Opinion by
Mb. Justice Potteb,
This is a bill for an accounting. The defendant admits that he has occupied a fiduciary relation to the plaintiff, but the terms of the contract, under which he accepted from the plaintiff the sum of §25,000, for investment, are in dispute. In accounting for the profits of the transaction in which both were interested, the defendant is not willing to share with the plaintiff, in proportion to the amount paid by each in cash, into the capital stock of the corporation which was organized, and whose properties were developed and sold. He claims that his obligation only requires him to give to the funds furnished by the plaintiff, the proportionate shares of profits, which would accrue, if all the money invested in the enterprise, most of which was borrowed by the company, be considered as capital [419]*419stock. But in dividing among themselves the net results of this transaction, the defendant and his associates shared the profits in exact accordance with their holdings in the stock of the Union Steel Company, and it was upon this basis that the defendant received one fourth of the amount. Large sums of money were loaned to the company through the good offices of the two principal stockholders and by means of their indorsements. Presumably, compensation for the loans was made by the payment of interest to the lenders. The plaintiff here contends, that the money he gave to the defendant was in payment for a definite number of shares of the capital stock of the Union Steel Company, in which the defendant was at the time interested to the extent of one fourth of the entire capital stock. The authorized capital of the Union Steel Company was $1,000,000, and the defendant was entitled to take and pay for one fourth of this amount, or $250,000 of the stock, divided into shares of the par value of $100 each. According to the view of the plaintiff, the amount which he paid in cash to the defendant, which was $25,000, was equal to just one tenth of the entire interest owned by the defendant, so that as he estimated it, he was buying the one tenth of a quarter interest in the entire capital stock of the Union Steel Company.
It seems that in the latter part of the year 1899, the defendant and a few associates organized the Union Steel Company for the purpose of building a plant, and manufacturing steel near Pittsburg. The authorized capital was $1,000,000, and ten per cent of this amount, or $100,000, was paid into the treasury of the company in cash by its organizers before the charter was granted. It does not appear from the evidence that anything more than this was ever paid in as capital stock. The additional funds needed were raised by borrowing, upon the demand notes of the company, indorsed by individual stockholders. The defendant, who was entitled to one quarter of the stock, paid in his one fourth of the cash subscription, which-was $25,000, and it does not appear that he ever paid anything more as subscription to the capital stock of the Union Steel Company. In order to facilitate the work of the steel company, and to strengthen its position, various subsidiary companies were organized in connection with the Union Steel Company. The Union Improvement Company was intended [420]*420to acquire real estate to be bought and sold in connection with the works, for dwellings and otherwise. The River Coal Company was intended to purchase coal and coke land for the supply of the mills and furnaces. The Donora Mining Company was organized for the purpose of holding mining lands to supply ore. The Republic Coke Company was acquired to insure that form of fuel. But these companies were managed and financed through the agency and offices of the Union Steel Company and with the exception of the Improvement Company were all sold to, and vested in, the Union Steel Company prior to the sale of its entire capital stock to the United States Steel Company.
The relation of the defendant to these various companies was the same as it was to the chief factor in the aggregation— the Union Steel Company, and it was through his ownership in that, that his share of the proceeds of the entire transaction was worked out.
The trial court has found as a fact, that “ the clear weight of the testimony establishes that the plaintiff, until the spring of 1900, was manager of the American Tin Plate Company in Indiana; and that he agreed to resign that position and accept a new position in the enterprise projected by the defendant, provided he were allowed to invest his money in the stock thereof.” That “the defendant finally acceded to plaintiff’s request for stock by selling him in March, 1901, $25,000 worth of defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company. And said sum was paid by plaintiff to defendant in two installments of $12,500 each—one in March, the other in July, 1901. The testimony likewise clearly establishes that plaintiff was buying $25,000 worth of stock in defendant’s interest in said three companies, and was to receive certificates of stock therefor.”
This is the crucial point in the case. What was the understanding upon which the $25,000 was paid to the defendant, and received by him? Was it for the purchase of capital stock in the corporation ? Or was it simply to be invested in an interest in the enterprise, proportioned to the whole money cost of the entire undertaking ? The court below has found the former to be the fact, and that the defendant received the [421]*421money from plaintiff in payment for that amount of capital stock.
Our examination of the evidence has satisfied us, that this finding of fact and the conclusion based thereon, is amply justified. It is supported by the testimony of Frank Donner, and by that of his wife, and is very strongly corroborated by the correspondence between the parties. In a series of letters the plaintiff asks to buy stock. The defendant says there will be but one kind of stock, and encouraged plaintiff by saying he will let him have some of his, if other cannot be had. Then finally, after several months, upon March 21, 1901 (exhibit No. 19), the defendant writes as follows: “Dear Frank: Please send me check for $12,500 to apply on a $25,000 interest in my interest in Union Steel, River Coal and Union Improvement Company. It will probably be some time before stocks are issued, and I cannot give you more than receipt for present.”
In reply to this letter, the plaintiff writes as follows (exhibit No. 34), dated March 25, 1901: “Dear Will: Enclosed find check for $12,500 to apply to my interest in U. S. Co., U. I. Co., and River Coal stock.” There were other significant statements which we do not take space to quote. But we do not doubt, that during the preliminary correspondence and when the money was actually paid by the plaintiff to the defendant, both parties had in mind the actual purchase by the plaintiff of a definite amount of capital stock. Otherwise, the repeated references to stock and to the issue of the certificates therefor, are utterly meaningless. It is perfectly apparent from the evidence that what was before the minds of the parties was the organization and development of the Union Steel Company, which had been incorporated with an authorized capital of $1,000,000. In this company, the defendant, it was agreed, had a one fourth interest, and this would entitle him to subscribe and pay for 2,500 shares the par value of $100 each, or $250,000 in all.
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Opinion by
Mb. Justice Potteb,
This is a bill for an accounting. The defendant admits that he has occupied a fiduciary relation to the plaintiff, but the terms of the contract, under which he accepted from the plaintiff the sum of §25,000, for investment, are in dispute. In accounting for the profits of the transaction in which both were interested, the defendant is not willing to share with the plaintiff, in proportion to the amount paid by each in cash, into the capital stock of the corporation which was organized, and whose properties were developed and sold. He claims that his obligation only requires him to give to the funds furnished by the plaintiff, the proportionate shares of profits, which would accrue, if all the money invested in the enterprise, most of which was borrowed by the company, be considered as capital [419]*419stock. But in dividing among themselves the net results of this transaction, the defendant and his associates shared the profits in exact accordance with their holdings in the stock of the Union Steel Company, and it was upon this basis that the defendant received one fourth of the amount. Large sums of money were loaned to the company through the good offices of the two principal stockholders and by means of their indorsements. Presumably, compensation for the loans was made by the payment of interest to the lenders. The plaintiff here contends, that the money he gave to the defendant was in payment for a definite number of shares of the capital stock of the Union Steel Company, in which the defendant was at the time interested to the extent of one fourth of the entire capital stock. The authorized capital of the Union Steel Company was $1,000,000, and the defendant was entitled to take and pay for one fourth of this amount, or $250,000 of the stock, divided into shares of the par value of $100 each. According to the view of the plaintiff, the amount which he paid in cash to the defendant, which was $25,000, was equal to just one tenth of the entire interest owned by the defendant, so that as he estimated it, he was buying the one tenth of a quarter interest in the entire capital stock of the Union Steel Company.
It seems that in the latter part of the year 1899, the defendant and a few associates organized the Union Steel Company for the purpose of building a plant, and manufacturing steel near Pittsburg. The authorized capital was $1,000,000, and ten per cent of this amount, or $100,000, was paid into the treasury of the company in cash by its organizers before the charter was granted. It does not appear from the evidence that anything more than this was ever paid in as capital stock. The additional funds needed were raised by borrowing, upon the demand notes of the company, indorsed by individual stockholders. The defendant, who was entitled to one quarter of the stock, paid in his one fourth of the cash subscription, which-was $25,000, and it does not appear that he ever paid anything more as subscription to the capital stock of the Union Steel Company. In order to facilitate the work of the steel company, and to strengthen its position, various subsidiary companies were organized in connection with the Union Steel Company. The Union Improvement Company was intended [420]*420to acquire real estate to be bought and sold in connection with the works, for dwellings and otherwise. The River Coal Company was intended to purchase coal and coke land for the supply of the mills and furnaces. The Donora Mining Company was organized for the purpose of holding mining lands to supply ore. The Republic Coke Company was acquired to insure that form of fuel. But these companies were managed and financed through the agency and offices of the Union Steel Company and with the exception of the Improvement Company were all sold to, and vested in, the Union Steel Company prior to the sale of its entire capital stock to the United States Steel Company.
The relation of the defendant to these various companies was the same as it was to the chief factor in the aggregation— the Union Steel Company, and it was through his ownership in that, that his share of the proceeds of the entire transaction was worked out.
The trial court has found as a fact, that “ the clear weight of the testimony establishes that the plaintiff, until the spring of 1900, was manager of the American Tin Plate Company in Indiana; and that he agreed to resign that position and accept a new position in the enterprise projected by the defendant, provided he were allowed to invest his money in the stock thereof.” That “the defendant finally acceded to plaintiff’s request for stock by selling him in March, 1901, $25,000 worth of defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company. And said sum was paid by plaintiff to defendant in two installments of $12,500 each—one in March, the other in July, 1901. The testimony likewise clearly establishes that plaintiff was buying $25,000 worth of stock in defendant’s interest in said three companies, and was to receive certificates of stock therefor.”
This is the crucial point in the case. What was the understanding upon which the $25,000 was paid to the defendant, and received by him? Was it for the purchase of capital stock in the corporation ? Or was it simply to be invested in an interest in the enterprise, proportioned to the whole money cost of the entire undertaking ? The court below has found the former to be the fact, and that the defendant received the [421]*421money from plaintiff in payment for that amount of capital stock.
Our examination of the evidence has satisfied us, that this finding of fact and the conclusion based thereon, is amply justified. It is supported by the testimony of Frank Donner, and by that of his wife, and is very strongly corroborated by the correspondence between the parties. In a series of letters the plaintiff asks to buy stock. The defendant says there will be but one kind of stock, and encouraged plaintiff by saying he will let him have some of his, if other cannot be had. Then finally, after several months, upon March 21, 1901 (exhibit No. 19), the defendant writes as follows: “Dear Frank: Please send me check for $12,500 to apply on a $25,000 interest in my interest in Union Steel, River Coal and Union Improvement Company. It will probably be some time before stocks are issued, and I cannot give you more than receipt for present.”
In reply to this letter, the plaintiff writes as follows (exhibit No. 34), dated March 25, 1901: “Dear Will: Enclosed find check for $12,500 to apply to my interest in U. S. Co., U. I. Co., and River Coal stock.” There were other significant statements which we do not take space to quote. But we do not doubt, that during the preliminary correspondence and when the money was actually paid by the plaintiff to the defendant, both parties had in mind the actual purchase by the plaintiff of a definite amount of capital stock. Otherwise, the repeated references to stock and to the issue of the certificates therefor, are utterly meaningless. It is perfectly apparent from the evidence that what was before the minds of the parties was the organization and development of the Union Steel Company, which had been incorporated with an authorized capital of $1,000,000. In this company, the defendant, it was agreed, had a one fourth interest, and this would entitle him to subscribe and pay for 2,500 shares the par value of $100 each, or $250,000 in all. In the other subsidiary companies, the defendant had the same proportionate interest, but it is admitted that the enterprise was substantially all one, and was controlled by and through, and in the interest of, the Union Steel Company, and that the interest held in it by the stockholders, measured the interest they held in all.
[422]*422. We agree with the trial court, that the defendant is trustee for the plaintiff for the amount of $25,000 of the capital stock of the Union Steel Company, sold to him not later than March 21, 1901.
But in taking the next step, to fix the amount of the holding of tlie defendant in the Union Steel Company, at that time, so as to get at the relative proportions in which to divide the profits arising from the sale of the entire assets of the companjq the trial judge assumed as a fact that W. H. Donner had paid in at the time he received the funds from his brother, the sum of $343,750 for capital stock. How this could be, is not shown. He was only entitled to subscribe for $250,000 in all, of the stock, so that if he did as a fact pay more than this amount into the treasury of the company, he must have occupied to that extent the position of creditor rather than that of stockholder. As a matter of fact, the most careful scrutiny of the evidence fails to show that he had at that time paid more than $25,000 cash into the Union Steel Company, upon account of his subscription to its stock. He seems also to have paid the same amount into the Union Improvement Company upon account of his subscription to its stock, and there stopped. Outside of these two payments his so-called contributions to the funds of this enterprise were apparently made up of the proceeds of demand notes made by the steel company, and indorsed by him. These notes could not in any sense be considered as payments to the company. They created indebtedness by the company. These demand notes were not paid, but were taken up by the issue of the company’s bonds upon the final sale to the United States Steel Company. So that the defendant did not pay anything to the company by means of the issue of these notes. Defendant was evidently under the impression that the giving of these notes by the company, indorsed in part by him, constituted payment by him. He so treated them in his testimony. He says: “ The cash advancements that I made were called bills payable, whereas the cash advancements that were made by Mr. A. W. Mellen and Mr. R. B. Mellen, in which I was charged on their books with a quarter, were called bills payable special, and those notes were made payable in first mortgage bonds.” An inspection of the notes themselves as shown by the exhibits, shows that they [423]*423were all bills payable of the Union Steel Company,, and the evidence is further that they were all paid by the issue of bonds by the corporation and were not paid by the defendant or by the Mellons. We are therefore unable to find in our analysis of the evidence any support for the statement by the defendant that he paid into the treasury of the Union Steel Company the sum of 1843,750. But the trial judge has accepted the statement of the defendant in that respect, apparently without question. As to this point he says: “ At that time the defendant’s interest was $343,750. That was the sum he then had invested in the companies. And the proportion that $25,000 bore to defendant’s—$343,450 was the ratio of his stock interest in defendant’s interest in the corporate-projects. In other words, 25,000/343,750 (4/55) of defendant’s interest was plaintiff’s stock share of the investment—an investment between them, in that ratio, running through the enterprise to its sale to the United States Steel Corporation. No other just inference of fact can be drawn from the testimony.” This was a mistake, for defendant was only entitled at the outside to subscribe for $250,000 of the stock, and he had not availed' himself of his right to do that. But conceding his ownership to that extent, then the denominator of the fraction adopted by the court should have been 250,000 instead of 343,750.
But this finding as to the amount paid in by defendant does not affect the principle adopted by the trial judge ; it only affects the proportion. It did not meet the view of counsel for the plaintiff, as appears from their tenth request for findings of fact, which was refused by the court below. However no exception was filed, and no appeal was taken by the plaintiff, and we cannot further consider this feature of the case here.
Much has been said in the argument about a difference in the apparent percentage of profit derived by the parties. It is urged that the plaintiff upon his comparatively small investment was awarded over 500 per cent, while, measured by percentage, the defendant gets one tenth as much or less. But this discrepancy is apparent rather than real, and is only made to appear by giving to the defendant credit personally for having contributed the funds which were as a matter of fact loaned by other parties to the corporation; and denying any part of this credit to the plaintiff. This is a mistaken view. The [424]*424corporation was in strong hands and they provided for it an astonishing extent of credit. But in so doing, they stood in the attitude of creditors, and not as stockholders; and the plaintiff as a shareholder was entitled to participate in the benefit resulting, in accordance with the amount of stock he held. In that respect, he was the.only stockholder who paid in full, the par value in cash of his holding of stock in the company. The others, including the defendant, for reasons best known to themselves, did not pay for their stock, but chose to aid the company in borrowing funds, rather than pay into the .treasury the full amount of their subscriptions. Of course, those who loaned money to the corporation, charged and were paid interest for the accommodation. But when it came to dividing the profits of the transaction, it was only as shareholders that they could participate in the results.
The culmination of the matter is thus set forth in the following finding by the court below: “ About December 15, 1902, defendant and the other holders of stock of the Union Steel Company, sold and transferred the stock and assets of the Union Steel Company, River Coal Company, Republic Coke Company and Donora Mining Company—including the interest of plaintiff therein—to the United States Steel Corporation for upwards of $22,300,000; on which the profits were upwards of $7,300,000, defendant receiving one fourth thereof.” It should be noted, however, as it appears in the evidence, that this consideration of $22,300,000 was paid not in money, or outside securities, but by means of bonds issued by the Union Steel Company; and the funds which had been temporarily advanced upon its demand notes were repaid by the substitution of these bonds. So that the liability which the defendant and his associates had assumed was thus Aviped out.
The difference betAveen the amount of this indebtedness and the amount of bonds received, constituted the profits upon the transaction. This sum being the proceeds of bonds issued by the corporation, was of course assets in the hands of its stockholders, and could only be properly distributed to them as such.
The United States Steel Company gave no consideration for the stock and assets of the Union Steel Company, which passed entirely to it, except to place its guarantee of payment upon [425]*425the outstanding bonds of the Union Steel Company, issued before the transfer.
We have no doubt as to the right and duty of the court to grant the relief sought by this bill. The case was heard broadly upon its merits; upon bill and answer, and cross bill and answer. By filing his cross bill, the defendant indicated his desire for a complete determination of the whole matter.
When the defendant undertook to act as agent for his brother, the plaintiff, in the investment of his money in the stock of the Union Steel Company, he became thereby charged with the duty of protecting that interest, which was combined with his own, quite as fully as he could his own. The legitimate consequence of the relation of trust which he had assumed, was that the resulting profits which followed the investment made for the plaintiff in the capital stock of the Union Steel Company, accrued to the principal and must be accounted for, to him.
As the trial judge well said: “ In the care of plaintiff’s interest the defendant, as trustee, was bound to exercise the utmost good faith. And good faith meant that in the ratio the trust bore to defendant’s interest (of which it was a part), it would share in the ultimate disposition of the property. Good faith meant loyalty to all the interests of the beneficiary.”
The assignments of error are all overruled. The decree of the court below is affirmed and this appeal is dismissed at the cost of the appellant.