
    James M. Redmond, appellant, and Philemon Dickerson, who sues for the use, &c., and others, respondents.
    1. The directors of an incorporated company cannot speculate with the funds or credit of the company, and appropriate to themselves the profit of such speculation. They cannot, in making sales or purchases for the company, take advantage of their position as directors, and either directly or indirectly speculate upon the company,
    2. If such a transaction has involved a complainant in a lawsuit, there is no propriety in his appealing to a court of conscience to give him redress, which he is not entitled to by the strict rules of the common law.
    3. Although a demurrer admits all the facts alleged in the bill, where a bill alleged as a fact, that a check was paid, and then proceeded to detail the manner and circumstances of its payment, and the circumstances appealed to, to show its payment, did not establish the fact. It was held that the allegation amounted to nothing.
    The bill alleges that the Boudinot Manufacturing Company was incorporated on the 12l.h day of February, 1835, with a capital stock not to exceed $200,000, to be divided into shares of one hundred dollars each, and that so soon as the sum of ten thousand dollars of such capital- should be paid in, or received satisfactorily, the said company were authorized to commence operations under their charter; that soon after the charter was granted, three hundred shares of the stock were subscribed and paid up in full to their par value of one hundred dollars per share; that the company commenced business operations; that in the year 1843 they became unable, for want of funds, to proceed, and accordingly suspended their business; that during that year, James M. Redmond, the complainant, made an agreement with Philemon Dickerson, John C. Benson, and Samuel G. Wheeler to purchase and divide equally among themselves the capital stock of the said company, with the intention of renewing business; that in pursuance of said agreement, Redmond purchased one hundred and twenty-six shares, Dickerson ninety-one shares, Benson five shares, and Wheeler five shares, making, in all, two hundred and twenty-seven shares, in which they were all equally interested, leaving seventy-three shares outstanding, and which were owned by Alfred Stoutenburgh and Edward Laffan; that a meeting of the stockholders was then called, at which the directors severally resigned their offices, and the complainant, together with the said Dickerson, Benson, Wheeler, and John M. Gould (to whom Mr. Dickerson had transferred one share of stock to qualify him) were elected directors; Philemon Dickerson was chosen president, Benson agent, and Samuel G. Wheeler commission merchant of the company, all to act without compensation; that the complainant and his partners in the stock, as before mentioned, then offered to Stoutenburgh and Laffan to advance funds with them in proportion to the shares they respectively held, to enable the company to re-commence business; that Stoutenburgh and Laffan refusing, the complainant and his said partners made application to the legislature for a supplement to the charter of the company, and which was passed March 4th, 1844, by which supplement the company were authorized to increase the par value of their shares from one hundred to one hundred and fifty dollars each; that the directors called
    
      in an installment of ten dollars on each share, to be paid in on the first day of June then next ensuing ; that, before the passage of the resolution to call in this installment, the complainant and his associates, Dickerson, Benson, and 'Wheeler, had made a contract with one Hamilton Gay for a large lot of cotton machinery, at a price of eighteen thousand eight hundred dollars, to be delivered on or before the tenth day of the same month of June aforesaid, at which time they were bound to pay six thousand eight hundred dollars on account of said contract, and to secure the payment of the balance, twelve, thousand dollars, by a mortgage on said machinery, and which machinery had been purchased with the intention of having the same conveyed to the company as soon as the same could safely and properly be done, and which could not be until Stoutenburgh and Laffan either paid up their installments, or their stock was declared forfeited ; that Stoutenburgh and Laffan did not pay the ten per cent, called in, and on the sixth of the same month of June aforesaid, by a resolution of the directors, their stock was declared forfeited ; that, on the said sixth of June, the complainant, in order to comply with the terms of the said act, made and delivered to the directors his check, as follows : “ Cashier of the Bank of New York, pay to the order of P. Dickerson, president of the Boudinot Manufacturing Company, Twelve Hundred and Sixty Dollars,” which sum was the amount of the installment of ten per cent, on the one hundred and twenty-six shares standing in his name as before mentioned; and each of his associates gave some check or memorandum in writing, for the ten per cent, on the shares standing in their names respectively ; that, at that time, the complainant owned but one-quarter of the two hundred and twenty-seven shares purchased as before mentioned ; that the checks were given as mere memoranda, to remain until the complainant and his said associates should transfer to the said company the said machinery purchased of Hamilton Gay, and that it was expressly agreed by the said company that the said checks should be canceled upon such transfers being made; that, at the same meeting of the directors, after the shares of Stoutenburgh and Laffan had been declared forfeited, the said company, according to the original understanding of the parties, resolved to purchase of the complainant and his associates (being the same persons as the company) the said machinery for the sum of twenty-eight thousand eight hundred dollars ; that the said company assumed the payment of the encumbrance on the machinery of twelve thousand dollars, and ordered their president and secretary to issue one hundred and fifty-two-shares of the capital stock at their par value of one hundred and ten dollars a share, amounting to the sum of sixteen thousand seven hundred and twenty dollars, the balance due the complainant and his associates within eighty dollars ? that, soon after the said meeting, the said complainant and his associates paid, and secured to be paid to the said Gay, from their own funds and credits, each one equal quarter payt of the said sum of six thousand eight hundred dollars ; took a conveyance of the machinery and gave a mortgage thereon for the said* $12,000, and forthwith conveyed the said machinery to the company, it never having been in the possession of the complainant or his associates; that there was no entry made on the books of the transaction, and that the one hundred and fifty-two shares of stock were not issued; that, in the fall of the year, the said complainant and Dickerson ascertained the affairs of the company to be involved in obscurity, and the books of the company to be loosely kept, whereupon the company came to a settlement with Wheeler, and the complainant purchased all Wheeler’s stock and interest j that the accounts were then adjusted, and a receipt given to Wheeler in full, in which adjustment no account or charge of the check in question was made against the complainant; that, on thé first of March, 1845, the complainant, Dickerson, and Benson, settled up all the affairs of the company, adjusted the accounts, and opened new books; which accounts so opened, set forth the actual state of the debts and credits of the company with the complainant and his associates, and all other persons, so far as the, names could be ascertained; that, by these books and accounts, it appears that the capital stock of the said company was valued at four hundred and seventy-nine shares, at one hundred and ten dollars per share, and it was declared that the same was paid up in full by the machinery, valued at fifty-two thousand six hundred and ninety dollars, and the complainant and his partners were credited upon the second books with the full par value of the stock, and were not charged with the said checks; that about the first September, 1845, the complainant negotiated with John Wood and Nathaniel S. Merritt for the sale of his stock, and exhibited to them a balance sheet from these books, and sold them his stock upon this exhibit, and that they purchased no check or claim against him ; that the check was filed away among canceled papers of the company, was found by Wood and Merritt, or their agents, and in 1849 a suit was commenced on this check against the complainant, in the name of Philemon Dickerson, president, for the use of the Boudinot Manufacturing Company, who used the name of Philemon Dickerson, as president; that on the 16th of June, 1849, upon a bill exhibited in the court by one of the creditors of the company,» under the act entitled “An act to prevent fraud by Incorporated Companies,” an injunction was issued against the company, and William Gledhill and Halmagh Van Winkle were appointed receivers; that at the instigation of the stockholders of the said company, the said receivers are now prosecuting the said suit upon the said chock.
    The prayer of the bill is, that the receivers may be decreed to deliver up to the complainant his said check, and the same be declared paid and satisfied; that the said Philemon Dickerson, John C. Benson and Samuel G. Wheeler may be decreed to be partners with the complainant in the transaction referred to, and liable to contribute to the expenses of the said suit at law, as well as their proportion of the sum, if any, found due on the check, and that the receivers may be enjoined from proceeding any further with the said suit at law.
    
      On the 18th day of May, 1860, the Chancellor made an order for the injunction according to the. prayer of the bill.
    On the 17th September, 1850, Philemon Dickerson, who sues for the use of “ The Boudinot Manufacturing Company,” William Gledhill and Halmagh Yan Winkle, receivers for the creditors and stockholdérs of “ The Boudinot Manufacturing Company,” by their solicitor, filed their joint and several demurrer to the bill.
    On the same day, John C. Benson, by John M. Gould, his solicitor, filed his several answer. And on the 13th December, 1850, Philemon Dickerson, by John M. Gould, his solicitor, filed his several answer.
    The Chancelloe. Upon the argument of this demurrer it was insisted—
    First. That there is no equity in the complainant’s bill.
    Second. That John C. Benson and Samuel G. Wheeler are not proper parties to the suit.
    It is manifest this bill cannot be sustained without the court’s giving its sanction to the transaction between the complainant and his associates, in reference to the machinery purchased of Hamilton Gay.
    There were three hundred shares of the stock of “The Boudinot Manufacturing Company” issued, and they were paid up in full. The par value being one hundred dollars per share, the capital paid in amounted to thirty thousand dollars.
    The complainant, together with Philemon Dickerson, John C. Benson' and Samuel G. Wheeler purchased all the stock issued, except seventy-three shares. They were elected directors of the company in connection with John M. Gould, to whom one share had been transferred, to qualify him to act as director. Having procured a supplement to the original act of incorporation authorizing an increase of the par value of the shares from one hundred to one hundred and fifty dollars each; in pursuance of this supplemental act, the directors, on the 5th of September, 1844, called in an instalment of ten per cent, on each share of the capital stock issued, to be paid on or before the 1st day of June then next. Before this resolution was adopted, the complainant and Dickerson, Benson, and Wheeler had made the contract with Hamilton Gay for the machinery. They were to pay for it the sum of eighteen thousand eight hundred dollars, of which sum six thousand eight hundred dollars was to be cash, and the balance, twelve thousand dollars, to be secured by a mortgage on the machinery. When they made this contract, they constituted a majority of the board of directors, there being but five directors, and the fifth one, John M. Gould, qualified to act by holding one share of stock, of which they were the owners, and which they had transferred to him to make him eligible as a director.
    There was some disagreement on the argument, whether or not it appeared, by the bill, that at the time of making the contract in question, the complainant and his associates were directors of the company. But I think this is very clear from the order of the transactions set forth in the bill, and that the complainant did not intend to conceal or question this fact.
    At the time this contract was made with Gay, there was an understanding between the complainant, and Dickerson, Benson, and Wheeler, as associates, and the same individuals, as directors of the company, that they should purchase this machinery for the company. The installment was to be paid in on the 1st of June, and the machinery was to be delivered on the 6th of June. It was not to be delivered until the 6 th, lest, as the bill alleges, the stockholders who should not have paid up their installments, might derive some benefit from the purchase. It was purchased by the complainant and his associates, as the bill states, with the intention of having the same conveyed to the company as soon as it could be safely and properly done. On the 6th of June, when the difficulty apprehended was removed by the forfeiture of Stoutenburgh and Laffan’s stock, the directors passed a resolution “ according to the original understanding of the parties,” that the company should purchase the machinery of the said associates for the sum of twenty-eight thousand eight hundred dollars.
    The machinery was then transferred to the company, without ever having been in the possession of the complainant or of his associates.
    Thus the complainant, and the three directors who were associated with him, made a profit out of the company of ten thousand dollars.
    According to the complainant’s own statement, they did not risk one farthing .in the transaction. They bought the machinery for the company, and had it depreciated on their hands, in the interval between the purchase and the delivery, the loss would have been sustained by the company, and not by them. They were but the agents of the company, and carried on the negotiation in their own names, merely for the purpose mentioned in the bill, to prevent defaulting stockholders from deriving any benefit from it, if they should make default in not paying up their installments.
    Is it lawful for the directors of an incorporated company thus to speculate out of the company in the purchase or sale of materials which are essential to carry on its business operations ?
    This company was incorporated “ for the purpose .of manufacturing cotton, woolen, hemp, or silk, and generally all articles manufactured from all or either of these articles, in their several and various branches.’' It was necessary for them to procure a mill and machinery to carry on their business. Now if, after the capital had been paid in, the individuals composing the first board of directors had purchased the machinery for eighteen thousand eight hundred dollars, and then transferred it to the company for the consideration of twenty-eight thpusand eight hundred dollars, making a speculation for themselves of a profit of ten thousand dollars, would the transaction be one which, if brought before a court of equity, ought to receive its sanction? Would the court aid the individuals composing the direction in reaping the fruits of such an arrangement?
    But this view of the case was combatted with great earnestness and ability by the complainant’s counsel. He insisted that the transaction was no injury to any one — that these directors, themselves owning all the stock, no one else was interested or could lose by it.
    If these individuals did not anticipate a profit in some way, it is difficult to conceive why they should have put the machinery in at an advance of ten thousand dollars. If they did expect a profit, it was to be made out of some other persons than themselves.
    But were not the public interested ? Why did the charter require a certain amount of money to be paid in, as capital, upon which the company were to do business ? Was it not for the protection of the public, with whom the company were to obtain credit, and to deal ? And did it make no difference to the public whether the capital was bona fide paid in, or was represented by machinery valued at an extravagant price? The company, in payment for this machinery, issued one hundred and fifty-two shares of stock. Had this stock been paid for in money, they would have realized sixteen thousand seven hundred and twenty dollars • and, instead of having a mortgage upon their machinery of twelve thousand dollars, they would have incurred an outstanding debt of but two thousand and eighty dollars. The company had been unsuccessful in business, and had become so embarrassed as to render it necessary to resort to legislative aid, in order to furnish a new capital, that they might resume business. Was not the important trust committed to these directors to manage this capital, as well for the protection of the public as for the profit of the stockholders ? Hid it make no difference, though these directors were the sole stockholders, whether that capital was improvidently diminished, or safely guarded and preserved, as a fund, for the future operations of the company? Was it not a breach of trust, for the directors so to speculate on that capital for their individual benefit, as to lessen the security which the legislature had intended to provide for the protection of their dealers and the business community ? The consequences are before us. The company is now insolvent, and its creditors are ten thousand dollars worse off on account of this' speculation.
    The directors of an incorporated company cannot speculate with the funds or credit of the company, and appropriate to themselves the profits of such speculations. They cannot, in making sales or purchases for the company, take advantage of their position as directors, and either directly or indirectly speculate upon the company. If they are the only persons interested as stockholders, yet, if such speculations impair the capital stock, and have a tendency to substitute a fictitious for a real capital, such transactions are opposed to the policy of their act of incorporation, and cannot, in any manner, be countenanced by a court of equity.
    There is no reason given in. the bill, showing the least propriety why the complainant and his associates should derive from the purchase of this machinery a profit of ten thousand dollars. They assumed no responsibilities, or ran no risks, for which this profit could be fairly considered a just compensation. If the transaction has involved the complainant in a lawsuit, there is no propriety in his appealing to a court of conscience to give him redress, which he is not entitled to by the strict rules of the common law.
    But, if I am wrong in the view I have taken, and if the transaction referred to will stand the test of law and equity, I think it is plain, from the facts stated in the bill, that the check of twelve hundred and sixty dollars has never been paid, nor bona fide satisfied.
    I would here remark that the complainant’s counsel is undoubtedly correct in his position that the demurrer admits all the facts alleged in the bill, and there is no room left for conjecture or mere' inference. But though the bill alleges it as a fact, that the check was paid, and then proceeds to detail the manner and the circumstances of its payment, if those circumstances appealed to to show its payment, do not establish the fact, the allegation amounts to nothing.
    Without any conjecture, or any argument to the facts, it appears to me the statements of the bill show, most conclusively, that the check in question has never been paid.
    
      The complainant had standing in his name one hundred and twenty-six shares of stock when the installment of ten per cent, was paid in. He gave this check of twelve hundred and sixty dollars to pay the installments on these shares.
    His associates gave their checks respectively for the amount of the ten per cent, on the shares standing in their respective names. The amount of shares standing in the name of the complainant and his associates was two hundred and twenty-seven : the sum total of the checks was two thousand two hundred and seventy dollars.
    The machinery was sold to the company for the sum of twenty-eight thousand eight hundred dollars. The company assumed the mortgage of twelve thousand dollars, leaving due to the complainants and his associates, sixteen thousand eight hundred dollars. To pay this balance of sixteen thousand eight hundred dollars, the directors, in the language of the bill, “ ordered the president and secretary to issue one hundred and fifty-two shares of the capital stock, which, at their par value of one hundred and ten dollars, amounted to the balance due your orator and his associates within eighty dollars.” The shares were not then transferred, but credit was given for them afterwards, and it is admitted that the complainant and his associates received them.
    In this transaction and in this way the bill alleges the checks wore paid. And yet it is admitted that all the company owed the associates was sixteen thousand eight hundred dollars, and that the one hundred and fifty-two shares of stock — par value, sixteen thousand seven hundred and twenty dollars — paid the sum due to within eighty dollars. The accounts then stood thus : The complainant and his associates owed the company two thousand two hundred and seventy dollars on their checks, and sixteen thousand seven hundred and twenty dollars for one hundred and fifty-two shares of stock, making a total of eighteen thousand nine hundred and ninety dollars. The company owed them sixteen thousand eight hundred dollars for the machinery, leaving a balance due the company of two thousand one hundred and ninety dollars.
    
      How, then, was the check of one thousand two hundred and sixty dollars paid in this negotiation ? There is no other way in which it is alleged to have been paid. How was it carried into this account? What had the check to do with the account ?
    It is true the bill alleges that the check was given as a mere memorandum, to be delivered up when the machinery was transferred to the company ; that after the transfer, the directors considered the check paid ; that through inadvertence it was-not delivered to the complainant, but was filed away with the canceled papers of the company; that some months after, when the accounts were made up, the check was not carried into them as a debt due the company. But is not all this accounted for from the confused manner in which, as the complainants themselves say, the accounts were kept ? Again, it is alleged that subsequently, “ an account of the capital stock was made, (called a stock ledger,) at which time, and by reference to such books, it appears that the capital stock of said company was valued at four hundred and seven'ty-nine shares, at one hundred and ten dollars per share, and it was declared that the same was paid up in full by the machinery, valued at fifty-two thousand six hundred and ninety dollars.” The bill has before undertaken to give us' an account of the number of shares issued, and of the particular manner in which they were paid. It tells us that three hundred shares were originally issued, of which the complainant and his associates became the owners of two hundred and twenty-seven. The remaining seventy-three shares of this three hundred were forfeited. One hundred and fifty-two more shares were issued for the machinery. This makes the whole stock, including the seventy-three forfeited shares, four hundred and fifty-two shares. And yet this stock ledger declares there are four hundred and seventy-nine shares of stock. And it declares, too, that one hundred and ten dollars per share was paid on them, when the ten per cent, was, in fact, never paid on the seventy-three shares; and it is unaccounted for how the twenty-nine additional shares got afloat. The complainant does not allege this amount of stock was issued, or ever paid for. He only states that, when the accounts were finally made up by a “ competent accountant ” employed for the purpose, that the “ stock ledger ” showed this statement.
    All these allegations and statements go only to show that there was an understanding that the check should be considered paid. At the same time they establish, beyond controversy, that the complainant has received from the company a full consideration for the check, and, at best, has never paid upon it but eighty dollars.
    I think there is no equity in the bill entitling the complainant to the interposition of this court.
    I deem it unnecessary to examine the other question submitted on the argument — whether John C. Benson and Samuel G. Wheeler are necessary parties to this suit ?
    A technical difficulty was suggested upon the pleadings.
    Philemon Dickerson answered the bill, and, it is insisted, it was irregular for him, after filing an- answer, to join in a demurrer with the receivers.
    The suit at law is in the name of Philemon Dickerson, who sues for the use of “ The Boudinot Manufacturing Company
    The bill prays for an injunction against Philemon. Dickerson, as trustee, and it likewise makes him a party, in his individual capacity, and calls upon him, as a partner in the transaction with the complainant, to contribute, if it should be decreed against the complainant that there is anything due upon the check.
    The answer filed by Philemon Dickerson is in his individual capacity, and it was proper for him to answer, as the bill implicates him in the whole transaction.
    The demurrer is the joint and several demurrer of Philemon Dickerson, who sues, &c., and the receivers.
    If there was really any informality, the court would order the name of Philemon Dickerson to be stricken from the demurrer, and would not permit the rights of the receivers to be prejudiced by any mere technical difficulty in the pleadings.
    
      But I do not see that there is any obstacle to deciding the case upon the demurrer as it stands.
    Let the complainant’s bill be dismissed, with costs.
    
      Wm. L. Dayton, for appellant.
    
      Asa Whitehead, for respondents.
   The opinion of the court was delivered by

Haines, J.

. The appellant filed his bill of complaint in the Court of Chancery, alleging that “ The Boudinot Manufacturing Company,” which was chartered on the 12th of February, 1835, with a capital not to exceed two hundred thousand dollars, divided into shares of one hundred dollars each, was organized upon a capital of thirty thousand dollars, subscribed and paid for three hundred shares of the stock. That the company, after some years, suspended operations for want of funds, and that the complainant, with Philemon Dickerson, Samuel G. Wheeler, and John C. Benson, in the year 1843, agreed to become partners in the purchase of the capital stock of the company, with the intention of putting the same into operation. That the complainant, accordingly, purchased one hundred and twenty-six shares, Philemon Dickerson ninety-one shares, and Wheeler and Benson each five shares, and held them in trust each for the other. The remaining seventy-three shares were held by Stoutenburgh and Laffan, who refused to sell them.' Mr. Dickerson transferred one share to John M. Gould, for the purpose of making him eligible as a director.

A meeting of the stockholders was then called, and the complainant, with Messrs. Dickerson, Wheeler, Benson, and Gould, elected directors.

The affairs of the company being embarrassed, and large sums of money being required to pay the debts and to put the machinery in condition, for operation to advantage, the complainant and his associates agreed to advance a sum of money sufficient for the purpose, if Stoutenburgh and Laffa'n would pay their proportion towards it, but they refused to advance any more money, or to sell their stock for any reasonable sum.

The associates, for the purpose of relieving themselves of this embarrassment, applied to the legislature and procured the passage of a supplement to the charter of the company. By this supplement they were authorized to increase the capital stock to three hundred thousand dollars, to be divided into shares of one hundred and fifty dollars each, and to demand from the stockholders an additional sum of fifty dollars on each share already subscribed for, by installments of ten dollars per share, on thirty days’ notice. The penalty for neglect of payment was the forfeiture of the stock.

The directors having, by a formal resolution, accepted the supplement, resolved to call in an installment of ten dollars on each share, payable on or before the first day of June then next, and gave the notice required.

Stoutenburgh and Laffan neglected to pay the installment, and the directors, on the sixth day of June,, declared their seventy-three shares to be forfeited to the company.

At the same time the complainant, on payment of the installment due upon the shares standing in his name, gave his check on the Bank of Hew York for twelve hundred and sixty dollars, payable to the order of Philemon Dickerson, president of the Boudinot Manufacturing Company, and each of the other associates gave some check or memorandum in writing for the installments due upon the shares held by them respectively. These checks, the complainant alleges, were given as their memoranda, to remain until they could transfer to the company certain machinery which they had purchased of one Hamilton Gay for sixteen thousand eight hundred dollars.

The company, then, in pursuance of the original understanding of the parties, agreed to purchase of the associates that machinery for twenty-six thousand eight hundred dollars, being an advance of ten thousand dollars upon their purchase of Mr. Gay.- In payment of this machinery, the company gave a mortgage upon it for twelve thousand dollars, and issued to the associates one hundred and fifty-two shares of the capital stock, which, at its par value of one hundred and ten dollars, amounted to the balance due them within the sum of eighty dollars.

The complainant, after this, purchased the interest of Wheeler, and, in September, 1845, Wood and Merritt purchased of the complainant all his interest in the company, after a balance sheet had been furnished to them, exhibiting the affairs of the corporation, but in which no mention was made of the check. It is alleged that it was understood by the directors that the check and memoranda given for the installments were paid off in the negotiation of the machinery, and were filed away among the canceled papers.

Wood and Merritt having become the owners of all the stock and effects of the company, brought an action at law upon the cheek, in the name of Philemon Dickerson, president of the Boudinot Manufacturing Company. After the commencement of that suit, certain creditors of the company procured an injunction, restraining them from the exercise of their corporate powers, and the appointment of receivers, who are prosecuting the action.

The bill in this cause was filed to stay the proceedings at law, and for specific and general relief.' An injunction was issued, and Messrs. Dickerson and Benson have filed their several answers. A general demurrer to the bill was filed on behalf of the receivers. The Chancellor, after argument, sustained the demurrer, and dismissed the bill.

From this decree the complainant appeals to this court, and the question is whether the demurrer was properly sustained..

The gravamen of the bill is that the complainant is sued at law against equity and good conscience. To maintain this position, it is insisted 2 First. That the check was given as a mere memorandum, to remain until the machinery should be transferred to the company, and that it was agreed by the company that it should be canceled upon such transfer being made.

The directors, in this matter, were proceeding under the authority of the supplement to their charter. That act authorized them to demand from the stockholders the additional sum of fifty dollars on each share of the capital stock already subscribed, not exceeding ten dollars on each share, at any one time ; and, by way of penalty for neglect to pay after the proper notice, they might declare the stock forfeited.

This was fully understood by the directors, and promptly acted upon by them in their resolutions of the sixth of June, declaring the seventy-three shares of Stoutenburgh and Laffan to be forfeited to the company for default of payment. And upon their own construction it must be held that the check and other memoranda given by the directors individually were taken as cash, and. intended to be bona fide payments of the amounts mentioned in them ; otherwise their own stock became liable to forfeiture, and it is not to be supposed that they would impose upon others the penalty which they had themselves incurred.

If they were not intended as payments, the directors would be obnoxious to the charge of having procured the supplement and called in the installment, for the mere purpose of wresting from the hands of Stoutenburgh and Laffan by the forms of law, the shares of stock which they had failed to get by fair negotiation. The object of increasing the value of the shares was to raise funds to pay the debts and put the works in operation, and if the directors paid nothing upon their shares, they might be suspected of the design of raising funds out of their fellow-corporators, without making any advances themselves.

If these checks were not taken as payments, and to be collected and converted into money, then the directors must have ventured upon an expedient to raise funds to increase the nominal value of the stock, and to create a fictitious credit, which is but too common with the managers of corporations, but which a court of justice can neither uphold nor approve. Such transactions may be sanctioned by the code of those whose motto is

Rem, faeias rem,
Meets si possis ; si non, quoeunque modo rem,”

but they cannot stand the test of law or equity. They who engage in them, whether tempted by the love of gain, or seduced by the force of example, must act upon their own responsibility, and at their own risk, and look t,o the end to justify the means. The aid or sanction of the courts they will seek in vain.

The suspicion, even, of this, we cannot entertain towards these directors. Their character should be a guarantee of the honesty of their intentions, and the alternative is, that the check was taken as a payment, to be converted into money for the purposes mentioned in the bill.

Secondly. It is urged that the action at law is against equity, because thé check was considered to have been paid, and was meant to be canceled.

The allegation of payment is accompanied by a statement of the manner in which it was done, to wit, that the machinery purchased of Mr. Gay, was conveyed to the company at an advance of ten thousand dollars; and that, in the estimates, and by the understanding of the directors, the whole stock was paid by this and other machinery.

It is unnecessary for the purpose of this suit, to inquire into the validity of this sale by the associates, as individuals, to themselves, as directors, at such an advance; or of its influence upon their creditors and the public. It is sufficient that it appears by the bill that the company directed the issue to the associates of one hundred and fifty-two shares of the capital stock, of the par value of sixteen thousand seven hundred and twenty dollars, expressly to pay for the machinery, and that by it they did pay to within eighty dollars of the sum of sixteen thousand eight hundred dollars, paid by the associates from their own funds to Mr. Gay. The machinery, therefore, cannot be considered as a payment of the check and memoranda given for the installment.

Upon, the merits of the case, as made by the complainant, the bill was properly dismissed.

There is another reason why the demurrer was well sustained. The bill does not present a case in which the aid of a court of equity is required. It does not seek a discovery to enable the complainant to make out his defence. There is no allegation in it that is not proper to be proved at law. The whole transaction is within the knowledge of some or all of the associates, and they are competent witnesses. The books and papers can be procured on notice or by process, or their contents be proved. The prayer that the check be given up to be canceled is that which every defendant at law might make, and if with success, he would find an easy way of changing the forum of every action. The contribution prayed for is a matter entirely between the associates, and cannot be considered in a suit between the owner of the check and the complainant. If the facts presented by the bill afford a defence, the complainant has adequate relief at law, and a court of equity should not take jurisdiction of the case.

Let the decree be affirmed, with costs.

Decree affirmed unanimously.  