Opinion of the Court, per CHASE, J. [Vol. 196. dians, committees, receivers and trustees. They receive appointment from the courts in trust capacities without giving a bond. It is assumed that the statutory restriction and regulation of their powers will make the execution of a bond in each particular instance unnecessary. The courts, in considering the effect of ultra vires acts, have always recognized the distinction between business and trading corporations and corporations whose purposes are largely fiduciary. * * * In Leavitt v. Yates (4 Edw. Ch. 134, 156) the court, referring to a banking corporation, say: "They can have no right or power to borrow money or contract for loans to enable them to engage in speculations, or in mercantile or other business having no sort of relation to and forming no part of the ordinary business of a bank. The unauthorized acts of agents are not binding on their principals; and directors are but agents or ministers, intrusted with powers to be exercised for the benefit of others. Those who have contributed to the formation of a banking capital by becoming shareholders; those who have intrusted their money on deposit, or have otherwise fairly become creditors of a bank, are entitled to protection against any unauthorized assumption of powers by the directors, or any misapplication of the assets or funds of the institution. Its property cannot be diverted to other purposes, or be used up in speculations foreign to the business of banking without a struggle for its recovery and an effort to reclaim it. A rigid adherence to this principle works no injustice, although it may sometimes produce a seeming hardship. Persons dealing with corporations or associations of limited capacity, must look to the character of the transactions they engage in with them. The law under which they act, and the business they are authorized to perform, is all written in the public statute book, with which every man is supposed to be acquainted." In Nassau Bank v. Jones (95 N. Y. 115, 120) this court, referring to a contract relating to the subscription to the stock of a railroad corporation, say: "Even a cursory view of the pro N. Y. Rep.] Opinion of the Court, per CHASE, J. * * * visions of the statute under which the plaintiff was organized, and the cases giving construction to the powers thereby conferred, renders it quite clear, that the contract under which the plaintiff claims was not only ultra vires, but contrary to public policy. The solvency of these institutions was guarded by special provisions and limitations in the act authorizing their incorporation, and has ever since been the object of sedulous care, both on the part of the legislature and of the courts. (Laws of 1837, chap. 360; Laws of 1854, chap. 329; Laws of 1862, chap. 62.) The language employed in the act defines their power and duties, and excludes by necessary implication a capacity to carry on any other business than that of banking, and the adoption of any other methods for the prosecution of such business than those specially pointed out by the statute. (Pratt v. Short, 79 N. Y. 440; Morse on Banking, 5; Talmage v. Pell, 7 N. Y. 347; People v. Utica Ins. Co., 15 Johns. 383.) * * The spirit of the law, as well as a sound public policy, forbid these institutions from risking the moneys intrusted to their care in doubtful speculations or enterprises." * "There can be no doubt that speculative contracts entered into for the sale of stock by the bank at the stock board, or elsewhere, subject to the hazard and contingencies of gain or loss, would be ultra vires, and a gross perversion of the powers conferred by its charter. But the bank, as the owner of stock, could sell it, as any other owner of similar property, and could employ a broker to sell it at the board." (Sistare v. Best, 88 N. Y. 527, 533.) "Speculative contracts entered into for the sale or purchase of stock or other property by a savings bank at the stock board or elsewhere, subject to the hazard and contingency of gain or loss, unless authorized by its charter, are ultra vires." (Jemison v. Citizens' S. Bank, 122 N. Y. 135.) 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 Opinion of the Court, per CHASE, J. [Vol. 196 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 not disclosed in this case, 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. We have already referred to the case of Appleton v. Citizens' Central Nat. Bank, in which this court has illustrated the effect of different circumstances in determining the legality of particular acts. The guaranty of said notes in this case, as well as the alleged guaranty to the plaintiff, was without any legitimate or adequate basis. Its president, as stated, assumed that there was no risk in what he did and directed, and he was doubtless influenced by a sentimental reason arising from the extent to which the defendant had been connected with the general scheme of floating the shipbuilding company. It did, however, create a hazard so great as to involve the very life of the defendant, and in our judgment it was wholly without authority. The result of such hazardous and reckless dealings and acts by the officers of trust companies is well illustrated in this case, as it appears that the defendant was organized with a large capital and paid in surplus in the spring of 1902, and within a few months thereafter was shorn of its surplus and compelled to reduce its stock to a small part of the origiual issue, and it has still upon its hands this serious litigation. If such business methods are authorized by statute and approved by the courts the purpose of the organization of trust companies would fail and result in a trap to those invited by the legislature to submit to such corporations their fiduciary accounts. It is claimed by the plaintiff that under the doctrine established in this state the defendant is liable notwithstanding its acts were beyond its corporate authority by reason of the fact N. Y. Rep.] Opinion of the Court, per CHASE, J. that it has by the agreement with the plaintiff secured to itself a benefit, and the plaintiff has performed his part of the agreement. As we have shown, the alleged agreement was not only outside of its corporate powers, but it was signed by its vice-president without the authority of its board of directors, and the seal was attached thereto without any statutory or other authority. Although the presence of a seal upon an instrument is prima facie proof that it was attached by proper authority (Quackenboss v. Globe & R. F. Ins. Co., 177 N. Y. 71) it is only such proof as may be conclusively rebutted, and it has been conclusively rebutted in this case. The plaintiff has never given to the defendant any concrete thing by virtue of the agreement. The bonds and stock mentioned in said agreement were never accepted by the defendant. The plaintiff has at most refrained from selling his bonds and stock and held himself in readiness to deliver the same to the defendant. During all of the time that he waited he knew, or should have known, that the defendant was not obligated to perform the alleged contract on its part. This action is simply to recover damages for such alleged breach of a writing signed without power in the corporation or authority in the officers who signed its name thereto. The doctrine sought to be invoked by the plaintiff in this case is not applicable. There is another reason why the plaintiff cannot recover in this case and that is that it appears from a reading of the alleged agreement apart from the testimony of witnesses that it is dependent upon the co-operation of the syndicate agreement. The plaintiff owned but a comparatively small portion of the bonds and stocks that had been issued by the shipbuilding company. The futility of the alleged agreement apart from the general pooling or syndicate agreement is apparent from a mere statement of the facts. The alleged agreement with the plaintiff was intended to co-operate with the syndicate agreement. It was to terminate before the time therein specifically mentioned on the termination of said syndicate agreement. The purpose and consideration of the agreement was wholly dependent upon the existence of a syndicate agreement which, as stated in the recital therein, provided for the deposit of all of the outstanding shipbuilding securities. The syndicate agreement was not consummated and the shipbuilding securities were sold at auction upon the market from time to time during the year mentioned. It is impossible to assume that such agreement was signed except as expressly stated therein for the purpose of an aid to a syndicate agreement then executed or subsequently to be executed. The alleged agreement was so dependent upon the existence of such syndicate agreement as to fail wholly without it. In view of the fact that the syndicate agreement was not consummated or its provisions carried out, the defendant did not obtain any advantage from or consideration for the alleged agreement with the plaintiff. The judgment should be affirmed, with costs. CULLEN, Ch. J., EDWARD T. BARTLETT, HAIGHT and VANN, JJ., concur; GRAY and WILLARD BARTLETT, JJ., absent. Judgment affirmed. THE CITY OF NEW YORK, Appellant, v. EDWARD P. BRYAN et al., as Trustees of the Creditors, Stockholders and Members of the NEW YORK AND LONG ISLAND RAILROAD COMPANY, Respondents. Street railroads - effect of ordinance permitting street railroad company to construct railroad and tunnel in city streets. The consent of the municipal authorities that a railroad company construct its tunnel and railroad in the city streets is not the grant of an independent franchise. Not only the franchise to be a corporation, but the franchises granted to the corporation, when formed, spring from the state; therefore, the consent of the city is but a step in the grant of a single, indivisible franchise to construct and operate a street railroad. The fact that the consent of municipal authorities permitting a railroad company, Incorporated under the General Railroad Law, to construct its railroad and a tunnel in the city streets, prescribed no limit of time |