Court Opinion

ID: 6595196
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:01:54.312385+00
Date Added: 2024-06-11T15:57:48.587307
License: Public Domain

BraNNON, Judge
(dissenting):
When this case was decided at a former term, after the best consideration which I could give the evidence, I was of opinion that the last report of Commissioner Brown, finding *649Jewett and Scott to be stockholders, is correct. I still remain of that opinion, and dissent from the action of a majority of the Court at this term, excluding them. I prepared at the former hearing the following opinion, which was then assented to by three judges:
This is an appeal taken by the adminstrators of Thomas A. Scott, deceased, and the administrator of Thomas L. Jew-ett, deceased, from decrees of the Circuit Court of Jefferson county in the two cases, heard together, of Crumlish’s Adm’r v. Shenandoah Val. R. Co. and others, and Fidelity Insurance Trust & Safe-Deposit Co. v. Shenandoah Val. R. Co. By a former decision in this Court by these causes, reported in 33 W. Ya. 761 (11 S. E. Rep. 58) an indebtedness Avas established against the Shenandoah Valley Railroad Company in favor of the Central Improvement Company, which a commissioner afterwards found to be eight hundred and tAventy thousand three hundred and fifty three dollars and eighty one cents, as of February 10, 1891. After the case returned from this Court to the Circuit Court on May 30, 1890, a reference was made to a commissioner to report who were stockholders of the Central Improvement Company entitled to participate in said fund, and the respective amounts to which they were entitled, and to audit debts a,gainst said company, and to settle the accounts of the special receiver, and ascertain what Avould be reasonable compensation for expense incurred by him, and a fair alloAvance of fees of counsel employed by him. In March, 1891, the petitions of the foreign executors of Thomas A. Scott, deceased, and of Thomas L. Jewett, and the petition of Charles McFadden were filed, respectively claiming that the estates of said Scott and Jewett were stockholders and said McFadden was a stockholder in the Central Improvement Company, and entitled to participate in its distributable assets. Certain decrees were entered prejudicial to the estates of Scott and Jewett, and then Davis, as administrator c. t. a. of Scot!., and as adminstrator of Jewett, appointed as such in West Virginia, filed their petitions, claiming that their decedents had been stockholders in the Central Improvement Company, and asking for their estates a participation in said fund, and praying that said decrees be re*650heard and reformed. The cases went on, resulting in a decree, not only not rehearing and reforming prior decrees complained of by Scott’s and Jewett’s representatives, but wholly denying to the estates of Scott and Jewett any) participation as stockholders in said fund, and dismissing their petitions,, and according to McFadden participation to only a, partial, extent of his claim; and they appealed here.
I have stated such fad^ as bear on the first question which I will decide, and that is whether Davis, the West Virginia personal representative of Scott’s and Jewett’s estates, can maintain this appeal. It is said he can not; that the foreign representatives were parties when decrees containing certain features prejudicial to said estates were made, and they alone can complain of them, that in fact, Davis can hold no place as* appellant either as to those decrees made before he appeared or since, as the foreign representatives were received and recognized as parties by the court, and have never been eliminated from the case, and both a foreign and domestic adminstrator can not represent the estate in one suit. This contention can not be sustained. A foreign personal representative can not sue or be sued outside the state granting him authority. Hull v. Hull, 26 W. Va. 15; Vaughan v. Northup, 15 Pet. 1; Bart. Ch. Prac. 152; Dickinson v. McCraw, 4 Rand. (Va.) 158; Story Confi. Law § 513; Dixon v. Ramsay, 3 Crunch 319; Fenwick v. Sears, 1 Crunch 259; 1 Lomax Ex’rs 121; 1 Rob. Prac. (new) 161; Andrews v. Avory, 14 Gratt. 229; 1 Lomax Ex’rs 142; Doolittle v. Lewis, 7 Johns. Ch. 45; Fugate v. Moore, 86 Va. 1049 (11 S. E. Rep. 1063). The fact may be pleaded in abatement or in bai?. Noonan v. Bradley, 9 Wall. 394.
Without discussing what would be the effect of a decree-for a foreign administrator where no question is raised, yet I can safely say that not only the defendant can raise objection, but that when a suit like this is pending, involving a fund wherein a decedent has a share to be recovered, by intervention in the case, the administrator deriving his authority in the state in which the fund is located, may come into-the case -and demand that his decedent’s share be decreed to him, notwithstanding a foreign administrator has be*651fore intervened and claimed it; and this because it is the administrator appointed in the state where the debt is owing who alone has title to it, and therefore can sue for it, the foreign administrator having no title. When the administrator loci rci sitae makes his appearance in the case, and is recognized, he displaces and eliminates the foreigner. Both can not be longer recognized, and he must be recognized who has title,-and whom the law recognizes. This is a suit iu equity. All being before the court, can not, ought not, the court to decree the rightful party? The case of Dearborn v. Mathers. 128 Mass. 194, relied upon by counsel to support the position above mentioned, was a case where a foreign administrator sued and obtained a verdict, and then a new trial was asked, because it had been discovered that his letters had been granted out of the state; and the court said that the objection should have'come by plea earlier, and as the granting a new trial was in discretion, and the plaintiff had after verdict and before judgment qualified in the state of the actions, and thus, before judgment, become possessed of title, and would be liable on his bond, and thus no loss could come to the defendant, a new trial was refused, and judgment rendered. There the plaintiff became before judgment vested with title by letters relating back to testator’s death.
The next question is, were Scott and Jewett stockholders in the Central Improvement Company? The commissioner reported on the evidence that Scott had subscribed and paid for twenty thousand dollars, Jewett five thousand dollars, and McFadden five thousand dollars of stock, but had no certificates. I shall not here detail the evidence upon what is purely a question of fact, as I conceive that the purpose of the requirement that we shall give reasons for our decisions refers to legal principles of decision, and was not designed to encumber the Reports with mere evidence, affording no guidance in future cases, like legal principles. Suffice it to say that upon examination of the evidence, we find that Scott, Jewett, and McFadden were such stockholders. The want of certificate does not alone furnish the test of whether a person is a stockholder in a private corporation. He is a *652stockholder who has subscribed for and paid for a given number of shares in its capital, as these parties did. The stock is one thing; the certificate quite another. The certificate is merely evidence, but not the only evidence of ownership of stock. The owner of stock is a shareholder without it. Cook, Stock, Stockh. & Corp. Law, § 10; Hawley v. Upton, 102 U. S. 314; 1 Beach, Priv. Corp. § 62.
Scott and Jewett so being stockholders, the next question is, were Scott and Jewett property denied any share in the fund in court as the property of the corporation, the Central Improvement Company? Various arguments are made to justify such exclusion. I will state the facts which seem to me to bear on this branch of our inquiry in this case. It will appear from the former decision in this case (33 W. Va. 775 (11 S. E. Rep. 58) that the basis of recovery by the Central Improvement Company against the Shenandoah Valley Railroad Company was under a certain agreement between them, which provided that the Shenandoah Valley Railroad Company should deliver the Central Improvement Company two hundred and fifty thousand dollars second mortgage bonds of the Shenandoah Valley Railroad Company, and income bonds, measured in amount by double the amount of stock of the Central Improvement Company paid in; and, on account of the failure to deliver said bonds this Court debited the Shenandoah Valley Railroad Company with two hundred and fifty thousand dollars, with interest, on account of the second mortgage bonds, and with three hundred and seventy nine thousand two hundred and twenty four dollars on account of the income bonds, reaching the latter sum by taking one hundred and thirty eight thousand dollars as the amount of siock of the Central Improvement Company wlúch liad been paid in, with interest, and then doubling it. When the commissioner was executing a reference requiring him to report who were stockholders of the Central Improvement Company entitled to share in this money, the Norfolk & Western Railroad Company appeared to own one hundred and twenty eight thousand dollars stock (later increased to one hundred and thirty four thousand dollars), and *653claimed, that one hundred and thirty eight thousand dollars as stock paid in was an unchangeable, immovable given sum in the problem of distribution, and that it must get of the amount to be divided among stockholders in the proportion which one hundred and thirty four thousand dollars bears to one hundred and thirty eight thousand dollars. This would leave an open space for only four thousand dollars of stock in other hands, and would not let in the whole thirty thousand dollars of stock owned by Scott, Jewett, and McFadden. Their thirty thousand dollar stock added to the one hundred and thirty four thousand dollars of the Norfolk & Western Railroad Company would make one hundred and sixty four thousand dollars of paid up stock.
Then Scott, Jewett and McFadden contend that the amount divisible among stockholders must be divided on a basis treating one hundred and sixty-four thousand dollars as the amount of paid-up stock of the Central Improvement Company, while the Norfolk & Western Railroad Company contend that it must be divided on a basis treating one hundred and thirty eight thousand dollars as the proper amount of paid-up stock. This contention of the Norfolk & Western Railroad Company is sought to be supported upon the theory that the sum of one hundred and thirty eigh t thousand dollars, as the amount of paid-up stock, is unalterably fixed as a matter of res judicata by the former decision of this Court, and constitutes an es-toppel against Scott’s, Jewett’s and McFadden’s contending for any other sum. Let us see as to this contention. The object of the suit of Fidelity Insurance, Trust & Safe-Deposit Co. v. Shenandoah Val. R. Co. was only to enforce a mortgage given by the latter to the former company. We may dismiss that suit from consideration here. The object of the suit of Crumlish’s Adm’r v. Shenandoah Val. R. Co. was to assert a debt against the Shenandoah Valley Railroad Company in favor of the Central Improvement Company. In ascertaining that debt, as above stated, the sum of one hundred and thirty eight thousand dollars was held by this-Court as the amount of the paid-up stock of the Central Improvement Company; and on the basis of that sum, a certain-*654amount was decreed against the Shenandoah Valley Railroad Company for its failure to deliver its income bonds to the Central Improvement Company. That this decision is res judicata and an estoppel upon the two corporations, the Shenandoah Valley Railroad Company and the Central Improvement Company, and stockholders of the latter company, for certain purpose's, admits of no question. The two corporations were parties, and of course they are bound; and as the Central Improvement Company was a party, and Crumlish was a stockholder of that company, suing for himself and all other stockholders, not only Crumlish, but all other stockholders, are concluded for certain purposes. Then what are those purposes? What the limit of this estoppel?
I do not question the case cited, Vanderwerken v. Glenn, 85 Va. 9 (6 S. E. Rep. 806) holding that “in a suit wherein a corporation is a party the decree binds the stockholders, though they be not personally parties,” nor the case of Hawkins v. Glen, 131 U. S. 319 (9 Sup. Ct. 739) holding that in the absence of fraud, stockholders are bound’ by a decree against the corporation in respect to corporate matters, and such decree is not open to collateral attack, when those cases are properly applied. I do not doubt that the sum fixed by said decision as the liability of the Shenandoah Valley Railroad Company to the Central Improvement Company and the elements entering into the process of reaching that sum, including one hundred and thirty eight thousand dollars, considered as the amount of paid-up stock, are forever binding on companies and stockholders. I do not question the proposition that neither the Central Improvement Company nor any of its stockholders can now say that the amount of indebtedness fixed by that decision in favor of the Central Improvement Company was not correctly fixed, or that one hundred and thirty eight thousand dollars paid-up stock, taken as a measure or basis in ascertaining that indebtedness, was not the correct amount for that purpose. The stockholders of the one company can for no purpose say the debt decreed against it is too large; the stockholders of the other can for no purpose say that the debt decreed in its favor is too small, because of! untrue data or elements in its ascertainment. The *655■one hundred and thirty eig'ht thousand dollars treated as •paid-up stock then appeared right; but, under evidence since taken, it appears to have been larger. Though wrong, yet nobody can now question it, so far as the amount recovered is concerned. But now that the money stands for distribution among stockholders, the estoppel ceases. It is now a fund in the corporate treasury, first for payment of debts, then for distribution among stockholders according to their holdings. It is simply assets distributable equally among them.
Shall the loss arising from- the fact that the evidence then present showed only one hundred and thirty eight thousand ■dollars paid up be borne by only some of the stockholders? • Shall not this loss be shared by all stockholders in common like any other loss ? The former decree of this Court, while it fixed irrevocably a cei tain sum as the liability of the Shenandoah Valley Railroad Company to the Central Improvement Company, and bound companies and their stockholders to that sum, did not fix the rights of stockholders as among themselves. The adjudication of the indebtedness of one -company to the other is one thing; the adjudication among stockholders of their respective rights as to each other is quite a different thing. The use of one hundred and thirty eight thousand dollars piaid-mp stock as a factor in the process of the adjudication of the indebtedness of the one company to the other is one use, but its use in the adjudication of the rights of stockholders among themselves is quite a different one. For the one purpose, its use as a factor in fixing that indebtedness, it stands immovable, since it did enter into the adjudication of a specific sum of indebtedness; but for the other purpose, as a factor in settling the rights of stockholders among themselves, it not only is not immovable, but it is not a factor, since it was not used in that matter, as that matter was not passed on by this Court.. That matter has never been passed on by this Court. It simply passed on the indebtedness between the two companies, but not on the rights of stockholders among themselves. That was not the point passed upon by the former decision. To make an adjudication an estoppel, it must appear that the same precise *656question ormatterwas adjudicated in the former adjudication or was necessarily involved in the adjudication. Western M. & M. Co. v. Virginia Cannel Coal Co., 10 W. Va. 250. The prior decision is conclusive, not only as to the matter actually determined, but also any other matter which the parties might have litigated, and'had decided as incident to, or essentially connected with, the matter actually determined, coming within the legitimate purview of the action. Sayre’s Adm’r v. Harpold, 33 W. Va., 553 (11 S. E. Rep. 16); Rogers v. Rogers, 37 W. Va. 407 (16 S. E. Rep. 633). Row the rights of the stockholders among themselves was surely not the subject-matter of the former decision of this Court, but the liability of one company to the other was that main subject-matter; nor were the rights of the stockholders among themselves necessarily involved in the settlement of the indebtedness between the companies; nor were the respective rights among themselves incident to or essentially connected with the adjudication of the indebtedness of the one company to the other. Their rights had nothing, to do with that indebtedness, but were irrelevant. What had the Shenandoah Valley Railroad Company, as debtor to the Central Improvement Company, to do with the rights of the stockholders of the Central Improvement Company? The bill of Crumlish had three main objects in view for relief: First. The recovery of a debt in favor of the! Central Improvement Company against the Shenandoah Valley Railroad Company; second, the ascertainment and payment of debts of the Central Improvement Company; third, the division of its assets among stockholders. Here were three separate and distinct purposes. The first object — the recovery of the debt against the debtor company, the onlj property of the other company— must be accomplished before the debts could be paid, and the balance distributed among the stockholders. A decree upon the single subject of the indebtedness of one company to the other was entered in the Circuit Court, leaving the other matters untouched, and that decree was brought here for review, and this Court passed upon that matter, leaving other matters untouched. How can this decree in any wise preclude action upon the matter of the distribution among *657stockholders? It is every day’s practice, when a bill calls for several different reliefs, to decree upon one, leaving the other intact; and, unless the things pertaining to one be necessarily involved in or essentially incident to the adjudication, it does not affect the relief to be afterwards given on other matters. For purposes of .estoppel under the doctrine of res judicata, there must be identity of causes of action in the two- controversies. 1 Greenl. Ev. § 528; Bigelow Estop. 75. There being three several matters contemplated as subjects of relief by the suit, we may say, for the present purpose, that there were three suits. The former decision was upon a trial of the first —indebtedness between the companies, arising from transactions between them. This controversy is upon another cause of action, arising from another transaction — that of subscription of stock, giving stockholders a cause of action against their corporation; and out of it arose controversy between stockholders. On the trial of the former the subject of the latter — the subscription of stock and amount paid therefor — came in only as evidence or collaterally, and was only incidentally cognizable. This will not make it an estoppel against the truth, so as to prevent the stockholder from showing that the amount of paid stock was greater than one hundred and thirty-eight thousand dollars. 1 Greenl. Ev. § 528; Coville v. Gilman, 13 W. Va. 314, 329, 332, 333; Henry v. Davis, Id. 230, pt. 4; Ford v. Ford, 68 Ala. 141; 2 Black. Judgm. §§ 611, 612, 622. Facts in a controversy on a trial, but not necessarily involved in the issue, though ever so important in its determination, are not settled by a judgment, but are open to controversy in any other suit between the same parties. Beckwith v. Thompson, 18 W. Va. 103. Not until the case went back from this-Court did the Circuit Court take any action upon the matter-of ascertaining and paying debts of the company, and settling the rights of stockholders, which it did by the reference to a commissioner to audit debts, and ascertain who were stockholders entitled to participate in the fund, and the amounts to which they were entitled. And the contention is that this one hundred and .thirty-eight thousand dollars-must be taken as the basis of the total sum charged to the-*658Shenandoah Valley Railroad Company for second mortgage bpnds and income bonds, though it was a factor only in fixing the charge for income bonds, and had .nothing whatever to do in fixing the charge for second mortgage bonds. I have devoted so much space to this subject of res juMcata, because it was so elaborately discussed and strongly relied upon in the able briefs of counsel and their oral argument.
Another ground for the insistence that one hundred and thirty eight thousand dollars must be taken as the full amount of paid-up stock is that the commissioner, after reporting that the Norfolk & Western Railroad Company owned one hundred and twenty eight thousand dollars stock of the Central Improvement Company, remarked, apparently to show why he had not reported more stock, that it appeared from the records of the two suits that stock has been issued aggregating one hundred and thirty eight thousand dollars, but that he had not discovered to whom the excess belonged, and this report was confirmed without exception as to that point. In the first place, I doubt whether this can be called an actual finding as a fact that only one hundred and thirty eight thousand dollars stock had been paid up; and moreover, the commissioner says: “There appears to have been stock issued and aggregating par value of one hundred and thirty eight thousand dollars.” What is meant by “stock issued?” Does it mean certificates issued? There could be stock without certificates. The order of confirmation reserved right, if Scott’s and Jewett’s representatives should show themselves to be stockholders, to except to the allowance by the report of fees and commissions, but confirmed it in other respects. It is plausibly argued that as yet the claimants had no standing in court, because they had yet shown no right to- stock. The fair construction of the order is, as I think it is, that as the fixing one hundred and thirty eight thousand dollars concerned them as stockholders, the right to except to that is to be regarded as reserved. But perhaps this is immaterial as the decree of May 30,1891, unequivocally confirmed that feature of the report. But it is an adequate answer to this contention that not till after said report was confirmed did the West Virginia administrators *659of Scott and Jewett appear in the cause by petitions, setting up the claims of their decedents to stock, and ask that all prior decrees be reheard and reversed. Upon these petitions such order of confirmation of said report would be reheard .and reversed. The prior proceedings, though the foreign representatives were before the court, did not conclude the adminstrators appointed in this state. By their petitions they excepted to said reports and former decrees. The report found the stock paid up one hundred and thirty eight thousand dollars on ihe evidence of the record alone, as it says, on the theory that this Court had unalterably fixed that sum, and that it was binding upon the stockholders inter sese, which we have seen is not the case. The commissioner, though he afterwards found that other stock had been paid for, felt himself bound, in making subsequent reports, by the former confirmed report. No petition to rehear was filed until one was filed in December, 1891, by Davis, administrator, and McFadden. Upon them the Court should have reviewed and corrected said decree, confirming said report. No matter what we call the petitions, full as they are; of matter showing title to cause of action, and for relief, assigning errors in former orders, and asking review, be the name what it may, petition by stranger just coming in, petition for rehearing, or bill of review, containing matter sufficient, it will be given effect according to its matter, regardless of name. Sturm v. Fleming, 22 W. Va. 404; Martin v. Smith, 25 W. Va. 579. I regard them as petitions of strangers intervening .asking relief in the cause, and, as incident, the rehearing of former orders, and to be treated as to those orders as a petition for rehearing, and they ought to be treated certainly as liberally as petitions for rehearing as was the pleading called bill of review in Martin v. Smith, supra, filed by a nonresident. If we were to call it a bill of review, it would call for reversal of those orders for error of law appearing on the face of the record, not looking into evidence, but only to the face of the report; and sc if we call it a petition for rehearing, and then we could look into the evidence; and so if we call it an original petition by a stranger intervening for the first time. For myself, I do not regard those orders, not carried *660into actual decree at the time the petitions were filed a» final, but only interlocutory, and reviewable on the hearing for the error on the face of the record, even did these petitions-not ask rehearing, hut only relief inconsistent with such orders. Hyman v. Smith, 10 W. Va. 298; opinion in Fowler v. Lewis’ Adm’r, 36 W. Va. 129 (14 S. E. Rep. 447). This appeal brings those orders up. Lloyd v. Kyle, 26 W. Va. 534.
Another reason suggested for adhering to the sum of one hundred and thirty eight thousand dollars as the basis of distribution is that the commissioner’s report of October 23, 1891, fixes the distribution; and that his finding, resting on that basis, is upon a question of fact; and that the law being that when a commissioner and the court have concurred in deciding a pure question of fact, this Court will give the finding great weight, unless it plainly appears to be wrong. Fry v. Feamster, 36 W. Va. 454 (15 S. E. Rep. 253). By the report aboye mentioned, the commissioner took said one hundred and thirty eight thousand dollars as the amount of paid up stock, and after deducting debts, commissions, etc., he allowed the Norfolk & Western Railroad Company, as owner of stock of the Central Improvement Company, a share in the-fund for distribution among stockholders based on an ownership of one hundred and twenty eight thousand and fifty dollars of stock, its share being fifty seven thousand and eight dollars and eighty six cents, and left only a balance of the distributable fund of four thousand four hundred and twenty nine dollars and seventeen cents for other shareholders; and by decree of May 30, 1891, the court again referred the case to him to report who was. entitled to said balance of our thousand four hundred and twenty-nine dollars and seventeen cents; and the commissioner reported, October 23, 1891, that Scott and Jewett were not entitled, and the-court confirmed the report. We can not, it is argued by counsel, apply the principle announced in Fry v. Feamster, supra, to this report, for the reason that it is not a finding on a pure question of fact; or rather, the ultimate fact found is only an erroneous legal conclusion from- other facts already found, which called in law for a different finding. The commissioner had found in a former report, and repeated it in *661this, that Scott and Jewett had subscribed.and paid for twenty five thousand dollars stock, and that alone called for a report in favor of their participation in the distribution. But as there was some evidence raising the question' whether •Scott and Jewett remained still stockholders, we may not be able to say that the finding against their right to .share in the fund was purely an erroneous legal conclusion. But this I say, that it being found, and rightly found, that Scott and Jewett had subscribed and paid for stock, it was incumbent on those who denied their continued ownership to prove it, and that the evidence fell very far short •of proving it, and the finding against them was contrary to the evidence. •
A further plea for the exclusion of Scott and Jewett is their laches. This plea is wholly untenable, but in deference to counsel I refer to it. Wherein are Scott and Jewett chargeable with laches ? One counsel says, only in failing to get certificate of entry on the books to show they were stockholders. •Surely, this ought not to exclude them. As to entry in company’s books, they had right to presume it would be done. It was not their fault, and the commissioner reports that substantially all the company’s books and papers were lost. Certificates of stock are not indispensable as evidence of stock ownership. Scott had receipts for payment for stock, but they were mislaid. It is said they should have presented their stock, so that it would have been known that the paid-up stock was more than one hundred and thirty eight thous- and dollars, so that the recovery against the Shenandoah Valley Railroad Company would have been larger. We do not know that they knew of Crumlish’s suit to enforce the ■company’s liability against the Shenandoah Valley Railroad ■Company. They were non-residents. There was no convention of stockholders; no order to ascertain them until August, 1890. Scott died in 1881; Jewett in 1875. Their representatives appointed in Pennsylvania appeared to claim their stock in February, 1891, and kept on claiming it The personal representatives appointed in this state filed petitions claiming this stock in December, 1891. Papers to prove payment for stock, are lost. Neither Scott nor Jewett nor *662tlxeir representatives were parties except constructively by Crumlish (a stockholder) and the company being parties. And if these stockholders knew of the suit, would they not have right to assume that their company would furnish the true amount of paid-up stock in order to recover the true amount of the debt? Are they more remiss in this than others? And why is it assumed that the stock of the petitioners was not a part of that one hundred and thirty eight thousand dollars? It was paid in cash, and part of the other stock was not. Was all the other stock present, and this alone absent? Noi other stockholder appeared but Crumlish until after the order for their convention. It would be inequitable to visit on them the burden of the failure to recover of the Shenandoah Valley Railroad Company as much as'would have been recovered had their stock been known. Both the stockholders were dead; their papers lost. ISTo1 other stockholder, except Crumlish, appeared, or did more than they. It is needless here to speak of the zealous efforts of the personal representatives of Scott and Jewett, commencing in February, 1891, to secure the fruits of this stock.
As to Scott’s ownership of stock, a plea of res judicata is relied upon as specially applicable to his ownership. In 1874, a suit in equity was brought by Jefferson county as a stockholder against the Shenandoah Valley Railroad Company to annul three contracts between the Shenandoah Valley Railroad Company and the Central Improvement Company, because, among other reasons, when two of said contracts were made, Scott was president and director of Shenandoah Valley Railroad Company, and stockholder in the Central Improvement Company, and the bill charged that he was a stockholder, and the answer of the Central Improvement Company denied that he was a stockholder, and the court held those contracts void. The fact that they were held void tends to sustain the claim that he was a stockholder. The fact that the decree finds that Walker and Bard-well were stockholders furnishes a mere implication that Scott was not. The denial in the Central Improvement Company’s answer that Scott was a stockholder can not preclude that stockholder’s showing himself to be a stockholder. It *663can not be possible tb;U an answer of a corporation denying that one is a stockholder in a suit to which he is not a party, where,the point comes up only incidentally as evidence, and not involving the adjudication of stockholders’ rights, can conclude him against showing in another suit, having for its object the ascertainment of the stockholders and the settlement of their respeei ive holdings, that he is a stockholder. If even Scott has been a party, the answer' of a codefendant would not be evidence against him. Let us even suppose that one hundred and thirty eight thousand dollars must be taken as the unalterable amount of stock paid in, where even then the equity of according to1 the Norfolk & Western Railroad Company its full ratable quota for the one hundred and thirty four thousand dollars owned by it, and denying any part to Scott’s and Jewett’s twenty five thousand dollars, and allowing McFadden less than his ratable quota, even on the basis that he owned only four thousand dollars stock, as found by the commissioner? The fund was for distribution among stockholders. The fact that it was smaller, by reason of its not appearing by evidence when the case was before in this Court that there was more stock than one hundred and thirty eight thousand dollars, than it would have been had the further evidence been present, can not prejudice one stockholder more than another, ratably. It is a loss common to> all. We may say that while the decree of March, 1891, confirming the report finding one hundred and thirty eight thousand dollars as the amount of paid-up stock, as long as it stood, would guide the commissioner, yet it ought not to have controlled the court in its final decree making distribution. The fund was for all stockholders. Why, in equity, should they not have shared by a common percentage?
My conclusion is That Scott’s estate is to be treated as a stockholder in the Central Improvement Company in the amount of twenty thousand dollars, Jewett’s estate in the amount of five thousand dollars, McFadden’s in the amount of five thousand dollars and the Norfolk and Western Railroad Company in the amount of one hundred and thirty four thousand dollars, and they are to share in the fund for dis*664tribution among stockholders ratably by a percentage common to all of them.
Another important question is, shall the special receiver have any compensation for services, and if so, what? The commissioner credited him with sixteen thousand four hundred and sixteen dollars and seven cents, apparently intended to be two per centum of the gross fund realized from the recovery by the Central Improvement Company against the Shenandoah Valley Railroad Company. The appellants protest against this charge on the fund, as it lessens their portion. They say he was no receiver, because the decrees appointing him were reversed. By decree in the Crumlish suit (November 29, 18871 a special receiver was appointed in the cause, and authorized to file his petition in the cause of Fidelity Insurance, Trust & Safe Deposit Co. v. Shenandoah Talley R. Co., brought to enforce a mortgage of the latter company, and by such petition to seek the recovery of the demand of the Central Improvement Company against the Shenandoah Valley Railroad Company, and to take such steps to that end as he might deem expedient, and to bring any money recovered into the Crumlish suit for distribution among those entitled thereto. The receiver gave bond under this appointment. In February, 1888, Crumlish’s administrator and the receiver filed such pel ition in the Fidelity, etc., Co. suit, making the Central Improvement Company a party, to assert the demand aforesaid. Afterwards the decree - appointing the receiver was wholly reversed. Afterwards by decree of December 3, 1889, the Central Improvement Company recovered of the Shenandoah Valley Railroad Company one hundred and twenty seven thousand dollars, and a special receiver was appointed to collect it. He never gave the bond required by this decree. Afterwards that decree was wholly reversed by this Court. It is plain that a reversal without reservation is a reversal in tolo and ends all powers as to future action growing out of the decree or judgment. Flemings v. Riddick, 5 Gratt. 272; 2 Freem. Judgm. § 481. After the first reversal, the Circuit Court adjudicated that the receiver was no longer receiver, as it reappointed him; but he gave no bond, and it is held that until he gave bond he is no receiver *665and has no title. Code, c. 133, s. 28; Donahue v. Fackler, 21 W. Va. 124; High, Rec. § 121; 20 Am. & Eng. Enc. Law 162. I think he was lawful receiver from his first appointment up to February 25, 1880, when the first reversal occurred; but I can not see how he was afterwards. There seems to be in the meager authorities on this particular point a difference, ■as to a right to charge the receiver’s compensation on the whole fund, between cases where the appointment was regularly made and where it was not. In cases where it is irregularly made, it seems not chargeable on the fund, as the party in interest may object. I would think with Judge Beck in Radford v. Folsom, 55 Iowa 286 (7 N. W. Rep. 604) that if jurisdiction existed, its erroneous exercise (in the appointment) would not affect the right of the receiver (as to compensation) aslongas the order of the court stands unreversed. But as the appointment is void, or becomes vacated and inoperative by reversal, how can it bind a party? Can he not avail himself of the nullity of the appointment? Perhaps that was among the reasons for which he sought reversal. In People v. Jones, 33 Mich. 303, it was held that as the appointment tv as void for want of jurisdiction, the receiver should have no compensation. In Verplank v. Insurance Co., 2 Paige 438, the appointment was reversed, and the receiver ordered to give up property and without compensation. In French v. Gifford, 31 Iowa 428, this distinction is clearly drawn by the holding that the rule that the compensation of a receiver to take charge of the assets and wind up the affairs of an insolvent corporation should be paid out of the fund in his hands generally applies to cases where he closes up his business, and settles his accounts, not to cases where the order appointing him is set aside as improperly made. It was later recognized in Radford v. Folsom, 55 Iowa 276 (7 N. W. Rep. 604). See Beach Rec. § 773; Gluck & B. Rec. § 105. These •cases tend strongly to show that we can not regard this receivership as continuing after reversal of the decree creating it. Its foundation failed.
Should a special receiver be given,compensation by way ■of commission on receipts or otherwise? There is no fixed rule. Often the commissions would be grossly excessive *666oi- often too little. In many instances there is an inclination to allow what are allowed administrators and trustees-for similar services. The true rule is' that he is an officer of the court, and the court may fix his compensation, giving him what is fair and reasonable under the circumstances of the particular case, rather than by any invariable rule or analogy. Abbott v. Packet Co., 4 Md. Ch. 310; Magee v. Cowperthwaite, 10 Ala. 966; Gardiner v. Tyler, 42 N. Y. 505; Gluck & B. Rec. § 103; High Rec. § 781. Where the fund is large, it is usual to allow a salary or lump sum. 1 Fost. Fed. Prac. § 258; Cowdrey v. Railroad Co., 1 Woods 346, Fed. Cas. No. 3,293; Farmers’Loan & Trust Co.v. Central Railroad of Iowa, 8 Fed. 60; Central Trust Co. v. Wabash, St. L. & P. Ry. Co., 32 Fed. 187. In French v. Gifford, supra, Miller, J., afterwards-Mr. Justice Miller, said: “While we concede that the receiver should receive a compensation corresponding to the-high degree of business capacity, integrity, and responsibility required in cases of this character, and which was secured in the person of the receiver in this case, yet we feel it our duty to allow only such sum as will be such reasonable-compensation.” In Central Trust Co. v. Wabash, St. L. & P. Ry. Co., 32 Fed. 188, Brewer, J. said what is obviously law,, that the allowance to a receiver is a judicial act, and while it is left to the discretion of the court, it is discretionary only in the sense that there are no fixed rules to determine the allowance, and it is not discretionary in the sense that courts may allow anything more than a fair and reasonable compensation; that the court desired to see officers of the court well paid, so that men!.of character] and ability may be willing to’ accept the burden and responsibilities of these trusts, but at the same time courts must not forget that the property to be charged with such allowances is not the property of the-judges, and that there are thousands all over the land who» are owners, whose] property by the strong hand of the law has been taken out of their custody and who look to the courts to see that no unjust or excessive burden is cast upon them. Courts 'may not exercise the generosity of owners, but are closely limited to the justice of judges. In this case there were no assets to care for or pursue but the debt on. the *667ShenandoahValley Railroad Company, and that came by decree. In fact, very little, if any, actual money eajne to the hands of the receiver. The Norfolk & Western Railroad Company purchased the railroad of the debtor company, and, owning a large share of the stock of the Central Improvement Company, was simply credited 'with it on purchase money. The receiver says in a brief filed by himself it paid the attorney’s fees and so-called “by-bid” below mentioned, aggregating three hundred and sixty thousand dollars, and that that part of the fund stood for its use, and that the same company owned three hundred and sixty thousand dollars out of three hundred and eighty two' thousand dollars of debts audited against the Central Improvement Company; and yet the receiver is given a commission on those sums. It is not made to appear by the record what, if. any, actual money went into his hands to be cared for and guarded, which constitutes a large element in the consideration for which receivers are allowed compensation. He made no report of it.
He appeared in court February 28, 1893, and admitted that there was then in his hands sixty one thousand nine hundred and forty dollars and three cents distributable among stockholders. That sum, with commissions, debts, and counsel fee, and by-bid, made up the sum recovered against the Shenandoah/Valley Railroad Company; so that, except said sum of sixty-one thousand nine hundred and forty dollars and three cents and commission, no other actual money came to his hands; and of thisi the Norfolk & Western Railroad Company owned the greater part as stockholder. Indeed, I see no decree directing the money to be paid him save that of November, 1887, which was reversed, as above stated. Thus, there is no ground for basipg compensation on commission on the said gross sum, as was done in. the report of the commissioner. We must adopt a specific sum. We find that he was a lawful receiver until February 25, 1889. Prior to that timejhe took some steps of importance in the cause. We can not, as a court of equity, deny him some compensation. It is urged he resisted with the means in his hands the participation of appellants as stockholders. He *668Aid except to the’report of the commissioner finding them to have paid for stock; but this was late, after all service for which he charges or can be allowed had ended. We do not .see that he used the fund for that purpose. He appears to have been through years diligent, zealous, laborious, and efficient in the prosecution of the rights of the Central Improvement Company against the Shenandoah Valley Bail-road Company under the most adverse and discouraging circumstances rendering its cause at various periods of the litigation to all reasonable appearances a forlorn hope; and ■though the decrees were reversed, the court still calls him .and treats him as receiver. McFadden, Scott, and Jewett shared the benefit of the services. I have fixed upon twelve thousand dollars as the total compensation of the receiver, of which Scott’s and Jewett’s estate and McFadden are to pay their proportionate part.
" Another important matter is the allowance by the commissioner out of the fund of two hundred thousand dollars for fees of counsel employed by the receiver in the prosecution of the demand of the Central Improvement Company. While the decree of November 27,1887, was unreversed, the special receiver employed counsel to prosecute the claim of the Central Improvement Company against the Shenandoah Valley Railroad Company; and they began proceedings and continued them until they gained their cause in the recovery of the large debt above spoken of. It is beyond any question fair and truthful to say, in a few words, that the services of the counsel were unremitting through the vicissitudes of victory and defeat in the courts, original and appellate, for twelve years, and able, laborious, zealous and faithful, yielding to none of many discouragements often presenting themselves. Orders appointing receivers should authorize the employment of counsel, if such is the purpose, as charges are often made for them after service rendered when it is difficult to deny them. Courts are indisposed to allow receivers for counsel when their employment has not been before authorized. High, Bee. § 805. This decree did not expressly authorize the receiver to employ counsel; but it empowered him to prosecute a suit for the recovery of^the *669claim, and “to take such other proceedings to that end as he may deem expedient;” and as counsel were absolutely necessary, we may say their employment was'contemplated by the-decree, and at any rate, that it was an act of sound discretion, which under the imperious nature and circumstances' of the case, a court ought to approve. No case ever required the service of counsel more. True, the decree appointing the receiver fell by reversal, but we hardly think that would vacate the retainer of counsel; and at any rate, these counsel went on term after term in open advocacy of the cause in the court which had appointed the receiver, and it thus recognized their continued relation to the cause. These services-redounded to the'benefit of each and every stockholder, and all must bear the burden of fair and reasonable compensation. If this Court sees, as it does, that such services were-essential, and that without them the debt would have been — • likely would have been — lost, and the stockholders themselves had not their own counsel, it would seem just to charge, and unjust not to charge, .all of them with such services, as they share in the fruits of these services. That a court of equity may allow receivers counsel fees in proper' cases is beyond question. Their amount is within the sound discretion of the court. Stuart v. Boulware, 133 U. S. 78, 10 Sup. Ct. 242.
But the action of a receiver in employing his relatives or’ friends as counsel on his own motion is open to great abuse, except when specially directed in open court, where the interests involved may be heard, and should be watched with great jealousy by courts. Courts must realize that they are • applying moneys in their grasp belonging to persons who, as the power is largely discretionary, are powerless to resist, absolutely helpless and remediless in courts of the last resort. Mr. Justice Brewer said in Central Trust Co. v. Wabash St. L. & P. Ry. Co., 32 Fed. 187: “There has been no little implied criticism in the language of appellate courts of the magnitude of the allowances made in foreclosure cases to counsel, receivers, and others. We are admonished by utterances of the Supreme Court to be cautious in this respect.” He said: “Our duties are as sacred, our responsibilities more solemn,. *670than those of any other parties connected with this foreclosure, for our action is almost certainly final.” I say our duties are more sacred and solemn than those of any others connected with this case, not only because our action is final, but for other and higher reasons. The highest court in the land, while making an allowance, deemed it necessary to adopt a point of broad scope in the syllabus of its decision, to emphasize prudence in this matter, in the strong language following: “The practice of allowing to trustees, complainants and receivers, and their counsel large and extravagant counsel fees and commissions, payable out of the trust fund under the control of the court, commented on and disapproved.” Trustees v. Greenough, 105 U. S. 527. I venture to repeat what I wrote in the case of Fowler v. Lewis Adm’r, 36 W. Va. 154 (14 S. E. Rep. 447): “I certainly am disposed to be fairly liberal to my own profession, but not at the sacrifice of the interests of the many. I do not think it would confer a benefit upon that honorable profession, comprising the brightest men and leaders in society, trusted by the public with their most vital, sacred and important interests, private and public; but it would in the end bring the whole bar into disrepute and unpopularity, by the improx>er and cormorant use which would often be made of the rule by the least meritorious of its members. An abuse we know it has become where it prevails. The United States Supreme Court in Trustees v. Greenough, 105 U. S. 527, condemns the practice of allowing large fees out of trust funds now prevalent; and Mr. Justice Miller, in the same case, dissented, and called it a ‘gross judicial abuse of the presnt day; namely, the absorption of the property or a fund which comes into the control of a court by making allowances for attorney’s fees and other expenses.’ ”
In view of the increasing number of instances in this state, in these days of its progress and development, in which courts of equity are called upon to administer the assets of corporations and others, I have availed myself of this occasion to advert to principles which will be of frequent use in the courts. It might be thought that as the receiver has not shown that he has paid these counsel fees, but that the Nor*671folk & Western Railroad Company has, we could not allow .anything- on this score, since it is only allowed on the theory that it is an expense of the receivership, and the fee is allowed to the receiver, not to counsel. Stuart v. Boulware, 133 U. S. 78 (10 Sup. Ct. 242). But the receiver employed the ■counsel and other stockholders have incurred the expense in saving assets for the common benefit, and others ought to help bear the burden. Trustees v. Greenough, 105 U. S. 527.
Therefore, on this branch of the case, it only remains to say what shall be allowed for such counsel fees. Some of these counsel had, before they engaged to the receiver, engaged with certain stockholders, holding a large amount of stock to recover it, having fees in some case for one fourth, in some one half, of recovery, contingent wholly on recovery, which, under the dark clouds then lowering over their stock, -were not unreasonable. It may be that these stockholders assented to the sum of two hundred thousand dollars. If so, that is their own act, but, of course, does not bind Scott’s and Jewett’s estates and McFadden, who stubbornly protest against any allowance to their prejudice; and we can not fix any sum approximating that sum, and thereby charge them on that basis by charging it on the fund. We do not intend to affect in any way am' arrangement which may have been made between receiver and counsel and other stockholders; but as to McFadden and Scott’s and Jewett’s estates, we must treat the fund, so far as they are concerned, not being parties to any private arrangement, as money in court, and deal with it as a court of equity. IVe find that in 1882, long before the receiver wa s appointed and authorized to go into the Fidelity Company’s suit to recover the debt due from the Shenandoah Valley Railroad Company, one of the firms of attorneys employed by the receiver (the receiver being a member of-it) had filed a bill in the suit of Crumlish’s administrator, as a stockholder in the Central Improvement Company, to assert that debt against the Shenandoah Valley Railroad Company, and success in that suit would have procured the fund for all. It does not appear what was the engagement between said administrator and his counsel. This is men-' tioned as a matter touching on the quantum of counsel fees. *672Again, we do not see that so many as five different attorneys were essential. We fix eight thousand dollars as the sum to-be paid by Scott’s and Jewett’s estates and McFadden proportionately as between themselves, for services redounding to their benefit for all fees of counsel. The receiver agreed on no fixed compensation with the attorneys, but it was to be left to the court. The amount, under any circumstance, would be within the discretion of the court. Stuart v. Boulware, 133 U. S. 78 (10 Sup. Ct. 242).
One of the attorneys for appellants makes the point that a certain contract bars any claim for counsel fees or receivers’ commissions. A written agreement was made between certain attorneys for certain unnamed stockholders of the Central Improvement Company and the Norfolk & Western Railroad Company, whereby the Norfolk & Western Railroad Company purchased the holdings of said stockholders at the price of five hundred thousand dollars; and it contains a fourth section, providing that the attorneys and receiver in these suits should relinquish all claims for fees or commissions except such as were paid out of said five hundred thous- and dollars, the receiver being aware of this contract, and signing an addendum- relative to- another clause. While I think that agreement would forbid attorneys and receivers from claiming any compensation from any stockholders other than those owning the stock sold by said agreement, yet, the agreement not including other stockholders, it seems to me it does not forbid the stockholders referred to in it from asserting an equity outside of1 it, of calling upon other stockholders to bear such part of the burden as a court of equity, would deem fair. T regard this claim to charge other stockholders with counsel fees as one made by some stockholders to compel others- to share their burden. This agreement, or any other for counsel fees, stands out to itself as made by parties competent to contract, and not binding on those standing out of such agreement.
The last matter for consideration is the allowance by the confirmed commissioner’s report of a sum of one hundred and sixty thousand dollars out of the fund. I state the facts pertinent to this point. The Central Improvemnt Company ob*673tained a decree against tbe Shenandoah Valley Railroad Company for the large sum so often above spoken of; but it was second as a lien to another of, say five million eight hundred thousand dollars, including costs. It is said in evidence tending to show it that the Norfolk & Western Railroad Company owned or was in touch with this prior lien, and had formed a plan to buy the Shenandoah Valley Railroad at the then approaching sale, under decree, at a sum only covering the prior lien, and shutting out the debt of the Central Improvement Company, and thus that debt was in imminent, actual danger of total loss to creditors and stockholders. In this emergency the bulk of the stockholders of the Central Improvement Company came together, and passed a resolution authorizing a committee by them appointed to take steps in their discretion to secure payment of said debt with power to place the debt as security for any money it might be necessary to borrow, or to use a portion of the debt to secure financial assistance in the purchase of the Shenandoah Valley Railroad, if a purchase should be necessary. Under this authority, after fruitless efforts in olher quarters, the committee made arrangements with the.Memphis & Charleston Construction Company, backed by four individuals, by which it was to bid for the road a sum sufficient to cover the debt of the Central. Improvement Company, for which service the Memphis &. Charleston Construction Company was to be paid two hundred thousand dollars. When the Norfolk & Western Railroad Company learned this, it agreed to and did bid a sunt sufficient to cover the Central Improvement Company’s debt. Afterwards the Memphis & Charleston Construction Company agreed to reduce the sum it was to get to one hundred and sixty thousand dollars, and it is this sum which was charged by said commissioner’s report as a proper charge upon said fund. The receiver, as such, was not a party to this’ contract, but in evidence says it is a fair and proper charge, under the necessity of the case. He did not pay it as a receiver. It is the necessity of this expenditure to save the debt of the Central Improvement Company from absolute loss which is pleaded to charge it upon the funds. Such *674loss might have come, hut can we assert that necessity to have in fact existed? Can it be demonstrated to us, as a court, by mere opinion evidence, that such loss surely would have fallen? How can we say, with a safety or certainty warranting us in allowing such a charge, that the Shenandoah Valley Railroad, with a mileage of two hundred and fifty five miles, running from Roanoke City, Va., to Hagers-town, Md., through the length of the Shenandoah Valley, and its whole line through one of the very finest and most beautiful sections of the Republic, touching or crossing three great east and west trunk lines, and in easy and close reach of another, forming an artery of connection between the great cities of the North, Boston, New York and Philadelphia, and the South- — -how can v, e say that this road, on actual sale, open to free competitive bidding, would not have brought seven million dollars? If we should say so, it would be an arbitray guess, in a legal point of view. Counsel proposes as a test that if the court would have authorized it in advance, it ought now to be allowed, and asks whether the expenditure would not have been authorized by a court in advance. I answer that it would not. The court would let the property take its chances in the usual course at the open .auction. Would a court, where a farm was to be sold for creditors having liens in different orders, at the request of some of the junior lienors, without the consent of others, make an order to pay a large sum to-procure a bid, and charge it ratably upon those not consenting, so as to lessen their shares? This charge is so large a drain on the fund, and so extraordinary and out of the usual line and course of the administration of assets of an insolvent corporation by a court of equity, that a court would not allow it. It is not a charge fairly and reasonably incident to such administration. Certain ones of the stockholders authorized the expenditure. They had clear right to do so-, but it was a sacrifice which they deemed prudent for the promotion of their own interests— their individual act, to save their own property; and the mere fact that their act resulted as a consequence in saving others interested is no reason for a court to charge an expenditure of that character and amount upon those not joining in the *675not, and protesting against their interests being burdened with it. They had a right to stand out and run the risk of loss, and let others make a sacrifice personal to themselves if Ihey chose. I have not met with or been cited to a case allowing a charge parallel with or analogous to this charge. The receiver has not paid it, nor could he have done so, for he can pay only such outlays as fall in the ordinary course of the business intrusted to him, such as are contemplated in his appointment. Cowdrey v. Railroad Co., 93 U. S. 352; Cowdrey v. Railroad Co., 1 Woods 331; Fed.Cas. No. 3,293. In extraordinary cases, involving a large outlay of money,, the receiver should apply to the court in advance for authority to make the outlay. Id. It can not be allowed on the ground that the receiver has paid it, but only on the ground that other stockholders incurred the expense; but that, as I have said, as to this expenditure, is one chargeable only to them.
Therefore, I think the decrees of the 20th day of February, 1893, and of the 28th day of February, 1893, should be wholly reversed; and the decree of May 30, 3891, should be reversed; except that provision directing payment to TJ. L. Boyce of a certain debt therein specified in favor of John Lee; and so much of the decree of March 2, 1891, as may be construed to the prejudice of the rights of Charles McFadden and the estates of said Scott and Jewett should be reversed, and the cause remanded, that a decree may be made according to the principles herein indicated.