Argument for Defendant in Error.

by the express language of the act of incorporation; so that the defendant's contention practically is that its own articles of incorporation are illegal and void. The same considerations apply to the objection that the lease was ultra vires as to the plaintiff. Both companies are incorporated under general laws, by articles of essentially the same character, purporting to contain in each case the powers which are here challenged. The law of Oregon authorizes corporations for any lawful business, enterprise, pursuit or occupation. This corporation. is created under that law for the lawful business of leasing and operating a railroad in that State. The whole case of the defendant rests on a misapprehension of the rule laid down by this court in Railroad Co. v. Thomas, 101 U. S. 71. There the company was created under a special act of the legislature, which gave it power to construct and operate, but not to lease; and the court held that a lease of the company was ultra vires. "The powers of corporations," says Mr. Justice Miller, "organized under legislative statutes are such, and such only, as those statutes confer. The charter of a corporation is the measure of its powers, and the enumeration of these powers implies the exclusion of all others." Had the defendant's articles been silent as to leasing, this case might have been cited as an authority against the validity of the lease, but with the articles as they are, it is an authority for the lease; and so, indeed, is every other case in the United States and England in which the contract of a corporation has been declared ultra vires.

The decision in Railroad Co. v. Thomas is avowedly based on the case of Ashbury Railway Carriage Co. v. Riche, L. R. 7 H. L. 653; and Mr. Justice Miller adopts the language used in that case. That case followed a long line of English cases in which companies organized under special acts were held incompetent to make contracts not falling within their purposes as defined by such acts. But that case has great value in the present controversy, inasmuch as, unlike its predecessors, but like this case, it concerns the power of a company incorporated, not by special act, but by articles of incorporation under a general act. The decision in that case assumes

Argument for Defendant in Error.

that the memorandum of association is the equivalent of a legislative charter. It was so held by Lord Selborne and by Lord Cairns, and their declarations are repeated and commented on in Railroad Co. v. Thomas. See also Pennsylvania Railroad v. St. Louis, Alton &c. Railroad, 118 U. S. 290.

These decisions, the only ones relied on, show that the disputed power is contained in the charter. The defendant is then driven to attack the charter. In the vague proposition that a lease of a railroad is contrary to public policy lies its whole case, inasmuch as by the general law of Oregon, anything may be leased, including a railroad.

That a lease of a railroad without power to that intent conferred upon the company making the lease is against public policy, may be admitted on the ground that it involves an abandonment of franchise and duty. But what has to be established here is, not that a lease without authority of the State is bad, but that a lease is in itself an unlawful purpose, business, or enterprise; because, if it is a lawful purpose, business or enterprise, then the State has conferred the power on both companies.

At common law corporations could be created by the king for any purpose, and with any powers not contrary to general law, including that of leasing or taking in lease. See Sutton's Hospital Case, 10 Rep. 1, 30 b. Under the Oregon corporation laws, a corporation has powers analogous to those of a corporation at common law, created by the king. In the analogous system of England under the Companies' Act, it has been held that the power of leasing is implied, although not specified in the memorandum of association. Featherston v. Lee Moor Porcelain Co., L. R. 1 Eq. 318.

In the laws of Oregon there is no public policy hostile to leasing. The constitution prohibits incorporation except under general laws. The general law, like the law of Great Britain, provides one code for all kinds of corporations. It defines the powers of such corporations including the power to "dispose of" their property. This power of disposition is again mentioned in the section which provides for the dissolution of corporations. As Judge Deady in the court below observes,

Argument for Defendant in Error.

the power to "dispose" implies a corresponding power in corporations to take. Again, we submit, although it is not necessary for our case that these provisions may reasonably be construed as meaning that the power to acquire or assign, by lease or otherwise, is incident to all corporations, whether leasing be assumed as an object in the articles of incorporation or not. See Miners' Ditch Co. v. Zellerbach, 37 California, 543; S. C. 99 Am. Dec. 300.

In its original form § 20 of the corporation laws of Oregon prohibited the leasing of railroads to a certain class of corporations, and thereby, by implication, permitted it to all others. In its amended form this prohibition was withdrawn, and leasing became thereby open to all.

Finally the act of 1880 granting certain rights and interests to the Oregonian Railway Company and its assigns, is inconsistent with a policy hostile to leasing. Not only is the grant made to the company and its assigns, but the company's right to assign the whole property is recognized, and it is enacted that certain of the rights granted by the act shall be assignable only with the whole railroad property of the grantee. This statute is cited here only as part of the proof which negatives the theory of a public policy hostile to leasing. Its importance in other respects is noticed elsewhere. See on these points, Oregon Cascade Co. v. Baily, 3 Oregon, 164; Fink v. Canyon Road Co., 5 Oregon, 301; Branson v. Oregon Railway Co., 10 Oregon, 278.

The defendant company is not entitled to challenge the legality of its own articles of incorporation, or to repudiate as unlawful a purpose which it was formed to carry out. See Ewing v. Robeson, 15 Indiana, 26; Dooley v. Cheshire Glass Co., 15 Gray, 494; Darge v. Horicon Co., 22 Wisconsin, 417; Racine &c. Railroad Co. v. Farmers' Loan and Trust Co., 49 Illinois, 331; S. C. 95 Am. Dec. 595.

II. The defendant is estopped from denying our corporate existence and powers.

The defendant's answer admits the contract as pleaded, i.e., the admission that it was signed by the defendant's president and secretary, sealed with the corporate seal, and

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Argument for Defendant in Error.

authorized by the board of directors, is an admission of the contract as pleaded. The allegation that the rent provided for was paid for three years is in itself an admission of the lease and of the existence between plaintiff and defendant of the relations of landlord and tenant. The contract as pleaded is a contract between the Oregonian Railway Company Limited and the defendant. The lease as pleaded is a lease by the Oregonian Railway Company Limited.

The rule applicable to this state of facts is laid down in Field on Corporations (Wood's edition) in the following terms: When the action is brought by the corporation on a contract executed by the defendant to it, the general rule is that the plaintiff need not offer to prove its corporate existence, and the defendant is estopped from denying it in the absence of fraud on the part of the corporation; and when a party is estopped from denying the existence of a corporation at the time he recognized it as such, if he denies its existence subsequently he must show how it ceased to exist." See also Hubbard v. Chappel, 14 Indiana, 601; Jones v. Cincinnati Type Foundry, 14 Indiana, 89; Dutchess Cotton Manufactur ing Co. v. Davis, 14 Johns. 238; S. C. 7 Am. Dec. 459; Cowell v. Springs Co., 100 U. S. 55; Commissioners v. Shield, 62 Missouri, 247; Evansville Railroad v. Evansville, 15 Indiana, 395; Heaston v. Cincinnati and Fort Wayne Railroad, 16 Indiana, 275; S. C. 79 Am. Dec. 430; Brownlee v. Ohio and Indiana Railroad, 18 Indiana, 68; Douglas County v. Bolles, 94 U. S. 104; Methodist Church v. Pickett, 19 N. Y. 482; Swartwout v. Michigan Railroad, 24 Michigan, 389; Kennedy v. Cotton, 28 Barb. 59; Phoenix Bank v. Donnell, 41 Barb. 572; Jones v. Bank of Tennessee, 8 B. Mon. 122; S. C. 46 Am. Dec. 540; Helena v. Turner, 36 Arkansas, 577; Mutual Ins. Co. v. Wilcox, 8 Bissell, 203; Franz v. Teutonia, 24 Maryland, 251; Cahill v. Kalamazoo Ins. Co., 2 Doug. (Mich.) 124; S. C. 43 Am. Dec. 457.

It was suggested by the defendant in the court below that the estoppel is limited to alleged defects of organization. No such limitation is inferred or implied in any of the cases, but the true rule is that, while a party is not estopped to show

Opinion of the Court.

that the corporation could have no legal existence, yet if the court knows, judicially or otherwise, (as by admission in the pleadings,) that there is a law under which it might exist, then the fact of contracting with the corporation estops the party from denying its corporate capacity.

It happens that the law under which the plaintiff claims to exist is fully before the court. Defendant expressly admits the British Companies' Act, 1862, as pleaded. The court itself knows the Oregon law, 1878, (p. 95,) under which it may lawfully engage in railroad business in Oregon, and the further act of 1880, (p. 56,) which expressly recognizes the plaintiff as a corporation lawfully engaged in such business, and grants to it and its assigns certain rights and privileges therein. The British law of its creation, whereby a company may be created for any lawful purpose; the Oregon law under which it may act in Oregon; the Oregon law, recognizing its lawful existence under its corporate name, and granting it facilities for its corporate business; the contract in its corporate name with the defendant; all these conditions show a de facto corporation, using corporate rights under a law which permits its existence, and raise an estoppel against persons dealing with it which is absolute.

Against this full recognition by the legislature no plea questioning the plaintiff's corporate existence or power can be of any avail. Such recognition was long ago held by this court to be conclusive as to the corporate character, and to give the power in question, even if not possessed before. Society for the Propagation of the Gospel v. Pawlet, 4 Pet. 480. See also Jameson v. People, 16 Illinois, 257; S. C. 63 Am. Dec. 304 ; Kanawha Coal Co. v. Kanawha and Ohio Coal Co., 7 Blatchford, 391.

MR. JUSTICE MILLER delivered the opinion of the court.

The two questions presented on this demurrer, and the only ones necessary to be considered, are:

First. Whether the plaintiff, the Oregonian Railway Company, Limited, organized under the laws of Great Britain,