"Vice-President Richmond and Danville "The Woodstock Iron Company will aid the | on behalf of the Woodstock Iron Company to “And plaintiff avers that said defendant was "In testimony whereof witness the signature "SAMUEL NOBLE, Sec'y and Treas. "ATLANTA, GA., Jan'y 17th, 1882. parcels of land for right of way and sidings [649] [650] [651] iff by said defendant upon the making of said | ber of miles, to wit, five miles, at a great ad- To the complaint the defendant filed a demurrer and also several pleas. The demurrer was to the effect that the contract set forth as the foundation of the action was without consideration and was contrary to public policy and void. The demurrer was overruled, and leave given to the defendent to file additional pleas. The original pleas were five in number, and to these six more were added. Of the original pleas one amounted to the general issue, denying the promise and undertaking in the manner and form alleged in the complaint; and one amounted to a plea of ultra vires, setting forth the charter of the defendant, showing the object of its incorporation to be the manufacture of pig metal and other products of iron ore, and their sale, connecting with that business all such operations as are usual and incidental thereto, and denying authority, under the charter, to make the agreement mentioned in the complaint. A demurrer to this last plea was sustained by the court. Of the additional pleas two only require notice-the 10th and 11th. The 10th plea is given in full below, and so much of the 11th plea as is necessary to its comprehension. "Plea 10. And the said defendant, for further answer to the complaint, says that at the time of the making of the alleged agreement stated and set forth in the complaint, plaintiff was engaged in locating and constructing the Georgia Pacific Railroad under a contract with the Georgia Pacific Railroad Company, under and by which plaintiff agreed with said Georgia Pacific Railroad Company to locate and construct said railroad by the nearest, cheapest, and most suitable route, from Atlanta, Georgia, through Alabama to Columbus, in the State of Mississippi, for a consideration, to wit: twenty thousand dollars per mile for each and every mile of said road so located and constructed. "That John W. Johnson, who negotiated and executed said contract with the defendant for plaintiff as vice-president, was, at the time said agreement was made, a stockholder and director of the Richmond and Danville Extension Company, and was also a stockholder and director and officer of the Georgia Pacific Railroad Company; that the Georgia Pacific Railroad Company was at said time, and is now, a separate and distinct company, and in no wise connected with plaintiff, except that some of the stockholders of said Georgia Pacific Railway Company were also stockholders in said Richmond and Danville Extension Company, and plaintiff was locating and constructing said road under its contract with said company as aforesaid "That in causing said road to be built via Anniston it was necessary to deflect the same from its nearest, cheapest, and most natural route from Atlanta to Columbus a great num Plea No. 11, after repeating the first paragraph of plea No. 10, alleges that John W. contract with defendant for plaintiff as viceJohnston, who negotiated and executed said president, was at the time a stockholder, director, and officer of the Georgia Pacific Railwhere defendant resided and did business, and way Company; and that he went to Anniston represented to defendant that he was a direcCompany, and also a stockholder, director, and tor and officer of the Georgia Pacific Railway officer of the Richmond and Danville Extension Company, and could control and induce the location and construction of said Georgia Pacific Railroad via the Town of Anniston, and would do so if the defendant would donate thousand dollars in cash, and deed to plaintiff, and pay to plaintiff the said sum of thirty or as it might direct, the large quantity of real estate described in the complaint, which defendant avers was of value, to wit: twenty thousand dollars, and that said Johnston then and there informed the defendant that unless defendant acceded to his said demand to pay plaintiff said sum of money, and convey to plaintiff, or as it might direct, the large quantity of valuable real estate aforesaid, said road would not be constructed by the Town of Anniston, but would be constructed by way of the Town of Oxford, which said town is within three miles of the Town of Anniston, and is a rival market to said Town of Anniston, and thence direct to Birmingham, along the line of a preliminary survey already made; and to secure the location and construction of said road via the said town of Anniston, and to prevent the locating and building of said road by way of the rival Town of Oxford, to the exclusion of the Town of Anniston, defendant was forced to agree, and did agree, to pay the said sum of thirty thousand dollars in cash, and to [653 convey to plaintiff, or as it might direct, the large quantity of valuable lands described in the complaint, as aforesaid.” To these pleas a demurrer was filed by the plaintiff and sustained by the court. The case was then tried upon the general issue by a jury, which rendered a verdict in favor of the plaintiff, assessing its damages at $27,067.42, upon which judgment was entered with costs, to review which the case is brought here on writ of error. Mr. John B. Knox, for plaintiff in error: The courts have uniformly held such contracts illegal. Fuller v. Dame, 18 Pick. 478; Holladay v. The Sovereign alone can object. Patterson, 5 Oreg. 177; Pac. R. Co. v. Seely, 45 | perial Gas Light & C. Co. 4 Barn. & Ad. 315. The contract is ultra vires. Pa. R. Co. v. Canal Comrs. 21 Pa. 22; Rice v. Minn. & N. W. R. Co. 66 U. S. 1 Black, 380 (17:153); MacGregor v. Deal & D. R. Co. 16 Eng. Law & Eq. 180; Madison W. & M. Pl. Road Co. v. Watertown & P. Pl. Road Co. 7 Wis. 59; Cent. R. & Bkg. Co. v. Smith, 76 Ala. 572; Pearce v. Madison & I. R. Co. 62 U. S. 21 How. 441 (16:184): Morris & E. R. Co. v. Sussex R. Co. 20 N. J. Eq. 542. The doctrine of estoppel cannot be held to apply. Marion Sav. Bank v. Dunkin, 54 Ala. 473; Chambers v. Falkner, 65 Ala. 448; Grand Lodge of Ala. v. Waddill, 36 Ala. 318; Ex parte Burnett, 30 Ala. 461; Montgomery v. Montgomery &W. Pl. Road Co. 31 Ala. 76; Eufaula v. McNab, 67 Ala. 588; Cent. R. & Bkg. Co. v. Smith, 76 Ala. 572; State v. Stebbins, 1 Stew. Ala. 308. Mr. H. C. Tompkins, for defendant in er ror: The demurrers raise every question that could be raised. Chambers Co. v. Clews, 88 U. S. 21 Wall. 317 (22:517); Junction R. Co. v. Bank of Ashland, 79 U. S. 12 Wall. 226 (20: 385); Hanrick v. Andrews, 9 Port. 9; Pitman v. Kintner, 5 Blackf. 250; Rodgers v. Brazeale, 34 Ala. 515; Craig v. Missouri, 29 U. S. 4 Pet. 410 (7: 903); Mason v. Eldred, 73 U. S. 6 Wall. 231 (18: 783); Mut. L. Ins. Co. v. Harris, 97 U. S. 331 (24: 959). The contract was ultra vires. Thomas v. West Jersey R. Co. 101 U. S. 85-86 (25: 953); Union Nat. Bank v. Matthews, 98 U. S. 621 (25:188); Rider L. Raft Co. v. Roach, 97 N. Y. 378; Chicago & A. R. Co. v. Derkes, 1 West. Rep. 553, 103 Ind. 520; Ward v. Johnson, 95 Ill. 215; Darst v. Gale, 83 Ill. 136; Oil Creek & A. R. R. Co. v. Pa. Transp. Co. 83 Pa. 160; Camden & A. R. Co. v. May's Landing & E. H. C. R. Co. 4 Cent. Rep. 801, 48 N. J. L. 530; Wright v. Pipe Line Co. 101 Pa. 204; Memphis & L. R. R. Co. v. Dow, 19 Fed. Rep. 388; Bissell v. Michigan Southern & N. 1. R. Co. 22 N. Y. 258; Parish v. Wheeler, 22 N. Y. 494; Sturgeon v. Daviess Co. 65 Ind. 302; Green's Brice, Ultra Vires, 729, note a; 2 Morawetz, Corp. § 689-696. The stockholders cannot, after a third party has carried out in good faith his part of the contract, repudiate the liability of the corporation thereon. Sheldon Hat Blocking Co v. Eickemeyer Hat Blocking Mach. Co. 90 N. Y. 607; Stewart v. Erie & W. Transp. Co. 17 Minn. 372; Watts' App. 78 Pa. 370; 2 Morawetz, Corp. § 625; Chicago, R. 1. & P. R. Co. v. Howard, 74 U. S. 7 Wall. 392 (19:117); Olcott v. Fond du Lac Co. 83 U. S. 16 Wall. 678 (21:382); Oates v. First Nat. Bank, 100 U. S. 239 (25:580). This court will not be bound by the decisions of the state courts on questions of general law. Russell v. Southard, 53 U. S. 12 How. 147-8 (13: 930, 931); Neves v. Scott, 54 U. S. 13 How. 268 (14:140); Boyce v. Tabb, 85 U. S. 18 Wall. 546 (21:757); Burgess v. Seligman, 107 U. S. 20 (27:359). A company has the right to locate its line where it will and take advantage of such right to obtain such premises. Cedar Rapids & St. P. R. Co. v. Spafford, 41 Iowa, 292; McClure v. Mo. River, Ft. S. & G. R. Co. 9 Kan. 373; Chicago & A. R. Co. v. Derkes, 1 West. Rep. 553, 103 Ind. 520; Spartanburg & U. R. Co. v. DeGraffenreid, 12 Rích. L. 675; McMillan v. Maysville & L. R. Co. 15 B. Mon. 218; Rhey v. Ebensburg & 8. Pl. Road Co. 27 Pa. 261; Jewett v. Lawrenceburgh & U. M. R. Co. 10 Ind. 539; Martin v. Pensacola & G. R. Co. 8 Fla. 370; Taggart v. Western Md. R. Co. 24 Md. 563, 581-2; Des Moines Valley R. Co. v. Graff, 27 Iowa, 99; First Nat. Bank v. Hur Ala. Gold L. Ins. Co. v. Cent. A. & M. Asso. 54 Ala. 77; Green's Brice, Ultra Vires 89; Callaway Min. & Mfg. Co. v. Clark, 32 Mo. 305;ford, 29 Iowa, 579; Detroit, L. & L. M. R. Co. Moss v. Averell, 10 N. Y. 455. Corporations are bound by contracts duly entered into by their directors, for purposes which they have treated as within the objects of their acts and which cannot be clearly shown not to fall within them. v. Starnes, 38 Mich. 698; Bucksport & B. R. Co. v. Brewer, 67 Maine, 295; Cumberland Val ley R. Co v. Baab, 9 Watts, 458, 2 Am. R. Cas. 187; International & G. N. R. Co. v. Dawson, 62 Tex. 260; Chapman v. Mad River & L. E. R. Co. 6 Ohio St. 120; Pixley v. Gould, 13 Bradw. 565; 2 Wood, R. Law, § 267. The contract, even if voidable, is not so at the instance of the third party. Twin-Lick Oil Co. v. Marbury, 91 U. S. 587 (23: 328); Thomas v. Brownville, Ft. K. & P. R. Co. 109 U. S. 522 (27: 1018); Pneumatic Gas Co. v. Berry, 113 U. S. 322 (28:1003). Shrewsbury & B. R. Co. v. North Western R. Co. 6 H. L. Cas. 113, 124; Green's Brice, Ultra Vires, 38 and n. a; Watts' App. 78 Pa. 370, 392; 1 Waterman, Corp. 598-600; Whitman Gold & S. Min. Co. v. Baker, 3 Nev. 386; 1 Morawetz, Corp. § 362-4; Merchants Nat. Bank v. Pomeroy Flour Co. 41 Ohio St. 552; | Bradley v. Ballard, 55 Ill. 413; Madison, W. & M. Pl. Road Co. v. Watertown & P. Pl. Road Co. 5 Wis. 173; Wheeler v. San Francisco & A. R. Co. 31 Cal. 46; South Wales R. Co. v. Red- Union Pac. R. Co. v. Credit Mobilier, 135 mond, 10 C. B. N. 8. 674; Hill v. Nisbet, 100 Mass. 367; Alexander v. Williams, 14 Mo. App. Ind. 341; Ellis v. Howe Machine Co. 9 Daly, 13; Kitchen v. St. Louis, K. C. & N. R. Co. 69 78; 1 Morawetz, Corp. § 320; Clarke v. Im-Mo. 224; Ashhurst's App. 60 Pa. 291; Euro129 U. S. U. S., Book 32. 53 There is no pretense of any actual fraud, and no facts are alleged from which it could be inferred. 823 [654] [655] pean & N. A. R. Co. v. Poor, 59 Maine, 277. Smalley v. Anderson, 2 T. B. Mon. 56; Mr. Justice Field delivered the opinion of the court: Company with the Georgia Pacific Railway As appears from the pleadings, which are set The Woodstock Iron Company complied with the contract only in part. At the request of the Extension Company it conveyed to the railroad company the several parcels of land mentioned, and also upon like request furnished it with cars to the value of $6,325. For the balance, amounting to $23,675, the present suit was brought, and the principal question presented to the court below, and to this court, is whether the contract is obligatory upon the defendant, or whether it is void as being against public policy. In determining this question, it must be borne in mind that the contract of the Extension shortest, cheapest, and most suitable route, to [656 ing proper accommodations, and in their this case the Extension Company, to which the acting as agents for the public, a confidence which, it seems, could be safely so reposed, when it is considered that the interests of the corporation as a company of passenger and freight carriers for profit was identical with the interests of those who were to be carried, and had goods to be carried, that is, with the public interest. This confidence, however, could only be safely so reposed under the belief that all the directors and members of the company should exercise their best and their unbiased The case of Fuller v. Dame is instructive judgment upon the question of such fitness, on this head. (18 Pick. 472.) It there ap- without being influenced by distinct and extrapeared that Dame, the defendant, was the own- neous interests, having no connection with the er of a large tract of land and flats situated on accommodation of the public or the interests Sea Street, and between it and Front Street, on of the company. Any attempt therefore, to the south side of Boston, which would be create and bring into efficient operation such greatly enhanced in value if the Boston and undue influence has all the injurious effects of Worcester Railroad Company would locate one a fraud upon the public, by causing a question [659] of its depots between those streets and easterly which ought to be decided with a sole and sinof Front Street. To induce the company to gle regard to public interests, to be affected make such location it was supposed to be nec- and controlled by considerations having no reessary to form an association, which would gard to such interests. It is no answer to say pay to it a large sum of money and furnish a that, by the Act of incorporation, the execularge tract of land for the depot, besides mak- tive authority was vested in a board of directing other donations; and to provide the money ors, and Mr. Fuller was not a director. He and land, also to form a Company to purchase was a member of the company and might be the flats and land between the streets named, chosen a director. He was an elector of the to be held as joint stock and laid out in due directors, and they were directly responsible to form and shape for sale. Fuller agreed to aid the stockholders. The immediate act of locaDame in getting up such company, and in in- tion was with directors, but the efficient auducing the railroad company to fix its termin- thority was with the members and stockholders ation and principal depot between those streets, of the corporation, who elect the directors. Fuller being himself of opinion that the rail-The election may depend upon the known views road ought, from a view of the public good and the good of its stockholders, to enter the city on the southerly side and have its principal de pot there. In consideration of such agreement Dame gave his note for $9,600, payable to Fuller in three years, the note being deposited with [658] third parties, to be delivered to him when the principal depot of the railroad company for merchandise was constructed between the streets mentioned. Fuller was at the time of the agreement a stockholder in the railroad company. The road having been completed, and the principal depot located between the streets mentioned, and the note not being paid, suit was brought upon it. It was adjudged that the contract was contrary to public policy, and that the note given in consideration of it was therefore void. In coming to this conclusion the court considered somewhat at large the ground upon which contracts of this character were avoided, and held that it was because they tended to place one under wrong influences, by offering him a temptation to do that which might injuriously affect the rights and interests of third persons, and that the case before it was within the operation of this principle, the contract tending injuriously to affect the public interest in establishing the fittest and most suitable location for the termination of the Boston and Worcester Railroad for the accommodation of the public travel. It is true the road was constructed and located by the corporation at the expense of private parties under the sanction of the Legislature, incorporated for that purpose, who were to be remunerated by a toll levied and regulated by law; and it was left to its directors to fix the termination and place of deposit. But the court added: "In doing this a confidence was reposed in them, and opinions of candidates upon this very ques- The case before us is much stronger than the The principle, which is so clearly and forcibly stated in Fuller v. Dame, has been applied in numerous instances by the highest courts of different States, to avoid contracts made to influence railroad companies in selecting their routes and locating their depots and stations, by donations of land and money to some of its directors or stockholders or agents. Thus in Bestor v. Wathen, 60 Ill. 138, it appeared that in 1849 the Legislature of Illinois incorporated a company to build a railroad from a point on the Mississippi River to Peoria, and that in 1852 the charter was amended so as to authorize the extension of the road from Peoria eastward to the state [660] line. In 1855 the company made a contract with the firm of Cruger, Secor and Company, by which the latter undertook the construction and |