Page:Federal Reporter, 1st Series, Volume 8.djvu/147

CLAFLIN V. SOUTII CAROLINA R. CO. 133 �liouse Company, of New York, for which valuable collaterals were pledged; and, besides, there was danger that if the debt was not paid the Company would be put into bankruptcy. It was believed that such a resuit would be disastrous to the interests of the South Caro- lina Company. For this reason the South Carolina Company seems to have treated the debt of the Greenville & Columbia Company as its own, and given its own notes to the warehouse company, secured by second mortgage bonds as collateral. This, I think, is fairly within the scope of the mortgage. While, nominally, the debts of the Iwo companies were distinct, the South Carolina Company was as deeply interested in saving the Greenville Company froin bankruptcy as that company could be itself. As the new bonds were made to take care of the debt incurred in buying the stock of this company, I cannot but think their lien should be sustained. In addition to this, it appears that these bonds were first put out under this pledge Feb- ruary 19, 1873, — only a few months after the second mortgage. From that day until the commencement of this suit no complaint bas been heard from any one. During all this time one of the mort- gage trustees was a director of the company. Many of the bonds have been sold under the pledge, and it is now too late to complain of their use or dispute their lien. In all matters affeetiug their secu- rity the bondholders are charged with the knowledge of their trustees. For the purpose of protecting their interests under the mortgage, the trustees are their agents. �Wiihout pursuing this branch of the case further, it is sufficient to say that I am of the opinion tliait the holders of all bonds now out on pledge by the company are entitled to their proportionate share of the security of the mortgage, to the extent that may be neeessary to \)a:j the debts for -which they are respectively held, and that all bonds sold under pledges carry tfieirlien with them to the purchaser. �The only question in this part of the case which remains to be con- sidired is as to the rights of the outstanding unseenred bondholders under the second mortgage. It is insisted in their behalf that the mortgage — �"Was a contract between the corporation and its creditors, and constituted a complete and executed trust for the creditors of the company then holding its opeii and unsecured bonds and its floating debt, for the retirement and extin- guishment of wliieh the bonds secured by said deed were to be exclusively applied." �From what I have already said it mnst be apparent that I can- iiot agree to this position. Whatever else the mortgage may be, it ��� �