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are certainly not regarded ordinarily as the just basis of contracts.2

the extent of holding that a contract, even under the seal of a company, cannot in general be enforced, if its object is to cause the corporate property to be diverted to purposes not within the scope of the act of incorporation. Thus, in the case of The East Anglian Railway Company v. The Eastern Counties Railway Company, 11 C. B. 803; s. c. 7 Eng. L. & Eq. 505, the Court of Common Pleas, after an elaborate argument, held that no action could be maintained against the defendants on a covenant into which they had entered for payment to the plaintiffs of the costs incurred in applications to parliament, made at the instance of the defendants, for obtaining from the legislature powers which the defendants considered it desirable for their interests that the plaintiffs should possess. The Chief Justice, in delivering the judgment of the court, says, (11 C. B. 809; s. c. 7 Eng. L. & Eq. 510,) The statute incorporating the defendants' company, gives no authority respecting the bills in parliament promoted by the plaintiffs, and we are therefore bound to say, that any contract relating to such bills is not justified by the act of parliament, is not within the scope of the authority of the company as a corporation, and is therefore void.'

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This case was afterwards recognized and acted on by the Exchequer Chamber, in the case of MacGregor v. The Official Manager of the Deal & Dover Railway Company, 18 Q. B. 618; s. c. 16 Eng. L. & Eq. 180. It must, therefore, be now considered as a well-settled doctrine, that a company, incorporated by act of parliament for a special purpose, cannot devote any part of its funds to objects unauthorized by the terms of its incorporation, however desirable such an application may appear to be.

I have referred to these cases, and there are others to the same effect, for the purpose of showing how firmly the law on this subject is established, and of guarding myself against being supposed to throw any doubt upon it. But I do not think that the present case comes within the principle on which these decisions have rested. The making of the Wisbeach & Spalding Branch was not treated by the legislature as a new and independent object to be carried into execution by distinct funds raised for that special purpose. The power to make the new line was, according to the construction I put on the act, merely an addition to the powers conferred by the former acts. So that after the Wisbeach & Spalding act came into operation, the rights and powers of the company were to be regarded as if they had originally been powers, to make the new line and to raise the additional capital. The new works were to be considered as having formed part of the original undertaking, and the new shares were to be considered as part of the general capital. From the time, therefore, when the Wisbeach & Spalding bill received the royal assent, (and until that happened there was no binding contract,) the directors had just the same right to apply their funds to

2

Gage v. Newmarket Railway Co., 18 Q. B. 457; s. c. 7 Railw. C. 168; s. c. 14 Eng. L. & Eq. 57; Porcher v. Gardner, 14 Jur. 43; 19 L. J. 63; 8 C. B. 461; Shelford on Railways, 402. See also Cumberland Valley Railway Co. v. Baab, 9 Watts, 458; Hawkes v. Eastern Counties Railway Co., 1 De G. M. & G. 737; s. c. 3 De G. & S. 314; 7 Railw. Cases, 219; s. c. 4 Eng. L. & Eq. 91.

2. But in many cases these provisional contracts have been enforced, notwithstanding the projected works have been abanthe purchase of land for the purposes of the new line, as, before the passing of that act, they had for the purchasing of land for the original line. This consideration, therefore, seems to me clearly to distinguish the present case from all those cases cited in the argument. The contract here was to apply the funds of the company to a purchase within the scope of its incorporation, and not to any purposes foreign to it, and I see no objection, therefore, to the contract on this first ground.

"But it was argued, secondly, that even supposing the contract not to be open to objection on the ground of its being an attempt to appropriate the company's funds to an object foreign to their original purposes, still, that it could not be supported, inasmuch as it was an agreement to purchase, for the new railway, lands not wanted for the purpose of making it. The directors had originally desired to obtain powers to make a staight cut from their new line to join the Ambergate, Nottingham, & Boston Railway, and for that purpose it would have been essential to them to possess the plaintiff's land, but they failed in their object of obtaining power to form this straight cut, and then there was not, it was said, any necessity for them to get possession of the plaintiff's land. A small portion only of it, about an acre and a half, is within the line of deviation, and it was argued that a contract to purchase the whole, (nearly six acres,) was a contract ultra vires, inasmuch as the company could only purchase what was really necessary or proper for the construction of the line. But the answer to this argument appeared to me satisfactory. The contract was not necessarily, and on the face of it, ultra vires. If the land in question was really wanted by the appellants for what are called extraordinary purposes, they were authorized to purchase it. Besides the line of deviation actually cuts the respondent's house in two, and in such circumstances the appellants had no right to take a part without taking the whole, if the plaintiff required them to do so; and it is a reasonable inference that the contract to purchase the whole was made, because, wanting what was within the limits of deviation, the directors knew that they could not stop short with what was within those limits. Be that, however, as it may, there was nothing to show the respondent that his land was not wanted for the legitimate objects of the company, and in such a case it cannot be permitted to the directors to allege that the contract was invalid as being beyond their powers; for, as argued at the bar, it could be no answer to an action for iron rails bargained and sold, that the contract had been entered into, not in order to obtain rails for the use of the line, but in order to keep them in hand for the purpose of a future use, on a speculation that iron was likely to rise in value. I consider, therefore, that this second objection is as untenable as the first."

In regard to the second point adverted to in the head notes of this case, Lord Campbell made some comments, which seem to us of very considerable weight as applicable to the general subject involved: "During the argument there was much discussion on the question how far such a company is bound by contracts entered into by the promoters of the act of parliament by which the company is constituted. That question really does not properly arise here; but I think it right to guard myself against the peril of being supposed to acquiesce in the doctrine

*doned. But where the contract is a mere arrangement to purchase land at a specified price, for the purpose of building the

*

contended for by the respondent's counsel, that there is complete identity between the promoters of the act and the company, and that as soon as the act has received the royal assent, a bill in equity might be filed against the company for specific performance of any contracts respecting land into which the promoters had entered. If the company should adopt the contract and have the full benefit of it, I think the company would be bound by it in equity, and therefore I approve of the decision in Edwards v. Grand Junction Canal Company, 1 Myl. & Cr. 650; 1 Railw. C. 173; although the language of Lord Cottenham in that case may require qualification and must be taken with reference to the facts with which he was dealing. But it seems to me that the extension contended for of the principle on which that case, and several similar cases which have followed it, rest, is quite unreasonable, and would lead to very mischievous consequences. Here, then, is a contract admitted to be under the common seal of the company. The appellants make an idle allegation that the seal was affixed without the sanction of a majority of the members of the company, but no fraud is imputed to Mr. Hawkes. The directors have repeatedly recognized the validity of the contract, and in an action at law upon it, under a plea of non est factum, they could have had no defence, though, if they could allege and prove that Mr. Hawkes was guilty of illegality in entering into it, the action would be barred.

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"But dismissing the charge that he was bargaining for the application of the fnnds of the company to a line to be made without the authority of parliament, the contract is merely the ordinary contract between a company meaning to apply to parliament for authority to extend a line of railway, and the owners of the land through which the extended line is meant to pass, to be carried into effect if the solicited act of parliament be obtained. The shareholders of the company might if they pleased object to their funds being applied to defraying the expense of soliciting the bill, but if they remain quiet it may fairly be inferred that they all approve of the extension; and when the bill to authorize the extension has received the royal assent, no shareholder can any longer complain. According to the manner in which such bills are usually framed, the extended line becomes part of the concern to be managed by the company for the profit of the body of shareholders, power being given to the company to increase the capital, or by some means to provide the money necessary to complete the extended line. Since the case of Simpson v. Lord Howden, 9 Cl. & Fin. 61, it is impossible to contend that an agreement by a land-owner to withdraw opposition to a bill for a railway intended to pass through his property is not a good and

3 Shrewsbury & Birmingham Railway Co. v. London & Northwestern Railway Co., 3 Mac. & G. 70; s. c. 20 L. J. Ch. 90; s. c. 14 Jur. 921; 1 Eng. L. & Eq. 122; Hawkes v. Eastern Counties Railway Co., 3 De G. & S. 314; s. c. 20 L. J. 243; s. c. 4 Eng. L. & Eq. 91; Preston v. Liverpool, Manchester, & Newcastle-upon-Tyne Junction Railway Co., 1 Simons (N. s.) 586; 7 Railway C. 1; 7 Eng. L. & Eq. 124.

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railway, and the quieting of opposition does not enter into the consideration, the company are not bound to pay over the money, valuable consideration. I adhere to the doctrine laid down in a passage quoted from my judgment in the case of the Mayor of Norwich v. The Norfolk Railway Company, 4 Ell. & Bl. 397; s. c. 30 Eng. L. & Eq. 120; but that referred to doing something which was positively criminal and indictable, the obstruction of a navigable river by building a bridge across it. This cannot lawfully be done in the hope that an act of parliament may be obtained to legalize it. But where no offence is to be committed against the public, and there is a mere want of authority for a transaction among private individuals or commercial companies, which authority can only be obtained by act of parliament, no objection whatever can be successfully made to the parties entering into an agreement for completing the transaction when the necessary authority is so obtained."

In regard to decreeing specific performance of contracts of this character, the Lord Chancellor makes some pertinent remarks: "The third point made in support of this appeal was, that even taking the contract to have been a good and valid contract, into which the company might lawfully enter, still, the case was one in which a court of equity ought not to interfere, but ought to leave the plaintiff to assert his legal rights by action. It was argued that the court has frequently acted on this principle in suits where a vendor has been seeking, as in this case, to enforce against a railway company the specific performance of a contract for the purchase of land, when the time within which the line was to be made had expired. And reference was in particular made to two cases decided by Lords Justice Knight Bruce and myself, when I held the office of Lord Justice. I allude to the cases of Webb v. The Direct London and Portsmouth Railway Company, 1 De G. Mac. & G. 521; s. c. 9 Eng. L. & Eq. 249, and Stuart v. The London & Northwestern Railway Company, 1 De G. Mac. & G. 721; s. c. 11 Eng. L. & Eq. 112.

“In the former of these cases (the particulars of which his lordship fully stated) the court proceeded on two grounds. In the first place, the terms in which the deed was framed were such as to lead the court strongly to the conclusion that the whole contract was meant to be conditional on the line being formed, and that if it should be (as in fact it was) abandoned by its projectors, then all the provisions of the agreement were to fall to the ground; a construction, I may observe, which receives great support from the subsequent case of Gage v. The Newmarket Railway Company, 18 Q. B. 457; s. c. 14 Eng. L. & Eq. 57. But independently of that difficulty the case appeared to be one in which a court of equity ought not to interfere in favor of the plaintiff, for that, by any such interference, we should be doing injustice in the attempt to add to the legal remedy. The injury which the plaintiff sustained by the nonperformance of the contract was this: though he was left with the whole of his land untouched, he lost all claim to the £4,500, and might, perhaps, have sustained damage consequent on his having been for five years liable to have any portion of it, not exceeding eight acres, taken by the company for the purpose of the railway. That was evidently a case for compensation by action for damages and not for relief by way of specific performance. Indeed, I hardly know how a decree for specific performance could have been there enforced, for no particular

.

unless they enter upon some portion of the land, and under such circumstances an absolute covenant to pay the money, by the company, would be ultra vires and void.1

eight acres had been contracted for, and the company had no power to select eight acres, except for the purpose of making the railway, the power to make which had long since ceased. On these grounds the court refused to interfere, leaving the plaintiff to the legal remedy on his covenant.

"I have thought it necessary to explain the grounds on which the decision in these two cases rested, for the purpose of showing that they are not at variance with the decision now under appeal. Here there is no uncertainty as to the subject-matter of the purchase. The vendor did not sleep on his rights, and wait until it was impossible for the purchaser to make the line. On the contrary, from the very day on which the contract was to be completed, he insisted on its performance, having shortly before that time quitted possession of the property, and within less than five months afterwards he filed his bill. It is true that the directors, after the filing of the bill, allowed the time to pass within which they were bound to complete the line. But the plaintiff is not to blame for that. He did not, either actively or passively, mislead the defendants, and it would be impossible to hold that he is not entitled to the relief he asks, without going to the length of saying that no vendor of an estate, contracting to sell to a railway company, can ever have a decree for a specific performance if the company should see fit afterwards to abandon the undertaking, with a view to which the contract was made."

4 Gage v. The Newmarket Railway, 18 Q. B. 457; s. c. 14 Eng. L. & Eq. 57. In this case, the views of Lord Campbell, in delivering the opinion of the court, do not seem to be altogether reconcilable with those expressed by the Lord Chancellor, in Hawkes v. The Eastern Counties Railway, but as they seem to us more consistent with the views maintained in this country, upon analogous subjects, and those which we anticipate may probably find more favor in the English courts when the outward pressure of circumstances shall, by lapse of time, be removed, we here adopt them. Lord Campbell, Ch. J.: “We are of opinion, that the defendants are entitled to our judgment. Taking the deed as set out on oyer, we think that there is no breach well assigned upon it. The covenant there (without saying any thing as the declaration does about reasonable time') is merely in these words: That in the event of the bill hereinbefore mentioned being passed in the present session of parliament, the said company shall, before they shall enter upon any part of the lands of the said Sir Thomas Rokewood Gage, in the said county of Suffolk, pay to the said Sir T. R. Gage, his heirs and assigns, the sum of £4,900 purchase-money, for any portion of his lands not exceeding fortythree acres, which the said company may, under the powers of their act, require and take for the purposes of their undertaking; that in addition to purchasemoney as aforesaid, the said company shall pay to the said Sir T. R. Gage, his heirs and assigns, before they shall enter upon any part of the said land, the sum of £7,100 as a landlord's compensation for the damage arising to his estate by the severance thereof, in respect of the lands, not exceeding forty-three acres, to be taken by them.' The question we have to determine is whether the company, never having entered upon any part of the plaintiff's lands, he is now entitled