Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/175

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 182. what may be regarded as exceptions or qualifications to it. For the management of the affairs of a corporation is ordinarily vested by the corporate constitution in the board of directors ; and this constitution embodying the original contract among the corporators is the final determinant of all rights and liabil- ities subsisting in respect of the corporate enterprise. Accord- ingly, if all the corporators or shareholders originally agreed that the management of the corporate enterprise should rest with the directors, it is incompetent for a majority of the share- holders to divest the directors of the management ; at least as long as a single shareholder objects ; for in such case to change the management of the corporate enterprise would violate the rights of the shareholders under the original agreement. And there is much reason in this, for manifestly the body of share- holders are incapable of managing the corporate business with efficiency. It is also to be remembered here, that as all persons dealing with a corporation are affected with knowledge of its constitution, x every one has notice of whatever incapacity the constitution has imposed on the body of shareholders. § 181. Accordingly, in one case where the enabling act con- tained the following provision : " the powers of the corporation shall be exercised by a board of trustees," a conveyance of real estate belonging to the corpo- ration was held invalid because authorized by a shareholders' meeting; 2 and in another case, a lease of cor- porate property, authorized in the same manner, was set aside on the ground that the management having been vested in the board of directors, a shareholders' meeting was incompetent to authorize the lease. 3 § 182. It is submitted, however, that any general rule which, from these cases, might be deduced as to the incapacity of shareholders to act in a corporate meeting, when the manage- Acts of the body corpo- rate; when held in- valid. 1 See § 195. 2 Gashwiler v. Willis, 33 Cal. 12. 8 Conro v. Port Henry Iron Co., 12 Barb. 27. But in this case the lease had been made to the principal share- holder for a nominal consideration, and was set aside at the suit of cred- itors on whom it was a fraud. It should have been set aside had its execution been perfectly regular. See, also, Union Gold Mining Co. v. Rocky Mn. Nat. Bk., 2 Col. 565; Mc- Cullough v. Moss, 5 Den. 567, 575; Union Mut. Ins. Co. v. Keyser, 32 N. H. 313, 315 ; Dana v. Bank of U. S., 5 W. & S. 223, 245-247; Dayton, etc., R. R. Co. v. Hatch, 1 Disney (Cin- cinnati Sup'r Ct.), 84. 155