14 F. 311 (D.Kan. 1882), Lewis v. Meier

Citation:14 F. 311
Party Name:LEWIS, JR., v. MEIER and others. [1]
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 311

14 F. 311 (D.Kan. 1882)

LEWIS, JR.,

v.

MEIER and others. 1

United States Circuit Court, D. Kansas.

November Term, 1882

Page 312

J. P. Usher, for complainant in cross-bill.

Mr. Glover and Mr. Shepley, for defendants.

McCRARY, C.J.

This suit was originally brought to foreclose a mortgage executed by the Kansas Pacific Railroad Company to certain trustees, to secure bonds to the amount of $6,500,000. The original bill has been dismissed, and the case stands upon a cross-bill filed by the defendant company, in which it is alleged that the mortgage above referred to is fraudulent and void, and ought, therefore, to be canceled as a cloud upon its title. It is alleged that said mortgage was executed as part of a scheme whereby the directors of the company united with certain others to enter into certain contracts with the company to build a portion of the company's railroad, and to receive certain considerations therefor. In other words, it is alleged that the directors of the company were members of a construction company, to which the bonds secured by said mortgage were issued, and that they contracted fraudulently with themselves. Conceding, for our present purposes, the truth of these allegations, the question arises, can the defendant company be granted the affirmative relief prayed for? The general rule is that a court of equity will not, in such cases, interfere in favor of either party, either to enforce or set aside the contract, or to award damages for its breach. The parties being in pari delicto, the court will leave them where it finds them. If this were a contract between natural persons, there could be no doubt about the application of this doctrine; but it is said that the rule does not apply to the defendant corporation, because, while the contract was made in the corporate name, the corporation is not, within the meaning of the rule, a party to it, since in making it the directors exceeded their authority. To sustain this view would be, in effect, to hold that a corporation can in no case be guilty of fraud; for, being an artificial being, it can act only through agents, and it

Page 313

would be impossible in any case to show that the charter of a corporation expressly authorized the perpetration of a fraud. It is, however, well settled that a corporation may be guilty of a fraud. The courts have gone further, and held such artificial persons liable in tort in certain cases. The true rule is that such acts as are done by the directors in the course and within the scope of their powers and duties, are to be regarded as the acts of the corporation. Such is the rule, even if the acts are unlawful and tortious. 2 Hil.Torts, 322; Copley v. G. & B. Sewing-Machine Co. 2 Woods, 494; Railroad Co. v. Quigley, 21 How. 202; Sandford v. Hundy, 23 Wend. 260; Brokaw v. N.Y., etc., Transp. Co. 32 N.Y.Law, 331; Fogg v. Griffin, 2 Allen, 1; Rives v. Plank-road...

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1 practice notes
  • 68 S.E.2d 56 (W.Va. 1951), CC784, American Barge Line Co. v. Koontz
    • United States
    • West Virginia Supreme Court of Appeals of West Virginia
    • December 20, 1951
    ...vessels using navigible waters, certain taxes may be levied and collected by the state. The case of Streckfus Steamers v. Fox, D.C., 14 F. 312, is a case wherein this state was permitted to collect sales and license taxes on sales of merchandise and business conducted on a steamboat using t......
1 cases
  • 68 S.E.2d 56 (W.Va. 1951), CC784, American Barge Line Co. v. Koontz
    • United States
    • West Virginia Supreme Court of Appeals of West Virginia
    • December 20, 1951
    ...vessels using navigible waters, certain taxes may be levied and collected by the state. The case of Streckfus Steamers v. Fox, D.C., 14 F. 312, is a case wherein this state was permitted to collect sales and license taxes on sales of merchandise and business conducted on a steamboat using t......