878 FEDBEAL BBPOBTBE. �rectors of the defendant corporation became interested with Smith, Dennison and Converse as parties thereto, so that two of the five contraotors were parties to the contract on both sides. The construction company thus organized went on under the contract for several years, expending large sums of money in the construction of the ro.ad, and now claims a large balance as due to it on said contract, for which it holds bonds secured by the mortgage sued on. It seekd to recover judg- ment and a foreclosure of said mortgage. The validity of the mortgage, and of the bonds to secure which it was given, de- pends upon the validity of the construction contract, which is the foundation upon which alone they must be supported. Upon consideration of the proofs in the case, the master's report, and the law, I have reached the following conclusions : �1. That the admission into the construction company, under the construction contract, of two officers of the railroad com- pany was unlawful and vitiated the contract. It matters not -whether the contract was entered into with the under- standing that the two railroad directors were to be admitted or not, their presence as parties on both sides during the pro- gress of the work, and when payments and settlements were to be made under the contract, is enough. Wardell v. B. Go. 4 Dillon, 33; B. Co. v. Poor, 59 Me. 270. �2. It is insisted that there bas been such acquiescence on the part of the stockholders of the defendant company, in the matters of which they now complain, that they are es- topped. It appears that the contract was openly made and reported to the board of directors of the railroad company, and by them approved, without any apparent effort at secrecy, and that the work of constructing the road was carried on by the construction company under the contract for a period of several years. It is inferred, and perhaps not without reason, from these facts that the stockholders generally were advised of the particulars of the contract, including the fact that two members of the board of directors were interested in it. It does not, however, follow in my opinion that the contract should be upheld and enforced in a court of equity as against the stockholders. ����
