and it is usually conclusively presumed that he has done so. (Balfour v. Irrigation Co., 123 Cal. 395, 55 Pac. 1062.)

Fraud of Agent.-The fraud of a bookkeeper of a corporation in withholding books of the corporation from examination by an insur ance adjuster, when properly instructed to submit them to examination, binds the corporation and vitiates an adjustment made in ignorance of the contents of the books withheld. (Stockton etc. Co. v. Glen's Falls Ins. Co., 98 Cal. 557, 33 Pac. 633.) Powers and Duties: See sec. 303, subd. 5, C. C., ante.

Compensation: See sec. 303, subd. 5, C. C., ante.

Directors: See sec. 305, C. C., ante.

Subd. 6. By-laws: See secs. 301, 303, 304, C. C., ante, for by-laws, and sec. 324, C. C., ante, for transfer of stock.

The power of a corporation to make by-laws for the transfer of their stock does not include the power to create liens thereon affecting purchasers for value without notice. (Anglo-California Bank v. Grangers' Bank, 63 Cal. 359. Note citations: 85 Am. Dec. 621; 6 Am. St. Rep. 839; 43 Am. St. Rep. 156, and 57 Am. St. Rep. 393.)

Subd. 7. Stockholders and Assessments: See secs. 322-327, C. C., ante, for stockholders, and secs. 331-349, C. C., ante for assessments. Subd. 8. Contracts-In General: See "Officers,' "" sec. 303, subd. 5, C. C., ante, and "Directors," sec. 305, C. C., ante.

Contracts of corporation stand on the same footing with the contracts of natural persons and depend on the same circumstances for their validity and effect. The doctrine of ratification and estoppel is as applicable to corporations as to individuals, and the former are bound by the acts of their agents in the same manner and to the same extent as the latter. (Argenti v. S. F., 16 Cal. 255; Pixley v. Western Pacific etc. Co., 33 Cal. 191, 91 Am. Dec. 628.)

Contracts of corporation are presumed valid in absence of proof to the contrary. (Shaver v. Bear River etc. Co., 10 Cal. 396.)

A contract of a corporation not upon its face necessarily beyond the powers of the corporation will, in the absence of proof, be presumed to be valid. (Union Co. v. Murphy's Flat Co., 22 Cal. 620.)

A corporation has power to make all contracts that are necessary and usual in the course of its business as a means to enable it to effect the object of its creation; and its right to do so cannot be questioned collaterally, but only in a direct proceeding by the government. (Union Co. v. Murphy's Flat Co., 22 Cal. 620; Cal. Tel. Co. v. Alta Co., 22 Cal. 427.)

A corporation formed for the purpose of improving real estate and speculating therein may do any act, whether on or off the land, the direct and proximate tendency of which is to benefit the property or enhance its value. No rule can be laid down defining what acts

have a direct and proximate benefit, but each case must be determined on its own circumstances. (Vandall v. South S. F. Dock Co., 40. Cal. 83.)

A corporation may enter into a contract with an individual which will have the effect to carry out directly or indirectly the object of its incorporation, and may provide in the agreement that gains or losses of the venture shall be borne equally by both parties. (Bates v. Coronado Beach Co., 109 Cal. 160, 41 Pac. 855.)

"Essential Contracts."-Whether a contract is "essential," within the meaning of section 354 of the Civil Code, is to be determined by the corporation, and if within the apparent scope of its organization, the corporation will not be permitted thereafter to question its effect. (Bates v. Coronado Beach Co., 109 Cal. 160, 41 Pac. 855.)

Where power to contract exists it must be exercised by a corporation or its agent in the same way a natural person can contract, unless restrained by its charter to some particular mode of contracting. (McKiernan v. Lenzen, 56 Cal. 61.)

A corporation can borrow money to carry on the business for which it is incorporated, although such power is not expressly given. (Magee v. Mokelumne etc. Co., 5 Cal. 528; Seeley v. San Jose etc. Co., 59 Cal. 22.)

Insurance Corporation-Power to Loan Money.-An insurance company has power to loan money out of its capital and accumulations, and to take a mortgage upon land as security therefor. (Sun Ins. Co. v. White, 123 Cal. 196, 55 Pac. 902.)

Statute of Frauds.-Statute of frauds apply to corporations the same as to individuals. (Smith v. Morse, 2 Cal. 524.)

A requirement that a corporation can only contract in writing refers only to contracts wholly executory. (Pixley v. R. R. Co., 33 Cal. 183, 91 Am. Dec. 623. To same effect: Barstow v. R. R. Co., 42 Cal. 467; Foulke v. R. R. Co., 51 Cal. 367; Main v. Casserly, 67 Cal. 129, 7 Pac. 426; Streeton v. Robinson, 102 Cal. 546, 36 Pac. 946; Gribble v. Columbus Brewing Co., 100 Cal. 72, 34 Pac. 527. Note citations: 84 Am. Dec. 313; 95 Am. Dec. 486, 627; 97 Am. Dec. 319; 3 Am. St. Rep. 132, 699; 36 Am. St. Rep. 186.)

Corporation as Agent-Partnership.-An agreement between a flume company and a water company making the latter the exclusive agent of the former for the sale and distribution of water within a city, and providing for a distribution of profits, does not create a partnership between the two corporations, but only a limited agency. (San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549, 41 Pac. 495.) A contract between a flume company and a water company, whereby the water company is the sole agent of the flume company for distribution of water within a city, and whereby the presidents of the two companies are created trustees to control the properties of the

two companies within the city for the use and benefit of the two companies, without giving the trustees power or authority over the sale of water, is not ultra vires nor contrary to public policy, in that it transfers the management of the affairs of the companies from their respective directors to the trustees. (San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549, 41 Pac. 495.)

Accounting.—Where a corporation is only an agent of partnership it is only the partnership or some one in its interest who would have the right to ask for an account of the agency or for a surrender of its assets. (Behlow v. Fischer, 102 Cal. 208, 36 Pac. 509.)

Where a party assigned certain patents to a corporation for an interest in the profits to be realized therefrom, the assignment created a fiduciary relation and rendered the corporation a trustee of the assignor as to his share of the profits, and must account to him for such share. (Schaake v. Eagle Automatic Can Co., 135 Cal. 472, 63 Pae. 1025, 67 Pac. 759.)

A suit to enforce the trust arising upon the failure of a business for the carrying out of which a corporation was formed by two parties will be determined in the light of the agreement of the two parties independent of the corporation. (Hunt v. Davis, 135 Cal. 31, 66 Pac. 957.)

Where it appears that a corporation succeeded directly to the business of the partnership, and assumed the duties of the partnership in reference to certain merchandise which it received from plaintiff, it is not essential to plaintiff's right of action against the corporation that there should have been a formal novation of the corporation in the contract, and a release of the partnership from liability thereon. (Mitrovich v. Packing Co., 123 Cal. 379, 55 Pac. 1064.)

Contracts Against Competition.-A contract whereby a flume company makes a water company its exclusive agent for the sale and distribution of water within a city, all sales being subject to the approval of the flume company, is not illegal nor against public policy as creating a monopoly, or injuriously affecting the interests of the city or its inhabitants, nor is such a contract an unreasonable restriction of competition between the parties. (San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549, 41 Pac. 495.)

Public policy does not condemn or prohibit a contract between two corporations to prevent a competition which would be the financial ruin of one or both of them, and which could not benefit the public. (San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549, 41 Pac. 495.)

Lease of plant by a corporation is invalid when it is prevented by so doing from performing its franchise duties. (Visalia etc. Co. v. Sims, 104 Cal. 326, 43 Am. St. Rep. 105, 111, 37 Pac. 1042. To same effect: Carter v. Meuli, 122 Cal. 369, 55 Pac. 138.)

Promissory Notes-Mortgages.-Corporations have power to create debts as incident to their expressed powers and to make promissory notes. (Smith v. Eureka Flour Mills, 6 Cal. 1. To same effect: Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 627. Note citation: 13 Am. Dec. 562.)

A corporation may bind itself by a note and mortgage executed by the president and secretary in their official capacity. (Rowe v. Water Co., 10 Cal. 441. To same effect: Verzan v. McGregor, 23 Cal. 346.)

Note is not void because it was made by a corporation prior to filing its by-laws. (Forbes v. San Rafael T. Co., 50 Cal. 340.)

A mortgage executed to secure advances made by the mortgagee for the care and preservation of the property of a corporation, and of trust property which inured to its benefit, and which was conveyed to it by the mortgagee, has a sufficient consideration for its support. (Porter v. Land Co., 127 Cal. 261, 59 Pac. 563.)

A promissory note, joint in form, executed by a corporation and by seven individuals "as stockholders," is the joint note of the individuals whose names are signed thereto, and of the corporation. (Savings Bank v. Market Co., 122 Cal. 28, 54 Pac. 273.)

The question of the liability of the individuals who signed a note as stockholders' is to be determined upon an inspection of the note; and as it purports upon its face to be an agreement by them to pay the note, and not merely to ratify its execution by the corporation, the fact that they promised to pay as stockholders is immaterial. (Savings Bank v. Market Co., 122 Cal. 28, 54 Pac. 273.) A mortgage purporting to be a mortgage of a corporation, but signed by its trustees individually, and not by the corporation by its trustees, is not a legal mortgage of the corporation, but it may be enforced in equity. (Love v. Sierra Nevada etc. Co., 32 Cal. 639, 91 Am. Dec. 602.)

Indorsement of Corporate Notes.-The indorsement of a note of a mining corporation makes the indorsers liable to the final payee, whether it was in fact legally executed by the corporation or not. The indorsers implied warranty that the note was all that it purported to be. (Bunker v. Osborne, 132 Cal. 480, 64 Pac. 853.)

An indorser of a corporation note, though liable to the payee as indorser, is a surety as to the maker, and payment by the surety extinguishes the note as to the corporation, and there can be no legal or equitable assignment of or subrogation to the extinguished note. An assignment thereof by the bank to the surety cannot create a cause of action thereon against the corporation or its stockholders. (Yule v. Bishop, 133 Cal. 574, 65 Pac. 1094, Harrison, J., and Van Dyke, J., dissenting.)

Corporation is liable on its promissory note, the consideration of which it has received and retained, although note was executed in pursuance of a contract ultra vires. (Main v. Casserly, 67 Cal.

127, 7 Pac. 426. To same effect: Gribble v. Columbus etc. Co., 100 Cal. 72, 34 Pac. 527. Distinguished: Pacific Bank v. Stone, 121 Cal. 209, 53 Pac. 634. Note citation: 94 Am. Dec. 385.)

Estoppel. If a person not duly authorized make a contract on behalf of corporation, and the corporation take and hold the benefit derived from such contract, it will be held to have made the contract its own by ratification or adoption, and will be estopped to dispute its liability thereon. (Pixley v. R. R. Co., 33 Cal. 183, 91 Am. Dec. 623.)

Where a corporation to whom had been assigned certain patents in consideration of an interest in the profits realized therefrom disposed of all its property, and authorized the delivery of the proceeds of the sale to its stockholders, in violation of statute, the corporation in an action for accounting is estopped to say that it is receiving for which it should account. (Schaake v. Eagle Automatic Can Co., 135 Cal. 472, 63 Pac. 1025, 67 Pac. 759.)

A corporation is estopped to deny the validity of an unauthorized mortgage where the mortgagee took the mortgage in part payment for land believing it to be valid, and the corporation retained the possession of the land and sold part of it, and recognized its indebtedness therefor, which was acquiesced in by its stockholders and directors until the mortgage was foreclosed five years after its purchase. (Blood v. La Serena Land etc. Co., 134 Cal. 361, 66 Pac. 317.)

Where the agent employed to sell land for a person, subscribed to the stock of the corporation and became its secretary, the estoppel of the corporation to deny the validity of a mortgage given in part payment for the land purchased is not affected by such subscription of the agent. (Blood v. La Serena etc. Co., 134 Cal. 361, 66 Pac. 317.)

Estoppel in pais may be shown without pleading, by way of equitable rebuttal to defendant's proof of want of authority to execute a note and mortgage sued upon, after plaintiff has established a prima facie case; and it is only when plaintiff must rely upon an estoppel in pais in order to maintain his action that it must be pleaded. (Blood v. Water Co., 113 Cal. 221, 41 Pac. 1017, 45 Pac. 252. Cited in Pacific Bank v. Stone, 121 Cal. 206, 53 Pac. 634.) Where a contract with a corporation is not only ultma vires, but also void as against public policy, the court will not give relief to either party, and the fact that the contract is performed on one part does not estop the other party to plead the invalidity of the contract. (Visalia etc. Co. v. Sims, 104 Cal. 326, 43 Am. St. Rep. 105, 111, 37 Pac. 1042.)

The party enjoying the benefit of a contract with a corporation cannot question its validity when sued upon as being beyond the capacity or power of the corporation to make. (Argenti v. S. F., 16 Cal. 255; Pixley v. Western Pacific etc. Co., 33 Cal. 191, 91 Am.