Page:Harvard Law Review Volume 9.djvu/291

EXERCISE OF CORPORATE POWER, 263 Pullman's Palace Car Co.^ Unfortunately, however, the symmetry of the development was marred by other language in the opinion, which seems to recognize a right to recover on what is called an '* implied contract " in cases where it is admitted that recovery on the express contract will not be allowed, and where it seems demonstrable that, consistently with settled principles, there can be no recovery in quasi contract.^ This would be an anomaly. Except in these particulars, however, Judge Thompson's " modern doctrine" has been the doctrine of the Supreme Court of the United States from the beginning. If we turn to the second of the two possible views of public policy in respect of corporate contracts, we must expect to find an entirely different development. When a court makes up its mind to enforce, as between the parties, a contract which is wholly foreign to the business of the corporation, and perhaps specifically prohibited by statute, it must be prepared to deal, sooner or later, with two legal problems. In the first place, there is the difficulty which results from the theory of special capacities. Under this theory, which is strongly asserted in a multitude of American cases,^ a corporation has no powers except such as are conferred by the grant contained in the charter. Under the doctrine of gen- eral capacities, the effect of incorporation is to create a legal person with the powers of every other legal person with respect to con- tracts, subject to such prohibitions upon the exercise of certain powers as the charter may impose. Under the former theory a corporation has power to make certain contracts only, and, by sup- position, the suggested contract is not one of them. Without power there can be no contract. If there is no contract, there is nothing to enforce. It is the case of the contract of a married woman. This difficulty can, in the judgment of the writer, be overcome in one way only, — by discarding the doctrine of special capacities and by adopting the doctrine of general capacities. A corporation would then stand upon the footing of a natural person, with power to make every kind of contract, subject to such pen- alties as the sovereign might impose for violating prohibitions 1 Supra. ' See 2 Am. Law Reg. & Rev. (n. s.) 296, for a discussion of this point by the present writer. ^ For example, in Thomas v. R. R. Co., loi U. S. 71 ; refusing to assent to the argument of counsel for plaintiff, who made a strong plea for the recognition of the doctrine of general capacities.