agree between themselves as to how it shall be voted. Act April 21, 1896 (P. L. 1896, p. 290, § 37).

I am referred to what I said in the Court of Errors and Appeals (speaking for myself and one other judge) in Warren v. Pim, 66 N. J. Eq. 353, 363, 59 Atl. 773, upon the subject of voting trusts; but at page 380 of 66 N. J. Eq., and page 783 of 59 Atl., I spoke of the right to dividends, the substantial fruit of stock ownership, as a property right and as a different thing from the right to vote as stockholder; of the one as being assignable separate from the stock itself, the other not.

The other matters of supposed public policy to which appeal is made by complainant have reference to the question of his liability, or the extent of his liability, to the defendant company. In dealing with them it is important to first determine upon what basis of fact we are to proceed.

Notwithstanding the findings against him in Massachusetts, I concede that upon this motion, equivalent as it is to a demurrer to his bill of complaint, the complainant is entitled (saving laches or acquiescence) to have his account of the transactions, as given in his bill, treated as strictly true. Now, this statement is to the effect that he was entirely blameless in his transactions with the company; that the property which he and his fellow promoter made over to the company in exchange for $3,250,000 of its stock was in truth worth at least as much as that sum; that full disclosure was made to the owners of every share of the authorized capital stock, not only of the $1,000 that appears to have been actually issued and outstanding when the votes were taken, but also to all members of his syndicate who with him and Lewisohn received the distribution of $2,000, 000 of the stock, and also to the owners of the remaining $500,000 of stock issued for working capital, because, as he says, he and Lewisohn themselves furnished this working capital and were entitled to this stock; and he says the syndicate members acquiesced in the withdrawal by himself and Lewisohn of the $1,250,000 worth of stock as a profit. Taking all this as true, I am unable to perceive the least ground of appeal to this court, for on that basis of fact there is not only no matter of New Jersey state policy involved, but no ground of liability is suggested against him by the present defendant in its Massachusetts actions. What the company alleges and relies upon there is an entirely different state of facts. And complainant's counsel do not pretend that he is in any danger from the courts of Massachusetts if they accept his view of the facts. And so we have Mr. Bigelow coming to New Jersey with this complaint: "I am entirely free from blame in the transaction, but the defendant company, notwithstanding this, has sought me out in my home jurisdiction,

me with wrongdoing, and has actually proved a case against me to the satisfaction of the trial judge." There being no suggestion that the Massachusetts court has not complete jurisdiction over his person or over the subject-matter, or that it lacks the pow. er to do full and complete justice in the premises, nor that his adversary has obstructed him in the least about producing his evidence, Mr. Bigelow's plain remedy is to prosecute his appeal before the court of last resort of the commonwealth and procure a reversal of the findings that have been unjustly rendered against him. There is neither reason nor authority for the interference of this court in the premises, if the facts be as complainant alleges them to be. The books, I believe, may be searched in vain for a case where a court of equity has enjoined a proceeding in another court of equity (perhaps I might say, or of common law) on the ground that the court in which the proceeding is pending has made, or may probably make, an erroneous determination of a mere matter of fact.

Perhaps the decision upon the topics remaining to be discussed might be rested here, and the bill dismissed, because Mr. Bigelow's complaint is merely that the trial justice in Massachusetts has mistaken the facts, and that there is danger the appellate tribunal there may make the like mistake-an inadmissible ground upon which to rest a prayer for injunction. I will not, however, rest here, but will consider how Mr. Bigelow's Case will stand if we assume Justice Sheldon's findings to be true. Indeed, it seems to me that in a suit like the present, brought for the sole purpose of removing the controversy out of the Massachusetts jurisdiction and bringing it into this court for determination, on the ground that New Jersey is the exclusive forum for the settlement of the legal questions involved, Mr. Bigelow is now estopped from here setting up that the facts are otherwise than as found by Justice Sheldon. The Massachusetts actions were commenced on October 7, 1902; Mr. Bigelow filed his answers therein, setting up, or at least having the opportunity to set up, every matter of fact as to the transactions between him and the company that is alleged in his present bill. He submitted to a hearing upon the merits, and it is only after the court there has found the facts against him that he comes to this court, more than five years after the actions there were commenced, with a prayer that their further prosecution be restrained. It is, I think, inequitable to permit a litigant to thus speculate upon the outcome in a court that has full jurisdiction over the subjectmatter and the parties, and when defeated there to go to another jurisdiction praying that his adversary may be restrained. I will endeavor to show later the effect of this estoppel as to the legal questions now attempt

matters of fact, the estoppel is, I think, especially clear. Mr. Bigelow has not merely delayed; he has acquiesced, has in effect ratified and confirmed (if need there were), the authority of Justice Sheldon to ascertain and determine the facts. He has had his "day in court," and the verdict is against him; his adversary, I think, is entitled to the benefit of that verdict. The appeals taken in Massachusetts do not alter this; for although the decrees are vacated, the findings of fact are not to be overruled on appeal unless they are without support in the evidence or are clearly contrary to the weight of evidence. The bill herein does no aver that the Sheldon findings are not fully sustained by the evidence, nor does it show what the evidence was. The company could not bring Mr. Bigelow into a New Jersey court against his will. If he had "won the verdict" before Mr. Justice Sheldon, this court could not have set it aside. To allow him to here dispute the adverse findings puts the matter in this position; that the company must win two concurring verdicts in order to ultimately succeed; while he succeeds if he wins either one of two. Assuming the probability of success in a single trial to be equal as between the parties, Mr. Bigelow's plan would leave to his adversary one-half of one-half a "chance" (or one "chance" out of four), and he would reserve all remaining "chances" (three out of four) for himself-a plain violation of that equality that is said to be synonymous with equity.

I will therefore discuss the arguments of complainant's counsel on the basis of the facts as found by Justice Sheldon; accepting these as true, not absolutely (for the bill avers a contrary state of facts), but sub modo, either (a) because with the facts as he asserts them there is no ground upon which this court can properly aid him, or (b) because he is estopped from denying the findings.

Justice Sheldon finds that there was no proper disclosure either to the company or to the stockholders thereof, aside from Bigelow and Lewisohn and their immediate agents and representatives; that $500,000 worth of stock was sold by the company (and not by Bigelow and Lewisohn) to the innocent public for working capital; that even the subscribers to Mr. Bigelow's syndicate were not made aware of the profit that be and Lewisohn were making out of the transaction above such as was shared in by the syndicate members themselves. Не finds that the property for which 100,000 shares (par $2,500,000) were issued was not worth in excess of $2,000,000, and that the property for which 30,000 shares (par $750,000) were issued was not worth in excess of $50,000; that Bigelow and Lewisohn were acting in a fiduciary capacity as promoters of the company, so that they owed to it the duty of full disclosure; that there

the shares in excess of the actual value of the property as a secret profit derived at the expense of their cestui que trust; that in the entire matter they acted in concert, each doing his part to carry out a general scheme for the advantage of both; that the control exercised by them over the company was a joint control, exercised by each for the benefit of both; that a proper disclosure of the facts by either would have frustrated the schemes of both; that the wrong complained of was the act of both, for which they must both be held responsible, both jointly and severally; and he therefore holds Mr. Bigelow liable for the entire loss to the company. Upon this state of facts, what ground can properly be urged for an injunction out of this court to restrain the due prosecution of the pending Massachusetts actions?

It is claimed that under New Jersey law Mr. Bigelow is not liable to the company for the amount ascertained by Justice Sheldon, nor in any amount. But certainly he would be liable as a promoter acting in a fiduciary capacity, if we take Justice Sheldon's findings as true. The liability of promoters is fully recognized in this state. Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eq. 219, 230, 27 Atl. 1094; Woodbury Heights Land Co. v. Loudenslager, 55 N. J. Eq. 78, 35 Atl. 436; Loudenslager v. Woodbury Heights Co., 58 N. J. Eq. 556, 43 Atl. 671 (the decree in this case was affirmed as to liability, and reversed only with respect to the amount chargeable against Loudenslager); Arnold v. Searing (N. J. Ch.) 67 Atl. 831. The case of See v. Heppenheimer, 55 N. J. Eq. 240, 36 Atl. 966, 56 N. J. Eq. 453, 41 Atl. 1116, and 69 N. J. Eq. 36, 61 Atl. 843, was a receiver's action against stockholders for unpaid subscriptions, but the doctrine of promoter's liability entered into the decision.

But it is further argued that, conceding Messrs. Bigelow and Lewisohn are liable for the undisclosed profits, yet Bigelow is himself liable, according to New Jersey law, for no more than the profit that he personally realized in the transaction. This argument is rested upon the decision of our Court of Errors and Appeals in the case of Loudenslager v. Woodbury Heights Land Co., 58 N. J. Eq. 556, 43 Atl. 671, reversing s. c., 55 N. J. Eq. 78, 35 Atl. 436. In that case a Dr. Roe was concerned in selling land to the company at a profit to himself. Roe alone held the options and obtained for the company the title to the lands purchased, and received from it the purchase price. Loudenslager was a party solely because of his agreement with Roe that Roe should pay him half of the profit as a compensation (see the essential facts recited in the opinion of Mr. Justice Garrison, at page 559 of 58 N. J. Eq., and page 672 of 43 Atl.). The suit was against Loudenslager alone, and this court held him liable to the company for Roe's profit as well as his own. The Court

He

I suggest is the true construction, or that otherwise an amendment of the pleadings should be permitted. Justice Sheldon finds that the market value of the shares was fully as great as their par value, at the time they were received by the promoters and for a considerable time thereafter; but he distinctly finds that this market value was due mainly to the manipulation of the promoters, and so his statement cannot be taken as meaning that the property that passed to the company was worth as much as the stock that was issued for it, in the face of his express finding to the contrary on this point. His findings must be taken as a whole. was dealing with the market value of the shares solely for the purpose of determining the actual profit that accrued to the promoters out of the undisclosed allotment of shares to them. Finding that they received the shares under such circumstances that they were not entitled to hold them as against the company, he naturally held that the sales made by them, although made at an enhanced value by reason of their own manipulation of the market, accrued to the benefit of the company and not of the promoters. Moreover, common experience tells us that the sale value of corporate shares in the market has only an indirect and sometimes a remote relation to the fair market value of the property that forms the assets of the corporation. It is easy to see, for instance, how when men of standing in the financial world promote a company, make over to it mining properties, and cause the shares to be placed upon the market, the confidence of purchasers of the shares in the standing and good faith of the promoters may enter largely into the competition for the shares, and thus affect their market value. Such purchasers may reasonably believe that the property was sold to the company by the promoters at a fair and open price; they may reasonably rely upon the liability of promoters to refund to the company any secret profit taken; if the promoters are solvent, this liability may stand in the minds of purchasers of the shares as an asset of the company to make good any deficiency in the value of the property; and, if the secret and forbidden profit of the promoters were taken in the form of shares, the liability to refund would be precisely equivalent to the inflation of the shares. So, likewise, the circumstance that the company was incorporated under the laws of New Jersey, which require in effect that the stock shall be represented by money or money's worth, may be deemed to have some effect upon the minds of purchasers of the shares. I do not mean to say that the individual buyer thinks these matters out in detail; but it is quite easy to see that they may have a general influence upon the market for shares.

(2) But even were the property that was made over to the company in fact fairly

sued against it, this would not be conclusive against the existence of a liability on the part of the promoters, for reasons that will presently appear.

(3) A very considerable part of the argument for complainant is addressed to a discussion of the law of promoter's liability as applied to the circumstances of this case; not, indeed, upon the basis of the correctness of Justice Sheldon's findings, but rather upon the supposition that Mr. Bigelow's account of the transactions is to be taken as true. I do not feel that I am called upon to definitely pass upon the questions thus raised, nor to examine them any further than to determine whether there is any question at issue that is beyond the proper cognizance of the Supreme Judicial Court of Massachusetts. Even were I to reach the conclusion that the company's case against Mr. Bigelow is unconscionable, yet if the questions raised are merely questions of equity, free from any element of law peculiar to New Jersey, of which Mr. Bigelow may not have the benefit in the Massachusetts jurisdiction, I could not properly entertain his bill. Much effort is expended by his counsel in the endeavor to persuade me that the case turns upon the New Jersey law of stockholder's liability for unpaid subscriptions, and that this is a question exclusively for the cognizance of New Jersey courts.

The extraordinary character of the arguments leads me to speak about the law of promoter's liability to such extent as may be necessary for explaining why I do not think the questions in dispute are of such a character that the court of last resort in the state where the controversy is now pending is unfit to be trusted with their solution. I give my impressions upon the topic without intending to be precise, but with sufficient accuracy, I trust, to show the ground of my decision upon the only point that I decide. The term "promoter" is a term, not of law, but of business. A promoter is one who seeks opportunities for making advantageous purchases and profitable investments in industrial or other enterprises, who interests men of means in such a project when found, organizes them into a corporation for the purpose of "taking over" the project, and attends upon the newly formed company until it is fully launched in business. He may be stockholder, director, officer, or none of these. His services begin before the company is formed, and ordinarily are not concluded until some time after its formation. For what he does and for what he spends in seeking out and bringing together property or opportunity, on the one hand, and men with capital, on the other, he is entitled to reasonable compensation and reinbursement by the new company. But it so often happens that promoters desire to make a profit exceeding mere compensation for their time and legitimate expenses that what they thus

ed "promoter's profits." No rule of law or of equity prohibits such profits, provided they be allowed as the result of a fair agreement amongst all parties concerned. But promoters quite often desire to take their profit immediately upon the formation of the company, while, in a practical sense, it is in the formative period, with directors and officers who are the mere employés and figureheads of the promoter. Equity recognizes that in such a state of affairs the company as a corporation cannot make a binding bargain with the promoter, because he in his control of the directors is acting as a fiduciary agent for the company, and is himself in that capacity making a bargain with himself in his individual capacity. Hence the rule that the burden of sustaining such a bargain is upon the promoter, and that it cannot stand unless he has seen to it that the company is equipped with an independent board of directors to represent the general body of shareholders as against the interest of the promoter himself, and that full disclosure is made to such board. Or, if there be not an independent board, there must be unanimous consent of all the shareholders, given after full disclosure.

Fraud or misrepresentation is not required to be shown, in order to disentitle the promoter to the secret profit. Some courts take the practical view that the body of shareholders who are entitled to be consulted, and to whom disclosure should be made, comprises not only those who are nominally shareholders at the time, but all others who in pursuance of the original scheme of the promoter thereafter become shareholders. Thus, in Arnold v. Searing (N. J. Ch.) 67 Atl. 881, Vice Chancellor Leaming held that the subscribers to a syndicate organized for the purpose of taking stock in a new company to be formed were essentially of the body of stockholders entitled to be consulted, although the technical relation of stockholder in the company had not yet arisen. Other courts have sometimes taken the more technical view that the bargain for promoter's profit is well made if assented to by those who are strictly shareholders at the time.

Saving the question of overvaluation, Messrs. Bigelow and Lewisohn would doubtless have been safe if they had received the assent of all the members of the syndicate to the profit, and if they had sold no stock to the public except under a plan of subscription that would have given to all purchasers fair notice of the circumstances, disclosing the profits that the promoters were making. Or they might have waited for the profit until their fiduciary relation to the company had entirely ceased. Of course, if such measures as these are to be adopted, it may render difficult the feat of buying property for $1,000,000 and selling the same property shortly afterwards to the public for

Where a promoter's profit is taken in the form of shares that represent no investment in money or in property. and exceed the reasonable services and legitimate expenses of the promoter, the shares are not deemed fully paid within the meaning of a statute that requires money or money's worth equivalent to the par value of the shares to be contributed by subscribers. And in such event the same promoter who takes such shares by way of secret and undisclosed profit while he is acting in a fiduciary capacity to the company, while liable to refund the shares or the proceeds of sale of them to the company on this account, will be also liable under the statute as for unpaid subscriptions. Of course, however, it is not a double liability. If he refunds the undisclosed profit, and thereby in effect satisfies his stock subscription, he cannot be held liable afterwards in an action upon the statute, and vice versa. On the other hand, the promoter who takes shares as an undisclosed profit may be liable as promoter, but under no liability for unpaid stock subscription. This might happen if he sold property to the company for no more than it was worth, but sold it at a price higher than his fiduciary duty to the company permitted; that is to say, at a secret profit to himself.

In many cases promoters, in anticipation of the formation of the company, themselves buy property in order to make it over to the company upon formation. Whether the company in such cases is entitled to claim the benefit of the bargain made by the promoter is often a question of nicety, and may depend upon whether the promoter buys the property with his own money, or with money that is in effect subscribed for the share capital. It may be thus in effect subscribed before the formation of the company, as is the case with many syndicates, in which event the promoter may be a trustee with respect to the property for the company thereafter to be formed, on the theory that the property was bought for the company.

Now, one of the fallacies, as I take it, of the argument for the complainant lies in dealing with Messrs. Bigelow and Lewisohn as if they themselves bought the stock of the Baltimore company and were entitled to do with it as they pleased. If it appears that they made the purchase with the money of the syndicate (and so Justice Sheldon finds), it is, I think, at least not unconscionable for the company to claim that the members of the syndicate were but prospective stockholders in the company, and that the company when formed was entitled to treat as a profit any value received by the promoters over and above what was paid for the Baltimore stock. I am aware that the Supreme Judicial Court of Massachusetts, upon consideration of Mr. Bigelow's demurrer, said (Old Dominion Copper Co. v. Bigelow, 188 Mass. 321, 74 N. E. 653, 108 Am. St. Rep. 479) that