Case ID: miss_17/html/0394-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Clayton", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Alexander H. Arthur vs. The President, Directors and Company of the Commercial and Railroad Bank of Vicksburg.
    A bank may make an assignment of its effects for the payment of its debts; such assignments, whether made voluntarily, or by operation of law, have often been upheld.
    No definite trust attaches to the assets of a bank in favor of all the creditors ; a bank may pay one creditor to the exclusion of all others, or may make a partial assignment of part of its effects to pay a specified debt; a preference therefore, in a general assignment by a bank, given to one creditor over others, does not vitiate the assignment. Such preferences, however, are suspicious, and to be watched with jealousy.
    In one sense the assets of a bank do constitute a trust fund, in this, that they cannot be lawfully diverted from the payment of debts; yet no creditor, unless he have a judgment or an assignment, has such an interest in them as will enable him to subject them to his debt.
    Whether or not a corporation, with a railroad franchise attached to it, has power to convey away the railroad and the franchises attached to it, is a matter between the state and the corporation, with which third persons have nothing to do.
    The tangible property and estate of a corporation, are subject to sale under execution in the same manner that those of an individual are ; where, therefore, by the charter of an incorporated railroad and banking company, the corporation was authorized to purchase the lands necessary for the site of the road and the requisite depots, stations and buildings, and to possess and hold the same in fee simple, it was held, that the real estate of the corporation, so purchased for the site of the road and the other purposes specified, were subject to sale under execution, and might be assigned by the corporation.
    Whether an assignment of the accruing profits of a railroad attached to an incorporated railroad and banking company, by the corporation, be not also an assignment of the estate on which the road is built, to the extent of the assignment of the profits of the road,— Query ?
    
    The franchise in a railroad erected by an incorporated railroad and banking company, cannot be sold or assigned without the consent of the power which granted it; it is a mere easement, not the subject of sale. If the road be sold or assigned, the franchise does not pass with it, nor is the corporation thereby dissolved, though it might be ground of forfeiture if insisted on by the state.
    Where an assignment was made by an incorporated railroad and banking company, of all its effects real and personal, to trustees for the purpose, first, of enabling them to borrow money to complete the road ; and second, out of the profits of the road when completed, first to pay the money borrowed, then the salaries of the assignees, the expenses of the trust, the bank and the railroad, and the residue to pay the general creditors who might come in under the assignment; the leading object of the assignment being to save the forfeiture of the charter of incorporation, which provided that the act of incorporation should be null and void if the road were not built in a limited time ; it was held, that if the assignment were otherwise obnoxious to the law., this motive would not avail to sustain it; as the charter of incorporation, by a failure to erect the road in the limited period, would not ipso facto have been avoided, nor until the state, by proper judicial proceeding, had obtained a judgment of forfeiture.
    A provision in a deed, to secure future advances, is not necessarily fraudulent; it depends on the lonafides of the transaction. Where, therefore, a banking company to which a railroad was attached by its charter, assigned all its effects, real and personal, to trustees, with power to them to borrow, on the security of the property of the bank, thus assigned, a large sum of money to expend in the completion of the railroad ; it was held, that this provision in the assignment was not necessarily, and on the face of it fraudulent and void.
    Where an incorporated railroad and banking company in failing circumstances, made an assignment of a very large amount of real and personal estate and choses in action, including the railroad, and imposed thereby various and onerous and responsible duties on the assignees, and provided in the deed of assignment, that each assignee should, out of the property assigned, receive an annual salary of eight thousand dollars ; it was held, that the amount of salary, though very large, and calculated to excite suspicion, was not necessarily fraudulent on the face of the assignment, hut was a subject to he inquired into by proof.
    A conveyance by a debtor in failing circumstances of all his property to trustees, in trust to retain it for an indefinite time, until after defraying the expenses of the trust, they have, out of the profits, paid all the debts of the grantor, when the property thus conveyed is to revert or be reconveyed to him, is fraudulent and void as hindering and delaying creditors.
    Where, therefore, an incorporated railroad and banking company, being in' failing circumstances, and by its charter owning in fee simple the site of the railroad and other buildings and lots attached to it; assigned by deed all of its real and personal estate to assignees to pay therewith, and out of the profits of the railroad when completed, it being then unfinished; a certain debt to be contracted by the assignees for the completion of the road, and all the expenses of the trust and of the corporation, and then the debts of the corporation, and no provision whatever was made for the sale of the fee simple of the corporation, in the site of the road and other buildings and lots attached to it; and the assignment of the profits of the road was indefinite in its duration, except that it was to last until the debts were paid ; when the fee with the road was to revert to the corporation ; it was held, that the tendency of the assignment was to lock up the estate indefinitely; to create a perpetuity; to hinder and delay creditors unreasonably ; and to secure an ultimate and permanent advantage to the corporation, and was therefore void.
    Any provision in a deed of assignment which materially hinders and delays creditors in the assertion of their rights, especially when coupled with a reservation of any part of the property to the grantor in the deed, makes the whole deed void.
    On appeal from the superior court of chancery; Hon. Robert H. Buckner, chancellor.
    Thomas E. Robins, William S. Bodley, and William C. Walker, filed their bill, in which they state, that on the 13th day of February, A. D. 1840, the President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, a duly incorporated company, assigned, by two deeds of assignment, all its property, and all the proceeds and profits of the railroad, to assignees, for the benefit of the creditors of the company. These deeds were exhibited with the bill. That Thomas E. Robins, William S. Bodley, and William W. Frazier, were the assignees of the bank, who accepted, and entered upon the discharge of the trusts contained in the assignments; that they had provided funds to, and did complete the railroad unfinished at the lime of the assignment, and proceeded to the collection of the debts; that in June, 1841, W. W. Frazier resigned his office as trustee, and William C. Walker was appointed, in the mode prescribed by the deeds, in his stead; that since the execution of the deeds of assignment and the transfer of the effects of the bank to the assignees, Alexander H. Arthur and other persons, who were made defendants to the bill, and who were creditors of the bank, had obtained judgments to different amounts against the company, and had levied executions upon real estate, belonging to the company before the assignment, and conveyed to the assignees, upon which the depot buildings attached to the railroad, in the city of Yicksburg, were erected ; the bill prayed for an injunction, which was granted.
    An amended bill was afterwards filed, stating, that the assignees, immediately upon the execution of the deeds of assignment, had taken possession and full control of all the property assigned; that at the time of the assignment, the railroad was finished only thirty miles in length, and did not extend to Jackson, its eastern terminus, by fourteen miles; that the part of the road then completed cost about eighteen hundred thousand dollars, all of which would have been hazarded, and probably lost. The public, and the creditors of the bank, would have been greatly injured, if the road had not been finished by the time stipulated in the charter.
    “ That the money stipulated to be borrowed to finish and complete the road, had been borrowed, and was advanced on the faith of the stipulation contained in the assignment; that the intention of the bank, in making said provision to borrow the money to complete the road, was honest and bona fide ; that at the time of the assignment, the bank was embarrassed in her condition, a large amount of debts was due to her, but it was-almost impossible to realize them, or a greater part of them, for a long time thereafter; that the bank was without means to complete the road, and could not have done so within the time stipulated in the charter, without borrowing money as stipulated in the assignment; the time within which said road was to be completed had nearly expired, not more than about twelve months being left within which to complete it; that, in pursuance of the power given them, they borrowed the money to complete the road, and that it has since been completed, and is now in successful operation.”
    To this bill, and amended bill, there was a general demurrer, filed by A. H. Arthur, one of the defendants. The chancellor overruled the demurrer; his opinion will be found in 1 S. & M. Ch. Rep. 208, 277; and Arthur appealed from his decision to this court. The deeds of assignment in the case are subjoined ; they are long, but the points assailed are so scattered through the deed, that they cannot be fairly presented, if the deeds are abbreviated.
    “This indenture, made and entered in this thirteenth day of February, 1840, between the President, Directors, and Company of the Commercial and Railroad Bank of Yicksburg, of the first part; W. W. Frazier, Thomas E. Robins, and William S. Bod-ley, of the second part; and various other persons and corporations, creditors of said party of the first part, who may become parties to this deed in the manner herein provided, of the third part, Witnesseth, that the said President, Directors, and Company of the Commercial and Railroad Bank, in consideration of the sum of five dollars to them in haryl paid, the receipt whereof is hereby acknowledged; and further, in consideration of the covenants, stipulations, and agreements herein contained, have given, granted, bargained, sold,- transferred, and assigned; and by these presents, do bargain, sell, transfer, and assign, to the said W. W. Frazier, Thomas E. Robins, and William S. Bodley, and to the survivor of the said trustees, and to the heirs, executors, and administrators of such survivor,'all the slaves, mules, oxen, carts, iron, wagons, and implements to work on the railroad, now building by said party of the first part, which said slaves, horses, carts, mules, oxen, and implements they are now using on, and upon said railroad, in finishing and completing the same. They also, for the consideration aforesaid, transfer and ássign the profits of said railroad, from and after the registration of this deed, until said railroad is finally completed to Jackson, to the said parties of the second part.
    
      “ To have and to hold the aforesaid property and profits to the said parties of the second part, and to the survivor of them, and to the heirs, executors, &c., of said survivor. In trust, however, and upon the following t.erms and conditions. Whereas the legislature, in incorporating the said Commercial and Railroad Bank of Yicksburg, by the fifth section of the charter, made it the imperative duty of the said Commercial and Railroad Bank of Yicksburg, to construct the railroad between Yicksburg and Jackson, and to keep the same in operation, and by the terms of said charter, if said road is not finished within six years from the first election of directors, the said charter is declared null and void ; and whereas the time has nearly arrived, when said road must, by the terms of the charter, be finished, and whereas it formed and constituted a part of the contract, as manifested in said charter, by and between the stockholders of said Commercial and Railroad Bank, that they would complete the said road, the making of which is declared to be the primary object in granting the charter; and whereas, it is essential to the creditors of said institution, that said road should be finished by the time stipulated, otherwise the corporation will be dissolved, and all debts due to it, and from it, will be extinguished, and the road, as far as now made, be forfeited; and whereas the profits of said road, will, if not wholly sufficient, greatly aid in paying the debts due by said bank, therefore the main and principal object of this deed of trust, is to secure to the creditors of said institution the benefit and advantages of said road, and by completing the same, afford facilities for the payment of the debts of said bank. Therefore, the said parties of the second part, are hereby declared to hold said property and profits herein transferred, in trust for all the creditors of said Commercial and Railroad Bank; and, with a view more effectually to carry the provision of this deed of trust into effect, the said trustees are hereby declared to be the joint agents of the party of the first part, and of all the creditors of said Commercial and Railroad Bank, who become parties hereto, as herein provided; and, as such, agents, the said trustees are hereby authorized and empowered to take possession of said railroad, and control the same for the purpose of ascertaining and receiving the profits of said road, until it is finished and completed to Jackson, and they are hereby authorized and empowered to appoint and employ all necessary agents, engineers, hands, &c., and to purchase all necessary implements, property, engines, and provisions necessary to carry on said road, and to keep the same in repair, and in full operation, until it is finally completed. And the said trustees hereby stipulate to keep a full, accurate, and complete account of all the receipts and expenditures of the said road, and furnish the same semiannually to the board of directors of said Commercial and Railroad Bank: and it is further stipulated and agreed, that all the slaves, wagons, carts, horses, mules, oxen, and other property and implements, of every kind and description, now 'in possession of said party of the first part, and in use on said road, shall be possessed, retained, and used for the purpose of finishing said road, and the same shall be retained and used by said trustees for the benefit of all concerned, until said road is completed; after which time, said slaves, property, horses, mules, oxen, and other property, shall be sold by said trustees; provided, however, that said trustees shall have liberty, when they deem it necessary, to sell any of said property, before said road is completed, and purchase other if necessary in its stead, or they may exchange the same for other property, whenever they may believe it to be for the interests of all the parties concerned that it should be done; and said property, so purchased, or received in exchange shall be held subject to the trusts of this deed ; and it is hereby made the duty of said trustees, to appropriate the profits of said road, or so much of them as may be deemed necessary, to the finishing of said road; and the fund arising from the sale of the property herein conveyed, and the surplus profits, if there should be any, together with all the future profits of said road, after it shall have been finished (after first paying or deducting all the necessary expenses of this deed of trust), shall be the net proceeds or avails in the hands of said trustees, to be appropriated pro rata in payment of the debts of the party of the first part.
    “And whereas the said party of the first part has this day, by deed, bearing even date with this, conveyed all of its property, choses in action, &c., except the property embraced in this deed, to the said W. W. Frazier, Thomas E. Robins, and W. S. Bod-ley, for the uses and purposes mentioned in said deed; and whereaá said-deed points out the manner and mode of notifying the creditors of said party of the first part, and also the manner and mode by which the creditors may, and shall, become parties thereto, and the manner and mode of dividing and appropriating the trust-fund among the various creditors of said party of the first part, it is therefore declared and agreed that the fund, arising under this deed of trust, shall be appropriated and divided among the creditors of the party of the first part, in the manner, and in the order, and according to the terms and stipulations, mentioned and contained in said deed of trust herein .referred to. And it is hereby made the duty of the said trustees, to make publication at such times and places, and for such length of lime, as will give to the creditors of said Commercial and Railroad Bank, notice of the execution of this deed of trust, and the one before referred to, and said trustees shall, by such publication, notify and require all the creditors of said Commercial and Railroad Bank, to file their claims within the time, and in the manner, pointed out in the deed of trust herein referred to, as having been executed this day by said party of the first part; and the mode and manner of ascertaining the validity of claims pointed out in said deed of trust shall govern in this; and all the creditors who file their claims as required by said deed of trust, will be considered as parties to this deed of trust.
    “In testimony wherof, D. Conyngham, president of the said Commercial and Railroad Bank of Vicksburg, by virtue of the authority in him vested by an order or resolution of the Jboard of directors of said bank, hereto affixes the common seal of said Commercial and Railroad Bank of Vicksburg, for and on hehalf of said corporation; and he, by virtue of the authority in him vested, hath affixed the common seal of said corporation to this deed, as the act and deed of the said corporation, and as evidence thereof he also hereto subscribes his own name, and the said parties of the second part have also hereunto set their hands and seals this day and year aforesaid.
    lfank°f^' Conyngham, President.
    Witness, W. W. Frazier, (seal.)
    J. G. Bibby,
    R. R. Robinson.
    "This indenture, made and entered into on this the thirteenth day of February, in the year of our Lord one thousand eight hundred and forty, between the President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, of the first part; William W. Frazier, Thomas E. Robins, and William S. Bodley, of the second part; and the various other persons and corporations, creditors of the said Commercial and Railroad Bank of Vicksburg, who shall be deemed parties to this instrument'in the manner herein provided, of the third part, witnessed :
    “Whereas, the embarrassed situation of the President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, and the present inability of its debtors to meet their liabilities, place it out of the power of said corporation to complete the railroad, or to pay its debts, without having time to make collections ; and whereas, the unprecedented pressure which now rests upon the community, and the utter impossibility for said corporation to collect its debts immediately, without being destructive to the interests of its. debtors, by causing a great sacrifice of their property, and without being destructive, also, to the best interests of the corporation, as such sacrifices on the part of its debtors will wholly disable them from complying with their engagements to said bank; all of which causes render it necessary (in order that justice may be done to all the creditors of said corporation, and in order to complete the railroad, which was the great and primary object for which the charter was granted), that an assignment of the property, debts, and effects of the said corporation, should at once be made for the benefit of the creditors, as will most effectually promote the interest of the creditors of the institution, and protect its debtors from loss and sacrifice, and at the same time furnish means to finish and complete the railroad immediately, and to protect and secure to the stockholders of the said road the franchises granted by the charter.
    “Now, to effect the purposes aforesaid, this indenture witness-eth : that the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, in consideration of the premises, and of five dollars to the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, in hand paid, by the parties of the second part, the receipt whereof is hereby acknowledged; and further, in consideration of the covenants, stipulations, and agreements herein contained, have given, granted, bargained, sold, assigned, and transferred and set over, and, by these presents do give, grant, bargain, sell, assign, transfer, and set over to said William W. Frazier, Thomas E. Robins, and William S. Bodley, and to the survivors of them, the said William W. Frazier, Thomas E. Robins, and William S. Bodley, and to the heirs, executors, administrators, and assigns of such survivor, all the property, real, personal, and mixed, which, either in law or equity, belongs to the said party of the first part to wit: its real and personal estate of every kind and description, situate in the county of Warren, and State of Mississippi, or elsewhere; its stocks, goods, wares, merchandise, bills receivable, bonds, notes, book accounts, claims, demands, judgments, choses in action, and all of its property of every kind and nature, whether enumerated and specifically mentioned or not. And the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, for the consideration aforesaid, do also bargain, transfer, and assign to the said William W. Frazier, Thomas E. Robins, and William S. Bod-ley, and to the survivor of the said William W. Frazier, Thomas E. Robins, and William S. Bodley, and to the heirs, executors, administrators, and assigns of such survivor, all the surplus profits hereafter arising, or which may hereafter accrue from said railroad, from and after the time said road is finished and completed to Jackson ; that is to say, all profits which may thereafter be received over and above the necessary expenditures and disbursements of the road, including officers’ salaries, &c., are to be received by said assignees; and only such profits as may arise after the completion of said road are to be received by said assignees; and, in order the more effectually to carry this provision into effect, the said trustees, or any hereafter to be appointed, are hereby declared to be the joint agents of the party of the first part, and of all the creditors of said corporation; and, as such agents, said trustees are hereby authorized and empowered to take possession of said road and control the same, for the purpose of finishing and completing the same, and to receive the profits and issues thereof; provided, however, that the horses, slaves, wagons, carts, mules, oxen, iron, engines, and implements of every kind now used in working on and constructing the railroad, are not thereby intended to pass to said assignees, and are hereby excepted out of the provisions of this deed: to have and to hold to the said William W. Frazier, Thomas E. Robins, and William S. Bodley, and to the survivor of the said William W. Frazier, Thomas E. Robins, and William S. Bodley, and to the heirs, executors, administrators, and assigns of such survivor; in trust, however, for the following uses and purposes, to wit: that the said William W. Frazier, Thomas E. Robins, and William S. Bodley, shall proceed in the manner that they may deem most for the interest of all concerned, to sell and dispose of, either at private sales or by auction, and to execute good and sufficient deeds, bills of sale, releases, and all other instruments of conveyance to effect a sale or transfer of the real and personal estate, goods, and stocks of said party of the first part herein conveyed, to such person or persons, and for such prices, as in their judgment may appear best for the interest of all concerned, and to collect and hold the proceeds of such sales, and also to collect and realize in money, the most that may be practicable from the bonds, bills of exchange, bills receivable, notes, claims, accounts, judgments, demands, choses in action, and profits of said railroad, from and after the time of its completion to Jackson, hereby transferred and assigned to them: provided, however, that said trustees shall in no case refuse to receive from debtors to said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, the bank notes, checks, post notes, certificates of deposit, and bills receivable, due from said bank or any of its branches, in payment of debts due to the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg; provided, such debtor or debtors shall give sufficient security for the amount of his, her, or their liabilities, within twelve months after the registration of this deed of trust: and it is further stipulated, that, in all cases where security is not given as contemplated by the provisions of this deed of trust, by any of the debtors to said bank, it shall not be compulsory on said trustees to institute suit immediately; but said trustees are hereby empowered to sue for, to renew or give further indulgence, or to compromise or settle said debts, in such manner as will best secure the same, and upon such conditions, as in their judgment will be for the interest of the creditors of said bank. And said trustees are hereby declared to have power, in all cases of doubtful debts, to compromise and settle the same upon such terms as they may deem best for all parties.
    And, from the proceeds of such sales and collections, the said trustees and the survivor of them, shall pay all just and reasonable expenses and charges of making and carrying into full effect this assignment and the objects thereof; in doing which, the said trustees are hereby authorized, according to their discretion, to employ one or more attorneys, agent or agents, who shall by them be paid, out of such proceeds, a reasonable compensation for their services. And it is further stipulated, that the said trustees shall retain for themselves, out of said proceeds, as compensation for their labor, trouble, and responsibility in the premises, at the rate of eight thousand dollars each per annum; which sum shall be in lieu of all commissions, and be a full compensation for their several services; and, out of said proceeds, shall also pay all the necessary expenses of the said President, Directors, and Company of the Commercial and Railroad Bank of Yicksburg, in the management of said corporation; and the residue of the proceeds of such sales and collections, and the profits arising from said railroad, from and after its completion to Jackson, shall be considered as the net avails or proceeds of the property, profits and effects hereby assigned.
    “And whereas, it was the principal object of the legislature, in granting the charter to said President, Directors, and Company of the Commercial and Railroad Bank of Yicksburg,- that the railroad from Yicksburg to Jackson should be made and completed; and whereas, if the said road is not completed within the time specified in said act of incorporation of said President, Directors and Company of the Commercial and Railroad Bank of Yicksburg, the charter will be forfeited, and the said road, as far as it is now made, will also be forfeited, and the profits thereof, which will eventually enable the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, to pay their liabilities, will be wholly lost to the creditors, — therefore, with a view to prevent irreparable injury to the creditors of said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, it is hereby stipulated and agreed, that the aforesaid trustees shall, and they are hereby declared to have the power, and it is hereby made their duty, to borrow, in the name and on behalf of said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, from any person or persons, corporation or corporations, such sum or sums of money, as may be necessary to complete said railroad to Jackson, provided said sum or sums of money, so to be borrowed, shall not exceed the amount of two hundred and fifty thousand dollars ; and should said sum of two hundred and fifty thousand dollars, or any part thereof, be borrowed, the property and effects hereby conveyed and assigned are to be bound for the payment of the same, with all interest thereon. Therefore, in the first place, out of said net avails or proceeds, the said trustees or the survivor of them, shall pay off and discharge, in preference to all other claims or demands, such amount, not exceeding the sum of two hundred and fifty thousand dollars, as may be borrowed by said trustees, from any person or persons, corporation or corporations, for the purpose of completing the railroad to Jackson. And, secondly, the said trustees, from said net avails or proceeds, which shall remain after the payment of said loans, if so made as aforesaid, for the purpose of finishing and completing said railroad, shall pay all the just debts, balances and sums due, from the party of the first part, of every kind and description, and for the payment of which, the party of the first part is legally liable; provided, however, that no stockholder, who has paid in his stock, or any part thereof, shall be considered as a creditor, within the meaning of this deed of trust, for such stock so paid in as aforesaid; and should the remainder of said net avails, or proceeds, not be enough to pay off all the debts and liabilities of said party of the ■first part in full, then the same shall be by said trustees applied in such manner as to pay off pro raía, or in equal proportion, to the amount of each debt or claim; and should there be a balance, after payment of all the debts due by said party of the first part, then such balance is to be paid to said party of the first part; provided, however, that no creditor of the said party of the first part shall be entitled to be paid any part or portion of the net avails or proceeds aforesaid, except upon the terms and conditions hereafter stated. And whereas it will be necessary for said trustees, in order to prevent a large accumulation of the net avails or proceeds as aforesaid, remaining upon their hands, to make stated dividends or apportionments among the creditors; and whereas, it is necessary for said trustees, when such dividends or apportionments, are made as aforesaid, to know the amount of the indebtedness of said party of the first part, and to whom indebted; therefore, it is stipulated, and it is hereby made the duty of said trustees to make publication, in such manner as will afford information to all creditors, and thereby notify all the creditors of said party of the first part, to file their claims, judgments, bills, bonds, notes, or other evidence of indebtedness, with said trustees or either of them, within twelve months from and after the registration of this deed of trust; and all the creditors of the said party of the first part, who shall so file their debts or claims as aforesaid, shall be considered and taken to be parties to this deed of trust; and at the end of twelve months from said registration, all the net avails or proceeds, after first paying the loan, should it be made, to complete the railroad as aforesaid, shall be divided equally, in proportion to the amount of each debt, among all creditors who have filed their claims as aforesaid. And said trustees shall, every six months thereafter, divide and apportion, pro rata¡ whatever net avails or proceeds may be on hand, among said creditors ; provided, however, that any creditor or creditors, who has not filed his, her, or their claims, or claim as aforesaid, may file the claims or claim, at any time afterwards; but in such case, such creditor or creditors shall only be entitled to a pro rata share of the succeeding dividends. And whereas many debts or claims may be presented which are of a doubtful character, or which may not be legally just, or which may have been paid, or which may otherwise be inequitable; therefore, no claim or demand (other than the bank notes, drafts, bills of exchange, and certificates of deposit, of said President, Directors, and Company of the Commercial and Railroad Bank of Yicksburg) shall be considered as received, or filed with said trustees; nor shall any claim or claims, other than those above enumerated, or any part thereof, be paid by them, unless the board of directors of said President, Directors and Company of the Commercial and Railroad Bank of Yicksburg, or a committee appointed by them, shall approve the same by indorsing the same as valid: and it shall be the duty of each and every creditor or claimant, before filing his or her claim with said trustees, to present the same (unless the claim consists of bank notes, or drafts, or checks, bills of exchange, or certificates of deposit, issued by said President, Directors and Company of the Commercial and Railroad Bank of Yicks-burg, or bonds made and executed by them as aforesaid) to the board of directors of said company, or to the committee appointed by them as aforesaid, for their approval. And in all cases when suit may be brought on any claim or claims, which have been rejected by said board of directors, or said committee, or on which they refuse or neglect to act, if the party or parties who hold such claim or claims shall notify the trustees, that suit has been commenced thereon, he or they shall be considered as a party or parties to this deed, from that time: provided he or they succeed in obtaining judgment against the said President, Directors and Company of the Commercial and Railroad Bank ■ of Yicksburg; and he or they shall be entitled to a pro rata share of the dividends from the time of the notification, if, as aforesaid, he or they obtain a judgment; but it shall be the duty of said trustees to go on, divide the net avails or proceeds in their hands, as herein provided, among all the other creditors, whose claims have been allowed. But if judgment shall be rendered against said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, in favor of said claimant or claimants, the proportion of said claimant or claimants shall be applied and paid in full, out of the succeeding dividends, so as to make his or their share equal with all other creditors; provided, however, that in all such cases, the said trustees, and the claimant or claimants, may submit the matter to three arbitrators, to be chosen by the parties, whose award shall be final and conclusive. And the said trustees are to have possession and control of the books, bonds, notes, choses in action, &c., of the said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, at the principal bank at Vicksburg, and at the branches thereof, so far as the same may be necessary, for them to collect and adjust; and the retention of the same, by the said party of the first part, in their banking-house at Vicksburg, and in the banking-houses of the branches of said bank, for the safe keeping of the same, and the convenience of all parties, will be considered as the possession of said trustees, and subject to their control, order, and direction. And it is expressly agreed, that the acts of a majority of said trustees, shall be the act of all, and as binding as if all had assented thereto: and the said parties of the second part, covenant, stipulate, and agree to and with the party of the first part, and with all and each of the creditors of the said party of the first part, who may become parties hereto, as is hereinbefore provided, that they will semiannually exhibit a statement of their accounts to the board of directors of the said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg: and it is further stipulated' and agreed, by and between the said parties, that if the trustees herein named, or either of them, die, or refuse to act, then, and in either of said cases, the board of directors of the said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, shall have power to appoint any other trustee or trustees in place of such as have died or refused to act, and the said substituted trustee or trustees, so appointed (which said appointment shall be entered on the minutes of the proceedings of the said board of directors of the President, Directors and Company of the Commercial and Railroad Bank of Vicksburg), shall have all the power and authority of the trustees herein appointed, and shall be subject to all the responsibilities and duties belonging to the trustees, herein particularly named as aforesaid, in this deed of trust: and said substituted trustees shall be entitled to the same compensation as is herein provided to be paid to the said trustees herein named: provided, that in appointing new trustees, the said board of Directors of the President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, shall have no power to change, alter, modify, or revoke any of the trusts hereby created; nor shall their failure or omission to appoint a trustee or trustees, when necessary, in anywise affect this trust, but the same may be supplied, if necessary, according to the rules which govern a court of chancery. Nor is the said board of directors to have power or authority in any manner to revoke this deed, or any part of it. Nor shall any appointment, or failure to appoint a trustee or trustees, in any manner give the board of directors of the said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, any control over this deed; and it is hereby declared to be the intention of the parties to this instrument, that the transfer of all the property, choses in actions, and effects, as before mentioned, is to embrace, and does by these presents include and embrace, all of the property, real and personal, choses in action, effects, &c., of the President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, at Vicksburg, and all their branches; the proceeds of all judgments recovered by the said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, and all claims now in suit and not reduced to judgment, and such as may be in the hands of attorneys for collection, in the State of Mississippi, or elsewhere ; and the said claims now in suit, and which may be in the hands of attorneys or agents for collection, are to be prosecuted, and the proceeds thereof, together with the proceeds of such claims as are reduced to judgment, are to be collected and received by the said trustees, and applied in the same manner as is provided herein, for the application of the proceeds of the other property, choses in action, and effects, hereinbefore mentioned; and said claims and judgment, &c., are to be subject in every respect to this deed, and the control of the -trustees herein named, as any other claim is subjected to their control hereby. And it is hereby declared, that the provisions of this deed of trust axe to apply in all respects, not only to the principal bank at Vicksburg, but to all of its branches; and this transfer embraces, and is intended to embrace, all the property of the said party of the first part (not herein excepted,) whether situated in Mississippi, or elsewhere. But it is understood, that no property, the use of which consists in the consumption, as wood, coal, &c., is intended to be embraced or conveyed hereby; and such property (together rvith that hereinbefore excepted,) is hereby excepted out of the general provisions of this deed. And it is further agreed, that out of the proceeds of the property hereby assigned, the said trustees shall pay any debt or debts, for which any of the property herein assigned is bound, or on which a lien exists, either by operation of law, or by contract; and such property, when so discharged from such lien, shall be, and is, hereby vested in said assignees, for the purposes of this trust.
    “ In testimony whereof, David Conyngham, President of the said President, Directors, and Company of the Commercial and Railroad Bank of Vicksburg, by virtue of the authority in him vested, by an order and resolution of the board of directors of said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, hereto affixes the common seal of said President, Directors and Company of the Commercial and Railroad Bank of Vicksburg, to this deed, for and on behalf of said President, Directors and Company of the Commercial, and Railroad Bank of Vicksburg; and he, by virtue of the authority in him vested, hath affixed the seal of said corporation to this deed, as the act and deed of said corporation; and as evidence thereof, he also subscribes his name hereto : And the said parties of the second part have hereunto set their hands and seals the day and year above written.
    £ lianifl Conyngham, President.
    Witness, W. W. Frazier, (seal.)
    J. B. Bibby, T. E. Robins, (seal.)
    R. R. Robinson. W. S. Bodley, (seal.)”
    
      The following are the only sections of the charter which bear on the case:
    “ Sec. 4. And be it further enacted, That such persons as may become subscribers for the stock of said company, their successors and assigns, shall be and they are hereby created and made a corporation and body politic, by the name and style of the President, Directors and Company of the Commercial and Railroad Bank of Vicksburg; and by that name they shall be, and are hereby made capable in law to have, hold, receive, possess, enjoy, and retain, to them and their successors, property and estate of whatever nature and quality soever, and the same to alien, transfer, and dispose of, so far as is necessary to carry into complete effect the main object of this charter, which is hereby declared to be the construction of a railroad from the city of Vicksburg, by way of Clinton, to Jackson, the seat of government of this state; and as such body corporate they can sue and be sued, plead and be impleaded; and prosecute and defend themselves in all courts whatsoever, and shall possess and enjoy all the rights, privileges, and immunities incident to corporations and bodies politic, have a common seal, and the same to change at pleasure, or act and contract without seal, and make such by-laws, rules and regulations, not inconsistent with the laws of the land, as may be deemed necessary for conducting the affairs of the company. And the said company is hereby identified and incorporated with the Clinton and Vicksburg Railroad Company, and vested with all the powers, privileges and franchises conferred on said company by an act entitled “An act to incorporate the Clinton and Vicksburg Railroad Company,” approved the I9th day of December, 1831, so far as said act comports with the provisions of this, and this is declared to be an amendment to and extension of the last act aforesaid. And said company may procure, by purchase or otherwise, such lands or other property as may be necessary for the site of said road, or its construction, or for the. erection of warehouses or other works incident thereto, or for any other purpose proper for the construction of said railroad, or for the repairing the same, or for the use and purposes of the bank and its branches, and shall hold and possess the same in fee simple.
    “Sec. 5. And be it further enacted, That it is hereby declared imperative on said company to construct said railroad, and put and keep the same in operation. Therefore, if said road shall not be commenced in two years from the first election of directors, or shall not be finished in six years from that time, then this act shall be null and void, and. the powers and privileges herein conferred shall cease and determine.
    “ Sec. 6. And be it further enacted, That said company may, and they are hereby authorized to extend said road, and to construct such lateral or branch roads as they may deem expedient, so as not to obstruct any other railroad, and the like rights and privileges are hereby secured to the company, as to lateral or branch roads and the extended road as by this act are conferred on them relative to the road from Vicksburg to Jackson.
    “ Sec. 7. And be it further enacted, That the banking privileges conferred, shall cease in thirty-two years from the day herein assigned for the opening of the books of subscription ; and in consideration of the great public services and benefits contemplated by this act, said company and its stock shall be exempt from taxation until two years after said bank goes into operation, after which time the legislature may, if they think proper, impose a tax on the stock of said company, not exceeding twenty-five cents per annum on the hundred dollars, to be paid into the literary fund.”
    The following sections are portions of the act to charter the Clinton and Vicksburg Railroad Company, and which company was incorporated as part of the Commercial and Railroad Bank of Vicksburg:
    “Sec. 9. Be it further enacted, That the president and directors, their officers, servants, and agents, shall have full power and authority to enter upon all lands, and tenements, through which they shall deem it necessary to make the said railroad, and to lay out the same according to their pleasure; and if the president and directors cannot agree with the owner of the land and tenements through which they desire the said road to pass, then, in that event, the damages shall be assessed by two disinterested freeholders, to be chosen equally by the president and directors, and such landholders or owners of the land; and in case such assessors shall not be able to make an award, they, the said assessors, shall have the power of choosing an umpire, whose assessment shall be final; and the amount of such damages as may be thus awarded shall be paid on demand by the said president and directors to the owner or owners of such land; ánd in case the owner or owners of such land shall refuse to appoint such assessors, then, upon the president and directors of said company signifying such refusal to any justice of the peace of the county wherein such lands may be, it shall be, and it is hereby made the duty of such justice of the peace immediately to appoint such assessor in that behalf.
    . “ Sec. 10. Be it further enacted, That the said president and ■directors, for the purpose of making the said railroad, or repairing 'the same after it shall have been made, shall also be at liberty, by themselves, their officers, agents, or servants, at any time to enter on any adjacent lands, and cut, quarry, dig, take and carry away, any wood, stone, gravel, or earth, which may be to them necessary : Provided, however, they make compensation to the owner or owners thereof, in the manner prescribed in the foregoing section.
    “Sec. 11. Be it further enacted, That whenever in the construction of said railroad, it shall be necessary to cross or intersect any established road or way, it shall be the duty of the president and directors of said company so to construct said railroad across any road, or way already or hereafter to be established by law, as not to impede the passage thereof: Provided always, that if a bridge is thrown over Big Black river, for the purpose of passing said road thereon, said bridge and road, shall be so constructed that the navigation of said river shall not be obstructed.
    “ Sec. 12. Be it further enacted, That the president and directors, or a majority of them, shall have power to purchase with the funds of the said company, and place on the said railroad, constructed by them under this act, all machines, wagons, vehicles, carriages, and teams of any description whatsoever, which they may deem proper and necessary for the purpose of transportation, and to do all other things appurtenant thereto, which they may conceive promotive of the ends and objects of this act.
    “ Sec. 13. Be it further enacted, That all machines, wagons, vehicles and carriages, purchased as aforesaid, with the funds of the company, and all their works constructed under the authority of this act, and all profits which shall accrue from the same, shall be vested in the respective shareholders of the company forever, in proportion to their respective
    “Sec. 14. Be it further enacted, That directors are hereby vested with the rights of on said road, at such points as they may de^.^^ ^ exact and demand such toll for transportation as the may require: Provided, however, that the directors shall annually establish a tariff of toí lish the same at each toll-gate, for the informador?’' lie; provided that such tariff of tolls shall not be altered oftener than once in each year.”
    
      W. Yerger, for appellant.
    The assignments are void.
    First. Because the corporation under its charter had no power to make such assignments.
    Second. If it had the power to assign its effects for the payment of its debts, yet the present assignments are fraudulent; were made to hinder, delay or defraud the creditors of the company, are not bona fide, and are therefore void.
    1. I will not discuss the question of power, but shall rely upon the elaborate arguments of Messrs. N. and W. G. Thompson, upon that point.
    2. In this case, the question of fraud must be determined from the evidence presented by the assignments themselves, as the case is submitted upon a demurrer to the bill of the assignees, and no extrinsic evidence of fraud could be introduced.
    
      1. I admit the general proposition, that a debtor in failing circumstances may make an assignment of his effects to trustees, for the benefit of his creditors generally, or for one creditor or class of creditors in preference to another class; provided such assignment be made bona fide, honestly to receive his effects for the purposes professed, and not with the intent to hinder, delay or defraud his creditors generally, or any particular creditor or class of creditors, or to secure any benefit to himself; if so made they are void. 2 Coke, part 3, p. 80, 81; 3 Dev. L. Rep. 147; 8 Dana, 263; 8 Johns. 446.
    Chancellor Kent says, “ It is altogether a question of intention, and if that be free from fraud, the assignment is not void.” 2 Johns. Ch. R. 283. To the same effect, 3 S. & M. 255.
    The supreme court of Massachusetts says, that these conveyances must be made “ in perfectly good faith. A good and adequate consideration is not alone sufficient to render a sale valid against creditors; it must also be made bona fide, and the least fraudulent or illegal intention between the parties, will vitiate the whole transaction.” 7 Pick. R. 74.
    2. In Kentucky it has been decided that, “if it appear on the face of the deed of trust, or by proof aliunde, that the object was to prevent a sacrifice of the debtor’s property, the deed is ipso facto void.” Vernon v. Morton, 8 Dana, 263.
    So also 1 J. J. Marshall, 226. So also in 3 Monroe, p. 3, the same doctrine is held, to which case particular reference is made. In Massachusetts, it has been held, that if “ the object was to prevent a sacrifice of the property, and to secure the rights of all the creditors to an equal distribution of the property, such an arrangement is against the policy of the law.” 7 Pick. R. 75.
    3. Again ; it has been held, that any stipulation in a deed of trust for the benefit of the debtor or his family, renders it fraudulent and void. 1 Hopk. 373 ; 3 Penn. R. 83; 11 Wend. 187; 2 Pick. 129; 2 Kent’s Com. 535; 5 Cowen, 547; 12 Serg. & R. 198.
    4. A deed of trust which is void in part for fraud, is void in toto. 14 Johns. R. 458; 4 S. & M. 257; 4 Yerg. 164, 415; 8 Ibid. 4L7.
    
      5. But again; a deed of trust made for future advances to the maker, who is insolvent, in preference to orto the exclusion of debts contracted previous to the making of it, is fraudulent and void. 7 Paige R. 568; Peacock v. Tompkins, Meigs R. 328.
    6. Tested by these rules, is this assignment valid 1 I think not.
    1. It was made because “ the embarrassed situation of the bank, and the inability of its debtors to meet their liabilities, placed it out of the power of said corporation to complete the railroad or to pay its debts, without having time to make collections.” Thus one of the motives with which it was made, was to “ hinder or delay” the creditors of the bank.
    2. The deed was made “ to prevent a sacrifice of the property of those indebted to the bank, which would be destructive to the best interests of the corporation, as such sacrifices on the part of its debtors, will wholly disable them from complying with their engagements to said bank.” Here the corporation avows that the .object was to “ prevent a sacrifice of the debtor’s property,” and the consequential damages which would be sustained by the „ corporation. The necessary consequence of a conveyance made for this purpose, is “ to hinder or delay ” the creditors of the bank from collecting their claims against the corporation, by subjecting to their payment the debts due to the corporation; and as the conveyance was made to prevent the “ immediate collection ” of these debts, it was of course intended to that extent to “ hinder or delay ” the creditors of the corporation from the immediate collection of their demands.
    3. The conveyance was made with the intention of securing a lasting and permanent benefit to the corporation, and was coupled with a trust for its benefit, and is therefore void. The conveyance declares “ that it is necessary that an assignment of the property, debts, and effects of the said corporation, should at once be made for the benefit of the creditors, as will most effectually promote the interest of the creditors of the institution, and protect its debtors from loss and sacrifice, and at the same time furnish means to finish and complete the railroad immediately, and to protect and secure to the stockholders of the said road the franchises granted by the charter.” If the intent with which it was made was to secure a lasting and permanent advantage, the deed must necessarily be declared void. Because, as the effect of all these kinds of conveyances,-is to “hinder or delay” creditors, they can only be upheld, when the motives which induce the party to make them are bona fide, and really only to prefer one creditor to another, or to secure an equal distribution of his effects among all its creditors.
    4. Courts of justice cannot, in fact they dare not, permit a debtor, in order to procure benefit and advantage to himself, to lock up his effects from the operation of judicial process, and to hinder or delay his creditors from collecting their demands. To do so is to open the door to fraud, and to invite all men who are in embarrassed circumstances, to place their property in the hands of friendly trustees, and beyond the reach of legal process. Mere conveyance must not only be upon “good consideration,” but bona fide, and no deed can by possibility be made in good faith towards creditors, the effect of which is to hinder or delay them in collecting their debts, and the motive for making which was to secure a lasting and permanent benefit to the debtor himself.
    5. The necessary effect of this conveyance is to “hinder and delay” the creditors of the bank in collecting their debts, and the bbjects, the intents of making it were to “ obtain time to make collections,” “to prevent the immediate collection of the debts due the corporation, which would cause great sacrifices of the debtor’s property, and thus be destructive to the best interests of the corporation,” “to protect the debtors from loss and sacrifice,” “ to furnish means to finish and complete the railroad immediately,” “ and to protect and secure to the stockholders of the said road, the franchises granted by the charter.” Surely no court can hesitate to say, that a conveyance dictated by such selfish considerations and motives, and having the effect to “hinder and delay” creditors, is made in bad faith towards the creditors so delayed, and fraudulent and void.
    Any other rule would enable and encourage debtors to place their property in the hands pf trustees, out of reach of their creditors, so that they could, by the annual products of their estate, ultimately pay their debts, and thus save the whole property for themselves. This was the object and intent with which this conveyance was made, and it is most surely illegal.
    6. There is no man who would not be willing to assign his property to trustees for the benefit of his creditors, if he could thereby procure “ time to collect his debts ” before that property was sold, and “prevent the sacrifice of the property of those indebted to him,” and also secure and protect himself in the use and enjoyment of the property assigned, after it had remained in the hands of the trustees, till by the time thus gained and its annual products, it had discharged his debts. And yet this is precisely what is designed, attempted and effected by this assignment.
    7. These conveyances are fraudulent because there is no period fixed within which this trust is to be closed. The trustees are not required to sell and dispose of the property conveyed to them at any time. A perpetual and unending trust is created, Nothing whatever is to be paid to creditors until the road is completed to Jackson, be that a short or long time. The trustees are not compelled to sue the debtors of the bank, but are authorized to renew their debts, to give them further indulgence. They are to sell the property on such terms and time as will be most for the “ interest of all concerned,” the bank as well as the creditors ; and at all times they are to receive from those indebted to the bank, in payment of what they owe, any of the longest notes, post notes, &c. made by the bank. All these stipulations are manifestly fraudulent, and are unjust and oppressive to the creditors of the bank, however promotive they may be to the interests of the bank, and beneficial to its debtors. 4 Wash. C. C. R. 232; 8 Yerg. 134.
    8. The assignment is fraudulent as to creditors, because it provided for the payment, not only of all just and reasonable expenses and charges of making and carrying into effect the assignment and the objects thereof, and for the payment of all such attorneys and agents as the trustees saw fit to employ for that purpose, but likewise provided for the payment to the trustees, the sum of eight thousand dollars a year each, or twenty-four thousand dollars per annum; but also for the payment to the president, directors and company, all the necessary expenses they might be put to in the management of the corporation, all of which expenses were to be paid first, before the creditors of the institution are to receive one cent. We accordingly find that seven years have elapsed since this trust was created, and the creditors are still hindered and delayed in their demands, and f188,000 of the effects of the corporation have been paid to three assignees, for the privilege of keeping the creditors from collecting their debts. These enormous and useless salaries, paid by an insolvent and embarrassed debtor to assignees, to take charge of a perpetual, unlimited and unending trust, except at the option of the assignees themselves, is of itself fraudulent as to creditors, because it abstracts from them that portion of the effects of the debtor to which they are entitled.
    9. The assignment is fraudulent because it provided for a future advance of $250,000, to be paid in preference of all other debts of the corporation ; and which advance was for the purpose of securing to the corporation the enjoyment of those corporate franchises, which they were about forfeiting by their own misconduct and misuser. This was illegal and fraudulent. Meigs R. 817; 7 Paige, 568.
    10. The deed is illegal and void because it stipulates that the corporation shall have power to appoint new trustees in the place of such as may die or refuse to act; and further provides, that said trustees shall not pay certain claims against the corporation, unless the board of directors shall approve the same by indorsing them as valid ; thus leaving it in the power of the corporation to postpone this class of creditors, which it is illegal to do. 11 Wend. 187; 15 Johns. 571.
    
      William Thompson, for the appellant.
    1. We do not rely upon the fact, that, as my Lord Coke says, the corporation has no soul, but we do contend that being destitute of that faculty, it has no original, inherent, transmissible power of its own; that it cannot lock up its property forever, create a perpetuity, and breathe life and immortality into others, “ A corporation is an artificial being, invisible, intangible; and existing only in contemplation of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.” 4 Wheat. 636.
    2. We contend that the assignment is void, for the reason that therein it is attempted to make over its franchises to others, and assign away the powers and privileges granted to it by the legislature as a personal trust and confidence, which is not allowed by law. See Dartmouth College v. Woodivard, 4 Wheat. 637, 638, 663; Clark v. Corporation of Washington, 12 lb. 40; Beatty v. The Lessee of Knowler, 4 Peters, 168; Jackson v. Lamphire, 3 Peters, 289; 4 lb. 514; 11 lb. 546 ; 13 Serg. & R. 212; Emmerson v. The Providence Hat Manufacturing Company, 12 Mass. R. 237.
    3. We contend that the deeds of assignment furnish upon their face conclusive evidence of fraud. Under this head we raise specifically the following objections:
    1st. The preamble itself shows that the deed is made for the purpose of hindering and delaying creditors in the collection of their debts; and to favor the debtors and save them, and also the corporation, from sacrifices.
    2d. There is no limit in duration to the trust, except it be when all the debts shall have been paid, which is likely never to be done.
    3d. No security is required of the assignees, nor their successors, however irresponsible they at any time may be; the bank having reserved the power to supply vacancies, may even destroy the trust by refusing to act, or by appointing irresponsible or incompetent persons. See section of the act of 1831, making it the duty of the bank to take bond and security of its officers, agents, &c.
    4th. The right of applying to the chancellor in case of misconduct on the part of the corporation in relation to the appointment, does not remove the objection; such power cannot be lawfully reserved by an insolvent debtor.
    
      5th. The books, bonds, notes, choses in action, &c., are to be left with the corporation, though declared to be considered in possession of the assignees, so far as may be necessary for them to collect and adjust the same; which is not such a parting with the possession as the law requires in cases of insolvency, where an absolute assignment of all the effects is pretended to be made, and not a mere agency created.
    6th. The assignees are bound to pay all necessary expenses of the president, directors and company in the management of the corporation. This includes the president’s salary, &c. &c. This is an unlawful and fraudulent reservation. Their banking privilege will not expire till about 1866 ; and though they had parted with all their effects, still the corporation retained its vitality, its doors were open, and its vaults ready to receive deposits, on which they could have gone on banking immediately after the assignment; beside, they might raise money by other means allowable by the charter, borrowing, for instance, perhaps as hopeful a speculation for profit, as was the investment of the borrowed capital for finishing the road. Beside all this, the company, by the charter, could go to banking, on the payment of three-fifths of the subscription for stock; if it has not heretofore required the remaining instalments to be paid, on professing to have assigned all its effects, its credit may have been renewed as to new engagements, and as a certificated bankrupt, or insolvent debtor, who had compounded, sometimes is fortunate enough to find forgotten remnants of fortune on which to start anew; so if there be remaining instalments, on the calling in of them, the bank might flourish again.
    7th. The cause assigned for making the assignment, as relates to the necessity to save the charter, by having the road finished in time; and thereby promote the interest of all parties, involves the same principle, as if a failing merchant assigned all his effects, stock in trade, &c., for the purpose of having the business continued, and his debts paid out of the profits; all which would be fraudulent and void.
    8th. The idea held out that they were bound by a contract with the state, to finish the road, under the cover of which pretence they have locked up their property for their own benefit, is fallacious, and everything based on it fraudulent and void.
    9th. They assigned to the assignees irrevocably the power to control and build the road, and for the tariff of tolls, and collect them. These are corporate powers, which cannot be assigned; but it will be argued that this is inoperative as an assignment, except to receive the profits; the other portion of the paragraph would be making the assignees agents; then, this is the result, the corporation has assigned away all its property to build a road; the profits of which are to pay their debts; the profits will depend on the tariff of tolls, which they are to fix annually. Will not the corporation, then, hold the purse strings, and be able to defeat the assignment, or keep all things under their control.
    10th. The deed empowers the assignees to borrow $>250,000 in the name and for the benefit of the corporation. An insolvent debtor, speculating to so large an amount, and subjecting to hazard the funds pretended to be assigned for. creditors, at least, which should have gone to the payment of the debts, will not be tolerated by the law.
    11th. The assignees are made in some very important particulars the joint agents of the company and the creditors, and powers revocable, so intermixed and mingled with such as are irrevocable, that it is impossible the machinery can operate in any lawful way.
    12th. The company reserve the privilege of adjudicating claims, except of a certain character, and they shall not be paid by the assignees, unless approved by the board of said president, directors and company, or a committee by them appointed; or until judgment should in a suit be rendered against them.
    13th. The assets were a trust fund and could not be assigned as has been attempted.
    14th. The trustees have the power in all cases of doubtful debts, to compromise the same, and settle them upon such terms as they may deem best for all parties. Of course not on the terms they may think best for the creditors in those claims that they or the bank may think doubtful; placing the assignees in opposition to one character of creditors.
    15th. Even if the court should be of opinion that the company could assign their effects through a trust fund, then we contend that there has not been a full, fair, and equal division of the trust fund among all the creditors
    16th. The $250,000 borrowed by the trustees inures to the benefit of the stockholders mostly at least, and not to that of the creditors.
    17th. The property is locked up an unreasonable time before payment or distribution can be made.
    18th. There is no schedule; in this case it was indispensable; hoqr could the creditors know the amount of the effects of the bank, so as to judge whether they had' best accept the terms offered by the assignment or not? How could they look to their rights after their acceptance, if they should accede to the terms which a disposition is evinced in the deeds to force on. them 1
    
    19th, The salaries of $8000 apiece to each of three assignees is irrevocable; the time may come when one trustee could discharge all the duties devolving on the three; and when he could discharge those duties for one-fourth of the present salary allowed to each trustee. The trustees hold their salary by contract, and it cannot be violated; then we argue that the corporation having given such salary, evinces a reckless disregard of the interest of creditors, that should have much weight in the consideration of this cause.
    20th. The assignees should at least have been required by the deed to exhibit a periodical statement to the creditors, as well as to the board of directors.
    21st. By giving to creditors who first accede to the assignment, a preference, evinces a clear disposition to force the creditors to an acceptance, that too without making a proper expose of the affairs, of the incorporation to enable them to judge what would be to their interest.
    22d. It does not appear that the stockholders sanctioned this assignment after it was made, or ever gave authority to make it. If it was unlawful or wrong in any sense, to make such an assignment, the stockholders will not be presumed to have authorized or approved it.
    23d. It does not appear how many of the creditors accepted it. The court will not presume they did accept that, which is so manifestly against their interest. The bill, it is true, says many creditors accepted the provisions of the deed, but does not state what proportion they bear to the whole number.
    24th. The right to pay in twelve months in the paper of the bank, or in longer time if the debts should be secured, is fraudulent against the right of creditors, and made for the benefit of debtors, which the preambles in the deeds seem to show was one object the corporation had in view in making the assignment.
    In support of many of the positions we have taken in relation to the deeds furnishing evidence of fraud, and much of that evidence of a conclusive character, we cite 8 Dana’s R. 263; Ward v. Trotter, 3 Monroe, ; 7 Pick. 75; 7 Paige’s R. 568; 11 Wendell, 187, 203; 14 John. R. 458; 2 Pick. R. 129; 4 S. & M. 129 ; Yoder v. Standiford, 7 Monroe, 485 ; 1 Binny, 516, 523; Riggs v. Murray, 2 Johns. Ch. R. 565; Felloivs v. Commercial and Railroad Bank of Vicksburg, decided by supreme court of Louisiana, in 1843; 5 Cowen, 547; 20 John. R. 449.
    
      George &. Yerger, for appellees,
    referred to his argument in chief published in S. & M. Ch. R. 247. He made the following additional points.
    1. Mr. Thompson says there is no right or power to transfer the road, or any of its branches. Answer. The road is not transferred; the profits only. 13 S. & R. 210, 211. Again, if the bank had no such power, it had the power to transfer its real estate, and that was levied on in this case. The assignment, if void for fraud as to part, is so as to the whole, because the statute declares the whole deed void. But’ when power to convey a part does not exist, the assignment is good for the residue.
    
      2. It is said it 'reserved a benefit to itself; that the intent was to save the franchises for the stockholders, as well as pay the debts. This is true, and it is perfectly legal. No property is reserved to itself, all is given up. The intent in part was to borrow enough to finish the railroad, and prevent the forfeiture of the charter. The bank had a right to borrow money for the purpose, (see fourth section of the charter) and had a right to secure it. The intent to save the charter is not fraudulent. There is no secret trust, no reservation of property. The intent is to benefit the stockholders, not by reserving property to its own use, but by preserving from destruction, the charter and the debts for the creditors. The Chancellor’s views, S. & M. Ch. R. 266, 267; Ex parte Conway, 4 Ark. 43.
    3. It is said it is void because it was made to secure future advances. The advance here was made to save the fund for the benefit of all the creditors. It was not advances ad libi-tum, to be made to the bank, which she could use or squander, but was to be applied to save the fund for all. See the chancellor’s views on this, 7 Paige R. 568; I S. & M. Ch. R. 267, 268. Advances were not to be paid to bank, but to trustees for benefit of trust fund, and was limited as to amount. It is not a reservation for the benefit of the grantor, but it is a reservation or appropriation for the creditors, they are to have the advantage. Suppose the deed had merely authorized the assignees to finish the road and pay for it out of the funds. This is the precise case. What is the difference if they take $250,000 of the property assigned to finish it, or borrow $250,000, and then pay it out of the funds. 22 Pick. 468 ; 13 Conn. 383; 11 Wend. 240 ; 21 Maine R. 280. As to preference, see 2 Kent, 315, note.
    4. The intent was to delay other creditors and prevent a sacrifice of the debtor’s property by giving debtors to bank time, &c. That it was to prevent sacrifice of property of debtors, &c. There is nothing to show it was the intent to prevent its own property from being sacrificed, by sale by one creditor, but even this, it had the right to do, if all the property was assignable for all the creditors. 6 Gill & John. 218 ; 3 M. & S. 37; 1 Binney, 516 ; 4 Mason, 211,212; 2 Paige R. 490; 16 Peters, 106, 116; 9 Pick. 410; Ex Parte Conway, 4 Ark. 32, 44, 46, 53; 11 Wend. 240. If the object be to defeat the persons in attachment, but no reservation to the debtor, it is good. 4 Mason, 210 ; 3 M. & S. —; case in 7 Pick. 74; 8 Dana, 263; 2 Kent 535 ; wholly inapplicable, see the cases. So of Read^. Carl, 3 S. & M. 74. The case of Ex parte Conway, 4 Ark. 44, is directly on the point. See recital of clauses making the assignment, p. 28 and 29. Upon the point of delay and giving time to debtors, see Ex parte Conway, 47. Where the object is to defeat a creditor of his debts, it is void. When the object is not to defeat, but to put him on equality, it is not void, though it prevents him from getting an advantage. See particularly 21 Maine R. 280; also 20 Ibid.
    5. Again, it is said it is void because they retain the power to appoint new trustees, if any die, and in default the chancery court. On this point, 1 S. & M. Ch. R. 221; 15 John. 571; 11 Wend. 202. See chancellor’s opinion, 270.
    6. It is said it locks up the property. True, so do all assignments; but is a year an unreasonable time ? Until that time all creditors can come in. Wendell, 217; 11 Wend. 240; 2 Paige, 490 ; 4 Mason, 225 ; Ex parte Conway, 4 Ark. 47, 48, 49 ; chancellor’s opinion, 1 S. & M. Ch. R. 271..
    7. As to the power to compromise doubtful or bad debts, see Ex parte Conway, 4 Ark. 44; 4 Rawle, 207; chancellor’s opinion, 1 S & M. Ch. R. 271.
    8. It is said it is void, because f8000 to the trustees is too large. Times were different then from times now. This is no reason to set it aside, unless it was done with a fraudulent design. Ex parte Conway, 4 Ark. 51.
    9. On the point of the joint agency, he referred to his argument in S. & M. Ch. R. 254, 255; chancellor’s opinion, 268, 269, particularly p. 272.
    10. It is said it is void because the deed gives the right to debtors to pay their debts in the notes of the bank. What is more equitable than this? By this means its debts will be paid, and it will pay its debts to the extent of payments made. But even, this provision is only to all who shall within a year secure their debts. Its object was to save the debts. See 6 and 7 Gill & Johns.
    11. The expenses of the bank to be paid, i. e. the necessary expenses. What more reasonable provision 1 The bank had suspended its operations. It had surrendered all its assets. It, although an existing corporation, became powerless as to the discharge of the ordinary purposes of its institution. 6 Gill & Johns. 230. The whole face of the deed shows that its expenses were merely such as were necessary to defend suits against it, or suits brought by it. It is not pretended it intends to go on and bank. The chancellor’s views on this are sound.
    12. The next point made is, the assignees are prohibited from paying contracted debts, &c., unless board of directors certified to their being genuine. This, it is argued, gave the bank the power of saying whether the debt should be paid or not. Thereby controlled the fund. The object of this stipulation is clearly shown to be, to guard against frauds being prac-tised on the trustees. But all idea of controlling the funds or excluding debts for fraudulent purposes is done away by the fact, that if the claim is rejected by the board, the party may sue, and if he recovers, he is enabled to receive his dividend from the time he notified the trustees, and so as to make the shares equal.
    13. As to there being no inventory, see argument, S. & M. Ch. R. 252; in addition, 22 Pick. 468.
    
      W. G. Thompson, for appellant.
    It is contended, on the part of the appellees, that this assignment will be upheld as a deed in trust for the payment of debts, on the ground that the franchises were thereby saved from forfeiture, and the property preserved to the creditors. I reply that the clause of forfeiture means only this, — that the state reserves to itself the power of compelling the corporation to comply with the terms of the charter, at the risk of a severe penalty. And it cannot be supposed that the corporation will be countenanced in a transaction which is opposed to the settled rules of law, merely on the ground that such transaction would enable the corporation to evade the penalty. This transaction, as an assignment for the payment of debts, is manifestly contrary to the rules of law controlling assignments of that nature. Moreover, if this assignment was made to avoid the forfeiture, I reply that, that object was accomplished fully when the road was completed, and how can the assignment be sustained any longer on that ground ? Truly, this is an assignment to prevent a forfeiture, and not a conveynce in trust for the payment of debts.
    Mr. Thompson made an oral argument, reviewing and replying to the position of Mr. George S. Yerger, and reading, commenting on and enlarging the argument made by him (Mr. Thompson) before the chancellor, .and which is published in S. & M. Ch. R. 223 to 247; and to the points, and authorities, and views taken in which, he referred the court.
   Mr. Justice Clayton

delivered the opinion of the court.

This is an appeal from a decree of the chancellor, overruling a demurrer to the bill of the complainants, the present appellees. The case as it existed before the chancellor, will be found in Smedes & Marshall’s Chancery Reports, p. 207, under the name of Robins and others v. Embry and others. It involves the validity of certain assignments made by the Commercial and Railroad Bank of Vicksburg, for the benefit of certain of its creditors. The objections urged in argument against the assignment are very numerous, and it may not be necessary to advert to all of them. The more prominent will receive our attention.

It is now settled that a bank may make an assignment of its effects, for the payment of its debts. Such assignments, whether made voluntarily, or by operation of law, have often been upheld. Hopkins et als. v. Gallatin Ins. Co., 4 Hump. 403; Beckwith v. Windsor Manuf. Co., 14 Con. 594; Union Bank of Tennessee v. Ellicott, 6 Gill & Johns. 363; Nevitt v. Bank of Port Gibson, 6 S. & M. 513. The objection, on this part of the case however, is, that the assets of a bank constitute a trust fund, for the payment of all its debts, and that no disposition can be made of this trust futid, but one which secures equality among the creditors ; in other words, that no priorities or preferences can be given.

In one sense the assets of a bank do constitute a trust fund, for they cannot be lawfully diverted from the payment of debts; yet no creditor, unless he have a judgment, has such an interest in them, apart from an assignment, as will enable him to subject them to his debt. A particular assignment may be made of part of the effects to pay a specified debt. Payment may be made to a single creditor, though such payment may exhaust the fund. These preferences could not be given if any definite trust attached to the assets, in favor of all the creditors. A preference given by a general assignment does not, therefore, of necessity, invalidate the deed; yet all such preferences are liable to objection, and must be watched with jealousy. Though they may create suspicion, they are not in themselves fraudulent.

Another objection is, that the corporatioj^Mfcnot the power to assign away the railroad, and the frapH^ annexed to it. To this it is replied in argument, that the conveyance does not assign the road itself, but the profits ; and that whilst there can be no transfer of the road itself, nor any execution sale of it, yet the profits may be assigned.

The question as to the power of the corporation, need not now be considered. That is a matter between the state and the corporation, with which third persons have nothing to do. American Colonization Society v. Wade, 7 S. & M. 663. Whether the road is the subject either of assignment, or of sale under execution, depends upon the nature of the estate which the corporation has in it.

In Pennsylvania it has been decided, that a turnpike company had no interest or estate in the land, over which the road run, but only an easement, which was not the subject of sale. Ammant v. Pittsburg Turnpike Company, 13 Serg. & R. 210. In North Carolina, it has been decided, that a railroad company has an. estate in the land, and not a mere easement, and that the estate is subject to sale under execution. The estate, it is there said, results not only from the express provisions of the charter, but from the necessity of the case. State v. Rives, 5 Ired. Law Rep. 307. It is not the franchise which is sold, but the property and estate of the corporation. The tangible property and estate of a corporation are no more exempt from execution, than those of an individual. Ibid. In the cause before us, the charter authorizes the corporation to purchase the lands necessary for the site of the road, and the requisite depots, stations and buildings, and to possess and hold the same in fee simple. Act of 1833, sec. 4. /If the estate be one in fee, we do not see why it is not the subject of assignment or of execution sale.i It is insisted in argument, that by this conveyance only the accruing profits are transferred. That is literally true ; but whether that would not pass the estate, may be matter of doubt. See Schermerhorne v. Schermerhorne, 6 Johns. Ch. 70; 1 Pow. on Mort. 326, n. But that doubt need not now be solved, because so far as this objection |^K^n assignment of either would be good. It is probable, ho^^Bfthat the estate passes to the same extent that the proñtsW^tfthenvise the land might be sold, and the deed thus rendered inoperative. Yet we do not decide this.

The franchise itself cannot be sold, or assigned without the consent of the power which granted it. It is a mere easement, a privilege granted to an artificial being, not the subject of sale. The sale or-assignment of the road does not carry the franchise with it, nor does it work a dissolution of the corporation. It may be ground of forfeiture if insisted on by the state, but does not of itself operate a dissolution. 5 Iredell, as above.

The deeds of assignment transfer all the debts, books, accounts, choses in action, and real and personal estate to the assignees, upon trust first to enable them to borrow the sum of $250,000 to complete the railroad to Jackson, and then out of the profits to pay first the sum so borrowed — next the salaries of the assignees and all the other expenses of the bank and the railroad, and the balance to apply to the payment of such general creditors, as might come in under the deed.

One of the leading motives assigned for making the convey-anee, was to prevent a forfeiture of the charter. The charter declares, that if the road be not completed within six years from the first election of directors, the act of incorporation should be null and void. Notwithstanding this declaration, it is well settled, that the charter would not be void, until the state by proper judicial proceeding had obtained a judgment of forfeiture. The assignment of all of its estate and property to trustees, by which it was disabled, from a compliance with its own share of the charter, was perhaps a not less valid cause of forfeiture. People v. Manhattan Company, 9 Wend. 351; 4 Wheat. 698. This motive will not avail therefore to sustain the deed, if it be obnoxious to the law.

It is insisted in argument, that the priority given to the person who might advance the money for the completion of the road, makes the deed fraudulent; and that the very high salaries to be paid tó the three assignees, eight thousand dollars each, is likewise fraudulent. *

It must be borne in mind, that in the present attitude of the cause, our attention is confined to the question of fraud in law; if the deed be not fraudulent on its face, we cannot now pronounce against it.

A provision in a deed to secure future advances, is not necessarily fraudulent; it depends on the bona jides of the transaction. Conard v. Atlantic Insurance Company, 1 Peters, 386. It cannot, therefore, be absolutely asserted of this provision, that it is fraudulent in law. The same is true in regard to the salaries of the assignees. They are certainly very high, and are as certainly calculated to excite suspicion. Yet the large amount of property transferred — the responsibilities to be incurred — the duties to be performed, and the degree of skill requisite for their proper discharge, may make them not unreasonable. All these are matters of proof, and cannot be determined on this demurrer.

A far more important and serious difficulty however remains. These assignments are of indefinite duration. They transfer all the property and estate, real and personal, of every kind and description, with some immaterial exceptions, to the assignees. They also transfer the surplus profits of the railroad, to be managed by the assignees, until all the debts shall be paid. If this be not an assignment of the railroad itself, it is not less liable to objection ; because the profits and all beneficial interest and enjoyment of it are intended to pass. No provision is made for a sale of the property. What interest had the corporation in the railroad at the time of assignment? By the charter it would seem a fee simple. The banking privileges were to cease in thirty years, but there is no limit to the franchise of the railroad, and it is expressly authorized to hold the property and estate necessary for the purposes of the road in fee simple. Sec. 4, of Charter. What then is to become of the railroad and its appurtenances, after the object of the assignment has been attained, and its purposes fulfilled ? Plainly they revert to the grantor, the corporation, after the lapse probably of many years.

Does the law permit a debtor in failing circumstances, to convey all his property to trustees, so as to exempt it from execution for an indefinite time, to authorize them to hold it against creditors, until the profits, pay all charges, expenses and debts, and then to reconvey it, or permit it to revert to the original owner ? Can property in this manner and to this extent be withdrawn from the operation of the law, in its due course against the consent of existing creditors ?

It is a settled rule of decision in such cases, that any provision which materially hinders and delays creditors in the assertion of their rights, especially when coupled with a reserva^ tion of any part of the property to the grantor in the deed, makes the whole void. No permanent, lasting and material benefit can be secured to him, without vitiating the whole conveyance. Pike v. Bacon, 21 Maine, 280; Hafner v. Irwin, 1 Iredell Law, 490; Hyslop v. Clark, 14 Johns. 458; Harris v. Sumner, 2 Pick. 129; Harney v. Pack & Clifton, 4 S. & M. 229.

In a late case it was said, “ the time has come when, if possible, some plain rule should be laid down, in regard to these conveyances, and that rule is this, that the debtor may make an appropriation of his property to the payment of particular creditors— but there must be no condition, direct or indirect, controlling this application. All over and above what is necessary for the devotion of the property to the payment of the debts, cometh of evil.” 1 Iredell, 500.

In this case, the property is not to be sold to pay the debts; on the contrary, it is carefully reserved from sale. The assignees are to keep up the railroad, until the profits pay the debts. The creditors are prohibited from touching the corpus, the property itself. The assignment is to continue, until the profits pay the debts, and then the property itself is to revert to the grantors. Its direct tendency is to lock up the estate indefinitely— to create a perpetuity —to hinder and delay creditors unreasonably, and to secure an ultimate and permanent advantage- to the grantor, the corporation. All these objects fall under the condemnation of the law; and in our view these deeds are void.

The supreme court of Louisiana, in a case arising under these deeds of assignment, has also decided that they are void by the principles of the common law. Fellows v. Commercial and Railroad Bank of Vicksburg, 6 Rob. La. R. 246.

The decision of this point renders any farther examination of the other errors assigned unnecessary.

The decree is reversed and the bill dismissed.

Mr. Chief, Justice Sharkey having been a director in the bank at the time of the assignment, delivered no opinion in the case.