with this view.25 On the other hand, it has been held that the prohibition in this act was a fundamental limitation on the power of New York corporations, and prevented them from taking foreign land by devise.26 In Massachusetts the court held that a municipal corporation of New York had no power to take a bequest; but as a bequest to such a corporation was valid in Massachusetts, and was a charitable bequest, it was put into the hands of trustees to be held until New York should empower its corporation to take it.27 The question of the power of a municipal corporation depends of course on different considerations.

In the same way where a statute of the State of charter forbids a general assignment by a corporation, this is not a limitation upon the power of the corporation, and has no extra-territorial effect; such a corporation may make an assignment in any State where such an assignment is permitted.28 So where a statute of the incorporating State forbids the giving of preferences, the execution by the corporation of a judgment note in another State is good; 29 so is a mortgage of land to secure a bona fide antecedent debt.30 The same is true of a bona fide acquisition of part of the assets in a foreign State. Thus where a New Jersey corporation transferred in New York a large part of its property to a creditor, who assigned to the defendant for value, the assignee of the corporation, which had been declared insolvent after the first

25 American Bible Society v. Marshall, 15 Oh. St. 537; Thompson v. Swoope, 24 Pa. 474.

26 Starkweather v. American Bible Society, 72 Ill. 50, 22 A. R. 133; House of Mercy v. Davidson, 90 Tex. 529, 39 S. W. 924.

27 Fellows v. Miner, 119 Mass. 541. See to the same effect Frazier v. St. Luke's Church, 10 Pa. Co. Ct. 53.

28 Warren v. First Nat. Bank, 149 Ill. 9, 38 N. E. 122; Boehme v. Rall, 51 N. J. Eq. 541, 26 Atl. 836; Pairpoint Mfg. Co. v. Phila. Optical & W. Co., 161 Pa. 17, 28 Atl. 1003; Borton v. Brines-Chase Co., 175 Pa. 209, 34 Atl. 597. Contra, McQueen v. New, 33 N. Y. S. 802, 87 Hun, 206 (semble); Pierce v. Crompton, 13 R. I. 312.

29 East Side Bank v. Columbus Tanning Co., 170 Pa. 1, 32 Atl. 539. 30 Nathan v. Lee, 152 Ind. 232, 52 N. E. 987, 43 L. R. A. 820.

transfer, was not allowed to recover the property, though a New Jersey statute made such a transfer in contemplation of insolvency void. The defendant had acquired a good title, by the law of the place of transfer; and the courts of that State would not allow it to be divested because of a New Jersey statute. It was attempted to impugn the bona fides of the defendant on the ground that he had constructive notice of the New Jersey act; but it was held that though one dealing with a corporation might be bound by constructive notice of the provisions of the charter, he could not be bound to know the laws of the incorporating State.31 So it was held in New York that a railway corporation chartered by Connecticut could make a contract of carriage to a point beyond its own lines, since domestic railroads could do so, although by the Connecticut law a railway company could make no such contract.32 It has, however, been held that where a statute of Missouri forbids the employee of a railroad being interested in furnishing supplies to a railroad, a railroad corporation of Missouri operating a line of road in Texas has no power to make a contract for supplies with an employee there.33 As this was a question between the corporation and one of its agents, and the prohibition in question had to do with the internal affairs of the corporation, the Missouri law was rightly applied.

6. The proof of powers.

Where a corporation attempts to enforce a right, the burden is upon it of showing that it has power to do the act; it must prove its charter in order to show its power.34 Thus where a foreign corporation applied for a writ of mandamus to compel

31 Hoyt v. Thompson, 19 N. Y. 207; acc. Hoyt v. Shelden, 3 Bosw. 267, 298. So also Standard Nat'l Bank v. Garfield Nat'l Bank, 67 N. Y. S. 472, 56 App. Div. 43.

32 Milnor v. New York & N. H. R. R., 53 N. Y. 363.

33 Rue v. Mo. Pac. Ry., 74 Tex. 474, 8 S. W. 533, 15 A. S. R. 852.

34 Morris v. Hall, 41 Ala. 510, 536 (semble); Diamond Match Co. v. Powers, 51 Mich. 145.

the register of deeds to let it examine the records, it was held that it must at least show that by its charter it had the right to hold lands.35

But it would seem that there are powers and limitations of power so obvious that they will be presumed in the absence of evidence to the contrary, even in a case where the burden is on the plaintiff, representing the rights of the corporation, to establish its powers. Thus where a stockholder in a foreign corporation brought a bill for an injunction to restrain the directors from paying out of the funds of the company the expense of a suit for libel against one of the members of the corporation, the court held that it might be assumed, in the absence of proof to the contrary, that the law of every country which can create a corporation would restrict its right to spend money to the purposes for which it is incorporated; and an English court might therefore say, without proof of the law of Turkey, that a Turkish corporation would have no right to spend its money in the prosecution of one of its members for libel.36 So it has been held that in the absence of proof of the statute law of its domicile, it will be presumed that a corporation has the power to make a general assignment.37 In Massachusetts, however, it has been held that where a foreign corporation charges its treasurer with making certain illegal payments, proof of the law of the charter State must be shown in order to prove the payments illegal, though

35 Diamond Match Co. v. Powers, 51 Mich. 145. GRAVES, C. J., said (at p. 147): “We have no means of knowing that it has capacity to buy or hold lands or deal in titles anywhere; or to carry on the business in which its petition alleges it to be engaged; or to apply itself to such an enterprise as making a system of abstracts of all the titles of all the real property in a county. The case is bare of information in regard to the true legal status of the relator, and as to whether it is other than a mere intruder in what it now demands. . . . The authority given to it by the State by which it was created is not disclosed and cannot be assumed."

36 Pickering v. Stephenson, L. R. 14 Eq. 322.

87 Lane v.

Wheelright, 23 N. Y. S. 596, 69 Hun, 180; McQueen v. New, 30 N. Y. S. 977 (reversed in 87 Hun, 206, 33 N. Y. S. 802); Franzen v. Zimmer, 35 N. Y. S. 612, 90 Hun, 103.

the courts said, "a transaction of this character ought to be forbidden by law." 38 These cases do not seem to be consistent; and the English doctrine is evidently preferable. The doctrine of the Massachusetts case is open to the objection that it presumes the foreign law to be different from the domestic law in the absence of proof (contrary to the ordinary rule) in order to accomplish a result which is admittedly unjust.

Where, however, a stranger is suing a foreign corporation upon a right alleged to have been derived from an act of the corporation, the rule is more liberal.39 "If a corporation created by the laws of another State whose existence and legal organization are not disputed, is found making contracts within this State through agents which it employs, and a suit is brought in such a manner that the corporation is made amenable to the jurisdiction of our courts, in our opinion it is not necessary for the plaintiff who seeks to enforce the contract to furnish in the outset any other evidence of the capacity of the corporation to make the contract." 40

§ 7. Corporate action.

The corporation may act either by itself or through agents; but in the latter case the corporation must by itself appoint at least its principal agents. The whole activity of a corporation must therefore have its origin in some personal act. And here two things are to be noticed: first, the act must be that of the corporation, the artificial person, and not the act of some or all of the individual members of the corporation; second, since the personality of the corporation and its power to act are derived from the law which incorporates it, every personal act of the corporation must take place within the jurisdiction of that law; any act done outside the jurisdiction of that law cannot be corporate action, but must be the act of the natural individuals who take part in it.

38 Sears v.

Kings County Elevated Ry., 156 Mass. 440, 31 N. E. 490. 39 Yeaton v. Eagle Oil & R. Co., 4 Wash. 183, 29 Pac. 1051.

40 Hoar, J., in McCluer v. Manchester & L. R. R., 13 Gray, 124, 74 A. D. 624.

The corporation as such acts in two ways: through its meetings, and by the use of its corporate seal. But as the authority to affix the seal must be derived from a vote of the corporation, the only ultimate source of corporate action is the corporation meeting. This must take place, therefore, within the State which has granted incorporation. A meeting of members of a corporation outside that State cannot be a meeting of the corporation, since it is outside the jurisdiction of the law which alone makes the corporation a person; the members, even when met together for action, are there a mere collection of individuals.41 The corporation at a valid meeting having appointed agents (directors or other agents), these agents or their sub-agents may then act for the corporation, as agents may act for a natural person, anywhere; their action is not confined to the State of incorporation. It is through agents alone that a corporation can act in a foreign State.

The corporation in appointing agents and the agents in acting must of course derive their power from the law which created the corporation. Whether it acts by itself or through its agent is immaterial: it cannot confer on an agent the power to do for it what it cannot do for itself. It is equally immaterial where the act in question is to be performed: in order to be an act of the corporation it must be authorized, if at all, in the place where the corporation has power to act, that is, in the State of its charter; and whether it may be authorized there depends on the charter and the law by which that is governed. 42

41 See infra, Chap. xiv.

42 Runyan v. Coster, 14 Pet. 122; Seattle Gas & El. Co. v. Citizens L. & P. Co., 123 Fed. 588; New York F. Ins. Co. v. Ely, 5 Conn. 560, 13 A. D. 100; Duke v. Taylor, 37 Fla. 64, 19 So. 172, 53 A. S. R. 232, 31 L. R. A. 448; Metropolitan Bank v. Godfrey, 23 Ill. 579; State v. Southern Pac. Co., 52 La. Ann. 1822, 28 So. 372; Black v. Delaware & R. Canal Co., 22 N. J. Eq. 130, 422; National Trust Co. v. Miller, 33 N. J. Eq. 155; Bard v. Poole, 12 N. Y. 495 (but see Griesa v. Mass. Ben. Assoc., 60 Hun, 581, 15 N. Y. S. 71); Ohio L. Ins. & Tr. Co. v. Merchants' Ins. & Tr. Co., 11 Humph. 1, 53 A. D. 742; Rue v. Missouri Pac. Ry., 74 Tex. 474, 8 S. W. 533, 15 A. S. R. 852; Rio Grande W. Ry. v. Telluride Power Tr. Co., 23 Utah, 22, 63 Pac. 995.