Richmond Guano Co. v. Farmers' Cotton Seed Oil Mill & Ginnery Co.

Citations

• 126 F. 712
• 61 C.C.A. 630
• 1903 U.S. App. LEXIS 4357

Syllabus

<p>1. Corporations — Limitation of Powers by Purpose of Incorporation-Contracts Ultra Vires.</p> <p>A corporation organized “to build and operate a cotton seed oil mill, and ginnery in connection therewith, to compress cotton seed oil, to buy cotton seed, to sell their products, to manipulate and compound cotton seed meal, with other substances and elements, so as to make fertilizers to be sold for fertilizing lands, and to gin and compress cotton into bales for the market,” has no power to engage in the business of buying and selling a fertilizer made by another, and which is sold in the same condition as when bought, and notes given by it for the purchase price of such fertilizer to be so sold are ultra vires and void.</p> <p>2. Same — Liability for Property Secured Through Ultra Vires Contract.</p> <p>A corporation which has secured property by means of a contract which was beyond its corporate powers to make, but which was entered into by both parties in good faith, and has sold or used such property, is liable for its value notwithstanding the fact that the contract was ultra vires, and it is equally liable if the ultra vires contract was one of agency under which it obtained the property and converted it to its own use.</p> <p>3. Same.</p> <p>Defendant corporation, which was created for manufacturing and selling cotton products, including fertilizers, and compressing cotton, entered into a contract with complainant by which it agreed to receive and sell “as agent” fertilizers manufactured by complainant, settlement therefor at the invoice price to be made on a certain date by payment in cash for all that had been sold for cash and by the execution of its notes for the remainder, notes to be taken from all time purchasers and turned over to complainant as collateral security for its own notes. The contract provided that, until sold, the fertilizers were to remain the property of complainant. Settlement was made by note, as provided in the contract. Held that, c