the mortgage to Edwards "is a second lien upon that portion of said railroad and its appurtenances, which extends from the southern terminus in the city of Selma northwardly to the one hundred mile post; and that, if the proceeds arising from the sale of the said 145 miles of said railroad and its appurtenances, and the sale of the rolling-stock and other personal property, upon which the said first mortgage is held to be a first lien, shall be more than sufficient to pay the bonds secured by the first mortgage, the excess shall be applied to the satisfaction of the debts secured by the said second mortgage." 3. That the mortgage to Fellows "is a first and prior lien upon the unsold lands of the Selma, Rome, and Dalton R. R. Co., known as the public lands aforesaid." 4. That the mortgage to Johnston and Stewart, as trustees, "is a lien upon all the property, real and personal, of every kind and description whatsoever, belonging to the Selma, Rome, and Dalton R. R. Co.; that it is a first and prior lien upon the portion of said railroad and its appurtenances, beginning at a point in Jacksonville, Calhoun County, Alabama, and extending northwardly and continuously to and including the northern terminus of said road in the town of Dalton, Georgia, and upon the branch railway known as the Ashby Branch; that it is a lien upon said public lands, subject only to the lien of the mortgage to Fellows, trustee; that it is a lien upon the said 145 miles of said railroad, subject to the lien of said first mortgage of the Alabama and Tennessee Rivers R. R. Co., and subject also to the lien of said second mortgage of said company; that it is a lien, also, upon the rolling-stock and other personal property owned by the Alabama and Tennessee Rivers R. R. Co. on the 8th August, 1866, subject only to the lien of said first mortgage of said company, and subject also to the equity between said first and second mortgages as hereinabove decreed; and that said mortgage to complainants creates a first and prior lien upon all other property, real and personal, of the Selma, Rome and Dalton R. R. Co., not herein before declared to be subject to the prior liens of other mortgages.'

The decree then proceeds thus: "And it appearing from a report of the register, read and filed ou the 14th February, 1877, modified and approved by order of the court made and entered on the 4th March, 1877, that it was necessary for the conservation of the railroad and its appurtenances in Alabama that the receivers, heretofore appointed in this cause, should purchase what is known as the Breed Rolling Stock; and the 'Equipment Associate Rolling Stock; and that in said purchase it was necessary, and the receivers did issue certificates of indebtedness of the value, at ninety cents on the dollar, of $303,080; and it appearing also from said report and the order of the court that the said receivers, for the purpose of making necessary repairs and improvements upon the railroad in Alabama, and

to pay what was due to connecting roads, issued like certificates of indebtedness, to the amount, at ninety cents on the dollar, of $67,950, and it having been provided in said certificates of indebtedness that the same should be a lien upon the rolling-stock purchased by said receivers; it is now, therefore, hereby adjudged, ordered, and decreed, that the said certificates above named, to the amount of principal and interest, to be ascertained as hereinafter provided, at which they were used in payment for said rolling-stock, or were sold for cash, with interest from the time they were issued upon such sum, are a first or prior lien or charge upon said 'Breed Rolling Stock,' and 'Equipment Associate Rolling Stock.'"

A

similar decree was rendered in reference to fifteen locomotive engines, called the "Welsh Locomotives," which were ordered to be sold separate from the other rolling-stock. An account was ordered to be stated by the register, of all the debts and claims against the Alabama and Tennessee Rivers R. R. Co., and also of the Selma, Rome, and Dalton R. R. Co.; and a sale was ordered to be made of the railroad, with all its property, etc., to satisfy the claims according to the liens declared by the decree.

The appeal is sued out by L. H. Meyer, who here makes fiftynine assignments of error, founded on the final decree, the various interlocutory decrees since the remandment of the cause, and all the matters which were assigned as error on the former appeal. Mrs. Reynolds also joins in all the assignments of error, except the 48th, which was founded on that part of the final decree which allowed the prior lien of the mortgage to Fellows on the public lands.

Pettus, Dawson & Tillman, for L. H. Meyer, appellant. 1. As to the legal effect of the contract for the consolidation of the three railroad companies, whether considered by itself, or in connection with the several statutes authorizing and ratifying it, the appellant relies on the former opinion of this court, and the authorities cited for the appellant on the former appeal. Railroad Co. v. Harris, 12 Wallace, 65. The cases of Clearwater v. Meredith, 1 Wallace, 40, and McMahon v. Morrison, 16 Indiana, 172, cited for appellees, have been pronounced mere dicta on this point, by the Supreme Court of the United States, in the recent case of Central Railroad and Banking Company v. Georgia, 8 Otto, 359. On the former appeal, the contract between the companies, and the several statutes relating thereto, were in evidence, and were fully considered. by the court; and it is submitted that there is nothing in either the pleadings or proof under the amended bill which can change or affect the decision of the legal question as before presented. Under the amended bill, and the evidence adduced in support of it, the main facts are not varied, but are only elaborated, and stated more in detail, leaving the general equities unchanged.

2. But, whether the legal effect of the consolidation of the sev

eral companies be, as the chancellor held, a dissolution of all the old companies, and the formation of a new company, or, as the appellant insists, merely a continuance of the old Alabama company under a new name, and with enlarged powers-whether the old company is to be regarded as dead, or as still living-the present company is fully bound by all the contracts, covenants and obligations of the old Alabama company. An express stipulation in the contract was, "that all the debts, contracts, obligations and liabilities of each one of the parties to this contract, are hereby assumed by the consolidated company formed under this agreement." By the terms of the contract, then, the new company acquired all the property and rights of the old company, and, at the same time, assumed and agreed to pay all its debts. The principle is well settled, that when property is transferred by one person to another, and the latter promises, in consideration of the transfer, to pay a debt or debts which the transferrer owes to third persons, a trust, or equitable lien on the property, is thereby created in favor of such creditors, for the payment of their debts; and this lien will prevail over all other liens or rights subsequently acquired, except as against a bona-fide purchaser for value without notice. 2 Story's Equity, § 1257-59; 2 Spence's Equity, 287; Perry on Trusts, $241, 594; Hallett v. Hallett, 2 Paige, 15; Harris v. Fly, 7 Paige, 421; Spofford v. Manning, 6 Paige, 383; Dodge v. Manning, 11 Paige, 334; Gregory v. Williams, 3 Mer. 382; Sheppard v. Sheppard, 7 John. Ch. 57; Clopton v. Sledge, 6 Ala. 589; Hobson v. Andrews, 23 Ala. 219. Here, there is no pretence that the complainants are creditors or purchasers without notice; for the contract between the companies, and the existence, nature and amount of the debts of the old Alabama company, are recited in the complainant's mortgage. Branch & Sons v. M. & W. P. R. R. Co., 59 Ala. 139.

3. Again, a corporation holds its property, first, in trust for its creditors, and then for its stockholders; and when it is dissolved, eo instanti, all of its creditors have a lien on all of its property, real, personal, or mixed; which lien is superior to all liens or equities subsequently acquired by any other person, except a bona-fide creditor or purchaser for value without notice. Mumma v. Potomac Company, 8 Peters, 281; Dummer v. Wood, 3 Mason, 308; Perry on Trusts, $ 241-2; 2 Story's Equity, $ 1252; Angell & Ames on Corporations, $$ 599, 600, notes; Huckabee v. Smith, 53 Ala. 191; Bank of St. Mary's v. St. John, 25 Ala. 566. If, then the old Alabama company was dissolved by its consolidation with the Georgia companies, its creditors still have a lien on all its property, superior to all other liens or equities subsequently acquired, except by a bona-fide creditor or purchaser for value without notice. The bill in this case, it must be remembered, is a general creditors'

bill, and seeks to marshal all the assets of an insolvent corporation, and to settle liens and priorities.

4. The court is asked to reconsider its former ruling, that the public lands held by the railroad company under the grant from the United States and the State, did not pass by the mortgage to Lamar and Hallett as trustees. When that mortgage was executed, the railroad company had authority, by the 6th section of its amended charter, "to pledge, in such form as the board of directors may think proper, by resolution, mortgage, or deed of trust, or otherwise, all the means, property and effects of the said company; and any pledge so made by said board of directors," it was declared, "whether by resolution, or mortgage, or deed of trust, or other form of contract, shall be valid and effectual to all intents and purposes." Session Acts 1851-2, p. 344. This is a very broad power; and the mortgage to Lamar and Hallett, which was executed under this power, employs words equally broad and comprehensive. It purports to grant and convey "the railroad constructed, and to be constructed," "with all appurtenances thereof, including all lands, houses, structures, fixtures, and machinery, piers and wharves, and franchises, privileges and rights, and all other property, real and personal, now owned, and which may hereafter be owned by" the grantor; "together with all the tolls, incomes, issues and profits, which may accrue from the said railroad, or from any other source whatsoever," etc. This is the "form of contract" which the directors thought proper to adopt for the security of the bonds, under the powers conferred upon them; and the language cannot be construed otherwise than as showing an intention to include all lands afterwards acquired by the company, without regard to the manner of its acquisition, or the source from which it was acquired. This being the intention of the parties, and the language used being broad enough to embrace the public lands afterwards acquired, those lands must pass by the mortgage, unless some principle of law prevents the deed from operating according to the intention of the parties.

5. The doctrine of ultra vires is invoked, to defeat this operation of the mortgage. To say that an act of a corporation is ultra vires, is simply to say that it is contrary to the policy of the State. But the grant of lands afterwards acquired, not appurtenant to the road, was not ultra vires when this mortgage was executed; and if it was, the State has since validated the grant in that particular. The 4th section of the original charter of the company declares, that the company "shall be capable in law of purchasing, holding, leasing, selling and conveying property, real, personal and mixed, so far as shall be necessary for the purposes of this incorporation." Session Acts 1847-8, p. 266. This power is entirely distinct from that given by the 10th section, which relates to the right of way and the construction of the road; and while the 10th 8 A. & E. R. Cas.-39

section was afterwards amended, so as to remove doubts which had arisen as to its operation and construction, the 4th section was left in full force, without limitation or qualification. This section, fairly construed, authorized the company to accept a grant of lands from the State, or from the United States, as well as to acquire them by purchase, or in any other way. That these lands passed by the conveyance to Lamar and Hallett, see Whitehead v. Vineyard, 50 Mo. 30; Wilson v. Boyce, 2 Otto, 325.

6. The grant of these lands to the company by the State carried with it, by necessary implication, the power to accept the grant; and the State has, by statutes since enacted, validated this mortgage, and declared that it shall have operation and effect according to its terms. Session Acts 1859-60, p. 223; Ib. 1865-6, p. 340. That these laws are a legitimate exercise of legislative power, and not obnoxious to any constitutional provision, see Cooley's Const. Lim. 369-78; 2 Redfield on Railways, 516, 692; Hall v. Railway Co., cited in 2 Redf. Railways, 517; Shaw v. Norfolk R. R. Co., 5 Gray, Mass. 179; Chapin v. Vermont R. R. Co., 8 Gray, 577; Miller v. R. and W. R. R. Co., 36 Vermont, 452; Bridgeport v. Housatonic R. R. Co., 15 Conn. 495; Galveston Railway v. Cowdrey, 11 Wallace, 459; 21 Howard, 425.

7. The mortgage to Lamar and Hallett contains ample covenants for further assurances, and full effect must be accorded to them. A mortgage of property to be afterwards acquired, whether it be real or personal, will be treated in equity as a binding contract, attaching to the property when acquired. This is on the principle, which is one of the fundamental maxims of a court of equity, that the court looks to the substance rather than the form of things, and considers that as actually done which it would decree to be done, or which was agreed to be done. Fonb. Eq. $9, mar. p. 419; 4 Bouvier's Inst. § 3729; 1 Story's Equity. 57; R. R. Co. v. Woelper, 64 Penn. St. R. 366; Craig v. Leslie, 3 Wheaton, 573. This principle would be applied, if there had been no covenant for further assurance, and if no further assurance had been given. But the contract with Breed, which expressly makes his lien "subject and subordinate to existing liens," which are clearly indicated to be the "mortgage bonds of the party of the first part, ""must be deemed a sufficient act of new or further as surance. Seymour v. C. and N. F. R. R. Co., 25 Barbour, 307-8. Under a covenant for further assurance, a subsequent title enures to the grantee, as well as under a covenant of warranty of title. Phelps v. Kellogg, 15 Illinois, 137; Fairbanks v. Williamson, 1 Greenl. 96; Bennett v. Waller, 23 Illinois, 97; Herman on Estoppel, SS 260, 278, 269.

8. The mortgage to Lamar and Hallett covers all of the railroad in this State, with its branches, and all the real property appurte nant to the railroad, all the franchises, all the lands acquired under