BardeeN, J.
The sole question for determination is whether we can spell out from the allegations of this complaint a cause of action in favor of the plaintiff and against Alexander Syme. An attempt has been made to allege, facts sufficient to show that he was guilty of a breach of duty towards the corporation, which rendered him liable thereto, and for which the defendants, as his heirs, are answerable. As a premise it is to be said that during the pendency of all the transactions set forth in the complaint the plaintiff was a going corporation, in debt, and embarrassed for want of ready money with which to meet current demands. Alexander Syme was its president and a director, and was familiar with its business affairs. At the time of the transaction with Humphrey the company was unable to [360] meet current demands. It is not shown whether the notes of the corporation held by Humphrey were past due or not. Although the corporation had no funds and had other pressing obligations, it is alleged that Syme, knowing that the purchase of the notes and collateral held by Humphrey “ would greatly benefit this plaintiff and all the stockholders thereof, without making any effort to buy the same for this plaintiff, and without the knowledge or consent of any of the other stockholders of the plaintiff,” made the purchase for himself in the name of his brother-in-law, Ilewitt. How much ‘Ivas paid for plaintiff’s notes, or how much for the collateral, is not stated. In the aggregate, the notes and the other securities are said to have been worth $45,000. If it be admitted that the 421 shares of stock and the three-eighths interest in the firm of Johnston, Syme & Baldwin were pledged as security for plaintiff’s note,— a fact concerning which the complaint leaves some doubt,— we are at a loss to understand upon what principle of law or equity the plaintiff can claim any interest in the same. Certainly, if plaintiff had paid its notes, the guarantors who put up the collaterals would have been released. It had no claim thereon, and, if it had purchased the same, could not have enforced such purchase against the guarantors of its notes. If the corporation could have raised the money, it would have been its clear duty to have paid the notes and thus released the securities. Again, it is not suggested how plaintiff had. any authority under its charter to purchase an interest in a mercantile firm. It may also be doubtful if it had any power to purchase its own stock. Certainly a corporation unable to pay its debts as they matured would not be permitted to purchase its own capital stock or buy an interest in an outside partnership; and if Syme, as managing officer, had counseled or done such a'thing with the company’s money, he would have been guilty of a gross breach of duty. On the other hand, Mr. Syme was a member of [361] the firm of Johnston, Syme & Baldwin. The interest of Mr. Johnston was for sale. The corporation had no legal right, either direct or remote, that it should remain pledged for the security of its debt. A purchase of that interest by Mr. Syme did not in any way conflict with any duty he owed the corporation. It did not increase its liabilities or diminish its assets. We will dismiss this branch of the case with the assertion that, so far as the purchase by Mr. Syme of the shares of stock and the interest in the firm is concerned, the complaint is barren of facts showing that plaintiff has an enforceable interest therein. It is also impossible to say with any certainty whether the notes purchased at the same time were purchased at a discount.
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BardeeN, J.
The sole question for determination is whether we can spell out from the allegations of this complaint a cause of action in favor of the plaintiff and against Alexander Syme. An attempt has been made to allege, facts sufficient to show that he was guilty of a breach of duty towards the corporation, which rendered him liable thereto, and for which the defendants, as his heirs, are answerable. As a premise it is to be said that during the pendency of all the transactions set forth in the complaint the plaintiff was a going corporation, in debt, and embarrassed for want of ready money with which to meet current demands. Alexander Syme was its president and a director, and was familiar with its business affairs. At the time of the transaction with Humphrey the company was unable to [360] meet current demands. It is not shown whether the notes of the corporation held by Humphrey were past due or not. Although the corporation had no funds and had other pressing obligations, it is alleged that Syme, knowing that the purchase of the notes and collateral held by Humphrey “ would greatly benefit this plaintiff and all the stockholders thereof, without making any effort to buy the same for this plaintiff, and without the knowledge or consent of any of the other stockholders of the plaintiff,” made the purchase for himself in the name of his brother-in-law, Ilewitt. How much ‘Ivas paid for plaintiff’s notes, or how much for the collateral, is not stated. In the aggregate, the notes and the other securities are said to have been worth $45,000. If it be admitted that the 421 shares of stock and the three-eighths interest in the firm of Johnston, Syme & Baldwin were pledged as security for plaintiff’s note,— a fact concerning which the complaint leaves some doubt,— we are at a loss to understand upon what principle of law or equity the plaintiff can claim any interest in the same. Certainly, if plaintiff had paid its notes, the guarantors who put up the collaterals would have been released. It had no claim thereon, and, if it had purchased the same, could not have enforced such purchase against the guarantors of its notes. If the corporation could have raised the money, it would have been its clear duty to have paid the notes and thus released the securities. Again, it is not suggested how plaintiff had. any authority under its charter to purchase an interest in a mercantile firm. It may also be doubtful if it had any power to purchase its own stock. Certainly a corporation unable to pay its debts as they matured would not be permitted to purchase its own capital stock or buy an interest in an outside partnership; and if Syme, as managing officer, had counseled or done such a'thing with the company’s money, he would have been guilty of a gross breach of duty. On the other hand, Mr. Syme was a member of [361] the firm of Johnston, Syme & Baldwin. The interest of Mr. Johnston was for sale. The corporation had no legal right, either direct or remote, that it should remain pledged for the security of its debt. A purchase of that interest by Mr. Syme did not in any way conflict with any duty he owed the corporation. It did not increase its liabilities or diminish its assets. We will dismiss this branch of the case with the assertion that, so far as the purchase by Mr. Syme of the shares of stock and the interest in the firm is concerned, the complaint is barren of facts showing that plaintiff has an enforceable interest therein. It is also impossible to say with any certainty whether the notes purchased at the same time were purchased at a discount.
The remaining question involves the right of an officer and director of a corporation to purchase outstanding liabilities of the corporation at a discount and enforce them in full. The relative duties and obligations of managers and officers of a corporation to it and its stockholders have been likened to those of trustees and cest/uis que trustent, and have been considered and enforced with varying degrees of strictness by the courts of this country. They are, however, of one accord on the proposition that a director of a stock corporation occupies one of those fiduciary relations where his ■dealings with the subject matter of his trust or agency, and with the beneficiary or party whose interest is confided to his care, are regarded with jealousy by the courts. He must deal with the interests confided to his care with conscientious fairness, and will not be permitted to secure advantages by virtue of his position prejudicial to the interests he represents. Twin-Licit, O. Co. v. Marbury, 91 U. S. 587. This court has asserted that rule in numerous cases, a few of which are here noted: Cook v. Berlin W. M. Co. 43 Wis. 433; Haywood v. Lincoln L. Co. 64 Wis. 639; Pittsburg M. Co. v. Spooner, 74 Wis. 307; Hins v. Van Dusen, 95 Wis. 503. The strictness of the earlier cases is somewhat [362] relaxed in instances when the corporation is still a going concern, as will be noted in the case last above cited. There the distinction between the power of directors in a solvent and insolvent corporation is pointed out by Mr. Justice MaRshall, and is reasserted in South Bend C. P. Co. v. George C. Cribb Co. 97 Wis. 230. See Barth v. Koeiting, 99 Wis. 243; Slack v. N. W. Wat. Bank, 103 Wis. 57. The cases all agree that an officer or director cannot rightfully seek and obtain profit at the expense of the corporation or its stockholders, and is bound to manage its business, affairs so as to promote the common interests. The rule has been broadly stated by some of the authorities that “ a trustee, executor, or assignee cannot buy up a debt or incumbrance to which the trust estate is liable, for less than is actually due thereon, and make a profit to himself.” Perry, Trusts, § 428. That is the doctrine sought to be invoked in this case, as applicable to a director regarded as a trustee of the corporation. But the statement, however correct in its application to specific instances, must be taken with the limitations which belong to it. The foundation of the rule is that a fiduciary agent, owing a duty to his principal, cannot make a contract for his own benefit which is inconsistent with that duty. It is where there is a collision between trust duty and personal interest that the equitable prohibition applies. The cases usually cited to support the doctrine are where a trustee buys in the property of his principal at a sacrifice for his benefit, when, if he bought it at all, it was his duty to do it for his principal, or he makes a contract in behalf of his principal with himself, directly or indirectly, as the other party to the agreement, or where by some secret arrangement he makes a profit directly at the expense of his principal. The following cases are illustrative of the rule thus stated: Bird C. & I. Co. v. Humes, 157 Pa. St. 278; Koehler v. Black River Falls I. Co. 2 Black, 715; Higgins v. Lansingh, 154 III. 301; Slade v. Van Vechten, 11 [363] Paige, 21. As before stated, the entire basis of the rule consists in the collision between trust duty and personal interest. Can it be said that any such conflict exists in the ordinary case of the purchase by a director in a going corporation of its outstanding obligations? This is the test to be applied to the facts stated in the complaint. It is nowhere stated whether the notes purchased by Syme were due or not. It is not claimed that any fund had been provided for the payment of these obligations. No special liquidation thereof had been ordered by the corporation. No fact or circumstance is alleged charging him with a present duty to act for the corporation which would make it inconsistent for him to make a personal purchase of these notes, save that he was an officer and director. On the contrary, it is alleged that the company was embarrassed and without funds to pay pressing demands,— not that it was insolvent, but hard up. There.was no present duty resting upon Syme to extinguish the notes, so far as appears from the complaint. It is not charged that he neglected any duty he owed to the corporation in not securing funds for their discharge, or that he diverted any of its moneys properly applicable thereto to other purposes. The plaintiff’s case rests upon the bald proposition that, being an officer, he could not purchase said notes at a discount. "We are not prepared to accept this statement in its entirety. It is only in cases where the conflict of duty mentioned arises that the rule is received in its fullest application. Thus, in Morawetz, Priv. Corp. § 521, it is said: “ So, an agent of a corporation may purchase claims against the company at a discount, and enforce them in full, if he is not under obligation to make the purchase on behalf of the corporation.” The supreme court of Kansas approved this statement as the law in a case where the treasurer of a railroad company purchased its promissory notes at a discount, and he was allowed to enforce them at their full face value. St. Louis, [364] Ft. S. & W. R. Co. v. Chenault, 36 Kan. 51. In Inglehart v. Thousand Island H. Co. 82 Hun, 377, tbe law is stated thus: “So, also, a trustee or director may with his own money purchase for himself, of a third person, a valid ánd subsisting outstanding debt owing by the company, and secure a perfect title thereto. Such a transaction is not even the ground for entertaining the suspicion that it is in violation of any duty which he owes the corporation, and there is no presumption of law against its fairness. . . . The other question to be considered in this connection is, Will the trustee or director be permitted to enforce a collection of the debt thus acquired for its entire amount, or shall he be limited.to the sum which he actually paid for the debt or obligation? I am unable to discover any good reason why he should not be permitted to enforce payment for the full amount, nor can I find any decision limiting the trustee to the sum actually paid.” See S. C. 109 N. Y. 454. In Bradly v. Marine & R. P. M. & M. Co. 3 Hughes, 26, the syllabus reads as follows: “The president of a corporation may with his own means (the company being embarrassed and without funds to do so) purchase the past-due, outstanding bonds of the corporation, and hold the same as against the company.” Perhaps the best-considered and most elaborate discussion of the question under consideration is found in Seymour v. Spring Forest C. Asso. 144 N. Y. 333, to which reference is made as supporting the conclusion here reached.
But we need not prolong the discussion. As we construe the complaint, it fails to show any breach of duty on the part of Mr. Syme for which he could be held liable in this action. But, should it be deemed otherwise, still we cannot see how this action can be maintained, if, as we have seen, plaintiff is not entitled to the collaterals mentioned. The notes given to Syme in renewal of the ones purchased are yet held by his heirs. In an action to enforce them, plaint[365] iff would have a complete remedy for its grievances, if they were real, in defense of a recovery thereon. So far as appears by the complaint, the plaintiff has never been called upon to pay a cent on these notes, either interest or principal. Under the circumstances stated, the necessity of applying to a court of equity for relief is not apparent. See Matteson v. Ellsworth, 28 Wis. 254; Miller v. Rouse, 8 Minn. 124.
Another objection of some importance is urged. It is. nowhere alleged when the corporation discovered the alleged shortcomings of Syme. Considerable time has elapsed since the alleged transactions took place, and since Syme’s. death. If they were voidable at the election of the corporation, the rule is that prompt action must be taken upon sufficient knowledge of the facts. Seymour v. Spring Forest C. Asso. 144 N. Y. 333. Delay must be excused when there is an appeal to equity.
What has been said renders it unnecessary to consider the-question whether plaintiff’s claim would be barred by failure to present a claim against the estate of Syme in the county court.
By the Court.— The order of the circuit court sustaining-the demurrer is affirmed.
Maeshall, J., dissents.