The opinion of the Court was afterwards drawn up by

Upon the general question presented in the argument of this case, viz. the legality of an assessment for the general objects and purposes for which the plaintiffs were incorporated, the Court are unanimously of opinion that such assessment would not be valid.

We are brought to this opinion by a careful consideration of the act of incorporation, and by a just construction of the obligations incurred under the instrument by which the individual members associated and became corporators. We consider the special promise incorporated with the subscription, as making the persons and property liable, to the extent of the subscription ; that is, to pay all assessments which shall be legally made ; the object of this form of subscription being obviously to create a personal duty upon those who should subscribe, beyond the statute liability which can be enforced only against their shares. The principle has heretofore been settled in analogous cases, that a mere subscription creates no promise, and gives no security to the corporation beyond the value of the stock, but that a promise superadded gives a right of action, where there are parties in being to give and take the promise.1 And this distinction is reasonable ; for as the objects for which such incor-' porations are applied for and granted are generally experimental, and as expenses must be incurred in trying the experiment, it is right and just that those who embark in the same cause should be holden to each other for a fair apportionment of the *32expenses ; and it is not unjust, if a majority of those who aggocjate ghouid determine to complete the object, that those in whose promises they confide to bear their proportion of expense should be compelled to pay. But all such promises are in their'nature conditional, and depend upon the terms on which they are made, with reference to the capacity, duties and powers of the other party to the contract, the corporation ; who cannot extend the effect of the promise beyond the original meaning and extent of it, any more than the other party can limit it.

The power of corporations is derived only from the act, grant, charter or patent by which they are created. In this Commonwealth the source and origin of such power is the legislature, and corporations are to exercise no authority, except what is given by express terms or by necessary implication by that body. No vote or act of a corporation can enlarge its chartered authority, either as to the subjects on which it is intended to operate, or the persons or property of the corporators.1 If created with a fund limited by the act, it cannot enlarge or diminish that fund, but by license from the legislature, and if the capital stock is parcelled out into a fixed number of shares, this number cannot be changed by the corporation itself. Vide 1 Dane’s Abr. 457, c. 22, art. 1, and the numerous authorities cited by that author. The promise on which this action is brought must be construed with reference to the charter of the company, it being founded on that, and is to be governed by it.

What then are the terms and the legal effect of the contract now under consideration ? The words, after stating the object of the subscription and referring to the act of incorporation, are —

“We the subscribers severally agree to take the number of shares of the capital stock in said corporation, which are affixed to our respective names, and to pay all sue! legal assessments on each of said shares, as shall be made Vy the future government of said corporation, after the same shall have been organized according to said act ; it being under*33stood, that in case more than five thousand shares shall be subscribed for, the committee, under whose direction this subscription is opened, shall reduce them to that number, in such a mode as they shall think equitable.”

An analysis of this contract will show the true and only fair construction of it. The promise is to pay all legal assessments. Upon what ? Upon the shares subscribed for. Shares of what ? Of the capital stock of the company created by the act of incorporation. What is this capital stock ? This must be answered by the act of incorporation, upon which the whole contract is founded ; and a reference to that shows manifestly, that the whole capital stock is composed of five thousand shares, which are liable to be assessed to the extent of one hundred dollars on each share. So that, potentially, the capital stock is five hundred thousand dollars, bui the corporators have a right to limit it to any less sum, by the assessment upon the shares, according to the amount of capital wanted for the object.

But this power of limitation is a privilege attached to the shares, and we think most clearly cannot be taken away by a reduction of the number of shares, leaving to the subscriber the hazard of being liable upon his subscription and promise to an amount much beyond what the actual expense of the project might subject him to, if the original number of shares were liable to assessment. Suppose, instead of the contemplated sum of five hundred thousand dollars, in the process and execution of the project, one hundred thousand dollars should be found to be competent to the purpose. Then it would follow, that upon five thousand shares a tax of twenty dollars on each share would be sufficient; whereas, if the shares were reduced to one thousand, an assessment to the whole extent of one hundred dollars on a share would Still be necessary.

Now a person called upon to subscribe, would naturally make his own calculations of the probable cost of the undertaking. He would see that the utmost limit of taxation is one hundred dollars upon a share, and that probably not more than one half of that sum would be required. I say probably, because the very fact of proceeding in the execution of *34the project with but little more than half the number of shares taken up, shows the opinion of the corporation, that half the contemplated capital would be sufficient. We think the subscriber cannot be deprived of this probable advantage, by the vote of the corporation reducing the number of shares, and that a tax founded on such reduction would be illegal.

Such we think is the spirit of the act of incorporation, the intent and meaning of the limitation of the number of shares to constitute the capital stock. It could have been introduced for no other purpose than to show the extent of liability. The accomplishment of this project may cost five hundred thousand dollars ; there shall be therefore five thousand shares liable to the extent of one hundred dollars each. It may cost much less ; the shares may be taxed much less, but cannot be carried beyond one hundred dollars. These are the terms held out to the subscribers by the act of incorporation, and by the subscription paper itself; for the promise is, to pay what shall be legally assessed according to the act of incorporation. Besides which, it is agreed, that if there be an over-subscription, the shares shall be reduced to the number prescribed in the act; and there is no provision for the case that has happened, of not much more than one half of the number of shares being subscribed for.

There is another view of the subject which goes strongly -to show the correctness of this exposition of the contract. Suppose the sum contemplated by the legislature as at least the possible cost of the undertaking, should turn out to be all necessary for its accomplishment; so that the expenditure of one half of the sum, would, in all probability, without the means of increasing it, be the cause of the loss of every thing but the value of the materials : — would the corporation have the right, by thus reducing the number of shares, to put in jeopardy the property of the corporators ? Certainly not. Every subscriber has a right to calculate upon a fund computed to be commensurate with the object, and that each ol five thousand shares should be liable, like his own, to a tax of one hundred dollars, in order to produce that effect. A power in the corporation to reduce the shares to one thousand, without the power of taxing them beyond one hundred *35dollars, would be a power to expend one hundred thousand dollars and no more, upon a project, which, to be profitable or even usefiii, would require five times that amount. The money expended in such case, would be nearly all lost and wasted. Nor do we believe that the corporation can make such a reduction legal, by a vote to limit the assessment upon a share to a less sum than one hundred dollars ; for the same result of insufficient funds, and a consequent loss, might be produced.

If the subscription paper or contract had been in a form of words a little different, a question could hardly arise as to its construction. Suppose it had been, — Whereas it is proposed to raise a sum, not exceeding five hundred thousand dollars, for the purpose of erecting dams, &c. in the town of Salem, and the capital stock is divided into five thousand shares, now we, the subscribers, agree to take the number of shares set against our names and pay such sums as shall be assessed upon our shares. What does this import, but that the subscriber to a share agrees to take and pay for one five thousandth part of the capital stock to be raised Could he, in that case, by virtue of such contract, be held to pay a thousandth part ? Certainly not. Now the subscription paper in this case is precisely of the same character, and of the same legal import and effect. That subscription and promise refer to the act of incorporation. That act requires that the capital stock shall be divided into five thousand shares ; and the paper itself recognises that number as expressive of the amomit of stock.

It has been urged however in argument, that an examination of other parts of the act of incorporation will show that it was the intention of the legislature, that the company, when organized, might proceed to execute the full purposes of their incorporation by assessments upon any number of shares over one thousand.

We construe the 7th section of the statute very differently, and think it shows most manifestly, that the legislature had in view an organization for special and limited purposes, previously to the completion of the stock by a full subscription. What is this provision of the 7th section ? Any two *36of the persons named in the act of incorporation are authorjze(j ^y jt t0 cap a meeting immediately after the passing of the act, at which meeting a clerk or secretary may be chosen, ■ who shall be duly sworn to record the doings of the meeting ; and any acts may be done for the purpose of organizing the said corporation and arranging its affairs : Provided no meet‘ng shall be called as aforesaid, before one thousand shares shall be subscribed for.

It is clear that it was not intended by this section to grant a power not contained in the other sections of the act, except so far as to authorize the calling of the first meeting for the necessary purpose mentioned in the section. It was to be a meeting of organization and preparation. Not even the officers, except the clerk or secretary, were to be chosen ; but they were to arrange their affairs, that is, take all the preliminary steps necessary to the advancement of the undertalcing, — provide by-laws, agree upon the number of votes, and prescribe the powers, duties and number of the general officers and agents necessary to be employed, together with the time and manner of choosing and appointing them. Clearly this was intended by the legislature, to grant the power of acting only to a limited extent, for the mere purpose of taking such precautionary and preliminary steps as would be absolutely necessary to the success of the undertaking, and even to the procurement of a full subscription. At this meeting “ any act or acts may be done for the purpose of organizing the said corporation, and arranging its affairs; at which meeting every person shall be entitled to one vote for each share owned by himd’ Why limit the powers of this meeting to these specified objects, if, as contended, the corporation had full power of raising the whole capital upon any number of shares not below one thousand ? And this too, under the' phrase arranging its affairs, which obviously means something short of carrying into execution the project in full, and assessing those who may have subscribed, to the extent of the liability of the shares. The corporation, under this section, had the same power of taxing upon one thousand and one shares, as they would have upon twenty-six hundred ; and can it be supposed, that un*37der the general terms of this act, and under the subscription, they can have the right to reduce the taxable capital down to one fifth of that on which the subscription was founded ? Upon what principle can a tax on two thousand and six hundred shares be sustained, that would not equally justify one upon any less number not below one thousand ? But it is said they became a corporate body by the acceptance of the act, and being such they enjoy all the powers vested in the body, and, of course, the power of proceeding in the objects of the incorporation, and then of necessity follows the power to assess all necessary taxes. But all this is petitio prindpii. The whole question is, whether they were a body politic and corporate with full powers, before the capital stock was created, and whether the legislature was not careful to give only limited powers until that event should happen. For no other reason is it possible to conceive why the specification of power under the 7th section should have been enacted. And it certainly cannot be within the authority of a company, by a vote, to assume a power beyond the provisions of their .charter.

This question goes deep into the interests oí those who embark in projects of improvement with the right to calculate upon a certain capital, and on their own liability to contribute towards raising it. If with the expectation of five hundred associates, or shares in that proportion, those who represent two hundred can assemble, and agree to carry on the whole work, by a major vote of that number, and assess themselves and the rest, and these doings are binding on the minority, the effect will be to discourage such enterprises, and subscriptions to objects which from their nature must be of doubtful success, will cease. A man may be willing, from public motives alone, to take Ins chance upon a limited proportion of five thousand shares of a capital stock, and altogether unwilling to adventure upon half that number ; and if he secure himself by the terms of his subscription, he cannot be bound beyond it by a major vote of those who may choose to persist in the adventure under discouraging circumstances.

But it has been argued, that, by the 6th section of the act of incorporation, the power of making assessments upon less *38than the whole number of shares contemplated as the amount the capital, is given by express provision or. necessary implication. We think a contrary inference more natural and just.

This section provides, that the corporation, or its officers duly authorized by its by-laws, may from time to time make assessments upon the shares subscribed for. If this had been all, the argument would have been plausible, but only plausible ; for the whole statute would be taken together, in the construction, and then by the shares subscribed for, would be found to be intended the five thousand shares which were to constitute the capital stock. But the assessments are to be made upon the shares subscribed for, until the whole amount of the said capital stock shall be paid in. Now the capital stock here contemplated was five hundred thousand dollars, because the power was given to assess to the whole extent of one hundred dollars a share on all the shares. The object of this section, to wit, an assessment upon the shares subscribed for until the capital stock should be paid in, could never be attained by assessments upon less than the whole number of shares ; and therefore the legislature did not intend by this phraseology to defeat this general object before ex plicitly stated. There is nothing then in the statute, which has a tendency to vary the obvious and necessary construction of the 4th section, which requires that the capital stock shall be divided into five thousand shares. This is to govern and limit the contract upon which the suit is brought, for the contract is referred to and founded upon this provision. And to extend it further would be to substitute a contract of our own making, for that on which the parties agreed.

And we perceive not the hardships which have been said to be likely to follow this decision. The act of incorporation remains in full force. If the proposed undertaking is likely to prove useful and profitable, it will be no difficult matter to procure subscribers enough, in addition to those already bound, to authorize the company to proceed. In that case. the present subscribers cannot recede, and we think them bound by their promise, as well as upon their shares, to submit to and pay all the assessments which may then be *39made within the terms of the act. It probably was never before attempted to proceed to the final execution of a public or private project compulsorily, upon one half of the contemplated shares set forth to the subscribers as representing the amount of stock. In the act establishing the Boston and Roxbury Mill Dam company, the possibility of a failure of the subscription was anticipated and guarded against, by enacting m the 9th section, that the corporation, or its officers, may make assessments on the shares subscribed for, for the purpose of effecting the objects of the corporation, and for any other necessary purpose ; provided that the whole amount of (he assessments shall not exceed one hundred dollars on each share, and in case the amount of one hundred dollars so assessed upon each share will not supply the necessary funds, the corporation may raise the funds required by selling any shares not subscribed for, or by creating and selling any number of shares over and above the number prescribed in the act. The subscribers under this act of incorporation were aware that their shares might be assessed, although the subscription might not be full, and probably considered it immaterial, as nothing but their shares would be liable ; and even if they should make special promises to pay the assessments, they would do it with a full knowledge of the consequences. Not so in the case before us, for from the tenor of the subscription paper, and the act of incorporation to which it referred, they would have no means of conjecturing, that by a vote of the corporation reducing the number of shares, they might be held personally to pay a much larger sum than otherwise would be chargeable upon their shares.

Hitherto we have considered only the general question, whether the corporation can proceed to make assessments for the general objects and purposes of the charter, upon the subscription as it now stands, or upon any number of shares less than the whole number into which the capital stock is divided by the act.1 It is a distinct question, whether the action can be maintained for the specific tax for which it is brought.

*40It is agreed in the statement of facts, that previously to the assessment of this tax, “ a large sum of money had been expended by the hoard of directors, and many contracts had been made by them.” The amount of the money disbursed, and the nature and extent of the contracts, are not specified ; but it appears by a certificate of the treasurer, which has been handed to us since the argument of the cause, that the disbursements made, together with what is due for necessary expenses, amount to 11,412 dollars and 23 cents ; and that contracts have been made for land, wharves, flats, &c. to the amount of 10,512 dollars and 50 cents : besides which there are other pending contracts, relating to timber and materials, the nature and amount of which are not stated. In regard to these contracts, we do not think they afford a basis for tire assessment, because they relate to the end and the object of the corporation; and whether authorized or not, sd as to make the corporate property liable for damages for the breach, or the directors by whom the contracts were made, or such members of the corporation as may have expressly assented to the making of the contracts, we are clear that the corporators are not personally liable upon their promise, because an assessment for this purpose is not a legal assessment within the terms of the promise and within the provisions of the act.

If the corporate powers to the extent of assessing upon the stockholders for the whole expense of the undertaking, did not exist until the whole number of shares had been taken up, which we think has been shown, it follows, necessarily, that there was no power in the corporation to authorize con tracts made for the purpose of completing the undertaking; and then it would also follow, that the act of the directors in malting such contracts was without legal authority. If it be granted that a contract justifying an assessment, could be made for the purchase of lands, wharves, &c. to the value of ten thousand dollars, it would not be possible to deny to the directors, the same power to make one or more contracts for the completion of the whole object, should it require the utmost limit of taxation upon the shares. This, V is said, will *41be hard upon those who have contracted with the directors or their agent, upon the faith and confidence that their acts would bind the corporation and the individual corporators by the terms of their subscription. But if hard, it is not new, that persons have made contracts with supposed agents, expecting the principals would be bound, and have been obliged to rely for their remedy upon the personal liability of those who assumed to be agents.1 But it will be hard upon the directors to be made personally liable on contracts which they supposed they were making for the corporation. This is true ; but the hardship cannot affect the legal principles by which the case must be governed. If property was the subject of their contracts, and the directors should be obliged to pay for it, the property will be theirs ; if damages only for the non-performance of the contracts should be recovered, it may be supposed that the terms of the bargain were so equal as to produce no great distress ; and if any of the corporators stimulated the directors to the exercise of this authority, by acts or votes, it may be that such persons will be held, in a proper action, to contribute to make up the loss. But those corporators who dissented, not being bound by the tenor of their original contract, cannot be held to contribute towards expenditures which were not warranted by the state of the corporation when they were incurred. From the precaution used in regard to the contracts actually made, of making them depend on the prosecution of the enterprise, it is not probable any difficulty will arise from this source.

But in regard to the disbursements actually made in money, or for which contracts are subsisting, in relation to expenses of a preliminary nature, necessarily incurred to obtain knowledge on the subject of the undertaking, or for the purpose of for warding the subscription, and extending the public patronage, we have come to a different conclusion ; in which we think we are equally well warranted by the act of incorporation and by the terms of subscription. We suppose all the prelimina*42ry expenses, such as for necessary surveys, legal advice m relation to titles to land which it might be necessary to acquire, employment of many persons, expense of meetings, and a variety of charges incident to the commencement of so considerable an object, are in the nature of charges either upon the original promoters of the design, or upon the corporation when organized ; upon the latter, if they expressly or by implication assume the same. And we take it for granted that these expenses have been assumed, and that they constitute the amount stated as actual disbursements by the directors, or that similar expenses have since been incurred by the corporation itself, which constitute these disbursements. On this subject however we are not sufficiently informed, as the items which compose the gross sum charged as disbursements, are not stated. If we found our opinion upon a false basis in this respect, and the parties think it worth their while to contend further, a new trial can be ordered to settle this point

Supposing then that the sums expended are for objects such as above mentioned, or similar to them, that is, for purposes preliminary to the actual execution of the project, we think a tax not too large to cover such expenditure is valid, and that the defendant is bound bpon his promise to pay it.

And we found our opinion upon a deliberate consideration of the act of incorporation, and particularly the 7th section of that act.

The legislature and the petitioners for the act, were probably aware, that the nature of the project which was wished to be authorized, was such as to require considerable expense, in order to produce that degree of information which would be necessary to insure a sufficient subscription. The scheme was new, except that it was preceded by the Boston and Roxbury Mill Dam Corporation, which, notwithstanding the most sanguine expectations, was known to have failed m regard to any profit to be derived by the owners of stock. The employment of much skill and judgment was requisite to enable them to show the practicability of the scheme, and its utility or probable profit. Provision therefore was made in the act of incorporation, for the organization of the com-*43pony upon one fifth part of the number of the shares constituting the capital stock, and power was given to the corporation so organized, to “ arrange its affairs.” We have before shown that the power given under this phraseology was necessarily a limited power. We are equally clear, that more was intended than a mere organization, for this power of arranging its affairs is superadded to the power previously given, to organize the company. Within the reasonable construction of tiiis phrase, “ arrange its affairs,” (presuming, as we are bound to presume, that something was intended,) we think was given the power to look into the circumstances and affairs of the project, the expense to be incurred to bring it into its existing state, the measures necessary to attract the public approbation and patronage, delineations, plans, surveys, philosophical examinations of the surface and contents of bays, coves, &c. to be occupied, expense of meetings, procuring subscriptions, &c. all of which might be necessary to enable the projectors to give such an exhibit of probable results as would be likely to promote the subscription.

Having this power in regard to these preliminary arrangements, and being a corporation, we think the power to assess for the purpose of defraying the consequent expense, necessarily follows ; for without any express authority, corporations may raise money by assessments for the legitimate purposes of their institution.

And power to this extent must be presumed to have been recognised by each subscriber, for he refers to the act, and is bound by a fair construction of it, whether he was aware of it at the time or not.

Had the corporation, immediately upon its organization, with one thousand shares only subscribed, voted to raise ten thousand dollars for the purpose of enabling the directors to procure all necessary information, and to take all proper measures to procure a full subscription to the projected measure, and to pay all expenses which had been incurred in obtaining the act of incorporation and otherwise in promoting the object, we cannot doubt but an assessment found*44ed on such vote would have been legal and valid, and would be justified under the power given to arrange its afiairs.” Such purposes would be mere arrangements, and the power being granted to make them, draws after it the power of providing by assessments for the expenses certainly and necessarily incident and consequent.

Suppose after such measures had been taken, and an expense unavoidably incurred, the result of the investigation had been so unfavorable as to induce the majority of the actual corporators, or of shares, according to the mode of voting, to discontinue any further proceedings, and abandon the project; — how shall these expenses be defrayed ? Certainly by a tax, for the expenses were incurred for the corporation, and with full power to incur them by virtue of the 7th section of the act. It is true, a tax might be unavailing amidst such circumstances, if there were no obligation collateral to that which by law rests upon the shares; but where there is a personal engagement, there is no difficulty. Every subscriber, in such case, is made to pay what he promised, and no more. The assessment only apportions upon each subscriber his quota of the whole expense, according to his interest in the undertaking.

No vote has been produced showing the purpose for which this assessment was granted, and we do not think it necessary; for if the whole product of the assessment does not exceed the sum wanted for the expenses which may lawfully be provided for in this way, it may be presumed that this was the object of the assessment, and that the money so raised will be applied to these purposes.

The result of the whole is, that the defendant is personally bound by his promise to pay all such assessments as should be legally made ; that an assessment made to raise money to defray expenses necessarily incurred in arrangements preparatory to the execution of the objects of the incorporation, is legal; that expenses of that nature having been incurred, and the assessment which is the subject of this suit not exceeding the sum necessary for the payment and discharge of them, the defendant is answerable for his proportion, according to the *45number of shares he subscribed for, and must therefore be defaulted.* 1