had he known or had any suspicion that said land was to be conveyed to any one for the price which the defendant Blount was to receive from the defendant Diggle as aforesaid, or had he known or suspected that said land was worth in the market as much as $2.50 per acre, or that the defendant S. C. Diggle or any one else was willing to pay $6 per acre therefor, but that he, the said Lewis, would have refused to have executed and delivered them or either of them in either contingency. lands to the defendant Blount, who should thereby become apparently the real owner of the said lands, and in pursuance of said agreement on the 23d day of June, 1906, the said defendant Wilson did execute and de confidence in the honor and integrity of the defendant Lindsey, and being ignorant of the falsity thereof, and believing the same to be true, and being incapable of understanding the nature and consequences of his acts by reason of his condition, he, the said Henry Lewis, was then and there induced and persuaded by the defendant Robert Lindsey, who was then and there acting for himself in behalf of his codefendants, except S. B. Kibler, to execute, acknowledge, and deliver in San Augustine county, Tex., to the defendant Robert Lindsey, an apparently valid "That, according to said agreement of said deed, conveying to the defendant Ben T. defendants, the said defendant Blount was Wilson the said undivided interest of 2,082 to furnish the money which was necessary acres above described, and thereafter on to procure the execution, delivery, and acJune 22d, in pursuance of said design to acknowledgment of said deed to the defendant quire from the said Henry Lewis his inter- Wilson that the defendant Lindsey was to est in said land for an inadequate price, by procure by the means aforesaid and under reason of the existence of the facts afore- the circumstances aforesaid, and that, after said, induced and persuaded said Henry Lew- the deed had been procured as aforesaid, is to execute, acknowledge, and deliver in San the defendant Wilson was to execute, acAugustine county, Tex, to the defendant | knowledge, and deliver a conveyance of said Robert Lindsey, another apparently valid deed conveying to the defendant Ben T. Wilson a said undivided interest of 138% acres above described in consideration of the sum of $2.50 per acre, all of which was done under the same conditions and the same cir-liver to the defendant Blount an apparently cumstances, except that at the time the last valid conveyance of the lands apparently condeed was executed the defendant Robert veyed to him by the said Henry Lewis, and Lindsey was not present actually in person. did then and there formally acknowledge Whereas, in fact and in truth the said de- said execution before the defendant Robert fendant did not reside in Western Texas and Lindsey, who was then and there a notary was not engaged in the cattle business and public of Nacogdoches county, and thereafter, did not desire to purchase said land for the in pursuance of said design as aforesaid, the purpose of using the same as a pasture for defendant Blount did execute and deliver his cattle, and said land could not have been on the 31st day of August, 1906, a conveysold to said defendant Ben T. Wilson for ance of said lands to the defendant Diggle that purpose, and the said $2.50 per acre for a consideration of more than $6 per acre was not a good price for said land at that aggregating more than $15,000 (the exact time, and it could have been sold then to amount being unknown to these plaintiffs), the defendant S. C. Diggle for more than $6 thus consummating and sealing with success per acre, but of the falsity of these state- the aforesaid design to deprive the said Henments and of each and all of them the said ry Lewis of his property, and to appropriate Henry Lewis was then and there utterly ob- to themselves the value thereof without his livious, but accepted said statements as true knowledge or consent, and to place the apby reason of his confidence in the said de- parent ownership thereof in the defendant fendant Lindsey as an honorable man and Diggle at a profit of more than $10,000 to his good friend and by reason also of his the defendants Blount, Lindsey, and Wilson, condition and his ignorance as aforesaid, all which said profit was made as aforesaid by of which contributed to the aforesaid design the defendants last aforesaid, while said of the aforesaid defendants to acquire from property was in their possession and the apthe said Lewis said land for an inadequate parent ownership in their name as aforesaid. price and enable them to consummate the That thereafter, to wit, on the 20th day of same by the execution and delivery, as afore- September, 1906, the defendant Diggle for said, of the apparently valid conveyance. a recited consideration of $20,000 in the conThat whereas the said Henry Lewis would veyance, the true consideration being unnot have executed and delivered said con- known to the plaintiffs, but plaintiffs allege veyances or either of them as aforesaid had the true consideration to have been $20,000, he known or suspected the existence of the upon information and belief, did execute and aforesaid design to acquire the said deliver to the defendant S. B. Kibler a deed land as aforesaid, or had he known or sus- conveying said land to him, who was then pected that the defendant Lindsey was act- and there ignorant of the means whereby ing for himself or the defendant Blount in the said Henry Lewis was induced to execute securing the execution and delivery to the and deliver the aforesaid conveyance to the defendant Wilson of said conveyance, or defendant Wilson as aforesaid, and who then 10 139 SOUTHWESTERN REPORTER Tex. 433, 61 S. W. 115), can be attacked by the grantor or his legal representatives and the property recovered from an innocent purchaser to whom it has been conveyed for value and without notice of the insanity of the grantor. 22 Cyc. 1173; Hull v. Louth, 109 Ind. 664, 10 N. E. 270, 58 Am. Rep. 405; Rogers v. Blackwell, 49 Mich. 192, 13 N. W. 512; Hovey v. Hobson, 53 Me. 451, 89 Am. Dec. 705; Wirebacks v. First National Bank, 97 Pa. 543, 39 Am. Rep. 821; Gates v. Carpenter, 43 Iowa, 155. and there paid without notice of the afore- | fraud, and it is not so contended by appelsaid fraud and mental incapacity of the said lees. [1] It seems to be settled law that a deed of Henry Lewis at the time the said deed was procured from him as aforesaid, a valuable an insane person, though voidable only and consideration therefor, and thereby became not absolutely void (Williams v. Sapieha, 94 an innocent purchaser under said circumstances, and is thereby protected against the legal consequences of said fraudulent acts upon the part of his codefendants. That said S. B. Kibler has acquired said lands free from taint of fraud at a price greater than the price received by the defendant Blount from the defendant Diggle to the extent of $5,000, and the said defendant Kibler is unwilling to convey said land to these plaintiffs and the other defendants to pay to said S. B. Kibler the money paid to them by him for said land as aforesaid, whereby it became impossible to restore the original position occupied by the parties before said wrongs were committed and said conveyances procured. And the said Henry Lewis in his lifetime was, and these plaintiffs, as the heirs at law of Henry Lewis, deceased, by reason of the facts aforesaid have been, compelled to affirm said contract and are entitled to actual damages from the defendants Blount, Lindsey, Wilson, and Diggle, and from each and all of them, for the difference between what was paid to the said Henry Lewis and what the defendants received for said land while in their possession, with 6 per cent. interest thereon from the date on which the said defendants received said profit and for which actual damages in the sum of $20,000 these plaintiffs sue and pray judgment." [2] This much may be conceded; but does it follow that, because appellants could have recovered the property in the hands of the present holders, they cannot elect to proceed against appellees for damages for the fraud and deceit by means of which they procured from Lewis, whom they knew to be mentally incapable, the conveyances in question? We think not. Under the allegations of the petition, appellees will be held in equity as trustees for their grantor, Lewis, as to the The land which land conveyed. 3 Pom. Eq. 1051, 1052; Jencks v. Cook, 9 R. I. 520. is, in effect, the trust fund, having been disposed of by them, appellants may elect to pursue and recover the land, or to sue appellees for the damages by reason of the alleged fraud. This is the effect of the holding of the Supreme Court in Silliman v. The grounds upon which appellees under- Gano, 90 Tex. 647, 648, 39 S. W. 559, 40 S. W. take to sustain the judgment of the trial 391, and it is supported by the soundest reacourt sufficiently show the only question pre- son and is in entire accord with the highest sented by this appeal. It is contended by equity and justice. The position assumed by them that the petition specially alleges that the demurrer is that, admitting that appelLewis, at the time he executed the deeds in lees have taken advantage of the mental imquestion, was of unsound mind, in fact, in- becility of the grantor, Lewis, and by the use sane, and it is not alleged that the present of fraudulent devices and representations proowner of the land, Kibler, has placed any cured from him conveyances of this land for improvements thereon, and that therefore a price grossly disproportionate to its known Kibler is not protected as an innocent pur- value, yet because he was in fact insane, chaser. From these facts appellees draw the which was known to them, and because of legal conclusion (and it must be assumed the further fact that they have succeeded in from their brief that upon this ground the selling the property to another, who was igtrial court sustained the demurrer and ex-norant of the fraud, and entirely innocent of ception) that the only remedy of appellants any knowledge of or connection therewith, was an action against Kibler to recover the they must go free, and such purchaser, innoland, which action must be instituted in cent in fact, be made to suffer. To state the Hartley county where the land lies. It is not proposition ought to be a sufficient answer to contended that the facts alleged do not au- it. Appellees contend, in effect, that if Lewis thorize a recovery of the land, but that, inas- had not been actually insane, but the vice in much as the petition shows a good cause of the conveyances had been merely that they action for the land against the present own- had been procured by fraud, appellant's suit er, appellants are confined to that remedy against them would lie, because in such case and cannot recover damages against the par- they could not recover the property in the ties who are alleged to have committed the hands of the present holder. It would be fraud. We think this fairly states the only strange if the added fact that the vendor, question presented by this appeal. Certainly Lewis, was in fact of unsound mind, which it could not be contended that the facts al- it is charged was known to appellees, would leged would not authorize a cancellation of protect them. Without the binding authority the deeds and a recovery of the land from of Silliman v. Gano, supra, we would have no any of the immediate parties to the alleged hesitation in arriving at the conclusion that the demurrer and exception were improperly sustained. Prondzinski v. Garbut, 10 N. D. 300, 86 N. W. 972; Lathrop v. Bampton, 31 Cal. 23, 89 Am. Dec. 141. The authorities cited by appellees do not tend to support the proposition advanced by them. The point decided in Houghton v. Rice, 15 Tex. Civ. App. 561, 40 S. W. 349, 1057, was that a levy upon and sale of the property of an insane person, when it is bought by the execution creditor for a grossly inadequate sum, the amount being credited upon the debt, would be set aside, though the creditor at the time of the sale was ignorant of the fact that the execution debtor was insane. The point decided in Searcy v. Hunter, 81 Tex. 644, 17 S. W. 372, 26 Am. St. Rep. 837, was that a bona fide purchaser from the vendee of a minor does not take title against the right of the minor to disaffirm upon attaining his majority. board may not bind the corporation by virtue of his position, but there must be action by the ing its performance, and such authority may board either in performing the act or authorizbe inferred from the surrounding circumstances. [Ed. Note. For other cases, see Corporations, Cent. Dig. § 1593; Dec. Dig. § 398.*] 2. CORPORATIONS (§ 314*)—Powers of DIRECTORS-CONTRACTS. A director of a railroad company, empowered to obtain a right of way for the company, has no authority to obtain a right of way from himself by binding the company to perpetually maintain a depot and line of railway in a designated place. [Ed. Note.-For other cases, see Corporations, Cent. Dig. § 1393; Dec. Dig. § 314.*] 3. CORPORATIONS (§ 399*)-CONTRACTS-PowERS OF AGENTS. A corporation is bound by oral or written contracts made by its authorized agents legally empowered to make contracts, within the scope of the powers of the corporation. [Ed. Note. For other cases, see Corporations, Cent. Dig. § 1588; Dec. Dig. § 399.*] 4. CORPORATIONS (§ 398*)-CONTRACTS-POWERS OF AGENTS. Cent. Dig. §§ 1592-1594; Dec. Dig. § 398.*] LIDITY. In McLean v. Stith, 50 Tex. Civ. App. 323, 112 S. W. 355, 356, there is an intimation In the absence of any authority of any that a purchaser from the vendee of an in-agent of a corporation to bind it by contract, a sane person having no knowledge of the in- contract purporting to perpetually bind the corsanity will not be protected as an innocent poration to perform a specified act is not bindpurchaser; but the facts in that case showed, ing on it. and it was held by the court, that such subsequent purchaser had notice of the insanity of the vendor of his vendor, and of course could not claim to be an innocent purchaser. None of these authorities to any extent support the action of the trial court in sustaining the demurrer and exception. We do not consider it of any importance that there was no allegation that the purchasers from appellees had placed any improvements on the land. This would have no effect on the rights of appellants as against appellees. We have carefully examined the assignments of error and propositions advanced by appellants, and the counter propositions of appellees in their briefs, and have reached the conclusion that the trial court erred in sustaining the general demurrer and special exception referred to. It follows that the judgment should be reversed, and the cause remanded, and it has been so ordered. Reversed and remanded. Where an owner, conveying land to a railroad company for a right of way and depot he made a contract binding the company to pergrounds, did not know the officers with whom petually maintain a depot and a line of road at a designated place, the mere fact that the company used the property acquired in the absence of affirmative evidence that it knew of the contract, did not render the contract binding on it though the owner was a promoter of the corporation. Cent. Dig. § 1716; Dec. Dig. § 426.*] 6. RAILROADS (§ 129*)-SALES-LIABILITIES A railroad company purchasing, as authorized by law, the property of another railroad corporation is not charged with notice of the existence of any contract binding the latter company to perpetually maintain its depot and line in a designated place, where the contract was not of record, and was not shown by the books of the company or the minutes of its board of directors. [Ed. Note. For other cases, see Railroads, Cent. Dig. §§ 399-403; Dec. Dig. § 129.*] Appeal from District Court, Armstrong County; S. P. Huff, Judge. Action by James Logue against the Southern Kansas Railway Company of Texas. From a judgment for plaintiff, defendant appeals. Reversed and rendered. Terry, Cavin & Mills, Madden, Trulove & Kimbrough, and F. M. Ryburn, for appellant. R. E. Carswell and R. R. Hazlewood, for appellee. FLY, J. Appellee sued appellant for damages alleged to have accrued to him by reason of the depreciation in value of town lots *For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep'r Indexes † Writ of error denied by Supreme Court. 12 139 SOUTHWESTERN REPORTER and lands in and near the town of Wash- each and the acreage property to $20 an acre, Appellant answered by general and special The salient facts are: That sections 62, 63, 98, and 99 are located near the northwest corner of Armstrong county, and form a square, 62 being the northwest quarter, 63 the northeast quarter, 98 the southeast quarter and 99 the southwest quarter of the The Ft. Worth & Denver Railway square. Company's line enters the square near the northeast corner of 98, runs across the southwest corner of 63 and across the south half of 62. The Panhandle road ran in a southwesterly direction from Panhandle across section 63 a short distance into section 98 where it formed a junction, at Washburn, with the Ft. Worth & Denver City Railway Company's line. R. E. Montgomery on February 10, 1888, acquired title to 98, except 40 acres, on May 3, 1890, obtained title to sections 63 and 99. Montgomery on December 31, 1891, conveyed to the Ft. Worth & Denver City Railway Company a right of way 200 feet wide across sections 62, 63 and 98, the consideration being two dollars, and on May 7, 1897, he conveyed all of sections 63, 98, and 99 not previously conveyed to the Panhandle Townsite Company, and that company, through Montgomery as its president, on De cember 1, 1906, conveyed to appellee, James Logue, for a recited consideration of $9,000 cash and three notes for $9,000, all of section 98 not previously sold, except the east one-half of the south-east quarter, 80 acres, and all of section 99, that had not been sold as lots and blocks, and all of section 63 that had not been sold as lots and blocks, and except "any right which the Ft. Worth and Denver City Railway Company or the Southern Kansas Railway Company of Texas may have to their right of way through said land." The Panhandle Railway Company was chartered in 1887 by R. E. Montgomery and others, and the charter provided that the principal business office should be maintained at Washburn. The road was constructed as herein before indicated across section 63 from Washburn to Panhandle, and on July 1, 1889, the company executed and delivered to the Central Trust Company of New York a mortgage or trust deed on all of its properties and franchises, to secure the payment of certain bonds, and having made default in payment, the reorganized company, and that none of the officials of the new company ever knew or heard of the agreement testified to by Montgomery. in 1898 a suit was instituted by the Trust | dent, and that Strong, Manvell and Robinson Company, in the Circuit Court of the United have never had any official connection with States for the Northern District of Texas, and judgment was rendered and the lien regularly foreclosed on the property described in the mortgage, and the same was regularly sold to Edward Wilder and the sale confirmed by the court. On December 5, 1898, the deed to Wilder was executed by Thomas P. Martin, Special Master in Chancery appointed by the federal court. While the property was held by Wilder the Legislature of Texas passed an act authorizing appellant to purchase the road and to operate it as a part of its line. Acting under that legislative authority, on January 1, 1900, Wilder conveyed the Panhandle Railway to appellant. The general offices of appellant were first located at Ft. Worth, were then legally removed to Panhandle City, Carson county, Tex., then on November 9, 1899, it moved its general offices to Amarillo in Potter county, Tex. The Legislature of Texas, in 1907, authorized appellant to abandon its track between Panhandle and Washburn, and to build its line southwest to Amarillo. Before the latter line was constructed appellant had run its trains to Washburn and thence to Amarillo over the line of the Ft. Worth & Denver City Railway Company. In the act authorizing the abandonment of the line between Panhandle and Washburn it was provided: "The enactment of this law shall not preclude any person, who may have a legal cause of action against the said Southern Kansas Railway Company for damages, if any, occasioned by reason of taking up and destruction of said track, from prosecuting said cause of action in the proper courts having jurisdiction thereof." In 1908 appellant, having constructed its direct line from Panhandle to Amarillo, tore up its track between Panhandle and Washburn and abandoned its right of way. Appellee bought the land in 1906, after he knew that appellant intended to tear up its track and abandon the road. Montgomery swore that he donated depot grounds and right of way-about 154 acresto the Ft. Worth & Denver and the Panhandle Roads and "the consideration was the building, establishment, and maintenance of both railways, with their depots and stations on my land, both companies taking possession of the land so donated and using it as they desired for railway purposes." He made a deed to the land donated to the Ft. Worth & Denver Road, but gave no deed to the Panhandle Road. He further testified: "I was one of the incorporators of the Panhandle Railway and a stockholder and director of the company, and its charter provided that its railway should be built over my land, its depot erected, located, and maintained thereon, and that its principal office should be and remain there forever, and that was the understanding and agreement between us. I can't tell what officers I had this agreement with as to the establishment and maintenance of the general offices of the building of the road, or the establishment of its station and depot on my land, but think it was with the president, who, I think was J. P. Smith, Morgan Jones, and probably some of the other officers of the company named in the charter, but I do know that my agreement with them was that this road, with its depot, station, and principal place of business should remain on the land that I donated forever, and I would not have donated this land for any other purpose, except a permanent one." J. P. Smith was dead at time of the trial, but Morgan Jones swore: "There was no understanding or agreement with any one with respect to the location of the general offices of said company at Washburn, the place named in said charter. The law reMontgomery swore that there was an agree- quires the general offices to be located at a ment between the officers of the Santa Fé place on the line of its railroad, and we seRailway Company, of which appellant is a lected that point on the line for the reason part, and officers of the Ft. Worth & Denver that it was the junction point with the Ft. City Railway Company, that the latter should Worth & Denver City Railway. My recolbuild the Panhandle Railroad and that it lection is that there was no discussion among should be turned over to the Santa Fé Road the stockholders or directors with respect to as soon as it could pay for the road. He stat- the location of the general offices of said comed that he did not remember the names of pany at Washburn. I determined that that the officers of the Santa Fé that made the was the place to locate them and had the agreement, but thought that it was Strong, charter drawn that way. The Panhandle president, or Robinson, engineer, and that Railway Company, its board of directors or Mr. Manvell, who succeeded Strong as presi- myself never entered into a contract with dent of the Santa Fé, recognized it. The un- R. E. Montgomery, or any one else, by which controverted testimony of five witnesses it was agreed to establish and forever mainshowed that the Atchison, Topeka & Santa tain the line of railway of the Panhandle Fé Railroad property was sold at foreclosure Railway Company and depot of said compasale on December 10, 1895; that a new com- ny, or the general offices of said company, pany was chartered on December 12, 1895, or any of them, at Washburn, in Armstrong and took the property and began business on county, Tex. I have heretofore stated that January 1, 1896; that since the reorganiza- no such agreement was ever made, as refertion Ripley has at all times been its presi-red to herein. I have heretofore stated that |