1. While the beneficiaries of a trust may apply to a court of equity to protect the trust property upon the refusal or failure of the trustee to do so, where the instrument creating the trust confers upon the trustee discretionary power to be exercised according to its judgment, and it has instituted an equitable proceeding respecting a particular transaction and subject matter, a court of equity will not interfere to control the trustee acting bona fide in the reasonable exercise of its discretion, and will restrain the beneficiaries from maintaining an independent proceeding subsequently instituted respecting the same transaction and subject matter. All parties who have asserted any rights in the subject matter in either of the proceedings here involved being parties to the proceeding instituted by the trustee, they may all be heard, and their rights and liabilities settled in that proceeding, and the whole matter finally adjudicated.

2. Under the facts of this case, it cannot be held that the trial court abused its discretion in authorizing the successor trustee to proceed with its action for the relief sought in the original petition.

ARGUED MAY 14, 1958 — DECIDED SEPTEMBER 5, 1958.

Plaintiffs in error are five of the six beneficiaries of the George T. Warren and the Virgil P. Warren Trusts (and will hereinafter be referred to as "beneficiaries"), which trusts own 3,000 shares of a total of 9,000 outstanding shares of the common stock of Warren Company, Inc.

Trust Company of Georgia (which will hereinafter be referred to as "Trust Company"), is the successor trustee of both of the trusts above referred to, having succeeded the original trustee, Virgil P. Warren, upon his death February 19, 1957. Under the instruments creating the trusts, the common stock of Warren Company was conveyed "unto the Trustee . . . together with all and singular the rights, members and appurtenances thereunto belonging and all the estate and rights of the Donor therein and thereto . . . to receive, hold, manage, invest and reinvest said described property," and the trust instruments provide that in the management of the trust estate and in the sale and investment and reinvestment thereof the trustee is not "required to report to or secure the approval or consent of any court or to make any annual or other returns to any court, and he shall not be liable for any mistakes of judgment, but only for any default or breach of trust on his part."

The Trust Company as successor trustee accepted the trust property and entered upon its duties shortly after the death of Virgil P. Warren without knowledge of any controversy or claim concerning the past operations, management, or stock of Warren Company, Inc., the former trustee having served as such from 1932 until his death, during which time no claim was made or controversy raised concerning the issue of Class "A" stock in January, 1951. After the Trust Company became trustee, and on June 4, 1957, the beneficiaries brought to its attention certain actions and dealings of the officers and directors of Warren Company, Inc., which they contend resulted in the alleged fraudulent and gratuitous issuance to such officers and directors of 9,000 shares of Class "A" stock of the company, and requested the Trust Company to employ three named attorneys to institute proceedings to have declared null and void the issuance of such stock, to pay these attorneys a minimum retainer of $5,000, plus an additional $35,000 if all the Class "A" stock should be voided, with fees in the event of settlement to be fixed by one of the beneficiaries and one of the attorneys. On June 14, 1957, the Trust Company received a letter from the attorneys named by the beneficiaries alleging perpetration of fraud by the management in connection with the issue of Class "A" stock, stating their position that the Trust Company should proceed to set aside said issue and requesting authorization by the Trust Company to take such legal action on its behalf. After an investigation of the transaction by the Trust Company, it declined to comply with this request, and notified the beneficiaries by letter that, if such a proceeding was instituted, it would have to be in their own names and at their expense, whereupon the beneficiaries made demand upon Warren Company, Inc., its stockholders and directors, that action be instituted to invalidate and cancel the 9,000 shares of Class "A" stock alleged to have been fraudulently and gratuitously issued, which demand was placed on the agenda of the annual meeting of the stockholders to be held on November 4, 1957, and so advised the Trust Company.

On November 1, 1957, the Trust Company filed this suit against the executors of Virgil P. Warren, the former trustee, for an accounting and recovery for the benefit of the trusts growing out of the issue in 1951 of the Class "A" stock, and self-dealing of the predecessor trustee in having issued to himself 4,080 shares of such stock while he was trustee of the two trusts, and an officer and director of Warren Company. The beneficiaries were made parties in that suit, the petition praying that they be made parties to set up whatever contentions they might wish to make.

The stockholders of Warren Company, at the annual meeting on November 4, 1957, declined to institute any action to cancel the Class "A" stock, and thereafter, on November 26, 1957, the beneficiaries filed their separate suit in the same court seeking to cancel and invalidate said Class "A" stock by reason of the same transaction set out by the trustee in its action.

The beneficiaries also filed a response to the Trust Company suit, requesting that it be held in abeyance until the issues involved in the suit by the beneficiaries were finally determined, and if, in that suit, it were determined that the Class "A" stock had been legally issued, that the Trust Company should be required to seek in its suit a restitution in kind of the 4,080 shares of Class "A" stock received by Virgil P. Warren, rather than a money judgment.

After the beneficiaries filed their separate suit, the Trust Company amended its petition and prayed that the beneficiaries be restrained from proceeding in their action or asserting any contention in regard to the Class "A" stock except in this action, and that the trustee be permitted to proceed with its suit for an accounting. To the order and judgment granting the relief prayed by the Trust Company the beneficiaries except.

The record discloses, and the trial judge was authorized to find, that Warren Company, Inc., was incorporated in 1927. From then until October 1, 1945, and from August 16, 1948, and until November 24, 1953, Virgil P. Warren served as President. Thereafter, until his death in 1957, he was Chairman of the Board. During most of its history, the company had operated profitably, but after the war developed such financial difficulties as to threaten the existence of the company. By 1950 the company required large additional financing in order to continue operation, but it was unable to obtain such financing from the Atlanta banks from which large loans were outstanding. In November, 1950, the management sought a loan of $1,000,000 from the Reconstruction Finance Corporation, and obtained the counsel and advice of Elbert P. Tuttle, as attorney, and Sykes Young, as accountant.

Reconstruction Finance Corporation and the participating bank, Citizens Southern National Bank, required as a condition to any loan an arrangement for the continuation of existing management and the assignment of a majority of the voting stock for the protection of the lender. A majority of the voting stock of the company was owned by the trusts represented by the Trust Company, and by the Virgil P. Warren Foundation, a charitable foundation. Counsel expressed doubt that this stock held by these fiduciaries could validly be pledged to secure such loan, and proposed the following plan to satisfy the conditions of voting control and management required by Reconstruction Finance Corporation and Citizens Southern National Bank: The company would issue 9,000 shares of nonpar value Class "A" common voting stock to participate in no dividends until the existing common stock should receive $10 a share in dividends in any year, and in case of liquidation the existing common stock should receive $140 per share, the amount determined at that time, in January, 1951, to be the book value thereof prior to the new issue participating in any distribution. The then present value of the Class "A" stock was thus dependent upon the future operation of the company under the guidance of its management. The entire issue was to be distributed to the management to satisfy the management requirement of the lenders, but pledged with Reconstruction Finance Corporation and Citizens Southern National Bank to satisfy the voting-control requirement. This plan was devised to enable the company to solve its financial difficulties while protecting the equity of the present stockholders and, at the same time, to offer sufficient inducement to the management of the company to remain with the company and work out its difficulties. This plan was approved by the board of directors on January 2, 1951, and the stockholders had a special meeting on January 6, 1951, with all of the stock of the company represented voting for an amendment to the charter authorizing the issuance of the Class "A" stock; but it is not made to appear that at that time the stockholders were informed as to whom and in what amounts the stock would be distributed. On January 9, 1951, the directors authorized the issue and distribution of the Class "A" stock to the management. The 4,080 shares to Virgil P. Warren and smaller distributions to other officers were made subject to a buy-and-sell agreement, whereby each officer receiving stock agreed in writing to sell his stock to the others in the event of his death or departure from the employ of the company, which agreement was pursuant to the suggestion of the local Reconstruction Finance Corporation officers concerned with the continuation of present management after the death of Virgil P. Warren.

Following this issue of Class "A" stock, a loan to the company in the amount of $750,000 was approved by Reconstruction Finance Corporation on February 15, 1951. All of the Class "A" stock and all of the common stock owned individually by Virgil P. Warren was pledged as collateral for the loan, and in addition Virgil P. Warren personally guaranteed $200,000 of the indebtedness and pledged as security certain of his personal assets. From 1951 to the present time the company has operated profitably under its then existing and present management. Dividends have been paid on the common stock each year since 1953. No dividends have been paid on the Class "A" stock. The record further discloses that, after the issuance and distribution of the Class "A" stock as above indicated, and at a time when the holders of the original stock had notice of the issuance and distribution of the stock, the board of directors determined that the proper preference figure for the common stock on liquidation set in 1951 as representing the full book value should have been $161 per share, and unanimously agreed that the company should establish such correct value of $161. This was accomplished by charter amendment authorized at a special meeting of the stockholders on April 23, 1954, long after the issuance and distribution of the Class "A" stock, at which meeting of the stockholders all the Class "A" stock and substantially all of the common stock was present and voted for the amendment.

Counsel for the plaintiffs in error state that the questions presented for determination are: 1. Was the Trust Company entitled to an order restraining the beneficiaries from proceeding with their suit to set aside the alleged unlawful issue of stock, "after the suit was filed pursuant to the express consent of the trustee?" 2. Is the discretion of a successor trustee of two trusts whose principal assets consist of stock in a family corporation founded by the father and grandfather of the beneficiaries so absolute and beyond the control of the courts as to permit such successor trustee to ignore the unanimous election of the beneficiaries of the trusts to seek restitution in kind rather than a money judgment? We will deal with these two questions in the order stated.

HAWKINS, Justice. (After stating the foregoing facts.)

1. There can be no serious question as to the right of the beneficiaries of a trust to apply to a court of equity to protect the trust property upon the refusal or failure of the trustee to do so. McGehee v. Pope, 167 Ga. 622 ( 146 S.E. 455); McLarty v. Abercrombie, 168 Ga. 742 ( 149 S.E. 30); President Trustees of Bowdoin College v. Merritt, 54 Fed. 55; and compare Denny v. Gardner, 149 Ga. 42 ( 99 S.E. 27); Jones v. Gann, 184 Ga. 722 ( 193 S.E. 174). Thus, had the trustee taken no action with respect to the transaction here involved, the beneficiaries would have been authorized to bring and prosecute their suit to set aside the issuance of Class "A" stock, the trustee having declined the request of the beneficiaries to bring such an action, and having notified the beneficiaries that if such a suit should be brought, it would have to be brought in the names of the beneficiaries and at their expense. However, such action on the part of the trustee cannot properly be construed as an express consent to the beneficiaries to bring such a proceeding. On the contrary, it was merely a refusal on its part to institute such a proceeding and a statement that, if such a proceeding should be brought, it would have to be brought in the name of the beneficiaries and at their own expense. That it was not an express consent by the trustee for the bringing of such a suit by the beneficiaries is conclusively shown by the fact that, before the bringing of any such suit by the beneficiaries, the Trust Company filed the present suit against the representatives of the predecessor trustee, seeking an accounting and a judgment against his estate for the alleged wrongful self-dealing by the issuance of Class "A" stock to the predecessor trustee while acting as a director and officer of the issuing corporation and as trustee of the trust property, and in which proceeding the beneficiaries were made parties defendant with the right to set up in this proceeding any claims they might have concerning the transaction, and in which proceeding as amended it was prayed that the beneficiaries be restrained from proceeding with their minority stockholders' suit or elsewhere except in the present case until further order of the court. The first question presented is, whether the trial court erred in restraining the beneficiaries from proceeding with their separate suit, and from otherwise proceeding except in the action filed by the trustee until further order of the court. It is well settled that where, as here, the instruments creating the trust confer upon the trustee discretionary power to be exercised according to its judgment, a court of equity will not interfere to control the trustee, acting bona fide, in the reasonable exercise of its discretion. Papot v. Gibson, 7 Ga. 530; Semmes v. Mayor c. of Columbus, 19 Ga. 471. In Miller v. Butler, 121 Ga. 758, 759 ( 49 S.E. 754), it is said: "Where the title to property is put in one person for the benefit of others, the latter take cum onere. The skill, ability, and solvency of the trustee operate to their advantage. But as to acts within the scope of his express or implied powers, they must suffer the consequences when they ultimately prove detrimental to the beneficiaries. The remedy in such a case is not to undo what has lawfully been done, but to proceed against the trustee ( Clark v. Flannery, 99 Ga. 239), whose personal and financial fitness were passed upon by the grantor when giving the land. The very instrument which created the estate put forward the trustee as the person who was to represent those interested therein when it became necessary to deal with third persons. On this principle cestuis que trust are bound by his non-action for a time long enough for him to be barred by the statute (Civil Code [1895] § 3773 [now Code § 3-710]); they are bound by his loss of a loan made in good faith to a person then solvent ( Walker v. Walker, 42 Ga. 135); by his receipt of funds which other prudent men then took as currency ( Campbell v. Miller, 38 Ga. 304); by a compromise honestly and in good faith made by him ( Maynard v. Cleveland, 76 Ga. 53 (6)). They are likewise bound by the results of suits instituted or defended by him for the benefit of the estate ( Gunn v. James, 120 Ga. 482); and this is so even if the judgment is rendered by default. Sanders v. Houston, 107 Ga. 59 (4). See Ferris v. Van Ingen, 110 Ga. 102 (6, 7), where the minor was held bound by the conduct of the mother to whom a year's support for herself and child had been set apart." See also annotations following Trout v. Pratt, 106 Va. 431 ( 56 S.E. 165, 8 L.R.A. (N.S.) 398); III Scott on Trusts (2d ed.), 2144-2148, §§ 282, 282.1.

The trial court in rendering its judgment in this case said: "I do not believe a trustee is bound to take the course of action demanded by some of the beneficiaries. For illustration, let us assume a trust of which there are four beneficiaries . . . and each demands a separate and distinct type of action. The trustee must exercise its judgment and take the risk of such liability as may result therefrom. But if the trustee pursues one course of action I do not believe the beneficiaries whose demands were not met can themselves thereupon each independently bring a separate type of action each asserts to be the better one under the circumstances. It is a matter of judgment as to which course of action should be taken and unless the trustee refuses to take any action I do not believe the other separate actions by the beneficiaries can be maintained. In exercising its judgment the trustee must necessarily consider the effects each course of action will have upon the trust assets. And it must be remembered that in this case the trust assets are 3,000 shares of stock in the Warren Company now in the possession of the trustee and which were the original trust corpus and these shares must be protected and preserved. If the successful bringing of a minority stockholders' suit to cancel the alleged illegally issued stock would result in destroying the bank credit necessary to the successful operation of the business or otherwise bring financial disaster to the company (as it might well do in this case), such a course of action would not be sound in protecting the assets of the trust, to wit: the 3,000 shares of stock it holds as trustee. The trustee cannot ignore all else in its eagerness to follow the wishes of a portion of the beneficiaries. Indeed, it must exercise its proper judgment regardless of the wishes of the beneficiaries. . . There has been no showing that the present trustee abused its discretion in taking the course of action of bringing this suit rather than acceding to the demands of some of the beneficiaries to . . . bring a minority shareholders' suit; and it is the opinion of the court that the petitioner as successor trustee is entitled to the interlocutory relief sought by it."

Under the evidence in this case, we cannot hold that the trial judge abused his discretion in granting the interlocutory injunction restraining the beneficiaries from proceeding in their action, and from otherwise proceeding except in this action until further order of the court, for in Sapp v. Ritch, 169 Ga. 33 (3) ( 149 S.E. 636), it is held: "In hearings upon applications for interlocutory injunctions, where the evidence upon material issues of fact is in conflict, the grant or refusal of applications is within the discretion of the chancellor, and the exercise of his discretion in granting or refusing the relief prayed for will not be controlled unless manifestly abused." See also Voyles v. Carr, 173 Ga. 627 (1) ( 160 S.E. 801); Ray v. Ray, 208 Ga. 733 (1) ( 69 S.E.2d 261). The beneficiaries are not precluded by the restraining order granted from setting up their claim in this proceeding. This being a proceeding in equity, and the beneficiaries and all others who have asserted any rights in the subject matter in either of the proceedings here involved being parties thereto, "They may all be heard, and their rights and liabilities settled in this one suit, and the whole matter finally adjudicated." Blaisdell v. Bohr, 68 Ga. 56, 61. See also Booth v. Stamper, 10 Ga. 109, 116; Fine v. Saul, 183 Ga. 309 ( 188 S.E. 439).

2. It is insisted by the plaintiffs in error that the trial court erred in ordering that "Petitioner, Trust Company of Georgia as trustee may proceed with this action for the relief sought in the original petition in this case." The original petition sought an accounting and the recovery of a money judgment against the executors of the predecessor trustee growing out of the issuance of 4,080 shares of Class "A" stock to the predecessor trustee. The beneficiaries, in their response to the plaintiff's petition, prayed that, should that stock not be canceled, the trustee be directed to seek a recovery of the stock in kind, rather than a money judgment, and in paragraphs 7 and 9 of their response as amended the plaintiffs in error set out the reasons why they contend this relief should be sought rather than that prayed for by the successor trustee; and in support of their contentions cite General Petroleum Corporation of California v. Dougherty, 117 F.2d 529, 539 (7), where it is held: "Where a trustee in violation of his trust has changed the trust property or its proceeds into other property, the cestui que trust has his option, either to hold the substituted property liable to the original trust, or to hold the trustee liable for breach of the trust. United States v. Dunn, 268 U.S. 121, 45 S. Ct. 451, 69 L. Ed. 876; Oliver et al. v. Piatt, 3 How. 333, 44 U.S. 333, 11 L. Ed. 622; Lathrop v. Bampton, 31 Cal. 17, 89 Am. Dec. 141. This right or option of the cestui que trust belongs exclusively to him, and it is not in the power of the trustee to deprive him of it." See also, in this connection, 90 C. J. S. 848, § 439 (a); 54 Am. Jur. 193, § 250.

The foregoing authorities have no application to the situation here presented. This is not a suit by the beneficiaries against the alleged unfaithful trustee, but is one brought against the personal representatives of the deceased predecessor trustee by a successor trustee whom the trial court has found under the evidence to be acting in good faith and according to its judgment within the discretionary power vested in it by the one creating the trust, and comes within the ruling made in the first division of this opinion that a court of equity will not interfere to control a trustee acting bona fide in the reasonable exercise of its discretion. In Hart v. Citizens National Bank, 105 Kan. 434, 438 ( 185 P. 1, 7 A.L.R. 933, 936), that court, in dealing with a situation somewhat similar to that presented by the record here, said: "After the spoliation occurred, a new trustee was appointed. As soon as Lillian M. Prager qualified as trustee, she took title to the trust estate, and became vested with all rights of action pertaining to the trust and trust property. The beneficiaries had no title to the trust property, no control over it, and no right of action growing out of its management and disposition. The new trustee had a complete, matured cause of action against both her unfaithful predecessor and the bank for devastavit, and a variety of remedies were available to her. She alone could pursue them." See also III Scott on Trusts (2d ed.) 2205, 2206, § 294.4. We cannot hold that the trial judge erred in ordering that the trustee may proceed with its action for the relief sought in the original petition in this case.

Judgment affirmed. All the Justices concur.