spondent having full notice that they were exceeding their powers, and were guilty of a breach of trust, he could not have enforced the contract either at law or in equity. But upon the face of the contract itself there is no reference whatever to the 'direct diverging line.' The recitals and the operative part of the contract refer only to the main line between Wisbach and Spalding, and to the 'curvilinear line' of junction delineated upon the parliamentary plan; nor is there any evidence to prove that the respondent was a party to the scheme alleged to have been formed by agents of the company to deceive Parliament by abandoning the curvilinear and substituting an unauthorized direct line of junction with the Ambergate railway": Eastern Counties R'y Co. v. Hawkes, 35 Eng. L. & Eq. 22.

And Lord St. Leonards also said: "Under this head [that the contract was ultra vires], the general question of the power of such companies to bind themselves was argued. Now this is a question between the appellants, bound by their contract under seal, and the party with whom they contracted. It is not a question between them and their share-holders, but, as was observed in Edwards v. Grand Junction R'y Co., 1 Mylne & C. 674, the court cannot recognize any party interested in the corporation, but must look to the rights and liabilities of the corporation itself. The covenant of the company is binding on the face of it, and the appellants must show, if they can, why it should not be so. Here they were properly bound. The property was within the bill as brought in, and within the act as passed, and if the property in question had not been purchased before the act, it might have been bought after the act passed. It is no objection that the whole was not within compulsory powers. The land clauses act provides that no party shall be required to sell a part only of any house, if he is able and willing to sell and convey the whole. And to that extent, of course, the appellants might properly agree to purchase the whole of the house, although they required only a part of it. And at all events other parts of the property, according to the plans, would have been required for the railway, and the whole might have been required. I do not think that the contract can be avoided by the appellants showing that they do not require the whole. Where directors are acting in the obvious line of duty, as in this case, buying off an opposition, and acquiring property necessary or useful for the corporation, and the party contracting with such directors

is not aware of any intended misapplication on their part, I am of opinion that the contract is binding, although it can afterwards be shown that the property really was not required for the railway. The safety of men in their daily contracts requires that this doctrine of ultra vires should be confined within narrow bounds": Eastern Counties R'y Co. v. Hawkes, 35 Eng. L. & Eq. 31. He further said: "My noble and learned friend showed that the mere circumstance of a covenant by directors in the name of the company, being ultra vires as between them and the share-holders, does not necessarily disentitle the covenantee to sue upon it"; and expressed a disposition "to restrain the doctrine of ultra vires to clear cases of excess of power, with the knowledge of the other party, express or implied, from the nature of the corporation and of the contract entered into": Id. 32.

From the cases cited, it very clearly appears that the question, as between stockholders and the corporation, is a very different one from that which arises between the corporation itself and strangers dealing with it; and the principle established where the contest arises between strangers and the corporation is, whether the act in question is one which the corporation is not authorized to perform under any circumstances, or one that may be performed by the corporation for some purposes, but may not for others. In the former case, the defense of ultra vires is available to the corporation as against all persons, because they are bound to know from the law of its existence that it has no power to perform the act. But in the latter case, the defense may or may not be available, depending upon the question whether the party dealing with the corporation is aware of the intention to perform the act for an unauthorized purpose, or under circumstances not justifying its performance. And the test, as between strangers having no knowledge of an unlawful purpose and the corporation, is to compare the terms of the contract with the provisions of the law from which the corporation derives its powers; and if the court can see that the act to be performed is necessarily beyond the powers of the corporation for any purpose, the contract cannot be enforced; otherwise it can. Or, in the language of Mr. Justice Selden, in the case before cited: "Where the want of power is apparent, upon comparing the act done with the terms of the charter, the party dealing with the corpora. tion is presumed to have knowledge of the defect, and the defense of ultra vires is available against him. But such a de

fense would not be permitted to prevail against a party who cannot be presumed to have had any knowledge of the want of authority to make the contract. Hence, if the question of power depends, not merely upon the law under which the corporation acts, but upon the existence of certain extrinsic facts resting peculiarly within the knowledge of the corporate officers, then the corporation would, I apprehend, be estopped from denying that which, by assuming to make the contract, it had virtually affirmed ": Bissell v. Michigan Southern and Northern Indiana R. R. Cos., 22 N. Y. 290.

Strangers are presumed to know the law of the land; and they are bound, when dealing with the corporations, to know the powers conferred by their charter. These are open to their inspection, and it is easy to determine whether the act is within the scope of the general powers conferred for that purpose. But they have no access to the private papers of the corporation, or to the motives which govern directors and stockholders, and no means of knowing the purposes for which an act that may be lawful for some purposes is done. The very fact that the appointed officers of the corporation assume to do an act in the apparent performance of their duties, which they are authorized to perform for the lawful purposes of the corporation, is a representation to those dealing with them. that the act performed is for a proper purpose. And such is the presumption of the law; and upon this presumption, strangers, having no notice in fact of the unlawful purpose, are entitled to rely. To this effect is the principle of the following, among other cases, as well as those already cited: Commissioners of Knox County v. Aspinwall, 21 How. 545, is a strong case applying this doctrine to public corporations; Gelpecke v. City of Dubuque, 1 Wall. 203, and cases cited; Bank of United States v. Dandridge, 13 Wheat. 69.

Upon any other principle, there would be no safety in dealing with corporations, and the business operations of these institutions would be greatly crippled, while the interests of the stockholders and the public, and their general usefulness, would be seriously impaired. The officers are appointed by the corporation, and if any loss results to strangers dealing with the corporation from their misrepresentation in matters within the general scope of their duties, it should fall upon the corporation, which is responsible for their appointment, rather than upon parties who have no other means of

ascertaining the facts, and must rely upon their assurances, or not deal with the corporation at all.

The next step in the argument is to ascertain whether the Miners' Ditch Company had power to sell and convey its corporate property for any purpose; and upon this point we entertain no doubt. We have already seen by the fourth section of the act under which it was incorporated that the corporation was empowered "to purchase, hold, sell, and convey such real and personal estate as the purposes of the corporation shall require." The power to sell and convey is as broad as its power to purchase and hold, and is granted in the same terms. There is no complaint that the property was not properly acquired, and that the corporation legally owned it. The jus disponendi necessarily attached as an incident to the ownership. The very idea of private property, in which the public has no rights, involves the idea of a right to sell and convey when the exigencies of the corporation require it. If a corporation could convey a part, it could convey the whole. The enterprise of the Miners' Ditch Company may have proved unprofitable, and rendered it necessary to dispose of its assets, and wind up the concern, as the only means of avoiding insolvency. It might be necessary to sell and convey a part or the whole of its property in order to raise means to pay its debts and avoid a sacrifice by forced sale. In either event, the sale and conveyance of the property, with these objects in view, would be a lawful purpose of the corporation. Although the object for which it was formed was to construct a ditch, and convey water for sale to miners, and for mechanical purposes, there was no obligation resting on the corporation to pursue this object after it became evident that the enterprise would be unprofitable, and result in insolvency or loss. When such a result appears to be unavoidable, obviously the only mode by which the interests of the parties, and of the public, could be subserved, would be to dispose of its assets in the most advantageous way, and pay off its debts, with a view to winding up the affairs of the corporation with the least possible loss.

When a corporation of the kind in question is formed under our laws, no obligation to the public is assumed to carry on the business for which it was formed throughout the period specified in its certificate, whether the enterprise proves profitable or not. A corporation may forfeit its franchise by nonuse, but a conveyance of property of the kind in question is

not a transfer of its franchise. The district judge in his opinion well says: "But the ditches and water rights were no part of the franchises; they were not given by the legislature. The whole property was situate on the public domain, and could be acquired only by appropriation or purchase. The Miners' Ditch Company did not acquire any right to or property in the ditches or water right by virtue of its incorporation. After its charter had been perfected, and the legislative grant of its franchise had fully vested, it still had not a foot of ditch or an inch of water. Its property had then to be acquired in the same way that a natural person, without any franchises, could have acquired it. The case is entirely dif ferent from that of a railroad company, where a right of way, and other special rights in the nature of property, are granted by the charter. The only special privilege which the Miners' Ditch Company received through its charter is simply the right to be a corporation, and thereby to do business in a manner different, in some respects, from that in which an ordinary association of natural persons may do business. A franchise was formerly said to be 'a branch of the royal prerogative, existing in the hands of a subject'; and it may still be defined to be a special grant by the sovereign power of a peculiar privilege whereby the recipient may do or enjoy something which, in the exercise of the general rights of a subject or citizen, he could not do or enjoy. But any citizen in the land might, by virtue of his general personal rights, have acquired everything mentioned in the deed. The conveyance, then, was not of any franchise of the corporation. It is claimed, however, that as the deed conveyed all the property of the corporation, it was, in effect, a transfer of corporate powers, because it left nothing upon which the corporate powers could be exercised; in other words, that it destroyed the existence of the corporation. But the property sold was not essential to the existence of the corporation. The corporation was in full existence the moment its charter was perfected, although at that time it had not, and could not have had, a dollar's worth of property; and the books are full of cases where it is held that a corporation still exists after all its property is gone. The Miners' Ditch Company certainly did not die upon the transfer of all its property, as the bringing of this suit witnesseth; and I presume that a defense to a suit brought by a corporation on the ground that it had no property, and was therefore dead, would find no countenance in a court."