gress of the action out of which the present appeal arises, is not, I must say, creditable to our legal proceedings. There was not in the case any fact in dispute; and the only questions which arose were questions of law, or questions, perhaps, as to the proper inferences to be drawn from facts as to which there was no dispute. The litigation appears to have been active and continuing, yet seven years have been consumed, and the result of all, up to the present time, is this, that in the Court of Exchequer, two out of the three judges were of the opinion that the plaintiff should have judgment; and when the case came before the Exchequer Chamber, it was heard before six judges, three of whom were of opinion that the plaintiff was entitled to judgment, the other three thinking that the defendant was entitled to judgment." The only doctrine of law involved in the case was that of ultra vires, and there is probably none more difficult of application to the decision of cases, or more uncertain and undefined. The phrase ultra vires, is used in the law in at least two different senses, as applied to two entirely distinct kinds of acts.

One embraces the acts of the directors of joint stock companies, who are the agents of the shareholders, ultra the deed of settlement. Properly, these are only acts of agents in excess of their powers as such, and it only leads to confusion to call them "acts ultra vires." The deed of settlement is a publicly recorded contract between the shareholders and directors, and every one dealing with the company is bound to take notice of its terms. If the directors make a contract beyond their powers as conferred by the deed of settlement, all the shareholders, or any one of them, may refuse to be bound by it. However, they may assent to it, or ratify it after execution, or by their acts estop themselves from objecting, and in such case it is binding on them. But there is here no question of ultra vires as between the company and the public; the question is always of ultra vires as between the directors and shareholders. Questions of ultra vires, in this sense, are mere questions of agency, and are therefore governed by old and well-settled rules of law.

The other sense of the phrase applies to acts of a corporation, which it is, regardless of any question of assent or dissent of its members, forbidden or not authorized to do, and it is in this sense only that the expression ultra vires

is properly used. Thus understood, the doctrine of ultra vires is of very modern date, and entirely the creation of the courts. There is no such thing as ultra vires in the case of a common law corporation (Case of Sutton's Hospital, 10 Coke, 30 C.), and it is not enacted in any statute. It affords, perhaps, the most remarkable instance in the history of English jurisprudence of the making of law by the judges; and having once been created, it is now probably saddled onto the backs of the courts, like Sinbad's Old Man of the Sea, not to be shaken off.

The doctrine was announced from the bench in America much sooner than in England, and the view of it taken here was at first adopted there. As first announced, it was drawn from the artificial nature of corporations, being based upon the supposed axiom, that, as a corporation is an artificial creature of the law, it has no existence except for the purposes. for which it was created. Hence, an act by the directors of a corporation, though done with the consent of all the stockholders, if not within the purposes for which it was created, was held to be not the act of the corporation, and therefore not binding on it. Head v. Providence Ins. Co., 2 Cranch, 150; People v. Utica Ins. Co., 15 Johns, 358; N. Y. Fire Ins. Co. v. Sturges, 2 Cowen, 664; Bank of U. S. v. Dandridge, 12 Wheaton, 64; Dartmouth College v. Woodward, 4 Wheaton, 518. This conclusion is inevitable from the premise; but is not the view of the nature of a corporation implied in that premise fallacious? It savors much of metaphysics, and of that kind of logic for which the schoolmen of the middle ages were famed, in which indeed it seems to be founded. Thus, about the earliest use of the phrase ultra vires occurs in Lord Kame's Principles of Equity, 3d Ed., p. 309, where it is said, "A principle in logics, that will without power can not produce any effect, is applicable to matters of law, and is thus expressed, that a deed ultra vires is null and void." Take, again, the language of Marshall, C. J., in Bank of U. S. v. Dandridge, 12 Wheat., at p. 92, where, speaking of corporations, he says: "Can such a being speak, or act otherwise than in writing? Being destitute of the natural organs of man, being distinct from all its members, can it communicate its resolution, or declare its will without the aid of some adequate substitute for those organs?" Or that of Ranney, J., in

Strauss v. Eagle Ins. Co., 5 Ohio St. 60, where, in the execution of an unauthorized contract, the corporation had taken, by endorsement from the other party to the contract, the promissory note of a third person, against whom it was then trying to enforce it. He says, in delivering the opinion of the court against the claim of the corporation, at p. 64: "If a fair construction of its charter does not confer the power, it is incompetent to become a party to the contract of indorsement, and without capacity to take or hold title. As well might a dead man, by the mere act of the indorser, be invested with the legal interest, as a corporation, which only lives for the purposes and objects intended by the legislature. Beyond these limits it has no existence, and its acts are neither more nor less than a mere nullity."

It is true that a corporation is a creature of the law; but so, too, are all legal rights and duties creatures of the law; and when the law creates a corporation, an artificial being, why should it not, so far as its nature permits, be capable of enjoying, and being affected by, all the rights and duties which have been previously created by the law? Why assume the necessity of an other special creation of rights and duties for the corporation, supplementary to the creation of the corporation, and of rights and duties in general?

Certain contracts, like that of marriage, for instance, a corporation is, in the nature of things, incapable of entering into; and it is not clear why the test of the capacity of a corporation, after it has once been created, to enter into a given contract, should ever be any other than its capacity in the nature of things, without reference to the manner of its creation. This was certainly the doctrine of the common law, as shown by the Case of Sutton's Hospital, 10 Coke, 1, a case which the courts had entirely lost sight of during the years they were creating the law of ultra vires, and which, with but a single exception, was not mentioned in any case until recently re-discovered by Blackburn.

It was therein resolved, 10 Coke, 30 B., that "when a corporation is duly created, all other incidents are tacite annexed, and therefore divers clauses subsequent in the charter are not of necessity, but only declaratory, and might well have been left out. As by the same authority, ability and capacity to purchase; but a clause

is added that they may alien, etc., and it need not, for it is incident. To sue and be sued, implead and be impleaded, to have a seal, etc., that is also declaratory, for when they are incorporated they may make or use what seal they will. To restrain them from aliening or demising but in a certain form, that is an ordinance testifying the King's desire, but it is but a precept, and doth not bind in law.” "This," says Blackburn, J., in Riche v. Ashbury Rwy. Car. Co., L. R. 9 Ex. 263, to me an express authority that, at common law, it is an incident to a corporation to use its common seal for the purpose of binding itself to anything to which a natural person could bind himself, and to deal with its property as a natural person might deal with his own. And further, that an attempt to forbid this, on the part of the King, even by express negative words, does not bind at law. Nor am I aware of any authority in conflict with this case."

seems

It is true that all modern corporations are created by statute, and that in this country they can only be created in that way. U. S. T. Co. v. Brady, 20 Barb. 119; Penn. R. R. Co. v. Commissioners, 21 Penn. St. 9; Franklin Bridge Co. v. Wood, 14 Ga. 80; but a statutory, and a common law, corporation are both equally artificial beings, alike creatures of the law, and any limitations of their capacity, inherent in their nature as such artificial creatures, inhere equally in both. So that if a common-law corporation, created for certain purposes, is not, by reason of its being an artificial being, non-existent as to its contracts made for another purpose, it is clear that a statutory corporation ought not to be; and it becomes evident that the theory of ultra vires, based on the want of power incident to the mode of creation of corporations, besides being founded in unnecessary metaphysical distinctions, is in conflict with the common law. The theory, as might be expected in the rapid multiplication of corporations in the last forty years, has not been logically adhered to. Thus, it soon became evident that it was necessary that corporations should be held liable for their torts, and that such is now the law is too well settled to require any citation of authorities. But if a corporation, because it is an artificial being, has no existence, save for the purposes for which it was created, then, since no corporation was ever created for the purpose of committing a tort, it can not, any more than

"a dead man,” commit one. Again, it is now settled, both at law and in equity, that a contract of a corporation, apparently within the scope of its powers, though actually beyond them, is binding on it. Royal Brit. Bank v. Turquand, 6 E. & B. 327; Re Athanæum L. Ins. Co., 4 K. & J. 549. But if a corporation has only such powers as are expressly conferred on it by its charter, and is "non-existent " for all other purposes, it can not increase them by seeming to have greater. Using the same kind of logic that underlies the theory itself, it might even be said that a corporation can not seem to have greater powers than it actually possesses, since the power of so seeming is not expressly conferred upon it. The only instance in our law, outside of corporations, where we find a physical capacity, combined with an absolute legal incapacity, to contract, is in the case of a married woman; and it is undeniably the law that the contract of a woman actually covert is absolutely void and not binding on her, though she be apparently sole, and even though she assert herself to be a feme sole, and the contract is made on the faith of that statement and her apparent discoverture.

Besides the theory of ultra vires, based on the limited capacities of corporations, there is a more modern one which rests the doctrine on illegality. Att'y-Gen. v. G. N. Rwy. Co., 6 Jur. N. S., 1006; McGregor v. D. & D. Rwy., 18 Q. B. 618; Taylor v. C. & M. Rwy. Co., L. R. 2 Ex. 356. It is thus stated by Blackburn, J., in Riche v. Ashbury Rwy. Car. Co., L. R. 9 Exch. 244, at p 262: "I do not entertain any doubt that, if on the true construction of any statute creating a corporation, it appears to be the intention of the legislature, express or implied, that the corporation shall not enter into a particular contract, every court, whether of law or equity, is bound to treat a contract entered into, contrary to the enactment, as illegal, and, therefore, wholly void, and to hold that a contract wholly void can not be ratified." The test, then, always is, not, did the legislature expressly enable the corporation to make the particular contract, but has it prohibited it, and every act not prohibited by the statute stands.

This view of ultra vires is not open to the same objections as the earlier one, and does not, like it, compel courts, in adjudicating upon contracts of corporations, to choose be

tween injustice and an abandonment of principle. Unlike the other, the theory of ultra vires, which rests it on statutory illegality, is consistent with the rule that corporations are liable for their torts, and for contracts apparently within the purpose of their creation, unless impliedly or expressly prohibited by the charter; in which case, as the prohibition is by statute, all men are put upon notice and act at their peril.

Under the earlier view, the contracts of a corporation in excess of expressly delegated power, must, like those of a married woman, be held absolutely void, whether executed or executory. On principle there can not, in the one case more than in the other, be an estoppel to set up the legal incapacity. Under the later view, since statutory illegality and common law illegality equally affect any contract into the consideration of which they have entered (White v. Bass, 3 Cush. 494; McGregor v. D. & D. Rwy., 18 Q. B. 618; Aubert v. Maze, 2 B. & P. 374; Collins v. Blantern, 2 Wils. 351) the question depends on the application of the rule, in pari delicto potior est conditio defendentis. When a corporation makes a prohibited contract, if it has been fully executed, the courts will refuse to disturb it. While executory on both sides, it is binding on neither; and if executed on either side the courts will refuse to lend any aid to the enforcement of performance by the other; subject, however, to this just exception, which can have no place under the older theory, that, if the charter clearly intended the contract to be illegal as to the corporation only, and not as to the other party, it may be enforced against, though not by the corporation. Oneida Bank v. Ontario Bank, 21 N. Y. 490; Tracy v. Talmage, 14 N. Y. 162. The doctrine of Blackburn, then, which seems now to be the prevailing one in England, has this to recommend it over the older theory of ultra vires that it is in harmony with the common law, while the other is not; that, resting upon statutory illegality, it can be applied according to the old and well-settled rules of law, while the other, resting on mere metaphysical conceptions, can not; that its source is the legislative will, as expressed in the statute creating the corporation, while the source of the other is the will of the court. G. H. W.

WANTED.-A judge who, though well able to express his own judgment, has the courage frequently to "concur." [Solicitor's Journal.

NUISANCE-BAWDY-HOUSE-DAMAGES.

GIVENS v. VAN STUDDIFORD.

St. Louis Court of Appeals-November, 1877.

HON. EDWARD A. LEWIS, Chief Justice.

66

66

ROBERT A. BAKEWELL, Associate Justices.
CHAS. S. HAYDEN,

A PERSON renting a house to be used as a bawdyhouse, or who knowingly allows it to be so used, is liable, at the suit of an adjoining owner, for the special damage caused by the depreciation in value of his property from the existence of a nuisance, over and above the wrong and injury done to the general public. APPEAL from the Circuit Court of St. Louis County.

W. G. Rainey, for appellant; Slayback & Haeussler, for respondent.

BAKEWELL, J., delivered the opinion of the

court:

This is an action of damages against defendant for permitting a nuisance to be established and maintained on the premises of defendant adjoining those of plaintiff, by which the value of plaintiff's property, consisting of a valuable residence, was permanently injured, and the rents which would otherwise have been received from the same were lost. The particular nuisance complained of is, that the house of defendant was occupied by prostitutes who conducted themselves in an indecent manner in the house, in full view of the neighborhood. The damages are laid at $25,000.

The answer is a general denial. There was a verdict found, judgment for defendant, and plaintiff appealed.

The testimony of plaintiff's witnesses was to the effect that plaintiff purchased, in 1867, a house on Walnut street, near Sixth street, in St. Louis; that defendant owned a house on Sixth street immediately adjoining; that defendant's house was rented to prostitutes in 1872; that plaintiff's tenants complained of the nuisance, and plaintiff notified defendant of the nuisance, and asked him to abate it, which was not done; that the women in defendant's house indecently exposed themselves at the windows; that since 1872 the house could be rented to no decent family; that since the date of the commencement of the nuisance the neighborhood is of bad fame, and many houses of the neighborhood are occupied by prostitutes; that the value of plaintiff's property has depreciated from the character of the neighborhood, and from the general depreciation in the value of real estate throughout the city since the commercial panic of 1873. One witness, a real estate agent, swore that the defendant's house was the first property in the neighborhood rented to prostitutes. It appeared that plaintiff bought the house in 1867 for $29,000 at a trustee's sale, and that he leased it to a railroad company for five years, the term expiring June, 1873, a month after which they moved out. After that, it was vacant for a year; was

then rented eighteen months at about $2,000, and has since been vacant, except that plaintiff occupied a room there, because he could

not rent it to any decent tenant. On the 4th of December, 1875, it was sold for $20,000, under a mortgage given by plaintiff for that amount, and at the date of the trial was held by plaintiff as lessee for a term of six months, at a monthly rent of $150, with the privilege of purchasing at the expiration of the term, for $24,657 and interest. The rental value of the property at the date of the trial was $1,800 a year.

The defendant introduced no testimony. At the close of plaintiff's case, defendant asked an instruction in the nature of a demurrer to the evidence, which was refused, and this action of the court was assigned for error.

We do not think that the trial-court erred in refusing to take the case from the jury. There was evidence tending to show a nuisance erected on the premises of defendant immediately adjoining and in full view of the house owned by plaintiff; that the defendant had notice of its existence, and had failed to remove the same, and that it occasioned special damage to plaintiff. It is true, that the evidence tended to show that the depreciation in plaintiff's property was attributable, in fact, to other causes, such as general depreciation in value, for which plaintiff was in nowise responsible. It was, however, for the jury to determine from the evidence, under proper directions from the court, what special damage, if any, was caused to plaintiff by the nuisance of which he complains. It is claimed by counsel for defendant that the injury so far arose from the negligence of plaintiff himself, that he might by ordinary care and exertion have avoided the injury. That would be a good defense, if shown; but it was for defendant to show it. It does not appear from anything in the testimony introduced by plaintiff.

At the instance of plaintiff, the court gave instructions to the effect that the keeping of a bawdyhouse is a nuisance for which damages may be recovered by one suffering a private injury therefrom; that these damages may be recovered from the landlord who rents his property for such a purpose, or knowingly allows it to be used; that the fact that other houses in the neighborhood were used for the same purpose, does not justify defendant in renting his house for purposes of prostitution; that, if defendant allowed his house to be so used, he is liable to plaintiff for all damages caused to plaintiff's property by that circumstance; that the measure of damages is the difference between the value of plaintiff's property, if defendant's property had not been used as a house of ill-fame, and the value of plaintiff's property as depreciated by such use of defendant's house; and that, in ascertaining that fact and assessing damages, the circumstances which might show a depreciation in value should be considered.

At the instance of defendant, the court instructed the jury: 1st. That if the plaintiff's interest in the property was worthless, at the time of bringing suit, they should find for the defendant, unless such condition of the property was in some degree brought about by the acts of the defendant. 2d. That plaintiff could not recover unless defendant either rented his house for a bawdy-house or knew

it was so used, and consented to such acts of his tenant as made the premises a nuisance. 3d. That to recover, plaintiff must prove that defendant's house was used as a bawdy-house with defendant's knowledge, and that plaintiff was injured by the nuisance on defendant's premises, and not by the fact that other houses in the neighborhood were used in like manner; and that plaintiff could recover in this suit only for such damages as were caused alone by the nuisance on defendant's premises. 4th. That if during the time plaintiff and defendant owned adjoining property, the neighborhood was bad, and defendant did not knowingly rent his house for, or permit it to be used as a bawdy-house, and neither house could be rented advantageously except to bawds, and any loss to plaintiff was caused by the general decline in the value of property, or by the character of the neighborhood, and not by the mere fact of the improper act of defendant's tenant, then plaintiff can not recover.

Instructions as to measure of damages, asked by plaintiff, were refused. It is not necessary to set them out for the purposes of this opinion.

A bawdy-house is a nuisance per se, and a proper subject for public prosecution wherever situated. It may also become a private nuisance; and whatever may have been formerly held as to no private action lying for a public nuisance, it is now well settled that such an action may lie; and it is unquestionable that, if a brothel is kept adjoining the tenement of another, by reason of which his tenants leave and his property is depreciated in value, he may maintain an action for the special damage that is sustained by him over and above the wrong and injury done to the general public. Hamilton v. Whitridge, 12 Mo. 128.

In such a case, a fair means of arriving at the actual damages would be to ascertain the loss of rent and depreciation of the value of the property caused by the nuisance. That is, how much less the property would sell for on account of the existence of the nuisance, and what rent has been lost from the same cause. But, in ascertaining these facts, all circumstances that would show a depreciation in value should be considered. I. C. R. R. Co. v. Grabill, 50 Ill. And the damages recovered must be the actual depreciation shown to be caused by the existence of the nuisance. Where property is changing its character, and what has been a good resident neighborhood has been invaded by business establishments which destroy its quiet, it is a matter of common observation that it passes through a period in which it is neither good for business of the better class, nor for residences; and drinking saloons, or other establishments more or less objectionable or disreputable, settle down, for a time, in what were once the residences of wealthy citizens. When a bawdy-house is opened in such a neighborhood, it may be very difficult to say how much any depreciation of value is attributable to that fact alone. But if it be shown that, after the defendant's house was occupied as a bawdy-house, other disreputable houses of the same character sprung up in the neighborhood, the mere fact that it may be impossible to say how much of the damages

are occasioned by the nuisance in defendant's premises, and how much by the other brothels, will be no bar to a recovery. For if it is impossible to separate the damages caused by others from those caused by defendant, he is liable for all such damages, if the natural and probable consequence of his illegal act was to cause the injury complained of. The fact that another person contributed, either before defendant's interposition or concurrently with it, in producing such damages, is no defense. Whart. Neg., § 144. So, in a recent case in Ohio, Boyd v. Watt, 27 Ohio State, 3 Cent. L. J. 756, where, under a statute of that state, one was sued for damages for selling liquor to another, whereby he became an habitual drunkard, it was held that it was no defense that others had sold the deceased liquor too: and it was further held, that any one who contributed to the result by illegal sales to the deceased might be held liable for the whole damages, where the damages could not be separated. "If the defendant," say the court, "is using the means calculated to produce the injury, the law presumes he intended to produce it; if others, with or without concert, were concurrently co-operating with him, using like means, they are acting under the same common design; and if injury resulted, each is liable, though each were acting without the knowledge of what the other was doing. Such is the uniform rule in this class of cases."

It is manifest from what has been said, that this case was given to the jury on a totally wrong theory of the law, and that the 2d, 3d and 4th instructions for defendant should have been refused. These instructions are further objectionable, because they tell the jury that defendant is not liable for a nuisance created and maintained solely by his tenants, without his knowledge or consent, and in this respect are not warranted by the evidence. Plaintiff swore he told defendant of the existence of the nuisance in 1872, and his testimony in this respect is not contradicted.

The judgment of the circuit court is reversed, and the cause remanded. All the judges concur.

PRACTICE IN FEDERAL COURTS.

SAGE v. TAUSZKY.

United States Circuit Court, Southern District of Ohio-December, 1877.

Before HON. P. D. SWING, District Judge.

THE Act of Congress of June, 1872 section 914, U. S. Rev. Stat., which requires that the practice, pleadings, and forms and modes of proceeding in civil causes, other than equity and admirality causes, in the circuit and district courts of the United States, shall conform, as nearly as may be, to the practice, pleadings, forms and modes of proceeding existing at the time in like causes in the courts of record of the state within which such circuit or district courts are held, has no application to the manner of taking depositions tó be used in the federal courts. The requirements which must be followed in taking depositions to be used as evidence in the federal courts are prescribed by §§ 863, 864 and 865, U. S. Rev. Stat., which have not been repealed by § 914.