Mellen v. Moline Malleable Iron Works, 131 U.S. 352 (1889)

behalf of other unsecured creditors, to set aside a conveyance of its real estate and a mortgage of its personal property, both made by the corporation in trust to secure certain preferred creditors, including among them a director of the corporation, and also to procure a dissolution of the corporation, and the closing up of its business, is a suit brought to remove an incumbrance or lien or cloud upon the title to such property within the meaning of § 8 of the act of March 3, 1875, 18 Stat. 472, c. 137, which authorizes a Circuit Court of the United States to summon in an absent defendant, and to exercise jurisdiction over his rights in the property in suit within the jurisdiction of the court. p. 353It is not necessary that the creditor of an insolvent corporation should

The present suit was commenced by an original bill exhibited May 5, 1884, by said Mellen and Boyd, citizens of Ohio, against the Moline Malleable Iron Works, Hemenway, Whee- , p. 355lock, Stephen T. Walker, Carson, and Jeremiah S. Keator and Ben. C. Keator, late partners as J. S. Keator & Son, all citizens of Illinois. The bill showed that Hill was compelled to pay and did pay off the debt of $20,000, with the interest accruing on the several notes, aggregating that sum.

The defendants Stillman W. Wheelock, A. L. Carson, Charles p. 357F. Hemenway, J. S. Keator and Ben. C. Keator filed a plea in bar of this suit. As the correctness of the decree below depends entirely upon the sufficiency of that plea, it is here given in full:

“ That long prior to the time when said George H. Hill sold and conveyed to said complainant Mellen in trust, for the use and benefit of said Sophia H. Boyd, his interest in said trust deed and chattel mortgage, as alleged in said bill of complaint, to wit, on the 2d day of July, 1883, the said National Furnace Company, in its own behalf and on behalf of all the creditors of the Moline Malleable Iron Works, exhibited its original bill of complaint in this honorable court and made parties defendant thereto said Moline Malleable Iron Works, Stillman W. Wheelock, George H. Hill, Amaziah L. Carson, Charles F. Hemenway, Henry H. Hill, Stephen T. Walker, Walter J. Entriken and the J. S. Keator Lumber Company, thereby stating, among other things, that said National Furnace Company was a creditor of said Moline Malleable Iron Works, and that at the time when the said Moline Malleable IronWorks executed the said trust deed and chattel mort^affeGO it was insolvent and its indebtedness was largely in excess of its capital stock, and that its officers and directors had assented to the cifeation of its indebtedness, and that the said conveyances were fraudulent and void as against creditors of said Moline Malleable IronWorks, and therein and thereby prayed, among other things, that a receiver might be appointed to take charge of and manage the property of the said corporation under the orders of this court, and that the said trust deed and chattel mortgage might be held and adjudged fraudulent and void as against said National Furnace Company and creditors of said Moline Malleable Iron Works ; to which said bill these defendants put in their several answers, and said Moline Malleable Iron Works, Henry H. Hill, and Stephen T. Walker interposed their several demurrers; that after exhibiting said bill of complaint, to wit, on the 1st day of August, 1883, upon the application of said National Furnace Company, for the preservation of the property of the said corporation pending the said suit, and for the benefit of all parties inter- p. 358ested therein and in the proceeds thereof, this honorable court entered an order in said cause, as appears of record in this court, appointing one Robert E. Jenkins receiver of the said Moline Malleable Iron Works, and of its property, and directing him to take and hold possession thereof under the orders of this honorable court, and directing the said Moline Malleable Iron Works to transfer and convey to said receiver its entire property, both real and personal, and to deliver up to said receiver the possession thereof; and that thereupon the said Moline Malleable Iron Works did transfer, convey and deliver up to said receiver its property and the possession thereof, and said receiver did enter into and take possession thereof.

Wheelock, Carson and J. S. Keator Lumber Company from the liabilities assumed by them as indorsers for said Moline Malleable Iron Works and the balance disbursed pro rata among the creditors of said company; that thereupon, to wit, on the 28th day of November, 1883, it was ordered by this honorable court, as appears of record in this court in said cause, that said National Furnace Company, the Moline Malleable Iron Works, Hemenway, Carson and George H. Hill plead, answer or demur to the said cross-bill on or before the 20th day of December, 1883, and that a copy of said order be served on said Hill on or before December 5,1883, and that in case said Hill did not appear and plead, answer or demur to said cross-bill as aforesaid the same should be taken as confessed by him ; that said order was duly served on said Hill on the 1st day of December, 1883, to wit, long prior to the maklng of the said assignment to said Mellen; that the said defendants, the National Furnace Company, Hemenway and Carson, answered said cross-bill, as directed by said order, but that said Hill and said Moline Malleable Iron Works failed to p. 360appear in said cause and to plead, answer or demur to said cross-bill therein, as directed by said order; that thereafter, to wit, on the 22d day of December, 1883, the said receiver filed his petition in said cause, alleging, among other things, that the property of said Moline Malleable Iron Works in his possession as such receiver (and including therein the said property covered by said trust deed and chattel mortgage) was rapidly depreciating in value, and that for the interests of all persons who might be interested therein, and to realize anything for the creditors therefrom, it should be sold at once, and praying that he might be authorized to offer the said property for sale, and that thereupon it was ordered, on said petition being filed, by this honorable court, as appears of record in said cause in this court, that the said receiver should offer and advertise for sale, in the manner directed by said order, all of said property and should report bids therefor to this court.

“ That thereafter, to wit, on the 3d day of March, 1884, it appearing to this honorable court that said George H. Hill resided beyond the jurisdiction of this court, it was ordered by this honorable court, as appears of record in this court, that said George H. Hill do appear and plead, answer, or demur to p. 361’the said original and supplemental bill of complaint in said cause on or before the 15th day of April, 1884, and that a copy of said order should be served upon said Hill on or before the 15th day of March, 1884, and that in case' he did not appear, plead, answer, or demur to said bill as directed the same should be taken as confessed by him; and that thereafter, to wit, long prior to the time when said Hill sold and conveyed to said Mellen his interest in said trust deed and mortgage, a certified copy of said order was served on said Hill; and thereafter, to wit, on the 22d day of April, 1884, said Hill not appearing and pleading, answering, or demurring to said original and supplemental bill, as directed by said order, it was ordered by this honorable court in said cause, as now appears of record therein in this court, that said original and supplemental bill be taken as confessed by said Hill.

“That thereafter, to wit, on the 23d day of April, 1884, long prior to the filing of the said bill of complaint by said William S. Mellen, said Hill not having appeared and pleaded, answered or demurred to said cross-bill, by the order of this court entered in said cause, and now appearing of record in this court, it was ordered that the said cross-bill of said Wheelock be taken as confessed by said George H. Hill; and afterwards, to wit, on the 26th day of June, 1884, the said cause came on to be heard upon the said original and supplemental bills of complaint and answers and replications thereto, and upon the said cross-bill of said Wheelock and the answers and replications thereto, and upon the testimony taken in said cause, and a final decree was then rendered therein, which now appears of record in this court, and it was therein, found by this honorable court, among other things, that the indebtedness of said Moline Malleable Iron Works was in excess of its capital stock in the sum of $75,000; that the said trust deed and chattel mortgage were valid in so far as they gave to said Wheelock, Carson and the J. S. Keator Lumber Company a first lien on the property therein described; and that said George H. Hill was not entitled to any lien or security by reason of said trust deed and mortgage: and that the same were invalid as to him, because the liabilities of said company p. 362in excess of its capital stock were incurred while he was one’ of the directors and its vice-president, and with his knowledge and assent thereto, and because he was named in said trust deed and chattel nfortgage as a beneficiary thereunder through his influence and control over said corporation as an officer thereof; and it was thereby decreed, among other things, that said Wheelock, Carson and the J. S. Keator Lumber Company were entitled to have and receive the proceeds derived from the sale of the property conveyed by said trust deed and mortgage in part satisfaction of the sums paid by them for said company.

The bill in this case which, for the purposes of the plea, is taken as admitted to be true, shows that the National Furnace Company had neither a legal nor an equitable lien upon, or claim to the property covered by the trust deeds. It shows that the Furnace Company was only a general unsecured creditor of the Moline Malleable Iron Works, and that its debt p. 363as such creditor was not due at the time it filed its bill of complaint in the Circuit Court. Its claim against the Iron Works had not been reduced to judgment, nor had it exhausted the property of the Iron Works, its debtor, by execution or other legal process, nor had any attachment or other process been issued by the Circuit Court or any other court, whereby any lien on or claim to the property covered by the trust deeds had been acquired. The case presented by that bill was not one covered by § 738, and, as attempting to enforce any lien on or claim to the property covered by the trust deeds, it could not have been sustained. Jones v. Green, 1 Wall. 330 ; Van Weel n .. Winston, 115 U. S. 228, 245 ; Freedman's Saving & Trust Co. v. Earle, 110 IT. S. 710; Shainwald n . Lewis, 6 Fed. Rep. 510; Pacific Railroad Co. n . Missouri Pacific Railway Co., 3 Fed. Rep. 772; Lovejoy v. Hartford Fire Ins Co., 11 Fed. Rep. 63; Hyde Park Gas Co. v. Kerber, 5 Brad well (Ill. App.) 132 ; Wincock v. Turpin, 96 Illinois, 135. Supposing, however, for the purposes of the argument, that it was such a bill, this suit is not one contemplated by § 738 of the Revised Statutes of the United States. An unsecured creditor bringing such a suit, whose claim is not in judgment, has no claim to and can have no lien on any part of the real or personal property of the corporation, such as is contemplated by § 738. In the event that the corporation is not dissolved, (and a creditor is not entitled to a decree to wind it up,) his bill necessarily must be dismissed. No receiver could be appointed who would have the right to sell the property until such action was taken by the court, and it does not appear by the record in this case that the Moline Malleable Iron Works ever was dissolved, or that the court found that the National Furnace Company was entitled .to have the corporation dissolved and the relief granted as provided by § 25, c. 32, of the Revised Statutes of Illinois.

II. The Circuit Court had no authority to make the order of sale that it made in the case brought by the National Furnace Company. The bill in that case showed and advised the court at the time it was making these orders, and confirming said sale, that Hill was a citizen of the State of Ohio, and a p. 364resident thereof. Any order made by the court affecting his interest before jurisdiction had been acquired of him or of his interest in the property, must be void. Webster v. Heed. 11 How. 437, 457; Windsor v. Me Veigh, 93 U. S. 274; United States v. Walker, 109 U. S. 258; Bigelow v. Forrest, 9 Wall. 339 ; Ex parte La/nge, 18 Wall. 163.

Was the decree in the suit instituted by the National Fuinace Company (to be hereafter called the Furnace Company) p. 365against the Moline Malleable Iron Works (to be hereafter called the Iron Works) and others, declaring that Hill was not entitled to a lien or security by reason of the trust deed and chattel mortgage of June 23, 1883, void for want of jurisdiction in the court that rendered it ? This is the principal question in the present case. Its solution depends upon the construction of the eighth section of the act of March 3, 1875, determining the jurisdiction of the Circuit Court of the United States. 18 Stat. 472, c. 137, § 8.

That section authorizes an order to be made directing an absent defendant in any suit brought in a Circuit Court of the United States to enforce any legal or equitable lien upon, or claim to, or to remove any incumbrance or lien or cloud upon the title, to real or personal property within the district where such suit is brought — such defendant not being an inhabitant of or found therein, and not voluntarily appearing in the suit — to appear, plead, answer or demur, by a designated day. The order must be served upon the absent defendant, if practicable, wherever found, and upon the person, if any, in charge or possession of the property. If such personal service be not practicable, the order must be published in such manner as the court may direct, not less than once a week for six consecutive weeks. If the defendant does not appear, plead, answer or demur, within the time limited, or within such further time as may be allowed, the court — proof being made of service or publication of the order, and of the performance of the directions therein contained—may “entertain jurisdiction and proceed to the hearing and adjudication of such suit in the same manner as if such absent defendant had been served with process within the said district.” “ But,” the act declares, “ said adjudication shall, as regards said absent defendant or defendants without appearance, affect only the property which shall have been the subject of the suit and under the jurisdiction of the court therein, within such district” A defendant, not personally notified as provided in the act, may within one year after final judgment enter his appearance in the suit; whereupon, the court must make an order setting aside the judgment and permitting him to plead, on payment of such costs as shall p. 366be deemed just; the suit then to proceed to final judgment, according to law. The previous statute gave the above remedy only in suits “ to enforce any legal or equitable lien or claim against real or personal property within the district where the suit is brought,” while the act of 1875 gives it also in suits brought “ to remove any incumbrance or lien or cloud upon the title to ” such property. Rev. Stat. § 738; 18 Stat. 472, c. 137, § 8.

This brings us to the question whether the steps taken in p. 368the suit brought by the National Furnace Company were such as authorized a decree that would affect Hill’s interest in the property covered by the trust deed and chattel mortgage. We lay out of view the fact that Hill was a citizen of Ohio, and neither appeared, nor was served with process within the district in which the suit was brought. He was personally served with copies of the orders requiring him to plead, answer, or demur, and the decree only affects his interest in property within the territorial limits of that district.

It appears from the plea upon which the cause was heard, that on the 1st of August, 1883, after the present appellees had answered the original bill in most part, and after the Iron Works had demurred, the court, upon the application of the Furnace Company, appointed a receiver to take possession of the property of the first named company, including that covered by the trust deed and chattel mortgage, for the benefit of all parties interested in it; and that, on the 28th of November, 1883, Wheelock, by leave, filed his cross-bill against the Iron Works, the Furnace Company, Geo. H. Hill, Hemenway, and Carson, asking a decree declaring said trust deed and mortgage valid as to himself, Carson and the Keator Lumber Company, and Void as to Hill. He alleged that the property embraced in the trust deed and chattel mortgage was rapidly depreciating in value, and ought to be sold, and the proceeds applied, primarily, to relieve himself, Carson and the Keator Lumber Company from the liabilities assumed by them as indorsers for the Iron Works. On the same day an order was entered requiring the defendants to the cross-bill to plead, answer, or demur to the same on or before December 20, 1883, and providing that if Hill (being served with a copy of the order on or before December 5, 1883) did not appear, plead, answer, or demur to the cross-bill, by the time fixed, the same would be taken as confessed by him. Hill was served — presumably in Ohio, where he resided — on the 1st of December, 1883, with such copy; but neither he nor the Iron Works appeared, pleaded, answered, or demurred to the cross-bill. It appearing from the petition of the receiver, filed December 22, 1883, that the property covered by the trust deed and mort- p. 369gage was rapidly depreciating in value, he was authorized by an order of court to advertise and sell it. He did sell it, and, February 20, 1884, reported a sale, by him, to Wheelock, pursuant to and in the manner directed by the court. That sale was approved, time being given to show cause why it should not be confirmed. The property was conveyed by the receiver to Wheelock. On the 3d of March, 1884, Hill was required by order of court to appear on or before April 15, 1884, and plead, answer, or demur to the original and supplemental bill, and it was ordered that if he did not, on or before the latter day, being previously served with a copy of such order, appear and plead, answer or demur, the bill would be taken as confessed by him. Long prior to the sale to Mellen of Hill’s interest in the trust and mortgage the latter was served with a copy of the order of March 3,1884, and on the 22d of April, 1884, the original and supplemental bills, Hill not having appeared, and answered, pleaded or demurred, were taken as confessed by him. On the succeeding day a like order was entered against him as to the cross-bill, he not having appeared, pleaded, answered or demurred thereto. The cause came on to be heard on the 26th of June, 1884, upon the original and supplemental bill, upon the cross-bill, upon the answer and replications thereto, and upon the testimony taken in the cause, when the final decree was rendered as set forth in the plea embraced in the statement of facts preceding this opinion.

vol . CXXXI—24 p. 370was not ordered or made until after Hill had been duly served with a copy of the order of November 28, 1883, to appear and plead, answer or demur, to the cross-bill by the day fixed in that order. If the sale was irregular, by reason of its being ordered and made before Hill was directed to appear and plead, answer or demur, to the original and supplemental bills, that is not a matter affecting the jurisdiction of the court to render a final decree in respect to his interest in the property; for the proceeds took the place of the property, and whatever rights Hill had in the latter were transferred to the former.

We have considered the case just as if the present suit had been brought by Hill. The appellants have no greater rights than he would have, if the present suit had been instituted by him; for Mellen, the trustee for Sophia H. Boyd, acquired his rights pendente lite. Hill sold and conveyed to him, after he had been personally served with copies of the order to appear and plead, answer or demur, to the original and supplemental bills, and only three days before the time fixed for his appearance to the original suit. His sale was more than three months after he was required to appear, and plead, answer, or demur to the cross-bill. That sale and conveyance coni not affect the power of the court to proceed to a final decree, so far as his interest in the property was concerned.. Nor by such sale and conveyance did Mellen and his cestui que trus p. 371acquire any absolute right to become a party to the suit instituted by the Furnace Company. Purchasers of property involved in a pending suit may be admitted as parties, in the discretion of the court; but they cannot demand, as of absolute right, to be made parties, nor can they complain if they are compelled to abide by whatever decree the court may render, within the limits of its power, in respect to the interest their vendor had in the property purchased by them pendente lite. Eyster v. Gaff, 91 IT. S. 521, 524; Union Trust Co. v. Inla/nd Navigation and Improvement Co., 130 U. S. 565; 1 Story’s Eq. Jur. § 406; Hurray v. Ballou, 1 Johns. Ch. 566. As said by Sir William Grant, in Bishop of Winchester v. Paine, 11 Ves. 194, 197, “the litigating parties are exempted from the necessity of taking any notice of a title so acquired. As to them, it is as if no such title existed. Otherwise, such suits would be indeterminable; or, which would be the same in effect, it would be in the pleasure of one party at wrhat period the suit should be determined.” The present proceeding is an attempt, upon the part of a purchaser pedente lite, to relitigate, in an original, independent suit, the matters determined in the suit to which his vendor was a party. That cannot be permitted, consistently with the settled rules of equity practice.

Among those covenants of the Pittsburgh Company, as lessee, which the Pennsylvania Company thus guaranteed the performance of, were the covenant in the sixth article to pay to or for the benefit of the Indiana Central Company three tenths of the gross earnings of the property leased, and the covenant in the ninth article, by which the Indiana Central Company assigns to the Pittsburgh Company certain existing p. 376contracts for transportation over, other railroads not mentioned above, and the Pittsburgh Company “ assumes, and agrees at its own risk and expense to carry out, each and all of said contracts, according to their respective tenors and legal liabilities, receiving and enjoying all benefits to be derived therefrom.”

The bridge contract was not one of the transportation contracts specified in the ninth article of the lease. But on February 16, 1869, the presidents of the Pittsburgh and Pennsylvania Companies, in their behalf, jointly addressed a formal letter to the president of the Indiana Central Company, referring to the bridge contract as having been under negotiation, but unexecuted by the Indiana Central Company, at the date of the final execution of the lease, and requesting him, in his official capacity, to execute the bridge contract, “it being p. 377understood that the said lessee and Pennsylvania Railroad Company shall assume all the liabilities and obligations and be entitled to all the benefits of said bridge contract, the same as if it had been specifically named and made a part of the ninth article of the said lease.”

It was on June 13, 1871, after all these transactions had p. 378taken place, that the bridge was accepted by the Bridge Company, and was opened for use ; and thenceforward it was used by the Pittsburgh and Pennsylvania Companies, in the exercise of the control asserted by them under the various contracts above mentioned. From that time the Bridge Company, acting in accordance with the understanding expressed in the letters from the presidents of the Pittsburgh and Pennsylvania Companies to the president of the Indiana Central Company, upon which the latter, in behalf of his company, had executed the bridge contract and the modification thereof, as well as the original lease and the amendment thereof, demanded payment directly from the Pittsburgh Company, semi-annually, of the sums payable by the Indiana Central Company for tolls and deficiencies under the modified bridge contract ; and for more than three years, from June, 1871, to September, 1874, the comptroller of the Pittsburgh Company, after examining the books of account of the Bridge Company, paid to the Bridge Company the amount both of such tolls and of such deficiencies. Since that time like payments were çlemanded by the Bridge Company of the Pittsburgh Company, and the tolls only were paid.

(1) As to the lessor. The Columbus, Chicago and Indiana Central Railway Company was a corporation of Ohio, Indiana and Illinois. By repeated decisions of this court, it is settled that this made it a separate corporation of each of the States, quoad the franchises conferred by and the property situate within such State. Ohio de Mississippi Railroad Co. v. Wheeler, 1 Black, 286 ; Railway Co. v. Whitton, 13 Wall. 270 ; Muller v. Dows, 94 IT. S. 444, 447 ; Kansas Pacific Railroad v. Atchison, Topeka dec. Railroad Co., 112 IT. S. 414. In order, therefore, that it might lease its entire road, the power must have been conferred by all the States through which its line ran. Doubtless, it might lease that part of its road lying in p. 379Ohio separately, if it had authority so to do under the laws of Ohio, and the same is true as to the portions of its line within the other States ; but to sustain a lease of its entire line, such as this was, the power must be shown to have been conferred by all these States. As that portion of the line situate within the State of Indiana, 424^ miles in length, separating the portions of the railroad lying in Ohio and Illinois from each other by the entire width of the State of Indiana, was necessarily an integral part thereof, it has been established by the decision of this court in the case of Pennsylvania Railroad v. St. Louis, Alton c& Terre Haute Railroad, 118 U. S. 290, 630, that there was no law of Indiana at the time this lease was made, conferring on the lessor company power to make it.

Neither Ohio, Indiana nor Illinois have conferred the power p. 380on any of the parties to this case to enter into the bridge contracts. The Indiana statutes were before this court in the case of the St. Louis, Alton and Terre Haute Railroad Company, and need no further reference. The form of the statute of Ohio, in force at the time the contract was made, will be found in 1 Swan & Critchfield, 281. It carefully limits the power to railroad companies whose lines of railroad connect or are continuous, and does not extend to bridge companies at all. Pearce v. Madison and Indianapolis Railroad, 21 How. 441. See also Davis v. Old Colony Railroad, 131 Mass. 258; York and Maryland Line Railroad v. Winans, 17 How. 30; Green Bay and Minnesota Railroad n . Union Steamboat Co., 107 IT. S. 98; Eastern Counties Railway v. Hawkes, 5 H. L. Cas. 331; Ashbury Railway Carriage <& Iron Co. v. Riche, L. R. 7 H. L. 653; McGregor n . Dover and Deal Railway, 18 Q. B. 618; East Anglian Railway Co. v. Eastern Counties Railway, 11 C. B. 775; Downing v. Mount Washington Road Co., 40 N. H. 230; Pittsburgh & Steubenville Railroad v. Allegheny County, 79 Penn. St. 210.

IV. The lease and amended lease, and with them all liability upon the bridge contracts, were determined by eviction, p. 381January 1st, 1875. The vifew taken by the court in its opinion makes it unnecessary to elaborate the argument on this point.

In Bank of Columbia v. Patterson, which was an action brought against a corporation by an administrator to recover for work done by his intestate under contracts with the committee of the corporation, he said: “ Wherever a corporation p. 382is acting within the scope of the legitimate purposes of its institution, all parol contracts, made by its authorized agents, are express promises of the corporation; and all duties imposed on them by law, and all benefits conferred at their request, raise implied promises, for the enforcement of which an action may well lie.” 7 Cranch, 306. “ Let us now consider what is the evidence in this case, from which the jury might legally infer an express or an implied . promise of the corporation. The contracts were for the exclusive use and benefit of the corporation, and made by their agents for purposes authorized by their charter. The corporation proceed, on the faith of those contracts, to pay money from time to time to the plaintiff’s intestate. Although, then, an action might have lain against the committee personally, upon their express contract, yet, as the whole benefit resulted to the corporation, it seems to the court that from this evidence the jury might legally infer that the corporation had adopted the contracts of the committee, and had voted to pay the whole sum which should become due under the contracts, and that the plaintiff’s intestate had accepted their engagement.” 7 Cranch, 307.

In Bank of United, States v. Dandridge, the point decided was that the approval of a cashier’s bond by the board of directors of a bank, as required by statute, need not appear upon the records of the board, but might be proved by presumptive evidence, in the same manner as similar facts might be proved in the case of private persons, not acting as a corporation or as the agents of a corporation. The general doctrine was affirmed, that the presumptions, which, by the general rules of evidence, “ are continually made, in cases of private persons, of acts even of the most solemn nature, when those are the natural result or necessary accompaniment of other circumstances,” are equally applicable to corporations; and it was said: “ Persons, acting publicly as officers of the corporation, are to be presumed rightfully in office; acts done by the corporation, which presuppose the existence of other acts to make them legally operative, are presumptive proofs of the latter. Grants and proceedings beneficial to the corporation are presumed to be accepted; and slight acts on their p. 383part, which can be reasonably accounted for only upon the supposition of such acceptance, are admitted as presumptions of the fact. If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed.” 12 Wheat. 70.

The evidence that the directors or stockholders of the Pennsylvania Company authorized or ratified the action of its president in this regard is not so full and conclusive, but is quite sufficient to bind this company. After the execution of p. 384the original bridge contract, the directors of the Pennsylvania Company twice joined with the president in a printed annual report to the stockholders, declaring in unequivocal terms the settled policy of this company to secure a continuous line of traffic from Philadelphia to Keokuk and westward, and stating that this object had been accomplished through the Pittsburgh Company.

These three reasons are clearly brought out in the unani- p. 385mous judgment of this court, delivered by Mr. Justice Campbell, in the leading case of Pearce v. Madison & Indianapolis Railroad, 21 How. 411, in which it was held that a railroad corporation was not liable to be sued upon promissory notes which it had given in payment for a steamboat received and used by it, and running in connection with its railroad.

VOL. CXXXI—25 p. 386and Pennsylvania Companies, and the Bridge Company was not a party to the lease.

By the statute of February 28, 1854, all railroad companies of Illinois, having their termini fixed by law, and their roads intersecting by continuous lines, are authorized to consolidate their property and stock with each other, or with companies out of the state, whose lines connect with theirs; and when, by reason of such consolidation, or of such extension into or through an adjoining state, it is necessary for the construction of any railroad to cross any stream of water, it may be done by bridges or viaducts. By the statute of February 12, 1855, all railroad corporations of Illinois have the power to make all necessary and convenient “ contracts and arrangements with each other, and with railroad corporations of other states, for leasing or running their roads, or any part thereof; ” as well as the “right of connecting with each other and with the railroads of other states, on such terms as shall be mutually agreed upon by the companies interested.” By the statute of February 16, 1865, “ it shall be lawrful for the directors of any railroad company created by the laws of this state to contract for the use and operation of any railroad connecting with their line beyond the limits of the state; and in all contracts for the use and operation of any railroad by another corporation, it shall be lawful for the parties to provide for the use of any of the powers and privileges of either or both of the corporations parties thereto.” And by the statute of February 25, 1867, “ railroads terminating or to terminate at any point, on any line of continuous railroad thoroughfare, where there now is or shall be a railroad bridge for crossing of passengers and freight in cars over the same as part of such thoroughfare, p. 387shall make convenient connections of such railroads, by rail, with the rail of such bridge; and such bridge shall permit and cause such connections of the rail of the same with the rail of such railroads, so that by reason of such railroads and bridge there shall be uninterrupted communication over such railroads and bridge as public thoroughfares.” See also Stats, of February 12, 1853, March 5, 1867, and March 11, 1869. Gross’s Stats. (3d ed.) 536-539.

By the laws of Illinois, as we have seen, the bridge contract was valid, and might lawfully be made between the Bridge Company and the Indiana Central Company; and it appears p. 388to us equally clear that the laws of Pennsylvania authorized the Pittsburgh and Pennsylvania Companies to assume the obligation of that contract with the Bridge Company, either directly or through the intervention of the Indiana Central Company.

It is proper to add that our judgment does not rest in any degree upon the ground suggested in argument, that the bridge contract and the lease having been executed, the Pittsburgh and Pennsylvania Companies, having received the benefits of them, are estopped to deny their validity; because, according to many recent opinions of this court, a contract made by a corporation, which is unlawful and void because beyond the scope of its corporate powers, does not, by being carried into execution, become lawful and valid, but the proper remedy of the party aggrieved is by disaffirming the contract, and suing to recover, as on a guant/am meruit, the value of what the defendant has actually received the benefit of. Louisiana n . Wood, 102 U. S. 294; Parkersburg v. Brown, 106 U. S. 487, 503; Chapman n . Douglas County, 107 U. S. 348, 360; Salt p. 390Lake City v. Hollister, 118 IT. S. 256, 263; Pennsylvania Railroad v. St. Louis &c. Railroad, 118 U. S. 290, 317, 318.