1. It has been expressly decided that the general provisions of the statute as to the mode of conveying real estate are exclusive.

2. So also that the vote of the corporation is indispensable to create the power to do so. VII. The addition to the name of Merritt Clark, of " President"; and of the name of the corporation, is a mere descriptio persona; and would not render the deed binding upon the corporation, even if Clark had authority to bind them.

VIII. The effect of the seal of the corporation being attached to the first mortgage.

1. It is attached to the paper in such a place, at the very top, as not to indicate it was done as an act of execution.

2. Sealing never held equivalent to signing.

3. The proof shows that the seal was attached after the execution of the instrument.

4. If it is regarded as any portion of the instrument, it will avoid it, as a material altera

tion.

PART II. Notice in fact may be relied upon by the plaintiffs.

Div. IX. There is no evidence of notice in fact, except by Miller and Baldwin. These cannot avail against the bondholders under the second mortgage.

1. These bonds are negotiable instruments, and pass an absolute title by delivery.

2. The notice to Baldwin was not valid for any species of contract. It was more calculated to put him off inquiry than no notice at all.

3. The fact that Miller had been trustee in a former mortgage, if a valid one, could be no notice to the cestuis que trust under the second mortgage, even if the securities were not negotiable. 1. He was a mere agent. 2. All the notice to him was acquired in a different transaction. 3. The fact that he retained $250,000 of the bonds secured by this mortgage for the benefit of the first bondholders, not secured at all, showed that he even was not attempting to gain any fraudulent advantage.

4. But notice to all the trustees will not aid the plaintiffs.

X. The claim to have the contract reformed, and for specific performance and a foreclosure, is not maintainable.

1. Because of the intervening rights of other bonâ fide encumbrancers.

2. This will be to supply a power, instead of aiding a defective execution of one.

3. The lapse of time and acquiescence of plaintiffs is an invincible obstacle to such a decree.

4. There is no such notice in fact to the subsequent encumbrancers, or even to Miller and Baldwin, as to justify a court of equity in interfering in any way.

XI. Some reliance is made upon the fuct of having obtained the indorsement of good counsel.

1. This cannot render an invalid instrument operative in law.

2. The omission to obtain proper advice may operate against a party.

3. The advice was rash if it was given.

4. This may not fairly justify any inference of bad faith in the bondholders, but it shows very clearly that those who executed the mortgage were not solicitous to have it valid, provided it did not bind them personally.

XII. The position of affairs called for despatch and some reserve.

1. Because the stockholders had subscribed under an assurance that no mortgage would be given.

2. The fact that the mention of any such mortgage has been studiously kept out of the written reports to the stockholders, shows reserve in fact.

3. The fact that the officers volunteered to get up this first mortgage, for the benefit of the contractors merely, is reason enough for reserve as to stockholders.

4. All the circumstances go to show that it was regarded as a temporary expedient by the officers of the company.

5 and 6. If the officers of the company or the bondholders believed in the validity of this contract, it was attributable exclusively to their studious reserve in regard to seeking thorough counsel, which is scarcely less than gross negligence, if we can fairly believe that it occurred altogether in good faith.

XIII. Under such a lame show of equity on the part of the plaintiffs, it would be going further than any case has ever gone to postpone the claim of those who appear throughout the transaction, in all their connection with it, to have acted in the utmost good faith.

§ 235 a. 1. THE following opinion, although not adopted by the court, will be found, we think, to contain sound views, and such as are in consonance with sound principle and established precedent, and such as must ultimately prevail. The idea upon which the court proceeded,1 in setting up a contract as a valid

1 Miller v. R. & W. Railw. Co., 36 Vt. R. 452. We have thought fit to add the statement of the case and the opinion of the court at length.

The Rutland and Washington Railroad Company, chartered in 1847, surveyed and located a railroad, and put it under contract for its entire completion, including land damages. The contractors were to receive in payment shares of the capital stock at par for all but $ 100,000, which was to be paid in money. They proceeded with the work, and when it became necessary to procure rails, the capital stock was found insufficient. Thereupon the directors voted to modify the contracts by issuing $250,000 in bonds, to procure the necessary iron, to be secured by mortgage of the road and its franchises, which bonds the contractors were to receive instead of an equal amount of stock, it having been ascertained that the bonds would be received for the iron; and the purchase was negotiated by one of the directors. The bonds and mortgage were authorized by votes of the directors, and M. Clark, president of the company, was appointed their agent and attorney to execute the mortgage, and authorized to give any further assurance and contract that might be proper. In the first annual report of the directors, made in 1851, they referred to the fact that these bonds were issued pursuant to the recommendations of stockholders, and that the iron necessary had been purchased with them. This report was presented and read by the president, and accepted by the stockholders. They were again referred to in the report of the directors of 1852, also accepted by the stockholders. Subsequent to this, in 1852, the corporation issued $550,000 of other bonds, and secured them by a mortgage of the road and the franchises and property belonging to it, $ 250,000 of which were designed by the parties to the transaction to be used in retiring the first mortgage, and the remainder in paying the other indebtedness of the company. The first mortgage bondholders did not assent to this arrangement. Miller, one of the trustees of the first mortgage, was also one of the trustees of the second. Authority to make the exchange was given to the president by the directors, and afterwards by a vote of the

mortgage of the road and its franchise, where it was not in form a mortgage, and not in the name of the corporation, is so stockholders at a meeting in 1853. In 1858, the railroad company leased their road to one Canfield for the yearly rent of $ 70,700. Of this $16,000 was made payable to the first mortgage bond- or note-holders, for their annual interest. In 1855, the corporation made another mortgage, securing $1,300,000 other bonds, intended to retire both the former issues, and also to pay any other indebtedness of the company. Those secured by the first mortgage declined this arrangement also. The first mortgage, made by Clark, in pursuance of the authority given by the directors in 1850, after reciting the votes, proceeded as follows:

"Know ye, therefore, that I, Merritt Clark, as I am the President of said company, as well by the power and authority vested in me by the vote aforesaid as in consideration of the sum of two hundred and fifty thousand dollars, to the use of the said corporation, well and truly paid, the receipt whereof is hereby acknowledged, do by these presents give, grant, bargain and sell unto the said trustees and their successors (to be by themselves nominated and appointed) the premises hereinabove and in said vote mentioned. To have and to hold the said granted and bargained premises to them the said trustees, their heirs, assigns, and successors forever, to their own use.

1

"And I, the said Merritt Clark, do hereby covenant to and with the said trustees and their successors that I am duly authorized and empowered to sell and convey the said premises to the said trustees in manner and form aforesaid, and that I will, and my heirs, executors, and administrators shall, warrant and defend the same to the said Miller and Knapp, trustees, their heirs, assigns, and successors, against the said corporation and all persons claiming from, by, through, or under me, the said Clark, but against no other persons."

The deed was conditioned to become void on payment by the corporation of the principal and interest of the $ 250,000 in bonds, and was signed and sealed by Clark in his own name simply. The acknowledgment was as follows:

"Then personally appeared the above-named Merritt Clark, the President of the above-named Rutland and Washington Railroad Company, and acknowledged the above instrument to be his free act and deed and the free act and deed of the said corporation."

A certificate was also appended, signed by Pierpoint and Williams, attorneys at law, and Ch. K. Williams, attorney at law, that the deed was drawn in proper form and duly executed.

Barrett, J. "Had the corporation legal competency to pledge its credit for the procurement of rails for its road, and to secure payment by a mortgage? "It is now to be regarded as settled beyond any proper ground of question that a corporation may contract debts necessary for the due performance of the objects of its creation, and may give valid security for their payment by the pledge of any property or interests in property that are subject to its disposal, by virtue of the implied power existing in it, and without any express provision of statute to that effect, provided it be not restricted by statute in this respect.

utterly in defiance of all just principle or sound precedent, that to its maintenance it will become necessary to disregard and subThe case of the Vermont & Canada Railw. v. Vermont Central Railw., Vt. Sup. Ct. Jan. 1861, referred to in the argument, does not fall within this proposition; for in that case the transaction in question was a contract of leasing for the payment of a stipulated rent, and of security for the payment of the rent, a transaction not within the express or implied powers of the two corporations till made so by statute. In the present case, the end and purpose of the creation of the corporation was the making and operating of a railroad. It was necessary to such end and purpose that the company should have rails as well as a road-way. It was competent for it to contract for their purchase, and to provide by proper means for the payment therefor. If it had not the money, it was competent for it to obtain credit by the pledge of its disposable rights and interests in property.

"The rails were purchased in the due course of business, and the obligations, called bonds, of the company were made and delivered in payment, purporting to be secured by a mortgage of the road and its franchises. And this was done in pursuance of an agreement on the part of the company that the bonds should be so secured, and they were received upon the assurance, made by the representative agents of the company, that they were so secured, by an instrument designed to be executed in pursuance of a vote of the directors authorizing the issue of the bonds and securing them by mortgage, and authorizing the presi dent, as agent of the company, to make such mortgage, accompanied with the opinion of eminent legal counsel that said instrument was valid as a mortgage of the corporation.

"It is satisfactorily established by the evidence that the directors, with the knowledge and concurrence of all the stockholders, designed that the mortgage should be given, and that Mr. Clark, the president of the company, designed, in executing his agency in that behalf, to make and execute a mortgage which should be the deed of the corporation. It is also established that the corporation had no money, and no means otherwise wherewith to pay for or secure the payment for the rails. The rails thus acquired were used by the corporation for the completion of its road.

"The intervention of the contracts for the completed construction of the road, including its rails, with the modification of them as shown by the proofs, does not vary the legal or equitable aspect of the case, upon the question of the security claimed to have been given by the corporation for the bonds first issued.

“In the transaction of negotiating for the rails and other like things, and providing for the payment, the corporation would act through the directors as matter of course, under the express terms of § 6 of the charter, that 'five directors shall form a board, who shall be competent to transact all the business of the company.' See Bank of Middlebury v. R. & W. Railw., 30 Vt. R. 159.

"There is no question as to the legal formality with which the directors acted in the present case. If, however, it was to be held that for validity the acts of

vert most of the law before established upon the point. But we desire to acknowledge the great learning and ability with which directors in this behalf must depend upon authority conferred by the corporation, we find ample ground for holding such authority to have been conferred, in the fact of the knowledge and concurrence of the stockholders in all that transpired, while the matter of issuing and securing the bonds was in progress, and in the repeated acts of ratification afterwards; especially in what occurred at the meetings of stockholders in 1851 and 1852, when the directors made their annual reports; as well as in what occurred in connection with, and as part of the transaction of making the second mortgage, in the latter part of the year 1852, and the lease to Mr. Canfield in 1853, and the third mortgage in 1855; in all which the existence of the first mortgage and of the bonds secured by it was recognized, and in no way repudiated, by the corporation. The principle is undoubtedly sound, as stated in Redfield on Railways, § 235, pl. 11, (vol. 2, p. 513) that when the company receive benefit upon money borrowed, they cannot avoid liability upon the mortgage given to secure its payment by denying the authority of those who contracted the loan in their behalf;' and the pertinency of its application to the present point is obvious. Noyes v. R. & B. Railw., 27 Vt. R. 110.

"In Curtis v. Leavitt, 15 N. Y. R. 47, the language of Comstock, J., is to the same effect. 'When a person receives and appropriates the benefits of a transaction done in his name and by his assumed authority, there exists the highest evidence of his approval. . . . . These rules are elementary, and are grounded on the simplest ideas of justice in the dealings between men. They are also as plainly applicable to corporate as to other transactions, where the dealing is within the powers of the corporations. In such a case, no possible reason can be presented why a corporate as well as a private person is not bound by the dealings of its agent which it has approved, and the benefits of which it has received and appropriated.' On page 49 he says, 'But corporations, like other principals, may act and be bound in any of the modes not opposed to the general rules of law applicable to such bodies. They may previously resolve, they may subsequently acquiesce, they may expressly ratify, they may intentionally receive and appropriate the proceeds of the unauthorized transaction, and thus put it out of their power to dispute the validity.' Brown, J., on pages 136 - 138, expresses the same views.

“It is understood, of course, that this could be applicable only in case of transactions such as the corporation could lawfully become a party to, and not to transactions in violation of corporate rights and duties, such as would be void, and could impose no liability.

"If it were doubtful whether the corporation had the right, by virtue of its inherent capacity, to issue the bonds and make provision for them by way of mortgage, we think the act passed Nov. 9, 1850, should be regarded as operative to confer the right, and as effective upon the transaction in question. Section 1 of that act is, 'Every railroad corporation within the state shall have power to issue notes or bonds for the purpose of building or furnishing their