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It is apparent that in the State of New Jersey special opportunity is given for the skill of counsel in drawing a certificate of incorporation. It is as though the Legislature had laid out, first, seven express powers which all corporations should possess, and then had defined certain limits beyond which corporate powers could not go, and then provided a method of obtaining the equivalent to a special charter containing any and every other power which should be desired, not inconsistent with the provisions of the act itself.

Implied powers.-The above statement outlines the statutory powers possessed by corporations, and which may be designated its express powers. The statute then provides that "No corporation shall possess or exercise "any other corporate powers, except such incidental powers as shall "be necessary to the exercise of the powers given." This is the statement in negative form of the general rule that a corporation has implied power to do any act reasonably necessary to the exercise of its express powers.

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The courts of New Jersey have placed a liberal construction upon the words " necessary to the exercise" contained in the Act of 1875. "Power "necessary to a corporation does not mean simply power which is indis"pensable a power which is obviously appropriate and con"venient to carry into effect the franchise granted has always been "deemed a necessary one. * * * In short, the term comprises a "grant of the right to use all the means suitable and proper to accom"plish the end which the Legislature had in view at the time of the en"actment of the charter." (State R. R. Co. v. Hancock, 35 N. J. Law, 537. See also McCulloch v. Maryland, 4 Wheat., 316, 414; Olmstead v. Morris Aqueduct, 47 N. J. Law, 311; Crawford v. Longstreet, 43 N. J. Law, 325; Morris Canal Co. v. Love, 37 N. J. Law, 60.)

"The general corporation act confers on the company certain powers, "the certificate contemplates others, and incidental powers follow, not "only with respect of the general but also of the special powers." (Ellerman v. Chicago Junction Ry., &c., Co., 49 N. J. Eq., p. 217, 241.)

As an example of implied power a corporation is impliedly authorized to borrow money and has the incidental power to give security for its repayment, and to make negotiable notes, and to endorse notes loaned to it for its accommodation. (Lucas v. Pitney, 27 N. J. Law, 221; Fifth Ward Sav. Bk. v. First Nat. Bank, 48 N. J. Law, 513; Blake v. Domestic Mfg. Co., 38 Atl. Rep.. 241. See also Savage v. Ball, 17 N. J. Eq., 142; Montague v. Church District, 34 N. J. Law, 218; Hackensack Water Co. v. De Kay, 36 N. J. Eq., 548.)

A corporation has no power to become a party to bills or notes for the accommodation of others. When, however, a corporation has power, under any circumstances, to issue negotiable paper, a bona fide holder has

2 the right to presume that it was issued under the circumstances which give the requisite authority, and such paper is no more liable to be impeached for any infirmity in the hands of such a holder than any other commercial paper. (Id.)

Bonds.-There is no statutory limitation on the power of a corporation organized under this act to issue bonds or debentures, whether secured by mortgage or otherwise.

Stockholders owing money to the corporation upon their subscriptions for stock have the right to buy and pay for the company's bonds and either hold them or pass them upon the market. (Bergen v. Porpoise Fishing Co., 42 N. J. Eq., 397.)

The lien of the holders of mortgage bonds relates to the time when the mortgage was recorded, and is superior to a mechanic's lien, although the bonds themselves were not issued until after the erection of the building had been commenced. (Central Trust Co., Trustee, v. Continental Iron Works, 51 N. J. Eq., 605.)

One who has accepted bonds of a corporation and sold them, and has afterwards bought all the company's property at a receiver's sale, subject to all encumbrances, is estopped to deny the validity of the bonds. (De Kay v. Voorhis, 36 N. J. Eq., 37; aff'd 36 N. J. Eq., 549.)

Coupon bonds are negotiable securities. (Boyd v. Kennedy, 38 N. J. Law, 146; Copper v. Fersey City, 44 N. J. Law, 634.)

As to the distinction between current corporate bonds and bonds that are overdue, as affecting the rights of holders thereof, see Midland R. R. Co. v. Hitchcock, 37 N. J. Eq., 549.

ULTRA VIRES.-It was formerly the rule in this State that acts of a corporation in excess of its express powers, or those necessarily implied, were void, and contracts which were ultra vires the corporation were incapable of enforcement or ratification. Such acts or contracts could not become the foundation of a right of action either by or against the corporation. (Trenton Mut. L. Ins. Co. v. McKelway, 12 N. J. Eq., 133; Nat'l Trust Co. v. Miller, 33 N. J. Eq., 163; Black v. Delaware & Raritan Canal Co., 24 N. J. Eq., 455; Leggett v. N. J. Mfg. & Bkg. Co., 1 N. J. Eq., 541; State v. Mansfield, 23 N. J. Law, 510.)

This rule no longer obtains. The present rule is that an ultra vires contract which has been performed on one side will be enforced in all those cases where the party performing cannot, upon rescission, be restored to his former status. The company is deemed to have acquiesced in the ultra vires act, and is precluded from interposing its own infirmity to the injury of the other party. An executory contract, ultra vires, however, cannot be enforced, even though acquiesced in by every stockholder, and an ultra vires contract, fully executed, cannot be receded from. (Camden & Atl. R.R. Co. v. Mays Landing, &c., R. R. Co., 48 N. J. Law, 530; Ellerman v. Chicago Junc. Ry., &c., Co., 49 N. J. Eq.. 242; Chapman v. Ironclad Rheostat Co., 62 N. J. Law, 497.)

Remedies.-1. By the stockholders and third persons.

The Court of Chancery will interfere by injunction, at the instance of a stockholder, to restrain the corporation from using the corporate funds in the exercise of unauthorized powers. (Gifford v. N. J. R. &

Transportation Co., 10 N. J. Eq., 171.) And in Del. & Rar. Canal v. 83 Rar. & Del. Bay R. Co., 16 N. J. Eq., 321; aff'd 18 N. J. Eq., 546, it was held that a court of equity will restrain a corporation from exercising powers with which the Legislature has not invested it if those powers interfere with the rights or property of others, whether such exercise is mistaken or fraudulent.

2.- Proceedings by the Attorney-General to forfeit the charter of the

company.

"The State may interpose its authority at any time and compel "an abandonment of the act in excess of power, and, if need be, revoke "the charter of the company for its usurpation.

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'When the State challenges the legality of the transaction, the para"mount and only question is whether it has bestowed upon the company "the requisite authority to engage in it. When the question arises "between the company and the other party to the contract, other legal "principles apply in determining whether the contract shall be observed." (Camden & Atl. R. R. Co. v. Mays Landing, &c., R. R. Co., 48 N. J. Law, 567.)

The Court of Chancery is not the proper tribunal for calling in question the rights of a corporation, as such, for the purpose of declaring its franchises forfeited and lost. Such power is of right to be exercised by a court of law. (Society for Establishing Useful Manufactures v. Morris Canal & Bkg. Co., 1 N. J. Eq., 157; Stockton v. American Tobacco Co., 55 N. J. Eq., 352.)

3. Banking powers prohibited to corporations organized under this act. No corporation created or to be created under the provisions of this act shall, by any implication or construction, be deemed to possess the power of carrying on the business of discounting bills, notes or other evidences of debt or of receiving deposits of money, of buying gold or silver bullion or foreign. coins, or of buying and selling bills of exchange, or of issuing bills, notes or other evidences of debt, upon loan or for circulation as money.

(As amended by Chap. 176, Laws of 1899; P. L. 1899, p. 473.) P. L. 1846, p. 16; Act of 1875, § 4.

The general prohibition against the exercise of unauthorized banking powers is contained in the "Act concerning banks and banking (Revision of 1899)."

Banking corporations must now be formed under "An Act concerning banks and banking (Revision of 1899)."

This section affects in no way the power of a corporation to issue and receive negotiable paper in the usual course of business, or for any pur

§ 4 pose incidental to the legitimate business for which the company was formed. (See Morawetz on Private Corporations, Section 321, and cases cited.)

Corporations formed under "An Act concerning trust companies (Revision of 1899)" have all the powers of banks except the power to discount bills and notes.

4. Charters subject to repeal.

The charter of every corporation, or any supplement thereto or amendment thereof, shall be subject to alteration, suspension and repeal, in the discretion of the legislature, and the legislature may at pleasure dissolve any corporation.

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P. L., 1846, p. 17, Act of 1875, § 6.

Charters are contracts.-"Charters of private corporations are regarded as executed contracts between the State and the corporator, and the rule is settled, that if the charter does not contain a reservation of power "in the Legislature to modify or change the contract, the Legislature "cannot repeal, impair or alter such a charter against the consent or "without the default of the corporation." (Montclair v. N. Y. & Greenwood Lake Ry. Co., 45 N. J. Eq., 436.)

It was to avoid the rule of the Dartmouth College case that this section was enacted.

"The power of the Legislature has its limits. It can repeal or sus"pend the charter; it can alter or modify it; it can take away the charter; "but it cannot impose a new one, and oblige the stockholders to accept it."

The power to repeal, suspend or alter the charter is a reservation to the State for the benefit of the public, to be exercised by the State only. "The State was making what had been decided to be a contract, and it "reserved the power of change, by altering, modifying or repealing the "contract." (Mills v. Central R. R. Co., 41 N. J. Eq., 1, 8.)

The Legislature has no authority to make any alteration or amendment in a charter granted subject to this section, that will defeat or substantially impair the object of the grant, or any rights which have vested under it. (Zabriskie v. Hackensack & N. Y. R. Co., 18 N. J. Eq., 178.)

The Legislature has power to confer upon a court authority to declare a charter forfeited for a specified misfeasance or malfeasance. (Huylar v. Cragin Cattle Co., 40 N. J. Eq., 392, 396.) See section 44, post.

5. This act may be amended or repealed, at the pleasure of the legislature, and every corporation created under this act shall be bound by such amendment; but such amendment or

repeal shall not take away or impair any remedy against any § 5-6
such corporation or its officers for any liability which shall have
been previously incurred; this act and all amendments thereof
shall be a part of the charter of every corporation heretofore or
hereafter formed hereunder, except so far as the same are inappli-
cable and inappropriate to the objects of such corporation.

P. L. 1846, p. 65; P. L. 1849, p. 301; Act of 1875, §§ 14, 35.
See notes to Section 4, ante.

II.-Formation, Constitution, Alteration, Dissolution.

6. Purpose for which corporation may be formed. Upon executing, recording and filing a certificate pursuant to all* the provisions of this act, three or more persons may become a corporation for any lawful purpose or purposes whatever other than a savings bank, a building and loan association, an insurance company, a surety company, a railroad company, a telegraph company, a telephone company, a canal company, a turnpike company or other company which shall need to possess the right of taking and condemning lands in this state, or other than a corporation provided for by "An Act concerning banks and banking (Revision of 1899)," or by "An Act concerning trust companies (Revision of 1899)," or by "An Act concerning safe-deposit companies (Revision of 1899)"; it shall, however, be lawful to form a company hereunder for the purpose of constructing, maintaining and operating railroads, telephone or telegraph lines outside of this state.

(As amended by Chap. 176, Laws of 1899; P. L. 1899, p. 473.)

P. L. 1846, p. 64; P. L. 1849, p. 300; P. L. 1852, p. 87; P. L. 1853, p. 427; P. L. 1855, p. 706; P. L. 1865, p. 707; P. L. 1865, p. 913; P. L. 1869, p. 1001; Act of 1875, § 10; P. L. 1876, p. 103; P. L. 1880, p. 92; P. L. 1888, p. 112; P. L. 1889, p. 411; P. L. 1894, p. 497.

Corporations may be organized under this act for any lawful purpose or purposes, and are not limited to a single object or purpose.

Under the

The incorporation of the classes of corporations expressly excepted from the provisions of this section is provided for by other acts. Some of these acts contain express provisions prohibiting the incorporation of companies provided for by them under any other act. See "An Act concerning banks and banking, Revision of 1899" (P. L. 1899, p. 431). provisions of the Trust Company Act of 1899 not only is the organization of a trust company forbidden under any other act, but the act forbids the exercise within the State of New Jersey of certain specified powers exclusively conferred upon trust companies (P. L. 1899, p. 455), the more important of which are:

"(1) To act as the fiscal or transfer agent of any state, municipality, * See section 43a, post.

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