Farmers' & Merchs.' Bank of L.A. v. Downey

Citations

• 53 Cal. 466

Syllabus

<p>Corporation — Relation between Directors and Stockholders.—The directors of a corporation act in a fiduciary capacity, and are trustees of the stockholders.</p> <p>Same—Equity Forbids Extra Profit.—Courts of Equity will not permit them, in the exercise of their duties as directors, to make a profit for themselves to the exclusion of the other stockholders,</p> <p>Illegal Profit of Director.—Where a director of a bank loaned the moneys of the bank, and took from the borrowers a note, running to the bank, for the principal sum loaned, at a rate of interest therein stipulated, but at the same time, and as part of the same transaction, made an agreement with the borrowers that they should permit him to participate with them in the profits of a purchase and sale of certain lands: held, that the Director could not be permitted to retain for himself the profits thus contracted for, but must surrender them to the bank to be participated in by all the stockholders.</p>