Court Opinion

ID: 6597654
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:04:35.117211+00
Date Added: 2024-06-11T15:57:54.134231
License: Public Domain

By the Court,

WhitoN, C. J.
However ungenerous it may seem, (to give the conduct of these defendants no harsher name,) for the defendants to refuse to pay the money which the plaintiffs have paid on their guaranty, we are of opinion that this bill cannot be sustained. The charter of the *79plaintiffs conferred only the ordinary powers necessary for the purpose of constructing their road. It gave no more. Indeed, it is not contended that the guaranty which the plaintiffs acquired was expressly authorized by the charter; but it is contended, that as the guaranty was made for the purpose of enabling the Watertown & Portland Plankroad Company to construct their road “westwardly from Watertown along a route and through a district of country so nearly identical with that along and through which said complainants were authorized to extend their road from Watertown westward” that the power to make the guaranty for such a purpose may be fairly inferred from the general powers given to build their own road.
We do not think that the facts stated, authorize any such inference. The complainants were authorized by their charter, and the amendments made to it, to construct their road from Milwaukee to Madison. They had completed the road from Milwaukee as far as Watertown, on the way to Madison. Instead of building the road between the last two named places, they (as stated in the bill) “ determined to leave the field west of Watertown, at least temporarily, to the other company.” That is to say, the complainants signed a guaranty for the purpose of enabling the Watertown & Portland Plankroad Company to borrow money with which to construct a road westwardly from Watertown, on a route nearly identical with their own, and abandoned, at least temporarily, the construction of the remainder of their road.
It is to be remembered that the bill does not allege that the route of the road which the Watertown & Portland Plankroad Company was to construct, extended to Madison, or that the road was in any way intended to connect the last mentioned town with Watertown or Milwaukee. In. our opinion, the signing of the guaranty by the complainants, for the purpose stated in the bill, was clearly without authority, and created *80no legal obligation. It has not been contended by the complainants that a corporation could enforce a contract which it was not authorized to make by its charter; we shall therefore cite but few authorities upon the contrary doctrine. Angeli & Ames on Corporations, §§ 111, 256, 258, 273, 391, 392, 393; Bank of Augusta vs. Earle, 13 Pet. R., 587; People vs. Utica Insurance Co., 15 I. R., 383; Bank of U. S. vs. Danbridge, 12 Wheat., 68; Dartmouth College vs. Woodward, 4 Wheat., 368.
But the counsel for the complainants contends that “the defendants have had the money for which the bills and mortgage were given, for a lawful purpose; and it is inequitable and fraudulent for them now to set up the act of the plaintiff in aiding them to get the money or in paying it when it became due to Cramer and Birchard, to defeat a recovery upon their mortgage.”
We do not think this view of the matter changes the legal rights of the parties. The plaintiff of course was aware of the extent of its own power. Those who managed the affairs of the corporation must have known that it; had no authority to guaranty the payment of the notes or bonds of third persons, and that if they attempted to do so, no legal obligation could result from such attempt
The payment of the money under such circumstances by the plaintiff was a payment in their own wrong, for which they cannot charge the defendants. The counsel for the complainants also claims that this contract of the complainants has been executed, and that, as it was not illegal, but at h ast only unauthorized by the charter of the company, the court should not now interfere to set it aside, after the defendants -have reaped all its benefits, although, perhaps, it could not have been enforced. We cannot view the matter in this light. The contract, so far'as it is relied upon for the purpose of affecting the defendants, is not executed, but executory merely. *81It is the foundation of the first action. The' complainants seek to recover upon it, and upon it alone. We must regard it as wholly insufficient to authorize the action, and must therefore reverse thé order of the circuit court .Order reversed and cause remanded for further proceedings.