therein of foreign corporations, as well as because of the liabilities which the trustee might incur through such entry; but the provision should always be phrased in optional form. It affords a basis for the appointment of a mortgage receiver to collect the income and to apply the net to the amounts due on the bonds. In special cases, there has been inserted a provision that a trustee might cause to be organized a corporation to operate a property of which the trustee might deem it desirable to take possession.

Another remedy which has come down from the early real property mortgages is that authorizing the trustee itself to sell the mortgaged premises without judicial foreclosure. This ancient right is now limited in many of the States and involves so many questions of procedure that it seldom is exercised with respect to realty. It is availed of frequently at the present time, however, to effect sales of pledged securities by the trustee in the same manner as pledged securities are sold in enforcement of ordinary collateral notes by the banks.

Of course, the mortgage also will authorize the enforcement of the security by foreclosure or other legal proceedings.

As to pledged stocks and bonds, it is proper to empower the trustee in an event of default or of receivership, to terminate the right of the company to collect the income of pledged stocks and bonds, or to vote in respect of the stocks.

The mortgage should specify that it is the duty of the trustee upon request of the holders of a prescribed amount of bonds and upon receiving indemnity to enforce the provisions of the indenture in such manner as may be advised by counsel.

To prevent annoyance or damage by any litigious holder of a few bonds against the interest of the holders generally, through involving the trustee of the company in litigation in respect of the bonds or indenture, it is customary to provide that a trustee shall not be required to take any action unless requested so to do by the holders of a substantial amount of the bonds, usually 10 per cent to 25 per cent.

Another very desirable provision gives to the trustee the right at its option to act upon an event of default without awaiting any period of grace, in case the company shall be put in the hands of a receiver at the suit of any one other than the trustee. In cases of commercial corporations, the mortgage security may be impaired if the company be left in the custody of a receiver for unsecured creditors, during the substantial period pending the termination of a period of grace. If the trustee is authorized to act promptly, it may have the receivership extended to the mortgaged property for its benefit and its protection.

In discussing the form of the bond, much attention was given to the mode of providing therein for the acceleration of the maturity of the principal of the debt in case of defaults, especially a continuing default in payment of interest. This right, of great importance to the trustee and the bondholders, should be conferred also in the mortgage with particular care. The method and the effect of foreclosing for any default except in payment of principal are vague and unsatisfactory. Unless the principal can be made to become due upon such a default, effective enforcement of the mortgage will be impracticable. Usually, this right is made exercisable by the trustee either in its discretion, or pursuant to the mandatory request of the holders of a specified amount of bonds. Without such specification the request of bondholders might have to be by all.1 Such a right of declaration should be accompanied by the corresponding right of the holder of at least a majority of the bonds to waive the declaration and its consequences, without prejudice however to any other right of the trustee or the bondholders, or to the right of future declarations, thus avoiding the rule in Dumpor's case that a condition once waived is lost forever.

2

It should be provided also that in case of sale of the property

1 See Mallory v. W. S. R. R. Co., 35 Superior Rep. (N. Y.) 174; 1873. See 4 Coke's Rep. 119 b; 1602.

for any cause either under the mortgage, or under any claim having priority thereto, the principal sum should become due forthwith without any further action.

Usually it is desirable that the entire mortgaged premises be sold in one parcel and as an entirety, and provision to that effect should be inserted in the mortgage, subject of course to other direction by bondholders or to the requirement of statutes. The character of notice to be given of the time and place of any sale should be prescribed, and power should be given to the person conducting the sale to adjourn the same to an appointed time at the same place without further notice or publication.

The trustee should have power to execute and to deliver to the purchasers upon such sale suitable conveyances, and the mortgage should contain a power of attorney from the mortgagor to execute such conveyances, and properly also a provision that if requested by the trustee the mortgagor itself will join in the execution.

The receipt of the trustee for the purchase money should be made a sufficient discharge therefor to the purchaser, and such purchaser should not be bound to inquire as to the use or the application of the proceeds or the necessity of the sale. Provision should be made to govern the order in which the proceeds of sale should be distributed.

It is important here to provide against acts by the mortgagor which would avoid the due payment of coupons and result in their being kept alive and entitled to the prior or equal security of the mortgage, thus increasing the debt in case of foreclosure.1

The mortgage should provide that any such coupons so kept alive shall not be entitled to the security or to any share of the proceeds of sale except subject to the payment of the principal and of all coupons not so funded.

1 See Ketchum v. Duncan, 96 U. S. 659; 1877; Wood v. Guarantee Trust Co., 128 U. S. 416; 1888; Morgan's Co. v. Texas Cent. Ry., 137 U. S. 171-196;

It is usual for the mortgagor to authorize the bondholders to purchase without accountability except for the purchase price, and on account of the purchase price to use any bonds or interest obligations to the extent of the amount payable upon them out of the proceeds of sale.

A covenant usual in the modern mortgage is that the mortgagor will pay the principal and the interest of the bonds to the trustee as trustee of an express trust; and that the trustee shall have the right to recover judgment therefor either before or after or during the pendency of foreclosure proceedings. These provisions may support a claim by the trustee to recover a deficiency judgment in jurisdictions where deficiency judgments are allowable.1

As a precaution against unforeseen contingencies, there is oftentimes inserted in mortgages a provision (of doubted legality) authorizing the mortgagor, prior to default, to surrender possession to the trustee and consenting to the appointment of a receiver. Such a provision might be useful in case of unjustifiable or predatory attempts to interfere with the exercise of the corporate powers.

In connection with the enforcement of the remedies of the trustee, the mortgage should provide specifically that the mortgagor waives its rights under any stay or extension law providing for valuation or appraisement or other postponement of the right of enforcement, and should contain an express waiver of the benefit of stay, extension, valuation and appraisement laws, and of any statutory right of redemption after a sale in enforcement of the mortgage. Even if at the time of the mortgage there be no such statutes in force, they may be made the subject of later enactment.

1 An interesting review by Judge EARL of the right to judgment for deficiency will be found in Frank v. Davis, 135 N. Y. 275; 1892.

See U. S. Sup. Ct. Equity Rule 10; Noonan v. Lee, 2 Black 499; 1862; Mackay v. Randolph Macon Co., 178 Fed. Rep. 881; 1910; Watson v. C. R. I. & P. R. R. Co., 169 App. Div. (N. Y.) 663; 1915; Grant v. Winona & S. W. Ry. Co., 85 Minn. 422; 1902; 89 N. W. 60; 1902.

Remedies frequently specified in important mortgages are the right of the trustee to obtain the appointment of a receiver of the mortgaged premises, the right of the company to deliver possession to the trustee prior to default, and the right of the trustee to maintain suits against impairment of the security by governmental authorities under unconstitutional legislation.

It is usual to provide that no delay or omission of the trustee shall be construed as a waiver, or a default, or an acquiescence.

The provision that all remedies shall be cumulative and not exclusive, but additional to any others given by law, has been considered already in discussing the very recent case, Watson v. C. R. I. & P. R. R,1 hereinafter examined.

The provision as to cumulative remedies probably was introduced originally to obtain or to save for the trustee a right to sue at law for the debt, concurrently with a suit to foreclose the mortgage or pledge, except where there may be statutory requirement of leave of the court,2 and also to avoid any implication that conditions affecting one of the trustee's remedies, such as foreclosure by advertisement, affected his right also as to a distinct and unconditional remedy such as foreclosure by suit.3

In connection with the statement of remedies, it should be provided that no holder of any bond or coupon shall have a right to institute proceedings under the indenture for any purpose whatsoever unless first he shall have given notice to the trustee and shall have afforded to the trustee reasonable opportunity to enforce such provision of the indenture, and shall have indemnified the trustee, nor unless the holders of a specified amount of bonds shall have joined with him in demanding such action. This requirement, however, would not be operative in any case where it would bar the bondholder of his just

1169 App. Div. (N. Y.) 663; 1915.

See Vanderbilt v. Schreyer, 91 N. Y. 392; 1883; Robert v. Kidansky, 111 App. Div. (N. Y.) 475; 1906.

Morgan's Co. v. Texas Central Ry. Co., 137 U. S. 171-192; 1890.