Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/701

 CHAP. XII.] SHAREHOLDERS AND OFFICERS. [§ 685. shareholder — a right secured to him by the fundamental contract embodied in the corporate constitution — that the ordinary business of the corporation shall be managed and controlled by the board of directors, so long as they act within the scope of their authority and honest discretion, free from the interference of even a majority of shareholders. Under such circumstances the fundamental plan, which every share- holder agreed to, was not that a majority of shareholders, but that the board of directors should, for ordinary purposes, man- age and control the affairs of the corporation. § 684. Thus, for instance, it has been held that a contract between two connecting railroads for the division of earnings according to the distance which each company should carry the passengers or freight for which the money is paid, is within the discretionary powers of the directors, and its execution cannot be enjoined by a shareholder in one of the companies who holds a majority of its stock, unless he shows a fraudulent purpose on the part of the directors by which he will be injured. 1 Similarly, the Supreme Court of the United States has decided that where the trustees or directors of a railroad company have appealed from a decree, and have directed their counsel to prosecute the appeal, the Supreme Court will not dismiss it on the motion of strangers to the decree, who, since the decree was rendered, have become the owners of the majority of the stock of the corporation. To the directors is, by law, committed the management of the concerns of the corporation ; they are its representatives in court, and represent shareholders and creditors. If, in prose- cuting an appeal to final judgment, they violate a corporate obligation or their own duty, shareholders must seek a remedy in some court of original jurisdiction. 2 § 685. It is, however, no part of the contract of any share- holder that directors shall do acts unauthorized bv „. ., Right of the corporate constitution ; and it is the right of share- every shareholder that they shall do no such acts, that officers nor indeed any act beyond their own authority, ^author" although within the corporate powers, unless the Redacts. 1 Elkins v. Camden and Atlantic R. I 2 Railway Co. v. Ailing, 99 U. S. 463. R. Co., 36 N. J. Eq. 241. | 681