for the publication of a libel, by its agents and servants in the due course of the business of the company, as where the company were the owners, and by their agents managed the electric telegraph along their line, and sent a despatch to the effect that the plaintiff's bank "had stopped payment," which proved not to be the fact. This despatch was sent for their own protection, in order to insure their agents against taking bills on such bank. But the message went beyond what was necessary for that purpose, and thus made the company responsible as for a voluntary publication. It would have answered all purposes to have directed their agents not to take the bills without assigning any reason.2 So, too, in Philadelphia, Wilmington, and Baltimore Railway v. Quigley, it was decided, *that a railway may become liable for publishing and circulating among its members a statement of the report of the directors, and the evidence on which it is based, although the report itself, when made to the stockholders in good faith, and for their information upon matters affecting their interest, would be regarded as a privileged communication.

2. But directors have been held liable, in many cases, personally, where the debt was that of the company, and where it so appeared upon the face of the contract. As upon a promissory note, which was expressed, "jointly and severally we promise to pay," ," "value received for and on behalf of the Wesleyan Newspaper Association. S. & W., Directors."4 But it is ordinarily a question of intention, whether the directors are personally liable if they act within the powers conferred by the company.5

" Whitfield v. South Eastern Railw., 1 Ellis, B. & Ellis, 115; s. c. 4 Jur. N. S. 688.

321 How. (U. S.) 202.

4 Healey v. Story, 3 Exch. 3. Alderson, B., said the terms, jointly and severally, imported a personal undertaking, inasmuch as they could properly have no application to the company. But see Roberts v. Button, 14 Vt. 195, and the cases cited, where the subject is examined more at length than space will here allow. Dewers v. Pike, Murphy & Hurl. 131. But in the case of Lindus v. Melrose, 3 H. & N. 177, before the Court of Exchequer Chamber (February, 1858), it was held that a promissory note expressed, "For value received we jointly promise to pay," and signed by three of the directors of a jointstock company, and countersigned by the secretary, and expressed to have been on account of stock of the company, did not bind the signers personally, but imported, on its face, a contract on behalf of the company.

Tyrrell v. Woolley, 1 Man. & Gr. 809; Burrell v. Jones, 3 B. & Ald. 47. In a somewhat recent case, Davidson v. Tulloch, 3 McQu. 783; s. c. 6 Jur. N. S. 543,

3. But where the directors of a railway assume to do an act exceeding their power, as accepting bills of exchange, which * does not come within the ordinary business of railways, they will be personally liable.6

4. But the business of railways is so much extended in this country, as borrowers of money, carriers, and contractors, in various ways, that it is not easy to determine, except from each particular case, how far the directors may draw or indorse bills, or, indeed, what particular acts they may or may not do.

In a recent case the question of the extent of corporate powers is considerably discussed, and it was held that the exercise of such powers must be conferred by their charters, but that it is the duty of courts to give the charters such a construction as to effect the leading purposes of the grant where that can be done consistently with the grant; and that business corporations have the power to make such contracts and in such forms as are requisite to accomplish the purposes of the grant, having regard to any special limitations contained in such grants, and that promissory notes or bills made or received by such corporations are prima facie valid, but that it is competent to show that the transactions out of which they arise are not within the powers of the corporation and thus defeat their operation. In another case it before the House of Lords, it was determined, that an action may be maintained against the directors of a company in respect of any transactions which the body of the shareholders could not sanction, but in respect of any transactions which they might sanction, although the directors might not have been justified in what they were doing, there can be no right of action. And directors are not liable for defect of authority to make a conveyance of property, the sale of which they had negotiated, but the actual sale being broken off by an objection of the vendee's solicitor, that the directors had not the requisite authority. Wilson v. Miers, 10 C. B. N. S. 348. See also Nowell v. Andover & R. Railw. Co., 3 Gif. 112; s. c. 7 Jur. N. S. 839. The company are not liable to make good any loss sustained through the false representations of their officers, although incidentally benefited thereby, unless they entered into the scheme for the purpose of such gain. Barry v. Croskey, 2 Johns. & H. 1.

Owen & Van Uster, 10 C. B. 318; Roberts v. Button, 14 Vt. 195. They are in all cases responsible for the consequences of omission of duty, to the same extent as other trustees. Vanguard v. Marshall, Law Rep. 6 Eq. 112.

7 Straus v. Eagle Insurance Co., 5 Ohio, N. S. 59.

8 Hamilton v. Newcastle & Danville Railw., 9 Ind. 359; M. & M. Railw. v. Hodge, id. 163. In Massachusetts it was held that the only remedy under the late statute for a corporate debt, against an officer of the corporation, was in equity. Bond v. Morse, 9 Allen, 471.

was held, that prima facie a railway company had power to execute promissory notes for its legal indebtedness, and that it could do this only by its agents; that no written or sealed authority to the agent was requisite; nor that the contract should be under seal unless specially so required by the charter; that it was not important to prove the consideration, as the law will make the same implications in favor of the note of a corporation as in other

cases.

5. By the construction of the English statutes, if a trustee or director of any public work made a contract for any matter not provided for in the special acts of the company or by the general statutes, applicable to the subject, or in a different form from * that so provided, he is taken to have intended to become personally responsible."

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

* SECTION III.

Compensation for Service of Directors.

1. In England, directors of railways are entitled to compensation for services.

4. Some American cases follow the English rule.

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

a disabled officer.

3. In this country are entitled to compensation,

in conformity to the order of the board.

which executed.

§ 137. 1. In England, in the absence of contract or usage, from which one might be inferred, directors of railways and other corpo

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.

rations 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

*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

1 Dunston v. The Imp. Gas L. Co., 3 B. & Ad. 125. But see Hall v. The Vt. & Mass. R., 28 Vt. 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 under 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 court. 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., 3 McQu. Ho. Lds. 799; s. c. 6 Jur. N. S. 877. Clarke v. Imp. G. L. Co., 4 B. & Ad. 315.

3 Hodges v. Rut. & Burlington Railw., 29 Vt. 220. 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 compensation to be made the directors. Henry v. Rut. & Bur. Railw., 27 Vt. 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 some express contract. Hall v. Vermont & Mass. Railw., 28 Vt. 401. But an allowance to a director for extra services made by a board of which the claimant was one, and his presence indispensable to constitute a quorum, is void, and any stockholder may on behalf of himself and others, enjoin the treasurer from payment. Butts v. Wood, 37 N. Y. 317.

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.* 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 holding 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 proceedings of directors and make it evidence.

2. Presumptions in favor of their containing all that passed.

3. Company will ratify unauthorized act of directors by acquiescence.

§ 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

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

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

1

Inglis v. The Great Northern Railw., 1 McQu. Ho. Lds. 112; s. c. 16 Eng. L. But independently was proved by a

& Eq. 55. Lord St. Leonards said, in the House of Lords: " of the evidence furnished by the books, the due appointment