Laughlin, J.:
The complaint was framed and the appeal has been argued on the theory that the certificate of incorporation is no broader than authorized and, therefore, since those powers apparently authorize any lawful business, with certain exceptions not applicable here (Business Corp. Law, § 2;
It will be observed from the statement of facts that the certificate of incorporation of the plaintiff does not indicate a primary purpose or purposes of its organization and specifies many powers and also confers upon it very general and comprehensive powers under which it may embark in a variety of enterprises without even limitation as to territory. It was authorized, among other things, to do a general business as a commission merchant, selling agent, and factor, under del credere commissions or otherwise in the manner and to the same extent as a natural person; to carry on business as a manufacturer, producer, merchant, and wholesale and retail importer and exporter of any products and merchandise; to make and enter into “all manner and kinds of contracts, agreements and obligations” for purchasing, acquiring, holding, manufacturing, selling or otherwise dealing in all kinds of goods, articles, or personal property, either as principal or as agent, and subject to the limitations and restrictions imposed by law to purchase, lease or otherwise acquire, hold, sell, convey, and dispose of real and personal property, including shares of stock and other securities and any interest in real or personal property, and to borrow money for its corporate purposes and to accept, indorse, execute and issue promissory notes and other obligations for the purchase of property or for any other purpose in or about the business of the company, [302]*302and to secure payment of such obligations by mortgage, pledge, deed of trust, or otherwise, and to carry on business at any place or places within the jurisdiction of the United States and in foreign countries, and to purchase, hold, mortgage, lease or otherwise dispose of and deal in real estate and personal property at any such place or places; to do all things necessary, suitable or proper for the accomplishment of any of the purposes, the attainment of any of the objects, or the furtherance of any of the powers set forth in the certificate of incorporation, either alone or in connection with others and either as principal or agent, and to do every other act or thing incidental or appertaining to and growing out of or connected with “ the aforesaid objects, purposes or powers, or any of them.”
So far as appears, this was the only business in which the plaintiff engaged and after inducing-the brokers to loan and advance the funds required over and above the margins deposited, it has repudiated all the transactions and claims the right to recover back the money deposited as margins.
It is to be borne in mind that it is the corporation itself which is attempting to repudiate its own contract duly authorized if the board of directors and stockholders could authorize it, and the purchases and sales of cotton future contracts which the defendants made for its account. The stockholders of the plaintiff are not directly before the court and it is unnecessary to express any opinion with respect to whether, after becoming stockholders of a corporation with such general powers, they might in any circumstances be entitled to enjoin the corporation from investing its funds in speculative prices. The points presented for decision relate only to the power of the corporation and its right to repudiate its own contract and transactions had under it and to recover back the moneys it deposited with the defendants solely on the ground that the contract and transactions which it assumed to authorize were ultra vires. I am of opinion that the authority conferred to buy and sell any kind of personal property and any interest therein authorized the corporation to deal in cotton and to buy and to sell it and to buy contracts for the future delivery of the cotton and to sell the same, which is the business it contracted to do. and transacted with the defendants under the contract. The company was not authorized to make unlawful [303]*303contracts (Medlin Milling Co. v. Moffatt Commission Co., 218 Fed. Rep. 686); but the facts alleged do not show that its agreement with the defendants was unlawful or that the transactions had thereunder were unlawful. If it had been alleged that the plaintiff did not intend to take the cotton under the contracts and that it was so understood between the plaintiff and the defendants and that it was not to accept delivery of any of the cotton and that there were to be no actual purchases or sales but that settlements were to be made between the plaintiff and the defendants solely on differences by which is meant that if the difference between the market price of a contract purchased for the plaintiff, and the price at which it was sold was in favor of the customer such difference was to be paid to the customer by the brokers, and if against the customer it was to be paid by it to the brokers, the agreement would constitute a gambling contract and be unlawful; but where that is not the intention of the customer and the understanding between him and the broker, purchases of cotton future contracts do not become unlawful by being closed out by a sale by the broker by direction of the customer before the time for the delivery of the cotton under the contracts and by a settlement being then made between them on the basis of the differences between the purchase and selling prices. (Hurd v. Taylor, 181 N. Y. 231; Springs v. James, 137 App. Div. 110; affd., 202 N. Y. 603; Smith v. Craig, 211 id. 456; Medlin Milling Co. v. Moffatt Commission Co., 218 Fed. Rep. 686; 14 Am. & Eng. Ency. of Law [2d ed.], 605-607; 26 id. 1060; 20 Cyc. 926-931; Dos Passes Stock & Stock B. 405, 505, 506, 568, 572, 575-577, 582.) ‘ The allegations of the complaint fall far short of showing that the agreement was illegal within the rule stated.
Counsel for the respondent claims that under the rules of the Cotton Exchange, the brokers deal as principals; and that, therefore, defendants were not the agents of the plaintiff and that it must be deemed to have dealt with them as principals, and that since it is alleged that the plaintiff never received anything from the defendants, it is entitled to recover the money deposited with them. The rules of the Cotton Exchange are not pleaded, but very likely they so provide, for it appears from reported decisions that thereunder the brokers as between [304]*304themselves become principals (Jemison v. C. S. Bank, 122 N. Y. 135); but such a rule would not preclude the making of a contract between a customer and a broker by which as between them the broker would become the agent of the customer who would be entitled as between him and the broker to the benefit of the transactions had by the broker as principal with other brokers but for the customer.
It is, of course, well settled that a trustee may not speculate with trust funds (Jemison v. C. S. Bank, supra; Hart v. Goadby, 138 App. Div. 160), and that principle of law was applied in Jemison v. C. S. Bank (supra),
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Laughlin, J.:
The complaint was framed and the appeal has been argued on the theory that the certificate of incorporation is no broader than authorized and, therefore, since those powers apparently authorize any lawful business, with certain exceptions not applicable here (Business Corp. Law, § 2;
It will be observed from the statement of facts that the certificate of incorporation of the plaintiff does not indicate a primary purpose or purposes of its organization and specifies many powers and also confers upon it very general and comprehensive powers under which it may embark in a variety of enterprises without even limitation as to territory. It was authorized, among other things, to do a general business as a commission merchant, selling agent, and factor, under del credere commissions or otherwise in the manner and to the same extent as a natural person; to carry on business as a manufacturer, producer, merchant, and wholesale and retail importer and exporter of any products and merchandise; to make and enter into “all manner and kinds of contracts, agreements and obligations” for purchasing, acquiring, holding, manufacturing, selling or otherwise dealing in all kinds of goods, articles, or personal property, either as principal or as agent, and subject to the limitations and restrictions imposed by law to purchase, lease or otherwise acquire, hold, sell, convey, and dispose of real and personal property, including shares of stock and other securities and any interest in real or personal property, and to borrow money for its corporate purposes and to accept, indorse, execute and issue promissory notes and other obligations for the purchase of property or for any other purpose in or about the business of the company, [302]*302and to secure payment of such obligations by mortgage, pledge, deed of trust, or otherwise, and to carry on business at any place or places within the jurisdiction of the United States and in foreign countries, and to purchase, hold, mortgage, lease or otherwise dispose of and deal in real estate and personal property at any such place or places; to do all things necessary, suitable or proper for the accomplishment of any of the purposes, the attainment of any of the objects, or the furtherance of any of the powers set forth in the certificate of incorporation, either alone or in connection with others and either as principal or agent, and to do every other act or thing incidental or appertaining to and growing out of or connected with “ the aforesaid objects, purposes or powers, or any of them.”
So far as appears, this was the only business in which the plaintiff engaged and after inducing-the brokers to loan and advance the funds required over and above the margins deposited, it has repudiated all the transactions and claims the right to recover back the money deposited as margins.
It is to be borne in mind that it is the corporation itself which is attempting to repudiate its own contract duly authorized if the board of directors and stockholders could authorize it, and the purchases and sales of cotton future contracts which the defendants made for its account. The stockholders of the plaintiff are not directly before the court and it is unnecessary to express any opinion with respect to whether, after becoming stockholders of a corporation with such general powers, they might in any circumstances be entitled to enjoin the corporation from investing its funds in speculative prices. The points presented for decision relate only to the power of the corporation and its right to repudiate its own contract and transactions had under it and to recover back the moneys it deposited with the defendants solely on the ground that the contract and transactions which it assumed to authorize were ultra vires. I am of opinion that the authority conferred to buy and sell any kind of personal property and any interest therein authorized the corporation to deal in cotton and to buy and to sell it and to buy contracts for the future delivery of the cotton and to sell the same, which is the business it contracted to do. and transacted with the defendants under the contract. The company was not authorized to make unlawful [303]*303contracts (Medlin Milling Co. v. Moffatt Commission Co., 218 Fed. Rep. 686); but the facts alleged do not show that its agreement with the defendants was unlawful or that the transactions had thereunder were unlawful. If it had been alleged that the plaintiff did not intend to take the cotton under the contracts and that it was so understood between the plaintiff and the defendants and that it was not to accept delivery of any of the cotton and that there were to be no actual purchases or sales but that settlements were to be made between the plaintiff and the defendants solely on differences by which is meant that if the difference between the market price of a contract purchased for the plaintiff, and the price at which it was sold was in favor of the customer such difference was to be paid to the customer by the brokers, and if against the customer it was to be paid by it to the brokers, the agreement would constitute a gambling contract and be unlawful; but where that is not the intention of the customer and the understanding between him and the broker, purchases of cotton future contracts do not become unlawful by being closed out by a sale by the broker by direction of the customer before the time for the delivery of the cotton under the contracts and by a settlement being then made between them on the basis of the differences between the purchase and selling prices. (Hurd v. Taylor, 181 N. Y. 231; Springs v. James, 137 App. Div. 110; affd., 202 N. Y. 603; Smith v. Craig, 211 id. 456; Medlin Milling Co. v. Moffatt Commission Co., 218 Fed. Rep. 686; 14 Am. & Eng. Ency. of Law [2d ed.], 605-607; 26 id. 1060; 20 Cyc. 926-931; Dos Passes Stock & Stock B. 405, 505, 506, 568, 572, 575-577, 582.) ‘ The allegations of the complaint fall far short of showing that the agreement was illegal within the rule stated.
Counsel for the respondent claims that under the rules of the Cotton Exchange, the brokers deal as principals; and that, therefore, defendants were not the agents of the plaintiff and that it must be deemed to have dealt with them as principals, and that since it is alleged that the plaintiff never received anything from the defendants, it is entitled to recover the money deposited with them. The rules of the Cotton Exchange are not pleaded, but very likely they so provide, for it appears from reported decisions that thereunder the brokers as between [304]*304themselves become principals (Jemison v. C. S. Bank, 122 N. Y. 135); but such a rule would not preclude the making of a contract between a customer and a broker by which as between them the broker would become the agent of the customer who would be entitled as between him and the broker to the benefit of the transactions had by the broker as principal with other brokers but for the customer.
It is, of course, well settled that a trustee may not speculate with trust funds (Jemison v. C. S. Bank, supra; Hart v. Goadby, 138 App. Div. 160), and that principle of law was applied in Jemison v. C. S. Bank (supra), wherein it was held that a savings bank, which was authorized to buy and sell government stocks and other securities, was not authorized to speculate in cotton futures; but the decision was predicated on the law regulating the securities in which such banks may invest the funds deposited with them and on the insecurity to the depositors that would result if such banks were allowed to speculate with the funds deposited with them. The courts in deciding whether acts are ultra vires and the effect thereof, recognize and apply a distinction between corporations, the purposes of which are, or largely are, of a fiduciary nature and business and trading corporations; and with respect to business and trading corporations .the defense of ultra vires is not looked upon with favor, and especially, as here, concerning contracts which have been fully executed by the other party. (Gause v. Commonwealth Trust Co., 196 N. Y. 134, 153-155; Whitney Arms Co. v. Barlow, 63 id. 62; Woodruff v. Erie R. Co., 93 id. 609; Keating v. American Brewing Co., 62 App. Div. 501; Vought v. Eastern Building & Loan Assn., 172 N. Y. 508; Wormser v. Metropolitan Street R. Co., 184 id. 83-90; Bath Gas Light Co. v. Claffy, 151 id. 24; White Corp. [8th ed.] 35.)
The complaint does not show the state' of the account between the plaintiff and the defendants, but it alleges that the defendants under the contract executed orders given by the plaintiff from time to time for the purchase and sale of cotton future contracts. These allegations preclude a recovery by the plaintiff, in disregard of the transactions had by the defendants for its account, of the money it deposited with the defendants.
[305]*305It follows that the order should be reversed, with ten dollars costs and disbursements, and the demurrer sustained and the complaint dismissed, with ten dollars costs.
Clarke, P. J., Smith, Page and Merrell, JJ., concur.
Order reversed, with ten dollars costs and disbursements, motion granted, demurrer sustained and complaint dismissed, with ten dollars costs.
Amd. by Laws of 1909, chap. 484.— [Rep.