where the party entered into it without notice of the facts constituting the infringement of the statute.

One important result of this common law prohibition is, that charters are construed strongly in favor of the state and against private corporations. In other words, no powers are presumed to have been granted except those conferred by express terms or by clear implication.1

§ 765. General rule with respect to dealings with outside parties. An approximately correct general rule was thus stated: "In a contract between a corporation and strangers dealing with it, when the act in question is one which the corporation has not power to perform under any circumstances, the corporation may avail itself of the defence of ultra vires, but when the act may be performed by the corporation for some purposes, but not for others, the defence of ultra vires may or may not be available according to the peculiarities of each case. If a stranger dealing with the corporation knew of its. intention to perform the act for an unauthorized purpose, the defence is available; otherwise not." 2

1 State v. Washington Sec. Library Co., 11 Ohio, 96; Webster v. The People, 98 Ill. 343, supra, 60, 61, 75.

2 Miners' Ditch Co. v. Zellerbach, 37 Cal. 543. The general rule here declared is supported by the following authorities: Hoyt v. Thompson, 19 N. Y. 207; Manhattan Hardw. Co. v. Phalan, 128 Pa. 110; 18 Atl. Rep. 428; Wright v. Hughes, 119 Ind. 324; Baker v. Harpster, 42 Kan 511; 22 Pac. Rep. 415; Wood v. Guar. T. & S. D. Co., 128 U. S. 416; Bank of U. S. v. Dandridge, 12 Wheat. 64; B'k of Columbia v. Patterson's Admin., 7 Cranch, 299; B'k of Northern Liberty v. Cresson, 12 Searg. & R. 313; Proprs. of Canal Bridge v. Gordon, 1 Pick. 296; Danforth v. Schoharie Turnp. Co., 12 Johns. 227; Randall v. Van Vechten, 19 Johns. 59; Mott v. Hicks, 1 Cow. 513; Dunn v. St. Andrew's Ch. 14 Johns, 117; Zabriskie v. The Cleveland, Columbus & Cinn. R. R. Co., 23 How. (U. S.) 281; Knox County v. Aspinwall, 21 How. (U. S.) 515; Bissell et al. v. City of Jeffersonville, 34 How. 287; Gelpecke v. City of Dubuque, 1 Wall. 203, 223; Van Hostrup v. Madison City, 1 Wall. 297; Meyer v. City of Muscatine 1 Wall. 393; Bulkeley v. The Derby Fishing Co., 2 Conn. 252; Manchester & L. R. R. Co. v. Concord R. Co., (N. H.) 20 A. 383; Hoyt v. Shelden, 3 Bosw. 294; Miller, et al. v. Rutland & Wash. R. Co., 36 Vt. 452; DeGroff v. Am. Linen

Where the want of power is apparent, upon comparing the act done with the terms of the charter, the party dealing with the corporation is presumed to have knowledge of the defect, and the defence of ultra vires is available against him. In other words, when the transaction is clearly in excess of the powers conferred under any and all ordinary circumstances, ultra vires is generally available to either party as a defence.1

But such a defence would not be permitted to prevail against a party who cannot be presumed to have had any knowledge of the want of authority to make the contract. Hence, if the question of power depends not merely upon the law under which the corporation acts, but upon the existence of certain extrinsic facts resting peculiarly within the knowledge of the corporate officers, then the corporation would be estopped from denying that which, by assuming to make the contract, it had virtually affirmed.2

Thread Co., 21 N. Y. 127; Parish v. Wheeler, 22 N. Y. 502; Bargate v. Shortridge, 31 Eng. Law & Eq. 51; Gordon v. Preston, 1 Watts. 387; Chapman & Harkness v. Mass. River, etc., R. R. Co., 6 Ohio St. 119; The Argeniti v. San Francisco, 16 Cal. 255. Compare Alta S. M. Co. v. Alta P. M. Co., 78 Cal. 629. 1 Alexander v. Cauldwell, 83 N. Y. 480; Nat. Trust Co. v. Centr. R. R. Co., 74 Ga. 509; Franklin Co. v. Lewiston Inst. for Savings, 68 Me. 43; Davis v. Old Colony R. R. Co., 131 Mass. 258; Seligman v. Charlottesville Nat. B'k, 3 Hughes, C. C. 647; Mut. Sav. B'k v. Meriden Agency Co., 24 Conn. 159; Abbott v. Balt., etc., Steam Packet Co., 1 Md. Ch. 542.

Bissell v. The Mich. Southern, etc., R. R. Co., 22 N. Y. 262; Commrs. of Knox County v. Aspinwall, 21 How. (U. S.) 545; Gelpecke v. City of Dubuque, 1 Wall. (U. S.) 203; Bank of U. S. v. Dandridge, 13 Wheat. 69. No defence that in making the contract the corporation violated its own rules. Samuel v. Fidelity & Cas. Co., 1 N. Y. S. 850. Argeniti v. San Francisco, 16 Cal. 255, brought into general view the whole doctrine under consideration. See also Gas Co. v. S. F., 9 Cal. 453; Fouchard v. Fouchard, 5 Cal. 806; Holland v. The City of S. F., 7 Cal. 361; Bailey v. The Mayor, etc., of N. Y., 3 Hill. 539; Lloyd v. The Mayor, etc., of N. Y. 1 Selson. 374; Milhau v. Sharp, 15 Barb. 210; B'k of U. S. v. Dandridge, 12 Wheat. 64; Delafield v. The State of Ill. 26 Wend. 192; McComb v. The Town Council of Akron, 15 Ohio St. 474; City of N. Y. v. Bailey, 2 Denio, 433; Goodlove v. The City of Cinn., 4 Ham. 500; B'k of Chillicothe v. The Town of Chillicothe, 7 Ohio St. 358; and Rhodes v. The City of Cleveland, 10 Id. 159.

It seems to be the established rule in Alabama that a corporation is not estopped by reason of having reIceived the benefits of a contract which is ultra vires from setting up its invalidity in defence of a suit to enforce it.1

§766. Executed contracts.-Actions on contracts executed by one of the parties in good faith cannot be defeated by a plea that the powers of the corporation have been exceeded.

"If an action cannot be brought directly upon the agreement, either equity will grant relief or an action in some other form will avail. The same rule holds e converso. If the other party has had the benefit of a contract fully performed by the corporation, he will not be heard to object that the contract and performance were not within the legitimate powers of the corporation." 2 The executed dealings of corpor

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1 Sherwood v. Alvis, 83 Ala. 115; Chewacla Lime Wks. v. Dismukes, 87 Ala. 344; 6 So. 122; Simmons v. Troy Iron Works (Ala.), 9 So. 160. See Alexander v. Cauldwell, 83 N. Y. 480.

2 Whitney Arms Co. v. Barlow, 63 N. Y. 62, per ALLEN, J.; Heims Brewing Co. v. Flannery (Ill.), 27 N, E. 286; Sherman C. T. Co. v. Morris, 43 Kan. 382; Union Water Co. v. Murphy's Flat, etc., Co., 22 Cal. 621, 630; Parish v. Wheeler, 22 N. Y. 506; Camden & A. R. Co. v. May's Landing, etc., Co., 48 N. J. L. 530; 7 A. 523; Ex parte Chippendale, 4 De G. M. & G. 19; In re Nat. P. B. Bldg. Soc., L. R. 5 Ch. App. 309; In re Cork, etc., R. Co., 4 Id. 748; Fishmongers Co. v. Robertson, 5 McG. 131; R. & B. R. Co. v. Proctor, 29 Vt. 93; Belcher Ref. Co. v. St. L. G. E. Co. (Mo.), 13 S. W. 822; Farmers' & Millers' B'k v. D. & M. R. Co., 17 Wis. 372; Brown v. Mullins (Ky.), 13 S. W. 427; Val. Ry. Co. v. Iron Co., 46 Ohio St. 44; Silver Lake B'k v. North, 4 J. Ch. (N. Y.) 370; De Groff v. Am. Linen Thread Co., 21 N. Y. 124, 127; Peek v. Doran Wright Co., 10 N. Y. S. 401; Holmes, etc., Co. v. Holmes & W. M. Co., 53 Hun, 52; Diamond Match Co. v. Roeber, 106 N. Y. 473; 60 Am. R. 464; 13 N. E. 419; Oil Co., etc., R. R. Co. v. Penn. Transp. Co., 83 Pa. St. 160, 166; Slater W. Co. v. Lamb, 143 Mass. 420; 9 S. E. 823; Chester Glass Co. v. Dewey, 16 Mass. 94, 102; Underwood v. Newport Lyceum, 5 B. Monr. 129; Manchester & L. R. Co. v. Concord R. Co. (N. H.), 20 A. 383; Southern Life Ins. Co. v. Lanier, 5 Fla. 110, 165; Chicago Bldg. Soc. v. Crowell, 65 Ill. 453; Fogg v. Blair, 133 U. S. 534; Ry. Co. v. McCarthy, 96 U. S. 258, 267; Pine Grove v. Talcott, 19 Wall. 666, 678; Poole v. W. Pt. B. & C. Ass'n, 30 F. 513; Rutland, etc., R. R. Co. v. Proctor, 29 Vt. 96, 97; Moore v. Tanning Co., 60 Vt. 459; Ward v. Johnson, 95 Ill. 215; Wright v. Hughes, 119 Ind. 324; L. N. C. & A. Ry.

ations must be allowed to stand for and against both parties where the plainest rules of good faith require." 1

1 Parish v. Wheeler, 22 N. Y. 497; Davidson v. Westchester Gas L. Co., 99N. Y. 558; 2 N. E. 892.

Co. v. Flanagan, 113 Ind. 488; 14 N. E. 370; Hall Mfg. Co. v. Am. Ry. Supply Co., 48 Mich. 331. A corporation may recover the value of groceries sold to the defendant through an agent of the corporation, the principal being undisclosed, although the corporation was chartered for the purpose of manufacturing woolen goods, and the sale was ultra vires. Slater Woolen Co. v. Lamb, 143 Mass. 420; 9 N. E. 823.

Where a railway company has fully performed all the conditions of a bond or contract for the construction of its road, the other parties to such contract who have therein promised aid to the company cannot invoke the doctrine of ultra vires in defence, on the ground that the company had no power to make such contract. Chicago & A. Ry. Co. v. Derkes, 103 Ind.520; 3 N. E. 239. See also, Kelly v. A. H. R. Co., 141 Mass. 496; 6 N. E. 745, where in an action upon certain promissory notes given by a horse railroad corporation in payment for the construction of its road, that corporation alleged that it was illegally organized, and had no authority to build the road, and that its act of making a contract for such construction was ultra vires, and that the notes given were void. The corporation had operated and taken the earnings of the road for a number of years, paying the interest on the notes, and it was held that this defence was not available to the corporation.

Where an illegal contract of consolidation between two competing railway lines has been executed, and defendant has derived all the benefits arising from the contract, its illegality is no defence to a bill in equity for an accounting and a return of the consideration to plaintiff whose property and equipments passed to defendant under the contract. Manchester & L. R. R. v. Concord R. R. (N. H.), 20 A. 383.

The rule that a corporation is estopped from pleading ultra vires when the contract has been executed by the other party does not apply, since defendant received nothing thereby, and since such transactions by a savings bank are against public policy. Affirming, 44 Hun, 412; Jamison v. Citizens' Sav. Bank, 125 N. Y. 135; 25 N. E. 264.

Where the indebtedness that a corporation is authorized by its charter to contract is limited, the objection that a mortgage for a sum in excess of this amount is ultra vires cannot be urged by an unsecured creditor, who became such after the mortgage was executed, and whose claim is open to the same objection. Allis v. Jones, 45 F. 148; Skeen v. Allis, Id.

A railroad company which has received aid bonds from a town in payment for its stock cannot claim that the transaction between it and the town was void. and hence the town never acquired the legal title to the stock, where it sold the bonds and received value therefor, and has never offered to return any of them, or asserted any right to the stock. Illinois G. T. Ry. Co. v. Wade, 11 S. Ct. 709. Under Rev. St. U. S. § 5200, providing that the amount for which any one individual or firm shall be indebted to a national bank shall not exceed a certain sum, when such a bank violates the provision by lending to one person an

The liability of a corporation upon ultra vires contracts does not rest upon the doctrine of ratification which, in ordinary legal acceptation which as applied to such contracts a party has authority to make, but upon acquiescence on which the other party transacted, so that he cannot be restored to his former status, and thereby the company is precluded from interposing its own infirmity as a defence.1

The plea of ultra vires should not, as a general rule, be allowed to prevail, whether interposed for or against a corporation, when it would not advance justice, but, on the contrary, would accomplish a legal wrong. But it is evident that in attempting to give prominence and perspicuity to this principle, the language of the courts in some of the cases is unnecessarily broad, and if followed and given effect as law, would overturn the whole doctrine of ultra vires, when invoked for the protection of private interests against abuse or usurpation of powers by corporations.

1 Camden & A. R. Co. v. May's Ldg., etc., R. Co., 48 N. J. L. 530. amount in excess of the limit, such person cannot set up the violation of the statute as a defence to his liability on the note. If a penalty is to be enforced against the bank, it can be done only at the instance of the government. A contract entered into by the bank in violation of this section is not void. Wyman v. Citizens' Nat. Bank, 29 F. 734.

Where one sells bonds to a national bank at a certain price, the bank agreeing to resell the bonds to the vendor at the same price or less, but, the bonds subsequently appreciating in value, the bank refused to resell them, held, in a suit by the vendor for the breach of contract, that the bank cannot escape liability by setting up that it had no authority, under the national bank act, to buy the bonds. Logan Co. Nat. Bank v. Townsend (Ky.), 3 S. W. 122.

Nor can the defence be urged, to defeat securities given for a loan made by a national bank, that the loan was for an amount in excess of the restriction of the United States statute upon the amount of loans which may be made by such banks. Mills Co. Nat. Bank v. Perry, 72 Iowa 15; 33 N. W. 341.

APPLIED TO FOREIGN CORPORATION.-The rule as to executed contracts is applied to a limited extent to foreign corporations. Thus, in an action by a foreign corporation to foreclose, it was held that inasmuch as the defendants hal received and enjoyed the benefits of performance it cannot plead that plaintiff had no power to contract within the state. Watts Campbell Co. v. Yuengling, 51 Hun, 302; Barnes v. Suddard, 117 Ill. 237; 7 N. E. 477.