16 FEDERAL nE1>o1vrEn.
Upon the second theory of the complainant’s case the inquiry
arises whether, by reason of the relations sustained by the lessor’s
directors towards the lessee, their action in voting for the lease was
in contravention of their duties to the lessor, and so obnoxious in the
view of a court of equity as to render the lease void at the election
of the lessor. It is well-settled that if directors of a corporation
enter into a contract in its behalf with themselves as the other con-
tracting party, the corporation may repudiate such contract.
In Thomas v. Brownville, etc., Ry. Co. 2 FED. REP. 877, it is held
that a contract between a railroad company and a construction com-
pany is void where any of the directors of the railroad are members
of the construction company, unless ratihed by a board of disinter-
ested directors. In Warrdell v. Union Pac. R. Oo. 4: Dill. 330, it is held
that a contract made in behalf of the corporation by the executive com-
mittee of the board of directors, in which the members of the executive
committee have a secret interest, is fraudulent as against the corpora-
tion, and the latter may repudiate it. Other authorities directly or
impliedly decide that the contract may be upheld, if, notwithstanding
the presence of interested directors, there was a quorum of disinter-
ested directors who participated in making the contract. Butts v._
Wood, 37 N. Y. 317; Coleman v. Second Avenue R. C0. 38 N. Y. 201;
U. S. Rolling Stock O0. v. A. at G. W. R. Co. 34 Ohio St. 450;
Flagg v. Manhattan Ry. C'0. 10 FED. REP. 413.
These adjudications proceed upon the principle, familiar and ele-
mentary in the law of agency, that the same person cannot act for
himself, and at the same time, and in the same transaction, as the
agent of another whose interests are conflicting. If an agent to sell
becomes the purchaser, or an agent to buy be himself the seller, a
court of equity, upon the timely application of the principal, will pre-
sume that the transaction was injurious. Although the honesty of
the agent may be unquestioned, and he may have attempted to exer-
cise scrupulous impartiality as between his own interests. and those
of his principal, it is the right of the latter to repudiate the transaction.
Directors of corporations are its agents, invested with wide powers
and clothed with large discretion; they represent stockholders who
are often practically voiceless in behalf of their own interests; and
they are held to the exercise of the utmost good faith in tl1e adminis-
tration of their trust. They abuse the fiduciary relation which they
~ sustain to the corporation and the stockholders, when they enter into
» contracts in which their private interests_ may antagcnize the inter
zsts 00-rmmit*..cd. to their care. The law does not require the corpv:.