TA 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 purchaser thereof enured 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 633] 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 first 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. Daw son, 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 Sep tember 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 iron 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 purchasers re built the road, purchased an entirely new roll634]ing 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 complainants' bill no demand was ever made by the complainants 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 the 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 bondholders claimed *that it was indebted to them, or that [635 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 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 iniprovement 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 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. Cedar Key, in the direction of Tampa Bay, the | $323,000, for which it was sold; and denied company gave notice to the trustees of the in- that he was one of the persons included in the terual improvement fund of its full acceptance designation Edward N. Dickerson and assoof the provisions of the act, and specified the ciates. line from Amelia Island to Cedar Key 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 Key- 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 636]to Cedar *Key and was able to provide the means necessary for the work; that upon the completion of the road from Amelia Island to Cedar Key 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, us the defendant believed. John H. Stewart and Frederick 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 following 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. accepted their trust in good faith, and without notice of any pretended claim on the property by the complainant in the original bill; that the bonds issued by the purchasers of the road were issued properly: and that the value there. of 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 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 Johnsou and Corcoran be enjoined from *seeking (638 to enforce their pretended lien. Upon this cross-bill no subpoena was issued nor proceedings had. These parties also filed a cross-bill, on Oc The defendant Yulee then described the di-tober 17, 1877, averring therein that they bad lapidated 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 improvement act and to prevent the sale of the road which he feared would be necessary. He 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 issued 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,trus 637] tees, had been suffered by McRae to be fraudulently and collusively sold for the benefit of the defendant Yulee; that the prop erty on the road was worth at the time of the sale $1,000,000, or even, in cash, the sum of The Atlantic, Gulf & West Indian 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 bimself 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 ten 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 complain ants averred, bad only come to their knowledge since the filing of their said bills, namely, that Campbell v. Walker, 5 Ves. Jr.680; Faucett v. Faucett, 1 Bush, 511, 89 Am. Dec. 639; Jackson v. Ludeling, 88 U. S. 21 Wall. 616 (22: 492); Covington & L. R. Co. v. Bowler, 9 Bush, 468. Every person to whom the trust property comes, by reason of there being no trustee, will be treated as a trustee. 1 Perry, Tr. (2d ed.) § 240, p. 299. The mere number of years is not always the only guide to inquiries into the existence of laches. Length of time alone is not a test of staleness. on November 10, 1879, there was submitted to dent of the Florida Railroad Company, a party the Secretary of the Interior of the United interested in the purchase of the same at pubStates by the Florida Railroad Company, at-lic auction, even in the absence of fraud, could tempting to secure the advantages of certain not hold title thereto as against the stocklaws relative to government land grants to cer- holders and beneficiaries. tain 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, 1860 (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 withdrawaliwas Paschall v. Hinderer, 28 Ohio St. 588; Beau made on March 26, 1881. It was alleged that champ v. Winn, L. R. 6 H. L. 223; Broadbent the company, having performed within the v. Imperial Gas Light Co. 7 De G. M. & G. proper time such work on the road between 436, 7 H. L. Cas. 601; Halstead v. GrinWaldo and Tampa as was required by the inter-nan, 152 U. S. 412 (38: 495); Proctor v. Cowper, nal improvement act, became entitled to land 2 Vern. 376: Morse v. Royal, 12 Ves. Jr. 355; along the road; that therefore the trustees of the Aylett v. King, 11 Leigh, 491; Stephens v. 639 second mortgage bonds *became entitled Martin, 85 Tenn. 278. to such land, and to hold the same for the benefit of the bolders 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 Badger v. Badger, 69 U. S. 2 Wall. 87 (17: James E. Broome, who was succeeded as trus- 836); Godden v. Kimmell, 99 U. S. 201 (25: 431); tee by S. A. Swann; that such bonds were in- Hammond v. Hopkins, 143 U. S. 224 (36: 134); ferior to the said second mortgage bonds, which Marsh v. Whitmore, 88 U. S. 21 Wall. 178 (22: constituted a first lien on the constructed por-482); Lansdale v. Smith, 106 U. S. 391 (27: tion of the road between Waldo and Tampa, on the franchise necessary for its operation, and on all the lands 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 a hearing upon the bills, answers, and evidence, the bills of the complainants were dismissed. The case was then brought here on appeal. Messrs. A. H. Garland, Wilkinson Call, George F. Curtis and Heber J. May, for appellants: Statute of limitations cannot be pleaded by trustees, in defense of a charge of breach of trust or the consequence of neglecting their duty in having sold an estate encumbered without satisfying that demand. Milnes v. Cowley, 4 Price, 103; Johnson v. Diversey, 82 Ill. 446; Reed v. West, 47 Tex. 240. Mere acquiescence will not be a bar where there is an express trust. Green's Case, L. R. 18 Eq. 428; Campbell v. Graham, 1 Russ. & M. 453; Pitt v. Dacre, L. R. 3 Ch. Div. 295. Such a sale has been held by the courts to be conclusive of intended fraud. Michoud v. Girod, 45 U. S. 4 How. 503 (11: 1076); Brooks v. Martin, 69 U. S. 2 Wall. 84, 85 (17: 736, 737). With the full knowledge Dickinson bad as to all these transactions it is impossible for this sale to stand. Hallett v. Collins, 51 U. S. 10 How. 174 (13: 376). Messrs. A. H. Wintersteen and John A. Henderson, for appellees: The gross laches of the complainant deprives him of all standing in a court of equity to obtain the relief sought. 219); Norris v. Haggin, 136 U. S. 386 (34: 424); Even in the most flagrant cases of fraud, protection of the status of a bona fide purchaser is sufficient against such claims as are here made. Chicago, R. I. & P. R. Co. v. Howard.74 U. S. 7 Wall. 392, 409 (19: 117, 120); Sullivan v. Portland & K. R. Co. 94 U. S. 806 (24: 324). No proof of fraud sufficient to call for relief, or of any fraud, has been made out against the defendants in respect to the matters in issue. Godden v. Kimmell, 99 U. S. 201 (25: 431); Fitzgerald & M. Constr. Co. v. Fitzgerald, 137 U. S. 98 (34: 608); Allen v. Gillette, 127 Ú. S. 589 (32: 271). Mr. Justice Shiras 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 Company, 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 one thousand dollars each, made by the Florida Railroad ComDavid L. Yulee, while a director and presi-pany, 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. was thus designated in the second section of the act: "That the said railroad shall commence in East Florida, upon some tributary of the Atlantic Ocean, within the limits of the state of Florida, having a sufficient outlet to the ocean to admit of the passage of sea steamers, and shall run through the eastern and southern part of the state in the most eligible direction to some point, bay, arm, or tributary of the Gulf of Mexico in South Florida, south of the Suwanee river, having a sufficient outlet for sea steamers, to be determined by a competent engineer, with the apsaid company." Under this proviso a route was selected beginning at Fernandina on Amelia Island, and terminating at Cedar Key, being on a bay of the Gulf of Mexico and south of the Suwanee river. The object of the bill was to set aside and 640 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 ex-proval of a majority of the directors of the ecuted 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. Afterwards the general improvement act of January 6, 1855, was passed, in the fourth section of which were enumerated certain lines of railroad as proper improvements to be aided in manner provided in said law, and among them "a line from Amelia Island on the Atlantic to the waters of Tampa bay, in South Florida, with an extension to Cedar Key." The fifth section of the act provided that the several railroad companies then or As already stated, the original bill of Robert H. Johnson was filed August 21, 1873almost seven years after the sale. W. W. Corcoran filed an intervening bill alleging owner-ganized or chartered by the legislature, or that ship 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, which was refused by the court. In February, 1886, Karrick V. Z. Riggs, Francis B. Riggs, and William C. Riggs, of New York, filed intervening petitions, alleging ownership of second mortgage bonds, and praying to be admitted as parties entitled to share in the relief prayed for. On December 7, 1887, after final hearing, a decree was filed dismissing the bills. On November 6, 1889, an appeal was allowed to this court. The principal grounds for relief stated in the bill were illegality in the form and manner of the sale and fraud and collusion between Dickerson, Yulee, and others, the purchasers, sufficient to vitiate the sale, even if it were valid in form. The charge of illegality in the sale of the railroad is based on two particulars -first, that the power of sale given to the trustees of the internal improvement fund in the act approved January 6, 1855, entitled "An 641 Jact to provide for and encourage *a liberal system of internal improvements in this state," did not authorize a sale, even in event of a default, until after the completion of the railroad in question, and that the said railroad was not completed at the time of the sale; and, secondly, because the persons who of ficiated as such trustees and made the sale were not lawfully constituted officers of the state, and their action was consequently null and void. The original company was incorporated by an act approved January 8, 1853, entitled "An act to incorporate a company to construct a railroad across the peninsula of Florida, under the style of the Florida Railroad Company." The route of the railroad might thereafter be chartered, any portion of whose routes, as authorized by their different charters and amendments, should be within the lines or routes laid down in section four, should have the right and privilege of constructing that part of the line embraced by their charter, on giving notice to the trustees of the internal improvement fund of their 642 full acceptance of the provisions of said act, specifying the part of the route they proposed to construct. The Florida Railroad Company, it is undeniably shown, gave such notice of acceptance, specifying the line from Amelia Island to Cedar Key as the part of the route which it proposed to construct; and on June 11, 1855, entered into a contract with Joseph Finegan & Company, whereby the latter agreed to construct a railroad from Fernan dina, on Amelia Island, to Cedar Key, in all respects conformable to the requirements of the general improvement act of January 6, 1855 Afterwards in December, 1855, the legis lature authorized the Florida Railroad Company to "construct the railroad from Amelia Island, on the Atlantic, to the waters of Tampa bay, in South Florida, with the extension to Cedar Key, in East Florida, under the provisions of the act approved January 6, 1855." The line between Amelia Island and Cedar Key was completed in 1861. The general improvement act of January 6, 1855, authorized companies accepting its provisions to issue first mortgage bonds at the rate of $10,000 per mile, which bonds were to be countersigned by the state treasurer and the trustees. It was further provided that the railroad company should pay to the trustees of the improvement fund fifty per cent of its net receipts every six months, to be applied by the trustees towards the payment of the interest on the bonds of the company, and should further pay, after the completion of the road, to the trustees | ber, 1855) were granted, they would also, conat least one half of one per cent on the amount struct the balance of the road to Tampa. of indebtedness or bond account as a sinking fund. Upon the failure of any railroad company accepting the provisions of the act to provide interest on the bonds issued by it and the percentage for the sinking fund, it was made the duty of the trustees, after the expiration of thirty days from said default or refusal, to take possession of said railroad and all its property and to advertise the same for sale at public auction to the highest bidder, either for cash or approved security, as they might think most advantageous, the proceeds to be applied to the 643]*purchase and cancelling of outstanding bonds, but the purchasers of the road to be bound to continue the payment of one per cent into the sinking fund until all the outstanding bonds should be discharged. In pursuance of these provisions and of the contracts of June, 1855, the Florida Railroad Company issued and paid over to the contractors and their successors, from time to time as the work progressed, all its first mortgage bonds, secured by a mortgage on its railroad from Fernandina to Cedar Key, and also a portion of its bonds, secured by a mortgage which was a second lien on the railroad from Fernandina to Cedar Key, but a first lien on certain town sites and other lands belonging to the company. As heretofore stated, the road from Fernandina to Cedar Key was completed in 1861, and, the company having failed to pay its interest, the trustees of the internal improvement fund took possession of the road, and sold it at auction to the highest and best bidder as proIvided for in the act of 1855. The contention now is that such sale was void, because the road between Fernandina and Cedar Key was not the road designated and pointed out, in the various acts of the legis lature, as the one on whose completion and after default the trustees were authorized to sell; that the road intended should extend from Fernandina to Tampa Bay. We think that this contention has not been successfully maintained. No doubt, some of the language used in the act of 1853 and in the amendatory act of December, 1855, might be read as indicating or designating Tampa Bay as the western terminus of the railroad, and Cedar Key as the terminus of a branch or extension. Yet the history of the legislation and of the transactions thereunder satisfactorily shows that such a construction was not put upon the acts of incorporation, either by the company itself, by the contractors who constructed the road, by the trustees of the internal improvement fund or by the state of Florida. Before the act of December, 1855, was passed the company contracted for the construction of the road from Fernandina to Cedar Key, and agreed to pay the contractors with first mortgage bonds upon that road, and these bonds and mortgage were issued accordingly. Subsequently the company made separate contracts for the construction of the route from the diverging point to Tampa and put a distinct mortgage upon it. The railroad company, upon the completion of its road to Cedar Key, and the trustees of the improvement fund, recognized this as a road completed under the provisions of the act of 1855, the one by paying and the other by receiving the interest and the sinking fund charges on the first mortgage bonds from March, 1861, to November 5, 1863, when default was made. The contractors agreed to build the road as an entirety from Fernandina, or Amelia Island, to Cedar Key, and accepted in payment, and sold to the public, bonds of the company, secured by a first mortgage thereon. The trustees of the improvement fund not only recognized these first mortgage bonds as securities coming within the provisions of the act of 1855 by receiving and applying the interest paid them by the company, but at last, in 1866, took possession of the road and franchises, as they were empowered to do in the act, and sold them to parties, who organized a new company. Finally the state of Florida, by its act of January 18, 1872, recognized the new company as one owning the property formerly belonging to the Florida Railroad Company, and authorized its change of names. The second ground relied on by the appelants, as invalidating the regularity of the sale, is the allegation that the persons who acted as trustees of the internal improvement [645 fund, in taking possession of the railroad and selling it, were not legally entitled to act as such; that they were not really officers of the state of Florida. The second section of the act of January 6, 1855, declares that the governor of the state, the comptroller of public accounts, the state treasurer, the attorney general, and the regis ter of state lands, and their successors in office, shall constitute the trustees to act under the provisions of the act. And we are asked to take notice of the historical facts of the civil war, and that the state government of Florida, in 1866, was declared by the act of March 2, 1867, to be illegal, and that between the outbreak of the rebellion and the adoption by the people of Florida, ir May, 1868, of a new constitution, there was an interim or interregnum, As we have seen, the company, in accepting during which there were no state officers in the benefits of the act of January 6, 1855, des- Florida qualified and competent to exercise the ignated the road which they intended to build powers and duties of trustees of the internal as extending from Amelia Island in the direc-improvement fund in accordance with the 644]tion of Tampa, as far as a point proper for divergence, to Cedar Key, and from said diverging point to Cedar Key. In the same letter of acceptance it was further said that if the amendment to their charter then pending in the legislature (meaning the act of Decem156 U. S. U. S., Book 39. provisions of the act of 1855. This contention is disposed of by referring to the well settled doctrine, affirmed in repeated decisions of this court, that "the acts of the several states, in their individual capacities and of their different departments of govern. 36 565 |