Mason v. York & Cumberland Railroad , 52 Me. 82 ( 1861 )

The opinion of the Court was drawn by

Appleton, J.

The rights and duties of the parties to this litigation can be best understood and most satisfactorily determined, by recurring to and examining, in the order of their execution, the several deeds and contracts in and by virtue of which they have their origin.

On the 5th August, 1850, John G. Myers & Co., entered into a contract with the York and Cumberland Railroad Company for the construction and equipment of their road, which was further modified, in writing, on 6th Eeb., 1851, when said Myers became the sole contracting party with the corporation.

■ On the same 6th Feb., 1851, the defendants made and executed to Myers a deed, upon the construction and effect of which the rights in controversy mainly depend.

(1.) In the matter of the bondholders of the York and Cumberland Railroad Co., 50 Maine, 552, it was determined that the conveyance to Myers was not a deed in trust, within the meaning of R. S., 1857, c. 51, § 53, but that it was a mortgage, and that Myers thereby acquired only the rights and was subject only to the liabilities of a mortgagee.

It was further held that, upon and after a transfer by Myers of the bonds of the corporation or any portion of the same, that he held the legal title as mortgagee for his remaining interest, and in trust for those to whom he had transferred the bonds.

(2.) The consideration of the mortgage from the railroad company to Myers, is expressed to be " the sum of one dollar, paid by the said John Gr. Myers of Portland, in said county, * * * in consideration of the stipulations contained in the contract of said Myers,” &c. The condition is "that, if said corporation, or their agents or assigns, pay to the said Myers or his assigns, who shall become the holder or holders thereof, the amounts specified in the several bonds and coupons for interest pertaining thereto, that shall be issued concurrently with these presents, and also as shall hereafter be issued by the directors of said corporation, according to, and to satisfy the terms of a contract existing between said corporation and said Myers, bearing-date the fifth day of August, A. D. 1850, and as modified, in writing, on the sixth day of February, A. D. 1851, for the construction and equipment of said railroad, as by reference to said contract and the records of said company will fully appear; each of said bonds being numbered consecutively, from one to the sum total thereof, requisite for the completion of said road according to said contract, and each being issued only by the previous specific vote thereof of the said directors, at their meeting duly notified; and, if said payments shall be made as the same shall respectively become clue according to the terms of said bonds and coupons ; and, if said contract shall also he fully performed hy said coiporaiion, in all respects, then this deed shall he null and void thereafter, otherwise the same shcdl remain good and in force.”

Myers-had contracted to build the road. It was a matter of justice that he should be secured for the labor he might perform and the advances he might make. The bonds were to be issued to- him in part payment of his contract. If issued, the contract would be discharged to the extent of the bonds received, and the indebtedness of the corporation would be upon their bonds and the contract, so far as it remained un'paicl. If not issued, it would be upon the contract. In either event, the corporation would be debtors and should secure their liabilities. The language of the deed is clear and precise. It expressly secures in terms the construction contract. To hold that it was not thereby secured would be at war with the plain language of the deed and the just and obvious intentions of the parties. It would be to strike out an essential condition, which the parties have deliberately inserted in their deed.

(3.) While it is thus clear that the payment of the construction contract is secured by the mortgage of the corporation to Myers, the question arises, whether the bondholders have priority over the construction contract, in the payment of their bonds, or whether all the debts secured by the mortgage are to be paid pari passu. Were the corporation- solvent, the inquiry would be of little moment. It is only because of its insolvency that it becomes material.

As the contract was made with, and the mortgage given to Myers, and, as the bonds were issued to him in reduction of his claims, he must be deemed as conusant of the terms and conditions of each and as assenting thereto. As long as the contract and bonds remain in his hands, the priority of right and the appropriation of payments are alike immaterial to both of the contracting parties. It is only when the bonds are transferred, that the question at once springs into importance.

The bonds, by the terms of the construction contract, are to be issued in part payment thereof. They are to be issued to Myers. Until so issued, the contract is secured by the mortgage. After they have been issued, the security of the‘mortgage attaches to them.

It was desirable, both to the corporation and to Myers, that the bonds issued should be saleable in the market. This was especially important to Myers, because he would thus be enabled, from their sale, the more readily to raise the funds necessary for the completion of his contract. The value of the bonds in the market would depend upon the probability of their payment, and this would be materially affected by the security pledged for such payment.

The contract was so made, the mortgage so written, the bonds so prepared, that they (the bonds) should be available in the market and readily command purchasers. By § 11, of the construction contract of February 6, 1851, the bonds issued by the railroad company are to be secured " by mortgage of all the real and personal property of said company,” with certain exceptions, &c., and "freed of all other and all prior incumbrance or lien whatever, excepting existing bonds to indemnify the present liabilities of the directors, &c. And no other indebtedness shall be created by said company to affect the credit of said bonds or prejudice their priority of payment, or acquire any concurrent lien upon the property so mortgaged. The bond certificates recite that, "for the security of said promise, (in the bond,) the property of the road, real and personal, is pledged, exclusively and unincumbered by any previous indebtedness, in the manner set forth in the statement annexed hereto.” By the annexed statement it appears that the issuing of bonds is restricted as therein stated, and that "the bonds so issued have a lien by mortgage, preceded by no other lien, upon the entire property, real and personal, of the company.” "The bonds,” according to the statement, are "secured by a mortgage of the entire property of the company out of Portland,” and represent no credit separated from the tangible and otherwise unincumbered property of the road.” In the mortgage to Myers, in the last clause, provision is made for the distribution of the proceeds of the sale of the property mortgaged, among the bondholders only, "share and share alike.”

It is apparent, by the acts and recitals of the railroad company, that it was their intention that the bonds should be secured by mortgage, and that they should have the precedence over all other claims; that there should neither be prior nor concurrent lien upon their estates, so as to diminish in any degree the acknowledged priority of the bondholders. That Myers must have so understood it cannot be doubted. Indeed, in his letter of August 7, 1856, as well as in the arrangements made when his mortgage was transferred to James Hayward, William Willis and James C. Churchill, this precedence of the bondholders and their right to the priority of payment is recognized.

The bonds are delivered to Myers. He sells them in the market. He sells them as they appear on inspection. He adopts what they say. He says they are secured as they are described to be. The representations on the face of the bond certificates are material and affect their price. It would be a fraud on those to whom Myers has transferred them, to permit him to claim as against the bondholders a concurrent lien for his construction contract.

The result is, that the contract and the bonds are secured by the mortgage to Myers, but, in marshalling the assets of the corporation arising from the mortgaged property, the bondholders are first to be' paid, "share and. share alike.” The contract is next to be paid. This construction gives effect to all the words of the mortgage. It protects the just rights of all. It secures the bondholders to the full extent of all their claims. It secures Myers. The corporation have no cause of complaint. Justice is done to all.

(4.) It is insisted that the mortgage to Myers confers a power to sell by reason of the following clause therein contained : —

"And it is further provided, and a condition of this deed, that the possession and uses of said premises shall at all times remain in the said grantors, so long as payment shall be made promptly and in good faith by said grantors, of said several bonds and of the coupons pertaining thereto as the same shall become due and payable, but upon failure thereof for the term of sixty days, the holder of said bonds or of any one or more thereof, shall and hereby is authorized and empowered to take full and complete possession of said premises and mortgaged property, real and personal, rights of way, and corporate franchise, without hindrance or process of law, for the common and joint benefit and the use of the holders of all the bonds so previously issued, and whether payment be then due or not, and in satisfaction thereof, and such holders shall share and share alike in the disposition and sale of the same for that purpose by public vendue, on reasonable notice given thei’eof, to the grantors aforesaid, first deducting from such proceeds all costs and expenses incident to such possession and sale.”

It is in proof that Myers, on July 29, 1856, proceeded to sell whatever he might lawfully sell under and by virtue of his mortgage to one Finch, who, January 1, 1857, transferred whatever he acquired by Myers’ deed to Hayward and others as trustees.

. It is not pretended that the mortgage to Myers has been foreclosed. The legal estate was conveyed to him as mortgagee and not otherwise. As such he had no right to sell. The power to sell, if given, is given by the clause under consideration.

The power of sale in a mortgage, when carried into effect, defeats the right of redemption. Its existence is not to be inferred unless the inference is unavoidable. The language giving it should be clear. Its meaning should be obvious. The power should be such that it can be carried into effect. The persons, by whom it is to be done, should be named.

In the case before us, the alleged power, if conferred upon any one, is conferred upon any bondholder as such. The power is given to no one specifically. • The bondholders are perpetually changing. Such a power is void from its very indefiniteness. There is no appointee. If one may sell, so may another. If one wishes to sell and the others do not, the exercise of the power of sale cannot be prevented. The sale may be made, though against the interests and notwithstanding the protestations of all but the bondholder selling. The power to sell, if incident to the ownership of a bond, will pass by its transmission. No provision is made for, no restriction is imposed upon the exercise of this power. Each may sell. The number of persons thus having the right to dispose of the estates mortgaged is coextensive with that of the bondholders. The bondholders may severally proceed to sell, but, if at the same time and at different places and upon different terms and conditions, who, of the bondholders thus selling, will confer a valid title upon the purchaser ?

The power of sale is not given in terms. It is not necessarily to be implied from the terms of the mortgage. A power, such as must be assumed to exist, to give validity to the sale, would be void from the indefiniteness of the persons upon whom it is conferred and from the impossibility of its execution.

No estate whatsoever is conveyed to the bondholders as nich. The fee is conveyed to Myers in mortgage. The bondholders, as such, have no estate in the possession of which they can enter or which they can.sell, It is in Myers as mortgagee.

(5.) The sale of the corporate franchise and of the mortgaged estate of the corporation being invalid, it becomes necessary to determine where the legal title of the mortgage may be, and whether the estate, in those in whom the title is now vested, is to be charged with the trust arising from the transferrence of the bonds, as we have seen it would be while it remained in Myers.

On the 1st Jan., 1857, Myers assigned and transferred, by deed, to James Hayward, William Willis, and James C. Churchill, all his " right, title and interest in and to the following described deeds, bonds, judgments, debts and claims, viz. : — To a mortgage made by said corporation to me, bearing date Jan. 6, 1851, they assuming my responsibilities and liabilities by virtue thereof to others. Also a judgment recovered by me against said corporation,” &c., &c. The judgment assigned was for damages for the non-fulfilment of the contract referred to in the mortgage.

By this conveyance the mortgage and the contract thereby secured passed from Myers to the assignees therein named.

The bondholders, it has been seen, were protected by the mortgage. The mortgagee, after the assignment of his bonds to the holders thereof, held the legal estate in trust for their benefit. The mortgage has not been discharged. Its terms are clear. The assignees are affected with notice thereof. They took the legal title with full notice of all subsisting equities, and they cannot be permitted to hold it discharged from existing trusts. In accordance with these views was the decision of this Court in Moore v. Ware, 38 Maine, 496, where it was held that, where one or more notes are given, secured by a mortgage of the maker, the mortgagee holds the estate, when one of the notes is transferred, in trust for its security ; and that the mortgage is in itself notice to the assignee of the trusts chargeable upon it, notwithstanding he may not know to whom the note may have been assigned.

It results, therefore, that, as between the bondholders and these assignees of the mortgage, they hold the estate as it was held by Myers, their assignor, and subject to the same trusts as when in his hands.

(6.) As the mortgage to Myers is subsisting in the hands of the assignees, with the trust in favor of the bondholders undischarged, all who are thereby secured, are equally entitled to the security which the mortgage gives. The lien of all is to be protected. The assent of Woodman and others no way injuriously affected or diminished their rights.

A distinction, too, between the Herrick bonds and the Emery bonds has been suggested. All bonds issued under the construction contract are secured by the mortgage. They, if received under it, were received in payment and reduced the amount due upon it. So, too, the rights of bona fide holders are always to be regarded and enforced.

But the rights of the different bondholders are not now to be determined, for the facts which create a supposed distinction are not before us, and a settlement of these conflicting rights, if conflict there be, would be premature.

The facts can be ascertained by a master after due notice to all interested, and, if there be any dispute as to the law, a further hearing can be had on exceptions to the master’s report.

(7.) On Nov. 1, 1851, the York & Cumberland Railroad Company deeded in trust and mortgage to Toppan Robie, John Anderson and Nathan Clifford, from whom the title has passed to Levi Morrill, Charles Q. Clapp and Edward H. Daveis, who are parties defendant.

As this is subsequent to the mortgage to Myers, the trustees acquired only the right of redeeming therefrom. Nothing has occurred by which the priority of the Myers mortgage has been impaired or the superior rights of the bondholders have been diminished.

(8.) On Jan. 1, 1857, the York & Cumberland Railroad Company deeded, in trust and mortgage, all its existing rights of franchise and property to James Hayward, William Willis and James C.. Churchill. James Hayward declined the trust, and it became vested in Nathan L. Wood-bury, who, with the other trustees, are parties defendant. -

This conveyance is subsequent in time and is subject to the prior rights of the preceding mortgagees. It conveyed whatever the company then owned and no more, and gave the trustees the right of removing prior existing incumbrances.

The title thus acquired is distinct from and not in conflict with, but in subservience to that of the mortgage of Feb. 6, 1851, which they acquired by assignment from Myers.

It will be perceived that the two mortgages in trust, of the railroad company, are of no material importance in the view we have taken of the cause, but the result of this litigation, so far as we are now called upon to decide, must depend upon the mortgage to Myers.

(9.) The bill in its original inception was by Smith, Mason and others, representing the holders of the Herrick and Emery bonds. A part of the complainants claim to discontinue the bill on their part. The respondents might have insisted upon costs, before the discontinuance was permitted, but as they have not so done, no reason is perceived against allowing the discontinuance as prayed for.

(10.) It seems, that some of the complainants transferred the bonds, by virtue of the ownership of which they are entitled to prosecute, to John B. Carroll, by whom the supplemental bill is filed. A supplemental bill, when properly before the Court, is an addition to the original bill and becomes a part of it, so that the whole may be taken as an amended bill. Gillet v. Hall, 13 Conn., 456. In Fellowes v. Deere, 3 Beavan, 353, liberty was given to amend by striking out the names of several co-plaintiffs and suing by one in behalf of others similarly situated, security being given for costs. " When the complainant sells his whole right in the suit, or it becomes vested in another by operation of law,” says Walworth, Ch., in Mills v. Hoag, 7 Paige, 18, "whether before or after a decision, if there be any further litigation in the case, it cannot be carried on in the name of the original complainant, by the party who has acquired the right; And, if the complainant’s interest is determined by a voluntary assignment, the assignee must make himself a party to the suit, by an original bill in the nature of a supplemental bill, before he can be permitted to proceed. Mitford’s Pl., 65; Binks v. Binks, 2 Bligh, 593.” The same principle was affirmed in Van Hoak v. Throckmorton, 8 Paige, 33.

(11.) The bill is prosecuted by Carroll, as one of the bondholders, secured by the Myers mortgage for himself, and all others entitled to the protection of that mortgage. That, in certain cases, a suit may be instituted by one for himself and others in like condition, seems well determined by all the authorities. " It is well settled,” remarks Sargent, J., in March v. Eastern R. R. Co., 40 N. H., 566, "that where the parties interested are numerous and the suit is for an object common to them all, some of the body may maintain a bill in behalf of themselves and others having a like interest, but, in all cases where one or a few individuals of a large number institute a suit in behalf of themselves and others, they must so describe themselves in the bill.” In Taylor v. Salmon, 4 M. & K., 142, Lord Cottenham says, the rule " that, where parties are numerous, and the suit is for an object common to them all, some of the body may maintain a bill in behalf of themselves and others, is established.” In Wallworth v. Hall, 4 M. & C., 649, the same learned Chancellor observes, that "where it becomes impossible to work out justice if the rule requiring all persons interested to be parties were not departed from, it must be relaxed rather than be allowed to stand as an obstruction to justice.” The bondholders, secured by the mortgage to Myers, are numerous. They constitute a fluctuating body. They are unknown to each other. The bondholders of to-day may cease to be such to-morrow. No one can compel another to act. Yet their interest is homogeneous. The right of one bondholder secured is the right of all. If the bill cannot be maintained by one or more for all, the plaintiff is remediless. If maintained, the rights of all can be preserved, protected and enforced. Where, as in this case, one sues for many, the Court will carefully guard the rights of the absent. The general rule is, that all parties interested in the subject of the suit, shall be parties to the record. "Then,” observes the Yice Chancellor, Sir John Leach, in Long v. Yonge, 2 Sim., 369, "there are certain exceptions. One exception is, where several persons having distinct rights against a common fund, or against one individual are allowed, a few of them, on behalf of themselves and the rest, to file a bill for the purpose of prosecuting their mutual rights against the common fund, or the individual liable to their demand.” Story on Eq. Plead., § 111, and the following sections.

"The rule is well established,” remarks Nelson, J., in Smith v. Swomestedt, 16 How. U. S., 288, "that, where the parties are numerous and the suit for an object common to them all, some of the parties may maintain a bill in behalf of themselves and of the others.”

But all parties are desirous of an early decision as to the various matters in controversy, and have waived all questions as to the sufficiency of parties or the structure of the bill as first drawn, or as subsequently amended.

The bill prays that the trustees now holding the Myers mortgage may be compelled to account, and that the mortgaged estate may be sold and the proceeds distributed among the various creditors of the company in the order of their priority.

The bondholders, the cestui que trusts, have a right to demand an account of the funds received by the trustees and to require their distribution.

The bondholders are entitled to the payment of their dues. They have a right to the proceeds of the estate pledged for their security. The trustees are bound to see that funds therefrom are realized as soon as it can be done with a due regard to the interests of all. To that end, the Myers mortgage should be foreclosed, and when this is done, the foreclosed estate should be sold and the proceeds distributed according to the legal rights of the different classes of creditors of the corporation.

This bill relates only to the bondholders secured by the mortgage to Myers, and is to enforce their claims. It would be premature to discuss the effect of the other conveyances to which our attention has been called, except so far as they have a bearing upon the matters now presented for adjudication.

A master must be appointed, whose duty it will be to state the accounts of the respondents — trustees of the Myers mortgage, —-to determine how many bonds have been issued by the corporation which are secured thereby, &e., &c., &c.

F. O. J. Smith, pro se.

[His argument upon his first and third exceptions is omitted, as the Court held that these points were not open to him in this case.]

Tenney, C. J., Cutting, May and Goodenow, JJ., concurred.

The case was accordingly sent to a master to determine, (inter alia,)

1. The number and amount o'f bonds issued by the railroad company under the construction contract and mortgage, and those outstanding; to whom the same were due; the amount thereof including interest or coupons for interest; and to receive and return the same into Court with his report.

2. How much was due upon the construction contract for which no bonds had been issued, and which was still secured by the mortgage; and to whom the same was due.

The case came again before the Law Court (July term, 1864,) on exceptions to the master’s report. '

No copy of the exceptions came into the hands of the .reporter ; but it seems that the' respondents excepted to the allowance by the master of the "Herrick bonds;” and that Mr. F. O. J. Smith excepted to the refusal of the master to pass upon the validity of the second and third mortgages of the corporation, referred to in the supplemental bill, and the answer; and to his refusal to allow certain amounts paid by said Smith as indorser of company notes, the avails of which were applied in payment of the construction contract; and the claim of said Smith to be the equitable assignee of one-fifth of the judgment recovered by Myers against the company, for non-fulfilment of the construction contract.

The facts upon which the exceptions are founded are sufficiently stated in the opinion.

In support of Ms second exception, he says: —

The notes and judgment already paid by Smith, each being parts of the construction cost of the road, went to the reduction of the amount payable to Myers in bonds. By the terms of the contract and mortgage, payments were to be made in cash and bonds, and all the construction contract unpaid was to be -secured by mortgage. The notes in question were given by the company in lieu of cash payments, and were never paid by the company. Hence, these amounts of the construction contract were never paid, and the equity of the mortgage security follows these notes for payment, on the same basis as it follows the Herrick bonds, whether specifically named or not in the mortgage, and constitutes a part of the construction debt of the contract, for which the mortgage was made expressly security. The ruling of the Court on the Herrick bonds in principle manifestly covers these unpaid notes, indorsed by the directors.

Evans, for the respondents.

The opinion of the Court was drawn by

Appleton, C. J.

On the 5th of August, 1850, John G. Myers entered into a contract with the York & Cumberland Railroad Company for the construction of their railroad. This contract was modified by the parties on the 6th Feb., 1851, on which day the railroad company gave said Myers a mortgage of all their real and personal estate, to secure the performance of this contract, and the payment of bonds issued in pursuance of its provisions.

When this case was under consideration at the hearing on bill, answer and proof, it was held that the bonds issued under the terms of the construction contract had priority of security over the contract — but that both were secured by the mortgage.

This bill is brought by the bondholders to enforce the payment of their debts by a foreclosure of the mortgage to Myers, and a sale of the mortgaged property.

(1.) Exception is taken to that part of the master’s report by which the Herrick bonds, so called, were allowed.

The facts in relation thereto, and the conclusion of the master upon those facts, are thus stated by him in his report.

" The whole number of this class of bonds known by the designation of the Herrick bonds, which have been presented and filed or claimed before me, is twenty-four, amounting in all to the sum of nineteen thousand and five hundred dóllars and interest, so far as interest may now be due thereon.

"From the records and other evidence, which have been presented to me, I am fully satisfied that the same were issued without any authority existing in the officers who issued them by virtue of a specific vote previously passed or existing at the time of their issue, and I am equally well satisfied that they were issued in payment of and were allowed towards liabilities of the company, which accrued under the construction contract with John Gr. Myers; and that said company, by their subsequent votes and action, have fully ratified and adopted the acts of the officers, who issued the said bonds, and have thus made the company liable for the same and the interest due thereon. They are in fact the bonds of the company, issued in payment of their indebtedness to Myers under the construction contract, and were allowed thereon. * * * I do further determine the said bonds, called the Herrick bonds, are secured by the mortgage from said company to said John Gr. Myers.”

That part of the condition of the mortgage which is descriptive of the bonds to be secured, is in these words, " each of these said bonds numbered consecutively from one to the sum total thereof, requisite for the cómpletion of said road according to said contract, and each being issued only by the previous specific vote of the said directors, at their meeting duly notified.”

The mortgage referred to secures to Myers the construction contract and the bonds issued and delivered him in part payment of the same.

The Herrick bonds answer all the requirements of this condition, save that they were issued without " the previous specific vote of the directors.” Instead of which, their validity, dependa on their subsequent adoption and ratification.

These bonds, though improvidently issued, were received by Myers in reduction of the amount due upon the construction contract. The York and Cumberland Railroad Co. have received the same benefit from them as if they had been issued in pursuance of a previous vote of the directors. By its subsequent action, the company has approved and ratified the unauthorized acts of its officers. And well it might, for it has received all the benefit it could have ever hoped to receive from these bonds. They have liquidated the indebtedness arising under the construction contract and they could have done no more, howsoever regularly issued. The company cannot, therefore, except to any irregularity on the part of its officers in issuing these bonds.

Nor can Myers take exception thereto. He has credited their amount on the construction contract. He has transferred them to the holders as valid, and has received an adequate consideration therefor. It is not for him to allege that he has been guilty of fraud in their transfer.

The trustees of the York aud Cumberland Railroad Co. are the assignees of Myers. They succeed to his rights, and are in the same condition as their assignor.

The holders of the bonds previously issued, and to which there are no objection, have no right to except. The Herrick bonds, if regularly issued, would have stood on an equality with the previous bonds of the company. They equally reduced the sum due on the construction contract, and are equally entitled to the protection of the mortgage given to Myers. The irregularity in their issue was one the company might waive, and, having waived it, they cannot now take advantage of it. Omnis ratihcibitio retrotrahitur et mandato priori cequiparaiur. The mortgage was given to secure the construction contract and bonds issued in payment thereof. These bonds were so issued. They answer the description in the mortgage in all respects save one, aucl, so far as relates to that, the company are estopped from relying upon, it, if it was ever available. They are within the equity of the mortgage. Neither the other bondholders nor the mortgagers, can interpose any valid objection to their allowance.

(2.) The master disallowed certain judgments against Mr. Smith, which he paid as indorser of certain notes for the York & Cumberland Railroad Company, the proceeds of which he claimed had been applied to the reduction of the construction contract, though, that they were so applied does not seem to have been in proof.

But if Mr. Smith indorsed for the company, he must look to them for the remuneration to which he is equitably entitled. The mortgage secures only the construction contract and the bonds issued in payment thereof. It is no security to every laborer, whom Myers may have employed, nor to every capitalist, who may have advanced him money towards the completion of the contract. Nor is it a security to those who may have loaned their credit or their capital to the company, though they may have been applied to the construction of the road. If the proceeds of the notes indorsed were paid to Myers, they, to that extent, reduced the amount on his contract, and can only confer rights in favor of Smith against the railroad corporation.

(3.) It is admitted by the parties that "the deeds and contracts so filed, purporting to be the deeds and contracts of said railroad company, were executed by the proper officers of said company, duly authorized thereto by votes of the directors of said company, at meetings duly held for that purpose.” This agreement renders it unnecessary to consider the validity of the second and third mortgages and the bonds secured thereby.

(4.) The legal title to the judgment, Myers v. York & Cumberland Railroad Company, is in the defendant trustees. If Mr. Smith is the owner in part of that judgment, it is as equitable assignee or as having an equitable lien. Whether his title is one which a court of\ equity would sustain, is not a question now properly before us. The bill is by the holders of the first mortgage bonds and to enforce their payment. It sets forth no such claim on his part as to this, and, if it had, a demurrer might have been properly filed on the ground of multifariousness. Neither by bill nor answer is the title of Mr. Smith to a portion of this judgment presented for our consideration. The bill contains no prayer for any decree in relation thereto, nor could one properly be made.

If it were necessary for the decision of the cause, it would seem that the report of the master is conclusive as to facts. "When the Court refers it to a master to examine and report as to the existence or non-existence of a fact or as to any other matter,” remarks Walworth, Ch., in the matter of Hemiup, 3 Paige, 307, "it is his duty to draw the conclusions from the evidence produced before him, and to report that conclusion only. And it is irregular and improper for him to set forth the evidence in his report, without the special direction of the Court. * * He must himself draw all the conclusions of fact as in a special verdict, leaving the question of law alone for the decision of the Court.” Exceptions to the report of the master overruled.

Report of master accepted.

Cutting, Davis, Kent, Walton, Dickerson and Barrows, JJ., concurred.