x999-1" type="majority"> Boyd, C. J.,

delivered the opinion of the Court.

In the case of Conowingo Land Company v. McGaw, 124 Md. 643, we reversed the judgment and awarded a new trial. When that case was about to be reached for retrial the appellee filed a bill in equity against McGaw and the Conowingo Land Company in which he alleged that he was the owner of 400 shares of the capital stock of that company and prayed, amongst other things, that McGaw be required to deliver up the evidences of debt claimed by him which were involved in the case in 124 Maryland; that they be declared to have been invalidly, illegally and fraudulently issued and void; that said McGaw be enjoined from asserting any right or claim to the said evidences of debt and to the sums of money mentioned therein, and from prosecuting his said claim against the Conowingo Company. It was further prayed that the Conowingo Company be enjoined from paying said evidences of debt or any sum or sums of money thereunder, and there was a prayer for general relief. A preliminary injunction was issued, separate answers of the defendants filed and testimony taken. A decree was passed making the injunction permanent and enjoining McGaw from further prosecution of the action referred to or from instituting any other action or proceeding on the “due bills” or “certificates of indebtedness” mentioned. It further ordered McGaw to cancel said due bills, or cause them to be cancelled, and to pay the costs. From that decree this appeal was taken.

The most important questions for our decision are: (a) Were the certificates of indebtedness legally and validly issued *674 by the Oonowingo Company; and (b) if they were not, was the plaintiff entitled to relief in a court of equity? Other questions were argued, but those are the most material ones.

(a) The form of the certificate is set out in full in 124 Maryland, and we will not copy it in this opinion. Mr. McGaw had two certificates for $5,000 each and one for $3,150. Certificates were issued to James H. Harlow for the same amounts. What we said in the opinion in 124 Md. is sufficient to show that we were of opinion that there was, nothing in the form of the certificates which would necessarily affect their validity, but it is strange that the president of the company was not called upon to sign them, as the treasurer who did sign them was an interested party. But inasmuch as the directors had unanimously authorized them to be issued, at a meeting over which the president presided, it may be that they were executed in the form they were for convenience, and not for the purpose of withholding from him knowledge that they were issued. After a careful examination of the evidence and the law applicable thereto-, we are of opinion that there was no consideration for them, and that the- directors had no power to pay Messrs. McGaw and Harlow the amounts they represented. Mr. Caldwell held the title to what was spoken of as the Bell property. He purchased it for $50,000, $25,000 of which were paid in cash and the remainder secured by mortgage. Mr. McGaw and Mr. Harlow each contributed $13,150, which was used in making the cash payment and some other payments in connection with the purchase. They had an arrangement with him by which he was to have an interest in the profits or the proceeds of sale to- be made by him and, without now referring to the evidence of Messrs. Harlow and Caldwell on that subject, we will quote from that of Mr. McGaw which in part was as follows: “5Q. What was the purpose of the incorporation of the Conowingo Land Company? A. The purpose was to define the three interests to Mr. Harlow, Mr. Caldwell -and myself. We had agreed to give Mr. Caldwell one-third of the profits above the cost of the property, and *675 the corporation was formed and the stock issued in order that he might definitely confine his interests above the cost of the property * * * 6Q. It has been suggested that the stock issued represented the total value of the land free from the debt to yon and Harlow. Please state what the fact was about that? (Mr. Robinson) : I object. (The Witness): it did not. It was done more especially to' define and to give Mr. Caldwell his interest above the cost that we had promised him for his various services.”

The Oonowingo Land Company was organized to take over that property. It had an authorized capital stock of $60,000, divided into COO shares of $100 each. After it was organized nine shares of stock were subscribed—three by Mr. McGaw, three by Mr. Harlow and three by Mr. Caldwell. A share was given by Hr. Harlow to his brother, George R. Harlow, and one by Mr. Caldwell to his brother, S. J’. Caldwell, for the purposes of the organization. Those five were named as directors. On April 17, 1902, Charles C. Caldwell submitted to the stockholders of the Oonowingo Land Company the following proposition:

“I, Charles C. Caldwell, hereby submit a proposition to subscribe for 59.1 shares of the capital stock of the par value of $100 each of the Conowingo Land Company of Cecil County, and in payment therefor, it is proposed to sell, transfer and convey to said company all my right, title, interest and claim of, in and to the tracts of land located on the east hank of the Susquehanna River in the 8th District of Cecil County, as conveyed to me by deed from Philip T. Bell and others representing the estate of James C. Bell, deceased, by their deed dated the 10th day of July, 1900, and duly recorded in the Land Records of Cecil County and upon the delivery of a deed by me to your company for said property, your company is to assume and pay the purchase money mortgage of $25,000 made and given by me in part payment for said land and property to the estate of the said James O. Bell, *676 deceased, and is also to issue and deliver to me the said 591 shares of the capital stock of your company of the par value of $100 each, all of which is respectfully submitted.

“(Signed) Charles C. Caldwell.”

That was accepted by the stockholders, and later on the same day Charles O. Caldwell, George K. McGaw, S. J. Oaldwell and James H. Harlow, who were four of the five directors, met and organized by electing Charles C. Caldwell president, James H. Harlow secretary, and George K. McGaw treasurer. At that meeting the secretary read the resolutions of the stockholders passed relative to the purhase by the company from Charles C. Caldwell of the property recently acquired by him from the estate of James O. Bell and the subscription thereby made by him to the capital stock of the company. It was resolved that the proper officers of the company be directed to cany out the instructions as provided for in the resolutions adopted at the meeting of the stockholders, and, after providing for the procuring of a corporate seal, stock certificates and necessary books and stationery, the minutes of the meeting concluded as follows:

“On motion, it was unanimously resolved that the officers be, and they are hereby authorized and directed to issue due bills of this company for cash advances with interest, namely: A due bill to George K. Mc-Gaw for $13,150.00, and a due bill to James H. Harlow for a like amount of $13,150.00, and that said due bills shall bear interest from the first day of April, 1902, at the rate of 6% per annum until paid by the company, the same having been part of the purchase money paid the said Bells for the real estate.”

A certificate of stock was issued to Oaldwell for 591 shares, which was returned and three certificates for 197 shares each were issued to Messrs. McGaw, Harlow and Oaldwell, which, together with .the -shares already held or controlled by each of them, made 200 shares for each—thus including the whole of the capital stock of the company. Sections 61 and 62 of *677 Article 23 of the Code of 1888 were still in force when the subscription of Caldwell was made and accepted for the 591 shares, as they continued to be for some years afterwards. The transactions were therefore governed by them and other provisions of the statute then applicable to subscriptions of ihe capital stock of corporations payable in land or other property.

.By Section 61 subscriptions to capital stock of a corporation were authorized to be made in land or other property at a valuation to he agreed upon between the corporation and the subscriber, when the property was such as it was proper that the corporation should own, but- not unless previously authorized "by the stockholders, assembled in general meeting pursuant to a call to consider the propriety of receiving the subscription and of fixing the terms. By Section 62, when property of any kind was so received in payment of stock, it was provided that “the books of the company shall he so kept as to show at all times fully what property was received for the said stock, at what value and the number of shares of the capital stock issued for the same; in all other cases money only shall be considered as payment of a subscription to any part of the capital stock.” Then by Section 65 the president and a majority of the trustees, directors or managers of such corporation were required to make a certificate, within thirty days after the payment of the last instalment of stock limited in the certificate of incorporation, stating the amount of the capital stock so fixed and paid in, and of all property received in payment for any of said subscriptions, and the extent to which said payments have been made in property, which certificates were required to he sworn to by the president and filed with the clerk of the court in which the certificate of incorporation was recorded.

It is therefore clear that'the stockholders, and not the directors, were required to act in such matters. There is no suggestion in the proposition submitted by Caldwell and accepted by the stockholders of a proposed payment by the company of any sum of money, except the $25,000 secured *678 by the mortgage, subject to which the land was conveyed. The 591 shares of the capital stock were to be in full payment o-f the property, subject to- the mortgage. That was required to be made a matter of record on the books of the company, so .as to show what the corporation received and what it gave in the transaction. In this case it gave $59,100 in the par value of stock for property which was subject to a $25,000 mortgage, but was not subject to the mortgage plus $26,300 of indebtedness. The directors had no- power to add such a burden on the company in that transaction. It would have opened the- door to- the grossest fraud, if that had been permitted by the statute. Anyone desiring to- buy stock of a company which had issued any of its stock for property would, under the statute, look to the minutes of the proceedings of the stockholders, and not to those o-f the directors, to ascertain what was done. The property was paid for by the stock, but if the theory of the appellant be correct, then any person who subscribed for stock to be paid for in property could not only have gotten stock, represented to be fully paid, but he could have been repaid all that the property had cost him. In short, he would have gotten his money back in cash, and then got the stock for nothing, if the property was not worth more than it had cost him. The law as found in those sections has been very materially changed, but it never contemplated such results as those we have suggested.

Mr. McGaw said that the plan was adopted so that Caldwell would get what he was entitled to-—one-third of the profits out of the land. That was a matter between Caldwell of the one part and McGaw and Harlow of the other part, and not between the company and. them. If the understanding was that they were first to be paid what they had paid out on the property, it could easily have been arranged. It could have been provided in the subscription that the company was to pay the amount or give a mortgage for it in addition to the stock, or they could have agreed with Caldwell that $26,300 worth of stock, or such amount- as would have- been proper and fair, should be first given to them, and the bal *679 ¡mee divided into three parts. According to the terms of the subscription, the property was to cost the company $59,100 plus the $25,000 mortgage, and that is what parties dealing with the company or in its stock had the right to. believe it did cost, but according to the appellant it cost $26,300 more. Such a transaction would be directly contrary to the letter and spirit of the statute.

Lt was suggested that the stockholders and the directors were the same parties, and hence it could make no real difference, but as we have shown when they acted in one capacity, as stockholders, they were authorized to do what they could not do when acting in the other, as directors, and the same protection is not afforded the public in the one ease as in the other. Moreover, the stock was liable to be sold, as it subsequently was sold, but there was nothing in the books of the company to suggest that there was such an indebtedness as this, excepting the resolution of the directors authorizing the giving of “due hills” and some later action by them providing for giving a second mortgage. We feel constrained, therefore, to answer the first question in the negative, and to bold that the certificates of indebtedness were not legally issued and the directors’ action was ultra vires.

(b) While the 400 shares of stock of the Conowingo Land Company stand in the name of Mr. Hoen, the appellee, he was representing the general mortgage bondholders, of the Susquehanna Power Company. He became the purchaser on the 21st of February, 1913, from trustees appointed by a decree of the Circuit Court for Harford County to sell the properties, rights, etc., of that company, which had acquired the 400 shares of stock formerly held by Messrs. McGaw and Harlow through several transfers. Messrs. McGaw and Harlow had sold those shares in 1905 to the Susquehanna Contracting Company. They and M. H. Houseman had by an agreement dated tbe 27th of April, 1905, agreed to sell and transfer to Harvey Fisk & Sons, bankers, or their nominee or nominees, a great many properties, rights, franchises, etc., in and along the Susquehanna River, also the capital stock of *680 several corporations, including two-thirds of the issued capital stock of the Conowingo Land Co. These properties, etc., had been acquired and were held by Messrs. McGaw and Harlow and their associates for the purpose of operating a hydro-electric development. Houseman had no interest in the Conowingo stock, but it belonged to McGaw and Harlow. That agreement was assigned to the Susquehanna Contracting Company, and another agreement was entered into on June 15, 1905, between Messrs. McGaw, Harlow and Houseman, called “vendors,” of the first part, and the Susquehanna Contracting Co., called “purchaser,” of the second part, for the sale and purchase of the properties, etc., to and by that company, and it is under that agreement the sale was consummated. Paragraph 3 of that agreement is as follows:

“(3) That the conveyances and transfers now being made by vendors or any of them cover and transfer to purchasers all the property interests in or in respect to lands or water rights or corporate stock or interests or other rights useful or valuable in the development of the water power of the Susquehanna River between Columbia and Havre de Grace, or which might be prejudicial thereto, if not transferred, which the vendors or any of them or their associates now own or control.”

The appellee contends that by that paragraph the 400 shares of stock and also the evidences of debt were sold by Messrs. McGaw and Harlow to the Susquehanna Contracting Company, but without deeming it necessary to determine whether it so clearly embraced the evidences of debt in question as in terms to include them in the sale, it can not be doubted that Messrs. McGaw and Harlow were in equity and justice under obligation to make known to- the purchaser the fact that they held such certificates and claimed to be entitled to be paid for them. The land held by the Conowingo Land Company bordered on the Susquehanna River, and was very valuable for the development scheme, and that was the only property that company owned.

*681 Although the appellee only became the purchaser of the stock on February 24, 1913, the mortgage which was given to .secure the bonds held by the bondholders whom appellant represented was executed some time before that, apparently on the 1st day of November, 1906, so far as we can tell from the record; certainly before the suit at law was brought by McGaw against the Conowingo Company, although we do not deem that very material, for even if that company had known of them before it gave the mortgage that would not preclude ¡he bondholders from relief if the certificates of indebtedness are invalid, as we have already said they are. Owing to the number of transactions, the different companies having- interets along the Susquehanna Fiver and the abbreviated record, it is somewhat difficult to ascertain accurately the dates and facts of some of the dealings, but apparently the McCalls Ferry Power Company at one time owned these four hundred share's of stock. Mr. Caldwell so testified, and on November 5, 1906, lie wrote a letter to the president and directors of that company protesting against the payment of the cerl ideates of indebtedness to McGaw or to Harlow, or to any person claiming to be the owner, holder or transferee of them, and denied that they were lawfully authorized or properly issued. The McCall’s Ferry Power Company and the Susquehanna Power Company had considerable litigation, <uid finally entered into an agreement settling their differences and the latter company became the owner of the 400 shares, although wo do not find the precise date on which it became the owner. As will be seen by reference to the. case in 124 Maryland, the certificates of indebtedness are payable to bearer, and that is doubtless the reason that the protest included anyone claiming lo be the owner, holder or transferee. The rights to properties, etc., along the- Susquehanna Fiver were apparently in considerable confusion, and the circumstances in connection with these certificates of indebtedness were such that a court of equity could better pass on them than could he done in a court of law. As we have determined that they were not validly issued, a comí of equity is *682 undoubtedly the proper forum in which to ask to have them cancelled. The bondholders of the Susquehanna Power Company, who purchased the properties, stocks, etc., through the appellee, are entitled to protection and could only obtain ample relief in a court of equity. In addition to that, the bill sought to enjoin the Conowingo Land Company from paying the certificates, and it was made a defendant. As the certificates are payable to> bearer, that might be the most effective way of reaching’ them. Then, as Mr. Caldwell was president when the directors authorized the certificates to- be issued, and was present when that was done and is still president, the appellee and those he represented might well have hesitated to permit him to have charge of the defense in a suit at law against the company for those certificates. Although the appellee is owner of the majority of the stock and might have controlled the election of officers when the time for an election arrived, in the meantime the law case might have been tried. For these and other reasons which might be given we are of the opinion that the appellee was entitled to relief in equity.

Explanation of the delay in asking the relief is shown by the fact that although the appellee purchased the properties, etc., for the bondholders in February, 1913, objections were filed to the sale, and were not disposed of until May, 1914, when the sale was ratified and confirmed. Pending the ratification of the sale, the suit reported in 124 Maryland was tried and a verdict rendered on April 2, 1914, upon which judgment was entered on June 13, 1914. An appeal was taken to this Court, and the judgment was reversed on the 13th of January, 1915, and a new trial was awarded. The bill in this case was filed May 25, 1915, when a new trial was about to be begun. So', without further prolonging this opinion by discussing other questions, we will affirm the decree.

■Decree affirmed, the appellant to pay the costs, above and below.

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