estate, in respect of the said 100 shares; and it is ordered that the costs of the said George Maitland of and incident to this application, including his costs, charges, and expenses properly incurred as such nominee as aforesaid, be taxed as between solicitor and client, and the said George Maitland is to be at liberty to add the amount thereof to his aforesaid debt." From this order the official liquidator of the Oriental Commercial Bank appealed.

SIR W. PAGE WOOD, L. J.

It does not appear to me that the Vice-Chancellor's order does anything more than work out the most common and ordinary justice. As between Mr. Maitland and the Tyne Company, according to my view in Hoare's Case, 2 J. & H. 229, to which I adhere, I am of opinion that Mr. Maitland is the shareholder. If the Tyne Company choose to do so, I do not see anything to prevent their exacting from him all payments to which as a shareholder he is liable. But, as between Mr. Maitland and the National Financial Company, the latter are the shareholders, they are simply his cestuis que trust, and his name has been used for their accommodation and for their convenience The position of a trustee so situated is not that he is to wait till he is thrown into prison in consequence of his cestuis que trust not paying what it is their bounden duty to pay; he has a right to say, "Provide me with the funds which are necessary to meet this difficulty; these are not my shares; I am not the owner of them; I have nothing to do with them; they are yours." Maitland being the trustee, and having been called upon to pay the 3250L., as between him and the cestuis que trust, the latter ought to find the money to pay it. He is called upon to make the payment, and he is entitled to rank as a creditor of the National Company for this sum and for any future claim, he undertaking not to pocket this money, but to hand it over in discharge of the liability against which he is entitled to be indemnified. He has therefore undertaken that the official liquidator of the National Company shall be at liberty to pay over to the liquidators of the Tyne Company the dividends which may become payable from time to time to him in the liquidation of the National Company in respect of the 3250L. Then the Tyne Company, who could not be bound to do any such thing, say: "That being so, we will complete the indemnity to Mr. Maitland by undertaking to accept these dividends in lieu of our claims against him." Then as to the statement that Mr. Maitland has already made a transfer to two other persons who are not already accepted by the Tyne Company, whatever may be said about their willingness to accept them, we have the fact before us that at present Mr. Maitland, and no one else, is responsible to the Tyne Company. Once establish the fact that he is a trustee, and, as such, is under liabilities at the request and in-stance of the cestuis que trust, the cestuis que trust are bound to indemnify him against all the consequences.

As to the question whether a debt will be proved against Mr. Maitland in some other proceeding, there is nothing in this order to pre

vent the company raising any question they please about that debt. They may apply to prevent the official liquidator from acting on the liberty given him by this order if circumstances arise to justify such a course; but, in the meantime, there is nothing to prevent them from honestly discharging their plain duty, namely, indemnifying their trustee from all the consequences of acting on their behalf. I think it is the simplest case possible, and that the appeal must be dismissed with costs.3

GREENSBORO &c. TURNPIKE CO. v. STRATTON.

1889. 120 Ind. 294, 22 N. E. 247.

OLDS, J.-This is an action to recover for the value of work and labor done and performed by the appellee on the turnpike owned by the appellant at appellant's request, and for gravel and materials furnished by appellee to appellant, and used in the construction and repair of the road-bed and bridges of said turnpike.

The case, as stated by counsel as shown by the evidence, is to the effect that in 1877 the defendant company was organized to build a turnpike, and an amount of capital stock subscribed and directors to manage the affairs of the corporation elected, the appellee being elected one of the directors. The directors collected all the capital stock subscribed, and expended the same in the construction of the road; the funds were insufficient to complete the road; after the funds were exhausted, the directors made an effort to have a tax levied to complete the road, but did not succeed. The directors, then consisting of appellee and Wood and Copeland, agreed by and between themselves to finish the road, appellee to do three-fifths of the work and the others one-fifth each, and, pursuant to this agreement, they completed the road and put it in operation and collected toll for its use. Appellee was from time to time re-elected director, and served as such until the first of the year 1886, when he was succeeded as director, and brought this suit.

The only alleged error properly presented by the record and discussed, is the giving of instruction No. 2 by the court, which instruction is as follows:

"2d. If, at the time the work and labor sued for was done, the plaintiff was a director of the defendant company, no contract or

See also, Shively v. Eureka &c. Min. Co. (1907) 5 Cal. App. 236, 89 Pac. 1073; Rider v. Union India Rubber Co. (1859) 5 Bosw. (N. Y.) 85, (affd.. 28 N. Y. 379); Young v. Naval &c. Society, Limited (1905) 1 K. B. 687, 92 L. T. R. 458 ("But directors being both agents of and trustees for the company are entitled to be indemnified by the company against all losses and expenses properly sustained and incurred by them in the due performance of their office").

As to right of directors to contribution, see Moxham v. Grant (1899) 69 L. J. Q. B. 97.-Eds.

agreement between him and his co-directors concerning said work or the price to be paid therefor, or the necessity or propriety therefor, could bind the company. But if the stock and means of the company were exhausted in building the road, and it was impossible by reason thereof to complete the road, and the directors agreed among themselves to complete the road, each doing a portion of the work necessary to finish the road according to the respective amounts of their stock, and charge the same to the company, and, in pursuance thereof, the plaintiff did a portion of the work sued for in finishing and completing the road, and it was to the best interest of said company to do said work, and it was necessary and proper to be done, taking into consideration all the circumstances and conditions of the road, the company would be liable in this action for the reasonable value of work done."

In Waterman's Law of Corporations, vol. 2, p. 367, the law is stated as follows: "When a director performs duties outside of those devolving upon him as a director, under an appointment by a resolution of the board, he will be entitled to compensation." Again, in vol. I, p. 461, it is said: "A director, by resolution of the board, may be empowered to transact any business or agency in behalf of the corporation; and unless there is some agreement express or implied from the circumstances attending appointment, to the contrary, the law will infer a contract on the part of the corporation with its agent, whether he be a director or a stranger, that he shall receive for such service a reasonable compensation.'

In the case of Rogers v. Hastings etc. R. W. Co., 22 Minn. 25, the plaintiff was a director of the company, and was, by resolution of the board of directors, appointed land commissioner of the company, and brought suit for his services as such commissioner; and the court says: "To entitle the plaintiff to recover for his services as land commissioner, it was not necessary that he should have received a formal appointment from the board, nor that his employment should have been formally authorized or ratified. If the services were performed under employment by an officer of the company, with the knowledge of the directors, and the company receive the benefit of them without objection, the company is liable upon an implied contract to pay the reasonable worth of the same."

In the case of the Santa Clara Mining Ass'n. v. Meredith, 49 Md. 389, the court states the rule of law to be, that "If a president or director of a corporation renders services to his corporation which are not within the scope of, and are not required of him by, his duties as president, or director, but are such as are properly to be performed by an agent, broker or attorney, he may recover compensation for such services upon an implied promise."

This, we think, the true rule, as supported by the great weight of authority. Chandler v. Monmouth Bank, I Green (N. J.) 255; Shackleford v. New Orleans, etc., R. R. Co., 37 Miss. 202; New Orleans etc. Co. v. Brown, 36 La. Ann. 138; Cheeney v. Lafayette

etc. R. Co., 68 Ill. 570; Henry v. Rutland etc. R. Co., 27 Vt. 435; Polk v. Reynolds, 54 Ind. 449.

In the case of Ward v. Polk, 70 Ind. 309, it was held that one who was a director of a drainage association could recover on a contract made with the directors of the association for the labor performed by him, notwithstanding he was himself a director. Bristol, etc., Co. v. Probasco, 64 Ind. 406.

We regard the rule of law to be, that when a director of a corporation performs services for the corporation, which are independent and outside of his duties as such director, he has the same right to recover upon an implied contract for such services as though he was not a director, and the same rule applies in regard to materials furnished by a director used by the corporation.

In this case it is conceded that the services rendered and materials furnished were necessary and proper, and enabled the company to finish and put the road in a condition for use, and to receive compensation for travel upon it, which it could not have done without the labor and materials furnished by the appellee, and he is entitled to recover a reasonable compensation for such labor and materials. We think there is no error in the instruction given by the court of which the appellant can complain.

Judgment affirmed, with costs.

Section 3.-Duties.

A-OBEDIENCE. ACTIONS ULTRA VIRES.

HODGES v. NEW ENGLAND SCREW CO.

1850. 1 R. I. 312.1

THIS was a bill in equity brought by complainant, a member of the New England Screw Co. against the Company and its directors, charging gross fraud, breach of trust and a violation of the charter.

GREENE, C. J.-There are some questions raised in the present suit, which we find no difficulty in deciding.

We think the directors of the Screw Company are liable in equity, as trustees, for a fraudulent breach of trust. The jurisdiction of a Court of Equity over such a case was affirmed by Lord Hardwicke in the case of The Charitable Corporation v. Sutton and others, (2) Atkins, 404.) in 1742, and has been exercised both in England and in this country ever since. In the case of the Attorney General v. Utica Insurance Company, (2 Johns. Ch. Rep. 359.) Chancellor Kent recognizes the jurisdiction as well settled. In Robinson and others v. Smith and others, (3 Paige 222,) and in Cunnningham v.

1

Statement abridged. Portions of opinion omitted.-Eds.

Pell and others, (5 Paige 607,) the same doctrine is affirmed and acted on. So also by Vice Chancellor McCoun, in Verplanck v. Mercantile Insurance Company, (1 Edwards 84). The cases on this point are so numerous, that we deem any farther reference unnecessary.

The primary party, to sue for such fraudulent breach of trust, is the corporation; because the corporation is the party injured. Robinson and others v. Smith and others, (3 Paige 222). But if the corporation refuse to sue the stockholders may sue in their individual names. So if the corporation be under the control of the guilty directors, the stockholders may sue. (3 Paige 222. (3 Paige 222. Ang. & Ames

on Corp., 304, 305.)

* *

In 1845, the Screw Company were desirous of enlarging their business, and obtained an amendment of their charter, under which they erected a rolling mill, and carried on the business of rolling iron; and, afterwards, finding this unprofitable, went into the business. of making railroad iron, and carried on that business until it ceased to be profitable, which was in the latter part of the year 1847. The business was then suspended.

The rolling mill establishment was then without employment. It had cost $155,000, and was discredited in the market by the unprofitable business which had been carried on there. In erecting the rolling mill establishment, and in carrying on the business there, the Screw Company had incurred a heavy debt. Under these circumstances, the directors of the Screw Company formed the plan of purchasing the nail machine and patent for making wrought nails, and of forming a new company, who were to become the purchasers of the rolling mill and works, and patent and nail machine, and to carry on the business of making wrought nails. The Screw Company were to sell their nail machine and patent, and rolling mill, to the new company at cost, being $182,000, and to receive $82,000 in money, and the balance, being $100,000, in the stock of the new company. The whole capital of the new company was to be $300,000, to be divided into six hundred shares of five hundred dollars each, of which the Screw Company were to take two hundred shares, provided two hundred shares were taken by others, and the company organized in three months.

One great object of the directors, in making this arrangement, was to effect a sale of their rolling mill upon advantageous terms, and to realize from the sale, in order partially, at least, to relieve themselves from debt.

Another object was the anticipated profits of the new business.

The immediate effect of the arrangement was, that the Screw Company received $82,000 in cash, for their rolling mill and nail machine and patent, and still retained, as a stockholder in the Iron Company, one-third of the same property, the other subscribers to the Iron Company putting their money against the rolling mill of the Screw Company, at cost.