Dickinson, J.
The facts of the case, as found by the court- upon the trial of the cause, are in substance as follows:
[159]*159The plaintiffs are stockholders in the Little Falls & Dakota Railroad Company. The amount of stock authorized by the articles of incorporation was 40,000 shares. At the date of the transactions complained of, August 4,1881, only 282 shares had been issued. Of this amount the defendant Yillard had purchased and held 126 shares. Thirty-six shares were then held by a partnership consisting of these plaintiffs, the defendants Barnum and Simmons, and three others. A short time after the above date the partnership acquired other stock, making the whole amount owned by it 59 shares. The defendants Barnum, Simmons, Yillard, and Starbuek were directors of the corporation.
Prior to August 4,1881, Villard had caused to be prepared, in form for execution, two contracts, both bearing the same date and being parts of one transaction or scheme. In one. of these the defendants Crooks and De Graff, who were partners having the partnership name of De Graff & Co., were the parties of the one part, and the railroad corporation defendant the party of the other part. By its terms De Graff & Co. were to construct and equip the road of that corporation, in consideration of which the corporation was to issue to them for each mile of constructed road 331 shares of its capital stock, and its bonds to the amount of $20,000 per mile, securing the same by mortgage of all its property and franchises; also, to assign to De Graff & Co. all municipal securities which should be issued in aid of the construction of the road. Such securities had then been voted with legislative authority, but upon certain considerations, to the amount of $164,800.
In the other proposed contract, the contracting parties named were De Graff & Co. and the defendant Starbuek. By its terms De Graff & Co. sold and assigned to Starbuek all the stock, mortgage bonds, and municipal securities which they were to receive under their contract with the railroad company. Starbuek was to pay them $5,446 for each $20,000 of mortgage bonds, with the accompanying 331 shares of stock. He was also to pay certain specified sums for extra work in construction, and to provide a large amount of material to be used in construction and equipment of the road. Yillard was in[160]*160terested with Starbuck in this contract, and was to receive some share of the stock and bonds referred to therein.
The actual cost of construction and equipment, as provided in the De Graff contract, would not exceed $14,000 per mile, nor would it cost Starbuck more than that sum to carry out his contract with them. The bonds and stock to be issued to De Graff & Co., and by them transferred to Starbuck, will, upon the completion of the road, considerably exceed in value the cost of such construction and equipment.
A meeting of the board of directors was held August 4, 1881, at which Barnum and Simmons were present. 'Yillard and Starbuck were not present. At this’meeting the proposed De Graff contract was presented at the instance of Yillard, who sought from the board authorization for its execution on the part of the corporation. Such authority was conferred by a unanimous vote of the directors present. After this authority had been conferred, the resignations of Yillard and Starbuck as directors, which had been sent in to be presented at this meeting, were accepted, and other directors named by Yillard were elected in their stead.
The two contracts were executed by the parties named therein respectively. At the time of the action of the board of directors above referred to, the entire transaction embraced in the two proposed contracts was understood by all of the directors present. Barnum and Simmons, before they voted in favor of the execution of the construction contract, required assurances to be made in behalf of Yillard that they should be permitted to share in the benefits to be derived by Starbuck and Yillard from the transaction. In requiring such assurances they acted in behalf of the partnership of which they and these plaintiffs were members. All of these partners knew of the assurances so given, and of the approval of the contract by the board. Belying upon the assurances given to Barnum and Simmons, the partners were satisfied, and immediately afterwards sought to avail themselves of the supposed benefit accruing to Starbuck and Yillard from the transaction, seeking to be allowed to contribhte one-fourth of the cost of carrying out the contract between Starbuck and De Graff & Co., and to receive a corresponding proportion of the bonds [161]*161and stock. Their proposals in that respect were rejected. Sixteen shares of the stock held by the partnership having been by it transferred to these plaintiffs individually, this action was commenced in their behalf, as well as in that of other stockholders; the relief sought being an adjudication that the contracts were fraudulent and void, and an injunction against the contemplated issuing of the bonds, mortgage, and stock, and the transfer of the same, and of the municipal securities as provided in the contracts.
The court has not in terms found the transaction complained of to be fraudulent, but from the facts found the conclusion of fraud cannot well be avoided; and, for the purposes of the case, we assume that the transaction was a fraud as to stockholders not consenting to it, for the reason that the corporation was made to assume obligations, by the issue of its bonds and stock, largely in excess of the amount necessary to raise money sufficient for the construction and equipment of the road; the difference between the actual cost of the work and the value of the stock, bond, and municipal securities, being really gratuitously bestowed by the corporation upon Starbuck and Yillard.
At the threshold, however, stands the maxim that “he who comes into equity must come with clean hands.” A court of equity will not, at the suit of a party to a fraud, grant affirmative relief from the consequences of it, but will leave the parties in the position in which they have placed themselves. This rule is applicable to the ■ case before us, and precludes the granting of relief at the suit of these plaintiffs, if the facts found by the court, as to the action of Barnum and Simmons in authorizing the execution of the contract, and the participation of the plaintiffs in the transaction, are sustained by the evidence.
It is claimed, however, that the findings are not justified by the evidence; that the assurance sought by Barnum and Simmons, and given to them, and relying upon which they voted in favor of the making of the contract, were to the effect that any stockholder might share in the enterprise. We will not consider whether, if this had been the fact, the transaction would not still have been a fraud upon stockholders. We deem the findings of the court sustained by the [162]*162evidence. It appears that, prior to the meeting of August 4th, the contemplated scheme of issuing stock and bonds for the building of the road, to the amount named in this contract, was disclosed by Villard to Barnum, and came also to the knowledge of Simmons; that these would be worth in market about their face value, while the road could be built for about $13,000 per mile, leaving a profit of about $7,000 per mile to those who should acquire the bonds and stock, and furnish the money necessary for construction.
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Dickinson, J.
The facts of the case, as found by the court- upon the trial of the cause, are in substance as follows:
[159]*159The plaintiffs are stockholders in the Little Falls & Dakota Railroad Company. The amount of stock authorized by the articles of incorporation was 40,000 shares. At the date of the transactions complained of, August 4,1881, only 282 shares had been issued. Of this amount the defendant Yillard had purchased and held 126 shares. Thirty-six shares were then held by a partnership consisting of these plaintiffs, the defendants Barnum and Simmons, and three others. A short time after the above date the partnership acquired other stock, making the whole amount owned by it 59 shares. The defendants Barnum, Simmons, Yillard, and Starbuek were directors of the corporation.
Prior to August 4,1881, Villard had caused to be prepared, in form for execution, two contracts, both bearing the same date and being parts of one transaction or scheme. In one. of these the defendants Crooks and De Graff, who were partners having the partnership name of De Graff & Co., were the parties of the one part, and the railroad corporation defendant the party of the other part. By its terms De Graff & Co. were to construct and equip the road of that corporation, in consideration of which the corporation was to issue to them for each mile of constructed road 331 shares of its capital stock, and its bonds to the amount of $20,000 per mile, securing the same by mortgage of all its property and franchises; also, to assign to De Graff & Co. all municipal securities which should be issued in aid of the construction of the road. Such securities had then been voted with legislative authority, but upon certain considerations, to the amount of $164,800.
In the other proposed contract, the contracting parties named were De Graff & Co. and the defendant Starbuek. By its terms De Graff & Co. sold and assigned to Starbuek all the stock, mortgage bonds, and municipal securities which they were to receive under their contract with the railroad company. Starbuek was to pay them $5,446 for each $20,000 of mortgage bonds, with the accompanying 331 shares of stock. He was also to pay certain specified sums for extra work in construction, and to provide a large amount of material to be used in construction and equipment of the road. Yillard was in[160]*160terested with Starbuck in this contract, and was to receive some share of the stock and bonds referred to therein.
The actual cost of construction and equipment, as provided in the De Graff contract, would not exceed $14,000 per mile, nor would it cost Starbuck more than that sum to carry out his contract with them. The bonds and stock to be issued to De Graff & Co., and by them transferred to Starbuck, will, upon the completion of the road, considerably exceed in value the cost of such construction and equipment.
A meeting of the board of directors was held August 4, 1881, at which Barnum and Simmons were present. 'Yillard and Starbuck were not present. At this’meeting the proposed De Graff contract was presented at the instance of Yillard, who sought from the board authorization for its execution on the part of the corporation. Such authority was conferred by a unanimous vote of the directors present. After this authority had been conferred, the resignations of Yillard and Starbuck as directors, which had been sent in to be presented at this meeting, were accepted, and other directors named by Yillard were elected in their stead.
The two contracts were executed by the parties named therein respectively. At the time of the action of the board of directors above referred to, the entire transaction embraced in the two proposed contracts was understood by all of the directors present. Barnum and Simmons, before they voted in favor of the execution of the construction contract, required assurances to be made in behalf of Yillard that they should be permitted to share in the benefits to be derived by Starbuck and Yillard from the transaction. In requiring such assurances they acted in behalf of the partnership of which they and these plaintiffs were members. All of these partners knew of the assurances so given, and of the approval of the contract by the board. Belying upon the assurances given to Barnum and Simmons, the partners were satisfied, and immediately afterwards sought to avail themselves of the supposed benefit accruing to Starbuck and Yillard from the transaction, seeking to be allowed to contribhte one-fourth of the cost of carrying out the contract between Starbuck and De Graff & Co., and to receive a corresponding proportion of the bonds [161]*161and stock. Their proposals in that respect were rejected. Sixteen shares of the stock held by the partnership having been by it transferred to these plaintiffs individually, this action was commenced in their behalf, as well as in that of other stockholders; the relief sought being an adjudication that the contracts were fraudulent and void, and an injunction against the contemplated issuing of the bonds, mortgage, and stock, and the transfer of the same, and of the municipal securities as provided in the contracts.
The court has not in terms found the transaction complained of to be fraudulent, but from the facts found the conclusion of fraud cannot well be avoided; and, for the purposes of the case, we assume that the transaction was a fraud as to stockholders not consenting to it, for the reason that the corporation was made to assume obligations, by the issue of its bonds and stock, largely in excess of the amount necessary to raise money sufficient for the construction and equipment of the road; the difference between the actual cost of the work and the value of the stock, bond, and municipal securities, being really gratuitously bestowed by the corporation upon Starbuck and Yillard.
At the threshold, however, stands the maxim that “he who comes into equity must come with clean hands.” A court of equity will not, at the suit of a party to a fraud, grant affirmative relief from the consequences of it, but will leave the parties in the position in which they have placed themselves. This rule is applicable to the ■ case before us, and precludes the granting of relief at the suit of these plaintiffs, if the facts found by the court, as to the action of Barnum and Simmons in authorizing the execution of the contract, and the participation of the plaintiffs in the transaction, are sustained by the evidence.
It is claimed, however, that the findings are not justified by the evidence; that the assurance sought by Barnum and Simmons, and given to them, and relying upon which they voted in favor of the making of the contract, were to the effect that any stockholder might share in the enterprise. We will not consider whether, if this had been the fact, the transaction would not still have been a fraud upon stockholders. We deem the findings of the court sustained by the [162]*162evidence. It appears that, prior to the meeting of August 4th, the contemplated scheme of issuing stock and bonds for the building of the road, to the amount named in this contract, was disclosed by Villard to Barnum, and came also to the knowledge of Simmons; that these would be worth in market about their face value, while the road could be built for about $13,000 per mile, leaving a profit of about $7,000 per mile to those who should acquire the bonds and stock, and furnish the money necessary for construction. Barnum was encouraged by Villard to form a pool here, and the assurance given that he, Villard, would help him. Upon such assurance, Barnum and Simmons proceeded to form the partnership of which the plaintiffs became members, for the purchase of stock, and with the purpose, as we think is apparent, of securing the benefits which the proposed arrangement promised. The nature of the scheme was made known by Barnum and Simmons to their associates in the partnership. At the time of the August meeting it was understood that, under the proposed contracts, the stock and bonds were to be transferred absolutely to De Graff & Co., and by them to Starbuck; Villard being also interested in them. It must have been understood that the contemplated transaction would leave stockholders without any power to acquire the new stock or the bonds, except as Starbuck or Villard should grant them the privilege of doing so.
That Barnum and Simmons, at the August meeting, required and obtained assurances in this respect only for themselves, and not in behalf of stockholders generally, and that they were induced by such assurances to consent to the contract, is strongly indicated by their own declarations, which are also legally imputable to these plaintiffs. In a letter written on the 5th of August by Barnum and Simmons to Villard, with the knowledge of the partners, at their instance, and in their behalf, this language is used by the writers whose names are subscribed: “In consequence of a conversation between yourself and Mr. Barnum, to the effect that if we should form a pool you would assist us, we have formed one, and by the assistance of a few friends are enabled to contribute or share towards building the road, and can furnish it as required by the contract. Before the passage of the resolution yesterday, accepting the contract, we were assured * * * [163]*163that you would permit us to furnish our share of the money necessary, and that we would receive the bonds and stock therefor on the same basis as yourselves or friends. Trusting implicitly in the promise and assurance, 'we most cheerfully indorsed the acceptance of the contract.”
We find also evidence leading to the same conclusion, in the negotiations upon this subject at the directors’ meeting of August 4th, but will not extend this opinion by reciting it. Not only does the evidence tend to charge the plaintiffs legally as parties participating through Barnum and Simmons in the making of the alleged fraudulent contract, but it places them in the position of having ratified the transaction with a knowledge of the facts, by seeking to obtain for themselves the fruits of it. It sustains the facts found by the court, and, for the reasons above stated, upon these facts these plaintiffs are not entitled to relief in equity.
Order affirmed.