Drunken persons.

Corporations.

has been said that a drunken person would be liable on a contract for actual necessaries or for goods supplied to him when drunk and kept when sober (1).

We pass on now to the law with regard to contracts entered into by corporations. The general principle of such cases was well stated by Baron Parke as follows: "Corporations which are creatures of law, are, when their seal is properly affixed, bound just as individuals are by their own contracts, and as much as all the members of a partnership would be by a contract in which all concurred." But where a corporation is created by an Act of Parliament for particular purposes, with special powers, then another question arises: their deed, though under their corporate seal, and that regularly affixed, does not bind them, if it appear by the express provisions of the statute creating the corporation, or by reasonable inference from its enactments, that the deed was ultrà vires-that is, that the legislature meant that such a deed should not be made (2).

The cases on this subject establish that a company when incorporated by Act of Parliament for a particular purpose has no existence except for that purpose, and cannot devote its funds to any purpose not authorized by the terms of its incorporation.

The course of existence of a company, as is well said by Mr. Brice (3), is marked out from its birth. It has been called into being for certain special purposes. It has therefore all the powers and capacities, and only those, which are expressly given it, or are absolutely requisite for the due carrying out of those purposes; and all the obligations it affects to assume which do not arise from or out of the pursuit of such purposes are null and void.

The next question to be considered is, How can a company contract? Here, again, the question is answered by judicial authority.

The law with regard to the contracts of corporations was much considered by the House of Lords in 1883 (4), where the following statement of the law made in 1838, and approved in 1840, was cited:

"The general rule of law is that a corporation contracts under its common seal; as a general rule, it is only in that

(1) Gore v. Gibson, 13 M. & W. 623.

(2) South Yorkshire Railway Co. v. Great Northern Railway Co., 9 Ex. 55, 89; National Marine Co. v. Donald, 28 L. J. (Ex.) 185; Eastern

Counties Railway Co. v. Hawkes, 5
H. L. C. 48.

(3) Brice on Ultra Vires, p. 46.
() Young & Co. v. Mayor and
Corporation of Leamington, 8 App.
Cas. 517.

That Corpora

way that a corporation can express its will or do any act.
general rule, however, has, from the earliest traceable periods,
been subject to exceptions, the decisions as to which furnish
the principle on which they have been established, and are
instances illustrating its application, but are not to be taken as
so prescribing in terms the exact limit that a merely circum-
stantial difference is to exclude from the exception. This prin-
ciple appears to be convenience amounting almost to necessity.
Wherever to hold the rule applicable would occasion very great
inconvenience, or tend to defeat the very object for which the
corporation was created, the exception has prevailed." Hence
the retainer by parol of an inferior servant, the doing of acts
very frequently recurring or too insignificant to be worth the
trouble of affixing the common seal are established exceptions;
on the same principle stands the form of accepting bills of
exchange and issuing promissory notes by companies incor-
porated for the purposes of trade, with the rights and liabilities
consequent thereon" (1).

In the case before the House of Lords the cases on this subject governed by the common law were characterized as "doubtful and conflicting," but modern decisions establish the proposition that, instead of convenience amounting almost to necessity, we must now read as the law of the present day, that a corporation may contract without seal, (1) with regard to all matters incidental to the purposes for which it exists, and (2) that in the case of a trading corporation this includes all contracts made in the ordinary course of its business, or for the purposes connected therewith (2).

The law on this subject was considered in a case where a company incorporated under the Companies Act, 1862, for the working of collieries, contracted, but not under seal, with an engineer for the erection of a pumping-engine and machinery for use in the colliery, and paid him part of the price. In an action by the company against the engineer for breach of contract in refusing to deliver the engine and machinery, it was held, affirming the judgment of the Court of Common Pleas, that the action was maintainable, though the contract was not under seal.

"We are asked," said the Court, "to overrule a long series of decisions in all the Courts, which, in accordance with

(1) Church v. Imperial Gas Co., 6 A. & E. 846.

(2) Pollock on Contracts, 5th ed. p. 145, et seq., where the authorities

are reviewed, and see also Leake on
Contracts, p. 588, et seq.; and see
Stevens v. Hounslow Burial Board,
61 L. T. 839.

tions.

394

CONTRACTS.

[Book III. sound sense, have held that the old rule as to corporations contracting only under seal does not apply to corporations or companies constituted for the purpose of trading, and we are invited to re-introduce a relic of barbarous antiquity. We are all of opinion that the judgment of the Court of Common Pleas ought to be affirmed.” (1)

It has been decided that if a contract is sent by a corporation to another person, who signs it, and the corporation afterwards makes an alteration in the terms of the contract, which alteration is consented to by the other party, after which the seal of the corporation is affixed, the contract is valid. (2)

The law which governs the relations between master and servant may now be briefly noticed. Contracts between them are, as stated in Chitty on Contracts, the subject of much statutory regulation (3). The Truck Acts prohibit the payment of wages in goods or otherwise than in the current coin of the realm. Payment of wages at public houses is prohibited. The law implies a promise by a servant to obey the orders of his master, if lawful and reasonable and within the scope of his employment, but when a servant contracts to serve his master the law does not imply a contract by the master to retain him in his service. In the absence of agreement to the contrary, the hiring of domestic or menial servants is for a year, to be determined by a month's notice, given by either side, or payment by the employer of a month's wages. The question, who are menial servants, has given rise to a good deal of litigation. A head gardener and a huntsman are within the rule. Α governess is not (4). A servant may be discharged without notice, for wilful disobedience, gross moral misconduct (e. g., if being a confidential servant of a merchant he speculates largely and perpetually in differences on the Stock Exchange (5)) habitual neglect of business, or incompetence. He has a right to wages accrued due, but not to wages accruing (6).

A branch of law which is to some extent connected with the law relating to master and servant is that which concerns apprentices. The contract of apprenticeship has been defined as one "whereby in consideration of the premium, or for no

(1) South of Ireland Colliery Co. v. Waddle, L. R. 4 C. P. 617.

(2) Dartford Guardians v. Trickett, 59 L. T. 754.

(3) Chitty on Contracts, 12th ed. p. 638, where the statutes are collected.

() MacDonnell, Law of Master

and Servant, p. 169, where the authorities are collected; Chitty on Contracts, 12th ed., p. 640.

(5) Pearce v. Foster, 17 Q. B. D. 587.

(6) See Chitty on Contracts, 12th ed. p. 642.

consideration at all, one person becomes bound to teach another a certain profession or trade, and the latter is bound to learn it and to serve the master as an apprentice." The contract of apprenticeship may be determined-(i.) by effluxion of time or by apprentice coming of age; (ii.) by bankruptcy of the master, see post, p. 933; (iii.) by death of master or apprentice; (iv.) by consent; (v.) by misconduct, where the contract specifically provides for such a mode of determination; but it must be borne in mind that at common law the master has no right to dismiss for misconduct. (1).

(1) Austin on Apprentices, pp. 16, 38, et seq. 68.

Void con

tracts.

Collins v.
Blantern.

CHAPTER IV.

ILLEGAL CONTRACTS.

Every contract, however made, which stipulates for the performance of an illegal act is void, the law recognising in this respect no distinction between contracts by deed which require no consideration to support them, and parol contracts which do require a consideration for their support.

"It would indeed be inconsistent with reason and principle," said Tindal, C.J., "to hold that by the mere ceremony of putting a seal to an instrument, that is by the voluntary act of the parties themselves, a contract which was void in itself on the ground of its being in violation of the law of the land, should be deemed valid, and an action be maintainable thereon in a Court of justice" (1).

It must also be remembered that the general rule as to the inadmissibility of parol evidence to contradict the terms of a written contract, or to add to its provisions, cannot be taken advantage of to prevent the defence of illegality from being set up where the illegality does not appear on the face of the instrument (2).

A leading case on the subject of illegality in a contract is Collins v. Blantern, decided in the year 1767. In that case an action was brought on a bond for £700. The defence was, that the bond had been given as an indemnity for a promissory note which had been entered into by the obligee of the bond in order to stifle a prosecution for wilful and corrupt perjury. It was urged in support of the bond in question, that as the bond appeared on the face of it to be good and lawful, no argument should be admitted to shew that it had been given upon an illegal consideration.

"It hath been insisted for the plaintiff," said the Lord Chief Justice Wilmot, "that he was not privy to the bargain and agreement, so as to him there appears to be nothing illegal

(1) The Gaslight and Coke Co. v. Turner, 5 Bing. (N.C.) 666.

(2) Collins v. Blantern, 2 Wils. 347. Smith's Leading Cases, vol. i.; and see Windhill Local Board of Health

v. Vint, 59 L. J. Ch. 738; and as to to non-recovery of money paid under illegal contract where there has been substantial part performance, Kearley v. Thompson, 24 Q. B. D. 472.