Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/655

 CHAP. X.j CORPORATION AND OFFICERS. [§ 631. to interpose, if they have the means or the inclination to take upon themselves the burden of such gigantic controversies as are involved in the railroad transactions of the present day, it would so far to legalize condonation of such transactions as are set forth in the bill, if mere knowledge by helpless stock- holders of the fraudulent acts of their directors were to prevent the corporation itself from seeking redress, if it act promptly when freed from the control of such directors. Frequently requesting unfaithful directors to resign or employ other counsel, so far from throwing on the stockholders the peril of losing their rights, represented by the company, if they do not personally assert them in place of the directors, operates of itself, without more, only to aggravate the wrong. At the same time it by no means follows that parties who have become interested in the plaintiff's corporation with knowledge of matters set forth in the bill, are entitled to the same standing as to relief with those who were interested in the corporation when the transactions complained of occurred." : § 631. Accordingly, when corporate officers have been guilty of a breach of trust towards the corporation, Reinedies the latter may disaffirm the transaction, provided ofthecor- . « . -ii • poration. the rights or innocent outsiders do not intervene, and may hold the officers liable for damages;- or without disaffirming the transaction, may compel the officers to account, with interest, for any profits they have made. 3 The corpora- tion cannot, however, adopt in part and in part repudiate an improper transaction of its officers. 4 And the right of a corporation to avoid a transaction on account of the fiduciary 1 Pacific R. R. of Missouri v. i hers, 26 Beav. 360; York, etc., R'y Pacific R'y Co., Ill U. S. 505, 520. Co. v. Hudson, 16 Beav. 485; Madrid Compare Graham v. Boston, etc., R. i Bank v. Pelly, L. R. 7 Eq. 442; Parker R. Co., 118 U. S. 162. 2 Ryan v. Leavenworth, etc., R'y Co., 21 Kan. 365. See also cases in last note but two. The receiver may sue. Curtis u. Leavitt, 15 N. Y. 10, v. McKenna, L. R. 10 Ch. 96; Buffalo, X. Y. and Erie R. R. Co. v. Lamp- son. 47 Barb. 533. Magnay, 25 Beav. 586; Second Xa- 44. See High on Receivers, § 316 tioual Bank v. Burt, 93 N. Y. 233. and §615. I It cannot retain the advantages and 8 Parker v. Xickerson, 112 Mass. ! repudiate the obligations of these 195; S. C, 137 Mass. 487; Greenfield transactions. Barr 0. N. Y., L. E. Savings Bank v. Simons, 133 Mass. & W. R. R. Co., 125 N. Y. 263. 415 {supra, § 629); Gaskell v. Cham- 635
 * Great Luxembourg R'y Co. v.