Cyclopedia of the Law of Private Corporations

hand, if the charter is public, and therefore known to the court, it may be necessary to allege facts specially to show that the wrong was a wrong and was not an act justified by the grant in the charter.57 A member suing the corporation and desiring to impeach its by-laws must make allegation showing their illegality by reason of statute or charter or constitution, or because in violation of terms of a prior contract.58

Some charters are judicially noticed.59 Since by-laws are not judicially known and must be proved whenever material,60 they and all private charters must be pleaded to get them before the court, which may be done by setting out the particular portions verbatim or in substance; but the legal effect of them cannot be pleaded as a conclusion.61

§ 3053. Statutes and facts entering into statutory rights of action. There is no distinctive rule for the pleading of statutes affecting corporate rights or liabilities. General public enabling statutes under which the corporation is formed, or a public act of incorporation, are judicially known to the court; but if incorporation was by private act or was in a foreign state it must be pleaded at least in general terms.62 These allegations when made are addressed to the issue of corporate existence.

In pleading a statutory cause of action all the elements of fact entering into it must be pleaded,63 which is nothing more than a general law of pleading; a stock assessment, 64 an assessment on mem

57 Where a tort is alleged in the doing of an act authorized by a public charter some fact must be alleged taking the act out of and beyond the warrant of the charter. A bare allegation that an authorized bridge was "unlawfully" constructed does not show a wrong. Stephen & C. Transp. Co. v. Central R. Co., 33 N. J. L. 229. 58 The illegality of amendments of by-lawз must be so pleaded. If the contract also be relied on enough of it must be set out to show that it was violated. Crittenden v. Southern Home Building & Loan Ass'n, 111 Ga. 266, 36 S. E. 643.

59 See § 3088, infra. 60 § 488, supra.

61 Mere allegations of the effect of a foreign charter and by-laws not ex

hibited or set out are bad as conclusions. Clark v. Mutual Reserve Fund. Life Ass'n, 14 App. Cas. (D. C.) 154, 43 L. R. A. 390.

In debt before a justice for a penalty for violation of plaintiff's bylaws, the by-law may be set out by reference to an attached printed copy. White Water Valley Canal Co. v. Boden, 8 Blackf. (Ind.) 130.

62 §§ 3042-3044, supra; chapter on Foreign Corporations, infra.

63 E. g., that the duty imposed was wholly intrastate in the instant case. Rixke v. Western U. Tel. Co., 96 Mo. App. 406, 70 S. W. 265.

64 A statutory notice precedent to assessment of stock must be pleaded. Mississippi, O. & R. R. R. Co. v. Gaster, 20 Ark. 455. See other cases

IS 3054 bers for improvements,65 or a statutory penalty for refusing inspection of books,66 therefore require allegations of facts made a predicate for such actions by the statutes. Statutory actions against officers and stockholders are treated generally in other chapters.67 Under the rule generally followed a statutory remedy available only for or against a corporation or bank may be invoked by suing in a name. which imports that capacity or character. 68

§ 3054. Corporate power or want of power. The power of the corporation to do a thing declared on as the basis of the action, and conversely the want of power relied on as making an actionable cause, needs to be pleaded or not according to the presumptions as to power which fellow from the fact of incorporation together with other allegations showing the character of the corporation. Applying the general rule that things implied or presumed need not be pleaded 69 this question is thrown back to an inquiry what powers are implied or presumed and what are not. Generally speaking the power to sue and be sued, to take, receive, hold, purchase, grant, and convey. property within the objects of its nature and creation, to make contracts within the same scope of its objects, and to control within limits its own internal regulation and relations, will be implied. And this statement may be augmented by the further one that if the general powers appear those will be implied which are reasonably incidental and accessory to the general powers, so that it may be said that they were contemplated as a part of them.70 Such powers

Chapter 17, supra, chapter on Stock and Stockholders, infra.

65 Where the statute requires the filing of a bond for proper application of money by a ditch company before enforcing or collecting any assessment, such filing must be alleged. Cooper v. Arctic Ditchers, 56 Ind. 233.

66 In a penal action for refusal to allow inspection of stockbook, it must be averred that the right of the person demanding was known to the officer who refused. Williams v. College Corner & R. Gravel Road Co., 45 Ind. 170. See other cases chapter on Inspection of Books, supra.

67 See Chaps. 17, 42, supra, and chapter on Stock and Stockholders, infra.

68 Suing by name of a bank sufficiently imports that plaintiff is a bank

to entitle it to a remedy given only to banks. There need be no express averment in the body of the pleading. Lewis v. Bank of Kentucky, 12 Ohio 132, 40 Am. Dec. 469.

In a statutory liability declared only against railroads and corporations, the corporate character of defendant must be alleged, but a name importing incorporation suffices (applying Employers' Liability Act which runs only against railroads and corporations). Ft. Wayne Gas. Co. v. Nieman, 33 Ind. App. 178, 71 N. E. 59.

69 Stephen on Pleading (Tyler's Ed.) 317, 318.

70 See generally Chapter 21, §§ 790792, supra.

need not be pleaded," and the failure to plead them does not expose the complaint to a demurrer; 72 but the issue must be raised, if at all, by an affirmative plea of ultra vires.73 If the implication is against the power it must be pleaded.74 Undoubtedly, if a power exists and is relied on, it will be better to plead it if there is any doubt as to the implication, for the burden of proof can be sustained by available proof, or the allegation will be regarded as unnecessary; though care must be taken not to limit the issues thereby and exclude proof that might sustain the case on some other power not so pleaded. But the sum of all this is that it is really a question of implications rather than one of pleading. The same reasoning will work out the question when it must or should be alleged that a lack of power exists, but in that aspect the implied or presumed powers must be negatived as if any other legal presumption was being negatived by pleading the facts. Lack of power is much more often pleaded defensively than

71 Howard v. Boorman, 17 Wis. 459. Power to make a contract when presumed need not be pleaded. Commonwealth Title Insurance & Trust Co. v. Cummings, 83 Fed. 767.

Plaintiff need not allege its powers involved in the contract sued on. Marsalis v. Texas Cactus Hedge Co., 2 Tex. Unrep. Cas. 292.

Presumably intra vires title need not be so pleaded. Farmers' & Millers' Bank v. Detroit & M. R. Co., 17 Wis. 372.

Defendant insurance company need not be alleged to have insurance pow ers. Feeny v. People's Fire Ins. Co., 25 N. Y. Super. Ct. 599.

Bill to foreclose by a corporation need not aver power to loan money and take mortgage. Boulware v. Davis, 90 Ala. 207, 9 L. R. A. 601, 8 So. 84; United States Mortg. Co. v. McClure, 42 Ore. 190, 70 Pac. 543.

In a suit to quiet title the corporate plaintiff need not allege power to hold land; that is presumed. Touart v. Jett Bros. Contracting Co., 169 Ala. 638, 53 So. 751; Torrent Fire Engine Co. No. 5 v. Mobile, 101 Ala. 559, 14 So. 557; Martin v. Kentucky Lands Inv. Co., 146 Ky. 525, Ann. Cas. 1913 C 332, 142 S. W. 1038.

Incapacity to hold land is defensive matter. Young Men's Christian Ass'n v. Dubach, 82 Mo. 475.

See generally §§ 3068, 3078, infra, where this rule takes expression in the converse statement that want of power cannot be questioned by demurrer but must be pleaded as a defense.

72 § 3068, infra.
73 § 3078, infra.

74 Where the cause of action is one impliedly beyond corporate powers, e. g., a guaranty, the power to make it should be pleaded as a fact. Rhorer v. Middlesboro Town & Lands Co., 103 Ky. 146, 19 Ky. L. Rep. 1788, 44 S. W. 448.

Allegation that defendant and other corporations are partners must be accompanied with allegation of power to become such. White v. Pecos Land & Water Co., 18 Tex. Civ. App. 634, 45 S. W. 207.

Power to do the thing sued on must be averred if such power does not ordinarily belong to corporations (lending money). Frye v. Bank of Illinois, 10 Ill. 332.

[§ 3054 affirmatively, to wit, as a plea of ultra vires; 75 but whether affirmative or negative in form allegations in the complaint as to the corporate powers quickly verge into the doctrine of ultra vires and its concomitant doctrines of estoppel.76 Therefore whenever the pleaded facts show the defendant estopped to question the power in question. an allegation in the complaint is needless now and according to the old and general rule of pleading," illustrating which is the rule that a corporation sued on a contract made by it, as alleged, need not be alleged to have had power to make such contract.7 78 It will be necessary to plead the character of the corporation and the nature and objects of it, whenever a limited range of powers peculiar to that kind of a corporation is relied on,79 or when it is desired to justify an act by charter power.80

The foregoing rules are general. There are exceptional actions and causes of action wherein the particular power or nature of the corporation must be pleaded, or conversely the want of power. Thus in quo warranto for usurpation of powers or franchises the very power itself is the subject of the action and must be alleged with certainty,81 and in mandamus to compel performance of a duty it may be requisite to allege power to perform it, or at least a duty which presupposes such power.82 In mandamus by a corporation grounding

75 Pleas of ultra vires, see § 3078, infra.

Complaint setting forth a contract which may be intra vires does not show want of power. Jacobs v. Monaton Realty Investing Corporation, 212 N. Y. 48, 105 N. E. 968, rev'g 160 N. Y. App. Div. 449, 145 N. Y. Supp. 611, which affirms 80 N. Y. Misc. 649, 141 N. Y. Supp. 1033.

76 See generally Chapter 37, supra. 77 Stephen on Pleading (Tyler's Ed.) 300, which lays down the rule as an exception to the necessity of alleging "title" or authority.

78"It would be an anomaly to hold that the complaint need not show that defendant company is a corporation, and at the same time require it to show that corporate powers had been conferred on the company." Klemik v. Henricksen Jewelry Co., 122 Minn. 380, 142 N. W. 871. also Alabama Gold Life Ins. Co.

See

Central Agricultural & Mechanical Ass'n, 54 Ala. 73; Fuller v. Naugatuck R. Co., 21 Conn. 557 (corporation sued on contract of common carriage); Montague v. Church School Dist. No. 3, 34 N. J. L. 218 (school district sued on a note).

Need not allege character of defendant's business and its powers. San Antonio Machine & Supply Co. v. Josey (Tex. Civ. App.), 91 S. W. 598.

79 Jacobs v. Monaton Realty Investing Corporation, 212 N. Y. 48, 105 N. E. 968, rev'g 160 N. Y. App. Div. 449, 145 N. Y. Supp. 611, which af firms judgment 80 N. Y. Misc. 649, 141 N. Y. Supp. 1033.

80 It must be pleaded that it was done thereunder. Crawfordsville & W. R. Co. v. Wright, 5 Ind. 252.

81 See chapter on Quo Warranto, infra.

82 See chapter on Mandamus, infra.

its application on its right to have a thing done, it must show its capacity or power in order to make out a breach of duty by respondent, if the right claimed is not one implied.83 Of course in the case of charters by public statute and as to all powers conferred by public statute on corporations of the party's class judicial notice of the powers removes all question of the necessity of pleading them. Identification of the corporation by the other allegations with the charter or the class suffices.8 84

The formation and existence of the corporation properly pleaded 85 will afford in many if not most cases a sufficient basis for any implication of corporate power that may be necessary, when taken in connection with the cause of action alleged. An allegation that a contract was made and entered into implies that there was power in plaintiff to make it,86 and it is implied that a contract was made in the regular course of business where the allegation is general that it was made.87 When power in a consolidated corporation is alleged it should be so pleaded as to ascribe the power to either the original or the successor corporation, and an allegation of it where both were mentioned was treated as applying to the original one.88

83 An application by a corporation for a writ of mandamus to compel the state auditor to pay over to it certain moneys voted to it as trustee by the act of the legislature should set out its qualifications as a corporation to administer the trust. Leatherwood v. Hill, 10 Ariz. 16, 85 Pac. 405.