§ 203 — Defense of ultra vires

§ 203. Defense of ultra vires.\n (a) No act of a corporation and no transfer of real or personal\nproperty to or by a corporation, otherwise lawful, shall, if duly\napproved or authorized by a judge, court or administrative department or\nagency as required, be invalid by reason of the fact that the\ncorporation was without capacity or power to do such act or to make or\nreceive such transfer, but such lack of capacity or power may be\nasserted:\n (1) In an action by a member against the corporation to enjoin the\ndoing of any act or the transfer of real or personal property by or to\nthe corporation. If the unauthorized act or transfer sought to be\nenjoined is being, or is to be, performed or made under any contract to\nwhich the corporation is a party, the court may, if all of the parties\nto the contract are parties to the action and if it deems the same to be\nequitable, set aside and enjoin the performance of such contract, and in\nso doing may allow to the corporation or to the other parties to the\ncontract, as the case may be, such compensation as may be equitable for\nthe loss or damage sustained by any of them from the action of the court\nin setting aside and enjoining the performance of such contract;\nprovided that anticipated profits to be derived from the performance of\nthe contract shall not be awarded by the court as a loss or damage\nsustained.\n (2) In an action by or in the right of the corporation to procure a\njudgment in its favor against an incumbent or former officer or director\nof the corporation for loss or damage due to his unauthorized act.\n (3) In an action or special proceeding by the attorney-general to\nannul or dissolve the corporation or to enjoin it from the carrying on\nof unauthorized activities.\n