Chewacla Lime Works v. Dismukes, Frierson & Co. , 87 Ala. 344 ( 1888 )

CLOPTON, J.

By an act of the General Assembly, amending the act “to incorporate the Chewacla Lime Company,” the name of the coi’poration was changed to the “Chewacla Lime ’Works.” The fifth section of the amendatory act provides: “That the said Chewacla Lime Works shall succeed, and does hereby succeed, to all the rights, privileges and immunities, and franchises and property, that was of and belonging to the said Chewacla Lime Company, and shall be subject to all liabilities and charges legitimately due from the said Chewacla Lime Company.” — Acts 1882-3, p. 369.

This action was commenced in a justice’s court, and was brought by appellees to recover the price of goods, which the indorsement on the summons avers were sold to the Chewacla Lime Works, by which name the corporation is sued; while the evidence shows that the goods were sold to the Chewacla Lime Company, before the amendment of the charter. On appeals from judgments of justices of the peace, the cause “must be tried de novo, and according to equity and justice, without regard to any defect in the summons or other process, or proceedings before the justice.” Code, 1886, § 3405. The corporation, notwithstanding the change of name, is one and the same entity. The averments of the statement of the cause of action might have been more formal, but there is no substantial variance between them and the proof.

It clearly appears that, at the time of the sale and delivery of the goods, the corporation was engaged in carrying on a general mercantile business, for which purpose they were bought. The material ground on which the defendant resists a recovery is, that the Chewacla Lime Company had no authority to engage in such business, and that the contract of purchase is ultra vires. The question raised involves the application of only a few principles of law, which may be regarded elementary. As corporations derive their existence and capacity from a special statute, or a general law empowering them to organize, they can not exercise any power, or act in any capacity, not authorized by the act of incorporation, or the general law. A corporation has no implied authority to engage in any business other than the particular enterprise for which it is chartered, or to do any act, or make any contract, not in pursuance of the purposes for which it was created. Authority to carry on a particular business, includes authority to conduct it in the usual and customary modes. Within the scope and purview of the chartered powers, the business, for which the corporation was chartered may be conducted in the same manner as individuals would conduct the same enterprise under similar circumstances. But any transaction or contract beyond this, not necessary or proper to enable the corporation to answer the purposes of its creation, is void.

The grant of powers conferred on the Chewacla Lime Company by the original act of incorporation, on which plaintiffs base the authority, is in the following language: “Shall be, and are hereby, made able and capable in law to have, purchase, receive, possess and enjoy, and realize to" them and their successors, lands, rights, tenements, hereditaments, goods, chattels and effects, in any amount the body corporate may deem necessary to carry all the objects of said corporation into full force and effect, which objects are, to mine lime-rock, and manufacture the same; and to keep up and run such machinery as may be necessary to saw lumber and make barrels for tbe packing of said lime, and tbe same to sell, devise, grant, alien and dispose of.” — Acts, 1862, p. 127. It is manifest that the act of incorporation grants no express authority to engage in a general mercantile business. Is there implied authority? The declared objects of the corporation are the mining and manufacture of lime-rock, and putting the product in a marketable condition. These purposes constitute limitations upon the exercise of the express and implied powers. There may be circumstances under which a manufacturing company would have implied authority to connect a supply store, with the business.of the corporation, as being ancillary thereto. In such case, the real and primary object must be auxiliary to the main enterprise of the corporation, for the purpose of providing supplies for the employees and laborers, founded on necessity arising from situation and condition. No circumstances are shown which bring the present case within this exception. A general mercantile business does not pertain to the purposes of mining and manufacturing lime-rock. They are separate and distinct in their nature and objects. A coal mining company has no implied authority to buy coals in the market, for the purpose of re-sale as a speculation. Alexander v. Caldwell, 83 N. Y. 480. A corporation authorized and organized to manufacture lime, can not buy lime manufactured elsewhere for the purpose of trade, in order to raise funds to carry on the corporate business. As well might such corporation engage in any other distinct business as that of merchandizing, because it may be deemed profitable, and will thus contribute, indirectly, to promote the objects of the corporation. A general mercantile business, being a distinct branch of business, the Ohewacla Lime Company had no authority, express or implied, to engage in carrying on the same.

The established rule in this State is, that a corporation is not estopped, by reason of having received the benefits of a contract which is ultra vires, from setting up its invalidity in defense of a suit brought to enforce it.—Sherwood v. Alvis, 83 Ala. 115; s. c., 3 Amer. St. Rep. 695.

The Circuit Court erred in giving the affirmative charge in favor of the plaintiffs.

Reversed and remanded.