
    Sanderson v. Ætna Iron and Nail Company.
    land was conveyed to a manufacturing company in payment for shares of its capital stock, and the company, exceeding its powers, rescinded the contract, reconveyed the property and canceled the stock, but no ac- • tual fraud or unfairness appeared, and no complaint of the transaction was made for sixteen months, during which time the company became insolvent, and the land reconveyed was sold to an innocent purchaser— Held: That a stockholder, having full knowledge of the facts from the-beginning, is precluded, in equity, by his laches, from asserting the invalidity of such rescission.
    
      Empire Frans. Co. v. Blanchard, 31 Ohio St. 650, followed.
    Error to the District Court of Cuyahoga county.
    This action was brought in the Court of Common Pleas of Cuyahoga county, January 20,1870, by Robert Sander-son, John B. Cowle, and Samuel Lord against The ¿Etna. Iron and Nail Company, Warwick Price, William B. Price,. Morrison Foster, E. T. Hamilton, and others. It is a creditor’s suit to enforce payment of a judgment. The only facts alleged in the petition which are not denied in the answer are the following :
    The .¿Etna Iron and Nail Company was organized as a corporation, under the laws of Ohio, July 15, 1867, “ for the purpose of engaging in the manufacturing of iron, merchant iron, nuts, spikes, bolts, and all other kinds of iron, manufactured, including nails, hoop iron, rivets, etc., and selling the articles and things so manufactured.” The capital stock was $200,000, divided into shares of $500 each. The places where the manufacturing establishment and branch thereof were required to be located were the-city of Cleveland and Newburgh township, Cuyahoga county.
    Warwick Price and William B. Price subscribed for twenty shares ($10,000) of the capital stock, and the plaintiff for twenty shares ($10,000), all to be paid in cash. The-plaintiffs are still stockholders.
    At the time of the organization, at a meeting of the-stockholders then held, Warwick, Price & Co. subscribed for sixty additional shares ($30,000), to be paid for by certain coal lands at Salineville, Columbiana county, Ohio. The directors were authorized to examine the property,, and, if in their opinion it would be for the benefit of the company, to approve the subscription, and that a. conveyance should then be executed and the stock issued.
    On July 18, 1867, the proposition was accepted and approved, and on September 9, 1867, W. and W. B. Price-conveyed the property to the company, and received the-certificates of stock, and thereupon the company took possession of the property, improved it, and mined coal therefrom for use in the company’s business.
    At a meeting of the directors, September 4, 1868, certain proceedings were had, which were entered on the rec■ords of the company, as follows: “ Sept. 4, 1868. Board met pursuant to adjournment. All the members present. "Whereas, this company purchased of Warwick and William B. Price certain coal lands near Salineville, Ohio, at or for the sum of $30,000, and paid for the same in the stock of the company; and, whereas, a number of stockholders are dissatisfied with the purchase, and desire that the said coal lands be conveyed back, and the stock taken up and canceled ; and the said W. and W. B. Price being willing to receive back said lands, and deliver up the stock to be canceled: Therefore, resolved, that the president be, and is hereby authorized and directed to reconvey to said Warwick and William B. Price said lands, and to receive from them said amount of stock, and cancel the same .....The above resolution was adopted by the following vote: In the affirmative, W. C. Moody, James Loveday, James Farmer, and W. B. Price; in the negative, Robert Sanderson. Then adjourned to meet 14th inst., at :9 o’clock a. m. W. B. Price, Secretary.”
    Sanderson is one of the plaintiffs. .
    The stockholders, on the same day, at a meeting held by them, confirmed the action of the board of trustees by the-following vote: In the affirmative, fourteen stockholders, representing one hundred and eighty-two shares of stock; in the negative, five stockholders (including plaintiffs), representing sixty shares of stock.
    The reconveyance of the .land and transfer of the stock were made accordingly, and that action was confirmed by the board of directors on September 14, 1868.
    At the same time W. and W. B. Price sold their remaining stock to Loveday, and ceased to have any connection with the company.
    August 28, 1869, the .¿Etna Iron and Nail Company made .an assignment of its property and assets of every kind to E. T. Hamilton for the benefit of its creditors.
    November 1, 1869, Warwick and William B. Price ■conveyed the lands in controversy to Morrison Foster, and placed him in possession, and he still retains possession.
    At the November term, 1869, of the Court of Common Pleas of Cuyahoga county, the plaintiffs obtained a judgment against the company for $9,370.24, which remains-unsatisfied of record; and on January 11, 1870, they caused the lands reeonveyed to the Prices to be levied on by virtue of an execution issued on the judgment, there being no other property.
    It is not admitted in the pleadings that anything is due from the Prices for improvements ; and, although it is admitted in their answer that at the time they transferred their sixty shares of stock to the company, and received a reconveyance of the land, the company was in debt, it is. averred that the company was solvent, and had assets-more than sufficient to pay all its debts. A large amount of indebtedness remains unpaid, but the Prices deny in their answer that the plaintiffs are creditors of the company. The petition contains many other averments, but they are denied in the answer of the Prices.
    The prayer of the petition is that the judgment may be enforced against the land, and that the land be sold for the benefit of the plaintiffs and other creditors; that, in case-the land can not be so subjected to the payment of the debts, that Warwick Price, William B. Price, and others named, be compelled to account for the value of the property ; and that other and further appropriate relief be granted.
    Morrison Poster says, in his answer, that he is a purchaser-in good faith, for a full consideration, to wit, $27,000, without any notice of any adverse right or claim on the part of the plaintiffs or the company or on its behalf.
    The company, by answer and cross-petition, adopts the petition of plaintiffs, and asks that the relief prayed for • may be granted for the benefit of the creditors of the company.
    Hamilton, as assignee, in his answer, admits the state-merits contained in the plaintiffs’ petition, and prays for a .sale of the property in dispute, or that the Prices be compelled to account for the value of the property, for the benefit of creditors.
    The district court, at the September term, 1872, dismissed the petition of the plaintiffs and the cross-petition of the -company. The opinion of the court was reduced to writing and adopted as a finding of law and fact, as appears by .a bill of exceptions, to which the opinion is attached.
    The errors relied on by the plaintiffs are that the finding is contrary to law, and that the court erred in denying the relief, and in dismissing the petition and cross-petition.
    The company relies on the same errors in its cross-petition in error.
    
      Bishop l¡¡ Adams, for plaintiffs in error:
    The coal land was a trust fund for creditors. Green’s Price’s Ultra Vires, 800, 311, 315; 2 Story’s Eq. Jur., § 1543. A corporation can not purchase its own stock. 17 Bai’b. 397; 2 N. Y. 18; 2 Sand. Ch. 259. The reconveyance to W. B. Price and cancellation of their stock was woid, and acquiescence can confer no right contrary to law. .8. & C. 304, § 81; lb. 309, §§ 90, 91; lb. 273; S. & S. 167, :242 ; Green’s Brice’s Ultra Vires, 30, 404, 462, 466 ; 38 Cal. -311; Herman on Est., § 414; 2 Sand. Ch. 273 ; 9 Paige, 158; 10 Ohio, 97; Abb. Big. Corp. 738, §§ 30, 81; 12 E. L. & E. 402 ; 5 Be G. & S. 402 ; 1 Edw. 84; 48 Pa. St. 29; 1 Red. on Railw. 583, 617; 18 Ohio St. 169; 1 McQueen, 461; 3 Mason, 309 ; 11 Ohio, 444; 2 Ohio St. 373. Those ■claiming under a corporation, however remotely, must take notice of its want of power. Ang. & Ames on Corp., §§ 183, 223, 299 ; 18 Ohio St. 269 ; 25 N. Y. 298; 21 Howard, 441; 23 Howard, 381; 2 Black, 715 ; 1 Smith’s L. C. (5th <ed.' 684.
    
      It. P. Panney, for defendants in error:
    There is no bill of exceptions which the court can notice, and hence the court can not consider any of the questions discussed by counsel for plaintiffs in error. Empire Trans. Co. v. Blanchard, 31 Ohio St. 650. There can be no rescission of the transaction, whereby the land was reconveyed and stock canceled, after such lapse of time and change of circumstances as occurred, before any steps were taken to rescind, and before suit was brought. New Albany v. Burke, 11 Wall. 105 ; Twin Lick Oil Co. v. Marbury, 91 U. S. 591; Grymes v. Saunders, 93 U. S. 62; Sullivan v. Portland, etc., R. Co., 94 U. S. 811; Brown v. Buena Vista Co., 95 U. S. 160 ; Hayward v. National Bank, 96 U. S. 617. If the transaction had been ultra vires, it could not, after being fully executed on both sides, be set aside for that reason. Whitney Arms Co. v. Barlow, 63 N. Y. 62; Railway Co. v. McCarthy, 96 U. S. 267. The whole transaction having been approved by the body of stockholders, no section of them, or the corporation itself, can now object to it. 2 Hare, 461.
    
      S. Burke, also for defendants in error :
    The company had no power to receive the subscription for shares of the capital stock payable in land. S. & S. 166; 18 Ohio St. 150; 20 Ohio St. 199 ; 5 Ohio St. 59; Abb. Dig. 799. In view of the controversy as to retaining the lands, the directors and stockholders might adjust their differences as they did. 4 Dana, 620; 8 Md. 230; 25 Miss. 559; 5 W. & S. Ill; 1 Head, 563; 2 Disney, 323; 1 Disney, 144. Foster has an indefeasible title. S. & C. 273; 7 Ohio (2 pt.), 165; 18 Johns. 515; Sug. Vend. 198; 10 Ohio, 498; 2 Ohio, 415 ; 5 Ohio St. 319; lb. 70 ; 6 Ohio St. 580 ; 10 Ohio, 83; 2 Barb. 158; 1 Johns. Oh. 574; 5 S. & R. 252; 10 Watts, 412; 14 Pick. 224; 32 Mo. 305; 6 N. H. 269 ; 1 Sand. Ch. 280 ; 21 Howard, 414 ; 16 Iowa, 284; 7 N. Y. 466; 5 Ohio, 207. The company had power to take from the Prices a valid title to the stock, and there is •no ground to compel them to account for the value of the land. 1 R. I. 164; 3 Blatch. 431; 1 Ed. Ch. 84 ; 17 N. Y. 507; 3 Md. Oh. 418; Abb. Dig. Oorp. 537; 2 Bosw. 75; 26 Ga. 17; 6 Ham. 218; 11 Wall. 96. Under the circumstances, the plaintiffs and the company are estopped to-avoid the transaction. Kerr on Fraud, 298-312; 22 Ala. 249; 1 Md. Oh. 496 ; 6 Gill, 156; 6 B. Mon. 553; 8 Conn. 145; 18 Maine, 94; 7 Howard, 234; 7 B. Mon. 305; 2 Cowen, 139; 16 Ohio St. 321; 2 Disney, 30; 5 Ohio, 386; 6 Gill & J. 424; 1 Denio, 69.
   Okey, J.

1. Where a party seeks a reversal for error in the finding, under section 280 of the civil code (75 Ohio L.. 645), it is essential that the record should show a substantial compliance with the statutory provision. In this case’ it is sought to substitute the opinion of the court, delivered in deciding the case, for such finding. While it is possible that an opinion may be in such terms as to fulfill the requirement of the statute in that particular, this opinion is not of that character; and, in fact, the case can not be distinguished from Empire Trans. Co. v. Blanchard, 31 Ohio St. 650, to which we adhere.

2. Whatever rights the company had to maintain the suit for the purpose of avoiding the rescission, were probably transferred to the assignee by the assignment, which is general in terms; at least, the company has no greater' right in that respect than the plaintiffs. Creditors may occupy a more favorable position than stockholders (Green’s Brice’s Ultra Yires, 133; 38 Cal. 311, 315); but, while the rendition of the judgment in favor of the plaintiffs is admitted, it is denied that they are in fact creditors ; and the assignee is not here asking' a reversal of the judgment. The only question, then, is whether the plaintiffs, as stockholders in this insolvent corporation, are entitled to relief on the admitted facts set forth in the statement of the case. It will be observed that these facts contain no statement of fraud or unfairness, or even want of form in the transaction, but the right of the stockholders to interfere is based solely on the want of power to rescind the transaction in> which W. & W. B. Price conveyed to the company the land in controversy in payment of $30,000, in shares of the company’s capital stock.

Admitting the right of stockholders to proceed in such cases (Field on Corp. § 398), the validity of the contract by which the land was conveyed to the company (Green’s Brice’s Ultra Vires, 108), and the invalidity of the transaction by which the contract was rescinded (1 Swan & Or. 309), are these stockholders, who have had notice from the first of the transaction, in a position 1o assert the invalidity of the reconveyance to W. & W. B. Price and the cancellation of the stock?

It appears that on the 5th of September, 1868, when the reconveyance was made, the stock was par, and it does not appear from the facts admitted that the company was then seriously embarrassed. Though the conveyance was made at the time stated, the action in that regard was not ratified by the directors for ten days thereafter. The plaintiffs have continued to be stockholders, and one of them has acted as a director. The company suffered embarrassment and made an assignment for the benefit of creditors, and the land was sold by the Prices to an innocent purchaser; yet no step was taken during the time, nor until January 20, 1870 — a period of sixteen months — to set aside the transaction ; nor was a claim made, so far as the record discloses, at any time before the commencement of this suit, that the transaction was unfair or invalid. Under these circumstances, we may fairly say that in view of the laches of these plaintiffs, we are precluded from granting to them the relief which they ask.

Judgment affirmed.  