Case Name: Michael Wall al. vs. Edward Boisgerard et al.
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1848-11
Citations: 11 S. & M. 574
Docket Number: 
Parties: Michael Wall al. vs. Edward Boisgerard et al.
Judges: 
Reporter: Mississippi Reports
Volume: 19
Pages: 574–591

Head Matter:
Michael Wall al. vs. Edward Boisgerard et al.
Where an unincorporated banking company, consisted of upwards of one hundred individuals, associated for banking purposes, each of whom executed a mortgage upon his individual property to secure his individual subscription for stock, and also the general liabilities of the association ; and the joint agents of the association for the conduct of its affairs, with authority to do so, assigned these mortgages to a creditor, to secure the repayment of a loan to the company; it was held, on a bill by the creditor against one of the mortgagors and the agents of the association, who effected the loan, that it was not necessary to make all the rffembers of the association parties to the .hill; as from their great number, had they been made parties, the suit would never have reached a hearing ; it is sufficient that the agents for all the partners are parties.
Where an unincorporated banking association provided, in their articles of partnership, for the annual election of president and directors, to conduct the affairs of the partnership; and a bill was filed by a creditor of the association to foreclose a mortgage executed by one of the stockholders, according to the articles of association, for his individual stock, and to secure the debts of the company, which mortgage, with others of a like kind, had been assigned to the creditor by the president and directors, to secure the repayment of a loan of money by this creditor; and to his bill the creditor made the mortgagor, and the president and directors, by name, who had negotiated the loan for the company, and assigned the mortgages to him, the only parties to the bill, without stating that there-had been any subsequent election of president and directors, though the bill was filed more than a year 'after the negotiation of the loan ; held, on demurrer to the hill, that a want of proper parties did not appear on the face, of the bill; non constat that there had been any re-election since the assignment of the mortgage, nor that, if another election had been held, the same president and directors had not been re-elected.
A member of an unincorporated banking company, associated for banking purposes under the style of the “ Real Estate Banking Company of Hinds County,” executed a mortgage to the president and directors, who by the contract of the association had the management of its affairs ; and by the mortgage recited, that whereas he had executed his bond, payable in instal-ments, at distant periods, for the stock subscribed for by him in the company, in order to secure the payment of the bond at the times stipulated, and to bind himself, in conjunction with each stockholder of the capital stock of the company, “to all and singular, the holders of the notes, bills, checks, and other liabilities of the said real estate banking company of Hinds county, now existing, or which may hereafter exist, at any time within fifteen years, the time prescribed in the bond and articles of association aforesaid,” he thereby conveyed the land to the president and directors; with this condition, that if he paid and satisfied the bond, and paid and satisfied the president and directors, and their successors, for the stock subscribed, at the periods when due, and should pay off and discharge all the notes, bills, checks, and other liabilities of the said real estate banking company, then the mortgage was to be void; held, that this mortgage was not only a secu rity as between the members of the association for the payment of the capital stock subscribed for, but it was also a security to the creditors, or those who might become so, of the association, for the payment of their claims ; and the creditor was not bound to wait until the instalments of the bond were due, before he could obtain the benefit of the mortgage ; and that an assignee of the president and directors, of the mortgage, who was a creditor of the company, could maintain his bill against the mortgagor and the president and directors, to subject the mortgaged property to the payment of his debt, as soon as that debt was due, without reference to the periods when the instalments of the bond and for stock were due; and that as soon as any debt became due, the mortgage was a security for it.
Appeal from the superior court of chancery; Hon. Robert H. Buckner, chancellor.
Edward Boisgerard and John Delafield, on the 5th of October, 1842, filed their bill, in which they state that Michael Wall and more than a hundred other persons, entered into articles of partnership in April, 1838, for the purpose of banking, under the style of the Real Estate Banking Company of Hinds County. The names of the partners are given, and the terms of the partnership. Among which were the following, in substance, viz: That the capital of the company should be at least $1,000,000, and should be subscribed in shares of $100 each, by any individual, the owner of unincumbered real estate within the limits of the state, or that part of Louisiana which lies directly along the margin of the Mississippi river.
That the payment of the stock so subscribed for, should be secured by bond and mortgage upon unincumbered real estate, to be executed by the subscriber upon the terms and conditions prescribed in the articles of association.
That so soon as ten thousand shares of the capital stock should be satisfactorily subscribed for, the stockholders should proceed by ballot to elect thirteen directors, who, when so elected, should constitute a provisional directory for the transaction of business, who should hold their office for only three months; after which the stockholders' should elect a permanent board of directors, who should hold till the 1st of March, 1839, after which a board should on that day annually be elected, to consist of thirteen directors to manage the affairs of the concern; but in case the stockholders should fail to hold the annual-election, the directors in office should continue to act as such until their successors could be duly elected.
That the. board of directors, when elected, should choose of their number a president; and the president and directors should appoint'other officers, fix salaries, and do and perform all acts which should be deemed by the said board of directors necessary and proper for the promotion of the interests and carrying out the purposes of the company.
That each and every one of the subscribers covenanted and agreed, that they would sustain and faithfully execute all engagements and obligations which might or should be entered into by said president and directors, or by their authority, provided they were not repugnant to the articles of association; and the stockholders and subscribers pledged themselves to assume the full responsibility of, and fully to ratify and confirm all the acts of the president and directors, performed by them in good faith, of what kind or nature soever the same might be, provided they were deemed by the president and directors expedient and advantageous to the company. • .
The bill further stated, that on the 3d of July, 1838, ten thousand shares of stock having been subscribed, Cowles Mead, Joseph A. McRaven, Nelson Kavanaugh, George Wyche, Thacher W. Winter, Hugh Campbell, Frederick Spann, Hin-chen A. Martin, James M. Wall, Erasmus D. Fenner, Benjamin Whitfield, Edward Pickett, and Samuel Neill were duly elected directors of the company until March 1, 1839, and Cowles Mead was elected their president. And on the 1st of March, 1839, thirteen directors were duly chosen, and Cowles Mead again elected their president; the directors being, with a few exceptions, the same who were first elected.
That M. Wall, on the 3d of July, 1838, subscribed for 239^%^ shares of stock in the association, and executed a bond to the president and directors of the company, and their successors in office, as they should be subsequently from time to time elected, for the sum of $23,929-29,. in which he acknowledged himself a member of the company, and which was to be defeated upon the payment of one third thereof at the end of five years, from and after the 1st day of January, 1839; one third thereof at the end of ten years, and the other third at the end of fifteen years from said date, and upon meeting and satisfying any other call that might be made upon him by the said president and directors, in pursuance of the requirements of said articles of association.
And that, on the said 3d day of July, in the year 1838 — the day of the date of the bond — the said M. Wall, still further to secure the amount of the stock by him subscribed, punctually, and at the periods in said bond specified, and to bind and render himself liable in conjunction with each and every of the stockholders of the said Real Estate Banking Company, to all and singular the holders of the notes, bills, checks, and other liabilities of the said Real Estate Banking Company of Hinds county, then existing, or which might exist, at any perio'd during fifteen years, from and after said 1st day of January, 1839; conveyed to said president and directors and their successors in office, by indenture of mortgage, certain lands lying in Hinds county, which was duly delivered, certified, and recorded, &c. The condition of this mortgage was as follows, viz.: “Provided, nevertheless, and the said indenture of mortgage, and the estate hereby granted are upon this express condition; that if the said Michael Wall, his heirs, executors, or administrators, should well and truly pay off, or cause to be paid off, discharged, and satisfied, the said bond or writing obligatory hereinbefore mentioned, and set forth, signed, sealed, and delivered by the said Michael Wall, in the manner and at the time aforesaid, and should well and truly pay or cause to be paid unto the said president and directors, &c., the said sum of money in the condition of the said bond or writing obligatory mentioned for the shares of the capital stock, &c., subscribed for, &c., at the times and periods when the same shall become due and payable according to the tenor and effect, &c., of said bond, &c.; and should well and truly pay off, satisfy, and discharge all the notes, bills, checks, and other liabilities of the said Real pstate Banking Company of Hinds County; that then and from thenceforth” the mortgage should be void, &c.
And the bill further averred, that by this bond and mortgage, the land conveyed thereby became liable for the payment of stock subscribed for, and also for all the debts of the association.
And that, at a meeting of the board of directors of said company, held at Clinton, in February, 1839, it was resolved, that Joseph Davenport and Jacob F. Foute should be, and they were appointed commissioners to negotiate a loan in New Orleans, with power to sell, transfer, pledge, or hypothecate the stock, bonds, and mortgages of the company, as collateral security for the repayment. And that, on the 6th of March, in the }rear 1839, a letter of attorney, with full powers, was made to them accordingly. That an agreement was entered into with the complainant, Boisgerard, by them, on or about the 9th of March, 1839, for the loan or advance by him to said company of $300,000, in consideration that the company would execute and deliver to him their joint and several bond, in the penal sum of $600,000; conditioned for the payment of $300,000 with interest, at seven per cent., and all proper costs and charges, on or before the first day of March, 1840, by shipments of cotton to Bonnafie, Boisgerard & Co. of Havre; and would assign and deliver to complainant, John Delafield, as trustee, certain bonds and indentures of mortgage, mentioned in a schedule annexed to said articles of agreement, amounting to $600,000 and upwards, with power and authority to him to collect the amounts due upon, and secured by the said bonds and the said indentures of mortgage, or to sell the said bonds and indentures of mortgage in case of need, and to apply the proceeds thereof to the payment of all or any sums of money due from the company to the complainant Boisgerard. And that, between the date of said agreement and the 20th of June, 1839, the said company should ship to Bonnaffe, Boisgerard & Co. at Havre, five thousand bales of cotton, out of which complainant, Boisgerard, was to receive $100,000 towards the repayment of said $300,000. And that, in case the company failed to perform their agreement, that they should reimburse to the complainant, Boisgerard, the amount of his advances in ninety days, and that the date of such failure should be fixed by notice of John Delafield, and a copy addressed to the company.
That the money ($300,000) was advanced, the bond for $600,000 executed, and deed made in pursuance of the agreement, by which the president and directors of said company, for the consideration of one dollar, and for divers other good causes and considerations, granted, bargained, sold, assigned, transferred, and set over to complainant, John Delafield, all the said several indentures of mortgage in the said instrument specified, being those mentioned in the schedule annexed to the agreement, together with the bonds or writings obligatory, in the said indentures of mortgage described, and all moneys due, or to become due on the said bonds or writings obligatory, and said indentures of mortgage; constituting said Delafield the agent, to use all lawful means to collect said moneys, &c. That among the mortgages and bonds so sold and transferred, was that of Michael Wall. That Boisgerard complied with his agreement; the company did not comply with theirs, and that they owe him $305,988-56, and interest since March, 1840; whereby M. Wall became, and was, and still is, liable and bound to complainant, Boisgerard, to pay the same.
The bill charges, that the whole amount of $23,929-20, mentioned in the condition of the said bond or writing obligatory, and the said indenture of mortgage executed by the said M. Wall, as aforesaid, and secured thereby, still remains due and unpaid, no part having been paid before the transfer, or since; by which the estate has become absolute in law, in complainant, Delafield, as trustee for complainant, Boisgerard; and that said mortgaged premises are a slender and scanty security, and wholly inadequate for the payment of the said sum of $23,929-20, mentioned in the said indenture of mortgage, executed by the said Michael Wall, as aforesaid; and that the whole property mentioned in all the said indentures of mortgage, conveyed and assigned to said Delafield, in trust for said Boisgerard, are wholly inadequate, and are a slender security for the payment of said $305,988-56. And the bill states, that the complainants do not seek to bring in, as parties to the suit, the great body of stockholders in, and subscribers to, said company; for the reason, that the great number of them, and the change of residence and death of many, would render it impossible to bring them all, and the heirs and representatives of such as have died, or may die during the pendency of the suit before the court. The bill made defendants, Wall, certain junior incumbrancers, and the president and directors by name who were elected on the 1st of March, 1839.
The bill prays, that the said Michael Wall may be decreed to pay the said sum of $23,929-20, mentioned in the condition of the said bond or writing obligatory, and the said indenture of mortgage executed by him, or the said sum of $305,988-56 and interest, by a short day, &c.; or. in default, that he and those claiming under him may be foreclosed of, and from all equity of redemption in, and to said mortgaged premises, &cl, and for general relief, &c. With the bill, as parts of it, exhibits are filed from A to J, of the above facts. Wall demurred to the bill' for these reasons:
1st. That all persons having a direct interest in the decree to be pronounced, are not made parties to the suit.
2d. That the debt secured by the mortgage was not one at the time of the filing of the bill, nor for more than a year thereafter. The court below overruled the demurrer, and Wall appealed.
C. R. Clifton, for appellant.
1. The company conducted its affairs by a president and twelve directors, and they are necessary parties to a bill, seeking like this, the adjustment of a complicated account against the company, and the sale of the mortgaged estate for the satisfaction of the amount claimed.
The complainants show by their bill, that, according to the articles of association, there was to be an annual election of directors on the first Monday in March of each year for fifteen years; the period for which the partnership was to continue, and that they made the contract therein set forth, with the directors who were elected on the first Monday of March, 1839; and they bring their bill against these same persons in the year 1842, without alleging that they were re-elected. The bill states, that the directors were to hold over until their successors were elected; but this statement could only be sufficient to support a suit against the original directors, when accompanied by the further one, that such successors had not been elected. When the complainants sue the directors first elected, after the expiration of their term of office, they must show that the contingency upon which they were to hold over, had actually happened. This they have failed to do. There is no averment in the bill to repel the presumption that the affairs of the company, at the date of filing it, were not in the hands of other and totally different persons.
The defendant below, as an individual member of the company, could know nothing of the justness of the claim; and the directors, having charge of the books and business of the company, and not those persons who were directors in 1839, when the contract was made, are the proper parties.
When a complainant shows that he has not made the proper parties defendants, it is good ground of demurrer to the bill; and when he does not show whether he has made the proper parties or not, it is likewise a good ground for demurrer, in the first case for the omission, in the last for the uncertainty. Story, Eq. PI. 414-417.
2. The party was to execute his bond to the company for the amount of stock subscribed, which was to be secured by mortgage on unincumbered real estate. The stock was to be paid in three instalments in cash; one third at the end.of five, one third at the end of ten, and one third at the end of fifteen years, from the 1st day of January, 1839.
The stock bond and mortgage conform to these articles, and the bill is filed to foreclose the mortgage in 1842, more than a year before the first instalment became due.
Courts of equity will never decree a foreclosure until the period limited for the payment be passed; and the estate, in consequence thereof, forfeited to the mortgagee, for it cannot shorten the time given by express covenant and agreement between the parties, as that would be to alter the nature of the contract, to the injury of the party affected thereby. 1 Powell on Mort. 337; 3 lb. 965 ; 2 Vent 365. Equity looks to the substantial objects of all contracts, independent of the forms they assume. Where a bond is given, and a mortgage is made to secure it, the bond is the evidence of the debt, and the mortgage but an incident or collateral security.
By the terms of the articles of association, nothing more was contemplated or required at the hands of each stockholder, than that he should give a bond and mortgage to secure the amount of stock he has taken, payable in five, ten and fifteen years. This the chancellor admits, but adds, “ this did not necessarily prevent the company from afterwards making the bond and mortgage sufficiently broad and comprehensive to embrace those who might become its creditors, either by a loan of money, or by the receipt of its bills.” Granted; but the point is not what the company could do, but what they did do. Did they convert a security, payable in five, ten and fifteen years, into one then presently due and payable? They did not.
The terms of the mortgage do not enlarge the liability, nor alter the period of its payment, because they expressly refer for their solution “to the tenor and effect and true intent and meaning ” of the articles of association.
The counsel for appellant reviewed at length the recitals of the mortgage, and the opinion of the chancellor, reported in S. & M. Ch. R. 404; and insisted, that the mortgage did not enlarge the liability of the bond, and that the reasoning of the chancellor did not establish it.
Potter, for appellees.
1. We refer to the opinion of the chancellor, and to brief for complainants, 1 S. & M. Ch. 404, and to authorities there cited. For further authorities on the rule as to parties to suits, and on exceptions to the rule, see Meux v. Mattby, 2 Swanst. R. 284; Wood v. Dummer, 3 Mason, 318; Smith v. Hibernian Mine Co. 1 Sch. & Lef. 240; Manning v. Thesiger, 1 Sim. & Stú. 106; Bromley v. Smith, 1 Sim. 8; Phillips v. Buckingham, 1 Yernon, 228, and Raithby’s note 1, at p. 230; Downes v. Thomas, 7 Yes. 207; Craker v. Parrott, 2 Ch. Ca. 228; Story, Eq. PI. § 87 to § 136, § 160; Mitf. PL 174; Calvert, Eq. (15 Law Library,) 46, 282, 288.
The reason of the rule, that all parties in interest should be parties to the suit, and also of the exception, where the parties are many, is well stated in an old case, Cranbourne v. Crisp, Finch, 105, cited in Calvert, Eq. 45, n. 3.
2. Although the mortgage is to be construed, so far as the rights'of the company are affected, as a security for the bond alone; still that clause which pledges the lands as a security for all the liabilities, will remain in full force, and sustain the claim made by the bill.
After stipulating in his mortgage for the full prior payment of this bond, Wall had an undoubted right to say his lands should also be subject for the payment of all the debts of the company; his co-partners could not complain that he thus went beyond what was required by the articles, and voluntarily gave a further security for the credit of the company, and for the benefit of its creditors. The company would thus have all it could demand by the articles — the land, as a security for the bond; the company creditors would have, what Wall might well give, a right to be paid from the mortgage property, subject to the prior right of the company. As demands against the company would be due presently, whilst the company could only demand the instal-ments as fixed in the bond, the company creditors might at once proceed against Wall and sell his interest in the mortgage property, and hold the estate, subject to the claim of the company.
Under this construction, the rule would be the same as if Wall had mortgaged the land to secure a debt due five years thereafter, and had then mortgaged the same land to secure a debt due one year thereafter. In such a case, the second mortgagee would not be delayed till the lapse of the five years, but might, when his claim fell due, foreclose the estate, and hold it, subject to the prior mortgage. Bose v. Page, 2 Simons, R. 471; Story, Ea. PI. 177.
But if the first mortgagee should join in the second mortgage, and agree that the whole estate should be liable for the debt due the second, mortgagee, then the latter would have a right, as against the first mortgagee, to prior satisfaction from the whole estate; the two mortgagees would have changed places, and the first mortgagee could claim only the surplus of the estate, after the second had been fully paid. Such would, indisputably, have been the effect of such a waiver by the first mortgagee. Such, in this case, is the predicament of the banking company. Admit that, by the terms of the mortgage, as controlled by the partnership articles, the company had a right, as against its creditors, to prior satisfaction from the estate, still, they have seen fit to contract with Boisgerard for a loan of money and to assign to him this mortgage, which by its terms pledges the land of Wall to secure the payment of this loan as a debt against the company; they have, by that agreement, and .by their assignment of the mortgage, pledged those lands to pay that loan at its maturity; that is to say, to pay it at a date long before the first instalment of the bond falls due. By the agreement, the mortgaged lands were to be assigned to Delafield, as trustee for Boisgerard, with full power to sell the same to raise the amount due on the loan; by the terms of the assignment, Delafield is empowered to subject the mortgaged lands and pay that amount from the proceeds. It is clear, from the tenor of the agreement and assignment, that the entire estate mortgaged by Wall was intended as a security for the amount so loaned by Boisgerard; the company has thus waived its right to prior satisfaction from the lands, and Boisgerard, subrogated and entitled to subject the whole estate, has full right to hold both the company and Wall to that clause in the mortgage, pledging the lands for the liabilities of the company. Wall cannot object, for he volunteered so to pledge his estate; the company cannot object, for it has waived its right to prior satisfaction. Coll, on Part. 113, 139; Gow. on Part. 11.
3. The mortgage deed is valid; the grantees are sufficiently described; the deed refers to the articles of association, and shows that the grant was made to the managers of a private company. “In deeds, the utmost certainty now required concerning the names of the parlies is, that ‘ there be sufficient shown to ascertain the grantor and grantee, and to distinguish them from all others.’ It is, also, the office of judges to take and expound the words, which the common people use to express their meaning, according to their intent, and not according to the very definition. It is, also, well settled, that a grantee, if known by two names, may take under either.” —Per Woodbury, J. Soc. for Prop. Gosp. v. Young, 2 N. Hamp. R. 313, 314; Jackson v. Goes, 13 John. 524; 3 Phil. Ev. (Cowen & Hill) 1359; Wilson v. Troup, 2 Cow. 228, 229 ; Colpoys v. Colpoys, 4 Eng. Cond. Chan. Rep. 216 ; Collins v. Lemasters, 2 Bailey, R. 145; Jackson v. Schoonmaker, 2 John. 234; 16 Johns. 172; 7 Mass. 384; Co. Lit. 183, b.; Hob. 277; Hall v. Leonard, 1 Pick. 30 ; 4 Kent, 462; Bac. Abr. Grant, C.; Com. Dig. Capacity, B. 1; Hoffman v. Porter, 2 Brock. 157, 159 ; Bac. Ab. Grant, C.; Shaw v. Loud, 12 Mass. 448 ; Shep. Touch, ch. 12, p. 236; Barkley v. Barkley, 3 M’Cord, 272; Hunt v. Wickliffe, 2 Pet. 208; Duncan v. Beard, 2 Nott & M’Cord, 400; Finley v. Humble, 1 A. K. Marsh. 293 ; Goodwin v. Richardson, 11 Mass. 475; Bacon v. Fitch, 1 Root, 181; Donaldson v. State Bank, Dev. Eq. R. 103 ; Gates v. Graham, 12 Wend. 56; Jacob’s Law Die. 217, 218; Inglis v. Sailors’ Snug Harbor, 3 Pet. 114; Bartlett v. King, 12 Mass. 537; 3 Phil. Ev. (Cow. & Hill) 1362, 1399; Tudor v. Terrell, 2 Dana, 47, 50; Livingston v. Delancey, 11 Johns. 365; Starling v. Blair, 4 Bibb, 288; Worthington v. Hylyer, 4 Mass. 205; 4 Day, 265, 465; Arundell v. Arundell, 1 Mylne & Keene, 316.
4. To show that the deed is valid as a mortgage to secure future liabilities, see 2 Powell on Mortg. 533'a, and note 1.

Opinion:
Mr. Chief Justice Sharkey
delivered the opinion of the court.
This bill was filed by Boisgerard and Delafield to foreclose a mortgage given by Wall. It appears, by the bill and exhibits, that in 1838, certain persons entered into a co-partnership, for the purpose of banking in the town of Clinton, under the name of " The Real Estate Banking Company of Hinds County." In form it was a bank, but as there was no charter, it was in fact but a partnership between the subscribers to the articles of partnership. The capital to be invested was called stock, and each subscriber designated the amount he was willing to invest. The second article provided, that the payment of stock subscribed for should be secured by a mortgage and bond, to be drawn according to a form to be prescribed by the company. By a subsequent article, it was provided, that the stock subscribed for should be paid in five, ten, and fifteen years, in equal instal-ments. Wall became a subscriber, and executed the mortgage on which this bill is founded.
After the company was formed, it proceeded in business by electing directors, &c., and being desirous to obtain a loan of money, sent agents to New Orleans for that purpose, clothed with full power to execute bonds for the company, and also to pledge or assign the bonds and mortgages given by the subscribers or stockholders. These agents entered into a contract with complainant, Boisgerard, from whom they borrowed $300,000, for which they executed a bond, and by the articles between them, also covenanted to ship in payment a large quantity of cotton, and that they would pay any balance that might be due. As a further security; they assigned bonds and mortgages to the amount of $600,000 to the complainant, Delafield, as a trustee for Boisgerard. .The bond and mortgage of Wall were amongst those assigned, and a large amount is alleged to remain unpaid, wherefore this suit was instituted. The chancellor overruled a demurrer to the bill, and the respondents appealed.
Two questions are now made by appellants; first, that it does not appear by the bill that proper parties have been made; and, second, that the mortgage is but a security for the payment of the sum subscribed as stock, no part of which was due at the time the bill was filed, and that consequently there can be no right of recovery.
The objection as to the parties is, that the complainant has proceeded against the president and directors, who were in office at the date of the contract with him, when, by the articles which he has made an exhibit, it is provided that there should be an annual election for directors, who might hold over, however, in case there was a failure to elect.
This compa^r consisted of many persons. The number is so great, indeed, that it would amount to a denial of justice to require that each member should be made a party. They had agreed to entrust the entire management of their business to a board of directors, to be annually elected, and the board of directors elected a president. A suit against all the partners would probably never reach a hearing, and it was, therefore, unnecessary to make all of them parties. Mitford's Pl. 166, 167; Story, Eq. Pl. 168, § 135 et seq., 142. The directors were the agents for all the partners, and it is sufficient that they are parties. Ib. 177, § 143; Ib. 118, § 97.
But was it incumbent on the complainants to look into the subsequent proceedings, to see whether they had complied with the terms of the partnership in making annual elections; and was it also incumbent on them to proceed against the directors subsequently elected? A demurrer can only be interposed for defects apparent on the face of the bill. Does it appear, in this instance, that the complainants are proceeding against wrong defendants? We think not. It does not appear from the bill that there ever was an election after that at which the defendants were elected. It may be that there never was another election; or it may be that the same directors were re-elected. It cannot be said, then, that the want of proper parties appears on the face of the bill, as it must be, to justify a demurrer. Story, Eq. Pl. 526, § 541. If parties not before the court are necessary and proper to the decree to be made under the bill, -this objection may be insisted upon in the answer, or at the hearing. Ib.
We come then to the main question : Is this mortgage merely a security for the payment of the bond given for stock, or does it also provide a security for other liabilities of the company ? The chancellor took a very correct view of this question, in his opinion, reported in 1 S. & M. Ch. R. 425. The question must turn exclusively on the true intent and meaning of the mortgage, as indicated by its language. It recites, " that whereas the said Michael Wall, having signed sealed, and delivered to said president and directors aforesaid, the bond, as required by said board and articles of association aforesaid, and being desirous still further to secure the payment of said stock subscribed for, as aforesaid, punctually at the times and periods prescribed in and by said bond and articles of association, and to bind and render himself, his heirs, executors, administrators and assigns liable, according to the tenor and effect, and true intent and meaning thereof, in conjunction with each and every stockholder of said capital stock of said ' Real Estate Banking Company of Hinds County,' to all and singular, the holders of the notes, bills, checks, and other liabilities of the said Real Estate Banking Company of Hinds County now existing, or which may hereafter exist at any time within fifteen years, the time prescribed in the bond and articles of association aforesaid of said Real Estate and Banking Company of Hinds County, now therefore this indenture, &c." The condition is in these words : "Provided, nevertheless, if the said Michael Wall, his heirs, executors, or administrators shall well and truly pay off, discharge, and satisfy the bond aforesaid, signed, sealed, and delivered by the said Michael Wall, as aforesaid, and well and truly pay and satisfy the said president and directors, and their successors in office, as aforesaid, for the stock subscribed for by the said Michael Wall, at the times and periods when the same shall become due and payable, and well and truly pay off and discharge all the notes, bills, checks, and other liabilities of the said Real Estate Banking Company of Hinds County, then and from henceforth, as well this present indenture and the estate hereby granted, as the bond aforesaid, shall cease and determine, and become absolutely null and void," &c.
Surely this language can admit of no dispute, as to the intention of the mortgagor. The object was twofold; first, to secure the payment-of the stock; and second, to secure the payment of the notes, bills, checks, and other liabilities of the company then existing, or to be afterwards created. Not only is .this object declared in the recital, but it is inserted in the condition; the mortgage was to become void on payment of the bond, according to its terms, and on payment of all the notes, bills, checks, and other liabilities of the company then existing, or thereafter to be created; not otherwise. It constitutes, therefore, a double security. It will not do to say that the mortgage was repugnant to the articles of association, and therefore not binding. The articles of association contain the terms of a contract between the partners, and it was competent for the partners to change or modify them in their transactions with the public. They commenced operations on a fictitious capital, or at least without any present capital. As between themselves, for the security of each, it was of course desirable that each member should secure the amount which he agreed to put in the concern, hence the provision requiring the bond and mortgage. Each member was liable on the notes and other contracts of the company; but as their success depended very much on the confidence which the public might repose in the association, it was thought advisable no doubt, that each mortgage should express on its face that it was a security for the debts of the company. In this way the creditors had the individual liability of each member, with the security afforded by the mortgage of each. The company had the right to prescribe the form of the mortgage, and we must suppose that this one is similar to the others. That the company had a right to waive its own security in favor of creditors, is too clear to admit of doubt. They had a right to relinquish it entirely in favor of creditors. This was a question amongst themselves. That they did so waive it, seems to be manifest. This mortgage was given to the company, and by accepting it, the terms and provisions contained in it were acceded to. Not only was it received, but it was assigned away by the company, as security for a debt. The president and directors were but the agents of the partners, and the mortgage was made to them for the benefit of each member, and for the benefit of creditors. The receipt of it was the act of the company, and the terms and conditions it contained were adopted by each member of the company; if it has diminished their security, they cannot urge that against their assignee, nor can the defendant urge this as an objection to the rights of the assignee, who is a creditor, because he expressly provided for such creditor. Nor is the claim of the creditor secondary; he is not bound to wait until the bond shall become due. The mortgage secures debts which were due at the time it was made, and all subsequent debts which might be created by the company, whose object and business was to contract debts. As soon, then, as any debt became dué, this mortgage became a security for it. It was not inconsistent with the terms of the mortgage, that the security might possibly be exhausted before the first instalment of the bond became due. There is no superior equity to give a preference to the debt secured by the bond. A mortgage to secure future advances or liabilities is as effectual as a mortgage for present liabilities. 4 Kent, 175.
We are therefore of opinion, that the decree overruling the demurrer should be affirmed, and the cause remanded for answer.