Full opinion text
THE COURT. This appeal is prosecuted by the complainants from a judgment in favor of respondents, made and entered by the trial court in an action tried before the court without a jury. The complainants, seventeen in number, are stockholders, ex-stockholders, or represent existing or former stockholders of H. Iiackfeld & Company, Limited, an Hawaiian corporation. That corporation, during the period involved herein, had its principal place of business in Honolulu, and was engaged in the sugar factor and merchandising business. The complaint is in equity, and is headed “Complaint for Accounting, Relief against Fraud and Conspiracy, for Damages and Incidental Relief”. The purport of the complaint is to require the individual and corporate respondents to account to complainants for all matters and things concerning the transfer and sale of the assets of IT. Hackfeld & Company, Limited, to American Factors, Limited, an Hawaiian corporation, organized for the express purpose of taking over the business and assets of said H. Hackfeld & Company, Limited. The gist of the complaint affirms the sale and alleges that the sale and transfer were the result of conspiracy, collusion and fraudulent connivance on the part of certain of the respondents, whereby they secured the assets and profitable business of H. Haekfeld & Company, Limited, at a price far below its alleged intrinsic value, in fraud of and to the financial injury of complainants. The object of the suit is to require respondents to account to complainants for the transfer and sale of the assets of H. Iiackfeld & Company, Limited, to American Factors, Limited, and to account for the difference between $7,500,000, the price at which the assets were sold, and the actual value of the assets of the corporation at the date of transfer, which appellants claim to be $17,500,000. The Alien Property Custodian of the United States was made a respondent, but no relief or judgment is sought against him, it being alleged that his interest as trustee for certain -of the stockholders “is identical with the interest of the complainants herein”, but not having joined as a complainant, he is joined as a respondent, “so that, as such trustee, he may properly receive the benefits of any judgment which may be entered herein”. Certain other persons are made formal respondents for the same reasons. The main theory upon which the complaint proceeds is that the Alien Property Custodian, by virtue of certain seizures of enemy owned stock, became a stockholder in H. Hackfeld & Company, Limited, and, it is alleged, certain of the respondents, while acting as trustees for all of the stockholders, concealed from the Alien Property Custodian, and from the other stockholders, certain material facts as to the real value of H. Hackfeld & Company, Limited, and, by a fraudulent conspiracy, controlled his vote as stockholder, and, by force, undue influence, coercion, fraud and concealment, induced the other stockholders, including the complainants, to vote for the sale of the assets of H. Hackfeld & Company, Limited, to American Factors, Limited, for a grossly inadequate price. On this appeal appellants contend that the action is one brought by stockholders on behalf of a defrauded corporation, and that it is not an action brought by appellants as individuals. This issue would be of some importance in the event of a reversal, for the reason that the trial court found that certain of the complainants were estopped from maintaining the action. However, in view of the conclusions hereinafter set forth, we do not deem it necessary to decide this question. In addition to 'the filing of this complaint the appellants have likewise filed a similar complaint in the Circuit Court for the First Judicial Circuit of Hawaii. In the same court in Hawaii there is likewise pending the final account of the Trent Trust Company, Limited, respondent herein, as trustee in liquidation of H. Hackfeld & Company, Limited. The complainants in the present action (appellants herein) have filed in Hawaii an answer and objections to this account. By stipulation it was agreed in substance that the present action was to be tried before the Honorable Frank J. Murasky, Judge of the Superior Court of the City and County of San Francisco, and it was likewise agreed that all of the issues in the present action and all of the issues raised in the two Hawaiian actions should be tried and determined in the Superior Court of the City and County of San Francisco. It was further stipulated that the existence of proceedings in either jurisdiction should not be pleaded as a bar to or in abatement of the proceedings in the other jurisdiction. The answer of respondents denies all of the material allegations of fraud and conspiracy found in the complaint, and further alleges ten special and affirmative defenses. These defenses briefly were (1) that all appellants are es-topped because they or their representatives unanimously voted for and approved the sale complained of; (2) that all appellants are barred by loches; (3) that all acts done by respondents were done under the authority of the Trading with the Enemy Act; (4) that the Treaty of Versailles bars those appellants who are German nationals; (5) that the action is barred by the Hawaiian statute of limitations; (6) that certain appellants are barred by virtue of written releases executed by them; (7) that the acts of the Alien Property Custodian are not subject to judicial examination or review; (8) same defense as to Trent Trust Company, Limited, in so far as it acted as the depositary and agent of the Alien Property Custodian; (9) same defense as to certain of the respondents who were appointed or elected pursuant to nomination of the Alien Property Custodian as officers, directors or trustees of H. Hackfeld & Company, Limited; (10) that the sale of the assets of H. Hackfeld & Company, Limited, was made in good faith at the request of the Alien Property Custodian in the public interest, and that all acts of which complaint is made were done and authorized by the provisions of the Trading with the Enemy Act. As mentioned above, the Alien Property Custodian of the United States was made a formal respondent. At the time the trial commenced he had not appeared or answered the allegations of the complaint. After considerable oral and documentary evidence had been introduced, the then Alien Property Custodian, Frederick C. Hicks, through the United States attorney’s office, appeared and filed an answer. He denied all of the allegations of fraud and conspiracy on the part of the Alien Property Custodian; alleged the stock had been seized as enemy owned, under the provisions of the Trading with the Enemy Act; specifically accepted the evidence and proceedings so far had as fully as though he had appeared and answered before the beginning of the trial, and asked for judgment against respondents for whatever sum the court may deem them liable. He did not directly affirm or deny the allegations of fraud in reference to the other respondents. At the conclusion of the trial, and after some 112 days had been consumed in the taking of evidence, the trial judge filed the following terse memorandum: “I am of the opinion that (1) no actual fraud on the part of respondents was shown; (2) no constructive fraud existed; (3) the price paid was adequate; (4) the suit is not barred by the Hawaiian statute of limitations; (5) plaintiffs were not guilty of loches. “Frank J. Murasky, Judge.” Findings of fact were prepared by counsel and approved by the court and judgment entered January 31, 1927. In due course appellants moved for a new trial, and, upon denial of the motion, have prosecuted this appeal by the alternative method from the whole of said judgment and from the order denying a new trial. Appellants in their opening briefs took the position that since the addition of section 956a to the Code of Civil Procedure, in 1927, this court could pass upon the weight of the evidence and, in a proper case, make new findings, contrary to the findings of the trial court, in reversing a case. The position of appellants in this regard is unsound. In the case of Tupman v. Haberkern, 208 Cal. 256 [280 Pac. 970], it was specifically held that the rule that this court is bound by the findings of the trial court based upon substantial evidence was in no way changed by the addition of section 956a to the Code of Civil Procedure. This position was reaffirmed by this court in Davis v. Chipman, 210 Cal. 609 [293 Pac. 40]. If the findings are supported by the evidence, and the findings support the judgment, nothing remains to be done except to affirm the judgment. This rule, many times enunciated by this court, was in no way changed by the- 1927 admendment. In addition to the argument in reference to the weight of the evidence, the appellants attack 11 of the 56 findings of the trial court as having no support in the evidence. After the opening brief of appellants had been filed and respondents had replied thereto, appellants, by permission of this court, filed a Supplemental Opening Brief”. In this brief the appellants contend that the stock in H. Hackfeld & Company, Limited, was never validly seized by the Alien Property Custodian, and was therefore illegally voted by him at the time the assets of the corporation were sold to American Factors, Limited. Respondents replied to this brief, and, in addition to answering the point on its merits, contend that the issue of the validity of the seizures is not properly before this court, for the reason that it was neither pleaded nor urged before the trial court, and that appellants are thus seeking to raise a new point and present a new theory on appeal. For reasons that will later appear, we have determined to decide this point on its merits. A brief summary of the facts of this case, as disclosed by the findings and amply supported by the evidence, is as follows. Prior to the World War the sugar industry of the Hawaiian Islands was practically eighty-eight per cent, controlled by five factor and agency corporations. These corporations' were Theo. Davis and Company, Limited, a concern British controlled, not a party to this proceeding; respondent C. Brewer & Company, Limited; respondent Castle & Cooke, Limited; respondent Alexander and Baldwin, Limited, and II. Hackfeld & Company, Limited. The three respondent corporations were controlled by American citizens. H. Hackfeld & Company, Limited, was looked upon as a German concern, it being controlled by German nationals or by Americans of German birth or name. It is in this' corporation that appellants herein were stockholders at the time the transactions here complained of took place. H. Hackfeld & Company, Limited, was an Hawaiian corporation, capitalized for $4,000,000, represented by 40,-000 shares of stock of the par value of $100, of which 37,000 shares were common stock and 3,000 shares preferred to the extent of ten per cent. When war .was declared by the United States against Germany in 1917 appellant J. F. Hackfeld, president of the corporation, was living in Germany; appellant George Rodiek was senior vice-president and general manager; appellant John F. Humburg was second vice-president and manager of the San Francisco office; J. F. C. Hagens a formal respondent, with interests identical with appellants, was third vice-president and assistant to Mr. Eodiek in Honolulu; appellants August Hamburg, E. W. Klebahn, Herman P. F. Schultze and B. yon Damn were departmental managers in Honolulu, and all but yon Damn were directors of the corporation; appellant J. C. Isenberg, a director, was in Germany. In addition, all were stockholders in varying amounts. It was found by the trial court, and appellants virtually admit, that at time the Trading with the Enemy Act was passed, in October of 1917, 14,724 shares of the capital stock of H. Hackfeld & Company, Limited, were owned by “enemies”, as defined by that act, and that, as such, all 14,724 shares were subject to seizure by the Alien Property Custodian of the United States, who was then J. Mitchell Palmer. In addition to the above enemy interest in the firm, another corporation,- enemy controlled, held 12,647 shares of the capital stock- of H. Hackfeld & Company, Limited. This corporation, organized under the laws of Hawaii, was J. F. Hackfeld, Limited, a holding company, organized by appellant J. F. Hackfeld for the purpose of administering his private fortune. This holding company had a capital stock of 5,000 shares, of which appellant J. F. Hackfeld held 4,969; appellants Julie Randolphi and Marie Feine, daughters of J. F. Hackfeld, and then living in Germany with him, held 10 shares each; appellant George Eodiek held 10 shares, and J. F. C. Hagens held 1 share. Thus ninty-nine per cent of the stock of this company was subject to seizure by the Alien Property Custodian as enemy owned. Mr. Hagens was the only director of this corporation in Hawaii during 1917 and 1918. From the above facts it is clear that the majority of the stock in H. Hackfeld & Company, Limited, was enemy owned or controlled. It is obvious also that if the interests in the two corporations should be seized by the Alien Property Custodian, he would, by virtue of such seizures, control H. Hackfeld & Company, Limited, in so far as a majority stockholder can control a corporation. He would hold 14,724 shares directly, and by virtue of the fact that he would hold ninety-nine per cent of the stock of J. F. Hackfeld, Limited, he would control the 12,647 shares of H. Hackfeld & Company, Limited, stock held by that company. He would thus, directly or indirectly, control 27,371 shares out of 40,000 shares, or about sixty-eight per cent of the stock in H. Hackfeld & Company, Limited. As will later appear this is just what did occur. In 1917 II. Hackfeld & Company, Limited, was one of the largest and most important of the five sugar factor companies mentioned above. In addition, it conducted a very large merchandising business and held various agencies of steamship lines and insurance companies. It was the agent of nine large and important sugar plantations in the islands, to which it rendered various services. It made money advances, sold the principal’s sugar on commission, furnished supplies under its agency contracts, on which commissions were charged, and acted as banker and adviser to the plantations which it served. The corporation, as did the other sugar factor companies, owned large blocks of stock in the various plantations whose agency contracts it held, and from which it derived a substantial part of its earnings. Moreover, several of the stockholders of H. Hackfeld & Company, Limited, as individuals, held large blocks of stock in the plantations whose agency' contracts the corporation held. The vote and influence thus secured was the main assurance of the stability of the agency relations. Through its various agency contracts the corporation controlled, in 1917, about twenty per cent of the sugar produced in the islands. The four other major sugar factor companies, above named, three of whom are respondents herein, operated under practically the same conditions as did II. Hackfeld & Company, Limited, rendering the same type of services to their client plantations, but were not engaged in the merchandising business. A circumstance stressed somewhat in this case is the fact that incorporated family estates played a very important part in the five factor companies. As already pointed out, J.. F. Hackfeld, Limited, held approximately thirty per cent of the stock of H. Hackfeld & Company, Limited. J. B. Atherton Estate, Limited, respondent herein, held thirty-five per cent of the stock of Castle & Cooke, Limited; Henry P. Baldwin, Limited, and respondent Alexander Properties Company owned, respectively, twenty-one per cent and six per cent of Alexander & Baldwin, Limited, and respondent Charles M. Cooke, Limited, owned about one-sixth of the stock of C. Brewer & Company, Limited. Immediately after United States declared war on Germany, H. Hackfeld & Company, Limited, found itself seriously embarrassed. The majority of its stock was enemy owned or controlled. In the public eye the corporation was fixed as a German concern, with German sympathies. Its chief executive had been German consul; the German consulate in Hawaii was housed in the Hackfeld Building; the imperial device was conspicuously displayed on the front of the building; a large portion of its stockholders had German names; a considerable number of its clients were Germans; its acting president, George Rodiek, in 1917, had been German consul, and early in that year had been indicted in San Francisco for breach of the neutrality laws in connection with the so-called “Hindu Plot”, and had pleaded guilty and been fined $10,000; and his consular secretary, an employee of H. Hackfeld & Company, Limited, was likewise indicted, pleaded guilty, and was fined $1,000. These facts are not recounted with any intent to imply that anyone connected with H. Hackfeld & Company, Limited, was disloyal to United States after Avar was declared. The record does not even intimate that such was the fact, and the trial court found, and all are agreed, that every person connected with the company and living in America during the war acted honorably and loyally. But the fact does exist that, because of the above facts, the corporation became increasingly embarrassed and hampered in its business relations. The United ' States government was suspicious of the corporation and the public Avas distrustful. The corporation was on the “black list” of Great Britain; the use of cable and radio was denied it; its steamship and some of its insurance agencies were canceled ; other business connections were severed, the importation of certain necessary supplies was stopped. In the public press during this period appeared various articles under the name of “Dixie Doolittle”, attacking the Americanism of certain of the officers of H. Hackfeld & Company, Limited. It Avas proved at the trial that the author of these articles was Richard H. Trent, president of the Trent .Trust Company, Limited, both respondents herein. Appellants make much of the fact, alleging it was the first step in the conspiracy to force the sale of the assets of H. Haekfeld & Company, Limited, to the other sugar factor companies at an inadequate price, hut the trial court found otherwise, and this finding is amply supported by the record. Certainly there was no evidence tending to connect Trent with any of the other respondents in reference to these articles. Such was the situation late in 1917. The prospect, was certainly ominous, particularly with the prospect, since the passage of the Trading with the Enemy Act, in October of 1917, of having a majority of the stock seized by the Alien Property Custodian. In December of 1917 the actual management of the affairs of H. Haekfeld & Company, Limited, was in the hands of Rodiek, Hagens and John Humburg. Rodiek and Humburg were in San Francisco, and in their absence Hagens was acting manager. Hagens became so disheartened with the situation that he cabled Humburg in San Francisco that he (Hagens) must resign. Humburg hastened to Honolulu to consider with Hagens the various problems faced by the company. They came to the conclusion that the only possible solution was to reorganize and Americanize IT. Haekfeld & Company, Limited. Hum-burg wrote to Rodiek on January 4, 1918, “ . . . the facts are there plain to everyone that, if German controlled, we go to pieces, or if we Americanize, we maintain our position. ...” Hagens and Humburg finally worked out the following plan: They came to the conclusion that a sufficient number of shares of H. Haekfeld & Company, Limited, stock held by the holding company, J. F. Haekfeld, Limited, must be sold so that a majority of the stock would be held by Americans, and that a new board of directors must be elected. They realized that the 14,724 shares of H. Haekfeld & Company, Limited, stock directly held by enemies could not be sold by the owners thereof, but they believed that they could sell the 12,647 shares of H. Haekfeld & Company, Limited, stock held by J. F. Haekfeld, Limited, for the reason that these shares were not technically “owned” by an enemy, being owned by an American corporation, J. F.' Haekfeld, Limited. Under the by-laws of J. F. Haekfeld, Limited, Hagens, as the sole director in Hawaii, was vested with all the powers of the entire board of directors, including the power to sell the corporate property. Negotiations were opened with respondent Walter F. Dillingham and his associates for the sale to them of some of this stock. After some haggling over price it was finally agreed that Hagens, as sole resident director of J. F. Hackfeld, Limited, should sell to the Dillingham group 11,000 shares of the H. Hackfeld & Company, Limited, stock held by the holding company, at a price of $180 per share. On January 11, 1918, the final step necessary to complete this so-called “January reorganization” was taken by the holding of a stockholders’ meeting of H. Hackfeld & Company, Limited. George Eodiek was removed from office as vice-president and director; J. F. Hackfeld, as president and director, and J. C. Isenberg, as director, were declared disqualified by virtue of their enemy status; SehuLtze resigned as treasurer and director; F. W. Klebahn and August Humburg resigned as directors. A new board was elected, the enemy stock not voting, with Hagens as president and a majority of the board being selected from the Dillingham group. In order to give this group more effective control, all of the local stockholders vested control of the voting power of the stock, for the duration of the war, in five of the new board. It was the belief of the organizers that they had Americanized H. Hackfeld & Company, Limited. They had done so, in the sense that the officers and a majority of the stockholders were American citizens. One of the Dillingham group was W. F. Frear, former Governor of Hawaii and former chief justice of the Hawaiian Supreme Court. He was sent to Washington to explain the plan to the Alien Property Custodian and, if possible, to secure his approval. The Custodian very strongly disapproved of the plan of the January reorganization, not because he did not approve the theory of the plan, but because the reorganization had proceeded without first securing his approval. He took the position that the holdings of J. F. Hackfeld, Limited, in H. Hackfeld & Company, Limited, were, in effect, enemy property. He considered that the reorganization was an encroachment upon his functions and an improper interference with the operation of the Trading with the Enemy Act. It was his opinion that approval of such plan, carried out without first securing his consent, would set a bad precedent in reference to the many other similar cases then pending before him. Frear, Hagens and Hamburg finally became convinced that it would not be prudent, politic or patriotic to withstand the desires of the government, and agreed to “unscramble” the January reorganization. As a result, the purchasers of the 11,000 shares agreed, on March 4, 1918, to retransfer the stock to J. F. Hackfeld, Limited, the final “unscrambling” being completed on March 29, 1918. Further reference to the January reorganization will be found later in this opinion. As stated above, the Trading with the Enemy Act was passed in October, 1917. Acting pursuant to the provisions of that act, and the rules and regulations promulgated thereunder, the Alien Property Custodian had cabled to the Trent Trust Company, Limited, which telegram was received in Hawaii on January 22, 1918, appointing that company depositary for seized enemy property in the territory of Hawaii. On January 29, 1918, the Custodian, through Trent seized 14,391 shares of H. Hackfeld & Company, Limited, and 4,989 shares of J. F. Hackfeld, Limited, stock. In March of 1918, 333 more shares of H. Hackfeld & Company, Limited, stock were seized. The validity of these seizures is one of the main points of law involved on this appeal and will be discussed in detail later in this opinion. For the purposes of the present discussion it will be assumed that the seizures were valid, and it will be assumed that, by virtue of these seizures, the Alien Property Custodian became vested with the rights of a stockholder in the two Hackfeld companies. It is at once apparent that after these seizures the Custodian was, in effect, the majority stockholder in the two companies. Directly or indirectly he was in control of 27,371 out of the 40,000 shares of H. Hackfeld & Company, Limited, stock and directly held ninety-nine per cent of the stock of J. F. Hackfeld, Limited. Immediately after the seizures had taken place the Custodian proceeded to take charge of the affairs of J. F. Hackfeld, Limited. A special meeting of the stockholders was held on February 6, 1918, Trent voting the Custodian's ninety-nine per cent interest, and Richard Trent, Frank C. Atherton and Richard A. Cooke were elected directors. Atherton and Cooke were intimately connected with the sugar industry. The former was vice-president, director and assistant manager of Castle & Cooke, Limited, while the latter was a director of C. Brewer & Company, Limited, and shortly became its vice-president. After the 11,000 shares mentioned above had been retransferred to J. F. Hackfeld, Limited, by orders of the Custodian, as majority stockholder, the company was ordered dissolved. This was effected on June 7, 1918, and the Trent Trust Company, Limited, was appointed trustee in liquidation. After the January reorganization had been “unscrambled”, as set forth above, Frear, Hagens and Hamburg proceeded to Washington, and reached there on March 19, 1918. Up until that time the Trading with the Enemy Act did not expressly confer the power to sell seized property upon the Custodian, but there was then pending in Congress, as Frear et al. well knew, an amendment to the act, to confer this power on the Custodian. This amendment was, in fact, passed on March 28, 1918. Frear, Hagens and Hamburg hoped to induce the Custodian to carry out the theory of the January reorganization by selling to the Dillingham group some of the seized stock. In the conferences that were held in Washington at this time, and in all other negotiations in reference to H. Hackfeld & Company, Limited, the Custodian was represented by Walter D. Denegre, chief of the Division in Insular Possessions, and Bradley Palmer, legal adviser to the Custodian. In these conferences, Frear, Hagens and Hamburg urged time and again that $180 was a fair price for the common stock, and, in fact, Hagens offered to sell his own holdings at that price if the Custodian desired that he withdraw from the company. No agreement as to the ultimate plan of reorganization resulted from these conferences, but it was decided to call a special meeting of the stockholders of H. Hackfeld & Company, Limited, to amend the by-laws in necessary particulars, and to elect new officers and directors, who should first be approved by the Custodian as principal stockholder. It was agreed that Hagens and Hum-burg were to continue as managers, but not as directors. Five of the new proposed board of nine were members of the Dillingham group connected with the January reorganization, and to these the Custodian, as majority stockholder, proposed to add Trent, Atherton and Cooke, who were already directors of J. F. Hackfeld, Limited, and George Sherman, another respondent herein, who was a retired New. York banker. The Custodian was in constant cable communication with Trent, and the latter clearly called the Custodian’s attention to the fact that Atherton and Richard Cooke were connected with rival sugar factor companies, but the Custodian replied that he wanted and needed them as directors because of their experience in the sugar business and standing in the islands. The new board of directors in due time was elected with the exception that Charles Hemenway, respondent, and treasurer and director of Alexander & Baldwin, Limited, was substituted for Campbell, one of the Dillingham group, at the request of the Custodian. The election was held April 20, 1918, all of the stockholders present voting for the resolution. The Custodian and his associates were well aware of the acuteness of the problem facing them and were also keenly aware of the necessity for speed in reference to its solution. All concerned, including Trent and the other representatives of the Custodian, wanted to preserve the business if possible, but above all they realized that Americanization of the firm was indispensable to its future prosperity. There were three possible solutions of the problem. These were: 1. The Custodian could sell the enemy owned and controlled stock along the lines of the January reorganization. Trent, as late as March, 1918, urged this plan on the Custodian, and all concerned, including at least one of the appellants, seemed agreed that $180 a share for H. Hackfeld & Company, Limited, common stock would be a fair price. 2. H. Hackfeld & Company, Limited, could be dissolved and its assets sold piecemeal. This plan the Custodian opposed, except as a last resort. It was his opinion that the keeping of the business alive was for the best interests of the corporation, its stockholders, and the welfare of the islands. It is a fact that the complete disintegration of the business of H. Hackfeld & Company, Limited, would have directly benefited the respondent sugar factor corporations, because they would naturally succeed to the agencies and other business of H. Hackfeld & Company, Limited. This the Custodian well knew. In reference to this point the trial court found in part that this plan “would have been far more desirable to them (respondents) from a financial standpoint than was the transfer of said business to American Factors, Ltd. ...” This finding is reasonable and finds ample support in the record. 3. The third plan, and the one that was ultimately adopted, was outlined by Bradley Palmer in a letter and in a cable to Trent dated April 4 and April 9, 1918, respectively, and in short was, “The corporation to sell its entire property and business as a going concern, to a new corporation to be organized under the laws of Hawaii for that purpose”. Appellants contend that the details of this plan were formulated not by the Custodian’s office but by respondent Atherton and others. The trial court found otherwise, and that finding is amply supported by the evidence. It was the plan thus suggested that was adopted, with minor changes, by the unanimous vote of the stockholders, including most of the appellants, on July 19, 1918, The basic features of this plan will be outlined later in this opinion. In Bradley Palmer’s letter and cable mentioned above, no price for the assets of H. Hackfeld & Company, Limited, had been suggested. The price of $180 per share fixed by the January reorganization would indicate a total value of $7,200,000, that sum being 40,000 times $180, which disregards the admitted lower value of the 3,000 shares of preferred stock. Bradley Palmer was called as a witness and testified that he doubted, when he wrote and cabled to Trent, if that much could be secured, and that he preferred to await a recommendation from Honolulu. In the .meantime, the Custodian had designated Messrs. Trent, Sherman, Atherton, Cooke and Hemenway as his personal “advisers”, and they are frequently so referred to in the record. All these men were directly connected with the sugar industry, as the Custodian well knew, but in spite of this he needed them to advise him on the many problems confronting him as majority stockholder. They were men of the highest business standing and integrity, with years of experience in the sugar business. It will be remembered that all of these advisers were elected to the board of directors of H. Hackfeld & Company, Limited, at the stockholders’ meeting of April 20, 1918. It was from these advisers that Bradley Palmer expected to and did receive advice as to the value of the assets of H. Hackfeld & Company, Limited. With such relevant information as they had at hand these advisers tentatively advised that $7,500,000 would be a fair price for the assets of the company. In arriving at this tentative figure the advisers were undoubtedly strongly influenced by the price of $180 per share fixed by Hagens and Humburg in January. This figure would indicate that the total assets of the company were worth about seven million dollars ($7,000,000) if the lower value of the 3,000 shares of preferred stock is taken into consideration. The advisers studied the plan and suggested some important practical changes. These were, explained to and were accepted by the Custodian. In order to secure all available information Trent' employed the Audit Company of Hawaii to make a report of the current-position and a summary of the business of H. Hackfeld & Company, Limited, for the past ten years. This report, after certain necessary corrections were made, showed a net valuation of over $9,000,000. Trent cabled or mailed all available information to the Custodian. The Custodian was doubtful if $7,500,000 could be realized. (That sum to be realized by a sale of 50,000 shares of American Factors, Limited, stock at $150 per share.) Trent and the other advisers were at first of the opinion that a higher price could be realized. On May 27, 1918, Trent cabled the Custodian that the advisers had tentatively fixed $8,400,000 as a fair valuation, but that they awaited further reports before making a final recommendation. On the same date, the Custodian cabled Trent that he proposed to suggest that new shares be offered at $150 per share, which would bring $7,500,000 for the assets of H. Hackfeld & Company, Limited. On June 27th Trent again suggested a higher price, so that holders of Hackfeld common stock would receive $200 a share and the holders of preferred $100. This would mean that about $7,700,000 would have to be secured for the assets of the company. He likewise reported at that time that the Hackfeld business was then earning about $100,000 a month. On July 7th the Custodian gave his final opinion on value. On that day he cabled to Trent-, “Think practical business considerations cannot justify price new shares over one hundred fifty dollar's. ’ ’ In the same cable he pointed out that the business could not continue as it was then, “account opposition British and American governments, now suspended temporarily by Custodian, but Custodian cannot maintain position any longer, therefore directors and stockholders have not to decide whether to stop business already doomed but what manner to obtain best consideration for assets. ... ”. Appellants contend that the price was fixed by respondents as part of a conspiracy to secure the assets of Haekfeld & Company, Limited, at a price far below their intrinsic value. Certainly the brief reference made, supra, to some of the correspondence amply supports the finding that the price of $150 a share for American Factors, Limited, stock was suggested by the Alien Property Custodian and not by the other respondents. It must be remembered that the Alien Property Custodian controlled sixty-eight per cent of the voting power of H. Haekfeld & Company, Limited. He was the largest stockholder. He was in control of the business of the company in a far greater sense than an ordinary majority stockholder would be. He was the official representative of the United States during war time, and consequently, his suggestions had a tremendous effect on all concerned. The Custodian’s final determination was that the stockholders must accept $7,500,000 for the assets of the company, or they must sell all the assets piecemeal. The Custodian’s plan was opposed by a group of stockholders consisting of Rodiek, J. F. and August Humburg, yon Damn, Klebahn and Schultze, all appellants herein. It should be here clearly pointed out that these stockholders would and did receive more for their stock under the Custodian’s plan than they would have realized at $.180 a share, the price they so consistently urged on the Custodian in the attempted January reorganization. Under the Custodian’s plan of $150 a share for 50,000 shares of American Factors stock, the sum of $7,500,000 would be realized by H. Haekfeld & Company, Limited, for its assets. By this plan, all stockholders in H. Haekfeld & Company, Limited, would and did receive about $194 a share for their common stock. These objectors' were well aware that liquidation, with a piecemeal sale of the assets, would net them far less than that sum. They therefore, approved, reluctantly it is true, the Custodian’s plan, rather than face this alternative. It should also be pointed out at this point that any one stockholder could have blocked the Custodian’s plan, and all concerned knew this fact. The trial court found, and everyone concerned with this appeal concedes or admits that, under Hawaiian law, the sale of the entire assets of a solvent corporation required the unanimous consent of all the stockholders. A special meeting of the stockholders was called for July 19, 1918. At this meeting every share of- stock in H. Hackfeld & Company, Limited, was represented, with the exception of 167 shares held by Emilie C. Pflueger, who later ratified the proceedings.- The directors had met on July 12th, 15th, and 17th, and drafted a resolution embodying the details of the Custodian’s plan, with several changes, most of which were later ratified by the Custodian. This resolution was proposed to the stockholders on July 19, 1918, by Mr. Trent. Mr. Milverton, an attorney representing Eodiek, Schultze and Klebahn, proposed several amendments,. which were adopted. Hagens seconded the resolution. The vote was unanimously affirmative, except that Milverton reserved Eodiek’s vote in order to get specific instructions from him. The meeting was adjourned until July 22d, at which time Milverton, having received specific cabled authority, approved the resolution on behalf of Eodiek. All of the stockholders, directly or by their duly authorized representatives, signed a copy of the resolution, which is set forth in full as exhibit A of the answer. This resolution authorized the following plan: 1. The board of directors of H. Hackfeld & Company, Limited, were to organize an Hawaiian corporation, to be named “American Factors, Limited”, with a capital stock of $5,000,000, evidenced by 50,000 shares of the par value of $100. A proposed form of articles of incorporation was appended to the resolution. 2. H. Hackfeld & Company, Limited, was to sell its entire business and assets as a going concern to the new corporation, in exchange for all of the latter’s stock, the assets of H. Hackfeld & Company, Limited,. to be deemed of the approximate value of $7,500,000. 3. H. Hackfeld & Company, Limited, was to transfer the 50,000 shares of American Factors, Limited, stock, received for its assets, to seven named trustees (all respondents herein), in exchange for trust certificates. The trust agreement, a copy of which was attached to the resolution, piovided that the trustees were to be vested with the voting power of the stock for the period of the war and three years thereafter. 4. The board of directors of H. Hackfeld & Company, Limited, were to sell the trust certificates at a fixed price of $150, with leave in the board to accept Liberty bonds at par up to eighty per cent of the aggregate price. (Thus $7,500,000 would be realized for the assets of H. Hackfeld & Company, Limited.) 5. H. Hackfeld & Company, Limited, to be then disincorporated and the net proceeds of the sale distributed to its stockholders. (This was done, the common stockholders receiving about $194 a share for their stock.) 6. The board of directors of H. Hackfeld & Company, Limited, were authorized to do everything necessary to carry the resolution into effect. 7. During the term of the trust, none but loyal citizens of the United States, approved by the trustees, could hold trust certificates, and no one person or corporation could hold more than 2,500 trust certificates. The trustees were specifically authorized to hold trust certificates on the same terms as other persons. Appellants contend that certain of the stockholders voted for and approved the above resolution as the result of duress or undue influence exerted upon them directly or indirectly by some of the respondents. They offered evidence tending to show that this was the fact, but the trial court believed otherwise, and on conflicting evidence decided in favor of respondents on this issue. This finding is conclusive on this court. Appellants likewise contend that certain of the respondents as trustees for appellant stockholders concealed material facts as to value from the stockholders and were, therefore, guilty of constructive fraud. The trial court found otherwise, and this finding, being based on conflicting testimony, cannot be disturbed on appeal. The necessary steps to be taken under the resolution of July 19, 1918, were immediately carried out. Subscriptions were received from August 5th to August 20th. Some 647 prospective subscribers, who were nearly all island people (which was in accordance with the Custodian’s intent to permit island people to participate), oversubscribed the number of shares available to the extent of about eleven per cent. The only appellant to subscribe was J. F. Humburg, and he subscribed only to 500 shares, although, because of his holdings in H. Hackfeld & Company, Limited, he could have subscribed to about 1300 shares. The proceeds of this sale amounted to $4,650,000 in cash and $2,850,000 in par value Liberty bonds, a total of $7,500,000. This sum was distributed to the stockholders of H. Hackfeld & Company, Limited, in the course of the liquidation of that company. In the course of liquidation, a rather significant fact appears. Trent Trust Company, Limited, trustee in liquidation, found it necessary to inter-plead the holders of the common and preferred stock to determine their relative rights in the liquidation assets. Appellants Rodiek, J. F. and August Humburg, von Damn, Klebahn and Schultze joined in the petition of the holders of the common stock. In that petition, those appellants pleaded and relied on the stockholders’ resolution of July 19, 1918, a year and a half after it was passed. From 1918 to 1924, various liquidation dividends were distributed by the trustee to each of the appellants, so that they received $194 per share for their H. Hackfeld & Company, Limited, common stock. Appellants at ho time during this period protested, objected, or gave notice of any defect in the sale of the business and, in fact, accepted and relied on the sale. As pointed out, supra, the resolution of July 19, 1918, had left to the trustees the determination of who could buy the trust certificates. The original plan suggested by the Custodian’s office had provided that the Custodian should pass upon all allotments. The directors in drafting the resolution had changed this provision to permit the seven trustees (five of whom were the confidential advisers of the Custodian) to pass upon all subscriptions. In so doing, the directors purported to act upon a cable from the Custodian to Trent of May 4, 1918, which stated in part: “I leave approval of all prospective purchasers to you comma Sherman comma Atherton comma Cooke comma and Hemenway period. Where you disapprove and need my support cable me signed A. Mitchell Palmer.” Appellants rely on this change in the plan as evidence of the fraud and conspiracy charged against respondents. It appears to us immaterial whether this change in the plan was authorized by the Custodian by the. above cable, or whether the directors made the change on their own initiative. In the first place, the only one who could complain was the Custodian, and not only has he not complained, but, indirectly at least, he expressed his approval of the plan. In the second place, all the other stockholders, with full knowledge that this provision was in the plan, voted for the resolution of July 19, 1918, unanimously. Moreover, in the face of the findings as to the good faith of these respondents, and in the face of the findings negativing the contentions of fraud and conspiracy, and in the face of the finding that full value was received for the assets of H. Haekfeld & Company, Limited (all of which findings are amply supported by the record), it does not appear to us just how appellants were in any way injured by this change in the plan. It was appellants who determined to sell and who fixed the price and it was, therefore, immaterial to them who should pass upon the purchasers. Among the subscriptions received was a joint subscription of twenty-three of the respondents, who applied for stock in the new company in blocks ranging from 100 shares to the maximum of 2,500 shares. The aggregate of this joint subscription was 27,000 shares. Each individual and corporate subscription in this group was conditioned upon the allotment of at least 25,000 shares to this group— 25,000 shares being one-half the total number of shares available. The document which incorporates the twenty-three subscriptions is referred to in the record as the “joint subscription” or “group” or “syndicate subscription”. However, the members of this group did not agree to pool their stock with respect to voting power, nor was any member restricted from selling his stock, either inside or outside the group. The purpose of the group subscription is clear. The members of this group wanted, if they were jointly to invest close to $4,000,000 in the new enterprise, to be sure that at least half of the stock of the new company should be held by those who would bring skill and experience in the sugar business to the new corporation. The appellants make much of this joint subscription, alleging that it conclusively proves the fraud and conspiracy, being the last step necessary for its consummation. To this contention there are several answers. Everyone concerned, and this includes all appellants who voted for the resolution of July 19, 1918, must have known at that time of the proposed joint subscription. It was announced in the press early in July, and the names of its principal participants were advertised publicly to stimulate interest in the sale of American Factors, Limited. Certainly it is not true that .the Alien Property Custodian did not know of the proposed joint subscription. He not only knew of, but approved it. Bradley Palmer testified that the Custodian knew and approved of the syndicate subscription and that the allotment of 25,000 shares to its members was exactly what he desired, because it insured to the new corporation and to the other 600-odd subscribers, stability, credit, leadership and skilled and experienced management. In making the various allotments of shares, the trustees rejected some subscriptions on various grounds. After certain corrections were made, there still remained an oversubscription of 4,645 shares. The trustees thereupon cut the subscriptions of the syndicate to 25,000 shares, the minimum, and the remaining excess was cut from the larger subscriptions. J. F. Humburg was the only appellant to subscribe. He subscribed for only 500 shares, although he could have subscribed to 1300 shares. The trustees at first rejected his subscription, but after the Custodian intervened on his behalf, the trústees awarded him 200 shares. Later certain questions arose as to interest charges and Humburg executed two releases of all claims against certain respondents arising out of the entire transaction. The above constitutes what we consider a fair summary of the facts, all of which find ample support in the record. The appellants in their complaint charged, and during the course of the trial attempted to prove, that the sale of the assets of H. Hackfeld & Company, Limited, to American' Factors, Limited, for $7,500,000 was part of a gigantic conspiracy on the part of respondents to secure this lucrative business for themselves at a price far less than its actual value, which they allege to be $17,500,000. Grave charges of actual and constructive fraud were made against respondents, and evidence was offered to prove these charges. On the issue of constructive fraud, appellants strenuously contend that many of the respondents were trustees for them and violated their trust. Particularly do appellants emphasize the point that those respondents who were directors of H. Hackfeld & Company, Limited, were trustees for the stockholders, and it is pointed out that they all, as members of the “syndicate”, purchased some of the stock themselves. This, it is contended, of itself proves constructive fraud. "We have grave doubts as to whether the respondent directors were in fact in the position of trustees in carrying out the provisions of the resolution of July 19, 1918. Of course, it is elementary that directors of a corporation in many ways are trustees for the stockholders, but, as we understand the law, directors are to be treated as trustees only when acting as such, and aré not trustees in reference to every corporate act. It appears to us that in selling the assets” of BE. BEackfeld & Company, Limited, the directors were not acting as trustees for the stockholders, for the simple reason that they were not acting upon their own initiative or discretion, but were acting upon direct orders from the stockholders themselves, as shown by the resolution of July 19, 1918, which resolution was approved unanimously by the stockholders. The directors, at the request of the largest stockholder, the Alien Property Custodian, could and did suggest to the stockholders as a body the plan that had been worked out to sell the assets of the company. But, as directors, they could and did go no further. When they submitted the plan to the stockholders, and fairly disclosed all relevant facts appertaining thereto, as found by the trial court on conflicting evidence, and when the directors disclosed to the stockholders, as they did, that they and the respective companies of which they were officers, were going to subscribe and were, therefore, prospective purchasers, their duty as trustees was ended. It was the stockholders who determined to sell and fixed the price— not the directors. What possible difference could it make to the stockholders, after they fixed the price, who purchased at the sale? Particularly, by what process of reasoning can it be said that the stockholders were defrauded by having the directors purchase at the sale, when the stockholders, ’ themselves, in the resolution of July 19, 1918, authorized the directors to buy? The argument falls of its own weight. It would serve no useful purpose to take up each point raised by appellants in reference to their theory of fraud and conspiracy. As is usual in such cases, the trial court was presented with two diametrically opposed stories, two diametrically opposed theories, two different and opposed interpretations of certain acts and facts, and, on such conflicting evidence, the trial court decided in favor of respondents. Under such circumstances, our well-known rule as to findings based on conflicting evidence forbids interference with the judgment. What was said by this court in the case of Brown v. Canadian Industrial Alcohol Co., 209 Cal. 596 [289 Pac. 613], in quoting from Hotaling v. Hotaling, 187 Cal. 695, at page 699 [203 Pac. 745], applies here: “ ‘ The trial judge was called upon to delicately adjust the balance so as to determine upon which side, in the great mass of conflicting evidence and inference, the preponderance might be; while upon this appeal our only duty is to ascertain if there was any substantial showing in behalf of the court’s finding to give rational support to the conclusion reached. ’ ” Due to its importance in this case, some mention should be made of the issue of value. Appellant’s whole case depended basically on proving that the price paid was inadequate. Unless they' could prove that $7,500,000 was not a fair and adequate price under the circumstances then existing for the assets of H. Hackfeld & Company, Limited, their charges of fraud and conspiracy became of only academic interest. Without such proof, they could show no damage, and this is admittedly an action for damages, not for rescission. Before discussing this issue directly, some mention should be made of the Richard Cooke letter of May 1, 1918. Richard Cooke was vice-president of Trent Trust Company, Limited; vice-president of C. Brewer & Company, Limited; vice-president of H. Hackfeld & Company, Limited, after May 20, 1918; director and president of J. F. Hackfeld, Limited, after February, 1918; and was also one of the personal advisers of the Custodian. In May of 1918 the advisers were not aware that the Custodian definitely had made. up his mind that his plan should, if possible, be adopted. The advisers, at that time, were still considering other possibilities. Under this state of facts, on May 1, 1918, Cooke wrote a detailed letter to Trent in reference to a plan to liquidate H. Hackfeld & Company, Limited, to sell its assets piecemeal. This.letter was “discovered” by appellants in the closing days of the trial, although the basic features of the Cooke plan were disclosed from the first days of the trial. Appellants contend that it conclusively shows concealment of pertinent facts both from the Custodian and from the other stockholders who are appellants herein, and that it likewise proves that the assets of H. Hackfeld & Company, Limited, were worth well over $11,000,000. It is admitted that this letter was not sent to the Custodian, nor was'it disclosed to the other stockholders. In this letter Cooke stated that “it appears to me that the net value of this concern is over $11,000,000 rather than being somewhere around $8,000,000, as had been roughly estimated”. He then pointed out that, under the Custodian’s plan,■ this sum could not be realized and suggested that $11,000,000 could possibly be realized by selling all the plantation stocks and agencies to the three respondent sugar factor companies; by selling the merchandising end of the business, its real estate, book accounts, etc., to a new corporation for $3,000,000; and distributing the balance of the assets by converting them into cash. After discussing the merits of his plan, as compared to that of the Custodian, Cooke analyzed the assets of H. Hackfeld & Company, Limited, indicating a total value of over $11,000,000. It will be noted that Cooke’s plan involved liquidation by a piecemeal sale of the assets of H. Hackfeld & Company, Limited. The basis of his plan, as shown by his financial setup, was to sell to the three respondent firms the plantation stocks held by Hackfeld for about $5,500,-000; that the agency contracts should be sold to these firms for $1,500,000; and that the same firms should largely finance the new merchandising corporation. The plan was obviously opposed to that of the Custodian, the latter desiring to preserve the business of H. Hackfeld & Company, Limited, intact, if possible. Cooke’s plan was utterly dependent on the necessary fact that buyers must be secured who would buy at that price, and these. buyers were to be the three respondent firms. The plan fell of its own weight, because immediately the prospective buyers refused to buy. It is true that the letter was not sent to the Custodian, nor disclosed to the other stockholders, and it is likewise true that there is some correspondence between some of the respondents indicating a desire that the plan be not suggested, but this does not amount to the fraudulent concealment of a material fact. In the first place, if the plan had been suggested to the Custodian and to the other stockholders, it would also have been necessary to point out that, although it was undoubtedly a good plan, it could not be carried out because the proposed buyers would not buy at that price. In the second place, although Trent did not send the letter to the Custodian, he did send substantially the same figures submitted by Cooke. If the plan had been an offer to buy instead of being, in effect, an offer to sell, which was immediately rejected by the offeree, there would be some merit in reference to this contention. The “concealment” of this plan, under such circumstances, was of no importance. Moreover, it must be remembered that most of the appellants were present in person or by proxy at the meeting of the stockholders on July 19, 1918. These men had all been intimately associated with H. Hackfeld & Company, Limited, for years. They were laboring under no misapprehensions as to the value of the business. The book value of the assets everyone knew was over $7,500,000, but also they all knew that a piecemeal sale of the assets, would not bring that much, under conditions then existing. If they had not believed, any one of them could have forced such a liquidation by a refusal to approve the resolution, and everyone present knew this fact. On the issue of value, the evidence supports the finding that $7,500,000 was the largest sum that could have been realized for the assets of IT. Hackfeld & Company, Limited, in August of 1918. It must be remembered that the fair value of the assets of the company in August of 1918 was the price those assets could be sold for as a unit in the open market, under the general conditions then prevailing. It seems rather futile to argue that buyers should have been willing to pay more, if in fact they would not do so. In addition to a vast amount of expert testimony offered by respondents to sustain, and which in fact does sustain, their theory of value, the following factors all indicate that the price paid was adequate: 1. The value of all the assets of H. Hackfeld & Company, Limited, was fixed by the January reorganizers at about $7,000,000. At that time, 11,000 shares of common stock were sold at $180, which price, taking into consideration the lower value of the preferred stock, indicates the value above mentioned. Moreover, the proposed buyers, the Dillingham group, only agreed to pay this price after it was agreed that they, as the new directors, were to be allowed to share to the extent of one per cent in the profits. It was Humburg and Hagens who fixed this price, and they certainly were qualified to pass upon the value of the company. After April 11, 1918, the public generally knew that in January these two qualified gentlemen had placed this value on the common stock. It is apparent that after the public knew this fact, a price much higher would have been impractical. Appellants sought to discredit this value by various theories, even going to the extent of discrediting one of their own number — J. F. Humburg — on the theory that he was a member of the buying group, and that, therefore, his estimate was to be distrusted. The trial court chose to believe that Hagens and Humburg acted in good faith, and that the price of $180 a share was fair. If $180 was fair in January, certainly $194 a share was fair in July and August of the same year. 2. Another factor of great importance on the question of value is the fact that the stockholders, the actual owners of the property, put a value on the net assets of the company when they unanimously adopted the resolution of July 19, 1918. It is, of course, elementary that an owner of property is competent to estimate its value. This well-recognized rule is stated as follows in 10 California Jurisprudence, section