“ Corporations, insolvent or financially embarrassed, often find it necessary to scale their debts and readjust stock issues with an agreement to conduct the same business with the same property under a reorganization. This may be done in pursuance of a private contract between bondholders and stockholders. ”

“ It is not a case of the transfer by stockholders of one company to themselves as stockholders of another. The railroad company was hopelessly insolvent. Its annual deficit was about five million dollars. Its general creditors, represented by the general creditors' bill, and its mortgage creditors, represented in the mortgage foreclosure proceeding, were endeavoring to prevent a disintegration, and to bring the property to sale. The stockholders, represented by the company, were resisting. ”

“ A combination is necessary to secure a bidder and to prevent a sacrifice. Co-operation being essential, there is no reason why the stockholders should not unite with the bondholders to buy in the property.
That was done in the present case. And while the agreement contained no provision as to the payment of unsecured creditors, yet the railway company purchased unsecured claims aggregating $14,000,000. ”

“ For what might be inexcusable delay in one case would not be inconsistent with diligence in another, and unless the nonaction of the complainant operated to damage the defendant, or to induce it to change its position, there is no necessary estoppel arising from the mere lapse of time. ”

“ He also agreed to cause the Coeur D'Alene to lease its property for 999 years to the Northern Pacific, which, in turn, was to guarantee the payment of the principal and interest of the bonds. The contract further recited that, in consideration of the execution of the lease and guaranty, Corbin would transfer to the Northern Pacific 5,100 fully paid and nonassessable shares of the capital stock of the Coeur D'Alene. ”

“ The railway seeks to distinguish that case from this, insisting that even if the stockholders' participation in the reorganization would have invalidated the proceeding, such result does not follow here because the court having charge of the foreclosure passed on this very question before the sale in 1896 and dismissed the bill of Paton, an unsecured creditor, when he made exactly the same attack upon the reorganization as that by Boyd in this bill. ”

“ The agreement was promptly carried into effect. A resolution was passed by the directors of the Coeur D'Alene, authorizing the issue of $825,000 of bonds for properly constructing, completing, and equipping the road; the 999-year lease was made and Corbin transferred his stock. Shortly afterwards the trust company, named in the mortgage, issued to Corbin, president, or order, $465,000 of the new bonds. ”