quorum. The board of directors of any corporation, by the affirmative vote of a majority of the whole board, may appoint from the directors an executive committee and such other committees as they may deem judicious, and, to such extent as shall be provided in the by-laws, may delegate to such committees any of the powers of the board of directors. If any corporation holds any stock in any other corporation, one director or executive officer of the corporation holding the stock as aforesaid may be chosen director of such other corporation whether he is a stockholder in such other corporation or not, but not more than one director or executive officer of the corporation holding the stock shall be a director in the other corporation unless eligible as a stockholder therein. At least once in each year the directors of every corporation shall make a full and detailed report of the financial condition of the corporation to its stockholders, which report shall be filed with the treasurer of the corporation, or, if there be no such officer, with the president, and be subject to the inspection of the stockholders at all reasonable times. Such report shall contain a statement of the number of shares of stock and the amount of other securities issued by any other corporation and owned by the corporation making the report, with the name and location of such other corporations. Subject to the by-laws adopted by the stockholders, the directors of any corporation may make and alter by-laws. NOTES. Management. The property and affairs of a corporation are under the management and control of the directors and the details are left to their discretion. The courts will not, in general, interfere with the exercise of that discretion so long as they act in good faith. Angell & Ames on Corporations, § 314. They may therefore pass dividends and apply profits to an enlargement of the business, always keeping within the objects for which the company was formed, Pratt et al. vs. Pratt, Read & Co., 33 Conn. 446; Smith, Trustee, vs. Dana et al., 77 Conn. 543; but after declaring a dividend they cannot withhold its payment when it can be paid without serious injury to the business. Beers vs. The Bridgeport Spring Co., 42 Conn. 17. Chosen annually and for one year. "It seems doubtful whether the provisions of the statute requiring directors to be chosen annually, and for the term of one year, were intended to apply to those who might be appointed upon an increase of the number of directors by an amendment of the by-laws at a special meeting, and whether, without changing the date of the annual meeting, such additional directors might not be appointed to hold office until the time of the next annual meeting." Gold Bluff M. & L. Corporation vs. Whitlock et al., 75 Conn. 669. Quorum. Measures passed by the majority of the quorum of directors at any meeting are considered as having been passed by the board, except in cases where it may be prescribed by statute, charter, or by-laws that there must be a majority vote of all the directors. See Morawetz on Corporations, § 247. As to votes purporting to be passed by the directors of a corporation, the law presumes they are passed by legal directors in the absence of evidence to the contrary. Fairfield County Turnpike Co. vs. Thorp, 13 Conn. 173. When the meeting of a board of directors of a New Haven bank was called by the cashier under instructions from the president, then in New York, by personal notice to the directors in New Haven without specifying the object of the meeting, it was held that this was a legal meeting for ordinary transactions, including the giving of a mortgage of the bank's real estate to remove a debt. Savings Bank of New Haven vs. Davis & Center et als., 8 Conn. 191. The management of a corporation cannot be paralyzed by every absence of a director from its place of business or from the state at a time when a meeting of the board seems necessary. Notice to a majority, in such a case, if they, being all that can be reached, proceed to hold the meeting, will, in the absence of any by-law to the contrary, support their action; at least if, as in the present instance, the others subsequently sign and file a waiver of notice, and the corporation acquiesces in what was done by making it the basis of a claim of legal right. Stafford Springs St. Ry. Co. vs. Middle River Mfg. Co. et al., 80 Conn. 37. Where the record book showed that a quorum was present at a directors' meeting, it was held as presumptive proof that all the directors had been duly notified of the meeting. Lane vs. Brainerd, 30 Conn. 565. Business may be transacted without previous notice when a majority of the directors, happening to be together, all agree to hold a meeting at once for that purpose. Chase vs. Tuttle, 55 Conn. 455. But there is no presumption that a conference of the majority is a regular meeting when no record of the conference has been made. New Haven Trust Co., Receiver, vs. Doherty et al., 75 Conn. 555. Direct Obligations of Directors and their liability. ors of a corporation stand for many purposes in the position of trustees. They may be called to account for fraudulent mismanagement of the corporate property or compelled to declare dividends when they are improperly withheld. Pratt vs. Pratt, Read & Co., 33 Conn. 446. If they mismanage the corporate affairs for their own benefit, a minority of the stockholders may maintain a suit in equity against them for an account and an injunction. Sears vs. Hotchkiss et als., 25 Conn. 171. Directors have no right under any circumstances to use their official positions for a purpose hostile to the corporation. Heminway vs. Heminway, 58 Conn. 443. Contracts made by the directors with the corporation advantageous to themselves are voidable, though not void. If ratified they are in equity regarded with suspicion under the rule that one acting in a fiduciary capacity should not use the relation for his personal benefit. Before such contracts can be considered ratified by acquiescence alone the delay must have been unreasonable, the stockholders must have been advised of all the material facts, and must have had an opportunity to act and to act with perfect freedom. Mallory vs. Mallory Wheeler Co., 61 Conn. 131. An agreement made by a majority of directors, privately, that they should be paid a percentage on all money raised upon the credit of a bond of indemnity, signed by them against the future indebtedness of the corporation, is not binding on such corporation. Butler vs. Cornwall Iron Co., 22 Conn. 335. Stockholders cannot sue directors for misconduct in office without showing an application to the directors for action by the corporation and refusal on their part to act. Allen vs. Curtis, 26 Conn. 456. The funds of a corporation cannot lawfully be withdrawn and used to adjust equities between subscribers to its capital stock arising out of their respective subscriptions; and a director who knowingly receives and appropriates to his own use the corpora tion's money for such a purpose, is chargeable with constructive fraud, and is bound to refund the amount to a trustee in bankruptcy for the benefit of the creditors of the insolvent corporation. Baldwin, Trustee, vs. Wolff, 82 Conn. 559; Directors are bound to manage the affairs of the corporation with reasonable diligence and ordinary care, that care which an ordinarily prudent man takes in the management of his own concerns. Angell & Ames on Corporations, § 314. The law requires of them good faith and ordinary diligence and care in the performance of their duties. Briggs vs. Spaulding, 141 U. S. 132; Martin vs. Webb, 110 U. S. 7, 15. It is difficult to say what degree of neglect will make a delinquent director liable for loss. A director who diligently attends to his duties and acts according to his best judgment will rarely be held to account. But a director is sometimes liable for a breach of duty of fellow directors in which he took no part, as, for example, if owing to his absence without excuse from a series of meetings they are enabled to commit a wrong. See 53 Am. Dec. 642. And it has been held that where directors relied entirely on reports rendered by an officer without inspecting the accounts themselves, they are liable for false information published by them in an annual statement. See note to Hodges vs. New England Screw Co., 53 Am. Dec. 642. Directors who are negligent in making a loan without investigating the security are liable to the receiver for the loss thereby caused. New Haven Trust Co., Receiver, vs. Doherty et al., 75 Conn. 555. So directors are liable to the receiver for diversion of assets by declaring dividends fraudulently and in bad faith while capital is impaired. Davenport, Receiver, vs. Lines, 77 Conn. 473. It is the custom to give a small sum to each director attending each meeting, in order to secure attendance, but directors are not legally entitled to any remunera |