Page:Federal Reporter, 1st Series, Volume 3.djvu/834

 TBUSTEES UCT. BUIIiDINQ FDND, ETC., V. BOBSBIUX. 827 �very sound exposition of tho law touching the liability of directors of corporations whose funds have been -wasted and capital squandered. Judge Sharswood said : "I have found no judgment or decree which bas held directors to acoount, except ■where they have themselves been personally guilty of some fraud on the corporation, or have known and connived at some fraud in others, or in which such fraud might have been prevented had they given ordinary attention to their duties. I do not mean to say, by any means, that their responsibility is limited to these cases, and that there might not exist such a case of negligence, or of acts vitra vires, as would make perfectly honest directors personally responsi- ble." �The proofs in the case he vras then deciding did not, of course, f ail within the category he enumerates of delinquencies which would, in his opinion, make directors personally liable. The judge goes on, in another place, to say : "While directors are personally responsible to their stockholders for any losses resulting from fraud, embezzlement, wilful mis- conduct, or breach of trust for their own benefit and not for the benefit of the stockholders, and for gross inattention and negligence, by which such fraud or misconduct has been per- petrated by agents, officers, or co-directors, yet they are not liable for mistakes of judgment, evfn though they may be 80 gross as to appear to us absurd and ridiculous, provided they are honest, and provided they are fairly within the scope i of the powers and discretion confided [by law] to the manag- ing body." �From this decision it appears that directors are liable for — First, fraud or embezzlement oommitted by themselves ; sec- end, wilful misconduct or breach of trust committed for their own benefit and not for the benefit of the stockholders ; third, acts vitra vires — that is to say, acts beyond the chartered powers of the corporations which they manage, and beyond the general powers conf erred by law upon corporations ; and, fourth, gross inattention and negligence, allowing fraud or misconduct on the part of agents, officers, or co-directors, ����