ment with him. *There was in it most of the elements of a vicious contract, which have avoided similar obligations in the Barb. 361. The enormity of such transactions, in some quarters, if universal and concurrent general opinion may be regarded as authentic, is truly appalling to any just sentiment of confidence in official fairness, and responsible relation to public trusts. It is probable that the virus of the disease lies deeper in the fountains of the common moral sentiment than we have generally supposed. We feel no disposition to join in a general outcry upon the subject. For we do not believe, as a general thing, that such evils are likely to be cured by any formal criticisms, either in the abstract or in particular cases, whether it come from the bench or the press. The difficulty is one which, for its cure, demands sterner remedies. The perpetrators of such enormities are quite too apt to consider, that because they have been made the victims of some severe strictures, in high places perhaps, they have expiated their guilt, and perhaps earned an indulgence for the future; and so rush at once into a deeper chasm of iniquity, just as soon as another tempting occasion presents. And it is not uncommon, that the administrators of the law, even in such cases, after having administered a somewhat scathing rebuke to the perpetrators of such crimes, begin to feel compunctious visitings, and terminate the drama, which was introduced with such a high-sounding announcement, by the infliction of a most insignificant penalty, which renders both the law and its ministers more or less objects of contempt. The true method undoubtedly, in such cases, if we desire to make the law, as it should be, a just and unaffected terror to evil-doers, is to say little, but do justice. Let the judgments of the courts, rather than the comments of the judges, testify to the sense of abhorrence of such crimes. These philippics from the bench generally are very justly regarded, not only by the people at large, but by the culprits themselves, as a kind of apology for the sentence, and thus destroy half its good effect. And if the other half is deducted by the judge, on account of the plainness and the honesty of the rebuke which he has already administered to the offender, very little remains. But the exposition of the subject, in an important case in the City of New York, is so instructive, that we venture to repeat it here.. In re Robert W. Lowber v. The Mayor, Aldermen, and Commonalty of the City of New York and In re A. C. Flagg, Comptroller, and others, tax-payers, v. Lowber. The gist of these cross-actions is, that by collusion with certain of the city authorities, Lowber was to receive $ 200,000 for a piece of land for a market on the East River. The arrangement was made by consenting to a judgment of court on the report of a referee. Comptroller Flagg, upon hearing of this judgment, took measures for obtaining a stay of proceedings. In giving judgment on this motion, Roosevelt, J., said :— "The decision of the general term of the superior court, it may be said, was not pronounced, and of course was not known till some months after the title in this case was passed, and even some weeks after the judgment in the present action was entered. But the fact, while it affords matter of vindication to the * leading cases cited. There was secrecy, individual application, a concealed promise of compensation, and utter ignorance and corporation counsel, is at the same time, of itself, a sufficient reason, under the circumstances, for opening the judgment, a reason, as it seems to me, not only sufficient, but controlling, leaving in any just view of the subject no alternative. To say that the citizens, in such a case, are to hazard more than a half . million of dollars, the probable cost of land and market, and that there is no relief, would be monstrous. The proposition shocks all our notions of law and judicial proceedings, and especially when broached in a court having, by the constitution, general jurisdiction in law and equity." “As matter of law,' (says the counsel of the city in his second point), 'I deny that the corporation can be ordered by this, or any court, to defend a suit.' The counsel seems to forget that if the corporation (by which he means the aldermen and other officers of the corporation) cannot be ordered to defend a suit, the corporators may be permitted to do it for them; and that if the court cannot compel the corporation to resist an unjust claim, it can refuse to permit its records to be used as the machinery for enforcing it. "If this were not so, of what avail would be the legislative restrictions on the power of contracting debts and on the power of exercising extensive functions ? All the property of the city, and all its revenues, past, present, and prospective, from taxation or otherwise, might be disposed of without appeal, by a single act of mortgage or conveyance, clothed in the form of a concerted judgment judgment, at the most, nominally defended, but really confessed — and of which, as in this case, the court itself, without its knowledge, might be made to figure as the innocent author. a "As matter of law, I deny that the court can be made, and thus in effect 'ordered,' by the boards of direction, by whatever name called, of this or any corporation, thus to lend its aid to violate the law and ruin the corporators. Nor is it true either, that the corporation counsel, in the defence of suits in this court, brought against the city, is subject to the absolute orders of the two boards, and ‘only responsible' to them. Although, in the loose language of ordinary discourse, the aldermen and assistant aldermen are commonly called 'the corporation,' they are in fact only its legislative, as distinguished from its executive, organs. The corporation of the city, as we have seen, consists of the whole body of the citizens. The citizens are the quasi stockholders. The 'charter officers,' whether legislative or executive, including the 'head of the law department,' are merely the agents and trustees of the citizens, and all ultimately responsible to them. It is an error on the part of the corporation counsel to assume, as he does in his third point, that he is responsible only to his client,' and that the client is the common council, as distinguished from the 'commonalty.' His office is the direct gift of the people, made elective for the express purpose of putting an end to the subserviency previously supposed to the exist, and of creating a check or counterpoise in its stead. Nor is this all; corporation counsel, when conducting the prosecution or defence of a suit in court, is an officer of the court, and as such, and like any other attorney in like 6 recklessness as to the competency of the party whose cause he was promoting, and whose reward he was to receive. There is the difference, that these directors were servants of an organization inferior to that of a state, yet acting in a very spacious sphere, and representing an extensive body of constituents. The difference between their * position and that of legislators, upon a question like this, appears to me but shadowy. “If, then, the claim of Clement would be promptly rejected, does the present plaintiff stand in a better position? His original employment might have been consistent with an open, avowed agency, an intent or instructions to make it known, and thus be free from all objections. But we are left in ignorance of what the terms of such original agreement were, how far they extended. All is indefinite, except merely an employment. He engages Clement, and here again, that employment may have been perfectly free from censure on the plaintiff's part. But upon the best consideration we can give, we cannot separate the act of Clement from the acts of the plaintiff. There is a legal identity for the purposes of this action. The plaintiff must be held to have employed Clement to do what he did do, or to have been bound to superintend his proceedings, and free them from what was illegal. It is impossible to permit him to profit by the misdeeds of his own agents, however ignorant and exempt from case, responsible to the court. Although subject, within certain limits, to the legally authorized resolutions of the common council, when acting in his general character of 'counsel to the corporation,' when acting as an attorney of the court he is subject to the rules and regulations of the court, and with this intimation will, I have no doubt, be perfectly prepared [see his communication] to perform any duty which such a result, or the office he holds, may devolve upon him.' “An order will, therefore, be entered (first submitting a draft to the court for settlement), directing that the judgment and execution be set aside, as also the answer, reference, and report; and that a new answer, to be prepared by the counsel to the corporation, and approved by the comptroller, be filed and served in twenty days from the date of this order, unless the comptroller, within the said twenty days, should elect, as he may, officially, and as a tax-payer and corporator, on behalf of himself and others, to file an original bill of complaint, setting forth such matters and making such parties, and praying such relief in the premises as he may be advised.” See also Semmes v. Mayor, &c. of Columbus, 19 Ga. R. 471. Ante, § 176. them himself. His ignorance, when knowledge was a duty, becomes equivalent to a fault." 4. The directors of a corporation, created for business purposes and profit, are trustees for the shareholders, and owe them all the duties and responsibilities which attach to other trustees and agents. If, therefore, a director enter into a contract for the company, he can derive no personal benefit from it. Accordingly, where the company had furnished the director with a large sum of money, to enable him to purchase the concession of another company in regard to their line, and he purchased it, as it turned out, of himself, being the concealed owner of it, it was held that the transaction could not stand, but the company must adopt or repudiate it altogether. But the company having sold the concession during the pendency of a suit impeaching the transaction, it was held they could have no relief, either as to the application of the money or otherwise.5 had 5. And where the directors of an insurance company purchased the stock of one of the board, and allowed him to retire. from his position both as director and shareholder, and had used the funds of the company to compensate him for his shares, it was held that this was such an irregularity as could not be confirmed and legalized by a meeting of the shareholders even, unless the deed of settlement under which the company was formed provided for its being so ratified, or for its transaction by the directors. And it was held, that in such case a bill in equity, filed by certain shareholders on behalf of themselves and the others against the company and the directors, praying that the directors might be decreed to restore to the company the funds so diverted by them, was maintainable.6 6. It seems to be regarded as a valid contract between the different directors of a corporation, by which one portion purchase the interest of another portion, to enable them to retire with a view to heal dissensions in the board; and the fact that the money is paid by the company's bankers and refunded by a * Great Luxembourg Railw. v. Magnay, 25 Beavan, 586; s. c. 4 Jur. N. S. 839. 6 5 See also Sturges v. Knapp, 31 Vt. R. 1. Hodgkinson v. National Live Stock Ins. Co., 5 Jur. N. S. 478, 969; s. c. 26 Beav. 473. resale of the shares thus purchased, will not render the contract invalid.7 7. But where by a constitutional provision of a corporation the director's office was vacated, if he participated in the profits of any contract with the company, but the company were empowered to borrow money on the director's own individual responsibility, or on other securities, it was held that a director, lending his own money to the company at a large interest, was not thereby disqualified from being a director.8 8. A director who acts as such by sitting at the board and executing works for the company, will be treated as such so far as his claim against the company is concerned, although he was not properly appointed.9 9. It is not ultra vires for a hotel company to lease part of their premises to a business company, with the condition that the first company shall have the exclusive privilege of supplying the portion so leased with all provisions, wines and liquors.1 10 10. Under the English statute 11 it is an answer to a claim for compensation for works of the company executed by the plaintiff, that he was at the time of entering into the contract interested therein, and it makes no difference that the consideration was executed, and the company had had the benefit of the contract.12 11. A contract made between the projector of a corporation and the directors of the company thereafter created, which is not in terms made conditional on the completion of the company, is not under the English statute binding upon the company when fully established. 13 12. A rule of the constitution of the company, whereby a director is prohibited from voting upon any matter in which he is interested, will not preclude him from voting as a shareholder at 7 Haddon v. Ayers, 5 Jur. N. S. 408. * Bluck v. Mullalue, 5 Jur. N. S. 1018; s. c. 27 Beav. 398. • South Essex Gas Light & Coke Co., in re 20 L. J. Ch. 43. 10 Simpson v. Westminster Palace Hotel Co., 6 Jur. N. S. 985; s. c. 2 De G. F. & J. 141; s. c. 8 Ho. Lds. Cas. 712. 11 7 & 8 Vic. c. 110, § 29. : 12 Stears v. South Essex Gas Light & Coke Co., 9 C. B. N. S. 180; s. c. 7 Jur. N. S. 447. See also Walker ex parte, 8 De G. M. & G. 607. 18 Gunn v. London & Lancashire Ass.. Co., 12 C. B. N. S. 694. |