* 5. In a case where the plaintiffs complained that the directors of the Victoria Park Company, and certain others, proprietive upon them to complete their works in a limited time, and to let the works remain unfinished after the expiration of the time is a violation of their duty to the public, and a violation which, if permitted, would enable the company to do that which this court has repeatedly exercised its jurisdiction and power to prevent. If they are allowed to neglect the completion of their works until after the expiration of the time limited by the act, and are then allowed to make profit of so much as they have done, and to abandon the rest, it would seem that the means might at any time be found to abandon any part of their works at their own pleasure, and thus might extensive fraud be committed upon shareholders who had subscribed for the whole works. Such permitted violation of a duty to the public would show a most unfortunate state of the law, and be, in my opinion, a great injury to the public. But regarding this as a public wrong, or as a violation of duty to the public, it does not appear to me that this court has jurisdiction to interfere. The case does not appear to me to come within the authority of any decided case, or within the principle of the cases in which the court has interfered to prevent application of funds, subscribed for a whole purpose, to the completion of a part of it only; nor can it, I think, be safely said, that in no case whatever ought joint-stock companies to be allowed to divide any profits, or receive any tolls until all their works have been completed. If parliament so enacted, it would probably be much better for the public, and also much better for the companies or shareholders themselves; but it is plain that the affairs of a company might be in such a state, with such probability of being at any time able to raise all the capital required for the completion of their works, that there would be no risk whatever in dividing some interim profits. But so far as the public interest is concerned, I do not think that this court has, on such a bill as this, jurisdiction to interfere. As to the duties which the governing body of such a company owe to their constituents, the shareholders, this court does not attempt to direct the performance of all such duties, but, on the contrary, leaves to the companies themselves the enforcement of all the duties arising out of matters which are the subject of internal arrangement. It seems very improper, and very imprudent, to treat as profit any part of their funds or income, at a time when they are without the pecuniary means of performing the works which they are bound to perform, in discharge of their duty to the public. The committee, with the sanction of the shareholders, are proceeding in a manner which (being attended with a constant breach of public duty) may result in the most serious injury to the shareholders themselves, in the same manner that any bad management injures those whose interests are affected by it; but they do it for themselves, and they must suffer the consequences. I think, therefore, that the demurrer for want of equity must be allowed. It appears to me that this court has not jurisdiction to interfere, on the mere ground that the defendants are acting in violation of their duty to the public, and that the misapplication of the income is a proper subject of internal regulation."

In Henry v. Great Northern Railw., 30 Law Times, 10, it is held, that the

tors of * shares, had entered into speculating purchases of the property of the company, and a majority of the directors being holders of preference shares, as they are called in England, are entitled to have the company enjoined from declaring any dividend in favor of the ordinary shareholders, so long as the company remains liable to a deficit in their funds, caused by an officer of the company having defrauded them by forgeries. This case was affirmed in the Equity Court of Appeal, 30 Law Times, 141. See also Gifford v. New Jersey Railw., 2 Stockton's Ch. 171. A minority of the stockholders of a corporation have a remedy in chancery against the directors, the corporation, and all others, individuals or corporations, to prevent a misapplication of the funds of the corporation in which they are interested. March v. Eastern Railw., 40 N. H. R. 548. Where, therefore, it was alleged in a bill that railroad A had leased and entered upon the track, furniture, fixtures, &c. of railroad B for a term of years, and had agreed to pay said railroad B, as rents at stated times, a certain share of the income and profits of both roads; and also that such profits to a large amount had been received by said railroad A, and had been accumulating for several years, said railroad A refusing to pay said rents according to the terms of said lease, and claiming to apply such profits in payment for investments by them made in the stock of other corporations, and in other schemes of speculation not warranted by the terms of said lease; and that said railroad B and its directors, being influenced by persons in the interest of said railroad A, had declined to take measures to collect said rents of said railroad A, but were allowing and consenting to such improper application of the funds belonging to them, to which funds the complainants, with the other stockholders, were proportionately entitled, as dividends upon their stock, it was held upon demurrer to this bill by railroad A, that a minority of the stockholders of railroad B might maintain suit against their own directors and their own corporation, and also against railroad A, the object of the suit being to prevent such misapplication of the funds, and to compel said railroad A to pay over its dues to railroad B, and to compel the latter to distribute the same as dividends among the complainants and others, its stockholders. But in order to prevent a multiplicity of suits, and that justice may be done between all parties interested, such stockholders should set forth in their bill that it is brought, not only for themselves, but in behalf of all others similarly interested, who may choose to become also plaintiffs in the proceeding. In the indentures whereby railroad B leased their road, &c. to railroad A, there was an agreement to refer to arbitration all disputes that might arise between them on the lease. Held, that this agreement not only did not oust the court of its jurisdiction, but that, under the circumstances, it might even enjoin both roads from making such reference in relation to the amount due to railroad B, and if such reference had been made, then from proceeding therewith. And even the fact that the contract was made and to be performed within a foreign jurisdiction would not hinder the court from acting, having jurisdiction of the parties. March v. Eastern Railw., 40 N. H. R. 548. In Nazro v. Merchants' Mutual Ins. Co., 14 Wisconsin R. 295, it is laid down that the capital stock of an incorporated company is a trust fund, the

bankrupts were not competent to exercise such office, and that the defendants were in various modes squandering the property of the company, and praying for the appointment of a receiver, and an injunction to compel the application of the company's resources to the extinguishment of its liabilities, and for the winding up of the affairs of the company, the Vice-Chancellor held, that upon the facts stated he must presume the existence of a board of direction de facto, and the possibility of convening a general meeting of proprietors capable of controlling the acts of the existing board, and that there therefore appeared no insuperable impediment in the way of the company obtaining redress in its corporate capacity for the acts complained of, and that therefore the plaintiffs could not sue in a form of pleading which assumed the practical dissolution of the corporation. In a later case before the Lord Chancellor, Cottenham, the opinion of Vice-Chancellor Wigram, in Foss v. Harbottle, is fully confirmed, and it was conceded that it makes no difference whether the acts complained of as being transacted by the usurping board proper application of which courts of equity will enforce by virtue of their inherent jurisdiction over trusts and frauds. See Lead Mining Co. v. Merryweather, 10 Jur. N. S. 1231. But the suit should, in form, be in behalf of all the shareholders. March v. Eastern Railw., supra; White v. Carmarthen, &c. Railw., 1 H. & M. 786. But see Croskey v. Bank of Wales, 9 Jur. N. S. 595; Thomas v. Hobler, 8 Jur. N. S. 125. An illusory suit, really brought in the interest of a rival company, was held not maintainable in Forrest v. Manchester, Sh. & L. Railw., on appeal, 7 Jur. N. S. 887. And see Burt v. British Nation Life Ins. Co., 5 Jur. N. S. 612; s. c. 25 L. J. Ch. 731, before the Lords Justices; Hutton v. Scarborough Cliff Hotel Co., 2 Drew & Sm. 514.

Foss v. Harbottle, 2 Hare, 461; Thames Haven Dock and Railw. Co. v. Hall, 3 Railw. C. 441. This last is an action for calls, and the question of the existence of the company was attempted to be raised, after the case was set down for trial. It was held too late to raise such questions, and also that the validity of the authority of directors to make calls, as such, could not be raised in this mode; and that after plea, it will be presumed that the attorney, bringing the suit, was appointed under the seal of the company, and the court refused to allow a plea, raising these points, to be filed, at this late hour. See also Exeter and C. Railw. v. Buller, 5 Railw. C. 211, where it is said, that if the directors refuse to comply with the vote of a majority of the shareholders, a court of equity will compel them to do so, by injunction. But the allegation that shares were bought up, by interested parties, to change the vote, is nothing which a court of equity will consider. That is what every one may lawfully do, if he do not infringe the terms of the charter. Mozley v. Alston, 1 Phil. C. C. 790.

of directors were absolutely void and illegal, or merely voidable at the election of the company. The Lord Chancellor said he had called for one case where a court of equity had assumed to try the validity of the election of corporate officers de facto exercising certain functions, and this at the suit of individual shareholders, where there appeared no impediment to the corporation seeking redress by mandamus, or any appropriate remedy, and as no such case had been produced he should assume that none existed, and he would not be the first to make such a case.8

• Mozley v. Alston, 1 Phillips, 790; Lord v. Copper Miners' Co., 2 Phillips, 740; Bailey v. Birkenhead, Lancashire, and Ch. J. Railw., 6 Railw. C. 256. In this last case it was held, that acts not set forth in the bill, although declared to be public acts, could not be referred to, in an argument on demurrer. It should be borne in mind, that the distinction attempted to be drawn, from some of the cases, between void acts of the directors and those which are merely voidable, is important chiefly in determining the discretion of the Chancellor, and is to be viewed in these cases, much as in other cases, where the authority of agents comes in question. Hodges on Railways, 71. And in Hichens v. Congreve, 4 Simons, 420, where certain persons agreed for the purchase of certain iron and coal mines for £10,000, formed a joint-stock company for working them, and stipulated for the sale of the mines to the company for £ 25,000, the £ 15,000 to be divided among the projectors and their friends, who acted as officers of the company, which being acceded to by the company, and the money distributed accordingly, upon a bill brought by some of the shareholders, on behalf of themselves and the others, against the persons who had participated in the £15,000, the latter were decreed to refund what they had received, and one of them having become bankrupt, after he had paid the amount received by him into court, under an order upon motion, it was considered that the plaintiffs were entitled to receive that sum, and were not to be put to prove their demand under the commission. Upon the question, who are to receive the benefit of the restitution, the Vice-Chancellor said, "Those who now are, and those who by assignment from the present proprietors may become, members of the company."

Directors to whom the entire management of the company is intrusted, and who receive a remuneration for their services out of the funds of the company, are under an obligation to the shareholders at large to use their best exertions in all matters which relate to the affairs of the company. And without any stipulation to that effect, the duty results, from the employment, not to make any profit out of the employment beyond their compensation, and not to acquire any adverse interest, while they remain directors. Benson v. Heathorn, 1 Y. & Coll. C. C. 326; Great Luxembourg Railw. v. Magnay, 25 Beav. 586; s. c. 4 Jur. N. S. 839; Gaskell v. Chambers, 5 Jur. N. S. 52; s. c. 28 L. J. Ch. 385; Hodginson v. National Live Stock Ins. Co., 5 Jur. N. S. 478; s. c. on Appeal, 5 Jur. N. S. 969. See also Robinson v. Smith, 3 Paige, 222. So, too, a director

6. But it seems to be well established, that the directors of a corporation are liable personally each for his own share in any loss occasioned to the company, for malversation, in the exercise of his functions, whether misfeasance, malfeasance, or non-feasance, the same as any other trustee, and redress may ordinarily be obtained in equity. And it seems in such cases, as each director is liable only for his own act, and those to which he has assented, and there is no contribution among wrong-doers, there is no necessity that all the board should be parties to the bill, and although strictly the proceeding should be instituted in

is liable to account for premiums received upon the sale of shares. York and N. M. Railw. v. Hudson, 19 Eng. L. & Eq. 361. It was held in this case, that the directors could not discharge themselves from such a claim by suggesting that the money had been expended for secret purposes connected with the enterprise, and that persons in a fiduciary relation could not retain any remuneration for their services. But upon this last point see Hall v. Vermont & Mass. Railw., 28 Vt. R. 401. Where the stock of certain shareholders was about to be sold, and the officers of the company appointed an agent to buy it "for the use of the company," but when purchased they took a portion of it to themselves, it was held they were liable, in an action at law (in Penn.), to any shareholder, for the damage thereby sustained by him. Kimmel v. Stoner, 18 Penn. St. 155; Attorney-General v. Wilson, 1 Craig & Phillips, 1. Redress in such cases is to be sought ordinarily, it would seem, in the name of the corporation. Society of Practical Knowledge v. Abbott, 2 Beavan, 559. But very extensive amendments in the frame of the bill, and even in the names of the parties, will be allowed. Jones v. Rose, 4 Hare, 52; Fellowes v. Deere, 3 Beavan, 353; 7 Id. 545; Tooker v. Oakley, 10 Paige, 288. Where the directors of a corporation pay over the funds in their hands, or in the treasury of the corporation, upon a pretended claim, which they must be presumed to know to be wholly unfounded, it is a breach of trust on their part, for which they are personally responsible, and one stockholder can maintain an action against them therefor, suing in his own name and in behalf of the other stockholders. Butts v. Wood, 38 Barb. 381. And see, as to the duties of directors and the degree of care required of them, Richards v. New Hampshire Ins. Co., 43 N. H. R. 263.

Officers of a corporation cannot purchase any claim against or interest in the company, except in trust for the company, after a resolution has been adopted by them, as managers, directing one of their number to purchase for the benefit of the company. A change of time and place from that published for the sale, where a resolution was passed directing the manager to purchase stock for the benefit of the company, is no revocation of the authority. In an action for conspiracy, proof of a division of the profits of the fraudulent concern, is sufficient evidence of combination in the first instance to render the declarations of one conspirator admissible in evidence against the rest. Ib.