Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/639

CHAP. X.] CORPORATION AND OFFICERS. [§ 618. they bound to exercise ? l Not the highest degree, not such as an extremely vigilant and very careful person would exer- cise. ... It would not be proper to answer the question by saying the lowest degree. . . . When one deposits money in a savings bank, or takes stock in a corporation, thus divest- ing himself of the immediate control of his property, he has the right to expect that the trustees or directors, who are chosen to take his place in the management and control of his property, will exercise ordinary care and prudence in the trusts committed to them — the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs. When one voluntarily takes the position of trustee or director of a corporation, good faith, exact justice, and public policy unite in requiring of him such a degree of care and prudence, and it is a gross breach of duty — crassa negligentia—not to bestow them." 2 § 618. Like directors, other corporate officers and agents are bound to observe the utmost good faith towards the corpora- tion ; and, perhaps, may be held to even a stricter performance of their duties ; for agents and officers, other than directors, usually receive salaries, and are supposed to devote a greater portion of their time to the service of the corporation ; 3 and, generally, all agents and servants of a corporation are bound to act with care and diligence, and, while engaged in the per- 1 Not keeping property of the cor- poration insured is not per se negli- gence on the part of directors: the complaint in such a case should allege facts showing that the direct- ors violated their duty in not keep- ing it insured. Charleston Boot, etc., Co. v. Dansmore, 60 N. H. 85. 2 Hun v. C'ary, 82 N. Y. 65, 70. Opinion of the court per Earl, J. See Citizens 1 Building Ass'n v. Cori- ell, 34 N. J. Eq. 383. Directors are liable only for gross negligence, Jones v. Johnson, 86 Ky. 530, which is absence of that diligence which ordinarily prudent business men would have exercised in their business. Savings Bk. v. Caperton, 87 Ky. 306. 3 Commercial Bank v. Ten Eyck, 48 N. Y. 305; Austin v. Daniels, 4 Den. (N. Y.) 299; East N. Y., etc., R. R. Co. o. Elmore, 5 Hun, 214; Pangborn v. Citizens' Building Ass'n, 35 N. J. Eq. 341; First Nat. B'k v. Reed, 36 Mich. 263. For disobeying an order of court regarding invest- ment of funds of a savings bank, its president may be punished for con- tempt, though the bank suffer no loss. Una v. Dodd, 39 N. J. Eq. 173. 619