tion until the time of the consolidation. Sev- I can be maintained at the instance of a coneral of the parties are not interested in the demand for the recovery of the certificates of stock in the Ft. Smith Company belonging to the county, which it is charged were wrongfully obtained, and are now withheld by the Atchison Company. The Atchison Company is not one of the consolidating companies, and that company is not interested in the cause of action to secure the annulment of the consolidation. Treating the allegations of the petition as though they had been separately stated and numbered, as we may, (Steward v. Balderston, 10 Kan. 131,) we will examine the first ground of demurrer insisted upon, namely, that several causes of action are improperly joined. Those in favor of the Ft. Smith Company against the Atchison Company cannot be properly united with causes in favor of Sumner county against the consolidated company, and the companies from which it was formed. Neither can the cause in favor of the county against the Atchison Company and the consolidated company to annul the lease be joined with the one to declare void the consolidation. We have seen that some of these causes affect parties that are not concerned in other causes which have been stated, and, as said in Lindh v. Crowley, 26 Kan. 47, "it will not do to unite in one pleading a cause of action against two or more, with a cause of action against a part of the defendants only." See, also, Haskell County Bank v. Bank of Santa Fe, (Kan.) 32 Pac. Rep. 624. Indeed, it would seem from what is shown in the record that the action to annul the consolidation should be brought by the attorney general in the naine of the state. In some of the allegations and arguments in behalf of the county the continued existence of the Ft. Smith Company is claimed, while in others the extinguishment of the corporation by the organization of the consolidation is assumed. If consolidation has been successfully accomplished the Ft. Smith and other constituent companies no longer exist, and the plaintiff below must obtain its rights as a stockholder against the consolidated company. Even if the proceedings were irregular or wrongful in some respects, the intelligent acquiescence or ratification of the stockholders in such a consolidation would make it good, and bind the stockholders. It would seem that the first and most important step in this litigation should have been the determination of the validity of the consolidation, and, if it is set aside, then some of the relief sought by the plaintiff below might be obtained. On the other hand, if it should be upheld as against the complaining stockholders, they would be concluded on several of the matters that are the subjects of complaint. Ordinarily the original or consolidated charter of a corporation should be attacked only at the instance of a public officer, and in the name of the state. Cases may arise where such an action stituent company, or a stockholder of the same, where the consolidation is void, and the officer whose province it is to bring such an action refuses to act; but it is not charged that the attorney general or county attorney had refused to institute an action to establish the invalidity or nonexistence of the corporation attempted to be created by the consolidation. It is conceded that the forms prescribed by the statute for the consolidation of railway companies have been observed in organizing the consolidated company. The articles of agreement have been filed with the secretary of state, and ever since that time, and for more than 10 years, the companies so organized have been exercising corporate powers, and had been assuming to be and to act as a corporation for more than five years before the amended petition was filed. In such a case a proceeding to inquire into the validity of the consolidation, and have it annulled, should be brought in the name of the state, by e proper prosecuting officer. Chicago, K. & W. R. Co. v. Board of Com'rs, 36 Kan. 128, 12 Pac. Rep. 593; In re Short, 47 Kan. 250, 27 Pac. Rep. 1005, and cases cited; Bell v. Railroad Co., (N. J. Ch.) 10 Atl. Rep. 741; Terhune v. Potts, 47 N. J. Law, 218; Rice v. Bank, 126 Mass. 303. Several other questions are suggested in the briefs of counsel, but they cannot be properly or satisfactorily determined until the petition and pleadings have been reformed and corrected. For the reasons stated the judgment of the district court will be reversed, and the cause remanded for further proceedings. All the justices concurring. (51 Kan, 547) SCHRAM, Sheriff, v. TAYLOR. (Supreme Court of Kansas. June 10, 1893.) FRAUDULENT CONVEYANCES-WHAT CONSTITUTES— EVIDENCE-INSTRUCTIONS. 1. A creditor who obtains a transfer to himself of all the property of his insolvent debtor, not for the honest purpose of securing payment of debt, but to aid the debtor in covering up his property and defeating other creditors, will not be protected, nor will the transfer be upheld by merely showing that his debt was bona fide. 2. A creditor who in good faith takes the property of his debtor, at a fair valuation, in payment of an honest debt, is not guilty of defrauding any one; and the fact that the payment of his debt in this manner may absorb the entire property of the debtor is no evidence of bad faith on the part of the creditor, and does not necessarily taint the transaction with fraud. 3. In such a case it should appear that the property transferred bears a just proportion to the amount of the debt sought to be paid by the transfer, and the failure of the trial court to include this principle in an instruction upon such a transfer is held to be material er ror. (Syllabus by the Court.) Error from district court, Butler county; C. A. Leland, Judge. Replevin by H. H. Taylor against Charles Schram, sheriff. Plaintiff had judgment, and defendant brings error. Reversed. Redden & Schumacher, for plaintiff in error. Hamilton & Leydig and J. K. Cubbison, for defendant in error. JOHNSTON, J. This was an action brought by H. H. Taylor to recover from Charles Schram, sheriff of Butler county, the possession of 1,210 head of sheep and 300 lambs, all of the alleged value of $5,065. The sheep were seized by the sheriff, as the property of J. C. Taylor, the father of the plaintiff below, to satisfy a judgment against the father. It appears that after J. C. Taylor had become financially embarrassed he sold, or claimed to sell and transfer, the sheep to his son, for a consideration of about $2,400, which was in the form of an incumbrance upon the sheep, and it is stated that the agreement was that the son should pay and discharge the debt and incumbrance which stood against the sheep. When the sheep had been turned over to the son the father had little, if any, property remaining to satisfy a large indebtedness that existed against him. The cause was tried with a jury, and some of the testimony submitted tended to show that the father was indebted to the son and the sheep were given to him in part payment of the indebtedness. It was claimed that the father owed the son $225 for work and labor; a one-fifth interest in a payment of $500 which had been made by the mother of J. C. Taylor to his five children, which, with interest for 10 years, amounted to about $200; also, a legacy of $255 left to H. H. Taylor by his grandmother, together with interest thereon; and also $375 upon a wheat crop raised by H. H. Taylor and his father while the former was a minor. Counsel for plaintiff in error challenges the validity of this indebtedness, and further insists that there was no bona fide sale of the sheep, nor anything paid upon them, but that they were simply taken subject to a mortgage much less in amount than the value of the sheep; that there was no actual change of possession; and that the sale and transfer were made with the intention to hinder, delay, and defraud the creditors of J. C. Taylor; and, further, that H. H. Taylor was aware of such purpose, and assisted in carrying it out. On the other hand, H. H. Taylor contends that the transfer was bona fide; that there was a complete and continued change of possession from the time of sale; and that the consideration paid by him for the sheep was the full value of the same. It is shown that he paid $1,100 of the indebtedness existing against the sheep, and gave his personal note and mortgage to secure the balance that was due upon them. H. H. Taylor now contends that he tried the case upon the theory that his father had paid to him what was due prior to the purchase of the sheep, and that the sole consideration of the purchase was the assumption and agreement to pay the amount of the mortgage indebtedness, which was then a lien upon them. The plaintiff in error tried the case upon the theory that H. H. Taylor pretended to be a creditor of his father, and had taken the sheep on his pretended claim of indebtedness, but that the value of the sheep greatly exceeded the amount of the indebt-edness and incumbrance, and the transfer was in bad faith, and that the value of the goods did not bear a just proportion to the amount of the indebtedness. There was testimony that justified the court in instructing upon both theories, and the principal error complained of is an instruction given to the jury, which reads as follows: "That when a person purchases goods with a knowledge that his vendor intends by the sale to defraud his creditors, or hinder or delay them in the collection of their debts, such purchaser will not be affected if he takes the goods, in good faith, in payment of his honest debt. A creditor vlo lates no rule of law when he takes payment of his debt, though he knows that other creditors are thereby deprived of all means of obtaining satisfaction of their own equally meritorious claims." One criticism upon the instruction is that it justified the jury in holding that the creditor or purchaser who knowingly assists a debtor to commit a fraud upon his creditors will be protected, and the transaction upheld. The language of the instruction is confused, inconsistent, and to some extent misleading. A purchaser who joins with a vendor in an attempt to defraud his creditors cannot be said to act in good faith. However, a purchaser who in good faith takes the property of his debtor, at a fair valuation, in payment of his honest debt, is not guilty of fraud against any one. The fact that the payment of his claim in this manner may absorb the entire property of the debtor is no evidence of bad faith, and does not necessarily taint the transaction with fraud. The most serious objection to this instruction, however, is the omission to state that the goods taken should bear a just proportion to the amount of the debt sought to be paid by the transaction. This court has repeatedly sustained transactions whereby bona fide creditors obtained a preference over other creditors by taking the property or security on the same, but it has never been held that he may take property greatly in excess of the amount of the debt. So it has been said that “a debtor in failing circumstances may prefer one creditor to another, although that creditor should be his wife, and he may in good faith transfer his property, at a fair price, to her, in payment of her bona fide claim." Bank v. Croco, 46 Kan. 631, 26 Pac. Rep. 942. In. the case of Bank v. Ridenour, 46 Kan. 721, 27 Pac. Rep. 150, cited by defendant in error, the right of a creditor to a preference was sustained, providing the transfer was made in good faith to pay a bona fide debt, and the value of the property taken was not in excess of the debt which was actually due. Many cases are cited which, it is stated, show "that where the conveyance to a creditor having a bona fide claim is in excess of the actual debt, or is given to favor the debtor, or merely to cover up the property from other. creditors, or to prevent a fair sale of the property, then the transaction, sale, or conveyance so fraudulently made to the creditor having the honest debt is void, at least as to the creditors not preferred.” See, also, Lewis v. Hughes, 49 Kan. 23, 30 Pac. Rep. 177; Dodson v. Cooper, 50 Kan. 32 Pac. Rep. 370. Counsel for Taylor recognizes the same principle where he states in his brief that "a creditor has the right to purchase, for a man always has the right to protect himself; and the creditor has a right to purchase property sufficient to pay his debt, provided his debt is just, and he only purchases enough property to pay his debt, and he purchases at a fair value." In this case it was claimed that the value of the sheep greatly exceeded the incumbrances against them, and there was a dispute in regard to the amount of the mortgages which constituted liens upon the sheep. On one side it was claimed that the mortgages amounted to about $2,300, and that the sheep were not, at the time of the transfer, worth more than $2 per head. The plaintiff in error insists, however, that the liens upon the sheep did not amount to $2,000, and that the sheep were actually worth nearly double the amount of the incumbrances. Whether the sheep, which constituted about all the property of the insolvent debtor, were taken at a fair value, was a material question in the case, and a proper instruction with regard to it was important. If it had been specially found that the amount of the liens and the value of the sheep were substantially the same, it might be said that no prejudice had resulted from the misdirection of the jury; but no special findings were made, and we are unable to find anything in the record to cure the vice of the instruction. In the general verdict returned in favor of Taylor it is found that the sheep were of the value of $3,200 at the commencement of the action, but what their value was at the time of the transfer cannot be stated with any degree of certainty. The sufficiency of the evidence is presented by a demurrer which was filed, but we cannot say that there was error in overruling it. If the case had been properly submitted to the jury, with a result similar to what was obtained, we would feel compelled to say that all questions respecting the honesty of the debt, the fairness of the price, and the good faith of Taylor, had been set tled by the jury, and that there was testimony enough to sustain their verdict. None of the other questions suggested by plaintiff in error are deemed to be material, but for the error already referred to the judgment of the district court will be reversed, and the cause remanded for another trial. All the justices concurring. (51 Kan. 554) CIMARRON LAND CO. v. BARTON. (Supreme Court of Kansas. June 10, 1893.) BOND TO CONVEY LAND-BREACH — MEASURE OF DAMAGES. The Cimarron Land Company entered into a written bond or contract with Mrs. Belle Barton, as follows: "Know all men by these presents, that the Cimarron Land Company, a corporation duly organized under the laws of the state of Kansas, acknowledges that the said Cimarron Land Company is indebted to Mrs. Belle Barton, of the town of Cimarron, Kansas, in the sum of $5,000, the payment of which we bind said corporation to well and truly pay as hereinafter provided. H. H. Unland, Vice President. Attest: C. H. Beery, Secretary. [Corporate seal.]" The written bond or contract was conditioned that the company would purchase block 43, in the Cimarron addition to the city of Cimarron, and convey the same by warranty deed to Mrs. Barton on or before January 1, 1888, upon the payment of $100. Held, that the amount stated in the bond or contract was nothing more than a penalty. For a breach of such bond or contract, the recovery must be limited to the actual damages proved. (Syllabus by the Court.) Error from district court, Gray county; A. J. Abbott, Judge. Action on a bond by Belle Barton against the Cimarron Land Company. Plaintiff had judgment, and defendant brings error. Reversed. The other facts fully appear in the following statement by HORTON, C. J.: On the 6th day of August, 1888, Mrs. Belle Barton commenced her action against the Cimarron Land Company to recover the sum of $5,000, upon the following written bond: "Know all men by these presents, that the Cimarron Land Company, a corporation duly organized under the laws of the state of Kansas, acknowledges that the said Cimarron Land Company is indebted to Mrs. Belle Barton, of the town of Cimarron, Kansas, in the sum of $5,000, the payment of which we bind said corporation to well and truly pay as hereinafter provided. H. H. Unland, Vice President. Attest: C. H. Beery, Secretary. [Corporate seal.]" "The condition of the above obligation is as follows, to wit: Whereas, the Cimarron Land Company did on the 30th day of November, 1885, sell and convey, by warranty deed, block 44, in the Cimarron Land Company's addition to the city of Cimarron, Kansas, to Mrs. Belle Barton, of Cimarron, Kansas; and whereas, the Cimarron Land Company was mistaken as to the boundaries of the said block 44, and represented to the said Mrs. Belle Barton that block 43 was included in block 44, and the said Mrs. Belle Barton, believing and relying on the truth of the representation made by said Cimarron Land Company, purchased said block 44, and, under and by the direction of the duly-authorized agent of the said Cimarron Land Company, took actual possession of block 43, and made lasting and valuable improvements thereon, of the value of $3,500; and whereas, the Cimarron Land Company were not the owners of block 43: now, the Cimarron Land Company agrees to purchase the said block 43, and convey the same by warranty deed to Mrs. Belle Barton on the payment of the $100 by Mrs. Belle Barton to the agent of the said land company on or before the 1st day of January, A. D. 1888, and if the said conditions are performed, then this obligation shall be null and void; otherwise, of full force and effect. In testimony whereof, we have hereunto set our hands, and caused the seal of the said corporation to be affixed, at the office of the said corporation, in Cimarron, Kansas, this 8th day of October, A. D. 1887. H. H. Unland, Vice President. C. H. Beery, Secretary. [Corporate seal.]" "State of Kansas, county of Gray-ss.: H. H. Unland, being duly sworn, on his oath says that he is vice president of the Cimarron Land Company, and that the president of the said corporation is absent from the state, and that he, the said H. H. Unland, by virtue of his office, is acting as the president of the said Cimarron Land Company. H. H. Unland. "Subscribed and sworn to before me this 8th day of October, A. D. 1887. M. S. Best, Notary Public. Commission expires 4th of August, 1891. [Notary seal.]" Trial before the court on the 13th of July, 1889, a jury being waived. Judgment was entered on the 23d of December, 1889, in favor of Mrs. Belle Barton, and against the Cimarron Land Company, for $5,000, with costs. The land company excepted, and brings the case here. A. J. Bryant, for plaintiff in error. Robert McCanse, for defendant in error. HORTON, C. J., (after stating the facts.) The trial court rendered judgment in favor of Mrs. Belle Barton, the plaintiff below, and against the Cimarron Land Company for the sum of $5,000, without any evidence showing, or tending to show, the actual damages which Mrs. Barton sustained from the breach of the written bond or contract sued upon. The bond or contract is clearly a penal one, and the $5,000 cannot be considered as liquidated damages. The recovery upon the bond must be limited to the actual damages sustained. Heatwole v. Gorrell, 35 Kan. 692, 12 Pac. Rep. 135; Condon v. Kemper, 47 Kan. 126, 27 Pac. Rep. 829, and cases cited. Therefore, as the bond shows that the parties fixed the sum of $5,000 as a penalty, to recover thereon any damages which might result from a breach thereof, the trial court committed error, in the absence of evidence of actual damages, in rendering judgment for $5,000. It is also claimed that the petition is defective in its allegations. As the petition was not attacked by motion or demurrer, and as an answer was filed, of course, upon the objection to the introduction of evidence, a liberal rule of construction must prevail. But as the case must go back for further proceedings it will be advisable for the plaintiff below to state more clearly the averments upon which she relies to recover. Other errors are alleged, but, as a new trial is to be had, these need not be commented upon. The judgment of the district court will be reversed, and cause remanded for further proceedings. All the justices concurring. (51 Kan. 535) HAYS, Sheriff, et al. v. CITIZENS' BANK et al. (Supreme Court of Kansas. June 10, 1893.) FRAUDULENT CONVEYANCES-SECURITY OF STOCKHOLDERS BY INSOLVENT CORPORATION. The directors of an insolvent corporation, and who are creditors of the same, cannot, while they continue in the control of its affairs and assets, take any advantage of their position to secure preference or advantage for themselves over other creditors, but must share ratably with the other general creditors in a distribution of the company's assets. (Syllabus by the Court.) Error from court of common pleas, Sedgwick county; Jacob M. Balderson, Judge. Replevin by W. W. Hays, sheriff, and Sullivan & Steinmetz, against the Citizens' Bank and Richard Merkle. Defendants had judgment, and plaintiffs bring error. Reversed. Edwin White Moore, for plaintiffs in error. Houston & Boone, for defendants in error. JOHNSTON, J. This was an action of replevin, brought to recover the possession of merchandise by the Citizens' Bank and Richard Merkle against W. W. Hays, as sheriff, and Charles Sullivan and George Steinmetz, as attaching creditors of the Steinhauser-Merkle Supply Company. The supply company was a corporation organized under the laws of Missouri, and had been engaged in business as a wholesale grocer at Wichita, Kan., for several years prior to July, 1888. The company had a capital stock of $30,000, $10,000 of which was originally held by Richard Merkle, $10,000 by Steinhauser, his son-in-law, and R. L. Merkle and H. H. Merkle, his sons, each had $5,000 of stock. For some time these four persons constituted the stockholders, and all of them were directors. In November, 1887, Richard Merkle donated and transferred his stock to his sons and son-in-law in equal shares. It appears that the business of the company was unprofitable, and on May 2, 1888, it are the trustees of the assets of the corporation for the benefit of all creditors alike, and must exercise their trust in good faith in behalf of all the creditors. If, therefore, the plaintiff, Richard Merkle, was a director in the aforesaid corporation when this chattel mortgage was given, and used his power as such director to secure the chattel mortgage, or was in substantial de executed to Richard Merkle a chattel mortgage upon its merchandise for $15,000, and about the same time executed another chattel mortgage upon the same property to the Citizens' Bank for $21,000, which was made subject and inferior to the one given to Richard Merkle. The amount of these two mortgages was far in excess of the property mortgaged. The mortgagees took possession of the mortgaged property at once, and pro-gree aided by his position as such director ceeded to convert it into money, and on July 1, 1888, an attachment action was commenced by the plaintiffs in error, and a portion of the mortgaged goods was levied upon by the sheriff. The mortgagees assumed and alleged that they had a joint lien upon the property, and united in bringing this action for the recovery of possession. The attaching creditors alleged that the mortgages were void, and executed with the intent to defraud creditors. It was further alleged that at the time of the execution of the mortgage to Richard Merkle he was a director of the corporation, the remaining directors being his sons and son-in-law, who were indebted to him in a great part for the stock which they owned. On the trial there was testimony tending to show that the company was insolvent when the mortgages were executed, and some testimony that Richard Merkle was then acting in the capacity of a director in the company. It is true that he had donated his stock six months before the mortgage was made, but there is no evidence that any transfer of the stock was made upon the stock books of the company; and, while one witness stated that he supposed that Richard Merkle had resigned his directorship, he based that supposition upon the fact that the stock had been sold. There is testimony that his name appeared upon the stationery and printed matter as a director, and that he continued to participate in the business of the company, and direct its management, up to the time that the mortgage was made. After this testimony tending to show insolvency, and that Merkle was a director at the time of the execution of the mortgage, the court was asked to give the following instruction: "If the jury shall find from the evidence that the plaintiff, Richard Merkle, was a director of the Steinhauser-Merkle Supply Company at the time when the chattel mortgage was executed, and the company was at that time insolvent, the chattel mortgage would only be valid provided the interest of the other creditors were fully and honestly prote ted in the transaction by the other directors. A director may take a chattel mortgage from the corporation for which he is so acting, to secure a bona fide indebtedness, if such mortgage be taken in good faith, and if such director derives no advantage over other creditors by reason of his office. But a director has no right to use his position to secure an advantage over other creditors. The directors of an insolvent corporation in obtaining a mortgage, the mortgage will be void as against an attaching creditor. In considering the question, you may take into consideration the fact that of the other three directors two were the sons and one the son-in-law of the plaintiff, Richard Merkle. The fact of the relationship mentioned between the plaintiff and the other directors of the corporation will warrant you in scrutinizing the transaction with especial care." This instruction was refused, and verdict and judgment were rendered in favor of the mortgagees. The refusal to charge the jury as requested, or that directors of a corporation which is insolvent or in a failing condition cannot, when they are creditors, secure an advantage or preference over other general creditors, is the principal complaint of the plaintiffs below. Although no strong or conclusive evidence was offered that Richard Merkle continued as a director until the mortgage was executed, yet the testimony offered was of such a character as to fairly raise the question, and require the giving of the rule of law applicable in such a case. Assuming that Richard Merkle was still a director, or was acting as such, when he obtained security for the debt alleged to be due to him from the company, can he take advantage of his knowledge of the failing condition of the corporation, and of the trust position which he holds, to protect and indemnify himself at the expense of the other general creditors? The directors of a corporation occupy a fiduciary character towards the stockholders and creditors, and, as said in Ryan v. Railway Co., 21 Kan. 389, "the law will not permit them to manage the affairs of the corporation for their personal and private advantage, when their duty would require them to work for and use reasonable efforts for the general interests of the corporation and its stockholders and creditors." See, also, Thomas v. Sweet, 37 Kan. 183, 14 Pac. Rep. 545. Although there is some diversity of opinion as to whether the directors and managers of an insolvent corporation can prefer one creditor over another, the decisions are well-nigh unani-, mous that the directors of such a corporation cannot, while they continue in the control of the remaining assets of the corporation, take any advantage of their position to secure preference or advantage for themselves over other creditors. In Haywood v. Lumber Co., 64 Wis. 639, 26 Pac. Rep. 184, it was held that it was not competent for a director of an insolvent corporation to take |