Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/654

 § 630.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. X. la Pacific Railroad of Missouri v. Missouri Paciiic Railway Company, 1 a foreclosure was brought against a railroad com- pany, and a decree of sale entered, practically by its consent, its answer having admitted the allegations of the bill. It then appealed from the decree, and tried to bring before the Federal Supreme Court on appeal facts showing that its directors and its solicitor had acted fraudulently and in hos- tility to its interests in allowing the decree to be taken. The corporate management seems to have been changed shortly after the entry of the decree. The appeal duly prosecuted was not decided for about three years. The appellate court found no error which it could correct on appeal, but intimated that a remedy could be had in the court below.- As soon as possible after the appeal was decided, suit was brought to set aside the decree. The defendants demurred on the ground of laches; but it was held, and sustained on appeal, that the time during which the appeal was pending should not be counted against the plaintiff. Giving the opinion of the court, Justice Blatch- ford said : " As to the frauds alleged in the bill respecting the matters in the conduct of the suit, resulting in the decree, the right to relief is based on the view, that the corporation itself, the present plaintiff, speaking and acting now for its stock- holders as a body, was powerless then, because it was mis- represented by unfaithful directors, who did what was done and refused to do otherwise, and through whom alone it could then speak and act. . . . Under such circumstances mere knowledge by or notice to the plaintiff, or its directors or officers, or more or less of its stockholders, is unimportant; and the plaintiff cannot be concluded by the failure of any number of its stockholders to do, what unfaithful directors ought to haye done, unless a case is shown of such acquies- cence, assent or ratification as would make it inequitable to permit what has been done to be set aside, or unless the rights of innocent purchasers have subsequently intervened, to an extent creating an equitable bar to the granting of relief. The bill in this case does not show such a state of things. While stockholders, more or less in number, may be allowed i 111 U. S. 505. 2 Reported as Pacific R. R. Co. v. I Ketchara, 101 U. S. 289. 634