State v. Florida Central Railroad (15 Fla. 690, 1876)

WESTCOTT, J.,

delivered the opinion of the Court.

.The appellants in .this case, looking to the assignment of ■errors and . the. parties;-named:.upon- the,; .calendar,, . are the Florida Central-Railroad Company, Edward*'M.- L’Engle, Fannie S. Fapy, executrix of the last will and .testament-of Mariano D. Papy, • deceased, and Robert J. Washington. ¥e consider the appeals in the order stated. -

The plaintiff, the State of . Florida,;has in-possession one thousand bonds of one thousand dollars each, bearing the seal of the Florida Central Railroad Company,: of-the following tenor and date: ■

”“No; J — -, $1,000,’ United' States óf America, 'State’of Florida. Bond of the' Florida' Central Railroad Company.

“ Know all mén by-thesé pi’eisehts, ’that* the' Florida Cé'xitral Raih’oad Company acknowledges itself indebted to the State of Florida in' the stun-' of one thousand dollars for value received, which sum the Florida- Central Railroad •Cóítípany' promises and agrees to pay totbe:State-of Florida on the first day of January A.’ D. nineteen ‘húndred,’ in the city of Néw York, With interest thereon’’ at the -rate- of-eight per centum per annum, payable semi-annually on the first days of Jxxly and-January in each-year, on the presentation and ' delivery óf' the proper coupons heréuntó ’attached.” This bond-is-one of'a s'eriesof 1-iketexxoxy limited-to sixteen thousand dollars per milé; ’ issued in accordance with' an act of the Legislature of the State of Florida-,' approved January 28th, eighteen hundred and seventy, ’-entitled’an aet to alter hud amend “ an -act entitled an act to. perfect’ the -public worksof ihe’State,” approved’ June YJth,'eighteen hiiindred and sixty-nine, and'given in exehange for bonds issued by the State ■ ofFloxida* to: aid - the 'Jacksonville,. Pensacola and Mobile1 Railroad Company tomompléfcep equip ándmaita,tain- its road for án Uqual axnountpin accordance with said act.

“ In witness' whereof* the ■ said • *”company: has ’ caused? this bond'- to he éigfied - and- attest eddni its’¡behalf byits*Presidenf, and the common seabaffixedat itS'ófíicein -A'--J.¡--gtHig'first day of January^ in1 thé’-¡year 18JO';-/--.:íx?-eí. oik xnvásh?

’-'“■Gaoi'W.''SiVEPSdiir,;Pffesid!enf?n

“ H. H. Thoxmepson, Treasurer.” .. -•■E ..yumy.vo:>

" To which bond is'attached the coupons* authorized fey the statute hereinafter referred to. ■ •• ■' ■ • ■ ■

This action was instituted by the State' in’March, 1872, to subject the property arid franchises of this company to sale, .the State'alleging in ' its1 amended complaint*, by which defendant was riiade a party,1 that the company had failed to __pay any of the interest due upon *the bonds.'* The defendant in argument denies that the allegations* óf the-complaint *‘set up an execution of these bonds by the company, and affirms that such allegation is necessary, to sustain . the decree. "Without stating in detail all of the allegations in reference to this subject, scattered as they are through a complaint of twenty-eight printed pages, we will say that from a careful .and accurate examination of - all the statements of the complaint upon this subject, there is such an allegation, and that the complaint also states, substantially; a sale of the State bonds which were issued-1 in exchange for ' the bonds of this company.- . .

■ The plaintiff claims, that .upon. this, ¡default it* was lawful for the State, through the Governor, to enter upon and take possession Of the, property and¡ franchises of .the company,, to sell the same and apply the proceeds in accordance with the provisions of. the statutes under .which ¡ it alleges the bonds were issued; and that,-this being a mortgage contract the remedy in equity ¡attaching to such; equitable relations was effective to. decree a ¡sale, and* an application of the proceeds to the holders of the*bonds of the. State.- • •*• • .. ...

- To this complaint the defendant in its< original ¡ answer replied, not. denying that the company was: ¡authorized to; issue the bonds, :or that they were; delivered to the: Governor, of the State, and admitting the power of the company ¡Under the law to execute its: bond; but'after setting up the. facts'connected with the exchange, alleging that the exchange was made without its sanction or assent, the company, while not denying that it adopted these bonds as bonds of the company, alleged that when it did so it was not aware of the form of the bond, or that it was to be exchanged with the State. It alleges, as a fact known to it, that an exchange of these company bonds for State bonds was made under an agreement between Milton S. Littlefield and Edward' Houstoun, who together owned a large majority of stock in the company; that the exchange was made upon the understanding that the bonds received in exchange were placed in Houstoun’s hands to secure amounts due him by Littlefield for the purchase of stock in the company, and for other sums due for other securities so purchased, as well as for payment for the stock in this company owned by other parties, it being understood that when this was done the bonds of the State should be delivered to Littlefield, who was the President of the Jacksonville, Pensacola and Mobile Rail Road Company. It was further agreed .between these parties thus owning nearly the entire stock of the company that Houstoun, if he so desired, might return the State bonds and receive the company bonds from the State ; that the State bonds not answering the purposes of Houstoun, he did so return them, and received the company bonds in lieu thereof; that Houstoun then made a request of the directors to authorize, in lieu of the company bonds held by him, an issue of company bonds secured by a deed of trust, so that he might obtain the benefit of the aforesaid agreement between himself and Littlefield; that before this could be done two of the stockholders of this defendant filed a complaint, and obtained an injunction against the said Houstoun, restraining him from making any disposition of the bonds; that while this injunction was pending, C. B. Coddington, who was in the city of Tallahassee, in this State, representing S. W. Hopkins & Co., who claimed to be financial .agents to sell said State bonds'for the benefit of the Jacksonville, Pensacola and Mobile. Railroad Company, made some arrangements, with the plaintiffs in said injunction, by which the injunction was waived, and at the request of said Coddington the said Houstoun authorized Robert H. Gamble, one of said plaintiffs,.and Comptroller of the State.of Florida, in whose office he had deposited the said railroad bonds, to deliver the same to the said Coddington, which was done; and the said Coddington delivered the. bonds issued by this defendant to the Governor, and obtained from him, in exchange the State bonds which had been before issued by the Governor under the law to the Jacksonville,- Pensacola and Mobile Railroad Company; and that it was -in this way, and without any sanction or assent on the part of -this defendant, the Governor got-.possession, of the bonds of this •defendant. The answer , alleges further that the .State of Florida had nothing whatever to do with the form and manner of the execution of. said company bonds, and never made or insisted.upon any requirements in connection therewith, and that, the Governor “ was. authorized by law to exchange bonds of. the - State,--ofFlorida for- bonds, of this defendants The answer .then affirms that said State bonds so delivered to Coddington,, (before. alleged to .be the representative of' S.- W, Hopkins^ &.-Co.,, financia],-.agents, to sell said bonds for the benefit of, the J.;P., &.M.; Co.,) have not been sold, and that said bonds are about Jo, be returned to the State and the bonds .of this defendant surrendered to it.

There was subsequently an amended complaint filed ¡by the plaintiff, ; but. as, it;,;was dismissed-,as, to , -thi^idefendant, its matter is .not-, material., -On .the' ,26th-qf.May,--A. Fh 1875, within,two months of three ;years:.afterJfie filing of the original answer; .and .after a,Nearing.pppu-aij,appeal in this court, there was ¡.fileJ;.- what.,,pnrpQrtqil-,,rtor.-be an amendej answer pf the. Florida Central Company,fin which iUallegecl -that the resol ntipu.of the stockholders apthprizing the issu.e.pfthe, one million .of bonds,was--rescin,dpdNy a,resql.ution of, its-directors., qn .the ^Ist-qf ¡18jTGr.j;. ibis resolution, wlficlr is made, an- e^ibit, -is tq the effgct-that the bonfis,- signed,. l3yr;,G..tTi;;S\vepsqn aFj^resi<3ent,Nefpre..that fggulj} .l¿9ih6!nse.F:.tp;:carry.,'iqut.- thp,„ inipntipn of their -Fftg -í&P&Nthe.s tophi .............." holders for their stock,) and that the resolution authorizing their issue, be rescinded and the bonds be destroyed. The directors, then, by resolution authorized a new bond to be issued for the purposes of the company. This bond, it appears, was never issued, .although its form was suggested. The amended answer alleged that at this time the State bonds were held by Edward Houstoun by agreement with the State of Florida and had not passed to the President of the Jacksonville, Pensacola and Mobile Company ; that he held them upon conditions to be performed before such deliver)', and that such conditions were never performed. The answer, then, alleges that in conformity with tin's resolution the State bonds were returned to the State, and the bonds of this defendant were withdrawn from the State and were placed with said Houstoun to be returned to this defendant for cancellation, all of which was agreed to by and between this defendant and the State of Florida; that subsequently, while these bonds were in the hands of said Houstoun for cancellation, they were by him, or some one acting for him, and without any authority or knowledge of this defendant, redelivered to the State of Florida. The amended answer then sets up that the purpose for which the company bond • was issued and delivered to the'State of Florida was in violation of its charter, and that said bonds are illegal and void- This answer then denies that any interest is due to the State of Florida on said pretended bonds, or that the bonds held by the State are a lien, and affirms that the State bonds are unconstitutional and void, and that the State has never paid any interest thereon, and has never been damnified by reason of its issuing said bonds. The rest of this answer is called a counter claim, but this was subsequently stricken out. There was a reply by the State to the counter claim, which, as a matter of course, v/ent with it.

These pleadings show the issues between the parties. After evidence, there was a decree for the sale of the road, and from this decree this appeal by the company is taken.

What purports here to be an amended answer of the company was not signed by the President or any officer thereof! and was not under the seal of the company. It was signed by the attorney of the company and sworn to by one of the-directors. The plaintiff insists that this was in no sense,an answer of the company, and this is unquestionably true.. The Supreme Court of the United States, in Bronson vs. LaCrosse Railroad Company, 2 Wall., 302, say, “ a corporation must appear and answer not under oath, but under* its common seal, and an omission thus to appear and answer-according to the rules and practice of the court, entitles the complainants to enter an order that the bill be taken pro confesso.” (See, also, Ang. and Ames on Corp., 665.) The Code (and this is a Code case) provides that the verification to such answer may be made by any officer of the corporation, but the rule, so far as it requires that the answer shall be under seal, is not thereby changed. This, however, does not meet the question here presented. In this case, this paper was filed after an order of the court permitting the company to file an amended answer, and the plaintiff, so far as this record discloses, makes no motion to strike the paper from the files, nor does the State disregard it, but treats the paper as the answer of the company by replying to it. Under these circumstances, the plaintiff cannot perhaps be heard to object to it upon appeal on the ground of this irregularity. This matter, however, does not affect the conclusion we reach, for, with or without this amended answer, our conclusion is the same. Without deciding this question, therefore, we may consider the amended answer.

An analysis of these pleadings will show that there are four general questions presented for consideration. The evidence applicable to each of these questions will be stated as each question is considered.

First. Did the company have the legal power and authority to issue these bpnds held by the State, and if it did have such power, were such bonds to be a first mortgage, with 'the right in the State to seize and sell the road under the statute of 1870 ?

Second. If such power existed, were there such circumstances connected with the issue, delivery and exchange as excuse the company from their payment ?

Third. Is there a remedy in equity as well as the particular remedy provided by the statutes ?

Fourth. Are the bonds now held in such manner as to vest a right of action in the State to subject the road and property of the company to sale ?

To the first question : This company is a private corporation, and all power which it possesses or can exercise must be derived from its charter, the amendments thereof, or from some action of the legislative department of the government granting such power, either in express words or by reasonable and necessary implication ; and it is proper, in fixing the powers of a corporation, as to the character of the contracts it may make (the question here) to regard the general scope and purpose of the grant by the Legislature, and not to disregard entirely reasonable implications resulting from attending circumstances. This we regard as the rule established by a fair construction of the English and American cases — when the question is as to its power to execute a bond, mortgage or contract of like character, with third parties. Where the charter proposes to delegate a sovereign power to the corporation, the rule may be more strict on account of the difference in the nature of such power and a power to mortgage its own property and franchises for its own purposes. 1 Red. on Rail., 5th Ed., 253, and cases cited; Price on Ultra Vires, 87, 90, 91, 93, 140, 141; 3 Rob., 513; 3 Md., 305 ; 2 Dutcher, 221; 1 H. and M., 786 ; 1 Watts, 385; 6 Humph., 515 ; 11 Ala., 437; 28 Ala., 321; S. C. 33, L. J., Ch. 93.

The Pennsylvania cases upon this question which have been called to our attention seem to be inconsistent with themselves, and, therefore, one or the other of the inconsistent views must be contrary to the general rule as deduced from other sources. Black; C. J., in the case of the Pennsylvania Railroad Company vs. Canal Commissioners (21 Penn. State, 22,) says : “ Corporate powers can never be created by implication nor extended by constructionwhile in the case of Commonwealth vs. Erie and Northeast Eailroad Company, (27 Penn. State, 351-2,) he says that the power must be given in plain words or by necessary implication. If there is any implication in the matter, it seems to me also that this necessarily involves construction, not indeed the liberal and 'broad construction to be given to a remedial statute, or the strict construction to be given to a penal statute, but a construction consistent with and following a reasonable view of the general scope and purpose of the legislative grant, viewed in the light of surrounding circumstances.

The Florida Central Eailroad Company was incorporated-in 1868, and was given all the powers and franchises before that time granted to the Florida, A. and G. C. Eailroad, by an act approved January 7, 1853, with power to exercise the said powers and franchises so far as they appertained to the rail/road constructed from the city of Jacksonville, i/n Duval county, to Lake City, in Columbia county. In addition to these powers, the act of 1868 gives it the express power to hold lands and tenements, goods and chattels that may be useful for the purposes of the road, and the same to grant, mortgage and dispose of. The fourteenth section of an act entitled “ An act to perfect the public works of the State,” approved June 24, 1869, authorized the Florida Central Company and the several companies owning the line of road between Quincy and Jacksonville to consolidate with the Jacksonville, Pensacola and Mobile Company, which was a company authorized to build a road from Quincy to Mobile. In the event of such consolidation, it authorized the Jacksonville, Pensacola and Mobile Company to raise money by way of mortgage of its property and franchises. It also authoi’ized agreements looking to a common management of these several roads without consolidation. The section then provided that the Jacksonville, Pensacola and Mobile Railroad Company, as to the road or roads, or parts of roads thus acquired, may • likewise issue coupon bonds or other evidences of debt, with coupons or otherwise, bearing-such rate of interest and payable at such time and place and on such terms as the directors may determine, and to each are hereby granted the same privileges as are herein granted to the Jacksonville, Pensacola and Mobile Railroad Company.

Under this act the J. P. & M. Company was authorized to exchange bonds with the State to the extent of fourteen thousand dollars per mile, the State to have a statutory lien and mortgage upon its property and franchises to secure the payment of the company bonds, with power in the Governor, upon default in payment of principal or interest for sixty days, to take possession of and sell the road ; and this right was granted to “ each ” of the roads owning the line, by the latter portion of the section above quoted. While this section gave the Florida Central Company the same right as the J. P. & M. Company to issue its own bond or mortgage, still by an examination of the act it will be seen that it was deficient in that no method was provided by which the mortgage could be used for the great end and object of this legislation, which was the extension of this line of road to Mobile. No action was taken by the Florida Central Company under this act, and perhaps for the reason stated an act was passed on the 28th of January, 1870, amending the act of June 24th, 1869. This act was entitled “ an act to alter and amend the act of J une 24th, 1869.” This act altered and amended the 4th, 9th, 11th, 12th and 20th sections of the previous act, leaving the 14dh section which had given the Florida Central Company the same rights as were granted to the J. P.db M. Compcmy in force, and also the 10th section of the act which authorized the J. P. db M. Company to deliver to the Governor of the State coupon bonds of the company in exchange for State bonds.

The sections of the act of 1869, thus changed and altered, embraced the 9th section, the section authorizing State aid to the amount of fourteen thousand dollars per mile to be given in exchange-for bonds to be delivered under the 10th section, as well as the section (the 11th section) defining the lien which would attach to the company bond in the hands of the State. In lieu of these sections the following provisions were substituted: Under the 9th section as altered the Governor of the State was directed to deliver to the President of the J. P. & M. E. E. Company, in order to aid the construction of its road westward from Quincy, '££ coupon bonds of the State to an amount equal to sixteen thousand dollars per mile for the whole line of road and length of railroad owned by or belonging to said Jacksonville, Pensacola and Mobile.Railroad Company, in exchcmge for first mortgage bonds of said railroad company, of the denomination of one thousand dollars, when the President thereof shall certify upon his oath that the road or parts of road for which he asks for an exchange of bonds is completed, and is in good running order. The said bonds shall be of the denomination of one thousand dollars, signed by the Governor, countersigned by the Treasurer, sealed with the great seal of the State. They shall bear eight per cent, interest, payable semi-annually, and shall be payable to bearer. They shall be dated on the first day of January, A. D. 1S70, and shall be due thirty years thereafter, and principal and interest shall be payable at such place in the city of New York as the Governor shall designate. The coupons for interest shall be payable to bearer, and shall be authenticated by the written or engraved signature of the Treasurer; Provided, however, that whenever the Jacksonville, Pensacola and Mobile Eailroad Company shall or may determine to pay the interest in gold, for or upon .their bonds or the bonds designated in the tenth section of an act entitled ‘ an act to perfect the public works of the State,’ approved June 24th, 1869, upon giving notice to the Governor of such intention, then the State bonds aforesaid and the coupons for interest on said bonds, shall be payable in gold, notice of which shall be given by the Governor in some paper published in the city of New York, and at the capital of this State, to be designated by the Governor.”

The tenth section remained as in the original act.

The eleventh section was altered and amended so as to read as follows: “ To secure the principal and interest of the said company bonds, the State of Florida shall, by this act, have a statutory lien, which shall be valid to all intents and purposes as a first mortgage duly registered on the part of the road for which the State bonds were delivered, and on all the property of the company, real and personal, appertaining to that part of the line which it may now have or may hereafter acquire, together with all the rights, franchises and powers thereto belonging, and in case of failure of the company to pay either the principal or interest of its bonds or any part thereof for twelve months after the same shall become due, it shall be lawful for the Governor to enter upon and take possession of said property and franchises, and sell the same at public auction, after having first given ninety days’ notice by public advertisement in at least one newspaper published in each of the following places : The city of New York in the State of New York, the city of Savannah in the State of Georgia, and the city of Tallahassee in the State of Florida, for lawful money of the United States, and for nothing else, except that the State for its own protection may become the purchaser at said sale, and may pay on said purchase any evidences of indebtedness the State may hold against said roads, which purchase money or said evidences of indebtedness shall be paid on the day of sale into the treasury of this State, or .within ten days thereafter; and all moneys arising from said sale and paid into the treasury of this State, as heretofore prescribed, shall be promptly and exclusively applied to the payment and satisfaction of the bonds issued by the State of Florida under this act, and in case the holders of said bonds do not present them for redemption within ninety days after said sale, the Treasurer shall invest the same, ©r any part thereof which may be remaining in his hands, in the securities of the United States, to be held by the State of Florida, as trustee for the bondholders, until said bondholders shall demand the same, upon which demand the Treasurer shall immediately turn over or pay said securities to the bondholders. The purchaser or purchasers of said road shall be by said sale possessed of all the rights, privileges and franchises of said defaulting company, together with the franchise of use and being a body politic, and the Governor shall, upon the payment of the said purchase money into the treasury of this State as above provided, immediately cause the purchaser or purchasers of said road at said salé to be placed in the actual possession, use and enjoyment thereof, and cause all the books, papers and real and personal property of said company, of every description, together with its franchise of use and being a body politic and corporate, to be turned over to said purchaser or purchasers, and the purchaser or purchasers of said road shall be by said sale possessed of all the rights, privileges and franchises of said defaulting company, together with the franchise of use and being a body politic and corporate, and may use any new corporate name they see fit, and make and use a new seal upon signifying their action in writing to the Governor, and thereafter may exercise all the rights of a body corporate and privileges thereof, and of said defaulting company, under said new name, for the term of thirty-five years to date, from the time of the purchase as aforesaid ; that any such sale shall be ratisfied by the Legislature before the same shall become effective.”

With this history of this legislation and this statement of the provisions of the original act as it stands altered and amended, we reach the additional section of the amendatory act under which it is claimed that the Florida Central Railroad Company had full authority to issue the bonds upon which suit is here brought. This section, (the fourth section of the amended act,) provides that the Governor - shall, for the purpose of further aiding said Jacksonville, Pensacola and Mobile Railroad Company in the speedy construction of its road, deliver to the president of said company coupon bonds of this State of the same character as those above described in this act, to the amount of sixteen thousand dollars per mile, upon receiving for and from the President of said company first mortgage bonds of like amount on anjr part or portion of the road between Quincy and Jacksonville; Provided, however, The State bonds under this section shall not be exchanged for first mortgage'bonds for a greater length than one hundred miles of any part of railroad betw’een Quincy and Jacksonville, provided the said railroad , company or compames shall not issue first mortgage bonds to a greater amount than sixteen thousand dollars per mile.

It is plain and clear from the letter of this act as amended that unless the exchange provided for under this section is an exchange of bonds on a line of road other than that ovmed by the Jacksonville, Pensacola and Mobile Company, that it is mere surplusage, useless unnecessary and of no effect. The ninth section of the act as amended directed the Governor to exchange bonds with the President of the Jacksonville, Pensacola and Mobile Company for the whole line of road and length of railroad owned by or belonging to the Jacksonville, Pensacola and Mobile Railroad Company. Now the exchange thus authorized with the Jacksonville, Pensacola and Mobile Company embraced, as is shown by the pleadings, the line of road extending from Quincy to Lake City; and the other part of the road between Quincy and Jacksonville, to-wit: from Lake City to Jacksonville, was all of this line of road that was left upon which an exchange coxrld be had. This was all owned by the Florida Central Eailroad Company, and hence the section was of no effect, unless it applied to this company. This construction not only makes the section of no effect, but such construction is inconsistent with a proper view of the other part of the section itself. The first proviso limiting the amount of bonds to be issued under this section shows that it was to be an additional issue to that authorized by the ninth section ; and the second proviso, using the words, “ company or companies,” in the connection in which they occur, construed with reference to the fact that the Jacksonville, Pensacola and Mobile Company had been given, under another section, full authority to exchange for its whole line of road, shows clearly that some company other than it was granted authority under this section. This being so, the only' company to which this section could apply was the Florida Central Eailroad Company. It is not necessary that the statute should use in express terms the name of the Florida Central Eailroad Company in conferring this power to issue first mortgage bonds. It is enough, if, by necessary implication, it has the power. The connection between two railroads is an act which requires the concurrence of both; and yet, when a statute authorizes one company to connect with another, the authority is necessarily conferred upon both. So here, where the law authorizes the State to receive from the Jacksonville, Pensacola and'Mobile Company bonds upon a line of road not owned by itself, and restricts the company or companies as to the amount they may issue, the power is necessarily granted to those companies to issue the bonds to the extent of the limitation. This is a case similar to that of a clearly implied power, resulting by necessary deduction from the purview of an act of parliament. The joint-stock companies’ act of 1844: (7 and 8 Vict. C. 110) having, in Section 4:5, laid down certain regulations as to the mode in which bills should be accepted, &c., on behalf of companies coming within this statute, it was assumed by the English courts as a matter of course that such companies thereby acquired the power to issue bills and notes. Halford vs. Cameron, &c., Railway Company, 16 Q. B., 442 ; 20 L. J. (Q. B.,) 160 ; Aggs vs. Nicholson, 1 H. and N., 165; 25 L. J., (Ex.,) 348. This case is much stronger than the English cases. They are cited simply to show the extent to which these courts have gone in the matter of implied powers. This conclusion is also consistent with the general purpose, scope and intent of all this legislation, futile though it may have been to accomplish the end desired. That purpose was to extend the line of railway from Quincy to Mobile.

The Jacksonville, Pensacola and Mobile Railroad Company owned the line of road from Quincy to Lake City,where it connected with the road of the Florida Central Company, whose road extended from Lake City to Jacksonville, and the Florida Central Company was given the opportunity, by this legislative action, of aiding in the extension of this connected line (from Lake City to Quincy) to Mobile, thus bringing its own road and the road of the Jacksonville, Pensacola and Mobile Railroad Company in connection with the roads radiating from that point.

This legisation, therefore, gives this company authority to issue “ first mortgage bonds;” and the next question is, whether it authorized a bond and accompanying mortgage to be executed in a formal manner by the company, or Avhether the bond which, under this statute, is called “ a first mortgage bond,” and to which the statutory lien and remedy attaches, is the bond referred to.

This section of the statute does not, in terms, authorize a bond and a separate mortgage to secure its payment. It, in terms, authorizes a “first mortgage bond.” The terms, “ first mortgage,” qualify the term “ bond,” and the necessary result is that it .means a bond that is to be a first mortgage Avithout such additional formalities of executing a mortgage, if such a thing is provided for in the act, and such construction is consistent with the other portions of the act. This is a strict construction, and we think the proper one.

Now, the bond which the Jacksonville, Pensacola and Mobile Company was authorized to issue was a simple bond, which was, under the statute, to be a “ first mortgage bond,” with a lien of the character defined in the act. No additional mortgage was to be executed to make it effective. In the section of the act making this amendment, the bonds, which the Jacksonville, Pensacola and Mobile Company were authorized to issue, were denominated “ first mortgage bonds,” the same terms used when this authority is granted the Florida Central Railroad Company. The bond which the Jacksonville, Pensacola and Mobile Company was to issue was a simple bond under the tenth section of the act, and by other sections of the act it is declared a “ first mortgage bond,” with the statutory lien and remedy incident thereto. In addition to this, the section authorizing the Governor to enter upon, take possession of and sell the property to which the lien attaches, provides that the State, at such sale, “ for its own protection, may become the purchaser at such sale, and may pay on said purchase any evidences of indebtedness the State may hold against said roads? If it was to have this lien only as to one road, the use of the term roads, instead of road, cannot be explained. If it has it as to two, it is all consistent, and if there is more than one, the other must be the Florida Central Railroad, as it and the Jacksonville, Pensacola and Mobile Railroad are the only two to which the term can apply, as they are the only roads which are authorized, under the act as altered and amended, to issue “ first mortgage bonds.” The necessary conclusion, we think, is that the first mortgage bond intended was the bond authorized by the tenth section of the original act, and to it in the hands of the State attached the lien and remedial rights provided in the act for its enforcement.

, The company here has issued a bond under the tenth sec-I tion of this act, and its acts have been in accordance with /the law as .construed by itself. A dissenting stockholder may well resist the company, or even its creditors, in en- | forcing claims of this character ; but where the company has I accepted the act and executed its bond, a plea of a want of authority while it must be sustained in all cases where it is j good, yet in the language of Lord St. Leonards, “ one cannot Vbut lament to see great companies like this, with an at-I torney always at its command, with every means of consulting counsel daily, if it thinks proper, entering into a con- : tract with a full knowledge of all their powers, and with legal advice constantly at command, turning round upon the party with whom they have contracted, and endeavoring to evade the contract upon the ground that the contract I they entered into is beyond their powers, and absolutely ille|gal on the face of it. One cannot but regret that these companies should resort to so unseemly a defence in courts of justice.” 15 Eng. Law and Eq. 367.

We now reach the second general question. Were there such circumstances connected with the issue, delivery and exchange of these bonds as excuse the company from their payment % The allegation in the amended answer of this company to the effect that a resolution was passed rescinding the resolution which authorized the issue of the bonds signed by Geo. W. Swepson, as President, (the bonds now sued upon), and directing their destruction, was passed as stated, but the resolution was never carried out and the bonds were not destroyed. It is hardly necessary to say that a debtor cannot destroy his obligation by resolutions of this character unexecuted. It is true as alleged in the amended answer, that Houstoun returned the bonds of the State to the State, after their first issue, and received the company bonds in return ; but it is not true that the bonds, with any assent of the State or of Houstoun were in his hands, to be returned for cancellation, or that there was any agreement on the part of the State of Florida that they should be can-celled. Houstoun retained the State bonds, and as the first answer admits, until Littlefield paid him certain debts. He received these bonds under his contract, which was that instead of selling the State bonds he might return them and take back the company bonds; and he was to hold them until other bonds of the company were delivered to him. Instead of doing this Houstoun delivered the company bonds to Coddington, and the State delivered its bonds in exchange to him. Now it may be that, under some circumstances, the want of an express assent by the company to these acts might be of some avail as against parties not bona fide holders for value of these bonds, but that question does riot arise here, and we desire to express no opinion upon the subject. In addition to this, too, it must be remembered that Littlefield and Houstoun, who together represented a very large majority of this stock, and to whose wishes the company seems in all its acts to have yielded assent, agreed to this exchange, and made no objection. But, however, all this may be, the allegations of the original answer, so far as it states facts, may be admitted ; and the allegations in the amended answer may be admitted to the extent they are sustained by the evidence as above shown, and there is but little in these allegations when viewed in the light of the subsequent action of the stockholders of this company.

On the 13th of May, A. I). 1871, after the company had failed to destroy its bonds as its directory had resolved, and after Coddington had made the exchange with the State, with the assent of Houstoun and Littlefield, Mr. Houstoun offered the following resolution at a meeting of the stockholders :

“ Besol/oed, That Edward Houstoun do place'the bonds referred to in the preamble and resolutions of the stockholders, adopted June 20th, 1870, in the hands of S. W. Hopkins & Co., for the purpose mentioned in said resolutions, subject to the same exceptions as therein expressed with respect to the proportion thereof applicable to the stock owned :by other parties, and according to the same terms therein -mentioned.”

The resolution was adopted. The bonds here referred to are tbe bonds now held by the State. So far as the exchange of these bonds by the company is concerned, here is its express authority given for it, and that must be an end of this matter.

We now reach the third general question. Is there a remedy in equity as well as through the exercise of the .power of sale given the trustee under the statute ?

It is insisted that these statutes give a. new right and prescribe a particular remedy not known to the common law, and that such remedy must be strictly pursued, and is exclusive of every other.

, The power of this corporation to make this particular first mortgage bond, and by its act create the trust, must result from legislative grant,, as tbe corporation has not, like an individual, -a general power to contract except where there is .a limitation. But-when a power granted by the Legislature .to a corporation is exercised, and it results in a contract which the statute makes a. mortgage, and to which it attaches a trust, it is as if the same power was- exercised by an -individual so-far ,as,the ,mere-áqt of making the-contract is -concerned. It is .true that neither a court oí equity nor law •can, :as a geñéral rule; aid: -the defective execution of a statutory power, because the mannner of the exercise -ofi-the .power -is-a- matter-of public policy-.;, -but if a:contract, is made -and-executed:by virtúó-of a statute, (the1 only way.in which corporation.can ,contraet:),iahd that-, contract is,a;,mortgage or. in-vol.ves ;:a: .trnst,-;there'isa.a.:!relatiqn-. and? right ’created .iwhich'is'-welhknowh;to.equity...'; ';o o-

If there is a trust and mortgage,;and.e.onn:eeted, with,there in: order .to! their- dnfeenfOTcemehtithere.is.-ja statu tory-power ■of sale^can-notoía -courtY of .equity at-'the suit of itbeafrustee •decree a sale conformably to the statutory power? "We cannot see that the Legislature in authorizing a corporation to execute a mortgage bond to have a statutory lien of defined character with a power of sale in a trustee named, is a statute giving a new right within the meaning of the authorities upon that subject. The cases reported in 1 Michigan, 200; 3 Mass. 310; 5 John. 174; and 5 Mass. 515, are clearly distinguishable from this. A statement of the case reported in 5th Mass., in which the opinion is delivered by Mr. Chief Justice Parsons, will show the clear ■distinction between this case and the class of cases sustaining the view maintained by the company here. “ By the statute of 1874, c. 66, § 1,” says Chief Justice Parsons, “ every person convicted of larceny might be punished by a fine not exceeding one hundred pounds, or by whipping not exceeding thirty-nine stripes. And the third section provided that besides the said punishment he should be sentenced to forfeit to the owner treble the value of the goods stolen, deducting the value of such of them as might be returned; and if the offender should be unable to pay the same he might be further sentenced to make satisfaction by service to the owner, who was empowered to dispose of him in service for such time as the court might assign. But it was enacted in the tenth section that unless the owner shall sell him in service within thirty days, or give to the gaoler security to pay the charges of keeping the convict in prison, the gaoler may set him at liberty, the prisoner paying him the prison charges.

“ When a statute creates a new right without prescribing a remedy, the common law will furnish an adequate remedy to give effect to the statute right. But when a statute has created a new right, and has also prescribed a remedy for the enjoyment of the right, he who claims the right must pursue the statute remedy.

“ In the case before us the right claimed by the plaintiff to receive the treble damages is given by the statute which also prescribes his remedy. Upon the sentence the defendant was in execution. If able to pay his body was a pledge to the plaintiff'; if unable the plaintiff might dispose' of .him in service for nine months. This disposition he was-.not obliged to make within thirty days if he would secure' the prison charges to the gaoler. On giving security he-might retain the body as a pledge nntil payment.

“But he wholly neglected his remedy. The. defendant ■not being able to pay, the plaintiff did not dispose of him nor retain the body by giving security. The defendant’was .afterwards lawfully discharged, and the plaintiff has now no remedy.”

Now here was certainly-a new right and new penalties.. If the right is new, then as remarked by Chief Justice Parsons, “ the common law will furnish an adequate remedy to give effect to the statute right.” But if the rights and relations created are known, then there will be known remedies. We think that the power of a court of equity attaches in this-case and that - the remedy prescribed by the statute is. not exclusive.

The court. of equity, however, should follow the law giving the right in its decree as -to time of sale and appropriation of trust funds, and .we think the franchise tobe a corporation will pass,-as it is covered by-the lien as defined 'by.-the statute. 2 Chand. 103 ; 1 Wis. 432 ; 55 Penn. State, 204 ; 8 Ala. 694 ; 15 Texas, 269.

.In this .case equities were claimed’ by the trustees of the-,i Internal Improvement fund by which they insisted they , had rights paramount" to those of . the State or the' bondholders, , and in.most cases of thisi.character-there &fe ¡differences to '-.be settled which necessarily.call into action'the plastic and extensive powers of a court of equity in the matter-of-mortgage^ .a.nd trusts,. ;This is a-.tr.nst‘Coiijffed-with a'mortgage-- and power, of sale. 3 John. Ch'y 344 : 2 Met. 252.

Having, determined. that there was.'power-in the Company under the statntes to issue? these bdn'dsj and having détérmined also that the last action of the stockholders approving, their issue for purposes of exchange is binding and effective upon the company, notwithstanding the previous unexecuted order of its directory to destroy them, and that there-is a remedy in equity under the mortgage and trust, the* next question is whether under the present status of these* bonds, as disclosed by the testimony, any cause of action has. accrued to the State as trustee. The State insists that Littlafield’s testimony is “ that the four million of bonds were* sold on November 14th, 1870, hut the J. P. &M.’ Company could not deliver the one million of bonds received from defendants until the stock in the Florida Central Company* was paid for. Stockholders of defendant company trusted; Houstoun to hold bonds until stock was paid for. Houstoun delivered them to S. W. Hopkins & Co., to their agent, Coddington, upon his promise to pay for stock. (Vide exhibits H, J, K, L, M, and N.) Of course this delivery was in satisfaction of the contract of sale of 14th of November, 1870. The deed of trust (exhibit E,) shows that not only have the State bonds received for defendants’: bonds been sold by the J. P. & M. E. E. Co., but that they are in Europe, and said, company made provision in said deed of trust to pay interest to the State on account’thereof; and further, the testimony shows .that S.. .W. ’Hopkins. .& Co: made.-advances oh the'very 'bonds-,before tbey.wére'- áén'í to Europe, and paid Houstoun dor, his 'stock and P. & G-. E:‘E. -bonds. Hopkins- &'Qo. :.also accepted:'draftfoi* S227,000 to pay debt of. J; P, & M. Company," due ¡Board of Trustees, which, if not,paid,- tbey?are!how4iable.to;pay;.'. : ,

•; - The- Florida Central-'Company-'..ihsists^that.the" State i. bonds,; - delivered' -.to Coddington; : by. the Governor ' for its ;bonds have not ,been sold, , and .'that, said bonds gre" about to. ...Lqreturned -to the'.State, ,:and:the bonds ofthb company returned to,'it,?.. ■ iTMs:i&la. mátérialussue inVolvihgWhonsideratipn.of.the évidencej-rand-.wéiprcic'eédtoi'Mamihhall of it ,having reference tothe subject::. * : k.h; v. •

The testimony bf Chas. IT. Foster is not material in the ‘consideration of this subject. "What he says relates to matters other than the present status of the State bonds.

Harrison Reed, who was Governor of the State at the time of the exchange, says little that has any bearing upon the subject. ITe states that about the time of the exchange he was given a draft of $227,000 by the President of the J. P. & M. Company npon S. W. Hopkins & Co. Upon the draft acceptance was waived, and no acceptance was shown. There was nothing but an unaccepted draft of Littlefield. This witness further says that Coddington was the agent of the State to see that this draft was paid from the proceeds of sale of the one million of bonds, but no contract pledging the bonds or their proceeds in that way for this sum is shown upon the part of any person. This witness states further that the draft was never paid, and no report was ever made to him as to the disposition of the bonds or thew proceeds. This witness mentions some receipt of Codding-ton given to him, but it is evident that the receipt referred to was a receipt given by Coddington to Houston, to which we will refer hereafter; If it was not this receipt, then its nature is not disclosed.

M. S. Littlefield’s testimony covers the matter of the issue of the bonds, and relates to the nature of contracts between himself, Houstoun and others, to which we hereafter refer as exhibits. He states that the stock he purchased of Houstoun was paid for about the 13th April, A. D. 1871, by S. W. Hopkins & Co., the fiscal agents of the J. P. & M. R. R. Company in New York and London. The witness then states that the J. P. & M. R. R. Company closed a contract with S. "W". Hopkins & Co. to sell the four millions of State bonds on the date of a letter in evidence, which is one of the exhibits hereafter referred to. That John Collinsoh, a civil éngineer and broker, residing in England, was the man with whom Messrs. Hopkins & Co “ contracted to sell ” said bonds for the J. P. & M. Co. That C. L. Chase went to Europe to negotiate the bonds of the company and to return to the State the State bonds. That in November, A. D. 1870, when the company offered the State bonds for sale to S. W. HopT&ms dé Go., it did not home the control of but three millions of scdd bonds. When the agreements were carried out between Houstoun, Sanderson and himself, the other million of State bonds would be controlled by the company. There were separate agreements between Houstowi and himself to be carried out before the last million of State bonds could be controlled by the J. P. dé M. Oom/pcmy.

This testimony does not establish a sale of these bonds, nor does it show that any advances were made upon them. It shows that at the time of the offer to sell the four million to S. W. Hopkins & Co. the J. P. & M. Co. controlled only three million, and that certain agreements between this witness and the two parties, Houstoun and Sanderson, were to be carried out, and then the J. P. & M. Company might control the bonds. There is no evidence here ¿hat the contract to sell the one million bonds of this, company to any person was ever carried out, or that there was any sale or ■pledge of the bonds. The naked;declaration ofth e witness that Houstoun was paid by S. W. Hopkins .& Co., the financial agents of the J. P. &.M., Co., does not prove a sale of ■these particular bonds., They had other securities of the J. P. & M. Co. in their hands, and Resides, .Littlefield, as we shall presently see,, qwqars positively that these bonds are not sold... So far, therefore,, as Littlefielcl’aiestimony is concerned, it does not show that these ,bonds are,,now in the -hands of a purchaser, pr that they are held as security-for any advances.• ■ - ,

- We come now to an examination of the exhibits which the State r.elies upon. ■ Plaintiff claims that exhibits H,.I, X, L, M, and N, have an important bearing on this,question, Ex- - Mbit H does not even piention these b,onds., Exhibit I is an agreement between-M. .S; Littlefield rand .Houstoun, which vdo.es not.even, mqntjopqtheEtatei bonds. .-Exhibit X is an agreement between Littlefield and Houstoun, by which Houstoun was to hold the one million of the bonds of the State, authorized to be exchanged under the act, to secure him in the payment of an unaccepted draft of Littlefield to him upon S. W. Hopkins & Co. for $163,026.70, bearing date Máy 13th, 1870. After payment of this draft and ■ expenses of sale of bonds, the balance was to be applied to other debts' therein named. Under this agreement Hous-toun had the option, upon the maturity of the note, of returning the State bonds' and receiving in lieu thereof the one' million dollars first mortgage bonds of the company. The evidence shows, and it is admitted, that he did return the State bonds and received the company bonds. This exhibit clearly does not prove a sale.

Exhibit L is a receipt given by Coddington, the agent of S. W. Hopkins & Co. for this one million bonds of the Florida Central Company. In this receipt he declares that he holds these bonds in trust for Houstoun, to pay him other sums for other parties named. The arrangement, however, was “based on the' assumption that the money would be paid from the proceeds of bonds negotiated by S. W. Hopkins & Co., of New York.”' The remainder of said proceeds was to be disposed of' as directed by the parties interested. These company bonds Coddington exchanged for State bonds.' The other evidence shows this, and hence we must look elsewhere than to this exhibit to trace the bonds of the State. '

While Coddingtdn contracted to hold the company bonds in trust,'he in fact exchanged them for State bonds. These he received as'the agent of S. W. Hopkins & Co., who were fiscal age fits bf the JV P. & M: Co. It cannot be said that the receipt shows either a pledge or sale of these particular State bonds. . Tkis receipt of Coddington is dated the 11th January; 1871: • The next' thing in the case stated having reference'to "the locality and status of the one million of .State bonds is a receipt' '(marked exhibit M) of S. W. Hop-bins. r& Got, given to Littlefield;op, the, 15th.,Apj.ll, 1871,.for .an order upon E. Houstouirfor the delivery.of certain Florida •Central Railroad-stock and bonds of the Pensacola & Georgia and Tallahassee Railroad. Companies, held, by Houstoun, ¡ upon their .payment-; to Houstoun . of $163,Q26 70,. S. W\,. Hopkins & Co., agreeing to hold these securities as collat-, •erais for the payment of; this sum,.as well as. for any subsequent advances that -may b&made by them against .the one million of bonds formerly held by Mr. Houstoun, until sufficient money shall be realized from tlje.salp 5f ;said million ••of bonds to reimburse them,for said, advances-,.or.until, the bonds shall be taken from market and returned to the State, and some mutually agreed, upon.- plan between said Little; field and themselves adoptee! to reimburse,, them,.or by issue, of railroad bonds, land floats, or any other securities, deemed •expedient. In this receipt for the order of- Littlefield upon Houstoun, S. W. Hopkins & Go. agree to hold the.securities, mentioned as collateral for payment of, the sn,m.-of,$>163,-, •026.70, as well as for any “ subsequent advances that may be made ” against the one million of'bonds,T until sufficient, money may be realized from , the sa]e of said million of bonds formerly held by Mr. Houston, and it was agreed •that they might ‘ftake the bonds from''market and.return -them to the State.” When -it is .-remembered,. that tljis, firifr were, the-agents of the J. P, &M. Co., who,-had their-bonds in hand to sell-them,-the amount of this paper is .simply that in the event they made advances against thebne'piib flion they might pay themselves, from, the proceeds óf' sale. It does not prove.that they have made such advances, or that the bonds have been sold. , It. establishes .that t these bonds are in their, hands for sale, ordo secure-.advances .that may be made.”.,,, ., , ,. . ... . ■- , ...

- Exhibit N,, to'which importance. .is given by the plaintiff, •is.a, letter of M. ,S. Littlefield - to Si W. Hopkins & Co'., offering to sell them the entire, four million bonds authorized sto be issued by the State.,. It is as followss . ,, ,

58'Old Broad Street, London, Nov. 14,’ 1870:

Messrs. S. "W. Hopkins &■ Co., London: ,

Gentlemen: I'herewith offer you 4,000 Florida' State-8 per cent gold bonds in aid of the Jacksonville, Pensacola, and Mobile Railroad Company for one thousand ($1,000} dollars gold each, at the price of one hundred (£100) pounds, sterling for each bond in the city of London, subject to theeommission agreed as per contract dated 13th day of April, 1870, with your good selves.

I remain, gentlemen, yours faithfully, ■

M. S. Littlefield, •

• J. P. & M. R. R. Co.

This is nothing more than an offer to sell these bonds, made a year before they were delivered to Coddington.. There is nothing to show that S. W. Hopkins & Co. made-such a purchase or took the bonds on these terms, or that they now hold this one million for any advances, or that any person has either paid or advanced money on these bonds to the J. P. & M. Co. This receipt to Littlefield, dated April 15, 1871, long after this letter in which they speak of subsequent advanees that may be made by them, shows that there was no sale to them.

Exhibit O is a resolution of the stockholders of the-Florida Central Company, passed May 13,1871, authorizing-E. Houstoun to place the bonds referred to in the preamble- and resolutions of the stockholders of the company, adopted June 2,1870, in the hands of S. ~W. Hopkins & Co. for the purpose mentioned in said resolution, subject to the same exceptions as therein expressed with- respect to the proportion thereof applicable to the stock owned by other parties and according to the terms therein- mentioned. This resolution, as a matter of course, does not show the present locality of the State bonds. Exhibit M, as we have, before-seen, shows the condition of the bonds, long after this resolution, in the hands of S. ~W.. Hopkins & Co., and it is unnecessary to repeat here what has been said in that eoncention.

The plaintiff insists that exhibit E, which is .la deed of trust executed by the President of the J.. P. & M. E. E.. Co. to D. Q-. Ambler, F. H. Flagg and C. L. Chase, on the -2d of October, 1871, shows the sale of these bonds by,the J. P. & M. Co. The President of this company, by their deed, inconsideration of a contract by the Florida Construction Company to construct the road westward, from Quincy to Mobile, conveyed to the parties named in trust for. the period of two years the rolling stock and equipments, &e., of the road, as well as the franchises incident and necessary for the operation of the road. While we think that the recitals in such a deed are not evidence against the Florida Central Eailroad Company, an. entire stranger to the instrument, (and indeed this objection is applicable to many of these exhibits,) yet these recitals do not show a sale of the one' million of bonds, when construed with the testimony of Chase, one of the trustees named in; the deed, and Gollinson and Coddington. To this testimony we refer subsequently, and here only examine these recitals. ’ The1 deed recites that the Jacksonville, Pensacola and Mobile Company has received from the State of Florida certain bonds; that this company is responsible for the payment of the interest on these bonds, and makes it the duty of the trustees to pay this interest under certain circumstances. The party of the first part transfers the proceeds arising from the negotiation and sale of the before-mentioned bonds yet to be received, and which are now on deposit in London, to the receipt whereof the authority of John Collinson, of London; is necessary to be obtained ; and such balance of-.the pro-: eeeds of the sale of-the remainder, of the said sum of four millions of bonds as remains .unapplied by the party, of the first part at the date- of. the execution of the deed.Mn the payment of the pliabilities which these trustees assumed,! the deed providedthat they shall be limited and- restrained to the proceeds of the sale of such of the aforesaid four millions of dollars of the bonds of the State of Florida as may come to their hands,, exclusive, of the said- $1,200,000, noio oil deposit, in London, which said $1,200,000 of bonds shall be applied .- exclusively to the coinpletion of said railroad.” ...Theyleed',furthér provides that,nothing-in., the, contract, shall%e, con.;, s strued to-interfere or conflict with .any contract or'.arrangement that has, heretofore been made ;wi,tl,i Jolin.CQllipson.or. Aaron Barnett,-or their associates,'for .the,;sale or negotiation of bonds that may,have been or may hereafter be issued.

The several,, recitals in .this - deed. must, be-congtr.ued;together and made' consistent. The, general power,as to,the, contract for the proceeds of four. Millions■ of bonds,-is afterwards limited, and in this limitation-,;$1^200;0.00 ,of these-, bonds are stated' to be on deposit in,. London-^ and1 these:., parties contract to apply these $l,2()0,00p.of-bond's to the'' completion, of the road, at,-the,,same, time agreeing not to-.,, intérfere with any contract or arrangement'for the sale or negotiation of bonds made with .Collinson or Barnett. A fair construction of, these recitals-shows,-that $1,200,000 of the four million'of bonds .are ,on deposit in London, and we are by this contract'left in.doubt -as to- whether1 the one-million of bonds then on deposit are not the bonds of the State exchanged with the: Jacks'oriville, Pensacola and Mobile.Company for the bonds of. the Florida .Central Company, which are the .bonds- out of which the rights, and equi--. ties claimed in this -suit by the State arise. This question is settled by. an admission- of the.State through.its attorney placed on record that the Florida, Central- Nailroad Com- , pany could prove b¡¡-.John Collinson that the bonds of the . State issued for the 'Florida Central Road have never been sold, cm id. that nothing' has been paid by the State'on said\ State bonds