corporations;1 and in general all extraordinary or unusual powers not conferred upon the directors expressly, or by necessary implication,' are reserved to the members.3 Continental Passenger Ry. Co., 14 Phila. 10; People v. Albany &c. R. Co., 77 N. Y. 232. Cf. In re St. Ann's Church, 23 How. Pr. 285; Robertson v. Bullions, (1854) 11 N. Y. 243; Elwell v. Dodge, 33 Barb. 339; In re Excelsior Fire Ins. Co., 19 Abb. Pr. 14; Dana v. Bank of the United States, 5 Watts & S. 246; Fisher v. New York &c. R. Co., 46 N. Y. 644; Central Crosstown Co. v. Twenty-Third St. &c. Co., 54 How. Prac. 183; Duncomb v. New York &c. R. Co., (1881) 84 N. Y. 190; Jack son v. New York &c. R. Co., (1874) 58 N. Y. 623. 1 This subject will be discussed in the treatment of CONSOLIDATION AND MERGER, infra. 2 An example of such necessary implication is the rule that the power to borrow money carries with it the power to mortgage the corporate property to secure the loans. Beach on Railways, § 609. 3" Directors, as I shall hereafter attempt to establish, are the agents of the corporation, having, as such, exclusive authority to act within their sphere. But they are also, in some respects, merely the executive agents of the stockholders, and as such may perform certain other acts if specially authorized thereto by their principals, and in respect to such action they are simply the agents of the shareholders, as well as of the corporation. The shareholders, the principals, having fixed the terms and conditions, which they had a right to do, upon which the directors, their agents, were authorized to part with the possession of the property in their charge, and to commit the possession and man agement thereof into other hands; what right have the agents to radically change or alter these terms and conditions without consulting their principals? . . . The directors thus being the agents of the corporation, what are their powers, and from whence are they derived, and how must corporative powers residing in the corporation, the. right to exercise which is not vested in the directors, be brought into operation? These questions are so intimately connected that they must be disposed of together. The powers of directors are such as are conferred by the charter of their corporation and the laws pertaining thereto, and such corporative powers as are not conferred by law upon the directors remain in the corporation, to be exercised, or at least set in motion by its component parts, the shareholdIn the case at bar, the charter provided that the directors were to manage the business and affairs of the company; and the question involved in this branch of the case is, whether this language conferred the right to exercise every corporate power possessed by the corporation, or merely to manage the ordinary business and affairs of the company for the carrying on of which it was organized, leaving the right remaining in the shareholders composing the company to set in motion os confirm corporate action within the limits of its powers, but extraordi nary and unusual in its nature. Within the sphere of their duties, the right of the directors to act is undoubtedly exclusive; and further, all corporate acts must be done through them, as they are the ex ers. 74. Direct participation in corporate management, not an incident of membership.- As a general rule the members or stockholders of a corporation have no right to participate directly in the management of its ordinary affairs. These clusive executive and administrative authority, but nevertheless all corporate powers do not reside in the board of directors." In re Metropolitan Elevated Ry. Co., (1884) 11 Daly, 367; s. c. 15 Am. & Eng. Ry. Cas. 1, per Van Brunt, J. 1" A commercial or other business corporation is constituted for the specific purpose of suing and being sued, granting and receiving, buying and selling, and doing other business in a corporate name and capacity totally distinct from that of any or all of its members considered as individuals. A corporation is a person. Its property is not the property of its stockholders. Its rights are not their rights. They have only an indirect interest therein. The rights of a stockholder are, to meet at stockholders' meetings, to participate in the profits of the business, and to require that the corporate property and funds shall not be diverted from their original purpose. If the company become insolvent, it is the right of the stockholders to have the property applied to the payment of its debts. I do not know of any other rights, except incidental ones, subsidiary or auxiliary to these. Of course a stockholder has ordinarily a right to a certificate for his stock, to transfer it on the company's books, and to inspect these books. For the invasion of these rights by the officers of the company, he may sue at law, or in equity, according to the nature of the case." Forbes v. Memphis &c. R. Co., (1872) 2 Woods, 381. "Corporate powers are usually distinguished into legislative, electoral, and administrative in private corporations aggregate, though sometimes all of the members act immediately in the administration of its affairs. Usually, for the sake of convenience, the direct management is intrusted by the charter to certain officers or board of managers elected by the members at large, though deriving their ordinary powers from the act of incorporation. These officers exercise the legislative and administrative functions; the former in the institution of by-laws for the general government of the company, the latter in the superintendence and execution of its general business. In other instances a select few, representing all those interested in the object of the association, are erected into and invested with all the powers of a corporation; and sometimes selected branches are divided into distinct classes. When the corporate existence is devolved on a board of officers, they not only wield the whole corporate authority, but may apply for and agree to radical changes in the instrument to which they owe the corporate being. When such a board is separated into integral parts occupying distinct positions, both must concur in any act having for its object an alteration in the fundamental law, though in the exercise of the ordinary powers of a corporation they act jointly and are governed by a majority of the united bodies. These in their capacity of managers have no authority either to call for or to assent to a change in the corporate constitution but by the agreement of a majority of the corporators." Commonwealth v. Cullen, (1850) 13 Pa. St. 113. are committed to trustees or directors, who, within the scope of their authority, act independently of the members,' throughout the term for which they were elected. A single stock 1 Beach on Railways, SS 468-471; ity thus given, the company is liable Conro v. Port Henry Iron Co., (1851) for their acts; but beyond these 12 Barb. 27; McCullough v. Morse, limits they can not bind their prin(1846) 5 Denio, 567; Railway Com- cipals;" Louisiana v. Bank of Louisipany v. Allerton, (1873) 18 Wall. 233; ana, (1834) 6 La. Ann. 745; Bank of Union Gold Mining Co. v. Rocky Kentucky v. Schuylkill Bank, (1846) Mountain Nat. Bank, (1875) 2 Colo. 1 Parson's Sel. Cas. 180, 235. Cf. 565; In re Wheeler, (1866) 2 Abb. People v. Metropolitan Ry. Co., Pr. (N. S.) 361; Gashwiler v. Willis, (1881) 26 Hun, 82; Howland v. Myer, (1867) 33 Cal. 11; Park v. Grant Lo- (1850) 2 Sandf. Super. Ct. 186; s. c. comotive Works, (1885) 40 N. J. Eq. affirmed 3 N. Y. 290; State v. Cur. 114, 117, the court saying; "In cases tis, (1874) 9 Nev. 325; Union Mutual where the power of the directors of &c. Ins. Co. v. Keyser, (1855) 32 a corporation is without limitation, N. H. 313; Black v. Delaware &c. and free from restraint, they are at Co., (1871) 22 N. J. Eq. 130. liberty to exercise a very liberal discretion as to what disposition shall be made of the gains of the business of the corporation. Their power over them is absolute so long as they act in the exercise of an honest judgment. . . . And their determination in respect to these matters, if made in good faith and for honest ends, though the result may show that it was injudicious, is final, and not subject to judicial revision; Fleckner v. United States Bank, (1823) 8 Wheaton, 338; Whitwell v. Warner, (1848) 20 Vt. 425; Ridgway v. Farmers' Bank, (1824) 12 Serg. & R. 256; Methodist Episcopal Church v. Sherman, (1874) 36 Wis. 404; Salem Bank v. Gloucester Bank, (1820) 17 Mass. 1, 28, 29, where a distinction is drawn between the powers of directors and those of corporate officers, the former being, it is said, the agents of the company, while the latter are its servants. 'The duties of both," the court continued, "are pointed out by statute, or prescribed in the by-laws, which are the promulgated will of the company. Acting within the limits of the author 2 Ordinarily the shareholders have no power to remove directors before the expiration of their term. Imperial &c. Hotel Co. v. Hampson, (1882) 23 Ch. Div. 1, 7. In a late case in West Virginia, a bill by certain stockholders for themselves and others alleged that the president and manager had abused his trust, that a majority of the directors and stockholders were his near kinsmen, and some of them resided at a distance and allowed him to select the proxy to vote their stock; that they refused to allow a committee appointed to examine the books to employ an expert; that at a meeting to elect directors some of them withdrew and broke up the meeting, and afterwards gave notice of another meeting to elect five directors, ignoring the fact that three had already been elected, was held insufficient, as showing neither that these directors and stockholders had acted fraudulently or in wilful disregard of their duties, nor that a majority of them had disabled themselves from acting in the premises, nor that they had been legally called on to act and had holder can not make a valid contract in the corporate name;1 and the directors may disregard specific directions from the members respecting matters committed generally to their control. The court will not compel compliance therewith, even at the suit of a majority of the members.2 § 75. The right to examine the books and records of the company — (a) The general rule. It is well settled, as a general proposition, that the members or stockholders of a corporation have a right to inspect the company's books and records, at all seasonable times, either in person or by attorney in refused to do so. Rathbone v. Parkersburg Gas Co., (W. Va. 1889) 8 S. E. Rep. 570. If under the charter or statute, the shareholders have power to remove directors for cause, a court of equity will not interfere with their discretion. Inderwick v. Snell, (1850) 2 Mac. & G. 216; nor enjoin a meeting called for the purpose of considering the question of removal. Isle of Wight Ry. Co. v. Tahourdin, (1883) 25 Ch. Div. 320. See further as to the English law of amotion, 8 & 9 Vic. ch. 16, $$ 70, 88, 89, 90, 91. 1 Morelock v. Westminster Water Co., (Md. 1886) 4 Atlan. Rep. 404; Robinson v. Hemstreet, (1885) 21 Fla. 342. Cf. Leggett v. New Jersey Manuf. & Banking Co., (1832) 1 Saxton's Ch. (N. J.) 541; s. c. 23 Am. Dec. 728, and note; Rice v. Peninsular Club, (1883) 52 Mich. 87. 2 Commonwealth v. Trustees of St. Mary's Church, (1821) 6 Serg. & R. 508; Dana v. Bank of the United States, (1843) 5 Watts & S. 223, 245; Dayton &c. R. Co. v. Hatch, (1855) 1 Disney, 84; Union Gold Mining Co. v. Rocky Mountain Nat. Bank, (1875) 2 Colo. 565; Union Mutual Fire Ins. Co. v. Keyser, 32 N. H. 313; Granger v. Grubb, (1870) 7 Phila. 350, where it was held that a vote ordered by the directors to be taken by a circular addressed to the stockholders is not binding, but merely advisory; Conro v. Port Henry Iron Co., (1851) 12 Barb. 27; McCullough v. Morse, (1846) 5 Denio, 567; Hoyt v. Thompson, (1859) 19 N. Y. 207; Dispatch Line of Packets v. Bellamy Manuf. Co., (1841) 12 N H. 205, 226; Salem Bank v. Gloucester Bank (1820) 17 Mass. 1, 29; State v. Bank of Louisiana, 6 La. Ann. 746. 3 Commonwealth v. Phoenix Iron Co., (1886) 105 Pa. St. 117, annotated by Chas. L. Billings in 23 Am. L. Reg. (N. S.) 388, 395; s. c. 23 Cent. L. J. 584, 587, annotated; Union Bank v. Knapp, 3 Pick. 96, 108; People v. Throop, 12 Wend. 183; Deaderick v. Wilson, 8 Baxt. 108; State v. Einstein, 46 N. J. 479; Union Bank v. Hunt, 76 Mo. 439; Wannell v. Kern, 57 Mo. 478; Angell & Ames on Corporations, § 681; Redfield on Railways, 227; Grant on Corporations, 311; Rex v. Shelley, 3 Term Rep. 142; Rex v. Babb, 3 Term Rep. 580; Harrison v. Williams, 3 Barn. & Cres. 162; Rogers v. Jones, 5 D. & R. 484; Cockburn v. Union Bank, 13 La. Ann. 289; 2 Phillips on Evidence, 313; 1 Wharton on Evidence, § 746; Beach on Railways, § 406. See also, "Inspection of Books and Papers," 6 Leg. Adv. 54. Under N. Y. Laws of 1842, ch. 65, a transfer agent of a foreign corporation is bound, at all reasonable times, to exhibit to any fact; and that the right to inspect carries with it, as an incident, the right to make copies. A stockholder also has a higher right to demand the production of corporate records in court to aid him in a suit with strangers, than the other party to the action may claim.3 The prevailing doctrine in the United States is said to permit an incorporator the same freedom in examining the books of the company as a partner has with respect to the books of his firm. But the right only extends to such documents as are necessary to the stockholder's particular purpose. A demand of an inspection of all the books, records and papers of the company is too broad.3 Ordinarily the right of inspection does not extend to books containing the minutes of directors' meetings, although, upon especial occasions and for especial purposes, it may be properly demanded. Statutes giving the shareholders of corporations the right to inspect the corporate books have been passed in many of the American States and in England. These statstockholder the transfer book and list of stockholders. Kennedy v. Chicago, Rock Island &c. R. Co., (1885) 14 Abb. N. Cas. 326. 1 Foster v. White, (1889) 86 Ala. 467; State v. Bienville Oil Works Co., 28 La. Ann. 204. 2 Cotheal v. Browner, 5 N. Y. 562; s. c. 10 Barb. 216; Beach on Railways, § 407. Co., (R. I. 1889) 17 Atlan. Rep. 61. Although Rev. St. Wis. 1878, § 1757, is found under the heading "Capital Stock," its provision that the books of every corporation containing the stock subscriptions and accounts shall be subject to the inspection of the stockholders, is not limited to the books containing the stock accounts, but extends to those 3 Mayor of Southampton v. Graves, containing the general accounts. (1800) 8 Term Rep. 590. State v. Bergenthal, (1888) 72 Wis. 314. 66 4 Morawetz on Corporations, § 473. Unless restricted by the charter, or by rules or by-laws passed in conformity thereto, a stockholder in a banking company has a right to inspect the discount book" of the bank, within proper and reasonable hours. Cockburn v. Union Bank, 11 La. Ann. 289; Hatch v. City Bank, 1 Rob. (La..) 470. But a by-law of a corporation authorizing the stockholders to inspect the books of account of the business of the company does not include the stock ledger, in which the transfers of stock are entered. Lyon v. American Screw 5 People v. Walker, 9 Mich. 328; Regina v. Mariquita Co., 1 Ellis & E. 289. Cf. Rex v. Merchant Tailors' Co., 2 Barn. & Ad. 115. 6 Alabama &c. R. Co. v. Rowley, 9 Fla. 508; Queen v. Mariquita Miring Co., 1 Ellis & E. 289; Lindley on Partnership, (4th ed.) 809. 7 Queen v. Mariquita Mining Co., 1 Ellis & E. 289. 8 Ala. Code, (1886) § 1677; Mo. Rev. Stat. (1879) §§ 720, 721; Wis. Rev. Stat. (1878) § 1757; Ill. Rev. Stat. (1874) ch. 32, § 13; Ohio Rev. Stat. (1886) § 3312; Vt. Laws of 1880, |