2. Public policy: corporations formed for special Powers must not be used to defeat important as being a ratification by all the partners of that which if any one of them dissented would not be the act of the firm for although the corporate body of which they are members is in many respects different from any ordinary partnership, it is treated, and justly treated, as a partnership for this purpose. It appears, then, that the unanimous assent of the members will remove all objections founded on the principles of partnership, and will so far leave the corporation in full possession of its common law powers. There are nevertheless many transactions which even the unanimous will of all the members cannot make binding as corporate acts. For the reasons which determine this we must seek farther. 2. Most corporations established in modern times by special Acts of Parliament have been established expressly for special purposes the fulfilment of which is considered to be for the benefit of the public as well as of the propurposes. prietors of the undertaking, and for this reason they are armed with extraordinary powers and privileges. Whatever a corporation may be capable of doing at common purposes law, there is no doubt that unusual powers given by the poration. Legislature for a special purpose must be employed only for that purpose: if Parliament empowers either natural persons or a corporation to take J. S.'s lands for a railway, J. S. is not bound to let them take it for a factory or to let them take an excessive quantity of land on purpose to resell it at a profit (i). If Parliament confers immunity for of incor (i) See Galloway v. Mayor of London, L. R. 1 H. L. at p. 43, Lord Carington v. Wycombe Ry. Co. 3 Ch. 377, 381. Nor may a company hold regattas or let out pleasure-boats to the inconvenience of the former owner on a piece of water acquired by them under their Act for a reservoir: Bostock v. N. Staffordshire Ry. Co. 3 Sm. & G. 283, 292; nor alienate land similarly acquired except for purposes authorized by the Act: Mulliner v. Midland Ry. Co. 11 Ch. D. 611, 622. But a statutory corporation acquiring property takes it with all its rights and incidents as against strangers, subject only to the duty of exercising those rights in good faith with a view to the objects of incorporation: Swindon Waterworks Co. v. Wilts and Berks Canal Navigation Co. L. R. 7 H L. 697, 704, 710; Bonner v. G. W. R. Co., C. A., 24 Ch. D. 1; and a corporation cannot bind itself not the obstruction of a navigable river by building a bridge at a specified place that will be no excuse for obstructing it in the like manner elsewhere. Moreover we cannot stop here. It is impossible to say that an incorporation for special objects and with special powers gives a restricted right of using those powers, but leaves the use of ordinary corporate powers without any restriction. The possession of extraordinary powers puts the corporation for almost all purposes and in almost all transactions in a wholly different position from that which it would have held without them; and apart from the actual exercise of them it may do many things which it was otherwise legally competent to do, but which without their existence it could practically never have done. Any substantial departure from the purposes contemplated by the Legislature, whether involving on the face of it a misapplication of special powers or not, would defeat the expectations and objects with which those powers were given. When Parliament, in the public interest and in consideration of a presumed benefit to the public, confers extraordinary powers, it must be taken in the same interest to forbid the doing of that which will tend to defeat its policy in conferring them; and to forbid in the sense not only of attaching penal consequences to such acts when done, but of making them wholly void if it is attempted to do them. Accordingly contracts of railway companies and corporations of a like public nature which can be seen to import a substantial contravention of the policy of the incorporating Acts are held by the courts to be void, and are often spoken of as mala prohibita, and illegal in the same sense that a contract of a natural person to do anything contrary to the provisions of an Act of Parliament is illegal (k). Others prefer to say that the to use in the future special powers which have presumably been conferred to be used for the public good: Ayr Harbour Trustees v. Oswald, 8 App. Ca. 623. (k) Blackburn, J. in Taylor v. Chichester & Midhurst Ry. Co. L. R. 2 Ex. 379; and (Brett and Grove, JJ. concurring) in Riche v. Ashbury Ry. Carriage Co. L. R. 9 Ex. 262, 266; Lord Hatherley, s. c. nom. Ashbury Ry. Carriage Co. v. Riche, L. R. 7 H. L. at p. 689. Interest of the public as investors. Legislature, acting indeed on motives of public policy, has simply disabled the corporation from doing acts of this class; "to regard the case as one of incapacity to contract rather than of illegality, and the corporation as if it were non-existent for the purpose of such contracts" (1). The difference, however, is but a verbal one, and both modes of expression have their convenience. The former seems appropriate in such a case as that where it was decided that the agreement of a third person to procure a company to do something foreign to its proper purposes is illegal and void (m). There is another consideration of a somewhat similar kind which applies equally to what may be called public companies in a special sense-i.e., such as are invested with special powers for carrying out defined objects of public interest-and ordinary joint-stock companies which have no such powers. The provisions for limited liability, and for the easy transfer of shares in both sorts of companies must be considered, in their modern form and extent at least, as a statutory privilege. These provisions also invest the companies with a certain public character and interest quite apart from the nature of their particular objects in each case, but derived from the fact that they do Buyers of professedly exist for particular objects. By far the greater part of their capital represents the money of shareholders who have bought shares in the market without any intention of taking an active part in the management of the concern, but on the faith that they know in what sort of pany have adventure they are investing their money, and that the shares in market and per sons giving credit to the com (1) Archibald, J. (Keating and Quain, JJ. concurring), L. R. 9 Ex. 293; Lord Cairns, L. R. 7 H. L. at p. 672; Lord Selborne, ib. 694. And Bramwell, L. J., rather strongly disapproves of calling such acts illegal, pointing out that if they were properly so called there would have been some means of restraining them in a court of common law at the instance of the Crown: A. G. v. G. E. Ry. Co. 11 Ch. D. at pp. 501-3. (m) McGregor v. Dover & Deal Ry. Co. 18 Q. B. 618, 22 L. J. Q. B. 69. See per Erle, J., in Mayor of Norwich v. Norfolk Ry. Co. 4 E. & B. 397, 24 L. J. Q. B. 105. a right to assume that to. company's funds are not being and will not be applied to other objects than those set forth in its constitution as de- the clared by the Act of incorporation, memorandum of associa- company's professed tion, or the like. This is not a mere repetition of the ob- objects are jections grounded on partnership law; the incoming share- adhered holder may protect himself for the future, but the mischief may be done or doing at the time of the purchase: and besides it may fairly be said that persons other than shareholders deal with the company on the faith of its adhering to its defined objects. They are entitled to "know that they are dealing with persons who can only devote their means to a given class of objects, and who are prohibited from devoting their means to any other purpose" (n). The assent of all those who are shareholders at a given time will of course bind them individually, but leaves this difficulty untouched (o). If I buy shares in a company which professes to make railway plant in England I have a right to assume that its funds are not pledged to pay for making a railway in Spain or Belgium, and it is the same if dealing with it as a stranger I lend money or otherwise give credit to it. Accordingly the provisions of the Companies Act, 1862, are to be considered as having been enacted in the interests of "in the first place, those who might become shareholders in succession to the persons who were shareholders for the time being; and secondly, the outside public, and more particularly those who might be creditors of companies of this kind" (p). The House of Lords has unanimously decided (after an equal division of opinion in the Court of Exchequer Chamber) that by the general scheme and on the true construction of the Act a company registered under it is forbidden to enter, even with the unanimous assent of the shareholders for the time being, into a contract foreign to its objects as defined in the memorandum of association (9). (n) Lord Hatherley, L. R. 7 H. L. at p. 684. (9) See L. R. 9 Ex. 270, 291. (p) Lord Cairns, L. R. 7 H. L. at p. 667. (q) Ashbury Ry. Carriage & Iron Inability of corpo- The diffi culty is partly formal. The reader is referred to the Appendix (r) for a selection of authorities showing how the doctrine of corporate powers here given in outline has gradually been worked out. It is not proposed to enter on any further discussion of the particular contracts which particular corporate bodies have been held incapable of making. One class of contracts, however, is in a somewhat peculiar position in this respect, and requires a little separate consideration. We mean the contracts expressed in negotiable instruments and governed by the law merchant. It is said and truly said that as a general rule a corporation cannot bind itself by a negotiable instrument (s). The origin and meaning of the rule are easily misapprehended. At first sight it looks like an obvious deduction from the doctrine of limited special capacities. If a corporation can only make such contracts as it is empowered to make, then it follows of course that among other things it cannot issue bills or notes without express or implied authority to do so; but we have seen that this ground is now hardly tenable. In order to state what we believe to be the true view we must to some extent anticipate the subject of the following chapter, so far as it relates to the form of corporate contracts. The general rule is that the contracts of a corporation must be made under its common seal, and it follows that a corporation cannot prima facie be bound by negotiable instruments in the ordinary form. The only early authority which is really much to the point was argued and partly decided on this footing (t). Of late Co. v. Riche, L. R. 7 H. L. 653; in (r) Note D. (s) A different rule prevails in the United States, where it is held that a corporation not expressly prohibited from so doing may give negotiable promissory notes for any of the legitimate purposes of its incorporation: Moss v. Averill, 10 N. Y. 449, and other authorities cited by Mr. Wald in his note here in American edition. (t) Broughton v. Manchester Waterworks Co. 3 B. & Ald. 1. The chief point was on the statutes giving the Bank of England exclusive rights of issuing notes, &c., within certain limits, as to which see Lindley, 1. 185, note. In Murray v. E. India Co. 5 B. & Ald. 204, the |