96
THE GREEN BAG
doings of his associates, since his own liability arises only from his actual participation in such wrongdoing; and, further, while he may be liable for the wrongdoings of his associates, though not joining in them, if he has knowledge of such transactions and remains inactive, yet if he is ignorant of such transactions certainly liability docs not rest upon him. . . . "If, thus, the inactive director may leave undone all the things a trustee or an agent may leave undone and may take advantage of all the protection the law affords to persons acting in such other capacities, and at the same time may be under no duty to recognize any obli gatory relation with respect to the conduct of his associates, it follows as a possible result, as here pointed out, or indeed as an inevitable result, that the real purposes for which direct ors are in fact chosen may be in large measure defeated. If, on the other hand, a directorship in itself means the assumption of any specific obligation other than the obligations one always is under with reference to one's personal con duct, then it w-ould seem necessary that the attempt to apply to the director only such tests of propriety of conduct as are applied to the trustee and agent must fail and that there must be recognized in the position of a director some further element of responsibility which has not thus far been clearly developed. A dogma which earlier prevailed (strengthened, doubt less, by the circumstance that many corpo rations then were of the charitatfle type), and which has not yet disappeared, assumed that directors were rendering gratuitous service to stockholders, and that accordingly there should be imposed upon the position of director as few obligations or hardships as possible, in order that men of the desired character would more readily accept election. If this idea proceeded from the supposition that it was desirable for the benefit of the stockholders or the corporation to secure as directors men of a peculiar qualification or standing, the stock holders on the other hand should be allowed to rely, in some degree at least, upon the effect of the same supposition. That reliance is frequently very real and of important conse quences, but if such reliance is now to be entirely disregarded in determining the responsibil ity of directors, then the popular notion of the corporate director is not in harmony with the legal notion; and the only real question is whether the legal or the popular concep tion should prevail, whether really any desir able end. is to be secured by adhering to the strict and perhaps inapplicable rules developed in the course of faltering attempts to define the position and duty of a director. It may be said that this requires the substitution of a practical or ethical standard for an existing legal standard which, however fallacious, is certain; but such substitution is the normal method by -which legal rules are often devel
oped, and if in this instance the law cannot lend itself to such development it fails of its purpose. That such modification of legal theory is necessary or proper need not now be urged, as the present purpose is merely to suggest the anomaly which has been allowed to persist." CORPORATIONS. " Why not Abolish Directors? " by Frank E. Hodgins, Canada Law Journal (V. xliv, p. 6). CORPORATIONS (Stockholders' Right to Sue). " Right of a Stockholder, Suing in Behalf o£ a Corporation, to Complain of Mis deeds occurring Prior to his Acquisition of Stock," by Murray Seasongood, Harvard Law Review (V. xxi, p. 195). Arguing against the theory that as a principle of equity, a stockholder suing in the right of a corporation to redress wrongs done the company, must have owned his stock at the time the wrongs were committed or must have had his shares devolve upon him since by operation of law. This rule is contrary to the English law and the author finds no sound theory on which an arbitrary limitation like this should be placed on a right to sue when the litigation if success ful redounds to the benefit of all the stock holders. Rule 94 of the United States Supreme Court makes this limitation, but this was adopted in order to stop collusive transfers made as a contrivance to confer jurisdiction on the federal court. In a number of states it is recognized that this is not a rule of equity and subsequent stockholders are allowed to sue, as in England, and in accord with Mr. Seasongood 's argument. EDUCATION. " The Two Year Course in Southern Law Schools," by Thomas A. Street, Law Notes (V. xi, p. 183). EVIDENCE. " Telephonic Communications in Evidence," Anon., Virginia Law Register (V. xiii, p. 665). EVIDENCE. "The Theory Upon Which Dying Declarations are admitted in Evidence," by William A. Purrington, Bench and Bar (V. xi, p. 91). EVIDENCE. Professor Wigmore has solved the problem of rapid antiquation of text books by the multiplication of decisions by publishing a supplement to his exhaustive treatise in which he collects the decisions of the last three years. The matter which is mostly classified citations to be added to notes is arranged under section headings correspond
