Page:Federal Reporter, 1st Series, Volume 3.djvu/837

 S30 FSDEBAIi BEFOBTEB. �think it is a Sound proposition of law that, wLenever there ■would be liability if the fraud had been practiced by directors thernselves upon the eomplainant, there is like liability if thera bas been that gross negligence on the part of directors which bas permitted the fraud to be practioed by officersunder their control. And unless we treat gross negligence, allowing fraud by such oiEcers, as the equivalent of fraud committed in per- son, the proposition of counsel for defence, that directors are not personally liable for acts short of fraud and of ultra vires, is not sound. With this qualification, however, I am willing to admit the soundness of the principle. �It may as well be noted here, however, that the bill in this suit charges that there were repeated declarations and pay- ments of dividends out of capital stock, which is prohibited by sections 32 and 33 of chapter 57 of the Code of Virginia, and is, therefore, vitra vires. Not unmindful of this feature of the bill, I shall in general treat it as a bill based upon charges of gross negligence. It is hardly necessary to pre- mise that if the bill charges gross negligence, equivalent to fraud in its results to the bank, and if the authorities to be cited show that directors are, in their relation to depositors, creditors, and stockholders, trustees of the capital and funds with which they are entrusted, then, even though it could be shown that directors are liable to be sued at law, yet that fact does not oust equity of the jurisdiction which it bas by virtue of its original jurisdiction of trusts and frauds j the remedy at law, where it exists, being cumulative and not exclusive. �Another case relied upon by counsel for the defence is that of Overend, Gurney & Co. v. Oumey, e Ch. App. Cases, L. E. 701. But that was a case in which the director defendant was charged, not with fraud, not with embezzlement, not with wilful misconduct or breach of trust, for his own advan- tage, at the company's expanse; not with acts ultra vires, nor even with gross negligence, whereby fraud and misconduct were permitted in of&cers or co-directors ; but the complaint there was, as the lord chancellor himself said, merely of "want of wisdom and want of ]udgment,"and the bill sought "solely on that ground" to fix the defendant director with liability for ����