Morton, J.
The question raised by the demurrer is whether the plaintiff is entitled to the relief which it seeks. It bases its right to relief on the fact that it is the holder, in good faith and for value, of certain construction debenture bonds which are past due, and it seeks on its own behalf and that of other like bondholders directly to reach and apply the $200,000 deposited with the State Treasurer, which seems to be the only tangible asset belonging to the canal company, either by way of subrogation to Lockwood, or by way of an equitable lien or mortgage on the property and assets of the canal company. Incidentally, the appointment of a receiver is also sought for. •
The first question is, whether the fact that the plaintiff is the holder of the bonds constitutes it a creditor of the canal company. The bonds are the promises of Lockwood, and are not indorsed or guaranteed by the company. They are signed by it “ as authorizing the aforesaid pledge of collateral,” referring to certain collateral described in the bonds; but manifestly this form of signing does not bind the canal company to pay the bonds. The plaintiff does not .indeed contend that the tenor of the bonds is such as to render the canal company liable as a [564]*564promisor or guarantor, but it insists that St. 1891, c. 397, § 36,
The only allegation in the bill of .an acceptance of the act is as follows: 11 And the plaintiff further, on information and belief, says that said corporation, as thus controlled by said Lockwood in the exercise of his will and power, accepted all the provisions of said act.” Meaning by “ said act,” as previously appears, St. 1891, c. 397. No action on the part of the officers or directors of the company is alleged, and none on that of the corporation except as controlled by Lockwood through his subscription to the capital stock and his contracts with it; in other words, as controlled by a subscriber to the entire capital stock, and by a contractor.
We doubt the sufficiency of such an averment to establish an acceptance of the act by the corporation, if that was necessary. But assuming either that an acceptance of the act was necessary, and that it sufficiently appears that it was accepted, or that the act operated to create a liability on the part of the canal company ex proprio vigore, and also assuming that an action may be maintained directly against the canal company by a bondholder on the promise thus implied or the obligation thus created, and that the plaintiff comes within the terms of § 36, we then come to the question whether the plaintiff is entitled to the relief which it seeks.
We see no ground on which the right of subrogation can be [565]*565maintained. There is no averment in the bill that the proceeds of the debenture bonds generally, or of the bonds in suit, went to pay land damages, or other claims whose payment was secured by the funds deposited with the State Treasurer.
The averment is, in substance, that a large amount of the construction debentures were disposed of, and either in themselves or by their proceeds applied for the purposes of the contracts of Lockwood, and in satisfaction of or on account of such labor, land, and other property and materials as a part of and for the use of the canal as would constitute liens on said $200,000. This amounts to little if anything more than would have been the case if the allegation had been that Lockwood procured his promissory notes to be discounted, and applied a large amount of' the proceeds to the purchase of property and the satisfaction of demands which would have constituted liens on the fund. Clearly there would have • been in such a case no right of subrogation on the part of the lenders, either as a class or in any particular case or cases. The fact that the transaction was a little more complicated than the one which we have mentioned, and that the bonds were secured by collateral consisting of scrip certificates issued by the company, and of Lockwood’s contracts and of his subscription for the stock, and that the company had assented to the transfer of these as security, does not, it seems to us, give the plaintiff a right of subrogation, even if by any stretch of construction we could interpret the bill as alleging that the proceeds of the bonds in suit had been applied generally or in any particular case to the payment of land damages, or in satisfaction of claims which would be entitled to a lien on the $200,000. Moreover, Lockwood’s contracts with the canal company bound him to complete the canal, and the wharves, approaches, etc., and to pay all damages against it, and to reimburse it for any payments which it had made or might be required to make, and, in short, to satisfy and extinguish the very claims to which the plaintiff asserts a right of subrogation through him, and which, for aught that appears, were paid and extinguished by him.
The plaintiff relies most strongly on its contention that the debenture bonds constitute an equitable lien or mortgage on the property and assets of the canal company. It argues that it is [566]*566evident from the trust indenture or mortgage, and from the bonds themselves, that it was the intention of the canal company and of Lockwood that the property and assets of the company should be security for the payment of such of the bonds as should be issued in accordance with the terms of the mortgage. The first and most obvious reply to this, though perhaps not a conclusive one, is that it would have been easy for the canal company to have mortgaged or created a lien upon its property and assets in favor of such bondholders if it had desired to do so. If it is objected that under the statute the canal company could not do this, then the plaintiff is asking us to compel the canal company to do indirectly what it could not do directly. But the conclusive answer is that the scheme adopted by the parties was a different one, and we cannot substitute another for that which they selected. There was no promise or agreement on the part of the canal company or of Lockwood that the debenture bondholders should have security on the property and assets of the company. Lockwood contracted with the company for the entire undertaking, and subscribed for the entire capital stock. Stock was to be issued to him in payment of what might become due him from the company, and bonds were also to be issued to him in further payment, so far as lawfully could be done by the company. But the statute provided that bonds could not be issued by the canal company except as and to the extent that capital stock was paid in. St. 1883, c.. 259, § 20. To avoid the difficulty thus arising, the company issued to Lockwood scrip certificates convertible into first mortgage bonds, and Lockwood, with the assent of the company, assigned to the Loan and Trust Company the scrip certificates, his contracts with the canal company, and his subscription to its capital stock as security for such of the debenture construction bonds deposited by him with the Loan and Trust Company as should be issued by it in accordance with the trust indenture or mortgage.
This was the method adopted to secure the holders of construction debenture bonds.
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Morton, J.
The question raised by the demurrer is whether the plaintiff is entitled to the relief which it seeks. It bases its right to relief on the fact that it is the holder, in good faith and for value, of certain construction debenture bonds which are past due, and it seeks on its own behalf and that of other like bondholders directly to reach and apply the $200,000 deposited with the State Treasurer, which seems to be the only tangible asset belonging to the canal company, either by way of subrogation to Lockwood, or by way of an equitable lien or mortgage on the property and assets of the canal company. Incidentally, the appointment of a receiver is also sought for. •
The first question is, whether the fact that the plaintiff is the holder of the bonds constitutes it a creditor of the canal company. The bonds are the promises of Lockwood, and are not indorsed or guaranteed by the company. They are signed by it “ as authorizing the aforesaid pledge of collateral,” referring to certain collateral described in the bonds; but manifestly this form of signing does not bind the canal company to pay the bonds. The plaintiff does not .indeed contend that the tenor of the bonds is such as to render the canal company liable as a [564]*564promisor or guarantor, but it insists that St. 1891, c. 397, § 36,
The only allegation in the bill of .an acceptance of the act is as follows: 11 And the plaintiff further, on information and belief, says that said corporation, as thus controlled by said Lockwood in the exercise of his will and power, accepted all the provisions of said act.” Meaning by “ said act,” as previously appears, St. 1891, c. 397. No action on the part of the officers or directors of the company is alleged, and none on that of the corporation except as controlled by Lockwood through his subscription to the capital stock and his contracts with it; in other words, as controlled by a subscriber to the entire capital stock, and by a contractor.
We doubt the sufficiency of such an averment to establish an acceptance of the act by the corporation, if that was necessary. But assuming either that an acceptance of the act was necessary, and that it sufficiently appears that it was accepted, or that the act operated to create a liability on the part of the canal company ex proprio vigore, and also assuming that an action may be maintained directly against the canal company by a bondholder on the promise thus implied or the obligation thus created, and that the plaintiff comes within the terms of § 36, we then come to the question whether the plaintiff is entitled to the relief which it seeks.
We see no ground on which the right of subrogation can be [565]*565maintained. There is no averment in the bill that the proceeds of the debenture bonds generally, or of the bonds in suit, went to pay land damages, or other claims whose payment was secured by the funds deposited with the State Treasurer.
The averment is, in substance, that a large amount of the construction debentures were disposed of, and either in themselves or by their proceeds applied for the purposes of the contracts of Lockwood, and in satisfaction of or on account of such labor, land, and other property and materials as a part of and for the use of the canal as would constitute liens on said $200,000. This amounts to little if anything more than would have been the case if the allegation had been that Lockwood procured his promissory notes to be discounted, and applied a large amount of' the proceeds to the purchase of property and the satisfaction of demands which would have constituted liens on the fund. Clearly there would have • been in such a case no right of subrogation on the part of the lenders, either as a class or in any particular case or cases. The fact that the transaction was a little more complicated than the one which we have mentioned, and that the bonds were secured by collateral consisting of scrip certificates issued by the company, and of Lockwood’s contracts and of his subscription for the stock, and that the company had assented to the transfer of these as security, does not, it seems to us, give the plaintiff a right of subrogation, even if by any stretch of construction we could interpret the bill as alleging that the proceeds of the bonds in suit had been applied generally or in any particular case to the payment of land damages, or in satisfaction of claims which would be entitled to a lien on the $200,000. Moreover, Lockwood’s contracts with the canal company bound him to complete the canal, and the wharves, approaches, etc., and to pay all damages against it, and to reimburse it for any payments which it had made or might be required to make, and, in short, to satisfy and extinguish the very claims to which the plaintiff asserts a right of subrogation through him, and which, for aught that appears, were paid and extinguished by him.
The plaintiff relies most strongly on its contention that the debenture bonds constitute an equitable lien or mortgage on the property and assets of the canal company. It argues that it is [566]*566evident from the trust indenture or mortgage, and from the bonds themselves, that it was the intention of the canal company and of Lockwood that the property and assets of the company should be security for the payment of such of the bonds as should be issued in accordance with the terms of the mortgage. The first and most obvious reply to this, though perhaps not a conclusive one, is that it would have been easy for the canal company to have mortgaged or created a lien upon its property and assets in favor of such bondholders if it had desired to do so. If it is objected that under the statute the canal company could not do this, then the plaintiff is asking us to compel the canal company to do indirectly what it could not do directly. But the conclusive answer is that the scheme adopted by the parties was a different one, and we cannot substitute another for that which they selected. There was no promise or agreement on the part of the canal company or of Lockwood that the debenture bondholders should have security on the property and assets of the company. Lockwood contracted with the company for the entire undertaking, and subscribed for the entire capital stock. Stock was to be issued to him in payment of what might become due him from the company, and bonds were also to be issued to him in further payment, so far as lawfully could be done by the company. But the statute provided that bonds could not be issued by the canal company except as and to the extent that capital stock was paid in. St. 1883, c.. 259, § 20. To avoid the difficulty thus arising, the company issued to Lockwood scrip certificates convertible into first mortgage bonds, and Lockwood, with the assent of the company, assigned to the Loan and Trust Company the scrip certificates, his contracts with the canal company, and his subscription to its capital stock as security for such of the debenture construction bonds deposited by him with the Loan and Trust Company as should be issued by it in accordance with the trust indenture or mortgage.
This was the method adopted to secure the holders of construction debenture bonds. By it the Loan and Trust Company, with the assent of the canal company, became the assignee of Lockwood’s contracts with it, and of his stock subscription, with all the rights to and control over the franchises, property, and [567]*567securities of the canal company which they gave; and we think that it is plain that it was intended to secure the debenture holders in the manner thus provided, and in no other. The plaintiff contends that the intention and agreement on the part of the canal company to subject its property and assets to a lien or mortgage in favor of the debenture holders are to be found first in the fact that the scrip certificates by which they are in part secured are convertible into first mortgage bonds, and secondly, because the bonds refer to the contracts and stock subscription, not as contracts and a stock subscription merely, but as “ controlling all said Canal Company’s franchises and securities.” But we think that the phrase last quoted is a description by Lockwood of the security which he assigned to the Loan and Trust Company, rather than an agreement on the part of the canal company that its property and assets were subject to a lien in favor of the debenture bondholders; and it seems to us that it cannot be held that, because by the agreement of the canal company the scrip certificates were convertible into first mortgage bonds, therefore the debenture bondholders had a lien on its property and assets. We assume in favor of the plaintiff, without deciding, that, if a party by a written agreement has manifested an intention to create in favor of another a lien or charge on his estate as security for the payment of a debt or obligation, equity will carry out the purpose thus manifested, and enforce the security; Pinch v. Anthony, 8 Allen, 536 ; but, for the reasons given, we do not think that the principle applies to this case.
There is a prayer for general relief, and from some allegations in the bill we are not entirely clear whether the plaintiff does not also seek on behalf of itself and other bondholders for a foreclosure of the mortgage. As a general rule, where property is conveyed to a trustee as security for numerous bondholders, the trustee is the party to initiate or defend suits in respect to the security, and the bondholders have no standing unless he refuses or neglects to perform his duty. First National Ins. Co. v. Salisbury, 130 Mass. 303. Cook, Stock & Stockholders, (3d ed.) § 826, and cases cited. In this case the trust indenture or mortgage expressly provides that the right of action under it is vested exclusively in the trust company, and that no debenture or cer[568]*568tificate holder shall have a right to institute any proceeding under it except in case of the refusal of the trustee to do its duty, and that the trustee shall be under no obligation to institute any suit or proceeding until it shall have been indemnified to its satis faction for expenses and costs, and against claims for damages. The bill alleges that the trust company has been requested to institute proceedings, but has refused, and admits in substance that no indemnity has been offered, and assigns as an excuse that it would be a hardship on the bondholders to be obliged to indemnify the trust company, and that they do not desire its intervention. Without undertaking to say that in no case would the claim of the trustee to indemnity be unjustifiable, or that indemnity ought to be furnished in every case, we are of opinion that no sufficient reason appears in this case to justify a suit by the bondholders in their own names to foreclose the mortgage. The fact that the trustee is a non-resident cannot avail, since, in the great majority of cases, it probably would be a non-resident as to some bondholders; and if in any case the hardship would be so' extreme as to excuse an offer of indemnity, it does not appear to be so here.
The remaining question relates to the appointment of a receiver. We do not think that the plaintiff makes out a case for one. What has just been said disposes of the application so far as it rests on the ground that the plaintiff is a bondholder secured by mortgage, and seeks the appointment of a receiver to foreclose the mortgage. It does not appear that the trustee will not act if properly indemnified. Though the charter may have expired by limitation, the corporation has not been dissolved, and cannot be in this proceeding, (Briggs v. Cape Cod Ship Canal Co. 137 Mass. 71,) and a receiver cannot be appointed, therefore, under Pub. Sts. c. 105, § 42. Generally, the appointment of a receiver rests in the sound discretion of the court. But in order to justify the appointment of one on the application of a creditor, it should at least appear that he has a valid claim against the corporation, that there are assets applicable to its payment, and that he has exhausted his legal remedies, or that the circumstances are such that to deny the application would lead to a wasting and loss of property which otherwise might be made available for the payment of the debts of the corporation, and [569]*569which could not be availed of in any other manner so satisfactorily as by the appointment of a receiver. A receivership is not to be regarded as an ordinary incident of the proceedings to collect a debt. Hollins v. Brierfield Coal & Iron Co. 150 U. S. 371. Parker v. Moore, 3 Edw. Ch. 234. High, Receivers, § 406. Thompson, Corp. §§ 6839, 6848, and cases cited.
We do not think that the facts that a corporation is insolvent, that its affairs are in inextricable confusion, and that it has preferred certain creditors, necessarily require the appointment of a receiver. In such a case the insolvent law of this State affords a complete remedy, and the failure of the parties to avail themselves of it does not of itself furnish a sufficient reason for the appointment of a receiver.
It is manifest that the bill cannot be retained merely for the entry of judgment against Lockwood or the Canal Company, or both. Andrews v. Moen, 162 Mass. 294.
Decree affirmed.
This section is as follows : “ Said Cape Cod Ship Canal Company shall, on or before the fifteenth day of July, in the year eighteen hundred and ninety-two, upon presentation, pay to the bona fide holders or purchasers for value of the following described debentures: the principal and accrued interest of such of the debentures of Frederic A. Lockwood, contractor, approved by the Cape Cod Ship Canal Company, and known as the Cape Cod Ship Canal construction debentures, as have been withdrawn from the Farmers’ Loan and Trust Company, trustee, in New York City, under the provisions of a certain indenture made by and between said Frederic A. Lockwood, said Cape Cod Ship Canal Company, and said Farmers’ Loan and Trust Company, trustee, in New York City, and are now, or may hereafter be, in the hands and possession of such bona fide holders or purchasers for value.”