Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/811

 CHAP. XVI.] LEGAL RELATIONS AMONG OFFICERS. [§ 804. damages resulting from the wrong-fill acts or omissions of their DO O appointees, or of other directors, when they themselves have neither participated in the wrongful acts nor connived at them, they would certainly seem to be entitled to indemnifica- tion from their appointees in the one case, and from the other directors in the other. This notion of different degrees of liability for wrongful acts or omissions is by no means a new doctrine, nor altogether the result of statute. Lord Hardwicke said in Charitable Corporation v. Sutton : l "In the present case one thing is clear, that [those] who were the five engaged in that confed- eracy are certainly liable to make good the losses which the corporation have sustained in the first place, and the committee- men [directors] who were not partners in the affair, in the second place only." Lord Hardwicke had in his mind rather their degrees of liability as enforced in a suit brought by the corporation ; still, carried out logically, any such idea must end in allowing contribution or indemnification among direct- ors and other officers of a corporation. § 804. And decisions sustain this conclusion. 2 Thus, in an English case, it was held an irregularity for directors to take the promissory notes of one of their number, instead of cash, in payment for shares ; and an irregularity that would render them liable to make good to the company any loss occurring on a promissory note so taken. But the court also held that the transaction was not so fraudulent or illegal as to entitle the representatives of a debtor to repudiate his debt as to the company ; and that the directors, who had voluntarily made good the full price of the shares, were entitled to be indemnified out of the assets of the debtor. 3 The court further held in another case, arising apparently from the same facts, that the directors who took part in the meetings at which the 1 2 Atkyns, 400, 404, § 619. 2 When a director, by agreement with his co-directors, for whom lie is to act as well as for himself in the matter, has taken bonds of the corporation below par, and sold them at a profit, and has been obliged to account to the corporation for the whole amount of profit realized, he is entitled to contribution from such of his co-directors as were associated with him in the transaction. Wid- rig v. Newport Street R'y Co., 82 Ky. 511. 8 Power v. Hoey, 19 W. R. 916. 791