Seeley v. Huntington Canal & Agricultural Ass'n

BARTCH, J. (after stating the facts). The decisive question here presented is whether the corporation had the power to levy an assessment for the purpose of constructing a reservoir. To ascertain what its power in the premises was, we must look into its articles of incorporation; the same having been entered into in the year 1889. Article 3, so far as material to this decision, reads: “The object and pursuit of business is to construct, manage, and control the number of canals and ditches, hereinafter described, taken from Huntington creek, and more particularly described, as follows [here are given the number and description of each canal and ditch], for the purpose of diverting the waters of said creek from its present channel and causing it to flow through said canals or ditches, thereby making practicable the irrigation and cultivation of large tracts of land heretofore unavailable for agricultural purposes except that which has been made so by the water that has run through the said, canals and ditches. And to this end the association may construct and maintain all necessary dams, head gates, flumes, and other or different means which may be necessary to control, regulate and distribute the said waters for the purposes herein mentioned. ’ ’ In this article the canals and ditches which constitute the subject-matter of the incorporation are specially enumerated. As will be noticed, the object of the [182] incorporation was to divert the water of á particular stream by means of certain canals and ditches already at the time of the incorporation, constructed, and not to impound or store water by means of reservoirs or otherwise. Clearly, the design of the incorporators was to divert, not .to store, water; and, for the “purpose of diverting” the water, they made provision in the articles to “construct and maintain all necessary dams, head gates, flumes,” and other means requisite for its proper distribution among those entitled thereto. It is manifest from a perusal of the articles that the power to construct reservoirs for the purpose of storing or impounding water was not within the intention of the incorporators, and not an object of the incorporation, and therefore such power cannot be exercised by the board of directors. Nor, under these articles, can the stockholders confer such power upon the board. It is well-settled law that a corporation can not legitimately transact business’not embraced within the purposes and scope of its incorporation. It follows that the board of directors, having had no power to build reservoirs for the purpose of storing water, had no authority to levy an assessment upon the capital stock for that purpose. Under the circumstances and the law applicable to this case, the assessment was unauthorized, and therefore null and void. "We are clearly of the opinion that the court erred in entering judgment in favor of the defendant. Such being the ease, it is not deemed necessary to discuss any other question presented. The judgment must be reversed, with costs, and the cause remanded, with directions to the court below to reinstate the complaint, and proceed with the trial in accordance herewith. BASKIN, C. J., and McCARTY, J., concur.