ETHIOPIAN ABATTOIRS' v. A. BESSE
rea to son give other than that this was an excuse devised suffi cien t no is e ther � the respondent to take th� money of the appella�t. The respondent _has repeatedly raised t11e defense of good faith. But we have come to tl1e con�I1:1s1on that the act of the �espond�nt. did from beginning to end arise 011t of. ba? faith and not out of good f �1th. This 1s because: firstly, it bought the shares 1nd1rectly and not openly and 1n good faith, secondly, it was agreed that the shares sl1ould be sold 011ly to . Etl1iopians instead of to any buyer ·when it knew tl1at tl1e sl1ares were unprofitable; and tl1irdly, it sold the shares which bad no profit and i11terest as tl1ough it l1ad, these for $150,000 which was beyond its price. As for the petition of the responclent that the contract shou1d be valid since the chairm,t11 was gra11ted wicle power tlnder Arts. 29 and 30 of the me1norandum of associ,1tion of the a1Jpellant compa11y, it is only to do tl1ose acts prescribed by law that directors are gr,t11ted wide po\ver under tl1e articles of association. Tl1ey are 11ot granted po,¥er to do acts \VJ1ich are inconsistent with. the Jaw. Even if they are gr,111ted it will not l)e s11pported by the law. It may be difficult for a thu:d p,1rty to knov\' \Vl1etl1er or not the sl1areholders gave an authorization on the basis of Art. 332 of tl1e Commercial Code. Had it been in other cases it wo11ld have been diffic11lt to say that l1e sl1ould have known it.
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Si11ce this article refers to the possibility of bu.ying a11d pledging one's own shares and since it affects tl1e i11terest of tl1e sha1·eholders, it would not be difficult for a sharel1older to know whether or 11ot a11 autho1·ization has been granted. And since the responde11t company is, though indirectly, the owner of the shares and since it ,vas able to know tl1at the shares vvere unprofitable, it is impossible to say that it did not know this. In general, the contract entered into by the respondent company and the chair man of the appellant company was a contract made without the authorization of the shareholders according to Art. 332 of the Commercial Code. Moreover, \Vhen we exan1ine tl1e Civil Code on tl1e basis of Arts. 1 and 216 of the Commercial Code, since this contract must be ratified or repudiated in a meeting of shareholders in accordance with Art. 2190, a resolution was passed in the meeting of tl1e sl1a1·eholders repudiating the contract; and in such a case there is no 1·eason to justify the validity of the contract. It is impossible to say that the shares 1nust be transferred back to the appellant on the ground that, though the men1ora11dum of associatio11 of the company lin1its to 40% the number of sl1ares that may be bo11ght by foreigners, the sl1ares of the respondent exceeds this limit; 11ot 011ly is the contention not based on tl1is fact, but it has also bee11 stated in the plaintiff's eleventh piece of evidence that the shares of foreigners do not exceed 3%. Therefore, havir1g supported the mi11ority opinion of the High Court and having reversed the majority o_pinion, ,ve have decided th.at the co.ntract which was n1ade between the 1·espo11dent compa11y a11d the chairman of the appellant compa11y an? which was .referred to under tl1e plaintiff's fourth piece of evidence must be invali dated; tl1at tl1e respondent must pay back to the appellant company the sum of $150,000 in accordance ""'ith Arts. 2193 (1) and 1815, and that the respondent must on receiving receipt pay the cou1·t fees paid by the app�llant and $500 for expenses incurred since the decision of the IIigh Co11rt ordering the payment of the court fees a11d the fact tl1at tl1e payment was made it1 this case were proper. the h wit e anc ord acc in ed cut exe Let be to t1rt Co it h I-Iig the be d to itte rem . . Megabit 14, 1957 E.C . J·udgment. .
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