New-York tribune., 1909-09-04
IRECTORS BLAM ED
REPUBLIC TRUST CASE.
Members of Board Held Respon-
sibie for Dresser Loans.

Saratoga Springs. y. y Sept. 3-Thirteen former
directors of the Trust Company of the Republic
are held responsible in decision made public to-
day by Justice Van Kirk for losses sustained by
the trust company through loans made in 1902 by
its president, Daniel Leroy Dresser from the com
panYs funds on securities of the United states
Shipbuding Company and for which restitution to
the trust company asked in a suit brought by
Charles H. Kavanaugh. stockholder, against the
directors. The action tried before Justice Van
Kirk in this village during the greater part of
June and July
Justice Van Kirk holds that the defendant direc-
tors. Perry Belmont. Charles d. Marvin. James
McMahon, Thomas Crimmins Charles W. Wet
more. William d. Baldwin, Ballard Mccall, Charles
F. Brooker George J. Could Elbridge G. SNOW
Herbert l.. Satterlee, George c. Boldt and Stuy-
Vesant Fish, failed to properly perform their duties
as directors: thai losses sustained by the trust
company were due to negligence, and that the In
divldual directors liable for the losses suffered
by the company during their terms of office, after
August 49, 1902 when. Justice Van Kirk decides,
had they performed their duties they would have
learned of improper and reckless loans being made
to Lewis Nixon president of the United States
shipbuilding Company, and others Up this
date he says, nothing had occurred of sufficient
Importance to put the directors on their guard
Justice Van Kirk excepts George c. Boldt from
any liability for transactions made after July and
prior to October 10, 1902. because he neces-
sarily absent from New York City. He also per
mits the defendant directors, after paying the
judgment directed in this action. to purchase back
from the trust company at for the common and
42 for the preferred stock OF the Bethlehem Steel
Corporation which realized by the trust
pany In connection with the items held by the
court to be losses. He also allows credit pro rata
To the directors for $S1 900 received by the
company in its action against the Sheldon synd-
cate.
THE DUTIES OF DIRECTORS.
In long opinion the justice comments on the
duties of directors generally. holding that if they
fit to intrust the business of the corporation
officers and employees the directors assume the
sponsihity and may be held responsible for the
acts of these employees. He says:
1t is not a sufficient excuse to state that loans
were not presented 10 the executive committee; it
TO be presented. The directors and members of the
executive committee have active duties and
their responsibility discharged by reason of the
lar meeting; their duties are not entirely limited
side of the regular meetings and each director and
a member of the executive committee ii he has
Where the duty Of knowing exists, ignorance due
negligence of duty creates the liability as
actual knowledge and failure TO act thereon
trusted them, and therefore neglected to exercise
the care a reasonably prudent man would exercise
care would have avoided or lessened the loss 1t is
petent officers who are believed to be reliable. The
directors ] haye other and additional duties .a.
company in whom they thoroughly rely, IL they
ft then. intrISt the business to those Off
ii is their per sOual trust and not the trust
of the company itself Of the stockholders, and
the true position is this: that If the director sees
fit to abandon his position and to rely upon the Of
fiCerS either during vacation time other
time he in effect: Il trust him and | assume
the responsibility of his acts without performing
my duties of supervision, as the law and bylaws
require to do. and | must be held aCCOunta-
BILE for the Of the officer to the same extent
as if I were present and performing my duties and
COnseptng to his acts
Under the facts I'm this particular case I am not
much impressed hy the contention that a director
Is negligent II he performs his duty as direc-
tors Of other institutions of the same kind in the
same city community perform theirS-that Is.
the custom prevails. a man cannot believe that
he may neglect his duty or do a wrongful act be
cause other men to his knowledge have the habit.
Justice Van Kirk characterizes the action
difficult and extraordinary case" and directs an
extra allowance of 5000 costs to the plaintiff
In his findings the justice gives total of the
losses for which he holds the directors accountable
The action brought TO recover about 100000.
The iudgment awards to-day with interest will
reach about S35O0N). according ITO State Senator
Bracket. the attorney for the plaintiffs.
Counsel for the former directors of the Trust
Company of the Republic said yesterday that
appeal would he taken from the decision OF Justice
Van Kirk and that payment by the directors would
be eougnt to the end.