1 be a corporation. Under the general incorporation law of Texas, one railroad company has no power to buy another railroad company, or to sell its road to another company or to another person. Any contract made by a quasi public corporation, such as a railway, canal or turnpike, which undertakes without the consent of the State to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burdens which it imposes, is held to be a violation of the contract with the State and void as against public policy. Or it may be said that such a corporation, in the absence of statutory authority, has no right to sell its franchise to be a corporation, or any property essential to its exercise acquired under law of eminent domain. So also transfers of powers of one such corporation to another are against public policy, and the courts will not promote transfer. For a corporation can not evade liability by delegating to another the performance of its public duties. And, negatively, a corporation owing a public duty can not contract not to perform that duty. The general rule holds good that a bank incor 1 Coe v. Columbus &c. Ry. Co., (1859) 10 Ohio St. 372; Commonwealth v. Smith, 10 Allen, 448; East Boston &c. R. Co. v. Hubbard, 10 Allen, 459; Richardson v. Sibley, 11 Allen, 65; Hall v. Sullivan R. Co., 21 Law Rep. 138; 1 Brun. Col. Cas. 613; Pierce v. Emery, 32 N. H. 484; Richards v. Merrimack &c. Co., 44 N. H. 127, 136; Bardstown &c. R. Co. v. Metcalfe, 4 Metc. (Ky.) 199; Arthur v. Commercial &c. Bank, 9 Smed. & M. 394; Kennebec &c. R. Co. v. Portland &c. R. Co., 59 Me. 9, 23; Shepley v. Atlantic &c. R. Co., 55 Me. 395, 407; Stewart's Appeal, 56 Pa. St. 413, 422; Pittsburg &c. R. Co. v. Allegheny Co., 63 Pa. St. 126, 135; Clarke v. Omaha &c. R. Co., 4 Neb. 458, 465; State v. Consolidation Coal Co., 46 Md. 1, 9; Hays v. Ottawa &c. R. Co., 61 Ill. 422; Wood v. Bedford &c. R. Co., 8 Phila. 94; Pearce v. Madison &c. R. Co., 21 How. 441. 2 Gulf &c. R. Co. v. Morris, (1887) 67 Tex. 692. 3 Thomas v. Railroad Co., 101 U. S. 71, 83; Pennsylvania R. Co. v. St. Louis &c. R. Co., 118 U. S. 290; Troy &c. R. Co. v. Boston &c. R. Co., 86 N. Y. 107; Fanning v. Osborne, 102 N. Y. 441; Stewart's Appeal, 56 Pa. St. 413; Commonwealth v. Smith, 114 Mass. 448, 456; Middlesex R. Co. v. Boston &c. R. Co., 115 Mass. 347; Branch v. Jesup, 106 U. S. 468, 484. 4 Fietsam v. Hay, (1887) 122 Ill. 293; s. c. 3 Am. St. Rep. 492. 5 Chicago Gas Light Co. v. People's Gas Light Co., (1887) 121 Ill. 530; s. c. 2 Am. St. Rep. 124. 6 Lancaster &c. Co. v. Rhoads, (1887) 116 Pa. St. 377; s. c. 2 Am. St. Rep. 608. So a contract, by a corporation authorized to make and sell gas, to discontinue such manufacture and sale, is ultra vires and void. Chicago porated under a special act of the legislature can not, in the absence of statutory enactment, sell, transfer or assign its franchise; that is, the corporate rights and privileges conferred upon it by the legislative grant. So, also, where some of the stockholders of one railway company bought up all the stock and bonds of another and destroyed them, without, however, buying the road itself, yet taking themselves to be owners of the road from the purchase of the stock and bonds, sold it to a third company, it was held that a creditor of the second company having obtained judgment against it, had the right to levy execution on the road and franchise, the purchase and destruction of the stock and bonds, and subsequent sale to the third company, not constituting a dissolution of the second so as to relieve it, as a corporation, from all its debts and obligations. -- § 362. The same subject continued. As to what is included under the term franchise, it has been decided that a railroad with all its rights, franchises and property, is not an entirety. And the line has been clearly drawn between it and alienable property. It is that a railroad company can not alienate real property, acquired and held for the exclusive purpose of the exercise of a franchise which can not be alienated, but it may alienate things requisite for its use after the road is constructed and prepared for use, which are to be regarded as personal property. The distinction is made that the franchise to build or manage a railroad, and take tolls thereon, are not necessarily corporate rights, and may be assigned and enjoyed by an individual, but the right to be or form a corporation is not the subject of sale or transfer in the Gas Light Co. v. People's Gas Light 1 Fietsam v. Hay, (1887) 122 Ill. 293. 2 Gulf &c. R. Co. v. Morris, (1887) 67 Tex. 692. 3 Dinsmore v. Racine &c. R. Co., 12 Wis. 659, 663; Hill v. La Crosse &c. R. Co., 11 Wis. 226. 4 Coe v. Columbus &c. R. Co., (1859) 10 Ohio St. 372; Shaw v. Norfolk Co. R. Co., 5 Gray, 162, 180; Arthur v. Commercial Bank, 9 Smed. & M. 394; Miller v. Rutland &c. R. Co., 36 Vt. 452, 473; Kelly v. Trustees, 58 Ala. 489; Wood v. Bedford &c. R. Co., 8 Phila. 94; Richards v. Merrimack &c. Co., 44 N. H. 127, 136. absence of statute, and does not go with the property and franchises when sold. The power to sell, mortgage or lease the franchises or property, even the franchise to be a corporation, may of course be expressly authorized by the legislature.? So the legislature may ratify and confirm such acts when done without authority. Of course general laws may authorize a telegraph company to sell to another company all its property, rights, privileges, and franchises, when each company has been incorporated under the law of the same State." Where the act under the authority of which a certain company purchased the property and franchises of another provides that all existing contracts for water privileges "shall be respected and maintained at rates not exceeding the present rates," it is held that this provision does not make perpetual, at the option of the lessee, such contracts, but merely binds the purchaser to respect them during the remainder of the unexpired term which they have to run. § 363. Power to lease property.- Private corporations. may lease their property with the same freedom as individuals, there being no public interest involved. Under laws providing that an association may erect and maintain docks along the shore of its lands, and have the exclusive control of them, the association may lease the exclusive control of such docks 1 Ragan v. Aiken, (1882) 9 Lea, 609; Hall v. Sullivan R. Co., 21 Law Rep. 138; Meyer v. Johnson, 53 Ala. 237; State v. Sherman, 22 Ohio St. 428; Smith v. Gower, 2 Duer, 17; Wilson v. Gaines, 3 Tenn. Ch. 602. In the principal case the bill alleged that a particular railroad, with all its property, effects and franchises, was sold under the proceeding by the State against delinquent railroads, and subsequently resold by the purchaser to an individual named, and by him to the defendant, who had continued to operate the road under the charter of the original corporation, and had charged and received from the complainants excessive freight, and it was held, upon demurrer, that the defendant was not the corporation, and that the bill was properly filed against him as an individual. 21 Rorer on Railroads, 257; State v. Sherman, 22 Ohio St. 411, 428; State v. Richmond &c. R. Co., 72 N. C. 634; Mahaska &c. R. Co. v. Des Moines Valley R. Co., 28 Iowa, 437; East Boston &c. R. Co. v. Eastern R. Co., 13 Allen, 422. 3 Shaw v. Norfolk Co. R. Co., 5 Gray, 162, 179; Richards v. Merrimack &c. Co., 44 N. H. 127, 136. 4 Hatch v. American Union Telegraph Co., 9 Abb. N. Cas. 223; New York Laws 1870, ch. 568. 5 Hurt v. Terrill, (1887) 83 Va. 167; Va. Acts 1878-9, p. 118, § 6. 6 See cases cited infra. to another. Under clauses in a company's charter, giving any act or contract done by two-thirds of the stockholders the same validity as if the consent of every shareholder were obtained thereto, the lease, after nine years' unsuccessful working, by a porcelain company of all its works and buildings for twenty-one years, was valid. It has been decided, however, that a corporation, authorized by its charter to sell the real estate necessary for the transaction of its business when not required for the uses of the corporation, can not lease such real estate, nor can it maintain under a lease an action for rent, such lease not being necessary to the exercise of the purposes for which it was chartered.3 And it is a reason given for disallowing leases of all the property of a company that the company was thereby deprived of its power to carry out the purposes of its creation. It has been said that a railway company may lease its property and road when not prohibited by statute or some principle of public policy. And it would seem that a railroad company possessing rolling-stock acquired or manufactured for the purposes of the company would be entitled to let such rolling-stock when it is not wanted for the working of its own line. Upon the same principle, where the lines of two companies are continuous, and 1 Smith v. Berndt, (1888) 1 N. Y. the business affairs of the corpora Supl. 108. 2 Featherstonehaugh v. Lee Moor &c. Co., (1865) L. R. 1 Eq. 318. 3 Metropolitan Concert Co. v. Abbey, 52 N. Y. Super. Ct. Rep. 97. 4 Cass v. Manchester, (1881) 9 Fed. Rep. 610; McKennan, J., said in this case: "The change proposed is not organic, it is true, but it is thorough and fundamental, as it affects the administration of the company's affairs. It involves a withdrawal from the control and management of the stockholders of the entire property of the corporation for a period of at least five years; it will preclude for a like period the exercise annually by the stockholders of their judgment as to the particular character and method of conducting tion; and it denies to the stockholders any right of suggestion or disapproval of the conditions upon which a relinquishment of important corporate faculties may be conceded. Surely a power which will be attended with such consequences does not relate to the ordinary business transactions,' nor to the orderly and proper administration of the affairs of the company,' and hence can not be exercised by the directors without express authority to them." 5 Pittsburg &c. R. Co. v. Columbus &c. R. Co., 8 Biss. 456. 6 Browne & Theobald's Railway Law, 96, citing Attorney-General v. Great Eastern Ry. Co., 11 Ch. Div. 449; s. c. 48 Law J. Ch. 428; s. c. 5 App. C. 473. the traffic of the one can be profitably worked only in connection with the other, that the latter may agree to supply the former with such rolling-stock as it may require, though this may involve the manufacture of rolling-stock in excess of its own wants. Two telegraph companies entered into an agreement by which either company was given the right to string its wires on any of the poles owned by the other, and to operate such wires for its own benefit. On non-payment of the rent provided for, the company whose poles were thus used might direct the other to remove its wires, and if they were not removed within six months after such notice they were to become the property of the company upon whose poles they were placed. Afterwards the defendant, acting under an arrangement with the receiver of one of the companies, entered on the premises in possession of the other company, and cut the wires which the latter had strung on the poles of the first company, no previous demand having been made for their removal. There was some irregularity in the proceedings of an executive committee of the first company, authorizing the agreement as to the use of its poles. The action of the committee in the premises was afterwards ratified by a resolution of the directors, which resolution was itself irregular and of doubtful validity, but no member of the corporation ever attempted to disaffirm the agreement. It was held, however, that the defendant could not question its validity as a corporate act; that the objection that the agreement was not sanctioned by three-fifths in interest of the stockholders of one of the companies had no force, inasmuch as that agreement involved no lease, sale or conveyance of the property of the company, or of any of its rights, privileges or franchises, or any interest therein, within the meaning of the statute; and that even if the agreement required such sanction, the omission to obtain it was not available to defendant. Where a contract of leasing is complete and executed, a plea of ultra vires by a defendant corporation is inadmissible in an action 1 Attorney-General v. Great Eastern Ry. Co., 11 Ch. Div. 449; s. c. 48 Law J. Ch. 428; s. c. 5 App. Cas. 473; Browne & Theobald's Railway Law, 97. 2 Farnsworth v. Western Union Tel. Co., (1889) 53 Hun, 636. |