266 HARVARD LAW REVIEW. in such a case is denied. We should then have a law practically without a sanction in the matter of restraint upon the making of corporate contracts. This state of affairs is to some extent recog- nized ; but it does not seem to be perceived that a significant alternative is presented to the judges in consequence of it. Shall the courts continue to maintain some theory of limited corporate power,*or shall they take the absence of real public interest in so vast a number of cases as an indication that the so called "law of ultra vires has survived whatever usefulness it may have pos- sessed } Apparently unconscious of the existence of this problem, the courts have undertaken the task contemplated by the former alternative, and have set themselves to discourage unauthorized and prohibited contracts by enforcing them between the parties only in favor of one who has performed his part. Readiness to perform is not enough : the contract must be executed in part before the judge will give it recognition. Here is a fruitful source of litiga- tion. What constitutes execution within the meaning of the rule } Is execution synonymous with that '* passage of money or prop- erty " which would give rise to a cause of action in quasi contract, even under the former of our two conceptions of public policy t These and many other similar questions confront the courts in their attempt to signify a qualified disapproval of unauthorized or prohibited contracts. What of the second alternative } Is there any reason, on prin- ciple, why the courts which believe in treating the prohibition as a condition should not carry out the theory to the end, and enforce all corporate contracts pricisely like other contracts, and subject only to the limitations which the general law of contracts recog- nizes 1 It seems to the writer that, if the doctrine of general capa- cities were once adopted, a strict adherence to our second line of policy would lead legitimately to that result. Some of the consid- erations in favor of the doctrine of general capacities have already been advanced. It remains to determine whether harm would result from the removal of all restraint from the corporate power to contract, — whether, in other words, society would be the loser through the death of the whole law of corporate power and ultra vires. It is interesting to note that Judge Thompson is to be found upon the negative side of this question. " My own view," he says,^
- is that the doctrine of ultra vires has no proper place in the law
1 pages 397, 398.
