Florida Railroad, and which had theretofore been known as the Florida Railroad Company, should thereafter be known as the Atlantic, Gulf & West India Transit Company; and the rights, franchises, and privileges, as well as the duties, responsibilities, and liabilities, of the said corporation, should in all respects remain and continue the same as though no change had been made in their said name.

On August 21, 1873, Robert H. Johnson, a citizen of the state of New York, brought his bill in equity in the circuit court of the United States for the Northern district of Florida against the said Atlantic, Gulf & West India Transit Company; John McRae, as trustee, appointed by the Florida Railroad Company, for the benefit of the holders of second mortgage bonds thereof, a citizen of the state of North Carolina; Marshall O. Roberts and Edward N. Dickerson, of the state of New York; Isaac K. Roberts, a citizen of the state of Louisiana; Samuel A. Swann, a citizen of the state of Florida; David L. Yulee, of Florida; and the Florida Railroad Company,-in which bill the complainant alleged that he was the holder and owner of two second mortgage bonds, of $1,000 each, of the Florida Railroad Company, dated March 1, 1856, payable March 1, 1891; that these bonds were a second mortgage on the Florida Railroad, and on property pretended to belong to the Atlantic, Gulf & West India Transit Company; that, by the terms of the bonds, the trustees named therein were empowered to sell or otherwise dispose of the said property, without judicial proceeding, for the benefit of the holders of the bonds in default of the payment of the principal or interest thereof to an amount equal to one year's interest; that there was then due on the bonds held by the complainant all of the principal and $1,760 of interest, amounting in all to $3,760, being in amount more than one year's interest; that, by reason of default of payment of interest, the principal had become demandable of the company; and that for the payment of the same all the said railroad property had become liable.

The complainant then referred to the issue of the first mortgage bonds under the internal improvement act, and averred that the railroad had never been completed; that, by the terms of its charter, its main track was to be extended to Tampa Bay; that this main track had never been built; and that the net earnings of the road had never at any time exceeded 6 per cent. of the capital stock, bonded debt, and sinking fund. It was alleged, therefore, that the interest due on such of the first mortgage bonds as might be outstanding was demandable of the internal improvement fund, and was not a charge upon the company or the road. The complainant claimed that if, however, it should be decreed that such interest was payable by the company, he was entitled to pay such interest and redeem the road.

The complainant stated that Soutter, one of the trustees for the benefit of the second mortgage bondholders, was not living, and averred that McRae, the other trustee, had neglected and refused to execute the powers of his trust for the benefit of the bondholders, and had suffered a large quantity of the, lands conveyed to him for the purposes of g the trust to be fraudulently and collusively sold for the benefit of the defendant David L. Yulee, and the Atlantic, Gulf & West India Transit Company. He averred that the railroad was of great value, and worth much more than enough to pay the whole amount of the outstanding bonds and other debts of the company; that the original Florida Railroad Company was identical with the Atlantic, Gulf & West India Transit Company, subject to the same trusts and liabil ities, and composed in part, if not altogether, of the same persons, and that the companies were in privity of estate and of person; that the change of name had been made in guile and covin, and with intent to defraud the creditors of the Florida Railroad Company; that the stockholders of that company, except the trustees of the internal improvement fund, and except such stockholders as had accepted stock in payment of debts due them for aiding in the construction of the road, were credit stockholders who had subscribed for stock chiefly in large amounts, and had paid only a small assessment thereon; that the majority of the stock was held in this manner by persons who had paid merely nominal sums thereon; that David L. Yulee was the president of the Florida Railroad Company, and had controlled, either in his own name or through Dickerson and associates, a majority of the shares of the capital stock of the company; and that the cost of construction of the railroad was paid almost entirely, if not altogether, out of moneys and credits resulting from negotiations of the first mortgage bonds and the sale of the second mortgage bonds.

It was further stated that the associates of Dickerson were unknown to the complainant, but the complainant stated that he was informed and believed that such associates included Yulee; and he prayed for a discovery from Yulee of the names of all such associates, and of the terms and manner of their association.

Other allegations of the bill were as follows: That in 1866, within six months arter the establishment of the so-called "provisional government" of the state of Florida, Ya lee, then president of the Florida Railroad Company, effected an arrangement by which the defendant Marshall O. Roberts advanced the money to Yulee and Dickerson and associates to purchase the first mortgage bonds of the company then outstanding, at about 20 per cent. of their face value, for the bene fit of Yulee and Dickerson and associates; that these bonds were so purchased by Yulee or by Dickerson and associates, or by

189.

Roberts for them, under an agreement that the railroad should be sold for the interest then accrued upon the bonds, and be bought in by Yulee and Dickerson and associates, and be held by them to the exclusion of the internal improvement fund and its interest in the capital stock of the company, and be divested of the trusts and liens theretofore created, and be freed from the debts and obligations due the complainant and the creditors of the company; that Yulee, president of the company, procured an order from the alleged governor and other officers of the pretended provisional government of Florida, claiming to be trustees of the internal improvement fund, for the seizure and sale of the railroad for the satisfaction of the 1 per cent. per annum due the sinking fund; that Yulee, president as aforesaid, agreed to pay in at such sale the majority of the outstanding first mortgage bonds, and further agreed with the said trustees to guaranty that the railroad should be purchased at the sale for an amount sufficient to pay 20 per cent. of the first mortgage bonds; that in pursuance of that agreement the railroad was seized and sold by the trustees, and was bid in by Isaac K. Roberts for the benefit of Edward N. Dickerson and associates for the sum of $323,000, of which all but about $96,000 was paid in the said first mortgage bonds; that the trustees, under an agreement negotiated by Yulee, also transferred to him and Dickerson and associates not less than 100,000 acres of public lands belonging to the said fund in payment of interest accrued on the first mortgage bonds, for the debt of which bonds Yulee and Dickerson and associates were liable as stockholders of the company; that thus the trustees not only received those bonds and canceled them, in violation of law, before their principal had become due, but likewise conveyed the land to Yulee and Dickerson and associates on the pretense that the interest of the same was due and demandable of them, the said trustees, and was a charge upon the said fund, and then really paid to Yulee and Dickerson and associates representing the company a large and valuable consideration for paying their own or the company's debt; that, since the alleged purchase of the road, Yulee and Dickerson and associates had continued in the possession, management, and ownership of the railroad as before, and that Yulee had directed its affairs and received its funds; that at the time of the sale the iron rails on the road were worth in cash a sum greater than the purchase money paid for the road, and that all the property of the company was then, at the time of the sale, worth not less than $1.000,000; that the internal improvement trust was a public trust, and that Yulee and Dickerson and associates had express notice thereof; that it was pretended by Yulee and Dickerson and associates that the road was seized and sold by the trustees

because of the inability and failure of the company to pay the 1 per cent. per annum due the sinking fund, when, in reality, the company was able to pay the same, and its failure so to do was the act and default of the persons who controlled it and who procured its seizure and sale in the interest of Yulee and Dickerson and associates; that the persons pretending to be governor, comptroller, treasurer, attorney general, and register of state lands, and, as such officers, trustees of the said fund, were without authority as such trustees; that such persons, having been placed in office under an unconstitutional exercise of power by the president of the United States, were without lawful authority to exercise the functions of their respective offices; that, therefore, the seizure and sale of the railroad as aforesaid was not only an intrusion and a trespass, but that such sale and the said purchase were absolutely void; that all that was paid by Yulee and his associates for the railroad at the sale thereof was a check for $26,000 and about $1,000,000 of first mortgage bonds, the principal of which was not due until 1892, which bonds were bought either by or for Yulee and his associates at about 20 per cent. of their face value; that those bonds, at the time they were procured to be sold and bought by Yulee and his associates for the purpose of obtaining the said sale, had not been sold in the manner required by law, but had been hypothecated by the company to effect a loan of money and to secure the repayment of the same, and were subject to hypothecation at the time they were so purchased; and that the holders of the bonds were not then demanding payment of the same, but were induced to sell them by the representations of Yulee, which the complainant believed to be untrue and to have been made with fraudulent intent, that the road could not be put in running order after the injuries it had sustained during the war without an advance of capital by the holders of the bonds, and that it was not then in condition to pay operating expenses.

The prayers of the bill were that the court might decree that the second mortgage bonds held by the complainant constituted a lien on the property of the Florida Railroad Company; that the complainant had a right to enter upon the property, and sell or otherwise dispose of the same, for the payment of the principal and interest of his bonds; that, inasmuch as the trustees of those bonds had failed and refused to perform their duties, the powers confided to them should be executed by the court; that the sale made by the trus tees of the internal improvement fund was without authority, and absolutely null and void, and in no way affected the complainant's right to have the property disposed of for the satisfaction of the said second mortgage bonds; that the persons who pretended to act as governor, comptroller, treasurer, attorney general, and register of state lands,

and, as such, to be trustees of the internal improvement fund, did not hold such offices in law, and, therefore, that the pretended sale by them of the road was void; that, if such sale of the property was valid for any purpose, the purchase thereof inured to the benefit of the stockholders, bondholders, and other creditors of the company, and of the internal improvement fund; that at the time of the sale the railroad was not a completed road, within the meaning of the internal improvement act, and, therefore, that the interest which had then accrued on the first mortgage bonds was not a charge upon the railroad, and that the same was not liable, under the provisions of the said act, to seizure and sale; that, either in the event that such interest should be decided by the court to be payable out of the said fund, or in the event that it should be decided to be a charge upon the railroad, the complainant had a right to pay the interest due on the outstanding ärst mortgage bonds, and to redeem the road for the satisfaction of his demands; that the said companies be foreclosed of all equity of redemption in the property; and that the same be sold for the payment of the complainant's bonds, subject to the lien of the principal of the first mortgage bonds.

The complainant further prayed for an injunction to restrain the defendant company and others from receiving the income of the road, and directing the business of the same, and for the appointment of a receiver to collect such income, and to manage the business of the road under the orders of the court.

September 11, 1873, the said complainant filed an amended bill, making George H. Dawson, executor of William Phelan, deceased, a party defendant, showing that Phelan had been the holder of certain bonds of the Florida Railroad Company, known as the "southern section bonds," and asserting that the lien of the same upon the said property was inferior to that of the bonds held by the complainant.

On the same day, Mark A. Knowlden, stating himself to be an executor of the said William Phelan, deceased, filed a cross bill relating to the same southern section bonds described in the complainant Johnson's amended bill, which bonds, as alleged, were secured by a deed of trust on the portion of the Florida Railroad between Waldo and Tampa. Upon this bill no proceedings appear to have been had.

The defendant Dickerson did not put in an answer to the complainant's bill, but on September 26, 1873, he filed an affidavit containing, among other things, the following statement: "At the time of the purchase, the road was entirely destroyed for many miles, the fron being removed to other roads and states, and the whole wood superstructure was decayed or destroyed and worthless. There were very few cars on the road, and the few that were there were entirely worthless, and not one of them is now in existence. The pur

chasers rebuilt the road, purchased an entire ly new rolling stock, built and furnished with? new machinery the workshops and other needed buildings, there being none at either end of the road, and set the road in operation. In doing this the purchasers have expended more than five hundred thousand dollars, more than the road has received by way of earnings from all sources whatever, and not one dollar has been repaid to any of the parties whose money has been expended in this work." He further stated that, from the time of the purchase of the road to the filing of the complainant's bill, no demand was ever made by the complainant in the case, or by any one, upon the owners of the road for payment of the second mortgage bonds, and that he never thought, or heard it suggested, that any such claim would be made; that the deed of trust to Stewart and Conkling, executed by the purchasers of the road, was duly recorded in every county in Florida in which the road existed; and that those trustees had indorsed a large number of bonds, which were sold to various bona fide holders, and which were then outstanding, secured by the said deed of trust. He further stated that the road was in the possession of the company defendant, and not of Yulee, the vice president of the company, or of any other person.

On the same day, Yulee filed an affidavit, in which he denied the essential allegations of the complainant's bill. He afterwards embodied the substance of his affidavit in his answer.

On September 27, 1873, the case was considered by Bradley, circuit justice, as to the complainant's motion for an injunction and the appointment of a receiver of the road, and the motion was denied.

The Atlantic, Gulf & West India Transit Company filed its answer on November 3, 1873, in which it denied, on information and belief, all the allegations of the bill which charged the Florida Railroad Company, the trustees of the internal improvement fund, and others with fraud, and denied that they had done any act in fraud of the complainant or any other bondholder or creditor of the Florida Railroad Company. The said defendant company averred that, until the bill was filed, it never heard that any of the bond-: *holders claimed that it was indebted to them, or that it held the property subject to the lien of the bonds, although the holders of almost all of the bonds had been in communication with the defendants. It further averred that the road was in its possession exclusively, and not in the possession or control of Yulee or any other person, and that Yulee had no authority over the road, except such as he derived from the company as one of its officers.

John McRae, surviving trustee of the second mortgage bonds, in his answer filed July 22, 1874, denied, in answer to the allegations of the bill, that he had neglected and refused to resist the sale of the road, or to have it set aside as fraudulent, and averred that until he

*636

saw such allegations he never heard it intimated or suggested, to the best of his recollection, that there was any fraud or irregularity in the sale by the trustees of the internal improvement fund, and that, therefore, the charge that he refused to interfere concerning the sale was untrue.

The answer of David L. Yulee was filed December 3, 1874. This defendant referred to the fifth section of the internal improvement act, and stated that as the road of the Florida Railroad Company authorized by its charter, and determined upon by a competent engineer and by the directors of the company, was upon the route from Amelia Island to Cedar Keys, in the direction of Tampa Bay, the company gave notice to the trustees of the internal improvement fund of its full acceptance of the provisions of the act, and specified the line from Amelia Island to Cedar Keys as the part of the road which it proposed to construct; that, soon after such notification, it entered into a contract for the construction of this portion of the road, in which contract it was stipulated that the contractors should receive the bonds which were to be issued under the said act; that all the bonds authorized by the act were issued; that under the said contract the road from Amelia Island to Cedar Keys was built; that the object of the act amending the company's charter was to enable it to construct the remainder of the line to Tampa, which it designed to do as soon as it had completed the line to Cedar* Keys and was able to provide the means necessary for the work; that, upon the completion of the road from Amelia Island to Cedar Keys, the said trustees regarded it as a completed road, under the said act and under the charter of the

company; that the company was liable thereafter for the sinking fund charges and interest; and that the company, believing that such were its obligations, paid several installments of sinking-fund charges, and also a due proportion of its net earnings, as required by law, down to August, 1864, as the defendant believed.

He

The defendant Yulee then described the dilapidated and impoverished condition of the road, caused by the interruption of business brought about by the war, and the great injury done the road by acts of the opposing armies, and averred that he used every means in his power to comply with the requirements of the internal improve ment act and to prevent the sale of the road, which he feared would be necessary. denied that he procured an order for the sale; that he agreed with the trustees that the road should be purchased for an amount sufficient to pay 20 per cent. of the outstanding first mortgage bonds; that the failure to make payment to the sinking fund was with intent to procure the seizure of the road and its purchase by Dickerson and associates; and he averred that, on the contrary, the sale of the road was caused by its

wrecked condition, and the failure of the company to obtain means to extricate itself from the situation in which it was left by the war. He denied that any of the first mortgage bonds were unissued and held in hypothecation for the company, or that any of such bonds were used for any other purposes than those contemplated by law, and averred that all of the said bonds were is sued by the company, under its contract for the building of the road, in payment for the bridges and other structures crossing the marshes and waters of Amelia river, and for iron and equipments put on the railroad. He denied, further, that the defendant company was identical with the original Florida Railroad Company, or was in any way connected with the transactions or obligations of the same; that lands conveyed to Soutter and McRae,* trustees, had been suffered by?? McRae to be fraudulently and collusively sold for the benefit of the defendant Yulee; that the property on the road was worth at the time of the sale $1,000,000, or even, in cash, the sum of $323,000, for which it was sold; and denied that he was one of the persons included in the designation "Edward N. Dickerson and associates."

On March 17, 1877, W. W. Corcoran was made a party defendant, and on the 2d of the following month he filed his bill, alleging his ownership of certain of the second mortgage bonds of the Florida Railroad Company, the principal of which was due on March 1, 1877, and upon which interest was due from March 1, 1860. He stated that he adopted all of the statements and allegations of the original bill filed by Johnson, and asked that he might be admitted to share in the relief therein prayed.

John A. Stewart and Frederic A. Conkling, trustees named in the deed of trust executed for the benefit of the holders of bonds issued by the purchasers at the said sale of the railroad property, were made parties defendant on October 16, 1877, and on the fol lowing day they filed their answer, which was devoted mainly to showing that it would be inequitable for the complainants to profit by their own laches, and to enjoy the advantages derived from the sale of the bonds to secure which the said deed of trust was made to the respondents, and thus to deprive the innocent holders of those bonds of the security upon which the loan was made.

These parties also filed a cross bill, on Oc tober 17, 1877, averring therein that they had accepted their trust in good faith, and without notice of any pretended claim on the property by the complainant in the orig inal bill; that the bonds issued by the purchasers of the road were issued properly; and that the value thereof was greatly impaired by the pretended lien of the said second mortgage bondholders. They therefore prayed for a decree that the deed of trust to them was a valid conveyance; that the

8£9.

holders of the second mortgage bonds be required to resort to lands in the hands of the said McRae, trustee; that the suit be dismissed; and that the complainants Johnson and Corcoran be enjoined from seeking to enforce their pretended lien. Upon this cross bill no subpoena was issued nor proceedings had.

The Atlantic, Gulf & West India Transit Company, on August 29, 1877, filed its answer to Corcoran's bill, in which answer, among other things, it set out that Corcoran was fully informed of all the essential transactions at the time they were made, upon which the claims of himself and Johnson were based, and had chosen to sleep upon his rights, and stated that, therefore, Corcoran ought not to be permitted, after a silence of about 10 years, to come into court with charges of fraud against the participants in those transactions.

Replications were duly made to all of the said answers, and the taking of testimony was begun on November 8, 1877.

On June 13, 1883, Bella A. Johnson, executrix of Robert H. Johnson, deceased, W. W. Corcoran, and others, presented to the said court a bill styled by them a bill of supplement, revivor, and amendment, seeking to bring in additional plaintiffs and defendants, and setting up matters which, as the complainants averred, had only come to their knowledge since the filing of their said bills, namely, that on November 10, 1879, there was submitted to the secretary of the interior of the United States by the Florida Railroad Company, attempting to secure the advantages of certain laws relative to government land grants to certain railroads, a map and evidence showing that a map of definite location of the company's road from Waldo to Tampa had been filed in the secretary's office by the company on December 14, 1850 (which map had been lost). and that the map last presented was a duplicate of the original map; that thereupon the secretary of the interior had approved the map and the original location and survey, and had directed that the necessary withdrawal of United States lands be made to secure the proper adjustment of the grant along the original line of the road; that this withdrawal was made on March 26, 1881. It was alleged that the company, having performed within the proper time such work on the road between Waldo and Tampa as was required by the internal improvement act, became entitled to land along the road; that, therefore, the trustees of the second mortgage bonds *became entitled to such land, and to hold the same for the benefit of the holders of those bonds, and subject to the lien thereof; that on March 1, 1859, the Florida Railroad Company issued other bonds, known as "southern extension bonds," attempted to be secured by a deed of trust executed to James E. Broome, who was succeeded as trustee by S. A. Swann; that such bonds were in

ferior to the said second mortgage bonds, which constitted a first lien on the constructed portion of the road between Waldo and Tampa, on the franchise necessary for its operation, and on all the land granted or to be granted by the United States in aid of the construction of the road. Relief was asked appropriate to these allegations. Leave to file this bill was denied by the court.

On December 7, 1887, after hearing upon the bills, answers, and evidence, the bills of the complainants were dismissed. The case was then brought here on appeal.

A. H. Garland, Wilkinson Call, Heber J. May, and George F. Curtis, for appellants. A. H. Wintersteen, for appellees.

Mr. Justice SHIRAS, after stating the facts in the foregoing language, delivered the opinion of the court.

On the 21st day of August, 1873. Robert H. Johnson, a citizen of the state of New York, filed, in the circuit court of the United States for the Northern district of Florida, a bill of complaint against the Atlantic, Gulf & West India Transit Campany, a corporation of the state of Florida, the Florida Railroad Company, and other persons.

The complainant alleged that he was the owner of two bonds, of $1,000 each, made by the Florida Railroad Company, dated March 1, 1856, payable on March 1, 1891, and secured by a second mortgage on the railroad, franchises, and property of said company, and which bonds, with interest thereon, were due and unpaid.

The object of the bill was to set aside and have declared null and void a sale of the property and franchises of the Florida Railroad Company, made on November 1, 1866, by the trustees of the internal improvement fund, in pursuance of the provisions of the acts of assembly under which the company was incorporated, and possessed its rights and property. It appears that, after said sale, a deed, bearing date November 3, 1866, was executed and delivered by the trustees to Edward N. Dickerson and his associates, representing the purchasers at the sale, and that subsequently the purchasers organized themselves into a new corporation, by the name of the Florida Railroad Company. This new company was reorganized January 1, 1870, under authority of an act of the legislature of Florida of June 24, 1869, and afterwards, by an act of assembly dated January 18, 1872, its name was changed to that of the Atlantic, Gulf & West India Transit Company.

As already stated, the original bill of Robert H. Johnson was filed August 21, 1873,-almost seven years after the sale. W. W. Corcoran filed an intervening bill, alleging ownership of some of the second mortgage bonds on April 2, 1877. In 1883, Bella A. Johnson, as executrix of Robert H. Johnson, deceased, W. W. Corcoran, and some new parties, applied for leave to file a supplementary bill,