§ 624. Of the title of purchasers as against mortgage lien, and of mortgagees as against vendor's lien.

§ 625.

The mortgage lien not impaired by change of route.

§ 626.

The mortgage lien not impaired by consolidation.

§ 627.

Of mortgage trustees.

§ 628.

§ 629.

Of the duties, liabilities and remuneration of mortgage trustees.
Of supplying vacancies.

§ 630. Of the removal of mortgage trustees.

§ 602. Of the power of corporations in general to borrow and to mortgage.- A corporation has authority to borrow money,' to give its notes, or to issue bonds therefor; and, as incidental to this power, it may mortgage its property, or give other security for the payment of its indebtedness."

4

1 Kent v. Quicksilver Mining Co. 78 N. Y. 159; Curtis v. Leavitt, 15 N. Y. 9; Clark v. Titcomb, 42 Barb. 122; Commissioners of Craven v. Atlantic etc. R. R. Co. 77 N. C. 239; Burr v. McDonald, 3 Gratt. 215; Union Bank v. Jacobs, 6 Humph. 515; Savannah etc. R. R. Co. v. Lancaster, 62 Ala. 555: Oxford Iron Co. v. Spradley, 46 Ala. 98; Booth v. Robinson, 55 Md. 419; Lucas v. Fitney, 27 N. J. 221; Thompson v. Lambert, 44 Iowa, 239; Philadelphia etc. R. R. Co. v. Stichter (Sup. Ct. of Pa.), 21 Am. Law Reg. N. S. 713; Ward v. Johnson, 95 I. 215; Bradley v. Ballard, 55 Ill. 413; 7 Am. Rep. 656; In re International etc. Society, Law R. 19 Eq. 312; Australian etc. Co. v. Mounsey, 4 Kay & J. 733; Bank of Australia v. Breillat. 6 Moore C. P. 152, 193.

2 Taylor on Corporations, § 125.

3 Commissioners of Craven v. Atlantic etc. R. R. Co. 77 N. C. 289. 4 Commissioners of Craven v. Atlantic etc. R. R. Co. 77 N. C. 289. 5 Hope etc. Ins Co. v. Perkins, 33 N. Y. 404; Nelson v. Eaton, 26 N. Y. 410; Uncas National Bank v. Rith, 23 Wis. 339.

603. Of the power of railway companies to borrow and to mortgage. It is generally held that railway corporations, being erected for the benefit and accommodation of the public, cannot without legislative authority, either absolutely or conditionally, by way of mortgage, alienate their franchises, or that property without which their franchises could have little more than a nominal existence.1 A railway company may, however, assign a call made but not yet payable, and give a specific charge on money

and dispose of their bonds for any amount so borrowed, and to mortgage their corporate property and franchises to secure the payment of any debt contracted by the company for the purpose aforesaid." So in California, railway companies are authorized by statute to mortgage their property." And in England, the Companies' Clauses Consolidation Act of 1845 enacts that if the company be authorized by the special act of incorporation to borrow money on mortgage or bond, it shall be lawful for it, subject to the restrictions contained in the special act of incorporation; to borrow on mortgage or bond such sums of money as shall from time to time, by an order of a general meeting of the company, be authorized, to be borrowed, not exceeding in the whole the sum prescribed by the special act of incorporation, and for securing the repayment of the money so borrowed, with interest, to mortgage the undertaking and the future calls on the stockholders, or to give bonds in the manner thereinafter mentioned. The same statute further provides, that if, after having borrowed any part of the money so authorized to be borrowed on mortgage or bond, the company pay off the same, it shall be lawful for it again to borrow the amount so paid off, and so from time to time; but that the power of reborrowing shall not be exercised without the authority of a general meeting of the company, unless the money be so reborrowed in order to pay off an existing mortgage or bond.

4

1 N. Y. Laws of 1850, ch. 140, § 10.

2 Cal. Acts of 1861, ch. 532, § 15, as amended by Cal. Acts of 1862, ch. 424, § 1; McLane v. Placerville etc. R. R. Co. 66 Cal. 606.

3 8 Vict. ch. 16, § 33.

4 4 Vict. ch. 16, § 39.

See, also, Hodges on Railways (7th ed.), 121.

8

29 10

claim against the company to the extent to which his loan has been so applied. But the burden of showing that the loan has been applied in payment of debts lies upon the claimant.9 The English statute known as the "Cheap Trains Act," after reciting that many railway companies have borrowed money, in a manner unauthorized by their acts of incorporation, upon the security of "loan notes" which have no legal validity, but which have been received in good faith and issued for the most part for the lawful purposes of the undertaking and in ignorance of their legal invalidity, declares it expedient to confirm such as have been already issued, but imposes a penalty for any further issue.11

1 Baroness Wenlock v. River Dee Co. 10 App. Cas. 354. See 7 & 8 Vict. ch. 18, § 19.

2 House of C. Stand. Ord. (for 1839) 153; House of L. Stand. Ord.

(for 1889) 112; 1 Hodges on Railways (7th ed.), 13.

3 Bateman v. Mid Wales R'y Co. Law R. 1 Com. P. 499.

4 Blackburn etc, Soc. v. Cunliffe etc. Co. 22 Ch. Div. 61.

5 Nowell v. Andover etc. R'y Co. 3 Giff. 112.

6 Fontaine v. Cormarthen etc. R'y Co. 5 Eq. 316, 325; Browne & Theobald's Railway Law, 85.

7 White v. Cormarthen etc. R'y Co. 33 Law J. Ch. 93; S. C 1 Hem & N. 786; In re Bagnalstown etc. R'y Co. I. R. 4 Eq. 505, where the cases are fully reviewed.

8 Blackburn etc. Soc. v. Cunliffe etc. Co. 22 Ch. Div. 61; 9 App. Cas. 857; Baroness Wenlock v. River Dee Co. 19 Q. B. Div. 155; In re Cork etc R'y Co. 4 Ch. 748; In re German Mining Co. 4 De Gex, M. & G. 19; Corry v. Londonderry etc. Co. 29 Beav. 263; Troup's Case, 29 Beav. 353; Ulster R'y Co. v. Banbridge etc. R'y Co. Ir. Rep. 2 Eq. 190. See In re National Permanent Benefit Building Soc. Ex parte Williamson, 5 Ch. 309; Browne & Theobald's Railway Law, 85.

9 Blackburn etc. Soc. v. Cunliffe etc. Co. 22 Ch. Div. 61; 9 App. Cas. 857; Browne & Theobald's Railway Law, 85.

10 7 & 8 Vict. ch. 85.

11 7 & 8 Vict. ch. 85, § 19; 1 Hodges on Railways (7th ed.), 131, 132.

$606.

Of the extent of the statutory authority. A statute subjecting the road and chartered rights of all railroad companies to sale for their