TITLE 46
PUBLIC UTILITIES AND PUBLIC TRANSPORTATION
ARTICLE 4
ELECTRIC MEMBERSHIP CORPORATIONS AND FOREIGN ELECTRIC COOPERATIVES
46-3-202. Defense of ultra vires.
No act of an electric membership corporation and no conveyance or transfer of real or personal property to or by an electric membership corporation shall be invalid by reason of the fact that the electric membership corporation was without capacity or power to do such act or to make or receive such conveyance or transfer; but such lack of capacity or power may be asserted:
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In an action by a member or director against the electric membership corporation to enjoin the doing of any act or the transfer of real or personal property by or to the electric membership corporation, unless the plaintiff has assented to the act or transfer in question or in bringing the action is acting in collusion with officials of the electric membership corporation. If the unauthorized act or transfer sought to be enjoined is being or is to be performed or made pursuant to any contract to which the electric membership corporation is a party, the court may, if all the parties to the contract are parties to the action and if it deems the same to be equitable, set aside and enjoin the performance of such contract and in so doing may allow to the electric membership corporation or to the other parties to the contract, as the case may be, compensation for the loss or damage sustained by either of them which may result from the action of the court in setting aside and enjoining the performance of such contracts; but anticipated profits to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained;
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In an action by the electric membership corporation, whether acting directly or through a receiver, trustee, or other legal representative or through members in a representative action, against an incumbent or former officer or director of the electric membership corporation for loss or damage due to his unauthorized act; or
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In an action by the Attorney General to dissolve the electric membership corporation or in an action by the Attorney General to enjoin the electric membership corporation from the transaction of unauthorized business.
(Code 1933, § 34C-203, enacted by Ga. L. 1981, p. 1587, § 1.)
JUDICIAL DECISIONS
Corporation may not borrow money for purpose of lending it to member.
- Under the Rural Electrification Act (7 U.S.C.
§
901 et seq.) and the Georgia enabling act of 1937 (Ga. L. 1937, p. 644), and the charter of the defendant electric membership corporation, the act of the electric membership corporation in borrowing money from the Federal Rural Electrification Administration for the purpose of lending it to one of its corporate members or stockholders, in order that the latter might erect and maintain a cold storage plant is ultra vires and illegal. Galloway v. Mitchell County Elec. Membership Corp., 190 Ga. 428, 9 S.E.2d 903 (1940).
RESEARCH REFERENCES
Am. Jur. 2d.
- 19 Am. Jur. 2d, Corporations,
§§
2009-2012, 2014-2016, 2034.
C.J.S.
- 19 C.J.S., Corporations,
§§
573-579.
