Opinion of the Court. such business accept stock of another corporation as collateral, and by the enforcement of its rights as pledgee it may become the owner of the collateral and be subject to liability as other stockholders. National Bank v. Case, 99 U. S. 628. So, also, a national bank may be conceded to possess the incidental power of accepting in good faith stock of another corporation as security for a previous indebtedness. It is clear, however, that a national bank does not possess the power to deal in stocks. The prohibition is implied from the failure to grant the power. First National Bank v. National Exchange Bank, 92 U. S. 122, 128. On behalf of the plaintiff below it was admitted at the trial that the stock of the savings bank was not "taken as security or anything of the kind," and it is not disputed in the argument at bar that the transaction by which this stock was placed in the name of the bank was one not in the course of the business of banking for which the bank was organized. 2. The transfer of the stock in question to the bank being unauthorized by law, does the fact that, under some circumstances, the bank might have legally acquired stock in the corporation estop the bank from setting up the illegality of the transaction? Whatever divergence of opinion may arise on this question from conflicting adjudications in some of the state courts, in this court it is settled in favor of the right of the corporation to plead its want of power, that is to say, to assert the nullity of an act which is an ultra vires act. The cases of Thomas v. Railroad Company, 101 U. S. 71; Pennsylvania Railroad v. St. Louis, Álton &c. Railroad, 118 U. S. 290; Oregon Railway & Navigation Co. v. Oregonian Railway Co., 130 U. S. 1; Pittsburgh, Cincinnati &c. Railway v. Keokuk & Hamilton Bridge Co., 131 U. S. 371; Central Transp. Co. v. Pullman's Car Co., 139 U. S. 24; St. Louis &c. Railroad v. Terre Haute & Indianapolis Railroad, 145 U. S. 393; Union Pacific Railway v. Chicago &c. Railway, 163 U. S. 564, and McCormick v. Market Nat. Bank, 165 U. S. 538, recognize as sound doctrine that the powers of corporations are such only as are conferred upon them by statute, and that, to quote from the Opinion of the Court. opinion of the court in Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 59 to 60: "A contract of a corporation, which is ultra vires, in the proper sense, that is to say, outside the object of its creation. as defined in the law of its organization, and therefore beyond the powers conferred upon it by the legislature, is not voidable. only, but wholly void, and of no legal effect. The objection to the contract is, not merely that the corporation ought not to have made it, but that it could not make it. The contract cannot be ratified by either party, because it could not have been authorized by either. No performance on either side can give the unlawful contract any validity, or be the foundation of any right of action upon it." This language was also cited and expressly approved in Jacksonville &c. Railway v. Hooper, 160 U. S. 514, 524, 530. As said in McCormick v. Market National Bank, 165 U. S. 538, 549: "The doctrine of ultra vires, by which a contract made by a corporation beyond the scope of its corporate powers is unlawful and void and will not support an action, rests, as this court has often recognized and affirmed, upon three distinct. grounds: The obligation of any one contracting with a corporation to take notice of the legal limits of its powers; the interest of the stockholders not to be subject to risks which they have never undertaken; and, above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law. Pearce v. Madison & Indianapolis Railroad, 21 How. 441; Pittsburgh, Chicago &c. Railway v. Keokuk & Hamilton Bridge Co., 131 U. S. 371, 384; Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 48." The doctrine thus enunciated is likewise that which obtains in England. Ashbury Railway Carriage & Iron Co. v. Riche, L. R. 7 H. L. 653; Attorney General v. Great Eastern Railway Company, 5 App. Cas. 473; Baroness Wenlock v. The River Dee Company, 10 App. Cas. 354; Trevor v. Whitworth, 12 App. Cas. 409; Ooregum Gold Mining Co. of India v. Roper, (1892) App. Cas. 125; Mann v. Edinburgh Northern Tramways, (1893) App. Cas. 69. Opinion of the Court. Applying the principles of law thus settled to the case at bar, the result is free from doubt. The power to purchase or deal in stock of another corporation, as we have said, is not expressly conferred upon national banks, nor is it an act which may be exercised as incidental to the powers expressly conferred. A dealing in stocks is consequently an ultra vires act. Being such, it is without efficacy. Pearce v. Railroad Company, 22 How. 441, 445. Stock so acquired creates no liability to the creditors of the corporation whose stock was attempted to be transferred. (Cook on Stock and Stockholders, vol. 1, p. 435, note 1 to sec. 316, and authorities there cited.) In the Royal Bank of India's case, L. R. 4 Ch. 252 (1869), while it was held by the Court of Appeal that, as incidental to the power to advance money on a deposit of shares of stock, a corporation might do such acts as were reasonable and proper for making the security available, it was conceded that a purchase of stock of another company as a speculation would have been ultra vires, and, despite acts of ownership exercised by the company, the shares might be repudiated at any time. Sir C. J. Selwyn, L. J., said (p. 261) : "If it could have been shown that it was an act absolutely prohibited by their memorandum of articles of association, then, no doubt, a different question would have arisen; the act would have been ultra vires and incapable of confirmation or ratification." Sir G. M. Giffard, L. J., said (p. 262): "I quite agree that the Royal Bank of India had no authority to speculate in shares, and that if it had gone upon the Stock Exchange and bought shares as a speculation, such a proceeding would have been ultra vires, and all that has taken place would not have been enough to constitute the Royal Bank of India shareholders in this bank, or prevent them from repudiating these shares." In Ex parte Liquidators of the British Nation Life Assurance Association, L. R. 8 Ch. Div. 679, (1879) the Court of Appeals (Lords Justices James, Baggally and Thesiger) dis VOL. CLXVII-24 Opinion of the Court. charged an order of an arbitrator which had put the British Nation Association on the list of contributories of the British Commercial Insurance Company, a corporation in the process of being wound up. Pursuant to authority conferred by its deed of settlement, the British Nation Association had, through its directors, purchased the business of the British Commercial Insurance Company. Under the agreement entered into between the companies, certain stock of the British Commercial Company was transferred to the trustees appointed by the British Nation Company. Subsequently this stock was transferred into the name of the association, and it was sought to hold it liable as a stockholder, because of its alleged ownership of such stock. Lord Justice James delivered the opinion of the court, holding that while the British Nation Association was empowered to purchase for investment shares of a certain character, it was not empowered to purchase stock which would practically constitute it a partnership in business speculations or adventures, and that the transfer of the stock in question into the name of the bank was ultra vires and void. It was further held that the shareholders who had transferred the stock to the British Nation Association had no power, as between themselves and the association, to transfer their liability to the latter, and that "No other person or body of persons could be prejudiced or benefited or affected by an instrument to which they were absolutely strangers, such instrument being void as between the parties to it." The case before the court was declared to be not one of a person induced to become a shareholder, and who had become a shareholder by fraud, but that of a person who had never in fact become a shareholder. The circumstance that the dealing in stocks by which, if at all, the stock of the California Savings Bank was put in the name of the California National Bank, was one entirely outside of the powers conferred upon the bank, and was in nowise the transaction of banking business or incidental to the exercise of the powers conferred upon the bank, distinguishes this case from the class of cases relied upon by the defendant Syllabus. in error. National Bank v. Whitney, 103 U. S. 99; National Bank v. Matthews, 98 U. S. 621. The difference between those cases and one like this was referred to in McCormick v. Market National Bank of Chicago, supra, and it is, therefore, unnecessary to particularly review them. The claim that the bank in consequence of the receipt by it of dividends on the stock of the savings bank is estopped from questioning its ownership and consequent liability, is but a reiteration of the contention that the acquiring of stock by the bank under the circumstances disclosed was not void but merely voidable. It would be a contradiction in terms to assert that there was a total want of power by any act to assume the liability, and yet to say that by a particular act the liability resulted. The transaction being absolutely void, could not be confirmed or ratified. As was said by this court in Union Pacific Railway V. Chicago &c. Railway, 163 U. S. 564, speaking through Mr. Chief Justice Fuller (p. 581): "A contract made by a corporation beyond the scope of its powers, express or implied, on a proper construction of its charter, cannot be enforced, or rendered enforceable by the application of the doctrine of estoppel." It follows from the foregoing that the judgment of the Supreme Court of California against the bank was erroneous, and it must, therefore, be MR. JUSTICE HARLAN dissented. Reversed. NEW ORLEANS v. CITIZENS' BANK. APPEAL FROM THE CIRCUIT COURT FOR THE EASTERN DISTRICT OF LOUISIANA. No. 108. Argued January 15, 18, 1897. Decided May 24, 1897. By the act of January 30, 1836, the legislature of Louisiana exempted the capital of the Citizens' Bank in New Orleans from taxation. The two judgments of the District Court of New Orleans between the bank and the city, which are set forth in the opinion of this court, hold that |