we have noticed, they are limited in their powers within the scope of the authority granted by the charter.

In Strasburgh R. Co. v. Echtenacht, 21 Pa. St., 220 (1853), which was a suit to recover on a subscription made to the shares of stock of a contemplated corporation, not yet organized, BLACK, C. J., observes: "Before the Strasburgh Railroad Company was incorporated, the defendant and others signed a paper agreeing that if it should be incorporated with certain privileges, they would subscribe the number of shares set opposite their respective names. The charter was obtained and the defendant refused to take the stock, whereupon the company brought this bill in equity to enforce specific performance of the contract.

"A contract cannot be made by one person alone. It takes two to make a bargain. Before a promise becomes a binding obligation, it must not only be made to, but must be expressly or impliedly accepted by, the party for whose benefit it was meant.

"The paper before us is no more than a naked expression of the subscriber's intention to purchase certain shares in the capital stock of a company, which it was expected would be incorporated by the legislature. Besides it is without any sufficient consideration. It is not pretended, and cannot be made out from the paper that the agreement of the defendant was the motive for the others for taking stock. It is well settled that procuring legislation of any kind is not a consideration which will support even a direct promise to pay a fair compensation for the labor of the promise about such a business.

"Again: If there was a binding engagement, it was not made with the railroad company which did not exist at the time.

"But supposing this to have been a valid contract, to which the plaintiff was a party, and based upon good consideration, a bill in equity is not the mode of enforcing it; the remedy at law for its violation being full, complete, and adequate."

The contrary doctrine has, however, been frequently affirmed under statutes providing for incorporation. "In this country preliminary subscriptions may generally be made, and in such cases the rights secured thereby become vested in the corporation when formed, as the right to membership thereby pledged is sufficient consideration for such subscription, and the company generally may recover calls on such subscriptions after its incorporation the same as though made after its complete organization. In fact, it is frequently required in organizing under general statutes, not only that preliminary subscriptions be made, but that a certain percentage of the sum be paid as a condition precedent to the organization, and these subscriptions, if the corporation is finally organized, become binding upon the subscribers, whether scrip is issued therefor or not, and they become a part of the assets of the corporation." Field on Corp., § 122. See, also, Griswold v. Peoria Universitg, 26 Ill., 41; Johnson v. Ewing Female University, 35 Id., 518; Anderson v. Newark, etc., R. Co., 12 Ind., 376; Johnson v. Wabash, etc., R. Co., 16 Id., 389; Heaston v. Cincinnati, etc., R. Co., Id., 275; Buffalo, etc., R. Co. v. Dudley, 14 N. Y., 336; Eastern P. R. Co. v. Vaughn, Id., 546; Lake Ontario R. Co. v. Mason, 16 Id.,

451; Rensselaer P. R. Co. v. Barton, Id., 457; Stanton v. Wilson, 2 Hill, 153; Hamilton, etc, R. Co. v. Rice, 7 Barb., 157; Reformed Church v. Brown, 29 Id., 335; Penobscot & C. R. Co. v. Dummer, 40 Me., 172; Walkins v. Eames, 9 Cush., 537; People's Ferry Co. v. Balch, 9 Gray, 303; Danbury, etc., R. Co. v. Wilson, 22 Conn., 435; Taggart v. West Maryland R. Co., 24 Md., 563.

Contract for right of way.-In New Haven & Northampton R. Co. v. Hayden, 107 Mass., 525, several persons signed a writing in which they undertook to secure subscriptions to the stock of a railroad corporation to a certain amount and pay for the same in installments, and also proposed to secure a right of way for the extension of the railroad, free of expense to the corporation, and to obtain the legislation needful to carry out the proposed extension, which was not to be binding unless they could secure the right of way or make such arrangements as should be satisfactory to the corporation.

The corporation accepted the proposal, having no authority at the time to extend the railroad, but subsequently obtained authority from the legislature. The signers afterwards agreed in writing that the railroad company might go forward and secure the right of way, without prejudice to the rights of either party; and it then purchased the right of way. In an action by the corporation against the signers for the failure to secure the right of way, the defendants claimed that the contract was void, as the plaintiffs had no power to make it. But the court held it binding upon them. The court say: "It was in substance an agreement to do something not at the time legal, but which the passing of an expected statute would render legal; and both parties must have understood that if the sanction of the legislature should be withheld the contract would not go into effect. The contract does not import that the plaintiffs bound themselves to construct the road at all events and without legislative authority. * In this

view of the case, we think that the objection that the plaintiffs had no legal authority to extend their road, and that the agreement to do so is therefore void, is wholly untenable.'

Reference was made also to various English authorities sustaining the same doctrine. See Scotch Northeastern R. Co. v. Stewart, 3 Macq., 382; Mayor of Norwich v. Norfolk R. Co., 4 El. & Bl., 397; Taylor v. Chichester & M. R. Co., 4 H. L. 628.

ILLUSTRATION OF THE DOCTRINE IN ITS APPLICATION TO SUITS IN EQUITY, TO CANCEL DEEDS, ETC.

FOURTEENTH SELECTED CASE.

MINERS' DITCH Co. V. ZELLERBACH & POWERS.*

DEALING WITH A CORPORATION.--The rights of strangers, dealing with a corporation, may vary according as they are considered with reference to the corporation itself, its creditors or the stockholders of the corporation. DIFFERENT KINDS OF CORPORATIONS.-There are three classes of corporations; to-wit., public municipal corporations, the object of which is to promote the public interest; corporations technically private, but of a quasi public character, having in view some public enterprise in which the public interests are involved, such as railroad, turnpike, and canal companies; and corporations strictly private.

WHEN ACTS OF CORPORATION ARE ULTRA VIRES.-The term ultra vires, when used in reference to corporations, is employed in different senses. An act is said to be ultra vires when it is not in the power of the corporation to perform it under any circumstances; and an act is also said to be ultra vires with reference to rights of certain parties, when the corporation cannot perform it without their consent; and it may also be ultra vires with reference to some specific purpose when the corporation cannot perform it for that purpose.

Idem. When the act of the corporation is ultra vires in the first sense mentioned, it is void in toto, and the corporation may avail itself of the plea; but when it is ultra vires in the second and third senses, the right of the corporation to avail itself of the plea will depend upon the circumstances of the case.

WHEN CORPORATION MAY REPUDIATE ITS CONTRACT.-In a contract between a corporation and strangers dealing with it, when the act in question is one which the corporation has no power to perform under any circumstances, the corporation may avail itself of the defense of ultra vires; but when the act may be performed by the corporation for some purposes, but not for others, the defense of ultra vires may or may not be available. If the stranger dealing with the corporation knew of its intention to perform the act for an unauthorized purpose, the defense is available, otherwise not.

CORPORATION MAY SELL ITS PROPERTY.-A corporation organized for the purpose of owning ditches for the conveyance and sale of water, possesses the power of selling and conveying all its corporate property, pro*Reported in 37 Cal., 543 (1869).

vided the sale is made for corporate or lawful purposes, and strangers taking a conveyance have a right to assume, as against the corporation, that the sale was for a lawful purpose.

Idem.-If the corporation contests the validity of such sale on the ground that it was made for an unlawful purpose, it devolves upon it to show that the party making the purchase knew of such unlawful purpose. Idem. Such sale may be made to any person, natural or artificial, capable of taking, and the stockholders of one or more corporations may form themselves into a new corporation, and the property of one or both of the old corporations may be conveyed to the new corporation. DEED OF CORPORATION.-Where a deed purporting to be the deed of a corporation is signed by its trustees as trustees, and has the corporate seal affixed, it is admissible in evidence as a deed of the corporation, and is itself prima facie evidence of the regular and duly authorized execution of the same.

Idem.--It devolves upon the party contesting the validity of such deed to overthrow the presumption that it was regularly and duly executed. RIGHT OF CORPORATION TO CONTEST ITS OWN SALE.-Where a corporation sells and conveys all its property for an illegal purpose, the contract being fully executed on both sides, and the property is afterward purchased by a stranger with knowledge of that fact, in an action against such stranger to recover the property, the corporation cannot avail itself of the invalidity of the transaction to defeat the conveyance. ILLEGAL SALE OF CORPORATION PROPERTY.-Conceding it to be unlawful for a corporation to make a sale of all its property to another corporation, and receive in payment therefor the stock of the grantee to be distributed among its own stockholders, yet, if such sale is made, and the contract fully executed, the corporation itself cannot recover back the property sold, or set aside the contract on account of its illegality.

Appeal from the District Court, Fourteenth Judicial District, Nevada county.

THIS was an action to recover possession of the Miners" Ditch, the Poorman's Ditch, the extension of the Poorman's Ditch, the Grizzly Ditch and its branches, the undivided twofifths of the Eureka Lake Water Company's Ditch, the undivided two-fifths of the Gray Diggings Mining Claims, the undivided two-fifth of the Lewis Mining Claims, the undivided two-fifths of the Isembeck & Co.'s Mining Claims, the undivided two-fifths of the Eureka Lake Water Company's saw-mill, and the land whereon the same stands, together with all and singular the appurtenances to the above named and specified property belonging.

t

The complaint was in the usual form, alleging ownership of and possession of the property by the plaintiff on the third day of January, 1863, and its ouster by the defendants on the same day. The defendants, in the tenth subdivision of their answer, set up the following as an equitable defense: "And for a tenth further and separate answer to the said several causes of action in the said amended complaint mentioned, and as a ground for the equitable interposition of the court, this defendant avers and shows as follows:

"That on the 14th day of May, 1859, the plaintiff, the Miners' Ditch Company was, and for some time prior thereto had been a corporation duly organized and existing under the laws of this State, and the owner and possessed of the several ditches and parcels of property mentioned and described in the first, second, third, and fourth counts of plaintiff's amended complaint.

"That at the same time another corporation, duly organized and existing under the laws of this State, and styled the Eureka Lake Company, owned and possessed certain other ditch property in said county of Nevada, which said ditches were constructed and used for the purpose of conveying and selling water for mining and other purposes in said county of Nevada and its vicinity.

"That the said Miners' Ditch Company and the said Eureka Lake Company were rival companies selling water in the same market.

"That a large portion of the stock in each of said corporations was held and owned by persons who were stockholders in both of said corporations.

"That at some time in the month of May, 1859, and prior to the 14th day of said month, at a meeting of the board of trustees of the Eureka Lake Company, regularly called and held for the purpose, it was unanimously resolved and determined, by a vote of the said board of trustees, that the president of said corporation, on its behalf, be and thereby was authorized and directed to propose to the Miners' Ditch Company that the several properties of and belonging to the said several corporations be consolidated, and the said corporations united in one, upon certain specified terms.