corporation always for their unintentional
neglect. Often they are busy men, have greater interests of their own,
and do not remember the things they learn about matters relating to
their corporation, and if it were always held as knowing as much as
they do on all occasions, the way of a corporation would be fraught
with a grave peril.

A proper distinction is made in the imputation of knowledge between
that of a bank director for example who is engaged chiefly in some
other business, and that of its president whose chief employment is
the management of his bank. Suppose he should learn about a defective
note before it was presented for discount, the bank would be very
properly charged with his knowledge, because it would be his clear
duty to remember what he had learned and impart it to his fellow
directors.

Directors sometimes go astray and cases are constantly arising to
determine their liability. When a corporation has failed or passed a
dividend nothing is more common than to accuse its directors of
negligence, incompetence or fraud. The legal rule of liability is
quite a different thing. Let us try to give this in the fewest words
possible. The charters of corporations, or statutes that apply to
directors, prescribe some definite things which they must do or not
do, and if these are violated they are clearly liable. The directors
of a bank are required to make a statement of its affairs to a
government official at a stated period, and if they neglect to do it,
or intentionally make a wrong and deceptive one, they are liable. By
many statutes they are forbidden to make loans above a certain amount,
or a fixed proportion of their bank's capital, and if they violate
this plain law they are liable. In all other cases where by charter or
statute a plain rule of duty is prescribed for directors, they are
liable, should they disregard it.

Besides these clearly defined lines of duty are other lines of duty in
which the proper course of action is not so clearly defined, indeed is
largely discretionary. From the nature of the business of almost any
kind of corporation, it is impossible to prescribe in detail the
course of action directors must follow. Much must be left to their
judgment. They must on all occasions be honest and free from fraud.
This is one limitation. If they are guilty of doing things tainted or
marked with fraud, they are liable. Fraud may be of two kinds,
omission and commission. If a director knew