New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1865-06-05

TO soy, President Smith or Director Jones can
moi buy rails or bolts or ties for the company
from himself rs a contractor or from the house
Of Smith, Jones & Co. whereof he is a member;
and If he attempts or assumes to do so, the
contract or bargain is utterly null and void no
matter whether essentially equitable or not
This Judgment was unhe'itatingly pronounced
after full discussion by some Of the most emil
nent jurists in the United Kingdoms.
The action was by the Mcssrs. Blake, ron
founders of Aberdeen, against the Railway
Company for non-psriormance of contract
whereby the Company had agreed to pur-
chase ana accept from the AIesSrs. Bake
certain iron chairs which they were TO manu-
iacture for the Company at a certain specified
price
The principal defense was that Mr.. Thomas
Blake, the managing partner OF the firm, was,
at the time of tho making Of the contract, a
Director, and, indeed, Chairman of the Railway
Company. and so incapacitated from dealing
: in that character with his OWL firm.
The decision was that the contract was in
capable Of being enforced, because it Is ex-
pressly voided by an act OF Parliament. And
it was laid down by Lord Erskine, in an
analogous case that, without any considcra-
ton of fraud or looking beyond the relation
of the parties, such contract is void as IN
terdicted by the policy of the law.
| Lord Cramworth, the Chancellor, in announc-
ing the decision in the above cited case de-
clared the drcctor Of railway company to-
be trustee and rs such, prccluded from deal
ing, on behalf of the company, with himself,
or with firm of which he is partner.
II is rule Of universal application that no
trustee shall be allowed to enter into engage
ments in which he haa, or con have, personal
interest conflicting, OF which may possibly con-
fict, W ii the interests of those whom he isl
bound by fduciary obligation TO protect.
So strictly is this principle adhered to, that
no question is allowed to he raised as to the
fairness or uniairness OF the Transaction.
| No man. in a court of equity, is allowed to-
buy ard sell the same property. J'e cannot
sell to himself
The rule which precludes an agent or trustee
, from dealing to his own profit with his priuc'
pal or ostG quc trust is applicable to all CON
tracts whether az to real or personal estate OF
As TO mercantile transactions.
In the case Of Gardner agt Ogden-decided
! in the Court of Appeals Of this State at the
December tenn, loG0-thc principle laid down
in the Aberdeen Railway case is cited with
approval.
J II has been repeatedly decided in our Court
! of Appeal. that the stockholders in a JOINT stock
company are the ecsiu' q"e T. SIS and the III
rcctor- the trustees.
Chancellor WalwoIth, in Robinson agt.
Smith 6 Paige, 232), says: IL have no hest
tniion in declaring il as the law of this State
/ that the director. Of monoyed or other joint
stock corporation who wi.'inlly abuse their
! trust, or misapply the funds oi the company, by
which % less is sustained, are personally liable
rs directors 10 make good that loss And they
are equally liable if they suffer the corporate
+ funds or property TO be lost or wasted by gross
negligence or nattcr'ion to The duties Of their
trust"
These are settled ciple, OF British and
American law. founded in equity, reason and
public policy; and they ought 20 be everywhere
proclaimed and enforced. Only make them
practically aud generally operative and many
railway and othar corporations which habitually
make feeble diyidcnds from large sceipts would
show far more satisfactory balance-shccts, aud
their managers would not bc obliged, as they
now often are, 10 apply TO bankers for loans or
10 legislatures lOr authority 10 increase their
charges. Thus the New FORK Central, if COM
mon fame is not in her case .ar, was for years
suppl d, at the rate OF hundreds of thousands /
Of dollars per annuu, out o. DE hardware estab /
l.shment or from the manuiactoy in which its
then Prcsider; was a principal partner, in plain
violation of the rule of law above cited What
could come Of This abuse of trust but prod
gality, waste, and Ultimate embara smentl
Will not some independent stakeholder in
each of our railroad and other great corpora
tious, call attention at is next annual meeting
to this rule of law, aud have due inquiry made
rs TO It's obser, alton and enforcement We are
confident IT,. improvement first in finances
afterNard in dividends, would in many cases
result.
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