Wardell v. Railroad Company - 103 U.S. 651 (1880)
U.S. Supreme Court
Wardell v. Railroad Company, 103 U.S. 651 (1880)
Wardell v. Railroad Company
103 U.S. 651
1. The directors of a corporation are subject to the obligations which the law imposes upon trustees and agents. They cannot, therefore, with respect to the same matters act for themselves and for it, nor occupy a position in conflict with its interests.
2. Hence a court will refuse to give effect to arrangements by directors of a railroad company to secure, at its expense, undue advantages to themselves by forming, as an auxiliary to it, a new company with the understanding that they or some of them shall become stockholders in it and then that valuable contracts shall be given to it by the railroad company in the profits of which they, as such stockholders, shall share.
3. The contract entered into July 18, 1868, by the Union Pacific Railroad Company, by direction of the executive committee of the board of directors, with Godfrey and Wardell, infra, p. 103 U. S. 652, which the latter assigned without consideration to a new company, in which a majority of the stock was taken by six directors of the old company, declared to be fraudulent and void.
The facts are stated in the opinion of the Court.