was set aside, and the purchase-money ordered to be refunded. The loaning company sought a refunding of the money loaned by them, with the interest, out of the refunded purchase-money. It was held they were entitled to a decree accordingly. But the lender of money to a company having no power to borrow, cannot compel the company to refund the money, unless it has been bona fide applied to the purposes of the company.9 8. Where part of a contract only is ultra vires of the company, a court of equity will restrain that portion only.10 Where there is a defect of capacity in the company to do the act, the power cannot be created by the express agreement of the shareholders; nor can it be presumed from any extent of acquiescence. But where only certain formalities are required to the valid execution of the act, as the consent of a general meeting, that will be presumed from acquiescence. But where dissentient members 12 were allowed to retire by the resolution of a general meeting, it was held the other members could not be allowed to question its regularity and validity, after an acquiescence of twenty years, although ultra vires. 9. Directors of an insurance company offered to pay losses caused by the explosion of gunpowder, although expressly excepted from the risks assumed by the policy, at the same time not admitting any legal liability to do so. On a bill by a shareholder to restrain the directors from doing so, it appearing that it was usual and advantageous for companies to do so, although not strictly 8 Ernest v. Croysdell, 2 De G. F. & J. 175; s. c. 6 Jur. N. S. 740. Troup in re, 29 Beav. 353; Hoare ex parte, 30 id. 225. 10 Maunsell v. Midland Great Western (Ireland) Railw. Co., 1 H. & M. 130; s. c. 9 Jur. N. S. 660. It was here held, that an agreement to contribute to the parliamentary deposit required on bills promoted by another company is ultra vires. So is an agreement to take shares in the future extension of another company. So also is an agreement to make traffic regulations applicable to future extensions. But no such agreement is ultra vires if its validity is expressly made dependent upon the sanction of parliament. But where part of an entire arrangement between two companies, the parts of which are dependent upon each other, is illegal, or ultra vires, a court of equity will restrain the execution of every portion of the arrangement. Hattersley v. Shelburne, 7 Law T. N. S. 650. "British Provident Life Ins. Co., ex parte Grady, 9 Jur. N. S. 631. 12 Brotherhood in re, 31 Beav. 365. A restriction upon the liability of the shareholders for bills drawn by the company will not affect the responsibility of the company. State Fire Ins. Co., 8 L. T. N. S. 146. responsible for the loss: held, that this was a mode of carrying on the business with which the court could not interfere.13 10. This is a most remarkable decision, but more remarkable for the reasons and grounds upon which it is placed. The fact that the unlawful payments proposed to be made were prudent and politic, is nothing more than may be urged in favor of all proposed illegal diversion of the funds of a company. It is always proposed thereby to advance the interests of the company, and consequently the dividends to the shareholders. It is impossible to suppose that any such principle can ultimately maintain its ground in the English courts of equity. 11. The subsequent cases seem to manifest the feeling that all secure ground to rest upon is taken from under them. It is said in one case 14 * that in matters strictly relating to the internal management of the company, even though not strictly within the terms of the constitution of the company, the court will not interfere. But it is here added, if the matters complained of are plainly beyond the powers of the company, and are inconsistent with the objects for which the company was constituted, the court will interfere, at the instance of the minority, to prevent the act complained of from being carried out. If this is intelligible to others, or reconcilable with good sense and good law, it certainly passes our comprehension, and we can only say that we should not expect it to be long maintained anywhere. It is nothing more or less than paying black mail to buy peace, and if public companies can do that with funds they hold in trust, it may be as well for courts of equity not to attempt to define what they may or may not do. § 148 a. The following points, decided by a court of learning and experience, in regard to the rights of railway corporations in one state to enter into permanent arrangements with similar corporations in other states, with our own comments upon it, as published in the American Law Register,1 we deem of sufficient importance as illustrating some of the doctrines discussed in the preceding section, to be here repeated. The opinion of Judge Storer, at length, will be found in the American Law Register,2 and will repay careful reading. 13 Taunton v. Royal Ins. Co., 2 H. & M. 135; s. c. 10 Jur. N. S. 291. 14 Gregory v. Patchett, 33 Beav. 595; s. c. 10 Jur. N. S. 1118. 1 Vol. 5, N. S., 733. 2 Vol. 5, N. S., 733–744. 1. The power of a receiver to sue in the name of the corporation. 2. Foreign railway corporation acquired no prerogative rights by leasing a portion of the track of a domestic railway. Superior Court of Cincinnati. Ohio and Mississippi Railroad Company v. Indianapolis and Cincinnati Railroad Company. 1. A receiver appointed by the Circuit Court of the United States for the Southern District of Ohio, to take possession of a railway and its effects, may sue in this court, upon a contract made by that corporation in the corporate name of the railway, without disclosing in the petition his own name as receiver. *2. A foreign corporation having no charter from the state of Ohio, authorizing it to construct and operate a railway in this state, cannot, by a transfer of a portion of a railway already constructed in the state by legal authority, acquire a right to use and operate such railway within this state. 3. The plaintiffs, being authorized to construct and operate a railway from Cincinnati to Vincennes, and the defendants, being authorized to construct and operate a railway from Indianapolis to Lawrenceburg, of a different gauge, entered into a contract whereby the defendants, in consideration of being allowed to lay a third rail on the road of the plaintiffs, to furnish motive power for hauling the cars of the defendants on that part of the road, agreed, among other things, to lend to the plaintiffs $30,000, for the purpose of erecting a depot for the plaintiffs in Cincinnati, to become the property of the plaintiffs at the expiration of the contract; to form no connections at or beyond Lawrenceburg prejudicial to the plaintiffs; and to give the plaintiffs exclusive control of the employees of the defendants while on the road of the plaintiffs. Held, on the construction of the charters of the plaintiffs and defendants, that such contract was beyond the competency of the contracting parties, and was void. 4. The contract also provided, that the defendants should have the use of a depot and certain grounds in Cincinnati for unloading goods and lumber, for thirty years. Held, that this created an easement in the land, and was, in connection with the laying and keeping up the third rail, in substance a lease, which the plaintiffs had no authority to make, and that it being for more than three years, was also invalid under the statute of frauds, for the want of legal acknowledgment. Held, also, that the defendants having as a foreign corporation no right to accept a lease of a railway in Ohio, the plaintiffs could not have had a specific performance of the agreement, the remedies of the parties not being mutual.3 *SECTION VIII. Companies exonerated from Contracts, by Act of the Legislature. § 149. It seems to be conceded that a railway company may plead a subsequent act of the legislature, in bar of the performance of their covenant or contract. But it will afford no bar, 3 We can see no good ground to question the soundness of the foregoing opinion; but it seems to us that the case exhibits in a strong light the embarrassments constantly resulting from having railway corporations restricted in their corporate functions to the limits of state lines. It would certainly seem that there is far more necessity and propriety in having all the railway corporations in the country possess a national character, than there is in giving the same character to all the banks of the country, which has been already practically effected by means of discriminating taxation. There is every reason to regard railways as national institutions, in almost every sense in which they possess a public character, or perform public service, with the single exception of intercommunication, which is mainly of local and state concern. 1. As one of the wonderful advancements of military operations in modern times, by which railways have wrought a complete change in the conduct of war, and have become an indispensable necessity, they are entirely of a national character, so much so as to exclude all state control in times of war or civil commotion. 2. In regard to postal communication, which has been regarded as exclusively of a national character, since the early and palmy days of the Persian monarchy, where public posts are said to have originated, railways must also be regarded as an indispensable necessity. For if we admit the right of state control over all or any considerable portion of the railways in the country, it will place all postal communication at the mercy and good will of state authority, which any one must see is wholly inadmissible. We discussed the rights of railway corporations in regard to acquiring land and other prerogative rights in adjoining states, without the action of the legislature, in a case in Vermont, many years since, when we came to the conclusion that no such prerogative rights could be acquired out of the state of the charter, except by legislative act. State v. B. C. & M. Railw., 25 Vt. 433. This will not preclude such corporations from acquiring the title of land out of the state, by voluntary contract, or entering into any other contract, of the ordinary character of contracts between natural persons, but it will not justify taking land compulsorily, or operating a railway and taking tolls, &c. unless the act either expressly, or by clear implication, renders the duty of the contract unlawful or comes in conflict with it.1 * SECTION IX. Width of Gauge. - Junction with other Roads. § 150. 1. Where the company's special act required them to lay down a railway of such gauge and construction as to be worked in connection with another company named (the broad gauge), a court of equity declined to interfere, by injunction, when the company were laying down part of the line with double tracks of the mixed gauge, there being no prohibition in the act against such a construction, the broad gauge being all which was required by the act.1 2. Where the act of incorporation gave the company the right to construct a road in a particular line, and also required them to purchase a former railway along the same route, and gave them the right to connect "their road with any road legally authorized to come within the limits of the city of Erie," it was held that this right extended equally to the road purchased or built by them, and that they had the right to connect with any other railway in the actual use of another company in Erie, without inquiry whether such company were in the legal use of their franchises at the time or not. That is a question which cannot be inquired into in this collateral manner.2 1 Wynn v. The Shropshire Union Railw. & Canal, 5 Exch. 420; Stevens v. South Devon Railw., 13 Beav. 48; s. c. 12 Eng. L. & Eq. 229. But where one was induced to give lands to a railway company, or subscribe for stock, and the essential inducement to make the contract was that the company should construct their road within some definite time, the extension of time for the construction of the road, by act of the legislature, will not exonerate the company from their obligation to such person. Henderson v. Railw. Company, 17 Texas, 560. 1 Great Western Railw. v. Oxford, Worcester, & Wolverhampton Railw., 5 De G. & S. 437; s. c. 10 Eng. L. & Eq. 297. Cleveland, Painsville, & Ashtabula Railw. v. The City of Erie, 27 Penn. St. 380. |