This is a representative action for an accounting'by the appellant and others, as members of axreorganization committee under a reorganization agreement involving the American Cotton Company and ten subsidiary companies. The ground of the demurrer relied upon and argued in behalf of the appellant at Special Term and ■ here, is that the complaint fails to state facts sufficient to constitute a cause of action. The reorganization agreement is-annexed to and made part of the complaint, as is also a plan of reorganization prepared by the reorganization committee and a statement of pro-" posed changes, modifications or departures from such plan of reorganization, likewise prepared by said committee. The reorganization agreement was made on the 16th day of-June, 1904. The jplan of reorganization . prepared by the committee bears date .the 19tli day of August, 1904, and the-statement of proposed changes, modifications or departures therefrom bears date the 25th day of July, 1905. The action was commenced on the 13th day of. December, 1905. There were three parties'to the reorganization agreement. The parties of the first part consisted of the appellant and the other members - of the reorganization committee and were therein designated the “ Committee.” . The ¡Bankers’" Trust Company was the party of the second part and was designated the Depositary.” - The parties of the third part consisted of such holders and owners of debenture bonds, notes and other obligations, and of - preferred and common stock of the American Cotton Company and of certificates of deposits therefor issued under a stockholders’ agreement" made on the 2d day of December, 1901, and such holders and owners of notes and other obligations and of the capital stock of ten specified companies as should become parties thereto by depositing their bonds, notes and other obligations,, stock and' certificates of deposit thereunder with said depositary, where it was provided that *257they should become parties to the agreement, as if they had signed and executed the same, and they were designated the “ Depositors.”
The plaintiff alleges that he owned sixty-five shares of the capital stock of the American Cotton Company, and that on or about the 15th day of August, 1904, pursuant to an invitation from the reorganization committee, he executed the reorganization agreement and deposited his stock with the depositary thereunder, and that a great number of others, falling within the class of those intended to be parties of the third part, did likewise and deposited their respective shares of stock, notes, bonds and other obligations and certificates of deposit with the depositary. The plaintiff further alleges that the reorganization committee enlarged their number and substituted the Metropolitan Trust Company as the depositary. Authority to do this, however, appears to have been conferred by the reorganization agreement. The plaintiff further alleges that the members of the reorganization committee thereafter took pos^ session of all of the property of the American Cotton Company and of the other ten corporations which, consisted, among other things, “of a large number of Letters Patent of the United Stafes and a large number of bales of cotton.” The plaintiff then charges -that by the use of the securities so deposited with the depositary the members of the reorganization committee “ in their individual capacity have received and realized large sums of money and property of large value besides that of the American Cotton Company which should have been held and administered by them for this plaintiff and other depositors under said reorganization agreement; but sai.d individual defendants have wasted and squandered a large amount of the said property and money, and have used for unauthorized and unlawful purposes a large portion of the balance of the same,” and have pledged some of said certificates of stock and other» corporate securities with banks, trust companies and other persons, natural and corporate, and “ have thus obtained loans of large sums of money, by the use of which, in speculation in stocks, bonds, cotton and otherwise, the said borrowers have realized large profits which in equity belong to this plaintiff and to other depositors under said agreement; ” that under- color of the reorganization agreement they have unnecessarily and without authority expended large sums *258. of money for counsel fees and otherwise in excess of the real value óf the services and consideration received, and have “ otherwise in a manner to the plaintiff unknown, by negligence and misfeasance, wasted and misapplied the assets of the property which they have thus acquired and have depreciated the valué of the certificates of stock and other securities deposited with them as aforesaid to .the great damage and loss of this plaintiff and the rest óf the said depositors;” that when plaintiff deposited his stock the-American Cotton Company was solvent, but subsequently it became insolvent, and, by collusion of the members of the reorganization committee ancjl the depositary, a receiver of its property was appointed by a vice-chancellor of New .Jersey on the 7th day of September, 1904; that each and every statement contained in the plan of reorganization which was issued to the depositors by the members of the committee on the "19th day of August, 1904, and in tile statement of proposed changes, modifications or departures from said plan issued by them to the depositors on the 25tli day of July, 1905, was false and untrue ; that, before commencing the action, the plaintiff demanded of the members of the-reorganization committee that they inform lii-m of the amount of the obligations and expenses that had béen incurred by-them under the reorganization agreement, -and of the amount which they had .determined should be his share of said expenses, but that they refused to give the information, and. he is wholly ignorant thereof and unable to decide intelligently whether or not to dissent from ' the plan of reorganization adopted by the committee; that-on‘or about the 9th day of November, 1905, in behalf of himself and of others similarly situated, he caused a demand in writing to be served on the members of the reorganization committee for an accounting for all acts done by them and for all property received by them under theu'eorganization agreement, or under color thereof, .and for all money and other property received by them by means of their connection with the reorganization agreement or with the American Cotton Company “ including all profits made by membership 1 in syndicates, and all profits made by the use of loans, which, you and which any one of" you have obtained from persons and corporations with whom yon have deposited funds, which you and which any one of you have obtained the custody of in connection with, said réor*259ganization agreement,, including profits made by Speculation and dealing in cotton,” but that they and each of them have failed to account in any respect. The prayer for relief is, as to' the members of the. reorganization committee,- that they account to the plaintiff and other depositors under the reorganization agreement “for all their acts and for all the acts of each of them under color of said Reorganization Agreement and under color of any modifications therein, and for all profits thus realized by them, and for all acts which they have committed by reason of the said stock certificates, which they have acquired as aforesaid,” and, in- the usual form, for other and further relief.
It is unnecessary to state in detail the provisions of the reorganization agreement. The purpose of the agreement was to vest the ownership and control of the corporations in the reorganization committee as the agents, attorneys in fact and trustees of the stockholders, bondholders and creditors, with a view to formulating a plan for reorganization, by forming a new-corporation to which the property would be transferred and in return for which the depositors would receive a proportionate share of the stock and securities of the new corporation. It was expressly provided in the reorganization agreement that the members of the reorganization committee should not be responsible for defects or errors and thal ■“ Neither the Committee nor the Depositary assume any personal responsibility for the execution of such Plan and .this Agreement, or any part thereof; the Committee, however, undertake in good faith to endeavor to prepare, adopt and execute the same.- No member of the Committee, nor the Depositary,'shall be personally liable for any act or omission of any agent or employee selected in good faith, nor for any error of judgment or mistake of law,'nor in any case except for his, its or their own individual willful malfeasance or neglect; and no member of the Committee shall in any case be personally liable for the act or omission of any other member of the Depositary, nor shall the Depositary be liable for the acts or defaults of the Committee.” The reorganization agreement expressly recognizes that the members of the reorganization committee were to receive, hold and sell or otherwise dispose of the property as trustees for the depositors, and that their obligation to the depositors to whom certificates of deposit were to be and were issued, was á trust *260liability. The committee were- authorized to sell or pledge the property depositéd under the reorganization agreement for the purpose- of raising moneys “ to provide for the use and operation of the business and properties of any of the-said companies, or for '-the corporate uses of any company formed or adopted pursuant to the plan,” and they were authorized to pledge the property “ for the payment of any moneys borrowed or agreed to be-paid and for,the performance of any other obligation incurred under the powers herein conferred.” The agreement provided that .any depositor who might not agree to the plan of reorganization prepared by the committee might dissent therefrom and withdraw from the reorganization agreement as -therein provided, within ten- days after notice of .the plan of reorganization should be mailed to him as therein provided,, and1 might likewise withdraw, as therein provided, within one week after the final publication of-notice of “ any intern tional- change or modification or departure ’■’ from -the plan' of reorganization prepared by the committee “ and this agreement.” It does not appéar that plaintiff’s demand for information was made before his time to' withdraw expired. No time is fixed in the reorganization agreement' within which the committee are required to ffilly complete their duties, and the only provision thereof with réspect to an accounting is that “ The accounts of the Committee ■ may be filed with the Depositary or with the Board of Directors of any company which may be organized or adopted under such Blan and this Agreement, within one year from the completion of the reorganization, unless a longer time be granted by the Depositary or by such Board. The accounts, when approved by the Depositary- or by-such Board of Directors shall be final, binding and conclusive upon all parties having any interest therein; and thereupon the Committee shall be- fully discharged of all liability and accountability hereunder.” . .
The learned counsel for the appellant concedes that his- client may presently be required to account for fraud or bad faith if any existed; but he contends that in view of,the purpose of the reorganization agreement, and the discretion ..vested in the- committee, no accounting should be ordered until the work of the reorganization committee has been completed, or a reasonable time therefor, has elapsed, unless fraud or bad faith is shown; and- lie claims that *261the allegations of the complaint are insufficient to admit evidence of fraud and bad faith. On the proposition that no accounting should be ordered at this time,- he cites the cases of Venner v. Fitzgerald (91 Fed. Rep. 335); Van Siclen v. Bartol (95 id. 793) and Nichols v. Rogers (139 Mass. 146), but they are not sufficiently in point to require serious consideration. The Venner case was a suit for an injunction to resti'ain the further consummation of a reorganization agreement for alleged unauthorized acts of the " committee iti purchasing securities of the old company and distributing the securities of the new. The Van Siclen case was a suit to enforce a liability against a reorganization committee for alleged breach of duty and for an accounting, of plaintiff’s property. The case was tried upon the' merits and the court found that the plaintiff failed to show gross negligence or willful malfeasance, for which alone the committee would be liable under the reorganization agreement, but a decree was entered requiring the defendants to pay the amount for which they were found to be accountable to him. ' In Nichols v. Rogers a number of purchasers of a mine entered into an agreement by which they gave one of their number “ sole, absolute and untrarqmeled control” of their interests, and lie agreed'to use Iiis best skill and judgment to recover the mine or their money. They advanced money to their trustee, who, acting under the trust agreement, purchased undivided parts of the mine and sold certain interests therein. Within three months of the date of the agreement one of the parties requested the trustee to convey to him his interest and to render an account. This was refused and' a bill in equity was filed to require the trustee to convey to the plaintiff his interest in the property. There was no allegation of misconduct or breach of the trust in the original bill. The bill was amended by alleging that the defendant “ now denies that the plaintiff has any interest ” in the property purchased with plaintiff’s money “ and claims to hold it to his own use, and that the defendant had not in his transaction acted in good faith, but had fraudulently and in bad faith.” The court held that the original bill did not aver that a reasonable time had elapsed or that defendant had completed the services or abandoned his efforts under the agreement, or that he had in any respect acted in bad faith, and that the demand for a conveyance of his interest “ was not in conformity to the agreement, but was in con*262travention of it.” With respect to the amendment the court held that as the acts were not charged to have been done before the bill was filed, they did not afford ground for equitable relief under the practice in that State and further added that the charge ■ of fraud was too general.
The plaintiff relies upon decisions in this’jurisdiction, where the 1 rule is. uniformly held to be that an action for an accounting against a trustee may be liad at any time regardless of imputed fraud- or -bad faith. (Slayback v. Raymond, 93 App. Div. 326, and cases cited-; Hancox v. Wall, 28 Hun, 214; Frethey v. Durant, 24. App. Div. 58 ; Jordan v. Underhill, 91 id. 124; Spier v. Hyde, 92 id. 467.) It is quite clear that a fiduciary relation existed between the depositors and the members of’the reorganization committee. The confidéncé .of the depositors in the members of the committee, shown by vesting in them broad powers and great discretion, .rendered it the duty . of the members of the committee to act in the utjnost good faith. (Industrial & General Trust, Ltd., v. Tod, 180 N. Y. 215.)
It is unnecessary to decide whether the depositors, might at any time without showing a breach of trust obtain an accounting. It • .may well be that until a. reasonable time had elapsed to enable the reorganization committee to perform the duties which they assumed, the court would not, in the absence of some allegation showing a breach of the trust or gross negligence or bad faith on the.part of the committee, call them to account. In the.case at ■bar, however, it appears that the committee had possession of this property in trust for the purposes of the agreement, for considerably more than a year, and there are allegations of fact which, if true, tend to show that there have been breaches of the. trust. The-allegations of fraud, waste and mismangement on the part of the committee are not unsupported by other facts, It is unnecessary, however, to decide whether these allegations, with the other facts averred in connection with them, remove the case from the application of those authorities (See Wood v. Amory, 105 N. Y. 278; Everett v. Everett, 180 id. 452; Meyers v. City of New York, 58 App. Div. 534; Kittinger v. Buffalo Traction Co., 160 N. Y. 377; Gernsheim v. Olcott, 10 N. Y. Supp. 438) which hold that bare allegations of fraud, waste or mismanagement áre me're conclusions . of law, but it may be observed that the decision, of the. court *263in Biddle Purchasing Co. v. Snyder (109 App. Div. 679), in which the allegations were quite similar, indicates that they are. The committee had no authority, under the reorganization agreement, to speculate with the securities deposited with them. The allegations of this complaint are sufficient to admit proof of the fact that these trustees speculated with the trust funds. Moreover, a charge is made that they issued false statements to the depositors; and if so, it must have been with a view to influencing their action in deciding whether or not to withdraw from the agreement. These and the, other allegations to which attention has been drawn, other allegations coupled with their refusal to give information to the plaintiff, are not consistent with good faith. ¥e are dealin'g now only with allegations. They may not be true, but they are sufficient in a technical point of view to enable tile plaintiff to present his case. If the complaint be sustained, it does not necessarily require that the organization plan be stayed or abandoned. It may be, if the proofs suffice, that the plaintiff will be entitled to an accounting for his share of the profits made by the trustees by an unauthorized use of the securities, and that the reorganization plan will be permitted to be consummated. The quantum of relief to be granted, if any, will depend altogether upon the proof, but is not material to a decision on the demurrer. I am, therefore, of opinion that the complaint states a good cause of action and that the demurrer thereto was properly overruled.
It follows that the interlocutory judgment should be affirmed, with costs.
Patterson, P. J., and Claree, J., concurred; Ingraham, J., dissented.