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which Sully should receive one part. It also provided for the payment out of the gross profits of $100,000 to Hammond for the purpose of reimbursing him for expenses theretofore incurred, as well as for any expenses which he might subsequently incur on account of the syndicate. Sully was without financial means.

In February, Hammond accused Sully of having obligated him personally to the payment of the $1,600,000 to the Securities Company, by the agreement of January 7 with that company. This Sully This Sully denied.

Sully entered actively upon the work of trying to dispose of the stock. He interested many persons of financial importance, but made no sales until the latter part of September, 1910, when he, acting for himself and assuming to act as the syndicate manager and for the Securities Company, entered into a contract with S. W. Fordyce of St. Louis, who owned the majority of the stock of the Thomas-Fordyce Manufacturing Company, by which he was to make certain expenditures for the purpose of demonstrating the commercial adaptability of five cotton gins of the DoremusFordyce type, and, if they were found to be satisfactory to Fordyce, the Securities Company was to deliver to him $250,000 of its preferred stock at $90 per share, and to accept in payment preferred stock of the Thomas-Fordyce Company, at a valuation of $100 per share, and also to pay in cash the outstanding accounts of the Thomas-Fordyce Company in an amount not to exceed $250,000. The contract also recited that all the parties thereto understood the minimum value of the assets of the Thomas-Fordyce Company was $500,000.

A few days afterwards, at a meeting between Sully, Hammond, and others, Sully outlined the Fordyce contract to them, but did not say that the shares of the Securities Company which he had sold were to be paid for by shares of the Thomas

Fordyce Company stock, or that the Securities Company was to obligate itself to pay $250,000 of the Thomas-Fordyce Company's debts.

In the early part of October, Sully had an interview with Hammond, in which the latter insisted upon having a further test made of the Doremus gin before a prospectus of the Securities Company was issued, and offered to pay the expenses of the test up to $10,000. As they were about to separate Sully renewed a request which he had made for $1,500 on his personal account, which Hammond refused. A short time afterwards, but on the same day, Sully informed Hammond that he would issue the prospectus just as soon as he got back to Washington, in order that he might sell stock for the purpose of raising funds, Hammond having refused to advance any more; to which Hammond replied: "If you do, Mr. Sully, I will repudiate you and your prospectus in every newspaper in the country.

The next day Sully wrote to Miller that, in view of Hammond's refusal to advance the money which he had requested, he wished to notify him that he had used his best endeavors to sell the stock, but that, owing to Hammond's failure to cooperate with him, he was unable to do so, and that he would, on demand from Miller, turn back to the latter, so far as he was able to do, all his rights or interest under the contract of December 28, 1909. Miller, on November 23, accepted the proposition, and so notified Sully, and demanded the return to him of the capital stock of the National Cotton Improvement Company which he, Miller, had delivered to Sully and Hammond under the contract of December 28, 1909.

The same day on which Sully wrote the letter to Miller, he tendered his resignation as vice president, general manager, and director of the Securities Company to Hammond, who was then president of the

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(48 App. D. C. 320.)

vember 16 not to give Hammond, or anyone representing him, any inkling of the terms of the contract between Fordyce and himself.

On the same day on which this letter was written there was a meeting of the board of directors of the Securities Company, which Sully attended. At this meeting Hammond said to Sully, "You are trying to stick me for $1,600,000," to which Sully replied, "I am not trying to do anything of the kind, and you know better than that;" and further remarked that he had proved to him, Hammond, that there was no liability on the part of the syndicate for the $1,600,000, so long as the members "used good faith." Notwithstanding Sully's assurance, the board at this meeting so changed the minutes of the January meeting as to make it appear that the proposition by Sully which the board had accepted did not obligate either Sully, Hammond, or the other members of the syndicate to pay the $1,600,000, unless they sold the stock.

On November 19, Sully wrote Hammond to the effect that he had changed his position with respect to the latter's liability to the Securities Company for the $1,600,000, and called upon him to make arrangements to take care of the payment of that sum, in case the syndicate was asked for it or any part thereof.

Later he admitted that, in October, he had been advised by his counsel that he and Hammond were jointly liable for that sum of money to the Securities Company under the agreement which he, Sully, had made with the company in the previous January.

On November 23 the board of directors of the Securities Company met again. A quorum of the directors was present, but all the others, including Sully, had notice of the meeting. Hammond presided. Sully's letter to Miller of October 12, to which reference has already been made, in which he offered to do all in his power to turn back to Miller all rights which he might have

under the contract of December 28, was laid before the meeting; also a letter from Hammond to Miller, which was joined in by other members of the syndicate, making substantially the same offer as that made by Sully. Miller stated that he had written to Sully, assenting to his proposition of October 12, and then demanded the redelivery to him of the National Cotton Improvement Company's stock which he had placed in the hands of the syndicate under the agreement of December 28. Hammond, on behalf of the syndicate, offered to return to the Securities Company the stock which the syndicate had received from it for sale, except a few qualifying shares held by the directors of the company. The board accepted the Hammond offer, rescinded the contract of January 7, whereby the syndicate was to purchase the stock of the Securities Company, accepted a return of all the stock which the company had placed in the hands of the syndicate, directed that it be canceled and that the stock of the National Cotton Improvement Company be returned to Miller in accordance with his request. Thus, all the stock of the Securities Company which the syndicate was to sell, and from the sale of which Sully and the other members expected to reap a profit, was canceled. But this is what Sully desired to accomplish when, on October 12, he said to Miller: "I will, on your demand, proceed as far as I can to turn back to you legally all and any of the rights or interests that I may have under this contract" [of December 28]. Miller, during the life of the offer, made the demand referred to. The action of the board of directors of the Securities Company just mentioned enabled the parties to satisfy the demand; and thus what Sully desired, if we are to credit his statement, was brought to

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vance the interests of the corporation.

At the close of all the evidence, Hammond moved for a directed verdict, which was overruled.

The learned trial justice, after a careful review of the evidence, said to the jury: "When we boil this case down to its last analysis, in my opinion it turns on the motive which induced the action of the board of directors on the 23d of November, 1910, in the passage of the resolution which they adopted." He charged that there was no evidence of actual damage, and that unless the jury found that Hammond and his associates, in the passage of the resolution of November 23, were actuated by a malignant purpose, their verdict must be for the defendant.

The jury was bound to follow these instructions (Kuhn v. Chicago, M. & St. P. R. Co.

Trial-instruction-duty of jury.

74 Iowa, 137, 140, 37 N. W. 116; Bartling v. Behrends, 20 Neb. 211, 29 N. W. 472; Moore v. Hinkle, 151 Ind. 343, 50 N. E. 822), and we must presume that they did so (Shreveport v. Cole, 129 U. S. 36, 42, 32 L. ed. 589, 591, 9 Sup. Ct. Rep. 210), and were governed by them in formulating their verdict. If there was vice in the instruction, it inheres in the verdict. Two questions, then, are presented for solution: (a) May the members of a board of directors, under any circumstances, be subjected to punitive damages because they voted for a resolution which resulted in no actual damage to the plaintiff, and (b) if so, may they be amerced in damages for passing a perfectly legal resolution, if it be found that their motives in doing so sinister.

were

Concerning the first question, the authorities are by no means in harmony, as a study of the following will show; 2 Sutherland, Damages, 3d ed. § 406, p. 1129; Hanewacker v. Ferman, 152 Ill. 321, 325, 38 N. E. 924; Kuhn v. Chicago, M. & St. P. R. Co. 74 Iowa, 137, 141, 37 N.

W. 116; Girard v. Moore, 86 Tex. 675, 26 S. W. 945; Stacy v. Portland Pub. Co. 68 Me. 279, 287; Wilson v. Vaughn, 23 Fed. 229; Press Pub. Co. v. Monroe, 51 L.R.A. 353, 19 C. C. A. 429, 38 U. S. App. 410, 73 Fed. 196, 201. But we do not find it necessary to decide the point. Whatever its solution may be, it would appear that in any event there must be proof of a tortious act.

liability.

This brings us to the second question. In our view it would be a dangerous doctrine to announce that a party may be punished for doing that which is legal, if, in the judgment of a jury, his motive was unworthy. Neither the diligence of counsel, nor our own researches, have uncovered any Corporationauthority, either sinister act of text or decision, directorswhich approves such a principle. Nor is it in consonance with reason. The motive of an act, as a general thing, has to do with its ethical value, not with its juristic character, and is immaterial where the act itself is legal. To condemn a legal act because of the motive which inspired it would be to subordinate the legal to the ethical, would be to condition the validity of acts upon the motive which called them into existence. This is not within the province of jurisprudence. Until ethical principles are adopted by the law, they lie in a domain apart from the field in which jurisprudence operates. "As long as a man keeps himself within the law by doing no act which violates it, we must leave his motives to Him who searches hearts." Chambers v. Baldwin, 91 Ky. 121, 11 L.R.A. 545, 34 Am. St. Rep. 165, 15 S. W. 57. This is in harmony with many decisions of the Federal courts. We cite a few: Evans v. Sioux City Service Co. 206 Fed. 841, 844; Jacobson v. Chicago, R. I. & P. R. Co. 176 Fed. 1004, 1005; Enos v. Kentucky Distilleries & Warehouse Co. 189 Fed. 342, 347; Warax v. Cincinnati, N. O. & T. P. R. Co. 72 Fed. 637, 640; Welch v. Cincinnati, N. O. & T. P. R. Co. 177 Fed. 760, 764; Chi

(48 App. D. C. 320.)

cago, B. & Q. R. Co. v. Willard, 220 U. S. 413, 427, 55 L. ed. 521, 527, 31 Sup. Ct. Rep. 460; Chicago, R. I. & P. R. Co. v. Schwyhart, 227 U. S. 184, 193, 57 L. ed. 473, 477, 33 Sup. Ct. Rep. 250; Adler v. Fenton, 24 How. 407, 410, 16 L. ed. 696, 697; Illinois C. R. Co. v. Sheegog, 215 U. S. 308, 316, 54 L. ed. 208, 211, 30 Sup. Ct. Rep. 101; Chicago, R. I. & P. R. Co. v. Dowell, 229 U. S. 102, 113, 57 L. ed. 1090, 1095, 33 Sup. Ct. Rep. 684.

In the Warax Case, Judge Taft said: "If the right exists, the motive for its exercise cannot defeat it."

The court announced in the Adler Case that "an act legal in itself, and violating no right, cannot be made actionable on account of the motive which superinduced it. It is the province of ethics to consider of actions in their relation to motives, but jurisprudence deals with actions in their relation to law, and for the most part independently of the motive."

Mr. Justice Holmes, speaking for the court in the Sheegog Case, said: "In the case of a tort which gives rise to a joint and several liability, the plaintiff has an absolute right to elect, and to sue the tort-feasors jointly if he sees fit, no matter what his motive."

Conspiracyuse of lawful

All the foregoing decisions deal with cases in which the element of conspiracy was lacking. If the jury in the present case had been told by the court that they could not find for the plaintiff unless the damages of which he complained were the result of a conspiracy between Hammond and others, the above authorities would not be in point, because in the case of a conspiracy the means means-effect. by which the wrong is accomplished, whether lawful or unlawful in themselves, are immaterial. United States v. Rintelen, 233 Fed. 793, 796; United States v. Moore, 173 Fed. 122, 132; State v. Buchanan, 5 Harr. & J. 317, 9 Am. Dec. 534; 12 C. J. § 3, p. 545. The gravamen of the action lies in the conspiracy and the resulting dam

age.

Hollinberger v. Stewart, 41 App. D. C. 197, 199.

But the deliberations of the jury were not limited by the court to the conspiracy charged. After stating that a party has a right to rescind a contract "which threatens to turn out disastrously for him, subject, however, to being mulcted in damages by the other party to the contract for whatever loss he may (might) suffer," the court said: "So that, in reaching a conclusion in this case, you are to consider ail the elements which entered into the consideration of the defendant and his associates on the board of directors in passing the resolution which took away the rights of the plaintiff under these contracts, on the one hand, and if the motives that inspired that action, if the purposes which they had in view, were for their own protection, or were bona fide, to release them from an obligation which seemed to be a menace to the company, or to the individuals connected with the company, or in good faith was to terminate an agreement which apparently had no possibility or no probability of being carried out by the other party to it, or for any other reason involving good faith on their part, then Mr. Sully is not entitled to recover in this case. On the other hand, if the thing was done maliciously, if this resolusake of injuring the property rights tion was passed maliciously, for the of the plaintiff, and not for these other motives which I have described, then he is entitled to a verdict at your hands, to be measured by a rule or an instruction which I will give you later."

Thus, the jury were told, in effect, that the resolution of November 23, by which the contracts referred to therein were rescinded, was legal, and if Hammond and his associates were liable to Sully on account of the passage of that resolution, it must be upon the assumption that their motive in passing it was vicicus. By this instruction the question of conspiracy was put out

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Motive as affecting personal liability of directors in voting for acts not in themselves illegal.

That directors of a corporation are personally liable in a civil action in damages, for injury to an individual caused by an act of the corporation for which they voted at a directors' meeting, if they voted in pursuance of a conspiracy to cause the injury, and not to benefit the corporation, seems to be a necessary implication from the decision and procedure of the court in the reported case (HAMMOND v. SULLY, ante, 160). The case seems to be one of first impression upon this point. Other points discussed incidentally, infra, are not exhaustively annotated.

No search has been made for cases like Martineau v. Foley (1918) 231 Mass, 220, 1 A.L.R. 1145, 120 N. E. 445, considering the question of liability of members of a labor union for concerted action that injures a contractor's business, it being presumed that the union was not incorporated.

It has been held that a corporation may be liable in damages to one injured by its act, brought about by a conspiracy among its directors or stockholders (Dorsey Mach. Co. v. McCaffrey (1894) 139 Ind. 545, 47 Am. St. Rep. 290, 38 N. E. 208), or by their conspiracy with other persons or corporations (Aberthaw Constr. Co. v. Cameron (1907) 194 Mass. 208, 120 Am. St. Rep. 542, 80 N. E. 478; Buffalo Lubricating Oil Co. v. Standard Oil Co. (1887) 106 N. Y. 669, 12 N. E. 825; West Virginia Transp. Co. v. Standard

Oil Co. (1902) 50 W. Va. 611, 56 L.R.A. 804, 88 Am. St. Rep. 895, 40 S. E. 591); but the question of maintaining a suit for damages against the directors personally, instead of against the corporation, does not seem to have been decided.

If the proposition that such action may be maintained against the directors personally is assumed to be correct, the further question that arises, when the ultimate act that caused the injury is not in itself illegal, would appear to depend upon the general principles underlying liability for conspiracy, such question not being peculiar to directors of corporations. And it may be well to observe that, upon this hypothesis, the existence of malice does not always seem to be the criterion. Some courts hold that, even though an act done in pursuance of an agreement is done with a malicious motive and results in injury, it is not actionable if the act is such that if done by an individual, it would not have been actionable. Watkins V. Perry (1914) 25 Colo. App. 425, 139 Pac. 551; Cohen v. Nathaniel Fisher & Co. (1909) 135 App. Div. 238, 120 N. Y. Supp. 546; Prospect Park & C. I. R. Co. v. Morey (1913) 155 App. Div. 347, 140 N. Y. Supp. 380. But the weight of authority is to the effect that an act done with a malicious motive (that is, the dominant purpose of the act is to do the injury, so that the

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