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Opinion of the Court, per EARL, J.

The

maintained therein for the benefit of all who will attend. It is the purpose of every Christian church to make converts, and extend its membership The Christian religion is essentially proselyting and aggressive. Its mission is to conquer the whole world, and hence no one is turned away from the doors of a Christian church so long as there is room. It was such property that the defendant took possession of. During the whole time of its possession it maintained services therein just as plaintiff would have been bound to. The services were just as much for those who, prior to the union, were members of plaintiff's church as for those who were members of defendant's church All of plaintiff's members became members of defendant's church, and nearly all of them continued to attend the services furnished by defendant. services were free to all. The defendant had agreed to maintain such services, and during the whole time expended more upon them than the entire income raised from pew rents. Is it just and equitable, under such circumstances, that the defendant should be charged with all the pew rents, and allowed nothing for maintaining the services? It will not do to say that the defendant was conducting its own business in the church, and should, therefore, be allowed nothing for conducting it. It was doing the plaintiff's business as well. It was devoting the property to the precise purpose to which the plaintiff was bound to devote it. It maintained services for the benefit not of its own corporators only, but for the benefit of the plaintiff's corporators, and all others who chose to attend. It is true that the plaintiff as a mere corporate entity was in no way benefited by the services. But, in treating this question, it will not do to view the plaintiff simply as an abstraction, without soul, life or substance, and separated from all its corporators and members. It must be viewed practically as it was, with corporators and members, and a mission and duty to perform. All its members were admitted as members of the defendant, and three of them were chosen trustees of the defendant, and many of them doubtless acted and voted as corporators of the defendSICKELS.-VOL. XXVIII. 13

Opinion of the Court, per EARL, J.

ant, and to some extent must have influenced its action. The defendant sold its property when real estate was depressed, and used its proceeds to pay off plaintiff's debts and save its property from sale by its creditors. Plaintiff's property has been saved until it is now worth more than it cost. In such a case what should be the rule upon which the accounting between the parties should be conducted? I think the rule adapted to this case, founded upon reason, justice and equity, is as follows: The plaintiff should pay to the defendant the amount the latter paid upon the debts owed by the plaintiff at the time of its conveyance, and the interest upon such sum from the time the defendant ceased to possess the property. For the use of the premises, the defendant should bear all the expenses of insurance, repairs, taxes, and for maintaining and keeping up the church and services therein, and should also lose the interest upon the money paid upon plaintiff's debts. This rule, we believe, will come nearer to doing justice between the parties than any other which has been suggested. This case may be likened to that of a vendor of land who receives the purchase-money and gives possession of the land, but afterwards fails to convey a title. In such a case, the general rule is, that he must take back his land and the purchaser take back his money. The one loses the use of the land and the other the use of his money. (Worrall v. Munn, 53 N. Y., 188; Kirtland v. Pounsett, 2 Taunt., 145; Leggott v. Metropolitan R. Co., L. R. 5 Ch. App. Cas., 716; Metropolitan R. Co. v. Defries, L. R. 2 Q. B. Div., 189, and on Appeal, 387.)

The defendant is not to be prejudiced in this case, because it paid some of the debts and continued in possession of the property after this suit was commenced. Its trustees were under a strong obligation to defend its title to the property. Before the suit was commenced there was the admission to membership in its church, and the resignation and election of trustees. It had sold pews to persons who relied upon its right to do so, and it had sold its property and paid a

Opinion of the Court, per EARL, J.

portion of plaintiff's debts. It had established services in plaintiff's church, and had doubtless incurred obligations in reference to them, and had acted in all things in good faith towards the plaintiff. The defendant was then entitled to an accounting; and all the debts of plaintiff paid after the suit was commenced were paid while the conveyance was held valid by the court below.

I am unable to ascertain from the evidence or findings precisely how much defendant paid upon the plaintiff's debts, including the mortgages. The defendant should be allowed all it paid upon the principal of such debts, and for interest due and paid by it down to the time it took possession; and then upon the principal and interest thus paid it should be allowed interest from the time possession was again delivered to the plaintiff. As the property is abundant security for the amount of debts claimed, it is not important that the possession should be restored to it. The court below may specify a time within which the amount found due the defendant must be paid, and may order a sale of the property in default of such payment, as in a case of foreclosure.

This litigation has been long and expensive. It must have embarrassed the Christian work of the Madison Avenue Baptist Church. It must have engendered discord where unity ought to prevail; and it would seem that a small share of that charity which "suffereth long and is kind" ought now to bring it to a speedy termination.

The judgment below must, therefore, be affirmed, so far as it adjudges the deed to the defendant invalid, and the title to be in the plaintiff; and in other respects it must be reversed, and the case must be remitted to the court below for an accounting upon the principles herein indicated, neither party to recover costs against the other in this court. All concur, except ALLEN, J., not sitting, and MILLER, J., not voting.

Judgment accordingly.

Statement of case.

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NORTON DOUGLASS, Respondent, v. JOHN B. IRELAND,
Appellant.

To charge the holder of stock of a manufacturing corporation, issued upon
and for the purchase of property, individually for the debts of the com-
pany, it is not enough to prove that the property was purchased at an
over valuation through a mere mistake or error of judgment on the part
of the trustees; it must be shown that the purchase was in bad faith and
to evade the statute.

All that is necessary, however, to establish legal fraud, which will take the
stock so issued out of the protection of the act of 1853 (chap. 333, Laws
of 1853), is to prove, 1st. That the stock exceeded in amount the value
of the property in exchange for which it was issued; and, 2d. That the
trustees so issued it deliberately and with knowledge of the real value of
the property; no other fraudulent intent need be alleged or proved.
In an action to charge the stockholders, the value of the property must be
determined, and evidence thereof is competent.

In such an action it appeared that the entire capital stock of the corpora-
tion, $300,000, was issued to H., one of its trustees, in consideration of
the assignment to the company of two executory contracts for the pur-
chase of mining property, upon which nothing had been paid; the con-
tract price was $40,000. One-third of the stock was immediately
retransferred to the company, to be sold to raise a "working capital."
This was sold at from forty to sixty cents on a dollar. Defendant know-
ing of, and participating as trustee of the corporation in the transaction,
purchased $25,000 of said stock at forty cents. The jury found the value
of the property to be $68,000. Held, that the evidence justified a finding
of fraud, and was sufficient to sustain a recovery.

Also, held, that an action brought against defendant and other trustees under the general manufacturing act (§ 12, chap. 40, Laws of 1848), to to charge them with the same debt because of failure to make the annual report, was not a bar to this action.

(Argued February 20, 1878; decided March 19, 1878.)

APPEAL from judgment of the General Term of the Supreme Court in the fourth judicial department. affirming a judgment in favor of plaintiff, entered upon a verdict.

This action was brought against defendant as a stockholder of "The Black River Iron and Mining Company of New York," a corporation organized under the general manufacturing act (chap. 40, Laws of 1848), under section 10 of

Statement of case.

said act, to recover certain debts of the corporation, on the ground that his stock was not paid up.

The complaint alleged, in substance, the incorporation of said company with a capital stock of $300,000, with five trustees, one of whom was defendant, and John Horton, another. That at the time of the incorporation Horton had a contract for the purchase of a furnace and mining premises, and one for the purchase of standing timber in the vicinity of the furnace, upon which contracts nothing had been paid, and their fair value did not exceed $20,000; which contracts Horton assigned to said company, receiving therefor the whole of the capital stock; that Horton thereafter divided $200,000 of said stock between himself and the other trustees, and defendant well knowing the facts received over $5,000 thereof; that said stock has never been paid in in any other way, and that no certificate as required by section 11 of said act has been made and recorded.

Upon the trial evidence as to the value of the property was received under objection and exception. The question as to value was, by consent, submitted to the jury; the other questions were decided by the court. The jury found the value of the property to be $65,000. The court found the incorporation of the company with a capital of $300,000, in 3,000 shares, the issuing and transfer of its capital stock in payment for the assignment of the two contracts substantially as alleged in the complaint; also, that Horton, in pursuance of the agreement with the company, on or about the same date, transferred back to the company 600 shares of the capital stock to be sold to pay the contract-price for the furnace property, which was $30,000, and also transferred back 1,000 shares of the capital stock in pursuance of the same agreement "for the purpose of enabling said company to raise a working capital by the sale of the same;" that defendant, knowing of and participating in the transactions, purchased of the company 250 shares for the sum of $10,000; that the value of the property was so disproportioned to the nominal value of the stock as "to take the

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