Truth. [volume] (Salt Lake City, Utah) 1901-1908, 1906-08-18
TRUTH

incorporating act In some states the
directors are personally liable as part
ners on contracts made ultra wires
Now, the Incorporating act under
which the corporation is organized
may be general in its terms, specify
ing only in broad terms the limits of
the corporations powers and rights.
III Will be understood, as we will see
later that corporation has the i'm
piled power to do any act necessary to
the carrying out of the purpose of its
organization as provided in it's char
ter. So corporation has the implied
power to hold any property necessary
to the carrying on of it's business, un.
less, of course, it is used for some
other purpose beyond the scope of its
authority, it has no right to acquire
and hold it, and contract looking to
that end would be void. A bank, for
instance, Incorporated to carry on a
banking business, loaning money on
real estate and taking it on a mort
gage, might enter into a valid contract
for the purpose of purchase of farm
implements, these being necessary to
the care of the farm until such time
as it could be sold and the loan repaid.
But contract by bank to buy farm
implements for the purpose of going
into the farming business in general,
would be null and void; and so of a
bank making contract to build rail
road; such a contract would be void
unless it could be shown that it was
necessarily incident to the carrying on
of its business as a bank Corpora
| tons may, unless prohibited by the
law under which they are organized,
| make negotiable paper, appoint agents
borrow money, and mortgage their
property.
In some cases the charter provides
the mode of contracting. In such
case contract made by the corpor.
alton by another mode than that
stated is void; for instance, if the
charter requires the signature OF a
particular officer, the contract is in
valid without it.
Where corporation has entered in
to an ultra wires contract and has had
the benefit of the performance of II
by the other party, the corporation
cannot go into court and claim thai
the contract was ultra wires and thai
it is under no obligation to fulfill its
part, at the same time retaining the
fruits of it's unauthorized acts. II
would be held by the court liable in
| EQUITY generally to restore or pay fol-
what it has received.
| A single stakeholder In the corpora
ton may restrain the board of direc
tors of the corporation from entering
into an ultra wires contract, and u~I
ally it is true that the board of direc
tors is liable to the shareholders fol
an ultra wires act. Then, too, the
state itself, through it's department Of
| justice, may in the courts restrain ar
ultra wires act, or compel the corpora
ton to forfeit it's right to do business
Contrary to the popular notion, &
corporation organized in one state has
no inherent right to do business in an
other state. The privilege it has so tt
do is mere courtesy Of that other state
A corporation organized under I've
laws of the state of New Jersey has NJ
inherent right to do business in the
state of Michigan; that it is permit
ted to do so is by the tacit agreement
of the latter state, or by what is know
as state comfy or courtesy. 1t follows
therefore, that one state may make
reasonable limitations on the right o
q foreign corporation to do business
within it's borders. 1t follows, o
course, that corporation cannot d,
in state other than its home stat,
an act contrary to the law or the poll
ry of that other state. though permit
ted to do so by the law under whicl