Bowie, C. J.,
delivered the opinion of this- Court:
The most prominent and material features of this case, have been elaborately argued and deliberately considered, in the decision of the ease of The Hoffman Steam Coal Company of Allegany County, vs. The Cumberland Coal & Iron Company, tried before this Court at June term 1860. A synopsis of the pleadings and points then presented, and the opinions of the Court, will he found in 16 Md. Rep., 456. The parties are the same, hut their position is now reversed. The former appeal was taken by the present appellees from the order of the Judge of the Circuit Court for Allegany County, passed after answers filed and testimony [131]*131taken by the parties, trader the Act of 1835, refusing to ■■dissolve and continuing the injunction before granted by him. This Court affirmed the orders of the Court below, and continued the injunction until final hearing.
The cause being remanded for further proceedings, commissions were issued, further testimony taken, and on final hearing, the same learned judge who granted and continued the injunction, dissolved the same and dismissed the bill. From which decree the present appeal is taken.
The cause being heard originally on testimony taken under the Act of 1835, a large proportion of the evidence now in the record has already been reviewed and-considered by our predecessors. It devolves upon u-s to determine how far the former testimony has been qualified by the latter, whether there is such a material change in the aspect of the case, as to oblige us to depart from the decision previously pronounced.
The law, as applied to the facts there developed, is expounded with great force in the opinion of our late brother, the Chief Justice. Much of the labor which the magnitude of the interests and record seemed to impose, lias already been performed; our duty being to observe that cardinal maxim of justice and jurisprudence, that the Court should adhere to its own decisions in the .same causo and between the same parties. '“Where, upon appeal, the Appellate Court decides a question presented by tbe record, and tbe cause is remanded, the decision is binding both upon tbe Court below and the Appellate Court, and cannot be reversed upon a second appeal." Emory & Garret vs. Owings, et al., 3 Md. Rep., 178. Preston vs. Leighton, 6 Md. Rep., 88. Hammond’s Lessee vs. Inloes, 4 Md. Rep., 138. Eyler & Matthews vs. Hoover, Ex’r of Crabbs, 8 Md. Rep., 1. Mong vs. Bell, 7 Gill, 246. Brotan vs. Sumerville, 8 Md. Rep., 444.
“All that is necessary to render the decision binding, is to sbow there was an application of the judicial mind to the precise question adjudged." Alexander vs. Worthington, 5 Md. Rep., 471.
[132]*132The eminent counsel who represent the appellees in this cause, admit ££the rule of law which precludes a trustee from purchasing from himself, is based upon sound principles and an enlarged public policy.”
The reason of the rule, they insist, should not however •be lost sight of: A trustee may, under certain conditions, purchase from his £cestui que trust.’ ” The transaction must he for a consideration adequate, and the “cestui que trust” must have full knowledge of all material circumstances, that he may be able to judge of the propriety of the transaction. The trustee must conceal nothing which may assist in forming the judgment. When, however, the trustee purchases from himself, the “cestui que trust” may, irrespective of the fairness of the transaction, rescind, if he elects to do so, within a reasonable time. They insist, "it should be borne in mind, however, that the rule of law here referred to, grew out of transactions quite different from the one before the Court.” Nevertheless while the mischiefs which the rule referred to, was intended to present, could rarely, if ever, grow out of a transaction like this, it was conceded for the purpose of this argument, that the rule invoked, applies. They contend, that the rights of rescisión is in the stockholders,-and not in the directors of the appellants; that the stockholders ratified the transaction, with full knowledge of the law and -the facts. They assert, that the right to-rescind, implies the duty of restoring or refunding the purchase money paid, and other moneys received under the contract, rvhich has not been done, or offered to bo done in this case.
In response to this latter and minor objection, the appellants allege there was nothing received by them which should have been refunded; that the assets of the company, of which Sherman was a director, were appropriated by him, to make the payments received, and that he is still in arrear to the appellants, for money had and received to their use. The matters of account between the appellants and appellee, are so numerous, intricate and involved, that [133]*133It is impossible for this Court to decido, what amount of assets, belonging to the former, were in the hands of tbe latter, at the date of the supposed payments, without the adjustment of the accounts by an audit. If tbe allegations of the appellants be true, there was nothing actually received by them. Equity would not under such circumstances require an offer to refund, as a condition precedent to the right or act of rescisión. It is no objection to the form of the bill that such an offer is not made under the circunistances of this case. The necessity or propriety of a tender, or offer to refund, depending entirely upon the existence of the facts, of bona fide payments. If that fact should appear from an Audit of the accounts, it would be ground for tbe Court to require repayment of t¡ie amount advanced, before tlie execution of a reconveyance, but it is not so controlling as to suspend the power of this Court, in granting the more partial relief by injunction.
Both the tribunals, who have previously considered this case, concur in considering the appellee, The Hoffman Steam Coal Company of Allegany County, as standing in the shoes of Sherman and .Dean, and equally affected with notice. No change, that we are aware of, has been wrought by the new testimony, in this aspect of it. The allegations of the bill and answers, the evidence, admissions and arguments of counsel, as well as the opinion of the Courts, all indicate, that the main question to be decided on this appeal is, whether the sale to Sherman and Dean lias been ratified by the stockholders, under the circumstances prescribed by tbis Court in its former opinion. The law announced on the former trial of this case, by the Court of Appeals, to which we are bound to conform, not less by its intrinsic merit than the weight of authority and precedent, is as follows:
“In this State, as elsewhere, it is well settled, that trustees cannot purchase at their own sales, either directly or indirectly, and if they do, such purchase will be set aside on the proper and reasonable application of the parties in[134]*134terested.” Richardson vs. Jones, 3 G. & J., 184. “This doctrine which is applicable to trustees, applies also to purchases, by persons acting in any fiduciary capacity, which imposes upon them the obligation of obtaining the best terms for the vendor, or which has enabled them to acquire a knowledge of the property.’ The authorities, supporting it, are numerous and uncontradictory. They will be found brought together to a considerable number in the notes lo the case of Fox vs. McRotte, 1 White & Tudor, Leading Ca. in Eg., 105. A director in a company holds such a relation to its stockholders. After citing and quoting with approbation the decision of the Aberdeen Railway Co. vs. Blaikie, 1 McQueen Repts., 461, and Michoud vs. Girod, 4 Howard, 503, this court proceeds: ‘These citations are sufficient to show, that the dealings of the defendant Sherman, with the property of the complainants, fall directly within the prohibition of the rule, and as a consequence are obnoxious to disavowal.’ ‘But, it is said, however this may be, the whole transaction was fully ratified and confirmed by the complainants, which ratification and confirmation, relieved it from all legal infirmity.’ An attentive consideration of its whole history, as detailed in the reeord, has not brought us to this opinion. The law governing questions of ratification like the present, is well settled. To render the act of ratification effective and conclusive, certain considerations are necessary. At the time of the supposed ratification, the principal must have been fully aware of every material circumstance of the transaction, the real value of the subject of the contract, and this act of ratification must have been an independent and substantive act, founded on complete information and of perfect freedom of volition.
“And in addition to all this, the cestui quo trust, must not only have been acquainted with the facts, but apprised of the law, how those facts would be dealt with if brought before a Court of Equity. Lewin on Trusts, (Ed. of 1858,) 615.
[135]*135“This last requisite it is nowhere shown in the proof, has been complied with; tint, on the contrary, it is fairly to be inferred, that the stockholders believed they were concluded by wbat bad been done, and this inference is particularly strengthened by the circumstances that the modification in the contract of transportation, was solicited and granted not as a matter of right, but as a concession on the part of the beneficiaries under it. In this view, it is not necessary we should dwell more fully on the other facts attending the negotiation and sale. Such commentary properly belong to the final hearing.”
To bring themselves within the conditions prescribed by the preceding paragraphs of this Court’s opinion, on the former appeal, lias been the object and effort of the appellees, since the causo ivas remanded for final hearing.
The sale to Sherman and Dean being subject to disavowal, in consequence of the admitted relation of the former to the vendors, and the sub-purchasers being held affected by notice, actual or constructive, independent substantive ratification and confirmation by the stockholders, with full knowledge of every material circumstance of the transaction — the real value of the subject of the contract — complete information of the facts, and the law in a Court of Equity as operating on such facts, and perfect freedom of volition, were held essential to make it valid.
All the testimony and argument, not relative to some one of these particulars, is therefore immaterial to our present inquiry. The learned judge who decided this case below, upon final hearing, says in his opinion:
“Upon the former hearing I decided, (and as before stated it was confirmed by the Court of Appeals,) that there was no sufficient evidence of such a ratification. But since that time, a large mass of testimony has been taken by the defendants on tills point, and no opposing testimony whatever, is presented on bebalf of the complainant.
“The case now coming up before me for final hearing, upon all the testimony, and the Court of Appeals having [136]*136settled the law and stated the conditions as to this question of ratification, I proceed to., examine whether this sale was ratified in accordance with, those conditions.
“The first of these conditions, as stated by the Court of Appeals in the language before quoted is, ‘whether the principal was fully aware of every, material circumstance of the transaction, and the real value of the subject of the contract.’ The evidence upon this point, as now disclosed, is all upon one side. The record of the proceedings of the meeting of stockholders of complainants, held on the 1st of June 1857, (being complainant’s'own record) shows, that immediately after the meeting was organized, at the request of Seth G-rosvenor, Esqr., the Secretary read the report of the year ending June 1st, 1856, together with the deed of conveyance and contract of land sold, with the proceedings of stockholders and Board of Directors appertaining thereto, which was fully discussed and satisfactorily explained. These are the words ot the complainants own record. And I may here inquire, judging from this language alone and unexplained, ivhat was read and what was. the knowledge here communicated ? It certainly imports that the minutes of the stockholder’s meeting (initiating the proceedings which led to the sale) of June 1855, were read; that the proceedings of the directors at their meetings in October, December, January and May 1856, authorizing and confirming the sale, Avere also read; that the report of the President to the stockholders in June 1856, notifying them of the sale and of the entire consideration to be paid, was also read; 'that the deed and the contract of transportation (copies of which were preserved amongst the archives of the company for future reference) were also read; that discussion thereupon took place as to the propriety and fairness of said deed and contract, and that the entire subject was fully discussed and satisfactorily explained.
“It is true that the latter part of the proceedings of the same meeting if unexplained might be ambiguous. But a [137]*137hast amount of testimony lias been taken since tbe former .bearing, by which it is shown conclusively, that the whole subject of this deed and contract was the first matter that engaged the attention of the stockholders at that meeting in June 1857, and that after the entire proceedings and the deed and contract had been read, discussed and fully considered, it was unanimously agreed to confirm and ratify the same. (See testimony of Beadle, Hinman, Loomis- and Mehaffey.) And the subsequent proceedings in reference to the release, are shown to have taken place just previous to the close of the meeting, and after the entire subject had been previously disposed of by a full and unequivocal ratification. (Sec testimony of Hinman, Beadle, Pettit, Mehaffey-and Loomis.”)
In this copious extract, the learned judge has put the evidence in support of the fact of ratification, as forcibly ami fully as the counsel of the appellees could have desired, and as it is, obviously, partly directed to tbe argument of the Court of Appeals, at the first hearing, on the absence of proof of knowledge on behalf of the stockholders of their right to disaffirm, we have chosen to express the learned judge’s opinion, in his own language.-
It was well asked, by the learned judge below, what was read, and what was the knowledge communicated ?' The documents referred to as read, and as the medium of the knowledge communicated to the stockholders, and the1 record showing all “which was fully discussed and satisfactorily explained” — after which a release was offered by Sherman and accepted by tbe stockholders, discharging the company from certain obligations imposed by the contract of transportation, — were all before the Circuit Court, and this Court, at the forme'1 hearing. Notwithstanding which, both tribunals arrived at the conclusion that there was then no sufficient evidence of ratification/ with full knowledge of the law and the facts. The Circuit judge having now reached a different result on the final hearing, the conclusion is, that something new was elicited by the' [138]*138great mass of testimony, in relation to the ratification or confirmation hy the stockholders, which was not laid before the Court before.
Upon an analysis of that testimony, it is believed it will be found, that the only difference in the status of the •case, then and now is, that at the former hearing, the defendants relied on circumstantial evidence of an implied ratification, and at the final hearing, on positive proof of an express ratification.
The fact of ratification, implied or express, was insisted on by the appellees, on each occasion. The Courts continued the injunction, upon the ground that, there was not sufficient proof of a valid ratification, implied or express. At the final hearing, the injunction was dissolved, on th§ hypothesis, that a valid ratification had been proved. The additional testimony, on the subject of ratification, is mainly, if not exclusively, as to the mode of ratification, i. e. the adoption of a resolution verbally on motion, that the sale to Sherman and Dean bo confirmed and ratified.
No additional testimony is offered of the character of the explanations, or the nature of the information given to the stockholders, prior to the ratification; the single additional fact, proved on this point is, that a verbal motion was made and seconded, that the sale to Sherman and Dean he confirmed and ratified, which was done. In his opinion on the motion to dissolve in the Circuit Court, the learned judge said: “I have seen no fact'or circumstance in this case, which authorises mo to determine that the stockholders, those whose interests and righto are materially affected, (indeed the only person injured) have been made acquainted with the nature and extent of the contract and sale in this cause. And the rule being ‘that they must he aware that the transaction is of on oh a character that they -could impeach it in a Court of Equity,’ I repeat, I cannot see in the case, the least evidence to establish such a knowledge.” (Opinion of Judge Perry, p. 297, Recd.)
The Court of Appeals, referring to the same argument [139]*139of the appellees, that the sale had been ratified, said: “An attentive consideration of its whole history as detailed in the record, has not brought us to this opinion. The law governing questions of ratification, in cases like the present, is well settled. To render the act ol ratification effective and conclusive, certain considerations arc necessary. At the lime of the supposed ratification, the principal must have been fully aware of every material circumstance of the transaction, tiro real value of the subject of the contract .and bis act of ratification must have been an independent and substantive act founded on complete information and of perfect freedom of volition. And in addition to all this, the cestui que trust must not only have been acquained with the facts, but apprised of the law, how those facts would he dealt with if brought before a Court of Equity. This last requisite it is nowwbere shown in tbe proof, has boon complied with.”
Thus it appears, in the judgment of both tribunals, tbat the appellees had failed on the motion to dissolve, to show a ratification by the stockholders with knowledge of tbe facts and the law. If so, what additional proof of-knowledge of facts and of lav/, is conveyed by the evidence, that a verbal motion to ratify and confirm, was made and adopted; after which, a committee was appointed to receive a release offered by Sherman.
The testimony at the first hearing, represented the release as obtained, as a matter of favor, after a declaration by G-rosvenor, that they no longer had any claims on Sherman and Dean. Commenting on which, this Court said: “It is fairly to be inferred, that tbe stockholders believed they were concluded by what had been done, and this inference is particularly strengthened by the circumstance, that the modification in the contract of transportation was solicited and granted, notas a matter of right, but as a concession on the part of tho beneficiary under it.”
To repel this presumption, the appellees proved that it was after a vote' of ratification and confirmation had been [140]*140passed, and other business intervened, that the subject of the release was introduced and its acceptance determined. The learned judge below sajes: “And although as stated by the Court of Appeals, it was a fair inference from the proceedings of the stockholders in reference to the release or modification of the transportation contract, that the parties believed they were concluded by what had been done, as that modification was granted not as matter of right, but as a concession on the part of Sherman and Dean; yet as these proceedings are now explained by the testimony since taken, no such inference can now be drawn.” We cannot concur in this deduction, for reasons which will be assigned, in the progress of our view of this testimony.
To recur to the questions, what was read, and what was the knowledge communicated? Passing over the initiatory proceedings, the. report to the stockholders of June 3rd, 1856, was read; which after reciting the resolution, adopted at the annual meeting of 1855, authorising the President and Directors to “sell such portion of the property of the company as they may deem advisable, and to institute and carry into effect such other measures as they may think proper for the interests of the company,” communicated as follows: “In pursuance of and by the advice of the Board of Directors, I have negotiated and completed a sale of a portion of the unworked lands of the company for the sum of ($140,000.) A larger sale was contemplated, but our chief object, the development of our property, encouraging and directing enterprise to the most accessible portion of the coal field, and furnishing additional transportation for our oivn railroad, was accomplished by this limited sale of a few hundred acres. Other considerations than price induced me to affect this sale, for in addition to the price received for the lands, the revenue from our railroads will be enhanced equal to $500 per acre for every acre sold from profits of transportation alone, coal necessarily passing over the company’s road, and that destined for [141]*141?£lie canal, being shipped from its wharves at Cumberland. * * * *• * The extinguishment of the bonded debt has been a leading feature in the policy pursued by all -the boards ■of directors since the organization of the company. * * * * X therefore have appropriated a portion of the proceeds of sale to the further extinguishment of the bonds to the amount of §112.000.”
It is said the deed and transportation contract wore read at the same time. Those being couched in technical terms, conveyed no precise information to the hearers. Their import and effect were interpreted through the annual report of the President, just read in the presence of Sherman to the stockholders, according to which, in addition to the price received, the revenue from the tolls or the compauy would be enhanced $500 per acre from profits of transportation alone.
They are assured that $355,000 is now the entire debt of the company, that they are possessed of more than one-ball' of the entire “Great Vein” of Allegany County, as yet comparatively undeveloped, and facilities for mining and transporting 250,000 tons with an increase in the same ratio each succeeding year. The report conveys no information of the terms of the contract or the obligations assumed by the Cumberland Coal and Iron Company for the transportion of coal. There is no reference in it to deeds, contracts or maps.
The Hoffman mine is not mentioned except incidentally thus: “This sale renders it expedient, to extend to the Hoffman mine, the company’s road, which it is expected will be completed in all this month, and I would earnestly recommend its further extension to the justly celebrated ‘Astor Mine,’ which has at great, cost been thoroughly developed and equipped” The Hoffman mine was then sold ! what was spoken of as expedient, the President had covenanted the company should do under a penalty of $100, for every twelve hours continued refusal or neglect, yet it was spoken of as a matter of choice, not of obligation, upon tbe same footing witb the Astor mine.
[142]*142Relying on the official exposition of the President, of the 2nd June 1856, read at the annual meeting of 185V, the stockholders had reason to regard the sale of the lands described as “a portion of the unworked lands,” and “this limited sale of a few hundred acres,” as an arrangement infinitely advantageous to them, involving no material part of their own resources, nor affecting in any manner injudiciously their franchises, privileges or property.
With such prospects, the stockholders might well be indifferent to the sale of “a portion of the unworked lands of the company.” After this representation of the facts by official documents and explanations from the President, the testimony of Petit, Loomis, Beadle, Baker, Hinman and Meliaffey, is relied upon by tbe appellees, to prove the fact of a formal act of confirmation and ratification by tbe stockholders, after full inquiry and discussion, on the 1st June 185V. Messrs. Mehaffey and Petit give the fullest accounts of what transpired at the annual meeting. Iu reply 'to the 60th interrogatory-in-chief, record p. 453: “State what was first dono upon the organization of that meeting, what business was first transacted.” Mehaffey answered.: “The first business done was a call by Mr. Seth Grosvenor for the reading of the report of 1858, of the President, of the affairs of the company. The report was read by the Secretary, and referred to a deed of the sale of the land to Sherman and Dean. That deed was then called for, I think, with a contract, and both were read by request of Mr. Grosvenor, and discussed and disposed of before tbe regular business, for tbe report of tbe year just closed, was called up.” . (The President’s report for the year ending. 2nd June 1856, containing no reference to the deed above mentioned, in this Mr. Mehaffey was entirely mistaken.)
61st Int. “Upon the conclusion of the reading of the deed and transportation contract, you say the matter was discussed. State the substance of what was said by the stockholders on that occasion, and who participated in tbe discussion.”
[143]*143Answer. “Mr. Grosvenor, who seemed to be at the bead of a party, came in under some rumors in the street, in relation to a sale of a portion of the company’s property, and wished to know what were the facts in regard to it. After the hearing the report, the deed and contract read, he frankly, for the first time, stated that he had heard vague rumors without specifying them, and that Ins object in calling for the papers was to bo informed of the facts. And be expressed himself, after an interchange of views jn regard to the matter, (there was quite a large number there,) exceedingly gratified that he had taken the course he had taken, and which was suggested to him by several of his friends then present. He said, he was the more gratified, because he found the rumors referred to had their foundation in Wall street, perhaps for the purpose of stock operations, and that he saw nothing there but what was right and proper. Dr. Beadle, Mr. Ilium an and some others took part in the discussion and expressed themselves as entirely satisfied, and that the whole matter was satisfactory to them. Mr. Gfrosveuor seemed to be the spokesman of tine party, and said nearly all that was to say about it. The question was asked by several of the stockholders present, as to the quantity of laud owned by the company, the effect of this sale, as to its advantages in reducing the bonded indebtedness, all with a view to form an opinion as to the propriety of the sale; and it was after such inquiries and interchange of views that they expressed themselves without a dissenting voice as to the propriety of the sale.”
62nd Int. “What did they say when they thus expressed themselves, and who said it?”
Answer. “Well, they all said it, that the whole transaction was proper, and that the rumors were false and an attempt to depreciate the stock of the company. ’ ’
63d Int. “After thus expressing themselves and before proceeding to any other business of the meeting, was any motion made or resolution offered, and if yea, what, and by whom? State particularly.”
[144]*144Answer. “A motion was made, but I can’t recollect by whom; my recollection is, however, that either Mr. Gresvenor or Mr. Hinman made the motion. I think it was the former. They were the persons who' took an' active port in the matter, and came in for the purpose. The motion was in approbation of the deed, and contract, the-report, and all that had been brought before them”
64th Int. “When this motion was so made, what was; done or said at that meeting?”
Answer. “Simply voting on the motion;- there was nothing said. It was an universal response in favor of the motion, which was adopted.”
65th Int. “Was that motion reduced to writing,, or the’ action of the meeting upon it ?”
Answer. “I have no recollection whether it was or not.”’ 96th Int. “Was it customary at the annual meetings of stockholders to submit motions, resolutions, without reducing them to writing?”
Answer. “It was frequently done.’’’
61th Int. “What was clone or said at that meeting, after the adoption of that motion or resolution ?”
Answer. “Mr. Grosveuor then left his seat, extending his hand to me and apologised for thus interrupting the regular business of the meeting, but said that he did it under a sense of duty, and was glad he had done so, and said, I am a large stockholder, and I now feel better and I hope you do too. I accepted the apology and told him that I was equally rejoiced at what he had done. He then requested, if in order, that I toould read the report of the year just closed, tohich toas done, and that report was also adopted without a dissenting voice. Immediately before or after the formal adjournment of the meeting, one of the gentlemen, I think it was Dr. Beadel, called for the contract, which had been already read and adopted, and he called my attention and Mr. Grosvenor’s, and one or two others, to a clause in it, requiring the company to carry coal for Sherman and Dean for the period of twenty [145]*145years, which it occurred to him on reflection, might become ouerons to or an impossibility on the part of the company, in the event (as near us 1 <-an recollect the words) of an earthquake or the road beiog carried away by a freshet, and he- suggested, if if hern; an and Dean would assent to it, some reservation, relieving- the company in such contingency, or inability, should he made. I observed that as far as I tv as concerned, 1 would assent to it at once, and I called Judge Sherman’s attention to it, Mr. Grosvenor, Mr. Hinman, Dr. JBeudol and others, and Judge Sherman, conferred together .among,- themselves, which resulted in the appointment of a committee to whom that matter was referred.”
68th Int. “What was said by Judge Sherman, if any thing, at the time it -was proposed such reservation or change should be made iu the contract?”
Answer. “1 recollect now that Sir. Grosvenor approached Judge Sherman and observed, that they had notv no legal right to ash any change or alteration but if lie would assent to it, they would be gratified; Judge Sherman said at once that he had no objection.”
Mr. Petit’s account (Rec’d p. 523,) of what .occurred at the annual meeting of stockholders, June 1857, and the order in which it occurred, is this:
“The President called the meeting to order, and arose-to read his report. He was interrupted by Mr. Grosvenor, who called for the reading of the report of the previous year, which was read. Mr. Grosvenor then called for all the papers referred to, in connection with the sale of lands to Sherman and Dean, referred to in the report. The deed and contract were then read by the Secretary and discuss.ed. Information was elicited by various stockholders, explained chiefly by the President, and after full ami free discussion, Mr. Grosvenor expressed himself satisfied. It was then moved by Mr. Grosvenor and seconded by Mr. Hinman, that we now proceed to ratify the sale; which motion was put by the President, and unanimously carri[146]*146ed. The President then read his report for the year'end-ing at that time, which was adopted unanimously,, oft mo" tion, and ordered to be printed,
“The meeting proceeded’ to the election of Directors,- tellers were appointed, and the polls were kept open until half-past two, P. M. During the interval between the opening and closing of the polls, much was said and mftch infor•.mation elicited in relation to the company’s interest, Sony® •one called or asked for the reading again of the ebntract between the ‘Company and Sherman and Dead-’ wh-ich was read. Dr. Beadel, or some one else, expressed himself that he would he better satisfied, if some modification were in that contract, or deed and contract, in reference to the obligations of tbe company, to carry coal, to make ■sidings, I think, under certain circumstances as contained in the agreement or contract, or deed anil contract. .
“Mr. Gfrosvenor remarked that, ‘we now have no legal •claims on Sherman and Dean,’ hut on Sherman saying that he was perfectly willing to make such modifications or to give up the property, by the amount of money he had paid on it being refunded, it was on motion of Dr. Beadle re~ solved, that a committee of stockholders numbering I think three, he appointed to act in connection with Sherman in-making such release or modification', and that the Board of Directors receive the same.”
At the risk of prolixity; we have quoted literally, the-evidence of two witnesses of the appellees who give the most particular and detailed accounts of the action of the stockholders, at their annual meeting of June 1857. Referring to the resolution of ratification-, and the subsequent release- or modification of the transportation contract, Messrs. . Loomis, Baker, Beadle and Hinman, depose to the facts of. confirmation and release more briefly, but substantially to the same effect. It is apparent from the evidence cited, tbe great solicitude of G-rosvenor and tbe party be represented, was to ascertain tbe effect of tbe sale on the stock of tbe company; be was a large stockholder, bad heard ru- [147]*147. mors on fhe street, to the injury of the stock, and carne to the meeting to inquire into the cause of these rumors. He required the report of Juno 1856, to he read, which according to the minutes of the company, had been adopted, printed and published a jrear before for circulation among the stockholders, and which it is to be presumed be had •already in his possession. He called for the deed and the ••contract, these likewise were on file in the office of the company and alike accessible to him. There was an interchange of views in regard to the matter. “Information was elicited by various stockholders, explained chiefly by the President, and after full and free discussion, Mr. Grosveuor expressed himself satisfied.” What the explanations of the President were, toe arc left to infer. There can be no doubt, they were in strict conformity with the annual report of 1856, which had just been read and was under discussion, and that of 1857, which was waiting to be read and ratified. The President, was the chief speaker. His management of the affairs of the company was under consideration. His re-election was depending on the result. Immediately after these explanations, on motion of Grosvenor, the sale and contract to Sherman and Doan were ratified and confirmed, and the annual report for the year 1857, was unanimously adopted. The stockholders then proceeded to elect officers for the ensuing year. As a natural consequence of what had transpired, ilehaffey was re-elected President, and Sherman, Torrov, Petit, Baker, Hinman and ethers, Directors, eacli receiving 27,997 votes; all those connected with the sale, either advising, participating or sustaining it, being continued in the direction. It is not only important, in investigating the circumstances of the confirmation of the' sale, to enquire what information was given, but who were,informed. The record shows that 22,496 shares of stock held by fifty-eight stockholders were voted hy proxy at the annual meeting of June 1857, by four persons. Vide Rec’d pp. 2, 11 and 12.
[148]*14828 stockholders owning 15,628 were repstd. by Torrey,
23 “ ££ 3,268 ££ ££ ££ Mehaffoy,
( C 2,800 ££ ££ ££ O’Brien,
U 100 “ “ “ Sherman.
58 22,406
Nearly three-fourths of the whole number of votes cast for the officers elected, were held by themselves.
If fifty-nine stockholders, owning twenty-two thousand shares of stock, were represented- by four persons, two of whom were directors and members of the committee recommending the sale of the lands, and a third the President of the company who made the sale; how many may be supposed to have held the remaining five or six thousand shares which voted at the election of President and Directors ?
The President and Directors in effect, represented the stockholders, at the annual meeting; reported nominally to the stockholders, but actually to themselves; ratified in the name and character of stockholders, their own acts as directors, and afterwards, re-elected themselves. In such a system of close corporations, it cannot bo supposed there was any development of facts, contrary to the tenor of the official reports, printed and circulated for the information of stockholders, and which we have seen abounded in sanguine expressions of anticipated profits, calculated to inspire the utmost confidence in the wisdom and management of the President and Directors. The resolution of ratification, was therefore not passed upon any additional information other than that contained in the official reports. It did not spring from any desire to confirm what they knew they had the power to-annul, but was an expression of the satisfaction of those then present, with the explanations made by the President. It was to silence the rumors in Wall street, and give tone to the stock. .The shareholders acted under the delusions of the original report when voting to confirm. After which, when some one [149]*149expressed bimself, that lie would lie better satisfied if some modification were made in the contract, Mr. Grosvenor remarked, “we now have no legal claims on Sherman and Dean,” &c.
“This modification (says the learned judge below,) was solicited and granted at- the close of the meeting,.after the sale had been ratified, and when it had become a matter for concession on the part of Sherman and Bean.”
Under the impression that the contract was valid and binding upon them, although the motion to confirm had not been reduced to writing or recorded; although the shareholders were still in session, and competent to alter or change any resolve or motion they had adopted; whilst the whole subject was still under their control, they, discovering objections in the contract, instead of rescinding it, appoint a committee to act in connection with Sherman in making a release or modification. Whilst matters were “in fieri,” they received as a concession, what they might have totally annulled. Wluit stronger evidence can be furnished of ignorance of their rights, than this action of the stockholders? Can it be supposed that men who imagined themselves legally bound by a verbal vote not registered or recorded, or if registered, that the same was irrevocable at the same meeting, comprehended the relations between trustees and cestui que trusts and the obligations imposed by technically drawn covenants and deeds ? The session of (2d June 1851) the stockholders, was in legal contemplation a unit, during which the act of ratification was subject to modification or rescission. Tbe release was accepted in acknowledged ignorance of tbeir right to rescind after the verbal vole to confirm had been passed. That modification was a virtual rescission of what had been passed antecedently, but being made in ignorance of their rigbt-s, instead of operating as a quasi confirmation, is evidence of such “crassa ignorantia” as annuls the whole. Confirmation according to the books, must be a solemn and deliberate act, not fished out from loose expressions in a [150]*150letter; and particularly where the original transaction was infected with fraud, the confirmation of it is so inconsistent with justice and so likely to be accompanied with imposition, that the Court will watch it with the utmost strictness, and not allow it to stand but on the clearest evidence. Morse vs. Royal, 12 Ves., cited in Lewin on Trusts. Without dwelling on the omission to ratify the sale at the first annual meeting after it transpired, it is obvious that in this instance, it seemed rather an accident than a deliberate act. It was entirely incidental to the inquiry instituted by G-rosvenor with regard to the effect of the sale upon the price of the stock; having his fears on that subject removed, as an expression of his satisfaction, or to give steadiness to the stock (and perhaps to allay any pre udice he might have created toward the President and Directors) he moved the sale be ratified and confirmed; but so immaterial was it considered, that the motion was not reduced to writing and not entered on the minutes; this is the more remarkable, when it is in proof, that a part of the minutes relating to this subject were made up by Mr. Sherman, a purchaser and director. Such verbal acts, on the part of a corporation, do not argue more deliberation, if as much, as the loose expressions in a letter of an individual. In the latter instance, the expressions however vague, are subject to inspection, examination and construction; in the former, they depend entirely on the shifting sands of memory, and assume any shape or meaning the mind of the witness impresses on them.
The “cestui que trusts,” as a class, had no notice, that the acts of their agents, performed twelve or fifteen months before, were to be subjects of consideration, for rejection or confirmation. To hold them to what was so informally done, by their proxies, without note, memorandum, or resolution upon the minutes of the corporation, would be to extend to the most dangerous proportions, the doctrine that corporations may be bound by acts ‘ ‘in pais’ ’ of either stockholders or directors, whether evidenced by writing or [151]*151not. It is almost a solecism to say that a corporate act of ratification or adoption can exist, without any “outward and visible sign" of such act. Having thus reviewed the question of knowledge of the facts on the part of the stockholders, at the date of the supposed act of confirmation, we will briefly refer to the other propositions, viz:
“The cestui que trusts must not only have been acquainted with the facts, but apprised of the law, how those facts would be dealt with if brought before a Court of Equity.”
When this proposition was announced, the Courts were not ignorant of the common law maxim: “ignorantia facti excusut, ignorantia juris non excusat,” but speaking of the conditions, required by a Court of Equity, to bind the consciences of suitors, who sought relief, or of respondents, who relied upon equitable defences in Courts of Equity, they limited the effect, of acts of confirmation or ratification to cases of actual knowledge, that the transaction was of such a character, that the party confirming it could impeach it, in a Court of Equity, and imposed the burden of proof of such knowledge on the party relying on the ratification.
Confirmation and ratification imply, to legal minds, knowledge of a defect in the act to be confirmed and of the right to reject or to ratify 'it. To say a person or corporation shall be proved to have this knowledge, is only to say that all that is implied by law in the act of ratification, must he fully proved, and is not to be presumed without proof in equity. The exceptions to or modifications of the maxim “ignorantia legis excusat neminem,” in equity, were not adverted to in the case of Stevenson vs. Iieigart; the general principle was incidently referred to, in connection with the facts of that case, which was a case at law. The series of decisions qualifying the maxim in cases where confirmation or ratification of an act, by a “cestui que trust,” is relied on in equity, is too well established to be questioned by an “obiter dictum.” In that case, tbe principle of Lammott vs. Bowley was acknowledg[152]*152ed, but held to be inapplicable. If a party will be relieved in equity, and is- not estopped from asserting bis title to property, although under a clear and unequivocal mistake of his legal rights, (where such rights are of a doubtful character,) he stood by and saw it sold and acquiesced for some time in such sale, as was held in that case, should “cestui que trusts” who did not contract or stand by, be concluded by constructive knowledge of the law, in regard to a sale, made by a trustee to himself, upon the presumption that the “cestui que trusts” were cognizant of their rights and meant to release them by a verbal vote ratifying such a sale, under the circumstances of this case ? In Lammott vs. Bowley, which was an application for an injunction against proceedings at law, on the ground that the defendant was aware of the facts and the law and had slept on bis rights, the qualifications of the maxim “ignoraniia legis excusat neminem,” and its application, were considered and discussed. The result of the review of the authorities was that some of the most enlightened^and celebrated men whose characters are recorded in judicial history, have given their sanction to the doctrine “that no man, acting under a plain and acknowledged mistake of his legal rights, shall forfeit those rights in consequnce of such misapprehension." Lammott vs. Bowley, 6 H. & J., 526.
“The doctrine of a Court of Chancery is not, as has been contended, that equity will not administer relief (in cases of mistake of law) upon the principle that every man is bound to know the law. It is not intended to say that the plea of ignorantia legis would in all instances be available in civil cases, (in criminal it never can be.) because some legal propositions are so plain and familiar even to ordinary minds, that it would be doing violence to probability to impute ignorance in such cases, but it is only meant, to say that where the legal principle is confessedly doubtful, and one about which ignorance may well be supposed to exist, a person acting under a misapprehension of the law [153]*153in such a case, shall not forfeit any of his legal rights by reason of such mistake.” Icl., 525. The injunction was refused and the defendant allowed to proceed at law.
(Decided Oct. 9th, 1863.)
The contracts of sale and transportation made by the directors with Sherman and Dean, not being ratified and confirmed by the stockholders, with that knowledge of the facts and the law required to make such ratification conclusive, the appellants have not forfeited their rights to rescind said contracts and to have .the property reconveyed upon terms consistent with equity.
A decree will be passed accordingly.
Decree reversed and cause remanded,