that so provided, he is taken to have intended to become personally responsible.9

6. Thus where a check on the company's bankers, for payment to a third party of the company's money, was drawn by three directors in the name of the company, but the document was signed by them in their own names, and countersigned by the secretary of the company, adding to his name "Secretary," and a stamp bearing the name of the company was affixed, but the three directors did not appear, on the face of the check, to be directors or to sign as such, it was held that it did not purport to be the check of the company, and was not binding on them.10

1. In England, directors of railways are enti- | 4. Some American cases follow the English tled to compensation for services.

rule.

2. But the company may grant an annuity to 5. Official bonds strictly limited to term for which executed.

a disabled officer.

3. In this country are entitled to compensation,

in conformity to the order of the board.

§ 137. 1. In England, in the absence of contract or usage, from which one might be inferred, directors of railways and other corporations are not entitled to compensation for services as directors. This is regarded as an office, and so an honorary service. And a resolution of the board of directors that compensation should be allowed for certain specified services, not being under seal, so as to amount to a by-law, will not entitle such director to sue the company for compensation for such service.1

9 Parrott v. Eyre, 10 Bing. 283; Wilson v. Goodman, 4 Hare, 54, 62; Higgins v. Livingstone, 4 Dow, P. C. 341.

10 Serrell v. Derbyshire, Staffordshire & Wor. J. Railw., 19 Law J. 371; s. c. 9 C. B. 811. It would seem, that without much latitude of construction this case might have been otherwise ruled, and been more satisfactory.

1 Dunston v. The Imp. Gas L. Co., 3 B. & Ad. 125. But see Hall v. The Vt. & Mass. R., 28 Vt. R. 401. The rule of law in that respect is different in this

country, a resolution of the board of directors having the same force, whether

2. But it would seem, that where the company voted an annuity to a disabled officer, in the nature of a retiring pension, and the directors, by deed, in the name of the company, made a formal grant in conformity with the vote, that the contract is binding upon the company, although no power is expressly given by their charter to grant annuities.2

3. Railway directors in this country are generally allowed compensation, but cannot recover it beyond the rate fixed by the general resolutions of the board. And where a director acts as a member of the executive committee of the board, or in selling the bonds of the company, his service is to be regarded as in his capacity of director, and the amount of compensation is limited to that allowed directors.3

4. Some of the American states adopt the English rule that railway directors cannot recover compensation for services rendered in obtaining subscriptions to the capital stock of the company, before its organization; or for any other services, unless they are most unquestionably beyond the range of their official duties.4 And it is here determined that it would make no difference that the services were rendered under an expectation and an understanding among those engaged in the enterprise that the services should be compensated by the company after its organization. And from the technical embarrassment of holdunder seal or not. Post, § 164, ante, § 130. See also Gaskell v. Chambers, 5 Jur. N. S. 52; s. c. 26 Beav. 360. In this case the directors transferred the business of the company to another company, and received from the latter a large sum for compensation, and withheld the particulars from their members. It was held they were trustees of the money for the members, and the directors were ordered to pay it into conrt. But the directors are not the servants of the individual shareholders, and therefore such an one who feels aggrieved must seek redress through the company for any misconduct of the directors. Orr v. Glasgow, A. & M. J. R. Co., 6 Jur. N. S. 877.

2 Clarke v. Imp. G. L. Co., 4 B. & Ad. 315.

Hodges v. Rut. & Burlington Railw., 29 Vt. R. But where a director performs services for the company, disconnected with his office, he is not restricted, in regard to compensation, by any resolution of the board, in regard to the com- · pensation to be made the directors. Henry v. Rut. & Bur. Railw., 27 Vt. R. 485. In another case it was held, that railway directors, as a general rule, are not entitled to compensation for their personal services, unless rendered under Hall v. Vermont & Mass. Railw., 28 Vt. R. 401. some express contract.

4 N. Y. & N. H. Railw. Co. v. Ketchum, 27 Conn. R. 170; post, § 140.

ing the company bound by any such arrangements before its existence, the policy of the law is wholly opposed to them. We think this by far the most salutary rule upon the subject.

5. It is scarcely necessary to state that official bonds for faithful administration by officers of corporations are to be limited strictly to the term for which such officer is elected. And if the office is annual, and the officer continued from year to year, without the renewal of the bond, and the officer's annual account is passed from year to year, until finally a defect occur at a remote period from that covered by the bond, there is no indemnity to be obtained under the bond.5

*SECTION IV.

Records of the Proceedings of Directors.

1. English statutes require minutes of pro- | 2. Presumptions in favor of their containing ceedings of directors and make it evi

dence.

all that passed.

§ 138. 1. The English general statutes require the directors to keep minutes of all appointments, contracts, orders, and proceedings of the directors and committees, in books kept for that purpose, and these, duly made, are receivable as evidence, without further authentication. But this is held not to exclude other evidence of such transactions.1

2. As against the company and the members present at a particular meeting, the minutes of the directors will be held prima facie correct.2 And where the proceedings of the minutes of the meeting are imperfect, it will be presumed that everything was brought before the meeting which it was requi

1

5 M. & M. Savings Co. v. O. F. Hall Ass., 48 Penn. St. 446.

1 Inglis v. The Great Northern Railw., 16 Eng. L. & Eq. 55. Lord St. Leonards said, in the House of Lords: "But independently of the evidence furnished by the books, the due appointment was proved by a witness, and his evidence was admissible evidence, for the act confers a privilege, but does not exclude other evidence of the fact. Miles v. Bough, 3 Q. B. 845.

2 Ex parte Stark, 10 Jur. N. S. 790.

site to bring before them to have the action of the company valid.3

3. The legality of the proceedings of directors in purchasing shares of the company for the company, which required the sanction of a general meeting, will be presumed either from lapse of time and no dissent on the part of the shareholders, or from the proceedings of the general meeting at which the matter would naturally have been acted upon not being forthcoming, as it was the duty of the company to keep regular minutes of such meeting. And it was also here held that the company, by transferring such shares, thereby confirmed the validity of the transfer to them.3 So also by paying an annuity the price

of such shares.3

3

SECTION V.

Authority of Directors to borrow Money, and buy Goods.

1. Authority of directors to bind company,
express or implied.

2. General agent will bind company within 5.
scope of his duties. Directors presumed
to assent to his contracts.

6.

3. Contracts under seal of company primâ 7. facie bind them.

4. Strangers must take notice of general want

of authority in directors, but not of mere informalities.

Cannot subscribe for stock of other companies.

May borrow money if requisite.

How far directors may bind company by accepting land in payment of subscription.

§ 139. 1. Joint-stock companies, under many of the English statutes,1 are held bound by contracts made by a competent board of directors, though not under seal, and not made in strict compliance with the acts.2 But those who seek to bind

3 Ex parte Lane, 1 De G. J. & Sm. 504, s. c. 10 Jur. N. S. 25.

1 7 & 8 Vict. ch. 110.

2 Ridley v. Plymouth Banking Co., 2 Exch. 711. Where one has the actual charge and management of the business of a corporation, with the knowledge of the directors, the company will be bound by his contracts, made on their behalf, within the apparent scope of the business thus intrusted to him. Goodwin v. Union Screw Co., 34 N. H. R. 378; Chicago, Burlington, & Quincy Railw. v. Coleman, 18 Illinois R. 297. In this case it is held, the admission of the president of the company in regard to the authority and acts of a sub-agent will bind the company.

such companies, on contracts made with the directors, must show their authority to bind the company, either by the terms. of the deed of settlement, or that the body of the shareholders authorized these persons to act on their behalf. A ratification by a competent board of directors will bind the company.2

*

2. The general rule upon this subject, in regard to goods and money which is obtained by agents, ostensibly clothed with competent authority, and which actually goes to the use of the company, seems to be that the company is holden. Thus where a joint-stock manufacturing company, having a board of directors, with authority to appoint officers and delegate their authority, purchased goods through the general manager of the company, or his deputy, or the secretary, all of whom were duly appointed, and when the goods were delivered on the company's premises, and used for their purposes, they were held liable, on the ground that the manager had authority to give such orders, in the absence of any express provision to the contrary. And it was held that, as to the other, the directors must be taken to have known that the goods had been furnished and used, and that, therefore, the company was liable to pay for them.3

3. A contract under the seal of the company is prima facie binding upon them. In such case it is not enough, in order to defeat a recovery upon the contract, to show an excess of authority on the part of the directors, who made the contract.

The

3 Smith v. Hull Glass Co., 9 Eng. L. & Eq. 442. And where the general agent of a manufacturing company directed the clerk to issue a promissory note in the name of the company, and it was shown that the note was in the form customarily used by the company, in other similar cases, and which they had always recognized, it was held to be sufficient proof of the execution of the note by the company to go to the jury, and to warrant them in finding that the company had adopted, by usage, the signature of their agent as their own, and intended to be bound by it. Mead v. Keeler, 24 Barb. 20. Such company may borrow money for its legitimate business, and bind itself by a written obligation for its repayment. Ib. See also Curtis v. Leavitt, 15 New York Court of Appeals, 9, where this subject is discussed.

4

* Royal British Bank v. Turquand, 32 Eng. L. & Eq. 273. Lord Ch. J. Campbell said, in giving judgment: "A good plea must allege facts to establish illegality, as was done in Collins v. Blantern, 2 Willes, 347, and Paxton v. Popham, 9 East, 408. A mere excess of authority by the directors, we think of itself would not amount to a defence. The bond being under the seal of the company, the gist of the defence must be illegality. If the directors had ex