Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/656

 § 633.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. X. relations sustained towards it by the other party, must be exercised within a reasonable time after the facts connected therewith are known or could by due diligence have been ascertained. 1 § 632. Of course, directors are not excluded from deriving profit from the corporate enterprise which is shared directors' by the (other) shareholders ; as, for instance, they corporation. ma Y rece i ve their proportion of dividends. Direct- ors may also loan money to the corporation if the terms are as favorable to the corporation as the most favorable terms on which the directors could borrow money for it from outsiders. 2 Thus, in Twin-Lick Oil Co. v. Marbury, 3 the Federal Su- preme Court held that there was no rule forbidding one di- rector among several from loaning money to the corporation, if the money is needed and the transaction is open and other- wise free from blame ; and that he might purchase its property at a fair public sale, made by a trustee under a deed of trust executed to secure the payment of his debt. The property in controversy was oil land of a fluctuating value ; the director committed no actual fraud ; and at the time of the sale the shareholders knew all the facts, and refused to join him either in the purchase or in paying assessments on their shares. It was held, that four years afterwards, when by his skill and energy he had made the property profitable, the corporation could not have the sale set aside or an accounting for profits. 4 § 633. The facts of another important case were as follows : 1 Twin-Lick Oil Co. v. Marbury, 91 U. S. 587. See Stewart v. Lehigh Valley R. R. Co., 38 N. J. L. 525. 2 Campbell's Case, 4 Ch. D. 470; Santa Cruz R. R. Co. v. Spreckles, 65Cal. 193; Sutter St. R. R. Co. v. Baum, 66 Cal. 44; Richardson v. Green, 133 U. S. 30; Holtu. Bennett, 146 Mass. 437; Neal's Appeal, 129 Pa. St. 64; Beach v. Miller, 130 111. 162; Roseboom v. Whittaker, 132 111. 81 ; Mullanphy Svgs. Bk. v. Schott, 135 111.655; Jones v. Hale, 32 Or. 465; Patterson v. Portland Smelting Works, 34 Or. 96. An owner of 636 property may sell it to a corporation of which he is an officer, provided he does not act on behalf of the cor- poration in the matter. Gamble v. Water Co., 122 N. Y. 91. See Crym- ble v. Mulvaney, 21 Col. 203. 3 91 U. S. 587. 4 Accord, Addison v. Lewis, 75 Va. 701, 720; Harts v. Brown, 77 111. 226; Saltmarsh v. Spaulding, 147 Mass. 224; New Memphis Gas Light Co. Cases, 105 Tenu. 268; Singer v. Salt Lake Copper M'f'g Co., 17 Utah, 143. See Seely v. San Jose Mill Co., 59 Cal. 22; Humphrey