Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/700

 § 683.] THE LAW OF PRIVATE CORPORATIONS. [t'HAP. XII. CHAPTER XII. LEGAL RELATIONS BETWEEN SHAREHOLDERS AND OFFICERS OF A CORPORATION. Effect of investing the officers with authority to manage the corporate enterprise, §§ 683, 684. Right of shareholders that officers shall do no unauthorized acts, §685. Remedy, § 686. Fraudulent or ultra vires acts, § 687. Shareholders incompetent to bring action a gainst officers until there has been a failure of the corpora- tion to act, § 688. Competency of shareholders to sue when the corporate management is in the hands of the guilty offi- cers, § 689. Corporation a necessary party ; ac- § 683. tion should be brought on behalf of all the shareholders, §§ 690, 691. Directors trustees for all the share- holders, § 692. Corporation cannot condone breach of trust, § 693. Responsibility of officers for error; for acts of other officers, § 094. Acts authorized by shareholders' meetings, § 695. Unconditional right of shareholders to sue for direct injuries, §§ 696, 697. Limits to the trust relation between shareholders and directors, § 698. Directors' right to indemnification, Effect of in- vesting the officers with au- thority to manage the corporate enterprise. When a number of persons have combined their property in a joint undertaking, agreeing that the enterprise shall be managed in a certain way, no one of them can at will withdraw from the agreement, or interfere, except as in the agreement provided for, with the management agreed on. Persons who become incorporated agree, that within the fair scope of the purposes of incorporation, the controlling discretion as to the corporate enterprise shall rest with the body corporate acting regularly, and through the will of a majority ; and that the ordinary corporate business shall be managed by directors and other officers elected directly or indirectly by the body corporate. 1 "Where, however, as is usual, by the constitution of a cor- poration the management of the corporate affairs is vested in a board of directors, it would seem to be the right of every 1 Dudley v. Kentucky High School, 9 Bush, 576. 680 See § 553.