Court Opinion

ID: 7368625
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:54:08.818333+00
Date Added: 2024-06-11T16:20:50.576218
License: Public Domain

on rehearing.
ANDERSON, C. J.
(12) The appellant asks for a reconsideration of the holding in the original opinion that the indemnity contract as set up by the defendant was ultra vires the corporation, and that the same could not be ratified by the plaintiff. We are still of the opinion that the original holding is not only supported by the authorities cited, but also by So. Mutual Association v. Boyd, et al., 145 Ala. 167, 41 South. 164; Cleveland Chair Co. v. Greenville, 146 Ala. 559, 41 South. 862, and cases there cited, as well as section 233 of the Constitution of 1901, and which says: “No corporation shall engage in any business other than that expressly authorized in its charter or articles of incorporation.”
This provision of our organic law has been given force and effect in our decisions generally without relaxation, except perhaps, to the extent of upholding acts not only expressly authorized under the charter powers of the corporation, but which may be necessarily incidental for carrying out the objects of their charters. Therefore, unless the act is expressly authorized by ’the charter or is necessarily incident to the powers for carrying out the objects of the charter, it is ultra vires the corporation.
The appellant recognizes the existence, in this state, of the rule as above declared, but contends that it has been relaxed to some extent by two recent decisions of this court, being Sales-Davis Co. v. Henderson-Boyd Co., 193 Ala. 166, 69 South. 527, and United States Foundry Co. v. Bailey, 194 Ala. 261, 69 South. 825. We do not think that the holding in the Henderson-Boyd Case, supra, departs from the rule existing in this state, as the opinion recognizes that the contract between the two corporations, in order to be binding, must have been within the charter powers of both. It is true that the opinion quotes from Cook on Corporations as to what the rule is, provided the state and stock*690holders and creditors do not object, and which said quotation was inapt and misleading without a notation of the fact that this state does object to such a rule or doctrine under the terms of section 233 of the Constitution and as previously enforced by the decisions of this court.
In the case of United States Foundry Co. v. Bailey, supra, 69 South. 825, there are expressions in the first part of the opinion which may not state the rule accurately, but we think that the real holding was that the corporation could do things only as authorized by its charter or necessarily incident to its charter powers.