duty.12 Nor are sureties for the fidelity of an agent liable for an embezzlement by the latter of the corporate funds intrusted to him, while engaged for the corporation in a business ultra vires of it. 18 Where the term of office is limited to a particular period, the presumption is, if nothing appear to the contrary, that the official bond was intended to be confined to the particular term; 14 but when the office is held at the will of those making the appointment, and is unlimited as to the term, the presumption is, nothing to the contrary, that the bond was intended to cover all the time the person shall continue in office under the appointment.15 And the sureties on an official bond given to the directors, who are chosen yearly, are liable after the expiration of the year, 16 and the directors, though out of office, may sue on the bond.17 A person about to become a surety on an official bond, is entitled to a knowledge of any facts material to his obligation, which are known to the directors, or could easily be obtained by them; 18 and if such facts are withheld, it will discharge the surety.19 But an omission by the company to investigate the accounts of an officer, where there is no suspicion, and the surety does not request an investigation, will not discharge the surety.20 20 An official bond, stipulating that the incumbent will "well and truly, faithfully, firmly, and impartially, execute and perform the duties of his office," does not, in legal effect, differ from one which merely stipulates" for the faithful" performance of his duties.21 1 See Maleverer v. Redshaw, 1 Mod. 35; Peppin v. Cooper, 2 Barn. & Ald. 431; Bank of Northern Liberties v. Cresson, 12 Serg. & R. 306. 2 Mayor etc. v. Harrison, 30 N. J. L. 73. 3 Bank of U. S. v. Dandridge, 12 Wheat. 64; Washington County Ins. Co. v. Colton, 26 Conn. 42; Austen v. Howard, 7 Taunt. 28; New Orleans Nat. Bank v. Wells, 28 La. An. 736. 4 Dedham Bank v. Chickering, 3 Pick. 335; Bank of Northern Liberties v. Cresson, 12 Serg. & R. 306. 5 Bank of U. S. v. Dandridge, 64; and see Hasting v. Bluehill Turnp. Co. 9 Pick. 80; State Bank v. Chetwood, 3 Halst. 1. 6 Bank of U. S. v. Dandridge, 12 Wheat. 64. 7 Bank of U. S. v. Dandridge, 12 Wheat. 64; and see Union Bank v. Ridgely, 1 Har. & G. 324; Lexington etc. R. R. Co. v. Elwell, 8 Allen, 371. 8 Thorne v. Travelers' Ins. Co. 80 Pa. St. 15. 9 Barrington v. Bank of Washington, 14 Serg. & R. 405; Union Bank . Forrest. 3 Cranch C. C. 218: Minor v. Mech. Bank, 1 Peters, 46; Atlan tic etc. R. R. Co. v. Cowles, 69 N. C. 59. 10 State Bank v. Chetwood, 3 Halst. 1. 11 Atlantic etc. R. R. Co. v. Cowles, 69 No. Car. 59. Compare Morris Canal etc. Co. v. Van Vorst, 1 Zab. 100. 12 Huntsville Bank v. Hill, 1 Stewt. 201. 13 Blair . Perpetual Ins. Co. 10 Mo. 559. Compare Melville v. Doidge, 6 Com. B. 450. 14 Welch v. Seymour, 28 Conn. 387; Manufacturers' etc. Co. v. Odd Fellows' Assoc. 48 Pa. St. 446; Liverpool Water Works Co. v. Atkinson, 6 East, 507. 15 Exeter Bank v. Rogers, 7 N. H. 21. Compare Lexington etc. R. R. Co. r. Elwell, 8 Alleu, 371; State Treasurer v. Mann, 34 Vt. 371; Union Bank r. Ridgeley, 1 Har. & J. 324. 16 Anderson v. Longden, 1 Wheat. 85. 17 Anderson v. Longden, 1 Wheat. 85. 18 Graves r. Lebanon Nat. Bank, 10 Bush, 23; but compare Tapley v. Martin, 116 Mass. 275. 19 Wayne. Commercial Nat. Bank, 52 Pa. St. 343; Franklin Bank v. Cooper, 29 Me. 542. 20 Wayne v. Commercial Nat. Bank, 52 Pa. St. 343; and compare Union Bauk v. Forrest, 3 Cranch C. C. 218; Inhabitants of Radfield v. Shaver, 50 Me. 36; Etna Life Ins. Co. v. Mabbett, 18 Wis. 667; State v. Atherton, 40 Mo. 209. 21 Mayor etc. v. Evans, 31 N. J. L. 342 § 139. Office of directors.-The directors of a corporation are the persons selected to manage its affairs for the benefit of the shareholders; and unless it be otherwise expressly provided, the administration of all the ordinary affairs of the corporation is committed to them.2 They are the chosen representatives of the corporation, and, for all purposes of dealing with others, they constitute the corporation. They must be regarded as agents,1 but they are the agents of the corporation, and not of the stockholders.5 But as it regards their acts in connection with the property held by the corporation itself, and to their management of its business, they are to be deemed trustees for the stockholders. It is a position of trust, by the acceptance of which the director places himself under an obligation to use his best efforts to promote the interests of the shareholders at large, and not to acquire any adverse interest while holding the position. His private interests must yield to his duty to the corporation whenever they are conflicting.8 When the corporation becomes insolvent, and is under the management of the directors, they hold the position of trustees of its assets for the benefit of its creditors.9 1 See York etc. Railw. Co. v. Hudson, 16 Beav. 495. Compare State v. Adams, 44 Mo. 570. 2 Dana v. Bank of U. S. 5 Watts & S. 246; Union Gold Min. Co. v. Rocky Mt. Nat. Bank, 2 Colo. 565; Fleckner v. U. S. Bank, 8 Wheat. 338; Gashwiler v. Wilns, 33 Cal. 11; Dayton etc. R. R. Co. v. Hatch, 1 Disn. 84; Couro v. Port Henry Iron Co. 12 Barb. 27. 3 Maynard v. Firemans' etc. Ins. Co. 34 Cal. 48. 4 See Belknap v. Davis, 19 Me. 455; Adriance v. Roome, 52 Barb. 399; Railway Co. v. Allerton, 18 Wall. 233; Smith v. Hull Glass Co. Il Com. B. 897. 5 Bank of U. S. v. Dandridge, 12 Wheat. 113; Dana v. Bank of U. S. 5 Watts & S. 246; and see Maynard v. Firemans' etc. Ins. Co. 34 Cal. 48. 6 San Francisco etc. R. R. Co. v. Bee, 48 Cal. 398; Covington etc. R. R. Co. v. Winslow, 9 Bush, 468; Blakev. Buffalo Creek R. 1. Co. 56 N. Y. 485; Butts v. Wood, 38 Barb. 181; Richards v. N. JI. Ins. Co. 43 N. H. 263; Commissioners etc. v. 1.eynolds, 44 Ind. 509; Hale v. Republican River Bridge Co. 8 Kan. 466; Black v. Del. etc. Canal Co. 24 N. J. Eq. 463; Mussina. Goldthwaite, 34 Tex. 125; Jackson v. Ludeling, 21 Wall. 616; Parker v. McKenna, Law R. 10 Ch. 96; Aberdeen Railw. Co. v. Blaikie, 1 Macq. 461; Barnes v. Brown, 80 N. Y. 527. Compare Spering's Appeal, 71 Pa. St. 11; 10 Am. R. 684. 7 European etc. Railw. Co. 59 Me. 277; First Nat. Bank v. Reed, 36 Mich. 263; Wardell v. Union Pacif. R. R. Co. 4 Dill. 330; kyan v. Law. rence etc. R. R. o. 21 Kan. 365; Cumberland Coal etc. Co. v. Parish, 42 Md. 558; Farmers' etc. Bank r. Downey, 53 Cal. 466; 31 Am. Rep. 62; Beuson v. Heathorn, 1 Younge & C. Ch. 326. 8 Ex parte Bennett, 18 Beav. 339. 9 Bradley v. Farwell, 1 Holmes, 433. Compare Stratton v. Allen, 16 N. J. Eq. 229; Buell . Buckingham, 16 Iowa, 284; Whitwell v. Warner, 20 Vt. 425; Hoyle v. Plattsburgh etc. R. R. Co. 54 N. Y. 314. § 140. Who cligible as directors, and how selected. The choice of directors is not limited to persons holding stock, unless the charter or a statute requires it; and where such qualification is expressly required, the owner of shares does not become disqualified by a mortgage of them.2 But if stockholders only may be chosen directors, persons having no interest in the stock, but fraudulently receiving the transfer of shares to qualify them, are not eligible. A charter provision requiring a certain number of the directors to be practical mechanics, does not require that they should be in actual practice at the time of their appointment.4 If ownership of the corporate stock is made a qualification for election, and a person not thus qualified is elected a director, his acting in that capacity does not amount to an implied contract to take or hold shares, and will not make him liable for the requisite number of shares to qualify him for the position. But the corporation will be bound by the acts which he performs, within the scope of the authority possessed by a director.7 Directors de facto are to be considered, prima facie, as directors de jure. Their contracts and other acts are valid, and bind the corporation; and the legality of their election cannot be inquired into collaterally.10 In the absence of any controlling regulation or usage, one who is elected a director is presumed to accept the office, unless he declines it.11 No positive act of acceptance is necessary.12 But this presumption of acceptance may be rebutted; 18 and longcontinued neglect to perform any duty as a director may be deemed equivalent to an abandonment or resignation of the office. 14 1 State v. McDaniel, 22 Ohio St. 354; Re British etc. Assoc. Law R. $ Ch. Div. 306. Compare Despatch Line v. Bellamy Manuf. Co. 12 N. H. 205. 2 Cumming v. Prescott, 2 Younge & C. 488. 3 Bartholomew v. Bentley, 1 Ohio St. 37. 4 Grey v. Mech. Bank etc. 2 Cranch C. C. 51. That the treasurer or secretary of a company may also be a director: sce Sargent v. Webster, 13 Met. 497; Iron Ship Coating Co. v. Blunt, Law R. 3 Com. P. 484. 5 Marquis of Abercorn's Case, 4 DeGex F. & J. 78; Brown's Case, Law R.9 Ch. 102; 8 Eng. 762. Compare Re Percy etc. Min. Co. Law R. 5 Ch. Div. 705; Leeke's Case, Law R. 6 Ch. 469. 6 Brown's Case, Law R. 9 Ch. App. 102; 8 Eng. 762. 7 Despatch Line v. Bellamy Manuf. Co. 12 N. H. 205. 8 Rockville etc. Turnp. Road, 2 Cranch C. C. 449; and see Ellis v. No. Car. Instit. etc. 68 No. Car. 423. 9 Baird v. Bank of Washington, 11 Serg. & R.411; Cooper v. Curtis, 30 Me. 488; Re County Life Assoc. Co. Law R. 5 Ch. 288. 10 Mozley v. Alston, 1 Phill. Ch. 790; Hughes v. Parker, 20 N. II. 58; Eakright v. Logansport R. R. Co. 13 Ind. 404; Ohio etc. R. R. Co. v. McPherson, 35 Mo. 13; Atlantic etc. R. R. Co. v. Jolinson, 70 No. Car. 843. 11 See Lockwood v. Mech. Nat. Bank, 9 R. I. 308; Blake v. Bayley, 16 Gray, 531; Nimmons v. Tappan, 2 Sweeney, 652. 12 Fulton Bank v. N. Y. etc. Canal Co. 4 Paige, 127. 13 Lockwood v. Mech. Nat. Bank, 9 R. I. 308. 14 Bartholomew v. Bentley, 1 Ohio St. 37. Compare Re Peninsula etc. Bank, Law R. 2 Eq. 435; Phelps v. Lyle, 11 Ad. & E. 113. § 141. Powers of directors in general. The powers of directors are either defined by the express language of the charter, or are derived by necessary implication therefrom. If the directors exceed the authority granted by the charter, the corporation is not bound by their unauthorized act.2 But ordinarily, they may do any act within the range of the corporate business, which the corporation can do, unless restrained by the charter and by-laws.3 Their duties are to conduct the affairs of the corporation in furtherance of the ends of its creation. They have no power to destroy, or to change fundamentally, the character or extent of the corporation;5 nor, in general, can they use the funds of the company for any purpose other than those for which they were contributed Special powers given them are to be construed subject to a paramount and inherent restriction, that they are to be exercised in subjection to the special purposes of the original bond of association. Directors cannot, without express authority, or by necessary implication, delegate to others any portion of their power requiring the exercise of discretion or judgment, 10 or which it is intended they shall exercise personally; 11 but, unless expressly forbidden so to do, they may authorize subordinate officials to perform mere ministerial acts. 12 It is not within the general powers of directors to release an original subscriber to the capital stock, or to make any arrangement with him by which the company, its creditors, or the state shall lose any of the benefits of his subscription.13 Every such arrangement is regarded in equity, not merely as ultra vires, but as a fraud upon other stockholders, upon the public, and upon the creditors of the company.14 Nor is it within the implied power of directors to apply to the legislature for an increase of their powers; 15 or to alienate the property of the corporation needed for the continuance of the corporate business; 16 or to sell bonds of the company; 17 or to allow overdrafts.18 But a power to accept an amendment is incident to a corporation, and may be exercised |