.

Note. Power to enter into partnership.

1. The general rule is that a corporation has no such power, unless expressly authorized: 1831, Sharon Canal Co. v. Fulton Bank, 7 Wend. (N. Y.) 412%; 1858, Whittenton Mills v. Upton, 10 Gray (Mass.) 582, 71 Am. Dec. 681; 1862, Marine Bank v. Ogden, 29 Ill. 248; 1885, Gunn v. Central R. Co., 74 Ga. 509; 1890, People v. North River Sug. R. Co., 121 N. Y. 582, 18 Am. St. Rep. 843, supra, p. 100; 1895, Aurora Bank v. Oliver, 62 Mo. App. 390; 1897, Sabine Tram Co. v. Bancroft, 16 Texas Civ. App. 170, 40 S. W. Rep. 837; 1899, Merchants' Nat'l Bank v. Standard W. Co., 6 Ohio N. P. 264.

2. Exceptions.-Some exceptions have been recognized by the courts. Of course, if expressly authorized there can be no question: 1878, Butler v. Am. Toy Co., 46 Conn. 136. In, 1851, Catskill Bank v. Gray, 14 Barb. (N. Y.) 471, it was held that an iron manufacturing company had implied power to become a partner with an individual. In, 1876, Allen v. Woonsocket Co., 11 R. I. 288, it was held that a corporation with undefined powers and a single shareholder could become a member of a partnership strictly at will. And in 1895, Bates v. Coronado Beach Co., 109 Cal. 160, it was held that a corporation could be a partner, if the management was left entirely to the corporation.

3. Although the corporation exceeds its powers by becoming a partner, it will be liable to the extent of benefits received upon joint_contracts: 1851, Catskill Bank v. Gray, 14 Barb. (N. Y.) 471; 1862, Marine Bank v. Ogden, 29 Ill. 248; 1880, Clarkson v. Erie & N. S. D., 6 Ill. App. 284; 1887, Swift, etc., v. Pacific Mail Steamship Co., 106 N. Y. 206; 1895, Northside R. Co. v. Worth