in the indenture, and to find the capital necessary for the construction of the extension's branches and works authorized to be constructed by the bills then pending in Parliament, and to pay the costs of preparing and promoting such bills, whether the same should pass into a law or not. The declaration further states that the bills were proceeded with, and two were passed, and that the cost of the bills, amounting to a large sum, had not been paid by the defendants to the plaintiffs.

The defendants set out indenture upon oyer, and pleaded that the plaintiffs had no authority to grant leases of their railways to the defendants; that they had been unable to obtain acts of Parliament for that purpose; that they had abandoned all intention of so doing; and that several shareholders of the defendant's company (naming them) had not assented to the making or executing the indenture, or the agreement therein contained.

The plaintiff demurred generally to this plea, and the question for the opinion of the court is, whether, upon this record, the plaintiffs can maintain their action. We are of the opinion that they cannot, and that the defendants are entitled to judgment.

The defendants are incorporated by the statute 6 & 7 W. 4, c. cvi., the first section of which enacts that certain persons shall be united into a company for making and maintaining the railway mentioned in that section, and other works by that act authorized, and for other purposes in that act declared, and for that purpose shall be one body corporate by the name and style of "The Eastern Counties Railway Company," and have perpetual succession and a common seal.

The third section empowers the company to raise a sum of money for making and maintaining the said railway and other works authorized by the act; and the 5th section directs the money so raised to be expended in and towards making and maintaining said railway and other works, and in otherwise carrying the act into execution. The money raised on mortgage is to be applied in the same way, § 246; and the profits of the company, after defraying the expense of making, maintaining and working the said railway, are to be accounted for

and divided amongst the proprietors of the undertaking. SS 170, 171.

This act is a public act, accessible to all, and supposed to be known to all, and the plaintiffs must, therefore, be pre- . sumed to have dealt with the defendants with a full knowledge of their respective rights, whatever those rights may be.

It is clear that the defendants have a limited authority only, and are a corporation only for the purpose of making and maintaining the railway sanctioned by the act; and that their funds can only be applied for the purposes directed and provided by the statute. Indeed, it is not contended that a company so constituted can engage in new trades not contemplated by their acts; but it is said they may embark in other undertakings, however various, provided the object of the directors be to increase the profit of their own railway.

This, in truth, is the same proposition in another form; for, if the company cannot carry on a new trade, merely because it was not contemplated by the act, they cannot embark in other undertakings not sanctioned by their act, merely because they hope the speculation may ultimately increase the profit of the shareholders. They cannot engage in a new trade because they are a corporation only for the purpose of making and maintaining the Eastern Counties Railway. What additional power do they acquire from the fact that the undertaking may in some way benefit their line? Whatever be their object, or the prospect of success, they are still but a corporation for the purpose only of making and maintaining the Eastern Counties Railway, and if they cannot embark in new trades, because they have only a limited authority, for the same reason they can do nothing not authorized by their act, and not within the scope of their authority.

Every proprietor, when he takes shares, has a right to expect that the conditions upon which the act was obtained will be performed, and it is no sufficient answer to a shareholder, expecting his dividend, that the money has been expended upon an undertaking which, at some remote period, may prove highly beneficial to the line. The public also has an interest in the proper administration of the powers conferred by the act. The comfort and safety of the line may be seriously im

paired if the money supposed to be necessary, and destined by Parliament for the maintenance of the railway, be expended in other undertakings not contemplated when the act was obtained, and not expressly sanctioned by the legislature.

The cases in equity which have been cited, proceeded upon this view of the subject, and were decided, not because the particular act restrained by injunction was a breach of trust, but because it was not in the scope of the directors' authority; was not justified by the statute, and was, therefore, illegal.

In Coleman v. The Eastern Counties Railway Company, 10 Beavan, 15, the Master of the Rolls (Lord LANGDALE) says: "It has been very properly admitted that railway companies have no right to enter into new trades or businesses not pointed out by the acts, but it has been contended that they have a right to pledge, without limit, the funds of the company in the encouragement of other transactions, however various and extensive, provided the object of that liability is to increase the traffic upon the railway, and thereby to increase the profit of the shareholders. There is, however, no authority for anything of that kind." So in Salomons v. Laing, 12 Beavan, 352, he 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

whatsoever.

The same principle was adopted by the Lord Chancellor in the case of Bagshaw v. The Eastern Union Railway Company 2 M'Naght. & G., 389, by Lord CRANWORTH in Beman v. Rufford, as reported in Jurist for this year (15 Jurist, 914), as we are told by Vice Chancellor Turner in the case of The Great Northern Railway Company v. The Eastern Counties Railway Company.

In the last two cases the learned judges treated questions similar to the present as purely legal questions, and, therefore, directed cases to be stated for the opinion of a court of law, but at this same time expressed their opinion that the contracts were illegal, and, therefore, void.

If the contract is illegal, as being contrary to the act of Parliament, it is unnecessary to consider the effect of dissentiate shareholders; for, if the company is a corporation only for. a

limited purpose and a contract like that under discussion is not within their authority, the assent of all the shareholders to such a contract, though it may make them all personally liable to perform such contract, would not bind them in their corporate capacity, or render fiable their corporate funds.

But it is said that it does not sufficiently appear upon this record that the bills in Parliament, and for which the defendants covenanted to pay the costs, were not connected with the defendant's railway. If railway companies could embark in undertakings collateral to their main line, merely because the main line might in the result be benefited, there would be much in this objection; but upon the view which we have above expressed, the objection cannnot prevail.

We know that each of the four litigant companies has a separate act of Parliament; we know that the statute incorporating the defendants' company gives nó authority respecting the bills promoted by the plaintiffs; and we are, therefore, bound to say that any contract relating to such bill is not justified by the act of Parliament; is not within the scope authorized by the company, as a corporation, and is, therefore, void. For these reasons we are of opinion that there ought to be judgment for the defendants.

JUDGMENT FOR THE DEFENDANTS.

LEASE OF ALL THE PROPERTY AND FRANCHISES OF A RAILROAD COMPANY, ULTRA VIRES.

SECOND SELECTED CASE.

THOMAS V. RAILROAD COMPANY.*

1. The powers of a corporation organized under a legislative charter are only such as the statute confers; and the enumeration of them implies the exclusion of all others.

2. A lease by a railroad company of all its road, rolling-stock, and franchises, for which no authority is given in its charter is ultra vires and void.

* Reported in 101 U. S., 71 (1879).

3. The ordinary clause in the charter authorizing such a company to contract with other transportation companies for the mutual transfer of goods and passengers over each other's roads, confers no authority to lease its road and franchises.

4. The franchises and powers of such a company are in a large measure designed to be exercised for the public good, and this exercise of them is the consideration for granting them. A contract by which the company renders itself incapable of performing its duties to the public, or attempts to absolve itself from its obligations without the consent of the State, violates its charter and is forbidden by public policy. It is, therefore, void.

5. The fact that the legislature, after such a lease was made, passes a statute forbidding the directors of the company, its lessees or agents, from collecting more than a fixed amount of compensation for carrying passengers and freight, is not a ratification of the lease or an acknowledgment of its validity.

6. Where a lease of this kind for twenty years was made, and the lessors resumed possession at the end of five years, and the accounts for that period were adjusted and paid, a condition in the lease to pay the value of the unexpired term is void, the case not coming within the principle that executed contracts originally ultra vires shall stand good for the protection of rights acquired under a completed transaction.

Error to the Circuit Court of the United States for the Eastern District of Pennsylvania.

Covenant. This was an action of covenant by George W. Thomas, Alfred S. Porter, and Nathaniel F. Chew, against the West Jersey Railroad Company, and they, to maintain the issue on their part, offered to prove the following facts: On the 8th day of October, 1863, the Millville and Glassboro Railroad Company, a corporation incorporated by the legislature of New Jersey, March 9, 1859, entered into an agreement with them, whereby it was stipulated that the company should, and did thereby, lease its road, buildings and rolling-stock to them for twenty years, from the first of August, 1863, for the consideration of one-half of the gross sum collected from the operation of the road by the plaintiffs during that period; that the company might at any time terminate the contract and retake possession of the railroad, and that in such case, if the plaintiff so desired, the company would appoint an arbitrator, who, with one appointed by them, should decide upon the value of the contract to them, and the loss and damage incurred by, and