#### Shaaber’s Appeal. [Shaaber et al. *v.*The Angelica Water Co. et al.]

It is. not an act ultra vires for a corporation for the supply of water to build a dam and lease it to an ice company for the purpose of harvesting ice.

The court will not reverse the finding of a master affirmed by the court, except in case of clear error.

The complainants had composed a majority of the board of directors of a corporation engaged in supplying water. The board.adopted a resolution to enlarge a dam in order to lease it to an ice company which the president of the water company was about forming. Stockholders of the water company were offered stock in the ice company. The dam and proposed lease were approved at the annual meeting of stockholders, and the terms of the lease left to the directors. A new board, of which the complainants were not members, was elected. The dam was built and leased for forty-nine years. The ice company spent considerable money upon its plant, and, at the next annual meeting of the water company, no objections were raised. Soon after, complainants filed this bill in equity, charging fraud and concealment on the part of the president, alleging that the rent reserved was too low, and the term of the lease by water company to ice company unreasonably long, and praying that the lease be declared void. The master found that there was no fraud, that there was a ratification of the lease, and laches in not sooner filing the bill, and his finding was confirmed by the court below, and the bill was dismissed with costs. *Held,*that the decree should be affirmed.

A chancellor would be slow to grant equitable interference in such a case. There is nothing to warrant the court in holding the lease void : Per Curiam.

The above lease was held not void, under the statute of frauds, because of vagueness of the description of the lands referred to in it.

March 5, 1889.

Appeal, No. 153, July T., 1888, from C. P. Berks Co., to. review a decree dismissing a bill in equity, by Daniel Shaaber, Henry C. England, Albert Thalheimer, Aaron Wilhelm, Philip M. Ermentrout, Matthan Harbster, David B. Brunner and William H. Wilhelm, against The Angelica Water Co., Geo. R. Frill, Darius P. Greth, Henry Ahrens, Chas. H. Schaeffer and Edwin F. Smith, officers and directors of the Angelica Water Co., and the Angelica Ice Co., No. 372 Equity Docket, 1885. Green and-Clark, JJ., absent. „

*436The bill, filed in October, 1885, alleged that the plaintiffs were owners of stock in the Angelica Water Co., a corporation, under the Act of April 29, 1874, and supplements, of which the defendants were directors; that the defendants were chief owners of the Angelica Ice Co., a corporation under the Act of 1874, and it supplements ; that, in order to control the Angelica Water Co. in the interest of the Angelica Ice Co., the said defendants purchased or caused to be purchased in their interest a sufficient number of shares in the Angelica Water Co., and caused themselves to be elected officers and directors of the Angelica Water Co., with the design and for the purpose of managing the Angelica Water Co. for the benefit of the Angelica Ice Co., and to the prejudice of the plaintiffs; and, with the money of the Angelica Water Co., erected unnecessary dams on the property of the Angelica Water Co., intended for the ice business, and then executed a lease of the ice dams from the Angelica Water Co. to the Angelica Ice Co. for an injuriously long term, and for less than one-half the true rental value, whereby the Angelica Ice Co. was making large profits. The bill prayed that these acts of the defendants be declared illegal and void as in fraud of the plaintiffs; and that the profits be paid to the Angelica Water Co.; with a prayer for general relief.

The answer admitted the interest and position of the parties as alleged, and averred that the building of the dam was authorized by the board of directors of the Angelica Water Co., at a time when some of the plaintiffs were members of the board, without objection; that, at a stockholders’ meeting at which some of the plaintiffs were present, the directors were unanimously authorized to make a lease to the Angelica Ice Co. on such terms as they might agree upon, and that the lease as made was fair.

The master, Henry C. G. Reber, Esq., reported, inter alia, as follows:

“The Angelica Water Co., in accordance with a resolution passed at an annual meeting of its stockholders on May 13, 1884, and in accordance with a resolution passed at a meeting of the board of directors held May 17, 1884, executed a lease (reciting the resolutions) to the Angelica Ice Co. ‘ for the term of 49 years from Oct. 1,1884, at an annual rental of $1,000 per year, ice or no ice, of all that certain dam now situated on property owned by the party of the first part (Angelica Water Co.), in Cumru township, Berks county, Pennsylvania; together with the lands covered by the water of said dam, and also the new dam about being erected on said premises by the party of the first part, together with all the land that shall be covered with said new dam now in process of erection, for the purpose of harvesting and housing ice, together with such adjacent land as may be necessary for the use of the said Ice Company in harvesting and housing ice; together with ingress to and egress from the same over the lands of the said Water Company, said adjacent land being such lands as may be laid off and selected by the *437committee on purchase and sale of water-rights, and attached hereto by plot or draft.’ ”

At the election of directors held May 13, 1884, all of the plaintiffs (who were in the board of directors), except D. B. Brunner and A. Wilhelm, were dropped from the board and others elected in their place.

Further findings of facts by the master appear by the exceptions filed, and by the following conclusions arrived at by him:

“ 1st. In the inception of the Ice Co., the plaintiffs all had an opportunity to join in the enterprise, and some of them actually subscribed towards stock which they afterwards refused to take. Subsequently they were offered 100 shares, which they again refused to take.

“ In the preliminary organization of the Ice Co., the building of the dam by the Water Co. and the erection of the houses by the Ice Co., there was no concealment from or unfairness towards the plaintiffs.

“ 2d. In building the dam in question, the defendants only continued and carried out the work planned by the plaintiffs, and which was carried on by the plaintiffs continuously until the expiration of their term of office.

“ 3d. The construction of said dam was necessary for the corporate purposes of the Angelica Water Co., and its use for ice purposes is an incident and not the object of its erection; in its erection, no work was extravagantly or unnecessarily performed, and, as it progressed, it received the approval and endorsement of the plaintiffs.

“ 4th. The erection of the dam as constructed, and the execution of the lease of the same to the Ice Co., were not ultra vires or injurious to the interest of the Angelica Water Co.”

Under this head, the master cited and reviewed: Stewart’s Ap., 56 Pa. 413 ; Spering’s Ap., 71 Pa. 11; McCurdy *v.*Myers, 44 Pa. 533; Perrine *v.*Canal Co., 9 How. 192 ; Armstrong *v.*Pa. R. R., 9 Va. 1; Simpson *v.*Hotel Co., 2 De G., F. & J. 141; 8 H. of L. C. 712 ; Whitney Arms Co. *v.*Barlow, 63 N. Y. 69.

“ 5th. The lease in question is a valid lease, containing all the essentials of a complete agreement under which the relation of landlord and tenant has been fully established; the rent reserved therein is fair and reasonable ; the term is not of unusual or unfair length, but proper under the circumstances; the lease was properly executed by the officers of both corporations and was duly ratified, and is binding on both parties. The fact that the leasing was not thrown open to general competition does not effect its validity, because the officers were directed by the stockholders of the Angelica Water Co. to make it to the Angelica Ice Co.”

To establish the validity of the lease, the master cited: Id-dings *v.*Nagle, 2 W. & S. 22; Ferguson *v.*Staver, 33 Pa. 411.

“ 6th. In the- making of the lease, there was no abuse, by the *438officers or directors of either corporation, of the powers vested in them by the stockholders; the plaintiffs were at no time deceived by the acts and declarations of the defendants, and there was no fraud perpetrated by the defendants.”

To establish these points the master cited and reviewed: Pierce, Railroads, p. 36; Morawetz, Private Corporations, 245, 334; Angelí & Ames, Corporations, §233, note a, 312; Watts’s Ap., 78 Pa. 370; ■Rolling Stock Co. *v.*R. R., 34 Ohio, 46; Adams Mining Co. *v.*Senter, 26 Mich. 73; Story, Agency, § 310; Wharton, Agency, § 244.

*“*7th. If there was any just cause for complaint on the part of the plaintiffs, their laches in waiting until the defendants had expended large sums of money, until new and innocent parties had invested in the business, and until the success of a speculative business venture had been demonstrated, estops them from seeking redress in the court of equity :” Twin-Lick Oil Co. *v.*Marbury, 91 U. S. 589; Watts’ Ap., 78 Pa. 370; Rolling Mill *v.*R. R., 120 U. S. 236; Tayíor, Private Corporations, 631; Upton, Assignee *v.*Tribilcock, 91 U. S. 45 ; Badger *v.*Badger, 2 Wall. 87; Harwoods. R. R., 17 Wall. 78; Marsh *v.*Whitman, 21 Wall. 178; Vigers *v.*Pike, 8 Cl. & Fin. 650; Ashurst’s Ap., 60 Pa. 290; Hotel Co. *v.*Wade, 97 U. S. 23; Beatty *v.*Northwestern Transp. Co., 10 Am. & Eng. Corp. Cas. 263; Smith *v.*McNeal, 68 Pa. 164; Keísey *v.*Bank, 69 Pa. 429; Bredin *v.*Dubarry, 64 Pa. 30; Gordon *v,*Preston, 1 Watts, 387.

“ Upon the whole case, after a full consideration of the testimony, and the arguments and authorities on which the plaintiffs’ case was supported, the master finds nothing which entitles the plaintiffs to relief, and therefore reports that the bill be dismissed with costs.”

The plaintiffs thereupon filed exceptions to the master’s report, alleging that the master erred, in not finding that:

“ 1. On May 19, 1884, the time of the execution of the lease, E. F. Smith held ten shares, and D. P. Greth five shares, of the stock of the Angelica Ice Co.

*“ 2.*The Angelica Water Works were constructed for the purpose of supplying water to an intended town opposite the city of Reading, and that, at the time the testimony was taken, only one house was reached by the pipes of the Angelica Water Co., and that house was a farmhouse.

*"*3. George R. Frill, Darius P. Greth, Henry Ahrens, Charles H. Schaeffer, and Edwin F. Smith, expended a large sum of money, namely, upwards of five thousand dollars, the property of the Angelica Water Co., in building ice dams and other conveniences and appliances necessary in the ice business and for purposes not within the scope of the powers of the Angelica Water Co., nor intended for the benefit of the Angelica Water Co., but intended for the business of harvesting, storing, and selling ice, with the design of using the same in the business and to the profit of the Angelica Ice Co., and to the prejudice of the plaintiffs.

*439*“*4. With expenses necessitated by its construction, the dam cost at the time of its completion $5,828.40, the money being partly taken from the treasury of the Angelica Water Co., but chiefly borrowed on its credit by bank discounts, as follows:

Timber.................................................................$2956 72

Lumber, spikes, &c.............................. 1338 73

Road forming breast of dam................................ 524 45

Sluices, part........... 708 41

Discount paid on loans............................................. 300 09

Total..........................................................$5828 40

*“*5. The plaintiffs assented to the construction of the dam, relying on the representations of the defendants that the work planned was simply an enlargement of the existing dam, at a cost of from $1800 to $2500, for the purpose of the water works.

“ 6. On May 13, 1884, at the time of the annual meeting of the Angelica Water Co., the plaintiffs were ignorant of the extent of the defendants’ plans, and of the cost and extent of the dam under construction by them.

*“*7. The Angelica Ice Co. had already taken possession of the premises in the early part of May, before the meeting of May 13, 1884, and before the plaintiffs knew of any plan of leasing the dam to them, and had begun digging trenches and putting foundation walls for extensive ice houses afterward erected by them on the property of the Angelica Water Co. upon land adjoining the dam.

“ 8. At the time the resolution was passed at the meeting of the stockholders of the Angelica Water Co., on May 13, 1884, whereby the making of the lease was referred to the board of directors of the Angelica Water Co., the plaintiffs were unsuspicious of any contemplated change in the board of directors, whose election was now to follow, and the Frill ticket for directors contained names of men who had not before been in any manner identified with the Angelica Water Co., and were not known to the plaintiffs to be stockholders until they appeared at this meeting, but to whom stock had been transferred as follows:

March 25, 1884, George R. Frill to Isaac Plank...............2 shares.

“ “ “ “ “ “ “ Thomas Lightfoot......2 “

“ “ " “ “ “ “ D. P. Greth..............2 “

“ “ “ “ “ “ “ Henry Saylor............2 “

“9. On May 13, 1884, when the making of the lease was referred to the board of directors, the plaintiffs believed that the old board of directors would be re-elected, and that they themselves would act for the Angelica Water Co. in making the lease.

“ 10. George R. Frill, D. P. Greth, Henry Ahrens, Charles H. Schaeffer, and Edwin F. Smith caused themselves to be elected officers and directors of the Angelica Water Co. with the design and for the purpose of managing the Angelica Water Co. for the benefit of the Angelica Ice Co., and to the prejudice of the plaintiffs.

*440II. No land was laid off in the manner described in the lease, and no draft was ever at any time attached to the lease, and the lease was never recorded.

“ 12. After the lease, Mr. England could get no knowledge of the proposed lease; a long while after he asked persons who would have known whether it was executed and they said it was not, as testified by him.

“ 13. After the lease, Mr. Thalheimer asked the treasurer for a report at one time with reference to the dam, and got the answer that they could not make a report to everybody, as testified by him.

“ 14. After the lease, Mr. Aaron Wilhelm told Mr. Frill that it was not an honest thing, and a wholesale steal, and there would be a great deal of dissatisfaction about it, as testified by him.

“15. After the lease, Mr. William Wilhelm did not think it was right and objected to it to Mr. Frill, and did not think he acted square, as testified by him.

■ “ 16. Messrs. Frill, Ahrens, Schaeffer, Greth and Smith, intending to act for the benefit of the Angelica Ice Company and in fraud of the plaintiffs, executed the lease complained of, and the said lease and the length of the term are injurious to the interests of the Angelica Water Co., and the rent reserved is less than one-half of the true annual value of the premises, and so known to the said defendants at the time of the execution of the lease.

“ 17. By reason of the facilities afforded them by the lease complained of, and the low rental named for the premises, the Angelica Ice Co. have made and are still making large profits from the same.

“ 18. The net profits of the property in the hands of the Angelica Ice Co. have been about $18,000 or $19,000 annually as the income of their investment, from which there was nothing to pay but the rent to the Angelica Water Co.

“ 19. The rent received does not amount to five per cent, on the capital stock of the Angelica Water Co., and nearly the entire . rental is consumed in paying for repairs to the dam and interest on the debt created in building it.

“ 20. The acts of Messrs. Frill, Greth, Ahrens, Schaeffer and Smith in the premises have been done and committed in willful breach of the trusts which the said defendants have undertaken to the plaintiffs as officers and directors of the Angelica Water Co., with an intent to injure and defraud the plaintiffs, and depreciate the value of their stock in the Angelica Water Co., and with the sole purpose of benefiting the Angelica Ice Co., so deriving therefrom large gains for themselves, to the prejudice of the plaintiffs.

“21. The time intervening between the making of the lease and the filing of the bill was filled with protests on the part of the plaintiffs and with negotiations between the plaintiffs and the defendants for settlement, which resulted in many of the plaintiffs’ party selling their stock to the defendants; and the dissatisfaction of the plaintiffs during this time was well known to the defendants.

*441“ 22. Mr. Shaaber and Mr. Thalheimer refused to go into the ice business under any conditions, and never assented in any way to the construction of a dam for ice purposes.

“ 23. In finding that the defendants, after their election in May, 1884, only continued and carried out the work planned by the plaintiffs several months before. There is no evidence that any of the plaintiffs ever planned the construction of a dam intended primarily for ice purposes. Mr. Shaaber and Mr. Thalheimer refused to go into the ice business under any circumstances. Their assent to the enlargement of the dam was wholly for water purposes.

“ 24. In finding that the resolution of the Angelica Water Co. authorizing the board of directors to lease to the Angelica Ice Co. was a reiteration of the original intention of the projectors of the Angelica Ice Co., and before the Angelica Ice Co. was organized it was understood that a lease was to be made by the Angelica Water Co. to the Angelica Ice Co. If such was the understanding of some of the plaintiffs, it would not effect Messrs. Shaaber and Thalheimer, who never were aware of any such an understanding on the part of any persons until the meeting of May 13, 1884, after which they at once dissented and protested.

“ 25. In finding that the construction of the dam and the lease were not ultra vires. The dam was certainly constructed primarily for ice purposes.

“ 26. In finding that the description of the premises leased was set forth with reasonable certainty.

“ 27. In finding that if any pecuniary interest could affect the integrity of the actions of the defendants, it would favor the Water Co. The defendants and their families had 264 of the 302 shares of the Angelica Ice Co. at the time of the execution of the lease, and Messrs. Saylor, Lightfoot, and Plank, their employees, had 30 of the remaining 38 shares. Messrs. Frill and Ahrens had the advantage of selling property worth *$*12,000 to the Ice Co. for *$20,000*besides.

“ 28. In finding that the plaintiffs’ declination *to*accept *stock*in the Angelica Ice Co. was unwise when coupled with the condition that Frill and Ahren’s property must be accepted at *$20,000,*and that the plaintiffs alone are to blame for the present situation. Messrs. Shaaber and Thalheimer were unwilling to go into the ice business under any conditions, and were not obliged to do so to save their property.

“ 29. In finding that the plaintiffs are not entitled to relief because of unreasonable delay in exercising their right of dissent, such defense not being made in the pleadings nor established by the evidence.

“ 30. In finding that the plaintiffs were guilty of laches in not filing their bill earlier, when the master finds that the dam was not ready for harvesting ice until December, 1884, and not fully completed until August, 1885, during which time the plaintiffs were only *442awakening to the defendants’ plans, and could get no information of the terms of the lease and cost of the dam, until the annual meeting in May, 1885, and when the time intervening between the making of the lease and the filing of the bill was filled with protests on the part of the plaintiffs, and with negotiations for settlement with the defendants, resulting in many of the plaintiffs’ party selling their stock to the defendants.

“31. In finding that the lease cannot be canceled because the defendants sold some of their stock of the Angelica Ice Co. to third parties during the time of the protests of the plaintiffs and their negotiations with the defendants.

“ 32. In finding that the plaintiffs were not deceived by the acts and declarations of the defendants. They were first entrapped into consenting to the enlargement of the dam, being told by Mr. Frill that this was necessary for‘the purposes of the water-works and would only cost from $1,800 to $2,500, and were then entrapped into passing a resolution referring the leasing of the dam for ice purposes to the board of directors, believing that they would be continued as directors, while the defendants had a new ticket in their pockets ousting the plaintiffs, ready to spring on the meeting as soon as the resolution had'passed.

“ 33. In finding that the lease was ratified by the proceedings of the annual meeting of 1885.

“34. In finding that acquiescence of the plaintiffs in the proceedings relative to the lease and construction of the dam creates an estoppel.

“ 35. In finding that there was no fraud perpetrated by the defendants in their capacity as officers and directors of the Angelica Water Co.

*“*36. In admitting and considering the testimony given against the plaintiffs’ objection by E. F. Smith, H. P. Crowell, John W. Baker, John R. Gonser, and Henry Ahrens as to the rentals paid for other ice dams.

“ 37. In admitting and considering the testimony given against the plaintiffs’ objection by Jefferson M. Keller, on cross-examination, concerning an attempt made by the ice dealers of Reading in 1882 or 1883 to consolidate their business, and the value then placed upon the respective properties.

*“*38. In finding that the resolution of the stockholders of the An- . gelica Water Co. authorizing a lease by the directors to the Angelica Ice Co., entitled the Angelica Ice Co. to the lease at all events, when it clearly appears that the plaintiffs were entrapped into assenting to this resolution by being led to believe that they would be continued as directors through complimentary remarks by Mr. Frill and the concealment of the defendants’ plans, and because they were not aware of the cost and extent of the dam in course of construction.

“ 39. In finding that the lease is not injurious to the interests of *443the Angelica Water Co., and that the rent received was a fair and reasonable rent, and that the term was a proper one.

“ 40. In finding that the valuation of the rental value was honestly, openly, and fairly made.

“ 41. In finding that the Angelica Ice Co. went into possession of the premises immediately after the making of the lease. They went into possession previously, in the early part of May, 1884, before they applied for a lease.

“ 42. In finding that, in the preliminary organization of the Angelica Ice Company, the building of the dam by the Angelica Water Co., and the erection of the houses by the Angelica Ice Co., there was no concealment from or unfairness towards the plaintiffs.

*“*43. In finding that the construction of the dam as it progressed received the approval of the plaintiffs, because, at the annual meeting held May 13, 1884, the actions of the board of directors during the year was approved. At that time, the construction of the dam had not progressed far enough for the plaintiffs to be aware of the defendants’ plans, and of the proposed extent and cost of the dam, which did not become apparent until a year afterwards.

“ 44. In finding that, in building the dam in question, the defendants only continued and carried out the work planned by the plaintiffs, and which was carried on by the plaintiffs continuously until the expiration of their term of office.

“45. In finding that the construction of the said dam was necessary for the corporate purposes of the Angelica Water Co., and that its use for ice purposes is an incident and not the object of its erection; that in its erection no work was extravagantly or unnecessarily performed, and that as it progressed it received the endorsement of the plaintiffs.

“ 46. In finding that the erection of the dam as constructed, and the execution of the lease of the same to the Angelica Ice Co., were not ultra vires or injurious to the interests of the Angelica Water Co.

“ 47. In finding that the lease in question is a valid lease, containing all the essentials of a complete agreement under which the relation of landlord and tenant has been fully established, the rent reserved therein is fair and reasonable, the term is not of unusual or unfair length, but proper under the circumstances; the lease was properly executed by the officers of both corporations and was duly ratified, and is binding on both parties, and that the fact that the leasing was not thrown open to general competition, does not affect its validity, because the officers were directed by the stockholders of the Angelica Water Co. to make it to the Angelica Ice Co.

“ 48. In finding that, in the making of the lease, there was no abuse by the officers and directors of either corporation of the powers vested in them by the stockholders, the plaintiffs were at no time deceived by the acts and declarations of the defendants, and there was no fraud perpetrated by the defendants.

*444“49. In finding that, if there was any just cause for complaint on the part of the plaintiffs, their laches in waiting until the defendants had expended large sums of money, until new and innocent parties had invested in the business, and until the success of a speculative business venture had been demonstrated, estops them from seeking redress in a court of equity.

“ 50. In reporting that the bill be dismissed. 51. In reporting that the bill be dismissed with costs. 52. In not recommending a decree in favor of the plaintiffs, as prayed for in the bill.”

The court dismissed the exceptions in the following opinion, by Albright, P. J.:

“ The able and exhaustive argument of counsel for plaintiffs has failed to convince the court that any of the exceptions can be sustained. An examination of the whole case has resulted in the conviction that the plaintiffs are not entitled to a decree against defendants, and that the questions before the court were well considered and correctly decided by the learned master. Upon his report, the exceptions are dismissed.

“ The pivotal question is whether the lease made by the Angelica Water Co. to the Angelica Ice Co. is void. For there is no prayer to reform the contract contained in the lease, nor is there any evidence to support a decree to reform. Whether or not the lease is valid, depends upon the election of the directors of the water company who made the lease — the election of May 13, 1884.

“ A resolution of the directors authorized the letting upon the terms of the lease. That a lease should be made was voted at a meeting of the stockholders. Geo. R. Frill was a large stockholder (he held 167 of the 400 shares), and he was active in the making of the lease.

“ Said election is attacked because of his (Frill’s) action regarding it. But what reason could be given for a conclusion that what he did concerning it was illegal or a fraud upon other stockholders under the rule of law invoked by the plaintiffs? ‘ While the right of a stockholder to contract with his corporation and become its creditor is conceded as a general proposition, the right of a person controlling a corporation to contract with it rests upon entirely different principles, if it exists at all. Where a person actually has actual control of a corporation, whether such control arises from the ownership of a majority of the shares or from his position or influence, and enters into a contract with such corporation, he is held to the most rigid good faith. The onus is upon him to show the fairness of the transaction, if it is called in question. It is a principle too well settled to be now successfully controverted, that the promoters, directors, or agents of a company shall not make a profit out of it by buying lands for it, or in dealing with it. This principle runs through all the fiduciary relations.’ Rice’s Appeal, 79 Pa. 168.

“ Frill had the right common to all the stockholders to vote his *445stock, to induce other stockholders to act upon his views, if he could, and to procure the election of himself and others who agreed with him as directors. The complaints based upon his interest as a stockholder and his influence and position are groundless, because he had not a majority of the stock and he had no power in the councils of the Water Co. except what his stock gave him.

“ It is also insisted that the lease is void under the statute of frauds, because of vagueness of the description of the lands referred to in it. Surely one interested as a lessor cannot be conceded a standing to declare void a lease because of uncertainty in the description of the land demised. In case of a dispute on that point between a lessor and lessee, equity might interfere to render certain the boundaries, according to the intent of the parties.

“ It is urged that the length of the term and the amount of rent reserved show a fraudulent intent, or constitute a legal fraud. But the evidence does not establish facts warranting such a determination. The reasoning and conclusion of the learned master upon this point cannot be successfully gainsaid. Then, too, the conduct of Frill must be viewed in the light of the surroundings when the ice company was formed, and the lease made. The project of creating an ice company originated with the stockholders of the Water Co. The business of furnishing water was unproductive, and it was thought that the ice business would be profitable. The intention and expectation of the promoters was that the stock of the new company should be taken by the holders of that of the old. Before and after the making' of the lease, the stockholders of the Water Co. were not only afforded an opportunity, but were urged to take stock in the Ice Co. ,

“ True, the stockholders of the Water Co. were not bound to invest in the Ice Co., and some of them declined to do so. But if the lease was not ultra vires, or void for any other reason, the fact that the lease may be to the detriment of those who refuse to join the new enterprise furnishes no reason for declaring void the contract. They took the risk so incident to investment in the stocks of a corporation, when the investor has not a controlling interest.

“ A stockholder runs the risk of having the concern managed by the majority in a way that may be detrimental to him and unwise. Nor was the grant of the ice privilege ultra vires the corporation lessor. The company had a dam and a pool for the purpose of supplying water. To realize from the ice by letting the privilege is in principle the same as if the company sold its ice. It would hardly be contended that if a water company or a corporation for the manufacture of iron or of cotton goods sold the ice naturally formed on its pool, that it thereby forfeited its charter. In the nature of things, the right to take ice must be subordinated to the purposes for which the corporation lessor was formed, that is, supplying water.

[“ Now, May 28, 1888, this cause came on to be heard, and was *446argued by counsel, and thereupon, upon consideration thereof, it is ordered, adjudged and decreed that the bill of the plaintiffs be dismissed and that the plaintiffs pay the costs.”] [53]

The plaintiffs thereupon took this appeal.

*The assignmejits of error*specified, 1-52, the action of the court in dismissing the exceptions to the master’s report, quoting them; and, 53, in decreeing as above, quoting the decree.

*Isaac Hiester,*with him *Garrett B. Stevens,*for appellants.

When stockholders consent to the construction of certain works, relying on an estimate made by the president, and also authorize a lease of the works to the president, supposing that they will be continued in' office as a majority of the directors to build the works and make the lease, and the president then, to the surprise of the old directors, who are unprepared for a contest, immediately elects his own board, erects extensive works not contemplated by the stockholders, costing nearly three times as much as his estimate, and makes a lease on terms fixed by his own board againt the protests of the other stockholders, such assent will not be regarded as authorizing his acts.

A fraud is seldom attempted without marks of fairness placed on its face. Decoys are the invariable evidence of a snare.. The confidence which partners and fellow-corporators owe each other cannot exist if a trap like this will be viewed by courts as assent on the part of one that the common property shall be diverted to the personal uses of the other.

Even the majority of a water company have no power to build an ice plant, that being outside the purpose for which the company was incorporated: McCurdy *v.*Myers, 44 Pa. 535.

A director stands in a fiduciary relation, and cannot buy of himself for his corporation, nor sell to himself: Pierce, Railroads, 36; Morawetz, Private Corporations, 245; Angelí and Ames, Corp., § 238, note 312; Butts *v.*Wood, 37 N. Y. 317; Ployle *v.*R. R., 54 N. Y. 314, 328; Blake *v.*R. R., 56 N. Y. 485,490; Barnes *v.*Brown, 80 N. Y. 527, 535; Duncomb *v.*R. R., 84 N. Y. 190, 198; Robinson *v.*Smith, 3 Paige, 222, 232; Koehler *v.*Co., 2Black,715; Blitz *v.*Plittison, 48 N. Y., 22 ; 1 Perry, Trusts, 207.

Promoters, directors or agents of a company shall not make a profit out of it in buying lands for it or dealing with it: Rice’s Ap., 79 Pa. 168; McElhenney’s Ap., 61 Pa. 188; Short *v.*Stevenson, 63 Pa. 95 ; R. R. *v.*Bowser, 48 Pa. 37; Bailey *v.*Gas Co., 69 Pa. 340.

Where a transaction is a fraud in law, it is not permissible to show that the transaction was an honest one: Michoud *v.*Girod, 4 How. 503, 507; Coburn *v.*Pickering, 3 N. H- 415 ; Story Eq. Jur., § 322; Wardell *v.*R. R., 103 U. S. 651; Jewett *v.*Miller, 10 N. Y. 402-405; Van Epps *v.*Van Epps, 9 Paige, 237, 242 ; Hatch *v.*Hatch, 9 Ves. 297; Whelpdale *v.*Cookson, 1 Ves. 8.

A director, whose personal interests are adverse to those of the *447corporation, ought to resign, even though the personal interests of a majority of the stockholders coincide with his : Goodings *v.*Canal Co., 18 Ohio, 169; Rolling Stock Co. *v.*R. R., 34 Ohio, 465 ; Ogden *v.*Murray, 39 N. Y. 202,267; R. R. *v.*Blakie, 1 Marq. (H. L. Cas.) 461.

In determining the rental value of an ice dam, a master should be governed by the unimpeached and unanimous testimony of disinterested leading ice dealers of the neighborhood familiar with the property. Evidence of particular rentals of other ice properties in other localities is inadmissible: See R. R. *v.*Patterson, 107 Pa. 461.

A master’s report is not conclusive, but is only a serviceable instrumentality: Phillip’s Ap., 68 Pa. 138, 139; Kutz’s Ap., 100 Pa' 75-

The plaintiffs did not acquiesce in the acts of the defendants : mere delay in bringing suit is not acquiescence: Kersey Oil Co. *v.*R. R. Co., S W. N. C. 147.

*C. H. Schaeffer,*with him *Geo. F. Baer,*for appellees.

The complaining stockholders refused to go into the Ice Co. because they did not believe that it would be a successful paying enterprise. They made no objection to the rent until the lease was executed. When objection was made, they were offered one-fourth of the stock of the Ice Co., and they unwisely declined to take1 it. They waited until the Ice Co. had expended over $30,000 and established a profitable business, and then filed this bill.

A stockholder cannot, without complaining, objecting, or attempting to have corporate action, maintain a bill to set aside, on the ground of improvidence or inexpediency, an act of the directors duly sanctioned by a majority of the stockholders: Dunphy *v.*Travellers’ Newspaper Assn., 19 A. & E. Corp. C. 349; Beatty *v.*Northwestern Trans. Co., 10 A. & E. Corp. C. 265 ; Allen *v.*Wilson, The Reporter, Vol. xxii., 641.

Here there was no attempt to secure the modification of the lease by the corporate action of the directors or stockholders.

Whatever right the corporation, or, on its refusal, stockholders, had to avoid the lease should have been exercised in a reasonable time after the facts were known or could have been known : Taylor on Private Corporations, Sec. 631; Twin-Lick Oil Co. *v.*Marbury, 91 U. S. 589.

Some of the stockholders of the Ice Co. purchased stock after the execution of the lease; these are, under all circumstances, innocent holders, and therefore the lease cannot be cancelled.

The plaintiffs are estopped by standing by and permitting the expenditure of a large sum of money on the faith of the lease : Smith *v.*McNeal, 68 Pa. 164; Bispham’s Eq., 284.

If there could be any doubt as to the force of the action of the stockholders at their annual meeting in 1884, the lease was ratified by the proceedings of the annual meeting of 1885.

*448March 18, 1889.

Per Curiam,

This is a voluminous record; a long master’s report; a large amount of testimony, and no less than fifty-three assignments of error, most of which relate to the findings of fact by the master. It would require an opinion of inconvenient length to discuss the case in detail. Nor is there anything which requires it. The learned judge who heard the argur ment below has examined the case with the care and attention for which he is conspicuous, and has sustained all the master’s findings of fact. No such clear error has been pointed out as would justify us in reversing him.

Nor is there anything to be found within the four corners of this record which would warrant us in holding that the lease made by the Angelica Water Co. to the Angelica Ice Co. is void. The whole case turns upon this question. The election of the directors of the water company who made the lease was regular; the letting was authorized by a resolution of the board of directors upon the terms contained in the lease; the stockholders of the water company had not only an opportunity to take stock in the ice company, but were urged to do so. It is only after the ice company had become a success, and these appellants saw they had made a mistake in not going into the ice company that complaint was made. Had the ice company proved a failure, it is not likely this bill would have been filed. A chancellor is slow to move in such a case as this.

The decree is affirmed and the appeal dismissed at the costs of the appellants. H. j. l.