736'
FEDERAL REP()R't:ER,
vol. 41.
date or prl;lsentment marks the date of investiture and recognition of diplomatic fUQCltious. "Oharges d'affaires ad interim;" says Martens, "are preseritedas:such." Guide Diplomatique, (5th Ed.) 61, § 16. It is to be presumed that the reason why Mr. Baiz was not presented as charge d'affaires ad interim was because it was not intended to make him such ap.officer. Had it been intended to make him charged'ajfa,iresad interim, hisown government would naturally have addressed him by that title, and Yr. Baiz would have been entitled to draw pay as such an officer. The absence of these circumstances also indicates the contrary intention. The fact that Mr. Baiz was an American citizen isa;Iso against t,he deferidant'scontention. ,It is a mooted question whether a citizen is ever entitled to such immunity. He is not entitled to it unless jurisdiction ovel' him is waived by accepting him as a foreign minister. No such waiver ought to be inferred upon a mere implication,. where the intent to appoirit the person to any diplomatic office is itself in doubt, through the minor character of the functions to be exercised, and the failure to designate him by any title of office. The evidence is insufficient to show that Mr. Baiz was intended to represent the sovereignty of Guatemala, Salvador, and Honduras ina gelleraldiplomatic capacity. The original letters of Mr. Lainfiestaand Mr. Bayard seem to contemplate, as I have· said, that Mr. Baiz should serve only asa mere channel of communication during the absence of any diplomatic representative. If diplomatic officers'do perform this function1,itis among the smallest of their duties. An American citizen and conaulof a foreign state, invested with this function, and no and without any diplomatic' title f1f. office, I cannot as invested with "the principal diplomatic functions," (section 4130,) or as entitled to the of an accredited diplomatic minister. The motion is denied.
STEWART 11.
ST.
LOUIS,
FT. S. & W. R. Co.
(Circuit Oourt, D. Kansas. February 26, 1887.)1 L CoRPOUTIONS.,...SALES BY DIREOTORS TO CORPORA.TION.
a.
T.and,A., for a small sum, purchal!led a road-bed, the construction of cost ol:l1y $2,000, caused a railroad company to be organized, and, with others, became directOrs thereof, and while in this relation contracted with the directors to sell read-bed to tbe company fcr$2(lO,OOO cash or bonds, and $H,600,OOO of capital The sale was formally ratified at a meeting of tbe directors, and entered on the records of and afterwards the stockholders unaminous· ly approved thepurcbase. At the time of the sale tbere were no stockholders, and file stock thus issued wasal1 that had been subscribed. Tbe company had no property except ita and the road"bed, and the value of notes and stock issued to T·.and A. had .no marketable value. Held, that the sale was not fraudulent.. . ·
BA.M:E-COIIIIPBNSATION OF OFFIOERS.
Where it is 'Understood by the directors of a corporation that ita omcers are to be paid for their llervices, though. no salary is fixerl . a note &iven at the end of the year for a reasonable sum then agreed upon is valid.. '
'Publication delayed byfaUure to receive copy.
STEWART tI. ST.
FT. S. & W. R. CO.
737
At Law. E. N. Hulett and J. D. McCleverty, for plaintiff. A. A. Harris and J.H. BaUee, for defendant. FOSTER, J. The plaintiff brings his action to recover on several promissory notes issued by the defendant company, amounting in the aggregate to $85,000. The defendant. by its answer, denies that A.M. Ayers as president, and IraD. Bronson as secretary, of said company, had authority to execute or issue said notes; that said notes were fraudulently and wrongfully issued through the collusion of the officers and directors of the company, and without any consideration whatever therefor. The facts, in brief, are as follows: In January, 1880, one M.S. Carter, oiSt. Louis, was the owner of a railroad bed graded and.constructedwestward from Ft. Scott to Humboldt byacompany known as the "Ft. Scott, Humboldt & Western Railroad Company," being a distance' of 40 miles. On the 17th of February, 1880, Francis Tierman and A. M. Ayers entered into a contract with said Carter for the purchase of said road-bed, in their own names, for the sum of 315,000, and afterwards, in May, sold a third interest in the same to John J. Franklin. In Jan-' uary preceding, said Tierman, Ayers, Bronson, and others associated with them, had become the promoters of the defendant railroad company, and had taken the necessary steps to incorporate said company, said Tierman and Ayers having signed and acknowledged the articles of incorporation on January 20th. Bronson and Hill acknowledged said articles on Februaty21st, aud the other five incorporators signed and acknowledged the same at different times from January 19th to Febrri.., ary 21st; and on the 23d day of February, 1880, the charter was filed: with the secretary of state, and the company became duly organized. Its purpose was to build and operate a railroad from the eastern line of the state, near Ft. Scott, in a westerly direction, through the counties of Bourbon, Allen, Woodson, Greenwood, Butler, and Sedgwick, to Kingman, in Kingman county. There were nine directors named for the first year, among whom' were A. M. Ayers, F. Tierman, H. M. Ayers, IJ:R D. Bronson, J. D. Hill, and others. At the first meeting, held February 28th, Francis Tierman was elected president, A. M. Ayers, vicepresident, and J. D. Bronson, secretary. In May following, said Tierman and A. M. Ayers entered into an agreement with the directors of said railroad company to sell to said company said road-bed at the sum of $200,000 cash or bonds, and $3,600,000 of the capital stock of the company. This sale and the terms thereof were afterwards, in November, at a meeting of the directors, formally ratified and approved, and appear in full on the records of the company. The purchase was afterwards approved, (March 4, 1881,) at a meeting of'the stockholders, by unanimous vote; and a deed of conveyance was afterwards made and delivered by said parties to said defendant for said road-bed. At the time of the sale there were no stockholders, and the $3,6QO,000 stock issued undel said purchase was all that had been subscribed or issued; and of the company were its charter and this road-bed. The v.41F.no.13-47
· :FEDERAL REPORTER ,.:vb!.
41.
said stock was issued, and the company, having no money or bonds, finally issued its notes for the '$200,000, of which $120',()OOhave been paid; and this suit is brought on the rema:ining $80,000, togethel' with a $5,000 note issued to J. D. Hill fora year's salary as superintendent. It''8ppears from: the evidence that the . originally 'cast about $2,000.1t had no ·marketable value,: only as it could be used· for the purpose for which. it was made. It also appears from the evidence that ,stcpck:and notesoLthe railroad company, at the time they were issued,;had ·no present marketable value. The value. of the<,pl'operty sold, as well: t i consideratiohpaid; (stock and notes,) depended ,very largely uponthesnccess ofthe.enterprise. There is no doubt but the directors Tierdmn,;l.6\.yers, .and.perhaps Bronson,:iwhile directors: oL the company, ; used..t heirinfluence to cOnsummate thissa:le from themselveS'asindividuals to':theo01ilpany; aoddt is altogether probable: they had that object in' bought the road-bed of Carter. But the question still remains, :were they. guilty ,of fraud, deception, or: any other breach of good faith:m;theirfiducia'rY relations.asdirectors? iAtethetime theyi bought the iptopertythedefendant company had not beeriorganized; and' at ttiilt!time,tOf course, they could not ,have held any fiduciary relations to,stockhlll1dersor anyone else. When the sale totbe oompany was hold.a:position of trust, and wereboubd,iin their offaithf.ullyand honestly execute their duties', and not to make ia'dealrwhere their pamonal interest should be/served 'at the peuse;of,th.rcompanythey represented., ·Wardellv. Railnf(/,aCo., 103. U.S.:651;Ryarv'v. Railroad Co., 21 KJan;366; Koe.1dm,V'J!lron 00.,2 Black';,715;lH Mo.r.Pciv. ,Corp. §517; MiChiOudv"Girodj':4iHow. 513. But; it does'jlOt folldw. (that the direotbI's are· prohibited, under 'all cir- . membei.'Jor,membersofr.theboardas incumsmnces, Jrom dealing dividuals,! But there must have been a fair; open: deal.' It-must have beenJi'eelfrom,fl'llUd or oollusion, and .char.aoterized by entire good faith. Hotd'·rJo..:: v.Wade, 97 U.. 13; 1 Mor.,Priv. Oorp. §§ 545; v,anOott'v. Van Brunt, 82;N; Y. 535;' SVmons v · Oil Co. , 6,]: Pa. St. 202; Oil: Co· . ./lJenamOte, 64pa;'St. 43; lUce'B Afpeal,-'19 Fa. St. 168 j Parv kerv. Nuikmo.1J;, 137M:ass.4B7. It does not appeltr ·in this case that there waslspy deceptionorfmudpracticedby thepartiss.: The proper-' ty was open to: inspectioil, and the approximate <:'.Qst iofconstructing it was easily obtainable.' Its value to theioompany for the purpose desired was not'difficult·toascer.taini" I find no evidence ofany'l'epresentationS: as to its ,talue otcost or purchase pride made by the parties sellingjbut there·istecord,evidence that the boardo.fdirectol'S, sevetal'tnonths after' the sale,and <With full kriowledge oitha irtl.llgabtitll1, fowally approved and .ratified it;, o.ndnot,only· that, .but sUbsequently ,'lie a,' . mooting of all the stockIaol(furBJ,: thel ttansaC!tion was ap;&lo:'ratified.; ;. Now,who was defraudecLor'.deceiired? ..A:llparties'-directors and stockholdets-assented' ta it; and,8nrely,shbsequentpurchasel'S'hf'stock, orth'e: corporation . self, cannotnowobj.ect to it; 1 Mor,iPl'i';· Corp. 290. It isttile the' vendors got :avery large advaneeon the prioe they paid', but· that is not alone the 'test. by 'Which ·the bona fidaof.· the transaction is to be,.ttied. J
STEWART". ST. LOUIS, FT. S.&: 'W. R. CO.
739
ld. 293. To them as individuals the property was of little or no value. To the railroad company, it could be ma:ie worth the price paid for it; and the vendors bent every energy to make the property useful to the company, llnd to make the enterprise successful, tor their chances of getting money or any other value for the property depended very largl3ly 011 the As before remarked, parties taking:sto,ck, afterwards the company cannot complain of the purchase. The'records of the company showed the transaction. It was not kept a secret. There was, nl> ;Iaw'com,pelling any person or municipality to take stock in the campa'.. ny unless they voluntarily chose to do so; and if -th'Ely'were dece,ived by of the 9fficers, their cause ,'or ·n:ction' rests ,on ," that deception, and not on an attack on the originaloontract of purchase. ' :; As to the $5,000 note, it must be said' that itw.a,s ',t fair c01l;1pensa:tion for the year's service of J. D. Hill as superintendent of the company. But his salary had not been fixed until end of th,e year, andfo!: that reason the defendant disputes its legality. It from the testiulOny that it was understood by the directors that, (he officers were to be paid for their services, and this sum was afterwards agreed on, and was reasona,ble. ,I know of no law to prevent its recovery.. Bank v. Drake, 29 3U,' 330, and cases cited; It is further urged by defendant that the execution of these notes was in violation of the fifteenth and other by-laws 6fthe company. 'This by-law prohibits the giving Cif bonds,bills, acceptances, etc., by the company, unless ordered by the board of :directors. A few words will dispose of this objection. The note to Hill of March 10, 1882, was made by positive order of the board of directors, and by the president and secretary,as therein directed. Some by-law of the company 'required notes to be made to the order of the president and secretary. This is a mere matter of form, and not material. The other notes were made August 15, 1881, and the bylaws were not adopted until tbe 20th of that month; and, besides, the board of directors, at their meeting in November, 1880, directed that orders be drawn on the, company for tbis $200,000. Orders are not notes; but that order of the board would, doubtless, have been good for acceptances, which stand on the same footing as notes under by-laws. Tbistransaction, so far as the main question is concerned, is a very common and usual one in the mining and oil interests of the A person becomes,by purchase or discovery, the owner of a mine or oil-welL' He proceeds to forma joint-stock company to develop and work it. He puts his property in at a price largely in excess ofwhat it cost him, and takes money or stocks, or both, in payment. Where no fraud or deception is practiced on anyone concerned, but the whole mat- , ter is o'penand fair, it seems to me that the transaction is legal. J udgmentmustgo for the plaintiff [or the amount claiIried.
in
Kan.
740
FEDERAL REPORTER,
vol. 41. STONE
CHll:ENEY
v.
NEBRASKA
& C.
Co.
'(01lrcuit Court, D.CoZerlldo. March 17,1890.)
L I.
EllTOPPlq. IN P.us-BOUNDARY LINE.
A land-owner who in good faith points out to the owner of adjoining land an incorrect division line, both, parties being iR1J.orant of the true line, is not estopped from denyipg that such line is the trUe boundary. ,. ' A trespasser who knowin!l"1.v takes stone from the land the value of. the ston,e a:f!ter it has beenqliarried.
MEASURB OI!'.DUA(H£S-WIJ,LPUL TRBSPASS-STONE IN QUARRY.
ot
another is liable for
.
NEW '.l'RJAL--NE;wLY-DISOOVEQDEVIDENODl-DILIGBNOB.
A corporatiun will not be granted anew trial on the ground of newly-discovered evidence, to be 8WOl'nto by its own otll.eara, who were present at the former trial, and shown by its own books,.where the failUre to produce suo)1. evidence at the former trisl is not excused.
At On motion for a new trial. A. L. Dottd, for plaintiff. Wolcott Vaile, for defendant. HALLETT, J. Pla'intiffand defendant own adjacent tracts of 1£1.04. This action was brought May 14, 1889, to recover the value of stone frpQl plaintiff's hmd.by defendant between the lstday of April, 1889, and the beginningofthe suit. On the trial it a,ppeared that plaintiff was in the,l$ervice of defendant when the quarry from which the stone was T,his was during the year 1888, and some months priof:.to the alleged trespo,ss. At that time, inquiry was made of plainti,ff £I.e .to the botinclary line between his land and defendant's land, Of it. Plaintiff pointed out a line, blazed upon trees that 10caHt)'l', whicbwas then thought to be the true line by all parties. Jt does not appear by this ,line was run, or that plaintiff had any better knQwledge of it than the officers ,and agents of defendant, and other persQ'ns.)ri the neighborho.od. '1'he quarry was opened immediateJy east of,this. line, and tfpon ground which afterwards. proved to be plaintiff's,:: Dqpbts having arisen as to the location of the quarry, and whetherit walluponplaintiff.'s ordefenq,ant's land, a survey was made in March; the knowledge and assent of both parties; and it ",as thenaf\certained that the greater part of the quarry was on plaintiff's land.· l'his ,/lCtion is brought to recover the,vahle of stone taken from the by defendant after the true line betwel'ln the tracts owned RY had been surveyed·. At the qefendant contended that, inasmuch as the qllarry was first opened under the Gircumstances stated, at an expense to of· about. $700 estopped to claim any stone at that timeuncoveredj and, as all the stone taken by defendant between the dates named was so uncovered, with the knowledge and consent of plaintiff, before the survey was made, there was no right of action. In this, however, there is nothing on which to found an estoppel. It does not appear that plaintiff had any better knowledge of the line