Case ID: ohio-st_18/html/0169-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Goodin and Samuel H. Goodin v. The Cincinnati and Whitewater Canal Company and others.
    1. The owner of land, who stands by, without objection, and sees a public railroad constructed over it, can not, after the road is completed, or large-expenditures have been made thereon upon the faith of his apparent acquiescence, reclaim the land, or enjoin its use by the railroad company. In such case there can only remain to the owner a right of compensation.
    2. As a general rule, the property of a corporation is a trust fund, for the-benefit of its creditors and stockholders, and they may, in all cases where it has been fraudulently or wrongfully disposed of by the directors, pursue it into the hands of purchasers with notice, and assert their lien upon it, or their claims for its value.
    3. A railroad company having purchased a majority of the shares of stock in-a canal company, elected for the latter a board of directors who were in the¡ interest of the railroad company, and then, with the assent of said board, appropriated the entire canal and property of the canal company as a railroad track, paying therefor a price or compensation which was agreed upon-by the directors of the two companies, but which was far below the actual value of the property. Held, that although the stockholders and creditors of the canal company can not, after the road has been completed, reclaim the-property, or enjoin its use, yet they are not concluded by such agreement, so far as regards the price of the property, but may, by action, compel the railroad company to account for its additional value.
    
      4. The rule of valuation in such cases is what the interest of the canal company was worth, not for canal purposes merely, or for any other particular use, but what it was worth generally, for any and all uses for which it might be-suitable.
    Error to the court of common pleas of Hamilton county. Be-served in the district court.
    The Cincinnati and Whitewater Canal Company was incorporated; in 1837, under a local act of that date (55 Ohio L. 393), and soon thereafter constructed its canal from Cincinnati to the Indiana state-line, near Harrison.
    *The Indianapolis and Cincinnati Eailroad Company was [170' subsequently chartered under the laws of Indiana, and constructed its road from Indianapolis to a point at or near the said western-terminus of the canal.
    Prior to 1862, the latter company used the Ohio and Mississippi Eailroad for transportation of its cars from that point to Cincinnati-But, in 1862, desiring to have an independent approach from Harrison to Cincinnati, the said Indianapolis and Cincinnati Eailroad Company, by its officers and agents, took stock in and organized a. new railroad company, under the laws of Ohio, by the name of the-Cincinnati and Indiana Eailroad Company. The object of this-movement was to obtain control of the canal, and convert it into a railroad track. As means to this end, the two railroad companies,, acting through their common president, Henry C. Lord, bought up, at nominal or very low rates, more than half the stock of the canal, company, and with the power thus acquired, reorganized its board of directors, putting in place of the old directory members who-were in the interest of the railroad companies, with Mr. Lord at their head as president, who thus became president of all three of the companies.
    A formal proceeding was then had before the probate judge of Hamilton county, at the instance, or rather in the name, of the Cincinnati and Indiana Bailroad Company, against the canal company, for the condemnation of the canal, its bod, embankments, fixtures, ■rights of way, grounds, etc., as a track, and for the uses of the new railroad company. In this proceeding, by agreement of jDarties, that is, by agreement of the two boards of directors thus constituted, a jury was dispensed with, the amount of compensation and -damages fixed at fifty-five thousand dollars, and the property condemned to the use of the Cincinnati and Indiana Bailroad Company.
    ■ At the time of this proceeding, the canal company was, as it still 'is, largely in debt. It had executed for the security of its creditors three several mortgages upon its entire property. These mortgages -were then in suit in the district court of Hamilton county, at the instance of the mortgagees, in an action entitled L’Hommedieu et al. v. Cincinnati and Whitewater Canal Company. In that action, an 171] interlocutory order had *been made for the sale of the canal -and appurtenances, and under this order the property had been appraised at $55,000, the same amount so agreed upon by the parties to the condemnation proceeding. It seems the railroad companies, acting through Mr. Lord, their president, had also bought up, at nominal or very low prices, a controlling amount of the mortgage debts represented in the action, and, thereupon, had procured a •stay of proceedings under the interlocutory order of sale, and an order of the district court, placing said sum of fifty-five thousand dollars in the hands of Mr. Lord, as receiver in the case, in lieu of the canal property so ordered to be sold. Mr. Lord, thereupon, as president of the Cincinnati and Indiana Bailroad Company, drew his check upon the funds of the company in bank for the $55,000, -and delivered the check to himself, as receiver in the case, for the benefit of the mortgage creditors, and thus paid to the canal com.pany the amount of the condemnation money.
    Immediately after these proceedings of condemnation, the Cincinnati and Indiana Bailroad Company took possession of the canal, •and proceeded to lay its road upon the banks and bed thereof, and -to appropriate its entire way, basins, bridges, tunnels, aqueducts, -and other fixtures, to the use of its railroad; and the canal was utterly abandoned and despoiled as such, the canal company from ¿that time ceasing to exorcise any control over the property.
    In December, 1864, after the Cincinnati and Indiana Bailroad Company had completed its road, with depots, machine-shops, turntables, and other necessary fixtures and appendages, at an, aggregate cost of over a million of dollars; and after the same had been equipped and put in running operation, and permanently leased to-the Indianapolis and Cincinnati Railroad Company, the plaintiffs, James and Samuel Goodin, who are owners of some of the stock, as ■ well as of part of the debts of the canal company, filed their original petition in this case, making the three corporations, as well as some of their individual officers, who took an active part in the proceedings complained of, parties defendant. The plaintiffs ask that the pretended sale or condemnation of the canal property may bo set aside as a fraud upon the minority *of the stockholders and [172 creditors who did not participate therein; that the railroad companies maybe enjoined from further using the line and fixtures of the canal for railroad purposes; or, if neither of those remedies cam-be granted, then they ask that the two railroad companies may be adjudged to hold the property as trustees, and compelled to account for the full value of the same to the canal company, or to its stock- - holders and creditors ; and for other relief.
    On the hearing in the common pleas, the court held the proceedings of condemnation to bo valid, and .that the plaintiffs were not entitled to any relief, and their petition was accordingly dismissed. A bill of exceptions, taken by the plaintiffs on the hearing, sets- ■ forth all the evidence in the cause, and shows that a motion of the ■ plaintiffs for a new trial, predicated upon the alleged ground that the finding of the court was against the law and evidence, was overruled.
    By the testimony sot forth in the bill of exceptions, it appears - that the canal property so condemned, at the time of its appropriation, was of little, if any, more value, to be used merely as a canal, than the sum agreed upon, to wit, the sum of $55,000; but that for • railroad purposes, or for general purposes, it was worth a much larger • sum. The witnesses, however, who put this high estimate upon the value of the property, do so upon the supposition or conviction, that the abandonment of the canal did not work a reversion of the property, or right of way, to the original proprietors, but that the same could lawfully be transferred by the canal company, or condemned in its hands for the uses of a railroad. The bill of exceptions also ■ shows that testimony offered by the plaintiffs to prove the value of the property for railroad purposes, or for general purposes, and not-■merely for the uses of a canal, was refused by the court, and that -the plaintiffs excepted to the order of refusal.
    A petition in error to reverse the judgment of the common pleas •was filed by the plaintiffs in the district court, and has been reserved .-.■for decision here.
    The assignments of error are, substantially that the court erred:
    1. In rejecting the testimony so offered by the plaintiffs.
    *2. In refusing a new trial.
    3. In dismissing the plaintiffs’ petition, and refusing the relief nought.
    
      T. W. Bartley, for plaintiffs:
    The nature of the case is such that it falls peculiarly within the equity or chancery jurisdiction of the court; and to that jurisdiction .are the questions arising here submitted.
    The stock and property of a corporation are deemed, in equity, a trust fund in the hands of the directors of a private corporation, for the'payment of the debts of the company. And the creditors of the corporation have a lien in equity on this property; and in case of wrongful disposition or misapplication of the property by the directors, the creditors may follow the property, and reach it in the hands of other parties to whom it has come with notice. 2 Story’s Eq. Jur., secs. 1252, 1257, 1258 (note 2) ; Mumma v. The Potomac Company, 8 Pet. 285 ; Adams’ Eq. (marg.) 142, 143; Collins v. Champ’s Heirs, 15 B. Monroe, 118.
    This doctrine of resulting trusts has been extensively applied in the case of creditors, where transfers of property have been made in fraud of creditors. See note on page 33 (marginal) of Adams' Eq., and cases there cited; Oliver v. Piatt, 3 How. U. S. 333; Bonsall’s Appeal, 1 Rawle, 266; Wallace v. Duffield, 2 Serg. & Rawle, 521; Wallace v. McCollough, 1 Rich. Eq. 426; Ex parte Houghton, 17 Ves. 253.
    The doctrine that the directors of a corporation are to be treated as trustees of the property of the corporation, and held to all the responsibilities, and subject to all the incidents of such fiduciary relation, is fully recognized in Aberdeen Railway Company v. Blakie, 1 Macqueen, 461. See also Wood v. Dummer, 3 Mason, 309 ; Devone v. Fanning, 2 Johns. Ch. 252; Peabody v. Flint et al., 6 Allen, 52.
    And where the majority of the directors of two corporations «conspire together to despoil one of the corporations of its franchise, .and also of its capital and effects of every kind, to the injury and total disregard of the rights of the stockholders and creditors, a petition in equity for relief may be maintained *by either. [174 stockholders or creditors. March v. Eastern Railway Company, 40 N. H. 548.
    Upon these authorities the jurisdiction of the court, in the case, is clear, and the power of the court to give the relief sought beyond «controversy.
    The whole defense set up in the answer turns upon these two questions: 1. Whether the railroad company was authorized by the provisions of the 12th section of the corporation act of 1852 to •condemn and appropriate the canal for the purposes of its railroad. .2. And if so, whether the railroad company had actually or legally made such appropriation.
    On the part of the plaintiffs, it is insisted, in the first place, that "the provisions of section 12 has no application to such a case, but manifestly applies to public ground in the charge or ownership of .all kinds of public or political corporations, quasi corporations, or public authorities, and that the canal was not liable to appropriation under it; and in the second place, that, if the provision of the statute, did give authority in such case, the requisite proceedings were not taken to make an appropriation according to the constitution of the state. Art. 1, sec. 19 ; art. 13, sec. 5.
    The agreement between the boards of directors of the two companies as to the compensation fco be paid for the canal, did not give legality to the appropriation. The directors 'of the canal company having no power to sell out the canal, they had no power to fix "the compensation to be paid on the appropriation.
    As to the kind of figure this agreement cuts in a court of equity, and as to the position of Mr. Lord, and as to the morality as well as the validity of this transaction before a chancellor, see the case of Aberdeen Railway Company v. Blakie, 1 Macqueen, 461.
    It is urged in the defense that the plaintiffs are barred by delay .and acquiescence. This is a ground of defense not stated nor set up in the answer,; and not being set up there, it can not now be set up on the evidence on the trial.
    But this is not a case for the application of the doctrine of acquiescence or estoppel. The railroad companies were not misled ^or deceived by the silence or acquiescence of the plaintiffs. [175 The remedy here sought is against the railroad companies. The» canal company has become a mere shadow, having no longer any substance in it. Neither the relation of stockholder nor creditor exists between the plaintiffs and the railroad company. The railroad companies have been guilty of a grievous tort, have wrongfully taken property and tortiously converted it to their own use, which was a trust fund, in which the plaintiffs were beneficiaries. And although the tortious conversion of the canal into a railway was commenced in 1863, it was not consummated until 1864, and in that year this suit was instituted. Plaintiffs had a right to wait a short time to ascertain whether the railroad companies would not render proper satisfaction, and do justice to the creditors and. stockholders of the canal company. But from about or near tho time of the beginning of the aggressions of the defendants, tho-plaintiffs, as creditors and stockholders, were represented, in effect, in the questions made in numerous applications for injunctions to restrain the railway company. The delay of plaintiffs for the decision of the questions in the eases pending, instituted by other-creditors and stockholders, could not have been very strong evidence of acquiescence. There has been no such unreasonable delay as to bar the relief sought in this case. Guest v. Homfray, 5 Ves. 818; 2 Story’s Eq. Jur., secs. 771, 777; 1 Redfield on Railways, 225, 226, 617, 618.
    It has been argued that plaintiffs should have sought their remedy under the proceedings in the L’Hommedieu case. But that case terminated in a final decree, prior to tho occurrence of tho transactions which constitute the foundation of this suit; and the-plaintiffs were never made parties in that case. And, furthermore, the decree in that case is under the control of tho defendants and used as an instrumentality’- to consummate defendants’ fraudulent purposes.
    It has been suggested, that the canal having been abandoned and' the right in the soil having reverted to the original owner, there-could be nothing in the hands of the railroad company, which could bo followed as the property of the canal company. This defense is-not set up in the answer, and is not, therefore, an issue in the case. 170] But the reversion *to the original owner can not go beyond the naked right in tho ground. The superstructure, and all tho works of the canal company made on the ground, would still be the-property of the company, and subject to the rights and claims of' its creditors and stockholders; and liable to be used for a canal, whenever the use for which the appropriation had been made, could, be revived. The movable materials of the superstructure, bridges,, etc., would foe liable to be removed. And having the right to revive the easement for the purposes of the canal, the stockholders- and creditors would have the right to make any other use of their superstructure and works, as well as the easement, which they could do with the consent of the original owners of the ground. ' They could have converted the entire works and easement of the canal into a railroad, which would have been worth between one and two-millions of dollars.
    It is but just and fair that the rp-ilroad company should be required to respond to the creditors and stockholders of the canal, company for the value to the railroad company for railroad purposes, of the property and effects of the canal company, acquired by converting the canal into a railroad. This can be ascertained!, by reference to a master.
    
      G. E. Pugh, for defendants:
    The petition of the plaintiffs amounts, in all, to this :
    1. That the property of the Cincinnati and Whitewater Canal. Company was worth more to the purchaser, the Cincinnati and Iniana Eailroad Company, than was paid for it.
    2. That there was collusion and fraud between the directors of" the two companies. •
    3. That the appropriation was illegal.
    As to the first point. — Suppose the defendants had ever so wrongfully and illegally despoiled the property of the Cincinnati and Whitewater Canal Company, to what extent were these plaintiffs, or any stockholder or creditor of the company, in fact, injured?" They could only, in the right of stockholders or of creditors, obtain judgment for their proportion, respectively, of the actual value of the property. And what was that value? Fifty thousand dollars,, say the appraisers, three ^discreet men appointed by the [177' district court of Hamilton county, in pursuance of the act of Ajiril 16, 1867, “ to authorize the foreclosure of mortgages executed by by turnpike, canal, or p.lank-road companies.” 4 Curwen’s Eev. Stat. 2975. The Cincinnati and Indiana Eailroad Company paid'fifty-five thousand dollars. Whoever else bid one .cent ?
    We are told that although the canal was valueless to the Cincinmati and Whitewater’ Canal Company, as a corporation, nevertheless it proved of immense value to the Cincinnati and Indiana .Eailroad Company for the purpose of being converted into a railrroad. Suppose that were so: the canal company could not con-vert its canal into a railroad; and the entire claim of the plaintiffs (whether as creditors or as stockholders) must be made through •■the canal company as a corporation.
    Eightly, therefore, did the court of common pleas decide that '-the question was not of how much or little value the property •afterward became, or in the ownership of a corporation which had the power of turning it into a railroad, but only what was its value to the Cincinnati and Whitewater Canal Company, at the time when it was ajipropriated, for the purposes for which that company could use or even hold it.
    The doctrine of the plaintiffs would authorize a man who had ¡sold his land for all it appeared to be worth at the time, or, at least, :all it was worth to him, afterward to claim an additional price for the reason that his vendee, by the employment of larger capital or .•ability, had enhanced it two or threefold.
    But I consider the act of April 16, 1857, as decisive in this re-gard. 4 Curwen’s Rev. Stat. 2975.
    
      As to the second point. — This relates to the alleged collusion between the directors of the three corporations defendant.
    How, the point is, or it is no point, that all or a majority of the •directors of the canal company so far betrayed their official trust as to allow the property of the corporation to pass into the control •of the Cincinnati and Indiana Eailroad Company for a grossly in.-adequate price. I ask, therefore, and confidently, where is the 178] proof? There is none, not a ^syllable. It is certain, I think, -that they did not err in judgment; but that, if it were shown, is not enough to maintain the plaintiffs’ allegation. There must be -evidence of a corrupt design. As to which, not only is there no •evidence, but the very imputation was disdained at the trial.
    But, it is said, the directors of the canal company were elected in the interest of the Cincinnati and Indiana, and Indianapolis and Cincinnati Eailroad Companies. How?
    The question is where to find collusion between the directors of the canal company and of the railroad companies; in regard to -which, again I say, there was no testimony at all.
    
      Third point. — That the appropriation was illegal. See the 12th section of the general corporation act, as amended April 15, 1857. 4 Curwen’s Rev. Stat. 2954.
    It is said that a canal does not come within any of the terms of description employed in this section. What are some of these terms ? “ Public way or ground of any kind.” “ Other public way or ground.” “ Other public ground.” I think any of these quite sufficient. Adams on Eject. 21; Cooper v. Williams, 4 Ohio, 254; Taylor v. Porter, 4 Hill, 140; Varick v. Smith, 5 Paige, 137; Matter of Albany Street, 11 Wend. 149; Bloodgood v. Mohawk and Hudson Railroad Company, 18 Wend. 9: Beekman v. Saratoga and Schenectady Railroad Co., 3 Paige, 45, 46; Young v. Buckingham, 5 Ohio, 485; Willyard v. Hamilton, 7 Ohio (pt. 2), 111; Cincinnati, Wilmington and Zanesville Railroad Co. v. Commissioners of Clinton County, 1 Ohio St. 77, 78; Geisy v. Cincinnati, Wilmington and Zanesville Railroad Co., 4 Ohio St. 308, 309; Coe v. Columbus, Piqua and Indiana Railroad Co., 10 Ohio St. 372, etc.; Id. 387, 388, etc.; Erie and Northeast Railroad Co. v. Casey, 2G Penn. St. 287, 288; West River Bridge Co. v. Dix, 6 How. 507; Junction Railroad Co. v. Ruggles, 7 Ohio St. 1; Enfield Toll Bridge Co. v. Hartford and New Haven Railroad Co., 17 Conn. 454, 455; White River Turnpike Co. v. Vermont Central Railroad Co., 21 Vt. 590; Proprietors of the Piscataqua Bridge v. New Hampshire Bridge, 7 N. H. 35, 36 ; Dyer v. Lady Jane Hay, 1 Macq. 312, 313; Chagrin Falls and Cleveland Plank-road Co. v. Cane, 2 Ohio St. 419, 420; Benedict v. Goit, 3 Barb. 459; Cincinnati and Spring Grove Avenue Street Railway Co. v. Village of Cumminsville, 14 Ohio St. 523, 524; The Commonwealth v. Temple, 14 Gray, 69; The People v. Kerr, 27 N. Y. 188. [179
    The question is foreclosed (so far as these plaintiffs are concerned) by the judgment of the district court in L’Hommedieu’s case.
   Welch, J.

The question mainly argued in this case is whether by the laws of Ohio, and particularly under the twelfth section of the general railroad act (1 S. & C. 278), there is any power given by which a canal can be condemned and converted into a railroad against the will of the owners of the canal. We think the question does not necessarily arise in the case, and therefore leave it undetermined. It is a question which the plaintiffs are not in a position to raise. Where a party stands by, as we pi’esume the plaintiffs to have done in the present case, and silently sees a public railroad constructed upon his land, it is too late for him, after the x’oad is completed, or large sums have been expended on the-faith of his apparent acquiescence, to seek by injunction, or otherwise,'to deny to the railroad company the right to use the property. Considerations of public policy, as well as recognized principles of justice between parties, require that we should hold, in such cases that the property of the owner can not be reclaimed, and that there'only remains to him a right of compensation. The-injunction in the px’esent case might have been sought at the fix’st-known attempt, or even threat, to despoil the canal, or to construct, the railroad upon its line. The omission to do so is an implied' assent. The wox’k being completed, the public, as well as those-directly interested in the road, as stockholders arid creditox’s, have-a right to insist on the application of the xmle that he who will xxot. speak when he should, will not be allowed to speak when he would.. So far, therefore, as regards the relief by way of injunction, or the right of the Cincinnati and. Indiana Railroad Company to the contixiued use of the property, we deem it quite immatexual whether-the proceedings of condemnation and appropriation are void ox-valid ; or if void, whether they are so for want of power in the-180] railroad company to condemn, for want *of power in the canal: company to agree upon the price, or for want of an assessment by a jury. It is enough to know that the appropriation has in fact been made, and that the plaintiffs have delayed their suit so long,, and under such circumstances, that to grant the request now would wox’k a great public ixxjxxxy, and be a virtual fraud upon the-Cincinnati axxd Indiana Railroad Company.

The case is faix’ly within the principle settled ixx that of Chapman & Harkness v. Railx-oad Companies, 6 Ohio St. 136. It may well be said in the present case, as the court said in the case referred to: • • • • “ Before a stockholder can be entitled to a. remedy by injunction against such departure from the original objects of the incorporation, he must have shown himself prompt, and vigilant in the assertion of his rights, as such stockholder. It. will not do for him to wait until the mischief of which he complains is accomplished, fortuxxes expended, and great public interests created. If he does he must be held to have acquiesced in the-change, or to content himself with some other form of remedy.”

Precisely the same point was determined in Kellog v. Ely, 15 Ohio St. 64, where the court say, when speaking of the plaintiff’s, right to an injunction : • • • • “ Eemaining inactive and silent until his swamp lands were drained by a ditch of nearly a mile in length, he then, for the first time, asks the interposition of a court •of equity. We think he comes too late.”

The question of compensation, however, stands upon a very different basis. The railroad company having acquired this property, ought to pay for it a fair value, unless by an agreement between the parties, such as a court of equity will uphold, a less price has been fixed. Was $55,000, then, a fair value for the property? And, if not, did the parties by a valid agreement fix upon a less sum ? These, it seems to us, are the only questions remaining in the case, and we are constrained to answer them in the .negative. "We think the price was grossly inadequate, and that the agreement can not be sustained in a court of equity.

In the case of Hatch v. The Cincinnati and Indiana Railroad *Company, decided at the present term of this court, the [181 railroad company claimed, and the court held, that the appropriation of the canal to railroad purposes did not work a reversion of the property to the original proprietors; in other words, that the canal company had a perpetual easement in the property, which was tranferable to a railroad company, and of course were entitled to receive a full compensation therefor. The court below, in the present ease, refused to hear evidence of value based upon that view of the law, but enough of evidence appears in the bill of exceptions, notwithstanding the refusal of the court, to show that the property was worth vastly more than $55,000, the price paid. True, the evidence shows that the property was of little value as a canal. As such, in the language of defendants’ witnesses, it was “ played out.”It seems to have been as such that it was appraised, upon the interlocutory order of sale, and as such it must have been valued by the two boards of directors at the time of its sale or pro forma condemnation. This was no fair method of estimating the value of the property. The true value of anything is what it is worth when .applied to its natural and legitimate uses — its best and most valuable uses. The estimate should have been of its value generally, for any and all uses, and not for any particular, and especially not for any inferior or inappropriate use. It is in vain to say that the property is worth little to the canal company, because they have-no power, as such, to convert it into a railroad. The stockholders and creditors of the canal company could organize themselves into a railroad company at any time, and thus realize the full value of the easement. But, even if they could not, that is no reason why their property should be taken from them at less than its value. The railroad company should pay somebody for this property. She refuses to pay the original owner's for it, because, she says, the canal company, by transferring it to her, prevented its relapse to such original owners; and she refuses to pay the canal company anything more than a nominal price for it, because, she says, if the-canal company had not transferred it to her, it would have relapsed; 182] and as the result of this logic, she gets the ^property for a merely nominal price. She gets it as a kind of waif, which, failing to find an owner, somehow falls into her hands as the fortunate-finder. The insolvency of the canal company is a poor reason to render for refusing to pay her a fair price for her property. If she-is insolvent, she has the more need of a full price.

As to the agreement by which the price or compensation was-fixed at 155,000, we have no hesitation in saying that it ought not to be allowed to stand, so as to affect the rights of those who gave-no assent thereto. Without attempting to decide as to the power-of directors, in the absence of authority given by the stockholders, to fix a price or compensation for the property so sought to be appropriated, it is enough to.say that this is not such an agreement as equity will sustain. |Therewas not only such a gross'inadequacy of price as to shock the moral sense, but there was, in effect, a sale-by a trustee to himself, or to his own use and benefit. This equity will never permit, not even where there is good faith and an adequate consideration. Here there was neither. The vendor and purchaser were in the same interest. As directors of the canal-company, it was the duty of Mr. Lord and his associates to obtain the highest price for the property, while as stockholders of the railroad company, it was their interest to get it as low as possible. It was, in effect, a sale by the railroad company to itself. There was-no adverse interest or adversary parties, and the sale was a mere form. Nothing is better settled in equity than that such a transaction on the part of a trustee does not bind the cestui que trust. It is equally well settled that the property of a corporation is á trust fund in the hands of its directors, for the benefit of its creditors and stockholders. 2 Story’s Eq. 1252; Aberdeen Railroad Co. v. Blakie, 1 Macqueen, 461; Wood v. Dummer, 3 Mason, 309. If it. was desired or intended to make such a purchase of the property as would bind the stockholders and creditors of the canal company,. all of them should have either been consulted or bought out. That would have been the fair way to accomplish the object To undertake, by getting control of the company, and then, under pretense-of acting as agents and trustees for all the '-¡^stockholders and [183¡ creditors, deliberately to trample under foot the rights of the minority, is rather a sharp practice, and one which a court of equity will never tolerate. A director whose personal interests are adverse to those of the corporation has no right to be or act as a director. As soon as he finds that he has personal interests which are in conflict with those of the company, he ought to resign. No matter if a majority of the stockholders, as well as himself, have personal interests in conflict with those of the company. He does not represent them as persons, or represent their personal interest. He represents them as stockholders, and their interests as such. He is trustee for the company, and whenever he acts against its interests — no matter how much he thereby benefits foreign interests of the individual stockholders, or how many of the individual stockholders act with him — he is guilty of a breach of trust, and a court of equity will set his acts aside, at the instance of stockholders or creditors who are damnified thereby. Any act of the directory by which they intentionally diminish the value of the stock or property of the company is a breach of trust, for which any of the stockholders or creditors may justly complain, although all the other stockholders and creditors are benefited, in some other way, more than they are injured as such.

While, therefore, we are of opinion that the court below was right in refusing the plaintiffs an injunction, in refusing to set the sale or appropriation aside, and in refusing to place the property in the hands of a receiver, we think the court erred in rejecting testimony as to the general value of the property, and in not finding and holding that the Cincinnati and Indiana Railroad Company was liable to account to the canal company for the full valué of the property taken, less the said sum of $55,000, already paid, and in refusing to grant a new trial on that ground.

Judgment reversed, and cause remanded for a new trial and further proceedings.

Day, C. J., and Brinkerhoff, Scott, and White, JJ., concurred. 
      
       Ante p. 92.