## Facts

- The Greenville and Raleigh Plank Road Company was incorporated by statute to create a plank road connection from Greenville to Raleigh and to collect tolls.
- The company built and operated only a segment from Greenville to Wilson; construction toward Raleigh stopped when funds were exhausted.
- After several years of toll operations, the company accumulated about $4,000.
- The president and directors, with approval of a majority of stockholders, resolved to buy a stage line (coaches, horses, and equipment) to operate on the road and to seek a federal contract to carry U.S. mail over the route.
- A minority of stockholders filed an equity bill alleging the road was worn and needed repair, and that purchasing and operating a stage line and carrying the mail was beyond the charter and a misapplication of corporate funds.
- The company demurred, asserting the bill stated no basis for equitable restraint and that the proposed actions were within corporate powers.

## Issues

1. Whether a charter to create and operate a toll plank road impliedly authorizes the corporation to operate a stage line and contract to carry the U.S. mail on that route.
2. Whether minority shareholders may obtain an injunction to prevent proposed corporate expenditures alleged to be ultra vires, even if approved by a majority of shareholders.

## Decision

- The Supreme Court of North Carolina overruled the demurrer.
- The court held the charter did not authorize establishing a stage line or contracting to carry the U.S. mail.
- Because the proposed expenditures were ultra vires, shareholders could seek equitable relief to restrain the misuse of corporate funds notwithstanding majority approval.

## Legal Principles

- A corporation has only those powers granted by its charter and those necessarily implied to carry out its express purposes; powers are construed narrowly against expansion into different enterprises.
- Operating a transportation service (stages and mail carriage) is distinct from owning and maintaining a toll road and is not an incidental power merely because it may increase toll revenue.
- Equity may enjoin threatened ultra vires acts and expenditures at the suit of shareholders, including minority shareholders, to prevent misapplication of corporate assets.
- Ultra vires activity may expose a corporation to public-law consequences, including potential forfeiture of corporate privileges, supporting equitable intervention before funds are committed.

## Conclusion

The court held that a plank-road corporation could not divert toll revenues to run a stage line or carry the mail absent charter authority, and that minority shareholders could enjoin proposed ultra vires spending even against the will of a shareholder majority.


Wiswall v. Greenville & Raleigh Plank Rd. Co., 56 N.C. (3 Jones Eq.) 183 (N.C. 1857)