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POWER OF DIRECTORS TO APPOINT EXECUTIVE COMMITTEE.

- An interesting question in the law of corporations is to what extent a board of directors may confide their powers to an executive committee. The right to delegate all their powers to such a committee, even though with the consent of the stockholders, would seem to be denied them by a dictum in a recent case. Canada-Atlantic and Plant S. S. Co., Ltd. v. Flanders, 145 Fed. Rep. 875 (C. C. A., First Circ.). On this point there is curiously little authority.

It is obvious that whether a board of directors may entrust their powers to an executive committee or not depends on the nature of their office. As to this, there are divergent views. One theory is that the directors are the agents of the stockholders to manage the business, and, as such, are unable to delegate their functions on the principle delegatus non potest delegare. This view, however, seems unsound, for if it were true, the stockholders, being principals, could at any time take charge of the affairs of the corporation and manage them to suit their wishes. This, it is settled, they cannot do. The other theory is that the directors represent the corporation completely, and can do what they as individuals within their own business could do. Hence, as principals, they can delegate the performance of acts which they themselves can perform.: This view, likewise, is open to criticism. The directors have no common law powers as directors; they exercise merely granted powers. However discordant the authorities may seem, in the ultimate they agree that these powers are held by the directors in some sort of a fiduciary relation, and are to be exercised for the benefit of the stockholders after the analogy of a trust relation. It is axiomatic that a trustee may not delegate his duties as such to a third party, for it is the exercise of his judgment and his discretion which is required by the creator of the trust. It is believed that the same is true of directors. 6 This being so, how far may they delegate their powers to an executive committee?

It may be admitted that, even in the absence of permission, the board of directors, however created, may delegate to agents or committees the doing of acts merely ministerial and the management of ordinary business, provided such business does not involve the exercise of executive functions regarding the “policy" of the corporation. The consent to delegate must be implied in such cases, for the directors in a large business are incapable of personally attending to its various details. It may also be admitted that if the statutes under which the corporation is organized, or its charter, contain provisions allowing the directors to entrust any or all of their duties to agents or committees, they may do so, for any duty to be exercised in a fiduciary relation may be delegated if the proper permission is given. And the same is true where the charter vests the management of the business in

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1 Gillis v. Bailey, 21 N. H. 149, 162. 2 Gashwiler v. Willis, 33 Cal. 11. See 19 Harv. L. Rev. 620. 3 Jones v. Williams, 139 Mo. 1, 26. 4 Town of Royalton v. The Royalton and Woodstock Turnpike Co., 14 Vt. 311,

Cook v. The Berlin Woolen Mill Co., 43 Wis. 433 ; In re Wincham Shipbuilding, etc., Co., 9 Ch. D. 322, 328.

6 Perry v. Tuskaloosa Cotton Seed Oil Mill Co., 93. Ala. 364, 371.

7 Andres v. Fry, 113 Cal. 124; The Pres., etc., of the Berks, etc., Turnpike Co. v. Myers, 6 Serg. & R. (Pa.) 12.

'8 Totterdell v. The Fareham Blue Brick & Tile Co., Ltd., L. R. I C. P. 674; Taylor v. The A. & M. Ass'n of West Ala., 68 Ala. 229.

the stockholders, who by by-laws create a board of directors and also consent to the delegation of powers to an executive committee. In all other cases, however, the power to delegate the duties of deciding the policy of the corporation and of generally overseeing its affairs should be denied. It is the exercise of the discretion and judgment of the directors for the benefit of the stockholders which is expected and required. It is their discretion and judgment that should be exercised.10

By WHAT Law DOMICILE IS DETERMINED. Whatever force the laws of one country have in another depends solely on the laws of the latter. Thus it is by virtue of their own laws that England ? and most of the American states 8 permit the movables of an intestate to descend according to the law of that country where the deceased was domiciled at the time of his death. The same is true of the general rule that, subject to some exceptions, the validity of a will, both in England * and America, is determined by the law of the testator's last domicile. For this reason the foreign law is treated as a fact, and is proved as such. The result is, that while the territorial law of the state where the movables are situated is the only law which binds them, disposition of them will actually be determined by the law of the owner's last domicile.

Domicile of choice is an inference or conclusion which the common law draws from the fact of residence coupled with the appropriate intent. Both England and America agree on this point, though they differ as to the nature of the intent required. A recent English case, however, raises an interesting question. Does the law of that country where the deceased resided, or the law of that country where the movables are situated, determine where the deceased was domiciled ? A British subject, born in England, had resided in France under such circumstances that the English law would deem him domiciled there, although he did not acquire a domicile which the French law would recognize. He died, leaving a will disposing of movables in England. The English court decided that both as to validity and construction the will should be governed by English law. In re Bowes, 22 T. L. R. 711 (Ch. D., July 18, 1906). The case follows without discussion a prior Chancery decision which, on similar facts as to the domicile of a Maltese person in Baden, decided that Maltese law governed the succession to the English movables of the intestate. Neither decision cited any authority on this point, but both proceeded on the apparently wrong assumption that the

9 Union Pac. R. R. v. Chicago, R. I. & Pac. Co., 163 U. S. 564.

10 Tempel v. Dodge, 89 Tex. 68; Weidenfeld v. Sugar Run R. R. Co., 48 Fed. Rep. 615; Charlestown Boot & Shoe Co. v. Dunsmore, 60 N. H. 85. Contra, Hoyt v. Thompson's Executor, 19 N. Y. 207; Burrill v. Nahant Bank, 2 Met. (Mass.) 163 ; The Black River Improvement Co. v. Holway, 85 Wis. 344.

1 See Story, Conf. of Laws, SS 18, 20, 23.
2 Crispin v. Doglioni, L. R. 1 H. L. 301.
3 See Wilkins v. Ellett, 108 U. S. 256; Lawrence v. Kittredge, 21 Conn. 577.

4 Goods of Maraver, I Hagg. Eccl. 498; Enohin v. Wylie, 10 H. L. Cas. 1; Whicker v. Hume, 7 H. L. Cas. 123.

5 Dupuy v. Wurtz, 53 N. Y. 556; Talbot v. Chamberlain, 149 Mass. 57. 6 See Bremer v. Freeman, 10 Moore P. C. 306; Haven v. Foster, 9 Pick. (Mass.)

? Udny v. Udny, L. R. 1 H. L. Sc. 441; Gilman v. Gilman, 52 Me. 165; Wilbraham v. Ludlow, 99 Mass. 587.

8 In re Johnson, (1903] 1 Ch. 821.

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domicile of the deceased was to be determined by foreign and not by English law. The main issue was the disposition to be made of English movables. By English law, which controlled the property, the domicile of the deceased was the determining fact. Obviously, therefore, the question of domicile should have been determined by English law. These two cases not only rest on no authority, but are opposed to two eminent text-writers, to the weight of the scanty American authority,19 and to prior and apparently controlling decisions in England, which seem to have been overlooked by court and counsel alike. 11 The true rule, therefore, appears to be that when the requisites of domicile, according to the lex rei sitae, exist, that law infers domicile, without regard to the law of the country where the deceased resided.

Another point in the prior Chancery decision is worth comment. The court suggests that, if it recognized the Baden domicile, it would then be bound to ascertain, not the Baden law of succession, but what territorial law of succession the Baden law would adopt under the circumstances, and then distribute these English movables accordingly. In other words, the court would apply first the English rule and then the Baden rule as to conflict of laws, in order to ascertain the rule of succession. This doctrine seems fundamentally wrong. It treats English movables, situated in England and controlled by English law, as if they were situated in Baden and controlled by Baden law. It reaches the right result only when the English and the foreign law adopt the same rule of succession, and then the application of the foreign law is superfluous. Collier v. Rivaz, it is true, gives some support to this position, but the apparently controlling cases of Bremer v. Freeman and Hamilton v. Dallas 11 are directly opposed.

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DAMAGES AGAINST IMPROVER OF CONVERTED PROPERTY.

Both on authority and on legal theory there has been much doubt as to what measure of damages should be recovered from one who has wrongfully severed property from another's land and increased its value. The tendency has been to depart from the technicalities of the common law and to deal with the question on grounds of fairness and public policy. The cases which have arisen may be divided into four classes: where there are a bona fide plaintiff and a bona fide defendant; a bona fide plaintiff and a mala fide defendant; a mala fide plaintiff and a bona fide defendant; and a mala fide plaintiff and a mala fide defendant. Where the plaintiff has acted in good faith, the authorities are practically unanimous in making the fides of the defendant a determining factor. Against a bona fide defendant, a bona fide plaintiff has been allowed by different courts to recover the value of the property before severance from the land," the value after severance, and the enhanced value less the increase for which the defendant was responsible. This conflict is due to the fact that the courts have not generally proceeded according to what seems to be the true theory,

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9 Dicey, Conf. of Laws, 113; 1 Wharton, Conf. of Laws, 157. 10 Harral v. Harral, 39 N. J. Eq. 279. But see Dupuy v. Wurtz, 53 N. Y. 556, 570.

11 Collier v. Rivaz, 2 Curt. Eccl. 855; Anderson v. Laneuville, 9 Moore P. C. 325; Bremer v. Freeman, 10 Moore P. C. 306; Hamilton v. Dallas, 1 Ch. D. 257.

1 Forsyth v. Wells, 41 Pa. St. 291.
2 White v. Yawkey, 108 Ala. 270.
3 Anderson v. Besser, 131 Mich. 481.

namely, that a bona fide defendant should be entitled on quasi-contractual principles to the cost of his labor, so long as it does not exceed the total increase in the value of the property. On the other hand, a defendant who has acted in bad faith is generally held answerable to a bona fide plaintiff to the extent of the value of the property in its improved state.5 His bad faith of course prevents his receiving any quasi-contractual relief. The enhanced value of the property should be made the measure of damages, not for the purpose of punishing the defendant, but because that is the value to which the plaintiff is justly entitled, since the defendant, knowing the facts, must be taken to have made the improvements for the owner's benefit.

The exceptional situation of a mala fide plaintiff and a bona fide defendant arose in a recent Michigan case. Gustin v. Embury Clark Lumber Co., 108 N. W. Rep. 650. The court allowed to be deducted from the enhanced value of the property the increase in value brought about by the defendant. The mala fides of the plaintiff was evidently considered, but on grounds of fairness it might well be urged that as the plaintiff consciously delayed suit he should recover only the value of the property before severance, thus losing any possible increase in value due to a rise in the market. The remaining combination of a mala fide plaintiff and a mala fide defendant was presented in a single case, in which damages were limited to the value of the standing timber. The case seems unsupportable, for neither on quasi-contractual principles nor on grounds of general fairness did the defendant deserve anything of the court. The plaintiff's like bad faith could not here affect his legal right, and the rule in the ordinary case of a mala fide defendant should apply.

If the doctrine of Wetherbee v. Green 8 is ever extended to include the case of a mala fide converter, a new problem as to damages will arise. Since the defendant by sufficiently increasing the value of the property will have acquired title to it, to allow the former owner to recover from the new owner any value added to the property after title passed would be manifestly illogical. But neither should the defendant escape by paying only the value of the property at the time of the conversion, for, had he been sued immediately before title passed, he would have been compelled to pay the value at that time. It would therefore seem proper to compel him to pay the value of the property when he acquired title.

RES IPSA LOQUITUR BETWEEN MASTER AND SERVANT. - The doctrine of res ipsa loquitur has been most frequently applied in cases of injuries to passengers of common carriers and to persons on the highway who have been struck by some substance falling from an adjoining building. In the case of a servant injured in the course of his service there is much dispute as to whether the doctrine should be applied. A recent case, where a servant was injured by the fall of an elevator, holds its application proper. John

4 See Trustees v. International Paper Co., 132 Fed. Rep. 92 ; 18 Harv. L. REV. 305.

6 Cheeney v. Stone Co., 41 Fed. Rep. 740. See Woodenware Co. v. United States, 106 U.S. 432.

6 Cf. Single v. Schneider, 24 Wis. 299.
: Single v. Schneider, 30 Wis. 570.
22 Mich. 311.

1 See Highland Boy Mining Co. v. Pouch, 124 Fed. Rep. 148.

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Samuels, Adm'r v. John McKesson, Fr., 113 N. Y. App. Div. 497. Some of the carrier cases may be explained on the ground that the carrier is regarded as a quasi-insurer of its passengers' safety, and not upon the view that the accident itself makes a prima facie case. And doubtless in the cases of pedestrians hit by a falling substance, there is an underlying principle that sound juridical policy requires a man so to use his property adjacent to the highway as not to endanger passers-by; so that in these cases negligence will be presumed until he who has all the evidence that would reveal whether the harm was culpable or innocent shall speak and explain it. But the essence of the doctrine itself is the effect to be given to a rather meager amount of circumstantial evidence, —- whether the circumstances of a particular case are sufficient to raise a rebuttable presumption of negligence.

No sound reason can be urged why the doctrine should not extend to cases of master and servant. The maxim originated from the nature of the occurrence, and not at all from the relation of the parties. Many of the numerous decisions generally cited as contra to the above case show, when analyzed, not so much that the court was unwilling to apply the doctrine to master and servant, as that the special facts involved were not such as to present a proper situation for its application. Others show that the true ground of the decision was that the servant impliedly assumed the risk, and not that the maxim was inapplicable.

That this is a doctrine only of the quantity of circumstantial evidence required, is proved by the fact that there is no case where liability is predicated on the happening of the accident alone. The fact that the deceased was killed beside a building by a brick does not make a prima facie case. But if the proof of circumstances goes enough further to show that he was a pedestrian on the street, that the brick fell from a neighboring building, and that the defendant was the owner of the building, the onus then devolves upon the defendant to go forward with evidence to disprove negligence.8 And so it would be a complete perversion of the doctrine to hold a railway company liable when the proof shows only that a man who was not a passenger was found dead in the morning, killed by a passing train; because there the circumstances go no further than to show a presumption at least equally as strong that he was egligent in not avoiding the train as that the engineer was negligent in not avoiding him." The doctrine, therefore, should be applied only where the conditions are such that a fair-minded man would say that if the instrument of the injury were properly examined and operated, the accident in all probability would not have happened ; where the instrument is within the defendant's control, and he has both user and inspection; and where the injury occurs irrespective of any contributory act of the plaintiff or of a third person. Of course, the relation of the parties to each other may be in itself a very important circumstance in determining whether the facts of a particular case call for the application of the doctrine. But it seems right, in the absence of public policy, to hold that the relation of master and servant, or any other relation, does not prevent as a matter of law the application of the maxim.

2 Osgood v. Los Angeles Traction Co., 137 Cal. 280. Cf. 16 Harv. L. Rev. 227. 3 See Hawser v. Cumberland & P. Rd. Co., 80 Md. 146. * Guldseth v. Carlin, 46 N. Y. Supp. 357. Cf. 18 HARV. L. Rev. 391. 5 See Murphy v. Great Northern Ry. Co., 68 Minn. 526. 6 Byrne v. Boadle, 2 H. & C. 722. 7 Church, Adm'r v. Northern Pac. Rd. Co., 31 Fed. Rep. 529. 8 See 4 Wig., Ev., § 2509.

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