Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/638

 § 617.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. X. Ordinary- care re- quired. negligence in attending to the corporate affairs, or gross mis- management whereby the corporate assets are wasted ; x for any acts in violation of the by-laws that occasion loss to the corporation ; 2 and for acts forbidden by statute which occasion loss, though the statute impose no penalty. 3 §<il7. "The first question to be considered is the measure of fidelity, care, and diligence which such trustees [trustees of a savings bank] owe to such a bank and its depositors. The relation existing between the corporation and its trustees is mainly that of principal and agent, and the relation between the trustees and the depos- itors is similar to that of trustee and cestui que trust. The trustees are bound to observe the limits placed upon their powers in the charter, and if they transcend such limits and cause damage, they incur liability. If they act fraudulently, or do a wilful wrong, it is not doubted that they may be held for all the damage they cause to the bank or its depositors. But if they act in good faith, within the limits of powers con- ferred, using proper prudence and diligence, they are not responsible for mere mistakes or errors of judgment. That the trustees of such corporations are bound to use some diligence in the discharge of their duties cannot be disputed. All the authorities hold so. What decree of care and diligence are rower is not a ratification of the treasurer's unauthorized act, and does not discharge him from his lia- bility to the corporation. Goodyear Dental Vulcanite Co. v. Caduc, 144 Mass. 85. 1 Austin v. Daniels, 4 Den. (N. Y. ) 299; Citizens' Loan Ass'n v. Lyon, 29 N. J. Eq. 110. See Merchants 1 Bank v. Jeffries, 21 W. Va. 504; Nix v. Miller, 26 Colo. 203; Bank v. Hill, 148 Mo. 380; Warren v. Robinson, 19 Utah, 289. 2 Citizens 1 Building Ass'n v. Coriell, 34 N. J. Eq. 383; Williams v. Riley, 34 N. J. Eq. 398; Oakland Bank v. Wilcox, 60 Cal. 126. An officer, e. g., a cashier, is not liable 618 to the corporation for acts done in good faith, but in violation of a by- law, when the board of directors, who have power to make by-laws and prescribe his duties, practically disregard the by-law which he has violated, and render his observance of it impossible. Thus, where a by- law provided that the cashier should consult a committee of directors in making discounts, he is not liable for neglecting to consult such com- mittee when, with the acquiescence of the board of directors, it holds no meetings. Second National Bank v. Burt, 93 N. Y. 233. 3 Thompson v. Greeley, 107 Mo. 577; Thompson u. Swain, ib. 594.