Forbes

The defendant was incorporated as a turnpike road company under the act of May 12, 1853 (Statutes 1853, p. 169), and the action is upon a note and mortgage executed by the board of directors as security for a debt contracted in the construction of the road. The defense is that the board of directors exceeded its authority in executing those instruments, which, it is claimed, were void ab initio. At the trial, the court excluded the note and mortgage when offered in evidence by the plaintiff, and this ruling is assigned as error.

Section 19 of the statute under which the defendant was incorporated, provides that the corporate powers are to be exercised by the board of directors, “with such limitations and restrictions, and to the extent only that may be prescribed in the by-laws of the company. It is expressly understood that the directors and officers have no powers, except such as are given by the stockholders in their resolutions and by-laws.” The same section further provides “that said board of directors shall not be empowered, in any manner, to mortgage, or otherwise to hypothecate the property of the company, until twenty-five per cent, of the capital stock has been paid in…