to this extent, he works in close accord with the members of the finance committee, carrying out their instructions, consulting with them frequently, and at all times referring to them matters of importance, or such as may be beyond his immediate. authority, ability or control.

Since the finance committee practically takes the place of the board of directors as far as the corporate finances are concerned, it usually and naturally has all the authority of the board itself over the treasurer. The matter is, however, one that may be determined absolutely by the charter or by-laws. These usually and properly prescribe that the treasurer shall report to and be controlled by the finance committee.

The general relation between the finance committee and the treasurer should be that of harmonious and effective cooperation. Both are working to the same end, i. e., the best possible administration of the financial affairs of the corporation, and there should be no conflict or friction between them.

In the smaller corporations the auditor is merely an occasional officer called in for the purpose of investigating and passing upon the treasurer's accounts. In such case his relation to the treasurer is temporary and needs no special discussion. The treasurer's books are opened to the auditor, who examines them, checks up their statements and reports his finding to the board. The treasurer will, naturally, furnish any proper information and assistance required by the auditor in the course of this examination and will facilitate his work in every way.

In the larger corporations, however, the conditions are materially different. Here the auditor, or comptroller as he is sometimes designated, is one of the regular officials of the corporation and his duties and the relations existing between him and the treasurer depend entirely upon the respective

duties of the two officials. These are usually set forth in the by-laws and vary in different corporations.

In the larger corporations the auditor is the accounting officer, taking entire charge of the general bookkeeping. The actual receipt, custody and disbursement of the funds and their general management remain with the treasurer. Detailed records of these receipts and disbursements as well as the general accounts of the corporation are kept in the auditor's department, the treasurer's records also covering these items but in a less detailed way.

In some corporations, accounts to be paid are authorized by the auditor, are approved perhaps by some other officer, and the actual payment is made by the treasurer. In other cases the payments are for all practical purposes made by the auditor, vouchers, duly signed and countersigned, being sent out to the parties to whom payments are due, these vouchers being payable on presentation to some designated bank which acts for the treasurer. Or again the voucher will be prepared or passed upon by the auditor and perhaps by the official in whose department the obligation arises, and this voucher when signed by the treasurer becomes a check, honored upon presentation at a designated bank.

The whole matter is one of adjustment, varying, as stated, in different corporations. In any case the auditor and the treasurer usually have distinct departments and while their accounts overlap in some measure as to cash received and disbursed, there is but little room for conflict between them. Each is independent of the other and exercises functions that should be distinct and so clearly defined that clashing is impossible.

§ 43. To the Other Officials.

In the

The three essential executive officers of the corporation. are the president, the secretary and the treasurer. usual corporate organization the president is the superior

officer of the three, and is usually given certain powers of supervision over the other two.

The secretary and treasurer are entirely independent of each other. Also their respective functions are so distinct that friction between them is unusual and absolutely unnecessary. In the smaller corporations the two offices are frequently and advantageously united in the same person.

Between the president and the treasurer the probability of friction is much greater. The president, as already stated, is usually given certain general powers of supervision over the other corporate officers, and as these powers are rarely defined with clearness, there is at times room for real difference of opinion as to their limits.

Under the usual by-law provisions the president has the right to inspect and examine the books, accounts and records of the treasurer at any reasonable time. He has, however, no right to interfere directly with the treasurer's actions unless he sees some actual neglect or improper performance of duty. In any such case it is his duty to call the matter to the treasurer's attention. If the latter is obviously at fault, it is his duty to heed the president's instructions. If, however, there is a difference of opinion between the two officials as to whether or no the treasurer is at fault, the president, unless specially empowered, cannot enforce his views directly. All he can do is to report the matter to the directors, and both officers will then be governed by the directors' decision.

As the president is the chief executive officer of the corporation, the treasurer is naturally expected to confer with him on matters of unusual importance or difficulty and to be guided to a greater or less extent by his opinions and suggestions. The president, however, as stated, cannot himself force the treasurer to heed his instructions unless he has been given some special power in the matter by charter or by-law provisions, or by action of the board of directors.

People, etc. v. Goldstein, 37 App. Div. (N. Y.) 550 (1899).

The offices of president and treasurer are occasionally united in one person but not commonly, as the respective duties of the two positions are apt to conflict. Thus in some states the statutes require the signature of both the president and treasurer to certificates of stock and the by-laws commonly prescribe a similar signature for the corporate checks and other instruments. It is obvious that the whole purpose of these precautionary measures would be defeated if the two offices were combined.

CHAPTER VII.

THE TREASURER'S LIABILITIES.

§ 44. Duties and Liabilities of Treasurer.

The treasurer is the custodian of the corporate funds.1 In the smaller corporations he is also usually required to keep or to be responsible for the keeping of the corporate books of account. In the larger corporations he is held responsible only for the records of his own department. In all corporations he is expected to make various financial reports as they are needed, and he must perform such other duties as may be required by the by-laws or be properly demanded of him by the directors. When his term of office expires, or before if legally demanded, he must return to the corporation all its moneys and property, including the books of account.

The treasurer's duty in regard to the moneys and the property of the corporation entrusted to his care, is that of an agent, and he is held to the same measure of accountability. In an early New York case it was expressed as follows: "The duty of a treasurer is to keep the moneys of his principal distinct from his own, and to be ready at all times to pay over what balance he owes to his principal." With sage recognition of the fact that readiness to perform is not performance, the learned judge continues, "and to pay the balance on demand."2

In his duties outside those relating directly to the custody of the corporate funds and property, the treasurer is likewise

1 Providence, etc. Co. v. Dixon, 114 N. Y. 80 (1889); Laurel Springs Land Co. v. Fougeray, 57 N. J. Eq. 318 (1898).

Second Ave. R. R. Co. v. Coleman, 24 Barb. 300 (1857); Hunter v. Robbins, 117 Fed. Rep. 920 (1902).