But in all these cases, in all cases of constructive trusts where it is said by some authorities chancery proceeds without regard to fraud, relief is granted upon some acknowledged ground of equitable jurisdiction, and administered by holding the wrongdoer to account as a trustee. There must be a confidential relation and unconscientious conduct on the part of one party to, and in abuse of, that relation, or there must be some ignorance, accident, mistake, or the like, against the unconscionable consequences of which equity will on general principles grant relief, else there can be no constructive trust.

That the relation of debtor and creditor is not of a confidential character, there can, of course, be no doubt. It is absurd to say that the creation of that relation involves aught of accident, mistake or ignorance. That a debtor has property of his creditor which in equity and good conscience belong to the creditor, because the debt contracted in its sale has not been paid, there is no warrant for saying. Equally unwarranted is the idea that in equity all the property of a debtor who has become insolvent belongs to the creditor, and is held by the debtor in trust for him. And this idea of ownership in the cestui que trust underlies the whole doctrine of trusts of every description. In all trusts the legal title is in one, the equitable ownership in another. A mere debt against one who has property, whether solvent or insolvent, is not ownership, nor is a right to charge a fund, or a lien upon it, the beneficial ownership of it. Confessedly the property and assets of a solvent corporation do not constitute a trust fund for its creditors. Can it be possible that a mere passing of a corporation from a state of solvency to a state of insolvency amounts to a declaration of an express trust for creditors, or to a resulting trust upon the theory that title to the assets of the concern should have been made to the creditors? Or is it conceivable that this mutation from the one condition to the other does violence to a confidential relation which never existed, and hence is a constructive trust? Or that this mere change of inherent conditions is the vestiture in the corporation through the ignorance or mistake of the creditor, or through mistake, or through fraud, of a greater title, or title to more property than was contemplated and intended, when before the change, confessedly, the corporation had the absolute and indefeasible title. free from all trusts to all its property and assets, and when the change itself involves nothing of fraud, of abuse of fiduciary relations, of ignorance, or mistake, or accident? The learned judges. who uphold this "American doctrine" may find something in these conditions of fact upon which to construct a trust, but I confess my utter inability to follow their arguments or to see with their eyes.

Nothing is clearer to my humble judgment than that the insolvency of a corporation - the existence of a corporation with property and debts, the property being insufficient to pay the debts is not within any definition of any trust known to equity jurisprudence. The creditors of such corporation have the same rights against it as they have against an insolvent partnership or an insolvent individual debtor and no other or more. They do not at law or in equity own the property of the one or the other; but the property of each is a fund for the payment of debts in the sense that neither can give it away, or dispose of it with intent to hinder, delay or defraud creditors. The property of the individual cannot be appropriated to his own use to the exclusion of his creditors under any cover whatever. The property of the partnership cannot be appropriated to the personal use of the partners, or in payment of the debts of the individuals composing the firm, to the exclusion of partnership creditors under any pretense whatever. And so the property of the corporation cannot be diverted to the use of stockholders to the exclusion of creditors under any circumstances whatever. The powers and limitations upon the powers of an insolvent corporation to deal with its property are precisely the same in all essentials as the powers and limitations upon the powers of insolvent individuals and insolvent partnerships. The estate of the debtor in each class is essentially the same -the corporation, no less than the individual and the partnership, is at law and in equity the owner of its property. The rights, remedies, and estates of creditors of each are also the same. They do not own the property of their corporation debtor or any interest in it, in equity or at law, any more than they own the property of their individual or partnership debtor. Their right against each is the same, to have their debts paid out of the property, but this right is not that of a cestui que trust, but whether the property is corporate or individual or partnership, it is the right of a creditor simply. Confessedly even this right may be defeated as to any particular creditors by a sale of the property in payment of another creditor, or by its being taken on execution in favor of another, or even by its sale by the debtor - corporation, individual or partnership— to a third person, and this although such purchaser have notice of the insolvency of the debtor. All which, as I have seen, would be impossible if the property constituted a trust estate, with the corporation as trustee and the creditors as cestui que trust, for in such case all who take notice of the insolvency would take subject to the trust, and themselves be held as trustee in invitum.

Not only are the rights of individual, partnership and corporation creditors the same against their insolvent debtors' estates, and each different in the same way from the rights of cestuis que trust, but the remedies of a corporation creditor, in the absence of a statute, are precisely those of a creditor of an individual or partnership. The remedy of each class of creditors may, upon a given state of facts, be in equity; but when this is so, it is not because of any supposed trust, but upon some recognized ground of equity jurisprudence, as where the debtor has fraudulently transferred his or its property, and chancery is invoked to set aside the transfer and subject the property. And when chancery has thus assumed jurisdiction, it will administer the estate for the equal benefit of all creditors before it, and to that end the court becomes a sort of trustee sub modo, in the administration of the property, but not with any reference to the character of the estate as being held in trust or otherwise, before and at the time jurisdiction. attached.

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Not all the publicists and courts in this country, nor the ablest of them, countenance this so-called "American doctrine." Mr. Pomeroy expressly repudiates it. He says: "In applying this principle [of constructive trusts], care should be taken to distinguish between actual trusts and those relations which are only trusts by way of metaphor; between persons who are true trustees holding the legal title for a beneficial owner, and those who simply occupy a position which is analogous in some respects to that of a trustee. The use of these terms to designate relations and parties which have no essential element in common with actual trusts and trustees can only produce confusion and inaccuracy. There are certain relations which are spoken of as trusts and as constituting a species of constructive trusts, but which are not, in any true and complete sense, trusts, and can only be called so by way of analogy or metaphor. Since they lack the element of fraud, they do not, in any view, properly belong to the division of constructive trusts. * The survivors of a partnership are called trustees for the estate of the deceased partner, with respect to his share of the firm property. This expression is mostly metaphorical; there is certainly nothing in the relation resembling a constructive trust. Extending the analogy still further, courts regard partnership property, after an insolvency or its affairs, as a trust fund for the benefit of its creditors, and the dissolution of the firm and in the proceeding for the winding up capital stock and other property of private corporations, especially after their dissolution, is treated as a trust fund in favor of creditors. These state

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ments may be sufficiently accurate as strong modes of expressing the doctrine that such property is a fund sacredly set apart for the payment of partnership and corporation creditors before it can be appropriated to the use of individual partners or corporators, and that the creditors have a lien upon it for their own security; but it is plain that no constructive trust can arise in favor of the creditors unless the partners or directors, through fraud or a breach of fiduciary duty, wrongfully appropriate the property and acquire the legal title to it in their own names, and thus place it beyond the reach of creditors through ordinary legal means." And in a note to the above text, the learned author says: "These cases are not constructive trusts, and are mentioned simply for the purposes of completeness and to distinguish between correct and mistaken conceptions." 2 Pomeroy's Eq. Jur., §§ 1044, 1045.

And the highest and ablest court in the land, the Supreme Court of the United States, has quite recently gone over this whole subject, considered exhaustively all its own decisions and dicta upon it, and in an able opinion by Brewer, J., repudiated the idea that the property of an insolvent corporation is a trust fund or estate held by the corporation or its officers for creditors as cestuis que trust. * * *

Other authorities might be collated on the question under consideration and in support of the view I have taken of it; but the foregoing will suffice, it is thought, for the purposes of this opinion. Upon them and by the force of the elementary principles of trust estates, I am impelled to the conclusion that the property of an insolvent corporation is not a trust fund or estate, accurately speaking, or in any sense other than that when the Chancery Court takes possession and control of such property upon some general principle of equity jurisdiction, wholly independent of any idea that the property constitutes a trust fund, it will be administered for the equal benefit of creditors. It follows that the bill cannot stand against the demurrers for multifariousness unless that objection can be met upon some other consideration than the trust character of the corporation property and assets, which is alone. and expressly, both in the averments of the bill itself and in the argument of counsel, relied on to support the decree overruling the demurrers.

In preparing the foregoing opinion, the writer assumed to express his individual views only because of decisions of this court referred to above which takes a different view as to the assets of an insolvent corporation being a trust fund. This opinion has now. however, been concurred in by my associates, and stands as the

opinion of the court. The cases of Corey v. Wadsworth, 99 Ala. 68; Goodyear Rubber Co. v. Scott & Co., 96 Ala. 439, and Gibson v. Trowbridge Furniture Co., 96 Ala. 357, supra, in so far as they are inconsistent with the views and conclusion we now express, are overruled.

The decree overruling the demurrers for multifariousness is reversed, and a decree will be here entered sustaining said assignments of demurrer.

Reversed, rendered and remanded.

(b) Right of Creditors as to the Management of Corporate Business.

GRAHAM V. RAILROAD Co.

102 United States Reports 148 (1880).

APPEAL from the Circuit Court of the United States for the Eastern District of Wisconsin.

This is a bill in equity, filed by Lawrence G. Graham and Donald G. Scott against the La Crosse & Milwaukee Railroad Co., the Milwaukee & St. Paul Railway Co., Moses Kneeland, James Ludington, Byron Kilbourn, and others, subject to certain real estate in the city of Milwaukee, Wisconsin, to the satisfaction of certain judgments recovered by the complainants against the firstnamed company for an indebtedness on contracts arising after its sale and conveyance of that real estate to Charles D. Nash. The defendants deraign title through him.

The court below dismissed the bill, whereupon the complainants appealed here. The remaining facts are stated in the opinion of the court.

BRADLEY, J. In September, 1855, the La Crosse & Milwaukee Railroad Co., not being indebted at that time, so far as appears, in any considerable amount, sold certain lands in the city of Milwaukee not then wanted for railroad purposes to Charles D. Nash for the sum of $25,000. The officers of the company who took a leading part in negotiating the sale are charged to have been interested in the purchase, and to have furnished Nash the means for effecting it. At all events, shortly after it was made, Nash conveyed the property, for the original consideration, to Moses Kneeland, one of the officers referred to, and Kneeland, retaining one-third part, subsequently conveyed