The Charitable Corp v Sutton

The Charitable Corporation was a company set up by royal charter, to give loans of money to poor people, to prevent them falling into the hands of pawnbrokers.

Lord Hardwicke held that because the directors are agents of the people who grant them power to manage the corporation's affairs they are liable for any negligent acts or omissions.

But it cannot be said to be an employment affecting the public government; and for this reason none of the directors of the great companies, the Bank, South-sea &c., are required to qualify themselves by taking the sacrament.

Now where acts are executed within their authority, as repealing bye-laws and making orders, in such cases though attended with bad consequences, it will be very difficult to determine that these are breaches of trust.

For it is by no means just in a judge, after bad consequences have arisen from such executions of their power, to say that they foresaw at the time what must necessarily happen; and therefore were guilty of a breach of trust.

By accepting a trust of this sort, a person is obliged to execute it with fidelity and reasonable diligence, and it is no excuse to say that they had no benefit from it, but that it was merely honorary (ante 60); and therefore they are within the case of common trustees.