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Opinion of the Court.

entered into it was not the intent of the contract that either party should be charged for improvements, additions or even restorations, in the real estate or terminal facilities of the other. But with the increase of business under the joint management, it became evident, if the business was to be retained, that larger terminal facilities at Boston were necessary; and the character and extent of the needed improvements were the subject of frequent consideration among the directors of the two companies. In the meantime the construction of another passenger station there was commenced by the Lowell Company. And at a meeting of the directors of the Nashua Corporation on the 23d of July, 1872, it was voted as follows: "That the expenditures made and to be made by the Boston and Lowell Railroad Corporation for land and building in Boston for a new station, and the expenditures made and to be made by said corporation for the building and completing the Mystic River Railroad, and for the improvements in Winchester for a new station and land for railway purposes, to the amount of $20,000, are to be treated in the management of the business under the joint business contract existing between said corporation and the Nashua and Lowell Railroad Corporation as follows, viz.: The said Boston and Lowell Railroad Corporation are to be paid the interest upon such expenditures made and to be made, at the rate of seven per cent per annum, at the end of each six months, out of the receipts of the joint corporations under said contract, and which is to be charged as a part of the expenses of operating said railways under said contract; and the cashier of said two corporations and treasurer of the Boston and Lowell Railroad Corporation is hereby directed to make up an interest account upon such expenditures to April 1, 1872, and pay the amount found due to the Boston and Lowell Railroad Corporation out of the joint receipts of said two corporations.”

Under the authority of this vote there was deducted from the net earnings of the joint management the interest on the expenditures incurred in the construction of the passenger station in the city of Boston, at the rate of seven per cent,

Opinion of the Court.

the same being treated as operating expenses of the road. The amount of the net earnings thus diverted from the Nashua Company, being thirty-one per cent of the interest on the whole expenditure incurred, is alleged to have been $181,962, and the right to thus appropriate those earnings depends upon the sufficiency of that authority. The question thus presented is not free from difficulty. As a general rule, we should not hesitate to say that the directors of the Nashua Company could not authorize, without the previous approval of its stockholders, the construction of a passenger station at a city in a State foreign to that in which it was created, and to which its own road did not extend, or the payment of any portion of the cost of the construction. Such expenditures would not be considered as falling within the ordinary scope of their powers. See Railway Co. v. Allerton, 18 Wall. 233; Davis v. Old Colony Railroad, 131 Mass. 258, and cases there cited, particularly Colman v. Eastern Counties Railway, 10 Beavan, 1, and Bagshaw v. Eastern Union Railway, 7 Hare, 114. But the fact that the increased facilities provided at Boston were necessary to enable the joint management to retain its extended business, in which the Nashua Company was of course directly interested, changes the position of the directors of that company with reference to such expenditures, and brings them within the general scope of the directors' powers. Such is the conclusion of a majority of the court, and, therefore, the suit cannot be maintained for the restoration to the complainant of moneys thus expended, which otherwise would have gone to it as net earnings of the joint management.

But the purchase of the controlling interest in the stock of the Lowell and Lawrence and of the Salem and Lowell Railroad Companies stands upon a different footing. That was a matter solely for the Lowell Corporation. The purchase was never authorized by any vote of the directors of the Nashua Company. At the time those roads were under lease to the Lowell Corporation, and had been taken into the joint account and the net earnings divided between the two corporations in the same ratio as were the earnings of their own roads.

Opinion of the Court.

This gave to the Nashua Corporation all the benefits that could possibly arise from the ownership by the Lowell Corporation of a controlling interest in their capital stock. The additional burden of the purchase could in no way, therefore, be cast upon the Nashua Corporation without the consent of its stockholders, and no such consent was given either by them, nor, as already said, was any given by its directors. The pretence for the purchase was that the leases were invalid, and that other parties might otherwise obtain control of those roads, and thus injuriously affect the business of the joint management. The charter of the complainant did not extend to the purchase of controlling interests in the railroads of other States under the apprehension that such roads might become business competitors. The complainant is, therefore, entitled to an accounting by the Lowell Company for the net earnings of the joint management which were appropriated towards the interest on the sums expended in the purchase of the stock of those companies, and to the payment of the amount found due to it upon such accounting

The decree of the court below will be reversed and the cause remanded for further proceedings in accordance with this opinion; and

It is so ordered.

MR. CHIEF JUSTICE FULLER, MR. JUSTICE GRAY and MR. JUSTICE LAMAR dissented on the question of jurisdiction.

MR. JUSTICE BLATCHFORD did not sit in this case, or take any part in its decision.

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A plaintiff who delays for fifteen years after an ed fraud comes to his

knowledge before seeking relief in equity is guilty of laches, and his bill should be dismissed.

IN EQUITY.

The defendants demurred to the bill and it was dismissed. The plaintiff appealed. The case is stated in the opinion.

Mr. J. H. McKune for appellant.

Mr. Louis T. Ilaggin and Mr. S. C. Denson for appellees.

MR. JUSTICE MILLER delivered the opinion of the court.

This is an appeal from the Circuit Court of the United States for the District of California. The plaintiff, Samuel Norris, who is appellant here, brought his suit in the Superior Court of the county of Sacramento, against James B. Haggin and Lloyd Tevis, by way of a bill in chancery. The bill gives a very lengthy account of what the plaintiff calls a “fraud and imposition” practised upon him by the defendants, who had been his agents and attorneys, and who, when he became so enfeebled in mind as to be incapable of understanding his rights or attending to business at all, procured from him conveyances and mortgages and other instruments in writing, by means of which they secured the title to over a million and a half dollars' worth of property, principally real estate.

This suit was commenced on the 21st day of August, 1884, and after a demurrer by defendants had been filed in the state

Opinion of the Court.

court, it was, on their motion, removed into the Circuit Court of the United States for the District of California. There the case was heard on the demurrer, which was sustained by the Circuit Court and the bill dismissed. 28 Fed. Rep. 275. From the decree dismissing the bill, the present appeal is brought.

The statements of the bill are very full and profuse in their recital of the advantages taken by the defendants of the plaintiff. He sets out in the amended bill, which was filed in the Circuit Court, that he was a citizen of the kingdom of Denmark, and a resident of the Sandwich Islands. That from the 1st day of December, 1819, until the 2d day of April, 1861, he was the owner in fee, in possession and entitled to the possession, of a certain piece or tract of land consisting of 45,000 acres, in the county of Sacramento, on the right bank of the American River, and known as the Rancho del Paso, and more particularly described in a patent from the government of the United States to him, which was duly recorded in the office of the recorder of Sacramento County. That also he was the owner of certain other parcels and lots of ground, the value of which in the aggregate amounted to $1,535,000. He then says that on or about the 1st day of January, 1855, said Haggin and Tevis became and, until a short time prior to the commencement of this suit were, the trusted agents, business managers and attorneys of plaintiff in and about the management of his business affairs connected with said property; that the defendants, for a valuable consideration, promised and undertook to act as his agents and confidential advisers, and that, having faith and confidence in their integrity and ability, he, from said first day of January, 1855, to the last of December, 1867, trusted them, and took and acted on their advice in all his business affairs, and counselled with them in all matters of importance, and confided to them all matters pertaining to his affairs. He then states that on the 4th day of March, 1859, he was injured by a severe blow on his head, whereby his senses and faculties were impaired, so that he then and thereby became deaf, and that for several months his hearing was wholly gone, and his left eye became and for several

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