
    Hopkins et als. vs. The Gallatin Turnpike Co.
    1. A corporation can exercise no powers but those which are expressly conferred upon it by the charter, or those which are necessary lo enable it to carry into effect the purposes for which it was created.
    2. A corporation has power to make a deed assigning its effects to a trustee for the benefit of creditors.
    3. It is not necessary that the officer of a corporation making a deed on behalf of the corporation should be authorized by power of attorney to affix the seal of the corpo* ration.
    4. Where the president of a‘corporation makes a deed on behalf of the corporation and affixes the seal of the corporation thereto, it will be presumed, in the absence of proof, that he was duly authorized by a vote of the board to make the deed.
    5. A corporation agreed with certain creditors, that if they would take stock in the company, their debts should be paid in bonds of the State of Tennessee, which the company would procure, provided they would take them at not less than eighty cents in the dollar. They subscribed. No order of the board was made for the assignment or delivery of the bonds to the creditors, and no assent on the part of the creditors had been made to take them at eighty cents in the dollar. The property, therefore, remained iu the company, and the bonds were subject to the lien of the attachment,
    Hopkins, Hall and others filed their bill in the Chancery Court at Gallatin against the “Gallatin Turnpike Company” and a part of the stockholders only, alleging that they were too numerous for all to be made parties, on the 28th day of February, 1842.
    On the 10th day of March, 1842, Hanna and others filed their bill against the company and’ the stockholders, in the same court.
    On the 15th day of March, 1842, James Key filed his bill against the company.
    These complainants were all creditors of the corporation who had obtained judgments against it; who had procured executions to be issued, and they had been returned “no property found.” These facts are set forth in the several bills. Hopkins, Hall and others had attached a portion of certain bonds of the State which, were in possession of the company before the other bills were filed.
    These bills alleged, that the company had made an assignment by deed of the property of the company in trust to B. Watkins, for the pretended purpose of securing certain creditors of and endorsers for the company.
    
      This deed is exhibited, and was made before the several judgments were obtained.
    This deed alleges the existence of certain debts not then due, and which the company owed; and to secure the payment of said debts, it sells and conveys in trust to B. Watkins “all the property of said turnpike company, to wit: the turnpike road of said company, commencing at the city of Nashville and passing through the town of Gallatin to the Kentucky line, and all the gates and gate houses, the land upon which said gate houses are erected and all attached to the same, and tolls received at the gates on said road.”
    This deed authorizes and directs the trustees to appropriate the tolls received, first to discharging the expenses incidental to keeping the said road in repair, and the balance to the extin-guishment of the specified debts.
    It was signed by Samuel Anderson, “President of the Galla-tin Turnpike Company,” and the seal of the Company affixed.
    The bills charged, that this deed was intended to hinder and delay creditors in the collection of their debts, and was fraudulent and void.
    This was denied in the answer. '
    The bills also alleged, that the company had five thousand dollars in bonds of the State, which was the property of the company, and prayed the subjection of them to the satisfaction of their judgments. The answer alleges that these bonds were contracted to certain stockholders, who had taken stock upon condition, that they should have these bonds at 80 cents in the dollar, in discharge of certain debts the company owed such stockholders. Hopkins, Hall and others asserted a prior lien on the bonds by virtue of their attachment.
    The bills prayed that the deed might be declared fraudulent and void, the road and its effects subjected to the satisfaction of the judgments, &c.
    The answer of the corporation was replied to, and the individual stockholders demurred to the bill.
    The several cases were consolidated on motion of the corporation; and no proof being taken, the case was heard before Chancellor Bramlitt, at the April term, 1843. He sustained the demurrer of the stockholders, and dismissed the bill as to them. He decreed the deed fraudulent and void, and appointed a receiver to receive the tolls, with instructions to distribute them, after discharging the expenses of repair, pro rata amongst the judgment creditors. The question of priority asserted by Hall, Hopkins and others, was reserved.
    The Turnpike Company alone appealed.
    
      Trimble and Guild, for the complainants.
    
      John J. White,
    
    for the Gallatin Turnpike Company, said:— The only questions for discussion here, are, 1st, in regard to the validity of the deed of trust executed by the company on the 15th of October, 1840; and 2d, in regard to the $5000 in bonds of the State of Tennessee.
    ' And 1st, in regard to the trust. The charge in the bill is, that this deed was made to hinder and delay creditors in the collection of their debts, and is therefore fraudulent and void. The answer expressly denies this allegation, and the proof shows that it was made Iona fide.
    
    This deed is next attempted to be set aside, upon the want of authority in the company to execute such an instrument. And first, I contend that no such question can be raised upon the pleadings. There is no allegation in the bill of a want of authority in the company to execute such an assignment. On the contrary, this power is impliedly admitted. The only charge, is, that under the circumstances mentioned, the whole property being conveyed just before the complainants obtained their judgments, it is fraudulent and void. Upon this point, see Carnead vs. Banks, 10 Wheaton, 189; Harding vs. Handy, 11 do. 103; Hyon vs. Tallmadge, 1 John. Ch. 186.
    But, 2d, with regard to the power of the company to execute such an assignment. That a debtor may by deed of trust prefer one creditor to another, when it is fair and bona fide, is a principle too well established to be shaken. 8 Yer. 134; 10 do. 146; 11 Wend. What is there that should prevent a corporation from doing the same thing, particularly one of this character? According to all the authorities, a corporation can exercise such powers as are specifically granted, or sueh as are incidental, or necessary to carry into effect the purposes for which it was established. 2 Kent’s Com. 226,1 ed.; 4 Wheat-on, 636. And it was an incident at common law to every corporation to have a capacity to purchase and alien lands and chattels, unless they were specially restrained by their charters, or by statute. Independent of positive law, all corporations have the absolute jus disponendi, neither limited as to objects nor circumscribed as to quantity. 2 Kent. 227, and authorities there cited. 4 Com. Dig. title Franchise, f. 11-18. Angelí and Ames on Corp. 78, 80-5, 104; 2 Yer. 167. I take it, therefore, the company would have the power of making the conveyance without any particular authority given by the charter. It would be highly important for it to possess this power. This charter was granted for the purpose of constructing an important road from Nashville by Gallatin to the Kentucky line, and terminating upon the Ohio river at Louisville. It was indispensable for them sometimes to anticipate their resources, to borrow money, and to use their credit, in the construction of the road; and this could not be effected without pledging their means which were alone the proceeds of the road.
    But if we look at the charter, we find ample authority given. Under the first section the company, among other things, is authorized and empowered to have and receive, purchase, possess, enjoy and retain lands, rents, goods, chattels, and effects of any kind, and to any amount necessary to carry into effect the object of the incorporation, and the same to use, alien and dispose of at pleasure; and by the 10th section, the turnpike road with all its appurtenances, together with all tolls and profits arising therefrom, are vested in the corporation.
    These are very different from the cases in 15 John, 357, and 2 Cowen, 664-678, which decide that when a company is incorporated for the purpose of insurance against fire, it cannot carry on banking operations, discount notes and transact other business of incorporated banks. This is upon the principie, that when a bank is incorporated with certain powers granted by the charter, it cannot be permitted to exercise other powers wholly distinct, having no reference to the specified object of the incorporation, not incidental, or necessary to carry into effect the purposes for which it was established. But such is not this case, the exercise of a distinct power, inconsistent with or repugnant to the charter, but one necessarily flowing from it, the merely pledging the means of the company, for the security and the payment of their debts.
    The exercise of this power by the company is fully sustained by the authorities. In the case of Jackson vs. Brown, 5 Wend. 590, it is decided that a corporation having power to convey real estate, may pledge it by mortgage, as security for the payment of its debts. The court say, “The general authority to sell and convey, includes the authority to mortgage. A mortgage is but a conditional conveyance. It would be very extraordinary if this or any other corporation had not the power to appropriate its property to the payment or security of its honest debts.” So here, this corporation has the power to purchase and convey real estate, as well as rents, goods, chattels and effects of any kind, which are vested in them for the purposes contemplated by the charter. The road likewise, and the tolls and profits arising from the same, are vested in the company, and which consequently they have the right to use for the security and in payment of their debts, which is all that is done by this conveyance. See, too, the case of James S. Conway et al. assignees of the Real Estate Bank, decided by the Supreme Court of Arkansas, 4 Arkansas Reports, 325, where the power of a corporation to make an assignment of its assets in payment of its debts, is elaborately and ably examined, and the court determined in favor of the exercise of the power. Also Catlin vs. The Eagle Bank, 6 Conn. Rep. 233; Savings Bank vs. Batin, 8 do. 512; 4 Gill & John. 219; 6 do. 375; The Union Bank of Tennessee vs. Elliott and others.
    
    With regard to the power of the president of the company to execute the deed, that is settled in 4 Yer. 9, Burnell vs. Bickins. See too Angelí and Ames, 114-15, sec. 7 and notes; and the Real Estate Bank case before referred to.
    Third; with regard to the $5000 in bonds of the State of Tennessee, which is claimed in these bills. The allegation of the bill is, that there are certain bonds, the property of the. company, in possession of the president or secretary. Defendants deny this, and say they belong to other individuals, naming them, who are creditors, and there the matter rests. Complainants do not amend their bill and make these individuals parties, and charge the fact that they are not entitled to these bonds, and thus place it in issue between them; of course, the answer being responsive to the bill, is conclusive upon this point. It cannot be said that this is a matter in avoidance, and must therefore be proved.
   Gkeen, J.

delivered the opinion of the court.

These are several distinct cases; but in each, the Gallatin Turnpike Company and some of its stockholders are made defendants; and the complainants seek to render liable to the satisfaction of their debts, certain bonds of the State which are held by the company, to have the road placed under the control of a receiver, and its profits applied to the liquidation of their debts, and to subject the stockholders to contribution, or the stock to sale.

It is alleged in the bills, that the road, gate and gate houses, have been conveyed to one B. Watkins, to save harmless certain sureties or endorsers of the company; and that the deed was made in favor of creditors, or that the debts secured thereby have been paid, or nearly so, by the receipts from the road. It is also alleged, that the company had State bonds to the amount of 5000 dollars in the hands of its officers, and that these bonds are choses in action, liable in equity to the payment of complainants’ debts.

The answer of the company denies that the deed to Watkins was made to hinder or delay other creditors; but that, having borrowed of the Bank of Tennessee a considerable sum of money for which personal security was given, this deed was made bonafide, to indemnify and save harmless the endorsers, and that but little., profits, have been realized, the expenses in the construction of a .bridge and keeping the road in repair, having been considerable.

With regard to the State bonds, the answer states, that in the spring of 1841, there was an attempt made to get the company out of debt, by procuring additional subscriptions to stock, on the part of stockholders who were creditors, and which would entitle the company to an equal amount to. the individual subscription in Slate bonds. ■ The amount subscribed by individuals was twenty thousand dollars, and the company consequently obtained twenty thousand dollars in State bonds. Each stockholder was entitled to an amount in bonds equal to his subscription of stock; that is to say, if he subscribed $500, or any other given sum, he was entitled to that amount in a State bond, if the balance of his debt would amount to that much. They were not, however, to get the bonds under an order of the board, unless they would allow eighty cents in the dollar for them. “The company have gone on, arid paid fifteen thousand dollars. The condition upon which they subscribed to the stock was, that they should be entitled to these bonds.” The defendant therefore denies that these bonds are liable to the satisfaction of complainants’ debts.

The answer was replied to, and the causes were brought to a hearing without proof. His honor the Chancellor decreed that the deed to Watkins was void, and the road should be placed in the hands of a receiver; that the five thousand dollars of State bonds were liable to these creditors; and that the complainants, and all other creditors, who would file their claims, and contribute to the expenses of the suit, should be paid pro rata by the proceeds of the road; and as to the bonds, the question of priority was reserved.

The bills were dismissed as to the other defendants. The turnpike company alone appealed to this court.

Inasmuch as the individual stockholders are not before this court, no appeal having been taken from the decree dismissing the bill as to them, the questions now to be considered are, first, as to the validity of the deed of assignment; and, secondly, whether the $5000 of State bonds are liable to ifae ckáffl of the complainants.

1st, as to the validity of the deec

The charge in the bill attacks fraud in its execution. This charge is specially denied in the answer, and there is no proof. But it is contended here now, that this deed is void:

1st. Because the corporation has no power to make a deed of assignment of its effects to secure creditors.

2d. Because the deed purports to have been executed in the name of the corporation, by S. R. Anderson, its president; and no power of attorney, under seal, is shown, authorizing him to make the deed.

3d. Because it does not appear that there was any vote of the board of directors, authorizing and empowering the president to affix the seal of the corporation to this deed.

1. As to the question, whether the corporation has power to make an assignment of its effects for the security or in payment of its creditors, there can be no doubt.

It is certainly true, that a corporation can exercise no powers that are not granted in the charter, or that are not incidental or necessary to carry into effect the purposes for which it was created. 2 Kent, 226, 1 ed. But these powers it may exercise as fully as a natural person can do.

At common law, it is an incident of a corporation to purchase and alien lands and chattels, to any extent, unless restrained by statute. 2 Kent, 227. But the charter of this corporation expressly confers the power to purchase “lands, goods and chattels to any extent necessary to carry into effect the objects of the incorporation,” and “the same to use, alien and dispose of at pleasure.” If the corporation may dispose of its property at pleasure by an absolute sale, certainly there can be no reason why it may not assign its property, or the profits of its business, to a trustee, for the payment of debts. That a corporation may make an assignment, see 6 Connecticut Rep. 238; 8 do. 505, 512; 6 Gill & John. 375; 4 do. 219. See also a late case, of Beckwith vs. The Windsor Manufacturing Company, 14 Connecticut Rep. 594, and the late cases of Dana vs. The Bank of the United States, decided by the Supreme Court of Pennsylvania, and the case exparte James S. Conway, decided by the Supreme Court of Arkansas.

2. But if is said, the agent to execute the deed should have been authorized by a power of attorney under seal.

We cannot regard this objection as valid. The common law rule, with regard to natural persons, that an agent, to bind his principal by deed, must be empowered by deed himself, cannot, in the nature of things, be applied to corporations aggregate. These beings of mere legal existence, and their board, as such, are, literally speaking, incapable of a personal act. They direct or assent by vote; but their most immediate mode of action must be by agents. If the corporation or its representative, the board, can assent primarily by vote alone, to say that it could constitute an agent to make a deed only by deed, would be to say that it could constitute no such agent whatever; for after all, who could seal the power of attorney, but one empowered by vote? Angel and Ames on Corpo. sec. 7. The Supreme Court of Connecticut, in the case of Beckwith vs. Windsor Manufacturing Company, before referred to, (14 Conn. R. 603,) in answering this objection, say: “The corporation could only act in making the conveyance, by some agent or officer of theirs; and were it necessary for the vote to be executed with the same formality as the deed, a similar difficulty would arise in the execution of that.” From the necessity of the case, therefore, the common law rule, as applied to individuals, cannot exist in relation to corporations aggregate.

3. Objection is made, that no vote of the board appears in this record, authorizing the execution of this deed, or assenting to it.

It is laid down by Angel & Ames on Corporations, 115, that when the common seal of a corporation appears to be affixed to an instrument, the seal itself is prima facie evidence that it was affixed by proper authority; and the contrary must be shown by the objecting party.

In the case before us, the deed has the corporation seal affixed to it; and it is not even alleged in either of the bills, that it was placed there by the president without authority. On the contrary, the statement in each of the bills impliedly admits the regularity of the execution of the deed. They allege that the deed was executed; but they insist it was made in fraud of their rights.

We think, therefore, on this part of the case, that the corporation had power to make this deed; that a power of attorney under seal to authorize the president to affix the corporation seal, was not necessary; that the existence of the seal of the corporation to the deed, is prima facie evidence that it was affixed by proper authority; and that it was made bona fide to secure the payment of a just debt; and consequently it is a valid conveyance, and cannot be set aside, in behalf of these creditors.

2d. We are next to consider the question as to the State bonds.

We think the 5000 dollar's of bonds which remain in the hands of the company undisposed of, belong to the company, and are choses in action liable to the satisfaction of complainants’ debts. That these bonds do not belong to the creditors, who had subscribed stock, is manifest from the facts stated in the answer of the defendant. The bonds had been obtained about a year before these bills were filed, and yet they had not been transferred to these creditors. Besides, the answer states that there was an order of the board, that the creditors who had thus subscribed for stock should be entitled to an equal amount in bonds, only on condition that they would allow eighty cents in the dollar., This proves that there was no contract creating an ownership, on the part of the creditors, of the bonds in question. They remained the property of the company, and it was understood that these subscribers for stock were to be preferred creditors, to be paid in the State bonds, provided they would receive them on the condition before mentioned. Until the creditors agreed to this condition and received their payment, the bonds remained the property of the company. As such, they are liable to these complainants’ debts. In the application of this fund, a question of priority arises between the complainants in these several bills. Hopkins, Hall and others filed their bill first, and obtained an attachment and injunction, to the amount of three thousand dollars of these bonds. The other bills were subsequently filed; and in these cases no other attachment issued.

The first bill, of Hopkins, Hall and others, filed under the act of 1832, ch. 11, (Nich. & Car. 222,) gives them a priority of Hen, to the amount of the bonds by them attached; so that $3000 of these bonds must be sold for their benefit. See 2 Paige’s Ch. Rep. 567, Corning & Norton vs. White. The remaining two thousand dollars of bonds will be sold, and all the creditors in the two last bills filed will receive of the fund pro rata.

The decree must be reversed, and decree according to the foregoing principles.  