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Savannah & C. R. Co. 43 Ga. 13-67; Kent v. Quicksilver Mining Co. 78 N. Y. 159-191.

These are, both of them, cases in which preferred stock has been issued, and elaborate opinions were delivered by the respective courts, and while in the case first cited the majority of the court held that the directors had power to issue the preferred stock in payment for work done in building the road, yet the court, on page 54, says:

"The question is not whether the directors had power to make it, but whether, after it has been made, after the company has, upon its part, got the benefit of the contract, after the other parties have, upon the faith of it, spent their money, and the company has acquiesced in the act of the directors, either the whole company or a portion of the stockholders can come forward and repudiate the contract ?"

On the next page the court answers the question, and says:,

"Such acts, though directly contrary to the provisions of the charter, if they be authorized by the stockholders or acquiesced in or confirmed, cannot be avoided after third persons have acted upon them."

The case of Kent v. Quicksilver Mining Co. seems to be still more in point, because there the court held, as I incline to hold here, that there was no power in the directors to issue preferred stock. The court say, on page 184:

"But there remains a serious question-whether, though there was at the outstart a minority of the stockholders who gave no assent to the corporate act, there has not been such tacit acquiescence and delay in action by that minority as to amount to indefensible laches and estoppel upon those who constituted it, and their assigns. In our judgment there has, and we find here a safe place on which to rest our decision of these cases."

So much in point here does the opinion in this case seem to be, that I cannot forbear to make a further quotation from page 185, where the court continues:

"For the lapse of four years, however, there was no action of the company or an individual stockholder to have a judicial declaration that the company had exceeded its powers and that it was invalid. We think that these facts, most of which are set forth in the findings of two of the cases, warrant the conclusion of law thereon, that the stockholders, by acquiescing in the action of the corporation in making the preferred stock, have ratified and assented thereto, and the same is binding upon them by reason of such assent and ratification."

Applying these principles to the case at bar, it is clear that whatever might have been the rights of complainant, if he had' promptly and actively sought redress for the wrongs complained of in reference to the issuance of this stock, he cannot now be allowed to disturb the

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contract of his corporation by which the stock was issued, delivered, and paid for over 10 years prior to the institution of his suit.

It is claimed that the law of Alabama is different from this, and that by a line of decision coming down to the case of Chambers v. Falkner, 65 Ala. 451, it has been settled that contracts of corporations which they have no power in their charters to make are void; that the courts cannot enforce them. But none of the cases cited are like the case at bar, in which complainant is not seeking to enforce an executory ultra vires contract, but the case is one of an executed contract, where the party paid his money and obtained his stock, and now stands upon the defensive and says that the corporation with which he dealt and the stockholders of the corporation cannot now rescind the contract. Besides that, this is a question of general corporate law, and even if the supreme court of Alabama has held the doctrine claimed, this court would not be bound by the decision, and at most it would be but persuasive.

Complainant invokes section 3242 of the Revised Code of Alabama, which provides:

"In actions seeking relief on the ground of fraud, where the statute has created a bar, the cause of action must not be considered as having accrued until the discovery by the aggrieved party of the facts constituting the fraud, after which he must have one year within which to prosecute his suit."

Complainant avers in his bill that "he was ignorant of the fact that said stock issued to the Louisville & Nashville Railroad Company was preferred stock, or that it bore interest, and of the terms and contract by and upon which said stock was issued to the said Louisville & Nashville Railroad Company, until the filing of the answers of the defendants to your orator's original bill; and that your orator had no knowledge or notice of any of the fraudulent acts of the said Louisville & Nashville Railroad Company which are averred and charged in your orator's original bill, or of any facts to put your orator upon inquiry, or create suspicion of such fraudulent acts, until within less than 12 months before said original bill was filed." This statute determines that in the class of cases to which it refers the action shall not be considered as having accrued until the discovery by the aggrieved party of the facts constituting the fraud, and the allegation of complainant's bill is that he was ignorant of these facts until the filing of the answers of defendants to your orator's original bill. To bring the allegation within the statute the complainant must mean by saying that he was ignorant of the facts until the filing of the answers, that he then, from the

answers, discovered the facts constituting the fraud. A discovery of facts by an aggrieved party would seem to imply a seeking for knowledge by such party; and the statute certainly was not intended to absolve a party from all effort or diligence to obtain a knowledge of the facts constituting the fraud complained of. The statute was certainly not intended and did not change the rule of equity upon the subject of diligence in such cases, and thus benefit those only who might be willfully ignorant, or who, from carelessness and indifference, should neglect to avail themselves of the means of information upon the subject.

The opinion of the supreme court of Alabama in the case of Porter v. Smith, 65 Ala. 172, upon the construction of this statute, is in accordance with this view. There must, then, be some disposition and effort to obtain a knowledge of the facts, and that is what the law calls reasonable diligence. The question is not simply what facts the complainant actually knew, but of what facts might he have obtained knowledge had he sought it from the natural sources of information which were at his command.

It is held in numerous cases that the means of knowledge are the same thing in effect as knowledge itself. And in the case of Wood v. Carpenter, 101 U. S., the supreme court, discussing not merely the Indiana statute but the general principle as well, say, at page 143: "The circumstances of the discovery must be fully stated and proved, and the delay which has occurred must be shown to be consistent with the requisite diligence." Applying these rules to the case at bar, the conclusion is inevitable that if the complainant did not actually know that the stock issued was preferred stock, he certainly had within his reach the means of knowledge. He was a stockholder in the company. It was incorporated to build and equip a railroad connecting North and South Alabama,-an enterprise of magnitude, involving the expenditure of large amounts of money. It, like other enterprises of the kind, experienced many vicissitudes and difficulties, as the legislation of the state and the public history of the times abundantly show, and it is difficult to see how he could have remained ignorant of the facts of which he complains, if he had used any diligence at all to obtain knowledge in regard to them. He does not say that he was ignorant that two millions of stock was issued to the Louisville & Nashville Railroad Company, but that he was ignorant that the stock issued was preferred stock, or that it bore interest, and of the terms and contract by and upon which said stock was

issued. It is fair, then, to infer that he knew, in the year 1871, that two millions of stock had been issued to the Louisville & Nashville Railroad Company, and he could hardly presume that at that time the stock of the South & North Alabama Railroad Company was worth par, or that any one would take it at par, and it would seem to be a very natural and reasonable inquiry for any one interested in the matter to make, as to the terms upon which this majority of the stock of the company was taken by the Louisville & Nashville Railroad Company.

Ignorance in regard to that matter is consistent only with carelessness and indifference, superinduced perhaps by the idea that the stock was of little value, (for I think that may be fairly inferred from the allegations of the bill,) that it was not worth a serious thought or an inquiry, and therefore no inquiry was made, though the sources of information were not closed, and if applied to would doubtless have disclosed, not only that the stock was issued, but that it was preferred or interest-bearing stock, and that it furnished the means by which the railroad was being built. If that hypothesis is the true one, it repels all idea of relief, such as is sought in this bill, for Lord Camden's maxim in relation to a court of equity must be borne in mind: "Nothing can call this court into activity but conscience, good faith, and reasonable diligence; where these are wanting, the court is passive and does nothing.'

One other point: It is claimed that the statute of limitations does not run here in favor of the Louisville & Nashville Railroad Company as the owner of this stock, because there exists the relation of trustee and cestui que trust. But what constitutes the trust, and who is the trustee, in whose favor the statute does not run? The Louisville & Nashville Railroad Company claims to be the owner and holder of this two millions of stock, and to say that it holds the stock in trust for the benefit of the complainant, or any one else, is a confusion of ideas. We are not dealing now on this nended bill with the property of the South & North Alabama Railroad Company, which is held by the corporation in trust for the benefit of the stockholders of that corporation, and we are not here concerned with the breaches of that trust, which the complainant charges in his original bill upon his own company, and the Louisville & Nashville Railroad Company, which he charges, by virtue of its ownership of a majority of the stock of the South & North Alabama Railroad Company, is enabled to, and, in collusion with the South & North Alabama Railroad Company, is

using and controlling the property and earnings of that corporation in breach of the trust imposed upon it, and in fraud of the rights and interests of the stockholders of the company.

It is a general principle that the property of a corporation is a trust fund for the benefit of the stockholders, in the hands of the corporate body, which is the trustee; but capital stock in the corporation, the certificate or evidence of which is in the hands of its owner, who has paid for it, is neither a trust fund, nor is its owner a trustee; and it is not perceived why statutes of repose do not run to protect the owner in his right to such property, the same as it would in reference to any other class of property.

The result of these views is that the demurrers to the amended bill are sustained.

DOMESTIC & FOREIGN MISSIONARY SOCIETY v. HINMAN and others.

(Circuit Court, D. Nebraska. January, 1881.)

1. CONCURRENT JURISDICTION-RIGHT TO POSSESSION OF PROPERTY.

By the service of a writ of replevin issued from a state court, the property comes into the custody and possession of that court, for all purposes of jurisdiction in that case, and no other court has a right to interfere with that possession, unless it be some court having a direct supervisory control over the court issuing the writ, or some superior jurisdiction in the premises. 2. SAME-REPLEVIN-RIGHT AND TITLE TO PROPERTY.

The question as to whether the property levied on under the writ of replevin is trust property, belonging to the complainant as trustee, or individual property of the defendant, is for the state court to determine in the replevin suit; and it cannot, therefore, be assumed, in determining the question of jurisdiction, that the property is trust property, and that complainant is entitled to it as trustee.

3. INJUNCTION-WHEN NOT TO ISSUE-RESTRAINING PROCEEDINGS IN THE COURT. The circuit court will not issue an injunction to restrain a party from claiming, using, occupying, incumbering, disposing of, or interfering, or in any manner intermeddling, with property which the state court has directed its officers to place in his hands.

Bill in Equity.

J. M. Woolworth, for complainant.

George W. Doane, for respondents.

MCCRARY, C. J. As one of the grounds upon which the respondent moves to dissolve the injunction, it is alleged that the property in controversy was, at and before the time of the commencement of this v.13,no.4-11

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