ing so he invites others to trust the bank on the strength of his name, and in such case he ought to bear his share of the consequences growing out of such a dual relation.” 71 § 2467. Nonresidence. Where a corporation officer is sought to be held personally liable for negligence, he cannot ordinarily escape liability merely on the ground that he is a nonresident. In the case of bank directors, it has been said that "there is no principle of law or morals that will permit the selection of nonresident directors of good character, whose names shall be a pledge of honest management, upon which the public shall make deposits and buy the stock of the bank, and then, when the crash comes, will excuse such directors from liability, because, being nonresidents, they could not give proper attention to their duties, and by private arrangement it was agreed that they should not be required to do So it is no excuse that the director lived far away." However, there is some authority holding that the duties of a nonresident director are less than those of a resident director.74 So. 73 § 2468. Ignorance. Ignorance on the part of the directors of any fact which it was their duty to know, and which they would have known if they had exercised ordinary care and diligence in the performance of their duty, cannot be set up by them to escape liability.75 This includes knowledge of the insolvency of the com 71 Rankin v. Cooper, 149 Fed. 1010, 1016. 72 Houston v. Thornton, 122 N. C. 365, 65 Am. St. Rep. 699, 29 S. E. 827. 73 McCormick v. King, 241 Fed. 737, 745. 74 Wallach v. Billings, 277 Ill. 218, 115 N. E. 382. 75 United States. Mutual Bldg. Fund & Dollar Sav. Bank v. Bossieux, 4 Hughes 387, 3 Fed. 817; Corbett v. Woodward, 5 Sawy. 416, Fed. Cas. No. 3,223. Illinois. Delano v. Case, 17 Ill. App. 531, aff'd 121 Ill. 247, 2 Am. St. Rep. 81, 12 N. E. 676. Maine. Bank of Mutual Redemption v. Hill, 56 Me. 385, 96 Am. Dec. 470. Missouri. Union Nat. Bank v. Hill, 148 Mo. 380, 71 Am. St. Rep. 615, 49 S. W. 1012. New Jersey. Williams v. McKay, 40 N. J. Eq. 189, 53 Am. Rep. 775. North Carolina. Houston v. Thornton, 122 N. C. 365, 65 Am. St. Rep.. 699, 29 S. E. 827; Solomon v. Bates, 118 N. C. 311, 54 Am. St. Rep. 725, 24 S. E. 746; Tate v. Bates, 118 N. C. 287, 54 Am. St. Rep. 719, 24 S. W. 482. Virginia. Marshall v. Farmers' & Mechanics' Sav. Bank of Alexander, 85 Va. 676, 2 L. R. A. 534, 17 Am. St. Rep. 84, 8 S. E. 586. England. Land Credit Co. of Ireland v. Lord Fermoy, 5 Ch. App. 763. In an action against a director by a co-operative insurance company to recover moneys alleged to have been wrongfully paid out, the director will pany.76 As said in connection with another rule of law by the Supreme Court of the United States,77 directors cannot "shut their eyes to what is going on around them. It is their duty to use ordinary diligence in ascertaining the condition of its business, and to exercise reasonable control and supervision of its officers. They have something more to do than, from time to time, to elect the officers of the bank, and to make declarations of dividends." So in England it has been held that if the ignorance of the director "arises 76 The duty of a director to the corporation requires him to know its financial standing, and he cannot set up his ignorance as a defense to the consequences of his own dereliction of duty. Folsom v. Smith, 113 Me. 83, 92 Atl. 1003. In Indiana the following instruction was approved: "The directors of a bank are conclusively presumed to know the business and financial condition of the bank. It is their duty to know whether it is solvent or not, and they cannot avoid responsibility on the ground of their ignorance of the bank's financial condition. They cannot be heard to say that they were not apprised of a fact, the existence of which is shown by the books, acts, and correspondence of the bank, and which would have come to their knowledge but for their neglect or inattention to the business of the bank;" and the Supreme Court, in commenting thereon, said that "ignorance of the important transactions of the corporation and of the general state of affairs, unless excusable for some special reason, which it is incumbent on them to establish, constitutes no defense to an action for damages for losses occasioned by or traceable to their failure to perform their official obligations." Coddington v. Canaday, 157 Ind. 243, 61 N. E. 567. "It is immaterial whether the defendants were cognizant of the insolvent condition of the company or not. The law charges them with actual knowledge of its financial condition, and holds them responsible for damages sustained by stockholders and creditors by reason of their negligence, fraud, or deceit. Pender v. Speight, 159 N. C. 616, 75 S. E. 851; Tounsend v. Williams, 117 N. C. 330, 23 S. E. 461; Solomon v. Bates, 118 N. C. 315, 24 S. E. 478, 54 Am. St. Rep. 725. While the directors are not liable for losses resulting from mistakes of judgment, such as are excused in law, they are liable for losses resulting from gross mismanagement and neglect of the affairs of the corporation. Good faith alone will not excuse them when there is lack of proper care, attention, and circumspection in the affairs of the corporation which is exacted of them as trustees." Anthony v. Jeffress, 172 N. C. 378, 90 S. E. 414. 77 Martin v. Webb, 110 U. S. 7, 15, 28 L. Ed. 49. from his wilfully shutting his eyes to the facts which are before him, he is equally guilty." 78 A director, however, is not chargeable with knowledge of its business transactions, for the purpose of holding him liable for mismanagement, merely because of his position as a director, when he has not been guilty of negligence.79 How far is knowledge to be imputed to a director or other corporate officer, when he seeks to evade liability by setting up his want of knowledge as a defense? So far as the powers of the corporation, and the powers and duties of the officers, are prescribed by statute, or charter or by-law, knowledge thereof is imputed to the officer. As to this there is no question. It is sometimes said that the directors and the managing officers are presumed to have knowledge of facts contained in the corporate records,80 but there are contrary statements that knowledge of what the corporate books and papers show is not to be imputed to the directors.81 In Tennessee it has been held that "a director in a suit between himself and the corporation, or those suing upon the corporate right of action, is not presumed to have knowledge of all that is shown by the books of the company. The presumption of knowledge attaching to a director applies only to suits between the bank and a stranger." 82 § 2469. - Want of experience or skill. In a leading Pennsylvania case, Judge Sharswood said that directors "are not liable for mistakes of judgment, even though they may be so gross as to appear to us absurd and ridiculous, provided they were honest and provided they are fairly within the scope of the powers and discretion confided to the managing body." 83 But in New York the Court of Appeals refused to assent to such rule, and held that a director "is bound not only to exercise proper care and diligence, but or78 Rance's Case, L. R. 6 Ch. 104. "Wilfully shutting his eyes," as used herein, includes "culpable negligence or reckless indifference by the director in the performance of his duties." Dovey v. Cory, [1901] A. C. 477, 490. 79 Rudd v. Robinson, 126 N. Y. 113, 12 L. R. A. 473, 22 Am. St. Rep. 816, 26 N. E. 1046; Wallace v. Lincoln Sav. Bank, 89 Tenn. 630, 24 Am. St. Rep. 625, 15 S. W. 448. 80 Mountain Water Works Const. Co. v. Holme, 49 Colo. 412, 113 Pac. 501; Coddington v. Canaday, 157 Ind. 243, 61 N. E. 567. 81 Briggs v. Spaulding, 141 U. S. 132, 162, 35 L. Ed. 662; Wakeman v. Dalley, 51 N. Y. 27, 32, 10 Am. Rep. 551; Mason v. Moore, 73 Ohio St. 275, 4 L. R. A. (N. S.) 597, 4 Ann. Cas. 240, 76 N. E. 932. 82 Wallace v. Lincoln Sav. Bank, 89 Tenn. 630, 24 Am. St. Rep. 625, 15 S. W. 448. 83 In re Spering's Appeal, 71 Pa. St. 11, 10 Am. Rep. 684. To same effect, Dunn v. Kyle, 14 Bush (Ky.) 134, 140. dinary skill and judgment. As he is bound to exercise ordinary skill and judgment, he cannot set up that he did not possess them. When damage is caused by his want of judgment, he cannot excuse himself by alleging his gross ignorance. One who voluntarily takes the position of director, and invites confidence in that relation, undertakes, like a mandatary, with those whom he represents or for whom he acts, that he possesses at least ordinary knowledge and skill, and that he will bring them to bear in the discharge of his duties." 84 However, even under the New York rule, it is evident that if a director has a practical business experience, the mere fact that he was not acquainted with the particular business in which the corporation is engaged, at the time of his election or appointment, is immaterial; 85 but where the president and secretary, paid officers of a life insurance company, were sued for losses sustained by the company through their negligence, they could not set up as an excuse their lack of experience in the business of life insurance.8 86 In line with the New York rule, it has been said, in a Utah case, in regard to bank directors, that the public "have a right to suppose that they are men of high character for integrity, of reasonably sound judgment, and of such good business sense as is necessary to conduct the affairs of the bank wisely and with reasonable. safety."87 § 2470. Agreement whereby director was not to be obliged to attend meetings. It is no defense that a director consented to go upon the board of directors upon an understanding with the president of the company that he should not be called upon to attend any of the meetings of the board, but would simply allow the use of his name in the directorate.8 88 § 2471. Liability of directors of national banks for negligence. The National Banking Act provides that if the directors of any 84 Hun v. Cary, 82 N. Y. 65, 73, 37 Am. Rep. 546. 85 In re Brazilian Rubber Plantations & Estates, [1911] 1 Ch. 425, 436. 86 New Haven Trust Co. v. Doherty, 74 Conn. 353, 356, 50 Atl. 887. The fact that the principal salaried officers of an insurance company were inexperienced in the insurance business does not excuse them from "'ex ercising such care and skill as ordinarily prudent management might require." New Haven Trust Co. v. Doherty, 74 Conn. 353, 50 Atl. 887. 87 Warren v. Robison, 19 Utah 289. 303, 75 Am. St. Rep. 734, 57 Pac. 287. 88 Kavanaugh v. Gould, 147 N. Y. App. Div. 281, 131 N. Y. Supp. 1059. Compare Briggs v. Spaulding, 141 U. S. 132, 35 L. Ed. 662. national bank shall "knowingly" violate, or "knowingly permit" any of its agents to violate any of the provisions of that act, "every director who participated in or assented to" the violation shall be personally liable for damages resulting therefrcm. The National Banking Act imposes upon directors duties which do not rest upon them at common law, among which is the furnishing to the Comptroller of the Currency reports concerning the condition of the bank and the publication thereof. The Supreme Court of the United States held that the former section "affords the exclusive rule by which to measure the right to recover damages from directors, based upon a loss alleged to have resulted solely from the violation by such directors of a duty expressly imposed upon them by a provision of the act," and that "liability cannot be entailed upon them by exacting a different and higher standard of conduct as regards such commands than that established by the statute without depriving directors of an immunity conferred upon them.' In a state court, the judgment of which was reversed, it was held that directors who merely negligently participate in or assent to an untrue report are liable, but the Supreme Court held that the false report must be "knowingly" made.89 In a later case, the Supreme Court of the United States held that there was liability, in case of an intentional violation of a statute by deliberately refusing to examine that which it was the duty of the directors to examine; and that where the Comptroller of the Currency gave notice to directors to charge off certain assets, the disregarding of such notice and representing such assets in a statement to be good was a violation of the statute so as to make the directors liable to one injured thereby.90 These decisions, it has been contended, are to be construed as taking away all common-law liability of a director of a national bank; but it seems that there is a liability on the part of national bank directors for failure to perform the duty which the general principles of the law cast upon them when they become directors, distinct from and in addition to the duties and liabilities imposed by the statutes.91 89 Yates v. Jones Nat. Bank, 206 U. S. 158. 51 L. Ed. 1002, rev'g 74 Neb. 734, 105 N. W. 287. On a new trial and subsequent writ of error, the court held that the directors had "knowingly" made a false report. Jones Nat. Bank v. Yates, 240 U. S. 541, 60 L. Ed. 788, rev'g 93 Neb. 121, 139 N. W. 844, 1135. 90 Thomas v. Taylor, 224 U. S. 73, 56 L. Ed. 673, aff'g 195 N. Y. 590, 89 N. E. 1113, 124 N. Y. App. Div. 53, 108 N. Y. Supp. 454. 91 Williams v. Brady, 232 Fed. 740. The provisions of the National |