Md.) BARROLL v. BENTON 101 stood that the employment was definitely | serted a clause authorizing the mortgagee or terminated, upon the facts stated the maid is entitled to the legacy. [7] 5. The question who are meant by "employés" in the clause giving $10,000 to be distributed among the employés of the O. J. Lewis Mercantile Company has not been argued by counsel. The word "employé" is defined in Webster's Dictionary as "a clerk or workman in the service of an employer, usually distinguished from official or officer, or one employed in a position of some authority." To the same effect see the Century Dictionary. The synonyms of the word are given by Soule as "agent, clerk, servant, hand," apparently implying service in an inferior capacity. While any one employed by a corporation in any capacity may perhaps be considered an employé of the corporation (and if from the context such appeared to be the meaning, the officers of the corporation might be intended by the term under some circumstances), such is not the meaning of the word as ordinarily employed. 10 Cyc. 1032, 1033. It is not probable that the testator intended that its Boston agent, its counsel, who was also a director, its treasurer, or its New York representative should share in the distribution of the $10,000. Especially is this apparent when account is taken of the fact that to each of these, except the New York representative, a specific bequest of $10,000 is given. It is more probable that the testator meant the employés in less responsible and less honorable positions. None of these officials have appeared to claim that they were employés of the corporation within the meaning of the word as understood by the testator, and the trustee is advised that they are not entitled to share in the distribution of the $10,000 given to employés. [8] Miss Tillie, the stenographer, is given a special bequest of $500, but it does not appear that she held any office in the corporation, nor does any ground occur upon which to distinguish the position of stenographer from that of bookkeeper or other clerk. The special gift to her is some evidence that it might not have been intended she should share in the general one, but it is not sufficient to authorize a finding of an expressed intention to exclude her from the class ordinarily embraced by the term employed, into which her occupation falls. She is included within the term "employés," and entitled to share in the gift to them. Case discharged. All concurred. any person to be named therein to sell the mortgaged premises, a personal trust and obligation is contemplated, which a corporation is incapable of performing. [Ed. Note. For other cases, see Mortgages, Cent. Dig. §§ 1036-1038; Dec. Dig. § 340.*] 2. MORTGAGES (§ 340*) — POWER OF SALE PERSONS ENTITLED TO EXECUTE. Under Code Pub. Civ. Laws, art. 66, § 6, providing that mortgages may contain a clause authorizing the mortgagee or any person named therein to sell the mortgaged premises, the power of sale in a mortgage to a corporation may be executed by an assignee of the mortgage, if the mortgage so provides, but not unless the power is extended in terms to assigns. [Ed. Note. For other cases, see Mortgages, Cent. Dig. §§ 1036-1038; Dec. Dig. § 340.*] 3. MORTGAGES (§ 340*) - POWER OF SALE PERSONS ENTITLED TO EXECUTE. Under Code Pub. Civ. Laws, art. 66, § 6, providing that mortgages may contain a clause authorizing the mortgagee or any other person where the mortgagee, who is given a power of named therein to sell the mortgaged premises, sale, is a natural person capable of executing the trust, the power passes to successive assigns, even in the absence of a stipulation in the mortgage to that effect, as an incident of the mortgage security. [Ed. Note. For other cases, see Mortgages, Cent. Dig. §§ 1036-1038; Dec. Dig. § 340.*] 4. MORTGAGES (§ 340*) POWER OF SALE PERSONS ENTITLED TO EXECUTE. Where a mortgage to a corporation conferred a power of sale on the mortgagee or B., its attorney or agent, B., as attorney or agent, had full authority to execute the power. [Ed. Note.-For other cases, see Mortgages, Cent. Dig. §§ 1036-1038; Dec. Dig. § 340.*] 5. MORTGAGES (§ 354*)-ADVERTISEMENT-REPORT OF SALE-DESCRIPTION OF CAPACITY. Where a mortgage to a corporation conferred a power of sale on the mortgagee or B., its attorney or agent, and the mortgage was assigned and by the assignee again assigned for purposes of collection to B., who executed the power of sale, the fact that he signed the advertisement and report of sale in his capacity as assignee rather than in his capacity as atespecially where the obligation of his bond intorney or agent did not render the sale invalid, cluded the performance of the trust reposed in him by the mortgage, since, where a party has delegated to him in one of those capacities, the various capacities and executes an authority law will attribute the act to the proper authority, although he does not profess to execute it in virtue of that particular power. [Ed. Note.-For other cases, see Mortgages, Cent. Dig. §§ 1051-1058, 1068, 1069; Dec. Dig. § 354.*] Appeal from Circuit Court, Kent County; Wm. H. Adkins, Judge. Proceeding on the report of the sale of property of Wilmer E. Benton and another by Hope H. Barroll, assignee, under a power of sale in a mortgage. From an order vacating the sale, the assignee appeals. Reversed and remanded. Argued before BOYD, C. J., and BRISCOE, BURKE, THOMAS, PATTISON, URNER, STOCKBRIDGE, and CONSTABLE, JJ. For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes URNER, J. This appeal is from an order vacating a sale of real estate reported to the circuit court for Kent county as having been made under a power of sale in a mortgage. The power was conferred upon the mortgagee, "the Second National Bank of Chestertown, Md., or Hope H. Barroll, its attorney or agent." The mortgage was transferred to the Third National Bank of Chestertown, and, having become overdue, and being in part unpaid, it was assigned for collection to Mr. Barroll, who proceeded to execute the power of sale. In his advertisement and re son, and therefore capable of executing the trust, it is regarded as an incident of the mortgage security, and as such it passes to successive assigns, even in the absence of a stipulation in the mortgage to that effect. Maslin v. Marshall, 94 Md. 484, 51 Atl. 85; Barrick v. Horner, 78 Md. 255, 27 Atl. 1111, 44 Am. St. Rep. 283; Dill v. Satterfield, 34 Md. 53; Berry v. Skinner, 30 Md. 567; Mackubin v. Boarman, 54 Md. 387. If [4, 5] In the case now before us there can be no doubt that the power of sale, being void as to the mortgagee corporation, and not being extended in terms to its assigns, could not be executed by the appellant, if his right to make the sale depended solely port the power contained in the mortgage is upon his interest as the assignee of the mortgage. But it is apparent that regardrecited as the source of his authority to less of the assignment the appellant had full make the sale; but this right is treated as authority, as the person named in the clause being vested in him by virtue of the assign-creating the power, to exercise it in his dement. The advertisement was signed by scribed character as attorney or agent. him as “Assignee of Mortgage," and the re- he had signed the advertisement and report port of sale as "Assignee and Trustee." The of sale in either of those capacities, the vabond which he filed preliminary to the sale refers to the assignment; but it was execut- lidity of the proceeding would have been beed by him in his individual capacity, and its condition is that he shall well and faithfully perform "the trust reposed in him by said mortgage and any decree or order in the premises." The court below set aside the sale on the ground that no valid authority to sell had been vested in the mortgagee or its assigns. This action was taken upon the theory that the power of sale which the mortgage attempted to give the mortgagee corporation was void and not susceptible of being transferred by assignment, and that, as the assigns of the bank were not expressly authorized to execute the power, a sale reported as being made by an assignee of the mortgage could not be sustained. [1] The provision in section 6 of article 66 of the Code that "in all mortgages there may be inserted a clause authorizing the mortgagee or any other person to be named therein to sell the mortgaged premises" has been held, in the light of other sections of the same article, to contemplate a personal trust and obligation, which a corporation is incapable of performing. Frostburg Mutual Building Association v. Lowdermilk, 50 Md. 179; Queen City Perpetual Building Association v. Price, 53 Md. 399. It was accordingly decided in the cases just referred to that a power of sale thus sought to be given to a corporation, or its unnamed attorney or agent, is, by reason of the corporate ability, inoperative and void. yond dispute. The practical inquiry, therefore, is whether the sale made by the appellant in distinct reference to a power expressly and lawfully conferred upon him by the mortgage must be held ineffectual, because the capacity in which he acts is not correctly stated. This question is answered by the decisions in Philbin v. Thurn, 103 Md. 349, 63 Atl. 571, State, Use of Gable, v. Cheston & Carey, 51 Md. 380, and Flickinger v. Hull, 5 Gill, 60. The principle applied in those cases is that, "where a party has various capacities, and executes an authority delegated to him in one of those capacities, the law will attribute the act to the proper authority, although he does not profess to execute it in virtue of that particular power." 51 Md. 380. In the Philbin Case a deed was made by grantors who described themselves as executors of the will of a designated testator. They were also trustees under the will. As executors they had no power to sell and convey the property; but they were fully authorized to do so as trustees. The opinion by Judge McSherry says: "In exercising a power which they undoubtedly possessed as trustees they inadvertently described themselves as executors, and the question is, Does this erroneous designation of the capacity to which the power belonged defeat the act done, when the act dis-done was clearly within the scope of their authority as trustees? Former decisions of this court answer that inquiry in the negative." [2, 3] In Chilton v. Brooks, 71 Md. 445, 18 Atl. 868, the authority to sell was conferred by the mortgage upon the mortgagee corporation, "its successors and assigns," or a designated person as attorney or agent, and it was held that an assignee may execute the power, if the mortgage so provides. Where, however, the mortgagee, who is given the The present case is governed by the same principle, and we must hold that, as the appellant was duly empowered by the mortgage to sell the property in his capacity of attorney or agent, and as the obligation of his bond includes the performance of the Md.) Order reversed, and cause remanded, the costs to be paid out of the proceeds of sale. (121 Md. 163) MT. VERNON-WOODBERRY COTTON 1913.) June 25, MORTGAGES (§ 287*) - CONSTRUCTION SALE MT. VERNON-WOODBERRY COTTON D. CO. v. CONTINENTAL T. CO. 103 sale he reported is not rendered invalid by | executed two mortgages, one to secure an the misdescription of his capacity, but is issue of first mortgage 5 per cent. bonds of properly sustainable as an exercise of the $8,000,000, and the other to secure an issue power with which he was actually invested of first income bonds of $6,000,000. It thus and to which the proceedings expressly re- began business with an aggregate capitalizafer. tion of $23,500,000, of which $1,000 apparently was cash. The balance of the stock, and possibly some of the bonds, were held to acquire certain cotton mills located in Maryland, Connecticut, Alabama, and South Carolina, in most cases by means of securing all or the majority of the capital stock of the companies theretofore operating such mills. In some manner, just how or for what consideration is not clear, substantially all of the stock and income bonds of the face value of $5,776,000, out of the total of $6,000,000, A corporate mortgage, covering certain passed into the hands of the Consolidated mills and machinery therein, provided that the Cotton Duck Company, and this latter corpotrustee, on request of the mortgagor, would re- ration in turn was under the control of the lease any real estate or leasehold no longer nec- International Cotton Mills through the ownessary for use in the mortgagor's business; that no such release should be made unless the ership of a majority of the stock. The propmortgagor had sold or contracted to exchange erty included in the two mortgages of Ausuch property for other property; that the gust 30th was 237 acres occupied by the proceeds of such sales should be "set apart plant of the Laurel Mills, 115 acres occupied and held in trust and applied to the purchase of other property, real or personal, or in bet- by the plant of the Franklinville Mills, and terments of or additions to the mortgaged prem- large amounts of the capital stock of the corises"; that any new property thereby acquired porations owning the other mills controlled should be subject to the lien; that the mort-through such stock ownership by the Mt. gagor might dispose of any machinery, equipment, etc., which might become obsolete or unfit for use, replacing it by new, which should become subject to the lien. The mortgage contained no express covenant by the mortgagor to keep the property in repair. Held, that the proceeds of the sale of a mill could not be used in purchasing machinery to replace other machinery, the use of which would involve its deterioration, if not its consumption, since the bondholders were entitled to have such proceeds so applied as to restore the security which they had before the sale, and hence, such proceeds having been turned over to the trustee to secure its release of such mill from the lien, the trustee could not be compelled to turn them over to the mortgagor to be applied in payment of new machinery. [Ed. Note.-For other cases, see Mortgages, Cent. Dig. §§ 782, 783; Dec. Dig. § 287.*] Appeal from Circuit Court of Baltimore City; Carroll T. Bond, Judge. Suit by the Mt. Vernon-Woodberry Cotton Duck Company against the Continental Trust Company of Baltimore, trustee, and others. From a decree in favor of defendants, plaintiff appeals. Affirmed. Argued before BOYD, C. J., and BRISCOE, BURKE, PATTISON, and STOCKBRIDGE, JJ. C. Baker Clotworthy and J. Southgate Lemmon, both of Baltimore, for appellant. Charles Markell, Charles Morris Howard, and Nicholas P. Bond, all of Baltimore, for appellees. STOCKBRIDGE, J. The Mt. VernonWoodberry Cotton Duck Company was incorporated in the month of June, 1899, with a capital stock of $9,500,000. On the 30th of August in the same year it Vernon-Woodberry Company. Among the provisions contained in the mortgage was the following in article 4, § 9: "The machinery, tools, furniture, equipment, supplies, and other like chattels conveyed, or intended to be conveyed by or pursuant to this indenture, shall be real estate for all the purposes of this indenture, and shall be held and taken to be fixtures and appurtenances of the said mill properties in or about which they are in use or intended for use respectively and part thereof, and are to be used and sold therewith and not separate therefrom, except as herein otherwise provided." Notwithstanding this definite, positive provision in the mortgage, in or about the year 1903 the Greenwoods Mill in Connecticut was completely dismantled, and all the ma chinery taken out; a portion of it was shipped to Tallassee to help supply a mill that was new and had never been fully equipped, and what was done with the balance does not appear from the record. Thereafter the Greenwoods Mill lay idle till December, 1911, when it was sold for $300,000 to a corporation known as the Draycott Mills, the trustees releasing the mortgages in compliance with a provision of the mortgages, which will be alluded to later, and the promissory note given for the purchase money was turned over to the trustees. In the summer before this sale was consummated those engaged in the management of the Mt. Vernon-Woodberry Company's properties, finding that a number of the mills were standing idle, and the others not being operated at a profit, and as the result of a *For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes The circuit court of Baltimore city, in which this case was tried, did not deem the determination of that question as the controlling factor in this case, nor does this court. The rights of the mortgagor company and the duties of the trustees are alike dependent upon the provisions contained in the mortgages. These are to be found in sections 1 and 2 of article 7 of the mortgages, and are as follows: careful examination of the conditions, came | 368, Central Trust Co. v. Arctic Ice Company, cluded under the rental or conditional sale agreement, and all of it was tagged as the property of the Consolidated Cotton Duck Company. After the consummation of the sale of the Greenwoods Mill, the Mt. Vernon-Woodberry Company applied to the trustees under the two mortgages to have turned over to it the $300,000 note of the Draycott Mills, in order that it might in turn pass the same to the Consolidated Company in payment to that extent for the machinery installed in certain mills to take the place of that which had become worn out or obsolete. This request was refused, and thereupon the present bill was filed to require the trustees to comply with this demand. In both the oral argument and the briefs filed the greatest stress was placed upon the question whether the new machinery did or did not upon installation become fixtures, so that the lien of the mortgages attached ahead of any claim of the lessor or conditional vendor, or whether it was covered or could be covered by the after-acquired property clause of the mortgages, without additional, independent conveyances thereof. These are questions upon which there is a wide diversity of decision in the various courts, and any attempt to harmonize the various decisions would be absolutely futile. The doctrine in this state will be found clearly laid down in such cases as Dudley v. No "Section 1. Upon the written request of the "Section 2. The mortgagor company, while . Md.) MT. VERNON-WOODBERRY COTTON D. CO. v. CONTINENTAL.T. CO. 105 the goods or material so disposed of with | to the payment for the replaced machinery other goods or material of the same kind or as a betterment of or addition to the mortquantity, or of equal value, which shall forth-gaged property. With that contention this with become subject to this indenture." court cannot agree. This section expressly provides that the moneys so derived “shall be set apart and held in trust," and applied to the purchase of other property. If language means anything, this can only mean that, inasmuch as the sale of any real or leasehold property covered by the mortgage is a diminution, pro tanto, of the security pledged for the mortgage debt, and that the cestuis que trustent, the bondholders are entitled to have the money so applied as to restore the security which they had before any sale had taken place. This is not accomplished by expending the money for that, the use of which must involve its deterioration, if not its consumption, made all the more apparent by the omission from the mortgage of any covenant to repair or keep in repair. This is a familiar rule in the administration of trust funds, one of almost daily application, and no reason has been suggested why it is any the less applicable where a corporation mortgage for a large amount is involved than when dealing with the ordinary trust, when an attempt is made for some supposed Before considering the effect of these provisions, mention must be made of two other facts. The mortgages are peculiar in that they do not contain any express covenant on the part of the mortgagor to keep its property in repair, and there is therefore no positive obligation upon the Mt. Vernon-Woodberry Company to keep up by proper care and repair any machinery which may be in any of its mills. The second fact has to do with the replacement or substitution of the new machinery for that discarded. When the old machinery was taken out it was apparently disposed of as junk, but even disposed of in this manner must have produced something; but that which was realized from its sale as junk was not applied on the purchase of the new machinery, but remains unaccounted for. It may have been added to the $1,000 cash with which the company started to do business. It also appears that the schedules presented, upon which the demand for the $300,000 was based, were not schedules of the machinery purchased or leased, but, as was testified by Mr. Taylor, were sched-pressing need to encroach on the corpus of ules "gotten up to make a sum adequate to cover" the amount for which the Greenwoods Mill was sold. These facts, while in some sense insignificant, throw a great deal of light upon the methods of the financial management of the company. the estate. No duty on the part of a trustee is better known, than the prevention of waste of the corpus of the trust estate. A court of equity never hesitates to actively interpose, if need be, for this purpose. In this respect the contention of the appellant is that the real value of the security for the bondholders lies, not in any particular piece or pieces of property, but in the maintenance of the mills in operation, and that the productivity of the mills will be increased, therefore the security of the bondholders increased by the sale of an idle mill and the employment of the proceeds in the improvement of the machinery of the remaining mills or mill. The right to do this is claimed under the language of section 1, which authorizes the application of the proceeds of the sale of real or leasehold property to the purchase of other property, real or personal, or in betterments of or additions to the mortgaged premises. All machinery, and cotton mill ma chinery is no exception to the rule, is bound to become worn by use or obsolete in form, and day by day suffers some depreciation from use. When as in the present case there is no obligation imposed on the company to repair or keep in repair the machinery, waste is an inevitable result, and it becomes but a question of time when, by repetitions of the process now sought to be employed, the entire corpus will be consumed. It remains to consider the two sections of article 7 of the mortgage, already quoted These provide specifically for two entirely separate and distinct matters. The first provides the method by which real or leasehold property, belonging to the company and subject to the mortgage, may be sold and released from the effect and operation of the mortgage, by joint action of the mortgagor and trustee, and for the disposition of any moneys realized from any such sale or sales. The second deals with the maintenance of the plant by providing for the disposition by the company, without the intervention of the trustee, of machinery, equipment, or implements, which may have become obsolete or unfit for use, and the replacement of "the same by new machinery, equipment," or implements, which shall then become subject to the mortgage, and also for the sale of the manufactured products of the company. What was done by the company in disposing of the old machinery and replacing with new, therefore, came exactly within the terms of section 2. But it is urged on behalf of the appellant that, inasmuch as it is provided by section 1 that the proceeds derived from the sale of real or leasehold property If section 2 of this article had been omitmay be "applied to the purchase of other ted entirely from the mortgage, it is difficult property, real or personal, or in betterments to see how the trustees could, with proper of or additions to the mortgaged premises," regard to the duties devolved on them, have the use of the $300,000 purchase money of done otherwise than refuse the demand of Greenwoods Mill is authorized to be applied the Mt. Vernon-Woodberry Company; but, |