Mr. Justice Dickey
delivered the opinion of the Court:
The decree in this case is not sustained by matters found in the record.
This is simply a bill by Loawenthal to foreclose a mortgage, and the property upon which such foreclosure is granted by the decree in this case is a section of twelve miles of a railroad, to be so taken out of the whole line of such railroad as to leave at each end of such section parts which without this section would be utterly valueless for the purposes of their construction. This section of railroad is sought to be subjected to the lien of the mortgage as the property of the Chicago, Danville and Vincennes Railway Company. The mortgage was given by that company to secure 500 coupon bonds of 11000 each, forty of which are held by Loewenthal, and such mortgage embraces the entire road among other things. The bill contains no charge of fraud against those claiming liens upon or interest in this property, and seeks no other relief.
It is not claimed by appellee that the mortgagor corporation ever acquired the legal title to any of the land upon which any part of this railroad Avas constructed, or the right of way over any part thereof, or to any part of the money or lands alleged to have been subscribed as donations. It simply claims that that company had an equity in the right of Avay, and in the other donations subscribed, and it appears from the bill and the proofs that this was not an absolute equitable right to the property in question, but a contingent equity, depending upon conditions which were never performed, and that the mortgagor corporation is not now and never has been in a situation to enforce a right to such property or any part thereof.
Complainant now comes into a court of equity seeking relief, and to enforce these equities. This can in no event be done, unless upon the ground that the conditions upon Avhich the equitable rights of the mortgagor depend have been performed by the Chicago and Southern Railroad Company, and in such case complainant could not be allowed to appropriate the performance by the Chicago and Southern Railroad Company without making adequate compensation for the benefit of such performance. He who seeks equity must do equity, and can never have relief in a court of chancery which would do injustice to others, unless it be for the enforcement of legal rights, and in many cases courts of chancery will not lend its aid to a party unless it consents to waive legal rights the enforcement of which would be unjust.
Complainant here has none but equitable rights, and these are such rights and such only as would belong to the mortgagor corporation had no assignment of the same been made or attempted after the lien of the mortgage attached.
If the Chicago, Danville and Vincennes Railway Company were complainant here, asserting an equitable right to an interest in or part of this railroad, and if it were conceded that the grading of the twelve miles of railroad in question was done by that corporation, it is plain that the utmost that it could justly claim would be an equitable interest in the entire railroad of which this twelve' miles constitutes a part. The extent of that interest in such case could only be the value of-the grading actually done by the mortgagor company on that twelve miles. That value could be properly, found only by ascertaining the entire value of the whole road, and then ascertaining what proportion of that entire value consisted of the grading done on these twelve miles in 1873. To this extent, in such case, might such interest in the road or in the fund arising from the sale of the entire road go, and no farther.
Complainant could, in no event appearing in this case, properly demand that the value of this entire road should be destroyed by cutting out twelve miles in the midst thereof and having that sold. Railroads for such purposes must be considered and treated as entireties. In this feature the decree was plainly erroneous. The whole case however, considered carefully, fails to show that complainant is entitled under this mortgage to any lien whatever upon any part of this railroad.
It is the law of this State, well settled by many decisions, that a mortgage is not assignable at law as commercial paper, although given to secure commercial paper; and that where the bona fide assignee of commercial paper so secured seeks relief in equity by the foreclosure of the mortgage, the mortgagor may successfully interpose any defence which would have been available against the original payee or holder of the paper.
In this case, if these forty bonds were ever delivered by the Chicago, Danville and Vincennes Eailway Company as its valid obligations, such delivery was to J. E. Young, the payee named on the bonds upon their face, or to Samuel J. Walker.
It is clearly proven that the Chicago, Danville and Vincennes Eailway Company never received any consideration whatever for these bonds. This would clearly be a full defence if the bonds were still in the hands of Young, or in the hands of Walker, and either Young or Walker were complainant.
Again, the bill seeks and the decree orders not merely the sale of the interest, if any, of the Chicago, Danville and Vincennes Eailway Company in the twelve miles of railroad in question, but the sale of the property in question, and by implication, holds that that twelve miles of railroad is in fact the property of that corporation. The proof shows that the Chicago and Southern Eailroad Company has the legal title to most of the property, and is equitably entitled to the entire legal title.
The only title or right which the Chicago, Danville and Vincennes Eailway Company ever had in any part of the line, consisted in certain contracts signed by the supposed owners of part of the land through which the road is built, promising to grant by deed to that company the right of way, fifty feet on each side of the center line, for the distance of two miles through sections eleven and thirty-five, and fifty feet on the west side of the centre line for half a mile, through the north half of section twenty-three, and for another half mile on the east side of the line, through the south half of the same section, all in the town of Lake, and in all amounting to the right of way for two miles and one-half.
These promises to so convey this small amount of right of way were however in writing, and to be performed only on certain express conditions to be performed by that corporation. These conditions that corporation never agreed to perform, and never did perform, and does not now offer to perform.
These contracts were conditioned that the Chicago, Dan-ville and Vincennes Railway Company, among other things, should, 1st, construct a railroad from the north line of Lake township to Thornton, to be run in.
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Mr. Justice Dickey
delivered the opinion of the Court:
The decree in this case is not sustained by matters found in the record.
This is simply a bill by Loawenthal to foreclose a mortgage, and the property upon which such foreclosure is granted by the decree in this case is a section of twelve miles of a railroad, to be so taken out of the whole line of such railroad as to leave at each end of such section parts which without this section would be utterly valueless for the purposes of their construction. This section of railroad is sought to be subjected to the lien of the mortgage as the property of the Chicago, Danville and Vincennes Railway Company. The mortgage was given by that company to secure 500 coupon bonds of 11000 each, forty of which are held by Loewenthal, and such mortgage embraces the entire road among other things. The bill contains no charge of fraud against those claiming liens upon or interest in this property, and seeks no other relief.
It is not claimed by appellee that the mortgagor corporation ever acquired the legal title to any of the land upon which any part of this railroad Avas constructed, or the right of way over any part thereof, or to any part of the money or lands alleged to have been subscribed as donations. It simply claims that that company had an equity in the right of Avay, and in the other donations subscribed, and it appears from the bill and the proofs that this was not an absolute equitable right to the property in question, but a contingent equity, depending upon conditions which were never performed, and that the mortgagor corporation is not now and never has been in a situation to enforce a right to such property or any part thereof.
Complainant now comes into a court of equity seeking relief, and to enforce these equities. This can in no event be done, unless upon the ground that the conditions upon Avhich the equitable rights of the mortgagor depend have been performed by the Chicago and Southern Railroad Company, and in such case complainant could not be allowed to appropriate the performance by the Chicago and Southern Railroad Company without making adequate compensation for the benefit of such performance. He who seeks equity must do equity, and can never have relief in a court of chancery which would do injustice to others, unless it be for the enforcement of legal rights, and in many cases courts of chancery will not lend its aid to a party unless it consents to waive legal rights the enforcement of which would be unjust.
Complainant here has none but equitable rights, and these are such rights and such only as would belong to the mortgagor corporation had no assignment of the same been made or attempted after the lien of the mortgage attached.
If the Chicago, Danville and Vincennes Railway Company were complainant here, asserting an equitable right to an interest in or part of this railroad, and if it were conceded that the grading of the twelve miles of railroad in question was done by that corporation, it is plain that the utmost that it could justly claim would be an equitable interest in the entire railroad of which this twelve' miles constitutes a part. The extent of that interest in such case could only be the value of-the grading actually done by the mortgagor company on that twelve miles. That value could be properly, found only by ascertaining the entire value of the whole road, and then ascertaining what proportion of that entire value consisted of the grading done on these twelve miles in 1873. To this extent, in such case, might such interest in the road or in the fund arising from the sale of the entire road go, and no farther.
Complainant could, in no event appearing in this case, properly demand that the value of this entire road should be destroyed by cutting out twelve miles in the midst thereof and having that sold. Railroads for such purposes must be considered and treated as entireties. In this feature the decree was plainly erroneous. The whole case however, considered carefully, fails to show that complainant is entitled under this mortgage to any lien whatever upon any part of this railroad.
It is the law of this State, well settled by many decisions, that a mortgage is not assignable at law as commercial paper, although given to secure commercial paper; and that where the bona fide assignee of commercial paper so secured seeks relief in equity by the foreclosure of the mortgage, the mortgagor may successfully interpose any defence which would have been available against the original payee or holder of the paper.
In this case, if these forty bonds were ever delivered by the Chicago, Danville and Vincennes Eailway Company as its valid obligations, such delivery was to J. E. Young, the payee named on the bonds upon their face, or to Samuel J. Walker.
It is clearly proven that the Chicago, Danville and Vincennes Eailway Company never received any consideration whatever for these bonds. This would clearly be a full defence if the bonds were still in the hands of Young, or in the hands of Walker, and either Young or Walker were complainant.
Again, the bill seeks and the decree orders not merely the sale of the interest, if any, of the Chicago, Danville and Vincennes Eailway Company in the twelve miles of railroad in question, but the sale of the property in question, and by implication, holds that that twelve miles of railroad is in fact the property of that corporation. The proof shows that the Chicago and Southern Eailroad Company has the legal title to most of the property, and is equitably entitled to the entire legal title.
The only title or right which the Chicago, Danville and Vincennes Eailway Company ever had in any part of the line, consisted in certain contracts signed by the supposed owners of part of the land through which the road is built, promising to grant by deed to that company the right of way, fifty feet on each side of the center line, for the distance of two miles through sections eleven and thirty-five, and fifty feet on the west side of the centre line for half a mile, through the north half of section twenty-three, and for another half mile on the east side of the line, through the south half of the same section, all in the town of Lake, and in all amounting to the right of way for two miles and one-half.
These promises to so convey this small amount of right of way were however in writing, and to be performed only on certain express conditions to be performed by that corporation. These conditions that corporation never agreed to perform, and never did perform, and does not now offer to perform.
These contracts were conditioned that the Chicago, Dan-ville and Vincennes Railway Company, among other things, should, 1st, construct a railroad from the north line of Lake township to Thornton, to be run in. connection with the Chicago, Danville and Vincennes Railroad Company into Chicago, and should have finished, by the 1st of December, 1873, that portion of the line from the south line of the town of Worth to the north line of the town of Lake ready for the running of cars thereon; and 2d, should locate stations at the crossing of every section line; and 3d, should run four trains daily each way with passenger accommodations; and 4th, should issue to the grantor of the right of way and to all resident purchasers and tenants (of such grantor) of land lying upon the line, for free transportation between the station nearest to the land granted and Chicago, for the term of three years from and after the completion of the road; and 5th, should transport all passengers at as low rates as any other railroad running out of Chicago.
And such agreements, on their face, say that the grantor of the right of way, in consideration of these agreements, agreed, among other things, to convey to the corporation the right of way in question upon the final completion of the railroad through the land over which the right of way was so to be granted.
JSTo one of these conditions is shown to have been performed by the Chicago, Danville and Vincennes Railway Company, nor is it shown that the directors of this company ever accepted or agreed to the terms of these agreements. By the proof there was a total failure of consideration. The railway company never constructed any part of this railroad; nor did that corporation furnish any part of the materials or labor for its construction or for any part of its construction ; it never located a station on the line; it never ran a train ; and it never issued any passes for free transportation to any of the parties so contracting to grant the right of way, or to any of their grantees or lessees. In fact, this corporation never owned a car or had one in its possession; never bought or owned a railroad tie, a single rail of railroad iron, or had title in law or in equity to any property whatever, real or personal, or had it in its power to own any property save the contingent interest in the right of way above spoken of and a like interest in certain promises to donate money and land by certain parties, made on the same conditions stated above as to right of way. This corporation never was in a condition to demand, in law or equity, from the original promisors either the right of way or any of the donations promised of money and land. The holders of the bonds of this corporation, as the beneficiary mortgagees of all the interests of the corporation, can have no higher right than the corporation itself. Nor can the right against the grantees or assignees of these subscribers of a right of way, or donations, be greater or larger than the right against the donors themselves. It follows that the Chicago, Danville and Vincennes Bailway Company have no equitable or legal title or interest in this piece of railroad. There is, hence, no interest or title in this piece of road which is subject to be sold by virtue of this mortgage.
The complainant alleges in his bill that the Chicago, Dan-ville and Vincennes Bailway Company, about the month of August, 1873, and in the fall of that year, graded the road bed of the twelve miles (subjected to sale by the decree), and during that year surveyed the line of the road from the city of Chicago to its southern terminus at Thornton. But this allegation is not supported at all by the proof.
The uncontradicted testimony in the record shows clearly that this grading was not done under the contract of Young (made with the Chicago, Danville and Vincennes Railway Company), but was done by Brown, in the employment of the Chicago, Danville and Vincennes Railroad Company, and that Brown’s work, done in 1873, was paid for by the railroad company and not by the railway company; also, that the surveying, engineering, and other incidental services relating to that grading, were done by the engineers and other employees of the railroad company and was paid for by that company. In fact, the fair inference from the proofs is, that there was never one cent paid to the Chicago, Danville and Vincennes Railway Company on the subscriptions to its stock or from any other source; that it never appointed any officers, except its directors, president, treasurer and secretary; that it never appointed or employed any general manager, or any engineer or surveyor, or laborer or agent for any purpose whatever. The obtaining of the subscriptions for donations and other aid, in the name of that company, seems to have been done by mere volunteers connected with and interested in the Chicago, Danville and Vincennes Railroad Company, without any procurement by the Chicago, Danville and Vincennes Railway Company. The fair inference from the proofs also is, that this railway company never did any acts whatever except the making of the contract with Young (which was never performed) and the ordering and causing the making of the trust deed to Fosdick and Fiske, and the preparation of the bonds described in that deed, ready for issue when it should so be ordered by that company, and that no authority or order was ever given by the directors of that company to any one to issue or deliver any of its bonds so prepared.
It would seem to be monstrously unjust to seize and take this road from the creditors of one corporation who furnished the money by which the entire construction of the road was paid for, and that without any suspicion of any adverse equities, and turn it over to the supposed creditors of another corporation in a case where neither these supposed creditors, nor the corporation whose mortgage they hold ever paid one dollar which went into the construction of the road. It ought not to be done unless there be some iron rule of law or principle of - equity which demands such result. But there is none such. As already shown, the mortgagor of the mortgage sought to be foreclosed has not and never had a consummated right or equity to the property in question; and if it were the full owner of the property, the complainant could not have' a foreclosure of this mortgage, even against the mortgagor, for want of any consideration whatever by the payee or first holder of the bonds in question.
The decree of the circuit court must be reversed, and the bill is dismissed.
Decree reversed.