Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/208

 § 223.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. success or required by the exigencies of the business ; and, since any person vested with authority to act for another must neces- sarily act largely according to an honest discretion, which un- der certain circumstances warrants acts that under different circumstances would constitute a flagrant breach of trust, so it may be said, that in critical emergencies the discretionary au- thority of directors justifies the doing of many acts which would be unauthorized under ordinary circumstances. § 221. The next general rule regarding the construction of the authority of directors is a negative one. Au- St'itGiiiGnt """ "~ of firat gen- thojrity_to_mana ! ge._the affairs_.of ..a coxporation does tion. imi *" not authorize the directorJTto change the scheme of tFe corporate enterprise or the nature of the corpo- rate business ; nor does it authorize them to bring the business to a conclusion either directly, or indirectly through acts which render the further carrying on of it as planned impossible. § 222Trhirdly and finally, since the constitution and all au- thority thereby conferred relate to a specific enterprise and cor- porate purpose, no authority is conferred on directors to bind the corporation in regard to matters having no con- Statement of second nection with the objects of incorporation. : UmHation. The three preceding rules outline the law regulat- ing the power of directors to bind by their acts the corporation and its property ; and the cases and instances now to be referred to will be but illustrations of their application ; but of their application as affected by rules previously discussed in regard to presumptions and estoppels and by special provi- sions in the constitution or by-laws of the corporation. § 223. How is the scope of the first general rule deter- gc of mined, — that directors may do any regular or ordi- the gen- nary act within the corporate powers, in the man- cril rule. ii' agement of the corporate business The word "ordinary" here is by no means synonymous with "routine;" it is in no sense limited to dairy clerical or ministerial manage- ment. It has a far more comprehensive meaning ; and a trans- Compare Wilbur v. Stoebel, 82 Mich. 344; King r. Barnes, 109 N. Y. 267. 1 See Bathe v. Decatur Agric. Soc, 73 Iowa, 11. That directors have no power to organize a second corpora- 188 tion in another state, and bind their home company for the expenses, was held in Eakins v. White Bronze Co., 75 Mich. 568.