fraud a purchase of stock by the former from the latter was valid, though in his official position the president knew at the time he purchased the stock it was worth more than its nominal market value, but did not disclose to the stockholder the facts within his knowledge as to its real value. The decision was rendered by a divided court in 1873. It is bottomed upon the view announced by the court that, while the officers and managing agents of a corporation are trustees for the corporation and its corporate property, they sustain no trust relation to the stockholders of the corporation, and owe to them none of the duties of a trust relation. The rule laid down has met with much criticism. The position taken leaves the stockholders' interest in the corporation and all matters affecting its value wholly in the charge and keeping 508 of the managing officers of the corporation, and leaves the stockholders their legitimate prey. We cannot give the sanction of our approval to the views there expressed.

The fact that the directors and managing officers of a corporation are quasi trustees for the stockholders does not prohibit them from dealing with the latter. The only restriction is that in such dealing their conduct be fair, open and above reproach. Because of the trust relation and the better opportunities afforded for acquiring information, before any director or managing officer of a corporation, having knowledge of its condition of affairs, can rightfully purchase the stock of one not actively engaged in the management, he must inform such stockholder of the true condition of affairs.

Defendant suggests that plaintiff himself should have exercised more diligence in investigating the affairs of the bank; that the books were open to him. By this we are asked to say that in this case a means of knowledge is equivalent to knowledge; that a clue to the facts which, if diligently followed up, would lead to a disclosure is equivalent to a discovery. Plaintiff could not be required to make an investigation of the books of the bank to determine its financial condition simply because it was in his power to do so. The diligence required by one to protect his interests is only such as a person of ordinary prudence would exercise under like circumstances. In a case like this the trust relation existing between the parties, the superior opportunities of defendant to know of the condition of the affairs of the bank, and his actual knowledge of its affairs, required no such diligence of inquiry on the part of plaintiff as contended for by defendant. Plaintiff had the right to rely

509

upon the belief that defendant would disclose to him the true condition of the affairs of the bank, and that he would not be called upon to investigate the condition of its affairs before he could with safety sell to defendant his holdings of stock. It is not the intent of the law to place a restraint on the affairs of business when conducted fairly, honestly and openly, nor to deprive one party to a contract of the advantage which superior judgment, greater skill or better information may give, but it cannot give its approval to a course of dealing that will permit those occupying a trust relation to be unmindful of the trust, betraying the confidence reposed, and profit by such betrayal.

The jury, in addition to returning a general verdict for plaintiff, returned numerous special findings. The record discloses that there was some competent testimony to support all the special findings returned, including the one that Randolph was the agent of defendant. The findings are in harmony with and uphold the general verdict.

The brief of plaintiff in error contains sixty-seven assignments of error. Most of them are based on the rulings of the trial court in the admission of testimony. Some are admitted by counsel to be unimportant, or cured or corrected by subsequent proceedings. Many of them are based on the claim that the testimony introduced was not within the issues. In a case of this character, where fraud is charged, great latitude is allowed to the scope of the inquiry, the limit resting largely in the discretion of the trial court. The record discloses no abuse of this discretion. Nor did the court abuse its discretion in limiting the number of witnesses used on impeachment.

case,

The instructions given fairly state the law of the 510 and there was no error in refusing the instructions requested and not given.

The judgment will be affirmed.

All the justices concurring.

On the Trusteeship of Directors of a corporation generally, see Bosworth v. Allen, 168 N. Y. 157, 85 Am. St. Rep. 667; Pacific Vinegar etc. Works v. Smith, 145 Cal. 352, 104 Am. St. Rep. 42; Scott v. Farmers' etc. Bank, 97 Tex. 31, 104 Am. St. Rep. 835. That a stockholder sustains to the directors the relation of a cestui que trust, see Pearson v. Concord, 62 N. H. 537, 13 Am. St. Rep. 590.

BOWDEN V. KANSAS CITY.

[69 Kan, 587, 77 Pac. 573.]

MUNICIPAL CORPORATION-Negligent Management of Property.-A municipal corporation is liable for negligence in the care and control of public property in the discharge of a ministerial duty, irrespective of whether or not an income is derived from it. (pp. 191, 192.)

MUNICIPAL CORPORATION-Safe Place for Firemen to Work. A municipal corporation is liable to a fireman for injuries sustained through its negligence in not furnishing him a reasonably safe place to work in one of its fire stations. (p. 192.)

MUNICIPAL CORPORATION — Fire Station Ministerial Duty. In the care and management of its fire stations a city dis charges a purely ministerial duty. (pp. 192, 193.)

True & Sims and Keplinger & Trickett, for the plaintiff in

error.

J. W. Dana, city counselor, and M. J. Reitz, city attorney, for the defendant in error.

587 GREENE, J. The plaintiff prosecutes error from a judgment sustaining a demurrer to his petition. The material facts alleged in the petition, which present 588 the question discussed in this opinion, briefly summarized, are that the defendant, a city of the first class, maintains a fire department and fire stations; that plaintiff was in charge of station No. 3, in which were kept a hose-cart and horses for drawing it; that it was his duty to clasp the collar on the horses when they dashed from their stalls to the tongue of the hose-cart upon the alarm of fire; that the floor between where the horses stood and the tongue of this cart, which had been laid with wooden blocks, had become so worn and rotten that a large hole had been made in the runway, which the city had negligently permitted to remain for a long period of time, notwithstanding the fact that the attention of the fire marshal had frequently been called to it and he had repeatedly promised to cause it to be repaired; that the city knew the floor was out of repair and had negligently omitted to put it in order; that on the occasion of plaintiff's injury he was in the discharge of his duties when a firealarm was turned in and one of the horses made a dash for the tongue of the hose-cart, where plaintiff was waiting to receive it to clasp the collar of the harness, the horse stumbled into the

hole, falling heavily against the plaintiff, which resulted in serious injuries, for which he sought to recover damages in this action.

It is contended that the petition does not affirmatively show that the city had notice of the defective and dangerous condition of the floor, and that it affirmatively shows that the plaintiff assumed the risk of injury which would probably result from such defective condition of the floor. Neither of these contentions is well taken. In some particulars the petition is not very specific in its allegations, but it is not fatally defective in either of the respects mentioned. 589 It is plain that the court below did not sustain the demurrer on either of these grounds.

The important question, and one to which counsel have directed their attention, is, Can a municipal corporation be made to respond in damages to the plaintiff for injuries sustained through its negligence in not furnishing him a reasonably safe place in which to perform his duties as an employé in one of its fire stations? Nonliability is asserted on the ground that municipal corporations are created by the state to assist in the administration of its laws; that the maintenance of a fire department is a governmental duty, and in the performance of such duty cities are limited sovereignties, or miniature states, and are exempt from all liability for the misfeasance of their agents. Whether the corporation in this instance was acting as a governmental agency in a public capacity representing the inhabitants of the city, or in its private corporate capacity, is not a material question; in either instance it was acting within the scope of its delegated authority. It possessed the power to provide and maintain a fire department for the protection of the property of the inhabitants, and in this respect it was performing a public duty. In order that this power might be more effectually executed the office of the fire marshal was created. The mayor and council were given power to appoint such officer, prescribe his duties, provide for his salary, and control him in the discharge of such duties as were imposed upon him, and hold him responsible for the manner in which he should perform them. Therefore, the fire marshal, while so acting, was the agent of the city and not an officer of the state.

In determining the necessity of a fire department, the number and location of fire stations, the kind, 590 quality and number of fire-extinguishers, and all matters involving the efficiency of such department, the council are in the exercise of their legislative power, judgment and discretion. In the performance of

such duties the questions of nonfeasance or misfeasance are not subjects of judicial inquiry. Having, however, determined these questions, the execution of the work and the management of its property is ministerial. In determining the locality, width and grade of streets, and in establishing a system of sewers, and the kind and location of the pipes therefor, the corporation exercises its legislative authority; in the one instance as a governmental instrumentality; in the other, in its public capacity, as benefactor of the inhabitants. In either case the city is liable to property owners for injuries to their property occasioned by the negligent execution of the plan.

The case of City of Toledo v. Cone, 41 Ohio St. 149, 163, was an action to recover damages for personal injuries sustained by the falling of an embankment supporting a vault in the city cemetery. The court said: "We think it is evident from these statutory provisions that the trustees of the cemetery in question were elected by the people of Toledo, to take charge, as their agents, of the cemetery property, and acted in that behalf in subordination to and subject to removal by the council of the corporation. The improvement or repair of the city vault, through their agency and that of the superintendent, was not a legislative or governmental act on the part of the city, but was merely the discharge of a ministerial duty, such as the city performs in repairing or improving its streets, sewers and wharves. It lay within the legislative capacity, judgment and discretion of the city to provide a cemetery for the burial of the dead, and to build requisite vaults; but, having become the 591 owner of such property, the city in managing it was held to the same degree of care in preventing damage to others as would be required of natural persons. By section 8 of the act of May, 1869, municipal corporations are made capable of acquiring, holding and possessing property, real and personal. Having such power, there would seem to be no more valid reason for exempting them from liability for private injuries caused by the improper management of their property than for exempting private corporations and natural persons under like circumstances."

In the case of Donahoe v. Kansas City, 136 Mo. 657, 670, 38 S. W. 571, 574, which was an action to recover damages for injuries sustained by the plaintiff while engaged as a laborer in digging a trench for a sewer, the allegations were that the city and its duly appointed representatives in charge of the work negligently and carelessly failed to brace, shore up and protect