Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/637

 CHAP. X.] CORPORATION AND OFFICERS. [§ 616. Directors' duties en- forceable by the cor- poration or its receiver. Joinder. plies an agreement to take the requisite number of shares within a reasonable time after assuming the office. 1 A director, moreover, is not bound to take the shares directly from the company, but may acquire them by purchase or gift from some prior holder. 2 § 615. Directors' duties are ordinarily enforceable in the name of the corporation ; 3 as it is only after failure or neglect on the part of the corporation to enforce the rights which it represents that the creditors or shareholders may themselves proceed to enforce such rights as pertain to them respectively. A receiver, however, or an assignee of the corporation has all the rights and capacities of action possessed by the corporation against its officers. 4 And in suits against them for damages arising from their negligent or wrongful acts or omissions all the guilty officers may be joined, or any one of them may be sued sepa- rately. 5 § 616. In brief, then, the duties of directors and other officers towards the corporation are to act for the furtherance ..., » . , . , . Liability of or the complex mass or interests which it possesses directors or represents, and to do no act infringing the rights of n ^i e ct of the possessors of any of those interests ; these duties aetsmvio- include all the duties considered in their correlations, lati , on of by-laws. and due proportions owed by the directors to any of the classes of persons interested in the corporate enterprise. For the consequences of a breach of this trust on their part, the officers are liable in damages ; and first of all, for any fraud or unfair dealing towards the corporation ; fi then for gross i Karuth's Case, L. R. 20 Eq. 506. See Hewitts Case, 25 Ch. Div. 283. 2 State ». Leete, 16 Nev. 242; Dent's & Forbe's Case, L. R. 8 Ch. 768; Brown's Case, L. R. 9 Ch. 102. See Chapman's Case, L. R. 2 Eq. 567; Austin's Case, L. R. 2 Eq. 435; Jenner's Case, 7 Ch. D. 132. See, also, § 578. But see In re Carriage Co-operative Supply Ass'n, 27 Ch. Div. 323. 3 Hersey v. Veazie, 24 Me. 9; Smith v. Hurd, 12 Mete. 371. 4 Hun v. Carey, 82 New York, 65; Mason v. Henry, 152 New York, 529; Shultz o. Christman, 6 Mo. App. 338; Austin v. Daniels, 4 Den. (New York) 299. s Hun v. Cary, 82 N. Y. 65. 6 First Nat. Bk. v. Reed, 36 Mich. 263. See Shultz v. Christman, ti Mo. App. 338; Metropolitan El. Ry. Co. v. Kneeland, 120 X. Y. 134; Cores v. Day, 99 Wis. 276. If a treasurer misappropriates funds of his corpo- ration and lends them to a third person, an action of contract brought by the corporation against tlie bor- 617