Mr. Justice Bailey
delivered the opinion of the Court:
No question is or can be made, that, under the arrangement in pursuance of which Cushman became the purchaser, at the foreclosure sale, of the property, rights and franchises of the Plymouth, Kankakee and Pacific Railroad Company, he became charged with a trust in favor of Bonfield and the other bondholders who placed their bonds in his hands, and that he bid off said property, rights and franchises as their trustee. Nor would there seem to be any doubt that said trust relation • continued up to the time the sale was confirmed and the master’s deed executed to Cushman, or up to the time of the conveyances by which said railroad property became vested in the Indiana, Illinois and Iowa Railroad Company.
True said trust relation was originally formed as a part, or at least in furtherance, of the scheme for the re-organization of the railroad enterprise embodied in the contract of February 1, 1876, between Cushman, acting for the majority of the bondholders, and Barnes, and it is also true that Barnes wholly failed to perform said contract, and that the scheme thereby contemplated was abandoned, but it does not follow that the trust relation between Cushman and said bondholders was thereby terminated. The bondholders, by virtue of their bonds and the deed of trust securing the same, had a first lien on the railroad property, and were entitled, on foreclosure and sale, to have the proceeds, after the payment of costs, applied upon the indebtedness evidenced by their bonds. It was of course for their interest, if they relied for satisfaction upon the foreclosure alone, to have the property sold in such manner as to bring the highest possible price. The arrangement under which the sale took place, however, had precisely the opposite result in view, viz, a sale for barely enough to-discharge the costs of the foreclosure, and consequently in such manner as to realize nothing whatever for distribution among the bondholders. This was the mode of sale outlined and insisted upon in the plan of re-organization submitted to and concurred in by all the bondholders, except a very few whose interests are not in question here. But the object of the sale, according to the scheme thus adopted, was not to-realize a sum of money with which to pay and discharge the bonds, but to perfect title in a trustee for the benefit of the-bondholders,' so that the property might afterwards be disposed of in such manner as should be most for their advantage.
By this scheme all competition in bidding was practically obviated. The bondholders had no interest in enhancing the price by bidding, as it was made to their advantage to have the property bid in, if possible, at a nominal price. Other creditors had no incentive to bid, as no part of the money realized would be applicable to the payment of their demands until after the payment of the full amount, principal and interest, due on the bonds, a sum which seems to have been largely in excess of the full value of'the property. Third parties had no interest in bidding, as they must have known that, as against them, the bondholders would be sure to run the property up to a price equal to or beyond its value. By making it for the interest of the bondholders, therefore, not to become bidders, Cushman was able to buy the property in for such sum as he saw fit to bid, and it was struck off to him in pursuance of said arrangement for $4000, a sum which, as the evidence seems to show, was only a small fraction of its actual value.
Cushman’s purchase having been made under these circumstances, it seems too plain for argument, that he held whatever rights he thus obtained in trust for all the bondholders, or at least in trust for those who accepted and became parties /to the arrangement under which the sale took place. And it. seems equally clear that.the trust thus created was impressed upon and followed the title which was subsequently perfected in Cushman by the execution of the master’s deed in pursuance of said sale. The failure of the scheme embodied in the I Barnes contract did not divest or extinguish said trust, as such j failure in no way restored the bondholders to the position inf which they stood before the sale. .It gave them no opportunity or right to have the property re-sold, so as to have it bring its true value, but Cushman, on the contrary, persisted in adhering to his bid, and subsequently obtained a confirmation of the sale and a conveyance of the title.
Nor was Bonfield’s beneficial interest in Cushman’s bid divested or extinguished by the fact that Cushman, for more than three years after the bid was made, was unable to obtain from the bondholders the funds necessary to pay the amount hid. It was at first supposed that only about $2000 in money would have to be raised for that purpose, and such would probably have been the case if the Barnes contract had been carried out, as that contract provided for the payment in another way of a portion of the expenses which the $4000 bid was intended to cover, viz, attorney’s fees and the fees and charges of the trustee in the deed of trust. It was upon this supposition that the call for $5 on each bond was made at the time the scheme for re-organization embodied in the Barnes contract was proposed to the bondholders for their adoption.
This assessment was promptly paid by Bonfield, and the same was true of Richards whose bonds Bonfield afterward purchased. A large majority of the bondholders, however, failed to pay said call, but their failure in no way affected Bonfield’s equitable rights. It was not a part of said scheme that each bondholder was to assume the responsibility of surety for all the others. Subsequently another assessment of $4 per bond was made by Cushman, and this assessment also was promptly met by both Bonfield and Richards. The assessments thus paid constituted nearly though not quite the entire amount of Bonfield’s pro rata share of the $4000 bid for the property. No other assessment was made, and it can not therefore be justly claimed that Bonfield lost or forfeited any of his equitable rights by a failure to share in the burdens which the trust imposed upon him.
Nor were Bonfield’s equitable interests in the property bid ■off by Cushman divested or affected by the act of a large majority of the bondholders who had originally joined in the j plan of re-organization, withdrawing their bonds and the assessments paid by them from Cushman. It may be that such withdrawal was an abandonment on the part of those withdrawing of their equitable interests acquired through their assent to said plan of re-organization,(but no act on their part could affect the vested rights of Bonfield. ] If Cushman, upon such withdrawal, had abandoned his bid and all rights under it, and suffered the property to be again sold under the foreclosure decree, perhaps a different result would have followed, but so long as the bid was adhered to and insisted upon, Bonfield’s equitable rights in the bid and the property purchased -could be divested only by his own voluntary act.
The learned counsel for the appellants strenuously insist that the evidence establishes an abandonment - by Bonfield of his equitable rights resulting from said bid, but in this we think they are clearly mistaken.
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Mr. Justice Bailey
delivered the opinion of the Court:
No question is or can be made, that, under the arrangement in pursuance of which Cushman became the purchaser, at the foreclosure sale, of the property, rights and franchises of the Plymouth, Kankakee and Pacific Railroad Company, he became charged with a trust in favor of Bonfield and the other bondholders who placed their bonds in his hands, and that he bid off said property, rights and franchises as their trustee. Nor would there seem to be any doubt that said trust relation • continued up to the time the sale was confirmed and the master’s deed executed to Cushman, or up to the time of the conveyances by which said railroad property became vested in the Indiana, Illinois and Iowa Railroad Company.
True said trust relation was originally formed as a part, or at least in furtherance, of the scheme for the re-organization of the railroad enterprise embodied in the contract of February 1, 1876, between Cushman, acting for the majority of the bondholders, and Barnes, and it is also true that Barnes wholly failed to perform said contract, and that the scheme thereby contemplated was abandoned, but it does not follow that the trust relation between Cushman and said bondholders was thereby terminated. The bondholders, by virtue of their bonds and the deed of trust securing the same, had a first lien on the railroad property, and were entitled, on foreclosure and sale, to have the proceeds, after the payment of costs, applied upon the indebtedness evidenced by their bonds. It was of course for their interest, if they relied for satisfaction upon the foreclosure alone, to have the property sold in such manner as to bring the highest possible price. The arrangement under which the sale took place, however, had precisely the opposite result in view, viz, a sale for barely enough to-discharge the costs of the foreclosure, and consequently in such manner as to realize nothing whatever for distribution among the bondholders. This was the mode of sale outlined and insisted upon in the plan of re-organization submitted to and concurred in by all the bondholders, except a very few whose interests are not in question here. But the object of the sale, according to the scheme thus adopted, was not to-realize a sum of money with which to pay and discharge the bonds, but to perfect title in a trustee for the benefit of the-bondholders,' so that the property might afterwards be disposed of in such manner as should be most for their advantage.
By this scheme all competition in bidding was practically obviated. The bondholders had no interest in enhancing the price by bidding, as it was made to their advantage to have the property bid in, if possible, at a nominal price. Other creditors had no incentive to bid, as no part of the money realized would be applicable to the payment of their demands until after the payment of the full amount, principal and interest, due on the bonds, a sum which seems to have been largely in excess of the full value of'the property. Third parties had no interest in bidding, as they must have known that, as against them, the bondholders would be sure to run the property up to a price equal to or beyond its value. By making it for the interest of the bondholders, therefore, not to become bidders, Cushman was able to buy the property in for such sum as he saw fit to bid, and it was struck off to him in pursuance of said arrangement for $4000, a sum which, as the evidence seems to show, was only a small fraction of its actual value.
Cushman’s purchase having been made under these circumstances, it seems too plain for argument, that he held whatever rights he thus obtained in trust for all the bondholders, or at least in trust for those who accepted and became parties /to the arrangement under which the sale took place. And it. seems equally clear that.the trust thus created was impressed upon and followed the title which was subsequently perfected in Cushman by the execution of the master’s deed in pursuance of said sale. The failure of the scheme embodied in the I Barnes contract did not divest or extinguish said trust, as such j failure in no way restored the bondholders to the position inf which they stood before the sale. .It gave them no opportunity or right to have the property re-sold, so as to have it bring its true value, but Cushman, on the contrary, persisted in adhering to his bid, and subsequently obtained a confirmation of the sale and a conveyance of the title.
Nor was Bonfield’s beneficial interest in Cushman’s bid divested or extinguished by the fact that Cushman, for more than three years after the bid was made, was unable to obtain from the bondholders the funds necessary to pay the amount hid. It was at first supposed that only about $2000 in money would have to be raised for that purpose, and such would probably have been the case if the Barnes contract had been carried out, as that contract provided for the payment in another way of a portion of the expenses which the $4000 bid was intended to cover, viz, attorney’s fees and the fees and charges of the trustee in the deed of trust. It was upon this supposition that the call for $5 on each bond was made at the time the scheme for re-organization embodied in the Barnes contract was proposed to the bondholders for their adoption.
This assessment was promptly paid by Bonfield, and the same was true of Richards whose bonds Bonfield afterward purchased. A large majority of the bondholders, however, failed to pay said call, but their failure in no way affected Bonfield’s equitable rights. It was not a part of said scheme that each bondholder was to assume the responsibility of surety for all the others. Subsequently another assessment of $4 per bond was made by Cushman, and this assessment also was promptly met by both Bonfield and Richards. The assessments thus paid constituted nearly though not quite the entire amount of Bonfield’s pro rata share of the $4000 bid for the property. No other assessment was made, and it can not therefore be justly claimed that Bonfield lost or forfeited any of his equitable rights by a failure to share in the burdens which the trust imposed upon him.
Nor were Bonfield’s equitable interests in the property bid ■off by Cushman divested or affected by the act of a large majority of the bondholders who had originally joined in the j plan of re-organization, withdrawing their bonds and the assessments paid by them from Cushman. It may be that such withdrawal was an abandonment on the part of those withdrawing of their equitable interests acquired through their assent to said plan of re-organization,(but no act on their part could affect the vested rights of Bonfield. ] If Cushman, upon such withdrawal, had abandoned his bid and all rights under it, and suffered the property to be again sold under the foreclosure decree, perhaps a different result would have followed, but so long as the bid was adhered to and insisted upon, Bonfield’s equitable rights in the bid and the property purchased -could be divested only by his own voluntary act.
The learned counsel for the appellants strenuously insist that the evidence establishes an abandonment - by Bonfield of his equitable rights resulting from said bid, but in this we think they are clearly mistaken. Expressions are to be found in certain of his letters appearing in evidence indicating that in his opinion the precise scheme for disposing of the railroad property outlined in the original plan for re-organization had failed, but the evidence is perfectly clear that, up to the time when, without his knowledge, Cushman, at Harvey’s request, conveyed said property to the Indiana, Illinois and Iowa Railroad Company, he was endeavoring, in conjunction with Cushman, and in conjunction with Harvey after he appeared upon the scene, to raise the money with which to pay Cushman’s bid so as to get the sale confirmed and the title perfected, and .also to find, either in some existing railroad company, or in. ■some company to be organized for the purpose, a suitable purchaser for said property. His conduct during all that period is shown to have been utterly inconsistent with the theory that he had abandoned his rights to said property, but to have consisted of what was tantamount to a repeated and persistent .assertion of his equitable interest therein.
But it is said that Harvey, who was not a party to the original plan of re-organization, by intervening and furnishing to Cushman the entire sum of money necessary to pay said bid, ■obtained a right to avail himself of said bid, to the exclusion of Bonfield. To this view we are unable to assent. Harvey had purchased and become the owner of over three-fourths of the outstanding bonds, and of course became entitled to those rights which such ownership gave him. At first he filed in the Federal Court objections to the confirmation of the sale of the railroad property to Cushman, and if he had persisted in his objections and succeeded in having a confirmation refused and the sale vacated, he would have been enabled to proceed with the enforcement of his rights in any legal mode, untrammelled by any equitable consideration growing out of the previous arrangement between the bondholders in pursuance of which Cushman had bid off the property. A sale de novo would then doubtless have been ordered, and at such sale any one ■or all of the bondholders might have taken steps to have the property bring its full value, and would each have been compelled to accept in full of his rights in the mortgaged property his pro ■rata share of the net proceeds of the sale. If at such sale Harvey had become the purchaser, his title would of ■course have been freed from all equities in favor of the other bond-holders. But by obtaining a confirmation of the sale already made and seeking to avail himself of the title thus obtained, he took such title wdth all the equitable burdens resting upon it. Said sale having been made in the interest of all the bondholders, he as a bondholder became entitled to an equitable interest proportionate to the number of bonds of which he had become the owner, while the equitable interests of Bonfield and the other bondholders remained unaffected.
If Harvey was compelled to pay more than his share of the expense of securing the title, he is doubtless entitled to proportionate remuneration from the other bondholders. The evidence seems to be, that the $4000 actually used by Cushman in paying his bid was furnished by Harvey, but the money paid by Bonfield, and by Richards whose bonds Bonfield bad purchased, upon the two assessments made by Cushman, amounted to within less than $14 of the pro rata share of the $4000 due from Bonfield on account of his thirteen bonds.
It is true the money paid by Bonfield does not seem to have been used by Cushman in paying his bid, but in paying other expenses attending the perfecting of the title which Harvey afterwards sold to his new railroad company, such as the expense of recording deeds conveying right of way, etc., but it was not Bonfield’s fault that the money contributed by him was not used for the purpose for which it was assessed and collected, and the purposes to which it was applied were doubtless relatively as effectual in enhancing the value of the title afterwards disposed of by Harvey as was the payment of the bid itself.
It should be observed in this connection that Harvey is shown by the evidence to have had full knowledge of the arrangement under which Cushman bid in the property for the benefit of the bondholders. This is shown very clearly by Bonfield’s testimony, and may also be fairly inferred from the terms of the indemnity bonds given by Harvey to Cushman at the time the latter conveyed said railroad property to Harvey’s new railroad company.
• It thus a-ppears that Harvey, with full knowledge of the trust reposed in Cushman and of Bonfield’s equitable interest in said railroad property, sold said property to the Indiana, Illinois and Iowa Railroad Company, a company organized by him for the purpose of becoming such purchaser and of which Harvey became the president, and received and retained for his own use the entire proceeds of such sale. Having thus in his possession the proceeds of trust property, the law very properly charges him as trustee and holds him accountable as such. '
Not only is this true, but we are of the opinion that the evidence sustains the charges of fraud and conspiracy made by the bill against Cushman and Harvey. It is clearly shown, and does not seem to be disputed, that while both Cushman and Harvey were having frequent conferences and correspondence with Bonfield in relation to making some proper disposition of said railroad property, they secretly and without his knowledge organized the Indiana, Illinois and Iowa Railroad Company and turned said property over to that company on their own terms, keeping the whole transaction purposely concealed from him until after it had been fully consummated. The only recognition of Bonfield’s rights in the whole transaction was a provision in the agreement between Cushman and Harvey by which Bonfield was to be paid $50 for each bond held by him and be reimbursed the assessments which he had paid, or that he should be given, in lieu of such pajrments, stock in the new company to the nominal amount of $1000 for each bond. The only excuse put forward by Cushman and Harvey for these clandestine transactions is, that Bo'nfield at the time was the president of another railroad company whose proposed line of railroad might to some extent compete with the line embraced in the property they were seeking to dispose of.
There can be no doubt that the disposition of said property in this mode was an actual and intentional fraud upon the rights of Bonfield. It will not do to say that it was made by a party who held a large majority of the bonds, and who by virtue of that fact had a right to dictate the terms of sale; nor that Bonfield had previously consented, either expressly or tacitly that such disposition of the property might ultimately be made as should be determined upon by the owners of the majority of the bonds. Notwithstanding such consent he, as one of the equitable owners of the property, had a right to be heard and to be consulted, and the careful, studious and intentional concealment from him of the entire transaction until after it was fully consummated, was a clear disregard and positive violation of his equitable rights. Such concealment could have been resorted to only for the purpose of excluding him from all participation in the disposition of1 property of which he was a part owner. Nor was the fact that he was the representative of a rival railroad enterprise any excuse. So long as he had an interest in the property to be sold, he was entitled to all the rights which such interest gave him, and it was not in the power of his co-owners, however much they may have been in the majority, to deprive him of such rights.
Said transaction also evidences an intention to compel Bonfield, whether willing or not, to accept the small sum of $50 each for his bonds, or to take, what we must presume was only a fair equivalent for that sum, $1000 of the full paid stock of the new railroad company. Such attempt by Cushman and Harvey to force Bonfield to sell out at their terms was of course without legal validity, but it furnishes additional evidence of a fraudulent conspiracy on their part' to deprive him of his equitable rights.
The theory upon which the decree in this ease is sought to be sustained is, that Cushman and Harvey are guilty of a fraudulent disposition or conversion of Bonfield’s equitable interest in said railroad property, and he now seeks to recover from them the value of said interest at the time of said conversion, such value being based upon and determined by the price for which the entire property was sold. The price received by Harvey was $150,000; but by the terms of the sale payment was made by delivering to Harvey $150,000 of the full paid stock of the Western Air Line Construction Company. The appellants claim that, at the utmost, Bonfield is entitled to demand only his proportionate share of said stock, and that they now profess to be willing to deliver to him. To this claim there are at least two sufficient answers. First, Bonfield is seeking to recover upon the theory of a fraudulent conversion of his property, and such conversion being shown, he is entitled to recover the value of his property at the time of the conversion, with interest, regardless of what the defendants actually obtained for it. Secondly, if the defendants had desired to discharge themselves of their liability to the complainant by delivering to him his proportion of said stock, they should have delivered or tendered it to him within a reasonable time after the sale. The sale took place in June, 1881, but no offer to deliver to the complainant any portion of said stock is shown to have been made prior to the final hearing of this case, which took place about nine years afterwards. The only thing in the nature of a tender which took place even at that time was an expression by Harvey, when he was being examined as a witness, of a readiness and willingness to deliver. to Bonfield his pro rata share of said stock. In.the meantime, however, the stock, which at the time it was received by Harvey, as the evidence tends to show, was worth its full par value, had become substantially valueless. If it had been delivered to Bonfield when first received, he doubtless might have disposed of it in such way as to have realized its par value, but the defendants having kept it until it has become worthless, can not discharge themselves by tendering it now, but must respond to the complainant for what it was worth when they received it, with interest.
As we have just remarked, the stock of the Western Air Line Construction Company, at the time of the sale of said railroad property, was substantially at par. The entire amount .of stock of said company was $1,000,000, of which other stock-holders purchased for cash at par $850,000, and the railroad property transferred by Cushman and Harvey, upon which about $750,000 in labor and money had been expended, was in some way turned in and taken as an equivalent for the remaining $ 150,000 of its capital stock. We are of the opinion that the Circuit Court was correct in estimating the value of the railroad property sold and of the stock received at $150,-000, and in fixing the amount Bonfield was entitled to recover on that basis. The court held that the defendants were liable to him to the amount of thirteen three-hundred-and-ninety-eighths of $150,000 with interest, after deducting the $4000 paid by Harvey for the Nicholl claim, and upon that basis a decree was entered for the complainant for $7057.80. We are of the opinion that the decree is fully sustained by the evidence and by the rules of law applicable to the case.
The point is made that, whatever may be Harvey’s liability, Cushman should not have been held liable. It is claimed that he was merely a trustee having no personal interest in the subject matter of the trust; that he received no part of the proceeds of the sale, but merely conveyed the property, as was his legal duty, in accordance with the direction and request of the owner of a majority of the bonds, and that having made such conveyance, he has no further responsibility in the matter. In this view we are unable to concur. The evidence clearly • shows that Cushman was an active participant with Harvey in the scheme to dispose of said property unbeknown to Bonfield and without his consent or concurrence, and in a mode intended to operate as an extinguishment of Bonfield’s equi- ■ table rights for a mere nominal consideration, and we see no reason why Cushman should not be held chargeable equally with Harvey for such tortious conversion of the trust property.
The point is also made that the decree is not warranted by the prayer of the bill. It is true there is no specific prayer for a money decree, the relief specifically prayed for being what would be substantially a specific enforcement of the plan of re-organization embodied in the agreement to which nearly all the bond-holders subscribed, by issuing to the complainant first mortgage bonds of the company to which the railroad property was transferred, in exchange for those already held by him. The bill however contains the general prayer for relief, and under that prayer, as the rule seems to be well settled in this State, the decree rendered was proper. McMillan v. James, 105 Ill. 194; Haworth v. Taylor, 108 id. 275; Curyea v. Berry, 84 id. 600; McGhee v. Wright, 16 id. 555; Stanley v. Valentine, 79 id. 544; Hopkins v. Snedaker, 71 id. 449; Isaacs v. Steel, 3 Scam. 97; Bruner v. Manlove, id. 339.
It is also claimed that the Nicholl title to a portion of the railroad property derived through the mechanic’s lien proceedings was paramount to the title acquired by Cushman through the foreclosure sale, and that Harvey, having bought in that title, has a right to hold and set it up as a paramount title against Bonfield and the other bondholders. To this claim it may be replied, first, that there is no sufficient proof in the record that the mechanic’s lien title was paramount to the title .acquired through the foreclosure proceedings. The defendants set up the mechanic’s lien title in their answer, and make certain averments in relation thereto which, if true, would tend-to show that such title was paramount, and they claim that because no issue was taken upon their allegations in that behalf, such allegations must be taken to be impliedly admitted.
At common law a traversable allegation in a pleading not denied is deemed to be impliedly admitted, but the rule of admissions by implication does not obtain in chancery pleadings.. There affirmative allegations either in bill or answer not expressly admitted must be proved. Where an answer sets up new matter which the complainant can meet by other new matter by way of avoidance, the proper practice, since special replications in chancery have gone into disuse, is to set up such new matter of replication by amendment to the bill. But a complainant is not called upon to amend his bill for the mere purpose of traversing affirmative allegations of the answer, and whether such allegations are met by amendment or not, the defendant is not relieved from the burden of proving them. We find nothing in the record, apart from the averments of the defendants’ answer tending to establish the character or validity of the Nieholl title, or which shows it to have-been paramount to the foreclosure title.
But even if it were admitted to be paramount, .it is clear that Harvey, after assuming the trust relation which he did "by coming in under the title acquired by Cushman through the foreclosure sale, could not purchase in an outstanding-paramount title and hold it adversely to Bonfield, the beneficiary. For what he was compelled to pay in buying in such outstanding title, he was of course entitled to credit in his accounting with Bonfield, but his purchase must be held to have/ been made in subordination to the trust with which he was-already charged.
After careful consideration of the entire record we are of the-opinion that the decree is the correct and proper result of the-evidence, and it follows that the judgment of the Appellate^ Court affirming said decree must be affirmed.
Judgment affirmed.