their guests, subject to the approval of the house-committee, it was held that the caterer might recover for refreshments furnished to guests of the club at the request of members of the house-committee. But the most important part of the duties of the managing board, and that which has most of all brought clubs under judicial notice, is that of enforcing the rules and maintaining the harmony of the club, and of sitting in judgment on the conduct of any member who is alleged to have infringed the rules or interrupted that harmony.2

§ 219. Managing boards of churches. The temporal affairs of churches and religious societies are managed by boards of trustees variously composed and designated under the several acts providing for their incorporation. The trustees of a church may assign seats, and forcibly remove one from a seat occupied without authority. A note signed by the trustees individually may bind the church. They must act, however, as a board, and even a majority of them can not bind the corporation by signing notes not authorized at a regular meeting. As the directors of companies having capital stock must be the owners of shares, so the trustees of religious societies must be members thereof. And under an act requiring the place of a trustee who has ceased to be a member of the society to be declared vacant, the court may enjoin his further acts. The New York statute provides a mode by which the question of who are the rightful trustees of a religious corporation may be determined. The question can not be settled in an action of ejectment. In Michigan on the question of the election of a deacon, the decision of the religious association is final. Nor is the case altered by the fact that the stat

1 Deller v. Staten Island Athletic Club, (1890) 9 N. Y. Supl. 876.

2 Leach's Club Cases, 15.

3 For these acts vide supra, § 10. 4 Sheldon v. Vail, (1882) 28 Hun, 354.

5 Where a note given by the trustees of a Methodist Episcopal Church to raise money to build a church was signed by them individually without any official designation, so that it might be negotiated, it was

held, that the obligation was of the church, and the church premises might be sold to pay it. Bushong v. Taylor, (1884) 82 Mo. 660.

6 People's Bank v. St. Anthony's R. C. Church, 39 Hun, 498.

First Reformed Presbyterian Church v. Bowden, 10 Abb. N. Cas. 1: N. Y. Laws 1813, ch. 60, § 3.

8 Concord Society v. Stanton, (1885) 38 Hun, 1.

ute makes deacons ex officio trustees upon the incorporation of the society. In Indiana to recover possession of church property by persons claiming to be trustees, it is not necessary to determine by quo warranto whether plaintiffs or defendants. are the legal trustees. In a vestry composed of the rector, churchwardens and others, the rector as a member of the vestry is entitled to vote."

Any

§ 220. Directors of companies having capital stock must be shareholders. At common law it was not necessary that a director should be a stockholder in the corporation. one competent to act as an agent, might be elected a director.3 It is contrary, however, to the spirit of modern legislation to permit the affairs of these great enterprises to be governed by persons having no pecuniary interest therein; accordingly it is generally required by the corporation laws of the several States that directors shall be chosen only from among members or stockholders of the company.

1 Attorney-General v. Geerlings, 55 Mich. 562.

2 Gaff v. Greer, 88 Ind. 122.

3 The charter of a Protestant Episcopal Church provided for the management of its temporal affairs by a vestry, to be composed of the rector,

66

churchwardens, and vestry men." It was provided that the rector should be chosen by the churchwardens and vestry men, and that the vestry should consist of twelve persons, to be elected in a specified manner. A by-law provided that the " vestry" should have full power to fill vacancies occurring in their body. It was held, that, as a member of the vestry, the rector was entitled to a vote in the election of a person to fill a vacancy. Neilson's Appeal, (1884) 105 Pa. St. 180.

4 Wight v. Springfield &c. R. Co., 117 Mass. 226; s. c. 19 Am. Rep. 412; In re &c. St. Lawrence Steamboat Co., 44 N. J. 529; State v. McDaniel, 22 Ohio St.354, 367; Ex parte Stock, 33 L. J. Ch. 731. Cf. Despatch Line

Such requirements con

v. Bellamy Manuf. Co., 12 N. H. 205; s.c. 37 Am. Dec. 203; Bartholomew v. Bentley, 1 Ohio St. 37; Taylor on Corporations, § 614, note.

5 As a married woman. People v. Webster, 10 Wend. 554.

6 Bartholomew v. Bentley, 1 Ohio St. 37; State v. Smith, (1887) 15 Oregon, 98; State v. Leete, 16 Nev. 242. A director of one company which holds stock in another is a "stockholder" in the latter within the meaning of an act prescribing such qualifications. Chase v. Tuttle, (1887) 55 Conn. 455; construing Conn. Laws of 1876, p. 117, together with Conn. Laws of 1880, p. 561. In New York it is provided by the General Railroad Act of 1850, that no person shall be a director unless he shall be a stockholder, owning stock absolutely in his own right and qualified to vote for directors at the election at which he shall be chosen. N. Y. Laws of 1850. ch. 140, § 5. By the Companies Clauses Act of 1845, in England, no person shall be capable

template of course only a bona fide holder of stock. But under these acts, a person who "holds" shares of stock issued in his name is recognized as a stockholder as well as one who "owns" them. Accordingly, the competency of a director is not impaired by the fact that his qualification shares were transferred to him in trust for the very purpose of enabling him to act. So also it has been decided that the holder of a power of attorney, being entitled to vote at corporate meetings, is competent to act as a director. The transfer books of the company are not conclusive that one is not a stockholder and eligible to election as director. And the inspectors of election have no power to decide that question. It can only be raised in the courts.

of being a director unless he be a shareholder, nor unless he be possessed of the number of shares prescribed by the act of incorporation, if any; and no person holding an office or place of trust or profit under the company, or interested in any contract with the company, shall be capable of being a director; and no director shall be capable of accepting any other office or place of trust or profit under the company, or of being interested in any contract with the company, during the time he shall be a director. 8 Vict. ch. 16, § 85. Under the English act it is held that only elected directors are required to be qualified as shareholders and not directors named in the special act of incorporation. Browne & Theobald's Ry. Law, 101, citing Portal v. Emmens, 1 C. P. Div. 664, 667.

In re St. Lawrence Steamboat Co., (1882) 44 N. J. L. 529. In this case a husband bought stock with his wife's money as an investment for her, but the certificate was accidentally made out to him. At first he ordered it to be changed, but afterwards concluded to take the stock himself, and countermanded the or

Persons elected to the office of

der, and transferred the cost from
his wife's account to his own; and
he was held to be a bona fide holder
of stock and eligible as director.
2 State v. Leete, 16 Nev. 242.

3 State v. Leete, 16 Nev. 242; Budd v. Monroe, 18 Hun, 316. Contra, Bartholomew v. Bentley, 1 Ohio St. 37. In the Nevada case cited above, a stockholder owning certain shares of stock in a corporation organized for the purpose of maintaining an irrigating ditch, gave them to his son with the request that new certificates should be issued in the son's name, and transferred upon the books of the company. This request was complied with. The son paid nothing for the stock, the transfer being made in order that he might be eligible to the office of trustee; and it was held, on a review of the statutes of Nevada, that the transaction constituted the son a stockholder, and made him eligible to office. State v. Leete, 16 Nev. 142. 4 State v. Ferris, 42 Conn. 560.

5 In re St. Lawrence Steamboat Co., (1882) 44 N. J. 529.

6 In re St. Lawrence Steamboat Co., (1882) 44 N. J. 529. Under a statutory provision, that the direct

director may go upon the market and purchase their qualifi cation shares, and are not bound to take them of the company itself.1

§ 221. A portion of the directors must be residents.There are provisions in the constitutions and statutes of several of the American States requiring that a certain proportion of the directors or trustees of corporations shall be residents of the State from which they derive their corporate existence.' In the absence of a requirement of this nature, however, there is no principle of common law imposing that qualification.3 A statutory provision by which a minority of the directors of a railway company are allowed to reside without the State will apply equally as well to a company owning a very short line, which they operate for their own private purposes, as to a company owning a more extended line, operated in the interest of the public. And these provisions do not apply to domestic railroads consolidated with railroads in other States."

§ 222. Unqualified directors.- Votes cast for a candidate. who is disqualified for the office, will not be thrown away, so as to make the election fall on a candidate having a minority of votes, unless the electors casting those votes had knowledge of the facts. And a corporation acquiescing in the election of a person who is not qualified to hold the office of director

ors of a corporation shall be elected from the shareholders, and a provision in the by-laws that transfers of shares shall be made only on the corporate books, and that for a desig nated time before the annual meeting the transfer book shall be closed, it has been held that although the privilege of voting or of receiving dividends may be denied a purchaser of shares, who has not procured his transfer to be recorded, yet that he is eligible to the office of director. State v. Smith, 15 Oregon, 98.

1 State v. Leete, 16 Nev. 242; Jenner's Case, 7 Ch. Div. 132; Dent's & Forbes' Case, L. R. 8 Ch. 768; Chapman's Case, L. R. 2 Eq. 567; Brown's Case, L. R. 9 Ch. 102; Ca

ruth's Case, L. R. 20 Eq. 506; In re Peninsular Bank, (1862) Austin's Case, L. R. 2 Eq. 435. Contra, Fowler's Case, L. R. 14 Eq. 316; Hay. ward's Case, L. R. 13 Eq. 30. Cf. Hamley's Case, 5 Ch. Div. 705.

2 E. g. Ill. Const. (1870) art. xi, § 11; N. Y. Laws of 1848, ch. 40. § 3; Cal. Civ. Code, § 285. Cf. Ohio & M. Ry. Co. v. People, (1888) 123 Ill. 467; State v. Smith, (1887) 15 Oregon, 98.

3 Kerchner v. Gettys, 18 S. C. 521. 4 State v. Smith, (1887) 15 Oregon, 98.

5 Ohio & M. Ry. Co. v. People, (1888) 123 Ill. 467.

6 In re St. Lawrence Steamboat Co., (1882) 44 N. J. 535.

thereby acknowledges him as a de facto officer and is bound by his acts and engagements. His title, however, may be contested and a new election ordered. So also, if after his election he sells the shares that qualify him for the office, he may be removed. This has been expressly provided by statute in England. But a pledge of his qualification shares or bare equitable assignment thereof, not completed by notice to the company, is no ground for removal. A director of a corporation, who ceases to be a stockholder during the term for which he was chosen, but continues to act as director, no judg ment of ouster having been pronounced against him, is a director de facto, and his acts are valid as to third persons." But in a recent case in New York it has been held that a director who sells all his stock and is thereafter superseded at a special stockholders' meeting held pursuant to notice, ceases to be a director either de jure or de facto, though the by-laws provide that directors shall be elected at the regular annual meeting; and a judgment by default against the company in pursuance of service of process on him is a nullity."

§ 223. Amotion of directors.- Directors themselves have no implied power to remove one of their own number from office even for cause; nor to exclude him from taking part in their proceedings; and one whom they attempt to exclude is entitled to an order restraining them from so doing. It has been said also that the members of the company have no in

8

1 Dispatch Line of Packets v. Bellamy, (1841) 12 N. H. 205. Cf. Easterly v. Barber, 65 N. Y. 252; Crain v. Easterly, 54 N. Y. 679. But under the English Companies Clauses Act, holding the requisite number of shares is a condition precedent to election as director, and the election of one without such qualification is void. Jenner's Case, (1877) 7 Ch. Div. 132; following Hamley's Case, 5 Ch. Div. 705; and Barber's Case, 5 Ch. Div. 963.

2 In re St. Lawrence Steamboat Co., (1882) 44 N. J. 529; Hamley's Case, 5 Ch. Div. 705; Barber's Case, 5 Ch. Div. 963.

3 Nathan v. Tompkins, (1886) 82 Ala. 447; Easterly v. Barber, 65 N. Y. 252, Crain v. Easterly, 54 N. Y. 679.

Companies Clauses Act of 1845, 8 Vict. ch. 16, § 86.

5 Cumming v. Prescott, 2 Young & C. 488; Ex parte Littledale, 24 L. J. Q. B. 9.

6 San José Savings Bank v. Sierra Lumber Co., (1883) 63 Cal. 179.

Beardsley v. Johnson, (N. Y. 1890) 24 N. E. Rep. 380; s. c. 49 Hun, 607.

8 Taylor on Corporations, § 650. Pulbrook v. Richmond &c. Co., (1878) 9 Ch. Div. 610.