In the "Memorandum of Association" we find that one of the objects of the incorporation is: "d. To borrow money and issue bonds transferable or to bearer, secured on all or any of the property of the company." If we consider together the general clause referred to in § 33, and also § 20, and this specification "d" in the "Memorandum of Association" (and there are no other provisions bearing upon the point), the power to borrow money was within the "spirit of the act" and the "intention of the charter," but the power to borrow could only be exercised in a particular way and to specific amounts, and the amounts borrowed from Davis were above the amounts authorized, and were not borrowed by the consent of the general meeting. The manifest intention of all of these provisions, taken together, was to authorize the directors to borrow to the extent of £100,000 with the consent of the general meeting, and to the extent of £10,000 without such consent, and that, if necessary, such loans could be by the directors, secured by mortgage on the company's property or by debentures. It was never intended by the charter to give the directors unlimited power to involve the company by borrowing money. The granting of the power to be done to a definite amount and in a certain way was a prohibition upon the directors to pursue any other course: Zottman v. Sun Francisco, 20 Cal. 96; Angell & Ames on Corp., § 111.

It is further urged that the contract with Davis was ultra vires in another respect, that it placed beyond the reach of the corporation, for an indefinite time, the appointment and removal of its agents. The contract required that Patrick should be the agent, and that he could be removed by Davis but not by the company, until Davis had been repaid advanced money, and certain ores had been delivered to him, and that Davis could remove Patrick at his pleasure, and appoint another agent for the company in Patrick's stead.

The articles of association say that the directors shall have power to appoint and remove agents, but the directors say that Davis may do these things and the directors shall not do so. The power to appoint agents and to remove unfaithful ones is a trust reposed alone in the directors, and they can not contract that power away. If that power is to be surrendered by the directors, it can only be surrendered to the corporation,

and not to a stranger. power to a stranger, then we might have the anomalous case of the formation of a corporation for mining purposes and the power assumed by the directors and without the consent of the corporation to put the property of the corporation beyond the reach of the corporation and to make the carrying out of the very object of the corporation an impossibility. The power to appoint and remove agents and managers rests with the company, and this power can not be shifted or taken away by any contract made by the directors: Neall v. Hill, 16 Ca!. 145; Grant on Corp. 243.

If the directors could transfer this

And further, Patrick, it is said and admitted, broke the contract with Davis by failing to make the monthly reports required, and this, too, without objection from Davis. If, for this violation of duty, the company could not remove Patrick, and thus repudiate the contract, then the contract was certainly one-sided. Davis reserved to himself the right to ignore the contract at pleasure, and to proceed against the company otherwise to secure payment of his debt. A corporation can not be bound by any such contract of its directors. The contract is not mutual but is ultra vires, as it is termed, beyond the authority of the directors, and is not binding upon the corporation: Fry on Specific Perf. 133; 2 Kent, 298-9.

And if it were true that such contract were binding upon the corporation after recognition, yet there is no evidence to show such recognition, except such as was made by the directors. But as the directors had no power to make such a contract, their recognition of it after it was executed made it no more binding. There is no evidence that the matter was brought before a general meeting of the company.

There are two minor points urged which we will notice. It is objected that the grounds of relief are alleged on information and belief instead of on direct and positive averment. Under 113 of the Practice Act, the allegation upon information and belief is sufficient.

It is likewise charged that the complaint does not set out the facts constituting the fraud charged. This may or may not be necessary, but the court will not now pass upon the point, as, aside from this, the complaint sets out enough facts to constitute a cause of action under § 254 of our Practice Act: Curtis v. Sutter, 15 Cal. 259.

Upon the whole case, therefore, we consider that the complaint was a sufficient statement of a case, and that the evidence before the court below was sufficient to warrant the conclusions that the company had the right to remove Patrick and to appoint another agent in his stead, and that the evidence was sufficient to show a well-grounded fear that force would be used to wrest the possession from the duly appointed agent. Hence we conclude that the action of the court below in granting a temporary injunction was not improper, and its action is therefore approved. And, as was ordered by the judge below, this injunction is not to prevent defendants from instituting or prosecuting any proper legal proceedings to secure any just rights or claims which they or either of them. may have against the plaintiff.

Judgment affirmed with costs.

SCHAEFFER, C. J., and EMERSON, J., concurred.

DOUGLASS, Respondent, v. IRELAND, Appellant.

(73 New York, 100. Court of Appeals, 1878.)

1 Personal liability of stockholder-Value of lands used to pay up stock, inquired into In an action to charge the holder of stock of a corporation, issued for the purchase of property, individually, with the debts of the company under the laws of New York, it appeared that the entire capital stock of the corporation, $300,000, was issued to H., one of the trustees, in consideration of the assignment to the company of two executory contracts on which nothing had been paid, one for furnace property at $30,000 and one for woodland at $10.000. H., without consideration, reconveyed to the company 600 shares, the par value being $100 per share, to be sold to pay the contract price of the furnace property and 1,000 shares to be sold to raise working capital, of which defendant purchased 250 shares at 40 cts. on the dollar, he having participated in the whole transaction as a trustee of the company. Held, that to justify a recovery it is not sufficient to prove an error of judgment by the trustees in the valuation of the property, but that it must be shown that the purchase at the price agreed upon was in bad faith and to evade the statute; and the facts in this case were sufficient to justify such a finding of fraud. Held, also, that evidence of the value of the property purchased was competent.

1 Sae cases under "PERSONAL LIABILITY."

Idem-Simultaneous action against trustees. An action brought against the trustees to charge them under the laws of New York with the same debt, because of failure to make the annual report, is no bar to an act.on against stockholders based on their personal liability.

Appeal from a judgment of the General Term of the Supreme Court in the Fourth Judicial Department, affirming a judgment in favor of plaintiff, entered upon a verdict.

This action was brought against defendant as a stockholder of "The Black River Iron and Mining Company of New York," a corporation organized under the General Manufacturing Act (Chap. 40, Laws of 1848), under Section 10 of said Act, to recover certain debts of the corporation, on the ground that his stock was not paid up.

The complaint alleged, in substance, the incorporation of said company with a capital stock of $300,000, with five trustees, of whom one was defendant and another John Horton. That at the time of the incorporation Horton had a contract for the purchase of a furnace and mining premises, and one for the purchase of standing timber in the vicinity of the furnace, upon which contracts nothing had been paid, and their fair value did not exceed $20,000; which contracts Horton assigned to said company, receiving therefor the whole of the capital stock; that Horton thereafter divided $200,000 of said stock between himself and the other trustees, and defendant well knowing the facts received over $5,000 thereof; that said stock has never been paid in any other way, and that no certificate as required by section 11 of said Act has been made and recorded.

Upon the trial, evidence as to value of the property was received under objection and exception. The question as to value was by consent submitted to the jury, the other questions were decided by the court. The jury found the value of the property to be $64,000. The court found the incorporation. of the company with a capital of $300,000, in 3,000 shares, the issuing and transfer of its capital stock in payment for the assignment of the two contracts, substantially as alleged in the complaint; also, that Horton, in pursuance of the agree ment with the company, on or about the same date, transferred back to the company 600 shares of the capital stock to be sold

to pay the contract price for the furnace property, which was $30,000, and also transferred back 1,000 shares of the capital stock in pursuance of the same agreement" for the purpose of enabling said company to raise a working capital by the sale of the same"; "that defendant, knowing of and participating in the transactions, purchased of the company 250 shares for the sum of $10,000; that the vaine of the property was so disproportioned to the nominal value of the stock as "to take the case out of a sound discretion exercised by the trustees"; and as conclusions of law he found that the transaction was a fraud upon the law, and can not be upheld as a mistake or innocent misunderstanding of the value of the said property"; that the capital had not been paid in as required by the statute, and that defendant was liable.

Further facts appear in the opinion.

FRANCIS KERNAN and NICHOLAS E. KERNAN, for appellant. C. D. ADAMS, for respondent.

ALLEN, J.

The question upon which this court divided in Boynton v. Hatch, 47 N. Y. 225, has been definitely settled by the later decisions of this court as well as the Commission of Appeals. The views I there expressed, and which were agreed to by two of my brethren, have been approved; and it is now settled that to charge a holder of stock issued upon and for the purchase of property individually for the debts of the company, it is not enough to prove that the property has been purchased and paid for at an overvaluation through a mere mistake or error of judgment on the part of the trustees, but that it must be shown that the purchase at the price agreed upon was in bad faith and to evade the statute. The transaction may be impeached for fraud, but not for error of judg ment or mistaken views of the value of the property, inasmuch as good faith and the exercise of an honest judgment is all that is required: Schenck v. Andrews, 57 N. Y. 133; Boynton v. Andrews, 63 Id. 93.

The entire capital stock of the "Black River Iron and Mining Company" was issued to Horton, one of the trustees, in