Bell, C. J.*
Notes of a corporation, signed by its officers acting within the scope of their authority, are binding upon it, provided they are made or given for any of the legitimate purposes for which.it was incorporated. Ang. & Am. on Corp. 234, 245; Smith v. Nashua, &c., 27 N. H. 94; Beers v. Phenix, &c., 14 Barb. 362 ; Moss v. Oakley, 2 Hill 263 ; Kelly v. Mayor, &c., 4 Hill 265; Attorney General v. Life, &c., 9 Paige 476; Mott v. Hicks, 1 Cow. 513; McCullough v. Moss, 5 Denio 577 ; Came v. Brigham, 39 Me. 39; Bank, &c., v. Patterson, 7 Cran. 299; Pierce on Railroads 372.
A corporation, created to construct a railroad, has power to borrow money, as one of the implied means necessary and proper to carry into effect its specific powers; and to give its promissory notes for the repayment of it. Union, &c., v. Jacobs, 6 Humph. 515; Ang. & Am. Corp. 234, note 3; Harvey v. Chase, 38 N. H. 278.
This power is not restricted by the provision of the charter, limiting the capital stock of the coi’poration to 20,000 shares; and prescribing that no assessment shall be laid on any share of a greater amount than $100 on each share; and that if a greater amount of money shall be necessary, it shall be raised by creating new shares. Union, &c., v. Jacobs, 6 Humph. 515; see Kelly v. Mayor, &c., 4 Hill 265.
Generally, corporations have the power at common law to sell and convey their property, as they think proper. Redf. R. W. 575; Gordon v. Preston, 1 Watts 385; Treadwell v. Salisbury, &c., 7 Gray 404.
The power of a corporation to sell and convey its property, and to borrow money, and make contracts, implies the power to mortgage its property, real or personal, to secure the payment of its debts. Redf. R. W. 575; Gordon v. Preston, 1 Watts 385; Haxton v. Bishop, 3 Wend. 13; DeRuyter v. St. Peter's, &c., 3 Barb. Ch. 124; S. C., 3 Comst. 242; Dispatch, &c., v. Bellamy, &c., 12 N. H. 205; [136] Flint v. Clinton, &c., 12 N. H. 480; Pierce v. Emery, 32 N. H. 504; Jackson v. Brown, 5 Wend. 594.
These principles are regarded as so well settled by authority, and by the common sentiment of the community, as to require n-Q discussion. Common errors, upon which great amounts of property have been invested, can not safely be corrected. \
The general principle, that corporations may sell or mortgage their real or personal property at their pleasure, is subject to ex-\ ceptions from the nature and purposes of some of them, and from the duties and liabilities imposed on them by their charters. Cox'porations for public objects, to which lai’ge powers are given to enable them to accommodate the public, and upon which public duties ai’e imposed for the benefit of the community, are held in England and in this State to be disabled to do any act which would amount to a renunciation of their duty to the public, or which directly and necessarily disable them from performing it. They caxx not convey away their franchise and cox’porate rights, nor pei’haps the track and right of way, which they take and hold for the necessary use of their road. Treadwell v. Salisbury, &c., 7 Gray 204; Pierce v. Emery, 32 N. H. 484. It is in the power of the legislature, as the representative of the public rights and interests, to authorize the corporatioxx to convey or mox’tgage their franchise and all the property of the cox’poration. In this case, at the time of the conveyance to the trustees, which is relied upon as part of the defense, the legislature had xxot given any assent or authority to execute such a mortgage; but it is contended that the mortgage is only voidable, and that it was capable of being i’atified and affirmed by the legislature, and that it would thereby be x-endered valid and effectual, and that such is the necessaxy effect of the statute of June 26, 1858, by which the holders of the moi’tgage were authorized to make sale of the mortgaged propex’ty. Though we can not assent to the broad terms in which it seems to be asserted, that the legislature may intei’fere with px’ivate rights, yet we entei’tain no doubts that the legislature may waive the public light to object to the acts of others, because they are opposed to the public interests, and where any act is invalid for want of legislative assent, may waive the objection, and ratify such act by a subsequent statute. Pierce v. Emery, 3 N. H. 504; Hall v. Sullivan, &c., Redf. 578; Shaw v. Norfolk, &c., 5 Gray 162; Pierce on Railroads 511. And we think the statute here relied upon must be held to have confii’med the moi’tgage to the trustees, so far as it was, defective for want of authority from the legislature, and to be a waiver also of all objection which the State or the public could ■ have to the election or qualification of the new trustees.
It was not in the power of the legislature, by subsequent acts, to change the lights of individuals in relation to pai’ticulars in which the State had no rights. These can not be affected by retrospective legislation. All such rights must be detei-mined according to the laws in force when the lights of the parties interested respectively accrued, or became definitely fixed. Rich v. Flanders, 39 N. H. 304.
Except the objections before suggested, it is not contended that [137] the notes and mortgage here were not made for purposes within the legitimate objects of the eorpoi’atiou.
It is however said that the mortgage is invalid, because it was given to secure future advances. Our statute (Rev. Stat., ch. 18, sec. 3) provides, that no estate conveyed in mortgage shall be hold by the mortgagee for the payment of any sum of money, or the performance of any other thing, the obligation or liability to the payment or performance of which, arises, is made, or contracted, after the execution and delivery of such mortgage. The notes or bonds here were not issued until after the mortgage was made, and the coi'poration was not indebted in anyway on account of these bonds, till they were disposed of subsequent to the formal execution and record of the mortgage. But this seems to us a narrow construction of the statute. It has been long held that a mortgage is not discharged by the renewal of the note, though by the deduction of payments and the addition of interest, the amount and date may be changed, but will be held a valid security for the new note. The law thus distinguishes between the debt and the instrument made as its eviden ce and security, the debt continuing though the note is changed.
Now the case finds that the notes and mortgage were made to raise money to pay the debts of the company, contracted in building the road. It was not a new indebtedness to be afterward contracted, but the old debt, which was in the view of all the parties to the mortgage, and though the notes were to bo of different dates and amounts, and perhaps to different persons, yet the court will look through the forms of the" transaction, and if it is shown tht the mortgage is made to secure the payment of an existing indebtedness, it will be sustained.
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Bell, C. J.*
Notes of a corporation, signed by its officers acting within the scope of their authority, are binding upon it, provided they are made or given for any of the legitimate purposes for which.it was incorporated. Ang. & Am. on Corp. 234, 245; Smith v. Nashua, &c., 27 N. H. 94; Beers v. Phenix, &c., 14 Barb. 362 ; Moss v. Oakley, 2 Hill 263 ; Kelly v. Mayor, &c., 4 Hill 265; Attorney General v. Life, &c., 9 Paige 476; Mott v. Hicks, 1 Cow. 513; McCullough v. Moss, 5 Denio 577 ; Came v. Brigham, 39 Me. 39; Bank, &c., v. Patterson, 7 Cran. 299; Pierce on Railroads 372.
A corporation, created to construct a railroad, has power to borrow money, as one of the implied means necessary and proper to carry into effect its specific powers; and to give its promissory notes for the repayment of it. Union, &c., v. Jacobs, 6 Humph. 515; Ang. & Am. Corp. 234, note 3; Harvey v. Chase, 38 N. H. 278.
This power is not restricted by the provision of the charter, limiting the capital stock of the coi’poration to 20,000 shares; and prescribing that no assessment shall be laid on any share of a greater amount than $100 on each share; and that if a greater amount of money shall be necessary, it shall be raised by creating new shares. Union, &c., v. Jacobs, 6 Humph. 515; see Kelly v. Mayor, &c., 4 Hill 265.
Generally, corporations have the power at common law to sell and convey their property, as they think proper. Redf. R. W. 575; Gordon v. Preston, 1 Watts 385; Treadwell v. Salisbury, &c., 7 Gray 404.
The power of a corporation to sell and convey its property, and to borrow money, and make contracts, implies the power to mortgage its property, real or personal, to secure the payment of its debts. Redf. R. W. 575; Gordon v. Preston, 1 Watts 385; Haxton v. Bishop, 3 Wend. 13; DeRuyter v. St. Peter's, &c., 3 Barb. Ch. 124; S. C., 3 Comst. 242; Dispatch, &c., v. Bellamy, &c., 12 N. H. 205; [136] Flint v. Clinton, &c., 12 N. H. 480; Pierce v. Emery, 32 N. H. 504; Jackson v. Brown, 5 Wend. 594.
These principles are regarded as so well settled by authority, and by the common sentiment of the community, as to require n-Q discussion. Common errors, upon which great amounts of property have been invested, can not safely be corrected. \
The general principle, that corporations may sell or mortgage their real or personal property at their pleasure, is subject to ex-\ ceptions from the nature and purposes of some of them, and from the duties and liabilities imposed on them by their charters. Cox'porations for public objects, to which lai’ge powers are given to enable them to accommodate the public, and upon which public duties ai’e imposed for the benefit of the community, are held in England and in this State to be disabled to do any act which would amount to a renunciation of their duty to the public, or which directly and necessarily disable them from performing it. They caxx not convey away their franchise and cox’porate rights, nor pei’haps the track and right of way, which they take and hold for the necessary use of their road. Treadwell v. Salisbury, &c., 7 Gray 204; Pierce v. Emery, 32 N. H. 484. It is in the power of the legislature, as the representative of the public rights and interests, to authorize the corporatioxx to convey or mox’tgage their franchise and all the property of the cox’poration. In this case, at the time of the conveyance to the trustees, which is relied upon as part of the defense, the legislature had xxot given any assent or authority to execute such a mortgage; but it is contended that the mortgage is only voidable, and that it was capable of being i’atified and affirmed by the legislature, and that it would thereby be x-endered valid and effectual, and that such is the necessaxy effect of the statute of June 26, 1858, by which the holders of the moi’tgage were authorized to make sale of the mortgaged propex’ty. Though we can not assent to the broad terms in which it seems to be asserted, that the legislature may intei’fere with px’ivate rights, yet we entei’tain no doubts that the legislature may waive the public light to object to the acts of others, because they are opposed to the public interests, and where any act is invalid for want of legislative assent, may waive the objection, and ratify such act by a subsequent statute. Pierce v. Emery, 3 N. H. 504; Hall v. Sullivan, &c., Redf. 578; Shaw v. Norfolk, &c., 5 Gray 162; Pierce on Railroads 511. And we think the statute here relied upon must be held to have confii’med the moi’tgage to the trustees, so far as it was, defective for want of authority from the legislature, and to be a waiver also of all objection which the State or the public could ■ have to the election or qualification of the new trustees.
It was not in the power of the legislature, by subsequent acts, to change the lights of individuals in relation to pai’ticulars in which the State had no rights. These can not be affected by retrospective legislation. All such rights must be detei-mined according to the laws in force when the lights of the parties interested respectively accrued, or became definitely fixed. Rich v. Flanders, 39 N. H. 304.
Except the objections before suggested, it is not contended that [137] the notes and mortgage here were not made for purposes within the legitimate objects of the eorpoi’atiou.
It is however said that the mortgage is invalid, because it was given to secure future advances. Our statute (Rev. Stat., ch. 18, sec. 3) provides, that no estate conveyed in mortgage shall be hold by the mortgagee for the payment of any sum of money, or the performance of any other thing, the obligation or liability to the payment or performance of which, arises, is made, or contracted, after the execution and delivery of such mortgage. The notes or bonds here were not issued until after the mortgage was made, and the coi'poration was not indebted in anyway on account of these bonds, till they were disposed of subsequent to the formal execution and record of the mortgage. But this seems to us a narrow construction of the statute. It has been long held that a mortgage is not discharged by the renewal of the note, though by the deduction of payments and the addition of interest, the amount and date may be changed, but will be held a valid security for the new note. The law thus distinguishes between the debt and the instrument made as its eviden ce and security, the debt continuing though the note is changed.
Now the case finds that the notes and mortgage were made to raise money to pay the debts of the company, contracted in building the road. It was not a new indebtedness to be afterward contracted, but the old debt, which was in the view of all the parties to the mortgage, and though the notes were to bo of different dates and amounts, and perhaps to different persons, yet the court will look through the forms of the" transaction, and if it is shown tht the mortgage is made to secure the payment of an existing indebtedness, it will be sustained.
A broader view would equally sustain this mortgage. It has been usual for cautious men to require that their mortgages should be put on record, and a certificate brought from the registry, that there is no previous incumbrance on the property, before advancing their money. It has never been doubted that such a mortgage was valid, though the note is made and the money advanced after the mortgage is made and recorded. The cases of Ward v. Borden, 30 N. H. 386; Parker v. Dustin, 22 N. H. 424; Stephens v. Buffalo, &c., 20 Barb. 332; Sawyer v. Thornton, 3 Met. 281; Parker v. Parker, 1 Gray 409, sustain the position that a mortgage does not take effect till the actual advance of the money, where the deed is first sent to the recoi’ds to be recorded. And a delivery of a deed to the register for the use of the grantee, intending that it shall then take effect, with the assent of the grantee afterward, is sufficient; 2 Greenl. Cr., Tit. 32, ch. 2, sec. 64, and note; Mayne v. Clark, 6 Cush. 11; as between the parties, though not against an intervening attachment. Ibid., and cases cited; Harrison v. Phillips, &c., 12 Mass. 461; Jackson v. Rowland, 6 Wend. 666; Lamson v. Thursday, 3 Met. 281. In these cases, until the money has been advanced or the assent of the absent grantee has been obtained, the transaction may be regarded as incomplete, and in fieri, and whether a day intervenes, or weeks, is unimportant. Upon the same view, the mortgage in this case may be regarded as incomplete, until the notes are-[138] issued. Cases lile© this seem not to fall within the spirit of the statute provision, however much they may appear to do so in terms.
The answer of the counsel as to the prospective issue of the bonds, seems also quite satisfactory. At the time the trustees took possession of the railroad, the corporation surrendered-it by a deed, which operates as a recognition and ratification of both the mortgage and notes, which had long before issued, from that time; and this was long before the present plaintiff commenced his suit. Beside, this objection ax^plies only to the mortgage, as it relates to the real estate, as it is said, and a trustee is not chargeable in this process for any other than personal property.
It is insisted that this mortgage was not duly executed, as to the personal estate, because it was not sworn to by the mortgagor. It is throughout the deed of the corporation, executed by the directors in the corporate name; but the directors, in signing the oath, did not profess to act for the corporation, and the certificate of the magistrate does not show that they acted for the corporation. They appear as acting for themselves alone. This question appears to be settled by the decision of the court in Flint v. Clinton, &c., 12 N. H. 430-436. There the company made an assignment of all their property to trustees for the payment of their debts. The statute declares that no such assignment shall be valid, until the person making it shall make oath that he has assigned all his property, &e. The oath was made by the agent who executed the assignment, that the company had assigned, &c., and this was held sufficient. Here the directors swear that the mortgage is made to secure the debt specified in the condition thereof, &c., that said bonds are issued to pay just debts of the company, &c.; the signatures to this oath did not purport to be on behalf of the corporation. The cases are entirely parallel. The case of Flint v. Clinton Co., was cited and approved in Tenney v. East Warren Lumber Co., 43 N. H. 343.
This supposed defect in the execution of the mortgage, so far as it affects personal propei'ty, seems sufficiently answered by the counsel for the trustees. Before the plaintiff’s claim intervened, the road and all its property had been delivered to the trustees. This was done July 20, 1855. This suit was not commenced till June, 1859. The statute provision is, that “no such mortgage shall be valid against any person except the mortgagor, his executors and administrators, unless possession is delivered or the mortgage is sworn to and recorded in the manner before prescribed.”. Rev. Stat., ch. 32, sec. 7; Comp. Stat. 294.
The next objection is, that the present trustees were not duly elected, because they had not been previously holders of bonds of the road, but they had each purchased a bond for the purpose of qualifying themselves for the trust. It is not found by the case that any actual fraud was intended or effected, and we can presume none. In itself there can be no objection to a man’s obtaining the necessary qualification to enable him to be a trustee or director, if no improper object or ¡purpose is' aimed at. We think, therefore, these gentlemen must be deemed legally competent to the trust, and their election valid.
[139] It is then objected that tbe bonds held by these trustees were sold before the occurrences upon which the plaintiff rests his claim, and their offices were thenceforth vacant. If it were true that any officer or trustee, whose eligibility depends on liis possessing a certain property qualification, ceases de facto to hold the office or trust, when he ceases to have the qualification, it.would make no difference in this case. The party who holds in his hands trust property knowingly, even by wrong, will be held in equity to be charged ■with the due execution of the trust. The funds which he receives as trustee or under circumstances which make him chargeable as trustee, he is bound to account for to those who are equitably entitled to them under that trust. He can not consequently be charged in a trustee process to third persons who are creditors of persons supposed to have the legal interest, if the title of the trustee fails. DeBarante v. Gott, 6 Barb. 498; Shepherd v. McEvers, 4 Johns. Ch. 138; 4 Kent Com. 307; 2 Mad. Ch. Pr. 125; 1 Story Eq. 384; 2 Story Eq. 502, &c.; Willard Eq. 418; 1 Johns. Ch. 575; Murray v. Ballou.
It is a settled rule of law that a trustee, after he has accepted the office, can not discharge himself by a subsequent resignation merely, or by any act of his own. He must either be discharged from the trust by virtue of a special provision of the deed or will, which creates the trust, or by an order or decree of the Court of Chancery (or other court of competent jurisdiction), or with the general consent of all persons interested in the execution of the trust. Cruger v. Holliday, 11 Paige 319; Shepherd v. McEvers, 4 Johns. Ch. 138; Matter of Van Wick, 1 Barb. Ch. 567; 1 Willard Eq. 470; Adams Eq. 38.
As a general rule a trustee can not be charged, unless at the time of the disclosure the principal defendant had a right of action against him for some indebtedness, or property in his possession, or unless the trustee had in his hands property belonging to the principal, which the latter had the legal right to take and carry away. Greenleaf v. Perrin, 8 N. H. 273; Boardman v. Cushing, 12 N. H. 112.
The trustee process can be maintained against an actual trustee, bond fide appointed by deed or will, only in a few cases. If the party attempted to be charged is a trustee for the benefit of the debtor, he may be charged for every thing in his hands for which he is at the time accountable to the debtor. But where the trust is created by a third person, and the trustee is vested with a discretion as to the time, amount or manner of the payments to be made to the debtor, he can not be charged as trustee. Briggs v. Beach, 18 Vt. 115; Vincent v. Gorham, 3 Met. 343; White v. Jenkins, 16 Mass. 62. If the trust is created by a stranger, though for the benefit of the debtor, the trustee can be charged only in conformity to the terms of the trust.
If the trust is created by the debtor, the trustee who has received the trust property may be charged, if the trust is fraudulent as to creditors, being for his own benefit; Crane v. Stickles, 15 Vt. 252; or if from any defect of the conveyance, the trust fails wholly never taking effect, though if the defect is such that equity would [140] decree the instrument to be reformed, in tbe absence of fraud, tbe trustee should not be charged.
If the trust, originally effective and operative, should, after a time, fail, because its objects become impracticable or have been fully accomplished, the trustee may be charged as trustee of the residue, for the debtor himself. But if the trustees fail, or if the property has got into wrong hands, equity never allows the trust to fail for want of a proper trustee, but will either compel a proper appointment or will itself appoint a trustee. Adams Eq. 174, note; King v. Donelly, 5 Paige 46; DeBarante v. Gott, 6 Barb. 498; Carter v. Orphan, &c., 9 Cow. 437; Jer. Eq. 163; Depeyster v. Clendenning, 8 Paige 310.
These principles of course limit the grounds upon which actual trustees can be charged to the cases of failure of the trust. If the trust exists for the benefit of any other than the debtor, the trustees can not be charged, because the fund to be reached is in equity, that is, by the law of the land, the property of the beneficiary, and not of the debtor. Mayhew v. Price, 42 Me. 296; Pickering v. Wendell, 20 N. H. 222; Hinckley v. Williams, 1 Cush. 492; Wright v. Bosworth, 7 N. H. 593; Dickenson v. Strong, 4 Pick. 57; Supton v. Cutter, 8 Pick. 298.
If, then, the defendant trustees were ineligible, or have subsequently become incapable, or if they or others have even got possession of the property by wrong, they can not be charged as trustees of the debtor. It is therefore unnecessary to consider any questions relating to the election of the trustees, or the subsequent transactions in relation to the road or the funds arising from it. To whomsoever else the trustees may be accountable, they are not so to the debtor corporation in this case, nor to its creditors.