The directors were elected at 12 o'clock on the day; organized at 3 o'clock, and voted to sell out the entire railroad and all its property, rights, privileges and franchises, and abolish the corporation. in less than fifteen minutes after they were organized as a board.

Second, we have shown that directors are trustees for the stockholders—not for a majority of them, but for all of them—and, if they accept the office of trustees, they must perform the duties of that office with honesty and fidelity; and if they do not they must abide the consequences.

Ten or twelve millions of dollars worth of trust property is not to be trifled with, with impunity, or be used for the private ends of any man, or set of men, however cunning, or however attractive or remunerative their scheme may be made to appear.

The annals of jurisprudence do not, we believe, furnish a more reckless and utter disregard of the rights and interests of stockholders than these men displayed; and there must be an immense chasm in the law if they are not amenable to its stearnest judgments and decrees.

Now, the same persons who were elected to manage and control the property for the stockholders, and who were in fact their trustees, had no sooner assumed office than they did, in violation of their duty and of all their obligations, sell out the entire property, and then walked off.

In the case of N. Y. Central Ins. Co. v. National Protection Ins. Co., 20 Barb. 470, the court said

"The rule is now well settled, both in England and in this country, that such a contract is voidable in a court of equity, at the election of the principal. The principle is illustrated in the case of an agent employed to sell. If such agent became himself the purchaser or agent of another, or if he be an agent to buy, and he become himself the seller, or the agent of another in making the sale, the principal may avoid the sale or the purchase, in equity. If he came to the court under a timely application, upon the fact being alleged and proved, the court will presume the transaction was injurious and consequently fraudulent; and this presumption cannot be disproved, unless it can be shown that the principal

was furnished with all the knowledge the agent possessed— gave him previous authority to become purchaser and seller, and afterwards assented to such purchase or sale. (Campbell v. Walker, 5 Ves. 678; 1 Ves. Jr. 278; Massey v. Davis, 2 Id. 317; 1 Russ. & Mylne, 58; 2 Myl. & K. 819; Story on Agency, §§ 9, 192, 211, 214, 210; Dunl. Paley on Agency, 33, 34; 1 Mason, 341; 6 Pick. 196; 2 Johns. Ch. 252; 5 Id. 388; Hopk. Ch. 515; 9 Paige 237, and a large number of other authorities cited.) The rule seems to be founded on the danger of imposition in such cases, and the presumption which a court of equity indulges of the existence of fraud which is inaccessible to the eye of the court, and consequently in equity such agreements are regarded as constructively fraudulent. (9 Paige 242; 4 Kent's Com. 438, 3d ed.) The rule is a settled one, and the presumption is a reasonable one, in a court of equity. The principal, in fact, has bargained for the exercise of all the skill, ability and industry of his agent, and he is entitled to demand the execution of this in his own favor. (Pars. on Cont. 74, 75.) When the agent, unbeknown to his principal, is acting equally in behalf of the other party, the presumption is not an unreasonable one. This principle, however, like the one that a trustee cannot be the purchaser of an estate, is a mere rule of equity. If the proper forms have been observed, the conveyance is good at law, and the title passes. The contract is not void but only voidable. (5 Met. 467; 5 John. 43, 48, and a large number of other authorities cited.) The rule of which we have been speaking is applicable to all persons placed in situations of trust or confidence with reference to the subject matter of the contract, and embraces trustees, executors, administrators, guardians, agents and factors, attorneys, solicitors, &c. It embraces all who come within the principle."

In Abbot v. American Hard Rubber Company, 33 Barb. 593, ALLEN, J., says

"No principle is better settled than that a person having a duty to perform for others cannot act in the same matter for his own benefit. A trustee cannot, directly or indirectly, by himself or through the agency of another, become the purchaser of the trust estate. Neither can he purchase an interest in property, and hold

it for his own benefit, when, in respect to such property, he has a duty to perform inconsistent with the character of a purchaser on his own account. Van Epps v. Van Epps, 2 Paige, 537. Hawley v. Cramer, 4 Cowen, 717. Slade v. Van Vechten, 11 Paige, 21. De Cartes v. Le Bay de Chamont, 3 ib. 178. It requires no authority to establish the fact that the directors of the American Hard Rubber Company could not have transferred the property of the corporation directly to themselves, or to a corporation in which they were stockholders and directors. That is, they could not act as buyers and sellers in the same transaction, whether they acted in their individual capacity, or as the directors of two trading corporations. [N. Y. Central Ins. Co. v. Nat. Prot. Ins. Co., 20 Barb. 468.] This rule of restriction upon the powers of the trustee invalidates every indirect, as it does every direct, transfer to himself, or for his benefit; and the intervention of a third person as a means or channel, by and through whom, the title is transferred from the cestui's que trust, and eventually rested in the trustee, will not uphold the transaction and sustain the title of the latter. Courts will look through the means to the end, and apply the proper remedy for the breach of trust. If the circumstances clearly show that the two transfers constitute but one transaction, they will be treated as parts of a single transaction, together perfecting a transfer from the trustee qua trustee to himself individually.

When the thing transferred does not rest in the possession of the first transferree, but it is immediately by him passed over to the trustee, for his benefit, or to an association represented by him, in whole or in part, the law will hold it to be a transfer in violation of the trust.

The rights of cestui's que trust require in such cases that the law should presume that the intermediate taker of the property was but the agent and instrument of the trustee-a means of conveyance. The contrary of the presumption ought not to be proved, or even alleged. It would be unsafe to uphold a transfer under such circumstances, for the want of express proof of the actual intent of the parties, from the facts or upon their oath, that the repurchase of the trustee was an after thought. When the title remains in the intermediate grantee but for a moment, or a very brief period of

time, and is at once transferred to the trustee, or for his benefit, the presumption that the two transfers were only intended to effect the one object, that of conveying the property to or for the benefit of the trustee, is as strong as is the malicious intent to kill from the deliberate use of a deadly weapon. This rule of law which makes certain cases of presumptiou conclusive, merely attaches itself to the circumstances when proved, it is not deduced from them. It is not a rule of inference from testimony; but a rule of protection as expedient for the public good.

There were only two entire days, exclusive of the Sunday intervening, for accomplishing the whole thing. It would be wrong to permit the presumption of intent attaching to these circumstances to be overcome by any amount of evidence. If it could be, stockholders would never be safe against the acts of faithless trustees. But it is not necessary to comment upon them. The experiment of the acting trustees in the two hard rubber companies has the merit of boldness as well as originality. Three of them marched out of the old company, laden with spoils with which they enriched themselves as stockholders of the new, and it cannot be that their wronged and injured associates are remediless. The plaintiff is entitled to the relief demanded, and an injunction and receiver are necessary to the preservation of the property, and the protection of his interests, pendente lite.

Neither the directors nor a majority of shareholders in any corporation can abolish or annihilate it.

In Wheaton et al. and the Trustees of the First Congregational Society of Syracuse v. Gates et al., 18 N. Y. 395, which was an action to set aside a certain order of the County Court, purporting to authorize the sale and conveyance of the church edifice and lot of the society, and to direct the distribution of the proceeds of such sale among the individuals composing the society, the court "The trustees had no authority to distribute the property of the society among its individual members, or any class of them. Their duty was to preserve and administer it in the promotion of the purposes for which the corporation was created. The court could not, according to the statute, approve of a plan for any application of the moneys arising upon a sale, ex

say:

cept one which was considered to be for the interest of the society, as an association, which was to continue organized for the purposes of its creation. There is a sense in which it might promote the interests of the individuals composing this religions organization, to dissolve their connection and establish new relations, but this is not what is meant by the statute. It was not in the power of the trustees, or a majority of the members of the society, or the County Court, or of all these authorities together, to abolish the corporation, or dissolve the society. If every individual having any interest in the matter should concur, it might be done; because there would be no one to question the act. But while any number of the members desire to continue the connection, all the others can not, by their own act, dissolve it."

In the case of Abbott v. American Hard Rubber Company, 33 Barb. 580, which was an action brought by one of the stockholders of the company for himself and others, to have an entire sale of the company's property by the directors, declared to be fraudulent and void

SUTHERLAND, J., in granting an injunction at special term says: "I do not think the directors, even with the consent of a majority of the stockholders, had a right, as against stockholders not consenting, thus, in effect, to discontinue its existence and defeat the object of its organization. I must assume, that these directors were chosen to manage the business of the corporation, and not to destroy and end it." He further said, that the democratic or representative principle does not apply to an act or acts of the majority inconsistent with the continued existence of the corporation, and the very object and purpose for which it was organized; nor does a stockholder consent to such acts by becoming a member, because the law does justify them; and to support the principle on which he holds the sale in question void for want of authority, he cites a large number of authorities on page 584.

In Abbott v. American Hard Rubber Company, 33 Barb. 591, ALLEN, J., says: "And can a board of trustees, at their option, thus compel their principals, the corporators, to change their busi