directors to institute the suit is sufficient. He need not also apply to a stockholder's meeting." Although it is said that the authority of stockholders in the management of business corporations is exhausted when they elect the directors (Thompson on Corporations, 2nd ed., §1178) nevertheless it is generally recognized that certain acts of boards of directors that are legal, but voidable, can be ratified and confirmed by a majority of the body of the stockholders as the ultimate parties in interest and thus make them binding upon the corporation. (Morawetz on Corporations, 2d ed., §§625, 626.) Such recognized authority in stockholders to ratify and confirm the acts of boards of directors is confined to acts voidable by reason of irregularities in the make-up of the board or otherwise or by reason of the directors of some of them being personally interested in the subject-matter of the contract or act, or for some other similar reason which makes the action of the directors voidable. No such authority exists in case of an act of the board of directors which is prohibited by law or which is against public policy. (Kent v. Quicksilver Min. Co. 78 N. Y. 159.) In any case where action is taken by stockholders confirming and ratifying a fraud and misapplication of the funds of the corporation by the directors or others the action is binding only by way of estoppel upon such stockholders as vote in favor of such approval. (Morawetz on Corporations, 2d ed., §625.) The distinction between acts that can and those that cannot be confirmed and ratified is shown in the report of two frequently cited English decisions, namely, Foss v. Harbottle, 2 Hare 461, and Bagshaw v. Eastern Union Ry. Co., 7 Hare 114. The former of these cases was limited to the approval of a legal but voidable act. In the Bagshaw case where the directors of a corporation had misapplied or were about to misapply certain moneys of the corporation, the court say: "No majority of the shareholders, however large, could sanction the misapplication of this portion of the capital. A single dissenting voice would frustrate the wishes of the majority. Indeed, in strictness, even unanimity would not make the act lawful. This appears to me to take it out of the case of Foss v. Harbottle, to which I was referred. That case does not, I apprehend, upon this point, go. further than this: That if the act, though it be the act of the directors only, be one which a general meeting of the company could sanction, a bill by some of the shareholders on behalf of themselves and others, to impeach that act, cannot be sustained, because a general meeting of the company might immediately confirm and give validity to the act of which the bill complains."

It is the governing body or bodies of a corporation with power to enforce a remedy to whom complaining stockholders must go with their demand for relief. The governing body of corporations in this state, as we have seen, is the board of directors. A complaining stockholder must go to such board for relief before he can bring an action, unless it clearly appears by the complaint that such application is useless. If the subject-matter of the stockholder's complaint is for any reason within the immediate control, direction or power of confirmation of the body of stockholders, it should be brought to the attention of such stockholders for action, before an action is commenced by a stockholder unless it clearly appears by the complaint that such application is useless.

The decision reported in Hawes v. Oakland, 104 U. S. 450, 26 U. S. (L. ed.) 827, and other similar decisions in the Federal and state courts are not in conflict with the decision about to be rendered herein. In such cases, as in this case, it is asserted that an application to the body of stockholders is unnecessary when it is unreasonable to require it. If the body of stockholders has no adequate power or authority to remedy the wrong asserted by the individual stockholders it is unreasonable and unnecessary to require an application to it to redress the wrong before bringing a representative action. (See opinion of Carr, J., in the appellate division herein, 150 App. Div. 298, 135 N. Y. S. 635. See, also, Delaware & H. Co. v. Albany & S. R. Co., 213 U. S. 435.)

$409

CHAPTER XIV

DISSOLUTION AND ACCOUNTING

A. IN AGENCY.

BLACKSTONE v. BUTTERMORE.

Supreme Court of Pennsylvania, 1866. [53 Pa. St. 266.] [Buttermore gave to one Davidson a power of attorney to sell the land in question, such instrument declaring that "this authority is irrevocable before the first day of May next." In April, Davidson sold the land to plaintiff, but defendant refused to perform. There was evidence that defendant had revoked the power before the sale to plaintiff, and that plaintiff had notice of the revocation. The court charged that the power was revocable, and that if it was revoked and plaintiff had notice of it before he entered into articles of agreement for the purchase of the land, he could not recover.]

AGNEW, J.: We have decided the substantial point in this case at the present term upon the appeal of Hartley and Minor from the Orphans' Court of Greene County, opinion by Thompson, J., 53 Pa. St. 212.

A power of attorney constituting a mere agency is always revocable. It is only when coupled with an interest in the thing itself, or the estate which is the subject of the power, it is deemed to be irrevocable, as where it is a security for money advanced or is to be used as a means of effectuating a purpose necessary to protect the rights of the agent or others. A mere power like a will is in its very nature revocable when it concerns the interest of the principal alone, and in such case even an express declaration of irrevocability will not prevent revocation. An interest in the proceeds to arise as mere compensation for the service of executing the power will not make the power irrevocable. Therefore, it has been held that a mere employment to transact the business of the principal is not irrevocable without an express covenant founded on sufficient consideration, notwithstanding the compensation of the agent is to result from the business to be performed and to be measured

by its extent. Coffin v. Landis, 10 Wright, 426. In order to make an agreement for irrevocability contained in a power to transact business for the benefit of the principal binding on him, there must be a consideration for it independent of the compensation to be rendered for the services to be performed. In this case, the object of the principal was to make sale solely for his own benefit. The agreement to give his agent a certain sum and a portion of the proceeds, was merely to carry out his purpose to sell. But what obligation was there upon him to sell, or what other interest beside his own was to be secured by the sale? Surely his determination to sell for his own ends alone was revocable. If the reasons for making a sale had ceased to exist, or he should find a sale injurious to his interests, who had a right to say he should not change his mind? The interest of the agent was only in his compensation for selling, and without a sale this is not earned. A revocation could not injure him. If he had expended money, time, or labor, or all, upon the business intrusted to him, the power itself was a request to do so, and on a revocation would leave the principal liable to him on his implied assumpsit. But it would be the height of injustice if the power should be held to be irrevocable merely to secure the agent for his outlay or his services rendered before a sale. The following authorities are referred to: Hunt v. Rousmanier, 8 Wheat. 174; Story on Agency, §§463, 464, 465, 468, 476, 477; Paley on Agency, 155; 1 Parsons on Cont. 59; Irwin v. Workman, 3 Watts, 357; Smyth v. Craig, 3 W. & S. 20. The judgment is therefore affirmed.

8410. Right to Terminate Distinguished from Power to Do So. We must carefully distinguish between the right to terminate an agency and the power to do so. A legal power has been defined as the capacity to change rights. Such a capacity does not necessarily involve the possession of a right on the part of the person vested with the power. It may, indeed, be exercised wrongfully and its legal effects may still be the same as if exercised rightfully, though the parties so exercising it may be liable in an action for damages. Thus, an agent acting within the apparent scope of his employment, but beyond the actual scope, has the power to bind his principal though he is liable to his principal for any damages resulting. In like manner, either the principal or the agent may, in most cases, terminate an agency without notice and without any reason, pro

vided care is taken to protect the public from error, though either may be liable to the other for having wrongfully terminated the agency contrary to a binding agreement.

8411 THE FARMER'S LOAN & TRUST CO. v. WILSON.

New York Court of Appeals, 1893. [139 N. Y. 284.]

Appeal from judgment of the General Term of the Supreme Court in the second judicial department, entered upon an order made May 9, 1892, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at Circuit without a jury.

This was an action to recover rent claimed to be due under a lease.

The facts, so far as material, are stated in the opinion.

O'BRIEN, J.: The plaintiff, as general guardian of infants, heirs and devisees of one William Maden, has recovered judgment against the defendant for rent claimed to be due under a lease of certain real estate, executed in the lifetime of the testator. Maden died in Cuba on the 6th of August, 1884, having by will devised the real estate in Brooklyn, the rent of which was claimed in this action, to his infant children, who are represented by the plaintiff. He had been for many years before his death a resident of Cuba, and the owner of the real estate in question. The will was duly proved and established under the laws of that country on the 27th of August, 1884, and such proceedings were afterwards had here that it was admitted to record in the office of the surrogate of New York on the 10th of June, 1885, and the plaintiff was appointed guardian December 19, 1888. The real estate had been for many years managed and rented by an agent of the owner, who acted under a verbal authority. The judgment was for rent accruing under the lease subsequent to the death of the owner from the month of September, 1884, to and including the month of May, 1885. It is undisputed that the defendant paid all the rent claimed to the agent subsequent to the death of his principal, but as it does not appear that the agent ever accounted for the same, the sole question presented by this appeal is whether the defendant is protected by such payment in this action.

On the 8th of April, 1884, the testator by his agent, and the defendant, executed the lease which appears to be under seal, acknowledged and recorded. By this instrument Maden, who is described as "of Cortenas, Island of Cuba," demised to