DIRECTORS. Persons appointed or elect ed according to law to manage and direct the affairs of a corporation or company. The di rectors collectively form the board of di rectors.
They are generally invested with certain powers by the charter of the corporation, and it is believed that there is no instance of a corporation created by statute without pro vision for such a board of control, whether un der the name of directors, or, as they are sometimes termed, managers or trustees,— the latter designation being more frequent in religious or charitable corporations. A comprehensive work on corporations states that the author has likewise found no in stance in which these officers were wanting ; 3 Thomp. Corp. § 3850. The power to elect directors has been held to be inherent and not dependent upon statute ; Hurlbut v, Marshall, 62 Wis. 590, 22 N. W. 852.
As to the nature of the office and its pow ers very different views have been held, and each is sustained by high authority. They have been held to be the corporation itself "to all purposes of dealing with others" and not to "exercise a delegated authority in the sense which applies to agents or attor neys ;" Shaw, C. J., in Burrill v. Bank, 2 Meth. (Mass.) 163, 35 Am. Dec. 395. Another view, and probably the one which is the best settled conclusion of judicial opinion in this Country, is that they are general agents; Simons v. Min. Co., 61 Pa. 202, 100 Am. Dec. 628; State v. Smith, 48 Vt. 266; Chetlain v. Ins. Co., 86 Ill. 220 ; President, etc., of Me chanics' Bank v. R. Co., 13 N. Y. 599; Good win V: Ins. Co., 24 Conn. 591. The question is of importance with respect to the power of directors to act outside of the home state of the corporation, in order to do which, they must act as agents ; Bank of Augusta v. Earle, 13 Pet. (U. S.) 519, 10 L. Ed. 274; Wright v. Bundy, 11 Ind. 398 ; McCall v. Mfg. Co., 6 Conn. 428. They are undoubted ly, in a certain sense, agents, but they are agents of the corporation, not of the stock holders ; they derive their powers' from the charter. They alone have the management of the affairs of the corporation, free from direct interference on the part of the stock holders ; Dana v. Bank, 5 W. & S. (Pa.) 246; Bank of U. S. v. Dandridge, 12 Wheat. (U. S.) 113, 6 L. Ed. 552; Dayton & C. R. Co. v. Hatch, 1 Disn. (Ohio) 84. The stockholders cannot perform any acts connected with the ordinary affairs of the corporation; Conro v. Iron Co., 12 Barb. (N. Y.) 27, 63; the dele gation of powers to the directors excludes control by the stockholders ; Union Gold Min. Co. v. Nat. Bank, 2 Colo. 565. See Fleckner v. Bank, 8 Wheat. (U. S.) 357, 5 L. Ed. 631; Gashwiler v. Willis, 33 Cal. 11, 91 Am. Dec. 607.
In England it is held that the directors of a company are in the position of managing partners, and their mandate is the mandate of the whole body of shareholders, not of the majority only. A simple majority of the shareholders cannot alter the mandate and override the discretion of the directors; [1906] 2 Ch. 34. The ultimate determination of the management rests with the stockhold ers, when by the charter the powers of the corporation are vested in them, or when it is silent on that question and does not com mit the exclusive control to the directors; Union Pac. R. Co. v. R. Co., 163 U. S. 564, 16
Sup. Ct. 1173, 41 L. Ed. 265. In this case the stockholders had adopted a by-law provid ing that the board should have the whole management of the property, of the company, and that they might delegate power to the executive committee. The latter authorized the president to execute a contract and the stockholders approved it and the action of the committee, but the board never formally acted; it was held that, as they had full knowledge of it, they would be presumed to have ratified it.
It has been said that directors are special agents of the corporation, and not general agents; Adriance v. Roome, 52 Barb. (N. Y.) 399; and this is the view which it is said that in England "the ingenuity of the bench has been taxed to demonstrate ;" 3 Thomp. Corp. § 3969; Lindl. Partn. (4th ed.) 249. Among the cases relied on as supporting this view are, 6 Exch. 796; 8 C. B. 849 ; 6 H. L. Cas. 401; L. R. 5 Eq. 316; but the distinction has been said not to be very satisfactory ; per Comstock, J., in President, Directors & Co. of Mechanics' Bank v. R. Co., 13 N. Y. 599. See Green's Brice, Ultra Vires 470, n. Although the weight of authority is as stat ed, it is nevertheless important to keep in view the different theories held, in order to weigh accurately the authorities upon the powers of directors, and to distinguish be tween them when they are to be applied to a particular case. Directors have no common law powers; 3 Thomp. Corp. § 3978; but only granted ones, although in dealing with corporations courts sometimes ascribe to the directors certain powers, termed implied powers, which, however, in fact amount to no more than a recognition by the courts of the usages of business and acts done in the course of business; id. But they have no power to make changes in the fundamental law of the corporation, their • relation to it being analogous to that of a legislature to the constitution of the •state; id. § 3979. Ac cordingly, their power to make such changes must be derived from the charter. They may not change the membership or capital of the corporation by increasing either ; Chi cago City R. Co. v. Allerton,•18 Wall. (U. S.) 233, 21 L. Ed. 902 ; Com. v. Gill, 3 Whart. (Pa.) 228; Gill v. Baits, 72 Mo. 424; or re ducing the capital ; Percy v. Millaudon, 3 La. 568; Hartridge v. Rockwell, R. M. Charlt. 260; nor make by-laws unless specially au thorized; Watson v. Printing Co., 56 Mo. App. 145; nor request or accept amendments to the charter ; Stark v. Burke, 9 La. Ann. 341; State v. Adams, 44 Mo. 570; Zabriskie v. R. Co., 18 N. J. Eq. 178, 90 Am. Dec. 617; Marlborough Mfg. Co. v. Smith, 2 Conn. 579 (but see contra, Dayton & C. R. Co. v. Hatch, 1 Disney (Ohio) 84, which is doubted, 3 Thump. Corp. § 3980, n. 7). They may alien Property in the course of business ; 3 Thomp. Corp. § 3984 (and see note on this subject; Garrett v. Plow Co., 59 Am. Rep. 466) ; or mortgage corporate • property ; Sargent v. Webster, 13 Mete. (Mass.) 497, 46 Am. Dec. Miller v. R. Co., 36 Vt. 452; Augusta Bank v. Hamblet, 35 Me. 491; Hendee v. Pinkerton, 14 Allen (Mass.) 381; Hoyt v.