CHAP. Vn.] LEGAL EFFECT OF CORPORATE ACTS. [§ 118. § 116. It must be borne in mind that the interests of some persons in the corporate enterprise will be opposed Divergency to the interests of others. While it is for the inter- of inter- ests, ests of shareholders that the corporate enterprise shall be managed so as to insure the continuing solvency of the corporation, it is also for their interests that dividends may be had from the business. The interests of creditors, on the other hand, are exclusively that the corporation shall continue able to pay the principal and interest of its indebtedness ; so the in- terests of shareholders may readily conflict with those of cred- itors. Again, it is possible that the interests of the state, or the public at large, may be opposed to the interests of share- olders and creditors alike ; and, in certain cases, where usually improper elements would be present, the interests of directors might diverge from those of the public, of shareholders, and of creditors. Finally, not only may the interests in the corporate enterprise of one class of persons be opposed to the interests of another class, but a divergency of interest may readily arise within the limits of a single class ; as* for instance, when the corporate solvency is not assured, it will be for the interests of one set of creditors to oppose the payment of debts alleged to be due another set. § 117. In short, incorporation, and subsequent acts in respect to the corporate enterprise, give rise to a conflict of opposing interests and to complicated legal relations, all of which inter- ests and relations must be regarded in applying the corporate funds. And to say that these funds must be managed with due regard to the interests of all, implies the further propo- sition that the managers of the corporate enterprise are account- able for the proper disposition of these funds to all persons interested, to the extent of the respective interests of such per- sons. In determining the legal relations arising from acts done by or on behalf of a corporation, the importance of bearing in mind that the legally protected interests of different persons in the corporate enterprise are distinguishable will be apparent throughout this chapter. § 118. In subscribing for shares, in managing the corporate enterprise, and in contracting on the credit of the corporate funds, everybody may rely on the constitution of the corpora- 89
