Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/643

 CHAP. X.] CORPORATION AND OFFICERS. [§ 621. the present case one thing is clear [those who were engaged in the confederacy to divert the funds of the corporation], are certainly liable to make good the losses which the corporation have sustained in the first place, and the committee-men who were not partners in this affair are liable in the second place only. Therefore, in the present case, I am of opinion, if there is no evidence, to charge the committee-men of being privy to the original design, yet they will be guilty in the second degree, by conniving at the affair, and not making use of the proper power invested in them by the charter, in order to prevent the ill consequences arising from such a confed- eracy." i § 620. Directors acting in good faith are not liable, in the absence of gross negligence, for doing what they Directors have been authorized to do, even though it was ? ot liable ' ° for errors imprudent; 2 nor for errors in judgment in matters ofjudg- within the scope of their discretion, even when the errors seem palpable, and such as men of ordinary prudence would not have committed. 3 They ordinarily receive no salary, 4 are required to exercise only reasonable care and pru- dence, and cannot be presumed to devote all their time to the service of the company; 5 and under any circumstances, in the absence of negligence, to hold them liable for the consequences of mere errors of judgment would add an undue hardship to the already onerous responsibilities of their position. § 621. The circumstances of a Tennessee case are of interest. 1 See, also, Briggsr. Spaulding, 141 U. S. 132; North Hudson B'ld'g Ass'n v. Childs, 82 Wis. 460; Henry v. Jackson, 37 Vt. 431; Wilkinson v. Dodd, 40 N. J. Eq. 123; aff'd 41 N. J. Eq. 566; Williams v. McKay, 40 N. J. Eq. 189; Deaderick v. Bank, 100 Tenn. 457; Utley v. Hill, 155 Mo. 232; Warren v. Robinson, 19 Utah, 289. 2 Overend v. Gurney, L. R. 4 Ch. 701; S. C, sub nom. Overend and Gurney Co. ». Gibb, L. R. 5 H. L. 480. See International, etc., R. R. Co. v. Bremond, 53 Tex. 96. Direct- ors of a savings bank are not lia- ble for not requiring the president to furnish a bond, when the charter leaves this to their discretion. Wil- liams v. Halliard, 38 N. J. Eq. 373. 3 Spering 1 s Appeal, 71 Pa. St. 11; Godbold v. Branch Bank of Mobile, 11 Ala. 191; Citizens' Building Ass'n ». Coriell, 35 N. J. Eq. 383; Hun v. Cary, 82 N. Y. 65, §617; Charita- ble Corporation v. Sutton, supra ; Excelsior Petroleum Co. v. Lacey, 63 N. Y. 422; Vance v. Phoenix Ins. Co., 4 Lea (Tenn.), 385. 4 See § 646. 5 Percy v. Millardon, 8 Mart. N. S. (La.) 68. 623