text:
    Herbert Booth King et al., App’lts, v. Alva E. Davis, Resp’t

      (Supreme Court, General Term, First Department,

      Filed November 30, 1891.)

    1. Corporations—Liability op president por parse representations —Insolvency.
    Plaintiffs contracted to advertise a magazine published by a corporation of which defendant had been manager and was the president, and it was claimed that he falsely represented that the corporation was solvent. It appeared that the only property belonging to the company was the right to publish said magazine, which belonged to another company, and a contract to purchase the same ; that judgment was recovered on a previous debt for fifty dollars, and execution thereon returned unsatisfied, and it was conceded that on the day following the making of the contract with plaintiffs the company was largely indebted. Held, that the evidence showed that the company was insolvent, and that the court erred in refusing a request to so charge. .
    2. Same—Charge.
    The court refused to charge that if the facts proved tended to establish a probability of guilt it was the duty of the jury to find in favor of plaintiffs. Held, no error; that a mere probability of guilt would not require a finding against defendant.
    3. Same.
    Nor is it error to refuse to charge that if defendant failed to make disclosure of the condition of the company upon inquiry being made it would constitute a fraud.
    Appeal from, a judgment recovered on the verdict of a jury, rand from an order denying a motion for a new trial.

      Charles A. Murphey, for app’lts; John Vincent, for resp’t.
   Daniels, J.

The defendant was the president of a company "known as The American Magazine Publishing Company. It was incorporated with a paid up capital of $5,000, and was engaged in the publication of the American Magazine. The plaintiffs’ business was that of advertising agents, and they entered into a ■contract with the company to advertise the magazine in a large number of newspapers, for which they were to be paid by the company in equal instalments the sum of $2,950 on the 20th of January and February, 1889. The contract for this publication was entered into on the 30th of November, 1888, and it was performed by the plaintiffs. But the notes which were given to pay for the advertisements were not paid, and judgments were recovered upon them against the company upon which executions were returned unsatisfied. To render the defendant liable for the payment of this indebtedness, it was alleged in this action that he had fraudulently misrepresented to the plaintiffs the financial condition of the company, and that it was upon those misrepresentations that the plaintiffs were induced to enter into and perform their contract and receive these notes from the company.

To maintain their action they relied for proof of the representations substantially upon their own evidence as witnesses. And the plaintiff Herbert Booth King as to this part of the case testified that prior to the making of the contract for the advertising of the magazine the defendant stated to him that the company had acquired money from a man living in Tarry town amounting to the sum of $15,000, and that it was in a flourishing condition. The other plaintiff, Frederick L. King, also testified that the defendant stated that the company was prosperous and ivas doing an increased business; that additional capital had come into the company from a contribution made by a person who was referred to, but whose name was not given. To prove that the defendant intended to deceive the plaintiffs by the representations asserted to have been made, further evidence was given of other representations made by the defendant, placing the company, if they were true, in a financial condition entitling it to confidence and credit. The defendant himself, as well as another person who was present, at the time of the interview, positively denied the making of these representations. And still others, who were examined as witnesses on behalf of the defendant and related what they stated to be their recollection as to what was said, omitted from their statements these representations. In this respect the case was consequently one for the determination of the jury, even with full effect given to the testimony of the witnesses sworn for the purpose of impeaching the defendant.

A further and equally important subject of proof was the financial condition of the company in whose employment the defendant had been as its manager for several months prior to the time when he became its president To establish its insolvency judgments which had been recovered against the company were produced and read in evidence, upon which executions were issued and returned unsatisfied in the early part of the year 1889. One of these judgments was recovered upon an indebtedness stated to have been created on the 10th of November, 1888, amounting to the sum of $59.50. The summons in the action in which it was recovered was served upon the defendant on the 10th of November, twenty days prior to the time when the contract was entered into for the advertising with the plaintiffs. And judgment by default was entered in that action on the 22d of the same month, the action being in the third district court of the city of New York. And an execution -upon this judgment was returned unsatisfied by the sheriff on the 21st of December, 1888. This recovery, and the return of the execution unsatisfied, was an indication certainly that the company had no property out of which this small amount could be collected by the sheriff.

It also appeared that the company was not the owner of the magazine which its business consisted in publishing, but that it had acquired the right to publish it from another company. On the 20th of November the defendant purchased the stock of this company from Mr. Hazen, who was its preceding owner and the-president of the company. And the defendant was asked, “Did the old company have anything else except its business to transfer at that time ? A. You mean the American Magazine Publishing Co?

“Q. Yes. A. It had nothing but its business; no.

“ Q. What was that ? Merely the right to publish this magazine? A. It had the right to publish and a contract to purchase.” When the defendant purchased the stock of the company from Mr. Hazen he gave him his note for the price. And Mr. Hazen testified that he had loaned and advanced to the company, a part of which money had been used by the defendant, the sum of $15,500. And a note was given to him by the defendant as president of the company for this money at the time when the stock was sold to him, which was the 20th of November, 1888. The defendant did not concede the validity of this indebtedness, although no reason was assigned which should bring it in question. But he did concede that the company was, for other obligations, in debt on the first of December in the sum of from five to eight thousand dollars, and, as he had previously testified, what it chiefly owned was the right to publish the magazine. It appeared further from another judgment which was read in evidence, recovered in favor of the Exchange Printing Company on the 19th of January, 1889, that an execution was issued upon it against the property of the defendant which realized the sum of $449.12, and it was returned unsatisfied as to the residue of $449.27. This was early in February following the recovery of the judgment. And no explanation was given in any form of these facts which would indicate that the company was in a solvent condition on the 30th of November, the time when the contract was made with the plaintiffs. It was neither contended nor shown that it had received any money other than that loaned to it by Mr. Hazen, and paid by him for the stock of the company, nor that it had any other property except the right.to publish the magazine and that which was seized under the execution issued upon the judgment of the Exchange Printing Company. And the evidence together supported the conclusion that the company must have been very largely insolvent at the time when these notes were made and delivered by it to the plaintiffs. And as its business had been -under the management and control of the defendant prior to the time when he became its president on the 20th of November, and was controlled and directed by him after that time, the conclusion seems to be well sustained that he must have known that to be the condition financially of this company.

At the close of the case the counsel for the plaintiffs asked the court “ To charge the jury that the evidence in this action establishes that on the 30th day of November, 1888, when this credit was given, that the American Magazine Company was insolvent.” To that the court responded “ I do not think that there is any such evidence. It is for the jury to say whether they are satisfied that it was solvent or insolvent It is not for me to say. On the evidence it is for the jury to say. I refuse to charge that and leave it for the jury to say whether they are satisfied the company was solvent or insolvent” And the counsel then excepted to the refusal to charge, and to the modifications which were made. The further request was then made “ To charge that such insolvency was then known to the defendant, who was the president of the company, and had chief management of its affairs.” That was .also left to the jury to say whether it was so dr not, and to the refusal to charge this proposition the counsel also excepted. Certainly the first proposition was fully established by the evidence, that the company was insolvent on the 30th of November, 1888, and the plaintiffs had the right to have that charged as a fact in their favor. As to the second the case is not so entirely clear, but at the same time the evidence appears to leave no ground for «doubt but that the defendant must have been well aware of the financial condition of the company at the time when this contract was made. Other requests were made which were refused by the ■court which are not entitled to any substantial consideration, for they embodied propositions which have not and cannot receive the sanction of the law. One of these was, that if the facts proved necessarily tend to establish a probability of guilt, it was the duty of the jury to find in favor of the plaintiffs.

This request was clearly unsound, for a mere probability of guilt would not require the jury to find a verdict against the defendant. What is requisite for that purpose is that the guilt should be established to the satisfaction of the jury by the evidence produced upon the trial. Neither was it error to refuse the request that if the plaintiffs inquired of the defendant as to the condition of the company, and he failed to make the disclosure, that this was a fraud upon them. And the exception taken to what was stated to be a portion of the charge, that if the defendant stated that the company was solvent he was not liable, was not founded in fact, for that was no part of the charge given by the court In this respect, while the charge may have been favorable to the defendant, it was free from all ground of legal exception. But as to the insolvency of the company, that was a fact which was so «conclusively proved as to be free from all possible controversy, •and the charge which was requested on that fact should have been given to the jury. This was an important part of the plaintiffs’ •case, and it may be that the refusal to charge this proposition resulted in the verdict which was rendered in favor of the defendant. For this reason the judgment and order should be reversed and a new trial directed, with costs to the plaintiffs to abide the event.

Van Brunt, P. J., concurs.


source: Caselaw Access Project

author: Van Brunt, P. J.

license: Public Domain

text:
    Edward S. Jaffray et al., App’lts, v. Samuel Goldstone, Survivor, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 30, 1891.)

    1. Discontinuance—Costs.
    Where a judgment in favor of the plaintiff is reversed by the court of appeals and a new trial granted, with costs to abide the event, this includes all costs up to that time, and the plaintiff may properly be required to pay the costs and an extra allowance as a condition of a.lowing him to discontinue.
    2. Same.
    It is improper in such case to direct that the action be dismissed on failure to pay such costs. All that the court can do under those circumstances is to deny the motion to discontinue.

      Appeal from order denying motion for leave to discontinue without costs and giving to defendant an extra allowance, and from order denying motion for re-taxation of costs.

      I. Q. Miller, for app’lts; W. A. Abbott, for resp’t.
   Van Brunt, P. J.

This action was brought to recover a balance alleged to be due to plaintiff from defendant for goods sold and delivered. Judgment was rendered in favor of the plaintiff, which judgment was affirmed by the general term, but was reversed by the court of appeals and a new trial ordered, with costs to abide event, and judgment was entered upon the remittitur. When the case was about to appear upon the day calendar for retrial the plaintiff obtained an order for the defendant to show cause why the action should not be discontinued without costs, or why the plaintiff should not have such other relief as might be just, and staying defendant’s proceedings. The defendant thereupon applied to the same judge who granted the previous order to show cause for an order requiring the plaintiff to show cause why an order should not be made granting the defendant an allowance of five per cent, upon the value of the subject matter involved in the action, and discontinuing the action with costs in favor of defendant against the plaintiffs and vacating the stay to the extent of permitting the defendant to make this motion.

Tiie two motions^ coming on together the court made the following order:

First. That the motion of plaintiffs for leave to discontinue this action without costs be, and the same hereby is, denied.

Second. That on the said motion of the defendant, the defendant is hereby allowed the sum of two hundred dollars ($200) by way of additional costs, said action being a difficult and extraordinary case.

I'hird. That the defendant is entitled to recover of the plaintiffs the full costs which he could tax if the complaint had been regularly dismissed upon a new trial on the merits.

Fourth. That this action be dismissed unless the plaintiffs pay said sum of two hundred dollars ($200) and said costs within ten (10) days after the taxation thereof.

The defendant thereupon taxed his costs, including a trial fee for the first trial, four term fees and the costs of appeal before the general term, to all of which items the plaintiff objected and made a motion for retaxation, which was denied, and from the two orders above mentioned this appeal is taken.

It is urged by the appellant that the granting of costs and extra allowance is adding to the judgment of the court of appeals, and that the sole duty of the special term was to enter exactly the order which the court of appeals directed, and that it-should neither add to nor take away therefrom, and that all that by the judgment of the court of appeals the defendant recovers are costs of the appeal, and not general costs of the action, nor is he entitled to an extra allowance.

In the case of Franey v. Smith, 126 N. Y., 658; 37 St. Rep., 480, to which this court has already had occasion to advert, the court of appeals laid down distinctly what, in their judgment, reversing an order with costs means, and what they intend when they reverse the judgment of the court below and grant a new trial, with costs to abide the event, which is the case at bar. 'They there state, “ where we reverse the judgment of the court below and grant a new trial in either an equitable or legal action, with costs to abide the event, all the costs of the action up to that time are intended.”

Therefore, if the plaintiff had failed to succeed upon a new trial, the defendant would have been entitled to tax all the previous costs, together with the costs of the appeal and the costs of the new trial. Now prior to the actual taking place of the new ¡trial the plaintiff makes an application for leave to discontinue without costs, or for such other relief as he might be entitled to; ¡and the court denied his motion to discontinue without costs, and granted the motion of the defendant for an extra allowance, and found that the defendant was entitled to the full costs, which he could have taxed if the complaint had been regularly dismissed upon a new trial upon the merits, and then that the action should be dismissed unless the plaintiff paid such allowance and costs.

It was undoubtedly the opinion of the court that the plaintiff should not be allowed to retire from this litigation without paying the costs which had accrued, and an extra allowance because of the character of the action.

The court had the right to determine upon what terms the plaintiff should be allowed to do this; and if the plaintiff was not satisfied with the terms, he could either appeal from the order, as he has done in this case, or he could go on with the action, refusing to accept the terms.

That the defendant, upon the dismissal of the complaint, would have been entitled to full costs under the decision we have already referred to, needs no comment; and that where an answer is put in, the plaintiff cannot retire without making himself subject to the payment of an extra allowance, is also equally well settled. And the rule that the motion for an extra allowance should have been made to the judge who tried the case has no application to a ■case of the character now before the court. Without any motion upon the part of the defendant, the court would have been entitled to impose an extra allowance as a condition of permitting the plaintiff to discontinue.

But, although no question in respect thereto has been presented upon this appeal, we do not think the fourth paragraph, of the order appealed from can be affirmed. The court had no power upon this motion to direct that the action be dismissed in -default of the payment of costs. All that it could do under those -circumstances was to deny the motion for discontinuance.

We are of opinion, therefore, that the order appealed from ¡should be modified by striking out the fourth paragraph, and affirmed as to the rest of the order, without costs of this appeal.

Barrett, J, concurs.


author: Ingraham, J.

text:
    Charles A. Leale, Resp’t, v. The Manhattan Railway Co. et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 30, 1891.)

    1. Railroad—Elevated—Freight depot.
    In an action to restrain the operation of an elevated railroad and for damages, the plaintiff cannot recover for depreciation caused by a freight depot established in the building next but one to his premises, where such depot is not in the street or on property subject to plaintiff's easement, and there is no evidence that such use of the building is illegal.
    2. Same—Evidence.
    In such action evidence of the prices at which adjoining property was offered to plaintiff at the time he bought is inadmissible.
    Appeal from judgment entered on the decision of the court at special term.

      Samuel Blythe Rogers, for app’lts; B. F. Dos Passos, for resp’t.
   Ingraham, J.

The plaintiff alleges that defendant has erected, constructed and maintains an elevated railroad and station at the intersection of Eighth avenue and Fifty-third street in front of plaintiff’s premises, an'd they also have established a freight station in a house or building next but one to the plaintiff’s premises and connected the aforesaid railroad station and the freight station by a continuous platform which covers or is built over the whole of the sidewalk, and the complaint demanded judgment that each and both of the defendants be perpetually restrained and enjoined from maintaining, constructing or operating the above described railroad and from maintaining and using the station at the corner of Fifty-third street and Eighth avenue and to recover damages for the loss of rentals caused by the construction and maintenance of such railroad and station.

The court found the construction and maintenance of the railroad and station, and also the following findings:

“ Tenth. That soon after the commencement and operation of said road, the defendants erected and established and still use and maintain a freight depot in the building next but one to the plaintiff’s premises and westerly therefrom, the platform of which said depot extends to within twenty feet of the plaintiff’s house and which said platform completely extends over the sidewalk below, and,

Seventeenth. That. the annual rental value of said premises, by reason of the construction and operation of said railroad and of the depot and freight depot aforesaid, has been diminished in the sum of $600, and that the fee value of said premises, for the same reason and cause, have been diminished in the sum of $6,500,” and, as conclusion of law, that plaintiff is entitled to recover from defendant the depreciation of the rental value of said property, and that plaintiff is also entitled to recover from defendants damages in the sum of $6,500, for the depreciation of the fee value of the said premises, and that plaintiff is entitled to an injunction restraining them from operating and maintaining the structure and railroad, running cars and engines and operating the same in front of plaintiff’s premises, and judgment was entered whereby plaintiff recovered from defendant the sum of $10,720.10, being the amount of the damage to the rental value to the premises with interest and costs, with an injunction restraining the operation and maintenance of the railroad in front of plaintiff’s premises unless the defendants pay to the plaintiff the sum of $6,500, the amount of the depreciation of the. fee of the plaintiff’s premises.

The damage thus caused to the plaintiff’s property is found by the court to be caused by the maintenance of the elevated railroad and the depot and freight depot. Such freight depot has been found to have been established in the building next but one to the plaintiff’s premises. It is not in the street or upon any property that is subject to plaintiff’s easement. There is no evidence in the case to show, nor is there any finding, that the employment or use of this building for a depot was illegal or interfered in any other way with plaintiff’s rights or property.

It is impossible for us to say how much of the total damage to the rental value of the propert}^ was caused by the maintenance and operation of the railroad structure in the street, and how much was caused by the maintenance of the depot in the building on the street, or how much of the $6,500 found by the court as the depreciation of the fee value of the property was caused by the elevated railroad structure or the depot.

So far as appears, the defendant who maintained the depot in the building had as much right to use its property for that purpose as the plaintiff had as to his property, and upon no principle can plaintiff recover damages caused to his property by reason of the use of the house or building for a depot either by the defendant or any other corporation.

Hor do I think that there is any evidence to justify the finding that this defendant maintained or operated the said depot.

While the denial of the allegation as to the maintenance and operation of the depot is not very specific, I think it is sufficient to raise an. issue' as to whether defendant, had established and maintained such freight depot in the building, and the fact conceded by the defendant on the trial that freight and baggage was taken at Ho. 243 West Fifty-third street from the platform and put into a baggage car of the elevated railroad, and that it is hauled by an engine of the elevated railroad eight or ten times a day; that the car is laden and unladen there, and that the Manhattan Eailroad derives a revenue from that business, with the limitation to such admission that it was not admitted that either of the defendants was concerned with the handling of the baggage or freight at that place upon their cars, is not an admission that the depot is operated and maintained by the defendants, and the testimony introduced by defendants shows that such depot is not maintained by the defendants, but another corporation known as the N. Y. City & Northern R. R. Co.

Plaintiff on the trial testified that at the time he purchased the property in question he made inquiry as to what neighboring property was held at and as to efforts to purchase neighboring property in Fifty-third street immediately contiguous to his own. property.

He was then asked this question. “ Q. Did you ascertain at-that time what the property was held at ? ”

That question was objected to by the counsel for defendant, as-irrelevant, incompetent, immaterial and hearsay. The objection was overruled, to which the defendant excepted, and the witness answered “ I saw the owner of the property 235, a similar house to mine, and after seeing him two or three times, the lowest price he would take for his house was $23,000.

Counsel for defendants then objected to the answer and moved to strike it out on the ground that it called for the opinion of the-witness, and also on the ground that it is hearsay. The motion was. denied, and evidence admitted to which the defendant excepted,, and the witness continued his answer: “No. 237 was offered to-' me for $21,000,” and the plaintiff was subsequently allowed to-testify to interviews with the owners of both houses, 235 and 237,. and offers made to him for the sale of such houses, and the counsel for the defendant then objected to all of the foregoing questions and answers, and the court admitted the same, to which the defendant excepted.

We think this evidence was all inadmissible and should have-been excluded by the court.

See case of Keller v. Paine, 34 Hun, 167, and cases there-cited.

Without passing upon the other questions raised, for the reasons before stated the judgment must be reversed, new trial ordered, with costs to appellant to abide the event

Van Brunt, P. J., and Daniels, J., concur.


author: Daniels, J. Van Brunt, P. J. Barrett, J.

text:
    John A. McNab, App’lt, v. The McNab & Harlin Mfg. Co. et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed November 30, 1891.)

      1. Manufacturing companies—Dividends—Surplus.
    The amount of a dividend and the extent of the surplus which the interests of the company require to be retained rests in the discretion of the trustees, and where they act in good faith they cannot be compelled at the suit of a stockholder to distribute such surplus.
    2. Same—Ultra vires.
    The business of the corporation was the manufacture and sale of brass-work. In connection therewith they also bought and sold iron pipe, and used the surplus for that purpose. Held, that a stockholder who did not object thereto and received his share of the profits made by such transactions could not be heard to claim that they were ultra vires.

    3. Same.
    The company had also loaned money to a railroad company, and sold rails to it. The president of the company offered to assume the transaction himself, and charge himself with the indebtedness so incurred, but the objecting stockholder would not consent thereto. Held, that he was thereby deprived of all right to object thereto.
    4. Same—Improper investment.
    A single past transaction in the investment in government bonds to-avoid taxation, which resulted in a loss, will not authorize the interference of a court of equity.

      5. Same—Increase of salary.
    Where the administration of the directors and officers of a company has • been eminently successful, and the company enjoys a high degree of prosperity, in the absence of proof of a preconcerted plan, the action of the board in increasing the salaries of the officers, none of them voting on the resolution in favor of himself, is not illegal.
    (Daniels, J., dissents.)
    Appeal from a judgment on trial at the special term.

      Artemus V. Smith, for app’lt; Frederic R. Coudert and Frederic G. Dow, for resp’ts.
   Daniels, J.

The McNab & Harlin Company, defendant, was incorporated on or about the 28th of April, 1871, under the laws of this state providing for the incorporation of manufacturing companies. Its business was declared to be that of manufacturing brass and iron goods for sale, and since its incorporation it has carried on that business. The plaintiff was the owner of eight shares of its capital stock, which consisted of 150 shares of $1,000 each, and the other defendants were officers and shareholders in the company. After its formation and in or about the year 1877 the company became unable to pay its debts, and a proceeding in bankruptcy was instituted to discharge it from its debts. Soon after the proceeding was commenced, the defendant Harlin became the president of the company. He owned seventy-eight shares of its capital stock and compromised the debts owing to the creditors of the company. The agreement for the compromise was to pay seventy-five per cent within the period of three years. After he took charge of the affairs of the company as its president, and under his management, the business became prosperous and the seventy-five per cent was paid to the creditors, and afterwards they were paid the additional sum of twenty-five per cent, making payment of their demands in full. The prosperity of the company continued, owing to the judicious management of the president, and for eight years prior to the time of the trial, which took place in May, 1891, its net profits amounted to the sum of $100,000 a year, or a sum slightly in advance of that amount, and from the year 1881 to the year 1891, it made and paid a dividend on its shares amounting to an average exceeding the sum of twenty-five per cent; and in addition to the dividends made in this manner, it accumulated a large surplus, which was mainly used in its business, but to the extent of $100,000 was in its deposit accounts. And it was stated by the treasurer in his evidence upon the trial that there was at that time an actual surplus owned by the company amounting to the sum of $152,209, and the plaintiff, whose action was brought to secure the distribution of the surplus by way of dividends, alleged and claimed that a still larger surplus had been earned and was owned by the company; and. it was one of the principal objects of the action to secure the -division of this surplus by way of dividends among the shareholders.

But, it was proved in the course of the trial that the surplus maintained by the company was profitably employed in purchasing the material used by it in the course of its manufactures, and that it was considered for the best interests of the company not to divide this surplus among the shareholders. The directors in restricting the dividends as they did, seem to have been impressed with the propriety of this conviction, and the dividends were accordingly limited to such amounts from year to year as did not intrench upon the large surplus which had been earned and secured. In their action upon this subject the trustees appear to have exercised the judgment which they deemed to be-most consistent with the prosperity and maintenance of the interests of the company, and the statute under which the incorporation took place delegated the authority of the trustees to manage the stock, property and concerns of the company, 2 R. S., 6th ed.r 503, § 29; and to what amount the dividends shall be made and the extent of the surplus which the interests of the company may require to be retained are within this delegation of authority confided to the trustees. And it was so regarded in Williams v. Western Union, etc., Co., 93 N. Y., 162, where it was said, with the apparent approval of the court, that “ When a corporation has a surplus, whether a dividend shall be made, and if made, how much it shall be, and when and where it shall be payable, rest in the fair and honest discretion of the directors, uncontrollable by the courts.” Id., 192. And no broader principle than this was-either stated or sanctioned in Scott v. Eagle Fire Co., 7 Paige, 198, or in either of the other authorities which have been brought to-the attention of the court. The principle to be applied is that which shall secure the observance of good faith on the part of the directors, and this principle was neither denied nor intrenched upon in Seeley v. N. Y., etc., Bk., 8 Daly, 400, which, was affirmed in 78 N. Y., 608.

The trustees are chosen by the shareholders to exercise their best judgment, depending upon their knowledge of the affairs and' condition of the company, and when that has been done, the-courts do not undertake to control their action, although they might differ in their views of the proper management to be adopted and followed. No reason has been disclosed by the case for doubting or impeaching the good faith of these trustees. Neither can it be affirmed justly, in view of the large business carried on by the company, that they acted unreasonably or capriciously in declining to order a larger dividend than that which was in fact, paid to the shareholders.

It appeared by the evidence that the company during the time it had been engaged in business, and the partnership which preceded it, had dealt in iron pipe. This pipe was purchased by it and sold in the course of its business, and it ordinarily had on hand iron pipe of the value of about thirty thousand dollars. This iron pipe was purchased and sold by the company as an adjunct to its business of manufacturing and selling its brass work; and it was considered by the persons in charge of the affairs of the company that it was judicious to unite the sale of the iron pipe with the brass work for the purpose of fulfilling the orders-received by it, and completing the purchases made by its customers. The evidence proved the fact to be that the sale of the-brass work and the iron pipe went very much together and that, the pipe became necessary to fill the purchases of the company’s customers; and it was stated in the evidence of Mr. Karlin, the president of the company, as a witness for the plaintiff, that this course of dealing was never objected to by the plaintiff in this suit; and that a large part of the profits of the company was derived from the sale of the iron pipe, and that no losses had resulted to the company from its dealings in this manner.

And these facts apparently deprived the plaintiff of the ground of complaint made by him against the officers of the company for dealing in this manner in iron pipe. Whether the dealings in the iron pipe were beyond the powers of the company as it was< incorporated it is not necessary to inquire, for the reason that the acquiescence of the plaintiff in this part of the business, and the acceptance by him of the profits derived from it through the dividends made and received by him, and which has not been denied by his evidence, preclude him' from maintaining this part of his action. Holmes v. Willard, 125 N. Y., 75 ; 34 St. Rep., 455. As to these dealings, he has no standing in court which will enable him to restrain the company from their continuation. They have been carried on with his implied approval too long, and the advantages from it have been enjoyed by him in too many instances, to permit him to question the propriety of this part of the business.

It further appeared by the evidence that the Sumpter & Charleston Railroad Company has become indebted to the McHab, etc., Company in the sum of about $104,000 for moneys which had been loaned to the president of the company when it existed under another name, and for rails and fastenings which had been sold by the McHab Company to the railroad company; and this was made a part of the plaintiff’s action for the reason that the McHab Company had no authority to loan money in this manner or to participate in the sale of railroad rails and fastenings. And, in this respect the plaintiff appears to be correct in the position taken in his behalf for the maintenance of so much of the action. But it appeared on the part of the defense, in answer to-this part of the case, that Mi: Karlin, the president of the company, had offered to take the bonds and stock obtained from the-railroad company for this indebtedness on his own account, and to charge himself with the amount of the indebtedness.

That was stated to be sufficiently secured to render the indebtedness good, and no evidence was given which proved the fact to be otherwise; but the plaintiff did not consent to this disposition of the bonds and stock of the railroad company. He did not agree that Mr. Karlin should take them and pay the company the amount of this indebtedness ; and after failing to accept this proposal, which would have thoroughly protected the McHab Company against loss, he was deprived of all ground of complaint as to this part of the case. Ho more could be required than that the officer, through whose management this indebtedness had been created, should take the debt from the company and reimburse it to the extent to which its moneys had been used in the creation of the debt. As to this part of the case the plaintiff’s action has accordingly failed.

In 1887 the company purchased $350,000 of United States bonds and retained them for a period of a month or upwards, when they were sold at a loss of about fifteen hundred dollars, and this purchase is made a substantial ground of complaint by the plaintiff in support of his action; but the evidence indicates the fact to be that these bonds- were purchased to avoid taxation upon the surplus owned by the company, and that they were used for that object. The law permitted the bonds to be purchased, as they were exempt from taxation, to protect the company against the payment of taxes to that extent. The transaction accordingly was not an unlawful one, although it resulted in failing to realize a profit to the company. But the purchase of these bonds, as well as the dealings with the South Carolina Railroad Company, were completed prior to the time of the commencement of the plaintiff’s action, and it was not averred that there was any disposition on the part of the company, or of its managing officers, to make a similar purchase in the future, or to increase the indebtedness owing to the company from the railroad company. Those were past transactions, and there was nothing of them left which required correction in any respect by the plaintiff’s action. If the company had threatened to continue these dealings, to extend those with the railroad company, it would have been entirely proper for the plaintiff to intervene by his suit to prevent that repetition; but it does not appear, either by the pleadings or the evidence, that there was any intention on the part of any person to repeat these dealings, and they, therefore, supplied no foundation for the plaintiff’s suit, which is an action in equity.

At the meeting of five of the trustees in May, 1887, resolutions were proposed and adopted increasing the salary of Mr. Harlin, the president, from $5,000 to $16,000, and of the defendant Kyle from $2,500 to $6,500, and of the defendant Macloy from the sum of $1,800 to $3,200, and also making an increase in the salary of the defendant Fifield, but which, however, was not objected to by the plaintiff; and creating a salary in favor of the defendant Merriam in the sum of $700. The resolutions providing for these salaries were adopted by four of the trustees, being a majority of the six trustees of the company, voting in favor of each of the resolutions, but neither one of the trustees voted for the resolution by which he himself was to be benefited. But as the resolutions came up for consideration, the other trustees who were present voted for the adoption of each resolution. Each one of the five trustees was present at the meeting where the resolutions were proposed and adopted, and the unanimity with which they were adopted is consistent with no other view of the facts than that it had been arranged before the resolutions were proposed that they should be proposed and adopted in favor of each one of the five trustees in this manner, and that each of the four trustees voted for the resolution in favor of the other trustee upon the understanding that a similar vote was to be given upon each resolution providing for the salary of each of the other trustees; and after the adoption of these resolutions, the salaries as they were so provided were paid to and received by these trustees. If each resolution had been voted for by the person intended to be benefited by it, the proceeding would have been unauthorized and illegal. Butts v. Wood, 37 N. Y., 317; Paine v. Irwin, 16 Hun, 390; Wardell v. R. R. Co., 103 U. S., 651; Atlanta, etc. Co., v. Andrews, 120 N. Y., 58 ; 30 St. Rep., 263 ; 8 id., 157. And, in judgment of law, the ease would be precisely the same if the trustees, as they appear to have done, agreed before the vote was taken that the votes should be given in this manner, and that all the trustees who were present except the one whose salary was to be provided for should vote for each of these resolutions. The-agreement was the same in its effect as it would have been if each of the five trustees had voted for each of the five resolutions, and that the law would not sustain them in doing, for a trustee of a company cannot by his own vote benefit himself in this manner, and whether the vote was given in form, or its result was provided for in a preceding agreement could not change the case. These resolutions were, therefore, unauthorized, and all the persons benefited, even though they received no more than they were entitled to have, with the exception of the treasurer, are liable to refund the excess received under the authority of the resolutions to the company.

The plaintiff first discovered at the meeting in 1888 that these-salaries had been advanced and provided for in this manner, and then he protested and objected to the changes which had been made, and, so far as his action has been brought to set aside these-resolutions and to avoid the salary and the increased salaries which they provided for, the action seems to have been well founded; and, as the facts all appear in the conclusions reached by the court, the judgment in the case should be so far modified as to declare these resolutions unlawful and to require the officers who have received the additional salaries under them, with the exception of the treasurer, and also to require of Merriam, to return the moneys received by them under the authority of the resolutions, to the company, and with that modification the judgment should be affirmed, but inasmuch as this is no more than a small portion of the object of the plaintiff’s action, and it cannot be sustained in other respects, the modification ■ should be without costs.

Van Brunt, P. J.

I dissent from the conclusion of Mr. Justice Daniels that the judgment in this case should be modified. There is no evidence whatever that the salaries proposed to be paid were in the slightest degree excessive.

The administration of the present officers of the company had been eminently successful, and merely because they were directors of the company they are not precluded fr«m being reasonably paid for their services. I think that the judgment should be affirmed, with costs.

Barrett, J.

I concur with the presiding justice. There was not a particle of evidence that the resolutions increasing the salarles were the result of a combination of any kind, fraudulent or innocent, or of pre-concerted action upon the part of the trustees. These resolutions were adopted by trustees who were themselves stockholders and who owned nearly the entire capital stock of the company. In fact, the plaintiff owned but eight shares out of one hundred and fifty, and he was the only complaining stockholder. It is difficult to believe that his complaint on this head was made in good faith. For it is entirely clear from the testimony that he believed that the president was most inadequately compensated, and that that officer’s salary should be largely increased. If the action of the trustees, under all the circumstances of this case, was in this particular illegal, then it is impossible legally to afford adequate compensation to the officers of a corporation, where an inadequate salary has once been fixed. The plaintiff’s objections on this head are not only untenable but are seemingly made in a spirit of mere antagonism to the trustees, resulting from differences of opinion as to the dividends which it has been deemed wise to declare and also from other differences of opinion as to the proper management of the company. The manner in which this company has been lifted from bankruptcy into prosperity and its splendid condition to-day furnish a complete justification of the course pursued by Mr. Harlin and afford conclusive evidence of the good judgment of the trustees with regard to all other matters complained of. These facts should protect them from attacks founded upon mere personal feeling.

The judgment should be affirmed, with costs.