that his fellow directors
were doing fraudulent things, and he kept away from directors'
meetings because he did not wish to participate in their wrongdoing,
or dared not go and try to stop them, or kept silent when he should
have exposed them, he must suffer in the end as one of the number
though entirely innocent of actual participation in the fraud. Many a
director knowing or suspecting with good reason that his fellow
directors were running the corporation in an illegal manner, has
quietly sold out leaving the stockholders to find out afterwards and
from some other source about the wrongdoing of their agents. In all
such cases of omission of duty a director is held responsible for the
wrongs of his associates.

Recently a court has declared that a director who desires to escape
further responsibility by resigning his position must make sure that
his resignation reaches the board. If therefore he should send it to
the secretary, who failed to deliver it to the board, his resignation
would not be effective and he would still be responsible like the
other directors for whatever the board might do.

What acts are fraudulent are sometimes difficult to determine.
Different courts interpret the same act sometimes in different ways.
They do not differ so much on the application of the principle--for
all acts of fraud, whether of omission or commission, directors are
liable.

There is another series of acts for which they are liable, those of
gross negligence. How gross must the act be? If it is so gross as to
amount to a fraud, they are liable; if not so gross, if no fraud is
found of any kind, nothing but negligence pure and simple, they are
not liable at all. Most courts though go further and declare that if
they are guilty of gross negligence, even though the smell or taint of
fraud is not perceptible, they are liable. What, then, is the nature
of the acts that constitute gross negligence? These cannot be easily
defined, they differ in each case; so each case stands by itself. This
is the conclusion of the highest court in the land and which is
followed by many others. The same case therefore may be regarded
differently by different tribunals. Thus some directors were tried not
long since for wrecking a national bank. The lower court decided that
all the directors were guilty of gross negligence, on appeal the
reviewing court decided that the president only was guilty of fraud
and acquitted the others.

DIVIDEND