time the meeting aforesaid was held. The shares for each one paid for as agreed upon. trial court, however, found and held, and we The same proportion was also ordered to be think correctly so, that there were then no oth-issued to the others who had agreed to take er stockholders except the five incorporators, stock in the company when organized. The and that they all participated in the meeting. The evidence giving rise to the controversy just referred to is to the effect that several of the plaintiffs had, in advance, agreed to purchase stock when the corporation should be organized, and, in order to secure funds to pay the government price for the coal lands, had advanced money for that purpose. resolutions duly adopted after the corporation was organized the money advanced by those persons and that paid by the incorporators was duly credited to each one, and stock was issued to those who had agreed to purchase stock in case a corporation was incorporated at the rate of $3 in stock for every $1 paid by them, while to the incorporators, except Margaret Kay, stock was issued for the amount subscribed by each. The parties who had agreed to purchase stock, however, and who were not incorporators, were not recognized as stockholders nor considered as such by any one until after the corporation was organized and stock was issued to them, and the court held that they were not stockholders until then. After the corporation was organized resolutions were duly passed, authorizing the issuance of 1,500 shares of the capital stock of said company to the Dr. E. A. Edlen before mentioned, to pay for the coal lands located in his name, as hereinbefore stated, upon his conveying to the corporation said coal lands. The doctor conveyed said coal lands to the corporation, and a certificate for 1,500 shares was duly issued to him, but by an understanding between Anderson and Draney, Gosling, and Ryan the certificate was not delivered to Edlen, but the stock was apportioned as follows: 600 shares to Anderson and 300 shares each to Draney, Gosling, and Ryan. Anderson, however, ap-issued to them as hereinbefore stated. portioned the 600 shares by transferring to Dr. Edlen what, as between them, it was agreed was his just proportion; and Anderson also transferred some of the stock to others, which, however, is not material here. The agreements to purchase stock were also approved at the stockholders' meeting aforesaid, and stock was ordered issued accordingly. To Draney, Gosling, Ryan, Anderson, and Mrs. Kay, the incorporators, stock was issued in the amounts each had subscribed for in the articles of incorporation. In addition to that there was also authorized to be issued to Ryan a certificate for additional stock purchased by him amounting to $1,300, and to Ryan amounting to $900, making a total of $3,500, which had been paid and for which stock was issued up to that time. There was also authorized to be issued to Margaret Kay 50 shares in addition to the 25 shares which she had subscribed for in the articles of incorporation, which gave her 3

evidence thus shows that all those who had agreed to take stock in the company upon its organization received 3 shares for every 1 paid for by them, and that the 1,500 shares that were issued to Dr. Edlen for the additional lands which were by him conveyed to the company, but which in fact belonged to By Anderson, were divided among Anderson, Draney, Gosling, and Ryan, Anderson receiving 600 shares while the other three received 300 shares each, as before stated. The evidence further shows that all those who agreed to purchase stock before incorporation obtained 3 shares of stock for each one paid for by them, while at least some of those who purchased stock thereafter received only 2 shares for each one paid for. It was also made to appear that, although Anderson is one of the incorporators and had subscribed for 22 shares of stock, yet he did not pay therefor, and the same was issued to the person who did pay for it, and that all of the stock issued to Anderson was paid for by the conveyance of the coal lands to the company. The evidence was also conclusive that there was neither fraud, concealment, deception, nor misrepresentation on the part of either Draney, Gosling, or Ryan; that the coal lands conveyed to the company were worth all that the company paid therefor, and that the capital stock of the company is worth at least $100 a share; that Draney, Gosling, and Ryan organized the corporation, obtained credit for it, and whatever success has been attained is very largely, if not entirely, due to their efforts, and they have not, nor has either of them, received any property or anything of value for which they did not pay in full, except the 300 shares of stock that was

In view of the foregoing facts they contend that the 300 shares that were issued to each of them represented the $90,000 worth of stock mentioned in the original agreement between them and Anderson, and that the 600 shares issued to the latter represented the $60,000 worth of stock which by that agreement was to be held by Anderson. Upon the other hand, the plaintiffs contend that neither Anderson, Draney, Gosling, nor Ryan paid any consideration whatever for said 1,500 shares of stock; that the company received nothing therefor, and that it was wrongfully issued to them. The court, however, found and held that, in view that Anderson owned the coal lands which were conveyed to the company by Dr. Edlen, there was good consideration for the 600 shares issued to Anderson, and that those shares are valid and should not be canceled, but it also held and found that the 900 shares issued to Draney, Gosling, and Ryan, although based upon the

The record also shows that at the time of the trial the total number of shares that had been issued by the company was 2,165, of which number the plaintiffs owned 351; Draney, including the 300 shares, owned 336 shares; Gosling, including the 300 shares, owned 446 shares; and Ryan, including the 300 shares, owned 386 shares. The balance of the 2,165 outstanding shares, amounting to 646 shares, are owned by various other persons, including Anderson..

The findings of fact are very voluminous, and contain much evidentiary matter not essential to the findings of fact. In view, however, that the evidence which must control this decision is practically without conflict, no purpose could be subserved in setting forth the findings nor in making specific reference thereto, and hence we shall refrain from doing so. The only question for determination is whether the judgment canceling the 900 shares of stock, issued to Draney, Gosling, and Ryan as before stated, should prevail. The question, therefore, that controls this case is one of law.

same consideration, were, nevertheless, issu- [Y. 11, 94 N. E. 1088, 38 L. R. A. (N. S.) ed without consideration, and hence should 988, Ann. Cas. 1912D, 1098; City of Chibe canceled. cago v. Cameron, 120 Ill. 447, 11 N. E. 899; Hanna v. Lyon, 179 N. Y. 107, 71 N. E. 778; Harvey v. Meigs, 17 Cal. App. 353, 119 Pac. 941; Old Dominion Copper Mining & Smelting Co. v. Bigelow, 203 Mass. 159, 89 N. E. 193, 40 L. R. A. (N. S.) 314; and Just v. Idaho Canal, etc., Co., 16 Idaho, 639, 102 Pac. 381, 133 Am. St. Rep. 140. While counsel for both sides have each cited a number of additional cases, yet the foregoing sufficiently illustrate the propositions that both sides contend for. While much is said in the cases cited by counsel for the defendants which is commendable, yet there is likewise much said in the cases cited by counsel for plaintiffs that is most salutary doctrine. Upon the whole, we are of the opinion that the better reason and the weight of authority are found in the cases cited by plaintiffs' counsel. We are of the opinion, however, that the case at bar is not controlled by either that class of cases cited by the defendants which hold that stockholders who acquired their stock subsequent to the transaction complained of cannot be heard to complain, nor by those cited by plaintiffs' counsel, in which it is held that, in case the corporation has suffered injury, and it does not sue in its own right, any stockholder may sue, regardless of whether he acquired his stock before or after the wrongful acts or transactions complained of. In our judgment the test should be whether the corporation or any stockholder has suffered a tangible wrong or injury to his property rights through the wrongful act or acts of the directors, officers, or stockholders complained of, and not whether the stockholder acquired his stock before or after the wrongful acts complained of, provided he is not a mere interloper and is acting in good faith, and is not for some other reason estopped from maintaining an action. Cases in which the stockholders may complain are, however, not cases like the one at bar, where the alleged wrongful acts complained of relate entirely to an agreement between the promoters of the corporation, and where all of the persons who subsequently became stockholders have received full value and have not been deceived in any way, and where the corporation has likewise received full value for the stock issued by it. The case at bar, in our judgment, is controlled by the decisions in the cases of Inland Nursery & Floral Co. v. Rice, 57 Wash. 67, 106 Pac. 499; Eggleston v. Pantages, 93 Wash. 221, 160 Pac. 425, and Garretson v. Pacific Crude Oil Co., 146 Cal. 184, 79 Pac. 838, and other like cases.

[1, 2] Counsel on both sides have devoted considerable space and effort in their respective briefs to a review of certain cases which they contend are decisive of the questions here involved. Defendants' counsel contend that in view that the plaintiffs, with the exception of Margaret Kay, have acquired 'their stock subsequent to the transaction of which they complain, they have no standing here. They further contend that, Margaret Kay being fully advised respecting the issuance of the stock, and in view that neither she nor the corporation has been defrauded or injured in any way, neither she nor the corporation has any legal cause for complaint. In support of their contentions counsel, among other cases, cite and rely on Home Fire Ins. Co. v. Barber, 67 Neb. 644, 93 N. W. 1024, 60 L. R. A. 927, 108 Am. St. Rep. 716; Blum v. Whitney, 185 N. Y. 232, 77 N. E. 1159; Garretson v. Pacific Crude Oil Co., 146 Cal. 184, 79 Pac. $38; Alexander v. Searcy, 81 Ga. 536, 8 S. E. 630, 12 Am. St. Rep. 337; Clark v. American Coal Co., 86 Iowa, 436, 53 N. W. 291, 17 L. R. A. 557; Eggleston v. Pantages, 93 Wash. 221, 160 Pac. 425. Upon the other hand, counsel for plaintiffs contends that, so long as either the corporation or any of the stockholders suffers injury, he may seek redress in the courts, regardless of whether he acquired his stock before or after the injurious act or transaction complained of, provided he is not a mere interloper and is not for some other reason estopped from bringing and maintaining an action. The principal cases relied on by plaintiffs' counsel are Politz v. Gould, 202 N.

In the first case cited above the same question was involved that is involved here. The Supreme Court of Washington, in the course of the opinion, said:

"The mere fact, notwithstanding it is alleged as wrongful and fraudulent, that the promoters of the company exchanged their property for stock of the company at a price agreed upon between themselves and the company, no rights of creditors being involved and subsequent stockholders obtaining full value in the purchase of their stock, gives no right of action in the company to subsequently cancel such promoters' stock upon the mere allegation of less valuation."

"The gist of the action, and the act around | make new entries. The latter entries would, which the alleged fraud centers, is the exchange however, again lapse, unless some one was of the property of Rice and Mumm for stock found who would advance the money to pay of the company at a valuation of $25,000. While the government price for the coal lands. In the complaint alleges such act to be fraudulent, order to obtain the necessary funds for that there is no sufficient allegation of facts in connection therewith to afford the appellant the purpose, Anderson entered into an agreement relief it here seeks. Fraud, to be actionable, with Draney, Gosling, and Ryan, who agreed must result in injury, and it nowhere appears to promote and organize a corporation to that injury has resulted to any one because of take over the coal lands, and to have said such exchange. It does not appear but that corporation issue a certain amount of stock subsequent stockholders purchased with full op- to Anderson for the lands, of which the three portunity for investigation into the condition promoters would take a stipulated amount. and assets of the company, and that the stock Why could these four not agree on precisely they purchased was fully worth the sum paid what each should receive in case the cortherefor. If, therefore, subsequent stockholders obtained full value, there can be no element poration was formed and the coal lands conof injury or fraud as to them. No complaint veyed to it? Is there any doubt that, acting is made as to creditors. in good faith and in no way violating any provision of the federal laws, Anderson could have obtained all or any part of the money with which to pay the government price for the coal lands from Draney, Gosling, and Ryan, with the agreement that a corporation should be organized when title to the land was obtained with a specified amount of capital stock, of which the three should receive a certain proportion for the money advanced and for their services, aid, and assistance in organizing the corporation and for obtaining credit for it? Is that not, in effect, what they did in entering into the agreement whereby Anderson was to receive $60,000 worth of stock, and Draney, Gosling, and Ryan were to receive $90,000 worth? They had, however, agreed among themselves that the corporation should be capitalized for $250,000, which left $100,000 worth of stock to be sold or disposed of otherwise. When the time came, however, to organize the corporation, the promoters did not have sufficient funds to comply with the statutory requirement of paying in 10 per cent. of ́ $250,000, the capitalization agreed upon, in cash. They, however, did have sufficient funds to pay 10 per cent. of a $50,000 capitalization, and hence they incorporated for the latter amount with the intention of increasing the capitalization to $250,000 as soon as possible, which they subsequently did. So far as it affected the plaintiffs and all subsequent stockholders, the latter trans

That case is approved and followed in the subsequent case of Eggleston v. Pantages, supra, where the court uses this language: "Moreover, they were subsequent stockholders. They obtained full value in the purchase of their stock. The dividends which they received during the first three years furnish ample evidence of that fact. In such a case, where the rights of creditors are not involved, it is immaterial in what or how prior stockholders paid for their stock."

To the same effect is Garretson v. Pacific Crude Oil Co., supra. Our attention has not been directed to a single case-indeed, we do not think there is such a case-where it was held that the promoters of a corporation who owned the property which is to be transferred to the corporation in exchange for corporate stock, or a portion of it, may not agree among themselves respecting the amount of stock that shall be issued for the property and how it shall be apportion-action was precisely the same as though the ed among the promoters. Indeed, the principle just stated is recognized in all the cases. In view of that, let us pause a moment to examine in what way Anderson, Draney, Gosling, and Ryan have defrauded or injured any one of the plaintiffs, or any other stockholder of the company, or the company itself.

Anderson had certain coal entries to which he was unable to acquire title unless he paid the government price therefor within the time limited by law. He had already been compelled to relinquish some of his entries because the time had expired within which to make payment, and he thus had induced his brother John and Dr. Edlen to

corporation had been organized for $250,000. The corporation did receive precisely the quantity of lands that it was intended it should receive, and every one who purchased stock received just what he purchased, and what it was intended he snould receive and pay for. Indeed, every one concedes that the stock was, and is, worth in excess of what he paid for it. Even Mrs. Kay, who, it seems, was the prime mover in bringing this action against the defendants, over and over again conceded that her stock was worth far in excess of what she paid for it. The fact is that she demanded just four times as much for her stock as she paid for it. All the oth

er stockholders who agreed to purchase stock | virtue of that agreement did not deprive eibefore the corporation was organized receiv- ther of the other stockholders, or the cor

ed at least three times the par value of what they paid for the stock, and, so far as the record discloses, none received less than twice the par value of the stock that he paid for. Draney, Gosling, and Ryan are the only three who paid the full par value for the stock subscribed for by each in the articles of incorporation. Mrs. Kay and all the others who agreed in advance to take stock in case the corporation should be organized were given $3 worth of stock for every $1 paid by them. Why did Draney, Gosling, and Ryan pay the par value of the stock? The answer is apparent. It was because they had an agreement with Anderson where by they were to receive 900 shares, which was to be distributed equally among the three. It was Draney, Gosling, and Ryan, or at least one of them, who paid the amount subscribed for by Anderson in the articles

of incorporation. Anderson was to receive 600 shares, which he did receive.

poration, of anything to which they were or it was legally entitled. And this is so, regardless of how the moralist might regard the transaction. Courts of equity are created and exist to prevent and to redress legal as contradistinguished from purely moral wrongs. The plaintiffs here do not, and, in sober truth, cannot, contend that Draney, Gosling, and Ryan, or either of either of them, or that the three have, or them, defrauded or deceived plaintiffs, or either of them has, taken or appropriated anything which legitimately belongs to the stockholders or to the corporation. What is it, then, that they complain about? It is in effect this: That although neither of them deceived, nor defrauded, any of the stockbelonged to them, or either of them, the holders, nor took or withheld anything which three have taken a greater share of the stock than in the judgment of the complainants

they should have taken for the services they rendered. The court, however, confirmed

what Anderson had received, and no one is here complaining with regard to that.

In

Now, if this judgment is to prevail what is the result? Draney, Gosling, and Ryan, who, by their efforts, made Anderson's coal view of that, and in view of all the facts, it entries valuable, and who financed and organized the corporation, the stock of which is not easy for us to conceive how what Analways has been and now is conceded to be derson received can be affirmed, while what at least worth par, are deprived of every- Draney, Gosling, and Ryan obtained must thing except the stock which they paid for at be condemned. If Anderson had failed to obpar, while every other person who agreed tain the necessary purchase price for the to purchase stock in advance, and to whom coal entries within the time required by law, stock was subsequently issued in accordance he would necessarily have forfeited all of his with his agreement, received 3, or at least 2, rights thereto, and the coal lands would have shares for each one paid for. But that is not reverted back to the government. If, thereall. As we have seen, there were 2,165 fore, the coal entries were worth the money shares issued of which Draney, Gosling, and paid therefor by the corporation-and no one Ryan, including the 900 shares, held 1,168, contends that they were not-then their value or 171 more than half. They thus had the is quite, as much attributable to the efforts control of the corporation they had organiz- and acts of Draney, Gosling, and Ryan as ed. The court, however, ordered them to sur- to those of Anderson. Without the money render to the company 900 shares, which to pay the government price the coal lands leaves them only 268 shares in a corporation would have been worthless. If, therefore, which has 2,165 shares outstanding, and Draney, Gosling, and Ryan provided the necwhich they created and financed. Moreover, essary funds, or obtained them in some legitplacing the 900 shares back into the treas-imate way, they were entitled to the fruits ury makes the inequality as between Draney, of their efforts precisely the same as AnderGosling, and Ryan and the other stockholders still more pronounced. Instead of there being 2,165 shares outstanding in case the judgment stands, according to the record there will be only 1,235 shares outstanding. In addition, therefore, to receiving 3 for 1 the stockholders will necessarily have the value of their stock enhanced so as to make it four or five times the value they paid for it. Of course, there is no doubt that under the agreement Anderson, Draney, Gosling, and Ryan obtained a greater profit even than that. That was, however, entirely due to the agreement pursuant to which they went into the enterprise, and which they had a right to make. What they obtained by

son was entitled to the fruits of what he had performed. If it be held that Anderson has given the corporation an adequate consideration for the 600 shares, as the court found he did, it necessarily follows that Draney, Gosling, and Ryan likewise have done so. It follows, therefore, that the judgment cannot prevail.

In this connection it may not be improper to suggest that if the court felt that it should interfere at all, then it should not have stopped short of unscrambling the whole transaction leading up to the incorporation and the issuance of the stock. It is not the province of a court of equity to adjust all alleged inequalities, but, if in this

It is insisted that we erred in assuming that the coal lands referred to in the opinion were purchased with the "private funds of appellants." We made no such assumption, and the facts with relation to how the funds for that purpose were obtained are correctly stated in the opinion. It is not necessary to repeat those statements. While it is true that the money was paid to the corporation and the lands were purchased in its name and technically with its funds, yet the fact is that it was through the efforts of Draney, Ryan, and Gosling that the funds were obtained, and that the corporation was organized. No one asserted-certainly we did not that the money of the other subscribers for stock was not used by the corporation to pay for the coal lands; nor did we assert that the money that was paid to the corporation was not corporate fundss. All that we did assert, and what the record shows, is that it was through the efforts of the three individuals last above named that the money was finally obtained to purchase the lands, and that those who subscribed for stock in the corporation obtained precisely the amount of stock it was agreed they should have, and that they paid for. We further held that the additional stock which was issued to Draney, Ryan, Gosling, and Anderson was issued in pursuance of the agreement which was entered into before the corporation was organized, and with which neither the corporation nor any of the other subscribers for stock were connected or had any concern. That fact is so palpable that no further comment is necessary.

case the court deemed that there were ine- | argument or citations of authority, we shall, qualities it should correct, it should have nevertheless, refer to a few matters which compelled all of the stockholders, including we deem material. Anderson, Draney, Gosling, and Ryan, to return for cancellation all of the stock issued to any or all of them which is in excess of what they paid therefor. If the court went to that extent, however, then in order to do equity among the parties, let us again suggest, it should have made due allowance to Anderson, Draney, Gosling, and Ryan for all that they did and for all the efforts and time they devoted to develop and make the coal entries available for incorporation, and also allow them proper compensation for what they did in obtaining credit for the corporation and in conducting its business affairs after it was organized. We mention these things, however, merely to illustrate how impracticable it is to determine the true equities in matters of this character as between the promoters and the subsequent stockholders of corporations. It is for this reason that courts ordinarily refrain from interfering with agreements and arrangements of the promoters of corporations, unless there is fraud or deception resulting in injury to creditors or to those who have a right to complain. In this case there is nothing of that character, and, hence, under such circumstances, courts do not attempt to establish poetic equality as between the parties who may become interested in the corporation. It does not follow that, because Draney, Gosling, and Ryan have profited in this matter, they necessarily have obtained something belonging to the plaintiffs, or to either of them, or to the corporation. Indeed, the record is conclusive that such is not the case. While it is true that, viewing the transactions merely in retrospect, it seems that Draney, Gosling, and Ryan have taken the lion's share, yet it is equally true that they obtained only what they had agreed to take in going into the enterprise. They had a right to propose and insist upon their own terms, and, unless and until they have defrauded some one, or have taken something which legally belongs to another, their agreements must prevail.

The judgment, therefore, should be, and it accordingly is, reversed, and the cause is remanded to the district court of Weber county, with directions to set aside the judgment and to dismiss the action. Defendants to recover costs on appeal.

Neither did we hold or suggest that Draney, Ryan, Gosling, and Anderson did not, in the final distribution of stock, obtain a larger proportion than did the other stockholders. The district court, however, found and decided (and no one complained of the finding and decision) that the 600 shares of stock which were issued to Anderson out of the 1,500 shares were properly issued to him. If that finding and decision is right, then, in view of all the facts and circumstances of this case, the court's finding and decision that the 900 shares which were issued to Draney, Ryan, and Gosling out of the 1,500 shares, of which Anderson received 600, were illegally issued cannot also be right, and we so held. Both the district court

MCCARTY, CORFMAN, THURMAN, and and respondents' counsel seem to overlook GIDEON, JJ., concur.

On Application for Rehearing. FRICK, J. Respondents' counsel has filed a petition in which he assigns several reasons why a rehearing should be granted. Although the petition is not supported by

or ignore the fact that if the respondents were in a court of equity so were the appellants; that, if there were equities in favor of respondents, there were also equities of equal weight in favor of appellants; and that, in a controversy between respondents and appellants respecting the distribution of the 1,500 shares of stock, in view of all