Saffold, C. J.
The facts, material to the enqui-ry, .according to the views we have taken of the case, present the following questions--the determination of which is considered sufficiently decisiveof the controversy.
1. Was Tilford’s debt due the trustees of the Couitland Company, admissible as a set-off in their favor, against the executor of John Spence, to whom Tilford had transferred his certificates of stock in the Company; or was there,error in the allowance thereof by the decree of the Circuit Court?
2. What was the effect of the sale of the six certificates of stock to Whitaker, while he acted as trustee and treasurer of the Company — was it valid as decreed by the Chancellor below, or was it void on the ground of either actual or constructive fraud.
3. Was the allowance of one thousand five hundred dollars to Whitaker, for his services as trustee and treasurer, equitably due, and properly alio wed ?
4. Should the charge of .five hundred dollars, as a fee to the defendant's attorneys, for defending this suit, have been allowed against the complainant ?
[312]*312The elaborate investigation which the subject appears to have received from the Chancelor in the Court below, and the respect I entertain for his opinions, together with the learned and satisfactory argument, of which we have liad the benefit in this Court, from the counsel on each side, entitle the case to our mature consideration.
1. The first question proposed for consideration, is important in principle and not. free from novelty or difficulty. The true character and legal effect, of these stock certificates, in the hands of a bona fide assignee, must depend on the law and usage, peculiar to such securities, in conjunction with the articles of association, from which they emanated. It is conceded by all, that they are not of the technical character of any of the instruments, specified in the statute concerning “bonds, notes,” &c.
It may be useful to speculate a moment, on the consequences of the principle contended for. The same individual might be the first or subsequent holder of many certificates, a separate one having issued for each share. Tilford held nineteen certificates, which he could have assigned to nineteen different persons. Had he held them as assignee; so far as depends upon the articles of association; and the equi[313]*313ty of the lien, they would have been no less chargeable with his debts, for lots purchased of the company. In either case, the assignments by him, might have been made at as tíiativ different times as he' had ^ t shares, and there were changes in the amount of profit or loss on the stock: so that the amount due thereon, at the time of assignment would have been different, on each several certificate. If the profit on the stock, be claimed as a set-off, on the ground, ¡of its being an interest which the debtor has assign-' ed, as in case of a bond, note, &o., the claim carl extend only to so much as had accrued at the time of the assignment, and interest, damages or, the like, which would accumulate as a legal consequence: for no right to any thing more, had ever vested;in the assignor — consequently he could never have assigned more. Then, how could ihe set-off, claimed against the former holder, be apportioned among the several assignees?
If the claim be sustained, with reference to the the value of the stock, when assigned, or any other time, the assignor proving insolvent, in justice and equity, it would seem, that each assignee should contribute his proportion in discharge of the Hen. If more has been recovered against one, how is he to coerce . contribution from the others? There is no privity between them. The fact is also material, in this view of the subject, that the accruing profits on the stock, according to the articles uere to -be annually paid over to the respective holders of the certificates : the necessary consequence of which was, that the right to the dividends, as they periodically accrued, vested directly in the holders of the " ' [314]*314certificates for the time being; and the assignors, never having had any title to them, they coaid not be set against their debts.
In these several respects, I think there is an obvious difference between these certificates and any of the-instruments, intended to be embraced, by the statute referred to, whiqh entitles the maker to the benefit of any payment, discount or set-off, made,had or possessed against the payee or obligee, before notice of the assignment.
Could it be said, that all the profits to arise on this stock, had accrued before the assignment, the fact would be immaterial to the principle. The certificates were equally assignable before, and the supposition, that they were so assigned, demonstrates the' objection to the principle. But. the fact, that profits subsequently accrued, in this case, may be assumed,, in as much as Whitaker the active trustee and treasurer of the company, after the right had been transferred to Spence, estimated the value of the stock at only about one fifth of its subsequent value.
I recognise the principle, that it is only by statute authority, that the payor of a note, or obligee of a bond, when sued by, and in the name of an assignee, can set-off a demand against the payee or obligee.— Whether the statute of Anne introduced a new principle, by attaching to promissory notes, payable to bearer, negotiable qualities, or whether the statute was, in this respect, only declaratory of the common-law ; yet, in either view of that mooted question, statute authority is necessary, to enable a defendant,, when sued by an assignee, who has a right of action in his own name, to avail himself of a set-off, due from the assignor, or any other, not a party to the [315]*315suit. In this respecta set-off stands on a different principle from failure or illegality of consideration, or any other vice in the contract. • In cases of the latter kind, the defence is available, at common law, in an action by the assignee, if he received the negotiable instrument after due, because non-payment at maturity furnishes a ground of suspicion : or if he received the security before due, having actual notice of such ground of defence.
But this right of defence does not, at common law, apply to sets-off which do not impugn the validity of the instrument sued on. It is true, that an as-signee who sues upon a chose in action, which, by law, is < not negotiable, or assignable, so as to enable him to sue in his own name, is subject to be set-off, by a debt againsMhe assignor; but it is so, because the assignor is the plaintiff in the action, and the assignee is only the cestui que use. There, the debts are mutual between the plaintiff and defendant.
But, even in such cases, where the defendant ol> tains the set-off, after notice of the transfer, law, as well as chancery will protect the equitable interest of the assignee, and disallow the set-off against, him.
I presume it will not he contended, that the assign- or of these certificates could, after the assignment, maintain any action upon them, in his own name, either in law or equity.
The case of Norton vs. Rose,a which is supposed by the counsel for the defendants, to be decisive in favor, is believed to sustain no principle, inconsistent with the views I have advanced. The Court there held, that an assignee of a bond, under the statute of Virginia, though for a valuable consideration, and without notice, took the same, subject to all the equi[316]*316ty of the obligor, against, the obligee. In that Slate a statute exists, similar to ours, authorising the as-signee to sue in his own'name; but it contains a proviso, that in such cases, the defendant shall have the benefit of all just discounts, which he can prove before notice of such assignment, given to him. The proviso, however, was considered as having no other effect in that ease, than to show that the statute did not render the instruments embraced by it, negotiable, by putting them on the footing of inland bills of exchange, as was done by the statute of Anne.— But it was perfectly clear, and so considered by the Court, that the bond, in that case, was of the description of securities contemplated by the statute, and thereby rendered assignable by indorsement, but not negotiable, so as to deny the defendant the benefit of discounts, either legal or equitable, before notice of the assignment.
This latter is the only difficult question on the point now under consideration. It is whether our statute applies to instruments such as these stock certificates. If it were conceded that it does, in all respects, to the same extent with bonds or promissory notes, the claim of set-off could not be resisted. This being the main question, but few of the .authorities relied on by the counsel can materially aid our de-cisión; and for this reason they will receive less consideration than they would otherwise require.
The opinion of this Court, in the case of Smith vs. Anderson, is not in point. The set-off there claimed and allowed was against promissory notes, in the ordinary form, between individuals, and given for definite sums of money, payable at fixed periods. The matter offered as a set-off, was money actually paid [317]*317for the use of the payee in the notes. From this no' tice alone,,it sufficiently appears to be inapplicable to my present enquiry. The question is altogether different, whether certificates of stock in this and similar associations or companies, do not constitute a different class of securities or property, which whether technically negotiable or not, as bills of exchange and the like, are equally exempt in the hands of a bona fide subsequent holder, ‘against any claim of set-off against a prior holder.
The decision must materially depend on the terms of the articles of association, under which 1he certificates issued, and the nature and object thereof. That it was competent for the Company, by their articles, to have retained alien on the certificates, as well as on the lots sold, to secure the purchase money for the. latter, can not be questioned; yet it may be doubted, if they could have done so with good faith, without expressing the lien in the certificates, as they did in the title bonds, or giving it publicity in some other way. The express provision for the lien in the bonds, and none in the certificates, furnishes a strong implication that it was not retained in the latter, or so intended. If it be farther found that the articles have expressly retained the lien on the certificates for other claims or demands, and none for the price of lots to be sold, this will warrant a still stronger inference against its existence in the latter case.
The articles (see 2d,) provide that each share, shall contribute equally to the payment of the lands to the general government, and all other expenses of the Company, and shall entitle the owner thereof (by assignment or otherwise) toan equal proportion of all profits and proceeds of the joint stock', The pay[318]*318ment on each share shall be made on such notice and at such times and places, as the trustees* shall, by their rules, prescribe ; and every share on which any payment shall not be made, when required, shall be forfeited to the Company. (3d ) — The trustees shall issue certificates for"each share. (4th.) — The certificates shall be assignable, &c. The assignee, and the heirs and representatives of stock holders, shall respectively be entitled to all the privileges and benefits, and subject to all the penalties and conditions, of the original parties.
Much reliance is had on this fourth article, and the argument deduced from it, that it places the heirs and representatives of the stockholders on the same footing with the assignee, and the former cannot be in' a' better situation than the ancestor,or less liable to the set-off. To this it is considered a sufficient answer to say, that the provision requires only that the heirs and representatives of the original stockholder shall be subject jtb all his liabilities, and the heirs and representatives of an assignee subject only to all his; and in either case, the responsibility shall extend alone to the charges, “expenses” and demands provided for by the articles, as entered into by and between “the original parties;” but that the assignee, his heirs or representatives, or the stock held by the former at the time of his death, should be chargeable with the price of lots purchased by the immediate or any remote assignor of the certificate, seems never to have been contemplated by any clause or sentence in the articles.
It would be worthy of consideratiqn, whether, if the stock be subject to set-off by the debt of the original assignor, it would not be equally so by the debt [319]*319of the last or any intermediate assignor. The latter would have been no less the "owner” or “ holder” of the stock than the former. It surely could never ha\-e been intended to embarrass the stock by incumbrances of-this kind, which must have prevented their circulation.
The eighth article directs; that, after the town shall have been laid off, the trustees shall sell at public sale to the highest bidder, at such times, and "on such terms as they may think proper, the lots therein,” not included in any reservations or donations they may have made.
The 10th requires the trustees to keep register books shewing the state of the funds oí the Company, the expenditures,debts due to and from the Company, and monies in their hands, which book shall, at all times, be open to the inspection of every stock* holder. No right of such inspection is secured to others who may be about to purchase the stock.
Article 11, directs, that outofthe proceeds of sales, the trustees shall retain what shall be necessary to pay the "expenditures,” which have been made in the business of the Company, and “the debts becoming due from the joint, stock, to pay (the government) for said lands, or for other purposes, and which can hot be provided for in due time out of other funds.” Here is no recognition of the right to retain proceeds for the payment to the Company for lots sold, but the contrary is implied.
The 12th article requires, that at least once in every twelve months, on the first day of November, annually, the accounts of the Company shall be scf stated as to shew what is due to each share, and the same shall be paid to the “ owner of the certificate,” [320]*320ori the production thereof, “ unless, said certificate shall have been forfeited according to these articles."’ This appears farther to preclude the right to retain- or withhold dividends, to be offered as sets-off against the debts of & former “owner” of the certificate of stock.
The 14th article provides that the owners of said certificates, whether original holders or assignees, and their representatives respectively, shall be entitled to all actions 'at. law and equity for a breach of these articles or any part thereof, as fully “ as if each oí said owners were here, by his own proper narpé made a party to this agreement.” Then, as the as-signee and his representatives, after assignment, aré to be treated and regarded in the same light as if they had been the original holders of the certificates, debts Or demands against other individuals, can not be available as sets-off against them.
I have noticed the substance of every piovision in the articles which appears to have the least bearing on the question-under consideration ¡ and they apJ pear to me to exclude the idea of any lien upon, or right to set-off any portion of the dividends on assigned certificates, in discharge of debts due the Company or their trustees, from foi-mer holders, for the price of lots purchased by them. This effect and intent I.think, are rendered the more evident,from the fact, that the trustees, in the execution of their authority¿ to urescribe the terms on which the lots were to be sold, (see 8th article,) required bonds with personal security, and by their title bonds to purchasers of lots, fexpressly retained a lien on them, for the payment of the consideration. In these respects, no difference Was made between stock-holders' and others who be[321]*321came purchasers; they took the same security from holders of stock as was required from strangers, and-We may presume a lien, or right of set-off against the stock was deemed unnecessary. It would seem to have been a rational conclusion, that the purchaser’s bond, with security deemed sufficient at the time; together with a- lien on the lots, for which the debts were owing, (the lots in most instances being purchased for the purpose of being improved,) would have furnished ample security. That such was the design'ofthe trustees, I can not doubt; but whether -it should prove so or not, they have provided no other security. While it must be conceded that the Company, or trustees,, had no power to adopt rules which were repugnant to the laws of the land; and that, being incorporated as a body politic, they could act only as an individual, or a voluntary association of individuals; yet they had the undoubted right, in their contracts, to stipulate such terms, and prescribe such rights, forfeitures and conditions, as were not prohibited by law: consequently, they had aright/ while adopting the articles for their government, and issuing the certificates for the stock, to have provided a lien upon them for debts due the Company from the original or any subsequent stock-holders, and having declined the insertion of any such stipulation, in either instrument, they could not afterwards claim it.
On principles of analogy, the case of Mandeville v. The Union Bank of Georgetown,a may be regarded as a strong authority in this case. In that case, Mandeville had executed a promissory note to C. J. Nourse or order — negotiable at the Union Bank of Georgetown — payable at the Potomac Bank in Alexandria; [322]*322the same having been made in the county of Alexandria. The note was discounted in the Bank in which it was expressed to be negotiable. When sued upon it by the Bank, Mande ville offered'to set-off, anote and acceptances of Nourse, of subsequent date, against his own note, upon- which suit was brought by the Bank as indorsee.- In support of the set-off, it was contended, that as the contract was subject to the laws of Virginia, which allowed the defendant to set-off against the assignee of a promissory note, any just claim which he had against the' original payee before notice of the' assignment, the defendant was entitled to the benefit of this, defence. Chief-Justice Marshall delivered the opinion of the Court, and said it was entirely immaterial, whether the question was governed by the laws of Virginia, or of Maryland. By neither of them could the discounts claimed by Mandeville be allowed: that by making his note negotiable in Bank, he authorised the Bank to advance on his credit, to the owner of the note, the sum expressed on its face: that it would "be á fraud on the Bank, to set up off-sets against the note,in consequence of any transactions between the-parties. - These off-sets were waived, and could not, after the note had been discounted, be again set up.
In one respect, at least, the objection to the off-set in that case, waá less forcible than in this, in that the note against which it was offered, was for the uncon- , ditional payment of a sum certain, on a fixed day.— Here, the "amount 'was contingent; payable at different times, and on condition that calls for payment to the United States on the lands, should be promptly met by the holders of the certificates for the time being; otherwise the same to be forfeited. Theinten[323]*323tion also to authorise the negotiation of these certificates was no less manifest, than it was in respect to the note drawn negotiable in Bank; and the tendency to defraud the assignee, by the claim of a set-off, about the same in either case. .
We do not perceive the difference, in principle, so far as this question is concerned, between these ■ certificates, and certificates for stock in a bank or other incorporated company, which, by their charter, are made transferable by assignment. Certificates for bank stock, are not usually declared by the charters, to be negotiable, nor the right to set off demands against the assignors, to the prejudice of the assignees, expressly denied — yet^such right is believed never to have been sustained. The idea seems to have prevailed universally, that the allowance of such sets-off was incompatible with the nature and object of such institutions; and we consider the same views alike applicable to associations of the character of the one in question.
The assignment of these certificates of stock has been attempted to be assimilated in argument, to an assignment by a copartner, of his interest in the concern — in which case the assigned interest would be subject to be discounted to the amount of all debts existing against the assignor, in favor of the other partners. To this argument, it is sufficient to reply, that an ordinary partnership is so far different from this association, as to destroy the force of any analogy between them, in reference to this question : that it is so, from the circumstance alone, that by law, such partner’s interest is not assignable, so as to constitute the assignee a partner, in lieu of the assignor. It is not to be doubted, however, that, partners are [324]*324competent, by the terms of their articles, to make valid ¡stipulations to this effect, and render such binding on themselves, as this company have done, by the terms of their association ; with the nature of which, such assignments are far more consistent.
After the views already taken of the case, the remaining questions may be briefly disposed of.
2. In leference to the second point, it is to be observed, that Whitaker was-the chief agent in all the company transactions — that he was the most active trustee, and also the treasurer — that his situation must have given him an intimate knowledge of the state and condition of the affairs of the company— that no other could have any satisfactory knowledge concerning them, unless derived through him. That ■ Spence, after he had acquired an interest in all Til-ford’s stock, by having received possession of the certificates, and a power of attorney to represent them, and sell them for his own benefit; and this, for a valuable and sufficient consideration, could not ascertain from Whitaker the true situation of the concern, or any thing near the value of the stock. On the contrary, that Whitaker had failed to keep a register of the accounts, as, by the articles, he was required to do; and of which, if kept, Spence, as a stockholder, would have been entitled to an inspection. This, at least, would have shewn him the amount of credit and debit, for and against the company; and, consequently; the data from which an estimate of the value of the stock could have been formed. For the want of correct information, he was induced to believe, that the shares, which afterwards proved to be worth four hundred and fifteen dollars, each, were only of the value of ninety-two dollars and nine[325]*325ty-four cents, and to sell sis of them to this trustee, at this grossly inadequate price. The unequal, .unjust and oppressive bargain, was the result, mainly of Spence’s erroneous impression, that Tilford’s debt, (nearly equal in amount, to the value of the certificates,) operated as a lien or incumbance on the stock, which Spence held, and part of which he then sold to Whitaker. This was at the time when the call was to be met, by the stock-holders, ‘for money to pay the government the original land debt — when a failure to pay, would produce a forfeiture of the stock, and when Spence was under the necessity of relying, for the means to meet the call, on the dividends of the stock, or a sale thereof.
The important fact here alluded to, and which cannot be without its influence on this point, is,that this erroneous estimate of the value of the certificates, and the idea of the incumbrance upon them, were created, and strenuously insisted upon by Whitaker;who, being the trustee, had a much better opportunity of knowing the true value, than Spence, or any other, and, in whom confidence had been reposed, for this purpose, and for his. correct management of the same.
These circumstances appear to present a case, to which the principle, that a trustee, in whom faith and confidence have been reposed, and whose agency imparted to him a more intimate knowledge of the condition and value of the subjects of the trust, than the cestui que trust, or others, could possess, and who has taken advantage of his superior knowledge, to force an unequal bargain, is peculiarly applicable, on the ground of either constructive or intentional [326]*326fraud. It maj be, that stock had previously sold at only the same rate, the sales, perhaps, effected in the same way; but, it cannot be maintained that a fair price was given by Whitaker — but the contrary fact, that he purchased at much less than half the value, is most manifest.
Admitting the principle, that in such cases, the subsequent approval or assent of the cestui que trust, or his ratification of the sale, will remove the objection of fraud; yet, the argument, in this case, that Spence’s prior approval and assent, the contract haT ving been made with him, should, have the same effect, cannot be sustained, for the obvious reason, that it was in effecting this purchase, that Whitaker availed himself of his superior knowledge and power; to secure the' advantage complained of — an objection, which has never been waived. We are of opinion, that, whether the evidence of artifice, misrepresentation and fraudulent design alone, would be sufficient to avoid and annul this contract, that these circumstances, existing between a trustee and cestui que trust, are amply sufficient, according to the current rules of decision, in’ England and America, and which have, in several previous cases, been recognis-ed by this court.
We, therefore, on the ground, that the sale of the six shares from John Spence, as attorney in fact, for Tilford, to Whitaker, was fraudulent and void, declare a rescission of it.
That Spence, at the time, acted in the capacity of attorney for Tilford, is considered immaterial, as the former had previously acquired the beneficial interest in the certificates, and then held an equitable ti-lle to them.
[327]*3273. On the third point, it is sufficient to say, that Whitaker, having been the active agent as trustee for all the company, while the members generally, were not required to render any personal services — * and', especially, for- the reason that he also served the company as treasurer; a duty confided to, and required of him alone, his claim, in this respect, is distinguishable from the claim for personal services, by ordinary trustees, or partners in trade. — That, in justice and equity, he was entitled, to reasonable compensation for his services ; and, as it does not appear, that the compensation allowed him, by the decree of the Circuit Court, was exorbitant or unreasonable, the decree, so far as relates to this allowance, is affirmed.
4. As respects the allowance of the five hundred dollars, as a fee against the complainant, for the defendants’ counsel, in this case, a consequence of our decision on the two first parts, is, that, however just the claim, of the counsel to this amount of compensation, it is no ' charge against the party who was compelled to sue, and against whom they were interposed.
• The result of these views is, that the decree of the Circuit Court be reversed, in relation to the points considered, except so far as it allows the fifteen hundred dollars to Whitaker, for his services, and in this, that it be affirmed. That this Court, having’the necessary data, will proceed to render such decree as the Circuit Court should have rendered : therefore, the clerk of this Court is directed to compute the amount due the plaintiff in error, accord-' [328]*328ing to the principles of this opinion, and prepare a decree accordingly, and charge the defendants in error with all the costs of this Court and the Court below.
Hopkins, J., not sitting.
Alk. Dig. 828