The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-11-23
DIRECTORS SHOULD DIRECT

. DlRECTORSj ShOULD DlhGOI'
very astonishing decision has been
rendered by Judge Walter Lloyd
Smith of the Appellate division Of the
Supreme Court Of New York State at
Albany, in the case of two directors
of the Trust Company of the Repub,
lie, who had been held responsible for
losses from loans in financing the
Ship building Trust in 1902, an opcr-
alton that not only failed, but wrecked
the Trust Company, The defense
made by the directors Of the company
was, that their business otherwise than
as directors took up so much of their time
that it was impossible for them to give
the attention to the affairs OF the Trust
Company of the Republic which would
really make them responsible for what
was done by that concern. Judge
Smith sustained this plea, stating that
to make "men of large business inter
est responsible for the small every day
transactions of the corporations OF
which they were directors. would be lit"
1lS less tHdH anu 80
judgments entered by Justice Nankirk
against those directors are set aside.
The case, however, is not ended, as 1t
will go TO the Court Of Appeals, where
the point will he determined whether
directors are actually required TO direct
the affairs of the concerns of which
they arc the head. or not.
The opinion of the court that the
large business interests Of directors
excuse them from responsibility IN
small transactions Of concerns in which
they are directors. would hardly apply
in this case, even If il were n sound
principle Of law; for the transactions
involved were so heavy that the conn
pany was wrecked because of them lr-
respective of this, however, If II Us true
that men having such large interests
are not TO be held responsible for what
the concerns do In which their names
appear as directors. the PLAN, common
sense, practical answer Is, they should
not undertake such direction if they
have not time to attend to it. Men
put their money in concerns of this
kind very often for the simple reason
that men of standing. influence, and
presumed financial ability are at the
head of those concerns. It is because
they are there. and because their pres
ence in such capacity is supposed to
guarantee business success, that many
men entrust their money for invest
ment TO those concerns. If it is true
that the position does not impose any
obligation to attend to the matters
which these big financial men are sup
posed to be there to attend to. then
the whole matter is a confidence game
upon the public in which, under the
shelter Of these big names, small scoun-
drels can pursue their robbing of men
who entrust their money to them, not
only without the responsibility which
is supposed TO entail. but the swipding
can proceed under the direct patronage
and support OF the law.
II is a plain case. as business prop
ositiop, that if those big financial men
are not able to give their attention
where their names are supposed to es-
tablish n guarantee to those who trust
in the good faith and Soundness Of
those names, then the law should pre-
vent such men being made directors.
The reason why men Of eminent finan'
ciaI standing are sought as directors
| is. because their names Will impose
confidence and will attract money.
There should, in all reason and sense,
he corresponding liability in the way
OF guarantee to those who thus invest,
that their money will be, in fact, pro
tected by the very emincnce of the
names which attract il. Otherwise the
law lends itself to swindling, and TO
the robbery of confiding men
The evident thing TO do in all cases
Of this kind is, to require the directors
of any concern to assume the respon-
sibllity which their name on the
board of directors implies and would
naturally impose. If these men have
not the time to attend to the business
which Is supposed to be under their
hand. they should decline to be direc,
tors and allow the directors places to
be filed by those who have the time
to attend TO the business Of directing
and who will see that the interests in
their care are duly protected.
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