RICHARDS, Circuit Judge.
This was a suit brought by the American Eoan & Trust Company (which we shall call the Trust Company) against the Cumberland Coal & Iron Company (which we shall term the Cumberland Company) to foreclose a mortgage or deed of trust on its coal, iron, and timber property in Tennessee, given to secure $440,000 of its bonds. The Cumberland Company answered, admitting it was insolvent and in default, and conceding the mortgage should be foreclosed. The appellants, the Big Creek Gap Coal & Iron Company (hereafter designated the Big Creek Company) and certain individuals, owners of about $275,000 of the preferred stock of the Cumberland Company, intervened, and, as stockholders, resisted the foreclosure, claiming (i) that the mortgage was ultra vires, (2) that it was unauthorized, and (3) that-it was executed in fraud of their rights. The case was referred to a master, who, in an elaborate report, in which he carefully compared and considered the conflicting evidence introduced, [632]*632found against the interveners, both upon the facts and the law. The case came before the court below upon exceptions to this report. In' a well-considered opinion the findings of the master were sustained and a decree of foreclosure granted. From this the interveners have ap-. pealed. '
. The charge of fraud grows out of the reorganization of the La Follette Coal & Iron Company (hereafter called the La Follette Company). The Big Creek Company was organized in 1888. It was the owner of a part of the mineral lands covered by the mortgage in question. Upon these lands it had paid between $23,000 and $30,000. The La Follette Company was organized in 1893, and the lands passed ip it, the Big Creek Company receiving $10,000 in cash, upwards of $40,000 in notes secured by mortgage, and $200,000 in bonds of the La Follette Company. In the summer of 1896 the La Follette Company was insolvent. It owe’d about $125,000 of the original vendors’ liens on its lands. It had outstanding $1,375,000 of mortgage bonds inferior to these liens. It owed the Electric Corporation, of Boston, its largest creditor, $200,000 borrowed money.- Of its bonds, this corporation held $82,000 by purchase and $740,000 as security. The mineral lands of the company were without railroad connection, and therefore practically valueless. It was necessary not only to get time but money to build a road and develop the lands, and no way to do this offered except through the Electric Corporation. Accordingly, H. M. La - Follette, the leading stockholder of the La Follette Company, set about to secure a reorganization, first seeing the Electric Corporation. In the fall of 1896 an agreement for the reorganization of the La Follette Company was entered into between its bondholders and the Electric Corporation. La Follette, as a bondholder owning 127 bonds, signed as one party of the first part, and the Electric Corporation signed as the party of the second part. Other bondholders became parties by depositing their bonds with the Trust Company upon the terms of the reorganization agreement. The receipts accepted in exchange expressed this condition. The new corporation, to he known as the Cumberland Coal & Iron Company, was to have an authorized capital stock of $2,500,000, divided into $1,000,000 of preferred and $1,500,000 common, and to issue $500,000 of bonds. The agreement provided that the Electric Corporation should surrender the $740,000 bonds held as collateral, cancel the indebtedness due it, purchase $66,000 of the preferred stock of the new company at 90, exchange the remaining $82,000 of bonds for preferred stock in the new company, and lend the railway company the sum of $150,000 for use in completing the line, transferring to the Cumberland Company a majority of the capital stock of the railway company. In consideration of this, the Cumberland Company was to issue to the Electric Corporation $400,000 of its bonds secured by mortgage. All depositing bondholders were to receive preferred stock in the new company for their holdings. Certain of the bondholders of the La Follette Company declined to deposit their bonds, and it became necessary to foreclose the mortgage on the lands. This was done, the property was' purchased by money put up by the Electric Corporation, and was subsequently turned over to the Cumberland -Company. ,- In May, 1897, the Cumberland Company was or[633]*633ganized, by-laws adopted, and steps taken to carry out the plan óf reorganization. The Electric, Corporation furnished the additional money required, turned -over the property it had purchased- under the foreclosure proceedings, surrendered the bonds and notes it held, and received á certain amount of preferred stock and the $400,000 of bonds. The other bondholders received in lieu of their bonds preferred stock in the new company. The claim of the interveners was that Ea Follette induced them to enter into the reorganization scheme by fraudulently concealing the fact that the Cumberland Company was to issue, and the Electric Corporation to receive, bonds which would become a first lien upon the property; that he led them to- believe there would be no interest in the property of the new company superior to theirs, as holders of its preferred stock. They also contended that the making of the mortgage was beyond the power of the company, and, moreover, was not authorized at any stockholders’ meeting lawfully called and held.
1. The right of minority stockholders of a corporation to intervene in a foreclosure suit when the corporation threatens, by collusion or otherwise, to neglect the proper defense of the suit, is established by a line of decisions (Dodge v. Woolsey, 18 How. 331, 341, 15 L. Ed. 401; Davenport v. Dows, 18 Wall. 626, 21 L. Ed. 938, and subsequent cases), but when they intervene they do so, not as individuals, but as stockholders, in the assertion- of rights common to the stockholders, which the corporation itself has declined to protect. Dickerman v. Northern Trust Co., 176 U. S. 181, 188, 20 Sup. Ct. 311, 44 L. Ed. 423. In the present case, where the interveners seek no affirmative relief of their own in the rescission of the agreement by which they acquired their preferred stock, but ask only that a foreclosure be denied on the ground that the mortgage, for different reasons, was invalid and void, they must stand upon the rights open to the corporation itself.
2. The principal contention is the charge of fraud. Since this involved disputed questions of fact upon which the master and the court below agreed, there must, under the rule, be a very plain showing of mistake to authorize us to go behind the report as confirmed by the court. Turley v. Turley, 85 Tenn. 251, 1 S. W. 891; Wilson v. Bogle, 95 Tenn. 290, 32 S. W. 386, 49 Am. St. Rep. 929; Tilghman v. Proctor, 125 U. S. 136, 8 Sup. Ct. 894, 31 L. Ed. 664; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764; Kiewert Co. v. Juneau, 47 U. S. App. 394, 78 Fed. 708, 24 C. C. A. 294; Belknap v. Central Trust Co., 47 U. S. App. 663, 80 Fed. 624, 26 C. C. A. 30. There is no such showing. Not only have the appellants failed to point out any plain mistake of fact or error of law in the report as affirmed, but the examination we have made of the testimony satisfies us that its conclusions are correct on all material points.
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RICHARDS, Circuit Judge.
This was a suit brought by the American Eoan & Trust Company (which we shall call the Trust Company) against the Cumberland Coal & Iron Company (which we shall term the Cumberland Company) to foreclose a mortgage or deed of trust on its coal, iron, and timber property in Tennessee, given to secure $440,000 of its bonds. The Cumberland Company answered, admitting it was insolvent and in default, and conceding the mortgage should be foreclosed. The appellants, the Big Creek Gap Coal & Iron Company (hereafter designated the Big Creek Company) and certain individuals, owners of about $275,000 of the preferred stock of the Cumberland Company, intervened, and, as stockholders, resisted the foreclosure, claiming (i) that the mortgage was ultra vires, (2) that it was unauthorized, and (3) that-it was executed in fraud of their rights. The case was referred to a master, who, in an elaborate report, in which he carefully compared and considered the conflicting evidence introduced, [632]*632found against the interveners, both upon the facts and the law. The case came before the court below upon exceptions to this report. In' a well-considered opinion the findings of the master were sustained and a decree of foreclosure granted. From this the interveners have ap-. pealed. '
. The charge of fraud grows out of the reorganization of the La Follette Coal & Iron Company (hereafter called the La Follette Company). The Big Creek Company was organized in 1888. It was the owner of a part of the mineral lands covered by the mortgage in question. Upon these lands it had paid between $23,000 and $30,000. The La Follette Company was organized in 1893, and the lands passed ip it, the Big Creek Company receiving $10,000 in cash, upwards of $40,000 in notes secured by mortgage, and $200,000 in bonds of the La Follette Company. In the summer of 1896 the La Follette Company was insolvent. It owe’d about $125,000 of the original vendors’ liens on its lands. It had outstanding $1,375,000 of mortgage bonds inferior to these liens. It owed the Electric Corporation, of Boston, its largest creditor, $200,000 borrowed money.- Of its bonds, this corporation held $82,000 by purchase and $740,000 as security. The mineral lands of the company were without railroad connection, and therefore practically valueless. It was necessary not only to get time but money to build a road and develop the lands, and no way to do this offered except through the Electric Corporation. Accordingly, H. M. La - Follette, the leading stockholder of the La Follette Company, set about to secure a reorganization, first seeing the Electric Corporation. In the fall of 1896 an agreement for the reorganization of the La Follette Company was entered into between its bondholders and the Electric Corporation. La Follette, as a bondholder owning 127 bonds, signed as one party of the first part, and the Electric Corporation signed as the party of the second part. Other bondholders became parties by depositing their bonds with the Trust Company upon the terms of the reorganization agreement. The receipts accepted in exchange expressed this condition. The new corporation, to he known as the Cumberland Coal & Iron Company, was to have an authorized capital stock of $2,500,000, divided into $1,000,000 of preferred and $1,500,000 common, and to issue $500,000 of bonds. The agreement provided that the Electric Corporation should surrender the $740,000 bonds held as collateral, cancel the indebtedness due it, purchase $66,000 of the preferred stock of the new company at 90, exchange the remaining $82,000 of bonds for preferred stock in the new company, and lend the railway company the sum of $150,000 for use in completing the line, transferring to the Cumberland Company a majority of the capital stock of the railway company. In consideration of this, the Cumberland Company was to issue to the Electric Corporation $400,000 of its bonds secured by mortgage. All depositing bondholders were to receive preferred stock in the new company for their holdings. Certain of the bondholders of the La Follette Company declined to deposit their bonds, and it became necessary to foreclose the mortgage on the lands. This was done, the property was' purchased by money put up by the Electric Corporation, and was subsequently turned over to the Cumberland -Company. ,- In May, 1897, the Cumberland Company was or[633]*633ganized, by-laws adopted, and steps taken to carry out the plan óf reorganization. The Electric, Corporation furnished the additional money required, turned -over the property it had purchased- under the foreclosure proceedings, surrendered the bonds and notes it held, and received á certain amount of preferred stock and the $400,000 of bonds. The other bondholders received in lieu of their bonds preferred stock in the new company. The claim of the interveners was that Ea Follette induced them to enter into the reorganization scheme by fraudulently concealing the fact that the Cumberland Company was to issue, and the Electric Corporation to receive, bonds which would become a first lien upon the property; that he led them to- believe there would be no interest in the property of the new company superior to theirs, as holders of its preferred stock. They also contended that the making of the mortgage was beyond the power of the company, and, moreover, was not authorized at any stockholders’ meeting lawfully called and held.
1. The right of minority stockholders of a corporation to intervene in a foreclosure suit when the corporation threatens, by collusion or otherwise, to neglect the proper defense of the suit, is established by a line of decisions (Dodge v. Woolsey, 18 How. 331, 341, 15 L. Ed. 401; Davenport v. Dows, 18 Wall. 626, 21 L. Ed. 938, and subsequent cases), but when they intervene they do so, not as individuals, but as stockholders, in the assertion- of rights common to the stockholders, which the corporation itself has declined to protect. Dickerman v. Northern Trust Co., 176 U. S. 181, 188, 20 Sup. Ct. 311, 44 L. Ed. 423. In the present case, where the interveners seek no affirmative relief of their own in the rescission of the agreement by which they acquired their preferred stock, but ask only that a foreclosure be denied on the ground that the mortgage, for different reasons, was invalid and void, they must stand upon the rights open to the corporation itself.
2. The principal contention is the charge of fraud. Since this involved disputed questions of fact upon which the master and the court below agreed, there must, under the rule, be a very plain showing of mistake to authorize us to go behind the report as confirmed by the court. Turley v. Turley, 85 Tenn. 251, 1 S. W. 891; Wilson v. Bogle, 95 Tenn. 290, 32 S. W. 386, 49 Am. St. Rep. 929; Tilghman v. Proctor, 125 U. S. 136, 8 Sup. Ct. 894, 31 L. Ed. 664; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764; Kiewert Co. v. Juneau, 47 U. S. App. 394, 78 Fed. 708, 24 C. C. A. 294; Belknap v. Central Trust Co., 47 U. S. App. 663, 80 Fed. 624, 26 C. C. A. 30. There is no such showing. Not only have the appellants failed to point out any plain mistake of fact or error of law in the report as affirmed, but the examination we have made of the testimony satisfies us that its conclusions are correct on all material points. To defeat the foreclosure, and thus deprive the Electric Corporation of its property in the bonds for which it released its former obligations, turned over to the new company the property it purchased at the foreclosure sale, and supplied the additional money demanded to afford a chance of success, the proof must be convincing that it (as well as the new company) was a party to the alleged fraud which it is claimed induced the interveners to exchange the bonds of the Ea Follette Company for the preferred [634]*634stock of the new company. There is no proof whatever upon this point, only suspicion and assertion. Moreover, it is obvious that, if La Follette did induce the belief that no bonds were to be issued by the new company, it was the failure of the interveners to consult the source of information pointed out in the receipts which permitted its continuance. When they turned over their bonds to the Trust Company, they got in exchange a receipt stating that the bonds were deposited “under and subject to the terms and provisions contained in the instrument known as the ‘plan and agreement for reorganization of the La Follette Coal & Iron Company, dated October 15, 1896,’ * * * a duplicate of which instrument is in possession of - the undersigned. * * * By accepting, this receipt the holder assents to the terms and provisions of said instrument, and becomes a party thereto.” Ordinary prudence would have dictated that the assenting bondholders should either inspect the plan of reorganization on file, or request a copy from the Trust Company. If they acted on the faith of what they claimed La Follette said, and deemed it of vital importance that his representation be made good, they would not only -have examined the agreement, but insisted that a clause be inserted providing that no bonds should be issued. Their subsequent acquiescence in the action of the company affords ground.for the suggestion that their present objection is not so much to the issue of the bonds as to the foreclosure of the mortgage securing them.
3. The objection that the mortgage was ultra vires does not appeal to us. The statute of Tennessee (Shannon’s Code, § 2054) conferred upon the company the power “to purchase and hold * * * any real estate necessary for the transaction of the corporate business,” and also the power “to borrow money and iss.ue notes or bonds upon the faith of the corporate property, and also to execute a mortgage or mortgages as further security for repayment of money thus borrowed.” As recited in the mortgage, the bonds were issued “for the purpose of paying or funding an obligation of $400,000 incurred by this company in the purchase of its coal, iron, and timber properties, and also for the purpose of raising funds with which to develop its business and property, or to pay off its liens or indebtedness now or hereafter existing.” To issue bonds for the purpose of taking up an outstanding obligation given in the purchase of corporate property is in effect the same as to issue bonds to borrow money with which to pay such outstanding obligation. What may be done indirectly may be done directly. As said by Mr. Justice Shiras, speaking for the Supreme Court, in Jacksonville, etc., Ry. Co. v. Hooper, 160 U. S. 514, 525, 16 Sup. Ct. 379, 383, 40 L. Ed. 515, and using the language of Lord Chancellor Selborne in Attorney General v. Great Eastern Ry., 5 App. Cas. 473, 478:
“This doctrine ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things .which the Legislature has authorized, ought not, unless expressly prohibited, to be held by judicial construction to be ultra vires.”
4. It was also insisted that the mortgage and bonds were unauthorized because executed and issued at a meeting held June 24, 1897, be[635]*635fore the interveners, who had subscribed for $275,000 of the $1,000,000 of • preferred stock, had received their stock and thus obtained the right to vote, and of which meeting due and proper notice was hot given the stockholders. The master considered these objections in detail, and found that the required corporate action was taken. It is not necessar_, however, to discuss the matter. As the court below suggested, and as we have pointed out, the interveners could make no defense not open to the corporation, and the corporation, having executed the mortgage and issued the bonds, and obtained in exchange money and property which it has since held and treated as its own, is estopped now from saying that what it did do was not done in the right way. The mortgage and bonds were authorized June 24, 1897, executed and issued April 2, 1898, and the foreclosure suit instituted June 5, 1900. Time enough, therefore, elapsed between the authorization and the issue for objections to have been made to the irregularity of the meeting. Since the corporation has enjoyed the fruits of the transaction, and the parties cannot now be replaced in the position they were before the bonds were issued, it is obviously too late to impeach the transaction on the ground of irregularity.
In conclusion, it may be observed that the Cumberland Company does not claim it was in any way deceived by either the Electric Corporation or the Trust Company. It knew what was being done when it got the money and property and gave in exchange the bonds. Those who charge fraud were bondholders of the old corporation. They do not seek a rescission of the contract by which they gave up their bonds and took in exchange the preferred stock. If they had stood out, as some of the holders did, they would have received their share of the proceeds of the .property under the foreclosure sale, after paying the underlying vendors’ lien. The amount, if any, would have been insignificant. They appreciated this, so they went into the reorganization, gave up their bonds, took the preferred stock, and assumed the resulting risks. There was no guaranty that the reorganized company would prove a success. The existing company had turned out a 'ailure, and the only chance for them was a reorganization with additional capital, offering a mere promise of success. They took the risk, and must abide the result.
The judgment of the court below is affirmed.