Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/640

 § 619.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. X. formanoe of their functions, to act wholly and entirely in its interests. 1 § 619. An admirable exposition of the liability of directors to the corporation for neglect of their duties is contained in a case decided by the greatest of England's chancellors as long ago as the year 1742. The facts of Charitable Corporation v. Sutton 2 were briefly as follows: The committee-men (direct- ors), into whose hands the general charge of the corporate affairs had been confided, had been guilty either of positive frauds and breaches of trust, or of gross negligence. The corporation had been formed for the purpose of lending on pledges, and, in contravention of its rules or by-laws, its affairs and the whole power and discretion of lending were left in charge of one or two persons in such a way as to afford them abundant opportunity to defraud the corporation, of which opportunity they took every advantage. In his opinion, Lord Hardwicke said : 3 " The grounds upon which the plaintiffs found their relief against the committee- men are these : 1. That they have been guilty of manifest breaches of trust, or, at least, of such supine and gross negli- gence of their duty, and so often repeated, that it will amount to a breach of trust. These are great and important questions. It will be proper to state what are the actual breaches of trust: 1st. Passing of notes, etc. 2dly. Signing notes for loans upon pledges, called renewal pledges, though they knew at the same time that the money originally lent was not paid. 3dly. Signing notes of John Thompson, warehouse-keeper. 4thly. Taking off all checks upon him, etc. 5thly. Making 1 A railroad company had a rule that persons not buying tickets be- fore entering should pay ten cents extra. A conductor did not collect this extra fare, but received the or- dinary fare, bought tickets himself, and punched and gave them in, con- cealing the facts. It was held that this did not constitute a payment, and that the railroad company could, notwithstanding, recover the fares collected by him in assumpsit as money had and received. Concord 620 R. R. Co. v. Clough, 49 N. H. 257. Compare Taylor v. Taylor, 74 Me. 582. The cashier of a bank, though authorized to loan its funds with or without security, is liable for money loaned without security to au indi- vidual, and not entered up for sev- eral years; such loan being evidently concealed from the trustees. San Joaquin Valley Bank v. Bours, 65 Cal. 247. 2 2 Atkyns, 400. 8 2 Atkyns, 403 et seq.