Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/652

 § 629.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. X. Thus, where the directors of a ferry company bought a steam- boat in their individual capacity, and so owning it bought it of themselves for the company at a large advance, it was held that the transaction was fraudulent, and that their profits en- ured to the benefit of the company, who might recover them with interest. 1 In another case the treasurer of a bank had received authority from it to sell certain of its property, which he thereupon sold to himself and some of his brother officers at the minimum price he was authorized to sell at; which was far below the market value of the property. The bank was allowed to recover of him the difference between the market value and the price at which he had sold to himself. 2 And when suit is brought against directors to compel them to ac- count for the profits of transactions wherein they have acted on behalf of the corporation, they cannot plead that the trans- actions were ultra vires the corporation. 3 But in Ashuelot R. R. v. Elliot, 57 N. H. 397, the treasurer of a corpo- ration, who was also trustee for bondholders, was held to account to the railroad company for profits made by him while in possession as trustee under the mortgage. Directors caunot speculate with corporate funds or credit and appro- priate the profit. Redmond v. Dick- erson, 9 N. J. Eq. 507. Directors of a bank must give up to it all secret profits received by them as a bonus to obtain a loan from it. Farmers', etc., Bank v. Downey, 53 Cal. 460. See, also, York, etc., R. R. Co. v. Hudson, 10 Beav. 485; Parker v. McKenna, L. R. 10 Ch. 90; Dunston v. Imperial Gas Co., 3 Barn. & Adol. 125; General Exchange Bank v. Hor- ner, L. R. 9 Eq. 580; Gaskeil v. Chambers, 26 Beav. 360; Madrid Bank v. Pelly, L. R. 7 Eq. 442; Eden c. Ridsdales Lamp Co., 23 Q. B. D. 368; Bland's Case [1893], 1 Ch. 012. When in pursuance of a secret agree- ment made with a promoter by a person about to become a director 632 that the said promoter would buy back said director's qualification shares at par— the promoter does buy them back at par when the shares are valueless in the market, the director will have to accouut to the corporation for the money re- ceived as secret profits. North Aus- tralian Territory Co., In re [1892], 1 Ch. 322; 2 Lindley on Part., 588- 589. 1 Parker v. Nickerson, 112 Massa- chusetts, 195. 2 Greenfield Savings Bank v. Si- mons, 133 Mass. 415. 3 See Hill v. Nisbet, 100 Ind. 341. Compare §§ 280-282, where it is shown that even when affected with no estoppel an outsider can take no advantage of the fact that a given transaction was ultra vires a corpo- ration. Similarly it is only the cor- poration, and its shareholders and creditors, that can avail of the fact that its officers were secretly inter- ested in matters wherein they acted for the corporation, or, as its agents, dealt with themselves. In a recent