Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/708

 § 693.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XII. hold their powers iti trust for all the shareholders, minority as well as majority ; * and the primary reason why a single share- holder cannot always bring suit against the guilty officers im- mediately is not the inconvenience which a multiplicity of suits might cause the latter, but rather the right of the corporation to control the actions of its appointees and bring them to ac- count. Accordingly, from the restrictions on the right of share- holders to bring suits against corporate officers for a breach of duty, it is not to be implied that directors and other officers do not owe to every shareholder the substantial duties which they owe immediately to the corporation. These restrictions are only in respect to the manner of enforcing their duties ; and the shareholders are the real beneficiaries. § 693. Thus, it may be said that the officers of a corpora- tion owe to the shareholders all the duties which they owe to the body corporate ; and the rules gov- erning the liability of officers to the body corporate also govern their substantial liability to the share- Moreover, it is beyond the powers of the corporation to condone gratuitously, so as to conclude non-consenting shareholders, a breach of trust on the part of directors, whereby the assets of the corporation have been wasted or the corporate interests injured. 2 Accordingly, for every breach of trust on the part of the officers of a corporation, whether the same consist in fraudulent or unauthorized acts or in gross negligence, 3 the guilty officers are liable to the individual shareholders in damages, or to account for unlawful profits made by them. 4 And to enforce this liability, actions may Corpora- tion cannot condone breach of trust. holders. 1 Harris v. North Devon R'y Co., 20 Beav. 384; Richards v. New Hampshire Ins. Co., 43 N. H. 263. Directors can make no disposition of the corporate funds which will not enure to the equal [proportion- ate] benefit of shareholders. Hale v. Republican River Bridge Co., 8 Kan. 460. In Richardson v. Larpent, 2 Y. & C. N. R. 507, the bill was dis- missed because shareholders, hold- ing views opposed to the plaintiff, were not made parties to the suit, 688 although the defendant directors held the views of such shareholders. Bruce, V. C, saying (p. 514), "Di- rectors are officially obliged to have an equal mind towards the share- holders, and cannot properly be con- sidered as representing an opposi- tion." 2 Hazard v. Durant, 11 R. I. 195. 8 Brinckerhoff v. Bostwick, 88 N. T. 52. 4 Ryan v. Leavenworth, etc., R'y Co., 21 Kans. 365; Farmers', etc., Bank v. Downey, 53 Cal. 466; Koehler