Sandy River Railroad v. Stubbs

| Me. | Dec 14, 1885

Virgin, J.

The complainant brings up this case by appeal from the decree of the presiding justice, who heard it on bill, ■answer and proof.

Its claim, briefly stated, is — that the defendant, as one of its •directors and for its benefit, purchased certain land in the village ■of Strong, but took the conveyance to himself, that the company -soon afterward located its track, erected its station house, water tank and wood-shed upon a portion of it; that the defendant ffiolds the title to the whole land thus purchased in 'trust for the •complainant; wherefore it prays that on payment to him of the •consideration, interest and expenses, he be decreed to convey to 4he company.

The defendant denies that he acted as director in hac re, and •claims that the company being unable to obtain from the owner •a right of way across the land upon the terms it proposed, he thereupon, without its direction, suggestion or knowledge, ¿purchased on his own personal responsibility, from the owner, (much more land than was necessary for the company’s use, to the •end that it might have so much of it as was necessary for railroad purposes, for a reasonable consideration, or for such a proportion of the whole consideration as the portion of the land needed and taken by the company should bear to the whole land.

Several of the allegations in the bill are not proved in the sense in which they are set out, and some of them — especially in paragraphs four and nine — are disproved. And without unprofitably extending this opinion by an analysis of the testimony, it is sufficient to say that the material facts, established by a fair preponderance of it, are these :

The company was organized in April, 1879. Prior to the following August it obtained by parol gift a right of way twenty feet in width — not including any land for its buildings — and located its track across land of one Porter, in the village of Strong. Some of its citizens and the two directors including the defendant, resident therein, expressed some dissatisfaction thereto, preferring a route farther east and neárer to the business center of the village. Whereupon, at the latter date mentioned, five of the seven directors together with Porter assembled at the defendant’s office to consider the proposed change of location which if made would also cross the land of Porter. A majority of the directors not residing in Strong being at least indifferent to the change, strenuously contended that it ought not to be made unless Porter would give this right of way, land damages for railroad buildings being inevitable on either route. But after a whole afternoon’s importunate urging he absolutely refused to accede, and the projected change was therefore substantially abandoned. Thereupon the defendant took Porter out upon the land, pointed out the probable proposed route and there made renewed but fruitless efforts to persuade him to give the right of way. Then the defendant proposed to personally purchase his entire field, which proposition Porter peremptorily declined to entertain. As the last resort, the defendant staked out some two and one-half acres of it, comprising much more land than they anticipated the company might need for all its purposes, but across which the new track might probably go; and after considerable bantering, Porter agreed to take five hundred dollars therefor, provided the defendant would erect and maintain a fence against the remainder of the lot, and the defendant closed the trade. Whereupon they returned to the office where the defendant made a detailed report of his negotiations with Porter, adding in substance that having purchased the land, he could accommodate the company with a right of way, and with as much land as was necessary if they wished to locate there. But the directors expressly repudiated all participation in the defendant’s purchase, alleging among other reasons that land there was not worth any such price and declaring that he must understand that it was his own personal trade — to which he readily and expressly assented — whereupon they separated.

A few days thereafter, the defendant paid Porter the five hundred dollars, received his deed containing the fencing clause and caused it to be recorded and subsequently built the fence. There was no other consideration for the land thus conveyed.

In September the location was changed. In November and December the station house and water-tank were erected, followed by the running of the trains and the erection of the wood-shed.

Subsequently the parties had several conferences in relation to settling the damages for the land taken for the track and buildings. Still later two committees were chosen for the same purpose. They staked out so much of the land as was deemed necessary for railroad purposes, agreed upon the price, but failed to conclude a final adjustment because the defendant declined to convey the fee instead of the use of the land so long as it should be used for railroad purposes. Thus the matter stood, until February, 1883, when the defendant, for the first time during the three and one-half years of his ownership of the land, received notice that the company claimed he held the whole land in trust simply. He had held the offices of director and clerk of the company from the time of its organization to November, 1883, attended its meetings, and never before received any intimation of such a claim.

Without questioning the rule so clearly recognized in this court (E. & N. A. R. Co. v. Poor, 59 Maine, 277), as well as in many others, that his directorship constituted the defendant, in law, an agent, and in equity a quasi trustee at least, and thereby established his fiduciary character; fully appreciating the foundation of the important doctrine by which equity requires that the confidence imposed in a trustee shall not be abused for his personal interests; keeping constantly in mind the jealousy with which courts scan the dealings of a trustee with respect to matters involved in the trust; holding with other courts that the cestui que trust’s right of avoidance does not necessarily depend upon the fraud or bona fides of the trustee (Duncomb v. N. Y. H. & N. R. R. Co. 84 N. Y. 199 ; and still we are of opinion that none of the cases or the principles announced therein invoked by the complainant, nor any of the numerous others upon the subject which we have carefully examined would warrant us in granting the prayer of the complainant.

The defendant zealously worked for the interests of his principal by seeking to change the location so as thereby to accommodate the business interests of the community in which one of its intermediate stations was to be located. This result had failed to be brought about by the other directors. As a last resort he personally purchased what was then considered two or three times more land than he deemed the needs of the road required for public use, not as a speculation from which he might derive secret profits (Thomp. Liab. Off. 360, § 8 and cases in notis) but to facilitate the desired object. Ho did not deal with the company’s funds, but paid his own without any assurance or intimation that the company would ever take any of the land. He did not deal with the company’s property. He did nothing which he concealed from its knowledge, but frankly and promptly disclosed the whole transaction and put his deed upon the public registry, and his acts were repudiated. He did no act in the premises in anywise inconsistent with the interests of his cestui que trust, nor acquired for himself any interest adverse to his company in any sense contemplated by the rules of equity governing trustees and cestius que trustent. McClanahan v. Henderson, 12 Am. Dec. 412; Van Epps v. Van Epps, 9 Paige, 238, 241.

There was no opportunity for a breach of trust, the defendant standing alone against the other six directors who had a full knowledge of all the facts with full control of the question of change of location. If they concluded to make the change the company could only " take and hold the land for public use,” E. S., c. 51, § 14. It had no right to insist upon having the fee. If the parties could not agree upon the land damages, the statute furnished a tribunal to adjust that question. E. S., 1871, c. 51, § 6. If they could not agree as to the "necessity or extent of the land to be taken,” their remedy was plain and adequate. E. S., 1871, c. 51, § 13.

But the alleged necessities for the whole land was evidently an afterthought on the part of the complainant. Its whole conduct down to February, 1883, points in that direction, the staking out of the land appropriated leaving a portion as not needed, the agreed price based upon a fair proportion of the whole consideration paid by the defendant, the three reports of outstanding liabilities for land damages including the defendant’s claim, and the long — more than three and one-half years — acquiescence of the company all afford ample proof that the company then took a new departure.

Decree affirmed. Bill-dismissed with costs.

Peters, C. J., Walton, Libbey, Foster and Haskell, JJ., concurred.