as before indicated, directors' statutory duties to manage would be sufficiently performed by absence; and, the denser the ignorance on a director's part of the business of his concern, the more certain his exoneration from liability for the tortious acts of the company's employes. Such a rule would be unhealthy and unsound.

The liability of a director in tort is not to be avoided by his "vicarious character," where the tort of the corporation has been committed through the directors. (Nunnelly v. So. Iron Co. (Tenn. Sup.), 28 Lawy. Rep. Ann. 421, s. c. 29 S. W. Rep. 361; Bank v. Byers, 139 Mo. 627, 41 S. W. Rep. 325; Delaney v. Rochereau, 34 La. Ann. 1123.)

Relationship of contract to a corporation neither adds to nor subtracts from a man's duty to strangers to so use his own property, or that under his control, as not to injure another. Baird v. Shipman (Ill. Sup.), 7 L. R. A. 128, 23 N. E. Rep. 384; Riche's note to Nunnelly v. So. Iron Co., supra; Jenne v. Sutton, 43 N. J. Law 257; Mayer v. Thompson-Hutchinson Building Co. (Ala.), 28 L. R. A. 433, 16 So. Rep. 620.

Eminent judges have drawn distinctions between a trustee's liability for misfeasance, malfeasance, and nonfeasance. (Bell v. Josselyn, 3 Gray 309.) But they are of no vital importance on this appeal. Nevertheless, reasoning upon these distinctions, defendants have argued that they are liable, if at all, to the corporation only, inasmuch as the record shows nonfeasance merely, or nonexecution of the duties of their directorships. This argument seems to overlook the proposition that directors are charged with the affirmative duty of knowing something of the management of their company's business, and of exercising reasonable supervision of its management.

Management usually signifies positive, rather than negative, con

duct.

As a matter of defense, it is proper to show all facts by which the jury can say whether the inaction or ignorance relied on is a sufficient excuse for the wrong done. But we have no hesitation in saying that, upon a state of facts like that before us, nonexecution which resulted in the positive act of a creation and maintenance of a continuing nuisance on account of which a third person was killed amounts, unless explained, to misfeasance upon the part of all the directors of the company, except as to Kenyon, who, it appears, prima facie, must have actually known of and authorized the nuisance. As to him it was malfeasance.

A director who knew nothing of the nuisance, and who could not, by exercising ordinary diligence in control, have known of it, or, generally speaking, one who, considering the situation and all the attendant circumstances, has performed his duty of taking care, is not liable, and can not be held so. In this case the defense must show this though, for a prima facie case is made by plaintiff.

Reversed and remanded.

Note. See note, supra, § 631.

TITLE II. EXTERNAL RELATIONS.

CHAPTER 19.

THE CORPORATE CREDITORS.

SUBDIVISION I. THE STATE And Corporate CREDITORS.

ARTICLE I. RIGHTS OF THE STATE.

Sec. 634. 1. To change remedies.

1843.

JAMES READ ET AL. v. THE FRANKFORT BANK.

IN THE SUPREME JUDICIAL COURT OF MAINE.
(10 Shep.) Rep. 318-322.

23 Maine

[Exceptions to ruling of the court below denying plaintiff's right to recover upon certain promissory notes from the bank as indorsers.]

TENNEY, J. By the statute of March 29, 1841, ch. 139, the act incorporating the Frankfort Bank was repealed, and provision made for the appointment of receivers, who were required, when qualified to act, to demand and receive of the officers of the bank the property to the same belonging. On the 16th of April, 1841, an additional act was passed requiring all creditors, in order to entitle themselves to a distributive share of the assets, and to prevent their claim from being barred, to exhibit and prove them to the receivers on or before the first day of July, 1842.

This action was commenced and an attachment of property made previous to the repeal of the charter of the bank, and it is insisted that thereby a right became vested in the plaintiffs to proceed with the suit under the laws which were in force at the time of its commencement, and that the same can not constitutionally be affected injuriously by any act of the legislature. But if the repeal was not in contravention of the constitution, it is contended that the plaintiffs have substantially complied with the statute of the 16th of April by causing a copy of the writ to be served on the receivers on the 17th of June, 1841, a time long before that, when the claim was to have been barred, if the same had not been exhibited and proved to the receivers.

By the act of 1831, chapter 519, entitled "an act to regulate banks and banking," section 32, the legislature reserve to themselves, in cases therein named, after certain proceedings, the right to declare charters of banks forfeit and void. The Frankfort bank, incorporated after the en

(1805)

actment of this statute, was subject to its provisions, which were a part of its charter. It is not contended that the bank had not exposed itself so that its charter was properly revoked, or that all the necessary steps were not taken by the legislature agreeably to the general statute of 1831, previous to the repealing act; and in default of evidence to the contrary, it must be so presumed. Neither is it contended that the bank did not submit to the provisions of the repealing statute, acknowledged the authority of the receivers, and surrendered to them its books and its property.

After this, the creditors of the bank can not object to the constitutionality of the act dissolving the corporation, when it was done for causes which by the charter were sufficient for the purpose, and when the repeal was conclusive upon the bank. Indeed, it is not seen how any objection can be made by those who had no other connection therewith than that of being its creditors. Whoever entered into contracts with it exposed himself to losses which might arise from its dissolution, as he would with natural persons by their death. No security was provided in the charter, or other statute, against such an exposure to injury.

The bank having ceased to exist, excepting so far that the receivers could prosecute any suit pending in its name, and could use the name of the bank in any suit which might be necessary to enable them to collect any of the debts due to the bank, there is no party whom the plaintiff can prosecute or take judgment or execution against, unless it be in a court of equity. The bank as such has no longer the power to sue or to be sued; the receivers alone are the successors of the corporation, and they take all the property for the purposes specified in the act of repeal, and for those purposes only. Their appointment and the power given to them in nowise infringe the previously existing rights of the plaintiffs. It is by and through them that the property is to be made available in the payment of the debts against the bank. If the receivers had not been appointed, the plaintiffs could have no better prosecuted their suit than they are now able to do. The repeal of the charter has presented the obstacle to their further proceedings by dissolving the party against whom they had com

menced them.

The obligation of the contract between the plaintiffs and the bank was not impaired by the repeal of its charter, but the mode of obtaining indemnity for its violation was changed. The bank was created by the legislature, and by the charter there was no provision made for the prosecution of suits against it, if that charter should be declared by the same power forfeit and void; but a mode has been provided in the repealing act, by which creditors are enabled to obtain satisfaction for their claims, to the extent of the means existing therefor. A remedy for a party may be changed or wholly taken away by the legislature without contravening the constitution of the United States. Thayer v. Seavey, 2 Fairf. 284; Oriental Bank v. Freese, 18 Me. R. 109. And such a change may constitutionally affect suits pending at the time when it is made.

Have the plaintiffs saved themselves from the operation of the limitation contained in the act of April 16, 1841? We are satisfied that they have not, though we do not perceive how a decision of that question can influence this case. For if we have taken the correct view of the effect of the act of repeal, this action can be no farther prosecuted in any court. The claim of the plaintiffs in this case is upon two notes of hand indorsed by the bank. The writ was the legal process to obtain a judgment upon this claim. In order to bring the affairs of the bank to a close within the time prescribed, the receivers were to be made satisfied of the existence of the demands and the legal title of the claimants to payment. The writ could not tend in the least to do either, and the service of the same by a copy was not such an act as to take the case from the effect of the limitation.

Non-suit confirmed.

Note. See Foster v. Essex Bank, 16 Mass. 245, supra, p. 895.

Sec. 635. 2. To dissolve the corporation.

See Mumma v. Potomac Company, 8 Pet. 281, supra, p. 896.

Sec. 636. 3. To amend corporate charters; repeal statutory liability.

See Hawthorne v. Calef, 2 Wall. (69 U. S.) 10, supra, p. 752; Woodworth v. Bowles, 61 Kan. 569, 60 Pac. Rep. 331, infra, p. 2014.

Note. See, also, 1884, Webb P. & F. Co. v. Beecher, 97 N. Y. 651; 1890, Hill v. Merchants' Mut. Ins. Co., 134 U. S. 515.

Sec. 637. 4. To protect, or discriminate in favor of, resident creditors.

See Blake v. McClung, 172 U. S. 239, infra, p. 2036; Blake v. McClung, 176 U. S. 59, infra, p. 2045; Sully v. American Nat'l Bank, 178 U. S. 289, infra, p. 2046; People v. The Granite State Assn., 161 N. Y. 492, infra, p. 2050.

ARTICLE II. RIGHTS OF CREDITORS.

Sec. 638. To have their security and remedy against the corporate assets substantially preserved without impairment.

See Mumma v. Potomac R,, 8 Peters 281, supra p. 896; Read v. Frankfort Bank, 23 Me. 318, supra, p.1805; Hawthorne v. Calef, z Wall. 10, supra, p. 752; Woodworth v. Bowles, 61 Kan. 569, 60 Pac. Rep. 331, infra, p. 2014.

Note. See, 1884, Webb P. & F. M. Co. v. Beecher, 97 N. Y. 651; 1890, Hill v. Merchants' Mut. Ins. Co., 134 U. S. 515.

SUBDIVISION II. THE CORPORATION AND ITS CREDITORS.

ARTICLE I. RIGHTS OF THE CORPORATION.

Sec. 639. 1. To manage its own business.

VIRGIL S. POND ET AL. v. FRAMINGHAM & LOWELL R. R. CO. 1881. IN THE SUPREME JUDICIAL COURT OF MASSACHUSETTS. 130 Mass. Rep. 194, 195.

MORTON, J. This is a bill in equity, the substantial allegations of which are, that the plaintiffs are creditors of the defendant corporation; that the corporation is insolvent; that all its property is mortgaged to trustees for the benefit of one class of creditors; that it owes large amounts to other creditors, one of whom has attached all its property; that it is about to execute a lease to said attaching creditor for the term of nine hundred and ninety-nine years, at a rental which will not pay the interest upon its indebtedness, and that the execution of said lease would be injurious to the interest of its creditors and stockholders. The prayer is for an injunction to restrain the defendant from further prosecuting its business, and for the appointment of receivers.

There is no statute giving this court equity jurisdiction in such a case as this, and the bill does not state a case within the general equity powers of a court of chancery. As is stated in Treadwell v. Salisbury Manuf. Co., 7 Gray 393, It is too well settled to admit of question, that a court of chancery has no peculiar jurisdiction over corporations, to restrain them in the exersise of their powers, or control their action, or prevent them from violating their charter, in cases where there is no fraud or breach of trust alleged as the foundation of the claim for equitable relief.”

The plaintiffs can not maintain this bill, unless upon the ground that any creditor can maintain a bill in equity against an individual debtor upon like allegations. But there is no allegation of fraud or