BISSELL V. THE MICHIGAN SOUTHERN N. IND. RD.

COMPANIES
COMSTOCK, Ch. J.
FACTS: The two corporations-defendants were jointly engaged in the business of
carrying passengers and freight between Chicago and Lake Erie, through a part of the
State of Illinois, and through the States of Indiana and Michigan, by three connected
railroads which they owned or controlled, and the business of which was managed under
a consolidated arrangement which had been in force between the defendants for some
time previous to the injury complained of.
They undertook and assumed to carry the plaintiff as a passenger from Chicago, or a
point near that place, that he took his seat in their cars accordingly, and that during the
transit he was injured by an accident which happened through their carelessness and
neglect.
Defendants deny liability on the ground that one of the companies was chartered by the
legislature of Michigan, with power to build a road in that State, and the other by the
legislature of Indiana, with power to build one in that State. They both insist that they had
no right or power under their respective charters to consolidate their business in the
manner stated, and especially that they could not legally, either separately or jointly,
acquire the possession and use of a connecting road in the State of Illinois and undertake
to carry passengers or freight over the same.
They do not deny that their boards of directors and agents, duly authorized to wield all
the powers which the corporations themselves possessed, entered into the arrangements
which have been mentioned, nor that, in the execution of those arrangements, they made
the contract with the plaintiff to carry him as a passenger; nor do they deny that they
received the benefit of that contract in the customary fare which he paid. Their defense is,
simply and purely, that they transcended their own powers and violated their own organic
laws. On this ground they insist that their business was not, in judgment of law,
consolidated; that they did not use and operate a road in Illinois; that they did not
undertake to carry the plaintiff over it; and did not, by their negligence, cause the injury
of which he complains; but that all these acts and proceedings were, in legal
contemplation, the acts and proceedings of the natural persons who were actually
engaged in promoting the same.
ISSUE: WON respondents may interpose the violation of their own charters to shield
them from responsibility?
HELD: NO. Such a defense is shocking to the moral sense.

This doctrine of theoretical perfection in corporations would convert them practically

into most mischievous monsters.
Doctrine of theoretical perfection - Every violation of their charter or
assumption of unauthorized power on the part of their officers, although with the
full approbation of their directors, is to be considered the act of the officers, and
is not to prejudice the corporation itself. There would be no possibility of ever
convicting a corporation of exceeding its powers.
Corporations are said to be clothed with certain powers enumerated in their charters or
incidental to those which are enumerated, and it is also said they cannot exceed those
powers.
When we speak of the powers of a corporation, the term only expresses the privileges and
franchises which are bestowed in the charter; and when we say it cannot exercise other
powers, the just meaning of the language is, that as the attempt to do so is without
authority of law, the performance of unauthorized acts is a usurpation which may be a
wrong to the State, or, perhaps, to the shareholders. But the usurpation is possible. In the
same sense, natural persons are under the restraints of law, but they may transgress the
law, and when they do so they are responsible for their acts. From this consequence
corporations are not wholly exempt.
The contract of the defendants to transport the plaintiffs from Chicago to Toledo was
illegal and void, they having, as we have seen, no power under their charters to enter into
the engagement for running their cars on joint account between those two places. It does
not follow, however, that they are not liable to the plaintiff in this action.
The plaintiff's claim, rests not upon his contract, but upon the right which every man has
to be protected from injury through the carelessness of others, whether artificial or natural
person.