Bostwick, 88 N. Y. 52, It was said the lia bility of directors for violations of their du ty, and the jurisdiction of equity to afford redress to the corporation and its share holders, exist independently of statute. This was a proceeding by a shareholder ; and in Dykman v. Keeney, 154 N. Y. 483, 48 N. E. 894, it was referred to to show that an ac tion in equity will lie by a shareholder, and it was said : There is a wide and vital dif ference between such a case and one where the action is by the corporation against its delinquent directors.
A director is an agent of the corporation, and accounts primarily with the corpora tion, which holds the legal title to the assets; but there is no privity at law between a stockholder and the directors, and hence equity Is generally the proper tribunal in which to enforce his rights, which are equi table and not legal; Emerson v. Gaither, 103 Md. 564, 64 Atl. 26, 8 L. R. A. (N. S.) 738, 7 Ann. Cas. 1114, where it was held that a receiver may proceed in equity to hold bank directors liable for losses caused by their permitting illegal loans and declaring improper dividends. See also North Hudson Mut. Building & Loan Ass'n v. Childs, 82 Wis. 460, 52 N. W. 600, 33 Am. St. Rep. 57 ; Robinson v. Hall, 63 Fed. 222, 12 C. C. A. 674 ; Hodges v. Screw Co., 1 R. I. 312, 53 Am. Dec. 624 ; Williams v. McKay, 40 N. J. Eq. 189, 53 Am. Rep. 775 ; Cockrill v. Cooper, 86 Fed. 7, 29 C. C. A. 529. In the last case it was said the office of a director is so much akin to those of a trustee that in many cases no substantial reason can be given for exempting directors from that de gree of control by a court of chancery which such courts ordinarily exercise over trus tees ; and to the same effect Bosworth v. Allen, 168 N. Y. 157, 61 N. E. 163, 55 L. R. A. 751, 85 Am. St. Rep. 667, where the charge against the directors was waste of corporate assets and unlawful gain to themselves. Other New York cases restricted the right of a receiver to bring an action against di rectors in equity where the charge against them Was negligent and wasteful conduct and a violation of the banking laws in many respects, and held that an action at law was the proper remedy ; Dykman v. Keeney, 154 N. Y. 483, 48 N. E. 894, following O'Brien v. Fitzgerald, 143 N. Y. 377, 38 N. E. 371; Stephens v. Overstolz, 43 Fed. 771. In a case in which it did not appear that an ac counting was necessary, it was held that the remedy of a receiver was at law ; Thompson v. Greeley, 107 Mo. 577, 17 S. W. 962.
Directors are not liable for the fraud of agents employed by them ; 26 W. R. 147; Thomp. Liab. of Dir. 355. Directors of a national bank are not insurers of the fideli ty of its agents, and are not responsible for losses resulting from the wrongful act or omission of other directors or agents, un lesS the loss is a consequence of their own neglect of duty ; Briggs v. Spaulding, 141 U. S. 132, 11 Sup. Ct. 924, 35 L. Ed. 662.
It is their duty to use their best efforts to promote the interests of the stockholders, and they cannot acquire any adverse inter ; Wardell v. R. Co., 4 Dill. 330, Fed.
Cas. No. 17,164; Farmers' & Merchants' Bank of Los Angeles v. Downey, 53 Cal. 466, 31 Am. Rep. 62 ; European & N. A. Ry. Co. v. Poor, 59 Me. 277; Ryan v. R. Co., 21 Kan. 365. A director may become a creditor of a corporation, where his action is not taint ed with fraud or other improper act ; Bor land v. Haven, 37 Fed. 394. It is said to be the rule that contracts made by a director with his company are voidable; L. R. 6 H. L. 189 ; Wardell v. R. Co., 4 Dill. 330, Fed. Cas. No. 17,164 ; Appeal of Rice, 79 Pa. 168; Twin Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328; President & Trustees of City of San Diego v. R. Co., 44 Cal. 106. In many instances the courts have held them abso lutely void. In a leading English case it was held that the directors were agents of the and could not be permitted enter nter into engagements or have any per sonal interest which might possibly conflict with the interests of the corporation, and that no question could be raised as to the fairness of such a contract; 1 MeQ. H. L. (Sc.) 461; and in several American cases tak ing this view it is considered that directors were subject to the rule applying to all per Sons standing in relations of trust and in volving duties inconsistent with their deal ing with the trust property as their own; Gardner v. Ogden, 22 N. Y. 327, 78 Am. Dec. 192 ; Port v. Russell, 36 Ind. 60, 10 Am. Rep. 5; Haywood v. Lincoln Lumber Co., 64 Wis. 639, 26 N. W. 184. A high authority says, "there is no sound principle of law or equity which prohibits" such contracts, if entered into In good faith, and where there is a quorum of directors_ on the other side of the contract present, so that the adoption of the measure does not depend on the vote of the interested director, and even in the ter case the contract is good at law. Be cause, however, he is on both sides of it, eq uity will closely scrutinize it and set it aside if it violates the good faith which the cir cumstances require ; 3 Thomp. Corp. § 4059 ; but in many cases contracts of a corpora tion with directors, fairly made, have been upheld; Jesup v. R. Co., 43 Fed. 483; Barr v. Glass Co., 51 Fed. 33 ; Illinois Pneumatic Gas Co. v. Berry, 113 U. S. 322, 5 Sup. Ct. 525, 28 L. Ed. 1003; Barnes v. Brown, 80 N. Y. 527; Smith v. Skeary, 47 Conn. 47. The true rule to be ascertained from the cases is probably, that as to such contract there is a presumption of invalidity which casts upon the party claiming under such contracts the burden of showing that no un due advantage was taken or resulted from the relation, and the evidence must clearly shoal such fairness and good faith; Skinner v. Smith, 134 N. Y. 240, 31 N. E. 911; War dell v. R. Co., 103 U. S. 651, 26 L. Ed. 509. Accordingly, the more reasonable view is that first stated, and it is supported by the weight of American authority; 3 Thomp. Corp. § 4061; but courts holding the extreme view that such contracts are void will not enforce the fairest contract if •the corpora tion exercises the option to set it aside; id.