Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/635

CHAP. X.J CORPORATION AND OFFICERS. [§ 613. of corporate officers — at least directors — are more compli- cated than those of ordinary agents of individuals. Pri- marily they are accountable for the proper performance of their duties to the corporation or body corporate as such. But it must be remembered that the body corporate not only repre- sents the interests of all the shareholders, but is also bound to regard the interests of the creditors of the corporation, whom in a certain sense it also represents ; and the directors, of course, are affected with knowledge of the fact that the powers of the body corporate must be exercised with due regard to the interests of all persons in any way interested in the corpo- rate enterprise. § 613, The powers of directors are either given them directly by the constitution of the corporation, or delegated to them by the majority of shareholders. 1 It would seem, accordingly, that those powers which directors receive directly from the constitution must be exercised with due regard for the interests of all persons entitled to rely on its provisions, and that the powers which directors receive by vote of a majority of share- holders must also be exercised with due regard for the interests of all, because that majority was bound to exercise its powers for the interests of all, and, therefore, only in the interests of all could it delegate power to others. Accordingly, the direct- ors cannot act with blind devotion for the interests of the majority of shareholders, 2 or even of all the shareholders, 3 but must regard at the same time the interests of creditors. 4 And the truth of this is not affected by the fact that ordinarily in the first instance directors are accountable for the abuse of their powers only to the body corporate ; because, as before Mo. 83; Barr v. N. Y., L. E. & W. R. R. Co., 125 N. Y. 263. Compare Metropolitan Elevated R. R. Co. v. Manhattan Elevated R. R. Co., 11 Daly (N. Y. ), 373, 516. Since direct- ors are trustees for the corporation, as under an express trust, the statute of limitations does not run against the demands of its receiver for mis- appropriation of moneys. Ellis v. Ward, 137 111. 509; Masonic, etc., Life Ass'n Co. v. Sharpe [1892], 1 Ch. 154. See § 626, note. 1 See §§ 219 et seq. 2 See Goodin v. Cincinnati, etc., Canal Co., 18 Ohio St. 169, § 559. 3 Certain corporate funds, i. e., those properly applicable to the payment of dividends, may be man- aged exclusively in the interests of shareholders or paid over to them, and the creditors have no ground to complain. See § 750. 4 See §§ 756 et seq. 615