herent power to remove the directors from office; that their election is a contract between the members and themselves that they shall continue in office throughout the term. It would certainly seem unreasonable, however, to hold the members of the company to any such implied engagement where the directors have broken the condition upon which it must be presumed to have been made by failing faithfully to perform the duties of their office. Accordingly it has been held that the power of removal for cause is incident to the power of appointment, even where the tenure of office is fixed for a definite period.* And the court will not interfere where the stockholders, having power to remove directors for reasonable cause, have acted upon a cause which the court might not have thought reason able. Nor on the other hand, when the stockholders have the power of removal, will the court restrain the directors from performing the functions of their office. The stockholders will be left to such remedy within the corporation as is provided by the charter or by-laws. Under the English Companies Clauses Act of 1845, accepting or continuing to hold any other place of trust or profit under the company, or being

1 Imperial Hydropathic &c. Co. v. Hampson, (1882) 23 Ch. Div. 1, 7; State v. Bryce, (1836) 7 Ohio, (pt. 2nd) 82.

2 There is no doctrine of common law, and there is no statutory provision which enables you to vary the contract entered into between the members that the directors shall hold office for a given period if that contract does not contain that power of removal. Imperial Hydropathic &c. Co. v. Hampson, 23 Ch. Div. 1, 7. Mr. Taylor in § 650 of his work on Corporations, very justly says that it would seem that for good grounds the majority of shareholders, in a duly summoned meeting of the corporation, should be competent to remove a director. At the same time, he says that, in the ordinary case of directors elected annually to serve for a year, there is no power in the

corporation to remove them arbitrarily before the expiration of their term of office.

4 Bayless v. Orne, (1840) Freem. Ch. 161, 176. Acc. dicta in Burr v. McDonald, (1846) 3 Gratt. 206, 224. So in Adamantine Brick Co. v. Woodruff, 4 MacArthur, (D. C.) 318, it was held that the stockholders of a corporation, in which the general public has no interest, may depose its directors and other officers without notice and trial.

5 Inderwick v. Snell, 2 Macn. & G. 217; Browne & Theobald's Ry. Law, 104.

6 Hattersley v. Earl of Shelburne, 10 Week. Rep. 881.

7 In Moses v. Tompkins, (1887) 84 Ala. 622, the court refused to enjoin directors from acting, where to have done so would have been tantamount to their amotion from office. And it

either directly or indirectly concerned in any contract with it, or participating in any manner in the profits of any work to be done for it, or ceasing at any time to hold the required number of shares in the company, vacates the office of a director, and it is enacted that he shall thenceforth cease from voting or acting as a director. It would seem to be self-evident that illegal acts by newly elected directors can not operate to reinstate their predecessors.2

3

Although a di

§ 224. Directors must act as a board. rector, like any other person, may be appointed by the board of directors to act as their agent, no single director has authority by virtue of his office to bind the company by his acts and engagements. Thus a single director can not sell the bonds of his company unless expressly authorized to do so." Nor can he bind his company to responsibility for goods furnished by a merchant to an employee of the company. Thus a director of a railroad company, though owning a majority of the stock, can not bind the company by a contract for the construction of its road way. No estoppel arises against the company, having a contract with one of its directors for the construction of a portion of its road way, where it had no knowledge of the latter's contract in its name with plaintiffs, at the time the work sued for was done, though it had been garnisheed in a suit against plaintiffs, and the estimates, furnished by the director's engineer, showed the work to have been done by plaintiffs. Even a majority of the directors or

was said that since the complainants held a majority of the capital stock, they had no excuse for not seeking a remedy within the corporation.

18 Vict. ch. 16, § 86. The provision, however, that if a director contract with his company his office shall become vacant does not avoid the contract. Foster v. Oxford &c. Ry. Co., (1853) 13 C. B. 200.

2 Beardsley v. Johnson, (1888) 49 Hun, 607.

3 Northampton Bank v. Pepoon, (1814) 11 Mass. 288.

N. J. 98; People's Bank v. St. Anthony's R. C. Church, (1886) 39 Hun, 498.

5 Titus v. Cairo &c. R. Co., 37 N. J. 98.

6 Rice v. Peninsular Club, (1884) 52 Mich. 87.

7 Allemong v. Simmons, (Ind. 1890) s. c. 7 Ry. & Corp. L. J. 416. The argument in this case is as follows:

66

It is true, Crawford was one of the directors of the company, and held a majority of the stock, but the existence of these facts conferred upon

Titus v. Cairo &c. R. Co., 37 him no power to make contracts for

all of them acting separately can not bind the corporation in regard to matters which they are only authorized to act upon as a board. Thus a majority of the directors signing sepa. rately, and not as a board, can not bind the company upon a promissory note. A director, however, will not be heard to deny his authority to contract for the company in an action upon a contract whereby he agreed to purchase land for the corporation, the title to be conveyed to him personally and to be reconveyed by him to the company.3

§ 225. Supplying vacancies in the board of directors.This matter is frequently provided for by statute. By such statutes the matter may be left to be regulated by the by-laws of the company. Where the directors are themselves authorized to supply vacancies in the board, their power to do so is held to be exclusive of any action on the part of the shareholders. The power to fill vacancies may be lost by the reduction of the number of directors below the number necessary to constitute a board.

3

§ 226. Term of office of directors. In the American States directors are usually elected annually to serve one year. But in England under the Companies Clauses Act of 1845, they serve three years, one-third retiring from office annually. In case of no election or failure to elect new di

1 Ala. Code, § 1424, authorizes the board to fill them until the next regular election. By the Companies Clauses Act of 1845, if any director die, or resign, or become disqualified and incompetent to act as a director, or cease to be a director by any other cause than that of going out of office by rotation, as therein provided, the remaining directors, if they think proper so to do, may elect in his place some other shareholder, duly qualified to be a director; and the shareholder so elected to fill up any such vacancy shall continue in office as a director so long only as the person in whose place he shall have been elected would have been entitled to continue if he had remained in office. 8 Vict. ch. 16, § 89.

kins, (1888) 84 Ala. 613. And where the vacancies have reduced the directors to a number less than the minimum prescribed by the articles of association as necessary to constitute a board, although there remain a number sufficient to constitute a quorum, if a legally constituted board were in existence, they can not validly elect new directors to fill the vacancies. Faure Electric Accumulator Co. v. Phillipart, (Q. B. Div. 1888) 4 Ry. & Corp. L. J. 319, 522, citing Bottomley's Case, 16 Ch. Div. 681.

5 E. g. N. Y. Laws, 1850, ch. 140, §5; Ala. Code, §§ 1923, 1925.

68 Vict. ch. 16, § 88.. The Companies Clauses Act of 1845, provides that at the ordinary annual meetings of

2 As in N. Y. Laws of 1850, ch. 140, shareholders, the shareholders, present personally or by proxy, shall

§ 5.

3 Moses v. Tompkins, (1887) 84 Ala. elect persons to supply the places of

613.

4 As where five of seven directors designated by the act of incorporation became disqualified to serve, it was held that the two remaining directors could not fill the vacancies thereby occasioned. Moses v. Tomp

the directors then retiring from office, agreeably to the provisions thereinafter contained; and that the several persons elected at any such meeting, being neither removed or disqualified, nor having resigned, shall continue to be directors until

rectors, the incumbents continue in office until an election may be held.1 When the term is fixed by statute, the directors have no power either to prolong or shorten their tenure of office,2 either directly or indirectly, as by changing the time of the annual meeting for the election of their successors.3

§ 227. Directors' powers. At common law the directors have powers co-extensive with those of the corporation, and have not a mere delegated authority as common agents.' And in the absence of restrictions in the charter or by-laws, directors have all the authority of the corporation itself in the conduct of its ordinary business. They are clothed with the power of managing the corporate property, and conducting the affairs of the company. Generally, whatever the directors