## Facts

- Utah State University (USU), a public “body politic and corporate,” authorized its assistant vice-president of finance, Donald A. Catron, to purchase “securities of any kind” through qualified brokers.
- Catron opened a special cash account with First Equity Corporation of Florida (First Equity), a stockbroker, and USU previously accepted and paid for certain securities acquired through that account.
- USU received advice from the Utah Attorney General’s office that USU should not invest in stocks and revoked Catron’s purchasing authority.
- First Equity was not sent the resolutions granting or revoking Catron’s authority.
- After the revocation, Catron placed additional orders for common stock through First Equity.
- When First Equity attempted delivery and payment for those shares (and commissions), USU refused, asserting the transactions were beyond USU’s legal power and Catron’s authority.
- First Equity sued to recover commissions and other losses from USU’s refusal to accept and pay for the ordered shares.

## Issues

1. Whether USU had legal authority under Utah law to invest institutional funds in common stock.
2. If USU lacked that power, whether stock-purchase contracts made on its behalf were void as ultra vires and thus unenforceable against USU.
3. Whether First Equity could recover based on Catron’s apparent authority or USU’s prior course of dealing, despite the lack of notice of Catron’s revocation.

## Decision

- The Utah Supreme Court affirmed summary judgment for USU.
- The court held USU lacked statutory authority to invest in common stock.
- Because the transactions were beyond USU’s corporate power, the stock-purchase contracts were void ultra vires.
- USU incurred no contractual obligation to pay for the disputed stock purchases or First Equity’s commissions.
- Apparent authority, prior dealings, and estoppel could not create or expand a public institution’s statutory powers.

## Legal Principles

- A public “body politic and corporate” possesses only powers expressly granted by statute, necessarily implied, or indispensable to its statutory purposes.
- When a contract is beyond the public entity’s corporate power (strict ultra vires), the contract is void and unenforceable, even if the counterparty acted in good faith and lacked notice of the limitation.
- Apparent authority and estoppel may bind a public entity only when the transaction is within the entity’s power but irregularly executed; they cannot validate acts outside the entity’s lawful power.
- Prior acceptance of similar transactions does not expand a public entity’s statutory authority or ratify contracts the entity lacked power to make.
- Public policy favoring legislative control and protection of public funds supports strict enforcement of statutory limits on public-entity investments.

## Conclusion

The court held that USU had no statutory power to invest in common stock, making the brokered stock-purchase contracts void ultra vires; as a result, First Equity could not recover payment or commissions from USU based on apparent authority, prior dealings, or estoppel.


First Equity Corp. of Fla. v. Utah State Univ., 544 P.2d 887 (Utah 1975)