the preferred stock to be called in and canceled. But the prayer for judgment is that all of the preferred stock, in whose hands soever it may be, be so dealt with, or for action equivalent thereto. Many, probably most of the holders of it, have become so after it had been some time in the market, notoriously dealt in as a valid and recognized issue, and at prices greater than that at which the common stock ruled, and greater than would be restored to the holder by any mode of equalization now suggested. The difference in the market price of the two kinds of stock is here noticed only as being a notorious fact, which could not fail to meet the attention of holders of common stock, and to call upon them for prompt action, if they ever meant to question the validity of the preferred stock; and as showing that the equalization of the two kinds of stock, upon the basis of making good for the payment of five dollars per share, at which the preference was first subscribed for, would not restore many preferred holders to the position in which they once stood. It is not practicable to adjudge that one or some shares be called in and canceled, or equalized with the common stock, without all are so treated; and to treat all thus would be to do an injury to some persons who have acted in reliance upon the doings of the company, which have been until now unquestioned by the common stockholders.

Nor can the issue of the preferred stock, with the privilege attached to it, be said to be an executory contract. It is so only in a part of it which it remains for the corporation to do. The first holders of it made their subscriptions and paid the stipulated price; and so they executed the contract on their part, and the corporation and the common stockholder got the benefit of the execution. The stock has been issued and gone into the channels of trade. The price paid for the privilege held out by the offer of preferred stock went into the funds of the corporation, gave it relief from its needs, and aided in putting it upon a course of prosperity which enhanced the value in market not only of the preferred but of the common stock. The contract has been executed in its essential parts; there remains to be done only what is a consequence of it, the result of the purchase of the stock on the one side, and the sale of it on the other. That can scarcely be called a

contract yet to be executed, in the application to it of the doctrine of ultra vires, whereby one party to it has received, and used for its purposes, the stipulated consideration, and has given to the other a right which he may sell in the market. The vendees can not be put back to the situation in which they were when they bought, by any terms proposed by the corporation or the common stockholders. Both parties would not now have the same position as if no contract had been made: 63 N. Y. supra, DeGroff v. Am. Linen Thread Co., 21 N. Y. 127; 22 Id. supra.

We have before made mention of the position that the transaction was unconscionable and extortionate. Looking at it now, it seems to be so. In consideration of five dollars paid, the company undertook to repay seven dollars yearly for all time, if there should be enough earned to do so; which will be an enormous return. It is difficult to enter into the exact condition of things at the date of the transaction, and to estimate the propriety of such a bargain. It may be that the prospect of earnings at all, or enough to fulfill the undertaking, was too remote to be probable; and that it was a desperate chance that was taken by those who subscribed. There is some reason to suppose so, from the fact that the chance was offered to all stockholders, and that so many did not take it, though it now appears so preposterously advantageous. However that may be, an unconscionable arrangement will not be disturbed when there has been ratification of it with knowledge of all its bearings, after time has been had for consideration: 1 Story Eq. Jur., sec. 315.

It is now left to apply our conclusions to the disposition of the three cases before us.

It follows from them that in the suit of William S. Hoyt v. The Quicksilver Mining Company, George L. Kent and others, the order of the General Terin of the second department, denying a new trial, should be affirmed; and that the judgment of the special term, dismissing the complaint on the merits and enjoining the plaintiff and all in like category, and declaring the defendant, George L. Kent, and all in like category, entitled to receive interest as set forth in the judgment; and declaring that the plaintiff and all in like category not entitled to receive net earnings, except as therein set forth;

and that the defendant, the company, render an account as therein set forth; and that the defendant, Kent, recover his costs; should be affirmed with costs. That in the suit of George L. Kent v. The Quicksilver Mining Company, David King, Jr., and others, the order of the General Term of the second department, denying a motion for a new trial, should be affirmed; and that the judgment of the Special Term, so far as it agrees with the preceding statement herein, should be affirmed; and that the plaintiff, Kent, recover his costs of the defendant company. In the suit of George L. Kent v. The Quicksilver Mining Company, Daniel Drew and others, the Special Term gave judgment for the plaintiff, with costs, which was correct. That judgment, in its terms, bound only the parties to it. The General Term of the first department in rendering judgment, in some phrases thereof, went beyond the scope of that of the Special Term, and by general description declared that persons not parties to the suit, in any way, were estopped if they gave a stockholder's vote for the resolution of February 24, 1870, or if they assented thereto, or in any way ratified it; but the General Term also affirmed in all things the judgment of the Special Term. We think that the General Term did not mean that persons not parties to the suit should be bound by the judgment; that the part of its judgment operative upon persons concerned is that which affirms the judgment of the Special Term. The judgment of the General Term should therefore be affirmed.

All concur.

Judgment accordingly.

CHEW ET AL. V. HENRIETTA MINING AND SMELTING COMPANY ET AL.

(2 Federal Reporter, 5. Circuit Court, U. S., East. District Missouri, 1880.)

1 Sale of corporate bonds by agent-Application of purchase money. Where a corporation places its bonds before maturity in the hands of an agent with power to negotiate them, a purchaser may presume that the 1Crump v. U. S. M, Co., 3 M. R. 454.

agent is acting within the scope of his authority, and is not bound to in quire into the application made by the agent of the proceeds of the sale. But if the purchaser is informed or has notice of intended misapplication, before purchase, he buys at his peril.

Separate estate of married woman-Notice to husband. In transactions relating to her separate estate a married woman is bound by notice to her husband only so far as he acts as her agent.

Cestui que trust-Notice to trustee. Notice to a trustee is not notice to the cestui que trust, where the trustee has no official relation to the transaction in controversy.

HITCHCOCK, LUBKE & PLAYER, for complainants.

M. B. JONAS, for respondents.

MCCRARY, C. J. (orally).

This case is submitted upon exceptions to the report of the master. It is a bill filed to foreclose a mortgage upon 640 acres of land in this State, executed to secure 100 bonds issued by the defendant corporation. Several parties appear in this case, claiming to be owners of some of these bonds. The master has reported his conclusions with regard to the title of each of the claimants. The only questions presented relate to the title of the plaintiff Chew, and the defendant Burch. Chew claims to be the owner of several of these bonds, and the master finds that he has no title. There is an exception. to his finding. Burch claims to own a large number of them and the master finds in his favor. There is an exception also to this finding. The bonds are negotiable, and, according to the repeated decisions of the Supreme Court of the United States, they have all the qualities of negotiable commercial paper. They were placed in the hands, a portion of them, at least, of one Muir, with authority to negotiate them for the benefit of the corporation. I think the language of the resolution of the corporation was " for the purpose of raising money to develop the mines."

Muir held these bonds in New York as the agent of the corporation, with this authority, and no other. He placed some of them in the hands of a man by the name of Dever, who transferred them to plaintiff Chew, in order to raise money; not, however, for the corporation, but for Muir's private purposes. Of course the question here is, and the only

question is, as to notice. Where a corporation places its bonds in the hands of an agent, with power to negotiate them, and puts them in that way upon the market before maturity, the purchaser has a right to presume that the agent is acting within the scope of his authority, and is not bound to inquire into the application he is to make of the proceeds of the sale. But if the purchaser is informed upon this subject, and has notice, then, of course, he takes them at his peril. The proof upon this point, so far as Chew is concerned, is found in his testimony, quoted by the master, as follows:

"Interrogatory 4. Did said Dever state for whose account he applied for loans on said bonds? Answer. Yes. He said the bonds were owned by William Muir, or held by William Muir; that said Muir was the agent of the Henrietta Mining and Smelting Company, at New York; that $100,000 of said bonds had been prepared for issuance by said company, the proceeds of sale of which were applied to the purchase of machinery to work the mine, which he said was located near Potosi, in the State of Missouri; he said further that William Muir was pressed for funds, and had requested him to make loans for him (Muir) on the said bonds."

I agree with the conclusion of the master that upon that statement Mr. Chew was fully informed, not only as to the nature and extent of Muir's authority, but of the fact that he was violating it in so placing the bonds for the purpose of raising money for his own purposes, and not for the corporation; and, on that ground, the exception to the report, so far as that part of it is concerned, is overruled.

As to the other part of the case-the title of the defendant Burch to the bonds represented by him—I have had more difficulty. But in this case, as in the other, it is simply a question of notice; and I believe the rulings of the Supreme Court go so far as to hold that there must be something amounting to bad faith on the part of the purchaser before his title to negotiable paper of this kind, purchased in the open market, can be defeated. An important fact in the case, as bearing upon the question of good faith, is this: Mrs. Burch advanced money-the title of the present defendant being derived from Mrs. Burch, of course the question is as to her title to the secretary of the company, and to her husband, for