Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/767

 CHAP. XIV.] OFFICERS AND CREDITORS. [§ 753. in general the responsibility of corporate officers to outsiders for whatever torts the former may commit would be regulated by the rules applicable to the responsibility of ordinary agents under similar circumstances. 1 Thus if, acting on behalf of their corporation, officers commit a fraud or other palpable wrong or tort, there would seem to be no reason why they and their corporation might not be joined as defendants in the same action by the injured person. 2 § 753. It may be stated as a general proposition, drawn from the principles of the law of agency as applicable to officers of corporations, that corporate officers contracting as such in good faith will not be personally liable to the other contracting party, if (1) the other party when contracting knows or ought to know that the officers are acting on behalf of their corporation, and (2) the officers have authority to make the contract, and (3) the contract is made in such form name to statements known to him to be false, or to statements which he had no reasonable ground to suppose to be true. Trimble v. Reid, 97 Ky. 713. Cf. Prewitt v. Trimble, 92 Ky. 176. If directors knowingly issue spurious stock and borrow money on it as collateral, representing it to be genuine, they are liable to the lender in an action for deceit. Nat. Ex- change Bank v. Sibley, 71 Ga. 726. So directors issuing bonds falsely purporting to be "first mortgage bonds," are liable for the fraud to an innocent purchaser who buys from the agent in whose hands the directors placed them for sale. Clark v. Edgar, 84 Mo. 106. Direct- ors of a bank are liable on insolvency of the bank for false representations made by the directors to the public as to the bank's solvency, whereby the depositor is induced to deposit. Seale v. Baker, 70 Texas. 283; Kink- ier v. Junica, 84 Tex. 116. It makes no difference that the plaintiff was a stockholder (last case). Compare Hunnewell v. Duxbury, 154 Mass. 286; Miller v. Howard, 95 Tenn. 407; Townsend v. Williams, 117 N. C. 330. 1 If the agent of a bank without authority — either because the au- thority has not been conferred by the bank as a matter of fact, or be- cause the bank has no power under its charter to confer such authority — pays away its money to the officer of another bank, and the latter officer knows that the agent has no author- ity to pay the money, and that his bank has no right to take it, he is liable personally to the first bank for the money, whether he has paid it over to its own bank or not. Ameri- can Nat. Bk. v. Wheelock, 45 N. Y. Super. Ct. 205. 2 See Hewett v. Swift, 3 Allen, 420; Campbell v. Portland Sugar Co., 62 Me. 552; In re Imperial Land Co., L. R. 10 Eq. 298; Wright v. Wilcox, 19 Wend. 343; Suydam v. Moore, 8 Barb. 358; Phelps v. Wait, 30 N. Y. 78. But see Parsons v. Winchell, 5 Cush. 592. 747