the contract is severable, and no inequity would result, and no estoppels have intervened, there is authority in this state for saying that the remedy by injunction is open to any non-assenting stockholder, at any time before the contract has been fully executed by one of the parties to it. It has been repeatedly held that stockholders who participate in an act are estopped from attacking its validity. It is also held that a stranger to the transaction, whose property rights are not affected thereby cannot raise the question of ultra vires. A corporation has no implied power to lend its credit to another46, nor can it become an accommodation maker, endorser, surety or guarantor in the absence of express charter authority47; but the defense of ultra vires cannot be invoked to defeat corporate paper, regular on its face, in the hands of a bona fide purchaser48. Where a corpora

43. Day v. Spiral Spring Buggy Co., 57 Mich. 146-150.

44. Butterworth & Lowe V. Milling Co., 115 Mich. 1; Lucas v. Fraint, 111 Mich. 426-435; Clark v. E. C. Clark Machine Co., 151 Mich. 416-421; Fourth National Bank v. Olney, 63 Mich. 58-63.

45. Collins v. Rea, 127 Mich. 273-276; Potter v. Saginaw Union Street Ry., 83 Mich. 285-297; Beecher v. Marquette, etc., Co., 45 Mich. 103-110.

46. Clark, Mason & Co. V. Parker, Webb & Co., 131 Mich. 139; Stillwell-Bruce, etc., Co. v. Niles Paper Mill Co., 115 Mich. 35.

47. A corporation has no implied power to become a surety in a transaction in which it has no interest. Knickerbocker V. Wilcox, 83 Mich. 200-207. When an officer or agent of a corporation gives a corporate note in payment of an individual obligation, the transaction is prima facie ultra vires. The taker of such paper is put upon inquiry as to such officer's authority. Proof that the officer or agent had general power to execute commercial paper in the name of the company has no tendency to prove his authority to make like paper for purely private purposes. Merchants' National Bank v. Detroit. etc., Knitting Works. 63 Mich. 620; McLel

lan v. Detroit File Works 56 Mich. 582; see also Riverside Iron Works v. Hall, 64 Mich. 165. In MeLellan v. Detroit File Works (ante), Chief Justice Cooley held that: "The general authority to make commercial paper in the name of a corporation is given to be exercised for the benefit and in the business of the corporation, but not for the benefit of the business of others; and it is therefore obvious that one who takes such paper with knowledge that it is not given for a corporate purpose, can have no claim to the protection which the law accords to a bona fide holder."

48. In Genesee County Savings Bank v. Michigan Barge Co., 52 Mich. 438-446, Justice Sherwood 'aid down the following rule: "Where a corporation has under any circumstances power to issue negotiable paper, the bona fide holder has the right to presume that it was issued under the circumstances which gave the requisite authority, and the negotiable paper of a corporation, which appears on its face to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder." See also Woodcock v. First National Bank., 113 Mich. 236-240; Fletcher

tion has accumulated a fund without authority and for an unauthorized purpose, it becomes charged with the obligations of a trustee; the fund is held as a trust fund for the benefit of the contributors, to whom it must be returned pro rata, according to their respective contributions. The decisions applying the doctrine of ultra vires in the various states are in irreconcilable confusion. Outside a few well settled principles, approval or disapproval of the defense is ruled by the facts and equities of each particular case. Application of the doctrine is, in practice, governed rather by the conscience of the court than by technical adherence to inflexible rules. It must be a barren record indeed, in which a modern court of last resort will fail to find an estoppel or some other controling principle, sufficient to prevent the plea of ultra vires working an injustice.

& Sons v. Circuit Judge, 136 Mich. 511-513. In the case last cited it was decided that usurious bonds would be held valid in the hands of a bona fide purchaser. One who takes paper of a corporation signed by an officer who is himself a payee is put upon inquiry as to the authority of the corpor

ate agent to execute such paper. One who purchases under these circumstances is charged with notice that the paper is presumptively ultra vires. New York Iron Mining Co. v. Negaunee Bank, 39 Mich. 646-653.

49. Calkins v. Bump, 120 Mich. 335-342.

§27. Preliminary Considerations.

Questions of ethics1, procedure2 and law immediately confront the attorney who has been employed to conduct the organization

of a corporation. Articles of association, by-laws, minutes of first meetings and, perhaps, a prospectus, subscription agreements, promoter's contracts, transfers of property, and forms for special stock certificates-are to be drafted. Each of these items has, or may have, a far reaching influence upon the future of the company. Care, skill and forethought are requisite to the successful accomplishment of the task. The soundness of the attorney's work is to be tested throughout the life of the corporation. Errors and insufficiencies may give rise to liabilities years afterwards. Too often, companies are formed in a spirit of haste that is afterwards repented at leisure.

§28. Selection of the Enabling Act.

A first consideration is the selection of an enabling act broad enough to cover the corporate objects. Organization under an act of insufficient scope may leave the corporation subject to at

capital will turn away. Inability to obtain funds, under these circumstances means embarrassment, possibly ruin. It follows that the cultivation of public confidence is essential to prudent corporate management. The only way to gain and preserve public confidence is to merit it. He serves his corpor ate clients best who insists upon adherence to sound principles.

It is incumbent upon the bar, as a matter of good citizenship, as well as for prudential reasons, to lend its powerful influence to the work of making corporate "securities" secure. Wise legislation, State examination and fair administration have made our State banks firm in the public faith. Like measures should produce like results in behalf of industrial organizations. When this has been accomplished-when a bogus stock shall be as rare as a bogus dollar -millions of dollars of the people's money will flow into the channels of corporate enterprise. As a matter of business, as a matter of conscience, as a matter of citizenship and good government, the leadership of the bar, individually and collectively, should be exerted to the end that public con

tack by the state3. Having found an act adapted to the desired purposes, its constitutionality should be carefully considered. The number of enabling acts that have been held unconstitutional in this state should stand as a constant warning. The necessity for vigilance in this respect is apparent when we remember that organization under a void law produces, in effect and legal liability, a partnership instead of a corporation1.

$29. Articles of Association.

In general, articles of association framed under the laws of Michigan must contain a brief statement of certain material facts. enumerated in the statute. For the sake of uniformity, it is sometimes provided by law that the secretary of state shall supply, upon application, suitable blank articles of association for the use of persons incorporating under certain acts". This provision, however, does not preclude the use of written or typewritten articles made in conformity with the statute. In draft

(m) Term of existence;

(n) Full names and addresses of incorporators.

Data for By-Laws:

(a) Date, place and hour of annual meeting;

(b) Notice-time and manner of service for stockholders' meetings and directors' meetings;

(c) Number of directors desired;

(d) Regulations governing directors' meetings;

(e) Special powers and duties of officers;

(f) Checks, notes and acceptances by whom to be signed;

(g) Contracts and conveyances -by whom to be executed;

(h) Certificates of stock-by whom signed, and how transferred;

(i) Form and custody of seal;
(i) Bonds of officers;
(k) Dividend date;

(1) End of fiscal year;

(m) Vote required to amend by-laws.

Data for Corporate Records:

(a) Date, time and place of first meeting;