Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/214

 § 230.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. § 229. Thirdly, directors cannot transfer property of fcfee cor- poration which is essential to the continuance of the corporate business; 1 nor have they power to give away the corporate funds or deprive the corporation of the means which it possesses to accomplish the purposes of its incorporation. 2 Accordingly, directors cannot ordinarily lease the whole plant of a corpora- tion ; 3 nor can the directors of a railroad company lease its road without special authority. 4 § 230. Fourthly, if directors have no power to sell corporate property which is essential to the continuance of the business, And directors cannot increase the capital stock indirectly, e. g., by agreeing to pay in stock for services and for money loaned, when the cor- poration has no stock in its treasury. Finley Shoe and Leather Co. v. Kurtz, supra. 1 Abbot v. American Hard Rubber Co., 33 Barb. 578; Rollins v. Clay, 33 Me. 132; Balliet v. Brown, 103 Pa. St. 546; Forrester v. B. & M. Min. Co., 21 Mont. 544. Compare Sheldon Hat Blocking Co. v. Eickemeyer Hat Blocking Machine Co., 90 N. Y. 607; Reichwald v. Commei - cial Hotel Co., 106111. 439; Temp. Ass'n v. Friendly Soc, 187 Pa. St. 38; and see §225. 2 Burke v. Smith, 16 Walt. 390, 395; Bedford R. R. Co. v. Bowser, 48 Pa. St. 29, 37; Jones v. Morrison, 31 Minn. 140; Field v. Investment Co., 123 Mo. 603. See Penobscot, etc., R. R. Co. v. Dunn, 39 Me. 587, 601. But it has been held that directors have power to apply £1,500 out of the undivided profits of a manufac- turing company, as a gratuity of one week's extra pay to each worker in the factory who had worked with a good character throughout the year. Hampson ». Price's Patent Candle Co., 44 L. J. Eq. 437. The point came up on a motion by a shareholder to restrain the payment. But see Jones v. Morrison, 31 Minn. 140. 194 3 Library Hall Co. v. Pittsburg Assn., 173 Pa. S. C. 30; Cass v. Man- chester Iron and Steel Co., 9 Fed. Rep. 640. In the last case the holder of a majority of stock had protested. 819; Mills v. Central R. R. Co., 41 N. J. Eq. 1; Board, etc., Tippecanoe County v. Lafayette, etc., R. R. Co., 50Ind. 85, 112; Martin v. Continental Passenger Ry. Co., 14 Phila. (Pa.) 10. Nor can directors change the termini of a railroad. See Board, etc., Tippecanoe County v. Lafayette, etc., R. R. Co., supra. When the lease of the railroad of ono company has been made to an- other railroad company, and ratified by the shareholders, the directors have no power, as against objecting shareholdei's, to change its provi- sions. March v. Eastern R. R. Co., 43 N. H. 515. Compare S. C, 40 N. H. 548. See Kersey Oil Co. v. Oil Creek, etc., R. R. Co., 12 Phila. 374. Compare Black v. Delaware and Raritan Canal Co., 22 N. J. Eq. 130, 407 et seq., and § 224, note. Iu Beveridge v. N. Y. E. R. Co., 112 N. Y. 1, it was held that when to lease its road was within the powers of a railroad corporation, the directors had authority to make the lease, the powers of the corporation being by its charter vested in them.
 * Stevens v. Davison, 18 Gratt.