Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/580

 § 553.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. IX. § 553. As against all persons, so as against the individual shareholders, or a minority of shareholders, the cor- Rightof, '. . J thecorpo- poration has the right to carry on the corporate en- control the tei'prisc in the manner and for the purposes set forth enterorise m lts constitution ; and within the scope of their powers the reasonable and fair discretion of the board of directors can be controlled, if at all, only through action of a majority of shareholders taken in the manner indi- cated by the corporate constitution. 1 " Each and every share- holder contracts that the will of the majority shall govern in all matters coming within the limits of the act of incorpora- tion ; and in cases involving no breach of trust, but only error or mistake of judgment on the part of directors who represent the company, individual stockholders have no right to appeal to the courts to dictate the line of policy to be pursued by the corporation." 2 Or, as Chief Justice Bigelow said in Durfee v. Old Colony Railroad Co. : 3 "We suppose it may be stated as an indisput- able proposition, that every person who becomes a member of a corporation aggregate by purchasing and holding shares, agrees by necessary implication that he will be bound by all acts and proceedings within the scope of the powers and authority conferred by the charter, which shall be adopted and sanctioned by a vote of the majority of the corporation duly taken and ascertained according to law, This is the unavoid- able result of the fundamental principle that the majority of shareholders can regulate and control the lawful exercise of the powers conferred on a corporation by its charter. A holder of shares in an incorporated body, so far as his individual rights and interests may be involved in the doings of the cor- poration, acting within the legitimate sphere of its corporate power, has no legal control over them save that which he can exercise by his single vote in the meetings of the company." 4 1 Gravenstine's Appeal, 49 Pa. St. 310; Smith v. Prattville M'f'g Co., 29 Ala. 503. See chap. 12. a Dudley v. Kentucky High School, 9 Bush (Ky.), 576, 578. 3 5 Allen, 230, 242. See § 534. 4 See, also, New hall ». Galena, etc., 560 R. R. Co., 14 111. 273; Joslyn i Pa- cific Mail S. S. Co., 12 Abh. Pr. N. S. ( N. Y. ) 329; Gifford v. New Jersey R. R. Co., 10 N. J. Eq. 171, 174; New Orleans, etc., R. R. Co. v. Harris, 27 Miss. 517, 537; Fluker v. Railway Co., 48 Kan. 577.