them contained any provisions which could enure to their benefit, or that the contract itself was entered into for any purpose connected with the undertaking already authorized by the Eastern Counties Railway act. But it does appear that the inducement to the entering into this contract was the prior and paramount stipulation that these three railways, constituting as they were then about to constitute, and as they do now constitute, the East Anglian Railways, were to be leased to the Eastern Counties Railway for 999 years. It is submitted that a contract of that nature, entered into by a company incorporated for one specific purpose only, and bound to apply its funds for that purpose exclusively, is void. Each shareholder has a right to repose in peace upon the purposes mentioned in the act of Parliament, upon the faith and confidence of which he has invested his money; the directors have no right to impose on him a speculation which is de hors the purposes mentioned in the act.

In Broughton v. The Manchester and Salford Water Works Company, 3 B. & Ald., 1 (E. C. L. R., Vol. 5), the defendants, a company not established for trading purposes, being sued on a bill of exchange, defended themselves on the ground that it was not competent to them to accept a bill of exchange, that being in contravention of the acts relating to the Bank of England; and this was held to be a good defense. And HOLROYD, J., said: "I take it to be clear, that where a statute prohibits a thing to be done, and does not expressly avoid the securities which fall within the prohibition, then, if the violation of the law does not appear on the face of the instrument, and the party taking it is ignorant that it is made in contravention of the statute, it is an available security in the hands of such person. I think, therefore, that, as the statute here does not expressly avoid the security, the bill of exchange, under the circumstances stated in Wigan v. Fowler, 1 Stark. N. P. C., 459 (E. C. L. R., Vol. 2), would not be void in the hands of an innocent holder. But here the defendants are made a corporation by a public act of Parliament, and every person is bound to take notice of that act; and when, therefore, a holder of a bill, though a bona fide indorsee takes the defendant's acceptance, he must know that they are a body corporate; and he,

therefore, receives it knowing it to be the acceptance of a corporation prohibited from owing money on such a bill; he is not, therefore, an innocent indorsee, because he takes a bill which he knows to be prohibited by statute; and that distinguishes the case from the case of Wigan v. Fowler.”

That is the ground upon which the cases, one and all, have proceeded. We may assume, therefore, that where a statute makes a contract illegal it is notice to all the world, and all are bound by the illegality of the transaction. It is idle to say that the shareholders in such a case may have relief in equity. It is only by treating the contract as illegal and void, and incapable of being enforced, that the shareholders, or the public, can be protected from excesses in the exercise of their powers by the directors. One of the earliest cases in equity upon this subject was that of Colman v. The Eastern Counties Railway Company, 10 Beavan, 1, where the directors of the company, who are the defendants in this action, for the purpose of encouraging the traffic on their railway, proposed to guaranty certain profits and secure the capital of an intended steam packet company, who were to run steam vessels from the port of Harwich, in connection with the railway; and it was held that such a transaction was not within the scope of their authority, and they were restrained from carrying the bargain into effect. Lord LANGDALE, M. R., lays down the rule in a manner that is quite decisive of the present case. "I think it right to observe," he says, "that companies of this kind, possessing most extensive powers, have so recently been introduced into this country, that neither the legislature nor the courts of justice have been able to understand all the different lights in which their transactions ought properly to be viewed. We must adhere, however, to ancient general and settled principles, so far as they can be applied to great combinations and companies of this kind. Joint stock companies have funds so extremely large, and exercise powers so extensive and so materially affecting the rights and interests of other persons, and the rights which the public or the subjects of her Majesty have been accustomed to enjoy under the protection of the laws established in this kingdom, that to look upon a railway company in the light of a common partnership, and as

subject to no greater vigilance than common partnerships are, would, I think, be greatly to mistake the functions which they perform, and the powers which they exercise, of interference, not only with the public, but with the private rights of all individuals in the realm. We are to look upon those powers as given to them in consideration of a benefit which, notwithstanding all other sacrifices, it is to be presumed and hoped, on the whole, will be obtained by the public. But it being the interest of the public to protect the private rights of all individuals, and to defend them from all liabilities beyond those necessarily occasioned by the powers given by the several acts, those powers must always be carefully looked to; I am clearly - of opinion that the powers which are given by an act of Parliament like that now in question extend no further than is expressly stated in the act, or is necessarily or properly required for carrying into effect the undertaking and works which the act has expressly sanctioned. I must, in the absence of any legal decision, say that I consider that the acquiescence of the shareholders in such transactions affords no grounds whatever for the presumption of their legality. I am far from saying that that which is here proposed to be done might not be profitable to this company, or that it might not be a public advantage. I am far from expressing an opinion that the establishment of a steam packet company at Harwich, communicating with this railway, might not only be of public but of national importance, or that it might not be proper to give this company authority to do that which they are now attempting to do, as it seems to me without authority. I mean to express no opinion as to this. What they are doing is this: Under the powers of this act of Parliament, enabling them to do what is required for the construction, maintenance, and proper and convenient use of this railway they are proposed to pledge the funds of this company to support the proposed Harwich Steam Packet Company to the extent of 150,000Z., or even 300,000l. It is not proposed that the railway company should directly, and by their own directors, engage in the steam packet company, and carry on that trade; but only that they should impose on the railway company the whole risk and liability, not only of paying interest at 57. per cent, but,

if the transaction should turn out an unprofitable one, of making good to every shareholder the full amount which he has paid. Is there anything in this act of Parliament sanctioning such a course of proceedings? Do the powers to construct, maintain and regulate the traffic, and do all that is necessary for the purpose of carrying on and working a railroad, imply that the directors are to be at liberty to pledge the funds of the company for a completely different transaction, in the hope that it may turn out a profitable one, and, by being itself profitable, add to the profits of the railway company? Surely there is nothing in the powers given by this act of Parliament which can authorize that."

It is clear, therefore, that, in the opinion of that very learned person, no prospect of advantage, however proximate, or even certain, to the present defendants, from the obtaining the proposed acts of Parliament by the other three companies, would justify them in imposing upon their shareholders the liability which is sought by this contract to be imposed upon them. His honor further observes, "I must say, that, in my opinion, to pledge the funds of this company for the purpose of supporting another company engaged in a hazardous speculation, is a thing which, according to the terms of this act of Parliament, they have not a right to do." A company established by act of Parliament with limited powers, and for limited purposes, cannot exceed those powers and apply the funds of the company to any purposes other than those specified in the act. In Salomons v. Laing, 12 Beavan, 339, a railway company became lawfully possessed of shares in another independent railway company; and it was held, that, having no authority to do so by their act of Parliament, they could not legally, as against one dissentient shareholder, increase the number of their shares, or apply their funds for the support of the second company. Lord LANGDALE there says: "A railway company incorporated by act of Parliament, is bound to apply all the moneys and property of the company for the purposes directed and provided for by the act, and for no other purpose whatever. Any application of or dealing with the capital, or any part of the capital, or any funds or money of the company, which comes under the control or management of the di

rectors, or governing body of the company, in any manner not distinctly authorized by the act, is in my opinion an illegal application or dealing." [MAULE, J.-Was the point made in any of these cases, that the contract was void in law?] It was, in Pagshaw v. The Eastern Union Railway Company, 2 M'N. & G., 389, a railway company having power, under separate acts of Parliament, to make and purchase certain branch railways, in connection with their main line, were for those purposes respectively authorized to raise the requisite capital, by the creation of new stock. Having issued scrip certificates accordingly, but being about to apply the money subscribed in respect thereof to the prosecution of works on their original line, a holder of such scrip filed a bill to restrain them; and Lord POTTENHAM held that those who subscribed for the purposes specified by the acts, had a right to have their money. applied to such purposes exclusively. In Beman v. Rufford, 15 Jurist, 914, the directors having entered into a contract, the legality of which was doubtful, to expend money in laying down rails, they were restrained at the suit of some of the shareholders from doing so until the validity of the contract had been decided at law. Lord CRANWORTH expressed a strong opinion that the contract was illegal, and said: "I am clearly of opinion, on all authorities, and all principle, that it is the province of this court to prevent such an illegal contract from being carried into effect, because, on the principle that has been so often laid down this court will not tolerate that parties having the enormous powers which these railway companies have obtained, shall lay out one farthing of the funds out of the way in which it was provided by the legislature that they should be applied." [MAULE, J.-All these cases arose upon the application of dissentient shareholders. Where an agreement has been procured by fraud, the party defrauded may at his election treat it as void, but he must make his election within a reasonable time. Campbell v. Fleming, 1 Ad. & E., 40 (E. C. L. R., Vol. 28); 3 N. & M., 834 (E. C. L. R., Vol. 28.) The party guilty of the fraud, however, has no such election.] Here the contract is not voidable at the election of either party; it is absolutely and incurably void. A contract may be illegal, as being in fraud of a particular individual; in that