Dominion Copper Co., 67 N. J. Eq., 399, 429; 72 Id., 595; aff'd 70 Atl. Rep., 1101.

Sale by a corporation of its property to the directors or to a company controlled by them may be questioned in equity by a dissenting stockholder. It is not necessary to show actual fraud in the transaction. The sale may be held voidable on the ground of constructive fraud. Mitchell v. United Box, Board & Paper Co., 72 N. J. Eq., 580.

Directors as Trustees for creditors.

Where the corporation is insolvent the directors are trustees for the creditors. See Section 64 and notes.

By statute, P. L. 1895, p. 166, Section 64 of this Act, corporations are prohibited from conveying or assigning any of their assets after they have become insolvent or suspended their ordinary business for want of funds to carry on the same. But even before the passage of this statute a board of directors of an insolvent company could not prefer one of its own members. "The weight of authority is in support of the wholesome rule that the directors of an insolvent corporation are trustees of its funds for its creditors; by no act of such director can he obtain a position superior to that of the other creditors for whose benefit he holds the trust assets." Montgomery v. Phillips, 53 N. J. Eq., 203, 217; Wilkinson v. Bauerle, 41 N. J. Eq., 635; Savage v. Miller, 56 N. J. Eq., 432.

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"Equity regards the property of a corporation as a fund held in trust for the payment of its debts, and if other than bona fide creditors of the corporation, or purchasers, possess themselves of it, they take it charged with this trust, which a court of equity will enforce against them. This is now a well-recognized rule of equity jurisprudence." National Trust Co. v. Miller, 33 N. J. Eq., 155, 163.

"The directors of an incorporated company cannot speculate with the funds or credit of the company, and appropriate to themselves the profits of such speculations. If they are the only persons interested as stockholders, yet, if such speculations impair the capital stock, and have a tendency to substitute a fictitious for a real value, such transactions are opposed to the policy of their act of incorporation, and cannot, in any manner, be countenanced by a court of equity." Redmond v. Dickerson et al., 9 N. J. Eq., 507, 516.

A contract by the directors to promote another corporation in another state, for the furtherance of the interests of their company, and to take a majority of its stock, held not to be ultra vires. Rubino v. Pressed Steel Car Co., 53 Atl. Rep., 1050.

As to powers of the directors of a defunct corporation, see In re Delaware River & Atlantic Ry. Co., 76 N. J. Law, 163,

Qualification of directors.

See note to Section 39.

Resignation of director.

A director of an ordinary business corporation can resign orally or in writing, unless there is some provision to the contrary in the charter or by-laws. Fearing v. Glenn, 73 Fed. Rep., 116. A written resignation takes effect on delivery to the president; acceptance by the board is not necessary. International Bank v. Faber, 86 Fed. Rep., 443.

Annual elections.

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"That provision of the charter, which declares that annual meetings of the stockholders shall be held for the election of directors, grants to the stockholders a highly important and valuable right, which the directors can neither defeat nor impair. The right, therefore. which, from its very No board of directoffice for a period

to change the day for the annual meeting is one nature, can alone be exercised by the stockholders. ors can, without the stockholders' consent, hold longer than one year. Elkins v. Camden & Atl. R. R. Co., 36 N. J. Eq., 467; Archer v. American Water Works Co., 50 N. J. Eq., 33.

Any action by the directors of a corporation, which is designed to retain themselves in office, and thus perpetuate their control over the affairs of the corporation, against the will of the holders of a majority of the stock, is illegal and void, and the injured stockholders, in such a case, are entitled to relief by injunction. Hilles v. Parish, 14 N. J. Eq., 380. See O'Connor v. International Silver Co., 68 N. J. Eq.,

67; aff'd, Id., 680.

For further cases as to elections, see notes to §§34, 36 and 42.

Classification of directors.

The classification provided for by the statute is twofold:

1. Classification by terms, the effect of which is to continue the directors in office for a longer term than one year and to cause the board to rotate in classes, so that in no one year can the personnel of the entire board be changed.

2. Classification by stock, by which one class of stock elects exclusively a certain number of directors. Thus it is possible to place the control of the company, to the extent of electing a majority of the directors, in any class of the stockholders, whether that class be a majority or a minority of the whole stock.

Either classification may be used without the other, or both may be combined.

Executive committee.

The courts are inclined to relax the rigor of the general rule and to recognize the power of directors to delegate current and ordinary business to a committee or committees. That is now not an uncommon

practice among business corporations. Metropolitan Telephone Co. v. Domestic Telegraph Co., 44 N. J. Eq., 568.

As to the ratification by the stockholders of the acts of a special committee appointed by the directors, see Kelsey v. New England Street Railway Co., 60 N. J. Eq., 230.

See also Canada-Atlantic & Plant S. S. Co. v. Flanders, 145 Fed. Rep., 875.

It has been held in New York that a board of twenty-three directors may delegate to a "quorum of any five of their number authority to transact all ordinary business.'' Hoyt v. Thompson's Executor, 19 N. Y., 207. Also, that the board of directors may appoint an executive committee of its own members with power to transact corporate business during the intervals between the meetings of the board. Olcott v. Tioga R. R. Co., 27 N. Y., 546; Sheridan Elec. Lt. Co. v. Chatham Nat. Bk., 127 N. Y., 517; First Nat. Bk. v. Com'l Travelers' Home Assn., 108 App. Div., 78; aff'd 185 N. Y., 575; Com'l Wood & Cement Co. v. Northampton Portland Cement Co., 190 N. Y., 1.

Provision should be made in the certificate of incorporation for the appointment of an executive committee and its powers.

Such provision is sometimes made in the by-laws.

13. Officers.

Every corporation organized under this act shall have a president, secretary and treasurer, who shall be chosen either by the directors or stockholders, as the by-laws may direct, and shall hold their offices until others are chosen and qualified in their stead; the president shall be chosen from among the directors; the secretary shall be sworn to the faithful discharge of his duty, and shall record all the votes of the corporation and directors in a book to be kept for that purpose, and perform such other duties as shall be assigned to him; the treasurer shall give bond in such sum, and with such surety or sureties, as shall be required by the by-laws, for the faithful discharge of his duty.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, §§17, 18.

Powers of officers.

When a corporation does not go outside of its corporate machinery to perform a corporate act, but acts through its own administrative

officers, its inherent agencies, it is acting per se and not per alium. This distinction is not merely verbal, and hence trivial, but, on the contrary, marks the wide difference that exists between acting for oneself by an inherent faculty and the employment of another person to act for one and in one's stead. The right of an artificial person to empower and employ agents or attorneys is identical with that of a natural person-each is governed alike by the law of principal and agent. American Soda Fountain Co. v. Stolzenbach, 75 N. J. Law, 721. But the powers of the officers of a corporation are strictly those of agents-powers either conferred by the charter or by-laws or delegated to them by the directors or managers. Fifth Ward Savings Bank v. The First Nat'l Bank, 48 N. J. Law, 513, 525; Stokes v. N. J. Pottery Co., 46 N. J. Law, 237.

Officers are presumed to have authority to perform duties which such officers ordinarily perform in similar corporations. Mutual Life Ins. Co. v. 42d St. R. R. Co., 74 Hun (N. Y.), 505.

Persons dealing with an officer of a corporation, who assumes to act for it in matters in which the interests of the corporation and such officer are adverse, is put upon inquiry as to the authority and good faith of the officer. McCloskey v. Goldman, 62 Misc. (N. Y.), 466; Moores v. Citizens' Nat. Bk., 111 U. S., 156.

The doctrine that a corporation may act only by a resolution of its board and under its corporate seal, has long been abandoned. In the conduct of its ordinary business a corporation acts by its agents, who may be appointed without formal action of its board, and not even in writing. American Insurance Co. v. Oakley, 9 Paige (N. Y.), 496. A corporation may be bound by acceptance and ratification of previously unauthorized acts of its agent, even when in the course of his principal's business he perpetrates a fraud. Garrison v. Technic Electrical Co., 55 N. J. Eq., 708; Flaherty v. Atlantic Lumber Co., 58 N. J. Eq., 467, 473; see also Bennett v. Millville Imp. Co., 67 N. J. Law, 320.

When an officer is clothed with apparent authority, although not inherent in his office, the general doctrine of agency applies, and the corporation may be liable for his acts. The authority of the officer does not depend so much on his title, or on the theoretical nature of his office, as on the duties he is in the habit of performing. Fifth Ward Savings Bank v. First Nat'l Bank, 48 N. J. Law, 513, 525; see also Blake v. Domestic Mfg. Co., 64 N. J. Eq., 480; Keen v. Maple Shade Land & Imp. Co., 63 N. J. Eq., 321; Kirkpatrick v. Eastern Milling & Export Co., 135 Fed. Rep., 146; aff'd 137 Id., 387; Kelly v. Jersey City Water Supply Co., 74 N. J. Law, 734; Crossley v. St. Philip Neri, 74 N. J. Law, 653.

A director, though owning a majority of the stock of a corporation, has no authority, as director, to act for the corporation, except as a member of the board of directors. Clement v. Young-McShea Amuse

ment Co., 70 N. J. Eq., 677. The rule is the same in New York even if the director owned all the stock. Buffalo Loan, Trust & Safe Deposit Co. v. Medina Gas & Elec. Lt. Co., 162 N. Y., 67; Palmer v. Ring, 113 App. Div., 643; Saranac & Lake Placid R. R. Co. v. Arnold, 167 N. Y., 368.

As to acts of an extraordinary nature, an officer must have express authority from the board of directors. He cannot confess judgment against the company. Stokes v. N. J. Pottery Co., 46 N. J. Law, 237. Nor has he power to execute a cognovit. Raub v. Blairstown Creamery Ass'n, 56 N. J. Law, 262. See also Lister Agricultural Chemical Works v. Selby, 68 N. J. Eq., 271.

The doctrine adopted by the Court of Errors and Appeals as to when a corporation is charged with notice from its agent's knowledge is stated in Sooy v. State, 41 N. J. Law, 394: "The knowledge of the agent is chargeable upon his principal whenever the principal, if acting for himself, would have received notice of the matters known to the agent." See Vulcan Detinning Co. v. American Can Co., 72 N. J. Eq., 387, at 400; s. c., 73 Atl. Rep., 603. But knowledge of an agent or officer should not be imputed to the corporation for the purpose of establishing fraud on its part. Ibid. See also Bank v. Christopher, 40 N. J. Law, 435; Canada Mfg. Co. v. Woodbridge, 58 N. J. Law, 134; Lanning v. Johnson, 75 N. J. Law, 259.

The question of the authority to sign an affidavit, either where the corporation is a party to the suit or where there is a statutory requirement upon the corporation to make, an affidavit, as in the case of a deed of trust covering personalty or chattel mortgage, is a very different question and is governed by different rules. See American Soda Fountain Co. v. Stolzenbach, 75 N. J. Law, 721; 16 L. R. A. (N. S.), 703, and cases cited. See also Michigan Law Review, Vol. 6, p. 692.

The officers may issue new bonds without authorization of the directors where the issue has been duly authorized and the new bonds are intended merely to remedy a defect in the original issue, and thus to express the real intention of the parties. Bergen v. Rogers, 67 Atl. Rep., 290; aff 'd., 70 Id. 1100.

A false statement by officers of a corporation, on selling shares of its stock, that none had been sold for less than par, is a material misrepresentation authorizing rescission. The affidavit of consideration required by the chattel mortgage act may be made in behalf of the corporation by an officer acting under its authority and possessed of the requisite knowledge to make such affidavit. In legal contemplation such an affidavit is the corporate act and not that of an agent or attorney. American Soda Fountain Co. v. Stolzenbach, 75 N. J. Law, 721; 16 L. R. A. (N. S.), 703; Michigan Law Review, Vol. 6, p. 692.

One who receives from a corporate officer the corporation's promissory note in payment of, or as security for, a personal debt of such