A ratification, to have this effect, must be made by a board composed of disinterested directors. It is not enough that such a contract has been ratified by a board composed in part of the interested directors. The least that can be required in such a case is that the directors concerned in the contract shall resign, and allow their places to be filled by persons who can, without bias, represent the interests of the corporation, and particularly of the individual stockholders.

In the case of R. Co. v. Dewey, 14 Mich. 477, the supreme court of that state had occasion to comment upon a contract made with a corporation by a company in which two of the directors were interested, and in the course of the opinion grave doubts were expressed by the court as to whether a ratification by the board, even with full knowledge of all the facts, could render the contract valid while the two interested directors remained influential members of the board, especially if they took part in such ratification.

The court was evidently strongly inclined to the opinion that such a ratification, even if made upon a full disclosure, would amount to nothing. The vice of the original contract would, in such a case, enter into the act of ratification-the latter, like the former, being a transaction in part by directors with themselves. Besides, where shall we draw the lines? If the presence of two interested directors in the board at the time of ratification does not vitiate the act, would the presence of a larger number of such directors have that effect, and if so, what number?

3. It remains to be determined whether the plaintiff can have relief to the extent that the railroad company has been benefited by the contract. This depends upon the question whether the contract was tainted with vice or immorality. Creath v. Sims, 5 How. 204. If it were possible to do so, consistently with well-settled principles of great public importance, I should be inclined to grant this relief, since, as between the parties, it is equitable that the corporation should account for whatever of value it has received from the construction company. But if there is in the contract the element of moral turpitude which the law denounces so strongly,

I am bound to hold that the parties must be left, without relief from the courts, where they have placed themselves.

The fact that two of the directors of the corporation were admitted to an interest in the contract, bad as that is in itself, is not all, nor the worst part of the transaction. On the same day that the construction contract was executed, and as a part of the transaction, the members of the construction company executed the following agreement with the members of the board of directors and certain other stockholders.

"In consideration of the execution and delivery of a certain contract to construct the Brownville, Fort Kearney & Pacific Railroad of Nebraska, wherein said railroad company agrees to turn over to us and our associates all of the property owned, and assets, subscriptions, etc., of said company, we, therefore, do promise and agree and bind ourselves to relieve the following, named subscribers to the capital stock of said company from the payment of any further amounts or assessments upon the stock which they may have subscribed thereto, by our paying out said stock, and receiving same assigned by them to us, viz.: Henry M. Atkinson, John L. Carson, R. W. Furnas, F. A. Tisdell, James L. McGee, C. F. Stewart, A. J. Ritter, H. C. Lett, T. W. Bedford, T. W. Tipton, John McPherson, and $500 on the stock of Evan Worthing, in all not to exceed $16,500 of the$41,000 of individual subscriptions to said company.

"Witness our hands, this eighteenth day of September, 1871, at the the city of Columbus, state of Ohio. "Witness: G. MOODIE.

[U. S. Int. Rev. Stamp, 50.]

B. E. SMITH,

"W. DENNISON,
"J. N. CONVERSE."

The list of stockholders in this agreement includes all the directors and five others. I am unable to construe this contract as anything else than a promise to pay each member of the board individually a consideration for his action as a director in voting for and executing the construction contract. The members of the board were stockholders, and as such liable to assessments. The construction company, "in con

sideration of the execution and delivery of" the construction contract, undertook to relieve the directors "from the payment of any further amounts or assessments upon the stock which they may have subscribed," etc.

The construction company agreed to "pay out" the stock of each director. The transaction then was as follows: The directors executed a contract by which they transferred to the construction company substantially all the property of the corporation and employed them to construct the road. In order to secure this contract the construction company took two of the directors into their firm, giving them an interest in the contract, and agreed to pay each of the other directors a pecuniary consideration for making the contract. There was, therefore, not a single member of the board who was not personally interested in favor of making the contract and in hostility to the interests of the stockholders for whom they were trustees, and whose rights they were bound to protect.

It may be that this agreement was not much considered at the time; that the directors and others interested were anxious to induce the construction company to take hold of the enterprise upon any terms, the company being unable to go. on with the work. All this is doubtless true, but it does not change the character of the written contract with which we have now to deal.

I am clearly of the opinion that the contract is so clearly illegal, against public policy, and vicious, that a court of equity cannot enforce it or grant any relief upon it. The bill must, therefore, be dismissed.

Marshall v. R. Co. 16 How. 314; Bank of the United States v. Owens, 2 Peters, 539; 2 Redfield on Railways, 576, 584; Pomeroy on Contracts and Specific Performances, §§ 284, 285, 286; Wight v. Rindskoff, 43 Wis. 344; McWilliams v. Phillips, 57 Miss. 196; Guernsey v. Cook, 120 Mass. 501; Letter v. Alvey, 15 Kan. 157

v.2,no.11-56

WILLIAMS v. REES, Collector, and another.

TAXATION-GAS COMPANIES-STATUTE OF ILLINOIS.-The legislature of the state of Illinois intended by the act of March 13, 1872, § 3, clause 4, as amended by the act of May 13, 1879, to except all manufacturing companies, except gas companies, from a capital stock tax. SAME-SAME-CONSTITUTION OF ILLINOIS.-The legislature of the state of Illinois can constitutionally assess and tax the capital stock of gas companies, while it exempts the stock of purely manufacturing companies from such taxation.

J. M. Jewell, for complainant.
J. K. Edsall, for defendants.

BLODGETT, D. J. Complainant, who is a citizen of the state of Pennsylvania, and a stockholder of the Chicago GasLight & Coke Company, brings this suit to enjoin the collection of the state, county and city taxes assessed upon the capital stock of the company for the year 1879.

By an act of the legislature of Illinois, approved February 12, 1849, entitled "An act to incorporate the Chicago GasLight & Coke Company," certain persons therein named, and their associates, were created a body politic and corporate, with perpetual succession, by the game and style of the “Chicago Gas-Light & Coke Company, with a capital stock of $50,000, which, by an amendment approved March 12, 1869, it was authorized to increase to $5,000,000, and with authority to manufacture and sell gas to be made from any or all substances, or a combination thereof, from which inflammable gas is usually made or obtained, and to be used for the purpose of lighting the city of Chicago, or the streets thereof, and any buildings therein, and to lay pipes for the purpose of conducting the gas in any of the streets or avenues of said city, with a further right, by the original charter and amendments, to purchase such an amount, in value and extent, of property and premises, in the city of Chicago, as may be necessary for its business, and to carry out the objects of its incorporation.

By an act of the general assembly of this state, approved

May 13, 1879, entitled "An act to amend sections 3 and 32 of an act entitled 'An act for the assessment of property, and for the levy and the collection of taxes,' approved March 30, 1872," it is provided:

"Fourth. The capital stock of all companies or associations now or hereafter created under the laws of this state (except those required to be assessed by the local assessors, as hereinafter provided) shall be so valued by the state board of equalization as to ascertain and determine, respectively, the fair cash value of such capital stock, including the franchise, over and above the assessed value of the tangible property of such company or association. Said board shall adopt such rules and principles for ascertaining the fair cash value of such capital stock as to it may seem equitable and just; and such rules and principles, when so adopted, if not inconsistent with this act, shall be as binding and of the same effect as if contained in this act, subject, however, to such change, alteration, or amendment, as may be found, from time to time, to be necessary by said board: Provided, that in all cases where the tangible property or capital stock of any company or association is assessed under this act, the shares of capital stock of any such company or association shall not be assessed or taxed in this state. This clause shall not apply to the capital stock, or shares of capital stock, of banks organized under the general banking laws of this state: Provided, further, that companies and associations organized for purely manufacturing purposes, or for printing, or for publishing of newspapers, or for the improving and breeding of stock, shall be assessed by the local assessors in like manner as the property of individuals is required to be assessed.

"32. Banking, bridge, express, ferry, gravel road, gas, insurance, mining, plank road, savings bank, stage, steamboat, street railroad, transportation, turnpike, and all other companies and associations incorporated under the laws of this state, (other than banks organized under the general banking laws of this state, and the corporations required to be assessed by the local assessors, as hereinbefore provided shall, in