under consideration for sustaining the decision of the court below.

The order of the Appellate Division and the surrogate's decree should be reversed, with costs in all courts, and the proceedings remitted to the Surrogate's Court for further action in accordance herewith.

CULLEN, Ch. J., GRAY, EDWARD T. BARTLETT, WERNER and WILLARD BARTLETT, JJ., concur; CHASE, J., absent. Ordered accordingly.

HARRY T. GAUSE, Appellant, v. COMMONWEALTH TRUST COMPANY OF NEW YORK, Respondent.

Corporations - powers of trust companies confined to those expressly conferred by statute or necessary to exercise of such powers illegal guaranty of stock pooling agreement by trust company unauthorized execution of agreement by officers of trust company.

The unexpressed and incidental powers possessed by a corporation are not limited to such as are absolutely or indispensably necessary to enable it to exercise the powers specifically granted, and whatever incidental powers are reasonably necessary to enable it to perform its corporate functions are implied from the powers affirmatively granted. But powers merely convenient or useful are not implied if they are not essential, having in view the nature and object of the incorporation. The authority of a corporation to perform a particular act is always dependent to a very considerable extent upon the facts and circumstances existing at the time when it is proposed to perform the act. The courts, in considering the effect of ultra vires acts, have always rec ognized the distinction between business and trading corporations and corporations whose purposes are largely fiduciary.

The legislature intended and the public interests demand that trust companies shall be confined not only within the words, but also within the spirit of the statutory provision which declares that a corporation shall not possess or exercise any corporate powers not given by law or not necessary to the exercise of the powers so given. Such authority does not permit a trust company to enter into speculative and uncertain schemes or, unless under peculiar circumstances, to become the guarantor of the indebtedness or business of others. Its authority to buy and sell stocks and bonds does not authorize it to indulge in hazardous

promoting schemes, although it may hope from the successful launching of such schemes to make large commissions and receive large bonuses.

Although the presence of the seal of a corporation upon an instrument is prima facie proof that it was attached by proper authority, it is such proof as may be conclusively rebutted.

The vice-president of a trust company signed an agreement in the name of the company with the owner of certain stocks and bonds of a corpora tion organized for the purpose of acquiring, combining and maintaining the property and business of certain previously existing plants, of which corporation the vice-president of the defendant, who signed the writing in suit, was also a vice-president. The instrument was sealed with the corporate seal and attested by an assistant secretary of the trust company. The seal of the corporation was affixed thereto without statutory or other authority. The alleged agreement guaranteed to the party, with whom it was made, the sale of the securities therein described at a price therein fixed within a specified period. No action authorizing the execution of such contract was considered or passed by either its board of directors, executive committee or stockholders. The purpose of the alleged agreement was to bring the party, with whom it was made, into a pooling agreement to protect the price of such securities. The trust company did not become the owner or purchaser of any of the securities and was not to profit directly in any way by their sale, but became the guarantor of a "future" and in substance of the prosperity and success of the speculative enterprise. Held, that the alleged agreement was signed and the corporate seal attached thereto without authority, and that the contract was outside the corporate powers of the trust company.

As stated therein, the contract in question was signed for the purpose of aiding a so called pooling or syndicate agreement, then executed or subsequently to be executed, and its purpose and consideration was wholly dependent upon the syndicate agreement. In view of the fact that the syndicate agreement was not consummated or its provisions carried out, the trust company did not obtain any advantage from or consideration for the alleged agreement of guaranty, and no recovery can be had thereon.

Gause v. Commonwealth Trust Co., 124 App. Div. 438, affirmed.

(Argued June 7, 1909; decided October 19, 1909.)

APPEAL from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered March 4, 1908, affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term.

On the 26th day of September, 1902, a written memoran. dum of agreement, dated August 28, 1902, was signed in the name of the defendant by one of its vice-presidents. It was sealed with the corporate seal and attested by an assistant secretary of the defendant, and it was also signed and sealed by the plaintiff. Duplicates were retained by the plaintiff and said vice-president. Said writing is as follows: "Memorandum of Agreement made this 28th day of August, A. D. 1902, by and between the Trust Company of the Republic, a corporation organized under the laws of New York, party of the first part, and Harry T. Gause, of Wilmington, Delaware, party of the second part. "Witnesseth: For and in consideration of the sum of one dollar in hand paid to him by the party of the first part the receipt whereof is hereby acknowledged by the party of the second part and for other good and valuable considerations, it is understood and agreed by and between the parties hereto as follows:

"1. WHEREAS it is the mutual desire of the parties hereto that the securities of the United States Shipbuilding Company shall be sold to the best advantage, both parties being interested in same, and

"WHEREAS a selling syndicate of which Thomas C. Clarke is named as manager has been formed to arrange for such sales and for other purposes under an agreement providing for the deposit of all of said securities except those of the party hereto of the second part with the party hereto of the first part for such purposes, both parties hereto will in good faith co-operate with the said syndicate in furthering such object and this agreement is intended to be an aid to same.

"2. The party of the second part agrees that he will deposit with the party of the first part all of his bonds and shares of preferred and common stock of the United States Shipbuilding Company under the terms and conditions of this agree ment as hereinafter set forth.

"3. The party of the first part will use and dispose of said securities of the party of the second part as in its judgment is

necessary to further the purposes of said syndicate and in so doing will do whatever is necessary, to insure equal benefits to the party hereto of the second part pro rata to his holdings of said securities that are enjoyed at any time by the vendors who shall be or become parties to the agreement with said syndicate in connection with the sale and disposition of said securities or the proceeds of sale of same, and it hereby guarantees to the party of the second part the sale of all of his said securities on or before August 25th, 1903, whether through the efforts of said syndicate or otherwise and the party of the first part agrees to account to the party of the second part on or before the 25th day of August, 1903, and that the prices thereof shall be on the basis which will realize to the party of the second part not less than 95 per cent of the par value of the bonds and 68 per cent of the par value of the said preferred stock and 25 per cent of the par value of the said common stock less brokerage expenses, as hereinafter stated and the party of the first part hereby agrees to pay to the party of the second part the interest on the bonds as and when received from the United States Shipbuilding Company during the period of this agreement; and in case of their sale or any of them during the period of this agreement and if under such circumstances it elects to retain the proceeds of the sale of the same under the provisions hereof until the final accounting hereunder the party of the first part agrees to pay to the party of the second part the accrued interest on such bonds as may be sold up to the dates of their sale, and also interest on the proceeds of the sale of same, at the same rate that the bonds would have earned if same had not been deposited under the terms of this agreement, said payments of interest to be made January 1st and July 1st, 1903, if this agreement is not sooner terminated, but at its termination at any time payment is to be made in full.

"4. The party of the first part is hereby accorded the exclusive right to sell the said securities of the party of the second part during the period of this agreement.

"5. The party of the first part shall have authority from

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time to time at any time to pay the usual brokerage and broker's expenses if any in connection with the sale of said. securities of the party of the second part.

"6. Said party of the first part shall not be liable for any error of judgment or for any mistake of law or fact, nor shall it be liable for any act or omission while endeavoring in good faith to carry out the purposes hereof according to its judg ment, but such exemption of liability shall not affect its liability named in clause 3 hereof. No obligation or liability in addition to those herein expressed shall be implied against the said party of the first part; it being the spirit and intent of this agreement that said securities are deposited as named under a guaranty of sale at not less than the minimum figures hereinbefore mentioned, and all proceeds of sale are to be accounted for at the figures at which such sales shall be made and the same with all incidental net profits in connection with the same.

"7. This agreement and all it contains shall become null and void on August 25, 1903, or at any time prior thereto coincident with the sale of and settlement for all of the said securities of the party of the second part or the termination of the said syndicate by the fulfillment of its agreement with the other vendors and underwriters of the said securities."

The bonds and stocks mentioned therein were not sold on or prior to August 25, 1903, and thereafter the plaintiff brought this action alleging that the securities mentioned in said writing were on said August 25, 1903, substantially valueless and he demanded judgment for $404,630, with interest from said August 25, 1903.

The defendant among other things in its answer alleged in substance: 1. That the contract in suit is ultra vires to the defendant corporation. 2. That the officers who assumed to execute the contract in suit had no authority to bind the defendant. 3. That at the time of the execution of the contract in suit an agreement was entered into between the plaintiff and the officer of the defendant who assumed to execute the contract in behalf of the defendant that such contract