it had withdrawn from the State. It was held that the appointment of attorney for acceptance of process survived the withdrawal of the company from the State as long as any liabilities remained outstanding in Massachusetts and that nonresidents could avail themselves of the same legal remedies thereunder as citizens of Massachusetts.

CHAPTER XIX

Trust Company Officers

§ 142. Impersonation of Trust Company by its Officers. Its officers are not merely agents of a trust company. They are the company itself. We have seen that "Its conscience is their conscience" and that therefore a Trust Company would not be heard to say that it was not affected by knowledge of its president of a fraud he had perpetrated on another company making it insolvent and unreliable as a place of deposit by the company, of money belonging to an estate held by it as an administrator.1

In a case where a member of the board of directors of a trust company purchased property, through a third person, which the trust company was employed to sell as trustee, the Court said: "Under the trust which was assumed by defendant corporation, it became the duty of that corporation to find an advantageous purchaser of the property of its cestui que trust. As that corporation could only act through its board, that duty necessarily belonged to the board and to each member of the

1. See section 18 citing Germania S. V & Trust Co. v. Driskill (1902), 23 Ky. L. Rep. 2050, 66 S. W. 610.

2. Purchase v. Atlantic Safe Deposit & Trust Co. (1913), 81 N. J. Eq. 344, 87 Atl. 444, affirmed on opinion below in 83 N. J. Eq. 353. See also Gay v. Young Men's Consol. Co-Op. Mercantile Inst. (1910), 37 Utah 280, 107 Pac. 237.

board. In finding a purchaser for the trust property, a member of the board did no more than perform his plain duty as a director-a duty which he owed alike to the corporation and to the cestui que trust of the corporation. which he was representing. The corporation and the cestui que trust were alike entitled to the service which was performed by the director, and were alike entitled to the free exercise of the judgment of the director touching the desirability of the sale, uninfluenced by hope of personal gain, for the relation of the board to the cestui que trust was clearly in the nature of a trust relation, notwithstanding the fact that the corporation which the board primarily represented was the legal trustee.

And likewise it is held that a statute respecting trust companies, extends to its board of directors and to each director "separately and individually," for it would be idle and vain unless the legislature in directing the corporate body, acting wholly by its directors, to do a thing required, or not to do a thing prohibited, meant that the directors should not make or cause the corporation to do what was forbidden, or omit to do what was directed." § 143. Duties of Directors Liability for Neglect-Distinction as to Executive Committee. The duties of trust company directors were thus summarized in a New York case:*

"If the by-laws require monthly meetings they must make diligent effort to be present thereat. They must give their best efforts to advance the corporation, both by advice and counsel and by active work on behalf of the corporation when such work may be assigned to them. If at their meetings, or otherwise, information should

3. People v. Knapp (1912), 206 N. Y. 373, 381, 99 N. E. 841. 4. Kavanaugh v. Gould (1911), 147 N. Y. App. Div. 281, N. Y. Supp. overruling 64 N. Y. Misc. 303, 118 N. Y. Supp. 758.

come to them of irregularity in the proceedings of the bank they are bound to take steps to correct those irregularities. The law has no place for dummy directors. They are bound generally to use every effort that a prudent business man would use in supervising his own affairs, with the right, however, ordinarily to rely upon the vigilance of the executive committee to ascertain and report any irregularity or improvident acts in its management."

The Court partly justified this exception as to a right of reliance upon an executive committee, on the grounds that it is not practical to commit supervision of detail to a large directorate (twenty-five in the case at bar), that a smaller number would do the work more efficiently and that responsibility would be greater because not so scattered. It then explained that the busy business men, whose membership was desirable upon the trust company boards, would not accept the position, if they were answerable for the neglect of the executive committee, and that the corporation "could not afford to loose them."

This reasoning appears to me to be inconsistent with the conclusion arrived at by the Court. If a smaller number works more efficiently, the corporation should not have a large board of directors. To permit the corporation to trade upon the connection of men too busy with their own affairs to give proper attention to their duties as directors, merely because of the value of their advice in emergencies, and their "large business connections," is to allow the trust company to reap an advantage without a corresponding measure of responsibility.

The further ground for distinction between directors generally and members of the executive committee,

assigned by the Court, in this case, is more convincing, I think. This is that the New York Banking Law applicable to trust companies, provides that the directors may "designate an executive committee," to whom detailed information as to purchase and sales of securities and discounts and loans may be made. Relying on this statutory provision, the Court said: "The necessary inference follows that the directors not upon the executive committee are not chargeable with knowledge of detail management, which need be reported only to the executive committee." The negligence complained of in this case related to loans and securities, and this statute was therefore applicable. Whether this right of reliance on an executive committee would extend to activities not recognized by the statute and particularly when they pertain to the strictly fiduciary capacities of a trust company was not an issue in this case. It was an action against directors to recover money lost to a trust company by reason of their alleged negligence. The liability of directors generally for losses caused by their negligence was recognized, but it was thought there was no negligence proven as to non-members of the executive committee, and that a member of the executive committee "was not negligent in taking a vacation while there were members of the executive committee sufficient to constitute a quorum at all times during the summer within reach."

A failure of directors to hold meetings must have caused the injury complained of, in order to be material in an action against them for negligence. Directors

5. As to right of directors to create an executive committee under express authority or by implication or usage, see Maryland Trust Co. v. National Mechanics' Bank (1906), 102 Md. 608, 63 Atl. 70.

6. Chambers v. Land Credit Trust Co. (1914), 92 Kan. 30, 139 Pac.