Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/649

 CHAP. X.] CORPORATION AND OFFICERS. [§ 627. discovered, and to compel the real delinquents to make good their breach of trust ; and it is very questionable whether an incoming director is liable in point of law for such omis- sions." § 627. It may be stated as a general rule that directors and other corporate officers should do no acts that are „ L Corporate likely to render their personal interests antagonistic officers to those of the corporation. 1 And when a corporate place their officer finds his personal interests substantially op- ^'position 1 posed to those of the corporation, then, not only on *? those of 1 . the corpo- account of the rights of the corporation and his ration, duties to it, but also for the sake of his own security, the plainest course for him is to resign. 2 For, under such circum- stances, every step he takes may be subjected to the most searching and harassing investigation at the instance of any person interested in the corporate enterprise, and he will find himself seriously hampered in the assertion of even his honest rights, if such he happen to possess. Thus, for instance, it has been held that directors of a railroad company cannot ac- quire an interest in the profits of a contract for the construc- tion of the road, that will give them a standing in a court of equity to interpose an objection to the consummation of a com- promise between the railroad company and its contractors. 3 In iHill v. Frazier, 22 Pa. St. 320; Goodin v. Cincinnati, etc., Canal Co., 18 Ohio St. 169; Attaway v. Nat. Bk., 93 Mo. 485; Hemingway v. Hem- ingway, 58 Conn. 443; §559, ante, ch. 9; Brewster v. Stratman, 4 Mo. App. 41; First Nat. Bk. v. Reed, 36 Mich. 263. See In re Imperial Land Co., Ex parte Larking, 4 Ch. D. 566. " Indeed it is not going too far to say that every director of a company is bound, when his personal interests conflict with his duty to the share- holders, to perform his duty toward them at a sacrifice of his own inter- ests; and a transaction in which a director on behalf of his company has in fact been dealing with himself as an individual cannot stand." 2 Lindley on Part., 590; Aberdeen Ry. Co. v. Blakie, 1 Macq. 461. The president of a corporation, to whom a bund has been delivered by the board for sale, cannot convert such bond to his own use in payment of a claim due him from the corporation. Gas Co. v. Reis, 54 Ohio St. 549. Cf. Hall v. Goodnight, 138 Mo. 576. 2 See Goodin v. Cincinnati, etc., Canal Co., supra. 3 Paine v. Lake Erie, etc., R. R. Co., 31 Ind. 283, 353. Compare Savings Bank v. Wulfekuhler, 19 Kan. 60. The president of a railroad company who is authorized with two other di- rectors to make a contract for the construction of the road, cannot se- cretly (at the time of contracting) acquire rights in the contract which he can enforce against the company; 629