Ed. H. Zurhorst. In October, 1892, Zurhorst bought the property so held by him for the use of the Sandusky & Columbus Short-Line Railway Company, then in course of construction. He advanced the entire purchase money, and took the title to himself for his indemnification. A part of the price so advanced has been repaid, but he claims, and the circuit court so found, that there is still due him $5,379.90, with interest. This sum Zurhorst borrowed from the appellee the Second National Bank of Sandusky, and executed his individual note therefor. This note was renewed from time to time until July, 1893, when a note made by the Lake Erie Construction Company, for whom Zurhorst had acted in acquiring this property, indorsed by Zurhorst, was substituted. This latter note was renewed in October, 1893, by a like note made by said Construction Company, and indorsed by Zurhorst. In December, 1893, Zurhorst, to secure this note, executed a mortgage upon the property so standing in his name. The property so bought by Zurhorst was at once taken possession of by the said Sandusky & Columbus Short-Line Railway Company, and has ever since been included in the yards of that company, and its successors, in the ownership of said railroad. It was included in the mortgages made by the said Short-Line Railway Company, which was foreclosed in the common pleas foreclosure suit heretofore set out, and was also included in the two mortgages subsequently made by the defendant the Railroad Company. The master reported that there was still due Zurhorst $5,379.90, with interest, for purchase money advanced by him, and that the property was, in equity, subject to a prior lien for his reimbursement, and that the mortgage made by Zurhorst to secure the note of the Construction Company indorsed by Zurhorst operated as an equitable assignment to the bank of the equitable lien of Zurhorst. This report was confirmed, and the decree below provided for the payment of this liability as a prior lien. From this decree the two trust companies, as mortgagees of the Railroad Company, have appealed.

Zurhorst's claim must stand or fall upon the equities existing between himself and the old Short-Line Railway Company. All who subsequently acquired interests did so subject to constructive notice that the legal title to this particular part of the Sandusky terminal property was in him, and therefore charged with his equitable rights, whatever they might be. Appellants concede that Zurhorst had a lien for his protection for advances of purchase money made by him, but they say that the last of such advance was the money borrowed from the Second National Bank, and for which that bank held his individual note, and that, when that bank accepted, in place of his note, the note of the Construction Company, the debt of the Construction Company to Zurhorst for purchase money advanced by him for it was paid; that the effect of the arrangement was to pay to the bank Zurhorst's debt to it, and at the same time to extinguish the obligation of the Construction Company to Zurhorst. This Construction Company was a corporation organized for the single purpose of constructing the Sandusky & Columbus Short-Line Railroad. Its contract was to acquire all necessary rights of way

and terminals, and to construct its railroad. For this service it was to be paid in the mortgage bonds and stock of the Railway Company. The Construction Company, though a separate legal entity, was in fact but the alter ego of the Railway Company. It had no capital. Its officers and directors were officers, directors, and clerks of the Railway Company. Both companies were under a substantially common management and control, and the only purpose of its organization was to better enable the Railway Company to dispose of its stock and mortgage bonds. Zurhorst was a director and the secretary of the Railway Company. He was also the agent of the Construction Company for the procurement of rights of way and terminal property, which the Construction Company undertook to procure for the Railway Company. The substitution of the note of the Construction Company, indorsed by Zurhorst, for the individual note of Zurhorst, was never intended or regarded by the Construction Company or the bank as the payment of either the obligation of Zurhorst to the bank or of the Construction Company to Zurhorst. The liability of Zurhorst was continued. Its form was changed so that he appeared to be only liable secondarily. But this change in the form of the obligation was done to reduce his apparent liability as maker, so as to comply with the law, which prohibited a national bank from lending to one person a greater sum than 10 per cent. of its capital. Zurhorst, at the date of this substitution, appeared to be indebted in a sum in excess of 10 per cent. of the bank's capital. All parties understood the purpose of the arrangement, and any presumption of payment is rebutted by the facts and circumstances of the case.

But it is said that Zurhorst is estopped to assert his lien against the old Short-Line Railway Company. The facts which are relied upon to constitute an estoppel are substantially these. Shortly after the note of the Construction Company had been given to the bank, the Construction Company rendered to the Railway Company a statement purporting to be payments made by it subsequent to April 10, 1893, for "surplus real estate" turned over to the Railway Company, which aggregated $20,817.26. One of the items in the detailed statement was in these words:

"For yards and terminals at Columbus S. & C. Junction at Sandusky, Ohio, as per deed from E. H. Zurhorst to the Sandusky & Columbus ShortLine Railway Company, dated

3,246.27

5,379.90

8,626.17"

This statement was received, and a resolution adopted by the railway directors approving same, and directing that bonds and stocks be turned over to the Construction Company in settlement of the estimate. Zurhorst was present, and, as a director, voted for this resolution, and, as secretary, spread it upon the minutes. It is now said that Zurhorst should have then asserted that he had not been paid his advances, and had not made a deed, and thus prevented the company from making a settlement with the Construction Company, based upon its claim to have paid Zurhorst for said

property and its conveyance to the Railway Company. Ordinarily, such a state of facts would operate as an estoppel. Zurhorst says he did not know that the estimate submitted by the Construction Company included any such item; that a number of estimates had been submitted, and all had been approved by the company's engineer, and that he made no special inquiry. This defense of ignorance involves a confession of negligence in respect to his duties as director which would hardly absolve him, if, through his negli gence, some real injury had come upon his corporation. But the master reports that nobody was misled by the estimate of the Construction Company or the silence of Zurhorst. The actual facts were at the time known to more than one of the directors present, including Col. F. J. Picard, vice president and general manager of the Railway Company. The truth is that the identity of the two corporations was so close, and they had so many common officials, that it is impossible to conceive how the Railway Company was misled, deceived, or injured by Zurhorst's silence, or by the payment of bonds made to the Construction Company upon their estimate. In the same bundle of papers was another exhibit, which showed that no deed had been made, and that Zurhorst had not been paid.

Under all the facts and circumstances the master was justified in his finding that the Railway Company was not ignorant of the real facts, and was not misled or deceived by the estimate of the Construction Company or silence of Zurhorst. The party relying upon silence as an estoppel must have been ignorant of the truth, and actually misled to his injury, before he can complain. To constitute an estoppel in pais, there must be shown some admission or conduct intended to influence the conduct or action of another, and which actually led him into a course prejudicial to his interests. If the Railway Company knew that Zurhorst had not been repaid his advances, and that the legal title still stood in him, it cannot say that Zurhorst's silence misled it into a line of conduct whereby it suffered a loss which would otherwise have been avoided. Neither is there evidence that any loss or injury actually occurred by the bond payment made on that estimate. The proceeds of those bonds appear to have been devoted to the use of the Railway Company in other matters, and so no loss resulted.

There seems to be a plain error in the matter of interest on this claim. Zurhorst's Exhibit F plainly shows that the discounts which he had paid upon his bank note up to October 1, 1893, form a part of this account there rendered, all of which he has received, save the amount due on his bank note. The decree will be modified so as to allow interest only from October 1, 1893. It was error to hold that Zurhorst's lien extended to the terminal property acquired from Frick. The decree will be corrected so as to confine the lien to 9.96 acres acquired from Marshall. The Second National Bank did not appeal. We cannot, therefore, consider the alleged error in respect to stopping interest on December 13, 1898. The bank must be regarded as acquiescing.

The costs of appeal in No. 907 will be paid by the appellant the Mercantile Trust Company.

On Petitions for Rehearing.

(July 2, 1901.)

1. John G. Carlisle and those associated with him as holders of general mortgage bonds complain because the court has not, in its opinion, specifically dealt with alleged diversions of prior lien bonds, and have affirmed the decree of the circuit court holding that the entire issue of $2,000,000 of prior lien bonds had been negotiated for value to a large number of persons, who are now the lawful holders of same for value. The decree in that respect was based upon the report of the special master. In the opinion heretofore filed we dealt very fully with the general claim made in behalf of general mortgage bondholders that the reorganization scheme or agreement should be rescinded, and the original mortgagees reinstated in their rights under mortgages made by predecessor companies. We need not repeat what we then said in respect to the general validity of the prior lien mortgage. It is enough to say that we upheld that mortgage as a prior lien. The complaint now is that particular bonds secured by that mortgage may be held by persons who took them with knowledge that the railroad company was issuing them in violation of the reorganization agreement, and to the injury of general mortgage bondholders, who were interested in having them applied in clearing away liens prior to both mortgages, according to the provisions of the reorganization agreement. The presumption exists that all these prior lien bonds are in the hands of purchasers for value without notice of any violation of the reorganization agreement. The burden of proof was upon those who desire to defeat the lien of any particular bond. Murray v. Lardner, 2 Wall. 110, 17 L. Ed. 857. The master reported that all of said bonds had been regularly and lawfully issued, and were in the hands of bona fide holders. The petition for rehearing complains of this finding and report, and points out certain bonds as bonds issued for purposes not contemplated by the reorganization agreement, and refers us to certain portions of the evidence heard by the master bearing upon this subject. It may be that, if the general mortgagees had acted with some vigilance, they might have prevented certain alleged diversions to their detriment. Instead of actively endeavoring to compel the railroad company to use the prior lien bonds for the purposes indicated by the reorganization agreement, the general mortgagees seem to have lain dormant. Indeed, we pointed out in our original opinion that they themselves had received such bonds in payment of interest upon their general mortgage bonds, and hence must have been aware that the railroad company was not strictly using the prior lien bonds as the reorganization agreement contemplated. The findings of fact by a master are supported by a strong presumption of correctness, and will not be set aside or modified in the absence of clear evidence of mistake or error. Camden v. Stuart, 144 U. S. 104, 12 Sup. Ct. 585, 36 L. Ed. 363; Lake Erie & W. R. Co. v. City of Fremont, 34 C. C. A. 625, 92 Fed. 721. The only exceptions to the report of the special master bearing upon the question as to the bona fide holding of the issue of prior lien bonds, interposed by Carlisle and others, are the tenth and twenty-second exceptions, which are in these words:

"(10) They also except to so much of said report as finds the fact to be that there has been no diversion of prior lien bonds, and say that the evidence before the master shows the contrary to be true, viz.: The statement of application of prior lien bonds furnished by George W. Sinks, trustee, dated August 1, 1898."

"(22) They also except to so much of said master's report as finds as matter of fact that the entire issue of the Mercantile Trust Company bonds has been duly made for the principal sum of $2,000,000, and that they have been duly delivered, and that there is no opposing evidence, and say that the evidence before the master shows the contrary to be true, viz.: The statement of George W. Sinks, trustee, dated August 1, 1898."

These exceptions do not point out any particular bonds which have been "diverted," or which are not now held by purchasers for value without notice. The exceptions are vague, general, and insufficient under the rules of practice, and are insufficient to support the errors assigned thereon. Exceptions to a master's report must point out specifically the errors upon which the party relies. The object of such definiteness is to give the master an opportunity to see wherein his report is subject to objection, and to apprise the opposite party of just what he has to meet. Railway Co. v. Gordon, 151 U. S. 285, 14 Sup. Ct. 343, 38 L. Ed. 164. The exceptions, if good for any purpose, would operate as a denial of the right of each holder of prior lien bonds to share in the security of the prior mortgage, and require the court to hear the whole case upon all the facts affecting each bond and its present holder. The exceptions are manifestly insufficient to raise any question against any particular bondholder.

2. Attention is called to the fact that certain prior lien bonds were placed by the railroad company in the hands of George W. Sinks, as trustee, to be used in paying certain debts mentioned in the agreement under which the bonds were so placed, and that one term of that agreement was that the coupons on such bonds, maturing before the bonds should be disposed of for the purpose of the trust, should be cut off, canceled, and delivered to the railroad company. It does not sufficiently appear how far Sinks has complied with this agreement, nor how far he still holds bonds under said trust. The decree will be modified, so far as it provides for interest upon bonds held by said Sinks as trustee under said agreement, and the matter is remitted to the circuit court, with direction to ascertain what bonds are held by said Sinks under said agreement, and to deal with the matter according to justice and right.

3. The petition of G. W. Sinks, trustee, presents no new question, and the application to rehear is denied.

4. The petition of Carlisle and others for a rehearing is denied. The decree will, however, be modified as above indicated.