tiff's division line, the Tremperskill runs entirely through the land of the defendant, down to the plaintiff's line, at which point the entire creek bears slightly westerly, and runs wholly upon the plaintiff's land. The line fence between the contending parties is located upon, and is a few feet east of the bank of said creek. This line is also the west line of the defendant's land, purchased by the defendant, and which had previously been taken off from the northeast corner of the land now owned by the plaintiff. In the month of November, 1902, the defendant dug a ditch upon his own land, north of the plaintiff's premises; and, by throwing stones, brush, and dirt into the Tremperskill creek at that point, defendant prepared to divert the water from the main stream, across his own land, down to a pond which he had just constructed for that purpose. The ditch so constructed runs southeasterly to a point opposite the east line of the plaintiff's premises. At that point excavations were made, and a pond was constructed along the plaintiff's east line, covering something like half an acre of land. A dam was built across the southerly portion of said pond, a wall was built upon the easterly side, and an embankment was thrown up against the plaintiff's line on the westerly side of the defendant's premises. About the 17th day of November, 1902, the water was diverted from said creek, and by the ditch so dug by the defendant a portion of said creek was carried into the pond in question. It is admitted by the defendant, and there seems to be no dispute about the question, that the pond was constructed for the purpose of filling the same with water, letting it freeze, and then taking from said pond quantities of ice, which were to be used in part upon the premises of the defendant, for dairy purposes, and also for sale to various other people, by filling ice and store houses, for a compensation paid to the defendant. The evidence is undisputed that a portion of the water in said creek was diverted and stored in said pond, and ice was frozen, cut, drawn away, and delivered to several other individuals and firms in the village of Andes. This action was brought to recover damages for the diversion of the water from said creek, and also to restrain the defendant from diverting and continuing to divert the same, and from using the ice from said pond for commercial purposes.

These facts raise but a single question of law. It is undoubtedly true that each riparian owner has the right to a reasonable and proper use of the water of a natural stream. Strobel v. Kerr Salt Co., 164 N. Y. 303, 58 N. E. 142, 51 L. R. A. 687, 79 Am. St. Rep. 643; Pierson v. Speyer, 178 N. Y. 270, 70 N. E. 799. I think, however, that each action_must be governed very largely by the facts of the particular case. Townsend v. Bell, 167 N. Y. 462, 60 N. E. 757. An adjoining riparian owner has a right to use water from the creek for farming and domestic purposes, and, probably, where the volume taken is not very considerable, he has the right to lead the water from that creek to his own premises for personal use in irrigation, building fish ponds, and for certain ornamental uses and purposes. One riparian owner has no right to divert the stream, and lessen the volume of water, to the detriment, annoyance, or future disadvantage or injury of the adjoining riparian owner. This proposition is carefully dis

and 127 New York State Reporter

cussed in the authorities cited, supra. It must be conceded that where there is no diversion of water from the stream, and the upper riparian owner has erected a mill dam or pond wholly upon his own land, not unnecessarily and unlawfully depriving the lower owner of his right to the use of the water, the upper owner may then use the ice upon the pond for any purpose to which he desires to devote it. That question seems to be well settled in several authorities in the lower courts of this state. State v. Pottmeyer, 33 Ind. 402, 5 Am. Rep. 224; Myer v. Whitaker, 55 How. Prac. 376; Dodge v. Berry, 26 Hun, 246; De Baun v. Bean, 29 Hun, 236; Hazleton v. Webster, 20 App. Div. 177, 46 N. Y. Supp. 922; Swan v. Goff, 39 App. Div. 95, 56 N. Y. Supp. 690. These decisions, however, are based upon the superior rights of the upper owner upon the stream, as owner of the soil. The lower riparian owner then takes his right to the use of the remainder subject to the lawful uses and conveniences of the other in the use of the stream.

The question now arises whether the defendant has an absolute right to divert any portion of this stream by constructing a new waterway or dike upon his own land, leading the water from the creek to a place opposite the land of the plaintiff, and there using that water in part for commercial purposes; thus enabling him to supply the inhabitants of the village of Andes with ice. These facts seem to be substantially admitted, and are entirely undisputed, upon the evidence in the case. Since its original construction, the defendant admits that the dan has been raised 18 inches, flooding a larger area of land, solely for the purpose of enabling him to take more ice from the pond for commercial purposes. It was admitted upon the trial that an eighth of an acre of land is amply sufficient for the defendant's private, farm, and domestic purposes. Is there any difference, in principle whether the stream is diverted and placed in a reservoir, and thence led in pipes to supply the inhabitants of the village of Andes with water? In either case there is a diversion of the stream. In the case at bar the water in the pond is left to congeal, and then, in that form, is transported to the inhabitants of the village.

I think the case of Penrhyn Slate Co. v. Granville El. L. & P. Co., 84 App. Div. 92, 82 N. Y. Supp. 547, demonstrates clearly that in principle there is no difference. It is there held:

“A riparian owner of land bordering on the stream has no right, as such, to divert a portion of the water of a stream and sell it to a village for the purpose of its municipal water supply."

It is also there held:

"If he does, a lower riparian owner is entitled to injunctive relief, although the percentage of the stream diverted is so small that the injury inflicted upon the lower riparian owner is very slight."

Following Strobel v. Kerr Salt Co., page 323 of 164 N. Y., page 148 of 58 N. E. (51 L. R. A. 687, 79 Am. St. Rep. 643).

The plaintiff is entitled to injunctive relief even though the damages are nominal. Amsterdam Knitting Co. v. Dean, 162 N. Y. 278, 56 N. E. 757. This is based upon the theory that to permit the diversion of the creek and the encroachment upon the plaintiff's rights might,

by acquiescence, ripen into the use of the whole stream for commercial purposes. See Western U. Tel. Co. v. Syracuse El. L. & P. Co., 178 N. Y. 338, 70 N. E. 866; Penrhyn Slate Co. v. Granville Co., supra. There is ample evidence in this case to show that at any time in low water, with the present construction of the outlet from said creek, the whole of the stream can be diverted and carried into the defendant's pond; and, if the season were an unusually dry one, continuing until winter comes, the defendant might monopolize and use the whole stream, to the injury and disadvantage of the plaintiff. This misfortune ought to be prevented if possible. The plaintiff is entitled to the natural flow of the water of said stream at all times, within the limits suggested, and he should not be deprived of those rights; nor should he be made to take the hazard of permitting the diversion of the stream to ripen into an acquired and permanent right. The plaintiff must therefore have a judgment restraining the defendant from diverting and using said stream, or permitting the same to be diverted and used, for commercial purposes, with damages against the defendant, which are hereby assessed at $100, besides the costs and disbursements of this action.

Judgment is ordered accordingly.

(103 App. Div. 282.)

CONTINENTAL INS. CO. et al. v. NEW YORK & H. R. CO. et al. (Supreme Court, Appellate Division, First Department. April 7, 1905.) 1. CORPORATIONS-CONTRACTS-RATIFICATION BY STOCKHOLDERS-RIGHTS

MINORITY.

OF

Where a contract between two corporations, made by the directors, several of whom were common to both corporations, was ratified by a majority of the stockholders of each, it could not, in the absence of any proof that it was calculated to defraud the minority stockholders, be set aside at their suit.

2. SAME-VOIDABLE CONTRACT-RESCISSION.

A voidable contract made by a corporation cannot be rescinded by a minority of the stockholders.

Appeal from Judgment on Report of Referee.

Action by the Continental Insurance Company and others against the New York & Harlem Railroad Company and another. From a judgment for defendants, plaintiffs appeal. Affirmed.

Argued before VAN BRUNT, P. J., and McLAUGHLIN, INGRAHAM, and LAUGHLIN, JJ.

John G. Milburn, for appellants.

William B. Hornblower, for respondents.

INGRAHAM, J. This action was originally brought by the Continental Insurance Company, as a stockholder of the New York & Harlem Railroad Company, on behalf of itself and all other stockholders of the Harlem Company similarly situated. Subsequently, by orders of the court, other stockholders of the Harlem Company were de parties plaintiff, so that at the time of the trial the plaintiffs were

and 127 New York State Reporter

the owners of 10,150 shares of the stock of the Harlem Company. The total stock of the Harlem Company is $10,000,000, divided into 200,000 shares; the plaintiffs representing a little over one-twentieth of the stock of the company. The action was brought to have declared null and void an agreement made between the New York & Harlem Railroad Company and the New York Central & Hudson River Railroad Company; the plaintiffs, as stockholders, seeking to enforce a cause of action vested in the corporation; the directors, after a request by the plaintiffs, having refused to commence this action.

To entitle the plaintiffs to any relief in this action, they were required to show that a cause of action existed in favor of the New York & Harlem Railroad Company to set aside the agreement, and to have it declared null and void. There is no claim that this agreement was ultra vires of the corporation. The claim of the plaintiffs seems to be based upon the fact that a majority of the directors of the Harlem Company were also directors of the Central Company, and that this agreement should be declared void because of the fact that a majority of the directors of each of the contracting companies were directors of both companies. It is not alleged that the Harlem Company, either by its directors or by a majority of its stockholders, has elected to rescind this agreement; but the plaintiffs, owning about one-twentieth of the stock of the Harlem Company, have elected to rescind the contract; the other nineteen-twentieths of the stockholders of the company having refused or failed to join with the plaintiffs in their attack upon this agreement, and having accepted its advantages by the receipt of dividends paid by the Central Company to the stockholders of the Harlem Company under its provisions.

The complaint contains allegations tending to show bad faith on the part of the directors in both corporations. It is sufficient to say that all of these charges, so far as they reflect upon the integrity of any of these gentlemen, were not only not sustained by a particle of evidence offered on behalf of the plaintiffs, but that the evidence disproved all of these allegations. Each of these gentlemen, with one exception, was interested more largely in the Harlem Company than in the Central Company, and would have profited individually to a much greater extent if the contention of the plaintiffs could be sustained. The case was tried by a referee who for many years has occupied a very distinguished position in the judiciary of this state, and he has rendered an extremely able opinion, in determining that the plaintiffs had no cause of action; and it would not be necessary for us to say anything further in disposing of this appeal than was said by him, but that we prefer to place our judgment upon the binding effect on the minority stockholders of the action of a majority of the stockholders approving the agreement that was made, and directing the directors and officers of the corporation to execute it on its behalf. To present this question, it is necessary to state the relations that existed between these two corporations and the precise question that was presented to them when this agreement was approved by the stockholders of the two companies: The Harlem Company was organized to operate a steam railroad in the state of New York, and the Central Company was organized to operate a railroad between New York and Buffaio, in the state of New

York. Prior to the year 1873 these two companies were operating their several lines of railroad, and on April 1st of that year there was executed and delivered an agreement, a copy of which is annexed to the complaint, by which the Harlem Company leased to the Central Company its railroad, extending from Forty-Second street, in the city of New York, to Chatham Four Corners, a distance of about 130 miles, for a period of 401 years from the 1st of April, 1873; the Central Company to pay as rent for the demised premises $2 upon each share of the capital stock of the Harlem Company on the 1st day of July and the 1st day of January in each year (the said amount being equal to 8 per cent. per annum on the par value of the said capital stock); to pay the interest on the bonds of the Harlem Company that were described in a schedule annexed to the lease, as such interest should from time to time become due and payable; and to pay the rent agreed to be paid by the Harlem Company to a railroad called the New York & Mahopac Railroad Company, according to the terms and conditions of the lease of that road to the Harlem Company; and to pay all taxes, charges, and assessments that might be imposed or assessed in any way on said railroad, branch, or property, or any part thereof. This lease also contained a provision that the authorized capital stock of the company was $10,000,000, and no more, consisting of 200,000 shares, of the par value of $50 per share; and the Harlem Company covenanted that the schedule annexed to the lease contained a full and correct statement of its outstanding bonds, and, as some of those bonds had not been issued, it was agreed that the unissued bonds should be delivered to the Central Company, to be disposed of by it as provided for in the agreement; the agreement to pay interest on these bonds to apply to the bonds then unissued, and which would be delivered to the Central Company. The lease also contained a covenant on behalf of the Harlem Company that it would not, during the continuance of the contract, "authorize, create or issue any stock or bonds addi- • tional to the amounts thereof respectively now authorized or outstanding, as hereinbefore stated, except at the request or upon the demand of the said party of the second part, as hereinafter set forth." The Central Company also agreed to pay the principal of all the bonds described in Schedule A, other than the bonds therein described as "Consolidated Mortgage, due May 1, 1900," as they shall respectively mature and be presented for payment

"And that it will, at the maturity thereof, pay the principal of the said 'Consolidated Mortgage' bonds if, and in case, it should not be paid by the party of the first part [Harlem Company]. In case of the payment thereof, or of some or any part thereof by the said party of the first part, then, and in that event, the said Party of the second part [Central Company] shall, thereafter, pay to the said party of the first part, semiannually, on the days when interest would become due and payable on said bonds, if the time thereof had been extended, an amount equal to such interest on said bonds, or on such part of them as may have been paid by the said party of the first part, so as fairly to adjust the obligation of the said party of the second part, herein contained, as to the annual rent on the said railroad and property herein demised. In case, however, the said 'Consolidated Mortgage' bonds shall be paid by the said party of the second part, the said party of the first part agrees that it will, whenever requested by the said party of the second part so to do, issue in lieu thereof new bonds bearing a similar rate of in