In regard to the bill being brought in the name of the trustees, without joining the bondholders, there can be, we think, no just

"It may, in many cases, be a very suspicious circumstance, when such a permission is given by the mortgagee; as, for instance, where a stock of goods, or articles of ordinary consumption, are pledged absolutely, and the title is consequently vested in the mortgagee; the liberty reserved to the mortgagor to sell, might well furnish, if unexplained, an implication of fraud in the contract; but where, from the nature of the property pledged, it is indispensable that many portions of it should, from time to time be repaired, reconstructed, or renewed, there can be no impropriety in permitting the party who is bound to keep up the road, and provide all things necessary to its use, to dispose of the old material, either in part payment of new appliances, or for its general preservation. By this permission no one can be defrauded, and no rule of law is violated. The recording of the mortgage advises the public that the company have pledged their property, and it seems to us that the license to sell it, as limited in the deed, confers no greater right than the mortgagors would have had, if no such clause were inserted. A broken locomotive, a worn-out rail, the timber necessary to repair the road-bed, require to be protected from injury, and made available for the purposes of the pledge; hence, the mortgagor may well be the agent of the parties interested in the security to see that their property, however useless, is not totally lost, and a power to sell, if necessary to effect that object, might be inferred from the relation of the parties to each other.

"The question how far the property and franchise of a railway company, or any similar corporate body, may be subject to sale by execution, has been frequently discussed and determined of late years, both in England and the United States. It is settled, we suppose, definitely, that the franchise, which includes the right of toll, cannot be levied on and sold, unless the legislature, who granted it, assent to the transfer. This was decided in The State v. Rives, 5 Iredell, 267.

"It is the rule adopted by the Supreme Court of Pennsylvania in Ammant v. The New Alexandria and Pittsburg Turnpike Road, 13 Serg. & Rawle, 212; in Leedom v. Plymouth R. R. Co., 5 Watts & Serg. 266; and in Susquehanna Canal Co. v. Bonham, 9 Id. 27; in Massachusetts, in Tippetts v. Walker, 4 Mass. R. 596; in Kentucky, in Winchester and Lexington Turnpike Company v. Vimont, 5 B. Monroe, 1.

"In Ohio the point was fully examined and decided in Seymour v. Milf. and Chillicothe Turnpike Company, 10 Ohio R. 476.

"The result is very clearly stated in the very accurate and learned treatise on the Law of Sheriffs and Coroners, by Mr. Gwynne, p. 341. "The right of taking toll is a franchise, and is not, at common law, nor by the statute of Ohio, regulating judgment and executions, subject to levy on execution; it may be reached in chancery.'

"And the rule thus established is not confined to the franchise merely, it covers every case where it is attempted to separate the structure of a railway or turnpike road, in parts, by a seizure on execution. The whole work is re

ground for any difference of opinion upon the proper application, of the most familiar principles of equity law.

In regard to the right of foreclosure, that must depend upon garded as an entire thing, and each portion so dependent upon every other that the integrity of the fabric, from its commencement to its terminus, will be preserved.

"Thus it is said in 13 Serg. & Rawle, 212, already cited, 'The inconvenience would be excessive if the right of the company could be cut up into an indefinite number of small parts and vested in individuals.' Such a course would defeat the object of the incorporation, both as respects the stockholders and the public also, who have a very material interest in the preservation of every important thoroughfare, as they derive daily benefit from its use. We must regard, then, not among the least of the considerations which very properly press upon us, in examining a question like this, the public right and the public advantage. So long as a highway, similar to the present, can be kept up, it is required by the public interest that it should be. When, however, the corporate body becomes so involved in debt that it cannot longer fulfil the object for which it was created, a court of equity should interfere, take possession of the whole property, and wind up the concern. This is not only the course indicated in kindred cases, but it is peculiarly fit where creditors and debtors, with their varied interests in a common fund, are to be protected by an equal division of the assets, according to the priority of their liens.

"We have referred to this view of the case to illustrate more fully the rule we should adopt in examining the questions submitted by the pleadings.

"We cannot now determine whether the property levied on is essential to the business of the company upon the principles we have laid down. It may be that there have been extravagant expenditures in the furnishing of the apartments occupied as offices; it may be that economy has been ignored, and the fashion of the day, in the outlay of money, has been adopted; it may be that the old rule' utere tuo ut alienum non lædas,' has been forgotten; and it is our duty, if either the one or the other of these conditions exist, to see that the evil, for it is one, is corrected.

“No company has the right to permit its agents to pervert the corporate funds from their legitimate purpose, by providing unnecessary or costly offices, or office furniture, for their subordinates. Such an assumption is equally improper as would be the lavish expenditure of their income in the payment of salaries disproportionate to the labor performed, or distributing it among an army of attachés and dependants, who may be all the while consuming the substance of the corporation at the expense of those who have paid up their stock, or loaned money upon their bonds.

“There must be a reference to a master to examine the property levied on, and report immediately whether the same, on the principle indicated by the court, is necessary to the operation of the road; and if any part thereof can be disposed of without injury to the company, to describe it.

"Until the coming in of the report no further order will be made.”

VOL. II.

35

the provisions of the deed. But if it be technically a mortgage, it will entitle the mortgagees to foreclosure,32 whether it contain a power of sale or not, that being but a cumulative remedy.

If it be what has been called a Welsh mortgage, or vivum vadium, or a provision for liquidating the debt out of the avails of the property, the more appropriate course will be the appointment of a receiver, or transferring the road into the power and control of the trustees, for the benefit of the bondholders, subject to accountability, before the courts of equity.

In another case 33 in the United States Circuit Court for the

32 And the equity of redemption will also subsist for the protection of the mortgagor. And in a late case in Maine it was held, that where a railway company, owning a railway lying in two different states, under charters from each of those states, mortgage their whole road and franchise, and their right to redeem in one state is sold on execution, the purchaser of the equity is entitled to redeem the whole road from the mortgage. Wood v. Goodwin, 49 Maine R. 260.

33 Coe, Trustee, v. Pennock & The Cleveland, Zanesville, & Cincinnati Railw., July Term, 1857, Am. Law Reg. Vol. 6, p. 27. We insert the opinion at length, as it comes from a judge of large experience and great practical good sense, upon a subject of vast importance to railway companies and to capitalists. "But it is not necessary to consider at large whether the mortgage in question, in regard to the equipments of the road acquired subsequent to the date of the mortgage, is operative at common law; as, if it cannot be so considered, there can be no doubt it is good in equity, and the question comes before us on a bill in equity. It seems to be admitted, as it is not denied, that the future profits of the road are subject to the mortgage. And what difference in principle can there be in the future profits and the necessary expenditure to produce such profits? Repairs, when necessary, of the rolling stock on the road, are not more within the mortgage than the purchase of the necessary supplies of such stock, as the public accommodation shall require. The mortgage was on a railway in full operation, embracing every necessary equipment and accommodation to give to it the utmost efficiency. This entered into the consideration of the parties to the mortgage, and anything short of this would, in a great degree, impair the security of that instrument.

Suppose a sheriff or constable had levied upon one or more of the passenger cars or of the locomotives within a few days after the machinery on the road was in motion; can any one suppose that the mortgage could have been defeated or its security impaired by such a step? Will it not be said that in such a case the stock would be within the protection of the mortgage? This no one could doubt, as a withdrawal of the stock from the road would not only impair the obligations of the mortgage, but defeat its object. In this respect, a railway in operation must be considered as protected in the capacity in which it was mort

northern district of Ohio, before the same learned judge, the following points were decided, wherein the same questions to some extent are further illustrated.

gaged; and this is so manifest that the public, and especially subsequent creditors, are bound to know it. But the protection by the mortgage of the equipments upon the road, in the case supposed, are not more indispensable than to keep them in repair, replace them when destroyed, or add to them when required by the public exigencies; these are all within the purview of the mortgage, the contemplation of the parties, and known to the public.

"Does this view impose any hardship on the manufacturer of a part of the equipments subsequent to the date of the mortgage? Certainly it does not. He has a right to retain the possession of his work until it is paid for or the payment secured. Having delivered possession to the company in the ordinary course of business, without receiving the payment, he can assert no lien upon it either in law or equity; he stands in relation to the company on a footing with other creditors who have no security for their debts.

“In Mitchell v. Winslow et al., 2 Story, 639, Mr. Justice Story says, • Courts of equity give effect to assignments, not only of choses in action, but of contingent interests, expectancies, and also of things which have no actual or potential existence, but rest in mere possibility only.' In respect to the latter, it is true, the assignment can have no positive operation to transfer, in præsenti, property in things not in esse; but it operates by way of present contract, to take effect and attach to the things assigned, when and as soon as they come in esse; and it may be enforced as such a contract in rem, in equity. The same doctrine is laid down by Lord Hardwicke. Also, it was so held in Hobson v. Travor, 2 P. Williams, 191; Carleton v. Laightor, 3 Meriv. 667; 5 M. & Selw. 228; Curtis v. Auber, 1 Jacob & Walker, 512, 526; 1 Mylne & Keen, 488; Langton v. Horton, 1 Hare, 549; Mitford v. Mitford, 9 Ves. 100. In his Equity Jurisprudence, § 1231, Mr. Justice Story says: "In equity there is a lien, not only on real estate, but on personal property, or on money in the hands of a third person, wherever that is a matter of agreement, at least against the party himself, and third persons who are volunteers and have notice. For it is a general principle in equity, that, as against the party himself and any claiming under him voluntarily or with notice, such an agreement raises a trust.'

"The mortgage having been placed upon record in the three counties through which the road was to be constructed, and was in fact constructed, I suppose it must operate as a notice of its contents. See Hawthorn v. Newcastle and North Shields Railway Company, reported in Cross on Liens, Appendix, 408; Abbot v. Goodwin, 20 Maine R. 408; 2 Appl. & Shep. 408; Macomber v. Parker, 14 Pick. 175.

“The third ground assumed is, 'that the trust deed is void for uncertainty as to the nature and extent of the grant.'

"The instrument has been attentively read and considered, and no uncertainty is perceived in its conditions, or as to the objects on which it is to operate. If its language were so vague as not to specify these matters with at least rea

A mortgage given on the entire property of a railway, including future receipts for transportation, with an agreement that sonable certainty, the mortgage could not be specifically enforced. But as this objection does not seem to arise on the face of the instrument, and has not been shown in the brief of counsel, no further examination will be given to it.

"In the fourth ground, it is contended that the mortgage is void under the statute of frauds.

"As the trust deed was entered into under the enactments of the legislature, it certainly cannot be said to be against the policy of the law; and it is not perceived that any of its provisions conflict with the statute of frauds, seeing that they are authorized by a law subsequent to that statute.

"In the fifth and last ground it is contended, 'the plaintiff does not show himself entitled to call upon this court to stay the hand of the judgment creditors.'

"The first mortgage to the complainant Coe was dated the 1st of April, 1852; the second to the same individual bears date in March, 1855.

"Prior to the execution of the second deed of trust to the complainant, a mortgage similar to the one first executed to the complainant was given to George Mygott by the same company, and on the same road, its equipments, &c., dated 1st of November, 1854, to secure the payment of bonds to the amount of seven hundred thousand dollars, which it was proposed to issue for the completion of the road, &c.

"It appears that the company employed P. F. Geisse to build for its use on the road a number of cars of different descriptions; and that in payment of the balance of his account, on the 20th November, 1854, he received sixteen of the second mortgage bonds, secured by the trust deed given to George Mygott. The judgment complained of was obtained on these bonds by Pennock and Hart.

"As the first mortgage of the complainant was executed the 1st of April, 1852, it is contended by the defendants' counsel that the first mortgage cannot avail him as to the two locomotives, the Hercules and Vulcan, and the passenger cars, 3, 4, 5, and 6, none of which were in existence until the fall of 1853, and the spring of 1854. And that before the execution of the complainant's second mortgage in March, 1855, this property had been conveyed to George Mygott by the trust deed dated November 1st, 1854, to secure sundry bonds, of which the sixteen on which the judgment was entered formed a part.

"This argument rests upon the hypothesis that as the two locomotives and passenger cars referred to were received by the company after the date of the first mortgage, and before the second mortgage was given to Mygott, and as the bonds on which the judgment was obtained were secured by the second mortgage, the complainant can claim no lien on this property under his first mortgage.

"The passenger cars and the locomotives referred to were in possession of the company and employed upon the road some months before the mortgage was executed to Mygott.