Structure of Corporations

Question 1

Charlestown Boot & Shoe

Answer 1

Facts: Osgood hired He is a consultant . Rec to BOD to sell equipt & get insurance. They don’t. Equipt deteriorated & warehouse burns down. Issue: Can Directors ignore advice of expert they hired?
Hold: Hell yea! Entitled to manage biz, don’t have to listen to non-directors even if they hired him
Rule: DL 141(a) doesn’t compel directors to work w a non-director.

Question 2

Jennings v. Pittsburg (Cal. 1961)

Answer 2

Facts: Egmore (treasurer) tells Jennings to find leaseback w x terms, says BOD will approve. Jennings does & BOD doesn’t approve.

Issue: Does Egmore have apparent authority to Jennings? To bind Co to K?

Hold: No. This is an extraordinary tranx. Should have put Jennings on notice. A can’t bind w his own words for apparent authority.

Rule: Individual Directors do NOT have pwe to affect Corp’s legal relations wrt 3Ps. Need decision from BOD, not Officer, for any extraordinary tranx. Reasoning: DL 142(a) Officers duties from bylaws or from BOD, officers chosen by BOD. Egmore’s actions undermine BOD pwr. Jennings could have gone to BOD & gotten a resolution. ALSO: Remember, apparent authority comes from P not A!