Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/645

CHAP. X.] CORPORATION AND OFFICERS. [§ 623 «  the amount of the loan, and so violates a provision in the charter of the bank, will be liable for any loss. 1 § 623. But it has been held that when the powers of direct- ors are uncertain or difficult to ascertain, and they act honestly under the advice of counsel, they will not be personally liable, even though their acts be afterwards declared beyond their au- thority and ultra vires? " In regard to whether the defendants [directors] should be held responsible for any of their acts and investments as ultra vires, it might be sufficient to notice the fact that the charter of this corporation was a very compli- cated one, made up by comparing together no less than sixteen acts of incorporation or supplements. ... To have mistaken the extent of their powers under such circumstances would not have been matter of surprise even in the most timid and cautious. We may adopt on this point the language of Green, C. J., in Hodges v. New England Screw Co., 1 R. I. 312 : ' In considering the question of the personal responsibility of the directors we shall assume that they violated the charter of the Screw Company. The question then will be, Was such viola- tion the result of mistake as to their powers, and if so, did they fall into the mistake from want of proper care, such care as a man of ordinary prudence practices in his own affairs? For if the mistake be such as with proper care might have been avoided, they ought to be liable. If, on the other hand, the mistake be such as the directors might well make, notwith- standing the exercise of proper care, and if they acted in good faith and for the benefit of the Screw Company, they ought not to be liable.' We may say in this case, conceding that the directors did violate the charter, it Avas a question upon which with all due care they might have made an honest mistake ; and moreover, it appears by the evidence and is so reported, that they acted throughout by the advice of their counsel. It is well settled that trustees will be protected from responsibil- ity under such circumstances." 3 Still, it may be suggested that as to transactions within the i Williams v. McDonald, 42 N. J. Eq. 392. 2 Spering's Appeal, 71 Pa. St. 11; Hodges v. New England Screw Co., 1 R. I. 312; S. C, 3 It. I. 9. 40 Compare Williams v. McDonald, 37 N. J. Eq. 409. 3 Spering's Appeal, 71 Pa. St. 11; opinion of the court per Sharswood, C. J. 625