established in view of the existing law. The defendant contends that the language of the statute is complied with, if two or more gates be erected within a space of ten miles, provided that the whole number of gates erected on the road does not average in excess of one to each ten miles. This is a possible construction, but we do not think a reasonable one. It is not in the interest of the public that the gates should be close together. Where the interpretation of a charter is doubtful, that construction is to be given to it which is most favorable to the people, provided it be equally reasonable. The learned judge of the court below, in his opinion filed in this case, pertinently remarks upon the point under consideration as follows: "No other act, prior or subsequent, affects the status of a wagon road company organized under the law of 1864, either by extending or curtailing its powers, franchises and privileges; hence we must look to the act of 1864 as the source of all the powers and privileges granted to the defendant. It is argued by counsel for the defendant that this act did not fix the distance between gates, but only restricted the number of gates in respect to the entire length of the road, the limit being one gate to ten miles of road, which would entitle the company to two gates for twenty miles, leaving the place of location to the option of the company. If this be the proper construction of the statute, then the two gates upon the twenty miles of road may be located within one mile or even a shorter distance of each other. The consequences of such a construction of the statute would be both an inconvenience and an injury to the public. The greater portion, perhaps, of the travel upon a public road, is only over a portion of its entire extent, coming as it does from converging and intersecting roads. Under the rule contended for by defendant, it would be in the power of the company to impose the same burdens and inconveniences upon the traveller passing over about one half of the road, as upon those passing over the entire line. This would be inequitable, and could not have been contemplated by the lawmakers; hence this construction of the act of 1864 must be rejected as unreasonable. The intention must have been to limit the distance between the gates to not less than ten miles."

We are in full accord with the views here expressed, and are consequently of opinion that the gate near Lawson was established and toll collected thereat without authority of law. We do not wish to be understood as intimating that in no event may there be two gates, where the length of the road is more than ten and less than twenty miles, or that if the entire length of the road is not ten miles there can be no gate. What we do decide is that whereever there are two gates or more, the distance between them must be not less than ten miles.

The court found that the defendant was guilty of unlawfully erecting and maintaining a toll house near Lawson, as a toll gate,

and was collecting tolls thereat without authority of law; wherefore it was adjudged that the defendant be excluded from further exercising the right and privilege of collecting tolls at the said toll gate, and that the defendant pay the costs of the action. It is competent for the commonwealth, through its courts, to waive a forfeiture of a charter, and it is generally its duty to do so where the infraction of its provisions is not wilful. Under the circumstances of this case, the judgment of the court in excluding the defendant only from the right and privilege of collecting toll at the gate near Lawson, was, we think, a proper judgment, and it will be affirmed.

Affirmed.

VIRGIL S. POND and others

V.

FRAMINGHAM AND LOWELL R. R. Co.

(130 Massachusetts Reports, 194.)

A bill in equity by creditors of a railroad corporation alleged that the corporation was insolvent; that all its property was mortgaged to trustees for the benefit of one class of creditors; that it owed large amounts to other creditors, one of whom had attached all its property; that it was about to execute a lease to the attaching creditor for a long term of years, at a rental which would not pay the interest upon its indebtedness; and that the execution of the lease would be injurious to the interest of its creditors and stockholders. The prayer of the bill was for an injunction to restrain the corporation from further prosecuting its business, and for the appointment of receivers. Held, that the bill did not state a case within the equity jurisdiction of the court.

MORTON, J.-This is a bill in equity, the substantial allegations of which are, that the plaintiffs are creditors of the defendant corporation; that the corporation is insolvent; that all its property is mortgaged to trustees for the benefit of one class of creditors; that it owes large amounts to other creditors, one of whom has attached all its property; that it is about to execute a lease to said attaching creditor, for the term of nine hundred and ninety-nine years, at a rental which will not pay the interest upon its indebtedness; and that the execution of said lease would be injurious to the interest of its creditors and stockholders. The prayer is for an injunction to restrain the defendant from further prosecuting its business, and for the appointment of receivers.

There is no statute giving this court equity jurisdiction in such a case as this, and the bill does not state a case within the general equity powers of a court of chancery. As is stated in Treadwell v. Salisbury Manuf. Co., 7 Gray, 393, "it is too well settled to

admit of question, that a court of chancery has no peculiar jurisdiction over corporations, to restrain them in the exercise of their powers, or control their action, or prevent them from violating their charter, in cases where there is no fraud or breach of trust alleged as the foundation of the claim for equitable relief."

The plaintiffs cannot maintain this bill, unless upon this ground that any creditor can maintain a bill in equity against an individual debtor upon like allegations. But there is no allegation of fraud or breach of trust, or any other ground of jurisdiction, which brings the case within the general equity powers of a court of chancery. The bill is an attempt by a creditor to restrain his debtor from making what is alleged to be an improvident contract. The rights of the parties are governed by the rules of the common law. The plaintiffs as creditors might by an attachment have obtained security which would take precedence of the contemplated lease; but if they could not, the court has no power to restrain the debtor from making a disposition of his property which is permitted by the common law, unless fraud or a breach of trust is alleged and shown.

The allegation that the defendant corporation is insolvent does not aid the plaintiffs. In the absence of any statute giving the power, this court has no authority to act as a court of insolvency for the liquidation of the affairs of an insolvent railroad corpora

tion.

Decree dismissing the bill affirmed.

M. Williams & Č. A. Williams, for the plaintiffs.
R. Olney, for the defendant.

GALVESTON, HARRISBURG & SAN ANTONIO R. R. Co.

V.

EMELINE L. BUTLER.

(56 Texas Reports, 506, 1882.)

-The plaintiff holding an unsatisfied judgment against the trustees of the B. B. &. C. sold-out railroad company, brought suit against the trustees and against the G., H. & S. A. Ry. Co., which was indebted in a large amount to the former, alleging that this indebtedness constituted the only assets available for the satisfaction of her claim, asking judgment against the G., H. & S. A. R. R. Co. Twelve years had passed since the B. &. & C. company was sold out. The trustees made no answer. The G., H. & S. A. company answered by a general demurrer and denial, and alleging in general. terms that the debts of the sold-out company exceeded largely its assets. Held

That from the lapse of time the presumption was that all the debts had been satisfied.

That from the silence of the trustees and the indefinite answer of the G.,

H. & S. A. company, the presumption was either that the debts had been satisfied, or that the assets were amply sufficient to pay all.

That such being the presumption, the suit by a single creditor to enforce payment of his judgment out of the trust fund was maintainable without attempting to make parties of other possible creditors.

That the answer set up no defence.

That the G., H. & S. A. Co. was protected, the trustees being parties to the suit.

APPROVED.-G., H. & S. A. Ry. Co. v. McDonald, 53 Tex. 510, approved and followed.

APPEAL from Harris. Masterson.

Tried below before the Hon. James

The Buffalo Bayou, Brazos & Colorado Railway Company being indebted to George Butler, the husband of appellee, prior to the 11th of June, 1868, the said Butler recovered a judgment against said company on the 18th of June, 1868. Seven days previouson the 11th of June, 1868-the company executed an assignment of their railway, etc., to E. P. Hill, trustee, as a preliminary step and as one of the means of accomplishing a full and complete sale and transfer of said railway, etc., to a new company then contemplated and provided for in said assignment. The consideration for which was the payment of the debt of the old company and the annual payment of $4,000 until such annual payment should cease by the payment of $200,000 in bonds of the new company or in money, etc.

The new company was organized under the name of the old company, and by act of the legislature the name of the company was changed to "The Galveston, Harrisburg & San Antonio Railway Company."

As contemplated in the assignment, the new company purchased at sheriff's and trustees' sales said railway, and on or about the 1st of May, 1874, received and accepted from said Hill a full and complete transfer of said railway, etc., as was vested in said Hill by said assignment.

Afterwards George Butler transferred said judgment to his wife, the said Emeline L. Butler, as her own separate property.

Afterwards said Emeline, joined by her husband, in an action of debt on said judgment against James Sorley and others, surviving directors and trustees of said old company, recovered judgment against them on the 6th day of February, 1880. Executions issued on said judgment and were returned "no property." Afterwards, on the 12th of April, 1880, this suit was filed against the surviving trustees and the new company, to subject the indebtedness of said new company to said trustees to the payment of said judgment. The trustees failing to answer, judgment was rendered against them by default.

The new company filed a demurrer, and pleaded the statute of limitations against the $4000 annual rental of the Columbus Tap,

etc., and also pleaded that the debts due and owning to the creditors of the old company, of the same class and standing in law as plaintiff's claim, far exceeded its assets, and that plaintiff was not in any event entitled to have more than a pro rata of such assets upon the distribution thereof among the creditors, which last plea, on exception, was stricken out and the demurrer overruled and judgment rendered for plaintiffs, providing protection for the new company against future liability pro tanto.

From that judgment the new company prosecuted this appeal. E. P. Hill, for appellant.

I. The court erred in overruling the demurrer of defendant to the petition of plaintiff.

1. So long as the trustees do not refuse to discharge the trusts reposed in them, so long as there is no violation of duty or conduct on their part prejudicial or inimical to the rights of the cestui que trust, the latter cannot institute or prosecute any proceedings which it is the right and duty of the trustees under the statute to institute and prosecute, and can exercise no control over them in the discharge of their duties. 11 Wall. 177; Field on Corporations, sec. 406, and cases cited in note 2, p. 432.

II. The court erred in sustaining the exceptions of plaintiff to the answer of defendant.

1. The effect of the statute (R. S., art. 4264) is to make the assets of the sold-out corporation, which is utterly extinguished, a trust fund to be administered by the trustees appointed by the statute (unless other persons shall be appointed by the court or legis lature). It follows that such fund is to be administered for the common benefit of all the cestui que trusts, and no one of them has a right to payment in full of his debt, when the fund is insufficient pay all the debts in full. There must be a pro rata distribution in such case. Pollard v. Bailey, 20 Wall. 527; Terry v. Tubman, 2 Otto, 161; Terry v. Little, 11 Otto, 216.

to

It must be supposed that the legislature had a purpose in view in enacting the law (art. 4264, R. S.), and the court will give effect to that purpose. The effect and intention of the law is plainly to create an express trust for the benefit of creditors. In other words, the effect of the act is to assign the assets of a sold-out railroad corporation to trustees for the benefit of creditors. Bliss on Code Pl., sec. 81, note 4, last sentence; Hallett v. Hallett, 2 Paige, 18; Egbert v. Woods, 3 Paige, 520; 1 Daniel's Ch. Pl. & Prac., p. 285, note 2; pp. 287-9; p. 293, note 2; Perry on Trusts, secs. 594, 602; 2 Story's Eq. sec. 1037; Story's Eq. Pl. sec. 157; R. R. Co. v. Le Gierse, 51 Tex. 189; Thomas v. Walsh, 44 Tex. 160; Caton v. Jones, 21 Tex. 788. If the theory of plaintiff's counsel be correct, then the demurrer should have been sustained, because the remedy simply of a writ of garnishment should have been pursued.