it is now held that a shareholder may distribute his stock in lots of ten among his friends, and thereby secure, in a clumsy and troublesome way, a vote for every share.[1]
The right to vote by proxy was not allowed at common law, in the absence of some special authorization.[2] This was often given in the charter.[3] Contrary to what is now generally held,* it is very doubtful if the authority of a by-law would have been held in the last century sufficient to confer the right.[4]
That the directors of a corporation shall manage its affairs honestly and carefully is primarily a right of the corporation itself rather than of the individual stockholders. The question may, however, be considered in this connection.
The only authority before the present century is the case of The Charitable Corporation v. Sutton,[5] decided by Lord Hardwicke. But this case is the basis, mediate or immediate, of all subsequent decisions on the point, and it is still quoted as containing an accurate exposition of the law.[6] The corporation was charitable only in name, being a joint-stock corporation for lending money on pledges. By the fraud of some of the directors or "committee-men," and by the negligence of the rest, loans were made without proper security. The bill was against the directors and other officers, " to have a satisfaction for a breach of trust, fraud, and mismanagement." Lord Hardwicke granted the relief prayed, and a part of his decision is well worth quoting. He says, " Committee-men are most properly agents to those who employ them in this trust, and who empower them to direct and superin- tend the affairs of the corporation.
" In this respect they may be guilty of acts of commission or omission, of malfeasance or nonfeasance.[7]
" Now, where acts are executed within their authority, as repeal- ing by-laws and making orders, in such cases, though attended with bad consequences, it will be very difficult to determine that
- r5 See the early case of Taylor v, Griswold, 14 N. J. L. 222 (1834).
- ↑ Moffat V, Farquhar, 7 Ch. D. 591, and cases therein cited.
- ↑ Phillips V, Wickham, i Paige Ch. 590; State v, Tudor, 5 Day, 329; Taylor v, Griswold, 14 N. J. L. 222; People v. Twaddell, 18 Hun, 427: Common, v, Bringhurst, 103 Pa. St. 134: Harben v, Phillips, 23 Ch. D. 14.
- ↑ E.g. the charter of the Mine Adventurers, 9 Anne, c. 24, or of the Northumberland Fishery Soc., 29 Geo. III., c. 25.
- ↑ Common, v, Bringhurst, 103 Pa. St 134, and cases therein cited.
- ↑ 2 Atk. 400.
- ↑ Taylor on Corp. § 619.
- ↑ Citing Domat's CItII Law, 2d B., tit. 3, secs, 1 and 2.
