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business or occupation, or in his peace and security of life. Every attempt by force, threat or intimidation to deter or control an employer in the determination of whom he will employ or what wages he will pay is an act of wrong and oppression; and any and every combination for such a purpose is an unlawful conspiracy. The law will protect the victim and punish the movers of any such combination. In law the offense is the combination for the purpose, and no overt act is necessary to constitute it. State v. Wilson, 30 Conn. 507; State v. Donaldson, supra; Walker v. Cronin, 107 Mass. 564; Carow v. Rutherford, 106 id. 10-15; Master Stevedores' Ass'n v. Walsh, 2 Daly, 12; Walsby v. Auley, 3 L. T. Rep. (N. S. 666; Reg. v. Duffield, 5 Cox C. C. 432; Parker v. Griswold, 17 Conn. 302; Springhead Spinning Co. v. Riley, L. R., 6 Eq. Cas. 551; Gilbert v. Mickle, 4 Sand. 381.

A wanton, unprovoked interference by a combination of many with the business of another, for the purpose of constraining that other to discharge faithful and long-tried servants, or to employ whom he does not wish or will to employ-an interference intended to produce, and likely to produce, annoyance and loss to that business-will be restrained and punished by the criminal law, as oppressive to the individual, injurious to the prosperity of the community, and subversive of the peace and good order of society. The recent case of State v. Glidden, already referred to, decided by the Supreme Court of Connecticut, is both in principle and features, identical with the case under review. The Carrington Publishing Company had in their employ a number of printers known as "non-union men" or "rats." The Typographical Union, the Knights of Labor, the Trades' Council, the Cigarmakers' Union, and other affiliated secret organizations, waited upon the company and demanded that their office be made a union office within twentyfour hours. Upon the refusal of the company to make their office a union office a boycott was instituted against them, which though not openly published, as in this case, was fully proved. The court, in its opinion, said: "If the defendants have the right which they claim, then all business enterprises are alike subject to their dictation. No one is safe in engaging in business, for no one knows whether is business affairs are to be directed by intelligence or ignorance; whether law and justice will protect the business, or brute force, regardless of law, will control it; for it must be remembered that the exercise of the power, if conceded, will by no means be confiued to the matter of employing help. Upon the same principle, and for the same reasons, the right to determine what business others shall engage in, when and where it shall be carried on, etc., will be demanded, and must be conceded. The principle, if it once obtains a foothold, is aggressive, and is not easily checked. It thrives on what it feeds on, and is insatiate in its demands. More requires more. If a large body of irresponsible men demand and receive power outside of law, over and above law, it is not to be expected that they will be satisfied with a moderate and reasonable use of it. All history proves that abuses and excesses are inevitable. The exercise of irresponsible power by men, like the taste of human blood by tigers, creates an unappeasable appetite for more." "Confidence is the corner-stone of all business-confidence that the government, through its courts, will be able to protect their rights; but if their rights (of business men) are such only as a secret, irresponsible organization is willing to give, where is that confidence which is essential to the prosperity of the country?" "The end would be anarchy, pure and simple, and the subversion not only of all business, but also of law and the government itself." "They (defendants) had a right to request the Carrington Publishing Company to dis.

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charge its workmen and employ themselves, and to use all proper argument in support of their request; but they had no right to say, 'You shall do this or we will ruin your business.' Much less had they a right to ruin its business. The fact that it is designed as a means to an end, and that end, in itself considered, is a lawful one, does not divest the transaction of its criminality."

The defendant lays great stress upon the case of State v. Hunt, 4 Metc. 111, as authority to sustain the legality of boycotting; but there is an obvious distinction between that case and that of this defendant. That was a club or combination of journeymen bootmakers simply to better their own condition, and it had no aim or means of aggression upon the business or rights of others; they simply had regulations for themselves, and did not combine or operate for a result mischievous, meddlesome and oppressive toward others. But even in that case the court, after supposing the case of a combination for the ultimate aud laudible object of reducing by mere competition the price of bread to themselves and their neighbors, said: "The legality of such an association will therefore depend upon the means to be used for its accomplishment. If it is to be carried into effect by fair and honorable means it is, to say the least, innocent; if by falsehood or force, it may be stamped with the character of comspiracy." Force may be operated either physically or mechanically, or it may be coercion by fear, threat or intimation of loss, injury, obloquy or suffering.

The evidence in this case shows that while Baughman Brothers were engaged in their 'lawful business as stationers and printers, the plaintiff in error and the other member of the Richmond Typographical Union No. 90, conspired to compel Baughman Brothers to make their office a union office, and to compel them not to employ any printer who did not belong to the said union. That upon the refusal of Baughman Brothers to make their office (for business) a union office, the plaintiff in error and others, composing the said Richmond Typographical Union No. 90, conspired and determined to boycott the said firm of Baughman Brothers as they had threatened to do; and sent circulars to a great many of the customers of the said firm, informing them that they had, "with the aid of the Knights of Labor and all the trades organizations in this city (Richmond), boycotted the establishment of Messrs. Baughman Brothers;" and formally notifying the said customers that the names of all persons who should persist in trading, patronizing or dealing with Baughman Brothers, after being notified of the boycott, would be published weekly in the Labor Herald as a black-list, who in their turn would be boycotted until they agreed to withdraw their patronage from Baughman Brothers; and accordingly the employees of Baughman Brothers were mercilessly hounded, by publication after publication, for months, in the Labor Herald (which was the boasted engine of the boycotting conspirators), whereby it was attempted to excite public feeling against them, and prevent them from obtaining even board and shelter; and the names of the customers and patrons of the said firm were published in the said sheet under the standing head of "Black-List."

The length of this opinion will preclude the mention of even a tithe of these incendiary publications, week after week, for mouths; but not only Baughman Brothers and their employees and their customers, but the hotels, boarding-houses, public schools, railroads and steamboats conducting the business travel and transportation of the city, were listed and published under the obloquy and denunciation of the "Black-List." One or two specimens will suffice:

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Boycott Baughman Brothers and all who patron

ize them." "Watch out for Baughman Brothers' 'rats,' and find out where they board. It is dangerous for honest men to board in the same house with these creatures. They are so mean that the air becomes contaminated in which they breathe."

"Boycott Baughman Brothers every day in the week." "Boycott Baughman Brothers because they are enemies of honest labor." "Boycott Baughman Brothers' customers wherever you meet them. "The Lynchburg boys will begin to play their hand on Messrs. Baughman's boycotted goods in a short time. The battle will not be fought in Richmond only, but in all Virginia and North Carolina will be raised the cry, 'Away with the goods of this tyrannical firm.' "Let our friends remember it is the patronage of the Chesapeake & Ohio, Richmond, Fredericksburg & Potomac, Richmond & Danville, and Richmond & Allegheny railroads that is keeping Baughman Brothers up.' "We are sorry to see the Exchange Hotel on the blacklist. There will be two thousand strangers in this city in October, none of whom will patronize a hotel or boarding house whose name appears on that list." "The boycott on Baughman Brothers is working so good that a man cannot buy a single bristol-board from the rat' firm without having his name put upon the black-list." "The old rat' establishment is about to cave in. Let it fall with a crash that will be a warning to all enemies of labor in the future."

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It was proved that the conspirators declared their set purpose and persistent effort to crush Baughman Brothers; that the minions of the boycott committee dogged the firm in all their transactions; followed their delivery wagon; secured the names of their pa trons, and used every means short of actual physical force to compel them to cease dealing with Baughman Brothers, thereby causing them to lose from 150 to 200 customers and $10,000 of net profit. The acts alleged and proved in this case are unlawful, and incompatible with the prosperity, peace and civilization of the country; and if they can be perpetrated with impurity by combinations of irresponsible cabals or cliques, there will be the end of government and of society itself. Freedom, individual and associated, is the boon and the boasted policy and peculium of our country; but it is liberty regulated by law; and the motto of the law is, "Sic utere tuo, ut alienum non ladas."

The plaintiff in error was properly convicted, and the judgment of the Hustings Court consplained of is affirmed.

FRAUD FALSE REPRESENTATIONS-LIA-
BILITY OF DIRECTORS.

TEXAS SUPREME COURT, MARCH 20, 1888.

SEALE V. BAKER.

The directors of a bank are personally liable, at the suit of a depositor induced to place money in an insolvent bank solely by the false representations of its solvency, made by them, whether such representations are made with the intent to defraud or not, where the directors, by the use of ordinary care, might have known that such representations were false.

COMMISSIONERS' decision.

Scott & Levi, for appellant.

Hutchinson, Carrington & Sears, for appellees B. F. Weems, R. Brewster and S. K. McIlhenny.

Baker, Botts & Baker, for appellees F. A. Rice and W. B. Botts.

Goldthwaite & Ewing, for appellee W. R. Baker.

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ACKER, J. The court below sustained general demurrers to the petition and dismissed the suit, from which judgment this appeal is taken. It now devolves on us to determine whether or not, on the case stated in the petition, appellant is entitled to recover. It is alleged in the petition that on the 19th day of December, 1885, and for one year preceding that date, appellees were directors of the banking corporation "The City Bank of Houston," actively directing and controlling its affairs and the conduct of its said business, and represented themselves and were generally and publicly known as such, and well knew and ought to have known, and by the use of ordinary care, such as it was their duty to have exercised, might have known all and singular the particulars and condition of said corporation in respect to the matters hereinafter mentioned, at the time when they severally transpired and took place. That during the period aforesaid the said defendants, who were all well and publicly known as possessed of remarkable business capacity, carried on the business of said bank, and held it out to the public as of undoubted financial ability and deserving of public confidence, and daily and continuously caused to be published, by their authority and direction, in the interest and behalf of said bank, advertisements in the Houston Daily Post, a daily newspaper and journal of general and wide circulation throughout the State of Texas and elsewhere, published in said city of Houston; and in the city directory of the city of Houston, a printed book of reference in general public use; and upon conspicuous sign-boards kept and exposed to the public at and near the door of the place of business of said bank; and upon printed letter-heads, upon and with which the business correspondence of said bank was conducted, and so generally circulated among all persons, including this plaintiff, having any transactions or correspondence with said bank, advertisements, statements and representations to the effect and in substance that the said bank had a capital of $500,000, was in sound financial condition, fully solvent, and wholly reliable and well deserving of public trust and confidence. That in truth and in fact the said advertisements, statements and representations, so caused to be published by said defendants, were, at the time they were severally so published, wholly false and untrue, and the said bank at the same time did not have a capital of $500,000, and was not in sound financial condition, nor solvent, nor reliable, nor in any mauner or wise deserving of public trust and confidence; but on the contrary, had long before lost all of its capital and a greater portion of its funds and assets which had come into its hands from its creditors, depositors and customers, and was and long had been hopelessly and irretrievably insolvent; for several years its current expenses had exceeded its earnings; it affairs had been and continued thereafter growing daily worse; it had been and then was and thereafter continued doing business upon a wholly fictitious credit; and from and after September 20, 1885, if not before that time, all reasonable hope and prospect of retrieving its solvency was utterly gone, and it was a mere question of a very short time when the true condition of said bank would necessarily become notorious, and it would be compelled to suspend business, to the great loss of its creditors and customers, and in the exercise of good faith and justice to the public its business should have been suspended and wound up long before the 8th day of December, 1885. That plaintiff read and believed said advertisements, statements and representations; and relying thereon and induced thereby, and not otherwise, he did, on the 8th day of December, 1885, place in said bank for collection, and to be placed to his credit, a draft for $2,500, which was collected by said bank, and the proceeds placed to his

credit therein as a customer of said bank. That on the 19th day of December said bank closed its doors, and suspended business in a wholly insolvent condition, whereby plaintiff has sustained damage. It is also alleged that said "false advertisements, statements and representations were caused to be published by said defendants with intent to deceive, and they did deceive the public and plaintiff as to the true condition of said bank, and to induce the public and plaintiff to confide in and exteud credit to and make deposits in said bank." It is further alleged that said advertisements, statements and representations were published as aforesaid in pursuance of a common design on the part of said defendants, in which they all joined, to give said bank a fictitious credit, wholly unwarranted in fact, and to induce thereby the public and this plaintiff to extend credit to and to make and to keep deposits in said bank, and that from and after the 20th day of September, 1885, the said defendants had no hope, in reason or fact, of restoring said bank to solvency, or of in any wise improving its condition; and its further continuance in business was by them designed and effected merely for the purpose of enabling certain of said directors to save themselves in respect of transactions with said bank upon which they claimed said bank was liable, directly or indidirectly, to them, and this at the expense and sacrifice of such persons as might happen to have funds in said bank when such design should be accomplished; and all the deposits received and credits contracted by said bank from the said 20th day of September, 1885, until its suspension, were received and coutracted without any prospect of making good or paying such liabilities, except partially only, and in so far as they might happen to be withdrawn and demanded in current transactions before the purpose aforesaid of continuing said business should be accomplished. That the transactions aforesaid, which were designed to be protected and secured by the further continuance of the business of said bank, consisted of pretended loans of money and accommodation paper by the said William R. Baker and Robert Brewster and S. K. McIlhenny, and by the McIlhenny Company, a corporation whereof the said S. K. McIlhenny was and still is the president, manager and principal stockholder.

For the purpose of promoting conciseness and simplicity we formulate the questions involved in this appeal as follows: (1) Are the directors of a banking corporation personally liable, at the suit of an individual depositor, for damages sustained by reason of the insolvency of the corporation, when the depositor is induced to place money in the hands of the corporation solely by representations of solvency made to the general public by the directors, who ought to have known, and by the use of ordinary care, such as it was their duty to have exercised, might have known that such representations were false? (2) Are such directors so liable to such depositor wheu such false representations are knowingly made with intent to defraud the public generally? (3) Are such directors so liable when such false representations are made in pursuance of a fraudulent combination and common design upon their part to give to the corporation a fictitious credit, that the business might be continued for the purpose of enabling such directors to collect certain pretended loans claimed to have been made by them to the corporation? If either of these questions is auswered in the affirmative, it follows that the court erred in sustaining the demurrers, and the judgment must be reversed. After a more than ordinarily careful investigation, we conclude that each and all of them must be answered affirmatively, which dispenses with the necessity for a separate discussion of each; for, if the appellees are liable under the circumstances stated in the first, a fortiori they are liable under the

circumstances stated in the second and third of these questions.

Directors of banking corporations occupy one of the most important and responsible of all business relations to the general public. By accepting the position, and holding themselves out to the public as such, they assume that they will supervise and give direction to the affairs of the corporation, and impliedly contract with those who deal with it that its affairs shall be condueted with prudence and good faith. They have important duties to perform toward its creditors, customers and stockholders, all of whom have the right to expect that these duties will be performed with diligence and fidelity, and that the capital of the corporation will thus be protected against misappropriation and diversion from the legitimate purposes of the corporation. Customers are invited to business relations, and are induced to accept and act upon such invitation by the representations that the institution is solvent and owns a certain amount of capital, and that this capital is under the supervision and control of certain directors. It is the duty of directors to know the condition of the corporation whose affairs they voluntarily assume to control, and they are presumed to know that which it is their duty to know, and which they have the means of knowing. If the representations are false, but relied and acted on by a customer to his damage, to hold that in such case the directors who made such false representations are not liable because they were ignorant of the falsity of the representations would be to award a premium for negligence in the performance of important and almost sacred duties voluntarily assumed, and to license fraud and deception of the most flagrant and pernicious character. It is a familiar principle of law that an action for damages lies against a party for making false and fraudulent representations whereby another is induced to do an act from which he sustains damage. If the representations are untrue, it is immaterial that they may have been made without fraudulent intent, and it is sufficient that they were made to the general public if the appellant was indnced thereby to deposit money in the bank. We think it can make no difference as to the liability of appellees that they made the representations as directors of the corporation.

We proceed now to notice some of the authorities which we think support our conclusions.

Bigelow, in his work on Estoppel, 538, after reviewing many authorities, states the rule as follows: "In accordance with the principles in these cases, it is held that directors of corporations, being bound to know the proceedings of the body, cannot escape the effect of representations made by them concerning the acts of the corporation, by the allegation of igno

rance.

In Field Corp., $$ 170-174, inclusive, it is said: "Where the directors of an insurance company had fraudulently caused false statements to be officially made as to the condition of the company, it was held that they were personally liable to a party who had suffered damage thereby. The directors are generally only bound in the management of the affairs of the corporation to use reasonable diligence and prudence -that is, to such diligence and prudence as men usually exercise in the management of their own affairs of a similar nature; and if they act in good faith, they are not personally responsible to stockholders for a loss that may be sustained thereby. But a director may be liable in damages for his fraudulent act. And it has been held that a director is personally respousible, not only for fraud and willful neglect, but also for his negligence, especially gross negligence. It will be apparent from what has been said that the relation not only of principal and ageut exists between the

corporation and the directors, but also the relation of trustee and cestui que trust exists between them and the stockholders and creditors. Accordingly they have no right to enter into or participate in any combination the object of which is to divest the company of its property and obtain it for themselves to the prejudice of members or creditors. Nor are they entitled to any share of capital stock or any dividends of profits, until its creditors are paid. This doctrine would of course be applicable in all cases of fraudulent or wrongful disposition of the corporate funds or property by directors; for as agents and trustees of the corporation, as well as the stockholders and creditors, they would be bound to perform their duties and administer the trust in good faith. The fiduciary character of directors referred to is such that the law will not permit them to manage the affairs of the corporation for their personal and private advantage when their duty would require them to work for and use reasonable efforts for the general interest (of the corporation and its stockholders and creditors. The confidence thus reposed in them cannot be thus abused with impunity, and they cannot use their position to promote their own interest, in respect to any thing thus intrusted to them to the prejudice of creditors or other members."

In Morse Banks, 131, et seq., it is said: "Whatever knowledge a director has or ought to have officially, he has or will be conclusively presumed at law to have as a private individual. Thus a director is affected with notice of the condition and transactions of the bank. If the bank is insolvent, or if it offers him for purchase notes which could only be legally sold by authority of a directorial vote which has not been given, he is affected with knowledge of the insolvency and of the illegality of the notes." Lyman v. Bank, 12 How. 225. The same author, p. 133, says: "If bank directors do not manage the affairs and business of the bank according to the directions of the charter and in good faith, they will be liable to make good all losses which their misconduct may inflict upon either stockholders or creditors, or both. They may be held to account to an injured party in a court of chancery, or they or any one of their number who shared in the wrong doing may be sued at law for damages."

In 3 Suth. Dam.587, 588, it is said: "If the person making the representations which are material, and which he intends should influence another, knows them to be false, the case is clear. Some question has been raised whether positive representations, made without knowledge, and believed to be true by the party making them, will sustain an action for damages in the nature of deceit. But the doctrine which seems supported by the great weight of authority is, that if a person states as of his own knowledge material facts which are susceptible of knowledge to one who relies and acts upon them as true, it is no defense to an action for deceit that the person making them believed them to be true. The falsity and fraud consist in representing that he knows the facts to be true of his own knowledge when he has not such knowledge. It is not necessary that the false representations be made to deceive the plaintiff in particular."

In 3 Wait Act. & Def. 436, it is said: "It has been laid down as settled law that if a party makes representations in such a manner as to import a knowledge in him of facts, while in fact he has no knowledge of the facts, and the representations are made with the intent that another shall rely on them, and these representations turn out to be false, it is as much a fraud as if the party making them knew them to be untrue." See also Kerr Fraud & M. 111, 324, 325.

In Gillet v. Phillips, 13 N. Y. 117, it is said: "By accepting the office of director be assumed a duty to the stockholders and creditors of the bank to inform

himself of what would appear by an inspection of the books of the institution of which he was one of the ostensible managers; and he cannot urge a want of notice arising from a neglect of duty."

The case of Morse v. Swits, decided by the Supreme Court of New York, and reported in 19 How. Pr. 286, was an action by a stockholder against the directors of a bank to recover of them personally damages for a false statement published concerning the affairs of the bank, by which the plaintiff was induced to purchase stock of the bank. Gould, J., delivering the opinion of the court, says: "I think the tendency of all the later decisions in this country and in England is in favor of extending the liability of every one who makes a public representation which he knows to be false, and upon faith in which any one has been led into a business transaction whereby he suffers damage. I do not understand that it is at all necessary to the right of action that the representation should have been intended for the party sustaining the loss, or in any way addressed to him. If it be made openly and publicly, so that it might well come to his ears, and he acts upon it, the party making it shall answer to him for his damages. He shall not be at liberty to sow falsehood broadcast without being responsible for the loss it causes. The falsehood may have been made for one purpose and published for that; but being published, the public, or any individual of the public, has the right to believe it. It must have been the intention of the persons publishing it that it should be believed. And if believing it, any one of the public acts on that belief, the makers and publishers of the falsehoods are to be held liable for the consequences they have caused." See authorities cited in note at end of this decision on page 288.

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The case of Society v. Underwood, 9 Bush, 617, was an action against the directors of a bank to recover to them personally damages for loss of deposits wrongfully converted, and it was there said: The question here presented is whether the directors, who had knowledge of these alleged wrongful sales, can be held to answer personally for the deposits so converted. Appellees insist that they cannot be so held because of want of privity between the depositors and themselves. They concede that for gross negligence or mismanagement upon their part, resulting in loss to the bank, they may be held to account to it; but urge that inasmuch as their undertaking was to the corporation, they can be proceeded against by it alone, and that appellants must look to the bank, and not to them. This position is plausible, but it cannot, in our opinion, be maintained. Bank directors are not mere agents, like cashiers, tellers and clerks. They are trustees for the stockholders, and as to their dealings with the bank, they not only act for it and in its name, but in a qualified sense are the bank itself. It is the duty of the board to exercise a general supervision over the affairs of the bank, and to direct and control the action of its subordinate officers in all important transactions. The community have a right to assume that the directory does its duty, and to hold them personally liable for neglecting it. Their contract is not alone with the bank. They invite the public to deal with the corporation, and when any one accepts their invitation, he has the right to expect reasonable diligence and good faith at their hands; and if they fail in either, they violate a duty they owe, not only to the stockholders, but to the creditors and patrons of the corporation."

The case of Bartholomew v. Bentley, 15 Ohio, 666, was a suit by an individual creditor of an insolvent bank against the officers of the bank to make them personally liable for losses sustained by the plaintiff by reason of his relying and acting upon false representations made by the defendants. It is there said:

separate and distinct from that sustained by the others, and that the action was well brought against the defendants.

The case of Morgan ▼. Skiddy, 62 N. Y. 325, was an action brought by a purchaser of stock of a corporation against the dirictors personally to recover the money paid for the stock, upon the ground that plaintiff had been induced to purchase the stock by false statements made in a prospectus issued by the defendants. It was said: "If the plaintiff purchased the stock relying upon the truth of the prospectus, he has a right of action for deceit against the persons, who with knowledge of the fraud and with intent to deceive, put it in circulation. The representation was made to each person comprehended within the class of persons who were designed to be injured by the prospectus, and when a prospectus of this character has been issued, no other relation between the parties need be shown except that created by the fraudulent and wrongful act of defendants in issuing or circulating the prospectus, and the resulting injury to the plaintiff. It is hardly necessary to say that a director of a company who knowingly issues or sanctions the circulation of a false prospectus, containing untrue statements of material facts, the natural tendency of which is to mislead and deceive the community, and to induce the public to purchase its stock, is responsible to those who are injured thereby. Mere exaggerated statements of the prospects of a new enterprise will not subject those who make them to liability; but no material misstatement or concealment of any material fact ought to be permitted. The directors of a company are supposed to know the facts touching its condition and property, and their statements in respect to its officers naturally attract pub

"It may be regarded as a well-settled principle that for every fraud or deceit which results in consequential damage to a party he may maintain a special action in the case. The principle is one of natural justice long recognized in the law. And it matters not, so far as the right of action is concerned, whether the means of accomplishing the deception [be complex or simple, a deep-laid scheme to swindle or a direct falsehood, a combined effort of a number of associates, or the sole effort of a solitary individual, provided the deception be effected, and the damage complained of be the consequence of the deception. A valid act of incorporation, or an invalid or pretended right to exercise corporate franchises, is alike powerless to secure the guilty from the consequences of their fraudulent conduct, when it has been knowingly resorted to as the mere means of chicane and imposition, and used to facilitate the work of deception and injury. Were it otherwise, it would be a reproach to the law. If the defendants, with design to defraud the public generally, have knowingly combined together, and held forth false and deceptive colors, and done acts which were wrong, and have thereby injured the plaintiff, they must make him whole by responding to the full extent of that injury, and they cannot place between him and justice, with any success, the charter of the bank, whether it be valid or void, forfeited, or in case. * * *Nor is it material that there should have been an intention to defraud the plaintiff in particular. If there was a general design to defraud all such as could be defrauded by taking their paper issues, it is sufficient, and the plaintiff may maintain his suit if he has taken the paper and suffers from the fraud. It is first said that to allow billholders who have been defrauded to sue the members of the company individually at law will produce endless litiga-lic confidence. If they fraudulently unite in an attion; and when applied, the remedy cannot do equal justice to all the creditors or to the members of the company. It may be that numerous suits will be prosecuted. * * * And yet the doctrine that because they have cheated many they are safer than they would be if only one man had suffered, does not attain in courts of justice. Again it is said the fund sought is a trust fund, and a bill in chancery is the proper remedy. There would be much propriety in the position were it in point of fact true that a party who has been defrauded by the act of another who has no redress save out of a fund composed solely of the proceeds of the imposition. In that case strict equity might require that all those whose injuries had been the source of the fund should share equitably in it. But the rule that a person sustaining damage by fraudulent acts of another can only look to a particular fund of the wrong-does for redress never existed any where."

The cases of Cross v. Sackett and Ward v. Sackett, 2 Bosw. 645, were actions brought by purchasers of stock of a corporation to recover a director's money paid for the stock, upon the ground of false representations made by the directors, in a prospectus and other advertisements, as to the value of the stock. In these cases it was held that the actions could be main- | tained, and that "there is no wrong or fraud which the directors of a joint-stock company, incorporated or otherwise, can commit, which cannot be redressed by appropriate and adequate remedies."

The case of Cazeaux v. Mali, 25 Barb. 578, was an action brought by a stockholder of a corporation against the officials and directors to recover of them personally the loss sustained by plaintiff by depreciation in the value of stock, caused by the fraudulent issue of stock beyond the authorized amount. It was there held that the action was properly brought by the plaintiff in his own name, without joining the other stockholders; the injury to each stockholder being

tempt to deceive the public, and by false statements of facts to give credit and currency to its stock, it is but simply justice that they shall answer to those who have been deluded into giving confidence to them."

The case of Shea v. Mabry, 1 Lea, 319, was an action by a judgment creditor of a corporation against the directors to recover the amount of the judgment, upon the ground that the directors had misapplied or converted the assets of the company. It was there held that "directors of corporations are not mere figure-heads. They are trustees for the company, for the stockholders, and for the creditors. The must not only use good faith, but also care, attention and circumspection in the affairs of the company, and particularly in the safe-keeping and disbursement of funds committed to their custody and control. They must see that the funds are appropriated, as intended, to the purposes of the trust; and if they misappropriate them, or allow others to divert them from these purposes, they must answer for it individually. Ignorance will not excuse when they have the means of knowledge.”

The case of Delano v. Case, decided by the appellate court of Illinois, and reported in the Bankers' Magazine for March, 1886, page 686, was an action by a general depositor against directors of a bank for permitting it to be held out to the public as solvent when in fact it was at the time insolvent. It was there held that the directors were individually liable to the depositor. The judgment of the appellate court was affirmed by the Supreme Court in June, 1887. 12 N. E. Rep. 676.

The case of Edgington v. Fitzmaurice, decided by the Court of Appeal of England in March, 1885, and published in the Central Law Journal of January 22, 1886, page 81, was an action by a purchaser of debentures of a corporation against the directors to recover of them personally damages for false representations

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