New-York tribune., 1877-10-27


APPLY It's ACKNOWLEDGEMENTS HELD 10
STRICT AcC)CNrABIITY.
20 the Edtfor o. rae TrtOune.
SIR: The crimes and ncCfgcnces of directors and
trustees are becoming 80 frequent and causing such
great and widespread suffering among the poor and
the ignorant that il Is timely and proper that the
community should understand The nature and eX-
tent Of the penalties imposed by law on such dere'
Ictions of duty. and that they should take some
concerted action to enforce those penalties.
The fact that defauting directors have hitherto
escaped punishment is not because our law makers
have furnished no remedy for the victims of such Of
fences hut II is because the victims do not seek to
apply the remedy. And it is perhaps not under
stood that penalty is also enforceable against those
directors who by their neglect. permit their stock
holders and depositors to be deirauded, as well as
against those who participate in aud benefit by the
fraud Now, what Is the law respecting the
rights Of deposors aud tockholderS and the abili-
ties of directors Il declares that the Office of direc-
TOR Il one of pure trust. and, when undcrt3kon the
duties involved in and created by that trust must
be faithfully and fully performed.
The law does not compel any man to be a director
but when he assumes and undertakes to act rs such,
il holds him 10 the sirctesl accountability. He be-
comes responsible not only for what be does hut
what he Gnis 20 DO iu thc discharge of that trust
He makes an implied contract with the shareholders
and depostors that me- VIII uss his utmost skli and
best services in all matters relating to the ai OF
the bank or company; aud those depo'itoTs and
stockholders can legally enforce that implied con-
tract aud recover damage. for its breach.
The acceptance therefore of the Office creates not
only tho litigation Of d,cbar0ug the duties arising
from it. but impose upon the directors the utmost
activity and fidelity IN the discharge Of their duties.
Every careless vote, or omission to overlook and
inquire into the acts of sub,rdinates and every
superficial auditing Of accounts, constitutes be-
travail Of trust in les, degree only than wrongful OF
fraudulent acton. The thrsalbarc excuse thai en-
innnt directors offer TO their constituents tha they
were imposed Upau hy their brother directions VIII
not bear the test of law The law cSar;s it1m them
the same degree of diligence and pTeC2uI'H mat q
discreet man exercises iu his own bus affairs.
Less than that Is Oisrr ear of the ilGHs OF 0'poSl-
tors and shareholder, f0i winch the law viii hOid
him 10 an account.
Itisa well-knowu fact that ninc-tenths Of the di-
rectors who manage on, bank, and corporations do
not own single share dollars interest IN the
corporation. They accept tire Office solely TO al
vance thoir own private interests or the interests oi
their friends This is clear defiance OF law. for no
pTipciplc is better established than th's. ttIt thc re-
taung or acquiring of any adverse mi rest lhca-
nactafes director from fulfilling his trU, ano rem
ders him liable penalty. 1or the reason iLdt IL
interfcres with the rights OF those TO Whoh hr owes
the duty of trustee
The foregoing are Wcll-eSt2hilshed plHclpicS
enunciated and defined by a series of Judicial dec'-
sions reaching back for "a century. Tested by these
urinciples and measured by this standard, YOU can
readily perceive that directors uOW-a-days fail far
short of their duty. anu are mourning namnIicN ana
causing losses for winch they can and should be
hel To a strict account.
Tie history OF many corporations in this city ana
State is but series of bctraya- of trust by direc-
tors and of gross imposition upon c0nhdlng invest
ors mauy of whom through their age, poverty or
ignorance, are incapable Of obtaining rcdrcSS
Thousands Of families ui themselves berctt of thcI
means Of support through ;hc fraud, which these
directors have been pcrpctiaiing or permitting.
The law furnishes ample remedies by which the
defaultiug director may be made to dis-orge, and
the careless director may De punished Let ;.n eX-
ample be made at once OF some of these eminenty
respsctable gentlemen. who, though eager 10 wear
the honors Of Office. too lazy too proGd to pCr
form the necessary clerical WORK which is really the
only safeguard against piuuder and dcfalcdtlOn.
AeC- lOTk, Oct. -, lSII. i.