Wales Ry. v. Redmond, 10 Com. B., N. S., 675, already cited. For example, if the legislature had the power to grant and had granted a special charter to the city company, and it had appeared that a street railway was necessary to the success of the corporation, and that this fact was known, it may be that the power to construct, or at least to aid the construction of, the street railway would have been implied. But this corporation having been created under a general law, we do not see that it can claim the right, by reason of its peculiar surroundings, to exercise a power which another like corporation could not exercise by reason of different circumstances. Our constitution provides that corporations shall be created only by general laws; and it would seem that one purpose of the provision was to prevent the legislature from granting to one corporation special powers or special privileges. At all events, the general law, as we think, should be construed as a general rule conferring upon each member of each particular class of corporations precisely the same powers.

Cities and towns have grown up without the aid of street railways. The origin of the latter is comparatively very recent. The law does not recognize them as a usual means of carrying out the purpose of a corporation organized to purchase and subdivide lands and to sell them in lots. They are provided for in the general law as a distinct purpose for which corporations may be created. The two enterprises may be of mutual assistance; and if the same persons desire to form two distinct corporations for the prosecution at the same time of two undertakings, with a view to the mutual benefit which may result from the concurrent operation of the two, no reason is seen why they should not do so. But each should confine itself to its proper business, and should not divert its capital or extend its credit to the assistance of the other.

In the case of Fort Worth City Co. v. Smith Bridge Co., 151 U. S. 294, the supreme court of the United States held that the contract of the city company to contribute to the construction of a bridge across a river which separated its lands from the city of Fort Worth was not ultra vires. The court say: "The object of the creation of the corporation was the acquisition and sale of lands on subdivision, and it cannot be successfully denied that the object would be directly promoted by the use of legitimate business methods to render the lands accessible. This involved the expenditure of money or the assumption of liability; but there is no element in this case of any unreasonable excess in that regard, or the pursuit of any abnormal and extraordinary

method." The same can hardly be any abnormal and extraordinary method." The same can hardly be said of the transaction developed in the present case. The argument of the court draws a line between such ordinary means as are generally 573 necessary to carry out the purposes of the corporation, and such as are abnormal and extraordinary. We think the powers attempted to be exercised by the two corporations in this case, and now in question, fall within the latter class.

Section 6 of article 12 of our constitution provides that "no corporation shall issue stock or bonds except for money paid, labor done, or property actually received, and all fictitious increase of stock or indebtedness shall be void." The decisions of the courts upon like provisions in the constitutions of other states have been such as in most cases to practically destroy its effect. It may be that it was not intended to prohibit corporations from selling their bonds below par-provided the transaction be made in good faith.

In Memphis etc. R. R. Co. v. Dow, 120 U. S. 287, the court, in speaking of a similar provision in the constitution of Arkansas, say: "It is not clear, from the words used, that the framers of that instrument intended to restrict private corporations-at least when acting with the approval of their stockholders, in the exchange of their stock or bonds for money, property, or labor, upon such terms as they deem proper; provided always, that the transaction be a real one, based upon a present consideration, and having reference to legitimate corporate purposes, and is not a mere device to evade the law and accomplish that which is forbidden."

While it may be that the purpose of the section was not to require that the corporation should receive a dollar in money or in value for every dollar of indebtedness created, we should be very reluctant to hold that it is not essential to the validity of the bonds, as to any excess, that the amount received should bear some reasonable and just approximation to the amount of the indebtedness. If it be said that there may be corporations whose business may demand that they should have power to sell their bonds greatly below par, the answer is, that it was most probably not the purpose of the framers of the constitution to foster corporate enterprise upon insufficient capital and credit. But that question is not before us. In this case, for example, the street railway company did not sell its bonds for thirty cents on the dollar; nor did the city company sell for seventy cents. They executed joint obligations and sold them at ninety-five cents, and divided the proceeds. Neither sold its bonds on their merits,

taking what they would bring upon the market. We think they are binding obligations against each of the corporations. The liability of each is in proportion to the amount received by it. For the excess, they received nothing, either in money, labor, or property.

Although the bonds, as we think, are not binding upon either company for so much of their amount as was properly chargeable in the first instance upon the other, it does not follow that they are void as a whole. There is no fraud in the transaction. A fair equivalent was given for the obligations. They were executed under the mistaken idea that, by reason of the benefits which would accrue to each corporation 574 from the concurrent prosecution of the two enterprises, each had the power to extend its credit in aid of the other. The companies bind themselves jointly and severally, and no reason is seen why each should not be held liable for so much of the indebtedness as it could legally have bound itself to pay: Thomas v. Brownville etc. R. R. Co., 109 U. S. 522.

The determination of the questions already discussed leaves but little to say in reference to the claims of the ThompsonHouston Electric Light Company and of the Brownell Car Company. The claims of the former consist of certain promissory notes given by the street railway company for certain electric machinery sold it by the electric light company, and indorsed by the city company; those of the latter are certain joint and several notes executed by the street railway company and the city company for certain street-cars furnished the street railway company. It follows, from what has been said, that in our opinion those claims are valid debts against the street-car company, but not against the city company.

The judgment will be reversed and the cause remanded. Upon another trial, the plaintiff below should have judgment against each of the companies for such proportion of the indebtedness evidenced by the bonds held by him as the amount actually received by such company bears to the amount paid for the bonds, with a foreclosure of the mortgage upon the property of such company. The liability on the bonds held by the intervenors should be apportioned in the same manner. The Thompson-Houston Electric Light Company and the Brownell Car Company should each have judgment, with foreclosure on their respective claims against the street railway company, but not against the city company.

The judgment is reversed and the cause remanded.

Motion for rehearing submitted, and subsequently by consent granted. By consent the writ of error was dismissed.

1

CORPORATIONS-POWERS-EXPRESS AND IMPLIED.-Corporations possess such powers, and such only, as the law of their creation confers upon them: Franklin Co. v. Lewiston Inst., 68 Me. 43; 28 Am. Rep. 9. The powers of a corporation are two-fold: 1. Those expressly granted; 2. Those incident and necessarily appertaining to it, whether expressed or not: Leggett v. New Jersey Mfg. etc. Co., 1 N. J. Eq. 541; 23 Am. Dec. 728. The essential powers of a corporation may be inferred as well as expressed: Cleveland etc. R. R. Co. v. Speer, 56 Pa. St. 325; 94 Am. Dec. 84. A corporation, unless prohibited by its charter or by statute, has power to make all contracts requisite for the purposes for which it was created: Deringer v. Deringer, 5 Houst. 416; 1 Am. St. Rep. 150. A corporation has a right to conduct its legitimate business by all means necessary to effect its object, and, within its prescribed range, can do whatever a natural person could do: Killingsworth v. Portland Trust Co., 18 Or. 351; 17 Am. St. Rep. 737. It may borrow money and bind itself by any form of obligation not forbidden: Wright v. Hughes, 119 Ind. 324; 12 Am. St. Rep. 412. But, as a corporation has only such powers as are expressly granted, or are necessary to carry into effect the powers thus granted: People v. River Raisin etc. R. R. Co., 12 Mich. 389; 86 Am. Dec. 64; Blair v. Perpetual Ins. Co., 10 Mo. 559; 47 Am. Dec. 129; New York Firemen Ins. Co. v. Ely, 5 Conn. 560: 13 Am. Dec. 100; New Orleans etc. Co. v. Ocean Dry Dock Co., 28 La. Ann. 173; 26 Am. Rep. 90; Caldwell v. Alton, 33 Ill. 416; 85 Am. Dec. 282; it can make only such contracts as are connected with the purpose for which it was created, and which are necessary, either directly or incidentally, to answer that end: Note to Abby v. Billups, 72 Am. Dec. 148; Rock River Bank v. Sherwood, 10 Wis. 230; 78 Am. Dec. 669; People v. River Raisin etc. R. R. Co., 12 Mich. 389; 86 Am. Dec. 64. It cannot contract in reference to objects differing essentially from those specified in its charter: Pennsylvania etc. Nav. Co. v. Dandridge, 8 Gill & J. 248; 29 Am. Dec. 543. If a corporation is confined to one kind of business, it cannot lawfully engage in enterprises foreign to that business. Thus, a banking business is entirely foreign to the charter of a corporation formed for the purpose of building and maintaining a railroad: People v. River Raisin etc. R. R. Co., 12 Mich. 389; 86 Am. Dec. 64. So, as the owning and navigating of steamships is a distinct business from the docking and repairing of such vessels, a corporation formed solely for the latter business cannot lawfully engage in the former: New Orleans etc. Co. v. Ocean Dry Dock Co., 28 La. Ann. 173; 26 Am. Rep. 90. And a company incorporated to engage "in whale fishing and in the manufacture of oil and spermaceti candles" has no power to purchase or deal in state bonds, though there are circumstances under which it cannot avoid its obligation given for such bonds: State v. Woram, 6 Hill, 33; 40 Am. Dec. 378. An incidental power of a corporation is one that is directly and immediately appropriate to the execution of the specific power granted, and not one that has a slight or remote relation to it: People v. Chicago Gas Trust Co., 130 Ill. 268: 17 Am. St. Rep. 319. Contracts of corporations are ultra vires when they involve adventures or undertakings outside of the scope of the powers given by their charters: Note to Kadish v. Garden City etc. Assn., 42 Am. St. Rep. 262.

ORIENTAL HOTEL COMPANY V. GRIFFITHS.

[88 TEXAS, 574.]

MECHANIC'S LIEN-CONSTRUCTION OF STATUTE.-Under a statute providing that "all liens for work and labor done or things furnished, as specified in this act, shall be upon an equal footing, without reference to the date of filing the account or lien; and in all cases where a sale shall be ordered and the property sold, which may be described in any account or lien, the proceeds arising from such sale, if not sufficient to discharge all the liens against the same, without reference to the date of filing the account or lien, shall be paid pro rata on the respective liens," each lienholder is entitled, under foreclosure proceedings and a sale thereunder, to share pro rata in the proceeds of the sale, if there is not enough to satisfy the several claims.

MECHANIC'S LIEN-DISPLACEMENT OF, BY CONTRACT LIEN.-An express statement in a deed of trust, given to secure the payment of certain mortgage bonds issued and sold by a hotel company, that it is to constitute a first and paramount lien on the property covered, does not affect mechanic's lienholders who were not parties to the agreement, where the deed discloses that the money obtained from the sale of such bonds was for the purpose of completing buildings to be erected upon the mortgaged property, and where work on such buildings had commenced before the execution of the deed of trust. A mechanic's lien given by statute cannot be displaced by the assertion of a lien created by contract.

MECHANIC'S LIEN-CONTRACTS-NOTICE-INTERVENING MORTGAGE.-Persons contract with reference to, and in view of, the laws in force, and are chargeable with notice of rights that may arise under such laws. Hence, an intervening mortgage, though in form a deed of trust, will not be allowed to destroy the statutory right to a mechanic's lien that may be acquired after the execution of the mortgage and during the completion of the building, which is covered by the mortgage, and upon which work had commenced prior to the execution of the instrument.

MECHANIC'S LIEN-PRIORITY OF, OVER MORTGAGE.— A lien or mortgage existing at "the inception" of a mechanic's lien is protected, but a contract lien created after "the inception” of the mechanic's lien is subordinate thereto.

MECHANIC'S LIEN-EQUALITY OF RIGHT—INTERVENING MORTGAGE.—If, after work has commenced on a building, and after mechanics' liens have attached, a mortgage is executed thereon, those who perform labor or furnish materials subsequent to the execution of the mortgage are also entitled to a lien under statutes placing every holder of a mechanic's lien upon an equal footing, and extending the lien in favor of each from the beginning to the completion of the work.

DEFINITIONS.-THE WORD "INCEPTION" means "Initial stage." It does not refer to a state of actual existence, but to a condition of things or circumstances from which the thing may develop, as where a building has been projected and its construction commenced.

STATUTES-CONSTRUCTION OF, WHEN AMBIGUOUS.If a statute is ambiguous in its terms or susceptible of two constructions, the evil results and hardships which may follow one construction may be properly considered by the court, and it is right that the court shall place upon the statute that interpretation of which it is fairly susceptible, which will attain the just solution of the questions involved and protect the rights of all the parties.