Mr. Justice Burnett
delivered the opinion of the court.
The question to be determined upon this appeal is whether or not the $13,000 of the bonds mentioned are [387]*387valid in the hands of the trust company, as against the interveners here. In effect, the trust company, by its custody of the interveners’ deed to the land in escrow, held the land itself in trust, for the time being, according to the terms of the escrow agreement. The transaction amounted to an option agreement for the sale of the real property in question, to be effected or not according to whether the notes mentioned were paid and the other conditions were performed or not. Under these circumstances, it was the duty of the trust company to act with the utmost candor and fairness toward the interveners, and not to part with their property, or, what was substantially the same thing, surrender their deed, without actual authority from them to do so. Above all, in equity and good conscience, it could not so manipulate the transaction as to impair or lessen the security for the payment of the purchase price of the land as against its clients, the interveners, or so as to gain over them an advantage for itself.
1, 2. It is contended, however, on behalf of the trust company, that the offer of the stone company made January 23, 1908, and above quoted, constituted a new contract, which supersedes and nullifies the escrow agreement under which the trust company held the deed of the interveners, and hence justified the trust company in delivering the deed to the grantee, and released it from any obligation to the interveners. This position is fallacious and unsound for three reasons: First, the offer and acceptance of January 23, 1908, was still executory when the trust company delivered the deed, and could not amount to payment of the purchase price of the land, so as to release the deed from escrow, until the $10,000 was actually paid and the $18,000 of bonds were actually delivered; second, although the trust company was a party to the escrow agreement, yet it was no party to the offer [388]*388and acceptance, and could not be affected by the latter; and, third, if the offer and acceptance had the effect to cancel the escrow agreement, it would carry with it the return of the deed to the interveners, so that it would not operate to affect their estate in the land.
3. We conclude, therefore, that the offer and acceptance did not of itself affect the duties and liabilities of the trust company under the escrow agreement. Under these circumstances, the trust company, occupying the fiduciary relation that it did to the interveners under the escrow agreement, could not so operate as to gain an advantage to itself over them. The conditions of the resolution passed with reference to the bonds were that they were to be sold, and that until said $10,500 cash had been realized, and such settlement made with Mr. Hegele and Mr. Riedle, no bonds should be sold, except on the condition that the money received therefor should be refunded and the return of the bonds demanded, in case of failure to realize $10,500 by sale of the bonds on or before April 1, 1908. The trust company was conversant with these conditions. The interveners had a right to rely upon their being performed and actual sales made. The clear weight of the testimony shows that at the time they took the $10,500 cash and $18,000 bonds, the interveners did not know that the trust company had assumed to take $17,000 of the bonds as a pledge to secure the payment of the $10,000. It is contended for the trust company that they must have knovtn it, or ought to have known it, or at least, by the exercise of reasonable diligence and prudence, might have discovered it. This contention would be well enough if the interveners and the trust company had been dealing with each other as adversaries, or on equal terms; but they were not. The trust company occupied a fiduciary relation to the interveners. It cannot escape its duty by saying what they must have known, or ought to [389]*389have known, or might have known. The interveners were entitled to rely upon their trustee for fair dealing and the absence of any action of the trust company hostile to them or favorable to its own interests as against those of the interveners.
Neither is it a question of what the stone company had a right to do with its own bonds. The question is, What right had the trustee to accept those bonds as a pledge, in such a way as to operate against the interest of the interveners, when it was bound in equity to protect that interest? It is manifest that the action of the trust company in taking $17,000 of the bonds as a pledge for repayment to it of $10,000 loaned to Baylis for the stone company, and finally buying in $13,000 of them at a sale to foreclose the pledge for the balance then due, was inimical to the interest of the interveners; for, by as much as the proceeds of a sale under foreclosure of the mortgage to secure the bonds would have to be applied to the pledged bonds, by so much would the fund applicable to the payment of the interveners’ bonds be diminished, and their security lessened. The essence of the trust company’s fault as a trustee is that it used its position to speculate on the securities, so as to get them at about 50 per cent of their face value, while the interveners were paying 100 per cent. This could not have been accomplished, unless the trust company had abused the confidence of the interveners by surrendering their deed without authority, and in violation of the escrow agreement.
4. The decree in the suit by the trust company to foreclose the pledge of the $13,000 bonds does not improve its title to those bonds as against the interveners, for the latter were not parties to that suit, and can be in no way affected by it.
[390]*3905. It remains to consider the plea of estoppel urged by the trust company. In that connection it is alleged, in substance, that the original escrow agreement was merged in the offer and acceptance, and terminated by the mutual consent of the stone company and the interveners; that the offer and acceptance became and was the only agreement between the interveners and the stone company touching any of the property mentioned in the complaint in intervention; that the latter agreement was performed by the payment by the stone company of $10,500 cash and $18,000 in bonds; and that the interveners had not returned either the cash or bonds to the stone company, but are seeking in this suit to foreclose the mortgage and force the payment of the bonds, and in the language of the plea, they are “still seeking to enforce the payment of the said bonds and the foreclosure of said mortgage or deed of trust long after they had known and been familiar with all the facts and circumstances and with all the representations and statements made at and prior to and subsequent to the acceptance of said cash and of said bonds by the interveners.” In our judgment, the trust company can take nothing by this plea of estoppel. It hinges upon the effort of the offer and acceptance. The trust company, not being a party to that arrangement, is not affected by it in its character as holder of the escrow deed, and can claim nothing under the offer and acceptance in its own behalf. It is elementary law that an estoppel applies only to parties and privies. Falls City Lumber Company v. Watkins, 53 Or. 212 (99 Pac. 884).
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Mr. Justice Burnett
delivered the opinion of the court.
The question to be determined upon this appeal is whether or not the $13,000 of the bonds mentioned are [387]*387valid in the hands of the trust company, as against the interveners here. In effect, the trust company, by its custody of the interveners’ deed to the land in escrow, held the land itself in trust, for the time being, according to the terms of the escrow agreement. The transaction amounted to an option agreement for the sale of the real property in question, to be effected or not according to whether the notes mentioned were paid and the other conditions were performed or not. Under these circumstances, it was the duty of the trust company to act with the utmost candor and fairness toward the interveners, and not to part with their property, or, what was substantially the same thing, surrender their deed, without actual authority from them to do so. Above all, in equity and good conscience, it could not so manipulate the transaction as to impair or lessen the security for the payment of the purchase price of the land as against its clients, the interveners, or so as to gain over them an advantage for itself.
1, 2. It is contended, however, on behalf of the trust company, that the offer of the stone company made January 23, 1908, and above quoted, constituted a new contract, which supersedes and nullifies the escrow agreement under which the trust company held the deed of the interveners, and hence justified the trust company in delivering the deed to the grantee, and released it from any obligation to the interveners. This position is fallacious and unsound for three reasons: First, the offer and acceptance of January 23, 1908, was still executory when the trust company delivered the deed, and could not amount to payment of the purchase price of the land, so as to release the deed from escrow, until the $10,000 was actually paid and the $18,000 of bonds were actually delivered; second, although the trust company was a party to the escrow agreement, yet it was no party to the offer [388]*388and acceptance, and could not be affected by the latter; and, third, if the offer and acceptance had the effect to cancel the escrow agreement, it would carry with it the return of the deed to the interveners, so that it would not operate to affect their estate in the land.
3. We conclude, therefore, that the offer and acceptance did not of itself affect the duties and liabilities of the trust company under the escrow agreement. Under these circumstances, the trust company, occupying the fiduciary relation that it did to the interveners under the escrow agreement, could not so operate as to gain an advantage to itself over them. The conditions of the resolution passed with reference to the bonds were that they were to be sold, and that until said $10,500 cash had been realized, and such settlement made with Mr. Hegele and Mr. Riedle, no bonds should be sold, except on the condition that the money received therefor should be refunded and the return of the bonds demanded, in case of failure to realize $10,500 by sale of the bonds on or before April 1, 1908. The trust company was conversant with these conditions. The interveners had a right to rely upon their being performed and actual sales made. The clear weight of the testimony shows that at the time they took the $10,500 cash and $18,000 bonds, the interveners did not know that the trust company had assumed to take $17,000 of the bonds as a pledge to secure the payment of the $10,000. It is contended for the trust company that they must have knovtn it, or ought to have known it, or at least, by the exercise of reasonable diligence and prudence, might have discovered it. This contention would be well enough if the interveners and the trust company had been dealing with each other as adversaries, or on equal terms; but they were not. The trust company occupied a fiduciary relation to the interveners. It cannot escape its duty by saying what they must have known, or ought to [389]*389have known, or might have known. The interveners were entitled to rely upon their trustee for fair dealing and the absence of any action of the trust company hostile to them or favorable to its own interests as against those of the interveners.
Neither is it a question of what the stone company had a right to do with its own bonds. The question is, What right had the trustee to accept those bonds as a pledge, in such a way as to operate against the interest of the interveners, when it was bound in equity to protect that interest? It is manifest that the action of the trust company in taking $17,000 of the bonds as a pledge for repayment to it of $10,000 loaned to Baylis for the stone company, and finally buying in $13,000 of them at a sale to foreclose the pledge for the balance then due, was inimical to the interest of the interveners; for, by as much as the proceeds of a sale under foreclosure of the mortgage to secure the bonds would have to be applied to the pledged bonds, by so much would the fund applicable to the payment of the interveners’ bonds be diminished, and their security lessened. The essence of the trust company’s fault as a trustee is that it used its position to speculate on the securities, so as to get them at about 50 per cent of their face value, while the interveners were paying 100 per cent. This could not have been accomplished, unless the trust company had abused the confidence of the interveners by surrendering their deed without authority, and in violation of the escrow agreement.
4. The decree in the suit by the trust company to foreclose the pledge of the $13,000 bonds does not improve its title to those bonds as against the interveners, for the latter were not parties to that suit, and can be in no way affected by it.
[390]*3905. It remains to consider the plea of estoppel urged by the trust company. In that connection it is alleged, in substance, that the original escrow agreement was merged in the offer and acceptance, and terminated by the mutual consent of the stone company and the interveners; that the offer and acceptance became and was the only agreement between the interveners and the stone company touching any of the property mentioned in the complaint in intervention; that the latter agreement was performed by the payment by the stone company of $10,500 cash and $18,000 in bonds; and that the interveners had not returned either the cash or bonds to the stone company, but are seeking in this suit to foreclose the mortgage and force the payment of the bonds, and in the language of the plea, they are “still seeking to enforce the payment of the said bonds and the foreclosure of said mortgage or deed of trust long after they had known and been familiar with all the facts and circumstances and with all the representations and statements made at and prior to and subsequent to the acceptance of said cash and of said bonds by the interveners.” In our judgment, the trust company can take nothing by this plea of estoppel. It hinges upon the effort of the offer and acceptance. The trust company, not being a party to that arrangement, is not affected by it in its character as holder of the escrow deed, and can claim nothing under the offer and acceptance in its own behalf. It is elementary law that an estoppel applies only to parties and privies. Falls City Lumber Company v. Watkins, 53 Or. 212 (99 Pac. 884). Not being in privity with the stone company, it can make no difference to the trustee whether the interveners returned the money to the stone company or not.
■ 6. Moreover, the offer and acceptance does not in any way refer to the escrow agreement, and cannot be held to abolish or terminate it. In order to reach the conclusion [391]*391of law set up in this plea of estoppel, to the effect that the escrow agreement was abrogated by the offer and acceptance, the trust company should have pleaded all the facts surrounding that transaction, among which, to be effectual, would have been, if it were a fact, the surrender of the deed to the interveners and the notes to the stone company. This would have indicated that the trust company had done equity by returning the deed of the interveners, thus restoring them to their former position, before going into the bond market to its own advantage, and in a manner detrimental to their cestui que trust. In the situation disclosed, it does not lie in the mouth of the trust company to set up the odious plea of estoppel. If the facts had been stated thus, a court might have reached the conclusion that the original agreement was abolished by the mutual consent of the stone company and the interveners; but until they do appear we cannot, as a matter of law, say that the original agreement in escrow was abolished. The design of an estoppel is to prevent the adverse party from alleging even the truth, and to have this drastic effect it is a rule that the plea must be formulated with great certainty, even to a certain intent, in every particular. The plea in question is really subject to a general demurrer, and cannot avail the trust company in this suit.
For the reason that its acceptance of the $17,000 of bonds as a pledge for the money loaned to the stone company was prejudicial to the interest of the interveners, as cestui que trust, the trust company cannot be protected in that transaction to the prejudice of the interveners. It is entitled, however, to be reimbursed for money advanced, so far as it operated to the advantage of the interveners. It would be inequitable to mulct the trust company in the unpaid portion of its , .money that actually went to the benefit of the interveners. Enabled as we are by the [392]*392testimony to trace the transaction accurately, the court is authorized to protect the trust company, so far as it acted in harmony with the interests of the interveners, but no farther. Bearing in mind that $10,000 of the cash received by the interveners was advanced by the trust company on the note of Baylis, we glean from the testimony, and especially from the copy of the note and the indorsements thereon received in evidence, that by sundry payments of principal and interest that note was reduced to $4,197.45, with interest from July 1, 1909, at ,6 per cent per annum; that rate having been agreed upon by the makers and the trust company after the note had run to June 5, 1909. The interveners having received the benefit of the money, of which this balance is unpaid, they must be held to allow the trust company to share pro rata, to that extent, with them in the proceeds of the foreclosure sale in this suit. In other words, -the trust company should stand in this suit as if it had a bond of $4,197.45, with interest thereon, as aforesaid, equal in validity to those bonds belonging to the interveners. No one questions the bonds held by H. C. Leonard of $5,000, Mrs. J. E. Hall, $1,000, and the Commercial Bank of Oakland, $500; so they should also rank with the bonds of the interveners.
We conclude upon the whole case that,- as against the interveners and the other bondholders mentioned, the $13,000 of bonds in possession of the trust company, numbered 55 to 80, both inclusive, should be held for naught, without prejudice to any cause of suit the trust company may have against the stone company to enforce payment of the same, and except, also, as to the amount of $4,197.45, with interest at 6 per cent per annum since July 21, 1909, as above mentioned, and that with this modification the decree of the court below should be affirmed, without either party recovering costs or disbursements from the other. MODIFIED.