and also a foreclosure at the same time, we suppose, is one which it will be impossible to maintain upon any powers hitherto exercised by courts of equity.

1. Because the instrument is not, and never was intended to be, a contract to execute a mortgage. Such a course would therefore be to make a contract for the parties.27

2. But if it were so in terms it could not be legally registered, and therefore the registry would not be constructive notice to the subsequent encumbrancers, and there is no pretence of notice in fact.

3. A decree for specific performance would therefore be impossible, even if the contract to execute a mortgage were conceded. 1. Because of the occurring of the intervening rights of subsequent bonâ fide encumbrancers. There must be notice of the prior equity to entitle the party to a decree.28 2. Because such a decree would be to aid a defective power, and not merely the defective execution of a power, which courts of equity will never do.29 3. The lapse of time is an invincible obstacle to a decree for specific performance.30 If the party have long acquiesced in a contract, it is not allowable for him to demand of a court of equity that it be reformed, or set aside, unless he can show some special excuse for the delay, as that the party was kept in ignorance of his right through the fraud of the other party.31

The whole history of equity jurisprudence will not furnish a single well-considered case, where the courts have set up an agreement to execute a mortgage, or the defective execution of a mortgage, as a valid mortgage, against subsequent encumbrancers, unless the holders of the securities under the junior mortgage took them subject to the prior encumbrance in terms, or else with full knowledge of its existence, either constructively or in fact. In this last case the second mortgage was defective, but it was expressly recited as a prior encumbrance, and the

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third mortgage made subject to it. Upon this ground the court held it binding upon those interested under the third mortgage. And in some cases full notice to the subsequent encumbrancers of an out-standing contract for a mortgage, or a defectively executed one, may postpone their claim, where it was taken with full knowledge that the contract or defective mortgage was the consideration for advances made, and was still relied upon by those making the advances as a valid security. Such facts render the conduct of the junior encumbrancer fraudulent.

4. But there is no satisfactory proof of any fraudulent purpose, even in Miller and Baldwin. They no doubt regarded the contract under which the plaintiffs claim as wholly inoperative and of no benefit to the bondholders under it. And the testimony certainly does not convince me that Miller and Baldwin, at the time the second mortgage was executed, or when Baldwin accepted the $300,000 bonds, had any belief that even the first bondholders relied upon it. Baldwin was not conversant with the mode of negotiating these bonds. He came into the company after all that had transpired. And Miller was not familiar with the negotiation of the bonds. Every one connected with that transaction, who did communicate with Miller, spoke of them as of no validity, even Judge Smalley, the counsel of the company at the latter period. It was the most natural conclusion then for him to adopt that view, as he unquestionably did, and acted upon it in good faith, supposing it was the view of the bondholders themselves, under the first contract. And it is not improbable this might have been the view of the bondholders even, and that they would have accepted the provision made for them in the utmost good faith, under the second mortgage, but for the unexpected failure of the company.

After this they very naturally fell back upon the first imperfect attempt to execute a mortgage, as the only hopeful reliance, - tabula in naufragio, - literally a plank in a shipwreck. But, at all events, there is no ground of claim that there is any notice which can by any fair construction affect the interest of the present bondholders under the second mortgage. We are not, therefore, called upon to determine absolutely how far the circumstances might affect Miller or Baldwin.

XI. There seems to have been some reliance in the argument

for the plaintiffs before the Chancellor, upon the fact that the bondholders under the first contract obtained the indorsement of very reliable counsel in favor of the capacity of the company to execute the mortgage in question.

1. I am not aware that any such argument will avail the plaintiffs if the contract under which they claim shall finally prove defective and insufficient in law to maintain that priority of right upon which alone the plaintiffs will be able to maintain their bill.

2. But, unquestionably, the omission to make proper inquiry or to take advice of counsel upon contracts of great consequence and difficulty, and especially of novel and unusual character, might be regarded as a very significant circumstance, tending to show that the party did not act in good faith; but that they might rather have obtained the best security they could; trusting to the uncertainties of the law rather than its certainties. In this view of the case it has seemed rather wonderful to me, that after those to whom these first mortgage bonds were offered in exchange for iron had proposed to act upon the opinion of able counsel in Vermont, indorsing the validity of the mortgage, that opinion should only have extended to the power of the corporation to execute such a mortgage and the effect of using the common seal; and never have been asked, either as to the mode of conferring such power or the mode of its execution, which seem quite as important considerations affecting the validity of the security as any other. But the point is not very important, and there may be some further opinion indorsing the validity of the mortgage in its present form. If so, the wonder will be how any one could give such advice.

3. If such counsel was given it would seem to me the more wonderful, when it is considered, that the course pursued in executing the mortgage was in violation of all established practice, as well as legal precedent, and especially in contravention of the general statutes of the state, and the reported decisions of the courts. It is natural to suppose that an opinion from well-informed business men could not have failed to elicit the fact, that the instrument under which the plaintiffs claim, was wholly deficient in all the essential legal requisites of a valid

mortgage of real estate by a corporation, both as to its form and the power under which it was executed.

4. We do not infer, either from the omission to seek proper counsels, or the fact that rash and imperfect advice was given and acted upon, that any of the parties acted in bad faith. But the facts and circumstances may justly be regarded, perhaps, as affording pretty satisfactory evidence that the officers of the company regarded it as a temporary expedient to save the credit of the company at the time. Their great anxiety seemed to be to satisfy those of whom they purchased the iron, and not to be personally responsible upon the contract.

XII. The position of affairs called for despatch, and more or less of reserve, as to all parties.

1. The stockholders along the line of the road, who constituted about one tenth of the whole, and all who were really so, bonâ fide, and not identified with the promoters of the enterprise, had subscribed under the positive assurance that no mortgage should be executed. This, then, was reason enough why it would not be discreet to call a meeting of the stockholders. For any one of such subscribers might place an extinguisher at once upon the whole scheme of the mortgage, by an injunction out of chancery. It would, therefore, not be wise to wake up the suspicions of the stockholders more than was indispensable.

2. From this same consideration, the fact of any such mortgage ever having been attempted to be executed, has all along been studiously kept out of the written reports of the officers of the company to the stated or occasional meetings of the stockholders. It has been named in discourse, and in conversation, at such meetings; but always with the assurance that it was irregular and inoperative, as a mortgage; so that the reputation of its existence has been kept constantly shrouded with the shadow of its being of no force or binding effect upon any one. The votes of the stockholders, therefore, ratifying a subsequent mortgage, sufficient to meet all their indebtedness, is not in fact, or in construction of law, any confirmation of the first mortgage, but rather the condemnation of it as a security, and making provision for securing the debts of the company, by a mortgage

properly executed, which was, in fact and in law, and in the intention of the stockholders, the first mortgage ever created by them.

3. The consideration, too, that the getting up of this first contract was altogether a volunteer matter on the part of the directors, at the time, to brace up the contractors, in a mode not provided for in the contract, affords additional reason why those directors would not desire to give much publicity to the transaction at the time, and to keep up the impression among the outside friends of the company that it was merely a temporary expedient, and never fully carried into effect, and that all which was expected of the company was to make provision at the proper time for retiring the bonds.

4. All this, and much more which might be adduced, convinces me, beyond all doubt, that the officers of the company managed to get along as quietly as possible with the instrument under which the plaintiffs now claim, merely desiring to get it into such state of forwardness as to induce the sale of the iron, and thus maintain the credit of the company and the progress of the works, until the proper time came to secure all the liabilities of the company necessarily incurred in the construction and equipment of its road, by a formally executed first mortgage, and that they succeeded in accomplishing this without exciting much stir out of doors.

5. Perhaps it is not fair to conclude that the directors were fully aware of its manifold deficiencies, but if they were not, it was certainly attributable to their prudent reserve, in not inquiring of their counsel, who should have been able to inform them at once that such an instrument had been decided to be of no validity in this state or anywhere else, many years before. And this is either fraud or gross negligence.

6. And if the bondholders under this contract believed they had obtained the security of a first mortgage upon the property and franchises of the company, present and future, it was what few others could have ever believed, who knew all the facts in the case, and what the slightest inquiry in the proper quarter would have enabled them to correct. Under such circumstances it would be going further than any late decision in equity has

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