Court Opinion

ID: 4932081
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:09:12.857129+00
Date Added: 2024-06-11T08:14:31.404982
License: Public Domain

KeNt, J.
The object and prayer, of this bill is, that the plaintiff corporation may be let in to redeem the mortgaged premises, viz., its road and all its corporate property, described in the deed to trustees for the benefit of what are termed the second mortgage bonds and bondholders.
Thepe is no question that the plaintiff corporation was the original owner of the road, and that it had the rights of a mortgager under the deed referred to. The question, if not the sole question before us is, whether that right of redemption has been legally and effectually foreclosed. If it has been, there would seem to be no equity or title to the property left in the plaintiffs. If it has not been, the plaintiffs should be let in to redeem.
Indeed it would seem, if there has been no legal foreclosure, there can be no legal existence of the defendant corporation,— for that exists only by the fact of a prior extinguishment of the right of redemption. Stat. 1857, c. 57.
In'the argument several objections are started touching the validity of the mortgage deed. It is said that the vote, of the stockholders did not authorize the president to mortgage the personal property or the franchise, and that therefore the deed, at least as to those particulars, was unauthorized and void.
An answer to this question, which certainly seems formidable, is that the bill nowhere sets up or alleges these matters, but simply sets out the existence of a legal mortgage, but denies any foreclosure and asks to redeem. The argument is, that if there was no legal mortgage no title passed, and the remedy would be at law or in equity to obtain a decree to declare the deed void, for the purpose of removing a cloud from the title of the plaintiffs.
On examination of the bill, it will be seen that it sets out in the *21commencement a full and very particular statement and history of the various incumbrances and mortgages which had been created and executed besides the issue of stock certificates. It names the Yarmouth extension, $204,000, to secure which a mortgage was given to trustees. It then alleges that another mortgage was given td other trustees of the railroad and franchise subject to the prior mortgage, to secure certain cities and towns which had loaned money to the corporation. This debt it is stated was $800,000. It next states that the corporation issued “ first mortgage bonds” to the amount of $280,000, in the year 1851, payable in ten years, and secured the same by a mortgage to the same individuals as trustees, subject to the mortgages before named. Then comes the allegation in reference to the mortgage now in question, “ that afterwards, in the year 1852, the said corporation duly issued, and sold in part, bonds known as the second mortgage bonds, to tli'e amount of $250,000, payable in twelve years with semi-annual interest, according to the tenor of coupons or interest warrants, thereto annexed, and secured the same by a mortgage of said railroad to said Patten, llagar, and McKeen, who were trustees in the other mortgages, in trust, subject, however, to the other mortgages hereinbefore named.” The bill then asserts that “ afterwards, in the year 1857, the said trustees,” the interest on said first and second mortgage bonds not having been paid by said corporation, “ in behalf of such bondholders, and by reason of the condition of the mortgage, given to secure said bonds, took the possession and management of said railroad, franchise, and furniture, and so continued the possession up to 1864.”
There is further on a statement that the defendant ■ corporation became possessed of said railroad, property, and franchise by some title derived by, through, or under the mortgages given to secure the first and second mortgage bonds, and a request for a disclosure of the title or claim set up.
The prayer of the bill is “ to be let in to redeem the mortgaged premises, on payment to the defendants of what shall appear to bo due to them, if anything, after deducting what the trustees and the defendant corporation have, or ought to have received from the *22profits and income of said mortgaged premises. The bill also prays for general relief.
The answers of the defendants, all admit the statement of mortgages and incumbrances as made by the plaintiffs. There is, therefore, no issue made by the bill, answers, or proofs, as to the legality or binding force of these several mortgages. The bill is one for redemption and that only, from a certain specified mortgage, — not to cancel or restrict it, or to set it aside. There are, doubtless, many things stated in the bill, and elicited in the proofs which might be of importance, in adjusting accounts and equities, if the foreclosure is found to be ineffectual. But the px-eliminary and vital question is whether the. mortgage has been foreclosed. The bill does not set up any original illegality, or want of binding obligation in the mortgage.
But if these objections, which have been stated in the argument, were fully open, we should be hardly ready to say that they were so clearly established as to require or justify the decision, that the mortgage was void. By the direct vote of the stockholders, authorizing the issue of the second mortgage bonds, the president was authorized “ to execute a mortgage of the road and appurtenances, subject to prior mortgages to secure said bonds.”
This authority is in terms broad and ample. It seems to us no forced construction, which should hold that the evident design was to give power to mortgage the real and personal property of the corporation, belonging to, used with, and which was in fact, practically, the road and appurtenances. Even if the word “ appurtenances ” had been omitted, and it had been simply a power to mortgage “ the road,” it would be too narrow a construction to limit the power to the road-bed and rails. By the terms used, it is evident that the corporation had in view the same property and rights that it had before mortgaged by the deeds to which this is subject. The vote, which authorized the mortgage to secure the first mortgage bonds, was more specific and included, in terms, “the franchise and furniture of the road.” It would be difficult to limit, by any satisfactory definition of the words “ the road and its appurtenances,” *23tbe force and effect of them, short of a power over all that was the road itself, and all that belonged to it as a railroad. Considering the object of the vote, the prior votes and mortgages referred to in this vote, and the evident intent to give full security on all the property, rights, and interests still remaining in the corporation, we see no reason to doubt, that power was given sufficient to cover the actual grant of the property, including the franchise named in the deed.
But it is objected that the corporation had no power to mortgage its franchise, without the consent of the legislature. The argument is, that the grant being to certain persons and their associates, the law will not sanction or permit the transfer to other persons or corporations.
It is by no means settled that this doctrine is recognized or admitted universally. It is doubted or denied in several cases in different States. The case of Shepley v. G. T. R. R., 55 Maine (published since the arguments were made in this case), is substantially a denial by our court of this doctrine, and the reasons there given are cogent and satisfactory, and are based on common sense and practical views, rather than on theoretic speculations, which have little basis in fact or experience.
But it is not denied that if the rule be, as first stated, subsequent ratification or recognition is equal to prior or direct assent by the legislature. An examination of the various enactments in relation to the roads and railroads generally leads to the conclusion that the State cannot and does not object. This objection, it is to be marked, is one resting solely on public policy, and the supposed interest of the State. It is one rather for the State than for the company to interpose.
Again; in this case the franchise — thé right to be a corporation and to exact and secure tolls and fare — becomes of little practical importance to the present defendant corporation. If the foreclosure of the mortgage on the __ other property mortgaged was perfect and sufficient, the statute authorized the body of bondholders to organize as a corporation at once, with all the powers of the for*24mer corporation, and to, in effect, assume a new franchise and act under it. If, then, the franchise of the old corporation was not mortgaged, or if the conveyance of it in mortgage was illegal for want of legislative consent, and if, therefore, it has not passed out of the old corporation, yet, if all the other property has passed to the second bondholders, their new legalized corporation is sufficient for all practical purposes, and exists by the express enactment of the legislature. The complainants recognize the existence of the corporation thus formed, by instituting this bill against them and requiring them by the new name to answer, and to account and to receive what may be found due, and to release the mortgaged property.
The plaintiffs having called in the bill for the disclosure of the defendant’s title, and for the grounds on which they assume to hold the railroad and its franchise and property,— the answers place that claim on the ground of the foreclosure of the second bond mortgage, and rest upon that. The answers and evidence show that the foreclosure was made under the provisions of the statute of 1857, by publishing in the newspapers and recording as therein required. The question is whether that foreclosure was effectual.
It is objected in the first place that the statute does not, by its terms and scope, apply to mortgages executed before its passage. We think that it is evident that'it was the intention of the legislature to provide a mode for the foreclosure of all existing, as well as all subsequent railroad mortgages. The statute was passed to give what may be considered by those interested, or some of them, a simple and effectual mode of securing and enforcing the rights of both mortgagers and mortgagees in such deeds. The language is sufficiently explicit, “ whenever any railroad corporation shall have mortgaged its franchise,” etc. The object in view was to reach all this class of conveyances, and the words used are sufficiently retrospective in their scope to include them.
But a more serious question is raised and pressed upon us with force and earnestness, and requires full consideration.
It may be stated to be in substance this: that if the statute is *25retrospective, so as to operate upon this mortgage, it is unconstitutional, and therefore void so far as this mortgage is in question. And it is unconstitutional because, if retrospective, it violates the provision of the Constitution of the United States, which prohibits a State from passing any law impairing the obligations of contracts.
It is insisted that this mortgage, having been given in the year 1852, must be governed by the law then existing, as to its redemption or foreclosure, and that the laws or rules then in force were so a part and parcel of the contract and so incorporated into it, that any change in the mode of foreclosure would impair the obligation within the prohibition. In following out this idea it is contended, that, in 1852, there was no mode by ’which a railroad mortgage like this could be foreclosed, under any of the existing statutes of the State, or by any of the established rules of law, applicable to mortgages and their foreclosure. The only mode by which it could be effected, it is claimed in the argument, is by a bill in equity to foreclose, instituted under the general equity powers of an equity court, by which a sale, or a strict and immediate foreclosure, would be ordered.
It is important to ascertain what provisions of law then existed for the foreclosure of mortgages in Maine, when this contract was entered into.
The statute law had always recognized the existence of a right in the mortgager of real estate to redeem the same after breach of the conditions, and had fixed that term at three years, after the commencement of proceedings to foreclose the equity. At the same time, it had provided by statute the mode of proceeding on the part of the mortgagee to foreclose. These modes were specifically stated and exactly defined. One mode was by entry and possession for the pui'pose of foreclosing by the written consent of the mortgager or his grantee. One by a peaceable entry, in presence of witnesses, whose certificate of the fact must be recorded in the Registry of Deeds. . Another mode was by a suit at law, declaring, in a real action, in the usual form, in which action either party, on motion and proof that the title claimed was in mortgage, might have *26a conditional judgment entered as on mortgage, in which it was decreed that if the debt was not paid in two months, an execution for possession should issue. If possession was taken under the judgment at law, the equity would be foreclosed in three years, after such execution of the writ of possession. Another mode of more recent date, but one existing some years before 1852, and now on the statute book, is by a publication in a newspaper without entry or suit, describing the mortgage, the breach of the condition, and intention thereby to foreclose the mortgage. The usual time of redemption, viz., three years, is allowed after the publication. We may .say, in passing, that this mode of foreclosure by advertising is in all essential particulars the same as that provided for in the statute of 1857 for railroad mortgages with the same rights and time for redemption.
The foregoing were all the modes by which a mortgage of - real estate could be foreclosed in Maine in 1852. It was decided in the case of Ireland v. Abbott, 24 Maine, 155, that since 1821, in Maine a mortgage of real estate cannot be foreclosed, except by pursuing one of the modes provided by the statute for that purpose.
The law in relation to mortgages of personal property in 1852, gave sixty days after breach for redemption. It was decided in several cases before 1852, that the title of the mortgagee became absolute as to the personal property mortgaged, at the expiration of sixty days without any action or proceeding to foreclose. Thompson v. Moore, 36 Maine, 47; Clapp v. Glidden, 39 Maine, 448.
More recently, by subsequent statutes, the mortgagee in such ■ cases must move to foreclose, but in 1852 the title to real estate, whatever that term includes, could be foreclosed in either of the modes pointed out in three years, and the title to personal property ‘ by lapse of sixty days after non-payment.
It is claimed that this railroad mortgage could not be foreclosed under any law existing in 1852. It would seem clear enough that whatever came under the name of real estate might be foreclosed, under the statute relating to real estate, and whatever was personal estate would be foreclosed in sixty days, after the failure to pay *27any coupons. Now the foreclosure actually attempted in 1859, although, following manifestly the then recent act of 1857, was yet, in substance, a compliance with the provisions of the statutes existing in 1852, viz., the mode by advertising. It is admitted in the argument of the plaintiff’s counsel that “ a mortgage embracing real estate, and also personal estate, distinct from each other, might be foreclosed as to the realty, as a farm and farming tools on it.” But he contends that the connection between the franchise and the easement is different. He urges that the franchise and easements could not be foreclosed by the then existing law, and that, therefore, this mortgage could not be. He admits that the real estate could be foreclosed under the then existing statutes. Perhaps the remarks before made, touching the franchise, might be applicable on this point, if all the real estate, including all that can properly come under that term, and all the personal property, including all that can come under that term, were legally foreclosed, under the statutes existing in 1852, by the published notice as to the one and by the expiration of sixty days, after non-payment, as to the other.
But if there were, in fact, no existing provisions by statute or common law, by which in 1852 this mortgage could be foreclosed, a question would arise, how would the parties stand? Why should not the old common-law doctrine apply, of a forfeiture of the entire property on a failure of strict compliance. But the plaintiff’s counsel contends that there was another and existing mode of foreclosure in this State at that time, viz., by a bill in equity by the mortgagee to enforce a foreclosure. And he further contends, that this mode was so a part of the mortgage or contract, that a foreclosure by any other mode impaired the obligation of the contract, as before stated.
This leads us to an examination of the origin and nature of'this-equity of redemption, and the various modes by which a foreclosure- or termination of this equitable right has been allowed to be effécted in England and in various States of the Union. The first reflection, after such examination, is that there is no fixed, uniform, and universally acknowledged rule dr mode, none that may be said] *28to accompany every mortgage, as a part of it, and to be the solq and inflexible way to enforce its foreclosure.
It may aid us in the consideration of the precise question before us, which must not be lost sight of, to examine briefly the origin and the judicial history of the equity of redemption, or the right to a reconveyance or restoration of the property conveyed by payment or performance after the day.
There is nothing in the ordinary mortgage deed itself, which by any language gives or indicates any such right. The conveyance is first absolute. It is then qualified with the proviso, that if the note, debt, or claim specified is paid when due, the deed is to be void. In the deed in question the proviso is “if such railroad company shall well and promptly pay,” etc. This is the contract at law, as a pledge. There is no intimation of any right to redeem beyond the day of payment.
At common law, as is well settled and perfectly understood, by non-payment, at the day, strictly according to the language of the deed, the mortgaged estate becomes the absolute property of the mortgagee without action or process. The common law has never yielded this doctrine, except when the legislature has changed it. It has left it to the courts of equity to create and to enforce equities. One of the most interesting portions of English judicial history is that which records the long, earnest, vigorous, if not violent struggles between the judges of the common law and equity courts on this matter. The sturdy and obstinate old common-law judges stood firmly and unyieldingly by the contract as it read, and rejected all claims to qualify or extend it, or to create new equities or rights. But the courts of chancery, at an early period, held that until foreclosed by decree the mortgager, by applying within a reasonable time and offering to pay debt, interest, and cost, etc., might redeem the estate forfeited at law. This right to redeem, because it was created by, and could only be enforced in the courts of equity, has been termed the mortgager’s “equity of redemption.” On the other hand, the mortgagee might, after the estate had become forfeited at law, file a bill in chancery to foreclose the equity. Where*29upon, tbe court, after account taken, will direct payment to be made witbin six months thereafter, or, in default, that the mortgage shall be foreclosed. The chief clerk appoints a day for payment, and upon default the mortgagee may obtain a final decree or order for foreclosure, which, when signed and enrolled, will foreclose the mortgage and fix the title absolutely in the mortgagee. A sale would sometimes be decreed in special cases, where in the judgment of the equity court it would be right and best for all parties. But a sale, unless by statute requirement, will not be ordered as a right, vested and fixed, which a party may insist upon. A sale under the general equity jurisdiction is by no means the certain or even the common mode of foreclosing the equity. It is true, that the original jurisdiction of the court of equity which it assumed by main strength, has been extended and regulated in England by statutes recently. And the cases in which the court may direct a sale, instead of a foreclosure of the title, have been enlarged and specified by English statutes of 15 and 16 Yict. But this rests on statutes not enacted and not in force here.
It is important to mark and remember the distinction between the powers and directions given by statute, and those which have been the creation of the courts of equity.
An important question here arises, as to the origin and history of this equity of redemption in this country, and particularly in our own and our mother State, Massachusetts.
It was and has ever been one of the boasts of New England, that our fathers brought here and established by naturalization the “ common law of England.” It has ever been in force here in its strictness, and its wonderful flexibility and power of adaptation to new relations and new exigencies. It is, to-day, the law of the land, except as changed by statute, or obsolete as to certain portions, by time and the extinction of customs and interests.
But our fathers did not bring with them to Massachusetts tlie court of equity, or the equity law, as expounded or created by that court. They did not bring the civil law, or any of its outgrowths, although, like wise men founding an empire, they, from time to time, *30incorporated into their statute law many principles of equity and many modifications of the stern strictness of the old common law.
There is no doubt, that, from early times, the colonial laws recognized and yielded to the doctrine of a saving of strict forfeiture in mortgages by payment after the day, and provided a mode of securing that right by statute. At the same time, they took care to provide a mode of foreclosure and a limitation of the time during which the right to redeem might be claimed. They saw that the moment you depart from the strictness of the common law, two things are to be regarded as essential and vital. First, if the right to redeem, beyond the day, is given to one party, a right to enforce a forfeiture and foreclosure, within a reasonable time, must be given to the other.
Otherwise, the right might continue indefinitely. Now both these rights were created, and existed by statute, here and in Massachusetts, and always so in this State. The equity of redemption here was not the creation or creature of an equity court struggling and disputing with the courts of common law, and in danger of strangulation if it came within the grasp of one of the black-letter judges. Both rights here existed by positive law and legislative enactments. But the rights of both parties were well defined, both as to what mortgages came within the provision, and how the foreclosure might be enforced, and how the equity of redemption might be made available. Mortgages of real estate, alone, were provided for. Or rather, we should say, this right of equity and this right of foreclosure existed only in those cases where the statute gave or recognized them. There was'no indefinite equity of redemption, created by equity courts, which could not be enforced by the existing modes, as pointed out in the statutes, but could only be foreclosed by a bill in equity. It may here be remarked, that, until quite recently, we have had no statute giving any right of redemption of pledges or mortgaged personal property, by payment beyond the day. And we have never .known of any claim that such an equity existed and could be maintained by any process in law or equity. The strict old common law applied to such mortgages or pledges of personal *31property bore, until tlie recent statutes. Tbe fact is illustrative of the position, that these rights are here the creation of positive law. Or, in other words, that the common law is the law of the land until some other power, sufficient to do it, has changed or modified it.
The equity of redemption, in real estate, lias always, with us, been a well-defined and determined right. It is the right to redeem, by payment or performance, in three years after entry or process to foreclose the estate. It is, in one sense, a definite legal estate, for it has always been subject to conveyance by deed, and to seizure and sale on execution against the mortgager for his- debts.
The process to enforce this right is given by statute, and is by a bill in equity. But the foreclosure, on the part of the mortgagee, has never been in this State by any process in equity. Such a mode is entirely unknown in our practice. There is no such authority given in the statute regulating mortgages. The statute is distinct in giving the remedy, by bill in equity, for redemption. But it gives, in detail, the modes by which a mortgagee, desirous of foreclosure, may proceed to effect his object. We have before stated all these modes, viz., by entry, by consent, by suit at law, by entry before witnesses, and by advertisement in a newspaper.
We repeat, because it is in our view an important fact, that the . mode of foreclosing a mortgage, by a bill in equity, has never been known in this State. No such case can be found, ve are quite sure, on our. records. If the right existed in 1852, it-was a dormant right, never having been used or recognized, nor specified in the statute before named as one of the modes to be pursued. If existing anywhere it must have been a latent, dormant, and undeveloped process inherent in this court, as a court of equity, in the same manner as it was claimed in early days by the English court of chancery.
But this court never has been a court of unlimited, general equity jurisdiction. It has never claimed or admitted the possession of such powers. Its equity powers are entirely the creation of the statutes, and have been, by statute, from time to time enlarged, *32but always precisely defined. It was decided in Leighton v. Leighton, 32 Maine, 402, that this court has equity jurisdiction in those cases only in .which it is conferred by statute. It was even held that where the statute gave expressly to the court equity jurisdiction “ in all cases of waste,” yet that this language did not give to the court all the powers possessed by courts having general equity jurisdiction in the matter of waste, but only to cases of waste at common law, where there was a privity of estate. It was admitted that the case of waste, presented by that bill, might justify a general chancery court, with full equity jurisdiction, in granting an injunction. The same point was so decided in Massachusetts in 5 Met. 150.
The well-settled doctrine, as expressed in the cases cited below,.is that the equity powers of this court áre conferred by statute and are there enumerated, beyond which is forbidden ground.
T. & C. R. R. v. Myers, 41 Maine, 109; Hayford v. Dyer, 40 Maine, 245 ; Woodward v. Cowing, 41 Maine, 9; Frost v. Butler, 7 Maine, 231; Smith v. Ellis, 29 Maine, 442.
It has been held that whatever the rules in equity might be as to set-off, they cannot prevail in this State when they are at variance with the provisions of our statutes relating to that subject. And so as to issuing injunctions. It is only when the power is given by statute that they can be issrred. This was the condition of the law and the court, in relation to mortgages, in 1852, when this mortgage was executed. And we are now prepared to examine the precise question raised in this part of the case by the plaintiff. It is, as we understand it, nakedly just this. That the statute law of Maine, as it existed in 1852, was not applicable to mortgages of railroads; that, from the peculiar nature of these mortgages, there could be no foreclosure of them, except by bill in equity, without special provision of statute therefor, and that no such statute could be applied to such existing or prior mortgage, because it would violate the provision of the United States constitution, before named,, prohibiting a State from enacting any law impairing the obligation of contracts. It is urged, that this was in substance in the nature of *33a Tested right, and so a part of the contract. That any other mode of foreclosure, although under a statute made for such cases, would violate the obligation of the contract.
It is strenuously pressed, in various forms, that a foreclosure by sale under a decree would be more advantageous to the mortgager, than a foreclosure of the title, so as to secure it to the mortgagee, and that this was a right inhering in the.eontract, and not part of the remedy. One answer to this view is to be found in what has before been shown, that a sale is by no means, even in the English practice, a fixed rule or established right in every case, nor is it a mode which either party can insist upon. The foreclosure may be strict, without sale, upon short notice and with not more than six months’ time to redeem. The length of the Chancellor’s foot is not more uncertain, than the precise order he may make.
It is, however, urged that where the foreclosure is by bill, all these chances are open in a court of general equity jurisdiction.
But if we come back to strict law or right, the question at once arises, whether, as matter of fact, there did not exist in 1852 any statute or other law in Maine, not merely giving the right, but compelling a party to foreclose any mortgage by a bill in equity? We have seen that no such law or rule was knovtn or in use. Is not the argument on the other side stronger, that, as any equity of redemption can here only arise from or out of the law, and is not inherent in the common-law contract, if there comes up a new case before unknown and unprovided for, which, by reason of its character and complication cannot be dealt with, either as to its redemption beyond the day, or its foreclosure by existing laws, there is no equity of redemption, but the case, and the contract, and the deed, must stand and be regulated as to the rights of both parties by its terms at common law.
If there is a legal equity of redemption in such a case, how is it created ? Can this court, with its limited chancery powers, create new species unknown to the statute or the common law? Can we make such an equity without a statute giving us the powers ? And, on the other hand, can we say that we have power to create a new *34mode of foreclosure, beyond those so clearly and precisely given in the statute, giving not merely a new mode, but leaving the time, terms, and conditions of foreclosure to the discretion of a judge? Would not this be judicial legislation, or the assumption of all the equity of unlimited equity courts ?
But if we assume that an equity of redemption could or might be thus created or recognized, it is apparent that it would be the creation of the law, by the court. At the same time, of -course, the same law must create or recognize a right to foreclose and extinguish this equity. Now, if the law thus creates both, why may not the law through the law-making power define, limit, and provide a mode ■of enforcing this indefinite and latent power? How would such a statute-remedy violate the obligation of the contract? Clearly not unless it affected some distinct right or obligation, secured to a party to the contract, and entering into and making a part of it at the time of its creation.
It is important to keep in view the exact proposition, by which it is attempted to demonstrate that the obligation of this contract is violated. It is not that the-obligation at common law is affected, but that an outgrowth of that contract (winch is the creation of the court, or at best of the law) was one part of the- original contract and incorporated into it, and that this right to redeem, thus created, could not be foreclosed by any existing statute, but only by a decree of sale by a court of equity, and that the legislature had no power to provide any other mode.-
The first and sufficient answer to this proposition in this case is, that, as we have seen, there never had been, and was not at the time of the execution of this mortgage, any such existing right to this mode of foreclosure. It was unknown to our law and our practice. It has never to this day been known in our judicial tribunals. How then could it be regarded so a part of a contract, so fixed and so incorporated into it, so certain and unchangeable a right as against all other modes of foreclosure, that no judge, and no legislature could adopt any other mode, without violating the constitution of the United States?
*35As a matter of fact, tlien, we find no such existing law, rule, or right that prescribes this single mode of foreclosure, and, therefore, no basis for the essential proposition.
We are not without direct authority in our own court, touching the equity powers of this court, in reference to foreclosure of mortgages. It appears that in the revision of the statutes in 1841, an attempt was made to define the powers of the court, as a court of equity, in one section of the statute relating, not to mortgages but to the supreme judicial court and its jurisdiction. R. S., c. 96, 1841. Among the cases named, as those which the court might hear and determine as a court of equity, “when the parties have not a plain and adequate remedy at law,”-are the following:
“All suits for the redemption and foreclosure of mortgaged estates.”
It was evident to every lawyer that the words “ and foreclosure’ were inserted by mistake, or if not, that they were entirely inoperative, and could not and did not confer any power on the court to alter the existing law as to the mode of foreclosing. The parties had a plain and an adequate remedy at law, and no mortgage could be foreclosed, except in the way the statute had pointed out.
The words in question had never been used before in any statute, and at most could only be applied when there was not a plain and adequate remedy by existing law, or by using equity to enforce existing modes of foreclosure. The statute gives no new power and no new mode.
It is worthy of remark, that, although the provision remained in the statute from 1841 to the new revision in 1857, yet no case can be found where it has been attempted to foreclose by bill in equity under it.
But the court was soon called upon to notice this interpolation, and to give a construction to it. In the case of Shaw v. Gray, 23 Maine, 178 (decided in 1843), the court says: “A court, having general equity powers, might compel him to place himself in the condition he would have been in, if he had merely procured the *36mortgage to be discharged. . -. . But 'the powers of this court,, as a. court of equity, are specific and limited by statute. In regard to mortgages, it is confined to suits for the redemption or foreclosure thereof. What is to be understood, in this instance, by foreclosure, it may be difficult to ascertain; for the legislature hare prescribed, with precision, what shall be done to foreclose a mortgage. This court, it is believed, are not vested with the power, to decree a foreclosure in any case. The acts which are to foreclose a. mortgage are, in every casé, to be those of the mortgagee, or of those standing in the place of the mortgagee. It is not presumable that the legislature intended to superadd a power in this court, to adjudge or decree a foreclosure, upon grounds other than what they have specifically enficted to be such. As to suits for redemption, the power delegated must have reference to the mode of proceeding particularly prescribed for the purpose.”
Again, in 1845, the court, in Chase v. Palmer, 25 Maine, 345, says: “ The proper proceeding against him would seem to be to obtain possession of, orto foreclose the mortgage. Yet we do not understand such to be the object of the bill. And if it were, though the court, by the R. S., c. 96, 1841, is in terms authorized to take cognizance, as a court of equity, of suits ‘ for the redemption and foreclosure of mortgaged estates,’ it is believed that the statute concerning mortgages (c. 125) actually precludes any action of this court, sitting in equity, on the subject of foreclosing mortgages; the, provisions of that statute containing the rules which must govern in reference thereto : and none of them having reference to the action of a court of equity; The language of the statute, therefore, as to foreclosing mortgages in a court of equity, is inappropriate, and must have been introduced inadvertently, without recurring to-the specific provisions enacted for the purpose.”
- In the report on the new revision of the statutes, in 1857, made to the legislature by the late Chief -Justice Shepley, who was a member of the court when the decision before cited was made, and who Has been familiar with the law and the practice of this State, since its formation, we find this note referring to this language in *37the statute of 1841, giving bis reasons for omitting tliem in the revision. He say's : “ The words ‘ and foreclosure ’ are omitted as suited to mislead; tbe court having decided tbat it bad no jurisdiction to foreclose a mortgage. 23 Maine, 174 ; 25 Maine, 341.”
We find that the legislature adopted the suggestion and omitted these words in the R. S. of 1857. The clause there reads, “ For the redemption of estates mortgaged.” The foreclosure in this case was commenced in 1859, after the statutes of 1857 went into operation.
It seems, then, that the court of this State gave a construction to tbe language used in tbe statute of 1841, and decided tbat, even when tbe words in .question were in tbe statute, the court bad no jurisdiction and no power to entertain a bill in equity, to foreclose any mortgage, for tbe reasons set forth in their opinions. No mortgage was, in fact, thus foreclosed, whilst the words remained in the statute.
The legislature, under the suggestion before quoted, struck the words out in the revision. This was a clear, affirmative act, by which the legislature declared that no power should rest in the court to foreclose a mortgage by bill in equity. It was not a mere omission to provide that mode, but, under the circumstances, equal to a clear declaration that no such power existed or should be exercised.
The former statute, it was declared by the court, so far as these words are concerned, whilst existing, gave no power to foreclose in equity. The legislature affirmed the same doctrine, and omitted the words as useless and tending to mislead. So that there never was a time when the court had the power claimed. And even if there had been such power from 1841 to 1857, it was taken away by the omission in the new statute, which was in force when this foreclosure was attempted. The mortgagees were not bound to institute proceeding for foreclosure, until they saw fit, under a claim from the bondholders. It is for the mortgagee to determine when he will foreclose.
Even if the language, in the law of 1841, had any practical force, *38yet surely the legislature might take away that power or mode of foreclosure, if they left the essential rights of the parties as they were prescribed and fixed by law, as to foreclosure, intact and unchanged. For those words gave no new rights to either party, or to the court to create any, or to decree any new mode of foreclosure as decided by the court in the above cases.
The legislature has power to alter remedies at pleasure. It could hardly be contended that this naked expression in the law of 1841, even if it had any force, so entered into and became part of the contract, as elsewhere explained, that mortgages executed between 1841 and 1857 must be foreclosed by a bill in equity, even after its repeal and in no other mode, and that the legislature had no ¡lower to alter or repeal the clause, because by so doing they would impair the- obligation of the contract.
It will be observed that the words in question do not create or imply any new mode of foreclosure. Had not a mortagee, during this time, a right to foreclose by any of the modes pointed out in the statute then existing, by entry or suit or advertising ? Clearly the pi’ovision, if operative, did not take away the right to use existing modes of foreclosure. If it did, then all the attempted foreclosures, during these sixteen years, are void. A result, to say the least, alarming in view of its effects in unsettling titles. But it did not.
The case does not, therefore, raise'the question how far the legislature may alter or limit or extend a certain fixed and established mode or remedy, nor whether a given case comes under the definition of a remedy, or is one where a substantial right is violated or taken away. It is common learning, that the legislature may change at will remedies, but cannot impair rights or obligations. It might, probably, be seriously questioned whether the legislature could constitutionally abridge the time of redemption existing by statute at the time the mortgage was given, say from three years to one year. This would be taking away a fixed right, one that existed when the contract was made, given by the statute law of the State’. It would take away two years’ time, and give nothing in lieu *39or exchange. But it could hardly be questioned that the legislature might vary or add to or diminish the different modes of foreclosure as to existing mortgages, provided no essential right that before existed was impaired. If the essential things, viz., on one side, throe years’ right to redeem, and on the other a mode of foreclosure by which reasonable notice must be given to the mortgager, are preserved, it matters but little what forms are adopted to enforce these rights. If a new case, not covered by existing statutes, arises, it would seem to be plainly the right and duty of the legislature to provide a mode by which the rights of both parties might be secured, following, if it saw fit, existing laws and forms and modes of proceeding as far as applicable, either to foreclose or to redeem. ' There could seem to be no objection to this unless it is plainly shown that some fixed, vested, or inherent right, existing at the time of the contract, is violated, as before stated.
Now in this case, the mode adopted by the statute was in substance and effect identical with one of the modes existing in 1852, viz., by advertising in a newspaper a certain number of times. The new statute gives the same time for redemption as the previous one, three full years. There is no objection made, that the time or notice was not sufficient, or that any right in these particulars had been infringed. The sole objection is that the mode of foreclosure was an infringement of an existing, fixed, and unalterable right to have a decree of absolute sale of the property within sixty days or some very short time. It might deserve consideration whether the granting of three years’ time for redemption, if it were in lieu of a peremptory sale, would impair or diminish the right. But it is unnecessary to discuss this point. If it were essential, we might be unable to find the fact established that the complainant’s essential rights were actually abridged, diminished, or injuriously affected by a three years' right of redemption before foreclosure, instead of a peremptory and immediate sale at auction. By our law, real estate is levied upon by an appraisement of three disinterested men, and the title is thus conveyed to the creditor, subject to a right of redemption in one year after the levy, by paying the appraised value *40and interest. In many other States such execution is levied by a sale of the premises by the sheriff, without any right of redemption. By our law, also, a lien can be created on real estate, by an attachment of it on mesne 2irocess, which holds good until a levy on the execution, if made within thirty days after judgment. Now if, in a State where the levy is made by sale, and such lien by attachment is recognized, the legislature, after such attachment and before judgment, should change the mode by adopting our law, by which all subsequent levies should be by the appraisement of three disinterested men, the debtor having a right to redeem in a year, could the debtor object that his right had been injuriously affected, and the constitution of the United States infringed ?
No one pretends that a mere change of form in the proceedings, or the substitution of one form of remedy for another, by which the same substantial result is reached, can work such a result. It must appear, distinctly, that some fixed and absolute right or condition of the contract is impaired injuriously, to the party complaining. That fact must be found and clearly established before any question of this nature can arise.
Our attention has been particularly called to the case' of Bronson v. Kinzie, 1 Howard, 811, and it is cited as sustaining the argument on the part of the complainants. On a careful examination, we do not find anything in the decision of that case, that militates with the views before expressed in this opinion.
. The facts in that case were, in brief, these: A mortgage given in Illinois, to secui’e payment of money on a day certain, containing a stipulation that if default be made in payment of principal or interest, the mortgagee might enter upon and sell the mortgaged premises at auction, and retain the amount due to him, rendering the surplus, if any, to the mortgager.
After this mortgage was executed, and before this bill to foreclose was filed, the legislature of Illinois passed a statute, which in terms applied to this mortgage, by which, in substance, a new equity of redemption in the mortgager was created, by giving him a right to redeem, after a sale, under a decree of a court of chancery for *41foreclosure, by paying the purchase-money and interest in twelve months after the sale ; and, further, if the debtor did not pay within that time, any judgment creditor might, on like terms, within fifteen months, pay and thus redeem for his own benefit. Another statute, enacted at the same session, also provided that in all sales for foreclosure, under a decree in chancery, the property should first be appraised by disinterested men, and if two-thirds of the appraisal was not bid, it should not be struck off.
The question before the court arose under a bill for foreclosure ; the complainant claiming that he had a right to have a decree of foreclosure and sale, under the law of Illinois, as it existed before the new statutes were passed.
The court based the decision of a majority, in favor of the complainant, on the ground that the obligation of the contract “ depended upon the laws of Illinois, at the time the deed was executed; and that at that time, by that law, a mortgagee had an absolute and undoubted right, under an ordinary mortgage deed, if the money is not paid, to go into the court of chancery and obtain its order for the sale of the whole mortgaged property (if the whole is necessary), free and discharged from the equitable interest of the mortgagers.” The court says: “ This is his right, by the law of the contract, and it is the duty of the court to maintain and enforce it.” This “right,” as before shown, does not, by the law of Maine, exist in the mortgagee and never has, and, therefore, this decision rests upon a vital fact, not found in the case before us. It is admitted, in the argument in this case, that there .was no statute law authorizing a foreclosure by a bill in equity, providing in its terms a mode of procedure, nor is it asserted that any such course was ever known in our practice. The argument is that such a course of proceeding was according to general equity practice, in courts of general equity jurisdiction, and might, therefore, have been resorted to in this case, and that, in fact, it was the only mode by which this mortgage could have been foreclosed. We have fully considered this proposition.
The court, in the case under consideration, after stating the common-law doctrine of absolute forfeiture of the estate, at the day, by *42non-payment, and tbe equity view of a resulting trust after the debt is paid, says that “ courts of equity lend their aid, either to the mortgager or mortgagee, in order to enforce their respective rights. The court will, upon the application of the mortgager, direct a re-conveyance to him upon payment of the money.” We have in Maine, by our statute, authorized this form of proceeding, on the part of the mortgager, to redeem. The court then goes on to say: “ And upon application of the mortgagee it will order a sale of the property to discharge the debt. But as courts of equity follow f1: law, they acknowledge the legal title of the mortgagee, and never deprive him of his right at law until his debt is paid, and he is entitled to the aid of the court to extinguish the equitable title of the mortgager in order that he may obtain the benefit of his security.” Then follows the language first quoted, as to his “ absolute and undoubted right ” to such a mode of foreclosure. The court then say's: “ When this contract was made, no statute had been passed by the State changing the rales of law or equity in relation to a contract of this kind. It must, therefore, be governed, and the rights of the parties under it measured, by the rales above stated. They were the laws of Illinois at the time.”
The opinion holds that by those laws then existing the mortgagee, in an ordinary mortgage, independent of the special right of sale stipulated in that deed, had a fixed, certain, and definite right to a foreclosure, under a bill in equity instituted by him, and to a decree of the court of equity for an absolute and immediate sale of the premises, by which his debt might be paid. That this law was incorporated into the contract and became a part of it. By the existing laws and practice of Illinois, mortgages are foreclosed by bill in equity.
The statute of Illinois did not attempt to change any form or take away the right to obtain a decree for a sale, but undertook, in the first place, to create a new equity of redemption after such sale, first for one year to the debtor, and he failing to redeem, for fifteen months to any judgment creditor of the debtor. And, not content with this, by a subsequent act, abrogated the right to sell under *43such decree, unless two thirds of a value fixed by appraisers should be offered at the auction sale. The court did not regard these new provisions as a mere change of remedy, a mere alteration of the form of reaching the same result, but as creating new and distinct rights and conditions, in and under the contract, injurious and unjust to the mortgagee, by giving a new estate, which before had no existence, to the debtor, and in a contingency to any judgment creditor. “ If,” say tire court, “ such rights may be added to the original contract, by subsequent legislation, it would be difficult to say at what point they must stop. The statute gives to the mortgager and to the judgment creditor an equitable estate in the premises, which neither of them would have been entitled to under the original contract, and these new interests are directly and materially in conflict with those which the mortgagee acquired, when the mortgage was made. Such modifications of a contract, by subsequent legislation, against the consent of one of the parties, unquestionably impairs its obligation and is forbidden by the constitution.”
The court also animadverts on the other provision, as to the new condition annexed to the sale, and shows how it might operate to prevent any sale or greatly delay the remedy of the creditors.
The court is careful to distinguish between a remedy and a right. It says: “ Although a new remedy may be deemed less convenient than the old one, and may, in some degree, render the recovery of debts more tardy and difficult, yet it will not follow .that the law is unconstitutional. Whatever belongs merely to the remedy, may be altered according to the will of the State, provided the alteration does not impair the obligation of the contract. But if that effect is produced, it is immaterial whether it is done by acting on the remedy, or directly on the contract itself.”
This case, we may remark, would more nearly resemble the one before us, if the debtor in Illinois had complained against the creditor, when he, abandoning his original right to foreclose absolutely by sale, had proceeded under the new statutes, yielding the new right of redemption to the debtor and causing an appraisement to be made. The court could hardly find grounds for sustaining such *44complaints, where it was manifest that no proceedings, injurious to the debtor, were shown or could be established.
The real question before us is, whether the debtors or the mortgagers have a right to insist upon a particular mode of foreclosure of his mortgage, when the mode adopted and sanctioned by the legislature is perfectly satisfactory to the mortgagee and has been adopted by him. What obligation of the contract is violated, under proceedings which secure the right to redeem amply and to the full extent known under any law of the State ? How is he injuriously affected ?
But even if we had before us the mortgagee, complaining of the statute mode of foreclosure and claiming a decree for a peremptory sale, our answer must be, “we can find no law or practice in this State, which gives you a right thus to foreclose. None such existed when you took the mortgage, and therefore no such right could make a part of your contract, as it did in the case cited under the laws of Illinois.” The distinction between the cases is obvious and clearly marked in several particulars, but chiefly and fundamentally in the existence in one case, and the non-existence in the other of this fixed right. Our view of the effect of the mode of foreclosure, 'adopted in this case, has been fully stated. It is ‘in substance that it neither gives any new right nor takes away from either party any vested or conceded or established right existing ■or in force when the contract was entered into, and violates no provision of the constitution of the United States.
The result upon this part of the case is, that, in form and substance, the foreclosure was sufficient to extinguish the right of redemption as claimed by respondents, unless rendered inoperative from other causes and for other reasons, hereafter to be considered.
But the complainants urge that the redemption should be open to them, even if the proceedings should be found to have been regular in form, and such as would bar them in the absence of other facts. They insist that the trustees were guilty of such laches, bad management, and illegal if not fraudulent combinations with other par*45ties to secure a foreclosure, when it might, and should have been, prevented by them; that the whole proceedings, however formal, should be set aside as- in fact a fraud upon the plaintiff corporation, subjecting them to a foreclosure, when it was the duty and within the power of the trustees to have prevented it.
In considering this branch of the case, it becomes important to ascertain tlie exact condition of tlie trustees, and their relation to tlie several parties in interest. They were appointed by tlie stockholders of tlie plaintiff corporation at tlie time tlie vote was passed, authorizing the issue of the second mortgage bonds, and before any of tlie bonds bad been sold, and, of course, before there were any second bondholders in existence. The deed to the trustees was executed within ten days after the vote.
At this time, the corporation was in possession and running and managing the road. The trustees were then mere mortgagees, out of possession, with no other rights or duties than such as related to holding and enforcing the mortgage. This deed was delivered in October, 1852, and the bonds thus secured were sold to different holders. The coupons were paid until 1856, but after the first of April of that year, payment of the coupons of this class ceased, and also of the first mortgage bonds, to secure which, a prior and similar mortgage had been made to tlie same individuals as trustees.
After this failure to pay the coupons due, the directors of the corporation by vote authorized “the president to enter into an arrangement with the trustees of the holders of the bonds, whereby they may take possession of the road ” upon certain conditions or understandings. In this vote tlie directors admit the fion-payment, and give their consent that trustees might enter and take possession of the road, under tlieir mortgage deed, and hold the same until the interest due upon those bonds should he paid. The vote then specifically points out how the proceeds are to be applied, and tlie order and priority of payment. Tbe last of all being the “coupons on tlie bonds of 1852” (tlie second mortgage bonds).
It does not distinctly appear that any subsequent formal agreement was made by the president and trustees. But this vote of *46the directors, who spoke and acted for the corporation, clearly indicates a conviction that the corporation was unable to meet its immediate liabilities, and was willing that the trustees should take possession and apply the proceeds according to the order set down.
The counsel for the plaintiff corporation, in his argument, assumes and claims that the possession taken by the trustees in September, 1857, was taken under this vote, and was continued under its terms and conditions. The paper appears among the exhibits of the defendants. It is not signed by the trustees or president, but shows only votes of directors. The answer of the surviving trustee (Mr. J. Patten) states that this entry, under the second mortgage, was made in accordance with the directions duly given by the second bondholders, at a meeting duly called, organized, and held for that purpose. The R. S. of 1857, c. 51, authorized such proceedings. We do not find among the exhibits any copy of such vote of the bondholders.
But if the entry and the taking of possession were in either mode, it is clear it was not taken for the purpose of foreclosing the mortgage. It was a possession for the purpose of taking the income, earnings, and receipts of the road, to be applied, if the entry was made under the vote of the directors, according to its terms, if under the vote and direction of the bondholders, according to the provisions of the statute.
The trustees were thus in possession. They evidently had duties to perform toward two parties. One, the corporation that designated them and whose property and railroad they had taken, the other, the bondholders for whom they held the property in trust and in mortgage. It was substantially the case of a mortgagee in possession before breach of the condition, or before entry for the purpose of foreclosure.
As such trustees it was their duty to manage the property with reasonable care, prudence, and faithfulness, to apply the net income according to the legal rights of all parties. But it is evident that under that entry and possession the mortgage in question was not and could not be foreclosed so as to devest the equity of the corpo*47ration. The trustees, thus holding, might be liable to the parties in interest for any neglect, fraud, or misconduct, but such possession, however long continued, would not extinguish the equity.
But in May, 1859, a number of the holders of the second mortgage bonds applied to the same trustees, then in possession as before described, to foreclose the second mortgage on the ground that the interest coupons thereon had not been paid since April, 1856.
In compliance with this request, the trustees proceeded to advertise for a foreclosure in pursuance of the statute of 1857. According to that statute, which, in this respect, resembles the general statute of 1841, this notice would be- effectual to foreclose, although no possession was taken under it. This mode, indeed, gives no right of possession, nor, in itself, does it affect any existing possession. The trustees remained, as before, in possession under their first entry. The notice for foreclosure, however, was a fact which was of great importance, and of vital interest to both the parties for whom they were trustees.
A mortgagee in possession is, undoubtedly, in an important sense, a trustee for the mortgager and bound to regard his interest. These trustees knew that in three years the equity would be foreclosed and it was their duty to prevent this consequence if they could legally, and had the. means or money in their hands which they could properly and consistently, with their obligations to others, and with their duty under the law or stipulations under which they acted, apply to the payment of those second mortgage coupons, due and unpaid. And we think, further, that if, having such means, they diverted them to other illegitimate objects, or entered into combinations with others to allow the time of redemption to run out, when it could have been prevented by the use of earnings or assets in their hands, which might, under their responsibilities and duties, have been so applied that the foreclosure should not be set up or be held effectual.
Again; if by intentional mismanagement or neglect, or by such gross and clearly proved misfeasance in their office and inattention to the wants and interests of the road as would amount to con*48structive fraud, the income was thereby reduced so as to affect the' net profits, which a different mode of administration would have produced, which profits would have been or might have been, with other means in their hands, properly applied to the payment of these coupons, before the three years would have expired, and would have been sufficient, that the same result as to the strict foreclosure would follow. It would be against right, reason, and fair dealing to hold otherwise.
This brings us to the consideration of the charges in the bill on these points. We must keep in mind the fact that the two parties are the corporation and the body of second bondholders, and that it is the acts and proceedings and conduct of the trustees that are in question. The questions raised touch them only in the result, although any connection or combination with others, if proved, may be important and may properly be considered if they bear upon that point.
The obligation was on the corporation to pay its debts, but as the source from which the money to pay them was expected to be derived was given into the hands of the trustees, it is but reasonable to require, in behalf of the original corporation, that the road should be managed, and the income applied, so that, if possible within the prescribed duties and obligations, a foreclosure might he prevented. At the same time the trustees are not to be held to do impossibilities, or what they had not legitimate means to do. They were not in possession, it must be remembered, of unlimited and unrestricted powers to do what they pleased with the income of the road. The law (R. S., c. 51) plainly points out their duty and limits, and specifies the order of appropriation of the income they may receive. This statute should be read in this connection.
The vote of the directors, as before shown, clearly and distinctly required a specific and progressing order of payments or appropriation to separate classes of claims, under seven heads, each being postponed to the preceding.
This brings us to a consideration and examination of the precise allegations in the bill, which are the only grounds which we can properly consider.
*49It is nowhere directly asserted in the bill that the trustees, at the time when the foreclosure, as claimed, became perfected, or at any other time had, actually, money in their hands, which they might legally and should have applied to the payment of the coupons due on-these bonds. But it is alleged, “ that the said trustees so carelessly, negligently, and unskillfully managed said railroad and its affairs, while in the possession thereof, that the net earnings and income received by them were much less, to wit, in the sum of two hundred thousand dollars per annum, than they should have been and would have been if the same had been faithfully and properly managed by said trustees, and in accordance with the spirit and fair intent of said trusts.”
There is another allegation in substance the same. It is that from the time when the trustees became possessed of the railroad, it has been of great value, and sufficient, if administered according to the true tenor and effect of the trust, and of the equitable liens with which the same was charged by the corporation, to have paid the interest upon the bonds, and should have been so applied. There is also an allegation that a majority of the directors, combining with the trustees for the purpose of becoming the owners of the railroad, neglected to pay the interest upon and redeem the bonds.
There is no allegation in the bill of willful, intentional, corrupt, or designed mismanagement or neglect. The charge is of negligence and unskillfulness. The trustees were John Patten, Joseph McKeen, and M. S. Hagar. They were designated by the plaintiff corporation for the trusts imposed by the deed, and for all the duties. which might thereafter devolve upon them as such trustees.
The corporation knew them and reposed great trust and confidence in them. It is apparent from the evidence, that it was well known to all, that they were not men having experience in the direct management of an operating railroad. It would hardly he reasonable to hold them responsible under the circumstances, for the highest skill, or for failure, in managing the road up to the highest point of success which it is possible might have been reached by experienced, long-tried, and exceptionable managers.
*50The charge is general. No specification of any particular instances, or detail of any definite failure or mismanagement is set forth in the bill.
The answer of the surviving trustee (Mr. Patten) distinctly denies the charge of mismanagement, and asserts the contrary. He avers that they did their best, and employed as superintendent a man of good reputation for skill, integrity, and experience, and gave their personal attention so far as required.
Is this denial overcome by the proof? In judging of the success and management of the road, it is fair to regard the condition in which it was, financially and structurally, when the trustees received it. Its financial condition is referred to, and may be gathered from the vote of the directors in 1856 before referred to. It is there stated as a reason for consenting to surrender the road to the trustees, that the coupons had not been paid, and that the directors had not the means at present to take up these coupons.
Comparing the receipts and expenditures after the trustees took possession, with those of the immediately preceding years, we do not find the comparison unfavorable to the trustees. It is shown that the- credit of the road was at a low ebb, and that the trustees used their private credit, at times, to keep it in operation. It does not appear that the corporation or its officers or the stockholders, at any time before the foreclosure, preferred complaints in any formal manner, if at all, as to the mismanagement of the road.
The testimony on this point introduced by the plaintiffs is rather of general impressions, beliefs, and suspicions that matters were not managed as well as they might be, than of any definite and distinct facts. It would be difficult for any master or auditor to state or fix upon any specific instance of neglect or want of skill, for which a sum of money should be charged to the trustees. It may be granted that the road, owing to various causes, was not yielding what might have been secured by a first-class road in a first-rate condition in all respects. There may have been, and probably were mistakes, and errors and miscalculations and disappointments to some persons who desired to use the road for transportation. It would be tedious *51and useless to go over all tlie evidence bearing on this point. On a careful and candid examination of it all, we have no hesitation in coming to the conclusion that the evidence fails to overcome tlie answers on this point, or to establish the charge within the rule before stated.
The next charge in the bill is, in substance, that the three trustees McKeeu, Patten, and Hagar, “ while acting as trustees and being in possession, combining with a majority of the directors named, and with R. D. Rice, John B. Brown, George E. Shepley, and H. N. Jose and others, contriving and intending to obtain for themselves and their associates the possession, management, and ownership of the railroad, franchise, and rolling stock, and to deprive the plaintiff corporation of the same, for that purpose bought in a large amount of different kinds of stock, bonds, coupons, and mortgages and other claims, which the plaintiff corporation was hound to pay and redeem, amounting to about seven hundred thousand dollars, and the plaintiffs allege that they are informed and believe, that these purchases were made with the money belonging to tlie corporation, being the earnings of tlie railroad, and that all this was done by the said trustees, directors, and other persons in connection and combination, for the purpose and with the intent as before set forth.
To this charge Mr. Patten answers, that ic is not true; that he never had part in or knew of any such combination or purchase; that the other trustees, so far as he knows or believes, never combined or purchased as charged; that ho has no knowledge or belief that any such purchase was made by the other trustees or other persons named in the bill. Mr. McKeen and Mr. Hagar, both deceased, before the bill was filed, or before any answer was made. Mrs. Hagar, as administratrix of her husband, in her answer, adopts the answer and denial of Mr. Patten. All the other parties to the bill, in tbeir answers, deny any sucli combination or purpose, or any connection of the trustees, as such, with any purchases.
We cannot find evidence in tlie case to overcome the denials. The testimony of defendants sustains the denial in the answers of *52any such fraudulent or unfaithful and dishonest combination, purpose, and acts on the part of the trustees. The testimony on the part of the plaintiffs fails to sustain it. The accounts, as presented, do not show any appropriations of the earnings of the road for such purpose. We speak now of the general charge of combination between the directors, trustees, and other persons to purchase the stock, bonds, coupons, etc., of the road, and the actual application of the funds of the corporation for the purpose of obtaining possession of the road and its entire franchise and property. The next charge, however, is more specific, and relates to what is called the Williams purchase, and is evidently more relied upon than the general charge above stated.
The charge in the bill is, in substance, that Reuel Williams, deceased, was the owner in his lifetime of original, preferred, and Yarmouth stock, bonds, coupons, and claims secured by a mortgage of the rolling stock, to the amount of five hundred thousand dollars, or thereabouts, and that in the year 1861 he offered to sell and dispose of the same to the trustees, for the benefit of the plaintiffs, for $113,000, or about that sum, being much less than the real value; but the trustees, contriving and intending to obtain for themselves and their associates the ownership of the road, declined to accept the offer and make that purchase, which, in the proper exercise of their trusts, they should have made.
This charge is also very distinctly and positively denied in the answers, and we find no testimony which establishes the facts charged against these denials, and the testimony of those who were concerned in the actual sale and transfer of these securities by Mr. Williams.
But the bill proceeds to make another charge against the trustees, in relation to this Williams’ purchase, and avers that after declining to purchase for the corporation, as before stated, Rice and Alden purchased them of Williams for the benefit of the trustees and their associates, and for the purposes before set forth, for the same sum ($113,000) which was paid to Williams out of the earnings, income, and profits of the road; and that instead of surrendering the said *53purchased securities and obligations to the original corporation, as in justice they should, they claim to hold the same against and to recover the same in full of them.
Then follows the several allegations before referred to, that the trustee's, directors, and the other persons before named combined together for the purpose of becoming owners of the road, and to effect that object, in violation of their trusts, neglected to pay the interest upon and redeem the bonds.
This matter of the Williams purchase forms a prominent part of the evidence and arguments in the case. The answers deny the charge of any connection of the trustees, in their capacity, in the original purchase from Mr. Williams.
On a careful examination and consideration of the evidence on this point, we cannot find sufficient evidence to sustain the allegation as made, viz., that the purchase by Rice and Alden of Williams was made for the benefit of the trustees alone, or with associates, in pursuance of a combination or agreement or understanding between the persons and parties named, to obtain possession and the property in the railroad for themselves, in fraud or wrong against the corporation, and that the earnings of the road were used for that fraudulent purpose. There is evidence which tends strongly to prove that one of the trustees (Mr. Hagar) had had conversation with Rice, concerning his proposed purchase, and that he was willing and desirous of being one of the company to purchase, if the terms were satisfactory. He died before the final contract with the trustees, but his administratrix was allowed to come in as one of the company (Rice and others), who sold to the trustees. But there is no sufficient evidence that in whatever he did or commenced, in relation to or in connection with the purchase by Rice of Williams, he was acting in his capacity of trustee, or using or promising to use the earnings of the road to carry out any illegal purpose. He seems to have acted as a private individual on his individual responsibility in this matter. And he was but one of three persons on the board, and could not if he -would thus divert the earnings without the consent of his associates, acting as a board.
*54The facts do not show, to our apprehension, the combination and purpose as charged against the trustees. They do show that there was a proposal and plan started to obtain, by purchase, of Mr. Williams his securities and claims, and that this plan and purpose was understood by several persons, and that there was a more or less distinct and binding agreement or understanding between Rice and other persons as to participation in the trade, and that these persons were some of them directors and some owners, by purchase and otherwise, of the bonds of the company. There is a considerable indefiniteness and want of clearness in some parts of the testimony as to this purchase, so far as others than the trustees were concerned.
But we must remember that the second bondholders, whose mortgage is, if foreclosed, the entire basis of the defense, were not responsible for the acts, intentions, or combinations of the directors or stockholdhers of the plaintiff corporation, or of the holders of other bonds. The trustees named in the deed were their trustees, and it is their acts or neglects alone, that the second mortgage bondholders can be held answerable for.
Now how stood matters from the time of possession by the trustees, up to the time of foreclosure, in May, 1862 ? The trustees had assumed a second possession, anew, for the first bondholders in September, 1860, about one year and a quarter after the possession taken under the second mortgage in question. But it is to be marked, that in neither case did they enter for the purpose of foreclosure, nor have they ever claimed a foreclosure by virtue of an entry, and continued possession. The foreclosure, if legally made, was made solely by virtue of the published notice, and the expiration of three years from its date, and so far as the foreclosure is in question, the possession is immaterial. There are allegations that the first bondholders commenced proceedings to foreclose, but we find no evidence of such attempt among the exhibits. The whole question rests upon the proposition that the mortgage of second bondholders was legally foreclosed. If not, the defense fails confessedly.
*55Although the evidence does not satisfy us that there was any unfaithful combination, on the part of the trustees, with others, to use the funds of the company to purchase the securities of Mr. Williams as before stated, yet it is admitted and clearly proved that the trustees did afterwards negotiate with Rice, the purchaser, for the sale and surrender to them of a portion of the bonds, etc., obtained from Mr. Williams, and agreed to pay therefor the sum of $110,000. The contract, as finally consummated, was dated Feb. 17, 1862, and the trustees, McKeen and Patten, agree to pay the above sum in semi-annual payments of $10,000 each, with interest, the first payment to be made on the 20th of March, 1862. These payments were to be made out of the net earnings of the road after paying certain special claims, being those which had priority over the first and second bonds. This contract was entered into in pursuance of the vote of the first and second bondholders, who had been separately organized into corporate bodies, under the statute of 1857. This contract, it will be observed, was signed about three months before the foreclosure of the second mortgage, under the advertisement.
It appears from the accounts, as stated, that in the year 1862, $28,300 was paid on this purchase, and the balance was paid in full in the year 1863.
The question is now reduced to this, whether the trustees, under the direction of the bondholders, diverted money and means in their possession and control which ought to have been applied to the payment of the over-due coupons of the second mortgage bonds by which the foreclosure might have been prevented. If they did, we do not see any reason why the foreclosure should not be disregarded and the plaintiffs let in to redeem. It was their duty to prevent a foreclosure, if they had means sufficient, which, without violation of prior rights, or the law or the obligation imposed and resting upon them, they could thus use.
They say they had no such means. As before stated, the bill does not directly assert that they had. It does charge that the directors, combining with the trustees and others, for the purpose *56of becoming the owners of the road, neglected to pay the interest upon and to redeem the bonds. But the directors were the officers and agents of the plaintiff corporation, the bondholders were not responsible for or liable to account for the neglects or misdeeds of such directors.
The bill, in its whole structure, seems to be based upon the alleged unfaithful, if not corrupLcombination and plan between the directors,' trustees, and others to defeat a redemption. We have before considered these charges in detail. Nevertheless, we should have little hesitation in holding, even in the absence of proof of the combination or conspiracy, that, if the trustees had funds in their hands which they might legally and properly (as before explained) haye paid to redeem these coupons of the second mortgage bonds, their neglect or omission to do so would have saved the foreclosure.
The three years for redemption expired about May 18,1862. In order to save the foreclosure, the whole amount due on these coupons must have been paid. The payment of even a large amount, if not sufficient to pay the “ uttermost farthing,” would have been of no avail. Now the trustees say that they could not do this for two reasons. The first, that they had at no time, after they took possession, net earnings sufficient to meet these demands. That the arrears of coupons on these bonds, in May, 1862, was between seventy and one hundred thousand dollars.
And they say, secondly, that whatever surplus means they had, they were bound to apply to demands of a prior date, having by the statute and by law precedence. They say that if they had paid these coupons, they would have been liable to other parties and to the charge of mismanagement in their office. They say that the question here must be determined by the state of facts existing prior to May 18, 1862, and that subsequent events or subsequent success or subsequent application of the money or assets of the new company or of the bondholders after foreclosure cannot change or vary the legal rights of the parties.
If the trustees had not funds which they could and should have used for this redemption, the plaintiff and complaining corporation-*57knew that the foreclosure bad been commenced; that in three years it would be complete, if the whole of this debt against them was not paid; that the corporation, and not the trustees, were the debtors; that if the trustees had no such funds at the day, the forfeiture of the estate was inevitable, and yet it does not appear that any effort or any offer of aid was made by the corporation or individual stockholders, but the time was allowed to elapse with all the resulting consequences of a new corporation, etc., provided in the statute. These facts and considerations might not be sufficient to estop the complainants, if the charges made had been sustained, but they cannot escape notice as belonging to the history of the case and the consideration of the proceedings of the trustees.
After a careful consideration of this part and the evidence to sustain these grounds of the case, we can find no sufficient reason for declaring the foreclosure ineffectual.
There would seem to bo no legal objection arising from the sub-, sequent acts of the trustees, or of the new corporation, if the trustees were not guilty of want of due diligence, in not redeeming before the expiration of the three years, as before explained. The only legitimate use that could be made of these subsequent facts, either in relation to the income of the road, or of the use of the funds, would be to connect them as far as they bore upon the previous proceedings. But taking the whole evidence together, and. keeping in mind the exact point to be established, our conclusion is that the bill must be dismissed. The bill dismissed.
AppletoN, C. J.; and Cutting, J., concurred.
Walton, DickeRSON, and Danfojrth, JJ., concurred in the result.
BaeROWS, J., did not concur.